G.R. No.
L-19937 February 19, 1979 mandamus to compel respondent judge of the Court of First Instance of Negros
ASSOCIACION DE AGRICULTURES DE TALISAY-SILAY, INC., TRINO
MONTINOLA, FERNANDO CUENCA, EDUARDO LEDESMA, EMILIO JISON, NILO
LIZARES, NICOLAS JALANDONI and SECRETARY OF LABOR, plaintiffs-
appellees,  that the take-over of the Central by the Government is unconstitutional. The two
vs.
TALISAY-SILAY MILLING CO., INC., and LUZON SURETY CO., INC., defendants-
appellants, PHILIPPINE NATIONAL BANK and THE SUGAR QUOTA
ADMINISTRATOR, defendants-appellees.
No. L-21304 February 19, 1979
REPUBLIC OF THE PHILIPPINES, petition, 
vs.
HON. JOSE FERNANDEZ. TALISAY-SILAY MILLING CO., INC. and TALISAY-
SILAY INDUSTRIAL COOPERATIVE ASSOCIATION, respondents.
San Juan, Africa, Gonzales & San Agustin for Asociacion de Agricultores, etc., et al..
Ernesto H. Cruz & Emilia F. Andres for The Secretary of Labor.
Felipe, Sison Torres & Associates for Talisay-Silay Milling Co., Inc.
Tolentino, Garcia & D. R Cruz for Luzon Surety Co., Inc.
Conrado Medina for Phil. National Bank.
Office of the Solicitor General for The Republic of the Philippines.
Ivan Solidum for Talisay-Silay Industrial Cooperative Association.
Solicitor General Estelito P. Mendoza Assistant Solicitor General Jose F. Racela Jr.,
and Solicitor Pio C. Guerrero, counsel for petitioner.
BARREDO, J.:
APPEAL, in G.R. No. 1,19937, by the defendants Talisay-Silay Milling Co., Inc. and
Luzon Surety Company, from the decision rendered by the Court of First Instance of
Manila in Civil Case No. 24128, entitled Asociacion de Agricultores de Talisay-Silay,
Inc. et al. vs. Talisay-Silay Milling Co., Inc, et al., on January 26, 1962 as wen as from
its order dated April 28, 1962 amending the same, which together granted the main
reliefs prayed for in the complaint, based on Republic Act 809, and dismiss all of the
counterclaims of the defendants; and PETITION, in G.R. No. L-21304, filed by the
Solicitor General in behalf of the Republic of the Philippines for certiorari and/or
Occidental to appoint, in Civil Case No. 6980 of said court, entitled Republic of the
Philippines vs. Talisay-Silay Milling Co., Inc., an administrator of respondent Central,
which the Government had taken over, pursuant to the provisions of the same
Republic Act 809 aforementioned, respondent judge having refused to do so, holding
cases, although proceeding from different courts and requiring distinct remedies,
have been consolidated because they involve closely related or partially Identical
issues between practically the same parties
Re: G.R. No. L-19937
THE PROCEEDINGS BELOW
1. The pleadings and stipulations of fact
The original basic complaint in this case filed as a class suit on September 23, 1954
named as plaintiffs the Asociacion de Agricultores de Talisay-Silay, Inc. and six
sugarcane planters, namely, Trino Montinola, Fernando Cuenca, Eduardo Ledesma,
Emilio Jison, Nilo Lizares and Nicolas Jalandoni, hereinafter to be referred to, jointly
with the Asociacion, as PLANTERS, and as defendant the Talisay-Silay Milling Co.,
Inc., hereinafter to be referred to as CENTRAL. Later on, on December 20, 1956, an
amended complaint was filed to supersede the original one. In the amended
complaint, the Secretary of Labor was joined as plaintiff, to represent the laborers
favored by the law in dispute, whereas, the Luzon Surety Company and Philippine
National Bank were impleaded as defendants. The amended complaint alleged three
main causes of action (the second, an alternative one), namely:
Under the first cause of action, the claim of the plaintiffs is that inasmuch as under
Republic Act 809, approved on June 22, 1952, it is provided that:
Section 1. In the absence of written milling agreements between
the majority of planters and the millers of sugarcane in any milling
district in the Philippines, the unrefined sugar produced in that
district from the mining by any sugar central of the sugar-cane of
any sugar-cane planter or plantation owner, as well as all by
products and derivatives thereof, shall be divided between them as
follows:
Sixty per centum for the planter, and forty per centum for the
central in any milling district the maximum actual production of
which is not more than four hundred thousand piculs:  Provided,
That the provisions of this section shag not apply to sugar centrals
with an actual production of less than one hundred fifty thousand
piculs.
Sixty-two and one-half per centum for the planter, and thirty-seven
and one-half per centum for the central in any milling district the
 maximum actual production of which exceeds four hundred
thousand piculs but does not ex six hundred thousand piculs;
Sixty-five per centum for the planter, and thirty-five per centum for
the central in any milling district the maximum actual production of
which exceeds six hundred thousand piculs but does not exceed
nine hundred thousand piculs;
Sixty-seven and one-half per centum for the planter, and thirty-two
and one-half per centum for the central in any mining district the
maximum actual production of which exceed nine hundred
thousand piculs but does not exceed one million two hundred
thousand piculs;
Seventy per centum for the planter, and thirty per centum for the
central in any milling district the maximum actual production of
which exceeds one on two hundred thousand piculs.
By actual production is meant the total production of the mill for the
crop year immediately preceding.
and considering that, according to them, in the Talisay-Silay milling district to which
they belong, a majority of the planters had no milling contracts, the court should:
1. Declare the applicability to the Talisay-Silay Mill District of the
sharing participation prescribed by Republic Act No. 809 for every
crop year starting from the crop year 1962-53;
2. Adjudicate in favor of plaintiffs PLANTERS and their laborers
who are herein represented by plaintiff Secretary of Labor the
amounts deposited with the defendant Philippine National Bank in
the account entitled 'In Trust for Talisay-Silay Milling Co., Inc.,
Asociacion de Agricultores de Talisay-Silay, Inc., and Department
of Labor. 1
3. Order the defendant CENTRAL to account for any unsold escrow
quedans or the proceeds thereof which have not been deposited
with the Philippine National Bank in the above-mentioned trust
account;
4. Order defendant CENTRAL and the defendant Luzon Surety Co.,
Inc. to account for and pay jointly and severally to plaintiffs
PLANTERS and their laborers represented by the plaintiff Secretary
of Labor the proceeds of the sugar representing the increased
participation (7-1/2%) for the 1954-55 crop year plus legal interest
in favor of the plaintiffs PLANTERS, computed on the basis of the
average market price during the month within which the sugar was
sold;
5. Order defendant CENTRAL to account for and pay to plaintiffs
PLANTERS and their laborers the increased participation in the by-
products and derivatives, namely: molasses, bagasse, and filter
cake;" (pp. 14-15, Record on Appeal of Central.)
As second and alternative cause of action, the PLANTERS averred that on or before
October 24, 1954, the CENTRAL executed contracts with eight planters in which a
higher percentage of partition in the sugar and by-products and derivatives produced
by the CENTRAL was given to said eight planters than those given to the rest of the
planters in the district, that is, 63% to 64%, the latter, whenever the production of the
CENTRAL should be 1,200,000 piculs or over, whereas all the others were given only
60%, and inasmuch as under the provisions of the milling contracts between the
PLANTERS and the CENTRAL since the crop year 1920-1921, the CENTRAL bound
itself to give all planters having contracts with it, the highest rate of participation it
would ever give to any planter, (a sort of most favored planter clause), the court
should:
1. Declare, in the event that this Honorable Court should rule that
the sharing proportion prescribed by Republic Act No. 809 is not
applicable to the Talisay-Silay Milling District, that the sharing
participation of 63%, or 64% in case the total production of
defendant CENTRAL is 1,200,000 piculs or over, in favor of
plaintiffs PLANTERS shall be applicable to the Talisay-Silay Mill
District starting from the crop year 1954-55 and for every crop year
thereafter;
2. Order the defendant CENTRAL to account for and pay to
plaintiffs PLANTERS the proceeds of the sugar and molasses
representing the increased participation in favor of said plaintiffs
PLANTERS during the past crop years starting from 1964-55 crop
year;" (pp. 15-16, Id.)
As third cause of action, the PLANTERS alleged that notwithstanding that the
applicability of Republic Act 809 to the Talisay-Silay milling district had already been
ruled upon by the Sugar Quota Administrator, the Central still refused to abide by said
ruling and to cause the release to the plaintiffs of the corresponding amounts to which
they are entitled, hence they were constrained to engage the services of legal
counsel, for which reason they prayed that the court:
1. Order the defendant CENTRAL to pay the amount of P50,000.00
as attorney's fees and litigation expenses incurred by plaintiff
ASOCIACION and plaintiffs PLANTERS;
2. Order the defendant CENTRAL to pay plaintiff ASOCIACION and
plaintiffs PLANTERS by way of moral and exemplary damages,
such amount as this Honorable Court may deem sufficient to set an
example for public good as provided for in Articles 2217 and 2219
of the New Civil Code; " (P. 16, Id.)
In the course of the proceedings below which terminated only in 1962, five (5)
supplements to the amended complaint were successively filed, year after year, to
cover the case of the PLANTERS and the Secretary of Labor for additional
participation corresponding to the crop years, 1957-1958, 19581959, 1959- 1960,
1960-1961 and 1961-1962.
In the meantime and within the periods fixed in the Rules, the defendant CENTRAL
filed its respective answers to the amended complaint and the supplements thereto.
In said answers, the CENTRAL alleged in substance the following defenses: (1) that
Republic Act 809 is invalid and unconstitutional; (2) that even if said Act were valid, it
is not applicable to the Talisay-Silay milling district because the majority of the
planters had written milling contracts with the CENTRAL at the time said Act went into
effect, and that this continued during the crop years 1951-52, 1952-53, 1953-54, and
all the subsequent crop years in dispute; (3) that the planters who entered into said
milling contracts did so voluntarily and those voluntary contracts may not be altered or
modified without infringing the constitutional guarantee on freedom of contracts and
the non-impairment clause of the Constitution; and as to those planters who entered
into contracts after the effective date of the law, they should be deemed as having
voluntarily waived all the rights and benefits that might accrue to them under it; (4)
that the Act does not contain any expressed or implied provision invalidating the
written milling contract s entered into between the CENTRAL and the owners of
adherent plantations before its effective date; (5) that the Act sanctions and allows the
entering into milling contracts after its effective date, and as a matter of fact a large
number of the PLANTERS are also planters in the Hawaiian-Philippine milling district,
adjoining the Talisay-Silay milling district, and they had entered into milling contracts
with the Hawaiian-Philippine Co. one year and four months after the effectivity of the
Act and in their milling contracts they had stipulations regarding sharing participation
without regard to the ratios fixed in the Act, and they have abided by those mining
contracts, and (6) that the arrangement, regarding the issuance of escrow quedans
and the deposit of the proceeds of the sale of the disputed increased participation of
the planters was agreed to and accepted by the CENTRAL from the Sugar Quota
Administrator under duress, because said Administrator would not allow the issuance
of any warehouse receipt on the share of the mill unless the CENTRAL agreed to the
escrow quedans arrangement; (7) that neither are the PLANTERS entitled to
increased participation as claimed by them in their second and alternative cause of
action because they do not qualify as the PLANTERS contemplated in their invoked
twenty second (Vigesimo Segundo) paragraph of the original milling contract, since
what are referred to in that paragraph are only the PLANTERS "que se obliguen a
moler cailadulce en la fabrics para la cosecha 1920-21 "; (8) that the provisions of
Republic Act 809 relating to the increased sharing participation of the planters would
affect and alter the allocation of exportable sugar to the United States (export A
sugar) among Philippine mills and plantation owners, in violation of the Trade
Relations Agreement between the Philip pines and the United States, and this is
precisely what is expected from the application of the law as provided in the second
paragraph of Section 8 of the very same Republic Act 809; and (9) that the instant
case is not a proper one for a class suit.
The CENTRAL also alleged various counterclaims, briefly stated as follows:
As first counterclaim, it is averred that an examination of the records of defendant
CENTRAL's mill site office revealed that during the 1951-52 crop year there was a
total of 182 planters adhered to the CENTRAL, and 105 of those planters had milling
contracts while 77 did not have; that in said crop year, the CENTRAL started milling
on October 18, 1951 and stopped on March 24, 1952, hence even before the
effective date of Republic Act 809 the CENTRAL had written milling agreements with
a majority of the planters; that during the 1952-53 year the CENTRAL had milling
contracts With 118 of the 205 planters; and in 1953-54 crop year it had milling
contracts with 132 out of 21 planters, and the d majority of planters who had milling
contracts with the CENTRAL had thereafter been maintained, if not actually
increased.
As second counterclaim, the CENTRAL claims that the most frequent basic plantation
milling share in the written contracts is 60% for the planters and 40% for the central in
au classes of sugar, and this sharing was applied to the non-contract planters
pursuant to Section 5 of Executive Order No. 900 and Section 11 of Executive Order
No. 901; that the correct sharing proportion between the CENTRAL and all the
planters in the 1951-52, 1952-53, 1953-54, 1954-55, 1955-56, 1956-57 and all
succeeding crop years, unless and until voluntarily changed by the parties, should
have been and should be 60% for the planters and 40% for the CENTRAL, excepting
only few planters with whom the CENTRAL had executed written milling contracts
establishing different sharing proportions; and the CENTRAL had the right to demand
specific performance by all the contract planters of their respective written milling
contracts.
As  third counterclaim,  it is alleged that the CENTRAL, before the recount of those
planters having milling contracts, had shared, as a temporary measure, with the
planters on the general basis of 55% for the planters and 45% for the miller in export
sugar. and 65% for the planters and 35% for the miller in domestic sugar, and a re-
adjustment in the sharing had to be made after the recount, so that the parties had to
make mutual restitution for the crop year 1953-54.
As fourth counterclaim, it is insisted that Republic Act 809 is unconstitutional and
invalid on the following grounds:
(a) Contrary to the provisions of Art. VI, Sec. 21 (1) of the 1935
Constitution, the Act embraces more than one subject.
In addition to providing, among other things, for the division of the
sugar manufactured at sugar manufactured, 'as well as all by-
products and derivatives thereof', the act amends the minimum
wage law by providing that 60% of the proceeds of the increased
participation in the sugar and all by-products and derivatives
thereof, of the plantation owner or sugar cane planter, shag be paid
to his laborers.
(b) The title, of the act reads as follows: 'An Act to regulate the
relations among persons engaged in the sugar industry and the
subject-matter of Sec. 4 of the act, which, among other things,
authorizes the Government of the Philippines to take a sugar mill,
and operate it through an administrator; of Sec. 5, which, among
other things, authorizes the Government to take over and
 administer a sugar plantation; of Sec. 6, which, among other things,
fixes the period of duration of the operation of a sugar mill by the
administrator; of Sec. 7 which, among other thing, establishes the
procedure for the appointment of the administrator, and for
ascertaining the compensation to be paid for the operation of the
sugar mill of Sec. 8, which, among other things, determines where
the compensation to be paid to the sugar mill or plantation owner,
or sugar cane planter shall be taken from; and of Sec. 9, which
provides that 60% of the proceeds of the increased participation in
the sugar crop and all by-products and derivatives thereof of the
plantation owner or sugar cane planter shall be paid to his laborers,
are not expressed in the title of the act, as is required by Sec. 21
(1) of Art. VI of the 1935 Constitution which renders the act, or, at
least, said Sections 4, 5, 6, 7, 8 and 9 invalid.
(c) The act deprives sugar mills, among them, defendant herein, or
authorizes the deprivation f said sugar mills of their property
(factories), without due process of law, and without just
compensation.
The act authorizes the seizure by the Government t of the Philip
pines of sugar mills upon a mere proclamation issued by the
President of the Philippines, and the act does not provide for just
compensation therefor to the owners of the sugar mills or for losses
due to mismanagement by the administrator, or other causes not
attributable to the owners of the sugar mills.
Section 8 of the act provides for compensation to the owners of
sugar mills but the same should be paid 'out of the proceeds of the
operation which would have corresponded to said central', or, in
other words, the compensation to be paid to the owners of sugar
mills will be taken from the property of the sugar mills themselves."
(pp. 69 to 7 1, Record on Appeal of Central.)
As fifth counterclaim, it is alleged that the plaintiffs' action is clearly unfounded and
the CENTRAL was compelled to incur expenses, to protect its rights and interests
through the employment of attorneys to represent it in this case, in the total amount of
P100,000.00.
Defendant CENTRAL prayed for the dismissal of the amended complaint, and,
particularly, for a declaration that as to sugar for export to the United States, Republic
Act 809, even if it is declared constitutional and valid, became inoperative as of
January 1, 1956, the effective date of the Revised Trade Agreement between the
Philippines and the United States. It further prayed, under the first counterclaim, to
order the Philippine National Bank to turn over to the CENTRAL all the deposits of the
proceeds of the sales of the sugar covered by escrow quedans; under the second
counterclaim, to order the specific performance by the contract PLANTERS of their
respective written milling contracts with the CENTRAL and to adjudge that the sharing
proportions between the CENTRAL and its planters, both contract and non-contract,
in the sugar and by-products produced, shall be 60% for the PLANTERS and 40% for
the CENTRAL in all the crop years referred to in the counterclaim, unless and until
voluntarily changed by the parties; to order the Sugar Quota Administrator to adjust
the issuance of quedans to the PLANTERS and to the CENTRAL in accordance with
the aforesaid sharing proportion, and to instruct his permit agent detailed with the
CENTRAL to sign such quedans; under the third counterclaim, to order the
PLANTERS concerned and the CENTRAL to make the reciprocal restitutions and re-
adjustments as mentioned in the counterclaim; under the fourth counterclaim, to
declare Republic Act 809 unconstitutional and invalid; under the fifth counterclaim, to
order the plaintiffs, jointly and severally to indemnify the CENTRAL in the sum of
P100,000.00 for attorney's fees and expenses of litigation.
The plaintiffs filed their answer to the counterclaims of the CENTRAL, denying the
material allegations therein, and reiterating that when Republic Act 809 took effect on
June 22, 1952 a majority of the planters adhered to the CENTRAL had no written
milling contract with it and even after the effectivity of said Act still the majority of the
planters did not have milling contracts, and if there were some planters who executed
milling contracts after the effectivity of the Act, said additional contracts cannot be
counted for the purpose 3f determining whether or not Republic Act 809 is applicable
to the district; denying at the same time that Republic Act 809 is unconstitutional, and
praying that defendant's counterclaims be dismissed.
The defendant Sugar Quota Administrator also filed his answer to the CENTRAL's
counterclaims, alleging defenses more or less similar to those of the plaintiffs
ASOCIACION and PLANTERS.
The Secretary of Labor likewise filed his answer to the counterclaims of the
CENTRAL, alleging practically the same defenses as those of the PLANTERS.
The defendant Luzon Surety Co., after its motion to dismiss the complaint was denied
by the court, filed an answer and put up as special defenses: that the complaint fails
to state a cause of action against it; that there is no privity between it and some of the
plaintiffs; that the condition precedent, "in the event that the courts should finally
adjudge that said Republic Act 809 is applicable to 1954-55 crop of the Talisay-Silay
Mill District and that the planters are entitled to an additional participation ... the
central will pay to each and every planter concerned ... had not yet been fulfilled,
hence the action of the plaintiffs against it was prematurely brought; that the terms
and conditions of the Surety Bond had been materially altered and/or novated without
its written conformity, thereby releasing it from liability if there is any. The Luzon
Surety Co. also demanded, by way of counterclaim, the payment to it by the plaintiffs
of the sum of ?20,000.00 as attorney's fees.2
The plaintiffs filed their answer to the counterclaim of the Luzon Surety Co., Inc.
denying all the allegations in said pleading.
From time to time between July 30, 1957 and December 5, 1960, the parties filed ten
partial stipulations of facts with supporting exhibits, on the basis of which they
submitted the case for decision without any presentation of any independent
exclusive evidence of any of them.
Meanwhile, on August 31, 1960, plaintiffs filed a Manifestation asking the court to
notify the Office of the Solicitor General that the question of constitutionality of
Republic Act 809 was raised. In answer thereto, the Solicitor General filed on October
14, 1960, the following Manifestation:
COMES NOW the undersigned counsel and in compliance with the
Order dated September 7, 1960 requiring the undersigned to
express their view on the constitutionality of Republic Act No. 809
pursuant to the provisions of Section 23 of Rule 3, of the Rules of
Court, to this Honorable Court respectfully allege:
1. That on April 3, 1957, the undersigned counsel filed in behalf of
the Sugar Quota Administrator the pleading entitled, 'Amended
Answer of the Sugar Quota Administrator to tile Counterclaims of
the Defendant Talisay-Silay Milling Co., Inc.' dated April 2,1957;
2. That in their answer to the fourth counterclaim, the undersigned
counsel have expressed their view on the constitutionality of
Republic Act No. 809, and for the purpose of this manifestation is -
reproduced hereunder:
TO THE FOURTH COUNTER-CLAIM
1. That he reproduces by reference his answer to the allegations
reproduced by reference in paragraph 1;
2. That he denies the allegation in paragraph 2 that Republic Act
No. 809 violates the constitutional prohibition that 'No bill which
may be enacted into law shall embrace more than one subject
which shall be expressed in the title of tile bill' (Art. VI. sec. 21 (1),
1935 Constitution), and states in connection therewith that the
various sections cited by defendant are germane to the title and
general object of the law (Gov't.'. Mr. Hongkong & Shanghai Bank,
66 Phil. 483);
3. That he denies the allegation in paragraph 2(c) that the Act
deprives defendant Mill of its property (factories) or authorizes such
deprivation without due process of law and without just
compensation, and states as reasons for such denial as follows:
(a) Republic Act No. 809, entitled 'An Act to Regulate the Iterations
Among Persons Engaged in the, Sugar Industry' was to cope with
'The necessity for increasing the share of the planters and laborers
in the income derived from the sugar industry ... (Explanatory Note
to H.B. 1517) and an implementation of the con. institutional
mandate that 'The Senate shall afford protection to labor ... and
shall regulate the relations between ... labor and capital in industry
and agriculture (Art. XIV, Sec. 6, 1935 Constitution) and is a proper
and valid exercise of police power;
(b) The Act does not provide for nor authorize the seizure of any
central but only the transfer or temporary assumption by the
government of the administration thereof, (1) 'In the event that any
central hall be unable to arrive at a milling agreement with a
majority N of the planters affiliated with it, and shall refuse to U the
sugarcane of such planters in the absence of such an agreement'
(Section 4) and (2) such 'prevention, interruption, or cessation of
the milling of sugar b the central concerned ... shall in the judgment
of the President, lead to a defficiency or delinquency in the filing of
the entire ire national quota for any particular year' (Sec. 6, par. 1);
(c) That contrary to defendant's claim, the Act provides for the
payment of just compensation to be paid for the temporary
operation or administration of the same (Central)' (Sec. 7) "with due
regard for the costs of operation or administration and such other
charges and deductions as the court may deem just and proper
(Sec. 8 ; although speaking, in the application of certain laws and
all h strictly regulations enacted pursuant to police power,
annoyance and financial loss are not compensable (Malcolm,
Philippine Constitutional Law). Provided the means adopted are
reasonably necessary for the accomplishments of the end in view,
not unduly oppressive upon individuals, and in the interests of the
public generally rather than of a particular class, the legislature may
adopt such regulations as it deems proper restricting, limiting and
regulating the use of private property in the exercise in its police
power ( U.S. vs. Toribio, 15 Phil.85 cited in U.S. v. Villareal, 28 Phil.
390). Persons and property may subjected to all kinds of restraints
and burdens, in order to secure the general comfort, health, and
prosperity of the State ( U.S. v. Gomez Jesus, 31 Phil. 218 cited in
Calalang v. A.D. Williams, et. al., 40 O.G. 7th Supp. 239 ). (pp. 319-
322, Rec. on Appeal of CENTRAL.)
2. The incident of the alleged disqualification of the judge.
Before the deciding the case, on October 12, 1961, the trial judge brought to the
attention of the parties that he had engaged on January 25, 1960, the services of
Attorney Jose L. Africa, of the law firm of counsel for plaintiffs, to represent him in
Civil Case No. 42036, also of the Court of First Instance of Manila, entitled Felipe
Cuaderno Sr. vs. Carmelino G. Alvendia, et al., in which he was a party defendant,
and that he wanted to hear from the parties whether they had any objection to his
deciding this case. The defendant CENTRAL prayed, on October 23, 1961, that the
presiding judge inhibit himself. On the other hand, the Sugar Quota Administrator, the
Philippine National Bank, the Secretary of Labor and the PLANTERS manifested that
they had no objection to the presiding judge rendering the decision. Upon the ground
that the majority of the lawyers expressed no objection to his deciding the case, on
November 21, 1961, the presiding judge issued an order stating that he considered
himself duty-bound to proceed taking cognizance of the case and that unless
restrained by an order of a Superior Court within 20 days, he would proceed to render
a decision on the merits. The motion for the reconsideration of said order was denied.
3. The original decision of the trial court.
On January 20, 1962, the trial court rendered a decision upholding the
constitutionality of Republic Act 809, upon the ground that its enactment is a
legitimate exercise of the police power of the State, and declaring that said law is
applicable to the Talisay-Silay milling district, because from the record it appears that
the majority of the planters in the district did not flave milling contracts with the
CENTRAL. Accordingly, plaintiffs-appellees were adjudged to be entitled to the
disputed portions of all the sugar milled at the CENTRAL and all the corresponding
by-products and derivatives, starting from The crop ear 1952-1953 up to crop year
1960-61, No pronouncement was made as regards the PLANTERS' alternative cause
of action.
With particular reference to the sugar produced in the crop year 1954-195z-), the
lower court ordered the CENTRAL and the Luzon Surety Company, Inc., jointly and
severally to pay the plaintiffs- appellees the sum of P949,856.53 with interest thereon
at the rate of 37c per annum from the time said amount was delivered to the Central
in the year 1955 until the same is fully paid. It further ordered the Philippine National
Bank to deliver to the plaintiffs-appellees all the amounts deposited with the said bank
as proceeds of the sugar in dispute corresponding to the crop years 1952-1953 up to
1960-1961, as well as the proceeds of the sale of the by-products and derivatives
corresponding to the same crop years. Correspondingly, the Sugar Quota
Administrator was ordered to be guided by the court's decision in the distribution of
the sugar and by-products and derivatives produced in the Talisay-Silay mill district
beginning with the agricultural year 1961-1962. The CENTRAL was further sentenced
to pay the plaintiffs-appellees the sum of fifty thousand pesos (P50,000.00.) as
attorney's fees, plus costs.
4. The amended decision
On May 4, 1962, upon two motions for reconsideration of practically the same tenor,
one filed by the PLANTERS and the other by the Secretary of Labor, the lower court
amended its decision" ... in the case that the increase in the planters' share of the
sugar and the by-products of sugarcane produced during the agricultural year 1959-
1960 should be 10%, thereby entitling the plaintiffs to 70% of the sugar production
and by products for that year and the defendant Sugar Central to 30% of said sugar
production." The decision was also amended so that a portion of the decision would
read: "The Court further orders the Philippine National Bank to deliver to the plaintiffs
all the amounts with said bank as proceeds of the sugar in dispute corresponding to
the following years: 1952-1953, 19531954, 1955-1956 up to 1960- 1961. The
defendant Talisay-Silay Milling Company, Inc. is hereby ordered to deliver to the
plaintiffs their share in accordance with the proportion indicated in this decision,
taking into account the increased proportion of the planters' share corresponding to
the agricultural years 1952-1953 up to 1960-1961." The decision was further
corrected, changing the name "Agustin P. Locson "appearing in the decision to '
'Agustin T. Locsin ". Hence, this appeal.
5. The other incidents in the course of this appellate proceeding
(a) On September 12, 1962, plaintiffs-appellees filed a motion praying that the
CENTRAL be directed to issue quedans covering the 1962-63 sugar production in the
proportion of 60% for the PLANTERS, 32-1/2% for the CENTRAL, and 7-1/2 in
escrow quedans" in the joint name of the ASOCIACION, the CENTRAL and the
Secretary of Labor, to be disposed of only by unanimous action of the three parties
and the proceeds of the sale of said escrow quedans" to be deposited with the
Philippine National Bank under Savings Account No. 151250 in trust for said entities
as in the previous crop years, or, in the alternative, that the movants be allowed to
Lake the disputed 7-1/2% upon filing of a bond to be fixed by the Court. This motion
was reiterated on April 27, 1963, May 25, 1963 and August 10, 1963. Later, on
September 7, 1963, a supplemental motion was filed in order to include a similar
prayer regarding the 1963-64 production. On September 26, 1963, the Court issued
the following resolution:
In G.R. No. L-19937, Associacion de Agricultores, etc. vs. Talisay-
Silay Milling, etc., acting on appellees supplemental petition dated
September 7, 1963, the Court directed the appellant Central to
issue escrow quedans covering the 7-1/2% of the sugar production
for 1962-963 (presently stored in its warehouse, 89,000 piculs of
sugar) in the joint name of the Associacion de Agricultores de
Talisay-Silay, Inc., the Talisay-Silay Milling Co. and the Secretary of
Labor, said escrow quedan to be disposed only by unanimous
action of said three parties, and the proceeds of the sale, if any, to
be deposited with the Philippine National Bank under Savings
Account No, 151250 in trust for said entities. as in the previous crop
years.
With the understanding that this order having been issued only for
the preservation and/or timely marketing of the said sugar crop,
does not decide the question whether it could or should be included
in this appealed litigation or should be disposed of in the Civil Case
No. 7104 of the Negros Occidental Court entitled 'Talisay-Silay
Industrial, etc. vs. Talisay-Silay Milling Co., etc.' which defendant-
appellant mentioned in its latest 'Manifestation.
(b) On October 31, 1963, plaintiffs-appellees filed a supplement to the
aforementioned petition dated September 2, 1963 asking the Court to resolve the
matter referring to the 1963-64 production, which had been left out, claiming at the
same time that the disputed portion should be 10%. The CENTRAL filed its opposition
on the ground that it was no longer the operator of the mill, the same having been
leased for three crop years to the Talisay-Silay Industrial Cooperative Associacion
(hereinafter referred to as TASICA) beginning with the crop year 1963-1964. As a
matter of fact, the disputed portions of the crop years 1962-63 and 1963-64 were
already the subject of litigation in Civil Case No. 7104 of the Court of First Instance of
Negros Occidental, entitled "Talisay-Silay Cooperative Associacion vs. Talisay-Silay
Milling Co. Inc.," an action of interpleader filed by TASICA asking that the CENTRAL
and the PLANTERS be made to litigate between themselves in regard to the disputed
portion of those crop years productions. The Secretary of Labor filed a motion oil
November 5, 1963 supporting the motion of plaintiffs- appellees. On November 7,
1963, the Court resolved that "the Court's resolution of September 26, 1963 in
connection with the 7-½ percent of the sugar production for 1962-1963 shall be
applicable and extended to the same portion of the sugar crop year 1963-64 under
the same terms and conditions. " It will be noted that the PLANTERS referred to the
disputed portion as amounting to 10%, whereas Our resolution mentioned only 7-½%.
According to the PLANTERS, although the total production in the Talisay-Silay mill
that year was less than 1,200,000 piculs, there should be added to it what were milled
by some of the planters in the Bacolod-Murcia and Ma-ao sugar centrals and with
said addition, the total would exceed 1.2 M piculs. We reserved the resolution on of
that issue until the decision of the (case.
(c) On December 16, 1963, the TASICA filed a special appearance questioning Our
jurisdiction over the incident, contending that it was the lessee of the central of
appellant milling company and miller beginning with the crop year 1963-1964, and
inasmuch as the pleadings in the trial court covered only up to crop year 1961-62, the
subsequent crop years should be the subject of another case, and, further, that since
it is not a part herein, it could not be legally subjected to any resolution issued by the
Court in this case. An opposition and counter-petition was filed by the PLANTERS
and the Secretary of Labor on December 21, 1963. The Court resolved, on December
23, 1963, to defer action on that matter of jurisdiction until the case is considered on
the merits.
(d) On March 20, 1964, the manager of TASICA invalidated the escrow quedans
covering the disputed 7-1/2 percent of the crop year 1963-64, for which reason the
PLANTERS filed a petition on March 25, 1964 to hold TASICA in contempt of court
and to declare without force and effect the invalidation made by it of the escrow
quedans. On May 18, 1964, the Court likewise resolved to defer action thereon until
this case i decided on the merits.
(e) On April 6, 1964, t lie Secretary of labor filed an urgent motion asking the Court to
declare illegal and violative of Our Resolution of November 7, 1963 the act of TASICA
of allowing the diversion of Talisay-Silay canes to the Bacolod-Murcia Milling Co., Inc.
and to issue a restraining order or writ of preliminary injunction prohibiting said
diversion. The PLANTERS joined said petition on April 15, 1964. After hearing the
parties on May 27, 1964, on the same date, the Court resolved to deny the prayer for
preliminary injunction, since, anyway, petitioners may just the same protect their
interests by producing or compelling the production of the milling record of any sugar
that might be so diverted.
(f) Since the resolution of November 7, 1963 remained unimplemented, on August 21,
1964, the PLANTERS filed a petition praying for an order directing TASICA and/or the
Sugar Quota Administrator to issue quedans covering the disputed portion of the
production for the crop year 1963-1964. On September 28, 1964 We ordered the
issuance of escrow quedans in the joint names of the ASOCIACION, the Secretary of
Labor, and TASICA, and the sugar covered by the quedans to be sold upon the
unanimous consent of the three parties and the proceeds to be deposited with a new
bank n trust for all said parties, without prejudice to resolving later the questions of
jurisdiction and of the sharing participation for the crop year 1963-64. 2a
(g) Upon petition of the PLANTERS, on June 2, 1965, the Court likewise directed the
issuance of escrow quedans covering the disputed Portion of the production for the
crop year 1964-65 in the joint names of the ASOCIACION, TASICA, and the
Secretary of Labor, to be disposed of under the same conditions as the disputed
portion of the preceding crop year.
(h) Similarly, upon petition also of the PLANTERS, on May 25, 1966, We ordered the
issuance of escrow quedans covering the disputed portion of the sugar production for
the crop year 1965- 1966 under the same conditions as the disputed portion of the
preceding year.
(i) In a resolution of February 8, 1967, the (court resolved merely to note the contents
of the manifestation of the PLANTERS praying for the disposal of the disputed portion
of the production for the crop year 1966-1967 and to consider the controversy relative
thereto when the case is decided on the merits.
(j) There are other motions and manifestation. 9 and oppositions and counter-motions
filed by the parties, but they all deal basically with the issues of (1) whether or not this
Court has jurisdiction to resolve matters related to the crop years subsequent to that
of 1960- 1961 covered by the decision of the trial court and the supplemental
pleadings submitted before said decision and (2) whether or not this Court has
acquired jurisdiction over TASICA for the purposes of this case.
Upon motions filed by each of them, Attys. Roman Ozaeta (now deceased), Jose E.
Romero (also already deceased), and Enrique Belo, and the law firm of Tanada,
Teehankee and Carreon, were allowed to appear as amici curiae in this case. The
Court has duly considered the points they have discussed and the arguments they
have advanced and is appreciative of their valueable assistance.
Long after these cases had been submitted for resolution and when We were already
finalizing Our decision, all of a sudden, on June 30, 1978, the appellees' counsel filed
a motion praying for another oral argument, which was subsequently joined by private
counsel appearing for the laborers. Over the opposition of appellant CENTRAL, the
Court granted said motion and set the hearing on September 6, 1978 but this was first
postponed to October 10, 1978 and later reset on November 17, 1978, after which,
the PLANTERS filed in addition to their Memorandum in Amplification of Oral
Argument dated November 17, 1978, a motion and manifestation i dated December
1, 1978, while on the other hand, the CENTRAL filed a supplemental memorandum
dated December 2, 1978. At the hearing, the new counsel for the CENTRAL,
Assemblyman Emmanuel Pelaez, formally withdrew the CENTRAL's first and second
assignments of error in its brief relative respectively to the alleged disqualification of
the trial judge and to the challenge against the constitutionality of Republic Act 809.
This withdrawal was reiterated in the CENTRAL's supplemental memorandum dated
December 2, 1978 which added its sixth assignment of error among those it is
withdrawing. Considering, however, that actually, such withdrawal of the first and
second assignments of error was made after the case had long been submitted for
decision, and anyway the two issues concerned have already been sufficiently
discussed by the previous counsels of the parties, as well as by the amici curiae, both
orally and in writing, the Court has opted to nevertheless pass on the assignments of
error referred to, in view of the transcedental importance of said issues, particularly
those vis-a-vis the constitutional provisions on social justice and freedom of contract
and the police power of the state to regulate the relations among the three main
elements of the sugar industry in the Philippines, the planters, the millers and the
laborers. As will be explained later, We are also disregarding the withdrawal of the
sixth assignment of error.
The case was deemed resubmitted for decision as of December 2, 1978.
OPINION
The CENTRAL has assigned seven errors allegedly committed by the trial court. The
Luzon Surety Company has assigned two. On the other hand, the plaintiffs-appellees,
aside from refuting the assignments made by the appellants, have made a counter-
assignment of three alleged errors. To simplicity and abbreviate discussion, and
considering that the supposed errors of the trial court counter-assigned by appellees
are inseparably related to some of the errors alleged by appellant Central, We shall
resolve appellees' counter-assigned errors together with the errors assigned by the
Central to which they respectively correspond.
I expressly in any law or rule among the disqualifications for him to take cognizance
The CENTRAL's first assigned error is as follows:
THE JUDGE A QUO WHO, NOT WITHSTANDING THE
PENDENCY OF THIS CASE BEFORE HIM, ENGAGED ATTY.
JOSE AFRICA OF THE PLANTERS AS HIS OWN LAWYER,
GRAVELY VIOLATED THE CANONS OF JUDICIAL ETHICS AND
SERIOUSLY ERRED IN AFTERWARDS INSISTING THAT IT
STILL AS 141S BOUNDEN AND UNAVOIDABLE DUTY TO
CONTINUE TO PRESIDE IN AND DECIDE THIS CASE;
(1) Because, in soliciting, contracting, and/or accepting the services
of Atty. Jose Africa of the planters as his own lawyer, the Judge a
quo had most improperly placed himself Under obligation to said
counsel for the planters, who, in the ordinary, course of nature and
the ordinary habits of life, would presumably N not accept and,
much less, demand payment for his services rendered, to the
Judge;
(2) Because, n accordance with the spirit and intent of our law, as
interpreted by this Honorable Court in the case of Gutierrez s
Santos GR No, L-15824), the judge a quo  and client of Atty. Jose
Africa of the planters had thereby disqualified himself to further
preside and render judgment in this case;
(3) Because, in accordance with recognized jurisprudence, also
cited and relied upon by his Honorable Court in the same case, due
process of law required a hearing before and impartial and
disinterested tribunal; that second only to the duty of rendering a
just decision is the duty of doing it in a manner that will not arouse
any suspicion as to its fairness and the integrity of the Judge; and
that no Judge shall precide in a case in which he is not whooly free,
disinterested, impartial and independent.
And relation to this alleged error, the CENTRAL prays:
The judge Carmelino Alvendia be declared legally disqualified,
within the intention and meaning of Section 1, Rule 126 of the
Rules of Court ( Rule 137 of the Revised Rules of 1964 ) and that
therefore his decision and all proceedings in this case be declared
null and void.
The issue thus posed is doubtless interesting and important, But iii tile peculiar
premises of the instant case, We do not deem it necessary to run once more thru the
whole gamut of jurisprudence here and elsewhere elucidating on the high ethical
principles that should guide a judge in every case where because of known relation
he has with any of the parties or counsel before him, which although not included
thereof, may yet leave room for doubt as to his absolute impartiality. Suffice it to say
that if for one reason or another not amounting to evident bad faith and deliberate
malintention a judge in such a situation continues to act — for undeniably, there are
men endowed with impregnable integrity who can unquestionably rise above the
feared compulsions of otherwise suspicious circumstances — the remedy does not lie
in the outright invalidation and setting aside of his actuations. The ultimate test this
Court has established in such a mileu is for the appellate tribunal to determine from
the record Whether or not actually the party complaining has been deprived of a fair
and impartial trial, and in the affirmative, to correspondingly grant a new trial. (Dais
vs. Torres, 57 Phil. 897.)
Indeed, in the case at hand, it is not imperative to rule on any possible bias on the
part of the trial judge. As We have indicated earlier, this case was submitted for
decision of the trial court on the basis exclusively of various agreed stipulations of
facts of the parties, accompanied by corresponding undisputed documents. No oral
evidence was presented by any of them. There was, therefore, no possibility that the
trial judge had either admitted or rejected any piece of evidence improperly or in
violation of any rule over tile objection of anyone of them. Neither do We have to
accord the usual deference given by appellate courts to any of his findings of fact on
account of his having been better situated to appreciate the credibility of any witness.
The complete record of the agreed stipulations of the parties and the pertinent
accompanying documents are before Us for our own first hand examination,
consideration and appreciation. We are entirely free to draw our own conclusions
from them without any regard to what appear in the appealed decision. Needless to
say, the rulings on questions of law therein are completely open to our review. In the
last analysis. therefore, no substantial prejudice to the right of the parties to a just, fair
and legal determination of the issues herein can be caused by rejecting appellant
Central's prayer for annulment of the decision under review. On the contrary, with the
time that has passed since this appeal came to this Court and in view of the unusually
long list of exhibits attached to the stipulations (from Exhibit A to Exhibit RRRRRR
with subsidiary numbers) it would be most impractical and unfair to all concerned for
Us to send this controversy back to the trial court, just so all of these stipulations and
exhibits may be the subject of another decision by a different judge, who will have to
study them all over again before he renders his decision, which inevitably will have to
be appealed to Us, and no one knows how many years again such repetitive
procedure will take. Accordingly, the CENTRAL's prayer for annulment must be, as it
is hereby, overruled.
II
Secondly, the Central, thru counsel, Atty. Vicente Hilado, assails the trial courts
negative resolution of the constitutional issues raised by it. According to the Central:
THE JUDGE A QUO AND CLIENT OF ATTY. JOSE AFRICA OF
THE PLANTERS ERRED IN NOT DECLARING REPUBLIC ACT
809 UNCONSTITUTIONAL AND NULL AND VOID;
(1) Because 'Police Power is a law of necessity' which can be
exercised by the State only when necessary to protect the interest
of the people in general; but not just to favor, and increase the
profits of a particular group or groups of sugarcane planters and
their own laborers, at the expense of the sugar centrals; in clear
violation of the constitutional prohibition against class legislation
and denial of the equal protection of the laws;
(2) Because it seems to us most illogical and unreasonable to
assume that the sugar industry in any milling district could not be
saved, unless the planters therein are given special protection and
treatment, so as to increase their profits; while the same industry in
other milling districts could very well be saved without giving the
planters therein equal protection and treatment to increase their
own profits;
(3) Because it seems to us equally illogical and unreasonable to
assume that the sugar industry in any milling district could very well
be saved without giving the platters therein such special protection
and treatment to increase their profits, when Fifty-one (51) out of
every One hundred (100) of them have written 'milling contracts
with the miller in their district;
(4) Because, it seems to use likewise illogical and unreasonable to
assume that the interest of the people in general requires that only
the laborers of the planters in the milling districts where the majority
of their employers have no written milling contracts with the miller
in their district should, at the expense of the Central, be so favored
and so discriminatory given higher and additional
compensations over and above the minimum wage fixed by law for
all other laborers in the country; but not those in districts where the
majority of their employers have such milling contracts with the
miller in their district;
(5) Because it seems to us also illogical and unreasonable to
assume that the interest of the people in general requires that the
planters (big or small) in the bigger milling districts be given higher
participations or shares in the sugar produced from their sugarcane
than the planters (big or small in the smaller milling district (Pp c-d,
Central's Brief,)
Joining the Central in this posture are the amici curiae, the late Justice Roman
Ozaeta and Ambassador Jose E. Romero and Atty. Enrique M. Belo. On the other
hand, aside from Justice Marceliano Montemayor and the law office of San Juan,
Africa and Benedicto, counsel for the plaintiff-appellee association and the sugar
planters, Attys. Paciano Villavieja and Porfirio Villanueva of the Department of Labor
and the other amici curiae, the law office of Tanada, Teehankee and Carreon, have
presented to the court the opposite view.
We have carefully considered the pros and cons forcefully and brilliantly discussed by
this array of learned legal luminaries, and it, must be stated that their respective
scholarIy and illuminating dissertations on the various constitutional questions herein
raised have considerably made the work of the Court much easier.
—A—
REPUBLIC ACT 809 IS A SOCIAL JUSTICE AND POLICE POWER MEASURE FOR
THE PROMOTION OF LABOR CONDITIONS IN SUGAR PLANTATIONS, HENCE
WHATEVER RATIONAL DEGREE OF CONSTRAINT IT EXERTS ON FREEDOM
OF CONTRACT AND EXISTING CONTRACTUAL OBLIGATIONS IS
CONSTITUTIONALLY PERMISSIBLE.
Despite very strongly persuasive arguments t the contrary of the distinguished
lawyers supporting the position of the centrals, the Court has arrived at the
conclusion, that Republic Act 809 was conceived and enacted as a social legislation
designed primarily to ameliorate the condition of the laborers in the sugar plantations,
and the fact that at the same time the planters would also be benefited by it does not
detract from if it does not add to such basic purpose of the Act. We do not deem it
necessary to make here an extended historical account of how the statute came into
being. The following observations of the trial court which, as the record reveals, are
more or less basically accurate should suffice, to Our mind, to project the social spirit
that animated the legislature:
Moreover Republic Act No. 809 seeks to reduce the inequality in
the benefits being received by the Central and The laborers. It
should be noted that tinder Section 9 of the law, 60% of the
increased participation shall be given to tile laborers and 40,7c. for
the planters. The application of the Act would go a long way
towards promoting better relations between the laborers on one
side and the planters and the Central on the other side.
The almost yearly ' v recurrence of strikes in the farms by the
laborers has for its root cause discontent generated by tile
inadequate earnings of the laborers. Theirs is a miserable lot for
they do not earn enough to give their families the minimum needed
to maintain a decent living in a civilized society, not to mention the
expenses necessary for the education of their children.
On the other hand, the planters are not without their problems.
Then have to bear the expenses of cultivation of the land which
includes the cost of the seeds and fertilizer. They have to pay their
taxes. They have to assume the unforeseen risks incident to raising
and producing the sugar cane like drought, locusts, and the like.
And hen the sugar cane is about ready for milling. there is the
added danger of fires which not infrequently reduce the harvest to
an amount which is not enough to cover the expenses in producing
the cane.
Considering that the share of the Central is entirely its own, and
that the share of the planters includes that of the laborers and,
therefore, has to be divided between them, a small increase in the
percentage of distribution of the yearly crop depending upon an
increased production is, in the opinion of the Court, just and
equitable.
Years ago, when the sugar industry was just being developed and
modernized, with the introduction in the Philippines of machinery to
replace the crude and antiquated means of extracting sugar from
the cane, it was necessary to induce capitalists to invest big sums
in building sugar centrals. Their capital has already been
recuperated plus allowance for reasonable earnings yearly. At
present, the only expenses of the Central consists of the
maintenance of its equipment, the replacement of worn out parts,
the fuel consumed during the milling season and the salaries of
personnel. Certainly, the Centrals are now in a position to
contribute to the burden of producing the cane and to solve the
perennial labor problems caused by the discontent of laborers
arising from their meager income. This problem is a constant threat
to the very existence of the sugar industry.
Realizing this danger to the biggest industry of the country, the late
President. Quezon caused a survey of the causes of the discontent
of the laborers and the recurrent trouble in the sugar regions. The
report submitted by the late Mr. Justice Moran after he investigated
the books of the Centrals and those of the planters, advocated very
strongly the necessity of a new and better sharing plan for the
sugar planters.
A bill similar to House Bill No. 1517 which finally became Republic
Act No. 809 was passed by Congress in 1951, but the same was
vetoed by the President. Members of both houses of the Legislative
approved Republic Act No. 809 because they found it necessary to
save the country's biggest industry. When the welfare of the public
is at stake, the state may, in the exercise of its police power, enact
legislation which may cause harm or injury to a certain class of the
inhabitants as long as it benefits the greater majority. The welfare
of the people is the supreme law. (Decision of Lower Court, pp.
409-412 of the Central's Record on Appeal.)
The primary purpose of the law to insure that the sugar plantation workers are paid
just wages is, indeed, stated by the authors themselves of the law in the explanatory
note of their bill, H. No. 1517 thus:
The necessity for increasing the share of the planters and the
laborers in the income derived from the sugar industry for its
stabilization is not a new question but an admitted fact even before
the outbreak of World War 11.
On February 23, 1938, President Quezon appointed Justice Manuel
V. Moran to make a study of the 'distribution of sugar resulting from
the milling of sugar-cane between the centrals and the planters with
a view to ameliorating the condition of the planters' laborers', and
after an exhaustive investigation covering several months, Justice
Moran filed his report on April 30, 1939, recommending an increase
in the participation of sugar planters, even in viola tion of existing
milling contracts, contending that such a law is con. institutional as
a valid exercise of the police power of the state. The National Sugar
Board created by Executive Orders Nos. 157 and 168, which made
another investigation of the sugar industry, in its report to the
President of the Philippines on August 2, 1939, confirmed
practically the findings of Justice Moran. (Appellees' Brief, pp.
7374.)
One Particular legislative incident should dispel all doubts about the overriding intent
of Congress in approving the Act, which, although by its title, appears to be only to
regulate the relations among the persons engaged in the sugar industry, is in fact to
improve the living conditions of the laborers in the farms. Section 10 of the original
bill, H. No. 1517, reads this wise:
SEC. 10. Effective upon the approval of this Act, the daily wage of
sugar farm workers shall be in accordance with the following scale:
(a) In milling districts where the participation between planters and
central is 60% for the planters and 40% for the central, the sugar
farm laborers shall receive a minimum daily wage equivalent to
10% of the average market price of export sugar per picul of the
preceding year, as declared by the Bureau of Commerce, including
free lodging; but in no case shall sugar farm laborers be paid a
daily wage of less than P 1.20 and free lodging.
(b) In milling districts where, under the provisions of section one
hereof, the participation of the planters is over 60%, the sugar farm
 laborers shall receive in addition to the minimum daily wage
provided for in paragraph (a) of this section, an additional rate of
P0. 10 per every I % increase in participation beyond 60%.
Evidently, this provision was inserted in the bill to give it the social ingredient without
which President Quirino felt any regulation fixing the sharing proportion between only
the millers and the planters would be unconstitutional, not only for impairing
contractual obligations but for in effect denying altogether to said parties the freedom
to contract, hence his veto of the original bill. Even then, when the bill reached the
Senate, the consensus among the senators was that it was imperative that the
laborers be given a proportionally bigger benefit than what the planters were to get
from the latter's increased share proposed in the House Bin. The records of the
Senate deliberations on this point showing how Section 9 as it now appears was
molded unmistakably support Our conclusion. On p. 549 et seq. of the Congressional
Record, Second Congress of the Republic of the Philippines, Third Regular Session,
Vol. III, Nos. 36-37, March 17 & 18, 1952, it is recorded thus:
Senator MONTANO. Mr. President, I have another amendment to
offer, but before I do so I wish to make a statement.
This is a joint amendment of Senators Puyat, Delgado and myself,
but before offering it, I wish to state that it was my intention to file
an amendment that reads as follows:
The proceeds of any increase in the participation granted the
planters under this Act over and above their present share shag
accrue to the exclusive benefit of the laborers of the said planters in
terms not only of wages but also of living conditions, and said
proceeds shall be placed under the control and administration of
the Department of Labor.'
However, since legislation not only is the ultimate result of logical
presentation and argument but also of compromise, the gentleman
from Bulacan, Senator Delgado, and the gentleman from
Pampanga, Senator Puyat, have expressed their desires to support
an amendment similar in nature only of lesser impact to the
planters. So, therefore, I am offering this joint amendment of
Senators Puyat, Delgado and myself:
On page 7, strike out the whole of Section 10 from line 4 to line 18
and in lieu thereof, insert the following:
THE PROCEEDS OF ANY INCREASE IN THE PARTICIPATION
GRANTED THE PLANTERS UNDER THIS ACT OVER AND
ABOVE THEIR PRESENT SHARE SHALL BE DIVIDED
BETWEEN THE PLANTER AND HIS LABORERS IN THE
PLANTATION IN THE FOLLOWING PROPORTION: SIXTY PER
CENTUM OF THE INCREASED PARTICIPATION FOR THE
LABORERS AND 40 PER CENTUM FOR THE PLANTERS, THE
DISTRIBUTION OF THE SHARE CORRESPONDING TO THE
LABORERS SHALL BE MADE UNDER THE SUPERVISION OF
THE DEPARTMENT OF LABOR.
xxx xxx xxx
Senator MONTANO. Mr. President, I shall proceed now to make a
statement on the amendment presented by Senators Puyat,
Delgado and myself, Mr. President, if there was any reason
adduced in support of the measure under consideration fixing the
new arrangements in the division of the produce in the sugar
plantation and centrals, there was no argument more potent, more
convincing than the supposed benefit that labor would ultimately
reap from these new arrangements, Even the explanatory note to
the bill under consideration lays proper stress on this phase of the
issue before the Congress today, that is, that the proponents of the
present amendment desire to improve the lot of the planters by an
increased share in the crop so that they will then be in a position to
pay more to their laborers in the farm.
In consonance with this belief we the proponents of this
amendment have seen fit to present a modification to the bill in the
sense that any and all increases that will accrue to the planters by
virtue of the bill, shall be divided in such proportion as to give 60
per cent to the laborers and 40 per cent to the planters. Before
presenting this amendment, I made a preliminary statement to the
effect that it was my intention to present an amendment which
would give to labor in the plantations all the benefits that would
accrue to planters by virtue of the passage and approval of this bill.
That was my intention, gentlemen, because it is a known fact, it is a
common belief in this country, that of all agricultural planters, the
sugar planters are the most benefited not only by the legislations
already passed by Congress but by the progress of the sugar
industry.
En este momento el Presidente Protempore ocupa la presidencia,
por designacion de la Mesa)
PREGUNTAS DEL SEN. OSIAS
Senator OSIAS Mr. President, may the gentleman be interrupted at
this point for a question? Will the gentleman kindly yield?
The PRESIDENT PRO TEMPORE The gentleman may yield, if he
so desires.
Senator OSIAS I just want to follow the trend of thought of the
gentleman, which I think is in the right direction. But may I know
from him the share that is alloted by this amendment to the planters
and the laborers?
Senator MONTANO. Sixty per cent of any increase is alloted to the
laborers and forty per cent to the planters.
Senator OSIAS May I announce that in due time I shall submit an
amendment to the amendment to make it 50-50. That is just an
announcement and I thank the gentleman for having permitted me
to interpellate him.
Senator MONTANO. (Continuing) Mr. President, of all the people in
this country who live by cultivating the soil, the sugar planters,
especially those in the province of Negros, are known to be the
most prosperous. There are even claims among those who oppose
the bill that there is no necessity for the present plan to increase the
participation of the plan. There an a time when the whole country
witnesses sugar planters and sugar barons from Negros who lived
luxuriously, and remembering this, many of our countrymen believe
that their present claim that they cannot even pay their laborers
decently has no basis in fact. The original big Mr. President and
gentleman, despite the calim that it will benefit labor, does not in
fact do that, because the said bill provides that in those plantations
where the increased share of the planters does not exceed 65 per
cent, labor shall not receive any benefit from the increased
participation of the planters because, in those plantations the
minimum wage law which already benefits labor shag govern. The
o text of the bill As no other than that the laborers shall participate
only in the increase where the participation given to the planters is
over and above 65 per cent.
Gentlemen, there is a potent group which comes to Congress and
pleads for an increase in the planters' participation in the sugar
crop, under the pretext of giving more participation to labor, but with
this bill gentlemen of the Senate, the Congress is miserably misled
because if these planters do not receive more than 5 per cent
above the basic 60 per cent the laborers win not receive any benefit
from that increased participation of the planters.
Mr. President, I am glad that the gentleman from La Union, who
announced his intention to file an amendment to my amendment by
reducing the share of labor from 60 per cent to 50 per cent, will give
his kind support to an amendment that will truly benefit labor and
the sugar planters. I am glad, but at the same time, I regret that
such a distinguished gentleman, and from presidential candidate,
shall double the reasonable 10 per cent reduction in the 60-40
sharing—60 for labor and 40 for capital and make it 50 for labor
and 50 for planters. I respect the opinion of the gentleman from La
Union, and I am certain that has a reason for announcing that he
would present an amendment making 50-50 the proportion which is
proposed at 60-40 in this amendment.
Mr. President and gentlemen—Iam now especially addressing
myself to the gentleman who announced that he would file such an
amendment, because this 10 per cent might represent the
difference between a reasonable standard of living or misery for the
laborers, but the 10 per cent deducted from the share of the
planters, especially when the planters come from Negros, wig not
diminish their luxurious standard of living. So, I plead now, Mr.
President and gentlemen, that if the gentleman from La Union really
wishes to support the noble purpose behind our amendment, he
should do it without reducing the minimum 60 per cent proposed to
be given to tabor to 50 per cent, because as I said, that 10 per cent
might represent the difference between misery or an ameliorated lot
for the farm laborers.
Mr. President, I thank you.
MANIFESTACIONES DEL SEN. OSIAS
Senator OSIAS Mr. President.
The PRESIDENT PRO TEMPORE Gentleman from La Union.
Senator OSIAS When I rose to direct an inquiry to the gentleman
from Cavite, who is sponsoring this amendment, I did so because I
wanted to be enlightened on the reasons that motivated the
presentation of this amendment. At the time I recalled that when
this bill under consideration was first presented, there was no
minimum wage law. During the period that had elapsed from the
presentation of the original bill to the present — through the various
tortous processes that it had to undergo and finally its veto by the
Chief Executive — a minimum wage law which is very
advantageous to labor and wage earners had been passed, and I
directed the question thinking that might not have been taken into
consideration.
Mr. President, the fundamental consideration that prompted me to
give my vote and support to this measure affecting the sugar
industry was that, while admitting that there should be no conflict
between central owners or. the one hand and planters from the
other, in the event that there is an unavoidable conflict between
these two, my heart instinctively and by conviction goes out to the
support of the planters because, they are the owners of the land,
and I consider the ownership of land in our country as -one of the
last bulwarks if not the last, of democracy in the Philippines.
In the course of my brief sponsorship during this session, Mr.
President, I stated that I would give my vote and support to this bin
because my thoughts and actuations in this august body in matters
of this nature have always been to consider always human rights
above property rights.
This amendment seeks, as it does, to benefit not only the planters
but also the laborers. I want to announce that I desist from my
original intention to present an amendment to the amendment, and
that I shall vote for this amendment offered by the gentlemen from
Cavite, Pampanga and Bulacan.
MANIFESTACIONES DEL SEN. PUYAT
Senator PUYAT. Mr. President.
The PRESIDENT PRO TEMPORE Gentleman from Pampanga and
Manila.
Senator PUYAT. Mr. President and gentlemen of he Senate: As a
co-author of this amendment, I plead earnestly for its approval, if for
no other reason than that the approval of t.s.n. amendment will be a
belated act of justice in favor of the laborers working in an industry
which has made thousands of people millionaires, and which
industry at the same time, allows its laborers to subsist on wages of
30 to 40 centavos a day. It is a sad commentary on any economic
system where the upper class becomes richer and vet the
foundation of the industry—labor—remains in that miserable
economic state in which it started. And if we will carry out the spirit
of this bill Mr. President, if we have to be consistent, may I
comment that while we are trying to improve the position of the
planter, the other factor in production, the laborer, is overlooked. So
I say, if we wish to be consistent, we have to take care of that
bigger section of the economic field which precisely is the basis of
the industry.
Mr. President, I am a planter, but at the same time it is known Chat
I am the son of a man who started in life as a laborer. Thus, I
understand the position of both the planner and the laborer. And I
say that, to a planter one or two thousand pesos more will not make
much difference. Yet to an ordinary laborer, an increase of twenty
or thirty centavos in his daily wages will mean a bigger meal, a
better home, better opportunities for education and an improvement
in health for his children. On the basis of this human consideration,
Mr. President, I plead that these countless anonymous laborers
who have made the sugar industry what it is today be given this
slight increase in their participation.
I thank you, Mr. President.
PREGUNTAS DEL SEN. PRIMICIAS
Senator PRIMICIAS. Mr. President will the gentleman may yield?
THE PRESIDENT PRO TEMPORE. The gentlemen may yield, if so
desires.
Senator PUYAT. I can never refuse the gentlemen from
Pangasinan, Mr, President.
Senator PRIMICIAS. I wish to state at the outset that I am in favor
of this ammendment, but one thing strikes me. The amendment,
now being sponsored by Your Honor and Senator Montano and
Delgado proposes to strike out the whole section 10 of the original
guarantee that under the provision now proposed in substitution of
said section 10, which gives 60 per cent of any increase in
participation to the laborers, these laborers will receive at least the
minimum compensation provided for in the Minimum Wage Law?
Senator PUYAT. The minimum wage provided therein is
compulsory, Mr. President. Whether section 10 is included or not,
the provisions of the Minimum Wage Law will have to be applied.
Senator PRIMICIAS. There might be a controversy later on
because, under section 10 of the original bill, the provisions of the
Minimum Wage Law are to be observed. With this amendment, all
such provision are deleted, which might give rise to the argument
later on that it was the intention of the Congress to make
ineffective, in this particular case, the Minimum Wage Law.
Senator PUYAT. Your Honor, although I feel that it will be a
superfluity or redundancy, to retain that portion of the bill which has
reference to the application of the Minimum Wage Law, the
sponsors will offer no objection.
Senator PRIMICIAS. For example, before the beginning of the
proposed amendment in capital letters, I would like to insert the
following: ' WITHOUT PREJUDICE TO ANY MINIMUM WAGE
LAW.'
MANIFESTACIONES DEL SEN. DELGADO
Senator DELGADO. Mr. President, may I just be permitted to give
briefly the reasons why I joined the sponsorship of this
amendment?
The PRESIDENT PRO TEMPORE. The gentleman from Bulacan
has the floor.
Senator DELGADO. Mr. President, while I was the Philippines'
Resident Commissioner in the United States, I had occasion to
investigate the living condition of the Filipino laborers in the United
States. In my travels through Hawaii, Guam and other places, I had
also occasion to receive most complementary reports regarding
Filipino laborers. It is indeed strange that there should be many
people believe that the Filipino as a laborer in his own country is
susceptible to criticism. I attribute this to the manner they are
treated and the wages they earn in their own country.
I am therefore co-sponsoring this ammendment, because I firmly
believe that it will be an incentive for the Filipinos as laborers in
their own country to attain the same height of success and industry
as the Filipinos in America, Hawaii, Guam and elsewhere have
achieved.
I thank you, Mr. President.
ENMIENDA PRIMICIAS A LAS
ENMIENDAS MONTANO
PUYAT Y DELGADO
The PRESIDENT PRO TEMPORE. The gentleman from
Pangasinan may state now his amendment.
Senator PRIMICIAS. The amendment to the amendment that I
propose is as follows: Insert before the text of the amendment in
capital letters the words 'WITHOUT PREJUDICE TO ANY
MINIMUM WAGE LAW'.
Senator MONTANO. Mr. President, may I suggest to the gentleman
from Pangasinan the change of the phraseology to the following:
THE PROVISIONS OF THE MINIMUM WAGE LAW
NOTWITHSTANDING
Senator PRIMICIAS. No that would carry the reverse meaning.
That would be just the opposite of what I intended.
The PRESIDENT PRO TEMPORE. Do the authors of the original
amendment accept the amendment?
Senator MONTANO. Mr. President, as announced before, we have
no objection to any amendment that would clarify the amendment
we presented, although it is our belief that any amendment tending
to clarify it is superfluity since the Minimum Wage Law is already a
law. However, we cannot offer any objection to anything that will
improve the amendment of the gentleman from Pangasinan.
The PRESIDENT PRO TEMPORE. Are there any remarks on the
amendment to the amendment?
EL SEN. PRIMICIAS RAZONA SU ENMIENDA
Senator PRIMICIAS. Mr. President, I cannot exactly agree to the
claim that the amendment to the amendment is a superfluity.
Should this matter come before the courts, lawyers will be looking
for loopholes in the law. It is better to be on the safe aside. I
therefore submit the amendment to the amendment.
The PRESIDENT PRO TEMPORE Is the Senate ready to vote on
the amendment of the gentleman from Pangasinan to the
amendment submitted by Senators Montano, Puyat and Delgado?
EL SEN. LAUREL FIDE UNA ACLARACION
Senator LAUREL. Mr. President, just for & clarification.
The PRESIDENT PRO TEMPORE The gentleman from Batangas.
Senator LAUREL. I understand that the amendment as amended
will read as follows: 'Without prejudice to any minimum wage law
the proceeds of any increase in the participation granted the
planters. .. 'etc. Does it mean that a laborer, who is receiving the
minimum wage, will get more, or may be get less when we say
without prejudice to any minimum wage law?' This amendment
seems to imply that if the laborer is getting the minimum wage and
his share propose in the bill does not reach the minimum wage, the
laborer will get the minimum wage and no more, even if he may get
more on the basis of the proportion outlined in the amendment. I
wish to be clarified with regard to the meaning of the amendment
as proposed to be amended.
The PRESIDENT PRO TEMPORE Will the author of the
amendment to the amendment please clarify?
Senator PRIMICIAS I think, Mr. President, we can clarify that by
changing the phraseology in this wise: 'IN ADDITION TO THE
BENEFITS GRANTED BY THE MINIMUM WAGE LAW etc.
Senator LAUREL. Can't we say, for instance.- 'IN ADDITION TO
THE MINIMUM WAGE TO WHICH A LABORER IS ENTITLED. . .
'etc.? In other words, the laborer will get the ' ' wage in all cases, in
addition to what he is entitled to under the proposed amendment. If
 that is the meaning then I suppose it should be worded that—IN
ADDITION TO THE MINIMUM WAGE TO WHICH THE LABORER
IS ENTITLED—, then follow the rest.
Senator PRIMICIAS Then, Mr. President, may I ask that my
amendment be reworded this way: 'IN ADDITION TO THE
BENEFITS GRANTED BY THE MINIMUM WAGE LAW'.
The PRESIDENT PRO TEMPORE Do the authors of the
amendment accept the amendment to the amendment now
reworded?
Senator MONTANO. We accept the amendment.
The PRESIDENT PRO TEMPORE Are there any further remarks to
the amendment to the amendment (Silence) The Secretary will
please read the amendment to the amendment before we vote,
The SECRETARY.
The text in capital letters small be preceded by the following words:
'IN ADDITION TO THE BENEFITS GRANTED BY THE MINIMUM
WAGE LAW
APROBACION DE LA ENMIENDA
PRIMICIAS A LA ENMIENDA
MONTANO, PUYAT Y DELGADO
The PRESIDENT PRO TEMPORE Those who are in favor of the
amendment to the amendment just read, will please say AYE
(Several Senators. AYE Those who are opposed will please say
NAY (Silence) The amendment to the amendment is
approved" (Congressional Record, Senate. Third Regular Session.
Second Congress of the Republic, Vol. III, Nos. 36 & 37, March 17
& 18, 1952, pp. 549, 552-556. Bold letters supplied)
Police Power
It is therefore beyond cavil that dealing as it did with the unfortunate plight of the farm
laborers crying for just and urgent amelioration and confronted with the usual
constitutional objections whenever contractual relations are sought to be regulated,
Congress ultimately availed of the state's police power, in the face of which all
arguments about freedom of contract and impairment of contractual obligation is have
generally been held not to prevail. In Lutz vs. Araneta  (G.R. No. L-2859, Dec. 22
1959), this Court recognized the propriety of exercising police power when it is
needed to do so in order that our sugar industry may be stabilized, and to that end, it
was held that the legislature could provide that the distribution of benefits from the
proceeds of sugar be readjusted among the components of the industry to enable it to
resist the added strain of the increase in taxes that it had to sustain then. With at least
equal persuasiveness must such reasoning obtain when the re-adjustment of the
distribution of proceeds is impelled by the need to render social justice among all the
participants in the industry, specially the laborers.
True it is that, as counsel for the centrals contend, police power cannot be resorted to
just any time the legislature wishes, but it is not correct to say that it is indispensable
that exceptional circumstances must exist before police power can be exercised. As
very aptly pointed out by the able amicus curiae, Attys. Tanada Teehankee and
Carreon, gone are the days when courts could "be found adhering to the doctrine that
interference with contracts can only be justified by exceptional circumstances", for the
"test of validity today under the due process clause, even in the case of legislation
interfering with existing contracts, is reasonableness, as held by this Honorable
Supreme Court in the case of People vs. Zeta. 3 In other words, freedom from
arbitrariness, capriciousness and whimsicality is the test of constitutionality." (p. 17,
Brief of Amicus Cuiae in Behalf of Silay-Saravia Planters' Association, Attys. Tanada
Teehankee and Carreon.) And there is not enough showing here of
unreasonableness in the legislation in question. Quite to the contrary, as win be
discussed anon We find all the provisions of the impugned act to be germane to the
end being pursued.
Social justice
But it is not police power alone that sustains the validity of the statutory provision in
dispute. Having in view its primary objective to promote the interests of labor, it can
never be possible that the State would be bereft of constitutional authority to enact
legislations of its kind. Here, in the Philippines, whenever any government measure
designed for the advancement of the working class is impugned on constitutional
grounds and shadows of doubt are cast over the scope of the State's prerogative in
respect thereto, the imperious mandate of the social justice Ideal consecrated in our
fundamental laws, both the old and the new 4 asserts its majesty, upon the courts to
accord utmost consideration to the spirit animating the act assailed, not just for the
sake of enforcing the explicit social justice provisions of the article on "Declaration of
Principles and State Policies", but more fundamentally, to serve the sacred cause of
human dignity, which is actually what lies at the core of those constitutional precepts
as it is also the decisive element always in the determination of any controversy
between capital and labor.
Thus, Section 5 of Article II of the Constitution of 1935, under the aegis of which the
law in question was enacted, made it one of the declared principles to which the
people committed themselves that "the promotion of social justice to insure the well
being and economic dc security of all the people should be the concern of the State."
More specifically in regard to labor, there was also Section 6 of Article XIX, to the
effect that "the State shall afford protection to labor ... and shall regulate the relation
between . . . labor and capital in industry and in agriculture. 5 It is difficult to conceive
of any legislation more aptly rooted in the declared principle and the plain injunction of
the old Constitution just quoted than the Act under discussion which is a law to
regulate the relations between the centrals and the planters with the primordial
objective of protecting and promoting the interests of labor. In regard then to the
arguments of the centrals relative to due process and the sanctity of contractual
obligations as well as the freedom of contract, We hold that more cogently than in
regard to the exertion of police power as discussed above, the criterion for
determining whether or not social justice has been over-extended in any given case is
nothing more than the economic viability or feasibility of the proposed law in favor of
labor, and certainly not the existence of exceptional circumstances. In other words, as
long as capital in industry or agriculture will not be fatally prejudiced to the extent of
incurring losses as a result of its enforcement, any legislation to improve labor
conditions would be valid, provided the assailed legislation is more or less demanded
as a measure to improve the situation in which the workers and laborers are actually
found And in the case at bar, there is not even a pretension that the finances of the
centrals would be anywhere in the red as a result of the enforcement of Republic Act
809.
In the light of the foregoing considerations, We do not find the position of the Central
that Section I of Republic Act 809 interferes unconstitutionally with existing contracts
and the freedom of all the parties concerned in entering into new ones to be
sufficiently persuasive.
—B—
THE ACT DOES NOT VIOLATE THE EQUAL PROTECTION CLAUSE.
No unequal protection of the laws
It is next argued that the challenged Act denies equal protection of the laws in several
ways to the different groups of laborers in the sugar industry. For instance, it is
pointed out that whereas it alleviates the condition of the workers in some sugar
plantations, it does not provide for similar treatment to the laborers in the centrals. In
fact, it is stressed, even among those working in the sugar farms, there is unequal
treatment, not only because Section 1 of the law expressly excludes from its
application milling districts with centrals having an actual production of less than one
hundred fifty thousand piculs of refined sugar, but also according to the schedule
prescribed in the same section, the share of the planters together with the resultant
share of the laborers is made proportional to the amount of production of the
corresponding mills instead of being uniform. So also it is decried that even as among
milling districts producing not less than 150,000 piculs, only the laborers working in
the plantations within he districts where the majority of the planters do not have
written milling contracts with the respective centrals are entitled to the benefits
ordained by the law and not all the laborers in all plantations where the planters have
been given increase in their shares, regardless of the existence of such majority.
—1—
Considering the purpose of the law the bigger share given to planters in districts with
bigger centrals is rational
Anent the indictment that the law discriminates between the planters in the big milling
districts, on the one hand, and those in small milling districts, on the other, by
providing for bigger shares to the planters in the former and smaller shares to those in
the latter, it appears to Us to be obvious that as the standard used by the legislature
is the amount of production in each district, naturally, the planters adhered to the
bigger centrals should be given bigger shares, considering that the more a central
produces, the bigger could be its margin of profit which can be correspondingly cut for
the purpose of enlarging the share of the planters. Understandably, the smaller
centrals may not be able to afford to have their shares reduced substantially, which is
evidently the reason why the law has not been made applicable to centrals having a
production of less than 150,000 piculs a year. In any event, the point raised relates to
the wisdom of the standard fixed by the legislature, which the courts are bound to
uphold, absent any indication, as in this case, of arbitrariness or capriciousness in it.
As appellees put it, "the law is applicable to all mill districts whose productions fall
within the standards set forth therein; the graduated scale of production is the goal
the law seeks to attain:-an increased production." (p. 36, Appellees' Brief.)
—2—
Laborers in the centrals are differently situated and are already protected by other
laws.
Much less s there substantial basis for the claim that it is within the constitutional
proscription under discussion for the Act to discriminate against the workers in the
centrals by not including them among the components of labor in the apportionment
of the fruits of their joint efforts with the planters. We have looked into the
corresponding factual premises of this contention of the Central relative to the equal
protection clause with the care they deserve, and We are of the considered opinion
that the criterion on which the provision in issue is predicated precludes the
conclusion of capricious and arbitrary discrimination which the Charter abhors. The
laborers in the central performs work the nature of which is entirely different from that
those working in the farms, thereby requiring the application to them of other laws
advatageous to labor, which upon the other hand, do not correspondingly favor
plantation or purely agricultural manpower. Besides, there is no denying the fact that
as industrial or semi-industrial workers, the laborers in the centrals, even the
farmhands, therein, are being more or less sufficiently taken care of under other
existing laws and the prevailing terms and conditions of their employment, for which
reason there is no known nor demonstrated demand, much less perceptible urgent
need, to bring them under the coverage of the instant legislative bounty. Nonetheless,
for the better protection of the laborers in the centrals against any attempt of their
employers to prejudice them in retaliation for the reduction of the income that the
operation of the law might cause the centrals concerned, Section 3 of the Act ordains
thus:
Sec. 3. Neither the enforcement of this Act nor anything contained
herein shall be deemed sufficient and just cause for the reduction of
the wages of workers employed by sugar centrals, for the
withdrawal or cancellation of any benefits, facilities, privileges, or
other concessions heretofore granted to them, or for the temporary
lay-off or permanent dismissal of any of the said workers.
 xxx xxx xxx
It is implicit in this provision that precisely because the legislature could not extend
any increase to the laborers of the centrals at the same time that the millers' share in
the production is being reduced, it however showed its concern for the laborers by
enjoining the centrals from adopting any measure that would in any manner place the
former in a worse position than where they were before the effectivity of the Act.
In this connection, We note that the following apr observations in the brief of Attys.
Tañada, Teehankee and Carreon stand unrefuted by any of the opposing counsels:
Alleged discrimination against laborers of sugar centrals.—Section
9 of Republic Act 809 requires that 60% of the increased rate of
participation be paid to the plantation laborers, while no additional
benefit is provided in the law for central laborers. On this ground, it
is contended that Republic Act 809 discriminates against laborers
of sugar centrals. Considered by itself the law appears to be lacking
in abstract symmetry, but when the actual facts regarding
employment conditions of plantations laborers, on one hand, and
central laborers on the other, are taken into account, the seemingly
inequality will disappear. There are many points of material
differences between the two categories of laborers. Most important
is the fact that because centrals, since their establishment in the
20s, had been receiving an undue proportion of the sugar
processed from the planters' sugarcane, they have always been
financially able to give their laborers better wages and better
employment conditions than planters could give to their laborers.
Another important difference that may be noted is the fact that the
laborers of planters, with their families, are more numerous than the
central laborers with their ramifies Even existing legislation, apart
from Republic Act 809, has provided or made available more
benefits to central laborers. Today, as at the time of passage of the
Sugar Act, farm laborers are expressly xcluded from the benefits of
Com. Act 444, otherwise known as the Eight-Hour Labor Law
(Section 2); of Act 1847, otherwise known as the Employers'
Liability Act (Section 9); of the Minimum Wage Law (Rep. Act. 602),
unless they are employed in a farm over 12 hectares in size
(Section 3, par. [b] and even then, the Minimum Wage Law
provides for a much lower wage level for farm laborers than that
provided for industrial laborers, the daily minimum wage for farm
laborers being originally P1.75 a day to become P2.00 a day one
year after the effective date of the Minimum Wage Law and P2.50 a
day one year still later, and for industrial laborers the minimum
wage being ?4.00 a day in Manila and P3.00 outside of Manila, but
to be increased to ?4.00 one year after the effective date of the law
(Pars. [a] and [b], Sec. 3); of Act 3961, as amended by Com. Act
324 and Rep. Act 46, providing for emergency medical treatment to
be furnished by their employers, unless the number of farm
laborers of any given employer is 30 or more (Section 1); of Rep.
Act 239, providing for emergency dental treatment, unless their
number is 50 or more (Section 1); and of Court Act 103 in regard to
submitting disputes -to the Court of Industrial Relations unless their
number exceeds 30 (Section 3); while laborers in sugar centrals
enjoy the benefits conferred by all the laws mentioned either
because they come squarely within their provisions or because,
where the laws fix the minimum number required in order to avail of
their benefits, the number of laborers in any given central always
and inevitably exceeds the minimum number respectively fixed in
the various laws mentioned; and few, if any, farm laborers can take
advantage of the collective bargaining rights provided in Com. Act
213 and the Industrial Peace Act, and at any rate, farm laborers
are, relatively, in weaker bargaining positions in negotiating with
their respective individual employers than laborers in sugar
centrals. RA 809 is therefore but a belated attempt to compensate
plantation laborers iii some form for what existing legislation denies
to them but grants to laborers of centrals. Though the Sugar Act
provides no new benefits for laborers in centrals, it ensures that its
enforcement and operation shall not be occasion for the reduction
or withdrawal of benefits at present enjoyed by them (Section 3)."
(Amicus curiaes Brief, pp. 46-49.)
—3—
How Sections I and 9 should be construed in order not to defeat the basic objective of
the Act and to avoid unconstitutionality thereof.
The claim of inequality in the benefits to labor resulting from the criterion of existence
or non-existence in the different milling districts of a majority of planters with written
contracts iii the determination of the applicability of the Act requires more extended
disquisition. Indeed, it is in connection with this point that We perceive a feature of the
Act which unless viewed in proper light would render the same constitutionality
objectionable.
Considering that because under the terms of Section 1 of the Act the ratios of sharing
therein specified are to be observed only in those milling districts where the majority
of the planters have no written contracts with the centrals, it is pointed out that it,
therefore, makes the benefits intended by it for the laborers dependent on the
subjective contingency of the millers and the planters signing or not written
agreements, instead of automatically by direct legislative fiat regardless of the will of
either the millers or the planters or both. Worse, it is contended, in consequence of
such condition in the law, it contains within its own provisions the very means by
which the planters can be benefited exclusively by an increase in their share, without
any obligation on their part to share such benefit with their laborers, despite the fact
that such laborers' share, as We have pointed out above, is precisely the very
element purposely and deliberately incorporated in the law to make it the social
legislation that it is, exempted from the constitutional injunctions and constraints
relative to contractual obligations and the freedom of contract. To put it otherwise, it is
argued that it is actually possible within the letter of this statute for the planters to
secure exclusively for themselves any increase they want, and even more than that
specified for them in Section 1 thereof, without being necessarily bound to share the
same with their laborers, by the simple expedient of the majority of them signing
contracts with the centrals providing for such increase, thus thwarting the very
avowed primary purpose of the legislature in approving the same. In brief, the terms
of the statute can easily be taken advantage of by the planters and the centrals in
complete disregard of the interests of labor for whom it was specifically designed.
Viewed in this manner, the Act would appear to be self-defeating in so far as the
laborers are concerned, but efficacious in providing what the PLANTERS desire for
themselves, contrary to its true objective of increasing the share of the planters only
as a means of ameliorating the situation of the laborers. Parenthetically, the Central
insists that this was actually the real scheme of the particular legislators who framed
the law — to compel the centrals to augment the share of the planters, and not really
to improve the lot of the laborers. Indeed, if such is the inevitable result of applying
the provisions in question, there is ample ground for considering them as violative of
the Constitution.
For instance, applying the bare letter of the Act, if the central and the majority of the
planters in any district having a production of more than one million two hundred
thousand piculs should agree by contract to reduce the share of the central from 40%
to 34% and to increase that of the planters from 60% to 66%, not only would the
planters be greatly benefited by the increase in their shares, but the centrals would
also save 4% which otherwise it would have to give to the planters if it were not to
sign contracts with the majority, and yet the laborers of the planters would get no part
of the increase their planters-employers would be entitled to, since it would be argued
that the clause in Section I the "absence of written milling agreements between the
majority of planter., and the millers in any milling districts is the condition sine qua
non of the enforceability of the whole Act, including Section 9, which is the one that
provides for the increase of the share of the laborers. This literal reading of the Act
manifestly inconsistent with its basic intent, does render the Act unconstitutional since
any legislative enactment that is deceptive by ostensibly being a social legislation to
ameliorate the condition of labor so that it may hurdle constitutional obstacles as a
police power or social justice measure, when in truth it is only intended to operate in
favor of the employer or of capital must be stricken down as a despicable fraud which
no constitution in the world can ever be covered as all the lawn under it to perpetrate
upon the people. Instead of Promoting social justice, the Act would clearly be a
double instrument of injustice and oppression to labor, for aside from perpetrating
their wretch condition they would be the victims of a legislative deception.
Accordingly, We feel it is the proper evaluation of the considerations just discussed
that is most decisive in the ultimate resolution of the controversy before Us.
Incidentally, We note that none of the learned counsels has discoursed on them from
what we deem to be the correct perspective, — namely, that as has been pointed out
above, the primary reason for being of Improvement of the condition of the plantation
laborers. It is quite regrettable that of the Secretary of Labor took no pains to adopt an
independent position from the lawyers of the planters and merely co-signed a joint
brief with them for the plaintiffs-appellees, hence their in ability to draw attention to
the inevitable inconsistency and conflict of interest between the plan and the laborers
resulting from the literal application of the law as above Pointed out. They have
overlooked the incontrovertible pro. Position that unless the laudable intention of the
law to protect the laborers is carried out in the construction and application of
Sections 1 and 9 vis-a-vis each other, any other way of implementing the same would
render it unconstitutional.
We reiterate that as can be n in the portion of the trial court's derision We have
quoted earlier, the declared foundation of the Act was the so-called Moran Report,
copy of the full text of which is attached to the printed me Of counsels for the planters.
The thrust of said report is that the sugar industry, a very vital element of the national
economy, would collapse if no means could be to compel the centrals to increase the
share of the planters in their milled sugar cane production, for without such the
planters; would not be able to contain the surging unrest and imminent refusal of their
laborers to work unless their demand for higher wages, which they badly need were
granted. The report proposed remedial measures to cope with the situation, and the
Act is the legislative effort in that direction. To quote again from the decision of the
learned trial judge:
Moreover, Republic Act No. 809 w to reduce the inequality in the to
being received by the Central and the laborers it should be noted
that under Section 9 of the law, 60% of the increase Participation
shag be given to the laborers and 40% for the planters. The
application of the Act would go a long way towards promoting better
relations between the laborers on one side and the planters and the
Central on the other side.
The almost yearly recurrence of strikes in the farm by the laborers
has for its root cause discontent generate by the inadequate
earnings of the laborer Theirs is a miserable lot for they do not earn
enough to give their families the minimum to maintain a decent
living in a city not to mention the for the education of their children.
xxx xxx xxx
Realizing this danger to the biggest industry of the country, the late
President Quezon caused a survey of the causes of the discontent
of the laborers and the reccurent trouble in the sugar region. The
report submitted by the late Mr. Justice Moran after he investigated
the books of the Centrals and those of the planters, advocated very
strongly the necessity of a new and better sharing plan for the
sugar planters. (Brief of the Appellees, pp 29-30; p. 31)
The moran report itself contains the following pertinent observations:
Considering the laborers to have been most adversely affected by
the limitation, the planters had come openly for an increase in the
wages of their plantation laborers provided their share in milling
contract be also increased. The following gives us a fair view of
their stand
At the beginning of this brief we have express our
indorsement, in principle, of the proposition to fix
minimum wage for the laborers in the sugar
plantations. This is because we are with the
laborers in their needs and in the improvement of
 their lot. But under the conditions in which the
finances of the mass of the planters are found,
nothing more can be done unless the state of
such finances is also ameliorated The proposed
fixing of minimum wages is intended to be a
measure of social justice to the laboring class but
to render justice to a class at the expense of
another class that also needs the New Deal will
be most unjust. We have an abiding faith in the
wisdom of our government and of those who
control it, and that when it renders justice it does
it not only to one class but to an classes needing
it. Finally, we trust that when the government
takes the steps towards adjusting the wages of
the laborers at the expense of planters it will, at
the same time adopt measure that will insure the
planters of the increase of the benefits they
derived from the industry. Any measure that the
government may adopt toward raising the
standard of wages for farm labor should be
accompanied by a readjustment of the milling
contract increasing the planter's share of the
sups otherwise such a measure will be unfair and
unjust to the planter.' ( See pp. 3435 of
Preliminary Report dated Sept. 18, 1937, of
Judge Francisco Zulueta, Court of Industrial
Relations, to Ms Excellency, the President,)
xxx xxx xxx
From what has been thus far discussed, two cardinal facts are
clear: (1) that in general the profits of the centrals greatly out
proportion those of the planters and (2) that the latter can not be
made to ameliorate the condition of their laborers unless their
milling shares be increased. It is thus obvious that the problem of
improving the lot of the laborers in the sugar industry depends upon
and is inseparably bound with another problem arising from the
contractual relation between planters and centrals. There can be no
question however, that if the centrals refuse to adjust their milling
contracts, to give room for increased participation in favor of the
planters and thus obstruct the government's legitimate policy of
improving the condition of the planters' laborers, its rightful authority
may be exercised either in the form of taxation or police power. It
may impose a tax on central's receipts. x x x" (Memorandum of
Justice Montemayor, pp. LXI to LXII LXV to LXVI See also Exhibit
0.)
Any increase in participation given to planters in contracts executed after the
approval of Republic Act 809 must be shared with laborers of the planters in the
manner provided in Section 9, even if by the reason of the number of such contracts,
Section 1 would not apply.
In other words, it is conceivable for Republic Act 809 to survive the constitutional
attack mounted by the counsels for the CENTRAL, if in any instance its provisions
can be availed of to get some advantage for the planters without their laborers being
correspondingly benefited. A greater and more intolerable social injustice would result
in such an event. In a sense, a dilemma has emerged. If We declare the Act
unconstitutional upon the ground that it is unwarranted invasion of the freedom of
contract as between the millers and the planters, the deplorable condition of the
laborers in the sugar farms would remain as it was before its enactment. On the other
hand, if We sustain its validity but at the same time apply it literally and sanction a
construction thereof that would enable the centrals and their planters to enter into
agreements, under which the latter would have to be given increased participation
without any obligation to share the same with their laborers, the Court would be a
party to a conspiracy to virtually defraud labor of the benefits, the grant of which is
precisely its sole redeeming feature to save it from unconstitutionality. For it is clear
for anyone to see that without the Act, under the conditions prevailing in the industry,
the planters would have no means of persuading, much less compelling, the centrals
or millers to give them any increase in their respective shares, whereas, with this law,
faced with the prospect of being forced to grant the planters their proportion of
sharing prescribed by it, if no written contracts were to be signed by them with the
majority of the planters, naturally, the centrals would readily agree to give the planters
the increase they want, — which could be less than that stipulated in the Act and yet
be exactly what the planters would get under it if the majority of them were not to
have written contracts with the central. In which eventuality, and should we uphold the
proposed strictly literal construction of the Act, the laborers would be left holding the
proverbial empty bag. In that way, the interests of the capitalist components of the
industry, the millers and planters, would be served by the compulsive effect of the law
but labor would not be assured of receiving even the crumbs, when the truth is that
the legislation would have no reason for being as a constitutional and enforceable
statute if it did not include mandatory provisions designed to lift them from misery.
The Court emphatically refuses to have anything to do with such an unconscionable
posture vis-a-vis the fate of labor, which pose, after all We must assume could not
have been in the contemplation of the legislature that precisely inserted into it its pro-
labor element in order to bring it within the ambit of the social justice and police power
protection of the fundamental law. We condemn such a view as definitely anti-social
and as a gross injustice to labor, which no respectable legislature composed of duly
elected representatives of the people may ever be deemed as capable of dirtying the
sacred statute books with. Conscious of the high mindedness of the Congress and
aware that deception, particularly if it would victimize labor, could never have been
within their contemplation, We are thoroughly convinced that the Act should never be
construed in the manner suggested.
The benefit to labor contemplated in Section 9 is ineludible eve if Section I should be
inapplicable
The way then to remove from Republic Act 809 any taint of any furtive character is to
construe it in the only manner its social justice purpose can be attained. Never should
its provisions be deemed as permitting the planters to benefit from the operation
thereof without their being compelled to give their laborers that without which the Act
would not have been approved by Congress nor allowed by President Quirino to
lapse into a law and for which alone it can avoid being struck down as
unconstitutional. It is a familiar rule in constitutional law that when a statute is
rationally capable of different constructions, that which wig render it unconstitutional
should be disregarded. Under the same principle, the constitutionality of a statute
should not be prejudiced by applying the same in a manner that would render it
unconstitutional As has Windy been demonstrated Republic Act 809 owes its
constitutionality exclusively to its labor content, hence to allow it to be applied in a
way that would strip it of that particular element would be fatal to its constitutional life.
In this connection, it is vigorously insisted that the terms of Section 1 are plan and
explicit to the effect that the Act may be applied only in the milling districts where the
majority of the planters do not have written contracts with the centrals. Likewise, it is
as vehemently contended that Section 9 compels the planters to e with their laborers
whatever increase the centrals would give them only and only if such m crease is
given to them "under the Act" more specifically, its Section 1, and, therefore,
whatever increase showed be given to the planters by written contract rather than by
the inexistence of a majority of such written contracts would not be within the
coverage of the Act. Viewing these arguments in the light of the social justice
imperatives that inform the Act, as discussed above, the Court cannot agree.
There is latent ambiguity in the Act, hence the justification and the need for judicial
construction
Granting arguendo  that the words of the provisions referred to do not suffer from
patent ambiguity, We nevertheless discern latent ambiguity in them—latent in the
sense that while the mandate to always protect labor whichever way said provisions
might be construed does not seem apparent in the language employed, such
compulsion—propelled by the indubitable spirit and objective of the Act—is readily
perceptible in the obvious coercive pressure that Section I exerts upon the centrals
for them to yield to the demand of the planters for written contracts with increased
shares for the latter, as otherwise, that is, if the majority of the planters should not
have written contracts, that is, if the majority of the planters should not have written
contracts, the fun force of said provision would fall on them (the centrals) and they
would have no alternative than to give their planters the higher ratio of shares
prescribed therein. In view of such latent ambiguity, judicial construction is imperative.
Thus, reading the provisions in question from the ineludible perspective of its pro-
labor intendment, We are not convinced that the existence of the majority of contract
planters mentioned in Section 1, attained after the effectivity of the Act, would
inexorably result in the inapplicability of Section 9, such that by such majority of
written contracts, the planters would be able to get by contract the increase intended
for them by Section 1 without being mandatorily bound to give their laborers any
portion thereof. We believe that to read Sections 1 and 9 in such manner would be
contrary to the very purpose for which the Act was conceived and approved.
It is clear to Us that all that Section 1 implies is that the proportions of sharing therein
specified would no longer hold in the event a majority of the planters in the district
should have written milling contracts with the centrals. In that sense, it cannot be aid
that the Act impairs the freedom of contract to which the CENTRAL and the planters
are entitled. The language of said section does not however appear to Us to
necessarily envisage inseparability of its applicability from the enforceability of the
rest of the Act. On the contrary, it is implicit in the separability clause contained in
Section 10 of the Act itself that to avoid that the unconstitutionality of any provision of
the Act which may result from its application in relation to another provision thereof,
such provisions should be accordingly applied independently of each other, specially
if by so doing, as in this instance, the objective of the statute can be best achieved.
More specifically with reference to the contention that Section 9 pegs or predicates
the right of labor to partake in the increase of the shares of the planters to the
increase resulting from the absence of a majority of contract planters provided for in
Section 1, We hold that it is entirely within the purview of the legislative pro-labor and
social justice intent of the Act that any increase the central should concede to the
planters by contract executed after the passage thereof is an increase "under the
Act", thereby resulting in the application of its Section 9, for there can be no doubt
that the centrals would only grant such increase for the ultimate purpose of avoiding
the application of Section 1, which is to say that the centrals' act of entering into
written contracts would plainly be nothing less than an ineludible consequence of the
compulsive effect of the Act intended by the legislature. That this construction may
not give the laborers exactly what the Act contemplates, since the contracts to be
entered into might actually parade for proportions less favorable to the planters than
that stipulated in Section I is no argument to render it untenable. What would happen
in such a case is only a lesser evil that the totally anti-social disaster of labor getting
absolutely nothing while the planters would be getting an increase which could be as
much as that provided for them (planters) in said section. To reiterate, the percentage
for labor specified in Section 9 may be safely construed to be demandable whatever
be the percentage of increase for the planters that their contracts with their centrals
might provide. And inasmuch as this constitutional approach just indicated is the only
one consistent with the manifest objective of the Act. We are duty bound to adopt the
same in the case at bar. The spirit rather than the latently ambiguous letter of the Act
must be enforced.
Why new contracts executed to secure majority were not illegal nor in bad faith
At this point, it may be asked, since the new contracts just referred to were entered
into purposely to avoid the application of Section 1 of the Act, should it not follow that
they should be declared non- existent in the determination of whether or not there
was absence of a majority of planters without written milling agreements with the
CENTRAL? At first blush, it would seem reasonable to so hold. On deeper reflection
and deliberation, however, it will be realized that it is not the purpose of the Act to
prevent the execution of new contracts, even if this would create a majority of contract
planters in any district. There is an abundant proof in the record that the interference
with contractual freedom intended by the Act was precisely in the sense that the
millers be placed in such a position that, for fear of being obliged to follow the ratio of
sharing prescribed in its Section 1, they would have to sign new contracts agreeing to
increase the share of the planters, leaving it to the planters to secure in the process of
bargaining the percentage they consider adequate for them under the circumstances.
In other words, the new contracts here in question cannot be deemed as entered into
in bad faith or for an illegal purpose, since the expected effect of the Act is that there
would be more contracts executed. Indeed, it was in the execution of those
agreements that the objective of the law may be said to have been Ideally achieved.
At the same time that freedom of contract was observed, the desired increase of the
share of the planters was also assured. It is as if the Act merely gave the planters a
bargaining force with winch to induce the millers to increase the share to be given to
them (planters), albeit on the condition that from any such the plantation laborers
would in turn be given the benefit stapulated for them in Section 9. As We see it, the
schedule of sharing as fixed in Section I was not to be the standard to be observed
when the parties are to negotiate by themselves. Said rule has to be followed only
when either the majority of the planters in the district or the miller refuse to sign any
agreement.
In conclusion, We hold that Republic Act 809 is a legitimate police power measure
and at the mm tame a proper and valid implementation of the social justice provisions
of the Constitution, and We have no alternative but to construe its provisions in the
manner most conducive to that end. This is the basic criterion We will adopt in
disposing of the other issues in this case, as will be seen anon
—C—
OTHER CONSTITUTIONAL OBJECTIONS LESS TENABLE
The rest of the constitutional issues raised by the CENTRAL are even less
impressive. Indeed, that the Act does not embrace more than one subject, that all the
matters dealt with by its provisions are sufficiently covered by its title and are
germane and that it does not deprive the CENTRAL of any property without due
process of law is clearly elucidated in the manifestation of the Solicitor General dated
October 14, 1960 quoted earlier in this decision. We find the position taken herein by
the Solicitor General to be well taken.
We are thus fully satisfied that the whole Republic Act 809, properly applied as
indicated in this decision, was well within the power of the legislature to enact and
that it does not violate any provision of the Constitution.
III
Thirdly the CENTRAL maintains that:
THE JUDGE A QUO AND CLIENT OF ATTY. JOSE AFRICA OF
THE PLANTERS ERRED IN HOLDING THAT THERE WAS AN
ABSENCE OF WRITTEN MILLING CONTRACTS BETWEEN THE
DEFENDANT CENTRAL AND THE MAJORITY OF THE
PLANTERS IN THE TALISAY-SILAY MILLING DISTRICT SINCE
THE CROP-YEAR 1952-53;
(1) Because His Honor has even the official
figure of the Sugar Quota Administrator, who
after investigating the planters-complaint found
that in the crop year 1952-:53 there were only
One Hundred Fifty-two (52) planters in the
Talisay-Silay milling district; and instead His
Honor has inflated said number to One Hundred
Seventy (170), or by Eighteen (18) more planter
by the simple expedient of (1), listing two planters
twice; (2), including in his list as planters in the
district, Eight (8) ne who were not registered
planters and were cultivating only 'emergency
plantations', not included in the Sugar Audit, as
defined in Act 4166 (Sugar Limitation Law); and
(3), counting Eight (81 other planters in his list
two times (See Annex 'C' of plaintiffs' amendment
complaint
(2) Because even the planters yes, in their said
cot filed with the Sugar Quota A Administrator
that there were only 'One Hundred fifty-four (154)
planters adhered to the Talisay-Silay Milling
District', and that Eighty-One (81) planters have
written minx contracts, Sixty-Two (62) of which
were executed on or before the effectivity of
Republic Act No. 809, and Nineteen (19), after
the effectivity of the above law. See Appendix '12'
of Central's
(3) Because the Judge a quo has clearly
confused the number of milling contracts with the
number of plan who cultivated and produced on
the plantations covered by said milling contracts."
(CENTRAL'S Brief, pp. 76-78.)
As can be seen, the issue raised in this assignment of error is
mainly factual. However, there are certain situations involved in the
resolution of said factual issue that call for the application of legal
concepts which the trial court appears not to have correctly
considered.
The criterion established by Section 1 should be observed not only once but year by
year.
Thus, the first point that has to be determined is whether the presence of the majority
of contract planters contemplated in the law has reference only to the contracts
existing during the: each year crop year. 1n other words, should the existence of such
majority be determined only once, that is, when the Act took effect or year by year?
The PLANTERS claim it should be only once while the CENTRAL contends it should
be every crop year. In fact, in this connection, in their brief, the PLANTERS have
counter assigned as alleged error of the trial court that:
(2) THE LOWER COURT ERRED IN HOLDING THAT THE
DETERMINATION OF MAJORITY SHOULD BE MADE FROM
YEAR TO YEAR. (Page a, Brief of PLANTERS.)
The ruling of the trial court on this point is as follows:
The Court holds that the sharing of the sugarcane produced during
one agricultural year between the planters and the Central shall
depend upon the existence or non-existence of the majority of
planters during that year as provided by Section 1 of Republic Act
No. 809. In other words, it is possible that during one agricultural
year the majority of the planters may not have written milling
agreements with the Central and, therefore, the sharing proportions
provided for in Section 1 of the Republic Act No. 809 shall apply;
while the following year the majority of said planters may have
written milling agreements with the Central, in which case the terms
of the contracts of the planters, both oral and written, shag govern.
It is, therefore, necessary that the determination of the existence or
non-existence of said majority be made each year.
In arriving at the above conclusion, the Court has taken into
consideration the text of the law as a whole and the purpose or
objective of the legislature in enacting the same. That the Central is
not deprived by Republic Act No. 809 of its right to induce the
planters to enter into written milling contracts with it subsequent to
the effectivity of said act for the purpose of avoiding the application
of the sharing proportions provided for in Section I of said Act is
evident from the text of Section 4 of the same Act which reads as
follows:
SEC. 4. In the event that any central shall be
unable to arrive at a g agreement with a majority
of the planters affiliated with it, and shall refuse to
mill the sugarcane of such planters in the
absence of such an agreement, the President of
the Philippines shall issue a proclamation
declaring that, in the interest of the national
welfare, the Government of the Philippines has
taken over the central concerned, and thereupon
the central shall be operated in the name and
under the authority of the Government by an
administrator to be appointed m Tile court
proceeding provided for in section seven of this
Act.
This section clearly allows the Central to attempt to arrive at a
written milling agreement with a majority of the planters affiliated
with it. Said attempt may be exercised at any time after the
passage of the Act and as often as the Central wishes to make the
attempt. The result of said attempt or attempts shag be considered
yearly in determining whether or not the majority of the planters
have written milling contracts with the Central for the purpose of
deter whether or not Republic Act No. 809 is applicable that year.
This interpretation is in accordance with the ruling of this Court
above to the effect that less are included within the meaning of the
term 'planter. The lease may be for two or three years or more. The
lessee may enter into a written milling contract with the Central for
the duration of the lease. If he shall be considered as one planter
with a written milling agreement for the purpose of applying Section
1 of Republic Act No. 809. Upon the expiration of the lease, the
right to enter or not to enter into a written milling agreement with the
Central reverts to the owner or passes to a new lessee or to both
owner and new lessee. For this reason Congress worded Republic
Act No. 809 in such a way that the applicability of said Act should
be determined every year.
We agree with the reasoning and conclusion of the trial court. Indeed, there are other
strong reasons in support of such holding.
As We see it, the obvious objective of the Act is more to induce the centrals to enter
into written agreements with the planters in their respective districts providing for
better sharing ratios than the old 60-40 scheme, rather than to directly fix for them
such ratio in the manner prescribed in Section 1. Were it the intent of the Act to
definitely fix said sharing ratios, without regard to the contractual agreements
between the parties, it would have been worded accordingly in the clearest terms,
considering that such fixing would amount to a curtailment of the freedom of contract
and may, therefore, be upheld only when the legislative intent is manifest and the
exertion of police power in the premises is reasonably justified. It would have been
the easiest thing for Congress to have provided clearly that thenceforth the sharing
ratios should be as indicated in the Act instead of making its own applicability and
enforcement dependent on factors obviously subjective to the parties concerned.
The question may be ask why did the law lay down as the criterion for its applicability
or enforcement t such a subjective condition as the absence of a majority of planters
with written t provisions of the Act would readily reveal that Congress was aware that
the beet way to deal with the problems of the sugar industry it had in mind was to
base their solution on the situation of the relationship between the planters and the in
each milling district instead of in all of them as a whole. It is a matter of judicial notice
that such situation in each district varied A uniform formula of solution must have
appeared to the legislature as impractical and justified to the member who were
conversant regarding the problem of the try Thus, the lawmakers knew that the of a
majority with written contracts in a district of any state that the planters were said with
the terms being given to them by the miller, hence the impropriety in such a district of
any state interference by legislative fiat based on police power. In the language of the
PLANTERS' brief, "if such condition was imposed by Congress, it would only mean
that C was to let well enough alone in a milling district wherein the majority of the
planters appeared to be satisfied. (pp. 77-78.) On the other hand the ab of such a
majority would the contrary, and this sad state of affairs was due to the fact that the
planters were practically at the mercy of the miller who could refuse to mill their by the
And so, by providing that unless it entered into written contracts with the majority of
the planters affiliated to it, the miller would have to follow the higher sharing ratio
prescribed m the law, and it was a that the miller would mother yield to the planters by
a by written contract to a better ratio if it was to save i from having to suffer a bigger
cut in shares its of the proceeds.
But why would the planter prefer to sign written con with a ratio for them different from
or less than that prescribe by the law which would apply if the majority of them were
to refrain from entering into written contracts? The reason may be found m the fact
that there are other advantages in having such contracts, aside from the sharing ratio
which could probably offset the resulting loss in the percentage of - Moreover, for the
good of the industry and better relations between the planter and the miller it is
always better to have written contracts to govern their relationship Nothing can best
promote the interests of the industry as a whole than mutual formal accord between
the planters and the millers. (See pp 22-23, Printed Memorandum on behalf of
PLANTERS and LABORERS in amplification of oral argument dated August 29,
1963.)
The foregoing considerations make it quite evident that the Congress could not have
contemplated g the situation obtaining on the date of its effectivity as a law the sole
and exclusive criterion for determining its applicability in the respective milling districts
of the Philippines. Our consider opinion is that the lawmakers were aware of how the
situation used to vary from crop year to crop year m each district, so they must have
deem it best to make the applicability of the Act go along the way such variations
would demand. We are the legislature could not have intended that the benefits for
labor envisaged in the law should be allowed to be completely negated nor rendered
ineffective for all the crop year to follow just because there was a majority of planters
with contracts in crop year 1952-53, a possibility which it could not have ignored .
The planters and laborers contend that the Congress must have had in contemplation
the fact that most if not all the contracts of 1920-21 had expired in 1950 and that it
was more likely that there would be only a minority of the planters with con. tracts by
the time the Act would be in force, hence the criterion under discussion. In any event,
they insist that the Congress must have contemplated that the contracts sign after the
approval of the Act should not be consider We do not see the relevant circumstances
that way. The truth revealed in the records is that many of the old contracts had
already been ex. tended way back in 1948. Withal We cannot read in the provisions
of the Act any indication to curtail the freedom of the parties to enter into contracts
after the passage of the Act. Again, if the Congress really intended to either suppress
that freedom or make the terms of future contracts subject to the sharing ratios
prescribed in Section 1, We cannot conceive of any ponderous consideration why
words to that effect were not used. If Congress had in mind that the old contracts had
already expired and it was its intention to disregard the new contracts to be signed
after its passage, it would have, with more reason, directly provided for the definite
and unconditional enforcement of Section 1 instead of imposing the condition about
the absence of a majority of contract planters. Withal, weighty reasons of
constitutional policy prevent Us from adopting a construction that would make the Act
violative of the freedom of contract. As a matter of fact, the PLANTERS and
LABORERS themselves practically concede the legal possibility of new contracts
providing for a ratio different from that in Section 1. (See p. 2 1, Printed Memo,
supra.)
But the PLANTERS insist that the above construction would mischievously leave it
entirely in the hands of some planters, who would augment the number of contract
planters by belatedly executing contracts with the CENTRAL, the fate of the other
planters and the laborers, who otherwise should be benefited by the Act. We are not
unaware of such possibility. However, We have to consider that, as already stated, it
is quite evident from the records of the deliberations in Congress that there was no
intent to entirely do away with the right of the parties to enter into written contracts. It
must have been assumed that faced with the inevitability of having to follow the
sharing ratio prescribed in Section 1, the millers would be more than willing to enter
into contracts providing for a ratio less prejudicial to them than that fixed in Section 1
but more beneficial to the planters than the old 60-40 ratio. In other words, sing the
share of the planters would still have been inevitable. Thus, the planters would not
really stand to lose very muck t with the other benefits that go with a written contract.
as far as the laborers are concerned, as We shall show later, any increase the
planters would be able to get would naturally entitle the laborers to the corresponding
share provided for io Section 9 of the Act.
For all these reasons, We find no alternative than to overrule the PLANTERS' second
counter-assignment of error,
—A—
THE NUMBER OF PLANTERS IN THE TALISAY-SILAY DISTRICT IN 1952-53
CROP YEAR
How many planters were there in the sugar district in question during the crop year
1952-53?.
It is but logical that in the solution of the problem on hand, the first thing We have to
determine is the correct number of planters who were affiliated to the Talisay-Silay
sugar district during the first crop year (1952-53) of the effectivity of Republic Act 809.
In this connection, the trial court found that there were one-hundred and seventy
(170) of them. But appellant CENTRAL maintains that in arriving at such conclusion,
His Honor adopted a concept of the term "planter" which is in some respects or as
applied to some of the actual situations herein involved is not legally correct, much
less realistic. A review of the record shows that the CENTRAL's observation is well
taken.
Thus, the trial court found:
For the sake of clarity, according to Exh. H-1, the planters affiliated
to the Talisay-Silay Milling District as at June 22, 1952 are the
following: (names)
…. As listed above, such planter was counted as one although he
may be planting two or more plantations. To the above 162 planters
should be added 8 other planters thereby making a total of 170
planters in the Talisay-Silay Milling District as at June 22, 1952.
These 8 planters are already included among the 162 fisted in Exh.
H1 but they have to be listed twice because each of them operates
at least one plantation under a written milling contract and one
other plantation without written milling contract. These planters are:
 No. 126e, as may be seen on page 4 of Exhibit H-1, thus entitling her to be included
  No. in the list
in the list of planters affiliated to the CENTRAL in addition to those list in the decision
under review.
  per Exh. H I

