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FIRST ASSIGNMENT EMPLOYER-EMPLOYEE REL RAUL G. LOCSIN anD EDDIE B. TOMAQUIN,versus - CHICONAZARIO, VELASCO, JR. NACHUR PERALTA, JJ.

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, On November 1, 1990, respondent Philippine Long Distance Telephone Company (PLDT) and the Security and Safety Corporation of the Philippines (SSCP) entered into a Security Services Agreement (Agreement) whereby SSCP would provide armed security guards to PLDT to be assigned to its various offices. Pursuant to such agreement, petitioners Raul Locsin and Eddie Tomaquin, among other security guards, were posted at a PLDT office. On August 30, 2001, respondent issued a Letter dated August 30, 2001 terminating the Agreement effective October 1, 2001. Despite the termination of the Agreement, however, petitioners continued to secure the premises of their assigned office. They were allegedly directed to remain at their post by representatives of respondent.

Then, on September 30, 2002, petitioners services were terminated. Thus, petitioners filed a complaint before the Labor Arbiter for illegal dismissal and recovery of money claims such as overtime pay, holiday pay, premium pay for holiday and rest day, service incentive leave pay, Emergency Cost of Living Allowance, and moral and exemplary damages against PLDT.

ISSUE:

Whether or not; complainants from being an alleged contractual employees of the respondent for thirteen (13) years as they were then covered by a contract, becomes regular employees of the respondent as the one (1) year extended services of the complainants were not covered by a contract, and can be considered as direct employment. (in short, whether or not a employeeemployer relationship exists) Held: LABOR ARBITER The Labor Arbiter rendered a Decision finding PLDT liable for illegal dismissal. Such conclusion was arrived at with the factual finding that petitioners continued to serve as guards of PLDTs offices. As such employees, petitioners were entitled to substantive and procedural due process before termination of employment. The Labor Arbiter held that respondent failed to observe such due process requirements. PLDT was ordered to pay complainants Raul E. Locsin and Eddie Tomaquin their separation pay and back wages. NLRC rendered a Resolution affirming in toto the Arbiters Decision. PDLT filed a Motion for Reconsideration of the NLRCs Resolution which was also denied. PLDT filed a Petition for Certiorari with the CA asking for the nullification of the Resolution issued by the NLRC as well as the Labor Arbiters Decision. The CA rendered the assailed decision granting PLDTs petition and dismissing petitioners complaint. COURT OF APPEALS The CA applied the four-fold test in order to determine the existence of an employer-employee relationship between the parties but did not find such relationship. It determined that SSCP was not a labor-only contractor and was an independent contractor having substantial capital to operate and conduct its

own business. The CA further bolstered its decision by citing the Agreement whereby it was stipulated that there shall be no employer-employee relationship between the security guards and PLDT. SUPREME COURT:

An Employer-Employee Relationship Existed Between the Parties It is beyond cavil that there was no employer-employee relationship between the parties from the time of petitioners first assignment to respondent by SSCP in 1988 until the alleged termination of the Agreement between respondent and SSCP. The only issue in this case is whether petitioners became employees of respondent after the Agreement between SSCP and respondent was terminated. This must be answered in the affirmative. Notably, respondent does not deny the fact that petitioners remained in the premises of their offices even after the Agreement was terminated. While respondent denies the alleged circumstances stated by petitioners, that they were told to remain at their post by respondents Security Department and that they were informed by SSCP Operations Officer Eduardo Juliano that their salaries would be coursed through SSCP as per arrangement with PLDT, it does not state why they were not made to vacate their posts. Respondent said that it did not know why petitioners remained at their posts. In the ordinary course of things, responsible business owners or managers would not allow security guards of an agency with whom the owners or managers have severed ties with to continue to stay within the business premises. This is because upon the termination of the owners or managers agreement with the security agency, the agencys undertaking of liability for

any damage that the security guard would cause has already been terminated. Thus, in the event of an accident or otherwise damage caused by such security guards, it would be the business owners and/or managers who would be liable and not the agency. The business owners or managers would, therefore, be opening themselves up to liability for acts of security guards over whom the owners or managers allegedly have no control.

This, to our mind and under the circumstances, is sufficient to establish the existence of an employer-employee relationship. Such power of control has been explained as the right to control not only the end to be achieved but also the means to be used in reaching such end.[10] With the conclusion that respondent directed petitioners to remain at their posts and continue with their duties, it is clear that respondent exercised the power of control over them; thus, the existence of an employer-employee relationship. Jurisprudence is firmly settled that whenever the existence of an employment relationship is in dispute, four elements constitute the reliable yardstick: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the employees conduct. It is the so-called control test which constitutes the most important index of the existence of the employer-employee relationship that is, whether the employer controls or has reserved the right to control the employee not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished. Stated otherwise, an employer-employee relationship exists where the person for whom the services are performed reserves the right to control not only the end to be achieved but also the means to be used in reaching such end. Both the Labor Arbiter and NLRC found that respondent did not observe such due process requirements. Having failed to do so, respondent is guilty of illegal dismissal.

WHEREFORE, we SET ASIDE the CAs Decision and Resolution in CAG.R. SP No. 97398. We hereby REINSTATE the Labor Arbiters Decision dated and the NLRCs Resolutions dated and . PEOPLES BROADCASTING SERVICE (BOMBO RADYO PHILS., INC.), VS THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, THE REGIONAL DIRECTOR, DOLE REGION VII, and JANDELEON JUEZAN, Private respondent Jandeleon Juezan filed a complaint against petitioner with the Department of Labor and Employment (DOLE) Regional Office No. VII, Cebu City, for illegal deduction, nonpayment of service incentive leave, 13th month pay, premium pay for holiday and rest day and illegal diminution of benefits, delayed payment of wages and noncoverage of SSS, PAG-IBIG and Philhealth.After the conduct of summary investigations, and after the parties submitted their position papers, the DOLE Regional Director found that private respondent was an employee of petitioner, and was entitled to his money claims. Petitioner sought reconsideration of the Directors Order, but failed. The Acting DOLE Secretary dismissed petitioners appeal. When the matter was brought before the CA, where petitioner claimed that it had been denied due process, it was held that petitioner was accorded due process as it had been given the opportunity to be heard, and that the DOLE Secretary had jurisdiction over the matter, as the jurisdictional limitation imposed by Article 129 of the Labor Code on the power of the DOLE Secretary under Art. 128(b) of the Code had been repealed by Republic Act No. (RA) 7730.

In the Decision of this Court, the CA Decision was reversed and set aside, and the complaint against petitioner was dismissed. PAST RULING OF THE SUPREME COURT The Court found that there was no employer-employee relationship between petitioner and private respondent. The National Labor Relations Commission (NLRC) was held to be the primary agency in determining the existence of an employer-employee relationship. This was the interpretation of the Court of

the clause in cases where the relationship of employer-employee still exists in Art. 128(b). From this Decision, the Public Attorneys Office (PAO) filed a Motion for Clarification of Decision (with Leave of Court). The PAO sought to clarify as to when the visitorial and enforcement power of the DOLE be not considered as co-extensive with the power to determine the existence of an employeremployee relationship. It is apparent that there is a need to delineate the jurisdiction of the DOLE Secretary vis--vis that of the NLRC. Under Art. 129 of the Labor Code, the power of the DOLE and its duly authorized hearing officers to hear and decide any matter involving the recovery of wages and other monetary claims and benefits was qualified by the proviso that the complaint not include a claim for reinstatement, or that the aggregate money claims not exceed PhP 5,000. RA 7730, or anAct Further Strengthening the Visitorial and Enforcement Powers of the Secretary of Labor, did away with the PhP 5,000 limitation, allowing the DOLE Secretary to exercise its visitorial and enforcement power for claims beyond PhP 5,000. The only qualification to this expanded power of the DOLE was only that there still be an existing employer-employee relationship. It is conceded that if there is no employer-employee relationship, whether it has been terminated or it has not existed from the start, the DOLE has no jurisdiction. Under Art. 128(b) of the Labor Code, as amended by RA 7730, the first sentence reads, Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. It is clear and beyond debate that an employer-employee relationship must exist for the exercise of the visitorial and enforcement power of the DOLE. Issue: May the DOLE make a determination of whether or not an employeremployee relationship exists, and if so, to what extent? HELD: The first portion of the question must be answered in the affirmative.

The prior decision of this Court in the present case accepts such answer, but places a limitation upon the power of the DOLE, that is, the determination of the existence of an employer-employee relationship cannot be co-extensive with the visitorial and enforcement power of the DOLE. But even in conceding the power of the DOLE to determine the existence of an employeremployee relationship, the Court held that the determination of the existence of an employer-employee relationship is still primarily within the power of the NLRC, that any finding by the DOLE is merely preliminary. This conclusion must be revisited. No limitation in the law was placed upon the power of the DOLE to determine the existence of an employer-employee relationship. No procedure was laid down where the DOLE would only make a preliminary finding, that the power was primarily held by the NLRC. The law did not say that the DOLE would first seek the NLRCs determination of the existence of an employeremployee relationship, or that should the existence of the employer-employee relationship be disputed, the DOLE would refer the matter to the NLRC. The DOLE must have the power to determine whether or not an employeremployee relationship exists, and from there to decide whether or not to issue compliance orders in accordance with Art. 128(b) of the Labor Code, as amended by RA 7730. The use of the "four way test" is not solely limited to the NLRC. The DOLE Secretary, or his or her representatives, can utilize the same test, even in the course of inspection, making use of the same evidence that would have been presented before the NLRC. The expanded visitorial and enforcement power of the DOLE granted by RA 7730 would be rendered nugatory if the alleged employer could, by the simple expedient of disputing the employer-employee relationship, force the referral of the matter to the NLRC. But it is precisely the DOLE that will be faced with that evidence, and it is the DOLE that will weigh it, to see if the same does successfully refute the existence of an employer-employee relationship. If the DOLE makes a finding that there is an existing employer-employee relationship, it takes cognizance of the matter, to the exclusion of the NLRC. The DOLE would have no jurisdiction only if the employer-employee relationship has already been terminated, or it appears, upon review, that no employer-employee relationship existed in the first place.

The Court, in limiting the power of the DOLE, gave the rationale that such limitation would eliminate the prospect of competing conclusions between the DOLE and the NLRC. This is not to say that the determination by the DOLE is beyond question or review. Suffice it to say, there are judicial remedies such as a petition for certiorari under Rule 65 that may be availed of, should a party wish to dispute the findings of the DOLE. It must also be remembered that the power of the DOLE to determine the existence of an employer-employee relationship need not necessarily result in an affirmative finding. The DOLE may well make the determination that no employer-employee relationship exists, thus divesting itself of jurisdiction over the case. It must not be precluded from being able to reach its own conclusions, not by the parties, and certainly not by this Court. Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully empowered to make a determination as to the existence of an employeremployee relationship in the exercise of its visitorial and enforcement power, subject to judicial review, not review by the NLRC. To recapitulate, if a complaint is brought before the DOLE to give effect to the labor standards provisions of the Labor Code or other labor legislation, and there is a finding by the DOLE that there is an existing employeremployee relationship, the DOLE exercises jurisdiction to the exclusion of the NLRC. If the DOLE finds that there is no employer-employee relationship, the jurisdiction is properly with the NLRC. If a complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement, the jurisdiction is properly with the Labor Arbiter, under Art. 217(3) of the Labor Code, which provides that the Labor Arbiter has original and exclusive jurisdiction over those cases involving wages, rates of pay, hours of work, and other terms and conditions of employment, if accompanied by a claim for reinstatement. If a complaint is filed with the NLRC, and there is still an existing employeremployee relationship, the jurisdiction is properly with the DOLE. The findings of the DOLE, however, may still be questioned through a petition for certiorari under Rule 65 of the Rules of Court. In the present case, the finding of the DOLE Regional Director that there was an employer-employee relationship has been subjected to review by this

Court, with the finding being that there was no employer-employee relationship between petitioner and private respondent, based on the evidence presented. The DOLE had no jurisdiction over the case, as there was no employer-employee relationship present. Thus, the dismissal of the complaint against petitioner is proper. WHEREFORE, the Decision of this Court in G.R. No. 179652 is hereby AFFIRMED, with the MODIFICATIONthat in the exercise of the DOLEs visitorial and enforcement power, the Labor Secretary or the latters authorized representative shall have the power to determine the existence of an employer-employee relationship, to the exclusion of the NLRC. G.R. No. 170087 August 31, 2006 ANGELINA FRANCISCO, Petitioner,vs. NATIONAL LABOR RELATIONS COMMISSION, KASEI CORPORATION, SEIICHIRO TAKAHASHI, TIMOTEO ACEDO, DELFIN LIZA, IRENE BALLESTEROS, TRINIDAD LIZA and RAMON ESCUETA, Respondents. DECISION YNARES-SANTIAGO, J.:

In 1995, petitioner was hired by Kasei Corporation during its incorporation stage. She was designated as Accountant and Corporate Secretary and was assigned to handle all the accounting needs of the company. She was also designated as Liaison Officer to the City of Makati to secure business permits, construction permits and other licenses for the initial operation of the company. Although she was designated as Corporate Secretary, she was not entrusted with the corporate documents; neither did she attend any board meeting nor required to do so. She never prepared any legal document and never represented the company as its Corporate Secretary. However, on some occasions, she was prevailed upon to sign documentation for the company. 6

In 1996, petitioner was designated Acting Manager. The corporation also hired Gerry Nino as accountant in lieu of petitioner. As Acting Manager, petitioner was assigned to handle recruitment of all employees and perform management administration functions; represent the company in all dealings with government agencies, especially with the Bureau of Internal Revenue (BIR), Social Security System (SSS) and in the city government of Makati; and to administer all other matters pertaining to the operation of Kasei Restaurant which is owned and operated by Kasei Corporation. For five years, petitioner performed the duties of Acting Manager. As of December 31, 2000 her salary was P27,500.00 plus P3,000.00 housing allowance and a 10% share in the profit of Kasei Corporation. In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. Petitioner alleged that she was required to sign a prepared resolution for her replacement but she was assured that she would still be connected with Kasei Corporation. Timoteo Acedo, the designated Treasurer, announced that nothing had changed and that petitioner was still connected with Kasei Corporation as Technical Assistant to Seiji Kamura and in charge of all BIR matters. Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning January up to September 2001 for a total reduction of P22,500.00 as of September 2001. Petitioner was not paid her mid-year bonus allegedly because the company was not earning well. On October 2001, petitioner did not receive her salary from the company. On October 15, 2001, petitioner asked for her salary from Acedo and the rest of the officers but she was informed that she is no longer connected with the company. Since she was no longer paid her salary, petitioner did not report for work and filed an action for constructive dismissal before the labor arbiter. Private respondents averred that petitioner is not an employee of Kasei Corporation. They alleged that petitioner was hired in 1995 as one of its technical consultants on accounting matters and act concurrently as Corporate. Petitioner had no daily time record and she came to the office any time she wanted. The company never interfered with her work except that from time to time, the management would ask her opinion on matters relating to her profession.The money received by petitioner from the corporation was

her professional fee subject to the 10% expanded withholding tax on professionals, and that she was not one of those reported to the BIR or SSS as one of the companys employees. ISSUE: The core issues to be resolved in this case are (1) whether there was an employer-employee relationship between petitioner and private respondent Kasei Corporation; and if in the affirmative, (2) whether petitioner was illegally dismissed.

The Labor Arbiter found that petitioner, being an employee of the corporation was illegally dismissed ordering ordering respondents to reinstate complainant to her former position without loss of seniority rights and jointly and severally pay complainant her money The NLRC affirmed with modification the Decision of the Labor Arbiter with the awards representing moral and exemplary damages and 10% share in profit in the respective accounts of P100,000.00 and P361,175.00 are deleted. On appeal, the Court of Appeals reversed the NLRC decision and rendered dismissing the complaint filed by private respondent against Kasei Corporation, et al. for constructive dismissal. The appellate court denied petitioners motion for reconsideration, hence, the present recourse. SUPREME COURT: We held in Sevilla v. Court of Appeals that in this jurisdiction, there has been no uniform test to determine the existence of an employer-employee relation. Generally, courts have relied on the so-called right of control test where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end. However, in certain cases the control test is not sufficient to give a complete picture of the relationship between the parties, owing to the complexity of such a relationship where several positions have been held by the worker. There are instances when, aside from the employers power to control the employee with respect to the means and methods by which the work is to be

accomplished, economic realities of the employment relations help provide a comprehensive analysis of the true classification of the individual, whether as employee, independent contractor, corporate officer or some other capacity. The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employers power to control the employee with respect to the means and methods by which the work is to be accomplished; and (2) the underlying economic realities of the activity or relationship. This two-tiered test would provide us with a framework of analysis, which would take into consideration the totality of circumstances surrounding the true nature of the relationship between the parties. This is especially appropriate in this case where there is no written agreement or terms of reference to base the relationship on; and due to the complexity of the relationship based on the various positions and responsibilities given to the worker over the period of the latters employment. The control test initially found application in the case of Viaa v. Al-Lagadan and Piga, 19 and lately in Leonardo v. Court of Appeals, 20 where we held that there is an employer-employee relationship when the person for whom the services are performed reserves the right to control not only the end achieved but also the manner and means used to achieve that end. In Sevilla v. Court of Appeals, 21 we observed the need to consider the existing economic conditions prevailing between the parties, in addition to the standard of right-of-control like the inclusion of the employee in the payrolls, to give a clearer picture in determining the existence of an employer-employee relationship based on an analysis of the totality of economic circumstances of the worker. Thus, the determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity, 22 such as: (1) the extent to which the services performed are an integral part of the employers business; (2) the extent of the workers investment in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the workers opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight required for the success of the claimed independent enterprise; (6) the permanency and duration of the relationship between the worker and the employer; and (7) the degree of dependency of

the worker upon the employer for his continued employment in that line of business. 23 The proper standard of economic dependence is whether the worker is dependent on the alleged employer for his continued employment in that line of business. By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because she was under the direct control and supervision of Seiji Kamura, the corporations Technical Consultant. She reported for work regularly and served in various capacities as Accountant, Liaison Officer, Technical Consultant, Acting Manager and Corporate Secretary, with substantially the same job functions, that is, rendering accounting and tax services to the company and performing functions necessary and desirable for the proper operation of the corporation such as securing business permits and other licenses over an indefinite period of engagement. Under the broader economic reality test, the petitioner can likewise be said to be an employee of respondent corporation because she had served the company for six years before her dismissal, receiving check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses and allowances, as well as deductions and Social Security contributions from August 1, 1999 to December 18, 2000. It is therefore apparent that petitioner is economically dependent on respondent corporation for her continued employment in the latters line of business. In Domasig v. National Labor Relations Commission, 28 we held that in a business establishment, an identification card is provided not only as a security measure but mainly to identify the holder thereof as a bona fide employee of the firm that issues it. Together with the cash vouchers covering petitioners salaries for the months stated therein, these matters constitute substantial evidence adequate to support a conclusion that petitioner was an employee of private respondent. We likewise ruled in Flores v. Nuestro that a corporation who registers its workers with the SSS is proof that the latter were the formers employees. The coverage of Social Security Law is predicated on the existence of an employer-employee relationship.

Furthermore, the affidavit of Seiji Kamura dated December 5, 2001 has clearly established that petitioner never acted as Corporate Secretary and that her designation as such was only for convenience. The actual nature of petitioners job was as Kamuras direct assistant with the duty of acting as Liaison Officer in representing the company to secure construction permits, license to operate and other requirements imposed by government agencies. Petitioner was never entrusted with corporate documents of the company, nor required to attend the meeting of the corporation. She was never privy to the preparation of any document for the corporation, although once in a while she was required to sign prepared documentation for the company. 30 The second affidavit of Kamura dated March 7, 2002 which repudiated the December 5, 2001 affidavit has been allegedly withdrawn by Kamura himself from the records of the case. 31 Regardless of this fact, we are convinced that the allegations in the first affidavit are sufficient to establish that petitioner is an employee of Kasei Corporation. Based on the foregoing, there can be no other conclusion that petitioner is an employee of respondent Kasei Corporation. She was selected and engaged by the company for compensation, and is economically dependent upon respondent for her continued employment in that line of business. Her main job function involved accounting and tax services rendered to respondent corporation on a regular basis over an indefinite period of engagement. Respondent corporation hired and engaged petitioner for compensation, with the power to dismiss her for cause. More importantly, respondent corporation had the power to control petitioner with the means and methods by which the work is to be accomplished. The corporation constructively dismissed petitioner when it reduced her salary by P2,500 a month from January to September 2001. This amounts to an illegal termination of employment, where the petitioner is entitled to full backwages. Since the position of petitioner as accountant is one of trust and confidence, and under the principle of strained relations, petitioner is further entitled to separation pay, in lieu of reinstatement. 34

WHEREFORE, the petition is GRANTED. The Decision and Resolution of the Court of Appeals dated October 29, 2004 and October 7, 2005, respectively, in CA-G.R. SP No. 78515 are ANNULLED and SET ASIDE. The

Decision of the National Labor Relations Commission dated April 15, 2003 in NLRC NCR CA No. 032766-02, isREINSTATED. The case is REMANDED to the Labor Arbiter for the recomputation of petitioner Angelina Franciscos full backwages from the time she was illegally terminated until the date of finality of this decision, and separation pay representing one-half month pay for every year of service, where a fraction of at least six months shall be considered as one whole year. G.R. No. 192558 February 15, 2012 BITOY JAVIER (DANILO P. JAVIER), Petitioner, vs. FLY ACE CORPORATION/FLORDELYN CASTILLO, Respondents. MENDOZA, J.: Facts: Javier filed a complaint before the NLRC for underpayment of salaries and other labor standard benefits. He alleged that he was an employee of Fly Ace since September 2007, performing various tasks at the respondents warehouse such as cleaning and arranging the canned items before their delivery to certain locations, except in instances when he would be ordered to accompany the companys delivery vehicles, as pahinante; that he reported for work from Monday to Saturday from 7:00 oclock in the morning to 5:00 oclock in the afternoon; that during his employment, he was not issued an identification card and payslips by the company; that on May 6, 2008, he reported for work but he was no longer allowed to enter the company premises by the security guard upon the instruction of Ruben Ong (Mr. Ong), his superior. He discovered that Ong had been courting his daughter Annalyn after the two met at a fiesta celebration in Malabon City; that Annalyn tried to talk to Ong and convince him to spare her father from trouble but he refused to accede; that thereafter, Javier was terminated from his employment without notice; and that he was neither given the opportunity to refute the cause/s of his dismissal from work. To support his allegations, Javier presented an affidavit of one Bengie Valenzuela who alleged that Javier was a stevedore or pahinante of Fly Ace from September 2007 to January 2008. The said affidavit was subscribed before the Labor Arbiter (LA).7 For its part, Fly Ace averred that it was engaged in the business of importation and sales of groceries. Sometime in December 2007, Javier was

contracted by its employee, Mr. Ong, as extra helper on a pakyaw basis at an agreed rate of P 300.00 per trip, which was later increased to P 325.00 in January 2008. Mr. Ong contracted Javier roughly 5 to 6 times only in a month whenever the vehicle of its contracted hauler, Milmar Hauling Services, was not available. On April 30, 2008, Fly Ace no longer needed the services of Javier. Denying that he was their employee, Fly Ace insisted that there was no illegal dismissal.8 Fly Ace submitted a copy of its agreement with Milmar Hauling Services and copies of acknowledgment receipts evidencing payment to Javier for his contracted services bearing the words, "daily manpower (pakyaw/piece rate pay)" and the latters signatures/initials. On November 28, 2008, the LA dismissed the complaint for lack of merit on the ground that Javier failed to present proof that he was a regular employee of Fly Ace. Complainant has no employee ID showing his employment nor any document showing that he received the benefits accorded to regular employees of the Respondents. Respondent Fly Ace is not engaged in trucking business but in the importation and sales of groceries. Since there is a regular hauler to deliver its products, we give credence to Respondents claim that complainant was contracted on "pakiao" basis. On appeal with the NLRC, Javier was favored. It ruled that the LA skirted the argument of Javier and immediately concluded that he was not a regular employee simply because he failed to present proof. It was of the view that a pakyaw-basis arrangement did not preclude the existence of employeremployee relationship. "Payment by result x x x is a method of compensation and does not define the essence of the relation. It is a mere method of computing compensation, not a basis for determining the existence or absence of an employer-employee relationship.10 In this case, the NLRC held that substantial evidence was sufficient basis for judgment on the existence of the employer-employee relationship. Javier was a regular employee of Fly Ace because there was reasonable connection between the particular activity performed by the employee (as a "pahinante") in relation to the usual business or trade of the employer (importation, sales and delivery of groceries). He may not be considered as an independent contractor because he could not exercise any judgment in the delivery of company products. He was only engaged as a "helper." On March 18, 2010, the CA annulled the NLRC findings that Javier was indeed a former employee of Fly Ace and reinstated the dismissal of Javiers complaint as ordered by the LA. According to the CA: Before a case for illegal

dismissal can prosper, an employer-employee relationship must first be established. It is incumbent upon private respondent to prove the employeeemployer relationship by substantial evidence. It is incumbent upon private respondent to prove, by substantial evidence, that he is an employee of petitioners, but he failed to discharge his burden. The non-issuance of a company-issued identification card to private respondent supports petitioners contention that private respondent was not its employee.12 Issue: Whether or not Javier was a regular employee. Ruling: The Court affirms the assailed CA decision. Quantum of evidence. It must be noted that the issue of Javiers alleged illegal dismissal is anchored on the existence of an employer-employee relationship between him and Fly Ace. In dealing with factual issues in labor cases, "substantial evidence that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion is sufficient."27 As the records bear out, the LA and the CA found Javiers claim of employment with Fly Ace as wanting and deficient. The Court is constrained to agree. Although Section 10, Rule VII of the New Rules of Procedure of the NLRC28 allows a relaxation of the rules of procedure and evidence in labor cases, this rule of liberality does not mean a complete dispensation of proof. Labor officials are enjoined to use reasonable means to ascertain the facts speedily and objectively with little regard to technicalities or formalities but nowhere in the rules are they provided a license to completely discount evidence, or the lack of it. The quantum of proof required, however, must still be satisfied. Accordingly, the petitioner needs to show by substantial evidence that he was indeed an employee of the company against which he claims illegal dismissal. No particular form of evidence is required to prove the existence of such employer-employee relationship. Any competent and relevant evidence to prove the relationship may be admitted. Hence, while no particular form of evidence is required, a finding that such relationship exists must still rest on

some substantial evidence. Moreover, the substantiality of the evidence depends on its quantitative as well as its qualitative aspects."30 Although substantial evidence is not a function of quantity but rather of quality, the x x x circumstances of the instant case demand that something more should have been proffered. Had there been other proofs of employment, such as x x x inclusion in petitioners payroll, or a clear exercise of control, the Court would have affirmed the finding of employer-employee relationship."31 In sum, the rule of thumb remains: the onus probandi falls on petitioner to establish or substantiate such claim by the requisite quantum of evidence.32 "Whoever claims entitlement to the benefits provided by law should establish his or her right thereto x x x."33 Sadly, Javier failed to adduce substantial evidence as basis for the grant of relief. In this case, the LA and the CA both concluded that Javier failed to establish his employment with Fly Ace. By way of evidence on this point, all that Javier presented were his self-serving statements purportedly showing his activities as an employee of Fly Ace. Clearly, Javier failed to pass the substantiality requirement to support his claim. Hence, the Court sees no reason to depart from the findings of the CA. The lone affidavit executed by one Bengie Valenzuela was unsuccessful in strengthening Javiers cause. In said document, all Valenzuela attested to was that he would frequently see Javier at the workplace where the latter was also hired as stevedore.34 Certainly, in gauging the evidence presented by Javier, the Court cannot ignore the inescapable conclusion that his mere presence at the workplace falls short in proving employment therein. E-E Relationship The Court is of the considerable view that on Javier lies the burden to pass the well-settled tests to determine the existence of an employer-employee relationship, viz: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employees conduct. Of these elements, the most important criterion is whether the employer controls or has reserved the right to control the employee not only as to the result of the work but also as to the means and methods by which the result is to be accomplished.35 In this case, Javier was not able to persuade the Court that the above elements exist in his case.1avvphi1 He could not submit competent proof that Fly Ace

engaged his services as a regular employee; that Fly Ace paid his wages as an employee, or that Fly Ace could dictate what his conduct should be while at work. In other words, Javiers allegations did not establish that his relationship with Fly Ace had the attributes of an employer-employee relationship on the basis of the above-mentioned four-fold test. Worse, Javier was not able to refute Fly Aces assertion that it had an agreement with a hauling company to undertake the delivery of its goods. It was also baffling to realize that Javier did not dispute Fly Aces denial of his services exclusivity to the company. In short, all that Javier laid down were bare allegations without corroborative proof.

G.R. No. 184885 March 7, 2012 ERNESTO G. YMBONG, Petitioner, vs. ABS-CBN BROADCASTING CORPORATION, VENERANDA SY AND DANTE LUZON, Respondents. VILLARAMA, JR., J.: Facts: Ymbong started working for ABS- in 1993 at its regional station in Cebu as a television talent, co-anchoring Hoy Gising and TV Patrol Cebu. His stint in ABS-CBN later extended to radio DYAB in 1995 where he worked as drama and voice talent, spinner, scriptwriter and public affairs program anchor. Like Ymbong, Leandro Patalinghug also worked for ABS-CBN Cebu. Starting 1995, he worked as talent, director and scriptwriter for various radio programs aired over DYAB. In 1996, ABS-CBN Head Office in Manila issued Policy regarding Employees Seeking Public Office." The pertinent portions read: Any employee who intends to run for any public office position, must file his/her letter of resignation, at least thirty (30) days prior to the official filing of the certificate of candidacy either for national or local election. X X X X X Further, any employee who intends to join a political group/party or even with no political affiliation but who intends to openly and aggressively campaign for a candidate or group of candidates (e.g. publicly speaking/endorsing candidate, recruiting campaign workers, etc.) must file a request for leave of absence subject to managements approval. For this particular reason, the employee should file the leave request at least thirty (30) days prior to the start of the planned leave period. Because of the impending May 1998 elections and based on his immediate recollection of the policy at that time, Dante Luzon, Assistant Station Manager of DYAB issued the following memorandum on March 25, 1998: Please be informed that per company policy, any employee/talent who wants to run for any position in the coming election will have to file a leave of absence the moment he/she files his/her certificate of candidacy. The services rendered by the concerned employee/talent to this company will then be temporarily suspended for the entire campaign/election period. For strict compliance. Luzon, however, admitted that upon double-checking of the

exact text of the policy, he saw that the policy actually required suspension for those who intend to campaign for a political party or candidate and resignation for those who will actually run in the elections. Luzon claims that Ymbong told him that he would leave radio for a couple of months because he will campaign for the administration ticket. It was only after the elections that they found out that Ymbong actually ran for public office himself at the eleventh hour. Ymbong claims that in accordance with the Memorandum, he informed Luzon through a letter that he would take a few months leave of absence from March 8, 1998 to May 18, 1998 since he was running for councilor of Lapu-Lapu City. As regards Patalinghug, Patalinghug approached Luzon and advised him that he will run as councilor for Naga, Cebu. According to Luzon, he clarified to Patalinghug that he will be considered resigned and not just on leave once he files a certificate of candidacy. Unfortunately, both Ymbong and Patalinghug lost in the May 1998 elections. Later, Ymbong and Patalinghug both tried to come back to ABS-CBN Cebu. According to Luzon, he informed them that they cannot work there anymore because of company policy not allowing any exceptions. ABS-CBN, however, agreed out of pure liberality to give them a chance to wind up their participation in the radio drama. The agreed winding-up, however, dragged on for so long prompting Luzon to issue to Ymbong the following memorandum dated September 14, 1998: Please be reminded that your services as drama talent had already been automatically terminated when you ran for a local government position last election. The Management however gave you more than enough time to end your drama participation and other involvement with the drama department. It has been decided therefore that all your drama participation shall be terminated effective immediately. Ymbong in contrast contended that after the expiration of his leave of absence, he reported back to work as a regular talent and in fact continued to receive his salary. On September 14, 1998, he received a memorandum stating that his services are being terminated immediately, much to his surprise. Thus, he filed an illegal dismissal complaint8 against ABS-CBN, Luzon and DYAB Station Manager Veneranda Sy. Patalinghug likewise filed an illegal dismissal complaint10 against ABS-CBN.

ABS-CBN prayed for the dismissal of the complaints arguing that there is no employer-employee relationship between the company and Ymbong and Patalinghug. 11 On 1999, the Labor Arbiter rendered a decision12 finding the dismissal of Ymbong and Patalinghug illegal. The Labor Arbiter found that there exists an employer-employee relationship between ABS-CBN and Ymbong and Patalinghug considering the stipulations in their appointment letters/talent contracts. The Labor Arbiter noted particularly that the appointment letters/talent contracts imposed conditions in the performance of their work, specifically on attendance and punctuality, which effectively placed them under the control of ABS-CBN. On March 8, 2004, the NLRC rendered a decision17 modifying the labor arbiters decision: Ordering ABS-CBN to reinstate Ymbong and to pay his full backwages. The NLRC also held that ABS-CBN wielded the power of control over Ymbong and Patalinghug, thereby proving the existence of an employer-employee relationship between them. On August 22, 2007, the CA rendered the assailed decision reversing and setting aside the March 8, 2004 Decision and June 21, 2004 Resolution of the NLRC. The CA declared Ymbong resigned from employment and not to have been illegally dismissed. The CA ruled that ABS-CBN is estopped from claiming that Ymbong was not its employee after applying the provisions of Policy to him. It noted that said policy is entitled "Policy on Employees Seeking Public Office" and the guidelines contained therein specifically pertain to employees and did not even mention talents or independent contractors. By applying the subject company policy on Ymbong, ABS-CBN had explicitly recognized him to be an employee and not merely an independent contractor. Issue: (1) whether Policy No. HR-ER-016 is valid; (2) whether the March 25, 1998 Memorandum issued by Luzon superseded Policy No. HR-ER-016; and (3) whether Ymbong, by seeking an elective post, is deemed to have resigned and not dismissed by ABS-CBN. Policy No. HR-ER-016 is valid.

ABS-CBN had a valid justification for Policy No. HR-ER-016. Its rationale is embodied in the policy itself, to wit: ABS-CBN strongly believes that it is to the best interest of the company to continuously remain apolitical. While it encourages and supports its employees to have greater political awareness and for them to exercise their right to suffrage, the company, however, prefers to remain politically independent and unattached to any political individual or entity. Therefore, employees who [intend] to run for public office or accept political appointment should resign from their positions, in order to protect the company from any public misconceptions. To preserve its objectivity, neutrality and credibility, the company reiterates the following policy guidelines for strict implementation. We have consistently held that so long as a companys management prerogatives are exercised in good faith for the advancement of the employers interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, this Court will uphold them. ABS-CBN is well within its rights to ensure that it maintains its objectivity and credibility and freeing itself from any appearance of impartiality so that the confidence of the viewing and listening public in it will not be in any way eroded. Even as the law is solicitous of the welfare of the employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied.361wphi1 Policy No. HR-ER-016 was not superseded by the March 25, 1998 Memorandum The CA correctly ruled that though Luzon has policy-making powers in relation to his principal task of administering the networks radio station in the Cebu region, the exercise of such power should be in accord with the general rules and regulations imposed by the ABS-CBN Head Office to its employees. Clearly, the March 25, 1998 Memorandum issued by Luzon which only requires employees to go on leave if they intend to run for any elective position is in absolute contradiction with Policy No. HR-ER-016 issued by the ABS-CBN Head Office in Manila which requires the resignation, not only the filing of a leave of absence, of any employee who intends to run for public office. Having been issued beyond the scope of his authority, the March 25, 1998 Memorandum is therefore void and did not supersede Policy No. HRER-016.

Ymbong is deemed resigned when he ran for councilor. He was separated from ABS-CBN not because he was dismissed but because he resigned. Since there was no termination to speak of, the requirement of due process in dismissal cases cannot be applied to Ymbong. Thus, ABS-CBN is not duty-bound to ask him to explain why he did not tender his resignation before he ran for public office as mandated by the subject company policy. In addition, we do not subscribe to Ymbongs claim that he was not in a position to know which of the two issuances was correct. Ymbong is fully aware that the subsisting policy is Policy No. HR-ER-016 and not the March 25, 1998 Memorandum for he only told the latter that he will only campaign for the administration ticket and not actually run for an elective post. Moreover, as pointed out by ABS-CBN, had Ymbong been truthful to his superiors, they would have been able to clarify to him the prevailing company policy and inform him of the consequences of his decision in case he decides to run, as Luzon did in Patalinghugs case. Petition for review on certiorari is DENIED for lack of merit.

G.R. No. 138051 June 10, 2004 JOSE Y. SONZA, petitioner, vs. ABS-CBN BROADCASTING CORPORATION, respondent. CARPIO, J.: FACTS: In May 1994, respondent ABS-CBN signed an Agreement with the Mel and Jay Management and Development Corporation(MJMDC) represented by Jose Y. Sonza and Carmela Tiangco. Referred to in the Agreement as AGENT, MJMDC agreed to provide SONZAs services exclusively to ABSCBN as talent for radio and television. On 1 April 1996, SONZA wrote a letter to ABS-CBNs President, Eugenio Lopez III, saying that he irrevocably resigns in view of recent events concerning his programs and career. The acts of the station are violative of the Agreement and said letter will serve as notice of rescission of said contract. The letter also contained the waiver and renunciation for recovery of the remaining amount stipulated but reserves the right to seek recovery of the other benefits under said Agreement. On 30 April 1996, SONZA filed a complaint against ABS-CBN before the DOLE- NCR Q.C.. SONZA complained for none payment of his salaries, separation pay, service incentive leave pay, 13th month pay, signing bonus, travel allowance and amounts due under the Employees Stock Option Plan (ESOP). ABSCBN filed a Motion to Dismiss on the ground that no employee-employer relationship existed between the parties. The Labor Arbiter denied the motion to dismiss by respondents but later dismissed the complaint for lack of jurisdiction. SONZA appealed to the NLRC but it affirmed the Labor Arbiters decision. SONZA filed a motion for reconsideration, which the NLRC also denied. The Court of Appeals affirmed the Decision. Hence, this petition. ISSUE Whether or not there exist an employer-employee relationship between Sonza and ABS-CBN. HELD

There is no employer-employee relationship between Sonza and ABS-CBN. The specific selection and hiring of SONZA, because of his unique skills, talent and celebrity status not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an independent contractual relationship. Applying the control test, SONZA is not an employee but an independent contractor. The clear implication is that SONZA had a free hand on what to say or discuss in his shows provided he did not attack ABS-CBN or its interests. ABS-CBNs control was limited only to the result of SONZAs work, whether to broadcast the final product or not. The records do not show that ABS-CBN exercised any supervision and control over how SONZA utilized his skills and talent in his shows. Even an independent contractor can validly provide his services exclusively to the hiring party. In the broadcast industry, exclusivity is not necessarily the same as control. The right to life and livelihood guarantees this freedom to contract as independent contractors. The right of labor to security of tenure cannot operate to deprive an individual, possessed with special skills, expertise and talent, of his right to contract as an independent contractor. An individual like an artist or talent has a right to render his services without any one controlling the means and methods by which he performs his art or craft. If radio and television program hosts can render their services only as employees, the station owners and managers can dictate to the radio and television hosts what they say in their shows. This is not conducive to freedom of the press. SONZAs claims are all based on the May 1994 Agreement and stock option plan, and not on the Labor Code. Clearly, the present case does not call for an application of the Labor Code provisions but an interpretation and implementation of the May 1994 Agreement. In effect, SONZAs cause of action is for breach of contract which is intrinsically a civil dispute cognizable by the regular courts.

G.R. No. 126297 February 11, 2008 PROFESSIONAL SERVICES, INC., petitioner, vs. THE COURT OF APPEALS and NATIVIDAD and ENRIQUE AGANA, respondents, x- - - - - - - - - - - - - - - - - - - - - - - - - - - - x G.R. No. 126467 February 11, 2008 NATIVIDAD (Substituted by her children MARCELINO AGANA III, ENRIQUE AGANA, JR., EMMA AGANA ANDAYA, JESUS AGANA, and RAYMUND AGANA) and ENRIQUE AGANA, petitioners, vs. THE COURT OF APPEALS and JUAN FUENTES, respondents, x- - - - - - - - - - - - - - - - - - - - - - - - - - - - x G.R. No. 127590 February 11, 2008 MIGUEL AMPIL, petitioner, vs. THE COURT OF APPEALS and NATIVIDAD AGANA and ENRIQUE AGANA, respondents. RESOLUTION SANDOVAL-GUTIERREZ, J.: FACTS: Natividad Agana was admitted at the Medical City General Hospital (Medical City) because of difficulty of bowel movement and bloody anal discharge. Dr. Ampil diagnosed her to be suffering from "cancer of the sigmoid." Thus, Dr. Ampil performed an anterior resection surgery upon her. During the surgery, he found that the malignancy had spread to her left ovary, necessitating the removal thus, Dr. Ampil obtained the consent of Atty. Enrique Agana, Natividads husband, to permit Dr. Juan Fuentes to perform hysterectomy upon Natividad.

After a couple of days, Natividad complained of excruciating pain in her anal region. Dr. Ampil and Dr. Fuentes told her that the pain was the natural consequence of the surgical operation. Natividad, accompanied by her husband, went to the United States to seek further treatment. After four (4) months of consultations and laboratory examinations, Natividad was told that she was free of cancer. Natividad flew back to the Philippines, still suffering from pains. Two (2) weeks thereafter, her daughter found a piece of gauze protruding from her vagina. Dr. Ampil managed to extract by hand a piece of gauze then assured Natividad that the pains would soon vanish but it intensified which prompting Natividad to seek treatment at the Polymedic General Hospital. Dr. Gutierrez found that the gauze had badly infected her vaginal vault. Another surgical operation was needed to remedy the situation. On November 12, 1984, Natividad and her husband filed with the RTC a complaint for damages against PSI (owner of Medical City), Dr. Ampil and Dr. Fuentes. On February 16, 1986, pending the outcome of the above case, Natividad died. The trial court rendered judgment in favor of spouses Agana finding PSI, Dr. Ampil and Dr. Fuentes jointly and severally liable. On appeal, the Court of Appeals, in its Decision dated September 6, 1996, affirmed the assailed judgment with modification in the sense that the complaint against Dr. Fuentes was dismissed. Issue: Whether or not there exist an employer-employee relationship. Ruling: The motion lacks merit. The First Division ruled that an employer-employee relationship "in effect" exists between the Medical City and Dr. Ampil. Consequently, both are jointly and severally liable to the Aganas. This ruling proceeds from the following ratiocination in Ramos: XXX In the first place, hospitals exercise significant control in the hiring and firing of consultants and in the conduct of their work within the hospital

premises. Doctors who apply for "consultant" slots, visiting or attending, are required to submit proof of completion of residency, their educational qualifications; generally, evidence of accreditation by the appropriate board (diplomate), evidence of fellowship in most cases, and references. These requirements are carefully scrutinized by members of the hospital administration or by a review committee set up by the hospital who either accept or reject the application. This is particularly true with respondent hospital. After a physician is accepted, either as a visiting or attending consultant, he is normally required to attend clinico-pathological conferences, conduct bedside rounds for clerks, interns and residents, moderate grand rounds and patient audits and perform other tasks and responsibilities, for the privilege of being able to maintain a clinic in the hospital, and/or for the privilege of admitting patients into the hospital. In addition to these, the physicians performance as a specialist is generally evaluated by a peer review committee on the basis of mortality and morbidity statistics, and feedback from patients, nurses, interns and residents. A consultant remiss in his duties, or a consultant who regularly falls short of the minimum standards acceptable to the hospital or its peer review committee, is normally politely terminated. In other words, private hospitals hire, fire and exercise real control over their attending and visiting "consultant" staff. While "consultants" are not, technically employees, a point which respondent hospital asserts in denying all responsibility for the patients condition, the control exercised, the hiring, and the right to terminate consultants all fulfill the important hallmarks of an employer-employee relationship, with the exception of the payment of wages. In assessing whether such a relationship in fact exists, the control test is determining. Accordingly, on the basis of the foregoing, we rule that for the purpose of allocating responsibility in medical negligence cases, an employer-employee relationship in effect exists between hospitals and their attending and visiting physicians. This being the case, the question now arises as to whether or not respondent hospital is solidarily liable with respondent doctors for petitioners condition. The basis for holding an employer solidarily responsible for the negligence of its employee is found in Article 2180 of the Civil Code which considers a person accountable not only for his own acts but also

for those of others based on the formers responsibility under a relationship of partia ptetas. Clearly, in Ramos, the Court considered the peculiar relationship between a hospital and its consultants on the bases of certain factors. One such factor is the "control test" wherein the hospital exercises control in the hiring and firing of consultants, like Dr. Ampil, and in the conduct of their work. Actually, contrary to PSIs contention, the Court did not reverse its ruling in Ramos. What it clarified was that the De Los Santos Medical Clinic did not exercise control over its consultant, hence, there is no employer-employee relationship between them. Thus, despite the granting of the said hospitals motion for reconsideration, the doctrine in Ramos stays, i.e., for the purpose of allocating responsibility in medical negligence cases, an employer-employee relationship exists between hospitals and their consultants. In the instant cases, PSI merely offered a general denial of responsibility, maintaining that consultants, like Dr. Ampil, are "independent contractors," not employees of the hospital. Even assuming that Dr. Ampil is not an employee of Medical City, but an independent contractor, still the said hospital is liable to the Aganas. LABOR DISPUTE CITIBANK, N.A., petitioner, vs. COURT OF APPEALS and CITI-BANK INTEGRATED GUARDS LABOR ALLIANCE (CIGLA) SEGA-TUPAS/FSM LOCAL CHAPTER No. 1394, respondents. In 1983, Citibank and El Toro Security Agency, Inc. (hereafter El Toro) entered into a contract for the latter to provide security and protective services to safeguard and protect the bank's premises, Under the contract, El Toro obligated itself to provide the services of security guards to safeguard and protect the premises and property of Citibank against theft, robbery or any other unlawful acts committed by any person and assumed responsibility for losses and damages that may be incurred by Citibank due to the negligence of El Toro or any of its Aassigned personnel.

Citibank renewed the security contract with El Toro yearly until 1990. On April 22, 1990, the contract between Citibank and El Toro expired. On June 7, 1990, respondent Citibank Integrated Guards Labor Alliance-SEGA-TUPAS/FSM (hereafter CIGLA) filed with the National Conciliation and Mediation Board (NCMB) a request for preventive mediation citing Citibank as respondent therein giving as issues for preventive mediation the following: a) Unfair labor practice;b) Dismissal of union officers/members; and c) Union bust. On June 10, 1990, petitioner Citibank served on El Toro a written notice that the bank would not renew anymore the service agreement with the latter. Simultaneously, Citibank hired another security agency, the Golden Pyramid Security Agency, to render security services at Citibank's premises. June 10, 1990, respondent CIGLA filed a manifestation with the NCMB that it was converting its request for preventive mediation into a notice of strike for failure of the parties to reach a mutually acceptable settlement of the issues On June 11, 1990, security guards of El Toro who were replaced by guards of the Golden Pyramid Security Agency considered the nonrenewal of El Toro's service agreement with Citibank as constituting a lockout and/or a mass dismissal security guards formerly assigned to Citibank under the expired agreement loitered around and near the Citibank premises in large groups of from twenty (20) and at times fifty (50) persons Faced with the prospect of disruption of its business operations, on June 5, 1990, petitioner Citibank filed with the Regional Trial Court Makati, a complaint for injunction and damages. 5 The complaint sought to enjoin CIGLA and any person claiming membership therein from striking or otherwise disrupting the operations of the bank. June 18, 1990, respondent CIGLA filed with the trial court a motion to dismiss the complaint alleging that:a)The Court had no jurisdiction, this being labor dispute;b)The guards were employees of the bank;c)There were pending cases/labor disputes between the guards and the bank at the different agencies of the Department of Labor and Employment (DOLE);d) The bank was guilty of forum shopping in filing the complaint with the RTC after submitting itself voluntarily to the jurisdiction of the different agencies of the DOLE.

the trial court denied respondent CIGLA's motion to dismiss. CIGLA then filed a motion for recon of such order with the same court. Trial court denied again said motion. Subsequently, respondent CIGLA filed with the trial court its answer to the complaint, and averred as special and affirmative defense lack of jurisdiction of the court over the subject matter of the case. Said court denied said motion. On May 24, 1991, respondent CIGLA filed with the Court of Appeals a petition for certiorari with preliminary injunction. the Court of Appeals promulgated its decision in CIGLA's favor, On April 29, 1992, petitioner Citibank filed a motion for reconsideration of the decision. On February 12, 1993, the Court of Appeals denied the motion, finding that the arguments in the motion for reconsideration are but a rehash, Hence, the petitioner's recourse to this Court ISSUES: 1. whether it is the labor tribunal or the regional trial court that has jurisdiction over the subject matter of the complaint filed by Citibank with the trial court. 2. Is there a labor dispute between Citibank and the security guards, members of respondent CIGLA, regardless of whether they stand in the relation of employer and employees? HELD: 1) This Court has held in many cases that "in determining the existence of an employer-employee relationship, the following elements are generally considered: 1) the selection and engagement of the employee; 2) the payment of wages; 3) the power of dismissal; and 4) the employer's power to control the employee with respect to the means and methods by which the work is to be accomplished".It has been decided also that the Labor Arbiter has no jurisdiction over a claim filed where no employer-employee relationship existed between a company and the security guards assigned to it by a security service contractor.In this case, it was the security agency El Toro that recruited, hired and assigned the watchmen to their place of work. It was the security agency that was answerable to Citibank for the conduct of its guards.

2) Article 212, paragraph 1 of the Labor Code provides the definition of a "labor dispute". It "includes any controversy or matter concerning terms or conditions of employment or the association or representation of persons in negotiating, fixing, maintaining, changing or arranging the terms and conditions of employment, regardless of whether the disputants stand in the proximate relation of employer and employee. If at all, the dispute between Citibank and El Toro security agency is one regarding the termination or non-renewal of the contract of services. This is a civil dispute. El Toro was an independent contractor. Thus, no employeremployee relationship existed between Citibank and the security guard members of the union in the security agency who were assigned to secure the bank's premises and property. Hence, there was no labor dispute and no right to strike against the bank. It is a basic rule of procedure that "jurisdiction of the court over the subject matter of the action is determined by the allegations of the complaint, irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein. The jurisdiction of the court can not be made to depend upon the defenses set up in the answer or upon the motion to dismiss, for otherwise, the question of jurisdiction would almost entirely depend upon the defendant." On the basis of the allegations of the complaint, it is safe to conclude that the dispute involved is a civil one, not a labor dispute.Consequently, we rule that jurisdiction over the subject matter of the complaint lies with the regional trial court. PHILIPPINE AIRLINES, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, FERDINAND PINEDA and GOGFREDO CABLING, respondents. Private respondents are flight stewards of the petitioner. Both were dismissed from the service for their alleged involvement in the April 3, 1993 currency smuggling in Hong Kong. on April 15, 1993, the petitioners were instructed to attend an investigation by respondent's "Security and Fraud Prevention SubDepartment" regarding an April 3, 1993 incident in Hongkong at which Joseph Abaca, respondent's Avionics Mechanic in Hongkong "was

intercepted by the Hongkong Airport Police at Gate 05 the ramp area of the Kai TakInternational Airport while about to exit said gate carrying a bag said to contain some 2.5 million pesos in Philippine Currencies at the Police Station. Mr. Abaca claimed that he just found said plastic bag at the Skybed Section of the arrival flight where petitioners served as flight stewards of said flight the petitioners sought "a more detailed account of what this HKG incident is all about"; but instead, the petitioners were administratively charged, "a hearing" on which "did not push through" until almost two (2) years after, "Mr. Joseph Abaca finally gave exculpating statements to the board in that he cleared petitioners from any participation or from being the owners of the currencies, and at which hearing Mr. Joseph Abaca volunteered the information that the real owner of said money as petitioners "thought that they were already fully cleared of the charges, as they no longer received any summons/notices on the intended "additional hearings" mandated by the Disciplinary Board," they were surprised to receive "on February 23, 1995. . . a Memorandum dated February 22, 1995" terminating their services for alleged violation of respondent's Code of Discipline "effective immediately"; Aggrieved by said dismissal, private respondents filed with the NLRC a petition 1for injunction which prays for reinstatement of private respondents; award of full backwages, moral and exemplary damages; and attorney's fees On April 3, 1995, the NLRC issued a temporary mandatory injunction 2 enjoining petitioner to cease and desist from enforcing its February 22, 1995 Memorandum of dismissal. On May 4, 1995, petitioner moved for reconsideration on the ground that the NLRC erred in granting a temporary injunction order when it has no jurisdiction to issue an injunction or restraining order since this may be issued only under Article 218 of the Labor Code if the case involves or arises from labor disputes; such is denied by the NLRC ruling that: they have jurisdiction and that what we have here is not a labor dispute as long as it concedes that as defined by law, a" (l) "Labor Dispute" includes any controversy or matter concerning terms or conditions of employment.

ISSUE: Can the National Labor Relations Commission (NLRC), even without a complaint for illegal dismissal tiled before the labor arbiter, entertain an

action for injunction and issue such writ enjoining petitioner Philippine Airlines, inc. from enforcing its Orders of dismissal against private respondents, and ordering petitioner to reinstate the private respondents to their previous positions? HELD: NOTHE power of the NLRC to issue an injunctive writ originates from "any labor dispute" upon application by a party thereof, which application if not granted "may cause grave or irreparable damage to any party or render ineffectual any decision in favor of such party." The term "labor dispute" is defined as "any controversy or matter concerning terms and conditions of employment or the association or representation of persons in negotiating, fixing. maintaining, changing, or arranging the terms and conditions of employment regardless of whether or not the disputants stand in the proximate relation of employers and employees." 8 The term "controversy" is likewise defined as "a litigated question; adversary proceeding in a court of law; a civil action or suit, either at law or in equity; a justiciable dispute." 9 A "justiciable controversy" is "one involving an active antagonistic assertion of a legal right on one side and a denial thereof on the other concerning a real, and not a mere theoretical question or issue." 10 Taking into account the foregoing definitions, it is an essential requirement that there must first be a labor dispute between the contending parties before the labor arbiter. In the present case, there is no labor dispute between the petitioner and private respondents as there has yet been no complaint for illegal dismissal filed with the labor arbiter by the private respondents against the petitioner. The petition for injunction directly filed before the NLRC is in reality an action for illegal dismissal. This is clear from the allegations in the petition which prays for; reinstatement of private respondents; award of full backwages, moral and exemplary damages; and attorney's fees. As such, the petition should have been filed with the labor arbiter who has the original and exclusive jurisdiction to hear and decide the cases involving all workers, whether agricultural or non-agricultural. The jurisdiction conferred by the foregoing legal provision to the labor arbiter is both original and exclusive, meaning, no other officer or tribunal can take cognizance of, hear and decide any of the cases therein enumerated. The

only exceptions are where the Secretary of Labor and Employment or the NLRC exercises the power of compulsory arbitration, or the parties agree to submit the matter to voluntary arbitration pursuant to Article 263 (g) of the Labor Code. On the other hand, the NLRC shall have exclusive appellate jurisdiction over all cases decided by labor arbiters as provided in Article 217(b) of the Labor Code. In short, the jurisdiction of the NLRC in illegal dismissal cases is appellate in nature and, therefore, it cannot entertain the private respondents' petition for injunction which challenges the dismissal orders of petitioner. Article 218(e) of the Labor Code does not provide blanket authority to the NLRC or any of its divisions to issue writs of injunction, considering that Section 1 of Rule XI of the New Rules of Procedure of the NLRC makes injunction only an ancillary remedy in ordinary labor disputes Finally, an injunction, as an extraordinary remedy, is not favored in labor law considering that it generally has not proved to be an effective means of settling labor disputes. 20 It has been the policy of the State to encourage the parties to use the non-judicial process of negotiation and compromise, mediation and arbitration. 21 Thus, injunctions may be issued only in cases of extreme necessity based on legal grounds clearly established, after due consultations or hearing and when all efforts at conciliation are exhausted which factors, however, are clearly absent in the present case. MANAGERIAL EMPLOYEE CHARLITO PEARANDA, Petitioner, vs. BAGANGA PLYWOOD CORPORATION and HUDSON CHUA, Respondents. Doctrine: Managerial employees and members of the managerial staff are exempted from the provisions of the Labor Code on labor standards. Since petitioner belongs to this class of employees, he is not entitled to overtime pay and premium pay for working on rest days. Facts: CharlitoPearanda was hired as an employee of Baganga Plywood Corporation (BPC)

Pearanda filed a Complaint for illegal dismissal with money claims against BPC and its general manager, Hudson Chua, before the NLRC.7 After the parties failed to settle amicably, the labor arbiter8 directed the parties to file their position papers and submit supporting documents. Penarandaalleges that his services were terminated without the benefit of due process and valid grounds in accordance with law. Penaranda also claim that he was not paid his overtime pay, premium pay for working during holidays/rest days, night shift differentials and finally claims for payment of damages and attorneys fees having been forced to litigate the present complaint. Respondents allege that complainants separation from service was done pursuant to Art. 283 of the Labor Code. BPC was on temporary closure due to repair and general maintenance and it applied for clearance with the Department of Labor and Employment to shut down and to dismiss employees .When BPC partially reopened Pearandafailed to reapply Ruling of Labor Arbiter : The labor arbiter ruled that there was no illegal dismissal and that petitioners Complaint was premature because he was still employed by BPC.11 The temporary closure of BPCs plant did not terminate his employment, hence, he need not reapply when the plant reopened. the labor arbiter found petitioner entitled to overtime pay, premium pay for working on rest days, and attorneys fees in the total amount of P21,257.98. Ruling of NLRC:Respondents filed an appeal to the NLRC, which deleted the award of overtime pay and premium pay for working on rest days. According to the Commission, petitioner was not entitled to these awards because he was a managerial employee.14 Ruling of CA: CA denied reconsideration on the ground that petitioner still failed to submit the pleadings filed before the NLRC. ISSUE: Whether petitioner was not a managerial employee, and therefore, entitled to the award granted by the labor arbiter. RULING: Article 82 of the Labor Code exempts managerial employees from the coverage of labor standards. Labor standards provide the working conditions of employees, including entitlement to overtime pay and premium pay for working on rest days.29 Under this provision, managerial employees are

"those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision." The Court disagrees with the NLRCs finding that petitioner was a managerial employee. However, petitioner was a member of the managerial staff, which also takes him out of the coverage of labor standards. Like managerial employees, officers and members of the managerial staff are not entitled to the provisions of law on labor standards.32 The Implementing Rules of the Labor Code define members of a managerial staff as those with the following duties and responsibilities: "(1) The primary duty consists of the performance of work directly related to management policies of the employer; "(2) Customarily and regularly exercise discretion and independent judgment; "(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof; or (ii) execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or (iii) execute under general supervision special assignments and tasks; and "(4) who do not devote more than 20 percent of their hours worked in a workweek to activities which are not directly and closely related to the performance of the work described in paragraphs (1), (2), and (3) above."33 Petitioner supervised the engineering section of the steam plant boiler. His work involved overseeing the operation of the machines and the performance of the workers in the engineering section. This work necessarily required the use of discretion and independent judgment to ensure the proper functioning of the steam plant boiler. As supervisor, petitioner is deemed a member of the managerial staff.35

On the basis of the foregoing, the Court finds no justification to award overtime pay and premium pay for rest days to petitioner.

