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Voluntary Arbitration - LEPANTO CERAMICS, INC. vs. LEPANTO CERAMICS EMPLOYEES ASSOCIATION, G.R. No. 180866, March 2, 2010, 614 s 63 DECISION

PEREZ, J.:

Before this Court is a Petition for Review on Certiorari under Rule 451 of the 1997 Rules of Civil Procedure filed by petitioner Lepanto Ceramics, Inc. (petitioner), assailing the: (1) Decision 2 of the Court of Appeals, dated 5 April 2006, in CA-G.R. SP No. 78334 which affirmed in toto the decision of the Voluntary Arbitrator3 granting the members of the respondent association a Christmas Bonus in the amount of Three Thousand Pesos (P3,000.00), or the balance of Two Thousand Four Hundred Pesos (P2,400.00) for the year 2002, and the (2) Resolution 4 of the same court dated 13 December 2007 denying Petitioners Motion for Reconsideration. The facts are: Petitioner Lepanto Ceramics, Incorporated is a duly organized corporation existing and operating by virtue of Philippine Laws. Its business is primarily to manufacture, make, buy and sell, on wholesale basis, among others, tiles, marbles, mosaics and other similar products.5 Respondent Lepanto Ceramics Employees Association (respondent Association) is a legitimate labor organization duly registered with the Department of Labor and Employment. It is the sole and exclusive bargaining agent in the establishment of petitioner.6 In December 1998, petitioner gave a P3,000.00 bonus to its employees, members of the respondent Association.7 Subsequently, in September 1999, petitioner and respondent Association entered into a Collective Bargaining Agreement (CBA) which provides for, among others, the grant of a Christmas gift package/bonus to the members of the respondent Association.8 The Christmas bonus was one of the enumerated "existing benefit, practice of traditional rights" which "shall remain in full force and effect." The text reads: Section 8. All other existing benefits, practice of traditional rights consisting of Christmas Gift package/bonus, reimbursement of transportation expenses in case of breakdown of service vehicle and medical services and safety devices by virtue of company policies by the UNION and employees shall remain in full force and effect. Section 1. EFFECTIVITY This agreement shall become effective on September 1, 1999 and shall remain in full force and effect without change for a period of four (4) years or up to August 31, 2004 except as to the representation aspect which shall be effective for a period of five (5) years. It shall bind each and every employee in the bargaining unit including the present and future officers of the Union. In the succeeding years, 1999, 2000 and 2001, the bonus was not in cash. Instead, petitioner gave each of the members of respondent Association Tile Redemption Certificates equivalent to P3,000.00.9 The bonus for the year 2002 is the root of the present dispute. Petitioner gave a year-end cash benefit of Six Hundred Pesos (P600.00) and offered a cash advance to interested employees equivalent to one (1) month salary payable in one year. 10 The respondent Association objected to the P600.00 cash benefit and argued that this was in violation of the CBA it executed with the petitioner. The parties failed to amicably settle the dispute. The respondent Association filed a Notice of Strike with the National Conciliation Mediation Board, Regional Branch No. IV, alleging the violation of the CBA. The case was placed under preventive mediation. The efforts to conciliate failed. The case was then referred to the Voluntary Arbitrator for resolution where the Complaint was docketed as Case No. LAG-PM-12-095-02. In support of its claim, respondent Association insisted that it has been the traditional practice of the company to grant its members Christmas bonuses during the end of the calendar year, each in the amount of P3,000.00 as an expression of gratitude to the employees for their participation in the companys continued existence in the market. The bonus was either in cash or in the form of company tiles. In 2002, in a speech during the Christmas celebration, one of the companys top executives assured the employees of said bonus. However, the Human Resources Development Manager informed

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them that the traditional bonus would not be given as the companys earnings were intended for the payment of its bank loans. Respondent Association argued that this was in violation of their CBA. The petitioner averred that the complaint for nonpayment of the 2002 Christmas bonus had no basis as the same was not a demandable and enforceable obligation. It argued that the giving of extra compensation was based on the companys available resources for a given year and the workers are not entitled to a bonus if the company does not make profits. Petitioner adverted to the fact that it was debt-ridden having incurred net losses for the years 2001 and 2002 totaling to P1.5 billion; and since 1999, when the CBA was signed, the companys accumulated losses amounted to over P2.7 billion. Petitioner further argued that the grant of a one (1) month salary cash advance was not meant to take the place of a bonus but was meant to show the companys sincere desire to help its employees despite its precarious financial condition. Petitioner also averred that the CBA provision on a "Christmas gift/bonus" refers to alternative benefits. Finally, petitioner emphasized that even if the CBA contained an unconditional obligation to grant the bonus to the respondent Association, the present difficult economic times had already legally released it therefrom pursuant to Article 1267 of the Civil Code.11 The Voluntary Arbitrator rendered a Decision dated 2 June 2003, declaring that petitioner is bound to grant each of its workers a Christmas bonus of P3,000.00 for the reason that the bonus was given prior to the effectivity of the CBA between the parties and that the financial losses of the company is not a sufficient reason to exempt it from granting the same. It stressed that the CBA is a binding contract and constitutes the law between the parties. The Voluntary Arbitrator further expounded that since the employees had already been given P600.00 cash bonus, the same should be deducted from the claimed amount of P3,000.00, thus leaving a balance of P2,400.00. The dispositive portion of the decision states, viz: Wherefore, in view of the foregoing respondent LCI is hereby ordered to pay the members of the complainant union LCEA their respective Christmas bonus in the amount of three thousand (P3,000.00) pesos for the year 2002 less the P600.00 already given or a balance of P2,400.00.12 Petitioner sought reconsideration but the same was denied by the Voluntary Arbitrator in an Order dated 27 June 2003, in this wise: The Motion for Reconsideration filed by the respondent in the above-entitled case which was received by the Undersigned on June 26, 2003 is hereby denied pursuant to Section 7 Rule XIX on Grievance Machinery and Voluntary Arbitration; Amending The Implementing Rules of Book V of the Labor Code of the Philippines; to wit: Section 7. Finality of Award/Decision The decision, order, resolution or award of the voluntary arbitrator or panel of voluntary arbitrators shall be final and executory after ten (10) calendar days from receipt of the copy of the award or decision by the parties and it shall not be subject of a motion for reconsideration.13 Petitioner elevated the case to the Court of Appeals via a Petition for Certiorari under Rule 65 of the Rules of Court docketed as CA-G.R. SP No. 78334.14 As adverted to earlier, the Court of Appeals affirmed in toto the decision of the Voluntary Arbitrator. The appellate court also denied petitioners motion for reconsideration. In affirming respondent Associations right to the Christmas bonus, the Court of Appeals held: In the case at bar, it is indubitable that petitioner offered private respondent a Christmas bonus/gift in 1998 or before the execution of the 1999 CBA which incorporated the said benefit as a traditional right of the employees. Hence, the grant of said bonus to private respondent can be deemed a practice as the same has not been given only in the 1999 CBA. Apparently, this is the reason why petitioner specifically recognized the grant of a Christmas bonus/gift as a practice or tradition as stated in the CBA. x x x. xxxx Evidently, the argument of petitioner that the giving of a Christmas bonus is a management prerogative holds no water. There were no conditions specified in the CBA for the grant of said benefit contrary to the claim of petitioner that the same is justified only when there are profits earned by the company. As can be gleaned from the CBA, the payment of Christmas bonus was not contingent upon the realization of profits. It does not state that if the company derives no profits, there are no bonuses to be given to the employees. In fine, the payment thereof was not related to the profitability of business operations.

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Moreover, it is undisputed that petitioner, aside from giving the mandated 13th month pay, has further been giving its employees an additional Christmas bonus at the end of the year since 1998 or before the effectivity of the CBA in September 1999. Clearly, the grant of Christmas bonus from 1998 up to 2001, which brought about the filing of the complaint for alleged non-payment of the 2002 Christmas bonus does not involve the exercise of management prerogative as the same was given continuously on or about Christmas time pursuant to the CBA. Consequently, the giving of said bonus can no longer be withdrawn by the petitioner as this would amount to a diminution of the employees existing benefits.15 Not to be dissuaded, petitioner is now before this Court. The only issue before us is whether or not the Court of Appeals erred in affirming the ruling of the voluntary arbitrator that the petitioner is obliged to give the members of the respondent Association a Christmas bonus in the amount of P3,000.00 in 2002.16 We uphold the rulings of the voluntary arbitrator and of the Court of Appeals. Findings of labor officials, who are deemed to have acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but even finality, and bind us when supported by substantial evidence. This is the rule particularly where the findings of both the arbitrator and the Court of Appeals coincide.17 As a general proposition, an arbitrator is confined to the interpretation and application of the CBA. He does not sit to dispense his own brand of industrial justice: his award is legitimate only in so far as it draws its essence from the CBA.18 That was done in this case. By definition, a "bonus" is a gratuity or act of liberality of the giver. It is something given in addition to what is ordinarily received by or strictly due the recipient. A bonus is granted and paid to an employee for his industry and loyalty which contributed to the success of the employers business and made possible the realization of profits.19 A bonus is also granted by an enlightened employer to spur the employee to greater efforts for the success of the business and realization of bigger profits.20 Generally, a bonus is not a demandable and enforceable obligation. For a bonus to be enforceable, it must have been promised by the employer and expressly agreed upon by the parties.21 Given that the bonus in this case is integrated in the CBA, the same partakes the nature of a demandable obligation. Verily, by virtue of its incorporation in the CBA, the Christmas bonus due to respondent Association has become more than just an act of generosity on the part of the petitioner but a contractual obligation it has undertaken.22 A CBA refers to a negotiated contract between a legitimate labor organization and the employer, concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit. As in all other contracts, the parties to a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided these are not contrary to law, morals, good customs, public order or public policy.23 It is a familiar and fundamental doctrine in labor law that the CBA is the law between the parties and they are obliged to comply with its provisions.24 This principle stands strong and true in the case at bar.
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A reading of the provision of the CBA reveals that the same provides for the giving of a "Christmas gift package/bonus" without qualification. Terse and clear, the said provision did not state that the Christmas package shall be made to depend on the petitioners financial standing. The records are also bereft of any showing that the petitioner made it clear during CBA negotiations that the bonus was dependent on any condition. Indeed, if the petitioner and respondent Association intended that the P3,000.00 bonus would be dependent on the company earnings, such intention should have been expressed in the CBA. It is noteworthy that in petitioners 1998 and 1999 Financial Statements, it took note that "the 1997 financial crisis in the Asian region adversely affected the Philippine economy."25 From the foregoing, petitioner cannot insist on business losses as a basis for disregarding its undertaking. It is manifestly clear that petitioner was very much aware of the imminence and possibility of business losses owing to the 1997 financial crisis. In 1998, petitioner suffered a net loss of P14,347,548.00.26 Yet it gave a P3,000.00 bonus to the members of the respondent Association. In 1999, when petitioners very own financial statement reflected that "the positive developments in the economy have yet to favorably affect the operations of the company,"27 and reported a loss of P346,025,733.00,28 it entered into the CBA with the respondent Association whereby it contracted to grant a Christmas gift package/bonus to

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the latter. Petitioner supposedly continued to incur losses in the years 200029 and 2001. Still and all, this did not deter it from honoring the CBA provision on Christmas bonus as it continued to give P3,000.00 each to the members of the respondent Association in the years 1999, 2000 and 2001. All given, business losses are a feeble ground for petitioner to repudiate its obligation under the CBA. The rule is settled that any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded on the constitutional mandate to protect the rights of workers and to promote their welfare and to afford labor full protection.30 Hence, absent any proof that petitioners consent was vitiated by fraud, mistake or duress, it is presumed that it entered into the CBA voluntarily and had full knowledge of the contents thereof and was aware of its commitments under the contract. The Court is fully aware that implementation to the letter of the subject CBA provision may further deplete petitioners resources. Petitioners remedy though lies not in the Courts invalidation of the provision but in the parties clarification of the same in subsequent CBA negotiations. Article 253 of the Labor Code is relevant: Art. 253. Duty to bargain collectively when there exists a collective bargaining agreement. - When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate nor modify such agreement during its lifetime. However, either party can serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the sixty (60)-day period and/or until a new agreement is reached by the parties. WHEREFORE, Premises considered, the petition is DENIED for lack of merit. The Decision of the Court of Appeals dated 5 April 2006 and the Resolution of the same court dated 13 December 2007 in CA-G.R. SP No. 78334 are AFFIRMED. SO ORDERED.
JOSE PORTUGAL PEREZ Associate Justice 2. Jurisdiction of LAs over corporate officers - RENATO REAL vs. SANGU PHILIPPINES, INC. and/ or KIICHI ABE, G.R. No. 168757, January 19, 2011. 640 s 67 DECISION DEL CASTILLO, J.:

The perennial question of whether a complaint for illegal dismissal is intra-corporate and thus beyond the jurisdiction of the Labor Arbiter is the core issue up for consideration in this case. This Petition for Review on Certiorari assails the Decision1 dated June 28, 2005 of the Court of Appeals (CA) in CA-G.R. SP. No. 86017 which dismissed the petition for certiorari filed before it. Factual Antecedents Petitioner Renato Real was the Manager of respondent corporation Sangu Philippines, Inc., a corporation engaged in the business of providing manpower for general services, like janitors, janitresses and other maintenance personnel, to various clients. In 2001, petitioner, together with 29 others who were either janitors, janitresses, leadmen and maintenance men, all employed by respondent corporation, filed their respective Complaints 2 for illegal dismissal against the latter and respondent Kiichi Abe, the corporations Vice-President and General Manager. These complaints were later on consolidated. With regard to petitioner, he was removed from his position as Manager through Board Resolution 2001-03 3adopted by respondent corporations Board of Directors. Petitioner complained that he was neither notified of the Board Meeting during which said board resolution was passed nor formally charged with any infraction. He just received from respondents a letter4 dated March 26, 2001 stating that he has been terminated from service effective March 25, 2001 for the following reasons: (1) continuous absences at his post at Ogino Philippines Inc. for several months which was detrimental to the corporations operation; (2) loss of trust and confidence; and, (3) to cut down operational expenses to reduce further losses being experienced by respondent corporation.

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Respondents, on the other hand, refuted petitioners claim of illegal dismissal by alleging that after petitioner was appointed Manager, he committed gross acts of misconduct detrimental to the company since 2000. According to them, petitioner would almost always absent himself from work without informing the corporation of his whereabouts and that he would come to the office only to collect his salaries. As he was almost always absent, petitioner neglected to supervise the employees resulting in complaints from various clients about employees performance. In one instance, petitioner together with a few others, while apparently drunk, went to the premises of one of respondents clients, Epson Precision (Phils.) Inc., and engaged in a heated argument with the employees therein. Because of this, respondent Abe allegedly received a complaint from Epsons Personnel Manager concerning petitioners conduct. Respondents likewise averred that petitioner established a company engaged in the same business as respondent corporations and even submitted proposals for janitorial services to two of the latters clients. Because of all these, the Board of Directors of respondent corporation met on March 24, 2001 and adopted Board Resolution No. 2001-03 removing petitioner as Manager. Petitioner was thereafter informed of his removal through a letter dated March 26, 2001 which he, however, refused to receive. Further, in what respondents believed to be an act of retaliation, petitioner allegedly encouraged the employees who had been placed in the manpower pool to file a complaint for illegal dismissal against respondents. Worse, he later incited those assigned in Epson Precision (Phils.) Inc., Ogino Philippines Corporation, Hitachi Cable Philippines Inc. and Philippine TRC Inc. to stage a strike on April 10 to 16, 2001. Not satisfied, petitioner together with other employees also barricaded the premises of respondent corporation. Such acts respondents posited constitute just cause for petitioners dismissal and that same was validly effected. Rulings of the Labor Arbiter and the National Labor Relations Commission The Labor Arbiter in a Decision5 dated June 5, 2003 declared petitioner and his co-complainants as having been illegally dismissed and ordered respondents to reinstate complainants to their former positions without loss of seniority rights and other privileges and to pay their full backwages from the time of their dismissal until actually reinstated and furthermore, to pay them attorneys fees. The Labor Arbiter found no convincing proof of the causes for which petitioner was terminated and noted that there was complete absence of due process in the manner of his termination. Respondents thus appealed to the National Labor Relations Commission (NLRC) and raised therein as one of the issues the lack of jurisdiction of the Labor Arbiter over petitioners complaint. Respondents claimed that petitioner is both a stockholder and a corporate officer of respondent corporation, hence, his action against respondents is an intra-corporate controversy over which the Labor Arbiter has no jurisdiction. The NLRC found such contention of respondents to be meritorious. Aside from petitioners own admission in the pleadings that he is a stockholder and at the same time occupying a managerial position, the NLRC also gave weight to the corporations General Information Sheet6 (GIS) dated October 27, 1999 listing petitioner as one of its stockholders, consequently his termination had to be effected through a board resolution. These, the NLRC opined, clearly established petitioners status as a stockholder and as a corporate officer and hence, his action against respondent corporation is an intra-corporate controversy over which the Labor Arbiter has no jurisdiction. As to the other complainants, the NLRC ruled that there was no dismissal. The NLRC however, modified the appealed decision of the Labor Arbiter in a Decision 7 dated February 13, 2004, the dispositive portion of which reads: WHEREFORE, all foregoing premises considered, the appealed Decision dated June 5, 2003 is hereby MODIFIED. Accordingly, judgment is hereby rendered DISMISSING the complaint of Renato Real for lack of jurisdiction. As to the rest of the complainants, they are hereby ordered to immediately report back to work but without the payment of backwages. All other claims against respondents including attorneys fees are DISMISSED for lack of merit. SO ORDERED. Still joined by his co-complainants, petitioner brought the case to the CA by way of petition for certiorari. Ruling of the Court of Appeals Before the CA, petitioner imputed upon the NLRC grave abuse of discretion amounting to lack or excess of jurisdiction in declaring him a corporate officer and in holding that his action against respondents is an intra-corporate controversy and thus beyond the jurisdiction of the Labor Arbiter.

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While admitting that he is indeed a stockholder of respondent corporation, petitioner nevertheless disputed the declaration of the NLRC that he is a corporate officer thereof. He posited that his being a stockholder and his being a managerial employee do not ipso facto confer upon him the status of a corporate officer. To support this contention, petitioner called the CAs attention to the same GIS relied upon by the NLRC when it declared him to be a corporate officer. He pointed out that although said information sheet clearly indicates that he is a stockholder of respondent corporation, he is not an officer thereof as shown by the entry "N/A" or "not applicable" opposite his name in the officer column. Said column requires that the particular position be indicated if the person is an officer and if not, the entry "N/A". Petitioner further argued that the fact that his dismissal was effected through a board resolution does not likewise mean that he is a corporate officer. Otherwise, all that an employer has to do in order to avoid compliance with the requisites of a valid dismissal under the Labor Code is to dismiss a managerial employee through a board resolution. Moreover, he insisted that his action for illegal dismissal is not an intra-corporate controversy as same stemmed from employee-employer relationship which is well within the jurisdiction of the Labor Arbiter. This can be deduced and is bolstered by the last paragraph of the termination letter sent to him by respondents stating that he is entitled to benefits under the Labor Code, to wit: In this connection (his dismissal) you are entitled to separation pay and other benefits provided for under the Labor Code of the Philippines.8 (Emphasis supplied) In contrast, respondents stood firm that the action against them is an intra-corporate controversy. It cited Tabang v. National Labor Relations Commission9 wherein this Court declared that "an intra-corporate controversy is one which arises between a stockholder and the corporation;" that "[t]here is no distinction, qualification, nor any exemption whatsoever;" and that it is "broad and covers all kinds of controversies between stockholders and corporations." In view of this ruling and since petitioner is undisputedly a stockholder of the corporation, respondents contended that the action instituted by petitioner against them is an intra-corporate controversy cognizable only by the appropriate regional trial court. Hence, the NLRC correctly dismissed petitioners complaint for lack of jurisdiction. In the assailed Decision10 dated June 28, 2005, the CA sided with respondents and affirmed the NLRCs finding that aside from being a stockholder of respondent corporation, petitioner is also a corporate officer thereof and consequently, his complaint is an intra-corporate controversy over which the labor arbiter has no jurisdiction. Said court opined that if it was true that petitioner is a mere employee, the respondent corporation would not have called a board meeting to pass a resolution for petitioners dismissal considering that it was very tedious for the Board of Directors to convene and to adopt a resolution every time they decide to dismiss their managerial employees. To support its finding, the CA likewise cited Tabang. As to petitioners co-complainants, the CA likewise affirmed the NLRCS finding that they were never dismissed from the service. The dispositive portion of the CA Decision reads: WHEREFORE, the instant petition is hereby DISMISSED. Accordingly, the assailed decision and resolution of the public respondent National Labor Relations Commission in NLRC NCR CA No. 036128-03 NLRC SRAB-IV-05-6618-01-B/056619-02-B/05-6620-02-B/10-6637-01-B/10-6833-01-B, STANDS. SO ORDERED. Now alone but still undeterred, petitioner elevated the case to us through this Petition for Review on Certiorari. The Parties Arguments Petitioner continues to insist that he is not a corporate officer. He argues that a corporate officer is one who holds an elective position as provided in the Articles of Incorporation or one who is appointed to such other positions by the Board of Directors as specifically authorized by its By-Laws. And, since he was neither elected nor is there any showing that he was appointed by the Board of Directors to his position as Manager, petitioner maintains that he is not a corporate officer contrary to the findings of the NLRC and the CA. Petitioner likewise contends that his complaint for illegal dismissal against respondents is not an intra-corporate controversy. He avers that for an action or suit between a stockholder and a corporation to be considered an intracorporate controversy, same must arise from intra-corporate relations, i.e., an action involving the status of a stockholder as such. He believes that his action against the respondents does not arise from intra-corporate relations but rather from employer-employee relations. This, according to him, was even impliedly recognized by respondents as shown by the earlier quoted portion of the termination letter they sent to him.

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For their part, respondents posit that what petitioner is essentially assailing before this Court is the finding of the NLRC and the CA that he is a corporate officer of respondent corporation. To the respondents, the question of whether petitioner is a corporate officer is a question of fact which, as held in a long line of jurisprudence, cannot be the subject of review under this Petition for Review on Certiorari. At any rate, respondents insist that petitioner who is undisputedly a stockholder of respondent corporation is likewise a corporate officer and that his action against them is an intra-corporate dispute beyond the jurisdiction of the labor tribunals. To support this, they cited several jurisprudence such as Pearson & George (S.E. Asia), Inc. v. National Labor Relations Commission,11Philippine School of Business Administration v. Leano,12 Fortune Cement Corporation v. National Labor Relations Commission13 and again, Tabang v. National Labor Relations Commission.14 Moreover, in an attempt to demolish petitioners claim that the present controversy concerns employer-employee relations, respondents enumerated the following facts and circumstances: (1) Petitioner was an incorporator, stockholder and manager of respondent company; (2) As an incorporator, he was one of only seven incorporators of respondent corporation and one of only four Filipino members of the Board of Directors; (3) As stockholder, he has One Thousand (1,000) of the Ten Thousand Eight Hundred (10,800) common shares held by Filipino stockholders, with a par-value of One Hundred Thousand Pesos (P100,000.00); (4) His appointment as manager was by virtue of Section 1, Article IV of respondent corporations By-Laws; (5) As manager, he had direct management and authority over all of respondent corporations skilled employees; (6) Petitioner has shown himself to be an incompetent manager, unable to properly supervise the employees and even causing friction with the corporations clients by engaging in unruly behavior while in clients premises; (7) As if his incompetence was not enough, in a blatant and palpable act of disloyalty, he established another company engaged in the same line of business as respondent corporation; (8) Because of these acts of incompetence and disloyalty, respondent corporation through a Resolution adopted by its Board of Directors was finally constrained to remove petitioner as Manager and declare his office vacant; (9) After his removal, petitioner urged the employees under him to stage an unlawful strike by leading them to believe that they have been illegally dismissed from employment.15Apparently, respondents intended to show from this enumeration that petitioners removal pertains to his relationship with respondent corporation, that is, his utter failure to advance its interest and the prejudice caused by his acts of disloyalty. For this reason, respondents see the action against them not as a case between an employer and an employee as what petitioner alleges, but one by an officer and at same time a major stockholder seeking to be reinstated to his former office against the corporation that declared his position vacant. Finally, respondents state that the fact that petitioner is being given benefits under the Labor Code as stated in his termination letter does not mean that they are recognizing the employer-employee relations between them. They explain that the benefits provided under the Labor Code were merely made by respondent corporation as the basis in determining petitioners compensation package and that same are merely part of the perquisites of petitioners office as a director and manager. It does not and it cannot change the intra-corporate nature of the controversy. Hence, respondents pray that this petition be dismissed for lack of merit. Issues From the foregoing and as earlier mentioned, the core issue to be resolved in this case is whether petitioners complaint for illegal dismissal constitutes an intra-corporate controversy and thus, beyond the jurisdiction of the Labor Arbiter. Our Ruling Two-tier test in determining the existence of intra-corporate controversy Respondents strongly rely on this Courts pronouncement in the 1997 case of Tabang v. National Labor Relations Commission, to wit: [A]n intra-corporate controversy is one which arises between a stockholder and the corporation. There is no distinction, qualification nor any exemption whatsoever. The provision is broad and covers all kinds of controversies between stockholders and corporations.16 In view of this, respondents contend that even if petitioner challenges his being a corporate officer, the present case still constitutes an intra-corporate controversy as petitioner is undisputedly a stockholder and a director of respondent corporation.

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It is worthy to note, however, that before the promulgation of the Tabang case, the Court provided in Mainland Construction Co., Inc. v. Movilla17 a "better policy" in determining which between the Securities and Exchange Commission (SEC) and the Labor Arbiter has jurisdiction over termination disputes, 18 or similarly, whether they are intracorporate or not, viz: The fact that the parties involved in the controversy are all stockholders or that the parties involved are the stockholders and the corporation does not necessarily place the dispute within the ambit of the jurisdiction of the SEC (now the Regional Trial Court19). The better policy to be followed in determining jurisdiction over a case should be to consider concurrent factors such as the status or relationship of the parties or the nature of the question that is subject of their controversy. In the absence of any one of these factors, the SEC will not have jurisdiction. Furthermore, it does not necessarily follow that every conflict between the corporation and its stockholders would involve such corporate matters as only SEC (now the Regional Trial Court20) can resolve in the exercise of its adjudicatory or quasijudicial powers. (Emphasis ours) And, while Tabang was promulgated later than Mainland Construction Co., Inc., the "better policy" enunciated in the latter appears to have developed into a standard approach in classifying what constitutes an intra-corporate controversy. This is explained lengthily in Reyes v. Regional Trial Court of Makati, Br. 142,21 to wit: Intra-Corporate Controversy A review of relevant jurisprudence shows a development in the Courts approach in classifying what constitutes an intracorporate controversy. Initially, the main consideration in determining whether a dispute constitutes an intra-corporate controversy was limited to a consideration of the intra-corporate relationship existing between or among the parties. The types of relationships embraced under Section 5(b) x x x were as follows: a) between the corporation, partnership or association and the public; b) between the corporation, partnership or association and its stockholders, partners, members or officers; c) between the corporation, partnership or association and the State as far as its franchise, permit or license to operate is concerned; and d) among the stockholders, partners or associates themselves. The existence of any of the above intra-corporate relations was sufficient to confer jurisdiction to the SEC (now the RTC), regardless of the subject matter of the dispute. This came to be known as the relationship test. However, in the 1984 case of DMRC Enterprises v. Esta del Sol Mountain Reserve, Inc., the Court introduced the nature of the controversy test. We declared in this case that it is not the mere existence of an intra-corporate relationship that gives rise to an intra-corporate controversy; to rely on the relationship test alone will divest the regular courts of their jurisdiction for the sole reason that the dispute involves a corporation, its directors, officers, or stockholders. We saw that there is no legal sense in disregarding or minimizing the value of the nature of the transactions which gives rise to the dispute. Under the nature of the controversy test, the incidents of that relationship must also be considered for the purpose of ascertaining whether the controversy itself is intra-corporate. The controversy must not only be rooted in the existence of an intra-corporate relationship, but must as well pertain to the enforcement of the parties correlative rights and obligations under the Corporation Code and the internal and intra-corporate regulatory rules of the corporation. If the relationship and its incidents are merely incidental to the controversy or if there will still be conflict even if the relationship does not exist, then no intra-corporate controversy exists. The Court then combined the two tests and declared that jurisdiction should be determined by considering not only the status or relationship of the parties, but also the nature of the question under controversy. This two-tier test was adopted in the recent case of Speed Distribution Inc. v. Court of Appeals:

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To determine whether a case involves an intra-corporate controversy, and is to be heard and decided by the branches of the RTC specifically designated by the Court to try and decide such cases, two elements must concur: (a) the status or relationship of the parties, and (2) the nature of the question that is the subject of their controversy. The first element requires that the controversy must arise out of intra-corporate or partnership relations between any or all of the parties and the corporation, partnership, or association of which they are not stockholders, members or associates, between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively; and between such corporation, partnership, or association and the State insofar as it concerns the individual franchises. The second element requires that the dispute among the parties be intrinsically connected with the regulation of the corporation. If the nature of the controversy involves matters that are purely civil in character, necessarily, the case does not involve an intra-corporate controversy. [Citations omitted.] Guided by this recent jurisprudence, we thus find no merit in respondents contention that the fact alone that petitioner is a stockholder and director of respondent corporation automatically classifies this case as an intra-corporate controversy. To reiterate, not all conflicts between the stockholders and the corporation are classified as intra-corporate. There are other factors to consider in determining whether the dispute involves corporate matters as to consider them as intra-corporate controversies. What then is the nature of petitioners Complaint for Illegal Dismissal? Is it intra-corporate and thus beyond the jurisdiction of the Labor Arbiter? We shall answer this question by using the standards set forth in the Reyes case. No intra-corporate relationship between the parties As earlier stated, petitioners status as a stockholder and director of respondent corporation is not disputed. What the parties disagree on is the finding of the NLRC and the CA that petitioner is a corporate officer. An examination of the complaint for illegal dismissal, however, reveals that the root of the controversy is petitioners dismissal as Manager of respondent corporation, a position which respondents claim to be a corporate office. Hence, petitioner is involved in this case not in his capacity as a stockholder or director, but as an alleged corporate officer. In applying the relationship test, therefore, it is necessary to determine if petitioner is a corporate officer of respondent corporation so as to establish the intra-corporate relationship between the parties. And albeit respondents claim that the determination of whether petitioner is a corporate officer is a question of fact which this Court cannot pass upon in this petition for review on certiorari, we shall nonetheless proceed to consider the same because such question is not the main issue to be resolved in this case but is merely collateral to the core issue earlier mentioned. Petitioner negates his status as a corporate officer by pointing out that although he was removed as Manager through a board resolution, he was never elected to said position nor was he appointed thereto by the Board of Directors. While the By-Laws of respondent corporation provides that the Board may from time to time appoint such officers as it may deem necessary or proper, he avers that respondents failed to present any board resolution that he was appointed pursuant to said By-Laws. He instead alleges that he was hired as Manager of respondent corporation solely by respondent Abe. For these reasons, petitioner claims to be a mere employee of respondent corporation rather than as a corporate officer. We find merit in petitioners contention. "Corporate officers in the context of Presidential Decree No. 902-A are those officers of the corporation who are given that character by the Corporation Code or by the corporations by-laws. There are three specific officers whom a corporation must have under Section 25 of the Corporation Code. These are the president, secretary and the treasurer. The number of officers is not limited to these three. A corporation may have such other officers as may be provided for by its by-laws like, but not limited to, the vice-president, cashier, auditor or general manager. The number of corporate officers is thus limited by law and by the corporations by-laws."22 Respondents claim that petitioner was appointed Manager by virtue of Section 1, Article IV of respondent corporations By-Laws which provides: ARTICLE IV OFFICER Section 1. Election/Appointment Immediately after their election, the Board of Directors shall formally organize by electing the President, Vice-President, the Secretary at said meeting.

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The Board, may from time to time, appoint such other officers as it may determine to be necessary or proper. Any two (2) or more positions may be held concurrently by the same person, except that no one shall act as President and Treasurer or Secretary at the same time. x x x x23 (Emphasis ours) We have however examined the records of this case and we find nothing to prove that petitioners appointment was made pursuant to the above-quoted provision of respondent corporations By-Laws. No copy of board resolution appointing petitioner as Manager or any other document showing that he was appointed to said position by action of the board was submitted by respondents. What we found instead were mere allegations of respondents in their various pleadings 24 that petitioner was appointed as Manager of respondent corporation and nothing more. "The Court has stressed time and again that allegations must be proven by sufficient evidence because mere allegation is definitely not evidence."25 It also does not escape our attention that respondents made the following conflicting allegations in their Memorandum on Appeal26 filed before the NLRC which cast doubt on petitioners status as a corporate officer, to wit: xxxx 24. Complainant-appellee Renato Real was appointed as the manager of respondent-appellant Sangu on November 6, 1998. Priorly [sic], he was working at Atlas Ltd. Co. at Mito-shi, Ibaraki-ken Japan. He was staying in Japan as an illegal alien for the past eleven (11) years. He had a problem with his family here in the Philippines which prompted him to surrender himself to Japans Bureau of Immigration and was deported back to the Philippines. His former employer, Mr. Tsutomo Nogami requested Mr. Masahiko Shibata, one of respondent-appellant Sangus Board of Directors, if complainant-appellee Renato Real could work as one of its employees here in the Philippines because he had been blacklisted at Japans Immigration Office and could no longer go back to Japan. And so it was arranged that he would serve as respondent-appellant Sangus manager, receiving a salary of P25,000.00. As such, he was tasked to oversee the operations of the company. x x x (Emphasis ours) xxxx As earlier stated, complainant-appellee Renato Real was hired as the manager of respondent-appellant Sangu. As such, his position was reposed with full trust and confidence. x x x While respondents repeatedly claim that petitioner was appointed as Manager pursuant to the corporations By-Laws, the above-quoted inconsistencies in their allegations as to how petitioner was placed in said position, coupled by the fact that they failed to produce any documentary evidence to prove that petitioner was appointed thereto by action or with approval of the board, only leads this Court to believe otherwise. It has been consistently held that "[a]n office is created by the charter of the corporation and the officer is elected (or appointed) by the directors or stockholders." 27 Clearly here, respondents failed to prove that petitioner was appointed by the board of directors. Thus, we cannot subscribe to their claim that petitioner is a corporate officer. Having said this, we find that there is no intra-corporate relationship between the parties insofar as petitioners complaint for illegal dismissal is concerned and that same does not satisfy the relationship test. Present controversy does not relate to intra-corporate dispute We now go to the nature of controversy test. As earlier stated, respondents terminated the services of petitioner for the following reasons: (1) his continuous absences at his post at Ogino Philippines, Inc; (2) respondents loss of trust and confidence on petitioner; and, (3) to cut down operational expenses to reduce further losses being experienced by the corporation. Hence, petitioner filed a complaint for illegal dismissal and sought reinstatement, backwages, moral damages and attorneys fees. From these, it is not difficult to see that the reasons given by respondents for dismissing petitioner have something to do with his being a Manager of respondent corporation and nothing with his being a director or stockholder. For one, petitioners continuous absences in his post in Ogino relates to his performance as Manager. Second, respondents loss of trust and confidence in petitioner stemmed from his alleged acts of establishing a company engaged in the same line of business as respondent corporations and submitting proposals to the latters clients while he was still serving as its Manager. While we note that respondents also claim these acts as constituting acts of disloyalty of petitioner as director and stockholder, we, however, think that same is a mere afterthought on their part to make it appear that the present case involves an element of intra-corporate controversy. This is because before the Labor Arbiter, respondents did not see such acts to be disloyal acts of a director and stockholder but rather, as constituting willful breach

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of the trust reposed upon petitioner as Manager.28 It was only after respondents invoked the Labor Arbiters lack of jurisdiction over petitioners complaint in the Supplemental Memorandum of Appeal29 filed before the NLRC that respondents started considering said acts as such. Third, in saying that they were dismissing petitioner to cut operational expenses, respondents actually want to save on the salaries and other remunerations being given to petitioner as its Manager. Thus, when petitioner sought for reinstatement, he wanted to recover his position as Manager, a position which we have, however, earlier declared to be not a corporate position. He is not trying to recover a seat in the board of directors or to any appointive or elective corporate position which has been declared vacant by the board. Certainly, what we have here is a case of termination of employment which is a labor controversy and not an intra-corporate dispute. In sum, we hold that petitioners complaint likewise does not satisfy the nature of controversy test. With the elements of intra-corporate controversy being absent in this case, we thus hold that petitioners complaint for illegal dismissal against respondents is not intra-corporate. Rather, it is a termination dispute and, consequently, falls under the jurisdiction of the Labor Arbiter pursuant to Section 21730 of the Labor Code. We take note of the cases cited by respondents and find them inapplicable to the case at bar. Fortune Cement Corporation v. National Labor Relations Commission 31 involves a member of the board of directors and at the same time a corporate officer who claims he was illegally dismissed after he was stripped of his corporate position of Executive VicePresident because of loss of trust and confidence. On the other hand, Philippine School of Business Administration v. Leano32 and Pearson & George v. National Labor Relations Commission33 both concern a complaint for illegal dismissal by corporate officers who were not re-elected to their respective corporate positions. The Court declared all these cases as involving intra-corporate controversies and thus affirmed the jurisdiction of the SEC (now the RTC) 34 over them precisely because they all relate to corporate officers and their removal or non-reelection to their respective corporate positions. Said cases are by no means similar to the present case because as discussed earlier, petitioner here is not a corporate officer. With the foregoing, it is clear that the CA erred in affirming the decision of the NLRC which dismissed petitioners complaint for lack of jurisdiction. In cases such as this, the Court normally remands the case to the NLRC and directs it to properly dispose of the case on the merits. "However, when there is enough basis on which a proper evaluation of the merits of petitioners case may be had, the Court may dispense with the time-consuming procedure of remand in order to prevent further delays in the disposition of the case."35 "It is already an accepted rule of procedure for us to strive to settle the entire controversy in a single proceeding, leaving no root or branch to bear the seeds of litigation. If, based on the records, the pleadings, and other evidence, the dispute can be resolved by us, we will do so to serve the ends of justice instead of remanding the case to the lower court for further proceedings."36 We have gone over the records before us and we are convinced that we can now altogether resolve the issue of the validity of petitioners dismissal and hence, we shall proceed to do so. Petitioners dismissal not in accordance with law "In an illegal dismissal case, the onus probandi rests on the employer to prove that [the] dismissal of an employee is for a valid cause."37 Here, as correctly observed by the Labor Arbiter, respondents failed to produce any convincing proof to support the grounds for which they terminated petitioner. Respondents contend that petitioner has been absent for several months, yet they failed to present any proof that petitioner was indeed absent for such a long time. Also, the fact that petitioner was still able to collect his salaries after his alleged absences casts doubts on the truthfulness of such charge. Respondents likewise allege that petitioner engaged in a heated argument with the employees of Epson, one of respondents clients. But just like in the charge of absenteeism, there is no showing that an investigation on the matter was done and that disciplinary action was imposed upon petitioner. At any rate, we have reviewed the records of this case and we agree with the Labor Arbiter that under the circumstances, said charges are not sufficient bases for petitioners termination. As to the charge of breach of trust allegedly committed by petitioner when he established a new company engaged in the same line of business as respondent corporations and submitted proposals to two of the latters clients while he was still a Manager, we again observe that these are mere allegations without sufficient proof. To reiterate, allegations must be proven by sufficient evidence because mere allegation is definitely not evidence.38 Moreover, petitioners dismissal was effected without due process of law. "The twin requirements of notice and hearing constitute the essential elements of due process. The law requires the employer to furnish the employee sought to be dismissed with two written notices before termination of employment can be legally effected: (1) a written notice apprising the employee of the particular acts or omissions for which his dismissal is sought in order to afford him an opportunity to be heard and to defend himself with the assistance of counsel, if he desires, and (2) a subsequent notice informing the employee of the employers decision to dismiss him. This procedure is mandatory and its absence taints the dismissal with illegality."39 Since in this case, petitioners dismissal was effected through a board resolution and all that petitioner
lawphi1

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received was a letter informing him of the boards decision to terminate him, the abovementioned procedure was clearly not complied with. All told, we agree with the findings of the Labor Arbiter that petitioner has been illegally dismissed. And, as an illegally dismissed employee is entitled to the two reliefs of backwages and reinstatement,40 we affirm the Labor Arbiters judgment ordering petitioners reinstatement to his former position without loss of seniority rights and other privileges and awarding backwages from the time of his dismissal until actually reinstated. Considering that petitioner has to secure the services of counsel to protect his interest and necessarily has to incur expenses, we likewise affirm the award of attorneys fees which is equivalent to 10% of the total backwages that respondents must pay petitioner in accordance with this Decision. WHEREFORE, the petition is hereby GRANTED. The assailed June 28, 2005 Decision of the Court of Appeals insofar as it affirmed the National Labor Relations Commissions dismissal of petitioners complaint for lack of jurisdiction, is hereby REVERSED and SET ASIDE. The June 5, 2003 Decision of the Labor Arbiter with respect to petitioner Renato Real is AFFIRMED and this case is ordered REMANDED to the National Labor Relations Commission for the computation of petitioners backwages and attorneys fees in accordance with this Decision. SO ORDERED.
MARIANO C. DEL CASTILLO Associate Justice 3. Voluntary Arbitrators - THE UNIVERSITY OF THE IMMACULATE CONCEPTION and MO. MARIA ASSUMPTA DAVID, RVM vs. NATIONAL LABOR RELATIONS COMMISSION and TEODORA AXALAN, G.R. No. 181146, January 26, 2011, 614 s 608 DECISION CARPIO, J.:

The Case This is a petition for review on certiorari1 of the 13 December 2007 Decision2 of the Court of Appeals in CA-G.R. SP No. 00812 affirming the 15 August 2005 and the 24 October 2005 Resolutions3 of the National Labor Relations Commission in NLRC CA No. M-008333-2005, which sustained the 11 October 2004 Decision4 of the Labor Arbiter in RAB-11-12-0118703 ordering petitioner to reinstate private respondent to her former position without loss of seniority rights and to pay her backwages, salary differentials, damages, and attorneys fees. The Facts Petitioner University of the Immaculate Conception is a private educational institution located in Davao City. Private respondent Teodora C. Axalan is a regular faculty member in the university holding the position of Associate Professor II. Aside from being a regular faculty member, Axalan is the elected president of the employees union.5 From 18 November to 22 November 2002, Axalan attended a seminar in Quezon City on website development. Axalan then received a memorandum6 from Dean Maria Rosa Celestial asking her to explain in writing why she should not be dismissed for having been absent without official leave. In her letter,7 Axalan claimed that she held online classes while attending the seminar. She explained that she was under the impression that faculty members would not be marked absent even if they were not physically present in the classroom as long as they conducted online classes. In reply,8 Dean Celestial relayed to Axalan the message of the university president that no administrative charge would be filed if Axalan would admit having been absent without official leave and write a letter of apology seeking forgiveness. Convinced that she could not be deemed absent since she held online classes, Axalan opted not to write the letter of admission and contrition the university president requested.9 The Dean wrote Axalan that the university president had created an ad hoc grievance committee to investigate the AWOL charge.10 From 28 January to 3 February 2003, Axalan attended a seminar in Baguio City on advanced paralegal training. Dean Celestial wrote Axalan informing her that her participation in the paralegal seminar in Baguio City was the subject of a second AWOL charge.11 The dean asked Axalan to explain in writing why no disciplinary action should be taken against her.12

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In her letter,13 Axalan explained that before going to Baguio City for the seminar, she sought the approval of VicePresident for Academics Alicia Sayson. In a letter,14 VP Sayson denied having approved Axalans application for official leave. The VP stated in her letter that it was the university president, Maria Assumpta David, who must approve the application. After conducting hearings and receiving evidence, the ad hoc grievance committee found Axalan to have incurred AWOL on both instances and recommended that Axalan be suspended without pay for six months on each AWOL charge. 15 The university president approved the committees recommendation. The university president then wrote Axalan informing her that she incurred absences without official leave when she attended the seminars on website development in Quezon City and on advanced paralegal training in Baguio City on 1822 November 2002 and on 28 January-3 February 2003, respectively. In the same letter, the university president informed Axalan that the total penalty of one-year suspension without pay for both AWOL charges would be effective immediately.16 On 1 December 2003, Axalan filed a complaint17 against the university for illegal suspension, constructive dismissal, reinstatement with backwages, and unfair labor practice with prayer for damages and attorneys fees. The university moved to dismiss the complaint on the ground that the Labor Arbiter had no jurisdiction over the subject matter of the complaint. The university maintained that jurisdiction lay in the voluntary arbitrator.18 In denying the universitys motion to dismiss, the Labor Arbiter held that there being no existing collective bargaining agreement between the parties, no grievance machinery was constituted, which barred resort to voluntary arbitration.19 Meanwhile, upon the expiration of the one-year suspension, Axalan promptly resumed teaching at the university on 1 October 2004. The Ruling of the Labor Arbiter On 11 October 2004, the Labor Arbiter rendered a Decision holding that the suspension of Axalan amounted to constructive dismissal entitling her to reinstatement and payment of backwages, salary differentials, damages, and attorneys fees, thus: WHEREFORE, premises laid, judgment is hereby rendered declaring that the suspension of complainant amounted to constructive dismissal, and as such, she is entitled to reinstatement and payment of her full backwages reckoned from the time it was withheld from her up to the time of reinstatement. Accordingly, Respondent University of the Immaculate Conception acting through its President, Respondent Mo. Maria Assumpta David, RVM, is directed to reinstate the complainant to her former position without loss of seniority rights and to pay her the sum of Five Hundred Forty Three Thousand Four Hundred Fifty Two Pesos (P543,452.00) representing her backwages, salary differentials (diminution) and damages plus ten percent (10%) thereof as attorneys fees or the sum of P54,345.20. The Respondent UIC and its President are hereby directed to inform this Office of the mode of compliance it will avail itself by reason of the Order of reinstatement. SO ORDERED.20 The university appealed the Labor Arbiters Decision to the National Labor Relations Commission (NLRC). It challenged the jurisdiction of the Labor Arbiter insisting that the voluntary arbitrator had jurisdiction over the labor dispute. The university pointed out that when the Labor Arbiter rendered his Decision on 11 October 2004, Axalan had returned to work on 1 October 2004 upon the expiration of the one-year suspension. The Ruling of the NLRC The NLRC held that the Labor Arbiter, not the voluntary arbitrator, had jurisdiction as the controversy did not pertain to a dispute involving the union and the university. In its 15 August 2005 Resolution, the NLRC ruled: WHEREFORE, for want of merit, the instant appeal is hereby DISMISSED.

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SO ORDERED.21 NLRC Commissioner Jovito C. Cagaanan, in his dissenting opinion, 22 stressed that the parties previously agreed to submit the dispute to voluntary arbitration, which cast doubt on the jurisdiction of the Labor Arbiter. The university moved for reconsideration of the NLRC Resolution. But the NLRC, in its 24 October 2005 Resolution,23 denied the motion for reconsideration for lack of merit. The university challenged both Resolutions of the NLRC before the Court of Appeals via a petition for certiorari. The Ruling of the Court of Appeals The Court of Appeals affirmed the findings of the Labor Arbiter and the NLRC. In its 13 December 2007 Decision, the Court of Appeals dismissed the universitys petition for certiorari, thus: We find no grave abuse of discretion amounting to lack or excess of jurisdiction on the part of public respondent in affirming the Labor Arbiter. Respondent Commissions ruling finds more than ample support in statutory and case law. It cannot, therefore, be characterized as whimsical, arbitrary, or oppressive. WHEREFORE, the instant petition is hereby DISMISSED. SO ORDERED.24 Dissatisfied, the university filed in this Court the instant petition for review on certiorari. The Issues The issues for resolution are (1) whether the voluntary arbitrator had jurisdiction over the labor dispute; (2) whether Axalan was constructively dismissed; and (3) whether the Labor Arbiters computation of backwages, damages, and attorneys fees was correct. The Courts Ruling The petition is impressed with merit. The university contends that based on the transcript of stenographic notes from the ad hoc grievance committee hearing held on 20 February 2003, the parties agreed that the voluntary arbitrator would have jurisdiction over the labor dispute. The university maintains that Axalans suspension does not constitute constructive dismissal and that the Labor Arbiters decision treating it as such is an attempt to make it appear that the voluntary arbitrator has no jurisdiction. The university points out that for constructive dismissal to exist, there must be severance of employment by the employee because of unbearable act of discrimination, insensibility, or disdain on the part of the employer leaving the employee with no choice but to forego continued employment. The university claims that on the contrary, Axalan eagerly reported for work as soon as the one-year suspension was over. The university further argues that assuming Axalan is entitled to backwages, it should have been based on Axalans average gross monthly income at the time she was suspended in SY2003-2004, which was P14,145.00, not on her average gross monthly income in SY2002-2003, which was P18,502.00. Private respondent Axalan counters that the university raises the same factual issues already decided unanimously by the Labor Arbiter, the NLRC, and the Court of Appeals. On the issue of jurisdiction, Axalan stresses that the present labor case, being a complaint for constructive dismissal and unfair labor practice, is within the jurisdiction of the Labor Arbiter. On the finding of constructive dismissal, Axalan points out that the Labor Arbiters factual finding of constructive dismissal, when affirmed by the NLRC and the Court of Appeals, binds this Court. Axalan claims that both AWOL charges against her were without basis and were only a form of harassment amounting to unfair labor practice. As to the computation of the award of backwages, Axalan points out that her average gross monthly income in SY2002-2003 was reduced in SY2003-2004 precisely because she was not given an overload of two extra assignments resulting in the diminution of her income. Axalan maintains that the award of damages was just proper considering that her suspension was without basis and amounted to unfair labor practice.

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Well-settled is the rule that the jurisdiction of this Court in a petition for review on certiorari is limited to reviewing only errors of law, not of fact, unless the factual findings being assailed are not supported by the evidence on record or the impugned judgment is based on a misapprehension of facts. Patently erroneous findings of the Labor Arbiter, even when affirmed by the NLRC and the Court of Appeals, are not binding on this Court.25 As to the first issue, Article 217 of the Labor Code states that unfair labor practices and termination disputes fall within the original and exclusive jurisdiction of the Labor Arbiter: ART. 217. Jurisdiction of Labor Arbiters and the Commission. (a) Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide x x x the following cases involving all workers, whether agricultural or non-agricultural: 1. Unfair labor practice cases; 2. Termination disputes; x x x x (Emphasis supplied) Article 262 of the same Code provides the exception: ART. 262. Jurisdiction over other labor disputes. The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks. (Emphasis supplied) In San Miguel Corp. v. NLRC,26 the Court ruled that for the exception to apply, there must be agreement between the parties clearly conferring jurisdiction to the voluntary arbitrator. Such agreement may be stipulated in a collective bargaining agreement. However, in the absence of a collective bargaining agreement, it is enough that there is evidence on record showing the parties have agreed to resort to voluntary arbitration.27 As can be gleaned from the transcript of stenographic notes of the administrative hearing held on 20 February 2003, the parties in this case clearly agreed to resort to voluntary arbitration. To quote the exact words of the parties counsels: Atty. Dante Sandiego: x x x So, are we to understand that the decision of the President shall be without prejudice to the right of the employees to contest the validity or legality of his dismissal or of the disciplinary action imposed upon him by asking for voluntary arbitration under the Labor Code or when applicable availing himself of the grievance machinery under the Labor Code which ends in voluntary arbitration. That will be the steps that we will have to follow. Atty. Sabino Padilla, Jr.: Yes, agreed.28 Thus, the Labor Arbiter should have immediately disposed of the complaint and referred the same to the voluntary arbitrator when the university moved to dismiss the complaint for lack of jurisdiction. No less than Section 3, Article XIII of the Constitution declares as state policy the preferential use of voluntary modes in settling disputes, to wit: Sec. 3. x x x x The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. (Emphasis supplied) As to the second issue, constructive dismissal occurs when there is cessation of work because continued employment is rendered impossible, unreasonable, or unlikely as when there is a demotion in rank or diminution in pay or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee leaving the latter with no other option but to quit.29 In this case however, there was no cessation of employment relations between the parties. It is unrefuted that Axalan promptly resumed teaching at the university right after the expiration of the suspension period. In other words, Axalan

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never quit. Hence, Axalan cannot claim that she was left with no choice but to quit, a crucial element in a finding of constructive dismissal. Thus, Axalan cannot be deemed to have been constructively dismissed. Significantly, at the time the Labor Arbiter rendered his Decision on 11 October 2004, Axalan had already returned to her teaching job at the university on 1 October 2004. The Labor Arbiters Decision ordering the reinstatement of Axalan, who at the time had already returned to work, is thus absurd. There being no constructive dismissal, there is no legal basis for the Labor Arbiters order of reinstatement as well as payment of backwages, salary differentials, damages, and attorneys fees.30 Thus, the third issue raised in the petition is now moot. Note that on the first AWOL incident, the university even offered to drop the AWOL charge against Axalan if she would only write a letter of contrition. But Axalan adamantly refused knowing fully well that the administrative case would take its course leading to possible sanctions. She cannot now be heard that the imposition of the penalty of six-month suspension without pay for each AWOL charge is unreasonable. We are convinced that Axalan was validly suspended for cause and in accord with procedural due process. The Court recognizes the right of employers to discipline its employees for serious violations of company rules after affording the latter due process and if the evidence warrants. The university, after affording Axalan due process and finding her guilty of incurring AWOL on two separate occasions, acted well within the bounds of labor laws in imposing the penalty of six-month suspension without pay for each incidence of AWOL. As a learning institution, the university cannot be expected to take lightly absences without official leave among its employees, more so among its faculty members even if they happen to be union officers. To do so would send the wrong signal to the studentry and the rest of its teaching staff that irresponsibility is widely tolerated in the academe. The law protects both the welfare of employees and the prerogatives of management. 31 Courts will not interfere with prerogatives of management on the discipline of employees, as long as they do not violate labor laws, collective bargaining agreements if any, and general principles of fairness and justice.32 WHEREFORE, we GRANT the petition. The 13 December 2007 Decision of the Court of Appeals in CA-G.R. SP No. 00812 affirming the 15 August 2005 and the 24 October 2005 Resolutions of the National Labor Relations Commission in NLRC CA No. M-008333-2005, which sustained the 11 October 2004 Decision of the Labor Arbiter in RAB-11-12-0118703, is SET ASIDE. No pronouncement as to costs. SO ORDERED.
ANTONIO T. CARPIO Associate Justice 4. Jurisdiction of BLR Director; Union Registration Cancellation THE HERITAGE HOTEL MANILA, acting through its owner, GRAND PLAZA HOTEL CORPORATION vs. NATIONAL UNION OF WORKERS IN THE HOTEL, RESTAURANT AND ALLIED INDUSTRIES-HERITAGE HOTEL MANILA SUPERVISORS CHAPTER (NUWHRAIN-HHMSC), G.R. No. 178296, January 12, 2011, 639 s 420 DECISION NACHURA, J.:

Before the Court is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) dated May 30, 2005 and Resolution dated June 4, 2007. The assailed Decision affirmed the dismissal of a petition for cancellation of union registration filed by petitioner, Grand Plaza Hotel Corporation, owner of Heritage Hotel Manila, against respondent, National Union of Workers in the Hotel, Restaurant and Allied Industries-Heritage Hotel Manila Supervisors Chapter (NUWHRAIN-HHMSC), a labor organization of the supervisory employees of Heritage Hotel Manila. The case stemmed from the following antecedents: On October 11, 1995, respondent filed with the Department of Labor and Employment-National Capital Region (DOLENCR) a petition for certification election.2 The Med-Arbiter granted the petition on February 14, 1996 and ordered the holding of a certification election.3 On appeal, the DOLE Secretary, in a Resolution dated August 15, 1996, affirmed the

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Med-Arbiters order and remanded the case to the Med-Arbiter for the holding of a preelection conference on February 26, 1997. Petitioner filed a motion for reconsideration, but it was denied on September 23, 1996. The preelection conference was not held as initially scheduled; it was held a year later, or on February 20, 1998. Petitioner moved to archive or to dismiss the petition due to alleged repeated non-appearance of respondent. The latter agreed to suspend proceedings until further notice. The preelection conference resumed on January 29, 2000. Subsequently, petitioner discovered that respondent had failed to submit to the Bureau of Labor Relations (BLR) its annual financial report for several years and the list of its members since it filed its registration papers in 1995. Consequently, on May 19, 2000, petitioner filed a Petition for Cancellation of Registration of respondent, on the ground of the non-submission of the said documents. Petitioner prayed that respondents Certificate of Creation of Local/Chapter be cancelled and its name be deleted from the list of legitimate labor organizations. It further requested the suspension of the certification election proceedings.4 On June 1, 2000, petitioner reiterated its request by filing a Motion to Dismiss or Suspend the [Certification Election] Proceedings,5 arguing that the dismissal or suspension of the proceedings is warranted, considering that the legitimacy of respondent is seriously being challenged in the petition for cancellation of registration. Petitioner maintained that the resolution of the issue of whether respondent is a legitimate labor organization is crucial to the issue of whether it may exercise rights of a legitimate labor organization, which include the right to be certified as the bargaining agent of the covered employees. Nevertheless, the certification election pushed through on June 23, 2000. Respondent emerged as the winner.6 On June 28, 2000, petitioner filed a Protest with Motion to Defer Certification of Election Results and Winner,7stating that the certification election held on June 23, 2000 was an exercise in futility because, once respondents registration is cancelled, it would no longer be entitled to be certified as the exclusive bargaining agent of the supervisory employees. Petitioner also claimed that some of respondents members were not qualified to join the union because they were either confidential employees or managerial employees. It then prayed that the certification of the election results and winner be deferred until the petition for cancellation shall have been resolved, and that respondents members who held confidential or managerial positions be excluded from the supervisors bargaining unit. Meanwhile, respondent filed its Answer8 to the petition for the cancellation of its registration. It averred that the petition was filed primarily to delay the conduct of the certification election, the respondents certification as the exclusive bargaining representative of the supervisory employees, and the commencement of bargaining negotiations. Respondent prayed for the dismissal of the petition for the following reasons: (a) petitioner is estopped from questioning respondents status as a legitimate labor organization as it had already recognized respondent as such during the preelection conferences; (b) petitioner is not the party-in-interest, as the union members are the ones who would be disadvantaged by the non-submission of financial reports; (c) it has already complied with the reportorial requirements, having submitted its financial statements for 1996, 1997, 1998, and 1999, its updated list of officers, and its list of members for the years 1995, 1996, 1997, 1998, and 1999; (d) the petition is already moot and academic, considering that the certification election had already been held, and the members had manifested their will to be represented by respondent. Citing National Union of Bank Employees v. Minister of Labor, et al. 9 and Samahan ng Manggagawa sa Pacific Plastic v. Hon. Laguesma,10 the Med-Arbiter held that the pendency of a petition for cancellation of registration is not a bar to the holding of a certification election. Thus, in an Order11 dated January 26, 2001, the Med-Arbiter dismissed petitioners protest, and certified respondent as the sole and exclusive bargaining agent of all supervisory employees. Petitioner subsequently appealed the said Order to the DOLE Secretary.12 The appeal was later dismissed by DOLE Secretary Patricia A. Sto. Tomas (DOLE Secretary Sto. Tomas) in the Resolution of August 21, 2002.13Petitioner moved for reconsideration, but the motion was also denied.14 In the meantime, Regional Director Alex E. Maraan (Regional Director Maraan) of DOLE-NCR finally resolved the petition for cancellation of registration. While finding that respondent had indeed failed to file financial reports and the list of its members for several years, he, nonetheless, denied the petition, ratiocinating that freedom of association and the employees right to self-organization are more substantive considerations. He took into account the fact that respondent won the certification election and that it had already been certified as the exclusive bargaining agent of the supervisory employees. In view of the foregoing, Regional Director Maraanwhile emphasizing that the non-compliance with the law is not viewed with favorconsidered the belated submission of the annual financial reports and the list of members as

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sufficient compliance thereof and considered them as having been submitted on time. The dispositive portion of the decision15 dated December 29, 2001 reads: WHEREFORE, premises considered, the instant petition to delist the National Union of Workers in the Hotel, Restaurant and Allied Industries-Heritage Hotel Manila Supervisors Chapter from the roll of legitimate labor organizations is hereby DENIED. SO ORDERED.16 Aggrieved, petitioner appealed the decision to the BLR. 17 BLR Director Hans Leo Cacdac inhibited himself from the case because he had been a former counsel of respondent. In view of Director Cacdacs inhibition, DOLE Secretary Sto. Tomas took cognizance of the appeal. In a resolution 18 dated February 21, 2003, she dismissed the appeal, holding that the constitutionally guaranteed freedom of association and right of workers to self-organization outweighed respondents noncompliance with the statutory requirements to maintain its status as a legitimate labor organization. Petitioner filed a motion for reconsideration,19 but the motion was likewise denied in a resolution 20 dated May 30, 2003. DOLE Secretary Sto. Tomas admitted that it was the BLR which had jurisdiction over the appeal, but she pointed out that the BLR Director had voluntarily inhibited himself from the case because he used to appear as counsel for respondent. In order to maintain the integrity of the decision and of the BLR, she therefore accepted the motion to inhibit and took cognizance of the appeal. Petitioner filed a petition for certiorari with the CA, raising the issue of whether the DOLE Secretary acted with grave abuse of discretion in taking cognizance of the appeal and affirming the dismissal of its petition for cancellation of respondents registration. In a Decision dated May 30, 2005, the CA denied the petition. The CA opined that the DOLE Secretary may legally assume jurisdiction over an appeal from the decision of the Regional Director in the event that the Director of the BLR inhibits himself from the case. According to the CA, in the absence of the BLR Director, there is no person more competent to resolve the appeal than the DOLE Secretary. The CA brushed aside the allegation of bias and partiality on the part of the DOLE Secretary, considering that such allegation was not supported by any evidence. The CA also found that the DOLE Secretary did not commit grave abuse of discretion when she affirmed the dismissal of the petition for cancellation of respondents registration as a labor organization. Echoing the DOLE Secretary, the CA held that the requirements of registration of labor organizations are an exercise of the overriding police power of the State, designed for the protection of workers against potential abuse by the union that recruits them. These requirements, the CA opined, should not be exploited to work against the workers constitutionally protected right to self-organization. Petitioner filed a motion for reconsideration, invoking this Courts ruling in Abbott Labs. Phils., Inc. v. Abbott Labs. Employees Union,21 which categorically declared that the DOLE Secretary has no authority to review the decision of the Regional Director in a petition for cancellation of union registration, and Section 4, 22 Rule VIII, Book V of the Omnibus Rules Implementing the Labor Code. In its Resolution23 dated June 4, 2007, the CA denied petitioners motion, stating that the BLR Directors inhibition from the case was a peculiarity not present in the Abbott case, and that such inhibition justified the assumption of jurisdiction by the DOLE Secretary. In this petition, petitioner argues that: I. The Court of Appeals seriously erred in ruling that the Labor Secretary properly assumed jurisdiction over Petitioners appeal of the Regional Directors Decision in the Cancellation Petition x x x. A. Jurisdiction is conferred only by law. The Labor Secretary had no jurisdiction to review the decision of the Regional Director in a petition for cancellation. Such jurisdiction is conferred by law to the BLR.