1. Lacson, Rafael 73 Who is considered planter within the contemplation of R.A. 809?

2. Lacson Salvador 43 At this juncture, it becomes imperative to define the term "planter" as that word is
used in Republic Act 809. In this regard, since the Act itself does not contain any
3. Lacson, Ernesto 47 definition, the trial court adopted the opinion of the Secretary of Justice (opinion No.
85, Series of 19541 and held that a planter is 4 done who is entitled to produce sugar
4. Lacson, Eduardo 71 on a plantation and to deliver his produce to a sugar mill for milling," and that "the
'planter' referred to in Republic Act 809 may be either the owner of the plantation who
5. Lacson, Daniel 133 produces or is entitled to produce sugarcane on his plantation or any lessee,
usufructuary or person (other than the owner) who has a right to cultivate and to
6. Lacson, Victoria 147 produce sugar thereon, provided that in either case, the planter has the right to
deliver the sugar to the Central for milling". (Pp. 413-414, Record on Appeal of the
7. Jalandoni Daniel 88 CENTRAL.) Basically, both the CENTRAL and the PLANTERS adhere to this
definition but do not see eye to eye on how to apply the same.
8. Oca, Gil de 36"
2. May "emergency" planters be counted as planters for the purposes of this case?
We believe not, but this point is hardly of any consequence.
(Pp. 421-428, Record on Appeal of CENTRAL.)

The inclusion in the list of the trial court of the following eight persons, namely:
Analysis of the trial court's findings

1. Dominador Agravante
A careful analysis of the above-quoted portion of the appeal. decisions reveals n
misconceptions in the mind of His Honor.
2. Julian Jonota
1. The trial court erred in including Emiliano Jison
3. Enrique Jundos
In regard to the number 162 u as main figure by His Honor, admittedly, the basis
thereof is Exhibit H-1, the Associated Planters' Final Report for the crop year 1952- 4. Vicente Layson
1953, prepared by the CENTRAL. It is conceded by the appellees, however, that, on
that basis or from the point of view of who are listed in Exhibit H-1, the correct number 5. Magdalena Medel
is really one hundred and sixty-one (161) only. There is agreement between the
parties that the name of Emiliano Jison (No. 38) in the trial court's list should be
excluded, since there is no planter with that name in the district. There is an Emilio 6. Romulo Puentebella
Jison, who is No. 102 in the list above. The name Emiliano Jison on page 1 of Exhibit
H-1 opposite Plantation Audit No. 58-d is admitted by the PLANTERS to actually refer 7. Armando Robello and
to Emilio Jison, even as the latter is also listed on page 3 of the same exhibit, which is
nothing strange because of the different plantation audit numbers to which each of 8. Milagros Villasor
said entries correspond, considering that Emilio Jison was working in two separate
registered plantations.
is assailed by the CENTRAL on the ground that as can be seen in Exhibit H-1, they
are merely "emergency" planters, so called because they have no corresponding
On the other hand, the other contention of the CENTRAL that the name of Gorgonio plantation audit number. It is insisted that inasmuch as under Section 7 of Executive
eyes had also been listed twice by the trial court, while apparently correct, is Order No. 873 and Section 12 of Executive Order No. 885, Series of 1935,
sufficiently explained by the fact that the second listing of Treyes name as No. 143 by supplementing the provisions of Act 4166, the Sugar Limitation Law, a planter is "any
His Honor should really correspond to and should be substituted with the name of person, firm or corporation, or combination thereof, entitled by virtue of ownership, or
Josefina Vda. de Lacson who, together with Treyes, is covered by Plantation Audit by virtue of written or oral contract with the owner of the plantation, to produce
sugarcane on the, plantation and to deliver the same to the mill to fill the whole or a
part of the plantation-owner's allotment", and, since the lands cultivated by the above-
named eight persons had no allotment of centrifugal sugar or were not included in the
audit of sugar mills and sugar plantations provided for in Executive Order of Governor
General No. 459, they could not be deemed "planters in the district" within the
contemplation of the sugar plantation laws. On the other hand, the PLANTERS
contend that considering that sugarcane cultivated by them was undisputably
delivered to the CENTRAL from their plantations, those plantations should be
considered part of the Milling district, it being provided in Section 1 (e) of Act 4166, as
amended, that all plantation is adherent by virtue of sugarcane being delivered
therefrom to a mill regardless of contract relations between the mill company and the
plantation owner and/or any other person cultivating sugarcane on the plantation.
Anent such conflicting views, it is, of course, beyond question that all said eight
persons did produce sugarcane from the plantations they cultivated and did deliver
their produce to the CENTRAL and the latter did mill their sugarcane during the crop
year 1952-53, albeit, contrary to the contention of the PLANTERS on page 49 of their
brief, none of them had any production co-efficients and allotments. We have
carefully examined Exhibit A-1, the Ut of co-efficients and production allotments for
1952-53 crop year and We have not found any of their names among those listed
therein. In fact, We have examined the lists for the other years, Exhibits A, A2 A-3, A-
4, etc. Their names are not in any of them Since they had no pro. production
allotments, it stands to reason that they were not producing to fill any quota
allotments. But even if We should hold that these eight emergency planters should be
excluded from the 161 We have found above, the final outcome of the issue under
discussion would not be altered, considering Our other finding, as will be stated later,
regarding the number of contract planters adherent to the CENTRAL during the crop
year 1952-53.
3. The trial court erroneously counted eight other planters twice.
According to the trial court, as appears in the abovequoted portion of its decision,
eight planters, namely, Rafael Lacson, Salvador Lacson, Ernesto Lacson, Eduardo
Lacson, Daniel Lacson, Victorians Lacson, Daniel Jalandoni and Gil de Oca, although
they are already included among the 161 listed by it "have to be listed twice because
each of them operates at least one plantation under a written milling contract and one
other plantation without written milling contract. (Pp. 427-428, Record on Appeal of
CENTRAL) We cannot agree. As We read Section 1 of Republic Act 809, "the a of
written milling agreements between the majority of the planters and the millers of
sugarcane in any milling district in the Philippines" plainly contemplates only the total
number of actual planters milling in a given central such that if the majority of that
number have written milling contracts, the Provision would no longer apply,
regardless of the number of plantations any of such planters have cultivated and
whether or not all of such plantations are covered by contracts. In other words, it is
absence of written contracts with the majority of the planters that is the criterion. If a
planter has a contract with the Central covering one plantation he works on, there can
be no absence of contract with him even if he cultivates other plantations not cover by
any contract. Indeed, it is absurd to think that a planter is a contract planter and a
non-contract planter at the same time where the law, as in this case, does not refer to
plantations cover or not covered by contracts, but only to planters who have or do not
have contracts with the Central. Thus, it is evident that the trial court erred in counting
those eight planters twice, once as contract planters and separately again as non-
contract planters, in computing the total number of planters in the district. Neither the
number of plantations worked by a planter nor the number of quotas he has is
relevant. Anyway, as long as a planter has a contract covering one plantation, the
likelihood, insofar as the ratio of sharing is concerned, is that he would get the same
ratio for the plantations not covered by the contract, since under Executive Orders
Nos. 900 and 901, Series of 1935, the plantation milling share for the plantations not
covered by any contract with the miller "shall be the most frequent basic plantation
milling share stipulated in valid written contracts."
In connection with the above figures, it is interesting to point out that in the official
communication of the Sugar Administrator, Annex C of the complaint in this case, it is
stated that according to the records of his office there were 152 planters adherent to
Talisay- Silay Milling Company during the crop year 1952-53. While neither party
admits the correctness of such figure, it may be noted that the CENTRAL's contention
in regard to the point at issue seems nearer to the finding of the Sugar Administrator,
whereas the conclusion of the trial judge, sustained by the PLANTERS, appears to be
quite farfetched. 6
There were 161 planters in 1952-53.
In the light of the foregoing disquisition, and adopting a liberal view as to the
emergency planters. Our conclusion is that for the purposes of the application of
Section 1 of Republic Act 809 to the Talisay-Silay sugar district during the crop year
1952-1953, there were one hundred sixty-one (161) planters adherent to the
CENTRAL.
—B—
THE NUMBER OF CONTRACT AND NON CONTRACT PLANTERS IN THE
TALISAY-SILAY DISTRICT IN 195253 CROP YEAR
Having arrived at the conclusion that there were 161 planters in the district in question
in crop year 1952-53, the next issue for Our resolution is, how many of those planters
had contracts with the CENTRAL during that period. Otherwise stated, was there
absence of contract with a majority of them during that crop year?
In arriving at its conclusion as to the number of contract planters the trial court merely
counted the contracts but omitted to consider how many planters are bound thereby
and, incidentally, who they are.
Ruling on this issue, after finding albeit erroneously that there were 170 planters in
the district, when there were actually only 161, including already the 8 emergency
ones, His Honor held:
Of the above planters, the following have written milling contracts
with the Central on June 22, 1952 as shown by their contracts
Exhs. C, C-1 to C-62:
 Exhibit C - Rosendo Alvarez
215 Lizares, Simplicio

Names… Among the planters in Exk H-1. (1 1) who did not have 216a Lizares, Heirs of Nicolas
the contracts when Republic Act No 809 was entered into the
milling contract on February 17, 1953 (Exhs. D, D-1, D-2, D-4, D- 217 Lizares, Emiliano
15, D-16, D-17, D-18 D-22, D-24 and D-25).They should be added
to this 63 with milling contracts during the 1952-1953, thereby a 218 Kilayko, Celsa L. Vda. de
total of 74. Since the majority of 170 is 86, the Court holds that a
majority of the planters in the Talisay-Silay Mining District did not 219a Panlilio Encarnacion L. Vda. de
have a written milling contract during the agricultural year 1952-
1953. Republic Act No. 809 is, therefore on Appeal of CENTRAL.) 220 Jalandoni Felisa L. Vda. de

It is to be noted that in arriving at the foregoing conclusion, the trial judge did not 22la Lizares, Dr. Antonio A.
more than count the number of con tracts presented in evidence, Exhibits C, C-1 to
C-62, D, D-1, D-2, D4 D-15, D-16, D-17, &18, D-22, D-24 and D-25. No effort was 222 Lizares, Heirs of Enrique
made to examine the details of said contracts in order to find out who and how many,
in fact, are the planters bound by each of them Actually, these details are of decisive 223a Parades, Efigenia L. Vda. de
importance, for the basis adopted by the trial court ignores the realities of the true
situation as well as the legal import of said contracts vis-a-vis the main issue 224a Guinto, Romedios L. de
presented for its determination.
225 Jalandoni Felisa L. Vda. de
On pages 90-92 of its brief, the CENTRAL makes the pertinent observations that.
227 Lizares, Rodolfo

... Thus, an examination of the milling contracts, in question, will 228a Asuncion Lopez Vda. de
show that some of the planters listed by the Judge, as for example,
Maria L de Misa (No. 9), act why had executed and signed at 229a Moreno, Jimmy Nolan
least three milling contractsmentioned by the Judge, namely-
Exhibits -C-46', -C-47' and -C-48'). On the other hand, some -
milling contracts, as, for example, Exhibit 'C-37', executed on May Analyzing the 63 contracts, Exhibits C, C-1 to C-62, plus the eleven new ones taken
13, 1948, by the Judicial Administrator of the owner, Estate of into consideration by the trial court, the obvious inevitable result is that there were 86
Enrica A. Vda. de Lizares, actually covers two plantations or contract planters.
haciendas named Minuluan and E But after the project of partition
of said Estate of Enrica Vda. de Lizares was later approved, as
There is ample support in the record for the points thus raised by the CENTRAL.
shown by Exhibit 'V', the hacienda Minuluan was ay subdivided
Indeed, a close scrutiny of the evidence shows quite plainly that there are contracts
among sixteen heirs, and each subdivision was given a separate
listed in the lower court's decision (Exhs. C, C1 to C-62) that bound not the persons
plantation audit number in the name of the heir, from Plantation No.
who appear to have executed the contracts with the CENTRAL but their successors
213 to Plantation No. 229-a; in such a way that in the hat of
in interest or their lessees An example of this is the case of Exh. C- 1 in the name of
plantation and corresponding Production Coefficients and Allotment
A. Be Chingsuy. This A. Be Chingsuy is not listed in Exhibit H-1 as one of the planters
contained in Exhibit Al per 1, First Stipulation, pp. 198-199,
affiliated with the CENTRAL daring the crop year 1952-53. The evidence shows that
Centrals Record on Appeal for the crop year 1952-1953, each of
Jose Beson is a transferee by absolute sale of Hda Tabayag, P/A 8, from A. Be
the newly numbered Division tions was already registered m the
Chingsuy (Exh. HH) and a lessee of Hda Cataywa, P/A 6a and Hda Luciana P/A 7a
name of the respective heirs as follows:
(Exh. A-1 p. 2). It is also shown that Francisco Kilayko is lessee of Hda Bantod P/A 4c
(Exh. A-1 p. 2). All these ha by contract y with the CENTRAL. Both Jose Beso and
Plantation No. Plantation Owners Fransisco Kilayko are listed in Exhibit H-1 as planters affiliated with the CENTRAL in
the crop year 1952-53 and the PLANTERS expressedly admit in their brief that Jose
213 Lizares, Maria A. Beson and Kilayko were con- tract planters for the crop year 1952-53. (p. V, Annex A)
The milling contract bound Jose Beson and Fransisco Kilayko because of the
214a- Ybiernas, Estrella M. de and Mapa, provision of paragraph 17, which is found in all milling contracts, as follows.
Placido L
 17. Que este contrato, y todos sus terminos obligaciones y
condiciones se entenderan contraidos tambien por las tierras y
plantaciones mencionadas y seran obterias para los Plantadores
testamentarios, albaceas cesionarios y representantes de los
Plantadores y para las plantaciones y las tierras
There are many other persons appearing as the ones who executed the milling
contracts, but were not planters affiliated to the CENTRAL during the crop year 1952-
53. This is where the lower court committed error. It simply assumed that the 63
contracts (Exhs. C, C-1 to C-62) as represent also 63 planters with milling contracts,
without taking into consideration that there were ninny of those contracts that bound
not the persons who executed them but the person or persons who are the
successors in interest of those who did so. What the lower court did was simply to
count the contracts as they are—63 in all— without even considering that there are
cases of two or three contracts appearing in the name of one person. Such for
instance, is the case of Maria L. de Misa, as pointed out by counsel for the
CENTRAL, who appears to have executed three contracts (Exhs. C-46, C-47 and C-
48). Then there is the case of Rosario Avancena Vda. de Lacson who appears to
have executed two contracts (Exhs. C-27 and 0,28). As can be seen, Rosario
Avancena Vda. de Lacson is not even listed in Exh. H1 as a planter affiliated to the
CENTRAL during the crop year 1952-53. There is also the case of Simplicio Lizares
who appears to have executed two contracts—one for himself (Exh. C- 43) and
another for the heirs of the late Agueda Lizares (Exh. 42). In other words, the finding
of the trial court that there were 63 contract planters has no other basis than that
there were numerically 63 contracts extent in the record. No thought at au was given
to the fact just pointed out that in a number of said contracts he PLANTERS involved
are the same. Neither did His Honor consider, that, on the other hand, there are
contracts that bound more than one PLANTER, such as the contracts executed by
Daniel Lacson, for himself and for four others (Exh. C-20); the contract executed by
the executor of the estate of Enrica Alunan Vda. de (Exh. C-37); the contract
executed by the executor of the estate of Esteban de la Rama (Exh. C-51); the
contract executed by the administrator of the estate of Domingo Rodriguez (Exh. C-
52); the contract executed by Magdalena I, de Treyes, for herself and as attorney-in-
fact of the other heirs, who were individually planters in their own right etc. These
case certainly make manifest the error committed by the lower court in simply
counting the 63 contracts as representing 63 contract planters affiliated with the
CENTRAL during the crop year 1952-53.
Contrary to the finding of the trial court them were 86 contract planter
It is Our consider opinion, and so We hold, that the court's that there were only
seventy-four (74) contract planters in the Talisay-Silay district in crop year 1952-53,
(the 63 that the court based on Exhibits C, C-1 to C-62 plus the eleven borne by
Exhibits D, D-1, D-2, D4 D-15, D-16, D-17, D18, D-22, D-24 and D-25, the contracts
executed on February 17, 1953, that is, after the Act took effect on June 22, 1952 but
within the crop year 1952-53) is inaccurate and does not t the true import of the
undisputed d to in the record sub. muted by the es along with their stipulations of fact.
We have scrutinized each of the contracts referred to by His Honor and checked and
rechecked their pertinent provision regarding the status of the contracting parties We
are fully convinced that, on the basis thereof, it is beyond question that there were no
less than eighty-six (86) contract planters in the district in question during the material
period here in dispute.
To begin with, there are forty-four (44) planters as to whim the CENTRAL and the
PLANTERS appear to be they are contract planters, namely-
1. Alverez, Ramon
(CENTRAL'S Brief pp. 93-117; PLANTERS Brief, A A. pp. IV to
LIX.)
However, in the Guidlines and Tabulations submitted to the Court by for the
PLANTERS, Atty. Miguel V. G to which is annexed as Exh. A-1 a hot of the planters
indicating who in the view of said PLANTERS had written con with the CENTRAL
during crop year 1952-53, the of Efraim Santibañez No. 38 above, does not appear
as a con planter, whereas Sergio Velez and Manuel Villanueva who are not are
above are included as contract planters. Since it is rather too late in the day now for
the PLANTERS to alter the classification, already given by them in their brief, in a
manner that would favor the while any admission made by them at this stage adverse
to their interest should bind the it results that We should consider the status of 46
planters to be contract planters during crop year 1952-53 as no longer controversial.
So, also are the parties in a t that the follow. ing seventy-five (75) planters are non-
contract ones: 7
(Included already among these 75 are the 8 emergency planters previously referred
to as being controversial).
Thus, it would appear that it is with t only to the follow forty (40) planters listed in the
trial courts decision that there is controversy in this case as to whether they are
contract planters or not.
40. Yusay, Enrique Dr.
Now, of this 40, ten (10), namely, (1) Rufino Advincula, (2) Ricardo do, (3) Lucilo
Blanca, (4) Juanita Castor, (25) Jesus de Magallanes, (26) Renato Malejan (27)
Miguel de Nepomuceno, (28) Eligio Nessia (33) Federico de Rentoy and (35) Jose
Torres, who is different from Jose R. Torres Jr., were held by the trial court to have
been contract planters in 195253, as already stated earlier, in view of Exhibits D, D-1,
D-2, D4 D-16, D-16, D-17, D-18, D-22 and D-24, 8 the ten (10) contracts executed by
them on February 17, 1953. In this regard, con to the contention of the PLANTERS in
their first counter-assignment of error in their brief to the effect that.
(l) THE LOWER COURT ERRED IN HOLDING THAT MILLING
CONTRACTS EXECUTED AFTER JUNE 22, 1952 SHOULD BE
CONSIDERED IN THE COUNTING OF CONTRACT PLANTERS.
(Page a. Brief of Appellees.)
there can be no possible doubt as to the propriety of these planters being considered
as contract planters for the period in question. The evidence shows that the su crop
Year in the Talisay-Silay Milling district begins on September of each year and y ends
in August of the following year. It is thus obvious that the crop year 1952-1953 began
in September of 1952. And since the ten (10) contracts referred to were executed in
February 1953, it follows that they correspond to the 1952-1953 crop year here in
dispute, hence, said counter assignment of error should be as it is hereby overrule
Therefor, Our remaining task is limited to the de tion thirty (30) planters in the
On this score, the evidence clearly establishes the status of those 30 planters to be
as follows:
GONZAGA, ADORACION (No. 6)—She is the absolute owner of a definite portion of
Hda Bubog, with P/A 20b covered by contract Exh. C-3 signed by Fernando H.
Ereneta covering the said entire Hda Bubog- Upon acquiring that definite portion of
Hda Bubog and also her own P/A, Adoracion Gonzaga milled her sugarcane with the
CENTRAL under the terms of the contract Exh. C-3 (Exhs. H-1, p. 4; A-1, p. 2; and
Y).
JALANDONI, DANIEL (No. 7)—In the very list of contracts in the decision of the lower
court, it appears that contract Exh. C-15 is in the name of Daniel H. Jalandoni as the
owner of P/A 152a and P/A 153a (Exh. H-1, p. 3). This planter had milling contract as
heir and owner of the Hda Cabug, P/A No. 152a and No. 163a, formerly belonging to
Ms aunt Rosario Hofilena and his mother Carmen Hofilena. He signed the mill. ing
contract Exh. C-15 as owner. It does not appear that Rosario Hofilena or Carmen
Hofilena ever executed a g contract. However, P/A 152a and P/A 153a cover among
other lands Lot No. 542, and contract Exh. C-15 executed on July 20, 1948 by Daniel
Jalandoni covered precisely Lot No. 542 of Hda Cabug There is Identity of the lot
covered by contract Exh. C-1 5, and P/A Nos. 152a and 163a. (Exhs. A-I, and V-11).
LACSON, CARIDAD (No. 9)—It appears that contract Exh. C-20 signed by Daniel
Lacson covers Hda Binonga Lot 482. It is shown in Exh. Y that Lot 482 is covered by
P/A Nos. 61a, 61c, and 61d. P/A 61a is planted by Daniel Lacson while P/A 61c is
planted and owned by Caridad Lacson (Exh. A-I p. 3) as successor in interest of the
former owners.
LACSON, DAMASO (No. 10)—He is the planter with P/A NO. 7-a, Hda Puyas (Exh.
H-1, p. 2). In the very list of contracts in the decision of the lower court it ap s that
contract Exh. C-19 was executed by Rodrigo Lacson and Damaso Lacson There is
no question, therefore, that Damaso Lacson is a contract planter.
LACSON, DANIEL (No. 11)—It appears that Daniel Lacson has P/A No. 61a. In the
very t of contracts in the lower court's decision, it appears that contract Exh. C-20 was
executed by Del Lacson for and in the place and stead of Josefa Lacson, Irene
Lacson, Salvacion Lacson and Teresa Lacson de Presbitero. Exh. Y, p. 2 shows that
P/A Nos. 61a, 61c, 61d Hda Binonga-Othella to Lot No. 482. Contract Exhibit G-20
executed by Daniel Lacson for and his co-heirs covers precisely Lot No. 482.
LACSON, EDUARDO (No. 12)—He is the owner of P/A No. 190, Hda Sta. Maria
(Exhs. H-1 p. 3; A-1 p. 4). In the very t of contracts appearing in the decision of the
lower court, it appears that Eduardo E. Lacson executed contract Exh. C-21. He
executed Exh. C-21 on June 15, 1948, covering Hda Sta. Maria.
LACSON, ERNESTO (No. 13)—In the very t of contracts in the decision of the lower
court, it appears that Ernesto Lacson executed contract Exh. C-22. He is the owner of
P/A No. 68e and lessee of P/A 68g owned by Mercedes, F do, Carolina and Estrella
Lacson Exhs A-1, p. 3). He executed the contract Exh. C-22 on July 1, 1948, covering
the portion corresponding to him of Lots Nos. 501 and 510 of the cadastral survey of
Talisay (Exh- Y p. 2).
LACSON, JOSEFINA (No. 14)—She owned and planted Hda San Antonio, P/A 207
Exh. H-1 p. 3 and Exh. A-1 p. 6). She is successor in interest of Rosario Avancena
Vda. de Lacson who executed contract Exh C-28.
LACSON, RAFAEL (No. 15)—In the very t of contracts in the decision of the lower
court, it appears that Rafael Lacson executed contract Exh. C-26. He owns Hda Vista
1 and 2 Exh. H-1 P. 2) P/A No. 125a, and Hda Sta. Maria (Exh- H-1 p. 3) with P/A No.
184. It appears that he executed contract Exh C26 on August 14, 1948 covering
these two haciendas.
LACSON, SALVADOR (No. 16)—In the very list of contracts in the decision of the
lower court it appears that Salvador Lacson executed contract Exhibit C-29. He has a
contract (Exh. C-29) for P/A 206, Hda San Rafael Exh. H-1, p. 3).
LACSON, VICTORIA (No. 17)—In the very t of contracts, in the decision of the lower
court, it appears that Victoria Lacson executed contract Exhibit C-31. Her contract
covered P/A 185, Lot 7 comp in Hda Sta. Maria.
LEDESMA, EDUARDO LACSON (No. 18)—The evidence shows that Eduardo
Lacson Ledesma is lessee of a portion of Hda. San Juan, P/A 68h, owned by Aurora
and Elisa Lacson, successors in interest to P/A 68h, covered by contract, Exh. C-22,
executed by Ernesto J. Lacson.
LIZARES Co., Inc. (No. 19)—It is the owner of Hda. Cabiayan with P/A 86 (Exh. H-1,
p. 2; and Exh. A-1, p. 3) covered by contract Exh. C-36 executed by Emiliano Lizares,
former owner.
LIZARES, HEIRS OF ENRIQUE (No.20)
LIZARES, JESUS (No. 21)
LIZARES, RODOLFO (No. 22)
The evidence shows that these planters were affiliated to the CENTRAL during the
crop year 1952-53.
The Heirs of Enrique Lizares owned part of Hda. Minuluan with P/A 222 (Exh. H-1, p.
4, and Exh. A-1 p.5). The date of entry in the District Transfer Registry shows that as
of August 8, 1951 the Heirs of Enrique Lizares already possessed a P/A number
(Exhs. TTT and BB).
Jesus Lizares was lessee of P/A 216a, Hda. Minuhan, owned by the Heirs of Nicolas
Lizares who were the heirs of Enrica Alunan Vds. de Lizares. He is also the lessee of
P/A Hda. Minuluan, owned by Asuncion Vda. de Lizares, an heir of Enrica Vda. de
Lizares. The evidence show that as of October 21, 1951, the date of entry of the
lease between Jesus Lizares and the Heirs of Nicolas Lizares in the District Planters
Registry, the heirs of Nicolas Lizares already possessed a P/A number (Exh. NNNN,
Exh. BB and Exh. A-1). The evidence also shows that as of October 12, 1951, the
date of entry of the lease between Jesus Lizares and Asuncion Vda. de Lizares in the
District Planters Registry, Asuncion L. Vda. de Lizares already possessed a P/A
number (Exh. CCCCC; Exh. BB and Exh. A-1).
Rodolfo Lizares is the successor in interest of Nolan Jesus, Ramon and Mary, all
surnamed Lizares, who owned P/A 227, Hda. Minuluan, in common as heirs of Enrica
Vda. de Lizares. P/A 227 was transferred to Rodolfo Lizares on August 8, 1951 and
entered in the District Transfer Registry on same date (Exh. AAAAA; Exh. BB; and
Exh. A-1).
The Hda. Minuluan formed part of the estate of Enrica Vda. de Lizares which was
covered by milling contract Exh. C-37 executed by the Administrator of the estate.
There was a project of partition and adjudication, of the estate of Enrica Vda. de
Lizares, approved by the court (Exh. V), and all the portions adjudicated to the heirs
were bound by the milling contract Exh. 37.
ESCAY JOSE G. (No. 5)
LOPEZ, LOLITA (DOLORES, R. DE) (No. 24)
OSMEÑA, LOURDES R. (No. 31)
PIROVANO, ESTEFANIA VDA. DE (No. 32)
SIAN, ANICETA RAMA DE (No. 34)
The foregoing persons are listed as planters affiliated to the CENTRAL during the
crop year 1952-53.
Jose Escay was lessee of Hda. Esmeralda, P/A 114b (Exh. H-1, p.1; Exh. A-1, p. 3),
which plantation was part of the estate of Esteban de la Rama representing Hijos de
I. de la Rama. The District Planters Registry shows that as of July 30, 1937 E. de la
Rama , representing Hijos de I. de la Rama had P/A number. (Exh. PPPPPP). Jose
Escay was bound by contract, Exh. C-51 executed by the administrator of the estate
of Esteban de la Rama.
Lolita (Dolores) de Lopez was the owner of P/A 23-23, 25-50 and 40-24 (Exh. H-1, p.
1), Hda. Cabanbanan, as heir and successor in interest of Esteban de la Rama. (Exh.
A-2, p. 11). The District Transfer Registry shows that on July 11, 1952, she already
had a P/A number (Exh. AAAAAA, and Exh. BB). She milled her sugarcane with the
CENTRAL under contract Exh. C-51 executed by the administrator of the estate of
Esteban de la Rama.
Lourdes R. Osmeña was the owner of P/A 23-22, 25-49 and 40-23 (Exh. H-1, p. 1),
Hda. Cabanbanan (Exh. A-2, p. 11). As of July 11, 1952 the District Transfer Registry
shows she had already a P/A number (Exh. YYYYY and Exh. BB). She was bound by
contract, Exh. C-51 executed by the administrator of the estate of Esteban de la
Rama.
Estefania Vda. de Pirovano was the owner of P/A 23-21 and 40-22(Exh. H-1, p. 1),
Hda. Cabanbanan (Exh. A-2, pp. 10-11). As of July 11, 1952 the District Transfer
Registry shows she had her P/A number (Exh. WWWWW and Exh. BB). She was
also bound by contract Exh. C-51, executed by the administrator of the estate of
Esteban de la Rama.
Aniceta Rama de Sian was the owner of P/A 22-24 and 4025. Hda Cabanbanan (Exh.
H-1, p. 1), also part of the estate of Esteban de la Rama. She was bound by contract
Exh. C-51 executed by the administrator of the estate of Esteban -is la Rama
Moreover, according to Exhibit D2s this planter executed a written agreement with the
CENTRAL on June 23, 1953.
Regarding the estate of Esteban de la Rama, the distribution of the estate is shown in
the project of partition Exh. V4 and the Identification of the lots inherited by the heirs
is shown in Exh. Y.
The PLANTERS contend that the planters who are heirs or lessee of plantations that
belonged to the to Of E Alunan Vda de Lizares and to the estate of Esteban de la
Rama can not be counted as contract planters because they did not execute
contracts with the CENTRAL themselves but we simply covered by the con executed
by the judicial administrators of those estates F C-37 and C-51). The PLANTERS
assert that the judicial administrators were not author by the court to enter into the
contracts, and so the milling contracts were null and specially because the milling
contracts contained provisions which would convey to the CENTRAL real rights over
the plantations cover by the contracts, such as easements etc.
For the of this cage, the contention of the PLANTERS can not be sustained. The
validity or nullity Of the contracts entered into by the ton of the estates of Enrica
Alunan Vda. de and of F, de la Rama is not in issue in the present cam What is
simply sought to be determined in this case is whether or not on June 22,1952 when
R.A. 809 went into effect the planters who produced in the plantations formerly to the
estates of Enrica A. Vda de Lizares and Esteban de la Rama were milling their
sugarcane with the CENTRAL under contract that where then accepted by the planter
as binding on them and the CENTRAL. Until those contracts are invalid by the court
in proper proceedings, , those contracts should be considered valid and binding
between the parties thereto and their sucessors in interest, as the said parties did in
fact consider them to be so. It cannot be gainsaid that those contracts were entered
into by the executor or administrator as a proper act of administration, and the heirs
and su s in interest of the properties belonging to the estate accept and benefited
from, that act of the administrator. We have found that the ad. administrators of the
estates of Enrica A. Vda de and Esteban de la Rama did not, in fact, enter into new
contracts. They simply signed extension contracts, or contracts that extended the
very contracts signed by the decedents themselves during their lifetime, because
those administrators considered it n for the proper administration of the sugar plants
tions that part of the estates under their administration. The administrator of the
estate of a deceased person may exercise all acts of administration without special
authority from the court. 9 The fact that even after the judicial ad. . administration of
the estates the heirs or successors in interest continued to abide by the contracts
executed by the administrators, and accepted the benefits arising from the contracts,
showed that those heirs and successors in interest ratified the acts of the
administrators and submitted themselves to the terms and conditions of the milling
contracts.
We hold therefore, that for the purposes of the application of R.A. 809 to the Talisay-
Silay Milling District for the crop year 1952-53, the milling contracts, Exh. C-37,
executed by the administrator of the estate of Enrica A. Vda. de , and Exh. C-51,
limited by the administrator Of the estate Of Esteban de la Rama, should be
considered not as merely the contracts of two planters but as the separate contracts
of the individual successors in interests of said estate who had already received their
respective shares in the respective inheritances and who were actually holding
separate and distinct Plantation Audit Numbers respectively and who were actually
dealing with the Central independently of each other, as they were deemed by the to
be such.
LOCSIN, AGUSTIN T. (No. 23)—The evidence shows that Agustin T. was the owner
of P—/A 235, Hda Matabang Exhs H-1, p. 5; and A-2 p. 10). This planter limited
milling contract Exh. D-14 on April 14,1953. Considering that crop year 1952-53
commenced On September 1, 1952 to August 31, 1953, he is thereby a contract
planter for the said crop year.
OCA, GIL DE (No. 29)—He was the lessee of Hda Librada, P/A 90o (Exh. H-1, p. i)
owned by Pa de Oca who executed contract, Exhibit C-49). OCA, LUZ DE (No. 30)-
She was the owner and planter of Hda. Matab-ang P/A 79 (Exh. H-1, p. 2) and which
was covered by contract, Exh C-42, executed by Simplicio Lizares for the heirs of
Agueda Aguade Lizares.
TRECHO FILEMON (No. 37)—In the very list of contracts in the lower court's decision
it appears that n Trecho executed contract, Exh C-56. He P/A 126 and is part of Hda
Pantayanan (Exh. H-1, p. 2.) In fact, Exhibit C-56 clearly states that he signed the as
owner of Lots Nos. 760-A, 767, 966 and 1303 all of the cadastral survey of Talisay
Negros Occidental, hence, the observation of the PLANTERS about his being a
lessee without any right to enter into a contract is not borne by the record.
TREYES, FLORENTINO (No. 38)—He was owner of P/A 194, Hda Baga-as (Exh. H-
1, p. 3). Hda Baga-as, with P/A 19s and 194 (See Exh. Y) was covered by con Exh.
C-59 ex. located by Magdalena Treyes and as power of attorney of an other heirs.
Florentino Treyes is successor in interest to P/A 194 (Exh- H-1, p. 3 and Exh. A-I, p.
4).
YBIERNAS VICENTE N 39)—He was the lessee of Hda Cabiayan, P/A 87b (Exh. H-
1, p. 2) by Placido Mapa and Estrella Mapa de Ybiernes (Exh. A-I, p. 3) who were the
successors in the of the former owner Adela L. Vda. de Mapa who executed contract,
Exh. C-44.
YUSAY, ENRIQUE (No. 40)—He was owner of Hda San Juan. P/A 68b Exh. A-I, p. 3
and (Exh. H-1, p. 2). He was the successor in the interest of Carolina Lacson Gigante
former owner of Part of Hda. San Juan that was by Enrique Yusay, who executed
contract, Exh. C-18.
JAREÑO CATALINO (No. 8)—Catalino Jareno, was owner of P/A 38a Hda Trinidad.
(Exh. H-1, p. 1 and Exh. A-1, p. 2). Mafia H. Maramba as judicial a administratrix of
the Estate of Esteban Henares milling contract, Exh. C-13, covering Hda Encarnacion
with P/A 37b and Hda. Trinidad with P/A 38a. Hda Trinidad w sold to Aniceta Jareno
Perdigueros (Exh. HH) and Catalino Jareno was successor interest of Aniceta Jareno
Perdigueros.
TRECHO BENJAMIN (No. 36)—He was owner of P/A 130b Hda Pantayanan (Exh. H-
1, p. 2; and Exh. A2 p. 4). He was successor m interest of Pelagio Vellarde who
executed con tract Exh. C-62 which covered Hda Pantayanan.
As initiated early. these 30 Planters We have found to have been established by
undisputable evidence to be contract planters, as just explained added to the 46
planters mutually admitted by the hides to be also contract planters, plus the 10
whom the trial court correctly included because they unquestionably signed contracts
on February 17, 1953, make eighty-six (86) contract planters. It is inconceivable how
any lessee number can be said to be home by the evidence on the record hence this
figure is well nigh uncontestable.
To summarize then the situation obtaining in the Talisay- Silay sugar district during
the crop year 1952-53, We can see that out of the one-hundred sixty (161) p We
found there were in the district during that period, eighty-six (86) had contracts
binding unto yes. Clearly, therefore since the majority of 161 is 81, the was a majority
of planter with written contracts during said crop year, hence Section 1 of Republic
Act 809 could not be applied in said district as far as that crop year is concerned.
—C—
THE SITUATION IN CROP YEAR l953-1954
Contrary to the finding of the trial court the majority of the contract planters in 1953-
54 was bigger and more indubitable
It is to be regretted that the trial; court made a very scanty of discourse situation that
obtained during the 1953-54 crop year. This is how y it viewed the matter.
For the year 1953-54, Alfredo A. Bustamante, a new planter
entered into a written milling contract but without duration or expiry
date (Exh. D-3). It shall be considered a written milling contract for
1953-1954 only and the number of planters shall be deemed
creased to 171.
Agustin T. Lacson also entered into a written milling contract E D
14) effective from 19r)3.1964 to June 1, 1965. He was a Planter in
1952-1953 without a written milling contract and therefore, the total
number of planters for that crop year will not be affected.
Aniceta R. de Sian milled her 1952-1953 crop under written milling
contract Exh. G-51 executed by the administrator of the estate of
Esteban de la Rama. Her contract Exh. D.23 dated June 23, 1953
has no date of effectvity- It should be considered for the 1953. 54
crop only and will increase the number of titers with written g
contracts for that year by one because her share of the properties
covered by the written contract executed by the administratrix Exh.
C5 1) is segregated and is now covered by Exh. D23, a separate
contract. Therefore, the planters for 1953-1954 are 173 and the
majority is 87.
Adding the three written contracts Exh. DS D-14 and D-23 to the 74
written milling contracts for the 19r)2.1953 agricultural Year will give
77, which is still short by 10 to obtain a majority for that year.
Hence, for the Year 1953-1954, Republic Act No. Mg also applies. "
(Pp. 432-433, Record on Appeal)
The evidence, however, reveals much more than what the trial
judge cared to discuss For ins Of the 161 planters in 1952-53 We
found above, as listed in Exhibit H-1, the following twelve (12)
planters (listed together with their respective status already de
determined earlier)) no longer appear in Exhibit H-2, the t of
planters in crop Year 1953-54:
1. Cordova, Candido (non-contract)
2. Gamboa, Angel S. (non-contract)
3. Granada. Pura G. de (non-contract)
4. Hilado, Alfonso (non-contract)
5. .Demetria Vda. de (contract)
6. Heirs of Enrique (contract)
7. Lizares, Purita (contract)
8. Locsin, Augusto M. (non-contract)
9. Medel, Magdalena (non-contract)
10. Oca Aniceta de (non-contract)
11. Oca, Fransisco de (non- contract)
12. Villanueva Manuel H. (contract)
This absence simply mean that they did not cultivate any plantation during that
period, thereby leaving only 149 of the initial 161 to be considered as having
continued to be planters in the 1963-54 period. As can be seen only four (4) of them
were contract planters; the rest or eight (81 were non-contract ones. On the other
hand, Exhibit H 2 contains the names Of fourteen (14) planters not listed in Exhibit H-
1, thereby indicating that these 14 must have been new planters who came in only in
the 1953-54 crop year. Adding these 14 to the 149 left of 1952-53 t the total of
Planters in 1953-54 crop year was 163.
The names of these 14 now planters as we as their respective contract status, as
shown by the documentary evidence corresponding annotated after the respective
names follow:
1. Bustamante, Alfredo (Exh. H-2, p. 6) (contract) Executed on Feb.
17,1953 Exh. D3
2. Cuenca, Fernando (Exh. H-2, p. 1) (non-contract)
3. Gamboa, Arturo (Exh. H-2 p. 4) (non-contract)
4. Gonzaga, Ricardo (Exh. H-2, p. 2) (non-contract)
5. Granada, Edgardo (Exh. H-2, p. 4) (contract) He executed milling
contract, Exit D-7 on February 16, 1954. E. Alibaso (without quota)
E H-2, p. 4)
6. Jocson, Narciso (Exit H-2, p. 4) (non-contract)
7. Kilayko, Agustin (Exh, H-2, p. 3) (contract) P/A No. 147a—Hda.
Matabang (Exh. Ha p. 3) The owner is Celsa L. Vda. de Kilayko
(Exh. A-2, p. 9)
According to Exh Y, p. 3, P/A 147a, Together with P/A 89a, is comp
among others, in lots Nos. 440-A. Lot 440-A is covered by Exh. C-
16, executed by the owner Celsa 1, Vda. de Kilayko on April 30,
1948. Planter-lessee must, therefore, be considered as also under
contract.
8. Kilayko, Jesus L. (Exh. P.-2, p. 1) (contract P/A No. 4d—Hda
Bantud (Exh. H-2, p. 1) Owner is Alejandro Chingsuy Exh. A-2, p.
7)
Plantation No. 4d. Hda Bantud is covered by contract Exh. C1
executed by he owner on August 12, 1948, covering lot No. 770,
which precisely comprised P/A 4d (Exh. Y, p. 1). Planter must,
therefore, be considered as a lessee under contract.
9. Lizares, Cecilia de Lacson (Exh, H-2 p. 4) (contract) P/A No. 213
—Hda. Cabiayan (Exh. H-2, p. 4) Owner (Exh. A-2, p. 10).
Hacienda Cabiayan (PIA Nos. 87b, 165, and 243) is comprised in
lots Nos. 711, 713 C (Exh. Y, p. 3). Lot 713 C is under contract,
Exh. C-44, executed by Adela L. Vda. de Mapa on April 30,1948.
Planter must therefore be considered as a successor in interest to a
plantation under contract, and must be considered as under
contract also.
10. Lizares, Lourdes (Exh. H-2 p. 4) (contract) P/A No. 223b-Hda.
Minuluan (Exh. H-2, p. 4), 242-Hda. Baga-as (Exh. H-2, P. 4), 266
—Hda. Minuluan (Exh. H-2, p. 4). 267—Hda. Concepcion (Exh. H-
2, p. 4).
Planter is owner of P/A 242 (Exh. A-2 p. 10); and lessee of P/A
223b owned by Efigenia L. Vda. de Lizares (Exh. A-2, p. 10). The
owners of P/A Nos. 266 and 267 do not appear in Exh. A2.
Exh. Y, p. 3, shows that P/A 242 comprises lots Nos. 476, 473,
451-B, 477, 471, and 469. These lots are covered by Exh. C-35,
executed by Dametria Vda. de Lizares. Planter must be considered
the latter's successor in interest to said lot, and must be considered
as under contract.
11. Lizares, Maria D. (Exh. H-2, p. 2) (contract) P/A No. 140 Hda.
San Fernando (Exh. H-2, p. 2) Owner (Exh. A-2, p. 9).
Exh. Y, p. 2, show that P/A 140 (together with 139b) comprises lots
Nos. 727 and 1166, Exh. C-46, executed by Maria Lizares de Misa
covered lot No. 727. Hence P/A 140 must be considered under
contract, and planter must be considered under contract.
12. Oca, Severino de (Exh. H-2, p. 4) (contract) E-Hda Concepcion
(without quota) Exit H-2, p. 4)
Executed contract D-19 on February 16,1964.
13. Torre, Pablo Dr. (Exh. H-2, p. 1) (non-contract)
14. Yusay, Julieta (Exh. H-2, p. 2) (non-contract)
In other words, eight (8) of the f (14) new planters in 1953-54 had contracts while six
(6) had none.
As to the 149 planters who continued in 1953-54, is the list of their names together
with the indications of respective contract status during that period, emphasis being
given to those who had no contracts in 1952-53 but who subsequently executed
written agreements the following year
1. Advincula Rufino (contract)
2. Agravante, Dominador (non-contract planter)
This planter, non-contract in the crop year 1952-1953 executed
Exh. D-6 on March 23, 1954. He must therefore be considered
under contract in crop year 1953-1954.
3. Alano, Amado Dr. (non-contract)
4.
8. Beson, Jose L (contract)
In 1953-1954, Jose L Beson his status as contract Catabla E H-2,
P. 1). This cannot change planter for he continued cultivating P/A
Nos. 6a and 7a which were under contract.
9. B Lucilo (Contract)
10.
124. Panlilio, Encarnacion L. Vda. de (contract)
This planter did not cultivate PA No. 88d in 1953-54. This will not
change her status for she still cultivated PA 88b which was under
contract.
125. 149. Yusay, Enrique Dr. (contract)
Thus, it appears that out of the 149 planters referred to, eighty-two (92) continued
having contracts, while six (6) who had none became contract planters 10 hence, there
were eighty-eight (88) contract planters and sixty-one (61) non-contract ones among
them.
There was a majority of contract planters in 1953-1954 crop year.
In brief, as already shown, there were 163 planters adhered to the CENTRAL during
the crop year 1953-54. We have found that there were 161 such planters in 1952-53.
To reiterate, twelve (12) of them ceased cultivating in the following year. Now, four (4)
of these were contract planters and eight (8) were non-contract ones, hence, of the
86 We found to be contract planters in 1952-53, only eighty-two (82) remained. But of
the fourteen (14) new planters that cultivated in 195354, eight (8) had contracts and
six (6) did not have. Adding the 8 new contract planters to the 82 left of the 1952- 53,
it results that there were ninety (90) contract planters. To this 90 we have to add also
the six (6) non-contract planters of 1952-53 who, as shown in the above list of 149,
entered into written contracts with the CENTRAL in 1953-54. Consequently, We can
see that there was a total of ninety-six (96) contract planters during that period.
As to the non-contract planters, of the 75 We found in 195253, eight (8) ceased to
cultivate, thus leaving only 67 of them. But with the coming in of six (6) new ones in
1953-54, the number would have risen again to 73, were it not for the fact that, as
already shown, six (6) of the non-contract planters of 1952-53, entered into contracts,
as just stated, in 1953-54, thus depleting the number of non-contract planters back to
67. Our conclusion, therefore, is that of the one hundred sixty-three (163) planters
adhered to the CENTRAL in 1953-54, ninety-six (96) were contract planters and only
sixty-seven (67) were non- contract planters. And so, there was also a clear majority
of contract planters in the Talisay-Silay district in the 1953-1954 crop year and
Section 1 of Republic Act 809 cannot applied to said district during that crop year.
—D—
THE SITUATIONS DURING EACH OF THE
SUBSEQUENT CROP YEARS FROM 1954-55
TO 1969-60
There was no material change in the situation of the parties after 1953-54 up to 1959-
60.
Our conclusions just set forth apply as wen to the situations obtaining in the
subsequent crop years from 1954-55 to 195960. In all of said crop years, there was a
majority of PLANTERS in the Talisay-Silay district with written agreements with the
CENTRAL.
Brief statement of the situation during each of the crop years mentioned, beginning
with 1954-55.
—1—
We have found that in crop year 1953-54, there were 163 planters, 96 of whom had
contracts and 67 without. In 195455, seven (7) of them did not plant, three (3) of
whom namely, Arturo Bustamante, Josefina Lacson and Emiliano Lizares, were
contract planters while the other four (4), namely, Fe S. Hofilena, Hector L. Hofilena,
Luis Ramiro Hofilena and Conrado L. Jimenes were not. However, twelve (12) new
planters went in that year. These 12, together with their pertinent circumstances were:
1. Consing A. C.M. (Exh. H3 p. 5) (non-contract). No contract
appears to have been entered into.
2. Gamboa, Ernesto (Exh. H3 p. 4) (non-contract)
3. Gonzales, Fausto (Exh. H3 p. 2) (contract) PA 83-Hda.
Esmeralda (Exh. H3 p. 2) Owner is Hijos de Inocentes de la Rama
(Exh.. A-4, p. 2)
According to Exh Y, p. 3, Hda Esmeralda, comprising PA Nos. 114-
b, 114-c, and 83, is covered by Lot No. 720. This lot is covered by
Exh. C-51, executed on March 12, 1951 by the Administrator of the
Testate Estate of Eateban de la Rama.
4. Lacson, Adela V. de (Exh. H3 p. 3) (contract) PA No. 207—Hda.
San Antonio (Exh- H3 p. 3)
5. Leduna Inocenta (Exh. H3 p. 3) (contract)
6. Lizares, Purita (contract)
This planter did not plant in 1953-54, but planted again in 195455
the same Hda PA 168, San Antonio Exh. H3 p. 3. For having
executed Exh. C-41 on June 15,1948, she must be deemed to
continue to be under contract.
7. Malan, Severino (Exh. H3 p. 4) (non-contract)
8. Oca, Aniceto de (Exh. H3 p. 3) non-contract)
9. Pimentel Isabelo (Exh. H3 p. 5) (contract)
10. eyes, Victor E H3 p. 4) (non-contract)
11. Velez, Enriquez EX H3 p. 5) (contract
12. Villanueva, Manuel H. (Exh. H3 p. 5) (contract)
As will be noted, of the 12, there were seven (7) contract planters and five (5) non-
contract planters.
Accordingly, as there were 163 planters in 1953-54 and seven ceased cultivating in
1954-55 but twelve new ones came in, there were one hundred sixty-eight (168)-163 -
7 = 156 + 12 = 168 - planters in the subsequent year. Now, of the 96 contract planters
in the former year, 3 stopped, but of the 12 who newly cultivated in 1954-55, 7 had
contracts and only 5 had none, and so, taking into account also the change of status
of Lizares & Co. Inc. from non- contract to contract planter, the number of contract
planters in 1954- 55 rose to 100 (96 - 3 = 93 + 7 = 100) while the non-contract
planters increased only by one for a total of 68. Clearly then, there was no absence of
written milling agreements between majority of planters and the millers in the Talisay-
Silay district in crop year 1954-56.
—2—
In crop year 1955-56
Practically the mm story may be repeated as to crop year 1955-56. Of the 168 p of
the p year, twenty-two (22) did not cultivate in 1965-56, but fourteen (14) new ones
came in, thus, there were 160 (168 - 22 = 146 + 14 = 160) planters that year. Of the
22, (15) were contract planters, namely Rufino Advincula Lucito Blanca, o
Bustamante, Juanita Castor, Edgardo Granada, Fidel M. Henares, Vicente Hofilena,
Agustin T. Locsin Jesus Magallanes, Renato Malejan Miguel de Nepomuceno, Elegio
Messia, Lourdes R. de 0 Isabelo Pimentel and Federico D. Rentoy whereas seven (7)
were not, namely, Dr. Amado Alano, A.G.M. Consing Heirs of Amalia Hernaez N
Jocson Anita L. de Ledesma, Julieta H. de Lopez and Severino Malan On the other
hand hereunder is what the evidence shows as to who the new planters were and
what was the respective status of each of them
1. Akol Claudia Jr. (Exh. H4 p. 1) (non-contract) PA No. 2b-Hda
Constancia Exh. H4 p. 1) 149b-Hda. N (Exh. H4 p. 3).
These plantations were formerly cultivated by Dr. Amado Alano Exh
A-4, P. 1), and as previously stated, were not under contract see p.
42 crop year 1952-53).
2. Akol Claudia Sr. (Exh. H4 p. 4) n tract)
3. Consing, Josefina M. Vda. de (Exh H4 p. 5) (contract) PA No.
235—Hda. Magdalena (Exh. H4 p. 5)
This plantation was formerly cultivated by Agustin T. (Exh. A-4, p.
1). The parties had stipulated as stated above (see p. 53, crop year
1952-U), that PA 235 is under contract Exh. HH)). Planter must,
therefore, be considered under contract.
4. Garcia, Alfonso (Exh. H-4. p. 5) (contract) PA 248-Hda.
Camantiro E H4 p. 5)
This plantation was formerly cultivated by Eligio Nessia (Exh. A-4,
p. 1). This plantation is covered by Exh. D-18 am No. 124, crop
year 1952-53). Planter must be considered a contract planter.
5. Garcia, Vicente (Exh. H-4. p. 5) (contract) PA No. 244—Hda.
Camantiro Exh. H4 p. 5)
This plantation was formerly cultivated by Lucilo B (Exh. A-4, P. 1).
This plantation was under contract Exh. D-2, and should be
considered, contract planter.
6. Ho Fe S. (Exh. H-1, p. 3) (non-contract) PA No. 157—Hda.
Cabug (Exh. H4 p. 3).
7. H , Hr L (Exh. H4 p. 3) (non-contract) PA No. 161—Hda Cabug
(Exh. H-4 p. 3)
8. Kilayko, Jose Maria H4 p. 3) (non contract)
9. Ledesma, Luis L. (Exh. H4 p. 4) (non-contract)
10. Revilla Carlos Exh. H-4. p. 4) (non-contract)
11. Sian Antonio N. ((Exh. H-4. p. 4) (contract) PA No. 100b Hda
Binaliwan (Exh. H-4. p. 4) 122b-Hda. Cafe (Exh. H4 p. 4)
These plantations were formerly cultivated by Vicente Hofilena
(Exh. A-4, p. 1). It was cultivated by Vicente H (Exh. A-4, p. 1). It
was stated in crop year 1952-53 that the plantations covered by
written contract. Hence plant must also be cons under contract.
12. Torres, Henrietta (Exh- H4 P. 5) (contract) PA 253—Hda.
Camantiro (Exh. H4 P. 5)
This plantation was previously cultivated by Rufino Advincula (Exh.
A-4, p. 1), who executed Exh. D. She is a contract planter.
13. Torres, Manuel (Exh- H-4. p. 5) (contract) PA No. 245—Hda
Camantiro (Exh. H4 p. 5), 246—Hda. Camantiro (Exh. H 4, p. 5)
Previous to the present crop year, PA 245 was cultivated by Jesus
M and covered by D-15, and PA 246 by Miguel Nepomuceno, and
covered by Exh. D-17. (See p. 45, crop year 19521953.)
14. Torres, Raquel Exh H4 p. 5) (contract) PA No. 252- Hda
Camantiro (Exh. H4 p. 5)
This plantation was formerly cultivated by Juanita Castor (Exh. A-
4, p. 1), who, as already stated (crop year 1952-53), executed Exh.
D-4.
As can be seen, seven (7) of them had contracts and seven (7) also had none.
It results, therefore, that of the 100 contract planters in 1954-55, only 85 were left, but
one of them Enrique Velez became a non- contract planter because while he had a
contract the year before for PA 86a, Hda Cabiayan he ceased to plant therein the
following year and continued only with the other plantation not covered by contract.
So, there were in the ultimate only 84 left, to whom must be added the 7 new ones
named above, thus making a total of 91 contract planters. On the other hand, from
the 68 non-contract planters of 1954-55, must be deducted seven who did not
cultivate the following year, but We have to add again the new 7 who come in. Thus,
the non-contract planters would have remained at 68 were it not for Velez having
become a non-contract planter, thereby their number to 69. Compared to the 91
contract plant 69 is y a minority. Again, the formula applied to the 1954-55 crop year
is applicable to 1955-56, for the reasons already discussed above.
—3—
In crop year 1956-57
The evidence on record relative to the situation that obtained during crop year 1956-
57 shows quite plainly that Our conclusion as to the ratio of sharing among the parties
for that year cannot be different from that of the previous years already considered.
Specifically seven (7) out of the 160 planters in 1955-56 did not plant in 1956-57,
while eighteen (18) new plan registered d d period, thereby resting in their being one
hundred seventy-one (17) planters to be considered for the latter crop year. Three (3)
planters, namely, Amparo G. Vda. de Gaston, Ignacio Lacson et al. and Victor
Treyes, of those who ceased in 1956-57, had no contract, whereas four (4). namely,
C. Kilayko, Inocenta Leduna Felicidad Olimpo and Sergio Velez had. Therefore, there
were only 87 contract planters left, but as may be noted hereunder, ten (10) of the
new planters had contracts and only eight (8) had none. Here is what the evidence
shows as to the 18 new planters:
1. Arzadon Tarcila Vda. de (Exh- H5 p. 1) (non-contract)
The owner is Tarcila Vda. de Hilado (Exh. A5 p. 1)
2. Bustamante, o (Exh. H5 p. 5) (contract) E-29-Dos Hermanos with
quota (Exh. H5 P. 5) Owner (Exh. A5 p. 5)
As said in crop year 1954-65, owner executed contract Exh. D-3 on
February 17, 1953. Planter is ore with contract.
3. Capay, Maximo Exh H-5 p. 1) (contract) PA No. 37-Hda.
Encarnacion (Exh. H5 p. 1) Owner (Exh. A-5, p. 1)
As per Exh. HH the parties have stipulated that PIA 37b (which
appears to be the same as PA No. 37) Hda Encarnacion, sold to
Maximo Capay on Oct. 23, 1954, is under contract. Hence, planter
must be so considered.
4. Ereñeta Josefina et al. E H5 p. 2) (contract) E-4-Hda Bayusan
with quota (Exh. H4 p. 2), E-Hda Bagaas with quota (Exh. H5 p. 2)
The last mentioned plantation was planted by Ereneta Justa and
Josefina. This appears to be the same as Ereneta Josefina et al.
hence the two plantations am placed under the same planter.
E-Bagaas as well as E4 Bayusan are owned by Ereneta Justa and
Josefina, et al. (Exh. A-5, p. 4). It does not appear that owners have
entered into any written milling contract. But we find that Hda
Bagaas of which Hda E, together with PA 193 and 194 are covered
by Exh. C-59. Hence, planter is to be considered as with contract.
5. Gaston, Antonio & Mar. D. de Locsin (Exh. H5 p. 1) (non-
contract)
6. Gaston, Virgilio (Adm) Exh. H-5 p. 1 (contract) PA No. 33f—Hda.
Puyas # 1 (Exh. H-6 p. 1)
The owner of Hda Puyas 1, according to Exh. A-5, p. 2, was Rufina
C. de Paula. This hacienda was cultivated by David Lacson, who,
as said in crop year 1952-53, was under contract. Hence, planter
must be considered to be under contract.
7. Guinto, os L. de Exh H5 p. 4) (contract) PA No. 224a-Hda.
Minuluan (Exh. H6 p. 4) Owner (Exh. A-5, p. 4)
The evidence shows that owner was one of those who executed
Exh. C-50 on May 4, 1948. She is, therefore, a planter with
contract.
8. Jalandoni Manuel A. (Exh. H-5 p. 1) (non-contract)
9. Jimenez, Conrado L. (Exh. H6 p. 3) (non-contract)
10. Jocson, Narciso Exh H-5 p. 2) (contract) E-7—Hda Caridad with
quota (Exh. H-6 p. 2) Owner is Jocson, Flory G. de (Exh. A-5, p. 4)
The evidence shows that N Jocson, as Attorney-in-fact of his wife,
Flory G. de Jocson, executed Exh. D9 on Feb. 9, 1954 covering lot,
among others, No. 1316-B of the Cadastral Survey of Talisay which
lot according to Exh. Y, p. 1, compromises Hda Caridad of which
E7 forms part. The plantation is, therefore, under contract and
planter should be considered a planter with contract.
 11. Kilayko Romeo C. (Exh. H5 p. 3) (contract) PA No. 123 C-Hda
Cafe (Exh. H5 p. 3)
This plantation was planted by Ramiro C. Kilayko in the previous
years, and that the plantations was covered by contract Exh. C-17,
executed by the owner Rufina C. Vda. de Kilayko on July 20.1948.
12. Lizares, Emiliano (Exh. H6 p. 4) (contract)
13. Lizares, Felisa (Exh. H-5 p. 2) (non-contract)
14. Malan, Severino (Exh. H-6 p. 2) (non-contract)
15. Model, Magdalena Exh. HP-5 P. 3) (non-contract)
16. Misa, Nicolas, and Maria L. de (Exh. H-5, p. 1) (contract) P/A
No. 18—Hda. Imbang # 2 (Exh. H-5, p.1) 19-Hda. Imbang # 3 (Exh.
H-5, p. 1) Owner (Exh. A-5, p. 3).
17. Rama, Esteban de la (Exh. H-5, p. 3) (non-contract) P/A No.
113, Hda. Cabanbanan (Exh. H-5, p. 3) Owner (Exh. A-5, p. 4)
It does not appear that planter-owner ever entered into any written
milling contract. Hence, he is without contract.
18. Velez, Soledad G. de (Exh. H-5, p. 4) (contract) P/A No. 239—
Hda. Camantiro (Exh. H-5, p. 4) Owner (Exh. A-5, p.4).
Planter-owner executed Exh. C-11 on August 10, 1948. She is,
therefore with contract.
Summarizing the foregoing data. We have 171 planters, 98 of them with contract (101
- 4 = 97 + 1 conversion from non-contract to contract) and 73 (69 - 3 = 66 + 8 = 74 -1,
the conversion just mentioned) without . No doubt, the application of the same
formula as in previous years is proper regarding the sharing of that year's production
among the parties.
—4—
In crop year 1957-58
Neither can We escape from the same conclusion as above when We come to crop
year 1957-58. The evidence is clear that there were one hundred sixty-nine (169)
planters then, ninety-seven with contracts, seventy-two (72) without.
Thirteen (13) of the 171 in 1956-57 failed to cultivate, but eleven (11) new ones did.
(171-13 = 158 + 11 = 169.) Of said 13, six (6), namely, Romeo C. Kilayko, Julio D.
Labayen, Pedro Lacson, Luz de Oca, Efrain Santibañez and Filemon Z. Trecho had
written agreements, while seven (7), namely, Walterio Granada, Roque Hofileña,
Tarcela Vda. de Hilado, Manuel A. Jalondoni, Eduardo & m.L. Ledesma, Felisa
Lizares and Severino Malan had none. The following list shows that of the eleven (11)
new planters, six (6) were contract planters and five (5) were not:
1. Camon, Melchor (Exh. K, p. 1) (non-contract)
2. Ereñeta, Justa A. (exh. K, p. 4) (contract) P/A E-Baga-as owned
by planter (Exh. K, p. 4).
It appear that Hda. Baga-as P/a nos. 193, 194 and E cover lots
Nos. 1278 E, 451, and 452, which lots are covered by Exh. C-59.
3. Gamboa, Oscar (Exh. K, p. 1) (contract) P/A No. 69c-
Hda.Camantiro (Exh. K, p. 1) Owner is Domingo & Rodrigo Lacson
(Exh. K. p 1)
It appears that owner Rodrigo Lacson executed Exh. C-19 on Aug.
10, 1948 covering lots Nos. 761 and 763, which lots, among others,
are covered by P/A 69 (P/A 69c and 204).
4. Javellana, Mercedes L. (Exh. K, p. 2) (non contract)
5. Kilayko, Dr. Jose C. (Exh. K, p. 2) (contract) P/A 123e-Hda. Cafe
(Exh. K, p. 2) Owner is Rufina Kilayko (Exh. K, p. 2)
Owner entered into contract Exh. C-17 covering Hda. Cafe.
6. Labayen, Amando (Exh. K, p. 2) (contract) P/A No. 272-Hda.
Matab-ang (Exh. K, p. 2) Owner (Exh. K, p. 2)
By stipulation of the parties as set forth in Exh. HH, this plantation
is to be considered under contract.
7. Labayen, Heirs of Vicente (Exh. K, p. 2) (contract) P/A No. 17e-
Hda. Matab-ang (Exh. K, p.2) Owner (Exh. K, p.2)
This planation is comprised in lot 1285 a which is covered by Exh.
-2, executed by Hormecinda Diaz on April 30, 1948.
8. Malan, Silvino (Exh. K, p. 4) (non-contract)
9. Mascanana, Emilio (Exh. K, p.5) (non-contract)
 10. Siason, R. & Yusay, S. (Exh. K, p. 2 (non-contract)
11. Treyes, Victor, et al (Exh. K. p, 4) (contract) P/A 128d-Hda.
Pantayan, owned by Felimon Trecho (Exh. K, p. 4); E20-Hda.
Mansueto, owned by planter (Exh. K, p.4)
These plantations were planted in the previous year by Felimon
Trecho, and Felimon Trecho was a contract planter. (See crop year
1952-53.)
—5—
In crop year 1958-59
It is almost a mootone to say that as to crop year 1958-59, We have not sen any
evidence that could materially bring about a conclusion different from those We
arrived at relative to provious years. Thus, to the one hundred sixty-one (169) plant
ers in 1957-58, must be added eleven (11) new ones as follows:
1. Bonin, Juan Z. (Exh. QQQQQQ-2, p. 1) (contract) P/A 28a-Hda.
Germinal., owned by Jose B. Gamboa (Exh. QQQQQQ-2, p. 1)
Owner executed Exh. C-8 on July 23, 1948 covering Hda.
Germinal. (See crop year 1952-1953). Planter-lessee must,
therefore, be considered under contract.
2. Cordova, Romulo (Exh. QQQQQQ-2, p. 1) (non-contract)
3. Florentino, Pedro (Exh. QQQQQQ-2, p. 1) (contract) P/A 5a-
Hda. Catabla, 6a-Hda. Cataywa, 7a-Hda. Luciana
All the plantations are owned by Alejandra Ching Suy.
These plantations were in the previous years planted by Jose L.
Beson (crop year 1952-1953), and as said before, they were
covered by Exh. C-1 executed by the owner.
4. Lacson, Remedios L. (Exh. QQQQQQ-2, p. 3) (contract) P/A No.
67-Hda. Bagacay owned by Felix Lacson. Hda. Bagacay was
formerly planted by Gloria Tampinco who executed Exh. C-23 over
it. Hence planter must also be considered under contract.
5. Lizares, Domingo (Exh. QQQQQQ-2, p. 3) (contract) P/ 168c-
Hda. San Jacinto, owned by Purita Lizares).
Owner executed Exh. C-41 over the Hacienda. (See crop year
1952-1953.)
6. Velez, Enriquez & J. Jalandoni (Exh. QQQQQQ-2 p. 4) (contract)
P/A No. 87a-Hda. Virgen del Pilar owned by Lizares & Co.
This plantation was formerly planted by Emiliano Lizares (see crop
year 1952-1953), who executed Exh. C-36 covering Hda. del Pilar
7. Villarde, Fausta P. (Exh. QQQQQQ-2, p. 4) (contract) P/A No.
129-Hda. Pantayanan owned by planter.
This plantation was formerly planted by Pelagio Villarde (crop year
1952-1953). The plantation is covered by Exh. C-55, executed by
Felicidad Olimpo Vda. de Trecho.
8. Villarde, Mauricia (Exh. QQQQQQ-2, p. 4) (contract) P/A 130-
Hda. Pantayanan owned by planter.
This plantation is covered by Exh. C-62 executed by Pelagio
Villarde. (See crop year 1952-1953.)
9. Treyes, Dominga (Exh. QQQQQQ-2, p. 4) (contract) P/A No. E-
33a-Hda. Baga-aa, owned by Justa A. Ereñeta.
Hda. E-Baga-as was covered by Exh. C-59. (See crop year 1956-
1957, New Planters.) Planter should be considered under contract.
10. Gonzaga, Anunciacion (Exh. QQQQQQ-2, p. 4) (non-contract)
11. Villanueva Samuel (Exh. 2 p. 5) (non-contract)
In other words, eight (8) new contract planters and three (3) non- contract ones came
in. On the other hand, sixteen (16) of the 169 did not plant thirteen (13) of them
contract planters namely, Josefa Co Justa A. Ereneta Adoracion Gonzaga, Luis L.
Gonzaga, Dr. Francisco Kilayko, Heirs of Vicente Labayen, Lizares & Co. Inc.,
Emiliano Lizares, Paulita Lizares, Nicolas and Maria L. de , Severino D. Oca, Gloria
L. de Tampinco and Pelagic Villarde and three (3) of them non-contract ones, namely,
Ernesto Gamboa, Benjamin ' C. Gaston and Caridad Granada. On the basis of these
data, We should add that 11 new planters to the 169 and then subtract the 16 who did
not plant, which remits in there having been 164 (169 + 11 = 180 - 16 = 164) planters
that year. Then, to the 97 contract planters in 1957-58, We should add the new ones
named above and afterwards subtract the 13 who did not cultivate that year, thereby
getting 92 (97 + 8 = 105 - 13 = 92) as the number of contract planters for the period.
We have to add one (1) more to these, making the total 93, because Jose N. Pa who
was in the list of non-contract planters in 1957-58, planted in 1958-59 PA 139b owned
by Celsa L. Villarde Kilayko, (Exhibit 2 p. 4) which is covered by con- tract, Exhibit C-
16, for which reason he a contract planter. On the other hand, the non-contract
planters would be 71 because 3, already listed above, stopped, and also 3.
abovename came in, but there was 1 conversion from non-contract to contract.
Again, therefore, there was a majority of contract planters in the district during crop
year 1958-59.
—6—
In crop year 1959-60
Crop year 1959-60, the last We will consider, was not also essentially different t from
the previous years. There were fourteen (14) new planters in that crop year, but eight
(8) of the 164 in the previous year stopped hence there were 170 (164 + 14 178 - 8 =
170) planters them Four (4) of the 14 now ones had contracts and ten (10) had none,
thus:
1. Bautista, Benjamin (Exh.QQQQQ-3,p. 1) (non contract)
2. Braganza, Angela E QQQQQQ-3 p. 1) (contract)
This plantation was covered by Exh. C-59. (See crop year 195253.)
3. Gamboa, Emilieta (Exh. QQQQQQ-3 p. 1) (non-contract)
4. Jalandoni Cesar Jr. (Exh. QQQQQQ-3 p. 2) (non- contract)
5. Jalbuena Augusta (Exh. QQQQQQ3 P. 2) (contract) PA No.
165b-Hda. Cabiayan 86b-Hda. Cabiayan.
Both plantations were owned by Lizares & Co. PA 86 was covered
by contract (Exh. HH).
Planter lessee was, a contract planter.
6. Jav Jose No. (Exh. QQQQQQ-3 p. 2) (non-contract)
7. Jison, J L. de Exh. QQQQQQ-3 p. 2) (non-con tract)
8. Lacson, Ernesto D. (Exh. QQQQQQ-3 p. 3) (contract) PA 19a-
Hda. Imbang # 3, owned by Misa Maria L de and Nicholas
This plantation was covered by Exh. C-47 (see crop year
19521953).
9. Lacson, German (Exh. QQQQQQ-3 p. 3) (contract) P/A No. 16b-
Hda. Imbang I owned by Misa Maria L de 18b-Hda. lmbang No. 2
owned by Misa Maria L de & N 140a-Hda. San Fernando, owned
by Misa Maria D.
P/A Nos. 16 and 18 were by Exh C-48 and Exh. C-47 am crop year
1952-53). PA 140a is by Exh. C-46 (see No. 11, now Planters, crop
year 1953-1954). Planters lessee therefore, be considered as
contract planter.
10. Lacson, Ignacio, et al. Exh QQQQQQ-3 P. 3) ( non-contract)
11. Lacson, Luis L (Exh. QQQQQQ-3 p. 4) (non-contract)
12. Oca, Hernando, de Exh. QQQQQQ-3 p. 4) (non-contract)
13. Ortiz, Victor Exh QQQQQQ-3 p. 4) (non-contract)
14. Vasquez, Jose L (Exh- QQQQQQ-3 p. 5) (non-contract)
The 4 contract planters who that year were Adela Vda. de Lacson, Maria D. Lizares,
Jose Torres Jr. and E Velez and the 4 contract one were Fernando M L. Jav
Magdalena Medel and Dr. Pablo Torres The rest is that of the 170 plan there wee 93
(93 + 4 97 - 4 = 93) contract and 77 (71 + 10 m 81 - 4 - 77) non- contract ones then.
Definitely there was a minority of tract planters during crop year 1959-60.
—E—
THE SIX CONTRACTS EXCLUDED BY THE
TRIAL COURT CANNOT AFFECT THE
RESULT WE HAVE ARRIVED AT
In its decision, the lower court singled out six contracts that it considered as effective
only for the crop year 1954-1955. According to the lower court the contracts did not
provide for a specific period of duration, and so that should not be counted m
determining who were contract planters during the crop years subsequent to the crop
year 1954-1955. These contracts am Exhibit D5 executed by the spouses Jose
Cuaycong and Natividad Lacson de Cuaycong-, Exhibit D7 executed by Edgardo
Granada; Exhibit D-13, executed by Vicente Layson Exhibit D-19, executed by
Severino de Oca Exhibit D-21, executed by Isabelo Pimentel and Exhibit D-23,
executed by Aniceta R. de Sian The truth of the matter, however, is that whether the
six planter concerned are considered to be contract planters or not, the rest of this
case, as maybe deduced from the above discussion and explanation of the relevant
detail cannot be altered. The fact that there was always a majority of contract planters
during the years referred to wig persist. 11 Nevertheless, just to of all the points on
which the trial court predicated its decision, We shall set forth Our views relative to
the particular ruling We are referring to.
We have examine these contracts one by one. We MA that in Exhibit D5 executed by
Jose Cuaycong and his wife, it is clearly stated that the contract is to be effective up
to June 1, 1964.
We also find that Exhibits D7 D-13, D-19 and D-21, lively executed by Edgardo
Granada, Vicente Layson, Severino de Oca, and Isabelo Pimentel, were milling
contracts that were executed by lessee of plantations adherent to the CENTRAL It is
provided in all these four milling contracts that the effectivity of the contracts was for
the entire duration of the lease. We do not find in the records of this case those
contracts of lease, but it is presumed, unless the contrary is shown, that the leases
would last for several years after their execution in 1954. Necessarily, the contracts
would also last for several years. There is absolutely no evidence in the record that
the milling contracts, Exhibits D7 D-13, D-19 and D 21 were intended to be good for
only one year. On the contrary, there is reason to believe that those milling contracts,
like the other contracts existing between the CENTRAL and the other planters, would
last until the crop year 1959-60.
As regards Exhibit D-23, executed by Aniceta R. de Sian it had really no date of
effectivity of the milling contract, but We do not agree with the view of the lower court
that the contract was good for only one crop year. This contract, Exhibit D-23, was an
extension of a previous g contract, and it is similar to the other contracts of extension,
signed by the other planters, which would expire during the crop year 1959-1960.
The lower court was not called upon to determine the period of the duration of the six
contracts in question. What was to be determined only as whether or not during a
particular crop year a planter was milling his sugarcane with the CENTRAL under a
milling contract, which was then mutually observed by the parties thereto. The power
of the court to fix the duration of an obligation may be exercised only when either of
the contracting parties should so request, or should k to terminate the obligation, but
the court cannot motu proprio retroactively and arbitrarily declare a contract to be
terminated several years back when the said judicial declaration is not sought by any
of the contracting parties. Our finding is that the persons who executed the six
contracts in question had been milling their sugarcane with the CENTRAL under the
terms and conditions of those contracts.
In consequence, We hold that the lower court erred when it considered the six
contracts, Exhibits D5 D7 D-13, D-19, D21 and D-23, as effective only for the crop
year 1954-65.
—F—
THE COURT SUSTAINS THE THIRD COUNTER-ASSIGNMENT OF ERROR IN
PLAINTIFFS- APPELLEES' BRIEF RE THE MOST FAVORED PLANTER CLAUSE
WHICH BECAME EFFECTIVE DURING THE 1954- 55 CROP YEAR.
At this juncture, We have arrived at the most important legal aspect of this case. In a
sense, where We are is actually the fuming point of the instant litigation. Here is
where the Court will have to enforce the evident and indubitable spirit of Republic Act
809 rather than what We have seen earlier in this decision to be the rather latently
ambiguous tenor of its provisions. Our fundamental perspective cannot be more
compeling which is to protect and preserve by all possible means within logic and law
whatever benefit can be derived by the sugar plantation laborers from the
implementation of the statute. Indeed, We would be miserably failing the primary
objective of the Act, were We to permit the capitalist sectors of the sugar industry—
the millers and the planters—to take advantage of the passage of the law thru some
kind of device, seemingly permitted by its language but which could exclude the less
fortunate third sector—the plantation laborers—from deriving any benefit from the
enforcement of the Act which We have found earlier in this decision to have been
approved precisely to ameliorate their financial and al condition. Importantly, We
reiterate emphatically the proposition We have rather lengthily dismissed earlier
herein that any construction of the statute under scrutiny that would allow the millers
and planters to enter into contracts that can have the effect of depriving the plantation
laborers of any share in the produce of the sugar district to which their planter-
employers belong must have to be ruled out, if We are to remain faithful to its basic
character as a police power and social justice measure.
The Central increased by contract the shares of some planters in 1954-55. Such
increase is of transcendental significance.
As We have stated earlier, in the amended complaint of plaintiffs- appellees, it is
alleged as a second and alternative cause of action that:
2. That defendant CENTRAL has refused and continues to refuge
to give all the plaintiffs PLANTERS a sharing participation in excess
of 60%;
3. That on October 26, 1954, the defendant CENTRAL, through its
General Manager, MN Castaneda sent the ASOCIACION a letter,
copy of which is hereto attached as Annex 'Band made an integral
part of this Amended Complaint informing the latter that certain
planters have been given a share in the sugar production as high
as 63% to 64% (64% if the production of the defendant CENTRAL
is 1,200,000 piculs or over),
4. That although the old written milling contracts in the Talisay-Silay
Mill District only stipulate a s participation of 60% for the planter,
the higher tion provided for in the new milling contracts is deemed
incorporated in the old written milling contracts because of the
following provision of the old written milling contracts:
VIGESIMO SEGUNDO: "La Contra" convine en
que no in aceptara mas adelante contratos con
ningun Plantador que reunan majores
condiciones que las co a que se obliguen a moler
au cana dulce en la fabrika para la de 1920-21;
quedando obligada, is contra esta clause a
conceder a dichos plantadores
 5. That both Sections 5 (b) and 11 (b) of the Executive Orders Nos.
900 and 901, of 1935, provide as follows:
Plantation milling share. The percentage of the
sugar manufactured by the filling from grown on a
plantation which the mill y re to. or credits to the
account of, the owner and/or planters of the
plantation Ma be known as the 'basic plantation
milling share' and A" be determined as follows:
(b) For plantation of parts thereof not covered by
valid written milling contract between the mill
company and the owners and/or planters of such
plantation, the basic plantation share shall be the
most frequent basic plantation milling share
stipulated in the valid written milling contract
between the mill company and the owners and/or
planters of the other plantations adherent to the
mill.
The third counter-assignment of error of the plaintiffs-appellees in their brief deals
with the failure of the trial court to make a finding on their above alternative cause of
action. Among other things, in said brief they argue
It is clear, therefore, that if Republic Act No. 809 is not applicable to
the Talisay-Silay Milling District, then the 'most favored planter
clause' can be invoked by all contract planters of the Talisay-Silay
MM District. Consequently, the higher s participation given by the
defendant Central to the planters mentioned in Exh. U became the
most frequent basic plantation g share of the said district 9@ from
the crop year 1954-55 as contemplated in Executive Order Nos.
900 and 901 @ of 1935. " (Page 19, Ap Brief.)
The prayer in said brief in respect to that counter-assignment of error is:
(2) In the alternative, declaring that the planters of the Talisay- Silay
Milling District are entitled to a higher sharing participation of 63%,
or 64% if the production of the Central exceeds 1,200,000 piculs,
starting from the 1954-55 crop year (Page 111, Ap Brief.)