SAMAHANG MANGGAGAWA SA CHARTER CHEMICAL SOLIDARITY OF UNIONS IN THE PHILIPPINES FOR EMPOWERMENT AND REFORMS (SMCC-SUPER), ZACARRIAS JERRY VICTORIO-Union President, Petitioner, vs. CHARTER CHEMICAL and COATING CORPORATION, Respondent. FACTS: SamahangManggagawasa 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. Company filed an Answer with Motion to Dismiss 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. Med-Arbiters Ruling :dismissing the petition for certification election. The Med-Arbiter ruled that petitioner union is not a legitimate labor organization because the Charter Certificate 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. The union registration was, thus, fatally defective. 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 :the DOLE granted the certification election among the regular rank-and-file employees of Charter Chemical and Coating Corporation Court of Appeals Ruling : 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 ISSUE: Whether or not there is a 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.

RULING: The mixture of rank-and-file and supervisory employees in petitioner union does not nullify its legal personality as a legitimate labor organization.The inclusion of the aforesaid supervisory employees in petitioner union does not divest it of its status as a legitimate labor organization.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.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.

PAMELA FLORENTINA P. JUMUAD, Petitioner, vs. HI-FLYER FOOD, INC. and/or JESUS R. MONTEMAYOR, Respondents.

FACTS: Pamela Florentina P. Jumuad(Jumuad) began her employment with respondent Hi-Flyer Food, Inc. (Hi-Flyer), as management trainee. Jumuad received several promotions until she became the area manager for the entire Visayas-Mindanao Aside from being responsible in monitoring her subordinates, Jumuad was tasked to: 1) be highly visible in the restaurants under her jurisdiction; 2) monitor and support day-to-day operations; and 3) ensure that all the facilities and equipment at the restaurant were properly maintained and serviced. Among the branches under her supervision were the KFC branches in Gaisano Mall, Cebu City (KFC-Gaisano); in Cocomall, Cebu City (KFC-Cocomall); and in Island City Mall, Bohol (KFC-Bohol). Hi-Flyer conducted series a food safety, service and sanitation audit atKFC-Gaisano and KFC-Cocomall and Hi-Flyer audited the accounts of KFC-Bohol amid reports that certain employees were covering up cash shortages. Seeking to hold Jumuad accountable for the irregularities uncovered in the branches under her supervision, Hi-Flyer sent Jumuad an Irregularities Reportand Notice of Charges. Jumuad submitted her written explanation. Hi-Flyer held an administrative hearing where Jumuad appeared with counsel. Apparently not satisfied with her explanations, Hi-Flyer served her a Notice of Dismissal. Jumuad to file a complaint against Hi-Flyer and/or Jesus R. Montemayor(Montemayor) for illegal dismissal before the NLRC. praying for reinstatement and payment of separation pay, 13th month pay, service incentive leave, moral and exemplary damages, and attorneys fees. Jumuad also sought the reimbursement of the amount equivalent to her forty percent (40%) contribution to Hi-Flyers subsidized car loan program. Labor Arbiters Ruling: the employers prerogative to dismiss or layoff an employee "must be exercised without abuse of discretion" and

"should be tempered with compassion and understanding." Thus, the dismissal was too harsh considering the circumstances. After finding that no serious cause for termination existed, the LA ruled that Jumuad was illegally dismissed. HI-FLYER FOOD, INC. AND OR JESUS R. MONTEMAYOR are hereby ordered to pay, jointly and severally, complainant PAMELA FLORENTINA P. JUMUAD, the total amount of THREE HUNDRED THIRTY-SIX THOUSAND FOUR HUNDRED PESOS (P 336,400.00), representing Separation Pay. Both Jumuad and Hi-Flyer appealed to the NLRC. Jumuad faulted the LA for not awarding backwages and damages despite its finding that she was illegally dismissed. Hi-Flyer and Montemayor, on the other hand, assailed the finding that Jumuad was illegally dismissed and that they were solidarily liable therefor. They also questioned the orders of the LA that they pay separation pay and reimburse the forty percent (40%) of the loan Jumuad paid pursuant to Hi-Flyers car entitlement program. NLRC affirmed in toto the LA decision the NLRC noted that even before the Irregularities Report and Notice of Charges were given to Jumuad two (2) electronic mails (e-mails) between Montemayor and officers of Hi-Flyer showed that Hi-Flyer was already determined to terminate Jumuad. According to the NLRC, these e-mails were proof that Jumuad was denied due process considering that no matter how she would refute the charges hurled against her, the decision of Hi-Flyer to terminate her would not change.24 CA rendered the subject decision reversing the decision of the labor tribunalthe CA was of the opinion that the requirements of substantive and procedural due process were complied with affording Jumuad an opportunity to be heard first, when she submitted her written explanation and then, when she was informed of the decision and the basis of her termination.28 As for the e-mail exchanges between Montemayor and the officers of Hi-Flyer, the CA opined that they did not equate to a predetermination of Jumuads termination. It was of the view that the e-mail exchanges were mere discussions between Montemayor and other officers of Hi-Flyer on whether grounds for disciplinary action or termination existed. To the mind of the CA, the emails just showed that Hi-Flyer extensively deliberated the nature and cause of the charges against Jumuad.29 ISSUE: On whether Jumuad was illegally dismissed

RULING:

Jumuad was terminated for neglect of duty and breach of trust and confidence. It has been said that a single or an isolated act of negligence cannot constitute as a just cause for the dismissal of an employee.To be a ground for removal, the neglect of duty must be both gross and habitual. On the other hand, breach of trust and confidence, as a just cause for termination of employment, is premised on the fact that the employee concerned holds a position of trust and confidence, where greater trust is placed by management and from whom greater fidelity to duty is correspondingly expected. The betrayal of this trust is the essence of the offense for which an employee is penalized.37 It should be noted, however, that the finding of guilt or innocence in a charge of gross and habitual neglect of duty does not preclude the finding of guilty or innocence in a charge of breach of trust and confidence. Each of the charges must be treated separately, as the law itself has treated them separately. the Court is convinced that Jumuad cannot be dismissed on the ground of gross and habitual neglect of duty. The Court notes the apparent neglect of Jumuad of her duty in ensuring that her subordinates were properly monitored and that she had dutifully done all that was expected of her to ensure the safety of the consuming public who continue to patronize the KFC branches under her jursidiction. It cannot be denied that Jumuad willfully breached her duties as to be unworthy of the trust and confidence of Hi-Flyer.First, there is no denying that Jumuad was a managerial employee. As correctly noted by the appellate court, Jumuad executed management policies and had the power to discipline the employees of KFC branches in her area. She recommended actions on employees to the head office. Pertinent is Article 212 (m) of the Labor Code defining a managerial employee as one who is vested with powers or prerogatives to lay down and execute management policies and/or hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees. Based on established facts, the mere existence of the grounds for the loss of trust and confidence justifies petitioners dismissal. Pursuant to the Courts

ruling in Lima Land, Inc. v. Cuevas,38as long as there is some basis for such loss of confidence, such as when the employer has reasonable ground to believe that the employee concerned is responsible for the purported misconduct, and the nature of his participation therein renders him unworthy of the trust and confidence demanded of his position, a managerial employee may be dismissed. In the present case, the CERs reports of Hi-Flyer show that there were anomalies committed in the branches managed by Jumuad. On the principle of respondeat superior or command responsibility alone, Jumuad may be held liable for negligence in the performance of her managerial duties. She may not have been directly involved in causing the cash shortages in KFC-Bohol, but her involvement in not performing her duty monitoring and supporting the day to day operations of the branches and ensure that all the facilities and equipment at the restaurant were properly maintained and serviced, could have truly prevented the whole debacle from ever occurring. Moreover, it is observed that rather than taking proactive steps to prevent the anomalies at her branches, Jumuad merely effected remedial measures. In the restaurant business where the health and well-being of the consuming public is at stake, this does not suffice. Thus, there is reasonable basis for Hi-Flyer to withdraw its trust in her and dismissing her from its service. JURISDICTION OF LABOR ARBITERS HALAGUENA vs. PAL, October 2, 2009

Facts: Petitioners were employed as female flight attendants of respondent Philippine Airlines (PAL) on different dates prior to November 22, 1996. They are members of the Flight Attendants and Stewards Association of the Philippines (FASAP), a labor organization certified as the sole and exclusive bargaining representative of the flight attendants, flight stewards and pursers of respondent.

On July 11, 2001, respondent and FASAP entered into a Collective Bargaining Agreement3 incorporating the terms and conditions of their agreement for the years 2000 to 2005, hereinafter referred to as PAL-FASAP CBA. Section 144, Part A of the PAL-FASAP CBA, provides that: A. For the Cabin Attendants hired before 22 November 1996: xxxx 3. Compulsory Retirement Subject to the grooming standards provisions of this Agreement, compulsory retirement shall be fifty-five (55) for females and sixty (60) for males. x x x. Petitioners and several female cabin crews manifested that the aforementioned CBA provision on compulsory retirement is discriminatory, and demanded for an equal treatment with their male counterparts. On July 12, 2004, Robert D. Anduiza, President of FASAP submitted their 2004-2005 CBA proposals6 and manifested their willingness to commence the collective bargaining negotiations between the management and the association, at the soonest possible time. On July 29, 2004, petitioners filed a Special Civil Action for Declaratory Relief with Prayer for the Issuance of Temporary Restraining Order and Writ of Preliminary Injunction7 with the Regional Trial Court (RTC) of Makati City, against respondent for the invalidity of Section 144, Part A of the PALFASAP CBA. On August 9, 2004, the RTC issued an Order8 upholding its jurisdiction over the present case. The RTC reasoned that: The allegations in the Petition do not make out a labor dispute arising from employer-employee relationship as none is shown to exist. Rather, this case seeks a declaration of the nullity of the questioned provision of the CBA, which is within the Court's competence, with the allegations in the Petition constituting the bases for such relief sought. The RTC issued a TRO . The respondent filed an omnibus motion10 seeking reconsideration of the order overruling its objection to the jurisdiction of the

RTC the lifting of the TRO. On September 27, 2004, the RTC issued an Order11 directing the issuance of a writ of preliminary injunction enjoining the respondent or any of its agents and representatives from further implementing Sec. 144, Part A of the PAL-FASAP CBA pending the resolution of the case. Aggrieved, respondent, filed a Petition for Certiorari and Prohibition with Prayer for a Temporary Restraining Order and Writ of Preliminary Injunction12 with the Court of Appeals (CA) praying that the order of the RTC, which denied its objection to its jurisdiction, be annuled and set aside for having been issued without and/or with grave abuse of discretion amounting to lack of jurisdiction. The CA rendered a Decision, granting the respondent's petition, and ruled that: WHEREFORE, the respondent court is by us declared to have NO JURISDICTION OVER THE CASE BELOW and, consequently, all the proceedings, orders and processes it has so far issued therein are ANNULED and SET ASIDE. Respondent court is ordered to DISMISS its Civil Case. Petitioner filed a motion for reconsideration,13 which was denied by the CA. Hence, the instant petition for certiorari under Rule 45. Issue: Whether the RTC has jurisdiction over the petitioners' action challenging the legality or constitutionality of the provisions on the compulsory retirement age contained in the CBA between respondent PAL and FASAP. Held: The petition is meritorious. Jurisdiction of the court is determined on the basis of the material allegations of the complaint and the character of the relief prayed for irrespective of whether plaintiff is entitled to such relief.14 In the case at bar, the allegations in the petition for declaratory relief plainly show that petitioners' cause of action is the annulment of Section 144, Part A of the PAL-FASAP CBA. The subject of litigation is incapable of pecuniary estimation, exclusively cognizable by the RTC, pursuant to Section 19 (1) of Batas Pambansa Blg.

129, as amended.15 Being an ordinary civil action, the same is beyond the jurisdiction of labor tribunals. The said issue cannot be resolved solely by applying the Labor Code. Rather, it requires the application of the Constitution, labor statutes, law on contracts and the Convention on the Elimination of All Forms of Discrimination Against Women,16 and the power to apply and interpret the constitution and CEDAW is within the jurisdiction of trial courts, a court of general jurisdiction. In Georg Grotjahn GMBH & Co. v. Isnani,17 this Court held that not every dispute between an employer and employee involves matters that only labor arbiters and the NLRC can resolve in the exercise of their adjudicatory or quasi-judicial powers. The jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is limited to disputes arising from an employer-employee relationship whichcan only be resolved by reference to the Labor Code, other labor statutes, or their collective bargaining agreement. Not every controversy or money claim by an employee against the employer or vice-versa is within the exclusive jurisdiction of the labor arbiter. Actions between employees and employer where the employer-employee relationship is merely incidental and the cause of action precedes from a different source of obligation is within the exclusive jurisdiction of the regular court.18 Here, the employer-employee relationship between the parties is merely incidental and the cause of action ultimately arose from different sources of obligation, i.e., the Constitution and CEDAW. Clearly, such claims fall outside the area of competence or expertise ordinarily ascribed to labor arbiters and the NLRC and the rationale for granting jurisdiction over such claims to these agencies disappears.19This Court holds that the grievance machinery and voluntary arbitrators do not have the power to determine and settle the issues at hand. They have no jurisdiction and competence to decide constitutional issues relative to the questioned compulsory retirement age.

In Saura v. Saura, Jr.,21 this Court emphasized the primacy of the regular court's judicial power enshrined in the Constitution that is true that the trend is towards vesting administrative bodies like the SEC with the power to adjudicate matters coming under their particular specialization, to insure a more knowledgeable solution of the problems submitted to them. This would also relieve the regular courts of a substantial number of cases that would otherwise swell their already clogged dockets. But as expedient as this policy may be, it should not deprive the courts of justice of their power to decide ordinary cases in accordance with the general laws that do not require any particular expertise or training to interpret and apply. Otherwise, the creeping take-over by the administrative agencies of the judicial power vested in the courts would render the judiciary virtually impotent in the discharge of the duties assigned to it by the Constitution. Thus, it does not necessarily follow that a resolution of controversy that would bring about a change in the terms and conditions of employment is a labor dispute, cognizable by labor tribunals. It is unfair to preclude petitioners from invoking the trial court's jurisdiction merely because it may eventually result into a change of the terms and conditions of employment. Along that line, the trial court is not asked to set and fix the terms and conditions of employment, but is called upon to determine whether CBA is consistent with the laws. Applying the same rationale to the case at bar, it cannot be said that the "dispute" is between the union and petitioner company because both have previously agreed upon the provision on "compulsory retirement" as embodied in the CBA. Also, it was only private respondent on his own who questioned the compulsory retirement. x x x. In the same vein, the dispute in the case at bar is not between FASAP and respondent PAL, who have both previously agreed upon the provision on the compulsory retirement of female flight attendants as embodied in the CBA. The dispute is between respondent PAL and several female flight attendants who questioned the provision on compulsory retirement of female flight attendants.

WHEREFORE, the petition is PARTLY GRANTED. The Decision and Resolution of the Court of Appeals, are REVERSED and SET ASIDE. The Regional Trial Court of Makati City, Branch 147 is DIRECTED to continue the proceedings in Civil Case No. 04-886 with deliberate dispatch.

PEPSI COLA DISTRIBUTOR PHILS.vs. GALANG, September 24,1991 Facts: The private respondents were employees of the petitioner who were suspected of complicity in the irregular disposition of empty Pepsi Cola bottles. On July 16, 1987, the petitioners filed a criminal complaint for theft against them but this was later withdrawn and substituted with a criminal complaint for falsification of private documents. After a preliminary investigation conducted by the Municipal Trial Court of Tanauan, Leyte, the complaint was dismissed.

Allegedly after an administrative investigation, the private respondents were dismissed by the petitioner company on November 23, 1987. As a result, they lodged a complaint for illegal dismissal with the Regional Arbitration Branch of the NLRC in Tacloban City and decisions mandateed reinstatement with damages. In addition, they instituted in the Regional Trial Court of Leyte, a separate civil complaint against the petitioners for damages arising from what they claimed to be their malicious prosecution.

The petitioners moved to dismiss the civil complaint on the ground that the trial court had no jurisdiction over the case because it involved employeeemployer relations that were exclusively cognizable by the labor arbiter. The motion was granted .On July 6, 1989, however, the respondent judge, acting on the motion for reconsideration, reinstated the complaint, saying it was "distinct from the labor case for damages now pending before the labor courts." The petitioners then came to this Court for relief.

Issue: Whether or not RTC has jurisdiction over the claim for damages arising from the malicious prosecution of the petitioner company.

Held: It must be stressed that not every controversy involving workers and their employers can be resolved only by the labor arbiters. This will be so only if there is a "reasonable causal connection" between the claim asserted and employee-employer relations to put the case under the provisions of Article 217. Absent such a link, the complaint will be cognizable by the regular courts of justice in the exercise of their civil and criminal jurisdiction.

In Medina v. Castro-Bartolome, 3 two employees filed in the Court of First Instance of Rizal a civil complaint for damages against their employer for slanderous remarks made against them by the company president. On the order dismissing the case because it came under the jurisdiction of the labor arbiters, Justice Vicente Abad Santos said for the Court: It is obvious from the complaint that the plaintiffs have not alleged any unfair labor practice. Theirs is a simple action for damages for tortious acts allegedly committed by the defendants. Such being the case, the governing statute is the Civil Code and not the Labor Code. It results that the orders under review are based on a wrong premise.

The case now before the Court involves a complaint for damages for malicious prosecution which was filed with the Regional Trial Court of Leyte by the employees of the defendant company. It does not appear that there is a "reasonable causal connection" between the complaint and the relations of the parties as employer and employees. The complaint did not arise from such relations and in fact could have arisen independently of an employment relationship between the parties. No such relationship or any unfair labor practice is asserted. What the employees are alleging is that the petitioners acted with bad faith when they filed the criminal complaint which the Municipal Trial Court said was intended "to harass the poor employees" and the dismissal of which was affirmed by the Provincial Prosecutor "for lack of evidence to establish even a slightest probability that all the respondents

herein have committed the crime imputed against them." This is a matter which the labor arbiter has no competence to resolve as the applicable law is not the Labor Code but the Revised Penal Code.

WHEREFORE, the order dated July 6, 1989, is AFFIRMED and the petition DENIED, with costs against the petitioner.

OKOL vs. SLIMMERs WORLD, December 11, 2009

Facts: Respondent Slimmers World International operating under the name Behavior Modifications, Inc. (Slimmers World) employed petitioner Leslie Okol (Okol) as a management trainee on 15 June 1992. She rose up the ranks to become Head Office Manager and then Director and Vice President from 1996 until her dismissal on 22 September 1999. On 28 July 1999, prior to Okols dismissal, Slimmers World preventively suspended Okol. The suspension arose from the seizure by the Bureau of Customs of seven Precor elliptical machines and seven Precor treadmills belonging to or consigned to Slimmers World. The shipment of the equipment was placed under the names of Okol and two customs brokers for a value less than US$500. For being undervalued, the equipment were seized. On 2 September 1999, Okol received a memorandum that her suspension had been extended from 2 September until 1 October 1999 pending the outcome of the investigation on the Precor equipment importation. On 17 September 1999, Okol received another memorandum from Slimmers World requiring her to explain why no disciplinary action should be taken against her in connection with the equipment seized by the Bureau of Customs. However, Slimmers World found Okols explanation to be unsatisfactory. Letter signed by its president Ronald Joseph Moy (Moy), Slimmers World terminated Okols employment.

Okol filed a complaint3 with the Arbitration branch of the NLRC against Slimmers World, for illegal suspension, illegal dismissal, unpaid commissions, damages and attorneys fees, with prayer for reinstatement and payment of backwages. Respondents filed a Motion to Dismiss4 the case with a reservation of their right to file a Position Paper at the proper time. The labor arbiter granted the motion to dismiss. The labor arbiter ruled that Okol was the vice-president of Slimmers World at the time of her dismissal. Since it involved a corporate officer, the dispute was an intra-corporate controversy falling outside the jurisdiction of the Arbitration branch.Okol filed an appeal with the NLRC. 6 The NLRC reversed and set aside the labor arbiters order. Respondents filed a Motion for Reconsideration with the NLRC. However, the NLRC not only decided the case on the merits but did so in the absence of position papers from both parties. The NLRC denied the motion for lack of merit. Respondents then filed an appeal with the Court of Appeals, the appellate court set aside the NLRCs Resolution The Court of Appeals ruled that the case, being an intra-corporate dispute, falls within the jurisdiction of the regular courts pursuant to Republic Act No. 8799.10 The appellate court added that the NLRC had acted without jurisdiction in giving due course to the complaint and deprived respondents of their right to due process in deciding the case on the merits.Okol filed a Motion for Reconsideration which was denied. Hence, the instant petition. Issue: Whether or not the NLRC has jurisdiction over the illegal dismissal case filed by petitioner. Held: The petition lacks merit. The issue revolves mainly on whether petitioner was an employee or a corporate officer of Slimmers World. Section 25 of the Corporation Code enumerates corporate officers as the president, secretary, treasurer and such other officers as may be provided for in the by-

laws. In Tabang v. NLRC,12 we held that an "office" is created by the charter of the corporation and the officer is elected by the directors or stockholders. On the other hand, an "employee" usually occupies no office and generally is employed not by action of the directors or stockholders but by the managing officer of the corporation who also determines the compensation to be paid to such employee. Clearly, from the documents submitted by respondents, petitioner was a director and officer of Slimmers World. The charges of illegal suspension, illegal dismissal, unpaid commissions, reinstatement and back wages imputed by petitioner against respondents fall squarely within the ambit of intracorporate disputes. In a number of cases,17 we have held that a corporate officers dismissal is always a corporate act, or an intra-corporate controversy which arises between a stockholder and a corporation. The question of remuneration involving a stockholder and officer, not a mere employee, is not a simple labor problem but a matter that comes within the area of corporate affairs and management and is a corporate controversy in contemplation of the Corporation Code.18 Prior to its amendment, Section 5(c) of Presidential Decree No. 902-A19 (PD 902-A) provided that intra-corporate disputes fall within the jurisdiction of the Securities and Exchange Commission (SEC): Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving: xxx c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations. Subsection 5.2, Section 5 of Republic Act No. 8799, which took effect on 8 August 2000, transferred to regional trial courts the SECs jurisdiction over all cases listed in Section 5 of PD 902-A: 5.2. The Commissions jurisdiction over all cases enumerated under Section 5 of Presidential Decree No. 902-A is hereby transferred to the Courts of general jurisdiction or the appropriate Regional Trial Court.

xxx It is a settled rule that jurisdiction over the subject matter is conferred by law.20 The determination of the rights of a director and corporate officer dismissed from his employment as well as the corresponding liability of a corporation, if any, is an intra-corporate dispute subject to the jurisdiction of the regular courts. Thus, the appellate court correctly ruled that it is not the NLRC but the regular courts which have jurisdiction over the present case.

LOCSIN VS. NISSAN LEASE PHILS., October 20,2010 Facts: Locsin was elected Executive Vice President and Treasurer (EVP/Treasurer) of NCLPI. As EVP/Treasurer, his duties and responsibilities included: (1) the management of the finances of the company; (2) carrying out the directions of the President and/or the Board of Directors regarding financial management; and (3) the preparation of financial reports to advise the officers and directors of the financial condition of NCLPI.6 Locsin held this position for 13 years, having been re-elected every year since 1992, until January 21, 2005, when he was nominated and elected Chairman of NCLPIs Board of Directors. A special meeting was called.One of the items of the agenda was the election of a new set of officers. Unfortunately, Locsin was neither re-elected Chairman nor reinstated to his previous position as EVP/Treasurer.8 Aggrieve, Locsin filed a complaint for illegal dismissal with prayer for reinstatement, payment of backwages, damages and attorneys fees before the Labor Arbiter against NCLPI and Banson, who was then President of NCLPI.9 On July 11, 2007, instead of filing their position paper, NCLPI and Banson filed a Motion to Dismiss,10 on the ground that the Labor Arbiter did not have jurisdiction over the case since the issue of Locsins removal as EVP/Treasurer involves an intra-corporate dispute. On August 16, 2007, Locsin submitted his opposition to the motion to dismiss, maintaining his position that he is an employee of NCLPI.

On March 10, 2008, Labor Arbiter Concepcion issued an Order denying the Motion to Dismiss, holding that her office acquired "jurisdiction to arbitrate and/or decide the instant complaint finding extant in the case an employeremployee relationship."11NCLPI, elevated the case to the CA through a Petition for Certiorari under Rule 65 of the Rules of Court.12 The CA Decision - Locsin was a corporate officer; the issue of his removal as EVP/Treasurer is an intra-corporate dispute under the RTCs jurisdiction. The CA reversed and set aside the Labor Arbiters Order denying the Motion to Dismiss and ruled that Locsin was a corporate officer. The position of Executive VicePresident/Treasurer is specifically included in the roster of officers provided for by the (Amended) By-Laws of petitioner corporation, his duties and responsibilities, as well as compensation as such officer are likewise set forth therein.14 Hence this petition. Issue: Whether or not the Labor Arbiter has jurisdiction over the alleged illegal dismissal, reinstatement, payment of backwages, and damages. Held: The petition lacks merit. Prefatorily, we agree with Locsins submission that the NCLPI incorrectly elevated the Labor Arbiters denial of the Motion to Dismiss to the CA. Locsin is correct in positing that the denial of a motion to dismiss is unappealable. As a general rule, an aggrieved partys proper recourse to the denial is to file his position paper, interpose the grounds relied upon in the motion to dismiss before the labor arbiter, and actively participate in the proceedings. Thereafter, the labor arbiters decision can be appealed to the NLRC, not to the CA. As a rule, we strictly adhere to the rules of procedure and do everything we can, to the point of penalizing violators, to encourage respect for these rules. We take exception to this general rule, however, when a strict implementation of these rules would cause substantial injustice to the parties. We see it appropriate to apply the exception to this case for the reasons discussed below; hence, we are compelled to go beyond procedure and rule on the merits of the case. In the context of this case, we see sufficient justification to rule on the employer-employee relationship issue raised by NCLPI, even

though the Labor Arbiters interlocutory order was incorrectly brought to the CA under Rule 65. x x x The NLRC rule proscribing appeal from a denial of a motion to dismiss is similar to the general rule observed in civil procedure that an order denying a motion to dismiss is interlocutory and, hence, not appealable until final judgment or order is rendered [1 Feria and Noche, Civil Procedure Annotated 453 (2001 ed.)]. In the labor law setting, a plain, speedy and adequate remedy is still open to the aggrieved party when a labor arbiter denies a motion to dismiss. This is Article 223 of Presidential Decree No. 442, as amended (Labor Code), 34 which states: 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 facieevidence of abuse of discretion on the part of the Labor Arbiter; x x x [Emphasis supplied.] A strict implementation of the NLRC Rules and the Rules of Court would cause injustice to the parties because the Labor Arbiter clearly has no jurisdiction over the present intra-corporate dispute. The CA correctly ruled that no employer-employee relationship exists between Locsin and Nissan. Locsin was undeniably Chairman and President, and was elected to these positions by the Nissan board pursuant to its By-laws.39 As such, he was a corporate officer, not an employee. The CA reached this conclusion by relying on the submitted facts and on Presidential Decree 902-A, which defines corporate officers as "those officers of a corporation who are given that character either by the Corporation Code or by the corporations by-laws." Likewise, Section 25 of Batas Pambansa Blg. 69, or the Corporation Code of the Philippines (Corporation Code) provides that corporate officers are the president, secretary, treasurer and such other officers as may be provided for in the by-laws. Even as Executive Vice-President/Treasurer, Locsin already

acted as a corporate officer because the position of Executive VicePresident/Treasurer is provided for in Nissans By-Laws. Article IV, Section 4 of these By-Laws specifically provides for this position. Given Locsins status as a corporate officer, the RTC, not the Labor Arbiter or the NLRC, has jurisdiction to hear the legality of the termination of his relationship with Nissan. We have held that a corporate officers dismissal is always a corporate act, or an intra-corporate controversy which arises between a stockholder and a corporation. So that the RTC should exercise jurisdiction based on the following legal reasoning: Prior to its amendment, Section 5(c) of Presidential Decree No. 902-A (PD 902-A) provided that intra-corporate disputes fall within the jurisdiction of the Securities and Exchange Commission (SEC): Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving: xxxx c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations. Subsection 5.2, Section 5 of Republic Act No. 8799, which took effect on 8 August 2000, transferred to regional trial courts the SECs jurisdiction over all cases listed in Section 5 of PD 902-A: 5.2. The Commissions jurisdiction over all cases enumerated under Section 5 of Presidential Decree No. 902-A is hereby transferred to the Courts of general jurisdiction or the appropriate Regional Trial Court. [Emphasis supplied.]

PEOPLE'S BROADCASTING SERVICE (BOMBO RADYO PHILS., INC.), Petitioner, vs.

THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, THE REGIONAL DIRECTOR, DOLE REGION VII, and JANDELEON JUEZAN, Respondents. RESOLUTION VELASCO, JR., J.: In a Petition for Certiorari under Rule 65, petitioner Peoples Broadcasting Service, Inc. (Bombo Radyo Phils., Inc.) questioned the Decision and Resolution of the Court of Appeals (CA) dated October 26, 2006 and June 26, 2007, respectively, in C.A. G.R. CEB-SP No. 00855. Private respondent Jandeleon Juezan filed a complaint against petitioner with the Department of Labor and Employment (DOLE) Regional Office No. VII, Cebu City, for illegal deduction, nonpayment of service incentive leave, 13th month pay, premium pay for holiday and rest day and illegal diminution of benefits, delayed payment of wages and noncoverage of SSS, PAG-IBIG and Philhealth.1 After the conduct of summary investigations, and after the parties submitted their position papers, the DOLE Regional Director found that private respondent was an employee of petitioner, and was entitled to his money claims.2 Petitioner sought reconsideration of the Directors Order, but failed. The Acting DOLE Secretary dismissed petitioners appeal on the ground that petitioner submitted a Deed of Assignment of Bank Deposit instead of posting a cash or surety bond. When the matter was brought before the CA, where petitioner claimed that it had been denied due process, it was held that petitioner was accorded due process as it had been given the opportunity to be heard, and that the DOLE Secretary had jurisdiction over the matter, as the jurisdictional limitation imposed by Article 129 of the Labor Code on the power of the DOLE Secretary under Art. 128(b) of the Code had been repealed by Republic Act No. (RA) 7730.3 In the Decision of this Court, the CA Decision was reversed and set aside, and the complaint against petitioner was dismissed. The dispositive portion of the Decision reads as follows: WHEREFORE, the petition is GRANTED. The Decision dated 26 October 2006 and the Resolution dated 26 June 2007 of the Court of Appeals in C.A. G.R. CEB-SP No. 00855 are REVERSED and SET ASIDE. The Order of the then Acting Secretary of the Department of Labor and Employment dated 27 January 2005 denying petitioners appeal, and the Orders of the Director,

DOLE Regional Office No. VII, dated 24 May 2004 and 27 February 2004, respectively, are ANNULLED. The complaint against petitioner is DISMISSED.4 The Court found that there was no employer-employee relationship between petitioner and private respondent. It was held that while the DOLE may make a determination of the existence of an employer-employee relationship, this function could not be co-extensive with the visitorial and enforcement power provided in Art. 128(b) of the Labor Code, as amended by RA 7730. The National Labor Relations Commission (NLRC) was held to be the primary agency in determining the existence of an employer-employee relationship. This was the interpretation of the Court of the clause "in cases where the relationship of employer-employee still exists" in Art. 128(b).5 From this Decision, the Public Attorneys Office (PAO) filed a Motion for Clarification of Decision (with Leave of Court). The PAO sought to clarify as to when the visitorial and enforcement power of the DOLE be not considered as co-extensive with the power to determine the existence of an employeremployee relationship.6 In its Comment,7 the DOLE sought clarification as well, as to the extent of its visitorial and enforcement power under the Labor Code, as amended. The Court treated the Motion for Clarification as a second motion for reconsideration, granting said motion and reinstating the petition.8 It is apparent that there is a need to delineate the jurisdiction of the DOLE Secretary vis--vis that of the NLRC. Under Art. 129 of the Labor Code, the power of the DOLE and its duly authorized hearing officers to hear and decide any matter involving the recovery of wages and other monetary claims and benefits was qualified by the proviso that the complaint not include a claim for reinstatement, or that the aggregate money claims not exceed PhP 5,000. RA 7730, or an Act Further Strengthening the Visitorial and Enforcement Powers of the Secretary of Labor, did away with the PhP 5,000 limitation, allowing the DOLE Secretary to exercise its visitorial and enforcement power for claims beyond PhP 5,000. The only qualification to this expanded power of the DOLE was only that there still be an existing employer-employee relationship. It is conceded that if there is no employer-employee relationship, whether it has been terminated or it has not existed from the start, the DOLE has no

jurisdiction. Under Art. 128(b) of the Labor Code, as amended by RA 7730, the first sentence reads, "Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection." It is clear and beyond debate that an employer-employee relationship must exist for the exercise of the visitorial and enforcement power of the DOLE. The question now arises, may the DOLE make a determination of whether or not an employer-employee relationship exists, and if so, to what extent? The first portion of the question must be answered in the affirmative. The prior decision of this Court in the present case accepts such answer, but places a limitation upon the power of the DOLE, that is, the determination of the existence of an employer-employee relationship cannot be co-extensive with the visitorial and enforcement power of the DOLE. But even in conceding the power of the DOLE to determine the existence of an employeremployee relationship, the Court held that the determination of the existence of an employer-employee relationship is still primarily within the power of the NLRC, that any finding by the DOLE is merely preliminary. This conclusion must be revisited. No limitation in the law was placed upon the power of the DOLE to determine the existence of an employer-employee relationship. No procedure was laid down where the DOLE would only make a preliminary finding, that the power was primarily held by the NLRC. The law did not say that the DOLE would first seek the NLRCs determination of the existence of an employeremployee relationship, or that should the existence of the employer-employee relationship be disputed, the DOLE would refer the matter to the NLRC. The DOLE must have the power to determine whether or not an employeremployee relationship exists, and from there to decide whether or not to issue compliance orders in accordance with Art. 128(b) of the Labor Code, as amended by RA 7730. The DOLE, in determining the existence of an employer-employee relationship, has a ready set of guidelines to follow, the same guide the courts

themselves use. The elements to determine the existence of an employment relationship are: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; (4) the employers power to control the employees conduct.9 The use of this test is not solely limited to the NLRC. The DOLE Secretary, or his or her representatives, can utilize the same test, even in the course of inspection, making use of the same evidence that would have been presented before the NLRC. The determination of the existence of an employer-employee relationship by the DOLE must be respected. The expanded visitorial and enforcement power of the DOLE granted by RA 7730 would be rendered nugatory if the alleged employer could, by the simple expedient of disputing the employer-employee relationship, force the referral of the matter to the NLRC. The Court issued the declaration that at least a prima facie showing of the absence of an employer-employee relationship be made to oust the DOLE of jurisdiction. But it is precisely the DOLE that will be faced with that evidence, and it is the DOLE that will weigh it, to see if the same does successfully refute the existence of an employer-employee relationship. If the DOLE makes a finding that there is an existing employer-employee relationship, it takes cognizance of the matter, to the exclusion of the NLRC. The DOLE would have no jurisdiction only if the employer-employee relationship has already been terminated, or it appears, upon review, that no employer-employee relationship existed in the first place. The Court, in limiting the power of the DOLE, gave the rationale that such limitation would eliminate the prospect of competing conclusions between the DOLE and the NLRC. The prospect of competing conclusions could just as well have been eliminated by according respect to the DOLE findings, to the exclusion of the NLRC, and this We believe is the more prudent course of action to take. This is not to say that the determination by the DOLE is beyond question or review.1avvphi1 Suffice it to say, there are judicial remedies such as a petition for certiorari under Rule 65 that may be availed of, should a party wish to dispute the findings of the DOLE. It must also be remembered that the power of the DOLE to determine the existence of an employer-employee relationship need not necessarily result in an affirmative finding. The DOLE may well make the determination that no

employer-employee relationship exists, thus divesting itself of jurisdiction over the case. It must not be precluded from being able to reach its own conclusions, not by the parties, and certainly not by this Court. Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully empowered to make a determination as to the existence of an employeremployee relationship in the exercise of its visitorial and enforcement power, subject to judicial review, not review by the NLRC. There is a view that despite Art. 128(b) of the Labor Code, as amended by RA 7730, there is still a threshold amount set by Arts. 129 and 217 of the Labor Code when money claims are involved, i.e., that if it is for PhP 5,000 and below, the jurisdiction is with the regional director of the DOLE, under Art. 129, and if the amount involved exceeds PhP 5,000, the jurisdiction is with the labor arbiter, under Art. 217. The view states that despite the wording of Art. 128(b), this would only apply in the course of regular inspections undertaken by the DOLE, as differentiated from cases under Arts. 129 and 217, which originate from complaints. There are several cases, however, where the Court has ruled that Art. 128(b) has been amended to expand the powers of the DOLE Secretary and his duly authorized representatives by RA 7730. In these cases, the Court resolved that the DOLE had the jurisdiction, despite the amount of the money claims involved. Furthermore, in these cases, the inspection held by the DOLE regional director was prompted specifically by a complaint. Therefore, the initiation of a case through a complaint does not divest the DOLE Secretary or his duly authorized representative of jurisdiction under Art. 128(b). To recapitulate, if a complaint is brought before the DOLE to give effect to the labor standards provisions of the Labor Code or other labor legislation, and there is a finding by the DOLE that there is an existing employeremployee relationship, the DOLE exercises jurisdiction to the exclusion of the NLRC. If the DOLE finds that there is no employer-employee relationship, the jurisdiction is properly with the NLRC. If a complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement, the jurisdiction is properly with the Labor Arbiter, under Art. 217(3) of the Labor Code, which provides that the Labor Arbiter has original and exclusive jurisdiction over those cases involving wages, rates of pay, hours of work, and other terms and conditions of employment, if accompanied by a claim for reinstatement. If a complaint is filed with the NLRC, and there is still an existing employeremployee relationship, the jurisdiction is properly with the DOLE. The

findings of the DOLE, however, may still be questioned through a petition for certiorari under Rule 65 of the Rules of Court. In the present case, the finding of the DOLE Regional Director that there was an employer-employee relationship has been subjected to review by this Court, with the finding being that there was no employer-employee relationship between petitioner and private respondent, based on the evidence presented. Private respondent presented self-serving allegations as well as self-defeating evidence.10 The findings of the Regional Director were not based on substantial evidence, and private respondent failed to prove the existence of an employer-employee relationship. The DOLE had no jurisdiction over the case, as there was no employer-employee relationship present. Thus, the dismissal of the complaint against petitioner is proper. WHEREFORE, the Decision of this Court in G.R. No. 179652 is hereby AFFIRMED, with the MODIFICATION that in the exercise of the DOLEs visitorial and enforcement power, the Labor Secretary or the latters authorized representative shall have the power to determine the existence of an employer-employee relationship, to the exclusion of the NLRC.

ART221 OF LABOR CODE MANILA ELECTRIC COMPANY VS. JAN CARLO GALA, March 7, 2012 FACTS: On March 2, 2006, respondent Jan Carlo Gala commenced employment with Meralco as a probationary lineman. He was assigned at Meralcos Valenzuela Sector. He was initially a member of the crew of Truck No. 1823 supervised by Foreman Narciso Matis. After one month, he joined the crew of Truck No. 1837 under the supervision of Foreman Raymundo Zuiga, Sr. On July 27, 2006, barely four months on the job, Gala was dismissed for alleged complicity on the May 25, 2006, pilferages of Meralcos electrical supplies. On that day, Gala and other Meralco workers were instructed to

replace

worn-out

electrical

pole

at

the

Pacheco

Subdivision

in Valenzuela City. Gala and the other linemen were directed to join Truck No. 1891, under the supervision of Foreman Nemecio Hipolito. When they arrived at the worksite, Gala and the other workers saw that Truck No. 1837, supervised by Zuiga, was already there. The linemen of Truck No. 1837 were already at work. Gala and the other members of the crew were instructed to help in the digging of a hole for the pole to be installed. While the Meralco crew was at work, Noberto Bing Llanes, a nonMeralco employee, arrived. He appeared to be known to the Meralco foremen as they were seen conversing with him. Llanes boarded the trucks, without being stopped, and took out what were later found as electrical supplies. Aside from Gala, the foremen and the other linemen who were at the worksite when the pilferage happened were later charged with misconduct and dishonesty for their involvement in the incident. Unknown to Gala and the rest of the crew, a Meralco surveillance task force was monitoring their activities and recording everything with a Sony video camera. The task force was composed of Joseph Aguilar, Ariel Dola and Frederick Riano. Meralco investigated the incident and asked Gala to explain. Gala denied involvement in the pilferage, contending that even if his superiors might have committed a wrongdoing, he had no participation in what they did. He claimed that: (1) he was at some distance away from the trucks when the pilferage happened; (2) he did not have an inkling that an illegal activity was taking place since his supervisors were conversing with Llanes, giving him the impression that they knew him; (3) he did not call the attention of his superiors because he was not in a position to do so as he was a mere lineman; and (4) he was just following instructions in connection with his work and had no control in the disposition of company supplies and materials. Gala maintained that his mere presence at the scene of the incident was not sufficient to hold him liable as a conspirator.

Despite Galas explanation, Meralco proceeded with the investigation and eventually terminated his employment on July 27, 2006. Gala responded by filing an illegal dismissal complaint against Meralco. The Compulsory Arbitration Rulings On September 7, 2007 Labor Arbiter Teresita D. Castillon-Lora dismissed the complaint for lack of merit. She held that Galas participation in the pilferage of Meralcos property rendered him unqualified to become a regular employee. NLRCs Ruling On May 2, 2008, the NLRC reversed the labor arbiters ruling. It found that Gala had been illegally dismissed, since there was no concrete showing of complicity with the alleged misconduct/dishonesty.The NLRC, however, ruled out Galas reinstatement, stating that his tenure lasted only up to the end of his probationary period. It awarded him backwages and attorneys fees. Both parties moved for partial reconsideration; Gala, on the ground that he should have been reinstated with full backwages, damages and interests; and Meralco, on the ground that the NLRC erred in finding that Gala had been illegally dismissed. The NLRC denied the motions. the Rules of Court. The CA Decision On August 25, 2009 the CA denied Meralcos petition for lack of merit and partially granted Galas petition. It concurred with the NLRC that Gala had been illegally dismissed, a ruling that was supported by the evidence. It opined that nothing in the records show Galas knowledge of or complicity in the pilferage. It found insufficient the joint affidavit of the members of Meralcos task force testifying that Gala and two other linemen knew Llanes. Both elevated the case to the CA through a petition for certiorari under Rule 65 of

The CA modified the NLRC decision of May 2, 2008, and ordered Galas reinstatement with full backwages and other benefits. The CA also denied Meralcos motion for reconsideration. Hence, the present petition for review on certiorari. Meralcos petition to [SC] Meralco faults the CA for not giving credit to its witnesses, which instead treated their joint affidavit as inconclusive to establish Galas participation in the pilferage. It submits that the affidavit of Meralcos three witnesses disproves the CAs findings, considering that their statements were based on their first-hand account of the incident during surveillance. The three Meralco employees stated that all of the companys foremen and linemen present at that time, including Gala, had knowledge of the pilferage that was happening at the time. According to Aguilar, Dola and Riano, the trucks crew, including Gala, was familiar with Llanes who acted as if his presence particularly, that of freely collecting materials and supplies was a regular occurrence during their operations. Meralco maintains that Gala himself admitted in his own

testimony, that he had been familiar with Llanes even before the pilfering incident. Meralco opines Galas admission, instead of demonstrating his feigned innocence, even highlights his guilt, especially considering that by design, his misfeasance assisted Llanes in the theft; Gala neither intervened to stop Llanes, nor did he report the incident to the Meralco management. Meralco posits that because of his undeniable knowledge in the pilferage activities done by their group, the company was well within its right in terminating his employment as a probationary employee for his failure to meet the basic standards for his regularization. The standard were explained to him and outlined in his probationary employment contract. For this reason and due to the expiration of Galas probationary employment, the CA should not have ordered his reinstatement with full backwages. Finally, Meralco

argues that even if Gala was illegally dismissed, he was only entitled to his backwages for the unexpired portion of his employment contract with the company. Galas Comment Gala asks for a denial of the petition because of (1) serious and fatal infirmities in the petition; (2) unreliable statements of Meralcos witnesses; and (3) clear lack of basis to support the termination of his employment. As to the merits of the case, Gala bewails Meralcos reliance on the joint affidavit of Aguilar, Dola and Riano not only because it was presented for the first time on appeal to the CA, but also because it was a mere afterthought. He explains that Aguilar and Dola were the very same persons who executed a much earlier sworn statement or transcription dated July 7, 2006. This earlier statement did not even mention Gala, but the later joint affidavit splashes GALAs name in a desperate attempt to link him to an imagined wrongdoing. Gala maintained that his mere presence at the scene of the incident was not sufficient to hold him liable as a conspirator. Finally, Gala posits that his reinstatement with full backwages is but a consequence of the illegality of his dismissal. He argues that even if he was on probation, he is entitled to security of tenure and claims that in the absence of any justification for the termination of his probationary employment, he is entitled to continued employment even beyond the probationary period. ISSUE: The petition is anchored on the ground that the CA seriously erred and gravely abused its discretion in 1. ruling that Gala was illegally dismissed; and 2. status. directing Galas reinstatement despite his probationary

HELD: the petition is GRANTED SC finds merit in the petition. Contrary to the conclusions of the CA and the NLRC, there is substantial evidence supporting Meralcos position that Gala had become unfit to continue his employment with the company. Gala was found, after an administrative investigation, to have failed to meet the standards expected of him to become a regular employee and this failure was mainly due to his undeniable knowledge, if not participation, in the pilferage activities done by their group, all to the prejudice of the Company. Gala insists that he cannot be sanctioned for the theft on may 25, 2006. He maintains that he had no direct participation in the incident and that he was not aware that an illegal activity was going on as he was at some distance from the trucks when the alleged theft was being committed. He adds that he did not call the attention of the foremen because he was a mere lineman and he was focused on what he was doing at the time. He argues that in any event, his mere presence in the area was not enough to make him a conspirator in the commission of the pilferage. Gala misses the point. He forgets that as a probationary employee, his overall job performance and his behavior were being monitored and measured in accordance with the terms and conditions of his probationary employment agreement. Which under its par. 8, he was subject to strict compliance with, and non-violation of the Company Code on Employee Discipline, Safety Code, rules and regulations and existing policies. Par. 10 required him to observe at all times the highest degree of transparency, selflessness and integrity in the performance of his duties and responsibilities, free from any form of conflict or contradicting with his own personal interest. The established fact that Llanes, a non-Meralco employee, was often seen during company operations, conversing with the foremen, for reason or reasons connected with the ongoing company operations, gives rise to the

question: what was he doing there? Apparently, he had been visiting Meralco worksites, at least in the Valenzuela Sector, not simply to socialize, but to do something else. As testified to by witnesses, he was picking up unused supplies and materials that were not returned to the company. From these factual premises, it is not hard to conclude that this activity was for the mutual pecuniary benefit of himself and the crew who tolerated the practice. For one working at the scene who had seen or who had shown familiarity with Llanes (a non-Meralco employee), not to have known the reason for his presence is to disregard the obvious, or at least the very suspicious. We consider, too, and we find credible the company submission that the Meralco crew who worked at the Pacheco Subdivision in Valenzuela City on May 25, 2006 had not been returning unused supplies and materials, to the prejudice of the company. From all these, the allegedly hearsay evidence that is not competent in judicial proceedings (as noted above), takes on special meaning and relevance. With respect to the video footage of the May 25, 2006 incident, Gala himself admitted that he viewed the tape during the administrative investigation, particularly in connection with the accusation against him that he allowed Llanes (binatilyong may kapansanan sa bibig) to board the Meralco trucks. The choice of evidence belongs to a party and the mere fact that the video was shown to Gala indicates that the video was not an evidence that Meralco was trying to suppress. Gala could have, if he had wanted to, served a subpoena for the production of the video footage as evidence. The fact that he did not does not strengthen his case nor weaken the case of Meralco. The totality of the circumstances obtaining in the case convinces us that Gala could not but have knowledge of the pilferage of company electrical supplies onMay 25, 2006; he was complicit in its commission, if not by direct

participation, certainly, by his inaction while it was being perpetrated and by not reporting the incident to company authorities. Thus, we find substantial evidence to support the conclusion that Gala does not deserve to remain in Meralcos employ as a regular employee. He violated his probationary employment agreement, especially the requirement for him to observe at all times the highest degree of transparency, selflessness and integrity in the performance of their duties and responsibilities. He failed to qualify as a regular employee. For ignoring the evidence in this case, the NLRC committed grave abuse of discretion and, in sustaining the NLRC, the CA committed a reversible error. The assailed decision and resolution of the Court of Appeals are SET ASIDE. NATIONWIDE SECURITY AND ALLIED SERVICES, INC. [NSAS] VS. THE COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION AND JOSEPH DIMPAZ, HIPOLITO LOPEZ, EDWARD ODATO, FELICISIMO PABON AND JOHNNY AGBAY. petition for certiorari seeking the reversal and setting aside of the Decision and the Resolution of the Court of Appeals, which affirmed the resolutions of the NLRC. FACTS: Labor Arbiter Manuel M. Manansala found NSAS, a security agency, not liable for illegal dismissal involving eight security guards who were employees of the petitioner. However, the Labor Arbiter directed the petitioner to pay the aforementioned security guards P81,750.00 in separation pay, P8,700.00 in unpaid salaries, P93,795.68 for underpayment and 10% attorney's fees based on the total monetary award. NSAS appealed to the NLRC which dismissed its appeal for two reasons -first, for having been filed beyond the reglementary period within which to

perfect the appeal and second, for filing an insufficient appeal bond. the Decision deemed FINAL and EXECUTORY. Its motion for reconsideration ALSO denied. NSAS appealed to the Court of Appeals to resolve on the merits rather than on pure technicalities in the interest of due process. The Court of Appeals dismissed the case, holding that in a special action for certiorari, the burden is on petitioner to prove not merely reversible error, but grave abuse of discretion amounting to lack of or excess of jurisdiction on the part of public respondent NLRC. The questioned Resolutions of the NLRC AFFIRMED. The Court of Appeals likewise denied the petitioner's motion for reconsideration. Hence, this petition ISSUE: WHETHER OR NOT TECHNICALITIES IN LABOR CASES MUST PREVAIL OVER THE SPIRIT AND INTENTION OF THE LABOR CODE UNDER ARTICLE 221 THEREOF WHICH STATES: "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 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."

HELD: Petition lacks merit. NSAS contends that the Court of Appeals erred when it dismissed its case based on technicalities while the private respondents contend that the appeal to the NLRC had not been perfected, since the appeal was filed outside the reglementary period, and the bond was insufficient. it must be pointed out here that the petition for certiorari filed with the Court by petitioner under Rule 65 of the Rules of Court is inappropriate. The proper remedy is a petition for review under Rule 45 purely on questions of law. There being a remedy of appeal via petition for review under Rule 45 of

the Rules of Court, the filing of a petition for certiorari under Rule 65 is improper. But even if we bend our Rules to allow the present petition for certiorari, still it will not prosper because we do not find any grave abuse of discretion amounting to lack of or excess of jurisdiction on the part of the Court of Appeals when it dismissed the petition of the security agency. We must stress that under Rule 65, the abuse of discretion must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion or personal hostility. No such abuse of discretion happened here. The decision of CA was not capricious nor arbitrary, nor was it a whimsical exercise of judgment amounting to a lack of jurisdiction. The Labor Code provides as follows: 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 question 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. 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.

* The New Rules of Procedure of the NLRC states: Section 1. Periods of appeal. - Decisions, resolutions or orders of the Labor Arbiter shall be final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt thereof; and in case of decisions, resolutions or orders of the Regional Director of the Department of Labor and Employment pursuant to Article 129 of the Labor Code, within five (5) calendar days from receipt thereof. If the 10th or 5th day, as the case may be, falls on a Saturday, Sunday or holiday, the last day to perfect the appeal shall be the first working day following such Saturday, Sunday or holiday. No motion or request for extension of the period within which to perfect an appeal shall be allowed. In the instant case, both the NLRC and the Court of Appeals found that petitioner received the decision of the Labor Arbiter on July 16, 1999. This factual finding is supported by sufficient evidence, and we take it as binding on us. NSAS then simultaneously filed its "Appeal Memorandum", "Notice of Appeal" and "Motion to Reduce Bond", by registered mail on July 29, 1999, under Registry Receipt No. 003098. These were received by the NLRC on July 30, 1999. The appeal to the NLRC should have been perfected, within a period of 10 days from receipt by petitioner clearly, the filing of the appeal--three days after July 26, 1999--was already beyond the reglementary period and in violation of the NLRC Rules and the pertinent Article on Appeal in the Labor Code. Failure to perfect an appeal renders the decision final and executory. The right to appeal is a statutory right and one who seeks to avail of the right must comply with the statute or the rules. The rules, particularly an appeal, must be strictly followed as they are considered indispensable interdictions against needless delays and for the orderly discharge of judicial business. It is only in highly meritorious cases that this Court will opt not to strictly apply the rules and thus prevent a grave injustice from being done. The exception does not obtain here. The decision of the Labor Arbiter is Final and Executory. ART 223

ISLRIZ TRADING/ VICTOR HUGO LU, PETITIONER, VS. EFREN CAPADA, LAURO LICUP, NORBERTO NIGOS, RONNIE ABEL, GODOFREDO MAGNAYE, ARNEL SIBERRE, EDMUNDO CAPADA, NOMERLITO MAGNAYE AND ALBERTO DELA VEGA, RESPONDENTS. Respondents EfrenCapada, LauroLicup, Norberto Nigos and GodofredoMagnaye were drivers while respondents Ronnie Abel, ArnelSiberre, EdmundoCapada, NomerlitoMagnaye and Alberto Dela Vega were helpers of Islriz Trading, a gravel and sand business owned and operated by petitioner Victor Hugo Lu. Claiming that they were illegally dismissed, respondents filed a Complaint for illegal dismissal and non-payment of overtime pay, holiday pay, rest day pay, allowances and separation pay against petitioner on August 9, 2000 before the Labor Arbiter. On his part, petitioner imputed abandonment of work against respondents. On December 21, 2001, Labor Arbiter Waldo Emerson R. Gan (Gan) rendered a Decision Declaring respondent ISLRIZ TRADING guilty of illegal dismissal AND Ordering respondent to reinstate complainants to their former positions without loss of seniority rights and the payment of full backwages from date of dismissal to actual reinstatement Aggrieved, petitioner appealed to the NLRC which granted the appeal. The NLRC set aside the Decision of Labor Arbiter Gan in a Resolution dated September 5, 2002. Finding that respondents' failure to continue working for petitioner was neither caused by termination nor abandonment of work, the NLRC ordered respondents' reinstatement but without backwages. December 9, 2003, however, respondents filed with the Labor Arbiter an Ex-Parte Motion to Set Case for Conference with Motion.They averred therein that since the Decision of Labor Arbiter Gan ordered their reinstatement, a Writ of Executiondated April 22, 2002 was already issued for the enforcement of its reinstatement aspect as same is immediately executory even pending appeal. The case was then set for pre-execution conference on January 29, February 24 and March 5, 2004. Both parties appeared thereat but failed to come to terms on the issue of the monetary award. Nevertheless, Labor Arbiter Danna M. Castillon (Castillon) still issued a Writ of Executiondated March 9, 2004 to enforce the monetary award in accordance with the abovementioned computation. Accordingly, the

Sheriff issued a Notice of Sale/Levy on Execution of Personal Propertyby virtue of which petitioner's properties were levied and set for auction sale In an effort to forestall this impending execution, petitioner then filed a Motion to Quash Writ of Execution with Prayer to Hold in Abeyance of Auction Sale[18] and a Supplemental Motion to Quash/Stop Auction Sale.[19] He also served upon the Sheriff a letter of protest respondents claimed that although petitioner's levied properties were already awarded to them, they could not take full control, ownership and possession of said properties because petitioner had allegedly padlocked the premises where the properties were situated. Hence, they asked Labor Arbiter Castillon to issue a break-open order, WHICH IS GRANTED. Undeterred, petitioner brought the matter to the CA through a Petition for Certiorari. But ca dismissed said petition. ISSUE: , whether respondents may collect their wages during the period between the Labor Arbiter's order of reinstatement pending appeal and the NLRC Resolution overturning that of the Labor Arbiter. HELD: In resolving the case, the Court examined its conflicting rulings with respect to the application of paragraph 3 of Article 223 of the Labor Code, viz: At the core of the seeming divergence is the application of paragraph 3 of Article 223 of the Labor Code which reads: `In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, pending appeal. The employee 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. The posting of a bond by the employer shall not stay the execution for reinstatement provided herein.' The view as maintained in a number of cases is that: `x xx[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. 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 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. 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." theGenuinoruling not only disregards the social justice principles behind the rule, but also institutes a scheme unduly favorable to management. 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 or tribunal. It likewise settled the view that the Labor Arbiter's order of reinstatement is immediately executory and the employer has to either re-admit them to work under the same terms and conditions prevailing prior to their dismissal, or to reinstate them in the payroll, and that failing to exercise the options in the alternative, employer must pay the employee's salaries.which automatically accrued from notice

of the Labor Arbiter's order of reinstatement until its ultimate reversal of the NLRC. The discussion, however, did not stop there. The court went on to declare that after the Labor Arbiter's decision is reversed by a higher tribunal, the employee may be barred from collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement pending appeal was without fault on the part of the employer. It then provided for the two-fold test in determining whether an employee is barred from recovering his accrued wages, to wit: (1) there must be actual delay or that the order of reinstatement pending appeal was not executed prior to its reversal; and (2) the delay must not be due to the employer's unjustified act or omission. Application of the Two-Fold Test to the present case 1STQUESTION:Was there an actual delay or was the order of reinstatement pending appeal executed prior to its reversal? there was an actual delay in the execution of the reinstatement aspect of the Decision of Labor Arbiter Gan prior to the issuance of the NLRC Resolution overturning the same. 2ND QUESTION: Was the delay not due to the employer's unjustified act or omission? Islriz Trading here did not undergo rehabilitation or was under any analogous situation which would justify petitioner's nonexercise of the options provided under Article 223 of the Labor Code. Notably, what petitioner gave as reason in not immediately effecting reinstatement after he was served with the Writ of Execution dated April 22, 2002 was that he would first refer the matter to his counsel as he could not effectively act on the order of execution without the latter's advice

CESAR V. GARCIA, CARLOS RAZON VS. KJ COMMERCIAL and REYNALDO QUE, Respondent KJ Commercial is a sole proprietorship. It owns trucks and engages in the business of distributing cement products.