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B. The unilateral inhibition by the BLR Director cannot justify the Labor Secretarys exercise of jurisdiction over the Appeal. C. The Labor Secretarys assumption of jurisdiction over the Appeal without notice violated Petitioners right to due process. II. The Court of Appeals gravely erred in affirming the dismissal of the Cancellation Petition despite the mandatory and unequivocal provisions of the Labor Code and its Implementing Rules.24 The petition has no merit. Jurisdiction to review the decision of the Regional Director lies with the BLR. This is clearly provided in the Implementing Rules of the Labor Code and enunciated by the Court in Abbott. But as pointed out by the CA, the present case involves a peculiar circumstance that was not present or covered by the ruling in Abbott. In this case, the BLR Director inhibited himself from the case because he was a former counsel of respondent. Who, then, shall resolve the case in his place? In Abbott, the appeal from the Regional Directors decision was directly filed with the Office of the DOLE Secretary, and we ruled that the latter has no appellate jurisdiction. In the instant case, the appeal was filed by petitioner with the BLR, which, undisputedly, acquired jurisdiction over the case. Once jurisdiction is acquired by the court, it remains with it until the full termination of the case.25 Thus, jurisdiction remained with the BLR despite the BLR Directors inhibition. When the DOLE Secretary resolved the appeal, she merely stepped into the shoes of the BLR Director and performed a function that the latter could not himself perform. She did so pursuant to her power of supervision and control over the BLR.26 Expounding on the extent of the power of control, the Court, in Araneta, et al. v. Hon. M. Gatmaitan, et al., 27pronounced that, if a certain power or authority is vested by law upon the Department Secretary, then such power or authority may be exercised directly by the President, who exercises supervision and control over the departments. This principle was incorporated in the Administrative Code of 1987, which defines "supervision and control" as including the authority to act directly whenever a specific function is entrusted by law or regulation to a subordinate. 28 Applying the foregoing to the present case, it is clear that the DOLE Secretary, as the person exercising the power of supervision and control over the BLR, has the authority to directly exercise the quasi-judicial function entrusted by law to the BLR Director. It is true that the power of control and supervision does not give the Department Secretary unbridled authority to take over the functions of his or her subordinate. Such authority is subject to certain guidelines which are stated in Book IV, Chapter 8, Section 39(1)(a) of the Administrative Code of 1987.29 However, in the present case, the DOLE Secretarys act of taking over the function of the BLR Director was warranted and necessitated by the latters inhibition from the case and the objective to "maintain the integrity of the decision, as well as the Bureau itself."30 Petitioner insists that the BLR Directors subordinates should have resolved the appeal, citing the provision under the Administrative Code of 1987 which states, "in case of the absence or disability of the head of a bureau or office, his duties shall be performed by the assistant head."31 The provision clearly does not apply considering that the BLR Director was neither absent nor suffering from any disability; he remained as head of the BLR. Thus, to dispel any suspicion of bias, the DOLE Secretary opted to resolve the appeal herself. Petitioner was not denied the right to due process when it was not notified in advance of the BLR Directors inhibition and the DOLE Secretarys assumption of the case. Well-settled is the rule that the essence of due process is simply an opportunity to be heard, or, as applied to administrative proceedings, an opportunity to explain ones side or an opportunity to seek a reconsideration of the action or ruling complained of.32 Petitioner had the opportunity to question the BLR Directors inhibition and the DOLE Secretarys taking cognizance of the case when it filed a motion for reconsideration of the latters decision. It would be well to state that a critical component of due process is a hearing before an impartial and disinterested tribunal, for all the elements of due process, like notice and hearing, would be meaningless if the ultimate decision would come from a partial and biased judge. 33 It was precisely to ensure a fair trial that moved the BLR Director to inhibit himself from the case and the DOLE Secretary to take over his function.

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Petitioner also insists that respondents registration as a legitimate labor union should be cancelled. Petitioner posits that once it is determined that a ground enumerated in Article 239 of the Labor Code is present, cancellation of registration should follow; it becomes the ministerial duty of the Regional Director to cancel the registration of the labor organization, hence, the use of the word "shall." Petitioner points out that the Regional Director has admitted in its decision that respondent failed to submit the required documents for a number of years; therefore, cancellation of its registration should have followed as a matter of course. We are not persuaded. Articles 238 and 239 of the Labor Code read: ART. 238. CANCELLATION OF REGISTRATION; APPEAL The certificate of registration of any legitimate labor organization, whether national or local, shall be canceled by the Bureau if it has reason to believe, after due hearing, that the said labor organization no longer meets one or more of the requirements herein prescribed.34 ART. 239. GROUNDS FOR CANCELLATION OF UNION REGISTRATION. The following shall constitute grounds for cancellation of union registration: xxxx (d) Failure to submit the annual financial report to the Bureau within thirty (30) days after the closing of every fiscal year and misrepresentation, false entries or fraud in the preparation of the financial report itself; xxxx (i) Failure to submit list of individual members to the Bureau once a year or whenever required by the Bureau.35 These provisions give the Regional Director ample discretion in dealing with a petition for cancellation of a unions registration, particularly, determining whether the union still meets the requirements prescribed by law. It is sufficient to give the Regional Director license to treat the late filing of required documents as sufficient compliance with the requirements of the law. After all, the law requires the labor organization to submit the annual financial report and list of members in order to verify if it is still viable and financially sustainable as an organization so as to protect the employer and employees from fraudulent or fly-by-night unions. With the submission of the required documents by respondent, the purpose of the law has been achieved, though belatedly. We cannot ascribe abuse of discretion to the Regional Director and the DOLE Secretary in denying the petition for cancellation of respondents registration. The union members and, in fact, all the employees belonging to the appropriate bargaining unit should not be deprived of a bargaining agent, merely because of the negligence of the union officers who were responsible for the submission of the documents to the BLR. Labor authorities should, indeed, act with circumspection in treating petitions for cancellation of union registration, lest they be accused of interfering with union activities. In resolving the petition, consideration must be taken of the fundamental rights guaranteed by Article XIII, Section 3 of the Constitution, i.e., the rights of all workers to selforganization, collective bargaining and negotiations, and peaceful concerted activities. Labor authorities should bear in mind that registration confers upon a union the status of legitimacy and the concomitant right and privileges granted by law to a legitimate labor organization, particularly the right to participate in or ask for certification election in a bargaining unit.36 Thus, the cancellation of a certificate of registration is the equivalent of snuffing out the life of a labor organization. For without such registration, it loses - as a rule - its rights under the Labor Code.37 It is worth mentioning that the Labor Codes provisions on cancellation of union registration and on reportorial requirements have been recently amended by Republic Act (R.A.) No. 9481, An Act Strengthening the Workers Constitutional Right to Self-Organization, Amending for the Purpose Presidential Decree No. 442, As Amended, Otherwise Known as the Labor Code of the Philippines, which lapsed into law on May 25, 2007 and became effective on June 14, 2007. The amendment sought to strengthen the workers right to self-organization and enhance the Philippines

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compliance with its international obligations as embodied in the International Labour Organization (ILO) Convention No. 87,38 pertaining to the non-dissolution of workers organizations by administrative authority. 39 Thus, R.A. No. 9481 amended Article 239 to read: ART. 239. Grounds for Cancellation of Union Registration.The following may constitute grounds for cancellation of union registration: (a) Misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution and by-laws or amendments thereto, the minutes of ratification, and the list of members who took part in the ratification; (b) Misrepresentation, false statements or fraud in connection with the election of officers, minutes of the election of officers, and the list of voters; (c) Voluntary dissolution by the members. R.A. No. 9481 also inserted in the Labor Code Article 242-A, which provides: ART. 242-A. Reportorial Requirements.The following are documents required to be submitted to the Bureau by the legitimate labor organization concerned: (a) Its constitution and by-laws, or amendments thereto, the minutes of ratification, and the list of members who took part in the ratification of the constitution and by-laws within thirty (30) days from adoption or ratification of the constitution and by-laws or amendments thereto; (b) Its list of officers, minutes of the election of officers, and list of voters within thirty (30) days from election; (c) Its annual financial report within thirty (30) days after the close of every fiscal year; and (d) Its list of members at least once a year or whenever required by the Bureau. Failure to comply with the above requirements shall not be a ground for cancellation of union registration but shall subject the erring officers or members to suspension, expulsion from membership, or any appropriate penalty. ILO Convention No. 87, which we have ratified in 1953, provides that "workers and employers organizations shall not be liable to be dissolved or suspended by administrative authority." The ILO has expressed the opinion that the cancellation of union registration by the registrar of labor unions, which in our case is the BLR, is tantamount to dissolution of the organization by administrative authority when such measure would give rise to the loss of legal personality of the union or loss of advantages necessary for it to carry out its activities, which is true in our jurisdiction. Although the ILO has allowed such measure to be taken, provided that judicial safeguards are in place, i.e., the right to appeal to a judicial body, it has nonetheless reminded its members that dissolution of a union, and cancellation of registration for that matter, involve serious consequences for occupational representation. It has, therefore, deemed it preferable if such actions were to be taken only as a last resort and after exhausting other possibilities with less serious effects on the organization.40 The aforesaid amendments and the ILOs opinion on this matter serve to fortify our ruling in this case. We therefore quote with approval the DOLE Secretarys rationale for denying the petition, thus: It is undisputed that appellee failed to submit its annual financial reports and list of individual members in accordance with Article 239 of the Labor Code. However, the existence of this ground should not necessarily lead to the cancellation of union registration. Article 239 recognizes the regulatory authority of the State to exact compliance with reporting requirements. Yet there is more at stake in this case than merely monitoring union activities and requiring periodic documentation thereof. The more substantive considerations involve the constitutionally guaranteed freedom of association and right of workers to self-organization. Also involved is the public policy to promote free trade unionism and collective bargaining as instruments of industrial peace and democracy. An overly stringent interpretation of the statute governing cancellation of union registration without regard to surrounding circumstances cannot be allowed. Otherwise, it would lead to an
1avvphi1

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unconstitutional application of the statute and emasculation of public policy objectives. Worse, it can render nugatory the protection to labor and social justice clauses that pervades the Constitution and the Labor Code. Moreover, submission of the required documents is the duty of the officers of the union. It would be unreasonable for this Office to order the cancellation of the union and penalize the entire union membership on the basis of the negligence of its officers. In National Union of Bank Employees vs. Minister of Labor, L-53406, 14 December 1981, 110 SCRA 296, the Supreme Court ruled: As aptly ruled by respondent Bureau of Labor Relations Director Noriel: "The rights of workers to self-organization finds general and specific constitutional guarantees. x x x Such constitutional guarantees should not be lightly taken much less nullified. A healthy respect for the freedom of association demands that acts imputable to officers or members be not easily visited with capital punishments against the association itself." At any rate, we note that on 19 May 2000, appellee had submitted its financial statement for the years 1996-1999. With this submission, appellee has substantially complied with its duty to submit its financial report for the said period. To rule differently would be to preclude the union, after having failed to meet its periodic obligations promptly, from taking appropriate measures to correct its omissions. For the record, we do not view with favor appellees late submission. Punctuality on the part of the union and its officers could have prevented this petition.41 WHEREFORE, premises considered, the Court of Appeals Decision dated May 30, 2005 and Resolution dated June 4, 2007 are AFFIRMED. SO ORDERED.
ANTONIO EDUARDO B. NACHURA Associate Justice 5. Collateral Attack on union personality LEGEND INTERNATIONAL RESORTS LIMITED vs. KILUSANG MANGGAGAWA NG LEGENDA (KML-INDEPENDENT), G.R. No. 169754, February 23, 2011 DECISION DEL CASTILLO, J.:

This Petition for Review on Certiorari assails the September 18, 2003 Decision of the Court of Appeals in CA-G.R. SP No. 72848 which found no grave abuse of discretion on the part of the Office of the Secretary of the Department of Labor and Employment (DOLE) which ruled in favor of Kilusang Manggagawa ng Legenda (KML). Also assailed is the September 14, 2005 Resolution denying petitioners motion for reconsideration. Factual Antecedents On June 6, 2001, KML filed with the Med-Arbitration Unit of the DOLE, San Fernando, Pampanga, a Petition for Certification Election1 docketed as Case No. RO300-0106-RU-001. KML alleged that it is a legitimate labor organization of the rank and file employees of Legend International Resorts Limited (LEGEND). KML claimed that it was issued its Certificate of Registration No. RO300-0105-UR-002 by the DOLE on May 18, 2001. LEGEND moved to dismiss2 the petition alleging that KML is not a legitimate labor organization because its membership is a mixture of rank and file and supervisory employees in violation of Article 245 of the Labor Code. LEGEND also claimed that KML committed acts of fraud and misrepresentation when it made it appear that certain employees attended its general membership meeting on April 5, 2001 when in reality some of them were either at work; have already resigned as of March 2001; or were abroad. In its Comment,3 KML argued that even if 41 of its members are indeed supervisory employees and therefore excluded from its membership, the certification election could still proceed because the required number of the total rank and file employees necessary for certification purposes is still sustained. KML also claimed that its legitimacy as a labor union could not be collaterally attacked in the certification election proceedings but only through a separate and independent action for cancellation of union registration. Finally, as to the alleged acts of misrepresentation, KML asserted that LEGEND failed to substantiate its claim. Ruling of the Med-Arbiter

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On September 20, 2001, the Med-Arbiter4 rendered judgment5 dismissing for lack of merit the petition for certification election. The Med-Arbiter found that indeed there were several supervisory employees in KMLs membership. Since Article 245 of the Labor Code expressly prohibits supervisory employees from joining the union of rank and file employees, the Med-Arbiter concluded that KML is not a legitimate labor organization. KML was also found to have fraudulently procured its registration certificate by misrepresenting that 70 employees were among those who attended its organizational meeting on April 5, 2001 when in fact they were either at work or elsewhere. KML thus appealed to the Office of the Secretary of the DOLE. Ruling of the Office of the Secretary of DOLE On May 22, 2002, the Office of the Secretary of DOLE rendered its Decision6 granting KMLs appeal thereby reversing and setting aside the Med-Arbiters Decision. The Office of the Secretary of DOLE held that KMLs legitimacy as a union could not be collaterally attacked, citing Section 5,7 Rule V of Department Order No. 9, series of 1997. The Office of the Secretary of DOLE also opined that Article 245 of the Labor Code merely provides for the prohibition on managerial employees to form or join a union and the ineligibility of supervisors to join the union of the rank and file employees and vice versa. It declared that any violation of the provision of Article 245 does not ipso facto render the existence of the labor organization illegal. Moreover, it held that Section 11, paragraph II of Rule XI which provides for the grounds for dismissal of a petition for certification election does not include mixed membership in one union. The dispositive portion of the Office of the Secretary of DOLEs Decision reads: WHEREFORE, the appeal is hereby GRANTED and the order of the Med-Arbiter dated 20 September 2001 is REVERSED and SET ASIDE. Accordingly, let the entire record of the case be remanded to the regional office of origin for the immediate conduct of the certification election, subject to the usual pre-election conference, among the rank and file employees of LEGEND INTERNATIONAL RESORTS LIMITED with the following choices: 1. KILUSANG MANGGAGAWA NG LEGENDA (KML-INDEPENDENT); and 2. NO UNION. Pursuant to Rule XI, Section II.1 of D.O. No. 9, the employer is hereby directed to submit to the office of origin, within ten days from receipt of the decision, the certified list of employees in the bargaining unit for the last three (3) months prior to the issuance of this decision. SO DECIDED.8 LEGEND filed its Motion for Reconsideration9 reiterating its earlier arguments. It also alleged that on August 24, 2001, it filed a Petition10 for Cancellation of Union Registration of KML docketed as Case No. RO300-0108-CP-001 which was granted11 by the DOLE Regional Office No. III of San Fernando, Pampanga in its Decision12 dated November 7, 2001. In a Resolution13 dated August 20, 2002, the Office of the Secretary of DOLE denied LEGENDs motion for reconsideration. It opined that Section 11, paragraph II(a), Rule XI of Department Order No. 9 requires a final order of cancellation before a petition for certification election may be dismissed on the ground of lack of legal personality. Besides, it noted that the November 7, 2001 Decision of DOLE Regional Office No. III of San Fernando, Pampanga in Case No. RO300-0108-CP-001 was reversed by the Bureau of Labor Relations in a Decision dated March 26, 2002. Ruling of the Court of Appeals Undeterred, LEGEND filed a Petition for Certiorari14 with the Court of Appeals docketed as CA-G.R. SP No. 72848. LEGEND alleged that the Office of the Secretary of DOLE gravely abused its discretion in reversing and setting aside the Decision of the Med-Arbiter despite substantial and overwhelming evidence against KML.

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For its part, KML alleged that the Decision dated March 26, 2002 of the Bureau of Labor Relations in Case No. RO3000108-CP-001 denying LEGENDs petition for cancellation and upholding KMLs legitimacy as a labor organization has already become final and executory, entry of judgment having been made on August 21, 2002.15 The Office of the Secretary of DOLE also filed its Comment 16 asserting that KMLs legitimacy cannot be attacked collaterally. Finally, the Office of the Secretary of DOLE stressed that LEGEND has no legal personality to participate in the certification election proceedings. On September 18, 2003, the Court of Appeals rendered its Decision17 finding no grave abuse of discretion on the part of the Office of the Secretary of DOLE. The appellate court held that the issue on the legitimacy of KML as a labor organization has already been settled with finality in Case No. RO300-0108-CP-001. The March 26, 2002 Decision of the Bureau of Labor Relations upholding the legitimacy of KML as a labor organization had long become final and executory for failure of LEGEND to appeal the same. Thus, having already been settled that KML is a legitimate labor organization, the latter could properly file a petition for certification election. There was nothing left for the Office of the Secretary of DOLE to do but to order the holding of such certification election. The dispositive portion of the Decision reads: WHEREFORE, in view of the foregoing, and finding that no grave abuse of discretion amounting to lack or excess of jurisdiction has been committed by the Department of Labor and Employment, the assailed May 22, 2002 Decision and August 20, 2002 Resolution in Case No. RO300-106-RU-001 are UPHELD and AFFIRMED. The instant petition is DENIED due course and, accordingly, DISMISSED for lack of merit.18 LEGEND filed a Motion for Reconsideration19 alleging, among others, that it has appealed to the Court of Appeals the March 26, 2002 Decision in Case No. RO300-0108-CP-001 denying its petition for cancellation and that it is still pending resolution. On September 14, 2005, the appellate court denied LEGENDs motion for reconsideration. Hence, this Petition for Review on Certiorari raising the lone assignment of error, viz: WHETHER X X X THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERRORS IN THE APPLICATION OF LAW IN DENYING THE PETITIONERS PETITION FOR CERTIORARI.20 Petitioners Arguments LEGEND submits that the Court of Appeals grievously erred in ruling that the March 26, 2002 Decision denying its Petition for Cancellation of KMLs registration has already become final and executory. It asserts that it has seasonably filed a Petition for Certiorari21 before the CA docketed as CA-G.R. SP No. 72659 assailing said Decision. In fact, on June 30, 2005, the Court of Appeals granted the petition, reversed the March 26, 2002 Decision of the Bureau of Labor Relations and reinstated the November 7, 2001 Decision of the DOLE Regional Office III ordering the cancellation of KMLs registration. Finally, LEGEND posits that the cancellation of KMLs certificate of registration should retroact to the time of its issuance.22 It thus claims that the petition for certification election and all of KMLs activities should be nullified because it has no legal personality to file the same, much less demand collective bargaining with LEGEND.23 LEGEND thus prays that the September 20, 2001 Decision of the Med-Arbiter dismissing KMLs petition for certification election be reinstated.24 Respondents Arguments In its Comment filed before this Court dated March 21, 2006, KML insists that the Decision of the Bureau of Labor Relations upholding its legitimacy as a labor organization has already attained finality25 hence there was no more hindrance to the holding of a certification election. Moreover, it claims that the instant petition has become moot because the certification election sought to be prevented had already been conducted.

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Our Ruling The petition is partly meritorious. LEGEND has timely appealed the March 26, 2002 Decision of the Bureau of Labor Relations to the Court of Appeals. We cannot understand why the Court of Appeals totally disregarded LEGENDs allegation in its Motion for Reconsideration that the March 26, 2002 Decision of the Bureau of Labor Relations has not yet attained finality considering that it has timely appealed the same to the Court of Appeals and which at that time is still pending resolution. The Court of Appeals never bothered to look into this allegation and instead dismissed outright LEGENDs motion for reconsideration. By doing so, the Court of Appeals in effect maintained its earlier ruling that the March 26, 2002 Decision of the Bureau of Labor Relations upholding the legitimacy of KML as a labor organization has long become final and executory for failure of LEGEND to appeal the same. This is inaccurate. Records show that (in the cancellation of registration case) LEGEND has timely filed on September 6, 2002 a petition for certiorari26 before the Court of Appeals which was docketed as CA-G.R. SP No. 72659 assailing the March 26, 2002 Decision of the Bureau of Labor Relations. In fact, KML received a copy of said petition on September 10, 200227 and has filed its Comment thereto on December 2, 2002. 28 Thus, we find it quite interesting for KML to claim in its Comment (in the certification petition case) before this Court dated March 21, 2006 29 that the Bureau of Labor Relations Decision in the petition for cancellation case has already attained finality. Even in its Memorandum30 dated March 13, 2007 filed before us, KML is still insisting that the Bureau of Labor Relations Decision has become final and executory. Our perusal of the records shows that on June 30, 2005, the Court of Appeals rendered its Decision 31 in CA-G.R. SP No. 72659 reversing the March 26, 2002 Decision of the Bureau of Labor Relations and reinstating the November 7, 2001 Decision of the Med-Arbiter which canceled the certificate of registration of KML.32 On September 30, 2005, KMLs motion for reconsideration was denied for lack of merit.33 On November 25, 2005, KML filed its Petition for Review on Certiorari34 before this Court which was docketed as G.R. No. 169972. However, the same was denied in a Resolution35 dated February 13, 2006 for having been filed out of time. KML moved for reconsideration but it was denied with finality in a Resolution36 dated June 7, 2006. Thereafter, the said Decision canceling the certificate of registration of KML as a labor organization became final and executory and entry of judgment was made on July 18, 2006.37 The cancellation of KMLs certificate of registration should not retroact to the time of its issuance. Notwithstanding the finality of the Decision canceling the certificate of registration of KML, we cannot subscribe to LEGENDs proposition that the cancellation of KMLs certificate of registration should retroact to the time of its issuance. LEGEND claims that KMLs petition for certification election filed during the pendency of the petition for cancellation and its demand to enter into collective bargaining agreement with LEGEND should be dismissed due to KMLs lack of legal personality. This issue is not new or novel. In Pepsi-Cola Products Philippines, Inc. v. Secretary of Labor,38 we already ruled that: Anent the issue of whether or not the Petition to cancel/revoke registration is a prejudicial question to the petition for certification election, the following ruling in the case of Association of the Court of Appeals Employees (ACAE) v. Hon. Pura Ferrer-Calleja, x x x is in point, to wit: x x x It is well-settled rule that a certification proceedings is not a litigation in the sense that the term is ordinarily understood, but an investigation of a non-adversarial and fact finding character. (Associated Labor Unions (ALU) v. Ferrer-Calleja, 179 SCRA 127 [1989]; Philippine Telegraph and Telephone Corporation v. NLRC, 183 SCRA 451 [1990]. Thus, the technical rules of evidence do not apply if the decision to grant it proceeds from an examination of the sufficiency of the petition as well as a careful look into the arguments contained in the position papers and other documents. At any rate, the Court applies the established rule correctly followed by the public respondent that an order to hold a certification election is proper despite the pendency of the petition for cancellation of the registration certificate of the respondent union. The rationale for this is that at the time the respondent union filed its petition, it still had the legal personality to perform such act absent an order directing the cancellation.39 (Emphasis supplied.)

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In Capitol Medical Center, Inc. v. Hon. Trajano,40 we also held that "the pendency of a petition for cancellation of union registration does not preclude collective bargaining."41 Citing the Secretary of Labor, we held viz: That there is a pending cancellation proceedings against the respondent Union is not a bar to set in motion the mechanics of collective bargaining. If a certification election may still be ordered despite the pendency of a petition to cancel the unions registration certificate x x x more so should the collective bargaining process continue despite its pendency. 42 (Emphasis supplied.) In Association of Court of Appeals Employees v. Ferrer-Calleja,43 this Court was tasked to resolve the issue of whether "the certification proceedings should be suspended pending [the petitioners] petition for the cancellation of union registration of the UCECA44."45 The Court resolved the issue in the negative holding that "an order to hold a certification election is proper despite the pendency of the petition for cancellation of the registration certificate of the respondent union. The rationale for this is that at the time the respondent union filed its petition, it still had the legal personality to perform such act absent an order directing a cancellation."46 We reiterated this view in Samahan ng Manggagawa sa Pacific Plastic v. Hon. Laguesma47 where we declared that "a certification election can be conducted despite pendency of a petition to cancel the union registration certificate. For the fact is that at the time the respondent union filed its petition for certification, it still had the legal personality to perform such act absent an order directing its cancellation."48 Based on the foregoing jurisprudence, it is clear that a certification election may be conducted during the pendency of the cancellation proceedings. This is because at the time the petition for certification was filed, the petitioning union is presumed to possess the legal personality to file the same. There is therefore no basis for LEGENDs assertion that the cancellation of KMLs certificate of registration should retroact to the time of its issuance or that it effectively nullified all of KMLs activities, including its filing of the petition for certification election and its demand to collectively bargain. The legitimacy of the legal personality of KML cannot be collaterally attacked in a petition for certification election. We agree with the ruling of the Office of the Secretary of DOLE that the legitimacy of the legal personality of KML cannot be collaterally attacked in a petition for certification election proceeding. This is in consonance with our ruling in Laguna Autoparts Manufacturing Corporation v. Office of the Secretary, Department of Labor and Employment 49 that "such legal personality may not be subject to a collateral attack but only through a separate action instituted particularly for the purpose of assailing it."50 We further held therein that: This is categorically prescribed by Section 5, Rule V of the Implementing Rules of Book V, which states as follows: SEC. 5.51 Effect of registration. The labor organization or workers association shall be deemed registered and vested with legal personality on the date of issuance of its certificate of registration. Such legal personality cannot thereafter be subject to collateral attack but may be questioned only in an independent petition for cancellation in accordance with these Rules. Hence, to raise the issue of the respondent unions legal personality is not proper in this case. The pronouncement of the Labor Relations Division Chief, that the respondent union acquired a legal personality x x x cannot be challenged in a petition for certification election.
1avvphi1

The discussion of the Secretary of Labor and Employment on this point is also enlightening, thus: . . . Section 5, Rule V of D.O. 9 is instructive on the matter. It provides that the legal personality of a union cannot be the subject of collateral attack in a petition for certification election, but may be questioned only in an independent petition for cancellation of union registration. This has been the rule since NUBE v. Minister of Labor, 110 SCRA 274 (1981). What applies in this case is the principle that once a union acquires a legitimate status as a labor organization, it continues as such until its certificate of registration is cancelled or revoked in an independent action for cancellation. Equally important is Section 11, Paragraph II, Rule IX of D.O. 9, which provides for the dismissal of a petition for certification election based on the lack of legal personality of a labor organization only in the following instances: (1) appellant is not listed by the Regional Office or the BLR in its registry of legitimate labor organizations; or (2) appellants legal personality has been revoked or cancelled with finality. Since appellant is listed in the registry of legitimate labor organizations, and its legitimacy has not been revoked or cancelled with finality, the granting of its petition for certification election is proper.52

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"[T]he legal personality of a legitimate labor organization x x x cannot be subject to a collateral attack. The law is very clear on this matter. x x x The Implementing Rules stipulate that a labor organization shall be deemed registered and vested with legal personality on the date of issuance of its certificate of registration. Once a certificate of registration is issued to a union, its legal personality cannot be subject to a collateral attack. In may be questioned only in an independent petition for cancellation in accordance with Section 5 of Rule V, Book V of the Implementing Rules."53 WHEREFORE, in view of the foregoing, the petition is PARTLY GRANTED. The Decision of the Court of Appeals dated September 18, 2003 in CA-G.R. SP No. 72848 insofar as it affirms the May 22, 2002 Decision and August 20, 2002 Resolution of the Office of the Secretary of Department of Labor and Employment is AFFIRMED. The Decision of the Court of Appeals insofar as it declares that the March 26, 2002 Decision of the Bureau of Labor Relations in Case No. RO300-0108-CP-001 upholding that the legitimacy of KML as a labor organization has long become final and executory for failure of LEGEND to appeal the same, is REVERSED and SET ASIDE. SO ORDERED.
MARIANO C. DEL CASTILLO Associate Justice 6. Final Executory Judgment; Judgment Nunc Pro Tunc FILIPINAS PALMOIL PROCESSING, INC. and DENNIS T. VILLAREAL vs. JOEL P. DEJAPA, represented by his Attorney-in-Fact MYRNA MANZANO, G.R. No. 167332, February 7, 2011, 641 s 572 DECISION PERALTA, J.:

Assailed in this petition for review on certiorari are the Resolutions dated December 10, 2004 1 and February 17, 20052 issued by the Court of Appeals (CA) in CA-G.R. SP No. 60562. The antecedent facts are as follows: On May 27, 1997, respondent Joey Dejapa filed a Complaint for illegal dismissal and money claims against petitioner Asian Plantation Phils., Inc. (formerly Veg. Oil Phils. Inc.), now Filipinas Palmoil Processing, Inc., Dennis T. Villareal and Tom Madula. On July 14, 1999, the Labor Arbiter (LA) dismissed respondent's complaint for lack of merit. Respondent filed his appeal with the National Labor Relations Commission (NLRC) which, in a Decision dated December 29, 1999, affirmed the LA decision. Respondent's motion for reconsideration was denied in a Resolution dated April 28, 2000. Aggrieved, respondent filed with the CA a petition for certiorari. Petitioners filed their Comment thereto. On August 29, 2002, the CA reversed and set aside the NLRC decision and resolution. The decretal portion of the decision states: WHEREFORE, premises considered, the assailed Decision dated December 29, 1999, as well as the Resolution dated April 28, 2000 in NLRC NCR CASE No. 0005-03748-97 (NLRC NCR CA No. 016505-98) are hereby REVERSED and SET ASIDE. Petitioner (herein respondent) is ordered REINSTATED without loss of seniority rights with payment of backwages, including his salary differentials, overtime pay, 13th month pay, service incentive leave pay and other benefits from the time his salary was withheld, or from December 1, 1997 until actual reinstatement. However, if reinstatement is no longer feasible, private respondent company is ordered to pay separation pay equivalent to one (1) month for every year of service where a fraction of six (6) months shall be considered as one whole year. Private respondent company is likewise ordered to pay P10,000.00 as moral damages and P10,000.00 as exemplary damages. In addition, private respondent company is ordered to pay attorneys fees in the amount equivalent to 10% of the total monetary award. SO ORDERED.3

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The CA found that petitioner company was respondent's employer and that Tom Madula was not really an independent contractor, but petitioner company's Operations Manager. It ruled that respondent was illegally dismissed by petitioner company. We quote the pertinent portions of the Decision, thus: It must be borne in mind that private respondent company's claim is principally anchored on the assertion that petitioner was not its employee but that of private respondent Madula who is allegedly an independent contractor.4 xxxx In this petition, there is no showing that private respondent Madula is an independent contractor. We reiterate that private respondent company failed to show any evidence to support such claim. Hence, it is fair to conclude that private respondent Madula is an employee of private respondent company. He is the operations manager of private respondent company. This fact was not refuted by either private respondent Madula or private respondent company."5 xxxx In fine, it is evident that private respondent Madula is indeed an employee of private respondent company. As its operations manager, he is deemed an agent of private respondent company.6 Petitioners' motion for reconsideration was denied in a Resolution7 dated July 14, 2003. Petitioners filed with Us a petition for review on certiorari, docketed as G.R. No. 159142, which We denied in a Resolution8 dated October 1, 2003 for petitioners' failure to take the appeal within the reglementary period. Petitioners' motion for reconsideration was denied in a Resolution 9 dated January 21, 2004; thus, the decision became final and executory on February 27, 2004, and an entry of judgment was subsequently made. Respondent, through his representative, filed with the LA a Motion for Execution and Computation of the Award. The LA issued a Writ of Execution10 dated July 12, 2004 for the implementation of the CA Decision dated August 29, 2002. Pursuant to the said writ of execution, petitioners' deposit in the United Coconut Planters Bank (UCPB) in the amount of P736,910.10 was garnished. On July 21, 2004, petitioners filed a Motion to Quash Writ of Execution11 on the ground that it can be held liable only insofar as the reinstatement aspect and/or the monetary award were concerned, pursuant to the CA Decision dated August 29, 2002, but not to backwages. Respondent filed his Comment/Opposition thereto. On August 6, 2004, respondent filed an Ex-Parte Motion for Order of Release praying for the immediate release of the garnished amount in the UCPB. On September 14, 2004, the LA issued its Order12 partially granting petitioners' Motion to Quash Writ of Execution, the decretal portion of which reads: WHEREFORE, the Motion to Quash Writ of Execution filed by Asian Plantation is partially granted in so far as the liability for backwages and reinstatement is concerned such that the same is adjudged against respondent Tom Madula. The respondents are solidarily liable to the rest of the award, except damages, which are for the sole account of respondent company. The garnished account of Filipinas Palm Oil Processing, Inc. with United Coconut Planters Bank is hereby ordered released to the extent of TWO HUNDRED SIXTY-SIX THOUSAND SEVEN HUNDRED FIFTY-SEVEN & 85/100 PESOS (P266,757.85). SO ORDERED.13 Dissatisfied, both parties filed their respective appeals with the NLRC. On October 19, 2004, respondent then filed before the CA a Very Urgent Motion for Clarification of Judgment, praying that the CA Decision dated August 29, 2002 be clarified to the effect that petitioner be made solely liable to the judgment award and, as a consequence thereof, to order the NLRC and the LA to implement the same and to direct the UCPB to

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release the garnished amount of P736,910.10 to the NLRC Sheriff and for the latter to deposit the same to the NLRC cashier for further disposition. On December 10, 2004, the CA rendered the assailed Resolution granting respondent's motion for clarificatory judgment, the pertinent portion of which provides: Obviously, the confusion was brought about by the September 14, 2004 Order of Labor Arbiter Savari. It is immediately apparent that the order is devoid of any legal basis since the ground relied upon by private respondent Filipinas Palmoil (Asian Plantation) is not among those grounds upon which a writ of execution may be quashed. As jurisprudentially settled, quashal of the writ of execution was held to be proper in the following instances: (a) when it was improvidently issued, (b) when it is defective in substance, (c) when it is issued against the wrong party, (d) where the judgment was already satisfied, (e) when it was issued without authority, (f) when a change in the situation of the parties renders execution inequitable, and (g) when the controversy was never validly submitted to the court, The ground invoked by private respondent Filipinas Palmoil (Asian Plantation) to quash the writ of execution is patently improper as it actually sought to vary the final judgment of this Court. Despite this, Labor Arbiter Savari "partially granted" the motion to quash. Worst, Labor Arbiter Savari even went to the extent of making her own findings of fact and ruling on the merits, and came out with an entirely new disposition different from that decreed by this Court in the August 29, 2002 decision. Such action on the part of Labor Arbiter Savari betrays sheer ignorance of settled precepts, and amounts to a clear encroachment and interference on the final judgment of this Court. Ordinarily, the recourse against such an order of the Labor Arbiter is to challenge the same on appeal or via the extraordinary remedies of certiorari, prohibition or mandamus. However, requiring petitioner to undergo such litigious process once again would not be in keeping with the protection to labor mandate of the Constitution. Thus, in order to write finis to this controversy, which has tarried for some time now, and in order to forestall the offshoot of another prolonged litigation, this Court, in the exercise of equity jurisdiction, hereby grants petitioner's motion for clarification. It is, of course, stressed that the Court is not amending its August 29, 2002 decision or rectifying a perceived error therein. With this clarification, this Court only states the obvious by explicitly articulating what should have been necessarily implied by the application of basic principles under our labor law.14 Thus, the dispositive portion of the assailed CA Resolution reads: WHEREFORE, in view of the foregoing, in accordance with petitioner's supplications, this Court renders, nunc pro tunc, the following clarification to the decretal portion of this Court's August 29, 2002 decision. WHEREFORE, premises considered, the assailed Decision dated December 29, 1999 as well as the Resolution dated April 28, 2000 in NLRC NCR CASE NO. 0005-03748-97 (NLRC NCR CA NO. 016505-98) are hereby REVERSED and SET ASIDE. Private respondent Filipinas Palmoil Processing Inc. (Asian Plantation Phils., Inc.) is hereby ordered to REINSTATE petitioner Joey Dejapa without loss of seniority rights and to pay him his backwages including his salary differentials, overtime pay, 13th month pay, service incentive leave pay and other benefits from the time his salary was withheld or from December 1, 1997 until actual reinstatement. If reinstatement is no longer feasible, private respondent Filipinas Palmoil Processing, Inc. (Asian Plantation Phils., Inc.) is likewise ordered to pay separation pay in addition to the payment of backwages and other benefits equivalent to one (1) month pay for every year of service, where a fraction of six (6) months shall be considered as one whole year. Private respondent Filipinas Palmoil Processing Inc. (Asian Plantation Phils., Inc.) is likewise ordered to pay petitioner P10,000.00 as moral damages, P10,000.00 as exemplary damages, and attorney's fees in the amount equivalent to 10% of the total monetary award. Private respondent Tom Madula is hereby relieved from any liability under the judgment. Labor Arbiter Lilia S. Savari is hereby directed to implement the final judgment of this Court strictly in accordance with the foregoing, and to order the UCPB to release the garnished amount of P736,910.10 to the NLRC Sheriff for further disposition.15 Petitioners' motion for reconsideration was denied in a Resolution dated February 17, 2005.

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Hence this Petition for review on certiorari raising the following grounds: THE HONORABLE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE CONTRARY TO LAW AND SETTLED RULINGS OF THE SUPREME COURT WHEN IT ORDERED THE COMPANY TO REINSTATE THE RESPONDENT AND PAY HIM BACKWAGES, SALARY DIFFERENTIALS, OVERTIME PAY, 13TH MONTH PAY, SERVICE INCENTIVE LEAVE PAY AND OTHER BENEFITS, AND IF REINSTATEMENT IS NOT POSSIBLE, TO PAY RESPONDENT SEPARATION PAY IN ADDITION TO BACKWAGES AND OTHER BENEFITS, PLUS DAMAGES AND ATTORNEY'S FEES CONSIDERING THAT: A. RESPONDENT WAS NEVER DISMISSED AND WAS NEVER UNDER THE EMPLOY OF THE COMPANY, [AND] B. QUASHAL OF THE WRIT OF EXECUTION IS PROPER UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE.16 Petitioners insist that: (1) it engaged the services of Tom Madula to provide it with manning services and delivery of liquid cargo; (2) Madula assigned respondent to work as barge patron in the company's Butuan depot; (3) the terms of the contract between Madula and petitioner were clear and categorical, which negate the existence of an employment relationship between respondent and petitioner; and (4) Madula's obligation to provide the services contracted and which were performed by respondent were among the functions expressly allowed by law to be contractible. Petitioners claim that the CA Decision dated August 29, 2002 did not even provide for the circumstances surrounding the alleged dismissal and how the same was effected; that even respondent's narration of facts in his position paper filed before the LA negated the existence of the fact of dismissal. Considering that petitioner company was not, at any time, the employer of respondent and that since there was no dismissal to speak of, it is but proper to order the quashal of the writ of execution. In his Comment, respondent claims that (1) petitioner seeks to reverse or set aside the CA Decision dated August 29, 2002, which had already attained finality and an entry of judgment had already been made; (2) the issues which petitioners raised have already been passed upon by the CA in its 2002 decision; and (3) the CA Resolution which is being assailed in this petition was merely a clarification of the final and executory CA Decision dated August 29, 2002, where the CA did not modify its earlier decision but only interpreted the same, which was well within its authority to do so. Respondent informs Us that the amount of P736,910.10 in the UCPB had already been released to the NLRC Sheriff and was deposited to the Cashier, who in turn had released the said amount to respondent through his attorney-in-fact. In their Reply, petitioners contend that it is not precluded from assailing the Resolutions issued by the CA via a petition for review under Rule 45 of the Rules of Court and reiterated the arguments raised in the petition. We find the petition unmeritorious. In the Decision dated August 29, 2002, the CA found petitioner as the employer of respondent; that Tom Madula was not really an independent contractor, but was only an employee of petitioner company being its operations manager; and that respondent was illegally dismissed by petitioner company. The CA Decision became final and executory on February 27, 2004 after we denied petitioners' petition for review on certiorari, and an entry of judgment was subsequently made. The instant petition for review filed with Us by petitioners assails the CA Resolutions dated December 10, 2004 and February 17, 2005, which the CA issued upon respondent's filing of a Very Urgent Motion for Clarificatory Judgment praying that the CA clarify its Decision dated August 29, 2002 declaring petitioner company solely liable to the judgment award and, as a consequence thereof, to order the NLRC and the LA to implement the same and for the UCPB to release the garnished amount of P736,910.10 to the Sheriff for further disposition. Notably, the CA Resolutions sought to be annulled in this petition were only issued to clarify the CA Decision dated August 29, 2002, which had already become final and executory in 2004. As a general rule, final and executory judgments are immutable and unalterable, except under these recognized exceptions, to wit: (a) clerical errors; (b) nunc pro tunc entries which cause no prejudice to any party; and (c) void judgments.17 What the CA rendered on December 10, 2004 was a nunc pro tunc order clarifying the decretal portion of the August 29, 2002 Decision. In Briones-Vazquez v. Court of Appeals,18 nunc pro tunc judgments have been defined and characterized as follows:

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The object of a judgment nunc pro tunc is not the rendering of a new judgment and the ascertainment and determination of new rights, but is one placing in proper form on the record, the judgment that had been previously rendered, to make it speak the truth, so as to make it show what the judicial action really was, not to correct judicial errors, such as to render a judgment which the court ought to have rendered, in place of the one it did erroneously render, nor to supply nonaction by the court, however erroneous the judgment may have been.19 By filing the instant petition for review with Us, petitioners would like to appeal anew the merits of the illegal dismissal case filed by respondent against petitioners raising the same arguments which had long been passed upon and decided in the August 29, 2002 CA Decision which had already attained finality. As the CA said in denying petitioners' motion for reconsideration of the assailed December 10, 2004 Resolution, to wit: It is basic that once a decision becomes final and executory, it is immutable and unalterable. Private respondents' (herein petitioners) motion for reconsideration seeks a modification or reversal of this Court's August 29, 2002 decision, which has long become final and executory, as in fact, it is already in its execution stage. It may no longer be modified by this Court or even by the Highest Court of the land.
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It should be sufficiently clear to private respondents (herein petitioners) that the December 10, 2004 Resolution was issued merely to clarify a seeming ambiguity in the decision but as stressed therein, it is neither an amendment nor a rectification of a perceived error therein. The instant motion for reconsideration has, therefore, no merit at all.20 We find that petitioners' action is merely a subterfuge to alter or modify the final and executory Decision of the CA which we cannot countenance without violating procedural rules and jurisprudence. In Navarro v. Metropolitan Bank and Trust Company,21 We discussed the rule on immutability of judgment and said: No other procedural law principle is indeed more settled than that once a judgment becomes final, it is no longer subject to change, revision, amendment or reversal, except only for correction of clerical errors, or the making of nunc pro tunc entries which cause no prejudice to any party, or where the judgment itself is void. The underlying reason for the rule is two-fold: (1) to avoid delay in the administration of justice and thus make orderly the discharge of judicial business, and (2) to put judicial controversies to an end, at the risk of occasional errors, inasmuch as controversies cannot be allowed to drag on indefinitely and the rights and obligations of every litigant must not hang in suspense for an indefinite period of time. As the Court declared in Yau v. Silverio, Litigation must end and terminate sometime and somewhere, and it is essential to an effective and efficient administration of justice that, once a judgment has become final, the winning party be, not through a mere subterfuge, deprived of the fruits of the verdict. Courts must therefore guard against any scheme calculated to bring about that result. Constituted as they are to put an end to controversies, courts should frown upon any attempt to prolong them. Indeed, just as a losing party has the right to file an appeal within the prescribed period, the winning party also has the correlative right to enjoy the finality of the resolution of his case by the execution and satisfaction of the judgment. Any attempt to thwart this rigid rule and deny the prevailing litigant his right to savor the fruit of his victory must immediately be struck down. Thus, in Heirs of Wenceslao Samper v. Reciproco-Noble, we had occasion to emphasize the significance of this rule, to wit: It is an important fundamental principle in our Judicial system that every litigation must come to an end x x x Access to the courts is guaranteed. But there must be a limit thereto. Once a litigant's rights have been adjudicated in a valid final judgment of a competent court, he should not be granted an unbridled license to come back for another try. The prevailing party should not be harassed by subsequent suits. For, if endless litigations were to be encouraged, then unscrupulous litigants will multiply in number to the detriment of the administration of justice.22 WHEREFORE, the petition is DENIED. The Resolutions of the Court of Appeals, dated December 10, 2004 and February 17, 2005, in CA-G.R. SP No. 60562, are AFFIRMED. SO ORDERED.
DIOSDADO M. PERALTA Associate Justice 7. Jurisdiction of NLRC over Third Part Claim PAQUITO V. ANDO vs. ANDRESITO Y. CAMPO, ET AL., G.R. No. 184007, February 16, 2011, 643 s 513

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DECISION NACHURA, J.:

Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court. Petitioner Paquito V. Ando (petitioner) is assailing the Decision2 dated February 21, 2008 and the Resolution3 dated July 25, 2008 of the Court of Appeals (CA) in CA-G.R. CEB-SP. No. 02370. Petitioner was the president of Premier Allied and Contracting Services, Inc. (PACSI), an independent labor contractor. Respondents were hired by PACSI as pilers or haulers tasked to manually carry bags of sugar from the warehouse of Victorias Milling Company and load them on trucks. 4 In June 1998, respondents were dismissed from employment. They filed a case for illegal dismissal and some money claims with the National Labor Relations Commission (NLRC), Regional Arbitration Branch No. VI, Bacolod City.5 On June 14, 2001, Labor Arbiter Phibun D. Pura (Labor Arbiter) promulgated a decision, ruling in respondents favor.6 PACSI and petitioner were directed to pay a total of P422,702.28, representing respondents separation pay and the award of attorneys fees.7 Petitioner and PACSI appealed to the NLRC. In a decision8 dated October 20, 2004, the NLRC ruled that petitioner failed to perfect his appeal because he did not pay the supersedeas bond. It also affirmed the Labor Arbiters decision with modification of the award for separation pay to four other employees who were similarly situated. Upon finality of the decision, respondents moved for its execution.9 To answer for the monetary award, NLRC Acting Sheriff Romeo Pasustento issued a Notice of Sale on Execution of Personal Property10 over the property covered by Transfer Certificate of Title (TCT) No. T-140167 in the name of "Paquito V. Ando x x x married to Erlinda S. Ando." This prompted petitioner to file an action for prohibition and damages with prayer for the issuance of a temporary restraining order (TRO) before the Regional Trial Court (RTC), Branch 50, Bacolod City. Petitioner claimed that the property belonged to him and his wife, not to the corporation, and, hence, could not be subject of the execution sale. Since it is the corporation that was the judgment debtor, execution should be made on the latters properties.11 On December 27, 2006, the RTC issued an Order 12 denying the prayer for a TRO, holding that the trial court had no jurisdiction to try and decide the case. The RTC ruled that, pursuant to the NLRC Manual on the Execution of Judgment, petitioners remedy was to file a third-party claim with the NLRC Sheriff. Despite lack of jurisdiction, however, the RTC went on to decide the merits of the case. Petitioner did not file a motion for reconsideration of the RTC Order. Instead, he filed a petition for certiorari under Rule 6513 before the CA. He contended that the RTC acted without or in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the Order. Petitioner argued that the writ of execution was issued improvidently or without authority since the property to be levied belonged to him in his personal capacity and his wife. The RTC, respondent contended, could stay the execution of a judgment if the same was unjust. 14 He also contended that, pursuant to a ruling of this Court, a third party who is not a judgment creditor may choose between filing a third-party claim with the NLRC sheriff or filing a separate action with the courts.15 In the Decision now assailed before this Court, the CA affirmed the RTC Order in so far as it dismissed the complaint on the ground that it had no jurisdiction over the case, and nullified all other pronouncements in the same Order. Petitioner moved for reconsideration, but the motion was denied.
lawph!l

Petitioner then filed the present petition seeking the nullification of the CA Decision. He argues that he was never sued in his personal capacity, but in his representative capacity as president of PACSI. Neither was there any indication in the body of the Decision that he was solidarily liable with the corporation. 16 He also concedes that the Labor Arbiters decision has become final. Hence, he is not seeking to stop the execution of the judgment against the properties of PACSI. He also avers, however, that there is no evidence that the sheriff ever implemented the writ of execution against the properties of PACSI.17 Petitioner also raises anew his argument that he can choose between filing a third-party claim with the sheriff of the NLRC or filing a separate action.18 He maintains that this special civil action is purely civil in nature since it "involves the manner in which the writ of execution in a labor case will be implemented against the property of petitioner which is not a

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corporate property of PACSI."19 What he is seeking to be restrained, petitioner maintains, is not the Decision itself but the manner of its execution.20 Further, he claims that the property levied has been constituted as a family home within the contemplation of the Family Code.21 The petition is meritorious. Initially, we must state that the CA did not, in fact, err in upholding the RTCs lack of jurisdiction to restrain the implementation of the writ of execution issued by the Labor Arbiter. The Court has long recognized that regular courts have no jurisdiction to hear and decide questions which arise from and are incidental to the enforcement of decisions, orders, or awards rendered in labor cases by appropriate officers and tribunals of the Department of Labor and Employment. To hold otherwise is to sanction splitting of jurisdiction which is obnoxious to the orderly administration of justice.22 Thus, it is, first and foremost, the NLRC Manual on the Execution of Judgment that governs any question on the execution of a judgment of that body. Petitioner need not look further than that. The Rules of Court apply only by analogy or in a suppletory character.23 Consider the provision in Section 16, Rule 39 of the Rules of Court on third-party claims: SEC. 16. Proceedings where property claimed by third person.If the property levied on is claimed by any person other than the judgment obligor or his agent, and such person makes an affidavit of his title thereto or right to the possession thereof, stating the grounds of such right or title, and serves the same upon the officer making the levy and a copy thereof upon the judgment obligee, the officer shall not be bound to keep the property, unless such judgment obligee, on demand of the officer, files a bond approved by the court to indemnify the third-party claimant in a sum not less than the value of the property levied on. In case of disagreement as to such value, the same shall be determined by the court issuing the writ of execution. No claim for damages for the taking or keeping of the property may be enforced against the bond unless the action therefor is filed within one hundred twenty (120) days from the date of the filing of the bond. The officer shall not be liable for damages for the taking or keeping of the property, to any third-party claimant if such bond is filed. Nothing herein contained shall prevent such claimant or any third person from vindicating his claim to the property in a separate action, or prevent the judgment obligee from claiming damages in the same or a separate action against a third-party claimant who filed a frivolous or plainly spurious claim. When the writ of execution is issued in favor of the Republic of the Philippines, or any officer duly representing it, the filing of such bond shall not be required, and in case the sheriff or levying officer is sued for damages as a result of the levy, he shall be represented by the Solicitor General and if held liable therefor, the actual damages adjudged by the court shall be paid by the National Treasurer out of such funds as may be appropriated for the purpose. On the other hand, the NLRC Manual on the Execution of Judgment deals specifically with third-party claims in cases brought before that body. It defines a third-party claim as one where a person, not a party to the case, asserts title to or right to the possession of the property levied upon. 24 It also sets out the procedure for the filing of a third-party claim, to wit: SECTION 2. Proceedings. If property levied upon be claimed by any person other than the losing party or his agent, such person shall make an affidavit of his title thereto or right to the possession thereof, stating the grounds of such right or title and shall file the same with the sheriff and copies thereof served upon the Labor Arbiter or proper officer issuing the writ and upon the prevailing party. Upon receipt of the third party claim, all proceedings with respect to the execution of the property subject of the third party claim shall automatically be suspended and the Labor Arbiter or proper officer issuing the writ shall conduct a hearing with due notice to all parties concerned and resolve the validity of the claim within ten (10) working days from receipt thereof and his decision is appealable to the Commission within ten (10) working days from notice, and the Commission shall resolve the appeal within same period. There is no doubt in our mind that petitioners complaint is a third- party claim within the cognizance of the NLRC. Petitioner may indeed be considered a "third party" in relation to the property subject of the execution vis--vis the Labor Arbiters decision. There is no question that the property belongs to petitioner and his wife, and not to the corporation. It can be said that the property belongs to the conjugal partnership, not to petitioner alone. Thus, the property belongs to a

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third party, i.e., the conjugal partnership. At the very least, the Court can consider that petitioners wife is a third party within contemplation of the law. The Courts pronouncements in Deltaventures Resources, Inc. v. Hon. Cabato25 are instructive: Ostensibly the complaint before the trial court was for the recovery of possession and injunction, but in essence it was an action challenging the legality or propriety of the levy vis-a-vis the alias writ of execution, including the acts performed by the Labor Arbiter and the Deputy Sheriff implementing the writ. The complaint was in effect a motion to quash the writ of execution of a decision rendered on a case properly within the jurisdiction of the Labor Arbiter, to wit: Illegal Dismissal and Unfair Labor Practice. Considering the factual setting, it is then logical to conclude that the subject matter of the third party claim is but an incident of the labor case, a matter beyond the jurisdiction of regional trial courts. xxxx x x x. Whatever irregularities attended the issuance an execution of the alias writ of execution should be referred to the same administrative tribunal which rendered the decision. This is because any court which issued a writ of execution has the inherent power, for the advancement of justice, to correct errors of its ministerial officers and to control its own processes. The broad powers granted to the Labor Arbiter and to the National Labor Relations Commission by Articles 217, 218 and 224 of the Labor Code can only be interpreted as vesting in them jurisdiction over incidents arising from, in connection with or relating to labor disputes, as the controversy under consideration, to the exclusion of the regular courts.26 There is no denying that the present controversy arose from the complaint for illegal dismissal. The subject matter of petitioners complaint is the execution of the NLRC decision. Execution is an essential part of the proceedings before the NLRC. Jurisdiction, once acquired, continues until the case is finally terminated,27 and there can be no end to the controversy without the full and proper implementation of the commissions directives. Further underscoring the RTCs lack of jurisdiction over petitioners complaint is Article 254 of the Labor Code, to wit: ART. 254. INJUNCTION PROHIBITED. No temporary or permanent injunction or restraining order in any case involving or growing out of labor disputes shall be issued by any court or other entity, except as otherwise provided in Articles 218 and 264 of this Code. That said, however, we resolve to put an end to the controversy right now, considering the length of time that has passed since the levy on the property was made. Petitioner claims that the property sought to be levied does not belong to PACSI, the judgment debtor, but to him and his wife. Since he was sued in a representative capacity, and not in his personal capacity, the property could not be made to answer for the judgment obligation of the corporation. The TCT28 of the property bears out that, indeed, it belongs to petitioner and his wife. Thus, even if we consider petitioner as an agent of the corporation and, therefore, not a stranger to the case such that the provision on third-party claims will not apply to him, the property was registered not only in the name of petitioner but also of his wife. She stands to lose the property subject of execution without ever being a party to the case. This will be tantamount to deprivation of property without due process. Moreover, the power of the NLRC, or the courts, to execute its judgment extends only to properties unquestionably belonging to the judgment debtor alone.29 A sheriff, therefore, has no authority to attach the property of any person except that of the judgment debtor.30 Likewise, there is no showing that the sheriff ever tried to execute on the properties of the corporation. In sum, while petitioner availed himself of the wrong remedy to vindicate his rights, nonetheless, justice demands that this Court look beyond his procedural missteps and grant the petition. WHEREFORE, the foregoing premises considered, the petition is GRANTED. The Decision dated February 21, 2008 and the Resolution dated July 25, 2008 of the Court of Appeals in CA-G.R. CEB-SP. No. 02370 are hereby REVERSED and

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SET ASIDE, and a new one is entered declaring NULL and VOID (1) the Order of the Regional Trial Court of Negros Occidental dated December 27, 2006 in Civil Case No. 06-12927; and (2) the Notice of Sale on Execution of Personal Property dated December 4, 2006 over the property covered by Transfer Certificate of Title No. T-140167, issued by the Acting Sheriff of the National Labor Relations Commission. SO ORDERED.
ANTONIO EDUARDO B. NACHURA Associate Justice

8.

Redundancy, ULP, RTSO NELSON A. CULILI vs. EASTERN TELECOMMUNICATIONS PHILIPPINES, INC., SALVADOR HIZON (President and Chief Executive Officer), EMILIANO JURADO (Chairman of the Board), VIRGILIO GARCIA (Vice President) and STELLA GARCIA (Assistant Vice President), G.R. No. 165381, February 9, 2011, 642 s 338 DECISION

LEONARDO-DE CASTRO, J.:

Before Us is a petition for review on certiorari1 of the February 5, 2004 Decision2 and September 13, 2004 Resolution3 of the Court of Appeals in CA-G.R. SP No. 75001, wherein the Court of Appeals set aside the March 1, 2002 Decision4 and September 24, 2002 Resolution5 of the National Labor Relations Commission (NLRC), which affirmed the Labor Arbiters Decision6 dated April 30, 2001. Respondent Eastern Telecommunications Philippines, Inc. (ETPI) is a telecommunications company engaged mainly in the business of establishing commercial telecommunications systems and leasing of international datalines or circuits that pass through the international gateway facility (IGF).7 The other respondents are ETPIs officers: Salvador Hizon, President and Chief Executive Officer; Emiliano Jurado, Chairman of the Board; Virgilio Garcia, Vice President; and Stella Garcia, Assistant Vice President. Petitioner Nelson A. Culili (Culili) was employed by ETPI as a Technician in its Field Operations Department on January 27, 1981. On December 12, 1996, Culili was promoted to Senior Technician in the Customer Premises Equipment Management Unit of the Service Quality Department and his basic salary was increased.8 As a telecommunications company and an authorized IGF operator, ETPI was required, under Republic Act. No. 7925 and Executive Order No. 109, to establish landlines in Metro Manila and certain provinces.9 However, due to interconnection problems with the Philippine Long Distance Telephone Company (PLDT), poor subscription and cancellation of subscriptions, and other business difficulties, ETPI was forced to halt its roll out of one hundred twentynine thousand (129,000) landlines already allocated to a number of its employees.10 In 1998, due to business troubles and losses, ETPI was compelled to implement a Right-Sizing Program which consisted of two phases: the first phase involved the reduction of ETPIs workforce to only those employees that were necessary and which ETPI could sustain; the second phase entailed a company-wide reorganization which would result in the transfer, merger, absorption or abolition of certain departments of ETPI.11 As part of the first phase, ETPI, on December 10, 1998, offered to its employees who had rendered at least fifteen years of service, the Special Retirement Program, which consisted of the option to voluntarily retire at an earlier age and a retirement package equivalent to two and a half (2) months salary for every year of service.12 This offer was initially rejected by the Eastern Telecommunications Employees Union (ETEU), ETPIs duly recognized bargaining agent, which threatened to stage a strike. ETPI explained to ETEU the exact details of the Right-Sizing Program and the Special Retirement Program and after consultations with ETEUs members, ETEU agreed to the implementation of both programs.13 Thus, on February 8, 1999, ETPI re-offered the Special Retirement Program and the corresponding retirement package to the one hundred two (102) employees who qualified for the program.14 Of all the employees who qualified to avail of the program, only Culili rejected the offer.15 After the successful implementation of the first phase of the Right-Sizing Program, ETPI, on March 1, 1999 proceeded with the second phase which necessitated the abolition, transfer and merger of a number of ETPIs departments.16 Among the departments abolished was the Service Quality Department. The functions of the Customer Premises Equipment Management Unit, Culilis unit, were absorbed by the Business and Consumer Accounts Department. The abolition of the Service Quality Department rendered the specialized functions of a Senior Technician unnecessary. As a result, Culilis position was abolished due to redundancy and his functions were absorbed by Andre Andrada, another employee already with the Business and Consumer Accounts Department.17

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On March 5, 1999, Culili discovered that his name was omitted in ETPIs New Table of Organization. Culili, along with three of his co-employees who were similarly situated, wrote their union president to protest such omission.18 In a letter dated March 8, 1999, ETPI, through its Assistant Vice President Stella Garcia, informed Culili of his termination from employment effective April 8, 1999. The letter reads: March 8, 1999 To: N. Culili Thru: S. Dobbin/G. Ebue From: AVP-HRD -----------------------------------------------------------------------------------------As you are aware, the current economic crisis has adversely affected our operations and undermined our earlier plans to put in place major work programs and activities. Because of this, we have to implement a Rightsizing Program in order to cut administrative/operating costs and to avoid losses. In line with this program, your employment with the company shall terminate effective at the close of business hours on April 08, 1999. However, to give you ample time to look for other employment, provided you have amply turned over your pending work and settled your accountabilities, you are no longer required to report to work starting tomorrow. You will be considered on paid leave until April 08, 1999. You will likewise be paid separation pay in compliance with legal requirements (see attached), as well as other benefits accruing to you under the law, and the CBA. We take this opportunity to thank you for your services and wish you well in your future endeavors. (Signed) Stella J. Garcia19 This letter was similar to the memo shown to Culili by the union president weeks before Culili was dismissed. The memo was dated December 7, 1998, and was advising him of his dismissal effective January 4, 1999 due to the Right-Sizing Program ETPI was going to implement to cut costs and avoid losses.20 Culili alleged that neither he nor the Department of Labor and Employment (DOLE) were formally notified of his termination. Culili claimed that he only found out about it sometime in March 1999 when Vice President Virgilio Garcia handed him a copy of the March 8, 1999 letter, after he was barred from entering ETPIs premises by its armed security personnel when he tried to report for work.21 Culili believed that ETPI had already decided to dismiss him even prior to the March 8, 1999 letter as evidenced by the December 7, 1998 version of that letter. Moreover, Culili asserted that ETPI had contracted out the services he used to perform to a labor-only contractor which not only proved that his functions had not become unnecessary, but which also violated their Collective Bargaining Agreement (CBA) and the Labor Code. Aside from these, Culili also alleged that he was discriminated against when ETPI offered some of his co-employees an additional benefit in the form of motorcycles to induce them to avail of the Special Retirement Program, while he was not.22 ETPI denied singling Culili out for termination. ETPI claimed that while it is true that they offered the Special Retirement Package to reduce their workforce to a sustainable level, this was only the first phase of the Right-Sizing Program to which ETEU agreed. The second phase intended to simplify and streamline the functions of the departments and employees of ETPI. The abolition of Culilis department - the Service Quality Department - and the absorption of its functions by the Business and Consumer Accounts Department were in line with the programs goals as the Business and Consumer Accounts Department was more economical and versatile and it was flexible enough to handle the limited functions of the Service Quality Department. ETPI averred that since Culili did not avail of the Special Retirement Program and his position was subsequently declared redundant, it had no choice but to terminate Culili.23 Culili, however, continued to report for work. ETPI said that because there was no more work for Culili, it was constrained to serve a final notice of termination24 to Culili, which Culili ignored. ETPI alleged that Culili informed his superiors that he would agree to his termination if ETPI would give him certain special work tools in addition to the benefits he was already offered. ETPI claimed that Culilis counter-offer was unacceptable as the work tools Culili wanted were worth almost a million pesos. Thus, on March 26, 1999, ETPI tendered to Culili his final pay check of Eight Hundred Fifty-Nine Thousand Thirty-Three and 99/100 Pesos (P859,033.99) consisting of his basic salary, leaves, 13th month pay and separation pay. 25 ETPI

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claimed that Culili refused to accept his termination and continued to report for work.26 ETPI denied hiring outside contractors to perform Culilis work and denied offering added incentives to its employees to induce them to retire early. ETPI also explained that the December 7, 1998 letter was never given to Culili in an official capacity. ETPI claimed that it really needed to reduce its workforce at that time and that it had to prepare several letters in advance in the event that none of the employees avail of the Special Retirement Program. However, ETPI decided to wait for a favorable response from its employees regarding the Special Retirement Program instead of terminating them.27 On February 8, 2000, Culili filed a complaint against ETPI and its officers for illegal dismissal, unfair labor practice, and money claims before the Labor Arbiter. On April 30, 2001, the Labor Arbiter rendered a decision finding ETPI guilty of illegal dismissal and unfair labor practice, to wit: WHEREFORE, decision is hereby rendered declaring the dismissal of complainant Nelson A. Culili illegal for having been made through an arbitrary and malicious declaration of redundancy of his position and for having been done without due process for failure of the respondent to give complainant and the DOLE written notice of such termination prior to the effectivity thereof. In view of the foregoing, respondents Eastern Telecommunications Philippines and the individual respondents are hereby found guilty of unfair labor practice/discrimination and illegal dismissal and ordered to pay complainant backwages and such other benefits due him if he were not illegally dismissed, including moral and exemplary damages and 10% attorneys fees. Complainant likewise is to be reinstated to his former position or to a substantially equivalent position in accordance with the pertinent provisions of the Labor Code as interpreted in the case of Pioneer texturing [Pioneer Texturizing Corp. v. National Labor Relations Commission], G.R. No. 11865[1], 16 October 1997. Hence, Complainant must be paid the total amount of TWO MILLION SEVEN HUNDRED FORTY[-]FOUR THOUSAND THREE [HUNDRED] SEVENTY[-] NINE and 41/100 (P2,744,379.41), computed as follows: I. Backwages (from 16 March 1999 to 16 March 2001) a. Basic Salary (P29,030 x 24 mos.) b. 13th Month Pay (P692,720.96/12) c. Leave Benefits 1. Vacation Leave (30 days/annum) P1,116.54 x 60 days 66,992.40 2. Sick Leave (30 days/annum) P1,116.54 x 60 days 3. Birthday Leave (1 day/annum) P1,116.54 x 2 days d. Rice and Meal Subsidy (P1,750 x 4.5 mos. = P7,875.00) 01 August 1991 (P1,850 x 12 mos = P22,200.00) 01 August 2000 16 (P1,950 x 7.5 mos. = P14,625.00) e. Uniform Allowance P7,000/annum x 2 years II. Damages a. Moral P500,000.00 b. Exemplary P250,000.00 III. Attorneys Fees (10% of award) GRAND TOTAL: 94,969.97 P2,744,379.4128 14,000.00 P949,699.72 16 March March 31 2001 31 July 66,992.40 2,233.08 July 1999 2000 P696,720.96 58,060.88

44,700.00

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The Labor Arbiter believed Culilis claim that ETPI intended to dismiss him even before his position was declared redundant. He found the December 7, 1998 letter to be a telling sign of this intention. The Labor Arbiter held that a reading of the termination letter shows that the ground ETPI was actually invoking was retrenchment and not redundancy, but ETPI stuck to redundancy because it was easier to prove than retrenchment. He also did not believe that Culilis functions were as limited as ETPI made it appear to be, and held that ETPI failed to present any reasonable criteria to justify the declaration of Culilis position as redundant. On the issue of unfair labor practice, the Labor Arbiter agreed that the contracting out of Culilis functions to non-union members violated Culilis rights as a union member. Moreover, the Labor Arbiter said that ETPI was not able to dispute Culilis claims of discrimination and subcontracting, hence, ETPI was guilty of unfair labor practice. On appeal, the NLRC affirmed the Labor Arbiters decision but modified the amount of moral and exemplary damages awarded, viz: WHEREFORE, the Decision appealed from is AFFIRMED granting complainant the money claims prayed for including full backwages, allowances and other benefits or their monetary equivalent computed from the time of his illegal dismissal on 16 March 1999 up to his actual reinstatement except the award of moral and exemplary damages which is modified to P200,000.00 for moral and P100,000.00 for exemplary damages. For this purpose, this case is REMANDED to the Labor Arbiter for computation of backwages and other monetary awards to complainant.29 ETPI filed a Petition for Certiorari under Rule 65 of the Rules of Civil Procedure before the Court of Appeals on the ground of grave abuse of discretion. ETPI prayed that a Temporary Restraining Order be issued against the NLRC from implementing its decision and that the NLRC decision and resolution be set aside. The Court of Appeals, on February 5, 2004, partially granted ETPIs petition. The dispositive portion of the decision reads as follows: WHEREFORE, all the foregoing considered, the petition is PARTIALLY GRANTED. The assailed Decision of public respondent National Labor Relations Commission is MODIFIED in that petitioner Eastern Telecommunications Philippines Inc. (ETPI) is hereby ORDERED to pay respondent Nelson Culili full backwages from the time his salaries were not paid until the finality of this Decision plus separation pay in an amount equivalent to one (1) month salary for every year of service. The awards for moral and exemplary damages are DELETED. The Writ of Execution issued by the Labor Arbiter dated September 8, 2003 is DISSOLVED.30 The Court of Appeals found that Culilis position was validly abolished due to redundancy. The Court of Appeals said that ETPI had been very candid with its employees in implementing its Right-Sizing Program, and that it was highly unlikely that ETPI would effect a company-wide reorganization simply for the purpose of getting rid of Culili. The Court of Appeals also held that ETPI cannot be held guilty of unfair labor practice as mere contracting out of services being performed by union members does not per se amount to unfair labor practice unless it interferes with the employees right to selforganization. The Court of Appeals further held that ETPIs officers cannot be held liable absent a showing of bad faith or malice. However, the Court of Appeals found that ETPI failed to observe the standards of due process as required by our laws when it failed to properly notify both Culili and the DOLE of Culilis termination. The Court of Appeals maintained its position in its September 13, 2004 Resolution when it denied Culilis Motion for Reconsideration and Urgent Motion to Reinstate the Writ of Execution issued by the Labor Arbiter, and ETPIs Motion for Partial Reconsideration. Culili is now before this Court praying for the reversal of the Court of Appeals decision and the reinstatement of the NLRCs decision based on the following grounds: I THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH THE APPLICABLE LAW AND JURISPRUDENCE WHEN IT REVERSED THE DECISIONS OF THE NLRC AND THE LABOR ARBITER HOLDING THE DISMISSAL OF PETITIONER ILLEGAL IN THAT: A. CONTRARY TO THE FINDINGS OF THE COURT OF APPEALS, RESPONDENTS CHARACTERIZATION OF PETITIONERS POSITION AS REDUNDANT WAS TAINTED BY BAD FAITH. B. THERE WAS NO ADEQUATE JUSTIFICATION TO DECLARE PETITIONERS POSITION AS REDUNDANT.

