[G.R. No. 169754. February 23, 2011.

LEGEND INTERNATIONAL RESORTS LIMITED, petitioner, vs. KILUSANG MANGGAGAWA NG LEGENDA (KML-
INDEPENDENT), respondent.

DECISION

DEL CASTILLO, J p:

This Petition for Review on Certiorari assails the September 18, 2003 Decision of the Court of Appeals in CA-G.R. SP
No. 72848 which found no grave abuse of discretion on the part of the Office of the Secretary of the Department of
Labor and Employment (DOLE) which ruled in favor of Kilusang Manggagawa ng Legenda (KML). Also assailed is the
September 14, 2005 Resolution denying petitioner's motion for reconsideration. ADCIca

Factual Antecedents

On June 6, 2001, KML filed with the Med-Arbitration Unit of the DOLE, San Fernando, Pampanga, a Petition for
Certification Election 1 docketed as Case No. RO300-0106-RU-001. KML alleged that it is a legitimate labor
organization of the rank and file employees of Legend International Resorts Limited (LEGEND). KML claimed that it
was issued its Certificate of Registration No. RO300-0105-UR-002 by the DOLE on May 18, 2001.

LEGEND moved to dismiss 2 the petition alleging that KML is not a legitimate labor organization because its
membership is a mixture of rank and file and supervisory employees in violation of Article 245 of the Labor Code.
LEGEND also claimed that KML committed acts of fraud and misrepresentation when it made it appear that certain
employees attended its general membership meeting on April 5, 2001 when in reality some of them were either at
work; have already resigned as of March 2001; or were abroad.

In its Comment, 3 KML argued that even if 41 of its members are indeed supervisory employees and therefore
excluded from its membership, the certification election could still proceed because the required number of the total
rank and file employees necessary for certification purposes is still sustained. KML also claimed that its legitimacy as a
labor union could not be collaterally attacked in the certification election proceedings but only through a separate
and independent action for cancellation of union registration. Finally, as to the alleged acts of misrepresentation,
KML asserted that LEGEND failed to substantiate its claim.

Ruling of the Med-Arbiter

On September 20, 2001, the Med-Arbiter 4 rendered judgment 5 dismissing for lack of merit the petition for
certification election. The Med-Arbiter found that indeed there were several supervisory employees in KML's
membership. Since Article 245 of the Labor Code expressly prohibits supervisory employees from joining the union of
rank and file employees, the Med-Arbiter concluded that KML is not a legitimate labor organization. KML was also
found to have fraudulently procured its registration certificate by misrepresenting that 70 employees were among
those who attended its organizational meeting on April 5, 2001 when in fact they were either at work or elsewhere.

KML thus appealed to the Office of the Secretary of the DOLE.

Ruling of the Office of the Secretary of DOLE

On May 22, 2002, the Office of the Secretary of DOLE rendered its Decision 6 granting KML's appeal thereby reversing
and setting aside the Med-Arbiter's Decision. The Office of the Secretary of DOLE held that KML's legitimacy as a
union could not be collaterally attacked, citing Section 5, 7 Rule V of Department Order No. 9, series of 1997.

The Office of the Secretary of DOLE also opined that Article 245 of the Labor Code merely provides for the prohibition
on managerial employees to form or join a union and the ineligibility of supervisors to join the union of the rank and
file employees and vice versa. It declared that any violation of the provision of Article 245 does not ipso facto render
the existence of the labor organization illegal. Moreover, it held that Section 11, paragraph II of Rule XI which
provides for the grounds for dismissal of a petition for certification election does not include mixed membership in
one union. SEHACI

The dispositive portion of the Office of the Secretary of DOLE's Decision reads:

WHEREFORE, the appeal is hereby GRANTED and the order of the Med-Arbiter dated 20 September 2001 is
REVERSED and SET ASIDE.

Accordingly, let the entire record of the case be remanded to the regional office of origin for the immediate conduct
of the certification election, subject to the usual pre-election conference, among the rank and file employees of
LEGEND INTERNATIONAL RESORTS LIMITED with the following choices:

1.KILUSANG MANGGAGAWA NG LEGENDA (KML-INDEPENDENT); and

2.NO UNION.

Pursuant to Rule XI, Section II.1 of D.O. No. 9, the employer is hereby directed to submit to the office of origin, within
ten days from receipt of the decision, the certified list of employees in the bargaining unit for the last three (3)
months prior to the issuance of this decision.

SO DECIDED. 8

LEGEND filed its Motion for Reconsideration 9 reiterating its earlier arguments. It also alleged that on August 24,
2001, it filed a Petition 10 for Cancellation of Union Registration of KML docketed as Case No. RO300-0108-CP-001
which was granted 11 by the DOLE Regional Office No. III of San Fernando, Pampanga in its Decision 12 dated
November 7, 2001.

In a Resolution 13 dated August 20, 2002, the Office of the Secretary of DOLE denied LEGEND's motion for
reconsideration. It opined that Section 11, paragraph II (a), Rule XI of Department Order No. 9 requires a final order
of cancellation before a petition for certification election may be dismissed on the ground of lack of legal personality.
Besides, it noted that the November 7, 2001 Decision of DOLE Regional Office No. III of San Fernando, Pampanga in
Case No. RO300-0108-CP-001 was reversed by the Bureau of Labor Relations in a Decision dated March 26, 2002.

Ruling of the Court of Appeals

Undeterred, LEGEND filed a Petition for Certiorari 14 with the Court of Appeals docketed as CA-G.R. SP No. 72848.
LEGEND alleged that the Office of the Secretary of DOLE gravely abused its discretion in reversing and setting aside
the Decision of the Med-Arbiter despite substantial and overwhelming evidence against KML.

For its part, KML alleged that the Decision dated March 26, 2002 of the Bureau of Labor Relations in Case No. RO300-
0108-CP-001 denying LEGEND's petition for cancellation and upholding KML's legitimacy as a labor organization has
already become final and executory, entry of judgment having been made on August 21, 2002. 15

The Office of the Secretary of DOLE also filed its Comment 16 asserting that KML's legitimacy cannot be attacked
collaterally. Finally, the Office of the Secretary of DOLE stressed that LEGEND has no legal personality to participate in
the certification election proceedings.
On September 18, 2003, the Court of Appeals rendered its Decision 17 finding no grave abuse of discretion on the
part of the Office of the Secretary of DOLE. The appellate court held that the issue on the legitimacy of KML as a labor
organization has already been settled with finality in Case No. RO300-0108-CP-001. The March 26, 2002 Decision of
the Bureau of Labor Relations upholding the legitimacy of KML as a labor organization had long become final and
executory for failure of LEGEND to appeal the same. Thus, having already been settled that KML is a legitimate labor
organization, the latter could properly file a petition for certification election. There was nothing left for the Office of
the Secretary of DOLE to do but to order the holding of such certification election.

The dispositive portion of the Decision reads:

WHEREFORE, in view of the foregoing, and finding that no grave abuse of discretion amounting to lack or excess of
jurisdiction has been committed by the Department of Labor and Employment, the assailed May 22, 2002 Decision
and August 20, 2002 Resolution in Case No. RO300-106-RU-001 are UPHELD and AFFIRMED. The instant petition is
DENIED due course and, accordingly, DISMISSED for lack of merit. 18 DTEScI

LEGEND filed a Motion for Reconsideration 19 alleging, among others, that it has appealed to the Court of Appeals
the March 26, 2002 Decision in Case No. RO300-0108-CP-001 denying its petition for cancellation and that it is still
pending resolution.

On September 14, 2005, the appellate court denied LEGEND's motion for reconsideration.

Hence, this Petition for Review on Certiorari raising the lone assignment of error, viz.:

WHETHER . . . THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERRORS IN THE APPLICATION OF LAW IN
DENYING THE PETITIONER'S PETITION FOR CERTIORARI. 20

Petitioner's Arguments

LEGEND submits that the Court of Appeals grievously erred in ruling that the March 26, 2002 Decision denying its
Petition for Cancellation of KML's registration has already become final and executory. It asserts that it has
seasonably filed a Petition for Certiorari 21 before the CA docketed as CA-G.R. SP No. 72659 assailing said Decision. In
fact, on June 30, 2005, the Court of Appeals granted the petition, reversed the March 26, 2002 Decision of the
Bureau of Labor Relations and reinstated the November 7, 2001 Decision of the DOLE Regional Office III ordering the
cancellation of KML's registration.
Finally, LEGEND posits that the cancellation of KML's certificate of registration should retroact to the time of its
issuance. 22 It thus claims that the petition for certification election and all of KML's activities should be nullified
because it has no legal personality to file the same, much less demand collective bargaining with LEGEND. 23

LEGEND thus prays that the September 20, 2001 Decision of the Med-Arbiter dismissing KML's petition for
certification election be reinstated. 24

Respondent's Arguments

In its Comment filed before this Court dated March 21, 2006, KML insists that the Decision of the Bureau of Labor
Relations upholding its legitimacy as a labor organization has already attained finality 25 hence there was no more
hindrance to the holding of a certification election. Moreover, it claims that the instant petition has become moot
because the certification election sought to be prevented had already been conducted.

Our Ruling

The petition is partly meritorious.

LEGEND has timely appealed the

March 26, 2002 Decision of the Bureau

of Labor Relations to the Court of

Appeals.

We cannot understand why the Court of Appeals totally disregarded LEGEND's allegation in its Motion for
Reconsideration that the March 26, 2002 Decision of the Bureau of Labor Relations has not yet attained finality
considering that it has timely appealed the same to the Court of Appeals and which at that time is still pending
resolution. The Court of Appeals never bothered to look into this allegation and instead dismissed outright LEGEND's
motion for reconsideration. By doing so, the Court of Appeals in effect maintained its earlier ruling that the March 26,
2002 Decision of the Bureau of Labor Relations upholding the legitimacy of KML as a labor organization has long
become final and executory for failure of LEGEND to appeal the same.
This is inaccurate. Records show that (in the cancellation of registration case) LEGEND has timely filed on September
6, 2002 a petition for certiorari 26 before the Court of Appeals which was docketed as CA-G.R. SP No. 72659 assailing
the March 26, 2002 Decision of the Bureau of Labor Relations. In fact, KML received a copy of said petition on
September 10, 2002 27 and has filed its Comment thereto on December 2, 2002. 28 Thus, we find it quite interesting
for KML to claim in its Comment (in the certification petition case) before this Court dated March 21, 2006 29 that
the Bureau of Labor Relations' Decision in the petition for cancellation case has already attained finality. Even in its
Memorandum 30 dated March 13, 2007 filed before us, KML is still insisting that the Bureau of Labor Relations'
Decision has become final and executory. cIaHDA

Our perusal of the records shows that on June 30, 2005, the Court of Appeals rendered its Decision 31 in CA-G.R. SP
No. 72659 reversing the March 26, 2002 Decision of the Bureau of Labor Relations and reinstating the November 7,
2001 Decision of the Med-Arbiter which canceled the certificate of registration of KML. 32 On September 30, 2005,
KML's motion for reconsideration was denied for lack of merit. 33 On November 25, 2005, KML filed its Petition for
Review on Certiorari 34 before this Court which was docketed as G.R. No. 169972. However, the same was denied in
a Resolution 35 dated February 13, 2006 for having been filed out of time. KML moved for reconsideration but it was
denied with finality in a Resolution 36 dated June 7, 2006. Thereafter, the said Decision canceling the certificate of
registration of KML as a labor organization became final and executory and entry of judgment was made on July 18,
2006. 37

The cancellation of KML's certificate of

registration should not retroact to the

time of its issuance.

Notwithstanding the finality of the Decision canceling the certificate of registration of KML, we cannot subscribe to
LEGEND's proposition that the cancellation of KML's certificate of registration should retroact to the time of its
issuance. LEGEND claims that KML's petition for certification election filed during the pendency of the petition for
cancellation and its demand to enter into collective bargaining agreement with LEGEND should be dismissed due to
KML's lack of legal personality.

This issue is not new or novel. In Pepsi-Cola Products Philippines, Inc. v. Secretary of Labor, 38 we already ruled that:

Anent the issue of whether or not the Petition to cancel/revoke registration is a prejudicial question to the petition
for certification election, the following ruling in the case of Association of the Court of Appeals Employees (ACAE) v.
Hon. Pura Ferrer-Calleja, . . . is in point, to wit:
. . . It is well-settled rule that 'a certification proceedings is not a litigation in the sense that the term is ordinarily
understood, but an investigation of a non-adversarial and fact finding character.' (Associated Labor Unions (ALU) v.
Ferrer-Calleja, 179 SCRA 127 [1989]; Philippine Telegraph and Telephone Corporation v. NLRC, 183 SCRA 451 [1990].
Thus, the technical rules of evidence do not apply if the decision to grant it proceeds from an examination of the
sufficiency of the petition as well as a careful look into the arguments contained in the position papers and other
documents.

At any rate, the Court applies the established rule correctly followed by the public respondent that an order to hold a
certification election is proper despite the pendency of the petition for cancellation of the registration certificate of
the respondent union. The rationale for this is that at the time the respondent union filed its petition, it still had the
legal personality to perform such act absent an order directing the cancellation. 39 (Emphasis supplied.)

In Capitol Medical Center, Inc. v. Hon. Trajano, 40 we also held that "the pendency of a petition for cancellation of
union registration does not preclude collective bargaining." 41 Citing the Secretary of Labor, we held viz.:

That there is a pending cancellation proceedings against the respondent Union is not a bar to set in motion the
mechanics of collective bargaining. If a certification election may still be ordered despite the pendency of a petition
to cancel the union's registration certificate . . . more so should the collective bargaining process continue despite its
pendency. 42 (Emphasis supplied.)

In Association of Court of Appeals Employees v. Ferrer-Calleja, 43 this Court was tasked to resolve the issue of
whether "the certification proceedings should be suspended pending [the petitioner's] petition for the cancellation of
union registration of the UCECA." 44 45 The Court resolved the issue in the negative holding that "an order to hold a
certification election is proper despite the pendency of the petition for cancellation of the registration certificate of
the respondent union. The rationale for this is that at the time the respondent union filed its petition, it still had the
legal personality to perform such act absent an order directing a cancellation." 46 We reiterated this view in
Samahan ng Manggagawa sa Pacific Plastic v. Hon. Laguesma 47 where we declared that "a certification election can
be conducted despite pendency of a petition to cancel the union registration certificate. For the fact is that at the
time the respondent union filed its petition for certification, it still had the legal personality to perform such act
absent an order directing its cancellation." 48

Based on the foregoing jurisprudence, it is clear that a certification election may be conducted during the pendency
of the cancellation proceedings. This is because at the time the petition for certification was filed, the petitioning
union is presumed to possess the legal personality to file the same. There is therefore no basis for LEGEND's assertion
that the cancellation of KML's certificate of registration should retroact to the time of its issuance or that it effectively
nullified all of KML's activities, including its filing of the petition for certification election and its demand to
collectively bargain. ESCTIA
The legitimacy of the legal personality

of KML cannot be collaterally attacked

in a petition for certification election.

We agree with the ruling of the Office of the Secretary of DOLE that the legitimacy of the legal personality of KML
cannot be collaterally attacked in a petition for certification election proceeding. This is in consonance with our ruling
in Laguna Autoparts Manufacturing Corporation v. Office of the Secretary, Department of Labor and Employment 49
that "such legal personality may not be subject to a collateral attack but only through a separate action instituted
particularly for the purpose of assailing it." 50 We further held therein that:

This is categorically prescribed by Section 5, Rule V of the Implementing Rules of Book V, which states as follows:

SEC. 5. 51 Effect of registration. — The labor organization or worker's association shall be deemed registered and
vested with legal personality on the date of issuance of its certificate of registration. Such legal personality cannot
thereafter be subject to collateral attack but may be questioned only in an independent petition for cancellation in
accordance with these Rules.

Hence, to raise the issue of the respondent union's legal personality is not proper in this case. The pronouncement of
the Labor Relations Division Chief, that the respondent union acquired a legal personality . . . cannot be challenged in
a petition for certification election.

The discussion of the Secretary of Labor and Employment on this point is also enlightening, thus:

. . . Section 5, Rule V of D.O. 9 is instructive on the matter. It provides that the legal personality of a union cannot be
the subject of collateral attack in a petition for certification election, but may be questioned only in an independent
petition for cancellation of union registration. This has been the rule since NUBE v. Minister of Labor, 110 SCRA 274
(1981). What applies in this case is the principle that once a union acquires a legitimate status as a labor organization,
it continues as such until its certificate of registration is cancelled or revoked in an independent action for
cancellation.

Equally important is Section 11, Paragraph II, Rule IX of D.O. 9, which provides for the dismissal of a petition for
certification election based on the lack of legal personality of a labor organization only in the following instances: (1)
appellant is not listed by the Regional Office or the BLR in its registry of legitimate labor organizations; or (2)
appellant's legal personality has been revoked or cancelled with finality. Since appellant is listed in the registry of
legitimate labor organizations, and its legitimacy has not been revoked or cancelled with finality, the granting of its
petition for certification election is proper. 52

"[T]he legal personality of a legitimate labor organization . . . cannot be subject to a collateral attack. The law is very
clear on this matter. . . . The Implementing Rules stipulate that a labor organization shall be deemed registered and
vested with legal personality on the date of issuance of its certificate of registration. Once a certificate of registration
is issued to a union, its legal personality cannot be subject to a collateral attack. In may be questioned only in an
independent petition for cancellation in accordance with Section 5 of Rule V, Book V of the Implementing Rules." 53

WHEREFORE, in view of the foregoing, the petition is PARTLY GRANTED. The Decision of the Court of Appeals dated
September 18, 2003 in CA-G.R. SP No. 72848 insofar as it affirms the May 22, 2002 Decision and August 20, 2002
Resolution of the Office of the Secretary of Department of Labor and Employment is AFFIRMED. The Decision of the
Court of Appeals insofar as it declares that the March 26, 2002 Decision of the Bureau of Labor Relations in Case No.
RO300-0108-CP-001 upholding that the legitimacy of KML as a labor organization has long become final and
executory for failure of LEGEND to appeal the same, is REVERSED and SET ASIDE.

SO ORDERED.
[G.R. No. 146206. August 1, 2011.]

SAN MIGUEL FOODS, INCORPORATED, petitioner, vs. SAN MIGUEL CORPORATION SUPERVISORS, and EXEMPT
UNION, respondent.

DECISION

PERALTA, J p:

The issues in the present case, relating to the inclusion of employees in supervisor levels 3 and 4 and the exempt
employees in the proposed bargaining unit, thereby allowing their participation in the certification election; the
application of the "community or mutuality of interests" test; and the determination of the employees who belong to
the category of confidential employees, are not novel. EcTDCI

In G.R. No. 110399, entitled San Miguel Corporation Supervisors and Exempt Union v. Laguesma, 1 the Court held
that even if they handle confidential data regarding technical and internal business operations, supervisory
employees 3 and 4 and the exempt employees of petitioner San Miguel Foods, Inc. (SMFI) are not to be considered
confidential employees, because the same do not pertain to labor relations, particularly, negotiation and settlement
of grievances. Consequently, they were allowed to form an appropriate bargaining unit for the purpose of collective
bargaining. The Court also declared that the employees belonging to the three different plants of San Miguel
Corporation Magnolia Poultry Products Plants in Cabuyao, San Fernando, and Otis, having "community or mutuality
of interests," constitute a single bargaining unit. They perform work of the same nature, receive the same wages and
compensation, and most importantly, share a common stake in concerted activities. It was immaterial that the three
plants have different locations as they did not impede the operations of a single bargaining representative. 2

Pursuant to the Court's decision in G.R. No. 110399, the Department of Labor and Employment-National Capital
Region (DOLE-NCR) conducted pre-election conferences. 3 However, there was a discrepancy in the list of eligible
voters, i.e., petitioner submitted a list of 23 employees for the San Fernando plant and 33 for the Cabuyao plant,
while respondent listed 60 and 82, respectively. 4

On August 31, 1998, Med-Arbiter Agatha Ann L. Daquigan issued an Order 5 directing Election Officer Cynthia
Tolentino to proceed with the conduct of certification election in accordance with Section 2, Rule XII of Department
Order No. 9.