On different dates, KJ Commercial employed as truck drivers and truck helpers petitioners Cesar V. Garcia, Carlos Razon, Alberto De Guzman, Tomas Razon, Omer E. Palo, Rizalde Valencia, Allan Basa, Jessie Garcia, Juanito Paras, Alejandro Orag, Rommel Pangan, Ruel Soliman, and Cenen Canlapan (petitioners). On 2 January 2006, petitioners demanded for a P40 daily salary increase. To pressure KJ Commercial to grant their demand, they stopped working and abandoned their trucks at the Northern Cement Plant Station in Sison, Pangasinan. They also blocked other workers from reporting to work. On 3 February 2006, petitioners filed with the Labor Arbiter a complaint6 for illegal dismissal, underpayment of salary and nonpayment of service incentive leave and thirteenth month pay. LABOR ARBITERS RULING: In his 30 October 2008 Decision, the Labor Arbiter held that KJ Commercial illegally dismissed petitioners. We examined the narration of facts of the respondents in their Position Paper and Supplemental Position Paper and we concluded that these complainants were actually terminated on January 2, 2006 and did not abandoned [sic] their jobs as claimed by the respondents when the respondents, in their Position Paper, admitted that their cement plant was shutdown on January 3, 2006 and when it resumed its operation on January 7, 2006, they ordered the other drivers to get the trucks in order that the hauling of the cements will not incur further delay and that their business will not be prejudiced. KJ Commercial appealed to the NLRC. It filed before the NLRC a motion to reduce bond and posted a P50,000 cash bond.. NLRC RULING: the NLRC dismissed the appeal. a motion to reduce bond shall only be entertained when the following requisites concur: 1) The motion is founded on meritorious ground; and 2)A bond of reasonable amount in relation to the monetary award is posted.We note that while respondents-appellants claim that they could not possibly produce enough cash for the required appeal bond, they are unwilling to at least put up a property to secure a surety bond. Conversely, respondents-appellants failed to perfect an appeal for failure to post the required bond. KJ Commercial filed a motion for reconsideration and posted a P2,562,930 surety bond.

NLRC RULING AS MR: In its 8 February 2010 Resolution, the NLRC granted the motion and set aside the Labor Arbiters 30 October 2008 Decision. It held that: Complainants silence on these material allegations consequently lends support to respondents-appellants[] contention that complainants were never dismissed at all but had stopped driving the hauler truck assigned to each of them when their demand for salary increase in the amount they wish was not granted by respondents-appellants. Petitioners filed a motion for reconsideration. In its 25 June 2010 Resolution, the NLRC denied the motion for lack of merit. Petitioners filed with the Court of Appeals a petition13 for certiorari under Rule 65 of the Rules of Court. CA RULING: In its 29 April 2011 Decision, the Court of Appeals dismissed the petition and affirmed the NLRCs 8 February and 25 June 2010 Resolutions. We find the records of the case bereft of evidence to substantiate the conclusions reached by the Labor Arbiter that petitioners were illegally dismissed from employment. ISSUE: W/N the Labor Arbiters 30 October 2008 Decision became final and executory; thus, the NLRCs 8 February and 25 June 2010 Resolutions and the Court of Appeals 29 April 2011 Decision are void for lack of jurisdiction. (Petitioners claim that KJ Commercial failed to perfect an appeal since the motion to reduce bond did not stop the running of the period to appeal.) HELD: The petition is unmeritorious. When petitioners filed with the Court of Appeals a petition for certiorari, they did not raise as issue that the Labor Arbiters 30 October 2008 Decision had become final and executory.Petitoners cannot, for the first time, raise as issue in their petition filed with this Court that the Labor Arbiters 30 October 2008 Decision had become final and executory. Points of law, theories and arguments not raised before the Court of Appeals will not be considered by this Court. Otherwise, KJ Commercial will be denied its right to due process. This argument cannot be passed upon in this appeal, because it was not raised in the tribunals a quo. Well-settled is the rule that issues not raised below cannot be raised for the first time on appeal. Thus, points

of law, theories, and arguments not brought to the attention of the Court of Appeals need not and ordinarily will not be considered by this Court. Petitioners allegation cannot be accepted by this Court on its face; to do so would be tantamount to a denial of respondents right to due process. KJ Commercials filing of a motion to reduce bond and delayed posting of the P2,562,930 surety bond did not render the Labor Arbiters 30 October 2008 Decision final and executory. The Rules of Procedure of the NLRC allows the filing of a motion to reduce bond subject to two conditions: (1) there is meritorious ground, and (2) a bond in a reasonable amount is posted. The NLRC has full discretion to grant or deny the motion to reduce bond,and it may rule on the motion beyond the 10-day period within which to perfect an appeal. Obviously, at the time of the filing of the motion to reduce bond and posting of a bond in a reasonable amount, there is no assurance whether the appellants motion is indeed based on meritorious ground and whether the bond he or she posted is of a reasonable amount. Thus, the appellant always runs the risk of failing to perfect an appeal. The filing of a motion to reduce bond and compliance with the two conditions stop the running of the period to perfect an appeal. Section 2, Article I of the Rules of Procedure of the NLRC states that, These Rules shall be liberally construed to carry out the objectives of the Constitution, the Labor Code of the Philippines and other relevant legislations, and to assist the parties in obtaining just, expeditious and inexpensive resolution and settlement of labor disputes. In order to give full effect to the provisions on motion to reduce bond, the appellant must be allowed to wait for the ruling of the NLRC on the motion even beyond the 10day period to perfect an appeal. If the NLRC grants the motion and rules that there is indeed meritorious ground and that the amount of the bond posted is reasonable, then the appeal is perfected. If the NLRC denies the motion, the appellant may still file a motion for reconsideration as provided under Section 15, Rule VII of the Rules. If the NLRC grants the motion for reconsideration and rules that there is indeed meritorious ground and that the amount of the bond posted is reasonable, then the appeal is perfected. If the NLRC denies the motion, then the decision of the labor arbiter becomes final and executory.

In the present case, KJ Commercial filed a motion to reduce bond and posted a P50,000 cash bond. When the NLRC denied its motion, KJ Commercial filed a motion for reconsideration and posted the full P2,562,930 surety bond. The NLRC then granted the motion for reconsideration. In any case, the rule that the filing of a motion to reduce bond shall not stop the running of the period to perfect an appeal is not absolute. The Court may relax the rule. In Intertranz Container Lines, Inc. v. Bautista,22 the Court held: Jurisprudence tells us that in labor cases, an appeal from a decision involving a monetary award may be perfected only upon the posting of a cash or surety bond. The Court, however, has relaxed this requirement under certain exceptional circumstances in order to resolve controversies on their merits. These circumstances include: (1) fundamental consideration of substantial justice; (2) prevention of miscarriage of justice or of unjust enrichment; and (3) special circumstances of the case combined with its legal merits, and the amount and the issue involved.23 In Ong v. Court of Appeals,26 the Court held that the bond requirement on appeals may be relaxed when there is substantial compliance with the Rules of Procedure of the NLRC or when the appellant shows willingness to post a partial bond. The Court held that, While the bond requirement on appeals involving monetary awards has been relaxed in certain cases, this can only be done where there was substantial compliance of the Rules or where the appellants, at the very least, exhibited willingness to pay by posting a partial bond.27

In the present case, KJ Commercial showed willingness to post a partial bond. In fact, it posted a P50,000 cash bond. In Ong, the Court held that, Petitioner in the said case substantially complied with the rules by posting a partial surety bond of fifty thousand pesos issued by Prudential Guarantee and Assurance, Inc. while his motion to reduce appeal bond was pending before the NLRC.28A Aside from posting a partial bond, KJ Commercial immediately posted the full amount of the bond when it filed its motion for reconsideration of the NLRCs 9 March 2009 Decision.

ART 224 MARIALY O. SY, VIVENCIA PENULLAR, AURORA AGUINALDO, GINA ANIANO,* GEMMA DELA PEA, EFREMIA* MATIAS, ROSARIO BALUNSAY, ROSALINDA PARUNGAO, ARACELI? RUAZA, REGINA RELOX, TEODORA VENTURA, AMELIA PESCADERO, LYDIA DE GUZMAN, HERMINIA HERNANDEZ, OLIVIA ABUAN, CARMEN PORTUGUEZ, LYDIA PENNULAR,* EMERENCIANA WOOD, PRISCILLA* ESPINEDA, NANCY FERNANDEZ, EVA* MANDURIAGA, CONSOLACION SERRANO, SIONY CASILLAN, LUZVIMINDA GABUYA, MYRNA TAMIN, EVELYN REYES, EVA AYENG, EDNA YAP, RIZA* DELA CRUZ ZUIGA, TRINIDAD RELOX, MARLON FALLA, MARICEL OCON, AND ELVIRA MACAPAGAL, VS. FAIRLAND KNITCRAFT CO., INC. [December 12, 2011] The issues of labor-only contracting and the acquisition of a labor tribunal of jurisdiction over the person of a respondent are the matters up for consideration in these consolidated Petitions for Review on Certiorari. FACTS: Fairland is a domestic corporation engaged in garments business, while Susan de Leon (Susan) is the owner/proprietress of Weesan Garments (Weesan). On the other hand, the complaining 34 workers (the workers) are sewers, trimmers, helpers, a guard and a secretary who were hired by Weesan. On December 23, 2002, workers Marialy O. Sy, Vivencia Penullar, Aurora Aguinaldo, Gina Aniano, Gemma dela Pea and Efremia Matias filed with the Arbitration Branch of the NLRC a Complaint for underpayment and/or nonpayment of wages, overtime pay, premium pay for holidays, 13th month pay and other monetary benefits against Susan/Weesan. In January 2003, the rest of the other workers also filed similar complaints. All the cases were consolidated (same cause of action.) On February 5, 2003, Weesan filed before DOLE-NCR a report on its temporary closure for a period of not less than six months. As the workers

were not anymore allowed to work on that same day, they filed on February 18, 2003 an Amended Complaint, and on March 13, 2003, another pleading entitled Amended Complaints and Position Paper for Complainants, to include the charge of illegal dismissal and impleaded Fairland and its manager, Debbie Manduabas (Debbie), as additional respondent. [* Take Note of the following FACTS:] A Notice of Hearing was sent to Weesan requesting it to appear before Labor Arbiter Ramon Valentin C. Reyes (LA REYES) on April 3, 2003, at 10:00 a.m. On said date and time, Atty. Antonio A. Geronimo (Atty. Geronimo) appeared as counsel for Weesan and requested for an extension of time to file his client's position paper. On the next hearing on April 28, 2003, Atty. Geronimo also entered his appearance for Fairland and again requested for an extension of time to file position paper. On May 16, 2003, Atty. Geronimo filed two separate position papers - one for Fairland and another for Susan/Weesan. The Position Paper for Fairland was verified by Debbie while the one for Weesan was verified by Susan. To these pleadings, the workers filed a Reply. Atty. Geronimo then filed a Consolidated Reply verified both by Susan and Debbie. On November 25, 2003, the workers submitted their Rejoinder. Ruling of the Labor Arbiter On Nov. 26, 2003 LA REYES dismissed the complaint for lack of merit and ordered respondents to pay each complainant P5,000 by way of financial assistance. Petitioners appealed to NLRC. NLRC RULING: Petition granted. The decision of LA Reyes was set aside and the dismissal of complainants illegal. Fairland was ordered to reinstate complainants to their position with full back wages with legal interests from until actual reinstatement and full payment, with retention of seniority rights and to pay solidarily with WEESAN the difference of their unpaid wages, unpaid

holidays, unpaid 13th month pays anf unpaid service incentive leave with legal interest. And in the event that reinstatement is not possible, to pay solidarily their respective separation pay. Fairland was likewise ordered to pay 10% of the gross award as and by attys fees. Atty. Geronimo filed a Motion for Reconsideration. Meanwhile Fairland filed another MR through Atty. Melina Tecson assailing the jurisdiction of the LA and the NLRC over it (fairland), claiming it was never summoned to appear, attend or participate in all the proceedings conducted. It also denied that it engaged the services of atty. Geronimo. NLRC DENIED BOTH MOTIONS! Thus, Fairland and Susan filed their separate petitions for Certiorari before CA. FAIRLAND (Contesting solidary liability) = CA-G.R. SP No. 93204 (Now under Atty. Tecson) SUSAN/ WEESAN (Contesting solidary liability)= CA-G.R. SP No. 93860 CAS RULING on FAIRLAND = CA-G.R. SP No. 93204: On July 25, 2007, CA denied Fairlands petition. It affirmed NLRCs ruling that the workers were illegally dismissed and that Weesan and Fairland were solidarily liable to them as labor-only contractor and principal, respectively. Fairland filed its MR and a Motion for Voluntary Inhibition of Assoc Justices Celia C. Librea-Leagogo and Regalado E. Maambong from handling the case. On Nov. 8, 2007, the case was duly transferred to CAs Special Ninth Division for the resolution of Fairlands MR. On May 9, 2008, CAs Special 9th Division reversed the 1st Divisions Ruling, and ruled that NLRC did not acquire jurisdiction over the person of FAIRLAND, and assuming they did, FAIRLAND is not liable to workers since Weesan is not a mere labor-only contractor but a bona fide independent contractor. In effect it annulled and set aside the decision of the NLRC and its resolution insofar as Fairland is concerned. Thus the WORKERS filed a petition for review on certiorari to SC.

CAS RULING on SUSAN/WEESAN= CA-G.R. SP No. 93860: On May 11, 2006 CA 9th Division issued a Resolution, temporarily Restraining the NLRC from enforcing its assailed Decision and thereafter CA 8th Division issued a writ of preliminary prohibitory injunction. On July 20, 2009, the Special 8th Division of CA resolved the case and was Denied Due Course and accordingly Dismissed for lack of merit. The Decision and Resolution of NLRC were AFFIRMED AND UPHELD. ( In effect sole liablity for all the workers claims is cast to Susan/Weesan) Susan moved for Reconsideration. CA Denied. Hence, SUSAN filed a petition for review on certiorari, which was initially DENIED by SC for failure to sufficiently show any reversible error in the judgment. THUS, Fairland and Susan filed their respective MRs. The Court resolved and ordered the Consolidation of SUSANs petition with that of the WORKERS.. Consequently Susans Petition for review on certiorari was reinstated in the interest of justice and to harmonize the Courts ruling in the case. ISSUES on GR No. 189658 (SUSANS PETITION for REVIEW): 1. CA erred in finding Susan a labor-only contractor acting as an agent for Fairland. 2. CA erred in finding that private respondents were illegally dismissed. SUSANS ARGUMENT: Susan insists that CA erred in ruling that Weesan is a labor-only contractor finding Fairland as the owner of the workplace. She maintained that the place is owned by De Luxe Shirt Factory and not by Fairland. Susan also avers that the CA erred in ruling that Weesan was guilty of illegal dismissal. She maintains that the termination of the workers was due to financial losses suffered by Weesan. In fact, Weesan submitted its Establishment Termination Report with the DOLE-NCR and same was duly received by the latter.

The Workers' Arguments The workers claim that Weesan is a labor-only contractor because it does not have substantial capital or investment in the form of tools, equipment, machineries, and work premises, among others, and that the workers it recruited are performing activities which are directly related to the garments business of Fairland. Hence, Weesan should be considered as a mere agent of Fairland, who shall be responsible to the workers as if they were directly employed by Fairland. *Fairland's Arguments (Relative topic/issue Art. 224 LC) Fairland maintains that it was never served with summons to appear in the proceedings before the Labor Arbiter nor furnished copies of the Labor Arbiter's Decision and Resolution on the workers' complaints for illegal dismissal; that it never voluntarily appeared before the labor tribunals through Atty. Geronimo; that it is a separate and distinct business entity from Weesan; that Weesan is a legitimate job contractor, hence, the workers were actually its (Weesan's) employees; and that, consequently, the workers have no cause of action against Fairland. ISSUES ON GR NO. 182915 ( Issues which the Workers raised): 1. W/N NLRC acquired jurisdiction over the person of FAIRLAND; 2. W/N NLRCs decision became final and executory; and 3. W/N Fairland is solidarily liable with Weesan Garment / Susan De Leon? Fairlands Position: It contests NLRCs jurisdiction over the person of Fairland through service of summons or voluntary appearance. It denies that It engaged the services of Atty. Geronimo and asserts that it has its own legal counsel, Atty. Tecson. Likewise emphasizes that when it filed its Motion for Reconsideration with the NLRC, it made an express reservation that the same was without

prejudice to its right to question the jurisdiction over its person and the binding effect of the assailed decision. In the absence, therefore, of a valid service of summons or voluntary appearance, the proceedings conducted and the judgment rendered by the labor tribunals are null and void as against it. Hence, Fairland cannot be held solidarily liable with Susan/Weesan. HELD: We grant the workers' petition (G.R. No. 182915) but deny the petition of Susan (G.R. No. 189658). 1. Susan/Weesan is a mere labor-only contractor. "There is labor-only contracting when the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal. In labor-only contracting, the following elements are present: (a) The person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others; and (b) The workers recruited and placed by such person are performing activities which are directly related to the principal business of the employer."[55] Here, there is no question that the workers, majority of whom are sewers, were recruited by Susan/Weesan and that they performed activities which are directly related to Fairland's principal business of garments. What must be determined is whether Susan/Weesan has substantial capital or investment in the form of tools, equipment, machineries, work premises, among others. SC found nothing to show that Weesan has investment in the form of tools, equipment or machineries. The records show that Fairland had to furnish Weesan with sewing machines. Also, Weesan was unable to show, it owned and possessed any other tools, equipment, and machineries necessary to its being a contractor or sub-contractor for garments. Neither was Weesan able to prove that it has substantial capital for its business. Likewise significant is the fact that there is doubt as to who really owns the work premises occupied by Weesan. The workers alleged that the work

premises utilized by Weesan is owned by Fairland, which significantly, was not in the business of renting properties. CAs Eighth Division observation on the matter: The work premises are likewise owned by Fairland, which petitioner tried to disprove by presenting a purported Contract of Lease with another entity, De Luxe Shirt Factory Co., Inc. However, there is no competent proof it paid the supposed rentals to said `owner'. Curiously, under the item `Rent Expenses' in its audited financial statement, only equipment rental was listed therein without any disbursement/expense for rental of factory premises, which only buttressed the claim of private respondents that the place where they reported to and performed sewing jobs for petitioner [Susan] and Fairland at No. 715 Ricafort St., Tondo, Manila, belonged to Fairland. Susan contests this pronouncement by pointing out that although only sewing machines were specified under the entry "Rent Expenses" in its financial statement, the rent for the factory premises is already deemed included therein since the contracts of lease she entered into with De Luxe referred to both the factory premises and machineries. We, however, find this ^ contention implausible. We went over the said contracts of lease and noted that same were principally for the lease of the premises. Only incidental thereto is the inclusion therein of the equipment found in said premises. Hence, we cannot see why the rentals for the work premises, for which Susan even went to the extent of executing a contract with the purported lessor, was not included in the entry for rent expenses in Weesan's financial statement. In an attempt to prove that it is De Luxe and not Fairland which owned the work premises, Susan attached to her petition the following: (1) a plain copy of Transfer Certificate of Title (TCT) No. 139790 and Declaration of Real Property both under the name of De Luxe; and, (2) Real Property Tax receipts issued to De Luxe for the years 2000-2004. However, the Court finds these documents wanting. The logical conclusion now is that Weesan does not have its own workplace and is only utilizing the workplace of Fairland to whom it supplied workers

for its garment business. As Susan/Weesan was not able to adduce evidence that Weesan had any substantial capital, investment or assets to perform the work contracted for, the presumption that Weesan is a labor-only contractor stands. 2. The National Labor Relations Commission and the Court of Appeals did not err in their findings of illegal dismissal. To negate illegal dismissal, Susan relies on the due closure of Weesan pursuant to the Establishment Termination Report it submitted to the DOLENCR. Indeed, Article 283of the Labor Code allows as a mode of termination of employment the closure or termination of business. "Closure or cessation of business is the complete or partial cessation of the operations and/or shut-down of the establishment of the employer. It is carried out to either stave off the financial ruin or promote the business interest of the employer." "The decision to close business [or to temporarily suspend operation] is a management prerogative exclusive to the employer, the exercise of which no court or tribunal can meddle with, except only when the employer fails to prove compliance with the requirements of Art. 283, to wit: a) that the closure/cessation of business is bona fide, i.e., its purpose is to advance the interest of the employer and not to defeat or circumvent the rights of employees under the law or a valid agreement; b) that written notice was served on the employees and the DOLE at least one month before the intended date of closure or cessation of business; and c) in case of closure/cessation of business not due to financial losses, that the employees affected have been given separation pay equivalent to month pay for every year of service or one month pay, whichever is higher." Here, Weesan filed its Establishment Termination Report allegedly due to serious business losses and other economic reasons. However, SC is mindful

of the doubtful character of Weesan's application for closure given the circumstances surrounding the same. First. Weesan filed with the DOLE-NCR its Establishment Termination Report merely eight days after the filing of the last complaint of the workers. Second, the Income Tax Returns for the years 2000, 2001 and 2002 attached to the Establishment Termination Report, contain no signature or initials of the receiving officer. The same holds true with Weesan's audited financial statements. This engenders doubt as to whether these documents were indeed filed with the proper authorities. Third, there was no showing that Weesan served upon the workers written notice at least one month before the intended date of closure of business, as required under Art. 283 of the Labor Code. In fact, when Weesan filed its Establishment Termination Report on February 5, 2003, it already closed the work premises and did not anymore allow them to report for work. This is the reason why the workers on February 18, 2003 amended their complaint to include the charge of illegal dismissal. "The burden of proving that x x x a temporary suspension is bona fide falls upon the employer." Clearly here, Susan/Weesan was not able to discharge this burden. Weesan failed to satisfactorily explain why the Income Tax Returns and financial statements it submitted do not bear the signature of the receiving officers. Also hard to ignore is the absence of the mandatory 30-day prior notice to the workers. Therefore, the NLRC and the CA, in CA-G.R. SP No. 93860, did not err in their findings that the workers were illegally dismissed by Susan/Weesan. 3. Fairland's claim of prescription deserves scant consideration. Fairland asserts that onl six out of the 34 workers-complainants. According to Fairland, these six workers were the only ones who were in the employ of Weesan at the time Fairland and Weesan had existing contractual relationship in 1996 to 1997. However, the Court notes that the records are bereft of anything that provides for such alleged contractual relationship and the period covered by it. Absent anything to support Fairland's claim, same deserves scant consideration.

Interestingly, we noticed Fairland's letter dated January 31, 2003 informing Weesan that it would temporarily not be availing of the latter's sewing services and at the same time requesting for the return of the sewing machines it lent to Weesan. Assuming said letter to be true, why was Fairland terminating Weesan's services only on January 31, 2003 when it is now claiming that its contractual relationship with the latter only lasted until 1997? Thus, we find the contentions rather abstruse. 4. G.R. No. 182915 (jurisdiction of LA and NLRC over Fairland) *** ART 224 LC!! "It is basic that the Labor Arbiter cannot acquire jurisdiction over the person of the respondent without the latter being served with summons." However, "if there is no valid service of summons, the court can still acquire jurisdiction over the person of the defendant by virtue of the latter's voluntary appearance." Although not served with summons, jurisdiction over Fairland and Debbie was acquired through their voluntary appearance. It can be recalled that the workers' original complaints for non-payment/ underpayment of wages and benefits were only against Susan/Weesan. For these complaints, the Labor Arbiter issued summons to Susan/Weesan. The workers thereafter amended their then already consolidated complaints to include illegal dismissal as an additional cause of action as well as Fairland and Debbie as additional respondents. We have, scanned the records but found nothing to indicate that summons with respect to the said amended complaints was ever served upon Weesan, Susan, or Fairland. True to their claim, Fairland and Debbie were indeed never summoned by the Labor Arbiter. The crucial question now is: Did Fairland and Debbie voluntarily appear before the Labor Arbiter as to submit themselves to its jurisdiction? Fairland argued before the CA that it did not engage Atty. Geronimo as its counsel. However, the Court held in Santos v. National Labor Relations Commission, viz: In the instant petition for certiorari, petitioner Santos reiterates that he should not have been adjudged personally liable by public respondents, the

latter not having validly acquired jurisdiction over his person whether by personal service of summons or by substituted service under Rule 19 of the Rules of Court. Petitioner's contention is unacceptable. The fact that Atty. Romeo B. Perez has been able to timely ask for a deferment of the initial hearing on 14 November 1986, coupled with his subsequent active participation in the proceedings, should disprove the supposed want of service of legal processes. Although as a rule, modes of service of summons are strictly followed in order that the court may acquire jurisdiction over the person of a defendant, such procedural modes, however, are liberally construed in quasi-judicial proceedings, substantial compliance with the same being considered adequate. Moreover, jurisdiction over the person of the defendant in civil cases is acquired not only by service of summons but also by voluntary appearance in court and submission to its authority. `Appearance' by a legal advocate is such `voluntary submission to a court's jurisdiction'. It may be made not only by actual physical appearance but likewise by the submission of pleadings in compliance with the order of the court or tribunal. To say that petitioner did not authorize Atty. Perez to represent him in the case is to unduly tax credulity. The employment of a counsel or the authority to employ an attorney, it might be pointed out, need not be proved in writing; such fact could [be] inferred from circumstantial evidence. x x x From the records, it appears that Atty. Geronimo first entered his appearance on behalf of Susan/Weesan in the hearing held on April 3, 2003. Being then newly hired, he requested for an extension of time within which to file a position paper for said respondents. On the next scheduled hearing, Atty. Geronimo again asked for another extension to file a position paper for all the respondents considering that he likewise entered his appearance for Fairland. Thereafter, said counsel filed pleadings such as Respondents' Position Paper and Respondents' Consolidated Reply on behalf of all the respondents namely, Susan/Weesan, Fairland and Debbie. The fact that Atty. Geronimo entered his appearance for Fairland and Debbie and that he actively defended them before the Labor Arbiter raised the presumption that he is authorized to appear for them. As held in Santos, it is unlikely that Atty. Geronimo would

have been so irresponsible as to represent Fairland and Debbie if he were not in fact authorized. As an officer of the Court, Atty. Geronimo is presumed to have acted with due propriety. Moreover, "[i]t strains credulity that a counsel who has no personal interest in the case would fight for and defend a case with persistence and vigor if he has not been authorized or employed by the party concerned." We do not agree with the reasons relied upon by the CA's Special Ninth Division when it ruled that Fairland, through Atty. Geronimo, did not voluntarily submit itself to the Labor Arbiter's jurisdiction. The presumption of authority of counsel to appear on behalf of a client is found both in the Rules of Court and in the New Rules of Procedure of the NLRC. Sec. 21, Rule 138 of the Rules of Court. Sec. 8, Rule III of the New Rules of Procedure of the NLRC, which is the rules prevailing at that time, states in part: SECTION 8. APPEARANCES. - An attorney appearing for a party is presumed to be properly authorized for that purpose. However, he shall be required to indicate in his pleadings his PTR and IBP numbers for the current year. Between the two provisions providing for such authority of counsel to appear, the Labor Arbiter is primarily bound by the latter one, the NLRC Rules of Procedure being specifically applicable to labor cases. As Atty. Geronimo consistently indicated his PTR and IBP numbers in the pleadings he filed, there is no reason for the Labor Arbiter not to extend to Atty. Geronimo the presumption that he is authorized to represent Fairland. *Although we note that Fairland filed a disbarment case against Atty. Geronimo due to the former's claim of unauthorized appearance, we hold that the same is not sufficient to overcome the presumption of authority. Such mere filing is not proof of Atty. Geronimo's alleged unauthorized appearance. Suffice it to say that an attorney's presumption of authority is a strong one. "A mere denial by a party that he authorized an attorney to appear for him, in the absence of a compelling reason, is insufficient to overcome the

presumption, especially when the denial comes after the rendition of an adverse judgment," such as in the present case. Citing PNOC Dockyard and Engineering Corporation v. National Labor Relations Commission, the CA likewise emphasized that in labor cases, both the party and his counsel must be duly served their separate copies of the order, decision or resolution unlike in ordinary proceedings where notice to counsel is deemed notice to the party. It then quoted Article 224 of the Labor Code as follows: ARTICLE 224. Execution of decisions, orders or awards. - (a) the Secretary of Labor and Employment or any Regional Director, the Commission or any Labor Arbiter, or med-arbiter or voluntary arbitrator may, motu proprio or on motion of any interested party, issue a writ of execution on a judgment within five (5) years from the date it becomes final and executory, requiring a sheriff or a duly deputized officer to execute or enforce final decisions, orders or awards of the Secretary of Labor and Employment or [R]egional Director, the Commission, the Labor Arbiter or Med-Arbiter, or Voluntary Arbitrators. In any case, it shall be the duty of the responsible officer to separately furnish immediately the counsels of record and the parties with copies of said decision, orders or awards. Failure to comply with the duty prescribed herein shall subject such responsible officer to appropriate administrative sanctions x x x The CA then concluded that since Fairland and its counsel were not separately furnished with a copy of the August 26, 2005 NLRC Resolution denying the motions for reconsideration of its November 30, 2004 Decision, said Decision cannot be enforced against Fairland. The CA likewise concluded that because of this, said November 30, 2004 Decision which held Susan/Weesan and Fairland solidarily liable to the workers, has not attained finality. We cannot agree. In Ginete v. Sunrise Manning Agency we held that: The case of PNOC Dockyard and Engineering Corporation vs. NLRC cited by petitioner enunciated that `in labor cases, both the party and its counsel must be duly served their separate copies of the order, decision or resolution; unlike in ordinary judicial proceedings where notice to counsel is deemed notice to

the party.' Reference was made therein to Article 224 of the Labor Code. But, as correctly pointed out by private respondent in its Comment to the petition, Article 224 of the Labor Code does not govern the procedure for filing a petition for certiorari with the Court of Appeals from the decision of the NLRC but rather, it refers to the execution of `final decisions, orders or awards' and requires the sheriff or a duly deputized officer to furnish both the parties and their counsel with copies of the decision or award for that purpose. There is no reference, express or implied, to the period to appeal or to file a petition for certiorari as indeed the caption is `execution of decisions, orders or awards'. Taken in proper context, Article 224 contemplates the furnishing of copies of `final decisions, orders or awards' and could not have been intended to refer to the period for computing the period for appeal to the Court of Appeals from a non-final judgment or order. The period or manner of `appeal' from the NLRC to the Court of Appeals is governed by Rule 65 pursuant to the ruling of the Court in the case of St. Martin Funeral Homes vs. NLRC. Section 4 of Rule 65, as amended, states that the `petition may be filed not later than sixty (60) days from notice of the judgment, or resolution sought to be assailed'. Corollarily, Section 4, Rule III of the New Rules of Procedure of the NLRC expressly mandates that For the purposes of computing the period of appeal, the same shall be counted from receipt of such decisions, awards or orders by the counsel of record.' Although this rule explicitly contemplates an appeal before the Labor Arbiter and the NLRC, we do not see any cogent reason why the same rule should not apply to petitions for certiorari filed with the Court of Appeals from decisions of the NLRC. This procedure is in line with the established rule that notice to counsel is notice to party and when a party is represented by counsel, notices should be made upon the counsel of record at his given address to which notices of all kinds emanating from the court should be sent. It is to be noted also that Section 7 of the NLRC Rules of Procedure provides that `(A)ttorneys and other representatives of parties shall have authority to bind their clients in all matters of procedure'' a provision which is similar to Section 23, Rule 138 of the Rules of Court. More importantly, Section 2, Rule 13 of the 1997 Rules of Civil Procedure analogously provides that if any party has appeared by counsel, service upon him shall be made upon his counsel.

To stress, Article 224 contemplates the furnishing of copies of final decisions, orders or awards both to the parties and their counsel in connection with the execution of such final decisions, orders or awards. However, for the purpose of computing the period for filing an appeal from the NLRC to the CA, same shall be counted from receipt of the decision, order or award by the counsel of record pursuant to the established rule that notice to counsel is notice to party. And since the period for filing of an appeal is reckoned from the counsel's receipt of the decision, order or award, it necessarily follows that the reckoning period for their finality is likewise the counsel's date of receipt thereof, if a party is represented by counsel. Hence, the date of receipt referred to in Sec. 14, Rule VII of the then in force New Rules of Procedure of the NLRC which provides that decisions, resolutions or orders of the NLRC shall become executory after 10 calendar days from receipt of the same, refers to the date of receipt by counsel. Thus contrary to the CA's conclusion, the said NLRC Decision became final, as to Fairland, 10 calendar days after Atty. Tecson's receipt thereof. In sum, we hold that the Labor Arbiter had validly acquired jurisdiction over Fairland and its manager, Debbie, through the appearance of Atty. Geronimo as their counsel and likewise, through the latter's filing of pleadings on their behalf. 5. Fairland is Weesan's principal. Viewed in its entirety, we declare that Fairland is the principal of the laboronly contractor- Weesan. Fairland, therefore, as the principal employer, is solidarily liable with Susan/Weesan, the labor-only contractor, for the rightful claims of the employees.

SECOND ASSIGNMENT ARTICLE 217

G.R. No. 152396

November 20, 2007

EX-BATAAN VETERANS SECURITY AGENCY, INC., petitioner, vs. THE SECRETARY OF LABOR BIENVENIDO E. LAGUESMA, REGIONAL DIRECTOR BRENDA A. VILLAFUERTE, ALEXANDER POCDING, FIDEL BALANGAY, BUAGEN CLYDE, DENNIS EPI, DAVID MENDOZA, JR., GABRIEL TAMULONG, ANTON PEDRO, FRANCISCO PINEDA, GASTON DUYAO, HULLARUB, NOLI DIONEDA, ATONG CENON, JR., TOMMY BAUCAS, WILLIAM PAPSONGAY, RICKY DORIA, GEOFREY MINO, ORLANDO RILLASE, SIMPLICIO TELLO, M. G. NOCES, R. D. ALEJO, and P. C. DINTAN, respondents

Carpio J., Facts Ex-Bataan Veterans Security Agency, Inc. (EBVSAI) is in the business of providing security services while private respondents are EBVSAI's employees assigned to the National Power Corporation at Ambuklao Hydro Electric Plant Private respondents led by Alexander Pocding (Pocding) instituted a complaint for underpayment of wages against EBVSAI before the Regional Office of the Department of Labor and Employment (DOLE). The Regional Office conducted a complaint inspection at the Ambuklao Plant where the following violations were noted: (1) non-presentation of records; (2) non-payment of holiday pay; (3) non-payment of rest day premium; (4) underpayment of night shift differential pay; (5) non-payment of service incentive leave; (6) underpayment of 13th month pay; (7) no registration; (8) no annual medical report; (9) no annual work accidental report; (10) no safety committee; and (11) no trained first aider. On the same date, the Regional Office issued a notice of hearing requiring EBVSAI and private respondents to attend the hearing on 22 March 1996.

On 19 August 1996, the Director of the Regional Office (Regional Director) issued an Order, which ordered EX-BATAAN VETERANS SECURITY AGENCY to pay the deficiencies owing to the affected within ten (10) calendar days upon receipt hereof. Otherwise, a Writ of Execution shall be issued. EBVSAI filed for a motion for reconsideration alleging that the Regional Director does not have jurisdiction over the case since the money claim of each private respondent exceeded P5,000. The Regional Dorector should have endorsed the case to the labor arbiter. The Regional Director denied the motion for reonsiconsideration and stated that, pursuant to Republic Act No. 7730 (RA 7730),the limitations under Articles 12912 and 217(6)13 of the Labor Code no longer apply to the Secretary of Labor's visitorial and enforcement powers under Article 128(b). The Secretary of Labor or his duly authorized representatives are now empowered to hear and decide, in a summary proceeding, any matter involving the recovery of any amount of wages and other monetary claims arising out of employer-employee relations at the time of the inspection. Ruling of Secretary of Labor: The Secreatary of Laor affirmed the order of the Regional Director with some Modifications. The secretary of Labor ruled that Pursuant to RA 7730, the Courts's ruling on the restrictive effect of Art. 129 in so far as the visitorial and enforcement powers of the Secretary of Labor is concerned is no longer controlling. The EBVSAI filed a motion for reconsideration which was denied by the Secreatary of Labor. EBVSAI filed for a petition for certiorari before the Court of Appeals. The Court of Appeals's ruling

The CA dismissed the petition and affirmed the decision of the Secretary of Labor and adopted the ruling that RA 7730 repealed the jurisdiction limitation imposed by Art. 129 on Art. 128 of the Labor Code. Issue Whether the Secretary of Labor or his representatives have jurisdiction over the money claims of private respondent even of it exceeds P5,000. Held The petition has no merit. EBVSAI maintains that under Articles 129 and 217(6) of the Labor Code, the Labor Arbiter, not the Regional Director, has exclusive and original jurisdiction over the case because the individual monetary claim of private respondents exceeds P5,000. EBVSAI also argues that the case falls under the exception clause in Article 128(b) of the Labor Code. EBVSAI asserts that the Regional Director should have certified the case to the Arbitration Branch of the National Labor Relations Commission (NLRC) for a full-blown hearing on the merits. In Allied Investigation Bureau, Inc. v. Sec. of Labor, we ruled that: While it is true that under Articles 129 and 217 of the Labor Code, the Labor Arbiter has jurisdiction to hear and decide cases where the aggregate money claims of each employee exceeds P5,000.00, said provisions of law do not contemplate nor cover the visitorial and enforcement powers of the Secretary of Labor or his duly authorized representatives. Rather, said powers are defined and set forth in Article 128 of the Labor Code (as amended by R.A. No. 7730) thus: Art. 128 Visitorial and enforcement power. --- x x x (b) Notwithstanding the provisions of Article[s] 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the

power to issue compliance orders to give effect to [the labor standards provisions of this Code and other] labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection.The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection. xxxx The aforequoted provision explicitly excludes from its coverage Articles 129 and 217 of the Labor Code by the phrase "(N)otwithstanding the provisions of Articles 129 and 217of this Code to the contrary x x x" thereby retaining and further strengthening the power of the Secretary of Labor or his duly authorized representatives to issue compliance orders to give effect to the labor standards provisions of said Code and other labor legislation based on the findings of labor employment and enforcement officer or industrial safety engineer made in the course of inspection.23 (Italics in the original) This was further affirmed in our ruling in Cirineo Bowling Plaza, Inc. v. Sensing,24 where we sustained the jurisdiction of the DOLE Regional Director and held that "the visitorial and enforcement powers of the DOLE Regional Director to order and enforce compliance with labor standard laws can be exercised even where the individual claim exceeds P5,000." In order to divest the Regional Director or his representatives of jurisdiction, the following elements must be present: (a) that the employer contests the findings of the labor regulations officer and raises issues thereon; (b) that in order to resolve such issues, there is a need to examine evidentiary matters; and (c) that such matters are not verifiable in the normal course of inspection. The rules also provide that the employer shall raise such objections during the hearing of the case or at any time after receipt of the notice of inspection results. In this case, the Regional Director validly assumed jurisdiction over the money claims of private respondents even if the claims exceeded P5,000 because such jurisdiction was exercised in accordance with Article 128(b) of the Labor Code and the case does not fall under the exception clause.

The Court notes that EBVSAI did not contest the findings of the labor regulations officer during the hearing or after receipt of the notice of inspection results. It was only in its supplemental motion for reconsideration before the Regional Director that EBVSAI questioned the findings of the labor regulations officer and presented documentary evidence to controvert the claims of private respondents. But even if this was the case, the Regional Director and the Secretary of Labor still looked into and considered EBVSAI's documentary evidence and found that such did not warrant the reversal of the Regional Director's order. The Secretary of Labor also doubted the veracity and authenticity of EBVSAI's documentary evidence. Moreover, the pieces of evidence presented by EBVSAI were verifiable in the normal course of inspection because all employment records of the employees should be kept and maintained in or about the premises of the workplace, which in this case is in Ambuklao Plant, the establishment where private respondents were regularly assigned.27 WHEREFORE, we DENY the petition. We AFFIRM the 29 May 2001 Decision and the 26 February 2002 Resolution of the Court of Appeals in CAG.R. SP No. 57653. G.R. No. 160146 December 11, 2009

LESLIE OKOL, Petitioner, vs. SLIMMERS WORLD INTERNATIONAL, BEHAVIOR MODIFICATIONS, INC., and RONALD JOSEPH MOY,Respondents. CARPIO, J.: FACTS Slimmers World International operating under the name Behavior Modifications, Inc. (Slimmers World) employed petitioner Leslie Okol (Okol) as a management trainee on 15 June 1992. She rose up the ranks to become Head Office Manager and then Director and Vice President from 1996 until her dismissal on 22 September 1999. Prior to Okols dismissal, Slimmers World preventively suspended Okol. The suspension arose from the seizure by the Bureau of Customs of seven Precor

elliptical machines and seven Precor treadmills belonging to or consigned to Slimmers World. On 2 September 1999, Okol received a memorandum that her suspension had been extended from 2 September until 1 October 1999 pending the outcome of the investigation on the Precor equipment importation. Okol the received another memorandum from Slimmers World requiring her to explain why no disciplinary action should be taken against her in connection with the equipment seized by the Bureau of Customs. Slimmers World found Okols explanation to be unsatisfactory. Through a letter dated 22 September 1999 signed by its president Ronald Joseph Moy (Moy), Slimmers World terminated Okols employment. Okol filed in the Arbitration branch of the NLRC against Slimmers World, Behavior Modifications, Inc. and Moy (collectively called respondents) for illegal suspension, illegal dismissal, unpaid commissions, damages and attorneys fees, with prayer for reinstatement and payment of backwages. Respondents filed a Motion to Dismiss the case with a reservation of their right to file a Position Paper at the proper time. Respondents asserted that the NLRC had no jurisdiction over the subject matter of the complaint. The ruling if the Labor Arbiter The labor arbiter granted the motion to dismiss. The labor arbiter ruled that Okol was the vice-president of Slimmers World at the time of her dismissal. Since it involved a corporate officer, the dispute was an intra-corporate controversy falling outside the jurisdiction of the Arbitration branch. The ruling of the NLRC Okol filed an appeal with the NLRC. In a Resolution dated 29 May 2001, the NLRC reversed and set aside the labor arbiters order. The NLRC ordered respondent Behavior Modification, Inc./Slimmers World International to reinstate complainant Leslie F. Okol to her former position with full back wages plus indemnity; However, should reinstatement be not feasible separation pay equivalent to one month pay per year of service is awarded, a fraction of at least six months considered one whole year. All other claims were ordered dismissed for lack of factual or legal basis.

Respondents filed a Motion for Reconsideration with the NLRC. Respondents contended that the relief prayed for was confined only to the question of jurisdiction. However, the NLRC not only decided the case on the merits but did so in the absence of position papers from both parties. In a Resolution8 dated 21 December 2001, the NLRC denied the motion for lack of merit. Respondents then filed an appeal with the Court of Appeals. The Ruling of the Court of Appeals The appellate court set aside the NLRCs Resolution dated 29 May 2001 and affirmed the labor arbiters Order dated 20 March 2000. The Court of Appeals ruled that the case, being an intra-corporate dispute, falls within the jurisdiction of the regular courts pursuant to Republic Act No. 8799.10 The appellate court added that the NLRC had acted without jurisdiction in giving due course to the complaint and deprived respondents of their right to due process in deciding the case on the merits. Okol filed a Motion for Reconsideration which was denied by the CA. Hence, the instant petition. ISSUE The issue is whether or not the NLRC has jurisdiction over the illegal dismissal case filed by petitioner. HELD The Courts Ruling The petition lacks merit. Petitioner insists that the Court of Appeals erred in ruling that she was a corporate officer and that the case is an intra-corporate dispute falling within the jurisdiction of the regular courts. Petitioner asserts that even as vicepresident, the work that she performed conforms to that of an employee rather than a corporate officer. Mere title or designation in a corporation will not, by itself, determine the existence of an employer-employee relationship.

Thus, having shown that an employer-employee relationship exists, the jurisdiction to hear and decide the case is vested with the labor arbiter and the NLRC. Respondents, on the other hand, maintain that petitioner was a corporate officer at the time of her dismissal from Slimmers World as supported by the General Information Sheet and Directors Affidavit attesting that petitioner was an officer. Even the alleged absence of any resolution of the Board of Directors approving petitioners termination does not constitute proof that petitioner was not an officer. Respondents assert that petitioner was not only an officer but also a stockholder and director; which facts provide further basis that petitioners separation from Slimmers World does not come under the NLRCs jurisdiction. In Tabang v. NLRC,12 we held that an "office" is created by the charter of the corporation and the officer is elected by the directors or stockholders. On the other hand, an "employee" usually occupies no office and generally is employed not by action of the directors or stockholders but by the managing officer of the corporation who also determines the compensation to be paid to such employee. The relevant portions of the Amended By-Laws of Slimmers World which enumerate the power of the board of directors as well as the officers of the corporation state: Article II The Board of Directors 1. Qualifications and Election The general management of the corporation shall be vested in a board of five directors who shall be stockholders and who shall be elected annually by the stockholders and who shall serve until the election and qualification of their successors. xxx Article III Officers xxx 4. Vice-President Like the Chairman of the Board and the President, the Vice-President shall be elected by the Board of Directors from [its] own members. The Vice-President shall be vested with all the powers and authority and is required to perform all the duties of the President during the absence of the latter for any cause.

The Vice-President will perform such duties as the Board of Directors may impose upon him from time to time. xxx Clearly, from the documents submitted by respondents, petitioner was a director and officer of Slimmers World. The charges of illegal suspension, illegal dismissal, unpaid commissions, reinstatement and back wages imputed by petitioner against respondents fall squarely within the ambit of intracorporate disputes. In a number of cases, we have held that a corporate officers dismissal is always a corporate act, or an intra-corporate controversy which arises between a stockholder and a corporation. The question of remuneration involving a stockholder and officer, not a mere employee, is not a simple labor problem but a matter that comes within the area of corporate affairs and management and is a corporate controversy in contemplation of the Corporation Code. Prior to its amendment, intra-corporate disputes fall within the jurisdiction of the Securities and Exchange Commission (SEC) which shal include: c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations. Subsection 5.2, Section 5 of Republic Act No. 8799, which took effect on 8 August 2000, transferred to regional trial courts the SECs jurisdiction over all cases listed in Section 5 of PD 902-A: 5.2. The Commissions jurisdiction over all cases enumerated under Section 5 of Presidential Decree No. 902-A is hereby transferred to the Courts of general jurisdiction or the appropriate Regional Trial Court. It is a settled rule that jurisdiction over the subject matter is conferred by law.20 The determination of the rights of a director and corporate officer dismissed from his employment as well as the corresponding liability of a corporation, if any, is an intra-corporate dispute subject to the jurisdiction of the regular courts. Thus, the appellate court correctly ruled that it is not the NLRC but the regular courts which have jurisdiction over the present case. WHEREFORE, we DENY the petition. We AFFIRM the 18 October 2002 Decision and 22 September 2003 Resolution of the Court of Appeals in CAG.R. SP No. 69893. This Decision is without prejudice to petitioner Leslie

Okols taking recourse to and seeking relief through the appropriate remedy in the proper forum.

G.R. No. 172013

October 2, 2009

PATRICIA HALAGUEA, MA. ANGELITA L. PULIDO, MA. TERESITA P. SANTIAGO, MARIANNE V. KATINDIG, BERNADETTE A. CABALQUINTO, LORNA B. TUGAS, MARY CHRISTINE A. VILLARETE, CYNTHIA A. STEHMEIER, ROSE ANNA G. VICTA, NOEMI R. CRESENCIO, and other flight attendants of PHILIPPINE AIRLINES, Petitioners, vs. PHILIPPINE AIRLINES INCORPORATED, Respondent. PERALTA, J.: FACTS Petitioners were employed as female flight attendants of respondent Philippine Airlines (PAL) on different dates prior to November 22, 1996. They are members of the Flight Attendants and Stewards Association of the Philippines (FASAP), a labor organization certified as the sole and exclusive certified as the sole and exclusive bargaining representative of the flight attendants, flight stewards and pursers of respondent. Respondent and FASAP entered into a Collective Bargaining Agreement3 incorporating the terms and conditions of their agreement for the years 2000 to 2005, hereinafter referred to as PAL-FASAP CBA. The said CBA provided that subject to the grooming standards of the agreement, the compulsory retirement of the Cabin Attendants hired before 22 November 1996 shall be fifty-five (55) for females and sixty (60) for males. Petitioners and several female cabin crews manifested that the aforementioned CBA provision on compulsory retirement is discriminatory, and demanded for an equal treatment with their male counterparts. This demand was reiterated in a letter by petitioners' counsel addressed to

respondent demanding the removal of gender discrimination provisions in the coming re-negotiations of the PAL-FASAP CBA. On July 29, 2004, petitioners filed a Special Civil Action for Declaratory Relief with Prayer for the Issuance of Temporary Restraining Order and Writ of Preliminary Injunction with the Regional Trial Court (RTC) of Makati City. The ruling of the RTC The RTC issued an Order upholding its jurisdiction over the present case. In the instant case, the thrust of the Petition is allegedly discriminatory as it discriminates against female flight attendants, in violation of the Constitution, the Labor Code, and the CEDAW. The allegations in the Petition do not make out a labor dispute arising from employer-employee relationship as none is shown to exist. This case is not directed specifically against respondent arising from any act of the latter, nor does it involve a claim against the respondent. Rather, this case seeks a declaration of the nullity of the questioned provision of the CBA, which is within the Court's competence. On September 27, 2004, the RTC issued an Order11 directing the issuance of a writ of preliminary injunction enjoining the respondent or any of its agents and representatives from further implementing Sec. 144, Part A of the PALFASAP CBA pending the resolution of the case. The respondent filed a Petition for Certiorari and Prohibition with Prayer for a Temporary Restraining Order and Writ of Preliminary Injunction with the Court of Appeals (CA) praying that the order of the RTC, which denied its objection to its jurisdiction, be annuled and set aside for having been issued without and/or with grave abuse of discretion amounting to lack of jurisdiction. The Ruling of the Court of Appeals According to the CA the respondent court has NO JURISDICTION OVER THE CASE BELOW and, consequently, all the proceedings, orders and processes it has so far issued therein are ANNULED and SET ASIDE. Respondent court is ordered to DISMISS its Civil Case No. 04-886.

ISSUE Whether the RTC has jurisdiction over the petitioners' action challenging the legality or constitutionality of the provisions on the compulsory retirement age contained in the CBA between respondent PAL and FASAP. HELD Petitioners submit that the RTC has jurisdiction in all civil actions in which the subject of the litigation is incapable of pecuniary estimation and in all cases not within the exclusive jurisdiction of any court, tribunal, person or body exercising judicial or quasi-judicial functions. The RTC has the power to adjudicate all controversies except those expressly witheld from the plenary powers of the court. The issue involved is constitutional in character, the labor arbiter or the National Labor Relations Commission (NLRC) has no jurisdiction over the case. Respondent, on the other hand, alleges that the labor tribunals have jurisdiction over the present case, as the controversy partakes of a labor dispute. The dispute concerns the terms and conditions of petitioners' employment in PAL, specifically their retirement age. The RTC has no jurisdiction over the subject matter of petitioners' petition for declaratory relief because the Voluntary Arbitrator or panel of Voluntary Arbitrators have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the CBA. The petition is meritorious. Jurisdiction of the court is determined on the basis of the material allegations of the complaint and the character of the relief prayed for irrespective of whether plaintiff is entitled to such relief.14 In the case at bar, the allegations in the petition for declaratory relief plainly show that petitioners' cause of action is the annulment of Section 144, Part A of the PAL-FASAP CBA. The allegations in the petition provides that they 1.) have the constitutional right to fundamental equality with men under Section 14, Article II, 1987 of the Constitution; 2) have the statutory right to equal work and employment opportunities with men under Article 3, Presidential Decree No. 442, The Labor Code and, within the specific context of this case, with the male cabin attendants of Philippine Airlines; and that it is unlawful,

even criminal, for an employer to discriminate against women employees with respect to terms and conditions of employment solely on account of their sex under Article 135 of the Labor Code as amended by Republic Act No. 6725 or the Act Strengthening Prohibition on Discrimination Against Women and that such discrimination is against Convention on the Elimination of All Forms of Discrimination Against Women (hereafter, "CEDAW"). They further contend that there is no reasonable, much less lawful, basis for Philippine Airlines to distinguish, differentiate or classify cabin attendants on the basis of sex and thereby arbitrarily set a lower compulsory retirement age of 55 for Petitioners; and that being patently unconstitutional and unlawful, Section 114, Part A of the PAL-FASAP 2000-2005 CBA must be declared invalid and stricken down to the extent that it discriminates against petitioner. The said issue cannot be resolved solely by applying the Labor Code. Rather, it requires the application of the Constitution, labor statutes, law on contracts and the Convention on the Elimination of All Forms of Discrimination Against Women,16 and the power to apply and interpret the constitution and CEDAW is within the jurisdiction of trial courts, a court of general jurisdiction. In Georg Grotjahn GMBH & Co. v. Isnani,this Court held that not every dispute between an employer and employee involves matters that only labor arbiters and the NLRC can resolve in the exercise of their adjudicatory or quasi-judicial powers. The jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is limited to disputes arising from an employer-employee relationship which can only be resolved by reference to the Labor Code, other labor statutes, or their collective bargaining agreement. Not every controversy or money claim by an employee against the employer or vice-versa is within the exclusive jurisdiction of the labor arbiter. Actions between employees and employer where the employer-employee relationship is merely incidental and the cause of action precedes from a different source of obligation is within the exclusive jurisdiction of the regular court. Here, the employer-employee relationship between the parties is merely incidental and the cause of action ultimately arose from different sources of obligation, i.e., the Constitution and CEDAW.