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II THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE IN FINDING THAT NO UNFAIR LABOR PRACTICE ACTS WERE COMMITTED AGAINST THE PETITIONER. III THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE IN DELETING THE AWARD OF MORAL AND EXEMPLARY DAMAGES AND ATTORNEYS FEES IN FAVOR OF PETITIONER AND IN DISSOLVING THE WRIT OF EXECUTION DATED 8 SEPTEMBER 2003 ISSUED BY THE LABOR ARBITER. IV THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE IN ABSOLVING THE INDIVIDUAL RESPONDENTS OF PERSONAL LIABILITY. V CONTRARY TO APPLICABLE LAW AND JURISPRUDENCE, THE COURT OF APPEALS, IN A CERTIORARI PROCEEDING, REVIEWED THE FACTUAL FINDINGS OF THE NLRC WHICH AFFIRMED THAT OF THE LABOR ARBITER AND, THEREAFTER, ISSUED A WRIT OF CERTIORARI REVERSING THE DECISIONS OF THE NLRC AND THE LABOR ARBITER EVEN IN THE ABSENCE OF GRAVE ABUSE OF DISCRETION.31 Procedural Issue: Court of Appeals' Power to Review Facts in a Petition For Certiorari under Rule 65 Culili argued that the Court of Appeals acted in contravention of applicable law and jurisprudence when it reexamined the facts in this case and reversed the factual findings of the Labor Arbiter and the NLRC in a special civil action for certiorari. This Court has already confirmed the power of the Court of Appeals, even on a Petition for Certiorari under Rule 65,32 to review the evidence on record, when necessary, to resolve factual issues: The power of the Court of Appeals to review NLRC decisions via Rule 65 or Petition for Certiorari has been settled as early as in our decision in St. Martin Funeral Home v. National Labor Relations Commission. This Court held that the proper vehicle for such review was a Special Civil Action for Certiorari under Rule 65 of the Rules of Court, and that this action should be filed in the Court of Appeals in strict observance of the doctrine of the hierarchy of courts. Moreover, it is already settled that under Section 9 of Batas Pambansa Blg. 129, as amended by Republic Act No. 7902[10] (An Act Expanding the Jurisdiction of the Court of Appeals, amending for the purpose of Section Nine of Batas Pambansa Blg. 129 as amended, known as the Judiciary Reorganization Act of 1980), the Court of Appeals pursuant to the exercise of its original jurisdiction over Petitions for Certiorari is specifically given the power to pass upon the evidence, if and when necessary, to resolve factual issues.33 While it is true that factual findings made by quasi-judicial and administrative tribunals, if supported by substantial evidence, are accorded great respect and even finality by the courts, this general rule admits of exceptions. When there is a showing that a palpable and demonstrable mistake that needs rectification has been committed34 or when the factual findings were arrived at arbitrarily or in disregard of the evidence on record, these findings may be examined by the courts.35 In the case at bench, the Court of Appeals found itself unable to completely sustain the findings of the NLRC thus, it was compelled to review the facts and evidence and not limit itself to the issue of grave abuse of discretion. With the conflicting findings of facts by the tribunals below now before us, it behooves this Court to make an independent evaluation of the facts in this case.

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Main Issue: Legality of Dismissal Culili asserted that he was illegally dismissed because there was no valid cause to terminate his employment. He claimed that ETPI failed to prove that his position had become redundant and that ETPI was indeed incurring losses. Culili further alleged that his functions as a Senior Technician could not be considered a superfluity because his tasks were crucial and critical to ETPIs business. Under our laws, an employee may be terminated for reasons involving measures taken by the employer due to business necessities. Article 283 of the Labor Code provides: Art. 283. Closure of establishment and reduction of personnel. - The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. There is redundancy when the service capability of the workforce is greater than what is reasonably required to meet the demands of the business enterprise. A position becomes redundant when it is rendered superfluous by any number of factors such as over-hiring of workers, decrease in volume of business, or dropping a particular product line or service activity previously manufactured or undertaken by the enterprise.36 This Court has been consistent in holding that the determination of whether or not an employees services are still needed or sustainable properly belongs to the employer. Provided there is no violation of law or a showing that the employer was prompted by an arbitrary or malicious act, the soundness or wisdom of this exercise of business judgment is not subject to the discretionary review of the Labor Arbiter and the NLRC.37 However, an employer cannot simply declare that it has become overmanned and dismiss its employees without producing adequate proof to sustain its claim of redundancy.38 Among the requisites of a valid redundancy program are: (1) the good faith of the employer in abolishing the redundant position; and (2) fair and reasonable criteria in ascertaining what positions are to be declared redundant,39 such as but not limited to: preferred status, efficiency, and seniority.40 This Court also held that the following evidence may be proffered to substantiate redundancy: the new staffing pattern, feasibility studies/ proposal on the viability of the newly created positions, job description and the approval by the management of the restructuring.41 In the case at bar, ETPI was upfront with its employees about its plan to implement a Right-Sizing Program. Even in the face of initial opposition from and rejection of the said program by ETEU, ETPI patiently negotiated with ETEUs officers to make them understand ETPIs business dilemma and its need to reduce its workforce and streamline its organization. This evidently rules out bad faith on the part of ETPI. In deciding which positions to retain and which to abolish, ETPI chose on the basis of efficiency, economy, versatility and flexibility. It needed to reduce its workforce to a sustainable level while maintaining functions necessary to keep it operating. The records show that ETPI had sufficiently established not only its need to reduce its workforce and streamline its organization, but also the existence of redundancy in the position of a Senior Technician. ETPI explained how it failed to meet its business targets and the factors that caused this, and how this necessitated it to reduce its workforce and streamline its organization. ETPI also submitted its old and new tables of organization and sufficiently described how limited the functions of the abolished position of a Senior Technician were and how it decided on whom to absorb these functions. In his affidavit dated April 10, 2000,42 Mr. Arnel D. Reyel, the Head of both the Business Services Department and the Finance Department of ETPI, described how ETPI went about in reorganizing its departments. Mr. Reyel said that in the course of ETPIs reorganization, new departments were created, some were transferred, and two were abolished. Among the departments abolished was the Service Quality Department. Mr. Reyel said that ETPI felt that the functions of the

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Service Quality Department, which catered to both corporate and small and medium-sized clients, overlapped and were too large for a single department, thus, the functions of this department were split and simplified into two smaller but more focused and efficient departments. In arriving at the decision to abolish the position of Senior Technician, Mr. Reyel explained: 11.3. Thus, in accordance with the reorganization of the different departments of ETPI, the Service Quality Department was abolished and its functions were absorbed by the Business and Consumer Accounts Department and the Corporate and Major Accounts Department. 11.4. With the abolition and resulting simplification of the Service Quality Department, one of the units thereunder, the Customer Premises Equipment Maintenance ("CPEM") unit was transferred to the Business and Consumer Accounts Department. Since the Business and Consumer Accounts Department had to remain economical and focused yet versatile enough to meet all the needs of its small and medium sized clients, it was decided that, in the judgment of ETPI management, the specialized functions of a Senior Technician in the CPEM unit whose sole function was essentially the repair and servicing of ETPIs telecommunications equipment was no longer needed since the Business and Consumer [Accounts] Department had to remain economical and focused yet versatile enough to meet all the multifarious needs of its small and medium sized clients. 11.5. The business reason for the abolition of the position of Senior Technician was because in ETPIs judgment, what was needed in the Business and Consumer Accounts Department was a versatile, yet economical position with functions which were not limited to the mere repair and servicing of telecommunications equipment. It was determined that what was called for was a position that could also perform varying functions such as the actual installation of telecommunications products for medium and small scale clients, handle telecommunications equipment inventory monitoring, evaluation of telecommunications equipment purchased and the preparation of reports on the daily and monthly activation of telecommunications equipment by these small and medium scale clients. 11.6. Thus, for the foregoing reasons, ETPI decided that the position of Senior Technician was to be abolished due to redundancy. The functions of a Senior Technician was to be abolished due to redundancy. The functions of a Senior Technician would then be absorbed by an employee assigned to the Business and Consumer Accounts Department who was already performing the functions of actual installation of telecommunications products in the field and handling telecommunications equipment inventory monitoring, evaluation of telecommunications equipment purchased and the preparation of reports on the daily and monthly activation of telecommunications equipment. This employee would then simply add to his many other functions the duty of repairing and servicing telecommunications equipment which had been previously performed by a Senior Technician.43 In the new table of organization that the management approved, one hundred twelve (112) employees were redeployed and nine (9) positions were declared redundant.44 It is inconceivable that ETPI would effect a company-wide reorganization of this scale for the mere purpose of singling out Culili and terminating him. If Culilis position were indeed indispensable to ETPI, then it would be absurd for ETPI, which was then trying to save its operations, to abolish that one position which it needed the most. Contrary to Culilis assertions that ETPI could not do away with his functions as long as it is in the telecommunications industry, ETPI did not abolish the functions performed by Culili as a Senior Technician. What ETPI did was to abolish the position itself for being too specialized and limited. The functions of that position were then added to another employee whose functions were broad enough to absorb the tasks of a Senior Technician. Culili maintains that ETPI had already decided to dismiss him even before the second phase of the Right-Sizing Program was implemented as evidenced by the December 7, 1998 letter. The December 7, 1998 termination letter signed by ETPIs AVP Stella Garcia hardly suffices to prove bad faith on the part of the company. The fact remains that the said letter was never officially transmitted and Culili was not terminated at the end of the first phase of ETPIs Right-Sizing Program. ETPI had given an adequate explanation for the existence of the letter and considering that it had been transparent with its employees, through their union ETEU, so much so that ETPI even gave ETEU this unofficial letter, there is no reason to speculate and attach malice to such act. That Culili would be subsequently terminated during the second phase of the Right-Sizing Program is not evidence of undue discrimination or "singling out" since not only Culilis position, but his entire unit was abolished and absorbed by another department. Unfair Labor Practice Culili also alleged that ETPI is guilty of unfair labor practice for violating Article 248(c) and (e) of the Labor Code, to wit:

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Art. 248. Unfair labor practices of employers. - It shall be unlawful for an employer to commit any of the following unfair labor practice: xxxx c. To contract out services or functions being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their rights to self-organization; xxxx e. To discriminate in regard to wages, hours of work, and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. Nothing in this Code or in any other law shall stop the parties from requiring membership in a recognized collective bargaining agent as a condition for employment, except those employees who are already members of another union at the time of the signing of the collective bargaining agreement. Employees of an appropriate collective bargaining unit who are not members of the recognized collective bargaining agent may be assessed a reasonable fee equivalent to the dues and other fees paid by members of the recognized collective bargaining agent, if such non-union members accept the benefits under the collective agreement: Provided, that the individual authorization required under Article 242, paragraph (o) of this Code shall not apply to the non-members of the recognized collective bargaining agent. Culili asserted that ETPI is guilty of unfair labor practice because his functions were sourced out to labor-only contractors and he was discriminated against when his co-employees were treated differently when they were each offered an additional motorcycle to induce them to avail of the Special Retirement Program. ETPI denied hiring outside contractors and averred that the motorcycles were not given to his co-employees but were purchased by them pursuant to their Collective Bargaining Agreement, which allowed a retiring employee to purchase the motorcycle he was assigned during his employment. The concept of unfair labor practice is provided in Article 247 of the Labor Code which states: Article 247. Concept of unfair labor practice and procedure for prosecution thereof. -- Unfair labor practices violate the constitutional right of workers and employees to self-organization, are inimical to the legitimate interest of both labor and management, including their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect, disrupt industrial peace and hinder the promotion of healthy and stable labor-management relations. In the past, we have ruled that "unfair labor practice refers to acts that violate the workers' right to organize. The prohibited acts are related to the workers' right to self-organization and to the observance of a CBA." 45 We have likewise declared that "there should be no dispute that all the prohibited acts constituting unfair labor practice in essence relate to the workers' right to self-organization."46 Thus, an employer may only be held liable for unfair labor practice if it can be shown that his acts affect in whatever manner the right of his employees to self-organize.47 There is no showing that ETPI, in implementing its Right-Sizing Program, was motivated by ill will, bad faith or malice, or that it was aimed at interfering with its employees right to self-organize. In fact, ETPI negotiated and consulted with ETEU before implementing its Right-Sizing Program. Both the Labor Arbiter and the NLRC found ETPI guilty of unfair labor practice because of its failure to dispute Culilis allegations. According to jurisprudence, "basic is the principle that good faith is presumed and he who alleges bad faith has the duty to prove the same."48 By imputing bad faith to the actuations of ETPI, Culili has the burden of proof to present substantial evidence to support the allegation of unfair labor practice. Culili failed to discharge this burden and his bare allegations deserve no credit. Observance of Procedural Due Process Although the Court finds Culilis dismissal was for a lawful cause and not an act of unfair labor practice, ETPI, however, was remiss in its duty to observe procedural due process in effecting the termination of Culili.

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We have previously held that "there are two aspects which characterize the concept of due process under the Labor Code: one is substantive whether the termination of employment was based on the provision of the Labor Code or in accordance with the prevailing jurisprudence; the other is procedural the manner in which the dismissal was effected."49 Section 2(d), Rule I, Book VI of the Rules Implementing the Labor Code provides: (d) In all cases of termination of employment, the following standards of due process shall be substantially observed: xxxx For termination of employment as defined in Article 283 of the Labor Code, the requirement of due process shall be deemed complied with upon service of a written notice to the employee and the appropriate Regional Office of the Department of Labor and Employment at least thirty days before effectivity of the termination, specifying the ground or grounds for termination. In Mayon Hotel & Restaurant v. Adana,50 we observed: The requirement of law mandating the giving of notices was intended not only to enable the employees to look for another employment and therefore ease the impact of the loss of their jobs and the corresponding income, but more importantly, to give the Department of Labor and Employment (DOLE) the opportunity to ascertain the verity of the alleged authorized cause of termination.51 ETPI does not deny its failure to provide DOLE with a written notice regarding Culilis termination. It, however, insists that it has complied with the requirement to serve a written notice to Culili as evidenced by his admission of having received it and forwarding it to his union president. In Serrano v. National Labor Relations Commission,52 we noted that "a job is more than the salary that it carries." There is a psychological effect or a stigma in immediately finding ones self laid off from work. 53 This is exactly why our labor laws have provided for mandating procedural due process clauses. Our laws, while recognizing the right of employers to terminate employees it cannot sustain, also recognize the employees right to be properly informed of the impending severance of his ties with the company he is working for. In the case at bar, ETPI, in effecting Culilis termination, simply asked one of its guards to serve the required written notice on Culili. Culili, on one hand, claims in his petition that this was handed to him by ETPIs vice president, but previously testified before the Labor Arbiter that this was left on his table.54 Regardless of how this notice was served on Culili, this Court believes that ETPI failed to properly notify Culili about his termination. Aside from the manner the written notice was served, a reading of that notice shows that ETPI failed to properly inform Culili of the grounds for his termination. The Court of Appeals, in finding that Culili was not afforded procedural due process, held that Culilis dismissal was ineffectual, and required ETPI to pay Culili full backwages in accordance with our decision in Serrano v. National Labor Relations Commission.55 Over the years, this Court has had the opportunity to reexamine the sanctions imposed upon employers who fail to comply with the procedural due process requirements in terminating its employees. In Agabon v. National Labor Relations Commission,56 this Court reverted back to the doctrine in Wenphil Corporation v. National Labor Relations Commission57 and held that where the dismissal is due to a just or authorized cause, but without observance of the due process requirements, the dismissal may be upheld but the employer must pay an indemnity to the employee. The sanctions to be imposed however, must be stiffer than those imposed in Wenphil to achieve a result fair to both the employers and the employees.58 In Jaka Food Processing Corporation v. Pacot,59 this Court, taking a cue from Agabon, held that since there is a clear-cut distinction between a dismissal due to a just cause and a dismissal due to an authorized cause, the legal implications for employers who fail to comply with the notice requirements must also be treated differently: Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause under Article 282 but the employer failed to comply with the notice requirement, the sanction to be imposed upon him should be tempered because the dismissal process was, in effect, initiated by an act imputable to the employee; and (2) if the dismissal is based on an authorized cause under Article 283 but the employer failed to comply with the notice requirement, the sanction should be stiffer because the dismissal process was initiated by the employer's exercise of his management prerogative.60

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Hence, since it has been established that Culilis termination was due to an authorized cause and cannot be considered unfair labor practice on the part of ETPI, his dismissal is valid. However, in view of ETPIs failure to comply with the notice requirements under the Labor Code, Culili is entitled to nominal damages in addition to his separation pay.
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Personal Liability of ETPIs Officers And Award of Damages Culili asserts that the individual respondents, Salvador Hizon, Emiliano Jurado, Virgilio Garcia, and Stella Garcia, as ETPIs officers, should be held personally liable for the acts of ETPI which were tainted with bad faith and arbitrariness. Furthermore, Culili insists that he is entitled to damages because of the sufferings he had to endure and the malicious manner he was terminated. As a general rule, a corporate officer cannot be held liable for acts done in his official capacity because a corporation, by legal fiction, has a personality separate and distinct from its officers, stockholders, and members. To pierce this fictional veil, it must be shown that the corporate personality was used to perpetuate fraud or an illegal act, or to evade an existing obligation, or to confuse a legitimate issue. In illegal dismissal cases, corporate officers may be held solidarily liable with the corporation if the termination was done with malice or bad faith. 61 In illegal dismissal cases, moral damages are awarded only where the dismissal was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy.62 Exemplary damages may avail if the dismissal was effected in a wanton, oppressive or malevolent manner to warrant an award for exemplary damages.63 It is our considered view that Culili has failed to prove that his dismissal was orchestrated by the individual respondents herein for the mere purpose of getting rid of him. In fact, most of them have not even dealt with Culili personally. Moreover, it has been established that his termination was for an authorized cause, and that there was no bad faith on the part of ETPI in implementing its Right-Sizing Program, which involved abolishing certain positions and departments for redundancy. It is not enough that ETPI failed to comply with the due process requirements to warrant an award of damages, there being no showing that the companys and its officers acts were attended with bad faith or were done oppressively. WHEREFORE, the instant petition is DENIED and the assailed February 5, 2004 Decision and September 13, 2004 Resolution of the Court of Appeals in CA-G.R. SP No. 75001 are AFFIRMED with the MODIFICATION that petitioner Nelson A. Culilis dismissal is declared valid but respondent Eastern Telecommunications Philippines, Inc. is ordered to pay petitioner Nelson A. Culili the amount of Fifty Thousand Pesos (P50,000.00) representing nominal damages for noncompliance with statutory due process, in addition to the mandatory separation pay required under Article 283 of the Labor Code. SO ORDERED.
TERESITA J. LEONARDO-DE CASTRO Associate Justice 9. Retrenchment PLASTIMER INDUSTRIAL CORPORATION and TEO KEE BIN vs. NATALIA C. GOPO, KLEENIA R. VELEZ, FILEDELFA T. AMPARADO, MIGNON H. JOSEPH, AMELIA L. CANDA, MARISSA D. LABUNOS, MELANIE T. CAYABYAB, MA. CORAZON DELA CRUZ, and LUZVIMINDA CABASA, G.R. No. 183390, February 16, 2011, 643 s 502 DECISION CARPIO, J.:

The Case Before the Court is a petition for review1 assailing the 13 August 2007 Decision2 and 5 June 2008 Resolution3 of the Court of Appeals in CA-G.R. SP No. 97271. The Antecedent Facts On 7 May 2004, the Personnel and Administration Manager of Plastimer Industrial Corporation (Plastimer) issued a Memorandum informing all its employees of the decision of the Board of Directors to downsize and reorganize its business operations due to withdrawal of investments and shares of stocks which resulted in the change of its corporate structure. On 14 May 2004, the employees of Plastimer, including Natalia C. Gopo, Kleenia R. Velez, Filedelfa T.

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Amparado, Mignon H. Joseph, Amelia L. Canda, Marissa D. Labunos, Melanie T. Cayabyab, Ma. Corazon dela Cruz and Luzviminda Cabasa (respondents) were served written notices of their termination effective 13 June 2004. On 24 May 2004, Plastimer and Plastimer Industrial Corporation Christian Brotherhood (PICCB), the incumbent sole and exclusive collective bargaining representative of all rank and file employees, entered into a Memorandum of Agreement (MOA) relative to the terms and conditions that would govern the retrenchment of the affected employees. On 26 May 2004, Plastimer submitted to the Department of Labor and Employment (DOLE) an Establishment Termination Report containing the list of the employees affected by the reorganization and downsizing. On 28 May 2004, the affected employees, including respondents, signed individual "Release Waiver and Quitclaim." Thereafter, respondents filed a complaint against Plastimer and its President Teo Kee Bin (petitioners) before the Labor Arbiter for illegal dismissal with prayer for reinstatement and full backwages, underpayment of separation pay, moral and exemplary damages and attorneys fees. Respondents alleged that they did not voluntarily relinquish their jobs and that they were required to sign the waivers and quitclaims without giving them an opportunity to read them and without explaining their contents. Respondents further alleged that Plastimer failed to establish the causes/valid reasons for the retrenchment and to comply with the one-month notice to the DOLE as well as the standard prescribed under the Collective Bargaining Agreement between Plastimer and the employees. Petitioners countered that the retrenchment was a management prerogative and that respondents got their retrenchment or separation pay even before the effective date of their separation from service. The Decisions of the Labor Arbiter and the NLRC In its 22 August 2005 Decision,4 the Labor Arbiter ruled that petitioners were able to prove that there was a substantial withdrawal of stocks that led to the downsizing of the workforce. The Labor Arbiter ruled that notice to the affected employees were given on 14 May 2004, 30 days before its effective date on 14 June 2004. It was only the notice to the DOLE that was filed short of the 30-day period. The Labor Arbiter further ruled that respondents claimed their separation pay in accordance with the MOA. The Labor Arbiter further ruled that respondents could not claim ignorance of the contents of the waivers and quitclaims because they were assisted by the union President and their counsel in signing them. Respondents appealed the Labor Arbiters decision before the National Labor Relations Commission (NLRC). In its 29 December 2005 Resolution,5 the NLRC affirmed the Labor Arbiters decision. The NLRC noted that respondents did not signify any protest to the MOA entered into between Plastimer and PICCB. The NLRC held that there was no proof that respondents were intimidated or coerced into signing the waivers and quitclaims because they were assisted by the union President and their counsel. The NLRC ruled that the filing of the complaint was just an afterthought on the part of respondents. Respondents filed a motion for reconsideration. In its 25 October 2006 Resolution,6 the NLRC denied the motion. Respondents filed a petition for certiorari before the Court of Appeals. The Decision of the Court of Appeals In its 13 August 2007 Decision, the Court of Appeals reversed the NLRC decision. The Court of Appeals ruled that there was no valid cause for retrenchment. The Court of Appeals noted that the change of management and majority stock ownership was brought about by execution of deeds of assignment by several stockholders in favor of other stockholders. Further, the Court of Appeals noted that while Plastimer claimed financial losses from 2001 to 2004, records showed an improvement of its finances in 2003. The Court of Appeals further ruled that Plastimer failed to use a reasonable and fair standard or criteria in ascertaining who would be dismissed and who would be retained among its employees. The Court of Appeals ruled that the MOA between Plastimer and PICCB only recognized the need for partial retrenchment and the computation of retrenchment pay without disclosing the criteria in the selection of the employees to be retrenched. Finally, the Court of Appeals ruled that the union President and the PICCBs counsel were not present when the retrenched employees were made to sign the waivers and quitclaims.

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The dispositive portion of the Court of Appeals decision reads: WHEREFORE, the instant petition is GRANTED. The assailed Resolutions of the NLRC in NLRC-NCR CA No. 046013-05 are hereby REVERSED AND SET ASIDE and a new judgment is entered finding petitioners to have been illegally dismissed. Plastimer Industrial Corporation is hereby ordered to reinstate petitioners to their former positions, without loss of seniority rights and other privileges, and to pay them their backwages from June 14, 2004 up to the time of actual reinstatement less the amounts they respectively received as separation pay. SO ORDERED.7 Petitioners filed a motion for reconsideration. In its 5 June 2008 Resolution, the Court of Appeals denied the motion. Hence, the petition before this Court. The Issue The only issue in this case is whether respondents were illegally retrenched by petitioners. The Ruling of this Court The petition has merit. Petitioners assail the Court of Appeals in substituting its own findings of facts to the findings of the Labor Arbiter and the NLRC. Petitioners argue that the findings of fact of the Labor Arbiter and the NLRC are accorded with respect if not finality. Petitioners allege that the Court of Appeals did not find any arbitrariness or grave abuse of discretion on the part of the NLRC and thus, it had no basis in reversing the NLRC resolutions which affirmed the Labor Arbiters decision. In a special civil action for certiorari, the Court of Appeals has ample authority to make its own factual determination.8 Thus, the Court of Appeals can grant a petition for certiorari when it finds that the NLRC committed grave abuse of discretion by disregarding evidence material to the controversy.9 To make this finding, the Court of Appeals necessarily has to look at the evidence and make its own factual determination. 10 In the same manner, this Court is not precluded from reviewing the factual issues when there are conflicting findings by the Labor Arbiter, the NLRC and the Court of Appeals.11 In this case, we find that the findings of the Labor Arbiter and the NLRC are more in accord with the evidence on record. One-Month Notice of Termination of Employment Article 283 of the Labor Code provides: ART. 283. Closure of establishment and reduction of personnel. - The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or to at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. In this case, Plastimer submitted the notice of termination of employment to the DOLE on 26 May 2004. However, notice to the affected employees were given to them on 14 May 2004 or 30 days before the effectivity of their termination from employment on 13 June 2004. While notice to the DOLE was short of the one-month notice requirement, the affected employees were sufficiently informed of their retrenchment 30 days before its effectivity. Petitioners failure to comply with the one-month notice to the DOLE is only a procedural infirmity and does not render the retrenchment illegal. In Agabon v.

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NLRC,12 we ruled that when the dismissal is for a just cause, the absence of proper notice should not nullify the dismissal or render it illegal or ineffectual. Instead, the employer should indemnify the employee for the violation of his statutory rights.13 Here, the failure to fully comply with the one-month notice of termination of employment did not render the retrenchment illegal but it entitles respondents to nominal damages. Validity of Retrenchment The Court of Appeals ruled that there was no valid cause for retrenchment. The Court of Appeals noted that while Plastimer claimed financial losses from 2001 to 2004, records showed an improvement of its finances in 2003.
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We do not agree. The Court of Appeals acknowledged that an independent auditor confirmed petitioners losses for the years 2001 and 2002.14 The fact that there was a net income in 2003 does not justify the Court of Appeals ruling that there was no valid reason for the retrenchment. Records showed that the net income of P6,185,707.05 for 2003 was not even enough for petitioners to recover from the P52,904,297.88 loss in 2002.15 Article 283 of the Labor Code recognizes retrenchment to prevent losses as a right of the management to meet clear and continuing economic threats or during periods of economic recession to prevent losses.16 There is no need for the employer to wait for substantial losses to materialize before exercising ultimate and drastic option to prevent such losses.17 Validity of Waivers and Quitclaims The Court has ruled that a waiver or quitclaim is a valid and binding agreement between the parties, provided that it constitutes a credible and reasonable settlement, and that the one accomplishing it has done so voluntarily and with a full understanding of its import.18 We agree with the Labor Arbiter and the NLRC that respondents were sufficiently apprised of their rights under the waivers and quitclaims that they signed. Each document contained the signatures of Edward Marcaida (Marcaida), PICCB President, and Atty. Bayani Diwa, the counsel for the union, which proved that respondents were duly assisted when they signed the waivers and quitclaims. Further, Marcaidas letter to Teo Kee Bin, dated 28 May 2004, proved that proper assistance was extended upon respondents, thus: Nais po naming iparating sa inyo na ginagampanan ng pamamahala ng unyon ang kanilang tungkulin lalo na sa pag "assist" ng mga miyembrong kasali sa retrenchment program at tumanggap ng kanilang separation pay sa ilalim ng napagkasunduang "Memorandum of Agreement." Naipaliwanag po sa bawat miyembro ang epekto ng kanilang pagtanggap ng kanilang mga separation pay. Wala kaming natanggap na masamang reaksiyon nang sila ay aming makausap at kanilang naiintindihan ang sitwasyon ng kumpanya.19 Hence, we rule that the waivers and quitclaims that respondents signed were valid. WHEREFORE, we SET ASIDE the 13 August 2007 Decision and 5 June 2008 Resolution of the Court of Appeals in CAG.R. SP No. 97271. We REINSTATE the 22 August 2005 Decision of the Labor Arbiter and the 29 December 2005 Resolution of the NLRC upholding the validity of respondents retrenchment with MODIFICATION that petitioners pay each of the respondents the amount of P30,000 as nominal damages for non-compliance with statutory due process. SO ORDERED.
ANTONIO T. CARPIO Associate Justice 10. Corporate officer, solidary liability - HARPOON MARINE SERVICES, Inc. and JOSE LIDO T. ROSIT vs. FERNAN H. FRANCISCO, G.R. No. 167751, March 2, 2011 DECISION DEL CASTILLO, J.:

Satisfactory evidence of a valid or just cause of dismissal is indispensably required in order to protect a laborers right to security of tenure. In the case before us, the employer presented none despite the burden to prove clearly its cause.

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This Petition for Review on Certiorari with Prayer for the Issuance of a Temporary Restraining Order and/or a Writ of Preliminary Injunction1 assails the Decision2 dated January 26, 2005 and Resolution3 dated April 12, 2005 of the Court of Appeals (CA) in CA-G.R. SP No. 79630, which affirmed the Decision4 of the National Labor Relations Commission (NLRC) dated March 31, 2003, as well as the NLRC modified Decision5 dated June 30, 2003, declaring petitioners Harpoon Marine Services, Incorporated (Harpoon) and Jose Lido T. Rosit (Rosit) solidarily liable to pay respondent Fernan H. Francisco (respondent) separation pay, backwages and unpaid commissions for illegally dismissing him. Factual Antecedents Petitioner Harpoon, a company engaged in ship building and ship repair, with petitioner Rosit as its President and Chief Executive Officer (CEO), originally hired respondent in 1992 as its Yard Supervisor tasked to oversee and supervise all projects of the company. In 1998, respondent left for employment elsewhere but was rehired by petitioner Harpoon and assumed his previous position a year after. On June 15, 2001, respondent averred that he was unceremoniously dismissed by petitioner Rosit. He was informed that the company could no longer afford his salary and that he would be paid his separation pay and accrued commissions. Respondent nonetheless continued to report for work. A few days later, however, he was barred from entering the company premises. Relying on the promise of petitioner Rosit, respondent went to the office on June 30, 2001 to receive his separation pay and commissions, but petitioner Rosit offered only his separation pay. Respondent refused to accept it and also declined to sign a quitclaim. After several unheeded requests, respondent, through his counsel, sent a demand letter dated September 24, 20016 to petitioners asking for payment of P70,000.00, which represents his commissions for the seven boats7 constructed and repaired by the company under his supervision. In a letter-reply dated September 28, 2001,8 petitioners denied that it owed respondent any commission, asserting that they never entered into any contract or agreement for the payment of commissions. Hence, on October 24, 2001, respondent filed an illegal dismissal complaint praying for the payment of his backwages, separation pay, unpaid commissions, moral and exemplary damages and attorneys fees. Petitioners presented a different version of the events and refuted the allegations of respondent. They explained that petitioner Rosit indeed talked to respondent on June 15, 2001 not to dismiss him but only to remind and warn him of his excessive absences and tardiness, as evinced by his Time Card covering the period June 1-15, 2001.9Instead of improving his work behavior, respondent continued to absent himself and sought employment with another company engaged in the same line of business, thus, creating serious damage in the form of unfinished projects. Petitioners denied having terminated respondent as the latter voluntarily abandoned his work after going on Absence Without Official Leave (AWOL) beginning June 22, 2001. Petitioners contended that when respondents absences persisted, several memoranda10 informing him of his absences were sent to him by ordinary mail and were duly filed with the Department of Labor and Employment (DOLE) on August 13, 2001. Upon respondents continuous and deliberate failure to respond to these memoranda, a Notice of Termination dated July 30, 200111 was later on issued to him. Respondent, however, denied his alleged tardiness and excessive absences. He claimed that the three-day absence appearing on his time card cannot be considered as habitual absenteeism. He claimed that he incurred those absences because petitioner Rosit, who was hospitalized at those times, ordered them not to report for work until he is discharged from the hospital. In fact, a co-worker, Nestor Solares (Solares), attested that respondent always goes to work and continued to report until June 20, 2001.12 Respondent further denied having received the memoranda that were allegedly mailed to him, asserting that said documents were merely fabricated to cover up and justify petitioners act of illegally terminating him on June 15, 2001. Respondent absolved himself of fault for defective works, justifying that he was illegally terminated even before the company projects were completed. Finally, respondent denied petitioners asseveration that he abandoned his job without any formal notice in 1998 as he wrote a resignation letter which petitioners received. As regards the commissions claimed, respondent insisted that in addition to his fixed monthly salary ofP18,200.00, he was paid a commission of P10,000.00 for every ship repaired or constructed by the company. As proof, he presented two check vouchers13 issued by the company showing payment thereof. Petitioners, on the other hand, contended that respondent was hired as a regular employee with a fixed salary and not as an employee paid on commission basis. The act of giving additional monetary benefit once in a while to employees was a form of recognizing employees efforts and cannot in any way be interpreted as commissions. Petitioners then clarified that the word "commission" as appearing in the check vouchers refer to "additional money" that employees receive as differentiated from the usual "vale" and is written for accounting and auditing purposes only.

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Ruling of the Labor Arbiter On May 17, 2002, the Labor Arbiter rendered a Decision14 holding that respondent was validly dismissed due to his unjustified absences and tardiness and that due process was observed when he was duly served with several memoranda relative to the cause of his dismissal. The Labor Arbiter also found respondent entitled to the payment of commissions by giving credence to the check vouchers presented by respondent as well as attorneys fees for withholding the payment of commissions pursuant to Article 111 of the Labor Code. The dispositive portion of the Labor Arbiters Decision reads: WHEREFORE, premises considered, judgment is hereby rendered finding the dismissal of complainant Fernan H. Francisco legal; ordering respondents Harpoon Marine Services Inc., and Jose Lido T. Rosit, to pay complainant his commission in the sum of PHP70,000.00; as well as attorneys fees of ten percent (10%) thereof; and dismissing all other claims for lack of merit. SO ORDERED.15 Proceedings before the National Labor Relations Commission Both parties appealed to the NLRC. Petitioners alleged that the Labor Arbiter erred in ruling that respondent is entitled to the payment of commissions and attorneys fees. They questioned the authenticity of the check vouchers for being photocopies bearing only initials of a person who remained unidentified. Also, according to petitioners, the vouchers did not prove that commissions were given regularly as to warrant respondents entitlement thereto.16 Respondent, on the other hand, maintained that his dismissal was illegal because there is no sufficient evidence on record of his alleged gross absenteeism and tardiness. He likewise imputed bad faith on the part of petitioners for concocting the memoranda for the purpose of providing a semblance of compliance with due process requirements.17 In its Decision dated March 31, 2003,18 the NLRC affirmed the Labor Arbiters award of commissions in favor of respondent for failure of petitioners to refute the validity of his claim. The NLRC, however, deleted the award of attorneys fees for lack of evidence showing petitioners bad faith in terminating respondent. As the NLRC only resolved petitioners appeal, respondent moved before the NLRC to resolve his appeal of the Labor Arbiters Decision.19 For their part, petitioners filed a Verified Motion for Reconsideration20 reiterating that there was patent error in admitting, as valid evidence, photocopies of the check vouchers without substantial proof that they are genuine copies of the originals. The NLRC, in its Decision dated June 30, 2003,21 modified its previous ruling and held that respondents dismissal was illegal. According to the NLRC, the only evidence presented by the petitioners to prove respondents habitual absenteeism and tardiness is his time card for the period covering June 1-15, 2001. However, said time card reveals that respondent incurred only three absences for the said period, which cannot be considered as gross and habitual. With regard to the award of commissions, the NLRC affirmed the Labor Arbiter because of petitioners failure to question the authenticity of the check vouchers in the first instance before the Labor Arbiter. It, nevertheless, sustained the deletion of the award of attorneys fees in the absence of proof that petitioners acted in bad faith. Thus, for being illegally dismissed, the NLRC granted respondent backwages and separation pay in addition to the commissions, as contained in the dispositive portion of its Decision, as follows: WHEREFORE, the decision dated 31 March 2003 is further MODIFIED. Respondents are found to have illegally dismissed complainant Fernan H. Francisco and are ordered to pay him the following: 1. Backwages = P218,066.33 (15 June 2001 17 May 2002) a) Salary P18,200.00 x 11.06 months = P201,292.00

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b) 13th month pay: P201,292.00/12 = 16,774.33 ---------------2. Separation Pay of one month salary for every year of service (October 1999 17 May 2002) P18,200.00 x 3 yrs. = 54,600.00 3. Commission = 70,000.00 TOTAL P342,666.33 The Motion for Reconsideration filed by complainant and respondents are hereby DISMISSED for lack of merit. SO ORDERED.22 Ruling of the Court of Appeals Petitioners filed a petition for certiorari23 with the CA, which on January 26, 2005, affirmed the findings and conclusions of the NLRC. The CA agreed with the NLRC in not giving any probative weight to the memoranda since there is no proof that the same were sent to respondent. It also upheld respondents right to the payment of commissions on the basis of the check vouchers and declared petitioners solidarily liable for respondents backwages, separation pay and accrued commissions. Petitioners moved for reconsideration which was denied by the CA. Hence, this petition. Issues WHETHER The Court of Appeals committed error in rendering its Decision and its Resolution dismissing and denying the Petition for Certiorari a quo when it failed to rectify and correct the findings and conclusions of the NLRC (and of the Labor Arbiter a quo), which were arrived at with grave abuse of discretion amounting to lack or excess of jurisdiction. In particular: I WHETHER THE COURT OF APPEALS ERRED WHEN IT FAILED TO REVERSE THE FINDINGS OF THE NLRC AND OF THE LABOR ARBITER A QUO BECAUSE THESE FINDINGS ARE NOT SUPPORTED BY SUBSTANTIAL EVIDENCE[;] ARE CONFLICTING AND CONTRADICTORY; GROUNDED UPON SPECULATION, CONJECTURES, AND ASSUMPTIONS; [AND] ARE MERE CONCLUSIONS FOUNDED UPON A MISAPPREHENSION OF FACTS, AMONG OTHERS. II WHETHER THE COURT OF APPEALS ERRED WHEN IT RULED THAT THERE WAS AN ILLEGAL DISMISSAL IN THE SEPARATION FROM EMPLOYMENT OF FERNAN H. FRANCISCO NOTWITHSTANDING THE FACT THAT HE WAS HABITUALLY ABSENT, SUBSEQUENTLY WENT ON AWOL, AND HAD ABANDONED HIS WORK AND CORRELATIVELY, WHETHER HE IS ENTITLED TO BACKWAGES AND SEPARATION PAY. III

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WHETHER THE COURT OF APPEALS ERRED WHEN IT RULED THAT FERNAN H. FRANCISCO IS ENTITLED TO COMMISSIONS IN THE AMOUNT OF P70,000 EVEN THOUGH NO SUBSTANTIAL EVIDENCE WAS SHOWN TO SUPPORT THE CLAIM. IV WHETHER THE COURT OF APPEALS ERRED WHEN IT RULED THAT THERE WAS BAD FAITH ON THE PART OF PETITIONER ROSIT EVEN THOUGH NO SUBSTANTIAL EVIDENCE WAS PRESENTED TO PROVE THIS AND CORRELATIVELY, WHETHER PETITIONER ROSIT CAN BE HELD SOLIDARILY LIABLE WITH PETITIONER HARPOON.24 Petitioners submit that there was no basis for the CA to rule that respondent was illegally dismissed since more than sufficient proof was adduced to show his habitual absenteeism and abandonment of work as when he further incurred additional absences after June 15, 2001 and subsequently went on AWOL; when he completely ignored all the notices/memoranda sent to him; when he never demanded for reinstatement in his September 24, 2001 demand letter, complaint and position paper before the Labor Arbiter; when it took him four months before filing an illegal dismissal complaint; and when he was later found to have been working for another company. Petitioners also question the veracity of the documents presented by respondent to prove his entitlement to commissions, to wit: the two check vouchers25 and the purported list26 of vessels allegedly constructed and repaired by the company. Petitioners insist that the check vouchers neither prove that commissions were paid on account of a repair or construction of a vessel nor were admissible to prove that a regular commission is given for every vessel that is constructed/repaired by the company under respondents supervision. The list of the vessels, on the other hand, cannot be used as basis in arriving at the amount of commissions due because it is self-serving, unsigned, unverified and merely enumerates a list of names of vessels which does not prove anything. Therefore, the award of commissions was based on unsupported assertions of respondent. Petitioners also insist that petitioner Rosit, being an officer of the company, has a personality distinct from that of petitioner Harpoon and that no proof was adduced to show that he acted with malice or bad faith hence no liability, solidary or otherwise, should be imposed on him. Our Ruling The petition is partly meritorious. Respondent was illegally dismissed for failure of petitioners to prove the existence of a just cause for his dismissal. Petitioners reiterate that respondent was a habitual absentee as indubitably shown by his time card for the period covering June 1-15, 2001,27 payroll28 for the same period as well as the memoranda29 enumerating his absences subsequent to June 15, 2001. Respondent belies these claims and explained that his absence for three days as reflected in the time card was due to petitioner Rosits prohibition for them to report for work owing to the latters hospitalization. He claims that he was illegally terminated on June 15, 2001 and was subsequently prevented from entering company premises. In defense, petitioners deny terminating respondent on June 15, 2001, maintaining that petitioner Rosit merely reminded him of his numerous absences. However, in defiance of the companys order, respondent continued to absent himself, went on AWOL and abandoned his work. We find no merit in petitioners contention that respondent incurred unexplained and habitual absences and tardiness. A scrutiny of the time card and payroll discloses that respondent incurred only three days of absence and no record of tardiness. As aptly held by the NLRC, the time card and payroll presented by petitioners do not show gross and habitual absenteeism and tardiness especially since respondents explanation of his three-day absence was not denied by petitioners at the first instance before the Labor Arbiter. No other evidence was presented to show the alleged absences and tardiness. On the other hand, Solares, a co-worker of respondent has stated under oath that, as their supervisor, respondent was diligent in reporting for work until June 20, 2001 when they heard the news concerning respondents termination from his job.

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Likewise, we are not persuaded with petitioners claim that respondent incurred additional absences, went on AWOL and abandoned his work. It is worthy to note at this point that petitioners never denied having offered respondent his separation pay. In fact, in their letter-reply dated September 28, 2001,30 petitioners intimated that respondent may pick up the amount of P27,584.37 any time he wants, which amount represents his separation and 13th month pays. Oddly, petitioners deemed it fit to give respondent his separation pay despite their assertion that there is just cause for his dismissal on the ground of habitual absences. This inconsistent stand of petitioners bolsters the fact that they wanted to terminate respondent, thus giving more credence to respondents protestation that he was barred and prevented from reporting for work. Jurisprudence provides for two essential requirements for abandonment of work to exist. The "failure to report for work or absence without valid or justifiable reason" and "clear intention to sever the employer-employee relationship x x x manifested by some overt acts" should both concur.31 Further, the employees deliberate and unjustified refusal to resume his employment without any intention of returning should be established and proven by the employer.32 Petitioners failed to prove that it was respondent who voluntarily refused to report back for work by his defiance and refusal to accept the memoranda and the notices of absences sent to him. The CA correctly ruled that petitioners failed to present evidence that they sent these notices to respondents last known address for the purpose of warning him that his continued failure to report would be construed as abandonment of work. The affidavit of petitioner Harpoons liaison officer that the memoranda/notices were duly sent to respondent is insufficient and self-serving. Despite being stamped as received, the memoranda do not bear any signature of respondent to indicate that he actually received the same. There was no proof on how these notices were given to respondent. Neither was there any other cogent evidence that these were properly received by respondent. The fact that respondent never prayed for reinstatement and has sought employment in another company which is a competitor of petitioner Harpoon cannot be construed as his overt acts of abandoning employment. Neither can the delay of four months be taken as an indication that the respondents filing of a complaint for illegal dismissal is a mere afterthought. Records show that respondent first attempted to get his separation pay and alleged commissions from the company. It was only after his requests went unheeded that he resorted to judicial recourse. In fine, both the NLRC and the CA did not commit manifest error in finding that there was illegal dismissal. The award of backwages and separation pay in favor of respondent is therefore proper. Respondent is not entitled to the payment of commissions since the check vouchers and purported list of vessels show vagueness as to sufficiently prove the claim. The Labor Arbiter, the NLRC and the CA unanimously held that respondent is entitled to his accrued commissions in the amount of P10,000.00 for every vessel repaired/constructed by the company or the total amount ofP70,000.00 for the seven vessels repaired/constructed under his supervision.
lawphi1

The Court, however, is inclined to rule otherwise. Examination of the check vouchers presented by respondent reveals that an amount of P30,000.00 and P10,000.00 alleged as commissions were paid to respondent on June 9, 2000 and September 28, 2000, respectively. Although the veracity and genuineness of these documents were not effectively disputed by petitioners, nothing in them provides that commissions were paid to respondent on account of a repair or construction of a vessel. It cannot also be deduced from said documents for what or for how many vessels the amounts stated therein are for. In other words, the check vouchers contain very scant details and can hardly be considered as sufficient and substantial evidence to conclude that respondent is entitled to a commission of P10,000.00 for every vessel repaired or constructed by the company. At most, these vouchers only showed that respondent was paid on two occasions but were silent as to the specific purpose of payment. The list of vessels supposedly repaired/constructed by the company neither validates respondents monetary claim as it merely contains an enumeration of 17 names of vessels and nothing more. No particulars, notation or any clear indication can be found on the list that the repair or complete construction of seven of the seventeen boats listed therein was supervised or managed by respondent. Worse, the list is written only on a piece of paper and not on petitioners official stationery and is unverified and unsigned. Verily, its patent vagueness makes it unworthy of any credence to be used as basis for awarding respondent compensations as alleged commissions. Aside from these documents, no other competent evidence was presented by respondent to determine the value of what is properly due him, much less his entitlement to a commission. Respondents claim cannot be based on allegations and unsubstantiated assertions without any competent document to support it. Certainly, the award of commissions in favor of respondent in the amount of P70,000.00 should not be allowed as the claim is founded on mere inferences, speculations and presumptions.

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Rosit could not be held solidarily liable with Harpoon for lack of substantial evidence of bad faith and malice on his part in terminating respondent. Although we find no error on the part of the NLRC and the CA in declaring the dismissal of respondent illegal, we, however, are not in accord with the ruling that petitioner Rosit should be held solidarily liable with petitioner Harpoon for the payment of respondents backwages and separation pay. As held in the case of MAM Realty Development Corporation v. National Labor Relations Commission,33"obligations incurred by [corporate officers], acting as such corporate agents, are not theirs but the direct accountabilities of the corporation they represent."34 As such, they should not be generally held jointly and solidarily liable with the corporation. The Court, however, cited circumstances when solidary liabilities may be imposed, as exceptions: 1. When directors and trustees or, in appropriate cases, the officers of a corporation (a) vote for or assent to [patently] unlawful acts of the corporation; (b) act in bad faith or with gross negligence in directing the corporate affairs; (c) are guilty of conflict of interest to the prejudice of the corporation, its stockholders or members, and other persons. 2. When the director or officer has consented to the issuance of watered stock or who, having knowledge thereof, did not forthwith file with the corporate secretary his written objection thereto. 3. When a director, trustee or officer has contractually agreed or stipulated to hold himself personally and solidarily liable with the corporation. 4. When a director, trustee or officer is made, by specific provision of law, personally liable for his corporate action.35 The general rule is grounded on the theory that a corporation has a legal personality separate and distinct from the persons comprising it.36 To warrant the piercing of the veil of corporate fiction, the officers bad faith or wrongdoing "must be established clearly and convincingly" as "[b]ad faith is never presumed."37 In the case at bench, the CAs basis for petitioner Rosits liability was that he acted in bad faith when he approached respondent and told him that the company could no longer afford his salary and that he will be paid instead his separation pay and accrued commissions. This finding, however, could not substantially justify the holding of any personal liability against petitioner Rosit. The records are bereft of any other satisfactory evidence that petitioner Rosit acted in bad faith with gross or inexcusable negligence, or that he acted outside the scope of his authority as company president. Indeed, petitioner Rosit informed respondent that the company wishes to terminate his services since it could no longer afford his salary. Moreover, the promise of separation pay, according to petitioners, was out of goodwill and magnanimity. At the most, petitioner Rosits actuations only show the illegality of the manner of effecting respondents termination from service due to absence of just or valid cause and non-observance of procedural due process but do not point to any malice or bad faith on his part. Besides, good faith is still presumed. In addition, liability only attaches if the officer has assented to patently unlawful acts of the corporation. Thus, it was error for the CA to hold petitioner Rosit solidarily liable with petitioner Harpoon for illegally dismissing respondent. WHEREFORE, the petition is PARTLY GRANTED. The Decision dated January 26, 2005 and Resolution dated April 12, 2005 of the Court of Appeals in CA-G.R. SP No. 79630 finding respondent Fernan H. Francisco to have been illegally dismissed and awarding him backwages and separation pay are AFFIRMED. The award of commissions in his favor is, however, DELETED. Petitioner Jose Lido T. Rosit is ABSOLVED from the liability adjudged against co-petitioner Harpoon Marine Services, Incorporated. SO ORDERED.

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MARIANO C. DEL CASTILLO Associate Justice 11. Labor organization/collateral attack/supervisory employees - SAMAHANG MANGGAGAWA SA CHARTER CHEMICAL SOLIDARITY OF UNIONS IN THE PHILIPPINES FOR EMPOWERMENT AND REFORMS (SMCC-SUPER), ZACARRIAS JERRY VICTORIO-Union President vs. CHARTER CHEMICAL and COATING CORPORATION, G.R. No. 169717, March 16, 2011, 645 s DECISION DEL CASTILLO, J.:

The right to file a petition for certification election is accorded to a labor organization provided that it complies with the requirements of law for proper registration. The inclusion of supervisory employees in a labor organization seeking to represent the bargaining unit of rank-and-file employees does not divest it of its status as a legitimate labor organization. We apply these principles to this case. This Petition for Review on Certiorari seeks to reverse and set aside the Court of Appeals March 15, 2005 Decision1 in CA-G.R. SP No. 58203, which annulled and set aside the January 13, 2000 Decision 2 of the Department of Labor and Employment (DOLE) in OS-A-6-53-99 (NCR-OD-M-9902-019) and the September 16, 2005 Resolution3 denying petitioner unions motion for reconsideration. Factual Antecedents On February 19, 1999, Samahang Manggagawa sa Charter Chemical Solidarity of Unions in the Philippines for Empowerment and Reforms (petitioner union) filed a petition for certification election among the regular rank-and-file employees of Charter Chemical and Coating Corporation (respondent company) with the Mediation Arbitration Unit of the DOLE, National Capital Region. On April 14, 1999, respondent company filed an Answer with Motion to Dismiss4 on the ground that petitioner union is not a legitimate labor organization because of (1) failure to comply with the documentation requirements set by law, and (2) the inclusion of supervisory employees within petitioner union.5 Med-Arbiters Ruling On April 30, 1999, Med-Arbiter Tomas F. Falconitin issued a Decision 6 dismissing the petition for certification election. The Med-Arbiter ruled that petitioner union is not a legitimate labor organization because the Charter Certificate, "Samasamang Pahayag ng Pagsapi at Authorization," and "Listahan ng mga Dumalo sa Pangkalahatang Pulong at mga Sumang-ayon at Nagratipika sa Saligang Batas" were not executed under oath and certified by the union secretary and attested to by the union president as required by Section 235 of the Labor Code 7 in relation to Section 1, Rule VI of Department Order (D.O.) No. 9, series of 1997. The union registration was, thus, fatally defective. The Med-Arbiter further held that the list of membership of petitioner union consisted of 12 batchman, mill operator and leadman who performed supervisory functions. Under Article 245 of the Labor Code, said supervisory employees are prohibited from joining petitioner union which seeks to represent the rank-and-file employees of respondent company. As a result, not being a legitimate labor organization, petitioner union has no right to file a petition for certification election for the purpose of collective bargaining. Department of Labor and Employments Ruling On July 16, 1999, the DOLE initially issued a Decision 8 in favor of respondent company dismissing petitioner unions appeal on the ground that the latters petition for certification election was filed out of time. Although the DOLE ruled, contrary to the findings of the Med-Arbiter, that the charter certificate need not be verified and that there was no independent evidence presented to establish respondent companys claim that some members of petitioner union were holding supervisory positions, the DOLE sustained the dismissal of the petition for certification after it took judicial notice that another union, i.e., Pinag-isang Lakas Manggagawa sa Charter Chemical and Coating Corporation, previously filed a petition for certification election on January 16, 1998. The Decision granting the said petition became final and executory on September 16, 1998 and was remanded for immediate implementation. Under Section 7, Rule XI of D.O. No. 9, series of 1997, a motion for intervention involving a certification election in an unorganized establishment should be filed prior to the finality of the decision calling for a certification election. Considering that petitioner union filed its petition only on February 14, 1999, the same was filed out of time.