On September 30, 1998, a certification election was conducted and it yielded the following results, 6 thus:

Cabuyao
Plant San Fernando

Plant Total

Yes 23 23 46

No 0 0 0

Spoiled 2 0 2

Segregated 41 35 76

––– ––– –––

Total Votes Cast 66 58 124

=== === ===

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

On October 21, 1998, the Med-Arbiter issued an Order directing respondent to submit proof showing that the
employees in the submitted list are covered by the original petition for certification election and belong to the
bargaining unit it seeks to represent and, likewise, directing petitioner to substantiate the allegations contained in its
Omnibus Objections and Challenge to Voters. 8

In compliance thereto, respondent averred that (1) the bargaining unit contemplated in the original petition is the
Poultry Division of San Miguel Corporation, now known as San Miguel Foods, Inc.; (2) it covered the operations in
Calamba, Laguna, Cavite, and Batangas and its home base is either in Cabuyao, Laguna or San Fernando, Pampanga;
and (3) it submitted individual and separate declarations of the employees whose votes were challenged in the
election. 9 SITCEA

Adding the results to the number of votes canvassed during the September 30, 1998 certification election, the final
tally showed that: number of eligible voters — 149; number of valid votes cast — 121; number of spoiled ballots — 3;
total number of votes cast — 124, with 118 (i.e., 46 + 72 = 118) "Yes" votes and 3 "No" votes. 10
The Med-Arbiter issued the Resolution 11 dated February 17, 1999 directing the parties to appear before the Election
Officer of the Labor Relations Division on March 9, 1999, 10:00 a.m., for the opening of the segregated ballots.
Thereafter, on April 12, 1999, the segregated ballots were opened, showing that out of the 76 segregated votes, 72
were cast for "Yes" and 3 for "No," with one "spoiled" ballot. 12

Based on the results, the Med-Arbiter issued the Order 13 dated April 13, 1999, stating that since the "Yes" vote
received 97% of the valid votes cast, respondent is certified to be the exclusive bargaining agent of the supervisors
and exempt employees of petitioner's Magnolia Poultry Products Plants in Cabuyao, San Fernando, and Otis.

On appeal, the then Acting DOLE Undersecretary, in the Resolution 14 dated July 30, 1999, in OS-A-2-70-91 (NCR-OD-
M-9010-017), affirmed the Order dated April 13, 1999, with modification that George C. Matias, Alma Maria M.
Lozano, Joannabel T. Delos Reyes, and Marilyn G. Pajaron be excluded from the bargaining unit which respondent
seeks to represent. She opined that the challenged voters should be excluded from the bargaining unit, because
Matias and Lozano are members of Magnolia Poultry Processing Plants Monthly Employees Union, while Delos Reyes
and Pajaron are employees of San Miguel Corporation, which is a separate and distinct entity from petitioner.

Petitioner's Partial Motion for Reconsideration 15 dated August 14, 1999 was denied by the then Acting DOLE
Undersecretary in the Order 16 dated August 27, 1999.

In the Decision 17 dated April 28, 2000, in CA-G.R. SP No. 55510, entitled San Miguel Foods, Inc. v. The Honorable
Office of the Secretary of Labor, Bureau of Labor Relations, and San Miguel Corporation Supervisors and Exempt
Union, the Court of Appeals (CA) affirmed with modification the Resolution dated July 30, 1999 of the DOLE
Undersecretary, stating that those holding the positions of Human Resource Assistant and Personnel Assistant are
excluded from the bargaining unit.

Petitioner's Motion for Partial Reconsideration 18 dated May 23, 2000 was denied by the CA in the Resolution 19
dated November 28, 2000.

Hence, petitioner filed this present petition raising the following issues:

I.
WHETHER THE COURT OF APPEALS DEPARTED FROM JURISPRUDENCE WHEN IT EXPANDED THE SCOPE OF THE
BARGAINING UNIT DEFINED BY THIS COURT'S RULING IN G.R. NO. 110399.

II.

WHETHER THE COURT OF APPEALS DEPARTED FROM JURISPRUDENCE — SPECIFICALLY, THIS COURT'S DEFINITION OF
A "CONFIDENTIAL EMPLOYEE" — WHEN IT RULED FOR THE INCLUSION OF THE "PAYROLL MASTER" POSITION IN THE
BARGAINING UNIT.

III.

WHETHER THIS PETITION IS A "REHASH" OR A "RESURRECTION" OF THE ISSUES RAISED IN G.R. NO. 110399, AS
ARGUED BY PRIVATE RESPONDENT.

Petitioner contends that with the Court's ruling in G.R. No. 110399 20 identifying the specific employees who can
participate in the certification election, i.e., the supervisors (levels 1 to 4) and exempt employees of San Miguel
Poultry Products Plants in Cabuyao, San Fernando, and Otis, the CA erred in expanding the scope of the bargaining
unit so as to include employees who do not belong to or who are not based in its Cabuyao or San Fernando plants. It
also alleges that the employees of the Cabuyao, San Fernando, and Otis plants of petitioner's predecessor, San
Miguel Corporation, as stated in G.R. No. 110399, were engaged in "dressed" chicken processing, i.e., handling and
packaging of chicken meat, while the new bargaining unit, as defined by the CA in the present case, includes
employees engaged in "live" chicken operations, i.e., those who breed chicks and grow chickens.

Respondent counters that petitioner's proposed exclusion of certain employees from the bargaining unit was a
rehashed issue which was already settled in G.R. No. 110399. It maintains that the issue of union membership
coverage should no longer be raised as a certification election already took place on September 30, 1998, wherein
respondent won with 97% votes.

Petitioner's contentions are erroneous. In G.R. No. 110399, the Court explained that the employees of San Miguel
Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando, and Otis constitute a single bargaining unit,
which is not contrary to the one-company, one-union policy. An appropriate bargaining unit is defined as a group of
employees of a given employer, comprised of all or less than all of the entire body of employees, which the collective
interest of all the employees, consistent with equity to the employer, indicate to be best suited to serve the
reciprocal rights and duties of the parties under the collective bargaining provisions of the law. 21 cHDEaC
In National Association of Free Trade Unions v. Mainit Lumber Development Company Workers Union — United
Lumber and General Workers of the Phils., 22 the Court, taking into account the "community or mutuality of
interests" test, ordered the formation of a single bargaining unit consisting of the Sawmill Division in Butuan City and
the Logging Division in Zapanta Valley, Kitcharao, Agusan [Del] Norte of the Mainit Lumber Development Company. It
held that while the existence of a bargaining history is a factor that may be reckoned with in determining the
appropriate bargaining unit, the same is not decisive or conclusive. Other factors must be considered. The test of
grouping is community or mutuality of interest. This is so because the basic test of an asserted bargaining unit's
acceptability is whether or not it is fundamentally the combination which will best assure to all employees the
exercise of their collective bargaining rights. 23 Certainly, there is a mutuality of interest among the employees of the
Sawmill Division and the Logging Division. Their functions mesh with one another. One group needs the other in the
same way that the company needs them both. There may be differences as to the nature of their individual
assignments, but the distinctions are not enough to warrant the formation of a separate bargaining unit. 24

Thus, applying the ruling to the present case, the Court affirms the finding of the CA that there should be only one
bargaining unit for the employees in Cabuyao, San Fernando, and Otis 25 of Magnolia Poultry Products Plant involved
in "dressed" chicken processing and Magnolia Poultry Farms engaged in "live" chicken operations. Certain factors,
such as specific line of work, working conditions, location of work, mode of compensation, and other relevant
conditions do not affect or impede their commonality of interest. Although they seem separate and distinct from
each other, the specific tasks of each division are actually interrelated and there exists mutuality of interests which
warrants the formation of a single bargaining unit.

Petitioner asserts that the CA erred in not excluding the position of Payroll Master in the definition of a confidential
employee and, thus, prays that the said position and all other positions with access to salary and compensation data
be excluded from the bargaining unit.

This argument must fail. Confidential employees are defined as those who (1) assist or act in a confidential capacity,
in regard (2) to persons who formulate, determine, and effectuate management policies in the field of labor
relations. 26 The two criteria are cumulative, and both must be met if an employee is to be considered a confidential
employee — that is, the confidential relationship must exist between the employee and his supervisor, and the
supervisor must handle the prescribed responsibilities relating to labor relations. The exclusion from bargaining units
of employees who, in the normal course of their duties, become aware of management policies relating to labor
relations is a principal objective sought to be accomplished by the "confidential employee rule." 27

A confidential employee is one entrusted with confidence on delicate, or with the custody, handling or care and
protection of the employer's property. 28 Confidential employees, such as accounting personnel, should be excluded
from the bargaining unit, as their access to confidential information may become the source of undue advantage. 29
However, such fact does not apply to the position of Payroll Master and the whole gamut of employees who, as
perceived by petitioner, has access to salary and compensation data. The CA correctly held that the position of
Payroll Master does not involve dealing with confidential labor relations information in the course of the
performance of his functions. Since the nature of his work does not pertain to company rules and regulations and
confidential labor relations, it follows that he cannot be excluded from the subject bargaining unit.

Corollarily, although Article 245 30 of the Labor Code limits the ineligibility to join, form and assist any labor
organization to managerial employees, jurisprudence has extended this prohibition to confidential employees or
those who by reason of their positions or nature of work are required to assist or act in a fiduciary manner to
managerial employees and, hence, are likewise privy to sensitive and highly confidential records. 31 Confidential
employees are thus excluded from the rank-and-file bargaining unit. The rationale for their separate category and
disqualification to join any labor organization is similar to the inhibition for managerial employees, because if allowed
to be affiliated with a union, the latter might not be assured of their loyalty in view of evident conflict of interests and
the union can also become company-denominated with the presence of managerial employees in the union
membership. 32 Having access to confidential information, confidential employees may also become the source of
undue advantage. Said employees may act as a spy or spies of either party to a collective bargaining agreement. 33

In this regard, the CA correctly ruled that the positions of Human Resource Assistant and Personnel Assistant belong
to the category of confidential employees and, hence, are excluded from the bargaining unit, considering their
respective positions and job descriptions. As Human Resource Assistant, 34 the scope of one's work necessarily
involves labor relations, recruitment and selection of employees, access to employees' personal files and
compensation package, and human resource management. As regards a Personnel Assistant, 35 one's work includes
the recording of minutes for management during collective bargaining negotiations, assistance to management
during grievance meetings and administrative investigations, and securing legal advice for labor issues from the
petitioner's team of lawyers, and implementation of company programs. Therefore, in the discharge of their
functions, both gain access to vital labor relations information which outrightly disqualifies them from union
membership. CTSHDI

The proceedings for certification election are quasi-judicial in nature and, therefore, decisions rendered in such
proceedings can attain finality. 36 Applying the doctrine of res judicata, the issue in the present case pertaining to the
coverage of the employees who would constitute the bargaining unit is now a foregone conclusion.

It bears stressing that a certification election is the sole concern of the workers; hence, an employer lacks the
personality to dispute the same. The general rule is that an employer has no standing to question the process of
certification election, since this is the sole concern of the workers. 37 Law and policy demand that employers take a
strict, hands-off stance in certification elections. The bargaining representative of employees should be chosen free
from any extraneous influence of management. A labor bargaining representative, to be effective, must owe its
loyalty to the employees alone and to no other. 38 The only exception is where the employer itself has to file the
petition pursuant to Article 258 39 of the Labor Code because of a request to bargain collectively. 40

With the foregoing disquisition, the Court writes finis to the issues raised so as to forestall future suits of similar
nature.
WHEREFORE, the petition is DENIED. The Decision dated April 28, 2000 and Resolution dated November 28, 2000 of
the Court of Appeals, in CA-G.R. SP No. 55510, which affirmed with modification the Resolutions dated July 30, 1999
and August 27, 1999 of the Secretary of Labor, are AFFIRMED.

SO ORDERED.
[G.R. No. 159460. November 15, 2010.]

SOLIDBANK CORPORATION (now known as FIRST METRO INVESTMENT CORPORATION), petitioner, vs. ERNESTO U.
GAMIER, ELENA R. CONDEVILLAMAR, JANICE L. ARRIOLA and OPHELIA C. DE GUZMAN, respondents.

[G.R. No. 159461. November 15, 2010.]

SOLIDBANK CORPORATION and/or its successor-in-interest, FIRST METRO INVESTMENT CORPORATION,

DEOGRACIAS N. VISTAN AND EDGARDO MENDOZA, JR., petitioners, vs. SOLIDBANK UNION AND ITS DISMISSED
OFFICERS AND MEMBERS, namely: EVANGELINE J. GABRIEL, TERESITA C. LUALHATI, ISAGANI P. MAKISIG, REY S.
PASCUA, EVELYN A. SIA, MA. VICTORIA M. VIDALLON, AUREY A. ALJIBE, REY ANTHONY M. AMPARADO, JOSE A.
ANTENOR, AUGUSTO D. ARANDIA, JR., JANICE L. ARRIOLA, RUTH SHEILA MA. BAGADIONG, STEVE D. BERING, ALAN
ROY I. BUYCO, MANALO T. CABRERA, RACHE M. CASTILLO, VICTOR O. CHUA, VIRGILIO Y. CO, JR., LEOPOLDO S.
DABAY, ARMAND V. DAYANG-HIRANG, HUBERT V. DIMAGIBA, MA. LOURDES CECILIA B. EMPARADOR, FELIX D.
ESTACIO, JR., JULIETA T. ESTRADA, MARICEL G. EVALLA, JOSE G. GUISADIO, JOSE RAINARIO C. LAOANG,
ALEXANDER A. MARTINEZ, JUAN ALEX C. NAMBONG, JOSEPHINE M. ONG, ARMANDO B. OROZCO, ARLENE R.
RODRIGUEZ, NICOMEDES P. RUIZO, JR., DON A. SANTANA, ERNESTO R. SANTOS, JR., EDNA M. SARONG, GREGORIO
S. SECRETARIO, ELLEN M. SORIANO, ROSIE C. UY, ARVIN D. VALENCIA, FERMIN JOSSEPH B. VENTURA, JR.,
EMMANUEL C. YAPTANCO, ERNESTO C. ZUNIGA, ARIEL S. ABENDAN, EMMA R. ABENDAN, PAULA AGNES A.
ANGELES, JACQUILINE B. BAQUIRAN, JENNIFER S. BARCENAS, ALVIN E. BARICANOSA, GEORGE MAXIMO P.
BARQUEZ, MA. ELENA G. BELLO, RODERICK M. BELLO, MICHAEL MATTHEW B. BILLENA, LEOPE L. CABENIAN,
NEPTALI A. CADDARAO, FERDINAND MEL S. CAPULING, MARGARETTE B. CORDOVA, MA. EDNA V. DATOR, RANIEL
C. DAYAO, RAGCY L. DE GUZMAN, LUIS E. DELOS SANTOS, CARMINA M. DEGALA, EPHRAIM RALPH A. DELFIN,
KAREN M. DEOCERA, CAROLINA C. DIZON, MARCHEL S. ESQUEJJO, JOCELYN I. ESTROBO, MINERVA S. FALLARME,
HERNANE C. FERMOCIL, RACHEL B. FETIZANAN, SAMUEL A. FLORENTINO, MENCHIE R. FRANCISCO, ERNESTO U.
GAMIER, MACARIO RODOLFO N. GARCIA, JOEL S. GARMINO, LESTER MARK Z. GATCHALIAN, MA. JINKY P. GELERA,
MA. TERESA G. GONZALES, GONZALO G. GUINIT, EMILY H. GUINO-O, FERDINAND S. HABIJAN, JUN G. HERNANDEZ,
LOURDES D. IBEAS, MA. ANGELA L. JALANDONI, JULIE T. JORNACION, MANUEL C. LIM, MA. LOURDES A. LIM,
EMERSON V. LUNA, NOLASCO B. MACATANGAY, NORMAN C. MANACO, CHERRY LOU B. MANGROBANG,
MARASIGAN G. EDMUNDO, ALLEN M. MARTINEZ, EMELITA C. MONTANO, ARLENE P. NOBLE, SHIRLEY A. ONG,
LOTIZ E. ORTIZ LUIS, PABLITO M. PALO, MARY JAINE D. PATINO, GEOFFREY T. PRADO, OMEGA MELANIE M.
QUINTANO, ANES A. RAMIREZ, RICARDO D. RAMIREZ, DANIEL O. RAQUEL, RAMON B. REYES, SALVACION N.
ROGADO, ELMOR R. ROMANA, JR., LOURDES U. SALVADOR, ELMER S. SAYLON, BENHARD E. SIMBULAN, MA.
TERESA S. SOLIS, MA. LOURDES ROCEL E. SOLIVEN, EMILY C. SUY AT, EDGAR ALLAN P. TACSUAN, RAYMOND N.
TANAY, JOCELYN Y. TAN, CANDIDO G. TISON, MA. THERESA O. TISON, EVELYN T. UYLANGCO, CION E. YAP, MA.
OPHELIA C. DE GUZMAN, MA. HIDELISA P. IRA, RAYMUND MARTIN A. ANGELES, MERVIN S. BAUTISTA, ELENA R.
CONDEVILLAMAR, CHERRY T. CO, LEOPOLDO V. DE LA ROSA, DOROTEO S. FROILAN, EMMANUEL B. GLORIA,
JULIETEL JUBAC AND ROSEMARIE L. TANG, respondents.

DECISION

VILLARAMA, JR., J p:
The consolidated petitions before us seek to reverse and set aside the Decision 1 dated March 10, 2003 of the Court
of Appeals (CA) in CA-G.R. SP Nos. 67730 and 70820 which denied the petitions for certiorari filed by Solidbank
Corporation (Solidbank) and ordered the reinstatement of the above-named individual respondents to their former
positions.

The Antecedents

Sometime in October 1999, petitioner Solidbank and respondent Solidbank Employees' Union (Union) were set to
renegotiate the economic provisions of their 1997-2001 Collective Bargaining Agreement (CBA) to cover the
remaining two years thereof. Negotiations commenced on November 17, 1999 but seeing that an agreement was
unlikely, the Union declared a deadlock on December 22, 1999 and filed a Notice of Strike on December 29, 1999. 2
During the collective bargaining negotiations, some Union members staged a series of mass actions. In view of the
impending actual strike, then Secretary of Labor and Employment Bienvenido E. Laguesma assumed jurisdiction over
the labor dispute, pursuant to Article 263 (g) of the Labor Code, as amended. The assumption order dated January
18, 2000 directed the parties "to cease and desist from committing any and all acts that might exacerbate the
situation." 3

In his Order 4 dated March 24, 2000, Secretary Laguesma resolved all economic and non-economic issues submitted
by the parties, as follows: aDcEIH

WHEREFORE, premises considered, judgment is hereby issued:

a.Directing Solidbank Corporation and Solidbank Union to conclude their Collective Bargaining Agreement for the
years 2000 and 2001, incorporating the dispositions above set forth;

b.Dismissing the unfair labor practice charge against Solidbank Corporation;

c.Directing Solidbank to deduct or check-off from the employees' lump sum payment an amount equivalent to seven
percent (7%) of their economic benefits for the first (1st) year, inclusive of signing bonuses, and to remit or turn over
the said sum to the Union's authorized representative, subject to the requirements of check-off; TaHDAS

d.Directing Solidbank to recall the show-cause memos issued to employees who participated in the mass actions if
such memos were in fact issued.
SO ORDERED. 5

Dissatisfied with the Secretary's ruling, the Union officers and members decided to protest the same by holding a
rally infront of the Office of the Secretary of Labor and Employment in Intramuros, Manila, simultaneous with the
filing of their motion for reconsideration of the March 24, 2000 Order. Thus, on April 3, 2000, an overwhelming
majority of employees, including the individual respondents, joined the "mass leave" and "protest action" at the
Department of Labor and Employment (DOLE) office while the bank's provincial branches in Cebu, Iloilo, Bacolod and
Naga followed suit and "boycotted regular work." 6 The union members also picketed the bank's Head Office in
Binondo on April 6, 2000, and Paseo de Roxas branch on April 7, 2000. DcTaEH

As a result of the employees' concerted actions, Solidbank's business operations were paralyzed. On the same day,
then President of Solidbank, Deogracias N. Vistan, issued a memorandum 7 addressed to all employees calling their
absence from work and demonstration infront of the DOLE office as an illegal act, and reminding them that they have
put their jobs at risk as they will be asked to show cause why they should not be terminated for participating in the
union-instigated concerted action. The employees' work abandonment/boycott lasted for three days, from April 3 to
5, 2000.