Thus, where the principal relief sought is to be resolved not by reference to the Labor Code or other labor relations statute or a collective bargaining agreement but by the general civil law, the jurisdiction over the dispute belongs to the regular courts of justice and not to the labor arbiter and the NLRC. In such situations, resolution of the dispute requires expertise, not in labor management relations nor in wage structures and other terms and conditions of employment, but rather in the application of the general civil law. Clearly, such claims fall outside the area of competence or expertise ordinarily ascribed to labor arbiters and the NLRC and the rationale for granting jurisdiction over such claims to these agencies disappears. This Court holds that the grievance machinery and voluntary arbitrators do not have the power to determine and settle the issues at hand. They have no jurisdiction and competence to decide constitutional issues relative to the questioned compulsory retirement age. Their exercise of jurisdiction is futile, as it is like vesting power to someone who cannot wield it. Thus, it does not necessarily follow that a resolution of controversy that would bring about a change in the terms and conditions of employment is a labor dispute, cognizable by labor tribunals. It is unfair to preclude petitioners from invoking the trial court's jurisdiction merely because it may eventually result into a change of the terms and conditions of employment. Along that line, the trial court is not asked to set and fix the terms and conditions of employment, but is called upon to determine whether CBA is consistent with the laws. Although the CBA provides for a procedure for the adjustment of grievances, such referral to the grievance machinery and thereafter to voluntary arbitration would be inappropriate to the petitioners, because the union and the management have unanimously agreed to the terms of the CBA and their interest is unified. In the same vein, the dispute in the case at bar is not between FASAP and respondent PAL, who have both previously agreed upon the provision on the compulsory retirement of female flight attendants as embodied in the CBA. The dispute is between respondent PAL and several female flight attendants who questioned the provision on compulsory retirement of female flight attendants. When petitioners in their individual capacities questioned the legality of the compulsory retirement in the CBA before the trial court, there was no showing that FASAP, as their representative, endeavored to adjust, settle or negotiate with PAL for the removal of the difference in compulsory

age retirement between its female and male flight attendants, particularly those employed before November 22, 1996. Without FASAP's active participation on behalf of its female flight attendants, the utilization of the grievance machinery or voluntary arbitration would be pointless. The trial court in this case is not asked to interpret Section 144, Part A of the PAL-FASAP CBA. Interpretation, as defined in Black's Law Dictionary, is the art of or process of discovering and ascertaining the meaning of a statute, will, contract, or other written document.24 The provision regarding the compulsory retirement of flight attendants is not ambiguous and does not require interpretation. Neither is there any question regarding the implementation of the subject CBA provision, because the manner of implementing the same is clear in itself. The only controversy lies in its intrinsic validity. Although it is a rule that a contract freely entered between the parties should be respected, since a contract is the law between the parties, said rule is not absolute. The question as to whether said Section 114, Part A of the PAL-FASAP CBA is discriminatory or not is a question of fact. This would require the presentation and reception of evidence by the parties in order for the trial court to ascertain the facts of the case and whether said provision violates the Constitution, statutes and treaties. A full-blown trial is necessary, which jurisdiction to hear the same is properly lodged with the the RTC. Therefore, a remand of this case to the RTC for the proper determination of the merits of the petition for declaratory relief is just and proper.1avvphi1 WHEREFORE, the petition is PARTLY GRANTED. The Decision and Resolution of the Court of Appeals, dated August 31, 2005 and March 7, 2006, respectively, in CA-G.R. SP. No. 86813 are REVERSED and SET ASIDE. The Regional Trial Court of Makati City, Branch 147 is DIRECTED to continue the proceedings in Civil Case No. 04-886 with deliberate dispatch. PAUL V. SANTIAGO, petitioner, vs. CF SHARP CREW MANAGEMENT, INC., respondent. G.R. No. 162419 July 10, 2007 TINGA, J. FACTS:

Santiago had been working as a seafarer for Smith Bell Management, Inc. (respondent) for about 5 years. On Feb. 3, 1998, he signed a new contract of employment with respondent, with the duration of 9 months. He was assured of a monthly salary of US$515.00, overtime pay and other benefits. The following day, the contract was approved by the POEA. Petitioner was to be deployed on board the "MSV Seaspread" which was scheduled to leave the port of Manila for Canada on Feb. 13, 1998. A week before the scheduled date of departure, Capt. Fernandez, respondents VP, sent a message to the captain of "MSV Seaspread," stating that he received a phone call from the wife of Santiago in Masbate asking him not to send her husband to MSV Seaspread anymore. Other callers who did not reveal their identity gave him some feedbacks that Santiago this time if allowed to depart will jump ship in Canada like his brother Christopher Santiago and as a result the vessel will be penalized. The captain of "MSV Seaspread" replied to cancel plans for Santiago to return to Seaspread. On Feb. 9, 1998, petitioner was thus told that he would not be leaving for Canada anymore, but he was reassured that he might be considered for deployment at some future date. Petitioner filed a complaint for illegal dismissal, damages, and attorney's fees against respondent and its foreign principal, Cable and Wireless (Marine) Ltd. The Labor Arbiter ruled that the employment contract remained valid but had not commenced since petitioner was not deployed. According to her, respondent violated the rules and regulations governing overseas employment when it did not deploy petitioner, causing petitioner to suffer actual damages representing lost salary income for 9 months and fixed overtime fee plus 10% attorney's fees while all the other claims are dismissed for lack of merit. On appeal by respondent, the NLRC ruled that there is no employeremployee relationship between petitioner and respondent because under the POEA Standard Contract, the employment contract shall commence upon actual departure of the seafarer from the airport or seaport at the point of hire and with a POEA-approved contract. In the absence of an employeremployee relationship between the parties, the claims for illegal dismissal, actual damages, and attorneys fees should be dismissed. The NLRC found respondents decision not to deploy petitioner to be a valid exercise of its management prerogative. Petitioner moved for the reconsideration of the NLRCs Decision but his motion was denied for lack of merit.

The Court of Appeals ruled that petitioner is not entitled to actual damages because damages are not recoverable by a worker who was not deployed by his agency within the period prescribed in the POEA Rules. It agreed with the NLRCs finding that petitioners non-deployment was a valid exercise of respondents management prerogative. It added that since petitioner had not departed from the Port of Manila, no employer-employee relationship between the parties arose and any claim for damages against the so-called employer could have no leg to stand on. Petitioners subsequent motion for reconsideration was denied. ISSUE: Whether or not the CA committed a serious error of law when it ignored Sec.10 of RA 8042 (Migrant Workers Act of 1995) as well as a section incorporated under the petitioners POEA approved Employment Contract that the claims or disputes of the Overseas Filipino Worker by virtue of a contract fall within the jurisdiction of the Labor Arbiter of the NLRC. HELD: Considering that petitioner was not able to depart from the airport or seaport in the point of hire, the employment contract did not commence, and no employer-employee relationship was created between the parties.26 The fact that the POEA Rules27 are silent as to the payment of damages to the affected seafarer does not mean that the seafarer is precluded from claiming the same. The sanctions provided for non-deployment do not end with the suspension or cancellation of license or fine and the return of all documents at no cost to the worker. They do not forfend a seafarer from instituting an action for damages against the employer or agency which has failed to deploy him. The POEA Rules only provide sanctions which the POEA can impose on erring agencies. It does not provide for damages and money claims recoverable by aggrieved employees because it is not the POEA, but the NLRC, which has jurisdiction over such matters. Despite the absence of an employer-employee relationship between petitioner and respondent, the Court rules that the NLRC has jurisdiction over petitioners complaint. The jurisdiction of labor arbiters is not limited to

claims arising from employer-employee relationships. Section 10 of R.A. No. 8042 (Migrant Workers Act), provides that: Sec. 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages. x x x Since the present petition involves the employment contract entered into by petitioner for overseas employment, his claims are cognizable by the labor arbiters of the NLRC. Article 2199 of the Civil Code provides that one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Respondent is thus liable to pay petitioner actual damages in the form of the loss of nine (9) months worth of salary as provided in the contract. He is not, however, entitled to overtime pay. There is no certainty that petitioner will perform overtime work had he been allowed to board the vessel. Petitioner is entitled to attorneys fees in the concept of damages and expenses of litigation. Respondents failure to deploy petitioner is unfounded and unreasonable, forcing petitioner to institute the suit below. However, moral damages cannot be awarded in this case. While respondents failure to deploy petitioner seems baseless and unreasonable, we cannot qualify such action as being tainted with bad faith, or done deliberately to defeat petitioners rights, as to justify the award of moral damages. ATLAS FARMS, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, JAIME O. DELA PEA and MARCIAL I. ABION, respondents. G.R. No. 142244 November 18, 2002 QUISUMBING, J. FACTS:

Private respondent Jaime O. dela Pea was employed as a veterinary aide by petitioner in December 1975. He was among several employees terminated in July 1989 but on July 8, 1989, he was re-hired by petitioner and given the additional job of feedmill operator. On March 13, 1993, Pea was allegedly caught urinating and defecating on company premises not intended for the purpose. The farm manager of petitioner issued a formal notice directing him to explain why disciplinary action should not be taken against him for violating company rules and regulations. Pea refused to receive the formal notice. He never bothered to explain, thus, on March 20, 1993, a notice of termination with payment of his monetary benefits was sent to him. He duly acknowledged receipt of his separation pay. Co-respondent Marcial I. Abion5 was a carpenter/mason and a maintenance man whose employment by petitioner commenced on October 8, 1990. Allegedly, he caused the clogging of the fishpond drainage resulting in damages worth several hundred thousand pesos when he improperly disposed of the cut grass and other waste materials into the ponds drainage system. Petitioner sent a written notice to Abion, requiring him to explain what happened, otherwise, disciplinary action would be taken against him. He refused to receive the notice and give an explanation, according to petitioner. Consequently, the company terminated his services on October 27, 1992. He acknowledged receipt of a written notice of dismissal, with his separation pay. Pea and Abion filed separate complaints for illegal dismissal that were later consolidated. Both claimed that their termination from service was due to petitioners suspicion that they were the leaders in a plan to form a union to compete and replace the existing management-dominated union. On November 9, 1993, the labor arbiter dismissed their complaints on the ground that the grievance machinery in the collective bargaining agreement (CBA) had not yet been exhausted. Private respondents availed of the grievance process, but later on refiled the case before the NLRC in Region IV. They alleged "lack of sympathy" on petitioners part to engage in conciliation proceedings. Their cases were consolidated in the NLRC. At the initial mandatory conference, petitioner filed a motion to dismiss, on the ground of lack of jurisdiction for the case belonged to the grievance machinery and thereafter the voluntary arbitrator, as provided in the CBA.

In a decision dated January 30, 1996, the labor arbiter dismissed the complaint for lack of merit, finding that the case was one of illegal dismissal and did not involve the interpretation or implementation of any CBA provision. He stated that Article 217 (c) of the Labor Code6 was inapplicable to the case. Further, the labor arbiter found that although both complainants did not substantiate their claims of illegal dismissal, there was proof that private respondents voluntarily accepted their separation pay and petitioners financial assistance. Thus, private respondents brought the case to the NLRC, which reversed the labor arbiters decision. Dissatisfied with the NLRC ruling, petitioner went to the Court of Appeals by way of a petition for review on certiorari under Rule 65, seeking reinstatement of the labor arbiters decision. The appellate court denied the petition and affirmed the NLRC resolution with some modifications. Petitioner forthwith filed its motion for reconsideration, which was denied. ISSUE: Whether the labor arbiter and the NLRC had jurisdiction to decide complaints for illegal dismissal HELD: Article 217 of the Labor Code provides that labor arbiters have original and exclusive jurisdiction over termination disputes. A possible exception is provided in Article 261 of the Labor Code, which provides thatThe Voluntary Arbitrator or panel of voluntary arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies referred to in the immediately preceding article. Accordingly, violations of a Collective Bargaining Agreement, except those which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved as grievances under the Collective Bargaining Agreement. For purposes of this article, gross violations of Collective Bargaining Agreement shall mean flagrant and or malicious refusal to comply with the economic provisions of such agreement. The Commission, its Regional Offices and the Regional Directors of the Department of Labor and Employment shall not entertain disputes, grievances or

matters under the exclusive and original jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately dispose and refer the same to the grievance Machinery or Arbitration provided in the Collective Bargaining Agreement. But as held in Vivero vs. CA,14 "petitioner cannot arrogate into the powers of Voluntary Arbitrators the original and exclusive jurisdiction of Labor Arbiters over unfair labor practices, termination disputes, and claims for damages, in the absence of an express agreement between the parties in order for Article 262 of the Labor Code [Jurisdiction over other labor disputes] to apply in the case at bar." Moreover, per Justice Bellosillo, it may be observed that under Policy Instruction No. 56 of the Secretary of Labor, dated 6 April 1993, "Clarifying the Jurisdiction Between Voluntary Arbitrators and Labor Arbiters Over Termination Cases and Providing Guidelines for the Referral of Said Cases Originally Filed with the NLRC to the NCMB," termination cases arising in or resulting from the interpretation and implementation of collective bargaining agreements and interpretation and enforcement of company personnel policies which were initially processed at the various steps of the plant-level Grievance Procedures under the parties collective bargaining agreements fall within the original and exclusive jurisdiction of the voluntary arbitrator pursuant to Art. 217 (c) and Art. 261 of the Labor Code; and, if filed before the Labor Arbiter, these cases shall be dismissed by the Labor Arbiter for lack of jurisdiction and referred to the concerned NCMB Regional Branch for appropriate action towards and expeditious selection by the parties of a Voluntary Arbitrator or Panel of Arbitrators based on the procedures agreed upon in the CBA. As earlier stated, the instant case is a termination dispute falling under the original and exclusive jurisdiction of the Labor Arbiter, and does not specifically involve the application, implementation or enforcement of company personnel policies contemplated in Policy Instruction No. 56. Consequently, Policy Instruction No. 56 does not apply in the case at bar. Records show, however, that private respondents sought without success to avail of the grievance procedure in their CBA.16 It is worth pointing out that private respondents went to the NLRC only after the labor arbiter dismissed their original complaint for illegal dismissal. Under these circumstances private respondents had to find another avenue for redress. We agree with the

NLRC that it was petitioner who failed to show proof that it took steps to convene the grievance machinery after the labor arbiter first dismissed the complaints for illegal dismissal and directed the parties to avail of the grievance procedure under Article VII of the existing CBA. They could not now be faulted for attempting to find an impartial forum, after petitioner failed to listen to them and after the intercession of the labor arbiter proved futile. The NLRC had aptly concluded in part that private respondents had already exhausted the remedies under the grievance procedure.18It erred only in finding that their cause of action was ripe for arbitration. One significant fact in the present petition also needs stressing. Pursuant to Article 26021 of the Labor Code, the parties to a CBA shall name or designate their respective representatives to the grievance machinery and if the grievance is unsettled in that level, it shall automatically be referred to the voluntary arbitrators designated in advance by the parties to a CBA. Consequently only disputes involving the union and the company shall be referred to the grievance machinery or voluntary arbitrators. In these termination cases of private respondents, the union had no participation, it having failed to object to the dismissal of the employees concerned by the petitioner. It is obvious that arbitration without the unions active participation on behalf of the dismissed employees would be pointless, or even prejudicial to their cause. Coming to the merits of the petition, the NLRC found that petitioner did not comply with the requirements of a valid dismissal. Given the fact of dismissal, it can be said that the cases were effectively removed from the jurisdiction of the voluntary arbitrator, thus placing them within the jurisdiction of the labor arbiter. Where the dispute is just in the interpretation, implementation or enforcement stage, it may be referred to the grievance machinery set up in the CBA, or brought to voluntary arbitration. But, where there was already actual termination, with alleged violation of the employees rights, it is already cognizable by the labor arbiter. In sum, we conclude that the labor arbiter and then the NLRC had jurisdiction over the cases involving private respondents dismissal, and no error was committed by the appellate court in upholding their assumption of jurisdiction. Having found private respondents dismissal to be illegal, and the labor arbiter and the NLRC duly vested with jurisdiction to hear and decide their cases, we agree with the appellate court that petitioner should pay the costs of suit.

PERPETUAL HELP CREDIT COOPERATIVE, INC., petitioner, vs. BENEDICTO FABURADA, SISINITA VILLAR, IMELDA TAMAYO, HAROLD CATIPAY, and the NATIONAL LABOR RELATIONS COMMISSION, Fourth Division, Cebu City, respondents. G.R. No. 121948 October 8, 2001 SANDOVAL-GUTIERREZ, J. FACTS: On January 3, 1990, private respondents filed a complaint against the Perpetual Help with the Arbitration Branch, Department of Labor and Employment (DOLE), Dumaguete City, for illegal dismissal, premium pay on holidays and rest days, separation pay, wage differential, moral damages, and attorney's fees. Forthwith, petitioner PHCCI filed a motion to dismiss the complaint on the ground that there is no employer-employee relationship between them as private respondents are all members and co-owners of the cooperative. Furthermore, private respondents have not exhausted the remedies provided in the cooperative by-laws. On September 3, 1990, petitioner filed a supplemental motion to dismiss alleging that Article 121 of R.A. No. 6939, otherwise known as the Cooperative Development Authority Law which took effect on March 26, 1990, requires conciliation or mediation within the cooperative before a resort to judicial proceeding. On the same date, the Labor Arbiter denied petitioner's motion to dismiss, holding that the case is impressed with employer-employee relationship and that the law on cooperatives is subservient to the Labor Code. On November 23, 1993, the Labor Arbiter rendered a decision declaring complainants illegally dismissed, thus respondent is directed to pay Complainants backwages, separation pay since reinstatement is evidently not feasible, 13th month pay, wage differentials and 10% attorney's fees from the aggregate monetary award. All other claims are hereby dismissed for lack of merit.

On appeal,1 the NLRC affirmed the Labor Arbiter's decision. ISSUE: Whether or not the labor arbiter has jurisdiction. HELD: Petitioner contends that the labor arbiter has no jurisdiction to take cognizance of the complaint of private respondents considering that they failed to submit their dispute to the grievance machinery as required by P.D. 175 (strengthening the Cooperative Movement) 8 and its implementing rules and regulations under LOI 23. Likewise, the Cooperative Development Authority did not issue a Certificate of Non-Resolution pursuant to Section 8 of R.A. 6939 or the Cooperative Development Authority Law. As aptly stated by the Solicitor General in his comment, P.D. 175 does not provide for a grievance machinery where a dispute or claim may first be submitted. LOI 23 refers to instructions to the Secretary of Public Works and Communications to implement immediately the recommendation of the Postmaster General for the dismissal of some employees of the Bureau of Post. Obviously, this LOI has no relevance to the instant case. Article 121 of Republic Act No. 6938 (Cooperative Code of the Philippines) provides the procedure how cooperative disputes are to be resolved, thus: ART. 121. Settlement of Disputes. Disputes among members, officers, directors, and committee members, and intra-cooperative disputes shall, as far as practicable, be settled amicably in accordance with the conciliation or mediation mechanisms embodied in the by-laws of the cooperative, and in applicable laws. Should such a conciliation/mediation proceeding fail, the matter shall be settled in a court of competent jurisdiction." Complementing this Article is Section8 of R.A. No. 6939 (Cooperative Development Authority Law) which reads: SEC. 8 Mediation and Conciliation. Upon request of either or both parties, the Authority shall mediate and conciliate disputes within a cooperative or between cooperatives: Provided, That if no mediation or conciliation succeeds within three (3) months from request thereof, a certificate of non-resolution

shall be issued by the Commission prior to the filing of appropriate action before the proper courts. The above provisions apply to members, officers and directors of the cooperative involved in disputes within a cooperative or between cooperatives. There is no evidence that private respondents are members of petitioner PHCCI and even if they are, the dispute is about payment of wages, overtime pay, rest day and termination of employment. Under Art. 217 of the Labor Code, these disputes are within the original and exclusive jurisdiction of the Labor Arbiter. Hence, the decision of respondent NLRC is AFFIRMED, with modification in the sense that the backwages due private respondents shall be paid in full, computed from the time they were illegally dismissed up to the time of the finality of this Decision.13

G.R. No. 128024 May 9, 2000 BEBIANO M. BAEZ, petitioner, vs. HON. DOWNEY C. VALDEVILLA and ORO MARKETING, INC., respondents. GONZAGA-REYES, J.: FACTS: Petitioner was the sales operations manager of private respondent in its branch in Iligan City. Defendant canvassed customers personally or through salesmen of plaintiff which were hired or recruited by him. If said customer decided to buy items from plaintiff on installment basis, defendant, without the knowledge of said customer and plaintiff, would buy the items on cash basis at ex-factory price, a privilege not given to customers, and thereafter required the customer to sign promissory notes and other documents using the name and property of plaintiff, purporting that said customer purchased the items from plaintiff on installment basis.

Thereafter, defendant collected the installment payments either personally or through Venus Lozano, a Group Sales Manager of plaintiff but also utilized by him as secretary in his own business for collecting and receiving of installments, purportedly for the plaintiff but in reality on his own account or business. The collection and receipt of payments were made inside the Iligan City branch using plaintiff's facilities, property and manpower. That accordingly plaintiff's sales decreased and reduced to a considerable extent the profits which it would have earned. In 1993, private respondent "indefinitely suspended" petitioner and the latter filed a complaint for illegal dismissal with the National Labor Relations Commission ("NLRC") in Iligan City . In a decision dated July 7, 1994, Labor Arbiter Nicodemus G. Palangan found petitioner to have been illegally dismissed and ordered the payment of separation pay in lieu of reinstatement, and of backwages and attorney's fees. The decision was appealed to the NLRC, which dismissed the same for having been filed out of time. 2 Elevated by petition for certiorari before this Court, the case was dismissed on technical grounds3; however, the Court also pointed out that even if all the procedural requirements for the filing of the petition were met, it would still be dismissed for failure to show grave abuse of discretion on the part of the NLRC. On November 13, 1995, private respondent filed a complaint for damages before the Regional Trial Court ("RTC") of Misamis Oriental: On January 30, 1996, petitioner filed a motion to dismiss the above complaint. He interposed in the court below that the action for damages, having arisen from an employer-employee relationship, was squarely under the exclusive original jurisdiction of the NLRC under Article 217(a), paragraph 4 of the Labor Code and is barred by reason of the final judgment in the labor case. He accused private respondent of splitting causes of action, stating that the latter could very well have included the instant claim for damages in its counterclaim before the Labor Arbiter. He also pointed out that the civil action of private respondent is an act of forum-shopping and was merely resorted to after a failure to obtain a favorable decision with the NLRC. Ruling upon the motion to dismiss, respondent .In declaring itself as having jurisdiction over the subject matter of the instant controversy, respondent court stated:A perusal of the complaint which is for damages does not ask for any relief under the Labor Code of the

Philippines. It seeks to recover damages as redress for defendant's breach of his contractual obligation to plaintiff who was damaged and prejudiced. The Court believes such cause of action is within the realm of civil law, and jurisdiction over the controversy belongs to the regular courts. While seemingly the cause of action arose from employer-employee relations, the employer's claim for damages is grounded on the nefarious activities of defendant causing damage and prejudice to plaintiff .The Court believes that there was a breach of a contractual obligation, which is intrinsically a civil dispute. The averments in the complaint removed the controversy from the coverage of the Labor Code of the Philippines and brought it within the purview of civil law. Petitioner's motion for reconsideration of the above Order was denied for lack of merit on October 16, 1996. Hence, this petition. ISSUE: Who between Labor Arbiters and regular courts had jurisdiction over claims for damages as between employers and employees. HELD: Art. 217(a), paragraph 4 of the Labor Code, which was already in effect at the time of the filing of this case, reads: 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, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural: 4. Claims for actual, moral, exemplary and other forms of damages arising from the employeremployee relations; There is no mistaking the fact that in the case before us, private respondent's claim against petitioner for actual damages arose from a prior employer-employee relationship. In the first place, private

respondent would not have taken issue with petitioner's "doing business of his own" had the latter not been concurrently its employee. Thus, the damages alleged in the complaint below are: first, those amounting to lost profits and earnings due to petitioner's abandonment or neglect of his duties as sales manager, having been otherwise preoccupied by his unauthorized installment sale scheme; and second, those equivalent to the value of private respondent's property and supplies which petitioner used in conducting his "business ". Second, and more importantly, to allow respondent court to proceed with the instant action for damages would be to open anew the factual issue of whether petitioner's installment sale scheme resulted in business losses and the dissipation of private respondent's property. This issue has been duly raised and ruled upon in the illegal dismissal case, where private respondent brought up as a defense the same allegations now embodied in his complaint, and presented evidence in support thereof. In other words, the issue of actual damages has been settled in the labor case, which is now final and executory. This is, of course, to distinguish from cases of actions for damages where the employer-employee relationship is merely incidental and the cause of action proceeds from a different source of obligation. Thus, the jurisdiction of regular courts was upheld where the damages, claimed for were based on tort 14, malicious prosecution 15, or breach of contract, as when the claimant seeks to recover a debt from a former employee 16 or seeks liquidated damages in enforcement of a prior employment contract. 17 Neither can we uphold the reasoning of respondent court that because the resolution of the issues presented by the complaint does not entail application of the Labor Code or other labor laws, the dispute is intrinsically civil. Article 217(a) of the Labor Code, as amended, clearly bestows upon the Labor Arbiter original and exclusive jurisdiction over claims for damages arising from employer-employee relations in other words, the Labor Arbiter has jurisdiction to award not only the reliefs provided by labor laws, but also damages governed by the Civil Code. 18 Thus, it is obvious that private respondent's remedy is not in the filing of this separate action for damages, but in properly perfecting an appeal from the Labor Arbiter's decision. Having lost the right to appeal on

grounds of untimeliness, the decision in the labor case stands as a final judgment on the merits, and the instant action for damages cannot take the place of such lost appeal. Respondent court clearly having no jurisdiction over private respondent's complaint for damages, we will no longer pass upon petitioner's other assignments of error.

AUSTRIA V NLRC (CENTRAL PHIL. UNION MISSION CORP. OF THE 7TH-DAY ADVENTIST) 312 SCRA 410 KAPUNAN; August 16, 1999

FACTS - Pastor Dionisio Austria worked with the Central Philippine Union Mission Corporation of the Seventh Day Adventists (SDA) for 28 years from 1963 to 1991. He began his work with the SDA on 15 July 1963 as a literature evangelist, selling literature of the SDA over the island of Negros. From then on, he worked his way up the ladder and got promoted several times. In January, 1968, he became the Assistant Publishing Director in the West Visayan Mission. In July, 1972, he was elevated to the position of Pastor covering the island of Panay, and the provinces of Romblon and Guimaras. He held the same position up to 1988. Finally, in 1989, he was promoted as District Pastor of the Negros Mission of the SDA and was assigned at Sagay, Balintawak and Toboso, Negros Occidental, with 12 churches under his jurisdiction. In January, 1991, he was transferred to Bacolod City. He held the position of district pastor until his services were terminated on 31 October 1991. - On various occasions from August up to October, 1991, Eufronio Ibesate, the treasurer of the Negros Mission asked him to admit accountability and responsibility for the church tithes and offerings collected by his wife, Thelma Austria, in his district which amounted to P15,078.10, and to remit the same

to the Negros Mission. Petitioner reasoned out that he should not be made accountable for the unremitted collections since it was Pastor Gideon Buhat and Ibesate who authorized his wife to collect the tithes and offerings since he was very sick to do the collecting at that time. - On 16 October 1991, petitioner went to the office of Pastor Buhat, the president of the Negros Mission. During said call, petitioner tried to persuade Pastor Buhat to convene the Executive Committee for the purpose of settling the dispute between him and Pastor David Rodrigo. The dispute between David Rodrigo and petitioner arose from an incident in which petitioner assisted his friend, Danny Diamada, to collect from Pastor Rodrigo the unpaid balance for the repair of the latter's motor vehicle which he failed to pay to Diamada. Due to the assistance of petitioner in collecting Pastor Rodrigo's debt, the latter harbored ill-feelings against petitioner. When news reached petitioner that Pastor Rodrigo was about to file a complaint against him with the Negros Mission, he immediately proceeded to the office of Pastor Buhat and asked the latter to convene the Executive Committee. Pastor Buhat denied the request of petitioner since some committee members were out of town and there was no quorum. Thereafter, the two exchanged heated arguments. Petitioner then left the office of Pastor Buhat. While on his way out, petitioner overheard Pastor Buhat saying "Pastor daw inisog na ina iya (Pastor you are talking tough)." Irked by such remark, petitioner returned to the office of Pastor Buhat, and tried to overturn the latter's table, though unsuccessfully, since it was heavy. Thereafter, petitioner banged the attache case of Pastor Buhat on the table, scattered the books in his office, and threw the phone. Fortunately, Pastors Yonillo Leopoldo and Claudio Montao were around and they pacified both. - On 17 October 1991, petitioner received a letter inviting him and his wife to attend the Executive Committee meeting. From October 21 to 22, the factfinding committee conducted an investigation. Petitioner immediately wrote Pastor Rueben Moralde, president of the SDA and chairman of the factfinding committee, requesting that certain members of the fact-finding committee be excluded in the investigation and resolution of the case. Out of the 6 members requested to inhibit themselves from the investigation and decision-making, only 2 were actually excluded: Pastor Buhat and Pastor

Rodrigo. Subsequently, petitioner received a letter of dismissal citing misappropriation of denominational funds, willful breach of trust, serious misconduct, gross and habitual neglect of duties, and commission of an offense against the person of employer's duly authorized representative, as grounds for the termination of his services.

ISSUES 1. WON the Labor Arbiter/NLRC has jurisdiction to try and decide the complaint filed by petitioner against the SDA 2. WON the termination of the services of petitioner is an ecclesiastical affair, and, as such, involves the separation of church and state 3. WON such termination is valid

HELD 1. YES and 2. NO [Resolved jointly since they are related] Ratio An ecclesiastical affair is one that concerns doctrine, creed or form or worship of the church, or the adoption and enforcement within a religious association of needful laws and regulations for the government of the membership, and the power of excluding from such associations those deemed unworthy of membership. Reasoning - Based on this definition, an ecclesiastical affair involves the relationship between the church and its members and relate to matters of faith, religious doctrines, worship and governance of the congregation. To be concrete, examples of this so-called ecclesiastical affairs to which the State cannot meddle are proceedings for excommunication, ordinations of religious ministers, administration of sacraments and other activities which attached religious significance. The case at bar does not even remotely concern any of the above cited examples. While the matter at hand relates to the church and its religious minister it does not ipso facto give the case a religious

significance. Simply stated, what is involved here is the relationship of the church as an employer and the minister as an employee. It is purely secular and has no relation whatsoever with the practice of faith, worship or doctrines of the church. In this case, petitioner was not excommunicated or expelled from the membership of the SDA but was terminated from employment. - Aside from these, SDA admitted in a certification issued by its officer, Ibesate, that petitioner has been its employee for 28 years. SDA even registered petitioner with the SSS as its employee. The worker's records of petitioner have been submitted by private respondents as part of their exhibits. From all of these it is clear that when the SDA terminated the services of petitioner, it was merely exercising its management prerogative to fire an employee which it believes to be unfit for the job. As such, the State, through the Labor Arbiter and the NLRC, has the right to take cognizance of the case. - Finally, private respondents are estopped from raising the issue of lack of jurisdiction for the first time on appeal. The active participation of a party coupled with his failure to object to the jurisdiction of the court or quasijudicial body is tantamount to an invocation of that jurisdiction and a willingness to abide by the resolution of the case and will bar said party from later on impugning the court or body's jurisdiction. 3. NO. Reasoning - The issue being the legality of petitioner's dismissal, the same must be measured against the requisites for a valid dismissal, namely: (a) the employee must be afforded due process, i.e., he must be given an opportunity to be heard and to defend himself, and; (b) the dismissal must be for a valid cause as provided in Article 282 of the Labor Code. Without the concurrence of these twin requirements, the termination would, in the eyes of the law, be illegal. As to Due Process

- Article 277(b) of the Labor Code further require the employer to furnish the employee with 2 written notices, to wit: (a) a written notice served on the employee specifying the ground or grounds for termination, and giving to said employee reasonable opportunity within which to explain his side, and, (b) a written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. - The first notice, which may be considered as the proper charge, serves to apprise the employee of the particular acts or omissions for which his dismissal is sought. The second notice on the other hand seeks to inform the employee of the employer's decision to dismiss him. This decision, however, must come only after the employee is given a reasonable period from receipt of the first notice within which to answer the charge and ample opportunity to be heard and defend himself with the assistance of a representative, if he so desires. Non-compliance therewith is fatal because these requirements are conditions sine quo non before dismissal may be validly effected. - SDA failed to substantially comply with the above requirements. With regard to the first notice, the letter dated 17 October 1991, which notified petitioner and his wife to attend the meeting on 21 October 1991, cannot be construed as the written charge required by law. A perusal of the said letter reveals that it never categorically stated the particular acts or omissions on which his impending termination was grounded. In fact, the letter never even mentioned that he would be subject to investigation. The letter merely mentioned that he and his wife were invited to a meeting wherein what would be discussed were the alleged unremitted church tithes and the events that transpired on 16 October 1991. For this reason, it cannot be said that petitioner was given enough opportunity to properly prepare for his defense. While admittedly, SDA complied with the second requirement, the notice of termination, this does not cure the initial defect of lack of the proper written charge required by law. As to Just Cause

- Private respondents allege that they have lost their confidence in petitioner for his failure, despite demands, to remit the tithes and offerings which were collected in his district. Settled is the rule that under Article 282 (c) of the Labor Code, the breach of trust must be willful. A breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It must rest on substantial grounds and not on the employer's arbitrariness, whims, caprices or suspicion, otherwise, the employee would eternally remain at the mercy of the employer. It should be genuine and not simulated. This ground has never been intended to afford an occasion for abuse, because of its subjective nature. The records show that there were only 6 instances when petitioner personally collected and received from the church treasurers the tithes, collections, and donations for the church. The testimony of Naomi Geniebla, the Negros Mission Church Auditor and a witness for private respondents, show that Pastor Austria was able to remit all his collections to the treasurer of the Negros Mission. Private respondents try to pin on petitioner the alleged non-remittance of the tithes collected by his wife. In the absence of conspiracy and collusion, which private respondents failed to demonstrate, between petitioner and his wife, he cannot be made accountable for the alleged infraction committed by his wife. After all, they still have separate and distinct personalities. Thus, the allegation of breach of trust has no leg to stand on. - Misconduct has been defined as improper or wrong conduct. It is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. For misconduct to be considered serious it must be of such grave and aggravated character and not merely trivial or unimportant. Based on this standard, we believe that the act of petitioner in banging the attache case on the table, throwing the telephone and scattering the books in the office of Pastor Buhat, although improper, cannot be considered as grave enough to be considered as serious misconduct. After all, as correctly observed by the Labor Arbiter, though petitioner committed damage to property, he did not physically assault Pastor Buhat or any other pastor present during the incident of 16 October 1991. In fact, the alleged offense

committed upon the person of the employer's representatives was never really established or proven by private respondents. Hence, there is no basis for the allegation that petitioner's act constituted serious misconduct or that the same was an offense against the person of the employer's duly authorized representative. - The final ground alleged by private respondents, gross and habitual neglect of duties, does not requires an exhaustive discussion. All private respondents had were allegations but not proof. Aside from merely citing the said ground, private respondents failed to prove culpability. In fact, the evidence on record shows otherwise. Petitioner's rise from the ranks proves that he was actually a hard-worker. Private respondents' evidence, which consisted of petitioner's Worker's Reports, revealed how petitioner travelled to different churches to attend to the faithful under his care. Indeed, he labored hard for the SDA, but, in return, he was rewarded with a dismissal from the service for a nonexistent cause. Disposition Finding of the Labor Arbiter that petitioner was terminated from service without just or lawful cause is SUSTAINED. Petitioner is entitled to reinstatement without loss of seniority right and the payment of full backwages without any deduction corresponding to the period from his illegal dismissal up to the actual reinstatement. Challenged Resolution of NLRC is NULLIFIED and SET ASIDE.

Department of Foreign Affairs v. NLRC, [G.R. No. 113191, September 18, 1996, 262 SCRA 39, 43 44]. This case involves an illegal dismissal case filed against the Asian Development Bank (ADB), it was ruled thatsaid entity enjoys immunity from legal process of every form and, therefore, the suit against it cannot prosper. And thisimmunity extends to its officers who also enjoy immunity in respect of all acts performed by them in their officialcapacity. The Charter and the Headquarters Agreement granting these immunities and privileges to the ADB are treatycovenants and commitments voluntarily assumed by the Philippine government which must be respected.

Department of Foreign Affairs vs. NLRC (G.R. No. 113191) (G.R. No. 113191, 18 September 1996; J. VITUG, Ponente; First Division)

Facts: A complaint for illegal dismissal was filed against the Asian Development Bank ("ADB"). Upon receipt of summonses, both the ADB and the DFA notified the Labor Arbiter that the ADB, as well as its President and Officers, were covered by an immunity from legal process except for borrowings, guaranties or the sale of securities pursuant to Article 50(1) and Article 55 of the Agreement Establishing the Asian Development Bank (the "Charter") in relation to Section 5 and Section 44 of the Agreement Between The Bank And The Government Of The Philippines Regarding The Bank's Headquarters (the"Headquarters Agreement"). The Labor Arbiter took cognizance of the complaint on the impression that the ADB had waived its diplomatic immunity from suit, and issued a judgment in favor of the complainant. The ADB did not file an appeal, but the DFA sought a nullification with the NLRC. The latter denied the request.

Issue: Whether or not ADB is immune from suit?

Ruling: No. Under the Charter and Headquarters Agreement, the ADB enjoys immunity from legal process of every form, except in the specified cases of borrowing and guarantee operations, as well as the purchase, sale and underwriting of

securities. The Banks officers, on their part, enjoy immunity in respect of all acts performed by them in their official capacity. The Charter and the Headquarters Agreement granting these immunities and privileges are treaty covenants and commitments voluntarily assumed by the Philippine government which must be respected.Being an international organization that has been extended a diplomatic status, the ADB is independent of the municipal law. One of the basic immunities of an international organization is immunity from local jurisdiction, i.e., that it is immune from the legal writs and processes issued by the tribunals of the country where it is found. The obvious reason for this is that the subjection of such an organization to the authority of the local courts would afford a convenient medium thru which the host government may interfere in their operations or even influence or control its policies and decisions of the organization; besides, such subjection to local jurisdiction would impair the capacity of such body to discharge its responsibilities impartially on behalf of its member-states." The ADB didn't descend to the level of an ordinary party to a commercial transaction,which should have constituted a waiver of its immunity from suit, by entering into service contracts with different private companies. There are two conflicting concepts of sovereign immunity, each widely held and firmly established. According to the classical or absolute theory, a sovereign cannot, without its consent, be made a respondent in the Courts of another sovereign. According to the newer or restrictive theory, the immunity of the sovereign is recognized only with regard to public acts or acts jure imperii of a state, but not with regard to private act or acts jure gestionis. Certainly, the mere entering into a contract by a foreign state with a private party cannot be the ultimate test. Such an act can only be the start of the inquiry. The logical question is whether the foreign state is engaged in the activity in the regular course of business. If the foreign state is not engaged regularly in a business or trade, the particular act or transaction must then be tested by its nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then it is an act jure imperii, especially when it is not

undertaken for gain or profit. The service contracts referred to by private respondent have not been intended by the ADB for profit or gain but are official acts over which a waiver of immunity would not attach.

Issue: Whether or not the DFA has the legal standing to file the present petition? Ruling:

The DFA's function includes, among its other mandates, the determination of persons andinstitutions covered by diplomatic immunities, a determination which, when challenged,entitles it to seek relief from the court so as not to seriously impair the conduct of the country's foreign relations. The DFA must be allowed to plead its case whenever necessary or advisable to enable it to help keep the credibility of the Philippine government before the international community. When international agreements are concluded, the parties thereto are deemed to have likewise accepted the responsibility of seeing to it that their agreements are duly regarded. In our country, this task falls principally on the DFA as being the highest executive department with the competence and authority to so act in this aspect of the international arena.

PNB v. CABANSAG G.R. No. 157010. June 21, 2005 PANGANIBAN, J. Facts:

In late 1998, Florence Cabansag arrived in Singapore as a tourist. She applied for employment, with the Singapore Branch of the Philippine National Bank, a private banking corporation organized and existing under the laws of the Philippines, with principal offices at the PNB Financial Center, Roxas Boulevard, Manila. At the time, the Singapore PNB Branch was under the helm of Ruben C. Tobias, a lawyer, as General Manager, with the rank of Vice-President of the Bank. At the time, too, the Branch Office had 2 types of employees: (a) expatriates or the regular employees, hired in Manila and assigned abroad including Singapore, and (b) locally (direct) hired. She applied for employment as Branch Credit Officer, at a total monthly package of $SG4,500.00, effective upon assumption of duties after approval. Ruben C. Tobias found her eminently qualified and wrote on October 26, 1998, a letter to the President of the Bank in Manila, recommending the appointment of Florence O. Cabansag, for the position. The President of the Bank was impressed with the credentials of Florence O. Cabansag that he approved the recommendation of Ruben C. Tobias. She then filed an Application, with the Ministry of Manpower of the Government of Singapore, for the issuance of an Employment Pass as an employee of the Singapore PNB Branch. Her application was approved for a period of 2 years. Ruben C. Tobias wrote a letter to Florence O. Cabansag offering her a temporary appointment, as Credit Officer, at a basic salary of Singapore Dollars 4,500.00, a month and, upon her successful completion of her probation to be determined solely, by the Bank, she may be extended at the discretion of the Bank, a permanent appointment and that her temporary appointment was subject to the following terms and conditions: 1. You will be on probation for a period of three (3) consecutive months from the date of your assumption of duty. 2. You will observe the Banks rules and regulations and those that may be adopted from time to time. 3. You will keep in strictest confidence all matters related to transactions between the Bank and its clients. 4. You will devote your full time during business hours in promoting the business and interest of the Bank. 5. You will not, without prior written consent of the Bank, be employed in anyway for any purpose whatsoever outside business hours by any person, firm or company.

6. Termination of your employment with the Bank may be made by either party after notice of one (1) day in writing during probation, one month notice upon confirmation or the equivalent of one (1) days or months salary in lieu of notice. Florence O. Cabansag accepted the position and assumed office. Barely 3 months in office, Florence O. Cabansag submitted to Ruben C. Tobias, on March 9, 1999, her initial Performance Report. Ruben C. Tobias was so impressed with the Report that he made a notation and, on said Report: GOOD WORK. However, in the evening of April 14, 1999, while Florence O. Cabansag was in the flat, which she and Cecilia Aquino, the Assistant VicePresident and Deputy General Manager of the Branch and Rosanna Sarmiento, the Chief Dealer of the said Branch, rented, she was told by the 2 that Ruben C. Tobias has asked them to tell Florence O. Cabansag to resign from her job. Florence O. Cabansag was perplexed at the sudden turn of events and the runabout way Ruben C. Tobias procured her resignation from the Bank. The next day, Florence O. Cabansag talked to Ruben C. Tobias and inquired if what Cecilia Aquino and Rosanna Sarmiento had told her was true. Ruben C. Tobias confirmed the veracity of the information, with the explanation that her resignation was imperative as a cost-cutting measure of the Bank. Ruben C. Tobias, likewise, told Florence O. Cabansag that the PNB Singapore Branch will be sold or transformed into a remittance office and that, in either way, Florence O. Cabansag had to resign from her employment. The more Florence O. Cabansag was perplexed. She then asked Ruben C. Tobias that she be furnished with a Formal Advice from the PNB Head Office in Manila. However, Ruben C. Tobias flatly refused. Florence O. Cabansag did not submit any letter of resignation. Ruben C. Tobias again summoned Florence O. Cabansag to his office and demanded that she submit her letter of resignation, with the pretext that he needed a Chinese-speaking Credit Officer to penetrate the local market, with the information that a Chinese-speaking Credit Officer had already been hired and will be reporting for work soon. She was warned that, unless she submitted her letter of resignation, her employment record will be blemished with the notation DISMISSED spread thereon. Without giving any definitive answer, Florence O. Cabansag asked Ruben C. Tobias that she be given sufficient time to look for another job. Ruben C. Tobias told her that she should be out of her employment by May 15, 1999.

However, on April 19, 1999, Ruben C. Tobias again summoned Florence O. Cabansag and adamantly ordered her to submit her letter of resignation. She refused. On April 20, 1999, she received a letter from Ruben C. Tobias terminating her employment with the Bank. Issues: 1. WON the arbitration branch of the NLRC in the National Capital Region has jurisdiction over the instant controversy; 2. WON the arbitration of the NLRC in the National Capital Region is the most convenient venue or forum to hear and decide the instant controversy; and 3. WON the respondent was illegally dismissed, and therefore, entitled to recover moral and exemplary damages and attorneys fees Held: The jurisdiction of labor arbiters and the NLRC is specified in Article 217 of the Labor Code as follows: 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, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural: 1. Unfair labor practice cases; 2. Termination disputes; 3. If accompanied with a claim for reinstatement, those cases that workers may file involving wage, rates of pay, hours of work and other terms and conditions of employment 4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations; 5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and 6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employeremployee relations, including those of persons in domestic or household service, involving an amount of exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.

(b) The commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. More specifically, Section 10 of RA 8042 reads in part: SECTION 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages. labor arbiters clearly have original and exclusive jurisdiction over claims arising from employer-employee relations, including termination disputes involving all workers, among whom are overseas Filipino workers (OFW). Respondent was directly hired, while on a tourist status in Singapore, by the PNB branch in that city state. Prior to employing respondent, petitioner had to obtain an employment pass for her from the Singapore Ministry of Manpower. Securing the pass was a regulatory requirement pursuant to the immigration regulations of that country. The Philippine government requires non-Filipinos working in the country to first obtain a local work permit in order to be legally employed here. That permit, however, does not automatically mean that the non-citizen is thereby bound by local laws only, as averred by petitioner. It does not at all imply a waiver of ones national laws on labor. Absent any clear and convincing evidence to the contrary, such permit simply means that its holder has a legal status as a worker in the issuing country. a branch office in Singapore. Significantly, respondents employment by the Singapore branch office had to be approved by Benjamin P. Palma Gil, the president of the bank whose principal offices were in Manila. This circumstance militates against petitioners contention that respondent was locally hired; and totally governed by and subject to the laws, common practices and customs of Singapore, not of the Philippines. Instead, with more reason does this fact reinforce the presumption that respondent falls under the legal definition of migrant worker, in this case one deployed in

Singapore. Hence, petitioner cannot escape the application of Philippine laws or the jurisdiction of the NLRC and the labor arbiter. Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social legislation, contract stipulations to the contrary notwithstanding. This pronouncement is in keeping with the basic public policy of the State to afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. Section 1(a) of Rule IV of the NLRC Rules of Procedure reads: Section 1. Venue (a) All cases which Labor Arbiters have authority to hear and decide may be filed in the Regional Arbitration Branch having jurisdiction over the workplace of the complainant/petitioner; Provided, however that cases of Overseas Filipino Worker (OFW) shall be filed before the Regional Arbitration Branch where the complainant resides or where the principal office of the respondent/employer is situated, at the option of the complainant. For purposes of venue, workplace shall be understood as the place or locality where the employee is regularly assigned when the cause of action arose. It shall include the place where the employee is supposed to report back after a temporary detail, assignment or travel. In the case of field employees, as well as ambulant or itinerant workers, their workplace is where they are regularly assigned, or where they are supposed to regularly receive their salaries/wages or work instructions from, and report the results of their assignment to their employers. Under the Migrant Workers and Overseas Filipinos Act of 1995 (RA 8042), a migrant worker refers to a person who is to be engaged, is engaged or has been engaged in a remunerated activity in a state of which he or she is not a legal resident; to be used interchangeably with overseas Filipino worker. Undeniably, respondent was employed by petitioner in its branch office in Singapore. Admittedly, she is a Filipino and not a legal resident of that state. She thus falls within the category of migrant worker or overseas Filipino worker. As such, it is her option to choose the venue of her Complaint against petitioner for illegal dismissal. The law gives her two choices: (1) at the

Regional Arbitration Branch (RAB) where she resides or (2) at the RAB where the principal office of her employer is situated. Since her dismissal by petitioner, respondent has returned to the Philippines -- specifically to her residence at Filinvest II, Quezon City. Thus, in filing her Complaint before the RAB office in Quezon City, she has made a valid choice of proper venue. Respondent was already a regular employee at the time of her dismissal, because her three-month probationary period of employment had already ended. This ruling is in accordance with Article 281 of the Labor Code: An employee who is allowed to work after a probationary period shall be considered a regular employee. Indeed, petitioner recognized respondent as such at the time it dismissed her, by giving her one months salary in lieu of a one-month notice, consistent with provision No. 6 of her employment Contract. As a regular employee, respondent was entitled to all rights, benefits and privileges provided under our labor laws. One of her fundamental rights is that she may not be dismissed without due process of law. The twin requirements of notice and hearing constitute the essential elements of procedural due process, and neither of these elements can be eliminated without running afoul of the constitutional guarantee. In dismissing employees, the employer must furnish them two written notices: 1) one to apprise them of the particular acts or omissions for which their dismissal is sought; and 2) the other to inform them of the decision to dismiss them. As to the requirement of a hearing, its essence lies simply in the opportunity to be heard. Respondent was not notified of the specific act or omission for which her dismissal was being sought. Neither was she given any chance to be heard, as required by law. At any rate, even if she were given the opportunity to be heard, she could not have defended herself effectively, for she knew no cause to answer to. All that petitioner tendered to respondent was a notice of her employment termination effective the very same day, together with the equivalent of a one-month pay. This Court has already held that nothing in the law gives an employer the option to substitute the required prior notice and opportunity to be heard with the mere payment of 30 days salary.

The employer shall be sanctioned for noncompliance with the requirements of, or for failure to observe, due process that must be observed in dismissing an employee. Moreover, Articles 282, 283 and 284 of the Labor Code provide the valid grounds or causes for an employees dismissal. The employer has the burden of proving that it was done for any of those just or authorized causes. The failure to discharge this burden means that the dismissal was not justified, and that the employee is entitled to reinstatement and back wages. Petitioner has not asserted any of the grounds provided by law as a valid reason for terminating the employment of respondent. It merely insists that her dismissal was validly effected pursuant to the provisions of her employment Contract, which she had voluntarily agreed to be bound to.

MA. ISABEL T. SANTOS, represented by ANTONIO P. SANTOS,vs. SERVIER PHILIPPINES, INC. and NATIONAL LABOR RELATIONS COMMISSION, [G.R. No. 166377. November 28, 2008.] Facts: Petitioner Ma. Isabel T. Santos was the Human Resource Manager of respondent Servier Philippines, Inc. since 1991 until her termination from service in 1999. On March 26 and 27, 1998, petitioner attended a meeting of all human resource managers of respondent, held in Paris, France. Since the last day of the meeting coincided with the graduation of petitioner's only child, she arranged for a European vacation with her family right after the meeting. While having dinner in a Paris restaurant w/ her family & friends, petitioner complained of stomach pain, then vomited. Eventually, she was brought to the hospital where she fell into coma for 21 days; and later stayed at the Intensive Care Unit (ICU) for 52 days. The hospital found that the probable cause of her sudden attack was "alimentary allergy", as she had recently ingested a meal of mussels. During the time that petitioner was confined at the hospital, her husband and son stayed with her in Paris. Petitioner's hospitalization

expenses, as well as those of her husband and son, were paid by respondent. Petitioner went back to the Philippines for the continuation of her medical treatment. She was then confined at the St. Luke's Medical Center for rehabilitation. During the period of petitioner's rehabilitation, respondent continued to pay the former's salaries; and to assist her in paying her hospital bills. In a letter dated May 14, 1999, respondent informed the petitioner that the former had requested the latter's physician to conduct a thorough physical and psychological evaluation of her condition, to determine her fitness to resume her work at the company. Petitioner's physician concluded that the former had not fully recovered mentally and physically. Hence, respondent was constrained to terminate petitioner's services effective August 31, 1999. As a consequence of petitioner's termination from employment, respondent offered a retirement package which consists of: Retirement Plan Benefits, Insurance Pension for 60 months from companysponsored group life policy, Educational assistance, & Medical and Health Care Of the promised retirement benefits amounting to P1,063,841.76, only P701,454.89 was released to petitioner's husband, the balance thereof was withheld allegedly for taxation purposes. Respondent also failed to give the other benefits. Petitioner instituted the instant case for unpaid salaries; unpaid separation pay; unpaid balance of retirement package plus interest; insurance pension for permanent disability; educational assistance for her son; medical assistance; reimbursement of medical and rehabilitation expenses; moral, exemplary, and actual damages, plus attorney's fees. The Labor Arbiter dismissed petitioner's complaint. The Labor Arbiter stressed that respondent had been generous in giving financial assistance to the petitioner. He likewise noted that there was a retirement plan for the benefit of the employees. In denying petitioner's claim for separation pay, the Labor Arbiter ratiocinated that the same had already been integrated in the retirement plan established by respondent. Thus, petitioner could no longer collect separation pay over and above her retirement benefits. The arbiter refused to rule on the legality of the deductions made by respondent from petitioner's total retirement benefits for taxation purposes, as the issue was beyond the

jurisdiction of the NLRC. On the matter of educational assistance, the Labor Arbiter found that the same may be granted only upon the submission of a certificate of enrollment. Lastly, as to petitioner's claim for damages and attorney's fees, the Labor Arbiter denied the same as the former's dismissal was not tainted with bad faith. On appeal to the National Labor Relations Commission (NLRC), the tribunal set aside the Labor Arbiter's decision & partly granted the appeal. The NLRC emphasized that petitioner was not retired from the service pursuant to law, collective bargaining agreement (CBA) or other employment contract; rather, she was dismissed from employment due to a disease/disability under Article 284 20 of the Labor Code. 21 In view of her non-entitlement to retirement benefits, the amounts received by petitioner should then be treated as her separation pay. Though not legally obliged to give the other benefits, i.e., educational assistance, respondent volunteered to grant them, for humanitarian consideration. The NLRC therefore ordered the payment of the other benefits promised by the respondent. Lastly, it sustained the denial of petitioner's claim for damages for the latter's failure to substantiate the same. Unsatisfied, petitioner elevated the matter to the Court of Appeals which affirmed the NLRC decision. Issues: Whether the deductions made by respondent from petitioners total retirement benefits for taxation purposes is beyond the jurisdiction of the NLRC Held: No. Contrary to the Labor Arbiter and NLRC's conclusions, petitioner's claim for illegal deduction falls within the tribunal's jurisdiction. It is noteworthy that petitioner demanded the completion of her retirement benefits, including the amount withheld by respondent for taxation purposes. The issue of deduction for tax purposes is intertwined with the main issue of whether or not petitioner's benefits have been fully given her. It is, therefore, a money claim arising from the employer-employee relationship, which clearly falls within the jurisdiction of the Labor Arbiter and the NLRC.

ARTICLE 218 PHILIPPINE AIRLINES, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, FERDINAND PINEDA and GOGFREDO CABLING, respondents. Private respondents are flight stewards of the petitioner. Both were dismissed from the service for their alleged involvement in the April 3, 1993 currency smuggling in Hong Kong. on April 15, 1993, the petitioners were instructed to attend an investigation by respondent's "Security and Fraud Prevention SubDepartment" regarding an April 3, 1993 incident in Hongkong at which Joseph Abaca, respondent's Avionics Mechanic in Hongkong "was intercepted by the Hongkong Airport Police at Gate 05 the ramp area of the Kai TakInternational Airport while about to exit said gate carrying a bag said to contain some 2.5 million pesos in Philippine Currencies at the Police Station. Mr. Abaca claimed that he just found said plastic bag at the Skybed Section of the arrival flight where petitioners served as flight stewards of said flight the petitioners sought "a more detailed account of what this HKG incident is all about"; but instead, the petitioners were administratively charged, "a hearing" on which "did not push through" until almost two (2) years after, "Mr. Joseph Abaca finally gave exculpating statements to the board in that he cleared petitioners from any participation or from being the owners of the currencies, and at which hearing Mr. Joseph Abaca volunteered the information that the real owner of said money as petitioners "thought that they were already fully cleared of the charges, as they no longer received any summons/notices on the intended "additional hearings" mandated by the Disciplinary Board," they were surprised to receive "on February 23, 1995. . . a Memorandum dated February 22, 1995" terminating their services for alleged violation of respondent's Code of Discipline "effective immediately"; Aggrieved by said dismissal, private respondents filed with the NLRC a petition 1for injunction which prays for reinstatement of private respondents; award of full backwages, moral and exemplary damages; and attorney's fees

On April 3, 1995, the NLRC issued a temporary mandatory injunction 2 enjoining petitioner to cease and desist from enforcing its February 22, 1995 Memorandum of dismissal. On May 4, 1995, petitioner moved for reconsideration on the ground that the NLRC erred in granting a temporary injunction order when it has no jurisdiction to issue an injunction or restraining order since this may be issued only under Article 218 of the Labor Code if the case involves or arises from labor disputes; such is denied by the NLRC ruling that: they have jurisdiction and that what we have here is not a labor dispute as long as it concedes that as defined by law, a" (l) "Labor Dispute" includes any controversy or matter concerning terms or conditions of employment. ISSUE: Can the National Labor Relations Commission (NLRC), even without a complaint for illegal dismissal tiled before the labor arbiter, entertain an action for injunction and issue such writ enjoining petitioner Philippine Airlines, inc. from enforcing its Orders of dismissal against private respondents, and ordering petitioner to reinstate the private respondents to their previous positions? HELD: NOTHE power of the NLRC to issue an injunctive writ originates from "any labor dispute" upon application by a party thereof, which application if not granted "may cause grave or irreparable damage to any party or render ineffectual any decision in favor of such party." The term "labor dispute" is defined as "any controversy or matter concerning terms and conditions of employment or the association or representation of persons in negotiating, fixing. maintaining, changing, or arranging the terms and conditions of employment regardless of whether or not the disputants stand in the proximate relation of employers and employees." 8 The term "controversy" is likewise defined as "a litigated question; adversary proceeding in a court of law; a civil action or suit, either at law or in equity; a justiciable dispute." 9 A "justiciable controversy" is "one involving an active antagonistic assertion of a legal right on one side and a denial thereof on the other concerning a real, and not a mere theoretical question or issue." 10

Taking into account the foregoing definitions, it is an essential requirement that there must first be a labor dispute between the contending parties before the labor arbiter. In the present case, there is no labor dispute between the petitioner and private respondents as there has yet been no complaint for illegal dismissal filed with the labor arbiter by the private respondents against the petitioner. The petition for injunction directly filed before the NLRC is in reality an action for illegal dismissal. This is clear from the allegations in the petition which prays for; reinstatement of private respondents; award of full backwages, moral and exemplary damages; and attorney's fees. As such, the petition should have been filed with the labor arbiter who has the original and exclusive jurisdiction to hear and decide the cases involving all workers, whether agricultural or non-agricultural. The jurisdiction conferred by the foregoing legal provision to the labor arbiter is both original and exclusive, meaning, no other officer or tribunal can take cognizance of, hear and decide any of the cases therein enumerated. The only exceptions are where the Secretary of Labor and Employment or the NLRC exercises the power of compulsory arbitration, or the parties agree to submit the matter to voluntary arbitration pursuant to Article 263 (g) of the Labor Code. On the other hand, the NLRC shall have exclusive appellate jurisdiction over all cases decided by labor arbiters as provided in Article 217(b) of the Labor Code. In short, the jurisdiction of the NLRC in illegal dismissal cases is appellate in nature and, therefore, it cannot entertain the private respondents' petition for injunction which challenges the dismissal orders of petitioner. Article 218(e) of the Labor Code does not provide blanket authority to the NLRC or any of its divisions to issue writs of injunction, considering that Section 1 of Rule XI of the New Rules of Procedure of the NLRC makes injunction only an ancillary remedy in ordinary labor disputes Finally, an injunction, as an extraordinary remedy, is not favored in labor law considering that it generally has not proved to be an effective means of settling labor disputes. 20 It has been the policy of the State to encourage the parties to use the non-judicial process of negotiation and compromise, mediation and arbitration. 21 Thus, injunctions may be issued only in cases of extreme necessity based on legal grounds clearly established, after due consultations or hearing and when all efforts at conciliation are exhausted which factors, however, are clearly absent in the present case.