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On motion for reconsideration, however, the DOLE reversed its earlier ruling. In its January 13, 2000 Decision, the DOLE found that a review of the records indicates that no certification election was previously conducted in respondent company. On the contrary, the prior certification election filed by Pinag-isang Lakas Manggagawa sa Charter Chemical and Coating Corporation was, likewise, denied by the Med-Arbiter and, on appeal, was dismissed by the DOLE for being filed out of time. Hence, there was no obstacle to the grant of petitioner unions petition for certification election, viz: WHEREFORE, the motion for reconsideration is hereby GRANTED and the decision of this Office dated 16 July 1999 is MODIFIED to allow the certification election among the regular rank-and-file employees of Charter Chemical and Coating Corporation with the following choices: 1. Samahang Manggagawa sa Charter Chemical-Solidarity of Unions in the Philippines for Empowerment and Reform (SMCC-SUPER); and 2. No Union. Let the records of this case be remanded to the Regional Office of origin for the immediate conduct of a certification election, subject to the usual pre-election conference. SO DECIDED.9 Court of Appeals Ruling On March 15, 2005, the CA promulgated the assailed Decision, viz: WHEREFORE, the petition is hereby GRANTED. The assailed Decision and Resolution dated January 13, 2000 and February 17, 2000 are hereby [ANNULLED] and SET ASIDE. SO ORDERED.10 In nullifying the decision of the DOLE, the appellate court gave credence to the findings of the Med-Arbiter that petitioner union failed to comply with the documentation requirements under the Labor Code. It, likewise, upheld the Med-Arbiters finding that petitioner union consisted of both rank-and-file and supervisory employees. Moreover, the CA held that the issues as to the legitimacy of petitioner union may be attacked collaterally in a petition for certification election and the infirmity in the membership of petitioner union cannot be remedied through the exclusion-inclusion proceedings in a preelection conference pursuant to the ruling in Toyota Motor Philippines v. Toyota Motor Philippines Corporation Labor Union.11 Thus, considering that petitioner union is not a legitimate labor organization, it has no legal right to file a petition for certification election. Issues I Whether x x x the Honorable Court of Appeals committed grave abuse of discretion tantamount to lack of jurisdiction in granting the respondent [companys] petition for certiorari (CA G.R. No. SP No. 58203) in spite of the fact that the issues subject of the respondent company[s] petition was already settled with finality and barred from being re-litigated. II Whether x x x the Honorable Court of Appeals committed grave abuse of discretion tantamount to lack of jurisdiction in holding that the alleged mixture of rank-and-file and supervisory employee[s] of petitioner [unions] membership is [a] ground for the cancellation of petitioner [unions] legal personality and dismissal of [the] petition for certification election. III Whether x x x the Honorable Court of Appeals committed grave abuse of discretion tantamount to lack of jurisdiction in holding that the alleged failure to certify under oath the local charter certificate issued by its mother federation and list of

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the union membership attending the organizational meeting [is a ground] for the cancellation of petitioner [unions] legal personality as a labor organization and for the dismissal of the petition for certification election.12 Petitioner Unions Arguments Petitioner union claims that the litigation of the issue as to its legal personality to file the subject petition for certification election is barred by the July 16, 1999 Decision of the DOLE. In this decision, the DOLE ruled that petitioner union complied with all the documentation requirements and that there was no independent evidence presented to prove an illegal mixture of supervisory and rank-and-file employees in petitioner union. After the promulgation of this Decision, respondent company did not move for reconsideration, thus, this issue must be deemed settled. Petitioner union further argues that the lack of verification of its charter certificate and the alleged illegal composition of its membership are not grounds for the dismissal of a petition for certification election under Section 11, Rule XI of D.O. No. 9, series of 1997, as amended, nor are they grounds for the cancellation of a unions registration under Section 3, Rule VIII of said issuance. It contends that what is required to be certified under oath by the local unions secretary or treasurer and attested to by the local unions president are limited to the unions constitution and by-laws, statement of the set of officers, and the books of accounts. Finally, the legal personality of petitioner union cannot be collaterally attacked but may be questioned only in an independent petition for cancellation pursuant to Section 5, Rule V, Book IV of the Rules to Implement the Labor Code and the doctrine enunciated in Tagaytay Highlands International Golf Club Incoprorated v. Tagaytay Highlands Empoyees Union-PTGWO.13 Respondent Companys Arguments Respondent company asserts that it cannot be precluded from challenging the July 16, 1999 Decision of the DOLE. The said decision did not attain finality because the DOLE subsequently reversed its earlier ruling and, from this decision, respondent company timely filed its motion for reconsideration. On the issue of lack of verification of the charter certificate, respondent company notes that Article 235 of the Labor Code and Section 1, Rule VI of the Implementing Rules of Book V, as amended by D.O. No. 9, series of 1997, expressly requires that the charter certificate be certified under oath. It also contends that petitioner union is not a legitimate labor organization because its composition is a mixture of supervisory and rank-and-file employees in violation of Article 245 of the Labor Code. Respondent company maintains that the ruling in Toyota Motor Philippines vs. Toyota Motor Philippines Labor Union14 continues to be good case law. Thus, the illegal composition of petitioner union nullifies its legal personality to file the subject petition for certification election and its legal personality may be collaterally attacked in the proceedings for a petition for certification election as was done here. Our Ruling The petition is meritorious. The issue as to the legal personality of petitioner union is not barred by the July 16, 1999 Decision of the DOLE. A review of the records indicates that the issue as to petitioner unions legal personality has been timely and consistently raised by respondent company before the Med-Arbiter, DOLE, CA and now this Court. In its July 16, 1999 Decision, the DOLE found that petitioner union complied with the documentation requirements of the Labor Code and that the evidence was insufficient to establish that there was an illegal mixture of supervisory and rank-and-file employees in its membership. Nonetheless, the petition for certification election was dismissed on the ground that another union had previously filed a petition for certification election seeking to represent the same bargaining unit in respondent company. Upon motion for reconsideration by petitioner union on January 13, 2000, the DOLE reversed its previous ruling. It upheld the right of petitioner union to file the subject petition for certification election because its previous decision was based on a mistaken appreciation of facts.15 From this adverse decision, respondent company timely moved for reconsideration by

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reiterating its previous arguments before the Med-Arbiter that petitioner union has no legal personality to file the subject petition for certification election. The July 16, 1999 Decision of the DOLE, therefore, never attained finality because the parties timely moved for reconsideration. The issue then as to the legal personality of petitioner union to file the certification election was properly raised before the DOLE, the appellate court and now this Court. The charter certificate need not be certified under oath by the local unions secretary or treasurer and attested to by its president. Preliminarily, we must note that Congress enacted Republic Act (R.A.) No. 9481 16 which took effect on June 14, 2007.17 This law introduced substantial amendments to the Labor Code. However, since the operative facts in this case occurred in 1999, we shall decide the issues under the pertinent legal provisions then in force (i.e., R.A. No. 6715,18 amending Book V of the Labor Code, and the rules and regulations 19 implementing R.A. No. 6715, as amended by D.O. No. 9,20 series of 1997) pursuant to our ruling in Republic v. Kawashima Textile Mfg., Philippines, Inc.21 In the main, the CA ruled that petitioner union failed to comply with the requisite documents for registration under Article 235 of the Labor Code and its implementing rules. It agreed with the Med-Arbiter that the Charter Certificate, Samasamang Pahayag ng Pagsapi at Authorization, and Listahan ng mga Dumalo sa Pangkalahatang Pulong at mga Sumangayon at Nagratipika sa Saligang Batas were not executed under oath. Thus, petitioner union cannot be accorded the status of a legitimate labor organization. We disagree. The then prevailing Section 1, Rule VI of the Implementing Rules of Book V, as amended by D.O. No. 9, series of 1997, provides: Section 1. Chartering and creation of a local chapter A duly registered federation or national union may directly create a local/chapter by submitting to the Regional Office or to the Bureau two (2) copies of the following: (a) A charter certificate issued by the federation or national union indicating the creation or establishment of the local/chapter; (b) The names of the local/chapters officers, their addresses, and the principal office of the local/chapter; and (c) The local/chapters constitution and by-laws provided that where the local/chapters constitution and by-laws [are] the same as [those] of the federation or national union, this fact shall be indicated accordingly. All the foregoing supporting requirements shall be certified under oath by the Secretary or the Treasurer of the local/chapter and attested to by its President. As readily seen, the Sama-samang Pahayag ng Pagsapi at Authorization and Listahan ng mga Dumalo sa Pangkalahatang Pulong at mga Sumang-ayon at Nagratipika sa Saligang Batas are not among the documents that need to be submitted to the Regional Office or Bureau of Labor Relations in order to register a labor organization. As to the charter certificate, the above-quoted rule indicates that it should be executed under oath. Petitioner union concedes and the records confirm that its charter certificate was not executed under oath. However, in San Miguel Corporation (Mandaue Packaging Products Plants) v. Mandaue Packing Products Plants-San Miguel Corporation Monthlies Rankand-File Union-FFW (MPPP-SMPP-SMAMRFU-FFW),22 which was decided under the auspices of D.O. No. 9, Series of 1997, we ruled In San Miguel Foods-Cebu B-Meg Feed Plant v. Hon. Laguesma, 331 Phil. 356 (1996), the Court ruled that it wasnot necessary for the charter certificate to be certified and attested by the local/chapter officers. Id. While this ruling was based on the interpretation of the previous Implementing Rules provisions which were supplanted by the 1997 amendments, we believe that the same doctrine obtains in this case. Considering that the charter certificate is prepared and issued by the national union and not the local/chapter, it does not make sense to have the

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local/chapters officers x x x certify or attest to a document which they had no hand in the preparation of.23 (Emphasis supplied) In accordance with this ruling, petitioner unions charter certificate need not be executed under oath. Consequently, it validly acquired the status of a legitimate labor organization upon submission of (1) its charter certificate, 24 (2) the names of its officers, their addresses, and its principal office, 25 and (3) its constitution and by-laws26 the last two requirements having been executed under oath by the proper union officials as borne out by the records. The mixture of rank-and-file and supervisory employees in petitioner union does not nullify its legal personality as a legitimate labor organization. The CA found that petitioner union has for its membership both rank-and-file and supervisory employees. However, petitioner union sought to represent the bargaining unit consisting of rank-and-file employees. Under Article 24527 of the Labor Code, supervisory employees are not eligible for membership in a labor organization of rank-and-file employees. Thus, the appellate court ruled that petitioner union cannot be considered a legitimate labor organization pursuant to Toyota Motor Philippines v. Toyota Motor Philippines Corporation Labor Union28(hereinafter Toyota). Preliminarily, we note that petitioner union questions the factual findings of the Med-Arbiter, as upheld by the appellate court, that 12 of its members, consisting of batchman, mill operator and leadman, are supervisory employees. However, petitioner union failed to present any rebuttal evidence in the proceedings below after respondent company submitted in evidence the job descriptions29 of the aforesaid employees. The job descriptions indicate that the aforesaid employees exercise recommendatory managerial actions which are not merely routinary but require the use of independent judgment, hence, falling within the definition of supervisory employees under Article 212(m)30 of the Labor Code. For this reason, we are constrained to agree with the Med-Arbiter, as upheld by the appellate court, that petitioner union consisted of both rank-and-file and supervisory employees. Nonetheless, the inclusion of the aforesaid supervisory employees in petitioner union does not divest it of its status as a legitimate labor organization. The appellate courts reliance on Toyota is misplaced in view of this Courts subsequent ruling in Republic v. Kawashima Textile Mfg., Philippines, Inc.31 (hereinafter Kawashima). InKawashima, we explained at length how and why the Toyota doctrine no longer holds sway under the altered state of the law and rules applicable to this case, viz: R.A. No. 6715 omitted specifying the exact effect any violation of the prohibition [on the co-mingling of supervisory and rank-and-file employees] would bring about on the legitimacy of a labor organization. It was the Rules and Regulations Implementing R.A. No. 6715 (1989 Amended Omnibus Rules) which supplied the deficiency by introducing the following amendment to Rule II (Registration of Unions): "Sec. 1. Who may join unions. - x x x Supervisory employees and security guards shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own; Provided, that those supervisory employees who are included in an existing rank-and-file bargaining unit, upon the effectivity of Republic Act No. 6715, shall remain in that unit x x x. (Emphasis supplied) and Rule V (Representation Cases and Internal-Union Conflicts) of the Omnibus Rules, viz: "Sec. 1. Where to file. - A petition for certification election may be filed with the Regional Office which has jurisdiction over the principal office of the employer. The petition shall be in writing and under oath. Sec. 2. Who may file. - Any legitimate labor organization or the employer, when requested to bargain collectively, may file the petition. The petition, when filed by a legitimate labor organization, shall contain, among others: xxxx (c) description of the bargaining unit which shall be the employer unit unless circumstances otherwise require; and provided further, that the appropriate bargaining unit of the rank-and-file employees shall not include supervisory employees and/or security guards. (Emphasis supplied)

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By that provision, any questioned mingling will prevent an otherwise legitimate and duly registered labor organization from exercising its right to file a petition for certification election. Thus, when the issue of the effect of mingling was brought to the fore in Toyota, the Court, citing Article 245 of the Labor Code, as amended by R.A. No. 6715, held: "Clearly, based on this provision, a labor organization composed of both rank-and-file and supervisory employees is no labor organization at all. It cannot, for any guise or purpose, be a legitimate labor organization. Not being one, an organization which carries a mixture of rank-and-file and supervisory employees cannot possess any of the rights of a legitimate labor organization, including the right to file a petition for certification election for the purpose of collective bargaining. It becomes necessary, therefore, anterior to the granting of an order allowing a certification election, to inquire into the composition of any labor organization whenever the status of the labor organization is challenged on the basis of Article 245 of the Labor Code. xxxx In the case at bar, as respondent union's membership list contains the names of at least twenty-seven (27) supervisory employees in Level Five positions, the union could not, prior to purging itself of its supervisory employee members, attain the status of a legitimate labor organization. Not being one, it cannot possess the requisite personality to file a petition for certification election." (Emphasis supplied) In Dunlop, in which the labor organization that filed a petition for certification election was one for supervisory employees, but in which the membership included rank-and-file employees, the Court reiterated that such labor organization had no legal right to file a certification election to represent a bargaining unit composed of supervisors for as long as it counted rank-and-file employees among its members. It should be emphasized that the petitions for certification election involved in Toyota and Dunlop were filed on November 26, 1992 and September 15, 1995, respectively; hence, the 1989 Rules was applied in both cases. But then, on June 21, 1997, the 1989 Amended Omnibus Rules was further amended by Department Order No. 9, series of 1997 (1997 Amended Omnibus Rules). Specifically, the requirement under Sec. 2(c) of the 1989 Amended Omnibus Rules that the petition for certification election indicate that the bargaining unit of rank-and-file employees has not been mingled with supervisory employees was removed. Instead, what the 1997 Amended Omnibus Rules requires is a plain description of the bargaining unit, thus: Rule XI Certification Elections xxxx Sec. 4. Forms and contents of petition. - The petition shall be in writing and under oath and shall contain, among others, the following: x x x (c) The description of the bargaining unit. In Pagpalain Haulers, Inc. v. Trajano, the Court had occasion to uphold the validity of the 1997 Amended Omnibus Rules, although the specific provision involved therein was only Sec. 1, Rule VI, to wit: "Section. 1. Chartering and creation of a local/chapter.- A duly registered federation or national union may directly create a local/chapter by submitting to the Regional Office or to the Bureau two (2) copies of the following: a) a charter certificate issued by the federation or national union indicating the creation or establishment of the local/chapter; (b) the names of the local/chapter's officers, their addresses, and the principal office of the local/chapter; and (c) the local/ chapter's constitution and by-laws; provided that where the local/chapter's constitution and by-laws is the same as that of the federation or national union, this fact shall be indicated accordingly. All the foregoing supporting requirements shall be certified under oath by the Secretary or the Treasurer of the local/chapter and attested to by its President." which does not require that, for its creation and registration, a local or chapter submit a list of its members.

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Then came Tagaytay Highlands Int'l. Golf Club, Inc. v. Tagaytay Highlands Employees Union-PGTWO in which the core issue was whether mingling affects the legitimacy of a labor organization and its right to file a petition for certification election. This time, given the altered legal milieu, the Court abandoned the view in Toyota and Dunlopand reverted to its pronouncement in Lopez that while there is a prohibition against the mingling of supervisory and rank-and-file employees in one labor organization, the Labor Code does not provide for the effects thereof. Thus, the Court held that after a labor organization has been registered, it may exercise all the rights and privileges of a legitimate labor organization. Any mingling between supervisory and rank-and-file employees in its membership cannot affect its legitimacy for that is not among the grounds for cancellation of its registration, unless such mingling was brought about by misrepresentation, false statement or fraud under Article 239 of the Labor Code. In San Miguel Corp. (Mandaue Packaging Products Plants) v. Mandaue Packing Products Plants-San Miguel Packaging Products-San Miguel Corp. Monthlies Rank-and-File Union-FFW, the Court explained that since the 1997 Amended Omnibus Rules does not require a local or chapter to provide a list of its members, it would be improper for the DOLE to deny recognition to said local or chapter on account of any question pertaining to its individual members. More to the point is Air Philippines Corporation v. Bureau of Labor Relations, which involved a petition for cancellation of union registration filed by the employer in 1999 against a rank-and-file labor organization on the ground of mixed membership: the Court therein reiterated its ruling in Tagaytay Highlands that the inclusion in a union of disqualified employees is not among the grounds for cancellation, unless such inclusion is due to misrepresentation, false statement or fraud under the circumstances enumerated in Sections (a) and (c) of Article 239 of the Labor Code. All said, while the latest issuance is R.A. No. 9481, the 1997 Amended Omnibus Rules, as interpreted by the Court in Tagaytay Highlands, San Miguel and Air Philippines, had already set the tone for it. Toyota and Dunlop no longer hold sway in the present altered state of the law and the rules.32 [Underline supplied] The applicable law and rules in the instant case are the same as those in Kawashima because the present petition for certification election was filed in 1999 when D.O. No. 9, series of 1997, was still in effect. Hence, Kawashimaapplies with equal force here. As a result, petitioner union was not divested of its status as a legitimate labor organization even if some of its members were supervisory employees; it had the right to file the subject petition for certification election. The legal personality of petitioner union cannot be collaterally attacked by respondent company in the certification election proceedings. Petitioner union correctly argues that its legal personality cannot be collaterally attacked in the certification election proceedings. As we explained in Kawashima: Except when it is requested to bargain collectively, an employer is a mere bystander to any petition for certification election; such proceeding is non-adversarial and merely investigative, for the purpose thereof is to determine which organization will represent the employees in their collective bargaining with the employer. The choice of their representative is the exclusive concern of the employees; the employer cannot have any partisan interest therein; it cannot interfere with, much less oppose, the process by filing a motion to dismiss or an appeal from it; not even a mere allegation that some employees participating in a petition for certification election are actually managerial employees will lend an employer legal personality to block the certification election. The employer's only right in the proceeding is to be notified or informed thereof. The amendments to the Labor Code and its implementing rules have buttressed that policy even more.33 WHEREFORE, the petition is GRANTED. The March 15, 2005 Decision and September 16, 2005 Resolution of the Court of Appeals in CA-G.R. SP No. 58203 are REVERSED and SET ASIDE. The January 13, 2000 Decision of the Department of Labor and Employment in OS-A-6-53-99 (NCR-OD-M-9902-019) is REINSTATED. No pronouncement as to costs. SO ORDERED.
MARIANO C. DEL CASTILLO Associate Justice

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PFIZER, INC. AND/OR REY GERARDO BACARRO, AND/OR FERDINAND CORTES, AND/OR ALFRED MAGALLON, AND/OR ARISTOTLE ARCE vs. GERALDINE VELASCO, G.R. No. 177467, March 9, 2011, 645 s 135 DECISION

LEONARDO-DE CASTRO, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Civil Procedure to annul and set aside the Resolution1 dated October 23, 2006 as well as the Resolution2 dated April 10, 2007 both issued by the Court of Appeals in CA-G.R. SP No. 88987 entitled, "Pfizer, Inc. and/or Rey Gerardo Bacarro, and/or Ferdinand Cortes, and/or Alfred Magallon, and/or Aristotle Arce v. National Labor Relations Commission Second Division and Geraldine Velasco." The October 23, 2006 Resolution modified upon respondents motion for reconsideration the Decision3 dated November 23, 2005 of the Court of Appeals by requiring PFIZER, Inc. (PFIZER) to pay respondents wages from the date of the Labor Arbiters Decision4 dated December 5, 2003 until it was eventually reversed and set aside by the Court of Appeals. The April 10, 2007 Resolution, on the other hand, denied PFIZERs motion for partial reconsideration. The facts of this case, as stated in the Court of Appeals Decision dated November 23, 2005, are as follows: Private respondent Geraldine L. Velasco was employed with petitioner PFIZER, INC. as Professional Health Care Representative since 1 August 1992. Sometime in April 2003, Velasco had a medical work up for her high-risk pregnancy and was subsequently advised bed rest which resulted in her extending her leave of absence. Velasco filed her sick leave for the period from 26 March to 18 June 2003, her vacation leave from 19 June to 20 June 2003, and leave without pay from 23 June to 14 July 2003. On 26 June 2003, while Velasco was still on leave, PFIZER through its Area Sales Manager, herein petitioner Ferdinand Cortez, personally served Velasco a "Show-cause Notice" dated 25 June 2003. Aside from mentioning about an investigation on her possible violations of company work rules regarding "unauthorized deals and/or discounts in money or samples and unauthorized withdrawal and/or pull-out of stocks" and instructing her to submit her explanation on the matter within 48 hours from receipt of the same, the notice also advised her that she was being placed under "preventive suspension" for 30 days or from that day to 6 August 2003 and consequently ordered to surrender the following "accountabilities;" 1) Company Car, 2) Samples and Promats, 3) CRF/ER/VEHICLE/SOA/POSAP/MPOA and other related Company Forms, 4) Cash Card, 5) Caltex Card, and 6) MPOA/TPOA Revolving Travel Fund. The following day, petitioner Cortez together with one Efren Dariano retrieved the above-mentioned "accountabilities" from Velascos residence. In response, Velasco sent a letter addressed to Cortez dated 28 June 2003 denying the charges. In her letter, Velasco claimed that the transaction with Mercury Drug, Magsaysay Branch covered by her check (no. 1072) in the amount of P23,980.00 was merely to accommodate two undisclosed patients of a certain Dr. Renato Manalo. In support thereto, Velasco attached the Doctors letter and the affidavit of the latters secretary. On 12 July 2003, Velasco received a "Second Show-cause Notice" informing her of additional developments in their investigation. According to the notice, a certain Carlito Jomen executed an affidavit pointing to Velasco as the one who transacted with a printing shop to print PFIZER discount coupons. Jomen also presented text messages originating from Velascos company issued cellphone referring to the printing of the said coupons. Again, Velasco was given 48 hours to submit her written explanation on the matter. On 16 July 2003, Velasco sent a letter to PFIZER via Aboitiz courier service asking for additional time to answer the second Show-cause Notice. That same day, Velasco filed a complaint for illegal suspension with money claims before the Regional Arbitration Branch. The following day, 17 July 2003, PFIZER sent her a letter inviting her to a disciplinary hearing to be held on 22 July 2003. Velasco received it under protest and informed PFIZER via the receiving copy of the said letter that she had lodged a complaint against the latter and that the issues that may be raised in the July 22 hearing "can be tackled during the hearing of her case" or at the preliminary conference set for 5 and 8 of August 2003. She likewise opted to withhold answering the Second Show-cause Notice. On 25 July 2003, Velasco received a "Third Show-cause Notice," together with copies of the affidavits of two Branch Managers of Mercury Drug, asking her for her comment within 48 hours. Finally, on 29 July 2003, PFIZER informed Velasco of its "Management Decision" terminating her employment. On 5 December 2003, the Labor Arbiter rendered its decision declaring the dismissal of Velasco illegal, ordering her reinstatement with backwages and further awarding moral and exemplary damages with attorneys fees. On appeal, the NLRC affirmed the same but deleted the award of moral and exemplary damages.5 The dispositive portion of the Labor Arbiters Decision dated December 5, 2003 is as follows:

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WHEREFORE, judgment is hereby rendered declaring that complainant was illegally dismissed. Respondents are ordered to reinstate the complainant to her former position without loss of seniority rights and with full backwages and to pay the complainant the following: 1. Full backwages (basic salary, company benefits, all allowances as of December 5, 2003 in the amount of

P572,780.00);

2. 13th Month Pay, Midyear, Christmas and performance bonuses in the amount of P105,300.00; 3. Moral damages of 4. Exemplary damages in the amount of 5. Attorneys Fees of 10% of the award excluding damages in the amount of The total award is in the amount of P50,000.00; P30,000.00; P67,808.00. P758,080.00.6

PFIZER appealed to the National Labor Relations Commission (NLRC) but its appeal was denied via the NLRC Decision7 dated October 20, 2004, which affirmed the Labor Arbiters ruling but deleted the award for damages, the dispositive portion of which is as follows: WHEREFORE, premises considered, the instant appeal and the motion praying for the deposit in escrow of complainants payroll reinstatement are hereby denied and the Decision of the Labor Arbiter is affirmed with the modification that the award of moral and exemplary damages is deleted and attorneys fees shall be based on the award of 13th month pay pursuant to Article III of the Labor Code.8 PFIZER moved for reconsideration but its motion was denied for lack of merit in a NLRC Resolution9 dated December 14, 2004. Undaunted, PFIZER filed with the Court of Appeals a special civil action for the issuance of a writ of certiorariunder Rule 65 of the Rules of Court to annul and set aside the aforementioned NLRC issuances. In a Decision dated November 23, 2005, the Court of Appeals upheld the validity of respondents dismissal from employment, the dispositive portion of which reads as follows: WHEREFORE, the instant petition is GRANTED. The assailed Decision of the NLRC dated 20 October 2004 as well as its Resolution of 14 December 2004 is hereby ANNULED and SET ASIDE. Having found the termination of Geraldine L. Velascos employment in accordance with the two notice rule pursuant to the due process requirement and with just cause, her complaint for illegal dismissal is hereby DISMISSED.10 Respondent filed a Motion for Reconsideration which the Court of Appeals resolved in the assailed Resolution dated October 23, 2006 wherein it affirmed the validity of respondents dismissal from employment but modified its earlier ruling by directing PFIZER to pay respondent her wages from the date of the Labor Arbiters Decision dated December 5, 2003 up to the Court of Appeals Decision dated November 23, 2005, to wit: IN VIEW WHEREOF, the dismissal of private respondent Geraldine Velasco is AFFIRMED, but petitioner PFIZER, INC. is hereby ordered to pay her the wages to which she is entitled to from the time the reinstatement order was issued until November 23, 2005, the date of promulgation of Our Decision.11 Respondent filed with the Court a petition for review under Rule 45 of the Rules of Civil Procedure, which assailed the Court of Appeals Decision dated November 23, 2005 and was docketed as G.R. No. 175122. Respondents petition, questioning the Court of Appeals dismissal of her complaint, was denied by this Courts Second Division in a minute Resolution12 dated December 5, 2007, the pertinent portion of which states: Considering the allegations, issues and arguments adduced in the petition for review on certiorari, the Court resolves to DENY the petition for failure to sufficiently show any reversible error in the assailed judgment to warrant the exercise of this Courts discretionary appellate jurisdiction, and for raising substantially factual issues.

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On the other hand, PFIZER filed the instant petition assailing the aforementioned Court of Appeals Resolutions and offering for our resolution a single legal issue, to wit: Whether or not the Court of Appeals committed a serious but reversible error when it ordered Pfizer to pay Velasco wages from the date of the Labor Arbiters decision ordering her reinstatement until November 23, 2005, when the Court of Appeals rendered its decision declaring Velascos dismissal valid.13 The petition is without merit. PFIZER argues that, contrary to the Court of Appeals pronouncement in its assailed Decision dated November 23, 2005, the ruling in Roquero v. Philippine Airlines, Inc.14 is not applicable in the case at bar, particularly with regard to the nature and consequences of an order of reinstatement, to wit: The order of reinstatement is immediately executory. The unjustified refusal of the employer to reinstate a dismissed employee entitles him to payment of his salaries effective from the time the employer failed to reinstate him despite the issuance of a writ of execution. Unless there is a restraining order issued, it is ministerial upon the Labor Arbiter to implement the order of reinstatement. In the case at bar, no restraining order was granted. Thus, it was mandatory on PAL to actually reinstate Roquero or reinstate him in the payroll. Having failed to do so, PAL must pay Roquero the salary he is entitled to, as if he was reinstated, from the time of the decision of the NLRC until the finality of the decision of the Court.15 (Emphases supplied.) It is PFIZERs contention in its Memorandum16 that "there was no unjustified refusal on [its part] to reinstate [respondent] Velasco during the pendency of the appeal,"17 thus, the pronouncement in Roquero cannot be made to govern this case. During the pendency of the case with the Court of Appeals and prior to its November 23, 2005 Decision, PFIZER claimed that it had already required respondent to report for work on July 1, 2005. However, according to PFIZER, it was respondent who refused to return to work when she wrote PFIZER, through counsel, that she was opting to receive her separation pay and to avail of PFIZERs early retirement program. In PFIZERs view, it should no longer be required to pay wages considering that (1) it had already previously paid an enormous sum to respondent under the writ of execution issued by the Labor Arbiter; (2) it was allegedly ready to reinstate respondent as of July 1, 2005 but it was respondent who unjustifiably refused to report for work; (3) it would purportedly be tantamount to allowing respondent to choose "payroll reinstatement" when by law it was the employer which had the right to choose between actual and payroll reinstatement; (4) respondent should be deemed to have "resigned" and therefore not entitled to additional backwages or separation pay; and (5) this Court should not mechanically apply Roquero but rather should follow the doctrine in Genuino v. National Labor Relations Commission18 which was supposedly "more in accord with the dictates of fairness and justice."19 We do not agree. At the outset, we note that PFIZERs previous payment to respondent of the amount of P1,963,855.00 (representing her wages from December 5, 2003, or the date of the Labor Arbiter decision, until May 5, 2005) that was successfully garnished under the Labor Arbiters Writ of Execution dated May 26, 2005 cannot be considered in its favor. Not only was this sum legally due to respondent under prevailing jurisprudence but also this circumstance highlighted PFIZERs unreasonable delay in complying with the reinstatement order of the Labor Arbiter. A perusal of the records, including PFIZERs own submissions, confirmed that it only required respondent to report for work on July 1, 2005, as shown by its Letter20 dated June 27, 2005, which is almost two years from the time the order of reinstatement was handed down in the Labor Arbiters Decision dated December 5, 2003. As far back as 1997 in the seminal case of Pioneer Texturizing Corporation v. National Labor Relations Commission,21 the Court held that an award or order of reinstatement is immediately self-executory without the need for the issuance of a writ of execution in accordance with the third paragraph of Article 223 22 of the Labor Code. In that case, we discussed in length the rationale for that doctrine, to wit: The provision of Article 223 is clear that an award [by the Labor Arbiter] for reinstatement shall be immediately executory even pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. The legislative intent is quite obvious, i.e., to make an award of reinstatement immediately enforceable, even pending appeal. To require the application for and issuance of a writ of execution as prerequisites for the execution of a reinstatement award would certainly betray and run counter to the very object and intent of Article 223, i.e., the immediate execution of a

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reinstatement order. The reason is simple. An application for a writ of execution and its issuance could be delayed for numerous reasons. A mere continuance or postponement of a scheduled hearing, for instance, or an inaction on the part of the Labor Arbiter or the NLRC could easily delay the issuance of the writ thereby setting at naught the strict mandate and noble purpose envisioned by Article 223. In other words, if the requirements of Article 224 [including the issuance of a writ of execution] were to govern, as we so declared in Maranaw, then the executory nature of a reinstatement order or award contemplated by Article 223 will be unduly circumscribed and rendered ineffectual. In enacting the law, the legislature is presumed to have ordained a valid and sensible law, one which operates no further than may be necessary to achieve its specific purpose. Statutes, as a rule, are to be construed in the light of the purpose to be achieved and the evil sought to be prevented. x x x In introducing a new rule on the reinstatement aspect of a labor decision under Republic Act No. 6715, Congress should not be considered to be indulging in mere semantic exercise. x x x 23 (Italics in the original; emphasis and underscoring supplied.) In the case at bar, PFIZER did not immediately admit respondent back to work which, according to the law, should have been done as soon as an order or award of reinstatement is handed down by the Labor Arbiter without need for the issuance of a writ of execution. Thus, respondent was entitled to the wages paid to her under the aforementioned writ of execution. At most, PFIZERs payment of the same can only be deemed partial compliance/execution of the Court of Appeals Resolution dated October 23, 2006 and would not bar respondent from being paid her wages from May 6, 2005 to November 23, 2005. It would also seem that PFIZER waited for the resolution of its appeal to the NLRC and, only after it was ordered by the Labor Arbiter to pay the amount of P1,963,855.00 representing respondents full backwages from December 5, 2003 up to May 5, 2005, did PFIZER decide to require respondent to report back to work via the Letter dated June 27, 2005. PFIZER makes much of respondents non-compliance with its return- to-work directive by downplaying the reasons forwarded by respondent as less than sufficient to justify her purported refusal to be reinstated. In PFIZERs view, the return-to-work order it sent to respondent was adequate to satisfy the jurisprudential requisites concerning the reinstatement of an illegally dismissed employee. It would be useful to reproduce here the text of PFIZERs Letter dated June 27, 2005: Dear Ms. Velasco: Please be informed that, pursuant to the resolutions dated 20 October 2004 and 14 December 2004 rendered by the National Labor Relations Commission and the order dated 24 May 2005 issued by Executive Labor Arbiter Vito C. Bose, you are required to report for work on 1 July 2005, at 9:00 a.m., at Pfizers main office at the 23rd Floor, Ayala LifeFGU Center, 6811 Ayala Avenue, Makati City, Metro Manila. Please report to the undersigned for a briefing on your work assignments and other responsibilities, including the appropriate relocation benefits. For your information and compliance. Very truly yours, (Sgd.) Ma. Eden Grace Sagisi Labor and Employee Relations Manager24 To reiterate, under Article 223 of the Labor Code, an employee entitled to reinstatement "shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll." It is established in jurisprudence that reinstatement means restoration to a state or condition from which one had been removed or separated. The person reinstated assumes the position he had occupied prior to his dismissal. Reinstatement presupposes that the previous position from which one had been removed still exists, or that there is an unfilled position which is substantially equivalent or of similar nature as the one previously occupied by the employee.25

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Applying the foregoing principle to the case before us, it cannot be said that with PFIZERs June 27, 2005 Letter, in belated fulfillment of the Labor Arbiters reinstatement order, it had shown a clear intent to reinstate respondent to her former position under the same terms and conditions nor to a substantially equivalent position. To begin with, the returnto-work order PFIZER sent respondent is silent with regard to the position or the exact nature of employment that it wanted respondent to take up as of July 1, 2005. Even if we assume that the job awaiting respondent in the new location is of the same designation and pay category as what she had before, it is plain from the text of PFIZERs June 27, 2005 letter that such reinstatement was not "under the same terms and conditions" as her previous employment, considering that PFIZER ordered respondent to report to its main office in Makati City while knowing fully well that respondents previous job had her stationed in Baguio City (respondents place of residence) and it was still necessary for respondent to be briefed regarding her work assignments and responsibilities, including her relocation benefits. The Court is cognizant of the prerogative of management to transfer an employee from one office to another within the business establishment, provided that there is no demotion in rank or diminution of his salary, benefits and other privileges and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause.26 Likewise, the management prerogative to transfer personnel must be exercised without grave abuse of discretion and putting to mind the basic elements of justice and fair play. There must be no showing that it is unnecessary, inconvenient and prejudicial to the displaced employee.27 The June 27, 2005 return-to-work directive implying that respondent was being relocated to PFIZERs Makati main office would necessarily cause hardship to respondent, a married woman with a family to support residing in Baguio City. However, PFIZER, as the employer, offered no reason or justification for the relocation such as the filling up of respondents former position and the unavailability of substantially equivalent position in Baguio City. A transfer of work assignment without any justification therefor, even if respondent would be presumably doing the same job with the same pay, cannot be deemed faithful compliance with the reinstatement order. In other words, in this instance, there was no real, bona fide reinstatement to speak of prior to the reversal by the Court of Appeals of the finding of illegal dismissal. In view of PFIZERs failure to effect respondent's actual or payroll reinstatement, it is indubitable that the Roqueroruling is applicable to the case at bar. The circumstance that respondent opted for separation pay in lieu of reinstatement as manifested in her counsels Letter28 dated July 18, 2005 is of no moment. We do not see respondents letter as taking away the option from management to effect actual or payroll reinstatement but, rather under the factual milieu of this case, where the employer failed to categorically reinstate the employee to her former or equivalent position under the same terms, respondent was not obliged to comply with PFIZERs ambivalent return-to-work order. To uphold PFIZERs view that it was respondent who unjustifiably refused to work when PFIZER did not reinstate her to her former position, and worse, required her to report for work under conditions prejudicial to her, is to open the doors to potential employer abuse. Foreseeably, an employer may circumvent the immediately enforceable reinstatement order of the Labor Arbiter by crafting return-to-work directives that are ambiguous or meant to be rejected by the employee and then disclaim liability for backwages due to non-reinstatement by capitalizing on the employees purported refusal to work. In sum, the option of the employer to effect actual or payroll reinstatement must be exercised in good faith. Moreover, while the Court has upheld the employers right to choose between actually reinstating an employee or merely reinstating him in the payroll, we have also in the past recognized that reinstatement might no longer be possible under certain circumstances. In F.F. Marine Corporation v. National Labor Relations Commission, 29 we had the occasion to state: It is well-settled that when a person is illegally dismissed, he is entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages. In the event, however, that reinstatement is no longer feasible, or if the employee decides not be reinstated, the employer shall pay him separation pay in lieu of reinstatement. Such a rule is likewise observed in the case of a strained employer-employee relationship or when the work or position formerly held by the dismissed employee no longer exists. In sum, an illegally dismissed employee is entitled to: (1) either reinstatement if viable or separation pay if reinstatement is no longer viable, and (2) backwages.30 (Emphasis supplied.) Similarly, we have previously held that an employees demand for separation pay may be indicative of strained relations that may justify payment of separation pay in lieu of reinstatement.31 This is not to say, however, that respondent is entitled to separation pay in addition to backwages. We stress here that a finding of strained relations must nonetheless still be supported by substantial evidence.32 In the case at bar, respondents decision to claim separation pay over reinstatement had no legal effect, not only because there was no genuine compliance by the employer to the reinstatement order but also because the employer chose not to act on said claim. If it was PFIZERs position that respondents act amounted to a "resignation" it should have informed

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respondent that it was accepting her resignation and that in view thereof she was not entitled to separation pay. PFIZER did not respond to respondents demand at all. As it was, PFIZERs failure to effect reinstatement and accept respondents offer to terminate her employment relationship with the company meant that, prior to the Court of Appeals reversal in the November 23, 2005 Decision, PFIZERs liability for backwages continued to accrue for the period not covered by the writ of execution dated May 24, 2005 until November 23, 2005. Lastly, PFIZER exhorts the Court to re-examine the application of Roquero with a view that a mechanical application of the same would cause injustice since, in the present case, respondent was able to gain pecuniary benefit notwithstanding the circumstance of reversal by the Court of Appeals of the rulings of the Labor Arbiter and the NLRC thereby allowing respondent to profit from the dishonesty she committed against PFIZER which was the basis for her termination. In its stead, PFIZER proposes that the Court apply the ruling in Genuino v. National Labor Relations Commission33 which it believes to be more in accord with the dictates of fairness and justice. In that case, we canceled the award of salaries from the date of the decision of the Labor Arbiter awarding reinstatement in light of our subsequent ruling finding that the dismissal is for a legal and valid ground, to wit: Anent the directive of the NLRC in its September 3, 1994 Decision ordering Citibank "to pay the salaries due to the complainant from the date it reinstated complainant in the payroll (computed at P60,000.00 a month, as found by the Labor Arbiter) up to and until the date of this decision," the Court hereby cancels said award in view of its finding that the dismissal of Genuino is for a legal and valid ground. Ordinarily, the employer is required to reinstate the employee during the pendency of the appeal pursuant to Art. 223, paragraph 3 of the Labor Code, which states: xxxx If the decision of the labor arbiter is later reversed on appeal upon the finding that the ground for dismissal is valid, then the employer has the right to require the dismissed employee on payroll reinstatement to refund the salaries s/he received while the case was pending appeal, or it can be deducted from the accrued benefits that the dismissed employee was entitled to receive from his/her employer under existing laws, collective bargaining agreement provisions, and company practices. However, if the employee was reinstated to work during the pendency of the appeal, then the employee is entitled to the compensation received for actual services rendered without need of refund. Considering that Genuino was not reinstated to work or placed on payroll reinstatement, and her dismissal is based on a just cause, then she is not entitled to be paid the salaries stated in item no. 3 of the fallo of the September 3, 1994 NLRC Decision.34 (Emphases supplied.) Thus, PFIZER implores the Court to annul the award of backwages and separation pay as well as to require respondent to refund the amount that she was able to collect by way of garnishment from PFIZER as her accrued salaries. The contention cannot be given merit since this question has been settled by the Court en banc. In the recent milestone case of Garcia v. Philippine Airlines, Inc.,35 the Court wrote finis to the stray posture inGenuino requiring the dismissed employee placed on payroll reinstatement to refund the salaries in case a final decision upholds the validity of the dismissal. In Garcia, we clarified the principle of reinstatement pending appeal due to the emergence of differing rulings on the issue, to wit: On this score, the Court's attention is drawn to seemingly divergent decisions concerning reinstatement pending appeal or, particularly, the option of payroll reinstatement. On the one hand is the jurisprudential trend as expounded in a line of cases including Air Philippines Corp. v. Zamora, while on the other is the recent case ofGenuino v. National Labor Relations Commission. At the core of the seeming divergence is the application of paragraph 3 of Article 223 of the Labor Code x x x. xxxx The view as maintained in a number of cases is that:

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x x x [E]ven if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. On the other hand, if the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary he received for he is entitled to such, more so if he actually rendered services during the period.(Emphasis in the original; italics and underscoring supplied) In other words, a dismissed employee whose case was favorably decided by the Labor Arbiter is entitled to receive wages pending appeal upon reinstatement, which is immediately executory. Unless there is a restraining order, it is ministerial upon the Labor Arbiter to implement the order of reinstatement and it is mandatory on the employer to comply therewith. The opposite view is articulated in Genuino which states: If the decision of the labor arbiter is later reversed on appeal upon the finding that the ground for dismissal is valid, then the employer has the right to require the dismissed employee on payroll reinstatement to refund the salaries [he] received while the case was pending appeal, or it can be deducted from the accrued benefits that the dismissed employee was entitled to receive from [his] employer under existing laws, collective bargaining agreement provisions, and company practices. However, if the employee was reinstated to work during the pendency of the appeal, then the employee is entitled to the compensation received for actual services rendered without need of refund. Considering that Genuino was not reinstated to work or placed on payroll reinstatement, and her dismissal is based on a just cause, then she is not entitled to be paid the salaries stated in item no. 3 of the fallo of the September 3, 1994 NLRC Decision. (Emphasis, italics and underscoring supplied) It has thus been advanced that there is no point in releasing the wages to petitioners since their dismissal was found to be valid, and to do so would constitute unjust enrichment. Prior to Genuino, there had been no known similar case containing a dispositive portion where the employee was required to refund the salaries received on payroll reinstatement. In fact, in a catena of cases, the Court did not order the refund of salaries garnished or received by payroll-reinstated employees despite a subsequent reversal of the reinstatement order. The dearth of authority supporting Genuino is not difficult to fathom for it would otherwise render inutile the rationale of reinstatement pending appeal. xxxx x x x Then, by and pursuant to the same power (police power), the State may authorize an immediate implementation, pending appeal, of a decision reinstating a dismissed or separated employee since that saving act is designed to stop, although temporarily since the appeal may be decided in favor of the appellant, a continuing threat or danger to the survival or even the life of the dismissed or separated employee and his family.36 Furthermore, in Garcia, the Court went on to discuss the illogical and unjust effects of the "refund doctrine" erroneously espoused in Genuino: Even outside the theoretical trappings of the discussion and into the mundane realities of human experience, the "refund doctrine" easily demonstrates how a favorable decision by the Labor Arbiter could harm, more than help, a dismissed employee. The employee, to make both ends meet, would necessarily have to use up the salaries received during the pendency of the appeal, only to end up having to refund the sum in case of a final unfavorable decision. It is mirage of a stop-gap leading the employee to a risky cliff of insolvency.
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Advisably, the sum is better left unspent. It becomes more logical and practical for the employee to refuse payroll reinstatement and simply find work elsewhere in the interim, if any is available. Notably, the option of payroll reinstatement belongs to the employer, even if the employee is able and raring to return to work. Prior to Genuino, it is unthinkable for one to refuse payroll reinstatement. In the face of the grim possibilities, the rise of concerned employees declining payroll reinstatement is on the horizon.

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Further, the Genuino ruling not only disregards the social justice principles behind the rule, but also institutes a scheme unduly favorable to management. Under such scheme, the salaries dispensed pendente lite merely serve as a bond posted in installment by the employer. For in the event of a reversal of the Labor Arbiter's decision ordering reinstatement, the employer gets back the same amount without having to spend ordinarily for bond premiums. This circumvents, if not directly contradicts, the proscription that the "posting of a bond [even a cash bond] by the employer shall not stay the execution for reinstatement." In playing down the stray posture in Genuino requiring the dismissed employee on payroll reinstatement to refund the salaries in case a final decision upholds the validity of the dismissal, the Court realigns the proper course of the prevailing doctrine on reinstatement pending appeal vis--vis the effect of a reversal on appeal. xxxx The Court reaffirms the prevailing principle that even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. x x x.37 (Emphasis supplied.) In sum, the Court reiterates the principle that reinstatement pending appeal necessitates that it must be immediately selfexecutory without need for a writ of execution during the pendency of the appeal, if the law is to serve its noble purpose, and any attempt on the part of the employer to evade or delay its execution should not be allowed. Furthermore, we likewise restate our ruling that an order for reinstatement entitles an employee to receive his accrued backwages from the moment the reinstatement order was issued up to the date when the same was reversed by a higher court without fear of refunding what he had received. It cannot be denied that, under our statutory and jurisprudential framework, respondent is entitled to payment of her wages for the period after December 5, 2003 until the Court of Appeals Decision dated November 23, 2005, notwithstanding the finding therein that her dismissal was legal and for just cause. Thus, the payment of such wages cannot be deemed as unjust enrichment on respondents part. WHEREFORE, the petition is DENIED and the assailed Resolution dated October 23, 2006 as well as the Resolution dated April 10, 2007 both issued by the Court of Appeals in CA-G.R. SP No. 88987 are hereby AFFIRMED. SO ORDERED.
TERESITA J. LEONARDO-DE CASTRO Associate Justice 13. Willful disobedience LORES REALTY ENTERPRISES, INC., LORENZO Y. SUMULONG III vs. VIRGINIA E. PACIA, G.R. No. 171189, March 9, 2011, 645 s 121 DECISION MENDOZA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court filed by petitioners Lores Realty Enterprises, Inc. (LREI) and Lorenzo Y. Sumulong III (Sumulong) seeking to reverse and set aside the November 25, 2005 Decision1 of the Court of Appeals (CA), in CA-G.R. SP No. 59975, which affirmed the Decision 2 of the National Labor Relations Commission (NLRC), in NLRC NCR CA No. 019221-99 (RAB-IV-10-10492-98-RI). The Facts In 1982, respondent Virginia E. Pacia (Pacia) was hired by LREI. At the time of her dismissal, she was the assistant manager and officer-in-charge of LREIs Accounting Department under the Finance Administrative Division. On October 28, 1998, LREIs acting general manager, petitioner Sumulong, through Ms. Julie Ontal, directed Pacia to prepare Check Voucher No. 16477 worth P150,000.00 as partial payment for LREIs outstanding obligation to the Bank of the Philippine Islands-Family Bank (BPI-FB). Pacia did not immediately comply with the instruction. After two repeated directives, Pacia eventually prepared Check No. 0000737526 in the amount ofP150,000.00. Later, Sumulong again directed Pacia to prepare Check Voucher No. 16478 in the amount ofP175,000.00 to settle the balance of LREIs outstanding indebtedness with BPI-FB. Pacia once again was slow in obeying the order. Due to the insistence of Sumulong, however, Pacia eventually prepared Check No. 0000737527 in the amount of P175,000.00.

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To explain her refusal to immediately follow the directive, Pacia reasoned out that the funds in LREIs account were not sufficient to cover the amounts to be indicated in the checks. The next day, October 29, 1998, Sumulong issued a memorandum 3 ordering Pacia to explain in writing why she refused to follow a clear and lawful directive. On the same day, Pacia replied in writing and explained that her initial refusal to prepare the checks was due to the unavailability of funds to cover the amounts and that she only wanted to protect LREI from liability under the Bouncing Checks Law.4 On November 6, 1998, Pacia received a notice of termination5 stating, among others, that she was being dismissed because of her willful disobedience and their loss of trust and confidence in her. Pacia then filed a Complaint for Unfair Labor Practice due to Harassment, Constructive Dismissal, Moral and Exemplary Damages6 against LREI and Sumulong. Subsequently, Pacia filed an Amended Complaint7 to include the charges of illegal dismissal and non-payment of salaries. On March 11, 1999, the Labor Arbiter (LA) rendered a decision8 finding that the dismissal of Pacia was for a just and valid cause but ordering payment of what was due her. The dispositive portion of the decision reads: WHEREFORE, premises considered, judgment is hereby rendered, as follows: 1. Ordering respondent corporation to pay complainant her:
a. unpaid salary P12,550.00

b. proportionate 13th month pay 20,916.66 Total P33,466.66

2. Dismissing the complaint for constructive/illegal dismissal, unfair labor practice, and claim for payment of damages and attorneys fees for lack of merit. SO ORDERED. On appeal, the NLRC in its March 31, 2000 Decision9 reversed the LAs Decision and found LREI and Sumulongguilty of illegal dismissal. Pertinent portions of the NLRC decision including the decretal portion read: A careful perusal of the records reveal[s] that complainants actuation herein cannot in any manner be construed as an act of insubordination. Neither can we classify it as an example of wilful disobedience by the employee of the lawful order of her employer in connection with her work. Records show that Check No. 0000737527 in the amount of P175,000.000 bounced as shown by the Return Checks Advice issued by the BPI family Bank on 3 November 1998. xxx xxx xxx

The above evidence clearly reveal[s] that there were no sufficient funds to cover the check which the acting Manager directed complainant to prepare. However, complainant nevertheless prepared Check Nos. 737527 and 737526 on 28 October 1998 and also corrected Check Vouchers Nos. 16477 and 16478 on 28 October 1998. We take note and give due merit to complainants explanation in her reluctance to issue checks against insufficient funds which was to protect the company and its signatories from liabilities resulting from issuance of bounced checks. Complainants initial refusal was good intentioned. Respondents also insist that complainant refused to follow a lawful directive of her superior officer to make some corrections on the vouchers. However, we cannot see how an order to

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prepare a check at the time when there was no sufficient fund to cover the same can be classified as a lawful directive of the acting Manager. xxx xxx xxx

Considering that complainant was illegally dismissed, the law provides that her reinstatement with payment of full backwages would be in order. However, mindful of the animosity and strained relations between parties emanating from this litigation we declare that in lieu of reinstatement, separation pay may be given to complainant, at the rate of one (1) month pay for every year of service. WHEREFORE, the Decision dated 11 March 1999 is MODIFIED. Respondent Lores Realty Ent., Inc. is held liable for illegally dismissing complainant and is directed to pay her, in addition to her unpaid salary and proportionate 13th month pay for the year 1998, the following: 1. Backwages (6 November 1998 to 15 March 2000) Basic Pay P25,100.00 x 16.3 mos. = P409,130.00 13th Month Pay P409,130.00 / 12 = 34,094.17 P443,224.17

2. Separation Pay (one month for every year of service) (18 years) P25,100 x 18 = P451,800.00 P895,024.17 vvvvvvvvvvvvv

The other findings are AFFIRMED. SO ORDERED.10 Dissatisfied, LREI and Sumulong elevated the case to the CA by way of a petition for certiorari under Rule 65 of the Rules of Court asserting grave abuse of discretion on the part of the NLRC in reversing the LAs finding that Pacia was guilty of wilful disobedience of a lawful order of her employer in connection with her work. On November 25, 2005, the CA found no merit in the petition and dismissed it.11 Thus: WHEREFORE, the petition is DISMISSED. Public respondents Decision dated 31 March 2000 and the Resolution dated 15 May 2000 in NLRC-RAB IV-10-10492-98-RI, CA NO. 019221-99, are AFFIRMED. SO ORDERED. The CA held that LREI and Sumulong failed to establish with substantial evidence that the dismissal of Pacia was for a just cause. It found that Pacias initial reluctance to obey the orders of her superiors was for a good reason - to shield the company from liability in the event that the checks would be dishonored for insufficiency of funds. Hence, the petition. THE ISSUES 1. WHETHER OR NOT THE INSTANT PETITION FOR REVIEW RAISES QUESTIONS OF LAW. 2. WHETHER OR NOT THE COURT OF APPEALS ERRED IN AFFIRMING THE RULING OF THE NLRC THAT THE ESTABLISHED FACTS JUSTIFY RESPONDENTS TERMINATION FROM EMPLOYMENT.

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3. WHETHER OR NOT THE AWARD OF BACKWAGES MUST BE COMPUTED FROM THE TIME OF DISMISSAL UNTIL FINALITY OF THE DECISION ESTABLISHING HER ILLEGAL DISMISSAL.12 In essence, the main issue to be resolved is whether Pacias dismissal was justified under the circumstances. The Court finds no merit in the petition. At the outset, it must be emphasized that the issues raised in this petition are questions of fact which are not proper subjects of an appeal by certiorari. Well-settled is the rule that under Rule 45 of the Rules of Court, only questions of law may be raised before this Court.13 A disharmony between the factual findings of the LA and the NLRC, however, opens the door to a review by this Court. Factual findings of administrative agencies are not infallible and will be set aside when they fail the test of arbitrariness. Moreover, when the findings of the NLRC contradict those of the LA, this Court, in the exercise of its equity jurisdiction, may look into the records of the case and re-examine the questioned findings.14 LREI and Sumulong argue that Pacias refusal to obey the directives of Sumulong was a "manifest intent not to perform the function she was engaged to discharge."15 They are of the position that Pacias claim of "good intentions" in refusing to prepare the checks was a mere afterthought. They stress that the instruction to prepare a check despite the absence of sufficient funds to cover the same was, nevertheless, a lawful order. On the other hand, Pacia counters that her initial reluctance to prepare the checks, which she knew were not sufficiently funded, cannot "be characterized as wrongful or perverse attitude."16 In her view, the directive to prepare the checks at the time it was not sufficiently funded was not a lawful order contemplated in Article 282 of the Labor Code. It was an unlawful directive because it asked for the preparation of a check despite the fact that the account had no sufficient funds to cover the same. She further explained that she did not comply with the directive in order to protect Sumulong and LREI from any liability in the event that the checks would be dishonored upon presentment for payment for insufficiency of funds. Article 282 of the Labor Code enumerates the just causes for which an employer may terminate the services of an employee, to wit: ARTICLE 282. Termination by employer. An employer may terminate an employment for any of the following causes: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; (b) Gross and habitual neglect by the employee of his duties; (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; (d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and (e) Other causes analogous to the foregoing. [Emphasis supplied] The offense of willful disobedience requires the concurrence of two (2) requisites: (1) the employees assailed conduct must have been willful, that is characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which he had been engaged to discharge.17 Let it be noted at this point that the Court finds nothing unlawful in the directive of Sumulong to prepare checks in payment of LREIs obligations. The availability or unavailability of sufficient funds to cover the check is immaterial in the physical preparation of the checks.
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Pacias initial reluctance to prepare the checks, however, which was seemingly an act of disrespect and defiance, was for honest and well intentioned reasons. Protecting LREI and Sumulong from liability under the Bouncing Checks Law18 was foremost in her mind. It was not wrongful or willful. Neither can it be considered an obstinate defiance of company

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authority. The Court takes into consideration that Pacia, despite her initial reluctance, eventually did prepare the checks on the same day she was tasked to do it. The Court also finds it difficult to subscribe to LREI and Sumulongss contention that the reason for Pacias initial reluctance to prepare the checks was a mere afterthought considering that "check no. 0000737527 under one of the check vouchers she reluctantly prepared, bounced when it was deposited."19 Pacias apprehension was justified when the check was dishonored. This clearly affirms her assertion that she was just being cautious and circumspect for the companys sake. Thus, her actuation should not be construed as improper conduct. In finding for Pacia, the Court is guided by the time-honored principle that if doubt exists between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter. The rule in controversies between a laborer and his master distinctly states that doubts reasonably arising from the evidence, or in the interpretation of agreements and writing, should be resolved in the former's favor.20 WHEREFORE, the petition is DENIED. SO ORDERED.
JOSE CATRAL MENDOZA Associate Justice 14. Separation Pay as financial assistance JULIET G. APACIBLE vs. MULTIMED INDUSTRIES INCORPORATED and THE BOARD OF DIRECTORS OF MULTIMED INDUSTRIES, The President MR. JOSELITO TAMBUNTING, Managers MARLENE L. OROZCO, VERONICA C. TIMOG, OLGA F. MARINO and MA. LUZ B. YAN, G.R. No. 178903, May 30, 2011 DECISION CARPIO MORALES, J.:

Petitioner Juliet Apacible was hired sometime in 1994 by respondent Multimed Industries Incorporated (the company) as Hospital Sales Representative. She rose from the ranks to become Assistant Area Sales Manager for Cebu Operations, the position she held at the time she was separated from the service in 2003. On August 4, 2003, petitioner was informed by respondent Marlene Orozco (Marlene), her immediate superior, that she would be transferred to the companys main office in Pasig City on account of the ongoing reorganization. As the transfer would entail major adjustments, petitioner requested that her transfer be made effective in October or November 2003 and that she be given time to discuss it with her husband and daughter. A week later, however, or on August 11, 2003, petitioner was informed that her transfer would be effective August 18, 2003. On even date, she was placed under investigation for the delayed released of BCRs (cash budget for customer representation in sealed envelopes which are given to loyal clients) which she received for distribution earlier in July 2003. In her written explanation,1 petitioner, admitting that the delay constituted a violation of company policies, averred that she forgot to endorse the BCRs because she was thinking about her impending transfer; and that she did not misappropriate the money as she had already released the BCRs. Finding that the delay in releasing the BCRs amounted to loss of trust and confidence, petitioner was given the option to resign. She thereupon reported to the head office in Pasig City where she met on August 23, 2003 with Marlene and respondent Ma. Luz B. Yan (referred to as Jig Blanco Yan [Jig] in the Decision and letters), respondent companys Human Resources Manager. In the meeting with Marlene and Jig, petitioner claims that Jig gave her four options: resignation, termination, availment of an early retirement package worth P40,000, or transfer to Pasig City. Without availing of any option, petitioner took a leave of absence on August 28, 29 and September 1, 2003. On September 1, 2003, petitioner, through her counsel Atty. Leo Montenegro, sent letters2 to respondent Olga Mario (Olga) and Jig denouncing their August 23 meeting as "illegal," "insensitive," "inhumane" and petitioners dismissals a "unilateral arrangement and ruthless display of power." In the same letter, Atty. Montenegro demanded payment of separation pay and stated that he had advised petitioner to remain in her current position in Cebu. On September 3, 2003, respondent company sent petitioner a memorandum-directive 3 for her to immediately report to the head office in Pasig City and to return the company vehicle assigned to her to the Cebu Office within 24 hours. Petitioner

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did not heed the directive, however. She instead filed an application for sick leave until September 11, 2003, and another until September 27, 2003. By Memorandum4 of October 1, 2003, respondent reiterated its directive to petitioner, but her counsel Atty. Montenegro sent another letter to Jig, faulting her for pressuring petitioner to resign and reiterating the demand for separation pay. Again Atty. Montenegro stated that he had advised petitioner to remain in Cebu. On October 6, 2003, petitioner requested that she be given her daily work assignment in Cebu, which request was later to be denied by Olga by letter5 dated October 8, 2003. On October 7, 2003, petitioner was given a show cause notice6 for her to explain in writing why she should not be sanctioned for insubordination for failure to comply with the transfer order. Again, petitioner, through Atty. Montenegro, wrote7 respondent company, maintaining that she was "not transferring to Manila" and that if the company "want[ed] petitioner out of the company," separation pay must be paid. By letter8 of October 14, 2003 to Atty. Montenegro, respondent company denied having pressured petitioner as it stressed that the transfer was based on business demands and did not entail a demotion in rank nor diminution of benefits. On November 4, 2002, respondent company sent petitioner a notice of termination9 effective November 7, 2003 for insubordination, prompting petitioner to file a complaint 10 for illegal dismissal, non-payment of overtime pay, 13th month pay, service incentive leave pay, separation pay, damages and attorneys fees before the Labor Arbiter. By Decision11 of March 22, 2005, the Labor Arbiter dismissed petitioners complaint, ruling that she was dismissed for just cause, i.e., fraud or loss or trust and confidence under Article 282 (a) and (c) of the Labor Code. On appeal, the National Labor Relations Commission (NLRC), by Decision12 of March 22, 2005, affirmed the Labor Arbiters decision but on a different ground petitioners refusal to obey the transfer orders which amounted to insubordination. The NLRC, however, granted petitioner separation pay by way of financial assistance amounting to P282,370, 13th month pay of P23,530.833, and P5,430.1925 representing salary for five unpaid days in November. In granting separation pay, the NLRC noted that petitioners refusal to comply with the transfer orders was upon advice of her counsel, hence, there was a "modicum of good faith" on her part. Respondent company moved for partial reconsideration of this ruling which petitioner, in her comment, opposed and even sought the award of moral and exemplary damages. By Resolution13 of February 22, 2006, the NLRC denied respondent companys motion, and glossed over petitioners comment as it was not under oath. By Decision14 of February 27, 2007, the Court of Appeals granted respondent companys appeal by modifying the NLRC Decision. It ruled that petitioner was not entitled to separation pay because, contrary to the NLRCs finding, she "lacked good faith." It noted that petitioner, from the start, knew and accepted the company policy on transfers whenever so required, and could not thus refuse "another valid reassignment by treating it as an imposition and burden." The appellate court further held that as an Assistant Area Sales Manager, petitioner was expected to "show more exacting work ethics, a higher degree of loyalty and respect as opposed to her subordinate employees," yet she "openly and continually defied" the transfer orders; and that her belligerent attitude became even more pronounced when her counsel sent several insulting and threatening letters to respondent company and its officers. The appellate court went on to find that petitioners acts were "highly insolent, impertinent and lacking in good faith," hence, not entitled to separation pay by way of financial assistance. Petitioners motion for reconsideration having been denied by Resolution 15 of June 28, 2007, she instituted the present petition in which she prays for the restoration of the award of the separation pay by way of financial assistance. The only issue thus proffered is whether petitioner is entitled separation pay by way of financial assistance. As found by the Labor Arbiter, the NLRC and the appellate court, petitioner was justly dismissed from employment. The NLRC awarded separation pay as financial assistance, however, noting that petitioners obstinacy was upon the advice of

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her counsel, Atty. Montenegro and, therefore, there was a modicum of good faith on her part. The appellate court demurred to this ruling, noting that petitioners actuations reeked of bad faith, hence, undeserving of separation pay. The petition fails. Reno Foods, Inc. v. Nagkakaisang Lakas ng Manggagawa (NLM))-Katipunan16 explains the propriety of granting separation pay in termination cases in this wise: The law is clear. Separation pay is only warranted when the cause for termination is not attributable to the employees fault, such as those provided in Articles 283 and 284 of the Labor Code, as well as in cases of illegal dismissal in which reinstatement is no longer feasible. It is not allowed when an employee is dismissed for just cause, such as serious misconduct. xxxx It is true that there have been instances when the Court awarded financial assistance to employees who were terminated for just causes, on grounds of equity and social justice. The same, however, has been curbed and rationalized in Philippine Long Distance Telephone Company v. National Labor Relations Commission. In that case, we recognized the harsh realities faced by employees that forced them, despite their good intentions, to violate company policies, for which the employer can rightly terminate their employment. For these instances, the award of financial assistance was allowed. But, in clear and unmistakable language, we also held that the award of financial assistance shall not be given to validly terminated employees, whose offenses are iniquitous or reflective of some depravity in their moral character. When the employee commits an act of dishonesty, depravity, oriniquity, the grant of financial assistance is misplaced compassion. It is tantamount not only to condoning a patently illegal or dishonest act, but an endorsement thereof. It will be an insult to all the laborers who despite their economic difficulties, strive to maintain good values and moral conduct. In fact, in the recent case of Toyota Motors Philippines, Corp. Workers Association (TMPCWA) v. National Labor Relations Commission, we ruled that separation pay shall not be granted to all employees who are dismissed on any of the four grounds provided in Article 282 of the Labor Code. Such ruling was reiterated and further explained in Central Philippines Bandag Retreaders, Inc. v. Diasnes: To reiterate our ruling in Toyota, labor adjudicatory officials and the CA must demur the award of separation pay based on social justice when an employees dismissal is based on serious misconduct or wilful disobedience; gross and habitual neglect of duty; fraud or wilful breach of trust; or commission of a crime against the person of the employer or his immediate familygrounds under Art. 282 of the Labor Code that sanction dismissals of employees. They must be most judicious and circumspect in awarding separation pay or financial assistance as the constitutional policy to provide full protection to labor is not meant to be an instrument to oppress the employers. The commitment of the Court to the cause of labor should not embarrass us from sustaining the employers when they are right, as assistance to the undeserving and those who are unworthy of the liberality of the law. (italics in the original, emphasis and underscoring supplied) Petitioner was, it bears reiteration, dismissed for wilfully disobeying the lawful order of her employer to transfer from Cebu to Pasig City. As correctly noted by the appellate court, petitioner knew and accepted respondent companys policy on transfers when she was hired and was in fact even transferred many times from one area of operations to another Bacolod City, Iloilo City and Cebu. Bascon v. Court of Appeals17 outlines the elements of gross insubordination as follows: As regards the appellate courts finding that petitioners were justly terminated for gross insubordination or wilful disobedience, Article 282 of the Labor Code provides in part: An employer may terminate an employment for any of the following causes: (a) Serious misconduct or wilful disobedience by the employee of the lawful orders of his employer or representative in connection with his work. However, wilful disobedience of the employers lawful orders, as a just cause for dismissal of an employee, envisages the concurrence of at least two requisites: (1) the employees assailed conduct must have been wilful, that is, characterized

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by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which he had been engaged to discharge. (emphasis and underscoring supplied) Clearly, petitioners adamant refusal to transfer, coupled with her failure to heed the order for her return the company vehicle assigned to her and, more importantly, allowing her counsel to write letters couched in harsh language to her superiors unquestionably show that she was guilty of insubordination, hence, not entitled to the award of separation pay. WHEREFORE, the petition is denied and the Decision of the Court of Appeals dated February 27, 2007 and Resolution of June 28, 2007 are AFFIRMED. SO ORDERED.
CONCHITA CARPIO MORALES Associate Justice 15. Appeal/Appeal Bond BANAHAW BROADCASTING CORPORATION vs. CAYETANO PACANA III, NOE U. DACER, JOHNNY B. RACAZA, LEONARDO S. OREVILLO, ARACELI T. LIBRE, GENOVEVO E. ROMITMAN, PORFERIA M. VALMORES, MENELEO G. LACTUAN, DIONISIO G. BANGGA, FRANCISCO D. MANGA, NESTOR A. AMPLAYO, LEILANI B. GASATAYA, LORETA G. LACTUAN, RICARDO B. PIDO, RESIGOLO M. NACUA and ANACLETO C. REMEDIO, G.R. No. 171673, May 30, 2011, 649 s 196 DECISION LEONARDO-DE CASTRO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure assailing the Decision 1 dated April 15, 2005 of the Court of Appeals in CA-G.R. SP No. 57847, and its Resolution2 dated January 27, 2006 denying petitioners Motion for Reconsideration. The factual and procedural antecedents of this case are as follows: Respondents in the case at bar, Cayetano Pacana III, Noe U. Dacer, Johnny B. Racaza, Leonardo S. Orevillo, Araceli T. Libre, Genovevo E. Romitman, Porferia M. Valmores, Meneleo G. Lactuan, Dionisio G. Bangga, Francisco D. Manga, Nestor A. Amplayo, Leilani B. Gasataya, Loreta G. Lactuan, Ricardo B. Pido, Resigolo M. Nacua and Anacleto C. Remedio (collectively, the DXWG personnel), are supervisory and rank and file employees of the DXWG-Iligan City radio station which is owned by petitioner Banahaw Broadcasting Corporation (BBC), a corporation managed by Intercontinental Broadcasting Corporation (IBC). On August 29, 1995, the DXWG personnel filed with the Sub-regional Arbitration Branch No. XI, Iligan City a complaint for illegal dismissal, unfair labor practice, reimbursement of unpaid Collective Bargaining Agreement (CBA) benefits, and attorneys fees against IBC and BBC. On June 21, 1996, Labor Arbiter Abdullah L. Alug rendered his Decision3 awarding the DXWG personnel a total ofP12,002,157.28 as unpaid CBA benefits consisting of unpaid wages and increases, 13th month pay, longevity pay, sick leave cash conversion, rice and sugar subsidy, retirement pay, loyalty reward and separation pay. 4 The Labor Arbiter denied the other claims of the DXWG personnel for Christmas bonus, educational assistance, medical check-up and optical expenses. Both sets of parties appealed to the National Labor Relations Commission (NLRC). On May 15, 1997, a Motion to Dismiss, Release, Waiver and Quitclaim,5 was jointly filed by IBC and the DXWG personnel based on the latters admission that IBC is not their employer as it does not own DXWG-Iligan City. On April 21, 1997, the NLRC granted the Motion and dismissed the case with respect to IBC.6 BBC filed a Motion for Reconsideration alleging that (1) neither BBC nor its duly authorized representatives or officers were served with summons and/or a copy of the complaint when the case was pending before the Labor Arbiter or a copy of the Decision therein; (2) since the liability of IBC and BBC is solidary, the release and quitclaim issued by the DXWG personnel in favor of IBC totally extinguished BBCs liability; (3) it was IBC that effected the termination of the DXWG personnels employment; (4) the DXWG personnel are members of the IBC union and are not employees of BBC; and (5) the sequestered properties of BBC cannot be levied upon. On December 12, 1997, the NLRC issued a Resolution vacating the Decision of Labor Arbiter Alug and remanding the case to the arbitration branch of origin on the ground that while the complaint was filed against both IBC and BBC, only IBC was served with summons, ordered to submit a position paper, and furnished a copy of the assailed decision.7

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On October 15, 1998, Labor Arbiter Nicodemus G. Palangan rendered a Decision adjudging BBC to be liable for the same amount discussed in the vacated Decision of Labor Arbiter Alug: WHEREFORE, premises considered, judgment is hereby rendered ordering the respondent Banahaw Broadcasting Corporation to pay complainants the following: 1. Cayetano Pacana III 2. Noe U. Dacer 3. Johnny B. Racaza 4. Leonardo S. Orevillo 5. Araceli T. Libre 6. Genovevo E. Romitman 7. Porferia M. Valmores 8. Meneleo G. Lactuan 9. Dionisio G. Bangga 10. Francisco D. Manga 11. Nestor A. Amplayo 12. Leilani B. Gasataya 13. Loreta G. Lactuan 14. Ricardo B. Pido 15. Resigolo M. Nacua 16. Anacleto C. Remedio GRAND TOTAL P 1,730,535.75 886,776.43 1,271,739.34 1,097,752.70 543,467.22 716,455.72 562,564.78 678,995.91 580,873.78 29,286.65 583,798.51 42,669.75 757,252.52 756,835.64 887,344.75 887,345.39 P 12,002,157.28

Respondent is likewise ordered to pay 10% of the total award as attorneys fee.8 Both BBC and respondents appealed to the NLRC anew. The appeal was docketed as NLRC CA No. M-004419-98. In their appeal, the DXWG personnel reasserted their claim for the remaining CBA benefits not awarded to them, and alleged error in the reckoning date of the computation of the monetary award. BBC, in its own Memorandum of Appeal, challenged the monetary award itself, claiming that such benefits were only due to IBC, not BBC, employees. 9 In the same Memorandum of Appeal, BBC incorporated a Motion for the Recomputation of the Monetary Award (of the Labor Arbiter),10 in order that the appeal bond may be reduced. On September 16, 1999, the NLRC issued an Order11 denying the Motion for the Recomputation of the Monetary Award. According to the NLRC, such recomputation would result in the premature resolution of the issue raised on appeal. The NLRC ordered BBC to post the required bond within 10 days from receipt of said Order, with a warning that noncompliance will cause the dismissal of the appeal for non-perfection.12 Instead of complying with the Order to post the required bond, BBC filed a Motion for Reconsideration, 13 alleging this time that since it is wholly owned by the Republic of the Philippines, it need not post an appeal bond. On November 22, 1999, the NLRC rendered its Decision14 in NLRC CA No. M-004419-98. In said Decision, the NLRC denied the Motion for Reconsideration of BBC on its September 16, 1999 Order and accordingly dismissed the appeal of BBC for non-perfection. The NLRC likewise dismissed the appeal of the DXWG personnel for lack of merit in the same Decision. BBC filed a Motion for Reconsideration of the above Decision. On January 13, 2000, the NLRC issued a Resolution15 denying the Motion.