On the third day of the concerted work boycott (April 5, 2000), Vistan issued another memorandum, 8 this time
declaring that the bank is prepared to take back employees who will report for work starting April 6, 2000 "provided
these employees were/are not part of those who led or instigated or coerced their co-employees into participating in
this illegal act." Out of the 712 employees who took part in the three-day work boycott, a total of 513 returned to
work and were accepted by the bank. The remaining 199 employees insisted on defying Vistan's directive, which
included herein respondents Ernesto U. Gamier, Elena R. Condevillamar, Janice L. Arriola and Ophelia C. De Guzman.
For their failure to return to work, the said 199 employees were each issued a show-cause memo directing them to
submit a written explanation within twenty-four (24) hours why they should not be dismissed for the "illegal
strike . . . in defiance of . . . the Assumption Order of the Secretary of Labor . . . resulting [to] grave and irreparable
damage to the Bank", and placing them under preventive suspension. 9

The herein 129 individual respondents were among the 199 employees who were terminated for their participation
in the three-day work boycott and protest action. On various dates in June 2000, twenty-one (21) of the individual
respondents executed Release, Waiver and Quitclaim in favor of Solidbank. 10

On May 8, 2000, Secretary Laguesma denied the motions for reconsideration filed by Solidbank and the Union. 11
HIACEa
The Union filed on May 11, 2000 a Motion for Clarification of certain portions of the Order dated March 24, 2000,
and on May 19, 2000 it filed a Motion to Resolve the Supervening Issue of Termination of 129 Striking Employees. On
May 26, 2000, Secretary Laguesma granted the first motion by clarifying that the contract-signing bonus awarded in
the new CBA should likewise be based on the adjusted pay. However, the Union's second motion was denied, 12 as
follows:

This Office cannot give due course to the Union's second motion. The labor dispute arising from the termination of
the Bank employees is an issue that ought to be entertained in a separate case. The assumption order of January 18,
2000 covered only the bargaining deadlock between the parties and the alleged violation of the CBA provision on
regularization. We have already resolved both the deadlock and the CBA violation issues. The only motion pending
before us is the motion for clarification, which we have earlier disposed of in this Order. Thus, the only option left is
for the Union to file a separate case on the matter. 13

In the meantime, the Monetary Board on July 28, 2000 approved the request of Metropolitan Bank and Trust
Company (Metrobank) to acquire the existing non-real estate assets of Solidbank in consideration of assumption by
Metrobank of the liabilities of Solidbank, and to integrate the banking operations of Solidbank with Metrobank.
Subsequently, Solidbank was merged with First Metro Investment Corporation, and Solidbank, the surviving
corporation, was renamed the First Metro Investment Corporation (FMIC). 14 By August 31, 2000, Solidbank ceased
banking operations after surrendering its expanded banking license to the Bangko Sentral ng Pilipinas. Petitioners
duly filed a Termination Report with the DOLE and granted separation benefits to the bank's employees. 15

Respondents Gamier, Condevillamar, Arriola and De Guzman filed separate complaints for illegal dismissal, moral and
exemplary damages and attorney's fees on April 28, May 15 and May 29, 2000, respectively (NLRC NCR Case Nos.
[S]30-04-01891-00, 30-05-03002-00 and 30-05-02253-00). The cases were consolidated before Labor Arbiter
Potenciano S. Cañizares, Jr. Respondent Union joined by the 129 dismissed employees filed a separate suit against
petitioners for illegal dismissal, unfair labor practice and damages (NLRC NCR Case No. 30-07-02920-00 assigned to
Labor Arbiter Luis D. Flores). DHEACI

Labor Arbiters' Rulings

In his Decision dated November 14, 2000, Labor Arbiter Potenciano S. Cañizares, Jr. dismissed the complaints of
Gamier, Condevillamar, Arriola and De Guzman. It was held that their participation in the illegal strike violated the
Secretary of Labor's return to work order upon the latter's assumption of the labor dispute and after directing the
parties to execute their new CBA. 16

On March 16, 2001, Labor Arbiter Luis D. Flores rendered a decision 17 in favor of respondents Union and employees,
the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered declaring complainants' dismissal as illegal and
unjustified and ordering the respondents Solidbank Corporation and/or its successor-in-interest First Metro
Investment Corporation and/or Metropolitan Bank and Trust Company and/or Deogracias Vistan and/or Edgardo
Mendoza to reinstate complainants to their former positions. Concomitantly, said respondents are hereby ordered to
jointly and severally pay the complainants their full backwages and other employee's benefits from the time of their
dismissal up to the date of their actual reinstatement; payment of ten (10%) percent attorney's fees; payment of ONE
HUNDRED FIFTY THOUSAND PESOS (P150,000.00) each as moral damages and ONE HUNDRED THOUSAND PESOS
(P100,000.00) each as exemplary damages which are computed, at the date of this decision in the amount of THIRTY
THREE MILLION SEVEN HUNDRED NINETY FOUR THOUSAND TWO HUNDRED TWENTY TWO PESOS and 80/100
(P33,794,222.80), by the Computation and Examination Unit of this branch and becomes an integral part of this
Decision.

SO ORDERED. 18 SCaEcD

Respondents Gamier, Condevillamar, Arriola and De Guzman appealed the decision of Labor Arbiter Cañizares, Jr. to
the National Labor Relations Commission (NLRC NCR CA No. 027342-01). Petitioners likewise appealed from the
decision of Labor Arbiter Flores (NLRC NCR CA No. 028510-01).

Rulings of the NLRC

On July 23, 2001, the NLRC's Second Division rendered a Decision 19 reversing the decision of Labor Arbiter Flores, as
follows:

WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby VACATED and SET ASIDE and a new
one entered dismissing the complaint for illegal dismissal and unfair labor practice for lack of merit. As equitable
relief, respondents are hereby ordered to pay complainants separation benefits as provided under the CBA at least
one (1) month pay for every year of service whichever is higher.

SO ORDERED. 20 ECDHIc

The Second Division ruled that the mass action held by the bank employees on April 3, 2000 infront of the Office of
the Secretary of Labor was not a legitimate exercise of the employees' freedom of speech and assembly. Such was a
strike as defined under Article 212 (o) of the Labor Code, as amended, which does not distinguish as to whom the
action of the employees is directed against, nor the place/location where the concerted action of the employees took
place. Complainants Gamier, Condevillamar, Arriola and De Guzman did not report for work and picketed the DOLE
premises on April 3, 2000; they continuously refused to report back to work until April 7, 2000 when they were
issued a Notice of Termination. It was stressed that the mass action of the bank employees was an incident of a labor
dispute, and hence the concerted work abandonment was a prohibited activity contemplated under Article 264 (a) of
the Labor Code, as amended, upon assumption of jurisdiction by the Secretary of Labor. Citing this Court's ruling in
the case of Telefunken Semiconductors Employees Union-FFW v. Court of Appeals, 21 the Second Division found
there was just and valid cause for the dismissal of complainants. 22

On the charge of forum shopping with respect to twenty-one (21) individual complainants who have voluntarily
settled their claims against Solidbank, the said cases not having been dismissed by the Labor Arbiter despite proper
motion, 23 the Second Division found that complainants admitted in their Answer that the said employees preferred
to pursue their own independent action against the bank and their names were stricken out from the original
complaint; hence, the Labor Arbiter erred in granting relief to said employees. Nevertheless, it held that the
complaint will not be dismissed on this ground as the issue of forum shopping should have been raised in the
proceedings before the Labor Arbiter. 24

Respondents filed a motion for reconsideration while the petitioners filed a partial motion for reconsideration. Both
motions were denied under Resolution 25 dated September 28, 2001.

As to respondents' appeal, the NLRC's Third Division by Decision 26 dated January 31, 2002, reversed the decision of
Labor Arbiter Cañizares, Jr., as follows: cEAHSC

WHEREFORE, the decision appealed from is hereby SET ASIDE and a new one entered finding the respondent
Solidbank Corporation liable for the illegal dismissal of complainants Ernesto U. Gamier, Elena P. Condevillamar,
Janice L. Arriola and Maria Ophelia C. de Guzman, and ordering the respondent bank to reinstate the complainants to
their former positions without loss of seniority rights and to pay full backwages reckoned from the time of their
illegal dismissal up to the time of their actual/payroll reinstatement. Should reinstatement not be feasible,
respondent bank is further ordered to pay complainants their separation pay in accordance with the provisions of the
subsisting Collective Bargaining Agreement.

All other claims are DISMISSED for lack of merit.

SO ORDERED. 27 ISHaTA

The Third Division held that the protest action staged by the bank's employees before the DOLE did not amount to a
strike but rather an exercise of their right to express frustration and dissatisfaction over the decision rendered by the
Secretary of Labor. Hence, it cannot be concluded that the activity is per se illegal or violative of the assumption
order considering that at the time, both parties had pending motions for reconsideration of the Secretary's decision.
Moreover, it was found that Gamier, Condevillamar, Arriola and De Guzman were not fully investigated on the charge
that they had instigated or actively participated in an illegal activity; neither was it shown that the explanations
submitted by them were considered by the management. Since said employees had presented evidence of plausible
and acceptable reasons for their absence at the workplace at the time of the protest action, their termination based
on such alleged participation in the protest action was unjustified. 28

Respondents filed a "partial motion" while the petitioners filed a motion for reconsideration of the Decision dated
January 31, 2002. Both motions were denied under Resolution 29 dated March 8, 2002.

On November 20, 2001, petitioners filed a petition for certiorari before the CA assailing the July 23, 2001 Decision
and Resolution dated September 28, 2001 of the NLRC's Second Division insofar as it ordered the payment of
separation benefits to the 129 terminated employees of Solidbank who participated in the mass action/strike (CA-
G.R. SP No. 67730). 30

On May 23, 2002, petitioners filed a separate petition in the CA (CA-G.R. SP No. 70820) seeking the reversal of the
January 31, 2002 Decision and Resolution dated March 8, 2002 of the NLRC's Third Division and praying for the
following reliefs: (1) immediate issuance of a TRO and writ of preliminary injunction to restrain/enjoin the NLRC from
issuing a writ of execution in NLRC CA No. 027342-01; (2) the petition be consolidated with CA-G.R. SP No. 67730
before the Thirteenth Division and CA-G.R. SP No. 68054 before the Third Division, or if consolidation is no longer
possible, that the petition be resolved independently of the aforesaid cases; and (3) granting the petition by annulling
and setting aside the January 31, 2002 Decision of the NLRC, and reinstating the November 14, 2000 Decision of
Labor Arbiter Cañizares, Jr. 31 TcEaAS

On August 9, 2002, petitioners filed a Manifestation before the Fifteenth Division (CA-G.R. SP No. 67730) attaching
thereto a copy of the Decision 32 (dated July 26, 2002) rendered by the CA's Special Third Division in CA-G.R. SP No.
68998, a petition for certiorari separately filed by Metrobank which also sought to annul and set aside the July 23,
2001 Decision of the NLRC's Second Division insofar as it ordered the payment of separation benefits to the dismissed
employees of Solidbank. In the said decision, the CA's Fourteenth Division gave due course to the petition of
Metrobank and affirmed the July 23, 2001 decision of the NLRC but reversed and set aside the portion of the decision
ordering the payment of separation benefits. 33

On September 11, 2002, respondents filed an Omnibus Motion and Counter-Manifestation arguing that petitioners'
Manifestation constitutes a judicial admission that Metrobank engaged in forum shopping; it was thus prayed that
CA-G.R. SP No. 68998 be consolidated with CA-G.R. SP No. 67730, the latter having a lower case number. Further,
respondents attached a copy of the Decision 34 dated August 29, 2002 rendered by the CA's Second Division in CA-
G.R. SP No. 68054, the petition separately filed by the Union and the 129 terminated employees of Solidbank from
the July 23, 2001 Decision of the NLRC's Second Division. The CA's Second Division granted the petition in CA-G.R. SP
No. 68054 and reinstated the March 16, 2001 Decision of Labor Arbiter Flores.
CA-G.R. SP Nos. 67730 and 70820 were consolidated before the Twelfth Division.

Court of Appeals' Ruling

On March 10, 2003, the CA rendered its Decision 35 the dispositive portion of which reads:

WHEREFORE, the twin petitions are hereby DENIED. The dismissal of private respondents are hereby declared to be
illegal. Consequently, petitioner is ordered to reinstate private respondents to their former position, consonant with
the Decision of this Court in CA-G.R. SP No. 68054. HcSDIE

SO ORDERED. 36

First, on the issue of forum shopping, the CA found that while there were indeed two cases filed respecting the same
matter of illegality of the dismissal of certain employees of Solidbank, it appears that the individual complainants
have no hand in initiating the case before the Labor Arbiter for which the Union filed the complaint in behalf of its
members. Hence, the individual complainants cannot be said to have deliberately or consciously sought two different
fora for the same issues and causes of action. Petitioners, moreover, failed to call the attention of the Labor Arbiter
as to the fact of filing of similar complaints by four employees.

As to the nature of the mass action resorted to by the employees of Solidbank, the CA ruled that it was a legitimate
exercise of their right to free expression, and not a strike proscribed when the Secretary of Labor assumed
jurisdiction over the impassé between Solidbank and the Union in the collective bargaining negotiations. The CA thus
reasoned:

. . . while conceding that the aggregated acts of the private respondents may have resulted in a stoppage of work,
such was the necessary result of the exercise of a Constitutional right. It is beyond cavil that the mass action was
done, not to exert any undue pressure on the petitioner with regard to wages or other economic demands, but to
express dissatisfaction over the decision of the Labor Secretary subsequent to his assumption of jurisdiction. Surely,
this is one course of action that is not enjoined even when a labor dispute is placed under the assumption of the said
Labor Secretary. To allow an act of the Labor Secretary — one man in the Executive Department — to whittle down a
freedom guaranteed by the Bill of Rights would be to place upon that freedom a limitation never intended by the
several framers of our Constitution. In effect, it would make a right enshrined in the Fundamental Law that was
ratified by the Sovereign People, subordinate to a prerogative granted by the Labor Code, a statutory enactment
made by mere representatives of the People. This anomaly We cannot allow.
xxx xxx xxx

Was private respondents' act of massing in front of the DOLE Building calculated by them to cause work stoppage, or
were they merely airing their grievance over the ruling of the Labor Secretary in exercise of their civil liberties? Who
can divine the motives of their hearts? But when two different interpretations are possible, the courts must lean
towards that which gives meaning and vitality to the Bill of Rights. . . . 37 (Emphasis supplied.) cCAIDS

On April 2, 2003, petitioners filed a motion for reconsideration but this was denied by the CA in its Resolution 38
dated August 7, 2003.

The Petitions

G.R. No. 159460

Petitioners argued that the CA erred in holding that the mass action of April 3, 2000 infront of the Office of the
Secretary of Labor was not a strike considering that it had all the elements of a strike and the respondents judicially
admitted that it was a strike. The CA deemed the mass action as an exercise of the respondents' freedom of
expression but such constitutional right is not absolute and subject to certain well-defined exceptions. Moreover, a
mass action of this nature is considered a strike and not an exercise of one's freedom of expression, considering
further that the Secretary's Order dated January 18, 2000 is a valid exercise of police power.

Petitioners assail the CA in not considering the damage and prejudice caused to the bank and its clients by
respondents' illegal acts. Respondents' mass actions crippled banking operations. Over-the-counter transactions
were greatly undermined. Checks for clearing were significantly delayed. On-line transactions were greatly
hampered, causing inestimable damage to the nationwide network of automated teller machines. Respondent
Union's actions clearly belie its allegation that its mass action was merely intended to protest and express their
dissatisfaction with the Secretary's Order dated March 24, 2000.

In view of the illegal strike conducted in violation of the Secretary's assumption order, petitioners maintain that the
dismissal of respondents was not illegal, as consistently ruled by this Court in many cases. Even granting arguendo
that their termination was illegal, the CA erred in ordering the reinstatement of respondents and holding that
Solidbank, FMIC and Metrobank are solidarily liable to the respondents. Lastly, the CA erred in not finding that
respondents were guilty of forum shopping as respondents' claim that they did not know the Union had filed a
complaint was unbelievable under the circumstances. 39 EHDCAI
G.R. No. 159461

Petitioners contend that the CA erred in ruling that the dismissal of respondents Gamier, Condevillamar, Arriola and
De Guzman was illegal, considering that this was not an issue raised in the petition for certiorari before the appellate
court. What was raised by petitioners was only the propriety of the award of separation pay by the NLRC which in
fact declared their dismissal to be valid and legal.

Petitioners maintain that respondents are not entitled to separation pay even if the dismissal was valid because they
committed serious misconduct and/or illegal act in defying the Secretary's assumption order. Moreover, the CA also
erred in disregarding the Release, Waiver and Quitclaim executed by twenty-one (21) individual respondents who
entered into a compromise agreement with Solidbank. 40

Issues

The fundamental issues to be resolved in this controversy are: (1) whether the protest rally and concerted work
abandonment/boycott staged by the respondents violated the Order dated January 18, 2000 of the Secretary of
Labor; (2) whether the respondents were validly terminated; and (3) whether the respondents are entitled to
separation pay or financial assistance.

Our Ruling

Article 212 of the Labor Code, as amended, defines strike as any temporary stoppage of work by the concerted action
of employees as a result of an industrial or labor dispute. A labor dispute 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 or not the
disputants stand in the proximate relation of employers and employees. 41 The term "strike" shall comprise not only
concerted work stoppages, but also slowdowns, mass leaves, sitdowns, attempts to damage, destroy or sabotage
plant equipment and facilities and similar activities. 42 Thus, the fact that the conventional term "strike" was not
used by the striking employees to describe their common course of action is inconsequential, since the substance of
the situation, and not its appearance, will be deemed to be controlling. 43 CScTDE

After a thorough review of the records, we hold that the CA patently erred in concluding that the concerted mass
actions staged by respondents cannot be considered a strike but a legitimate exercise of the respondents' right to
express their dissatisfaction with the Secretary's resolution of the economic issues in the deadlocked CBA
negotiations with petitioners. It must be stressed that the concerted action of the respondents was not limited to the
protest rally infront of the DOLE Office on April 3, 2000. Respondent Union had also picketed the Head Office and
Paseo de Roxas Branch. About 712 employees, including those in the provincial branches, boycotted and absented
themselves from work in a concerted fashion for three continuous days that virtually paralyzed the employer's
banking operations. Considering that these mass actions stemmed from a bargaining deadlock and an order of
assumption of jurisdiction had already been issued by the Secretary of Labor to avert an impending strike, there is no
doubt that the concerted work abandonment/boycott was the result of a labor dispute.

In Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. National Labor Relations Commission, 44 petitioners
union and members held similar protest rallies infront of the offices of BLR and DOLE Secretary and at the company
plants. We declared that said mass actions constituted illegal strikes:

Petitioner Union contends that the protests or rallies conducted on February 21 and 23, 2001 are not within the
ambit of strikes as defined in the Labor Code, since they were legitimate exercises of their right to peaceably
assemble and petition the government for redress of grievances. Mainly relying on the doctrine laid down in the case
of Philippine Blooming Mills Employees Organization v. Philippine Blooming Mills Co., Inc., it argues that the protest
was not directed at Toyota but towards the Government (DOLE and BLR). It explains that the protest is not a strike as
contemplated in the Labor Code. The Union points out that in Philippine Blooming Mills Employees Organization, the
mass action staged in Malacañang to petition the Chief Executive against the abusive behavior of some police officers
was a proper exercise of the employees' right to speak out and to peaceably gather and ask government for redress
of their grievances.

The Union's position fails to convince us. aDHCcE

While the facts in Philippine Blooming Mills Employees Organization are similar in some respects to that of the
present case, the Union fails to realize one major difference: there was no labor dispute in Philippine Blooming Mills
Employees Organization. In the present case, there was an on-going labor dispute arising from Toyota's refusal to
recognize and negotiate with the Union, which was the subject of the notice of strike filed by the Union on January
16, 2001. Thus, the Union's reliance on Philippine Blooming Mills Employees Organization is misplaced, as it cannot
be considered a precedent to the case at bar.

xxx xxx xxx

Applying pertinent legal provisions and jurisprudence, we rule that the protest actions undertaken by the Union
officials and members on February 21 to 23, 2001 are not valid and proper exercises of their right to assemble and
ask government for redress of their complaints, but are illegal strikes in breach of the Labor Code. The Union's
position is weakened by the lack of permit from the City of Manila to hold "rallies." Shrouded as demonstrations,
they were in reality temporary stoppages of work perpetrated through the concerted action of the employees who
deliberately failed to report for work on the convenient excuse that they will hold a rally at the BLR and DOLE offices
in Intramuros, Manila, on February 21 to 23, 2001 . . . (Emphasis supplied.)