ARTICLE 223 PIONEER TEXTURIZING CORP. v. NLRC (GR No. 118651, 16 October 1997) Francisco FACTS: Lourdes de Jesus has been a reviser/trimmer of Pioneer Texturizing Corp. since 1980. As a reviser/trimmer, de Jesus based her assigned work on a paper note posted by Pioneer. The posted paper which contains the corresponding price for the work to be accomplished by a worker is identified by its P.O. Number. In 1992, she worked on P.O. No. 3853 by trimming the cloths ribs. She thereafter submitted tickets corresponding to the work done to her supervisor. Three days later, de Jesus received a memorandum from Pioneers personnel manager requiring her to explain why no disciplinary action should be taken against her for dishonesty and tampering of official records and documents with the intention of cheating as P.O. No. 3853 allegedly required no trimming. The memorandum also placed her under preventive suspension for 30 days. In her handwritten explanation, she maintained that she merely committed a mistake in trimming P.O. No. 3853 as it had the same style and design as P.O. No. 3824 which has an attached price list for trimming the ribs and admitted that she may have been negligent in presuming that the same work was to be done with P.O. 3853, but not for dishonesty or tampering. Pioneer nonetheless terminated her from employment and sent her a notice of termination upon expiry of her preventive suspension. De Jesus then filed a complaint for illegal dismissal against Pioneer. The LA noted that de Jesus was amply accorded procedural due process in her termination from service; however, after observing that de Jesus made some further trimming on P.O. No. 3853 and that her dismissal was not justified, the LA held Pioneer of illegal dismissal and ordered Pioneer to reinstate de Jesus to her former position with payment of full backwages. The NLRC ruled that de Jesus was negligent in presuming that the ribs of P.O. No. 3853 should likewise be trimmed for having the same style and design as P.O. No.

3824, thus Pioneer could not entirely be faulted for dismissing de Jesus. The NLRC declared that the status quo between the parties should be maintained and affirmed the LAs order of reinstatement, but without backwages. The NLRC further directed Pioneer to pay de Jesus her back salaries from the date she filed her motion for execution up to the date of the promulgation of the decision. Pioneer filed a partial motion for reconsideration which the NLRC denied. Pioneer filed a petition to the SC, anchored substantially on the NLRCs alleged error in holding that de Jesus is entitled to reinstatement and backwages, because it claims that de Jesus was not illegally dismissed in the first place. Pioneer also claims that an order for reinstatement is not self executory and stresses that there must be a writ of execution which may be issued by the NLRC or by the LA motu proprio or on motion of an interested party. It further maintains that even if a writ of execution was issued, a timely appeal coupled by the posting of an appropriate supersedeas bond, which it did in this case, effectively forestalled and stayed execution of the reinstatement order of the LA. ISSUE: W/N an order for reinstatement needs a writ of execution. HELD: NO. Article 223 of the Labor Code expressly provides that insofar as the reinstatement aspect is concerned, shall be immediately be executory, even pending appeal The posting of a bond by the employer shall not stay the execution for reinstatement provided. It must be construed to mean exactly what it says. In declaring that a reinstatement order is not self-executory and needs a writ of execution, the SC in a prior case adverted to the rule provided under Article 224. A closer examination, however, shows that the necessity for a writ of execution under Article 224 applies only to final and executory decisions which are not within the coverage of Article 223. Article 224 states that the need for a writ of execution applies only within five years from the date of a decision, an order or award becomes final and executory. It cannot relate to an award or order of reinstatement still to be appealed or pending appeal which Article 223 contemplates. The provision of Article 223 is clear that an award 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 n 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 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 inaction on the of the LA or the NLRC could easily delay the issuance of the writ thereby setting at naught the strict mandate and noble purpose envisioned by the said Article. In other words, if the requirements of Article 224 were to govern, then the executory nature of a reinstatement order or award contemplated in 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. In ruling that an order or award for reinstatement does not require a writ of execution, the Court is simply adhering and giving meaning to the rule that all doubts in the interpretation and implementation of labor laws should be resolved in favor of labor. Henceforth, it is ruled that an award or order for reinstatement is self-executory. After receipt of the decision or resolution ordering the employees reinstatement, the employer has a right to choose whether to re-admit the employee to work under the same terms and conditions prevailing prior to his dismissal or to reinstate the employee in the payroll. In either instance, the employer has to inform the employee of his choice. The notification is based on practical considerations for without notice, the employee has no way of knowing if he has to report for work or not. On appeal, however, the appellate tribunal concerned may enjoin or suspend the reinstatement order in the exercise of its sound discretion.

Petition denied, LA decision is reinstated. ROQUERO VS. PHILIPPINE AIRLINES, INC. G.R. NO. 152329. APRIL 22, 2003. PUNO, J. FACTS 1. Petitioner Alejandro Roquero and Rene Pabayo were ground equipment mechanics of respondent Philippine Airlines, Inc. (PAL). They were caught red-handed possessing shabu within the company premises by PAL Security and NARCOM personnel. 2. Subsequently, they received a notice of administrative charge for violating the PAL Code of Discipline. They were required to answer the charges and were placed under preventive suspension. In their answer, petitioner and Pabayo alleged that they were instigated by PAL to take the drugs. 3. In a Memorandum, Roquero and Pabayo were dismissed by PAL. Thus, they filed a case for illegal dismissal. The Labor Arbiter upheld the dismissal but awarded the parties separation pay. During the period of their appeal with the NLRC, the complainants were acquitted by the RTC in the criminal case charging them of violation of Republic Act 6425. 4. The NLRC ruled in favor of the complainants finding PAL guilty of instigation. However, it ordered reinstatement to their former positions but without backwages. Roquero and Pabayo did not appeal the decision but filed a motion for a writ of execution of the reinstatement order. The Labor Arbiter granted the motion but PAL refused to executed on the ground that they have already filed a petition for review before the Supreme Court. 5. During the pendency of the case, PAL and Pabayo executed a compromise agreement and the latter withdrew the case with regard to him. The Court of

Appeals upheld the dismissal but did not award the separation pay on the ground that one who has been validly dismissed is not entitled to those benefits. ISSUES 1. Was Roqueros dismissal valid? 2. Can the executory nature of the reinstatement order be halted by a petition filed in the higher courts without any restraining order or preliminary injunction having been ordered in the meantime? HELD 1. YES. Roquero is guilty of serious misconduct for possessin and using shabu. He violated Chapter 2,Article VII, section 4 of the PAL Code of Discipline stating, any employee who, while in the company premises or on duty, takes or is under the influence of prohibited or controlled drugs, or hallucinogenic substances or narcotics shall be dismissed. Serious misconduct is defined as the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgement. For serious misconduct to warrant the dismissal of an employee, it (1) must be serious; (2) must relate to the performance of the employees duty; and (3) must show that the employee has become unfit to continue working for the employer. It is of public knowledge that drugs can damage the mental faculties. Roqueros job was with the maintenance and repair of PALs airplanes. He cannot discharge that duty if he is a drug user. His failure to do this job can mean great loss of lives and properties. Hence, even if he was instigated to take the drugs, he has no right to be reinstated to his position. Petitioner cannot also complain that he was denied procedural due process for PAL complied with the two-notice requirement before dismissing him. The twinnotice rule requires (1) the notice which apprises the employee of the particular acts or omissions for which his dismissal is being sought along with

the opportunity for the employee to air his side, and (2) the subsequent notice to of the employers decision to dismiss him. Both were given by respondent PAL. 2. NO. Article 223, paragraph 3 of the Labor Code, as amended by Section 12 of Republic Act No. 6715, and Section 2 of the NLRC Interim Rules on Appeals under RA No. 6715, provide that an order of reinstatement by the Labor Arbiter is immediately executory even pending appeal. The rationale being the law itself laid down a compassionate policy as to vivify and enhance the provisions of the 1987 Constitution on labor and the working man. 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 for 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 SC. Technicalities have no room in labor case where the Rules of Court are applied only in a suppletory manner and only to effectuate the objectives of the Labor Code and not to defeat it. Hence, even if the reinstatement order 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 of the higher court. On the other hand, if the employee has been reinstated during the appeal period and such order is reversed with finality, the employee is not required to reimburse whatever salary he has received for he is entitled to such, more so if he actually rendered services during the period.

No.3

AIR PHILIPPINES CORPORATION vs. ENRICO E. ZAMORA G.R. NO. 148247 August 7, 2006 AUSTRIA-MARTINEZ, J.: FACTS: Enrico Zamora (Zamora) was employed with Air Philippines Corporation (APC) as a B-737 Flight Deck Crew. He applied for promotion to the position of airplane captain and underwent the requisite training program. After completing training, he inquired about his promotion but APC did not act on it; instead, it continued to give him assignments as flight deck crew. Zamora filed a Complaint with the Labor Arbiter. He argued that the act of APC of withholding his promotion rendered his continued employment with it oppressive and unjust. He therefore asked that APC be held liable for constructive dismissal. APC denied that it dismissed complainant. It pointed out that, when the complaint was filed on May 14, 1997, complainant was still employed with it. It was only on May 22, 1997 that complainant stopped reporting for work, not because he was forced to resign, but because he had joined a rival airline, Grand Air. The Labor Arbiter ruled in favor of Zamora and declared APC liable for constructive dismissal. And ordered the following: 1. Reinstate complainant to his position as B-737 Captain without loss of seniority right immediately; 2. Pay complainant his full backwages from May 15, 1997 up to the promulgation of this decision on the amount of P1,732,500; 3. Pay complainant the amount of P2,000,000.00 in the concept of moral damages and P1,000,000.00 as exemplary damages; 4. Pay attorneys fees equivalent to 10% of the total award. Zamora filed a Motion for Execution of the order of reinstatement, which the Labor Arbiter issued the corresponding writ of execution directing APC to reinstate complainant to his former position. Meanwhile, APC appealed to NLRC assailing its liability for constructive dismissal. The NLRC granted the appeal. It held that no dismissal, constructive or otherwise, took place. Yet subsequent thereto NLRC modified its decision, still granting the appeal of APC, but ordered the latter to pay Zamora his unpaid salaries and allowance totaling P198,502.30 within 15 days.

APC sought a partial reconsideration but NLRC denied the same. NLRC justified the grant of salaries and allowances to Zamora arose from the order of his reinstatement which is executory even pending appeal of respondent questioning the same, pursuant to Article 223 of the Labor Code. APC filed a Petition for Certiorari with the CA. APCS only issue was whether the NLRC committed grave abuse of discretion in granting respondent unpaid salaries while declaring him guilty of abandonment of employment. APC attached to its petition, certified true copies of the Resolutions of the NLRC , the Decision of the Labor Arbiter, and photocopies of the notice of garnishment,the Order of the Labor Arbiter authorizing Sheriff Fulgencio Lavarez to implement the writ of execution, and the Resolution of the NLRC enjoining implementation of the writ of execution. CA dismissed the petition for failure of APC to "attach copies of all pleadings (such complaint, answer, position paper) and other material portions of the record as would support the allegations therein." Subsequently, APC filed a Motion for Reconsideration, and attached to it the pleadings and portions of the case record required by the Court of Appeals. CA denied the motion for reconsideration, Hence, this Petition for Review on Certiorari under Rule 45. ISSUE: 1. W/N CA WAS CORRECT IN THE ACT OF DISMISSING APCS PETITION FOR CERTIORARI ON THE GROUND THAT APC FAILED TO ATTACH COPIES OF ALL PLEADINGS AND OTHER MATERIAL PORTIONS OF THE RECORD AND THE ACT OF DENYING APCS MR, INSPITE THE FACT THAT APC SUBMITTED COPIES OF ALL PLEADINGS AND DOCUMENTS REQUIRED. 2. W/N NLRC COMMITTED GRAVE ABUSE OF DISCRETION IN HOLDING APC LIABLE TO ZAMORA FOR PHP 198,502.30? HELD: 1. We grant the petition. Only those pleadings, parts of case records and documents which are material and pertinent,[Test of Relevancy-] in that they may provide the basis for a determination of a prima facie case of abuse of discretion, are required to be attached to a petition for certiorari. A petition lacking such documents contravenes paragraph 2, Section 1, Rule 65 and may be dismissed outright under Section 3, Rule 46. However, if it is shown that the omission has been rectified by the subsequent submission of the documents required, the petition must be given due course or reinstated, if it

had been previously dismissed. Other pleadings and portions of case records need not accompany the petition, unless the court will require them in order to aid it in its review of the case. Omission of these documents from the petition will not warrant its dismissal. As a general rule, a petition lacking copies of essential pleadings and portions of the case record may be dismissed. This rule, however, is not petrified. There are, however, guideposts it must follow: First, not all pleadings and parts of case records are required to be attached to the petition. Only those which are relevant and pertinent must accompany it. The test of relevancy is whether the document in question will support the material allegations in the petition, whether said document will make out a prima facie case of grave abuse of discretion as to convince the court to give due course to the petition. Second, even if a document is relevant and pertinent to the petition, it need not be appended if it is shown that the contents thereof can also be found in another document already attached to the petition. Thus, it will suffice that only a certified true copy of the judgment is attached. Third, a petition lacking an essential pleading or part of the case record may still be given due course or reinstated upon showing that petitioner later submitted the documents required, or that it will serve the higher interest of justice that the case be decided on the merits. It is readily apparent in this case that the Court of Appeals was overzealous in its enforcement of the rules. There was no need at all for copies of the position papers and other pleadings of the parties; these would have only cluttered the docket. It was therefore unreasonable of the Court of Appeals to have dismissed it. More so that petitioner later corrected the purported deficiency by submitting copies of the pleadings and other documents. 2. There is no more obstacle to the petition for certiorari against NLRC taking its course. However, rather than remand it to the Court of Appeals for resolution, we resolve it here and now to expedite matters. We hold that the NLRC did not commit grave abuse of discretion in holding petitioner liable to respondent forP198,502.30. In Roquero v. Philippine Airlines, Inc., we resolved the same issue as follows: We reiterate the rule that technicalities have no room in labor cases where the Rules of Court are applied only in a suppletory manner and only to effectuate the objectives of the Labor Code and not to defeat them. Hence, 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. 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. In Aris (Phil.) Inc. v. National Labor Relations Commission, we held: In short, with respect to decisions reinstating employees, the law itself has determined a sufficiently overwhelming reason for its execution pending appeal. 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.

NO. 4 LUNESA O. LANSANGAN AND ROCITA CENDAA vs. AMKOR TECHNOLOGY PHILIPPINES, INC., G.R. No. 177026 January 30, 2009 CARPIO MORALES, J.: LUNESA O. LANSANGAN AND ROCITA CENDAA v. AMKOR TECHNOLOGY PHILIPPINES577 SCRA 493 (2009), SECOND DIVISION (Carpio Morales, J.) Payment of backwages and other benefits is justified only if the employee was unjustly dismissed. An email was sent to Amkor Technology Philippines (Amkor) through their General Manager alleging thatthe Lunesa Lansangan (Lansangan) and Rocita Cendana (Cendana) stole company time. Lansangan and Cendana admitted to the wrongdoing and were terminated for extremely serious offenses The two then filed a case of illegal dismissal against Amkor. The Labor Arbiter (LA) ordered for their reinstatement to their former positions without backwages, but dismissed the complaint on basis of Lansangan and Cendanas guilt. The two did not appeal the finding that they were guilty, and moved for the writ of execution. Amkor appealed the decision to the National Labor Relations

Commissions and was subsequently granted. The NLRC deleted the grant for reinstatement of the LA. The Court of Appeals affirmed the decision of the NLRC that Lansangan and Cendana were guilty of misconduct and ordered AMKOR to "pay petitioners their corresponding backwages for the period between the Arbiters decision up to the date of the NLRC Decision, citing Article 223 of the Labor Code and Roquero v. Philippine Airlines. Both parties filed their respective motions for partial reconsideration which were denied. Only petitioners have come to this Court via the present petition for review. ISSUE: Whether or not Lansangan and Cendana are entitled to backwages and reinstatement covering the periods stated above and whether or not the ruling of CA was based on law and prevailing Jurisprudence? HELD: The Petition Fails. Since AMKOR did not appeal from the appellate courts decision, the said courts order for it to pay backwages to petitioners for the therein specified period has become final. The Arbiter found Lansangan and Cendanas dismissal to be valid. Such finding had, as stated earlier,become final, they not having appealed it. In Roquero vs. PAL, as well as Article 223 of the Labor Code on which the CA relied, finds no application in the present case. Article 223 concerns itself with an interim relief, granted to a dismissed or separated employee while the case for illegal dismissal is pending appeal, as what happened in Roquero. It does not apply where there is no finding of illegal dismissal, as in the present case. Following Article 279 which provides: In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. petitioners are not entitled to full backwages as their dismissal was not found to be illegal. Agabon v. NLRC so states payment of backwages and other benefits is justified only if the employee was unjustly dismissed.

No. 5 MARILOU S. GENUINO vs. NLRC, CITIBANK, N.A., WILLIAM FERGUSON, and AZIZ RAJKOTWALA, G.R. Nos. 142732-33 December 4, 2007 x - - - - - - - - - - - - - - - - - - - - - - -x CITIBANK, N.A., WILLIAM FERGUSON, and AZIZ RAJKOTWALA vs. NLRC and MARILOU GENUINO, G.R. Nos. 142753-54 VELASCO, JR., J.: FACTS: Citibank is an American banking corporation duly licensed to do business in the Philippines. William Ferguson was the Manila, Country Corporate Officer and Business Head of the Global Finance Bank of Citibank while Aziz Rajkotwala was the International Business Manager for the Global Consumer Bank of Citibank. Genuino was employed by Citibank in 1992 as Treasury Sales Division Head with the rank of Assistant Vice-President. Genuino was tasked to solicit investments, and peso and dollar deposits for, and keep them in Citibank; and to sell and/or push for the sale of Citibank's financial products, for the account and benefit of Citibank. She received a monthly compensation of PhP 60,487.96, exclusive of benefits and privileges. On August 23, 1993, Citibank sent Genuino a letter charging her with "knowledge and/or involvement" in transactions "which were irregular or even fraudulent." In the same letter, Genuino was informed she was under preventive suspension. Genuino wrote a reply to Citibank and asked the bank about the factual and legal basis of its charges, to afford her an opportunity to explain; She likewise asked to substantiate the charge of fraudulent transactions against their client; or if the same cannot be substantiated; to Correct/repair/compensate the damage you have caused the clients. In reply, Victorino P. Vargas, Citibanks Country Senior Human Resources Officer, sent a letter to Genuino, reminding her about the charges and also gave a list of 12 Clients to whom the transactions were considered by Citibank as fraudulent. The letter likewise directed Genuino to explain in writing 3 days from the receipt why her employment should not be terminated in view of her involvement in these irregular transactions. She was also directed to appear in an administrative investigation which was set on Sept. 21, 1993. Genuino's counsel replied through a letter, demanding for a bill of particulars regarding the charges against Genuino. Citibank's counsel replied a day before the

scheduled investigation, yet the charges were still unsubstantiated. However, it further contained charges against Genuino for violating the conflict of interest rule. Genuino did not appear in the administrative investigation. Her lawyers wrote a letter to Citibank's counsel asking specifically the transaction, the dates, funds and amount involved. In reply, Citibank's counsel noted Genuino's failure to appear in the investigation and gave Genuino til Sept 23 to submit her written explanation. Genuino did not submit her written explanation. On September 27, 1993, Citibank informed Genuino that it found Genuino and Santos used "facilities of Genuino's family corporation, namely, Global Pacific, personally and actively participated in the diversion of bank clients' funds to products of other companies that yielded interests higher than what Citibank products offered, and that Genuino and Santos realized substantial financial gains, all in violation of existing company policy and the Corporation Code, which for your information, carries a penal sanction." Genuino's employment was terminated by Citibank on grounds of (1) serious misconduct, (2) willful breach of the trust reposed upon her by the bank, and (3) commission of a crime against the bank. Genuino filed before the Labor Arbiter a Complaint against Citibank for illegal suspension and illegal dismissal with damages and prayer for temporary restraining order and/or writ of preliminary injunction. The Labor Arbiter rendered a Decision finding the dismissal of Genuino to be without just cause and in violation of her right to due process, and ordered to immediately reinstate Genuino to her former position or its equivalent without loss of seniority rights and other benefits, with backwages in the amount of P493,800.00 (P60,000 x 8.23 mos.). Likewise the Arbiter ordered Citibank to pay the amount of 1.5 Million Pesos and P500,000.00 by way of moral and exemplary damages plus 10% of the total monetary award as attorney's fees. Both parties appealed to the NLRC. The NLRC reversed the Labor Arbiter's decision with modification: (1) SETTING ASIDE the appealed decision of the Labor Arbiter; (2) DECLARING the dismissal of the complainant valid and legal on the ground of serious misconduct and breach of trust and confidence and consequently DISMISSING the complaint a quo; but (3) ORDERING the respondent bank 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 parties' motions for reconsideration were denied by the NLRC. On petition for review to CA, Genuino prayed for the reversal of the NLRC's decision insofar as her dismissal was not for just cause and not in accordance with due process. Meanwhile, Citibank questioned the NLRC's order to pay Genuino's salaries from the date of reinstatement until the date of the NLRC's decision. CAs Ruling:. The CA, denied due course to and dismissed both petitions. However, upon reconsideration, it Upheld NLRCs ruling aside from No 3 above and ordered Citibank, to pay Ms. Marilou S. Genuino P5,000.00 instead as indemnity for non-observance of due process. ISSUE: WHETHER OR NOT THE DISMISSAL OF GENUINO IS FOR A JUST CAUSE AND IN ACCORDANCE WITH DUE PROCESS; AND WHETHER OR NOT GENUINO IS ENTITLED TO BACKWAGES HELD: The dismissal was for just cause but lacked due process. Genuino Not entitled to backwages. The CAs decisions are AFFIRMED with MODIFICATION that Genuino is entitled to PhP 30,000 as indemnity for non-observance of due process. (Item (3) of the Decision of the NLRC) 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: In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The employee 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. The posting of a bond by the employer shall not stay the execution for reinstatement provided herein. 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 NLRCs Decision. SC finds Genuino's dismissal justified. Genuino was aware of the bank's Corporate Policy Manual specifically with regard to avoiding conflicts of interest. Citibank discovered that Genuino and Santos were instrumental in the withdrawal by bank depositors of PhP 120 million of investments in Citibank which was subsequently invested in another foreign bank, under the control of Global and Torrance, another corporation controlled by Genuino and Santos. Citibank also filed two criminal complaints against Genuino and Santos for violations of the conflict of interest rule provided in Sec. 31 in relation to Sec. 144 of the Corporation Code. Art. 282(c) of the Labor Code provides that an employer may terminate an employment for fraud or willful breach by the employee of the trust reposed in him/her by his/her employer or duly authorized representative. In order to constitute as just cause for dismissal, loss of confidence should relate to acts inimical to the interests of the employer. Also, the act complained of should have arisen from the performance of the employee's duties. For loss of trust and confidence to be a valid ground for an employee's dismissal, it must be substantial and not arbitrary, and must be founded on clearly established facts sufficient to warrant the employee's separation from work. We also held that: [L]oss of confidence is a valid ground for dismissing an employee and proof beyond reasonable doubt of the employee's misconduct is not required. It is sufficient if there is some basis for such loss of confidence or if the employer has reasonable ground to believe or to entertain the moral conviction that the employee concerned is responsible for the

misconduct and that the nature of his participation therein rendered him unworthy of the trust and confidence demanded by his position. As Genuino was tasked to solicit investments, and peso and dollar deposits for, and keep them in Citibank. She held a position of trust and confidence. She could not likewise feign ignorance of the businesses of Citibank, and of Global and Torrance. Assuming that Citibank did not engage in the same securities dealt with by Global and Torrance; nevertheless, it is to the interests of Citibank to retain its clients and continue investing in Citibank. All the pieces of evidence compel us to conclude that Genuino did not have her employer's interest. The letter of the bank's clients which attested that the withdrawals from Citibank were made upon their instructions is of no import. All told, Citibank had valid grounds to dismiss Genuino on ground of loss of confidence. Effect of Citibanks failure to afford Genuino Due process: In view of Citibank's failure to observe due process, however, nominal damages are in order but the amount is hereby raised to PhP 30,000.

xxxxxxxxxxx All facts Below are for purposes of explaining the importance of notice in administrative/Labor related cases Only. You may disregard reading it, as you may. But I included it here anyway, incase raised as a question. In a string of cases, we have repeatedly said that the requirement of twin notices must be met. In the recent case of King of Kings Transport, Inc. v. Mamac, we explained; the following should be considered in terminating the services of employees: (1) The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period. "Reasonable opportunity" under the Rules means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense. This should be construed as a period of at least 5 calendar days from receipt of the notice to give the employees an opportunity to study the accusation against them, consult a

union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to enable the employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged against the employees. (2) After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the employees will be given the opportunity to: (1) explain and clarify their defenses to the charge against them; (2) present evidence in support of their defenses; and (3) rebut the evidence presented against them by the management. During the hearing or conference, the employees are given the chance to defend themselves personally, with the assistance of a representative or counsel of their choice. Moreover, this conference or hearing could be used by the parties as an opportunity to come to an amicable settlement. (3) After determining that termination of employment is justified, the employers shall serve the employees a written notice of termination indicating that: (1) all circumstances involving the charge against the employees have been considered; and (2) grounds have been established to justify the severance of their employment. The Labor Arbiter found that Citibank failed to adequately notify Genuino of the charges against her. On the contrary, the NLRC held that "the function of a 'notice to explain' is only to state the basic facts of the employer's charges, which x x x the letters of September 13 and 17, 1993 in question have fully served." The Implementing Rules and Regulations of the Labor Code provide that any employer seeking to dismiss a worker shall furnish the latter a written notice stating the particular acts or omissions constituting the grounds for dismissal. The purpose of this notice is to sufficiently apprise the employee of the acts complained of and enable him/her to prepare his/her defense. The letters sent by Citibank did not identify the particular acts or omissions allegedly committed by Genuino. The letters did not adduce the extent of Genuino's alleged knowledge and participation in the diversion

of bank's clients' funds, manner of diversion, and amounts involved; the acts attributed to Genuino that conflicted with the bank's interests; and the circumstances surrounding the alleged irregular transactions, were not specified in the notices/letters. While the bank gave Genuino an opportunity to deny the truth of the allegations in writing and participate in the administrative investigation, the fact remains that the charges were too general to enable Genuino to intelligently and adequately prepare her defense. The two-notice requirement of the Labor Code is an essential part of due process. The first notice informing the employee of the charges should neither be pro-forma nor vague. It should set out clearly what the employee is being held liable for. The employee should be afforded ample opportunity to be heard and not mere opportunity. As explained in King of Kings Transport, Inc., ample opportunity to be heard is especially accorded the employees sought to be dismissed after they are specifically informed of the charges in order to give them an opportunity to refute such accusations leveled against them. Since the notice of charges given to Genuino is inadequate, the dismissal could not be in accordance with due process. In view of Citibank's failure to observe due process, however, nominal damages are in order but the amount is hereby raised to PhP 30,000 pursuant to Agabon v. NLRC. The NLRC's order for payroll reinstatement is set aside. In Agabon, we explained: The violation of the petitioners' right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages. The amount of such damages is addressed to the sound discretion of the court, taking into account the relevant circumstances. Considering the prevailing circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We believe this form of damages would serve to deter employers from future violations of the statutory due process rights of employees. At the very least, it provides a vindication or recognition of this fundamental right granted to the latter under the Labor Code and its Implementing Rules. Thus, the award of PhP 5,000 to Genuino as indemnity for non-observance of due process under the CA's Resolution is increased to PhP 30,000.

The directive of the NLRC 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," Is hereby cancelled, in view of its finding that the dismissal of Genuino is for a legal and valid ground.

NERISSA BUENVIAJE, SONIA FLORES, BELMA OLIVIO, GENALYN PELOBELLO, MARY JANE MENOR, JOSIE RAQUERO, ESTRELITA MANAHAN, REBECCA EBOL, and ERLINDA ARGA, petitioners, vs. THE HONORABLE COURT OF APPEALS (SPECIAL FORMER SEVENTH DIVISION), HONORABLE ARBITER ROMULUS PROTASIO, COTTONWAY MARKETING CORPORATION and MICHAEL G. TONG, President and General Manager, respondents. FACTS: Petitioners were former employees of Cottonway Marketing Corp. (Cottonway), hired as promo girls for their garment products. after their services were terminated as the company was allegedly suffering business losses, petitioners filed with the National Labor Relations Commission (NLRC) a complaint for illegal dismissal, underpayment of salary, and non-payment of premium pay for rest day, service incentive leave pay and thirteenth month pay against Cottonway Marketing Corp. and Network Fashion Inc./JCT International Trading.1 Labor Arbiter Romulus S. Protasio issued a Decision finding petitioners' retrenchment valid and ordering Cottonway to pay petitioners' separation pay and their proportionate thirteenth month pay.2 On appeal, the NLRC reversed the Decision of the Labor Arbiter and ordered the reinstatement of petitioners without loss of seniority rights and other privileges. It also ordered Cottonway to pay petitioners their proportionate thirteenth month pay and their full backwages inclusive of allowances and other benefits, or their monetary equivalent

computed from the time their salaries were withheld from them up to the date of their actual reinstatement.3 Cottonway filed a motion for reconsideration which was denied by the Commission. Cottonway filed with the NLRC a manifestation stating that they have complied with the order of reinstatement by sending notices requiring the petitioners to return to work, but to no avail; and consequently, they sent letters to petitioners informing them that they have lost their employment for failure to comply with the return to work order. petitioners filed with the NLRC a motion for execution of its Decision on the ground that it had become final and executory.7 the Research and Investigation Unit of the NLRC issued a computation of the monetary award in accordance with the Decision of the NLRC.8 Cottonway filed a manifestation with the NLRC reiterating their allegations in their manifestation and further alleging that petitioners have already found employment elsewhere.10 the Research and Investigation Unit of the NLRC issued an additional computation of petitioners' monetary award in accordance with the NLRC decision.11 Cottonway filed with the NLRC a supplemental manifestation praying that the Commission allow the reception of evidence with respect to their claim that petitioners have found new employment. The Commission denied Cottonways prayer. Labor Arbiter Romulus S. Protasio issued an Order declaring that the award of backwages and proportionate thirteenth month pay to petitioners should be limited from the time of their illegal dismissal up to the time they received the notice of termination sent by the company upon their refusal to report for work despite the order of reinstatement. He cited the fact that petitioners failed to report to their posts without justifiable reason despite respondent's order requiring them to return to work immediately. The Labor Arbiter ordered the Research and Investigation Unit to recompute the monetary award in accordance with its ruling.1 The Labor Arbiter, however, was set aside by the Commission in its. The Commission ruled that its Decision has become final and executory and it is the ministerial duty of the Labor Arbiter to issue the corresponding writ of execution to effect full and unqualified implementation of said decision.15 The Commission thus ordered that

the records of the case be remanded to the Labor Arbiter for execution. Cottonway moved for reconsideration of said resolution, to no avail. Cottonway filed a petition for certiorari with the Court of Appeals seeking the reversal of the ruling of the NLRC and the reinstatement issued by Labor Arbiter Romulus S. Protasio. The appellate court granted the It ruled that petitioners' reinstatement was no longer possible as they deliberately refused to return to work despite the notice given by Cottonway. The Court of Appeals thus held that the amount of backwages due them should be computed only up to the time they received their notice of termination. "Petitioner's termination of private respondents' employment by reason of their failure to report for work despite due notice being valid, it would change the substance of the questioned decision which awards backwages to the complainants up to their reinstatement. Again, private respondents' reinstatement is no longer possible because of the supervening event which is their valid termination. The deliberate failure to report for work after notice to return bars reinstatement. It would be unjust and inequitable then to require petitioner to pay private respondents their backwages even after the latter were validly terminated when in fact petitioner dutifully complied with the reinstatement aspect of the decision. Thus, the period within which the monetary award of private respondents should be based is limited up to the time of private respondents' receipt of the respective notices of termination on August 27, 1998."17 The Court of Appeals denied petitioners' motion for reconsideration . Petitioners now question the Decision and Resolution of the Court of Appeals. ISSUE: which is the computation of petitioners' backwageswhether it should be limited from the time they were illegally dismissed until they received the notice of termination sent by Cottonway on August 1, 1996 as argued by respondent company, or whether it should be computed from the time of their illegal dismissal until their actual reinstatement as argued by the petitioners. RULING: We agree with the petitioners.

The issue of the legality of the termination of petitioners services has been settled in the NLRC decision dated March 26, 1996. Thus, Cottonway was ordered to reinstate petitioners to their former position without loss of seniority rights and other privileges and to pay them full backwages Under R.A. 6715, employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time their actual compensation was withheld from them up to the time of their actual reinstatement. If reinstatement is no longer possible, the backwages shall be computed from the time of their illegal termination up to the finality of the decision.2
1

The Court explained the meaning of "full backwages" in the case of Bustamante vs. NLRC:22 backwages to be awarded to an illegally dismissed employee, should not, as a general rule, be diminished or reduced by the earnings derived by him elsewhere during the period of his illegal dismissal. The underlying reason for this ruling is that the employee, while litigating the legality (illegality) of his dismissal, must still earn a living to support himself and family, while full backwages have to be paid by the employer as part of the price or penalty he has to pay for illegally dismissing his employee. The clear legislative intent of the amendment in Rep. Act No. 6715 is to give more benefits to workers than was previously given them under the Mercury Drug rule or the "deduction of earnings elsewhere" rule. Thus, a closer adherence to the legislative policy behind Rep. Act No. 6715 points to "full backwages" as meaning exactly that, i.e., without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal. In other words, the provision calling for "full backwages" to illegally dismissed employees is clear, plain and free from ambiguity and, therefore, must be applied without attempted or strained interpretation. Index animi sermo est." (emphasis supplied) The Court does not see any reason to depart from this rule in the case of herein petitioners. The decision of the NLRC dated March 26, 1996 has become final and executory upon the dismissal by this Court of Cottonways petition for certiorari assailing said decision and the denial of its motion for reconsideration. Said judgment may no longer be disturbed or modified by any court or tribunal. It is a fundamental rule that when a judgment becomes final and executory, it becomes immutable and unalterable, and any

amendment or alteration which substantially affects a final and executory judgment is void, including the entire proceedings held for that purpose. Once a judgment becomes final and executory, the prevailing party can have it executed as a matter of right, and the issuance of a writ of execution becomes a ministerial duty of the court. A decision that has attained finality becomes the law of the case regardless of any claim that it is erroneous. The writ of execution must therefore conform to the judgment to be executed and adhere strictly to the very essential particulars.23 To justify the modification of the final and executory decision of the NLRC dated March 26, 1996, the Court of Appeals cited the existence of a supervening event, that is, the valid termination of petitioners' employment due to their refusal to return to work despite notice from respondents reinstating them to their former position. We cannot concur with said ruling. Petitioners' alleged failure to return to work cannot be made the basis for their termination. Such failure does not amount to abandonment which would justify the severance of their employment. To warrant a valid dismissal on the ground of abandonment, the employer must prove the concurrence of two elements: (1) the failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship.24 The facts of this case do not support the claim of Cottonway that petitioners have abandoned their desire to return to their previous work at said company. It appears that three months after the NLRC had rendered its decision ordering petitioners reinstatement to their former positions, Cottonway sent individual notices to petitioners mandating them to immediately report to work. The petitioners, however, were not able to promptly comply with the order. Instead, their counsel, Atty. Roberto LL. Peralta, sent a reply letter to Atty. De Luna stating that his clients were not in a position to comply with said order since the NLRC has not yet finally disposed of the case. We note that Cottonway, before finally deciding to dispense with their services, did not give the petitioners the opportunity to explain why they were not able to report to work. The records also do not bear any proof that all the petitioners received a copy of the letters. Cottonway merely claimed that some of them have left the country and some have found other employment. This,

however, does not necessarily mean that petitioners were no longer interested in resuming their employment at Cottonway as it has not been shown that their employment in the other companies was permanent. It should be expected that petitioners would seek other means of income to tide them over during the time that the legality of their termination is under litigation. Furthermore, petitioners never abandoned their suit against Cottonway. While the case was pending appeal before the NLRC, the Court of Appeals and this Court, petitioners continued to file pleadings to ensure that the company would comply with the directive of the NLRC to reinstate them and to pay them full backwages in case said decision is upheld. Moreover, in his reply to the companys first letter, petitioners counsel expressed willingness to meet with the companys representative regarding the satisfaction of the NLRC decision. It appears that the supposed notice sent by Cottonway to the petitioners demanding that they report back to work immediately was only a scheme to remove the petitioners for good. Petitioners failure to instantaneously abide by the directive gave them a convenient reason to dispense with their services. This the Court cannot allow. Cottonway cited Article 223 of the Labor Code providing that the decision ordering the reinstatement of an illegally dismissed employee is immediately executory even pending appeal as basis for its decision to terminate the employment of petitioners. We are not convinced. Article 223 of the Labor Code 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. x x x xxxxxxxxx In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The employee 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. The posting of a bond by the employer shall not stay the execution for reinstatement provided herein. x x x x x x x x x x x x."

The foregoing provision is intended for the benefit of the employee and cannot be used to defeat their own interest. The law mandates the employer to either admit the dismissed employee back to work under the same terms and conditions prevailing prior to his dismissal or to reinstate him in the payroll to abate further loss of income on the part of the employee during the pendency of the appeal. But we cannot stretch the language of the law as to give the employer the right to remove an employee who fails to immediately comply with the reinstatement order, especially when there is reasonable explanation for the failure. If Cottonway were really sincere in its offer to immediately reinstate petitioners to their former positions, it should have given them reasonable time to wind up their current preoccupation or at least to explain why they could not return to work at Cottonway at once. Cottonway did not do either. Instead, it gave them only five days to report to their posts and when the petitioners failed to do so, it lost no time in serving them their individual notices of termination. We are, therefore, not impressed with the claim of respondent company that petitioners have been validly dismissed on August 1, 1996 and hence their backwages should only be computed up to that time. We hold that petitioners are entitled to receive full backwages computed from the time their compensation was actually withheld until their actual reinstatement, or if reinstatement is no longer possible, until the finality of the decision, in accordance with the Decision of the NLRC dated March 26, 1996 which has attained finality.28

FIRST DIVISION G.R. No. 177467 March 9, 2011

PFIZER, INC. AND/OR REY GERARDO BACARRO, AND/OR FERDINAND CORTES, AND/OR ALFRED MAGALLON, AND/OR ARISTOTLE ARCE, Petitioners, vs. GERALDINE VELASCO, Respondent. DECISION LEONARDO-DE CASTRO, J.: Private respondent Geraldine L. Velasco was employed with petitioner PFIZER, INC. as Professional Health Care Representative . 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. PFIZER through its Area Sales Manager, herein petitioner Ferdinand Cortez, personally served Velasco a "Show-cause Notice". 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 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. Velasco sent a letter addressed to Cortez 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 ofP23,980.00 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. 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. Velasco sent a letter to PFIZER via Aboitiz courier service asking for additional time to answer the second Show-cause Notice. Velasco filed a complaint for illegal suspension with money claims before the Regional Arbitration Branch. PFIZER sent her a letter inviting her to a disciplinary hearing . 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" She likewise opted to withhold answering the Second Showcause Notice, 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 PFIZER informed Velasco of its "Management Decision" terminating her employment. 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 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 PFIZER moved for reconsideration but its motion was denied for lack of merit. PFIZER filed with the Court of Appeals .Court of Appeals upheld the validity of respondents dismissal from employment,.

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 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 up to the Court of Appeals Decision PFIZER filed the instant petition assailing the aforementioned Court of Appeals Resolutions. ISSUE: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.

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 appealDuring 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 Commission18which 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. the Court held that an award or order of reinstatement is immediately selfexecutory without the need for the issuance of a writ of execution in

accordance with the third paragraph of Article 22322 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 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 inMaranaw, 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 x23 (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 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- towork 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. 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 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 return-to-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 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 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. 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 self-executory 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.

ARTICLE 224 Yupangco Cotton Mills, Inc. vs. CA (2002) Facts: Petitioner contended that a sheriff of the NLRC erroneously and unlawfully levied certain properties which it claims as its own. It filed a 3rd party claim with the Labor Arbiter and recovery of property and damages with the RTC. The RTC dismissed the case. In the CA, the court dismissed the petition on the ground of forum shopping and that the proper remedy was appeal in due course, not certiorari or mandamus. Petitioner filed a MFR and argued that the filing of a complaint for accion reinvindicatoria with the RTC was proper because it is a remedy specifically granted to an owner (whose properties were subjected to a writ of execution to enforce a decision rendered in a labor dispute in which it was not a party). The MFR was denied. Hence, petitioner filed this appeal. Issue: Whether the CA has jurisdiction over the case Held: YES A third party whose property has been levied upon by a sheriff to enforce a decision against a judgment debtor is afforded with several alternative remedies to protect its interests. The third party may avail himself of alternative remedies cumulatively, and one will not preclude the third party from availing himself of the other alternative remedies in the event he failed in the remedy first availed of.

Thus, a third party may avail himself of the following alternative remedies: a) File a third party claim with the sheriff of the Labor Arbiter, and b) If the third party claim is denied, the third party may appeal the denial to the NLRC. Even if a third party claim was denied, a third party may still file a proper action with a competent court to recover ownership of the property illegally seized by the sheriff. The filing of a third party claim with the Labor Arbiter and the NLRC did not preclude the petitioner from filing a subsequent action for recovery of property and damages with the Regional Trial Court. And, the institution of such complaint will not make petitioner guilty of forum shopping.

[G.R. No. 184007, February 16, 2011] PAQUITO V. ANDO, PETITIONER, VS. ANDRESITO Y. CAMPO, ET AL., RESPONDENTS. Facts: Petitioner was the president of Premier Allied and Contracting Services, Inc. (PACSI). Respondents were hired by PACSI as pilers or haulers tasked to manually carry bags of sugar. 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. NLRC decided in the favor of respondents directing petitioner to pay 442,702. Petitioner and PACSI appealed to the NLRC. In a decision but failed to perfect his appeal because he did not pay the supersedes bond. It also affirmed the Labor Arbiter's 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 Property 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 theissuance of (TRO) before the RTC 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 latter's properties. RTC denied the prayer for TRO because lack of jurisdiction pursuant to the NLRC Manual on the Execution of Judgment, petitioner's 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 filed a petition for certiorari under Rule 65 before the CA. CA affirmed RTC decision hence this petition Issue: whether RTC has jurisdiction over disputes arising from labor decisions. Whether the notice of sale was valid. Held: CA did not, in fact, err in upholding the RTC's 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. 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. The NLRC Manual on the Execution of Judgment deals specificallywith 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. It also sets out the procedure for the filing of a third-party claim There is no doubt in our mind that petitioner's 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 Arbiter's 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 third party, i.e., the conjugal partnership. At the very least, the Court can consider that petitioner's wife is a third party within contemplation of the law. 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. There is no denying that the present controversy arose from the complaint for illegal dismissal. The subject matter of petitioner's 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, and there can be no end to the controversy without the full and proper implementation of the commission's directives. 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. 2. notice of sale null and void The power of the NLRC, or the courts, to execute its judgment extends only to properties unquestionably belonging to the judgment debtor alone. A sheriff, therefore, has no authority to attach the property of any person except that of the judgment debtor. 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. 3RD ASSIGNMENT G.R. No. 162943 December 6, 2010

EMPLOYEES UNION OF BAYER PHILS., FFW and JUANITO S. FACUNDO, in his capacity as President,Petitioners, vs.

BAYER PHILIPPINES, INC., DIETER J. LONISHEN (President), ASUNCION AMISTOSO (HRD Manager), AVELINA REMIGIO AND ANASTACIA VILLAREAL, Respondents. VILLARAMA, JR., J.: FACTS: Petitioner Employees Union of Bayer Philippines (EUBP) is the exclusive bargaining agent of all rank-and-file employees of Bayer Philippines (Bayer), and is an affiliate of the Federation of Free Workers (FFW). In 1997, EUBP, headed by its president Juanito S. Facundo (Facundo), negotiated with Bayer for the signing of a collective bargaining agreement (CBA). During the negotiations, EUBP rejected Bayers 9.9% wage-increase proposal resulting in a bargaining deadlock. Subsequently, EUBP staged a strike, prompting the Secretary of the Department of Labor and Employment (DOLE) to assume jurisdiction over the dispute. Respondent Avelina Remigio (Remigio) and 27 other union members, without any authority from their union leaders, accepted Bayers wage-increase proposal. EUBPs grievance committee questioned Remigios action and reprimanded Remigio and her allies. The DOLE Secretary issued an arbitral award ordering EUBP and Bayer to execute a CBA Barely six months from the signing of the new CBA, during a companysponsored seminar, Remigio solicited signatures from union members in support of a resolution containing the decision of the signatories to: (1) disaffiliate from FFW, (2) rename the union as Reformed Employees Union of Bayer Philippines (REUBP), (3) adopt a new constitution and by-laws for the union, (4) abolish all existing officer positions in the union and elect a new set of interim officers, and (5) authorize REUBP to administer the CBA between EUBP and Bayer. The said resolution was signed by 147 of the 257 local union members. With both seeking recognition from Bayer and demanding remittance of the union dues collected from its rank-and-file members. Remigios splinter group wrote Facundo, FFW and Bayer informing them of the decision of the majority of the union members to disaffiliate from FFW. Bayer responded by deciding not to deal with either of the two groups, and by placing the union dues collected in a trust account until the conflict between the two groups is resolved. EUBP filed a complaint for unfair labor practice (first ULP complaint) against Bayer for non-remittance of union dues.

EUBP later sent a letter to Bayer asking for a grievance conference. Apparently, the two groups failed to settle their issues. Bayer decided to turn over the collected union dues amounting to P254,857.15 to respondent Anastacia Villareal, Treasurer of REUBP. EUBP lodged a complaint against Remigios group before the Industrial Relations Division of the DOLE praying for their expulsion from EUBP for commission of "acts that threaten the life of the union." Labor Arbiter Jovencio Ll. Mayor, Jr. dismissed the first ULP complaint for lack of jurisdiction. Petitioners filed a second ULP complaint against herein respondents. The Regional Director of the Industrial Relations Division of DOLE issued a decision dismissing the issue on expulsion filed by EUBP against Remigio and her allies for failure to exhaust reliefs within the union and ordering the conduct of a referendum to determine which of the two groups should be recognized as union officers. The BLR reversed the Regional Directors ruling and ordered the management of Bayer to respect the authority of the dulyelected officers of EUBP in the administration of the prevailing CBA.Labor Arbiter Waldo Emerson R. Gan dismissed EUBPs second ULP complaint for lack of jurisdiction. The CA sustained both the Labor Arbiter and the NLRCs rulings. ISSUE: Whether or not the act of the management of Bayer in dealing and negotiating with Remigios splinter group despite its validly existing CBA with EUBP can be considered unfair labor practice . HELD:The petition is partly meritorious. 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 INTER/INTRA-UNION DISPUTES 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; XI AND

(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 membership; of acceptance/non-acceptance for union

(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; (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 selforganization, 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. It is clear from the foregoing that the issues raised by petitioners do not fall under any of the aforementioned circumstances constituting an intra-union dispute. More importantly, the petitioners do not seek a determination of whether it is the Facundo group (EUBP) or the Remigio group (REUBP)

which is the true set of union officers. Instead, the issue raised pertained only to the validity of the acts of management in light of the fact that it still has an existing CBA with EUBP. Thus as to Bayer, Lonishen and Amistoso the question was whether they were liable for unfair labor practice, which issue was within the jurisdiction of the NLRC. The dismissal of the second ULP complaint was therefore erroneous. However, as to respondents Remigio and Villareal, we find that petitioners complaint was validly dismissed. Petitioners ULP complaint cannot prosper as against respondents Remigio and Villareal because the issue, as against them, essentially involves an intra-union dispute based on Section 1 (n) of DOLE Department Order No. 40-03. To rule on the validity or illegality of their acts, the Labor Arbiter and the NLRC will necessarily touch on the issues respecting the propriety of their disaffiliation and the legality of the establishment of REUBP issues that are outside the scope of their jurisdiction. Accordingly, the dismissal of the complaint was validly made, but only with respect to these two respondents. But are Bayer, Lonishen and Amistoso liable for unfair labor practice? On this score, we find that the evidence supports an answer in the affirmative. It must be remembered that a CBA is entered into in order to foster stability and mutual cooperation between labor and capital. An employer should not be allowed to rescind unilaterally its CBA with the duly certified bargaining agent it had previously contracted with, and decide to bargain anew with a different group if there is no legitimate reason for doing so and without first following the proper procedure. If such behavior would be tolerated, bargaining and negotiations between the employer and the union will never be truthful and meaningful, and no CBA forged after arduous negotiations will ever be honored or be relied upon. Article 253 of the Labor Code, as amended, plainly provides: ART. 253. Duty to bargain collectively when there exists a collective bargaining agreement. Where there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate or 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 60-day period and/or until a new agreement is reached by the parties. (Emphasis supplied.)1avvphi1

This is the reason why it is axiomatic in labor relations that a CBA entered into by a legitimate labor organization that has been duly certified as the exclusive bargaining representative and the employer becomes the law between them. Additionally, in the Certificate of Registration issued by the DOLE, it is specified that the registered CBA serves as the covenant between the parties and has the force and effect of law between them during the period of its duration. Compliance with the terms and conditions of the CBA is mandated by express policy of the law primarily to afford protection to labor and to promote industrial peace. Thus, when a valid and binding CBA had been entered into by the workers and the employer, the latter is behooved to observe the terms and conditions thereof bearing on union dues and representation. If the employer grossly violates its CBA with the duly recognized union, the former may be held administratively and criminally liable for unfair labor practice. Indeed, in Silva v. National Labor Relations Commission, we explained the correlations of Article 248 (1) and Article 261 of the Labor Code to mean that for a ULP case to be cognizable by the Labor Arbiter, and for the NLRC to exercise appellate jurisdiction thereon, the allegations in the complaint must show prima facie the concurrence of two things, namely: (1) gross violation of the CBA; and (2) the violation pertains to the economic provisions of the CBA. This pronouncement in Silva, however, should not be construed to apply to violations of the CBA which can be considered as gross violations per se, such as utter disregard of the very existence of the CBA itself, similar to what happened in this case. When an employer proceeds to negotiate with a splinter union despite the existence of its valid CBA with the duly certified and exclusive bargaining agent, the former indubitably abandons its recognition of the latter and terminates the entire CBA.

G.R. No. 168583

July 26, 2010

ATTY. ALLAN S. MONTAO, Petitioner, vs. ATTY. ERNESTO C. VERCELES, Respondent. DEL CASTILLO, J.:

FACTS: Atty. Montao worked as legal assistant of FFW Legal Center. Subsequently, he joined the union of rank-and-file employees, the FFW Staff Association, and eventually became the employees union president ,he was likewise designated officer-in-charge of FFW Legal Center. Atty. Montao was nominated for the position of National VicePresident. However, the Commission on Election (FFW COMELEC), informed him that he is not qualified for the position as his candidacy violates the 1998 FFW Constitution and By-Laws, particularly Section 76 of Article XIX8 and Section 25 (a) of Article VIII, both in Chapter II thereof. Atty. Montao thus filed an Urgent Motion for Reconsideration. Despite the pending motion for reconsideration with the FFW COMELEC, and strong opposition and protest of respondent Atty. Ernesto C. Verceles (Atty. Verceles), a delegate to the convention and president of University of the East Employees Association (UEEA-FFW) which is an affiliate union of FFW, the convention delegates allowed Atty. Montaos candidacy. He emerged victorious and was proclaimed as the National Vice-President. Atty. Verceles, filed before the BLR a petition for the nullification of the election of Atty. Montao as FFW National Vice-President. Atty. Montao filed his Comment with Motion to Dismiss on the grounds that the Regional Director of the Department of Labor and Employment (DOLE) and not the BLR has jurisdiction over the case. The BLR rendered a Decision dismissing the petition for lack of merit. Atty. Verceles filed a Motion for Reconsideration but it was denied by the BLR. The CA set aside the BLRs Decision. ISSUE: Wheteher or not CA gravely erred in upholding the jurisdiction of the BLR and granting the petition to annul Atty. Montanos election on the fround that FFW Staff Association is not a legitimate labor organization. HELD: The petition is devoid of merit. The BLR has jurisdiction over intraunion disputes involving a federation. Section 226 of the Labor Code28 clearly provides that the BLR and the Regional Directors of DOLE have concurrent jurisdiction over inter-union and intra-union disputes. Such disputes include the conduct or nullification of election of union and workers association officers.29 There is, thus, no doubt as to the BLRs jurisdiction over the instant dispute involving member-unions of a federation arising from disagreement over the provisions of the federations constitution and by-laws. We agree with BLRs observation that:

Rule XVI lays down the decentralized intra-union dispute settlement mechanism. Section 1 states that any complaint in this regard shall be filed in the Regional Office where the union is domiciled. The concept of domicile in labor relations regulation is equivalent to the place where the union seeks to operate or has established a geographical presence for purposes of collective bargaining or for dealing with employers concerning terms and conditions of employment. The matter of venue becomes problematic when the intra-union dispute involves a federation, because the geographical presence of a federation may encompass more than one administrative region. Pursuant to its authority under Article 226, this Bureau exercises original jurisdiction over intra-union disputes involving federations. It is well-settled that FFW, having local unions all over the country, operates in more than one administrative region. Therefore, this Bureau maintains original and exclusive jurisdiction over disputes arising from any violation of or disagreement over any provision of its constitution and by-laws.30 Atty. Montao is not qualified to run as FFW National Vice-President in view of the prohibition established in Section 76, Article XIX of the 1998 FFW Constitution and By-Laws.1awph!1 Section 76, Article XIX of the FFW Constitution and By-laws provides that no member of the Governing Board shall at the same time be an employee in the staff of the federation. There is no dispute that Atty. Montao, at the time of his nomination and election for the position in the Governing Board, is the head of FFW Legal Center and the President of FFW Staff Association. Even after he was elected, albeit challenged, he continued to perform his functions as staff member of FFW and no evidence was presented to show that he tendered his resignation.38 On this basis, the FFW COMELEC disqualified Atty. Montao. The BLR, however, overturned FFW COMELECs ruling and held that the applicable provision is Section 26 of Article VIII. The CA subsequently affirmed this ruling of the BLR but held Atty. Montao unqualified for the position for failing to meet the requirements set forth therein. We find that both the BLR and CA erred in their findings. To begin with, FFW COMELEC is vested with authority and power, under the FFW Constitution and By-Laws, to screen candidates and determine their qualifications and eligibility to run in the election and to adopt and promulgate rules concerning the conduct of elections.39 Under the Rules Implementing the Labor Code, the Committee shall have the power to

prescribe rules on the qualification and eligibility of candidates and such other rules as may facilitate the orderly conduct of elections.40 The Committee is also regarded as the final arbiter of all election protests.41 From the foregoing, FFW COMELEC, undeniably, has sufficient authority to adopt its own interpretation of the explicit provisions of the federations constitution and by-laws and unless it is shown to have committed grave abuse of discretion, its decision and ruling will not be interfered with. The FFW Constitution and By-laws are clear that no member of the Governing Board shall at the same time perform functions of the rank-and-file staff. The BLR erred in disregarding this clear provision. The FFW COMELECs ruling which considered Atty. Montaos candidacy in violation of the FFW Constitution is therefore correct. We, thus, concur with the CA that Atty. Montao is not qualified to run for the position but not for failure to meet the requirement specified under Section 26 (d) of Article VIII of FFW Constitution and By-Laws. We note that the CAs declaration of the illegitimate status of FFW Staff Association is proscribed by law, owing to the preclusion of collateral attack. We nonetheless resolve to affirm the CAs finding that Atty. Montao is disqualified to run for the position of National Vice-President in view of the proscription in the FFW Constitution and By-Laws on federation employees from sitting in its Governing Board. Accordingly, the election of Atty. Montao as FFW VicePresident is null and void.