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BBC filed with the Court of Appeals a Petition for Certiorari under Rule 65 of the Rules of Court assailing the above dispositions by the NLRC. The Petition was docketed as CA-G.R. SP No. 57847. On April 15, 2005, the Court of Appeals rendered the assailed Decision denying BBCs Petition for Certiorari. The Court of Appeals held that BBC, though owned by the government, is a corporation with a personality distinct from the Republic or any of its agencies or instrumentalities, and therefore do not partake in the latters exemption from the posting of appeal bonds. The dispositive portion of the Decision states: WHEREFORE, finding no grave abuse of discretion on the part of public respondents, We DENY the petition. The challenged decision of public respondent dated November 22, 1999, as well as its subsequent resolution dated January 13, 2000, in NLRC Case No. M-004419-98 are hereby AFFIRMED. The decision of the Labor Arbiter dated October 15, 1998 in RAB Case No. 12-09-00309-95 is hereby declared FINAL AND EXECUTORY.16 On January 27, 2006, the Court of Appeals rendered the assailed Resolution denying the Motion for Reconsideration. Hence, this Petition for Review. As stated above, both the NLRC and the Court of Appeals dealt with only one issue whether BBC is exempt from posting an appeal bond. To recall, the NLRC issued an Order denying BBCs Motion for the Recomputation of the Monetary Award and ordered BBC to post the required bond within 10 days from receipt of said Order, with a warning that noncompliance will cause the dismissal of the appeal for non-perfection. 17 However, instead of heeding the warning, BBC filed a Motion for Reconsideration, alleging that it need not post an appeal bond since it is wholly owned by the Republic of the Philippines. There is no dispute as regards the history of the ownership of BBC and IBC. Both BBC and IBC, together with Radio Philippines Network (RPN-9), were formerly owned by Roberto S. Benedicto (Benedicto). In the aftermath of the 1986 people power revolution, the three companies, collectively denominated as Broadcast City, were sequestered and placed under the control and management of the Board of Administrators (BOA). 18 The BOA was tasked to operate and manage its business and affairs subject to the control and supervision of the Presidential Commission on Good Government (PCGG).19 In December 1986, Benedicto and PCGG allegedly executed a Management Agreement whereby the Boards of Directors of BBC, IBC and RPN-9 were agreed to be reconstituted. Under the agreement, 2/3 of the membership of the Boards of Directors will be PCGG nominees, and 1/3 will be Benedicto nominees. A reorganized Board of Directors was thus elected for each of the three corporations. The BOA, however, refused to relinquish its function, paving for the filing by Benedicto of a Petition for Prohibition with this Court in 1989, which was docketed as G.R. No. 87710. In the meantime, it was in 1987 when the Republic, represented by the PCGG, filed the case for recovery/reconveyance/reversion and damages against Benedicto. Following our ruling in Bataan Shipyard & Engineering Co., Inc. (BASECO) v. Presidential Commission on Good Government,20 the institution of this suit necessarily placed BBC, IBC and RPN-9 under custodia legis of the Sandiganbayan. On November 3, 1990, Benedicto and the Republic executed a Compromise Agreement whereby Benedicto, in exchange for immunity from civil and criminal actions, "ceded to the government certain pieces of property listed in Annex A of the agreement and assigned or transferred whatever rights he may have, if any, to the government over all corporate assets listed in Annex B of the agreement."21 BBC is one of the properties listed in Annex B.22Annex A, on the other hand, includes the following entry: CESSION TO THE GOVERNMENT: I. PHILIPPINE ASSETS: xxxx 7. Inter-Continental Broadcasting Corporation (IBC), 100% of total assets estimated at P450 million, consisting of 41,000 sq.mtrs. of land, more or less, located at Broadcast City Quezon City, other land and buildings in various Provinces, and operates the following TV stations: a. TV 13 (Manila)

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b. DY/TV 13 (Cebu) c. DX/TV 13 (Davao) d. DYOB/TV 12 (Iloilo) e. DWLW/TV 13 (Laoag) as well as the following Radio Stations a. DZMZ-FM Manila b. DYBQ Iloilo c. DYOO Roxas d. DYRG Kalibo e. DWLW Laoag f. DWGW Legaspi g. DWDW Dagupan h. DWNW Naga i. DXWG Iligan . . . . . . . . . . P352,455,286.0023 (Emphasis supplied.) Then Senator Teofisto T. Guingona, Jr. filed a Petition for Certiorari and Prohibition seeking to invalidate the Compromise Agreement, which was docketed as G.R. No. 96087. The Petition was consolidated with G.R. No. 87710. On March 31, 1992, this Court, in Benedicto v. Board of Administrators of Television Stations RPN, BBC and IBC,24 promulgated its Decision on the consolidated petitions in G.R. No. 87710 and G.R. No. 96087. Holding that the authority of the BOA had become functus oficio, we granted the Petition in G.R. No. 87710, ordering the BOA to "cease and desist from further exercising management, operation and control of Broadcast City and is hereby directed to surrender the management, operation and control of Broadcast City to the reorganized Board of Directors of each of the Broadcast City television stations."25 We denied the Petition in G.R. No. 96087 for being premature, since the approval of the Compromise Agreement was still pending in the Sandiganbayan.26 The Sandiganbayan subsequently approved the Compromise Agreement on October 31, 1992, and the approval was affirmed by this Court on September 10, 1993 in Republic v. Sandiganbayan. 27 Thus, both BBC and IBC were government-owned and controlled during the time the DXWG personnel filed their original complaint on August 29, 1995. In the present Petition, BBC reiterates its argument that since it is now wholly and solely owned by the government, the posting of the appeal bond was unnecessary on account of the fact that it is presumed that the government is always solvent.28 Citing the 1975 case of Republic (Bureau of Forestry) v. Court of Appeals, 29 BBC adds before us that it is not even necessary for BBC to raise its exempt status as the NLRC should have taken cognizance of the same.30 When the Court of Appeals affirmed the dismissal by the NLRC of BBCs appeal for failure of the latter to post an appeal bond, it relied to the ruling of this Court in Republic v. Presiding Judge, Branch XV, Court of First Instance of Rizal. 31 The appellate court, noting that BBCs primary purpose as stated in its Articles of Incorporation is to engage in commercial radio and television broadcasting, held that BBC did not meet the criteria enunciated in Republic v. Presiding Judge for exemption from the appeal bond.32 We pertinently held in Republic v. Presiding Judge:

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The sole issue implicit in this petition is whether or not the RCA is exempt from paying the legal fees and from posting an appeal bond. We find merit in the petition. To begin with, We have to determine whether the RCA is a governmental agency of the Republic of the Philippines without a separate, distinct and independent legal personality from the latter. We maintain the affirmative. The legal character of the RCA as a governmental agency had already been passed upon in the case of Ramos vs. Court of Industrial Relations wherein this Court held: "Congress, by said Republic Act 3452 approved on June 14, 1962, created RCA, in pursuance of its declared policy, viz: SECTION 1. It is hereby declared to be the policy of the Government that in order to stabilize the price of palay, rice and corn, it shall engage in the 'purchase of these basic foods directly from those tenants, farmers, growers, producers and landowners in the Philippines who wish to dispose of their produce at a price that will afford them a fair and just return for their labor and capital investment and whenever circumstances brought about by any cause, natural or artificial, should so require, shall sell and dispose of these commodities to the consumers at areas of consumption at a price that is within their reach. "RCA is, therefore, a government machinery to carry out a declared government policy just noted, and not for profit. "And more. By law, RCA depends for its continuous operation on appropriations yearly set aside by the General Appropriations Act. So says Section 14 of Republic Act 3452: SECTION 14. The sum of one hundred million pesos is hereby appropriated, out of any funds in the National Treasury not otherwise appropriated, for the capitalization of the Administration: Provided, That the annual operational expenses of the Administration shall not exceed three million pesos of the said amount: Provided further, That the budget of the Rice and Corn Administration for the fiscal year nineteen hundred and sixty-three to nineteen hundred and sixty-four and the years thereafter shall be included in the General appropriations submitted to Congress. "RCA is not possessed of a separate and distinct corporate existence. On the contrary, by the law of its creation, it is an office directly under the Office of the President of the Philippines." Respondent, however, contends that the RCA has been created to succeed to the corporate assets, liabilities, functions and powers of the abolished National Rice & Corn Corporation which is a government-owned and controlled corporation separate and distinct from the Government of the Republic of the Philippines. He further contends that the RCA, being a duly capitalized entity doing mercantile activity engaged in the buying and selling of palay, rice, and corn cannot be the same as the Republic of the Philippines; rather, it is an entity separate and distinct from the Republic of the Philippines. These contentions are patently erroneous. xxxx The mercantile activity of RCA in the buying and selling of palay, rice, and corn is only incident to its primary governmental function which is to carry out its declared policy of subsidizing and stabilizing the price of palay, rice, and corn in order to make it well within the reach of average consumers, an object obviously identified with the primary function of government to serve the well-being of the people. As a governmental agency under the Office of the President the RCA is thus exempt from the payment of legal fees as well as the posting of an appeal bond. Under the decisional laws which form part of the legal system of the Philippines the Republic of the Philippines is exempt from the requirement of filing an appeal bond on taking an appeal from an adverse judgment, since there could be no doubt, as to the solvency of the Government. This well-settled doctrine of the Government's exemption from the requirement of posting an appeal bond was first enunciated as early as March 7, 1916 in Government of the Philippine Island vs. Judge of the Court of First Instance of Iloilo and has since been so consistently enforced that it has become practically a matter of public knowledge and certainly a matter of judicial notice on the part of the courts of the land.33 In the subsequent case of Badillo v. Tayag,34 we further discussed that:

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Created by virtue of PD No. 757, the NHA is a government-owned and controlled corporation with an original charter. As a general rule, however, such corporations -- with or without independent charters -- are required to pay legal fees under Section 21 of Rule 141 of the 1997 Rules of Civil Procedure: "SEC. 21. Government Exempt. - The Republic of the Philippines, its agencies and instrumentalities, are exempt from paying the legal fees provided in this rule. Local governments and government-owned or controlled corporations with or without independent charters are not exempt from paying such fees." On the other hand, the NHA contends that it is exempt from paying all kinds of fees and charges, because it performs governmental functions. It cites Public Estates Authority v. Yujuico, which holds that the Public Estates Authority (PEA), a government-owned and controlled corporation, is exempt from paying docket fees whenever it files a suit in relation to its governmental functions. We agree. x x x.35 We can infer from the foregoing jurisprudential precedents that, as a general rule, the government and all the attached agencies with no legal personality distinct from the former are exempt from posting appeal bonds, whereas governmentowned and controlled corporations (GOCCs) are not similarly exempted. This distinction is brought about by the very reason of the appeal bond itself: to protect the presumptive judgment creditor against the insolvency of the presumptive judgment debtor. When the State litigates, it is not required to put up an appeal bond because it is presumed to be always solvent.36 This exemption, however, does not, as a general rule, apply to GOCCs for the reason that the latter has a personality distinct from its shareholders. Thus, while a GOCCs majority stockholder, the State, will always be presumed solvent, the presumption does not necessarily extend to the GOCC itself. However, when a GOCC becomes a "government machinery to carry out a declared government policy,"37 it becomes similarly situated as its majority stockholder as there is the assurance that the government will necessarily fund its primary functions. Thus, a GOCC that is sued in relation to its governmental functions may be, under appropriate circumstances, exempted from the payment of appeal fees. In the case at bar, BBC was organized as a private corporation, sequestered in the 1980s and the ownership of which was subsequently transferred to the government in a compromise agreement. Further, it is stated in its Amended Articles of Incorporation that BBC has the following primary function: To engage in commercial radio and television broadcasting, and for this purpose, to establish, operate and maintain such stations, both terrestrial and satellite or interplanetary, as may be necessary for broadcasting on a network wide or international basis.38 It is therefore crystal clear that BBCs function is purely commercial or proprietary and not governmental. As such, BBC cannot be deemed entitled to an exemption from the posting of an appeal bond. Consequently, the NLRC did not commit an error, and much less grave abuse of discretion, in dismissing the appeal of BBC on account of non-perfection of the same. In doing so, the NLRC was merely applying Article 223 of the Labor Code, which provides: ART. 223. Appeal. - Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. Such appeal may be entertained only on any of the following grounds: (a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter; (b) If the decision, order or award was secured through fraud or coercion, including graft and corruption; (c) If made purely on questions of law; and (d) If serious errors in the findings of facts are raised which would cause grave or irreparable damage or injury to the appellant.

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In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. (Italization supplied.) The posting of the appeal bond within the period provided by law is not merely mandatory but jurisdictional. The failure on the part of BBC to perfect the appeal thus had the effect of rendering the judgment final and executory.39 Neither was there an interruption of the period to perfect the appeal when BBC filed (1) its Motion for the Recomputation of the Monetary Award in order to reduce the appeal bond, and (2) its Motion for Reconsideration of the denial of the same. In Lamzon v. National Labor Relations Commission,40 where the petitioner argued that the NLRC gravely abused its discretion in dismissing her appeal on the ground of non-perfection despite the fact that she filed a Motion for Extension of Time to File an Appeal Bond, we held: The pertinent provision of Rule VI, NLRC Rules of Procedure, as amended, provides as follows: xxxx Section 6. Bond. - In case the decision of a Labor Arbiter, POEA Administrator and Regional Director or his duly authorized hearing officer involves a monetary award, an appeal by the employer shall be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission or the Supreme Court in an amount equivalent to the monetary award, exclusive of moral and exemplary damages and attorney's fees. The employer as well as counsel shall submit a joint declaration under oath attesting that the surety bond posted is genuine and that it shall be in effect until final disposition of the case. The Commission may, in meritorious cases and upon Motion of the Appellant, reduce the amount of the bond. The filing, however, of the motion to reduce bond shall not stop the running of the period to perfect appeal.
1awphil

Section 7. No Extension of Period. - No motion or request for extension of the period within which to perfect an appeal shall be allowed." As correctly observed by the NLRC, petitioner is presumptuous in assuming that the 10-day period for perfecting an appeal, during which she was to post her appeal bond, could be easily extended by the mere filing of an appropriate motion for extension to file the bond and even without the said motion being granted. It bears emphasizing that an appeal is only a statutory privilege and it may only be exercised in the manner provided by law. Nevertheless, in certain cases, we had occasion to declare that while the rule treats the filing of a cash or surety bond in the amount equivalent to the monetary award in the judgment appealed from, as a jurisdictional requirement to perfect an appeal, the bond requirement on appeals involving monetary awards is sometimes given a liberal interpretation in line with the desired objective of resolving controversies on the merits. However, we find no cogent reason to apply this same liberal interpretation in this case. Considering that the motion for extension to file appeal bond remained unacted upon, petitioner, pursuant to the NLRC rules, should have seasonably filed the appeal bond within the ten (10) day reglementary period following receipt of the order, resolution or decision of the NLRC to forestall the finality of such order, resolution or decision. Besides, the rule mandates that no motion or request for extension of the period within which to perfect an appeal shall be allowed. The motion filed by petitioner in this case is tantamount to an extension of the period for perfecting an appeal. As payment of the appeal bond is an indispensable and jurisdictional requisite and not a mere technicality of law or procedure, we find the challenged NLRC Resolution of October 26, 1993 and Order dated January 11, 1994 in accordance with law. The appeal filed by petitioner was not perfected within the reglementary period because the appeal bond was filed out of time. Consequently, the decision sought to be reconsidered became final and executory. Unless there is a clear and patent grave abuse of discretion amounting to lack or excess of jurisdiction, the NLRC's denial of the appeal and the motion for reconsideration may not be disturbed.41 (Underscoring supplied.) In the case at bar, BBC already took a risk when it filed its Motion for the Recomputation of the Monetary Award without posting the bond itself. The Motion for the Recomputation of the Monetary Award filed by BBC, like the Motion for Extension to File the Appeal Bond in Lamzon, was itself tantamount to a motion for extension to perfect the appeal, which is prohibited by the rules. The NLRC already exhibited leniency when, instead of dismissing the appeal outright, it merely ordered BBC to post the required bond within 10 days from receipt of said Order, with a warning that noncompliance will cause the dismissal of the appeal for non-perfection. When BBC further demonstrated its unwillingness by completely ignoring this warning and by filing a Motion for Reconsideration on an entirely new ground, the NLRC cannot be said to

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have committed grave abuse of discretion by making good its warning to dismiss the appeal. Therefore, the Court of Appeals committed no error when it upheld the NLRCs dismissal of petitioners appeal. WHEREFORE, the instant Petition for Review on Certiorari is DENIED. The Decision of the Court of Appeals dated April 15, 2005 in CA-G.R. SP No. 57847, and its Resolution dated January 27, 2006 are hereby AFFIRMED. No pronouncement as to costs. SO ORDERED.
TERESITA J. LEONARDO-DE CASTRO Associate Justice 16. Voluntary Resignation RODOLFO LUNA vs. ALLADO CONSTRUCTION CO., INC., and/or RAMON ALLADO, G.R. No. 175251, May 30, 2011, 649 s 262 DECISION LEONARDO-DE CASTRO, J.:

This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure seeking to reverse and set aside the Decision1 dated July 28, 2006 of the Court of Appeals as well as its Resolution 2 dated September 28, 2006 denying the motion for reconsideration filed by petitioner. As narrated in the Court of Appeals July 28, 2006 Decision, the facts of this case are as follows: [Respondent] Allado Construction Co., Inc. is a juridical entity engaged in the construction business; [respondent] Ramon Allado is the President of the said corporation. [Petitioner] filed a complaint before the Executive Labor Arbiter Arturo Gamolo, RAB Branch XI, Davao City, alleging that he was an employee of herein [respondents], having been a part of [respondents] construction pool of personnel. He had continuously rendered services as a warehouseman and a timekeeper in every construction project undertaken by [respondents]. Sometime in the afternoon of November 24, 2001, while at [respondents] construction site in Maasim, Sarangani Province, he was given a travel order dated November 24, 2001 to proceed to [respondents] main office in Davao City for reassignment. Upon arrival at the office of [respondents] on November 26, 2001, he was told by one Marilou Matilano, personnel manager of [respondents], to sign several sets of "Contract of Project Employment". He refused to sign the said contracts. Because of his refusal, he was not given a reassignment or any other work. These incidents prompted him to file the complaint. [Respondents], on the other hand, alleged that on November 29, 2001, [petitioner] applied for a leave of absence until December 6, 2001, which was granted. Upon expiration of his leave, [petitioner] was advised to report to the companys project in Kablacan, Sarangani Province. However, he refused to report to his new assignment and claimed instead that he had been dismissed illegally.3 Finding that petitioner should be deemed to have resigned,4 the Labor Arbiter dismissed petitioners complaint for illegal dismissal against respondents, but ordered the latter to pay the former the amount of P18,000.00 by way of financial assistance. The dispositive portion of the Decision5 dated June 26, 2002 of the Labor Arbiter is as follows: WHEREFORE, foregoing considered, judgment is hereby rendered dismissing the action for illegal dismissal but ordering respondent ALLADO CONSTRUCTION CO., INC. to extend complainant RODOLFO LUNA the amount of PESOS: EIGHTEEN THOUSAND PESOS (P18,000.00) by way of financial assistance to tide him over during his post-employment with the former.6 Only respondents interposed an appeal with the National Labor Relations Commission (NLRC), purely for the purpose of questioning the validity of the grant of financial assistance made by the Labor Arbiter. In its Resolution7 dated May 9, 2003, the NLRC reversed the June 26, 2002 Decision of the Labor Arbiter and declared respondents guilty of illegal dismissal and ordered them to pay petitioner one-month salary for every year of service as separation pay, computed at P170.00 per day and full backwages from November 21, 2001 up to the finality of the decision. The dispositive portion of the May 9, 2003 NLRC Resolution reads:

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WHEREFORE, the appeal is Granted and the assailed Decision is reversed and vacated; A new judgment is rendered declaring respondents-appellant guilty of illegal dismissal and to pay complainant-appellant one (1) month salary for every year of service as separation pay, computed at P170.00 per day and full backwages from November 21, 2001 up to the finality of the decision.8 Respondents moved for reconsideration but their motion was denied in the NLRC Resolution9 dated September 30, 2003 due to lack of merit. Unperturbed, respondents elevated their cause to the Court of Appeals via a petition for certiorari under Rule 65 of the Rules of Court to set aside the aforementioned NLRC issuances and to reinstate the Labor Arbiters decision with the modification that the award of financial assistance be deleted. In its Decision dated July 28, 2006, the Court of Appeals granted respondents petition for certiorari and disposed of the case in this wise: ACCORDINGLY, the assailed Orders of respondent Commission are hereby SET ASIDE. The Decision of the Labor Arbiter in NLRC Case No. RAB XI-12-01312-01 is hereby REINSTATED with the MODIFICATION that the award of financial assistance is deleted.10 Relying on jurisprudence, the Court of Appeals held that it was grave abuse of discretion for the NLRC to rule on the issue of illegal dismissal when the only issue raised to it on appeal was the propriety of the award of financial assistance. The Court of Appeals further ruled that financial assistance may not be awarded in cases of voluntary resignation. Expectedly, petitioner filed a motion for reconsideration but this was denied by the Court of Appeals in its Resolution dated September 28, 2006. Hence, this petition for review wherein the petitioner puts forward for resolution the following issues: (A) WHETHER OR NOT THE NLRC, IN THE EXERCISE OF ITS INHERENT POWERS, COULD STILL REVIEW ISSUES NOT BROUGHT DURING THE APPEAL; (B) WHETHER OR NOT RESPONDENT COURT OF APPEALS EXERCISED GRAVE ABUSE OF DISCRETION IN DISREGARDING (1) THE FINDINGS OF FACT OF THE NLRC; (2) THE PRINCIPLE OF SOCIAL JUSTICE; AND (3) EXISTING JURISPRUDENCE WITH RESPECT TO AWARD OF FINANCIAL ASSISTANCE; and (C) WHETHER OR NOT RESPONDENT COURT OF APPEALS EXHIBITED BIAS AND PARTIALITY WHEN IT RENDERED THE SUBJECT DECISION AND RESOLUTION CONSIDERING THE HASTY AND IMPROVIDENT ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION TO FRUSTRATE PETITIONER IN IMPLEMENTING THE FINAL AND EXECUTORY JUDGMENT OF THE NLRC RENDERED IN FAVOR OF PETITIONER.11 Anent the first issue, petitioner argues that the NLRC has the authority to review issues not brought before it for appeal. Petitioner bases this argument on Article 218(c) of the Labor Code, which provides: ART. 218. Powers of the Commission. The Commission shall have the power and authority: xxxx (c) To conduct investigation for the determination of a question, matter or controversy within its jurisdiction, proceed to hear and determine the disputes in the absence of any party thereto who has been summoned or served with notice to appear, conduct its proceedings or any part thereof in public or in private, adjourn its hearings to any time and place, refer technical matters or accounts to an expert and to accept his report as evidence after hearing of the parties upon due notice, direct parties to be joined in or excluded from the proceedings, correct, amend, or waive any error, defect or irregularity whether in substance or in form, give all such directions as it may deem necessary or expedient in the determination of the dispute before it, and dismiss any matter or refrain from further hearing or from determining the dispute or part thereof, where it is trivial or where further proceedings by the Commission are not necessary or desirable. (Emphasis supplied.)

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Furthermore, petitioner attempts to reinforce his position by citing New Pacific Timber & Supply Company, Inc. v. National Labor Relations Commission,12 where the Court expounded on the powers of the NLRC as provided for by Article 218(c) of the Labor Code, to wit: Moreover, under Article 218(c) of the Labor Code, the NLRC may, in the exercise of its appellate powers, "correct, amend or waive any error, defect or irregularity whether in substance or in form." Further, Article 221 of the same provides that: "In any proceeding before the Commission or any of the Labor Arbiters, the rules of evidence prevailing in courts of law or equity shall not be controlling and it is the spirit and intention of this Code that the Commission and its members and the Labor Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily and objectively and without regard to technicalities of law or procedure, all in the interest of due process. x x x."13 (Emphasis supplied.) We find petitioners argument to be untenable. Section 4(c), Rule VI of the 2002 Rules of Procedure of the NLRC, which was in effect at the time respondents appealed the Labor Arbiters decision, expressly provided that, on appeal, the NLRC shall limit itself only to the specific issues that were elevated for review, to wit: RULE VI Appeals Section 4. Requisites for Perfection of Appeal. x x x. xxxx (c) Subject to the provisions of Article 218, once the appeal is perfected in accordance with these Rules, the Commission shall limit itself to reviewing and deciding specific issues that were elevated on appeal. (Emphasis supplied.) As a testament to its effectivity and the NLRCs continued implementation of this procedural policy, the same provision was retained as Section 4(d), Rule VI of the 2005 Revised Rules of Procedure of the NLRC. In the case at bar, the NLRC evidently went against its own rules of procedure when it passed upon the issue of illegal dismissal although the question raised by respondents in their appeal was concerned solely with the legality of the labor arbiters award of financial assistance despite the finding that petitioner was lawfully terminated. To reiterate, the clear import of the aforementioned procedural rule is that the NLRC shall, in cases of perfected appeals, limit itself to reviewing those issues which are raised on appeal. As a consequence thereof, any other issues which were not included in the appeal shall become final and executory. We are cognizant of the fact that Article 218(c) of the Labor Code grants the NLRC the authority to "correct, amend or waive any error, defect or irregularity whether in substance or in form" in the exercise of its appellate jurisdiction. However, a careful perusal of the body of jurisprudence wherein we upheld the validity of the NLRCs invocation of that prerogative would reveal that the said cases involved factual issues and circumstances materially dissimilar to the case at bar. In New Pacific Timber,14 which petitioner cited, we ruled that there was no grave abuse of discretion on the part of the NLRC, using Article 218(c) as part basis, when it entertained the petition for relief filed by a party and treated it as an appeal, even if it was filed beyond the reglementary period for filing an appeal. Before that case, we invoked the same Labor Code provision in City Fair Corporation v. National Labor Relations Commission15 and Judy Philippines, Inc. v. National Labor Relations Commission16 to justify our ruling that the NLRC did not abuse its discretion when it allowed in both cases the appeal of a party even if it was filed a day, or even a few days, late. Similarly, we held in Industrial Timber Corporation v. Ababon,17 that substantial justice is best served by permitting the NLRC to allow a petition for relief filed by a party despite the earlier commission of a procedural defect of filing the motion for reconsideration three days late on the strength of Article 218(c) and other pertinent labor law provisions. In Pison-Arceo Agricultural and Development Corporation v. National Labor Relations Commission,18we held that procedural rules governing service of summons are not strictly construed in NLRC proceedings owing to the relaxation of technical rules of procedure in labor cases as well as to Article 218(c). We likewise held inAguanza v. Asian Terminal, Inc.,19 that the insufficiency of a supersedeas bond is a defect in form which the NLRC may waive. Furthermore, in Independent Sagay-Escalante Planters, Inc. v. National Labor Relations Commission,20 we ruled that the NLRC had ample authority, under Article 218(c), to disregard the circumstance

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that the appeal fee had been tardily paid by one party and to order both parties to present evidence before the Labor Arbiter in support of their claims. Lastly, in Faeldonia v. Tong Yak Groceries21 and Mt. Carmel College v. Resuena,22 we used Article 218(c) to justify the NLRCs reversal of the Labor Arbiters factual conclusions. However, in both cases, there was no objection that the NLRC passed upon issues that were not raised on appeal. On the other hand, it is already settled in jurisprudence that the NLRC may not rely on Article 218(c) of the Labor Code as basis for its act of reviewing an entire case above and beyond the sole legal question raised. In Del Monte Philippines, Inc. v. National Labor Relations Commission,23 which was correctly pointed out by the Court of Appeals as a case that is on all fours with the case at bar, we held that the NLRC cannot, under the pretext of correcting serious errors of the Labor Arbiter in the interest of justice, expand its power of review beyond the issues elevated by an appellant, to wit: The issue presented for adjudication in this petition is whether or not there was grave abuse of discretion on the part of the NLRC in reversing the labor arbiters decision. We rule in the affirmative. An appeal from a decision, award or order of the labor arbiter must be brought to the NLRC within ten (10) calendar days from receipt of such decision, award or order, otherwise, the same becomes final and executory [Art. 223, Labor Code; Rule VIII, Sec. 1(a), Revised Rules of the NLRC]. Moreover, the rules of the NLRC expressly provide that on appeal, the Commission shall limit itself only to the specific issues that were elevated for review, all other matters being final and executory [Rule VIII, Sec. 5(c), Revised Rules of the NLRC, italics supplied]. In the present case, petitioner, aggrieved by the labor arbiters decision ordering the extension of financial assistance to Galagar despite the finding that his termination was for just cause, specifically limited his appeal to a single legal question, i.e., the validity of the award of financial assistance to an employee dismissed for pilfering company property. On the other hand, private respondent did not appeal. When petitioner limited the issue on appeal, necessarily the NLRC may review only that issue raised. All other matters, including the issue of the validity of private respondents dismissal, are final. If private respondent wanted to challenge the finding of a valid dismissal, he should have appealed his case seasonably to the NLRC. By raising new issues in the reply to appeal, private respondent is in effect appealing his case although he has, in fact, allowed his case to become final by not appealing within the reglementary period. A reply/opposition to appeal cannot take the place of an appeal. Therefore, in this case, the dismissal of the complaint for illegal dismissal and the denial of the prayer for reinstatement, having become final, can no longer be reviewed. Justifying its right to review the entire case and not just the sole legal question raised, public respondent relied on Article 218 (c) of the Labor Code. In the resolution denying the motion for reconsideration, public respondent quoted that portion which provides that the NLRC may in the exercise of its appellate power "correct, amend or waive any error, defect or irregularity whether in substance or in form." Such reliance is misplaced. The Labor Code provision, read in its entirety, states that the NLRCs power to correct errors, whether substantial or formal, may be exercised only in the determination of a question, matter or controversywithin its jurisdiction [Art. 218, Labor Code]. Therefore, by considering the arguments and issues in the reply/opposition to appeal which were not properly raised by timely appeal nor comprehended within the scope of the issue raised in petitioners appeal, public respondent committed grave abuse of discretion amounting to excess of jurisdiction. The contention that the NLRC may nevertheless look into other issues although not raised on appeal since it is not bound by technical rules of procedure, is likewise devoid of merit. The law does not provide that the NLRC is totally free from "technical rules of procedure", but only that the rules of evidence prevailing in courts of law or equity shall not be controlling in proceedings before the NLRC [Art. 221, Labor Code]. This is hardly license for the NLRC to disregard and violate the implementing rules it has itself promulgated. Having done so, the NLRC committed grave abuse of discretion.24 (Emphases supplied.) The Court reiterated the foregoing ruling in Torres v. National Labor Relations Commission25 and United Placement International v. National Labor Relations Commission.26

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With regard to the second assignment of error which essentially involves the determination of factual issues, we are reminded that, in a petition under Rule 45 of the Rules of Court, only questions of law, not of fact, may be raised before the Court.27 However, where the findings of the NLRC contradict those of the Labor Arbiter, the Court, in the exercise of equity jurisdiction, may look into the records of the case and reexamine the questioned findings.28 In the case at bar, we are constrained to reexamine the factual findings of the Labor Arbiter and the Court of Appeals, on one side, and of the NLRC, on the other, since they have divergent appreciations of the facts of this case. Petitioner argues that the NLRC had established that there existed serious doubt between the evidence presented by the parties and, thus, the NLRC was correct in resolving the doubt in petitioners favor following jurisprudence which states that if doubt exists between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter.29 The argument is unmeritorious. This is not a case where there is mere doubt between the evidence of the parties; but the question here is, whether in the first place, there was substantial evidence for petitioners claim in his complaint that he was actually dismissed from the service of respondents on November 26, 2001 (as alleged in his Complaint) or November 27, 2001 (as alleged in his Position Paper) when he purportedly refused to sign on November 26, 2001 blank project employment contracts. It was incorrect for the NLRC to conclude that doubt exists between the evidence of both parties, thus, necessitating a ruling in favor of petitioner, because a careful examination of the records of this case would reveal that there was no adequate evidentiary support for petitioner's purported cause of action -- actual illegal dismissal. As shown by the records, inconsistent with his claim that he was actually dismissed on November 26 or 27, 2001, petitioner applied for and was granted a week long leave from November 29 to December 6, 2001. Petitioner did not deny that he indeed filed and signed the leave application form submitted by respondents as an attachment to their position paper. He merely claimed that he went on leave since he was not given any work assignment by the Company. However, the leave application form which bore his signature clearly stated that his reason for going on leave was "to settle [his] personal problem."30 Indeed, the NLRC gravely abused its discretion in reversing the Labor Arbiters decision on mere conjectures and insubstantial grounds. In its Resolution dated May 9, 2003, the NLRC concluded that petitioner "was not allowed to work in his former position because he was already replaced"31 merely on the basis of the handwritten notation that stated "Who will replace him?"32 found on the Leave Application Form which petitioner himself filled-up and signed. The same notation could reasonably be interpreted as asking who will be substituting petitioner for the duration of his leave. It was speculative at best for the NLRC, in resolving respondents motion for reconsideration, to rule that the notation meant permanent replacement simply because the words "in the meantime" were lacking.33 Contrary to the NLRCs interpretation of this notation, it, in fact, belied petitioners contention that he was already dismissed or had no existing work assignment for, if so, there would be no need for him to file a leave application and for the employer to find someone to replace him. In any event, such notation cannot be credibly construed as substantial proof of petitioner's alleged illegal dismissal. The NLRC further erroneously concluded that petitioner was illegally dismissed since during the several mandatory conferences between the parties, respondents purportedly never asked petitioner to go back to work without signing the alleged blank project employment contracts. From that circumstance, the NLRC inferred that respondents were no longer in need of petitioner's services. This rationalization is difficult to accept because it goes against the pronouncement of the Labor Arbiter in his Decision dated June 26, 2002. The Labor Arbiter who presided during the mandatory preliminary conferences plainly stated in his Decision that respondent corporation, through its representative during preliminary conference, denied the contract of project employment and confirmed the availability of the same employment to petitioner without any demotion in rank or diminution of benefits. 34 Thus, the Labor Arbiter concluded that "complainants refusal to resume employment without valid cause and instead demanded separation pay and backwages is tantamount to resignation."35 To reiterate, petitioner did not appeal from the foregoing findings of the Labor Arbiter and he should be deemed to have accepted those factual findings. If he had truly felt aggrieved, petitioner himself would have questioned the Labor Arbiters findings with the NLRC. Instead of pursuing all legal remedies to protect his rights, petitioner did not even file any opposition or comment to respondents Appeal Memorandum with the NLRC. He only participated in the proceedings

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again when the NLRC had already rendered a decision in his favor and he opposed respondents motion for reconsideration of the NLRC decision. In petitioners Reply and Memorandum filed with this Court, petitioners counsel belatedly offered the explanation that the appeal of the Labor Arbiters decision was not filed for he failed to contact his client in time. 36 We find that we cannot give credence to this excuse. On record is a registry return card that showed that petitioner received his copy of the Labor Arbiters decision by mail on July 19, 2002 even before his counsel did on August 1, 2002. It is difficult to believe that petitioner, after receiving the Labor Arbiters decision, would not himself contact his lawyer regarding the same. Verily, it is settled in jurisprudence that a party that did not appeal a judgment is bound by the same and he cannot obtain from the appellate court any affirmative relief other than those granted, if any, in the decision of the lower court or administrative body.37 Also in connection with the second issue, petitioner argued in his Memorandum that, assuming without admitting that there was no illegal dismissal, the award of financial assistance was in accordance with existing jurisprudence pursuant to the principle of social justice. On this point, we agree with petitioner. Eastern Shipping Lines, Inc v. Sedan 38 bears certain parallelisms with the present controversy. In Eastern, the employer likewise questioned the grant of financial assistance on the ground that the employees refusal to report back to work, despite being duly notified of the need for his service, is tantamount to voluntary resignation. In that case, however, we ruled: We are not unmindful of the rule that financial assistance is allowed only in instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Neither are we unmindful of this Court's pronouncements in Arc-Men Food Industries Corporation v. NLRC, and Lemery Savings and Loan Bank v. NLRC, where the Court ruled that when there is no dismissal to speak of, an award of financial assistance is not in order. But we must stress that this Court did allow, in several instances, the grant of financial assistance. In the words of Justice Sabino de Leon, Jr., now deceased, financial assistance may be allowed as a measure of social justice and exceptional circumstances, and as an equitable concession. The instant case equally calls for balancing the interests of the employer with those of the worker, if only to approximate what Justice Laurel calls justice in its secular sense. 39 (Emphases supplied.) There appears to be no reason why petitioner, who has served respondent corporation for more than eight years without committing any infraction, cannot be extended the reasonable financial assistance of P18,000.00 as awarded by the Labor Arbiter on equity considerations. We see no merit in respondents contention that petitioner was guilty of insubordination or abandonment. Significantly, the Labor Arbiter made no finding that petitioner was guilty of insubordination or abandonment. It would appear that a few days after the expiration of his applied for leave, petitioner filed his complaint for illegal actual dismissal. Other than their self-serving allegations, respondents offered no proof that upon the expiration of petitioners leave they directed petitioner to report to work but petitioner willfully failed to comply with said directive. On the contrary, in their own position paper, respondents prayed, aside from the dismissal of the complaint, that petitioner be directed by the Labor Arbiter to return to work and only when petitioner fails to comply with such order did they pray that petitioner be considered to have abandoned his work.40 The Labor Arbiter did not grant this particular relief prayed for by respondents but instead awarded financial assistance to petitioner.
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In some cases where there is neither a dismissal nor abandonment, we have previously held that separation pay may be awarded under appropriate circumstances. Thus, in Indophil Acrylic Mfg. Corp. v. National Labor Relations Commission,41 wherein the employer claimed that the employee had resigned/abandoned his work while the employee believed that he had been terminated, the Court held: We have turned a heedful eye on all the pleadings and evidence submitted by the parties and have concluded that there was NO DISMISSAL. Setting aside the other arguments of the parties which we find irrelevant, attention is called to the letter dated October 2, 1989 of petitioner's Personnel Manager, Mr. Nicasio B. Gaviola, to private respondent which the latter does not dispute, the full text of which reads: "Records show that you have not been reporting to (sic) work since September 16, 1989 up to this writing. For what reason, we are not aware.

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With this letter, you are required to report to this office and explain your unauthorized absences within three (3) days upon receipt hereof. Failure to report as required shall mean that we will consider you having resigned for abandonment of job." (sic) Clearly, therefore, petitioner had disregarded private respondent's previous resignation and still considers him its employee. It follows, that at the time private respondent filed his complaint for illegal dismissal before the Labor Arbiter, on October 4, 1989, petitioner has not dismissed him. xxxx There being no dismissal of private respondent by petitioner to speak of, the status quo between them should be maintained as a matter of course. But there is no denying that their relationship must have been ruptured. Taking into account the misconception of private respondent that he was dismissed and the October 2, 1989 letter of petitioner, the parties could have easily settled their controversy at the inception of the proceedings before the Labor Arbiter. This they failed to do. Thus, in lieu of reinstatement, petitioner is ordered to grant separation pay to private respondent. x x x.42 (Emphases supplied.) Applying the above ratiocination by analogy and in accordance with equity, we uphold the Labor Arbiters award of financial assistance as proper in this case. Lastly, with regard to the third issue, petitioner argues that the former Special Twenty-Second Division of the Court of Appeals exhibited its bias and partiality when it issued a temporary restraining order (TRO) to stop and frustrate the enforcement of the decision rendered by the NLRC despite the fact that only one of its member associate justices granted the same without the concurrence of the two other member associate justices who merely concurred subsequently. The argument is without merit. In fact, the issue is hardly contentious. The granting of a TRO by a justice of the Court of Appeals who is theponente of the case, even without the concurrence of the other associate justices assigned in the division, is allowed under Section 5, Rule VI of the 2002 Internal Rules of the Court of Appeals, to wit: Section 5. Action by a Justice. - All members of the Division shall act upon an application for a temporary restraining order and writ of preliminary injunction. However, if the matter is of extreme urgency, and a Justice is absent, the two other justices shall act upon the application. If only the ponente is present, then he shall act alone upon the application. The action of the two Justices or of the ponente shall however be submitted on the next working day to the absent member or members of the Division for ratification, modification or recall. (Emphases supplied.) The records of this case would attest to the urgency of the situation which necessitated the exceptionally prompt issuance of the TRO at issue. When the TRO was issued, the NLRC Regional Arbitration Branch No. XI was already in the process of enforcing the assailed Resolution of the NLRC dated May 9, 2003 as evidenced by its issuance of a Notice of Hearing43 for a pre-execution conference which was impelled by a motion made by petitioner. 44 The pre-execution conference was conducted as scheduled, thus, respondents filed with the Court of Appeals an Urgent Motion for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction.45 In view of the urgency of the situation and in order to prevent the petition of respondents from becoming moot and academic, Court of Appeals Associate Justice Romulo V. Borja, the Chairman of the Twenty-Second Division, issued a Resolution dated June 14, 2006, granting the TRO prayed for by respondents. 46 Nonetheless, the grant of said TRO was subsequently concurred in by the rest of the members of the Division, namely Associate Justices Antonio L. Villamor and Ramon R. Garcia, in their separate Resolutions both dated June 19, 2006. 47 Clearly, the issuance of the TRO at issue was in accordance with the 2002 Internal Rules of the Court of Appeals. WHEREFORE, the petition is PARTLY GRANTED. The assailed Decision dated July 28, 2006 as well as the Resolution dated September 28, 2006 of the Court of Appeals in CA-G.R. SP No. 81703 are AFFIRMED WITH THE MODIFICATION that the award of financial assistance is REINSTATED. The Labor Arbiters Decision dated June 26, 2002 is AFFIRMED in toto.

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SO ORDERED.
TERESITA J. LEONARDO-DE CASTRO Associate Justice 17. Appeal Decision of SECLAB MIGUEL DELA PENA BARAIRO vs. OFFICE OF THE PRESIDENT and MST MARINE SERVICES (PHILS.), INC. , G.R. No. 189314, June 15, 2011, 652 s 356 DECISION CARPIO MORALES, J.:

Miguel Barairo (petitioner) was hired1 on June 29, 2004 by respondent MST Marine Services (Phils.) Inc., (MST) for its principal, TSM International, Ltd., as Chief Mate of the vessel Maritina, for a contract period of six months. He boarded the vessel and discharged his duties on July 23, 2004, but was relieved 2 on August 28, 2004 ostensibly for transfer to another vessel, Solar. Petitioner thus disembarked in Manila on August 29, 2004. Petitioner was later to claim that he was not paid the promised "stand-by fee" in lieu of salary that he was to receive while awaiting transfer to another vessel as in fact the transfer never materialized. On October 20, 2004, petitioner signed a new Contract of Employment3 for a six-month deployment as Chief Mate in a newly-built Japanese vessel, M/T Haruna. He was paid a one-month "standby fee" in connection with the Maritina contract. Petitioner boarded the M/T Haruna on October 31, 2004 but he disembarked a week later as MST claimed that his boarding of M/T Haruna was a "sea trial" which, MST maintains, was priorly made known to him on a "stand-by" fee. MST soon informed petitioner that he would be redeployed to the M/T Haruna on November 30, 2004, but petitioner refused, prompting MST to file a complaint4 for breach of contract against him before the Philippine Overseas Employment Administration (POEA). Petitioner claimed, however, that he was placed on "forced vacation" when he was made to disembark from the M/T Haruna, and that not wanting to experience a repetition of the previous "termination" of his employment aboard the Maritina, he refused to be redeployed to the M/T Haruna. By Order5 of April 5, 2006, then POEA Administrator Rosalinda D. Baldoz penalized petitioner with one year suspension from overseas deployment upon a finding that his refusal to complete his contract aboard the M/T Haruna constituted a breach thereof. On appeal by petitioner, the Secretary of Labor, by Order6 of September 22, 2006, noting that it was petitioners first offense, modified the POEA Order by shortening the period of suspension from one year to six months. The Office of the President (OP), by Decision7 of November 26, 2007, dismissed petitioners appeal for lack of jurisdiction, citing National Federation of Labor v. Laguesma.8 The OP held that appeals to it in labor cases, except those involving national interest, have been eliminated. Petitioners motion for partial reconsideration was denied by Resolution9 of June 26, 2009, hence, the present petition. Following settled jurisprudence, the proper remedy to question the decisions or orders of the Secretary of Labor is via Petition for Certiorari under Rule 65, not via an appeal to the OP. For appeals to the OP in labor cases have indeed been eliminated, except those involving national interest over which the President may assume jurisdiction. The rationale behind this development is mirrored in the OPs Resolution of June 26, 2009 the pertinent portion of which reads: . . . [T] he assailed DOLEs Orders were both issued by Undersecretary Danilo P. Cruz under the authority of theDOLE Secretary who is the alter ego of the President. Under the "Doctrine of Qualified Political Agency," a corollary rule to the control powers of the President, all executive and administrative organizations are adjuncts of the Executive Department, the heads of the various executive departments are assistants and agents of the Chief Executive, and, except in cases where the Chief Executive is required by Constitution or law to act in person or the exigencies of the situation demand that he act personally, the multifarious executive and administrative functions of the Chief Executive are performed by and through the executive departments, and the acts of the Secretaries of such departments, performed and promulgated in the regular course of business are, unless disapproved or reprobated by the Chief Executive presumptively the acts of the Chief Executive.10 (emphasis and underscoring supplied)

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It cannot be gainsaid that petitioners case does not involve national interest. Petitioners appeal of the Secretary of Labors Decision to the Office of the President did not toll the running of the period, hence, the assailed Decisions of the Secretary of Labor are deemed to have attained finality. Although appeal is an essential part of our judicial process, it has been held, time and again, that the right thereto is not a natural right or a part of due process but is merely a statutory privilege. Thus, the perfection of an appeal in the manner and within the period prescribed by law is not only mandatory but also jurisdictional and failure of a party to conform to the rules regarding appeal will render the judgment final and executory. Once a decision attains finality, it becomes the law of the case irrespective of whether the decision is erroneous or not and no court - not even the Supreme Court - has the power to revise, review, change or alter the same. The basic rule of finality of judgment is grounded on the fundamental principle of public policy and sound practice that, at the risk of occasional error, the judgment of courts and the award of quasi-judicial agencies must become final at some definite date fixed by law.11 (underscoring in the original, emphasis supplied)
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At all events, on the merits, the petition just the same fails. As found by the POEA Administrator and the Secretary of Labor, through Undersecretary Danilo P. Cruz, petitioners refusal to board the M/T Haruna on November 30, 2004 constituted unjustified breach of his contract of employment under Section 1 (A-2) Rule II, Part VI [sic] of the POEA Seabased Rules and Regulations. 12 That petitioner believed that respondent company violated his rights when the period of his earlier Maritina contract was not followed and his "stand-by fees" were not fully paid did not justify his refusal to abide by the valid and existing Haruna contract requiring him to serve aboard M/T Haruna. For, as noted in the assailed DOLE Order, "if petitioners rights has been violated as he claims, he has various remedies under the contract which he did not avail of." Parenthetically, the Undersecretary of Labor declared that "the real reason [petitioner] refused to re-join Haruna on November 30, 2004, is that he left the Philippines on November 29, 2004 to join MT Adriatiki, a vessel of another manning agency," which declaration petitioner has not refuted. WHEREFORE, the petition is DENIED. SO ORDERED.
CONCHITA CARPIO MORALES Associate Justice 18. Appeal UNIVERSITY PLANS INCORPORATED vs. BELINDA P. SOLANO, TERRY A. LAMUG, GLENDA S. BELGA, MELBA S. ALVAREZ,* WELMA R. NAMATA, MARIETTA D. BACHO and MANOLO L. CENIDO, G.R. No. 170416, June 22, 2011, 652 s 492 DECISION DEL CASTILLO, J.:

The National Labor Relations Commission (NLRC) is not precluded from conducting a preliminary determination of the merit or lack of merit of a motion to reduce bond.1 This Petition for Review on Certiorari assails the Decision2 dated October 27, 2004 of the Court of Appeals (CA) in CAG.R. SP No. 77397 which denied the Petition for Certiorari filed before it. Likewise assailed is the CA Resolution 3 dated November 10, 2005 denying the Motion for Reconsideration thereto. Factual Antecedents Respondents Belinda P. Solano (Solano), Terry A. Lamug (Lamug), Glenda S. Belga (Belga), Melba S. Alvarez (Alvarez), Welma R. Namata (Namata), Marietta D. Bacho (Bacho) and Manolo L. Cenido (Cenido) filed before the Labor Arbiter complaints for illegal dismissal, illegal deductions, overriding commissions, unfair labor practice, moral and exemplary damages, and actual damages against petitioner University Plans Incorporated. Ruling of the Labor Arbiter

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In a Decision4 dated July 31, 2000, the Labor Arbiter found petitioner guilty of illegal dismissal and ordered respondents reinstatement as well as the payment of their full backwages, proportionate 13th month pay, moral/exemplary damages, and attorneys fees, viz: WHEREFORE, premises considered, the respondents University Plans, Inc., Ernesto D. Tuazon, Joel D. Paguio, Maribel Sto. Domingo and Renato P. Dragon are hereby ordered to reinstate the seven complainants to their former positions without loss of seniority rights and other appurtenant benefits and to pay said complainants jointly and severally the amounts computed as follows: Backwages 1. Belinda Solano 2. Glenda S. Belga 13th Month Pay Moral/Exemplary Damages P10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00

P701,666.66 P30,000.00 245,583.33 10,500.00 10,500.00 8,085.00 4,930.75 7,500.00 36,993.75

3. Welma R. Namata 245,583.33 4. Melba S. Almarez 243,168.33

5. Marrieta D. Bacho 191,317.75 6. Terry E. Lamug 7. Manolo L. Ceido 505,833.33 801,937.50

Respondents are likewise ordered to pay attorneys fees equivalent to ten (10%) percent of the judgment award. All other claims are hereby dismissed for lack of merit. SO ORDERED.5 Ruling of the National Labor Relations Commission Petitioner filed before the NLRC its Memorandum on Appeal6 as well as a Motion to Reduce Bond.7 Simultaneous with the filing of said pleadings, it posted a cash bond in the amount of P30,000.00. In its Motion to Reduce Bond, petitioner alleged that it was under receivership and that it cannot dispose of its assets at such a short notice. Because of this, it could not post the required bond. Nevertheless, it has P30,000.00 available for immediate disposition and thus prayed that said amount be deemed sufficient to satisfy the required bond for the perfection of its appeal. In an Order8 dated April 25, 2001, the NLRC denied petitioners Motion to Reduce Bond and directed it to post an additional appeal bond in the amount of P3,013,599.50 within an unextendible period of 10 days from notice, otherwise the appeal shall be dismissed for non-perfection. In resolving the motion, the NLRC held that the amount of the appeal bond is fixed by law pursuant to Article 223 of the Labor Code which provides in part that: Article 223. Appeal . - x x x In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. (Emphasis ours.) xxxx Petitioner filed a Motion for Reconsideration9 insisting that the NLRC has the discretion to reduce the appeal bond upon motion of appellant and on meritorious grounds. It argued that the fact that it was under receivership and could not dispose of any or all of its assets without prior court approval are meritorious grounds justifying the reduction of the appeal bond.