6. That construing together the above-quoted provisions of the law In connection with such posture of the PLANTERS, admitted it is that on October 26,
and the contract, the plaintiffs PLANTERS, both with and without 1954, General Manager M. N. Castaneda of the CENTRAL addressed the following
written @ contracts, are therefore entitled starting from the crop letter to the ASOCIACION:
year 1954-55 to a sharing participation of 63% of the production, or
64% in case the sugar production of the defendant CENTRAL is
1,200,000 piculs or over, inasmuch as said higher participation THE TALISAY-SILAY MILLING CO., INC.
should be considered as the most frequent basic plantation milling
share for the Talisay-Silay MM District;" (Pp. 10-13, Central's Rec. TALISAY, NEGROS OCCIDENTAL
on Appeal)
PHILIPPINESOctober 26, 1954
The prayer corresponding to the foregoing cause of action is as follows:
Asociacion de Agricultores de 
ON THE SECOND AND ALTERNATIVE CAUSE OF ACTION— Talisay-Silay Talisay, 
Negros Occidental
1. Declare in that event that this Honorable Court should rule that
the sharing proportion prescribed by Republic Act No. 809 is not Sirs:
applicable to the Talisay-Silay Mill District, that the sharing
participation of 63%, or 64% in case the total production of Please be advised that in accordance with the milling contracts
defendant CENTRAL is 1,200,000 piculs or over, in favor of executed by this Central and the planters indicated below, the
plaintiffs PLANTERS shall be applicable to the Talisay-Silay Mill sugar distributions corresponding to the signatories thereof are as
District starting from the crop year 1954-55 and for every crop Year follows:
thereafter,

2. Order the defendant CENTRAL to account for and pay to Na Hacie C

plaintiffs PLANTERS the proceeds of the sugar and molasses me nda en
reprinting the increased participation in favor of said plaintiffs tra
PLANTERS during the past crop years starting from 1954-55 crop l
year," (Pp. 15-16, Id.)
  Share Sh  
 ar son, Maria %-
e Ang 36
elin %
Joc Gloria 38 a
son, %
Flor (Ra      
y C. mon
de Lac
son)
Lay Bayus 38
son, an %
Vice Note. 36%-64% for centrals and planter's participation, respectively
nte in force if production exceeds or reaches 1,200,000 piculs. Yours
M. truly,/M.N. Castanedat/.M.N. CastanedaGeneral Manager

  Magb 38 (Pp. 393-394, Record on Appeal)

uyo %
The letter does not say so, but the evidence is uncontradicted that all the contracts
  Tamb 38
referred to were executed between February and September, 1954, hence they
ara %
correspond W the 1953-54 crop year. 12
Gra Gloria 48
nad, % However, in its supplemental memorandum October 2, 1978, the CENTRAL
Edg maintains that although there were really increases given to some planters in their
ardo new contracts, as thus alleged by the PLANTERS, the provisions granting said in
were never fully implemented and, in fact, it was soldy during crop year 1954-55 that
Oca Carida 38 it was partially implemented, as shown, according to it, in Annex A of said
, d % supplemental memorandum; which is the record of actual percentage shares given to
Sev the favored planters from crop year 1953-54 to crop year 1959-60. In other words,
erin whereas, on the one hand, the PLANTERS contend that the most favored planter
o de clause should be held by Us to have been in force from crop year 1954-55 and all
subsequent crop years, on the other hand, the CENTRAL maintains that at most it
Dali 38% 62   showed apply only to crop year 1954-55.
mo- %
os In regard to this controverted point it is Our considered opinion and so We hold that
Boni both parties should be bound by their respective pleadings in the trial court and to the
faci positions taken by them in their respective briefs. Notwithstanding that the note that
a A. the contracts containing the most favored planter clause became effective during the
1953-54 crop year, the PLANTERS have specifically asked in their pleading that the
Jun Conce 37 same applied from crop year 1954-55 and the subsequent ones, which must be due
dos pcion %- to the fact that as the CENTRAL contends, according to the records, it was only in
Enri 36 that year that it was implemented. But We cannot, on the other hand, sustain the
que % pose of the CENTRAL that said enforcement of the clause in controversy be limited to
the 1954-55 crop year exclusively, because We find this contention to be rather late,
Lac Sta. 37 since in the CENTRAL's answer to the amended complaint of the PLANTERS filed on
son, Maria %- December 22, 1956 already, which answer is dated February 28, 1957, on which date
Nati 36 the actual facts must have been by then within the know of the CENTRAL, it was
vida % completely silent in respect to this particular point, even as it denied the correct new
d of the PLANTERS' construction of the most favored planter clause. More, the
PLANTERS reiterated their position in their brief as appellees, by way of a third
Lac Sta. 37 counter-assignment of error, and no reply brief appears to have been filed by the
CENTRAL Indeed, We cannot consider as admissable evidence at this appeal stage,
the aforementioned honed Annex A of the CENTRAL's supplemental memorandum of
D 2,1978. The best We can do under the lances is to bind the PLANTERS to their
repeated posture of asking that the said clause in question be considered in relation
to crop year 195455 onward.
The effect of such most favored planter clause
Thus, it is such increase in the shares of some planters given by the CENTRAL by
virtue of the contracts referred to that entails the legal consequences. We are about
to considered The PLANTERS maintain that.
We respectfully submit that the Lower Court should have made a
specific finding on the alternative cause of action, notwithstanding
on the first cause of action.
This alternative cause of action is predicated on Executive Order
No. 900 series of 1935 section 5 (b) and Executive Order No. 901
series of 1935 section 1 1 (b) which both provide as follows:
Plantation milling shares—The percents of the
manufactured by the mill from grown on a
plantation tion which the mill company returns to,
or credits to the account of the owner and/or
planters of the plantation milling share's and be
determined as follows:
xxx xxx xxx
(b) For plantations or parts them not covered by
valid written milling contract between the mill
company and the owners and/or planters of such
plantation, the basic plants tion share shall be the
most frequent basic plantation milling share
stipulated in valid written milling contract between
the mill company and the owners and/or planters
of other plantations a t to the mill.
Before 1954, the maximum share given by the defendant
CENTRAL to any Planter of the Talisay-Silay Mill District was 60%.
However, the written milling contracts con this stipulation:
'VIGESIMO SEGUNDO,, La Contra conviene an
que no in aceptara mas adelante contratos con
ningun Plantador que mejores condicion que las
co 9 a log que se obliguen a W vu cana dulce en
la fabrics para a co de 1920-21; quedando
obligada, si contraviniese esta clause a co a
dichos Plantadores los privilejos favorables que
comsidiere a los nuevo (See the aforementioned
Paragraph Of this Milling Contracts attached to
Exh. C, C-1 to C-62.)
On October 26,1954, this defendant CENTRAL sent a letter to the
plaintiff ASOCIACION (Exh- 'U') informing the latter that certain ion
as high t CENTRAL is tion can also be "M in the Con as E D-5 and
D-10.
Considering, therefore, of the ' effects planter clause the old milling
it f that the participation of 63-64% in favor of the planters is
deemed incorpoarted into the new contracts becoming thereby the
most frequent basic plantation milling share in the Talisay-Silay Mill
District starting from the 1954-55 crop year.
It should be pointed out that the Phrase que majores condicion que
I" co a a las que las consedidas a los que cana dulce en la fabrics
para la de 1920-21 does not mean that only planters who agreed to
start milling their canes from the 1920-21 crop are entitled to the
'most favored planter clause'. The correct in. interpretation is that
the and clause shall be applicable to all planters whose contracts
contained the same terms and conditions as those in the 1920-21
contracts. An tion of the milling contracts Exh 'C', 'C-l' to 'C-62')
would show that practice all of them are extensions of the old 1920-
21 contract. This 1920-21 contract is the pre-war standard milling
contract of the Talisay-Silay Mill District. As a matter of fact, all pro-
war contracts, of date of execution were clause to have
commenced from 1920-21 and to terminate 30 Years thereafter or
1949-50. Thus, the old standard milling contract provided.-
OBLIGACIONES DEL PLANTADOR
Primera: Que durante el periods de treinta (30) alios a contar el
mornento en que La Central le no que se haba a recibirla entregara
a la nada IA Central debidamente despuntada y limpia de punta y
hoja toda la cana que se cultivate y produzca en sua dichos tierras
y haciendas
xxx xxx xxx
OBLIGACIONES MUTULASES
12. Este contrato es an vigor hasta ell dia de Junio de 1960. IA
primers cosecha Plantador que se su a cosecha de 1920-21, y la
ultima, la de 1949-1950.
(Appendix '14' of the Answer found on pp. 160 and 153 of the
Centrals Record on Appeal.)
 It is clear, therefore, that if the Republic Act 809 is not applicable to
the Talisay-Silay Mill District then the most favored planter clause
can be invoked by all contract planters of the Talisay-Silay Mill
District. Consequently, the higher sharing participation given by the
defendant Central to the planters mentioned in the Exh. 'U' became
the most frequent basic plantation milling share of the said district
starting fro the crop year 1954-55 as contenplated in Executive
Order Nos. 900 and 901 series of 1935. (Pp. 15-19, Planters Brief)
On the other hand, the position of the CENTRAL in respect to the issue thus rail by
the PLANTERS is limited in its answer to the amended complaint thus:
4. In answer to paragraph 4 of W Second and Alternative Cause of
Action, it avers that in the old written g contracts in the Talisay-
Silay Mill district the stipulated planter's participation is 55%, and
that is, as appears from the copy of clause "VEGISIMO
SEGUNDO" them in paragraph 4 of the Second and Alternative
Cause of Action, the stipulations of said clause are confined to
planters que as obliguen a moler cana dulce en la fabrics para la
cosecha la 1920-21'. and none of the instant plaintiffs under that
description (Page 40, Record on Appeal)
As We read it, the contractual stipulation around which the instant controversy
between the appellant and the appellees revolves does not really present much
difficulty as to what it must have been contemplated by the parties to signify. It is a
provision found m all contracts between the Central and the Planters. It reads:
VIGESIMO SEGUNDO: La Central' conviene en que no firmara in
aceptara mas adelante contratos con ningun Plantador, que
majores condiciones que las concedidas a los que se obliguen a
moler su cana dulce en la fabrics para la co de 1920-21; quedando
obligada si contraviniese esta clause a conceder a dichos
Plantadores los privilegios favorables que concediere a los nuevos
It is Our considered opinion that the following free literal translation of such Spanish
worded provision fairly conveys what the parties to the contracts in dispute had in
mind
TWENTY SECOND: The Central agrees that it will neither signed
nor accept, other contracts with any Planter, which will provide
conditions better than those conceded to those Planters who had
obligated themselves to mill their sugarcane in the factory during
the 1920-21 harvest; thereby being bound, should it contravene this
clause to concede to those Planters the same favorable conditions
which it shall have conceded to the new ones.
The obvious thrust of this provision is to see to it that the planters who had bound
themselves by their contracts with the CENTRAL in 1920 to the ratio of sharing
stipulated are not tied down to said rates should the CENTRAL grant higher tags of s
to any planter subsequently executing contracts with it. Under this stipulation, should
such eventually materialize during the life of the earlier contracts, all the planters
concerned would automatically be entitled henceforth to the higher ratio stipulated in
the new contracts, as if the former contracts were correspondingly ammended for the
purpose. In effect, this twenty-second clause of the 1920-21 contracts partake of the
nature of a most favored planter clause, to the end that no planter in the district can
be granted a higher percentage on sharing than any other, thereby to maintain
uniformity in the relation of the CENTRAL with all the affiliated and thereby
correspondingly avoid discrimination among them which could be judicial to the
interest of the industry.
We cannot accept the CENTRAL's pose that the PLANTERS of 1953-54 do not quill
under the on of planter "que se obliquen a moler calla duice en la fabrics pare la
cosecha 1920-21 " (in English-who had obligated during the this clause refers
exclusively to the very planters who signed the contracts in the 1920-21 crop year,
thereby excluding entirely from the enjoyment of the benefits thereof even the au in-
interest of said planters. In effect, the theory of the CENTRAL is that the right created
by and its obligation related thereto is purely personal to the planters of 1920-21.
The Court cannot agree. A studious examination of all the contracts in the record
would give anyone the unmistakable .- impression that the contractual relationship
between the miller and the planters in all the sugar districts of the Philippines is
characterized by uniformity and "equal treat among all the planters. 13 There are no
instances where any planter or group of planters of a given district is extended any
favorable term or terms not similarly given to all the other affiliated planters of that
district. Indeed, We are impressed that it is essential for the good of the sugar
industry itself that the millers do not discriminate among their planters. So much so
that to maintain such even treatment, y as to the ratio of sharing in the p of production
Section 5 (b) of Executive Order No. 900, series of 1935 and Section I 1 (b) of
Executive Order No. 901, of the same series both provide as follows:
Plantation milling shares. The percent of the W manufactured by
the mill from o grown on a plantation which the mill company
returns to, or credits to the account of the owner and/or planters of
the plantation milling share and shall be de as follows:
xxx xxx xxx
(b) For plantations or parts f not covered by valid written milling
contract between the milling company and the owners and/or
planters of such plantation, the basic plantation share shall be the
most ent basic plantation milling share stipulated in valid writ. ton
contracts between the milling company and the owners and/or
planters of other plantations adherent to the mill.
thereby extending even to the non-contract planters the required equality and
uniformity among the contract planters. In fact, the periods of the contracts are
practically co-terminus with each other, except perhaps in the instances where the
planters who dealt directly with the CENTRAL happened to be mere lessees for
limited periods. (Exhibits D7 D-13, D-19 and D-2 1.) Such being the case, We are
more in to view the right involved in the clause in question as not personal to the
original planters of 1920-21, contrary to the claim of the CENTRAL. We read
stipulation as not depriving the original parties thereto of the prerogative to transfer
and transmit their rights and obligations to others during the duration of their
contracts. The guarantee of equal treatment implicit in the provision is in line with the
characteristic uniformity that pervades among all the contracts among the component
elements of the industry. We see no reason why the assignees and transferees of the
original parties should be limited against. To be mm this is the logical and legal
consequence of stipulation No. 17 of the 1920-21 contracts which reads as follows:
17. Que este contrato, y todos sua terminos obnociones y
condiciones se entenderan contreados tambien por las tierras y
plantaciones mencionadas y awa, obtorios para los Plantador os
albaceas cesionarios y representantes de los Plantadores y para
las plantaciones y las tierras. " (See Annex A of Exhibit C.)
This is in consonance with Article 1311 of the Civil Code which provides that
"contracts take effect only between parties their assigns and heirs, except in cases
where the rights and obligations arising from the contract are not transmissible by
their nature, or by stipulation or by law. " (Cristobal v. Gomez, 50 Phil 810; Eleizegue
vs. Lawn Tennis Club, 2 Phl. 309.)
Not only that. AU but eleven of the contracts here in dispute are mere extensions of
the original contracts of 1920-21. For example, Exhibit C, the contract between the
CENTRAL and PLANTER Rosendo Alverez, which is mutatis mutandis Identical with
all the others, contains the following provisions:
WHEREAS, the PLANTER represents and warrants that he is the
present true and lawful owner, in fee simple, of the following
described land (hereinafter referred to as the PLANTATION):
(description)
WHEREAS, the said PLANTATION is subject to a milling contract
heretofore executed by and between the parties (or their
predecessors in interest) 'duly registered and annotated on then the
of the d property' under the terms and conditions set forth in the
printed form of the d milling contract, copy of which is hereto
attached and made an integral part of marked as Annex A;
WHEREAS, the mid milling contract is due to expire on June 1,
1950, and the parties hereto have agreed to extend the same for
the period here fixed, under the terms and conditions, except as
herein other provided, or modified.
The ready and necessary implication of these whereases is that the PLANTERS who
are parties in the instant case are either the same planters of 1920-21 or their
successors. And since it is stipulated that they are "subject to the same terms and
conditions coned in the printed form Annex A regardless of whether they are the
same parties or successors, the ineludible inference is that all the rights and
obligations of the original PLANTER bound by said contract were transmitted to said
successors, without any qualification, much less any diminution Again, from the
second whereas abovequoted it can be clearly gathered that the extension agreed
upon was made subject to the same terms and conditions of the original contracts,
"except as herein otherwise provided, changed or modified." And scrutinizing the
terms of said contracts, it is obvious that there is no contrary provision, change or
modification stipulated therein in regard to the clause under consideration.
In this connection, it may also be explained that in the new contracts, Exhibits D-6 to
D-13, inclusive, and D-19, D-21 and NNNNNN the only modifications contained
therein which differentiate them from the old ones consist in the reference to the
PLANTERS concerned as not being either the same planters of 1920-21 or their
successors but new, ones, and, of course, the additional corresponding stipulations
from that fact. What is importantly relevant is that it is expressly stipulated in these
new contracts that the parties have agreed to make the same subject to the Identical
terms and conditions as those in the 1920-21 contracts, which necessary means that
all the rights granted to the 1920-1-11 planters were also being extended to the new
planters. In other words, as to the these new planters, the so-called most favored
planters clause became obligatory upon the CENTRAL not by transmission from a
predecessor-in-interest but by consequent concession on the part of the CENTRAL in
the new contracts, when it agreed that they would be subject to the terms and
conditions of the 1920-21 contracts. For better appreciation, We quote the pertinent
provision thus:
WHEREAS, the PLANTER represents and warrants that he is the
present true and lawful owner, in fee simple, of the following
described land (hereinafter referred to as the PLANTATION):
(description)
WHEREAS, the parties herein have agreed and stipulated to
subject the said plantation to the applicable terms, conditions and
stipulations of a milling contract heretofore executed by and
between the CENTRAL and other adherent planters, as set forth in
the printed form of the said milling contract, copy of which is hereto
attached and made an m part hereof, marked as Annex A, except
as such applicable terms and conditions of Annex A are herein
otherwise provided, change or modified;
NOW, THEREFORE, for and in consideration of and of the
premises covered t.s.n. and under herein and in said Annex A
provided, the parties have agreed and stipulate and by presents do
hereby agree and stipulate, as follows:
1. —PERIOD OF MILLING CONTRACT.
This agreement, as well as the aforesaid applicable terms,
condition and stipulations of A shall be effective immediately and
 shall extend until the first day of June, 1964 and the last crop of
year PLANTER to be subject thereto, as hereby amended, shag be
the sugar crop of 1963-64.
2. —RAILROAD.
The CENTRAL will maintain and operate its existing lines of steam
or motor railway, or both, with all existing sidings, for the
transportation of sugarcane, sugar, fertilizer, materials and supplies
over rights-of way now used by it, during the whole period of this
contract.
The CENTRAL, if it should find it necessary, will also construct s
such branch lines of railway, either permanent or temporary, at
such points or places as may in its judgment from time to time
deem necessary, to receive and transport sugarcane from the
PLANTER's lands to the mill, either independently or in connection
with the aforesaid existing railroad systems as the CENTRAL may
consider most convinient for the general operation of its factory.
3. —PARTICIPATION IN THE SUGAR AND PRODUCTS
Paragraph VIGESIMOPRIMERO of the PACTOS QUE SE
OBLIGADA LA CENTRAL of the aforesaid Annex A is hereby
amended by reducing the share of the CENTRAL in the sugar and
the molasses produced, from forty-five percent (45%) to thirty-eight
(38%) . (Exhibit D-6.)
From the very nature of the clause in dispute, We are convinced that it is obviously
among the terms and conditions referred to in this provision as "applicable".
Briefly stated, the very circumstances indicated in the contracts m dispute compel the
natural and inescapable conclusion that the plaintiffs-PLANTERS in the instant caw
are entitled to the benefits of the most favored planter clause just discuss Upon these
premises We find no alternative than to sus the PLANTERS' third counter-assignment
of error. We hold that under the above-quoted twenty second clause of the contracts
We have discuss the appellant CENTRAL must extend to all the Planters having
contracts with it during the 1953-54 crop year the highest rate of sharing stipulated in
the contracts it had newly entered into with some planters in 1954 as specified in the
foregoing discussion. And pursuant to Executive Orders Nos. 900 and 901 just cited,
the same ratio should govern insofar as the non- contract planters are concerned.
May Section 9 of Republic Act 809 be applied to such ensuing situation such that the
plantation laborers should be held entitled to a portion of the increase thus given to
the planters? We believe so.
In consequence of the foregoing conclusion We have arrived at, the next issue for
Our resolution is whether or not the increase in the share We have thus recognized
the PLANTERS to be entitled to correspondingly carries with it the application of
Section 9 of Republic Act 809 which prescribes a share for the laborers to be taken
from any increase that the PLANTERS would get "under the Act." This is what that
Section 9 provides:
Sec. 9. In addition to the benefits granted by the Minimum Wage
Law, the proceeds of any increase in the participation granted the
planters under this Act and above their present share shall be
divided between the planter and his laborer in the plantation in the
following proportion:
Sixty per centum of the increased participation for the laborers and
forty per centum for the planters. The distribution of the share
corresponding to the laborers shag be made under the supervision
of the Department of Labor.
The benefits granted to laborers in sugar plantations under this Act
and in the Minimum Wage Law shall not in any way be diminished
by such labor contracts known as 'by the piece,' 'by the volume,' 'by
the area,' or by any other system of 'pakyaw,' the Secretary of
Labor being hereby authorized to issue the necessary orders for
the enforcement of this provision.
But before We address Ourselves to that all-important legal issue, We should
perhaps find out first what is the exact factual milieu that will serve as definite basis
for Our action.
(Page 436, Record on Appeal)
and that the by-products produced during the same periods are as follows:
(Pp. 436-437, Record on Appeal)
On the basis of the foregoing figures, excluding, of course. crops years 1952-53 and
1953-54 before the most favored planter clause went into effect, and if Section 1 of
Republic Act 809 were to be applied, the sharing ratio between the mill and the
planters in the Talisay-Silay district would have been 65% for the planters and 35%
for the mill in the crop years 1956-57 and 1957-58; and 67-_% for the planters and
32-1/2 for the mill in crop years 1954-55, 1957-58, and 1958-59; and 70% for the
Planters and 30% for the mill in crop year 1959-60.
Now, the respective ratios stipulated in the contracts concerned are them
Exhibit D5 contract of Jews Cuaycong 
—37% for the Central and 
63% for the planter
Exhibit D-6 of Dominador Agravante and/or his wife Bonifacia A.
Dalimo-os 
 —38% for the Central and 
62% for the planter

Exhibit D-7 of Eduardo Granada 

88% for the Central and 
62% for the planter The legal reasons and the logic and equity behind this ruling.

Exhibit D9 of Flory de Jocson  As earlier intimated the of the foregoing ruling may not be readily discernable One
—38% for the Central and  may not yet it from the language of the statute read in isolation from the in escapable
62% for the planter objective of the enactment and the com reasons that brought about its As far as the
PLANTERS are co they would view the W con- sequence of the most favored planter
Exhibit D-10 of Ewe Jundos  clause in their contracts with the CENTRAL as being outside the purview of Republic
—37% for the Central and  Act 80. And from the point of view of the CENTRAL they would naturally rather be
63% for the planter adjudged liable to give the stipulated increase by virtue of said clause than be com to
comply with the ratios provided for in Section I thereof. Thus, if We did nothing more
than enforce the twenty. contractual clause in question, it is to be that all the
Exhibit D-12 of Vicente Layson  PLANTERS, herein plaintiffs, would be more than contended to receive the increase
—38% for the Central and  of 3% or 4% in their share of the production in 1954-55, and the subsequent years
62% for the planter provided they would not have any obligation to give any part thereof to their laborers.

Exhibit D-13 also of Vicente Layson  We are fully convinced, however, that the Court is called upon to go father and inquire
—38% for the Central and  as to the applicability of Section 9 of the Act in the pre It is to Us utterly inconceivable
62% for the planter that the legislature ever contemplated that as a consequence of the direct or indirect
enforcement of the Act, the PLANTERS would by contract be getting an se of their
Exhibit D-19 of Severino de Oca  participation in the sugar production of their district for yes alone, with their la not
—38% for the Central and  getting any on thereof. And, as We view it, the pivotal consideration in that t is
62% for the planter, whether or not the execution of the new contracts in 1953-54, particularly those that
provided for increased shares for the planters, and the consequent enforcement t of
with the proviso that in any crop year wherein the production ex the most favored planter clause may be deemed as resulting in an increase of the
1,200,000 piculs, the proportion would be 64%-36%. share of the PLANTERS "under the Act" as that phrase is used in Section 9 thereof
as effectively as if there had been an ab (during said crop year) of written milling
agreements between the majority of planters and the s of sugarcane" in the Talisay-
Thus, there were at least two planters given 63%. Under the favored planter clause, Silay district referred to in its Section 1.
and because there was always a majority of contract planters, the PLANTERS
became entitled, instead of that provided by the law, to a sharing of only 63 - 37
during the whole period referred to, except for crop year 1969-60, when it was 64- 36. In this connection, it may be recalled that m the crop Year 1952-53, the first year of
Accordingly, We hereby declare and hold that out of the 3% and 4% increase We enforceability of Republic Act 809, there were initially only 76 planters with contracts
have thus found the PLANTERS are entitled to, their respective laborers are in turn with the CENTRAL it was the execution of 10 contracts on February 17, 1953 that
entitled to 6%. Therefore, the portions in dispute and held in escrow, namely, 5% for increased their number to 86. Had those 10 planters opted not to sign any contract,
1956-57 and 1957-58; 7-1/2% for 1954-55,1955-56 and 1958-59; and 10% for 1959- there would have been a majority of non-contract Planters during that Year, for Out Of
60, should be shared as follows: the 161 planters, there would have been only 76 with contracts and 85 without. With
those figures and the rates of increase provided for in Section 1 of the Act in mind, it
is not difficult to and deem as a certainty that the parties concerned must have
exerted all efforts to bring about new contracts, and the bargaining and concessions
involved in the process may well be left for the imagination. One has to be very naive
to believe that those 10 contracts which overturned the situation for the benefit of the
CENTRAL were offered to the CENTRAL by the planters concerned on a silver platter
This is not to ascribe bad faith per se to any of the parties involved; it is only a
recognition of how hard economic factors can force those adversely affected thereby
to k alternatives and devices, not anyway proscribed by the letter of the law, by which
the expected harm can at least be mitigated if not evaded.
What happened in the crop years after 1952-53 must have been the same story told
all over. The majority of contract planters had to maintained Thus, as We have
already explained with c reference to the pertinent detailed facts. the majority of 1 1 in
1952-53 became 29 in 1953-54 and 32 in 195455. After the most favored planter
clause went into effect, the situation for the PLANTERS became less critical and so,
the majorities in 1955-56 and 1958-59 were only 22, in 1956-57 and 1957-58 were 25
and in 1959-60, 26. Besides, many of the contracts were expiring by end of the
1950's.
We take judicial notice of the fact that as things stood in the sugar industry at the tune
of the passage of Republic Act 809, the millers occupied such a position of
dominance over the planters that enabled the former to dictate unquestioningly under
what terms the sugarcane of the latter would be it is easily understandable that
nothing short of governmental compulsion in the form of authoritative mandatory
regulations or legislations could have made the CENTRAL yield to any diminution of
its participation in the sugar production of its district of that prevailing at the time. Am
effective legislative threat spelling economic disadvantage to it was imperative. The
Moran report above-referred to attests to that. Indeed, it may be mentioned here that
the Court knows that in other sugar districts judicial controversies exist involving
claims that, with the cooperation of the planters concerned, contracts have been
executed in frantic attempts to minimize as much as possible the effects of the law
insofar as the millers were concerned, to the prejudice of the plantation laborers who
were made to conform, if they did, to minor improvements of their condition which
were much less than what would otherwise have been given to them under it.
The conclusion is thus inescapable that what brought about the increased
participation for the planters concerned in the contracts here in dispute cannot be
anything else than the feared consequence of the application of Section '. of the law
under discussion. In other words, those increase were given purposely to avoid the
effects of said provision. Thus, there can be no doubt that at least in logic and equity
if not in Act law, the said increases come under the provision of Section 9 which
refers to "any increase in the participation granted the planters under this Act " We
can assume that the legislature is not as naive as to make the primordial purpose of
its enactment to provide relief to the plantation laborers dependent exclusively on the
absence of a majority of plan having written agreements with the millers, when it was
aware or ought to have been aware that it was the easiest thing for the miners to
concede to the planters by contract increases much less than those prescribed by the
statute and thereby preclude the application of Section 1. The Court is thoroughly
convinced that the increase contemplated in Section 9 as the criterion for the direct
participation of labor in the production of the district could not be only that prescribed
in Section 1, which is based on ab of contracts with the majority of the planters in the
district After mature deliberation on all relevant circumstances and considerations,
We have arrived at the conclusion that even when there is a majority of contract
planters in the district, Section 9 would still apply as long as the contracts providing
increase for m the participation of the planters have been executed purportedly to
attain the majority required by Section 1, and thereby to prevent the application of the
i rates of increase prescribed by the provisions thereof. It is only by this construction
that the full intent of the law under consideration can be realized.
We are not unmindful of the vehement suggestion of counsel for the laborers that the
more reasonable construction of the Act is that all contracts entered into to avoid the
application of its Section 1 should be deemed illegal and void as having been
executed in contravention or avoidance of public policy. We have in fact given
considerable weight to it. We crowd not, however, ignore the more ponderous
consideration that the law was not intended to do away entirely with the freedom of
contract, guaranteed by the Constitution. There are to be sure the forces of police
power and the social justice provisions of the Constitution that, as We have explained
earlier, can be availed of, but We are persuaded on the basis of the circumstances of
record in this case as well as those within judicial notice that the Congress had no
intent to improve the condition of the planters and their laborers in a manner that
would curtail the normal exercise by the planters and the mill owners of their liberty to
contract. It is precisely in the compulsion that Section 9 carries to make the planters
share, by giving 60% of whatever increase the latter would obtain from the miller, that
the police power and the social justice provisions operated
Withal it t be mid with exact certainty that the con. tracts in question were entered into
in bad faith. The stronger probability is t all the parties con might have understood the
Act as merely a means by which to the millers to relax their adamance to mm the
contracts that were about to expire If nothing were done to provide the planters with
something to effectively induce the to improve the former's situation, both the planters
and their laborers word have remained chained to their wretched cm tion particularly
the laborers. With the Act, however, the were deprived of their superior position from
which court dictate their terms, for the without having that if they to enter into
contracts the ratio provided in Section I word hurt them to its he extent. Thus, the
planters were enabled to bargain with the now for better terms without having to lose
the advantages that go with having a contract, as t ha none. And in Our view, it is abo
in relation to any improved share that the planters may gain by contract that the Act
conceived the corresponding increase for the plantation laborers stipulated in Section
9.
The proceeds from mill sugar during crop year 195455 were retained by the
CENTRAL hence there should be a separate computation in relation thereto.
As has been indicated in the earlier portions of this opinion, by ent of the parties and
on the security of a bond given by the defendant- apt Luzon Surety Company all the
proceeds Of the sugarcane milled during the 1954-55 crop year in the amount of
P949,856.53 were by the CENTRAL. The trial court sentenced the CENTRAL to pay
the ASOCIACION the said amount plus interest of 3% per anum from October 1,
1955 to the date of payment, In this ap the CENTRAL denied liability therefor upon
the sole that there was a majority of planters with contracts during said crop year. It
did not raise any issue as to the amount On the other hand, the PLANTERS did not
appeal from nor did they even counter as error the rate of interest fixed by the trial
court. Accordingly, We are without authority to change the rate of t thus fixed by His
Honor.
Therefore, as of November 30, 1978, the amount in issue should have been
P1,610,006.94, including already the interest earned. This amount corresponds to the
7-1/2% that should have been held in escrow of the total production for that crop year.
Now, since We hold that the correct ratio for that crop PLANTERS, intead of 40-60,
the result is, as already indicated earlier, that of the said 7-1/2% which should have
been held in escrow, 4-1/2% shold pertain to the CENTRAL and 3% to the
PLANTERS, and inasmuch as to make the computation simpler, 4-1/2% of 7-1/2% is
60% and 4% of 7-1/2% is 40%, it follows that the CENTRAL is obligated to the
ASOCIACION for only P644,002.76 and the PLANTERS shall pay their respective
laborers a total of P386,401.66 out ot the said amount.
—G—
PUBLIC INTEREST COMPELS THE COURT
TO EXTEND THIS DECISION TO ALL
SUBSEQUENT CROP YEARS UP
to 1966-67.
The evidence regarding crop year 1960-61 is inconclusive.
The decision under review covers even crop year 1960-61. The pertinent portion
thereof runs that:
"After the year 1955-1956, up to the present there has not been any appreciable
change in the number of planters with written milling contracts with the Central. This
is particularly true after the crop year 1959-1960 because that was the last year of
effectivity of the contracts Exh. C, C-1 to C-62. Therefore, Republic Act No. 809 is
applicable to all subsequent agricultural years up to 1960-1961. (Page 435, Record
on Appeal of CENTRAL.)
In truth, however, the conclusion of His Honor regarding crop year 1960-61 is not
based on solid evidence. Thus, with respect to all the previous years, the parties
submitted stipulations of facts, accompanied by documents which provided sufficient
basis for the needed findings of fact regarding the number of planters that cultivated
during each of those crop years and who among them were the contract and non-
contract ones. But the last of those stipulations was that of December 5, 1960
covering the 1959-60 crop year. There was no stipulation touching on crop year 1960-
61. On the con after the trial court had, by its order of December 1, 1959 declared the
case submitted for separate judgment, pursuant t to the joint motion of the parties of
November 13, 1959, as regards crop yearn 1952-53 to 1958-59, albeit no such
separate judgment was ever rendered, and after it had later on declared the whole
case submitted for decision in its order Of March 25, 196 1, as pointed out in
PLANTERS' motion in this court below of September 26, 1961, in that very motion,
PLANTERS asked to be allowed to resort to a Request for Admission precisely for the
reason that "the parties have not been able to agree on the stipulation of facts"
because of "unavoidable circumstances occasioned by the checking of the records
and their transmission from Negros to Manila." The record does not even show how
this motion was disposed of. Neither does it appear that the request for a on just
mentioned, if it went thru its course, brought forth any results. True it is that Exhibit
SSSSSS attached to the d request for admission could be a genuine record of the
CENTRAL as to how many planters there were in 1960-61, but We cannot find in the
record any reliable concrete evidence as to how many of them had written milling
agreements with the CENTRAL.
In a word, the evidence on the disputed matters in this case which were presented by
the parties in the lower court is complete only up to what refers to crop years 1959-
60. There is partial evidence showing the number of planters in crop year 196061 but
not enough about the number of contract planters. But the p of each year's production
continued to be hold in escrow as indicated in this decision up to crop year 1966-67,
even after the entry of TASICA hereinto, hence, from time to time, as already stated
at the outset, corresponding motions were filed for the proper disposition of said
proceeds, including those corresponding to the crop years subsequent to 1959-60 up
to 1966-67. The problem which confronts Us at this point is whether or not this case
should be remanded to the trial court for appropriate disposition of the matters relative
to the crop years from 1960-61 to 1966-67. The foregoing consideration
notwithstanding, We hold that there is no need for such remand.
Cases involving labor deserve expeditious and simplified handling not only by the
courts but more appropriately by the employers whose attitude should be openness
and goodwill rather than reluctance and antagonism.
In this connection, the Court cannot but articulate the observation that, even as the
submission by the parties of stipulations of facts as to material matters relative to crop
years 1952-53 to 1959-60 is creditably in the right direction, much more could have
been accomplished to facilitate the expeditious termination of this very important
litigation and thus bring into reality the amelioration of the laborers in the sugar
industry designed by Republic Act 809, had the CENTRAL and the PLANTERS been
more candid to each other regarding such a simple matter of how many contract and
non-contract planters there were in the district. it cannot be overemphasized that
labor has a big stake here. Republic Act 809 accorded the plantation laborers the all-
important opportunity to secure what they should have had long before, namely, a
direct share in the production of the sugar industry in which they constitute an
indispensable element. Certainly, it is to be regretted that it has taken all those long
years before those laborers could be finally told they can get at that only a fraction of
the measure of amelioration they had expected.
That is not to say that the Court is not entirely blameless for its own part in such
delay, added to the six or seven years that the p in the court below lasted, even if Our
failure to act earlier can be explained. These cans were submitted for decision by the
Court as early as August 12, 1963. In the usual course of the Court's functioning, the
records passed from one Justice to another. In the process, some of them reached
their compulsory age of retirement. It took sometime before they were succeeded by
new ones who had to go over the said records all over again. One can have an Idea
of the time those Justices and the writer of this opinion had to take in going over and
studying the same, if it is considered that there are no less than five of volumes of
pleadings almost two feet thick and as many bundles of exhibits numbering over a
thousand and marked as Exhibits A, A-1 et seq. up to RRRRRR-1 of documents,
tabulations, reports and rather volumminous manuscript of various kinds, some of
them mere copies which can be read only with difficult and the use of magnifying
glasses.
This mountain of papers, data and literature would have been entirely unnecessary
had there been honest and sincere effort on the part of both parties to make the Act
effective, if only for the sake of giving labor promptly what was due it. All technicalities
should have been set aside. Surely, the question of how many planters there were in
the district each year could not have been disputable, being so concrete and readily
demonstrable. And the question of how many of said planters had written agreements
with the CENTRAL was no more complicated. It is incomprehensible why so much
evidence had to be produced to complicate the determination of these practically
obvious facts. True it is that certain situations involving some planters or some
contracts required the settlement of differences of views as to their legal status, but
the determination for those issues, as We have seen them, did not require the mass
of evidence We have been made to examine and evaluate. This should not have
been the case. Although the rulings this Court has made on the point under
discussion in earlier cases referred only to expediting of execution of judgments,
already final, awarding monetary claims of laborers, We hold that the principles
underlying the same can apply correspondingly with as much reason and force to the
circumstances of the instant ligitigation. Parahphrasing what We said in Danao
Development Corporation vs. National Labor Relations Commission et al., G.R. Nos.
L-40706-07, promulgated on February 16, 1978, which was a reiteration of OUr
admonition in the earlier case of East Asiatic Company Ltd. et al. vs. The Court of
Industrial Relations, 40 SCRA 521, claims of laborers must be attended to with
complete openness and in the best of faith, to the end that there may be the most
expeditious determination therof soonest by mutual admissions between the parties
relative to matters that should ordinarily be beyond dispute. In such instances, it is the
inescapable duty of management or ot the capitalist sector to lay its books open for
oppropriate inspection and examination of the duly authorized representatives of the
laborers and to otherwise furnish them with correct and accurate information needed
by them, considering the nature of the controversy. Equally it is the obligation of labor
and other parties concerned to reveal without loss of time and in an good faith facts of
their own peculiar knowledge which are relevant and material to the investigation.
1. The matters related to the crop years after 1 should therefore be settled here, if
legally possible
2. All the proceeds related 1960-61 to 1966-67 belong to the PLANTERS and their
laborers in the proportion of 40-60 per Section 9.
With these considerations in mind and yielding to the prayer of the PLANTERS, the
Court has opted to dispense with further proceedings in the trial court for the purpose
of disposing of the issues involved in the crop years after 1959-60 up to 1966-67. In
doing this, We are not overlooking that the CENTRAL as later on TASICA have
always insisted that the pleadings including the supplemental ones, filed with the
lower court and in which the parties joined issued for resolution of His Honor refer to
events that took place only up to 1959-60 or at the latest 1960-61 and, therefore, in
this appeal, this Court has no jurisdiction to pass on matters affecting crop years
1960-61 to 1966-67, much leas those subsequent thereto.
Strictly s g from the technical point of view, the CENTRAL and TASICA could have
merit. But under the circumstances now obtaining and with the changed attitude of
the parties manifested at the hearing of October 10, 1978 and their latest written
representations prior and subsequent thereto, it would appear that for Us to t this
decision to the crop years up to 1959-60 and leave the matters related to the
subsequent crop years for further proceeding in the trial court by requiring the filing of
new pleadings and corresponding presentation of evidence would be to waste tune,
effort and money to all concerned. As We see it, what could be factual issues that the
trial court would be mill upon to resolve are no longer controverted by the parties,
namely, (1) whether or not there was a majority of plant with written contracts during
those crop years in question and (2) the production correspond thereto.
As to such first issue the pleadings and manifestations of the parties relative to the
latest relevant developments in the controversy among them as well as in the sugar
industry, par. particularly in the Talisay-Silay district do not indicate any possibility that
the majority of the planters therein had renewed or extended their contracts with the
CENTRAL or that a sufficient number of new ones had entered into written contracts
such as to maintain the majority of contract planters beyond crop year 1959-60.
Nowhere in its latest representations does the CENTRAL make any claim that such
majority has continued after the 1959-60 contracts expired. In fact, neither the
CENTRAL nor TASICA has specifically and effectively denied the allegation in
paragraph 5 (a) of the Counter. Petition of the PLANTERS dated December 21, 1963
and paragraph 2 (b) (1) of the Manifestation and Motion of January 10, 1967 of the
PLANTERS that as found by the trial court, it crop year 1959-60 .... was the last year
of effectivity of the contracts Exhs. C, C-1 to C-62" and, therefore, the majority of
planters in the Talisay-Silay milling district did not have writ. ten agreements since
then. And as far as the production figures for the crop Years 1960-61 to 1966-67
supplied by the parties and extant in the record, We do not perceive any dispute as to
their accuracy except as to crop year 1963-64 where according to the of the
CENTRAL the total production was only 1,155.064.09 piculs whereas the PLANTERS
claim it was 1,186,679.37 piculs plus 16,340.36 piculs thru accommodation in Ma-ao
Sugar Central and 202.77 milled m Bacolod-Murcia Milling Co. to make a total of
1,203,222.48 piculs. Actually, the PLANTERS have been asking for a reconsideration
of Our tion of November 7, 1963 which fixed the percentage of disputed sharing at
62-1/2 and 37-1/2, contending that it should have been 70-30 because y the
production was over 1,200,000 piculs. Accordingly, leaving for further disposition the
2-1/2% in controversy for crop year 1963-64, it is quite obvious that what would be
done by the trial court to dispose of the controversy crop Years 1960-61 to 1966-67
may be as well done here and now,
Upon the foregoing premises and in the exercise of Our plenary adjudicatory powers.
thereby to avoid delaying farther the complete tion of this quarter-of-a-century case,
We laid and hold that in contrast to crop yearn 1952-53 to 1959-60, Republic Act 809,
particularly Sections 1 and 9 thereof, was applicable to and in force and effect in the
Talisay-Silay milling district from crop year 1960-61 to crop year 196667 and that all
the disputed proceeds of production during the whole of said period deposited in the
various banks hereinafter to be specified pertain exclusively to the PLANTERS and
their respective plantation laborers in the proportion of 40% thereof for the
PLANTERS and 60% for the LABORERS.
—IV—
The CENTRAL's fourth assignment of error is to the effect that:
 THE JUDGE A QUO AND CLIENT OF ATTY. JOSE AFRICA OF
THE PLANTERS ERRED IN APPARENTLY OVERLOOKING
THAT THE CONGRESS OF THE PHILIPPINES DID NOT INTEND
AND DID NOT MEAN TO APPLY REPUBLIC ACT 809 IN A
MANNER THAT WOULD NULLIFY EXISTING CONTRACTUAL
RIGHTS AND IMPAIR THE OBLIGATION OF EXISTING
CONTRACTS;
(1) Because the Congress of the Philippines in the Explanatory
Note to the Bill H No. 1517) which became Rep. Act No. 809 has in
effect clearly acknowledge its constitutional duty and intention to
respect and uphold the obligation of existing contracts, by frankly
stating that 'this bill does not violate existing milling agreements
between planters and millers of sugarcane as its provisions
are only applicable in the absence of such milling contracts', in fact,
Section 10 of said Act clearly anticipates that the application of its
provisions to planters under contract would be invalid, planters in
his district
(2) Because it seems to us clearly illogical and unreasonable to
hold that said Act would violate or impair the obligation of existing
contracts only when the planters under contract happen to be in the
majority, but not when the planters under contract happen to be in
the minority in their district;
(3) Because, Republic Act 809 cannot in good conscience be
interpreted in manner that will so unjustly allow or permit any
planter under contract to repudiate his contractual obligations to the
Central, but at the same time to retain and enjoy all the rights and
benefits accruing to him under the same contract, regardless of
whether he happens to be in the majority or in the minority of the
planters in his district;
(4) Because, contractual rights are also property rights, and the
State cannot, by simple legislative fiat, deprive the millers of their
contractual and property rights, just to give them to, and increase
the profits of, the planters; and also to make the millers pay
additional compensation to the planters' own laborers, over
theminimum wage fixed by law for all other laborers in the country,
regardless of whether the planters under contract happen to be in
the majority or in the minority in their milling district. (Pp. 124-126,
Brief of CENTRAL.)
—A—
THIS FOURTH ASSIGNMENT OF ERROR OF THE CENTRAL HAS BECOME
ACADEMIC
Stated differently, the position of the CENTRAL is that even on the assumption that
there was a of a majority of planters in the district with written milling agreements.
with it during the periods in question and hence, Section 1 of Republic Act 809 would
be applicable during the periods, the ratios of sharing therein prescribed may not be
applied to those of the minority who had written contracts for providing for lesser
percentage of shares for the respective Planters concerned. Consider however, that
in of the CENTRAL's third assignment of error, We have rev the lower s finding on
which the instant assignment of error is premise, the issue thus by the CENTRAL has
lost relevance. And more so because We have sua the PLANTERS, third counter-
assignment of error. As may be it is Our ruling above that the of point in determining
the ratio of among the CENTRALS the PLANTERS and the latter's laborers need not
be the absence along of a majority of Planters with written milling contracts with the
CENTRAL referred to in Section I of the Act but the provisions of its section 9
construed in conjunction with the effect of the most, planter flavored clause in the
prevailing milling contracts, even if the planters having such contracts were in the
majority, with the result with the percentage of the share of all the planters with the
contracts should be 63% from the years from 1952-53 to 1959-60, except for 1958-59
when it should be 64%. And such being the case, said 63% and 64%, as the case
may be, constituted "the most frequent basic plantation milling share stipulated in
valid written milling contracts between the mill company and the owners and/or
planters of other plantations adherent to the Mill referred to in Executive Orders Nos.
900 and 901, Series of 1935. It follows from this that the said 63% and 64% became
the percentage to which planters without written contracts with the CENTRAL became
entitled. With the foregoing view We have taken of the basic points related to the
CENTRAL's fourth assignment of error, and since, in the light of such view, the
predicate of the instant assignment cannot exist, further discussion thereof is now
purely academic and of no practical bearing on the W result of this case. In brief, no
distinction need be drawn between contract planters and non-contract planters for the
purpose of determining the share to which the planters in the district should be
entitled.
—V—
The CENTRAL submits as its fifth assignment of error that:
THE JUDGE A QUO AND CLIENT OF ATTY. JOSE AFRICA OF
THE PLANTERS ALSO ERRED IN APPARENTLY
OVERLOOKING THAT REPUBLIC ACT 809, BY EXPRESS
PROVISION OF SECTION 8 THEREOF, WAS NOT INTENDED
AND CANNOT BE PERMITTED TO AFFECT THE ALLOCATION
OF THE PRODUCTION AND/OR MARKETING ALLOTMENTS OR
ALLOWANCES OF THE EXPORT, OR "A" SUGAR
(EXPORTABLE TO THE UNITED STATES OF AMERICA), THE
ALLOCATION OF WHICH AMONG ALL THE MILLING DISTRICTS
IN THE PHILIPPINES, AND IN TURN BETWEEN THE MILLERS
AND THE PLANTERS IN THEIR RESPECTIVE MILLING
DISTRICTS, HAS BEEN FIXED IN ACCORDANCE WITH THE
TRADE RELATIONS AGREEMENT BETWEEN THE PHILIPPINES
AND THE UNITED STATES OF AMERICA. (Page 135,
CENTRAL's Brief.)
—A—
THIS ALTERNATIVE PROPOSITION OF THE CENTRAL NEED NOT BE
CONSIDERED BECAUSE WE HOLD THAT SECTION 1 OF REPUBLIC ACT 809
DID NOT APPLY TO THE TALISAY-SILAY DISTRICT DURING THE MATERIAL
YEARS IN DISPUTE.
The sole point raised by the CENTRAL under the last afore. quoted assignment of
error is that it is not within the power of the Philippine Legislature to alter or modify, as
it does in Sec. tion I of Republic Act 809, the allocation of export or "A" sugar in view
of the provisions of its Section 8 which reads pertinently as follows:
SEC. 8. The compensation to the central or planter or plan. ration
owner shall be paid out of the proceeds of the operation which
would have corresponded to the said central or planter or plantation
owner, with due regard for the costs of operation or administration
and such other charges and deductions as the court may deem just
and proper.
Nothing in this Act shall be deemed to affect the agreement
between the Republic of the Philippines and the United States of
America concerning trade and related matters during a transitional
period following the institution of Philippine Independence, and the
protocol and annexes thereof, as proclaimed on the first day of
January, nineteen hundred and forty-seven.
It is argued that under Public Law 371 of the Congress of the United States, approved
on April 30, 1946 and other known as the Philippine Trade Act of 1946, as well as
Commonwealth Act 733 approved on July 3, 1946, which authorized the acceptance
of the trade agreement "to be entered into between the President of the Philippines
and the President of the United States pursuant to Public Law 371 ", the tion of sugar
exportable from the Philippines to the United States was expressly limited "... to the
sugar producing mills and plantation owners in the Philippines in the calendar year
1940, whose sugars were exported to the United States during such calendar year, or
their successor-in-interest, proportionately on the basis of their average annual
production (or in the case of such a successor-in-interest the average annual
production of his predecessor-in-interest) for the calendar years 1931-1932 and 1933,
and the amount of sugar which may be so exported shall be allocated each year
between each mill NW the plantation owners on the basis of the proportion of sugar to
which each milling and the plantation owners are respectively entitled m accordance
with any agreements between them, or any extension, modification, or renewal
thereof. " Hence, it would be violative of the laws mentioned for the Congress of the
Philippines to alter the apportionment of ratio of sharing between the CENTRAL and
the PLANTERS in the instances where there are no contracts.
Whatever merit there may be in such pose, We consider it quite pointless for Us to
rule on it, since, as We have held above, the distribution of the proceeds of sugar
production from each crop year from 1952-53 to crop year 1959-60 should be on the
basis of the existing contracts between the CENTRAL and the PLANTERS, including
particularly the most favored planter clause, which became operative directly on the
PLANTERS, majority of whom had written milling agreements with the CENTRAL
during said periods, together with the provisions of Executive Orders Nos. 900 and
901, Series of 1935, on the non-contract planters and, therefore, such allocation is
plainly "in accordance with any milling agreement between them (the millers and
planters) or any extension, modification or renewal thereof," as required by the
statutes invoked.
In any event, We wish to make it clear that We agree with the following ratiocination
of distinguished counsel for the PLANTERS:
1. Congress of the Philippines has the power to legislate on the
allocation of our quota to the US. market
The argument of Appellant Central on this point smacks of a
colonial mentality. The Philippine-American agreements on the
subject of sugar never contemplated the abdication of our
sovereign rights on the matter. Section 211 of the Philippine Trade
Act of 1946 provides:
(d) Allocation of quotas for Unrefined Sugars.
The quota for unrefined sugars, including that
required to manufacture the refined sugars,
established by this section shall be allocated
annually to the sugar producing mills and
plantation owners in the Philippines in the
calendar year 1940 whose sugars were exported
to the United States during such calendar year,
or their successors in interest, proportionately on
the basis of their average annual production (or
in the cage of such a successor in interest, the
average annual production of his prod r in
interest) for the calendar years 1931, 1932 and
1933, and the amount of sugars which may be so
exported shall be allocated in each year between
each mm and the plantation owners on the basis
of the proportion of sugars to which each mill and
the plantation owners are respectively entitled, in
accordance with any milling agreements between
them or any extension modification or renewal
thereof.
The extension, modification or renewal" of milling agreements
mentioned in the foregoing legal provision is not necessarily limited
to an extension, modification or renewal arising from contracts. The
same may arise from law as a result of the exercise of police
power.
Not only are existing laws read into contracts in order to fix
obligations as between the parties, but the reservation of essential
attributes of sovereign power is also read into contracts as a
postulate of the legal order.' (Home Bldg. Loan Assn. v. Blaisdell
290 U.S. 398).
The absence of intention on the part of the United States to
encroach on the exercise of our sovereign functions nor on the part
of the Philippines to abdicate its sovereign rights is clear from the
wording of Section 215 of the said Philippine Trade Act of 1946
which states:
Sec. 215. Laws putting into effect allocations of
Quotas. The necessary laws and regulations for
putting into effect the allocation of quotas on the
basis provided for in section 211, 212, and 214,
respectively, shall not be enacted by The United
States, it being the purpose of this title that such
laws and regulations shall be enacted by the
Philippines.
There is, therefore, no justification in construing the Trade
Agreement as a restriction on the power of Congress to legislate on
the sharing participation between millers and planters. The United
States had no reason to require the to its police power to regulate
the relations between and millers planters, particularly to fix their
petition in the sugar production. In other words the United States
had no petition as to how the export quota would be distributed
among the millers and planters, its only concern being that the said
quota should not be exceeded.
As this Honorable Court has pointed out:
It is to be that both Acts (Bell and Tydings
McDuffie) provide for allocation of the sugar
quota in each year between the mills and the
planters thereby implying that the allocation could
vary from year to year. (Suarez v. ML Arayat GR
L-6435 prom. March 31, 1955).
In the absence of clear and express treaty limitation, it should never
be a that the Philippine abdicated its sovereign power on a matter
trial to our economy.
Statutes in derogation of sovereignty should be
strictly construed in favor of the state, so that its
sovereignty may be uphold and not narrowed or
destroyed and should not be permitted to divest
the state or its government of any of its
perogatives rights or remedies unless the
intention of the legislature to effect this object in
clearly expressed (People v Centr-O Mart 214 P.
2d 378; Valley Country v. Thomas, 97 P. 2d 345;
Appeal of Reading Co. 22 A. 2d 906, 343 Pa
320,59 C.J. p. 1121 note 68; 82 C.J.S. P. 936).
It should also be that the allocation of the sugar quota is not in the
nature of a or bounty. As this Honorable Court in the Suarez case
observed:
Such contention unwarrantedly assumes that the
allocation provide in Section 211 of the 1946
Philippine Trade Act (Bell Act) is in the nature of
a bounty or reward for past service in producing
and exporting sugar to the United States on or
before 1940. We see no reason for such
construction. The reference to 1940 export in
Section 211 (d) in our opinion merely purports to
restrict future sugar exports to the Philippine
sugar producers entitled to quotas m 1940, and
to exclude those who entered the sugar
production filed at a later date. The plain terms of
the on indicate that it was designed to merely
continue the original system of allocation
between planters and sugar producing mills
initiated in 1934 by the Tydings McDuffie Act, in
recognition of the complementary roles and
respective contributions of planters and
processors to the production and manufacture of
the sugar. It is to be observed that both Act (Bell
and Tydings Mc Duffie) provide for allocation of
the sugar quota in each year between the mills
and the planters, thereby that implying that the
allocation could vary from year to year.' (Suarez
vs. Mount Arayat, on supra).
Executive Order No. 900, it is true establish a formula for
determination of the respective marketing coefficients of the
plantation-owners and millers but it does not follow that the basis Of
the quota sharing is fixed and absolute as to preclude change.
Section 5 of Executive Order No. 900 provided
5. Plantation milling share.—The percentage of the sugar
manufactured by the Sugar from sugarcane grown on a plantation
which the mill company returns to, or credits to the account of, the
owner and/or planters of the plantation shall be known as the "basic
plantation milling share' and shall be determined as follows:
(a) For any plantation or a part thereof covered
by a valid written milling contract between the mill
company and the owner and/or planters of that
 plantation, the basic plantation share shall be as
stipulated in the contract.
(b) For plantations or parts thereof not covered
by a valid written milling contract between the mill
company and the owner and/or planters of such
plantations, the basic plantation share shall be
the most frequent basic plantation milling share
stipulated in valid written milling contracts
between the mill company and the owners and/or
planters of other plantations adherent to the milt
In determining the most frequent basic plantation
milling share, plantations owned by or operated
for the account of the mill company shall not be
co
(c) The qualification (basic) as used in this
sections shall be taken to include any general
increase plantation milling shares effected by
action of the management, directors trustees,
shareholders or owner of the mill se long as such
action shall be valid or an . Variations in
plantation milling shares due to bonuses
penalties, or methods of cane delivery, provoked
for in valid written milling contracts shall not be
considered as " basic in d plantation milling
shares, but may be adjusted between the mill
company and the owners and/or planters
concerned by cash payments, or in W by end t of
warehouse receipts from one party to other. ...
By no stretch of the imagination can this pro be con. considered as
an obstacle to the exercise of legislative authority, particularly one
based on police power, winch may alter the basis or formula
contained m Executive Order No 900. Needless to state
irrepealable laws are not countenanced in this jurisdiction.
There can be no vested right to the continued
existence of a statute which precludes its change
or appeal (Traux v. Corrigan 257 U.S. 312,66 L.
Ed. 254)
In other words, the quota allocation by the State having been
predicated on the exercise of police power, there is no reason why
the same police power cannot now be ex to promote the public
welfare.
Like Executive Order No. 900 which established a formula for the
de petition of marketing co-efficients for A sugar (U.S. Export),
Executive Order No. 901 established a formula for the
determination of the marketing coefficients for B and C sugar
(Domestic and Reserve Sugar). Said Executive Order No. 901
provides:
11. Plantation milling share.—The percentage of
the sugar manufactured by the mill from
sugarcane grown on a plantation which the mill
company returns to, or credits to the account of,
the owner and/or planters of the plantation shall
be known as the 'basic plantation milling share'
and shall be determined an follows:
(a) For any plantation or a part
thereof covered by a valid
written milling contract between
the mill company and the
owner and/or planters of that
plantation, the basic plantation
share shall be as stipulated in
the contract.
(b) For plantation or parts
thereof not co by a valid written
milling contract between the
milling company and the owner
and for planters of such
plantations, the basic
plantation share shall be the
most ent basic plantation the
contracts between the milling
company between the owners
and/or planters of other
plantations adhered to the
milling In de the moment basic
plantation milling between
plantations owned by or
operated for the account of the
milling company shall not be
considered.
(c) The qualification 'basic' as
used in this on be taken to de
any in plantation Milling shares
effected by action of the
management, , directors
trustees, or owners of the mill
so long as such action A" be
valid or subsisting. ...
 Since this involves practically the same t in the can of Executive
Order No. 900, we respectfully reiterate our refutation thereof
particularly that there can be no vested right in the f in the
Executive order because the some is to change by the of the very
same police power to which it owes its existence (Pp. 82-91, Brief
of Appellees.)
as well as the arguments along the vein by Amicus Curiae, Atty. Tanada Teehankee
and Cartoon on pages 2 to 40 of their brief which for the sake of brevity. We just
incorporate hereto by reference.
—VI—
The sixth assignment of error of the CENTRAL is as follows:
THE JUDGE A QUO AND CLIENT OF ATTY. JOSE AFRICA OF
THE PLANTERS HAD NO JURISDICTION AND ERRED IN
ADJUDICATING AND ORDERING THE DELIVERY TO THE
PLAINTIFFS IN THIS CASE, THE TOTAL AMOUNT DEPOSITED
WITH THE PHILIPPINE NATIONAL BANK, WHICH, EVEN IF THE
CONTROVERTED LAW IS FINALLY HELD VALID AND
APPLICABLE, WOULD BELONG, NOT TO THE FEW PLANTERS.
WHO ARE PLAINTIFFS IN THIS CASE, BUT TO THE
NUMEROUS OTHER PLANTERS IN THE DISTRICT WHO HAVE
NOT JOINED AND ARE NOT PARTIES IN THIS CASE, EXCEPT
FOR THE RELATIVELY SHALL PORTION WHICH WOULD
CORRESPOND TO SAID FEW PLANTERS WHO ARE
PLAINTIFFS IN THIS CASE;
—A—
THE THRUST OF THIS ALLEGED ERROR OF THE TRIAL COURT IS THE
ERRONEOUS THEORY OF THE CENTRAL THAT THE INSTANT ACTION IS NOT
A CLASS SUIT, WHICH WE HOLD IT IS, HENCE THE MONEY IN ESCROW IN THE
BANKS MAY BE DISPOSED OF IN THIS CASE NOT ONLY AMONG ALL THE
NAMED PARTIES HEREIN BUT AMONG ALL THE PLANTERS IN THE DISTRICT,
THEIR RESPECT LABORERS AND THE CENTRAL.
The evident premise of the CENTRAL's sixth assignment of error aforequoted is that
the action may not be deem as a class suit hence, the trial court had no authority to
adjudicate the money held in by the banks in favor of the PLANTERS who are not a
named as parties herein.
On this score, the CENTRAL seeks umbrage under the ruling in Berses vs.
Villanueva, 25 Phil. 473, wherein We held that where numerous defendants or
individuals are occupying different portions of a big parcel of land, a class suit would
not lie because "each of the defendants had an interest only in the particular portion
of the land he was occupying. "
We are of the considered view that apart from the correctness of the procedural
theory advanced by the PLANTERS as regards the particular issue under discussion,
practical con considerations conducive to the earliest de petition of inevitable
subsequent controversies between the unnamed planters, on the one hand, and the
CENTRAL, on the other, which would necessarily hinge on the main prop of this
decision make it desirable and proper that any such further litigation, which cannot
have any different result, be now foreclosed. But very little elucidation is to
demonstrate the palpable community of interest of all the planters in the district in the
set t of the two vital issues of fact and the various es of law submitted for Our
determination in this case, the resolution of which has no on and cannot in any event
affect either the respective allocations or quota of each individual planter m the district
or their rights of ownership or on over the respective plantations they worked on
during the ma periods herein involved. We believe the CENTRAL cannot be unaware
of these considerations, and We welcome its formal withdrawal of the above
assignment Of error. (CENTRAL's Supplemental Memorandum of December 2. 1978,
p. 1) But, just the We feel that for the benefit of all concerned it is best to explain why
its position cannot be sustained.
Thus by settling the controversy as to whether or not Section I of Republic Act 809 a
to the Talisay-Silay district the factual issues to be have to do only with the number of
planter there were m the district during the periods in dispute and how many of them
had written milling to with the CENTRAL Of m it was of particular respectively to each
of those who worked on the petitions within the as to who of them should be as
deemed as planters Or Dot, and being planters who among them were contract and
non-contract planters within the contemplation of Section 7 of Republic Act 809. But
at the same time, it cannot be denied that the same issues were of common interest
to all the PLANTERS and, in fact, to their respective laborers, since it is on the correct
resolution thereof that the expected improvement or augmentation of their share in
the production of the CENTRAL would depend. In other words, an the PLANTERS in
the district as well as their respective laborers were similarly situated, whether they
were named parties or not. More than that, the resolution of said issues could not in
any event be different as to any of them, which is virtually say. ing that the subject
matter of the controversy cannot be but of common and general interest to all of then
On the other hand, the number of planters involved, not to mention the number of
laborers to be affected, is so numerous as to make it impracticable to bring them all to
court. Under these circumstances, the propriety of considering the present litigation
as a class suit cannot be open to question. As a matter of fact, in another case
practically on all fours with the instant one, We already ruled against the pretention of
the CENTRAL here. We refer to the case of Felipe Acar et al., vs. Hon. Inocencio
Rosal etc. et al., 19 SCRA 625, wherein it was held that the suit filed by ten (10)
laborers to recover "their alleged participation or shares amounting to the aggregate
sum of P14,030,836.74, in the sugar, molasses, bagasse and other derivatives,
based on the provisions of Republic Act 809 (The Sugar Act of 1952)", the very law
here in issue, was a proper class suit.
Moreover, according to Chief Justice Moran 15 the theory in the United States that a
class suit. is permissable w there is community of interest in the question involved
and in the relief sought, even in the absence of community of interest in the subject
matter of the litigation, "may be adopted in the Philippines under the present rules
which authorized joinder of parties who have common interest in the MM question of
fact or law where the relief sought arises out of the same transaction or series of
transactions. " This view s the position of appellees in this case.
—VI—
The seventh assignment of error of the CENTRAL alleging that:
THE JUDGE A QUO AND CLIENT OF ATTY. JOSE AFRICA OF
THE PLANTERS FINALLY ERRED IN RENDERING BOTH THE
ORIGINAL JUDGMENT AND THE SUBSEQUENT AMENDATORY
ORDER HEREIN APPEALED FROM.
is a mere corollary of its preceding assignments which We have overruled and does
not, therefore, need further discuss Like the previous ones, the same must perforce
be similarly overruled.
—VIII—
RE: THE APPEAL OF LUZON SURETY CO., INC.
—A—
THE APPEAL OF LUZON SURETY CO., INC. IS PRACTICALLY ACADEMIC
Defendant-appellant Luzon Surety Co., Inc. submits the following assignments of
error:
I
THE LOWER COURT ERRED IN NOT DISMISSING THE
COMPLAINT AGAINST THE DEFENDANT LUZON SURETY CO.,
INC,, ON THE GROUND THAT THE ACTION AGAINST IT WAS
PREMATURELY PRESENTED.
II
THE LOWER COURT ERRED IN ORDERING DEFENDANT
LUZON SURETY CO., INC. TO PAY PLAINTIFFS THE VALUE OF
ITS BOND.
The factual background of Luzon's appeal is simple. It is more or less accurately
narrated in said appellant's brief thus:
STATEMENT OF THE FACTS AND OF THE CASE
On September 23, 1954, plaintiff filed their original complaint
against defendant Talisay-Silay Milling Co., Inc. (R. A p. 1).
On November 20, 1954, the defendant Luzon Surety Co., Inc. and
the defendant Talisay-Silay Milling Co., Inc. issued a bond binding
themselves to pay jointly and severally the Sugar Quota
Administrator and the Asociacion de Agricultores de Talisay-Silay,
Inc. in the sum of P1,000,000.00 under the condition that: in the
event that the court should finally adjudge that said Republic Act
No. 809 is applicable to the 1954-55 crop of Talisay-Silay Mill
District, and that the planters are entitled to an additional
participation of SEVEN AND A HALF (7-1/2%) PERCENT, or less,
over and above SIXTY (60%) PERCENT, of their respective
production in that year, the CENTRAL will pay to each and every
planter concerned, through the Sugar Quota Administration and the
Association and the Asociacion de Agricultores de Talisay-Silay,
Inc., the value of such additional participation of SEVEN AND A
HALF (7-1/2%) PERCENT, or less, as may be determined by the
courts in accordance with the average market price during the
month within which the sugar is sold. (Annex 'A', R.A. pp. 18-24).
In the light of the foregoing stipulation and upon finding and holding that Republic Act
809 applied to the Talisay-Silay district during crop year 1954-55, the trial court
rendered its appealed judgment, the pertinent portion of which reads thus:
With respect to the disputed portion of the sugar produced in 1954-
1955, inasmuch as the same has been sold and the amount
realized and turned over to the defendant Central under the surety
bond filed by the Luzon Surety & Company, Inc. has been
determined to be valued in the amount of P949,856.53, with
interest thereon at the rate of 3% per annum from the time the said
amount was delivered to the Central in the year 1955 until the same
is fully paid. ...(Pp. 439-440, Record on Appeal.)
Upon these premises, We do not believe Luzon's appeal requires extended
discussion. In fact, it appears to Us to be virtually academic, and We are thus relieved
of having to pass on any of the legal arguments advanced by counsel in their brief.
In this decision, We hold, as already explained above, that during the crop year 1954-
55, there was a majority of planters in the Talisay-Silay district with written milling
agreements with the CENTRAL, hence Section 1 of Republic Act 809 did not apply
then. We are further holding, however, that by virtue of the most- favored-planter
clause, the PLANTERS are en titled to a 3% increase in their share of the production
of the CENTRAL in that year, 60% of which should in turn be paid to the respective
plantation laborers of the PLANTERS pursuant to Section 9 of the Act. Hence, it is
clear that the basic contingency that is the condition of Luzon's bond in question has
fundamentally ma except that it would not be enforceable, strictly speaking from the
point of view of the matter most favorable to Luzon, until after this decision has
become final and the CENTRAL does not pay.
Now, under the terms of this decision, the CENTRAL is entitled to receive a total
amount much more than what is involved in the Luzon bond use of our holding above
that from crop year 1952-53 to crop year 1959-60, Republic Act 809 was not
applicable to the Talisay-Silay milling district and, therefore, a large portion of the
money held in escrow by the Philippine National Bank for the purposes of this case
will go to the CENTRAL. And so, brushing aside technicalities otherwise applicable,
this controversy involving Luzon may more expeditiously be disposed of by holding
that whatever amount corresponds to the PLANTERS and their laborers of the money
that the CENTRAL got under the Luzon bond corresponding to the 1954-55 crop year
should be deducted from the total sum that the CENTRAL is entitled to under this
decision. Anyway, the CENTRAL is the principal under the bond, and since it has the
necessary amount with which to comply with the terms thereof, it is unnecessary to
render any judgment which can be executed against Luzon. Accordingly, the
requirements of justice can be fully satisfied by a modification of the judgment of the
trial court sentencing the CENTRAL to pay the PLANTERS and their laborers
11949,856.53 plus interest at 3% per annum in the that the judgment should be that
of the total amount that is due the CENTRAL under this decision of the proceeds
deposited in escrow for the crop years 1952-53, 1953-54 and 1955-56 to 1959-60,
there should be deducted the equivalent of 60% of said P 949,856-53 plus 3% per
annum which shall be paid instead to the PLANTERS and their respective laborers at
the ratio of 40% thereof for the former and 60% for their laborers or the Secretary of
Labor.
IX
INCIDENTS DURING THE APPEAL
Issues raised by the TASICA.
As stated in the prefatory portion of this decision during the pendency of this appeal
the CENTRAL leased for a period of three years, beginning September 1, 1963, its
mill to the TASICA, which thereby acquired the mill rights and became the miller in
the Talisay- Silay milling district starting from the crop year 1963-1964. In the
resolution dated November 8, 1963, the Court ordered that the resolution of
September 26, 1963, in connection with the disposition of the controverted 71/2
percent of the sugar production for the crop year 1962-63 be made applicable to the
controverted portion of the W production during the crop year 1963-1964, under the
same terms and conditions.
On December 16, 1963, TASICA filed a s appearance questioning the jurisdiction of
this Court over its person, on the ground that it was not a party to this case, and
therefore, could not be legally bound by any of its resolution with t to the sugar
production for the crop year 1963-1964. We deferred action on the question of
jurisdiction until the case would be considered on the merits. Like We deferred action
on the contempt charge against the TASICA arising from the invalidation by its
Manager of the quedans covering the controverted 7-1/2 percent of the production for
the crop year 1963-1964.
The appellees and the amici curiae maintain that TASICA is subject to the jurisdiction
of this Court and is liable for contempt of this Court because (1) TASICA, being a
lessee of the mill and the milling rights of the CE was a transferee. pendente lite, and,
by the provision of Section 20, Rule 3, of the Rules of Court, it was bound by any
judgment or order which might be rendered against the original party and transferor;
and (2) TASICA had actual notice of the resolution of this Court of November 7, 1963
which it violated when it invalidated the escrow quedans issued pursuant to said
resolution.
As We have indicated earlier, We feel it is in the best interest of justice that the whole
controversy regarding the application of Republic Act 809 to the Talisay-Silay milling
district shoul be completely determined, if legally and equitably possible, in this
proceeding. Indeed, as We see it, nothing substancial would be gained by any of the
parties if we reserved for the trial court the remaining issues just mentioned affecting
TASICA. After all, the lease contract between the CENTRAL expired in crop year
1966-67 and no new material circumstances have been shown to have taken place
during the period of said lease that could in any way alter the points in dispute which
arose relative to crop year 1963-64. Withal, Our impression is that the TASICA
arrangement might have been intended to prolong the controversy, but in truth it is
quite obvious that the lease of the CENTRAL did not and could not have had the
effect of substantially changing the basic issues herein.
On the issue of jurisdiction
The contention of the TASICA that this Court has no jurisdiction to consider and
decide questions related to the crop years regarding which the parties did not present
evidence or any stipulations of fact in the court below loses sight of the fact that in a
general sense the pleadings filed by the parties in the trial court refer not only to the
crop year 1952-53 but to all subsequent crop years. Thus, at least in the prayer of the
amended complaint referring to the second alternative cause of action, the plaintiffs-
appellees ask for judgment covering "crop year 1954-55 and—every crop year
thereafter". Accordingly it cannot be said that the crop years 1960-61 to 1966-67 are
not covered by the pleadings. Of course, inasmuch as the trial was terminated in
1961, strickly speaking, it would be more appropriate to require supplemental
pleadings and corresponding hearings by the trial court, if indeed there were any
factual issues on which the parties are in disagreement and the new legal issues are
being raised. But, despite the contention of the CENTRAL and TASICA in its earlier
pleadings in this Court that they would be denied due process if they were not given
an opportunity to be heard on facts and issues related to the later crop years, a
comprehensive view of the case convinces Us that there are no such possible new
issues. The main factual question of number of contract planters, as already observed
earlier in this opinion, became a dead issue after the expiration of most of contracts at
the end of crop year 1959-60. And the figures regarding the production during the
later crop years cannot be controversial except as to the 1963-64 crop year, which
We are resolving elsewhere in this decision. More importantly, the PLANTERS and
the laborers have been constantly asking that the judgment herein should include
these later crop years, and although the CENTRAL has as late as in its supplemental
memorandum of December 2, 1978 insisted formally on a remand of this case to the
trial court for the p under discussion, Our plain understanding from counsel for the
Central when they submitted the detailed figures relative to the money in dispute here
deposited in escrow in different banks is that the CENTRAL has no serious objection
to the prayer of the PLANTERS and laborers.
On the joinder of TASICA
Similarly, TASICAs contention that it is not a transferee pendente lite of the
CENTRAL from the point of view of Section 20 of Rule 3 is without merit. The
predicate of its argument is that the crop years 1960-61 are not covered by the
pleadings in the lower court, which We have just shown is not accurate. Under the
cited rule, a transferee pendente lite does not have to be included or impleaded by
name in order to be bound by the judgment because the action or suit may be
continued for or against the original party or the transferor and still be binding on the
transferee.
On the alleged contempt committed by TASICA
The motion for contempt against TASICA is based on the "invalidation" by its
manager of the quedans in escrow for crop year 1963-64, which were issued to
TASICA instead of the CENTRAL as required by Our resolution of November 7, 1963.
The CENTRAL and TASICA have explained that the supposed invalidation was an
unintentional mistake. Besides, our subsequent resolution of September 28, 1964 has
been duly complied with and with such compliance, no substantial in jury can be said
to have been suffered by the PLANTERS. We find the explanation of TASICA
satisfactory, hence the motion to declare it in contempt is hereby denied.
IN RE THE QUESTION OF WHO IS THE COUNSEL FOR
THE PLANTATION LABORERS
Incidentally, and on the basis of the compliance filed by the Secretary of Labor dated
August 23, 1977 and by Attys. Montemayor and Dimaano and Camilo L. Sabio dated
August 15, 1977, the Court makes it clear that the principal counsel of record of the
plaintiffs plantation laborers in this case are the official lawyers of the Secretary of
Labor, who under Republic Act 809, is their sole legal representative, namely
Attorneys Ernesto H. Cruz and Emilia E. Andres of the Legal Division of the
Department of Labor, with whom collaborating counsels Attys. Montemayor, Dimaano
and Sabio, are expected to coordinate for common representation on behalf of said
laborers.
THE MATTER OF BAGASSE, MOLASSES, PRESS CAKES AND OTHER
DERIVATIVES AND BY PRODUCTS OF MILLED SUGARCANE
The decision of the trial court under review adjudged the ASOCIACION to be entitled
to increased shares not only of the proceeds of milled sugar but also that of the
corresponding derivatives and by-products of the milled sugarcane. His Honor is
correct, for under Section 1 of Republic Act 809, it is clear that the ratio of sharing
therein fixed refers not only to the unrefined sugar produced by the miller of the
sugarcane of the planters but of all the by-products and derivatives thereof, by which
is meant the bagasse, press rakes and molasses In other words, the law requires that
these derivatives and by products should be divided between the CENTRAL and the
ASOCIACION in the same proportion as the money that has been deposited in
escrow which corresponds only to the proceeds of unrefined sugar. As may be noted,
however, the record reveals nothing as to the amount and value of said by-products
and derivatives produced during the whole period here in dispute from crop years
1952-53 to 1966-67, and it is to be presumed that no corresponding deposits in
escrow had been made therefor. Accordingly, it is imperative that such accounting be
made by the CENTRAL. On the basis of the result of such accounting, the CENTRAL
should pay the respective amounts due the ASOCIACION, and, of course, the
respective PLANTERS should in turn pay the 60% share due their laborers, pursuant
to Section 9 of the Act, as We have construed the same above.
Specifically, since, as discussed earlier, Section 1 did not ap ply to the Talisay-Silay g
district du ' crop years 1952- 53 to 1959-60 because there was always a majority then
of planters with written milling contracts with the miller, the ASOCIACION would not
have been entitled to any increased share in the produce during those crop years
were it not for Our holding herein that by virtue of the most-favored-planter clause, the
ASOCIACION is entitled to the 3% and 4% increases in the share of the planters, as
already shown earlier. it follows then that the ASOCIACION, and correspondingly the
laborers, should also share in the proceeds of the by-products and derivatives during
the whole period that the most-favored planter clause was operative, namely, from
crop year 1954-55 to crop year 1959-60, in the same proportion as the increase in the
proceeds of unrefined sugar. The same is true as regards crop years 1960-61 to
1966-67 where the whole disputed portions should go to the ASOCIACION and the
laborers.
RE: G.R. NO. L-21304
As stated earlier, the Petition in this case was filed on May 16, 1963 for the purpose
of securing an order of this Court compelling the respondent judge to appoint in Civil
Case No. 6980 of the Court of First Instance of Negros Occidental, a temporary
administrator to operate the respondent sugar central until the end of the milling
period 1962-1963, pursuant to Sections 4 and 7 of Republic Act 809, petitioner
claiming that notwithstanding that respondent CENTRAL was refusing to mill the
sugarcane of the planters in the district respondent judge declined to appoint such
administrator, holding that the takeover of a central provided for m the law is
unconstitution On May 22, 1963, the Court heard the oral argument of the parties. On
May 31, 1963, the Court, reserving its opinion on the merits of the case and the
validity of the law" directed respondent judge to forthwith appoint a qualified
administrator "of the sugar central of the Respondent dent Central for the exclusive
purpose of milling the g 1962-1963 crop of Talisay-Silay Mill District".
Under date of June 4, 196.3, respondents CENTRAL and ASSOCIACION filed an
"Ex-parte Petition for Immediate Redress of Unwitting Injustice" claiming:
7. —That respondents therefore 8 y believe and most respectfully
submit that the highest intents of justice require that the mandatory
injunction, which for all practical intents and purposes, was under
the circumstances virtually a definite writ of & issued by this
Honorable Court in Baguio on May 31, 1963, without knowing about
the settlement Of the alleged subsequent controversy regarding the
cutting of said Young canes should be promptly set aside, with or
without a decision on the merits, in order to thereby redress, even
 partially the undeniable moral and injury, mental anguish, serious
anxiety, besmirched reputation, moral shock and social humiliation
caused by the same to the respondents in this case (Article 2217,
Civil Code).
However, upon being to answer by the Court, the Solicitor General filed an Opposition
to this petition stating that:
Respondents' motion dated June 4, 1963 seeks in effect a
reconsideration of the resolution of this Honorable Court dated May
31, 1963 granting the appointment of an administrator.
The resolution however directed that the administrator should act only for the 4
exclusive purpose of milling the 1962-63 crop of the Talisay-Silay Mill District.' The
milling of the crop was officially terminated on June 5, 1963 at 11:05 P.M. (Copy of
Special A administrative Order No. 5) is attached hereto as Annex 'I') and both
petitioner and respondents filed separate mong before the Court of First Ins of Negros
Occidental to d the a petition terminated.
On June 15, 1963, the Court of First Instance of N Occidental
granted both motions and declared the appointment of the
administrator terminated (A copy of the Order is attached hereto as
Annex '2').
The said motion of June 4, INS therefore is now moot and
academic. " (Pp. 163-164, Record.)
And so, on July 1, 1963, the Court required the Solicitor General "to show cause—
why this case should not be dismissed " In compliance therewith, the Solicitor
General made the following representation:
l. That the issue before this Honorable Court has not been rendered
moot and academic by the termination of the a petition of the sugar
central of the respondent Talisay-Silay Milt CD Inc. because.
a) The questioned Order of the Respondent
Judge contains a declaration of the
unconstitutionality of Section 7 of Republic Act
No. 809, thereby necessitating a review by this
Honorable Court;
b) The petition seeks to obtain an interpretation
of petition 7 of Republic Act No. 809, particularly
as to whether or not under 86d Section, it is the
duty of the Court of First Instance to appoint an
administrator before conducting a hearing on the
legality or propriety of Executive Proclamation for
the administration of a sugar central.
2. That the resolution of the legal questions are of vital and
transcedental dental importance to the Public at large and to the
sugar industry in particular, inasmuch as the legal provision under
consideration is the only feasible and effective remedy m
preventing paraIization petition of the milling operations in a Mill
District, which in turn will lead to a deficiency or diliquency in the
filling of the entire national quota.
Moreover, there is the practical consideration that the need for
governmental administration of a central under Rep. Act No. 809
would probably arise only towards the end of the milling season
when the production is about to exceed 1,200,000 piculs and the
central owner stubbornly refuses to produce further, because to
exceed 1,200,000 piculs mean an in the pa of the Planters and their
laborers in the next crop year in a with Section I of Rep. Act No.
809. Since the time required to mill the remaining canes would
usually be very short, as in the case at bar, any governmental
administration granted by this Honorable Court as an on the legality
or propriety of Executive administration of a sugar central ancillary
remedy will naturally be terminated before tins Honorable Court can
have an opportunity to act on the main case.
3. That this Honorable Court in cases wherein public interest is
involved has proceeded to act on the case even if the matter may
be moot and academic, as in the case of Krivenko vs- Register of
Deeds (44 O.G. 471).
WHEREFORE, it is respectfully prayed that this Honorable Court
consider for resolution the issues raise in the petition for certiorari
and/or mandamus, particularly the question as to whether or not
Section 7 of Republic Act No. 809 is unconstitutional insofar as it
requires the appointment of an administrator prior to the hearing on
the legality or propriety of the Executive Proclamation. (Pp. 192194,
Id.)
and the respondents represented by Atty. Vicente Hilado countered in a motion med
on October 10, 1963 thus:
Now come the respondents, by their undersigned attorney, and respectfully
represent:
1. —That in the Manifestation, dated July 16, 1963, filed by the
Solicitor General for the petitioner in this case, the petitioner has
invoked the 'vital and transcendental importance to the public at
large and to the sugar industry in particular' of the legal questions
involve in this case to justify its prayer that this Honorable Court
consider for resolution the issues raised in the petition for certiorari
and/or mandamus, particularly the question as to whether or not
Section 7 of Republic Act 809 is unconstitutional insofar as it
requires the appointment of an administrator prior to the hearing on
the legality or propriety of the executive proclamation.
2. —That pursuant to said prayer of the petitioner, this Honorable
Court on August 12, 1963, approved the following resolution:
Considering petitioner's comment for the
dismissal in 1, 21304 (Republic of the Philippines
vs. Hon. Jose Fernandez, Talisay- Silay Milling
Co., Inc. and Talisay-Silay Industrial Cooperation
Association), and the Solicitor General's motion
that this Court consider for resolution the issue
raised in the question as to whether or not
Section 7 of Republic Act 809 is unconstitutional
insofar as it is required the appointment of an
administrator prior to the hearing on the legality
or propriety of the Executive Proclamation. THE
COURT RESOLVED to consolidate this case
with L-19937.
already produced the total amount of sugar that it has been
allocated and licensed to produce during the crop year 1962-63, in
accordance with Sections 4, 5 and 15, of the Sugar Limitation Law
(Act 4166, as amended), which, in effect, prohibit and penalize the
milling and/or manufacture by a sugar central of a bigger amount of
sugar than it has been so allocated and licensed to produce during
each crop year, as follows:
SEC. 4. After this Act takes effect, it shall be
unlawful to manufacture centrifugal or "AA"
refined sugar without first obtaining a license
therefor in accordance  with the provisions of this
Act.
SEC. 5. The total amount of centrifugal and "AA"
refined sugar for the manufacture of which
license may be issued for any crop or calendar
year under terms of this Act, shall be the sum
total of the following:

3. —That, in view of the fact that Section 7 of Republic Act 809 (a) The quantity in short tons of
does not contain any express provision which makes it a mandatory "A" and "AA" sugar which shall
duty specifically enjoined by law (as contemplated in Section 3 of be Identical with the amount of
Rule 67 of the Rules of Court) for the Court to appoint an such sups which, under Act of
administrator upon the filing of the petition mentioned in said Congress, may be shipped to
Section 7 of Republic Act 809, the respondent in this case interpret Continental United States
said resolution of this Honorable Court to mean only that this during the calendar year, plus
Honorable Court is willing to resolve the question of whether said
Section 7 would not be unconstitutional, as a violation of the (b) Such a quantity in short
constitutional right to due process, if interpreted in the sense that it tons of "B" sugar as the
makes it the specific legal duty of the Court to appoint said Governor- General may from
administrator immediately upon the filing of the required petition, time to time find to be required
and prior to the hearing on the legality or propriety of the executive for consumption within the
proclamation involved, which the respondent central is expressly Philippine Islands, either in its
given by said Sec. 7 the right to raise, as a preferential question, original form or as refined
after due notice, undoubtedly with the intention and purpose sugar, plus
precisely to preserve and protect said constitutional right of the
central to due process of law before it may be deprived of the right
to the possession and administration of its property, which is of (c) A quantity in abort tons of
course a necessary attribute and integral part of the right of "C" sugar equivalent to ten per
ownership; centum of the total of (a) and
(b) or 100,000 short tons,
whichever is greater, provided
4. —That of equal importance as the legal question of the that in determining said amount
constitutionality of said Section 7 of Republic Act 809, if so the Governor-General may, in
interpreted as to deprive the respondent central of its constitutional his discretion deduct therefrom
right to due process, is, in our humble opinion, the legal question of the whole or any part of the
validity and propriety arising from the fact that the Presidential amount of "C" sugar in stock at
Proclamation and consequent petition for appointment of time of determination
administrator which gave rise to the present case were respectively
issued and filed, notwithstanding that the respondent central had
SEC. 15. Any mill company or refining plant manufacturing
centrifugal or "AA" sugar, repectively, in a quantity greater than the
quantity prescribed in its license  or any person manufacturing
centrifugal -or "AA" refined sugar without a shall be punished by a
fine of fifty-pesos for each short ton or fraction of more than one
half a short ton so manufactured and such sugar shall be seized
and disposed of as the President of the Philippines shall direct in
such manner as will not be inconsistent with the purpose of this Act.
5. —That said fact is alleged in the Option to Appointment of
Adminisrator, filed by respondents in the court below, which is
attached as Annex '3' of the petition in this case, and is also
reproduced and incorporated by referred as part of respondents'
answer to the petition in this mm see par. 1 of respondents' answer
in this case);
6. —That, in view of 9W provisions of Sections 4, 5 and 15 of the
Sugar Limitation Law, the very important legal question arises
whether or not Section 4 of the same Republic Act 809 which
allows the Government to take over and have an administrator
appointed for a sugar central which 'shall refuse to mill the
sugarcane of such planters in the absence of such an agreement'
could or should be interpreted to include the case of a sugar central
which stop or discontinues further milling and manufacture of
sugar after it has manufactured the total amount of sugar which it
has been allocated and licensed to produced during any crop-
year, and thereby avoid possible prosecution and punishment for
the violation of said restrictive provisions of the Sugar Limitation
Law; in such a way that it would be liable to such prosecution and
punishment, if it continues to mill and manufacture more than said
total production quota which it has been allocated and licensed to
produce during that crop year, and, on the other hand, would be
also liable to seizure, if it ceases to mill the excessive sugarcanes
produced by the planters, as the Government has tried to do in this
case;
7. —That, as a matter of fact, for the incoming crop year 196364,
the Sugar Quota Administration has allocated to and licensed the
herein respondent central to mill and produce the total amount of
1,147,253.38 picul but the big sugarcane crop planted by the
planters for this crop year is again expected to produce
considerably much more t n said amount of 1, 147,253.38 piculs;
and it is very probable that efforts will again be exerted to threaten
and compel the herein respondent central and its present lessee
(also respondent herein) to exceed its said total allocated
production quota, in violation of said Sections 4, 5 and 15 of the
Sugar Limitation Law, under pain of g again subjected to seizure
and placed under administrator petition by the Government. Copy
of the production quotas allocated to each and every milling district
in the Philippines for the crop year 1963-64 and of the circular letter
of transmittal of the Sugar Quota Administration, dated August 27,
1963, are attached to and made a part of this motion, marked as
Annexes '1' and '1-A'.
8. —That, in justice and fairness to the herein respondents
therefore, and in order to prevent a multiplicity of suits and
repetition of the unpleasant and untenable situation created by the
Presidential Proclamation and comment petition for appointment of
administrator which gave rise to the present case it would, in our
humble opinion, be only proper and fitting for this Honorable Court
to consider and resolve in this case also the very important
question of the real import, scope and extent of said Section 4 of
Republic Act 809, particularly the legality and/or propriety of the
executive proclamation and petition for appointment of an
administrator for the respondent Central notwithstanding the fact
that it had m fact already produced more than the total amount of
sugar which it has been allocated and licensed to produce the crop
year 1962-63, in accordance with said Sections 4, 5 and 15 of the
Sugar Limitation Law.
WHEREFORE, respondents r respectfully pray that in the interest
of a speedy administration of justice, and thereby avoid continued
or renewed and further protracted litigation, this Honorable Court
see fit to resolve in this case, once and for all the very important
legal questions hereinabove mentioned, particularly the legal
.question of the proper and correct interpretation, scope and extent
of said Section 4 of Republic Act 809, in the light of the provisions
of said ions 4, 5 and 15 of the Sugar Limitation Law." (Pp. 196- 201,
Id.)
We must resist the temptation to acquired to the insistent prayer of the parties that the
constitutional. issue passed upon by respondent judge be settled, if only because
none of the parties ever raised that issue below, and the considerations now being
submitted by the Solicitor General of supposed urgency of resolving said
constitutional question do not, m Our Opinion justify departur from the general made
the Court has always adhered to, as stated in Santiago vs. Far Eastern Broadcasting,
73 Phil. 408, to the effect that "the constitutionality of a law will not be considered
unless the point is specially pleaded, insisted upon and adequately argued. " (at p.
412) Anyway, the appointment of an administrator t to Sections 4 and 7 of Republic
Act 809 ordered by this Court on May 31, 1963 hardly e of material importance
because the administration was, by agreement of the parties terminated as of June 5,
1963. We are not impressed that the allocations regarding moral image and injury,
etc. in respondents' ex-parte petition of June 4, 1963 can have substantial basis or
will even be insisted upon anymore. In other words, no active and positive substantial
basis or will be due any of the parties even if We should decide here the constitutional
matter referred to one way or the other.
And as regards the plea of respondents relative to the construction of Section 4 of
Republic Act 809 in relation to Sections 4, 5 and 15 of Act 4166, the Sugar Limitation
Law, it is to be noted that in his "Manifestation" dated October 29, 1963, the Solicitor
General defined the position of the Government to be as follows:
 3. That in connection with the statement of rest Sugar Central in its
motion dated October 10, 1963 that if it is compelled to mill more
sugar than the quota allotted to him he will be Liable hinder the
penal provisions of the Sugar Limitations Law Sees 4, 5, and 6),
suffice it to state that a sugar central is sub to hinder Rep. Act 809
only when its refusal to mill will cause a in the national quota; the
fact implicit to be- milled that when the mill stops operating there is
sugar yet to be milled and the quota to it (both the basic and the
additional) has not yet been filled" (Pp. 207-208, Id.)
which is substantially in accord with the contention of said respondents
JUDGMENT
Predicated on all the foregoing considerations, it is the judgment of the Court in G. R.
No. L-l9937 that the decision of the be, as it is hereby, modified in the following
manner the wit:
(a) Republic Act 809 otherwise kown as the Sugar Act of 1952, is hereby declared not
to be unconstitutional and is therefore enforceable in all sugar districts wherein
relevant facts come within the conditions prescribed therein;
(b) Thus, inasmuch as relative to crop yearn 1952-53 to 1959-60 in the sugar district
of apt TALISAY. SILAY MILLING CO., INC., it has been proven that there were
written milling agreements between the majority of the planters and the miller m said
district, the one of Sec- petition I of said Act providing for the in which the unrefined
sugar produced in the district from the milling by said CENTRAL of the sugarcane of
the planters or plantation owners, as well as the by-products and derivatives should
be apportioned among them did not apply to said district, hence, the ratio of sharing
of the proceeds of the production during those crop years must be that fixed in the yet
contracts of the CENTRAL and the PLANTERS, as construed in this decision:
(b) Accordingly as crop year 1952-53 and 1953. 54, the amended complaint of the
PLANTERS and the SECRETARY OF LABOR is dismissed and the deft PHILIPPINE
NATIONAL BANK is hereby am to Pay to the appellant CE out of the money
deposited with it in for the purpose of this case, the amounts hereunder as specified
as corresponding to said crop years, plus the interest up to the time full payment is
made;
(d) In relation to crop year, 1954-55 in which all the proceeds of the sugarcane milled
by the ASOCIACION amounting to P949,856.53 were retained by the CENTRAL the
judgement of the trial court sentencing the CENTRAL to pay the whole said amount to
the ASOCIACION with interest at 3% per annum is modified only in the this only
P644,002.76 shall be paid by the CENTRAL and that out of this latter su 60% thereof,
or P326,401.66 A" be paid by the PLANTERS to their respective laborers, per Section
9 of Republic Act 809. (As explained earlier, the P949,856.53 represented 7-1/2% of
the total proceeds for crop year 1954-55 which should have been deposited in escrow
but which, by agreement of the parties was retained for itself by the CENTRAL under
the legality of a bond given by the appellant Luzon Surety Company conditioned on
the payment to the ASOCIACION, upon the petition of this case of whatever amount
may be found due to and which amount the lower court fixed as abovestated. No a
was taken by the ASOCIACION from d judgment, hence the modification should only
be as to the proportion or ratio of sharing. Under the foregoing opinion, of the 7-1/2%
in controversy only 3% should go to the ASOCIACION to complete the 63% the
PLANTERS are entitled to under the most-favored-planter clause Now, 3%
represents 2/5 or 40% of the 7-1/2% in question, hence of the P949,856.53, plus 3%
interest per annum which totaled to P1,610,006.94 as of November 30, 1978, 60% or
P966,004.14 should be the share of the CENTRAL 4 which should be considered as
already fully paid, and the remaining 40% or M",002.26 d be paid by the CENTRAL to
the ASOCIACION.)
(1) However to matter the said amount of P 644,002.26 should
merely be deducted from whatever tow amount the CENTRAL is
entitled to under this decision the same to be added corresponding
to the respective of the PLANTERS and their laborers in the
amounts just indicated, for which reason no judgment need be
rendered against the defendant LUZON Surety Company and it
hereby of any execution under its bond, Exhibit P, and the said
bond is hereby ordered cancelled.
(e) As crop years 1955-56 to 1959-60, the defendant Philippine National Bank is
hereby sentenced to Pay Out of the money deposited with it for purposes of this case
as follows
(1) To the plaintiff-appellee ASOCIACION for the benefit of the
PLANTERS 40% of the amounts or to each of said crop year
except crop year 1988-59, in respect to which the amount should
be 53.33%, including in both instances all the interests actually
earned up to the time of full payment. (The portions retained for
crop years 1955-56 and 1958- 59 were 7-1/2% of the total p each
of mill crop year, for crop years 1956-57 and 1957-58, 5%; and for
crop year 1959-60, 10%; and inasmuch as the sharing for 1955-56,
1957-58, 1958-59 and 1959-60, per the most-favored-planter
clause, was 63-37 and in 1958-59 it was 6436, of the 7-1/2 for
1955-56 and of the 5% for 1956-57 and 1957-58, the plan should
get 3%; of the 7-1/2 for 1958-59, 4%; and of the 10% for 1959-60
also 3%, the total production having exceeded 1,200,000 piculs
only in 1958-69; however, what was retained for crop year 1958-59
was 7-1/2 and in 1969-60 it was 10%.)
(f) As regards crop year 1960-61 and all the subsequent crop years up to 1966-
67 16 the Philippine National Bank, the Philippine Commercial and Industrial Bank and
the Pacific Banking Corporation are hereby ordered to pay the Plaintiff
ASSOCIACION, for the benefit of all the PLANTERS in this class suit, all the amount
respectively deposited with said banks for the purposes, of this case in the joint
names of the ASSOCIACION, the CENTRAL/TASICA and the Secretary of Labor
during said crop years, together with all the interest earned up to the date of full
payment, and all the PLANTERS n turn are hereby sentenced to forthwith pay and
distribute, under the supervision of the Secretary of Labor, to their respective laborers
during said crop years, 60% of the amount to be so paid to each of them by the
banks.
(g) According to the compliance made by for the CENTRAL dated December 21,
1978, the detailed data ing the production in piculs and the exact amounts i escrow in
the three different banks aforesaid honed during op years material to this case,
computed together with all the corresponding interest earned up to November 30,
1978 Id the total thereof, duly coed by the respective e as follows:
  TOTAL PRODUCTION  
Pursuant to paragraph (d) (1) above, the amount of P644,002.76 should by deducted
from the P12,217,775.76 due the CENTRAL, thereby reducing the total amount to be
paid to it to P11,573,773.00 and increasing the amounts due the PLANTERS and
their laborers to P15,265,533.81 and P22,895,300.87, respectively, 60% of the
P644,002.76 being added to the share of the laborers and 40% thereof or
P257,601.10 being added to that of the PLANTERS.
As indicated, all the above figures or amounts are as of November 30, 1978, hence,
for purposes of implementation or execution, corresponding additional amounts
should be added to cover the respective interests from December 1, 1978 to the date
of payment.

CROP IN PICULS
(h) Finally, relative to the amount and value of the byproducts and derivatives of the
YEAR
milled sugarcane, the CENTRAL is hereby ordered to make an accounting thereof
corresponding to crop year 1954-55 to crop year 1966-67, and to pay to the
1952-53 864,493
ASOCIACION for the benefit of the PLANTERS, at the same ratio fixed above for the
proceeds of unrefined sugar, the corresponding value thereof, and the PLANTERS
1963-54 1,057,980.19
are in turn sentenced to pay their respective laborers, under the supervision of the
Secretary of Labor 17 60% of the amount to be paid to them by the CENTRAL thru the
1956-56 820,704.29 ASOCIACION. as in the case of the proceeds of unrefined sugar.
1966-67 806,864.36
Resolution of the TASICA incidents
1957-58 984,848.53
1. Re: The issues of jurisdiction and of joinder of TASICA
1958-59 1,250,008.70
Considering that, as already explained earlier, although TASICA was not a party in
1969-60 1,189,837.37 the proceedings in the court below, the basic issues between the original parties
raised in their pleadings contemplate also the crop years subsequent to 1959-60 and
1960-61 1,137,910.36 inasmuch as the production figures during those crop years which are already before
Us as part of the record of this case are not disputed, thus obviating also the
1961-62 1,140,794.01 necessity of supplemental pleadings as well as the presentation of evidence thereon,
for the same would be a mere formality, the Court holds that under these peculiar
1962-63 1,186,679.35 circumstances, it has jurisdiction to include as it has included above in this
adjudication the matters involving said crop years. In this connection, it is to be noted
1963-64 1,165,064.09 that, according to the record, notice of the rehearing of this case was sent by
registered mail to counsel of record Of TASICA, and nothing further has been heard
1964-65 862,855.01 from d counsel on this point at issue, which to Our mind indicates that TASICA has
already lost interest in it.
1966-66 663,958.14

1966-67 567,656 Based on the foregoing consideration that the incidents involving TASICA in this
appeal stage of this case are but incidental to the continuation of the issues duly
  TOTAL— raised in the court a quo, the Court holds that TASICA is a mere transferee pendente
lite of the interests of the CENTRAL in this case within the contemplation of on 20 of
Rule 3 and that, therefore, this judgment binds TASICA without the need of its being
Thus, on the basis of these figures, the respective amounts for (b), (e) (1) and o formally impleaded as a party hereto.
above should be as follows'
For the reasons already stated earlier which the Court considers satisfactory, the
Amounts to be paid to: motion for contempt filed by the plaintiff-appellees against TASICA is denied.
2. Percentage of disputed portions in 1963-64 crop year's production
Anent the issue of whether the disputed portion for crop year 1963- 64 should be 10%
instead of 7-½%, the Court, as maybe observed has computed the same on the basis
of 7½%. At the moment, We are of the view that, unless clear evidence is presented
to show that there were planters of the Talisay-Silay milling district who mill in the Ma-
ao Sugar Central and the Bacolod-Murcia Milling Co. for the specific purpose of
evading the provisions of Section 1 of public Act 809, something which is particularly
amount the interest of the said themselves the position of the CENTRAL that the mid
milling in those other centrals was done in the ordinary course and with the authority
of the Sugar Administrator, is well taken. If the plaintiff" have the and necessary feel
they can pursue the matter further the right to do so is hereby for them.
All of the CENTRAL's counterclaim are hereby accordingly overruled.
In G.R. No. L-21304, the petition is hereby dismissed the issues raised therein, as We
have demonstrated a few pages back, having already become moot and academic.
No attorney's fees, bad faith on the part of the CENTRAL in the premises not having
been sufficiently Shown.
No costs in both cases.
Castro, C.J., Antonio, Concepcion Jr., Santos. Fernandez and Guerrero, JJ., concur.
Makasiar, J., concur in the result.
Teehankee, Aquino, Abad Santos, De Castro and Melencio-Herrera took no part.
Separate Opinions
Fernando, J., concurring:
Joins in the opinion and res the right to file a brief concurrence on the constitutional
issues involves
  Separate Opinions
Fernando, J., concurring:
Joins in the opinion and res the right to file a brief concurrence on the constitutional
issues involves
#Footnotes
1 The parties entered into an agreement whereby the escrow
quedans were to be issued corresponding to the increase in
participation claimed by plaintiffs, the same to be sold only with the
consent of the Asociacion or PLANTERS, the Secretary of Labor
and the CENTRAL, every year while the case is pending, the
proceeds to be deposited in a bank in trust for the Secretary of
Labor, the Asociacion or Planters and the Central to be disposed of
in the manner the court may eventually decide. The agreement as
implemented eventually covered the proceeds of crop years 1952-
53, 1953-54 and 195556 to 1961-62.
2 The reasons for the inclusion of the Luzon Surety Company and
the Philippine National Bank as defendants are stated in Paragraph
8 of the amended complaint thus:
8. That defendant CENTRAL refuse and
continues to refuse to follow the sharing
participation prescribed by Republic Act No. 809,
For the crop years 1952-53, 1953-54, 1954-55,
1955-56 and 1956-57, plaintiffs PLANTERS were
only given a share of 60% of the production
instead of their legal share of 65% for 1952-53,
65% for 1953-54, 67-1/2% for 1955-56, and
651,o for 1956-57. The disputed portions of the
sugar production for the crop years 1952-53,
1953-54, 1955-56, and 195657 were covered by
escrow quedans issued in the names of plaintiff
ASOCIACION, plaintiff Secretary of Labor and
defendant CENTRAL with the understanding that
said escrow quedans were to be sold from time
to time with the conformity of the three parties
mentioned and the proceeds thereof deposited
with the Philippine National Bank in an account
entitled 'In Trust for Talisay-Silay Mg Co., Inc.,
Asociacion de Agricultores de Talisay-Silay and
Department of Labor'. The disputed portion for
the crop year 1954-55 was, upon agreement of
the parties, delivered to defendant CENTRAL
subject to the conditions stated in the Luzon
Surety Co. Inc. Bond No. 5835, copy of which is
hereto attached as Annex 'A' and made an
integral part of this Amended Complaint,
executed in favor of the plaintiff ASOCIACION
and the Sugar Quota Administrator. (Pp. 8-9,
Record on Appeal of CENTRAL.)
2a Accordingly, the proceeds were deposited half and half with the
Philippine Commercial and Industrial Bank and the Pacific Banking
Corporation respectively, and subsequently, those of crop years
referred to in the following paragraphs (g) to (i) were likewise
deposited in said banks.
3 98 Phil 143.
4 SEC. 6. The State shag promote social justice to e the dignity,
welfare, and security of all the people. Tow this end, the State shall
regulate the acquisition, ownership, use, enjoyment, and disposition
of private property, and equitably diffuse property ownership and
profits. (Article 11 1973 Constitution)
SEC. 9. The State shall afford protection to labor, promote full
employment and equality in employment, e equal work
opportunities regardless of sex, race, or creed, and regulate the
relations between workers and employers. The State shall a the
rights of workers to self-organization, collective bargaining security
of tenure, and just and humane conditions of work. The State may
provide for compulsory arbitration. (Id.)
5 These provisions of the 1935 Constitution have been reenacted in
Sections 6 and 9 of Article II on Declaration of Principles and State
Policies of the 1973 Constitution.
6 On the other hand, the fm given by the Sugar Administrator
regarding the number of contract planter to which the
PLANTERS would love importance can hardly be reliable
considering that the primary and best evidence of the existence of
the contracts are found in the records of the Central and, of course,
of the respective planters con In fact, in their brief, the PLANTERS
maintain that notwithstanding the announced result of the
administrative investigation conducted by the Sugar Administrator
respecting the matters here in dispute, "the Lower Court (and on
appeal the appellate court) had (would have) the power to make its
own findings of fact on the basis of the evidence presented. " (pp.
37- 38.)
7 PLANTERS' brief, Appendix A. The CENTRAL did not dude those
in its t of contract planters so it is d the CENTRAL considers them
as non-contract planter, pp- 93-117 of CENTRAL's brief.
8 Exhibit D-25 is not included hem It is the contract of Jose r Torres
Jr. who is as No. 40 in the list of the uncontroverted contract
planters.
9 See Moran Comments on the Rule of Court", VOL III, P. 452, and
mm cited therein, in connection with comments on Rule 84 of the
Rules of Court
10 These are: (No. 2) Dominador Agravante (No. 18) Jose
Cuaycong', (No. 19) Natividad Cuaycong, (No. 62) Flory G. de
Jocson; (No. 64) Enrique Jundos and (No. 87) Vicente Layson
11 Subtracting f4 from the number of contract planters in each of
the succeeding years, 1955-56 to 1960, and adding the same
number to that of non-contract ones will still result in the contract
planters being in the majority during that whole period.
12 Exhibit D5 the contract of Natividad-Lacson and her husband
Jose Cuaycong was executed on August 14, 1954; Exhibit D-6, that
of Bonifacia A. Dalimo-os wife of Dominador Agravante, on April 5,
1964; Exhibit D-7 of Edgardo Granada on February 16, 1954;
Exhibit D9 of Flory C. de Jocson, on February 9, 19s4; Exhibit D-10
of Enrique Jundos on July 24,1954; Exhibit D-12 of Vicente M.
Layso on February 9, 1954 and Exhibit D-13 of the mm planter, on
February 16, 1954, Exhibit D-19 of Severino de Oca, on February
3, 1954 and Exhibit NNNNNN of Ramon B. Lacson on August 9,
1954.
13 The record of this case includes not only the contracts in issue
but of printed contracts of other sugar centrals with their respective
planters. (See Exhibits M to M-9.)
14 For simpler computation 4-½% of the 7-½% in escrow is
equivalent to 60% of the amount in dispute for the co crop year,
whereas, 3-½% is 53.83% of said amount.
15 Moran, Rules Of Court, VOL II, p. 203,1970 ed.
16 After crop year 1966-67, no more retentions or deposit escrow
were made because the mount of production no longer 600,000
piculs and there is no indication at all that the opted by the
CENTRAL was not in accordance with Section 1 of ,public Act 809.
17 Now, Minister of Labor.
G.R. No. L-69870 November 29, 1988
NATIONAL SERVICE CORPORATION (NASECO) AND ARTURO L.
PEREZ, petitioners, 
vs.
THE HONORABLE THIRD DIVISION, NATIONAL LABOR RELATIONS
COMMISSION, MINISTRY OF LABOR AND EMPLOYMENT, MANILA AND
EUGENIA C. CREDO, respondents.
G.R. No. 70295 November 29,1988
EUGENIA C. CREDO, petitioner, 
vs.
NATIONAL LABOR RELATIONS COMMISSION, NATIONAL SERVICES
CORPORATION AND ARTURO L. PEREZ, respondents.
The Chief Legal Counsel for respondents NASECO and Arturo L. Perez.
Melchor R. Flores for petitioner Eugenia C. Credo.
PADILLA, J.:
Consolidated special civil actions for certiorari seeking to review the decision * of the
Third Division, National Labor Relations Commission in Case No. 11-4944-83 dated
28 November 1984 and its resolution dated 16 January 1985 denying motions for
reconsideration of said decision.
Eugenia C. Credo was an employee of the National Service Corporation (NASECO),
a domestic corporation which provides security guards as well as messengerial,
janitorial and other similar manpower services to the Philippine National Bank (PNB)
and its agencies. She was first employed with NASECO as a lady guard on 18 July
1975. Through the years, she was promoted to Clerk Typist, then Personnel Clerk
until she became Chief of Property and Records, on 10 March 1980. 1
Sometime before 7 November 1983, Credo was administratively charged by Sisinio
S. Lloren, Manager of Finance and Special Project and Evaluation Department of
NASECO, stemming from her non-compliance with Lloren's memorandum, dated 11
October 1983, regarding certain entry procedures in the company's Statement of
Billings Adjustment. Said charges alleged that Credo "did not comply with Lloren's
instructions to place some corrections/additional remarks in the Statement of Billings
Adjustment; and when [Credo] was called by Lloren to his office to explain further the
said instructions, [Credo] showed resentment and behaved in a scandalous manner
by shouting and uttering remarks of disrespect in the presence of her co-
employees." 2
On 7 November 1983, Credo was called to meet Arturo L. Perez, then Acting General
Manager of NASECO, to explain her side before Perez and NASECO's Committee on
Personnel Affairs in connection with the administrative charges filed against her. After
said meeting, on the same date, Credo was placed on "Forced Leave" status for 1 5
days, effective 8 November 1983. 3
Before the expiration of said 15-day leave, or on 18 November 1983, Credo filed a
complaint, docketed as Case No. 114944-83, with the Arbitration Branch, National
Capital Region, Ministry of Labor and Employment, Manila, against NASECO for
placing her on forced leave, without due process. 4
Likewise, while Credo was on forced leave, or on 22 November 1983, NASECO's
Committee on Personnel Affairs deliberated and evaluated a number of past acts of
misconduct or infractions attributed to her. 5 As a result of this deliberation, said
committee resolved:
1. That, respondent [Credo] committed the following offenses in the
Code of Discipline, viz:
OFFENSE vs. Company Interest & Policies
No. 3 — Any discourteous act to customer, officer and employee of
client company or officer of the Corporation.
OFFENSE vs. Public Moral
No. 7 — Exhibit marked discourtesy in the course of official duties
or use of profane or insulting language to any superior officer.
OFFENSE vs. Authority
No. 3 — Failure to comply with any lawful order or any instructions
of a superior officer.
2. That, Management has already given due consideration to
respondent's [Credo] scandalous actuations for several times in the
past. Records also show that she was reprimanded for some
offense and did not question it. Management at this juncture, has
already met its maximum tolerance point so it has decided to put an
end to respondent's [Credo] being an undesirable employee. 6
The committee recommended Credo's termination, with forfeiture of benefits. 7
On 1 December 1983, Credo was called age to the office of Perez to be informed that
she was being charged with certain offenses. Notably, these offenses were those
which NASECO's Committee on Personnel Affairs already resolved, on 22 November
1983 to have been committed by Credo.
In Perez's office, and in the presence of NASECO's Committee on Personnel Affairs,
Credo was made to explain her side in connection with the charges filed against her;
however, due to her failure to do so, 8 she was handed a Notice of Termination, dated
24 November 1983, and made effective 1 December 1983. 9 Hence, on 6 December
1983, Credo filed a supplemental complaint for illegal dismissal in Case No. 11-4944-
83, alleging absence of just or authorized cause for her dismissal and lack of
opportunity to be heard. 10
After both parties had submitted their respective position papers, affidavits and other
documentary evidence in support of their claims and defenses, on 9 May 1984, the
labor arbiter rendered a decision: 1) dismissing Credo's complaint, and 2) directing
NASECO to pay Credo separation pay equivalent to one half month's pay for every
year of service.11
Both parties appealed to respondent National Labor Relations Commission (NLRC)
which, on 28 November 1984, rendered a decision: 1) directing NASECO to reinstate
Credo to her former position, or substantially equivalent position, with six (6) months'
backwages and without loss of seniority rights and other privileges appertaining
thereto, and 2) dismissing Credo's claim for attorney's fees, moral and exemplary
damages. As a consequence, both parties filed their respective motions for
reconsideration, 12 which the NLRC denied in a resolution of 16 January 1985. 13
Hence, the present recourse by both parties. In G.R. No. 68970, petitioners challenge
as grave abuse of discretion the dispositive portion of the 28 November 1984 decision
which ordered Credo's reinstatement with backwages. 14Petitioners contend that in
arriving at said questioned order, the NLRC acted with grave abuse of discretion in
finding that: 1) petitioners violated the requirements mandated by law on termination,
2) petitioners failed in the burden of proving that the termination of Credo was for a
valid or authorized cause, 3) the alleged infractions committed by Credo were not
proven or, even if proved, could be considered to have been condoned by petitioners,
and 4) the termination of Credo was not for a valid or authorized cause. 15
On the other hand, in G.R. No. 70295, petitioner Credo challenges as grave abuse of
discretion the dispositive portion of the 28 November 1984 decision which dismissed
her claim for attorney's fees, moral and exemplary damages and limited her right to
backwages to only six (6) months. 16
As guidelines for employers in the exercise of their power to dismiss employees for
just causes, the law provides that:
Section 2. Notice of dismissal. — Any employer who seeks to
dismiss a worker shall furnish him a written notice stating the
particular acts or omission constituting the grounds for his
dismissal.
xxx xxx xxx
Section 5. Answer and Hearing. — The worker may answer the
allegations stated against him in the notice of dismissal within a
reasonable period from receipt of such notice. The employer shall
afford the worker ample opportunity to be heard and to defend
himself with the assistance of his representative, if he so desires.
Section 6. Decision to dismiss. — The employer shall immediately
notify a worker in writing of a decision to dismiss him stating clearly
the reasons therefor. 17
These guidelines mandate that the employer furnish an employee sought to be
dismissed two (2) written notices of dismissal before a termination of employment can
be legally effected. These are the notice which apprises the employee of the
particular acts or omissions for which his dismissal is sought and the subsequent
notice which informs the employee of the employer's decision to dismiss him.
Likewise, a reading of the guidelines in consonance with the express provisions of
law on protection to labor 18(which encompasses the right to security of tenure) and
the broader dictates of procedural due process necessarily mandate that notice of the
employer's decision to dismiss an employee, with reasons therefor, can only be
issued after the employer has afforded the employee concerned ample opportunity to
be heard and to defend himself.
In the case at bar, NASECO did not comply with these guidelines in effecting Credo's
dismissal. Although she was apprised and "given the chance to explain her side" of
the charges filed against her, this chance was given so perfunctorily, thus rendering
illusory Credo's right to security of tenure. That Credo was not given ample
opportunity to be heard and to defend herself is evident from the fact that the
compliance with the injunction to apprise her of the charges filed against her and to
afford her a chance to prepare for her defense was dispensed in only a day. This is
not effective compliance with the legal requirements aforementioned.
The fact also that the Notice of Termination of Credo's employment (or the decision to
dismiss her) was dated 24 November 1983 and made effective 1 December 1983
shows that NASECO was already bent on terminating her services when she was
informed on 1 December 1983 of the charges against her, and that any hearing which
NASECO thought of affording her after 24 November 1983 would merely be pro
forma or an exercise in futility.
Besides, Credo's mere non-compliance with Lorens memorandum regarding the entry
procedures in the company's Statement of Billings Adjustment did not warrant the
severe penalty of dismissal of the NLRC correctly held that:
... on the charge of gross discourtesy, the CPA found in its Report,
dated 22 November 1983 that, "In the process of her
testimony/explanations she again exhibited a conduct unbecoming
in front of NASECO Officers and argued to Mr. S. S. Lloren in a
sarcastic and discourteous manner, notwithstanding, the fact that
she was inside the office of the Acctg. General Manager." Let it be
noted, however, that the Report did not even describe how the so
called "conduct unbecoming" or "discourteous manner" was done
by complainant. Anent the "sarcastic" argument of complainant, the
purported transcript 19 of the meeting held on 7 November 1983
does not indicate any sarcasm on the part of complainant. At the
most, complainant may have sounded insistent or emphatic about
her work being more complete than the work of Ms. de Castro, yet,
the complaining officer signed the work of Ms. de Castro and did
not sign hers.
As to the charge of insubordination, it may be conceded, albeit
unclear, that complainant failed to place same
corrections/additional remarks in the Statement of Billings
Adjustments as instructed. However, under the circumstances
obtaining, where complainant strongly felt that she was being
discriminated against by her superior in relation to other
employees, we are of the considered view and so hold, that a
 reprimand would have sufficed for the infraction, but certainly not
termination from services. 20
As this Court has ruled:
... where a penalty less punitive would suffice, whatever missteps
may be committed by labor ought not to be visited with a
consequence so severe. It is not only because of the law's concern
for the working man. There is, in addition, his family to consider.
Unemployment brings untold hardships and sorrows on those
dependent on the wage-earner. 21
Of course, in justifying Credo's termination of employment, NASECO claims as
additional lawful causes for dismissal Credo's previous and repeated acts of
insubordination, discourtesy and sarcasm towards her superior officers, alleged to
have been committed from 1980 to July 1983. 22
If such acts of misconduct were indeed committed by Credo, they are deemed to
have been condoned by NASECO. For instance, sometime in 1980, when Credo
allegedly "reacted in a scandalous manner and raised her voice" in a discussion with
NASECO's Acting head of the Personnel Administration 23 no disciplinary measure
was taken or meted against her. Nor was she even reprimanded when she allegedly
talked 'in a shouting or yelling manner" with the Acting Manager of NASECO's
Building Maintenance and Services Department in 1980 24 or when she allegedly
"shouted" at NASECO's Corporate Auditor "in front of his subordinates displaying
arrogance and unruly behavior" in 1980, or when she allegedly shouted at NASECO's
Internal Control Consultant in 1981. 25 But then, in sharp contrast to NASECO's
penchant for ignoring the aforesaid acts of misconduct, when Credo committed
frequent tardiness in August and September 1983, she was reprimanded. 26
Even if the allegations of improper conduct (discourtesy to superiors) were
satisfactorily proven, NASECO's condonation thereof is gleaned from the fact that on
4 October 1983, Credo was given a salary adjustment for having performed in the job
"at least [satisfactorily]" 27 and she was then rated "Very Satisfactory" 28as regards job
performance, particularly in terms of quality of work, quantity of work, dependability,
cooperation, resourcefulness and attendance.
Considering that the acts or omissions for which Credo's employment was sought to
be legally terminated were insufficiently proved, as to justify dismissal, reinstatement
is proper. For "absent the reason which gave rise to [the employee's] separation from
employment, there is no intention on the part of the employer to dismiss the employee
concerned." 29 And, as a result of having been wrongfully dismissed, Credo is entitled
to three (3) years of backwages without deduction and qualification. 30
However, while Credo's dismissal was effected without procedural fairness, an award
of exemplary damages in her favor can only be justified if her dismissal was effected
in a wanton, fraudulent, oppressive or malevolent manner. 31A judicious examination
of the record manifests no such conduct on the part of management. However, in
view of the attendant circumstances in the case, i.e., lack of due process in effecting
her dismissal, it is reasonable to award her moral damages. And, for having been
compelled to litigate because of the unlawful actuations of NASECO, a reasonable
award for attorney's fees in her favor is in order.
In NASECO's comment 32 in G.R. No. 70295, it is belatedly argued that the NLRC has
no jurisdiction to order Credo's reinstatement. NASECO claims that, as a government
corporation (by virtue of its being a subsidiary of the National Investment and
Development Corporation (NIDC), a subsidiary wholly owned by the Philippine
National Bank (PNB), which in turn is a government owned corporation), the terms
and conditions of employment of its employees are governed by the Civil Service
Law, rules and regulations. In support of this argument, NASECO cites National
Housing Corporation vs. JUCO, 33 where this Court held that "There should no longer
be any question at this time that employees of government-owned or controlled
corporations are governed by the civil service law and civil service rifles and
regulations."
It would appear that, in the interest of justice, the holding in said case should not be
given retroactive effect, that is, to cases that arose before its promulgation on 17
January 1985. To do otherwise would be oppressive to Credo and other employees
similarly situated, because under the same 1973 Constitution ,but prior to the ruling
in National Housing Corporation vs. Juco, this Court had recognized the applicability
of the Labor Code to, and the authority of the NLRC to exercise jurisdiction over,
disputes involving terms and conditions of employment in government owned or
controlled corporations, among them, the National Service Corporation
(NASECO).<äre||anº•1àw>  34
Furthermore, in the matter of coverage by the civil service of government-owned or
controlled corporations, the 1987 Constitution starkly varies from the 1973
Constitution, upon which National Housing Corporation vs. Juco is based. Under the
1973 Constitution, it was provided that:
The civil service embraces every branch, agency, subdivision, and
instrumentality of the Government, including every government-
owned or controlled corporation. ... 35
On the other hand, the 1987 Constitution provides that:
The civil service embraces all branches, subdivisions,
instrumentalities, and agencies of the Government, including
government-owned or controlled corporations with original
charter. 36 (Emphasis supplied)
Thus, the situations sought to be avoided by the 1973 Constitution and expressed by
the Court in the National Housing . Corporation case in the following manner —
The infirmity of the respondents' position lies in its permitting a
circumvention or emasculation of Section 1, Article XII-B of the
constitution. It would be possible for a regular ministry of
government to create a host of subsidiary corporations under the
 Corporation Code funded by a willing legislature. A government-
owned corporation could create several subsidiary corporations.
These subsidiary corporations would enjoy the best of two worlds.
Their officials and employees would be privileged individuals, free
from the strict accountability required by the Civil Service Decree
and the regulations of the Commission on Audit. Their incomes
would not be subject to the competitive restrains of the open market
nor to the terms and conditions of civil service employment.
Conceivably, all government-owned or controlled corporations
could be created, no longer by special charters, but through
incorporations under the general law. The Constitutional
amendment including such corporations in the embrace of the civil
service would cease to have application. Certainly, such a situation
cannot be allowed to exist. 37
appear relegated to relative insignificance by the 1987 Constitutional provision that
the Civil Service embraces government-owned or controlled corporations with original
charter; and, therefore, by clear implication, the Civil Service does not include
government-owned or controlled corporations which are organized as subsidiaries of
government-owned or controlled corporations under the general corporation law.
The proceedings in the 1986 Constitutional Commission also shed light on the
Constitutional intent and meaning in the use of the phrase "with original charter."
Thus
THE PRESIDING OFFICER (Mr. Trenas)
Commissioner Romulo is recognized.
MR. ROMULO. I beg the indulgence of the
Committee. I was reading the wrong provision.
I refer to Section 1, subparagraph I which reads:
The Civil Service embraces all branches, subdivisions,
instrumentalities, and agencies of the government, including
government-owned or controlled corporations.
My query: Is Philippine Airlines covered by this provision? MR.
FOZ. Will the Commissioner please state his previous question?
MR. ROMULO. The phrase on line 4 of Section
1, subparagraph 1, under the Civil Service
Commission, says: "including government-owned
or controlled corporations.' Does that include a
corporation, like the Philippine Airlines which is
government-owned or controlled?
MR. FOZ. I would like to throw a question to the
Commissioner. Is the Philippine Airlines
controlled by the government in the sense that
the majority of stocks are owned by the
government?
MR. ROMULO. It is owned by the GSIS. So, this
is what we might call a tertiary corporation. The
GSIS is owned by the government. Would this be
covered because the provision says "including
government-owned or controlled corporations."
MR. FOZ. The Philippine Airlines was established
as a private corporation. Later on, the
government, through the GSIS, acquired the
controlling stocks. Is that not the correct
situation?
MR. ROMULO. That is true as Commissioner
Ople is about to explain. There was apparently a
Supreme Court decision that destroyed that
distinction between a government-owned
corporation created under the Corporation Law
and a government-owned corporation created by
its own charter.
MR. FOZ. Yes, we recall the Supreme Court
decision in the case of NHA vs. Juco to the effect
that all government corporations irrespective of
the manner of creation, whether by special
charter or by the private Corporation Law, are
deemed to be covered by the civil service
because of the wide-embracing definition made
in this section of the existing 1973 Constitution.
But we recall the response to the question of
Commissioner Ople that our intendment in this
provision is just to give a general description of
the civil service. We are not here to make any
declaration as to whether employees of
government-owned or controlled corporations are
barred from the operation of laws, such as the
Labor Code of the Philippines.
MR. ROMULO. Yes.
MR. OPLE. May I be recognized, Mr. Presiding
Officer, since my name has been mentioned by
both sides.
MR. ROMULO. I yield part of my time.
 THE PRESIDING OFFICER (Mr.Trenas).
Commissioner Ople is recognized.
MR. OPLE. In connection with the coverage of
the Civil Service Law in Section 1 (1), may I
volunteer some information that may be helpful
both to the interpellator and to the Committee.
Following the proclamation of martial law on
September 21, 1972, this issue of the coverage
of the Labor Code of the Philippines and of the
Civil Service Law almost immediately arose. I
am, in particular, referring to the period following
the coming into force and effect of the
Constitution of 1973, where the Article on the
Civil Service was supposed to take immediate
force and effect. In the case of LUZTEVECO,
there was a strike at the time. This was a
government-controlled and government-owned
corporation. I think it was owned by the PNOC
with just the minuscule private shares left. So, the
Secretary of Justice at that time, Secretary Abad
Santos, and myself sat down, and the result of
that meeting was an opinion of the Secretary of
Justice which 9 became binding immediately on
the government that government corporations
with original charters, such as the GSIS, were
covered by the Civil Service Law and
corporations spun off from the GSIS, which we
called second generation corporations
functioning as private subsidiaries, were covered
by the Labor Code. Samples of such second
generation corporations were the Philippine
Airlines, the Manila
Hotel and the Hyatt. And that demarcation worked very well. In fact,
all of these companies I have mentioned as examples, except for
the Manila Hotel, had collective bargaining agreements. In the
Philippine Airlines, there were, in fact, three collective bargaining
agreements; one, for the ground people or the PALIA one, for the
flight attendants or the PASAC and one for the pilots of the ALPAC
How then could a corporation like that be covered by the Civil
Service law? But, as the Chairman of the Committee pointed out,
the Supreme Court decision in the case of NHA vs. Juco unrobed
the whole thing. Accordingly, the Philippine Airlines, the Manila
Hotel and the Hyatt are now considered under that decision
covered by the Civil Service Law. I also recall that in the emergency
meeting of the Cabinet convened for this purpose at the initiative of
the Chairman of the Reorganization Commission, Armand Fabella,
they agreed to allow the CBA's to lapse before applying the full
force and effect of the Supreme Court decision. So, we were in the
awkward situation when the new government took over. I can agree
with Commissioner Romulo when he said that this is a problem
which I am not exactly sure we should address in the deliberations
on the Civil Service Law or whether we should be content with what
the Chairman said that Section 1 (1) of the Article on the Civil
Service is just a general description of the coverage of the Civil
Service and no more.
Thank you, Mr. Presiding Officer.
MR. ROMULO. Mr. Presiding Officer, for the
moment, I would be satisfied if the Committee
puts on records that it is not their intent by this
provision and the phrase "including government-
owned or controlled corporations" to cover such
companies as the Philippine Airlines.
MR. FOZ. Personally, that is my view. As a
matter of fact, when this draft was made, my
proposal was really to eliminate, to drop from the
provision, the phrase "including government-
owned or controlled corporations."
MR. ROMULO. Would the Committee indicate
that is the intent of this provision?
MR. MONSOD. Mr. Presiding Officer, I do not
think the Committee can make such a statement
in the face of an absolute exclusion of
government-owned or controlled corporations.
However, this does not preclude the Civil Service
Law to prescribe different rules and procedures,
including emoluments for employees of
proprietary corporations, taking into consideration
the nature of their operations. So, it is a general
coverage but it does not preclude a distinction of
the rules between the two types of enterprises.
MR. FOZ. In other words, it is something that
should be left to the legislature to decide. As I
said before, this is just a general description and
we are not making any declaration whatsoever.
MR. MONSOD. Perhaps if Commissioner
Romulo would like a definitive understanding of
the coverage and the Gentleman wants to
exclude government-owned or controlled
corporations like Philippine Airlines, then the
recourse is to offer an amendment as to the
coverage, if the Commissioner does not accept
 the explanation that there could be a distinction
of the rules, including salaries and emoluments.
MR. ROMULO. So as not to delay the
proceedings, I will reserve my right to submit
such an amendment.
xxx xxx xxx
THE PRESIDING OFFICE (Mr. Trenas)
Commissioner Romulo is recognized.
MR. ROMULO. On page 2, line 5, I suggest the
following amendment after "corporations": Add a
comma (,) and the phrase EXCEPT THOSE
EXERCISING PROPRIETARY FUNCTIONS.
THE PRESIDING OFFICER (Mr. Trenas). What
does the Committee say?
SUSPENSION OF SESSION
MR. MONSOD. May we have a suspension of
the session?
THE PRESIDING OFFICER (Mr. Trenas). The
session is suspended.
It was 7:16 p.m.
RESUMPTION OF SESSION
At 7:21 p.m., the session was resumed.
THE PRESIDING OFFICER (Mr. Trenas). The session is resumed.
Commissioner Romulo is recognized.
MR. ROMULO. Mr. Presiding Officer, I am amending my original
proposed amendment to now read as follows: "including
government-owned or controlled corporations WITH ORIGINAL
CHARTERS." The purpose of this amendment is to indicate that
government corporations such as the GSIS and SSS, which have
original charters, fall within the ambit of the civil service. However,
corporations which are subsidiaries of these chartered agencies
such as the Philippine Airlines, Manila Hotel and Hyatt are excluded
from the coverage of the civil service.
THE PRESIDING OFFICER (Mr. Trenas). What
does the Committee say?
MR. FOZ. Just one question, Mr. Presiding
Officer. By the term "original charters," what
exactly do we mean?
MR. ROMULO. We mean that they were created
by law, by an act of Congress, or by special law.
MR. FOZ. And not under the general corporation
law.
MR. ROMULO. That is correct. Mr. Presiding
Officer.
MR. FOZ. With that understanding and
clarification, the Committee accepts the
amendment.
MR. NATIVIDAD. Mr. Presiding officer, so those
created by the general corporation law are out.
MR. ROMULO. That is correct: 38
On the premise that it is the 1987 Constitution that governs the instant case because
it is the Constitution in place at the time of decision thereof, the NLRC has jurisdiction
to accord relief to the parties. As an admitted subsidiary of the NIDC, in turn a
subsidiary of the PNB, the NASECO is a government-owned or controlled corporation
without original charter.
Dr. Jorge Bocobo, in his Cult of Legalism, cited by Mr. Justice Perfecto in his
concurring opinion in Gomez vs. Government Insurance Board (L-602, March 31,
1947, 44 O.G. No. 8, pp. 2687, 2694; also published in 78 Phil. 221) on the effectivity
of the principle of social justice embodied in the 1935 Constitution, said:
Certainly, this principle of social justice in our Constitution as
generously conceived and so tersely phrased, was not included in
the fundamental law as a mere popular gesture. It was meant to
(be) a vital, articulate, compelling principle of public policy. It should
be observed in the interpretation not only of future legislation, but
also of all laws already existing on November 15, 1935. It was
intended to change the spirit of our laws, present and future. Thus,
all the laws which on the great historic event when the
Commonwealth of the Philippines was born, were susceptible of
two interpretations strict or liberal, against or in favor of social
justice, now have to be construed broadly in order to promote and
achieve social justice. This may seem novel to our friends, the
 advocates of legalism but it is the only way to give life and
significance to the above-quoted principle of the Constitution. If it
was not designed to apply to these existing laws, then it would be
necessary to wait for generations until all our codes and all our
statutes shall have been completely charred by removing every
provision inimical to social justice, before the policy of social justice
can become really effective. That would be an absurd conclusion. It
is more reasonable to hold that this constitutional principle applies
to all legislation in force on November 15, 1935, and all laws
thereafter passed.
WHEREFORE, in view of the foregoing, the challenged decision of the NLRC is
AFFIRMED with modifications. Petitioners in G.R. No. 69870, who are the private
respondents in G.R. No. 70295, are ordered to: 1) reinstate Eugenia C. Credo to her
former position at the time of her termination, or if such reinstatement is not possible,
to place her in a substantially equivalent position, with three (3) years backwages,
from 1 December 1983, without qualification or deduction, and without loss of
seniority rights and other privileges appertaining thereto, and 2) pay Eugenia C.
Credo P5,000.00 for moral damages and P5,000.00 for attorney's fees.
If reinstatement in any event is no longer possible because of supervening events,
petitioners in G.R. No. 69870, who are the private respondents in G.R. No. 70295 are
ordered to pay Eugenia C. Credo, in addition to her backwages and damages as
above described, separation pay equivalent to one-half month's salary for every year
of service, to be computed on her monthly salary at the time of her termination on 1
December 1983.
SO ORDERED.
Fernan, C.J., Melencio-Herrera, Paras, Feliciano, Gancayco, Bidin, Sarmiento,
Cortes, Griño-Aquino, Medialdea and Regalado, JJ., concur.
Narvasa, J., is on leave.
Gutierrez, Jr., J., in the result.
 
Separate Opinions
CRUZ, J.,  concurring:
While concurring with Mr. Justice Padilla's well-researched ponencia, I have to
express once again my disappointment over still another avoidable ambiguity in the
1987 Constitution.
It is clear now from the debates of the Constitutional Commission that the
government-owned or controlled corporations included in the Civil Service are those
with legislative charters. Excluded are its subsidiaries organized under the
Corporation Code.
If that was the intention, the logical thing, I should imagine, would have been to simply
say so. This would have avoided the suggestion that there are corporations with
duplicate charters as distinguished from those with original charters.
All charters are original regardless of source unless they are amended. That is the
acceptable distinction. Under the provision, however, the charter is still and always
original even if amended as long it was granted by the legislature.
It would have been clearer, I think, to say "including government owned or controlled
corporations with legislative charters." Why this thought did not occur to the
Constitutional Commission places one again in needless puzzlement.
 
 
Separate Opinions
CRUZ, J.,  concurring:
While concurring with Mr. Justice Padilla's well-researched ponencia, I have to
express once again my disappointment over still another avoidable ambiguity in the
1987 Constitution.
It is clear now from the debates of the Constitutional Commission that the
government-owned or controlled corporations included in the Civil Service are those
with legislative charters. Excluded are its subsidiaries organized under the
Corporation Code.
If that was the intention, the logical thing, I should imagine, would have been to simply
say so. This would have avoided the suggestion that there are corporations with
duplicate charters as distinguished from those with original charters.
All charters are original regardless of source unless they are amended. That is the
acceptable distinction. Under the provision, however, the charter is still and always
original even if amended as long it was granted by the legislature.
It would have been clearer, I think, to say "including government owned or controlled
corporations with legislative charters." Why this thought did not occur to the
Constitutional Commission places one again in needless puzzlement.
G.R. No. 80609 August 23, 1988
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, petitioner,  respondent) mal feasance, for which she is to suffer the penalty of
vs.
THE NATIONAL LABOR RELATIONS COMMISSION and MARILYN
ABUCAY, respondents.
Nicanor G. Nuevas for petitioner.
CRUZ, J.:
The only issue presented in the case at bar is the legality of the award of financial
assistance to an employee who had been dismissed for cause as found by the public
respondent.
Marilyn Abucay, a traffic operator of the Philippine Long Distance Telephone
Company, was accused by two complainants of having demanded and received from
them the total amount of P3,800.00 in consideration of her promise to facilitate
approval of their applications for telephone installation. 1 Investigated and heard, she
was found guilty as charged and accordingly separated from the service.2 She went to
the Ministry of Labor and Employment claiming she had been illegally removed. After
consideration of the evidence and arguments of the parties, the company was
sustained and the complaint was dismissed for lack of merit. Nevertheless, the
dispositive portion of labor arbiter's decision declared:
WHEREFORE, the instant complaint is dismissed for lack of merit.
Considering that Dr. Helen Bangayan and Mrs. Consolacion
Martinez are not totally blameless in the light of the fact that the
deal happened outhide the premises of respondent company and
that their act of giving P3,800.00 without any receipt is tantamount
to corruption of public officers, complainant must be given one
month pay for every year of service as financial assistance. 3
Both the petitioner and the private respondent appealed to the National Labor
Relations Board, which upheld the said decision in toto and dismissed the
appeals. 4 The private respondent took no further action, thereby impliedly accepting
the validity of her dismissal. The petitioner, however, is now before us to question the
affirmance of the above- quoted award as having been made with grave abuse of
discretion.
In its challenged resolution of September 22, 1987, the NLRC said:
... Anent the award of separation pay as financial assistance in
complainant's favor, We find the same to be equitable, taking into
consideration her long years of service to the company whereby
she had undoubtedly contributed to the success of respondent.
While we do not in any way approve of complainants (private
dismissal, it is for reasons of equity and compassion that we
resolve to uphold the award of financial assistance in her favor. 5
The position of the petitioner is simply stated: It is conceded that an employee illegally
dismissed is entitled to reinstatement and backwages as required by the labor laws.
However, an employee dismissed for cause is entitled to neither reinstatement nor
backwages and is not allowed any relief at all because his dismissal is in accordance
with law. In the case of the private respondent, she has been awarded financial
assistance equivalent to ten months pay corresponding to her 10 year service in the
company despite her removal for cause. She is, therefore, in effect rewarded rather
than punished for her dishonesty, and without any legal authorization or justification.
The award is made on the ground of equity and compassion, which cannot be a
substitute for law. Moreover, such award puts a premium on dishonesty and
encourages instead of deterring corruption.
For its part, the public respondent claims that the employee is sufficiently punished
with her dismissal. The grant of financial assistance is not intended as a reward for
her offense but merely to help her for the loss of her employment after working
faithfully with the company for ten years. In support of this position, the Solicitor
General cites the cases of Firestone Tire and Rubber Company of the Philippines v.
Lariosa 6 and Soco v. Mercantile Corporation of Davao, 7 where the employees were
dismissed for cause but were nevertheless allowed separation pay on grounds of
social and compassionate justice. As the Court put it in the Firestone case:
In view of the foregoing, We rule that Firestone had valid grounds
to dispense with the services of Lariosa and that the NLRC acted
with grave abuse of discretion in ordering his reinstatement.
However, considering that Lariosa had worked with the company
for eleven years with no known previous bad record, the ends of
social and compassionate justice would be served if he is paid full
separation pay but not reinstatement without backwages by the
NLRC.
In the said case, the employee was validly dismissed for theft but the NLRC
nevertheless awarded him full separation pay for his 11 years of service with the
company. In Soco, the employee was also legally separated for unauthorized use of a
company vehicle and refusal to attend the grievance proceedings but he was just the
same granted one-half month separation pay for every year of his 18-year service.
Similar action was taken in Filipro, Inc. v. NLRC, 8 where the employee was validly
dismissed for preferring certain dealers in violation of company policy but was allowed
separation pay for his 2 years of service. In Metro Drug Corporation v. NLRC, 9 the
employee was validly removed for loss of confidence because of her failure to
account for certain funds but she was awarded separation pay equivalent to one-half
month's salary for every year of her service of 15 years. In Engineering Equipment,
Inc. v. NLRC, 10 the dismissal of the employee was justified because he had
instigated labor unrest among the workers and had serious differences with them,
among other grounds, but he was still granted three months separation pay
corresponding to his 3-year service. In New Frontier Mines, Inc. v. NLRC, 11 the
employee's 3- year service was held validly terminated for lack of confidence and
abandonment of work but he was nonetheless granted three months separation pay.
And in San Miguel Corporation v. Deputy Minister of Labor and Employment, et
al ., 12 full separation pay for 6, 10, and 16 years service, respectively, was also
allowed three employees who had been dismissed after they were found guilty of
misappropriating company funds.
The rule embodied in the Labor Code is that a person dismissed for cause as defined
therein is not entitled to separation pay. 13 The cases above cited constitute the
exception, based upon considerations of equity. Equity has been defined as justice
outside law, 14 being ethical rather than jural and belonging to the sphere of morals
than of law. 15 It is grounded on the precepts of conscience and not on any sanction of
positive law. 16 Hence, it cannot prevail against the expressed provision of the labor
laws allowing dismissal of employees for cause and without any provision for
separation pay.
Strictly speaking, however, it is not correct to say that there is no express justification
for the grant of separation pay to lawfully dismissed employees other than the
abstract consideration of equity. The reason is that our Constitution is replete with
positive commands for the promotion of social justice, and particularly the protection
of the rights of the workers. The enhancement of their welfare is one of the primary
concerns of the present charter. In fact, instead of confining itself to the general
commitment to the cause of labor in Article II on the Declaration of Principles of State
Policies, the new Constitution contains a separate article devoted to the promotion of
social justice and human rights with a separate sub- topic for labor. Article XIII
expressly recognizes the vital role of labor, hand in hand with management, in the
advancement of the national economy and the welfare of the people in general. The
categorical mandates in the Constitution for the improvement of the lot of the workers
are more than sufficient basis to justify the award of separation pay in proper cases
even if the dismissal be for cause.
The Court notes, however, that where the exception has been applied, the decisions
have not been consistent as to the justification for the grant of separation pay and the
amount or rate of such award. Thus, the employees dismissed for theft in the
Firestone case and for animosities with fellow workers in the Engineering Equipment
case were both awarded separation pay notnvithstanding that the first cause was
certainly more serious than the second. No less curiously, the employee in the Soco
case was allowed only one-half month pay for every year of his 18 years of service,
but in Filipro the award was two months separation pay for 2 years service. In
Firestone, the emplovee was allowed full separation pay corresponding to his 11
years of service, but in Metro, the employee was granted only one-half month
separation pay for every year of her 15year service. It would seem then that length of
service is not necessarily a criterion for the grant of separation pay and neither
apparently is the reason for the dismissal.
The Court feels that distinctions are in order. We note that heretofore the separation
pay, when it was considered warranted, was required regardless of the nature or
degree of the ground proved, be it mere inefficiency or something graver like
immorality or dishonesty. The benediction of compassion was made to cover a
multitude of sins, as it were, and to justify the helping hand to the validly dismissed
employee whatever the reason for his dismissal. This policy should be re-examined. It
is time we rationalized the exception, to make it fair to both labor and management,
especially to labor.
There should be no question that where it comes to such valid but not iniquitous
causes as failure to comply with work standards, the grant of separation pay to the
dismissed employee may be both just and compassionate, particularly if he has
worked for some time with the company. For example, a subordinate who has
irreconcilable policy or personal differences with his employer may be validly
dismissed for demonstrated loss of confidence, which is an allowable ground. A
working mother who has to be frequently absent because she has also to take care of
her child may also be removed because of her poor attendance, this being another
authorized ground. It is not the employee's fault if he does not have the necessary
aptitude for his work but on the other hand the company cannot be required to
maintain him just the same at the expense of the efficiency of its operations. He too
may be validly replaced. Under these and similar circumstances, however, the award
to the employee of separation pay would be sustainable under the social justice policy
even if the separation is for cause.
But where the cause of the separation is more serious than mere inefficiency, the
generosity of the law must be more discerning. There is no doubt it is compassionate
to give separation pay to a salesman if he is dismissed for his inability to fill his quota
but surely he does not deserve such generosity if his offense is misappropriation of
the receipts of his sales. This is no longer mere incompetence but clear dishonesty. A
security guard found sleeping on the job is doubtless subject to dismissal but may be
allowed separation pay since his conduct, while inept, is not depraved. But if he was
in fact not really sleeping but sleeping with a prostitute during his tour of duty and in
the company premises, the situation is changed completely. This is not only
inefficiency but immorality and the grant of separation pay would be entirely
unjustified.
We hold that henceforth separation pay shall be allowed as a measure of social
justice only in those instances where the employee is validly dismissed for causes
other than serious misconduct or those reflecting on his moral character. Where the
reason for the valid dismissal is, for example, habitual intoxication or an offense
involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the
employer may not be required to give the dismissed employee separation pay, or
financial assistance, or whatever other name it is called, on the ground of social
justice.
A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding
rather than punishing the erring employee for his offense. And we do not agree that
the punishment is his dismissal only and that the separation pay has nothing to do
with the wrong he has committed. Of course it has. Indeed, if the employee who
steals from the company is granted separation pay even as he is validly dismissed, it
is not unlikely that he will commit a similar offense in his next employment because
he thinks he can expect a like leniency if he is again found out. This kind of misplaced
compassion is not going to do labor in general any good as it will encourage the
infiltration of its ranks by those who do not deserve the protection and concern of the
Constitution.
The policy of social justice is not intended to countenance wrongdoing simply
because it is committed by the underprivileged. At best it may mitigate the penalty but
it certainly will not condone the offense. Compassion for the poor is an imperative of
every humane society but only when the recipient is not a rascal claiming an
undeserved privilege. Social justice cannot be permitted to be refuge of scoundrels
any more than can equity be an impediment to the punishment of the guilty. Those
who invoke social justice may do so only if their hands are clean and their motives
blameless and not simply because they happen to be poor. This great policy of our
Constitution is not meant for the protection of those who have proved they are not
worthy of it, like the workers who have tainted the cause of labor with the blemishes
of their own character.
Applying the above considerations, we hold that the grant of separation pay in the
case at bar is unjustified. The private respondent has been dismissed for dishonesty,
as found by the labor arbiter and affirmed by the NLRC and as she herself has
impliedly admitted. The fact that she has worked with the PLDT for more than a
decade, if it is to be considered at all, should be taken against her as it reflects a
regrettable lack of loyalty that she should have strengthened instead of betraying
during all of her 10 years of service with the company. If regarded as a justification for
moderating the penalty of dismissal, it will actually become a prize for disloyalty,
perverting the meaning of social justice and undermining the efforts of labor to
cleanse its ranks of all undesirables.
The Court also rules that the separation pay, if found due under the circumstances of
each case, should be computed at the rate of one month salary for every year of
service, assuming the length of such service is deemed material. This is without
prejudice to the application of special agreements between the employer and the
employee stipulating a higher rate of computation and providing for more benefits to
the discharged employee. 17
WHEREFORE, the petition is GRANTED. The challenged resolution of September
22,1987, is AFFIRMED in toto except for the grant of separation pay in the form of
financial assistance, which is hereby DISALLOWED. The temporary restraining order
dated March 23, 1988, is LIFTED. It is so ordered.
Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano, Gancayco, Bidin,
Sarmiento, Cortes and Medialdea, JJ., concur.
 
Separate Opinions
 
FERNAN, C.J.,  dissenting:
The majority opinion itself declares that the reason for granting separation pay to
lawfully dismissed employees is that "our Constitution is replete with positive
commands for the promotion of social justice, and particularly the protection of the
rights of the workers." 1
It is my firm belief that providing a rigid mathematical formula for determining the
amounts of such separation pay will not be in keeping with these constitutional
directives. By computing the allowable financial assistance on the formula suggested,
we shall be closing our eyes to the spirit underlying these constitutional mandates
that "those who have less in life should have more in law." It cannot be denied that a
low salaried employee who is separated from work would suffer more hardship than a
well-compensated one. Yet, if we follow the formula suggested, we would in effect be
favoring the latter instead of the former, as it would be the low- salaried employee
who would encounter difficulty finding another job.
I am in accord with the opinion of Justice Sarmiento that we should not rationalize
compassion and that of Justice Padilla that the awards of financial assistance should
be left to the discretion of the National Labor Relations Commission as may be
warranted by the "environmental facts" of the case.
PADILIA, J.,  separate opinion
I concur in the decision penned by Mr. Justice Cruz when it disallows separation pay,
as financial assistance, to the private respondent, since the ground for termination of
employment is dishonesty in the performance of her duties.
I do not, however, subscribe to the view that "the separation pay, if found due under
the circumstances of each case, should be computed at the rate of one month salary
for every year of service, assuming the length of such service is deemed material."
(p.11, Decision). It is my considered view that, except for terminations based on
dishonesty and serious misconduct involving moral turpitude-where no separation pay
should be allowed--in other cases, the grant of separation pay, i.e. the amount
thereof, as financial assistance to the terminated employee, should be left to the
judgment of the administrative agency concemed which is the NLRC. It is in such
cases- where the termination of employment is for a valid cause without, however,
involving dishonesty or serious misconduct involving moral turpitude-that the
Constitutional policy of affording protection to labor should be allowed full play; and
this is achieved by leaving to the NLRC the primary jurisdiction and judgment to
determine the amount of separation pay that should be awarded to the terminated
employee in accordance with the "environmental facts" of each case.
It is further my view that the Court should not, as a rule, disturb or alter the amount of
separation pay awarded by the NLRC in such cases of valid termination of
employment but with the financial assistance, in the absence of a demonstrated grave
abuse of discretion on the part of the NLRC.
GRIÑO AQUINO, J.,  dissent:
We should not rationalize compassion. I vote to affirm the grant of financial
assistance.
 
