#1-14 THIRD DIVISION

ARTICLE X: LEAVE OF ABSENCE

CONTINENTAL STEEL G.R. No. 182836 xxxx

MANUFACTURING
CORPORATION, Section 2. BEREAVEMENT
Petitioner, Present: LEAVEThe Company agrees to grant a
bereavement leave with pay to any employee in
- versus - CARPIO, J., case of death of the employees legitimate
Chairperson, dependent (parents, spouse, children, brothers
HON. ACCREDITED CHICO-NAZARIO, and sisters) based on the following:
VOLUNTARY VELASCO, JR.,
ARBITRATOR ALLAN S. NACHURA, and 2.1 Within Metro Manila up to
MONTAO and PERALTA, JJ. Marilao, Bulacan - 7 days
NAGKAKAISANG
MANGGAGAWA NG 2.2 Provincial/Outside Metro Manila -
CENTRO STEEL Promulgated: 11 days
CORPORATION-
SOLIDARITY OF UNIONS xxxx
IN THE PHILIPPINES FOR
EMPOWERMENT AND October 13, 2009 ARTICLE XVIII: OTHER BENEFITS
REFORMS (NMCSC-
SUPER), xxxx
Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Section 4. DEATH AND ACCIDENT
- - - - - -x INSURANCEThe Company shall grant death
and accidental insurance to the employee or his
family in the following manner:

DECISION xxxx

4.3 DEPENDENTSEleven Thousand

CHICO-NAZARIO, J.:
Before Us is a Petition for Review on Certiorari, under
Rule 45 of the Rules of Court, assailing the Decision[1] dated 27
February 2008 and the Resolution[2] dated 9 May 2008 of the
Court of Appeals in CA-G.R. SP No. 101697, affirming the
Resolution[3] dated 20 November 2007 of respondent Accredited
Voluntary Arbitrator Atty. Allan S. Montao (Montao) granting
bereavement leave and other death benefits to Rolando P.
Hortillano (Hortillano), grounded on the death of his unborn
child.
The antecedent facts of the case are as follows:
Five Hundred Fifty Pesos (Php11,550.00) in
case of death of the employees legitimate
dependents (parents, spouse, and children). In
case the employee is single, this benefit covers
the legitimate parents, brothers and sisters only
with proper legal document to be presented
(e.g. death certificate).[4]
The claim was based on the death of Hortillanos unborn
child. Hortillanos wife, Marife V. Hortillano, had a premature
delivery on 5 January 2006 while she was in the 38th week of
pregnancy.[5] According to the Certificate of Fetal Death dated 7
January 2006, the female fetus died during labor due to fetal
Anoxia secondary to uteroplacental insufficiency.[6]

Hortillano, an employee of petitioner Continental Steel
Manufacturing Corporation (Continental Steel) and a member of
respondent Nagkakaisang Manggagawa ng Centro Steel
Corporation-Solidarity of Trade Unions in the Philippines for
Empowerment and Reforms (Union) filed on 9 January 2006, a
claim for Paternity Leave, Bereavement Leave and Death and
Accident Insurance for dependent, pursuant to the Collective
Bargaining Agreement (CBA) concluded between Continental
and the Union, which reads:
Continental Steel immediately granted Hortillanos claim
for paternity leave but denied his claims for bereavement leave
and other death benefits, consisting of the death and accident
insurance.[7]
Seeking the reversal of the denial by Continental Steel of
Hortillanos claims for bereavement and other death benefits,
the Unionresorted to the grievance machinery provided in the
CBA. Despite the series of conferences held, the parties still
failed to settle their dispute,[8] prompting the Union to file a
Notice to Arbitrate before the National Conciliation and
Mediation Board (NCMB) of the Department of Labor and
Employment (DOLE), National Capital Region (NCR). [9] In a
Submission Agreement dated 9 October 2006, the Union and
Continental Steel submitted for voluntary arbitration the sole
issue of whether Hortillano was entitled to bereavement leave and
other death benefits pursuant to Article X, Section 2
and Article XVIII, Section 4.3 of the CBA.[10] The parties
mutually chose Atty. Montao, an Accredited Voluntary
Arbitrator, to resolve said issue.[11]
When the preliminary conferences again proved futile in
amicably settling the dispute, the parties proceeded to submit their
respective Position Papers, [12] Replies,[13] and Rejoinders[14] to
Atty. Montao.
The Union argued that Hortillano was entitled to
bereavement leave and other death benefits pursuant to the
CBA. The Union maintained that Article X, Section 2 and Article
XVIII, Section 4.3 of the CBA did not specifically state that
the dependent should have first been born alive or must have
acquired juridical personality so that his/her subsequent death
could be covered by the CBA death benefits. The Union cited
cases wherein employees of MKK Steel Corporation (MKK
Steel) and Mayer Steel Pipe Corporation (Mayer Steel), sister
companies of Continental Steel, in similar situations as Hortillano
were able to receive death benefits under similar provisions of
their CBAs.
The Union mentioned in particular the case of Steve L.
Dugan (Dugan), an employee of Mayer Steel, whose wife also
prematurely delivered a fetus, which had already died prior to the
delivery. Dugan was able to receive paternity leave, bereavement
leave, and voluntary contribution under the CBA between his
union and Mayer Steel.[15] Dugans child was only 24 weeks in the
womb and died before labor, as opposed to Hortillanos child who
was already 37-38 weeks in the womb and only died during labor.
The Union called attention to the fact that MKK Steel
and Mayer Steel are located in the same compound as Continental
Steel; and the representatives of MKK Steel and Mayer Steel who
signed the CBA with their respective employees unions were the
same as the representatives of Continental Steel who signed the
existing CBA with the Union.
Finally, the Union invoked Article 1702 of the Civil
Code, which provides that all doubts in labor legislations and
labor contracts shall be construed in favor of the safety of and
decent living for the laborer.
On the other hand, Continental Steel posited that the
express provision of the CBA did not contemplate the death of an
unborn child, a fetus, without legal personality. It claimed that
there are two elements for the entitlement to the benefits, namely:
(1) death and (2) status as legitimate dependent, none of which
existed in Hortillanos case. Continental Steel, relying on Articles
40, 41 and 42[16] of the Civil Code, contended that only one with
civil personality could die. Hence, the unborn child never died
because it never acquired juridical personality.Proceeding from
the same line of thought, Continental Steel reasoned that a fetus
that was dead from the moment of delivery was not a person at
all. Hence, the term dependent could not be applied to a fetus that
never acquired juridical personality. A fetus that was delivered
dead could not be considered a dependent, since it never needed
any support, nor did it ever acquire the right to be supported.
Continental Steel maintained that the wording of the
CBA was clear and unambiguous. Since neither of the parties
qualified the terms used in the CBA, the legally accepted
definitions thereof were deemed automatically accepted by both
parties. The failure of the Union to have unborn child included in
the definition of dependent, as used in the CBA the death of
whom would have qualified the parent-employee for bereavement
leave and other death benefits bound the Union to the legally
accepted definition of the latter term.
Continental Steel, lastly, averred that similar cases
involving the employees of its sister companies, MKK Steel and
Mayer Steel, referred to by the Union, were irrelevant and
incompetent evidence, given the separate and distinct
personalities of the companies. Neither could the Union sustain its
claim that the grant of bereavement leave and other death benefits
to the parent-employee for the loss of an unborn child constituted
company practice.
On 20 November 2007, Atty. Montao, the appointed
Accredited Voluntary Arbitrator, issued a Resolution[17] ruling
that Hortillano was entitled to bereavement leave with pay and
death benefits.
Atty. Montao identified the elements for entitlement to
said benefits, thus:
This Office declares that for the entitlement of
the benefit of bereavement leave with pay by
the covered employees as provided under
Article X, Section 2 of the parties CBA, three
(3) indispensable elements must be present: (1)
there is death; (2) such death must be of
employees dependent; and (3) such dependent
must be legitimate.
On the otherhand, for the entitlement
to benefit for death and accident insurance as
provided under Article XVIII, Section 4,
paragraph (4.3) of the parties CBA, four (4)
indispensable elements must be present: (a)
there is death; (b) such death must be of
employees dependent; (c) such dependent must
 be legitimate; and (d) proper legal document to
be presented.[18]
Atty. Montao found that there was no dispute that the
death of an employees legitimate dependent occurred. The fetus
had the right to be supported by the parents from the very moment
he/she was conceived. The fetus had to rely on another for
support; he/she could not have existed or sustained
himself/herself without the power or aid of someone else,
specifically, his/her mother. Therefore, the fetus was already a
dependent, although he/she died during the labor or
delivery. There was also no question that Hortillano and his wife
were lawfully married, making their dependent, unborn child,
legitimate.
In the end, Atty. Montao decreed:
WHEREFORE, premises considered, a
resolution is hereby rendered ORDERING
[herein petitioner Continental Steel] to pay
Rolando P. Hortillano the amount of Four
Thousand Nine Hundred Thirty-Nine Pesos
(P4,939.00), representing his bereavement leave
pay and the amount of Eleven Thousand Five
Hundred Fifty Pesos (P11,550.00) representing
death benefits, or a total amount of P16,489.00
The complaint against Manuel Sy,
however, is ORDERED DISMISSED for lack
of merit.
All other claims are DISMISSED for
lack of merit.
Further, parties are hereby ORDERED
to faithfully abide with the herein dispositions.
Aggrieved, Continental Steel filed with the Court of
Appeals a Petition for Review on Certiorari,[19] under Section 1,
Rule 43 of the Rules of Court, docketed as CA-G.R. SP No.
101697.
Continental Steel claimed that Atty. Montao erred in
granting Hortillanos claims for bereavement leave with pay and
other death benefits because no death of an
employees dependent had occurred. The death of a fetus, at
whatever stage of pregnancy, was excluded from the coverage of
the CBA since what was contemplated by the CBA was the death
of a legal person, and not that of a fetus, which did not acquire
any juridical personality. Continental Steel pointed out that its
contention was bolstered by the fact that the term death was
qualified by the phrase legitimate dependent. It asserted that the
status of a child could only be determined upon said childs birth,
otherwise, no such appellation can be had. Hence, the
conditions sine qua non for Hortillanos entitlement to
bereavement leave and other death benefits under the CBA were
lacking.
The Court of Appeals, in its Decision dated 27 February
2008, affirmed Atty. Montaos Resolution dated 20 November
2007. The appellate court interpreted death to mean as follows:
[Herein petitioner Continental Steels]
exposition on the legal sense in which the term
death is used in the CBA fails to impress the
Court, and the same is irrelevant for
ascertaining the purpose, which the grant of
bereavement leave and death benefits
thereunder, is intended to serve. While there is
no arguing with [Continental Steel] that the
acquisition of civil personality of a child or
fetus is conditioned on being born alive upon
delivery, it does not follow that such event of
premature delivery of a fetus could never be
contemplated as a death as to be covered by the
CBA provision, undoubtedly an event causing
loss and grief to the affected employee, with
whom the dead fetus stands in a legitimate
relation. [Continental Steel] has proposed a
narrow and technical significance to the term
death of a legitimate dependent as condition for
granting bereavement leave and death benefits
under the CBA. Following [Continental Steels]
theory, there can be no experience of death to
speak of. The Court, however, does not share
this view. A dead fetus simply cannot be
equated with anything less than loss of human
life, especially for the expectant parents. In this
light, bereavement leave and death benefits are
meant to assuage the employee and the latters
immediate family, extend to them solace and
support, rather than an act conferring legal
status or personality upon the unborn child.
[Continental Steels] insistence that the
certificate of fetal death is for statistical
purposes only sadly misses this crucial point.[20]
Accordingly, the fallo of the 27 February 2008 Decision of the
Court of Appeals reads:
WHEREFORE, premises considered,
the present petition is hereby DENIED for lack
of merit. The assailed Resolution
dated November 20, 2007 of Accredited
Voluntary Arbitrator Atty. Allan S. Montao is
hereby AFFIRMED and UPHELD.
With costs against [herein petitioner
Continental Steel].[21]

[22]
In a Resolution dated 9 May 2008, the Court of
Appeals denied the Motion for Reconsideration[23] of Continental
Steel.
Hence, this Petition, in which Continental Steel persistently
argues that the CBA is clear and unambiguous, so that the literal
and legal meaning of death should be applied. Only one with
juridical personality can die and a dead fetus never acquired a
juridical personality.
We are not persuaded.
As Atty. Montao identified, the elements for bereavement leave
under Article X, Section 2 of the CBA are: (1) death; (2) the death
must be of a dependent, i.e., parent, spouse, child, brother, or
sister, of an employee; and (3) legitimate relations of the
dependent to the employee. The requisites for death and accident
insurance under Article XVIII, Section 4(3) of the CBA are: (1)
death; (2) the death must be of a dependent, who could be a
parent, spouse, or child of a married employee; or a parent,
brother, or sister of a single employee; and (4) presentation of the
proper legal document to prove such death, e.g., death certificate.
It is worthy to note that despite the repeated assertion of
Continental Steel that the provisions of the CBA are clear and
unambiguous, its fundamental argument for denying Hortillanos
claim for bereavement leave and other death benefits rests on the
purportedly proper interpretation of the terms death and
dependent as used in the CBA. If the provisions of the CBA are
indeed clear and unambiguous, then there is no need to resort to
the interpretation or construction of the same. Moreover,
Continental Steel itself admitted that neither management nor
the Union sought to define the pertinent terms for bereavement
leave and other death benefits during the negotiation of the CBA.
The reliance of Continental Steel on Articles 40, 41 and
42 of the Civil Code for the legal definition of death is
misplaced. Article 40 provides that a conceived child acquires
personality only when it is born, and Article 41 defines when a
child is considered born. Article 42 plainly states that civil
personality is extinguished by death.
First, the issue of civil personality is not relevant
herein. Articles 40, 41 and 42 of the Civil Code on natural
persons, must be applied in relation to Article 37 of the same
Code, the very first of the general provisions on civil personality,
which reads:
Art. 37. Juridical capacity, which is the
fitness to be the subject of legal relations, is
inherent in every natural person and is lost only
through death. Capacity to act, which is the
power to do acts with legal effect, is acquired
and may be lost.
We need not establish civil personality of the unborn child herein
since his/her juridical capacity and capacity to act as a person are
not in issue. It is not a question before us whether the unborn
child acquired any rights or incurred any obligations prior to
his/her death that were passed on to or assumed by the childs
parents. The rights to bereavement leave and other death benefits
in the instant case pertain directly to the parents of the unborn
child upon the latters death.
Second, Sections 40, 41 and 42 of the Civil Code do not
provide at all a definition of death. Moreover, while the Civil
Code expressly provides that civil personality may be
extinguished by death, it does not explicitly state that only those
who have acquired juridical personality could die.
And third, death has been defined as the cessation of life.[24] Life
is not synonymous with civil personality. One need not acquire
civil personality first before he/she could die. Even a child inside
the womb already has life. No less than the Constitution
recognizes the life of the unborn from conception,[25] that the
State must protect equally with the life of the mother. If the
unborn already has life, then the cessation thereof even prior to
the child being delivered, qualifies as death.
Likewise, the unborn child can be considered a dependent under
the CBA. As Continental Steel itself defines, a dependent is one
who relies on another for support; one not able to exist or sustain
oneself without the power or aid of someone else. Under said
general definition,[26]even an unborn child is a dependent of its
parents. Hortillanos child could not have reached 38-39 weeks of
its gestational life without depending upon its mother, Hortillanos
wife, for sustenance. Additionally, it is explicit in the CBA
provisions in question that the dependentmay be the parent,
spouse, or child of a married employee; or the parent, brother, or
sister of a single employee. The CBA did not provide a
qualification for the child dependent, such that the child must
have been born or must have acquired civil personality, as
Continental Steel avers. Without such qualification,
then child shall be understood in its more general sense, which
includes the unborn fetus in the mothers womb.
The term legitimate merely addresses the dependent
childs status in relation to his/her parents. In Angeles v.
Maglaya,[27] we have expounded on who is a legitimate child, viz:
A legitimate child is a product of, and,
therefore, implies a valid and lawful marriage.
Remove the element of lawful union and there
is strictly no legitimate filiation between parents
and child. Article 164 of the Family Code
cannot be more emphatic on the matter:
Children conceived or born during the marriage
of the parents are legitimate. (Emphasis ours.)
Conversely, in Briones v. Miguel,[28] we identified an
illegitimate child to be as follows:

The fine distinctions among the
various types of illegitimate children have been
eliminated in the Family Code. Now, there are
only two classes of children -- legitimate (and
those who, like the legally adopted, have the
rights of legitimate children) and illegitimate.
All childrenconceived and born outside a valid
marriage are illegitimate, unless the law itself
gives them legitimate status. (Emphasis ours.)
which is essentially a contract between private
persons. What petitioner has lost sight of is the
avowed policy of the State, enshrined in our
Constitution, to accord utmost protection and
justice to labor, a policy, we are, likewise,
sworn to uphold.
In Philippine Telegraph & Telephone
Corporation v. NLRC [183 SCRA 451 (1990)],
we categorically stated that:

When conflicting
interests of labor and capital
It is apparent that according to the Family Code and the are to be weighed on the
afore-cited jurisprudence, the legitimacy or illegitimacy of a child scales of social justice, the
attaches upon his/her conception. In the present case, it was not heavier influence of the latter
disputed that Hortillano and his wife were validly married and should be counter-balanced
that their child was conceived during said marriage, hence, by sympathy and compassion
making said child legitimate upon her conception. the law must accord the
underprivileged worker.
Also incontestable is the fact that Hortillano was able to comply
with the fourth element entitling him to death and accident Likewise, in Terminal Facilities and
insurance under the CBA, i.e., presentation of the death certificate Services Corporation v. NLRC [199 SCRA 265
of his unborn child. (1991)], we declared:

Given the existence of all the requisites for bereavement leave Any doubt
and other death benefits under the CBA, Hortillanos claims for concerning the rights of labor
the same should have been granted by Continental Steel. should be resolved in its favor
pursuant to the social justice
We emphasize that bereavement leave and other death benefits policy.
are granted to an employee to give aid to, and if possible, lessen
the grief of, the said employee and his family who suffered the
loss of a loved one. It cannot be said that the parents grief and IN VIEW WHEREOF, the Petition
sense of loss arising from the death of their unborn child, who, in is DENIED. The Decision dated 27 February 2008 and
this case, had a gestational life of 38-39 weeks but died during Resolution dated 9 May 2008 of the Court of Appeals in CA-G.R.
delivery, is any less than that of parents whose child was born SP No. 101697, affirming the Resolution dated 20 November
alive but died subsequently. 2007 of Accredited Voluntary Arbitrator Atty. Allan S. Montao,
which granted to Rolando P. Hortillano bereavement leave pay
Being for the benefit of the employee, CBA provisions on and other death benefits in the amounts of Four Thousand Nine
bereavement leave and other death benefits should be interpreted Hundred Thirty-Nine Pesos (P4,939.00) and Eleven Thousand
liberally to give life to the intentions thereof. Time and again, the Five Hundred Fifty Pesos (P11,550.00), respectively, grounded
Labor Code is specific in enunciating that in case of doubt in the on the death of his unborn child, are AFFIRMED. Costs against
interpretation of any law or provision affecting labor, such should Continental Steel Manufacturing Corporation.
be interpreted in favor of labor.[29] In the same way, the CBA and
CBA provisions should be interpreted in favor of SO ORDERED.
labor. In Marcopper Mining v. National Labor Relations
Commission,[30] we pronounced:

Finally, petitioner misinterprets the

declaration of the Labor Arbiter in the assailed
decision that "when the pendulum of judgment
swings to and fro and the forces are equal on
both sides, the same must be stilled in favor of
labor." While petitioner acknowledges that all
doubts in the interpretation of the Labor Code
shall be resolved in favor of labor, it insists that
what is involved-here is the amended CBA
 STAR PAPER CORPORATION, G.R. No. 164774
JOSEPHINE ONGSITCO &
SEBASTIAN CHUA,
Petitioners, Present:
PUNO, J., Chairman,
SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
-versus- GARCIA, JJ.
Promulgated:
RONALDO D. SIMBOL, April 12, 2006
WILFREDA N. COMIA &
LORNA E. ESTRELLA,
Respondents.
x--------------------------------------
- - - - - - - - -x
DECISION
PUNO, J.:
We are called to decide an issue of first impression:
whether the policy of the employer banning spouses from
working in the same company violates the rights of the employee
under the Constitution and the Labor Code or is a valid exercise
of management prerogative.
At bar is a Petition for Review on Certiorari of the
Decision of the Court of Appeals dated August 3, 2004 in CA-
G.R. SP No. 73477 reversing the decision of the National Labor
Relations Commission (NLRC) which affirmed the ruling of the
Labor Arbiter.
Petitioner Star Paper Corporation (the company) is a
corporation engaged in trading principally of paper products.
Josephine Ongsitco is its Manager of the Personnel and
Administration Department while Sebastian Chua is its Managing
Director.
The evidence for the petitioners show that
respondents Ronaldo D. Simbol (Simbol), Wilfreda N. Comia
(Comia) and Lorna E. Estrella (Estrella) were all regular
employees of the company.[1]
Simbol was employed by the company on October 27,
1993. He met Alma Dayrit, also an employee of the company,
whom he married on June 27, 1998. Prior to the marriage,
Ongsitco advised the couple that should they decide to get
married, one of them should resign pursuant to a company policy
promulgated in 1995,[2] viz.:
1. New applicants will not be allowed to be hired if in
case he/she has [a] relative, up to [the] 3 rd degree of relationship,
already employed by the company.
2. In case of two of our employees (both
singles [sic], one male and another female) developed a friendly
relationship during the course of their employment and then
decided to get married, one of them should resign to preserve the
policy stated above.[3]
Simbol resigned on June 20, 1998 pursuant to the
company policy.[4]
Comia was hired by the company on February 5, 1997.
She met Howard Comia, a co-employee, whom she married
on June 1, 2000. Ongsitco likewise reminded them that pursuant
to company policy, one must resign should they decide to get
married. Comia resigned on June 30, 2000.[5]
Estrella was hired on July 29, 1994. She
met Luisito Zuiga (Zuiga), also a co-worker. Petitioners stated
that Zuiga, a married man, got Estrella pregnant. The company
allegedly could have terminated her services due to immorality
but she opted to resign on December 21, 1999.[6]
The respondents each signed a Release and Confirmation
Agreement. They stated therein that they have no money and
property accountabilities in the company and that they release the
latter of any claim or demand of whatever nature.[7]
Respondents offer a different version of their
dismissal. Simbol and Comia allege that they did not resign
voluntarily; they were compelled to resign in view of an illegal
company policy. As to respondent Estrella, she alleges that she
had a relationship with co-worker Zuiga who misrepresented
himself as a married but separated man. After he got her pregnant,
she discovered that he was not separated. Thus, she severed her
relationship with him to avoid dismissal due to the company
policy. On November 30, 1999, she met an accident and was
advised by the doctor at the Orthopedic Hospital to recuperate for
twenty-one (21) days. She returned to work on December 21,
1999 but she found out that her name was on-hold at the gate. She
was denied entry. She was directed to proceed to the personnel
office where one of the staff handed her a memorandum. The
memorandum stated that she was being dismissed for immoral
conduct. She refused to sign the memorandum because she was
on leave for twenty-one (21) days and has not been given a
chance to explain. The management asked her to write an
explanation. However, after submission of the explanation, she
was nonetheless dismissed by the company. Due to her urgent
need for money, she later submitted a letter of resignation in
exchange for her thirteenth month pay.[8]
Respondents later filed a complaint for unfair labor
practice, constructive dismissal, separation pay and attorneys fees.
They averred that the aforementioned company policy is illegal
and contravenes Article 136 of the Labor Code. They also
contended that they were dismissed due to their union
membership.
On May 31, 2001, Labor Arbiter Melquiades Sol del
Rosario dismissed the complaint for lack of merit, viz.:
[T]his company policy was decreed pursuant to what the
respondent corporation perceived as management prerogative.
This management prerogative is quite broad and encompassing
for it covers hiring, work assignment, working method, time,
place and manner of work, tools to be used, processes to be
followed, supervision of workers, working regulations, transfer of
employees, work supervision, lay-off of workers and the
discipline, dismissal and recall of workers. Except as provided for
or limited by special law, an employer is free to regulate,
according to his own discretion and judgment all the aspects of
employment.[9] (Citations omitted.)
On appeal to the NLRC, the Commission affirmed the
decision of the Labor Arbiter on January 11, 2002. [10]
Respondents filed a Motion for Reconsideration but was
denied by the NLRC in a Resolution[11] dated August 8, 2002.
They appealed to respondent court via Petition for Certiorari.
In its assailed Decision dated August 3, 2004, the Court
of Appeals reversed the NLRC decision, viz.:
WHEREFORE, premises considered, the May 31, 2002
(sic)[12] Decision of the National Labor Relations Commission is
hereby REVERSED and SET ASIDE and a new one is entered as
follows:
(1) Declaring illegal, the petitioners dismissal from
employment and ordering private respondents to reinstate
petitioners to their former positions without loss of seniority
rights with full backwages from the time of their dismissal until
actual reinstatement; and
(2) Ordering private respondents to pay petitioners
attorneys fees amounting to 10% of the award and the cost of this
suit.[13]
On appeal to this Court, petitioners contend that the
Court of Appeals erred in holding that:
1. X X X THE SUBJECT 1995
POLICY/REGULATION IS VIOLATIVE OF THE
CONSTITUTIONAL RIGHTS TOWARDS MARRIAGE AND
THE FAMILY OF EMPLOYEES AND OF ARTICLE 136 OF
THE LABOR CODE; AND
2. X X X RESPONDENTS RESIGNATIONS WERE
FAR FROM VOLUNTARY.[14]
We affirm.
The 1987 Constitution[15] states our policy towards the
protection of labor under the following provisions, viz.:
Article II, Section 18. The State affirms labor as a
primary social economic force. It shall protect the rights of
workers and promote their welfare.
xxx
Article XIII, Sec. 3. The State shall afford full protection
to labor, local and overseas, organized and unorganized, and
promote full employment and equality of employment
opportunities for all.
It shall guarantee the rights of all workers to self-
organization, collective bargaining and negotiations, and peaceful
concerted activities, including the right to strike in accordance
with law. They shall be entitled to security of tenure, humane
conditions of work, and a living wage. They shall also participate
in policy and decision-making processes affecting their rights and
benefits as may be provided by law.
The State shall promote the principle of shared
responsibility between workers and employers, recognizing the
right of labor to its just share in the fruits of production and the
right of enterprises to reasonable returns on investments, and to
expansion and growth.
The Civil Code likewise protects labor with the
following provisions:
Art. 1700. The relation between capital and labor are not
merely contractual. They are so impressed with public interest
that labor contracts must yield to the common good. Therefore,
such contracts are subject to the special laws on labor unions,
collective bargaining, strikes and lockouts, closed shop, wages,
working conditions, hours of labor and similar subjects.
Art. 1702. In case of doubt, all labor legislation and all
labor contracts shall be construed in favor of the safety and decent
living for the laborer.
The Labor Code is the most comprehensive piece of
legislation protecting labor. The case at bar involves Article 136
of the Labor Code which provides:
Art. 136. It shall be unlawful for an employer to require
as a condition of employment or continuation of employment that
a woman employee shall not get married, or to stipulate expressly
or tacitly that upon getting married a woman employee shall be
deemed resigned or separated, or to actually dismiss, discharge,
discriminate or otherwise prejudice a woman employee merely by
reason of her marriage.
Respondents submit that their dismissal violates the
above provision. Petitioners allege that its policy may appear to
be contrary to Article 136 of the Labor Code but it assumes a new
meaning if read together with the first paragraph of the rule. The
rule does not require the woman employee to resign. The
employee spouses have the right to choose who between them
should resign. Further, they are free to marry persons other than
co-employees. Hence, it is not the marital status of the
employee, per se, that is being discriminated. It is only intended
to carry out its no-employment-for-relatives-within-the-third-
degree-policy which is within the ambit of the prerogatives of
management.[16]
It is true that the policy of petitioners prohibiting close
relatives from working in the same company takes the nature of
an anti-nepotism employment policy. Companies adopt these
policies to prevent the hiring of unqualified persons based on their
status as a relative, rather than upon their ability.[17] These
policies focus upon the potential employment problems arising
from the perception of favoritism exhibited towards relatives.
With more women entering the workforce, employers
are also enacting employment policies specifically prohibiting
spouses from working for the same company. We note that two
types of employment policies involve spouses: policies banning
only spouses from working in the same company (no-spouse
employment policies), and those banning all immediate family
members, including spouses, from working in the same
company (anti-nepotism employment policies).[18]
Unlike in our jurisdiction where there is no express
prohibition on marital discrimination,[19] there are twenty state
statutes[20] in the United States prohibiting marital discrimination.
Some state courts[21] have been confronted with the issue of
whether no-spouse policies violate their laws prohibiting both
marital status and sex discrimination.
In challenging the anti-nepotism employment policies in
the United States, complainants utilize two theories of
employment discrimination: the disparate treatment and
the disparate impact. Under the disparate treatment analysis,
the plaintiff must prove that an employment policy is
discriminatory on its face. No-spouse employment policies
requiring an employee of a particular sex to either quit, transfer,
or be fired are facially discriminatory. For example, an
employment policy prohibiting the employer from hiring wives of
male employees, but not husbands of female employees, is
discriminatory on its face.[22]
On the other hand, to establish disparate impact, the
complainants must prove that a facially neutral policy has a
disproportionate effect on a particular class. For example,
although most employment policies do not expressly indicate
which spouse will be required to transfer or leave the
company, the policy often disproportionately affects one sex. [23]
The state courts rulings on the issue depend on their
interpretation of the scope of marital status discrimination within
the meaning of their respective civil rights acts. Though
they agree that the term marital status encompasses discrimination
based on a person's status as either married, single, divorced, or
widowed, they are divided on whether the term has
a broader meaning. Thus, their decisions vary.[24]
The courts narrowly[25] interpreting marital status to
refer only to a person's status as married, single, divorced, or
widowed reason that if the legislature intended a broader
definition it would have either chosen different language or
specified its intent. They hold that the relevant inquiry is if one is
married rather than to whom one is married. They construe
marital status discrimination to include only whether a person is
single, married, divorced, or widowed and not the identity,
occupation, and place of employment of one's spouse. These
courts have upheld the questioned policies and ruled that they did
not violate the marital status discrimination provision of their
respective state statutes.
The courts that have broadly[26] construed the term
marital status rule that it encompassed the identity, occupation
and employment of one's spouse. They strike down the no-spouse
employment policies based on the broad legislative intent of the
state statute. They reason that the no-spouse employment policy
violate the marital status provision because it arbitrarily
discriminates against all spouses of present employees without
regard to the actual effect on the individual's qualifications or
work performance.[27] These courts also find the no-spouse
employment policy invalid for failure of the employer to present
any evidence of business necessity other than the general
perception that spouses in the same workplace might adversely
affect the business.[28] They hold that the absence of such a bona
fide occupational qualification[29] invalidates a rule denying
employment to one spouse due to the current employment of the
other spouse in the same office.[30] Thus, they rule that unless the
employer can prove that the reasonable demands of the business
require a distinction based on marital status and there is no better
available or acceptable policy which would better accomplish the
business purpose, an employer may not discriminate against an
employee based on the identity of the employees spouse. [31] This
is known as the bona fide occupational qualification exception.
We note that since the finding of a bona fide
occupational qualification justifies an employers no-spouse rule,
the exception is interpreted strictly and narrowly by these state
courts. There must be a compelling business necessity for which
no alternative exists other than the discriminatory practice.[32] To
justify a bona fide occupational qualification, the employer must
prove two factors: (1) that the employment qualification is
reasonably related to the essential operation of the job involved;
and, (2) that there is a factual basis for believing that all or
substantially all persons meeting the qualification would be
unable to properly perform the duties of the job.[33]
The concept of a bona fide occupational qualification is
not foreign in our jurisdiction. We employ the standard
of reasonableness of the company policy which is parallel to the
bona fide occupational qualification requirement. In the recent
case of Duncan Association ofDetailman-PTGWO and
Pedro Tecson v. Glaxo Wellcome Philippines,
Inc.,[34] we passed on the validity of the policy of a
pharmaceutical company prohibiting its employees from marrying
employees of any competitor company. We held that Glaxo has a
right to guard its trade secrets, manufacturing formulas, marketing
strategies and other confidential programs and information from
competitors. We considered the prohibition against personal or
marital relationships with employees of competitor companies
upon Glaxos employees reasonable under the circumstances
because relationships of that nature might compromise the
interests of Glaxo. In laying down the assailed company policy,
we recognized that Glaxo only aims to protect its interests against
the possibility that a competitor company will gain access to its
secrets and procedures.[35]
The requirement that a company policy must
be reasonable under the circumstances to qualify as a valid
exercise of management prerogative was also at issue in the 1997
case of Philippine Telegraph and Telephone Company v.
NLRC.[36] In said case, the employee was dismissed in violation
of petitioners policy of disqualifying from work any woman
worker who contracts marriage. We held that the company policy
violates the right against discrimination afforded all women
workers under Article 136 of the Labor Code, but established a
permissible exception, viz.:
[A] requirement that a woman employee must remain
unmarried could be justified as a bona fide occupational
qualification, or BFOQ, where the particular requirements of the
job would justify the same, but not on the ground of a general
principle, such as the desirability of spreading work in the
workplace. A requirement of that nature would be valid provided
it reflects an inherent quality reasonably necessary for
satisfactory job performance.[37] (Emphases supplied.)
The cases of Duncan and PT&T instruct us that the
requirement of reasonableness must be clearly established to
uphold the questioned employment policy. The employer has the
burden to prove the existence of a reasonable business necessity.
The burden was successfully discharged in Duncan but not in
PT&T.
We do not find a reasonable business necessity in the
case at bar.
Petitioners sole contention that the company did not just
want to have two (2) or more of its employees related between the
third degree by affinity and/or consanguinity[38] is lame. That the
second paragraph was meant to give teeth to the first paragraph of
the questioned rule[39] is evidently not the valid reasonable
business necessity required by the law.
It is significant to note that in the case at bar,
respondents were hired after they were found fit for the job, but
were asked to resign when they married a co-employee.
Petitioners failed to show how the marriage of Simbol, then a
Sheeting Machine Operator, to Alma Dayrit, then an employee of
the Repacking Section, could be detrimental to its business
operations. Neither did petitioners explain how this detriment will
happen in the case of Wilfreda Comia, then a Production Helper
in the Selecting Department, who married Howard Comia, then a
helper in the cutter-machine. The policy is premised on the mere
fear that employees married to each other will be less efficient. If
we uphold the questioned rule without valid justification, the
employer can create policies based on an unproven presumption
of a perceived danger at the expense of an employees right to
security of tenure.
Petitioners contend that their policy will apply only
when one employee marries a co-employee, but they are free to
marry persons other than co-employees. The questioned policy
may not facially violate Article 136 of the Labor Code but
it creates a disproportionate effect and under the disparate impact
theory, the only way it could pass judicial scrutiny is a showing
that it is reasonable despite the discriminatory, albeit
disproportionate, effect. The failure of petitioners to prove a
legitimate business concern in imposing the questioned policy
cannot prejudice the employees right to be free from arbitrary
discrimination based upon stereotypes of married persons
working together in one company.[40]
Lastly, the absence of a statute expressly prohibiting
marital discrimination in our jurisdiction cannot benefit the
petitioners. The protection given to labor in our jurisdiction is
vast and extensive that we cannot prudently draw inferences from
the legislatures silence[41]that married persons are not protected
under our Constitution and declare valid a policy based on a
prejudice or stereotype. Thus, for failure of petitioners to present
undisputed proof of a reasonable business necessity, we rule that
the questioned policy is an invalid exercise of management
prerogative. Corollarily, the issue as to whether respondents
Simbol and Comia resigned voluntarily has become moot and
academic.
As to respondent Estrella, the Labor Arbiter and the
NLRC based their ruling on the singular fact that her resignation
letter was written in her own handwriting. Both ruled that her
resignation was voluntary and thus valid. The respondent court
failed to categorically rule whether Estrella voluntarily resigned
but ordered that she be reinstated along with Simbol and Comia.
Estrella claims that she was pressured to submit a
resignation letter because she was in dire need of money. We
examined the records of the case and find Estrellas contention to
be more in accord with the evidence. While findings of fact by
administrative tribunals like the NLRC are generally given not
only respect but, at times, finality, this rule admits of
exceptions,[42] as in the case at bar.
Estrella avers that she went back to work on December
21, 1999 but was dismissed due to her alleged immoral conduct.
At first, she did not want to sign the termination papers but she
was forced to tender her resignation letter in exchange for her
thirteenth month pay.
The contention of petitioners that Estrella was pressured
to resign because she got impregnated by a married man and she
could not stand being looked upon or talked about as
immoral[43] is incredulous. If she really wanted to avoid
embarrassment and humiliation, she would not have gone back to
work at all. Nor would she have filed a suit for illegal dismissal
and pleaded for reinstatement. We have held that in voluntary
resignation, the employee is compelled by personal reason(s) to
dissociate himself from employment. It is done with the intention
of relinquishing an office, accompanied by the act of
abandonment. [44] Thus, it is illogical for Estrella to resign and
then file a complaint for illegal dismissal. Given the lack of
sufficient evidence on the part of petitioners that the resignation
was voluntary, Estrellasdismissal is declared illegal.
IN VIEW WHEREOF, the Decision of the Court of
Appeals in CA-G.R. SP No. 73477 dated August 3,
2004 is AFFIRMED.
SO ORDERED.
 G.R. No. 111105 June 27, 1995
ROLANDO REVIDAD, PABLITO LALUNA,
RAFAEL ANGELES, TEODORO ROSARIO, ROMEO
REVIDAD, JACINTO GRUTA, JOSE ESPAÑOL,
FLORENTINO LOCSIN, ROGELIO PARADERO,
MARCELINO DEROTA, ARMANDO CABALES,
BENJAMIN MONTESA and RAYMOND
VIDAL, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and
ATLANTIC, GULF AND PACIFIC COMPANY OF
MANILA, INC., respondents.
REGALADO, J.:
This original action for certiorari seeks to nullify the
decision rendered by public respondent National Labor Relations
Commission (NLRC) on July 14, 1993 1 which reversed the
decision of the labor arbiter and ordered the dismissal of herein
petitioners' complaint for illegal dismissal.
It appears that sometime in March, 1988, private
respondent Atlantic, Gulf and Pacific Company of Manila, Inc.
(hereafter, AG & P ) terminated the services of 178 employees,
including herein petitioners, under a redundancy program. As a
consequence, a complaint for illegal dismissal with prayer for
reinstatement was filed by herein petitioners (except Jose
Español) with public respondent and docketed in its Arbitration
Branch as NLRC-NCR Cases
Nos. 00-01-00489-89, 00-01-00515-89, 00-01-00643-89, 00-01-
01143-89, and 00-03-01216-89. These cases were subsequently
decided in favor of petitioners, as a result of which they were
reinstated on July 8, 1991 and assigned to the Batangas plant of
private respondent.
The records show, however, that pursuant to Presidential
Directive No. 0191 2 issued on July 25, 1991 by the company's
president and containing management's decision to lay off 40% of
the employees due to financial losses incurred from 1989-1990,
AG & P implemented and effected, starting August 3, 1991, the
temporary lay-off of some 705 employees. By reason thereof, the
AG & P United Rank and File Association (URFA, for facility),
which was the employees' union, staged a strike. 3
In a conciliation conference over the labor dispute held
before the National Conciliation and Mediation Board on August
13, 1991, the parties agreed to submit the legality of the lay-offs
to voluntary arbitration. Accordingly, the case was filed with
Voluntary Arbitrator Romeo B. Batino, entitled "AG & P United
Rank and File Association vs. AG & P Company of Manila. Inc.,"
on the principal issue of whether the massive lay-off, in the
exercise of AG & P's management prerogative, constituted a
violation of their existing collective bargaining agreement which
would be tantamount to an unfair labor practice. This issue was
eventually resolved by the voluntary arbitrator in a decision dated
January 7, 1992 where it was held that AG & P had the right to
exercise its management prerogative to temporarily lay off its
employees owing to the unfavorable business climate being
experienced by the company consequent to the financial reverses
it suffered from 1987 to 1991. 4
In the meantime, as found by public respondent in its
decision, 5 the three labor unions then existing at AG & P met on
September 7, 1991 with the corporation's management officials at
its Batangas plant in a conference presided by Congressman
Hernando B. Perez and wherein the Parties arrived at the
following agreement:
1. The Company agrees to extend financial assistance to
all temporarily laid off or to be laid off employees the equivalent
of two (2) months pay to be paid as follows: The first one month
pay on September 15, 1991 and the second one month pay on or
before December 10, 1991. The said financial assistance shall be
deductible from the employees' separation pay should they not be
resolved by the company within the six-month lay off period or
from cook benefit due them should they not be recalled.
2. The supervisors' claim that, the separation pay of
supervisors should be computed on the basis of one month pay for
every year of service in accordance with precedent adopted by the
Company for supervisors who were terminated in the post. The
Company agrees to consider this claim favorably should the
supervisors be able to establish with convincing proof that there is
really such precedent in the Company.
3. There should be consultations between the Unions in
BMFY and the Company before any temporary lay-off of
employees in BMFY should be effected and the parties agree that
a dialogue to discuss such matters be undertaken by them.
4. The LAKAS-NFL agree(s) to the understanding
specified in paragraph 1 abovestated concerning the financial
assistance to be extended to those who were temporarily laid off
or to be laid off in BMFY. It is clear, however, that the financial
assistance due on or before December 10, 1991 shall no longer be
effected regarding employees who might have been recalled in
the meantime.
5-A-See page 3 of this agreement.
5. The temporarily laid off employees who might find
jobs elsewhere during the period of lay-off will be paid their
separation pay in accordance with the CBA/Labor Code or
existing Company Policy applicable.
6. The notice of Strike filed by the AG & P Supervisory
Employees Union is hereby withdrawn from the DOLE.
7. The pickets shall be lifted immediately by BMFY and
AGPEC upon signing of this agreement.
8. There shall be no retaliatory charges by one against
the other in relation to this labor dispute.
9. All non-laid off employees will report immediately to
the Company on Monday, December 9, 1991.
5-A. The Lakas-NFL requests that employees belonging
to LAKAS who were or may be temporarily laid off and may not
be recalled within six months from lay-off shall have the option to
be paid their separation pay or let their temporary lay-off status be
extended up to the time when jobs would become available and
their services are needed by the Company.
10. All laid off employees will be given preference in
hiring as long as they meet the qualifications requested for the
position or job opening.6
On September 17, 1991, herein petitioners were served a
notice of temporary lay-off, the text of which reads as follows:
 Pursuant to the agreement dated September 7, 1991
among Unions and AG & P, represented by Atty. Pedro F. Perez,
we regret to advi(s)e you that you are part of the employee(s) to
be placed on Temporary Lay-off, after exhausti(on) of your
Vacation Leave credits if there is any.
Henceforth, you will be immediately placed on priority
reserve list for both overseas and domestic assignments and
should the Company need your service, we will advise you
accordingly.
Kindly present this letter to Finance Department to Mr.
Sammy O. De Guzman to collect your temporary financial
assistance equivalent to two months basic pay as follows, one
month on 15 September 1991 and one month on 10 December
1991. If you will be recalled within the 6 month lay-off period,
then the financial assistance shall be deductible from your salary
in six (6) equal installments semi-monthly.7
Thereafter, petitioners received their respective financial
assistance and they signed a pro forma authorization in favor of
AG & P to deduct from the separation pay due them the amount
of financial assistance received pursuant to the aforesaid
agreement of September 7, 1991.
As earlier stated, it was on January 7, 1992 when the
voluntary arbitrator rendered a decision finding justification for
the mass lay-off of the AG & P employees caused by financial
reverses suffered by the company.
On February 11, 1992, considering that petitioners were
not being recalled by the AG & P management, they filed a
complaint for illegal dismissal and unfair labor practice against
AG & P before respondent commission where it was docketed as
NLRC Case No. NCR-00-02-00996-92. On August 24, 1992,
Labor Arbiter Nieves V. de Castro rendered judgment 8 ordering
the reinstatement of petitioners, with payment of full back wages,
on the ground that AG & P failed to substantiate the alleged
losses it incurred in 1991 which resulted in the retrenchment of its
operations. The labor arbiter explicated in her aforesaid decision
that while it had been established that private respondent suffered
serious losses from 1987 to 1990, it allegedly failed to prove
continuous losses in 1991 which would justify the temporary lay-
off of herein petitioners, thus:
. . . . But respondent failed to submit any evidence to
show that indeed it was continuously suffering from serious
losses in 1991. While it is well settled that AG & P suffered from
serious losses from 1987 up to 1990, respondent failed to
establish lawful basis for effecting another lay-off on September
17, 1991. And even if the said lay-off was relative to an
agreement between the Management and the Union existing
thereat, the same may only be given an imprimatur if and when
the parties thereto have justifiable reasons therefor, and provided
further that it will not adversely affect the rights and interests of
others.
Respondent cannot forever make use of the losses
incurred in a specific period of time and which was the basis of a
previous lay-off as a ground (for) another lay-off every time or
anytime it thought of terminating, an employee or a batch of
employees.9
On appeal, public respondent NLRC reversed and set
aside the decision of the labor arbiter, and dismissed the
complaint for illegal dismissal for lack of merit. In ruling that the
order of reinstatement with payment of backwages has no basis in
fact and in law, public respondent declared that, contrary to the
labor arbiter's findings, there was only one lay-off, that is, the lay-
off effected on September 17, 1991 the legality of which had
already been passed upon and upheld in the voluntary arbitration
proceedings. Hence, this petition which prays for the
affirmance in totoof the labor arbiter's decision.
Petitioners argue that public respondent gravely abused
its discretion and committed serious errors or law when it held
that —
1. Petitioners' dismissal was valid because it was due to
private respondent's serious losses when in fact there is no
evidence to justify this; moreover, the latter failed: (a) to serve on
the Department of Labor and Employment a written notice of
termination at least one month before petitioners' dismissal; (b) to
observe fair and reasonable standards in effecting retrenchment;
and (c) to show that it first instituted cost reduction measures in
other areas of production before undertaking retrenchment as a
last resort and, therefore, their dismissal is against the doctrine
laid down in RCPI v. NLRC and Mendero, G.R. Nos. 101181-84,
June 22, 1992.
2. It has no more basis to affirm the labor arbiter's
decision for the reason that petitioners had received monetary
consideration for their dismissal when said consideration is short
of what the parties' CBA or the law accords to petitioners. 10
Petitioners contend that their lay-off on September 17,
1991 cannot be justified by the losses suffered by AG & P from
1989 to 1990 since it had not been shown that such losses
continued up to 1991; that their lay-off was merely in retaliation
to an adverse decision against AG & P rendered by the NLRC in
an earlier case involving the same parties, which resulted in the
reinstatement of herein petitioners on July 8, 1991; that the
termination of petitioners' employment on September 17, 1991
could not have been the subject of the voluntary arbitration
proceedings before Voluntary Arbitrator Batino, contrary to the
findings of public respondent NLRC that there was only one lay-
off, considering that the issue involved therein was the legality of
the mass lay-off of more than 705 employees of AG & P which,
however, did not include herein petitioners; and that if such
allegation of AG & P were true, it could have easily invoked the
voluntary arbitration case as res judicata to the aforesaid illegal
termination case subsequently filed by petitioners, but which AG
& P did not do.
Petitioners further contend that assuming arguendo that
indeed there was only one lay-off, their temporary lay-off
supposedly due to retrenchment is illegal because: (a) AG & P
failed to show that it incurred losses in 1991 to justify such
termination; (b) no written notice of termination was submitted
with the Department of Labor and Employment one month before
the date of the temporary lay-off; (c) AG & P failed to observe
fair and reasonable standards in effecting retrenchment; and (d)
there is no showing that cost reduction measures were undertaken
before management resorted to retrenchment of employees.
Finally, it is claimed that petitioners merely received financial
assistance which does not, however, bar them from questioning
the legality of their dismissal, aside from the fact that they have
not been given their separation pay.
We find that the temporary lay-off of herein petitioners
is valid and justified, and that by reason of management's failure
to recall them, their services shall be considered duly terminated
and they shall be entitled to separation pay equivalent to one
month pay or at least one-half (½) month pay for every year of
service, whichever is higher. The financial assistance which
petitioners have received shall be deducted from the amount of
separation pay they will receive, pursuant to Paragraph 1 of the
September 7, 1991 agreement.
We are not, however, in accord with the findings of
public respondent that the subject of voluntary arbitration
proceedings was the September 17, 1991 lay-off of herein
petitioners, which allegedly was the one and only lay-off effected
by AG & P. Private respondent AG & P does not deny nor
controvert the allegation in the position paper submitted by the
AG & P-URFA with the voluntary arbitrator that the AG & P
management started the actual implementation of the company's
Presidential Directive No. 0191 on August 3, 1991 by effecting
the temporary lay-off of more than 705 employees. Thus, the lay-
off of herein petitioners on September 17, 1991 cannot be validly
asserted as the only lay-off subject of the aforementioned
voluntary arbitration proceedings.
On the contrary, it is more logical to conclude from the
evidence on record that there could have possibly been not just
one or two separate and unrelated terminations because what was
actually involved here was a continuing process or correlated
series of temporary lay-offs implemented by private respondent
on the basis of its president's directive for retrenchment by reason
of the financial reverses being suffered by the company.
This fact may be clearly deduced from a reading of the
position paper submitted by the AG & P-URFA with the
voluntary arbitrator 11 wherein it is categorically stated that as of
the date thereof, that is, October 17, 1991, "the lay-off program
has continued even as the parties agreed to submit its legality or
illegality to voluntary arbitration." The union's position paper
merely echoed the sentiment expressed by its president, Nicanor
Melano, in a letter addressed to the AG & P Head of Employee
Relations, Judge Pedro Reyes, dated August 17, 1991, 12 in effect
condemning management for continuously laying off employees
despite the pendency of the labor dispute before the voluntary
arbitrator, and demanding that the company cease from pursuing
its retrenchment scheme.
Suppletorily, there was the agreement 13 of September 7,
1991 executed by and between AG & P, on the one hand, and the
three unions, on the other, which has been repeatedly adverted to.
Said agreement was actually an offshoot of the strike staged by
the employees which was triggered by the implementation of the
mass lay-offs. A cursory perusal thereof indeed makes it quite
clear that the crux of the negotiations between management and
its employees concerns the manner with which future possible
lay-offs would be implemented and the financial assistance to be
extended to those employees already laid off or who may be laid
off. Thus, paragraph 3 of the agreement states that "(t)here should
be consultations between the Unions in BMFY and the Company
before any temporary lay-off of employees in BMFY should be
effected and the parties agree that a dialogue to discuss such
matters be undertaken by them." It is thereby unmistakable, from
the plain and simple wordings of the agreement, that the company
would continue to exercise its management prerogative to lay off
employees as the need arises, but subject to the conditions
imposed therein.
The fact that the three unions which negotiated with
management acquiesced to the aforequoted third stipulation
should be deemed an admission and recognition on their part that
there would be a continuing need to lay off employees as a
consequence of the dwindling financial capacity of the company
to maintain its existing work force. It would have been quite
absurd and unnatural for the union to have agreed to additional
lay-offs in the future if it did not unqualifiedly believe that there
truly existed a persisting and irreversible financial instability in
the business concerns of AG & P.
Petitioners were temporarily laid off pursuant to this
agreement which, not being contrary to law, morals and public
policy, is valid and binding between the parties. More
importantly, it will be noted that the AG & P-URFA did not as
much as raise an objection nor file a protest against such lay-offs,
as it would have been wont to do had petitioners' assertions really
been true. And, confirmatory thereof, herein petitioners never
raised the issue that the consultation requirement contained in the
agreement was not resorted to or followed before their lay-off was
effected. It would, therefore, be safe to assure that such procedure
had been followed, thereby lending credence to the obvious fact
that the services of petitioners were legally terminated.
The bare allegation that the dismissal of petitioners was
a retaliatory move by the company after the former won in an
earlier illegal termination case and by reason of which they were
reinstated by the latter, without any supporting evidence to prove
bad faith or ill motive on the part of the company, cannot stand
against and is diametrically opposed to the findings in the
voluntary arbitration proceedings. Voluntary Arbitrator Batino
declared in no uncertain terms, after an assiduous and painstaking
evaluation of the documentary evidence and position papers
submitted by the parties, that the exercise of AG & P's
management prerogative to lay off employees was fair,
reasonable and just and that it was neither oppressive, malicious,
harsh, nor vindictive. Worse, it was there stated that the union, to
which herein petitioners belonged, never imputed bad faith or ill
motives in the selection of the employees to be temporarily laid
off. This finding is totally contradictory to the indefensible
hypothesis invoked by petitioners which, from the very stare, was
bound to fail considering the circumstances obtaining in this case.
We are accordingly convinced, and so hold, that both the
retrenchment program of private respondent and the dismissal of
petitioners were valid and legal.
First, it has been sufficiently and convincingly
established by AG & P before the voluntary arbitrator that it was
suffering financial reverses. Even the rank and file union at AG &
P did not contest the fact that management had been undergoing
financial difficulties for the past several years. Hence, the
voluntary arbitrator considered this as an admission that indeed
AG & P was actually experiencing adverse business conditions
which would justify the exercise of its management prerogative to
retrench in order to avoid the not so remote possibility of the
closure of the entire business which, in the opinion of the
voluntary arbitrator, would in the last analysis be adverse to both
the management and the union.
Second, the voluntary arbitrator's conclusions were
premised upon and substantiated by the audited financial
statements and the auditor's reports of AG & P for the years 1987
to 1991. 14 These, financial statements audited by independent
external auditors constitute the normal and reliable method of
proof of the profit and loss performance of a company. 15
Third, contrary to petitioners' asseverations, proof of
actual financial losses incurred by the company is not a
condition sine qua non, for retrenchment. Retrenchment is one of
the economic grounds to dismiss employees, which is resorted to
by an employer primarily to avoid or minimize business
losses. 16 The law recognizes this under Article 283 of the Labor
Code which provides that:
Art. 283. Closure of establishment and reduction of
personnel. — The employer may also terminate the employment
of any employee due to the installation of labor saving devices,
redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking, unless
the closing is for the purpose of circumventing the provisions of
this Title, by serving a written notice on the workers and the
Ministry of Labor and Employment at least one (1) month before
the intended date thereof. In case of termination due to the
installation of labor saving devices or redundancy, the worker
affected thereby shall be entitled to a separation pay equivalent to
at least his one (1) month pay or to at least one (1) month pay for
every year of service, whichever is higher. In case of
retrenchment to prevent losses and in cases of closures or
cessation of operations of establishment or undertaking not due to
serious business losses or financial reverses, the separation pay
shall be equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1)
whole year.
In its ordinary connotation, the phrase "to prevent
losses" means that retrenchment or termination of the services of
some employees is authorized to be undertaken by the employer
sometime before the anticipated losses are actually sustained or
realized. It is not, in other words, the intention of the lawmaker to
compel the employer to stay his hand and keep all his employees
until after losses shall have in fact materialized. If such an intent
were expressly written into the law, that law may well be
vulnerable to constitutional attack as unduly taking property from
one man to be given to another.
At the other end of the spectrum, it seems equally clear
that not every asserted possibility of loss is sufficient legal
warrant for the reduction of personnel. In the nature of things, the
possibility of incurring losses is constantly present, in greater or
lesser degree, in the carrying on of business operations, since
some, indeed many, of the factors which impact upon the
profitability or viability of such operations may be substantially
outside the control of the employer. 17
On the bases of these considerations, it follows that the
employer bears the burden to prove his allegation of economic or
business reverses with clear and satisfactory evidence, it being in
the nature of an affirmative defense. 18 As earlier discussed, we
are fully persuaded that the private respondent has been and is
besieged by a continuing downtrend in both its business
operations and financial resources, thus amply justifying its resort
to drastic cuts in personnel and costs.
To the point of being plethoric, the explanation advanced
by private respondent in its position paper submitted to the
voluntary arbitrator is highly enlightening and is here quoted in
full:
Figure 1 shows, in bar graph form, the comparative Net
Income or Net Loss of the Company from 1987 to 1990 as well as
the projected Net Loss for 1991. The graph clearly illustrates the
financial hemorrhage being endured by the Company. The Net
Incomes of 1968 and 1989 (P2.6 million and P5.8 million,
respectively) dwindles into insignificance beside the net Losses of
1987 and 1990 as well as the estimated Net Loss for 1991 (P35.4
million, P76.2 million and P250 million, respectively). Moreover,
the P54.8 million Net Income of 1989 is due solely to the
dissolution of 2 subsidiaries which resulted in a "paper gain" of
about P134 million. In other words, there was an actual loss of
about 80 million but a paper gain of P54 million in 1989.
xxx xxx xxx
Figure 2, on the other hand, shows the dwindling number
of projects being undertaken by the Company for the past four
years. As of August 1991, there are only 17 ongoing projects of
the Company (as compared to the 1987 peak of 67), 13 of which
are mere carry-overs from the previous years. The projects being
the main source of the Company's revenues, the graph in Figure 2
further confirms the severe losses being suffered by the Company.
xxx xxx xxx
With retained earnings at the financially comfortable
level of more than P400 million, it may be suggested, that the
Company delay implementation of the decisions to streamline,
centralize, retrench, and cut expenses in general, in the hope that
the situation of the Company's financial conditions proves that
this suggestion is not viable. Figure 3 proves this by showing, in
bar graph form, a comparative study of the Company's Working
Capital for the period 1987 to 1990. The legend "Working Capital
— source" indicates the amount generated by the Company
during the fiscal year. "Working Capital — use" indicates the
amount used by the Company during the fiscal year. And
"Inc/Dec in Working Capital" indicates the increase or decrease
in Working Capital at fiscal year's end. It is readily seen from
Figure 3 that, except for 1988, more working capital was used
than was generated for the period under study and the same is
chronically being depleted. This means that the Company is
running out of money to pay for its bills.
xxx xxx xxx
Figure 4 plots the Current Ratio of the Company over
time. "Current Ratio" is the ratio of a firm's Current Assets to its
Current Liabilities. It thus measures the firm's ability to
immediately pay its current debts. The rule of thumb prescribes a
Current Ratio of 2, meaning, for every peso of short-term debt,
there should be two pesos of cash or "near-cash" available. Figure
4 clearly shows that as early as 1987, the Company is below par.
Worse, in 1990, the Current Ratio is less than 1. This means that
it has more short-terms debts than current assets. 19
We might as well make mention of the fact that as early
as March 4, 1991, the President of AG & P had issued Circular
No. CEO-191, 20 addressed to all AG & P employees wherein
they were apprised of the financial difficulties of the company
and of the decisions made by its board of directors aimed at
arresting any further dissipation of company resources. It
informed the employees that "we simply no longer have the
resources required to fully support anything much beyond our
mainline activities. We each must therefore now make a choice to
either stand solidly behind these critical moves poise ourselves
for an eventual collapse. According to private respondent AG &
P, the decision was calculated to turn the company into a lean and
trim centralized organization, by shedding off marginal business
activities, in the process availing of the Company's Retirement
Plan and retrenching personnel in the affected areas whenever
necessary. The circular is more than sufficient notice to AG & P
employees, as well as herein petitioners, of the then impending
decision of the company to carry out its retrenchment program for
the reasons therein stated.
Anent the mandatory written notice to be filed with the
labor department one month before retrenchment, 21 we are of the
considered opinion that the proceedings had before the voluntary
arbitrator, where both parties were given the opportunity to be
heard and present evidence in their favor, constitute substantial
compliance with the requirement of the law. The purpose of this
notice requirement is to enable the proper authorities to ascertain
whether the closure of the business is being done in good faith
and is not just a pretext for evading compliance with the just
obligations of the employer to the affected employees. 22 In fact,
the voluntary arbitration proceedings more than satisfied the
intendment of the law considering that the parties were accorded
the benefit of a hearing, 23 in addition to the right to present their
respective position papers and documentary evidence.
For that matter, hearing and investigation by the
employer, where the reason for termination is retrenchment due to
financial reverses and not to an act attributable to the employee, is
not even required because it is considered a surplusage under
existing jurisprudence. Hence, it has been held that:
. . . Where, as in the instant case, the ground for
dismissal or termination of services does not relate to a
blameworthy act or omission on the part of the employee, there
appears to us no need for an investigation and hearing to be
conducted by the employer who does not, to begin with, allege
any malfeasance or non-feasance on the part of the employee. In
such case, there are no allegations which the employee should
refute and defend himself from. Thus, to require petitioner
Wiltshire to hold a hearing, at which private respondent would
have had the right to be present, on the business and financial
circumstances compelling retrenchment and resulting in
redundancy, would be to impose upon the employer an
unnecessary and inutile hearing as a condition for legality of
termination.
This is not to say that the employee may not contest the
reality or good faith character of the retrenchment or redundancy
asserted as grounds for termination of services. The appropriate
forum for such controversion would, however, be the Department
of Labor and Employment and not an investigation or hearing to
be held by the employer itself. It is precisely for this reason that
an employer seeking to terminate services of an employee or
employees because of "closure of business establishment and
reduction of personnel," is legally required to give written notice
not only to the employee but also to the Department of Labor and
Employment at least one month before effectivity date of the
termination. 24
At any rate, considering that the Office of the Voluntary
Arbitrator is under the jurisdiction of the Department of Labor
and Employment, it would be superfluous to still require the
service of notice with the latter when proceedings have already
been initiated with the former precisely to carry out the very
purpose for which said notice is intended.
In Lopez Sugar Corporation vs. Federation of Free
Workers, et al., supra, this Court set out the general standards in
terms of which the acts of an employer in retrenching or reducing
the number of its employees must be appraised, to wit:
. . . . Firstly, the losses expected should be substantial
and not merely de minimis in extent. If the loss purportedly
sought to be forestalled by retrenchment is clearly shown to be
insubstantial and inconsequential in character, the bona
fide nature of the retrenchment would appear to be seriously in
question. Secondly, the substantial loss apprehended must be
reasonably imminent, as such imminence can be perceived
objectively and in good faith by the employer. There should, in
other words, be a certain degree of urgency for the retrenchment,
which is after all a drastic recourse with serious consequences for
the livelihood of the employees retired or otherwise laid off.
Because of the consequential nature of retrenchment, it must,
thirdly, be reasonably necessary and likely to effectively prevent
the expected losses. The employer should have taken other
measures prior or parallel to retrenchment to forestall losses, i.e.,
cut other costs than labor costs. . . .
Lastly, but certainly not the least important, alleged
losses if already realized, and the expected imminent losses
sought to be forestalled, must be proved by sufficient and
convincing evidence. The reason for requiring this quantum of
proof is apparent; any less exacting standard of proof would
render too easy the abuse of this ground for termination or
services of employees. . . .
It is obvious from the preceding discussions that the
aforequoted guidelines have been faithfully met by the company.
As a final word, let it be reiterated herein what we have
heretofore said, that the law in protecting the rights of the laborer
authorizes neither oppression nor self-destruction of the
employer. While the Constitution is committed to the policy of
social justice and the protection of the working class, it should not
be supposed that every labor dispute will be automatically
decided in favor of labor. Management also has its own rights,
which as such are entitled to respect and enforcement in the
interest of simple fair play. Out of its concern for those with less
privileges in life, the Supreme Court has inclined more often than
not toward the worker and upheld his cause with his conflicts
with the employer. Such favoritism, however, has not blinded the
Court to rule that justice is in every case for the deserving, to be
dispensed in the light of the established facts and applicable law
and doctrine. 25