Moreover, it is explicit from the directive of the Secretary in his January 18, 2000 Order that the Union and its
members shall refrain from committing "any and all acts that might exacerbate the situation," 45 which certainly
includes concerted actions. For all intents and purposes, therefore, the respondents staged a strike ultimately aimed
at realizing their economic demands. Whether such pressure was directed against the petitioners or the Secretary of
Labor, or both, is of no moment. All the elements of strike are evident in the Union-instigated mass actions.

The right to strike, while constitutionally recognized, is not without legal constrictions. 46 Article 264 (a) of the Labor
Code, as amended, provides:

Art. 264.Prohibited activities. — (a) . . .

No strike or lockout shall be declared after assumption of jurisdiction by the President or the Secretary or after
certification or submission of the dispute to compulsory or voluntary arbitration or during the pendency of cases
involving the same grounds for the strike or lockout. cCESaH

xxx xxx xxx (Emphasis supplied.)

The Court has consistently ruled that once the Secretary of Labor assumes jurisdiction over a labor dispute, such
jurisdiction should not be interfered with by the application of the coercive processes of a strike or lockout. 47 A
strike that is undertaken despite the issuance by the Secretary of Labor of an assumption order and/or certification is
a prohibited activity and thus illegal. 48

Article 264 (a) of the Labor Code, as amended, also considers it a prohibited activity to declare a strike "during the
pendency of cases involving the same grounds for the same strike." 49 There is no dispute that when respondents
conducted their mass actions on April 3 to 6, 2000, the proceedings before the Secretary of Labor were still pending
as both parties filed motions for reconsideration of the March 24, 2000 Order. Clearly, respondents knowingly
violated the aforesaid provision by holding a strike in the guise of mass demonstration simultaneous with concerted
work abandonment/boycott.

Notwithstanding the illegality of the strike, we cannot sanction petitioners' act of indiscriminately terminating the
services of individual respondents who admitted joining the mass actions and who have refused to comply with the
offer of the management to report back to work on April 6, 2000. The liabilities of individual respondents must be
determined under Article 264 (a) of the Labor Code, as amended:

Art. 264. Prohibited activities. — . . .

xxx xxx xxx

Any worker whose employment has been terminated as a consequence of an unlawful lockout shall be entitled to
reinstatement with full back wages. Any union officer who knowingly participates in an illegal strike and any worker
or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have
lost his employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute
sufficient ground for termination of his employment, even if a replacement had been hired by the employer during
such lawful strike. HIcTDE

xxx xxx xxx

The foregoing shows that the law makes a distinction between union officers and members. For knowingly
participating in an illegal strike or participating in the commission of illegal acts during a strike, the law provides that
a union officer may be terminated from employment. The law grants the employer the option of declaring a union
officer who participated in an illegal strike as having lost his employment. It possesses the right and prerogative to
terminate the union officers from service. 50

However, a worker merely participating in an illegal strike may not be terminated from employment. It is only when
he commits illegal acts during a strike that he may be declared to have lost employment status. 51 We have held that
the responsibility of union officers, as main players in an illegal strike, is greater than that of the members and,
therefore, limiting the penalty of dismissal only for the former for participation in an illegal strike is in order. 52
Hence, with respect to respondents who are union officers, the validity of their termination by petitioners cannot be
questioned. Being fully aware that the proceedings before the Secretary of Labor were still pending as in fact they
filed a motion for reconsideration of the March 24, 2000 Order, they cannot invoke good faith as a defense. 53

For the rest of the individual respondents who are union members, the rule is that an ordinary striking worker cannot
be terminated for mere participation in an illegal strike. There must be proof that he or she committed illegal acts
during a strike. In all cases, the striker must be identified. But proof beyond reasonable doubt is not required.
Substantial evidence available under the attendant circumstances, which may justify the imposition of the penalty of
dismissal, may suffice. Liability for prohibited acts is to be determined on an individual basis. 54
Petitioners have not adduced evidence on such illegal acts committed by each of the individual respondents who are
union members. Instead, petitioners simply point to their admitted participation in the mass actions which they knew
to be illegal, being in violation of the Secretary's assumption order. However, the acts which were held to be
prohibited activities are the following: ITEcAD

. . . where the strikers shouted slanderous and scurrilous words against the owners of the vessels; where the strikers
used unnecessary and obscene language or epithets to prevent other laborers to go to work, and circulated libelous
statements against the employer which show actual malice; where the protestors used abusive and threatening
language towards the patrons of a place of business or against co-employees, going beyond the mere attempt to
persuade customers to withdraw their patronage; where the strikers formed a human cordon and blocked all the
ways and approaches to the launches and vessels of the vicinity of the workplace and perpetrated acts of violence
and coercion to prevent work from being performed; and where the strikers shook their fists and threatened non-
striking employees with bodily harm if they persisted to proceed to the workplace. . . 55

The dismissal of herein respondent-union members are therefore unjustified in the absence of a clear showing that
they committed specific illegal acts during the mass actions and concerted work boycott.

Are these dismissed employees entitled to backwages and separation pay?

The award of backwages is a legal consequence of a finding of illegal dismissal. Assuming that respondent-union
members have indeed reported back to work at the end of the concerted mass actions, but were soon terminated by
petitioners who found their explanation unsatisfactory, they are not entitled to backwages in view of the illegality of
the said strike. Thus, we held in G & S Transport Corporation v. Infante 56 —

It can now therefore be concluded that the acts of respondents do not merit their dismissal from employment
because it has not been substantially proven that they committed any illegal act while participating in the illegal
strike. . . .

xxx xxx xxx

With respect to backwages, the principle of a "fair day's wage for a fair day's labor" remains as the basic factor in
determining the award thereof. If there is no work performed by the employee there can be no wage or pay unless,
of course, the laborer was able, willing and ready to work but was illegally locked out, suspended or dismissed or
otherwise illegally prevented from working. While it was found that respondents expressed their intention to report
back to work, the latter exception cannot apply in this case. In Philippine Marine Officers' Guild v. Compañia
Maritima, as affirmed in Philippine Diamond Hotel and Resort v. Manila Diamond Hotel Employees Union, the Court
stressed that for this exception to apply, it is required that the strike be legal, a situation that does not obtain in the
case at bar. (Emphasis supplied.) IEAacS

Under the circumstances, respondents' reinstatement without backwages suffices for the appropriate relief. But
since reinstatement is no longer possible, given the lapse of considerable time from the occurrence of the strike, not
to mention the fact that Solidbank had long ceased its banking operations, the award of separation pay of one (1)
month salary for each year of service, in lieu of reinstatement, is in order. 57 For the twenty-one (21) individual
respondents who executed quitclaims in favor of the petitioners, whatever amount they have already received from
the employer shall be deducted from their respective separation pay.

Petitioners contended that in view of the blatant violation of the Secretary's assumption order by the striking
employees, the award of separation pay is unjust and unwarranted. That respondent-members themselves
knowingly participated in the illegal mass actions constitutes serious misconduct which is a just cause under Article
282 for terminating an employee.

We are not persuaded.

As we stated earlier, the Labor Code protects an ordinary, rank-and-file union member who participated in such a
strike from losing his job, provided that he did not commit an illegal act during the strike. 58 Article 264 (e) of the
Labor Code, as amended, provides for such acts which are generally prohibited during concerted actions such as
picketing: HEacDA

No person engaged in picketing shall commit any act of violence, coercion or intimidation or obstruct the free ingress
to or egress from the employer's premises for lawful purposes, or obstruct public thoroughfares. (Emphasis
supplied.)

Petitioners have not adduced substantial proof that respondent-union members perpetrated any act of violence,
intimidation, coercion or obstruction of company premises and public thoroughfares. It did not submit in evidence
photographs, police reports, affidavits and other available evidence.

As to the issue of solidary liability, we hold that Metrobank cannot be held solidarily liable with Solidbank for the
claims of the latter's dismissed employees. There is no showing that Metrobank is the successor-in-interest of
Solidbank. Based on petitioners' documentary evidence, Solidbank was merged with FMIC, with Solidbank as the
surviving corporation, and was later renamed as FMIC. While indeed Solidbank's banking operations had been
integrated with Metrobank, there is no showing that FMIC has ceased business operations. FMIC as successor-in-
interest of Solidbank remains solely liable for the sums herein adjudged against Solidbank.
Neither should individual petitioners Vistan and Mendoza be held solidarily liable for the claims adjudged against
petitioner Solidbank. Article 212 (e) 59 does not state that corporate officers are personally liable for the unpaid
salaries or separation pay of employees of the corporation. The liability of corporate officers for corporate debts
remains governed by Section 31 60 of the Corporation Code. cDCEIA

It is basic that a corporation is invested by law with a personality separate and distinct from those of the persons
composing it as well as from that of any other legal entity to which it may be related. Mere ownership by a single
stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself sufficient
ground for disregarding the separate corporate personality. 61 In labor cases, in particular, the Court has held
corporate directors and officers solidarily liable with the corporation for the termination of employment of corporate
employees done with malice or in bad faith. 62 Bad faith is never presumed. 63 Bad faith does not simply connote
bad judgment or negligence — it imports a dishonest purpose or some moral obliquity and conscious doing of wrong.
It means a breach of a known duty through some motive or interest or ill-will that partakes of the nature of fraud. 64

Respondents have not satisfactorily proven that Vistan and Mendoza acted with malice, ill-will or bad faith. Hence,
said individual petitioners are not liable for the separation pay of herein respondents-union members.

WHEREFORE, the petitions are PARTLY GRANTED. The Decision dated March 10, 2003 of the Court of Appeals in CA-
G.R. SP Nos. 67730 and 70820 is hereby SET ASIDE. Petitioner Solidbank Corporation (now FMIC) is hereby ORDERED
to pay each of the above-named individual respondents, except union officers who are hereby declared validly
dismissed, separation pay equivalent to one (1) month salary for every year of service. Whatever sums already
received from petitioners under any release, waiver or quitclaim shall be deducted from the total separation pay due
to each of them. ISCaDH

The NLRC is hereby directed to determine who among the individual respondents are union members entitled to the
separation pay herein awarded, and those union officers who were validly dismissed and hence excluded from the
said award.

No costs.

SO ORDERED.
[G.R. No. 178409. June 8, 2011.]

YOLITO FADRIQUELAN, ARTURO EGUNA, ARMANDO MALALUAN, DANILO ALONSO, ROMULO DIMAANO, ROEL
MAYUGA, WILFREDO RIZALDO, ROMEO SUICO, DOMINGO ESCAMILLAS and DOMINGO BAUTRO, petitioners, vs.
MONTEREY FOODS CORPORATION, respondent.

[G.R. No. 178434. June 8, 2011.]

MONTEREY FOODS CORPORATION, petitioner, vs. BUKLURAN NG MGA MANGGAGAWA SA MONTEREY-ILAW AT

BUKLOD NG MANGGAGAWA, YOLITO FADRIQUELAN, CARLITO ABACAN, ARTURO EGUNA, DANILO ROLLE,
ALBERTO CASTILLO, ARMANDO MALALUAN, DANILO ALFONSO, RUBEN ALVAREZ, ROMULO DIMAANO, ROEL
MAYUGA, JUANITO TENORIO, WILFREDO RIZALDO, JOHN ASOTIGUE, NEMESIO AGTAY, ROMEO SUICO, DOMINGO
ESCAMILLAS and DOMINGO BAUTRO, respondents.

DECISION

ABAD, J p:

These cases are about the need to clearly identify, for establishing liability, the union officers who took part in the
illegal slowdown strike after the Department of Labor and Employment (DOLE) Secretary assumed jurisdiction over
the labor dispute. DIESaC

The Facts and the Case

On April 30, 2002 the three-year collective bargaining agreement or CBA between the union Bukluran ng
Manggagawa sa Monterey-Ilaw at Buklod ng Manggagawa (the union) and Monterey Foods Corporation (the
company) expired. On March 28, 2003 after the negotiation for a new CBA reached a deadlock, the union filed a
notice of strike with the National Conciliation and Mediation Board (NCMB). To head off the strike, on April 30, 2003
the company filed with the DOLE a petition for assumption of jurisdiction over the dispute in view of its dire effects
on the meat industry. In an Order dated May 12, 2003, the DOLE Secretary assumed jurisdiction over the dispute and
enjoined the union from holding any strike. It also directed the union and the company to desist from taking any
action that may aggravate the situation.

On May 21, 2003 the union filed a second notice of strike before the NCMB on the alleged ground that the company
committed unfair labor practices. On June 10, 2003 the company sent notices to the union officers, charging them
with intentional acts of slowdown. Six days later or on June 16 the company sent new notices to the union officers,
informing them of their termination from work for defying the DOLE Secretary's assumption order.
On June 23, 2003, acting on motion of the company, the DOLE Secretary included the union's second notice of strike
in his earlier assumption order. But, on the same day, the union filed a third notice of strike based on allegations that
the company had engaged in union busting and illegal dismissal of union officers. On July 7, 2003 the company filed a
petition for certification of the labor dispute to the National Labor Relations Commission (NLRC) for compulsory
arbitration but the DOLE Secretary denied the motion. He, however, subsumed the third notice of strike under the
first and second notices.

On November 20, 2003 the DOLE rendered a decision that, among other things, upheld the company's termination of
the 17 union officers. The union and its officers appealed the decision to the Court of Appeals (CA).

On May 29, 2006 the CA rendered a decision, upholding the validity of the company's termination of 10 union officers
but declaring illegal that of the other seven. Both parties sought recourse to this Court, the union in G.R. 178409 and
the company in G.R. 178434. HcSCED

The Issues Presented

The issues these cases present are:

1.Whether or not the CA erred in holding that slowdowns actually transpired at the company's farms; and

2.Whether or not the CA erred in holding that union officers committed illegal acts that warranted their dismissal
from work.

The Rulings of the Court

First. The law is explicit: no strike shall be declared after the Secretary of Labor has assumed jurisdiction over a labor
dispute. A strike conducted after such assumption is illegal and any union officer who knowingly participates in the
same may be declared as having lost his employment. 1 Here, what is involved is a slowdown strike. Unlike other
forms of strike, the employees involved in a slowdown do not walk out of their jobs to hurt the company. They need
only to stop work or reduce the rate of their work while generally remaining in their assigned post.
The Court finds that the union officers and members in this case held a slowdown strike at the company's farms
despite the fact that the DOLE Secretary had on May 12, 2003 already assumed jurisdiction over their labor dispute.
The evidence sufficiently shows that union officers and members simultaneously stopped work at the company's
Batangas and Cavite farms at 7:00 a.m. on May 26, 2003.

The union of course argues that it merely held assemblies to inform members of the developments in the CBA
negotiation, not protest demonstrations over it. But as the CA correctly observed, if the meetings had really been for
the stated reason, why did the union officers and members from separate company farms choose to start and end
their meetings at the same time and on the same day? And if they did not intend a slowdown, why did they not hold
their meetings after work. There is no allegation that the company prevented the union from holding meetings after
working hours.

Second. A distinction exists, however, between the ordinary workers' liability for illegal strike and that of the union
officers who participated in it. The ordinary worker cannot be terminated for merely participating in the strike. There
must be proof that he committed illegal acts during its conduct. On the other hand, a union officer can be terminated
upon mere proof that he knowingly participated in the illegal strike. 2

Still, the participating union officers have to be properly identified. 3 The CA held that the company illegally
terminated union officers Ruben Alvarez, John Asotigue, Alberto Castillo, Nemesio Agtay, Carlito Abacan, Danilo
Rolle, and Juanito Tenorio, there being no substantial evidence that would connect them to the slowdowns. The CA
said that their part in the same could not be established with certainty. acHDTE

But, although the witnesses did not say that Asotigue, Alvarez, and Rolle took part in the work slowdown, these
officers gave no credible excuse for being absent from their respective working areas during the slowdown. Tenorio
allegedly took a break and never went back to work. He claimed that he had to attend to an emergency but did not
elaborate on the nature of such emergency. In Abacan's case, however, he explained that he was not feeling well on
May 26, 2003 and so he decided to take a two-hour rest from work. This claim of Abacan is consistent with the report
4 that only one officer (Tenorio) was involved in the slowdown at the Calamias farm.

At the Quilo farm, the farm supervisor did not include Castillo in the list of employees who failed to report for work
on May 26, 2003. 5 In Agtay's case, the evidence is that he was on his rest day. There is no proof that the union's
president, Yolito Fadriquelan, did not show up for work during the slowdowns. The CA upheld his dismissal, relying
solely on a security guard's report that the company submitted as evidence. But, notably, that report actually
referred to a Rolly Fadrequellan, another employee who allegedly took part in the Lipa farm slowdown. Besides,
Yolito Fadriquelan was then assigned at the General Trias farm in Cavite, not at the Lipa farm. In fact, as shown in the
sworn statements 6 of the Cavite farm employees, Fadriquelan even directed them not to do anything which might
aggravate the situation. This clearly shows that his dismissal was mainly based on his being the union president.
The Court sustains the validity of the termination of the rest of the union officers. The identity and participations of
Arturo Eguna, 7 Armando Malaluan, 8 Danilo Alonso, 9 Romulo Dimaano, 10 Roel Mayuga, 11 Wilfredo Rizaldo, 12
Romeo Suico, 13 Domingo Escamillas, 14 and Domingo Bautro 15 in the slowdowns were properly established. These
officers simply refused to work or they abandoned their work to join union assemblies.

In termination cases, the dismissed employee is not required to prove his innocence of the charges against him. The
burden of proof rests upon the employer to show that the employee's dismissal was for just cause. The employer's
failure to do so means that the dismissal was not justified. 16 Here, the company failed to show that all 17 union
officers deserved to be dismissed.

Ordinarily, the illegally dismissed employees are entitled to two reliefs: reinstatement and backwages. Still, the Court
has held that the grant of separation pay, instead of reinstatement, may be proper especially when as in this case
such reinstatement is no longer practical or will be for the best interest of the parties. 17 But they shall likewise be
entitled to attorney's fees equivalent to 10% of the total monetary award for having been compelled to litigate in
order to protect their interests. 18

WHEREFORE, the Court MODIFIES the decision of the Court of Appeals in CA-G.R. SP 82526, DECLARES Monterey
Foods Corporation's dismissal of Alberto Castillo, Nemesio Agtay, Carlito Abacan, and Yolito Fadriquelan illegal, and
ORDERS payment of their separation pay equivalent to one month salary for every year of service up to the date of
their termination. The Court also ORDERS the company to pay 10% attorney's fees as well as interest of 6% per
annum on the due amounts from the time of their termination and 12% per annum from the time this decision
becomes final and executory until such monetary awards are paid. CcEHaI

SO ORDERED.
[G.R. No. 189314. June 15, 2011.]

MIGUEL DELA PENA BARAIRO, petitioner, vs. OFFICE OF THE PRESIDENT and MST MARINE SERVICES (PHILS.), INC.,
respondent.

DECISION

CARPIO MORALES, J p:

Miguel Barairo (petitioner) was hired 1 on June 29, 2004 by respondent MST Marine Services (Phils.) Inc., (MST) for
its principal, TSM International, Ltd., as Chief Mate of the vessel Maritina, for a contract period of six months. He
boarded the vessel and discharged his duties on July 23, 2004, but was relieved 2 on August 28, 2004 ostensibly for
transfer to another vessel, Solar. Petitioner thus disembarked in Manila on August 29, 2004.

Petitioner was later to claim that he was not paid the promised "stand-by fee" in lieu of salary that he was to receive
while awaiting transfer to another vessel as in fact the transfer never materialized.

On October 20, 2004, petitioner signed a new Contract of Employment 3 for a six-month deployment as Chief Mate
in a newly-built Japanese vessel, M/T Haruna. He was paid a one-month "standby fee" in connection with the
Maritina contract. IDTSaC

Petitioner boarded the M/T Haruna on October 31, 2004 but he disembarked a week later as MST claimed that his
boarding of M/T Haruna was a "sea trial" which, MST maintains, was priorly made known to him on a "stand-by" fee.
MST soon informed petitioner that he would be redeployed to the M/T Haruna on November 30, 2004, but petitioner
refused, prompting MST to file a complaint 4 for breach of contract against him before the Philippine Overseas
Employment Administration (POEA).

Petitioner claimed, however, that he was placed on "forced vacation" when he was made to disembark from the M/T
Haruna, and that not wanting to experience a repetition of the previous "termination" of his employment aboard the
Maritina, he refused to be redeployed to the M/T Haruna.