Separate Opinions
FERNAN, C.J.,  dissenting:
The majority opinion itself declares that the reason for granting separation pay to
lawfully dismissed employees is that "our Constitution is replete with positive
commands for the promotion of social justice, and particularly the protection of the
rights of the workers." 1
It is my firm belief that providing a rigid mathematical formula for determining the
amounts of such separation pay will not be in keeping with these constitutional
directives. By computing the allowable financial assistance on the formula suggested,
we shall be closing our eyes to the spirit underlying these constitutional mandates
that "those who have less in life should have more in law." It cannot be denied that a
low salaried employee who is separated from work would suffer more hardship than a
well-compensated one. Yet, if we follow the formula suggested, we would in effect be
favoring the latter instead of the former, as it would be the low- salaried employee
who would encounter difficulty finding another job.
I am in accord with the opinion of Justice Sarmiento that we should not rationalize
compassion and that of Justice Padilla that the awards of financial assistance should
be left to the discretion of the National Labor Relations Commission as may be
warranted by the "environmental facts" of the case.
PADILIA, J.,  separate opinion
I concur in the decision penned by Mr. Justice Cruz when it disallows separation pay,
as financial assistance, to the private respondent, since the ground for termination of
employment is dishonesty in the performance of her duties.
I do not, however, subscribe to the view that "the separation pay, if found due under
the circumstances of each case, should be computed at the rate of one month salary
for every year of service, assuming the length of such service is deemed material."
(p.11, Decision). It is my considered view that, except for terminations based on
dishonesty and serious misconduct involving moral turpitude-where no separation pay
should be allowed--in other cases, the grant of separation pay, i.e. the amount
thereof, as financial assistance to the terminated employee, should be left to the
judgment of the administrative agency concemed which is the NLRC. It is in such
cases- where the termination of employment is for a valid cause without, however,
involving dishonesty or serious misconduct involving moral turpitude-that the
Constitutional policy of affording protection to labor should be allowed full play; and
this is achieved by leaving to the NLRC the primary jurisdiction and judgment to
determine the amount of separation pay that should be awarded to the terminated
employee in accordance with the "environmental facts" of each case.
It is further my view that the Court should not, as a rule, disturb or alter the amount of
separation pay awarded by the NLRC in such cases of valid termination of
employment but with the financial assistance, in the absence of a demonstrated grave
abuse of discretion on the part of the NLRC.
GRIÑO AQUINO, J.,  dissent:
We should not rationalize compassion. I vote to affirm the grant of financial
assistance.
G.R. Nos. L-34069-70 February 28, 1973
B.F. GOODRICH PHILIPPINES, INC., petitioner, 
vs.
B.F. GOODRICH (MARIKINA FACTORY) CONFIDENTIAL & SALARIED
EMPLOYEES UNION-NATU, B.F. GOODRICH (MAKATI OFFICE) CONFIDENTIAL
& SALARIED EMPLOYEES UNION-NATU, and COURT OF INDUSTRIAL
RELATIONS, respondents.
Manuel O. Chan for petitioner.
Domingo E. de Lara and Associates for respondents.
FERNANDO, J.:
The specific question raised impressed with an aspect of novelty, sustained with vigor
and plausibility, persuaded this Court that the petition was worth looning into. It is
whether the determination of an unfair labor practice case, brought against
respondent-unions, must precede the holding of a certification election. A negative
response came from respondent Court of Industrial Relations, through Judge
Ansberto Paredes. His order, affirmed by respondent Court en banc, is sought to be
nullified in this certiorari proceeding. The answer filed on behalf of respondent-unions
would sustain its validity. What is more, it called attention to what is characterized as
a consistent pattern of anti-union practices on the part of petitioner intended to defeat
the rights of labor to collective bargaining. A careful study of the specific legal issue
posed, namely, whether the existence of an unfair labor practice case against a labor
organization, consisting of an illegal strike, would suffice to call for the postponement
of a proposed certification election, incidentally started at the instance of petitioner
itself, yields the same conclusion reached by respondent Court. The objectives of the
Industrial Peace Act1 would be sooner attained if, at the earliest opportunity, the
employees, all of them of an appropriate collective bargaining unit, be polled to
determine which labor organization should be its exclusive representative. Moreover,
the discretion on the matter vested in respondent Court is rarely interfered with. We
dismiss the petition.
It was shown in the petition that on February 27, 1971, one Rodolfo Pajaro, as
President of B.F. Goodrich (Makati Office) Confidential and Salaried Employees
Union-NATU, sent a letter to the petitioner, seeking recognition as the bargaining
agent of such employees so that thereafter there could be negotiations for a collective
contract.2Similarly, on the same date, one Pablo C. Fulgar, as President of B.F.
Goodrich (Marikina Factory) Confidential and Salaried Employees Union-NATU and
one Marcelino Lontok, Jr., representing himself as Vice-President, NATU, sent a letter
to the petitioner, of a similar tenor.3 Petitioner, as employer, countered by filing on
March 6, 1971, two petitions for certification election with respondent Court of
Industrial Relations.4 Then came on March 10, 1971, two strike notices from
respondents, filed with the Bureau of Labor Relations, demanding union
recognition.5 It was not until April 13, 1971, that respondent Court commenced the
hearings of the petitions for certification election.6 It was then alleged that on two days
in April 19 and 20, 1971, there was a strike staged by those affiliated with private
respondents, to force recognition of their unions.7 Subsequently, after preliminary
investigation first had, on a finding of a  prima facie case of illegal strike and unfair
labor practice committed by the members of the two unions, Case No. 5612-ULP of
the Court of Industrial Relations for unfair labor practice was filed against
them.8 There was on May 27, 1971, an answer with affirmative defenses filed in such
case.9 Earlier, on May 20, 1971, the petitioner filed identical motions in MC Cases
Nos. 2995 and 2996 to hold in abeyance the hearings of the petitions for certification
election. 10 Then, on August 5, 1971, respondent Court, through Judge Ansberto
Paredes, denied the petitioner's motions to hold in abeyance the hearing of MC
Cases Nos. 2995 and 2996. 11
The challenged order of Judge Paredes stated the nature of the issue before him as
well as the respective positions of the parties: "Submitted for resolution without further
arguments are petitioner's motions filed in each of the above-entitled cases, praying
that the proceedings therein be held in abeyance pending final judgment in Case No.
5612-ULP and the oppositions thereto filed by the respondent unions. It is petitioner's
stand that if Case No. 5612-ULP will prosper and the strike staged by respondent
unions during the pendency of the instant cases will be declared illegal and the
individual members cited therein as respondents found guilty of the unfair labor
practice acts complained of, the latter will consequently lose their status as
employees and will be disqualified to vote in a certification election that may be
ordered by the Court. On the other hand, respondents-oppositors maintain that the
pendency of said unfair labor practice case is not a bar to the hearing of the instant
cases, following the ruling of this Court in Case No. 2536-MC entitled "In re: Petition
for Certification Election at the Central Textile Mills, Inc., Vicente Flores, et al."
" 12 This was his ruling: "The motions can not be granted. Individual respondents in
the ULP case are still employees and possessed of the right to self-organization.
Included therein is their choice of a bargaining representative (Secs. 2 [d], 3 & 12, R.
A. 875). To hold the certification proceedings in abeyance until final judgment of the
ULP case will be a denial of the aforesaid statutory right, the employees being left
without a collective bargaining representative." 13 The dispositive portion was to deny
the motions for lack of merit. There was a motion for reconsideration, but such motion
did not prosper. It was denied on August 31, 1971. 14
These certiorari proceedings were then filed with this Court, with petitioners
maintaining through copious references to National Labor Relations Board cases that,
with the declaration of what it considered to be an illegal strike resulting in an unfair
labor practice case, the status as employees of members of the two respondent
Labor Unions would be placed in doubt and thus should be determined before the
certification election. This Court, in a resolution of November 10, 1971, required
private respondents to file an answer. There is, on the whole, an admission of the
allegations of the petition. In addition, the following special and affirmative defenses
were interposed: "That up to the present, the strike of the respondent unions is still
on, thus the striking employees cannot be considered to have abandoned, quit, or
otherwise terminated their employment relationship with the petitioner company, on
the basis of the doctrine that a strike does not serve to sever the employer-employee
relationship; ... That the respondent unions were virtually coerced by the petitioner
company's blatant resort to all kinds of union-busting tactics, topped by the technical
refusal to recognize and bargain with the respondent unions through the neat trick of
filing a baseless petition for certification election and questioning therein the right of
over 90% of the unions' membership to join the unions; ... That the members of the
respondent unions are still employees of the petitioner company and as such are
qualified to vote in any certification election that the Court of Industrial Relations may
direct to be held on the petitioner company's own petition, pursuant to Section 2(d) of
Republic Act 875, ... ." 15 They sought the dismissal of these certiorari proceedings for
lack of merit. Subsequently, memoranda were filed by the parties, and the case was
deemed submitted on February 14, 1972.
As made clear at the outset, petitioner has not made out a case for the reversal of the
challenged order of Judge Ansberto Paredes.
1. There is novelty in the specific question raised, as to whether or not a certification
election may be stayed at the instance of the employer, pending the determination of
an unfair labor practice case filed by it against certain employees affiliated with
respondent-unions. That is a matter of which this Court has not had an opportunity to
speak on previously. What is settled law, dating from the case of Standard Cigarette
Workers' Union v. Court of Industrial Relations, 16 decided in 1957, is that if it were a
labor organization objecting to the participation in a certification election of a
company-dominated union, as a result of which a complaint for an unfair labor
practice case against the employer was filed, the status of the latter union must be
first cleared in such a proceeding before such voting could take place. In the
language of Justice J.B.L. Reyes as ponente: "As correctly pointed out by Judge
Lanting in his dissenting opinion on the denial of petitioner's motion for
reconsideration, a complaint for unfair labor practice may be considered a prejudicial
question in a proceeding for certification election when it is charged therein that one
or more labor unions participating in the election are being aided, or are controlled, by
the company or employer. The reason is that the certification election may lead to the
selection of an employer-dominated or company union as the employees' bargaining
representative, and when the court finds that said union is employer-dominated in the
unfair labor practice case, the union selected would be decertified and the whole
election proceedings would be rendered useless and nugatory." 17 The next year, the
same jurist had occasion to reiterate such a doctrine in Manila Paper Mills Employees
and Workers Association v. Court of Industrial Relations, 18 thus: "We agree with the
CIR on the reasons given in its order that only a formal charge of company
domination may serve as a bar to and stop a certification election, the reason being
that if there is a union dominated by the Company, to which some of the workers
belong, an election among the workers and employees of the company would not
reflect the true sentiment and wishes of the said workers and employees from the
standpoint of their welfare and interest, because as to the members of the company
dominated union, the vote of the said members in the election would not be free. It is
equally true, however, that the opposition to the holding of a certification election due
to a charge of company domination can only be filed and maintained by the labor
organization which made the charge of company domination, because it is the entity
that stands to lose and suffer prejudice by the certification election, the reason being
that its members might be overwhelmed in the voting by the other members
controlled and dominated by the Company," 19 It is easily understandable why it
should be thus. There would be an impairment of the integrity of the collective
bargaining process if a company-dominated union were allowed to participate in a
certification election. The timid, the timorous and the faint-hearted in the ranks of
labor could easily be tempted to cast their votes in favor of the choice of
management. Should it emerge victorious, and it becomes the exclusive
representative of labor at the conference table, there is a frustration of the statutory
scheme. It takes two to bargain. There would be instead a unilateral imposition by the
employer. There is need therefore to inquire as to whether a labor organization that
aspires to be the exclusive bargaining representative is company-dominated before
the certification election.
2. The unique situation before us, however, it exactly the reverse. It is management
that would have an unfair labor practice case filed by it for illegal strike engaged in by
some of its employees concluded, before it would agree to the holding of a
certification election. That is the stand of petitioner. It does not carry conviction. The
reason that justifies the postponement of a certification election pending an inquiry, as
to the bona fides of a labor union, precisely calls for a different conclusion. If under
the circumstances disclosed, management is allowed to have its way, the result might
be to dilute or fritter away the strength of an organization bent on a more zealous
defense of labor's prerogatives. The difficulties and obstacles that must be then
hurdled would not be lost on the rest of the personnel, who had not as yet made up
their minds one way or the other. This is not to say that management is to be
precluded from filing an unfair labor practice case. It is merely to stress that such a
suit should not be allowed to lend itself as a means, whether intended or not, to
prevent a truly free expression of the will of the labor group as to the organization that
will represent it. It is not only the loss of time involved, in itself not likely to enhance
the prospect of respondent-unions, but also the fear engendered in the mind of an
ordinary employee that management has many weapons in its arsenal to bring the full
force of its undeniable power against those of its employees dissatisfied with things
as they are. There is no valid reason then for the postponement sought. This is one
instance that calls for the application of the maxim, lex dilationes semper exhorret.
Moreover, is there not in the posture taken by petitioner a contravention of what is
expressly set forth in the Industrial Peace Act, which speaks of the labor
organizations "designated or selected for the purpose of collective bargaining by the
majority of the employees in an appropriate collective bargaining unit [be the
exclusive] representative of all the employees in such unit for the purpose of
collective bargaining." 20 The law clearly contemplates all the employees, not only
some of them. As much as possible then, there is to be no unwarranted reduction in
the number of those taking part in a certification election, even under the guise that in
the meanwhile, which may take some time, some of those who are employees could
possibly lose such status, by virtue of a pending unfair labor practice case.
3. Nor would any useful purpose be served by such a postponement of the holding of
a certification election until after the determination of the unfair labor practice case
filed. The time that might elapse is hard to predict, as the matter may eventually reach
this Tribunal. In the meanwhile, there is no opportunity for free choice on the part of
the employees as to which labor organization shall be their exclusive bargaining
representative. The force of such an objection could be blunted if after a final decision
to the effect that the employees complained of were engaged in illegal strike, they
would automatically lose their jobs. Such is not the law, however. 21 It does not
necessarily follow that whoever might have participated in a strike thus proscribed
has thereby forfeited the right to employment. What will be gained then by holding in
abeyance the certification election? There is no certitude that the final decision
arrived at in the pending unfair labor practice case would sustain the claim of
petitioner. Even if success would attend such endeavor, it cannot be plausibly
asserted that its employees adjudged as having been engaged in such illegal strike
are ipso facto deprived of such status. There is thus an aspect of futility about the
whole thing. Why should not respondent Court then decide as it did?
4. This Court, moreover, is led to sustain the challenged order by another
consideration. In General Maritime Stevedores' Union v. South Sea Shipping
Line, 22 a 1960 decision, Justice Labrador, speaking for this Court, stated that the
question of whether or not a certification election shall be held "may well be left to the
sound discretion of the Court of Industrial Relations, considering the conditions
involved in the case, ... ." 23 This Court has since then been committed to such a
doctrine. 24 As a matter of fact, the only American Supreme Court decision cited in the
petition, National Labor Relations Board v. A.J. Tower Co., 25 likewise, sustains the
same principle. It was there held that the discretion of the labor tribunal, in this case,
the National Labor Relations Board of the United States, is not lightly to be interfered
with. The issue in that case, as noted in the opinion of Justice Murphy, equally noted
for his labor law decisions, as well as his civil libertarian views, "concerns the
procedure used in elections under the National Labor Relations Act in which
employees choose a statutory representative for purposes of collective bargaining.
Specifically, we must determine the propriety of the National Labor Relations Board's
refusal to accept an employers post-election challenge to the eligibility of a voter who
participated in a consent election." 26 His opinion then went on to state that the First
Circuit Court of Appeals set aside the Board's order. The matter was then taken to the
United States Supreme Court on certiorari. In reversing the Circuit Court of Appeals,
Justice Murphy made clear the acceptance of such a doctrine in the light of the
National Labor Relations Act thus: "As we have noted before, Congress has entrusted
the Board with a wide degree of discretion in establishing the procedure and
safeguards necessary to insure the fair and free choice of bargaining representatives
by employees." 27 Hence, this ruling of American Supreme Court: "It follows that the
court below erred in refusing to enforce the Board's order in full." 28 In the United
States as in the Philippines, the decision in such matters by the administrative agency
is accorded the utmost respect. Relevant is this affirmation by the then Justice, now
Chief Justice, Concepcion that in such proceedings, the determination of what is an
appropriate bargaining unit is "entitled to almost complete finality." 29 The prevailing
principle then on questions as to certification, as well as in other labor cases, is that
only where there is a showing of clear abuse of discretion would this Tribunal be
warranted in reversing the actuation of respondent  of the Association as the duly authorized bargaining agency for managers and
Court. 30 There is no showing of such a failing in this case.
WHEREFORE, the petition for certiorari is dismissed. With costs against petitioner.
Concepcion, C.J., Makalintal, Zaldivar, Castro, Teehankee, Barredo, Makasiar,
Antonio and Esguerra, JJ., concur
G.R. Nos. L-30632-33 April 11, 1972
CALTEX FILIPINO MANAGERS AND SUPERVISORS ASSOCIATION petitioner, 
vs.
COURT OF INDUSTRIAL RELATIONS, CALTEX (PHILIPPINES), INC., W.E.
MENEFEE and B.F. EDWARDS, respondents.
Domingo E. de Lara and Associates for petitioner.
Siguion Reyna, Montecillo, Belo and Ongsiako for private respondent.
VILLAMOR, J.:p
This is an appeal by the Caltex Filipino Managers and Supervisors' Association from
the resolution en banc dated May 16, 1969 of the Court of Industrial Relations
affirming the decision dated February 26, 1969 of Associate Judge Emiliano C.
Tabigne, Associate Judge Ansberto P. Paredes dissented from the resolution of the
majority on the ground that the Industrial Court in a representation case cannot take
cognizance of the issue of illegality of a strike and proceed to declare the loss of the
employee status of employees inasmuch as that matter ought to be processed as an
unfair labor practice case. Judge Tabigne's decision covers two cases, namely, Case
No. 1484-MC (1) in which he declared the strike staged on April 22, 1965 by the
Association as illegal with the consequent forfeiture of the employee status of three
employees (Jose J. Mapa, President of the Association; Dominador Mangalino, Vice-
President and Herminigildo Mandanas) and Case No. 4344-ULP against Caltex
(Philippines), Inc., Ben F. Edwards W.E. Menefee which Judge Tabigne dismissed for
lack of merit and substantial evidence.
The following proceedings gave rise to the present appeal:
The Caltex Filipino Managers and Supervisors' Association is a labor organization of
Filipino managers supervisors in Caltex (Philippines), Inc., respondent Company in
this proceeding. After the Association was registered as a labor organization it sent a
letter to the Company on January 21, 1965 informing the latter of the former's
registration; the Company replied inquiring on the position titles of the employees
which the Association sought to represent. On February 8, 1965 the Association sent
a set of proposals to the Company wherein one of the demands was the recognition
supervisors in the Company. To this the Company countered stating that a distinction
exists between representatives of management and individuals employed as
supervisors and that it is Company's belief that managerial employees are not
qualified for membership in a labor organization; hence, it is digested that the
Association institute a certification proceeding so as to remove any question with
regard to position titles that should be included in the bargaining unit. The Association
felt disinclined to follow the suggestion of the Company 1 and so on February 22, 1965
the Company initiated a certification proceeding docketed as Case 1484-MC.
On March 8, 1965 the Association filed notice to strike giving the following reasons:
Refusal to bargain in good faith and to act on demands, a copy of
which is enclosed; resort to union-busting tactics in order to
discourage the activities of the undersigned association and its
members, including discrimination and intimidation of officers and
members of the association and circulation of promises of
immediate benefits to be given by the company to its employees,
officers and members of this association or those intending to join
the same, if the employees concerned in due course will vote
against the selection of this association as the exclusive collective
bargaining unit for managers and supervisors of the Company in
the petition for certification the latter filed. (Annex "A" of Annex "A",
Petition).
On March 29, 1965, during the hearing of the certification proceedings, Judge
Tabigne cautioned the parties to maintain the status quo; he specifically advised the
employees not to go on strike, making it clear, however, that in the presence of unfair
labor practices they could go on strike even without any notice.2
On the basis of the strike notice filed on March 8, 1965 and in view of acts committed
by the Company which the Association considered as constituting unfair labor
practice, the Association struck on April 22, 1965, after the efforts exerted by the
Bureau of Labor Relations to settle the differences between the parties failed. Then,
through an "Urgent Petition" dated April 26, 1965 filed as Case No. 1484-MC(1), or as
an incident of the certification election proceedings (Case No. 1484-MC), the
Company prayed as follows:
WHEREFORE, petitioner respectfully prays this Honorable Court
that:
1. The strike of respondent Caltex Filipino Managers and
Supervisors Association be declared illegal;
2. The officers and members of respondent association who have
instigated, declared, encouraged and/or participated in the illegal
 strike be held and punished for contempt of this Honorable Court
and be declared to have lost their employee status;
3. Pending hearing on the merits and upon the filing of a bond in an
amount to be fixed by this Honorable Court, a temporary injunction
be issued restraining respondent association, its officers, members
and representatives acting for and on their behalf from committing,
causing or directing the commission of the unlawful acts
complained of, particularly obstructing and preventing petitioner, its
customers, officers and non-striking employees from entering and
going out of its various offices, in its refinery, installations, depots
and terminals and the use or threat of violence and intimidation;
4. After trial, said injunction be made permanent;
5. The damages that petitioner has suffered and will suffer up to the
trial of this action be ascertained and judgment be rendered against
respondent association, its officers, members and representatives
jointly and severally for the amount thereof.
Petitioner prays for such other and further relief as this Honorable
Court may deem just and equitable in the premises. (Annex "D",
Petition)
Such urgent petition was frontally met by the Association with a motion to dismiss
questioning the jurisdiction of the industrial court. The motion to dismiss was opposed
by the Company and on May 17, 1965 the trial court denied the same. Not satisfied
with the order of May 17, 1965, the Association moved for its reconsideration before
respondent court en banc.
Because of the settlement between the parties on May 30, 1965 of some of their
disputes, the Association filed with respondent court under date of June 3, 1965 a
manifestation (to which was attached a copy of the return-to-work agreement signed
by the parties on May 30, 1965), to the effect that the issues in Case No. 1484-MC (1)
had become moot and academic. Under date of June 15, 1965 the Company filed a
counter-manifestation disputing the representations of the Association on the effect of
the return-to-work agreement. On the basis of the manifestation and counter-
manifestation, respondent court en banc issued a resolution on August 24, 1965
allowing the withdrawal of the Association's motion for reconsideration against the
order of May 17, 1965, on the theory that there was justification for such withdrawal.
Relative to the resolution of August 24, 1965 the Company filed a motion for
clarification which the Association opposed on September 22, 1965, for it contended
that such motion was in reality a motion for reconsideration and as such filed out of
time. But respondent court brushed aside the Association's opposition and proceeded
to clarify the resolution of August 24, 1965 to mean that the Company was not barred
from continuing with Case No. 1484-MC(1).
At the hearing on September 1, 1965 of Case No. 1484-MC(1) the Association
insisted that the incident had become moot and academic and must be considered
dismissed and, at the same time, it offered to present evidence, if still necessary, in
order to support its contention. Respondent court thereupon decided to secure
evidence from the parties to enlighten it on the interpretation of the provisions of the
return-to-work agreement relied upon by the Association as rendering the issues
raised in Case No. 1484-MC(1) already moot and academic. Evidence having been
received, the trial court ruled in its order of February 15, 1966 that under the return-to-
work agreement the Company had reserved its rights to prosecute Case No. 1484-
MC(1) and, accordingly, directed that the case be set for hearing covering the alleged
illegality of the strike. Within the prescribed period the Association filed a motion for
reconsideration of the February 15, 1966 order to which motion the Company filed its
opposition and, in due course, respondent court en banc issued its resolution dated
March 28, 1966 affirming the order. Appeal from the interlocutory order was elevated
by the Association to this Court in G.R. No. L-25955, but the corresponding petition
for review was summarily "DISMISSED for being premature" under this court's
resolution of May 13, 1966.
After a protracted preliminary investigation, the Association's charge for unfair labor
practices against the Company and its officials docketed in a separate proceeding
was given due course through the filing by the prosecution division of respondent
court of the corresponding complaint dated September 10, 1965, in Case No. 4344-
ULP against Caltex (Philippines), Inc., W. E. Menefee and B.F. Edwards. As noted by
respondent court in its decision under review, Case No. 4344-ULP was filed by the
Association because, according to the latter, the Company and some of its officials,
including B.F. Edwards, inquired into the organization of the Association and he
manifested his antagonism to it and its President; that another Company official, W.E.
Menefee issued a statement of policy designed to discourage employees and
supervisors from joining labor organizations; that the Company refused to bargain
although the Association commands majority representation; that due to the steps
taken by the Company to destroy the Association or discourage its members from
continuing their union membership, the Association was forced to file a strike notice;
that on April 22, 1965 it declared a strike; and that during the strike the Company and
its officers continued their efforts to weaken the Association as well as its picket lines.
The Company in its answer filed with respondent court denied the charges of unfair
labor practice.
Considering the interrelation of the issues involved in the two cases and by
agreement of the parties, the two cases were heard jointly. This explains why only
one decision was rendered by respondent court covering both Case No. 1484-MC(1),
relating to the illegality of the strike as contended by the Company, and Case No.
4344-ULP, referring to the unfair labor practice case filed by the Association against
the Company, W.E. Menefee and B.F. Edwards.
The Association assigned the following errors allegedly committed by respondent
court:
I
 RESPONDENT COURT ERRED IN ASSUMING JURISDICTION
OVER CASE NO. 1484-MC(1).
II
ASSUMING THAT RESPONDENT COURT HAS JURISDICTION
OVER CASE NO. 1484-MC(1), IT ERRED IN NOT HOLDING
THAT THE SAME ALREADY BECAME MOOT WITH THE
SIGNING OF THE RETURN TO WORK AGREEMENT ON MAY
30, 1965.
III
ASSUMING LIKEWISE THAT RESPONDENT COURT HAS
JURISDICTION OVER CASE NO. 1484-MC(1), IT ERRED IN
HOLDING THAT CAFIMSA'S STRIKE WAS STAGED FOR NO
OTHER REASON THAN TO COERCE THE COMPANY INTO
RECOGNIZING THE CAFIMSA AND THAT SUCH STRIKE WAS
UNJUSTIFIED, UNLAWFUL AND UNWARRANTED.
IV
RESPONDENT COURT ERRED IN AFFIRMING THE TRIAL
COURT'S CONCLUSION THAT CAFIMSA'S STRIKE WAS
DECLARED IN OPEN DEFIANCE OF THE MARCH 29, 1965
ORDER IN CERTIFICATION CASE NO. 1484-MC.
V ORDERING THE COMPANY TO PAY BACK WAGE AND
RESPONDENT COURT ERRED IN AFFIRMING THE TRIAL
COURT'S FINDING, DESPITE THE SUBSTANTIAL CONTRARY
EVIDENCE ON RECORD, THAT THE STRIKERS RESORTED TO
MEANS BEYOND THE PALE OF THE LAW IN THE
PROSECUTION OF THE STRIKE AND IN DISREGARDING THE
CONSIDERATION THAT THE STRIKERS MERELY EMPLOYED
LAWFUL ACTS OF SELF-PRESERVATION AND SELF-
DEFENSE.
VI
RESPONDENT COURT ERRED IN AFFIRMING THE DISMISSAL
BY THE TRIAL COURT OF J.J. MAPA, CAFIMSA'S PRESIDENT,
AND OTHERS, OR IN OTHERWISE PENALIZING THE
STRIKERS.
VII
ASSUMING ARGUENDO THAT THE FACTS FOUND BY THE
TRIAL COURT SHOULD BE ACCEPTED, IN DISREGARD OF
THE EVIDENCE PRESENTED BY THE COMPANY DAMAGING
TO ITS CAUSE, OR ALTHOUGH THE TRIAL COURT
DISREGARDED THE SUBSTANTIAL INCRIMINATORY
EVIDENCE AGAINST THE COMPANY, RESPONDENT COURT
ERRED IN NOT APPLYING THE PRINCIPLE OF IN PARI
DELICTO.
VIII
RESPONDENT COURT ERRED IN FAILING TO HOLD THAT THE
COMPANY IS BARRED UNDER SECTION 9(e) OF THE
REPUBLIC ACT NO. 875 FROM SEEKING THE RELIEF PRAYED
FOR IN CASE NO. 1484-MC(1).
IX
RESPONDENT COURT ERRED IN ENTIRELY ABSOLVING THE
COMPANY FROM THE UNFAIR LABOR PRACTICE CHARGE
AND IN DISREGARDING THE SUBSTANTIAL INCRIMINATORY
EVIDENCE RELATIVE THERETO AGAINST THE COMPANY.
X
RESPONDENT COURT ERRED IN RENDERING JUDGEMENT
FOR THE CAFIMSA IN CASE NO. 4344-ULP AND IN NOT
ATTORNEY'S FEES.
XI
RESPONDENT COURT ERRED IN PREMATURELY
IMPLEMENTING THE TRIAL COURT'S DISMISSAL OF J.J. MAPA
AND DOMINADOR MANGALINO (Brief for the Petitioner, pp. 1-4).
To our mind the issues raised in this appeal may be narrowed down to the following:
1. whether or not the Court of Industrial Relations has jurisdiction over Case No.
1484-MC(1);
2. Whether or not the strike staged by the Association on April 22, 1965 is illegal and,
incident thereto, whether respondent court correctly terminated the employee status
of Jose Mapa, Dominador Mangalino and Herminigildo Mandanas and reprimanded
and admonished the other officers of the Association; and
3. Whether or not respondent court correctly absolved the respondents in Case No.
4344-ULP from the unfair labor practice charge.
Respondent's court's jurisdiction over Case No. 1484-MC(1) has to be tested by the
allegations of the "Urgent Petition" dated April 26, 1965 filed by the Company in
relation to the applicable provisions of law. A reading of said pleading shows that the
same is for injunctive relief under Section 9(d) of Republic Act No. 875 (Magna Carta
of Labor); for contempt, obviously pursuant to See, 6 of Commonwealth Act No. 103
in conjunction with Sec. 3 (b) of Rule 71 of the Rules of Court; and for forfeiture of the
employee status of the strikers by virtue of their participation in what the Company
considered as an "illegal strike."
It is well known that the scheme in Republic Act No. 875 for achieving industrial
peace rests essentially on a free and private agreement between the employer and
his employees as to the terms and conditions under which the employer is to give
work and the employees are to furnish labor, unhampered as far as possible by
judicial or administrative intervention. On this premise the lawmaking body has
virtually prohibited the issuance of injunctive relief involving or growing out of labor
disputes.
The prohibition to issue labor injunctions is designed to give labor a comparable
bargaining power with capital and must be liberally construed to that end (U.S. vs.
Brotherhood of Locomotive Engineers, 79 F. Supp. 485, Certioraridenied, 69 S. Ct.
137, 335 U.S. 867, cause remanded on other grounds, 174 F. 2nd 160, 85 U.S. App.
D.C., certiorari denied 70 S. Ct. 140, 338 U.S. 872, 94 L. Ed. 535). It is said that the
prohibition creates substantive and not purely procedural law. (Oregon Shipbuilding
Corporation vs. National Labor Relations Board, 49 F. Supp. 886). Within the purview
of our ruling, speaking through Justice Labrador, in Social Security Employees
Association (PAFLU), et al. vs. The Hon. Edilberto Soriano, et al. (G.R. No. L-20100,
July 16, 1964, 11 SCRA 518, 520), there can be no injunction issued against any
strike except in only one instance, that is, when a labor dispute arises in an industry
indispensable to the national interest and such dispute is certified by the President of
the Philippines to the Court of Industrial Relations in compliance with Sec. 10 of
Republic Act No. 875. As a corollary to this, an injunction in an uncertified case must
be based on the strict requirement See. 9 (d) of Republic Act No. 875; the purpose of
such injunction is not to enjoin the strike itself, but only unlawful activities. To the
extent, then, that the Company sought injunctive relief under Sec. 9(d) of Republic
Act No.875, respondent court had jurisdiction over the Company's "Urgent Petition"
dated April 26, 1965.
As to the "contempt aspect" of Case No. 1484-MC(1), the jurisdiction of respondent
court over it cannot be seriously questioned it appearing that Judge Tabigne in good
faith thought that his "advice" to the Association during the hearing on March 29,
1965 not to strike amounted a valid order. This is not to say, however, that respond
court did not err in finding that the advice given by Judgre Tabigne during the hearing
on March 29, 1965 really constituted an order which can be the basis of a contempt
proceeding. For, in our opinion, what Judge Tabigne statement during said hearing
should be construed what actually was — an advice. To say that it was an order
would be to concede that respondent court could validly enjoin strike, especially one
which is not certified in accord with Sec. 10 of Republic Act No. 875. To adopt the
view of respondent court would not only set at naught the policy of the law as
embodied in the said statute against issuance of injunctions, but also remove from the
hands of labor unions and aggrieved employees an effective lawful weapon to either
secure favorable action on their economic demand or to stop unfair labor practices on
the part of their employer.
With respect to the alleged "illegality of the strike," as claimed by the Company, and
the consequent forfeiture of the employee status of the strikers, we believe these
matters which are neither pertinent to nor connected with a certification case as
opined by Judge Paredes, to which we agree. Respondent court, therefore, initially
erred in entertaining this issue in Case No. 1484-MC(1). No prejudice, however, has
resulted since, as correctly pointed out by respondent court, the illegality for the strike
was squarely raised by the Company as a defense in Case No. 4344-ULP and, in any
event, we observe that the Association was given all the opportunity to put forward its
evidence.
We now come to the important issue as to whether the strike staged by the
Association on April 22, 1965 is illegal. From an examination of the records, we
believe that the lower court erred in its findings in this regard.
To begin with, we view the return-to-work agreement of May 30, 1965 as in the nature
of a partial compromise between the parties and, more important, a labor contract;
consequently, in the latter aspect the same "must yield to the common good" (Art.
1700, Civil Code of the Philippines) and "(I)n case of doubt ... shall be construed in
favor of the safety and decent living for the laborer" (Art. 1702, ibid). To our mind
when the Company unqualifiedly bound itself in the return-to-work agreement that all
employees will be taken back "with the same employee status prior to April 22, 1965,"
the Company thereby made manifest its intention and conformity not to proceed with
Case No. 1484-MC, (c) relating the illegality of the strike incident. For while it is true
that there is a reservation in the return-to-work agreement as follows:
6. The parties agree that all Court cases now pending shall
continue, including CIR Case No. 1484-MC.
we think the same is to be construed bearing in mind the conduct and intention of the
parties. The failure to mention Case No. 1484-MC(1) while specifically mentioning
Case No. 1484-MC, in our opinion, bars the Company from proceeding with the
former especially in the light of the additional specific stipulation that the strikers
would be taken back with the same employee status prior to the strike on April 22,
1965. The records disclose further that, according to Atty. Domingo E. de Lara when
he testified on October 9, 1965, and this is not seriously disputed by private
respondents, the purpose of Paragraph 10 of the return-to-work agreement was, to
quote in part from this witness, "to secure the tenure of employees after the return-to-
work agreement considering that as I understand there were demotions and
suspensions of one or two employees during the strike and, moreover, there was this
incident Case No. 1484-MC(1)" (see Brief for the Petition pp. 41-42). To borrow the
language of Justice J.B.L. Reyes in Citizens Labor Union Pandacan Chapter vs.
Standard Vacuum Oil Company (G.R. No. L-7478, May 6, 1955), in so far as the
illegality of the strike is concerned in this proceeding and in the light of the records.
 ... the matter had become moot. The parties had both abandoned
their original positions and come to a virtual compromise and
agreed to resume unconditionally their former relations. To proceed
with the declaration of illegality would not only breach this
understanding, freely arrived at, but to unnecessarily revive
animosities to the prejudice of industrial peace. (Emphasis
supplied)
Conceding arguendo that the illegality incident had not become moot and academic,
we find ourselves unable to agree with respondent court to the effect that the strike
staged by the Association on April 22, 1965 was unjustified, unreasonable and
unwarranted that it was declared in open defiance of an order in Case No. 1484-MC
not to strike; and that the Association resorted to means beyond the pale of the law in
the prosecution of the strike. As adverted to above, the Association filed its notice to
strike on March 8, 1965, giving reasons therefor any one of which is a valid ground for
a strike.
In addition, from the voluminous evidence presented by the Association, it is clear
that the strike of the Association was declared not just for the purpose of gaining
recognition as concluded by respondent court, but also for bargaining in bad faith on
the part of the Company and by reason of unfair labor practices committed by its
officials. But even if the strike were really declared for the purpose of recognition, the
concerted activities of the officers and members of the Association in this regard
cannot be said to be unlawful nor the purpose thereof be regarded as trivial.
Significantly, in the voluntary return-to-work agreement entered into between the
Company and the Association, thereby ending the strike, the Company agreed to
recognize for membership in the Association the position titles mentioned in Annex
"B" of said agreement.3 This goes to show that striking for recognition is productive of
good result in so far as a union is concerned.
Besides, one of the important rights recognized by the Magna Carta of Labor is the
right to self-organization and we do not hesitate to say that is the cornerstone of this
monumental piece of labor legislation. Indeed, because of occasional delays incident
to a certification proceeding usually attributable to dilatory tactics employed by the
employer, to a certain extent a union may be justified in resorting to a strike. We
should not be understood here as advocating a strike in order to secure recognition of
a union by the employer. On the whole we are satisfied from the records that it is
incorrect to say that the strike of the Association was mainly for the purpose of
securing recognition as bargaining agent.
As will be discussed hereinbelow, the charge of unfair labor practice against the
Company is well-taken. It is, therefore, clear error on the part of the Association is
unjust, unreasonable and unwarranted.
We said earlier that the advice of Judge Tabigne to maintain the status quo cannot be
considered as a lawful order within the contemplation of the Magna Carta of Labor,
particularly Section 10 thereof; to so regard it as an order would be to grant
respondent court authority to forbid a strike in an uncertified case which it is not
empowered to do. The fact that the strike was not staged until April 22, 1965 is
eloquent proof enough of the desire of the Association and its officers and members
to respect the advice of Judge Tabigne. However, as shown in this case during the
pendency of the certification proceedings unfair labor practices were committed by
the Company; hence, the Association was justified in staging a strike and certainly
this is not in violation of the advice of Judge Tabigne on March 29, 1965.
Respondent court picked out a number of incidents, taking place during the strike, to
support its conclusion that the strikers resorted to means beyond the pale of the law
in the prosecution of a strike. Thus, it made mention of the blocking by a banca
manned by two striking supervisors by the name of Dominador Mangalino and one
Bonecillo of the Caltex M/V Estrella when it was about to depart; the blocking at the
refinery of the Company in Bauan, Batangas of the LSCO WARA, the Hills Bros
Pinatubo, and the Mobil Visayas so that they could not dock; the blocking by the
strikers of incoming vehicles, non-striking supervisors, and rank-and-file workers to
prevent them from entering the refinery gate in Bauan, Batangas, at the Poro
Terminal, at the Company's Padre Faura office in Manila, and at the Pandacan
Terminal; that at the Legaspi and Mambulao Bulk Depots the striking supervisors
refused to surrender to their superiors the keys to the depots and storage tanks; and
that also at the Legaspi Depot the truck ignition keys were mixed up or thrown at the
seats of the trucks in violation of the Company regulations in order to create
confusion and thus prevent the trucks from being used.4 To refute these and similar
findings of respondent court the Association, drawing chiefly and abundantly from the
Company's own evidence,5 called attention to the exculpatory declarations of the
Company's own witnesses6 either establishing or tending to establish that the
picketing the strikers was generally peaceful and orderly. We find that such, indeed,
was the real situation during the strike and it would be the height of injustice to rule
otherwise in the face of the records before us.
In ignoring strong evidence coming from the witnesses of the Company damaging to
its case as well as that adduced by the Association also damaging to the Company's
case, we believe that respondent court clearly and gravely abused its discretion
thereby justifying us to review or alter its factual findings (see Philippine Educational
Institution vs. MLQSEA Faculty Association, 26 SCRA 272, 278).7 There is thus here,
to employ the language of Justice J.B.L. Reyes in Lakas ng Pagkakaisa sa Peter
Paul vs. Court of Industrial Relations, 96 Phil., 63, "an infringement of cardinal
primary rights of petitioner, and justified the interposition of the corrective powers of
this Court (Ang Tibay vs. Court of Industrial Relations and National Labor Union, 69
Phil., 635):
(2) Not only must the party be given an opportunity to present his
case and to adduce evidence tending to establish the rights which
he asserts but the tribunal must consider the evidence presented.
(Chief Justice Hughes in Morgan vs. U.S., 298 U.S. 468, 56 S. Ct.
906, 80 Law Ed. 1288.) In the language of this Court in Edwards
vs. McCoy, 22 Phil., 598, "the right to adduce evidence, without the
corresponding duty on the part of the board to consider it, is vain.
Such right is conspicuously futile if the person or persons to whom
the evidence is presented can thrust it aside without notice or
consideration." (Ibid., p. 67)8
We are convinced from the records that on the whole the means employed by the
strikers during the strike, taking into account the activities of the Company and the
non-striking employees on the same occasion, cannot be labeled as unlawful; in other
words, the Company itself through the provocative, if not unlawful, acts of the non-
striking employees9 is not entirely blameless for the isolated incidents relied upon by
respondent court as tainting the picketing of the strikers with illegality. As we said
through Justice Fernando in Shell Oil Workers' Union vs. Shell Company of the
Philippines, Ltd., 
L-28607, May 31, 1971, 39 SCRA 276:
6. Respondent court was likewise impelled to consider the strike
illegal because of the violence that attended it. What is clearly
within the law is the concerted activity of cessation of work in order
that a union's economic demands may be granted or that an
employer cease and desist from the unfair labor practice. That the
law recognizes as a right. There is though a disapproval of the
utilization of force to attain such an objective. For implicit in the very
concept of a legal order is the maintenance of peaceful ways. A
strike otherwise valid, if violent, in character, be placed beyond the
pale. Care is to be taken, however, especially where an unfair labor
practice is involved, to avoid stamping it with illegality just because
it is tainted by such acts. To avoid rendering illusory the recognition
of the right to strike, responsibility in such a case should be
individual not collective. A different conclusion would be called for,
of course, if the existence of force while the strike lasts is pervasive
and widespread, consistently and deliberately resorted to as a
matter of policy. It could be reasonably concluded then that even if
justified as to end, it becomes illegal because of means employed.
(Ibid., p. 292; emphasis supplied).
In the same case we further observed:
... Barely four months ago, in Insular Life Assurance Co., Ltd.
Employees' Association vs. Insular Life Assurance Co., Ltd., there
is the recognition by this Court, speaking through Justice Castro, of
picketing as such being "inherently explosive". It is thus clear that
not every form of violence suffices to affix the seal of illegality on a
strike or to cause the loss of employment of the guilty party. (Ibid.,
pp. 293-294; emphasis supplied)
In the cited case of Insular Life Assurance Co., Employees' Association-NATO, FGU
Insurance Group Workers & Employees Association-NATU and Insular Life Building
Employees Association-NATU vs. The Insular Life insurance Co., Ltd., FGU
Insurance Group, et al., L-25291, January 30, 1971, 37 SCRA 244, we held through
Justice Castro, and this is here applicable to the contention of theAssociation, as
follows:
... Besides, under the circumstances the picketers not legally bound
to yield their grounds and withdraw from the picket lines. Being
where the law expects them to be in the legitimate exercise of their
rights, they had every reason to defend themselves and their rights
from any assault or unlawful transgression. ... (Ibid., p. 271)
In this cited case, by the way, we reversed and set aside the decision of the Court of
Industrial Relations and ordered the Company to reinstate the dismissed workers
backwages.
Let us now examine the charge of unfair labor practice which respondent court
dismissed for lack of merit and substantial evidence.
Under Sec. 14(c) of Republic Act No. 875, the parties themselves are required "to
participate fully and promptly in such meetings and conferences as the (Conciliation)
Service may undertake." In this case, the parties agreed to meet on April 21, 1965
and yet, notwithstanding this definite agreement, the Company sent no
representatives. The Company's claim to bargaining in good faith cannot be given
credence in the face of the fact that W.E. Menefee the Company's Managing Director,
conveniently left Manila for Davao on April 17 or 18, 1965, as admitted by W.E.
Wilmarth. 10
Nowhere is there serious claim on the part of the Company that it entertains real
doubt as to the majority representation of the Association. Consider further that
admittedly the certification election proceeding for the Cebu Supervisors Union in the
Company had been pending for six (6) years already. From all appearances,
therefore, and bearing in mind the deliberate failure of the Company to attend the
conciliation meetings on April 19 and 21, 1965, it is clear that the Company employed
dilatory tactics doubtless to discredit CAFIMSA before the eyes of its own members
and prospective members as an effective bargaining agent, postpone eventual
recognition of the Association, and frustrate its efforts towards securing favorable
action on its economic demands.
It is likewise not disputed that on March 4, 1965, the Company issued its statement of
policy (Exh. B). At that time the Association was seeking recognition as bargaining
agent and has presented economic demands for the improvement of the terms and
conditions of employment of supervisors. The statement of policy conveyed in
unequivocal terms to all employees the following message:
We sincerely believe that good employee relations can be
maintained and essential employee needs fulfilled through sound
management administration without the necessity of employee
organization and representations. We respect an employee's right
to present his grievances, regardless of whether or not he is
represented by a labor organization. (Emphasis supplied)
An employee reading the foregoing would at once gain impression that there was no
need to join the Association. For he is free to present his grievances regardless of
whether or not he is represented by a labor organization.
The guilty conduct of the Company before, during after the strike of April 22, 1965
cannot escape the Court's attention. It will suffice to mention typical instances by way
of illustration. Long prior to the strike, the Company had interferred with the Cebu the Association be permitted to recover attorney's fees as claimed in its tenth
Supervisors' Union by enticing Mapa into leaving the Union under the guise of assignment of error.
promotion in Manila; shortly before the strike, B.R. Edwards, Manager-Operations,
had inquired into the formation and organization of the petitioner Association in this WHEREFORE, respondent court's resolution en banc dated May 16, 1969, together
case. During the strike, in addition to the culpable acts of the Company already with the decision dated February 26, 1969, is reversed and judgment is hereby
narrated above, due significance must be given to the inclusion initially of J.J. Mapa rendered as follows:
and A. Buenaventura, the Association's President and Vice-President respectively, in
1965, in two coercion cases filed at that time and their subsequent elimination from
the charges the initiative of the Company after the settlement of strike; 11 the cutting 1. In Case No. 1484-MC(1), the Court declares the strike of the Caltex Filipino
off of telephone facilities extended Association members in the refinery; and the use Managers and Supervisors' Association as legal in all respects and, consequently,
of a member of the Association to spy for the company. 12 The discriminatory acts the forfeit of the employee status of J.J. Mapa, Dominador Mangalino and
practiced by the Company against active unionists after the strike furnish further Herminigildo Mandanas is set aside. The Company is hereby ordered to reinstate J.J.
evidence that Company committed unfair labor practices as charged. 13 Victims of Mapa and Dominador Mangalino to their former positions without loss of seniority and
discrimination are J.J. Mapa, A.E. Buenaventura, E.F. Grey, Eulogio Manaay,14 Pete privileges, with backwages from the time of dismissal on July 1, 1969. Since
Beltran, Jose Dizon, Cipriano Cruz, F.S. Miranda and many others. The Herminigildo Mandanas appears to have voluntarily left the Company, no
discrimination consisted in the Company's preferring non-members of the Association reinstatement is ordered as to him.
in promotions to higher positions and humiliating active unionists by either promoting
junior supervisors over them or by reduction of their authority compared to that 2. In Case No. 4344-ULP, the Court finds the Company B.F. Edwards and W.E.
assigned to them before the strike, or otherwise downgrading their positions. 15 Menefee guilty of unfair labor practices and they are therefore ordered to cease and
desist from the same. In this connection, the Company is furthermore directed to pay
Then, effective July 1, 1969, the Company terminated the employment of J.J. Mapa backwages to the striking employees from April 22, 1965 to May 30, 1965 and to pay
and Dominador Mangalino, President and Vice-President, respectively, of the attorney's fees which are hereby fixed at P20,000.00.
Association at that time. And this the Company did not hesitate to do notwithstanding
the Association's seasonable appeal from respondent court's decision. We perceive Costs against private respondents.
in this particular action of the Company its anti-union posture and attitude. In this
connection, we find merit in the claim of petitioner that the dismissal of Mapa and Concepcion, C.J., Reyes, J.B.L., Makalintal, Zaldivar, Castro, Fernando, Teehankee,
Mangalino was premature considering that respondent court did not expressly provide Barredo and Makasiar,. JJ., concur.
that such dismissal might be effected immediately despite the pendency of the appeal
timely taken by the Association. The situation would have been different had
respondent court ordered the dismissal of Mapa and Mangalino immediately. As the  
decision is silent on this matter the dismissal of said officers of the Association ought
to have been done only upon the finality of the judgment. Because appeal was timely
G.R. No. L-21278      December 27, 1966
taken, the Company's action is patently premature and is furthermore evidence of its
desire to punish said active unionists.
FEATI UNIVERSITY, petitioner, 
vs.
Verily, substantial, credible and convincing evidence appear on record establishing
HON. JOSE S. BAUTISTA, Presiding Judge of the Court of Industrial Relations
beyond doubt the charge of unfair labor practices in violation of Sec. 4 (a), Nos. (1),
and FEATI UNIVERSITY FACULTY CLUB-PAFLU, respondents.
(3), (4), (5) and (6), of Republic Act No. 875. And pursuant to the mandate of Art. 24
of the Civil Code of the Philippines that courts must be vigilant for the protection of
one at a disadvantage — and here the Association appears to be at a disadvantage ----------------------------------------
in its relations with the Company as the records show — adequate affirmative relief,
including backwages, must be awarded to the strikers. It is high-time and imperative G.R. No. L-21462      December 27, 1966
that in order to attain the laudable objectives of Republic Act 875 calculated to
safeguard the rights of employees, the provisions thereof should be liberally
FEATI UNIVERSITY, petitioner-appellant, 
construed in favor of employees and strictly against employer, unless otherwise
vs.
intended by or patent from language of the statute itself.
FEATI UNIVERSITY FACULTY CLUB-PAFLU, respondent-appellee.

The Court takes judicial notice of the considerable efforts exerted by both parties in
----------------------------------------
the prosecution of respective cases and the incidents thereof both before lower court
and this Court since 1965 to date. Under the circumstances and in conformity with
Art. 2208, No. 11, the Civil Code of the Philippines, it is but just, fair and equitable that G.R. No. L-21500      December 27, 1966
FEATI UNIVERSITY, petitioner-appellant,  (1) for the issuance of the writ of preliminary injunction enjoining respondent Judge
vs.
FEATI UNIVERSITY FACULTY CLUB-PAFLU, respondent-appellee.
Rafael Dinglasan for petitioner.
Cipriano Cid and Associates for respondents.
ZALDIVAR, J.:
This Court, by resolution, ordered that these three cases be considered together, and
the parties were allowed to file only one brief for the three cases.
On January 14, 1963, the President of the respondent Feati University Faculty Club-
PAFLU — hereinafter referred to as Faculty Club — wrote a letter to Mrs. Victoria L.
Araneta, President of petitioner Feati University — hereinafter referred to as
University — informing her of the organization of the Faculty Club into a registered
labor union. The Faculty Club is composed of members who are professors and/or
instructors of the University. On January 22, 1963, the President of the Faculty Club
sent another letter containing twenty-six demands that have connection with the
employment of the members of the Faculty Club by the University, and requesting an
answer within ten days from receipt thereof. The President of the University answered
the two letters, requesting that she be given at least thirty days to study thoroughly
the different phases of the demands. Meanwhile counsel for the University, to whom
the demands were referred, wrote a letter to the President of the Faculty Club
demanding proof of its majority status and designation as a bargaining representative.
On February 1, 1963, the President of the Faculty Club again wrote the President of
the University rejecting the latter's request for extension of time, and on the same day
he filed a notice of strike with the Bureau of Labor alleging as reason therefor the
refusal of the University to bargain collectively. The parties were called to
conferences at the Conciliation Division of the Bureau of Labor but efforts to conciliate
them failed. On February 18, 1963, the members of the Faculty Club declared a strike
and established picket lines in the premises of the University, resulting in the
disruption of classes in the University. Despite further efforts of the officials from the
Department of Labor to effect a settlement of the differences between the
management of the University and the striking faculty members no satisfactory
agreement was arrived at. On March 21, 1963, the President of the Philippines
certified to the Court of Industrial Relations the dispute between the management of
the University and the Faculty Club pursuant to the provisions of Section 10 of
Republic Act No. 875.
In connection with the dispute between the University and the Faculty Club and
certain incidents related to said dispute, various cases were filed with the Court of
Industrial Relations — hereinafter referred to as CIR. The three cases now before this
Court stemmed from those cases that were filed with the CIR.
CASE NO. G.R. NO. L-21278
On May 10, 1963, the University filed before this Court a "petition for certiorari and
prohibition with writ of preliminary injunction", docketed as G.R. No. L-21278, praying:
Jose S. Bautista of the CIR to desist from proceeding in CIR Cases Nos. 41-IPA,
1183-MC, and V-30; (2) that the proceedings in Cases Nos. 41-IPA and 1183-MC be
annulled; (3) that the orders dated March 30, 1963 and April 6, 1963 in Case No. 41-
IPA, the order dated April 6, 1963 in Case No. 1183-MC, and the order dated April 29,
1963 in Case No. V-30, all be annulled; and (4) that the respondent Judge be ordered
to dismiss said cases Nos. 41-IPA, 1183-MC and V-30 of the CIR.
On May 10, 1963, this Court issued a writ of preliminary injunction, upon the
University's filing a bond of P1,000.00, ordering respondent Judge Jose S. Bautista
as Presiding Judge of the CIR, until further order from this Court, "to desist and refrain
from further proceeding in the premises (Cases Nos. 41-IPA, 1183-MC and V-30 of
the Court of Industrial Relations)."1 On December 4, 1963, this Court ordered the
injunction bond increased to P100,000.00; but on January 23, 1964, upon a motion
for reconsideration by the University, this Court reduced the bond to P50,000.00.
A brief statement of the three cases — CIR Cases 41-IPA, 1183-MC and V-30 —
involved in the Case G.R. No. L-21278, is here necessary.
CIR Case No. 41-IPA, relates to the case in connection with the strike staged by the
members of the Faculty Club. As we have stated, the dispute between the University
and the Faculty Club was certified on March 21, 1963 by the President of the
Philippines to the CIR. On the strength of the presidential certification, respondent
Judge Bautista set the case for hearing on March 23, 1963. During the hearing, the
Judge endeavored to reconcile the part and it was agreed upon that the striking
faculty members would return to work and the University would readmit them under
a status quo  arrangement. On that very same day, however, the University, thru
counsel filed a motion to dismiss the case upon the ground that the CIR has no
jurisdiction over the case, because (1) the Industrial Peace Act is not applicable to the
University, it being an educational institution, nor to the members of the Faculty Club,
they being independent contractors; and (2) the presidential certification is violative of
Section 10 of the Industrial Peace Act, as the University is not an industrial
establishment and there was no industrial dispute which could be certified to the CIR.
On March 30, 1963 the respondent Judge issued an order denying the motion to
dismiss and declaring that the Industrial Peace Act is applicable to both parties in the
case and that the CIR had acquired jurisdiction over the case by virtue of the
presidential certification. In the same order, the respondent Judge, believing that the
dispute could not be decided promptly, ordered the strikers to return immediately to
work and the University to take them back under the last terms and conditions
existing before the dispute arose, as per agreement had during the hearing on March
23, 1963; and likewise enjoined the University, pending adjudication of the case, from
dismissing any employee or laborer without previous authorization from the CIR. The
University filed on April 1, 1963 a motion for reconsideration of the order of March 30,
1963 by the CIR en banc, and at the same time asking that the motion for
reconsideration be first heard by the CIR en banc. Without the motion for
reconsideration having been acted upon by the CIR en banc, respondent Judge set
the case for hearing on the merits for May 8, 1963. The University moved for the
cancellation of said hearing upon the ground that the court en banc should first hear
the motion for reconsideration and resolve the issues raised therein before the case is
heard on the merits. This motion for cancellation of the hearing was denied. The
respondent Judge, however, cancelled the scheduled hearing when counsel for the
University manifested that he would take up before the Supreme Court, by a petition
for certiorari, the matter regarding the actuations of the respondent Judge and the
issues raised in the motion for reconsideration, specially the issue relating to the
jurisdiction of the CIR. The order of March 30, 1963 in Case 41-IPA is one of the
orders sought to be annulled in the case, G.R. No. L-21278.
Before the above-mentioned order of March 30, 1963 was issued by respondent
Judge, the University had employed professors and/or instructors to take the places
of those professors and/or instructors who had struck. On April 1, 1963, the Faculty
Club filed with the CIR in Case 41-IPA a petition to declare in contempt of court
certain parties, alleging that the University refused to accept back to work the
returning strikers, in violation of the return-to-work order of March 30, 1963. The
University filed, on April 5,1963, its opposition to the petition for contempt, denying
the allegations of the Faculty Club and alleging by way of special defense that there
was still the motion for reconsideration of the order of March 30, 1963 which had not
yet been acted upon by the CIR en banc. On April 6, 1963, the respondent Judge
issued an order stating that "said replacements are hereby warned and cautioned, for
the time being, not to disturb nor in any manner commit any act tending to disrupt the
effectivity of the order of March 30,1963, pending the final resolution of the
same."2 On April 8, 1963, there placing professors and/or instructors concerned filed,
thru counsel, a motion for reconsideration by the CIR en banc of the order of
respondent Judge of April 6, 1963. This order of April 6, 1963 is one of the orders that
are sought to be annulled in case G.R. No. L-21278.
CIR Case No. 1183-MC relates to a petition for certification election filed by the
Faculty Club on March 8, 1963 before the CIR, praying that it be certified as the sole
and exclusive bargaining representative of all the employees of the University. The
University filed an opposition to the petition for certification election and at the same
time a motion to dismiss said petition, raising the very same issues raised in Case
No. 41-IPA, claiming that the petition did not comply with the rules promulgated by the
CIR; that the Faculty Club is not a legitimate labor union; that the members of the
Faculty Club cannot unionize for collective bargaining purposes; that the terms of the
individual contracts of the professors, instructors, and teachers, who are members of
the Faculty Club, would expire on March 25 or 31, 1963; and that the CIR has no
jurisdiction to take cognizance of the petition because the Industrial Peace Act is not
applicable to the members of the Faculty Club nor to the University. This case was
assigned to Judge Baltazar Villanueva of the CIR. Before Judge Villanueva could act
on the motion to dismiss, however, the Faculty Club filed on April 3, 1963 a motion to
withdraw the petition on the ground that the labor dispute (Case No. 41-IPA) had
already been certified by the President to the CIR and the issues raised in Case No.
1183-MC were absorbed by Case No. 41-IPA. The University opposed the
withdrawal, alleging that the issues raised in Case No. 1183-MC were separate and
distinct from the issues raised in Case No. 41-IPA; that the questions of recognition
and majority status in Case No. 1183-MC were not absorbed by Case No. 41-IPA;
and that the CIR could not exercise its power of compulsory arbitration unless the
legal issue regarding the existence of employer-employee relationship was first
resolved. The University prayed that the motion of the Faculty Club to withdraw the
petition for certification election be denied, and that its motion to dismiss the petition
be heard. Judge Baltazar Villanueva, finding that the reasons stated by the Faculty
Club in the motion to withdraw were well taken, on April 6, 1963, issued an order
granting the withdrawal. The University filed, on April 24, 1963, a motion for
reconsideration of that order of April 6, 1963 by the CIR en banc. This order of April 6,
1963 in Case No. 1183-MC is one of the orders sought to be annulled in the case,
G.R. No. L-21278, now before Us.
CIR Case No. V-30  relates to a complaint for indirect contempt of court filed against
the administrative officials of the University. The Faculty Club, through the Acting
Chief Prosecutor of the CIR, filed with the CIR a complaint docketed as Case No. V-
30, charging President Victoria L. Araneta, Dean Daniel Salcedo, Executive Vice-
President Rodolfo Maslog, and Assistant to the President Jose Segovia, as officials of
the University, with indirect contempt of court, reiterating the same charges filed in
Case No. 41-IPA for alleged violation of the order dated March 30, 1963. Based on
the complaint thus filed by the Acting Chief Prosecutor of the CIR, respondent Judge
Bautista issued on April 29, 1963 an order commanding any officer of the law to
arrest the above named officials of the University so that they may be dealt with in
accordance with law, and the same time fixed the bond for their release at P500.00
each. This order of April 29, 1963 is also one of the orders sought to be annulled in
the case, G.R. No. L-2l278.
The principal allegation of the University in its petition for certiorari and prohibition
with preliminary injunction in Case G.R. No. L-21278, now before Us, is that
respondent Judge Jose S. Bautista acted without, or in excess of, jurisdiction, or with
grave abuse of discretion, in taking cognizance of, and in issuing the questioned
orders in, CIR Cases Nos. 41-IPA 1183-MC and V-30. Let it be noted that when the
petition for certiorari and prohibition with preliminary injunction was filed on May 10,
1963 in this case, the questioned order in CIR Cases Nos. 41-IPA, 1183-MC and V-
30 were still pending action by the CIR en banc upon motions for reconsideration filed
by the University.
On June 10, 1963, the Faculty Club filed its answer to the petition for certiorari and
prohibition with preliminary injunction, admitting some allegations contained in the
petition and denying others, and alleging special defenses which boil down to the
contentions that (1) the CIR had acquired jurisdiction to take cognizance of Case No.
41-IPA by virtue of the presidential certification, so that it had jurisdiction to issue the
questioned orders in said Case No. 41-IPA; (2) that the Industrial Peace Act
(Republic Act 875) is applicable to the University as an employer and to the members
of the Faculty Club as employees who are affiliated with a duly registered labor union,
so that the Court of Industrial Relations had jurisdiction to take cognizance of Cases
Nos. 1183-MC and V-30 and to issue the questioned orders in those two cases; and
(3) that the petition for certiorari and prohibition with preliminary injunction was
prematurely filed because the orders of the CIR sought to be annulled were still the
subjects of pending motions for reconsideration before the CIR en banc when said
petition for certiorari and prohibition with preliminary injunction was filed before this
Court.
CASE G.R. NO. L-21462
This case, G.R. No. L-21462, involves also CIR Case No. 1183-MC. As already
stated Case No. 1183-MC relates to a petition for certification election filed by the
Faculty Club as a labor union, praying that it be certified as the sole and exclusive
bargaining representative of all employees of the University. This petition was
opposed by the University, and at the same time it filed a motion to dismiss said
petition. But before Judge Baltazar Villanueva could act on the petition for certification
election and the motion to dismiss the same, Faculty Club filed a motion to withdraw
said petition upon the ground that the issue raised in Case No. 1183-MC were
absorbed by Case No. 41-IPA which was certified by the President of the Philippines.
Judge Baltazar Villanueva, by order April 6, 1963, granted the motion to withdraw.
The University filed a motion for reconsideration of that order of April 6, 1963 by the
CIR en banc. That motion for reconsideration was pending action by the CIR en
banc when the petition for certiorariand prohibition with preliminary injunction in Case
G.R. no. L-21278 was filed on May 10, 1963. As earlier stated this Court, in Case
G.R. No. L-21278, issued a writ of preliminary injunction on May 10, 1963, ordering
respondent Judge Bautista, until further order from this Court, to desist and refrain
from further proceeding in the premises (Cases Nos. 41-IPA, 1183-MC and V-30 of
the Court of Industrial Relations).
On June 5, 1963, that is, after this Court has issued the writ of preliminary injunction
in Case G.R. No. L-21278, the CIR en banc issued a resolution denying the motion
for reconsideration of the order of April 6, 1963 in Case No. 1183-MC.
On July 8, 1963, the University filed before this Court a petition for certiorari, by way
of an appeal from the resolution of the CIR en banc, dated June 5, 1963, denying the
motion for reconsideration of the order of April 6, 1963 in Case No. 1183-MC. This
petition was docketed as G.R. No. L-21462. In its petition for certiorari, the University
alleges (1) that the resolution of the Court of Industrial Relations of June 5, 1963 was
null and void because it was issued in violation of the writ of preliminary injunction
issued in Case G.R. No. L-21278; (2) that the issues of employer-employee
relationship, the alleged status as a labor union, majority representation and
designation as bargaining representative in an appropriate unit of the Faculty Club
should have been resolved first in Case No. 1183-MC prior to the determination of the
issues in Case No. 41-IPA and therefore the motion to withdraw the petition for
certification election should not have been granted upon the ground that the issues in
the first case have been absorbed in the second case; and (3) the lower court acted
without or in excess of jurisdiction in taking cognizance of the petition for certification
election and that the same should have been dismissed instead of having been
ordered withdrawn. The University prayed that the proceedings in Case No. 1183-MC
and the order of April 6, 1963 and the resolution of June 5, 1963 issued therein be
annulled, and that the CIR be ordered to dismiss Case No. 1183-MC on the ground of
lack of jurisdiction.
The Faculty Club filed its answer, admitting some, and denying other, allegations in
the petition for certiorari; and specially alleging that the lower court's order granting
the withdrawal of the petition for certification election was in accordance with law, and
that the resolution of the court en banc on June 5, 1963 was not a violation of the writ
of preliminary injunction issued in Case G.R. No. L-21278 because said writ of
injunction was issued against Judge Jose S. Bautista and not against the Court of
Industrial Relations, much less against Judge Baltazar Villanueva who was the trial
judge of Case No. 1183-MC.
CASE G.R. NO. L-21500
This case, G.R. No. L-21500, involves also CIR Case No. 41-IPA. As earlier stated,
Case No. 41-IPA relates to the strike staged by the members of the Faculty Club and
the dispute was certified by the President of the Philippines to the CIR. The University
filed a motion to dismiss that case upon the ground that the CIR has no jurisdiction
over the case, and on March 30, 1963 Judge Jose S. Bautista issued an order
denying the motion to dismiss and declaring that the Industrial Peace Act is
applicable to both parties in the case and that the CIR had acquired jurisdiction over
the case by virtue of the presidential certification; and in that same order Judge
Bautista ordered the strikers to return to work and the University to take them back
under the last terms and conditions existing before the dispute arose; and enjoined
the University from dismissing any employee or laborer without previous authority
from the court. On April 1, 1963, the University filed a motion for reconsideration of
the order of March 30, 1963 by the CIR en banc. That motion for reconsideration was
pending action by the CIR en banc when the petition for certiorari and prohibition with
preliminary injunction in Case G.R. No. L-21278 was filed on May 10, 1963. As we
have already stated, this Court in said case G.R. No. L-21278, issued a writ of
preliminary injunction on May 10, 1963 ordering respondent Judge Jose S. Bautista,
until further order from this Court, to desist and refrain from further proceeding in the
premises (Cases Nos. 41-IPA, 1183-MC and V-30 of the Court of Industrial
Relations).
On July 2, 1963, the University received a copy of the resolution of the CIR en banc,
dated May 7, 1963 but actually received and stamped at the Office of the Clerk of the
CIR on June 28, 1963, denying the motion for reconsideration of the order dated
March 30, 1963 in Case No. 41-IPA.
On July 23, 1963, the University filed before this Court a petition for certiorari, by way
of an appeal from the resolution of the Court of Industrial Relations en banc dated
May 7, 1963 (but actually received by said petitioner on July 2, 1963) denying the
motion for reconsideration of the order of March 30, 1963 in Case No. 41-IPA. This
petition was docketed as G.R. No. L-21500. In its petition for certiorari the University
alleges (1) that the resolution of the CIR en banc, dated May 7, 1963 but filed with the
Clerk of the CIR on June 28, 1963, in Case No. 41-IPA, is null and void because it
was issued in violation of the writ of preliminary injunction issued by this Court in G.R.
No. L-21278; (2) that the CIR, through its Presiding Judge, had no jurisdiction to take
cognizance of Case No. 41-IPA and the order of March 30, 1963 and the resolution
dated May 7, 1963 issued therein are null and void; (3) that the certification made by
the President of the Philippines is not authorized by Section 10 of Republic Act 875,
but is violative thereof; (4) that the Faculty Club has no right to unionize or organize
as a labor union for collective bargaining purposes and to be certified as a collective
bargaining agent within the purview of the Industrial Peace Act, and consequently it
has no right to strike and picket on the ground of petitioner's alleged refusal to
bargain collectively where such duty does not exist in law and is not enforceable
against an educational institution; and (5) that the return-to-work order of March 30,
1963 is improper and illegal. The petition prayed that the proceedings in Case No. 41-
IPA be annulled, that the order dated March 30, 1963 and the resolution dated May 7,
1963 be revoked, and that the lower court be ordered to dismiss Case 41-IPA on the
ground of lack of jurisdiction.
On September 10, 1963, the Faculty Club, through counsel, filed a motion to dismiss
the petition for certiorari on the ground that the petition being filed by way of an
appeal from the orders of the Court of Industrial Relations denying the motion to
dismiss in Case No. 41-IPA, the petition for certiorari is not proper because the orders
appealed from are interlocutory in nature.
This Court, by resolution of September 26, 1963, ordered that these three cases
(G.R. Nos. L-21278, L-21462 and L-21500) be considered together and the motion to
dismiss in Case G.R. No. L-21500 be taken up when the cases are decided on the
merits after the hearing.
Brushing aside certain technical questions raised by the parties in their pleadings, We
proceed to decide these three cases on the merits of the issues raised.
The University has raised several issues in the present cases, the pivotal one being
its claim that the Court of Industrial Relations has no jurisdiction over the parties and
the subject matter in CIR Cases 41-IPA, 1183-MC and V-30, brought before it, upon
the ground that Republic Act No. 875 is not applicable to the University because it is
an educational institution and not an industrial establishment and hence not an
"employer" in contemplation of said Act; and neither is Republic Act No. 875
applicable to the members of the Faculty Club because the latter are independent
contractors and, therefore, not employees within the purview of the said Act.
In support of the contention that being an educational institution it is beyond the
scope of Republic Act No. 875, the University cites cases decided by this Court: Boy
Scouts of the Philippines vs. Juliana Araos, L-10091, Jan. 29, 1958; University of San
Agustin vs. CIR, et al.,  L-12222, May 28, 1958; Cebu Chinese High School vs.
Philippine Land-Air-Sea Labor Union, PLASLU, L-12015, April 22, 1959; La
Consolacion College, et al. vs. CIR, et al.,  L-13282, April 22, 1960; University of the
Philippines, et al. vs. CIR, et al., L-15416, April 8, 1960; Far Eastern University vs.
CIR, L-17620, August 31, 1962. We have reviewed these cases, and also related
cases subsequent thereto, and We find that they do not sustain the contention of the
University. It is true that this Court has ruled that certain educational institutions, like
the University of Santo Tomas, University of San Agustin, La Consolacion College,
and other juridical entities, like the Boy Scouts of the Philippines and Manila
Sanitarium, are beyond the purview of Republic Act No. 875 in the sense that the
Court of Industrial Relations has no jurisdiction to take cognizance of charges of
unfair labor practice filed against them, but it is nonetheless true that the principal
reason of this Court in ruling in those cases that those institutions are excluded from
the operation of Republic Act 875 is that those entities are not organized, maintained
and operated for profit and do not declare dividends to stockholders. The decision in
the case of University of San Agustin vs. Court of Industrial Relations, G.R. No. L-
12222, May 28, 1958, is very pertinent. We quote a portion of the decision:
It appears that the University of San Agustin, petitioner herein, is an
educational institution conducted and managed by a "religious non-stock
corporation duly organized and existing under the laws of the Philippines." It
was organized not for profit or gain or division of the dividends among its
stockholders, but solely for religious and educational purposes. It likewise
appears that the Philippine Association of College and University Professors,
respondent herein, is a non-stock association composed of professors and
teachers in different colleges and universities and that since its organization
two years ago, the university has adopted a hostile attitude to its formation
and has tried to discriminate, harass and intimidate its members for which
reason the association and the members affected filed the unfair labor
practice complaint which initiated this proceeding. To the complaint of unfair
labor practice, petitioner filed an answer wherein it disputed the jurisdiction
of the Court of Industrial Relations over the controversy on the following
grounds:
"(a) That complainants therein being college and/or university
professors were not "industrial" laborers or employees, and the
Philippine Association of College and University Professors being
composed of persons engaged in the teaching profession, is not
and cannot be a legitimate labor organization within the meaning of
the laws creating the Court of Industrial Relations and defining its
powers and functions;
"(b) That the University of San Agustin, respondent therein,
is not  an institution established for the purpose of gain or division of
profits, and consequently, it is not an "industrial" enterprise and the
members of its teaching staff are not engaged in "industrial"
employment (U.S.T. Hospital Employees Association vs. Sto.
Tomas University Hospital, G.R. No. L-6988, 24 May 1954; and
San Beda College vs. Court of Industrial Relations and National
Labor Union, G.R. No. L-7649, 29 October 1955; 51 O.G. (Nov.
1955) 5636-5640);
"(c) That, as a necessary consequence, alleged controversy
between therein complainants and respondent is not an "industrial"
dispute, and the Court of Industrial Relations has no
jurisdiction, not only on the parties but also over the subject matter
of the complaint."
The issue now before us is: Since the University of San Agustin is not an
institution established for profit or gain, nor an industrial enterprise, but one
established exclusively for educational purposes, can it be said that its
relation with its professors is one of employer and employee that comes
under the jurisdiction of the Court of Industrial Relations? In other words, do
the provisions of the Magna Carta on unfair labor practice apply to the
relation between petitioner and members of respondent association?
The issue is not new. Thus, in the case of Boy Scouts of the Philippines v.
Juliana V. Araos, G.R. No. L-10091, promulgated on January 29, 1958, this
Court, speaking thru Mr. Justice Montemayor, answered the query in the
negative in the following wise:
"The main issue involved in the present case is whether or not a
charitable institution or one organized not for profit but for more
elevated purposes, charitable, humanitarian, etc., like the Boy
Scouts of the Philippines, is included in the definition of "employer"
contained in Republic Act 875, and whether the employees of said
 institution fall under the definition of "employee" also contained in
the same Republic Act. If they are included, then any act which
may be considered unfair labor practice, within the meaning of said
Republic Act, would come under the jurisdiction of the Court of
Industrial Relations; but if they do not fall within the scope of said
Republic Act, particularly, its definitions of employer and employee,
then the Industrial Court would have no jurisdiction at all.
xxx      xxx      xxx
"On the basis of the foregoing considerations, there is every reason
to believe that our labor legislation from Commonwealth Act No.
103, creating the Court of Industrial Relations, down through the
Eight-Hour Labor Law, to the Industrial Peace Act, was intended by
the Legislature to apply only to industrial employment and to govern
the relations between employers engaged in industry and
occupations for purposes of profit and gain, and their industrial
employees, but not to organizations and entities which are
organized, operated and maintained not for profit or gain, but for
elevated and lofty purposes, such as, charity, social service,
education and instruction, hospital and medical service, the
encouragement and promotion of character, patriotism and kindred
virtues in youth of the nation, etc.
"In conclusion, we find and hold that Republic Act No. 875,
particularly, that portion thereof regarding labor disputes and unfair
labor practice, does not apply to the Boy Scouts of the Philippines,
and consequently, the Court of Industrial Relations had no
jurisdiction to entertain and decide the action or petition filed by
respondent Araos. Wherefore, the appealed decision and resolution
of the CIR are hereby set aside, with costs against respondent."
There being a close analogy between the relation and facts involved in the
two cases, we cannot but conclude that the Court of Industrial Relations has
no jurisdiction to entertain the complaint for unfair labor practice lodged by
respondent association against petitioner and, therefore, we hereby set
aside the order and resolution subject to the present petition, with costs
against respondent association.
The same doctrine was confirmed in the case of University of Santo Tomas v. Hon.
Baltazar Villanueva, et al., G.R. No. L-13748, October 30, 1959, where this Court
ruled that:
In the present case, the record reveals that the petitioner University of Santo
Tomas is not an industry organized for profit but an institution of learning
devoted exclusively to the education of the youth. The Court of First Instance
of Manila in its decision in Civil Case No. 28870, which has long become
final and consequently the settled law in the case, found as established by
the evidence adduced by the parties therein (herein petitioner and
respondent labor union) that while the University collects fees from its
students, all its income is used for the improvement and enlargement of the
institution. The University declares no dividend, and the members of the
corporation who founded it, as ordained in its articles of incorporation,
receive no material compensation for the time and sacrifice they render to
the University and its students. The respondent union itself in a case before
the Industrial Court (Case No. 314-MC) has averred that "the University of
Santo Tomas, like the San Beda College, is an educational institution
operated not for profit but for the sole purpose of educating young men."
(See Annex "B" to petitioner's motion to dismiss.). It is apparent, therefore,
that on the face of the record the University of Santo Tomas is not a
corporation created for profit but an educational institution and therefore not
an industrial or business organization.
In the case of La Consolacion College, et al. vs. CIR, et al., G.R. No. L-13282, April
22, 1960, this Court repeated the same ruling when it said:
The main issue in this appeal by petitioner is that the industry trial court
committed an error in holding that it has jurisdiction to act in this case even if
it involves unfair labor practice considering that the La Consolacion College
is not a business enterprise but an educational institution not organized for
profit.
If the claim that petitioner is an educational institution not operated for profit
is true, which apparently is the case, because the very court a quo  found
that it has no stockholder, nor capital . . . then we are of the opinion that the
same does not come under the jurisdiction of the Court of Industrial
Relations in view of the ruling in the case of Boy Scouts of the Philippines v.
Juliana V. Araos, G.R. No. L-10091, decided on January 29, 1958.
It is noteworthy that the cases of the University of San Agustin, the University of
Santo Tomas, and La Consolacion College, cited above, all involve charges of unfair
labor practice under Republic Act No. 875, and the uniform rulings of this Court are
that the Court of Industrial Relations has no jurisdiction over the charges because
said Act does not apply to educational institutions that are not operated or maintained
for profit and do not declare dividends. On the other hand, in the cases of Far Eastern
University v. CIR, et al.,  G.R. No. L-17620, August 31, 1962, this Court upheld the
decision of the Court of Industrial Relations finding the Far Eastern University, also an
educational institution, guilty of unfair labor practice. Among the findings of fact in said
case was that the Far Eastern University made profits from the school year 1952-
1953 to 1958-1959. In affirming the decision of the lower court, this Court had thereby
ratified the ruling of the Court of Industrial Relations which applied the Industrial
Peace Act to educational institutions that are organized, operated and maintained for
profit.
It is also noteworthy that in the decisions in the cases of the Boy Scouts of the
Philippines, the University of San Agustin, the University of Sto. Tomas, and La
Consolacion College, this Court was not unanimous in the view that the Industrial
Peace Act (Republic Act No. 875) is not applicable to charitable, eleemosynary or
non-profit organizations — which include educational institutions not operated for
profit. There are members of this Court who hold the view that the Industrial Peace
Act would apply also to non-profit organizations or entities — the only exception being
the Government, including any political subdivision or instrumentality thereof, in so far
as governmental functions are concerned. However, in the Far Eastern University
case this Court is unanimous in supporting the view that an educational institution that
is operated for profit comes within the scope of the Industrial Peace Act. We consider
it a settled doctrine of this Court, therefore, that the Industrial Peace Act is applicable
to any organization or entity — whatever may be its purpose when it was created —
that is operated for profit or gain.
Does the University operate as an educational institution for profit? Does it declare
dividends for its stockholders? If it does not, it must be declared beyond the purview
of Republic Act No. 875; but if it does, Republic Act No. 875 must apply to it. The
University itself admits that it has declared dividends.3 The CIR in its order dated
March 30, 1963 in CIR Case No. 41-IPA — which order was issued after evidence
was heard — also found that the University is not for strictly educational purposes
and that "It realizes profits and parts of such earning is distributed as dividends to
private stockholders or individuals (Exh. A and also 1 to 1-F, 2-x 3-x and 4-x)"4 Under
this circumstance, and in consonance with the rulings in the decisions of this Court,
above cited, it is obvious that Republic Act No. 875 is applicable to herein petitioner
Feati University.
But the University claims that it is not an employer within the contemplation of
Republic Act No. 875, because it is not an industrial establishment. At most, it says, it
is only a lessee of the services of its professors and/or instructors pursuant to a
contract of services entered into between them. We find no merit in this claim. Let us
clarify who is an "employer" under the Act. Section 2(c) of said Act provides:
Sec. 2. Definitions.—As used in this Act —
(c) The term employer include any person acting in the interest of an
employer, directly or indirectly, but shall not include any labor organization
(otherwise than when acting as an employer) or any one acting in the
capacity or agent of such labor organization.
It will be noted that in defining the term "employer" the Act uses the word "includes",
which it also used in defining "employee". [Sec. 2 (d)], and "representative" [Sec.
2(h)]; and not the word "means" which the Act uses in defining the terms "court" [Sec.
2(a)], "labor organization" [Sec. 2(e)], "legitimate labor organization [Sec. 2(f)],
"company union" [Sec. 2(g)], "unfair labor practice" [Sec. 2(i)], "supervisor" [Sec. 2(k)],
"strike" [Sec. 2(l)] and "lock-out" [Sec. 2(m)]. A methodical variation in terminology is
manifest. This variation and distinction in terminology and phraseology cannot be
presumed to have been the inconsequential product of an oversight; rather, it must
have been the result of a deliberate and purposeful act, more so when we consider
that as legislative records show, Republic Act No. 875 had been meticulously and
painstakingly drafted and deliberated upon. In using the word "includes" and not
"means", Congress did not intend to give a complete definition of "employer", but
rather that such definition should be complementary to what is commonly understood
as employer. Congress intended the term to be understood in a broad meaning
because, firstly, the statutory definition includes not only "a principal employer but
also a person acting in the interest of the employer"; and, secondly, the Act itself
specifically enumerated those who are not included in the term "employer", namely:
(1) a labor organization (otherwise than when acting as an employer), (2) anyone
acting in the capacity of officer or agent of such labor organization [Sec. 2(c)], and (3)
the Government and any political subdivision or instrumentality thereof insofar as the
right to strike for the purpose of securing changes or modifications in the terms and
conditions of employment is concerned (Section 11). Among these statutory
exemptions, educational institutions are not included; hence, they can be included in
the term "employer". This Court, however, has ruled that those educational
institutions that are not operated for profit are not within the purview of Republic Act
No. 875.5
As stated above, Republic Act No. 875 does not give a comprehensive but only a
complementary definition of the term "employer". The term encompasses those that
are in ordinary parlance "employers." What is commonly meant by "employer"? The
term "employer" has been given several acceptations. The lexical definition is "one
who employs; one who uses; one who engages or keeps in service;" and "to employ"
is "to provide work and pay for; to engage one's service; to hire." (Webster's New
Twentieth Century Dictionary, 2nd ed., 1960, p. 595). The Workmen's Compensation
Act defines employer as including "every person or association of persons,
incorporated or not, public or private, and the legal representative of the deceased
employer" and "includes the owner or lessee of a factory or establishment or place of
work or any other person who is virtually the owner or manager of the business
carried on in the establishment or place of work but who, for reason that there is an
independent contractor in the same, or for any other reason, is not the direct
employer of laborers employed there." [Sec. 39(a) of Act No. 3428.] The Minimum
Wage Law states that "employer includes any person acting directly or indirectly in
the interest of the employer in relation to an employee and shall include the
Government and the government corporations". [Rep. Act No. 602, Sec. 2(b)]. The
Social Security Act defines employer as "any person, natural or juridical, domestic or
foreign, who carries in the Philippines any trade, business, industry, undertaking, or
activity of any kind and uses the services of another person who is under his orders
as regards the employment, except the Government and any of its political
subdivisions, branches or instrumentalities, including corporations owned or
controlled by the Government." (Rep. Act No. 1161, Sec. 8[c]).
This Court, in the cases of the The Angat River Irrigation System, et al. vs. Angat
River Workers' Union (PLUM), et al., G.R. Nos. L-10934 and L-10944, December 28,
1957, which cases involve unfair labor practices and hence within the purview of
Republic Act No. 875, defined the term employer as follows:
An employer is one who employs the services of others; one for whom
employees work and who pays their wages or salaries (Black Law
Dictionary, 4th ed., p. 618).
An employer includes any person acting in the interest of an employer,
directly or indirectly (Sec. 2-c, Rep. Act 875).
Under none of the above definitions may the University be excluded, especially so if it
is considered that every professor, instructor or teacher in the teaching staff of the
University, as per allegation of the University itself, has a contract with the latter for
teaching services, albeit for one semester only. The University engaged the services
of the professors, provided them work, and paid them compensation or salary for their
services. Even if the University may be considered as a lessee of services under a
contract between it and the members of its Faculty, still it is included in the term
"employer". "Running through the word `employ' is the thought that there has been an
agreement on the part of one person to perform a certain service in return for
compensation to be paid by an employer. When you ask how a man is employed, or
what is his employment, the thought that he is under agreement to perform some
service or services for another is predominant and paramount." (Ballentine Law
Dictionary, Philippine ed., p. 430, citing Pinkerton National Detective Agency v.
Walker, 157 Ga. 548, 35 A. L. R. 557, 560, 122 S.E. Rep. 202).
To bolster its claim of exception from the application of Republic Act No. 875, the
University contends that it is not state that the employers included in the definition of
2 (c) of the Act. This contention can not be sustained. In the first place, Sec. 2 (c) of
Republic Act No. 875 does not state that the employers included in the definition of
the term "employer" are only and exclusively "industrial establishments"; on the
contrary, as stated above, the term "employer" encompasses all employers except
those specifically excluded by the Act. In the second place, even the Act itself does
not refer exclusively to industrial establishments and does not confine its application
thereto. This is patent inasmuch as several provisions of the Act are applicable to
non-industrial workers, such as Sec. 3, which deals with "employees' right to self-
organization"; Sections 4 and 5 which enumerate unfair labor practices; Section 8
which nullifies private contracts contravening employee's rights; Section 9 which
relates to injunctions in any case involving a labor dispute; Section 11 which prohibits
strikes in the government; Section 12 which provides for the exclusive collective
bargaining representation for labor organizations; Section 14 which deals with the
procedure for collective bargaining; Section 17 which treats of the rights and
conditions of membership in labor organizations; Sections 18, 19, 20 and 21 which
provide respectively for the establishment of conciliation service, compilation of
collective bargaining contracts, advisory labor-management relations; Section 22
which empowers the Secretary of Labor to make a study of labor relations; and
Section 24 which enumerates the rights of labor organizations. (See Dissenting
Opinion of Justice Concepcion in Boy Scouts of the Philippines v. Juliana Araos, G.R.
No. L-10091, January 29, 1958.)
This Court, in the case of Boy Scouts of the Philippines v. Araos, supra, had occasion
to state that the Industrial Peace Act "refers only to organizations and entities created
and operated for profits, engaged in a profitable trade, occupation or industry". It
cannot be denied that running a university engages time and attention; that it is an
occupation or a business from which the one engaged in it may derive profit or gain.
The University is not an industrial establishment in the sense that an industrial
establishment is one that is engaged in manufacture or trade where raw materials are
changed or fashioned into finished products for use. But for the purposes of the
Industrial Peace Act the University is an industrial establishment because it is
operated for profit and it employs persons who work to earn a living. The term
"industry", for the purposes of the application of our labor laws should be given a
broad meaning so as to cover all enterprises which are operated for profit and which
engage the services of persons who work to earn a living.
The word "industry" within State Labor Relations Act controlling labor
relations in industry, cover labor conditions in any field of employment where
the objective is earning a livelihood on the one side and gaining of a profit on
the other. Labor Law Sec. 700 et seq. State Labor Relations Board vs.
McChesney, 27 N.Y.S. 2d 866, 868." (Words and Phrases, Permanent
Edition, Vol. 21, 1960 edition p. 510).
The University urges that even if it were an employer, still there would be no
employer-employee relationship between it and the striking members of the Faculty
Club because the latter are not employees within the purview of Sec. 2(d) of Republic
Act No. 875 but are independent contractors. This claim is untenable.
Section 2 (d) of Republic Act No. 875 provides:
(d) The term "employee" shall include any employee and shall not be limited
to the employee of a particular employer unless the act explicitly states
otherwise and shall include any individual whose work has ceased as a
consequence of, or in connection with, any current labor dispute or because
of any unfair labor practice and who has not obtained any other substantially
equivalent and regular employment.
This definition is again, like the definition of the term "employer" [Sec. 2(c)], by the
use of the term "include", complementary. It embraces not only those who are usually
and ordinarily considered employees, but also those who have ceased as employees
as a consequence of a labor dispute. The term "employee", furthermore, is not limited
to those of a particular employer. As already stated, this Court in the cases of The
Angat River Irrigation System, et al. v. Angat River Workers' Union (PLUM), et
al., supra, has defined the term "employer" as "one who employs the services of
others; one for whom employees work and who pays their wages or salaries.
"Correlatively, an employee must be one who is engaged in the service of another;
who performs services for another; who works for salary or wages. It is admitted by
the University that the striking professors and/or instructors are under contract to
teach particular courses and that they are paid for their services. They are, therefore,
employees of the University.
In support of its claim that the members of the Faculty Club are not employees of the
University, the latter cites as authority Francisco's Labor Laws, 2nd ed., p. 3, which
states:
While the term "workers" as used in a particular statute, has been regarded
as limited to those performing physical labor, it has been held to embrace
stenographers and bookkeepers. Teachers are not included, however.
It is evident from the above-quoted authority that "teachers" are not to be included
among those who perform "physical labor", but it does not mean that they are not
employees. We have checked the source of the authority, which is 31 Am. Jur., Sec.
3, p. 835, and the latter cites Huntworth v. Tanner, 87 Wash 670, 152 P. 523, Ann
Cas 1917 D 676. A reading of the last case confirms Our view.
That teachers are "employees' has been held in a number of cases (Aebli v. Board of
Education of City and County of San Francisco, 145 P. 2d 601, 62 Col. App 2.d 706;
Lowe & Campbell Sporting Goods Co. v. Tangipahoa Parish School Board, La. App.,
15 So. 2d 98, 100; Sister Odelia v. Church of St. Andrew, 263 N. W. 111, 112, 195
Minn. 357, cited in Words and Phrases, Permanent ed., Vol. 14, pp. 806-807). This
Court in the Far Eastern University case, supra, considered university instructors as
employees and declared Republic Act No. 875 applicable to them in their employment
relations with their school. The professors and/or instructors of the University neither
ceased to be employees when they struck, for Section 2 of Rep. Act 875 includes
among employees any individual whose work has ceased as consequence of, or in
connection with a current labor dispute. Striking employees maintain their status as
employees of the employer. (Western Cartridge Co. v. NLRB, C.C.A. 7, 139 F2d 855,
858).
The contention of the University that the professors and/or instructors are
independent contractors, because the University does not exercise control over their
work, is likewise untenable. This Court takes judicial notice that a university controls
the work of the members of its faculty; that a university prescribes the courses or
subjects that professors teach, and when and where to teach; that the professors'
work is characterized by regularity and continuity for a fixed duration; that professors
are compensated for their services by wages and salaries, rather than by profits; that
the professors and/or instructors cannot substitute others to do their work without the
consent of the university; and that the professors can be laid off if their work is found
not satisfactory. All these indicate that the university has control over their work; and
professors are, therefore, employees and not independent contractors. There are
authorities in support of this view.
The principal consideration in determining whether a workman is an
employee or an independent contractor is the right to control the manner of
doing the work, and it is not the actual exercise of the right by interfering with
the work, but the right to control, which constitutes the test. (Amalgamated
Roofing Co. v. Travelers' Ins. Co., 133 N.E. 259, 261, 300 Ill. 487, quoted in
Words and Phrases, Permanent ed., Vol. 14, p. 576).
Where, under Employers' Liability Act, A was instructed when and where to
work . . . he is an employee, and not a contractor, though paid specified sum
per square. (Heine v. Hill, Harris & Co., 2 La. App. 384, 390, in Words and
Phrases, loc, cit.) .
Employees are those who are compensated for their labor or services by
wages rather than by profits. (People vs. Distributors Division, Smoked Fish
Workers Union Local No. 20377, Sup. 7 N. Y. S. 2d 185, 187 in Words and
Phrases, loc, cit.)
Services of employee or servant, as distinguished from those of a contractor,
are usually characterized by regularity and continuity of work for a fixed
period or one of indefinite duration, as contrasted with employment to do a
single act or a series of isolated acts; by compensation on a fixed salary
rather than one regulated by value or amount of work; . . . (Underwood v.
Commissioner of Internal Revenue, C.C.A., 56 F. 2d 67, 71 in Words and
Phrases, op. cit., p. 579.)
Independent contractors can employ others to work and accomplish
contemplated result without consent of contractee, while "employee" cannot
substitute another in his place without consent of his employer. (Luker Sand
& Gravel Co. v. Industrial Commission, 23 P. 2d 225, 82 Utah, 188, in Words
and Phrases, Vol. 14, p. 576).
Moreover, even if university professors are considered independent contractors, still
they would be covered by Rep. Act No. 875. In the case of the Boy Scouts of the
Philippines v. Juliana Araos, supra, this Court observed that Republic Act No. 875
was modelled after the Wagner Act, or the National Labor Relations Act, of the United
States, and this Act did not exclude "independent contractors" from the orbit of
"employees". It was in the subsequent legislation — the Labor Management Relation
Act (Taft-Harley 
Act) — that "independent contractors" together with agricultural laborers, individuals
in domestic service of the home, supervisors, and others were excluded. (See
Rothenberg on Labor Relations, 1949, pp. 330-331).
It having been shown that the members of the Faculty Club are employees, it follows
that they have a right to unionize in accordance with the provisions of Section 3 of the
Magna Carta of Labor (Republic Act No. 875) which provides as follows:
Sec. 3. Employees' right to self-organization.—Employees shall have the
right to self-organization and to form, join or assist labor organizations of
their own choosing for the purpose of collective bargaining through
representatives of their own choosing and to engage in concerted activities
for the purpose of collective bargaining and other mutual aid or protection. . .
.
We agree with the statement of the lower court, in its order of March 30, 1963 which
is sought to be set aside in the instant case, that the right of employees to self-
organization is guaranteed by the Constitution, that said right would exist even if
Republic Act No. 875 is repealed, and that regardless of whether their employers are
engaged in commerce or not. Indeed, it is Our considered view that the members of
the faculty or teaching staff of private universities, colleges, and schools in the
Philippines, regardless of whether the university, college or school is run for profit or
not, are included in the term "employees" as contemplated in Republic Act No. 875
and as such they may organize themselves pursuant to the above-quoted provision of
Section 3 of said Act. Certainly, professors, instructors or teachers of private
educational institutions who teach to earn a living are entitled to the protection of our
labor laws — and one such law is Republic Act No. 875.
The contention of the University in the instant case that the members of the Faculty
Club can not unionize and the Faculty Club can not exist as a valid labor organization
is, therefore, without merit. The record shows that the Faculty Club is a duly
registered labor organization and this fact is admitted by counsel for the University.5a
The other issue raised by the University is the validity of the Presidential certification.
The University contends that under Section 10 of Republic Act No. 875 the power of
the President of the Philippines to certify is subject to the following conditions,
namely: (1) that here is a labor dispute, and (2) that said labor dispute exists in an
industry that is vital to the national interest. The University maintains that those
conditions do not obtain in the instant case. This contention has also no merit.
We have previously stated that the University is an establishment or enterprise that is
included in the term "industry" and is covered by the provisions of Republic Act No.
875. Now, was there a labor dispute between the University and the Faculty Club?
Republic Act No. 875 defines a labor dispute as follows:
The term "labor dispute" includes any controversy 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 regardless of whether the
disputants stand in proximate relation of employer and employees.
The test of whether a controversy comes within the definition of "labor dispute"
depends on whether the controversy involves or concerns "terms, tenure or condition
of employment" or "representation." It is admitted by the University, in the instant
case, that on January 14, 1963 the President of the Faculty Club wrote to the
President of the University a letter informing the latter of the organization of the
Faculty Club as a labor union, duly registered with the Bureau of Labor Relations; that
again on January 22, 1963 another letter was sent, to which was attached a list of
demands consisting of 26 items, and asking the President of the University to answer
within ten days from date of receipt thereof; that the University questioned the right of
the Faculty Club to be the exclusive representative of the majority of the employees
and asked proof that the Faculty Club had been designated or selected as exclusive
representative by the vote of the majority of said employees; that on February 1, 1963
the Faculty Club filed with the Bureau of Labor Relations a notice of strike alleging as
reason therefor the refusal of the University to bargain collectively with the
representative of the faculty members; that on February 18, 1963 the members of the
Faculty Club went on strike and established picket lines in the premises of the
University, thereby disrupting the schedule of classes; that on March 1, 1963 the
Faculty Club filed Case No. 3666-ULP for unfair labor practice against the University,
but which was later dismissed (on April 2, 1963 after Case 41-IPA was certified to the
CIR); and that on March 7, 1963 a petition for certification election, Case No. 1183-
MC, was filed by the Faculty Club in the CIR. 6 All these admitted facts show that the
controversy between the University and the Faculty Club involved terms and
conditions of employment, and the question of representation. Hence, there was a
labor dispute between the University and the Faculty Club, as contemplated by
Republic Act No. 875. It having been shown that the University is an institution
operated for profit, that is an employer, and that there is an employer-employee
relationship, between the University and the members of the Faculty Club, and it
having been shown that a labor dispute existed between the University and the
Faculty Club, the contention of the University, that the certification made by the
President is not only not authorized by Section 10 of Republic Act 875 but is violative
thereof, is groundless.
Section 10 of Republic Act No. 875 provides:
When in the opinion of the President of the Philippines there exists a labor
dispute in an industry indispensable to the national interest and when such
labor dispute is certified by the President to the Court of Industrial Relations,
said Court may cause to be issued a restraining order forbidding the
employees to strike or the employer to lockout the employees, and if no
other solution to the dispute is found, the Court may issue an order fixing the
terms and conditions of employment.
This Court had occasion to rule on the application of the above-quoted provision of
Section 10 of Republic Act No. 875. In the case of Pampanga Sugar Development
Co. v. CIR, et al., G.R. No. L-13178, March 24, 1961, it was held:
It thus appears that when in the opinion of the President a labor dispute
exists in an industry indispensable to national interest and he certifies it to
the Court of Industrial Relations the latter acquires jurisdiction to act thereon
in the manner provided by law. Thus the court may take either of the
following courses: it may issue an order forbidding the employees to strike or
the employer to lockout its employees, or, failing in this, it may issue an
order fixing the terms and conditions of employment. It has no other
alternative. It can not throw the case out in the assumption that the
certification was erroneous.
xxx      xxx      xxx
. . . The fact, however, is that because of the strike declared by the members
of the minority union which threatens a major industry the President deemed
it wise to certify the controversy to the Court of Industrial Relations for
adjudication. This is the power that the law gives to the President the
propriety of its exercise being a matter that only devolves upon him. The
same is not the concern of the industrial court. What matters is that by virtue
of the certification made by the President the case was placed under the
jurisdiction of said court. (Emphasis supplied)
To certify a labor dispute to the CIR is the prerogative of the President under the law,
and this Court will not interfere in, much less curtail, the exercise of that prerogative.
The jurisdiction of the CIR in a certified case is exclusive (Rizal Cement Co., Inc. v.
Rizal Cement Workers Union (FFW), et al., G.R. No. L-12747, July 30, 1960). Once
the jurisdiction is acquired pursuant to the presidential certification, the CIR may
exercise its broad powers as provided in Commonwealth Act 103. All phases of the
labor dispute and the employer-employee relationship may be threshed out before the
CIR, and the CIR may issue such order or orders as may be necessary to make
effective the exercise of its jurisdiction. The parties involved in the case may appeal to
the Supreme Court from the order or orders thus issued by the CIR.
And so, in the instant case, when the President took into consideration that the
University "has some 18,000 students and employed approximately 500 faculty
members", that `the continued disruption in the operation of the University will
necessarily prejudice the thousand of students", and that "the dispute affects the
national interest",7and certified the dispute to the CIR, it is not for the CIR nor this
Court to pass upon the correctness of the reasons of the President in certifying the
labor dispute to the CIR.
The third issue raised by the University refers to the question of the legality of the
return-to-work order (of March 30, 1963 in Case 41-IPA) and the order implementing
the same (of April 6, 1963). It alleges that the orders are illegal upon the grounds: (1)
that Republic Act No. 875, supplementing Commonwealth Act No. 103, has
withdrawn from the CIR the power to issue a return-to-work order; (2) that the only
power granted by Section 10 of Republic Act No. 875 to the CIR is to issue an order
forbidding the employees to strike or forbidding the employer to lockout the
employees, as the case may be, before either contingency had become a fait
accompli; (3) that the taking in by the University of replacement professors was valid,
and the return-to-work order of March 30, 1963 constituted impairment of the
obligation of contracts; and (4) the CIR could not issue said order without having
previously determined the legality or illegality of the strike.
The contention of the University that Republic Act No. 875 has withdrawn the power
of the Court of Industrial Relations to issue a return-to-work order exercised by it
under Commonwealth Act No. 103 can not be sustained. When a case is certified by
the President to the Court of Industrial Relations, the case thereby comes under the
operation of Commonwealth Act No. 103, and the Court may exercise the broad
powers and jurisdiction granted to it by said Act. Section 10 of Republic Act No. 875
empowers the Court of Industrial Relations to issue an order "fixing the terms of
employment." This clause is broad enough to authorize the Court to order the strikers
to return to work and the employer to readmit them. This Court, in the cases of
the Philippine Marine Officers Association vs. The Court of Industrial Relations,
Compania Maritima, et al.; and Compañia Martima, et al. vs. Philippine Marine Radio
Officers Association and CIR, et al., G.R. Nos. L-10095 and L-10115, October 31,
1957, declared:
We cannot subscribe to the above contention. We agree with counsel for the
Philippine Radio Officers' Association that upon certification by the President
under Section 10 of Republic Act 875, the case comes under the operation
of Commonwealth Act 103, which enforces compulsory arbitration in cases
of labor disputes in industries indispensable to the national interest when the
President certifies the case to the Court of Industrial Relations. The evident
intention of the law is to empower the Court of Industrial Relations to act in
such cases, not only in the manner prescribed under Commonwealth Act
103, but with the same broad powers and jurisdiction granted by that act. If
the Court of Industrial Relations is granted authority to find a solution to an
industrial dispute and such solution consists in the ordering of employees to
return back to work, it cannot be contended that the Court of Industrial
Relations does not have the power or jurisdiction to carry that solution into
effect. And of what use is its power of conciliation and arbitration if it does
not have the power and jurisdiction to carry into effect the solution it has
adopted? Lastly, if the said court has the power to fix the terms and
conditions of employment, it certainly can order the return of the workers
with or without backpay as a term or condition of employment.
The foregoing ruling was reiterated by this Court in the case of Hind Sugar Co. v.
CIR, et al.,  G.R. No. L-13364, July 26, 1960.
When a case is certified to the CIR by the President of the Philippines pursuant to
Section 10 of Republic Act No. 875, the CIR is granted authority to find a solution to
the industrial dispute; and the solution which the CIR has found under the authority of
the presidential certification and conformable thereto cannot be questioned (Radio
Operators Association of the Philippines vs. Philippine Marine Radio Officers
Association, et al., L-10112, Nov. 29, 1957, 54 O.G. 3218).
Untenable also is the claim of the University that the CIR cannot issue a return-to-
work order after strike has been declared, it being contended that under Section 10 of
Republic Act No. 875 the CIR can only prevent a strike or a lockout — when either of
this situation had not yet occurred. But in the case of Bisaya Land Transportation Co.,
Inc. vs. Court of Industrial Relations, et al., No. L-10114, Nov. 26, 1957, 50 O.G.
2518, this Court declared:
There is no reason or ground for the contention that Presidential certification
of labor dispute to the CIR is limited to the prevention of strikes and lockouts.
Even after a strike has been declared where the President believes that
public interest demands arbitration and conciliation, the President may
certify the ease for that purpose. The practice has been for the Court of
Industrial Relations to order the strikers to work,  pending the determination
of the union demands that impelled the strike. There is nothing in the law to
indicate that this practice is abolished." (Emphasis supplied)
Likewise untenable is the contention of the University that the taking in by it of
replacements was valid and the return-to-work order would be an impairment of its
contract with the replacements. As stated by the CIR in its order of March 30, 1963, it
was agreed before the hearing of Case 41-IPA on March 23, 1963 that the strikers
would return to work under the status quo arrangement and the University would
readmit them, and the return-to-work order was a confirmation of that agreement.
This is a declaration of fact by the CIR which we cannot disregard. The faculty
members, by striking, have not abandoned their employment but, rather, they have
only ceased from their labor (Keith Theatre v. Vachon et al., 187 A. 692). The striking
faculty members have not lost their right to go back to their positions, because the
declaration of a strike is not a renunciation of their employment and their employee
relationship with the University (Rex Taxicab Co. vs. CIR, et al., 40 O.G., No. 13,
138). The employment of replacements was not authorized by the CIR. At most, that
was a temporary expedient resorted to by the University, which was subject to the
power of the CIR to allow to continue or not. The employment of replacements by the
University prior to the issuance of the order of March 30, 1963 did not vest in the
replacements a permanent right to the positions they held. Neither could such
temporary employment bind the University to retain permanently the replacements.
Striking employees maintained their status as employees of the employer
(Western Castridge Co. v. National Labor Relations Board, C.C.A. 139 F. 2d
855, 858) ; that employees who took the place of strikers do not displace
them as `employees." ' (National Labor Relations Board v. A. Sartorius &
Co., C.C.A. 2, 140 F. 2d 203, 206, 207.)
It is clear from what has been said that the return-to-work order cannot be considered
as an impairment of the contract entered into by petitioner with the replacements.
Besides, labor contracts must yield to the common good and such contracts are
subject to the special laws on labor unions, collective bargaining, strikes and similar
subjects (Article 1700, Civil Code).
Likewise unsustainable is the contention of the University that the Court of Industrial
Relations could not issue the return-to-work order without having resolved previously
the issue of the legality or illegality of the strike, citing as authority therefor the case
of Philippine Can Company v. Court of Industrial Relations, G.R. No. L-3021, July 13,
1950. The ruling in said case is not applicable to the case at bar, the facts and
circumstances being very different. The Philippine Can Company case, unlike the
instant case, did not involve the national interest and it was not certified by the
President. In that case the company no longer needed the services of the strikers, nor
did it need substitutes for the strikers, because the company was losing, and it was
imperative that it lay off such laborers as were not necessary for its operation in order
to save the company from bankruptcy. This was the reason of this Court in ruling, in
that case, that the legality or illegality of the strike should have been decided first
before the issuance of the return-to-work order. The University, in the case before Us,
does not claim that it no longer needs the services of professors and/or instructors;
neither does it claim that it was imperative for it to lay off the striking professors and
instructors because of impending bankruptcy. On the contrary, it was imperative for
the University to hire replacements for the strikers. Therefore, the ruling in the
Philippine Can case that the legality of the strike should be decided first before the
issuance of the return-to-work order does not apply to the case at bar. Besides, as
We have adverted to, the return-to-work order of March 30, 1963, now in question,
was a confirmation of an agreement between the University and the Faculty Club
during a prehearing conference on March 23, 1963.
The University also maintains that there was no more basis for the claim of the
members of the Faculty Club to return to their work, as their individual contracts for
teaching had expired on March 25 or 31, 1963, as the case may be, and
consequently, there was also no basis for the return-to-work order of the CIR because
the contractual relationships having ceased there were no positions to which the
members of the Faculty Club could return to. This contention is not well taken. This
argument loses sight of the fact that when the professors and instructors struck on
February 18, 1963, they continued to be employees of the University for the purposes
of the labor controversy notwithstanding the subsequent termination of their teaching
contracts, for Section 2(d) of the Industrial Peace Act includes among employees
"any individual whose work has ceased a consequence of, or in connection with, any
current labor dispute or of any unfair labor practice and who has not obtained any
other substantially equivalent and regular employment."
The question raised by the University was resolved in a similar case in the United
States. In the case of Rapid Roller Co. v. NLRB 126 F. 2d 452, we read:
On May 9, 1939 the striking employees, eighty-four in number, offered to the
company to return to their employment. The company believing it had not
committed any unfair labor practice, refused the employees' offer and
claimed the right to employ others to take the place of the strikers, as it
might see fit. This constituted discrimination in the hiring and tenure of the
striking employees. When the employees went out on a strike because of
the unfair labor practice of the company, their status as employees for the
purpose of any controversy growing out of that unfair labor practice was
fixed. Sec. 2 (3) of the Act. Phelps Dodge Corp. v. National Labor Relations
Board, 313 U.S. 177, 61 S. Ct. 845, 85. L. ed. 1271, 133 A.L.R. 1217.
For the purpose of such controversy they remained employees of the
company. The company contended that they could not be their employees in
any event since the "contract of their employment expired by its own terms
on April 23, 1939."
In this we think the company is mistaken for the reason we have just pointed
out, that the status of the employees on strike became fixed under Sec. 2 (3)
of the Act because of the unfair labor practice of the company which caused
the strike.
The University, furthermore, claims that the information for indirect contempt filed
against the officers of the University (Case No. V-30) as well as the order of April 29,
1963 for their arrest were improper, irregular and illegal because (1) the officers of the
University had complied in good faith with the return-to-work order and in those cases
that they did not, it was due to circumstance beyond their control; (2) the return-to-
work order and the order implementing the same were illegal; and (3) even assuming
that the order was legal, the same was not Yet final because there was a motion to
reconsider it.
Again We find no merit in this claim of Petitioner. We have already ruled that the CIR
had jurisdiction to issue the order of March 30, 1963 in CIR Case 41-IPA, and the
return-to-work provision of that order is valid and legal. Necessarily the order of April
6, 1963 implementing that order of March 30, 1963 was also valid and legal.
Section 6 of Commonwealth Act No. 103 empowers the Court of Industrial Relations
of any Judge thereof to punish direct and indirect contempts as provided in Rule 64
(now Rule 71) of the Rules of Court, under the same procedure and penalties
provided therein. Section 3 of Rule 71 enumerates the acts which would constitute
indirect contempt, among which is "disobedience or resistance to lawful writ, process,
order, judgment, or command of a court," and the person guilty thereof can be
punished after a written charge has been filed and the accused has been given an
opportunity to be heard. The last paragraph of said section provides:
But nothing in this section shall be so construed as to prevent the court from
issuing process to bring the accused party into court, or from holding him in
custody pending such proceedings.
The provision authorizes the judge to order the arrest of an alleged contemner
(Francisco, et al. v. Enriquez, L-7058, March 20, 1954, 94 Phil., 603) and this,
apparently, is the provision upon which respondent Judge Bautista relied when he
issued the questioned order of arrest.
The contention of petitioner that the order of arrest is illegal is unwarranted. The
return-to-work order allegedly violated was within the court's jurisdiction to issue.
Section 14 of Commonwealth Act No. 103 provides that in cases brought before the
Court of Industrial Relations under Section 4 of the Act (referring to strikes and
lockouts) the appeal to the Supreme Court from any award, order or decision shall not
stay the execution of said award, order or decision sought to be reviewed unless for
special reason the court shall order that execution be stayed. Any award, order or
decision that is appealed is necessarily not final. Yet under Section 14 of
Commonwealth Act No. 103 that award, order or decision, even if not yet final, is
executory, and the stay of execution is discretionary with the Court of Industrial
Relations. In other words, the Court of Industrial Relations, in cases involving strikes
and lockouts, may compel compliance or obedience of its award, order or decision
even if the award, order or decision is not yet final because it is appealed, and it
follows that any disobedience or non-compliance of the award, order or decision
would constitute contempt against the Court of Industrial Relations which the court
may punish as provided in the Rules of Court. This power of the Court of Industrial
Relations to punish for contempt an act of non-compliance or disobedience of an
award, order or decision, even if not yet final, is a special one and is exercised only in
cases involving strikes and lockouts. And there is reason for this special power of the
industrial court because in the exercise of its jurisdiction over cases involving strikes
and lockouts the court has to issue orders or make decisions that are necessary to
effect a prompt solution of the labor dispute that caused the strike or the lockout, or to
effect the prompt creation of a situation that would be most beneficial to the
management and the employees, and also to the public — even if the solution may
be temporary, pending the final determination of the case. Otherwise, if the
effectiveness of any order, award, or decision of the industrial court in cases involving
strikes and lockouts would be suspended pending appeal then it can happen that the
coercive powers of the industrial court in the settlement of the labor disputes in those
cases would be rendered useless and nugatory.
The University points to Section 6 of Commonwealth Act No. 103 which provides that
"Any violation of any order, award, or decision of the Court of Industrial Relations
shall after such order, award or decision has become final, conclusive
and executory  constitute contempt of court," and contends that only the disobedience
of orders that are final (meaning one that is not appealed) may be the subject of
contempt proceedings. We believe that there is no inconsistency between the above-
quoted provision of Section 6 and the provision of Section 14 of Commonwealth Act
No. 103. It will be noted that Section 6 speaks of order, award or decision that
is executory. By the provision of Section 14 an order, award or decision of the Court
of Industrial Relations in cases involving strikes and lockouts are
immediately executory, so that a violation of that order would constitute an indirect
contempt of court.
We believe that the action of the CIR in issuing the order of arrest of April 29, 1963 is
also authorized under Section 19 of Commonwealth Act No. 103 which provides as
follows:
SEC. 19. Implied condition in every contract of employment.—In every
contract of employment whether verbal or written, it is an implied condition
that when any dispute between the employer and the employee or laborer
has been submitted to the Court of Industrial Relations for settlement or
arbitration pursuant to the provisions of this Act . . . and pending award, or
decision by the Court of such dispute . . . the employee or laborer shall not
strike or walk out of his employment when so enjoined by the Court after
hearing and when public interest so requires, and if he has already done so,
that he shall forthwith return to it, upon order of the Court, which shall be
issued only after hearing when public interest so requires or when the
dispute cannot, in its opinion, be promptly decided or settled; and if the
employees or laborers fail to return to work, the Court may authorize the
employer to accept other employees or laborers. A condition shall further be
implied that while such dispute . . . is pending, the employer shall refrain
from accepting other employees or laborers, unless with the express
authority of the Court, and shall permit the continuation in the service of his
employees or laborers under the last terms and conditions existing before
the dispute arose. . . . A violation by the employer or by the employee or
laborer of such an order or the implied contractual condition set forth in this
section shall constitute contempt of the Court of Industrial Relations and
shall be punished by the Court itself in the same manner with the same
penalties as in the case of contempt of a Court of First Instance. . . .
We hold that the CIR acted within its jurisdiction when it ordered the arrest of the
officers of the University upon a complaint for indirect contempt filed by the Acting
Special Prosecutor of the CIR in CIR Case V-30, and that order was valid. Besides
those ordered arrested were not yet being punished for contempt; but, having been
charged, they were simply ordered arrested to be brought before the Judge to be
dealt with according to law. Whether they are guilty of the charge or not is yet to be
determined in a proper hearing.
Let it be noted that the order of arrest dated April 29, 1963 in CIR Case V-30 is being
questioned in Case G.R. No. L-21278 before this Court in a special civil action
for certiorari. The University did not appeal from that order. In other words, the only
question to be resolved in connection with that order in CIR Case V-30 is whether the
CIR had jurisdiction, or had abused its discretion, in issuing that order. We hold that
the CIR had jurisdiction to issue that order, and neither did it abuse its discretion
when it issued that order.
In Case G.R. No. L-21462 the University appealed from the order of Judge Villanueva
of the CIR in Case No. 1183-MC, dated April 6, 1963, granting the motion of the
Faculty Club to withdraw its petition for certification election, and from the resolution
of the CIR en banc, dated June 5, 1963, denying the motion to reconsider said order
of April 6, 1963. The ground of the Faculty Club in asking for the withdrawal of that
petition for certification election was because the issues involved in that petition were
absorbed by the issues in Case 41-IPA. The University opposed the petition for
withdrawal, but at the same time it moved for the dismissal of the petition for
certification election.
It is contended by the University before this Court, in G.R. L-21462, that the issues of
employer-employee relationship between the University and the Faculty Club, the
alleged status of the Faculty Club as a labor union, its majority representation and
designation as bargaining representative in an appropriate unit of the Faculty Club
should have been resolved first in Case No. 1183-MC prior to the determination of the
issues in Case No. 41-IPA, and, therefore, the motion to withdraw the petition for
certification election should not have been granted upon the ground that the issues in
the first case were absorbed in the second case.
We believe that these contentions of the University in Case G.R. No. L-21462 have
been sufficiently covered by the discussion in this decision of the main issues raised
in the principal case, which is Case G.R. No. L-21278. After all, the University wanted
CIR Case 1183-MC dismissed, and the withdrawal of the petition for certification
election had in a way produced the situation desired by the University. After
considering the arguments adduced by the University in support of its petition
for certiorari by way of appeal in Case G.R. No. L-21278, We hold that the CIR did
not commit any error when it granted the withdrawal of the petition for certification
election in Case No. 1183-MC. The principal case before the CIR is Case No. 41-IPA
and all the questions relating to the labor disputes between the University and the
Faculty Club may be threshed out, and decided, in that case.
In Case G.R. No. L-21500 the University appealed from the order of the CIR of March
30, 1963, issued by Judge Bautista, and from the resolution of the CIR en
banc promulgated on June 28, 1963, denying the motion for the reconsideration of
that order of March 30, 1963, in CIR Case No. 41-IPA. We have already ruled that the
CIR has jurisdiction to issue that order of March 30, 1963, and that order is valid, and
We, therefore, hold that the CIR did not err in issuing that order of March 30, 1963
and in issuing the resolution promulgated on June 28, 1963 (although dated May 7,
1963) denying the motion to reconsider that order of March 30, 1963.
IN VIEW OF THE FOREGOING, the petition for certiorari and prohibition with
preliminary injunction in Case G.R. No. L-21278 is dismissed and the writs prayed for
therein are denied. The writ of preliminary injunction issued in Case G.R. No. L-21278
is dissolved. The orders and resolutions appealed from, in Cases Nos. L-21462 and
L-21500, are affirmed, with costs in these three cases against the petitioner-appellant
Feati University. It is so ordered.
Concepcion, C.J., Dizon, Regala, Makalintal, Bengzon, J.P., Sanchez and Castro,
JJ., concur.
Reyes, J.B.L., J., concurs but reserves his vote on the teacher's right to strike.
G.R. No. L-33705 April 15, 1977
AIR LINE PILOTS ASSOCIATION OF THE PHILIPPINES (GASTON
GROUP), petitioner, 
vs.
THE COURT OF INDUSTRIAL RELATIONS and AIR LINES PILOTS
ASSOCIATION OF THE PHILIPPINES (GOMEZ GROUP), respondents.
G.R. No. L-35206 April 15, 1977
CESAR CHAVEZ, JUR FRANCISCO ACHONDOA, SERAFIN ADVINCULA,
MAXIMO R. AFABLE, ALFREDO AGBULOS, SOLOMON A. HERRERA, NEMESIO
ALMARIO, JULIUS AQUINO, RENE ARELLANO, CARLITO ARRIBE FERNANDO
AYUBO GENEROSO BALTAZAR, EDDIE BATONG MALAQUE, URSO D. BELLO,
TOMAS BERNALES RUDOLFO BIDES AUGUSTO BLANCO, HORACIO BOBIS
ROMEO B. BONTUYAN ANTONINO E. BUENAVENTURA, PEDRO BUNI
ISABELO BUSTAMANTE, JOSE BUSTAMANTE, RICARDO BUSTAMANTE,
ERNESTO D. BUZON TRANQUILINO CABE ISIDORO CALLEJA, CESAR
CARETA FERNANDO CARAG, ROGELIO CASINO, JOSE CASTILLO, NICANOR
CASTILLO, RAFAEL CASTRO, JOSE DE LA CONCEPCION, CARLOS CRUZ,
WILFREDO CRUZ, MAGINOO CUSTODIO, TOMAS DE LA JOSE DE LEON,
BENJAMIN DELFIN, GREGORIO DELGADO, IRINEO DEROTAS DUMAGUIN
BENEDICTO FELICIANO, RODRIGO FRIAS JOSE GIL, ANTONIO GOMEZ,
ROBERTO GONZALEZ, BIENVENIDO GOROSPE, AMADO R. GULOY JOSE
GUTIERREZ, ANTONIO IBARRETA MUSSOLINI IGNACIO, ROBERTO INIGO
MATIAS JABIER ROGELIO JARAMILLO HARRY JISON, ALBERTO JOCSON,
VALENTIN LABATA JAIME LACSON, JORGE LACSON, FRANCISCO LANSANG
MENANDRO LAUREANO, JESUS LAQUINDANUM LEONARDO LONTOC, RAUL
LOPEZ, RENE LORENZO, OSBORNE LUCERO, ARISTON LUISTRO MANUEL
LUKBAN, VIRGILIO MABABA, MARIANO MAGTIBAY, EDGARDO MAJARAIS
EMILIO MALLARE LEONCIO MANARANG, ALFREDO MARBELLA, ALFREDO
MARTINEZ, EDILBERTO MEDINA, CLEMENTE MIJARES, EDMUNDO MISA,
CONRADO MONTALBAN, FERNANDO NAVARRETE, EUGENIO NAVEA
ERNESTO TOMAS, NIERRAS PATROCINIO OBRA, VICTORINO ORGULLO
CLEMENTE PACIS, CESAR PADILLA, ROMEO PAJARILLO RICARDO
PANGILINAN, CIRILO PAREDES, AMANDO PARIS ALBERTO PAYUMO, PEDRO
PENERA FRANCISCO PEPITO, ADOLFO PEREZ, DOMINGO POLOTAN
EDUARDO RAFAEL, SANTOS RAGAZA TEODORO RAMIREZ, RAFAEL RAVENA
ANTONIO REYES, GREGORIO RODRIGUEZ, LEONARDO SALCEDO, HENRY
SAMONTE, PAQUITO SAMSON, ARTHUR B. SANTOS, ARTURO T. SANTOS
ANGELES SARTE, VALERIANO SEGURA, RUBEN SERRANO, LINO SEVERINO,
ANGEL SEVILLA, BENJAMIN SOLIS, PATROCINIO TAN, RAFAEL TRIAS
EDGARDO VELASCO, LORETO VERGEIRE RUBEN VICTORINO, ALEXANDER
VILLACAMPA, CAMILO VILLAGONZALO BAYANI VILLANUEVA, RIZAL
VILLANUEVA, ROMULO VILLANUEVA, ROLANDO VILLANUEVA, CARLOS
VILLAREAL, and ALFONSO SAPIRAIN AND OTHERS and AIR LINE PILOTS
ASSOCIATION. OF THE PHILIPPINES (GASTON), petitioners, 
vs. 
THE HONORABLE JUDGES ARSENIO I. MARTINEZ, AMANDO C. BUGAYONG
and JOAQUIN M. SALVADOR of the COURT OF INDUSTRIAL RELATIONS, BEN
HUR GOMEZ, claiming to represent AIR LINE PILOTS ASSOCIATION OF THE
PHILIPPINES, CARLOS ORTIZ AND OTHERS, and PHILIPPINE AIR LINES
INC.,respondents.
J. C. Espinas & Associates for petitioner (Gaston Group)
Jose K. Manguiat Jr. for respondent Court, et al.
E. Morabe & Associate for respondent (Gomez Group).