WHEREFORE, the decision appealed from is hereby

AFFIRMED, with the modification that private respondent
Atlantic, Gulf and Pacific Company of Manila, Inc. is ORDERED
to pay herein petitioners their separation pay equivalent to one
month pay or at least one-half (1/2) month pay for every year of
service, whichever is higher. The financial assistance which
herein petitioners may have received shall be deducted from the
separation pay to which they are entitled. SO ORDERED.
G.R. No. 75662 September 15, 1989
MERCURY DRUG CORPORATION, petitioner
vs.
NATIONAL LABOR RELATIONS COMMISSION, NLRC
SHERIFF and CESAR E. LADISLA, respondents.
Veronica G. de Vera for petitioner.
David B. Agoncillo for private respondent.
FERNAN, C.J.:
Petitioner assails in this petition for review on certiorari the
Resolution dated July 24, 1986 of the National Labor Relations
Commission in NLRC Case No. RB-IV-19301-78-T denying
petitioner's motion for reconsideration of its decision dated April
30, 1986 which reversed the decision of Labor Arbiter Ceferina J.
Diosana and ordered the reinstatement of private respondent
Cesar E. Ladisla to his former position with full backwages.
Records show that private respondent Cesar E. Ladisla was
employed by petitioner Mercury Drug Corporation as a Stock
Analyst at its Claro M. Recto Branch. He had been with the
company for two years and nine months when on August 15,
1977 he was apprehended by representatives of Mercury Drug
while in the act of pilfering company property consisting of three
(3) bottles of Persantin and one (1) bottle of Valoron at 100
tablets per bottle with a total value of P272.00. He admitted his
guilt to the investigating representatives of petitioner company
and executed a handwritten admission. Said admission was
repeated verbally at the police station before the arresting officer
as shown in the Booking Sheet and Arrest Report which was
signed and authenticated by Ladisla. 1 Thus, on August 19, 1977,
petitioner, while simultaneously placing private respondent on
preventive suspension, filed before the Department of Labor an
application for the termination of private respondent's
employment on grounds of dishonesty and breach of trust.
Private respondent opposed the aforesaid application for
clearance to terminate his services alleging among others, that his
suspension and proposed dismissal were unfounded and baseless
being premised on the machinations and incriminatory acts of Ms.
Leonora Suarez and Edgardo Imperial, Manager and Retail
Supervisor, respectively, of petitioner's Claro M. Recto Branch;
and that he was not given the opportunity to be heard nor allowed
to explain his side before he was summarily suspended.
The parties were then required by the Arbitration Branch of the
Department of Labor to file their respective position papers.
While the case was being heard by Labor Arbiter Ceferina J.
Diosana petitioner filed a criminal complaint for attempted
qualified theft against private respondent before the Fiscal's
Office of Manila but this was dismissed by the court before the
arraignment of the accused. However, the case was refiled and
docketed as Criminal Case No. 43096 before Judge Pedro A.
Ramirez of the then Court of First Instance, subsequently the
Regional Trial Court of Manila, Branch XXX.
In a decision dated November 8, 1979. 2 Labor Arbiter Ceferina J.
Diosana sustained the validity of private respondent's dismissal
and granted petitioner's application for clearance to terminate, the
services of the former. Private respondent appealed his aforesaid
dismissal to the National Labor Relations Commission. Pending
resolution of the appeal, herein petitioner filed a Manifestation
with said Commission notifying the latter of the ongoing trial in
Criminal Case No. 43096 against private respondent. On
September 15, 1983, judgment was rendered in Criminal Case
No. 43096, finding private respondent accused guilty of the crime
of simple theft. 3 No appeal was taken from the decision in the
subject criminal case, private respondent having availed himself
of the benefits of the Probation Law. He was eventually
discharged from probation on December 27, 1984, after
complying with the terms and conditions thereof. 4
On April 30, 1986, public respondent National Labor Relations
Commission reversed the decision of the Labor Arbiter because it
found no substantial evidence establishing the charge against
private respondent Ladisla stating thus:
WHEREFORE, the Decision appealed from is hereby set aside
and a new one entered ordering respondent to immediately
reinstate him in (sic) his former position with full back wages.
SO ORDERED. 5
Petitioner filed a motion for reconsideration of the
aforementioned decision, which was denied by public respondent
Commission in its resolution dated July 24, 1986. 6 Hence, this
petition assailing the latter's reversal of the labor arbiter's decision
and its order for the reinstatement with full back wages of private
respondent.
Petitioner submits that it was serious legal error on the part of
public respondent to order the reinstatement of private respondent
who was convicted of the crime of simple theft by Judge Pedro
Ramirez in Criminal Case No. 43096 filed by petitioner against
said private respondent-employee involving the same facts
obtaining in the present case for termination. On the other hand,
private respondent maintains that he was a victim of revenge and
incriminatory machinations as the charge of qualified theft of
company property was a frame-up.
We hold that public respondent National Labor Relations
Commission committed a grave abuse of discretion amounting to
lack of jurisdiction in finding no substantial evidence to sustain
the charge against private respondent. This conclusion is in
complete and utter disregard of the Regional Trial Court's
conviction of private respondent for the crime of simple theft
which decision was rendered prior to its own assailed decision. It
must be remembered that proceedings in criminal cases such as
that held in the subject criminal case require proof beyond
reasonable doubt to establish the guilt of the accused and findings
of fact of the trial court on this matter are generally accorded
great weight by appellate courts most especially where no appeal
had been filed thereafter, thus rendering the said findings final. As
mentioned earlier, private respondent did not appeal from the
decision of the lower court but instead availed himself of the
benefits of the probation law which was correspondingly granted
by the Regional Trial Court.
Dismissal of a dishonest employee is to the best interest not only
of management but also of labor. As a measure of self-protection
against acts inimical to its interest, a company has the right to
dismiss its erring employees. An employer cannot be compelled
to continue in employment an employee guilty of acts inimical to
its interest, justifying loss of confidence in him. The law does not
impose unjust situations on either labor or management. 7 We
therefore find justification in the termination of private
respondent Cesar E. Ladisla's employment by petitioner Mercury
Drug Corporation.
Under Article 282(c) of the Labor Code, an employer may
terminate an employment for "fraud or willful breach by the
employee of the trust reposed in him by his employer or his duly
authorized representative." Loss of confidence is established as a
valid ground for the dismissal of an employee. The law does not
require proof beyond reasonable doubt of the employee's
misconduct to invoke such a justification. It is sufficient that there
is some basis for the loss of trust or that the employer has
reasonable grounds to believe that the employee is responsible for
the misconduct and his participation therein renders him
unworthy of the trust and confidence demanded of his position. 8
medicines and where he was given the opportunity to state his
defenses, and thereafter, before the arbitration branch of the
Department of Labor where he was required and did submit his
position paper.
The law in protecting the rights of the laborer, authorizes neither
oppression nor self-destruction of the employer. 11While the
Constitution is committed to the policy of social justice and the
protection of the working class, it should not be supposed that
every labor dispute will be automatically decided in favor of
labor. Management also has its own rights, which, as such, are
entitled to respect and enforcement in the interest of simple fair
play. Out of its concern for those with less privileges in life, the
Supreme Court has inclined more often than not toward the
worker and upheld his cause in his conflicts with the employer.
Such favoritism, however, has not blinded the Court to the rule
that justice is in every case for the deserving, to be dispensed in
the light of the established facts and applicable law and doctrine
. 12
WHEREFORE, the assailed resolution of the National Labor
Relations Commission is reversed and set aside and the Labor
Arbiter's decision of November 8, 1979 dismissing Cesar E.
Ladisla as petitioner's stock analyst is hereby reinstated. No costs.
SO ORDERED.