G.R. No. 168475

July 4, 2007

EMILIO E. DIOKNO, VICENTE R. ALCANTARA, ANTONIO Z. VERGARA, JR., DANTE M. TONG, JAIME C. MENDOZA, ROMEO M. MACAPULAY, ROBERTO M. MASIGLAT, LEANDRO C. ATIENZA, ROMULO AQUINO, JESUS SAMIA, GAUDENCIO CAMIT, DANTE PARAO, ALBERTO MABUGAT, EDGARDO VILLANUEVA, JR., FRANCISCO ESCOTO, EDGARDO SEVILLA, FELICITO MACASAET, and JOSE Z. TULLO, Petitioners, vs. HON. HANS LEO J. CACDAC, in his capacity as Director of the Bureau of Labor Relations, DOLE, MANILA, MED-ARBITER TRANQUILINO C. REYES, EDGARDO DAYA, PABLO LUCAS, LEANDRO M. TABILOG, REYNALDO ESPIRITU, JOSE VITO, ANTONIO DE LUNA, ARMANDO YALUNG, EDWIN LAYUG, NARDS PABILONA, REYNALDO REYES,

EVANGELINE ESCALL, ALBERTO ALCANTARA, ROGELIO CERVITILLO, MARCELINO MORELOS, FAUSTINO ERMINO, JIMMY S. ONG, ALFREDO ESCALL, NARDITO C. ALVAREZ, JAIME T. VALERIANO, JOHNSON S. REYES, GAUDENCIO JIMENEZ, JR., GAVINO R. VIDANES, ARNALDO G. TAYAO, BONIFACIO F. CIRUJANO, EDGARDO G. CADVONA, MAXIMO A. CAOC, JOSE O. MACLIT, JR., LUZMINDO D. ACORDA, JR., LEMUEL R. RAGASA, and GIL G. DE VERA, Respondents. CHICO-NAZARIO, J.:

FACTS: The First Line Association of Meralco Supervisory Employees (FLAMES) is a legitimate labor organization which is the supervisory union of Meralco. Petitioners and private respondents are members of FLAMES. The COMELEC was composed of petitioner Dante M. Tong as its chairman, and petitioners Jaime C. Mendoza and Romeo M. Macapulay as members. Subsequently, private respondents Jimmy S. Ong, Nardito C. Alvarez, Alfredo J. Escall, and Jaime T. Valeriano filed their respective certificates of candidacy. The COMELEC rejected Jimmy S. Ongs candidacy on the ground that he was not a member of FLAMES. The certificates of candidacy of Nardito C. Alvarez, Alfredo J. Escall, and Jaime T. Valeriano were similarly rejected on the basis of the exclusion of their department from the scope of the existing collective bargaining agreement (CBA). Private respondents Jimmy S. Ong, Nardito C. Alvarez, Alfredo J. Escall, Jaime T. Valeriano (Ong, et al.), and a certain Leandro M. Tabilog filed a Petition for the nullification of the COMELEC order before the MedArbitration Unit of the Department of Labor and Employment (DOLE). Petitioners filed a Petition with the COMELEC seeking the disqualification of private respondents Edgardo Daya, Pablo Lucas, Leandro Tabilog, Reynaldo Espiritu, Jose Vito, Antonio de Luna, Armando Yalung, Edwin Layug, Nards Pabilona, Reynaldo Reyes, Evangeline Escall, Alberto Alcantara, Rogelio Cervitillo, Marcelino Morelos, and Faustino Ermino (Daya, et al.). In their campaign, they allegedly colluded with the officers of the Meralco Savings and Loan Association (MESALA) and the Meralco Mutual Aid and Benefits Association (MEMABA) and exerted undue influence on the members of FLAMES.

The COMELEC issued a Decision, declaring Daya, et al., officially disqualified to run and/or to participate in the FLAMES elections. he interest of FLAMES. Private respondents Daya, et al., along with Ong, et al., filed with the Med-Arbitration Unit of the DOLE-NCR, a Petition to: a) Nullify Order of Disqualification; b) Nullify Election Proceedings and Counting of Votes; c) Declare Failure of Election; and d) Declare Holding of New Election to be Controlled and Supervised by the DOLE. Med-Arbiter Tranquilino B. Reyes, Jr. issued a Decision in favor of private respondents, Daya, et al. Aggrieved, petitioners filed an appeal before the Director of the BLR. The Director of the BLR issued a Resolution, affirming in toto the assailed Decision of the Med-Arbiter. Petitioners elevated the case to the Court of Appeals via a Petition for Certiorari.The Court of Appeals found petitioners appeal to be bereft of merit. ISSUE: Whether or not the Court of Appeals committed grave abuse of discretion when it affirmed the jurisdiction of the BLR to take cognizance of the case. HELD: The Petition is devoid of merit. We affirm the finding of the Court of Appeals upholding the jurisdiction of the BLR. Article 226 of the Labor Code is hereunder reproduced, to wit: ART. 226. BUREAU OF LABOR RELATIONS. The Bureau of Labor Relations and the Labor Relations Divisions in the regional offices of the Department of Labor shall have original and exclusive authority to act, at their own initiative or upon request of either or both parties, on all interunion and intra-union conflicts, and all disputes, grievances or problems arising from or affecting labor-management relations in all workplaces whether agricultural or nonagricultural, except those arising from the implementation or interpretation of collective bargaining agreements which shall be the subject of grievance procedure and/or voluntary arbitration. The Bureau shall have fifteen (15) working days to act on labor cases before it, subject to extension by agreement of the parties. The amendment to Article 226, as couched in Republic Act No. 6715, which is relied upon by petitioners in arguing that the BLR had been divested of its jurisdiction, simply reads, thus: Sec. 14. The second paragraph of Article 226 of the same Code is likewise hereby amended to read as follows: "The Bureau shall have fifteen (15) calendar days to act on labor cases before it, subject to extension by agreement of the parties."

This Court in Bautista v. Court of Appeals, interpreting Article 226 of the Labor Code, was explicit in declaring that the BLR has the original and exclusive jurisdiction on all inter-union and intra-union conflicts. We said that since Article 226 of the Labor Code has declared that the BLR shall have original and exclusive authority to act on all inter-union and intra-union conflicts, there should be no more doubt as to its jurisdiction. As defined, an intra-union conflict would refer to a conflict within or inside a labor union, while an inter-union controversy or dispute is one occurring or carried on between or among unions.35 More specifically, an intra-union dispute is defined under Section (z), Rule I of the Rules Implementing Book V of the Labor Code, viz: (z) "Intra-Union Dispute" refers to any conflict between and among union members, and includes all disputes or grievances arising from any violation of or disagreement over any provision of the constitution and by-laws of a union, including cases arising from chartering or affiliation of labor organizations or from any violation of the rights and conditions of union membership provided for in the Code. The controversy in the case at bar is an intra-union dispute. There is no question that this is one which involves a dispute within or inside FLAMES, a labor union. At issue is the propriety of the disqualification of private respondents Daya, et al., by the FLAMES COMELEC in the 7 May 2003 elections. It must also be stressed that even as the dispute involves allegations that private respondents Daya, et al., sought the help of non-members of the union in their election campaign to the detriment of FLAMES, the same does not detract from the real character of the controversy. It remains as one which involves the grievance over the constitution and bylaws of a union, and it is a controversy involving members of the union. Moreover, the nonmembers of the union who were alleged to have aided private respondents Daya, et al., are not parties in the case. We are, therefore, unable to understand petitioners persistence in placing the controversy outside of the jurisdiction of the BLR. The law is very clear. It requires no further interpretation. The Petition which was initiated by private respondents Daya, et al., before the BLR was properly within its cognizance, it being an intraunion dispute. Indubitably, when private respondents Daya, et al., brought the case to the BLR, it was an invocation of the power and authority of the BLR to act on an intra-union conflict. We cannot accept, and the Court of Appeals rightfully rejected, the contention of petitioners that the private respondents Daya, et al.s complaint filed before the Med-Arbiter failed to comply with the jurisdictional requirement because

it was not supported by at least thirty percent (30%) of the members of the union. Section 1 of Rule XIV of the Implementing Rules of Book V mandates the thirty percent (30%) requirement only in cases where the issue involves the entire membership of the union, which is clearly not the case before us. The issue is obviously limited to the disqualification from participation in the elections by particular union members.

FELIPE O. MAGBANUA, CARLOS DE LA CRUZ, REMY ARNAIZ, BILLY ARNAIZ, ROLLY ARNAIZ, DOMINGO SALARDA, JULIO CAHILIG and NICANOR LABUEN, vs. RIZALINO UY G.R. No. 161003. May 6, 2005 Facts: As a final consequence of the final and executory decision of the Supreme Court which affirmed with modification the decision of the NLRC, hearings were conducted to determine the amount of wage differentials due the eight petitioners. The petitioners filed a Motion for Issuance of Writ of Execution. Rizalino Uy filed a Manifestation requesting that the cases be terminated and closed, stating that the judgment award as computed had been complied with to the satisfaction of petitioners. Said Manifestation was also signed by the eight petitioners. Together with the manifestation is a Joint Affidavit dated May 5, 1997 of petitioners, attesting to the receipt of payment from respondent and waiving all other benefits due them in connection with their complaint. On October 20, 1997, six of the eight petitioners filed a Manifestation requesting that the cases be considered closed and terminated as they are already satisfied of what they have received from respondent. Together with said Manifestation is a Joint Affidavit in the local dialect, of the six petitioners attesting that they have no more collectible amount from respondent and if there is any, they are abandoning and waiving the same. Issues: 1. Whether or not the final and executory judgment of the Supreme Court could be subject to compromise settlement; 2. Whether or not the petitioners affidavit waiving their awards in the labor case executed without the assistance of their counsel and labor arbiter is valid. Held: 1. There is no justification to disallow a compromise agreement, solely

because it was entered into after final judgment. The validity of the agreement is determined by compliance with the requisites and principles of contracts, not by when it was entered into. Petitioners voluntarily entered into the compromise agreement. Circumstances also reveal that respondent has already complied with its obligation pursuant to the compromise agreement. Having already benefited from the agreement, estoppel bars petitioners from challenging it. 2. The presence or the absence of counsel when a waiver is executed does not determine its validity. There is no law requiring the presence of a counsel to validate a waiver. The test is whether it was executed voluntarily, freely and intelligently; and whether the consideration for it was credible and reasonable. Where there is clear proof that a waiver was wangled from an unsuspecting or a gullible person, the law must step in to annul such transaction. In the present case, petitioners failed to present any evidence to show that their consent had been vitiated.

Phil. Journalistic Inc., v. NLRC (September 5, 2006) G.R. 166421 Facts: In NLRCs Resolution dated May 31, 2001, petitioner Philippine Journalists, Inc. (PJI) was adjudged liable in the total amount of P 6,447,008.57 for illegally dismissing 31 complainants-employees and that there was no basis for the implementation of petitioner's retrenchment program. Thereafter, the parties executed a Compromise Agreement dated July 9, 2001, where PJ I undertook to reinstate the 31 complainant employees effective July 1, 2001 without loss of seniority rights and benefits; 17 of them who were previously retrenched were agreed to be given full and complete payment of their respective monetary claims, while 14 others would be paid their monetary claims minus what they received by way of separation pay. The compromise agreement was submitted to the NLRC for approval. All the employees mentioned in the agreement and in the NLRC Resolution affixed their signatures thereon. They likewise signed the Joint Manifesto and Declaration of Mutual Support and Cooperation which had also been submitted for the consideration of the labor tribunal. The NLRC forthwith issued another Resolution on

July 25, 2002, which among others declared that , the compromise agreement was approved and NCMB NCR NS-03 -087-00 was deemed closed and terminated. In the meantime, however, the Union filed another Notice of Strike on July 1, 2002. In an Order dated September 16, 2002, the DOLE Secretary certified the case to the Commission for compulsory arbitration. The case was docketed as NCMB-NCR-NS-07-251-02. In its Resolution dated July 31, 2003, the NLRC ruled that the complainants were not illegally dismissed. The May 31, 2001 Resolution declaring the retrenchment program illegal did not attain finality as "it had been academically mooted by the compromise agreement entered into between both parties on July 9, 2001." The Union assailed the ruling of the NLRC before the CA via petition for certiorari. In its Decision dated August 17, 2004, the appellate court held that the NLRC gravely abused its discretion in ruling for PJI. The compromise agreement referred only to the award given by the NLRC to the complainants in the said case, that is, the obligation of the employer to the complainants. Issue: 1. whether an NLRC Resolution, which includes a pronouncement that the members of a union had been illegally dismissed, is abandoned or rendered "moot and academic" by a compromise agreement subsequently entered into between the dismissed employees and the employer; and 2. whether such a compromise agreement constitutes res judicata to a new complaint later filed by other union members-employees, not parties to the agreement, who likewise claim to have been illegally dismissed. Held: The petition is denied. Article 2028 of the New Civil Code: it is "a contract whereby the parties, by making reciprocal concessions, avoid litigation or put an end to one already commenced." It contemplates mutual concessions and mutual gains to avoid the expenses of litigation, or, when litigation has already begun, to end it because of the uncertainty of the result. Article 227 of the Labor Code of the Philippines authorizes compromise agreements voluntarily agreed upon by the parties, in conformity with the basic policy of the State "to promote and

emphasize the primacy of free collective bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as modes of settling labor or industrial disputes." ART. 227 Compromise Agreements. Any compromise settlement, including those involving labor standard laws, voluntarily agreed upon by the parties with the assistance of the Bureau or the regional office of the Department of Labor, shall be final and binding upon the parties. The National Labor Relations Commission or any court shall not assume jurisdiction over issues involved therein except in case of noncompliance thereof or if there is prima facie evidence that the settlement was obtained through fraud, misrepresentation, or coercion. Thus, a judgment rendered in accordance with a compromise agreement is not appealable, and is immediately executory unless a motion is filed to set aside the agreement on the ground of fraud, mistake, or duress, in which case an appeal may be taken against the order denying the motion. Under Article 2037 of the Civil Code, "a compromise has upon the parties the effect and authority of res judicata," even when effected without judicial approval; and under the principle of res judicata, an issue which had already been laid to rest by the parties themselves can no longer be relitigated. The Court spelled out the distinguishing features of a compromise agreement that is basically intended to resolve a matter already in litigation, or what is normally termed as a judicial compromise. The Court held that once approved, the agreement becomes more than a mere contract binding upon the parties, considering that it has been entered as the court's determination of the controversy and has the force and effect of any other judgment. Further: once approved by the court, a judicial compromise is not appealable and it thereby becomes immediately executory but this rule must be understood to refer and apply only to those who are bound by the compromise and, on the assumption that they are the only parties to the case, the litigation comes to an end except only as regards to its compliance and the fulfillment by the parties of their respective obligations thereunder. The reason for the rule, said the Court in Domingo v. Court of Appeals [325 Phil. 469], is that when both parties so enter into the agreement to put a close to a pending litigation between them and ask that a decision be rendered in conformity therewith, it would

only be "natural to presume that such action constitutes an implicit waiver of the right to appeal" against that decision. The order approving the compromise agreement thus becomes a final act, and it forms part and parcel of the judgment that can be enforced by a writ of execution unless otherwise enjoined by a restraining order. The execution and subsequent approval by the NLRC of the agreement forged between it and the respondent Union did not render the NLRC resolution ineffectual, nor rendered it "moot and academic." The agreement becomes part of the judgment of the court or tribunal, and as a logical consequence, there is an implicit waiver of the right to appeal. In any event, the compromise agreement cannot bind a party who did not voluntarily take part in the settlement itself and gave specific individual consent. It must be remembered that a compromise agreement is also a contract; it requires the consent of the parties, and it is only then that the agreement may be considered as voluntarily entered into. A careful perusal of the wordings of the compromise agreement will show that the parties agreed that the only issue to be resolved was the question of the monetary claim of several employees. CA was correct in holding that the compromise agreement pertained only to the "monetary obligation" of the employer to the dismissed employees, and in no way affected the Resolution in NCMB-NCR-NS-03-087-00 dated May 31, 2001 where the NLRC made the pronouncement that there was no basis for the implementation of petitioners' retrenchment program. To reiterate, the rule is that when judgment is rendered based on a compromise agreement, the judgment becomes immediately executory, there being an implied waiver of the parties' right to appeal from the decision.The judgment having become final, the Court can no longer reverse, much less modify it. Abaria vs. NLRC G.R. No. 154113 FACTS: Metro Cebu Community Hospital, Inc. (MCCHI), presently known as the

Visayas Community Medical Center (VCMC), a non-stock, non-profit corporation, operates the Metro Cebu Community Hospital (MCCH) which is owned by the United Church of Christ in the Philippines (UCCP) and Rev. Gregorio P. Iyoy is the Hospital Administrator. The National Federation of Labor (NFL) is the exclusive bargaining representative of the rank-and-file employees of MCCHI. Nava wrote Rev. Iyoy expressing the unions desire to renew the CBA, attaching to her letter a statement of proposals signed/endorsed by 153 union members. However, MCCHI returned the CBA proposal for Nava to secure first the endorsement of the legal counsel of NFL as the official bargaining representative of MCCHI employees. Meanwhile, MCCHI was informed that the proposed CBA submitted by Nava was never referred to NFL and that NFL has not authorized any other legal counsel or any person for collective bargaining negotiations. The collection of union fees (check-off) was temporarily suspended by MCCHI in view of the existing conflict between the federation and its local affiliate. Thereafter, MCCHI attempted to take over the room being used as union office but was prevented to do so by Nava and her group who protested these actions and insisted that management directly negotiate with them for a new CBA. Several union members led by Nava and her group launched a series of mass actions around the hospital premises and putting up placards. MCCHI directed the union officers led by Nava to submit within 48 hours a written explanation why they should not be terminated for having engaged in illegal concerted activities amounting to strike, and placed them under immediate preventive suspension. Responding to this directive, Nava and her group denied there was a temporary stoppage of work, explaining that employees wore their armbands only as a sign of protest and reiterating their demand for MCCHI to comply with its duty to bargain collectively. With the intensified atmosphere of violence and animosity within the hospital premises as a result of continued protest activities by union members, MCCHI suffered heavy losses due to low patient admission rates. The hospitals suppliers also refused to make further deliveries on credit.

With the volatile situation adversely affecting hospital operations and the condition of confined patients, MCCHI filed a petition for injunction in the NLRC. MCCHIs was granted a permanent injunction enjoining the Nava group from committing illegal acts mentioned in Art. 264 of the Labor Code. Thereafter, several complaints for illegal dismissal and unfair labor practice were filed by the terminated employees against MCCHI, Rev. Iyoy, UCCP and members of the Board of Trustees of MCCHI. ISSUES: 1. Whether MCCHI is guilty of unfair labor practice; 2. Whether petitioning employees were illegally dismissed; and 3. If their termination was illegal, whether petitioning employees are entitled to separation pay, backwages, damages and attorneys fees. HELD: 1. NO. Art. 248 (g) of the Labor Code, as amended, makes it an unfair labor practice for an employer [t]o violate the duty to bargain collectively as prescribed by the Code. The applicable provision in this case is Art. 253. Records of the NCMB and DOLE Region 7 confirmed that NAMA-MCCHNFL had not registered as a labor organization, having submitted only its charter certificate as an affiliate or local chapter of NFL. Not being a legitimate labor organization, NAMA-MCCH-NFL is not entitled to those rights granted to a legitimate labor organization under Art. 242. Aside from the registration requirement, it is only the labor organization designated or selected by the majority of the employees in an appropriate collective bargaining unit which is the exclusive representative of the employees in such unit for the purpose of collective bargaining, as provided in Art. 255. NAMAMCCH-NFL is not the labor organization certified or designated by the majority of the rank-and-file hospital employees to represent them in the CBA negotiations but the NFL, as evidenced by CBAs concluded in 1987, 1991 and 1994. While it is true that a local union has the right to disaffiliate from the national federation, NAMA-MCCH-NFL has not done so as there was no any effort on its part to comply with the legal requisites for a valid disaffiliation during the freedom period or the last 60 days of the last year

of the CBA, through a majority vote in a secret balloting in accordance with Art. 241 (d). Nava and her group simply demanded that MCCHI directly negotiate with the local union which has not even registered as one. 2. NO. Art. 264 (a) of the Labor Code, as amended, provides for the consequences of an illegal strike to the participating workers: Any union officer who knowingly participates in 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. The above provision makes a distinction between workers and union officers who participate in an illegal strike: an ordinary striking worker cannot be terminated for mere participation in an illegal strike. There must be proof that he or she committed illegal acts during a strike. A union officer, on the other hand, may be terminated from work when he knowingly participates in an illegal strike, and like other workers, when he commits an illegal act during a strike. Considering their persistence in holding picketing activities despite the declaration by the NCMB that their union was not duly registered as a legitimate labor organization and the letter from NFLs legal counsel informing that their acts constitute disloyalty to the national federation, and their filing of the notice of strike and conducting a strike vote notwithstanding that their union has no legal personality to negotiate with MCCHI for collective bargaining purposes, there is no question that NAMA-MCCH-NFL officers knowingly participated in the illegal strike. THE HERITAGE HOTEL MANILA v. NATIONAL UNION OF WORKERS IN THE HOTEL, RESTAURANT AND ALLIED INDUSTRIES-HERITAGE HOTEL MANILA SUPERVISORS CHAPTER (NUWHRAIN-HHMSC),

G.R. No. 178296 NACHURA, J.: FACTS Respondent filed with the Department of Labor and Employment-National Capital Region (DOLE-NCR) a petition for certification election. The MedArbiter granted the petition on and ordered the holding of a certification election. Petitioner filed a motion for reconsideration, but it was denied on. 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. Consequently, 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. Nevertheless, the certification election pushed through and respondent emerged as the winner. Petitioner filed a Protest with Motion to Defer Certification of Election Results and Winner, stating that the certification election held 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. 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, the Med-Arbiter dismissed petitioners protest, and certified respondent as the sole and exclusive bargaining agent of all supervisory employees. In the meantime, the Regional Director 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 considered the belated submission of the annual financial reports and the list of members as sufficient compliance.

Aggrieved, petitioner appealed the decision to the BLR. BLR Director inhibited himself from the case because he had been a former counsel of respondent. In view of this, DOLE Secretary Sto. Tomas took cognizance of the appeal and 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. ISSUE: Whether the Labor Secretary has jurisdiction to review the decision of the Regional Director in a petition for cancellation. HELD: Yes. 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. 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. 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. 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.

THE HERITAGE HOTEL MANILA, acting through its owner, GRAND PLAZA HOTEL CORPORATION, petitioner vs. NATIONAL UNION OF WORKERS IN THE HOTEL, RESTAURANT AND ALLIED INDUSTRIES-HERITAGE HOTEL MANILA SUPERVISORS CHAPTER (NUWHRAIN-HHMSC), respondent. G.R. No. 178296 January 12, 2011 NACHURA, J. FACTS: Respondent filed with the DOLE-NCR a petition for certification election. The Med-Arbiter granted the petition and ordered the holding of a certification election. On appeal, the DOLE Secretary, affirmed the Med-Arbiter's order and remanded the case to the Med-Arbiter for the holding of a pre-election conference on February 26, 1997. Petitioner's motion for reconsideration was denied. The pre-election conference was not held as initially scheduled. Petitioner moved to dismiss the petition due to alleged repeated nonappearance of respondent. The latter agreed to suspend proceedings until further notice. The pre-election conference resumed on January 29, 2000. Petitioner discovered that respondent had failed to submit to the BLR its annual financial report for several years and the list of its members since it filed its registration papers hence it filed a Petition for Cancellation of Registration of respondent and prayed that respondent's Certificate be cancelled and its name be deleted from the list of legitimate labor organizations and suspension of the certification election proceedings. 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. The certification election pushed through and respondent emerged as the winner. Petitioner filed a Protest with Motion to Defer Certification of Election Results and Winner. Petitioner also claimed that some of respondent's members were not qualified to join the union because they were either confidential employees or managerial employees. Respondent prayed for the dismissal of the petition for the following reasons: (a) petitioner is estopped from questioning respondents status as it had already recognized respondent as a legitimate labor organization during the pre-election 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; (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. The Med-Arbiter dismissed petitioner's protest reasoning that the pendency of a petition for cancellation of registration is not a bar to the holding of a certification election. Petitioner appealed to the DOLE Secretary but was dismissed and motion for reconsideration was denied. In the meantime, Regional Director Maraan of DOLE-NCR finally resolved the petition for cancellation of registration in favor of respondents, ratiocinating that freedom of association and the employees right to selforganization 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. He emphasized that the non-compliance with the law is not viewed with favor but considered the belated submission of the annual financial reports and the list of members as sufficient compliance thereof and considered them as having been submitted on time. Petitioner appealed the decision to the BLR but the BLR Director inhibited himself from the case because he had been a former counsel of respondent.

DOLE Secretary Sto. Tomas took cognizance of the appeal and dismissed it due to the constitutional rights. The motion for reconsideration was likewise denied. Petitioner filed a petition for certiorari with the CA but it was denied as well as the motion for reconsideration. ISSUE: Whether the registration of the labor union should be cancelled. HELD: No. Articles 238 of the Labor Code provides that the certificate of registration shall be canceled by the Bureau if it has reason to believe that the organization no longer meets one or more of the requirements, while article 239 failure to submit the annual financial report or the list of individual members to the Bureau shall constitute a ground for cancellation. These provisions give the Regional Director ample discretion in dealing with a petition for cancellation of a unions registration. 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. 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. 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. Labor Codes provisions on cancellation of union registration and on reportorial requirements have been recently amended by R.A. No. 9481, An Act Strengthening the Workers Constitutional Right to Self-Organization. The amendment sought to strengthen the workers right to self-organization and enhance the Philippines compliance with its international obligations as embodied in the ILO Convention No. 87. Thus, R.A. No. 9481 amended Article 239 (read present Labor Code) and also inserted Article 242-A (read LC), which provides in part that failure to submit annual report and list of members 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, provides that "workers and employers organizations shall not be liable to be dissolved or suspended by administrative authority." The ILO has opined that the cancellation of union registration is tantamount to dissolution of the organization which would give rise to the loss of legal personality of the union or loss of advantages necessary for it to carry out its activities. It has 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. Therefore we deny petition and rule that failure to submit its annual financial reports and list of individual members should not necessarily lead to the cancellation of union registration. 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. 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.

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.

REPUBLIC OF THE PHILIPPINES, represented by Department of Labor and Employment (DOLE), petitioner vs. KAWASHIMA TEXTILE MFG., PHILIPPINES, INC., respondent. G.R. No. 160352 July 23, 2008 AUSTRIA-MARTINEZ, J. FACTS: On January 24, 2000, Kawashima Free Workers Union-PTGWO (KFWU) filed with DOLE Regional Office a Petition for Certification Election to be conducted in the bargaining unit composed of 145 rank-and-file employees of respondent. Attached to its petition are a Certificate of Creation of Local/Chapter issued by DOLE Regional Office No. IV, stating that KFWU submitted to said office a Charter Certificate issued to it by the national federation Phil. Transport & General Workers Organization (PTGWO), and a Report of Creation of Local/Chapter. Respondent filed a Motion to Dismiss on the ground that KFWU did not acquire any legal personality because its membership of mixed rank-and-file and supervisory employees violated Article 245 of the Labor Code, and its failure to submit its books of account contravened the ruling of the Court in 1 case. Med-Arbiter Bactin found KFWUs legal personality defective and dismissed its petition for certification election because at least 2 members of KFWU are supervisory employees.Since petitioners members are mixture of rank and file and supervisory employees, petitioner union, at this point [in] time, has not attained the status of a legitimate labor organization. Petitioner should first exclude the supervisory employees from it membership before it can attain the status of a legitimate labor organization. The commingling of rank and file and supervisory employees in one (1) bargaining unit cannot be cured in the exclusion-inclusion proceedings [at] the pre-election conference.

On the basis of the aforecited decision, respondent filed with DOLE Regional Office a Petition for Cancellation of Charter/Union Registration of KFWU, the final outcome of which, unfortunately, cannot be ascertained from the records. Meanwhile, DOLE granted KFWUs appeal and remanded the case to the office of origin for the immediate conduct of certification election, subject to the usual pre-election conference, among the rank-and-file employees of Kawashima Textile Manufacturing Philippines, Inc. The DOLE held that Med-Arbiter Bactin's reliance on the decided case was misplaced, for while Article 245 declares supervisory employees ineligible for membership in a labor organization for rank-and-file employees, the provision did not state the effect of such prohibited membership on the legitimacy of the labor organization and its right to file for certification election. Neither was such mixed membership a ground for cancellation of its registration. Section 11, Paragraph II, Rule XI of Department Order No. 9 "provides for the dismissal of a petition for certification election based on lack of legal personality of a labor organization only on the following grounds: (1) [KFWU] is not listed by the Regional Office or the Bureau of Labor Relations in its registry of legitimate labor organizations; or (2) [KFWU's] legal personality has been revoked or canceled with finality." The DOLE noted that neither ground existed; on the contrary, KFWU's legal personality was wellestablished, for it held a certificate of creation and had been listed in the registry of legitimate labor organizations. As to the failure of KFWU to file its books of account, the DOLE held that such omission was not a ground for revocation of union registration or dismissal of petition for certification election, for under Section 1, Rule VI of Department Order No. 9, a local or chapter like KFWU was no longer required to file its books of account. Respondent filed a Motion for Reconsideration but the DOLE denied the same. On appeal by respondent, the CA reversed DOLEs decision and reinstated the Med-Arbiters decision. KFWU filed a Motion for Reconsideration but the CA denied it. ISSUE:

Whether a mixed membership of rank-and-file and supervisory employees in a union is a ground for the dismissal of a petition for certification election. HELD: R.A. No. 9481 amended Art. 245 of the Labor Code and inserted Art. 245-A, 258-A and 238-A (read Labor Code). The latter provision indicates that a pending petition for cancellation of registration will not hinder a legitimate labor organization from initiating a certification election. However, R.A. No. 9481 took effect only on June 14, 2007; hence, it applies only to labor representation cases filed on or after said date. As the petition for certification election subject matter of the present petition was filed by KFWU on January 24, 2000, R.A. No. 9481 cannot apply to it. There may have been curative labor legislations that were given retrospective effect, but not the aforecited provisions of R.A. No. 9481, for otherwise, substantive rights and interests already vested would be impaired in the process. Instead, the law and rules in force at the time of the filing by KFWU of the petition for certification election on January 24, 2000 are R.A. No. 6715 and its the Rules and Regulations, as amended by Department Order No. 9, series of 1997. It was in Sec. 3 of R.A. No. 875 that such questioned mingling was first prohibited but the invalidity of membership of one of the organizers does not make the union illegal, where the requirements of the law for the organization thereof are, nevertheless, satisfied and met. Then the Labor Code was enacted in 1974 without reproducing Sec. 3 of R.A. No. 875. The provision in the Labor Code closest to Sec. 3 is Article 290, which is silent on the prohibition. The Omnibus Rules Implementing Book V of the Labor Code (Omnibus Rules) merely provides in Section 11, Rule II, thus: Sec. 11. Supervisory unions and unions of security guards to cease operation. All existing supervisory unions and unions of security guards shall, upon the effectivity of the Code, cease to operate as such and their registration certificates shall be deemed automatically cancelled. However, existing collective agreements with such unions, the life of which extends beyond the date of effectivity of the Code shall be respected until their expiry date insofar as the economic benefits granted therein are concerned.

Members of supervisory unions who do not fall within the definition of managerial employees shall become eligible to join or assist the rank and file organization. The determination of who are managerial employees and who are not shall be the subject of negotiation between representatives of supervisory union and the employer. If no agreement s reached between the parties, either or both of them ma bring the issue to the nearest Regional Office for determination. The obvious repeal of the last clause of Sec. 3, R.A. No. 875 prompted the Court to declare in a case (Bulletin v. Sanchez) that supervisory employees who do not fall under the category of managerial employees may join or assist in the formation of a labor organization for rank-and-file employees, but they may not form their own labor organization. Effective 1989, R.A. No. 6715 restored the prohibition against the questioned mingling in one labor organization: "Art. 245 (of LC). Ineligibility of managerial employees to join any labor organization; right of supervisory employees. Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees 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." Unfortunately, just like R.A. No. 875, R.A. No. 6715 omitted specifying the exact effect any violation of the prohibition would bring about on the legitimacy of a labor organization. But it was provided in the IRR of RA 6715: 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. and Rule V (Representation Cases and Internal-Union Conflicts) of the Omnibus Rules:

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. 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 the court ruled in 2 cases (Toyota case and Dunlop case) that a labor organization composed of both rank-and-file and supervisory employees is no legitimate labor organization at all. It 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 cannot possess the requisite personality to file a petition for certification election. 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. Hence in the cases that were filed (Tagaytay Highlands case, San Miguel case, and Air Philippines case), the court abandoned the Toyota ruling and reverted to its previous pronouncement 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. 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. The Court reverses the ruling of the CA and reinstates that of the DOLE granting the petition for certification election of KFWU. Eagle Ridge Golf & Country Club vs. CA, et. al. G.R. No. 178989, March 18, 2010 Facts: Petitioner Eagle Ridge Golf and Country Club(Eagle Ridge), which has around 112 rank-and-file employees, alleges that Eagle Ridge Employees Union(EREU) committed fraud, misrepresentation and false statement when it filed for its registration and that EREU failed to comply with the membership requirement for the registration as a labor organization. Eagle Ridge seeks to have EREUs registration cancelled when the Union filed a petition for certification election. Eagle Ridge alleged that the EREU declared in its application for registration having 30 members, when the minutes of its December 6, 2005 organizational meeting showed it only had 26 members. The misrepresentation was exacerbated by the discrepancy between the certification issued by the Union secretary and president that 25 members actually ratified the constitution and by-laws on December 6, 2005 and the fact that 26 members affixed their signatures on the documents, making one signature a forgery.

DOLE Regional Director granted Eagle Ridges petition and delisted EREU from the roster of legitimate labor organizations. EREU appealed to the BLR, which initially affirmed the order of the Regional Director, but upon filing of the EREU of a motion for reconsideration it was reinstated in the roster of legitimate labor organizations. Eagle Ridge filed a motion for reconsideration but was denied, thus a petition for certiorari to the CA. The CA dismissed Eagle Ridges petition for being deficient as the verification and certification of non-forum shopping was subscribed to by Luna C. Piezas on her representation as the legal counsel of the petitioner, but sans [the requisite] Secretarys Certificate or Board Resolution authorizing her to execute and sign the same. The CA denied a motion for reconsideration. Issue: Did the CA commit grave abuse of discretion in denying Eagle Ridges petition to cancel EREUs registration? Ruling: No. A scrutiny of the records fails to show any misrepresentation, false statement, or fraud committed by EREU to merit cancellation of its registration. The Union submitted the required documents attesting to the facts of the organizational meeting on December 6, 2005, the election of its officers, and the adoption of the Unions constitution and by-laws. EREU complied with the mandatory minimum 20% membership requirement under Art. 234(c). when it had 30 employees as member when it registered. Any seeming infirmity in the application and admission of union membership, most especially in cases of independent labor unions, must be viewed in favor of valid membership.

In the issue of the affidavits of retraction executed by six union members, the probative value of these affidavits cannot overcome those of the supporting affidavits of 12 union members and their counsel as to the proceedings and the conduct of the organizational meeting on December 6, 2005. The DOLE Regional Director and the BLR OIC Director obviously erred in giving

credence to the affidavits of retraction, but not according the same treatment to the supporting affidavits. It is settled that affidavits partake the nature of hearsay evidence, since they are not generally prepared by the affiant but by another who uses his own language in writing the affiants statement, which may thus be either omitted or misunderstood by the one writing them. It is required for affiants to re-affirm the contents of their affidavits during the hearing of the instant case for them to be examined by the opposing party, i.e., the Union. For their non-presentation, the six affidavits of retraction are inadmissible as evidence against the Union in the instant case. Twenty percent (20%) of 112 rank-and-file employees in Eagle Ridge would require a union membership of at least 22 employees. When the EREU filed its application for registration on December 19, 2005, there were clearly 30 union members. Thus, when the certificate of registration was granted, there is no dispute that the Union complied with the mandatory 20% membership requirement. Prior to their withdrawal, the six employees who retracted were bona fide union members. With the withdrawal of six union members, there is still compliance with the mandatory membership requirement under Art. 234(c), for the remaining 24 union members constitute more than the 20% membership requirement of 22 employees. ELECTROMAT MANUFACTURING AND RECORDING CORPORATION, PETITIONER, VS. HON. CIRIACO LAGUNZAD, IN HIS CAPACITY AS REGIONAL DIRECTOR, NATIONAL CAPITAL REGION, DEPARTMENT OF LABOR AND EMPLOYMENT; AND HON. HANS LEO J. CACDAC, IN HIS CAPACITY AS DIRECTOR OF BUREAU OF LABOR RELATIONS, DEPARTMENT OF LABOR AND EMPLOYMENT, PUBLIC RESPONDENTS. BRION, J.: Facts: The private respondent Nagkakaisang Samahan ng Manggagawa ng Electromat-Wasto (union), a charter affiliate of the Workers Advocates for Struggle, Transformation and Organization (WASTO), applied for registration with the Bureau of Labor Relations (BLR). Supporting the application were the following documents: (1) copies of its ratified constitution and by-laws (CBL); (2) minutes of the CBL's adoption and ratification; (3)

minutes of the organizational meetings; (4) names and addresses of the union officers; (5) list of union members; (6) list of rank-and-file employees in the company; (7) certification of non-existence of a collective bargaining agreement (CBA) in the company; (8) resolution of affiliation with WASTO, a labor federation; (9) WASTO's resolution of acceptance; (10) Charter Certificate; and (11) Verification under oath. The BLR thereafter issued the union a Certification of Creation of Local Chapter (equivalent to the certificate of registration of an independent union), pursuant to Department Order No. (D.O.) 40-03. Electromat Manufacturing and Recording Corporation (company) filed a petition for cancellation of the union's registration certificate, for the union's failure to comply with Article 234 of the Labor Code. It argued that D.O. 4003 is an unconstitutional diminution of the Labor Code's union registration requirements under Article 234. On November 27, 2003, Acting Director Ciriaco A. Lagunzad of the Department of Labor and Employment (DOLE)-National Capital Region dismissed the petition. In the appeal by the company, BLR affirmed the dismissal. The company thereafter sought relief from the CA through a petition forcertiorari, contending that the BLR committed grave abuse of discretion in affirming the union's registration despite its non-compliance with the requirements for registration under Article 234 of the Labor Code. The CA dismissed the petition and affirmed the assailed BLR ruling. It brushed aside the company's objection to D.O. 40-03, and it pointed out that D.O. 40-03 was issued by the DOLE pursuant to its rule-making power under the law. The company moved for reconsideration, arguing that the union's registration certificate was invalid as there was no showing that WASTO, the labor federation to which the union is affiliated, had at least ten (10) locals or chapters as required by D.O. 40-03. The CA denied the motion, holding that no such requirement is found under the rules. Hence, the present petition. The company points out that D.O. 40-03 delisted some of the requirements under Article 234 of the Labor Code for the registration of a local chapter.

The company contends that the enumeration of the requirements for union registration under the law is exclusive and should not be diminished, and that the same requirements should apply to all labor unions whether they be independent labor organizations, federations or local chapters. It adds that in making a different rule for local chapters, D.O. 40-03 expanded or amended Article 234 of the Labor Code, resulting in an invalid exercise by the DOLE of its delegated rule-making power. It thus posits that the union's certificate of registration which was issued "in violation of the letters of Article 234 of the Labor Code" is void and of no effect, and that the CA committed grave abuse of discretion when it affirmed the union's existence. Issue: whether D.O. 40-03 is a valid exercise of the rule-making power of the DOLE.

held: We rule in the affirmative. Earlier in Progressive Development Corporation v. Secretary, Department of Labor and Employment,[19] the Court encountered a similar question on the validity of the old Section 3, Rule II, Book V of the Rules Implementing the Labor Code [20] which stated: Union affiliation; direct membership with a national union. - The affiliate of a labor federation or national union may be a local or chapter thereof or an independently registered union. a) The labor federation or national union concerned shall issue a charter certificate indicating the creation or establishment of a local or chapter, copy of which shall be submitted to the Bureau of Labor Relations within thirty (30) days from issuance of such charter certificate. xxxx e) The local or chapter of a labor federation or national union shall have and maintain a constitution and by-laws, set of officers and books of accounts. For reporting purposes, the procedure governing the reporting of independently registered unions, federations or national unions shall be observed. Interpreting these provisions of the old rules, the Court said that by force of law, the local or chapter of a labor federation or national union becomes a legitimate labor organization upon compliance with Section 3, Rule II, Book V

of the Rules Implementing the Labor Code, the only requirement being the submission of the charter certificate to the BLR. Further, the Court noted that Section 3 omitted several requirements which are otherwise required for union registration, as follows: 1) The requirement that the application for registration must be signed by at least 20% of the employees in the appropriate bargaining unit; 2) The submission of officers' addresses, principal address of the labor organization, the minutes of organization meetings and the list of the workers who participated in such meetings; 3) The submission of the minutes of the adoption or ratification of the constitution and by-laws and the list of the members who participated in it. Notwithstanding these omissions, the Court upheld the government's implementing policy expressed in the old rules when it declared in Progressive Development Undoubtedly, the intent of the law in imposing lesser requirements in the case of a branch or local of a registered federation or national union is to encourage the affiliation of a local union with a federation or national union in order to increase the local union's bargaining powers respecting terms and conditions of labor. It was this same Section 3 of the old rules that D.O. 40-03 fine-tuned when the DOLE amended the rules on Book V of the Labor Code, thereby modifying the government's implementing policy on the registration of locals or chapters of labor federations or national unions. The company now assails this particular amendment as an invalid exercise of the DOLE's rule-making power. In any case, the local union in the present case has more than satisfied the requirements the petitioner complains about; specifically, the union has submitted: (1) copies of the ratified CBL; (2) the minutes of the CBL's adoption and ratification; (3) the minutes of the organizational meetings; (4) the names and addresses of the union officers; (5) the list of union members; (6) the list of rank-and-file employees in the company; (7) a certification of non-existence of a CBA in the company; (8) the resolution of affiliation with WASTO and the latter's acceptance; and (9) their Charter Certificate. These submissions were properly verified as required by the rules. In sum, the

petitioner has no factual basis for questioning the union's registration, as even the requirements for registration as an independent local have been substantially complied with. We, thus, find no compelling justification to nullify D.O. 40-03.

G.R. No. 162943

December 6, 2010

EMPLOYEES UNION OF BAYER PHILS., FFW and JUANITO S. FACUNDO, in his capacity as President,Petitioners, vs. BAYER PHILIPPINES, INC., DIETER J. LONISHEN (President), ASUNCION AMISTOSO (HRD Manager), AVELINA REMIGIO AND ANASTACIA VILLAREAL, Respondents. VILLARAMA, JR., J.: FACTS: Petitioner Employees Union of Bayer Philippines (EUBP) is the exclusive bargaining agent of all rank-and-file employees of Bayer Philippines (Bayer), and is an affiliate of the Federation of Free Workers (FFW). In 1997, EUBP, headed by its president Juanito S. Facundo (Facundo), negotiated with Bayer for the signing of a collective bargaining agreement (CBA). During the negotiations, EUBP rejected Bayers 9.9% wage-increase proposal resulting in a bargaining deadlock. Subsequently, EUBP staged a strike, prompting the Secretary of the Department of Labor and Employment (DOLE) to assume jurisdiction over the dispute. Respondent Avelina Remigio (Remigio) and 27 other union members, without any authority from their union leaders, accepted Bayers wage-increase proposal. EUBPs grievance committee questioned Remigios action and reprimanded Remigio and her allies. The DOLE Secretary issued an arbitral award ordering EUBP and Bayer to execute a CBA Barely six months from the signing of the new CBA, during a companysponsored seminar, Remigio solicited signatures from union members in support of a resolution containing the decision of the signatories to: (1) disaffiliate from FFW, (2) rename the union as Reformed Employees Union of Bayer Philippines (REUBP), (3) adopt a new constitution and by-laws for the union, (4) abolish all existing officer positions in the union and elect a new set

of interim officers, and (5) authorize REUBP to administer the CBA between EUBP and Bayer. The said resolution was signed by 147 of the 257 local union members. With both seeking recognition from Bayer and demanding remittance of the union dues collected from its rank-and-file members. Remigios splinter group wrote Facundo, FFW and Bayer informing them of the decision of the majority of the union members to disaffiliate from FFW. Bayer responded by deciding not to deal with either of the two groups, and by placing the union dues collected in a trust account until the conflict between the two groups is resolved. EUBP filed a complaint for unfair labor practice (first ULP complaint) against Bayer for non-remittance of union dues. EUBP later sent a letter to Bayer asking for a grievance conference. Apparently, the two groups failed to settle their issues. Bayer decided to turn over the collected union dues amounting to P254,857.15 to respondent Anastacia Villareal, Treasurer of REUBP. EUBP lodged a complaint against Remigios group before the Industrial Relations Division of the DOLE praying for their expulsion from EUBP for commission of "acts that threaten the life of the union." Labor Arbiter Jovencio Ll. Mayor, Jr. dismissed the first ULP complaint for lack of jurisdiction. Petitioners filed a second ULP complaint against herein respondents. The Regional Director of the Industrial Relations Division of DOLE issued a decision dismissing the issue on expulsion filed by EUBP against Remigio and her allies for failure to exhaust reliefs within the union and ordering the conduct of a referendum to determine which of the two groups should be recognized as union officers. The BLR reversed the Regional Directors ruling and ordered the management of Bayer to respect the authority of the dulyelected officers of EUBP in the administration of the prevailing CBA.Labor Arbiter Waldo Emerson R. Gan dismissed EUBPs second ULP complaint for lack of jurisdiction. The CA sustained both the Labor Arbiter and the NLRCs rulings. ISSUE: Whether or not the act of the management of Bayer in dealing and negotiating with Remigios splinter group despite its validly existing CBA with EUBP can be considered unfair labor practice . HELD:The petition is partly meritorious. 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 INTER/INTRA-UNION DISPUTES 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 membership; of acceptance/non-acceptance for union XI AND

(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; (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 selforganization, 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. It is clear from the foregoing that the issues raised by petitioners do not fall under any of the aforementioned circumstances constituting an intra-union dispute. More importantly, the petitioners do not seek a determination of whether it is the Facundo group (EUBP) or the Remigio group (REUBP) which is the true set of union officers. Instead, the issue raised pertained only to the validity of the acts of management in light of the fact that it still has an existing CBA with EUBP. Thus as to Bayer, Lonishen and Amistoso the question was whether they were liable for unfair labor practice, which issue was within the jurisdiction of the NLRC. The dismissal of the second ULP complaint was therefore erroneous. However, as to respondents Remigio and Villareal, we find that petitioners complaint was validly dismissed. Petitioners ULP complaint cannot prosper as against respondents Remigio and Villareal because the issue, as against them, essentially involves an intra-union dispute based on Section 1 (n) of DOLE Department Order No. 40-03. To rule on the validity or illegality of their acts, the Labor Arbiter and the NLRC will necessarily touch on the issues respecting the propriety of their disaffiliation and the legality of the establishment of REUBP issues that are outside the scope of their jurisdiction. Accordingly, the dismissal of the complaint was validly made, but only with respect to these two respondents. But are Bayer, Lonishen and Amistoso liable for unfair labor practice? On this score, we find that the evidence supports an answer in the affirmative. It must be remembered that a CBA is entered into in order to foster stability and mutual cooperation between labor and capital. An employer should not be allowed to rescind unilaterally its CBA with the duly certified bargaining agent it had previously contracted with, and decide to bargain anew with a different group if there is no legitimate reason for doing so and without first following the proper procedure. If such behavior would be tolerated, bargaining and negotiations between the employer and the union will never be truthful and meaningful, and no CBA forged after arduous negotiations will

ever be honored or be relied upon. Article 253 of the Labor Code, as amended, plainly provides: ART. 253. Duty to bargain collectively when there exists a collective bargaining agreement. Where there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate or 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 60-day period and/or until a new agreement is reached by the parties. (Emphasis supplied.)1avvphi1 This is the reason why it is axiomatic in labor relations that a CBA entered into by a legitimate labor organization that has been duly certified as the exclusive bargaining representative and the employer becomes the law between them. Additionally, in the Certificate of Registration issued by the DOLE, it is specified that the registered CBA serves as the covenant between the parties and has the force and effect of law between them during the period of its duration. Compliance with the terms and conditions of the CBA is mandated by express policy of the law primarily to afford protection to labor and to promote industrial peace. Thus, when a valid and binding CBA had been entered into by the workers and the employer, the latter is behooved to observe the terms and conditions thereof bearing on union dues and representation. If the employer grossly violates its CBA with the duly recognized union, the former may be held administratively and criminally liable for unfair labor practice. Indeed, in Silva v. National Labor Relations Commission, we explained the correlations of Article 248 (1) and Article 261 of the Labor Code to mean that for a ULP case to be cognizable by the Labor Arbiter, and for the NLRC to exercise appellate jurisdiction thereon, the allegations in the complaint must show prima facie the concurrence of two things, namely: (1) gross violation of the CBA; and (2) the violation pertains to the economic provisions of the CBA. This pronouncement in Silva, however, should not be construed to apply to violations of the CBA which can be considered as gross violations per se, such as utter disregard of the very existence of the CBA itself, similar to what happened in this case. When an employer proceeds to negotiate with a splinter union despite the existence of its valid CBA with the duly certified and

exclusive bargaining agent, the former indubitably abandons its recognition of the latter and terminates the entire CBA.

G.R. No. 168583

July 26, 2010

ATTY. ALLAN S. MONTAO, Petitioner, vs. ATTY. ERNESTO C. VERCELES, Respondent. DEL CASTILLO, J.: FACTS: Atty. Montao worked as legal assistant of FFW Legal Center. Subsequently, he joined the union of rank-and-file employees, the FFW Staff Association, and eventually became the employees union president ,he was likewise designated officer-in-charge of FFW Legal Center. Atty. Montao was nominated for the position of National VicePresident. However, the Commission on Election (FFW COMELEC), informed him that he is not qualified for the position as his candidacy violates the 1998 FFW Constitution and By-Laws, particularly Section 76 of Article XIX8 and Section 25 (a) of Article VIII, both in Chapter II thereof. Atty. Montao thus filed an Urgent Motion for Reconsideration. Despite the pending motion for reconsideration with the FFW COMELEC, and strong opposition and protest of respondent Atty. Ernesto C. Verceles (Atty. Verceles), a delegate to the convention and president of University of the East Employees Association (UEEA-FFW) which is an affiliate union of FFW, the convention delegates allowed Atty. Montaos candidacy. He emerged victorious and was proclaimed as the National Vice-President. Atty. Verceles, filed before the BLR a petition for the nullification of the election of Atty. Montao as FFW National Vice-President. Atty. Montao filed his Comment with Motion to Dismiss on the grounds that the Regional Director of the Department of Labor and Employment (DOLE) and not the BLR has jurisdiction over the case. The BLR rendered a Decision dismissing the petition for lack of merit. Atty. Verceles filed a Motion for Reconsideration but it was denied by the BLR. The CA set aside the BLRs Decision.

ISSUE: Wheteher or not CA gravely erred in upholding the jurisdiction of the BLR and granting the petition to annul Atty. Montanos election on the fround that FFW Staff Association is not a legitimate labor organization. HELD: The petition is devoid of merit. The BLR has jurisdiction over intraunion disputes involving a federation. Section 226 of the Labor Code28 clearly provides that the BLR and the Regional Directors of DOLE have concurrent jurisdiction over inter-union and intra-union disputes. Such disputes include the conduct or nullification of election of union and workers association officers.29 There is, thus, no doubt as to the BLRs jurisdiction over the instant dispute involving member-unions of a federation arising from disagreement over the provisions of the federations constitution and by-laws. We agree with BLRs observation that: Rule XVI lays down the decentralized intra-union dispute settlement mechanism. Section 1 states that any complaint in this regard shall be filed in the Regional Office where the union is domiciled. The concept of domicile in labor relations regulation is equivalent to the place where the union seeks to operate or has established a geographical presence for purposes of collective bargaining or for dealing with employers concerning terms and conditions of employment. The matter of venue becomes problematic when the intra-union dispute involves a federation, because the geographical presence of a federation may encompass more than one administrative region. Pursuant to its authority under Article 226, this Bureau exercises original jurisdiction over intra-union disputes involving federations. It is well-settled that FFW, having local unions all over the country, operates in more than one administrative region. Therefore, this Bureau maintains original and exclusive jurisdiction over disputes arising from any violation of or disagreement over any provision of its constitution and by-laws.30 Atty. Montao is not qualified to run as FFW National Vice-President in view of the prohibition established in Section 76, Article XIX of the 1998 FFW Constitution and By-Laws.1awph!1 Section 76, Article XIX of the FFW Constitution and By-laws provides that no member of the Governing Board shall at the same time be an employee in the staff of the federation. There is no dispute that Atty. Montao, at the time of his nomination and election for the position in the Governing Board, is the head of FFW Legal Center and the President of FFW Staff Association. Even

after he was elected, albeit challenged, he continued to perform his functions as staff member of FFW and no evidence was presented to show that he tendered his resignation.38 On this basis, the FFW COMELEC disqualified Atty. Montao. The BLR, however, overturned FFW COMELECs ruling and held that the applicable provision is Section 26 of Article VIII. The CA subsequently affirmed this ruling of the BLR but held Atty. Montao unqualified for the position for failing to meet the requirements set forth therein. We find that both the BLR and CA erred in their findings. To begin with, FFW COMELEC is vested with authority and power, under the FFW Constitution and By-Laws, to screen candidates and determine their qualifications and eligibility to run in the election and to adopt and promulgate rules concerning the conduct of elections.39 Under the Rules Implementing the Labor Code, the Committee shall have the power to prescribe rules on the qualification and eligibility of candidates and such other rules as may facilitate the orderly conduct of elections.40 The Committee is also regarded as the final arbiter of all election protests.41 From the foregoing, FFW COMELEC, undeniably, has sufficient authority to adopt its own interpretation of the explicit provisions of the federations constitution and by-laws and unless it is shown to have committed grave abuse of discretion, its decision and ruling will not be interfered with. The FFW Constitution and By-laws are clear that no member of the Governing Board shall at the same time perform functions of the rank-and-file staff. The BLR erred in disregarding this clear provision. The FFW COMELECs ruling which considered Atty. Montaos candidacy in violation of the FFW Constitution is therefore correct. We, thus, concur with the CA that Atty. Montao is not qualified to run for the position but not for failure to meet the requirement specified under Section 26 (d) of Article VIII of FFW Constitution and By-Laws. We note that the CAs declaration of the illegitimate status of FFW Staff Association is proscribed by law, owing to the preclusion of collateral attack. We nonetheless resolve to affirm the CAs finding that Atty. Montao is disqualified to run for the position of National Vice-President in view of the proscription in the FFW Constitution and By-Laws on federation employees from sitting in its Governing Board. Accordingly, the election of Atty. Montao as FFW VicePresident is null and void.