CASTRO, C.J.:
These are two petitions for certiorari (L-33705 and L-35206), consolidated for
purposes of decision because they involve more or less the same parties and
interlocking issues.
In L-33705 the petitioner Air Line Pilots Association of the Philippines (Gaston group)
maintains that the Court of Industrial Relations acted without jurisdiction in passing
upon (1) the question of which, in a certification proceeding, between the set of
officers elected by the group of Philippine Air Lines pilots headed by Captain Felix
Gaston, on the one hand, and the set of officers elected by the group headed by
Captain Ben Hur Gomez, on the other, is the duly elected set of officers of the Air
Line Pilots Association of the Philippines, and (2) the question of which, between the
two groups, is entitled to the name, office and funds of the said Association.
In L-35206 the individual petitioners (numbering 127) and the Air Line Pilots
Association of the Philippines (hereinafter referred to as ALPAP) (Gaston maintain
that the industrial Court acted without jurisdiction and with grave abuse of descretion
in promulgating its resolution dated June 19, 1972 which suspended the hearing of
the said petitioners' plea below for reinstatement and/or return to work in the
Philippine Air Lines (hereinafter referred to as PAL) or, alternatively, the payment of
their retirement and/or separation pay, as the case may be, until this Court, shall have
decided L-33705.
L-33705
On January 2, 1971, the Air Line Pilots Association of the Philippines, represented by
Ben Hur Gomez who claimed to be its President, filed a petition with the Court of
Industrial Relations praying for certification as the sole and exclusive collective
bargaining representative of "all the pilots now under employment by the Philippine
Air Lines, Inc, and are on active flight and/or operational assignments." The petition
which was docketed in the sala of Judge Joaquin M. Salvador as Case 2939-MC was
opposed in the name of the same association by Felix C. Gaston (who also claimed
to be its President) on the ground that the industrial court has no jurisdiction over the
subject-matter o" the petition "because a certification proceeding in the Court of
Industrial Relations is not the proper forum for the adjudication of the question as to
who is the lawful president of a legitimate labor organization."
On May 29, 1971, after hearing the petition, Judge Salvador rendered a decision
certifying the —
... ALPAP composed only of pilots employed by PAL with Capt. Ben
Hur Gomez as its president, as the sole and exclusive Bargaining
representative of all the pilots employed by PAL and are on active
flights and/or operational assignments, and as such is entitled to all
the rights and privileges of a legitimate labor organization, including
the right to its office and its union funds.
The following circumstances were cited by Judge Salvador to justify the conclusions
reached by him in his decision, namely:
(a) that there has been no certification election within the Period of 12 months prior to
the date the petition for certification was filed;
(b) that the PAL entered into a collective bargaining agreement with ALPAP for "pilots
in the employ of the Company" only for the duration of the period from February 1,
1969 to January 31, 1972:
(c) that PAL pilots belonging to the Gaston, group, in defiance of court orders issued
in Case 101-IPA(B) (see L-35206, infra)  retired/resigned en masse from the PAL and
retired/resigned accompanied this with actual acts of not reporting for work;
(d) that the pilots affiliated with the Gaston group tried to then deposits and other
funds from the ALPAP Cooperative Credit union on the ground that they have already
retired/resigned from PAL;
(e) that some of the members of the Gaston Group joined another airline after their
retirement/resignation;
(f) that the Gaston group claimed before the industrial court that the order enjoining
them from retiring or resigning constituted a violation of the prohibition against
involuntary servitude (see L-35206, infra);
(g) that the contention that the mess retirement or resignation was merely an
involuntary protest by those affiliated with the Gaston group is not borne out by the
evidence as, aside their aforementioned acts, the said group of pilots even filed a civil
complaint against the PAL in which the cessation of their employment with PAL was
strongly expressed by them.
It appears that prior to the filing of the certification petition below, a general ALPAP
membership meeting was held on October 30, 1970, at which 221 out of 270
members adopted a resolution amending ALPAP's constitution and by-laws by
providing in a new section thereof that —
Any active member who shall be forced to retire or forced to resign
or otherwise terminated for union activities as solely determine' by
the Association shall have the option to either continue to be and
remain as an active member in good standing or to resign in writing
his active membership with the Association. ...
According to ALPAP (Gaston), the foregoing amendment was adopted "In anticipation
on the fact that they may be forced to resign or retire because of their 'union
activities.' At this period of time, PAL and ALPAP were locked in alabor dispute
certified by the President to the Industrial court and docketed as Case 101-IPA(B)
(see L-35206, infra).
On December 12, 1970, despite a no-work-stoppage order of the industrial court, a
substantial majority of ALPAP members filed letters of retirement/resignation from the
PAL.
Thereafter, on December 18-22, 1970, an election of ALPAP officers was held.
resulting in the election of Felix C. Gaston as President by 180 votes. Upon the other
hand, on December 23, 1970, about 45 pilots who did not tender their retirement or
resignation the PAL gathered at the house of Atty. Morabe and elected Ben Hur
Gomez as ALPAP President.
On June 3, 1971, ALPAP (Gaston) filed an opposition in Case 101-IPAB to an
urgent ex parte motion of the PAL to enjoin the members of ALPAP from retiring or
resigning en masse  It was claimed by ALPAP (Gaston) that —
1. Insofar as herein oppositors are concerned, the allegations of
respondent that their 'resignations' and 'retirements' are sham
resignations and retirements and that 'There is no honest or
genuine desire to terminate the employee relationship with PAL are
completely false. Their bona fide intention to terminate their
employer-employee relationship with PAL is conclusively shown by
the fact that they have not sought reinstatement in or re-
employment by PAL and also by the fact that they are either
seeking employment in another airline company;
2. Respondent in effect recognized such bona fide intention of the
herein oppositors as shown by the fact that it accepted said
resignations and retirements and did not initiate any contempt
proceedings against them; and
3. The action of herein oppositors in filing their resignations and
retirements was a legitimate exercise of their legal and
constitutional rights and the same, therefore, cannot be considered
as a valid ground to deprive them of benefits which they had
already earned including, among others, retirement benefits to
which they are entitled under the provisions of an existing contract
between petitioner and respondent. Such deprivation would
constitute impairment of the obligations of contract.
On June 15, 1971, the industrial court en banc, acting on a motion for reconsideration
filed by ALPAP (Gaston) in Case 2939-MC against the decision of Judge Salvador,
denied the same. The said court's resolution was then appealed to this Court (L-
33705).
L-35206
On October 3, 1970, the President of the Philippines certified a labor dispute between
members of ALPAP and the PAL to the Court of Industrial Relations. The dispute
which had to do with union economic demands was docketed as Case No. 101-
IPA(B) and was assigned to Judge Ansberto P. Paredes.
On October 7, 1970, after conferring with both parties for two days, Judge Paredes
issued a return-to-work order, the pertinent portions of which read as follows:
PALEA and ALPAP, their officers and members, and i 11
employees who have joined the present strike which resulted from
the labor disputes certified by the President to the Court, or who
have not reported for work as a result of the strikes, are hereby
ordered forthwith to call off the strikes and lift the picket lines ... and
return to work not later than Friday, October 9, 1970, and
management to admit them back to work under the same terms
and conditions of employment existing before the strikes, including
what has been earlier granted herein.
PAL is ordered not to suspend, dismiss or lay-off any employee as
a result of these strikes. Read into this order is the provision of
Section 19, C.A. 103, as amended, for the guidance of the parties,
xxx xxx xxx
Failure to comply with any provision of this Order shall constitute
contempt of court, and the employee failing or refusing to work by
October 9, 1970, without justifiable cause, shall immediately be
replaced by PAL, and may not be reinstated without prior Court
order and on justifiable grounds.
On October 10, 1970, Judge Paredes, having been informed that the strikes had not
been called off, issued another order directing the strikers to lift their pickets and
return to work and explaining that his order of October 7, 1970 partook of the nature
of amandatory injunction under the doctrine laid down in Philippine Association of
Free Labor Union (PAFLU) vs. Hon, Joaquin M. Salvador, et al., (L-29471 and L-
29487, September 28, 1968).
The strike, however, continued until the industrial court en banc denied, on October
19, 1970, ALPAP's motion for reconsideration of the said orders.
On October 22, 1970, the strikers returned to work, except (according to the PAL) two
pilots, one of them being Felix C. Gaston who allegedly refused to take the flights
assigned to him. Due to his refusal, among other reasons, PAL terminated Gaston's
services on October 27, 1970. His dismissal was reported to the industrial court on
October 29, 1970. Thereafter, the court a quo  set the validity of Gaston's dimissal for
hearing, but, on several occassions, he refused to submit his side before the hearing
examiner, claiming that his case would be prosecuted through the proper forum at the
proper time.
On November 24, 1970, the PAL filed an urgent ex parte motion with the industrial
court to enjoin the members of ALPAP from proceeding with their intention to retire or
resign en masse. On November 26, 1970, Judge Paredes issued an order
commanding ALAPAP members —
 ... not to strike or in any way cause any stoppage in the operation
and service of PAL, under pain of dismisal and forfeiture of rights,
and privilieges accruing to their respective employments should
they disregard this Order; and PAL is also ordered not to lockout
any of such members and officers of ALPAP under pain of
contempt and cancellation of its franchise.
ALPAP filed a motion for the reconsideration of the foregoing order claiming, among
other, that it subjected them to involuntary servitude:
It is crystal-clear that the disputed Order in effect compels the
members of petiitioner to work against their will. Stated differently,
the members of petitioner association are bieng perced or forced by
the Trial Court to be in a state of slavery for the beneift of
respondent corporation. In this regard, therefore, the Trial Court
grossly violated a Constitutional mandate which states:
No involuntary servitude in any form shall exist except as a
punishment for c rime whereof the party shall have been duly
convicted. (Article III, Section 1 (13)).
The constitutional provision does not provide any condition as to
the cause or causes of the unwillingness to work. Suffice it to say
that an employee for whatever reason of his own. cannot be
compelled and forced to work against his will.
The court a quo  however, denied the foregoing motion for reconsideration on
December 11, 1970.
Just the same, on December 12, 1970, a substantial majority of the members of
ALPAP staged a mass resignation and/or retirement from PAL
In vigorous protest to your provocative harrassment, unfair labor
tactics, the contemptuous lockout of our co-members and your
vicious and vindictive attitude towards labor most exemplified by
the illegal termination of the services of our President, Capt, Felix
C. Gaston
The mentioned individual letters of retirement/resignation were accepted by PAL on
December 14, 1970, with the caveat that the pilots concerned will not be entitled to
any benefit or privilege to which they may otherwise be entitled by reason of their
employment with the PAL, as the pilots' acts constituted R violation of the November
26, 1970 order of the industrial court.
On December 28, 1970, Ben Hur Gomez, alleging that he was elected President of
ALPAP by its members who did not join the mass resignation and retirement, filed a
motion in Case 101 IPA by praying that he be allowed to represent the ALPAP which
was theretofore represented by Capt. Felix Gaston because the pilots who retired or
resigned from PAL ceased to be employees Thereof and no longer have any interest
in the subject-matter of the said case. This was later converted into a motion to
intervene on February 9, 1971.
On September 1, 1971, Felix Gaston filed a motion for Contempt against PAL stating
that his dismissal from PAL on October 27, 1970 was without just cause and violation
of the Order of the industrial court dated October 7, 1970 as well as section 19 of C.A.
103. He prayed that he be reinstated.
On October 23, 1971, twenty-one pilots who filed their retirement. from PAL filed a
petition in the 'Industrial court praying also that they be readmitted to PAL or, failing
so, that they be allowed to retire with the benefits provided for under the PAL
Retirement Plan or, if they are not yet e i b e to under said Plan, that they be given
separation pay, In their petition for reinstatement, said Pilots (who were later joined by
other pilots similarly situated) alleged, inter alia—
1. That they are some of the employees of the respondent
company and members of the petitioner union who resigned en
masse  or retired en masse from the respondent after having been
led to believe in good faith by Capt. Felix Gaston who was then the
uncontested president of the petitioner union and their counsel that
such a mass resignation or mass retirement was a valid exercise of
their right to protest the dismissal of Capt. Gaston in connection
with the Certified dispute that was pending before the Court.
2. That later on they came to know that such a mass resignation or
surpass retirement was enjoined by this Honorable Court 'under the
pain of' dismissal and forfeiting of rights and privileges accruing to
their respective employment if they disregarded such order of
injunction,
3. That they did not deliberately disregard such injunction order and
if they failed to comply with it within a reasonable time, it was
because they were made to believe and assured by their leader
that such resignation or retirement was a lawful exercise of
concerted action that the full consequences of such act was not
explained to them by counsel: and in addition, they were told that
those who returned to the company would be expelled from the
union, and suffer the corresponding penalty.
xxx xxx xxx
ALPAP (Gomez) opposed the foregoing petitions. In this connection, the records
disclose that on August 20, 1971, 89 of the pilots who retired en masse from PAL
filed a complaint with the Court of First Instance of Manila in Case 15084 for the
recovery of retirement benefits due them under the PAL Retirement Plan. The
complaint was dismissed by the trial, court on PAL's motion. The records, however,
do not disclose the reason for the said dismissal.
On December 23, 1971, Judge Paredes issued an order deferring action on the
motion to dismiss the petitions for reinstatement on the ground that the matters
alleged in the said petitions would required the submission of proof. ALPAP (Gomez,)
filed a motion for reconsideration of this order but the same was denied by the
industrial court en banc for being pro forma.
On February 1, 1972, ALPAP (Gaston) joined and consolidated the mentioned
petitions for reinstatement, The same was opposed by both PAL and ALPAP
(Gomez),
On March 24, 1972, ALPAP (Gomez) filed a motion to suspend the proceedings in
Case 101-IPA(B) until the prejudicial question of who should prosecute the main case
(Case 101-IPA) is resolved. On April 18, 1972, Judge Paredes issued an order
deferring the hearing of the main case until this Court shall have decided L-33705, but
allowing other matters, including the consolidated petition for reinstatement, to be
heard.
On. May 5, 1972, ALPAP (Gomez) filed another motion to suspend the hearing on the
mentioned petition for reinstatement on the ground that this Court's decision in L-
33705 should be awaited. ALPAP (Gaston) opposed that motion on the ground that
the matter had already been denied twice and the order setting the case for hearing
was merely. On May 15, 1972, Judge Paredes denied the said motion to suspend the
hearing on the petition for reinstatement unless a countermanding Order is issued by
a higher Court."
On May 18, 1972, ALPAP (Gomez) filed a motion for reconsideration of Judge
Paredes' order, alleging that employee status of those who resigned or retired en
masse was an issue in mentioned Case 2939-MC decision on which is still pending
consideration before Court in L-33705.
On June 19, 1972, the industrial court en banc passed a resolution reversing Judge
Paredes' order on the ground that the question of the employee status of the pilots
who were seeking reinstatement with PAL has already been raised squarely in Case
2939-MC and resolved by the said tribunal found that the said pilots have already lost
their employee status as a consequence of their resignations and/or retirement from
PAL which had been duly accepted by the latter.
DISCUSSION
In 'Its brief before this Court, ALPAP (Gaston) states that it goes not question the
recognition extended by PAL to ALPAP (Gomez ) the collective bargaining agent of
all PAL pilots on active flight duty. Neither does it dispute the assumption by ALPAP
(Gomez) of the authority to manage and administer the collective bargaining
agreement between ALPAP and PAL (which at any rate had expired on January 31,
1972) nor the right of ALPAP (Gomez) to negotiate and conclude any other collective
bargaining agreement with PAL. What it disputes, however, is the authorization given
by the industrial court to ALPAP (Gomez), in a certification proceeding, to take over
the corporate name, office and funds of ALPAP.
This Court has always stressed that a certification proceeding is not a litigation, in the
sense in which this term is ordinarily understood, but an investigation of a non-
adversary, fact finding character in which the Court of Industrial Relations plays the
part of a disinterested investigator seeking merely to ascertain the desires of
employees as to the matter of their representation (National Labor Union vs. Go Soc
and Sons, 23 SCRA 436; Benguet Consolidated, Inc. vs. Bobok Lumber Jack Ass'n.,
L-11029, May 23, 1958; Bulakena Restaurant and Caterer vs. C.I.R., 45 SCRA 95;
LVN Pictures, Inc. vs. Philippine Musicians Guild (FFW) and C.I.R., 1 SCRA 132).
Such being the nature of a certification proceeding, we find no cogent reason that
should prevent the industrial court, in such a proceeding, from inquiring into and
satisfying itself about matters which may be relevant and crucial. though seemingly
beyond the purview of such a proceeding, to the complete realization of the well-
known purposes of a certification case.
Such a situation may arise, as it did in the case at bar, where a group of pilots of a
particular airline, allegedly anticipation their forced retirement or resignation on
account of strained relations with the airline arising from unfulfilled economic
demands, decided to adopt an amendment to their organization's constitution and by-
laws in order to enable them to retain their membership standing therein even after
the termination of their employment with the employer concerned. The industrial court
definitely should be allowed ample discretion to secure a disclosure of circumstances
which will enable it to act fairly in a certification case.
This Court nonetheless finds, after a close and dispassionate study of the facts on
record, that the industrial court's conclusion, that the mentioned amendment to the
ALPAP constitution and by-laws is illegal (a) because it was not adopted in
accordance with the procedure prescribed and (b) because member of labor
organization cannot adopt an amendment to their fundamental charter so as to
include non employees (of PAL) as member, is erroneous.
We have made a careful examination of the records of L-33705 and we find the
adoption of the resolution introducing the questioned amendment to be substancial
compliance with the ALPAP constitution and by-law. Indeed, there is no refutation of
the act that 221out of the 270 members of ALPAP did cast their votesin favor of the
said amendment on October 30, 1970 at the ALPAP general membership meeting.
Their Court cannot likewise subcribe to the restrictive interpretation made by the court
below of the term "labor organization," which Section 2(e) of R.A. 875 defines as any
union or association of employees which exist, in whole or in part, for the purpose of
the collective bargaining or dealing with employers concerning terms and conditions
of employment." The absence of the condition which the court below would attach to
the statutory concept of a labor organization, as being limited to the employees of
particular employer, is quite evident from the law. The emphasis of Industrial Peace
Act is clearly on the pourposes for which a union or association of employees
established rather than that membership therein should be limited only to the
employees of a particular employer. Trite to say, under Section 2(h) of R.A 875
"representative" is define as including "a legitimate labor organization or any officer or
agent of such organization, whether or not employed by the employer or
employeewhom he represents." It cannot be overemphasized likewise that labor
dispute can exist "regardless of whether the disputants stand in the proximate relation
of employer and employee. (Section 2(j), R.a. 875).
There is, furthermore, nothing in the constitution and by-laws of ALPAP which
indubitably restricts membership therein to PAL pilots alone. 1 Although according to
ALPAP (Gomez there has never been an instance when a non-PAL pilot became a
member of ALPAP, the complete lack of any such precondition for ALPAP
membership cannot but be interpreted as an unmistakable authority for the
association to accept pilots into its fold though they may not be under PAL's employ.
The fundamental assumptions relied upon by the industrial court as bases for
authorizing ALPAP (Gomez) to take over the office and funds of ALPAP being, in this
Court's opinion, erroneous, and, in the absence of any serious dispute that on
December 18-22, 1970 Felix C. Gaston, and four other pilots, were elected by the
required majority of ALPAP members as officers of their association, this Court
hereby rules that the mentioned authorization to ALPAP (Gomez) to take over the
office, funds and name of ALPAP was done with grave abuse of discretion.
Moreover, this Court cannot hold as valid and binding the election of Ben Hur Gomez
as President of ALPAP. He was elected at a meeting of only 45 ALPAP members
called just one day after the election of Felix C. Gaston as President of ALPAP who,
as shown, received a majority of 180 votes out of a total membership of 270. tender
the provisions of section 4, article in of the Constitution and By-Laws of ALPAP, duly
elected officers of that association shall remain in office for ac least one year;
The term of office of the officers of the Association shall start on the
first day of the fiscal year of the Association. It shall continue for
one year or until they are re-elected or until their successors have
been elected or appointed and takes office in accordance with the
Constitution and by-laws.
While this Court considers the ruling of the court below, on the matter of who has the
exclusive rights to the office, funds and name of ALPAP, as having been erroneously
made, we cannot hold, however, that those belonging to the group of ALPAP
(Gomez) do not possess any right at all over the office, funds and name of ALPAP of
which they are also members.
In our opinion, it is perfectly within the powers and prerogatives of a labor
organization, through its duly elected officers, to authorize a segment of that
organization to bargain collectively with a particular employer, particularly where
those constituting the segment share a common and distinguishable interest, apart
from the rest of their fellow union members, on matters that directly affect the terms
and conditions of their particular employment. As the circumstances pertinent to the
case at bar presently stand, ALPAP (Gaston) has extended recognition to ALPAP
(Gomez) to enter and conclude collective bargaining contracts with PAL. Having
given ALPAP (Gomez) this authority, it would be clearly unreasonable on the part of
ALPAP (Gaston) to disallow the former a certain use of the office, funds and name of
ALPAP when such use is necessary or would be required to enable ALPAP (Gomez)
to exercise, in a proper manner, its delegated authority to bargain collectively with
PAL. Clearly, an intelligently considered adjustment of grievances and integration of
the diverse and varying interests that not infrequently and, often, unavoidably
permeate the membership of a labor organization, will go a long way, in achieving
peace and harmony within the ranks of ALPAP. Of course, in the eventuality that the
pilots presently employed by PAL and who subscribe to the leadership of Ben Hur
Gomez should consider it to their better interest to have their own separate office,
name and union funds, nothing can prevent them from setting up a separate labor
union. In that eventuality, whatever vested rights, interest or participation they may
have in the assets, including cash funds, of ALPAP as a result of their membership
therein should properly be liquidated in favor of such withdrawing members of the
association.
On the matter of whether the industrial court also abuse its authority for allowing
ALPAP (Gomez) to appropriate the ALPAP name, it does not appear that the herein
petitioner has shown below any exclusive franchise or right to the use of that name.
Hence, there is no proper basis for correcting the action taken by the court below on
this regard.
L-35206
The threshold issue posed in L-35206 is whether the Court of Industrial Relations
acted without jurisdiction and with grave abuse of discretion in promulgating the
resolution dated June 19, 1972 suspending hearings on the mentioned petition for
reinstatement until this Court shall have decided L-33705.
We find no merit to the charge made.
While it is correct, as submitted by ALPAP (Gaston), that in the 1971 case
of Philippine Federation of Petroleum Workers (PFPW) vs. CIR  (37 SCRA 716) this
Court held that in a certified labor dispute all issues involved in the same should be
determined in the case where the certified dispute was docketed and that the parties
should not be permitted to isolate other germane issues or demands and reserve
them for determination in the other cases pending before other branches of the
industrial court, non-compliance with this rule is at best an error in procedure, rather
than of jurisdiction, which is not beyond the power of this Court to review where
sufficient reasons exists, a situation not obtaining in the case at bar.
After a thoroughgoing study of the records of these two consolidated petitions, this
Court finds that the matter of the reinstatement of the pilots who retired or resigned
from PAL was ventilated fully and adequately in the certification case in all its
substantive aspects, including the allegation of the herein petitioners that they were
merely led to believe in good faith that in retiring or resigning from PAL they were
simply exercising their rights to engage in concerted activity. In the light of the
circumstances thus found below it can be safely concluded that the mass retirement
and resignation action of the herein petitioners was intentionally planned to abort the
effects of the October 7, 10 and 19, 1970 return-to-work orders of the industrial court
(which they, in fact, ignored for more than a week) by placing themselves beyond the
jurisdictional control of the said court through the umbrella of the constitutional,
prohibition against involuntary servitude, thereby enabling them to pursue their main
pressure objective of grounding most, if not all, PAL flight operations. Clearly, the
powers given to the industrial court in a certified labor dispute will be meaningless
and useless to pursue where its jurisdiction cannot operate.
We cannot consequently disagree with the court a quo when it concluded that the
actuations of the herein petitioners after they retired and resigned en masse — their
retrieval of deposits and other funds from the ALPAP Cooperative Credit Union on the
ground that they have already retired or resigned, their employment with another
airline, the filing of a civil suit for the recovery of their retirement pay where they
invoked the Provision against involuntary servitude to obtain payment thereof, and
their repeated manifestations before the industrial court that their retirement and
resignation were not sham, but voluntary, and intentional — are, in the aggregate,
indubitable indications that the said pilots did retire/resign from PAL with full
awareness of the Likely consequences of their acts. Their protestations of good faith,
after nearly a year of underscoring the fact that they were no longer employed with
PAL, cannot but appear to a reasonable mind as a late and regrettable ratiocination.
Parenthetically, contrary to ALPAP (Gaston)'s argument that the pilots' retirement'
resignation was a legitimate concerted activity , citing Section 2(1) of the Industrial
Peace Act which defines "strike" as "any temporary stoppage of work by the
concerted action of employees as a result of an industrial dispute," it is worthwhile to
observe that as the law defines it, a strike means only a "temporary stoppage of
work." What the mentioned pilots did, however, cannot be considered, in the opinion
of this Court, as mere "temporary stoppage of work." What they contemplated was
evidently a permanent cut-off of employment relationship with their erstwhile
employer, the Philippine Air Lines. In any event, the dispute below having been
certified as existing in an industry indispensable to the national interest, the said
pilots' rank disregard for the compulsory orders of the industrial court and their daring
and calculating venture to disengage themselves from that court's jurisdiction, for the
obvious purpose of satisfying their narrow economic demands to the prejudice of the
public interest, are evident badges of bad faith.
A legitimate concerted activity is a matter that cannot be used to circumvent judicial
orders or be tossed around like a plaything Definitely, neither employers nor
employees should be allowed to make of judicial authority a now-youve-got-it-now-
you-dont affair. The courts cannot hopefully effectuate and vindicate the sound
policies of the Industrial Peace Act and all our labor laws if employees, particularly
those who on account of their highly, advanced technical background and relatively
better life status are far above the general working class spectrum, will be permitted
to defy and invoke the jurisdiction of the courts whenever the alternative chosen will
serve to feather their pure and simple economic demands.
ACCORDINGLY, in L-33705 the resolution of the Court of Industrial Relations dated
June 15, 1971 upholding the decision of Judge Joaquin M. Salvador dated May 29,
1971 is hereby modified in accordance with the foregoing opinion. Felix 6. Gaston or
whoever may be the incumbent President of ALPAP is hereby ordered to give to any
member withdrawing his membership from ALPAP whatever right, interest or
participation such member may have in the assets, including cash funds, of ALPAP
as a result of his membership in that association.
In L-35206, the petition assailing the resolution of the Court of Industrial Relations
dated June 19, 1972, is hereby dismissed for lack of merit insofar as the petitioners'
allegations of their right to reinstatement with PAL is concerned. With reference to the
alternative action, re: payment of their claims for retirement or separation pay, the
Secretary of Labor, in accordance with the applicable procedure prescribed by law, is
hereby ordered to determine whether such claim is in order, particularly in view of
the caveat made by PAL, in accepting the petitioners' individual letters of
retirement/resignation, that said petitioners shall not be entitled to any benefit or
privilege to which they may otherwise be entitled by reason of their employment with
PAL as the former's acts constituted a violation of the order of the industrial court
dated November 26, 1970.
Without costs in both instances.
Barredo, Makasiar, Antonio, Muñoz Palma, Concepcion, Jr., and Martin, JJ., concur.
Fernando, J, concurs in the opinion of the Chief Justice in L-33705 and in the opinion
of Justice Teehankee in L-35206.
Aquino, J., took no part.
Separate Opinions
TEEHANKEE, J.,  concurring:
In L-33705, a certification proceeding, I concur with the ruling 1 that there is nothing in
the law which supports respondent court's restrictive interpretation that would limit
membership in a labor organization to the employees of a particular employer, (for
such an archaic view would be practically a death blow to the cause of unionism and
would fragment unions into as many employers that there may be); and that
specifically in the case of ALPAP (Air Line Pilots Association of the Philippines) there
is nothing in its Constitution and by-laws that would restrict its membership to
Philippine Air Lines, Inc. (PAL) pilots alone. (Obviously, the organizational set up was
for ALPAP as a union to be composed of all airline pilots in the Philippines regardless
of employer, patterned after the ALPAP (Air Line Pilots Association) in the United
States which has a reputed membership of 46,000 with locals established by the
members at their respective companies of employment).
The Court therefore properly upheld the election of the Gaston faction by a clear
majority of the ALPAP membership (1221 out of 270) as against the Gomez faction of
45 members; recognized Gaston's election as president of ALPAP as against the
rump election of Gomez to the same position; and ruled out respondent court's action
of authorizing the Gomez faction to take over the office, funds and name of ALPAP as
a grave abuse of discretion and a nullity.
Of course, only the pilots actually in the employ of the PAL to the exclusion of those
who had resigned or retired or otherwise been separated from its employment could
take part in the PAL certification election. Under normal circumstances, the ALPAP as
the duly organized labor union (composed of both factions) would manage and
administer the collective bargaining agreement arrived at between employer and
employees.
But this did not hold true in the present case, since in effect the Gomez faction
consisting of pilots who continued in the employ of PAL and did not follow the action
of the majority composing the Gaston faction of resigning and retiring en masse  from
their employment separated themselves from ALPAP and were granted separate
recognition by PAL as the ALPAP (Gomez) faction constituting the exclusive
collective bargaining representation for the pilots who continued in its employ, The
original union ALPAP as headed by Gaston on concedes this and makes it quite clear
in its brief that it does not question the recognition extended by PAL to the Gomez
faction nor the latter's right to manage and administer the collective bargaining
agreement and to negotiate and conclude any other collective bargaining agreement
with PAL.
The actual dispute was thus reduced to whether the Gomez faction in separating
themselves from ALPAP as headed by Gaston could take over and appropriate the
corporate name, office and funds of ALPAP, as authorized by respondent court.
Such take-over or appropriation of ALPAP by the Gomez faction could not be validly
done nor authorized by respondent court, as now ruled by this Court. But since
ALPAP does recognize the right of the Gomez faction to separate and secede from
ALPAP and for the members of the Gomez faction composed of pilots who have
remained in the employ of PAL to form their own union, the Court's judgment has
ordered ALPAP as headed by Gaston as the recognized president thereof or his duly
elected successor to give to any withdrawing member i.e. the members of the Gomez
faction "whatever right. interest or participation such member may have in the assets,
including cash funds of ALPAP as a result of his membership in that association."
I take this to mean that ALPAP is thereby ordered to liquidate the membership of
each withdrawing member although ALPAP is a non-stock association) and give him
the equivalent of the net book value in cash of his aliquot share in the net asset of
ALPAP as of the date of withdrawal of de facto of the Gomez faction which may be
fixed as December 23, 1970, the late when Ben Hur Gomez was elected as president
of his faction by ALPAP members who did no join the mass resignation of retirement,
I believe that in fairness the Equivalent value of any use made by the Gomez faction
of the ALPAP office and funds from and after their date of withdrawal (which
obviously was in and for their own exclusive interest and benefit) should in turn be
offset against whatever may be determined to be the collective value of their ALPAP
membership as of the date of their withdrawal on December 23, 1970.
In L-35206, the judgment penned by the Chief Justice rejects the petitioners-pilots'
petition for readmission to PAL and their rounds in support thereof, inter alia, that they
were led to believe in good faith by their union president Gaston and their counsel
that their mass resignation and retirement were a valid exercise of' their right to
protest the dismissal of Gaston notwithstanding the pendency of their certified dispute
in the industrial court, that they were assured by their leader that it was a lawful
exercise of concerted action, that the full consequences of such act were not
explained to them by counsel and that they had so acted under threat of expulsion
from the union (which appear to be borne out by the fact that within the year after
finally appreciating the full consequences of their illconceived mass protest reitrement
and resignation they sought to withdraw the same and petitioned for readmission in
line with the return-to-work orders).
The principal ground for the Court's judgment cannot be faulted, to wit, that such
action of mass retirement and resignation which plainly intended to abort the effects
of the indusgtrial court's return-to-work orders and to place petitioners-pilots beyond
the court's return-to-work orders and to place petitioners-pilots beyond the court's
jurisdictional control, after the President had certified the labor dispute thereto for
compulsory arbitration in the public interest, could not be sanctioned nor tolerated
since "clearly, the powers given to the industrial court in a certified labor dispute will
be meaningless and useless to pursue where its jurisdiction cannot operate. 2
Still, since the industrial court en banc  set aside Judge Paredes' orders to receive
proof on the pilots' petitions for reinstatement on the basis inter alia of the Gomez
factions' contention that the prejudicial question of who of the two faction's contention
that the prejudicial question of who of the two factions should prosecute the main
case (the labor dispute) should first be resolved in the certification case pending as
Case L-33705 before theis Court 3 and since the matters raised in the petition for
reinstatement were quite serious and did required the submission of proof as held by
Judge Paredes in the December 23, 1971 order, the question of merit of the pilots'
rank-and-file petitions for reinstatement could perhaps have been deferred and
likewise remanded to the National Labor Relations Commission — since after all their
alternative prayer for payment of their claims for retirement or speration pay is being
remanded to the National Labor Relations Commission "to determine whether such
claim is in order" by receiving the proof of the parties — and such proof covers the
very same matters raised as supporting grounds and reasons in the petitions for
reinstatment.
After all, if the pilots duly substantiated with convincing proof their allegations in
support of their petitions for reinstatement that they had been misled and/or coerced
by their leader and counsel into presenting their mass retirement and resignation
without the full consequences having been explained to them the pilots would be in
the same situation of rank-and-file members of a union who engage in an illegal
strike, in which case under this Court's liberal and compassionate doctrine, only the
leaders (and those who actually resorted to violence which is of no application here)
would receive the capital of dismissal — unless this Court were somehow to make an
exception of the pilots and exclude them from the application of this established
doctrine because "of their highly advanced technical background and relatively better
life status — far above the general working class spectrum." 4
Withal, the Court's decision requires the National Labor Relations Commission with
reference to the pilots' alternative claims for retirement or separation pay "to
determine whether such claim is in order, particularly in view of the caveat made by
PAL, in accepting the petitioners' individual letters of retirement/resignation, that said
petitioners shall not be entitled to any benefit or privilege to which they may otherwise
be entitled by reason of their employment with PAL as the former's acts constituted a
violation of the order of the industrial court dated November 26, 1970."
The said November 26, 1970 order commanded ALPAP members "not to strike or in
any way Cause any stoppage in the operation and service of PAL, under pain of
dismissal  and forfeiture of rights and privileges accruing to their respective
employments should they disregard this Order; and PAL is also ordered not to lockout
any of such members and officers of ALPAP under pain of contempt and cancellation
of its franchise.
I venture to suggest as a specific guideline 5 for the National Labor Relations
Commission's consideration (in order to expedite settlement of the case and assuage
the anxieties of petitioners and their families) that the pending question appears to be
one of law, whose resolution would not be affected by the proof that may be
submitted to the said commission upon remand of the case.
The question of law is: was it within the industrial court's power as provided in Judge
Paredes' above-quoted order to order "forfeiture of rights and privileges accruing to
their respective employments" should they disregard his return-to-work order? It
should be noted that the PAL in accepting the letters of retirement/resignation made
the caveat that the pilots concerned would forfeit any retirement benefit or privilege
that they would otherwise be entitled to by reason of their employment with PAL, as
their acts constituted a violation of the cited return-to-work order, thus indicating that
were it not for such order, PAL would have no basis for imposing any forfeiture of
earned retirement privileges since it was in turn accepting the pilots' retirement and
resignation.
If the industrial court had no such power to order forfeiture of the pilots'
retirement/resignation privileges and benefits for violation of its return to work order,
then there would be no legal basis for the denial of such retirement privileges and
benefits.
That the industrial court had such power is open to grave doubts. For disregard and
violation of the return to work order, the industrial court could impose the capital
penalty of dismissal from employment. True, the pilots carried out an advised mass
retirement/resignation to abort the effects of the return-to-work order but the
effectiveness of the penalty of dismissal is borne out by the fact that within the year
the pilots had come to realize and regret the futility of their act and were seeking
readmission Then again, the industrial Court had the power of contempt — it could
have declared the mass retirement illegal as this Court has in fact so declared and
used its coercive power of contempt under Rule 71, section 7 by requiring
imprisonment of the petitioners until they purged themselves of contempt by
complying with the return-to-work order.
But to declare the forfeiture of retirement privileges and benefits which the petitioners
had earned and would otherwise be entitled to by reason of their years of
employment of PAL appears to be beyond the coercive as well as punitive powers of
the industrial court — in the same way that is threatened cancellation of PAL's
franchise as granted by Congress for violation of the lockout prohibition aspect of the
same order was beyond its powers.
The end result, then, would be that assuming that petitioners had willfully violated the
rertun-to-work order of November 26, 1970 and had not ben misled into presenting
their mass retirement/resignation, such violation could not legally result in a forfeiture
of their retirement prvileges and benefits as decreed in the order since such forfeiture
was beyond the industrial court's power and authorituy. Their loss of employment and
the denial of their readmission certainly constitute sufficient punshment and
vindication of the court's authority. All the more so would such non-forteiture of
earned reirement privileges and benefits be in consonance with fairness and equity
should the pilots duly establish the factual averments of thier cited petition for
readmission and for payment of their said privileges and benefits.
 
 
Separate Opinions
TEEHANKEE, J.,  concurring:
In L-33705, a certification proceeding, I concur with the ruling 1 that there is nothing in
the law which supports respondent court's restrictive interpretation that would limit
membership in a labor organization to the employees of a particular employer, (for
such an archaic view would be practically a death blow to the cause of unionism and
would fragment unions into as many employers that there may be); and that
specifically in the case of ALPAP (Air Line Pilots Association of the Philippines) there
is nothing in its Constitution and by-laws that would restrict its membership to
Philippine Air Lines, Inc. (PAL) pilots alone. (Obviously, the organizational set up was
for ALPAP as a union to be composed of all airline pilots in the Philippines regardless
of employer, patterned after the ALPAP (Air Line Pilots Association) in the United
States which has a reputed membership of 46,000 with locals established by the
members at their respective companies of employment).
The Court therefore properly upheld the election of the Gaston faction by a clear
majority of the ALPAP membership (1221 out of 270) as against the Gomez faction of
45 members; recognized Gaston's election as president of ALPAP as against the
rump election of Gomez to the same position; and ruled out respondent court's action
of authorizing the Gomez faction to take over the office, funds and name of ALPAP as
a grave abuse of discretion and a nullity.
Of course, only the pilots actually in the employ of the PAL to the exclusion of those
who had resigned or retired or otherwise been separated from its employment could
take part in the PAL certification election. Under normal circumstances, the ALPAP as
the duly organized labor union (composed of both factions) would manage and
administer the collective bargaining agreement arrived at between employer and
employees.
But this did not hold true in the present case, since in effect the Gomez faction
consisting of pilots who continued in the employ of PAL and did not follow the action
of the majority composing the Gaston faction of resigning and retiring en masse  from
their employment separated themselves from ALPAP and were granted separate
recognition by PAL as the ALPAP (Gomez) faction constituting the exclusive
collective bargaining representation for the pilots who continued in its employ, The
original union ALPAP as headed by Gaston on concedes this and makes it quite clear
in its brief that it does not question the recognition extended by PAL to the Gomez
faction nor the latter's right to manage and administer the collective bargaining
agreement and to negotiate and conclude any other collective bargaining agreement
with PAL.
The actual dispute was thus reduced to whether the Gomez faction in separating
themselves from ALPAP as headed by Gaston could take over and appropriate the
corporate name, office and funds of ALPAP, as authorized by respondent court.
Such take-over or appropriation of ALPAP by the Gomez faction could not be validly
done nor authorized by respondent court, as now ruled by this Court. But since
ALPAP does recognize the right of the Gomez faction to separate and secede from
ALPAP and for the members of the Gomez faction composed of pilots who have
remained in the employ of PAL to form their own union, the Court's judgment has
ordered ALPAP as headed by Gaston as the recognized president thereof or his duly
elected successor to give to any withdrawing member i.e. the members of the Gomez
faction "whatever right. interest or participation such member may have in the assets,
including cash funds of ALPAP as a result of his membership in that association."
I take this to mean that ALPAP is thereby ordered to liquidate the membership of
each withdrawing member although ALPAP is a non-stock association) and give him
the equivalent of the net book value in cash of his aliquot share in the net asset of
ALPAP as of the date of withdrawal of de facto of the Gomez faction which may be
fixed as December 23, 1970, the late when Ben Hur Gomez was elected as president
of his faction by ALPAP members who did no join the mass resignation of retirement,
I believe that in fairness the Equivalent value of any use made by the Gomez faction
of the ALPAP office and funds from and after their date of withdrawal (which
obviously was in and for their own exclusive interest and benefit) should in turn be
offset against whatever may be determined to be the collective value of their ALPAP
membership as of the date of their withdrawal on December 23, 1970.
In L-35206, the judgment penned by the Chief Justice rejects the petitioners-pilots'
petition for readmission to PAL and their rounds in support thereof, inter alia, that they
were led to believe in good faith by their union president Gaston and their counsel
that their mass resignation and retirement were a valid exercise of' their right to
protest the dismissal of Gaston notwithstanding the pendency of their certified dispute
in the industrial court, that they were assured by their leader that it was a lawful
exercise of concerted action, that the full consequences of such act were not
explained to them by counsel and that they had so acted under threat of expulsion
from the union (which appear to be borne out by the fact that within the year after
finally appreciating the full consequences of their illconceived mass protest reitrement
and resignation they sought to withdraw the same and petitioned for readmission in
line with the return-to-work orders).
The principal ground for the Court's judgment cannot be faulted, to wit, that such
action of mass retirement and resignation which plainly intended to abort the effects
of the indusgtrial court's return-to-work orders and to place petitioners-pilots beyond
the court's return-to-work orders and to place petitioners-pilots beyond the court's
jurisdictional control, after the President had certified the labor dispute thereto for
compulsory arbitration in the public interest, could not be sanctioned nor tolerated
since "clearly, the powers given to the industrial court in a certified labor dispute will
be meaningless and useless to pursue where its jurisdiction cannot operate. 2
Still, since the industrial court en banc  set aside Judge Paredes' orders to receive
proof on the pilots' petitions for reinstatement on the basis inter alia of the Gomez
factions' contention that the prejudicial question of who of the two faction's contention
that the prejudicial question of who of the two factions should prosecute the main
case (the labor dispute) should first be resolved in the certification case pending as
Case L-33705 before theis Court 3 and since the matters raised in the petition for
reinstatement were quite serious and did required the submission of proof as held by
Judge Paredes in the December 23, 1971 order, the question of merit of the pilots'
rank-and-file petitions for reinstatement could perhaps have been deferred and
likewise remanded to the National Labor Relations Commission — since after all their
alternative prayer for payment of their claims for retirement or speration pay is being
remanded to the National Labor Relations Commission "to determine whether such
claim is in order" by receiving the proof of the parties — and such proof covers the
very same matters raised as supporting grounds and reasons in the petitions for
reinstatment.
After all, if the pilots duly substantiated with convincing proof their allegations in
support of their petitions for reinstatement that they had been misled and/or coerced
by their leader and counsel into presenting their mass retirement and resignation
without the full consequences having been explained to them the pilots would be in
the same situation of rank-and-file members of a union who engage in an illegal
strike, in which case under this Court's liberal and compassionate doctrine, only the
leaders (and those who actually resorted to violence which is of no application here)
would receive the capital of dismissal — unless this Court were somehow to make an
exception of the pilots and exclude them from the application of this established
doctrine because "of their highly advanced technical background and relatively better
life status — far above the general working class spectrum." 4
Withal, the Court's decision requires the National Labor Relations Commission with
reference to the pilots' alternative claims for retirement or separation pay "to
determine whether such claim is in order, particularly in view of the caveat made by
PAL, in accepting the petitioners' individual letters of retirement/resignation, that said
petitioners shall not be entitled to any benefit or privilege to which they may otherwise
be entitled by reason of their employment with PAL as the former's acts constituted a
violation of the order of the industrial court dated November 26, 1970."
The said November 26, 1970 order commanded ALPAP members "not to strike or in
any way Cause any stoppage in the operation and service of PAL, under pain of
dismissal  and forfeiture of rights and privileges accruing to their respective
employments should they disregard this Order; and PAL is also ordered not to lockout
any of such members and officers of ALPAP under pain of contempt and cancellation
of its franchise.
I venture to suggest as a specific guideline 5 for the National Labor Relations
Commission's consideration (in order to expedite settlement of the case and assuage
the anxieties of petitioners and their families) that the pending question appears to be
one of law, whose resolution would not be affected by the proof that may be
submitted to the said commission upon remand of the case.
The question of law is: was it within the industrial court's power as provided in Judge
Paredes' above-quoted order to order "forfeiture of rights and privileges accruing to
their respective employments" should they disregard his return-to-work order? It
should be noted that the PAL in accepting the letters of retirement/resignation made
the caveat that the pilots concerned would forfeit any retirement benefit or privilege
that they would otherwise be entitled to by reason of their employment with PAL, as
their acts constituted a violation of the cited return-to-work order, thus indicating that
were it not for such order, PAL would have no basis for imposing any forfeiture of
earned retirement privileges since it was in turn accepting the pilots' retirement and
resignation.
If the industrial court had no such power to order forfeiture of the pilots'
retirement/resignation privileges and benefits for violation of its return to work order,
then there would be no legal basis for the denial of such retirement privileges and
benefits.
That the industrial court had such power is open to grave doubts. For disregard and
violation of the return to work order, the industrial court could impose the capital
penalty of dismissal from employment. True, the pilots carried out an advised mass
retirement/resignation to abort the effects of the return-to-work order but the
effectiveness of the penalty of dismissal is borne out by the fact that within the year
the pilots had come to realize and regret the futility of their act and were seeking
readmission Then again, the industrial Court had the power of contempt — it could
have declared the mass retirement illegal as this Court has in fact so declared and
used its coercive power of contempt under Rule 71, section 7 by requiring
imprisonment of the petitioners until they purged themselves of contempt by
complying with the return-to-work order.
But to declare the forfeiture of retirement privileges and benefits which the petitioners
had earned and would otherwise be entitled to by reason of their years of
employment of PAL appears to be beyond the coercive as well as punitive powers of
the industrial court — in the same way that is threatened cancellation of PAL's
franchise as granted by Congress for violation of the lockout prohibition aspect of the
same order was beyond its powers.
The end result, then, would be that assuming that petitioners had willfully violated the
rertun-to-work order of November 26, 1970 and had not ben misled into presenting
their mass retirement/resignation, such violation could not legally result in a forfeiture
of their retirement prvileges and benefits as decreed in the order since such forfeiture
was beyond the industrial court's power and authorituy. Their loss of employment and
the denial of their readmission certainly constitute sufficient punshment and
vindication of the court's authority. All the more so would such non-forteiture of
earned reirement privileges and benefits be in consonance with fairness and equity
should the pilots duly establish the factual averments of thier cited petition for
readmission and for payment of their said privileges and benefits.
G.R. No. 93117 August 1, 1995
LOPEZ SUGAR CORPORATION, petitioner, 
vs.
HON. SECRETARY OF LABOR AND EMPLOYMENT, NATIONAL CONGRESS OF
UNIONS IN THE SUGAR INDUSTRY OF THE PHILIPPINES (NACUSIP) and
COMMERCIAL AND AGRO-INDUSTRIAL LABOR ORGANIZATION
(CAILO), respondents.
VITUG, J.:
The decision of public respondent, assailed in this petition for certiorari, is anchored
on Article 257 of the Labor Code, as amended, which provides:
Art. 257. Petitions in unorganized establishments. — In any
establishment where there is no certified bargaining agent, a
certification election shall automatically be conducted by the Med-
Arbiter upon the filing of a petition by a legitimate labor
organization.
The Med-Arbiter, sustained by the Secretary of Labor and Employment, has
ruled that the above provision is mandatory and gives him no other choice
than to conduct a certification election upon the receipt of the corresponding
petition.
On 26 July 1989, private respondent National Congress of Unions in the Sugar
Industry of the Philippines-TUCP ("NACUSIP-TUCP") filed with the Department of
Labor and Employment ("DOLE") Regional Office No. VI, Bacolod City, a petition for
direct certification or for certification election to determine the sole and exclusive
collective bargaining representative of the supervisory employees of herein petitioner,
Lopez Sugar Corporation ("LSC"), at its sugar central in Fabrica, Sagay, Negros
Occidental.
In its petition, docketed Case No. RO6-MA-021-89, NACUSIP-TUCP averred that it
was a legitimate national labor organization; that LSC was employing 55 supervisory
employees, the majority of whom were members of the union; that no other labor
organization was claiming membership over the supervisory employees; that there
was no existing collective bargaining agreement covering said employees; and that
there was no legal impediment either to a direct certification of NACUSIP-TUCP or to
the holding of a certification election. 1
In its comment and opposition, dated 14 August 1989, LSC contended, among other
things, that the petition was bereft of any legal or factual basis; that the petition was
nothing more than a useless scrap of paper designed to harass the company; and
that its employees above the rank-and-file category were in truth unaware of the
petition.2
On 18 August 1989, the Commercial and Agro-Industrial Labor Organization
("CAILO"), a registered labor organization also claiming to count substantial
membership among the LSC supervisory employees, moved to intervene. 3 The
motion was granted.4
On 22 August 1989, NACUSIP-TUCP submitted Charter Certificate No. 003-89, dated
20 July 1989, of the NACUSIP-TUCP Lopez Sugar Central Supervisory
Chapter.5 LSC, on its part, submitted a list of its employees above the rank-and-file
status preparatory to the inclusion/exclusion proceedings.6
On 13 September 1989, one Carlos S. Gevero, asserting a right to represent the
"supervisors of LSC," filed a motion to dismiss the petition for lack of interest on the
part of the supervisory employees. 7
At the hearing of 20 September 1989, both NACUSIP-TUCP and CAILO failed to
appear. Hearing was re-set for 29 September 1989 8 but, again, neither NACUSIP-
TUCP nor CAILO appeared. On 16 October 1989, nonetheless, Med-Arbiter Felizardo
T. Serapio issued an Order9 granting the petition. He ruled that under Article 257 of
the Labor Code, as amended, the Med-Arbiter was left with no option but to order the
conduct of a certification election immediately upon the filing of the petition, holding
that the subsequent disaffiliation or withdrawals of members did not adversely affect
the standing of the petition. The dispositive portion of his Order read:
VIEWED IN THE LIGHT OF THE FOREGOING, the petition for
certification election among the supervisory employees of the
Lopez Sugar Central, filed by the NACUSIP-TUCP is, as it is
hereby GRANTED with the following choices:
1) National Congress of Unions in the Sugar Industry of the Phils.
(NACUSIP-TUCP);
2) Commercial and Agro-Industrial Labor Organization (CAILO);
3) No Union.
The designated representation officer is hereby directed to call the
parties to a pre-election conference to thresh out the mechanics of
the certification election, including the inclusion and exclusion of
voters and to conduct the election within twenty (20) days from
receipt by the parties of this Order. The list submitted by the
Employer (LSC Employees other than rank and file) shall be used
to determine the eligible voters.
SO ORDERED. 10
LSC appealed to the DOLE and asseverated that the order was a patent
nullity and that the Med-Arbiter acted with grave abuse of discretion. 11
In denying the appeal, the Secretary of Labor, in his Decision of 06 March 1990, has
likewise ruled that the holding by the Med-Arbiter of a certification election is
mandatory under Article 257 of the Labor Code; that the subsequent withdrawals and
disauthorization/disaffiliation of some supervisory personnel in the petition for
certification election could not bar its being granted; and that a certification election is
still the most appropriate means to finally settle the issue of representation. 12
Hence, this petition for certiorari; it is argued that —
Public Respondent Honorable Secretary of Labor and Employment
(has) committed grave abuse of discretion amounting to lack of
jurisdiction when it refused to dismiss a petition for certification
election despite clear lack of legal and factual basis for holding the
same. 13
The Solicitor General agrees with public respondent in arguing that the tenor of Article
257 (supra) of the Labor Code is one of command. He cites paragraph 2, Section 6,
Rule V, Book V, of the Implementing Rules and Regulations of the Labor Code, to the
effect that once "a petition (is) filed by a legitimate organization involving an
unorganized establishment, the Med-Arbiter shall immediately order the conduct of a
certification election," which is designed, he continues, to give substance to the
workers' right to self- organization.14 Petitioner promptly retorts that it has no quarrel
with public respondent on the objectives of the law but it points out that the
application of Article 257 clearly must first be occasioned by a genuine petition from a
legitimate labor organization.
Not too long ago, the Court already had an opportunity to pass upon this very issue
in Progressive Development Corporation vs. Secretary, Department of Labor and
Employment, 15 where we said:
But while Article 257 cited by the Solicitor General directs the
automatic conduct of a certification election in an unorganized
establishment, it also requires that the petition for certification
election must be filed by a legitimate labor organization. Article 242
enumerates the exclusive rights of a legitimate labor organization
among which is the right to be certified as the exclusive
representative of all the employees in an appropriate collective
bargaining unit for purposes of collective bargaining.
Meanwhile, Article 212(h) defines a legitimate labor organization as
"any labor organization duly registered with the DOLE and includes
any branch or local thereof." (Emphasis supplied) Rule I, Section
1(j), Book V of the Implementing Rules likewise defines a legitimate
labor organization as "any labor organization duly registered with
the DOLE and includes any branch, local or affiliate thereof."
(Emphasis supplied)
Indeed, the law did not reduce the Med-Arbiter to an automaton which can instantly
be set to impulse by the mere filing of a petition for certification election. He is still
tasked to satisfy himself that all the conditions of the law are met, and among the
legal requirements is that the petitioning union must be a legitimate labor organization
in good standing.
The petition for certification election, in the case at bench, was filed by the NACUSIP-
TUCP, a national labor organization duly registered with the DOLE render
Registration Certificate No. FED-402-6390-IP. The legitimate status of NACUSIP-
TUCP might be conceded; being merely, however, an agent for the local organization
(the NACUSIP-TUCP Lopez Sugar Central Supervisory Chapter), the
federation's bona fide status alone would not suffice. The local chapter, as its
principal, should also be a legitimate labor organization in good standing. Accordingly,
in Progressive Development, we elucidated:
In the case of union affiliation with a federation, the documentary
requirements are found in Rule II, Section 3(e), Book V of the
implementing Rules, which we again quote as follows:
the secretary or treasurer, as the case may be, of such local or
chapter, and attested to by its president.
Absent compliance with these mandatory requirements, the local or
chapter does not become a legitimate labor organization. 16
The only document extant on record to establish the legitimacy of the NACUSIP-
TUCP Lopez Sugar Central Supervisory Chapter is a charter certificate and nothing
else. The instant petition, at least for now, must thus be GRANTED.
WHEREFORE, the assailed Decision of the Secretary of Labor, dated 06 March
1990, affirming that of the Med-Arbiter, is ANNULLED and SET ASIDE. The petition
for certification election is dismissed. No costs.
SO ORDERED.

(c) The local or chapter of a labor federation or national union shall Feliciano, Romero and Melo, JJ., concur.
have and maintain a constitution and by-laws, set of officers and
books of accounts. For reporting purposes, the procedure
G.R. No. 87700 June 13, 1990
governing the reporting of independently registered unions,
federations or national unions shall be observed. (Emphasis
supplied) SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, DANIEL S.L.
BORBON II, HERMINIA REYES, MARCELA PURIFICACION, ET AL., petitioners, 
vs.
Since the "procedure governing the reporting of independently
HON. JESUS G. BERSAMIRA, IN HIS CAPACITY AS PRESIDING JUDGE OF
registered unions" refers to the certification and attestation
BRANCH 166, RTC, PASIG, and SAN MIGUEL CORPORATION, respondents.
requirements contained in Article 235, paragraph 2, it follows that
the constitution and by-laws, set of officers and books of accounts
submitted by the local and chapter must likewise comply with these Romeo C. Lagman for petitioners.
requirements. The same rationale for requiring the submission of
duly subscribed documents upon union registration exists in the Jardeleza, Sobrevinas, Diaz, Mayudini & Bodegon for respondents.
case of union affiliation. Moreover, there is greater reason to exact
compliance with the certification and attestation requirements
because, as previously mentioned, several requirements applicable
to independent union registration are no longer required in the case
of the formation of a local or chapter. The policy of the law in MELENCIO-HERRERA, J.:
conferring greater bargaining power upon labor unions must be
balanced with the policy of providing preventive measures against Respondent Judge of the Regional Trial Court of Pasig, Branch 166, is taken to task
the commission of fraud. by petitioners in this special civil action for certiorari and Prohibition for having issued
the challenged Writ of Preliminary Injunction on 29 March 1989 in Civil Case No.
A local or chapter therefore becomes a legitimate labor 57055 of his Court entitled "San Miguel Corporation vs. SMCEU-PTGWO, et als."
organization only upon submission of the following to the BLR:
Petitioners' plea is that said Writ was issued without or in excess of jurisdiction and
1) A charter certificate, within 30 days from its issuance by the labor with grave abuse of discretion, a labor dispute being involved. Private respondent
federation or national union, and San Miguel Corporation (SanMig. for short), for its part, defends the Writ on the
ground of absence of any employer-employee relationship between it and the
contractual workers employed by the companies Lipercon Services, Inc. (Lipercon)
2) The constitution and by-laws, a statement on the set of officers,
and D'Rite Service Enterprises (D'Rite), besides the fact that the Union is bereft of
and the books of accounts all of which are certified under oath by
personality to represent said workers for purposes of collective bargaining. The
Solicitor General agrees with the position of SanMig.
The antecedents of the controversy reveal that:
Sometime in 1983 and 1984, SanMig entered into contracts for merchandising
services with Lipercon and D'Rite (Annexes K and I, SanMig's Comment,
respectively). These companies are independent contractors duly licensed by the
Department of Labor and Employment (DOLE). SanMig entered into those contracts
to maintain its competitive position and in keeping with the imperatives of efficiency,
business expansion and diversity of its operation. In said contracts, it was expressly
understood and agreed that the workers employed by the contractors were to be paid
by the latter and that none of them were to be deemed employees or agents of
SanMig. There was to be no employer-employee relation between the contractors
and/or its workers, on the one hand, and SanMig on the other.
Petitioner San Miguel Corporation Employees Union-PTWGO (the Union, for brevity)
is the duly authorized representative of the monthly paid rank-and-file employees of
SanMig with whom the latter executed a Collective Bargaining Agreement (CBA)
effective 1 July 1986 to 30 June 1989 (Annex A, SanMig's Comment). Section 1 of
their CBA specifically provides that "temporary, probationary, or contract employees
and workers are excluded from the bargaining unit and, therefore, outside the scope
of this Agreement."
In a letter, dated 20 November 1988 (Annex C, Petition), the Union advised SanMig
that some Lipercon and D'Rite workers had signed up for union membership and
sought the regularization of their employment with SMC. The Union alleged that this
group of employees, while appearing to be contractual workers supposedly
independent contractors, have been continuously working for SanMig for a period
ranging from six (6) months to fifteen (15) years and that their work is neither casual
nor seasonal as they are performing work or activities necessary or desirable in the
usual business or trade of SanMig. Thus, it was contended that there exists a "labor-
only" contracting situation. It was then demanded that the employment status of these
workers be regularized.
On 12 January 1989 on the ground that it had failed to receive any favorable
response from SanMig, the Union filed a notice of strike for unfair labor practice, CBA
violations, and union busting (Annex D, Petition).
On 30 January 1989, the Union again filed a second notice of strike for unfair labor
practice (Annex F, Petition).
As in the first notice of strike. Conciliatory meetings were held on the second notice.
Subsequently, the two (2) notices of strike were consolidated and several conciliation
conferences were held to settle the dispute before the National Conciliation and
Mediation Board (NCMB) of DOLE (Annex G, Petition).
Beginning 14 February 1989 until 2 March 1989, series of pickets were staged by
Lipercon and D'Rite workers in various SMC plants and offices.
On 6 March 1989, SMC filed a verified Complaint for Injunction and Damages before
respondent Court to enjoin the Union from:
a. representing and/or acting for and in behalf of the employees of
LIPERCON and/or D'RITE for the purposes of collective bargaining;
b. calling for and holding a strike vote, to compel plaintiff to hire the
employees or workers of LIPERCON and D'RITE;
c. inciting, instigating and/or inducing the employees or workers of
LIPERCON and D'RITE to demonstrate and/or picket at the plants
and offices of plaintiff within the bargaining unit referred to in the
CBA,...;
d. staging a strike to compel plaintiff to hire the employees or
workers of LIPERCON and D'RITE;
e. using the employees or workers of LIPERCON AND D'RITE to
man the strike area and/or picket lines and/or barricades which the
defendants may set up at the plants and offices of plaintiff within
the bargaining unit referred to in the CBA ...;
f. intimidating, threatening with bodily harm and/or molesting the
other employees and/or contract workers of plaintiff, as well as
those persons lawfully transacting business with plaintiff at the work
places within the bargaining unit referred to in the CBA, ..., to
compel plaintiff to hire the employees or workers of LIPERCON and
D'RITE;
g. blocking, preventing, prohibiting, obstructing and/or impeding the
free ingress to, and egress from, the work places within the
bargaining unit referred to in the CBA .., to compel plaintiff to hire
the employees or workers of LIPERCON and D'RITE;
h. preventing and/or disrupting the peaceful and normal operation
of plaintiff at the work places within the bargaining unit referred to in
the CBA, Annex 'C' hereof, to compel plaintiff to hire the employees
or workers of LIPERCON and D'RITE. (Annex H, Petition)
Respondent Court found the Complaint sufficient in form and substance and issued a
Temporary Restraining Order for the purpose of maintaining the status quo, and set
the application for Injunction for hearing.
In the meantime, on 13 March 1989, the Union filed a Motion to Dismiss SanMig's
Complaint on the ground of lack of jurisdiction over the case/nature of the action,
which motion was opposed by SanMig. That Motion was denied by respondent Judge
in an Order dated 11 April 1989.
After several hearings on SanMig's application for injunctive relief, where the parties
presented both testimonial and documentary evidence on 25 March 1989, respondent
Court issued the questioned Order (Annex A, Petition) granting the application and
enjoining the Union from Committing the acts complained of,  supra. Accordingly, on
29 March 1989, respondent Court issued the corresponding Writ of Preliminary
Injunction after SanMig had posted the required bond of P100,000.00 to answer for
whatever damages petitioners may sustain by reason thereof.
In issuing the Injunction, respondent Court rationalized:
The absence of employer-employee relationship negates the
existence of labor dispute. Verily, this court has jurisdiction to take
cognizance of plaintiff's grievance.
The evidence so far presented indicates that plaintiff has contracts
for services with Lipercon and D'Rite. The application and contract
for employment of the defendants' witnesses are either with
Lipercon or D'Rite. What could be discerned is that there is no
employer-employee relationship between plaintiff and the
contractual workers employed by Lipercon and D'Rite. This,
however, does not mean that a final determination regarding the
question of the existence of employer-employee relationship has
already been made. To finally resolve this dispute, the court must
extensively consider and delve into the manner of selection and
engagement of the putative employee; the mode of payment of
wages; the presence or absence of a power of dismissal; and the
Presence or absence of a power to control the putative employee's
conduct. This necessitates a full-blown trial. If the acts complained
of are not restrained, plaintiff would, undoubtedly, suffer irreparable
damages. Upon the other hand, a writ of injunction does not
necessarily expose defendants to irreparable damages.
Evidently, plaintiff has established its right to the relief demanded.
(p. 21, Rollo)
Anchored on grave abuse of discretion, petitioners are now before us seeking
nullification of the challenged Writ. On 24 April 1989, we issued a Temporary
Restraining Order enjoining the implementation of the Injunction issued by
respondent Court. The Union construed this to mean that "we can now strike," which
it superimposed on the Order and widely circulated to entice the Union membership
to go on strike. Upon being apprised thereof, in a Resolution of 24 May 1989, we
required the parties to "RESTORE the status quo ante declaration of strike" (p. 2,62
Rollo).
In the meantime, however, or on 2 May 1989, the Union went on strike. Apparently,
some of the contractual workers of Lipercon and D'Rite had been laid off. The strike
adversely affected thirteen (13) of the latter's plants and offices.
On 3 May 1989, the National Conciliation and Mediation Board (NCMB) called the
parties to conciliation. The Union stated that it would lift the strike if the thirty (30)
Lipercon and D'Rite employees were recalled, and discussion on their other
demands, such as wage distortion and appointment of coordinators, were made.
Effected eventually was a Memorandum of Agreement between SanMig and the
Union that "without prejudice to the outcome of G.R. No. 87700 (this case) and Civil
Case No. 57055 (the case below), the laid-off individuals ... shall be recalled effective
8 May 1989 to their former jobs or equivalent positions under the same terms and
conditions prior to "lay-off" (Annex 15, SanMig Comment). In turn, the Union would
immediately lift the pickets and return to work.
After an exchange of pleadings, this Court, on 12 October 1989, gave due course to
the Petition and required the parties to submit their memoranda simultaneously, the
last of which was filed on 9 January 1990.
The focal issue for determination is whether or not respondent Court correctly
assumed jurisdiction over the present controversy and properly issued the Writ of
Preliminary Injunction to the resolution of that question, is the matter of whether, or
not the case at bar involves, or is in connection with, or relates to a labor dispute. An
affirmative answer would bring the case within the original and exclusive jurisdiction
of labor tribunals to the exclusion of the regular Courts.
Petitioners take the position that 'it is beyond dispute that the controversy in the
court  a quo involves or arose out of a labor dispute and is directly connected or
interwoven with the cases pending with the NCMB-DOLE, and is thus beyond the
ambit of the public respondent's jurisdiction. That the acts complained of (i.e., the
mass concerted action of picketing and the reliefs prayed for by the private
respondent) are within the competence of labor tribunals, is beyond question" (pp. 6-
7, Petitioners' Memo).
On the other hand, SanMig denies the existence of any employer-employee
relationship and consequently of any labor dispute between itself and the Union.
SanMig submits, in particular, that "respondent Court is vested with jurisdiction and
judicial competence to enjoin the specific type of strike staged by petitioner union and
its officers herein complained of," for the reasons that:
A. The exclusive bargaining representative of an employer unit
cannot strike to compel the employer to hire and thereby create an
employment relationship with contractual workers, especially were
the contractual workers were recognized by the union, under the
governing collective bargaining agreement, as excluded from, and
therefore strangers to, the bargaining unit.
B. A strike is a coercive economic weapon granted the bargaining
representative only in the event of a deadlock in a labor dispute
over 'wages, hours of work and all other and of the employment' of
the employees in the unit. The union leaders cannot instigate a
strike to compel the employer, especially on the eve of certification
elections, to hire strangers or workers outside the unit, in the hope
the latter will help re-elect them.
C. Civil courts have the jurisdiction to enjoin the above because this
specie of strike does not arise out of a labor dispute, is an abuse of
 right, and violates the employer's constitutional liberty to hire or not
to hire. (SanMig's Memorandum, pp. 475-476, Rollo).
We find the Petition of a meritorious character.
A "labor dispute" as defined in Article 212 (1) of the Labor Code includes "any
controversy or matter concerning terms and conditions of employment or the
association or representation of persons in negotiating, fixing, maintaining, changing,
or arranging the terms and conditions of employment, regardless of whether the
disputants stand in the proximate relation of employer and employee."
While it is SanMig's submission that no employer-employee relationship exists
between itself, on the one hand, and the contractual workers of Lipercon and D'Rite
on the other, a labor dispute can nevertheless exist "regardless of whether the
disputants stand in the proximate relationship of employer and employee" (Article 212
[1], Labor Code, supra) provided the controversy concerns, among others, the terms
and conditions of employment or a "change" or "arrangement" thereof (ibid). Put
differently, and as defined by law, the existence of a labor dispute is not negative by
the fact that the plaintiffs and defendants do not stand in the proximate relation of
employer and employee.
That a labor dispute, as defined by the law, does exist herein is evident. At bottom,
what the Union seeks is to regularize the status of the employees contracted by
Lipercon and D'Rite in effect, that they be absorbed into the working unit of SanMig.
This matter definitely dwells on the working relationship between said employees vis-
a-vis SanMig. Terms, tenure and conditions of their employment and the arrangement
of those terms are thus involved bringing the matter within the purview of a labor
dispute. Further, the Union also seeks to represent those workers, who have signed
up for Union membership, for the purpose of collective bargaining. SanMig, for its
part, resists that Union demand on the ground that there is no employer-employee
relationship between it and those workers and because the demand violates the
terms of their CBA. Obvious then is that representation and association, for the
purpose of negotiating the conditions of employment are also involved. In fact, the
injunction sought by SanMig was precisely also to prevent such representation.
Again, the matter of representation falls within the scope of a labor dispute. Neither
can it be denied that the controversy below is directly connected with the labor
dispute already taken cognizance of by the NCMB-DOLE (NCMB-NCR- NS-01- 021-
89; NCMB NCR NS-01-093-83).
Whether or not the Union demands are valid; whether or not SanMig's contracts with
Lipercon and D'Rite constitute "labor-only" contracting and, therefore, a regular
employer-employee relationship may, in fact, be said to exist; whether or not the
Union can lawfully represent the workers of Lipercon and D'Rite in their demands
against SanMig in the light of the existing CBA; whether or not the notice of strike was
valid and the strike itself legal when it was allegedly instigated to compel the
employer to hire strangers outside the working unit; — those are issues the resolution
of which call for the application of labor laws, and SanMig's cause's of action in the
Court below are inextricably linked with those issues.
The precedent in Layno vs. de la Cruz (G.R. No. L-29636, 30 April 1965, 13 SCRA
738) relied upon by SanMig is not controlling as in that case there was no controversy
over terms, tenure or conditions, of employment or the representation of employees
that called for the application of labor laws. In that case, what the petitioning union
demanded was not a change in working terms and conditions, or the representation
of the employees, but that its members be hired as stevedores in the place of the
members of a rival union, which petitioners wanted discharged notwithstanding the
existing contract of the arrastre company with the latter union. Hence, the ruling
therein, on the basis of those facts unique to that case, that such a demand could
hardly be considered a labor dispute.
As the case is indisputably linked with a labor dispute, jurisdiction belongs to the labor
tribunals. As explicitly provided for in Article 217 of the Labor Code, prior to its
amendment by R.A. No. 6715 on 21 March 1989, since the suit below was instituted
on 6 March 1989, Labor Arbiters have original and exclusive jurisdiction to hear and
decide the following cases involving all workers including "1. unfair labor practice
cases; 2. those that workers may file involving wages, hours of work and other terms
and conditions of employment; ... and 5. cases arising from any violation of Article
265 of this Code, including questions involving the legality of striker and lockouts. ..."
Article 217 lays down the plain command of the law.
The claim of SanMig that the action below is for damages under Articles 19, 20 and
21 of the Civil Code would not suffice to keep the case within the jurisdictional
boundaries of regular Courts. That claim for damages is interwoven with a labor
dispute existing between the parties and would have to be ventilated before the
administrative machinery established for the expeditious settlement of those disputes.
To allow the action filed below to prosper would bring about "split jurisdiction" which is
obnoxious to the orderly administration of justice (Philippine Communications,
Electronics and Electricity Workers Federation vs. Hon. Nolasco, L-24984, 29 July
1968, 24 SCRA 321).
We recognize the proprietary right of SanMig to exercise an inherent management
prerogative and its best business judgment to determine whether it should contract
out the performance of some of its work to independent contractors. However, 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
(Section 3, Article XIII, 1987 Constitution) equally call for recognition and protection.
Those contending interests must be placed in proper perspective and equilibrium.
WHEREFORE, the Writ of certiorari is GRANTED and the Orders of respondent
Judge of 25 March 1989 and 29 March 1989 are SET ASIDE. The Writ of Prohibition
is GRANTED and respondent Judge is enjoined from taking any further action in Civil
Case No. 57055 except for the purpose of dismissing it. The status quo  ante
declaration of strike ordered by the Court on 24 May 1989 shall be observed pending
the proceedings in the National Conciliation Mediation Board-Department of Labor
and Employment, docketed as NCMB-NCR-NS-01-02189 and NCMB-NCR-NS-01-
093-83. No costs.
G.R. No. 103560 July 6, 1995
GOLD CITY INTEGRATED PORT SERVICE, INC. (INPORT), petitioner,  Union — Federation of Free Workers (MLU-FFW) with whom petitioner had an
vs.
NATIONAL LABOR RELATIONS COMMISSION (Fifth Division) ADELO EBUNA,
EMMANUEL VALMORIDA, RODOLFO PEREZ, ROGER ZAGADO, MARCOS
GANZAN, AND REY VALLE, (WILFREDO DAHAN, ROGELIO VILLAFUERTE,
WILFREDO AMPER, RICARDO ABA, YOLITO AMBUS, FIDEL CALIO, VICENTE
CAHATOL, SOTECO CUENCA, NICOLAS DALAGUAN, BALBINO FAJARDO,
ROLANDO JAMILA, RICARDO LAURETO, RUDY LAURETO, QUIRICO LEJANIO,
OSCAR LAPINIG, FELIPE LAURETE, JESUSTUDY OMISOL, ZOSIMO OMISOL,
PEDRO SUAREZ, SATURNINO SISIBAN and MANUEL YANEZ), respondents.
G.R. No. 103599 July 6, 1995
ADELO EBUNA, WILFREDO DAHAN, RICARDO LAURETO, REY VALLE,
VICENTE CAHATOL, MARCOS GANZAN, RODOLFO PEREZ, ROEL SAA,
ROGELIO VILLAFUERTE, MANUEL YANEZ, WILFREDO AMPER, QUIRECO
LEJANO, EMMANUEL VALMORIA, ROLANDO JAMILLA, NICOLAS DALAGUAN,
BALBINO FAJARDO, PEDRO SUAREZ, ELPIDIO ESTROGA, RUBEN PAJO,
JESUSTODY OMISOL, RICARDO ABA, FIDEL CALIO, SATURNINO SESYBAN,
RUDY LAURETO, OSCAR LAPINIG, FELIPE LAURENTE, ROGER ZAGADO,
SOTECO CUENCA, FIDEL ESLIT, ZOSIMO OMISOL, ANGEL BERNIDO, and
MICHAEL YAGOTYOT, petitioners, 
vs.
NATIONAL LABOR RELATIONS COMMISSION, FIFTH DIVISION, and GOLD
CITY INTEGRATED PORT SERVICES, INC. (INPORT), respondents.
ROMERO, J.:
Should separation pay and backwages be awarded by public respondent NLRC to
participants of an illegal strike? This is the core issue to be decided in these two
petitions.
Gold City Integrated Port Service, Inc. (INPORT) filed a petition for certiorari against
the National Labor Relations Commission (NLRC) assailing the latter's decision in
"Gold City Integrated Port Services, Inc. v. Adelo Ebuna, et al." (NLRC RAB X Case
No. 5-0405-85) with twenty-seven private respondents (G.R. No. 103599).1 This
petition has been consolidated with G.R. No. 103599 where the petitioners are the
private respondents in instant case and the private respondent is INPORT. For the
sake of clarity, INPORT shall be denominated in the case at bench as the petitioner
and the employees as private respondents.
Instant case arose from the following facts:
Early in the morning of April 30, 1985, petitioner's employees stopped working and
gathered in a mass action to express their grievances regarding wages, thirteenth
month pay and hazard pay. Said employees were all members of the Macajalar Labor
existing collective bargaining agreement.
Petitioner was engaged in stevedoring and arrastre services at the port of Cagayan
de Oro. The strike paralyzed operations at said port.
On the same morning, the strikers filed individual notices of strike ("Kaugalingon nga
Declarasyon sa Pag-Welga") with the then Ministry of Labor and Employment.
With the failure of conciliation conferences between petitioner and the strikers,
INPORT filed a complaint before the Labor Arbiter for Illegal Strike with prayer for a
restraining order/preliminary injunction.
On May 7, 1985, the National Labor Relations Commission issued a temporary
restraining order. Thereafter, majority of the strikers returned to work, leaving herein
private respondents who continued their protest.2
Counsel for private respondents filed a manifestation that petitioner required prior
screening conducted by the MLU-FFW before the remaining strikers could be
accepted back to work.
Meanwhile, counsel for the Macajalar Labor Union (MLU-FFW) filed a "Motion to Drop
Most of the Party Respondents From the Above Entitled Case." The 278 employees
on whose behalf the motion was filed, claimed that they were duped or tricked into
signing the individual notices of strike. After discovering this deception and verifying
that the strike was staged by a minority of the union officers and members and
without the approval of, or consultation with, majority of the union members, they
immediately withdrew their notice of strike and returned to work.
The petitioner INPORT, not having interposed any objection, the Labor Arbiter, in his
decision dated July 23, 1985, granted their prayer to be excluded as respondents in
the complaint for illegal strike. Moreover, petitioner's complaint was directed against
the 31 respondents who did not return to work and continued with the strike.
For not having complied with the formal requirements in Article 264 of the Labor
Code,3 the strike staged by petitioner's workers on April 30, 1985 was found by the
Labor Arbiter to be illegal.4 The workers who participated in the illegal strike did not,
however, lose their employment, since there was no evidence that they participated in
illegal acts. After noting that petitioner accepted the other striking employees back to
work, the Labor Arbiter held that the private respondents should similarly be allowed
to return to work without having to undergo the required screening to be undertaken
by their union (MLU-FFW).
As regards the six private respondents who were union officers, the Labor Arbiter
ruled that they could not have possibly been "duped or tricked" into signing the strike
notice for they were active participants in the conciliation meetings and were thus fully
aware of what was going on. Hence, said union officers should be accepted back to
work after seeking reconsideration from herein petitioner.5
The dispositive portion of the decision reads:
IN VIEW OF THE FOREGOING, it is hereby ordered that the strike
undertaken by the officers and majority union members of Macajalar Labor
Union-FFW is ILLEGAL contrary to Article 264 of the Labor Code, as
amended. Our conclusion on the employment status of the illegal strikers is
subject to our discussion above.6
Both petitioner and private respondents filed motions for reconsideration, which public
respondent NLRC treated as appeals.7
On January 14, 1991, the NLRC affirmed with modification8 the Arbiter's decision. It
held that the concerted action by the workers was more of a "protest action" than a
strike. Private respondents, including the six union officers, should also be allowed to
work unconditionally to avoid discrimination. However, in view of the strained relations
between the parties, separation pay was awarded in lieu of reinstatement. The
decretal portion of the Resolution reads:
WHEREFORE, the decision appealed from is Affirmed with modification in
accordance with the foregoing resolution. Complainant INPORT is hereby
ordered, in lieu of reinstatement, to pay respondents the equivalent of twelve
(12) months salaries each as separation pay. Complainant is further ordered
to pay respondents two (2) years backwages based on their last salaries,
without qualification or deduction. The appeal of complainant INPORT
is Dismissed for lack of merit.9
Upon petitioner's motion for reconsideration, public respondent modified the above
resolution on December 12, 1991. 10
The Commission ruled that since private respondents were not actually terminated
from service, there was no basis for reinstatement. However, it awarded six months'
salary as separation pay or financial assistance in the nature of "equitable relief." The
award for backwages was also deleted for lack of factual and legal basis. In lieu of
backwages, compensation equivalent to P1,000.00 was given.
The dispositive portion of the assailed Resolution reads:
WHEREFORE, the resolution of January 14, 1991 is Modified reducing the
award for separation pay to six (6) months each in favor of respondents,
inclusive of lawful benefits as well as those granted under the CBA, if any,
based on the latest salary of respondents, as and by way of financial
assistance while the award for backwages is Deleted and Set Aside. In lieu
thereof, respondents are granted compensation for their sudden loss of
employment in the sum of P1,000.00 each. The motion of respondents to
implead PPA as third-party respondent is Noted. Except for this modification
the rest of the decision sought to be reconsidered shall stand. 11
In the instant petitions for certiorari, petitioner alleges that public respondent
Commission committed grave abuse of discretion in awarding private respondents
separation pay and backwages despite the declaration that the strike was illegal.
On the other hand, private respondents, in their petition, assail the reduction of
separation pay and deletion of backwages by the NLRC as constituting grave abuse
of discretion.
They also allege that the Resolution of January 14, 1991 could not be reconsidered
after the unreasonable length of time of eleven months.
Before proceeding with the principal issues raised by the parties, it is necessary to
clarify public respondent's statements concerning the strike staged by INPORT's
employees.
In its resolution dated January 14, 1991, the NLRC held that the facts prevailing in the
case at bench require a relaxation of the rule that the formal requisites for a
declaration of a strike are mandatory. Furthermore, what the employees engaged in
was more of a spontaneous protest action than a strike. 12
Nevertheless, the Commission affirmed the Labor Arbiter's decision which declared
the strike illegal.
A strike, considered as the most effective weapon of labor, 13 is defined as any
temporary stoppage of work by the concerted action of employees as a result of an
industrial or labor dispute. 14 A labor dispute includes any controversy or matter
concerning terms or conditions of employment or the association or representation of
persons in negotiating, fixing, maintaining, changing or arranging the terms and
conditions of employment, regardless of whether or not the disputants stand in the
proximate relation of employers and employees. 15
Private respondents and their co-workers stopped working and held the mass action
on April 30, 1985 to press for their wages and other benefits. What transpired then
was clearly a strike, for the cessation of work by concerted action resulted from a
labor dispute.
The complaint before the Labor Arbiter involved the legality of said strike. The Arbiter
correctly ruled that the strike was illegal for failure to comply with the requirements of
Article 264 (now Article 263) paragraphs (c) and (f) of the Labor Code. 16
The individual notices of strike filed by the workers did not conform to the notice
required by the law to be filed since they were represented by a union (MLU-FFW)
which even had an existing collective bargaining agreement with INPORT.
Neither did the striking workers observe the strike vote by secret ballot, cooling-off
period and reporting requirements.
As we stated in the case of National Federation of Sugar Workers v. Ovejera, 17 the
language of the law leaves no room for doubt that the cooling-off period and the
seven-day strike ban after the strike-vote report were intended to be mandatory. 18
Article 265 of the Labor Code reads, inter alia:
(i)t SHALL be unlawful for any labor organization . . . to declare a strike . . .
without first having filed the notice required in the preceding Article or
without the necessary strike vote first having been obtained and reported to
the Ministry. (Emphasis ours)
In explaining the above provision, we said:
In requiring a strike notice and a cooling-off period, the avowed
intent of the law is to provide an opportunity for mediation and
conciliation. It thus directs the MOLE to exert all efforts at mediation
and conciliation to effect a voluntary settlement' during the cooling-
off period. . . .
xxx xxx xxx
The cooling-off period and the 7-day strike ban after the filing of a
strike-vote report, as prescribed in Art. 264 of the Labor Code, are
reasonable restrictions and their imposition is essential to attain the
legitimate policy objectives embodied in the law. We hold that they
constitute a valid exercise of the police power of the state. 19
From the foregoing, it is patent that the strike on April 30, 1985 was illegal
for failure to comply with the requirements of the law.
The effects of such illegal strikes, outlined in Article 265 (now Article 264) of
the Labor Code, make a distinction between workers and union officers who
participate therein.
A union officer who knowingly participates in an illegal strike and any worker
or union officer who knowingly participates in the commission of illegal acts
during a strike may be declared to have lost their employment status. 20 An
ordinary striking worker cannot be terminated for mere participation in an
illegal strike. There must be proof that he committed illegal acts during a
strike. A union officer, on the other hand, may be terminated from work when
he knowingly participates in an illegal strike, and like other workers, when he
commits an illegal act during a strike.
In the case at bench, INPORT accepted the majority of the striking workers,
including union officers, back to work. Private respondents were left to
continue with the strike after they refused to submit to the "screening"
required by the company. 21
The question to be resolved now is what these remaining strikers,
considering the circumstances of the case, are entitled to receive under the
law, if any.
Are they entitled, as they claim, to reinstatement or separation pay and
backwages?
In his decision, the Labor Arbiter ordered INPORT to reinstate/accept the
remaining workers as well as to accept the remaining union officers after the
latter sought reconsideration from INPORT. 22
The NLRC on January 14, 1991, modified the above decision by ordering
INPORT to pay private respondents the equivalent of twelve months in
salary as separation pay in lieu of reinstatement and two years'
backwages. 23
On reconsideration, public respondent modified its original award and
reduced the separation pay to six months, deleted the award for backwages
and instead awarded P1,000.00 as compensation for their sudden loss of
employment. 24
Under the law, an employee is entitled to reinstatement and to his full
backwages when he is unjustly dismissed. 25
Reinstatement means restoration to a state or condition from which one had
been removed or separated. Reinstatement and backwages are separate
and distinct reliefs given to an illegally dismissed employee. 26
Separation pay is awarded when reinstatement is not possible, due, for
instance, to strained relations between employer and employee.
It is also given as a form of financial assistance when a worker is dismissed
in cases such as the installation of labor saving devices, redundancy,
retrenchment to prevent losses, closing or cessation of operation of the
establishment, or in case the employee was found to have been suffering
from a disease such that his continued employment is prohibited by law. 27
Separation pay is a statutory right defined as the amount that an employee
receives at the time of his severance from the service and is designed to
provide the employee with the wherewithal during the period that he is
looking for another employment. 28 It is oriented towards the immediate
future, the transitional period the dismissed employee must undergo before
locating a replacement job. 29
Hence, an employee dismissed for causes other than those cited above is
not entitled to separation pay. 30Well-settled is it that separation pay shall be
allowed only in those instances where the employee is validly dismissed
for causes other than serious misconduct or those reflecting on his moral
character. 31
Backwages, on the other hand, is a form of relief that restores the income
that was lost by reason of unlawful dismissal. 32
It is clear from the foregoing summary of legal provisions and jurisprudence
that there must generally be unjust or illegal dismissal from work, before
reinstatement and backwages may be granted. And in cases where
reinstatement is not possible or when dismissal is due to valid causes,
separation pay may be granted.
Private respondents contend that they were terminated for failure to submit
to the controversial "screening" requirement.
Public respondent Commission took the opposite view and held:
As the evidence on record will show, respondents were not actually
terminated from the service. They were merely made to submit to a
screening committee as a prerequisite for readmission to work.
While this condition was found not wholly justified, the fact remains
that respondents who are resistant to such procedure are partly
responsible for the delay in their readmission back to work. Thus,
We find justifiable basis in further modifying our resolution of
January 14, 1991 in accordance with the equities of the case.
We shall therefore recall the award for backwages for lack of
factual and legal basis. The award for separation pay shall likewise
(be) reasonably reduced. Normally, severance benefit is granted as
an alternative remedy to reinstatement. And since there is no
dismissal to speak of, there is no basis for awarding reinstatement
as a legal remedy. In lieu thereof, We shall grant herein
respondents separation pay as and by way of financial assistance
in the nature of an "equitable relief". 33
We find that private respondents were indeed dismissed when INPORT
refused to accept them back to work after the former refused to submit to the
"screening" process.
Applying the law (Article 264 of the Labor Code) which makes a distinction,
we differentiate between the union members and the union officers among
private respondents in granting the reliefs prayed for.
Under Article 264 of the Labor Code, a worker merely participating in an
illegal strike may not be terminated from his employment. It is only when he
commits illegal acts during a strike that he may be declared to have lost his
employment status. Since there appears no proof that these union members
committed illegal acts during the strike, they cannot be dismissed. The
striking union members among private respondents are thus entitled to
reinstatement, there being no just cause for their dismissal.
However, considering that a decade has already lapsed from the time the
disputed strike occurred, we find that to award separation pay in lieu of
reinstatement would be more practical and appropriate.
No backwages will be awarded to private respondent-union members as a
penalty for their participation in the illegal strike. Their continued participation
in said strike, even after most of their co-workers had returned to work, can
hardly be rewarded by such an award.
The fate of private respondent-union officers is different. Their insistence on
unconditional reinstatement or separation pay and backwages is
unwarranted and unjustified. For knowingly participating in an illegal strike,
the law mandates that a union officer may be terminated from
employment. 34
Notwithstanding the fact that INPORT previously accepted other union
officers and that the screening required by it was uncalled for, still it cannot
be gainsaid that it possessed the right and prerogative to terminate the union
officers from service. The law, in using the word may, grants the employer
the option of declaring a union officer who participated in an illegal strike as
having lost his employment. 35
Moreover, an illegal strike which, more often than not, brings about
unnecessary economic disruption and chaos in the workplace should not be
countenanced by a relaxation of the sanctions prescribed by law.
The union officers are, therefore, not entitled to any relief.
However, the above disquisition is now considered moot and academic and
cannot be effected in view of a manifestation filed by INPORT dated May 15,
1987. 36 In said Manifestation, it attached a Certification by the President of
the Macajalar Labor Union (MLU-FFW) to the effect that the private
respondents/remaining strikers have ceased to be members of said union.
The MLU-FFW had an existing collective bargaining agreement with
INPORT containing a union security clause. Article 1, Section 2(b) of the
CBA provides:
The corporation shall discharge, dismiss or terminate any employee
who may be a member of the Union but loses his good standing
with the Union and or corporation, upon proper notice of such fact
made by the latter; provided, however, . . . after they shall have
received the regular appointment as a condition for his continued
employment with the corporation. . . . 37
Since private respondents (union members) are no longer members of the
MLU, they cannot be reinstated. In lieu of reinstatement, which was a proper
 remedy before May 1987 when they were dismissed from the union, we
award them separation pay. We find that to award one month salary for
every year of service until 1985, after April of which year they no longer
formed part of INPORT's productive work force partly through their own fault,
is a fair settlement.
Finally, there is no merit in INPORT's statement that a Resolution of the
NLRC cannot be modified upon reconsideration after the lapse of an
unreasonable period of time. Under the present circumstances, a period of
eleven months is not an unreasonable length of time. The Resolution of the
public respondent dated January 14, 1991 did not acquire finality in view of
the timely filing of a motion for reconsideration. Hence, the Commission's
modified Resolution issued on December 12, 1991 is valid and in
accordance with law.
In sum, reinstatement and backwages or, if no longer feasible, separation
pay, can only be granted if sufficient bases exist under the law, particularly
after a showing of illegal dismissal. However, while the union members may
thus be entitled under the law to be reinstated or to receive separation pay,
their expulsion from the union in accordance with the collective bargaining
agreement renders the same impossible.
The NLRC's award of separation pay as "equitable relief" and P1,000.00 as
compensation should be deleted, these being incompatible with our findings
detailed above.
WHEREFORE, from the foregoing premises, the petition in G.R. No. 103560
("Gold City Integrated Port Service Inc. v. National Labor Relations
Commission, et al.") is GRANTED. One month salary for each year of
service until 1985 is awarded to private respondents who were not union
officers as separation pay. The petition in G.R. No. 103599 ("Adelo Ebuna,
et al. v. National Labor Relations Commission, et al.") is DISMISSED for lack
of merit. No costs.
SO ORDERED.
Feliciano, Melo, Vitug and Francisco, JJ., concur.
 