Private respondent's admission of his guilt as earlier stated, his

subsequent conviction in Criminal Case No. 43096 and his
acceptance of the same as implied in the absence of an appeal
therefrom and his subsequent application for probation
established beyond reasonable doubt his guilt for the crime of
simple theft. It was this same act which gave rise to his conviction
by the trial court that was the basis for the termination of his
employment by petitioner.

We have held that the eventual conviction of the employee who is

prosecuted for his misconduct is not indispensable to warrant his
dismissal by his employer. 9 More specifically, an employee who
has been exonerated from a criminal charge of theft of gasoline
on the basis of technicality may still be dismissed from
employment if the employer has ample reason to mistrust
him. 10 If acquittal from the criminal charge does not negate the
existence of a ground for loss of trust and confidence, with more
reason should conviction for such criminal charge fortify said
mistrust.

Anent private respondent's claim of summary suspension without

being given the opportunity to be heard, the Court takes note that,
in addition to the fact that his suspension was merely preventive
pending approval by the Department of Labor of its application
for clearance to terminate the services of private respondent, the
latter was given the chance to defend himself in several instances:
at the Police Precinct No. III, Western Police District, Metro
Manila where he was brought for investigation or questioning
immediately after the occurrence of the alleged pilferage of
Caltex(Philippines) Inc. vs Philippine Labor Organization
G.R. No. L-9915, May 27, 1959 – FULL TEXT - NONE

FACTS:

Del Rosario was hired by Caltex Inc. as labourer in its Pandacan

Terminal. About 2months later, the company suspended him for i
nsubordination and later filed a petition with the Industrial Court f
or authority to dismiss him. After hearing, del Rosario was found
guilty. However, ordered his reinstatement, believing, the punish
ment was too severe.

ISSUE:

Whether or not the employee guilty of insubordination should be r

einstated.

RULING:

No, he should not be reinstated and even if ordered by the court.

Considering the period of time that Del Rosario had been working
before his suspension, 2 months, can be said that he was on temp
orary or trial basis. Caltex has the right to place him under this co
ndition to determine his fitness and competency.

Furthermore, the acts of insubordination for which del Rosario wa

s found guilty consist od disorderly conduct and wilful disobedien
ce, committed in a very short period of 2months and willful disob
edience is a justifiable ground for an employee’s discharge.
G.R. No. L-53515 February 8, 1989
SAN MIGUEL BREWERY SALES FORCE UNION
(PTGWO), petitioner,
vs.
HON. BLAS F. OPLE, as Minister of Labor and SAN
MIGUEL CORPORATION, respondents.
Lorenzo F. Miravite for petitioner.
Isidro D. Amoroso for New San Miguel Corp. Sales Force Union.
Siguion Reyna, Montecillo & Ongsiako for private respondent.
GRIÑO-AQUINO, J.:
This is a petition for review of the Order dated February 28, 1980
of the Minister of Labor in Labor Case No. AJML-069-79,
approving the private respondent's marketing scheme, known as
the "Complementary Distribution System" (CDS) and dismissing
the petitioner labor union's complaint for unfair labor practice.
On April 17, 1978, a collective bargaining agreement (effective
on May 1, 1978 until January 31, 1981) was entered into by
petitioner San Miguel Corporation Sales Force Union (PTGWO),
and the private respondent, San Miguel Corporation, Section 1, of
Article IV of which provided as follows:
Art. IV, Section 1. Employees within the appropriate bargaining
unit shall be entitled to a basic monthly compensation plus
commission based on their respective sales. (p. 6, Annex A; p.
113, Rollo.)
In September 1979, the company introduced a marketing scheme
known as the "Complementary Distribution System" (CDS)
whereby its beer products were offered for sale directly to
wholesalers through San Miguel's sales offices.
The labor union (herein petitioner) filed a complaint for unfair
labor practice in the Ministry of Labor, with a notice of strike on
the ground that the CDS was contrary to the existing marketing
scheme whereby the Route Salesmen were assigned specific
territories within which to sell their stocks of beer, and
wholesalers had to buy beer products from them, not from the
company. It was alleged that the new marketing scheme violates
Section 1, Article IV of the collective bargaining agreement
because the introduction of the CDS would reduce the take-home
pay of the salesmen and their truck helpers for the company
would be unfairly competing with them.
The complaint filed by the petitioner against the respondent
company raised two issues: (1) whether the CDS violates the
collective bargaining agreement, and (2) whether it is an indirect
way of busting the union.
In its order of February 28, 1980, the Minister of Labor found:
... We see nothing in the record as to suggest that the unilateral
action of the employer in inaugurating the new sales scheme was
designed to discourage union organization or diminish its
influence, but rather it is undisputable that the establishment of
such scheme was part of its overall plan to improve efficiency and
economy and at the same time gain profit to the highest. While it
may be admitted that the introduction of new sales plan somewhat
disturbed the present set-up, the change however was too
insignificant as to convince this Office to interpret that the
innovation interferred with the worker's right to self-organization.
Petitioner's conjecture that the new plan will sow dissatisfaction
from its ranks is already a prejudgment of the plan's viability and
effectiveness. It is like saying that the plan will not work out to
the workers' [benefit] and therefore management must adopt a
new system of marketing. But what the petitioner failed to
consider is the fact that corollary to the adoption of the assailed
marketing technique is the effort of the company to compensate
whatever loss the workers may suffer because of the new plan
over and above than what has been provided in the collective
bargaining agreement. To us, this is one indication that the action
of the management is devoid of any anti-union hues. (pp. 24-25,
Rollo.)
The dispositive part of the Minister's Order reads:
WHEREFORE, premises considered, the notice of strike filed by
the petitioner, San Miguel Brewery Sales Force Union-PTGWO
is hereby dismissed. Management however is hereby ordered to
pay an additional three (3) months back adjustment commissions
over and above the adjusted commission under the
complementary distribution system. (p. 26, Rollo.)
The petition has no merit.
Public respondent was correct in holding that the CDS is a valid
exercise of management prerogatives:
Except as limited by special laws, an employer is free to regulate,
according to his own discretion and judgment, all aspects of
employment, including hiring, work assignments, working
methods, time, place and manner of work, tools to be
used, processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, lay-off of
workers and the discipline, dismissal and recall of work. ... (NLU
vs. Insular La Yebana Co., 2 SCRA 924; Republic Savings Bank
vs. CIR 21 SCRA 226, 235.) (Perfecto V. Hernandez, Labor
Relations Law, 1985 Ed., p. 44.) (Emphasis ours.)
Every business enterprise endeavors to increase its profits. In the
process, it may adopt or devise means designed towards that goal.
In Abbott Laboratories vs. NLRC, 154 SCRA 713, We ruled:
... 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.
So long as a company's management prerogatives are exercised in
good faith for the advancement of the employer's 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 (LVN Pictures Workers vs. LVN, 35
SCRA 147; Phil. American Embroideries vs. Embroidery and
Garment Workers, 26 SCRA 634; Phil. Refining Co. vs. Garcia,
18 SCRA 110). San Miguel Corporation's offer to compensate the
members of its sales force who will be adversely affected by the
implementation of the CDS by paying them a so-called "back
adjustment commission" to make up for the commissions they
might lose as a result of the CDS proves the company's good faith
and lack of intention to bust their union.

WHEREFORE, the petition for certiorari is dismissed for lack of

merit.