By Order 5 of April 5, 2006, then POEA Administrator Rosalinda D. Baldoz penalized petitioner with one year
suspension from overseas deployment upon a finding that his refusal to complete his contract aboard the M/T
Haruna constituted a breach thereof.
On appeal by petitioner, the Secretary of Labor, by Order 6 of September 22, 2006, noting that it was petitioner's first
offense, modified the POEA Order by shortening the period of suspension from one year to six months. DcSTaC

The Office of the President (OP), by Decision 7 of November 26, 2007, dismissed petitioner's appeal for lack of
jurisdiction, citing National Federation of Labor v. Laguesma. 8

The OP held that appeals to it in labor cases, except those involving national interest, have been eliminated.
Petitioner's motion for partial reconsideration was denied by Resolution 9 of June 26, 2009, hence, the present
petition.

Following settled jurisprudence, the proper remedy to question the decisions or orders of the Secretary of Labor is
via Petition for Certiorari under Rule 65, not via an appeal to the OP. For appeals to the OP in labor cases have indeed
been eliminated, except those involving national interest over which the President may assume jurisdiction. The
rationale behind this development is mirrored in the OP's Resolution of June 26, 2009 the pertinent portion of which
reads:

. . . [T] he assailed DOLE's Orders were both issued by Undersecretary Danilo P. Cruz under the authority of the DOLE
Secretary who is the alter ego of the President. Under the "Doctrine of Qualified Political Agency," a corollary rule to
the control powers of the President, all executive and administrative organizations are adjuncts of the Executive
Department, the heads of the various executive departments are assistants and agents of the Chief Executive, and,
except in cases where the Chief Executive is required by Constitution or law to act in person or the exigencies of the
situation demand that he act personally, the multifarious executive and administrative functions of the Chief
Executive are performed by and through the executive departments, and the acts of the Secretaries of such
departments, performed and promulgated in the regular course of business are, unless disapproved or reprobated by
the Chief Executive presumptively the acts of the Chief Executive. 10 (emphasis and underscoring supplied) DHIaTS

It cannot be gainsaid that petitioner's case does not involve national interest.

Petitioner's appeal of the Secretary of Labor's Decision to the Office of the President did not toll the running of the
period, hence, the assailed Decisions of the Secretary of Labor are deemed to have attained finality.

Although appeal is an essential part of our judicial process, it has been held, time and again, that the right thereto is
not a natural right or a part of due process but is merely a statutory privilege. Thus, the perfection of an appeal in the
manner and within the period prescribed by law is not only mandatory but also jurisdictional and failure of a party to
conform to the rules regarding appeal will render the judgment final and executory. Once a decision attains finality, it
becomes the law of the case irrespective of whether the decision is erroneous or not and no court — not even the
Supreme Court — has the power to revise, review, change or alter the same. The basic rule of finality of judgment is
grounded on the fundamental principle of public policy and sound practice that, at the risk of occasional error, the
judgment of courts and the award of quasi-judicial agencies must become final at some definite date fixed by law. 11
(underscoring in the original, emphasis supplied)

At all events, on the merits, the petition just the same fails.

As found by the POEA Administrator and the Secretary of Labor, through Undersecretary Danilo P. Cruz, petitioner's
refusal to board the M/T Haruna on November 30, 2004 constituted unjustified breach of his contract of employment
under Section 1 (A-2) Rule II, Part VI [sic] of the POEA Seabased Rules and Regulations. 12 That petitioner believed
that respondent company violated his rights when the period of his earlier Maritina contract was not followed and
his "stand-by fees" were not fully paid did not justify his refusal to abide by the valid and existing Haruna contract
requiring him to serve aboard M/T Haruna. For, as noted in the assailed DOLE Order, "if petitioner's rights has been
violated as he claims, he has various remedies under the contract which he did not avail of." DaEATc

Parenthetically, the Undersecretary of Labor declared that "the real reason [petitioner] refused to re-join Haruna on
November 30, 2004, is that he left the Philippines on November 29, 2004 to join MT Adriatiki, a vessel of another
manning agency," which declaration petitioner has not refuted.

WHEREFORE, the petition is DENIED.

SO ORDERED.
[G.R. Nos. 191138-39. October 19, 2011.]

MAGDALA MULTIPURPOSE & LIVELIHOOD COOPERATIVE and SANLOR MOTORS CORP., petitioners, vs. KILUSANG
MANGGAGAWA NG LGS, MAGDALA MULTIPURPOSE & LIVELIHOOD COOPERATIVE (KMLMS) and UNION
MEMBERS/STRIKERS, namely: THOMAS PADULLON, HERBERT BAUTISTA, ARIEL DADIA, AVELINO PARENAS, DENNIS
MONTEALEGRE, SONNY CONSTANTINO, SHANDY CONSTANTINO, JOSEPH PERNIA, PETER ALCOY, EDILBERTO
CERILLE, FERNANDO LEONOR, TEOTIMAR REGINIO, ALBERTO BAJETA, ALLAN MENESES, RONEL FABUL, JESUS
COMENDADOR, JERRY PERNIA, OSCAR RIVERA, LEO MELGAR, ENRICO LAYGO, RICKY PALMERO, ROWELL GARCIA,
LEOPITO MERANO, ALEJANDRO DE LARA, JOEL GARCIA, BONIFACIO PEREDA, REMEGIO CONSTANTINO, DICKSON
PILAPIL, RANDY CORDANO, DARIUS PILAPIL, VENICE LUCERO, GREGORIO REANZARES, EULOGIO REGINIO, MICHAEL
JAVIER, DENNIS MOSQUERA, FREDDIE AZORES, ROGELIO CABRERA, AURELIO TAGUINOD, OSCAR TAGUINOD,
DEWELL PILAPIL, JOEL MAS-ING, EDUARDO LOPEZ, GLICERIO REANZAREZ, JOSEPH FLORES, BUENATO CASAS,
ROMEO AZAGRA, ALFREDO ROSALES, ESTELITO BAJETA, PEDY GEMINA, FERNANDO VELASCO, ALBERTO CANEZA,
ALEJANDRO CERVANTES, ERICK CARVAJAL, RONALDO BERNADEZ, JERRY COROSA, JAYSON COROSA, JAYSON
JUANSON, SHELLY NAREZ, EDGARDO GARCIA, ARIEL LLOSALA, ROMMEL ILAYA, RODRIGO PAULETE, MERVIN
PANGUINTO, MARVIN SENATIN, JAYSON RILLORA, RAFAEL SARMIENTO, FREDERICK PERMEJO, NICOLAS
BERNARDO, LEONCIO PAZ DE LEON, EDWARD DENNIS MANAHAN, ANTONIO BALDAGO, ALEXANDER BAJETA,
respondents.

DECISION

VELASCO, JR., J p:

The Case

Petitioners Magdala Multipurpose & Livelihood Cooperative and Sanlor Motors Corp. assail and seek the modification
of the June 30, 2009 Decision 1 and January 28, 2010 Resolution 2 of the Court of Appeals (CA) in CA-G.R. SP Nos.
88614 and 88645, which affirmed in toto the October 15, 2004 Decision 3 of the National Labor Relations
Commission (NLRC) in NLRC CA No. 040560-04 (NLRC RAB IV-9-1265-02-R).

The Facts

Respondent Kilusang Manggagawa ng LGS, Magdala Multipurpose and Livelihood Cooperative (KMLMS) is the union
operating in Magdala Multipurpose & Livelihood Cooperative and Sanlor Motors Corp.

KMLMS filed a notice of strike on March 5, 2002 and conducted its strike-vote on April 8, 2002. However, KMLMS
only acquired legal personality when its registration as an independent labor organization was granted on April 9,
2002 by the Department of Labor and Employment under Registration No. RO-400-200204-UR-002. 4 On April 19,
2002, it became officially affiliated as a local chapter of the Pambansang Kaisahan ng Manggagawang Pilipino when
its application was granted by the Bureau of Labor Relations. 5

Thereafter, on May 6, 2002, KMLMS — now a legitimate labor organization (LLO) — staged a strike where several
prohibited and illegal acts were committed by its participating members.

On the ground of lack of valid notice of strike, ineffective conduct of a strike-vote and commission of prohibited and
illegal acts, petitioners filed their Petition to Declare the Strike of May 6, 2002 Illegal 6 before the NLRC Regional
Arbitration Board (RAB) No. IV in Quezon City, docketed as NLRC RAB IV-9-1265-02-R. In their petition, as well as their
Position Paper, 7 petitioners prayed, inter alia, that the officers and members of respondent KMLMS who
participated in the illegal strike and who knowingly committed prohibited and illegal activities, respectively, be
declared to have lost or forfeited their employment status. AaECSH

The Ruling of the Labor Arbiter

In her March 26, 2004 Decision, 8 Executive Labor Arbiter Lita V. Aglibut (LA Aglibut) found the May 6, 2002 strike
illegal and declared 41 workers to have lost their employment, the dispositive portion reading:

WHEREFORE, this Office finds the strike conducted by the Kilusang Manggagawa ng LGS, Magdala/Sanlor Motors-
KMLMS, now known and registered as Kilusang [Manggagawa] Ng LGS/Magdala Sanlor Motors Corporation-PKMP,
illegal and the employment status of the following workers are hereby declared forfeited: . . . .

All other claims are dismissed for lack of merit.

SO ORDERED. 9

On the ground of non-compliance with the strict and mandatory requirements for a valid conduct of a strike under
Article 263 (c), (d) and (f) of the Labor Code and Rule XXII, Book V of the Omnibus Rules Implementing the Labor
Code, LA Aglibut found the May 6, 2002 strike illegal and accordingly dismissed all the 14 union officers of KMLMS. LA
Aglibut likewise found 27 identified members of KMLMS to have committed prohibited and illegal acts proscribed
under Art. 264 of the Labor Code and accordingly declared them to have forfeited their employment.
Both parties appealed the Decision of LA Aglibut before the NLRC.

The Ruling of the NLRC

On October 15, 2004, the NLRC rendered its Decision affirming with modification LA Aglibut's Decision by declaring
an additional seven (7) union members to have forfeited their employment status. The decretal portion reads:

WHEREFORE, premises considered, the decision appealed from is affirmed with modification in that [said seven union
members] are also declared to have lost their employment status for having committed prohibited acts.

SO ORDERED. 10

Unsatisfied, both parties again filed their respective appeals before the CA.

The Ruling of the CA

The CA rendered the assailed Decision on June 30, 2009 affirming in toto the NLRC Decision, the fallo reading:

WHEREFORE, in view of the following disquisition, the respective petitions for certiorari in CA-G.R. SP. No. 88614 and
CA-G.R. SP. No. 88645 are hereby DISMISSED for lack of merit. Accordingly, the assailed Decision, dated 15 October
2004, of the National Labor Relations Commission (NLRC) in NLRC CA No. 040560-04 (NLRC RAB IV-9-1265-02-R) is
hereby AFFIRMED in toto. SCHIcT

SO ORDERED. 11

Thus, petitioners have come to Us, praying for a partial modification of the assailed CA Decision by declaring
additional 73 12 similarly erring KMLMS members to have lost their employment.

The Issues
A

THE COURT OF APPEALS ERRED IN REFUSING TO SIMILARLY DECLARE AS HAVING LOST THEIR EMPLOYMENT STATUS
THE REST OF THE UNION STRIKERS WHO HAVE PARTICIPATED IN THE ILLEGAL STRIKE AND COMMITTED
PROHIBITED/ILLEGAL ACTS, TO THE PREJUDICE OF PETITIONERS['] BUSINESS OPERATIONS.

THE COURT OF APPEALS ERRED IN REFUSING TO AWARD DAMAGES AND ATTORNEY'S FEES AS A RESULT OF THE
ILLEGAL STRIKE THAT NEARLY CRIPPLED THE BUSINESS OPERATIONS OF PETITIONERS. 13

The Court's Ruling

The petition is partly meritorious.

First Issue: The May 6, 2002 Strike Was Illegal

There is no question that the May 6, 2002 strike was illegal, first, because when KMLMS filed the notice of strike on
March 5 or 14, 2002, it had not yet acquired legal personality and, thus, could not legally represent the eventual
union and its members. And second, similarly when KMLMS conducted the strike-vote on April 8, 2002, there was still
no union to speak of, since KMLMS only acquired legal personality as an independent LLO only on April 9, 2002 or the
day after it conducted the strike-vote. These factual findings are undisputed and borne out by the records.

Consequently, the mandatory notice of strike and the conduct of the strike-vote report were ineffective for having
been filed and conducted before KMLMS acquired legal personality as an LLO, violating Art. 263 (c), (d) and (f) of the
Labor Code and Rule XXII, Book V of the Omnibus Rules Implementing the Labor Code. The Labor Code provisos
pertinently provide:

ART. 263.Strikes, Picketing and Lockouts. — (a) . . .

(c)In case of bargaining deadlocks, the duly certified or recognized bargaining agent may file a notice of strike or the
employer may file a notice of lockout with the Ministry at least 30 days before the intended date thereof. In case of
unfair labor practice, the period of notice shall be 15 days and in absence of a duly certified or recognized bargaining
agent, the notice of strike may be filed by any legitimate labor organization in behalf of its members. However, in
case of dismissal from employment of union officers duly elected in accordance with the union constitution and by-
laws, which may constitute union busting, where the existence of the union is threatened, the 15-day cooling-off
period shall not apply and the union may take action immediately. (As amended by Executive Order No. 111,
December 24, 1986.) TEDaAc

(d)The notice must be in accordance with such implementing rules and regulations as the Ministry of Labor and
Employment may promulgate.

xxx xxx xxx

(f)A decision to declare a strike must be approved by a majority of the total union membership in the bargaining unit
concerned, obtained by secret ballot in meetings or referenda called for that purpose. A decision to declare a lockout
must be approved by a majority of the board of directors of the corporation or association or of the partners in a
partnership, obtained by secret ballot in a meeting called for that purpose. The decision shall be valid for the
duration of the dispute based on substantially the same grounds considered when the strike or lockout vote was
taken. The Ministry may, at its own initiative or upon the request of any affected party, supervise the conduct of the
secret balloting. In every case, the union or the employer shall furnish the Ministry the results of the voting at least
seven days before the intended strike or lockout, subject to the cooling-off period herein provided. (As amended by
Batas Pambansa Bilang 130, August 21, 1981 and further amended by Executive Order No. 111, December 24, 1986.)

On the other hand, Rule XXII, Book V of the Omnibus Rules Implementing the Labor Code likewise pertinently
provides:

RULE XXII

CONCILIATION, STRIKES AND LOCKOUTS

xxx xxx xxx

SEC. 6.Who may declare a strike or lockout. — Any certified or duly recognized bargaining representative may declare
a strike in cases of bargaining deadlocks and unfair labor practices. The employer may declare a lockout in the same
cases. In the absence of a certified or duly recognized bargaining representative, any legitimate labor organization in
the establishment may declare a strike but only on grounds of unfair labor practice. (Emphasis supplied.) cSTHAC
It is, thus, clear that the filing of the notice of strike and the conduct of the strike-vote by KMLMS did not comply with
the aforequoted mandatory requirements of law and its implementing rules. Consequently, the May 6, 2002 strike is
illegal. As the Court held in Hotel Enterprises of the Philippines, Inc. (HEPI) v. Samahan ng mga Manggagawa sa Hyatt-
National Union of Workers in the Hotel and Restaurant and Allied Industries (SAMASAH-NUWHRAIN), 14 these
requirements are mandatory and failure of a union to comply renders the strike illegal.

Striking KMLMS Members Committed Prohibited Acts

There is likewise no dispute that when the May 6, 2002 illegal strike was conducted, the members of respondent
KMLMS committed prohibited and illegal acts which doubly constituted the strike illegal. This is the unanimous
factual finding of the courts a quo which the Court accords finality, as supported by evidence on record.

The proscribed acts during a strike are provided under Art. 264 of the Labor Code, thus:

ART. 264.Prohibited Activities. — (a) No Labor organization or employer shall declare a strike or lockout without first
having bargained collectively in accordance with Title VII of this Book or without first having filed the notice required
in the preceding Article or without the necessary strike or lockout vote first having been obtained and reported to
the Ministry.

No strike or lockout shall be declared after assumption of jurisdiction by the President or the Minister or after
certification or submission of the dispute to compulsory or voluntary arbitration or during the pendency of case
involving the same grounds for the strike or lockout.

Any worker whose employment has been terminated as a consequence of any unlawful lockout shall be entitled to
reinstatement with full backwages. Any union officer who knowingly participates in an illegal strike and any worker or
union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost
his employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient
ground for termination of his employment, even if a replacement had been hired by the employer during such lawful
strike.

xxx xxx xxx

(e)No person engaged in picketing shall commit any act of violence, coercion or intimidation or obstruct the free
ingress to or egress from the employer's premises for lawful purposes, or obstruct public thoroughfares. (As
amended by Batas Pambansa Bilang 227, June 1, 1982). cHSIDa

Here, the striking workers committed acts of (1) interference by obstructing the free ingress to or egress from
petitioners' compound and (2) coercion and intimidation. As aptly pointed out by the appellate court:

This is clear from the Police Blotter Certifications, including a Complaint for Grave Coercion, Affidavits from several
workers, including one from a proprietor, all of whom were prevented from entering the company premises and
doing their work or conducting their business, and the countless photographs which show the striking workers
blocking the gates of the company premises which became the basis of the judgment of the Labor Arbiter and NLRC.
15

Thus, We agree with the CA that the arguments of respondent KMLMS are bereft of merit as the May 6, 2002 strike
was properly declared an illegal strike and the prohibited and illegal acts committed by union members during said
strike were duly proved by substantial evidence on record. Substantial evidence is that amount of relevant evidence
which a reasonable mind might accept as adequate to justify a conclusion. 16

Proper Sanctions for the Illegal Strike

We now come to the proper sanctions for the conduct of union officers in an illegal strike and for union members
who committed illegal acts during a strike. The above-cited Art. 264 of the Code presents a substantial distinction of
the consequences of an illegal strike between union officers and mere members of the union. For union officers,
knowingly participating in an illegal strike is a valid ground for termination of their employment. But for union
members who participated in a strike, their employment may be terminated only if they committed prohibited and
illegal acts during the strike and there is substantial evidence or proof of their participation, i.e., that they are clearly
identified to have committed such prohibited and illegal acts.

As earlier explained, the May 6, 2002 strike is illegal for non-compliance with provisions of law and its implementing
rules. Consequently, the termination of employment of the 14 union officers is proper.

In the case of union members who participated in the May 6, 2002 strike and committed prohibited and illegal acts of
interference by obstructing the free ingress to or egress from petitioners' compound, coercion and intimidation, the
forfeiture of their employment is also proper.
LA Aglibut found 27 union members to have committed the illegal acts and properly declared the forfeiture of their
employment status. The NLRC found additional seven (7) union members committing illegal acts and likewise
declared the forfeiture of their employment status. Thus, a total of 34 union members have been declared to have
lost their employment due to their commission of prohibited and illegal acts during the illegal strike of May 6, 2002.
Petitioners, however, take umbrage for the non-declaration of the forfeiture of employment of 72 other union
members who were similarly situated as the 34 union members whose employment was declared forfeited in
committing prohibited and illegal acts during the May 6, 2002 strike. ACEIac

In affirming the NLRC Decision and refusing to declare the other strikers as dismissed, the appellate court found that
not all of the photographs in evidence sufficiently show the strikers committing illegal acts and that the identification
of said strikers is questionable considering that some were still identified even when their faces were indiscernible
from the photographs.

We, however, cannot agree with the appellate court's view that there is no substantial proof of the identity of the
other 72 striking union members who committed prohibited and illegal activities. The prohibited and illegal acts are
undisputed. It is only the identity of the striking union workers who committed said acts that is the crux of the partial
modification prayed for by petitioners.

In the instant case, We have pored over the attachments to the pleadings of the parties and We find that petitioners
have substantially proved the identity of 72 other union members who committed prohibited and illegal acts during
the May 6, 2002 illegal strike, thus:

First, the photographs 17 submitted by petitioners graphically depict and show the identities of the union members
who committed prohibited and illegal acts. Second, the identities of these union members were substantially proved
through the eyewitnesses 18 of petitioners who personally knew and recognized them as those who committed the
prohibited and illegal acts. Thus, the identities of these 72 other union members who participated in the strike and
committed prohibited and illegal acts are not only shown through the photographs, but are also sufficiently
supported, as earlier cited, by police blotter certifications, 19 a criminal complaint for grave coercion, 20 and
affidavits of several workers 21 and a proprietor. 22 As aptly pointed out by petitioners, while several union members
were penalized, other union members with them who are identifiable in the photographs and attested to by
witnesses were not so penalized. This must be corrected, for these other unpenalized union members were similarly
situated with those penalized in that they all committed the same prohibited and illegal acts during the strike. Absent
any exculpating circumstance, they must all suffer the same fate with the statutorily provided consequence of
termination of employment.