G.R. No. L-37662 July 15, 1975
RADIO COMMUNICATIONS OF THE PHILIPPINES, INC. (RCPI), petitioner,  the offer in writing within which to file his objections. Both counsel
vs.
PHILIPPINE COMMUNICATIONS ELECTRONICS & ELECTRICITY WORKERS'
FEDERATION (FCWF), RADIO COMMUNICATIONS OF THE PHILIPPINES, INC.
EMPLOYEES UNION (RCPIEU), COURT OF INDUSTRIAL RELATIONS (CIR), and
SPECIAL SHERIFF OF THE COURT OF INDUSTRIAL RELATIONS, respondents.
RESOLUTION
BARREDO, J.:
Three incidents arising from Our decision in this case dated August 30, 1974: (1)
Motion for reconsideration filed by petitioner; (2) Manifestation and motion for
intervention of United RCPI Communications Labor Association-Philippine
Association of Free Labor Unions (URCPICLA- PAFLU); and (3) Prayer for a modified
judgment filed by respondent union, Philippine Communications, Electronics &
Electricity Workers' Federation, RCPI Employees' Union (RCPIEU).
I
In its motion for reconsideration, petitioner suggests that Our decision did not
resolved squarely the issue of whether or not respondent Industrial Court gravely
abused its discretion in declaring petitioner, by its order of February 15, 1973, as
having waived its right to make an offer of its evidence and in forthwith considering
the matter of the implementation of the return-to-work order of April 23, 1968 as
directed in the writ of execution of December 29, 1969 submitted for resolution. It is
claimed that this issue is pivotal, for if it is resolved in its favor, the ordered
reinstatement of the 167 employees and workers enumerated in respondent court's
order of October 5, 1973 may not be complied with until after the issues of fact
regarding their identity and status as such workers and employees have been
reviewed and passed upon in the light of the evidence offered by petitioner at the
hearing. Petitioner invokes Section 20 of Commonwealth Act 103 together with this
Court's injunction in Ang Tibay vs. CIR, 69 Phil. 365, that the industrial Court must
"use the authorized legal methods of securing evidence and informing itself of acts
material and relevant to the controversy" in seeing to it "that the law is enforced." In
other words, petitioner submits that in ignoring or refusing to take into account
evidence already in the record albeit not duly offered, respondent court sacrificed
substance for technicality.
In this connection, it may be well to bear in mind, that the reasons why respondent
court felt compelled to act as it did are explained in its order of February 15, 1973
thus:
All these aforestated pleadings were set for hearing on January 29,
1973. After the parties made clear their respective positions on the
issues involved, the Court gave the counsel for respondent until
February 3, 1973 within which to submit his offer of exhibits in
writing and the counsel for petitioner three (3) days after receipt of
were also given by the Court ten (10) days from submission of the
objection within which to submit simultaneous memoranda (t. s. n.,
pp. 2-6, Jan. 29, 1973).
 Considering that February 3, 1973, had already lapsed without
respondents having as yet submitted its offer of exhibits, despite
the so many chances given to it, there is now valid reason to grant
the urgent motion of petitioner. (Page 58, Rollo.)
As We have said in Our decision, "(a) bare recital of the above facts renders
undeniable the far-from-commendable efforts of petitioner to set at naught a return-to-
work order. Considering that it is of a peremptory character and its execution was
long overdue, the challenged actuation of respondent court had all the earmarks of
legality." It is not true then that We have not resolved the issue referred to. Indeed, all
that need be added here is that while it is true that labor cases, especially those
involving claims for compensation due the workers, must be resolved on the basis of
all material facts, and it is the inescapable duty of all parties concerned, including the
court, to disregard all technical rules in barring1 and discovering them, on the other
hand, it is as important that said cases must be decided on time for the obvious
reason that the claimants are not in a position to engage in any long drawn
proceedings without risking either their wherewithal or their convictions. The Courts
cannot leave the progress of the case to the convenience of the parties, particularly,
the employer who can afford to keep it dragging. Accordingly, where the inquiry into
the material facts is unreasonably delayed by unwarranted and unexplained
actuations of any of the parties, no abuse of discretion is committed by the court if it
deems the right of such offending party to present his factual side of the issue waived.
This is particularly true in the case at bar, for, as the record shows, the order of
reinstatement which has remained unobeyed by petitioner to this day was issued
more than seven years ago and was in fact already nearing five years old when the
above-quoted order of February 15, 1973 had to be issued in exasperation by
respondent court. The duty of the court spoken of in Ang Tibay to ferret out all facts
necessary for the just determination of the rights of the parties without regard to
technical rules ceases when the court is disabled by the very indifference and
inattention, if not disregard, of a party of the orders of the court designed to expedite
proceedings already being protracted through maneuvers of the same party.
Besides, it is noteworthy that petitioner did not even care to move for the
reconsideration of the order in question. Taking the court for granted, it merely went
ahead and made its required offer of evidence, at long last, eighteen days late. If only
to make all and sundry understand that no one can thus trifle with the court with
impunity, petitioner should suffer the consequences of its patent lack of diligence in
the protection of its interest which it has coupled with inexplicable failure to accord the
orders of the court due attention, considering it was undertaking a task of vital public
interest, the implementation of a peremptory return-to-work order it had issued five
years back.
It is of no consequence that respondent union's motion to strike out the offer of
evidence belatedly filed by petitioner was not resolved by respondent court. The fact
of the matter is that said offer had already been deemed waived by the court.
Procedurally, therefore, there was no need to strike out something that had not been
included legally in the record.
In view of the foregoing considerations, and for the reason that the arguments of
petitioner relative to Presidential Decree No. 21 have been more than adequately
discussed in Our decision, petitioner's motion is denied for lack of merit.
II
The motion to intervene of URCPICLA-PAFLU is likewise without merit. Aside from
the fact that it had already intervened in the court below but later on did nothing to
protect its pretended rights relative to the orders assailed here, on the merits, its
position suffers from the same fatal defect of the motion for reconsideration of
petitioner in that it is premised on erroneous assumptions regarding the objective and
purpose of Presidential Decree No. 21. The members of movant union were hired or
employed by petitioner in open violation of the order of reinstatement of the Industrial
Court and as such they cannot have any legal standing as employees protected by
said Presidential Decree. It would be absurd if an employer were to be required to
seek prior clearance from the Department of Labor before he can layoff workers he
has hired as substitutes for strikers subsequently ordered reinstated by the courts,
particularly if the employer has, as in the instant case, hired said substitutes in
violation of a restraining order not to hire anyone without the permission of the court.
The motion to intervene is, therefore, denied.
III
It is the plea of respondent unions for modification of Our decision that deserves
favorable consideration. The prayer is for Us to include in the judgment an award of
backwages to the employees and laborers concerned, in addition to their immediate
reinstatement. The plea is opposed by petitioner upon the ground that the issue of
payment of backwages was neither raised in nor passed upon by the Industrial Court
and is, in fact, not even touched in the previous pleadings of the parties in the instant
case. Additionally, it is averred that the matter is now actually being looked into by the
National Labor Relations Board, hence it is not necessary for this Court to take it up.
We are of the considered opinion that, indeed, the award prayed for is in order. The
fact that nothing was done in the court below about it is not a valid objection to the
granting thereof. Neither can its denial be justified just because it was not expressly
demanded by respondents before Our decision was handed down. Such award is
such a logical and inescapable consequence of the order of reinstatement that
actually one is incomplete without the other.
We are not dealing here with backwages to be paid to workers who are being ordered
reinstated as a consequence of a finding by the court that their suspension or
dismissal by their employer is illegal, which, of course, is dependent on the sound
discretion of the court. (Union of Philippine Education Employees vs. Philippine
Education Company, 91 Phil. 93.) In the present instance, what is involved is a failure
to comply with, nay a veiled defiance by respondent of a return-to-work order of the
Industrial Court issued seven years ago. Worse, from all appearances, such
continued resistance of petitioner to said peremptory order can hardly evoke
sympathy. To begin with, its attempt to question the identity of those entitled to
reinstatement claiming that they were not actually in their employ at the time of the
declaration of the strike sounds hollow. It is inconceivable that strangers and
outsiders would try to be taken in such a surreptitious manner. Neither can the
allegation that petitioner has presented evidence of abandonment prior to the strike
and of resignations subsequent thereto be of help to petitioner. Voluntary
abandonment of work before a strike is too unusual to be readily credible whereas
purported resignations after a strike and during the pendency of protracted
reinstatement proceedings are at least suspect and do not affect the employee status
of the persons concerned, unless there is patent evidence that the pretended
abandonment or resignation was due to another employment.2 Moreover, the
proceedings below had been stalled by transparent dilatory moves of petitioner which
are basically irreconcilable with the attitude of cooperativeness and obedience an
employer is expected to maintain at all times towards orders of the court issued by
virtue of powers expressly granted to it by law. (Section 10, Republic Act 875; Section
19, Commonwealth Act 103.)
The Industrial Court had no discretion in the matter. There was no controversial issue
of fault it had to decide. It was a plain case of exacting the most natural sanction for a
defiance of its order. If it overlooked the award, seemingly engrossed as it was in
resolving the issue of identity of the strikers raised by petitioner, that was plain error
which it is within Our prerogative to correct motu propio, as We do in appeals by writ
of error in respect to a manifest error not assigned nor discussed by appellant in his
brief. (Section 7, Rule 51.) Employees and workers deprived of their means of
livelihood in defiance of a judicial order the legality of which is beyond dispute do not
have to remind the court of their right to get compensated of their lost earnings upon
their actual reinstatement. Award thereof should come as a matter of course. For us
not to rule on this point now only to leave it for action by the National Labor Relations
Board and thereby give rise to another possible appeal to Us is to unnecessarily
lengthen even more the tortuous road already travelled by respondents in their effort
to get what has been rightfully due them since years ago. We would be recreant to
our constitutional duty to give protection to labor that way.
IV
Taking all circumstances of this case into account, We find no justifiable reason why
We cannot apply here in respect to the amount of the award the ruling in Feati
University Club vs. Feati University, G. R. No. L-35103, Aug. 15, 1974, wherein We
said:
As to the amount of backwages, the Court applies the precedent
recently set in Mercury Drug Co. vs. CIR (L-23357, April 30, 1974,
applied in NASSCO vs. CIR, L-31852 & L-32724, June 28, 1974
and Almira, et al vs. B. F. Goodrich Phil., Inc., L-34974, July 25,
1974.) of fixing the amount of backwages to a just and reasonable
level without qualification or deduction so as to avoid protracted
delay in the execution of the award for backwages due to extended
hearings and unavoidable delays and difficulties encountered in
determining the earnings of the laid-off employees ordered to be
reinstated with backwages during the pendency of the case for
purposes of deducting the same from the gross backwages
awarded.
As has been noted, this formula of awarding reasonable net
backwages without deduction or qualification relieves the
employees from proving or disproving their earnings during their
lay-off and the employers from submitting counterproofs, and
obviates the twin evils of idleness on the part of the employee who
would "with folded arms, remain inactive in the expectation that a
windfall would come to him" (Itogon Suyoc Mines, Inc. vs. Sangilo-
Itogon Workers Union, 24 SCRA 873 (1968), cited in Diwa ng
Pagkakaisa vs. Filtex International Corp., 43 SCRA 287 (1972) per
Makalintal, now C.J.) and attrition and protracted delay in satisfying
such award on the part of unscrupulous employers who have
seized upon the further proceedings to determine the actual
earnings of the wrongfully dismissed or laid-off employees to hold
unduly extended hearings for each and every employee awarded
backwages and thereby render practically nugatory such award and
compel the employees to agree to unconscionable settlements of
their backwages award in order to satisfy their dire need. See La
Campana Food Products, Inc. vs. CIR, 28 SCRA 314 (1969)
and Kaisahan ng Mga Manggagawa vs. La Campana Food
Products, Inc., 36 SCRA 142 (1970).1äwphï1.ñët
This formula of making a flat award for a given period has been adopted in
subsequent cases.3 Accordingly, each of the 167 members of respondent unions
named in the decision under review and found by the Industrial Court to be entitled to
reinstatement should be paid backwages for two years, without any deduction or
qualification, at the respective rates of compensation they were receiving at the time
of the strike, November 17, 1967. It goes without saying that all those who can be
shown by incontestible evidence to have died prior to the date of the strike shall be
disregarded, but the heirs of those who have died after the strike shall receive the
respective proportional amounts due their predecessors-in-interest as of the time of
death, if the same occurred less than two years from the date of the strike, and the
full two-years backwages, if after two years from said date. Any amount paid by
reason or on the occasion of supposed resignations after the strike shall not be
deducted.
Before closing, it must be mentioned that the Court understands that notwithstanding
that its decision of August 30, 1974 is immediately executory, the employees
concerned have not yet been reinstated up to now. Petitioner is warned that the
pendency of the present incidents is no excuse for its failure to comply immediately
with said decision and appropriate action would have to be taken to protect the dignity
of the court, if such attitude continues.
WHEREFORE, the motion for reconsideration of petitioner dated September 16, 1974
as well as the motion to intervene of URCPICLA-PAFLU of October 16, 1974 are both
denied for lack of merit. On the other hand, the motion of respondent RCPIEU of
November 6, 1974 for modification of judgment is granted, if only to complete Our
decision, which cannot be final without such award being included therein. Petitioner
is ordered to pay the 167 employees and workers of petitioner enumerated in the
lndustrial Court's order of October 5,1973 backwages for two years, without any
deduction or qualification, pursuant to the tenor of the above opinion. This resolution
is also immediately executory.
Antonio, Aquino and Concepcion Jr., JJ., concur.
Separate Opinions
FERNANDO, J.,  concurring:
It has been observed, and not without justification, that the solution of labor
controversies taxes to the utmost the ingenuity courts and arbiters for what may serve
to do justice in the instance may later prove to be inconvenient of later application
analogous fact situations. For in no other kind of litigation is there a greater need for
sizing up situations, very often unique in character and thus not likely to repeat
themselves. Care is to be taken therefore that while the conclusion reached in any
litigation with its essentially peculiar circumstances may commend itself, the doctrine
announced does not deviate from the main stream of juristic thought. It is to the credit
of the opinion of Justice Barredo that there is adherence to prescribed norms
governing labor-management relations. It is impressed with an even greater
significance for it manifests in no uncertain terms that this Court is not likely to
tolerate such conduct as that displayed by petitioner when all these past years it
persistently refused to obey respondent Court's order for immediate reinstatement.
Such intransigence is unjustified even if sought to be cloaked under a claim of a
denial of procedural due process. Such behavior is antithetical to the rule of law.
What was stressed in Philippine Associations of Free Labor Unions v.
Salvador1 comes to mind. Thus: "Law stands for order, for the peaceful and
systematic adjustment of frictions and conflicts unavoidable in a modern society with
its complexities and clashing interests. The instrumentality for such balancing or
harmonization is the judiciary and other agencies exercising quasi-judicial powers.
When judicial or quasi-judicial tribunals speak, what they decree must be obeyed,
what they ordain must be followed. A party dissatisfied may ask for a reconsideration
and, if denied, may go on to a higher tribunal. As long as the orders stand unmodified
however, they must, even if susceptible to well-founded doubts on jurisdictional
grounds, be faithfully complied with.2 At the very least, petitioner ought to have
complied if not at the first opportunity, after it was notified of our decision promulgated
on August 30, 1974.3 It did not turn out that way. Our resolution then appropriately
takes it to task. I concur and add a few words.
1. At the outset, may I refer to what led our Division to assign another member to pen
the resolution, when the usual practice is for the ponente to speak for the Tribunal in
passing upon a motion for reconsideration. As set forth by Justice Barredo in his
opening paragraph, three pleadings were filed after the promulgation of our judgment:
(1) the motion for reconsideration filed by petitioner, (2) the manifestation and motion
for intervention of United RCPI Communications Labor Association, and (3) the
motion for modification of the decision filed by respondent union. The points of law
raised did call for further study. The allegation of denial of procedural due process
has had to be inquired into, even if impressed at the most with deceptive plausibility.
As is made clear in the resolution, it could not survive the test of a rigorous analysis.
What is more, it was previously considered and rejected as set forth in Justice
Barredo's opinion. Nonetheless, several sessions were devoted to considering the
motion for intervention and the modification of the decision. When a consensus was
reached, it was apparent that the approach followed by Justice Barredo was the focal
point on which all could agree. It was deemed best therefore for him to speak for the
rest of us.
2. It is readily apparent that with insistence of petitioner on the claim of an alleged
denial of procedural due process being indicative not so much of reliance on
applicable precedents but as a further excuse for delay, what did call for further
reflection was the motion to intervene of a union representing the temporary
employees of petitioner and the plea for the implementation of the decision rendered
so that an award of backwages be granted. Candor compels the admission that there
were some misgivings on my part as to the possible adverse consequences to the
former set of workers once the order for reinstatement is implemented. If it were a
case solely of management being made to bear the burden for failure to implement an
order of respondent Court, then no problem arises. It was its fault and it had no one
else to blame. Certainly it could and should be held accountable. Nonetheless, as
pointed out in our resolution, the temporary labor force ought to have been aware of
the transitory character of their employment. At any rate, I do not think that our
resolution can be construed to mean any loss of whatever contractual right may have
been entered by them with petitioner. That is a matter which to my mind is not
covered by what is decided today. It is in that sense that for me there is no possible
objection to the ground that the protection to labor is less than it should be4 or the
principle of social justice is disregarded.5 On this point, what for me is most creditable
in our resolution is that the long-suffering employees and laborers, who in the past
had been battling in vain against the wall of resistance put up by petitioner, would at
long last receive their due. Once again, there is fealty to the concept of a
compassionate society which is even more marked under the present
Constitution.6 Also, from the constitutional standpoint, that is to render clear that in
appropriate cases, the declaration of principles and state policies7 have a mandatory
force of their own and are not just mere statements of noble platitudes or glittering
generalities unrelated to reality.
3. One last word. There is, of course, the expectation that counsel should employ all
the energies at one's command in the defense of the rights of his clients. His zeal is
to be commended. He will not be true to his calling if such qualities are lacking in his
advocacy. Nonetheless, there should be awareness likewise that at a certain stage in
litigation, the appropriate course, as a matter of fact the only course, is to defer to an
order of an inferior court or administrative agency unless duly set aside. The rule of
law, to repeat, cannot be satisfied with anything less. Nor is there any justification for
a member of the bar indiscriminately seizing upon any doctrine that might at most
yield a colorable appearance of validity to a legal argument, so that his client would
have no reason to feel that he is less than wholehearted in his handling of a case.
The honor of the profession requires that on matters of law, it is a client who should
yield to the lawyer and not the other way around.
There is on my part, to repeat, full agreement with what has been so ably and clearly
said by Justice Barredo.
 
G.R. No. L-54334 January 22, 1986
KIOK LOY, doing business under the name and style SWEDEN ICE CREAM
PLANT, petitioner,  initial hearing for April 29, 1979. For failure however, of the parties to submit their
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC) and PAMBANSANG
KILUSAN NG PAGGAWA (KILUSAN), respondents.
Ablan and Associates for petitioner.
Abdulcadir T. Ibrahim for private respondent.
CUEVAS, J.:
Petition for certiorari to annul the decision 1 of the National Labor Relations
Commission (NLRC) dated July 20, 1979 which found petitioner Sweden Ice Cream
guilty of unfair labor practice for unjustified refusal to bargain, in violation of par. (g) of
Article 2492 of the New Labor Code, 3 and declared the draft proposal of the Union for
a collective bargaining agreement as the governing collective bargaining agreement
between the employees and the management.
The pertinent background facts are as follows:
In a certification election held on October 3, 1978, the Pambansang Kilusang
Paggawa (Union for short), a legitimate late labor federation, won and was
subsequently certified in a resolution dated November 29, 1978 by the Bureau of
Labor Relations as the sole and exclusive bargaining agent of the rank-and-file
employees of Sweden Ice Cream Plant (Company for short). The Company's motion
for reconsideration of the said resolution was denied on January 25, 1978.
Thereafter, and more specifically on December 7, 1978, the Union furnished 4 the
Company with two copies of its proposed collective bargaining agreement. At the
same time, it requested the Company for its counter proposals. Eliciting no response
to the aforesaid request, the Union again wrote the Company reiterating its request
for collective bargaining negotiations and for the Company to furnish them with its
counter proposals. Both requests were ignored and remained unacted upon by the
Company.
Left with no other alternative in its attempt to bring the Company to the bargaining
table, the Union, on February 14, 1979, filed a "Notice of Strike", with the Bureau of
Labor Relations (BLR) on ground of unresolved economic issues in collective
bargaining. 5
Conciliation proceedings then followed during the thirty-day statutory cooling-off
period. But all attempts towards an amicable settlement failed, prompting the Bureau
of Labor Relations to certify the case to the National Labor Relations Commission
(NLRC) for compulsory arbitration pursuant to Presidential Decree No. 823, as
amended. The labor arbiter, Andres Fidelino, to whom the case was assigned, set the
respective position papers as required, the said hearing was cancelled and reset to
another date. Meanwhile, the Union submitted its position paper. The Company did
not, and instead requested for a resetting which was granted. The Company was
directed anew to submit its financial statements for the years 1976, 1977, and 1978.
The case was further reset to May 11, 1979 due to the withdrawal of the Company's
counsel of record, Atty. Rodolfo dela Cruz. On May 24, 1978, Atty. Fortunato
Panganiban formally entered his appearance as counsel for the Company only to
request for another postponement allegedly for the purpose of acquainting himself
with the case. Meanwhile, the Company submitted its position paper on May 28,
1979.
When the case was called for hearing on June 4, 1979 as scheduled, the Company's
representative, Mr. Ching, who was supposed to be examined, failed to appear. Atty.
Panganiban then requested for another postponement which the labor arbiter denied.
He also ruled that the Company has waived its right to present further evidence and,
therefore, considered the case submitted for resolution.
On July 18, 1979, labor arbiter Andres Fidelino submitted its report to the National
Labor Relations Commission. On July 20, 1979, the National Labor Relations
Commission rendered its decision, the dispositive portion of which reads as follows:
WHEREFORE, the respondent Sweden Ice Cream is hereby
declared guilty of unjustified refusal to bargain, in violation of
Section (g) Article 248 (now Article 249), of P.D. 442, as amended.
Further, the draft proposal for a collective bargaining agreement
(Exh. "E ") hereto attached and made an integral part of this
decision, sent by the Union (Private respondent) to the respondent
(petitioner herein) and which is hereby found to be reasonable
under the premises, is hereby declared to be the collective
agreement which should govern the relationship between the
parties herein.
SO ORDERED. (Emphasis supplied)
Petitioner now comes before Us assailing the aforesaid decision contending that the
National Labor Relations Commission acted without or in excess of its jurisdiction or
with grave abuse of discretion amounting to lack of jurisdiction in rendering the
challenged decision. On August 4, 1980, this Court dismissed the petition for lack of
merit. Upon motion of the petitioner, however, the Resolution of dismissal was
reconsidered and the petition was given due course in a Resolution dated April 1,
1981.
Petitioner Company now maintains that its right to procedural due process has been
violated when it was precluded from presenting further evidence in support of its
stand and when its request for further postponement was denied. Petitioner further
contends that the National Labor Relations Commission's finding of unfair labor
practice for refusal to bargain is not supported by law and the evidence considering
that it was only on May 24, 1979 when the Union furnished them with a copy of the
proposed Collective Bargaining Agreement and it was only then that they came to
know of the Union's demands; and finally, that the Collective Bargaining Agreement
approved and adopted by the National Labor Relations Commission is unreasonable
and lacks legal basis.
The petition lacks merit. Consequently, its dismissal is in order.
Collective bargaining which is defined as negotiations towards a collective
agreement,6 is one of the democratic frameworks under the New Labor Code,
designed to stabilize the relation between labor and management and to create a
climate of sound and stable industrial peace. It is a mutual responsibility of the
employer and the Union and is characterized as a legal obligation. So much so that
Article 249, par. (g) of the Labor Code makes it an unfair labor practice for an
employer to refuse "to meet and convene promptly and expeditiously in good faith for
the purpose of negotiating an agreement with respect to wages, hours of work, and all
other terms and conditions of employment including proposals for adjusting any
grievance or question arising under such an agreement and executing a contract
incorporating such agreement, if requested by either party.
While it is a mutual obligation of the parties to bargain, the employer, however, is not
under any legal duty to initiate contract negotiation. 7 The mechanics of collective
bargaining is set in motion only when the following jurisdictional preconditions are
present, namely, (1) possession of the status of majority representation of the
employees' representative in accordance with any of the means of selection or
designation provided for by the Labor Code; (2) proof of majority representation; and
(3) a demand to bargain under Article 251, par. (a) of the New Labor Code . ... all of
which preconditions are undisputedly present in the instant case.
From the over-all conduct of petitioner company in relation to the task of negotiation,
there can be no doubt that the Union has a valid cause to complain against its
(Company's) attitude, the totality of which is indicative of the latter's disregard of, and
failure to live up to, what is enjoined by the Labor Code — to bargain in good faith.
We are in total conformity with respondent NLRC's pronouncement that petitioner
Company is GUILTY of unfair labor practice. It has been indubitably established that
(1) respondent Union was a duly certified bargaining agent; (2) it made a definite
request to bargain, accompanied with a copy of the proposed Collective Bargaining
Agreement, to the Company not only once but twice which were left unanswered and
unacted upon; and (3) the Company made no counter proposal whatsoever all of
which conclusively indicate lack of a sincere desire to negotiate. 8 A Company's
refusal to make counter proposal if considered in relation to the entire bargaining
process, may indicate bad faith and this is specially true where the Union's request
for a counter proposal is left unanswered. 9 Even during the period of compulsory
arbitration before the NLRC, petitioner Company's approach and attitude-stalling the
negotiation by a series of postponements, non-appearance at the hearing conducted,
and undue delay in submitting its financial statements, lead to no other conclusion
except that it is unwilling to negotiate and reach an agreement with the Union.
Petitioner has not at any instance, evinced good faith or willingness to discuss freely
and fully the claims and demands set forth by the Union much less justify its
opposition thereto. 10
The case at bar is not a case of first impression, for in the Herald Delivery Carriers
Union (PAFLU) vs. Herald Publications  11 the rule had been laid down that "unfair
labor practice is committed when it is shown that the respondent employer, after
having been served with a written bargaining proposal by the petitioning Union, did
not even bother to submit an answer or reply to the said proposal This doctrine was
reiterated anew in Bradman vs. Court of Industrial Relations  12 wherein it was further
ruled that "while the law does not compel the parties to reach an agreement, it does
contemplate that both parties will approach the negotiation with an open mind and
make a reasonable effort to reach a common ground of agreement
As a last-ditch attempt to effect a reversal of the decision sought to be reviewed,
petitioner capitalizes on the issue of due process claiming, that it was denied the right
to be heard and present its side when the Labor Arbiter denied the Company's motion
for further postponement.
Petitioner's aforesaid submittal failed to impress Us. Considering the various
postponements granted in its behalf, the claimed denial of due process appeared
totally bereft of any legal and factual support. As herein earlier stated, petitioner had
not even honored respondent Union with any reply to the latter's successive letters,
all geared towards bringing the Company to the bargaining table. It did not even
bother to furnish or serve the Union with its counter proposal despite persistent
requests made therefor. Certainly, the moves and overall behavior of petitioner-
company were in total derogation of the policy enshrined in the New Labor Code
which is aimed towards expediting settlement of economic disputes. Hence, this
Court is not prepared to affix its imprimatur to such an illegal scheme and dubious
maneuvers.
Neither are WE persuaded by petitioner-company's stand that the Collective
Bargaining Agreement which was approved and adopted by the NLRC is a total nullity
for it lacks the company's consent, much less its argument that once the Collective
Bargaining Agreement is implemented, the Company will face the prospect of closing
down because it has to pay a staggering amount of economic benefits to the Union
that will equal if not exceed its capital. Such a stand and the evidence in support
thereof should have been presented before the Labor Arbiter which is the proper
forum for the purpose.
We agree with the pronouncement that it is not obligatory upon either side of a labor
controversy to precipitately accept or agree to the proposals of the other. But an
erring party should not be tolerated and allowed with impunity to resort to schemes
feigning negotiations by going through empty gestures.13 More so, as in the instant
case, where the intervention of the National Labor Relations Commission was
properly sought for after conciliation efforts undertaken by the BLR failed. The instant
case being a certified one, it must be resolved by the NLRC pursuant to the mandate
of P.D. 873, as amended, which authorizes the said body to determine the
reasonableness of the terms and conditions of employment embodied in any
Collective Bargaining Agreement. To that extent, utmost deference to its findings of
reasonableness of any Collective Bargaining Agreement as the governing agreement months of service (including overtime) per
by the employees and management must be accorded due respect by this Court. calendar year, are members of the Regular Labor
Pool, upon prior approval by the company. Said
WHEREFORE, the instant petition is DISMISSED. The temporary restraining order Emergency Leave is not cumulative (sic) nor
issued on August 27, 1980, is LIFTED and SET ASIDE. commutable." (pp. 46-47, Rollo; Emphasis
supplied.)
No pronouncement as to costs.
ARTICLE XVII — SPECIAL PROVISIONS.
SO ORDERED.
Sec. 4 — Union Education and Training Fund.
The Company agrees to contribute twelve
Concepcion, Jr., (Chairman), Abad Santos, Escolin and Alampay, JJ., concur. thousand (P12,000.00) pesos per year to the
Union Education and Training Fund. (p.
48, Rollo.)
.R. No. 93983 June 29, 1992

The controversy arose when petitioner, through its new Assistant General Manager
DAVAO INTEGRATED PORT AND STEVEDORING SERVICES
Benjamin Marzo, insisted that the above provisions are to be interpreted as:
CORPORATION, petitioner,

1. Under Article VIII, Section 4 (Emergency Leave) — that before

vs.
ALFREDO C. OLVIDA IN HIS CAPACITY AS VOLUNTARY ARBITRATOR, AND
THE ASSOCIATION OF TRADE UNIONS (ATU-TUCP)., respondents.
 
GRIÑO-AQUINO, J.:p
This petition for certiorari with prayer for the issuance of a temporary restraining order
impugns the Decision dated May 19, 1990 of the Voluntary Arbitrator, Alfredo C.
Olvida, in "Association or Trade Unions (ATU-TUCP) vs. Davao Integrated Port and
Stevedoring Services Corporation" (Case No. AC-220-RBXI-03-001-90 in the National
Conciliation and Mediation Board, Regional Branch XI. Davao City).
The controversy centers on the interpretation of two provisions of the five-year
Collective Bargaining Agreement (effective April 15, 1989 up to April 14, 1994)
between the petitioner, Davao Integrated Port and Stevedoring Services Corporation
(or "DIPSSC"), and the respondent, Association of Trade Unions [ATU-TUCP] (the
Union, for short). Those provisions are:
1. ARTICLE VIII — SICK, VACATION AND EMERGENCY
LEAVES.
the intermittent field workers who are members of the Regular
Labor Pool can avail of the six (6) days Emergency Leave provided
in this provision, the workers must have rendered at least six
months of service per calendar year regardless of their employment
status (i.e., regular or probationary). Thus, all regular (non-
intermittent) field workers, who belong to the Regular Labor Pool
must have rendered at least six months of service per calendar
year to be entitled to the six days Emergency Leave Pay. Petitioner
pointed out that the phrase "per calendar year" is used twice in
Section 4, the first of which modifies the word "pay" and the second
modifies the phrase "who or rendered at least six months of
service." (pp. 130-131.) The entitlement and enjoyment of the
emergency leave must be strictly availed in the calendar year on
which the six months service was rendered.
2. Under Article XVII, Section 4 (Union Education and Training
Fund) — petitioner required that the Union should first prepare and
submit a seminar program before it can avail of the Education and
Training Fund of P12,000.00 per annum.
After due hearing, respondent Arbitrator rendered a decision on May 19, 1990,
upholding the union's interpretations of Article VIII, Section 4 and Article XVII, Section
4, of the Collective Bargaining Agreement. The dispositive portion of the decision
reads:

Sec. 4 — Emergency Leaves. The Company
agrees to grant a maximum or six (6) days
Emergency Leave with pay per calendar year to
all regular field workers, covered by this
agreement who have rendered at least six
1. The first sentence of Article VIII, Section 4 which read: "The
Company agrees to grant maximum or six (6) days Emergency
Leave with pay per calendar year to all regular field workers" —
refers to all non-intermittent regular field workers who reported for
work everyday and therefore the requirement of six (6) months or
 1,248 hours does not apply; whereas, the next sentences which
stated the following: "covered by this agreement who have
rendered at least six months (including overtime) per calendar year,
are members of the Regular Labor Pool, upon prior approval by the
company." — refers to intermittent workers/members of the Regular
Labor Pool, whose work depends upon the arrival of vessels in the
wharf and therefore must comply [with] the requirement in the
agreement, and so before it can avail of the six (6) days Emergency
Leave with pay must first rendered at least six months (including
overtime) per calendar year. Once the 1,248 hours (6 months) is
complied subject workers can avail the benefit anytime an
Emergency occurred and the same condition of 1,248 hours shall
no longer apply in the succeeding calendar years.
2. With respect to the other provision of Article XVII, Section 4 of
the new CBA — Union Education and Training Fund — since the
language of the agreement is clear and simple the respondent
company shall comply [with] its obligation by contributing to the
Union Education and Training Fund the amount of Twelve
Thousand (P12,000.00) pesos per year at the beginning of each
and every year and/or P1,000.00 at the end of each and every
month during the lifetime of the CBA at the option of the respondent
company. Any post signing condition impose by either or the parties
that may affect the spontaneous implementation of Article XVII,
Section 4 is foreign to the language of the contract. (pp. 139-
140. Rollo.)
In this petition for certiorari, petitioner assails the respondent Arbitrator's construction
of Section 4, Article VII (on emergency leave) and Section 4, Article XVII (on the
Union Education and Training Fund) of the CBA.
After deliberating on the divergent views of the parties on the aforementioned
controversial provisions of the CBA, the Court finds the petitioner's interpretation of
Section 4, Article VIII (emergency leave) more logical than the Arbitrator's and the
Union's. The provision of the CBA is clear: (1) the employee must be a member of the
Regular Labor Pool; (2) he is entitled to only six (6) days emergency leave with pay
per calendar year; and (3) he must have rendered service for at least six (6) months
during the year when he took his emergency leave. The emergency leave may be
staggered or it may last for any number of days as emergencies arise but the
employee is entitled only to six (6) days of emergency leave "with pay" per year.
Since the emergency leave is allowed to enable the employee to attend to an
emergency in his family or household, it may be taken at any time  during the calendar
year but he must render at least six months service for that year to be entitled to
collect his wages for the six (6) days of his emergency leave. Since emergencies are
unexpected and unscheduled happenings, it would be absurd to require the employee
to render six (6) months service before being entitled to take a six-day emergency
leave with pay for it would mean that no emergency leave can be taken by an
employee during the first six months of a calendar year.
With regard to the provision on Union Education and Training Fund in Section 4,
Article XVII of the CBA, the petitioner's requirement that the Union submit a seminar
program for each calendar year before it may claim the company's P12,000 yearly
donation to the fund, is not warranted by the terms of the CBA. The Arbitrator did not
abuse his discretion in ruling that the respondent company should comply with its
obligation to contribute to the Union Education and Training Fund the amount of
Twelve Thousand (P12,000.00) pesos per year by paying said amount to the Union at
the beginning of each and every year, or contributing P1,000.00 at the end of each
and every month during the lifetime or the CBA, at the option of the company. As
correctly observed by the Arbitrator, the employer's demand for the submission of a
seminar program "is foreign to the language of the contract" with the union.
WHEREFORE, the petition for certiorari is GRANTED. Section 4, Article VIII of the
CBA is interpreted to mean that any employee who is a member of the Regular Labor
Pool is entitled to six (6) days emergency leave with pay per calendar year provided
he has rendered at least six (6) months service during the year when he took his
emergency leave. The decision of the respondent Voluntary Arbitrator is AFFIRMED
in other respects. No costs.
G.R. No. L-49046 January 26, 1988
SATURNO A. VICTORIA, petitioner, 
vs.
HON. AMADO G. INCIONG, DEPUTY MINISTER, and FAR EAST
BROADCASTING COMPANY, INC., respondents.
FERNAN, J.:
Petition for review of the Order of the then Acting Secretary of Labor Amado G.
Inciong dated June 6, 1978, in NLRC Case No. RB-1764-75, reversing the decision of
the National Labor Relations Commission dated November 17, 1976 and holding that,
under the law and facts of the case, there was no necessity for private respondent to
obtain a clearance for the termination of petitioner's employment under Article 257 [b]
of the Labor Code, as amended, and that a mere report of such termination was
sufficient, under Section 11 [f]. Rule XIV of the Rules and Regulations implementing
said Code.
Petitioner Saturno Victoria was employed on March 17, 1956 by private respondent
Far East Broadcasting Company, Incorporated as a radio transmitter operator.
Sometime in July 1971, he and his co-workers organized the Far East Broadcasting
Company Employees Association. After registering their association with the then
Department of Labor, they demanded recognition of said association by the company
but the latter refused on the ground that being a non-profit, non-stock, non-
commercial and religious corporation, it is not covered by Republic Act 875, otherwise
known as the Industrial Peace Act, the labor law enforced at that time.
Several conciliation meetings were held at the Department of Labor and in those
meetings, the Director of Labor Relations Edmundo Cabal advised the union
members that the company could not be forced to recognize them or to bargain
collectively with them because it is a non-profit, non-commercial and religious
organization. Notwithstanding such advice, the union members led by Saturno
Victoria as its president, declared a strike and picketed the company's premises on
September 6, 1972 for the purpose of seeking recognition of the labor union.
As a countermeasure, the company filed a case for damages with preliminary
injunction against the strikers before the then Court of First Instance of Bulacan
docketed as Civil Case No. 750-V. Said court issued an injunction enjoining the three-
day-old strike staged against the company. The complaint was later amended
seeking to declare the strike illegal.
Upon the declaration of martial law on September 21, 1972 and the promulgation of
Presidential Decree No. 21 creating the National Labor Relations Commission, the ad
hoc National Labor Relations Commission took cognizance of the strike through
NLRC Case No. 0021 entitled "Far East Broadcasting Company Employees
Association, complainant versus Far East Broadcasting Company, respondent" and
NLRC Case No. 0285 entitled "Generoso Serino, complainant, versus Far East
Broadcasting Company, respondent", both cases for reinstatement due to the
company's return to accept the union's offer to return to work during the pendency of
the case in the Court of First Instance.
On December 28, 1972, Arbitrator Flavio Aguas rendered a joint decision in the two
cases mentioned above recognizing the jurisdiction of the Court of First Instance of
Bulacan, the dispositive portion reading as follows:
IN VIEW WHEREOF, and in the interest of justice and equity, it is
hereby directed that:
1. That striking members of the Far East Broadcasting Company
Employees Association return to their respective positions in the
corporation;
2. The respondent Far East Broadcasting Company Incorporated to
accept back the returning strikers without loss in rank seniority or
status;
3. The workers shall return to work within [10] days from receipt of
this resolution otherwise they shall be deemed to have forfeited
such right;
4. The respondent shall report compliance with this decision within
fifteen [15] days from receipt hereof.
This Order shall, however, be without prejudice to whatever
decision the Court of First Instance of Bulacan may promulgate in
Civil Case No. 750-V and to the requirements the existing order
may need of people working with the mass media of
communications.
IT IS SO ORDERED. 1
The decision of the arbitrator was successively appealed to the ad hoc National Labor
Relations Commission, the Secretary of Labor and the Office of the President of the
Philippines, and was affirmed in all instances.
On April 23, 1975, the Court of First Instance of Bulacan rendered judgment, to wit:
WHEREFORE, judgment is hereby rendered:
1. Making injunction against defendants permanent;
2. Declaring that this Court has jurisdiction to try and hear the
instant case despite Section 2 of Presidential Decree No. 2;
3. Declaring that plaintiff Far East Broadcasting Company is a non-
profit organization since it does not declare dividends;
4. Declaring that the strike admitted by the defendants to have
been declared by them is illegal inasmuch as it was for the purpose
of compelling the plaintiff-company to recognize their labor union
which could not be legally done because the plaintiffs were not
covered by Republic Act 875;
5. Declaring that the evidence presented is insufficient to show that
defendants caused the damage to the plaintiff consequent on the
destruction of its relays and its antennas as well as its transmission
lines.
SO ORDERED. 2
On April 24, 1975, by virtue of the above decision, the company notified Saturno
Victoria that he is dismissed effective April 26, 1975. Thereupon, he filed Case No.
RB-IV-1764 before the National Labor Relations Commission, Regional Branch IV
against the company alleging violation of article 267 of the Labor Code which requires
clearance from the Secretary of Labor for every shutdown of business establishments
or dismissal of employees. On February 27, 1976, Labor Arbiter Manuel B. Lorenzo
rendered a decision in petitioner's favor declaring the dismissal to be illegal, thereby
ordering reinstatement with fun backwages. On appeal, the arbiter's decision was
aimed by the National Labor Relations Commission. But when the commission's
decision was in turn appealed to the Secretary of Labor, it was set aside and in lieu
thereof the questioned Order dated June 6, 1978 was issued.
In view of its brevity and for a better understanding of the reasons behind it, We quote
the disputed Order in full:
ORDER
This is an appeal by respondent from the Decision of the National
Labor Relations Commission, dated November 17, 1976.
The Commission upheld the Decision of the labor arbiter dated
February 27, 1976 ordering respondent to reinstate with full
backwages herein complainant Saturno A. Victoria based on the
finding that respondent did not file any application for clearance to
terminate the services of complainant before dismissing him from
his employment.
Briefly the facts of this case are as follows:
Complainant Saturno Victoria is the president of the Far East
Broadcasting Company Employees Union. On September 8, 1972,
the said union declared a strike against respondent company. On
September 11, 1972, respondent filed with the Court of First
Instance of Bulacan, Civil Case No. 750-V, for the issuance of an
injunction and a prayer that the strike be declared illegal.
On October 24, 1972, complainant together with the other strikers
filed with the ad hoc National Labor Relations Commission Case
Nos. 0021 and 0285 for reinstatement. The Arbitrator rendered a
decision in said case on December 28, 1972, wherein he ordered
respondent to reinstate complainants subject to the following
condition:
"This Order shall, however, be without prejudice
to whatever decision the Court of First Instance
may promulgate on Civil Case No. 750-V and to
the requirements the existing order may need of
people working with the mass media of
communications."
Since said decision was affirmed by the NLRC, the Secretary of
Labor, and the Office of the President of the Philippines,
complainants were reinstated pursuant thereto.
In a Decision dated April 23, 1975, in Civil Case No. 750-V,
promulgated by the Court of First Instance of Bulacan, the strike
staged by herein complainant and the other strikers was declared
illegal. Based on said Decision, respondent dismissed complainant
from his employment. Hence, complainant filed the instant
complaint for illegal dismissal.
Under the aforecited facts, we do not agree with the ruling of the
Commission now subject of this appeal that an application for
clearance to terminate herein complainant is mandatory on the part
of respondent before terminating complainant's services. We
believe that what would have been necessary was a report as
provided for under Section 11 [f] Rule XIV, Book V of the Rules and
Regulations Implementing the Labor Code. Moreover, even if an
application for clearance was flied, this Office would have treated
the same as a report. Otherwise, it would render nugatory the
Decision of the Arbitrator dated December 28, 1972 in Case Nos.
0021 and 0285 which was affirmed by the Commission, the
Secretary of Labor and the Office of the President of the
Philippines, ordering his temporary reinstatement, subject to
whatever Decision the CFI of Bulacan may promulgate in Civil
Case No. 750-V. It could be clearly inferred from said CFI Decision
that if the strike is declared illegal, the strikers will be considered to
have lost their employment status under the then existing laws and
jurisprudence, otherwise strikers could stage illegal strike with
impunity. Since the strike was declared illegal, respondent acted in
good faith when it dispensed with the services of herein
complainant.
For failure of respondent to file the necessary report and based on
equitable considerations, complainant should be granted separation
pay equivalent to one-half month salary for every year of service.
WHEREFORE, let the decision of the National Labor Relations
Commission dated November 17, 1976 be, as it is hereby, set
aside and a new judgment is entered, ordering respondent to give
complainant separation pay equivalent to one-half month salary for
every year of service.
SO ORDERED. 3
Petitioner elevates to Us for review on certiorari the aforequoted Order seeking to
persuade this Court that then Acting Secretary of Labor Amado G. Inciong committed
reversible error in holding that, under the law and facts of this case, a mere report of
the termination of the services of said petitioner was sufficient. Petitioner assigns the
following errors:
I
WHETHER OR NOT A CLEARANCE FROM THE SECRETARY OF LABOR IS STILL
NECESSARY BEFORE THE PETITIONER HEREIN COULD BE DISMISSED
CONSIDERING THE RESTRICTIVE CONDITION IN THE DECISION OF THE
COMPULSORY ARBITRATOR IN NLRC CASE NOS. 0021 AND 0285.
II
WHETHER OR NOT THE DECISION OF THE COURT OF FIRST INSTANCE OF
BULACAN IN CIVIL CASE NO. 750-V IPSO FACTO GAVE THE RESPONDENT
COMPANY AUTHORITY TO DISMISS HEREIN PETITIONER WITHOUT ANY
CLEARANCE FROM THE SECRETARY OF LABOR. 4
The substantive law on the matter enforced during the time of petitioner's dismissal
was Article 267 [b] of the Labor Code [in conjunction with the rules and regulations
implementing said substantive law.] Article 267 reads:
No employer that has no collective bargaining agreement may shut
down his establishment or dismiss or terminate the service of
regular employees with at least one [1] year of service except
managerial employees as defined in this book without previous
written clearance from the Secretary of Labor.
Petitioner maintains that the abovecited provision is very clear. It does not make any
distinction as to the ground for dismissal. Whether or not the dismissal sought by the
employer company is for cause, it is imperative that the company must apply for a
clearance from the Secretary of Labor.
In a recent case 5 penned by Justice Abraham F. Sarmiento promulgated on June 30,
1987, we had occasion to rule in agreement with the findings of then Presidential
Assistant for Legal Affairs Ronaldo Zamora that the purpose in requiring a prior
clearance from the Secretary of Labor in cases of shutdown or dismissal of
employees, is to afford the Secretary ample opportunity to examine and determine
the reasonableness of the request.
The Solicitor General, in relation to said pronouncement and in justification of the
Acting Labor Secretary's decision makes the following observations:
It is true that article 267 [b] of the Labor Code requires that before
any business establishment is shut down or any employee is
dismissed, written clearance from the Secretary of Labor must first
be obtained. It is likewise true that in the case of petitioner, there
was no written clearance in the usual form. But while there may not
have been strict compliance with Article 267 there was substantial
compliance. The Secretary of Labor twice manifested his
conformity to petitioner's dismissal.
The first manifestation of acquiescence by the Secretary of Labor to
the dismissal of petitioner was his affirmance of the decision of the
arbitrator in NLRC Case Nos. 0021 and 0285. The arbitrator
ordered the reinstatement of the strikers but subject to the decision
of the CFI of Bulacan in Civil Case No. 750-V. The Secretary of
Labor affirmed the decision of the arbitrator. In effect, therefore, the
Secretary of Labor issued a  carte blanche to the CFI of Bulacan to
either dismiss or retain petitioner.
The second manifestation was his decision in NLRC Case No. RB-
IV-1764-65 wherein he said that clearance for the dismissal of
petitioner was not required, but only a report; that even if an
application for clearance was filed, he would have treated it as a
mere report. While this is not prior clearance in the contemplation of
Article 267, it is at least a ratification of the dismissal of petitioner. 6
We agree with the Solicitor General. Technically speaking, no clearance was
obtained by private respondent from the then Secretary of Labor, the last step
towards full compliance with the requirements of law on the matter of dismissal of
employees. However, the rationale behind the clearance requirement was fully met.
The Secretary of Labor was apprised of private respondent's intention to terminate
the services of petitioner. This in effect is an application for clearance to dismiss
petitioner from employment. The affirmance of the restrictive condition in the
dispositive portion of the labor arbiter's decision in NLRC Case Nos. 0021 and 0285
by the Secretary of Labor and the Office of the President of the Philippines, signifies a
grant of authority to dismiss petitioner in case the strike is declared illegal by the
Court of First Instance of Bulacan. Consequently and as correctly stated by the
Solicitor General, private respondent acted in good faith when it terminated the
employment of petitioner upon a declaration of illegality of the strike by the Court of
First Instance of Bulacan. Moreover, the then Secretary of Labor manifested his
conformity to the dismissal, not once, but twice. In this regard, the mandatory rule on
clearance need not be applied.
The strike staged by the union in 1972 was a futile move. The law then enforced,
Republic Act 875 specifically excluded respondent company from its coverage. Even
if the parties had gone to court to compel recognition, no positive relief could have
been obtained since the same was not sanctioned by law. Because of this, there was
no necessity on the part of private respondent to show specific acts of petitioner
during the strike to justify his dismissal.
This is a matter of responsibility and of answerability. Petitioner as a union leader,
must see to it that the policies and activities of the union in the conduct of labor
relations are within the precepts of law and any deviation from the legal boundaries
shall be imputable to the leader. He bears the responsibility of guiding the union along
the path of law and to cause the union to demand what is not legally demandable,
would foment anarchy which is a prelude to chaos.
Petitioner should have known and it was his duty to impart this imputed knowledge to
the members of the union that employees and laborers in non- profit organizations
are not covered by the provisions of the Industrial Peace Act and the Court of
Industrial Relations [in the case at bar, the Court of First Instance] has no jurisdiction
to entertain petitions of labor unions or organizations of said non-profit organizations
for certification as the exclusive bargaining representatives of said employees and
laborers. 7
As a strike is an economic weapon at war with the policy of the Constitution and the
law at that time, a resort thereto by laborers shall be deemed to be a choice of
remedy peculiarly their own and outside of the statute, and as such, the strikers must
accept all the risks attendant upon their choice. If they succeed and the employer
succumbs, the law will not stand in their way in the enjoyment of the lawful fruits of
their victory. But if they fail, they cannot thereafter invoke the protection of the law for
the consequences of their conduct unless the right they wished vindicated is one
which the law will, by all means, protect and enforce. 8
We further agree with the Acting Secretary of Labor that what was required in the
case of petitioner's dismissal was only a report as provided under Section 11 [f] of
Rule XIV of the Rules and Regulations implementing the Labor Code which provides:
Every employer shall submit a report to the Regional Office in
accordance with the form presented by the Department on the
following instances of termination of employment, suspension, lay-
off or shutdown which may be effected by the employer without
prior clearance within five [5] days thereafter:
xxx xxx xxx
[f] All other terminations of employment, suspension, lay-offs or
shutdowns, not otherwise specified in this and in the immediately
preceding sections.
To hold otherwise would render nugatory the conditions set forth in the decision of
Labor Arbiter Aguas on the basis of which petitioner was temporarily reinstated.
Inasmuch as there was a valid and reasonable ground to dismiss petitioner but no
report as required by the implementing rules and regulations of the Labor Code was
filed by respondent Company with the then Department of Labor, petitioner as held by
the Acting Secretary of Labor, is entitled to separation pay equivalent to one-half
month salary for every year of service.
WHEREFORE, the petition is dismissed. The decision of the acting Secretary of
Labor is AFFIRMED in toto.
SO ORDERED.
Gutierrez, Jr., Feliciano, Bidin and Cortes, JJ., concur.
 
G.R. No. L-46562 March 31, 1978
VASSAR INDUSTRIES EMPLOYEES UNION (VIEU), petitioner, 
vs.
HON. FRANCISCO L. ESTRELLA; as Acting Director of the Bureau of Labor
Relations, ASSOCIATED LABOR UNIONS (ALU), and VASSAR INDUSTRIES,
INC., respondents.
Jose C. Espinas for petitioner.
Abraham B. Drapiza for respondent Unions.
Maria de la Paz Singson, for respondent Vassar Industries, Inc.
Acting Solicitor General Vicente V. Mendoza, Assistant Solicitor General Reynato S.
Puno and Solicitor Ramon A. Barcelona for respondent The Hon. Francisco L.
Estrella, etc.
FERNANDO, J.:
There appears to be as yet a failure to grasp the scope and amplitude of the
constitutional right to freedom of association. 1 That seems to be the only explanation
but certainly not the justification, for the refusal of respondent Francisco L. Estrella,
then the Acting Director of the Bureau of Labor Relations, to register petitioner Vassar
Industries Employees Union. 2 His communication to that effect is worded thus: "We
are hereby returning the application for registration of the [Vassar Industries
Employees Union] together with all the accompanying documents with the information
that the application is denied on the ground that there is already a registered
collective bargaining agent in the company." 3 Petitioners prayed that a restraining
order be issued, and, after hearing, that its application for registration be given due
course. Accordingly, in a resolution dated August 29, 1977, this Court issued such
restraining order and required comment from the respondents. The comment of the
then Acting Solicitor General Vicente V. Mendoza, 4 after setting forth the pertinent
facts, submitted this conclusion; "From the aforestated undisputed facts, it is the
considered opinion of this representation that the actuation of the then Acting [Bureau
of Labor Relations] Director cannot be sustained for the following reasons: a) the
ground for the denial of the registration of petitioner union is the existence of a
registered collective bargaining agent, but this is erroneous since the CBA expired on
May 15, 1977, and the records do not show that [the Associated Labor Union] has
been certified anew. 
b) Besides, the registration of a labor union is not solely for the purpose of qualifying
the union as the exclusive collective bargaining agent since it is entitled to other rights
and prerogatives as enumerated in Art. 243 of the Labor Code. c) As long as an
applicant union complies with all of the legal requirements for registration, it becomes
the BIR's ministerial duty to so register the union. d) No hearing, whatsoever, was
conducted to ascertain the existence of a collective bargaining agent, thus depriving
petitioner union of its day in court." 5 His recommendation is "that the case be ordered
remanded to the BLR for the registration of the petitioner union." 6 The other private
respondents also submitted their comments but failed to meet squarely the issue of
the failure to comply with the constitutional mandate of freedom of association. It is
thus obvious that the petition is impressed with merit.
There is no dispute on the facts. There was in existence a collective bargaining
agreement between private respondents Associated Labor Unions and Vassar
Industries, Inc. which expired on May 15, 1977. Prior to such date, 111 of a total
number of 150 employees of such firm disaffiliated from the former labor organization
and formed their own union. Thereafter, they filed an application for registration of
their union with the Bureau of Labor Relations, complying with an the requirements of
both the Labor Code and its implementing regulations. While such application was
pending, petitioner Union filed a petition for certification as bargaining agent for the
rank-and-file employees of the company. The Med-Arbiter, on May 24, 1977, denied
their plea on the ground that the union was not duly registered with the Department of
Labor. Then came a motion for reconsideration praying that the dismissal be set
aside until action be taken on its pending application for registration. On July 5, 1977,
respondent Estrella, then Acting Director of the Bureau of Labor Relations, denied, as
previously noted, the application for registration "on the ground that there is a
registered collective bargaining agent in the company." Hence this petition. It should
also be noted that there is this submission in the comment of the then Acting Solicitor
General Vicente V. Mendoza: "It may not be amiss to mention herein that before filing
the instant comment, prior consultation was made with Director Carmelo C. Noriel of
the Bureau of Labor Relations, and he shares our view on the matter leaving it to the
undersigned to make the appropriate recommendation in the premises to this
Honorable Court." 7
The petition, to repeat, is impressed with merit. certiorari lies.
1. In U.E. Automotive Employees and Workers Union v. Noriel, 8 reference was made
to the fact that a notable feature of our Constitution is that "freedom of association is
explicitly ordained; it is not merely derivative, peripheral or penumbral, as is the case
in the United States. It can trace its origin to the Malolos Constitution." 9 An earlier
decision, Federacion Obrera v. Noriel, 10 sets forth the scope and amplitude of such
right: "Clearly, what is at stake is the constitutional right to freedom of association on
the part of employees. Petitioner labor union was in the past apparently able to enlist
the allegiance of the working force in the Anglo-American Tobacco Corporation.
Thereafter, a number of such individuals joined private respondent labor union. That
is a matter clearly left to their sole uncontrolled judgment. There is this excerpt
from Pan American World Airways, Inc. v. Pan American Employees
Association: "There is both a constitutional and statutory recognition that laborers
have the right to form unions to take care of their interests vis-a-viz their employees.
Their freedom to form organizations would be rendered nugatory if they could not
choose their own leaders to speak on their behalf and to bargain for them." It cannot
be otherwise, for the freedom to choose which labor organization to join is an aspect
of the constitutional mandate of protection to labor. Prior to the Industrial Peace Act,
there was a statute setting for the guidelines for the registration of labor unions. As
implied in Manila Hotel Co. v. Court of Industrial Relations, it was enacted pursuant to
what is ordained in the Constitution. Thus, in Umali v. Lovina, it was held that
mandamus lies to compel the registration of a labor organization. There is this apt
summary of what is signified in Philippine Land-Air-Sea Labor Union v. Court of
Industrial Relations, "to allow a labor union to organize itself and acquire a personality
distinct and separate from its members and to serve as an instrumentality to conclude
collective bargaining agreements ... ." It is no coincidence that in the first decision of
this Court citing the Industrial Peace Act, Pambujan United Mine Workers v. Samar
Mining Company, the role of a labor union as the agency for the expression of the
collective will affecting its members both present and prospective, was stressed. That
statute certainly was much more emphatic as to the vital aspect of such a right as
expressly set forth in the policy of the law. What is more, there is in such enactment
this categorical provision on the right of employees to self-organization: "Employees
shall have the right to self-organization and to form, join or assist labor organizations
of their own choosing for the purpose of collective bargaining through representatives
of their own choosing and to engage in concerted activities for the purpose of
collective bargaining and other mutual aid or protection." The new Labor Code is
equally explicit on the matter. Thus: "The State shall assure the rights of workers to
self-organization, collective bargaining, security of tenure and just and humane
conditions of work." 11
2. Equally so, whatever question may arise from the disaffiliation was set at rest by a
recent decision of this Court in Philippine Labor Alliance Council v. Bureau of Labor
Relations. 12 Thus: "It is indisputable that the present controversy would not have
arisen if there were no mass disaffiliation from petitioning union. Such a phenomenon
is nothing new in the Philippine labor movement. Nor is it open to any legal objection.
It is implicit in the freedom of association explicitly ordained by the Constitution. There
is then the incontrovertible right of any individual to join an organization of his choice.
That option belongs to him. A workingman is not to be denied that liberty. He may be,
as a matter of fact, more in need of it the institution of collective bargaining as an
aspect of industrial democracy is to succeed. No obstacle that may possibly thwart
the desirable objective of militancy in labor's struggle for better terms and conditions
is then to be placed on his way. Once the fact of disaffiliation has been demonstrated
beyond doubt, as in this case, a certification election is the most expeditious way of
determining which labor organization is to be the exclusive bargaining representative.
It is as simple as that." 13
3. The only novel feature of this case then is the fact that, as noted in the comment of
private respondent Associated Labor Unions, there was subsequently entered into a
collective bargaining agreement with the other private respondent Vassar Industries,
Inc. on September 26, 1977, allegedly containing "substantial benefits for the
employees, which contract (CBA) was approved and ratified by the majority of the
general membership or employees of the Vassar Industries, Inc. ... ." 14 It is on that
basis that a dismissal of the petition is sought. It may be stated at the outset that
while such collective bargaining agreement was entered into during the pendency of a
restraining order issued by this Court as far back as August 29, 1977, it may be
argued that there is no technical violation as the restraining order sought by petitioner
labor union was limited to preventing the two private respondents "from continuing to
check-off the petitioner's members who disaffiliated from the ALU of union dues and
other assessments, until further orders from this Honorable Court ... 15 Nonetheless, it
is quite obvious that when the two parties entered into such a collective bargaining
agreement, such a move was motivated by the desire to impart a moot and academic
aspect to this petition. It should not therefore elicit the approval of this Court,
especially so as upon the expiration oil the collective contract, it is made "the duty of
both parties to keep the status quo and to continue in full force and effect the terms
and conditions of the existing agreement during the sixty-day period and/or until a
new agreement is reached by the parties." 16 With a pending petition for certification,
any such agreement entered into by management with a labor organization is fraught
with the risk that such a labor union may not be chosen thereafter as the collective
bargaining representative. That is the situation that is confronted by private
respondents. Any other view would render nugatory the clear statutory policy to favor
certification election as the means of ascertaining a true expression of the will of the
workers as to which labor organization would represent them. 17
4. Now for the appropriate remedy. The prayer in the petition is limited to ordering
respondent official to give due course to petitioner's application for registration. 18 As
this is a certiorari proceeding, equitable in character, this Court is empowered to grant
the relief adequate and suitable under the circumstances so that justice in all its
fullness could be achieved. There is this affirmation in the comment of the then Acting
Solicitor General Vicente V. Mendoza as counsel for respondent Estrella: "As long as
an applicant union complies with all of the legal requirements for registration, it
becomes the BLR's ministerial duty to so register the union." 19 It suffices then to
order that petitioner Union be registered, there being no legal obstacle to such a step
and the duty of the Bureau of Labor Relations being clear. Then there is this ruling in
Philippine Labor Alliance Council v. Bureau of Labor Relations 20 that calls for
application that "once the fact of disaffiliation has been demonstrated beyond doubt,
as in this case, a certification election is the most expeditious way of determining
which labor organization is to be the exclusive bargaining representative." 21 In the
meanwhile, if as contended by private respondent labor union the interim collective
bargaining agreement, which it engineered and entered into on September 26, 1977,
has much more favorable terms for the workers of private respondent Vassar
Industries, then it should continue in full force and effect until the appropriate
bargaining representative is chosen and negotiations for a new collective bargaining
agreement thereafter concluded. This is one way of assuring that both the social
justice, 22 and the protection to labor provisions 23 would be effectively implemented
without sanctioning an attempt to frustrate the exercise of this Court's jurisdiction in a
pending case.
WHEREFORE, the writ of certiorari is granted and the Bureau of Labor Relations
ordered to conduct at the earliest practicable date of a certification election with
petitioner labor union, Vassar Industries Labor Union, and private respondent labor
union, Associated Labor Unions, participating therein to determine the exclusive
bargaining representative of the workers employed in Vassar Industries, Inc. This
decision is immediately executory.
Barredo, Antonio, Aquino, Concepcion, Jr., and Santos, JJ., concur.
 