SO ORDERED.
G.R. No. 178296 January 12, 2011
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.
DECISION
NACHURA, J.:
Before the Court is a petition for review on certiorari of the
Decision1 of the Court of Appeals (CA) dated May 30, 2005 and
Resolution dated June 4, 2007. The assailed Decision affirmed the
dismissal of a petition for cancellation of union registration filed
by petitioner, Grand Plaza Hotel Corporation, owner of Heritage
Hotel Manila, against respondent, National Union of Workers in
the Hotel, Restaurant and Allied Industries-Heritage Hotel Manila
Supervisors Chapter (NUWHRAIN-HHMSC), a labor
organization of the supervisory employees of Heritage Hotel
Manila.
The case stemmed from the following antecedents:
On October 11, 1995, respondent filed with the Department of
Labor and Employment-National Capital Region (DOLE-NCR) a
petition for certification election.2 The Med-Arbiter granted the
petition on February 14, 1996 and ordered the holding of a
certification election.3 On appeal, the DOLE Secretary, in a
Resolution dated August 15, 1996, affirmed the Med-Arbiter’s
order and remanded the case to the Med-Arbiter for the holding of
a preelection conference on February 26, 1997. Petitioner filed a
motion for reconsideration, but it was denied on September 23,
1996.
The preelection conference was not held as initially scheduled; it
was held a year later, or on February 20, 1998. Petitioner moved
to archive or to dismiss the petition due to alleged repeated non-
appearance of respondent. The latter agreed to suspend
proceedings until further notice. The preelection conference
resumed on January 29, 2000.
Subsequently, petitioner discovered that respondent had failed to
submit to the Bureau of Labor Relations (BLR) its annual
financial report for several years and the list of its members since
it filed its registration papers in 1995. Consequently, on May 19,
2000, petitioner filed a Petition for Cancellation of Registration of
respondent, on the ground of the non-submission of the said
documents. Petitioner prayed that respondent’s Certificate of
Creation of Local/Chapter be cancelled and its name be deleted
from the list of legitimate labor organizations. It further requested
the suspension of the certification election proceedings. 4
On June 1, 2000, petitioner reiterated its request by filing a
Motion to Dismiss or Suspend the [Certification Election]
Proceedings,5 arguing that the dismissal or suspension of the
proceedings is warranted, considering that the legitimacy of
respondent is seriously being challenged in the petition for
cancellation of registration. Petitioner maintained that the
resolution of the issue of whether respondent is a legitimate labor
organization is crucial to the issue of whether it may exercise
rights of a legitimate labor organization, which include the right
to be certified as the bargaining agent of the covered employees.
Nevertheless, the certification election pushed through on June
23, 2000. Respondent emerged as the winner.6
On June 28, 2000, petitioner filed a Protest with Motion to Defer
Certification of Election Results and Winner,7stating that the
certification election held on June 23, 2000 was an exercise in
futility because, once respondent’s registration is cancelled, it
would no longer be entitled to be certified as the exclusive
bargaining agent of the supervisory employees. Petitioner also
claimed that some of respondent’s members were not qualified to
join the union because they were either confidential employees or
managerial employees. It then prayed that the certification of the
election results and winner be deferred until the petition for
cancellation shall have been resolved, and that respondent’s
members who held confidential or managerial positions be
excluded from the supervisors’ bargaining unit.
Meanwhile, respondent filed its Answer8 to the petition for the
cancellation of its registration. It averred that the petition was
filed primarily to delay the conduct of the certification election,
the respondent’s certification as the exclusive bargaining
representative of the supervisory employees, and the
commencement of bargaining negotiations. Respondent prayed
for the dismissal of the petition for the following reasons: (a)
petitioner is estopped from questioning respondent’s status as a
legitimate labor organization as it had already recognized
respondent as such during the preelection conferences; (b)
petitioner is not the party-in-interest, as the union members are
the ones who would be disadvantaged by the non-submission of
financial reports; (c) it has already complied with the reportorial
requirements, having submitted its financial statements for 1996,
1997, 1998, and 1999, its updated list of officers, and its list of
members for the years 1995, 1996, 1997, 1998, and 1999; (d) the
petition is already moot and academic, considering that the
certification election had already been held, and the members had
manifested their will to be represented by respondent.
Citing National Union of Bank Employees v. Minister of Labor,
et al.9 and Samahan ng Manggagawa sa Pacific Plastic v. Hon.
Laguesma,10 the Med-Arbiter held that the pendency of a petition
for cancellation of registration is not a bar to the holding of a
certification election. Thus, in an Order11 dated January 26, 2001,
the Med-Arbiter dismissed petitioner’s protest, and certified
respondent as the sole and exclusive bargaining agent of all
supervisory employees.
Petitioner subsequently appealed the said Order to the DOLE
Secretary.12 The appeal was later dismissed by DOLE Secretary
Patricia A. Sto. Tomas (DOLE Secretary Sto. Tomas) in the
Resolution of August 21, 2002.13Petitioner moved for
reconsideration, but the motion was also denied.14
In the meantime, Regional Director Alex E. Maraan (Regional
Director Maraan) of DOLE-NCR finally resolved the petition for
cancellation of registration. While finding that respondent had
indeed failed to file financial reports and the list of its members
for several years, he, nonetheless, denied the petition,
ratiocinating that freedom of association and the employees’ right
to self-organization are more substantive considerations. He took
into account the fact that respondent won the certification election
and that it had already been certified as the exclusive bargaining
agent of the supervisory employees. In view of the foregoing,
Regional Director Maraan—while emphasizing that the non-
compliance with the law is not viewed with favor—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. The dispositive portion of the
decision15 dated December 29, 2001 reads:
WHEREFORE, premises considered, the instant petition to delist
the National Union of Workers in the Hotel, Restaurant and
Allied Industries-Heritage Hotel Manila Supervisors Chapter
from the roll of legitimate labor organizations is hereby DENIED.
SO ORDERED.16
Aggrieved, petitioner appealed the decision to the BLR.17 BLR
Director Hans Leo Cacdac inhibited himself from the case
because he had been a former counsel of respondent.
In view of Director Cacdac’s inhibition, DOLE Secretary Sto.
Tomas took cognizance of the appeal. In a resolution18dated
February 21, 2003, she dismissed the appeal, holding that the
constitutionally guaranteed freedom of association and right of
workers to self-organization outweighed respondent’s
noncompliance with the statutory requirements to maintain its
status as a legitimate labor organization.
Petitioner filed a motion for reconsideration,19 but the motion was
likewise denied in a resolution20 dated May 30, 2003. DOLE
Secretary Sto. Tomas admitted that it was the BLR which had
jurisdiction over the appeal, but she pointed out that the BLR
Director had voluntarily inhibited himself from the case because
he used to appear as counsel for respondent. In order to maintain
the integrity of the decision and of the BLR, she therefore
accepted the motion to inhibit and took cognizance of the appeal.
Petitioner filed a petition for certiorari with the CA, raising the
issue of whether the DOLE Secretary acted with grave abuse of
discretion in taking cognizance of the appeal and affirming the
dismissal of its petition for cancellation of respondent’s
registration.
In a Decision dated May 30, 2005, the CA denied the petition.
The CA opined that the DOLE Secretary may legally assume
jurisdiction over an appeal from the decision of the Regional
Director in the event that the Director of the BLR inhibits himself
from the case. According to the CA, in the absence of the BLR
Director, there is no person more competent to resolve the appeal
than the DOLE Secretary. The CA brushed aside the allegation of
bias and partiality on the part of the DOLE Secretary, considering
that such allegation was not supported by any evidence.
The CA also found that the DOLE Secretary did not commit
grave abuse of discretion when she affirmed the dismissal of the
petition for cancellation of respondent’s registration as a labor
organization. Echoing the DOLE Secretary, the CA held that the
requirements of registration of labor organizations are an exercise
of the overriding police power of the State, designed for the
protection of workers against potential abuse by the union that
recruits them. These requirements, the CA opined, should not be
exploited to work against the workers’ constitutionally protected
right to self-organization.
Petitioner filed a motion for reconsideration, invoking this
Court’s ruling in Abbott Labs. Phils., Inc. v. Abbott Labs.
Employees Union,21 which categorically declared that the DOLE
Secretary has no authority to review the decision of the Regional
Director in a petition for cancellation of union registration, and
Section 4,22 Rule VIII, Book V of the Omnibus Rules
Implementing the Labor Code.
In its Resolution23 dated June 4, 2007, the CA denied petitioner’s
motion, stating that the BLR Director’s inhibition from the case
was a peculiarity not present in the Abbott case, and that such
inhibition justified the assumption of jurisdiction by the DOLE
Secretary.
In this petition, petitioner argues that:
I.
The Court of Appeals seriously erred in ruling that the Labor
Secretary properly assumed jurisdiction over Petitioner’s appeal
of the Regional Director’s Decision in the Cancellation Petition x
x x.
A. Jurisdiction is conferred only by law. The Labor Secretary had
no jurisdiction to review the decision of the Regional Director in
a petition for cancellation. Such jurisdiction is conferred by law to
the BLR.
B. The unilateral inhibition by the BLR Director cannot justify
the Labor Secretary’s exercise of jurisdiction over the Appeal.
C. The Labor Secretary’s assumption of jurisdiction over the
Appeal without notice violated Petitioner’s right to due process.
II.
The Court of Appeals gravely erred in affirming the dismissal of
the Cancellation Petition despite the mandatory and unequivocal
provisions of the Labor Code and its Implementing Rules.24
The petition has no merit.
Jurisdiction to review the decision of the Regional Director lies
with the BLR. This is clearly provided in the Implementing Rules
of the Labor Code and enunciated by the Court in Abbott. But as
pointed out by the CA, the present case involves a peculiar
circumstance that was not present or covered by the ruling in
Abbott. In this case, the BLR Director inhibited himself from the
case because he was a former counsel of respondent. Who, then,
shall resolve the case in his place?
In Abbott, the appeal from the Regional Director’s decision was
directly filed with the Office of the DOLE Secretary, and we
ruled that the latter has no appellate jurisdiction. In the instant
case, the appeal was filed by petitioner with the BLR, which,
undisputedly, acquired jurisdiction over the case. Once
jurisdiction is acquired by the court, it remains with it until the
full termination of the case.25
Thus, jurisdiction remained with the BLR despite the BLR
Director’s inhibition. When the DOLE Secretary resolved the
appeal, she merely stepped into the shoes of the BLR Director and
performed a function that the latter could not himself perform.
She did so pursuant to her power of supervision and control over
the BLR.26
Expounding on the extent of the power of control, the Court, in
Araneta, et al. v. Hon. M. Gatmaitan, et al.,27pronounced that, if a
certain power or authority is vested by law upon the Department
Secretary, then such power or authority may be exercised directly
by the President, who exercises supervision and control over the
departments. This principle was incorporated in the
Administrative Code of 1987, which defines "supervision and
control" as including the authority to act directly whenever a
specific function is entrusted by law or regulation to a
subordinate.28 Applying the foregoing to the present case, it is
clear that the DOLE Secretary, as the person exercising the power
of supervision and control over the BLR, has the authority to
directly exercise the quasi-judicial function entrusted by law to
the BLR Director.
It is true that the power of control and supervision does not give
the Department Secretary unbridled authority to take over the
functions of his or her subordinate. Such authority is subject to
certain guidelines which are stated in Book IV, Chapter 8, Section
39(1)(a) of the Administrative Code of 1987. 29 However, in the
present case, the DOLE Secretary’s act of taking over the
function of the BLR Director was warranted and necessitated by
the latter’s inhibition from the case and the objective to "maintain
the integrity of the decision, as well as the Bureau itself." 30
Petitioner insists that the BLR Director’s subordinates should
have resolved the appeal, citing the provision under the
Administrative Code of 1987 which states, "in case of the absence
or disability of the head of a bureau or office, his duties shall be
performed by the assistant head." 31 The provision clearly does not
apply considering that the BLR Director was neither absent nor
suffering from any disability; he remained as head of the BLR.
Thus, to dispel any suspicion of bias, the DOLE Secretary opted
to resolve the appeal herself.
Petitioner was not denied the right to due process when it was not
notified in advance of the BLR Director’s inhibition and the
DOLE Secretary’s assumption of the case. Well-settled is the rule
that the essence of due process is simply an opportunity to be
heard, or, as applied to administrative proceedings, an opportunity
to explain one’s side or an opportunity to seek a reconsideration
of the action or ruling complained of.32 Petitioner had the
opportunity to question the BLR Director’s inhibition and the
DOLE Secretary’s taking cognizance of the case when it filed a
motion for reconsideration of the latter’s decision. It would be
well to state that a critical component of due process is a hearing
before an impartial and disinterested tribunal, for all the elements
of due process, like notice and hearing, would be meaningless if
the ultimate decision would come from a partial and biased
judge.33 It was precisely to ensure a fair trial that moved the BLR
Director to inhibit himself from the case and the DOLE Secretary
to take over his function.
Petitioner also insists that respondent’s registration as a legitimate
labor union should be cancelled. Petitioner posits that once it is
determined that a ground enumerated in Article 239 of the Labor
Code is present, cancellation of registration should follow; it
becomes the ministerial duty of the Regional Director to cancel
the registration of the labor organization, hence, the use of the
word "shall." Petitioner points out that the Regional Director has
admitted in its decision that respondent failed to submit the
required documents for a number of years; therefore, cancellation
of its registration should have followed as a matter of course.
We are not persuaded.
Articles 238 and 239 of the Labor Code read:
ART. 238. CANCELLATION OF REGISTRATION; APPEAL
The certificate of registration of any legitimate labor organization,
whether national or local, shall be canceled by the Bureau if it has
reason to believe, after due hearing, that the said labor
organization no longer meets one or more of the requirements
herein prescribed.34
ART. 239. GROUNDS FOR CANCELLATION OF UNION
REGISTRATION.
The following shall constitute grounds for cancellation of union
registration:
xxxx
(d) Failure to submit the annual financial report to the Bureau
within thirty (30) days after the closing of every fiscal year and
misrepresentation, false entries or fraud in the preparation of the
financial report itself;
xxxx
(i) Failure to submit list of individual members to the Bureau
once a year or whenever required by the Bureau. 35
These provisions give the Regional Director ample discretion in
dealing with a petition for cancellation of a union’s registration,
particularly, determining whether the union still meets the
requirements prescribed by law. It is sufficient to give the (b) Misrepresentation, false statements or fraud in connection
Regional Director license to treat the late filing of required with the election of officers, minutes of the election of officers,
documents as sufficient compliance with the requirements of the and the list of voters;
law. After all, the law requires the labor organization to submit
the annual financial report and list of members in order to verify (c) Voluntary dissolution by the members.
if it is still viable and financially sustainable as an organization so
R.A. No. 9481 also inserted in the Labor Code Article 242-A,
as to protect the employer and employees from fraudulent or fly-
which provides:
by-night unions. With the submission of the required documents
by respondent, the purpose of the law has been achieved, though ART. 242-A. Reportorial Requirements.—The following are
belatedly. documents required to be submitted to the Bureau by the
legitimate labor organization concerned:
We cannot ascribe abuse of discretion to the Regional Director
and the DOLE Secretary in denying the petition for cancellation (a) Its constitution and by-laws, or amendments thereto, the
of respondent’s registration. The union members and, in fact, all minutes of ratification, and the list of members who took part in
the employees belonging to the appropriate bargaining unit should the ratification of the constitution and by-laws within thirty (30)
not be deprived of a bargaining agent, merely because of the days from adoption or ratification of the constitution and by-laws
negligence of the union officers who were responsible for the or amendments thereto;
submission of the documents to the BLR.
(b) Its list of officers, minutes of the election of officers, and list
Labor authorities should, indeed, act with circumspection in of voters within thirty (30) days from election;
treating petitions for cancellation of union registration, lest they
be accused of interfering with union activities. In resolving the (c) Its annual financial report within thirty (30) days after the
petition, consideration must be taken of the fundamental rights close of every fiscal year; and
guaranteed by Article XIII, Section 3 of the Constitution, i.e., the
rights of all workers to self-organization, collective bargaining (d) Its list of members at least once a year or whenever required
and negotiations, and peaceful concerted activities. Labor by the Bureau.
authorities should bear in mind that registration confers upon a
Failure to comply with the above requirements shall not be a
union the status of legitimacy and the concomitant right and
ground for cancellation of union registration but shall subject the
privileges granted by law to a legitimate labor organization,
erring officers or members to suspension, expulsion from
particularly the right to participate in or ask for certification
membership, or any appropriate penalty.
election in a bargaining unit.36 Thus, the cancellation of a
certificate of registration is the equivalent of snuffing out the life ILO Convention No. 87, which we have ratified in 1953, provides
of a labor organization. For without such registration, it loses - as that "workers’ and employers’ organizations shall not be liable to
a rule - its rights under the Labor Code.37 be dissolved or suspended by administrative authority." The ILO
has expressed the opinion that the cancellation of union
It is worth mentioning that the Labor Code’s provisions on
registration by the registrar of labor unions, which in our case is
cancellation of union registration and on reportorial requirements
the BLR, is tantamount to dissolution of the organization by
have been recently amended by Republic Act (R.A.) No. 9481,
administrative authority when such measure would give rise to
An Act Strengthening the Workers’ Constitutional Right to Self-
the loss of legal personality of the union or loss of advantages
Organization, Amending for the Purpose Presidential Decree No.
necessary for it to carry out its activities, which is true in our
442, As Amended, Otherwise Known as the Labor Code of the
jurisdiction. Although the ILO has allowed such measure to be
Philippines, which lapsed into law on May 25, 2007 and became
taken, provided that judicial safeguards are in place, i.e., the right
effective on June 14, 2007. The amendment sought to strengthen
to appeal to a judicial body, it has nonetheless reminded its
the workers’ right to self-organization and enhance the
members that dissolution of a union, and cancellation of
Philippines’ compliance with its international obligations as
registration for that matter, involve serious consequences for
embodied in the International Labour Organization (ILO)
occupational representation. It has, therefore, deemed it preferable
Convention No. 87,38 pertaining to the non-dissolution of
if such actions were to be taken only as a last resort and after
workers’ organizations by administrative authority.39 Thus, R.A.
exhausting other possibilities with less serious effects on the
No. 9481 amended Article 239 to read:
organization.40
ART. 239. Grounds for Cancellation of Union Registration.—The
The aforesaid amendments and the ILO’s opinion on this matter
following may constitute grounds for cancellation of union
serve to fortify our ruling in this case. We therefore quote with
registration:
approval the DOLE Secretary’s rationale for denying the petition,
(a) Misrepresentation, false statement or fraud in connection with thus:
the adoption or ratification of the constitution and by-laws or
It is undisputed that appellee failed to submit its annual financial
amendments thereto, the minutes of ratification, and the list of
reports and list of individual members in accordance with Article
members who took part in the ratification;
239 of the Labor Code. However, the existence of this ground
should not necessarily lead to the cancellation of union
registration. Article 239 recognizes the regulatory authority of the
State to exact compliance with reporting requirements. Yet there
is more at stake in this case than merely monitoring union
activities and requiring periodic documentation thereof.
The more substantive considerations involve the constitutionally
guaranteed freedom of association and right of workers to self-
organization. Also involved is the public policy to promote free
trade unionism and collective bargaining as instruments of
industrial peace and democracy.1avvphi1 An overly stringent
interpretation of the statute governing cancellation of union
registration without regard to surrounding circumstances cannot
be allowed. Otherwise, it would lead to an unconstitutional
application of the statute and emasculation of public policy
objectives. Worse, it can render nugatory the protection to labor
and social justice clauses that pervades the Constitution and the
Labor Code.
Moreover, submission of the required documents is the duty of
the officers of the union. It would be unreasonable for this Office
to order the cancellation of the union and penalize the entire
union membership on the basis of the negligence of its officers.
In National Union of Bank Employees vs. Minister of Labor, L-
53406, 14 December 1981, 110 SCRA 296, the Supreme Court
ruled:
As aptly ruled by respondent Bureau of Labor Relations Director
Noriel: "The rights of workers to self-organization finds general
and specific constitutional guarantees. x x x Such constitutional
guarantees should not be lightly taken much less nullified. A
healthy respect for the freedom of association demands that acts
imputable to officers or members be not easily visited with capital
punishments against the association itself."
At any rate, we note that on 19 May 2000, appellee had submitted
its financial statement for the years 1996-1999. With this
submission, appellee has substantially complied with its duty to
submit its financial report for the said period. To rule differently
would be to preclude the union, after having failed to meet its
periodic obligations promptly, from taking appropriate measures
to correct its omissions. For the record, we do not view with favor
appellee’s late submission. Punctuality on the part of the union
and its officers could have prevented this petition.41
WHEREFORE, premises considered, the Court of Appeals
Decision dated May 30, 2005 and Resolution dated June 4, 2007
are AFFIRMED.
SO ORDERED.
B G.R. No. L-52824 March 16, 88
REYNALDO BAUTISTA, petitioner,
vs.
HON. AMADO C. INCIONG, in his capacity as Deputy
Minister of Labor and ASSOCIATED LABOR UNIONS
(ALU), respondents.
GUTIERREZ, JR., J.:
This is an illegal dismissal case. The respondent Deputy
Minister dismissed the complaint of herein petitioner principally
on the ground that no employer-employee relationship existed
between the petitioner and respondent Associated Labor Unions
(ALU).
The facts as found by the National Capital Region
Director of the then ministry of Labor (MOL) Region IV are as
follows:
Complainant (petitioner) was employed by ALU as
'Organizer' in 1972 with a starting salary of P250.00 a month. As
such he paid his monthly SSS contributions, with the respondent
as his employer. On March 15, 1979, He was left in the office of
ALU while his other co-organizers were in Cainta, Rizal
attending a certification election at Chrysler Philippines, as he
was not the organizer assigned in said company. On March 16,
1979, he went on sick leave for ten (10) days. His SSS sickness
benefit application form signed by ALU's physician was given to
ALU for submission to the SSS. On March 16, 1979, complainant
reported back for work upon expiration of his leave but was
informed by ALU's Area Vice-President for Luzon of his
termination effective March 15, 1979. Hence, this complaint filed
on March 28, 1979. On April 18, 1979, however, ALU filed a
clearance application to terminate complainant's services effective
March 16, 1979 on the ground of abandonment of work. (p. 48,
Rollo)
Based on these findings, the Director ruled in favor of
the petitioner and ordered the respondent Union to reinstate the
petitioner to his former position with full backwages and to pay
him emergency allowance, 13th month pay and to refund his
Mutual Aid Fund Deposit in the amount of P 370.00
Respondent ALU appealed to the Ministry of Labor. On
October 23,1979, the respondent Deputy Minister set aside the
order of the Director and dismissed the petitioner's complaint for
lack of merit. In his order, the Deputy Minister found that the
petitioner was merely accomodated by the respondent union after
he was dismissed by his former employer sometime in 1972 and
that his membership coverage with the SSS which shows that
respondent ALU is the one paying the employer's share in the
premiums is not conclusive proof that respondent is the
petitioner's employer because such payments were performed by
the respondent as a favor for all those who were performing full
time union activities with it to entitle them to SSS benefits. The
Deputy Minister further ruled that the non-existence of an
employer-employee relationship between the parties is bolstered
by the fact that respondent ALU is not an entity for profit but a
duly registered labor union whose sole purpose is the
representation of its bona fide organization units where it is
certified as such.
In this petition, the petitioner contends that the
respondent Deputy minister committed grave abuse of discretion
in holding that there was no employer-employee relationship
between him and the respondent union so much so that he is not
entitled to the benefits that he is praying for.
We agree with the petitioner.
There is nothing in the records which support the Deputy
minister's conclusion that the petitioner is not an employee of
respondent ALU. The mere fact that the respondent is a labor
union does not mean that it cannot be considered an employer of
the persons who work for it. Much less should it be exempted
from the very labor laws which it espouses as labor organization.
In case of es v. Brotherhood Labor Unity Movement in the
Phillipines Zamora, ,(147 SCRA 49, 54), we outlined the factors
in ascertaining an employer-employee realtionship:
In determining the existence of an employer-employee
relationship, the elements that are generally considered are the
following : (a) the selection and engagement of the employee; (b)
the payment of wages; (c) the power of dismissal; and (d) the
employer's power to control the employee with respect to the
means and methods by which the work is to be accomplished. It is
the so-called 'control test' that is the most important element
(Investment Planning Corp. of the Phils. v. The Social Security
System, 21 SCRA 492; Mafinco Trading Corp. v.
Ople, supra, and Rosario Brothers, Inc. v. Ople, 131 SCRA 72)
In the case at bar, the Regional director correctly found
that the petitioner was an employee of the respondent union as
reflected in the latter's individual payroll sheets and shown by the
petitioner's membership with the Social Security System (SSS)
and the respondent union's share of remittances in the petitioner's
favor. Even more significant, is the respondent union's act of
filing a clearance application with the MOL to terminate the
petitioner's services. Bautista was selected and hired by the
Union. He was paid wages by the Union. ALU had the power to
dismiss him as indeed it dismissed him. And definitely, the Union
tightly controlled the work of Bautista as one of its organizers.
There is absolutely no factual or legal basis got deputy Minister
Inciong's decision.
We are, thus, constrained to reverse the findings of the
respondent Deputy Minister. However, the records show that
antipathy and antagonism between the petitioner and the
respondent union militate against the former's reinstatement. ALU
would not want to have a union organizer whom it does not trust
and who could sabotage its efforts to unionize commercial and
industrial establishments. Severance pay, therefore, is more
proper in order. As we have ruled in the case of Asiaworld
Publishing House, Inc. v. Hon. Blas Ople, et al., (G.R. No. 56398,
July 23, 1987) quoting the cast of Balaquezon EWTU v.
Zamora, (97 SCRA 5,8):
It should be underscored that the backwages are being
awarded on the basis of equity or in the nature of severance pay.
This means that a monetary award is to be paid to the employees
as an alternative to reinstatement which can no longer be effected
in view of the long passage of time or because of the realities of
the situation. (Emphasis supplied)
WHEREFORE, the petition is hereby GRANTED and
the decision of the respondent Deputy Minister is ANNULLED
and SET ASIDE. The Order of Regional Director Francisco L.
Estrella is REINSTATED and ordered executed but instead of
returning the petitioner to his former position, the private
respondent is ordered to pay him an amount equal to his
backwages for only three years and the separation pay to which
he may be entitled as of the end of the three year period under the
applicable law or collective bargaining agreement.
SO ORDERED.
G.R. No. L-26461 November 27, 1968
ASSOCIATED LABOR UNION, petitioner,
vs.
JUDGE JOSE C. BORROMEO and ANTONIO LUA doing
business under the name CEBU HOME & INDUSTRIAL
SUPPLY, respondents.
Seno, Mendoza, Ruiz and Associates for petitioner.
Diores and Escareal Law Office for respondents.
CONCEPCION, C.J.:
Original action for certiorari and prohibition, with preliminary
injunction, to annul writs of preliminary injunction issued in Case
No. R-9414 of the Court of First Instance of Cebu, entitled "Cebu
Home and Industrial Supply and Antonio Lua vs. Associated
Labor Union", and to restrain the Honorable Jose C. Borromeo, as
Judge of that Court, from hearing said case.
Petitioner herein, Associated Labor Union — hereinafter referred
to as ALU — is a duly registered labor organization. Among the
members thereof are employees of Superior Gas and Equipment
Company of Cebu, Inc. hereinafter referred to as SUGECO — a
domestic corporation with offices at Juan Luna Street, Cebu City
and a factory plant in Basak, Mandaue, province of Cebu. On
January 1, 1965, ALU and SUGECO entered into a collective
bargaining contract, effective up to January 1, 1966. Negotiations
for the renewal of the contract between ALU and SUGECO were
begun prior to the date last mentioned. While said negotiations
were going on, late in February, 1966, twelve (12) SUGECO
employees resigned from ALU. Thereupon, the negotiations
stopped. On March 1, 1966, ALU wrote SUGECO requesting that
the twelve (12) resigned employees be not allowed to report for
work unless they produced a clearance from ALU;1 but this
request was immediately rejected by SUGECO, upon the ground
that it would cause irreparable injury, that the bargaining contract
had lapsed already, and that SUGECO could no longer demand
said clearance from its employees. SUGECO intimated, however,
that, should the twelve (12) men rejoin ALU, negotiations "for the
renewal of the collective bargaining contract" could be resumed.
On the same date, ALU wrote SUGECO charging that the latter
was bargaining in bad faith and that its supervisors had
campaigned for the resignation of ALU members, as well as
serving notice that, unless these unfair labor practice acts were
stopped immediately and a collective bargaining contract between
SUGECO and ALU forthwith entered into, the latter would
declare a strike and establish the corresponding picket lines "in
any place where your business may be found." Counsel for
SUGECO replied to the ALU, on March 3, 1966, stating that,
with the resignation of the aforementioned ALU members, ALU
no longer represented the majority of the SUGECO employees for
purposes of negotiation and recognition.
On March 4, 1966, ALU struck and picketed the SUGECO plant
in Mandaue. The next day, March 5, SUGECO commenced Civil
Case No. R-9221 of the Court of First Instance of Cebu, against
ALU, to restrain the same from picketing said plant and the
SUGECO offices at Cebu City and elsewhere in the Philippines.
Forthwith, the Honorable Amador E. Gomez, as Judge of the
Court of First Instance of Cebu, Branch II, caused to be issued, ex
parte, the writ of preliminary injunction prayed for by SUGECO.
On the same date,2 ALU preferred, in the Court of Industrial
Relations — hereinafter referred to as CIR unfair labor practice
charges against SUGECO, its general manager, Concepcion Y.
Lua — hereinafter referred to as Mrs. Lua — and its two (2)
supervisors, alleging, inter alia, that these respondents had
coerced and exerted pressure upon the aforementioned ALU
members to resign, as they did resign from ALU, and that their
resignations were seized upon by SUGECO to refuse further
negotiations with ALU. On April 29, 1966, an acting prosecutor
of the CIR filed therein against SUGECO the corresponding
complaint for unfair labor practice.3
Meanwhile, ALU had moved for a reconsideration of the order of
Judge Gomez, dated March 5, 1966, sanctioning the issuance of
the writ of preliminary injunction against ALU. This motion was
later denied by Judge Jose C. Borromeo, who presided Branch IV
of the Court of First Instance of Cebu.4 Hence, on May 9, 1966,
ALU instituted Case No. L-25999 of the Supreme Court, for
certiorari and prohibition, with preliminary injunction, against
Judges Gomez and Borromeo and the SUGECO, and prayed
therein that the CFI of Cebu be declared without jurisdiction over
the subject-matter of said Case No. R-9221; that the writ of
preliminary injunction therein issued be annulled; that Judges
Gomez and Borromeo be directed to dismiss said case; and that,
meanwhile, they be ordered to desist from further proceedings in
said case, and from enforcing the writ aforementioned. On May
16, 1966, we issued the writ of preliminary injunction sought by
ALU in L-25999. Subsequently, or on February 9, 1967, we
rendered judgment therein in favor of ALU, annulling the writ of
preliminary injunction issued in said Case No. R-9221, on March
5, 1966, directing respondent Judges to dismiss the same, and
declaring permanent the writ of preliminary injunction issued by
us on May 16, 1966.
Soon after the issuance of the latter writ, ALU resumed the
picketing of the SUGECO plant in Mandaue. Moreover, it began
to picket the house of Mrs. Lua, SUGECO's general manager, and
her husband Antonio Lua — hereinafter referred to as Mr. Lua —
at Abellana Street, Cebu City, and the store of the Cebu Home
and Industrial Supply — hereinafter referred to as Cebu Home —
at Gonzalez Street, Cebu City. The Cebu Home, which belongs to
and is managed by Mr. Lua, deals in general merchandise, among
which are oxygen, acetylene and cooking gas produced by
SUGECO. On June 21, 1966, Cebu Home and Mr. Lua —
hereinafter referred to as respondents — filed a complaint,
docketed as Civil Case No. 9414 of the CFI of Cebu, against
ALU, to restrain the latter from picketing the store and residence
aforementioned and to recover damages. Thereupon, Judge
Borromeo issued an order requiring the ALU to show cause why
the writ sought should not be issued. In a memorandum filed on
June 25, 1966 and a motion to dismiss dated June 29, 1966, the
ALU assailed the Court's jurisdiction to hear the case upon the
ground that it had grown out of a labor dispute. This,
notwithstanding, on June 30, 1966, Judge Borromeo issued an
order the dispositive part of which reads:
WHEREFORE, upon filing of a bond by the petitioners5 in the
amount of P3,000.00 to answer for damages which the
respondent6 may be entitled, let a writ of preliminary injunction
be issued, restraining the respondent, its officers, employees,
agents or persons acting in its behalf:
1) From picketing the office of the Cebu Home and Industrial
Supply in Gonzales Street, Cebu City and the residence of the
petitioner Antonio Lua in Abellana Street, Cebu City;
2) From preventing the employees of the petitioners from entering
inside or going out the office of the Cebu Home and Industrial
Supply and the residence of the petitioner Antonio Lua;
3) From stopping the car, truck or other vehicles entering or going
out the office of Cebu Home and Industrial Supply and the
residence of Antonio Lua;
4) From preventing the sale and distribution by the petitioners of
its merchandise in connection with its business; and
5) From performing acts which cause disturbance of the
tranquility and privacy of the petitioner and his family.
On July 4, 1966, respondents herein moved to amend the
foregoing order so as to broaden its scope. Upon the other hand,
on July 6, 1966, ALU sought a reconsideration of said order and
the lifting of the writ of preliminary injunction issued on June 30,
1966. Acting upon a motion to amend of respondents herein,
Judge Borromeo issued, on July 22, 1966, another order, from
which we quote:
Considering the evidence presented and the facts stated in the
previous order of the Court, it is believed that the petition is
justified and that the acts complained of, if not restrained, will
render the writ of preliminary injunction ineffective.
WHEREFORE, in connection with the writ of preliminary
injunction which was previously issued, the respondent union, its
members, agents or persons acting in its behalf are hereby
restrained:
a) From preventing the petitioners, their employees or
representatives from unloading their merchandise and other
supplies coming from Manila or other places and from hauling
them from the waterfront for the purpose of delivering them to the
place of the petitioners;
b) From preventing the petitioners or their representatives from
delivering and loading their empty tanks and other supplies to the
boat or other means of transportation for Manila or other places;
and
c) From preventing, obstructing or molesting the petitioners, their
employees or representatives from performing acts in connection
with their business.
On July 25, 1966, Judge Borromeo denied ALU's motion to
dismiss Case No. R-9414 and to reconsider his order and dissolve
the writ of preliminary injunction of June 30, 1966. Thereupon, or
on August 26, 1966, ALU commenced the present action
for certiorari and prohibition with preliminary injunction, to
annul the writs of preliminary injunction issued, on June 30 and
July 22, 1966, in Case No. R-9414 and to restrain the lower court
from hearing the same.
ALU maintains that the lower Court has no jurisdiction over Case
No. R-9414 because it had grown out of a labor dispute, is
intimately connected with an unfair labor practice case pending
before the CIR and involves a strike the injunction against which
had already been lifted by the Supreme Court in G.R. No. L-
25999.7 Moreover, ALU claims that even if the lower court had
jurisdiction over Case No. R-9414, the writs of preliminary
injunction issued therein are null and void, not only because of
said lack of jurisdiction, but, also, because it failed to observe the
requirements of Sec. 9(f) of Republic Act No. 875, as well as the
provisions of Sec. 9 (d) (5) of the same Act, requiring findings of
facts on matters enumerated therein.
Upon the other hand, respondents argue that the issue in the lower
court does not fall within the jurisdiction of the CIR, there being
no employer-employee relationship and "no labor dispute"
between the ALU members and Cebu Home; and that, at any rate,
the SUGECO products distributed and sold by Cebu Home, came,
not from the SUGECO plant in Mandaue, but from other parts of
the Philippines. Respondents further deny that the residence of
Mr. Lua was being used as a place to store and refill SUGECO
gas for resale.
Respondents' pretense is untenable. To begin with, Section 5 (a)
of Republic Act No. 8758 vests in the Court of Industrial
Relations exclusive jurisdiction over the prevention of any unfair
labor practice. Moreover, for an issue "concerning terms, tenure
or conditions of employment, or concerning the association or
representation of persons in negotiating, fixing, maintaining,
changing, or seeking to arrange terms or conditions of
employment" to partake of the nature of a "labor dispute", it is not
necessary that "the disputants stand in the proximate relation of
employer and employee."9
Then, again, in order to apply the provisions of Sec. 9 of Republic
Act No. 875, governing the conditions under which "any
restraining order" or "temporary or permanent injunction" may
issue in any "case involving or growing out of a labor dispute", it
is not indispensable that the persons involved in the case be
"employees of the same employer", although this is the usual
case. Sec. 9,10 likewise, governs cases involving persons: 1)
"who are engaged in the same industry, trade, craft, or
occupation"; or 2) "who ... have direct or indirect interests
therein", or 3) "who are members of the same or an affiliated
organization of employers or employees"; or 4) "when the case
involves any conflicting or competing interests in a "labor
dispute" (as hereinbefore defined) or "persons participating or
interested" therein (as hereinafter defined)". Furthermore, "a
person or association shall be held to be a person participating or
interested in a labor dispute if relief is sought against him or it"
and "he or it is engaged in the same industry, trade, craft, or
occupation in which such dispute occurs, or has a direct or
indirect interest therein, or is a member, officer, or agent of any
association composed in whole or in part of employees or
employers engaged in such industry, trade, craft, or occupation." 11
Now, then, there is no dispute regarding the existence of a labor
dispute between the ALU and SUGECO-Cebu; that SUGECO's
general manager, Mrs. Lua, is the wife of the owner and manager
of Cebu Home, Antonio Lua; and that Cebu Home is engaged in
the marketing of SUGECO products. It is, likewise, clear that as
managing member of the conjugal partnership between him and
his wife, Mr. Lua has an interest in the management by Mrs. Lua
of the business of SUGECO and in the success or failure of her
controversy with the ALU, considering that the result thereof may
affect the condition of said conjugal partnership. Similarly, as a
distributor of SUGECO products, the Cebu Home has, at least, an
indirect interest in the labor dispute between SUGECO and the
ALU and in Case No. R-9221. In other words, respondents herein
have an indirect interest in said labor dispute, for which reason,
we find that Section 9 of Republic Act No. 875 squarely applies
to Case No. R-9414.
Thus, in Goldfinger v. Feintuch,12 it was held:
Within the limits of peaceful picketing, however, picketing may
be carried on not only against the manufacturer but against a non-
union product sold by one in unity of interest with the
manufacturer who is in the same business for profit. Where a
manufacturer pays less than union wages, both it and the retailers
who sell its products are in a position to undersell competitors
who pay the higher scale, and this may result in unfair reduction
of the wages of union members. Concededly the defendant union
would be entitled to picket peacefully the plant of the
manufacturer. Where the manufacturer disposes of the product
through retailers in unity of interest with it,13 unless the union
may follow the product to the place where it is sold and
peacefully ask the public to refrain from purchasing it, the union
would be deprived of a fair and proper means of bringing its plea
to the attention of the public.
Besides, the ALU introduced evidence to the effect that the
SUGECO products had been brought to Cebu Home and were
being distributed in the latter, as a means to circumvent, defeat or
minimize the adverse effects of the picketing conducted in the
SUGECO plant and offices in Mandaue and Cebu City
respectively by ALU. It is true that respondents averred that said
products were purchased by Cebu Home before the strike was
declared against SUGECO and that some of said products were
obtained from SUGECO in other parts of the country; but, even if
true, these circumstances did not place the picketing of the Cebu
Home beyond the pale of the aforesaid Section 9 of Republic Act
No. 875 because, as distributor of SUGECO products, Cebu
Home was engaged in the same trade as SUGECO. Neither does
the claim that some SUGECO products marketed by Cebu Home
had come, not from the Mandaue plant, but from other parts of the
Philippines, detract from the applicability of said provisions,
considering that ALU had struck against SUGECO and had
announced, as early as March 1, 1966 — or three (3) days before
it struck — its intent to picket "any place where your business
may be found" and that SUGECO in Cebu is a sister company of
SUGECO elsewhere in the Philippines.
For, a similar reason, in American Brake Shoe Co. v. District
Lodge 9 of International Association of Machinists,14the Supreme
Court of Pennsylvania ruled:
Where corporate employer had separate plants in Missouri and
Pennsylvania, and labor dispute existed at Missouri plant, but not
at the Pennsylvania plant, peaceful picketing at Pennsylvania
plant by members of union representing employees
at Missouri plant was not an unfair labor practice as defined by
Labor Management Relations Act....15
In the language of the American Jurisprudence: 16
It seems now generally agreed that a state cannot either by its
common law or by statute prohibit the peaceful picketing of a
place of business solely on the ground that the picketing is carried
on by persons not employed therein. The United States Supreme
Court has held that the constitutional guaranty of free speech is
infringed by the judicial policy of a state to forbid peaceful
picketing on the ground that it is being conducted by strangers to
the employer affected, that is, by persons not in the relation of
employer and employee with him. Rules limiting picketing to the
occasion of a labor dispute are not offended by the act of a union
having a grievance against a manufacturer in picketing a retail
establishment in which its products are sold when there is a unity
of interest between the manufacturer and the retailer; this is true
even when the shopkeeper is the sole person required to run his
business. And the right of employees on strike at one plant of an
employer to picket another plant of the same employer has been
upheld even though some of the employees of the picketed plant
as a result refused to work despite a no-strike agreement. Also, a
union may picket a retail store selling goods made in
a nonunion factory between which and the union there is an
industrial dispute, provided there is a unity of interest between the
retailer and the manufacturer.17
Apart from the foregoing, it will be recalled that, prior to the
expiration of the collective bargaining contract between ALU and
SUGECO, on January 1, 1966, negotiations had started for the
renewal of said contract; that during said negotiations, late in
February 1966, twelve (12) SUGECO employees resigned from
ALU, owing — according to charges preferred by ALU and
confirmed by a complaint filed by a CIR prosecutor — to unfair
labor practices allegedly committed by SUGECO and its
supervisors who, it was also claimed, had induced and coerced
said employees to quit the ALU, which they did; that, thereupon,
SUGECO stopped negotiating with ALU alleging that, with the
resignation of said twelve (12) members, ALU no longer
represented a majority of the SUGECO employees; that on March
4, 1966, ALU declared a strike and picketed the SUGECO plant
in Mandaue; that the next day, SUGECO filed Case No. R-9221
of the CFI of Cebu, which forthwith issued a writ of preliminary
injunction restraining ALU from picketing, not only the plant,
but, also, the SUGECO offices elsewhere in the Philippines; that
said injunction was dissolved by the Supreme Court on May 16,
1966;18 and that the premises of respondents herein were not
picketed until after our injunction was enforced, subsequently to
May 16, 1966.