G.R. No. 168475

July 4, 2007

EMILIO E. DIOKNO, VICENTE R. ALCANTARA, ANTONIO Z. VERGARA, JR., DANTE M. TONG, JAIME C. MENDOZA, ROMEO M. MACAPULAY, ROBERTO M. MASIGLAT, LEANDRO C. ATIENZA, ROMULO AQUINO, JESUS SAMIA, GAUDENCIO CAMIT, DANTE PARAO, ALBERTO MABUGAT, EDGARDO VILLANUEVA, JR., FRANCISCO ESCOTO, EDGARDO SEVILLA, FELICITO MACASAET, and JOSE Z. TULLO, Petitioners, vs. HON. HANS LEO J. CACDAC, in his capacity as Director of the Bureau of Labor Relations, DOLE, MANILA, MED-ARBITER TRANQUILINO C. REYES, EDGARDO DAYA, PABLO LUCAS, LEANDRO M. TABILOG, REYNALDO ESPIRITU, JOSE VITO, ANTONIO DE LUNA, ARMANDO YALUNG, EDWIN LAYUG, NARDS PABILONA, REYNALDO REYES, EVANGELINE ESCALL, ALBERTO ALCANTARA, ROGELIO CERVITILLO, MARCELINO MORELOS, FAUSTINO ERMINO, JIMMY S. ONG, ALFREDO ESCALL, NARDITO C. ALVAREZ, JAIME T. VALERIANO, JOHNSON S. REYES, GAUDENCIO JIMENEZ, JR., GAVINO R. VIDANES, ARNALDO G. TAYAO, BONIFACIO F. CIRUJANO, EDGARDO G. CADVONA, MAXIMO A. CAOC, JOSE O. MACLIT, JR., LUZMINDO D. ACORDA, JR., LEMUEL R. RAGASA, and GIL G. DE VERA, Respondents. CHICO-NAZARIO, J.:

FACTS: The First Line Association of Meralco Supervisory Employees (FLAMES) is a legitimate labor organization which is the supervisory union of Meralco. Petitioners and private respondents are members of FLAMES. The COMELEC was composed of petitioner Dante M. Tong as its chairman, and petitioners Jaime C. Mendoza and Romeo M. Macapulay as members. Subsequently, private respondents Jimmy S. Ong, Nardito C. Alvarez, Alfredo J. Escall, and Jaime T. Valeriano filed their respective certificates of candidacy. The COMELEC rejected Jimmy S. Ongs candidacy on the ground that he was not a member of FLAMES. The certificates of candidacy of Nardito C. Alvarez, Alfredo J. Escall, and Jaime T. Valeriano were

similarly rejected on the basis of the exclusion of their department from the scope of the existing collective bargaining agreement (CBA). Private respondents Jimmy S. Ong, Nardito C. Alvarez, Alfredo J. Escall, Jaime T. Valeriano (Ong, et al.), and a certain Leandro M. Tabilog filed a Petition for the nullification of the COMELEC order before the MedArbitration Unit of the Department of Labor and Employment (DOLE). Petitioners filed a Petition with the COMELEC seeking the disqualification of private respondents Edgardo Daya, Pablo Lucas, Leandro Tabilog, Reynaldo Espiritu, Jose Vito, Antonio de Luna, Armando Yalung, Edwin Layug, Nards Pabilona, Reynaldo Reyes, Evangeline Escall, Alberto Alcantara, Rogelio Cervitillo, Marcelino Morelos, and Faustino Ermino (Daya, et al.). In their campaign, they allegedly colluded with the officers of the Meralco Savings and Loan Association (MESALA) and the Meralco Mutual Aid and Benefits Association (MEMABA) and exerted undue influence on the members of FLAMES. The COMELEC issued a Decision, declaring Daya, et al., officially disqualified to run and/or to participate in the FLAMES elections. he interest of FLAMES. Private respondents Daya, et al., along with Ong, et al., filed with the Med-Arbitration Unit of the DOLE-NCR, a Petition to: a) Nullify Order of Disqualification; b) Nullify Election Proceedings and Counting of Votes; c) Declare Failure of Election; and d) Declare Holding of New Election to be Controlled and Supervised by the DOLE. Med-Arbiter Tranquilino B. Reyes, Jr. issued a Decision in favor of private respondents, Daya, et al. Aggrieved, petitioners filed an appeal before the Director of the BLR. The Director of the BLR issued a Resolution, affirming in toto the assailed Decision of the Med-Arbiter. Petitioners elevated the case to the Court of Appeals via a Petition for Certiorari.The Court of Appeals found petitioners appeal to be bereft of merit. ISSUE: Whether or not the Court of Appeals committed grave abuse of discretion when it affirmed the jurisdiction of the BLR to take cognizance of the case. HELD: The Petition is devoid of merit. We affirm the finding of the Court of Appeals upholding the jurisdiction of the BLR. Article 226 of the Labor Code is hereunder reproduced, to wit: ART. 226. BUREAU OF LABOR RELATIONS. The Bureau of Labor Relations and the Labor Relations Divisions in the regional offices of the Department of Labor shall have original and exclusive authority to act, at their own initiative or upon request of either or both parties, on all inter-

union and intra-union conflicts, and all disputes, grievances or problems arising from or affecting labor-management relations in all workplaces whether agricultural or nonagricultural, except those arising from the implementation or interpretation of collective bargaining agreements which shall be the subject of grievance procedure and/or voluntary arbitration. The Bureau shall have fifteen (15) working days to act on labor cases before it, subject to extension by agreement of the parties. The amendment to Article 226, as couched in Republic Act No. 6715, which is relied upon by petitioners in arguing that the BLR had been divested of its jurisdiction, simply reads, thus: Sec. 14. The second paragraph of Article 226 of the same Code is likewise hereby amended to read as follows: "The Bureau shall have fifteen (15) calendar days to act on labor cases before it, subject to extension by agreement of the parties." This Court in Bautista v. Court of Appeals, interpreting Article 226 of the Labor Code, was explicit in declaring that the BLR has the original and exclusive jurisdiction on all inter-union and intra-union conflicts. We said that since Article 226 of the Labor Code has declared that the BLR shall have original and exclusive authority to act on all inter-union and intra-union conflicts, there should be no more doubt as to its jurisdiction. As defined, an intra-union conflict would refer to a conflict within or inside a labor union, while an inter-union controversy or dispute is one occurring or carried on between or among unions.35 More specifically, an intra-union dispute is defined under Section (z), Rule I of the Rules Implementing Book V of the Labor Code, viz: (z) "Intra-Union Dispute" refers to any conflict between and among union members, and includes all disputes or grievances arising from any violation of or disagreement over any provision of the constitution and by-laws of a union, including cases arising from chartering or affiliation of labor organizations or from any violation of the rights and conditions of union membership provided for in the Code. The controversy in the case at bar is an intra-union dispute. There is no question that this is one which involves a dispute within or inside FLAMES, a labor union. At issue is the propriety of the disqualification of private respondents Daya, et al., by the FLAMES COMELEC in the 7 May 2003 elections. It must also be stressed that even as the dispute involves allegations that private respondents Daya, et al., sought the help of non-members of the

union in their election campaign to the detriment of FLAMES, the same does not detract from the real character of the controversy. It remains as one which involves the grievance over the constitution and bylaws of a union, and it is a controversy involving members of the union. Moreover, the nonmembers of the union who were alleged to have aided private respondents Daya, et al., are not parties in the case. We are, therefore, unable to understand petitioners persistence in placing the controversy outside of the jurisdiction of the BLR. The law is very clear. It requires no further interpretation. The Petition which was initiated by private respondents Daya, et al., before the BLR was properly within its cognizance, it being an intraunion dispute. Indubitably, when private respondents Daya, et al., brought the case to the BLR, it was an invocation of the power and authority of the BLR to act on an intra-union conflict. We cannot accept, and the Court of Appeals rightfully rejected, the contention of petitioners that the private respondents Daya, et al.s complaint filed before the Med-Arbiter failed to comply with the jurisdictional requirement because it was not supported by at least thirty percent (30%) of the members of the union. Section 1 of Rule XIV of the Implementing Rules of Book V mandates the thirty percent (30%) requirement only in cases where the issue involves the entire membership of the union, which is clearly not the case before us. The issue is obviously limited to the disqualification from participation in the elections by particular union members.

FIRST DIVISION [G.R. No. 169717, March 16, 2011] SAMAHANG MANGGAGAWA SA CHARTER CHEMICAL SOLIDARITY OF UNIONS IN THE PHILIPPINES FOR EMPOWERMENT AND REFORMS (SMCC-SUPER), ZACARRIAS JERRY VICTORIO - UNION PRESIDENT, PETITIONER,VS. CHARTER CHEMICAL AND COATING CORPORATION, RESPONDENT. 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 Dismiss[4] 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. MEDARBITERS RULING:On April 30, 1999, Med-Arbiter Tomas F. Falconitin issued a Decisiondismissing the petition for certification election. The Med-Arbiter ruled that petitioner union is not a legitimate labor organization because the Charter Certificate, "Sama-samang 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 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. DOLES RULING:July 16, 1999, the DOLE initially issued a Decision[8] in favor of respondent company dismissing petitioner union's appeal on the ground that the latter's petition for certification election was filed out of time. Although the DOLE ruled, contrary to the findings of the MedArbiter, that the charter certificate need not be verified and that there was no independent evidence presented to establish respondent company's 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. 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 union's petition for certification election. CA's RULING: 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-Arbiter's 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 exclusioninclusion proceedings in a pre-election 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. ISSUE:WON 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 [union's] membership is [a] ground for the cancellation of petitioner [union's] legal personality and dismissal of [the] petition for certification election. HELD: 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. The issue as to the legal personality of petitioner union is not barred by the July 16, 1999 Decision of the DOLE. The charter certificate need not be certified under oath by the local union's secretary or treasurer and attested to by its president. In San Miguel Foods-Cebu B-Meg Feed Plant v. Hon. Laguesma, 331 Phil. 356 (1996), the Court ruled that it was not 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 local/chapter's 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 union's 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-laws[26]-- 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 legal personality of petitioner union cannot be collaterally attacked by respondent company in the certification election proceedings. TAGAYTAY HIGHLANDS INTERNATIONAL GOLF CLUB INCORPORATED, petitioner, vs. TAGAYTAY HIGHLANDS EMPLOYEES UNION-PGTWO, respondent. DECISION CARPIO-MORALES, J.:

On October 16, 1997, the Tagaytay Highlands Employees Union (THEU) Philippine Transport and General Workers Organization (PTGWO), Local Chapter No. 776, a legitimate labor organization said to represent majority of the rank-and-file employees of THIGCI, filed a petition for certification election before the DOLE Mediation-Arbitration Unit, Regional Branch No. IV. THIGCI, in its Comment[1] filed on November 27, 1997, opposed THEUs petition for certification election on the ground that the list of union members submitted by it was defective and fatally flawed as it included the names and signatures of supervisors, resigned, terminated and absent without leave (AWOL) employees, as well as employees of The Country Club, Inc., a corporation distinct and separate from THIGCI; and that out of the 192

signatories to the petition, only 71 were actual rank-and-file employees of THIGCI.

THIGCI also alleged that some of the signatures in the list of union members were secured through fraudulent and deceitful means, and submitted copies of the handwritten denial and withdrawal of some of its employees from participating in the petition. THEU asserted that it had complied with all the requirements for valid affiliation and inclusion in the roster of legitimate labor organizations pursuant to DOLE Department Order No. 9, series of 1997,[5] on account of which it was duly granted a Certification of Affiliation by DOLE on October 10, 1997;[6] and that Section 5, Rule V of said Department Order provides that the legitimacy of its registration cannot be subject to collateral attack, and for as long as there is no final order of cancellation, it continues to enjoy the rights accorded to a legitimate organization. THEU thus concluded in its Reply[7] that under the circumstances, the MedArbiter should, pursuant to Article 257 of the Labor Code and Section 11, Rule XI of DOLE Department Order No. 09, automatically order the conduct of a certification election. DOLE Med-Arbiter Anastacio Bactin ordered the holding of a certification election among the rank-and-file employees. Passing on THIGCIs allegation that some of the union members are supervisory, resigned and AWOL employees or employees of a separate and distinct corporation, the Med-Arbiter held that the same should be properly raised in the exclusion-inclusion proceedings at the pre-election conference. As for the allegation that some of the signatures were secured through fraudulent and deceitful means, he held that it should be coursed through an independent petition for cancellation of union registration which is within the jurisdiction of the DOLE Regional Director. In any event, the Med-Arbiter held that THIGCI failed to submit the job descriptions of the questioned employees and other supporting documents to bolster its claim that they are disqualified from joining THEU.

THIGCI appealed to the Office of the DOLE Secretary which set aside the said Med-Arbiters Order and accordingly dismissed the petition for certification election on the ground that there is a clear absence of community or mutuality of interests, it finding that THEU sought to represent two separate bargaining units (supervisory employees and rankand-file employees) as well as employees of two separate and distinct corporate entities. Upon Motion for Reconsideration by THEU, DOLE Undersecretary Rosalinda Dimalipis-Baldoz, held that since THEU is a local chapter, the twenty percent (20%) membership requirement is not necessary for it to acquire legitimate status, hence, the alleged retraction and withdrawal of support by 45 of the 70 remaining rank-and-file members . . . cannot negate the legitimacy it has already acquired before the petition; that rather than disregard the legitimate status already conferred on THEU by the Bureau of Labor Relations, the names of alleged disqualified supervisory employees and employees of the Country Club, Inc., a separate and distinct corporation, should simply be removed from the THEUs roster of membership; and that regarding the participation of alleged resigned and AWOL employees and those whose signatures are illegible, the issue can be resolved during the inclusion-exclusion proceedings at the pre-election stage. The records of the case were thus ordered remanded to the Office of the MedArbiter for the conduct of certification election.

the Court of Appeals denied THIGCIs Petition for Certiorari and affirmed the DOLE Resolution. It held that while a petition for certification election is an exception to the innocent bystander rule, hence, the employer may pray for the dismissal of such petition on the basis of lack of mutuality of interests of the members of the union as well as lack of employer-employee relationship ISSUES Won SUPERVISORY EMPLOYEES AND NON-EMPLOYEES COULD SIMPLY BE REMOVED FROM APPELLEES ROSTER OF RANK-ANDFILE MEMBERSHIP INSTEAD OF RESOLVING THE LEGITIMACY OF RESPONDENT UNIONS STATUS

Won THE DISQUALIFIED EMPLOYEES STATUS COULD READILY BE RESOLVED DURING THE INCLUSION AND EXCLUSION PROCEEDINGS HELD: The statutory authority for the exclusion of supervisory employees in a rankand-file union, and vice-versa, is Article 245 of the Labor Code, to wit: Article 245. Ineligibility of managerial employees to join any labor organization; right of supervisory employees. Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees 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. While above-quoted Article 245 expressly prohibits supervisory employees from joining a rank-and-file union, it does not provide what would be the effect if a rank-and-file union counts supervisory employees among its members, or vice-versa. Citing Toyota[19] which held that a labor organization composed of both rank-and-file and supervisory employees is no labor organization at all, and the subsequent case of Progressive Development Corp. Pizza Hut v. Ledesma[20] which held that: The Labor Code requires that in organized and unorganized establishments, a petition for certification election must be filed by a legitimate labor organization. The acquisition of rights by any union or labor organization, particularly the right to file a petition for certification election, first and foremost, depends on whether or not the labor organization has attained the status of a legitimate labor organization. In the case before us, the Med-Arbiter summarily disregarded the petitioners prayer that the former look into the legitimacy of the respondent Union by a sweeping declaration that the union was in the possession of a charter certificate so that for all intents and purposes, Sumasaklaw sa Manggagawa sa Pizza Hut (was) a legitimate organization,[21] (Underscoring and emphasis supplied),

petitioner contends that, quoting Toyota, [i]t becomes necessary . . ., 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.[22] Continuing, petitioner argues that without resolving the status of THEU, the DOLE Undersecretary conveniently deferred the resolution on the serious infirmity in the membership of [THEU] and ordered the holding of the certification election which is frowned upon as the following ruling of this Court shows: We also do not agree with the ruling of the respondent Secretary of Labor that the infirmity in the membership of the respondent union can be remedied in the pre-election conference thru the exclusion-inclusion proceedings wherein those employees who are occupying rank-and-file positions will be excluded from the list of eligible voters. Public respondent gravely misappreciated the basic antipathy between the interest of supervisors and the interest of rank-and-file employees. Due to the irreconcilability of their interest we held in Toyota Motor Philippines v. Toyota Motors Philippines Corporation Labor Union, viz: x x x Clearly, based on this provision [Article 245], 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 posses 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. (Emphasis by petitioner) (Dunlop Slazenger (Phils.), v. Secretary of Labor, 300 SCRA 120 [1998]; Underscoring and emphasis supplied by petitioner.) The petition fails. After a certificate of registration is issued to a union, its legal personality cannot be subject to collateral attack. It may be questioned only in an independent petition for cancellation in accordance with Section 5

of Rule V, Book IV of the Rules to Implement the Labor Code (Implementing Rules) which section reads: Sec. 5. 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. (Emphasis supplied) The grounds for cancellation of union registration are provided for under Article 239 of the Labor Code, as follows: Art. 239. Grounds for cancellation of union registration. The following shall 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) Failure to submit the documents mentioned in the preceding paragraph within thirty (30) days from adoption or ratification of the constitution and by-laws or amendments thereto; (c) Misrepresentation, false statements or fraud in connection with the election of officers, minutes of the election of officers, the list of voters, or failure to subject these documents together with the list of the newly elected/appointed officers and their postal addresses within thirty (30) days from election; (d) Failure to submit the annual financial report to the Bureau within thirty (30) days after the losing of every fiscal year and misrepresentation, false entries or fraud in the preparation of the financial report itself; (e) Acting as a labor contractor or engaging in the cabo system, or otherwise engaging in any activity prohibited by law; (f) Entering into collective bargaining agreements which provide terms and conditions of employment below minimum standards established by law;

(g) Asking for or accepting attorneys fees or negotiation fees from employers; (h) Other than for mandatory activities under this Code, checking off special assessments or any other fees without duly signed individual written authorizations of the members; (i) Failure to submit list of individual members to the Bureau once a year or whenever required by the Bureau; and (j) Failure to comply with the requirements under Articles 237 and 238, (Emphasis supplied), while the procedure for cancellation of registration is provided for in Rule VIII, Book V of the Implementing Rules. 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 above-quoted Article 239 of the Labor Code. THEU, having been validly issued a certificate of registration, should be considered to have already acquired juridical personality which may not be assailed collaterally. As for petitioners allegation that some of the signatures in the petition for certification election were obtained through fraud, false statement and misrepresentation, the proper procedure is, as reflected above, for it to file a petition for cancellation of the certificate of registration, and not to intervene in a petition for certification election. Regarding the alleged withdrawal of union members from participating in the certification election, this Courts following ruling is instructive: [T]he best forum for determining whether there were indeed retractions from some of the laborers is in the certification election itself wherein the workers can freely express their choice in a secret ballot. Suffice it to say that the will of the rank-and-file employees should in every possible instance be determined by secret ballot rather than by administrative or quasi-judicial inquiry. Such representation and certification election cases are not to be

taken as contentious litigations for suits but as mere investigations of a nonadversary, fact-finding character as to which of the competing unions represents the genuine choice of the workers to be their sole and exclusive collective bargaining representative with their employer.[23] As for the lack of mutuality of interest argument of petitioner, it, at all events, does not lie given, as found by the court a quo, its failure to present substantial evidence that the assailed employees are actually occupying supervisory positions. While petitioner submitted a list of its employees with their corresponding job titles and ranks,[24] there is nothing mentioned about the supervisors respective duties, powers and prerogatives that would show that they can effectively recommend managerial actions which require the use of independent judgment.[25] As this Court put it in Pepsi-Cola Products Philippines, Inc. v. Secretary of Labor:[26] Designation should be reconciled with the actual job description of subject employees x x x The mere fact that an employee is designated manager does not necessarily make him one. Otherwise, there would be an absurd situation where one can be given the title just to be deprived of the right to be a member of a union. In the case of National Steel Corporation vs. Laguesma (G. R. No. 103743, January 29, 1996), it was stressed that: What is essential is the nature of the employees function and not the nomenclature or title given to the job which determines whether the employee has rank-and-file or managerial status or whether he is a supervisory employee. (Emphasis supplied).[27] WHEREFORE, the petition is hereby DENIED. Let the records of the case be remanded to the office of origin, the Mediation-Arbitration Unit, Regional Branch No. IV, for the immediate conduct of a certification election subject to the usual pre-election conference.

ASSIGNMENT NUMBER 4

General Santos Coca-Cola Plant Free Workers Union vs. Coca-Cola Bottlers Philippines Inc., G.R. No. 178647 February 13, 2009 NACHURA, J.: Facts: In 1990, the CCBPI experienced a significant decline in profitability due to the Asian economic crisis. To curve the negative effect, it implemented three (3) waves of an Early Retirement Program (ERP). Meanwhile, there was a memorandum issued mandating to put on hold all requests for hiring to fill in vacancies in both regular and temporary positions. Because several availed of the ERP, vacancies were created. This prompted the Petitioner Union to negotiate with the Labor Management Committee (LMC) for filling up the vacancies. No resolution was reached on the matter, faced with freeze hiring, CCBPI engaged the services of JLBP Services Corporation that provides manpower services. On January 2002 the Union filed in with the National Conciliation and Mediation Board (MCMB) a Notice of Strike on the ground of ULP for contracting-out services regularly performed by union members (union busting). After conciliation/mediation proceedings the Parties failed to arrive to an amicable settlement. The CCBI filed a Petition for Assumption of Jurisdiction with the Secretary of DOLE. The DOLE Secretary issued an order enjoining the threatened strike and certifying the dispute to the NLRC compulsory arbitration. On 2003, the NLRC ruled that the Company is not guilty of ULP anchoring its ruling on the validity of the Going-to-the-Market system, leading to closure of certain sales offices and conventional sales route. On appeal, CA affirmed the decision finding that JLBP was an independent contractor and also found that contracting out jobs was a valid exercise of management prerogative to meet the exigent circumstances. On the other hand, petitioner failed to adduce evidence to prove that contracting out of jobs by the company resulted in the dismissal of petitioners members, prevented them from exercising their right to self-organization, led to the Unions

demise or that their group was singled out by the company. Consequently, the CA declared that CCBPI was not guilty of unfair labor practice. Issue: Whether contracting-out of jobs to JLBP amounted to ULP. Ruling: Petition is denied. The NLRC found and the same was sustained by the CA that the companys action to contract-out the services and functions performed by Union members did not constitute unfair labor practice as this was not directed at the members right to self-organization. Art. 248 UNFAIR LABOR PRACTICE OF EMPLOYERS. It shall be unlawful for an employer to commit any of the following unfair labor practices: (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 right to self-organization; Unfair Labor Practice refers to acts that violate the workers right to organize The prohibited acts are related to the workers right to selforganization and to the observance of a CBA. Without that element, the acts, even if unfair, are not unfair labor practice. Both the NLRC and the CA found that petitioner was unable to prove its charge of unfair labor practices. It was the Union that had the burden of adducing substantial evidence to support its allegations of unfair labor practice, which burden it failed to discharge.

UST FACULTY UNION, vs. UNIVERSITY OF SANTO TOMAS, REV. FR. ROLANDO DE LA ROSA, REV. FR. RODELIO ALIGAN, DOMINGO LEGASPI, and MERCEDES HINAYON, G.R. No. 180892 April 7, 2009 VELASCO, JR., J.: FACTS: This case is a Petition to reverse CAs decision. CA affirmed NLRCs resolution affirming LA Madriagas 2003 Decision. All decisions were in favour of Respondents declaring the latter not guilty of Unfair Labor Practice.

The UST Faculty Union (USTFU) informed its members of a General Assembly. One of its agenda is the election of officers. The then incumbent president of the USTFU was Atty. Eduardo J. Mario, Jr. Fr. Rodel Aligan, O.P., Secretary General of the UST, issued a Memorandum allowing the request of the Faculty Clubs of the university to hold a convocation, which the members of the faculty including members of USTFU attended without the participation of UST administration. An election of USTFU was conducted by a group called Reformist Alliance. Learning that the convocation was intended for election, some members walked out, but Gil Gamilla and other faculty members (Gamilla Group) were elected as the president and officers, respectively, of the union. Such election was communicated to the UST administration in. Thus, there were two (2) groups claiming to be the USTFU: the Gamilla Group and the group led by Atty. Mario, Jr. (Mario Group). 1. Marino group filed a compliant for ULP against UST with the Arbitration Branch. 2. It also filed a complaint before Med-Arbiter praying for the nullification of the election of the Gamilla Group. Meanwhile, a CBA was entered between Gamilla Group and UST superseding the existing CBA of UST and USTFU. Thereafter, Gamilla, accompanied by the barangay captain in the area, Chief Security Officer of the UST, padlocked the office of the USTFU. Afterwards, an armed security guard of the UST was posted in front of the USTFU office. The Med-Arbiter declared the election of Gamilla Group as null and void and ordering that this group cease and desist from performing the duties and responsibilities of USTFU officers. On appeal, to the Director Bureau of Labor Relations it affirmed the decision of Med-Arbiter. And on appeal before this Court, the Court upheld the ruling of BLR. Thus, USTFU (Marino Group) filed a Manifestation with the Arbitration Branch of the NLRC informing it of the Decision of the Court. Thereafter, the Arbitration Branch of the NLRC issued a Decision dismissing the complaint for lack of merit on the ground that USTFU failed to establish with clear and

convincing evidence that indeed UST was guilty of ULP. (APPARENT CONFLICT OF DECISION BETWEEN MED-ARBITER AND LABOR ARBITERS DECISION) As to the CBA, the labor arbiter ruled that when the new CBA was entered into, (1) the Gamilla Group presented more than sufficient evidence to establish that they had been duly elected as officers of the USTFU; and (2) the ruling of the med-arbiter that the election of the Gamilla Group was null and void was not yet final and executory. Thus, UST was justified in dealing with and entering into a CBA with the Gamilla Group, including helping the Gamilla Group in securing the USTFU office. USTFU appealed to the NLRC, the NLRC affirmed the decision of LA. When the case is elevated to CA, the Court affirmed the decision of NLRC. Hence, this petition.

Issue: Whether or not the decision nullifying the election of Gamilla Group, was a sufficient fact that constitutes ULP And must be recognized by the LA/NLRC? Ruling: The petition must be denied. UST Is Not Guilty of ULP The general principle is that one who makes an allegation has the burden of proving it. While, there are exceptions to this general rule, in the case of ULP, the alleging party has the burden of proving such ULP. SC citing De Paul/King Philip Customs Tailor v. NLRC that "a party alleging a critical fact must support his allegation with substantial evidence. Any decision based on unsubstantiated allegation cannot stand as it will offend due process." While in the more recent case Standard Chartered Bank Employees Union (NUBE) v. Confesor: In order to show that the employer committed ULP under the Labor Code, substantial evidence is required to support the claim.

Substantial evidence has been defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. It is the burden of the alleging party to prove such allegation with substantial evidence. Such principle finds justification in the fact that ULP is punishable with both civil and/or criminal sanctions. In no way can the contents of the letter memorandum be interpreted to mean that faculty members were required to attend the convocation. Not one coercive term was used in the memorandum to show that the faculty club members were compelled to attend such convocation. And the phrase "we are allowing them to hold a convocation" negates any idea that the UST would participate in the proceedings. In other words, the Memorandum, does not support a claim that UST organized the convocation in connivance with the Gamilla Group. the labor arbiter ruled that: Neither are We persuaded by complainants stand that respondents acquiescence to bargain with USTFU, through Gamillas group, constitutes unfair labor practice. x x x Such conduct alone, uncorroborated by other overt acts leading to the commission of ULP, does not conclusively show and establish the commission of such unlawful acts. The Gamilla Group represented itself to UST as the duly elected officials of the USTFU. As such, respondents were bound to deal with them. Art. 248(g) of the Labor Code provides that: Unfair labor practices of employers.It shall be unlawful for an employer to commit any of the following unfair labor practice: (g) To violate the duty to bargain collectively as prescribed by this Code. ART. 250. Procedure in collective bargaining.The following procedures shall be observed in collective bargaining: (a) When a party desires to negotiate an agreement, it shall serve a written notice upon the other party with a statement of its proposals. The other party shall make a reply thereto not later than ten (10) calendar days from receipt of such notice; Moreover, Art. 252 of the Code defines the duty to bargain collectively as:

The duty to bargain collectively means the performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to wages, hours of work and all other terms and conditions of employment including proposals for adjusting any grievances or questions arising under such agreement and executing a contract incorporating such agreements if requested by either party but such duty does not compel any party to agree to a proposal or to make any concession. Before the SC held the nullification of the election held by the Gamilla Group, there was a presumption that the members of the Gamilla Group were validly elected officers and directors of USTFU. The Gamilla Group submitted a Letter whereby it informed Fr. Rolando De La Rosa that its members were the newly elected officers and directors of USTFU. More important though is the fact that the Mario Group did not informed the UST of their objections to the election of the Gamilla Group. Instead, petitioner filed a complaint with the med-arbiter praying for the nullification of the election of the Gamilla Group. As such, there was NO reason not to recognize the Gamilla Group as the new officers and directors of USTFU. And the UST was obligated to deal with the USTFU, as the recognized representative of the bargaining unit, through the Gamilla Group. USTs failure to negotiate with the USTFU would have constituted ULP. It is not the duty or obligation of UST to inquire into the validity of the election of the Gamilla Group. Such issue is properly an intra-union controversy subject to the jurisdiction of the med-arbiter of the DOLE. Respondents could not have been expected to stop dealing with the Gamilla Group on the mere accusation of the Mario Group that the former was not validly elected into office. As to the padlocking of the USTFU office, The pieces of evidence presented, fail to support petitioners conclusions. With regard to the photograph, while it evidences that there was indeed a guard posted at the USTFU office, such cannot be used to claim that the guard prevented the Mario Group from performing its duties. Petitioner again failed to present evidence to support its contention that UST committed acts amounting to ULP. In sum, petitioner makes several

allegations that UST committed ULP. The onus probandi falls on the shoulders of petitioner to establish or substantiate such claims by the requisite quantum of evidence. In labor cases as in other administrative proceedings, substantial evidence or such relevant evidence as a reasonable mind might accept as sufficient to support a conclusion is required. In this case, petitioner miserably failed to adduce substantial evidence as basis for the grant of relief. Philippine Skylanders, Inc., Mariles Romulo and Francisco Dakila vs. NLRC, LA Emerson Tumanon, Philippine Association of Free Labor Unions (PAFLU) SEPTEMBER (Now unified PAFLU) and Serafin Ayroso. ______ Philippine Skylanders and Workers Association-NCW, Macario Cabanias, Pepito Rodillas, Sharon Castillo, Danilo Carbonel, Manuel Eda, Rolando Felix, Jocelyn Fronda, Ricardo Lumba, Joseph Marisol, Nerisa Mortel, Teofilo Quirong, Leonardo Reyes, Manuel Cadiente and Herminia Riosa vs. PAFLU SEPTEMBER and NLRC. G.R. No. 127431. January 31, 2002 Bellosilo; J:, FACTS: Nov. 1993, the Philippine Skylander Employees Association (PSEA), a local labor union affiliated with the Phillippine Association of Free Labor Unions (PAFLU)[a.k.a. Mother federation] September, PAFLU won in the certification election conducted among the rank and file employees of Philippine Skylander, Inc. (PSI). its rival union, Philippine Skylanders Employees Association-WATU (PSEA-WATU) immediately protested the result of the election before the Secretary of Labor. Several months later, pending settlement of the controversy, PSEA sent PAFLU a notice of disaffiliation citing as reason PAFLUs supposed deliberate and habitual dereliction of duty toward its members. PSEA subsequently affiliated itself with the National Congress of Workers (NCW), changed its name to Philippine Skylanders Employees AssociationNational Congress of Workers (PSEA-NCW).

On March 17, 1994 PSEA-NCW entered into a CBA with PSI which was immediately registered with DOLE. Meanwhile, PAFLU Secretary General Serafin Ayroso wrote Mariles C. Romulo requesting a copy of PSIs audited financial statement. Ayroso explained that with the dismissal of PSEAWATUs election protest the time was ripe for the parties to enter into a collective bargaining agreement. PSI through its personnel manager Francisco Dakila denied the request citing as reason PSEAs disaffiliation from PAFLU and its subsequent affiliation with NCW. PAFLU through Serafin Ayroso filed a complaint for unfair labor practice against PSI, its president Mariles Romulo and personnel manager Francisco Dakila. 2 days later filed another complaint PAFLU claimed that Dakila was present in PSEA's organizational meeting thereby confirming his illicit participation in union activities. Ayroso added that the members of the local union had unwittingly fallen into the manipulative machinations of PSI and were lured into endorsing a collective bargaining agreement which was detrimental to their interests.[7] The two (2) complaints were thereafter consolidated. PAFLU amended its complaint by including the elected officers of PSEAPAFLU as additional party respondents and claimed they were equally guilty of unfair labor practice since they brazenly allowed themselves to be manipulated and influenced by petitioner Francisco Dakila Labor Arbiter declared PSEAs disaffiliation from PAFLU invalid and held PSI, PSEA-PAFLU and their respective officers guilty of unfair labor practice. Explaining, that the company knowingly sanctioned and confederated with Dakila in actively assisting a rival union. This, according to the Labor Arbiter, was a classic case of interference for which PSI could be held responsible. As PSEA-NCW's personality was not accorded recognition, its collective bargaining agreement with PSI was struck down for being invalid. NLRC upheld the Decision of the Labor Arbiter and conjectured that since an election protest questioning PSEA-PAFLUs certification as the sole and exclusive bargaining agent was pending resolution before the Secretary of Labor, PSEA could not validly separate from PAFLU, join another national federation and subsequently enter into a collective bargaining agreement with its employer-company

ISSUE: Whether or not PSEA, which is an independent and separate local union, may validly disaffiliate from PAFLU pending the settlement of an election protest questioning its status as the sole and exclusive bargaining agent of PSIs rank and file employees HELD: Petition Granted. YES. The pendency of an election protest involving both the mother federation and the local union did not constitute a bar to a valid disaffiliation. At the outset, let it be noted that the issue of disaffiliation is an inter-union conflict the jurisdiction of which properly lies with the Bureau of Labor Relations (BLR) and not with the Labor Arbiter. Reasoning: in Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc. the SC upheld the right of local unions to separate from their mother federation on the ground that as separate and voluntary associations, local unions do not owe their creation and existence to the national federation to which they are affiliated but, instead, to the will of their members. The sole essence of affiliation is to increase, by collective action, the common bargaining power of local unions for the effective enhancement and protection of their interests. Yet the local unions remain the basic units of association, free to serve their own interests subject to the restraints imposed by the constitution and by-laws of the national federation and free also to renounce the affiliation upon the terms laid down in the agreement which brought such affiliation into existence. There is nothing shown in the records nor is it claimed by PAFLU that the local union was expressly forbidden to disaffiliate from the federation nor were there any conditions imposed for a valid breakaway. As such, the pendency of an election protest involving both the mother federation and the local union did not constitute a bar to a valid disaffiliation. It was reasonable then for PSI to enter into a collective bargaining agreement with PSEA-NCW. As PSEA had validly severed itself from PAFLU, there would be no restrictions which could validly hinder it from subsequently affiliating with NCW and entering into a collective bargaining agreement in behalf of its members.

The mere act of disaffiliation did not divest PSEA of its own personality; neither did it give PAFLU the license to act independently of the local union. Inconsistent to its mission, PAFLU cannot simply ignore the demands of the local chapter and decide for its welfare. PAFLU might have forgotten that as an agent it could only act in representation of and in accordance with the interests of the local union. The complaint then for unfair labor practice lodged by PAFLU against PSI, PSEA and their respective officers, having been filed by a party which has no legal personality to institute the complaint, should have been dismissed at the first instance for failure to state a cause of action. Policy considerations dictate that in weighing the claims of a local union as against those of a national federation, this of the former must be preferred. Parenthetically though, the desires of the mother federation to protect its locals are not altogether to be shunned. It will however be to err greatly against the Constitution if the desires of the federation would be favoured over those of its members. If it were otherwise, instead of protection, there would be disregard and neglect of the lowly workingmen. TROPICAL HUT EMPLOYEES UNION-CGW v. TROPICAL HUT FOOD MARKET, INC.,

Facts

On January 2, 1968, the rank and file workers of the Tropical Hut Food Market Incorporated organized a local union called the Tropical Hut Employees Union (THEU), elected their officers and adopted their constitution and by-laws and immediately sought affiliation with National Association of Trade Unions (NATU). It appears however that NATU itself as a labor federation was not registered with the Department of Labor. A collective bargaining agreement was concluded between THEUNATU, represented by its local president and the national officers of NATU (Ignacio Lacsina, President, Pacifico Rosal, Executive Vice-

President and Marcelino Lontok Jr., Vice President), and Tropical Hut Food Market Incorporated (represented by Cesar Azcona, President and Gen. Manager.) Article III (Union Membership and Union Check-off) of the agreement provided that: 1. Employees who are already member of the Union upon the time of signing shall be required to maintain their membership therein as a condition of continued employment. (Sec 1) 2. Any employee discharged from the Union for joining another federation or forming another union, or who fails or refuses to maintain membership, shal upon written request of the Union be discharged by the company (Sec 3) A new CBA was entered by THEU-NATU and Tropical Hut incorporating the union-shop security clause and check-off authorization form On December 19, 1973, the incumbent officers of THEU informed NATU that THEU was disaffiliating from the NATU federation. The secretary of THEU made an open announcement that THEU had disaffiliated from NATU and is now affiliating with Confederation of General Workers (CGW)/ THEU-CGW held its annual election of officers with Jose Encinas being elected as president. Pacifico Rosal, president of CGW demanded remittance of the union dues collected by the Tropical Hut Food Mart, Inc, but this was refused by the latter. NATU Requested that Encinas be dismissed in view of the violation of Sec 3 of Article III of the CBA. NATU returned the letter of disaffiliation on the ground that:

i. The right to disaffiliate belongs to the union membership who on the basis of verified reports received by have not been consulted regarding the matter. ii. Withdrawal from the organization shall be valid three (3) months notice of intention to withdraw is served upon the National Executive Council. Arturo Dilag was elected THEU-NATU president and on Feb. 24, 1974, THEU-NATU notified the entire rank and file employees of the company that they will be given forty-eight hours upon receipt to answer and affirm their membership. The employees failed to reply and so a letter was sent to them advising them that the THEA-NATU shall enforce the union security clause and that a request for their dismissal has been made. Upon Dilags request, the company suspended twenty four (24) workers on March 5, 37 on March 8 and two more on March 11. A joint letter petition (signed by 67 employees) was filed with the Secretary of Labor, NLRC chairman and Director of Labor Relations. Another letter (signed by 146) member of THEU-CGW was sent to the President of the Philippines informing him of ULP committed by private respondents against THEU-CGW members. LABOR ARBITER (Arbitrator Daniel Lucas) ordered: 1. Reinstatement of all complainants 2. Cease and desist (company) from committing further acts of dismissal without previous order of the NLRC. LABOR ARBITER (Arbitrator Cleto Villatuya) ordered: 1. Reinstate immediately 63 complainants 2. Desist from committing acts of unfair labor practices

NATU and Dilag appealed both decision to the NLRC. NLRC reversed the decisions. According to the NLRC they are deemed to have lost their status as employees of the company. It added that to give another chance to individual complainants, they are to be reemployed upon their voluntary reaffirmation of membership and loyalty to the THEU-NATU.

SECRETARY OF LABOR: affirmed.

ISSUE: Whether or not the dismissal of employees resulting from their unions disaffiliation for the mother federation was illegal and constituted unfair labor practice on the part of the company and federation.

HELD:

RE: Disaffiliation

The right of a local union to disaffiliate from its mother federation is well-settled. A local union, being a separate and voluntary association, is free to serve the interest of all its members including the freedom to disaffiliate when circumstances warrant. The inclusion of the word NATU after the name of the local union THEU in the registration with the Department of Labor is merely to stress that the THEU is NATU's affiliate at the time of the registration. It does not mean that the said local union cannot stand on its own. Neither can it be interpreted to mean that it cannot pursue its own interests independently of the federation. A local union owes its creation and continued existence to the will of its members and not to the federation to which it belongs. There is nothing in the constitution of the NATU or in the constitution of the THEU-NATU that the THEU was expressly forbidden to disaffiliate from the federation.

RE: ULP

there is no merit in the contention of the respondents that the act of disaffiliation violated the union security clause of the CBA and that their dismissal as a consequence thereof is valid. A perusal of the collective bargaining agreements shows that the THEU-NATU, and not the NATU federation, was recognized as the sole and exclusive collective bargaining agent for all its workers and employees in all matters concerning wages, hours of work and other terms and conditions of employment Granting arguendo, that the fact of retraction is true, the evidence on record shows that the letters of retraction were executed on various dates beginning January 11, 1974 to March 8, 1974. This shows that the retractions were made more or less after the suspension pending dismissal on January 11, 1974 of Jose Encinas, , and the suspension pending their dismissal of the other elected officers and members of the THEU-CGW. There is no use in saying that the retractions obliterated the act of disaffiliation as there are doubts that they were freely and voluntarily done especially during such time when their own union officers and co-workers were already suspended pending their dismissal. with regard to the process by which the workers were suspended or dismissed, this Court finds that it was hastily and summarily done without the necessary due process. When petitioners failed comment on their recommendation for dismissal, respondent company immediately suspended them and thereafter effected their dismissal. This is certainly not in fulfillment of the mandate of due process, which is to afford the employee to be dismissed an opportunity to be heard. The prerogative of the employer to dismiss or lay-off an employee should be done without abuse of discretion or arbitrainess, for what is at stake is not only the employee's name or position but also his means of livelihood. Likewise, an employer can be adjudged guilty of unfair labor practice for having dismissed its employees in line with a closed shop provision if they were not given a proper hearing.

PUREFOODS CORPORATION vs.NAGKAKAISANG SAMAHANG MANGGAGAWA NG PUREFOODS RANK-AND-FILE, ST. THOMAS FREE WORKERS UNION, PUREFOODS GRANDPARENT FARM WORKERS UNION and PUREFOODS UNIFIED LABOR ORGANIZATION FACTS Three labor organizations and a federation are respondents in this caseNagkakaisang Samahang Manggagawa Ng Purefoods Rank-AndFile (NAGSAMA-Purefoods), the exclusive bargaining agent of the rank-and-file workers of Purefoods meat division throughout Luzon; St. Thomas Free Workers Union (STFWU), of those in the farm in Sto. Tomas, Batangas; and Purefoods Grandparent Farm Workers Union (PGFWU), of those in the poultry farm in Sta. Rosa, Laguna. These organizations were affiliates of the respondent federation, Purefoods Unified Labor Organization (PULO). On February 8, 1995, NAGSAMA-Purefoods manifested to petitioner corporation its desire to re-negotiate the collective bargaining agreement (CBA) then due to expire on the 28th of the said month. The organization submitted to the company its January 28, 1995 General Membership Resolution approving and supporting the unions affiliation with PULO, adopting the draft CBA proposals of the federation, and authorizing a negotiating panel which included among others a PULO representative. The company refused to recognize PULO and its participation, even as a mere observer, in the negotiation. On July 24, 1995, the petitioner company concluded a new CBA with another union in its farm in Malvar, Batangas. On July 29, 1995, four company employees facilitated the transfer of around 23,000 chickens from the poultry farm in Sto. Tomas, Batangas (where STFWU was the exclusive bargaining agent) to that in Malvar. The following day, the regular rank-and-file workers in the Sto. Tomas farm were refused entry in the company premises (They were eventually terminated.) The farm manager, supervisors and electrical workers of the Sto. Tomas farm, who were members of another union, were retained. Purefoods alleged that:

1. PULO was not a legitimate labor organization or federation for it did not have the required minimum number of member unions 2. The closure of the Sto. Tomas farm was not arbitrary but was the result of the financial non-viability of the operations therein, or the consequence of the landowners pre-termination of the lease agreement 3. That the other complainants had no cause of action considering that it was only the Sto. Tomas farm which was closed 4. That the termination of the employees complied with the 30-day notice requirement and that the said employees were paid 30-day advance salary LABOR ARBITER: Dismissed the complaint. NO ULP nor illegally dismissed the employees. NLRC: reversed the ruling of the LA:
1. 2.

3.

4.

The companys refusal to recognize the labor organizations affiliation with PULO was unjustified The refusal constituted undue interference in, and restraint on the exercise of the employees right to self-organization and free collective bargaining. The real motive of the company in the sudden closure of the Sto. Tomas farm and the mass dismissal of the STFWU members was union busting Because the requisites of a valid lockout were absent, the NLRC concluded that the company committed ULP.

ISSUE: Whether or not the termination of the employees and closure of the Sto. Tomas farm was valid. HELD: It is crystal clear that the closure of the Sto. Tomas farm was made in bad faith. Badges of bad faith are evident from the following acts of the petitioner:

1. it unjustifiably refused to recognize the STFWUs and the other unions affiliation with PULO; 2. it concluded a new CBA with another union in another farm during the agreed indefinite suspension of the collective bargaining negotiations; 3. it surreptitiously transferred and continued its business in a less hostile environment; and it suddenly terminated the STFWU members, but retained and brought the non-members to the Malvar farm. Ineluctably, the closure of the Sto. Tomas farm circumvented the labor organizations right to collective bargaining and violated the members right to security of tenure.19 The sudden termination of the STFWU members is tainted with ULP because it was done to interfere with, restrain or coerce employees in the exercise of their right to self-organization.

De La Salle University v. De La Salle University Employees Association (DLSUEA-NAFTEU) G.R. No. 177283, April 7, 2009

Facts :

In 2001, a splinter group of respondent filed a petition for conduct of elections with the DOLE alleging that the then incumbent officers of respondent had failed to call for a regular election since 1985. Respondents officers claimed that by virtue of RA 6715, which amended the Labor Code, the term of office of its officers was extended to five years or until 1992 during which a general assembly was held affirming their hold-over tenure until the termination of collective bargaining negotiations.

Acting on the petitioner, the DOLE-NCR held that the holdover authority of respondents incumbent set of officers had been extinguished by virtue of the execution of the CBA and ordered the conduct of elections subject to pre-election conferences.

Respondent wrote a letter to DLSU President to put on escrow all union dues/agency fees and whatever money considerations deducted from salaries of concerned co-academic personnel until the election of union officials has been scheduled and been held. Petitioner in response, to do the following: (1) establish a savings account for the Union where all collected union dues and agency will be deposited and held in trust; and (2) discontinue normal relations with any group within the Union including the incumbent set of officers.

Respondents filed a complaint against petitioner for Unfair Labor Practice (ULP) claiming that petitioner unduly interfered with its internal affairs. During the pendency of this complaint, respondent file a notice of strike. LA dismissed the respondent ULP complaint. On appeal, NLRC affirmed the decision of LA. On respondents petition for certiorari before the CA, the Court set aside the decision of NLRC. Hence, petitioners petition for review on certiorari.

Issue:

Whether the NLRC gravely abuse its discretion when it held that petitioner were not guilty of ULP considering that the temporary measures implemented by the University were undertaken in good faith and only to maintain its neutrality amid the intra-union dispute.

Ruling:

It bears noting that at the time petitioners questioned moves were adopted, a valid and existing CBA had been entered between the parties. It thus behooved petitioners to observe the terms and conditions thereof bearing on union dues and representation. It is axiomatic in labor relations that a CBA entered into by a legitimate labor organization and an employer become the law between the parties, compliance with which is mandated by express policy of the law.

Malayang samahan ng mga manggagagwa sa m. Greenfield vs. Ramos FACTS: Petitioner MSMS, (local union) is an affiliate of ULGWP (federation). A local union election was held under the action of the federation. The defeated candidates filed a petition for impeachment. The local union held a general membership meeting. Several union members failed to attend the meeting. The local union requested the company to deduct the union fines from the wage of those union members who failed to attend the general membership meeting. The Secretary General of the federation disapproved the resolution imposing the Php50 fine. The company then sent a reply to petitioners request stating it cannot deduct fines without going against certain laws. The imposition of the fine became the subject of a bitter disagreement between the Federation and the local union culminating to the latters declaration of general autonomy from the former. The federation asked the company to stop the remittance of the local unions share in the education funds. The company led a complaint of interpleader with the DOLE. The federation called a meeting placing the local union under trusteeship and appointing an administrator. Petitioner union officers received letters from the administrator requiring them to explain why they should not be removed from the office and expelled from union membership. The officers were expelled from the federation. The federation advised the

company of the expulsion of the 30 union officers and demanded their separation pursuant to the Union Security Clause in the CBA. The Federation filed a notice of strike with the NCMB to compel the company to effect the immediate termination of the expelled union officers. Under the pressure of a strike, the company terminated the 30 union officers from employment. The petitioners filed a notice of strike on the grounds of discrimination; interference; mass dismissal of union officers and shop stewards; threats, coercion and intimidation ; and union busting. The petitioners prayed for the suspension of the effects of their termination. Secretary Drilon dismissed the petition stating it was an intra-union matter. Later, 78 union shop stewards were placed under preventive suspension. The union members staged a walkout and officially declared a strike that afternoon. The strike was attended by violence.

ISSUES: 1. Whether or not the company was illegal dismissal. 2. Whether or not the strike was illegal. 3. Whether or not petitioners can be deemed to have abandoned their work.

HELD: 1. Yes. The charges against respondent company proceeds from one main issue the termination of several employees upon the demand of the federation pursuant to the union security clause. Although the union security clause may be validly enforced, such must comply with due process. In this case, petitioner union officers were expelled for allegedly committing acts of disloyalty to the federation. The company did not inquire into the cause of the expulsion and merely relied upon the federations allegations. The issue is not a purely intra-union matter as it was later on converted into a termination dispute when the company dismissed the petitioners from work without the benefit of a separate notice and hearing. Although it started as an intra-union dispute within the exclusive jurisdiction of the BLR, to remand the same to the BLR would intolerably delay the case and the Labor Arbiter could rule upon it. As to the act of disaffiliation by the local union; it is settled that a

local union has the right to disaffiliate from its mother union in the absence of specific provisions in the federations constitution prohibiting such. There was no such provision in federation ULGWPs constitution. 2. No. As to the legally of the strike; it was based on the termination dispute and petitioners believed in good faith in dismissing them, the company was guilty of ULP. A no-strike, no lockout provision in the CBA can only be invoked when the strike is economic. As to the violence, the parties agreed that the violence was not attributed to the striking employees alone as the company itself hired men to pacify the strikers. Such violence cannot be a ground for declaring the strike illegal. 3. As to the dismissal of the petitioners; respondents failed to prove that there was abandonment absent any proof of petitioners intention to sever the employee-employer relationship. G.R. No. 170287 February 14, 2008

ALABANG COUNTRY CLUB, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, ALABANG COUNTRY CLUB INDEPENDENT EMPLOYEES UNION, CHRISTOPHER PIZARRO, MICHAEL BRAZA, and NOLASCO CASTUERAS, respondents. VELASCO, JR., J.: FACTS: Petitioner Alabang Country Club, Inc. (Club) is a domestic nonprofit corporation.Respondent Alabang Country Club Independent Employees Union (Union) is the exclusive bargaining agent of the Club's rankand-file employees.Rrespondents Christopher Pizarro, Michael Braza, and Nolasco Castueras were elected Union President, Vice-President, and Treasurer, respectively. The Club and the Union entered into a CBA, which provided for a Union shop and maintenance of membership shop. SECTION 4. TERMINATION UPON UNION DEMAND. Upon written demand of the UNION and after observing due process, the Club shall dismiss a regular rank-and-file employee on any of the following grounds:

(a) Failure to join the UNION within five (5) days from the time of regularization; (b) Resignation from the UNION, except within the period allowed by law; (c) Conviction of a crime involving moral turpitude; (d) Non-payment of UNION dues, fees, and assessments; (e) Joining another UNION except within the period allowed by law; (f) Malversation of union funds; (g) Actively campaigning to discourage membership in the UNION; and (h) Inflicting harm or injury to any member or officer of the UNION. An election was held and a new set of officers was elected. They discovered some irregularly recorded entries, unaccounted expenses and disbursements, and uncollected loans from the Union funds. The Union notified respondents Pizarro, Braza, and Castueras of the audit results and asked them to explain the discrepancies in writing.2 Respondents denied the allegations against them. Despite their explanations, respondents Pizarro, Braza, and Castueras were expelled from the Union, were furnished individual letters of expulsion for malversation of Union funds.6 Attached to the letters were copies of the Panawagan ng mga Opisyales ng Unyon signed by 37 out of 63 Union members and officers, and a Board of Directors' Resolution7 expelling them from the Union. The Union, invoking the Security Clause of the CBA, demanded that the Club dismiss respondents Pizarro, Braza, and Castueras in view of their expulsion from the Union. It was constrained to terminate the employment of said respondents. Respondents Pizarro, Braza, and Castueras challenged their dismissal from the Club in an illegal dismissal complaint filed with the NLRC.

The Labor Arbiter ruled in favor of the Club. On appeal, NLRC granted such ruling the dismissal as illegal. The CA upheld the NLRC ruling. ISSUE: Whether or not the three respondents were illegally dismissed and whether they were afforded due process. HELD: The petition is meritorious. Under the Labor Code, an employee may be validly terminated on the following grounds: (1) just causes under Art. 282; (2) authorized causes under Art. 283; (3) termination due to disease under Art. 284; and (4) termination by the employee or resignation under Art. 285. Another cause for termination is dismissal from employment due to the enforcement of the union security clause in the CBA. Here, Art. II of the CBA on Union security contains the provisions on the Union shop and maintenance of membership shop. There is union shop when all new regular employees are required to join the union within a certain period as a condition for their continued employment. There is maintenance of membership shop when employees who are union members as of the effective date of the agreement, or who thereafter become members, must maintain union membership as a condition for continued employment until they are promoted or transferred out of the bargaining unit or the agreement is terminated.18 Termination of employment by virtue of a union security clause embodied in a CBA is recognized and accepted in our jurisdiction.19 This practice strengthens the union and prevents disunity in the bargaining unit within the duration of the CBA. By preventing member disaffiliation with the threat of expulsion from the union and the consequent termination of employment, the authorized bargaining representative gains more numbers and strengthens its position as against other unions which may want to claim majority representation. In terminating the employment of an employee by enforcing the union security clause, the employer needs only to determine and prove that: (1) the union security clause is applicable; (2) the union is requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support the union's decision to expel the employee from the union. These requisites constitute just cause for terminating an employee based on the CBA's union security provision. After a careful evaluation of the evidence on hand vis--vis a thorough assessment of your defenses presented in your letter-explanation dated October 6, 2001 of which you also expressed that you waived your right

to be present during the administrative investigation conducted by the Union's Board of Directors on October 6, 2001, Management has reached the conclusion that there are overwhelming reasons to consider that you have violated Section 4(f) of the CBA, particularly on the grounds of malversation of union funds. The Club has determined that you were sufficiently afforded due process under the circumstances. Inasmuch as the Club is duty-bound to comply with its obligation under Section 4(f) of the CBA, it is unfortunate that Management is left with no other recourse but to consider your termination from service effective upon your receipt thereof. We wish to thank you for your services during your employment with the Company. It would be more prudent that we just move on independently if only to maintain industrial peace in the workplace. We rule that the Club substantially complied with the due process requirements before it dismissed the three respondents. We explained in Malayang Samahan: x x x Although this Court has ruled that union security clauses embodied in the collective bargaining agreement may be validly enforced and that dismissals pursuant thereto may likewise be valid, this does not erode the fundamental requirements of due process. The reason behind the enforcement of union security clauses which is the sanctity and inviolability of contracts cannot override one's right to due process.24 The CA and the three respondents err in relying on Malayang Samahan, as its ruling has no application to this case. Finally, the issue that since there was no bad faith on the part of the Club, the Union is solely liable for the termination from employment of the three respondents, has been mooted by our finding that their dismissal is valid.

G.R. No. 114974

June 16, 2004

STANDARD CHARTERED BANK EMPLOYEES UNION (NUBE), petitioner, vs.

The Honorable MA. NIEVES R. CONFESOR, in her capacity as SECRETARY OF LABOR AND EMPLOYMENT; and the STANDARD CHARTERED BANK, respondents. CALLEJO, SR., J.: FACTS: Standard Chartered Bank (the Bank, for brevity) is a foreign banking corporation doing business in the Philippines. The exclusive bargaining agent of the rank and file employees of the Bank is the Standard Chartered Bank Employees Union (the Union, for brevity). The Bank and the Union signed a five-year CBA with a provision to renegotiate the terms thereof on the third year. Prior to the expiration of the three-year period2 but within the sixty-day freedom period, the Union initiated the negotiations. The Bank attached its counter-proposal to the noneconomic provisions proposed by the Union.8 The Union, through Divinagracia, suggested that the bank lawyers should be excluded from the negotiating team. The Bank acceded.11Diokno suggested to Divinagracia that Jose P. Umali, Jr., the President of the National Union of Bank Employees (NUBE), the federation to which the Union was affiliated, be excluded from the Unions negotiating panel.12 Towards the end of the Banks presentation, Umali requested the Bank to validate the Unions "guestimates," especially the figures for the rank and file staff. The Union declared a deadlock25 and filed a Notice of Strike before the National Conciliation and Mediation Board. On the other hand, the Bank filed a complaint for Unfair Labor Practice (ULP) and Damages before the NLRC in Manila.The Bank alleged that the Union violated its duty to bargain, as it did not bargain in good faith. It contended that the Union demanded "sky high economic demands," indicative of blue-sky bargaining.27 Further, the Union violated its no strikeno lockout clause by filing a notice of strike before the NCMB. Considering that the filing of notice of strike was an illegal act, the Union officers should be dismissed. Finally, the Bank alleged that as a consequence of the illegal act, the Bank suffered nominal and actual damages and was forced to litigate and hire the services of the lawyer.28

Then Secretary of Labor and Employment (SOLE) issued an Order assuming jurisdiction over the labor dispute at the Bank. WHEREFORE, the Standard Chartered Bank and the Standard Chartered Bank Employees Union NUBE are hereby ordered to execute a collective bargaining agreement incorporating the dispositions contained herein. xxx The SOLE dismissed the charges of ULP of both the Union and the Bank, explaining that both parties failed to substantiate their claims. The Bank and the Union signed the CBA.32s Hence, this present petition. ISSUE: Whether or not the Union was able to substantiate its claim of unfair labor practice against the Bank arising from the latters alleged "interference" with its choice of negotiator; surface bargaining; making bad faith non-economic proposals; and refusal to furnish the Union with copies of the relevant data. HELD: The petition is bereft of merit. "Interference" under Article 248 (a) of the Labor Code The Union further cited the case of Insular Life Assurance Co., Ltd. Employees Association NATU vs. Insular Life Assurance Co. Ltd.,39 wherein this Court said that the test of whether an employer has interfered with and coerced employees in the exercise of their right to self-organization within the meaning of subsection (a)(1) is whether the employer has engaged in conduct which it may reasonably be said, tends to interfere with the free exercise of employees rights under Section 3 of the Act.40 Further, it is not necessary that there be direct evidence that any employee was in fact intimidated or coerced by statements of threats of the employer if there is a reasonable inference that anti-union conduct of the employer does have an adverse effect on selforganization and collective bargaining.41 ART. 243. COVERAGE AND EMPLOYEES RIGHT TO SELFORGANIZATION. All persons employed in commercial, industrial and agricultural enterprises and in religious, charitable, medical or educational institutions whether operating for profit or not, shall have the right to self-organization and to form, join, or assist labor

organizations of their own choosing for purposes of collective bargaining. Ambulant, intermittent and itinerant workers, selfemployed people, rural workers and those without any definite employers may form labor organizations for their mutual aid and protection. and Articles 248 and 249 respecting ULP of employers and labor organizations. Article 248(a) of the Labor Code, considers it an unfair labor practice when an employer interferes, restrains or coerces employees in the exercise of their right to self-organization or the right to form association. The right to selforganization necessarily includes the right to collective bargaining. Parenthetically, if an employer interferes in the selection of its negotiators or coerces the Union to exclude from its panel of negotiators a representative of the Union, and if it can be inferred that the employer adopted the said act to yield adverse effects on the free exercise to right to self-organization or on the right to collective bargaining of the employees, ULP under Article 248(a) in connection with Article 243 of the Labor Code is committed. The circumstances that occurred during the negotiation do not show that the suggestion made by Diokno to Divinagracia is an anti-union conduct from which it can be inferred that the Bank consciously adopted such act to yield adverse effects on the free exercise of the right to self-organization and collective bargaining of the employees, especially considering that such was undertaken previous to the commencement of the negotiation and simultaneously with Divinagracias suggestion that the bank lawyers be excluded from its negotiating panel. It is clear that such ULP charge was merely an afterthought. The accusation occurred after the arguments and differences over the economic provisions became heated and the parties had become frustrated. It happened after the parties started to involve personalities. The Duty to Bargain Collectively Surface bargaining is defined as "going through the motions of negotiating" without any legal intent to reach an agreement.50 The resolution of surface

bargaining allegations never presents an easy issue. The determination of whether a party has engaged in unlawful surface bargaining is usually a difficult one because it involves, at bottom, a question of the intent of the party in question, and usually such intent can only be inferred from the totality of the challenged partys conduct both at and away from the bargaining table.51 It involves the question of whether an employers conduct demonstrates an unwillingness to bargain in good faith or is merely hard bargaining.52 The Union has not been able to show that the Bank had done acts, both at and away from the bargaining table, which tend to show that it did not want to reach an agreement with the Union or to settle the differences between it and the Union. Admittedly, the parties were not able to agree and reached a deadlock. However, it is herein emphasized that the duty to bargain "does not compel either party to agree to a proposal or require the making of a concession."53 Hence, the parties failure to agree did not amount to ULP under Article 248(g) for violation of the duty to bargain. In view of the finding of lack of ULP based on Article 248(g), the accusation that the Bank made bad-faith provisions has no leg to stand on. The records show that the Banks counterproposals on the non-economic provisions or political provisions did not put "up for grabs" the entire work of the Union and its predecessors. The Union Did Not Engage In Blue-Sky Bargaining We, likewise, do not agree that the Union is guilty of ULP for engaging in blue-sky bargaining or making exaggerated or unreasonable proposals.59 The Bank failed to show that the economic demands made by the Union were exaggerated or unreasonable. The minutes of the meeting show that the Union based its economic proposals on data of rank and file employees and the prevailing economic benefits received by bank employees from other foreign banks doing business in the Philippines and other branches of the Bank in the Asian region.