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The NLRC, however, denied petitioners motion for reconsideration in a Resolution 10 dated March 21, 2003. It ruled that while it has the discretion to reduce the appeal bond, it is nevertheless not persuaded that petitioner was incapable of posting the required bond. It noted that petitioner failed to submit any financial statement or provide details anent its alleged receivership or its sources of income. Citing Rubber World (Phils.) Inc. v. National Labor Relations Commission11 where the Security and Exchange Commission (SEC) issued an Order of Suspension of Payments, the NLRC noted that this was not obtaining in the present case. And since the appeal was not perfected due to petitioners failure to post the required bond, the NLRC dismissed the same. Unsatisfied, petitioner went to the CA through a Petition for Certiorari.12 Ruling of the Court of Appeals In a Decision13 dated October 27, 2004, the CA held that the NLRC in meritorious cases and upon motion by the appellant may reduce the amount of the bond. However, in order for the NLRC to exercise this discretion, it is imperative for the petitioner to show veritable proof that it is entitled to the same. Since petitioner failed to provide the NLRC with sufficient basis to determine its incapacity to post the required appeal bond, the CA opined that the NLRCs denial of petitioners Motion to Reduce Bond was justified. Hence, it denied the petition. As petitioners Motion for Reconsideration14 was likewise denied in a Resolution15 dated November 10, 2005, petitioner is now before this Court through the present Petition for Review on Certiorari.16 Issues Petitioner advances the following grounds: I. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR WHEN IT DID NOT CONSIDER THE FACT THAT PETITIONER UNIVERSITY PLANS, INC. IS UNDER RECEIVERSHIP. II. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR WHEN IT FAILED TO CONSIDER AND DISPOSE OF THE MERITS OF THE CASE. A. THERE WAS ABSENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN RESPONDENTS SOLANO, BELGA, NAMATA, LAMUG AND ALVAREZ AND UPI. B. RESPONDENT BACHO WAS VALIDLY RETRENCHED. C. RESPONDENT CENIDO WAS DISMISSED FOR CAUSE. III. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR, WHEN IT FAILED TO APPRECIATE THE FACT [THAT] MESSRS. ERNESTO D. TUAZON AND JOEL D. PAGUIO, MS. MARIBEL STO. DOMINGO AND MR. RENATO DRAGON, WERE IMPROPERLY IMPLEADED AND CONSEQUENTLY, THE LABOR ARBITER DID NOT ACQUIRE JURISDICTION OVER THEM. IV. CONSEQUENTLY, IT IS SIMPLY GRAVE ABUSE OF DISCRETION, NOT TO MENTION GROSS AND PALPABLE ERROR FOR THE HONORABLE COURT OF APPEALS TO HAVE UPHELD THE LABOR ARBITERS ORDER OF

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REINSTATEMENT OF RESPONDENTS AND TO PAY THEM BACKWAGES, MORAL AND EXEMPLARY DAMAGES AND 10% ATTORNEYS FEES.17 The Parties Arguments Petitioner stresses that it is under receivership pursuant to Presidential Decree No. 902-A. As such, all pending actions for claims are automatically stayed to enable the management committee or the rehabilitation receiver to effectively exercise its powers free from any judicial or extrajudicial interference. And since such suspension is automatic, there is no need for it to submit an Order of Suspension of Payments from the SEC, contrary to the ruling of the NLRC. The Cease and Desist Order18 dated August 23, 1999 and the May 23, 2000 Order 19 placing petitioner under receivership both issued by the SEC would have sufficed. Also, since its assets could not be disposed of nor could a case be filed against its receiver without prior leave of court pursuant to Section 6, Rule 59 of the Rules of Court,20 petitioner argues it was difficult for it to raise the required amount of the bond. Petitioner insists that the NLRC should have considered these circumstances when it resolved its Motion to Reduce Bond and likewise by the CA when it affirmed the NLRCs denial of said motion. Besides, this Court, in several cases, has relaxed the requirement of posting an appeal bond as a condition for perfecting an appeal under Article 223 of the Labor Code in line with the desired objective of resolving the controversies on the merits. Petitioner likewise faults the CA when it did not dispose of the case on the merits. It then insists that there is no employeremployee relationship between it and respondents Solano, Belga, Namata, Lamug and Alvarez; that respondent Bacho was validly retrenched; that respondent Cenido was dismissed for cause; and consequently, that they are all not entitled to reinstatement, backwages, moral and exemplary damages, and attorneys fees. It also asserts that its officers should not have been held jointly and severally liable to respondents. For their part, respondents aver that the CA correctly affirmed the NLRCs denial of petitioners Motion to Reduce Bond. Aside from the very clear provisions of Article 223 of the Labor Code and of Section 6, Rule VI of the NLRC Rules of Procedure on the matter, the discretion to reduce the appeal bond rests upon the NLRC and only in justifiable and meritorious cases. And since petitioner failed to justify its claim to a reduction of the appeal bond, the NLRC properly denied its motion. Respondents likewise assert that petitioner has already lost its right to appeal considering that same was not perfected when it failed to put up the required appeal bond within the time prescribed by the NLRC. Because of this, the Labor Arbiters Decision became final and executory and, hence, the NLRC did not err in not touching upon the merits of the appeal. Meanwhile, in the Memorandum21 filed by respondent Solano, she informs this Court that upon verification from the SEC, petitioner was placed under liquidation as early as 2002. This can further be deduced from the September 1, 2003 Order22 of the SEC designating Atty. Francis Carlo D. Taparan as its liquidator and from the February 13, 2007 letter 23 of SEC Secretary C.A. Gerard M. Lukban, which quoted excerpts from the minutes of the April 13, 2005 SEC Meeting designating him as petitioners new liquidator. In view of these, respondents argue that petitioners claim of receivership has already lost significance and therefore has become moot and academic. Our Ruling There is merit in the petition. Posting of bond is indispensable to the perfection of an appeal in cases involving monetary awards from the Decision of the Labor Arbiter. Article 223 of the Labor Code provides in part: Article 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. x x x xxxx

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In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. (Emphasis supplied.) x x x x. While pertinent portions of Sections 4 and 6, Rule VI of the Revised Rules of Procedure of the NLRC read: SECTION 4. REQUISITES FOR PERFECTION OF APPEAL a) The appeal shall be: 1) filed within the reglementary period provided in Section 1 of this Rule; 2) verified by the appellant himself in accordance with Section 4, Rule 7 of the Rules of Court, as amended; 3) in the form of a memorandum of appeal which shall state the grounds relied upon and the arguments in support thereof, the relief prayed for, and with a statement of the date the appellant received the appealed decision, resolution or order; 4) in three (3) legibly typewritten or printed copies; and 5) accompanied by i) proof of payment of the required appeal fee; ii) posting of a cash or surety bond as provided in Section 6 of this Rule; iii) a certificate of non-forum shopping; and iv) proof of service upon the other parties. xxxx SECTION 6. BOND. In case the decision of the Labor Arbiter or the Regional Director involves a monetary award, an appeal by the employer may be perfected only upon the posting of a bond, which shall either be in the form of cash deposit or surety bond equivalent in amount to the monetary award, exclusive of damages and attorneys fees. xxxx No motion to reduce bond shall be entertained except on meritorious grounds, and only upon the posting of a bond in a reasonable amount in relation to the monetary award. x x x (Emphasis supplied.) The abovementioned provisions highlight the importance of posting a cash or surety bond in the perfection of an appeal to the NLRC from the Labor Arbiters judgment involving a monetary award. Thus, in Ramirez v. Court of Appeals,24 this Court held, viz: Under the Rules, appeals involving monetary awards are perfected only upon compliance with the following mandatory requisites, namely: (1) payment of the appeal fees; (2) filing of the memorandum of appeal; and (3)payment of the required cash or surety bond. The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards from the decision of the labor arbiter. The intention of the lawmakers to make the bond a mandatory requisite for the perfection of an appeal by the employer is clearly expressed in the provision that an appeal by the employer may be perfected only upon the posting of a cash or surety bond. The word only in Article 223 of the Labor Code makes it unmistakably plain that the lawmakers intended the posting of a cash or surety bond by the employer to be the essential and exclusive means by which an employers appeal may be perfected. The word may refers to the perfection of an appeal as optional on the part of the defeated party, but not to the compulsory posting of an appeal bond, if he desires to appeal. The meaning and the intention of the legislature in enacting a statute must be determined from the language employed; and where there is no ambiguity in the words used, then there is no room for construction. 25 (Emphasis supplied; citations omitted.) When the amount of bond may be reduced. Notably, however, under Section 6, Rule VI of the NLRCs Revised Rules of Procedure, the bond may be reduced albeit only on meritorious grounds and upon posting of a partial bond in a reasonable amount in relation to the monetary award. Suffice it to state that while said Rules "allows the Commission to reduce the amount of the bond, the exercise of the authority is not a matter of right on the part of the movant, but lies within the sound discretion of the NLRC upon a showing of meritorious grounds."26

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In Nicol v. Footjoy Industrial Corporation,27 the Court reviewed the jurisprudence28 respecting the bond requirement for perfecting appeal and summarized the guidelines under which the NLRC must exercise its discretion in considering an appellants motion for reduction of bond, viz: [T]he bond requirement on appeals involving monetary awards has been and may be relaxed in meritorious cases. These cases include instances in which (1) there was substantial compliance with the Rules, (2) surrounding facts and circumstances constitute meritorious grounds to reduce the bond, (3) a liberal interpretation of the requirement of an appeal bond would serve the desired objective of resolving controversies on the merits, or (4) the appellants, at the very least, exhibited their willingness and/or good faith by posting a partial bond during the reglementary period. Conversely the reduction of the bond is not warranted when no meritorious ground is shown to justify the same; the appellant absolutely failed to comply with the requirement of posting a bond, even if partial; or when the circumstances show the employers unwillingness to ensure the satisfaction of its workers valid claims.29 The NLRC is not precluded from conducting a preliminary determination of the merit or lack of merit of a motion to reduce bond. In Nicol, the Labor Arbiter ordered the employer to pay the employees monetary award in the total amount ofP51,956,314.00. When the employer appealed to the NLRC, it claimed that it was in dire financial condition and thus moved to reduce the bond to P10 million, for which it posted a surety bond. The NLRC however denied the motion and required the employer to file an additional bond of P41,956,314.00. Failing to do so, the NLRC dismissed the employers appeal for non-perfection thereof. On appeal, the CA held that the NLRC should have determined the merit of employers grounds for the reduction of its appeal bond through the reception of evidence instead of requiring it to put up a bond in the equivalent amount of the award without regard to its reasons and arguments, and without determining for itself what amount would be reasonable under the circumstances. Hence, it directed the NLRC to consider the employers motion to reduce bond after receiving evidence thereon, and upon a timely posting of the required reasonable supersedeas bond, to give due course to the appeal and to determine the merits of the case.
1avvphi1

When the case reached this Court, we affirmed the CAs ruling that the NLRC gravely abused its discretion in denying the motion to reduce bond peremptorily without considering the evidence presented. We further ruled, viz:: [T]he NLRC was not precluded from making a preliminary determination of their [the employer] financial capability to post the required bond, without necessarily passing upon the merits. Since the intention is merely to give the NLRC an idea of the justification for the reduced bond, the evidence for the purpose would necessarily be less than the evidence required for a ruling on the merits. Indeed, it only bears stressing that the NLRC is not precluded from receiving evidence on appeal as technical rules of evidence are not binding in labor cases. On the contrary, the Labor Code explicitly mandates it to use every and all reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process.30 The NLRC erred in not considering the merit or lack of merit of petitioners Motion to Reduce Bond. Petitioner attached to its Motion to Reduce Bond the SEC Orders dated August 23, 1999 and May 23, 2000. The Order of August 23, 1999 is a Cease and Desist Order which, among others, prohibited the officers and agents of petitioner from withdrawing from its trust funds or from making any disposition thereof and, ordered the freeze of all its assets and properties. On the other hand, the May 23, 2000 Order reads in part that: In view of the voluntary request for receivership of the University Plans, Inc. (UPI), after being found to have a Trust Fund and Capital Deficiency, unable to pay the same despite its commitment to pay, and pursuant to Presidential Decree No. 902-A, as amended, University Plans, Inc. is therefore, placed under the management and control of a RECEIVER x x x31 (Emphasis supplied.) From the said SEC Orders, it is unmistakable that petitioner was under receivership. And from the tenor and contents of said Orders, it is possible that petitioner has no liquid asset which it could use to post the required amount of bond. Also, it

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is quite understandable that because of petitioners financial state, it cannot raise the amount of more than P3 million within a period of 10 days from receipt of the Labor Arbiters judgment. However, the NLRC ignored petitioners allegations and instead remained adamant that since the amount of bond is fixed by law, petitioner must post an additional bond of more than P3 million. This, to us, is an utter disregard of the provision of the Labor Code and of the NLRC Revised Rules of Procedure allowing the reduction of bond in meritorious cases. While the NLRC tried to correct this error in its March 21, 2003 Resolution 32 by further explaining that it was not persuaded by petitioners alleged incapability of posting the required amount of bond for failure to submit financial statement, list of sources of income and other details with respect to the alleged receivership, we still find the hasty denial of the motion to reduce bond not proper. Notwithstanding petitioners failure to submit its financial statement and list of sources of income and to give more details relative to its receivership, it was nevertheless able to show through the abovementioned SEC Orders that it was indeed under a state of receivership. This should have been sufficient reason for the NLRC to not outrightly deny petitioners motion. As to the lacking documents and details on the receivership, it is true that they are needed by the NLRC in determining petitioners capacity to post the required amount of bond. However, their absence should not lead to the outright denial of the motion since as earlier discussed, the NLRC is not precluded from conducting a preliminary determination on the merit or lack of merit of a motion to reduce bond. Here, considering the clear showing of petitioners state of receivership, the NLRC should have conducted such preliminary determination and therein require the submission of said documents and other necessary evidence before proceeding to resolve the subject motion. After all, the present case falls under those cases where the bond requirement on appeal may be relaxed considering that (1) there was substantial compliance with the Rules;33 (2) the surrounding facts and circumstances constitute meritorious grounds to reduce the bond; and (3) the petitioner, at the very least, exhibited its willingness and/or good faith by posting a partial bond during the reglementary period. Also, such a procedure would be in keeping with the Labor Codes mandate to use every and all reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process.34 We thus find error on the part of the NLRC when it denied petitioners Motion to Reduce Bond and likewise on the part of the CA when it affirmed said denial. In view of the foregoing, a remand of this case to the NLRC for the conduct of preliminary determination of the merit or lack of merit of petitioners Motion to Reduce Bond is proper. In so doing, the NLRC is also reminded to consider respondent Solanos allegation that petitioner is now under liquidation and to receive evidence thereon so that it may judiciously resolve the Motion to Reduce Bond. As regards the issues relating to the substantial merits of the case, we shall leave the same to the NLRC. This is because should the NLRC eventually find the Motion to Reduce Bond meritorious, it shall give due course to the appeal upon the timely posting of a reasonable amount of supersedeas bond it deems appropriate under the circumstances, and shall then proceed to determine the merits of the case. WHEREFORE, the petition is GRANTED. The assailed Decision dated October 27, 2004 and Resolution dated November 10, 2005 of the Court of Appeals in CA-G.R. SP No. 77397 are REVERSED and SET ASIDE. This case is ordered remanded to the National Labor Relations Commission for the conduct of preliminary determination of the merit or lack of merit of petitioners Motion to Reduce Bond. Should the National Labor Relations Commission find the Motion to Reduce Bond meritorious, it is directed to give due course to the appeal upon timely filing of a reasonable supersedeas bond in an amount it deems appropriate under the circumstances, and to hear and resolve the case with dispatch. SO ORDERED.
MARIANO C. DEL CASTILLO Associate Justice 19. Duties of parties to maintain status quo GENERAL MILLING CORPORATION-INDEPENDENT LABOR UNION (GMC-ILU) vs. GENERAL MILLING CORPORATION, G.R. No. 183122, June 15, 2011, 652 s 235

x - - - - - - - - - - - - - - - - - - - - - - -x GENERAL MILLING CORPORATION vs. GENERAL MILLING CORPORATION-INDEPENDENT LABOR UNION (GMC-ILU), ET. AL, G.R. No. 183889 DECISION PEREZ, J.:

Assailed in these petitions for review on certiorari filed pursuant to Rule 45 of the 1997 Rules of Civil Procedure are the Court of Appeals(CA) resolution of the separate petitions for certiorari questioning the 20 July 2006 Decision 1 rendered and the 23 August 2006 Resolution2 issued by the Fourth Division of the National Labor Relations Commission (NLRC), Cebu City, in NLRC Case No. V-000632-2005. In G.R. No. 183122, petitioner General Milling Corporation-Independent

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Labor Union (the Union) seeks the reversal of the 10 October 2007 Decision rendered by the Special Twentieth Division of the CA in CA-G.R. CEB-SP No. 02226,3 the dispositive portion of which states: WHEREFORE, all the foregoing premises considered, the instant Petition is hereby PARTIALLY GRANTED. The July 20, 2006 Decision of respondent NLRC in NLRC Case No. V-000632-2005 is hereby AFFIRMED insofar as it affirmed the October 27, 2005 Order of Executive Labor Arbiter Ortiz in RAB Case No. VII-06-0475-1992 with the modification of: a) excluding the vacation leave salary rate differentials, sick leave salary rate differentials, b) excluding employees who have executed quitclaims which are hereby declared valid, and c) deducting salary increases and other employment benefits voluntarily given by respondent GMC in the computation of benefits. Accordingly, the instant case is hereby REFERRED to the GRIEVANCE MACHINERY under the imposed CBA for the recomputation of benefits claimed by petitioner GMC-ILU under the said imposed CBA taking into consideration the guidelines laid down by the Court in this Decision as well as the validity of the subject quitclaims hereinbefore discussed. SO ORDERED.4 In G.R. No. 183889, petitioner General Milling Corporation (GMC) prays for the setting aside of the 16 November 2007 Decision rendered by the Eighteenth Division of the CA in CA-G.R. CEB-SP No. 02232,5 the decretal portion of which states: WHEREFORE, the Decision dated July 20, 2006 and the Resolution dated August 23, 2006 of public respondent NLRC are hereby AFFIRMED IN TOTO and the instant petition is DISMISSED. SO ORDERED.6 The Facts On 28 April 1989, GMC and the Union entered into a collective bargaining agreement (CBA) which provided, among other terms, the latters representation of the collective bargaining unit for a three-year term made to retroact to 1 December 1988. On 29 November 1991 or one day before the expiration of the subject CBA, the Union sent a draft CBA proposal to GMC, with a request for counter-proposals from the latter, for the purpose of renegotiating the existing CBA between the parties. In view of GMCs failure to comply with said request, the Union commenced the complaint for unfair labor practice which, under docket of RAB Case No. VII-06-0475-92, was dismissed for lack of merit in a decision dated 21 December 1993 issued by the Regional Arbitration Branch-VII (RAB-VII) of the National Labor Relations Commission (NLRC).7 On appeal, however, said dismissal was reversed and set aside in the 30 January 1998 decision rendered by the Fourth Division of the NLRC in NLRC Case No. V-0112-94,8 the dispositive portion of which states: WHEREFORE, premises considered, the instant appeal is hereby GRANTED. The Decision dated December 21, 1993 is hereby VACATED and SET ASIDE and a new one issued ordering the imposition upon the respondent company of the complainant union[s] draft CBA proposal for the remaining two years duration of the original CBA which is from December 1, 1991 to November 30, 1993; and for the respondent to pay attorneys fees. SO ORDERED.9 With the reconsideration and setting aside of the foregoing decision in the NLRCs resolution dated 6 October 1998, 10 the Union filed the petitions for certiorari docketed before the CA as CA-G.R. SP Nos. 50383 and 51763. In a decision dated 19 July 2000, the then Fourteenth Division of the CA reversed and set aside the NLRCs 6 October 1998 resolution and reinstated the aforesaid 30 January 1998 decision, except with respect to the undetermined award of attorneys fees which was deleted for lack of statement of the basis therefor in the assailed decision. 11 Aggrieved by the CAs 26 October 2000 resolution denying its motion for reconsideration, GMC elevated the case to this Court via the petition for review on certiorari docketed before this Court as G.R. No. 146728. In a decision dated 11 February 2004 rendered by the Courts then Second Division, the CAs 30 January 1998 decision and 26 October 2000 resolution were affirmed,12 upon the following findings and conclusions, to wit:

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GMCs failure to make a timely reply to the proposals presented by the union is indicative of its utter lack of interest in bargaining with the union. Its excuse that it felt the union no longer represented the worker, was mainly dilatory as it turned out to be utterly baseless. We hold that GMCs refusal to make a counter proposal to the unions proposal for CBA negotiation is an indication of its bad faith. Where the employer did not even bother to submit an answer to the bargaining proposals of the union, there is a clear evasion of the duty to bargain collectively. Failing to comply with the mandatory obligation to submit a reply to the unions proposals, GMC violated its duty to bargain collectively, making it liable for unfair labor practice. Perforce, the Court of Appeals did not commit grave abuse of discretion amounting to lack or excess of jurisdiction in finding that GMC is, under the circumstances, guilty of unfair labor practice. xxxx x x x (I)t would be unfair to the union and its members if the terms and conditions contained in the old CBA would continue to be imposed on GMCs employees for the remaining two (2) years of the CBAs duration. We are not inclined to gratify GMC with an extended term of the old CBA after it resorted to delaying tactics to prevent negotiations. Since it was GMC which violated the duty to bargain collectively, based on Kiok Loy and Divine World University of Tacloban, it had lost its statutory right to negotiate or renegotiate the terms and conditions of the draft CBA proposed by the union. xxxx Under ordinary circumstances, it is not obligatory upon either side of a labor controversy to precipitately accept or agree to the proposals of the other. But an erring party should not be allowed with impunity to schemes feigning negotiations by going through empty gestures. Thus, by imposing on GMC the provisions of the draft CBA proposed by the union, in our view, the interests of equity and fair play were properly served and both the parties regained equal footing, which was lost when GMC thwarted the negotiations for new economic terms of the CBA.13 With the ensuing finality of the foregoing decision, the Union filed a motion for issuance of a writ of execution dated 21 March 2005, to enforce the claims of the covered employees which it computed in the sum of P433,786,786.36 and to require GMC to produce said employees time cards for the purpose of computing their overtime pay, night shift differentials and labor standard benefits for work rendered on rest days, legal holidays and special holidays. 14 On 18 April 2005, however, GMC opposed said motion on the ground, among other matters, that the bargaining unit no longer exist in view of the resignation, retrenchment, retirement and separation from service of workers who have additionally executed waivers and quitclaims acknowledging full settlement of their claims; that the covered employees have already received salary increases and benefits for the period 1991 to 1993; and, that aside from the aforesaid supervening events which precluded the enforcement thereof, the decision rendered in the case simply called for the execution of a CBA incorporating the Unions proposal, not the outright computation of benefits thereunder.15 In a "Submission" dated 27 May 2005, GMC further manifested that the Union membership in the bargaining unit did not exceed 286 and that following employees should be excluded from the coverage of the decision sought to be enforced: (a) 47 employees who were hired after 1992; (b) 234 employees who had been separated from the service; (c) 37 employees who, as daily paid rank and file employees, were represented by another union and covered by a different CBA; and, (d) 41 workers holding managerial/supervisory/confidential positions. 16 In its comment to the foregoing "Submission", however, the Union argued that the benefits derived from its proposed CBA extended to both union members and non-members; that the newly hired employees were entitled to the benefits accruing after their employment by GMC; that the employees who had, in the meantime, been separated from service could not have validly waived the benefits which were only determined with finality in the 11 February 2004 decision rendered in G.R. No. 146728; that the CBA benefits can be extended the daily paid employees upon their re-classification as monthly paid employees as well as to GMCs managerial and supervisory employees, prior to their promotion; and, that the imposition of its CBA proposals necessarily calls for the computation of the benefits therein provided.17 Acting on the memoranda the parties filed in support of their respective positions, 18 Executive Labor Arbiter Violeta OrtizBantug issued the 27 October 2005 order, limiting the computation of the benefits of the Unions CBA proposal to the remaining two years of the duration of the original CBA or from 1 December 1991 up to 30 November 1993. The computation covered the 436 employees included in the Unions list, less the following: (a) 77 employees who were hired or regularized after 30 November 1993; (b) 36 daily paid rank and file employees who were covered by a separate CBA;

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(c) 41 managerial/supervisory employees; and (d) 1 employee for whom no salary-rate information was submitted in the premises.19 As a consequence, said Executive Labor Arbiter disposed of the aforesaid pending motion and incidents in the following wise: Based on all the foregoing, computations have been made, details of which are prepared and reflected in separate pages but which still form part of this Order. By way of summary, the grand total consists of the following: Salary Increase Differentials Rest Day Vacation Leave Differentials Sick Leave Differentials School Opening Bonus P17,575,000.00 4,320,148.50 920,013.42 920,013.42 5,094,044.69

13th Month Pay Differentials 1,468,999.98 Christmas Bonus Signing Bonus Total Money Claims Sacks of Rice 4,560,816.78 1,310,000.00 P36,169,036.79 6,372

Issue the appropriate writ of execution based on the foregoing computations. SO ORDERED.20 Aggrieved, the Union filed a partial appeal dated 2 November 2005, on the ground that the Executive Labor Arbiter abused her discretion in: (a) confining the computation of the benefits from 1 December 1991 to 30 November 1993 in favor of only 281 employees out of the 436 included in its list; (b) computing only 10 out of the 15 benefits provided under its CBA proposal; and (c) failing to direct the GMC to produce the employees time cards and other pertinent documents essential for the computation of the benefits due in the premises.21 In turn, GMC filed its 17 November 2005 "Objections" to the aforesaid 22 October 2005 order, arguing that the Executive Labor Arbiter not only varied the dispositive portion of the NLRC decision dated 30 January 1998 but also ignored the quitclaims executed and the benefits actually paid in the premises.22 Reiterating the foregoing arguments in its 16 May 2006 opposition to the Unions partial appeal, GMC further maintained that its not being duly heard on the computation of the award in the subject 27 October 2005 order rendered the Unions partial appeal premature; and, that its CBA with the Union had expired on 30 November 1993, with the latter exerting no effort at all for its renewal.23 On 20 July 2006, the NLRC rendered a decision in NLRC Case No. V-000632-2005, affirming the aforesaid 27 October 2005 order of execution. Finding that the duty to maintain the status quo and to continue in full force and effect the terms of the existing agreement under Article 253 of the Labor Code of the Philippines applies only when the parties agreed to the terms and conditions of the CBA, the NLRC upheld the Executive Labor Arbiters computation on the ground, among others, that the decision sought to be enforced covered only the remaining two years of the duration of the original CBA, i.e., from 1 December 1991 to 30 November 1993; that like GMCs supposed grant of additional benefits during the remaining term of the original CBA, the Unions claims for payment of vacation leave salary differentials, sick leave salary rate differentials, dislocation allowance, separation pay for voluntary resignation and separation pay salary rate differentials were not sufficiently established; that required by law to preserve its records for a period of five years, GMC cannot possibly be expected to preserve employees records for the period 1 December 1991 to 30 November 1993; and, that the claimant has the burden of proving entitlement to holiday pay, premium for holiday and rest day as well night shift differentials. Giving short shrift to GMCs objections as aforesaid, the NLRC likewise ruled that computation of the monetary award was necessary for the enforcement of this Courts 11 February 2004 decision and avoidance of multiplicity of suits.24 Dissatisfied with the NLRCs 23 August 2006 denial of their motions for reconsideration of the foregoing decision,25 GMC and the Union filed separate Rule 65 petitions for certiorari before the CA. Docketed as CA-G.R. CEB-SP No. 02226 before the CAs Special Twentieth Division, the Unions petition was partially granted in the 10 October 2007 decision

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rendered in the case,26 upon the finding that the parties old CBA was superseded by the imposed CBA which provided a term of five years from 1 December 1991 and remained in force until a new CBA is concluded between the parties. Brushing aside the Executive Labor Arbiters computation of the benefits as "too sweeping" and "inaccurate", the CA ruled that: (a) employees hired after the effectivity of the imposed CBA are entitled to its benefits on their first day of work; (b) daily paid employees are entitled to said benefits from the first day they became regular monthly paid employees; (c) managerial and supervisory employees are entitled to the same benefits until their promotion as such; (d) employees for whom no information as to salary rate were submitted are entitled to the CBA benefits upon submission of proof in respect thereto; and, (e) employees who signed Deeds of waiver, release and quitclaim are no longer entitled to said benefits.27 Rejecting the argument that the NLRC erred in upholding the Executive Labor Arbiters computation of only 10 out of the 15 benefits provided under the imposed CBA, the CA went on to take appropriate note of the fact that no proof was submitted by the Union to justify the grant of said benefits. While ruling that the imposed CBA had the same force and effect as a negotiated CBA, the CA, however, faulted the Union for its "hasty" and "premature" filing of its motion for issuance of a writ of execution, instead of first demanding the enforcement of the imposed CBA from GMC and, failing the same, referring the matter to the grievance machinery or voluntary arbitration provided under the imposed CBA, in accordance with Articles 260 and 261 of the Labor Code. Acknowledging the difficulty of computing the benefits demanded by the Union in the absence of evidence upon which to base the same, the CA referred the case to the Grievance Machinery under the imposed CBA and directed the exclusion of the following items from said computation: (a) the Unions claims for vacation leave salary rate differentials and sick leave salary rate differentials; (b) the benefits in favor of the employees who have already executed quitclaims in favor of GMC; and (c) the salary increases and other employment benefits GMC had, in the meantime, extended its employees.28 Discontented with the CAs 14 May 2008 resolution denying its motion for reconsideration of the foregoing decision,29 the Union filed its Rule 45 petition currently docketed before this Court as G.R. No. 183122.30 On the other hand, GMCs petition for certiorari assailing the NLRCs 20 July 2006 decision was docketed as CA-G.R. SP No. CEB-SP No. 02232 before the CAs Eighteenth Division 31 which subsequently rendered the decision dated on 16 November 2007, dismissing the same for lack of merit. Finding that both parties were given an opportunity to present their respective positions during the pre-execution conference conducted a quo, the CA ruled that the Executive Labor Arbiters 27 October 2005 order had attained finality insofar as GMC is concerned, in view of its failure to perfect an appeal therefrom by paying the required appeal fee and posting the cash or surety bond in an amount equivalent to the benefits computed. In addition to rejecting GMCs argument that the quitclaims executed by its employees were in the nature of a supervening event which rendered execution proceedings impossible, the CA held that said quitclaims did not extend to the benefits provided under the imposed CBA and that the additional benefits supposedly received by GMCs employees should not be deducted therefrom, for lack of sufficient evidence to prove the same.32 Aggrieved by the denial of its motion for reconsideration of the foregoing decision in the CAs resolution dated 10 July, 2008,33 GMC filed the petition for review on certiorari docketed before us as G.R. No. 183889.34 The Issues In G.R. No. 183122, the Union proffers the following grounds for the grant of its petition, to wit: I. THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION AND COMMITTED REVERSIBLE ERROR IN AFFIRMING THE COMPUTATION OF THE NLRC IN ITS DECISION DATED JULY 20, 2006 AND DISTORTING THE APPLICATION OF ARTICLE 253 OF THE LABOR CODE IN THE EXECUTION OF THE DECISION OF THIS HONORABLE COURT IN G.R. NO. 146728. II. THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION AND COMMITTED REVERSIBLE ERROR IN EXCLUDING FROM THE COMPUTATION THE EMPLOYEES WHO HAVE EXECUTED QUITCLAIMS, IN EXCLUDING FROM THE COMPUTATION VACATION AND SICK LEAVE SALARY DIFFERENTIALS, AND IN DEDUCTING ALLEGED SALARY INCREASES AND OTHER BENEFITS GIVEN BY [GMC]. III. THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION AND COMMITTED REVERSIBLE ERROR IN REFERRING THE INSTANT CASE TO THE GRIEVANCE MACHINERY FOR COMPUTATION OF THE BENEFITS DUE UNDER THE IMPOSED CBA. IV. THE DECISION IN THE INSTANT CASE IS IN DIRECT CONFLICT WITH THE DECISION OF ANOTHER DIVISION OF THE COURT OF APPEALS INVOLVING THE SAME ISSUES.35

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In G.R. No. 183889, GMC prays for the setting aside of the CAs 16 November 2007 decision in CA-G.R. CEB-SP No. 02232, on the following grounds, to wit: A. THE DECISION OF NOVEMBER 16, 2007 AND THE RESOLUTION OF JULY 10, 2008 OF THE COURT OF APPEALS ARE CONTRARY TO LAW. B. THE DECISION OF NOVEMBER 16, 2007 AND THE RESOLUTION OF JULY 10, 2008 OF THE COURT OF APPEALS ARE NOT IN ACCORD WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT. C. THE DECISION OF NOVEMBER 16, 2007 AND THE RESOLUTION OF JULY 10, 2008 OF THE COURT OF APPEALS ARE CONTRARY TO THE ESTABLISHED FACTS. D. THE DECISION OF NOVEMBER 16, 2007 AND THE RESOLUTION OF JULY 10, 2008 OF THE COURT OF APPEALS VIOLATE THE LAW OF THE CASE. E. THE DECISION OF NOVEMBER 16, 2007 AND THE RESOLUTION OF JULY 10, 2008 OF THE COURT OF APPEALS CONTRAVENE THEIR OWN DECISION IN AN EXACTLY SIMILAR CASE INVOLVING THE SAME PARTIES.36 As may be gleaned from the grounds GMC and the Union interpose in support of their respective petitions, it is evident that we are called upon to determine the following matters: (a) the period of effectivity of the imposed CBA; (b) the employees covered by the imposed CBA; and, (c) the benefits to be included in the execution of the 11 February 2004 decision rendered in G.R. No. 146728. Preliminary to the foregoing considerations is the effect of the rendition of diametrically opposed decisions in CA-G.R. CEB. SP Nos. 02226 and 02232 by the CAs Special Twentieth and Eighteenth Divisions on the parties conflicting claims. The Courts Ruling We find the reversal of the assailed decisions in order. Both GMC and the Union call our attention to the fact that the 10 October 2007 decision rendered by the CAs Special Twentieth Division in CA-G.R. CEB-SP No. 02226 is in conflict with the 16 November 2007 decision rendered by the same courts Eighteenth Division in CA-G.R. CEB-SP No. 02232. In G.R. No. 183122, the Union argues that, given the identity of parties and issues raised in said cases, the 16 November 2007 decision in CA-G.R. CEB-SP No. 02232 should have been taken considered and adopted by the CAs Special Twentieth Division in resolving its motion for reconsideration of the 10 October 2007 decision in CA-G.R. CEB-SP No. 02226.37 In G.R. No. 183889, on the other hand, GMC maintains that, having been rendered ahead of the 16 November 2007 decision in CA-G.R. CEB-SP No. 02232, the CAs Special Twentieth Divisions 10 October 2007 in CA-G.R. CEB-SP No. 02226 is the law of the case which the Eighteenth Division erroneously contravened when it dismissed its petition for certiorari.38 The conflicting decisions in CA-G.R. CEB-SP Nos. 02226 and 02232 would have been, in the first place, avoided had the CA consolidated said cases pursuant to Section 3, Rule III of its 2002 Internal Rules (IRCA). 39 Being intimately and substantially related cases, their consolidation should have been ordered to avert the possibility of conflicting decisions in the two cases.40 Although rendered on the merits by a court of competent jurisdiction acting within its authority, neither one of said decisions can, however, be invoked as law of the case insofar as the other case is concerned. The doctrine of "law of the case" means that whatever is once irrevocably established as the controlling legal rule or decision between the same parties in the same case continues to be the law of the case, whether correct on general principles or not, 41 so long as the facts on which such decision was predicated continue to be the facts of the case before the court. 42 Considering that a decision becomes the law of the case once it attains finality, 43 it is evident that, without having achieved said status, the herein assailed decisions cannot be invoked as the law of the case by either GMC or the Union. Anent its period of effectivity, Article XIV of the imposed CBA provides that "(t)his Agreement shall be in full force and effect for a period of five (5) years from 1 December 1991, provided that sixty (60) days prior to the lapse of the third year of effectivity hereof, the parties shall open negotiations on economic aspect for the fourth and fifth years effectivity of this Agreement."44 Considering that no new CBA had been, in the meantime, agreed upon by GMC and the Union, we find that the CAs Special Twentieth Division correctly ruled in CA-G.R. CEB-SP No. 02226 that, pursuant to Article 253 of the Labor Code,45 the provisions of the imposed CBA continues to have full force and effect until a new CBA has been entered into by the parties. Article 253 mandates the parties to keep thestatus quo and to continue in full force and effect the terms

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and conditions of the existing agreement during the 60-day period prior to the expiration of the old CBA and/or until a new agreement is reached by the parties.46 In the same manner that it does not provide for any exception nor qualification on which economic provisions of the existing agreement are to retain its force and effect, 47 the law does not distinguish between a CBA duly agreed upon by the parties and an imposed CBA like the one under consideration. The foregoing disquisition notwithstanding, it bears emphasizing, however, that the dispositive portion of the 30 January 1998 decision rendered by the Fourth Division of the NLRC in NLRC Case No. V-0112-94 specifically ordered "the imposition upon [GMC] of the [Unions] draft CBA proposal for the remaining two years duration of the original CBA which is from 1 December 1991 to 30 November 1993."48 Initially set aside in the 6 October 1998 resolution issued in the same case by the NLRC49 and reinstated in the 19 July 2000 decision rendered by the CAs then Fourteenth Division in CA-G.R. SP Nos. 50383 and 51763,50 said 30 January 1998 decision was upheld in the 11 February 2004 decision rendered by this Court in G.R. No. 146728 which, in turn, affirmed the CAs 19 July 2000 decision as aforesaid. 51 Considering that the 30 January 1998 decision sought to be enforced confined the application of the imposed CBA to the remaining two-year duration of the original CBA, we find that the computation of the benefits due GMCs covered employees was correctly limited to the period 1 December 1991 to 30 November 1993 in the 27 October 2005 order issued by Executive Labor Arbiter Violeta Ortiz-Bantug and the 20 July 2006 decision rendered by the NLRC in NLRC Case No. V-000632-2005. Consequently, insofar as the execution of the 30 January 1998 decision is concerned, the Union is out on a limb in espousing a computation which extends the benefits of the imposed CBA beyond the remaining two-year duration of the original CBA. The rule is, after all, settled that an order of execution which varies the tenor of the judgment or exceeds the terms thereof is a nullity.52 Since execution not in harmony with the judgment is bereft of validity, 53it must conform, more particularly, to that ordained or decreed in the dispositive portion of the decision sought to be enforced. Considering that the decision sought to be enforced pertains to the period 1 December 1991 to 30 November 1993, it necessarily follows that the computation of benefits under the imposed CBA should be limited to covered employees who were in GMCs employ during said period of time. While it is true that the provisions of the imposed CBA extend beyond said remaining two-year duration of the original CBA in view of the parties admitted failure to conclude a new CBA, the corresponding computation of the benefits accruing in favor of GMCs covered employees after the term of the original CBA was correctly excluded in the aforesaid 27 October 2005 order issued in RAB VII-06-0475-1992. Rather than the abbreviated preexecution proceedings before Executive Labor Arbiter Violeta Ortiz-Bantug, the computation of the same benefits beyond 30 November 1993 should, instead, be threshed out by GMC and the Union in accordance with the Grievance Procedure outlined as follows under Article XII of the imposed CBA, to wit: Article XII GRIEVANCE PROCEDURE

Section 1. Whenever an employee covered by the terms of this Agreement believes that the COMPANY has violated the express terms thereof, or is aggrieved on the enforcement or application of the COMPANYs personnel policies, he/she shall be required to follow the procedure hereinafter set forth in processing the grievance. The COMPANY will not be required to consider a grievance unless it is presented within 7 days from the alleged breach of the express terms of this Agreement or the COMPANY personnel policies, STEP I. The employee, through the UNION Steward, shall present the alleged grievance in writing to the immediate superior and they shall endeavor to settle the grievance within ten (10) days. STEP II. Failing the settlement in Step I, the UNION President and the Personnel Officer shall meet and adjust the grievance within fifteen (15) days. STEP III. Any unresolved grievance shall be referred to the Arbitration Committee provided hereunder. Section 2. Procedure before the Grievance Committee. A. In the event a dispute arises concerning the application or interpretation of the terms of this Agreement or enforcement/application of the COMPANY personnel policies which cannot be settled pursuant to Section I and II, Section 1 hereof, an Arbitration Committee shall be formed for the purpose of settling that particular dispute only. The Grievance Committee shall be composed of three (3) members, one to be appointed by the COMPANY as its representative, another to be appointed by the UNION, and the third to be appointed by common agreement of the two

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representatives selected from among the list of accredited voluntary arbitrators in the Province of Cebu, or from government officials or civic leaders and responsible citizens in the community. B. In all meetings of the Grievance Committee organized for the purpose of resolving a particular dispute, all members must be present and no business shall be deliberated upon if any member thereof is absent. However, if any member is unable to attend the meeting, he/she shall immediately appoint one to represent him/her, but if the one appointed by agreement of both representatives of the COMPANY and the UNION is the one absent, the two representatives present shall agree between themselves on any person to take the place of the absent member. Any business or matter shall be considered as passed and approved by the Committee when there is a vote thereo[n] by at least two (2) members present and the same shall be final and binding on the parties concerned. C. All decisions of the Committee shall be final: provided, however, that all decisions of the Committee shall be limited to the terms and provisions of this Agreement and in no event may the terms and provisions of this Agreement be altered, amended or modified by the Committee.54 Article II of the imposed CBA, relatedly, provides that "(t)he employees covered by this Agreement are those employed as regular monthly paid employees at the [GMC] offices in Cebu City and Lapulapu City, including cadet engineers, salesmen, veterinarians, field and laboratory workers, with the exception of managerial employees, supervisory employees, executive and confidential secretaries, probationary employees and the employees covered by a separate Collective Bargaining Agreement at the Companys Mill in Lapulapu City." 55 Gauged from the express language of the foregoing provision, we find that Executive Labor Arbiter Violeta Ortiz-Bantug correctly excluded the following employees from the list of 436 employees submitted by the Union 56 and the computation of the benefits for the period 1 December 1991 to 30 November 1993, to wit: (a) 77 employees who were hired or regularized after 30 November 1993; (b) 36 daily paid rank and file employees who were covered by a separate CBA; (c) 41 managerial/supervisory employees; and, (d) 1 employee for whom no salary-rate information was submitted in the premises.57 However, we find that the 234 employees who had already been separated from GMCs employ by the time of the rendition of the 11 February 2004 decision in G.R. No. 146728 should further be added to these excluded employees. The record shows that said 234 employees were union members whose employment with GMC ceased as a consequence of death, termination due to redundancy, termination due to closure of plant, termination for cause, voluntary resignation, separation or dismissal from service as well as retirement. 58 Upon compliance with GMCs clearance requirements59 and in consideration of sums ranging from P38,980.12 to P631,898.72, due payment and receipt of which were duly acknowledged, it appears that said employees executed deeds of waiver, release and quitclaim60 which uniformly stated as follows: THAT, for and in consideration of the said payment, I have remised, released and do hereby discharge, and by these presents do for myself, my heirs, executors and administrators, remise, release and forever discharge said GENERAL MILLING CORPORATION, its successors and assigns, and/or any of its officers or employees of and from any and all manner of actions, cause or causes of actions, sum or sums of money, account damages, claims and demands whatsoever by way of separation pay, benefits, bonuses, and all other rights to compensation, salary, wage, emolument, reimbursement, or monetary benefits, which I ever had, now have or which my heirs , executors and administrators hereafter can, shall or may have, upon or by reason of any matter, cause or things whatsoever in connection with my former employment in and retirement from the said GENERAL MILLING CORPORATION.
1avvphi1

THAT, I have signed this Deed of Waiver, Release and Quitclaim after I have read the contents thereof and understood the same and its legal effects. In its assailed 16 November 2007 decision in CA-G.R. CEB-SP No. 02232, the CAs then Eighteenth Division brushed aside said deeds of waiver, release and quitclaim on the ground, among other matters, that the same only covered the employees separation pay and retirement benefits but did not extend to the benefits which had accrued in their favor under the imposed CBA; and, that to be valid, the waiver "should be couched in clear and unequivocal terms leaving no doubt as to the intention of those giving up a right or a benefit that legally pertains to them." 61 In so doing, however, the CAs Eighteenth Division egregiously disregarded the clear intent on the part of the employees who executed said deeds of waiver, release and quitclaim to relinquish all present and future claims arising out of

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their employment with GMC. Although generally looked upon with disfavor, 62 it cannot be gainsaid that legitimate waivers that represent a voluntary and reasonable settlement of laborers' claims should be so respected by the Court as the law between the parties. 63 It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on its face, that the law will step in to annul the questionable transaction.64 The absence of showing of these factors in the case at bench impels us to uphold the validity of said deeds of waiver, release and quitclaim and, to exclude the employees who executed the same from those still entitled to the benefits under the imposed CBA both before and after the remaining term of the original CBA. The waiver was all inclusive. There was not even a hint of a limitation of coverage. Inasmuch as mere allegation is not evidence, the basic evidentiary rule is to the effect that the burden of evidence lies with the party who asserts the affirmative of an issue has the burden of proving the same 65 with such quantum of evidence required by law. In administrative or quasi-judicial proceedings like those conducted before the NLRC, the standard of proof is substantial evidence which is understood to be more than just a scintilla or such amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. 66 Since it does not mean just any evidence in the record of the case for, otherwise, no finding of fact would be wanting in basis, the test to be applied is whether a reasonable mind, after considering all the relevant evidence in the record of a case, would accept the findings of fact as adequate.67 Viewed in the light of Unions failure to prove the factual bases for the computation of the same, we find that the NLRC correctly affirmed Executive Labor Arbiter Violeta OrtizBantugs exclusion of the following benefits from the order dated 27 October, 2005, to wit: (a) vacation leave salary rate differentials; (b) sick leave salary rate differentials; (c) dislocation allowance; (d) separation pay for voluntary resignation; and (e) separation pay salary rate differentials. 68 For want of substantial evidence to prove the same, the CAs Eighteenth Division also correctly brushed aside GMCs insistence on the deduction of the additional benefits it purportedly extended to its employees from 1 December 1991 to 30 November 1993. 69 As for the benefits after the expiration of the term of the parties original CBA, we find that the extent thereof as well as identity of the employees entitled thereto will be better and more thoroughly threshed out by the parties themselves in accordance with the grievance procedure outlined in Article XII of the imposed CBA. Aside from being already beyond the scope of the decision sought to be enforced, these matters will not be accurately ascertained from the summaries of claims the parties have been wont to submit at the pre-execution conference conducted a quo. Taking into consideration such factors as hiring of new employees, personnel movement and/or promotions as well as separations from employment which may have, in the meantime, occurred after the expiration of the remaining term of the original CBA, the identity of the covered employees as well as the extent of the benefits due them should clearly be reckoned from acquisition and/or until loss of their status as regular monthly paid GMC employees. Since the computation must likewise necessarily take into consideration the increases in salaries and benefits that may have been given in the intervening period, both GMC and the Union are enjoined to make the pertinent employment and company records available to each other, to facilitate the expeditious and accurate determination of said benefits. WHEREFORE, premises considered the assailed decisions dated 10 October 2007 and 16 November 2007 are REVERSED and SET ASIDE. In lieu thereof, the 27 October 2005 order issued by Labor Arbiter Violeta OrtizBantug is ordered REINSTATED and MODIFIED to further exclude the 234 employees who have executed deeds of waiver, release and quitclaim from the computation of the benefits for the remaining term of the original CBA. SO ORDERED.
JOSE PORTUGAL PEREZ Associate Justice 20. Constructive dismissal WILLIAM ENDELISEO BARROGA vs. DATA CENTER COLLEGE OF THE PHILIPPINES and WILFRED BACTAD,1 G.R. No. 174158, June 27, 2011, 652 s 676 DECISION DEL CASTILLO, J.:

Our labor laws are enacted not solely for the purpose of protecting the working class but also the management by equally recognizing its right to conduct its own legitimate business affairs. This Petition for Review on Certiorari2 seeks the reversal of the Resolutions dated May 15, 2006 3 and August 4, 20064 of the Court of Appeals (CA) in CA-G.R. SP No. 93991, which dismissed petitioner William Endeliseo Barrogas Petition

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for Certiorari for procedural infirmities, as well as the Decision 5 dated August 25, 2005 and Resolution6 dated January 31, 2006 of the National Labor Relations Commission (NLRC), with respect to the dismissal of petitioners claim of constructive dismissal against respondents Data Center College of the Philippines and its President and General Manager, Wilfred Bactad. Factual Antecedents On November 11, 1991, petitioner was employed as an Instructor in Data Center College Laoag City branch in Ilocos Norte. In a Memorandum7 dated June 6, 1992, respondents transferred him to University of Northern Philippines (UNP) in Vigan, Ilocos Sur where the school had a tie-up program. Petitioner was informed through a letter8 dated June 6, 1992 that he would be receiving, in addition to his monthly salary, a P1,200.00 allowance for board and lodging during his stint as instructor in UNP-Vigan. In 1994, he was recalled to Laoag campus. On October 3, 2003, petitioner received a Memorandum9 transferring him to Data Center College Bangued, Abra branch as Head for Education/Instructor due to an urgent need for an experienced officer and computer instructor thereat. However, petitioner declined to accept his transfer to Abra citing the deteriorating health condition of his father and the absence of additional remuneration to defray expenses for board and lodging which constitutes implicit diminution of his salary.10 On November 10, 2003, petitioner filed a Complaint11 for constructive dismissal against respondents. Petitioner alleged that his proposed transfer to Abra constitutes a demotion in rank and diminution in pay and would cause personal inconvenience and hardship. He argued that although he was being transferred to Abra branch supposedly with the same position he was then holding in Laoag branch as Head for Education, he later learned through a Memorandum 12 from the administrator of Abra branch that he will be re-assigned merely as an instructor, thereby relegating him from an administrative officer to a rank-and-file employee. Moreover, the elimination of his allowance for board and lodging will result to an indirect reduction of his salary which is prohibited by labor laws. Petitioner also claimed that when he questioned the indefinite suspension of the scholarship for post-graduate studies extended to him by respondents,13 the latter became indifferent to his legitimate grievances which eventually led to his prejudicial re-assignment. He averred that his transfer is not indispensable to the schools operation considering that respondents even suggested that he take an indefinite leave of absence in the meantime if only to address his personal difficulties.14 Petitioner thus prayed for his reinstatement and backwages. Further, as Head for Education at Data Center College Laoag branch, petitioner asked for the payment of an overload honorarium as compensation for the additional teaching load in excess of what should have been prescribed to him. Exemplary damages and attorneys fees were likewise prayed for. For their part, respondents claimed that they were merely exercising their management prerogative to transfer employees for the purpose of advancing the schools interests. They argued that petitioners refusal to be transferred to Abra constitutes insubordination. They claimed that petitioners appointment as instructor carries a proviso of possible reassignments to any branch or tie-up schools as the schools necessity demands. Respondents argued that petitioners designation as Head for Education in Laoag branch was merely temporary and that he would still occupy his original plantilla item as instructor at his proposed assignment in Abra branch. Respondents denied liability to petitioners monetary claims. Ruling of the Labor Arbiter On September 24, 2004, the Labor Arbiter rendered a Decision15 dismissing the Complaint for lack of merit. The Labor Arbiter ruled that there was no demotion in rank as petitioners original appointment as instructor on November 11, 1991 conferred upon respondents the right to transfer him to any of the schools branches and that petitioners designation as Head for Education can be withdrawn anytime since he held such administrative position in a non-permanent capacity. The Labor Arbiter held that the exclusion of his allowance for board, lodging and transportation was not constructive dismissal, enunciating that the concept of non-diminution of benefits under Article 100 of the Labor Code prohibits the elimination of benefits that are presently paid to workers to satisfy the requirements of prevailing minimum wage rates. Since the benefit claimed by petitioner is beyond the coverage of the minimum wage law, its non-inclusion in his reassignment is not considered a violation. The Labor Arbiter also denied petitioners claim for overload honorarium for failure to present sufficient evidence to warrant entitlement to the same. The claim for damages was likewise denied. Ruling of the National Labor Relations Commission

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In a Decision16 dated August 25, 2005, the NLRC affirmed the findings of the Labor Arbiter that there was no constructive dismissal. It ruled that the management decision to transfer petitioner was well within the rights of respondents in consonance with petitioners contract of employment and which was not sufficiently shown to have been exercised arbitrarily by respondents. It agreed with the Labor Arbiter that petitioners designation as Head for Education was temporary for which he could not invoke any tenurial security. Further, the NLRC held that it was not proven with certainty that the transfer would unduly prejudice petitioners financial situation. The NLRC, however, found petitioner to be entitled to overload honorarium pursuant to CHED Memorandum Order No. 25 for having assumed the position of Head for Education, albeit on a temporary basis. The NLRC disposed of the case as follows: WHEREFORE, premises considered, the decision under review is hereby MODIFIED by ordering the respondent Data Center College of the Philippines, to pay the complainant the sum of SEVENTY THREE THOUSAND SEVEN THUNDRED [sic] THIRTY and 39/100 Pesos (P73,730.39), representing overload honorarium. All other claims are DISMISSED for lack of merit. SO ORDERED.17 From this Decision, both parties filed their respective motion for partial reconsideration. Petitioner assailed the NLRC Decision insofar as it dismissed his claims for reinstatement, backwages, damages and attorneys fees. 18Respondents, for their part, questioned the NLRCs award of overload honorarium in favor of petitioner. These motions were denied by the NLRC in a Resolution dated January 31, 2006.19 Ruling of the Court of Appeals Both parties filed petitions for certiorari before the CA. Respondents petition for certiorari was docketed as CA-G.R. SP No. 94205, which is not subject of the instant review. On the other hand, petitioner filed on April 7, 2006, a Petition for Certiorari20 with the CA docketed as CA-G.R. SP No. 93991 assailing the NLRCs finding that no constructive dismissal existed. Realizing his failure to attach the requisite affidavit of service of the petition upon respondents, petitioner filed on April 27, 2006, an Ex-Parte Manifestation and Motion21 to admit the attached affidavit of service and registry receipt in compliance with the rules. On May 15, 2006, the CA dismissed the petition in CA-G.R. SP No. 93991 in a Resolution which reads: Petition is DISMISSED outright due to the following infirmities: 1. there is no statement of material dates as to when the petitioner received the assailed decision dated August 25, 2005 and when he filed a Motion for Reconsideration thereof; 2. there is no affidavit of service attached to the petition; 3. these initiatory pleadings and the respondents Motion for Reconsideration of the Decision dated August 25, 2005 are not attached to the petition. SO ORDERED. 22 Petitioner filed a Motion for Reconsideration23 alleging that the material dates of receipt of the NLRC Decision and the filing of his motion for reconsideration are explicitly stated in his Partial Motion for Reconsideration which was attached as an annex to the petition and was made an integral part thereof. As to the absence of the affidavit of service, petitioner argued that there is no legal impediment for the belated admission of the affidavit of service as it was duly filed before the dismissal of the petition. As for his failure to attach respondents motion for reconsideration, petitioner manifested that a separate petition for certiorari has been filed by respondents and is pending with the CA, docketed as CA-G.R. SP No. 94205, where the denial of said motion is at issue. On August 4, 2006, the CA issued the following Resolution: Due to non-compliance despite opportunity afforded to comply, petitioners June 9, 2006 Motion for Reconsideration is hereby DENIED for lack of merit.

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SO ORDERED.24 Issues Hence, this petition assigning the following errors: THE HONORABLE COURT OF APPEALS PATENTLY COMMITTED REVERSIBLE ERROR IN DISMISSING THE PETITION FOR CERTIORARI [UNDER RULE 65] OF THE PETITIONER BY GIVING PRECEDENT TO TECHNICALITIES RATHER THAN THE MERITORIOUS GROUNDS ASSERTED THEREIN. THE PUBLIC RESPONDENT, NATIONAL LABOR RELATIONS COMMISSION, SERIOUSLY ERRED IN ITS CONSLUSIONS OF LAW IN RENDERING IT[S] ASSAILED DECISION AND RESOLUTION STATING THAT THE PETITIONER WAS NOT CONSTRUCTIVELY DISMISSED, THUS, NOT ENTITLED TO REINSTATEMENT, BACKWAGES, AND ATTORNEYS FEES.25 Petitioner imputes grave abuse of discretion on the CA in not giving due course to his petition despite substantial compliance with the requisite formalities as well as on the NLRC in not ruling that he was constructively dismissed by respondents. Our Ruling Petitioners substantial compliance calls for the relaxation of the rules. Therefore, the CA should have given due course to the petition. The three material dates which should be stated in the petition for certiorari under Rule 65 are the dates when the notice of the judgment was received, when a motion for reconsideration was filed and when the notice of the denial of the motion for reconsideration was received.26 These dates should be reflected in the petition to enable the reviewing court to determine if the petition was filed on time.27 Indeed, petitioners petition before the CA stated only the date of his receipt of the NLRCs Resolution denying his motion for partial reconsideration. It failed to state when petitioner received the assailed NLRC Decision and when he filed his partial motion for reconsideration. However, this omission is not at all fatal because these material dates are reflected in petitioners Partial Motion for Reconsideration attached as Annex "N" of the petition. In Acaylar, Jr. v. Harayo,28 we held that failure to state these two dates in the petition may be excused if the same are evident from the records of the case. It was further ruled by this Court that the more important material date which must be duly alleged in the petition is the date of receipt of the resolution of denial of the motion for reconsideration. In the case at bar, petitioner has duly complied with this rule. Next, the CA dismissed the petition for failure to attach an affidavit of service. However, records show that petitioner timely rectified this omission by submitting the required affidavit of service even before the CA dismissed his petition. Thirdly, petitioners failure to attach respondents motion for reconsideration to the assailed NLRC decision is not sufficient ground for the CA to outrightly dismiss his petition. The issue that was raised in respondents motion for reconsideration is the propriety of the NLRCs grant of overload honorarium in favor of petitioner. This particular issue was not at all raised in petitioners petition for certiorari with the CA, therefore, there is no need for petitioner to append a copy of this motion to his petition. Besides, as already mentioned, the denial of respondents motion for reconsideration has been assailed by respondents before the CA docketed as CA-G.R. SP No. 94205. At any rate, the Rules do not specify the documents which should be appended to the petition except that they should be relevant to the judgment, final order or resolution being assailed. Petitioner is thus justified in attaching the documents which he believed are sufficient to make out a prima facie case.29 The Court has time and again upheld the theory that the rules of procedure are designed to secure and not to override substantial justice.30 These are mere tools to expedite the decision or resolution of cases, hence, their strict and rigid application which would result in technicalities that tend to frustrate rather than promote substantial justice must be avoided.31 The CA thus should not have outrightly dismissed petitioners petition based on these procedural lapses.
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Nevertheless, the instant petition merits dismissal on substantial grounds. After a careful review of the records and the arguments of the parties, we do not find any sufficient basis to conclude that petitioners re-assignment amounted to constructive dismissal. Constructive dismissal is quitting because continued employment is rendered impossible, unreasonable or unlikely, or because of a demotion in rank or a diminution of pay. It exists when there is a clear act of discrimination, insensibility or disdain by an employer which becomes unbearable for the employee to continue his employment. 32 Petitioner alleges that the real purpose of his transfer is to demote him to the rank of an instructor from being the Head for Education performing administrative functions. Petitioner further argues that his re-assignment will entail an indirect reduction of his salary or diminution of pay considering that no additional allowance will be given to cover for board and lodging expenses. He claims that such additional allowance was given in the past and therefore cannot be discontinued and withdrawn without violating the prohibition against non-diminution of benefits. These allegations are bereft of merit. Petitioner was originally appointed as instructor in 1991 and was given additional administrative functions as Head for Education during his stint in Laoag branch. He did not deny having been designated as Head for Education in a temporary capacity for which he cannot invoke any tenurial security. Hence, being temporary in character, such designation is terminable at the pleasure of respondents who made such appointment.33 Moreover, respondents right to transfer petitioner rests not only on contractual stipulation but also on jurisprudential authorities. The Labor Arbiter and the NLRC both relied on the condition laid down in petitioners employment contract that respondents have the prerogative to assign petitioner in any of its branches or tie-up schools as the necessity demands. In any event, it is management prerogative for employers to transfer employees on just and valid grounds such as genuine business necessity. 34 It is also important to stress at this point that respondents have shown that it was experiencing some financial constraints. Because of this, respondents opted to temporarily suspend the post-graduate studies of petitioner and some other employees who were given scholarship grants in order to prioritize more important expenditures.35 Indeed, we cannot fully subscribe to petitioners contention that his re-assignment was tainted with bad faith. As a matter of fact, respondents displayed commiseration over the health condition of petitioners father when they suggested that he take an indefinite leave of absence to attend to this personal difficulty. Also, during the time when respondents directed all its administrative officers to submit courtesy resignations, petitioners letter of resignation was not accepted. 36 This bolsters the fact that respondents never intended to get rid of petitioner. In fine, petitioners assertions of bad faith on the part of respondents are purely unsubstantiated conjectures. The Court agrees with the Labor Arbiter that there was no violation of the prohibition on diminution of benefits. Indeed, any benefit and perks being enjoyed by employees cannot be reduced and discontinued, otherwise, the constitutional mandate to afford full protection to labor shall be offended. 37 But the rule against diminution of benefits is applicable only if the grant or benefit is founded on an express policy or has ripened into a practice over a long period which is consistent and deliberate.38 Petitioner was granted a monthly allowance for board and lodging during his stint as instructor in UNP-Vigan, Ilocos Sur as evinced in a letter dated June 6, 1992 with the condition stated in the following tenor: Please be informed that during your assignment at our tie-up at UNP-VIGAN, ILOCOS SUR , you will be receiving a monthly Board and Lodging of Pesos: One Thousand Two Hundred x x x (P1,200.00). However, you are only entitled to such allowance, if you are assigned to the said tie-up and the same will be changed or forfeited depending upon the place of your next reassignment.39 (Italics supplied.) Petitioner failed to present any other evidence that respondents committed to provide the additional allowance or that they were consistently granting such benefit as to have ripened into a practice which cannot be peremptorily withdrawn. Moreover, there is no conclusive proof that petitioners basic salary will be reduced as it was not shown that such allowance is part of petitioners basic salary. Hence, there will be no violation of the rule against diminution of pay enunciated under Article 100 of the Labor Code.40 WHEREFORE, the Resolutions dated May 15, 2006 and August 4, 2006 of the Court of Appeals in CA-G.R. SP No. 93991 are SET ASIDE. The Decision dated August 25, 2005 and Resolution dated January 31, 2006 of the National

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Labor Relations Commission in NLRC Case No. RAB I-12-1242-03 (LC) insofar as it found respondents Data Center College of the Philippines and Wilfred Bactad not liable for constructive dismissal, are AFFIRMED. SO ORDERED.
MARIANO C. DEL CASTILLO Associate Justice 21. Dismissal due to disease ROMEO VILLARUEL vs. YEO HAN GUAN, doing business under the name and style YUHANS ENTERPRISES, G.R. No. 169191, June 1, 2011, 650 s 64 DECISION PERALTA, J.:

Assailed in the present petition are the Decision1 and Resolution2 of the Court of Appeals (CA) dated February 16, 2005 and August 2, 2005, respectively, in CA-G.R. SP No. 79105. The CA Decision modified the March 31, 2003 Decision of the National Labor Relations Commission (NLRC) in NLRC NCR CA 028050-01, while the CA Resolution denied petitioner's Motion for Reconsideration. The antecedents of the case are as follows: On February 15, 1999, herein petitioner filed with the NLRC, National Capital Region, Quezon City a Complaint3for payment of separation pay against Yuhans Enterprises. Subsequently, in his Amended Complaint and Position Paper4 dated December 6, 1999, petitioner alleged that in June 1963, he was employed as a machine operator by Ribonette Manufacturing Company, an enterprise engaged in the business of manufacturing and selling PVC pipes and is owned and managed by herein respondent Yeo Han Guan. Over a period of almost twenty (20) years, the company changed its name four times. Starting in 1993 up to the time of the filing of petitioner's complaint in 1999, the company was operating under the name of Yuhans Enterprises. Despite the changes in the company's name, petitioner remained in the employ of respondent. Petitioner further alleged that on October 5, 1998, he got sick and was confined in a hospital; on December 12, 1998, he reported for work but was no longer permitted to go back because of his illness; he asked that respondent allow him to continue working but be assigned a lighter kind of work but his request was denied; instead, he was offered a sum of P15,000.00 as his separation pay; however, the said amount corresponds only to the period between 1993 and 1999; petitioner prayed that he be granted separation pay computed from his first day of employment in June 1963, but respondent refused. Aside from separation pay, petitioner prayed for the payment of service incentive leave for three years as well as attorney's fees. On the other hand, respondent averred in his Position Paper5 that petitioner was hired as machine operator from March 1, 1993 until he stopped working sometime in February 1999 on the ground that he was suffering from illness; after his recovery, petitioner was directed to report for work, but he never showed up. Respondent was later caught by surprise when petitioner filed the instant case for recovery of separation pay. Respondent claimed that he never terminated the services of petitioner and that during their mandatory conference, he even told the latter that he could go back to work anytime but petitioner clearly manifested that he was no longer interested in returning to work and instead asked for separation pay. On November 27, 2000, the Labor Arbiter handling the case rendered judgment in favor of petitioner. The dispositive portion of the Labor Arbiter's Decision reads, thus: WHEREFORE, premises considered, judgment is hereby rendered in favor of the complainant and against herein respondent, as follows: 1. Ordering the respondents to pay separation benefits equivalent to one-half () month salary per year of service, a fraction of six months equivalent to one year to herein complainant based on the complainant's length of service reckoned from June 1963 up to October 1998 as provided under Article 284 of the Labor Code, the same computed by the Computation and Examination Unit which we hereby adopt and approved (sic) as our own in the amount of NINETY-ONE THOUSAND FOUR HUNDRED FORTY-FIVE PESOS (P91,445.00); 2. Ordering the respondents to pay service incentive leave equivalent to fifteen days salary in the amount of THREE THOUSAND FIFTEEN PESOS (P3,015.00).