This factual background reveals that, from sometime before

January 1, 1966 — when negotiations for the renewal of the
collective bargaining agreement between SUGECO and ALU
were begun — to sometime after May 16, 1966,19or, at least, from
late in February 1966 — when the aforementioned unfair labor
practices were allegedly committed by SUGECO — to sometime
before June 21, 1966,20 there was ample opportunity to store
SUGECO products in respondents' premises. There was,
therefore, reasonable ground for the ALU to believe or suspect
that SUGECO was using said premises to circumvent and blunt
the ALU strike and picketing in the SUGECO plant in Mandaue
or to defeat or offset the adverse effects of both.

Respondent Judge seemed to be of the opinion that, for the

subject-matter of Case No. 9414 to be within the exclusive
jurisdiction of the CIR, it was necessary to establish, as a fact, the
truth of ALU's contention that respondents' premises were being
used as an outlet for SUGECO products.

Such view suffers from a basic flaw. It overlooks the fact that the
jurisdiction of a court or quasi-judicial or administrative organ is
determined by the issues raised by the parties, not by their success
or failure in proving the allegations in their respective
pleadings.21 Said view would require the reception of proof, as a
condition precedent to the assumption of jurisdiction, when
precisely jurisdiction must exist before evidence can be taken,
since the authority to receive it is in itself an exercise of
jurisdiction. Moreover, it fails to consider that, to affect the
jurisdiction of said court, or organ, the main requirement is that
the issue raised be a genuine one. In other words, the question
posed must be one that is material to the right of action or which
could affect the result of the dispute or controversy.22 Such is,
manifestly, the nature of ALU's contention in the lower court,
which should have, accordingly, granted the motion to dismiss
and lifted the writs of preliminary injunction complained of.

Finally, respondents herein have not alleged, let alone proved,

that the conditions enumerated in Section 9 (d) of Republic Act
No. 875,23 as a prerequisite to an injunction in labor disputes,
have been complied with. Such failure is, as has been repeatedly
held24 fatal to the validity of said injunction.

WHEREFORE, the orders of respondent Judge dated June 30,

and July 22, 1966 and the writs of preliminary injunction issued
in accordance therewith are hereby declared null and void ab
initio, with costs against respondents herein, the Cebu Home and
Industrial Supply and Antonio Lua. It is so ordered.

Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro,

Fernando and Capistrano, JJ., concur.
 G.R. No. 85343 June 28, 1989
PHILTRANCO SERVICE
ENTERPRISES, petitioner,
vs.
BUREAU OF LABOR RELATIONS and KAPISANAN NG
MGA KAWANI, ASSISTANT, MANGGAGAWA AT
KONPIDENSIYAL SA PHILTRANCO, respondents.
Bengzon, Zarraga, Narciso, Cudala, Pecson & Bengson
for petitioner.
Lily S. Dayaon for KASAMA KO .
GUTIERREZ, JR., J.:
In this petition for certiorari, the petitioner assails the
order of the Bureau of Labor Relations (BLR) dated September 5,
1988. The dispositive portion of the order reads:
WHEREFORE, premises considered, the Order of the
Med-Arbiter dated 4 April 1988 is hereby set aside and vacated
and a new one entered ordering the conduct of a certification
election among regular rank-and-file professional, technical,
administrative and confidential employees of respondent
company, with the following choices:
1. Kapisanan ng mga Kawani, Assistant Manggagawa at
Konpidensyal sa Philtranco (KASAMA KO)
2. No Union.
Let, therefore the records of the case be remanded to the
Office of origin for the immediate conduct of the election.
SO ORDERED. (Rollo, p. 33)
The antecedent facts are as follows:
Petitioner Philtranco Service Enterprises, Inc. is a land
transportation company engaged in the business of carrying
passengers and freight. The company employees included field
workers consisting of drivers, conductors, coach drivers, coach
stewards and mechanics and office employees like clerks,
cashiers, programmers, telephone operators, etc.
On February 15, 1988, the Kapisanan ng mga Kawani,
Assistant, Manggagawa at Konpidensyal sa Philtranco
(KASAMA KO), a registered labor organization filed a petition
for certification election with the Department of Labor and
Employment, alleging among others that:
xxx xxx xxx
3. Petitioner desires to represent all professional,
technical, administrative, and confidential employees personnel of
respondent at its establishments in Luzon, Visayas and Mindanao
for purposes of collective bargaining;
4. The aforementioned employees were always expressly
excluded from participating in the certification election conducted
among the rank and file employees (drivers, conductors, coach
drivers, coach stewards, and mechanics) of respondent and are
excluded from the bargaining unit covered by the CBA between
respondent and its rank and file employees. In addition, there
exist substantial differences in the terms and conditions of
employment between the above-mentioned employees, hence, the
former are covered by another appropriate bargaining unit which
is separate and distinct from that of the rank and file employees of
respondent and; which has been recognized by the Bureau of
Labor Relations and upheld by the Honorable Supreme Court.
Attached hereto as Annex 'A' and Annex 'B' are copies of the
decision of the BLR and the Supreme Court in support thereof;
xxx xxx xxx
6. The petition is supported by the signatures of more
than twenty percent (20%) of all covered employees as provided
for by law and which shall be presented during the initial hearing;
xxx xxx xxx
8. There has been no Consent Election or Certification
Election held and conducted by this Honorable Office for the past
three (3) years prior to the filing of this petition in the bargaining
unit petitioner sought to represent, the last Certification Election
having been held last November 27, 1984. Attached hereto as
Annex "C" is a copy of the Order issued by this Honorable Office
relative to the result of the last certification election. (Rollo, pp. 4-
5)
On February 24, 1988, the National Mines and Allied
Workers Union (NAMAWU-MIF) filed a motion for intervention
alleging that it is the bargaining agent of the workers at Philtranco
and as such it has a substantial interest in the outcome of the
petition.
On February 26, 1988, Arbiter Paterno Adap called the
parties to a hearing. Philtranco and NAMAWU were ordered to
submit their respective position papers and KASAMA KO was
given the opportunity to submit a reply.
On April 4, 1988, a resolution was rendered with the
following dispositive portion:
WHEREFORE, in the light of the foregoing premises,
this petition is, as it is hereby ordered DISMISSED. If there are
still individual members of the herein petitioner eligible to join a
labor organization, it is hereby directed that all should be
included/incorporated in the existing bargaining unit.
Parties are further directed/enjoined to device a
mechanism for the implementation of the matter herein treated.
(Rollo, pp. 29-30)
KASAMA KO appealed to the Bureau of Labor
Relations (BLR) On September 5, 1988 the BLR reversed the
resolution of the Med-Arbiter. A motion for reconsideration was
denied in an order dated October 10, 1988.
As prayed for by the petitioner, a temporary restraining
order was issued by this Court on November 7, 1988 restraining
the BLR from enforcing and/or carrying out the decision dated
September 5, 1988 and the order dated October 10, 1988.
The Labor Code recognizes two (2) principal groups of
employees, namely, the managerial and the rank and file groups.
Thus, Art. 212 (k) of the Code provides:
xxx xxx xxx
(k) Managerial employee' is one who is vested with
powers or prerogatives to lay down and execute management
policies and/or to hire, transfer, suspend, lay-off, recall, discharge,
assign or discipline employees, or to effectively recommend such
managerial actions. All employees not falling within this
definition are considered rank and file employees for purposes of
this Book.
In implementation of the aforequoted provision of the
law, Section 11 of Rule II, Book V of the Omnibus Rules
implementing the Labor Code did away with existing supervisors'
unions classifying the members either as managerial or rank and
file employees depending on the work they perform. If they
discharge managerial functions, supervisors are prohibited from
forming or joining any labor organization. If they do not perform
managerial work, they may join the rank and file union and if
none exists, they may form one such rank and file organization.
This rule was emphasized in the case of Bulletin Publishing Corp.
v. Sanchez, (144 SCRA 628 [1986]).
It, therefore, follows that the members of the KASAMA
KO who are professional, technical, administrative and
confidential personnel of PHILTRANCO performing managerial
functions are not qualified to join, much less form a union. This
rationalizes the exclusion of managers and confidential
employees exercising managerial functions from the ambit of the
collective bargaining unit. As correctly observed by Med-Arbiter
Adap:
... managerial and confidential employees were expressly
excluded within the operational ambit of the bargaining unit for
the simple reason that under the law, managers are disqualified to
be members of a labor organization.
On the other hand, confidential workers were not
included because either they were performing managerial
functions and/or their duties and responsibilities were considered
or may be categorized as part and parcel of management as the
primary reason for their exclusion in the bargaining unit. The
other categorized employees were likewise not included because
parties have agreed on the fact that the aforementioned group of
workers are not qualified to join a labor organization at the time
the agreement was executed and that they were classified as
outside the parameter of the bargaining unit. (Rollo, pp. 28-29)
The respondents, on the other hand, aver that the
members of the respondent union are rank and file employees
qualified to form a union. In fact their status as rank and file
employees was allegedly recognized by this Court in the case of
Pantranco South Express, Inc. v. NAMAWU, (G.R. No. 67475,
July 30, 1984).
The reliance on the Pantranco South Express, Inc. case is
misplaced. The petition filed by Pantranco South Express Inc.
simply asked for a ruling that certain employees were performing
managerial functions. We denied the petition for lack of merit in a
minute resolution. There was absolutely no discussion on the
recognition of another separate rank and file union in addition to
the existing bargaining unit.
There is no conflict. The employees of Philtranco have
been appraised and their functions evaluated. Managers by any
name may not join the rank and file union. On the other hand,
those who are rank and file workers may join the existing
bargaining unit instead of organizing another bargaining unit and
compelling the employer to deal with it.
We are constrained to disallow the formation of another
union. There is no dispute that there exists a labor union in the
company, herein intervenor, the NAMAWU-MIF which is the
collective bargaining agent of the rank and file employees in
PHILTRANCO.
Article 2 of the Collective Bargaining Agreement
between PHILTRANCO and NAMAWU-MIF under the sub-title
Appropriate Bargaining Unit provides:
Section 1 -The appropriate bargaining unit covered by
this agreement consists of all regular rank- and file employees of
the company. Managerial, confidential, casuals, temporary,
probationary and contractual employees as well as trainees,
apprentices, security personnel and foreman are excluded from
the bargaining unit and therefore, not covered by this
AGREEMENT. The job description outside the bargaining unit
are enumerated in the list hereto attached as Annex '1' and made
an integral part hereof (Emphasis supplied; Rollo, p. 27)
We see no need for the formation of another union in
PHILTRANCO. The qualified members of the KASAMA KO
may join the NAMAWU-MIF if they want to be union members,
and to be consistent with the one-union, one-company policy of
the Department of Labor and Employment, and the laws it
enforces. As held in the case of General Rubber and Footwear
Corp. v. Bureau of Labor Relations (155 SCRA 283 [1987]):
... It has been the policy of the Bureau to encourage the
formation of an employer unit 'unless circumstances otherwise
require. The proliferation of unions in an employer unit is
discouraged as a matter of policy unless there are compelling
reasons which would deny a certain class of employees the right
to self-organization for purposes of collective bargaining. This
case does not fall squarely within the exception. (Emphasis
supplied).
There are no compelling reasons in this case such as a
denial to the KASAMA KO group of the right to join the certified
bargaining unit or substantial distinctions warranting the
recognition of a separate group of rank and file workers.
Precisely, NAMAWU-MIF intervened to make it clear it has no
objections to qualified rank and file workers joining its union.
It is natural in almost all fairly sized companies to have
groups of workers discharging different functions. No company
could possibly have all employees performing exactly the same
work. Variety of tasks is to be expected. It would not be in the
interest of sound labor-management relations if each group of
employees assigned to a specialized function or section would
decide to break away from their fellow-workers and form their
own separate bargaining unit. We cannot allow one unit for
typists and clerks, one unit for accountants, another unit for
messengers and drivers, and so on in needless profusion. Where
shall the line be drawn? The questioned decision of the public
respondent can only lead to confusion, discord and labor strife.
The respondents state that this case is an exception to the
general rule considering that substantial differences exist between
the office employees or professional, technical, administrative
and confidential employees vis-a-vis the field workers or drivers,
conductors and mechanics of the petitioner. Against this
contention, we find that the "substantial differences" in the terms
and conditions of employment between the private respondent's
members and the rest of the company's rank and file employees
are more imagined than real. We agree with the petitioner that the
differences alleged are not substantial or significant enough to
merit the formation of another union.
PHILTRANCO is a large bus company engaged in the
business of carrying passengers and freight, servicing Luzon,
Visayas and Mindanao. Certainly there is a commonality of
interest among filing clerks, dispatchers, drivers, typists, and field
men. They are all interested in the progress of their company and
in each worker sharing in the fruits of their endeavors equitably
and generously. Their functions mesh with one another. One
group needs the other in the same way that the company needs
them all. The drivers, mechanics and conductors are necessary for
the company but technical, administrative and office personnel
are also needed and equally important for the smooth operation of
the business. There may be differences as to the nature of their
individual assignments but the distinctions are not enough to
warrant the formation of separate unions. The private respondent
has not even shown that a separate bargaining unit would be
beneficial to the employees concerned. Office employees also
belong to the rank and file. There is an existing employer wide
unit in the company represented by NAMAWU-MIF. And as
earlier stated, the fact that NAMAWU-MIF moved to intervene in
the petition for certification election filed by KASAMA KO
negates the allegations that "substantial differences" exist
between the employees concerned. We find a commonality of
interest among them. There are no compelling reasons for the
formation of another union.
We quote with favor Med-Arbiter Adap's rationale, to
wit:
... It is against the policy of the Department of Labor to
dismember the already wide existing bargaining unit because of
its well established goal towards a single employer wide unit
which is more to the broader and greater benefit of the employees
working force.
The philosophy is to avoid fragmentation of the
bargaining unit so as to strengthen the employees bargaining
power with the management. To do otherwise, would be contrary,
inimical and repugnant to the objectives of a strong and dynamic
unionism. Let there be a unified whole rather than a divisive one,
let them speak as one in a clear resonant voice unmarred by
dissension towards progressive unionism. (Rollo, p. 29)
WHEREFORE, the decision of the Bureau of Labor
Relations, dated September 5, 1988 and the Order dated October
10, 1988 are hereby SET ASIDE. The resolution of the Med-
Arbiter dated April 4, 1988 is REINSTATED. The restraining
order issued by the Court on November 7, 1988 is made
permanent.
SO ORDERED.
 G.R. No. 75039 January 28, 1988
FRANKLIN BAKER COMPANY OF THE
PHILIPPINES, petitioner,
vs.
HONORABLE CRESENCIO B. TRAJANO, DIRECTOR OF
BUREAU OF LABOR RELATIONS, FRANKLIN BAKER
BROTHERHOOD ASSOCIATION (TECHNICAL AND
OFFICE EMPLOYEES)-ASSOCIATION OF TRADE
UNIONS (ATU), respondents.
PARAS, J.:
This is a petition for certiorari seeking the annulment of.
(a) the Order of Mediator-Arbiter Conchita J. Martinez of the
Ministry of Labor and Employment, Davao City, dated September
17, 1984 in LRD Case No. R-22 MED-ROXI-UR-28-84 entitled
"In Re: Petition for Certification Election Among the Office and
Technical Employees of Franklin Baker Company of the
Philippines, Davao Plant at Coronan, Sta. Cruz, Davao del Sur,
Franklin Baker Company of the Philippines, Davao Plant,
Employer, Franklin Baker Brotherhood Association (Technical
and Office Employees)-Association of Trade Unions (ATU),"
insofar as it includes the managerial employees (inspectors,
foremen and supervisors) in the certification election; (b) the
Order of April 7, 1986 of Director Cresencio B. Trajano, also of
the MOLE, dismissing the appeal of aforesaid Order of
September 17, 1985 for lack of merit; and (c) the Order of June 6,
1986 of said Director denying reconsideration of his Order of
April 7, 1986 and affirming the same in toto (Rollo, p. 90).
In brief, the undisputed facts of this case are as follows:
On April 23, 1984, private respondent Franklin Baker
Brotherhood Association-(ATU) filed a petition for certification
election among the office and technical employees of petitioner
company with the Ministry of Labor and Employment, Regional
Office No. XI, Davao City, docketed as LRD No. R-22, MED-
ROXI-UR-2884. Among other things, it alleges that Franklin
Baker Company of the Phils. Davao Plant, had in its employ
approximately ninety (90) regular technical and office employees,
which group is separate and distinct from the regular rank and file
employees and is excluded from the coverage of existing
Collective Bargaining Agreement.
Petitioner company did not object to the holding of such
an election but manifested that out of the ninety (90) employees
sought to be represented by the respondent union, seventy four
(74) are managerial employees while two (2) others are
confidential employees, hence, must be excluded from the
certification election and from the bargaining unit that may result
from such election (Rollo, p. 3).
Hearings were held and thereafter, the parties agreed to
file their respective memoranda. Likewise, petitioner filed a reply
to private respondent's Memorandum (Rollo, p. 4).
Subsequently, on September 17, 1984, Med-Arbiter
Conchita J. Martinez issued an order, the dispositive part of which
reads:
Accordingly, the petition is hereby granted and a
certification election among the office and technical employees of
Franklin Baker Company of the Philippines, Davao Plant is
ordered within twenty (20) days from receipt hereof. The choices
shall be the following:
1. Franklin Baker Brotherhood Association-(ATU)
2. No Union
The representation officer assigned shall call the parties
for a pre-election conference at least five (5) days before the date
of the election to thresh out the mechanics of the election, the
finalization of the list of voters, the posting of notices and other
relevant matters.
The company's latest payroll shall be the basis for
determining the office and technical workers qualified to vote.
SO ORDERED. (Rollo, pp. 47-48).
From the aforequoted order petitioner Company
appealed to the Bureau of Labor Relations, docketed as BLR Case
No. A-22884, praying that the appealed order be set aside and
another be issued declaring the seventy four (74) inspectors,
foremen and supervisors as managerial employees.
During the pendency of the appeal, sixty one (61) of the
employees involved, filed a Motion to Withdraw the petition for
certification election praying therein for their exclusion from the
Bargaining Unit and for a categorical declaration that they are
managerial employees, as they are performing managerial
functions (Rollo, p. 4).
On April 7, 1986, public respondent Bureau of Labor
Relations Cresencio B. Trajano issued a Resolution affirming the
order dated September 17, 1984, the dispositive part of which
reads:
WHEREFORE, the appealed Order dated September 17,
1985 is hereby affirmed and the appeal dismissed for lack of
merit. Let the certification election among the office and technical
employees of Franklin Baker Company of the Philippines proceed
without delay.
The latest payrolls of the company shall be used as basis
of determining the list of eligible voters. (Rollo, p. 77),
Petitioner company sought the reconsideration of the
aforequoted resolution but its motion was denied by Director
Cresencio B. Trajano in his order dated June 6, 1986, the
dispositive part of which reads:
WHEREFORE, the appeal of respondent company is,
dismissed for lack of merit and the Bureau's Resolution dated
April 1986 affirmed in toto.
Let, therefore, the pertinent papers of this case be
immediately forwarded to the Office of origin for the conduct of
the certification election. (Rollo, p. 90).
Hence, this petition.
In the resolution of July 30, 1986, the Second Division
of this Court without giving due course to the petition required
the respondents to file their comment (Rollo, p. 91). On August
28, 1986, public respondent filed its comment (Rollo, pp. 99 to
102). Likewise private respondent filed its comment on
September 5, 1986 (Rollo, pp. 104 to 107).
In the resolution of September 8, 1986, petitioner was
required to file its reply to public respondent's comment (Rollo, p.
119) which reply was filed on September 18, 1986 (Rollo, pp.
122-127).
On October 20, 1986, this Court resolved to give due
course to the petition and required the parties to file their
respective Memoranda (Rollo, p. 133). In compliance with said
resolution, petitioner and private respondent filed their
Memoranda on December 8, 1986 and December 29, 1986,
respectively (Rollo, pp. 183-187). On the other hand, public
respondent filed with this Court a manifestation (Rollo, p. 153) to
the effect that it is adopting as its memorandum its comment
dated August 18, 1986 (Rollo, p. 99) which manifestation was
noted by this Court in its resolution dated November 26, 1986
(Rollo, p. 155).
The lone assignment of error raised by petitioner states:
Public respondent acted with grave abuse of discretion
amounting to lack of jurisdiction when he ruled that the 76
employees subject of this petition are not managerial employees
(inspectors, foremen, supervisors and the like) and therefore, may
participate in the certification election among the office and
technical employees. Such ruling is contrary to jurisprudence and
to the factual evidence presented by petitioner which was not
rebutted by private respondent union and is therefore patently
baseless.
From this assigned error two questions are raised by
petitioner, namely: (1) whether or not subject employees are
managerial employees under the purview of the Labor Code and
its Implementing Rules; and (2) whether the Director of the
Bureau of Labor Relations acted with abuse of discretion in
affirming the order of Mediator-Arbiter Conchita J. Martinez.
There is no question that there are in the DAVAO Plant
of petitioner company approximately 90 regular technical and
office employees which form a unit, separate and distinct from
the regular rank and file employees and are excluded from the
coverage of existing Collective Bargaining Agreement; that said
group of employees organized themselves as Franklin Baker
Brotherhood Association (technical and office employees) and
affiliated with the local chapter of the Association of trade Unions
(ATU), a legitimate labor organization with Registration Permit
No. 8745 (Fed) LC and with office located at the 3rd Floor of
Antwell Bldg., Sta. Ana, Davao City; that petitioner company did
not object to the holding of such certification, but only sought the
exclusion of inspectors, foremen and supervisors, members of
Franklin Baker Brotherhood Association (technical and office
employees) numbering 76 from the certification election on the
ground that they are managerial employees.
A managerial employee is defined as one "who is vested
with powers or prerogatives to lay down and execute management
policies and/or to hire, transfer, suspend, lay-off, recall, discharge,
assign or discipline employees, or to effectively recommend such
managerial actions." (Reynolds Phil. Corp. v. Eslava, 137 SCRA
[1985], citing Section 212 (K), Labor Code.
Also pertinent thereto is Section 1 (M) of the
Implementing Rules and Regulations, which is practically a
restatement of the above provision of law.
To sustain its posture, that the inspectors, foreman and
supervisors numbering 76 are managerial employees, petitioner
painstakingly demonstrates that subject employees indeed
participate in the formulation and execution of company policies
and regulations as to the conduct of work in the plant, exercised
the power to hire, suspend or dismiss subordinate employees and
effectively recommend such action, by citing concrete cases,
among which are: (1) Mr. Ponciano Viola, a wet process
inspector, who while in the performance of his duty, found Mr.
Enrique Asuncion, a trimmer "forging", falsifying and simulating
a company time card (timesheet) resulting in payroll padding,
immediately recommended the dismissal of said erring employee,
resulting in the latter's discharge. (Employer's Memo, Rollo,
p.18); (2) Mr. Manuel Alipio, an opening inspector,
recommended for suspension Nut Operator Ephraim Dumayos
who was caught in the act of surreptitiously transferring to a co-
worker's bin some whole nuts which act constitutes a violation of
company policy; (3) Mr. Sofronio Abangan, a line inspector,
censured and thereafter recommended the suspension of Mr.
Romeo Fullante, for being remiss in the proper and accurate
counting of nuts; (4) Binleader Dionisio Agtang was required to
explain his inefficiency of Mr. Saturnino Bangkas, Bin Loading
Inspector; (5) for disobeying the orders of Bin Loading Inspector
Mauricio Lumanog's order, Macario Mante, Eduardo Adaptor,
Rodolfo Irene and George Rellanos were all recommended for
suspension which culminated in an investigation conducted by
Lumanog's higher bosses (Ibid., p. 20).
It has also been shown that subject employees have the
power to hire, as evidenced by the hiring of Rolando Asis, Roy
Layson, Arcadio Gaudicos and Felix Arciaga, upon the
recommendation of Opening Inspector Serafin Suelo, Processing
Inspector Leonardo Velez and Laureano C. Lim, Opening
Inspector (Ibid., p. 21).
It will be noted, however, that in the performance of
their duties and functions and in the exercise of their
recommendatory powers, subject employees may only
recommend, as the ultimate power to hire, fire or suspend as the
case may be, rests upon the plant personnel manager.
The test of "supervisory" or "managerial status" depends
on whether a person possesses authority to act in the interest of
his employer in the matter specified in Article 212 (k) of the
Labor Code and Section 1 (m) of its Implementing Rules and
whether such authority is not merely routinary or clerical in
nature, but requires the use of independent judgment. Thus, where
such recommendatory powers as in the case at bar, are subject to
evaluation, review and final action by the department heads and
other higher executives of the company, the same, although
present, are not effective and not an exercise of independent
judgment as required by law (National Warehousing Corp. v.
CIR, 7 SCRA 602-603 [1963]).
Furthermore, in line with the ruling of this Court, subject
employees are not managerial employees because as borne by the
records, they do not participate in policy making but are given
ready policies to execute and standard practices to observe, thus
having little freedom of action (National Waterworks and
Sewerage Authority v. NWSA Consolidated, L-18938, 11 SCRA
766 [1964]).
Petitioner's contention that the Director of the Bureau of
Labor Relations acted with abuse of discretion amounting to lack
of jurisdiction in holding that the 76 employees are not
managerial employees and must be included in the certification
election has no basis in fact and in law. Neither is its contention
that the use of the word's "and/or" categorically shows that
performance of the functions enumerated in the law qualifies an
employee as a managerial employee.
It is well settled that the findings of fact of the Ministry
of Labor and National Labor Relations Commission are entitled
to great respect, unless the findings of fact and the conclusions
made therefrom, are not supported by substantial evidence, or
when there is grave abuse of discretion committed by said public
official (Kapisanan ng Manggagawa sa Camara Shoes, 2nd Heirs
of Santos Camara, et al., 111 SCRA 477 [1982]; International
hardwood and Veneer Co. of the Philippines v. Leonardo, 117
SCRA 967 [1982]; Pan-Phil-Life, Inc. v. NLRC, 114 SCRA 866
[1982]; Pepsi-Cola Labor Union-BF LUTUPAS Local Chapter N-
896 v. NLRC, 114 SCRA 930 [1982]; Egyptair v. NLRC, 148
SCRA 125 [1987]; RJL Martinez Fishing Corp. v. NLRC, G.R.
Nos. 63550-51, 127 SCRA 455 [1984]; and Reyes v. Phil.
Duplicators, G.R. No. 54996, 109 SCRA 489 [1981]).
By "grave abuse of discretion" is meant, such capricious
and whimsical exercise of judgment as is equivalent to lack of
jurisdiction. The abuse of discretion must be grave as where the
power is exercised in an arbitrary or despotic manner by reason of
passion or personal hostility and must be so patent and gross as to
amount to an evasion of positive duty or to a virtual refusal to
perform the duty enjoined by or to act at all in contemplation of
law (G.R. No. 59880, George Arguelles [Hda. Emma Arguelles v.
Romeo Yang, etc.], September 11, 1987).
Moreover, this Court has ruled that findings of
administrative agencies which have acquired expertise, like the
Labor Ministry, are accorded respect and finality (Special Events
and Central Shipping Office Workers Union v. San Miguel Corp.,
122 SCRA 557 [1983] and that the remedy of certiorari does not
lie in the absence of any showing of abuse or misuse of power
properly vested in the Ministry of Labor and Employment (Buiser
v. Leogardo, Jr., 131 SCRA 151 [1984]).
After a careful review of the records, no plausible reason
could be found to disturb the findings of fact and the conclusions
of law of the Ministry of Labor.
Even if We regard the employees concerned as
"managerial employees," they can still join the union of the rank
and file employees. They cannot however form their own
exclusive union as "managerial employees" (Bulletin Publishing
Corporation v. Sanchez, 144 SCRA 628).
PREMISES CONSIDERED, the petition is
DISMISSED, and the assailed resolution and orders are
AFFIRMED.
SO ORDERED.
 G.R. No. 74425 October 7, 1986 adopted a charter therefor, calling themselves members of the
BULLETIN PUBLISHING CORPORATION, petitioner, "Bulletin Publishing Corporation Supervisors Union" or BSU. A
vs. petition for registration of BSU, was filed with the Ministry of
HON. AUGUSTO S. SANCHEZ, CRESENCIANO B. TRAJANO,
Labor and Employment. On March 26, 1986, Registration
PRIMITIVA C. BATERBONIA, ROLANDO G. OLALIA, ISIDRO
Certificate No. 10547-LC was issued. On March 31, 1986, a letter
S. MOLINA, EDUARDO C. MORALES, ZACARIAS F. FLORES,
JR., PEDRO M. GALLO, LORETO F. MIJARES, LUIS B.
was sent to the management of petitioner corporation by BSU
ILAGAN, ERNESTO O. VALDEZ, EUGENIO L. RIVERA, giving notice of the registration of the BSU and demanding its
BENJAMIN B. BERNAS, LORETO D. DE LOS REYES, recognition as the sole bargaining agent of all the supervisors in
BONIFACIO A. SOTELO, FE F. ARRE, FELIPE R. OLARTE, the company. BSU supervisors union, is, at present, an affiliate of
RAYMOND T. RIVERA, STEWART C. CACHO, DOMINADOR the National Federation of Labor Unions (NAFLU) and the
V. CURAY, FERNANDO S. LAZARO, ERNESTO L. BAUTISTA, Kilusang Mayo Union (KMU). BSU is alleged to be supported in
VICENTE O. ABANILLA, JOSE B. BERNAL, RAMIRO A. its strike move by the said groups. (Petition, p. 13, Rollo, p. 10).
NEBRES, ALCANTARA S. DE LA PAZ and LUIS F.
On April 8, 1986, a petition for direct certification was
GARCIA, respondents.
filed by the BSU as the bargaining representative of the
Guillermo S. Santos for petitioner.
supervisors. On April 12, 1986, a notice of strike by BSU was
Mildred Ramos for respondent Bulletin Publishing
filed with the Ministry of Labor due to certain acts allegedly
Corporation Supervisors Union.
performed by petitioner which BSU claims, in effect, to be union
Olalia, Dimapilis & Associates for private respondents.
busting and unfair labor practices. Refusing to recognize the
BSU, the Bulletin Publishing Corporation filed a petition dated
ALAMPAY, J.:
April 25, 1986, seeking cancellation of the registration of the
Petitioner Bulletin Publishing Corporation invokes the
BSU on the ground that Article 246 of the Labor Code and
equity jurisdiction of this Court in this case for certiorari,
Section 11 of Rule II, Book V of the Implementing Rules thereof,
prohibition, and for preliminary injunction, with a plea for the
prohibit supervisors from forming labor organizations.
issuance of an ex-parte restraining order prohibiting private
As the supervisors threatened to strike on May 12, 1986,
respondents from declaring a strike. The purpose of Petitioner is
following the expiration of the fifteen-day cooling-off period,
to prevent the private respondents, members of the Bulletin
petitioner was prompted to file a petition with the Ministry of
Publishing Corporation Supervisors Union (BSU), from staging a
Labor, urging therein that said office assume jurisdiction in the
strike against the said publishing company.
matter of the impending strike. When the Minister of Labor failed
Petitioner also prays that this Court declare null and void
to exercise his jurisdiction or act on the matter, petitioner then felt
Registration Certificate No. 10547 issued by the Ministry of
that the remedy it seeks should be sought from this Court
Labor and Employment to the aforestated Supervisors Union or
because, further resort to the Ministry of Labor may be construed
BSU.
as a tacit recognition by petitioner of the supervisors union (BSU)
The crux of the dispute in the present case is whether or
which would be inconsistent with petitioner's challenge to the
not supervisors in petitioner company may, for purposes of
assertion of BSU to exist as a legitimate labor union.
collective bargaining, form a union separate and distinct from the
Petitioner invokes the equity jurisdiction of this Court,
existing union organized by the rank-and-file employees of the
claiming that a strike by the BSU which it considers a bogus
same company.
union and whose registration and operation is challenged as
Petitioner corporation has been engaged in the business
against public policy and legal prohibitions, will cause untold
of newspaper and magazine publishing for over half a century. its
harm on herein petitioner which is engaged in publishing daily
current publications include the national daily "Bulletin Today"
periodicals.
(now Manila Daily Bulletin), the tabloid "Tempo", and a weekly
In accordance with our Resolution dated May 12, 1986,
magazine called "Panorama". The total number of the personnel
a hearing of petitioner's motion for preliminary injunction was
complement of the said firm (exclusive of the editorial staff,
scheduled for May 14, 1986, with a temporary restraining order
contract workers and casuals, etc.), constituting the rank-and-file
being then issued. This Court enjoined the private respondents
regular members, is said to be over three hundred persons. The
from proceeding with their contemplated strike. Respondents
supervisory employees number forty-eight. About three hundred
were likewise required to comment on the petition. The
employees belonging to the rank-and-file had previously formed
corresponding separate Comment of the public and private
the Bulletin Employees Union. This labor organization (BEU)
respondents were later timely submitted to the Court.
presently administers their current Collective Bargaining
Considering the allegations contained in the petition, the
Agreement which began on July 15, 1984 and remain effective up
issues raised, and the arguments adduced by the parties, the Court
to July 15, 1987. Ever since, there has been only one bargaining
resolves to give due course to the petition, and to consider the
unit in the petitioner company and this is the BEU - the union of
separate Comment of both private and public respondents as their
the rank-and-file employees. Supervisory employees were never
Answer to the petition.
included in said bargaining unit nor had they ever sought
In the light of the factual background of this case, We
inclusion in the said BEU labor union, much less registered any
are constrained to hold that the supervisory employees of
protest or challenged to their non-inclusion therein.
petitioner firm may not, under the law, form a supervisors union,
On March 12, 1986, 25 out of 48 supervisors in the
separate and distinct from the existing bargaining unit (BEU),
Bulletin Publishing Corporation formed a labor union and
composed of the rank-and-file employees of the Bulletin
Publishing Corporation. It is evident that most of the private
respondents are considered managerial employees. Also it is
distinctly stated in Section 11, Rule I I, of the Ommibus Rules
Implementing the Labor Code, that supervisory unions are
presently no longer recognized nor allowed to exist and operate as
such.
Article 246 of the Labor Code explicitly excludes
managerial employees from the right of self-organization, the
right to form, join and assist labor organizations. A perusal of the
job descriptions corresponding to the private respondents as
outlined in the petition, clearly reveals the private respondents to
be managers, purchasing officers, personnel officers, property
officers, supervisors, cashiers, heads of various sections and the
like. The nature of their duties gives rise to the irresistible
conclusion that most of the herein private respondents are
performing managerial functions (Petition, pp. 5-6; Rollo, pp. 6-
7). Their responsibilities inherently require the exercise' of
discretion and independent judgment as supervisors. They possess
the power and authority to lay down or exercise management
policies. Managerial employees are those vested with powers or
prerogatives to lay down and execute management policies and/or
to hire, transfer, suspend, lay-off, recall, discharge, assign or
discipline employees, or to effectively recommend such
managerial actions. All employees not falling within this
definition are considered rank-and file employees (Article 212
(k), Labor Code). We further find very plainly stressed in Section
11, Rule II, Book V of the Omnibus Rules implementing the same
Labor Code, that "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 ... 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 labor
organization and if none exists, to form or assist in the forming of
such rank-and-file organizations." (Emphasis supplied).
It is, therefore, evident that while mention is made of
supervisors unions with reference to those existing before the
enactment of the Labor Code, greater significance must attach to
the fact that under the present Labor Code all these supervisory
unions should, after the effectivity of the Labor Code on January
1, 1975, cease to operate and that the registration certificate of
any such supervisors union should even be deemed to be
automatically cancelled. It is also clear that such of those
supervisory employees who do not assume any managerial
function may join or assist an existing rank-and-file union or if
none exists, to join or assist in the formation of such rank-and-file
organization.
It follows as a logical conclusion that the members of the
Bulletin Supervisory Union, wholly composed of supervisors
employed by petitioner corporation, are not QUALIFIED to
organize a Labor Union of their own. Aside from this reason, is
the fact that there is already an existing legitimate labor union, the
BEU, which enjoys a current collective bargaining agreement
with the petitioner publishing company.
What is pointed out under the law, is that employees
who discharge managerial functions, as well as the supervisory
employees who do not yet fall within the definition of managerial
employees, are prohibited from organizing themselves into a
labor union constituted for the purpose of acting as a collective
bargaining unit. To sanction the recognition of the Supervisors
Union of private respondents, which paradoxically or
inadvertently received a registration certificate from the Ministry
of Labor, would be for this Court to accept and tolerate a manifest
violation of the Labor Code. The rationale for this inhibition has
been stated to be, because if these managerial employees would
belong to or be affiliated with a Union, the latter might not be
assured of their loyalty to the Union in view of evident conflict of
interests. The Union can also become company- dominated with
the presence of managerial employees in Union membership.
The submission of the private respondents that they do
not actually perform duties which are managerial in character is
untenable. Firstly, the status of respondents as "managerial
employees" is readily reflected by their long years of
acquiescence to their exclusion: (a) from the rank-and-file unit of
employees and from membership in the Bulletin Publishing
Corporation Employees Union; and (b) from their coverage in the
current and past Collective Bargaining Agreements.
Acquiescence by private respondents to a classification
and situation far different from the rank-and-file employees for a
long and unceasing period of time obviously indicates that their
exclusion from the rank-and-file union was upon their awareness
that their duties place them in a category different from those to
which the rank-and-file employees pertain. It is significant that
only 25 of the 48 employees who are said to be managers and/or
supervisors, belatedly insist in forming a new and separate union.
Petitioner surmises that the motivation behind this
belated move is possibly because private respondents herein are
apprehensive that they might be adversely affected by policies
which the new management of petitioner corporation introduced
to streamline its business operation and eliminates weaknesses in
the corporate structure affecting revenue and profitability.
Understandably, the purpose behind the formation of the Union
would be to gain leverage to pressure Management to desist from
the contemplated measures.
Private respondents are incorrect when they manifest in
their comment to the petition that they "could be appropriately
classified as supervisory employees and, therefore, are eligible to
organize their own union but are ineligible to join the union of
their subordinates", citing Adamson and Adamson versus CIR, L-
35120, January 31, 1984, 127 SCRA 268 (Private Respondents'
Comment to the Petition, p. 2, dated May 23, 1986, Rollo, p. 83).
The reference made by private respondents to said case
of Adamson and Adamson versus CIR (supra), and the
pronouncements made therein that "supervisory employees of an
employer cannot join any labor organization of employees under
their supervision but may validly form a separate organization of
their own" no longer can be invoked for the benefit of private
respondents. As aptly countered by the petitioner in its
manifestation dated June 2, 1986, submitted through its counsel:
2. Adamson & Adamson vs. CIR, 127 SCRA 268. In
quoting from this decision of this Honorable Court, private
respondents intentionally deleted the phrase "under the Industrial
Peace Act" obviously to mislead this Honorable Court into
believing that up to now supervisors still have the right to form
unions. This right has been disallowed, disauthorized and
discontinued under Article 246 of the New Labor Code and
Section 11, Rule II. Book Five of the Implementing Rules. (Rollo,
p. 106)
Indeed, the Industrial Peace Act or Republic Act 875,
referred to in said Adamson, et al. vs. CIR case, became effective
on January 17, 1953. It has, however, been superseded and
supplanted by the present Labor Code which took effect on
January 1, 1975. What should be applied now are the specific
provisi•ns of the Omnibus Rules Implementing the Labor Code
which have been already above-quoted (supra). In fact, no less
than the public respondents herein, represented by the present
Solicitor General, in this regard, even state in their Comment to
the Petition, the following:
The only issue determinative of the present controversy
is whether or not the supervisors in petitioner company may form
a union for purposes of collective bargaining separate and distinct
from that of the rank-and-file unit.
It is our submission that they may not. The New Labor
Code recognizes two principal groups of employees, namely,
managerial and the rank-and- file group. Thus, Art. 212 (k)
provides:
Managerial employee' is one who is vested with powers
or prerogatives to lay down and execute management policies
and/or to hire, transfer, suspend, lay-off, recall,, discharge, assign
or discipline employees, or to effectively recommend such
managerial actions. All employees not falling within this definition
are considered rank and file employees for purposes of this Book.
(Emphasis supplied)
In amplification of the aforequoted provisions of the law,
Sec. 11 of Rule II, Book V of the Omnibus Rules Implementing
the Labor Code did away with existing Supervisors Union,
classifying the members thereof as neither managerial or rank-
and-file employees depending on the work they perform. If they
discharge managerial functions they are prohibited from forming
or joining any labor organization. If they do not perform
managerial work, they may join or assist the rank- and-file union
and, if none exists, they may form one such rank-and-file
organization. From these, one can readily infer that the law no
longer recognizes supervisory Unions.
A perusal of the job descriptions of private respondents
as outlined in the petition shows that most of them do not perform
managerial work. Hence, although not qualified to organize a
labor union of their own, they may join the certified rank-and-file
organization in the Company, which has a current collective
bargaining agreement to expire on July 15, 1987.
On the query of this Honorable Court regarding the new
policy of the MOLE, if any, with respect to Supervisory
Unions, the BLR Director in his reply letter dated May 21, 1986
to our letter of May 14, 1986 (copy of said letter is hereto
attached as Annex "A") supports the view that under the Labor
Code and its implementing rules, supervisory unions cannot
organize as a labor unit separate from that of the rank-and-file
organization. (Emphasis supplied)
However, he points out that on a number of occasions,
the Bureau has allowed the registration of certain categories of
non-managerial employees which include supervisors who are not
performing managerial functions similar to that of the non-
managerial members of the Bulletin Publishing Corporation
Supervisors Union (BPCSU) At any rate, he states that "there is
as yet no decree, executive order or issuance, whether draft or in
force, which expressly modified the provision of the Labor Code
on supervisory unions. (Rollo, pp. 89-91)
The foregoing discussion of public respondents will
reflect and emphasize the lack of any legal basis of the
assumption made by private respondents that they may organize a
supervisory union of their own, distinct and separate from the
existing union of the rank-and-file employees of the Bulletin
Publishing Corporation.
In view of these premises, and considering the stand
taken no less by respondent director Cresenciano B. Trajano, in
his aforestated reply-letter to Assistant Solicitor General Amado
D. Aquino, dated May 21, 1986 (Rollo, pp. 93-' 95), as disclosed
to this Court, the petition for cancellation of Certificate No.
10547, issued on March 26, 1986 by the Ministry of Labor and
Employment, said to be still pending in that office, ought
therefore to be now acted upon thereat.
Finally, it is averred by petitioner that the resort to strike
by private respondents is untimely and premature because of the
pendency of a case with the Ministry of Labor docketed as NCR-
LRD-4-166-88 which private respondents themselves filed and
which is for direct certification of said supervisors union as the
bargaining representative of the supervisors. This assertion of
petitioner should be up held. Article 265, paragraph 2 of the
Labor Code expressly provides that "no stake or lock-out shall be
declared ... during the pendency of cases involving the same
grounds for the strike or lock-out." (Emphasis supplied).
Private respondents declare that the primary reasons
which prompted their filing of a notice of strike on April 8, 1986,
are the arbitrary and discriminatory retirement of four (4)
members of the supervisors union effective April 17, 1986,
namely: Jose B. Bernal, Ramiro A. Nebres, Alcantara S. de la Paz
and Luis F. Garcia, who were among those who initiated the
formation of their union; as well as the immediate promotion of
some members of the union to executive positions in order to
remove the said persons promoted from the coverage of, or
membership from the supervisory union. Private respondents
charge that these acts are tantamount to union busting tactics and
constitute unfair labor practices that warrant a strike.
Furthermore, private respondents claim that petitioner
does not have any definite policy governing the retirement
of supervisory employees as distinguished from rank-and-file
employees. Under the Collective Bargaining Agreement currently
in effect, rank-and- file employees may be retired upon reaching
25 years of service or 60 years of age, at the management's
option. It is claimed that this policy cannot or has never been
applied to supervisors who are not members of the rank-and-file
Bulletin Employees union.
We are not persuaded by private respondents'
submissions. The main issues in this case are the legality of a
supervisory union and the certificate of registration issued
therefor, and the validity of a threatened strike by members of
such union. The matter of the retirement of the four retirees is
only an incident to the case. It may not be used to skirt the real
question of the legality of the organization of a supervisors union.
Parenthetically, it is said that three out of the retirees, Messrs.
Garcia, de la Paz and Bernal collected their retirement benefits
(Rollo, p. 65), rendering the alleged ill-motives behind their
retirement untenable. This matter cannot be invoked by private
respondents herein as an indication of union busting practice of
petitioner, absent any showing of protest by the said retirees
themselves.
Respondents make much ado that petitioner does not
have a definite policy regarding the retirement of supervisory
employees. Petitioner has satisfactorily shown to this Court that it
has been management policy to likewise apply the provisions of
the Collective Bargaining Agreement (CBA) between petitioner
and the rank-and-file union (BEU), also to supervisors. According
to the uncontroverted submission of petitioner, the provisions of
Section 4 in relation to Section 1 of Article X of the said CBA,
have been repeatedly applied to supervisory personnel even if
they are not included in the scope of the CBA. The pertinent.
provisions on retirement are as follows:
Section 4. — The COMPANY, at its option retire an
employee or worker who has rendered 25 years of service or who
has reached the age of 60 years in his last birthday by paying him
full benefits provided in Section 1 of this Article.
Section 1. — Any employee in the active service of the
COMPANY as of the date of signing of this Agreement whose
service with the COMPANY is terminated for any reason other
than those enumerated in A article 283 of Presidential Decree
No. 442 as amended, shall be entitled to gratuity pay in an amount
equivalent to one month's pay for every year of continuous
service based on the salary as of the date of termination. Such
gratuity shall not be in addition to, but shall be in lieu of, the
termination pay benefits to which the employee or worker is
entitled under the Labor Code of the Philippines, or any similar
legislation, provided that if the benefits to which the employee or
worker may be entitled under such statute are greater than that
provided in the Article, the employee or worker shall receive the
greater amount. (Emphasis ours).
The aforestated sections explicitly declare, in no
uncertain terms, that retirement of an employee may be done
upon initiative and option of the management. And where there
are cases of voluntary retirement, the same is effective only upon
the approval of management. The fact that there are some
supervisory employees who have not yet been retired after 25
years with the company or have reached the age of sixty merely
confirms that it is the singular prerogative of management, at its
option, to retired supervisors or rank-and-file members when it
deems fit. There should be no unfair labor practice committed by
management if the retirement of private respondents were made
in accord with the agreed option. That there were numerous
instances wherein management exercised its option to retire
employees pursuant to the aforementioned provisions, appears to
be a fact which private respondents have not controverted. It
seems only now when the question of the legality of a supervisors
union has arisen that private respondents attempt to inject the
dubious theory that the private respondents are entitled to form a
union or go on strike because there is allegedly no retirement
policy provided for their benefit. As above noted, this assertion
does not appear to have any factual basis.
It is even more untenable for private respondents to
suggest that the "sudden promotion" of the supervisors union
members to executive positions was intended to remove them
from the coverage of or from membership in the supervisory
union. The promotion of employees to managerial or executive
positions rests upon the discretion of management. Managerial
positions are offices which can only be held by persons who have
the trust of the corporation and its officers. It is the prerogative of
management to promote any individual working within the
company to a higher position. It should not be inhibited or
prevented from doing so. A promotion which is manifestely
beneficial to an employee should not give rise to a gratuitous
speculation that such a promotion was made simply to deprive the
union of the membership of the promoted employee, who after all
appears to have accepted his promotion.
We find nothing improper in the promotions made by the
petitioner company. These were but in implementation of
petitioner's well-considered policy on retirement and promotions
intended to improve the morale of lower and middle management
ranks by promoting those specially deserving before they are
eventually retired. This then would allow subsequent promotions
of their replacements from lower ranks. As petitioner explains,
these retirements and promotions were but in accord with a
carefully studied and pre-established policy which had been
implemented during the past years and unrelated to and without
connection with the organization of private respondents' Union,
BSU.
In sum, where concerted activities are aimed at
compelling an employer to ignore the clear mandate of the Labor
Code, as in the instant case, grounds based on equity may be
invoked from the courts in order to restrain the questioned
activities. We cannot remain oblivious to the fact that a strike, as
that contemplated by the supervisors union against petitioner can
cause irreparable injury to its publications, diminish goodwill and
seriously affect its continuity with its regular readers.
Trade unionism and strikes are legitimate weapons of
labor granted by our statutes. But when these instruments are
utilized by managerial/supervisory employees in violation of
existing labor laws, the misuse of these tactics can be the subject
of judicial intervention to forestall grave injury to a business
enterprise.
WHEREFORE, the temporary restraining order issued
by this Court, dated May 12, 1986, enjoining the private
respondents from declaring or staging a strike against the
petitioner herein, in all its forms, including walk-out, mass leave,
or any kind of activity that will lead to a work stoppage, is hereby
made permanent. The public respondents are also directed to act
upon and resolve, at the earliest possible time and in the light of
the discussion and pronouncements made by the Court in this
case, the petition dated April 25, 1986, submitted by the petitioner
herein for the cancellation of Bulletin Publishing Corporation
Supervisors Union Registration Certificate No. 105-47-LC.
SO ORDERED.
 [G.R. No. L-10675. April 29, 1960.]