G.R. No. 146728

February 11, 2004

GENERAL MILLING CORPORATION, petitioner, vs HON. COURT OF APPEALS, GENERAL MILLING CORPORATION INDEPENDENT LABOR UNION (GMC-ILU), and RITO MANGUBAT, respondents. facts In its two plants located at Cebu City and Lapu-Lapu City, petitioner General Milling Corporation (GMC) employed 190 workers. They were all members of private respondent General Milling Corporation Independent Labor Union (union, for brevity), a duly certified bargaining agent. On April 28, 1989, GMC and the union concluded a collective bargaining agreement (CBA) which included the issue of representation effective for a term of three years. The CBA was effective for three years retroactive to December 1, 1988. Hence, it would expire on November 30, 1991. On November 29, 1991, a day before the expiration of the CBA, the union sent GMC a proposed CBA, with a request that a counter-proposal be submitted within ten (10) days. As early as October 1991, however, GMC had received collective and individual letters from workers who stated that they had withdrawn from their union membership, on grounds of religious affiliation and personal differences. Believing that the union no longer had standing to negotiate a CBA, GMC did not send any counter-proposal. On December 16, 1991, GMC wrote a letter to the unions officers, Rito Mangubat and Victor Lastimoso. The letter stated that it felt there was no basis to negotiate with a union which no longer existed, but that management was nonetheless always willing to dialogue with them on matters of common concern and was open to suggestions on how the company may improve its operations. In answer, the union officers wrote a letter dated December 19, 1991 disclaiming any massive disaffiliation or resignation from the union and submitted a manifesto, signed by its members, stating that they had not withdrawn from the union. On January 13, 1992, GMC dismissed Marcia Tumbiga, a union member, on the ground of incompetence. The union protested and requested GMC to

submit the matter to the grievance procedure provided in the CBA. GMC, however, advised the union to "refer to our letter dated December 16, 1991." Thus, the union filed, on July 2, 1992, a complaint against GMC with the NLRC, Arbitration Division, Cebu City. The complaint alleged unfair labor practice on the part of GMC for: (1) refusal to bargain collectively; (2) interference with the right to self-organization; and (3) discrimination. The labor arbiter dismissed the case with the recommendation that a petition for certification election be held to determine if the union still enjoyed the support of the workers. The union appealed to the NLRC. On January 30, 1998, the NLRC set aside the labor arbiters decision. Citing Article 253-A of the Labor Code, as amended by Rep. Act No. 6715,4 which fixed the terms of a collective bargaining agreement, the NLRC ordered GMC to abide by the CBA draft that the union proposed for a period of two (2) years beginning December 1, 1991, the date when the original CBA ended, to November 30, 1993. The NLRC also ordered GMC to pay the attorneys fees. In its decision, the NLRC pointed out that upon the effectivity of Rep. Act No. 6715, the duration of a CBA, insofar as the representation aspect is concerned, is five (5) years which, in the case of GMC-Independent Labor Union was from December 1, 1988 to November 30, 1993. All other provisions of the CBA are to be renegotiated not later than three (3) years after its execution. Thus, the NLRC held that respondent union remained as the exclusive bargaining agent with the right to renegotiate the economic provisions of the CBA. Consequently, it was unfair labor practice for GMC not to enter into negotiation with the union. The NLRC likewise held that the individual letters of withdrawal from the union submitted by 13 of its members from February to June 1993 confirmed the pressure exerted by GMC on its employees to resign from the union. Thus, the NLRC also found GMC guilty of unfair labor practice for interfering with the right of its employees to self-organization. On GMCs motion for reconsideration, the NLRC set aside its decision of January 30, 1998, through a resolution dated October 6, 1998. It found GMCs doubts as to the status of the union justified and the allegation of coercion exerted by GMC on the unions members to resign unfounded. Hence, the union filed a petition for certiorari before the Court of Appeals. For failure of the union to attach the required copies of pleadings and other documents and material portions of the record to support the allegations in its petition, the CA dismissed the petition on February 9, 1999.

On July 19, 2000, the appellate court granting the petition. The NLRC Resolution of October 6, 1998 is hereby SET ASIDE, and its decision of January 30, 1998 is, except with respect to the award of attorneys fees which is hereby deleted, REINSTATED. A motion for reconsideration was seasonably filed by GMC, but in a resolution dated October 26, 2000, the CA denied it for lack of merit. ISSUES: (1) won GMC was guilty of unfair labor practice for violating the duty to bargain collectively and/or interfering with the right of its employees to selforganization, and (2) won ca committed grave abuse of discretion in imposing upon GMC the draft CBA proposed by the union for two years to begin from the expiration of the original draft. HELD: 1)yes. Article 253-A of the Labor Code, as amended by Rep. Act No. 6715, states: ART. 253-A. Terms of a collective bargaining agreement. Any Collective Bargaining Agreement that the parties may enter into shall, insofar as the representation aspect is concerned, be for a term of five (5) years. No petition questioning the majority status of the incumbent bargaining agent shall be entertained and no certification election shall be conducted by the Department of Labor and Employment outside of the sixty-day period immediately before the date of expiry of such five year term of the Collective Bargaining Agreement. All other provisions of the Collective Bargaining Agreement shall be renegotiated not later than three (3) years after its execution.... The law mandates that the representation provision of a CBA should last for five years. The relation between labor and management should be undisturbed until the last 60 days of the fifth year. Hence, it is indisputable that when the union requested for a renegotiation of the economic terms of the CBA on November 29, 1991, it was still the certified collective bargaining agent of the workers, because it was seeking said renegotiation within five (5) years from the date of effectivity of the CBA on December 1, 1988. The unions proposal was also submitted within the prescribed 3-year period from the date of effectivity of the CBA, albeit just before the last day of said period. It was obvious that GMC had no valid reason to refuse to negotiate in good faith with the union. For refusing to send a counter-proposal to the union and to bargain anew on the economic terms of the CBA, the company committed

an unfair labor practice under Article 248 of the Labor Code, which provides that: ART. 248. Unfair labor practices of employers. It shall be unlawful for an employer to commit any of the following unfair labor practice: (g) To violate the duty to bargain collectively as prescribed by this Code; Article 252 of the Labor Code elucidates the meaning of the phrase "duty to bargain collectively," thus: ART. 252. Meaning of duty to bargain collectively. The duty to bargain collectively means the performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement.... We have held that the crucial question whether or not a party has met his statutory duty to bargain in good faith typically turn$ on the facts of the individual case. There is no per se test of good faith in bargaining.Good faith or bad faith is an inference to be drawn from the facts. The effect of an employers or a unions actions individually is not the test of good-faith bargaining, but the impact of all such occasions or actions, considered as a whole. It bears stressing that the procedure in collective bargaining prescribed by the Code is mandatory because of the basic interest of the state in ensuring lasting industrial peace. Thus: ART. 250. Procedure in collective bargaining. The following procedures shall be observed in collective bargaining: (a) When a party desires to negotiate an agreement, it shall serve a written notice upon the other party with a statement of its proposals. The other party shall make a reply thereto not later than ten (10) calendar days from receipt of such notice. (Under scoring supplied.) We hold that GMCs refusal to make a counter-proposal to the unions proposal for CBA negotiation is an indication of its bad faith. 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. Did GMC interfere with the employees right to self-organization? The CA found that the letters between February to June 1993 by 13 union members signifying their resignation from the union clearly indicated that GMC exerted pressure on its employees. The records show that GMC presented these letters to prove that the union no longer enjoyed the support of the workers. The fact that the resignations of the union members occurred during the pendency of the case before the labor arbiter shows GMCs desperate attempts to cast doubt on the legitimate status of the union. We agree with the CAs conclusion that the ill-timed letters of resignation from the union members indicate that GMC had interfered with the right of its employees to self-organization. Thus, we hold that the appellate court did not commit grave abuse of discretion in finding GMC guilty of unfair labor practice for interfering with the right of its employees to self-organization.

(2)no. The Code provides: ART. 253. Duty to bargain collectively when there exists a collective bargaining agreement. .... 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 60-day period [prior to its expiration date] and/or until a new agreement is reached by the parties. (Underscoring supplied.) The provision mandates the parties to keep the status quo while they are still in the process of working out their respective proposal and counter proposal. The general rule is that when a CBA already exists, its provision shall continue to govern the relationship between the parties, until a new one is agreed upon. The rule necessarily presupposes that all other things are equal. That is, that neither party is guilty of bad faith. However, when one of the parties abuses this grace period by purposely delaying the bargaining process, a departure from the general rule is warranted. it 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 Word 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. G.R. No. 149440 January 28, 2003

HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO VILLEGAS and CRISTINE SEGURA, petitioners, vs. NATIONAL FEDERATION OF SUGARCANE WORKERS-FOOD AND GENERAL TRADE, respondents. PANGANIBAN, J.: FACTS: The complainants [herein respondents] refused to work and/or were choosy in the kind of jobs they wanted to perform, the records is replete with complainants' persistence and dogged determination in going back to work. "Indeed, it would appear that respondents did not look with favor workers' having organized themselves into a union. Thus, when complainant union was certified as the collective bargaining representative in the certification elections, respondents under the pretext that the result was on appeal, refused to sit down with the union for the purpose of entering into a collective bargaining agreement. Moreover, the workers including complainants herein were not given work for more than one month. In protest, complainants staged a strike which was however settled upon the signing of a Memorandum of Agreement which stipulated among others that: 'a) The parties will initially meet for CBA negotiations on the 11th day of January 1991 and will endeavor to conclude the same within thirty (30) days. 'b) The management will give priority to the women workers who are members of the union in case work relative . . . or amount[ing] to gahit and [dipol] arises. 'c) Ariston Eruela Jr. will be given back his normal work load which is six (6) days in a week. 'd) The management will provide fifteen (15) wagons for the workers and that existing workforce prior to the actual strike will be given priority.

However, in case the said workforce would not be enough, the management can hire additional workers to supplement them. e) The management will not anymore allow the scabs, numbering about eighteen (18) workers[,] to work in the hacienda; and 'f) The union will immediately lift the picket upon signing of this agreement.' alleging that complainants failed to load the fifteen wagons, respondents reneged on its commitment to sit down and bargain collectively. Instead, respondent employed all means including the use of private armed guards to prevent the organizers from entering the premises. starting September 1991, respondents did not any more give work assignments to the complainants forcing the union to stage a strike on January 2, 1992. But due to the conciliation efforts by the DOLE, another Memorandum of Agreement was signed by the complainants and respondents which provides: '1. That the list of the names of affected union members hereto attached and made part of this agreement shall be referred to the Hacienda payroll of 1990 and determine whether or not this concerned Union members are hacienda workers;xxxx Pursuant thereto, the parties subsequently met and the Minutes of the Conciliation Meeting showed as follows:The following are deemed not considered employees: 1. Luisa Rombo 2.Ramona Rombo,3. Bobong Abrega, 4. Boboy Silva, 'The name Orencio Rombo shall be verified in the 1990 payroll. The following employees shall be reinstated immediately upon availability of work:Jose Dagle, Alejandro Tejares, Rico Dagle, Gaudioso Rombo, Ricardo Dagle, Martin Alas-as Jr., Jesus Silva, Cresensio Abrega, Fernando Silva,nAriston Eruela Sr., Ernesto Tejares, Ariston Eruela Jr.' "When respondents again reneged on its commitment; complainants filed the present complaint. CA RULING:The CA affirmed that while the work of respondents was seasonal in nature, they were considered to be merely on leave during the off-season and were therefore still employed by petitioners. Moreover, the workers enjoyed security of tenure. Any infringement upon this right was deemed by the CA to be tantamount to illegal dismissal. The CA likewise concurred with the NLRC's finding that petitioners were guilty of unfair labor practice. ISSUES: (1) won repondents are regular employees

(2) won petitioner is guilty of ULP HELD: 1. Article 280 of the Labor Code, as amended, states:Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. "An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exist." (Italics supplied) For respondents to be excluded from those classified as regular employees, it is not enough that they perform work or services that are seasonal in nature. They must have also been employed only for the duration of one season. The evidence proves the existence of the first, but not of the second, condition. The fact that respondents with the exception of Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy Silva repeatedly worked as sugarcane workers for petitioners for several years is not denied by the latter. Evidently, petitioners employed respondents for more than one season. Therefore, the general rule of regular employment is applicable. In Abasolo v. National Labor Relations Commission,the Court issued this clarification: "[T]he test of whether or not an employee is a regular employee has been laid down in De Leon v. NLRC, in which this Court held: "The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual trade or business of the employer. The connection can be determined by considering

the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists. (2)The NLRC also found herein petitioners guilty of unfair labor practice. It ruled as follows: "Indeed, from respondents' refusal to bargain, to their acts of economic inducements resulting in the promotion of those who withdrew from the union, the use of armed guards to prevent the organizers to come in, and the dismissal of union officials and members, one cannot but conclude that respondents did not want a union in their haciendaa clear interference in the right of the workers to self-organization." We uphold the CA's affirmation of the above findings. Indeed, factual 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. Their findings are binding on the Supreme Court. Verily, their conclusions are accorded great weight upon appeal, especially when supported by substantial evidence. Consequently, the Court is not dutybound to delve into the accuracy of their factual findings, in the absence of a clear showing that these were arbitrary and bereft of any rational basis." ST. JOHN COLLEGES, INC., petitioner vs. ST. JOHN ACADEMY FACULTY AND EMPLOYEES UNION, respondent. G.R. No. 167892 October 27, 2006 YNARES-SANTIAGO, J. FACTS: Petitioner, SJCI, owns and operates St. Johns Academy. Prior to 1998, the Academy offered a secondary course only. The high school then employed about 80 teaching and non-teaching personnel who were members of the Union. The CBA between SJCI and the Union was set to expire on May 31, 1997. During the negotiations, SJCI rejected all the proposals of the Union for an increase in workers benefits. This resulted to a bargaining deadlock which

led to the holding of a valid strike by the Union on November 10, 1997. In order to end the strike, on November 27, 1997, SJCI and the Union, through the efforts of the NCMB, agreed to refer the labor dispute to the Sec. of Labor and Employment (SOLE) for assumption of jurisdiction where the parties agree to submit their position paper; that management shall grant the employees cash advance; that the union shall lift the picket immediately, remove all obstruction and return to work; that no retaliatory action shall be undertaken by either party against each other in relation to the strike. The strike ended and classes resumed. Pending resolution of the labor dispute before the SOLE, the Board of Directors of SJCI approved on February 22, 1998 a resolution recommending the closure of the high school which was approved by the stockholders on even date. The reason being the irreconcilable differences between the school management and the Academys Union particularly the safety of our students and the financial aspect of the ongoing CBA negotiations. SJCI informed the DOLE, DECS, parents, students and the Union of the impending closure of the high school which took effect on March 31, 1998. On April 2, 1998, SJCI informed the DOLE that as of March 31, 1998, 51 employees had received their separation compensation package while 25 employees refused to accept the same. On May 4, 1998, the 25 employees conducted a protest action within the perimeter of the high school. The Union filed a notice of strike with the NCMB only on May 7, 1998. On May 19, 1998, SJCI filed a petition to declare the strike illegal before the NLRC since it was in violation of the procedural requirements under the Labor Code. On May 21, 1998, the 25 employees filed a complaint for ULP, illegal dismissal and non-payment of monetary benefits against SJCI before the NLRC. The Union members alleged that the closure of the high school was done in bad faith in order to get rid of the Union and render useless any decision of the SOLE on the CBA deadlocked issues. The two cases were then consolidated. On January 8, 1999, Labor Arbiter dismissed the Unions complaint for ULP and illegal dismissal while granting SJCIs petition to declare the strike illegal coupled with a declaration of loss of employment status of the 25 Union members involved in the strike. In the proceedings before the SOLE, the Union filed a manifestation to maintain the status quo on March 30, 1998 praying that SJCI be enjoined from closing the high school. It claimed that the decision of SJCI to close violated the SOLEs assumption order and the agreement of the parties not to

take any retaliatory action against the other. SJCI filed a motion to dismiss with entry of appearance on October 14, 1998 claiming that the closure of the high school rendered the CBA deadlocked issues moot. Upon receipt of the Labor Arbiters decision in the aforesaid consolidated cases, SJCI filed a second motion to dismiss on February 1, 1999 arguing that the case had already been resolved. After the favorable decision of the Labor Arbiter, SJCI resolved to reopen the high school for school year 1999-2000. However, it did not restore the high school teaching and non-teaching employees it earlier terminated. That same school year SJCI opened an elementary and college department. On July 23, 1999, the SOLE denied SJCIs motions to dismiss and certified the CBA deadlock case to the NLRC. It ordered the consolidation of the CBA deadlock case with the ULP, illegal dismissal, and illegal strike cases which were then pending appeal before the NLRC. On June 28, 2002, the NLRC rendered judgment reversing the decision of the Labor Arbiter. It found SJCI guilty of ULP and illegal dismissal and ordered it to reinstate the 25 employees to their former positions without loss of seniority rights and other benefits, and with full backwages. Moreover, it ruled that the mass actions conducted by the 25 employees on May 4, 1998 could not be considered as a strike since, by then, the employer-employee relationship had already been terminated due to the closure of the high school. On appeal, the Court of Appeals affirmed with modification the decision of the NLRC. ISSUE: Whether petitioner is liable for ULP and illegal dismissal when it closed down the high school on March 31, 1998. HELD: Under Art. 283 of the Labor Code, the following requisites must concur for a valid closure of the business: (1) serving a written notice on the workers; (2) serving a notice with the DOLE; (3) payment of separation pay; and (4) cessation of the operation must be bona fide. It is not disputed that the first two requisites were satisfied. The third requisite would have been satisfied were it not for the refusal of the herein private respondents to accept the separation compensation package. The instant case, revolves around the fourth requisite, i.e., whether SJCI closed the high school in good faith. The two decisive factors in determining whether SJCI acted in bad faith are (1) the timing of, and reasons for the closure of the high school, and (2) the timing of,

and the reasons for the subsequent opening of a college and elementary department, and, ultimately, the reopening of the high school department by SJCI after only one year from its closure. It is not difficult to discern that the closure was done to defeat the parties agreement to refer the labor dispute to the SOLE; to unilaterally end the bargaining deadlock; to render nugatory any decision of the SOLE; and to circumvent the Unions right to collective bargaining and its members right to security of tenure. By admitting that the closure was due to irreconcilable differences between the Union and school management, specifically, the financial aspect of the ongoing CBA negotiations, SJCI in effect admitted that it wanted to end the bargaining deadlock and eliminate the problem of dealing with the demands of the Union. This is precisely what the Labor Code abhors and punishes as unfair labor practice since the net effect is to defeat the Unions right to collective bargaining. SJCI contends that it was forced to close down the high school due to alleged difficult labor problems that it encountered while dealing with the Union since 1995, specifically, the Unions illegal demands of entitlement to the unimplemented 20% tuition fee increase, in violation of R.A. 6728 or the "Government Assistance to Students and Teachers in Private Education Act," which led SJCI to refuse hence the holding of a strike on November 10, 1998. These alleged difficult labor problems are normal in any business establishment. SJCIs remedy under the law is to refer the matter for voluntary or compulsory dispute resolution. This incident could hardly establish the good faith of SJCI or justify the high schools closure in 1998. Also, SJCI failed to establish how and why these demands were in excess of the limitation set by R.A. 6728. There is no basis, therefore, to hold that the Union ever made illegal or excessive demands. At any rate, even assuming that the Unions demands were illegal or excessive, the important and crucial point is that these alleged illegal or excessive demands did not justify the closure of the high school and do not, in any way, establish SJCIs good faith. The employer cannot unilaterally close its establishment on the pretext that the demands of its employees are excessive. Neither party is obliged to give-in to the others excessive or unreasonable demands during collective bargaining, and the remedy in such case is to refer the dispute to the proper tribunal for resolution. This was what SJCI and the Union did when they referred the 1997 CBA bargaining deadlock to the SOLE; however, SJCI pre-empted the resolution of the dispute by closing the

high school. SJCI disregarded the whole dispute resolution mechanism and undermined the Unions right to collective bargaining when it closed down the high school while the dispute was still pending with the SOLE. The Labor Code does not authorize the employer to close down the establishment on the ground of illegal or excessive demands of the Union. Instead, aside from the remedy of submitting the dispute for voluntary or compulsory arbitration, the employer may file a complaint for ULP against the Union for bargaining in bad faith. If found guilty, this gives rise to civil and criminal liabilities and allows the employer to implement a lock out, but not the closure of the establishment resulting to the permanent loss of employment of the whole workforce. The employer carries the burden of proof to establish that the closure of the business was done in good faith. There is insufficient evidence to hold that the safety and well-being of the students were endangered and/or compromised, and that the Union was responsible therefor. Even assuming arguendo that the students safety and well-being were jeopardized by the said protest actions, the alleged threat to the students safety and well-being had long ceased by the time the high school was closed. Moreover, the parents were vehemently opposed to the closure of the school because there was no basis to claim that the students safety was at risk. Taken together, these circumstances lead to the inescapable conclusion that SJCI merely used the alleged safety and well-being of the students as a subterfuge to justify its actions. As correctly observed by the CA, the petitioner itself said that the closing down of the school was, "because of irreconcilable differences between the school management and the Academys Union." Indeed, this translates into an admission that the cessation of business was neither due to any patrician nor noble objective of protecting the studentry but because the administration no longer wished to deal with respondent Union. The fact that after one year from the time it closed its high school, SJCI opened a college and elementary department, and reopened its high school department showed that it never intended to cease operating as an educational institution. Second, there is evidence on record contesting the alleged reason of SJCI for reopening the high school, i.e., that its former students and their parents allegedly clamored for the reopening of the high school. Finally, when SJCI reopened its high school, it did not rehire the Union members. Evidently,

the closure had achieved its purpose, that is, to get rid of the Union members. Clearly, these pieces of evidence show that the high schools closure was done in bad faith. We agree with the findings of the NLRC and CA that the protest actions of the Union cannot be considered a strike because, by then, the employeremployee relationship has long ceased to exist because of the previous closure of the high school on March 31, 1998. SJCI is liable for ULP and illegal dismissal. CENTRAL AZUCARERA DE BAIS EMPLOYEES UNION-NFL [CABEUNFL], represented by its President, PABLITO SAGURAN, Petitioner vs. CENTRAL AZUCARERA DE BAIS, INC. [CAB], represented by its President, ANTONIO STEVEN L. CHAN, Respondent G.R. No. 186605 November 17, 2010 MENDOZA, J. FACTS: Respondent CAB is a corporation represented by its President, Chan. CABEU-NFL is a duly registered labor union and a certified bargaining agent of the CAB rank-and-file employees, represented by its President, Saguran. On January 19, 2004, CABEU-NFL sent CAB a proposed CBA seeking increases in the daily wage, bonus, and leave benefits. On March 27, 2004, CAB responded with a counter-proposal. On May 21, 2004, CAB received an Amended Union Proposal sent by CABEU-NFL reducing its previous demand regarding wages and bonuses. CAB, however, maintained its position on the matter. Thus, the collective bargaining negotiations resulted in a deadlock. CABEU-NFL filed a Notice of Strike with the NCMB which then assumed conciliatory-mediation jurisdiction and summoned the parties to conciliation conferences. In its June 2, 2005 Letter sent to CAB, CABEU-NFL requested copies of CABs annual financial statements from 2001 to 2004 and asked for the resumption of conciliation meetings. CAB replied through its June 14, 2005 Letter to NCMB Regional Director that: Saguran is no longer an employee of the Central for he was one of those lawfully terminated due to an authorized cause; the Union already lost its majority status by reason of the disauthorization and withdrawal of support thereto by more than 90% of the rank and file employees in the bargaining unit of Central sometime in

January, 2005; and the workers themselves organized themselves into a new Union known as CABELA and had concluded a new collective bargaining agreement with the Central on April 21, 2005 in Dumaguete City. The aforesaid CBA had been duly ratified by the rank and file workers constituting 91% of the collective bargaining unit. Therefore, the request for further conciliation conference will serve no lawful and practical purpose. It appears that the NCMB failed to act on the letter-response of CAB. Neither did it convene CAB and CABEU-NFL to continue the negotiations between them. Reacting from the letter-response of CAB, CABEU-NFL filed a Complaint for ULP for the formers refusal to bargain with it. On July 13, 2006, the LA dismissed the complaint. LA provided that: It cannot be said that respondent CAB refused to negotiate or that it violated its duty to bargain collectively in light of its active participation in the past CBA negotiations at the plant level as well as in the NCMB. CAB replied to the complainant Unions CBA proposals with its own set of counterproposals. Unfortunately, both exercises resulted in a deadlock. We do not agree that CAB committed an unfair labor practice act in questioning the capacity of Saguran to represent; in writing the NCMB Director stating its legal position on complainants request that further conciliation will serve no lawful and practical purpose. It was incumbent upon the NCMB to make a ruling and if it chose not to pursue further negotiation, CAB should not be faulted therefor. The conciliation/mediation by the NCMB has not been officially concluded, thus we find the instant complaint for unfair labor practice not only without merit but also premature. On appeal, the NLRC reversed the LAs decision and found CAB guilty of unfair labor practice. The NLRC explained: It is undeniable that complainant is the certified collective bargaining agent of the regular workers and seasonal employees of respondent. Its status as such was determined in a certification election conducted by the DOLE. As such, there was no reason for respondent to deal and negotiate with CABELA since the latter does not have such status of majority representation. Based on this premise, respondent violated its duty to bargain with complainant when during the pendency of the conciliation proceedings before the NCMB it concluded a CBA with another union as a consequence, it refused to resume negotiation with complainant upon the latters demand. With respect to respondents observation that the request for conciliation meeting was signed by one who is not eligible and authorized to represent any union with the company since he is no longer an employee, suffice it to state that at the time the request was

made, such employee has questioned the validity of his dismissal with then NLRC. Respondents failure to act on the request of the complainant to resume negotiation for no valid reason constitutes unfair labor practice. CAB moved for a reconsideration but the motion was denied by the NLRC. CAB elevated the matter to the CA by way of a petition for certiorari. CA found CABs petition meritorious and reversed the NLRC decision and resolution. The CA pointed out: CABEU-NFL failed in its burden of proof to present substantial evidence to support the allegation of unfair labor practice. CAB was not scuttling the ongoing negotiations towards a new collective bargaining agreement. It was simply propounding a position to the NCMB for the latter to rule on. That the negotiations did not push through was not the result of CAB managements intransigence because there was none at least so far as the case record confirms. There is nothing that establishes petitioners predetermined resolve not to budge from an initial position perhaps stubbornness of some ambiguous sort but not the absence of good faith to pursue collective bargaining. CABEU-NFL moved for a reconsideration but its motion was denied. ISSUE: Whether or not CAB committed unfair labor practice. HELD: No. The concept of unfair labor practice is provided in Article 247 of the Labor Code which states: Unfair labor practices violate the constitutional right of workers and employees to self-organization, are inimical to the legitimate interests 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. The Labor Code enumerates the acts constituting unfair labor practices of the employer, thus: Article 248. Unfair Labor Practices of Employers.It shall be unlawful for an employer to commit any of the following unfair labor practice: (g) To violate the duty to bargain collectively as prescribed by this Code. It must be shown that CAB was motivated by ill will, "bad faith, or fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy, and, of course, that social humiliation, wounded

feelings or grave anxiety resulted " in suspending negotiations with CABEUNFL. CAB believed that CABEU-NFL was no longer the representative of the workers. It just wanted to foster industrial peace by bowing to the wishes of the overwhelming majority of its rank and file workers and by negotiating and concluding in good faith a CBA with CABELA." Such actions of CAB are nowhere tantamount to anti-unionism, the evil sought to be punished in cases of unfair labor practices. Furthermore, basic is the principle that good faith is presumed and he who alleges bad faith has the duty to prove the same. By imputing bad faith to the actuations of CAB, CABEU-NFL has the burden of proof to present substantial evidence to support the allegation of unfair labor practice. CABEU-NFL refers only to the circumstances mentioned in the letterresponse, namely, the execution of the supposed CBA between CAB and CABELA and the request to suspend the negotiations, to conclude that bad faith attended CABs actions. It failed to substantiate its claim of unfair labor practice to rebut the presumption of good faith. As correctly determined by the LA, the filing of the complaint for unfair labor practice was premature inasmuch as the issue of collective bargaining is still pending before the NCMB. Petition is denied.

G.R. No. 162943

December 6, 2010

EMPLOYEES UNION OF BAYER PHILS., FFW and JUANITO S. FACUNDO, in his capacity as President, Petitioners, vs. BAYER PHILIPPINES, INC., DIETER J. LONISHEN (President), ASUNCION AMISTOSO (HRD Manager), AVELINA REMIGIO AND ANASTACIA VILLAREAL, Respondents.

FACTS: Union of Bayer Philippines3 (EUBP) is the exclusive bargaining agent of all rank-and-file employees of Bayer Philippines (Bayer), and is an affiliate of the Federation of Free Workers (FFW). EUBP, headed by its president Juanito S. Facundo (Facundo), negotiated with Bayer for the signing of a collective bargaining agreement (CBA). During the negotiations, EUBP rejected Bayers 9.9% wage-increase proposal resulting in a bargaining deadlock. Subsequently, EUBP staged a strike, prompting the Secretary of the Department of Labor and Employment (DOLE) to assume jurisdiction over the dispute. pending the resolution of the dispute, respondent Avelina Remigio (Remigio) and 27 other union members, without any authority from their union leaders, accepted Bayers wage-increase proposal. EUBPs grievance committee questioned Remigios action and reprimanded Remigio and her allies. the DOLE Secretary issued an arbitral award ordering EUBP and Bayer to execute a CBA retroactive to January 1, 1997 and to be made effective until December 31, 2001. The said CBA4 was registered. the rift between Facundos leadership and Remigios group broadened. Remigio solicited signatures from union members in support of a resolution containing the decision of the signatories to: (1) disaffiliate from FFW, (2) rename the union as Reformed Employees Union of Bayer Philippines (REUBP), (3) adopt a new constitution and by-laws for the union, (4) abolish all existing officer positions in the union and elect a new set of interim officers, and (5) authorize REUBP to administer the CBA between EUBP and Bayer.7 The said resolution was signed by 147 of the 257 local union members. A subsequent resolution was also issued affirming the first resolution.8 A tug-of-war then ensued between the two rival groups, with both seeking recognition from Bayer and demanding remittance of the union dues collected

from its rank-and-file members. Bayer responded by deciding not to deal with either of the two groups, and by placing the union dues collected in a trust account until the conflict between the two groups is resolved.12 EUBP filed a complaint for unfair labor practice (first ULP complaint) against Bayer for non-remittance of union dues. while the first ULP case was still pending and despite EUBPs repeated request for a grievance conference, Bayer decided to turn over the collected union dues amounting to P254,857.15 to respondent Anastacia Villareal, Treasurer of REUBP. EUBP lodged a complaint18 against Remigios group before the Industrial Relations Division of the DOLE praying for their expulsion from EUBP for commission of "acts that threaten the life of the union." Labor Arbiter Jovencio Ll. Mayor, Jr. dismissed the first ULP complaint for lack of jurisdiction.19 The Arbiter explained that the root cause for Bayers failure to remit the collected union dues can be traced to the intra-union conflict between EUBP and Remigios group20 and that the charges imputed against Bayer should have been submitted instead to voluntary arbitration.21 EUBP did not appeal the said decision.22 petitioners filed a second ULP complaint against herein respondents. charging the respondents with unfair labor practice committed by organizing a company union, gross violation of the CBA and violation of their duty to bargain.23 Petitioners complained that Bayer refused to remit the collected union dues to EUBP despite several demands sent to the management.24 They also alleged that notwithstanding the requests sent to Bayer for a renegotiation of the last two years of the 1997-2001 CBA between EUBP and Bayer, the latter opted to negotiate instead with Remigios group.25 REUBP and Bayer agreed to sign a new CBA. Remigio immediately informed her allies of the managements decision.26

In response, petitioners immediately filed an urgent motion for the issuance of a restraining order/injunction27 before the National Labor Relations Commission (NLRC) and the Labor Arbiter against respondents. Petitioners asserted their authority as the exclusive bargaining representative of all rankand-file employees of Bayer and asked that a temporary restraining order be issued against Remigios group and Bayer to prevent the employees from ratifying the new CBA. Later, petitioners filed a second amended complaint28 to include in its complaint the issue of gross violation of the CBA for violation of the contract bar rule following Bayers decision to negotiate and sign a new CBA with Remigios group. the Regional Director of the Industrial Relations Division of DOLE issued a decision dismissing the issue on expulsion filed by EUBP against Remigio and her allies for failure to exhaust reliefs within the union and ordering the conduct of a referendum to determine which of the two groups should be recognized as union officers.29 EUBP seasonably appealed the said decision to the Bureau of Labor Relations (BLR). the BLR reversed the Regional Directors ruling and ordered the management of Bayer to respect the authority of the duly-elected officers of EUBP in the administration of the prevailing CBA.31 BLR ruling came late since Bayer had already signed a new CBA32 with REUBP. The said CBA was eventually ratified by majority of the bargaining unit.33 Labor Arbiter Waldo Emerson R. Gan dismissed EUBPs second ULP complaint for lack of jurisdiction.34 Clearly then, as the case involves intra-union disputes, this Office is bereft of any jurisdiction pursuant to Article 226 of the Labor Code. the NLRC resolved to dismiss36 petitioners motion for a restraining order and/or injunction stating that the subject matter involved an intra-union dispute, over which the said Commission has no jurisdiction.37

Aggrieved by the Labor Arbiters decision to dismiss the second ULP complaint, petitioners appealed the said decision, but the NLRC denied the appeal.38 EUBPs motion for reconsideration was likewise denied.39 Thus, petitioners filed a Rule 65 petition to the CA. On December 15, 2003, the CA sustained both the Labor Arbiter and the NLRCs rulings. the instant case was brought about by the action of the Group of REM[I]GIO to disaffiliate from FFW and to organized (sic) REUBP under the tutelage of REM[I]GIO and VILLAREAL. At first glance of the case at bar, it involves purely an (sic) inter-union and intra-union conflicts or disputes between EUBP-FFW and REUBP which issue should have been resolved by the Bureau of Labor Relations under Article 226 of the Labor Code. However, since no less than petitioners who admitted that respondents committed gross violations of the CBA, then the BLR is divested of jurisdiction over the case and the issue should have been referred to the Grievance Machinery and Voluntary Arbitrator and not to the Labor Arbiter as what petitioners did in the case at bar. x x x CBA entered between BAYER and EUBP-FFW [has] a life span of only five years and after the said period, the employees have all the right to change their bargaining unit who will represent them. If there exist[s] two opposing unions in the same company, the remedy is not to declare that such act is considered unfair labor practice but rather they should conduct a certification election provided [that] it should be conducted within 60 days of the so[]called freedom period before the expiration of the CBA. ISSUE: whether the act of the management of Bayer in dealing and negotiating with Remigios splinter group despite its validly existing CBA with EUBP can be considered unfair labor practice and, if so, whether EUBP is entitled to any relief. HELD:

The petition is partly meritorious. 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.49 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. It is clear from the foregoing that the issues raised by petitioners do not fall under any of the aforementioned circumstances constituting an intra-union dispute. More importantly, the petitioners do not seek a determination of whether it is the Facundo group (EUBP) or the Remigio group (REUBP) which is the true set of union officers. Instead, the issue raised pertained only to the validity of the acts of management in light of the fact that it still has an existing CBA with EUBP. Thus as to Bayer, Lonishen and Amistoso the question was whether they were liable for unfair labor practice, which issue was within the jurisdiction of the NLRC. The dismissal of the second ULP complaint was therefore erroneous. However, as to respondents Remigio and Villareal, we find that petitioners complaint was validly dismissed. Petitioners ULP complaint cannot prosper as against respondents Remigio and Villareal because the issue, as against them, essentially involves an intraunion dispute based on Section 1 (n) of DOLE Department Order No. 40-03. To rule on the validity or illegality of their acts, the Labor Arbiter and the NLRC will necessarily touch on the issues respecting the propriety of their disaffiliation and the legality of the establishment of REUBP issues that are outside the scope of their jurisdiction. Accordingly, the dismissal of the complaint was validly made, but only with respect to these two respondents. But are Bayer, Lonishen and Amistoso liable for unfair labor practice? On this score, we find that the evidence supports an answer in the affirmative.

It must be remembered that a CBA is entered into in order to foster stability and mutual cooperation between labor and capital. An employer should not be allowed to rescind unilaterally its CBA with the duly certified bargaining agent it had previously contracted with, and decide to bargain anew with a different group if there is no legitimate reason for doing so and without first following the proper procedure. If such behavior would be tolerated, bargaining and negotiations between the employer and the union will never be truthful and meaningful, and no CBA forged after arduous negotiations will ever be honored or be relied upon. Article 253 of the Labor Code, as amended, plainly provides: ART. 253. Duty to bargain collectively when there exists a collective bargaining agreement. Where there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate or 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 60-day period and/or until a new agreement is reached by the parties. (Emphasis supplied.)1avvphi1 This is the reason why it is axiomatic in labor relations that a CBA entered into by a legitimate labor organization that has been duly certified as the exclusive bargaining representative and the employer becomes the law between them. Additionally, in the Certificate of Registration50 issued by the DOLE, it is specified that the registered CBA serves as the covenant between the parties and has the force and effect of law between them during the period of its duration. Compliance with the terms and conditions of the CBA is mandated by express policy of the law primarily to afford protection to labor51 and to promote industrial peace. Thus, when a valid and binding CBA had been entered into by the workers and the employer, the latter is behooved to observe the terms and conditions thereof bearing on union dues and representation.52 If the employer grossly violates its CBA with the duly recognized union, the former may be held administratively and criminally liable for unfair labor practice.53

Respondents Bayer, Lonishen and Amistoso, contend that their acts cannot constitute unfair labor practice as the same did not involve gross violations in the economic provisions of the CBA, citing the provisions of Articles 248 (1) and 26154 of the Labor Code, as amended.55 Their argument is, however, misplaced. Indeed, in Silva v. National Labor Relations Commission,56 we explained the correlations of Article 248 (1) and Article 261 of the Labor Code to mean that for a ULP case to be cognizable by the Labor Arbiter, and for the NLRC to exercise appellate jurisdiction thereon, the allegations in the complaint must show prima facie the concurrence of two things, namely: (1) gross violation of the CBA; and (2) the violation pertains to the economic provisions of the CBA.57 This pronouncement in Silva, however, should not be construed to apply to violations of the CBA which can be considered as gross violations per se, such as utter disregard of the very existence of the CBA itself, similar to what happened in this case. When an employer proceeds to negotiate with a splinter union despite the existence of its valid CBA with the duly certified and exclusive bargaining agent, the former indubitably abandons its recognition of the latter and terminates the entire CBA. Respondents cannot claim good faith to justify their acts. They knew that Facundos group represented the duly-elected officers of EUBP. Moreover, they were cognizant of the fact that even the DOLE Secretary himself had recognized the legitimacy of EUBPs mandate by rendering an arbitral award ordering the signing of the 1997-2001 CBA between Bayer and EUBP. Respondents were likewise well-aware of the pendency of the intra-union dispute case, yet they still proceeded to turn over the collected union dues to REUBP and to effusively deal with Remigio. The totality of respondents conduct, therefore, reeks with anti-EUBP animus. Bayer, Lonishen and Amistoso argue that the case is already moot and academic following the lapse of the 1997-2001 CBA and their renegotiation with EUBP for the 2006-2007 CBA. They also reason that the act of the company in negotiating with EUBP for the 2006-2007 CBA is an obvious

recognition on their part that EUBP is now the certified collective bargaining agent of its rank-and-file employees.58 We do not agree. First, a legitimate labor organization cannot be construed to have abandoned its pending claim against the management/employer by returning to the negotiating table to fulfill its duty to represent the interest of its members, except when the pending claim has been expressly waived or compromised in its subsequent negotiations with the management. To hold otherwise would be tantamount to subjecting industrial peace to the precondition that previous claims that labor may have against capital must first be waived or abandoned before negotiations between them may resume. Undoubtedly, this would be against public policy of affording protection to labor and will encourage scheming employers to commit unlawful acts without fear of being sanctioned in the future.1avvphi1 Second, that the management of Bayer decided to recognize EUBP as the certified collective bargaining agent of its rank-and-file employees for purposes of its 2006-2007 CBA negotiations is of no moment. It did not obliterate the fact that the management of Bayer had withdrawn its recognition of EUBP and supported REUBP during the tumultuous implementation of the 1997-2001 CBA. Such act of interference which is violative of the existing CBA with EUBP led to the filing of the subject complaint. 1) Respondents Bayer Phils., Dieter J. Lonishen and Asuncion Amistoso are found LIABLE for Unfair Labor Practice, and are hereby ORDERED to remit to petitioners the amount of P254,857.15 representing the collected union dues previously turned over to Avelina Remigio and Anastacia Villareal. They are likewise ORDERED to pay petitioners nominal damages in the amount of P250,000.00 and attorneys fees equivalent to 10% of the monetary award; and

G.R. Nos. 158930-31

March 3, 2008

UNION OF FILIPRO EMPLOYEES - DRUG, FOOD AND ALLIED INDUSTRIES UNIONS - KILUSANG MAYO UNO (UFE-DFA-KMU), petitioner, vs. NESTL PHILIPPINES, INCORPORATED, respondent. x------------------------------------------x G.R. Nos. 158944-45 March 3, 2008

NESTL PHILIPPINES, INCORPORATED, petitioner, vs. UNION OF FILIPRO EMPLOYEES - DRUG, FOOD AND ALLIED INDUSTRIES UNIONS - KILUSANG MAYO UNO (UFE-DFA-KMU), respondent. RESOLUTION CHICO-NAZARIO, J.: UFE-DFA-KMU was the sole and exclusive bargaining agent of the rank-andfile employees of Nestl belonging to the latters Alabang and Cabuyao plants. as the existing collective bargaining agreement (CBA) between Nestl and UFE-DFA-KMU4 was to end on 5 June 2001,5 the Presidents of the Alabang and Cabuyao Divisions of UFE-DFA-KMU informed Nestl of their intent to "open [our] new Collective Bargaining Negotiation for the year 2001-2004 x x x as early as June 2001."6 In response thereto, Nestl informed them that it was also preparing its own counter-proposal and proposed ground rules to govern the impending conduct of the CBA negotiations. On 29 May 2001, in another letter to the UFE-DFA-KMU (Cabuyao Division only)7, Nestl reiterated its stance that "unilateral grants, one-time company grants, company-initiated policies and programs, which include, but are not limited to the Retirement Plan, Incidental Straight Duty Pay and Calling Pay Premium, are by their very nature not proper subjects of CBA negotiations and therefore shall be excluded therefrom."8 Dialogue between the company and the union thereafter ensued. Nestl requested9 the National Conciliation and Mediation Board (NCMB), to

conduct preventive mediation proceedings between it and UFE-DFA-KMU owing to an alleged impasse in said dialogue; i.e., that despite fifteen (15) meetings between them, the parties failed to reach any agreement on the proposed CBA. Conciliation proceedings proved ineffective, though, and the UFE-DFA-KMU filed a Notice of Strike10 on 31 October 2001 with the NCMB, complaining, in essence, of a bargaining deadlock pertaining to economic issues, i.e., "retirement (plan), panel composition, costs and attendance, and CBA".11 On 07 November 2001, another Notice of Strike12 was filed by the union, this time predicated on Nestls alleged unfair labor practices, that is, bargaining in bad faith by setting pre-conditions in the ground rules and/or refusing to include the issue of the Retirement Plan in the CBA negotiations. The result of a strike vote conducted by the members of UFE-DFA-KMU yielded an overwhelming approval of the decision to hold a strike.13 prior to holding the strike, Nestl filed with the DOLE a Petition for Assumption of Jurisdiction,14 praying for the Secretary of the DOLE, , to assume jurisdiction over the current labor dispute in order to effectively enjoin any impending strike by the members of the UFE-DFA-KMU at the Nestls Cabuyao Plant in Laguna. Sec. Sto. Tomas issued an Order15 assuming jurisdiction over the subject labor dispute. Accordingly, any strike or lockout is hereby enjoined. The parties are directed to cease and desist from committing any act that might lead to the further deterioration of the current labor relations situation. The parties are further directed to meet and convene for the discussion of the union proposals and company counter-proposals before the National Conciliation and Mediation Board (NCMB) despite the order enjoining the conduct of any strike or lockout and conciliation efforts by the NCMB, the employee members of UFE-DFA-KMU at Nestls Cabuyao Plant went on strike.

In view of the above, in an Order dated on 16 January 2002, Sec. Sto. Tomas directed: (1) the members of UFE-DFA-KMU to return-to-work within twentyfour (24) hours from receipt of such Order; (2) Nestl to accept back all returning workers under the same terms and conditions existing preceding to the strike; (3) both parties to cease and desist from committing acts inimical to the on-going conciliation proceedings leading to the further deterioration of the situation; and (4) the submission of their respective position papers within ten (10) days from receipt thereof. But notwithstanding the Return-to-Work Order, the members of UFE-DFA-KMU continued with their strike, thus, prompting Sec. Sto. Tomas to seek the assistance of the Philippine National Police (PNP) for the enforcement of said order. Nestl and UFE-DFA-KMU filed their respective position papers. Nestl addressed several issues concerning economic provisions of the CBA as well as the non-inclusion of the issue of the Retirement Plan in the collective bargaining negotiations. On the other hand, UFE-DFA-KMU limited itself to the issue of whether or not the retirement plan was a mandatory subject in its CBA negotiations. Sec. Sto. Tomas allowed UFE-DFA-KMU the chance to tender its stand on the other issues raised by Nestl but not covered by its initial position paper by way of a Supplemental Position Paper. UFE-DFA-KMU, instead of filing the above-mentioned supplement, filed several pleadings, The union posited that Sec. Sto. Tomas "could only assume jurisdiction over the issues mentioned in the notice of strike subject of the current dispute,"17 and that the Amended Notice of Strike it filed did not cite, as one of the grounds, the CBA deadlock. Sec. Sto. Tomas denied the motion for reconsideration of UFE-DFA-KMU. UFE-DFA-KMU filed a Petition for Certiorari18 before the Court of Appeals, alleging that Sec. Sto. Tomas committed grave abuse of discretion amounting to lack or excess of jurisdiction when she issued the Orders . In the interim, Acting Secretary of the DOLE, Hon. Arturo D. Brion, came

out with an Order19 ruling that: a. we hereby recognize that the present Retirement Plan at the Nestl Cabuyao Plant is a unilateral grant that the parties have expressly so recognized subsequent to the Supreme Courts ruling in Nestl, Phils. Inc. vs. NLRC, G.R. No. 90231, February 4, 1991, and is therefore not a mandatory subject for bargaining; b. the Unions charge of unfair labor practice against the Company is hereby dismissed for lack of merit; c. the parties are directed to secure the best applicable terms of the recently concluded CBSs between Nestl Phils. Inc. and it eight (8) other bargaining units, and to adopt these as the terms and conditions of the Nestl Cabuyao Plant CBA; d. all union demands that are not covered by the provisions of the CBAs of the other eight (8) bargaining units in the Company are hereby denied; e. all existing provisions of the expired Nestl Cabuyao Plant CBA without any counterpart in the CBAs of the other eight bargaining units in the Company are hereby ordered maintained as part of the new Nestl Cabuyao Plant CBA; f. the parties shall execute their CBA within thirty (30) days from receipt of this Order, furnishing this Office a copy of the signed Agreement; g. this CBA shall, in so far as representation is concerned, be for a term of five (5) years; all other provisions shall be renegotiated not later than three (3) years after its effective date which shall be December 5, 2001 (or on the first day six months after the expiration on June 4, 2001 of the superceded CBA). UFE-DFA-KMU moved to reconsider the aforequoted ruling, but such was subsequently denied.. For the second time, UFE-DFA-KMU went to the Court of Appeals via another Petition for Certiorari seeking to annul the Orders of 02 April 2002

and 06 May 2002 of the Secretary of the DOLE, having been issued in grave abuse of discretion amounting to lack or excess of jurisdiction. the appellate court promulgated its Decision on the twin petitions for certiorari, ruling entirely in favor of UFE-DFA-KMU. Both parties appealed the aforequoted ruling. Nestl essentially assailed that part of the decision finding the DOLE Secretary to have gravely abused her discretion amounting to lack or excess of jurisdiction when she ruled that the Retirement Plan was not a valid issue to be tackled during the CBA negotiations; UFE-DFA-KMU, in contrast, questioned the appellate courts decision finding Nestl free and clear of any unfair labor practice. Since the motions for reconsideration of both parties were denied UFE-DFAKMU and Nestl separately filed the instant Petitions for Review on Certiorari under Rule 45 of the Rules of Court, as amended. ISSUE: Firstly, it questions this Courts finding that Nestl was not guilty of unfair labor practice, considering that the transaction speaks for itself, i.e, res ipsa loquitor. And made an issue again is the question of whether or not the DOLE Secretary can take cognizance of matters beyond the amended Notice of Strike. HELD: As to the charge of unfair labor practice: The motion does not put forward new arguments to substantiate the prayer for reconsideration of this Courts Decision except for the sole contention that the transaction speaks for itself, i.e., res ipsa loquitor. Nonetheless, even a perusal of the arguments of UFE-DFA-KMU in its petition and memorandum in consideration of the point heretofore raised will not convince us to change our disposition of the question of unfair labor practice. UFE-DFA-KMU argues therein that Nestls "refusal to bargain on a very important CBA economic provision constitutes unfair labor practice."23 It explains that Nestl

set as a precondition for the holding of collective bargaining negotiations the non-inclusion of the issue of Retirement Plan. In its words, "respondent Nestl Phils., Inc. insisted that the Union should first agree that the retirement plan is not a bargaining issue before respondent Nestl would agree to discuss other issues in the CBA."24 It then concluded that "the Court of Appeals committed a legal error in not ruling that respondent company is guilty of unfair labor practice. It also committed a legal error in failing to award damages to the petitioner for the ULP committed by the respondent."25 We are unconvinced still. The duty to bargain collectively is mandated by Articles 252 and 253 of the Labor Code Obviously, the purpose of collective bargaining is the reaching of an agreement resulting in a contract binding on the parties; but the failure to reach an agreement after negotiations have continued for a reasonable period does not establish a lack of good faith. The statutes invite and contemplate a collective bargaining contract, but they do not compel one. The duty to bargain does not include the obligation to reach an agreement. The crucial question, therefore, of whether or not a party has met his statutory duty to bargain in good faith typically turns on the facts of the individual case. As we have said, there is no per se test of good faith in bargaining. Good faith or bad faith is an inference to be drawn from the facts. The effect of an employers or a unions individual actions is not the test of good-faith bargaining, but the impact of all such occasions or actions, considered as a whole, and the inferences fairly drawn therefrom collectively may offer a basis for the finding of the NLRC.26 For a charge of unfair labor practice to prosper, it must be shown that Nestl was motivated by ill will, "bad faith, or fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy, and, of course, that social humiliation, wounded feelings, or grave anxiety resulted x x x"27 in disclaiming unilateral grants as proper subjects in their collective bargaining negotiations. While the law makes it an obligation for the

employer and the employees to bargain collectively with each other, such compulsion does not include the commitment to precipitately accept or agree to the proposals of the other. All it contemplates is that both parties should approach the negotiation with an open mind and make reasonable effort to reach a common ground of agreement. Herein, the union merely bases its claim of refusal to bargain on a letter28 dated 29 May 2001 written by Nestl where the latter laid down its position that "unilateral grants, one-time company grants, company-initiated policies and programs, which include, but are not limited to the Retirement Plan, Incidental Straight Duty Pay and Calling Pay Premium, are by their very nature not proper subjects of CBA negotiations and therefore shall be excluded therefrom." But as we have stated in this Courts Decision, said letter is not tantamount to refusal to bargain. In thinking to exclude the issue of Retirement Plan from the CBA negotiations, Nestl, cannot be faulted for considering the same benefit as unilaterally granted, considering that eight out of nine bargaining units have allegedly agreed to treat the Retirement Plan as a unilaterally granted benefit. This is not a case where the employer exhibited an indifferent attitude towards collective bargaining, because the negotiations were not the unilateral activity of the bargaining representative. Nestls desire to settle the dispute and proceed with the negotiation being evident in its cry for compulsory arbitration is proof enough of its exertion of reasonable effort at good-faith bargaining. In the case at bar, Nestle never refused to bargain collectively with UFE-DFAKMU. The corporation simply wanted to exclude the Retirement Plan from the issues to be taken up during CBA negotiations, on the postulation that such was in the nature of a unilaterally granted benefit. An employers steadfast insistence to exclude a particular substantive provision is no different from a bargaining representatives perseverance to include one that they deem of absolute necessity. Indeed, an adamant insistence on a bargaining position to the point where the negotiations reach an impasse does not establish bad faith.[fn24 p.10] It is but natural that at negotiations, management and labor adopt positions or make demands and offer proposals and counter-proposals. On account of the importance of the economic issue

proposed by UFE-DFA-KMU, Nestle could have refused to bargain with the former but it did not. And the managements firm stand against the issue of the Retirement Plan did not mean that it was bargaining in bad faith. It had a right to insist on its position to the point of stalemate. The foregoing things considered, this Court replicates below its clear disposition of the issue: The concept of "unfair labor practice" is defined by the Labor Code undr rticles 247 and 248. The provisions of the preceding paragraph notwithstanding, only the officers and agents of corporations associations or partnerships who have actually participated, authorized or ratified unfair labor practices shall be held criminally liable. (Emphasis supplied.) Herein, Nestl is accused of violating its duty to bargain collectively when it purportedly imposed a pre-condition to its agreement to discuss and engage in collective bargaining negotiations with UFE-DFA-KMU. A meticulous review of the record and pleadings of the cases at bar shows that, of the two notices of strike filed by UFE-DFA-KMU before the NCMB, it was only on the second that the ground of unfair labor practice was alleged. Worse, the 7 November 2001 Notice of Strike merely contained a general allegation that Nestl committed unfair labor practice by bargaining in bad faith for supposedly "setting pre-condition in the ground rules (Retirement issue)." (Notice of Strike of 7 November 2001; Annex "C" of UFE-DFA-KMU Position Paper; DOLE original records, p. 146.) In contrast, Nestl, in its Position Paper, did not confine itself to the issue of the non-inclusion of the Retirement Plan but extensively discussed its stance on other economic matters pertaining to the CBA. It is UFE-DFA-KMU, therefore, who had the burden of proof to present substantial evidence to support the allegation of unfair labor practice. A perusal of the allegations and arguments raised by UFE-DFA-KMU in the Memorandum will readily disclose the need for the presentation of evidence

other than its bare contention of unfair labor practice in order to make certain the propriety or impropriety of the ULP charge hurled against Nestl. Under Rule XIII, Sec. 4, Book V of the Implementing Rules of the Labor Code: x x x. In cases of unfair labor practices, the notice of strike shall as far as practicable, state the acts complained of and the efforts to resolve the dispute amicably." (Emphasis supplied.) In the case at bar, except for the assertion put forth by UFE-DFA-KMU, neither the second Notice of Strike nor the records of these cases substantiate a finding of unfair labor practice. It is not enough that the union believed that the employer committed acts of unfair labor practice when the circumstances clearly negate even a prima facie showing to warrant such a belief. Employers are accorded rights and privileges to assure their selfdetermination and independence and reasonable return of capital. This mass of privileges comprises the so-called management prerogatives. In this connection, the rule is that good faith is always presumed. As long as the companys exercise of the same is in good faith to advance its interest and not for purpose of defeating or circumventing the rights of employees under the law or a valid agreement, such exercise will be upheld. There is no per se test of good faith in bargainingGood faith or bad faith is an inference to be drawn from the facts. Herein, no proof was presented to exemplify bad faith on the part of Nestl apart from mere allegation. Construing arguendo that the content of the aforequoted letter of 29 May 2001 laid down a pre-condition to its agreement to bargain with UFE-DFAKMU, Nestls inclusion in its Position Paper of its proposals affecting other matters covered by the CBA negates the claim of refusal to bargain or bargaining in bad faith. Accordingly, since UFE-DFA-KMU failed to proffer substantial evidence that would overcome the legal presumption of good faith on the part of Nestl, the award of moral and exemplary damages is unavailing.