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All other claims are dismissed for lack of merit. SO ORDERED.6 Aggrieved, respondent filed an appeal with the NLRC. On March 31, 2003, the Third Division of the NLRC rendered its Decision7 dismissing respondent's appeal and affirming the Labor Arbiter's Decision. Respondent filed a Motion for Reconsideration,8 but the same was denied by the NLRC in a Resolution 9 dated May 30, 2003. Respondent then filed with the CA a petition for certiorari under Rule 65 of the Rules of Court. On February 16, 2005, the CA promulgated its presently assailed Decision disposing as follows: WHEREFORE, premises considered, the petition is partially GRANTED. The award of separation pay is hereby DELETED, but the Decision insofar as it awards private respondent [herein petitioner] service incentive leave pay of three thousand and fifteen pesos (P3,015.00) stands. The NLRC is permanently ENJOINED from partially executing its Decision dated November 27, 2000 insofar as the award of separation pay is concerned; or if it has already effected execution, it should order the private respondent to forthwith restitute the same. SO ORDERED.10 Herein petitioner filed his Motion for Reconsideration11 of the CA Decision, but it was denied by the CA via a Resolution12 dated August 2, 2005. Hence, the instant petition based on the following assignment of errors: I THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ITS FAILURE TO APPRECIATE THE ADMISSION BY [PETITIONER] OF THE FACT AND VALIDITY OF HIS TERMINATION BY THE [RESPONDENT]. II [THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED] IN DENYING [PETITIONER'S] ENTITLEMENT TO SEPARATION PAY UNDER ARTICLE 284 OF THE LABOR CODE AND UNDER THE OMNIBUS RULES IMPLEMENTING THE LABOR CODE. III THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THE BURDEN OF PROOF THAT AN EMPLOYEE IS SUFFERING FROM DISEASE THAT HAS TO BE TERMINATED REST[S] UPON THE EMPLOYER IN ORDER FOR THE EMPLOYEE TO BE ENTITLED TO SEPARATION PAY. IV THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ORDERING THE DELETION OF THE AWARD OF SEPARATION PAY TO THE [PETITIONER].13 The Court finds the petition without merit. The assigned errors in the instant petition essentially boil down to the question of whether petitioner is entitled to separation pay under the provisions of the Labor Code, particularly Article 284 thereof, which reads as follows:

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An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid separation pay equivalent to at least one (1) month salary or to one-half () month salary for every year of service whichever is greater, a fraction of at least six months being considered as one (1) whole year. A plain reading of the abovequoted provision clearly presupposes that it is the employer who terminates the services of the employee found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees. It does not contemplate a situation where it is the employee who severs his or her employment ties. This is precisely the reason why Section 8, 14 Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code, directs that an employer shall not terminate the services of the employee unless there is a certification by a competent public health authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment. Hence, the pivotal question that should be settled in the present case is whether respondent, in fact, dismissed petitioner from his employment. A perusal of the Decisions of the Labor Arbiter and the NLRC would show, however, that there was no discussion with respect to the abovementioned issue. Both lower tribunals merely concluded that petitioner is entitled to separation pay under Article 284 of the Labor Code without any explanation. The Court finds no convincing justification, in the Decision of the Labor Arbiter on why petitioner is entitled to such pay. In the same manner, the NLRC Decision did not give any rationalization as the gist thereof simply consisted of a quoted portion of the appealed Decision of the Labor Arbiter. On the other hand, the Court agrees with the CA in its observation of the following circumstances as proof that respondent did not terminate petitioner's employment: first, the only cause of action in petitioner's original complaint is that he was "offered a very low separation pay"; second, there was no allegation of illegal dismissal, both in petitioner's original and amended complaints and position paper; and, third, there was no prayer for reinstatement. In consonance with the above findings, the Court finds that petitioner was the one who initiated the severance of his employment relations with respondent. It is evident from the various pleadings filed by petitioner that he never intended to return to his employment with respondent on the ground that his health is failing. Indeed, petitioner did not ask for reinstatement. In fact, he rejected respondent's offer for him to return to work. This is tantamount to resignation. Resignation is defined as the voluntary act of an employee who finds himself in a situation where he believes that personal reasons cannot be sacrificed in favor of the exigency of the service and he has no other choice but to disassociate himself from his employment.15 It may not be amiss to point out at this juncture that aside from Article 284 of the Labor Code, the award of separation pay is also authorized in the situations dealt with in Article 28316 of the same Code and under Section 4 (b), Rule I, Book VI of the Implementing Rules and Regulations of the said Code 17 where there is illegal dismissal and reinstatement is no longer feasible. By way of exception, this Court has allowed grants of separation pay to stand as "a measure of social justice" where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character.18 However, there is no provision in the Labor Code which grants separation pay to voluntarily resigning employees. In fact, the rule is that an employee who voluntarily resigns from employment is not entitled to separation pay, except when it is stipulated in the employment contract or CBA, or it is sanctioned by established employer practice or policy.19 In the present case, neither the abovementioned provisions of the Labor Code and its implementing rules and regulations nor the exceptions apply because petitioner was not dismissed from his employment and there is no evidence to show that payment of separation pay is stipulated in his employment contract or sanctioned by established practice or policy of herein respondent, his employer. Since petitioner was not terminated from his employment and, instead, is deemed to have resigned therefrom, he is not entitled to separation pay under the provisions of the Labor Code. The foregoing notwithstanding, this Court, in a number of cases, has granted financial assistance to separated employees as a measure of social and compassionate justice and as an equitable concession. Taking into consideration the factual circumstances obtaining in the present case, the Court finds that petitioner is entitled to this kind of assistance. Citing Eastern Shipping Lines, Inc. v. Sedan,20 this Court, in the more recent case of Eastern Shipping Lines v. Antonio,21 held:

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But we must stress that this Court did allow, in several instances, the grant of financial assistance. In the words of Justice Sabino de Leon, Jr., now deceased, financial assistance may be allowed as a measure of social justice and exceptional circumstances, and as an equitable concession. The instant case equally calls for balancing the interests of the employer with those of the worker, if only to approximate what Justice Laurel calls justice in its secular sense. In this instance, our attention has been called to the following circumstances: that private respondent joined the company when he was a young man of 25 years and stayed on until he was 48 years old; that he had given to the company the best years of his youth, working on board ship for almost 24 years; that in those years there was not a single report of him transgressing any of the company rules and regulations; that he applied for optional retirement under the company's noncontributory plan when his daughter died and for his own health reasons; and that it would appear that he had served the company well, since even the company said that the reason it refused his application for optional retirement was that it still needed his services; that he denies receiving the telegram asking him to report back to work; but that considering his age and health, he preferred to stay home rather than risk further working in a ship at sea. In our view, with these special circumstances, we can call upon the same "social and compassionate justice" cited in several cases allowing financial assistance. These circumstances indubitably merit equitable concessions, via the principle of "compassionate justice" for the working class. x x x In the present case, respondent had been employed with the petitioner for almost twelve (12) years. On February 13, 1996, he suffered from a "fractured left transverse process of fourth lumbar vertebra," while their vessel was at the port of Yokohama, Japan. After consulting a doctor, he was required to rest for a month. When he was repatriated to Manila and examined by a company doctor, he was declared fit to continue his work. When he reported for work, petitioner refused to employ him despite the assurance of its personnel manager. Respondent patiently waited for more than one year to embark on the vessel as 2nd Engineer, but the position was not given to him, as it was occupied by another person known to one of the stockholders. Consequently, for having been deprived of continued employment with petitioner's vessel, respondent opted to apply for optional retirement. In addition, records show that respondent's seaman's book, as duly noted and signed by the captain of the vessel was marked "Very Good," and "recommended for hire." Moreover, respondent had no derogatory record on file over his long years of service with the petitioner.
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Considering all of the foregoing and in line with Eastern, the ends of social and compassionate justice would be served best if respondent will be given some equitable relief. Thus, the award of P100,000.00 to respondent as financial assistance is deemed equitable under the circumstances.22 While the abovecited cases authorized the grant of financial assistance in lieu of retirement benefits, the Court finds no cogent reason not to employ the same guiding principle of compassionate justice applied by the Court, taking into consideration the factual circumstances obtaining in the present case. In this regard, the Court finds credence in petitioner's contention that he is in the employ of respondent for more than 35 years. In the absence of a substantial refutation on the part of respondent, the Court agrees with the findings of the Labor Arbiter and the NLRC that respondent company is not distinct from its predecessors but, in fact, merely continued the operation of the latter under the same owners and the same business venture. The Court further notes that there is no evidence on record to show that petitioner has any derogatory record during his long years of service with respondent and that his employment was severed not by reason of any infraction on his part but because of his failing physical condition. Add to this the willingness of respondent to give him financial assistance. Hence, based on the foregoing, the Court finds that the award of P50,000.00 to petitioner as financial assistance is deemed equitable under the circumstances. WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of Appeals are AFFIRMED with MODIFICATION by awarding petitioner with financial assistance in the amount of P50,000.00. SO ORDERED.
DIOSDADO M. PERALTA Associate Justice 22. Effect of SECLABs Assumption of Jurisdiction, strikes; liability of union officers and members YOLITO FADRIQUELAN, ARTURO EGUNA, ARMANDO MALALUAN, DANILO ALONSO, ROMULO DIMAANO, ROEL MAYUGA, WILFREDO RIZALDO, ROMEO SUICO, DOMINGO ESCAMILLAS and DOMINGO BAUTRO vs. MONTEREY FOODS CORPORATION, 651 s 481

x - - - - - - - - - - - - - - - - - - - - - - -x MONTEREY FOODS CORPORATION, Petitioner vs. BUKLURAN NG MGA MANGGAGAWA SA MONTEREY-ILAW AT BUKLOD NG MANGGAGAWA, YOLITO FADRIQUELAN, CARLITO ABACAN, ARTURO EGUNA, DANILO ROLLE, ALBERTO CASTILLO, ARMANDO MALALUAN, DANILO ALFONSO, RUBEN ALVAREZ, ROMULO DIMAANO, ROEL MAYUGA, JUANITO TENORIO, WILFREDO RIZALDO, JOHN ASOTIGUE, NEMESIO AGTAY, ROMEO SUICO, DOMINGO ESCAMILLAS and DOMINGO BAUTRO, G.R. No. 178434 DECISION

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These cases are about the need to clearly identify, for establishing liability, the union officers who took part in the illegal slowdown strike after the Department of Labor and Employment (DOLE) Secretary assumed jurisdiction over the labor dispute. The Facts and the Case On April 30, 2002 the three-year collective bargaining agreement or CBA between the union Bukluran ng Manggagawa sa Monterey-Ilaw at Buklod ng Manggagawa (the union) and Monterey Foods Corporation (the company) expired. On March 28, 2003 after the negotiation for a new CBA reached a deadlock, the union filed a notice of strike with the National Conciliation and Mediation Board (NCMB). To head off the strike, on April 30, 2003 the company filed with the DOLE a petition for assumption of jurisdiction over the dispute in view of its dire effects on the meat industry. In an Order dated May 12, 2003, the DOLE Secretary assumed jurisdiction over the dispute and enjoined the union from holding any strike. It also directed the union and the company to desist from taking any action that may aggravate the situation. On May 21, 2003 the union filed a second notice of strike before the NCMB on the alleged ground that the company committed unfair labor practices. On June 10, 2003 the company sent notices to the union officers, charging them with intentional acts of slowdown. Six days later or on June 16 the company sent new notices to the union officers, informing them of their termination from work for defying the DOLE Secretarys assumption order. On June 23, 2003, acting on motion of the company, the DOLE Secretary included the unions second notice of strike in his earlier assumption order. But, on the same day, the union filed a third notice of strike based on allegations that the company had engaged in union busting and illegal dismissal of union officers. On July 7, 2003 the company filed a petition for certification of the labor dispute to the National Labor Relations Commission (NLRC) for compulsory arbitration but the DOLE Secretary denied the motion. He, however, subsumed the third notice of strike under the first and second notices. On November 20, 2003 the DOLE rendered a decision that, among other things, upheld the companys termination of the 17 union officers. The union and its officers appealed the decision to the Court of Appeals (CA). On May 29, 2006 the CA rendered a decision, upholding the validity of the companys termination of 10 union officers but declaring illegal that of the other seven. Both parties sought recourse to this Court, the union in G.R. 178409 and the company in G.R. 178434. The Issues Presented The issues these cases present are: 1. Whether or not the CA erred in holding that slowdowns actually transpired at the companys farms; and 2. Whether or not the CA erred in holding that union officers committed illegal acts that warranted their dismissal from work. The Rulings of the Court First. The law is explicit: no strike shall be declared after the Secretary of Labor has assumed jurisdiction over a labor dispute. A strike conducted after such assumption is illegal and any union officer who knowingly participates in the same may be declared as having lost his employment. 1 Here, what is involved is a slowdown strike. Unlike other forms of strike, the employees involved in a slowdown do not walk out of their jobs to hurt the company. They need only to stop work or reduce the rate of their work while generally remaining in their assigned post. The Court finds that the union officers and members in this case held a slowdown strike at the companys farms despite the fact that the DOLE Secretary had on May 12, 2003 already assumed jurisdiction over their labor dispute. The evidence sufficiently shows that union officers and members simultaneously stopped work at the companys Batangas and Cavite farms at 7:00 a.m. on May 26, 2003.

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The union of course argues that it merely held assemblies to inform members of the developments in the CBA negotiation, not protest demonstrations over it. But as the CA correctly observed, if the meetings had really been for the stated reason, why did the union officers and members from separate company farms choose to start and end their meetings at the same time and on the same day? And if they did not intend a slowdown, why did they not hold their meetings after work. There is no allegation that the company prevented the union from holding meetings after working hours. Second. A distinction exists, however, between the ordinary workers liability for illegal strike and that of the union officers who participated in it. The ordinary worker cannot be terminated for merely participating in the strike. There must be proof that he committed illegal acts during its conduct. On the other hand, a union officer can be terminated upon mere proof that he knowingly participated in the illegal strike.2 Still, the participating union officers have to be properly identified.3 The CA held that the company illegally terminated union officers Ruben Alvarez, John Asotigue, Alberto Castillo, Nemesio Agtay, Carlito Abacan, Danilo Rolle, and Juanito Tenorio, there being no substantial evidence that would connect them to the slowdowns. The CA said that their part in the same could not be established with certainty. But, although the witnesses did not say that Asotigue, Alvarez, and Rolle took part in the work slowdown, these officers gave no credible excuse for being absent from their respective working areas during the slowdown. Tenorio allegedly took a break and never went back to work. He claimed that he had to attend to an emergency but did not elaborate on the nature of such emergency. In Abacans case, however, he explained that he was not feeling well on May 26, 2003 and so he decided to take a two-hour rest from work. This claim of Abacan is consistent with the report 4 that only one officer (Tenorio) was involved in the slowdown at the Calamias farm.
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At the Quilo farm, the farm supervisor did not include Castillo in the list of employees who failed to report for work on May 26, 2003.5 In Agtays case, the evidence is that he was on his rest day. There is no proof that the unions president, Yolito Fadriquelan, did not show up for work during the slowdowns. The CA upheld his dismissal, relying solely on a security guards report that the company submitted as evidence. But, notably, that report actually referred to a Rolly Fadrequellan, another employee who allegedly took part in the Lipa farm slowdown. Besides, Yolito Fadriquelan was then assigned at the General Trias farm in Cavite, not at the Lipa farm. In fact, as shown in the sworn statements 6 of the Cavite farm employees, Fadriquelan even directed them not to do anything which might aggravate the situation. This clearly shows that his dismissal was mainly based on his being the union president. The Court sustains the validity of the termination of the rest of the union officers. The identity and participations of Arturo Eguna,7 Armando Malaluan,8 Danilo Alonso,9 Romulo Dimaano,10 Roel Mayuga,11 Wilfredo Rizaldo,12Romeo Suico,13 Domingo Escamillas,14 and Domingo Bautro15 in the slowdowns were properly established. These officers simply refused to work or they abandoned their work to join union assemblies. In termination cases, the dismissed employee is not required to prove his innocence of the charges against him. The burden of proof rests upon the employer to show that the employees dismissal was for just cause. The employers failure to do so means that the dismissal was not justified.16 Here, the company failed to show that all 17 union officers deserved to be dismissed. Ordinarily, the illegally dismissed employees are entitled to two reliefs: reinstatement and backwages. Still, the Court has held that the grant of separation pay, instead of reinstatement, may be proper especially when as in this case such reinstatement is no longer practical or will be for the best interest of the parties.17 But they shall likewise be entitled to attorneys fees equivalent to 10% of the total monetary award for having been compelled to litigate in order to protect their interests.18 WHEREFORE, the Court MODIFIES the decision of the Court of Appeals in CA-G.R. SP 82526, DECLARESMonterey Foods Corporations dismissal of Alberto Castillo, Nemesio Agtay, Carlito Abacan, and Yolito Fadriquelan illegal, and ORDERS payment of their separation pay equivalent to one month salary for every year of service up to the date of their termination. The Court also ORDERS the company to pay 10% attorneys fees as well as interest of 6% per annum on the due amounts from the time of their termination and 12% per annum from the time this decision becomes final and executory until such monetary awards are paid. SO ORDERED.

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ROBERTO A. ABAD Associate Justice 23. Power of SECLAB to give arbitral awards; disaffiliation CIRTEK EMPLOYEES LABOR UNION- FEDERATION OF FREE WORKERS vs. CIRTEK ELECTRONICS, INC., G.R. No. 190515, June 6, 2011, 650 s 656 RESOLUTION CARPIO MORALES, J.:

This resolves the motion for reconsideration and supplemental motion for reconsideration filed by respondent, Cirtek Electronics, Inc., of the Courts Decision dated November 15, 2010. Respondent-movant avers that petitioner, in filing the petition for certiorari under Rule 65, availed of the wrong remedy, hence, the Court should have dismissed the petition outright. It goes on to aver that the Court erred in resolving a factual issue whether the August 24, 2005 Memorandum of Agreement (MOA) was validly entered into , which is not the office of a petition for certiorari. Respondent-movant further avers that the MOA1 signed by the remaining officers of petitioner Union and allegedly ratified by its members should have been given credence by the Court. Furthermore, respondent-movant maintains that the Secretary of Labor cannot insist on a ruling beyond the compromise agreement entered into by the parties; and that, as early as February 5, 2010, petitioner Union had already filed with the Department of Labor and Employment (DOLE) a resolution of disaffiliation from the Federation of Free Workers resulting in the latters lack of personality to represent the workers in the present case. The motion is bereft of merit. Respondent indeed availed of the wrong remedy of certiorari under Rule 65. Due, however, to the nature of the case, one involving workers wages and benefits, and the fact that whether the petition was filed under Rule 65 or appeal by certiorari under Rule 45 it was filed within 15 days (the reglementary period under Rule 45) from petitioners receipt of the resolution of the Court of Appeals Resolution denying its motion for reconsideration, the Court resolved to give it due course. As Almelor v. RTC of Las Pias, et al. 2 restates: Generally, an appeal taken either to the Supreme Court or the CA by the wrong or inappropriate mode shall be dismissed. This is to prevent the party from benefiting from ones neglect and mistakes. However, like most rules, it carries certain exceptions. After all, the ultimate purpose of all rules of procedures is to achieve substantial justice as expeditiously as possible. (emphasis and underscoring supplied) Respecting the attribution of error to the Court in ruling on a question of fact, it bears recalling that a QUESTION OF FACT arises when the doubt or difference arises as to the truth or falsehood of alleged facts,3 while a QUESTION OF LAW exists when the doubt or difference arises as to what the law is on a certain set of facts. The present case presents the primordial issue of whether the Secretary of Labor is empowered to give arbitral awards in the exercise of his authority to assume jurisdiction over labor disputes. Ineluctably, the issue involves a determination and application of existing law, the provisions of the Labor Code, and prevailing jurisprudence. Intertwined with the issue, however, is the question of validity of the MOA and its ratification which, as movant correctly points out, is a question of fact and one which is not appropriate for a petition for review on certiorari under Rule 45. The rule, however, is not without exceptions, viz: This rule provides that the parties may raise only questions of law, because the Supreme Court is not a trier of facts. Generally, we are not duty-bound to analyze again and weigh the evidence introduced in and considered by the tribunals below. When supported by substantial evidence, the findings of fact of the CA are conclusive and binding on the parties and are not reviewable by this Court, unless the case falls under any of the followingrecognized exceptions: (1) When the conclusion is a finding grounded entirely on speculation, surmises and conjectures; (2) When the inference made is manifestly mistaken, absurd or impossible;

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(3) Where there is a grave abuse of discretion; (4) When the judgment is based on a misapprehension of facts; (5) When the findings of fact are conflicting; (6) When the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee; (7) When the findings are contrary to those of the trial court; (8) When the findings of fact are conclusions without citation of specific evidence on which they are based; (9) When the facts set forth in the petition as well as in the petitioners' main and reply briefs are not disputed by the respondents; and (10) When the findings of fact of the Court of Appeals are premised on the supposed absence of evidence and contradicted by the evidence on record. (emphasis and underscoring supplied) In the present case, the findings of the Secretary of Labor and the appellate court on whether the MOA is valid and binding are conflicting, the former giving scant consideration thereon, and the latter affording it more weight. As found by the Secretary of Labor, the MOA came about as a result of the constitution, at respondents behest, of the Labor-Management Council (LMC) which, he reminded the parties, should not be used as an avenue for bargaining but for the purpose of affording workers to participate in policy and decision-making. Hence, the agreements embodied in the MOA were not the proper subject of the LMC deliberation or procedure but of CBA negotiations and, therefore, deserving little weight. The appellate court, held, however, that the Secretary did not have the authority to give an arbitral award higher than what was stated in the MOA. The conflicting views drew the Court to re-evaluate the facts as borne by the records, an exception to the rule that only questions of law may be dealt with in an appeal by certiorari under Rule 45. As discussed in the Decision under reconsideration, the then Acting Secretary of Labor Manuel G. Imson acted well within his jurisdiction in ruling that the wage increases to be given are P10 per day effective January 1, 2004 and P15 per day effective January 1, 2005, pursuant to his power to assume jurisdiction under Art. 263 (g)4 of the Labor Code. While an arbitral award cannot per se be categorized as an agreement voluntarily entered into by the parties because it requires the interference and imposing power of the State thru the Secretary of Labor when he assumes jurisdiction, the award can be considered as an approximation of a collective bargaining agreement which would otherwise have been entered into by the parties. Hence, it has the force and effect of a valid contract obligation between the parties.5 In determining arbitral awards then, aside from the MOA, courts considered other factors and documents including, as in this case, the financial documents6 submitted by respondent as well as its previous bargaining history and financial outlook and improvements as stated in its own website.7 The appellate courts ruling that giving credence to the "Pahayag" and the minutes of the meeting which were not verified and notarized would violate the rule on parol evidence is erroneous. The parol evidence rule, like other rules on evidence, should not be strictly applied in labor cases. Interphil Laboratories Employees Union-FFW v. Interphil Laboratories, Inc. 8 teaches: [R]eliance on the parol evidence rule is misplaced. In labor cases pending before the Commission or the Labor Arbiter, the rules of evidence prevailing in courts of law or equity are not controlling. Rules of procedure and evidence are not applied in a very rigid and technical sense in labor cases. Hence, the Labor Arbiter is not precluded from accepting and evaluating evidence other than, and even contrary to, what is stated in the CBA . (emphasis and underscoring supplied)

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On the contention that the MOA should have been given credence because it was validly entered into by the parties, the Court notes that even those who signed it expressed reservations thereto. A CBA (assuming in this case that the MOA can be treated as one) is a contract imbued with public interest. It must thus be given a liberal, practical and realistic, rather than a narrow and technical construction, with due consideration to the context in which it is negotiated and the purpose for which it is intended.9 As for the contention that the alleged disaffiliation of the Union from the FFW during the pendency of the case resulted in the FFW losing its personality to represent the Union, the same does not affect the Courts upholding of the authority of the Secretary of Labor to impose arbitral awards higher than what was supposedly agreed upon in the MOA. Contrary to respondents assertion, the "unavoidable issue of disaffiliation" bears no significant legal repercussions to warrant the reversal of the Courts Decision. En passant, whether there was a valid disaffiliation is a factual issue. Besides, the alleged disaffiliation of the Union from the FFW was by virtue of a Resolution signed on February 23, 2010 and submitted to the DOLE Laguna Field Office on March 5, 2010 two months after the present petition was filed on December 22, 2009, hence, it did not affect FFW and its Legal Centers standing to file the petition nor this Courts jurisdiction to resolve the same. At all events, the issue of disaffiliation is an intra-union dispute which must be resolved in a different forum in an action at the instance of either or both the FFW and the Union or a rival labor organization, not the employer. An intra-union dispute refers to any conflict between and among union members, including grievances arising from any violation of the rights and conditions of membership, violation of or disagreement over any provision of the unions constitution and by-laws, or disputes arising from chartering or disaffiliation of the union. Sections 1 and 2, Rule XI of Department Order No. 40-03, Series of 2003 of the DOLE enumerate the following circumstances as inter/intra-union disputes, viz: RULE XI INTER/INTRA-UNION DISPUTES AND OTHER RELATED LABOR RELATIONS DISPUTES Section 1. Coverage. - Inter/intra-union disputes shall include: (a) cancellation of registration of a labor organization filed by its members or by another labor organization; (b) conduct of election of union and workers association officers/nullification of election of union and workers association officers; (c) audit/accounts examination of union or workers association funds; (d) deregistration of collective bargaining agreements; (e) validity/invalidity of union affiliation or disaffiliation; (f) validity/invalidity of acceptance/non-acceptance for union membership; (g) validity/invalidity of impeachment/expulsion of union and workers association officers and members; (h) validity/invalidity of voluntary recognition; (i) opposition to application for union and CBA registration; (j) violations of or disagreements over any provision in a union or workers association constitution and by-laws; (k) disagreements over chartering or registration of labor organizations and collective bargaining agreements; (l) violations of the rights and conditions of union or workers association membership;

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(m) violations of the rights of legitimate labor organizations, except interpretation of collective bargaining agreements; (n) such other disputes or conflicts involving the rights to self-organization, union membership and collective bargaining (1) between and among legitimate labor organizations; (2) between and among members of a union or workers association. Section 2. Coverage. Other related labor relations disputes shall include any conflict between a labor union and the employer or any individual, entity or group that is not a labor organization or workers association. This includes: (1) cancellation of registration of unions and workers associations; and (2) a petition for interpleader.10(emphasis supplied) Indeed, as respondent-movant itself argues, a local union may disaffiliate at any time from its mother federation, absent any showing that the same is prohibited under its constitution or rule. Such, however, does not result in it losing its legal personality altogether. Verily, Anglo-KMU v. Samahan Ng Mga Manggagawang Nagkakaisa Sa Manila Bay Spinning Mills At J.P. Coats11 enlightens: A local labor union is a separate and distinct unit primarily designed to secure and maintain an equality of bargaining power between the employer and their employee-members. A local union does not owe its existence to the federation with which it is affiliated. It is a separate and distinct voluntary association owing its creation to the will of its members. The mere act of affiliation does not divest the local union of its own personality, neither does it give the mother federation the license to act independently of the local union. It only gives rise to a contract of agency where the former acts in representation of the latter. (emphasis and underscoring supplied)
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Whether then, as respondent claims, FFW "went against the will and wishes of its principal" (the member-employees) by pursuing the case despite the signing of the MOA, is not for the Court, nor for respondent to determine, but for the Union and FFW to resolve on their own pursuant to their principal-agent relationship. WHEREFORE, the motion for reconsideration of this Courts Decision of November 15, 2010 is DENIED. SO ORDERED.
CONCHITA CARPIO MORALES Associate Justice 24. In pari delicto in strikes and lockouts AUTOMOTIVE ENGINE REBUILDERS, INC. (AER), ANTONIO T. INDUCIL, LOURDES T. INDUCIL, JOCELYN T. INDUCIL and MA. CONCEPCION I. DONATO vs. PROGRESIBONG UNYON NG MGA MANGGAGAWA SA AER, ARNOLD VILLOTA, FELINO E. AGUSTIN, RUPERTO M. MARIANO II, EDUARDO S. BRIZUELA, ARNOLD S. RODRIGUEZ, RODOLFO MAINIT, JR., FROILAN B. MADAMBA, DANILO D. QUIBOY, CHRISTOPHER R. NOLASCO, ROGER V. BELATCHA, CLEOFAS B. DELA BUENA, JR., HERMINIO P. PAPA, WILLIAM A. RITUAL, ROBERTO CALDEO, RAFAEL GACAD, JAMES C. CAAMPUED, ESPERIDION V. LOPEZ, JR., FRISCO M. LORENZO, JR., CRISANTO LUMBAO, JR., and RENATO SARABUNO, G.R. No. 160138, July 13, 2011, 653 s

x - - - - - - - - - - - - - - - - - - - - - - -x PROGRESIBONG UNYON NG MGA MANGGAGAWA SA AER, ARNOLD VILLOTA, FELINO E. AGUSTIN, RUPERTO M. MARIANO II, EDUARDO S. BRIZUELA, ARNOLD S. RODRIGUEZ, RODOLFO MAINIT, JR., FROILAN B. MADAMBA, DANILO D. QUIBOY, CHRISTOPHER R. NOLASCO, ROGER V. BELATCHA, CLEOFAS B. DELA BUENA, JR., HERMINIO P. PAPA, WILLIAM A. RITUAL, ROBERTO CALDEO, RAFAEL GACAD, JAMES C. CAAMPUED, ESPERIDION V. LOPEZ, JR., FRISCO M. LORENZO, JR., CRISANTO LUMBAO, JR., and RENATO SARABUNO, vs. AUTOMOTIVE ENGINE REBUILDERS, INC., and ANTONIO T. INDUCIL, G.R. No. 160192 DECISION MENDOZA, J.:

Challenged in these consolidated petitions for review is the October 1, 2003 Amended Decision 1 of the Court of Appeals (CA), in CA-G.R. SP No. 73161, which modified the Resolution2 of the National Labor Relations Commission (NLRC), by ordering the immediate reinstatement of all the suspended employees of Automotive Engine Rebuilders, Inc. (AER) without backwages. Records show that AER is a company engaged in the automotive engine repair and rebuilding business and other precision and engineering works for more than 35 years. Progresibong Unyon Ng Mga Manggagawa sa AER(Unyon) is the legitimate labor union of the rank and file employees of AER which was formed in the year 1998.

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Due to a dispute between the parties, both filed a complaint against each other before the NLRC. AER accused the Unyon of illegal concerted activities (illegal strike, illegal walkout, illegal stoppage, and unfair labor practice) while Unyon accused AER of unfair labor practice, illegal suspension and illegal dismissal. AERs Managements Version On January 28, 1999, eighteen (18) employees of AER, acting collectively and in concert, suddenly and without reason staged a walkout and assembled illegally in the company premises. Despite managements plea for them to go back to work, the concerned employees refused and, instead, walked out of the company premises and proceeded to the office of the AER Performance and Service Center (AER-PSC)located on another street. Upon arrival, they collectively tried to cart away one (1) line boring machine owned by AER out of the AERPSC premises. They threatened and forced the company guards and some company officers and personnel to open the gate of the AER-PSC compound. They also urged the AER-PSC employees to likewise stop working. The concerned employees occupied the AER-PSC premises for several hours, thus, disrupting the work of the other employees and AERs services to its clients. They refused to stop their unlawful acts despite the intervention of the barangay officers. They left the AER-PSC premises only when the police intervened and negotiated with them. Subsequently, management issued a memorandum requiring the employees who joined the illegal walkout to explain in writing why they should not be disciplined administratively and dismissed for their unjustified and illegal acts. The concerned employees submitted their written explanation which contained their admissions regarding their unjustified acts. Finding their explanation unsatisfactory, AER terminated the services of the concerned employees. On February 22, 1999, the concerned employees started a wildcat strike, barricaded company premises, and prevented the free ingress and egress of the other employees, officers, clients, and visitors and the transportation of company equipments. They also tried to use force and inflict violence against the other employees. Their wildcat strike stopped after the NLRC issued and served a temporary restraining order (TRO). Meantime, six (6) of the concerned employees, namely: Oscar Macaranas, Bernardino Acosta, Ferdinand Flores, Benson Pingol, Otillo Rabino, and Jonathan Taborda resigned from the company and signed quitclaims. Unyons Version On December 22, 1998, Unyon filed a petition for certification election before the Department of Labor and Employment (DOLE) after organizing their employees union within AER. Resenting what they did, AER forced all of its employees to submit their urine samples for drug testing. Those who refused were threatened with dismissal. On January 8, 1999, the results of the drug test came out and the following employees were found positive for illegal drugs: Froilan Madamba, Arnold Rodriguez, Roberto Caldeo, Roger Bilatcha, Ruperto Mariano, Edwin Fabian, and Nazario Madala. On January 12, 1999, AER issued a memorandum suspending these employees from work for violation of Article D, Item 2 of the Employees handbook which reads as follows: Coming to work under the influence of intoxicating liquor or any drug or drinking any alcoholic beverages on the premises on company time. Out of the seven (7) suspended employees, only Edwin Fabian and Nazario Madala were allowed by AER to report back to work. The other five (5) suspended employees were not admitted by AER without first submitting the required medical certificate attesting to their fitness to work. While they were in the process of securing their respective medical certificates, however, they were shocked to receive a letter from AER charging them with insubordination and absence without leave and directing them to explain their acts in writing. Despite their written explanation, AER refused to reinstate them.

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Meanwhile, Unyon found out that AER was moving out machines from the main building to the AER-PSC compound located on another street. Sensing that management was going to engage in a runaway shop, Unyon tried to prevent the transfer of the machines which prompted AER to issue a memorandum accusing those involved of gross insubordination, work stoppage and other offenses. On February 2, 1999, the affected workers were denied entry into the AER premises by order of management. Because of this, the affected workers staged a picket in front of company premises hoping that management would accept them back to work. When their picket proved futile, they filed a complaint for unfair labor practice, illegal suspension and illegal dismissal. Ruling of the Labor Arbiter On August 9, 2001, the Labor Arbiter (LA) rendered a decision3 in favor of Unyon by directing AER to reinstate the concerned employees but without backwages effective October 16, 2001. The LA ruled, among others, that the concerned employees were suspended from work without a valid cause and without due process. In finding that there was illegal suspension, the LA held as follows: There is no doubt that the hostile attitude of the management to its workers and vice versa started when the workers began organizing themselves into a union. As soon as the management learned and received summons regarding the petition for certification election filed by the employees, they retaliated by causing the employees to submit themselves to drug test. And out of the seven who were found positive, five were placed on a 12 day suspension namely: (1) Froilan Madamba; (2) Arnold Rodriguez; (3) Roberto Caldeo; (4) Roger Belatcha; and (5) Ruperto Mariano. This is illegal suspension plain and simple. Even if they were found positive for drugs, they should have been caused to explain why they were found so. It could have been that they have taken drugs as cure for ailment under a physicians prescription and supervision. Doubts should be in favor of the working class in the absence of evidence that they are drug addicts or they took prohibited or regulated drugs without any justifiable reason at all. In fact, there is not even a showing by the company that the performance of these employees was already adversely affected by their use of drugs. Lest be misunderstood that we are considering use of prohibited drug or regulated drugs, what we abhor is suspension without valid cause and without due process.4 The LA further held that AER was guilty of illegal dismissal for refusing to reinstate the five (5) employees unless they submit a medical certificate that they were fit to work. Thus: x x x Firstly, the employer has not even established that the five employees are sick of ailments which are not curable within six months, a burden which rests upon the employers and granting that they were sick or drug addicts, the remedy is not dismissal but to allow them to be on sick leave and be treated of their illness and if not cured within 6 months, that is the time that they may be separated from employment but after payment of months salary for every year of service by way of separation pay.5 Finally, the LA held that the concerned employees were not totally without fault. The concerted slowdown of work that they conducted in protesting their illegal suspension was generally illegal and unjustifiable. The LA, thus, ruled that both parties were in pari delicto and, therefore, must suffer the consequences of the wrong they committed. NLRC Ruling Both parties filed their respective appeals with the NLRC. The concerned employees argued that the LA erred in 1) not awarding backwages to them during the period of their suspension; 2) not holding that AER is guilty of unfair labor practice; and 3) not holding that they were illegally dismissed from their jobs.6 AER, on the other hand, claimed that the LA erred in finding that there was illegal dismissal and in ordering the reinstatement of the concerned employees without backwages.7 On March 5, 2002, the NLRC issued a Resolution8 modifying the LA decision by setting aside the order of reinstatement as it found no illegal dismissal.

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The NLRC, however, considered only three (3) out of the eighteen concerned employees, (18) namely: Froilan Madamba, Ruperto Mariano, and Roberto Caldeo because their names were commonly identified in the LA decision and in the concerned employees position paper as those employees who were allegedly illegally suspended. It wrote that these three (3) employees were validly suspended because they were found positive for illegal drugs in the drug test conducted by AER. Management was just exercising its management prerogative in requiring them to submit a medical fit-to-work certificate before they could be admitted back to work. The drug test was found to be not discriminatory because all employees of AER were required to undergo the drug test. Neither was the drug test related to any union activity. Finally, the NLRC ruled that the concerned employees had no valid basis in conducting a strike. Considering that the concerted activity was illegal, AER had the right to immediately dismiss them. Unyon and the concerned employees filed a petition before the CA advancing the following ARGUMENTS PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN HOLDING THAT THERE ARE ONLY THREE (3) REMAINING COMPLAINANTS IN THE CASE FILED BY THE PETITIONERS. PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN HOLDING THAT THE SUSPENSION OF SEVERAL PETITIONERS WAS VALID DESPITE THE ABSENCE OF DUE PROCESS. PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN SUSTAINING THE VALIDITY OF THE DISMISSAL OF EMPLOYEES WHO TESTED POSITIVE DURING THE DRUG TEST. PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN ABSOLVING PRIVATE RESPONDENTS OF THE OFFENSE OF UNFAIR LABOR PRACICE. PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN DISMISSING PETITIONERS COMPLAINT FOR ILLEGAL DISMISSAL. The CA Ruling On June 27, 2003, the CA rendered a decision,9 the dispositive portion of which reads as follows: WHEREFORE, premises considered, the petition is GRANTED. Respondents are hereby directed to reinstate the petitioners effective immediately but without backwages, except those who were tested positive for illegal drugs and have failed to submit their respective medical certificates. SO ORDERED.10 The CA explained that there still remained 26 complaining employees and not just three (3) as claimed by the NLRC, because 32 members of Unyon signed and filed the complaint, and from the 32 complaining members, only six (6) voluntarily signed quitclaims in favor of AER. It reasoned out that the number of parties to a complaint would correspond to the number of signatories thereto and not necessarily to the names commonly appearing or identified in the position paper and the LA decision. Citing Section 6 of the Rules of Court, the CA held that all persons in whom or against whom any right to relief in respect to or arising out of the same transaction or series of transactions is alleged to exist, whether jointly, severally, or in the alternative, may join as plaintiffs or be joined as defendants in one complaint. The CA, however, agreed with the NLRC on the legality and validity of the suspension. The CA wrote: The petitioners themselves have admitted that all of them were ordered to give their urine samples for the drug test; that the drug test was applicable to all the employees lends credence that such test was not related to any union activity. The union members were not singled out for said drug testing.

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The complainants who tested positive for illegal drugs were validly suspended under the company rules. The Employees Handbook of Company Rules and Regulations prohibit employees from reporting for work under the influence of intoxicating liquor and drugs. With the finding that the petitioners tested positive for illegal drugs, AER merely exercised their management prerogative to require a medical certificate that said employees were already fit to work before they can be admitted back to work. Due to the failure of the affected petitioners to submit a medical certificate that they are already fit to work, they were dismissed. Petitioners act of not reporting for duty upon presentation of the medical certificate that they are fit to work as per agreement with the DOLE NCMB on January 25, 1999 had the marks of willful disobedience giving AER the right to terminate employment.11 The CA further ruled that both parties were guilty of unfair labor practice. It stated that the hostile attitude of AER towards its workers and vice-versa started when the workers began organizing themselves into a union. AER tried to have a runaway shop when it transferred some of its machinery from the main building to the AER-PSC office located on another street on the pretext that the main building was undergoing renovation. AER also prevented its employees, even those who were excluded from its complaint, from going back to work for allegedly staging an illegal strike. On the other hand, the concerted work slowdown staged by the concerned employees as a result of their alleged illegal suspension was unjustified. Hence, both parties were found by the CA to be in pari delicto and must bear the consequences of their own wrongdoing. On October 1, 2003, upon the motion for partial reconsideration filed by Unyon praying for the payment of full backwages and the reinstatement of all suspended employees, the CA rendered the assailed Amended Decision, the dispositive portion of which reads, as follows: WHEREFORE, the partial motion for reconsideration is GRANTED insofar as the reinstatement of the suspended employees is concerned. This Courts decision dated June 27, 2003 is hereby MODIFIED. Private respondents are hereby directed to reinstate all the petitioners immediately without backwages. SO ORDERED.12 Unsatisfied, both parties filed the present consolidated petitions on the following GROUNDS FOR UNYON: THE COURT OF APPEALS LEGALLY ERRED IN NOT AWARDING BACKWAGES TO INDIVIDUAL PETITIONERS NOTWITHSTANDING HAVING ORDERED THEIR REINSTATEMENT TO THEIR PREVIOUS POSITIONS. FOR AER: THE HONORABLE COURT OF APPEALS ERRED GRIEVOUSLY WHEN IT GAVE SO MUCH WEIGHT ON THE PRIVATE RESPONDENTS PARTIAL MOTION FOR RECONSIDERATION BY AMENDING ITS DECISION IN ORDERING THEIR IMMEDIATE REINSTATEMENT INCLUDING THOSE WHO HAVE TESTED POSITIVE FOR ILLEGAL DRUGS (DRUG ADDICTS) AND HAVE FAILED TO SUBMIT ANY MEDICAL CERTIFICATE. G.R. No. 160138 AERs Position AER questions the findings of the CA that there were 32 complaining employees, which number was reduced to only 26 because six (6) resigned and signed waivers and quitclaims. It argues that the CA should have respected the findings of the LA and the NLRC that there were only 18 complaining employees, which was reduced to 12 due to the resignations and signing of the corresponding Release and Quitclaims by six (6) of them. The figure was further reduced to 8, and finally to just 3 complaining employees.

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AER argues that the reinstatement of those employees who tested positive for drugs and refused to submit their respective medical certificate certifying that they were fit to work, violated AERs rules and regulations, and the law in general because it would allow the sheltering of drug addicts in company premises. AER likewise insists that the drug test that it conducted was not related to any union activity because the test covered all employees. The drug test was part of company rules and guidelines designed to instill discipline and good behavior among its employees as contained in its Employees Manual Company Rules and Regulations. AER also claims that it simply exercised its employers prerogative in requiring a medical certificate from the affected employees. Finally, AER avers that the complaining employees, who did not report back to work despite their medical certificate attesting that they were fit to work, committed willful disobedience. AER claims that the complainingemployees violated their agreement with the DOLE-National Conciliation and Mediation Board (NCMB) dated January 25, 1999. AER likewise contends that the complaining employees are deemed to have lost their employment status when they engaged in unlawful activities such as abandonment of work, stoppage of work and the commission of attempted theft involving its boring machine. Hence, the termination of their employment was valid. Unyons Position Unyon argues that the complaint it filed indicated that there were 32 complainants who signed the complaint. Out of the 32, six (6) executed waivers and quitclaims leaving 26 complainants, not 3 as claimed by AER. Unyon likewise avers that the dismissal of the affected employees was unlawful for lack of valid ground and prior notice. Although it admits that some of the complainant employees tested positive for drugs, it posits that AER should have, at least, required those affected employees to explain why they tested positive for drugs because it could be possible that the drug taken was a regulated drug for an ailment and prescribed by a doctor. Therefore, prior notice or due process was still necessary. Unyon further asserts that the penalty for testing positive for illegal drugs was only a 15-day suspension, which was already served by the affected employees. It also points out that AER never imposed the policy of drug examination on its employees before the union was organized. Clearly, AER adopted a hostile attitude towards the workers when they organized themselves into a union. Moreover, of the 32 complaining employees in the illegal dismissal case against AER, only 18 were charged by AER with illegal strike. Unyon argues that AER should have admitted back to work those employees who were not included in the charge. There was no allegation either that those excluded were involved in the January 28, 1999 incident. Lastly, Unyon claims that the penalty of outright dismissal against the eighteen (18) employees charged with illegal strike was grossly disproportionate to their offense. G.R. 160192 Unyons Position Unyon basically argues that there was enough proof that AER acted in bad faith and it was guilty of illegal lock-out for preventing the affected employees from going back to work. Hence, the complaining employees are entitled to backwages. AERs Position AER counters that there are only three (3) remaining complaining employees who were validly suspended, namely: Froilan Madamba, Ruperto Mariano and Roberto Caldeo. AER claims that these employees are not entitled to backwages or even reinstatement because their separation from work was valid due to their unlawful activities and willful disobedience. AER further states that Unyon failed to properly file a verified position paper. Hence, the complaining employees who failed to file a verified position paper should be excluded from the petition. In sum, the main issue to be resolved in these consolidated cases is whether or not the CA erred in ruling for the reinstatement of the complaining employees but without grant of backwages.

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The Courts Ruling The Court agrees with the ruling of the CA that there were 32 complaining employees who filed and signed their complaint dated February 18, 1999 for unfair labor practice, illegal dismissal and illegal suspension. 13 Out of the 32, six (6) undeniably resigned and signed waivers and quitclaims, leaving 26 remaining complainant employees. Thus, the Court adopts and affirms the following CA ruling on this matter: The number of parties to a complaint corresponds to the number of signatories thereto and not necessarily to the names commonly appearing or identified in the position paper. All persons in whom or against whom any right to relief in respect to or arising out of the same transaction or series of transactions is alleged to exist whether jointly, severally, or in the alternative, may, except as otherwise provided in these Rules, join as plaintiffs or be joined as defendants in one complaint, where any question of law or fact common to all such plaintiffs or to all such defendants may arise in the action; but the court may make such orders as may be just to prevent any plaintiff or defendant from being embarrassed or put to expense in connection with any proceedings in which he may have no interest.14 This Court likewise affirms the ruling of the CA favoring the reinstatement of all the complaining employees including those who tested positive for illegal drugs, without backwages. The Court is in accord with the ruling of the LA and the CA that neither party came to court with clean hands. Both were in pari delicto. It cannot be disputed that both parties filed charges against each other, blaming the other party for violating labor laws. AER filed a complaint against Unyon and its 18 members for illegal concerted activities. It likewise suspended 7 union members who tested positive for illegal drugs. On the other hand, Unyon filed a countercharge accusing AER of unfair labor practice, illegal suspension and illegal dismissal. In other words, AER claims that Unyon was guilty of staging an illegal strike while Unyon claims that AER committed an illegal lockout. AERs fault is obvious from the fact that a day after the union filed a petition for certification election before the DOLE, it hit back by requiring all its employees to undergo a compulsory drug test. Although AER argues that the drug test was applied to all its employees, it was silent as to whether the drug test was a regular company policy and practice in their 35 years in the automotive engine repair and rebuilding business. As the Court sees it, it wasAERs first ever drug test of its employees immediately implemented after the workers manifested their desire to organize themselves into a union. Indeed, the timing of the drug test was suspicious. Moreover, AER failed to show proof that the drug test conducted on its employees was performed by an authorized drug testing center. It did not mention how the tests were conducted and whether the proper procedure was employed. The case of Nacague v. Sulpicio Lines,15 is instructive: Contrary to Sulpicio Lines allegation, Nacague was already questioning the credibility of S.M. Lazo Clinic as early as the proceedings before the Labor Arbiter. In fact, the Labor Arbiter declared that the S.M. Lazo Clinic drug test result was doubtful since it is not under the supervision of the Dangerous Drug Board. The NLRC and the Court of Appeals ruled that Sulpicio Lines validly terminated Nacagues employment because he was found guilty of using illegal drugs which constitutes serious misconduct and loss of trust and confidence. However, we find that Sulpicio Lines failed to clearly show that Nacague was guilty of using illegal drugs. We agree with the Labor Arbiter that the lack of accreditation of S.M. Lazo Clinic made its drug test results doubtful. Section 36 of R.A. No. 9165 provides that drug tests shall be performed only by authorized drug testing centers. Moreover, Section 36 also prescribes that drug testing shall consist of both the screening test and the confirmatory test. Section 36 of R.A. No. 9165 reads: SEC. 36. Authorized Drug Testing. Authorized drug testing shall be done by any government forensic laboratories or by any of the drug testing laboratories accredited and monitored by the DOH to safeguard the quality of test results. The DOH shall take steps in setting the price of the drug test with DOH accredited drug testing centers to further reduce the cost of such drug test. The drug testing shall employ, among others, two (2) testing methods, the screening test which will determine the positive result as well as the type of drug used and the confirmatory test which will confirm a positive screening test. x x x (Emphases supplied) Department Order No. 53-03 further provides:

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Drug Testing Program for Officers and Employees Drug testing shall conform with the procedures as prescribed by the Department of Health (DOH) (www.doh.gov.ph). Only drug testing centers accredited by the DOH shall be utilized. A list of accredited centers may be accessed through the OSHC website (www.oshc.dole.gov.ph). Drug testing shall consist of both the screening test and the confirmatory test; the latter to be carried out should the screening test turn positive. The employee concerned must be informed of the test results whether positive or negative. In Social Justice Society v. Dangerous Drugs Board, we explained: As to the mechanics of the test, the law specifies that the procedure shall employ two testing methods, i.e., the screening test and the confirmatory test, doubtless to ensure as much as possible the trustworthiness of the results. But the more important consideration lies in the fact that the tests shall be conducted by trained professionals in accesscontrolled laboratories monitored by the Department of Health (DOH) to safeguard against results tampering and to ensure an accurate chain of custody. The law is clear that drug tests shall be performed only by authorized drug testing centers. In this case, Sulpicio Lines failed to prove that S.M. Lazo Clinic is an accredited drug testing center. Sulpicio Lines did not even deny Nacagues allegation that S.M. Lazo Clinic was not accredited. Also, only a screening test was conducted to determine if Nacague was guilty of using illegal drugs. Sulpicio Lines did not confirm the positive result of the screening test with a confirmatory test. Sulpicio Lines failed to indubitably prove that Nacague was guilty of using illegal drugs amounting to serious misconduct and loss of trust and confidence. Sulpicio Lines failed to clearly show that it had a valid and legal cause for terminating Nacagues employment. When the alleged valid cause for the termination of employment is not clearly proven, as in this case, the law considers the matter a case of illegal dismissal. (Emphases supplied) Furthermore, AER engaged in a runaway shop when it began pulling out machines from the main AER building to the AER-PSC compound located on another street on the pretext that the main building was undergoing renovation. Certainly, the striking workers would have no reason to run and enter the AER-PSC premises and to cause the return of the machines to the AER building if they were not alarmed that AER was engaging in a runaway shop. AER committed another infraction when it refused to admit back those employees who were not included in its complaint against the union. Thirty-two (32) employees filed a complaint for illegal dismissal, illegal suspension and unfair labor practice against AER. AER charged 18 employees with illegal strike. AER should have reinstated the 14 employees excluded from its complaint. Regarding AERs contention that the affected workers abandoned their jobs, the Court has thoroughly reviewed the records and found no convincing proof that they deliberately abandoned their jobs. Besides, this Court has consistently declared in a myriad of labor cases that abandonment is totally inconsistent with the immediate filing of a complaint for illegal dismissal. In any event, the penalty of dismissal imposed by AER against the striking employees, who, by the way, only staged a one day walkout, was too severe. The pronouncement in the case of Tupas Local Chapter No. 979 v. NLRC16 is worth reiterating: Neither respondent commission's decision nor the labor arbiter's decision as affirmed with modification by it cites any substantial facts or evidence to warrant the terribly harsh imposition of the capital penalty of dismissal and forfeiture of employment on twenty-two of forty-four workers for having staged the so-called one-day (more accurately, a onemorning) "sitdown strike" on August 19, 1980 to inform respondent employer of their having formed their own union and to present their just requests for allowances, overtime pay and service incentive leave pay. Prescinding from respondent commission's misappreciation of the facts and evidence and accepting for the nonce its factual conclusion that the petitioners staged a one-morning sit-down strike instead of making a mass representation for the employer to recognize their newly formed union and negotiate their demands, respondent commission's decision is not in consonance with the constitutional injunction that the Court has invariably invoked and applied to afford protection to labor and assure the workers' rights to self-organization, collective bargaining, security of tenure and just and humane conditions of work. The said decision likewise is not in accordance with settled and authoritative doctrine and legal principles that a mere finding of the illegality of a strike does not automatically warrant a wholesale dismissal of the strikers from their

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employment and that a premature or improvident strike should not be visited with a consequence so severe as dismissal where a penalty less punitive would suffice. Numerous precedents to this effect have been cited and reaffirmed x x x. x x x x. In the analogous case of PBM Employees Organization vs. PBM Co., Inc., 17[10]/ the Court, in setting aside the questioned industrial court's orders held that "the dismissal or termination of the employment of the petitioning eight (8) leaders of the union is harsh for a one-day absence from work." They had been ordered dismissed for having carried out a mass demonstration at Malacaang on March 4, 1969 in protest against alleged abuses of the Pasig police department, upon two days' prior notice to respondent employer company, as against the latter's insistence that the first shift should not participate but instead report for work, under pain of dismissal. The Court held that they were merely exercising their basic human rights and fighting for their very survival "in seeking sanctuary behind their freedom of expression as well as their right of assembly and of petition against alleged persecution of local officialdom." We ruled that "(T)he appropriate penalty - if it deserves any penalty at all - should have been simply to charge said one-day absence against their vacation or sick leave. But to dismiss the eight (8) leaders of the petitioner Union is a most cruel penalty, since as aforestated the Union leaders depend on their wages for their daily sustenance as well as that of their respective families aside from the fact that it is a lethal blow to unionism, while at the same time strengthening the oppressive hand of the petty tyrants in the localities." [Emphases supplied] It must also be noted that there were no injuries during the brief walkout. Neither was there proof that the striking workers inflicted harm or violence upon the other employees. In fact, the Police Memorandum18 dated January 29, 1999 reported no violent incidents and stated that all parties involved in the January 28, 1999 incident were allowed to go home and the employees involved were just given a stern warning. To the Courts mind, the complaining workers temporarily walked out of their jobs because they strongly believed that management was committing an unfair labor practice. They had no intention of hurting anybody or steal company property. Contrary to AERs assertion, the striking workers did not intend to steal the line boring machine which they tried to cart away from the AER-PSC compound; they just wanted to return it to the main AER building. Like management, the union and the affected workers were also at fault for resorting to a concerted work slowdown and walking out of their jobs of protest for their illegal suspension. It was also wrong for them to have forced their way to the AER-PSC premises to try to bring out the boring machine. The photos19 shown by AER are enough proof that the picketing employees prevented the entry and exit of non-participating employees and possibly AERs clients. Although the unions sudden work stoppage lasted a day, it surely caused serious disturbance and tension within AERs premises and could have adversely affected AERs clients and business in general. The in pari delicto doctrine in labor cases is not novel to us. It has been applied in the case of Philippines Inter-Fashion, Inc. v NLRC,20 where the Court held: The Solicitor General has correctly stated in his comment that "from these facts are derived the following conclusions which are likewise undisputed: that petitioner engaged in an illegal lockout while the NAFLU engaged in an illegal strike; that the unconditional offer of the 150 striking employees to return to work and to withdraw their complaint of illegal lockout against petitioner constitutes condonation of the illegal lock-out; and that the unqualified acceptance of the offer of the 150 striking employees by petitioner likewise constitutes condonation of the illegal strike insofar as the reinstated employees are concerned." The issues at bar arise, however, from respondent commission's approval of its commissioner's conclusions that (1) petitioner must be deemed to have waived its right to pursue the case of illegal strike against the 114 employees who were not reinstated and who pursued their illegal lockout claim against petitioner; and (2) the said 114 employees are entitled to reinstatement with three months' backwages. The Court approves the stand taken by the Solicitor General that there was no clear and unequivocal waiver on the part of petitioner and on the contrary the record shows that it tenaciously pursued its application for their dismissal, but nevertheless in view of the undisputed findings of illegal strike on the part of the 114 employees and illegal lockout on petitioner's part, both parties are in pari delicto and such situation warrants the restoration of the status quo ante and bringing the parties back to the respective positions before the illegal strike and illegal lockout through the reinstatement of the said 114 employees, as follows:

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The Bisaya case (102 Phil. 438) is inapplicable to the present case, because in the former, there were only two strikers involved who were both reinstated by their employer upon their request to return to work. However, in the present case, there were more than 200 strikers involved, of which 150 who desired to return to work were reinstated. The rest were not reinstated because they did not signify their intention to return to work. Thus, the ruling cited in the Bisaya case that the employer waives his defense of illegality of the strike upon reinstatement of strikers is applicable only to strikers who signified their intention to return to work and were accepted back ... Truly, it is more logical and reasonable for condonation to apply only to strikers who signified their intention to return and did return to work. The reason is obvious. These strikers took the initiative in normalizing relations with their employer and thus helped promote industrial peace. However, as regards the strikers who decided to pursue with the case, as in the case of the 114 strikers herein, the employer could not be deemed to have condoned their strike, because they had not shown any willingness to normalize relations with it. So, if petitioner really had any intention to pardon the 114 strikers, it would have included them in its motion to withdraw on November 17, 1980. The fact that it did not, but instead continued to pursue the case to the end, simply means that it did not pardon the 114 strikers. xxx xxx xxx

The finding of illegal strike was not disputed. Therefore, the 114 strikers employees who participated therein are liable for termination (Liberal Labor Union v. Phil. Can Co., 91 Phil. 72; Insurefco Employees Union v. Insurefco, 95 Phil. 761). On the other hard, the finding of illegal lockout was likewise not disputed. Therefore, the 114 employees affected by the lockout are also subject to reinstatement. Petitioner, however, contends that the application for readmission to work by the 150 strikers constitutes condonation of the lockout which should likewise bind the 114 remaining strikers. Suffice it to say that the 150 strikers acted for themselves, not on behalf of the 114 remaining strikers, and therefore the latter could not be deemed to have condoned petitioner's lockout. The findings show that both petitioner and the 114 strikers are in pari delicto, a situation which warrants the maintenance of the status quo. This means that the contending parties must be brought back to their respective positions before the controversy; that is, before the strike. Therefore, the order reinstating the 114 employees is proper. With such restoration of the status quo ante it necessarily follows, as likewise submitted by the Solicitor General, that the petition must be granted insofar as it seeks the setting aside of the award of three months' backwages to the 114 employees ordered reinstated on the basis of the general rule that strikers are not entitled to backwages (with some exceptions not herein applicable, such as where the employer is guilty of oppression and union-busting activities and strikers ordered reinstated are denied such reinstatement and therefore are declared entitled to backwages from the date of such denial). More so, is the principle of "no work, no pay" applicable to the case at bar, in view of the undisputed finding of illegality of the strike. Likewise, the in pari delicto doctrine was applied in the case of First City Interlink Transportation Co. Inc. v The Honorable Secretary,21 thus: 3) Petitioner substantially complied with the Return to Work Order. The medical examination, NBI, Police and Barangay Clearances as well as the driver's and conductor's/conductress licenses and photographs required as conditions for reinstatement were reasonable management prerogatives. However, the other requirements imposed as condition for reinstatement were unreasonable considering that the employees were not being hired for the first time, although the imposition of such requirements did not amount to refusal on the part of the employer to comply with the Return to Work Order or constitute illegal lockout so as to warrant payment of backwages to the strikers. If at all, it is the employees' refusal to return to work that may be deemed a refusal to comply with the Return to Work Order resulting in loss of their employment status. As both the employer and the employees were, in a sense, at fault or in pari delicto, the nonreturning employees, provided they did not participate in illegal acts; should be considered entitled to reinstatement. But since reinstatement is no longer feasible, they should be given separation pay computed up to March 8, 1988 (the date set for the return of the employees) in lieu of reinstatement. [Emphases and underscoring supplied]
1avvphi1

In the case at bar, since both AER and the union are at fault or in pari delicto, they should be restored to their respective positions prior to the illegal strike and illegal lockout. Nonetheless, if reinstatement is no longer feasible, the concerned employees should be given separation pay up to the date set for the return of the complaining employees in lieu of reinstatement.

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WHEREFORE, the petitions are DENIED. Accordingly, the complaining employees should be reinstated without backwages. If reinstatement is no longer feasible, the concerned employees should be given separation pay up to the date set for their return in lieu of reinstatement. SO ORDERED.
JOSE CATRAL MENDOZA Associate Justice 25. Appropriate bargaining unit; confidential employees - SAN MIGUEL FOODS, INCORPORATED vs. SAN MIGUEL CORPORATION SUPERVISORS and EXEMPT UNION, G.R. No. 146206, August 1, 2011, 655 s 1 DECISION PERALTA, J.:

The issues in the present case, relating to the inclusion of employees in supervisor levels 3 and 4 and the exempt employees in the proposed bargaining unit, thereby allowing their participation in the certification election; the application of the "community or mutuality of interests" test; and the determination of the employees who belong to the category of confidential employees, are not novel. In G.R. No. 110399, entitled San Miguel Corporation Supervisors and Exempt Union v. Laguesma,1 the Court held that even if they handle confidential data regarding technical and internal business operations, supervisory employees 3 and 4 and the exempt employees of petitioner San Miguel Foods, Inc. (SMFI) are not to be considered confidential employees, because the same do not pertain to labor relations, particularly, negotiation and settlement of grievances. Consequently, they were allowed to form an appropriate bargaining unit for the purpose of collective bargaining. The Court also declared that the employees belonging to the three different plants of San Miguel Corporation Magnolia Poultry Products Plants in Cabuyao, San Fernando, and Otis, having "community or mutuality of interests," constitute a single bargaining unit. They perform work of the same nature, receive the same wages and compensation, and most importantly, share a common stake in concerted activities. It was immaterial that the three plants have different locations as they did not impede the operations of a single bargaining representative.2 Pursuant to the Court's decision in G.R. No. 110399, the Department of Labor and Employment National Capital Region (DOLE-NCR) conducted pre-election conferences.3 However, there was a discrepancy in the list of eligible voters, i.e., petitioner submitted a list of 23 employees for the San Fernando plant and 33 for the Cabuyao plant, while respondent listed 60 and 82, respectively.4 On August 31, 1998, Med-Arbiter Agatha Ann L. Daquigan issued an Order 5 directing Election Officer Cynthia Tolentino to proceed with the conduct of certification election in accordance with Section 2, Rule XII of Department Order No. 9. On September 30, 1998, a certification election was conducted and it yielded the following results,6 thus: Cabuyao San Fernando Total Plant Plant Yes No Spoiled Segregated 23 0 2 41 23 0 0 35 58 46 0 2 76 124

Total Votes Cast 66

On the date of the election, September 30, 1998, petitioner filed the Omnibus Objections and Challenge to Voters,7 questioning the eligibility to vote by some of its employees on the grounds that some employees do not belong to the bargaining unit which respondent seeks to represent or that there is no existence of employer-employee relationship with petitioner. Specifically, it argued that certain employees should not be allowed to vote as they are: (1) confidential employees; (2) employees assigned to the live chicken operations, which are not covered by the bargaining unit; (3) employees whose job grade is level 4, but are performing managerial work and scheduled to be promoted; (4) employees who belong to the Barrio Ugong plant; (5) non-SMFI employees; and (6) employees who are members of other unions.

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On October 21, 1998, the Med-Arbiter issued an Order directing respondent to submit proof showing that the employees in the submitted list are covered by the original petition for certification election and belong to the bargaining unit it seeks to represent and, likewise, directing petitioner to substantiate the allegations contained in its Omnibus Objections and Challenge to Voters.8 In compliance thereto, respondent averred that (1) the bargaining unit contemplated in the original petition is the Poultry Division of San Miguel Corporation, now known as San Miguel Foods, Inc.; (2) it covered the operations in Calamba, Laguna, Cavite, and Batangas and its home base is either in Cabuyao, Laguna or San Fernando, Pampanga; and (3) it submitted individual and separate declarations of the employees whose votes were challenged in the election.9 Adding the results to the number of votes canvassed during the September 30, 1998 certification election, the final tally showed that: number of eligible voters 149; number of valid votes cast 121; number of spoiled ballots - 3; total number of votes cast 124, with 118 (i.e., 46 + 72 = 118 ) "Yes" votes and 3 "No" votes.10 The Med-Arbiter issued the Resolution11 dated February 17, 1999 directing the parties to appear before the Election Officer of the Labor Relations Division on March 9, 1999, 10:00 a.m., for the opening of the segregated ballots. Thereafter, on April 12, 1999, the segregated ballots were opened, showing that out of the 76 segregated votes, 72 were cast for "Yes" and 3 for "No," with one "spoiled" ballot.12 Based on the results, the Med-Arbiter issued the Order13 dated April 13, 1999, stating that since the "Yes" vote received 97% of the valid votes cast, respondent is certified to be the exclusive bargaining agent of the supervisors and exempt employees of petitioner's Magnolia Poultry Products Plants in Cabuyao, San Fernando, and Otis. On appeal, the then Acting DOLE Undersecretary, in the Resolution 14 dated July 30, 1999, in OS-A-2-70-91 (NCR-OD-M9010-017), affirmed the Order dated April 13, 1999, with modification that George C. Matias, Alma Maria M. Lozano, Joannabel T. Delos Reyes, and Marilyn G. Pajaron be excluded from the bargaining unit which respondent seeks to represent. She opined that the challenged voters should be excluded from the bargaining unit, because Matias and Lozano are members of Magnolia Poultry Processing Plants Monthly Employees Union, while Delos Reyes and Pajaron are employees of San Miguel Corporation, which is a separate and distinct entity from petitioner. Petitioners Partial Motion for Reconsideration15 dated August 14, 1999 was denied by the then Acting DOLE Undersecretary in the Order16 dated August 27, 1999. In the Decision17 dated April 28, 2000, in CA-G.R. SP No. 55510, entitled San Miguel Foods, Inc. v. The Honorable Office of the Secretary of Labor, Bureau of Labor Relations, and San Miguel Corporation Supervisors and Exempt Union, the Court of Appeals (CA) affirmed with modification the Resolution dated July 30, 1999 of the DOLE Undersecretary, stating that those holding the positions of Human Resource Assistant and Personnel Assistant are excluded from the bargaining unit. Petitioners Motion for Partial Reconsideration18 dated May 23, 2000 was denied by the CA in the Resolution 19dated November 28, 2000. Hence, petitioner filed this present petition raising the following issues: I. WHETHER THE COURT OF APPEALS DEPARTED FROM JURISPRUDENCE WHEN IT EXPANDED THE SCOPE OF THE BARGAINING UNIT DEFINED BY THIS COURT'S RULING IN G.R. NO. 110399. II. WHETHER THE COURT OF APPEALS DEPARTED FROM JURISPRUDENCE - SPECIFICALLY, THIS COURT'S DEFINITION OF A "CONFIDENTIAL EMPLOYEE" - WHEN IT RULED FOR THE INCLUSION OF THE "PAYROLL MASTER" POSITION IN THE BARGAINING UNIT. III.