COMPAÑIA MARITIMA, Petitioner, v. ERNESTA CABAGNOT DECISION

VDA. DE HIO, for herself and as Guardian-ad-litem of her minor
children, DIONISIO, JR., ERNESTO, RAUL, and ESTER, all
surnamed HIO, and PABLO VELEZ WATCHMEN’S
AGENCY, Respondents. GUTIERREZ DAVID, J.:

Aurelio Quitoriano for Petitioner.

Appeal by certiorari from a decision of the Workmen’s
Ernesta Cabagnot Vda. de Hio for herself and in behalf of her minor Compensation Commission.
children.
The petitioner, Compañia Maritima, is a domestic corporation
Mendiola & Cruz for respondent Agency.
organized under Philippine laws for the purpose of engaging in
interisland trade, while the respondent Pablo Velez Special
Watchmen’s Agency is a single proprietorship owned and
SYLLABUS
operated by Mr. Pablo Velez, engaged in the business of
supplying watchmen and protective services to shipping
companies requesting such services. The watchmen supplied by
1. EMPLOYER AND EMPLOYEE; ABSENCE OF
the said agency are recruited from the Manila Bay Watchmen’s
WRITTEN CONTRACT OF EMPLOYMENT; OTHER BASES
Association, a duly registered labor organization with whom
OF EXISTENCE OF RELATIONSHIP. — Although there
Velez had a collective bargaining contract under which fifteen per
appears to be no written contract of employment, where it appears
cent (15%) of the total wages of the watchmen are collected by
that the shipping company owns the vessel where the deceased
the latter as commission. The members of the _Manila Bay
was assigned as gangwayman, and the salary of the deceased was
Watchmen’s Association compose the membership of the Pablo
paid directly from its funds, there was an employer-employee
Velez Watchmen’s Agency.
relationship between the company and the deceased.
On or about the later part of August, 1954, a strike was staged by
2. WORKMEN’S COMPENSATION; WHEN EMPLOYEE IS
the Marine Officer’s Guild and the petitioner contracted with the
EXCLUDED FROM TERM "LABORER" OR "EMPLOYEE" ;
Pablo Velez Special Watchmen’s Agency for the latter to give
MEANING OF CASUAL SERVICE. — It is clear from section
security to the officers of the said petitioner who did not join the
39 (b) of the Workmen’s Compensation Act that for an employee
strike. Among the members of the pablo Velez Watchmen’s
to be excluded from the term "laborer" or "employee" under the
Agency detailed with the company was the late Dionisio Hio. On
Act, his employment must be "purely casual and is not for the
September 4, 1954, the said Dionisio Hio was on a night shift
purpose of the occupation or business of the employer." And the
duty as gangwayman of the M/V BASILAN, a vessel owned by
casual service that the law speaks of must be construed,
petitioner. At about 8:30 o’clock in the evening of that same day,
interpreted and concluded by the circumstance of whether or not
the said Dionisio Hio and several others were picked on a jeep by
the aforesaid service is related with the occupation or business of
the Chief Engineer of the vessel in order to escort him to his
the employer.
home at Perla, Harrison, Pasay City. Upon their arrival at his
residence, the said engineer offered some drinks to the deceased
3. ID.; INTOXICATION AT TIME OF INJURY; CONFLICT IN
and the other watchmen who accompanied him home. After
TESTIMONY. — Where the testimony or evidence shows a
having several rounds of liquor, the watchmen left the engineer’s
conflict as to whether or not the deceased was intoxicated at the
house and they arrived at their respective posts at about 2:00 a.m.
time of the injury, it is not error to fail to find that the deceased
the following day, September 5. At about 6 o’clock that morning,
was intoxicated, for such ruling is necessarily included in a
the body of Dionisio Hio was found floating near the side of the
finding that the accident arose out of the employment.
M/V BASILAN along the gangway of which he was assigned for
duty.
4. ID.; ID.; DEGREE OF PROOF REQUIRED TO SUPPORT
DEFENSE OF INTOXICATION. — The defense of drunkenness
The deceased is survived by his wife Ernesta Cabagnot Hio and
in workmen’s compensation cases must be supported by clear and
three minor children all of whom were dependent on his wages at
convincing proof to the effect that such intoxication or
the time of his death.
drunkenness rendered the employee incapable of doing his work
so that he could not be said to be engaged in his employment. The
Upon a claim for compensation made by the widow, in her behalf,
accident or injury must be shown to have arisen out of his
and in behalf of her children, the Workmen’s Compensation
drunken condition and not out of the work.
Commission, finding that Dionisio Hio died of an accident that
occurred in the course of his employment, and declaring the
5. ID.; ID.; ID.; BURDEN OF PROOF ON EMPLOYER. — The
Compañia Maritima as employer thereof, ordered that company to
burden of establishing intoxication and that it caused the injury is
pay these survivors the sum of P4,000.00 as death compensation,
on the employer.
P200.00 as reimbursement for burial expenses and P41.00 as fees
required under section 55 of the Workmen’s Compensation Act,
as amended.
In this appeal, we are asked to rule on (1) whether or not the
deceased was an employee of the Compañia Maritima, entitled to
compensation under the Workmen’s Compensation Act; and (2)
whether or not the deceased was intoxicated while performing his
duty as watchman at the time of his death.
The petitioner claims that it never had any employer-employee
relationship with the deceased. The claim is without merit. While
it is true that no written employment contract between the
petitioner and the deceased was presented in evidence, it is not
disputed that the petitioner company owns the vessel where the
deceased was assigned as gangwayman, and it was found by the
Commission that the salary of the deceased was paid directly
from the funds of petitioner. From these circumstances, it would
appear that at the time of the accident the deceased was under
petitioner’s employ.
There is nothing to the contention that the deceased was but a
casual employee whose services were engaged only for the
duration of the strike and, therefore, not entitled to compensation.
The section of the law cited by the petitioner in support of this
contention reads:red:chanrobles.com.ph
"SEC. 39(b).’Laborer’ is used as a synonym of ‘employee’ and
means every person who has entered the employment of, or works
under a service or apprenticeship contract for an employer. It does
not include a person whose employment is purely casual and is
not for the purpose of the occupation or business of the employer.
. . . ."cralaw virtua1aw library
It is clear from the above that for an employee to be excluded
from the term "laborer" or "employee" under the Act, his
employment must be "purely casual and is not for the purpose of
the occupation or business of the employer." In a case (Cajes v.
Philippine Manufacturing Co., 40 Off. Gaz., p. 1251), where this
Court had occasion to interpret the above-quoted section, it was
held that the casual service that the law speaks of must be
construed, interpreted and concluded by the circumstance of
whether or not the aforesaid service is related with the occupation
or business of the employer. We have reason to believe that the
work of the deceased in the case at bar was in connection with the
business of petitioner. It has been shown that it was not only
during the strike that the Compañia Maritima needed the services
of watchmen. In fact, the petitioner admitted having its own
permanently employed watchmen doing the same duties as that of
the deceased. The duties referred to must be that of giving
security not only to the cargo of the vessel but also to the lives of
its officers and crew, and they are, undoubtedly, in connection
with the business of the petitioner. Without security, any shipping
company could not possibly go on with its maritime business.
In disclaiming liability, the petitioner further insists that the
deceased was intoxicated while performing his duty as
gangwayman in the early morning of September 5, 1954. The
Workmen’s Compensation Commission, however, upon
examination of the evidence on this point, noted serious
contradictions in the testimony of the witnesses. While one
witness for the Pablo Velez Watchmen’s Agency testified that
after the alleged drinking spree at the house of the Chief Engineer
of the M/V BASILAN the deceased together with his companions
proceeded to their respective posts at Pier 8, another witness
averred that they went to other night spots in Pasay City. On the
other hand, the testimony of the claimant widow that the deceased
never got drunk while on duty, and the autopsy report and
testimony of Dr. Cabreira of the Manila Police Department to the
effect that there were no indications of alcohol in the body of the
deceased would show that the deceased was not drunk at the time
of his death. There is authority to the effect that where the
testimony or evidence shows a conflict in the testimony as to
whether or not the deceased was intoxicated at the time of the
injury, it is not error to fail to find that the deceased was
intoxicated, for such ruling is necessarily included in a finding
that the accident arose out of the employment (Napoleon v.
McCulby Francisco, Vol. 2, p. 156). The defense of drunkenness
in workmen’s compensation cases must be support by clear and
convincing proof to the fact that such intoxication or drunkenness
rendered the employee in capable of doing his work so that he
could not be said to be engaged in his employment. The accident
or injury must be shown to have arisen out of his drunken
condition and not out of the work. No such evidence was adduced
in the present case.
It is worthy to note that the witnesses who testified on the alleged
drunkenness of the deceased were witnesses for the Pablo Velez
Watchmen’s Agency, and not for petitioner. The latter could have
presented as witness its Chief Engineer to bolster its defense of
drunkenness, but it failed to do so. It has been ruled that the
burden of establishing intoxication and that it caused the injury is
on the employer (Ruprecht v. Red Lumber Co., 2 Cal. Ind. Acc.
Comm. 860; 12 N.C.C.A. 79, cited in The Workmen’s
Compensation Law by Morabe and Inton, p. 115). Having failed
in this case to prove that the deceased died in a state of
drunkenness, the petitioner is not excused to the widow and
children of the deceased.
Wherefore, the decision appealed from is affirmed at petitioner’s
costs.
 G.R. No. 46739 September 23, 1939
PAMPANGA BUS COMPANY, INC., petitioner,
vs.
PAMBUSCO EMPLOYEES' UNION, INC, respondent.
L.D. Lockwood for petitioner.
Jose Alejandrino for respondent.
MORAN, J.:
On May 31, 1939, the Court of Industrial Relations
issued an order, directing the petitioner herein, Pampanga Bus
Company, Inc., to recruit from the respondent, Pambusco
Employees' Union, Inc., new employees or laborers it may need
to replace members of the union who may be dismissed from the
service of the company, with the proviso that, if the union fails to
provide employees possessing the necessary qualifications, the
company may employ any other persons it may desire. This order,
in substance and in effect, compels the company, against its will,
to employ preferentially, in its service, the members of the union.
We hold that the court has no authority to issue such
compulsory order. The general right to make a contract in relation
to one's business is an essential part of the liberty of the citizens
protected by the due-process clause of the Constitution. The right
of the laborer to sell his labor to such person as he may choose is,
in its essence, the same as the right of an employer to purchase
labor from any person whom it chooses. The employer and the
employee have thus an equality of right guaranteed by the
Constitution. "If the employer can compel the employee to work
against the latter's will, this is servitude. If the employee can
compel the employer to give him work against the employer's
will, this is oppression." (Mills vs. United States Printing Co., 99
App. Div., 605; 91 N.Y.S., 185, 189-192.)
Section of Commonwealth Act No. 213 confers upon
labor organizations the right "to collective bargaining with
employers for the purpose of seeking better working and living
conditions, fair wages, and shorter working hours for laborers,
and, in general, to promote the material, social and moral well-
being of their members." The term "collective bargaining"
denotes, in common usage as well as in legal terminology,
negotiations looking toward a collective agreement. This
provision in granting to labor unions merely the right of collective
bargaining, impliedly recognizes the employer's liberty to enter or
not into collective agreements with them. Indeed, we know of no
provision of the law compelling such agreements. Such a
fundamental curtailment of freedom, if ever intended by law upon
grounds of public policy, should be effected in a manner that is
beyond all possibility of doubt. The supreme mandates of the
Constitution should not be loosely brushed aside. As held by the
Supreme Court of the United States in Hitchman Coal &
Co. vs. Mitchell (245 U. S., 229; 62 Law. ed., 260, 276):
. . . Whatever may be the advantages of "collective
bargaining," it is not bargaining at all, in any just sense, unless it
is voluntary on both sides. The same liberty which enables men to
form unions, and through the union to enter into agreements with
employers willing to agree, entitles other men to remain
independent of the union, and other employers to agree with them
to employ no man who owes any allegiance or obligation to the
union. In the latter case, as in the former, the parties are entitled to
be protected by the law in the enjoyment of the benefits of any
unlawful agreements they make. This court repeatedly has held
that the employer is as free to make non-membership in a union a
condition or employment, as the working man is free to join the
union, and that this is a part of the constitutional rights of
personal liberty and private property, not to be taken away by
legislation, unless through some proper exercise of the paramount
police power. (Adair vs. United States, 208 U.S., 161, 174; 52
Law. ed., 436, 442; 28 Sup. Ct. Rep., 277; 13 Ann. Cas., 764;
Coppage vs. Kansas, 236 U.S., 1, 14; 59 Law. ed., 441, 446;
L.R.A., 1915C, 960; 35 Sup. Ct. Rep., 240.)
The freedom of contract guaranteed by the Constitution
may be limited by law through a proper exercise of the paramount
police power. Thus, in order to promote industrial peace, certain
limitations to the employer's right to select his employees or to
discharge them, are provided in section 21 of Commonwealth Act
No. 103 and section 5 of Commonwealth Act No. 213, which
reads as follows:
It shall be unlawful for any employer to discharge or to
threaten to discharge, or in any other manner discriminate against,
any laborer or employee because such person has testified or is
about to testify, or because such employer believes that he may
testify in any investigation, proceeding or public hearing
conducted by the Court or any board of inquiry. (Sec. 21,
Commonwealth Act No. 103.)
Any person or persons, landlord or landlords,
corporation or corporations or their agents, partnership or
partnerships of their agents, who intimidate or coerce any
employee or laborer or tenant under his or their employ, with the
intent of preventing such employee or laborer or tenant from
joining any registered legitimate labor organization of his own
choosing, or, who dismiss or threaten to dismiss such employee
or laborer or tenant from his employment for having joined, or for
being a member of, any registered legitimate labor organization,
shall be guilty of a felony and shall be punished by imprisonment
of not exceeding one year or a fine not exceeding one thousand
pesos, or both, at the discretion of the court. (Sec. 5,
Commonwealth Act No. 213.)
These two provisions were, however, patterned after the
Wagner Act, and the Supreme Court of the United States, in the
case of National Labor Relations Board vs. Jones & Laughlin
Steel Corporation (301 U.S., 1; 81 Law. ed., 893, 916), said:
The Act (Wagner Act) does not compel agreements
between employers and employees. It does not compel any
agreement whatever. It does not prevent employer 'from refusing
to make a collective contract and hiring individuals on whatever
terms' the employer "may be unilateral action determine." The
Act expressly provides in sec. 9 (a) that any individual employee
or a group of employees shall have the right at any time to present
grievances to their employer. The theory of the Act is that free
opportunity for negotiation with accredited representatives of
employees is likely to promote industrial peace and may bring
about the adjustments and agreements which the Act in itself does
not attempt to compel. As we said in Texas & N.O.R.
Co. vs.Brotherhood of R. & S.S. Clerks (281 U.S., 548; 74 Law.
ed., 1034; 50 S. Ct., 427, supra), and repeated in Virginian R.
Co. vs. System Federation, R. E. D. (300 U. S., 515, ante, 789; 57
S. Ct., 592), the cases of Adair vs. United States (208 U.S., 161;
52 Law. ed., 436; 28 S. Ct., 277; 13 Ann. Cas., 764), and
Coppage vs.Kansas (236 U.S., 1; 59 Law. ed., 441; 35 S. Ct., 240;
L.R.A. 1915C, 960), are inapplicable to legislation of this
character. The Act does not interfere with the normal exercise of
the right of the employer to select its employees or to discharge
them. The employer may not, under cover of that right, intimidate
or coerce its employees with respect to their self-organization and
representation, and, on the other hand, the board is not entitled to
make its authority a pretext for interference with the right of
discharge when that right is exercised for other reasons than such
intimidation and coercion.
This ruling was reiterated and confirmed in the
Association Press vs. National Labor Relations Board (301 U.S.,
103; 81 Law. ed., 953, 960, 961).
Thus considered, the order appealed from is hereby
reversed, with costs against the respondent Pambusco Employees'
Union, Inc.