Thus, We find that there was patent misappreciation of evidence both by the LA and the NLRC, but it was not
corrected by the CA.
Second Issue: Damages and Attorney's Fees

Anent the issue of the award of damages and attorney's fees, We affirm the courts a quo's uniform findings and
rulings that while petitioners prayed for damages and attorney's fees, they failed to substantiate their claims.
CaSHAc

Indeed, the grant of damages and attorney's fees requires factual, legal and equitable justification; its basis cannot be
left to speculation or conjecture. 23 Petitioners simply bank their claims on the Affidavit 24 of Julito Sioson. The claim
for actual damages for losses of PhP10,000 daily or PhP260,000 a month, as averred by Sioson, cannot be sustained
by a mere affidavit of the owner without being buttressed by other documentary evidence or unassailable
substantiation. Even if attested to in an affidavit, the amount claimed for actual damages is merely speculative at
most. To be recoverable, actual damages must not only be capable of proof, but must actually be proved with
reasonable degree of certainty. The Court cannot simply rely on speculation, conjecture, or guesswork in determining
the amount of damages. 25 Without any factual basis, it cannot be granted.

That petitioners had to litigate on the occasion of the illegal strike does not necessarily mean that attorney's fees will
automatically be granted. On one hand, in labor cases, attorney's fees granted under Art. 111 26 of the Labor Code
apply to unlawful withholding of wages, which indubitably does not apply to the instant case. On the other hand, Art.
2208 (2) of the Civil Code does not ipso facto grant the award of damages in the form of attorney's fees to a winning
party, for the exercise of protection of one's right is not compensable.

Besides, jurisprudence instructs that for the award of attorney's fees to be granted, there must be factual, legal and
equitable justification. 27 As the Court held in Filipinas Broadcasting Network, Inc. v. Ago Medical and Educational
Center-Bicol Christian College of Medicine (AMEC-BCCM):

It is an accepted doctrine that the award thereof as an item of damages is the exception rather than the rule, and
counsel's fees are not to be awarded every time a party wins a suit. The power of the court to award attorney's fees
under Article 2208 of the Civil Code demands factual, legal and equitable justification, without which the award is a
conclusion without a premise, its basis being improperly left to speculation and conjecture. In all events, the court
must explicitly state in the text of the decision, and not only in the decretal portion thereof, the legal reason for the
award of attorney's fees. 28

The fact that the courts a quo did not award attorney's fees to petitioners persuasively shows that they found no
factual, legal and equitable justification for it. Neither do We find any.
WHEREFORE, the instant petition is hereby PARTIALLY GRANTED. The assailed June 30, 2009 CA Decision in CA-G.R.
SP Nos. 88614 and 88645 is AFFIRMED with MODIFICATION in that the following additional 72 union members who
committed prohibited and illegal acts during the May 6, 2002 strike are also declared to have forfeited their
employment: Thomas Padullon, Herbert Bautista, Ariel Dadia, Avelino Parenas, Dennis Montealegre, Sonny
Constantino, Shandy Constantino, Joseph Pernia, Peter Alcoy, Edilberto Cerille, Fernando Leonor, Teotimar Reginio,
Alberto Bajeta, Allan Meneses, Ronel Fabul, Jesus Comendador, Jerry Pernia, Oscar Rivera, Leo Melgar, Enrico Laygo,
Ricky Palmero, Rowell Garcia, Leopito Merano, Alejandro de Lara, Joel Garcia, Bonifacio Pereda, Remegio
Constantino, Dickson Pilapil, Randy Cordano, Aurelio Taguinod, Oscar Taguinod, Dewell Pilapil, Joel Mas-ing, Eduardo
Lopez, Glicerio Reanzarez, Joseph Flores, Buenato Casas, Romeo Azagra, Alfredo Rosales, Estelito Bajeta, Pedy
Gemina, Fernando Velasco, Alberto Caneza, Alejandro Cervantes, Erick Carvajal, Ronaldo Bernadez, Jerry Corosa,
Jayson Corosa, Jayson Juanson, Shelly Narez, Alexander Bajeta, Edgardo Garcia, Ariel Llosala, Rommel Ilaya, Rodrigo
Paulete, Mervin Paquinto, Marvin Senatin, Jayson Rillora, Darius Pilapil, Venice Lucero, Gregorio Reanzares, Eulogio
Reginio, Michael Javier, Dennis Mosquera, Freddie Azores, Rogelio Cabrera, Rafael Sarmiento, Frederick Permejo,
Nicolas Bernardo, Leoncio Paz de Leon, Edward Dennis Manahan and Antonio Baldago. EISCaD

No pronouncement as to costs.

SO ORDERED.
[G.R. No. 154113. December 7, 2011.]

EDEN GLADYS ABARIA, ROMULO ALFORQUE, ELENA ALLA, EVELYN APOSTOL, AMELIA ARAGON, BEATRIZ
ALBASTRO, GLORIA ARDULLES, GLENDA BANTILAN, VIRGILIE BORINAGA, ROLDAN CALDERON, ILDEBRANDO CUTA,
ROMEO EMPUERTO, LANNIE FERNANDEZ, LUCINELL GABAYERON, JESUSA GERONA, JOSE GONZAGA, TEOFILO
HINAMPAS, JOSEFINA IBUNA, MARLYN LABRA, MARIA CARMENCITA LAO, ERA CANEN, RODNEY REX LERIAS, ERNIE
MANLIGAS, JOHANNE DEL MAR, RUBY ORIMACO, CONSTANCIO PAGADOR, MARVELOUS PANAL, NOLAN PANAL,
LILLAN PETALLAR, GERNA PATIGDAS, MELODIA PAULIN, SHIRLEY ROSE REYES, JOSEFINA REYES, OSCAR DE LOS
SANTOS, SOLOMON DE LOS SANTOS, RAMON TAGNIPIS, BERNADETTE TIBAY, RONALD TUMULAK, LEONCIO
VALLINAS, EDELBERTO VILLA and the NAGKAHIUSANG MAMUMUO SA METRO CEBU COMMUNITY HOSPITAL,
petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, METRO CEBU COMMUNITY HOSPITAL, INC., ITS
BOARD OF TRUSTEES, REV. GREGORIO IYOY, SHIELA BUOT, REV. LORENZO GENOTIVA, RUBEN CARABAN, RUBEN
ESTOYE, LILIA SAURO, REV. ELIZER BERTOLDO, RIZALINA VILLAGANTE, DRA. LUCIA FLORENDO, CONCEPCION
VILLEGAS, REV. OLIVER CANEN, DRA. CYD RAGAS, REV. MIKE CAMBA, AVEDNIGO VALIENTE, RIZALINO TAGANAS,
CIRIACO PONGASI, ISIAS WAGAS, REV. ESTER GELOAGAN, REV. LEON MANIWAN, CRESENTE BAOAS, WINEFREDA
BARLOSO, REV. RUEL MARIGA AND THE UNITED CHURCH OF CHRIST IN THE PHILIPPINES, REV. HILARIO GOMEZ,
REV. ELMER BOLOCON, THE NATIONAL FEDERATION OF LABOR AND ARMAND ALFORQUE, respondents.

[G.R. No. 187778. December 7, 2011.]

PERLA NAVA, DANIELA YOSORES, AGUSTIN ALFORNON, AILEEN CATACUTAN, ROLANDO REDILOSA, CORNELIO
MARIBOJO, VIRGENCITA CASAS, CRISANTA GENEGABOAS, EMILIO LAO, RICO GASCON, ALBINA BAÑEZ, PEDRO
CABATINGAN, PROCOMIO SALUPAN, ELIZABETH RAMON, DIOSCORO GABUNADA, ROY MALAZARTE, FELICIANITA
MALAZARTE, NORBERTA CACA, MILAGROS CASTILLO, EDNA ALBO, BERNABE LUMAPGUID, CELIA SABAS, SILVERIO
LAO, DARIO LABRADOR, ERNESTO CANEN, JR., ELSA BUCAO, HANNAH BONGCARAS, NEMA BELOCURA, PEPITO
LLAGAS, GUILLERMA REMOCALDO, ROGELIO DABATOS, ROBERTO JAYMA, RAYMUNDO DELATADO, MERLYN
NODADO, NOEL HORTELANO, HERMELO DELA TORRE, LOURDES OLARTE, DANILO ZAMORA, LUZ CABASE,
CATALINA ALSADO, RUTH BANZON AND THE NAGKAHIUSANG MAMUMUO SA METRO CEBU COMMUNITY
HOSPITAL, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (FOURTH DIVISION), METRO CEBU
COMMUNITY HOSPITAL, INC., BOARD OF TRUSTEES, REV. GREGORIO IYOY, SHIELA BUOT, REV. LORENZO
GENOTIVA, RUBEN CABABAN, ROSENDO ESTOYE, LILIA SAURO, REV. ELIZER BERTOLDO, RIZALINA VILLAGANTE,
DRA. LUCIA FLORENDO, CONCEPCION VILLEGAS, REV. OLIVER CANEN, DRA. CYD RAAGAS, REV. MIKE CAMBA,
AVIDNIGO VALIENTE, RIZALINO TAGANAS, CIRIACO PONGASI, ISIAS WAGAS, REV. ESTER GELOAGAN, REV. LEON
MANIWAN, CRESENTE BAOAS, WINIFREDA BARLOSO, REV. RUEL MARIGA, THE UNITED CHURCH OF CHRIST IN THE
PHILIPPINES, REV. HILARIO GOMEZ, REV. ELMER BOLOCON, THE NATIONAL FEDERATION OF LABOR AND
ARMANDO ALFORQUE, respondents.

[G.R. No. 187861. December 7, 2011.]

METRO CEBU COMMUNITY HOSPITAL, presently known as Visayas Community Medical Center (VCMC), petitioner,
vs. PERLA NAVA, DANIELA YOSORES, AGUSTIN ALFORNON, AILEEN CATACUTAN, ROLANDO REDILOSA, CORNELIO
MARIBOJO, VIRGENCITA CASAS, CRISANTA GENEGABOAS, EMILIO LAO, RICO GASCON, ALBINA BANEZ, PEDRO
CABATINGAN, PROCOMIO SALUPAN, ELIZABETH RAMON, DIOSCORO GABUNADA, ROY MALAZARTE, FELICIANITA
MALAZARTE, NORBERTA CACA, MILAGROS CASTILLO, EDNA ALBO, BERNABE LUMABGUID, CELIA SABAS, SILVERIO
LAO, DARIO LABRADOR, ERNESTO CANEN, JR., ELSA BUCAO, HANNAH BONGCARAS, NEMA BELOCURA, PEPITO
LLAGAS, GUILLERMA REMOCALDO, ROGELIO DABATOS, ROBERTO JAYMA, RAYMUNDO DELATADO, NOEL
HORTELANO, HERMELO DE LA TORRE, LOURDES OLARTE, DANILO ZAMORA, LUZ CABASE, CATALINA ALSADO AND
RUTH BANZON, respondents.

[G.R. No. 196156. December 7, 2011.]

VISAYAS COMMUNITY MEDICAL CENTER (VCMC) formerly known as METRO CEBU COMMUNITY HOSPITAL (MCCH),
petitioner, vs. ERMA YBALLE, NELIA ANGEL, ELEUTERIA CORTEZ and EVELYN ONG, respondents.

DECISION

VILLARAMA, JR., J p:

The consolidated petitions before us involve the legality of mass termination of hospital employees who participated
in strike and picketing activities.

The factual antecedents:

Metro Cebu Community Hospital, Inc. (MCCHI), presently known as the Visayas Community Medical Center (VCMC),
is a non-stock, non-profit corporation organized under the laws of the Republic of the Philippines. It operates the
Metro Cebu Community Hospital (MCCH), a tertiary medical institution located at Osmeña Boulevard, Cebu City.
MCCH is owned by the United Church of Christ in the Philippines (UCCP) and Rev. Gregorio P. Iyoy is the Hospital
Administrator.

The National Federation of Labor (NFL) is the exclusive bargaining representative of the rank-and-file employees of
MCCHI. Under the 1987 and 1991 Collective Bargaining Agreements (CBAs), the signatories were Ciriaco B. Pongasi,
Sr. for MCCHI, and Atty. Armando M. Alforque (NFL Legal Counsel) and Paterno A. Lumapguid as President of NFL-
MCCH Chapter. In the CBA effective from January 1994 until December 31, 1995, the signatories were Sheila E. Buot
as Board of Trustees Chairman, Rev. Iyoy as MCCH Administrator and Atty. Fernando Yu as Legal Counsel of NFL,
while Perla Nava, President of Nagkahiusang Mamumuo sa MCCH (NAMA-MCCH-NFL) signed the Proof of Posting. 1
cSaADC

On December 6, 1995, Nava wrote Rev. Iyoy expressing the union's desire to renew the CBA, attaching to her letter a
statement of proposals signed/endorsed by 153 union members. Nava subsequently requested that the following
employees be allowed to avail of one-day union leave with pay on December 19, 1995: Celia Sabas, Jesusa Gerona,
Albina Bañez, Eddie Villa, Roy Malazarte, Ernesto Canen, Jr., Guillerma Remocaldo, Catalina Alsado, Evelyn Ong,
Melodia Paulin, Sofia Bautista, Hannah Bongcaras, Ester Villarin, Iluminada Wenceslao and Perla Nava. However,
MCCHI returned the CBA proposal for Nava to secure first the endorsement of the legal counsel of NFL as the official
bargaining representative of MCCHI employees. 2

Meanwhile, Atty. Alforque informed MCCHI that the proposed CBA submitted by Nava was never referred to NFL and
that NFL has not authorized any other legal counsel or any person for collective bargaining negotiations. By January
1996, the collection of union fees (check-off) was temporarily suspended by MCCHI in view of the existing conflict
between the federation and its local affiliate. Thereafter, MCCHI attempted to take over the room being used as
union office but was prevented to do so by Nava and her group who protested these actions and insisted that
management directly negotiate with them for a new CBA. MCCHI referred the matter to Atty. Alforque, NFL's
Regional Director, and advised Nava that their group is not recognized by NFL. 3 ASHEca

In his letter dated February 24, 1996 addressed to Nava, Ernesto Canen, Jr., Jesusa Gerona, Hannah Bongcaras, Emma
Remocaldo, Catalina Alsado and Albina Bañez, Atty. Alforque suspended their union membership for serious violation
of the Constitution and By-Laws. Said letter states:

During the last General Membership Meeting of the union on February 20, 1996, you openly declared that you
recognized the officers of the KMU not those of the NFL, that you submit to the stuctures [sic] and authority of the
KMU not of the NFL, and that you are loyal only to the KMU not to the NFL.

Also, in the same meeting, you admitted having sent a proposal for a renewed collective bargaining agreement to the
management without any consultation with the NFL. In fact, in your letter dated February 21, 1996 addressed to Rev.
Gregorio Iyoy, the Administrator of the hospital, you categorically stated as follows: "We do not need any
endorsement from NFL, more particularly from Atty. Armando Alforque to negotiate our CBA with MCCH." You did
not only ignore the authority of the undersigned as Regional Director but you maliciously prevented and bluntly
refused my request to join the union negotiating panel in the CBA negotiations.

Your above flagrant actuations, made in the presence of the union membership, constitute the following offenses:
1.Willful violation of the Constitution and By-Laws of the Federation and the orders and decisions of duly constituted
authorities of the same (Section 4 (b), Article III), namely:

a)Defying the decision of the organization disaffiliating from the KMU; and

b)Section 9 (b), Article IX which pertains to the powers and responsibilities of the Regional Director, particularly, to
negotiate and sign collective bargaining agreement together with the local negotiating panel subject to prior
ratification by the general membership;

2.Joining or assisting another labor organization or helping in the formation of a new labor organization that seeks or
tends to defeat the purpose of the Federation (Section 4 (d), Article III) in relation to the National Executive Board's
Resolution No. 8, September 26-27, 1994, to wit: SaCIDT

"Pursuant to the NEB Resolution disaffiliating from the KMU dated September 11, 1993, the NEB in session hereby
declare that KMU is deemed an organization that seeks to defeat the objective of establishing independent and
democratic unions and seeks to replace the Federation as exclusive representative of its members.

Committing acts that tend to alienate the loyalty of the members to the Federation, subvert its duly constituted
authorities, and divide the organization in any level with the objective of establishing a pro-KMU faction or
independent union loyal to the KMU shall be subject to disciplinary action, suspension or expulsion from union
membership, office or position in accordance with paragraph[s] d and f of Section 4, Article III, and paragraph h,
Section 6, Article VI, paragraph d, Section 9, Article IX."

You are, therefore, directed to submit written explanation on the above charges within five (5) days from receipt
hereof. Failure on your part shall be considered a waiver of your right to be heard and the Federation will act
accordingly.

Considering the gravity of the charges against you, the critical nature of the undertaking to renew the collective
bargaining agreement, and the serious threat you posed to the organization, you are hereby placed under temporary
suspension from your office and membership in the union immediately upon receipt hereof pending investigation
and final disposition of your case in accordance with the union's constitution and by-laws.

For your guidance and compliance. 4

On February 26, 1996, upon the request of Atty. Alforque, MCCHI granted one-day union leave with pay for 12 union
members. 5 The next day, several union members led by Nava and her group launched a series of mass actions such
as wearing black and red armbands/headbands, marching around the hospital premises and putting up placards,
posters and streamers. Atty. Alforque immediately disowned the concerted activities being carried out by union
members which are not sanctioned by NFL. MCCHI directed the union officers led by Nava to submit within 48 hours
a written explanation why they should not be terminated for having engaged in illegal concerted activities amounting
to strike, and placed them under immediate preventive suspension. Responding to this directive, Nava and her group
denied there was a temporary stoppage of work, explaining that employees wore their armbands only as a sign of
protest and reiterating their demand for MCCHI to comply with its duty to bargain collectively. Rev. Iyoy, having been
informed that Nava and her group have also been suspended by NFL, directed said officers to appear before his office
for investigation in connection with the illegal strike wherein they reportedly uttered slanderous and scurrilous words
against the officers of the hospital, threatening other workers and forcing them to join the strike. Said union officers,
however, invoked the grievance procedure provided in the CBA to settle the dispute between management and the
union. 6 CSAaDE

On March 13 and 19, 1996, the Department of Labor and Employment (DOLE) Regional Office No. 7 issued
certifications stating that there is nothing in their records which shows that NAMA-MCCH-NFL is a registered labor
organization, and that said union submitted only a copy of its Charter Certificate on January 31, 1995. 7 MCCHI then
sent individual notices to all union members asking them to submit within 72 hours a written explanation why they
should not be terminated for having supported the illegal concerted activities of NAMA-MCCH-NFL which has no legal
personality as per DOLE records. In their collective response/statement dated March 18, 1996, it was explained that
the picketing employees wore armbands to protest MCCHI's refusal to bargain; it was also contended that MCCHI
cannot question the legal personality of the union which had actively assisted in CBA negotiations and
implementation. 8

On March 13, 1996, NAMA-MCCH-NFL filed a Notice of Strike but the same was deemed not filed for want of legal
personality on the part of the filer. The National Conciliation and Mediation Board (NCMB) Region 7 office likewise
denied their motion for reconsideration on March 25, 1996. Despite such rebuff, Nava and her group still conducted
a strike vote on April 2, 1996 during which an overwhelming majority of union members approved the strike. 9

Meanwhile, the scheduled investigations did not push through because the striking union members insisted on
attending the same only as a group. MCCHI again sent notices informing them that their refusal to submit to
investigation is deemed a waiver of their right to explain their side and management shall proceed to impose proper
disciplinary action under the circumstances. On March 30, 1996, MCCHI sent termination letters to union leaders and
other members who participated in the strike and picketing activities. On April 8, 1996, it also issued a cease-and-
desist order to the rest of the striking employees stressing that the wildcat concerted activities spearheaded by the
Nava group is illegal without a valid Notice of Strike and warning them that non-compliance will compel management
to impose disciplinary actions against them. For their continued picketing activities despite the said warning, more
than 100 striking employees were dismissed effective April 12 and 19, 1996.
Unfazed, the striking union members held more mass actions. The means of ingress to and egress from the hospital
were blocked so that vehicles carrying patients and employees were barred from entering the premises. Placards
were placed at the hospital's entrance gate stating: "Please proceed to another hospital" and "we are on protest."
Employees and patients reported acts of intimidation and harassment perpetrated by union leaders and members.
With the intensified atmosphere of violence and animosity within the hospital premises as a result of continued
protest activities by union members, MCCHI suffered heavy losses due to low patient admission rates. The hospital's
suppliers also refused to make further deliveries on credit. acEHCD

With the volatile situation adversely affecting hospital operations and the condition of confined patients, MCCHI filed
a petition for injunction in the NLRC (Cebu City) on July 9, 1996 (Injunction Case No. V-0006-96). A temporary
restraining order (TRO) was issued on July 16, 1996. MCCHI presented 12 witnesses (hospital employees and
patients), including a security guard who was stabbed by an identified sympathizer while in the company of Nava's
group. MCCHI's petition was granted and a permanent injunction was issued on September 18, 1996 enjoining the
Nava group from committing illegal acts mentioned in Art. 264 of the Labor Code. 10

On August 27, 1996, the City Government of Cebu ordered the demolition of the structures and obstructions put up
by the picketing employees of MCCHI along the sidewalk, having determined the same as a public nuisance or
nuisance per se. 11

Thereafter, several complaints for illegal dismissal and unfair labor practice were filed by the terminated employees
against MCCHI, Rev. Iyoy, UCCP and members of the Board of Trustees of MCCHI.