Footnotes
1 According to Article IV, Section 7 of the Constitution: "The right to
form associations or societies for purposes not contrary to law shall
not be abridged."
2 The private respondents are the Associated Labor Unions and
the Vassar Industries, Inc.
3 Petition, paragraph 6.
4 He was assisted by Assistant Solicitor General Reynato S. Puno
and Solicitor Ramon A. Barcelona.
5 Comment, 2 and 3.
6 Ibid, 4.
7 Ibid, 3.
8 L-44350, November 25, 1976, 74 SCRA 1963.
9 Ibid, 75. Three American cases were cited: National Association
for the Advancement of Colored People v. Alabama, 357 US 449
(1958); Bates v. City of Little Rock, 361 US 516 (1960); National
Association for the Advancement of Colored People v. Alabama,
371 US 415 (1963).
10 L-41937, July 6, 1976, 72 SCRA 24.
11 Ibid, 30-32. The Pan American World Airways decision, L-
25094, April 29, 1969, is reported in 27 SCRA 1202; the Manila
Hotel decision, in 80 Phil. 145 (1948); the Umali decision, in 86
Phil. 313 (1950); the Philippine Land-Air-Sea Labor Union decision,
in 93 Phil. 747 (1953); and the Pambujan United Mine Workers
decision, in 94 Phil. 932 (1954).
12 L-41288, January 31, 1977, 75 SCRA 162.
13 Ibid, 167-168. The following cases were cited: Binalbagan-
Isabela Sugar Co., Inc. v. Philippine Association of Free labor
Unions, L-18782, Aug. 29, 1963, 8 SCRA 700; Itogon-Suyoc Mines
Inc. v. Baldo, L-17739, Dec. 24, 1964, 12 SCRA 599; Citizens
Labor Union-CCLU v. Court of Industrial Relations, L-24320, Nov.
12, 1966, 18 SCRA 624; Lakas ng Manggagawang Makabayan v.
Court of Industrial Relations, L-32178, Dec. 28, 1970, 36 SCRA
600; Philippine Association of Free Labor Unions (PAFLU) v. Court
of Industrial Relations, L-33781, Oct. 31, 1972, 47 SCRA 390;
Federation of Free Workers v. Parades, L-36466, Nov. 26, 1973, 54
SCRA 75; Liberty Cotton Mills Workers Union v. Liberty Cotton
Mills, Inc., L-33987, Sept. 4, 1975, 66 SCRA 512. The latest case in
point is Elisco-Elirol Labor Union v. Noriel, L-41965, Dec. 29, 1977.
14 Comment, 2.
15 Petition, Prayer, 8.
16 Article 254 of the Labor Code of the Philippines (1974).
 17 Cf. Philippine Association of Free Labor Unions v. Bureau of
Labor Relations, L-42115,  SINGER MACHINE COLLECTORS UNION-BAGUIO (SIMACUB), respondents.
Jan. 27, 1976, 69 SCRA 132; Federacion Obrera v. Noriel, L-
41937, July 6, 1976, 72 SCRA 24; UE Automotive Employees and
Workers Union-Trade Unions of the Philippines and Allied Services
v. Noriel, L-44350, Nov. 25, 1976, 74 SCRA 72; Philippine Labor
Alliance Council v. Bureau of Labor Relations, L-41288, Jan. 31,
1977, 75 SCRA 162; Today's Knitting Free Workers Union v. Noriel,
L-45057, Feb. 28, 1977, 75 SCRA 450; Benguet Exploration
Miner's Union v. Noriel, L-44110, March 29, 1977, 76 SCRA 107;
Kapisanan v. Noriel, L-45475, June 20, 1977, 77 SCRA 414;
Rowell Labor Union-Trade Unions of the Philippines v. Ople, L-
42270, July 29, 1977, 78 SCRA 166.
18 Petition, 8.
19 Comment, 3.
20 L-41288, January 31, 1977, 75 SCRA 162.
21 Ibid, 168.
22 According to Article II, Section 6 of the Constitution; "The State
shall promote social justice to ensure the dignity, welfare, and
security of all the people. Towards this end, the State shall regulate
the acquisition, ownership, use, enjoyment, and disposition of
private property, and equitably diffuse property ownership and
profits."
23 Section 9 reads: "The State shall afford protection to labor,
promote full employment and equality in employment, ensure equal
work opportunities regardless of sex, race, or creed, and regulate
the relations between workers and employers. The State shall
assure the right of workers to self- organization, collective
bargaining, security of tenure, and just and humane conditions of
work. The State may provide for compulsory arbitration."
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 91307             January 24, 1991
SINGER SEWING MACHINE COMPANY, petitioner  commission agents are not employees but are independent contractors.
vs.
HON. FRANKLIN M. DRILON, MED-ARBITER FELIX B. CHAGUILE, JR., and
Misa, Castro, Villanueva, Oposa, Narvasa & Pesigan for petitioner.
Domogan, Lockey, Orate & Dao-ayan Law Office for private respondent.
GUTIERREZ, JR., J.:
This is a petition for certiorari assailing the order of Med-Arbiter Designate Felix B.
Chaguile, Jr., the resolution of then Labor Secretary Franklin M. Drilon affirming said
order on appeal and the order denying the motion for reconsideration in the case
entitled "In Re: Petition for Direct Certification as the Sole and Exclusive Collective
Bargaining Agent of Collectors of Singer Sewing Machine Company-Singer Machine
Collectors Union-Baguio (SIMACUB)" docketed as OS-MA-A-7-119-89 (IRD Case No.
02-89 MED).
On February 15, 1989, the respondent union filed a petition for direct certification as
the sole and exclusive bargaining agent of all collectors of the Singer Sewing
Machine Company, Baguio City branch (hereinafter referred to as "the Company").
The Company opposed the petition mainly on the ground that the union members are
actually not employees but are independent contractors as evidenced by the
collection agency agreement which they signed.
The respondent Med-Arbiter, finding that there exists an employer-employee
relationship between the union members and the Company, granted the petition for
certification election. On appeal, Secretary of Labor Franklin M. Drilon affirmed it. The
motion for reconsideration of the Secretary's resolution was denied. Hence, this
petition in which the Company alleges that public respondents acted in excess of
jurisdiction and/or committed grave abuse of discretion in that:
a) the Department of Labor and Employment (DOLE) has no jurisdiction over
the case since the existence of employer-employee relationship is at issue;
b) the right of petitioner to due process was denied when the evidence of the
union members' being commission agents was disregarded by the Labor
Secretary;
c) the public respondents patently erred in finding that there exists an
employer-employee relationship;
d) the public respondents whimsically disregarded the well-settled rule that
The respondents, on the other hand, insist that the provisions of the Collection
Agency Agreement belie the Company's position that the union members are
independent contractors. To prove that union members are employees, it is asserted
that they "perform the most desirable and necessary activities for the continuous and
effective operations of the business of the petitioner Company" (citing Article 280 of
the Labor Code). They add that the termination of the agreement by the petitioner
pending the resolution of the case before the DOLE "only shows the weakness of
petitioner's stand" and was "for the purpose of frustrating the constitutionally
mandated rights of the members of private respondent union to self-organization and
collective organization." They also contend that under Section 8, Rule 8, Book No. III
of the Omnibus Rules Implementing the Labor Code, which defines job-contracting,
they cannot legally qualify as independent contractors who must be free from control
of the alleged employer, who carry independent businesses and who have substantial
capital or investment in the form of equipment, tools, and the like necessary in the
conduct of the business.
The present case mainly calls for the application of the control test, which if not
satisfied, would lead us to conclude that no employer-employee relationship exists.
Hence, if the union members are not employees, no right to organize for purposes of
bargaining, nor to be certified as such bargaining agent can ever be recognized. The
following elements are generally considered in the determination of the employer-
employee relationship; "(1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the power to control the
employee's conduct — although the latter is the most important element" (Mafinco
Trading Corporation v. Ople, 70 SCRA 139 [1976]; Development Bank of the
Philippines v. National Labor Relations Commission, 175 SCRA 537 [1989]; Rosario
Brothers, Inc. v. Ople, 131 SCRA 72 [1984]; Broadway Motors Inc. v. NLRC, 156
SCRA 522 [1987]; Brotherhood Labor Unity Movement in the Philippines v. Zamora,
147 SCRA 49 [1986]).
The Collection Agency Agreement defines the relationship between the Company and
each of the union members who signed a contract. The petitioner relies on the
following stipulations in the agreements: (a) a collector is designated as a collecting
agent" who is to be considered at all times as an independent contractor and not
employee of the Company; (b) collection of all payments on installment accounts are
to be made monthly or oftener; (c) an agent is paid his compensation for service in
the form of a commission of 6% of all collections made and turned over plus a bonus
on said collections; (d) an agent is required to post a cash bond of three thousand
pesos (P3,000.00) to assure the faithful performance and observance of the terms
and conditions under the agreement; (e) he is subject to all the terms and conditions
in the agreement; (f) the agreement is effective for one year from the date of its
execution and renewable on a yearly basis; and (g) his services shall be terminated in
case of failure to satisfy the minimum monthly collection performance required, failure
to post a cash bond, or cancellation of the agreement at the instance of either party
unless the agent has a pending obligation or indebtedness in favor of the Company.
Meanwhile, the respondents rely on other features to strengthen their position that the
collectors are employees. They quote paragraph 2 which states that an agent shall
utilize only receipt forms authorized and issued by the Company. They also note
paragraph 3 which states that an agent has to submit and deliver at least once a
week or as often as required a report of all collections made using report forms
furnished by the Company. Paragraph 4 on the monthly collection quota required by
the Company is deemed by respondents as a control measure over the means by
which an agent is to perform his services.
The nature of the relationship between a company and its collecting agents depends
on the circumstances of each particular relationship. Not all collecting agents are
employees and neither are all collecting agents independent contractors. The
collectors could fall under either category depending on the facts of each case.
The Agreement confirms the status of the collecting agent in this case as an
independent contractor not only because he is explicitly described as such but also
because the provisions permit him to perform collection services for the company
without being subject to the control of the latter except only as to the result of his
work. After a careful analysis of the contents of the agreement, we rule in favor of the
petitioner.
The requirement that collection agents utilize only receipt forms and report forms
issued by the Company and that reports shall be submitted at least once a week is
not necessarily an indication of control over the means by which the job of collection
is to be performed. The agreement itself specifically explains that receipt forms shall
be used for the purpose of avoiding a co-mingling of personal funds of the agent with
the money collected on behalf of the Company. Likewise, the use of standard report
forms as well as the regular time within which to submit a report of collection are
intended to facilitate order in office procedures. Even if the report requirements are to
be called control measures, any control is only with respect to the end result of the
collection since the requirements regulate the things to be done after the performance
of the collection job or the rendition of the service.
The monthly collection quota is a normal requirement found in similar contractual
agreements and is so stipulated to encourage a collecting agent to report at least the
minimum amount of proceeds. In fact, paragraph 5, section b gives a bonus, aside
from the regular commission every time the quota is reached. As a requirement for
the fulfillment of the contract, it is subject to agreement by both parties. Hence, if the
other contracting party does not accede to it, he can choose not to sign it. From the
records, it is clear that the Company and each collecting agent intended that the
former take control only over the amount of collection, which is a result of the job
performed.
The respondents' contention that the union members are employees of the Company
is based on selected provisions of the Agreement but ignores the following
circumstances which respondents never refuted either in the trial proceedings before
the labor officials nor in its pleadings filed before this Court.
1. The collection agents are not required to observe office hours or report to
Singer's office everyday except, naturally and necessarily, for the purpose of
remitting their collections.
2. The collection agents do not have to devote their time exclusively for
SINGER. There is no prohibition on the part of the collection agents from
 working elsewhere. Nor are these agents required to account for their time
and submit a record of their activity.
3. The manner and method of effecting collections are left solely to the
discretion of the collection agents without any interference on the part of
Singer.
4. The collection agents shoulder their transportation expenses incurred in
the collections of the accounts assigned to them.
5. The collection agents are paid strictly on commission basis. The amounts
paid to them are based solely on the amounts of collection each of them
make. They do not receive any commission if they do not effect any
collection even if they put a lot of effort in collecting. They are paid
commission on the basis of actual collections.
6. The commissions earned by the collection agents are directly deducted by
them from the amount of collections they are able to effect. The net amount
is what is then remitted to Singer." (Rollo, pp. 7-8)
If indeed the union members are controlled as to the manner by which they are
supposed to perform their collections, they should have explicitly said so in detail by
specifically denying each of the facts asserted by the petitioner. As there seems to be
no objections on the part of the respondents, the Court finds that they miserably failed
to defend their position.
A thorough examination of the facts of the case leads us to the conclusion that the
existence of an employer-employee relationship between the Company and the
collection agents cannot be sustained.
The plain language of the agreement reveals that the designation as collection agent
does not create an employment relationship and that the applicant is to be considered
at all times as an independent contractor. This is consistent with the first rule of
interpretation that the literal meaning of the stipulations in the contract controls
(Article 1370, Civil Code; La Suerte Cigar and Cigarette Factory v. Director of Bureau
of Labor, Relations, 123 SCRA 679 [1983]). No such words as "to hire and employ"
are present. Moreover, the agreement did not fix an amount for wages nor the
required working hours. Compensation is earned only on the basis of the tangible
results produced, i.e., total collections made (Sarra v. Agarrado, 166 SCRA 625
[1988]). In Investment Planning Corp. of the Philippines v. Social Security System, 21
SCRA 924 [1967] which involved commission agents, this Court had the occasion to
rule, thus:
We are convinced from the facts that the work of petitioner's agents or
registered representatives more nearly approximates that of an independent
contractor than that of an employee. The latter is paid for the labor he
performs, that is, for the acts of which such labor consists the former is paid
for the result thereof . . . .
x x x           x x x          x x x
Even if an agent of petitioner should devote all of his time and effort trying to
sell its investment plans he would not necessarily be entitled to
compensation therefor. His right to compensation depends upon and is
measured by the tangible results he produces."
Moreover, the collection agent does his work "more or less at his own pleasure"
without a regular daily time frame imposed on him (Investment Planning Corporation
of the Philippines v. Social Security System, supra; See alsoSocial Security System v.
Court of Appeals, 30 SCRA 210 [1969]).
The grounds specified in the contract for termination of the relationship do not support
the view that control exists "for the causes of termination thus specified have no
relation to the means and methods of work that are ordinarily required of or imposed
upon employees." (Investment Planning Corp. of the Phil. v. Social Security
System,  supra)
The last and most important element of the control test is not satisfied by the terms
and conditions of the contracts. There is nothing in the agreement which implies
control by the Company not only over the end to be achieved but also over the means
and methods in achieving the end (LVN Pictures, Inc. v. Philippine Musicians Guild, 1
SCRA 132 [1961]).
The Court finds the contention of the respondents that the union members are
employees under Article 280 of the Labor Code to have no basis. The definition that
regular employees are those who perform activities which are desirable and
necessary for the business of the employer is not determinative in this case. Any
agreement may provide that one party shall render services for and in behalf of
another for a consideration (no matter how necessary for the latter's business) even
without being hired as an employee. This is precisely true in the case of an
independent contractorship as well as in an agency agreement. The Court agrees
with the petitioner's argument that Article 280 is not the yardstick for determining the
existence of an employment relationship because it merely distinguishes between two
kinds of employees, i.e., regular employees and casual employees, for purposes of
determining the right of an employee to certain benefits, to join or form a union, or to
security of tenure. Article 280 does not apply where the existence of an employment
relationship is in dispute.
Even Section 8, Rule 8, Book III of the Omnibus Rules Implementing the Labor Code
does not apply to this case.1âwphi1Respondents assert that the said provision on job
contracting requires that for one to be considered an independent contractor, he must
have "substantial capital or investment in the form of tools, equipment, machineries,
work premises, and other materials which are necessary in the conduct of his
business." There is no showing that a collection agent needs tools and machineries.
Moreover, the provision must be viewed in relation to Article 106 of the Labor Code
which provides:
 Art. 106. Contractor or subcontractor. — Whenever an employer enters into
a contract with another person for the performance of the former's work, the
employees of the contractor and of the latter's subcontractor, if any, shall be
paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his
employees in accordance with this Code, the employer shall be jointly and
severally liable with his contractor or subcontractor to such employees to the
extent of the work performed under the contract, in the same manner and
extent that he is liable to employees directly employed by him.
x x x           x x x          x x x
There is "labor-only" contracting where the person supplying workers to an
employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and the workers
recruited and placed by such persons are performing activities which are
directly related to the principal business of such employer. In such cases,
the person or intermediary shall be considered merely as an agent of the
employer who shall be responsible to the workers in the same manner and
extent as if the latter were directly employed by him." (p. 20)
It can readily be seen that Section 8, Rule 8, Book Ill and Article 106 are relevant in
determining whether the employer is solidarily liable to the employees of an alleged
contractor and/or sub-contractor for unpaid wages in case it is proven that there is a
job-contracting situation.
The assumption of jurisdiction by the DOLE over the case is justified as the case was
brought on appeal by the petitioner itself which prayed for the reversal of the Order of
the Med-Arbiter on the ground that the union members are not its employees. Hence,
the petitioner submitted itself as well as the issue of existence of an employment
relationship to the jurisdiction of the DOLE which was faced with a dispute on an
application for certification election.
The Court finds that since private respondents are not employees of the Company,
they are not entitled to the constitutional right to join or form a labor organization for
purposes of collective bargaining. Accordingly, there is no constitutional and legal
basis for their "union" to be granted their petition for direct certification. This Court
made this pronouncement in La Suerte Cigar and Cigarette Factory v. Director of
Bureau of Labor Relations, supra:
. . . The question of whether employer-employee relationship exists is a
primordial consideration before extending labor benefits under the
workmen's compensation, social security, medicare, termination pay and
labor relations law. It is important in the determination of who shall be
included in a proposed bargaining unit because, it is the sine qua non, the
fundamental and essential condition that a bargaining unit be composed of
employees. Failure to establish this juridical relationship between the union
members and the employer affects the legality of the union itself. It means
the ineligibility of the union members to present a petition for certification
election as well as to vote therein . . . . (At p. 689)
WHEREFORE, the Order dated June 14,1989 of Med-Arbiter Designate Felix B.
Chaguile, Jr., the Resolution and Order of Secretary Franklin M. Drilon dated
November 2, 1989 and December 14, 1989, respectively are hereby REVERSED and
SET ASIDE. The petition for certification election is ordered dismissed and the
temporary restraining order issued by the Court on December 21, 1989 is made
permanent.
SO ORDERED.
G.R. No. 108855             February 28, 1996
METROLAB INDUSTRIES, INC., petitioner, 
vs.
HONORABLE MA. NIEVES ROLDAN-CONFESOR, in her capacity as Secretary
of the Department of Labor and Employment and METRO DRUG
CORPORATION EMPLOYEES ASSOCIATION - FEDERATION OF FREE
WORKERS, respondents.
DECISION
KAPUNAN, J.:
This is a petition for certiorari under Rule 65 of the Revised Rules of Court seeking
the annulment of the Resolution and Omnibus Resolution of the Secretary of Labor
and Employment dated 14 April 1992 and 25 January 1993, respectively, in OS-AJ-
04491-11 (NCMB-NCR-NS-08-595-91; NCMB-NCR-NS-09-678-91) on grounds that
these were issued with grave abuse of discretion and in excess of jurisdiction.
Private respondent Metro Drug Corporation Employees Association-Federation of
Free Workers (hereinafter referred to as the Union) is a labor organization
representing the rank and file employees of petitioner Metrolab Industries, Inc.
(hereinafter referred to as Metrolab/MII) and also of Metro Drug, Inc.
On 31 December 1990, the Collective Bargaining Agreement (CBA) between
Metrolab and the Union expired. The negotiations for a new CBA, however, ended in
a deadlock.
Consequently, on 23 August 1991, the Union filed a notice of strike against Metrolab
and Metro Drug Inc. The parties failed to settle their dispute despite the conciliation
efforts of the National Conciliation and Mediation Board.
To contain the escalating dispute, the then Secretary of Labor and Employment,
Ruben D. Torres, issued an assumption order dated 20 September 1991, the
dispositive portion of which reads, thus:
 WHEREFORE, PREMISES CONSIDERED, and pursuant to Article 263 (g)
of the Labor Code, as amended, this Office hereby assumes jurisdiction
over the entire labor dispute at Metro Drug, Inc. - Metro Drug Distribution
Division and Metrolab Industries, Inc.
Accordingly, any strike or lockout is hereby strictly enjoined.  The Companies
and the Metro Drug Corp.Employees Association - FFW are likewise
directed to cease and desist from committing any and all acts that might
exacerbate the situation.
Finally, the parties are directed to submit their position papers and evidence
on the aforequoted deadlocked issues to this office within twenty (20) days
from receipt hereof.
SO ORDERED.1 (Emphasis ours.)
On 27 December 1991, then Labor Secretary Torres issued an order resolving all the
disputed items in the CBA and ordered the parties involved to execute a new CBA.
Thereafter, the union filed a motion for reconsideration.
On 27 January 1992, during the pendency of the abovementioned motion for
reconsideration, Metrolab laid off 94 of its rank and file employees.
On the same date, the Union filed a motion for a cease and desist order to enjoin
Metrolab from implementing the mass layoff, alleging that such act violated the
prohibition against committing acts that would exacerbate the dispute as specifically
directed in the assumption order. 2
On the other hand, Metrolab contended that the layoff was temporary and in the
exercise of its management prerogative. It maintained that the company would suffer
a yearly gross revenue loss of approximately sixty-six (66) million pesos due to the
withdrawal of its principals in the Toll and Contract Manufacturing Department.
Metrolab further asserted that with the automation of the manufacture of its product
"Eskinol," the number of workers required for its production is significantly reduced.3
Thereafter, on various dates, Metrolab recalled some of the laid off workers on a
temporary basis due to availability of work in the production lines.
On 14 April 1992, Acting Labor Secretary Nieves Confesor issued a resolution
declaring the layoff of Metrolab's 94 rank and file workers illegal and ordered their
reinstatement with full backwages. The dispositive portion reads as follows:
WHEREFORE, the Union's motion for reconsideration is granted in part, and
our order of 28 December 1991 is affirmed subject to the modifications in
allowances and in the close shop provision. The layoff of the 94 employees
at MII is hereby declared illegal for the failure of the latter to comply with our
injunction against committing any act which may exacerbate the dispute and
with the 30-day notice requirement. Accordingly, MII is hereby ordered to
reinstate the 94 employees, except those who have already been recalled,
to their former positions or substantially equivalent, positions with full
backwages from the date they were illegally laid off on 27 January 1992 until
actually reinstated without loss of seniority rights and other benefits. Issues
relative to the CBA agreed upon by the parties and not embodied in our
earlier order are hereby ordered adopted for incorporation in the CBA.
Further, the dispositions and directives contained in all previous orders and
resolutions relative to the instant dispute, insofar as not inconsistent herein,
are reiterated. Finally, the parties are enjoined to cease and desist from
committing any act which may tend to circumvent this resolution.
SO RESOLVED. 4
On 6 March 1992, Metrolab filed a Partial Motion for Reconsideration alleging that the
layoff did not aggravate the dispute since no untoward incident occurred as a result
thereof. It, likewise, filed a motion for clarification regarding the constitution of the
bargaining unit covered by the CBA.
On 29 June 1992, after exhaustive negotiations, the parties entered into a new CBA.
The execution, however, was without prejudice to the outcome of the issues raised in
the reconsideration and clarification motions submitted for decision to the Secretary of
Labor. 5
Pending the resolution of the aforestated motions, on 2 October 1992, Metrolab laid
off 73 of its employees on grounds of redundancy due to lack of work which the union
again promptly opposed on 5 October 1992.
On 15 October 1992, Labor Secretary Confesor again issued a cease and desist
order. Metrolab moved for a reconsiderations.6
On 25 January 1993, Labor Secretary Confesor issued the assailed Omnibus
Resolution containing the following orders:
xxx       xxx       xxx
1. MII's motion for partial reconsideration of our 14 April 1992 resolution
specifically that portion thereof assailing our ruling that the layoff of the 94
employees is illegal, is hereby denied. MII is hereby ordered to pay such
employees their full backwages computed from the time of actual layoff to
the time of actual recall;
2. For the parties to incorporate in their respective collective bargaining
agreements the clarifications herein contained; and
3. MII's motion for reconsideration with respect to the consequences of the
second wave of layoff affecting 73 employees, to the extent of assailing our
ruling that such layoff tended to exacerbate the dispute, is hereby denied.
 But inasmuch as the legality of the layoff was not submitted for our
resolution and no evidence had been adduced upon which a categorical
finding thereon can be based, the same is hereby referred to the NLRC for
its appropriate action.
Finally, all prohititory injunctions issued as a result of our assumption of
jurisdiction over this dispute are hereby lifted.
SO RESOLVED.7
Labor Secretary Confesor also ruled that executive secretaries are excluded from the
closed-shop provision of the CBA, not from the bargaining unit.
On 4 February 1993, the Union filed a motion for execution. Metrolab opposed.
Hence, the present petition for certiorari with application for issuance of a Temporary
Restraining Order.
On 4 March 1993, we issued a Temporary Restraining Order enjoining the Secretary
of Labor from enforcing and implementing the assailed Resolution and Omnibus
Resolution dated 14 April 1992 and 25 January 1993, respectively.
In its petition, Metrolab assigns the following errors:
A.
THE PUBLIC RESPONDENT HON. SECRETARY OF LABOR AND
EMPLOYMENT COMMITTED GRAVE ABUSE OF DISCRETION AND
EXCEEDED HER JURISDICTION IN DECLARING THE TEMPORARY
LAYOFF ILLEGAL, AND ORDERING THE REINSTATEMENT AND
PAYMENT OF BACKWAGES TO THE AFFECTED EMPLOYEES.*
B.
THE PUBLIC RESPONDENT HON. SECRETARY OF LABOR AND
EMPLOYMENT GRAVELY ABUSED HER DISCRETION IN INCLUDING
EXECUTIVE SECRETARIES AS PART OF THE BARGAINING UNIT OF
RANK AND FILE EMPLOYEES.8
Anent the first issue, we are asked to determine whether or not public respondent
Labor Secretary committed grave abuse of discretion and exceeded her jurisdiction in
declaring the subject layoffs instituted by Metrolab illegal on grounds that these
unilateral actions aggravated the conflict between Metrolab and the Union who were,
then, locked in a stalemate in CBA negotiations.
Metrolab argues that the Labor Secretary's order enjoining the parties from
committing any act that might exacerbate the dispute is overly broad, sweeping and
vague and should not be used to curtail the employer's right to manage his business
and ensure its viability.
We cannot give credence to Metrolab's contention.
This Court recognizes the exercise of management prerogatives and often declines to
interfere with the legitimate business decisions of the employer. However, this
privilege is not absolute but subject to limitations imposed by law. 9
In PAL v. NLRC, 10 we issued this reminder:
xxx       xxx       xxx
. . . the exercise of management prerogatives was never considered
boundless. Thus, in Cruz vs.  Medina(177 SCRA 565 [1989]), it was held that
management's prerogatives must be without abuse of discretion. . . .
xxx       xxx       xxx
All this points to the conclusion that the exercise of managerial prerogatives
is not unlimited. It is circumscribed by limitations found in law, a collective
bargaining agreement, or the general principles of fair play and
justice (University of Sto. Tomas v. NLRC, 190 SCRA 758 [1990]) . . . .
(Emphasis ours.)
xxx       xxx       xxx
The case at bench constitutes one of the exceptions. The Secretary of Labor is
expressly given the power under the Labor Code to assume jurisdiction and resolve
labor disputes involving industries indispensable to national interest. The disputed
injunction is subsumed under this special grant of authority. Art. 263 (g) of the Labor
Code specifically provides that:
xxx       xxx       xxx
(g) When, in his opinion, there exists a labor dispute causing or likely to
cause a strike or lockout in an industry indispensable to the national interest,
the Secretary of Labor and Employment may assume jurisdiction over the
dispute and decide it or certify the same to the Commission for compulsory
arbitration. Such assumption or certification shall have the effect of
automatically enjoining the intended or impending strike or lockout as
specified in the assumption or certification order. If one has already taken
place at the time of assumption or certification, all striking or locked out
employees shall immediately return to work and the employer shall
immediately resume operations and readmit all workers under the same
terms and conditions prevailing before the strike or lockout. The Secretary of
Labor and Employment or the Commission may seek the assistance of law
 enforcement agencies to ensure compliance with this provision as well as
with such orders as he may issue to enforce the same. . . . (Emphasis ours.)
xxx       xxx       xxx
That Metrolab's business is of national interest is not disputed. Metrolab is one of the
leading manufacturers and suppliers of medical and pharmaceutical products to the
country.
Metrolab's management prerogatives, therefore, are not being unjustly curtailed but
duly balanced with and tempered by the limitations set by law, taking into account its
special character and the particular circumstances in the case at bench.
As aptly declared by public respondent Secretary of Labor in its assailed resolution:
xxx       xxx       xxx
MII is right to the extent that as a rule, we may not interfere with the
legitimate exercise of management prerogatives such as layoffs. But it may
nevertheless be appropriate to mention here that one of the substantive evils
which Article 263 (g) of the Labor Code seeks to curb is the exacerbation of
a labor dispute to the further detriment of the national interest. When a labor
dispute has in fact occurred and a general injunction has been issued
restraining the commission of disruptive acts, management prerogatives
must always be exercise consistently with the statutory objective. 11
xxx       xxx       xxx
Metrolab insists that the subject layoffs did not exacerbate their dispute with the
Union since no untoward incident occurred after the layoffs were implemented. There
were no work disruptions or stoppages and no mass actions were threatened or
undertaken. Instead, petitioner asserts, the affected employees calmly accepted their
fate "as this was a matter which they had been previously advised would be
inevitable. 12
After a judicious review of the record, we find no compelling reason to overturn the
findings of the Secretary of Labor.
We reaffirm the doctrine that considering their expertise in their respective fields,
factual findings of administrative agencies supported by substantial evidence are
accorded great respect and binds this Court. 13
The Secretary of Labor ruled, thus:
xxx       xxx       xxx
Any act committed during the pendency of the dispute that tends to give rise
to further contentious issues or increase the tensions between the parties
should be considered an act of exacerbation. One must look at the act itself,
not on speculative reactions. A misplaced recourse is not needed to prove
that a dispute has been exacerbated. For instance, the Union could not be
expected to file another notice of strike. For this would depart from its theory
of the case that the layoff is subsumed under the instant dispute, for which a
notice of strike had already been filed. On the other hand, to expect violent
reactions, unruly behavior, and any other chaotic or drastic action from the
Union is to expect it to commit acts disruptive of public order or acts that
may be illegal. Under a regime of laws, legal remedies take the place of
violent ones. 14
xxx       xxx       xxx
Protest against the subject layoffs need not be in the form of violent action or any
other drastic measure. In the instant case the Union registered their dissent by swiftly
filing a motion for a cease and desist order. Contrary to petitioner's allegations the
Union strongly condemned the layoffs and threatened mass action if the Secretary of
Labor fails to timely intervene:
xxx       xxx       xxx
3. This unilateral action of management is a blatant violation of the injunction
of this Office against committing acts which would exacerbate the dispute.
Unless such act is enjoined the Union will be compelled to resort to its legal
right to mass actions and concerted activities to protest and stop the said
management action. This mass layoff is clearly one which would result in a
very serious labor dispute unless this Office swiftly intervenes. 15
xxx       xxx       xxx
Metrolab and the Union were still in the process of resolving their CBA deadlock when
petitioner implemented the subject layoffs. As a result, motions and oppositions were
filed diverting the parties', attention, delaying resolution of the bargaining deadlock
and postponing the signing of their new CBA, thereby aggravating the whole conflict.
We, likewise, find untenable Metrolab's contention that the layoff of the 94 rank-and-
file employees was temporary, despite the recall of some of the laid off workers.
If Metrolab intended the layoff of the 94 workers to be temporary, it should have
plainly stated so in the notices it sent to the affected employees and the Department
of Labor and Employment. Consider the tenor of the pertinent portions of the layoff
notice to the affected employees:
xxx       xxx       xxx
 Dahil sa mga bagay na ito, napilitan ang ating kumpanya na magsagawa ng
"lay-off" ng mga empleyado sa Rank & File dahil nabawasan ang trabaho at
puwesto para sa kanila. Marami sa atin ang kasama sa "lay-off" dahil wala
nang trabaho para sa kanila. Mahirap tanggapin ang mga bagay na ito
subalit kailangan nating gawin dahil hindi kaya ng kumpanya ang magbayad
ng suweldo kung ang empleyado ay walang trabaho. Kung tayo ay patuloy
na magbabayad ng suweldo, mas hihina ang ating kumpanya at mas
marami ang maaaring maapektuhan.
Sa pagpapatupad ng "lay-off" susundin natin ang LAST IN-FIRST OUT
policy. Ang mga empleyadong may pinakamaikling serbisyo sa kumpanya
ang unang maaapektuhan. Ito ay batay na rin sa nakasaad sa ating CBA na
ang mga huling pumasok sa kumpanya ang unang masasama sa "lay-off"
kapag nagkaroon ng ganitong mga kalagayan.
Ang mga empleyado na kasama sa "lay-off" ay nakalista sa sulat na ito. Ang
umpisa ng lay-off ay sa Lunes, Enero 27. Hindi na muna sila papasok sa
kumpanya. Makukuha nila ang suweldo nila sa Enero 30, 1992.
Hindi po natin matitiyak kung gaano katagal ang "lay-off", ngunit ang aming
tingin ay matatagalan bago maakaroon na dagdag na trabaho. Dahil dito,
sinimulan na namin ang isang "Redundancy Program" sa mga
supervisors. Mabawasan ang mga puwesto para sa kanila, kaya sila ay
mawawalan ng trabaho at bibigyan na ng redundancy pay. 16 (Emphasis
ours.)
xxx       xxx       xxx
We agree with the ruling of the Secretary of Labor, thus:
xxx       xxx       xxx
. . . MII insists that the layoff in question is temporary not permanent. It then
cites International Hardware, Inc. vs. NLRC, 176 SCRA 256, in which the
Supreme Court held that the 30-day notice required under Article 283 of the
Labor Code need not be complied with if the employer has no intention to
permanently severe (sic) the employment relationship.
We are not convinced by this argument. International Hardware involves a
case where there had been a reduction of workload. Precisely to avoid
laying off the employees, the employer therein opted to give them work on a
rotating basis. Though on a limited scale, work was available. This was the
Supreme Court's basis for holding that there was no intention to permanently
severe (sic) the employment relationship.
Here, there is no circumstance at all from which we can infer an intention
from MII not to sever the employment relationship permanently. If there was
such an intention, MII could have made it very clear in the notices of layoff.
But as it were, the notices are couched in a language so uncertain that the
only conclusion possible is the permanent termination, not the continuation,
of the employment relationship.
MII also seeks to excuse itself from compliance with the 30-day notice with a
tautology. While insisting that there is really no best time to announce a bad
news, (sic) it also claims that it broke the bad news only on 27 January 1992
because had it complied with the 30-day notice, it could have broken the bad
news on 02 January 1992, the first working day of the year. If there is really
no best time to announce a bad news (sic), it wouldn't have mattered if the
same was announced at the first working day of the year. That way, MII
could have at least complied with the requirement of the law. 17
The second issue raised by petitioner merits our consideration.
In the assailed Omnibus Resolution, Labor Secretary Confesor clarified the CBA
provisions on closed-shop and the scope of the bargaining unit in this wise:
xxx       xxx       xxx
Appropriateness of the bargaining unit.
xxx       xxx       xxx
Exclusions. In our 14 April 1992 resolution, we ruled on the issue of
exclusion as follows:
These aside, we reconsider our denial of the modifications which
the Union proposes to introduce on the close shop provision. While
we note that the provision as presently worded has served the
relationship of the parties well under previous CBA'S, the shift in
constitutional policy toward expanding the right of all workers to
self-organization should now be formally by the parties, subject to
the following exclusions only:
1. Managerial employees; and
2. The executive secretaries of the President, Executive Vice-
President, Vice-President, Vice-President for Sales, Personnel
manager, and Director for Corporate Planning who may have
access to vital labor relations information or who may otherwise act
in a confidential capacity to persons who determine or formulate
management policies.
The provisions of Article I (b) and Attachment I of the 1988-1990
CBA shall thus be modified consistently with the foregoing.
Article I (b) of the 1988-1990 CBA provides:
 b) Close Shop. - All Qualified Employees must join the Association
immediately upon regularization as a condition for continued
employment. This provision shall not apply to: (i) managerial
employees who are excluded from the scope of the bargaining unit;
(ii) the auditors and executive secretaries of senior executive
officers, such as, the President, Executive Vice-President, Vice-
President for Finance, Head of Legal, Vice-President for
Sales, who are excluded from membership in the Association; and
(iii) those employees who are referred to in Attachment I hereof,
subject, however, to the application of the provision of Article II, par.
(b) hereof. Consequently, the above-specified employees are not
required to join the Association as a condition for their continued
employment.
On the other hand, Attachment I provides:
Exclusion from the Scope of the Close Shop Provision.
The following positions in the Bargaining Unit are not covered by
the Close Shop provision of the CBA (Article I, par. b):
1. Executive Secretaries of Vice-Presidents, or equivalent positions.
2. Executive Secretary of the Personnel Manager, or equivalent
Positions.
3. Executive Secretary, of the Director for Corporate Planning, or
equivalent positions.
4. Some personnel in the Personnel Department, EDP Staff at
Head Office, Payroll Staff at Head office, Accounting Department at
Head Office, and Budget Staff, who because of the nature of their
duties and responsibilities need not join the Association as a
condition for their employment.
5. Newly-hired secretaries of Branch Managers and Regional
Managers.
Both MDD and MII read the exclusion of managerial employees and
executive secretaries in our 14 April 1992 resolution as exclusion from the
bargaining unit. They point out that managerial employees are lumped under
one classification with executive secretaries, so that since the former are
excluded from the bargaining unit, so must the latter be likewise excluded.
This reading is obviously contrary to the intent of our 14 April 1992
resolution. By recognizing the expanded scope of the right to self-
organization, our intent was to delimit the types of employees excluded from
the close shop provision, not from the bargaining unit, to executive
secretaries only. Otherwise, the conversion of the exclusionary provision to
one that refers to the bargaining unit from one that merely refers to the close
shop provision would effectively curtail all the organizational rights of
executive secretaries.
The exclusion of managerial employees, in accordance with law, must
therefore still carry the qualifying phrase "from the bargaining unit", in Article
I (b) (i) of the 1988-1990 CBA. In the same manner, the exclusion of
executive secretaries should be read together with the qualifying phrase "are
excluded from membership in the Association" of the same Article and with
the heading of Attachment I. The latter refers to "Exclusions from Scope of
Close Shop Provision" and provides that "[t]he following positions in
Bargaining Unit are not covered by the close shop provision of the CBA."
The issue of exclusion has different dimension in the case of MII. In an
earlier motion for clarification, MII points out that it has done away with the
positions of Executive Vice-President, Vice-President for Sales, and Director
for Corporate Planning. Thus, the foregoing group of exclusions is no longer
appropriate in its present organizational structure. Nevertheless, there
remain MII officer positions for which there may be executive secretaries.
These include the General Manager and members of the Management
Committee, specifically i) the Quality Assurance Manager; ii) the Product
Development Manager; iii) the Finance Director; iv) the Management System
Manager; v) the Human Resources Manager; vi) the Marketing Director; vii)
the Engineering Manager., viii) the Materials Manager; and ix) the
Production Manager.
xxx       xxx       xxx
The basis for the questioned exclusions, it should be noted, is no other than
the previous CBA between MII and the Union. If MII had undergone an
organizational restructuring since then, this is a fact to which we have never
been made privy. In any event, had this been otherwise the result would
have been the same. To repeat, we limited the exclusions to recognize the
expanded scope of the right to self-organization as embodied in the
Constitution. 18
Metrolab, however, maintains that executive secretaries of the General Manager and
the executive secretaries of the Quality Assurance Manager, Product Development
Manager, Finance Director, Management System Manager, Human Resources
Manager, Marketing Director, Engineering Manager, Materials Manager and
Production Manager, who are all members of the company's Management Committee
should not only be exempted from the closed-shop provision but should be excluded
from membership in the bargaining unit of rank and file employees as well on grounds
that their executive secretaries are confidential employees, having access to "vital
labor information." 19
We concur with Metrolab.
Although Article 245 of the Labor Code 20 limits the ineligibility to join, form and assist
any labor organization to managerial employees, jurisprudence has extended this
prohibition to confidential employees or those who by reason of their positions or
nature of work are required to assist or act in a fiduciary manner to managerial
employees and hence, are likewise privy to sensitive and highly confidential records.
The rationale behind the exclusion of confidential employees from the bargaining unit
of the rank and file employees and their disqualification to join any labor organization
was succinctly discussed in Philips Industrial Development v. NLRC: 21
xxx       xxx       xxx
On the main issue raised before Us, it is quite obvious that respondent
NLRC committed grave abuse of discretion in reversing the decision of the
Executive Labor Arbiter and in decreeing that PIDI's "Service Engineers,
Sales Force, division secretaries, all Staff of General Management,
Personnel and Industrial Relations Department, Secretaries of Audit, EDP
and Financial Systems are included within the rank and file bargaining unit."
In the first place, all these employees, with the exception of the service
engineers and the sales force personnel, are confidential employees. Their
classification as such is not seriously disputed by PEO-FFW; the five (5)
previous CBAs between PIDI and PEO-FFW explicitly considered them as
confidential employees. By the very nature of their functions, they assist and
act in a confidential capacity to, or have access to confidential matters of,
persons who exercise managerial functions in the field of labor relations. As
such, the rationale behind the ineligibility of managerial employees to form,
assist or join a labor union equally applies to them.
In Bulletin Publishing Co., Inc. vs. Hon. Augusto Sanchez, this court
elaborated on this rationale, thus:
. . . 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.
In Golden Farms, Inc. vs. Ferrer-Calleja, this Court explicitly made this
rationale applicable to confidential employees:
This rationale holds true also for confidential employees such as
accounting personnel, radio and telegraph operators, who having
access to confidential information, may become the source of
undue advantage. Said employees may act as a spy or spies of
either party to a collective bargaining agreement. This is specially
true in the present case where the petitioning Union is already the
bargaining agent of the rank-and-file employees in the
establishment. To allow the confidential employees to join the
existing Union of the rank-and-file would be in violation of the terms
of the Collective Bargaining Agreement wherein this kind of
employees by the nature of their functions/positions are expressly
excluded.
xxx       xxx       xxx
Similarly, in National Association of Trade Union-Republic Planters Bank
Supervisors Chapter v. Torres 22 we declared:
xxx       xxx       xxx
. . . As regards the other claim of respondent Bank that Branch
Managers/OICs, Cashiers and Controllers are confidential
employees, having control, custody and/or access to confidential
matters, e.g., the branch's cash position, statements of financial
condition, vault combination, cash codes for telegraphic transfers,
demand drafts and other negotiable instruments, pursuant to Sec.
1166.4 of the Central Bank Manual regarding joint custody, this
claim is not even disputed by petitioner. A confidential employee is
one entrusted with confidence on delicate matters, or with the
custody, handling, or care and protection of the employer's
property. While Art. 245 of the Labor Code singles out managerial
employees as ineligible to join, assist or form any labor
organization, under the doctrine of necessary implication,
confidential employees are similarly disqualified. . . .
xxx       xxx       xxx
. . . (I)n the collective bargaining process, managerial employees
are supposed to be on the side of the employer, to act as its
representatives, and to see to it that its interest are well protected.
The employer is not assured of such protection if these employees
themselves are union members. Collective bargaining in such a
situation can become one-sided. It is the same reason that impelled
this Court to consider the position of confidential employees as
included in the disqualification found in Art. 245 as if the
disqualification of confidential employees were written in the
provision. If confidential employees could unionize in order to
bargain for advantages for themselves, then they could be
governed by their own motives rather than the interest of the
employers. Moreover, unionization of confidential employees for the
purpose of collective bargaining would mean the extension of the
law to persons or individuals who are supposed to act "in the
interest of the employers. It is not farfetched that in the course of
collective bargaining, they might jeopardize that interest which they
are duty-bound to protect. . . .
 xxx       xxx       xxx
And in the latest case of Pier 8 Arrastre & Stevedoring Services, Inc. vs. Roldan-
Confesor, 23 we ruled that:
xxx       xxx       xxx
Upon the other hand, legal secretaries are neither managers nor
supervisors. Their work is basically routinary and clerical. However, they
should be, differentiated from rank-and-file employees because they are
tasked with, among others, the typing of legal documents, memoranda and
correspondence, the keeping of records and files, the giving of and receiving
notices, and such other duties as required by the legal personnel of the
corporation. Legal secretaries therefore fall under the category
of confidential employees. . . .
xxx       xxx       xxx
We thus hold that public respondent acted with grave abuse of discretion in
not excluding the four foremen and legal secretary from the bargaining unit
composed of rank-and-file employees.
xxx       xxx       xxx
In the case at bench, the Union does not disagree with petitioner that the executive
secretaries are confidential employees. It however, makes the following contentions:
xxx       xxx       xxx
There would be no danger of company domination of the Union since the
confidential employees would not be members of and would not participate
in the decision making processes of the Union.
Neither would there be a danger of espionage since the confidential
employees would not have any conflict of interest, not being members of the
Union. In any case, there is always the danger that any employee would leak
management secrets to the Union out of sympathy for his fellow rank and
filer even if he were not a member of the union nor the bargaining unit.
Confidential employees are rank and file employees and they, like all the
other rank and file employees, should be granted the benefits of the
Collective Bargaining Agreement. There is no valid basis for discriminating
against them. The mandate of the Constitution and the Labor Code, primarily
of protection to Labor, compels such conclusion. 24
xxx       xxx       xxx
The Union's assurances fail to convince. The dangers sought to be prevented,
particularly the threat of conflict of, interest and espionage, are not eliminated by non-
membership of Metrolab's executive secretaries or confidential employees in the
Union. Forming part of the bargaining unit, the executive secretaries stand to benefit
from any agreement executed between the Union and Metrolab. Such a scenario,
thus, gives rise to a potential conflict between personal interests and their duty as
confidential employees to act for and in behalf of Metrolab. They do not have to be
union members to affect or influence either side.
Finally, confidential employees cannot be classified as rank and file. As previously
discussed, the nature of employment of confidential employees is quite distinct from
the rank and file, thus, warranting a separate category. Excluding confidential
employees from the rank and file bargaining unit, therefore, is not tantamount to
discrimination.
WHEREFORE, premises considered, the petition is partially GRANTED. The
resolutions of public respondent Secretary of Labor dated 14 April 1992 and 25
January 1993 are hereby MODIFIED to the extent that executive secretaries of
petitioner Metrolab's General Manager and the executive secretaries of the members
of its Management Committee are excluded from the bargaining unit of petitioner's
rank and file employees.
SO ORDERED.
Padilla, Bellosillo, Vitug and Hermosisima, Jr., JJ., concur.
G.R. No. 84433 June 2, 1992
ALEXANDER REYES, ALBERTO M. NERA, EDGARDO M. GECA, and 138
others, petitioners, 
vs.
CRESENCIANO B. TRAJANO, as Officer-in-Charge, Bureau of Labor Relations,
Med. Arbiter PATERNO ADAP, and TRI-UNION EMPLOYEES UNION, et
al., respondent.
NARVASA, C.J.:
The officer-in-charge of the Bureau of Labor Relations (Hon. Cresenciano Trajano)
sustained the denial by the Med Arbiter of the right to vote of one hundred forty-one
(141) members of the "Iglesia ni Kristo" (INK), all employed in the same company, at
a certification election at which two (2) labor organizations were contesting the right to
be the exclusive representative of the employees in the bargaining unit. That denial is
assailed as having been done with grave abuse of discretion in the special civil action
of certiorari at bar, commenced by the INK members adversely affected thereby.
The certification election was authorized to be conducted by the Bureau of Labor
Relations among the employees of Tri-Union Industries Corporation on October 20,
1987. The competing unions were Tri-Union Employees Union-Organized Labor
Association in Line Industries and Agriculture (TUEU-OLALIA), and Trade Union of
the Philippines and Allied Services (TUPAS). Of the 348 workers initially deemed to
be qualified voters, only 240 actually took part in the election, conducted under the
provision of the Bureau of Labor Relations. Among the 240 employees who cast their
votes were 141 members of the INK.
The ballots provided for three (3) choices. They provided for votes to be cast, of
course, for either of the two (2) contending labor organizations, (a) TUPAS and (b)
TUEU-OLALIA; and, conformably with established rule and practice, 1 for (c) a third
choice: "NO UNION."
The final tally of the votes showed the following results:
TUPAS 1
TUEU-OLALIA 95
NO UNION 1
SPOILED 1
CHALLENGED 141
The challenged votes were those cast by the 141 INK members. They were
segregated and excluded from the final count in virtue of an agreement
between the competing unions, reached at the pre-election conference, that
the INK members should not be allowed to vote "because they are not
members of any union and refused to participate in the previous certification
elections."
The INK employees promptly made known their protest to the exclusion of their votes.
They filed f a petition to cancel the election alleging that it "was not fair" and the result
thereof did "not reflect the true sentiments of the majority of the employees." TUEU-
OLALIA opposed the petition. It contended that the petitioners "do not have legal
personality to protest the results of the election," because "they are not members of
either contending unit, but . . . of the INK" which prohibits its followers, on religious
grounds, from joining or forming any labor organization . . . ."
The Med-Arbiter saw no merit in the INK employees 1 petition. By Order dated
December 21, 1987, he certified the TUEU-OLALIA as the sole and exclusive
bargaining agent of the rank-and-file employees. In that Order he decided the fact
that "religious belief was (being) utilized to render meaningless the rights of the non-
members of the Iglesia ni Kristo to exercise the rights to be represented by a labor
organization as the bargaining agent," and declared the petitioners as "not possessed
of any legal personality to institute this present cause of action" since they were not
parties to the petition for certification election.
The petitioners brought the matter up on appeal to the Bureau of Labor Relations.
There they argued that the Med-Arbiter had "practically disenfranchised petitioners
who had an overwhelming majority," and "the TUEU-OLALIA certified union cannot
be legally said to have been the result of a valid election where at least fifty-one
percent of all eligible voters in the appropriate bargaining unit shall have cast their
votes." Assistant Labor Secretary Cresenciano B. Trajano, then Officer-in-Charge of
the Bureau of Labor Relations, denied the appeal in his Decision of July 22, 1988. He
opined that the petitioners are "bereft of legal personality to protest their alleged
disenfrachisement" since they "are not constituted into a duly organized labor union,
hence, not one of the unions which vied for certification as sole and exclusive
bargaining representative." He also pointed out that the petitioners "did not participate
in previous certification elections in the company for the reason that their religious
beliefs do not allow them to form, join or assist labor organizations."
It is this Decision of July 22, 1988 that the petitioners would have this Court annul and
set aside in the present special civil action of certiorari.
The Solicitor General having expressed concurrence with the position taken by the
petitioners, public respondent NLRC was consequently required to file, and did
thereafter file, its own comment on the petition. In that comment it insists that "if the
workers who are members of the Iglesia ni Kristo in the exercise of their religious
belief opted not to join any labor organization as a consequence of which they
themselves can not have a bargaining representative, then the right to be
representative by a bargaining agent should not be denied to other members of the
bargaining unit."
Guaranteed to all employees or workers is the "right to self-organization and to form,
join, or assist labor organizations of their own choosing for purposes of collective
bargaining." This is made plain by no less than three provisions of the Labor Code of
the Philippines. 2 Article 243 of the Code provides as follows: 3
ART. 243. Coverage and employees right to self-organization. —
All persons employed in commercial, industrial and agricultural
enterprises and in religious, charitable, medical, or educational
institutions whether operating for profit or not, shall have the right to
self-organization and to form, join, or assist labor organizations of
their own choosing for purposes or collective bargaining. Ambulant,
intermittent and itinerant workers, self-employed people, rural
workers and those without any definite employers may form labor
organizations for their mutual aid and protection.
Article 248 (a) declares it to be an unfair labor practice for an employer, among
others, to "interfere with, restrain or coerce employees in the exercise of their right to
self-organization." Similarly, Article 249 (a) makes it an unfair labor practice for a
labor organization to "restrain or coerce employees in the exercise of their rights to
self-organization . . . "
The same legal proposition is set out in the Omnibus Rules Implementing the Labor
Code, as amended, as might be expected Section 1, Rule II (Registration of Unions),
Book V (Labor Relations) of the Omnibus Rules provides as follows; 4
Sec. 1. Who may join unions; exception. — All persons employed in
commercial, industrial and agricultural enterprises, including
employees of government corporations established under the
Corporation Code as well as employees of religious, medical or
educational institutions, whether operating for profit or not, except
managerial employees, shall have the right to self-organization and
to form, join or assist labor organizations for purposes of collective
bargaining. Ambulant, intermittent and without any definite
employers people, rural workers and those without any definite
employers may form labor organizations for their mutual aid and
protection.
x x x           x x x          x x x
The right of self-organization includes the right to organize or affiliate with a labor
union or determine which of two or more unions in an establishment to join, and to
engage in concerted activities with co-workers for purposes of collective bargaining
through representatives of their own choosing, or for their mutual aid and
protection, i.e., the protection, promotion, or enhancement of their rights and
interests. 5
Logically, the right NOT  to join, affiliate with, or assist any union, and to disaffiliate or
resign from a labor organization, is subsumed in the right to join, affiliate with, or
assist any union, and to maintain membership therein. The right to form or join a labor
organization necessarily includes the right to refuse or refrain from exercising said
right. It is self-evident that just as no one should be denied the exercise of a right
granted by law, so also, no one should be compelled to exercise such a conferred
right. The fact that a person has opted to acquire membership in a labor union does
not preclude his subsequently opting to renounce such membership. 6
As early as 1974 this Court had occasion to expatiate on these self-evident
propositions in Victoriano v. Elizalde Rope Workers' Union, et al., 7 viz.:
. . .What the Constitution and Industrial Peace Act recognize and
guarantee is the "right" to form or join associations. Notwithstanding
the different theories propounded by the different schools of
jurisprudence regarding the nature and contents of a "right," it can
be safely said that whatever theory one subscribes to, a right
comprehends at least two broad notions, namely: first, liberty or
freedom, i.e., the absence of legal restraint, whereby an employee
may act for himself being prevented by law; second, power,
whereby an employee may, as he pleases, join or refrain from
joining an association. It is therefore the employee who should
decide for himself whether he should join or not an association; and
should he choose to join; and even after he has joined, he still
retains the liberty and the power to leave and cancel his
membership with said organization at any time (Pagkakaisa
Samahang Manggagawa ng San Miguel Brewery vs. Enriquez, et
al., 108 Phil. 1010, 1019). It is clear, therefore, that the right to join
a union includes the right to abstain from joining any union (Abo, et
al. vs. PHILAME [KG] Employees Union, et al., L-19912, January
20, 1965, 13 SCRA 120, 123, quoting Rothenberg, Labor
Relations). Inasmuch as what both the Constitution and the
Industrial Peace Act have recognized, the guaranteed to the
employee, is the "right" to join associations of his choice, it would
be absurd to say that the law also imposes, in the same breath,
upon the employee the duty to join associations. The law does not
enjoin an employee to sign up with any association.
The right to refuse to join or be represented by any labor organization is recognized
not only by law but also in the rules drawn up for implementation thereof. The original
Rules on Certification promulgated by the defunct Court of Industrial Relations
required that the ballots to be used at a certification election to determine which of
two or more competing labor unions would represent the employees in the
appropriate bargaining unit should contain, aside from the names of each union, an
alternative choice of the employee voting, to the effect that he desires not to which of
two or more competing labor unions would represent the employees in the
appropriate bargaining unit should contain, aside from the names of each union, an
alternative choice of the employee voting, to the effect that he desires not to be
represented by any union. 8 And where only one union was involved, the ballots were
required to state the question — "Do you desire to be represented by said union?" —
as regards which the employees voting would mark an appropriate square, one
indicating the answer, "Yes" the other, "No."
To be sure, the present implementing rules no longer explicitly impose the
requirement that the ballots at a certification election include a choice for "NO
UNION" Section 8 (rule VI, Book V of the Omnibus Rules) entitled "Marketing and
canvassing of votes," pertinently provides that:
. . . (a) The voter must write a cross (X) or a check (/) in the square
opposite the union of his choice. If only one union is involved, the
voter shall make his cross or check in the square indicating "YES"
or "NO."
x x x           x x x          x x x
Withal, neither the quoted provision nor any other in the Omnibus Implementing Rules
expressly bars the inclusion of the choice of "NO UNION" in the ballots. Indeed it is
doubtful if the employee's alternative right NOT  to form, join or assist any labor
organization or withdraw or resign from one may be validly eliminated and he be
consequently coerced to vote for one or another of the competing unions and be
represented by one of them. Besides, the statement in the quoted provision that "(i)f
only one union is involved, the voter shall make his cross or check in the square
indicating "YES" or "NO," is quite clear acknowledgment of the alternative possibility
that the "NO" votes may outnumber the "YES" votes — indicating that the majority of
the employees in the company do not wish to be represented by any union — in
which case, no union can represent the employees in collective bargaining. And
whether the prevailing "NO" votes are inspired by considerations of religious belief or
discipline or not is beside the point, and may not be inquired into at all.
The purpose of a certification election is precisely the ascertainment of the wishes of
the majority of the employees in the appropriate bargaining unit: to be or not to be
represented by a labor organization, and in the affirmative case, by which particular
labor organization. If the results of the election should disclose that the majority of the
workers do not wish to be represented by any union, then their wishes must be
respected, and no union may properly be certified as the exclusive representative of
the workers in the bargaining unit in dealing with the employer regarding wages,
hours and other terms and conditions of employment. The minority employees — who
wish to have a union represent them in collective bargaining — can do nothing but
wait for another suitable occasion to petition for a certification election and hope that
the results will be different. They may not and should not be permitted, however, to
impose their will on the majority — who do not desire to have a union certified as the
exclusive workers' benefit in the bargaining unit — upon the plea that they, the
minority workers, are being denied the right of self-organization and collective
bargaining. As repeatedly stated, the right of self-organization embraces not only the
right to form, join or assist labor organizations, but the concomitant, converse
right NOT  to form, join or assist any labor union.
That the INK employees, as employees in the same bargaining unit in the true sense
of the term, do have the right of self-organization, is also in truth beyond question, as
well as the fact that when they voted that the employees in their bargaining unit
should be represented by "NO UNION," they were simply exercising that right of self-
organization, albeit in its negative aspect.
The respondents' argument that the petitioners are disqualified to vote because they
"are not constituted into a duly organized labor union" — "but members of the INK
which prohibits its followers, on religious grounds, from joining or forming any labor
organization" — and "hence, not one of the unions which vied for certification as sole
and exclusive bargaining representative," is specious. Neither law, administrative rule
nor jurisprudence requires that only employees affiliated with any labor organization
may take part in a certification election. On the contrary, the plainly discernible
intendment of the law is to grant the right to vote to all bona fide employees in the
bargaining unit, whether they are members of a labor organization or not. As held
in Airtime Specialists, Inc. v. Ferrer-Calleja: 9
In a certification election all rank-and-file employees in the
appropriate bargaining unit are entitled to vote. This principle is
clearly stated in Art. 255 of the Labor Code which states that the
"labor organization designated or selected by the majority of the
employees in an appropriate bargaining unit shall be the exclusive
representative of the employees in such unit for the purpose of
collective bargaining." Collective bargaining covers all aspects of
the employment relation and the resultant CBA negotiated by the
certified union binds all employees in the bargaining unit. Hence, all
rank-and-file employees, probationary or permanent, have a
substantial interest in the selection of the bargaining representative.
The Code makes no distinction as to their employment for
certification election. The law refers to "all" the employees in the
bargaining unit. All they need to be eligible to support the petition is
to belong to the "bargaining unit".
Neither does the contention that petitioners should be denied the right to vote
because they "did not participate in previous certification elections in the company for
the reason that their religious beliefs do not allow them to form, join or assist labor
organizations," persuade acceptance. No law, administrative rule or precedent
prescribes forfeiture of the right to vote by reason of neglect to exercise the right in
past certification elections. In denying the petitioners' right to vote upon these
egregiously fallacious grounds, the public respondents exercised their discretion
whimsically, capriciously and oppressively and gravely abused the same.
WHEREFORE, the petition for certiorari is GRANTED; the Decision of the then
Officer-in-Charge of the Bureau of Labor Relations dated December 21, 1987
(affirming the Order of the Med-Arbiter dated July 22, 1988) is ANNULLED and SET
ASIDE; and the petitioners are DECLARED to have legally exercised their right to
vote, and their ballots should be canvassed and, if validly and properly made out,
counted and tallied for the choices written therein. Costs against private respondents.
SO ORDERED.
Paras, Padilla and Regalado, JJ., concur.
Nocon, J., is on leave.
G.R. No. 74262 October 29, 1987
GENERAL RUBBER and FOOTWEAR CORPORATION, petitioner, 
vs.
BUREAU OF LABOR RELATIONS, NATIONAL ASSOCIATION OF TRADE UNION
OF MONTHLY PAID EMPLOYEES-NATU, respondents.
PARAS, J.:
Petitioner is a corporation engaged in the business of manufacturing rubber sandals
and oilier rubber products. In 1985, the Samahang Manggagawa sa General Rubber
Corporation — ANGLO was formed by the daily paid — rank and file employees as
their union for collective bargaining, after the expiration on October 15, 1985 of the
collective bargaining agreement previously executed by petitioner with General
Rubber Workers Union (Independent) on October 15, 1982. Be it noted however that
on July 17, 1985, the monthly — paid employees of the petitioner-corporation, after
forming their own collective bargaining unit the National Association of Trade Unions
of Monthly Paid Employees-NATU, filed a petition for direct certification with tile
Bureau of Labor Relations which petition was opposed by herein petitioner. On
September 2, 1985, the Med-Arbiter issued an Order for the holding of a certification
election after finding that a certification election is in order in this case and observing
that it is the fairest remedy to determine whether employees of petitioner desire to
have a union or not. On appeal, the Bureau of Labor Relations denied both the
appeal and motion for reconsideration interposed by petitioner and affirmed the ruling
of the Med-Arbiter. Hence, the present petition, imputing serious error's of law and
grave abuse of discretion on the part of the Bureau of Labor Relations in issuing the
assailed order which sanctioned the creation of two (2) bargaining units within
petitioner-corporation with the following:
GROUNDS FOR REVIEW
I
The Bureau of Labor Relations committed serious error of law and
grave abuse of discretion in ordering the creation of a new
bargaining unit at petitioner, notwithstanding that there is already
an existing bargaining unit, whose members are represented for
collective bargaining purposes by Samahang Manggagawa sa
General Rubber Corporation- ANGLO.
II
The Bureau of Labor Relations committed serious error of law in
holding that managerial employees or those employees exercising
managerial functions can legally form and join a labor organization
and be members of the new bargaining unit.
III
The Bureau of Labor Relations committed grave abuse of discretion
in holding that supervisors, employees perform- ing managerial,
confidential and technical functions and office personnel, who are
negotiated by petitioner to be excluded from the existing bargaining
unit because they are performing vital functions to management,
can form and join a labor organization and be members of the new
bargaining unit.
Expounding on its position, petitioner argues that:
1. The order violates the thrust of the Labor Code insofar as formation of a bargaining
unit is concerned. A policy is in favor of a larger unit and not the creation of smaller
units in one establishment which might lead to formation, thus impractical.
2. Article 246 of the Labor Code explicitly provides that managerial employees are
ineligible to join or form any labor organization. Since it has been shown by the
petitioners that 30% of the monthly-paid employees are managers or employees
exercising managerial functions, it was grave error for the Bureau of Labor Relations
to allow these monthly paid employees to form a union and/or a bargaining unit.
3. The Bureau of Labor Relations overlooked the fact that these monthly-paid-
employees are excluded from the first existing bargaining unit of the daily-paid rank
and file employees because in the year 1963, when the employees of petitioner
initially started to exercise their right to self-organization, herein petitioner bargained
for the exclusion of the monthly-paid employees from the existing bargaining unit
because they are performing vital functions of management. In view of this exclusion,
petitioner took upon itself to take care of them and directly gave them the benefits or
privileges without having to bargain for them or without the aid of the bargaining arm
or force of a union.
Petitioner's contentions are devoid of merit.
Among other issues answered in the assailed order are the following findings of fact:
Regarding the second issue, we deem it necessary to examine the
respective functions of the employees. It appears therefrom that
they perform supervisory functions. Verily they make
recommendation petitions as to what Managerial actions to take in
disciplinary cases. However, that fact alone does not make them
managerial employees already, It is more a question of how
effective are those recommendations which aspect has not been
clearly established in this case. As defined in the Labor Code, a
"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." Thus, employees who do not fall within this definition are
considered rank-and-file employees.
Lastly, we find that the third issue has been raised for the first time
on appeal. 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. It is undisputed that the
monthlies who are rank-and-file have been historically excluded
from the bargaining unit composed of daily-paid rank-and-filers that
is, since 1963 when the existing rank- and- file union was
recognized. In fact, the collective bargaining agreement (CBA)
which expired last 15 October 1985 provides as follows:
ARTICLE I
SCOPE
 Section 1. Appropriate bargaining unit. — This more importantly, to fulfill the policy of the New Labor Code as well as to be
Agreement covers all regular employees and consistent with Our ruling in the Bulletin case, supra, the monthly-paid rank-and-file
workers employed by the company at its factory employees should be allowed to join the union of the daily-paid-rank-and-file
in Malabon, Metro Manila. The words employees of petitioner so that they can also avail of the CBA benefits or to form their
"employee," "laborer" and "workers" when used own rank-and-file union, without prejudice to the certification election that has been
in this Agreement shall be deemed to refer to ordered.
those employees within the bargaining unit.
Employees who occupy managerial, confidential WHEREFORE, premises considered, the petition is hereby DISMISSED for lack of
or technical positions, supervisors, contract merit.
employees, monthly-paid employees, security as
wen as office personnel are excluded from the
appropriate bargaining unit (emphasis supplied). [G.R. No. 81883. September 23, 1992.]

In view of the above, the monthly-paid rank-and-file employees ran KNITJOY MANUFACTURING, INC., Petitioner, v. PURA FERRER-CALLEJA,
form a union of their own, separate and distinct from the existing Director of Bureau of Labor Relations, and KNITJOY MONTHLY EMPLOYEES
rank-and-file union composed of daily-paid workers. (Rollo, pp. UNION, Respondents.
1920)
[G.R. No. 82111. September 23, 1992.]
Thus, it can be readily seen from the above findings of the Bureau of labor Relations CONFEDERATION OF FILIPINO WORKERS (CFW), Petitioner, v. DIRECTOR
that the members of private respondent are not managerial employees as claimed by PURA FERRER-CALLEJA and KNITJOY MONTHLY EMPLOYEES UNION
petitioners but merely considered as rank-and-file employees who have every right to (KMEU), Respondents.
self-organization or to be heard through a duly certified collective bargaining union.
The Supervisory power of the members of private respondent union consists merely V.E. Del Rosario & Associates for petitioner in G.R. No. 81883.
in recommending as to what managerial actions to take in disciplinary cases. These
members of private respondent union do not fit the definition of managerial Rogelio R. Udarbe for petitioner in G.R. No. 82111.
employees which We laid down in the case of Bulletin Publishing Corporation v.
Sanchez (144 SCRA 628). These members of private respondent union are therefore Banzuela, Flores, Miralles, Raneses, Sy, Taquio and Associates for Private
not prohibited from forming their own collective bargaining unit since it has not been Respondent.
shown by petitioner that "the responsibilities (of these monthly-paid-employees)
inherently require the exercise of discretion and independent judgment as
supervisors" or that "they possess the power and authority to lay down or exercise
management policies." Similarly, he held in the same case that "Members of SYLLABUS
supervisory unions who do not fall within the definition of managerial employees shall
become eligible to loin 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. 1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; LABOR RELATIONS; ONE
COMPANY-ONE UNION POLICY; EXCEPTION. — The suggested bias of the Labor
Code in favor of the one company-one union policy, anchored on the greater mutual
Perhaps it is unusual for the petitioner to have to deal with two (2) collective
benefits which the parties could derive, especially in the case of employees whose
bargaining unions but there is no one to blame except petitioner itself for creating the
bargaining strength could undeniably be enhanced by their unity and solidarity but
situation it is in. From the beginning of the existence in 1963 of a bargaining limit for
diminished by their disunity, division and dissension, is not without exceptions. The
the employees up to the present, petitioner had sought to indiscriminately suppress
present Article 245 of the Labor Code expressly allows supervisory employees who
the members of the private respondent"s right to self-organization provided for by law.
are not performing managerial functions to join, assist or form their separate union but
Petitioner, in justification of its action, maintained that the exclusion of the members of
bars them from membership in a labor organization of the rank-and-file employees.
the private respondent from the bargaining union of the rank-and-file or from forming
Even Section 2(c), Rule V, Book V of the Implementing Rules and Regulations of the
their own union was agreed upon by petitioner corporation with the previous
Labor Code, which seeks to implement the policy, also recognizes exceptions. The
bargaining representatives namely: the General "Rubber Workers Union PTGWO the
usual exception, of course, is where the employer unit has to give way to the other
General Workers Union — NAFLU and the General Rubber Workers Union
units like the craft unit, plant unit, or a subdivision thereof, the recognition of these
(independent). Such posture has no leg to stand on. It has not been shown that
exceptions takes into account the policy to assure employees of the fullest freedom in
private respondent was privy to this agreement. And even if it were so, it can never
exercising their rights. Otherwise stated, the one company-one union policy must
bind subsequent federations and unions particularly private respondent-union
yield to the right of the employees to form unions or associations for purposes not
because it is a curtailment of the right to self-organization guaranteed by the labor
contrary to law, to self-organization and to enter into collective bargaining
laws. However, to prevent any difficulty. and to avoid confusion to all concerned and,
negotiations, among others, which the Constitution guarantees.
2. CONSTITUTIONAL LAW; BILL OF RIGHTS; RIGHT TO FROM UNION OR
ASSOCIATIONS; SCOPE. — The right to form a union or association or to self-
organization comprehends two (2) broad notions, to wit: (a) the liberty or freedom,
i.e., the absence of restraint which guarantees that the employee may act for himself
without being prevented by law, and (b) the power, by virtue of which an employee
may, as he pleases, join or refrain from joining an association. (Victoriano v. Elizalde
Rope Workers’ Union, 59 SCRA 54).
3. LABOR AND SOCIAL LEGISLATION; LABOR CODE; LABOR RELATIONS; ONE
COMPANY-ONE UNION POLICY; NOT APPLICABLE WHERE EXISTING UNION
COVERED ONLY ONE CLASS OF EMPLOYEES; CASE AT BAR. — in the
bargaining history of KNITJOY, the CBA has been consistently limited to the regular
rank-and-file employees paid on a daily or piece-rate basis. On the other hand, the
rank-and-file employees paid on a monthly basis were never included within its
scope. Respondent KMEU’s membership is limited to the latter class of employees,
KMEU does not seek to dislodge CFW as the exclusive bargaining representative for
the former. The records further disclose that in the certification solicited by TUPAS
and during the elections which followed thereafter, resulting in the certification of
CFW as the exclusive bargaining representative, the monthly-paid employees were
expressly excluded. Thus, the negotiations between CFW and KNITJOY following
such a certification could only logically refer to the rank-and-file employees paid on a
daily or piece-rate basis. Clearly therefore, KNITJOY and CFW recognize that insofar
as the monthly-paid employees are concerned, the latter’s constituting a separate
bargaining unit with the appropriate union as sole bargaining representative, can
neither be prevented nor avoided without infringing on these employees’ rights to
form a union and to enter into collective bargaining negotiations. Stated differently,
KNITJOY and CFW recognize the fact that the existing bargaining unit in the former is
not — and has never been — the employer unit. Given this historical and factual
setting, KMEU had the unquestioned and undisputed right to seek certification as the
exclusive bargaining representative for the monthly-paid rank-and-file employees;
both KNITJOY and CFW cannot block the same on the basis of this Court’s
declaration in Bulletin Publishing Corp. v. Hon. Sanchez 15 and General Rubber and
Footwear Corp. v. Bureau of Labor Relations (155 SCRA 283 [1987]) regarding the
one-company-one union concept.
4. ID.; ID.; ID.; CERTIFICATION ELECTION; RESULTS THEREOF CONFINED
ONLY TO THE GROUP IT REPRESENTS; CBA ENTERED DOES NOT BAR
HOLDING OF ANOTHER CERTIFICATION ELECTION FOR THE OTHER GROUP;
CASE AT BAR. — Considering that (a) the TUPAS solicited certification election was
strictly confined to the rank-and-file employees who are paid on a daily or piece-rate
basis, (b) the results of the election must also necessarily confine the certified union’s
representation to the group it represents and (c) the issue of the plight of the monthly-
paid employees was still pending, KNITJOY and CFW clearly acted with palpable bad
faith and malice in including within the scope of the new CBA these monthly-paid
employees. Thus was effected a conspiracy to defeat and suppress the right of the
KMEU and its members to bargain collectively and negotiate for themselves, to
impose upon the latter a contract the negotiation for which they were not even given
notice of, consulted or allowed to participate in, and to oust from the BLR the pending
appeal on the certification issue. In the latter case, KNITJOY and CFW are guilty of
contumacious conduct. It goes without saying then that the new CBA cannot validly
include in its scope or coverage the monthly-paid rank-and-file employees of
KNITJOY. It does not bar the holding of a certification election to determine their sole
bargaining agent, and the negotiation for and the execution of a subsequent CBA
between KNITJOY and the eventual winner in said election (Section 4, Rule V, Book
V of the Rules Implementing the Labor Code).
DECISION
DAVIDE, JR., J.:
These petitions have a common origin and raise identical issues. They were ordered
consolidated on 23 November 1988.
In G.R. No. 81883, the 1 December 1987 Decision of respondent Director of the
Bureau of Labor Relations in BLR Case No. A-10-315-87, which reversed the Order
of Med-Arbiter-Designate Rolando S. dela Cruz dated 4 September 1987 and ordered
the holding of a certification election among the regular rank-and-file monthly-paid
employees of Knitjoy Manufacturing, Inc. (KNITJOY), is assailed by the latter.
The Med-Arbiter’s order dismissed the petition of private respondent Knitjoy Monthly
Employees Union (KMEU) for such certification election and directed the parties "to
work out (sic) towards the formation of a single union in the company."cralaw
virtua1aw library
The antecedent material operative facts in these petitions are as follows:chanrob1es
virtual 1aw library
Petitioner KNITJOY had a collective bargaining agreement (CBA) with the Federation
of Filipino Workers (FFW). The bargaining unit covered only the regular rank-and-file
employees of KNITJOY paid on a daily or piece-rate basis. It did not include regular
rank-and-file office and production employees paid on a monthly basis. The CBA
expired on 15 June 1987. Prior to its expiration, the FFW was split into two (2)
factions — the Johnny Tan and the Aranzamendez factions. The latter eventually
became the Confederation of Filipino Workers (CFW), herein petitioner in G.R. No.
82111.
Also prior to the expiration of the CBA, the Trade Union of the Philippines and Allied
Services (TUPAS) filed a petition for the holding of a certification election among
KNITJOY’s regular rank-and-file employees paid on a daily and piece-rate basis.
Excluded were the regular rank-and-file employees paid on a monthly basis. In the
certification election conducted on 10 June 1987, CFW emerged as the winner;
thereafter, negotiations for a new CBA between CFW and KNITJOY
commenced.chanroblesvirtualawlibrary
On 24 June 1987, during the pendency of the said negotiations, private respondent
KMEU filed a petition for certification election among KNITJOY’s regular rank-and-file
monthly-paid employees with Regional Office No. IV of the Department of Labor and
Employment (DOLE) which docketed the same as R-04-OD-M-6-75-87. The Knitjoy
Monthly Employees Association and Confederation of Citizens Labor Union (KMEA-
CCLU), another union existing in the said company, and petitioner CFW intervened KNITJOY and CFW separately moved to reconsider the said decision alleging, as
therein. principal underpinning therefor, the conclusion and signing between them, allegedly
on 27 November 1987 — before the rendition of the challenged decision — of a CBA
The petition was dismissed in the Order of 4 September 1987 of Med-Arbiter Rolando which includes in its coverage the monthly-paid rank-and-file employees. It is averred
S. de la Cruz, the dispositive portion of which reads:jgc:chanrobles.com.ph that said CBA has rendered the case moot and academic; moreover, to remove the
monthly-paid employees from their present bargaining unit would lead to the
"WHEREFORE, premises considered, the petition is hereby Dismissed, but the fragmentation thereof, contrary to existing labor policies favoring larger
parties are instructed to work out (sic) towards the formation of a single union in the units.chanrobles virtual lawlibrary
company." 1 
In her Decision of 8 February 1988, respondent Director denied for lack of merit the
KMEU filed a motion to reconsider this order, which was treated as an appeal by the motion for reconsideration on the principal ground that although the monthly-paid
Bureau of Labor Relations (BLR). rank-and-file employees were allegedly included within the scope of the new CBA,
they are not barred from forming a separate bargaining unit considering that: (a) since
On 1 December 1987, public respondent Pura Ferrer-Calleja. Director of the BLR, the petition for certification election was filed as early as 24 June 1987, there already
handed down a Decision 2 reversing the order of Med-Arbiter de la Cruz. The existed a pending. representation issue when KNITJOY and CFW commenced
dispositive portion of the Decision reads:jgc:chanrobles.com.ph negotiations for a new CBA; nevertheless, KMEU was not brought into the said
negotiations and was therefore not a privy to the CBA; (b) members of KMEU did not
"WHEREFORE, premises considered, the Appeal of Knitjoy Monthly Employees is participate in the ratification of the CBA; contrary to KNITJOY s claim that the same
hereby granted subject to the exclusion of the monthly paid employees who are was unanimously ratified by the members of the bargaining unit, the CBA failed to
deemed managerial. mention even one monthly-paid employee who participated in the ratification process,
and (c) while it is true that the policy of the DOLE is to favor a one company-one
Let, therefore, the certification election proceed without delay, with the following as union scenario which finds basis in Section 2, Rule V, Book V of the Rules
choices:chanrob1es virtual 1aw library Implementing the Labor Code, there are, nonetheless, some exceptions thereto, as
where the bargaining history requires the formation of another bargaining unit.
1. Knitjoy Monthly Employees Union (KMEU); and Besides, such a policy must yield to an employee’s Constitutional right to form unions
which includes the freedom to join a union of one’s choice. 4 
2. No Union.
The new CBA, which KMEU claims to have been signed on 12 December 1987, and
The company’s latest payroll shall be the basis in determining the list of eligible not on 27 November 1987 as both KNITJOY and CFW boldly assert, defines the
voters. bargaining unit covered as follows:jgc:chanrobles.com.ph

SO ORDERED."cralaw virtua1aw library
Respondent Director brushed aside KNITJOY’s arguments that the monthly-paid
employees have the same working incentives as their counterparts, the daily-paid
workers; that the existing collective bargaining agent (CFW) is willing to include the
monthly-paid employees, and that out of the 212 monthly-paid employees, 116 qualify
as managerial employees while the rest who are holding confidential or technical
positions should likewise be excluded. In finding for KMEU, said Director declared
that:jgc:chanrobles.com.ph
"As pointed out by the Supreme Court in the similar case of General Rubber and
Footwear Corporation v. Bureau of Labor Relations, Et Al., G.R. No. 74262, it is
perhaps unusual for management to have to deal with two (2) collective bargaining
unions but there is no one to blame except management for creating the situation it is
in. From the beginning of the existence of the CBA, management had sought to
indiscriminately suppress the members of the petitioners’ right (sic) to self-
organization. Respondents’ argument that the incumbent collective bargaining agent
is willing to accommodate herein petitioner is of no moment since the option now
rests upon the petitioner as to whether or not they desire to join the existing collective
bargaining agent or remain as separate (sic) union." 3  provisions which consider the CFW as the sole and exclusive bargaining agent of all
"SECTION 2. The bargaining unit covered by this Agreement consists of all regular
and permanent rank-and-file employees of the COMPANY employed in its production
plants and paid on a daily or piece-rate basis and regular, rank-and-file monthly paid
office employees, excluding managerial, supervisory, casual, temporary and
probationary employees, and security guards." 5 
Unfazed by their defeat before the BLR, KNITJOY and CFW separately filed the
instant petitions. The former imputes upon respondent Director grave abuse of
discretion in holding that (a) the scope of the bargaining unit agreed upon in the new
CBA does not bind KMEU because it is not a party thereto, (b) the acceptance by all
the members of KMEU of all benefits of the CBA did not constitute an overt act of
ratification and (c) the CBA was concluded on 12 December 1987 and not on 27
November 1987. It further contends that respondent Director contumaciously violated
the one company-one union policy of the Labor Code and disregarded the ruling of
this Court in Bulletin Publishing Corp. v. Hon. Sanchez, 6 reiterated in part in General
Rubber and Footwear Corp. v. Bureau of Labor Relations. 7 Upon the other hand,
CFW contends that respondent Director committed grave abuse of discretion in (a)
allowing the creation of a unit separate from the existing bargaining unit defined in the
new CBA thus abetting the proliferation of unions, (b) disregarding the CBA
rank-and-file employees and (c) excluding CFW from the choices of unions to be x           x          x
voted upon. 8 

On 24 August 1988, 9 this Court gave due course to the petition in G.R. No. 81883 (c) description of the bargaining unit which shall be the employer unit unless
after both the public and private respondents filed their separate comments and the circumstances otherwise require; . . . ." (Emphasis supplied)
petitioner filed its consolidated reply thereto. 10 
The usual exception, of course, is where the employer unit has to give way to the
On 23 November 1988, G.R. No. 82111 was consolidated with G.R. No. 81883 and other units like the craft unit, plant unit, or a subdivision thereof, the recognition of
the petitioner in the former was ordered to file a consolidated reply to the separate these exceptions takes into account the policy to assure employees of the fullest
comments of both respondents. 11  freedom in exercising their rights. 12 Otherwise stated, the one company-one union
policy must yield to the right of the employees to form unions or associations for
The principal issues raised in these petitions are:chanrob1es virtual 1aw library purposes not contrary to law, to self-organization and to enter into collective
bargaining negotiations, among others, which the Constitution guarantees. 13 
1. Whether or not petitioner KNITJOY’s monthly-paid regular rank-and-file employees
can constitute an appropriate bargaining unit separate and distinct from the existing The right to form a union or association or to self-organization comprehends two (2)
unit composed of daily or piece-rate paid regular rank-and-file employees, and broad notions, to wit: (a) the liberty or freedom, i.e., the absence of restraint which
guarantees that the employee may act for himself without being prevented by law,
2. Whether or not the inclusion in the coverage of the new CBA between KNITJOY and (b) the power, by virtue of which an employee may, as he pleases, join or refrain
and CFW of the monthly-paid rank-and-file employees bars the holding of a from joining an association. In Victoriano v. Elizalde Rope Workers’ Union, 14 this
certification election among the said monthly paid employees. Court stated:jgc:chanrobles.com.ph

We decide for the respondents. ". . . Notwithstanding the different theories propounded by the different schools of
jurisprudence regarding the nature and contents of a ‘right’, it can be safely said that
1. The suggested bias of the Labor Code in favor of the one company-one union whatever theory one subscribes to, a right comprehends at least two broad notions,
policy, anchored on the greater mutual benefits which the parties could derive, namely: first, liberty or freedom, i.e., the absence of legal restraint, whereby an
especially in the case of employees whose bargaining strength could undeniably be employee may act for himself without being prevented by law; and second, power,
enhanced by their unity and solidarity but diminished by their disunity, division and whereby an employee may, as he pleases, join or refrain from joining an association.
dissension, is not without exceptions. It is, therefore, the employee who should decide for himself whether he should join or
not an association, and should he choose to join, he himself makes up his mind as to
The present Article 245 of the Labor Code expressly allows supervisory employees which association he would join; and even after he has joined, he still retains the
who are not performing managerial functions to join, assist or form their separate liberty and the power to leave and cancel his membership with said organization at
union but bars them from membership in a labor organization of the rank-and-file any time [Pagkakaisa Samahang Manggagawa ng San Miguel Brewery v. Enriquez,
employees. It reads:jgc:chanrobles.com.ph Et Al., 108 Phil., 1010, 1019]. It is clear, therefore, that the right to join a union
includes the right to abstain from joining any union [Abo, Et. Al. v. PHILAME (KG)
"ARTICLE 245. Ineligibility of managerial employees to join any labor organization; Employees Union, Et Al., L-19912, January 30, 1965, 13 SCRA 120, 123, quoting
right of supervisory employees. — Managerial employees are not eligible to join, Rothenberg, Labor Relations]. Inasmuch as what both the Constitution and the
assist or form any labor organization. Supervisory employees shall not be eligible for Industrial Peace Act have recognized, and guaranteed to the employee, is the ‘right’
membership in a labor organization of the rank-and-file employees but may join, to join associations of his choice, it would be absurd to say that the law also imposes,
assist or form separate labor organizations of their own."cralaw virtua1aw library in the same breath, upon the employee the duty to join associations. The law does
not enjoin an employee to sign up with any association."cralaw virtua1aw library
This provision obviously allows more than one union in a company.
Furthermore, it is not denied that in the bargaining history of KNITJOY, the CBA has
Even Section 2(c), Rule V, Book V of the Implementing Rules and Regulations of the been consistently limited to the regular rank-and-file employees paid on a daily or
Labor Code, which seeks to implement the policy, also recognizes exceptions. It piece-rate basis. On the other hand, the rank-and-file employees paid on a monthly
reads:chanrobles virtual lawlibrary basis were never included within its scope. Respondent KMEU’s membership is
limited to the latter class of employees, KMEU does not seek to dislodge CFW as the
"SECTION 2. Who may file. — Any legitimate labor organization or the employer, exclusive bargaining representative for the former. The records further disclose that in
when requested to bargain collectively, may file the petition. the certification solicited by TUPAS and during the elections which followed
thereafter, resulting in the certification of CFW as the exclusive bargaining
The petition, when filed by a legitimate labor organization shall contain, among representative, the monthly-paid employees were expressly excluded. Thus, the
others:chanrob1es virtual 1aw library negotiations between CFW and KNITJOY following such a certification could only
logically refer to the rank-and-file employees paid on a daily or piece-rate basis.
Clearly therefore, KNITJOY and CFW recognize that insofar as the monthly-paid
employees are concerned, the latter’s constituting a separate bargaining unit with the
appropriate union as sole bargaining representative, can neither be prevented nor
avoided without infringing on these employees’ rights to form a union and to enter into
collective bargaining negotiations. Stated differently, KNITJOY and CFW recognize
the fact that the existing bargaining unit in the former is not — and has never been —
the employer unit. Given this historical and factual setting, KMEU had the
unquestioned and undisputed right to seek certification as the exclusive bargaining
representative for the monthly-paid rank-and-file employees; both KNITJOY and CFW
cannot block the same on the basis of this Court’s declaration in Bulletin Publishing
Corp. v. Hon. Sanchez 15 and General Rubber and Footwear Corp. v. Bureau of
Labor Relations 16 regarding the one company-one union concept. Petitioners have
obviously misread these cases. In the first, We stated that" [t]he crux of the
dispute . . . is whether or not supervisors in petitioner company therein may, for
purposes of collective bargaining, form a union separate and distinct from the existing
union organized by the rank-and-file employees of the same company," 17 and ruled
that the members of the Bulletin Supervisory Union, wholly composed of supervisors,
are not qualified to form a union of their own under the law and rules then existing,
considering that" [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;" 18 hence, under Article 246 19 of the Labor Code,
they cannot form, join and assist labor organizations. It should be stressed that the
statement therein that supervisors "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" 20 is no longer legally feasible under
existing laws. As earlier noted, the present Article 245 of the Labor Code allows
supervisory employees who are not exercising managerial functions to join, assist or
form separate labor organizations of their own but prohibits them from joining a labor
organization composed of the rank-and-file employees.chanrobles lawlibrary : rednad
The second case on the other hand, demolishes the stand of KNITJOY and CFW for,
as correctly contended by the respondents, it in fact recognizes an exception to the
one company-one union concept. Thus:jgc:chanrobles.com.ph
"Perhaps it is unusual for the petitioner to have to deal with two (2) collective
bargaining unions but there is no one to blame except petitioner itself for creating the
situation it is in. From the beginning of the existence in 1963 of a bargaining unit for
the employees up to the present, petitioner had sought to indiscriminately suppress
the members of the private respondent’s right (sic) to self-organization provided for by
law. Petitioner, in justification of its action, maintained that the exclusion of the
members of the private respondent from the bargaining union of the rank-and-file or
from forming their own union was agreed upon by petitioner corporation with the
previous bargaining representatives . . . Such posture has no leg to stand on. It has
not been shown that private respondent was privy to this agreement. And even if it
were so, it can never bind subsequent federations and unions particularly private
respondent-union because it is a curtailment of the right to self-organization
guaranteed by the labor laws. However, to prevent any difficulty and to avoid
confusion to all concerned and, more importantly, to fulfill the policy of the New Labor
Code as well as to be consistent with Our ruling in the Bulletin case, supra, the
monthly-paid rank-and-file employees should be allowed to join the union of the daily-
paid-rank-and-file employees of petitioner so that they can also avail of the CBA
benefits or to form their own rank-and-file union, without prejudice to the certification
election that has been ordered." 21 (Emphasis supplied)
2. Regardless of the date when the new CBA was executed - whether on 27
November 1987 as contended by KNITJOY and CFW or 12 December 1967 as
claimed by the respondents — the fact remains that it was executed before the
resolution of KMEU’s petition for certification election among the monthly paid
employees became final. This Court, however, sustains the respondents’ claim for
indeed if it was executed by the parties on 27 November 1987, both KNITJOY and
CFW would have immediately filed the appropriate pleading with the BLR informing it
of such execution and moving for the dismissal of the appeal on the ground that it has
been rendered moot and academic. Moreover, public respondent’s finding on this
point is supported by substantial evidence, thus:jgc:chanrobles.com.ph
"The parties could not have signed the said CBA on 27 November 1987, contrary to
their allegation, because from 4:00 - 10:00 p.m. on the same day, 27 November 1987,
the parties still attended a conciliation conference before Assistant Director Maximo L.
Lim of the NCR (see Annex "F" of respondent’s Supplemental Motion for
Reconsideration) and agreed in principle on nine (9) items or provisions to be
included in said CBA. Said minutes do not state that these nine items are the
remaining unresolved issues in the negotiation of the CBA." 22 It was only in their
motion for the reconsideration of public respondent’s decision of 1 December 1987
that the existence of the new CBA was made known.chanrobles virtualawlibrary
chanrobles.com:chanrobles.com.ph
Considering that (a) the TUPAS solicited certification election was strictly confined to
the rank-and-file employees who are paid on a daily or piece-rate basis, (b) the
results of the election must also necessarily confine the certified union’s
representation to the group it represents and (c) the issue of the plight of the monthly-
paid employees was still pending, KNITJOY and CFW clearly acted with palpable bad
faith and malice in including within the scope of the new CBA these monthly-paid
employees. Thus was effected a conspiracy to defeat and suppress the right of the
KMEU and its members to bargain collectively and negotiate for themselves, to
impose upon the latter a contract the negotiation for which they were not even given
notice of, consulted or allowed to participate in, and to oust from the BLR the pending
appeal on the certification issue. In the latter case, KNITJOY and CFW are guilty of
contumacious conduct. It goes without saying then that the new CBA cannot validly
include in its scope or coverage the monthly-paid rank-and-file employees of
KNITJOY. It does not bar the holding of a certification election to determine their sole
bargaining agent, and the negotiation for and the execution of a subsequent CBA
between KNITJOY and the eventual winner in said election. Section 4, Rule V, Book
V of the Rules Implementing the Labor Code expressly
provides:jgc:chanrobles.com.ph
"SECTION 4. Effects of early agreements. — The representation case shall not,
however, be adversely affected by a collective bargaining agreement registered
before or during the last 60 days of a subsisting agreement or during the pendency of
the representation case." (Emphasis supplied)
The public respondent then committed no abuse of discretion ordering a certification
election among the monthly-paid rank-and-file employees, except managerial
employees, of KNITJOY. The choice however, should not be, as correctly contended
by CFW, limited to merely (a) KMEU and (b) no union. The records disclose that the
intervenors in the petition for certification are the KMEA-CCLU and CFW. They
should be included as among the choices in the certification election.cralawnad
WHEREFORE, the instant petitions are DISMISSED. However, the challenged
decision of public respondent of 1 December 1987 is modified to include in the
choices for the certification election petitioner Confederation of Filipino Workers
(CFW) and the Knitjoy Monthly Employees Association and Confederation of Citizens
Labor Unions (KMEU-CCLU).
Costs against petitioners.
SO ORDERED.
Bidin, Romero and Melo, JJ., concur.
Gutierrez, Jr., J., is on official leave.
KATIPUNAN NG MGA MANGGAGAWA SA DAUNGAN (KAMADA), petitioner,
vs.  HON. PURA FERRER-CALLEJA and ASSOCIATED SKILLED AND
TECHNICAL EMPLOYEES UNION (ASTEUO), respondents.
DECISION
PANGANIBAN, J.:
May a new labor union be organized and granted registration during the lifetime
of a collective bargaining agreement (CBA) between the company and another
union?
The Case
This is the simple query brought before this Court by Petitioner Katipunan ng
mga Manggagawa sa Daungan (KAMADA) via a petition[1] for certiorari under Rule 65
of the Rules of Court assailing the Order[2] dated February 27, 1992 of Public
Respondent Pura Ferrer-Calleja, Director of the Bureau of Labor Relations (BLR), in
BLR Case No. A-4-12-91 (NCR-0D-M-90-10-007) which reversed the resolution [3] of
Med-Arbiter Edgardo De la Cruz. Public respondent disposed as follows:[4]
WHEREFORE, premises considered, this Office having found that no ground exists
for the cancellation of the union registration of ASTEOU [sic], the decision of Med-
Arbiter de la Cruz is hereby reversed. Let, therefore, the certificate of registration of
ASTEOU [sic] (Associated Skilled and Technical Employees Union of OTSI) be
reinstated in the registry of Unions.
The subsequent appeal filed by the counsel for the petitioner was treated as a
motion for reconsideration and denied in the other assailed Order[5] dated March 20,
1992. Hence, this petition before us.
The Facts
Petitioner claims to be the sole and exclusive bargaining agent for all workers in
Ocean Terminal Services, Inc. (OTSI).[6] After a certification election, it concluded a
collective bargaining agreement with the company. Soon thereafter, in September
1990, private respondent union (ASTEUO) -- allegedly composed also of OTSI
workers -- was registered.
Upon learning of such fact, Petitioner KAMADA filed a suit to cancel the
registration of ASTEUO on the ground that the latters members were already covered
by the existing collective bargaining agreement. Private respondent, on the other
hand, claimed that its existence as a union could not be disturbed, as its registration
was made during the freedom period when there was no collective bargaining
agreement concluded as yet.
Private respondents registration was cancelled by the med-arbiter in his
resolution dated November 27, 1990, finding that the organization of another union
covering the same workers can no longer be considered as a labor protective [sic]
activity under P.D. 1391[7] and that this will even be against the present policy of one
union in one company.[8]
Private respondent appealed to the Bureau of Labor Relations. As earlier stated,
Public Respondent Pura Ferrer-Calleja, director of the said office, reversed the
decision of the med-arbiter and denied the subsequent motion for reconsideration.
The Issue
Petitioner accuses public respondent of grave abuse of discretion amounting to
lack of jurisdiction and gross ignorance of the law. It argues that private respondent,
contrary to Section 4 (f), Rule II, Book V of the Rules Implementing the Labor
Code, obtained its union registration beyond the last sixty (60) days of the existing
CBA, and after participating in the certification election where it lost.
More specifically, petitioner raises in its Memorandum dated May 3, 1993, the
following three grounds to reverse public respondents Order:[9]
1. That there was already an existing certified bargaining agent when it obtained its
registration;
2. The same cannot be considered as a labor productive activity under PD 1391; and
3. It is against the policy of one union in one company.
The Courts Ruling
Petitioners contentions are utterly devoid of merit.
First Issue: Timeliness of Registration
We quote hereunder public respondents disquisition which clearly shows the
untenable position of petitioner:[10]
A perusal of the arguments advanced in this suit shows that some clarification is
necessary regarding the present laws on union registration. First, nowhere does the
law contemplate or even intimate that once a union of a bargaining unit has registered
with the DOLE, this prevents all other would-be union from registering. The reasons
are obvious. To establish such a rule would render superflous (sic) certification
elections, and would establish in perpetuity anyone who had the good fortune, means
or scheme to beat everyone else to the punch. Second, in order to establish order
and effectively exercise this right, certain policies have been instituted. One such
policy, taken from letter (f) of Section 4 of Rule II of Book V of the Implementing Rules
of the Labor Code, is that applications for union registration are not valid if filed within
one year from certification elections and/or are done during the effectivity of a CBA
unless filed within the freedom period.
Anent the above, and the facts of this case, ASTEOUs [sic] union registration issued
last September, 1990 cannot be assailed. The period of prohibition of union
registration in relation to certification elections starts from the final proclamation of
certification election results in a final decision of the DOLE or the Supreme Court. In
the present case, the Order of the Secretary of DOLE was issued last October 31,
1990, a month after the registration of ASTEOU [sic]. Moreover, KAMADAs previous
CBA expired on March 23, 1989, while its new CBA was not signed until April 25,
1991.
It is settled that factual findings of quasi-judicial agencies, like the Labor
Department,[11] which have acquired expertise in matters entrusted to their jurisdiction,
are accorded by this Court not only respect but finality if supported by substantial
evidence. Substantial evidence refers to that amount of relevant evidence which a
reasonable mind may accept as adequate to justify a conclusion.[12]
In this case, the findings of the public respondent, particularly those on the dates
of the registration and the signing of the CBA, are supported by substantial
evidence. In fact, petitioner does not even contradict these findings.
Having ruled on the factual findings, we now take up the relevant labor
regulations. Section 3, Rule V, Book V of the Omnibus Rules Implementing the Labor
Code,[13] prohibits not the registration of a new union but the holding of a certification
election within one year from the date of issuance of a final certification election
result. Clearly, private respondents registration is not covered by the prohibition. In
any event, the union registration was effected in September 1990, a month before the
secretary of labor issued his decision on the result of the certification election on
October 31, 1990. Hence, there was yet no certified bargaining agent when the
private respondent was registered as a union.
Second Issue: Labor Productive Activity
Petitioner argues that private respondents registration cannot be considered a
labor productive activity under PD 1391, specifically under paragraph 6 thereof which
reads:
6. No petitions for certification election, for intervention or disaffiliation shall be
entertained or given due course except within the 60-day freedom period immediately
preceding the expiration of a collective bargaining agreement.
Very clearly, the foregoing provision does not help petitioner. It has nothing to
do with the registration of a union. It deals only with petitions for certification election,
intervention or disaffiliation and not -- we hazard being redundant -- to applications for
registration of a new union.
Third Issue: One Union in One Company
As regards petitioners battle cry of one union in one company, this Court has
already laid down in Knitjoy Manufacturing, Inc. vs. Ferrer-Calleja[14] the exceptions to
that policy. The Court, through Mr. Justice Hilario G. Davide, Jr., held:
1. The suggested bias of the Labor Code in favor of the one company-one union
policy, anchored on the greater mutual benefits which the parties could derive,
especially in the case of employees whose bargaining strength could undeniably be
enhanced by their unity and solidarity but diminished by their disunity, division and
dissension, is not without exceptions.
The present Article 245 of the Labor Code expressly allows supervisory employees
who are not performing managerial functions to join, assist or form their separate
union but bars them from membership in a labor organization of the rank-and-file
employees. It reads:
ART. 245. Ineligibility of managerial employees to join any labor organization; right of
supervisory employees. -- Managerial employees are not eligible to join, assist or
form any labor organization. Supervisory employees shall not be eligible for
membership in a labor organization of the rank-and-file employees but may join,
assist or form separate labor organizations of their own.
This provision obviously allows more than one union in a company.
Even Section 2 (c), Rule V, Book V of the Implementing Rules and Regulations of the
Labor Code, which seeks to implement the policy, also recognizes exceptions. It
reads:

SEC. 2. Who may file. -- Any legitimate labor organization or the employer, when
requested to bargain collectively, may file the petition.

The petition, when filed by a legitimate labor organization shall contain, among
others:

xxx

(c) description of the bargaining unit which shall be the employer unit unless

circumstances otherwise require;  x x x. (Emphasis supplied)

The usual exception, of course, is where the employer unit has to give way to the
other units like the craft unit, plant unit, or a subdivision thereof; the recognition of
these exceptions takes into account the policy to assure employees of the fullest
freedom in exercising their rights. (PASCUAL. C., Labor Relations Law, 1986, ed.,
109) Otherwise stated, the one company-one union policy must yield to the right of
the employees to form unions or associations for purposes not contrary to law, to self-
organization and to enter into collective bargaining negotiations, among others, which
the Constitution guarantees. (Section 8, Article III and Section 3, Article XIII, 1987
Constitution).

Moreover, the issue of which union truly represents the working force should be
raised during the certification election, not during the registration period. Indeed, a
certification election provides the most effective and expeditious mode to determine
the real representatives of the working force in the appropriate bargaining unit. [15] It
may be well to add that Section 5, Rule II, Book V [16] of the Omnibus Rules
Implementing the Labor Code, enumerates the grounds for the denial of registration
to local unions, and the existence of another union is not one of these grounds.
WHEREFORE, the petition is DISMISSED for utter lack of merit. Double costs
against the petitioner.
SO ORDERED.
Narvasa, C.J., (Chairman), Davide Jr., Melo,  and  Francisco, JJ.,  concur.