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WHETHER THIS PETITION IS A "REHASH" OR A "RESURRECTION" OF THE ISSUES RAISED IN G.R. NO. 110399, AS ARGUED BY PRIVATE RESPONDENT. Petitioner contends that with the Court's ruling in G.R. No. 110399 20 identifying the specific employees who can participate in the certification election, i.e., the supervisors (levels 1 to 4) and exempt employees of San Miguel Poultry Products Plants in Cabuyao, San Fernando, and Otis, the CA erred in expanding the scope of the bargaining unit so as to include employees who do not belong to or who are not based in its Cabuyao or San Fernando plants. It also alleges that the employees of the Cabuyao, San Fernando, and Otis plants of petitioners predecessor, San Miguel Corporation, as stated in G.R. No. 110399, were engaged in "dressed" chicken processing, i.e., handling and packaging of chicken meat, while the new bargaining unit, as defined by the CA in the present case, includes employees engaged in "live" chicken operations, i.e., those who breed chicks and grow chickens. Respondent counters that petitioners proposed exclusion of certain employees from the bargaining unit was a rehashed issue which was already settled in G.R. No. 110399. It maintains that the issue of union membership coverage should no longer be raised as a certification election already took place on September 30, 1998, wherein respondent won with 97% votes. Petitioners contentions are erroneous. In G.R. No. 110399, the Court explained that the employees of San Miguel Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando, and Otis constitute a single bargaining unit, which is not contrary to the one-company, one-union policy. An appropriate bargaining unit is defined as a group of employees of a given employer, comprised of all or less than all of the entire body of employees, which the collective interest of all the employees, consistent with equity to the employer, indicate to be best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law.21 In National Association of Free Trade Unions v. Mainit Lumber Development Company Workers Union United Lumber and General Workers of the Phils,22 the Court, taking into account the "community or mutuality of interests" test, ordered the formation of a single bargaining unit consisting of the Sawmill Division in Butuan City and the Logging Division in Zapanta Valley, Kitcharao, Agusan [Del] Norte of the Mainit Lumber Development Company. It held that while the existence of a bargaining history is a factor that may be reckoned with in determining the appropriate bargaining unit, the same is not decisive or conclusive. Other factors must be considered. The test of grouping is community or mutuality of interest. This is so because the basic test of an asserted bargaining units acceptability is whether or not it is fundamentally the combination which will best assure to all employees the exercise of their collective bargaining rights.23 Certainly, there is a mutuality of interest among the employees of the Sawmill Division and the Logging Division. Their functions mesh with one another. One group needs the other in the same way that the company needs them both. There may be differences as to the nature of their individual assignments, but the distinctions are not enough to warrant the formation of a separate bargaining unit.24 Thus, applying the ruling to the present case, the Court affirms the finding of the CA that there should be only one bargaining unit for the employees in Cabuyao, San Fernando, and Otis 25 of Magnolia Poultry Products Plant involved in "dressed" chicken processing and Magnolia Poultry Farms engaged in "live" chicken operations. Certain factors, such as specific line of work, working conditions, location of work, mode of compensation, and other relevant conditions do not affect or impede their commonality of interest. Although they seem separate and distinct from each other, the specific tasks of each division are actually interrelated and there exists mutuality of interests which warrants the formation of a single bargaining unit. Petitioner asserts that the CA erred in not excluding the position of Payroll Master in the definition of a confidential employee and, thus, prays that the said position and all other positions with access to salary and compensation data be excluded from the bargaining unit. This argument must fail. Confidential employees are defined as those who (1) assist or act in a confidential capacity, in regard (2) to persons who formulate, determine, and effectuate management policies in the field of labor relations.26 The two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee - that is, the confidential relationship must exist between the employee and his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations. The exclusion from bargaining units of employees who, in the normal course of their duties, become aware of management policies relating to labor relations is a principal objective sought to be accomplished by the "confidential employee rule."27

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A confidential employee is one entrusted with confidence on delicate, or with the custody, handling or care and protection of the employers property.28 Confidential employees, such as accounting personnel, should be excluded from the bargaining unit, as their access to confidential information may become the source of undue advantage. 29 However, such fact does not apply to the position of Payroll Master and the whole gamut of employees who, as perceived by petitioner, has access to salary and compensation data. The CA correctly held that the position of Payroll Master does not involve dealing with confidential labor relations information in the course of the performance of his functions. Since the nature of his work does not pertain to company rules and regulations and confidential labor relations, it follows that he cannot be excluded from the subject bargaining unit. Corollarily, although Article 24530 of the Labor Code limits the ineligibility to join, form and assist any labor organization to managerial employees, jurisprudence has extended this prohibition to confidential employees or those who by reason of their positions or nature of work are required to assist or act in a fiduciary manner to managerial employees and, hence, are likewise privy to sensitive and highly confidential records.31 Confidential employees are thus excluded from the rankand-file bargaining unit. The rationale for their separate category and disqualification to join any labor organization is similar to the inhibition for managerial employees, because if allowed to be affiliated with a union, the latter might not be assured of their loyalty in view of evident conflict of interests and the union can also become company-denominated with the presence of managerial employees in the union membership.32 Having access to confidential information, confidential employees may also become the source of undue advantage. Said employees may act as a spy or spies of either party to a collective bargaining agreement.33
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In this regard, the CA correctly ruled that the positions of Human Resource Assistant and Personnel Assistant belong to the category of confidential employees and, hence, are excluded from the bargaining unit, considering their respective positions and job descriptions. As Human Resource Assistant,34 the scope of ones work necessarily involves labor relations, recruitment and selection of employees, access to employees' personal files and compensation package, and human resource management. As regards a Personnel Assistant,35 one's work includes the recording of minutes for management during collective bargaining negotiations, assistance to management during grievance meetings and administrative investigations, and securing legal advice for labor issues from the petitioners team of lawyers, and implementation of company programs. Therefore, in the discharge of their functions, both gain access to vital labor relations information which outrightly disqualifies them from union membership. The proceedings for certification election are quasi-judicial in nature and, therefore, decisions rendered in such proceedings can attain finality.36 Applying the doctrine of res judicata, the issue in the present case pertaining to the coverage of the employees who would constitute the bargaining unit is now a foregone conclusion. It bears stressing that a certification election is the sole concern of the workers; hence, an employer lacks the personality to dispute the same. The general rule is that an employer has no standing to question the process of certification election, since this is the sole concern of the workers. 37 Law and policy demand that employers take a strict, hands-off stance in certification elections. The bargaining representative of employees should be chosen free from any extraneous influence of management. A labor bargaining representative, to be effective, must owe its loyalty to the employees alone and to no other.38 The only exception is where the employer itself has to file the petition pursuant to Article 258 39 of the Labor Code because of a request to bargain collectively.40 With the foregoing disquisition, the Court writes finis to the issues raised so as to forestall future suits of similar nature. WHEREFORE, the petition is DENIED. The Decision dated April 28, 2000 and Resolution dated November 28, 2000 of the Court of Appeals, in CA-G.R. SP No. 55510, which affirmed with modification the Resolutions dated July 30, 1999 and August 27, 1999 of the Secretary of Labor, are AFFIRMED. SO ORDERED.
DIOSDADO M. PERALTA Associate Justice 26. Dismissal vs Resignation JHORIZALDY UY vs. CENTRO CERAMICA CORPORATION AND/OR RAMONITA Y. SY and MILAGROS U. GARCIA, G.R. No. 174631, October 19, 2011 DECISION VILLARAMA, JR., J.:

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Before us is a petition for review on certiorari under Rule 45 assailing the Decision1 dated April 21, 2006 and Resolution2 dated September 7, 2006 of the Court of Appeals (CA) in CA-G.R. SP No. 88061. The CA annulled and set aside the Decision3 dated July 29, 2004 rendered by the National Labor Relations Commission (NLRC) in NLRC NCR CA No. 035557-03 which reversed the Labor Arbiters ruling that petitioner was not illegally dismissed. Factual Antecedents Petitioner Jhorizaldy Uy was hired by respondent Centro Ceramica Corporation as full-time sales executive on March 21, 1999 under probationary employment for six months. He became a regular employee on May 1, 2000 with monthly salary of P7,000.00 and P1,500.00 transportation allowance, plus commission. On March 18, 2002, petitioner filed a complaint for illegal dismissal against the respondent company, its President Ramonita Y. Sy (Sy) and Vice-President Milagros Uy-Garcia (Garcia). Petitioner alleged that his predicament began when former VP Garcia was rehired by respondent company in the last quarter of 2001. Certain incidents involving longtime clients led to a strained working relationship between him and Garcia. On February 19, 2002 after their weekly sales meeting, he was informed by his superior, Sales Supervisor Richard Agcaoili, that he (petitioner) was to assume a new position in the marketing department, to which he replied that he will think it over. His friends had warned him to be careful saying "mainit ka kay Ms. Garcia." That same day, he was summoned by Sy and Garcia for a closed-door meeting during which Sy informed him of the termination of his services due to "insubordination" and advised him to turn over his samples and files immediately. Sy even commented that "member ka pa naman ng [S]ingles for [C]hrist pero napakatigas naman ng ulo mo." On February 21, 2002, he was summoned again by Sy but prior to this he was already informed by Agcaoili that the spouses Sy will give him all that is due to him plus goodwill money to settle everything. However, during his meeting with Sy, he asked for his termination paper and thereupon Sy told him that "If thats what you want I will give it to you". She added that "pag-isipan mo ang gagawin mo dahil kilala mo naman kami we are powerful."4 Petitioner further narrated that on February 22, 2002, he turned over company samples, accounts and receivables to Agcaoili. Thereafter, he did not report for work anymore. But on March 6, 2002, an employee of respondent company presented to him at his apartment the following memorandum: MEMO OF NOTICE OF CHARGES MEMORANDUM: TO: JHORIZALDY B. UY FROM: RAMONITA Y. SY RE: FAILURE TO MEET QUOTA FOR SALES EXECUTIVE DATE: February 21, 2002 Records show that you have failed to meet the quota for sales executives, set for the period from 1999 to 2001 in violation of your contract of employment. In view of the foregoing, please explain in writing within twenty[-]four (24) hours from receipt hereof, why the company should not terminate your contract of employment.5 He did not receive said memo because it was not written on the company stationery and besides he had already been dismissed. As to his alleged low output, he was surprised considering that last January 2002, he was informed by Agcaoili that management was satisfied with his performance and he ranked second to the top performer, Edwin I. Hirang. By that time, all of the sales people of the company could not meet the P1.5 Million sales quota, so respondents are clearly zeroing in on him. Finally, on March 13, 2002, respondents sent him another memo, which reads:

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MEMO OF NOTICE OF CHARGES INTER-OFFICE MEMORANDUM NO. 2: TO: JHORIZALDY B. UY THRU: RICHARD B. AGCAOILI FROM: RAMONITA Y. SY RE: NOTICE OF CHARGE OF ABSENCE WITHOUT LEAVE DATE: March 13, 2002 Records show that since February 22, 2002, to date, you have failed to report for work, without informing your employer of the reason therefor and without securing proper leave in violation of your contract of employment and existing company rules and regulations. Further, you have refused to receive any of your monetary entitlements such as salary, commission and other amounts due to you despite notice that the same are available to you for payment. Further, to this date, you have not submitted any explanation in writing in response to our Memo dated February 21, 2002, requiring you to explain your failure to meet your quota as Sales Executive. In view of the foregoing, please explain in writing twenty four (24) hours from receipt hereof, why the company should not terminate your contract of employment for serious violations of your employment contract as indicated above.6 He referred the above letter to his counsel who sent the following letter-reply: MS. RAMONITA Y. SY Centro Ceramica Corporation 225 EDSA, East Greenhills Mandaluyong City We are writing you in behalf of Mr. Jhorizaldy B. Uy who used to be a Sales Executive of your firm. On February 19, 2002, you informed him that from Sales Executive he was to assume a new position in the marketing department. He refused and when he later said that "pag-iisipan ko pa" you charged him with insubordination. Your Ms. Nita Garcia even lamented in this wise "single (for Christ) ka pa naman." Right then you terminated his services and was directed to turn over everything that he had which was company owned and it was on February 22, 2002 that the turn over was made. On or about March 6, 2002 an employee of your company saw him in his apartment giving him a memorandum to explain his alleged failure to meet the quota as Sales Executive. He admits with c[a]ndor that he did not receive the said memorandum because it was written not on the company stationary. Just the same the contents of the said letter has bec[o]me irrelevant because he has been already dismissed as of February 19, 2002 and as regards the low output he says that all of the sales people could not meet the quota and why zero in on him. Then on Mach 13, 2002 you sent him a memorandum to explain in writing within twenty four (24) hours why he should not be dismissed for his alleged absence without leave. You must have been advised by someone that your dismissal of Mr. Uy on February 19, 2002 is doubly illegal, i.e., for lack of due process and sufficient cause and the March 13, 2002 memorandum is to make up for such lapse so that if Mr. Uy files a case of illegal dismissal, you can conveniently say that he violated his contract of employment and that he was on absence without leave. Nice move, but it may not be nice later on. x x x x7

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For his illegal termination, petitioner asserted that he is entitled to his unpaid commission, tax refund, back wages and reinstatement. On the other hand, respondents denied dismissing petitioner. They countered that petitioners poor sales performance did not improve even after he was regularized. On February 18, 2002, management met with the Sales Group on a per agent basis to discuss sales performance, possible salary realignment and revamp of the Sales Group. Agcaoili relayed to petitioner the poor assessment of his sales performance and the possibility that he will be transferred to another department although there was yet no official decision on the matter. Petitioner then told Agcaoili that he was aware of the problem and his possible termination, prompting the latter to convince the former to consider voluntarily resigning from the company rather than be terminated. The next day, February 19, 2002, petitioner talked anew to Agcaoili and informed the latter that he will just resign from the company and sought an appointment with Sy. When petitioner inquired how much he will get if he will resign, Sy advised him that he would get salaries and commissions to which he is legally entitled; hence, for items sold and already delivered, he will be receiving the commission in full, but for those sold but yet to be delivered, as per company policy, he will receive the commissions only upon delivery of the items. Upon hearing this, petitioner suddenly got mad and said that if that is the case, the company president should just terminate him and walked out. Petitioner was given a chance, through the two memos issued to him, to explain his failure to meet the prescribed sales quota and his failure to report for work without informing the company of the reason therefor. But he never submitted his explanations to his violations of the contract of employment, and abandoned his job which is another ground for terminating his employment. While it would appear that petitioner aimed to secure his alleged money claims from the respondents, this does not justify abandonment of his work as respondents never had the intention of terminating his services. Respondents maintained that petitioner voluntarily left his workplace and refused to report for work as in fact he indicated to his sales supervisor that he will just resign; however, he never submitted a letter of resignation.8 Respondents also denied the claims of petitioner regarding an alleged souring of his relations with Garcia, as in fact it was petitioner who clearly had a personal grudge against her and not the other way around. The alleged incidents with client actually showed it was petitioner who was discourteous and abusive. There was likewise no reason for respondent Sy to say they were powerful because petitioner did not at all threaten to sue or do something to their prejudice. To refute petitioners unfounded allegations, respondents presented the affidavits of the following: (1) co-employee Rommel Azarraga who admitted he was the person who warned petitioner to be careful and told him "mainit ka kay Mrs. Garcia" and explained that he only made such statement in order to scare petitioner and convince him to change his attitude; the truth is that Mrs. Garcia had not spoken to him about harbouring any ill feelings towards petitioner and neither does he know of any incident or circumstance which may give rise to such ill feeling of Mrs. Garcia towards petitioner; (2) Richard Agcaoili who corroborated the respondents claims, denying that petitioner was terminated due to insubordination; he further denied having told petitioner that management was satisfied with his performance, the truth being that while petitioner may have ranked second to the top performer, there was actually only two remaining senior sales agents while the rest have more or less six months experience; considering the number of years of his service to the company, petitioner should have improved as against other agents most of whom were newly-hired and still under probation; and (3) Arnulfo Merecido, respondent companys employee (warehouse helper) who claimed that he had a fistfight with petitioner sometime in June 2000 which arose from the latters insulting remarks regarding his family.9 Labor Arbiters Ruling In his decision10 dated April 8, 2003, Labor Arbiter Elias H. Salinas dismissed petitioners complaint on the basis of his finding that it was petitioner who opted not to report for work since February 22, 2002, after offering to resign (as told to his supervisor) because he could not accept his possible transfer to another department. NLRCs Ruling Petitioner appealed to the NLRC which reversed the Labor Arbiters ruling. The NLRC found that the dismissal of petitioner was made under questionable circumstances, thus giving weight to petitioners assertion that he was being singled out notwithstanding that all sales personnel similarly could not meet the P1.5 million monthly sales quota. Such finding is reinforced by the fact that no sanction was imposed on petitioner or any other employee for the supposed failure to meet the quota, thereby creating the impression that the situation was tolerated by the respondents. The NLRC thus decreed: WHEREFORE, premises considered, the Decision dated April 8, 2003 is set aside and reversed. A new one is entered finding complainant to have been illegally dismissed and thus entitled to reinstatement with backwages. Respondent Centro Ceramica Corporation is hereby ordered to pay complainant his backwages reckoned from the date of his dismissal on February 19, 2002 up to the date of the promulgation of this decision. As reinstatement is no longer feasible,

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complainant should instead be paid separation pay equivalent to one half (1/2) month pay for every year of service. In addition, respondents company should pay complainant his unpaid commission in the amount of P16,581.00. All other claims are dismissed for lack of merit. SO ORDERED.11 Court of Appeals Ruling Respondents elevated the case to the CA which reversed the NLRC and dismissed petitioners complaint. According to the CA, petitioner by his own account had admitted that it was he who asked for his dismissal when he narrated that during his meeting with Sy, he had asked for his termination paper and she threatened to do so if that was what he wanted. It also noted the affidavit of Agcaoili who attested that petitioner was merely informed of the decision to transfer him to another department, which is not denied by the petitioner; said witness also said that the turnover of company documents and files was voluntary on the part of petitioner who expressed desire to resign from the company. Another statement considered by the CA is that made by witness Azarraga who explained that he only mentioned the name of Ms. Garcia to petitioner when he warned the latter to be careful, simply because she is a member of the Couples for Christ who may have an influence over petitioner who is a member of the Singles for Christ. As to the memos sent by the company to petitioners residence, this shows that it has not yet terminated the employment of petitioner. Thus, the CA held that the evidence on record supports the Labor Arbiters finding that petitioner "informally severed" the employment relationship as manifested by his voluntary transfer of his accountabilities to his supervisor and thereafter his act of not reporting for work anymore. Petitioners motion for reconsideration having been denied, the present petition was filed in this Court. Issue The sole issue to be addressed is whether petitioner was dismissed by the respondents or voluntarily severed his employment by abandoning his job. Arguments of the Parties Petitioner assails the CAs misappreciation of the facts, completely relying on respondents allegations particularly on what transpired during the meeting with respondents Sy and Garcia, of which the appellate court made a "twisted" interpretation of their conversation. Hence, instead of decreeing petitioners illegal termination based on Sys verbal dismissal without just cause and due process, the CA proceeded to conclude that petitioner voluntarily and informally severed his relation with the company. As to the affidavit of Agcaoili, his statement that he merely informed petitioner of the decision to transfer him to another department is of no moment because what matters is the action of Sy who dismissed petitioner outright. Moreover, Agcaoili, being under the employ of respondents, would logically be biased and he would naturally tend to protect the company by his statements regarding petitioners case. On the other hand, Azarragas confusing and inconsistent statements only confirmed that Garcia indeed had a grudge against petitioner, as he could not give a rational explanation for warning petitioner to be careful with Garcia. Petitioner further contends that his act of turning over his accountabilities to his supervisor cannot be considered voluntary on his part as it was done by him knowing that he was already terminated and upon the specific instructions of Sy and Garcia. The CA therefore erred in relying on the unbelievable submission of respondents that such transfer of company documents and samples was indicative of petitioners desire to resign. It failed to see that petitioners reaction to his impending transfer to another department ("pag-iisipan ko pa") was due to his not coming to terms with Garcia and aware of the warning earlier given by his friends. Under this scenario, the animosity between petitioner and Garcia was evident such that Garcia eventually prevailed upon Sy to terminate petitioners services. Unfortunately, it was on the very same day that petitioner was verbally terminated by Sy on the ground of insubordination and ordered to immediately turn over his files and samples. It was on February 21, 2002 that Agcaoili told petitioner that the company will give him all that is due him plus goodwill money, and in a meeting with Sy he had asked for his termination paper because he was in fact already terminated on February 19, 2002 but she responded by saying that if that was what he wanted she will give it to him and even threatened him to think because respondents are powerful. In their Comment, respondents assert that the CA committed no reversible error in concluding that petitioner was not illegally terminated. They stress that the evidence clearly established that petitioner was not dismissed but required

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merely to explain why he failed to report for work after meeting the company president. As to petitioners act of turning over his accountabilities, respondents argue that this cannot be considered proof of his illegal dismissal because it was done voluntarily in line with his proposed resignation. Respondent company was about to conduct its investigation on petitioner who went AWOL since February 19, 2002 but then he refused to accept the memos sent to him, thus confirming categorically that respondents were investigating his failure to report for work and giving him all the opportunity to explain his absence. The Courts Ruling We grant the petition. As a general rule, only questions of law may be allowed in a petition for review on certiorari.12 Considering, however, that the Labor Arbiters findings were reversed by the NLRC, whose Decision was in turn overturned by the CA, reinstating the Labor Arbiters Decision, it behooves the Court to reexamine the records and resolve the conflicting rulings.13 Scrutinizing the records, we find that the NLRCs finding of illegal dismissal is supported by the totality of evidence and more consistent with logic and ordinary human experience than the common finding of the CA and Labor Arbiter that petitioner informally severed his employment relationship with the company. It hardly convinces us that after declining his supposed transfer to another department as per the information relayed to him by his supervisor, petitioner would readily turn over his files and samples unless something critical indeed took place in his subsequent closed-door meeting with Sy and Garcia. As correctly pointed out by petitioner, it is irrelevant whether or not he had earlier inquired from his supervisor what he will receive if he offers instead to resign upon being told of his impending transfer, for what matters is the action of Sy on his employment status. If ever petitioner momentarily contemplated resignation and such was the impression he conveyed in his talk with his supervisor prior to the meeting with Sy, such is borne by circumstances indicating Garcias antagonism towards petitioner. In any event, whether such perception of a strained working relationship with Garcia was mistaken or not is beside the point. The crucial factor is the verbal order directly given by Sy, the company president, for petitioner to immediately turn over his accountabilities. Notably, Sy got irked when petitioner asked for his termination paper. Petitioner apparently wanted to ascertain whether such summary dismissal was official, and it was well within his right to demand that he be furnished with a written notice in order to apprise him of the real ground for his termination. Contrary to respondents theory that petitioners act of turning over the company files and samples is proof of his voluntary informal resignation rather than of the summary dismissal effected by management, no other plausible explanation can be made of such immediate turn over except that petitioner directly confirmed from the company president herself that he was already being dismissed. The subsequent memos sent to petitioners residence after he did not anymore report for work only reinforce the conclusion that the belated written notice of the charge against him his alleged failure to meet the prescribed sales quota was an afterthought on the part of respondents who may have realized that they failed to observe due process in terminating him. That respondents would still require a written explanation for petitioners poor sales performance after the latter already complied with Sys directive to turn over all his accountabilities is simply inconsistent with their claim that petitioner offered to resign and voluntarily relinquished possession of company files and samples when told of his impending transfer. In other words, petitioner was not given any opportunity to defend himself from whatever charges hurled by management against him, such as poor sales performance as relayed to him by his supervisor, when Sy unceremoniously terminated him which must have shocked him considering that his supervisor earlier advised that he would just be transferred to another department. Under this scenario, petitioners decision not to report for work anymore was perfectly understandable, as the sensible reaction of an employee fired by no less than the company president. It was indeed a classic case of dismissal without just cause and due process, which is proscribed under our labor laws. As to the affidavits submitted by the respondents, these are at best self-serving having been executed by employees beholden to their employer and which evidence by themselves did not refute petitioners main cause of action -- the fact of his summary dismissal on February 19, 2002. Respondents effort to present the case as one of an erring employee about to be investigated for poor sales performance must likewise fail. The NLRC duly noted the discriminatory treatment accorded to petitioner when it declared that there is no evidence at all that other sales personnel who failed to meet the prescribed sales quota were similarly reprimanded or penalized. Incidentally, the question may be asked if petitioner whose performance was assessed by management as "poor" yet admittedly ranked second to the top sales agent of the company, why was it that no evidence was submitted by respondents to show the comparative sales performance of all sales agents? Given the strained working relationship with Garcia, or at least a perception of such gap on the part of petitioner, the latter could not have been properly informed of the actual ground for his dismissal. But more importantly, respondents terminated petitioner first and only belatedly sent him written notices of the charge against him. Fairness requires that dismissal, being the ultimate penalty that can be meted out to an employee, must have a clear basis. Any

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ambiguity in the ground for the termination of an employee should be interpreted against the employer, who ordained such ground in the first place.14 Resignation is defined as"the voluntary act of employees who are compelled by personal reasons to disassociate themselves from their employment. It must be done with the intention of relinquishing an office, accompanied by the act of abandonment."15 In this case, the evidence on record suggests that petitioner did not resign; he was orally dismissed by Sy. It is this lack of clear, valid and legal cause, not to mention due process, that made his dismissal illegal, warranting reinstatement and the award of backwages.16 Moreover, the filing of a complaint for illegal dismissal just three weeks later is difficult to reconcile with voluntary resignation. Had petitioner intended to voluntarily relinquish his employment after being unceremoniously dismissed by no less than the company president, he would not have sought redress from the NLRC and vigorously pursued this case against the respondents.17 When there is no showing of a clear, valid and legal cause for the termination of employment, the law considers it a case of illegal dismissal. Furthermore, Article 4 of the Labor Code expresses the basic principle that all doubts in the interpretation and implementation of the Labor Code should be interpreted in favor of the workingman. This principle has been extended by jurisprudence to cover doubts in the evidence presented by the employer and the employee. 18 Thus we have held that if the evidence presented by the employer and the employee are in equipoise, the scales of justice must be tilted in favor of the latter.19 Accordingly, the NLRCs finding of illegal dismissal must be upheld. However, the award of back wages and separation pay in lieu of reinstatement should be modified. Under the doctrine of strained relations, the payment of separation pay has been considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable.20 Under the facts established, petitioner is entitled to the payment of full back wages, inclusive of allowances, and other benefits or their monetary equivalent, computed from the date of his dismissal on February 19, 2002 up to the finality of this decision, and separation pay in lieu of reinstatement equivalent to one month salary for every year of service, computed from the time of his engagement by respondents on March 21, 1999 up to the finality of this decision.21
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WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated April 21, 2006 and Resolution dated September 7, 2006 of the Court of Appeals in CA-G.R. SP No. 88061 are SET ASIDE. The Decision dated July 29, 2004 of the National Labor Relations Commission in NLRC NCR CA No. 035557-03 is REINSTATED and AFFIRMED WITH MODIFICATIONS in that in addition to the unpaid commission of P16,581.00, respondent Centro Ceramica Corporation is hereby ordered to pay petitioner Jhorizaldy Uy his full back wages, inclusive of allowances, and other benefits or their monetary equivalent, computed from the date of his dismissal on February 19, 2002 up to the finality of this decision, and separation pay in lieu of reinstatement equivalent to one monthsalary for every year of service, computed from the time of his engagement by respondent corporation on March 21, 1999 up to the finality of this decision. No pronouncement as to costs. SO ORDERED.
MARTIN S. VILLARAMA, JR. Associate Justice 27. Strike MAGDALA MULTIPURPOSE & LIVELIHOOD COOPERATIVE and SANLOR MOTORS CORP. vs. KILUSANG MANGGAGAWA NG LGS, MAGDALA MULTIPURPOSE & LIVELIHOOD CORPERATIVE (KMLMS) and UNION MEMBERS/ STRIKERS, namely: THOMAS PADULLON, HERBERT BAUTISTA, ARIEL DADIA, AVELINO PARENAS, DENNIS MONTEALEGRE, SONNY CONSTANTINO, SHANDY CONSTANTINO, JOSEPH PERNIA, PETER ALCOY, EDILBERTO CERILLE, FERNANDO LEONOR, TEOTIMAR REGINIO, ALBERTO BAJETA, ALLAN MENESES, RONEL FABUL, JESUS COMENDADOR, JERRY PERNIA, OSCAR RIVERA, LEO MELGAR, ENRICO LAYGO, RICKY PALMERO, ROWELL GARCIA, LEOPITO MERANO, ALEJANDRO DE LARA, JOEL GARCIA, BONIFACIO PEREDA, REMEGIO CONSTANTINO, DICKSON PILAPIL, RANDY CORDANO, DARIUS PILAPIL, VENICE LUCERO, GREGORIO REANZARES, EULOGIO REGINIO, MICHAEL JAVIER, DENNIS MOSQUERA, FREDDIE AZORES, ROGELIO CABRERA, AURELIO TAGUINOD, OSCAR TAGUINOD, DEWELL PILAPIL, JOEL MAS-ING, EDUARDO LOPEZ, GLICERIO REANZAREZ, JOSEPH FLORES,BUENATO CASAS, ROMEO AZAGRA, ALFREDO ROSALES, ESTELITO BAJETA, PEDY GEMINA, FERNANDO VELASCO, ALBERTO CANEZA, ALEJANDRO CERVANTES, ERICK CARVAJAL, RONALDO BERNADEZ, JERRY COROSA, JAYSON COROSA, JAYSON JUANSON, SHELLY NAREZ, EDGARDO GARCIA, ARIEL LLOSALA, ROMMEL ILAYA, RODRIGO PAULETE, MERVIN PANGUINTO, MARVIN SENATIN, JAYSON RILLORA, RAFAEL SARMIENTO, FREDERICK PERMEJO, NICOLAS BERNARDO, LEONCIO PAZ DE LEON, EDWARD DENNIS MANAHAN, ANTONIO BALDAGO, ALEXANDER BAJETA, G.R. Nos. 191138-39, October 19, 2011 DECISION VELASCO, JR., J.:

The Case Petitioners Magdala Multipurpose & Livelihood Cooperative and Sanlor Motors Corp. assail and seek the modification of the June 30, 2009 Decision1 and January 28, 2010 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP Nos. 88614 and 88645, which affirmed in toto the October 15, 2004 Decision 3 of the National Labor Relations Commission (NLRC) in NLRC CA No. 040560-04 (NLRC RAB IV-9-1265-02-R).

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The Facts Respondent Kilusang Manggagawa ng LGS, Magdala Multipurpose and Livelihood Cooperative (KMLMS) is the union operating in Magdala Multipurpose & Livelihood Cooperative and Sanlor Motors Corp. KMLMS filed a notice of strike on March 5, 2002 and conducted its strike-vote on April 8, 2002. However, KMLMS only acquired legal personality when its registration as an independent labor organization was granted on April 9, 2002 by the Department of Labor and Employment under Registration No. RO-400-200204-UR-002. 4 On April 19, 2002, it became officially affiliated as a local chapter of the Pambansang Kaisahan ng Manggagawang Pilipino when its application was granted by the Bureau of Labor Relations.5 Thereafter, on May 6, 2002, KMLMSnow a legitimate labor organization (LLO)staged a strike where several prohibited and illegal acts were committed by its participating members. On the ground of lack of valid notice of strike, ineffective conduct of a strike-vote and commission of prohibited and illegal acts, petitioners filed their Petition to Declare the Strike of May 6, 2002 Illegal 6 before the NLRC Regional Arbitration Board (RAB) No. IV in Quezon City, docketed as NLRC RAB IV-9-1265-02-R. In their petition, as well as their Position Paper,7 petitioners prayed, inter alia, that the officers and members of respondent KMLMS who participated in the illegal strike and who knowingly committed prohibited and illegal activities, respectively, be declared to have lost or forfeited their employment status. The Ruling of the Labor Arbiter In her March 26, 2004 Decision,8 Executive Labor Arbiter Lita V. Aglibut (LA Aglibut) found the May 6, 2002 strike illegal and declared 41 workers to have lost their employment, the dispositive portion reading: WHEREFORE, this Office finds the strike conducted by the Kilusang Manggagawa ng LGS, Magdala / Sanlor MotorsKMLMS, now known and registered as Kilusang [Manggagawa] Ng LGS/Magdala Sanlor Motors Corporation PKMP, illegal and the employment status of the following workers are hereby declared forfeited: x x x. All other claims are dismissed for lack of merit. SO ORDERED.9 On the ground of non-compliance with the strict and mandatory requirements for a valid conduct of a strike under Article 263(c), (d) and (f) of the Labor Code and Rule XXII, Book V of the Omnibus Rules Implementing the Labor Code, LA Aglibut found the May 6, 2002 strike illegal and accordingly dismissed all the 14 union officers of KMLMS. LA Aglibut likewise found 27 identified members of KMLMS to have committed prohibited and illegal acts proscribed under Art. 264 of the Labor Code and accordingly declared them to have forfeited their employment. Both parties appealed the Decision of LA Aglibut before the NLRC. The Ruling of the NLRC On October 15, 2004, the NLRC rendered its Decision affirming with modification LA Aglibuts Decision by declaring an additional seven (7) union members to have forfeited their employment status. The decretal portion reads: WHEREFORE, premises considered, the decision appealed from is affirmed with modification in that [said seven union members] are also declared to have lost their employment status for having committed prohibited acts. SO ORDERED.10 Unsatisfied, both parties again filed their respective appeals before the CA. The Ruling of the CA

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The CA rendered the assailed Decision on June 30, 2009 affirming in toto the NLRC Decision, the fallo reading: WHEREFORE, in view of the following disquisition, the respective petitions for certiorari in CA-G.R. SP. No. 88614 and CA-G.R. SP. No. 88645 are hereby DISMISSED for lack of merit. Accordingly, the assailed Decision, dated 15 October 2004, of the National Labor Relations Commission (NLRC) in NLRC CA No. 040560-04 (NLRC RAB IV-9-1265-02-R) is hereby AFFIRMED in toto. SO ORDERED.11 Thus, petitioners have come to Us, praying for a partial modification of the assailed CA Decision by declaring additional 7312 similarly erring KMLMS members to have lost their employment. The Issues A THE COURT OF APPEALS ERRED IN REFUSING TO SIMILARLY DECLARE AS HAVING LOST THEIR EMPLOYMENT STATUS THE REST OF THE UNION STRIKERS WHO HAVE PARTICIPATED IN THE ILLEGAL STRIKE AND COMMITTED PROHIBITED/ILLEGAL ACTS, TO THE PREJUDICE OF PETITIONERS[] BUSINESS OPERATIONS. B THE COURT OF APPEALS ERRED IN REFUSING TO AWARD DAMAGES AND ATTORNEYS FEES AS A RESULT OF THE ILLEGAL STRIKE THAT NEARLY CRIPPLED THE BUSINESS OPERATIONS OF PETITIONERS.13 The Courts Ruling The petition is partly meritorious. First Issue: The May 6, 2002 Strike Was Illegal There is no question that the May 6, 2002 strike was illegal, first, because when KMLMS filed the notice of strike on March 5 or 14, 2002, it had not yet acquired legal personality and, thus, could not legally represent the eventual union and its members. And second, similarly when KMLMS conducted the strike-vote on April 8, 2002, there was still no union to speak of, since KMLMS only acquired legal personality as an independent LLO only on April 9, 2002 or the day after it conducted the strike-vote. These factual findings are undisputed and borne out by the records. Consequently, the mandatory notice of strike and the conduct of the strike-vote report were ineffective for having been filed and conducted before KMLMS acquired legal personality as an LLO, violating Art. 263(c), (d) and (f) of the Labor Code and Rule XXII, Book V of the Omnibus Rules Implementing the Labor Code. The Labor Code provisos pertinently provide: ART. 263. Strikes, Picketing and Lockouts. (a) x x x (c) In case of bargaining deadlocks, the duly certified or recognized bargaining agent may file a notice of strike or the employer may file a notice of lockout with the Ministry at least 30 days before the intended date thereof. In case of unfair labor practice, the period of notice shall be 15 days and in absence of a duly certified or recognized bargaining agent, the notice of strike may be filed by any legitimate labor organization in behalf of its members. However, in case of dismissal from employment of union officers duly elected in accordance with the union constitution and by-laws, which may constitute union busting, where the existence of the union is threatened, the 15-day cooling-off period shall not apply and the union may take action immediately. (As amended by Executive Order No. 111, December 24, 1986.) (d) The notice must be in accordance with such implementing rules and regulations as the Ministry of Labor and Employment may promulgate.

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xxxx (f) A decision to declare a strike must be approved by a majority of the total union membership in the bargaining unit concerned, obtained by secret ballot in meetings or referenda called for that purpose. A decision to declare a lockout must be approved by a majority of the board of directors of the corporation or association or of the partners in a partnership, obtained by secret ballot in a meeting called for that purpose. The decision shall be valid for the duration of the dispute based on substantially the same grounds considered when the strike or lockout vote was taken. The Ministry may, at its own initiative or upon the request of any affected party, supervise the conduct of the secret balloting. In every case, the union or the employer shall furnish the Ministry the results of the voting at least seven days before the intended strike or lockout, subject to the cooling-off period herein provided. (As amended by Batas Pambansa Bilang 130, August 21, 1981 and further amended by Executive Order No. 111, December 24, 1986.) On the other hand, Rule XXII, Book V of the Omnibus Rules Implementing the Labor Code likewise pertinently provides: RULE XXII CONCILIATION, STRIKES AND LOCKOUTS xxxx SEC. 6. Who may declare a strike or lockout. Any certified or duly recognized bargaining representative may declare a strike in cases of bargaining deadlocks and unfair labor practices. The employer may declare a lockout in the same cases. In the absence of a certified or duly recognized bargaining representative, any legitimate labor organization in the establishment may declare a strike but only on grounds of unfair labor practice. (Emphasis supplied.) It is, thus, clear that the filing of the notice of strike and the conduct of the strike-vote by KMLMS did not comply with the aforequoted mandatory requirements of law and its implementing rules. Consequently, the May 6, 2002 strike is illegal. As the Court held in Hotel Enterprises of the Philippines, Inc. (HEPI) v. Samahan ng mga Manggagawa sa Hyatt-National Union of Workers in the Hotel and Restaurant and Allied Industries (SAMASAH-NUWHRAIN), 14 these requirements are mandatory and failure of a union to comply renders the strike illegal. Striking KMLMS Members Committed Prohibited Acts There is likewise no dispute that when the May 6, 2002 illegal strike was conducted, the members of respondent KMLMS committed prohibited and illegal acts which doubly constituted the strike illegal. This is the unanimous factual finding of the courts a quo which the Court accords finality, as supported by evidence on record. The proscribed acts during a strike are provided under Art. 264 of the Labor Code, thus: ART. 264. Prohibited Activities. (a) No Labor organization or employer shall declare a strike or lockout without first having bargained collectively in accordance with Title VII of this Book or without first having filed the notice required in the preceding Article or without the necessary strike or lockout vote first having been obtained and reported to the Ministry. No strike or lockout shall be declared after assumption of jurisdiction by the President or the Minister or after certification or submission of the dispute to compulsory or voluntary arbitration or during the pendency of case involving the same grounds for the strike or lockout. Any worker whose employment has been terminated as a consequence of any unlawful lockout shall be entitled to reinstatement with full backwages. Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike. xxxx

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(e) No person engaged in picketing shall commit any act of violence, coercion or intimidation or obstruct the free ingress to or egress from the employers premises for lawful purposes, or obstruct public thoroughfares. (As amended by Batas Pambansa Bilang 227, June 1, 1982). Here, the striking workers committed acts of (1) interference by obstructing the free ingress to or egress from petitioners compound and (2) coercion and intimidation. As aptly pointed out by the appellate court: This is clear from the Police Blotter Certifications, including a Complaint for Grave Coercion, Affidavits from several workers, including one from a proprietor, all of whom were prevented from entering the company premises and doing their work or conducting their business, and the countless photographs which show the striking workers blocking the gates of the company premises which became the basis of the judgment of the Labor Arbiter and NLRC.15 Thus, We agree with the CA that the arguments of respondent KMLMS are bereft of merit as the May 6, 2002 strike was properly declared an illegal strike and the prohibited and illegal acts committed by union members during said strike were duly proved by substantial evidence on record. Substantial evidence is that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.16 Proper Sanctions for the Illegal Strike We now come to the proper sanctions for the conduct of union officers in an illegal strike and for union members who committed illegal acts during a strike. The above-cited Art. 264 of the Code presents a substantial distinction of the consequences of an illegal strike between union officers and mere members of the union. For union officers, knowingly participating in an illegal strike is a valid ground for termination of their employment. But for union members who participated in a strike, their employment may be terminated only if they committed prohibited and illegal acts during the strike and there is substantial evidence or proof of their participation, i.e., that they are clearly identified to have committed such prohibited and illegal acts. As earlier explained, the May 6, 2002 strike is illegal for non-compliance with provisions of law and its implementing rules. Consequently, the termination of employment of the 14 union officers is proper. In the case of union members who participated in the May 6, 2002 strike and committed prohibited and illegal acts of interference by obstructing the free ingress to or egress from petitioners compound, coercion and intimidation, the forfeiture of their employment is also proper. LA Aglibut found 27 union members to have committed the illegal acts and properly declared the forfeiture of their employment status. The NLRC found additional seven (7) union members committing illegal acts and likewise declared the forfeiture of their employment status. Thus, a total of 34 union members have been declared to have lost their employment due to their commission of prohibited and illegal acts during the illegal strike of May 6, 2002. Petitioners, however, take umbrage for the non-declaration of the forfeiture of employment of 72 other union members who were similarly situated as the 34 union members whose employment was declared forfeited in committing prohibited and illegal acts during the May 6, 2002 strike. In affirming the NLRC Decision and refusing to declare the other strikers as dismissed, the appellate court found that not all of the photographs in evidence sufficiently show the strikers committing illegal acts and that the identification of said strikers is questionable considering that some were still identified even when their faces were indiscernible from the photographs. We, however, cannot agree with the appellate courts view that there is no substantial proof of the identity of the other 72 striking union members who committed prohibited and illegal activities. The prohibited and illegal acts are undisputed. It is only the identity of the striking union workers who committed said acts that is the crux of the partial modification prayed for by petitioners. In the instant case, We have pored over the attachments to the pleadings of the parties and We find that petitioners have substantially proved the identity of 72 other union members who committed prohibited and illegal acts during the May 6, 2002 illegal strike, thus: First, the photographs17 submitted by petitioners graphically depict and show the identities of the union members who committed prohibited and illegal acts. Second, the identities of these union members were substantially proved through

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the eyewitnesses18 of petitioners who personally knew and recognized them as those who committed the prohibited and illegal acts. Thus, the identities of these 72 other union members who participated in the strike and committed prohibited and illegal acts are not only shown through the photographs, but are also sufficiently supported, as earlier cited, by police blotter certifications,19 a criminal complaint for grave coercion,20and affidavits of several workers21 and a proprietor.22 As aptly pointed out by petitioners, while several union members were penalized, other union members with them who are identifiable in the photographs and attested to by witnesses were not so penalized. This must be corrected, for these other unpenalized union members were similarly situated with those penalized in that they all committed the same prohibited and illegal acts during the strike. Absent any exculpating circumstance, they must all suffer the same fate with the statutorily provided consequence of termination of employment. Thus, We find that there was patent misappreciation of evidence both by the LA and the NLRC, but it was not corrected by the CA. Second Issue: Damages and Attorneys Fees

Anent the issue of the award of damages and attorneys fees, We affirm the courts a quos uniform findings and rulings that while petitioners prayed for damages and attorneys fees, they failed to substantiate their claims. Indeed, the grant of damages and attorneys fees requires factual, legal and equitable justification; its basis cannot be left to speculation or conjecture. 23 Petitioners simply bank their claims on the Affidavit 24 of Julito Sioson. The claim for actual damages for losses of PhP 10,000 daily or PhP 260,000 a month, as averred by Sioson, cannot be sustained by a mere affidavit of the owner without being buttressed by other documentary evidence or unassailable substantiation. Even if attested to in an affidavit, the amount claimed for actual damages is merely speculative at most. To be recoverable, actual damages must not only be capable of proof, but must actually be proved with reasonable degree of certainty. The Court cannot simply rely on speculation, conjecture, or guesswork in determining the amount of damages.25 Without any factual basis, it cannot be granted. That petitioners had to litigate on the occasion of the illegal strike does not necessarily mean that attorneys fees will automatically be granted. On one hand, in labor cases, attorneys fees granted under Art. 111 26 of the Labor Code apply to unlawful withholding of wages, which indubitably does not apply to the instant case. On the other hand, Art. 2208(2) of the Civil Code does not ipso facto grant the award of damages in the form of attorneys fees to a winning party, for the exercise of protection of ones right is not compensable. Besides, jurisprudence instructs that for the award of attorneys fees to be granted, there must be factual, legal and equitable justification.27 As the Court held in Filipinas Broadcasting Network, Inc. v. Ago Medical and Educational Center-Bicol Christian College of Medicine (AMEC-BCCM): It is an accepted doctrine that the award thereof as an item of damages is the exception rather than the rule, and counsels fees are not to be awarded every time a party wins a suit. The power of the court to award attorneys fees under Article 2208 of the Civil Code demands factual, legal and equitable justification, without which the award is a conclusion without a premise, its basis being improperly left to speculation and conjecture. In all events, the court must explicitly state in the text of the decision, and not only in the decretal portion thereof, the legal reason for the award of attorneys fees.28 The fact that the courts a quo did not award attorneys fees to petitioners persuasively shows that they found no factual, legal and equitable justification for it. Neither do We find any. WHEREFORE, the instant petition is hereby PARTIALLY GRANTED. The assailed June 30, 2009 CA Decision in CA-G.R. SP Nos. 88614 and 88645 is AFFIRMED with MODIFICATION in that the following additional 72 union members who committed prohibited and illegal acts during the May 6, 2002 strike are also declared to have forfeited their employment: Thomas Padullon, Herbert Bautista, Ariel Dadia, Avelino Parenas, Dennis Montealegre, Sonny Constantino, Shandy Constantino, Joseph Pernia, Peter Alcoy, Edilberto Cerille, Fernando Leonor, Teotimar Reginio, Alberto Bajeta, Allan Meneses, Ronel Fabul, Jesus Comendador, Jerry Pernia, Oscar Rivera, Leo Melgar, Enrico Laygo, Ricky Palmero, Rowell Garcia, Leopito Merano, Alejandro de Lara, Joel Garcia, Bonifacio Pereda, Remegio Constantino, Dickson Pilapil, Randy Cordano, Aurelio Taguinod, Oscar Taguinod, Dewell Pilapil, Joel Masing, Eduardo Lopez, Glicerio Reanzarez, Joseph Flores, Buenato Casas, Romeo Azagra, Alfredo Rosales, Estelito

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Bajeta, Pedy Gemina, Fernando Velasco, Alberto Caneza, Alejandro Cervantes, Erick Carvajal, Ronaldo Bernadez, Jerry Corosa, Jayson Corosa, Jayson Juanson, Shelly Narez, Alexander Bajeta, Edgardo Garcia, Ariel Llosala, Rommel Ilaya, Rodrigo Paulete, Mervin Paquinto, Marvin Senatin, Jayson Rillora, Darius Pilapil, Venice Lucero, Gregorio Reanzares, Eulogio Reginio, Michael Javier, Dennis Mosquera, Freddie Azores, Rogelio Cabrera, Rafael Sarmiento, Frederick Permejo, Nicolas Bernardo, Leoncio Paz de Leon, Edward Dennis Manahan and Antonio Baldago. No pronouncement as to costs. SO ORDERED.
PRESBITERO J. VELASCO, JR. Associate Justice 28. Union Security Clause - BANK OF THE PHILIPPINE ISLANDS vs. BPI EMPLOYEES UNION-DAVAO CHAPTER-FEDERATION OF UNIONS IN BPI UNIBANK, G.R. No. 164301, October 19, 2011 RESOLUTION LEONARDO-DE CASTRO, J.:

In the present incident, petitioner Bank of the Philippine Islands (BPI) moves for reconsideration 1 of our Decision dated August 10, 2010, holding that former employees of the Far East Bank and Trust Company (FEBTC) "absorbed" by BPI pursuant to the two banks merger in 2000 were covered by the Union Shop Clause in the then existing collective bargaining agreement (CBA)2 of BPI with respondent BPI Employees Union-Davao Chapter-Federation of Unions in BPI Unibank (the Union). To recall, the Union Shop Clause involved in this long standing controversy provided, thus: ARTICLE II xxxx Section 2. Union Shop - New employees falling within the bargaining unit as defined in Article I of this Agreement, who may hereafter be regularly employed by the Bank shall, within thirty (30) days after they become regular employees, join the Union as a condition of their continued employment. It is understood that membership in good standing in the Union is a condition of their continued employment with the Bank.3 (Emphases supplied.) The bone of contention between the parties was whether or not the "absorbed" FEBTC employees fell within the definition of "new employees" under the Union Shop Clause, such that they may be required to join respondent union and if they fail to do so, the Union may request BPI to terminate their employment, as the Union in fact did in the present case. Needless to state, BPI refused to accede to the Unions request. Although BPI won the initial battle at the Voluntary Arbitrator level, BPIs position was rejected by the Court of Appeals which ruled that the Voluntary Arbitrators interpretation of the Union Shop Clause was at war with the spirit and rationale why the Labor Code allows the existence of such provision. On review with this Court, we upheld the appellate courts ruling and disposed of the case as follows: WHEREFORE, the petition is hereby DENIED, and the Decision dated September 30, 2003 of the Court of Appeals is AFFIRMED, subject to the thirty (30) day notice requirement imposed herein. Former FEBTC employees who opt not to become union members but who qualify for retirement shall receive their retirement benefits in accordance with law, the applicable retirement plan, or the CBA, as the case may be.4 Notwithstanding our affirmation of the applicability of the Union Shop Clause to former FEBTC employees, for reasons already extensively discussed in the August 10, 2010 Decision, even now BPI continues to protest the inclusion of said employees in the Union Shop Clause. In seeking the reversal of our August 10, 2010 Decision, petitioner insists that the parties to the CBA clearly intended to limit the application of the Union Shop Clause only to new employees who were hired as non-regular employees but later attained regular status at some point after hiring. FEBTC employees cannot be considered new employees as BPI merely stepped into the shoes of FEBTC as an employer purely as a consequence of the merger.5

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Petitioner likewise relies heavily on the dissenting opinions of our respected colleagues, Associate Justices Antonio T. Carpio and Arturo D. Brion. From both dissenting opinions, petitioner derives its contention that "the situation of absorbed employees can be likened to old employees of BPI, insofar as their full tenure with FEBTC was recognized by BPI and their salaries were maintained and safeguarded from diminution" but such absorbed employees "cannot and should not be treated in exactly the same way as old BPI employees for there are substantial differences between them." 6 Although petitioner admits that there are similarities between absorbed and new employees, they insist there are marked differences between them as well. Thus, adopting Justice Brions stance, petitioner contends that the absorbed FEBTC employees should be considered "a sui generis group of employees whose classification will not be duplicated until BPI has another merger where it would be the surviving corporation." 7 Apparently borrowing from Justice Carpio, petitioner propounds that the Union Shop Clause should be strictly construed since it purportedly curtails the right of the absorbed employees to abstain from joining labor organizations.8 Pursuant to our directive, the Union filed its Comment9 on the Motion for Reconsideration. In opposition to petitioners arguments, the Union, in turn, adverts to our discussion in the August 10, 2010 Decision regarding the voluntary nature of the merger between BPI and FEBTC, the lack of an express stipulation in the Articles of Merger regarding the transfer of employment contracts to the surviving corporation, and the consensual nature of employment contracts as valid bases for the conclusion that former FEBTC employees should be deemed new employees. 10 The Union argues that the creation of employment relations between former FEBTC employees and BPI (i.e., BPIs selection and engagement of former FEBTC employees, its payment of their wages, power of dismissal and of control over the employees conduct) occurred after the merger, or to be more precise, after the Securities and Exchange Commissions (SEC) approval of the merger.11 The Union likewise points out that BPI failed to offer any counterargument to the Courts reasoning that: The rationale for upholding the validity of union shop clauses in a CBA, even if they impinge upon the individual employee's right or freedom of association, is not to protect the union for the union's sake. Laws and jurisprudence promote unionism and afford certain protections to the certified bargaining agent in a unionized company because a strong and effective union presumably benefits all employees in the bargaining unit since such a union would be in a better position to demand improved benefits and conditions of work from the employer. x x x. x x x Nonetheless, settled jurisprudence has already swung the balance in favor of unionism, in recognition that ultimately the individual employee will be benefited by that policy. In the hierarchy of constitutional values, this Court has repeatedly held that the right to abstain from joining a labor organization is subordinate to the policy of encouraging unionism as an instrument of social justice.12 While most of the arguments offered by BPI have already been thoroughly addressed in the August 10, 2010 Decision, we find that a qualification of our ruling is in order only with respect to the interpretation of the provisions of the Articles of Merger and its implications on the former FEBTC employees security of tenure. Taking a second look on this point, we have come to agree with Justice Brions view that it is more in keeping with the dictates of social justice and the State policy of according full protection to labor to deem employment contracts as automatically assumed by the surviving corporation in a merger, even in the absence of an express stipulation in the articles of merger or the merger plan. In his dissenting opinion, Justice Brion reasoned that: To my mind, due consideration of Section 80 of the Corporation Code, the constitutionally declared policies on work, labor and employment, and the specific FEBTC-BPI situation i.e., a merger with complete "body and soul" transfer of all that FEBTC embodied and possessed and where both participating banks were willing (albeit by deed, not by their written agreement) to provide for the affected human resources by recognizing continuity of employment should point this Court to a declaration that in a complete merger situation where there is total takeover by one corporation over another and there is silence in the merger agreement on what the fate of the human resource complement shall be, the latter should not be left in legal limbo and should be properly provided for, by compelling the surviving entity to absorb these employees. This is what Section 80 of the Corporation Code commands, as the surviving corporation has the legal obligation to assume all the obligations and liabilities of the merged constituent corporation. Not to be forgotten is that the affected employees managed, operated and worked on the transferred assets and properties as their means of livelihood; they constituted a basic component of their corporation during its existence. In a merger and consolidation situation, they cannot be treated without consideration of the applicable constitutional declarations and directives, or, worse, be simply disregarded. If they are so treated, it is up to this Court to read and interpret the law so that they are treated in accordance with the legal requirements of mergers and consolidation, read in light of the social justice, economic and social provisions of our Constitution. Hence, there is a need for the surviving

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corporation to take responsibility for the affected employees and to absorb them into its workforce where no appropriate provision for the merged corporation's human resources component is made in the Merger Plan.13 By upholding the automatic assumption of the non-surviving corporations existing employment contracts by the surviving corporation in a merger, the Court strengthens judicial protection of the right to security of tenure of employees affected by a merger and avoids confusion regarding the status of their various benefits which were among the chief objections of our dissenting colleagues. However, nothing in this Resolution shall impair the right of an employer to terminate the employment of the absorbed employees for a lawful or authorized cause or the right of such an employee to resign, retire or otherwise sever his employment, whether before or after the merger, subject to existing contractual obligations. In this manner, Justice Brions theory of automatic assumption may be reconciled with the majoritys concerns with the successor employers prerogative to choose its employees and the prohibition against involuntary servitude.
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Notwithstanding this concession, we find no reason to reverse our previous pronouncement that the absorbed FEBTC employees are covered by the Union Shop Clause. Even in our August 10, 2010 Decision, we already observed that the legal fiction in the law on mergers (that the surviving corporation continues the corporate existence of the non-surviving corporation) is mainly a tool to adjudicate the rights and obligations between and among the merged corporations and the persons that deal with them. 14 Such a legal fiction cannot be unduly extended to an interpretation of a Union Shop Clause so as to defeat its purpose under labor law. Hence, we stated in the Decision that: In any event, it is of no moment that the former FEBTC employees retained the regular status that they possessed while working for their former employer upon their absorption by petitioner. This fact would not remove them from the scope of the phrase "new employees" as contemplated in the Union Shop Clause of the CBA, contrary to petitioner's insistence that the term "new employees" only refers to those who are initially hired as non-regular employees for possible regular employment. The Union Shop Clause in the CBA simply states that "new employees" who during the effectivity of the CBA "may be regularly employed" by the Bank must join the union within thirty (30) days from their regularization. There is nothing in the said clause that limits its application to only new employees who possess non-regular status, meaning probationary status, at the start of their employment. Petitioner likewise failed to point to any provision in the CBA expressly excluding from the Union Shop Clause new employees who are "absorbed" as regular employees from the beginning of their employment. What is indubitable from the Union Shop Clause is that upon the effectivity of the CBA, petitioner's new regular employees (regardless of the manner by which they became employees of BPI) are required to join the Union as a condition of their continued employment.15 Although by virtue of the merger BPI steps into the shoes of FEBTC as a successor employer as if the former had been the employer of the latters employees from the beginning it must be emphasized that, in reality, the legal consequences of the merger only occur at a specific date, i.e., upon its effectivity which is the date of approval of the merger by the SEC. Thus, we observed in the Decision that BPI and FEBTC stipulated in the Articles of Merger that they will both continue their respective business operations until the SEC issues the certificate of merger and in the event no such certificate is issued, they shall hold each other blameless for the non-consummation of the merger.16 We likewise previously noted that BPI made its assignments of the former FEBTC employees effective on April 10, 2000, or after the SEC approved the merger.17 In other words, the obligation of BPI to pay the salaries and benefits of the former FEBTC employees and its right of discipline and control over them only arose with the effectivity of the merger. Concomitantly, the obligation of former FEBTC employees to render service to BPI and their right to receive benefits from the latter also arose upon the effectivity of the merger. What is material is that all of these legal consequences of the merger took place during the life of an existing and valid CBA between BPI and the Union wherein they have mutually consented to include a Union Shop Clause. From the plain, ordinary meaning of the terms of the Union Shop Clause, it covers employees who (a) enter the employ of BPI during the term of the CBA; (b) are part of the bargaining unit (defined in the CBA as comprised of BPIs rank and file employees); and (c) become regular employees without distinguishing as to the manner they acquire their regular status. Consequently, the number of such employees may adversely affect the majority status of the Union and even its existence itself, as already amply explained in the Decision. Indeed, there are differences between (a) new employees who are hired as probationary or temporary but later regularized, and (b) new employees who, by virtue of a merger, are absorbed from another company as regular and

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permanent from the beginning of their employment with the surviving corporation. It bears reiterating here that these differences are too insubstantial to warrant the exclusion of the absorbed employees from the application of the Union Shop Clause. In the Decision, we noted that: Verily, we agree with the Court of Appeals that there are no substantial differences between a newly hired non-regular employee who was regularized weeks or months after his hiring and a new employee who was absorbed from another bank as a regular employee pursuant to a merger, for purposes of applying the Union Shop Clause. Both employees were hired/employed only after the CBA was signed. At the time they are being required to join the Union, they are both already regular rank and file employees of BPI. They belong to the same bargaining unit being represented by the Union. They both enjoy benefits that the Union was able to secure for them under the CBA. When they both entered the employ of BPI, the CBA and the Union Shop Clause therein were already in effect and neither of them had the opportunity to express their preference for unionism or not. We see no cogent reason why the Union Shop Clause should not be applied equally to these two types of new employees, for they are undeniably similarly situated.18 Again, it is worthwhile to highlight that a contrary interpretation of the Union Shop Clause would dilute its efficacy and put the certified union that is supposedly being protected thereby at the mercy of management. For if the former FEBTC employees had no say in the merger of its former employer with another bank, as petitioner BPI repeatedly decries on their behalf, the Union likewise could not prevent BPI from proceeding with the merger which undisputedly affected the number of employees in the bargaining unit that the Union represents and may negatively impact on the Unions majority status. In this instance, we should be guided by the principle that courts must place a practical and realistic construction upon a CBA, giving due consideration to the context in which it is negotiated and purpose which it is intended to serve.19 We now come to the question: Does our affirmance of our ruling that former FEBTC employees absorbed by BPI are covered by the Union Shop Clause violate their right to security of tenure which we expressly upheld in this Resolution? We answer in the negative. In Rance v. National Labor Relations Commission,20 we held that: It is the policy of the state to assure the right of workers to "security of tenure" (Article XIII, Sec. 3 of the New Constitution, Section 9, Article II of the 1973 Constitution). The guarantee is an act of social justice. When a person has no property, his job may possibly be his only possession or means of livelihood. Therefore, he should be protected against any arbitrary deprivation of his job. Article 280 of the Labor Code has construed security of tenure as meaning that "the employer shall not terminate the services of an employee except for a just cause or when authorized by" the Code. x x x (Emphasis supplied.) We have also previously held that the fundamental guarantee of security of tenure and due process dictates that no worker shall be dismissed except for a just and authorized cause provided by law and after due process is observed.21 Even as we now recognize the right to continuous, unbroken employment of workers who are absorbed into a new company pursuant to a merger, it is but logical that their employment may be terminated for any causes provided for under the law or in jurisprudence without violating their right to security of tenure. As Justice Carpio discussed in his dissenting opinion, it is well-settled that termination of employment by virtue of a union security clause embodied in a CBA is recognized in our jurisdiction.22 In Del Monte Philippines, Inc. v. Saldivar, 23 we explained the rationale for this policy in this wise: Article 279 of the Labor Code ordains that "in cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by [Title I, Book Six of the Labor Code]."Admittedly, the enforcement of a closed-shop or union security provision in the CBA as a ground for termination finds no extension within any of the provisions under Title I, Book Six of the Labor Code. Yet jurisprudence has consistently recognized, thus: "It is State policy to promote unionism to enable workers to negotiate with management on an even playing field and with more persuasiveness than if they were to individually and separately bargain with the employer. For this reason, the law has allowed stipulations for 'union shop' and 'closed shop' as means of encouraging workers to join and support the union of their choice in the protection of their rights and interests vis-a-vis the employer."24 (Emphasis supplied.) Although it is accepted that non-compliance with a union security clause is a valid ground for an employees dismissal, jurisprudence dictates that such a dismissal must still be done in accordance with due process. This much we decreed in General Milling Corporation v. Casio,25 to wit:

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The Court reiterated in Malayang Samahan ng mga Manggagawa sa M. Greenfield v. Ramos that: While respondent company may validly dismiss the employees expelled by the union for disloyalty under the union security clause of the collective bargaining agreement upon the recommendation by the union, this dismissal should not be done hastily and summarily thereby eroding the employees' right to due process, self-organization and security of tenure. The enforcement of union security clauses is authorized by law provided such enforcement is not characterized by arbitrariness, and always with due process. Even on the assumption that the federation had valid grounds to expel the union officers, due process requires that these union officers be accorded a separate hearing by respondent company. The twin requirements of notice and hearing constitute the essential elements of procedural due process. The law requires the employer to furnish the employee sought to be dismissed with two written notices before termination of employment can be legally effected: (1) a written notice apprising the employee of the particular acts or omissions for which his dismissal is sought in order to afford him an opportunity to be heard and to defend himself with the assistance of counsel, if he desires, and (2) a subsequent notice informing the employee of the employer's decision to dismiss him. This procedure is mandatory and its absence taints the dismissal with illegality. Irrefragably, GMC cannot dispense with the requirements of notice and hearing before dismissing Casio, et al. even when said dismissal is pursuant to the closed shop provision in the CBA. The rights of an employee to be informed of the charges against him and to reasonable opportunity to present his side in a controversy with either the company or his own union are not wiped away by a union security clause or a union shop clause in a collective bargaining agreement. x x x26 (Emphases supplied.) In light of the foregoing, we find it appropriate to state that, apart from the fresh thirty (30)-day period from notice of finality of the Decision given to the affected FEBTC employees to join the Union before the latter can request petitioner to terminate the formers employment, petitioner must still accord said employees the twin requirements of notice and hearing on the possibility that they may have other justifications for not joining the Union. Similar to our August 10, 2010 Decision, we reiterate that our ruling presupposes there has been no material change in the situation of the parties in the interim. WHEREFORE, the Motion for Reconsideration is DENIED. The Decision dated August 10, 2010 is AFFIRMED, subject to the qualifications that: (a) Petitioner is deemed to have assumed the employment contracts of the Far East Bank and Trust Company (FEBTC) employees upon effectivity of the merger without break in the continuity of their employment, even without express stipulation in the Articles of Merger; and (b) Aside from the thirty (30) days, counted from notice of finality of the August 10, 2010 Decision, given to former FEBTC employees to join the respondent, said employees shall be accorded full procedural due process before their employment may be terminated. SO ORDERED.
TERESITA J. LEONARDO-DE CASTRO Associate Justice