On August 4, 1999, Executive Labor Arbiter Reynoso A. Belarmino rendered his decision 12 dismissing the complaints
for unfair labor practice in NLRC Case Nos. RAB-VII-02-0309-98, RAB-VII-02-0394-98 and RAB-VII-03-0596-98 filed by
Nava and 90 other complainants. Executive Labor Arbiter Belarmino found no basis for the charge of unfair labor
practice and declared the strike and picketing activities illegal having been conducted by NAMA-MCCH-NFL which is
not a legitimate labor organization. The termination of union leaders Nava, Alsado, Bañez, Bongcaras, Canen, Gerona
and Remocaldo were upheld as valid but MCCHI was directed to grant separation pay equivalent to one-half month
for every year of service, in the total amount of P3,085,897.40 for the 84 complainants. 13

Complainants appealed to the Commission. On March 14, 2001, the NLRC's Fourth Division rendered its Decision, 14
the dispositive portion of which reads:

WHEREFORE, premises considered, the decision of the Executive Labor Arbiter dismissing the complaint for unfair
labor practice and illegal dismissal is AFFIRMED with MODIFICATIONS declaring the dismissal of all the complainants
in RAB Case No. 07-02-0394-98 and RAB Case No. 07-03-0596-98 valid and legal. Necessarily, the award of separation
pay and attorney's fees are hereby Deleted. aHCSTD
Resolution on RAB Case No. 07-02-0309-98 is hereby Deferred upon Joint Motion of the parties.

SO ORDERED. 15

In its Resolution dated July 2, 2001, the NLRC denied complainants' motion for reconsideration. 16

Complainants elevated the case to the Court of Appeals (CA) (Cebu Station) via a petition for certiorari, docketed as
CA-G.R. SP No. 66540. 17

In its Resolution dated November 14, 2001, the CA's Eighth Division dismissed the petition on the ground that out of
88 petitioners only 47 have signed the certification against forum shopping. 18 Petitioners moved to reconsider the
said dismissal arguing that the 47 signatories more than constitute the principal parties as the petition involves a
matter of common concern to all the petitioning employees. 19 By Resolution 20 dated May 28, 2002, the CA
reinstated the case only insofar as the 47 petitioners who signed the petition are concerned.

Petitioners challenged the validity of the November 14, 2001 and May 28, 2002 resolutions before this Court in a
petition for review on certiorari, docketed as G.R. No. 154113.

Meanwhile, the NLRC's Fourth Division (Cebu City) rendered its Decision 21 dated March 12, 2003 in RAB Case Nos.
07-02-0309-98 (NLRC Case No. V-001042-99) pertaining to complainants Erma Yballe, Evelyn Ong, Nelia Angel and
Eleuteria Cortez as follows:

WHEREFORE, premises considered, the decision of the Executive Labor Arbiter dismissing the complaint for unfair
labor practice and illegal dismissal is AFFIRMED with MODIFICATIONS declaring all complainants to have been validly
dismissed. Necessarily, the award of separation pay and attorney's fees are hereby Deleted.

SO ORDERED. 22

The NLRC likewise denied the motion for reconsideration filed by complainants Yballe, et al., in its Resolution dated
April 13, 2004. 23 cCEAHT
On October 17, 2008, the CA rendered its Decision 24 in CA-G.R. SP No. 66540, the dispositive portion of which
states:

WHEREFORE, premises considered, judgment is hereby rendered AFFIRMING the Decision of the National Labor
Relations Commission (NLRC) — Fourth Division dated March 14, 2001 in NLRC Case No. V-001042-99, WITH
MODIFICATIONS to the effect that (1) the petitioners, except the union officers, shall be awarded separation pay
equivalent to one-half (1/2) month pay for every year of service, and (2) petitioner Cecilia Sabas shall be awarded
overtime pay amounting to sixty-three (63) hours.

SO ORDERED. 25

Petitioners filed a motion for reconsideration while private respondents filed a motion for partial reconsideration
questioning the award of separation pay. The former also invoked the decision of this Court in Bascon v. Court of
Appeals, 26 while the latter argued for the application of the ruling in decision rendered by the CA (Cebu City) in
Miculob v. NLRC, et al. (CA-G.R. SP No. 84538), 27 both involving similar complaints filed by dismissed employees of
MCCHI.

By Resolution 28 dated April 17, 2009, the CA denied both motions:

WHEREFORE, the petitioners' Motion for Reconsideration and the private respondent[s'] Motion for Partial
Reconsideration of the October 17, 2008 Decision are both DENIED for lack of merit.

The Motions for Substitution of Counsel and Compromise Agreements submitted by petitioners Bernardito Lawas,
Avelina Bangalao, Dailenda Hinampas and Daylinda Tigo are hereby approved. Consequently, said petitioners are
ordered dropped from the list of petitioners and the case is deemed dismissed as to them.

SO ORDERED. 29

Complainants Yballe, et al., also challenged before the CA the March 12, 2003 Decision and April 13, 2004 Resolution
of the NLRC in a petition for certiorari, docketed as CA-G.R. SP No. 84998 (Cebu City). By Decision 30 dated November
7, 2008, the CA granted their petition, as follows:

WHEREFORE, the challenged Decision of public respondent dated March 12, 2003 and its Resolution dated April 13,
2004 are hereby REVERSED AND SET ASIDE. Private respondent Metro Cebu Community Hospital is ordered to
reinstate petitioners Erma Yballe, Eleuteria Cortes, Nelia Angel and Evelyn Ong without loss of seniority rights and
other privileges; to pay them their full backwages inclusive of their allowances and other benefits computed from the
time of their dismissal up to the time of their actual reinstatement. cTADCH

No pronouncement as to costs.

SO ORDERED. 31

Private respondents (MCCHI, et al.) moved to reconsider the above decision but the CA denied their motion on
February 22, 2011. 32

Both petitioners and private respondents in CA-G.R. SP No. 66540 appealed to this Court. Private respondent MCCHI
in CA-G.R. SP No. 84998, under its new name Visayas Community Medical Center (VCMC), filed a petition for
certiorari in this Court.

In G.R. No. 187778, petitioners Nava, et al., prayed that the CA decision be set aside and a new judgment be entered
by this Court (1) declaring private respondents guilty of unfair labor practice and union busting; (2) directing private
respondents to cease and desist from further committing unfair labor practices against the petitioners; (3) imposing
upon MCCH the proposed CBA or, in the alternative, directing the hospital and its officers to bargain with the local
union; (4) declaring private respondents guilty of unlawfully suspending and illegally dismissing the individual
petitioners-employees; (5) directing private respondents to reinstate petitioners-employees to their former positions,
or their equivalent, without loss of seniority rights with full backwages and benefits until reinstatement; and (6)
ordering private respondents to pay the petitioners moral damages, exemplary damages, legal interests, and
attorney's fees. 33

On the other hand, petitioner MCCHI in G.R. No. 187861 prayed for the modification of the CA decision by deleting
the award of separation pay and reinstating the March 14, 2001 decision of the NLRC. 34

In G.R. No. 196156, MCCHI/VCMC prayed for the annulment of the November 7, 2008 Decision and February 22,
2011 Resolution of the CA, for this Court to declare the dismissal of respondents Yballe, et al., as valid and legal and
to reinstate the March 12, 2003 Decision and April 13, 2004 Resolution of the NLRC.

G.R. No. 187861 was consolidated with G.R. Nos. 154113 and 187778 as they involve similar factual circumstances
and identical or related issues. G.R. No. 196156 was later also consolidated with the aforesaid cases.
The issues are: (1) whether the CA erred in dismissing the petition for certiorari (CA-G.R. SP No. 66540) with respect
to the petitioners in G.R. No. 154113 for their failure to sign the certification against forum shopping; (2) whether
MCCHI is guilty of unfair labor practice; (3) whether petitioning employees were illegally dismissed; and (4) if their
termination was illegal, whether petitioning employees are entitled to separation pay, backwages, damages and
attorney's fees. IHCSTE

Dropping of petitioners who did not

sign the certification against forum

shopping improper

The Court has laid down the rule in Altres v. Empleo 35 as culled from "jurisprudential pronouncements", that the
certification against forum shopping must be signed by all the plaintiffs or petitioners in a case; otherwise, those who
did not sign will be dropped as parties to the case. Under reasonable or justifiable circumstances, however, as when
all the plaintiffs or petitioners share a common interest and invoke a common cause of action or defense, the
signature of only one of them in the certification against forum shopping substantially complies with the Rule.

In the case at bar, the signatures of 47 out of 88 petitioning employees in the certification against forum shopping
constitute substantial compliance with the rule. There is no question that they shared a common interest and
invoked a common cause of action when they filed suit before the Labor Arbiter and NLRC questioning the validity of
their termination and charging MCCHI with unfair labor practice. Thus, when they appealed their case to the CA, they
pursued the same as a collective body, raising only one argument in support of their cause of action, i.e., the illegal
dismissal allegedly committed by MCCHI when union members resorted to strike and mass actions due to MCCHI's
refusal to bargain with officers of the local chapter. There is sufficient basis, therefore, for the 47 signatories to the
petition, to speak for and in behalf of their co-petitioners and to file the Petition for Certiorari in the appellate court.
36 Clearly, the CA erred in dropping as parties-petitioners those who did not sign the certification against forum
shopping.

However, instead of remanding the case to the CA for it to resolve the petition with respect to the herein petitioners
in G.R. No. 154113, and as prayed for, the Court shall consider them parties-petitioners in CA-G.R. SP No. 66540,
which case has already been decided and now subject of appeal in G.R. No. 187778.

MCCHI not guilty of unfair

labor practice
Art. 248 (g) of the Labor Code, as amended, makes it an unfair labor practice for an employer "[t]o violate the duty to
bargain collectively" as prescribed by the Code. The applicable provision in this case is Art. 253 which provides:

ART. 253.Duty to bargain collectively when there exists a collective bargaining agreement. — When there is a
collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate
nor modify such agreement during its lifetime. However, either party can serve a written notice to terminate or
modify the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both parties to keep
the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the
60-day period and/or until a new agreement is reached by the parties. DECSIT

NAMA-MCCH-NFL charged MCCHI with refusal to bargain collectively when the latter refused to meet and convene
for purposes of collective bargaining, or at least give a counter-proposal to the proposed CBA the union had
submitted and which was ratified by a majority of the union membership. MCCHI, on its part, deferred any
negotiations until the local union's dispute with the national union federation (NFL) is resolved considering that the
latter is the exclusive bargaining agent which represented the rank-and-file hospital employees in CBA negotiations
since 1987.

We rule for MCCHI.

Records of the NCMB and DOLE Region 7 confirmed that NAMA-MCCH-NFL had not registered as a labor
organization, having submitted only its charter certificate as an affiliate or local chapter of NFL. 37 Not being a
legitimate labor organization, NAMA-MCCH-NFL is not entitled to those rights granted to a legitimate labor
organization under Art. 242, specifically:

(a)To act as the representative of its members for the purpose of collective bargaining;

(b)To be certified as the exclusive representative of all the employees in an appropriate collective bargaining unit for
purposes of collective bargaining;

xxx xxx xxx

Aside from the registration requirement, it is only the labor organization designated or selected by the majority of
the employees in an appropriate collective bargaining unit which is the exclusive representative of the employees in
such unit for the purpose of collective bargaining, as provided in Art. 255. 38 NAMA-MCCH-NFL is not the labor
organization certified or designated by the majority of the rank-and-file hospital employees to represent them in the
CBA negotiations but the NFL, as evidenced by CBAs concluded in 1987, 1991 and 1994. While it is true that a local
union has the right to disaffiliate from the national federation, NAMA-MCCH-NFL has not done so as there was no
any effort on its part to comply with the legal requisites for a valid disaffiliation during the "freedom period" 39 or
the last 60 days of the last year of the CBA, through a majority vote in a secret balloting in accordance with Art. 241
(d). 40 Nava and her group simply demanded that MCCHI directly negotiate with the local union which has not even
registered as one. aCHDST

To prove majority support of the employees, NAMA-MCCH-NFL presented the CBA proposal allegedly signed by 153
union members. However, the petition signed by said members showed that the signatories endorsed the proposed
terms and conditions without stating that they were likewise voting for or designating the NAMA-MCCH-NFL as their
exclusive bargaining representative. In any case, NAMA-MCCH-NFL at the time of submission of said proposals was
not a duly registered labor organization, hence it cannot legally represent MCCHI's rank-and-file employees for
purposes of collective bargaining. Hence, even assuming that NAMA-MCCH-NFL had validly disaffiliated from its
mother union, NFL, it still did not possess the legal personality to enter into CBA negotiations. A local union which is
not independently registered cannot, upon disaffiliation from the federation, exercise the rights and privileges
granted by law to legitimate labor organizations; thus, it cannot file a petition for certification election. 41 Besides,
the NFL as the mother union has the right to investigate members of its local chapter under the federation's
Constitution and By-Laws, and if found guilty to expel such members. 42 MCCHI therefore cannot be faulted for
deferring action on the CBA proposal submitted by NAMA-MCCH-NFL in view of the union leadership's conflict with
the national federation. We have held that the issue of disaffiliation is an intra-union dispute 43 which must be
resolved in a different forum in an action at the instance of either or both the federation and the local union or a rival
labor organization, not the employer. 44

Not being a legitimate labor organization nor the certified exclusive bargaining representative of MCCHI's rank-and-
file employees, NAMA-MCCH-NFL cannot demand from MCCHI the right to bargain collectively in their behalf. 45
Hence, MCCHI's refusal to bargain then with NAMA-MCCH-NFL cannot be considered an unfair labor practice to
justify the staging of the strike. 46 EHCDSI

Strike and picketing activities

conducted by union officers and

members were illegal

Art. 263 (b) of the Labor Code, as amended, provides:

ART. 263.Strikes, picketing and lockouts. — . . .

(b)Workers shall have the right to engage in concerted activities for purposes of collective bargaining or for their
mutual benefit and protection. The right of legitimate labor organizations to strike and picket and of employers to
lockout, consistent with the national interest, shall continue to be recognized and respected. However, no labor
union may strike and no employer may declare a lockout on grounds involving inter-union and intra-union disputes.

xxx xxx xxx (Emphasis supplied.)

As borne by the records, NAMA-MCCH-NFL was not a duly registered or an independently registered union at the
time it filed the notice of strike on March 13, 1996 and when it conducted the strike vote on April 2, 1996. It could
not then legally represent the union members. Consequently, the mandatory notice of strike and the conduct of the
strike vote report were ineffective for having been filed and conducted by NAMA-MCCH-NFL which has no legal
personality as a legitimate labor organization, in violation of Art. 263 (c), (d) and (f) of the Labor Code and Rule XXII,
Book V of the Omnibus Rules Implementing the Labor Code. 47

Art. 263 of the Labor Code provides:

ART. 263.Strikes, picketing and lockouts. — (a) . . .

xxx xxx xxx

(c)In cases of bargaining deadlocks, the duly certified or recognized bargaining agent may file a notice of strike or the
employer may file a notice of lockout with the Department at least 30 days before the intended date thereof. In cases
of unfair labor practice, the period of notice shall be 15 days and in the absence of a duly certified or recognized
bargaining agent, the notice of strike may be filed by any legitimate labor organization in behalf of its members.
However, in case of dismissal from employment of union officers duly elected in accordance with the union
constitution and by-laws, which may constitute union busting, where the existence of the union is threatened, the
15-day cooling-off period shall not apply and the union may take action immediately. (As amended by Executive
Order No. 111, December 24, 1986.)

(d)The notice must be in accordance with such implementing rules and regulations as the Department of Labor and
Employment may promulgate. TcSCEa

xxx xxx xxx

(f)A decision to declare a strike must be approved by a majority of the total union membership in the bargaining unit
concerned, obtained by secret ballot in meetings or referenda called for that purpose. A decision to declare a lockout
must be approved by a majority of the board of directors of the corporation or association or of the partners in a
partnership, obtained by secret ballot in a meeting called for that purpose. The decision shall be valid for the
duration of the dispute based on substantially the same grounds considered when the strike or lockout vote was
taken. The Department may, at its own initiative or upon the request of any affected party, supervise the conduct of
the secret balloting. In every case, the union or the employer shall furnish the Ministry the voting at least seven days
before the intended strike or lockout, subject to the cooling-off period herein provided. (As amended by Batas
Pambansa Bilang 130, August 21, 1981 and further amended by Executive Order No. 111, December 24, 1986.)
(Emphasis supplied.)

Rule XXII, Book V of the Omnibus Rules Implementing the Labor Code reads:

RULE XXII

CONCILIATION, STRIKES AND LOCKOUTS

xxx xxx xxx

SEC. 6.Who may declare a strike or lockout. — Any certified or duly recognized bargaining representative may declare
a strike in cases of bargaining deadlocks and unfair labor practices. The employer may declare a lockout in the same
cases. In the absence of a certified or duly recognized bargaining representative, any legitimate labor organization in
the establishment may declare a strike but only on grounds of unfair labor practice. (Emphasis supplied.)

Furthermore, the strike was illegal due to the commission of the following prohibited activities: 48 (1) violence,
coercion, intimidation and harassment against non-participating employees; and (2) blocking of free ingress to and
egress from the hospital, including preventing patients and their vehicles from entering the hospital and other
employees from reporting to work, the putting up of placards with a statement advising incoming patients to proceed
to another hospital because MCCHI employees are on strike/protest. As shown by photographs 49 submitted by
MCCHI, as well as the findings of the NCMB and Cebu City Government, the hospital premises and sidewalk within its
vicinity were full of placards, streamers and makeshift structures that obstructed its use by the public who were
likewise barraged by the noise coming from strikers using megaphones. 50 On the other hand, the affidavits 51
executed by several hospital employees and patients narrated in detail the incidents of harassment, intimidation,
violence and coercion, some of these witnesses have positively identified the perpetrators. The prolonged work
stoppage and picketing activities of the striking employees severely disrupted hospital operations that MCCHI
suffered heavy financial losses. TSaEcH
The findings of the Executive Labor Arbiter and NLRC, as sustained by the appellate court, clearly established that the
striking union members created so much noise, disturbance and obstruction that the local government authorities
eventually ordered their removal for being a public nuisance. This was followed by an injunction from the NCMB
enjoining the union leaders from further blocking the free ingress to and egress from the hospital, and from
committing threats, coercion and intimidation against non-striking employees and patients/vehicles desiring to enter
for the purpose of seeking medical treatment/confinement. By then, the illegal strike had lasted for almost five
months.

Consequences of illegal strike

to union officers and members

Art. 264 (a) of the Labor Code, as amended, provides for the consequences of an illegal strike to the participating
workers:

. . . Any union officer who knowingly participates in illegal strike and any worker or union officer who knowingly
participates in the commission of illegal acts during a strike may be declared to have lost his employment status:
Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination
of his employment, even if a replacement had been hired by the employer during such lawful strike.

The above provision makes a distinction between workers and union officers who participate in an illegal strike: an
ordinary striking worker cannot be terminated for mere participation in an illegal strike. There must be proof that he
or she committed illegal acts during a strike. A union officer, on the other hand, may be terminated from work when
he knowingly participates in an illegal strike, and like other workers, when he commits an illegal act during a strike.
52

Considering their persistence in holding picketing activities despite the declaration by the NCMB that their union was
not duly registered as a legitimate labor organization and the letter from NFL's legal counsel informing that their acts
constitute disloyalty to the national federation, and their filing of the notice of strike and conducting a strike vote
notwithstanding that their union has no legal personality to negotiate with MCCHI for collective bargaining purposes,
there is no question that NAMA-MCCH-NFL officers knowingly participated in the illegal strike. The CA therefore did
not err in ruling that the termination of union officers Perla Nava, Catalina Alsado, Albina Bañez, Hannah Bongcaras,
Ernesto Canen, Jesusa Gerona and Guillerma Remocaldo was valid and justified. HDATCc

With respect to the dismissed union members, although MCCHI submitted photographs taken at the picket line, it did
not individually name those striking employees and specify the illegal act committed by each of them. As to the
affidavits executed by non-striking employees, they identified mostly union officers as the persons who blocked the
hospital entrance, harassed hospital employees and patients whose vehicles were prevented from entering the
premises. Only some of these witnesses actually named a few union members who committed similar acts of
harassment and coercion. Consequently, we find no error committed by the CA in CA-G.R. SP No. 66540 when it
modified the decision of the NLRC and ruled that the dismissal of union members who merely participated in the
illegal strike was illegal. On the other hand, in CA-G.R. SP No. 84998, the CA did not err in ruling that the dismissal of
Yballe, et al. was illegal; however, it also ordered their reinstatement with full back wages.

Dismissed union members not

entitled to backwages but

should be awarded separation

pay in lieu of reinstatement

Since there is no clear proof that union members actually participated in the commission of illegal acts during the
strike, they are not deemed to have lost their employment status as a consequence of a declaration of illegality of
the strike.

Petitioners in G.R. Nos. 154113 and 187778 assail the CA in not ordering their reinstatement with back wages.
Invoking stare decisis, they cited the case of Bascon v. Court of Appeals 53 decided by this Court in 2004 and which
involved two former hospital employees who likewise sued MCCHI after the latter terminated their employment due
to their participation in the same illegal strike led by NAMA-MCCH-NFL. In said case we ruled that petitioners Cole
and Bascon were illegally dismissed because MCCHI failed to prove that they committed illegal acts during the strike.
We thus ordered the reinstatement of petitioners Bascon and Cole without loss of seniority rights and other
privileges and payment of their back wages inclusive of allowances, and other benefits computed from the time they
were dismissed up to the time of their actual reinstatement. Bascon was also the basis of the award of back wages in
CA-G.R. SP No. 84998.

Stare decisis et non quieta movere. Stand by the decision and disturb not what is settled. Under the doctrine of stare
decisis, once a court has laid down a principle of law as applicable to a certain state of facts, it will adhere to that
principle and apply it to all future cases where the facts are substantially the same, 54 even though the parties may
be different. It proceeds from the first principle of justice that, absent any powerful countervailing considerations,
like cases ought to be decided alike. Thus, where the same questions relating to the same event have been put
forward by parties similarly situated as in a previous case litigated and decided by a competent court, the rule of
stare decisis is a bar to any attempt to relitigate the same issue. 55 TCacIA

The doctrine though is not cast in stone for upon a showing that circumstances attendant in a particular case override
the great benefits derived by our judicial system from the doctrine of stare decisis, the Court is justified in setting it
aside. 56 For the Court, as the highest court of the land, may be guided but is not controlled by precedent. Thus, the
Court, especially with a new membership, is not obliged to follow blindly a particular decision that it determines,
after re-examination, to call for a rectification. 57

Although the Bascon case involved the very same illegal strike in MCCHI which led to the termination of herein
petitioners, its clearly erroneous application of the law insofar only as the award of back wages warrants setting aside
the doctrine. Indeed, the doctrine of stare decisis notwithstanding, the Court has abandoned or overruled precedents
whenever it realized that the Court erred in the prior decisions. "Afterall, more important than anything else is that
this Court should be right." 58

In G & S Transport Corporation v. Infante, 59 the Court explained the rationale for its recent rulings deleting back
wages awarded to the dismissed workers if the strike was found to be illegal. Considering that they did not render
work for the employer during the strike, they are entitled only to reinstatement.

With respect to backwages, the principle of a "fair day's wage for a fair day's labor" remains as the basic factor in
determining the award thereof. If there is no work performed by the employee there can be no wage or pay unless,
of course, the laborer was able, willing and ready to work but was illegally locked out, suspended or dismissed or
otherwise illegally prevented from working. While it was found that respondents expressed their intention to report
back to work, the latter exception cannot apply in this case. In Philippine Marine Officers' Guild v. Compañia
Maritima, as affirmed in Philippine Diamond Hotel and Resort v. Manila Diamond Hotel Employees Union, the Court
stressed that for this exception to apply, it is required that the strike be legal, a situation that does not obtain in the
case at bar.

Under the circumstances, respondents' reinstatement without backwages suffices for the appropriate relief. If
reinstatement is no longer possible, given the lapse of considerable time from the occurrence of the strike, the award
of separation pay of one (1) month salary for each year of service, in lieu of reinstatement, is in order. 60 (Emphasis
supplied.) AaCcST

The CA decision in CA-G.R. SP No. 66540 ordering the payment of separation pay in lieu of reinstatement without
back wages is thus in order, to conform to the policy of a fair day's wage for a fair day's labor. The amount of
separation pay is increased to one month pay for every year of service, consistent with jurisprudence. Accordingly,
the decision in CA-G.R. SP No. 84998 is modified by deleting the award of back wages and granting separation pay in
lieu of reinstatement.

It is to be noted that as early as April 8, 1996, union members who took part in the concerted activities have been
warned by management that NAMA-MCCH-NFL is not a legitimate labor organization and its notice of strike was
denied by the NCMB, and directed to desist from further participating in such illegal activities. Despite such warning,
they continued with their picketing activities and held more mass actions after management sent them termination
notices. The prolonged work stoppage seriously disrupted hospital operations, which could have eventually brought
MCCHI into bankruptcy had the City Government of Cebu not issued a demolition order and the NLRC Region 7 not
formally enjoined the prohibited picketing activities. Also, the illegal dismissal complaints subsequently filed by the
terminated employees did not obliterate the fact that they did not suffer loss of earnings by reason of the employer's
unjustified acts, there being no unfair labor practice committed by MCCHI. Hence, fairness and justice dictate that
back wages be denied the said employees who participated in the illegal concerted activities to the great detriment
of the employer.

Separation pay is made an alternative relief in lieu of reinstatement in certain circumstances, like: (a) when
reinstatement can no longer be effected in view of the passage of a long period of time or because of the realities of
the situation; (b) reinstatement is inimical to the employer's interest; (c) reinstatement is no longer feasible; (d)
reinstatement does not serve the best interests of the parties involved; (e) the employer is prejudiced by the
workers' continued employment; (f) facts that make execution unjust or inequitable have supervened; or (g) strained
relations between the employer and employee. 61

Considering that 15 years had lapsed from the onset of this labor dispute, and in view of strained relations that
ensued, in addition to the reality of replacements already hired by the hospital which had apparently recovered from
its huge losses, and with many of the petitioners either employed elsewhere, already old and sickly, or otherwise
incapacitated, separation pay without back wages is the appropriate relief. We note that during the pendency of the
cases in this Court, some of the petitioners have entered into compromise agreements with MCCHI, all of which were
duly approved by this Court. Thus, excluded from the herein monetary awards are the following petitioners whose
compromise agreements have been approved by this Court and judgment having been entered therein: Gloria
Arguilles, Romulo Alforque, Gerna Patigdas-Barte, Daylinda Tigo Merlyn Nodado, Ramon Tagnipis, Bernabe
Lumapguid, Romeo Empuerto, Marylen Labra, Milagros Castillo Bernadette Pontillas-Tibay, Constancio Pagador,
Nolan Alvin Panal, Edilberto Villa, Roy Malazarte, Felecianita Malazarte and Noel Hortelano. DaTISc

Attorney's fees

The dismissed employees having been compelled to litigate in order to seek redress and protect their rights, they are
entitled to reasonable attorney's fees pursuant to Art. 2208 (2) of the Civil Code. In view of the attendant
circumstances of this case, we hold that attorney's fees in the amount of P50,000.00 is reasonable and justified.
However, the respondents in G.R. No. 196156 are not entitled to the same relief since they did not appeal from the
CA decision which did not include the award of attorney's fees.

WHEREFORE, the petition for review on certiorari in G.R. No. 187861 is DENIED while the petitions in G.R. Nos.
154113, 187778 and 196156 are PARTLY GRANTED. The Decision dated October 17, 2008 of the Court of Appeals in
CA-G.R. SP No. 66540 is hereby AFFIRMED with MODIFICATIONS in that MCCHI is ordered to pay the petitioners in
G.R. Nos. 154113 and 187778, except the petitioners who are union officers, separation pay equivalent to one month
pay for every year of service, and reasonable attorney's fees in the amount of P50,000.00. The Decision dated
November 7, 2008 is likewise AFFIRMED with MODIFICATIONS in that MCCHI is ordered to pay the private
respondents in G.R. No. 196156 separation pay equivalent to one month pay for every year of service, and that the
award of back wages is DELETED.

The case is hereby remanded to the Executive Labor Arbiter for the recomputation of separation pay due to each of
the petitioners union members in G.R. Nos. 154113, 187778 and 196156 except those who have executed
compromise agreements approved by this Court.

No pronouncement as to costs.

SO ORDERED.
[G.R. No. 172666. December 7, 2011.]

PICOP RESOURCES, INCORPORATED (PRI), Represented in this Petition by MR. WILFREDO D. FUENTES, in his
capacity as Senior Vice-President and Resident Manager, petitioner, vs. RICARDO DEQUILLA, ELMO PABILANDO,
CESAR ATIENZA and ANICETO ORBETA, JR., and NAMAPRI-SPFI, respondents.

DECISION

MENDOZA, J p:

This is a petition for review assailing the April 14, 2005 Decision 1 of the Court of Appeals (CA) which reversed and set
aside the Resolutions 2 of the National Labor Relations Commission (NLRC) dated December 27, 2002 and March 28,
2003, and reinstated the June 9, 2001 Decision 3 of the Labor Arbiter (LA), which declared the dismissal of the private
respondents as illegal.

The Facts

Ricardo Dequilla, Cesar Atienza and Aniceto Orbeta (private respondents) were regular rank-and-file employees of
Picop Resources, Inc. (PICOP) and members of the NAMAPRI-SPFL, a duly registered labor organization and existing
bargaining agent of the PICOP rank-and-file employees. PICOP and NAMAPRI-SPFL had a collective bargaining
agreement (CBA) which would expire on May 22, 2000.

On May 16, 2000, the late Atty. Proculo P. Fuentes, Jr. (Atty. Fuentes), then National President of the Southern
Philippines Federation of Labor (SPFL), advised the PICOP management to terminate about 800 employees due to
acts of disloyalty, specifically, for allegedly campaigning, supporting and signing a petition for the certification of a
rival union, the Federation of Free Workers Union (FFW) before the 60-day "freedom period" and during the
effectivity of the CBA. Such acts of disloyalty were construed to be a valid cause for termination under the terms and
conditions of the CBA. Based on the CBA, the freedom period would start on March 22, 2000. caHIAS

Acting on the advice of Atty. Fuentes, Atty. Romero Boniel (Atty. Boniel), Manager of the PICOP Legal and Labor
Relations Department, issued a memorandum directing the employees concerned to explain within seventy-two (72)
hours why their employment should not be terminated due to alleged acts of disloyalty. Upon receiving their
explanation letters, Atty. Boniel endorsed the same to Atty. Fuentes who then requested the termination of 46
employees found guilty of acts of disloyalty.
On October 16, 2000, PICOP served a notice of termination due to acts of disloyalty to 31 of the 46 employees.
Private respondents were among the 31 employees dismissed from employment by PICOP on November 16, 2000.

Enraged at what management did to them, private respondents filed a complaint before the NLRC Regional
Arbitration Branch No. XIII, Butuan City, for Unfair Labor Practice and Illegal Dismissal with money claims, damages
and attorney's fees.

LA Ruling

On June 9, 2001, after the parties submitted their respective position papers, the LA rendered a decision declaring as
illegal the termination of the private respondents. The dispositive portion of the LA Decision reads:

WHEREFORE, premises considered, judgment is hereby entered:

1.Declaring complainants' dismissal illegal; and

2.Ordering respondents PRI and NAMPRI-SPFL to reinstate complainants to their former or equivalent positions
without loss of seniority rights and to jointly and solidarily pay their backwages in the total amount of P177,403.68,
as shown in the computation, hereto attached and marked as Annex "A" hereof, plus damages in the amount of
P10,000.00 each and attorney's fees equivalent to 10% of the total monetary award. aHADTC

SO ORDERED. 4

NLRC Ruling

PICOP elevated the LA decision to the NLRC but its appeal was dismissed in the November 19, 2002 NLRC Resolution.
5 On motion for reconsideration, however, the NLRC issued another resolution, 6 dated December 27, 2002,
reversing and setting aside its November 19, 2002 Resolution, the dispositive portion of which reads:

WHEREFORE, foregoing premises considered, the above resolution dated November 19, 2002, is Reversed and Set
Aside. In lieu thereof, a new judgment is rendered DISMISSING the above-entitled case for lack of merit.
SO ORDERED. 7

CA Ruling

Upon the denial of their motion for reconsideration, the private respondents brought the case to the CA. On April 14,
2005, the CA rendered the subject decision reversing and setting aside the December 27, 2002 NLRC resolution and
reinstating the June 9, 2001 Decision of the LA. The decretal portion of the CA decision reads:

WHEREFORE, premises considered, [the] instant petition is GRANTED and the assailed resolutions of the Public
Respondent NLRC are hereby REVERSED and SET ASIDE. In view thereof, ordered REINSTATED is the Decision of
Acting Executive Labor Arbiter Rogelio P. Legaspi dated 09 June 2001 which reads:

WHEREFORE, premises considered, judgment is hereby entered:

1.Declaring complainants' dismissal illegal; and

2.Ordering Respondents PRI and NAMPRI-SPFL to reinstate Complainants to their former or equivalent positions
without loss of seniority rights and to jointly and solidarily pay their backwages in the total amount of P177,403.68,
plus damages in the amount of P10,000.00 each and attorney's fees equivalent to 10% of the total monetary award.
TCaSAH

SO ORDERED. 8

The CA ruled, among others, that although private respondents signed an authorization for the filing of the petition
for certification election of a rival union, PICOP Democratic Trade Unionist-Federation of Free Workers (FFW), such
act was not a sufficient ground to terminate the employment of private respondents. It explained:

Ruminating from the alleged violation of the CBA, We see no reason, sufficient and compelling enough, to sustain the
Public Respondent's raison d'etre in overturning the Labor Arbiter's ruling in favor of the Petitioners. While it is true
that Petitioners signed the authorization in support of the Petition for certification election of FFW before the
"freedom period," such act is not a sufficient ground to terminate the employment of the Petitioners in as much as
the petition itself was filed during the freedom period. Hence, there is nil a basis to impute acts of disloyalty to
Petitioners. Imputations of an alleged violation of the CBA should not arise from a vague and all embracing definition
of alleged "acts of disloyalty." Neither should it arise from speculative inferences where no evidence appears from
the record that Respondent NAMAPRI-SPFL expressly defined "acts of disloyalty." Besides, to Our mind, signing an
authorization for the filing of the petition for certification election does not constitute an act of disloyalty per se.
There must be proof of contemporaneous acts of resignation or withdrawal of their membership from the
Respondent NAMAPRI-SPFL to which they are members. Respondents miserably failed to present evidence to justify
a valid termination of employees in pursuance to the CBA allegedly violated. Petitioners, in fact remained in good
standing, a continuing requirement for retaining their employment in the Respondent PRI. Petitioners neither joined
nor affiliated with FFW and continuously paid their union dues with Respondent NAMAPRI-SPFL. Consequently, this
lends credence to the Labor Arbiter's ruling that Petitioners' dismissal was indeed illegal.

Likewise, the advise of the Respondent NAMAPRI-SPFL to the Respondent PRI to effect the termination of employees,
including herein Petitioners, finds no basis in fact and in law considering that at the time the Respondent PRI
dismissed the Petitioners, among others, on 16 November 2000, there was no more CBA to speak of after it had
already expired on 22 May 2000. 9

The CA further agreed with private respondents that Article 256 and not Article 253, of the Labor Code applied in this
case. The CA discussed this point as follows:

We are inclined to favor Petitioner's stance that Article 256, supra, is applicable. The issue of acts of disloyalty relates
more to a direct connection on the alleged violation or breach of loyalty to the majority status of the incumbent
union than on violation of the terms and conditions of the agreement under Article 253, supra, as the Respondents
would want Us to believe. Article 256 provides that at the expiration of the 60-day period reckoned from the
expiration date of the CBA, the employer shall continue to recognize the majority status of the incumbent bargaining
agent only where no petition for certification election is filed. However, as earlier pointed, a petition was already filed
by the Petitioners, among others, during the 60-day freedom period. Clearly, from the imports of said provision, it
will render nugatory the purpose of the law providing for a freedom period for the filing of a petition for certification
election should the act of signing/filing the said petition be interpreted as an act of disloyalty and will render farce
the need for a certification election as an instrument of ascertaining the true expression of the will of the workers as
to which labor organization would represent them. CHTcSE

To construe the provision of law in Article 253, supra, as imposing a restriction against the signing and filing a petition
for certification election during the freedom period, is to violate the constitutional right of the employees to organize
freely. It is a basic precept of statutory construction that statutes should be construed not so much according to the
letters that killeth but in line with the purpose for which they have been enacted. 10

Not in conformity with the CA decision, PICOP filed this petition for review posing the following

ISSUES
WHETHER [OR NOT] AN EXISTING COLLECTIVE BARGAINING AGREEMENT (CBA) CAN BE GIVEN ITS FULL FORCE AND
EFFECT IN ALL ITS TERMS AND CONDITIONS INCLUDING ITS UNION SECURITY CLAUSE, EVEN BEYOND THE 5-YEAR
PERIOD WHEN NO NEW CBA HAS YET BEEN ENTERED INTO?

WHETHER OR NOT AN HONEST ERROR IN THE INTERPRETATION AND/OR CONCLUSION OF LAW FALLS WITHIN THE
AMBIT OF THE EXTRA ORDINARY REMEDY OF CERTIORARI UNDER RULE 65, REVISED RULES OF COURT. 11

PICOP basically argues that Article 253 of the Labor Code applies in this case. Article 253 of the Labor Code provides
that the terms and conditions of a CBA remain in full force and effect even beyond the 5-year period when no new
CBA has yet been reached. It claims that the private respondents violated this provision when they campaigned for,
supported and signed FFW's petition for certification election on March 19 and 20, 2000, before the onset of the
freedom period. It further argues that private respondents were not denied due process when they were terminated.
Finally, it claims that the decision of the NLRC on the issues raised was not without merit. Even assuming that it erred
in its judgment on the legal issues raised, its error is not equivalent to an abuse of discretion that should fall within
the ambit of the extraordinary remedy of certiorari.

Private respondents' position

Private respondents argue that the substantial arguments raised by PICOP in this petition are basically a rehash of the
same issues and arguments contained in its Motion for Reconsideration of the CA decision. Private respondents
adopted and repleaded the ruling of the CA in their Comment 12 on this petition.

The Court's Ruling

The petition merits a denial.

There is no question that in the CBA entered into by the parties, there is a union security clause. The clause imposes
upon the workers the obligation to join and maintain membership in the company's recognized union as a condition
for employment. ASTcEa

"Union security" is a generic term, which is applied to and comprehends "closed shop," "union shop," "maintenance
of membership," or any other form of agreement which imposes upon employees the obligation to acquire or retain
union membership as a condition affecting employment. There is union shop when all new regular employees are
required to join the union within a certain period as a condition for their continued employment. There is
maintenance of membership shop when employees, who are union members as of the effective date of the
agreement, or who thereafter become members, must maintain union membership as a condition for continued
employment until they are promoted or transferred out of the bargaining unit, or the agreement is terminated. A
closed shop, on the other hand, may be defined as an enterprise in which, by agreement between the employer and
his employees or their representatives, no person may be employed in any or certain agreed departments of the
enterprise unless he or she is, becomes, and, for the duration of the agreement, remains a member in good standing
of a union entirely comprised of or of which the employees in interest are a part. 13

There is no dispute that private respondents were members of NAMAPRI-SPFL who were terminated by PICOP due to
alleged acts of disloyalty. It is basic in labor jurisprudence that the burden of proof rests upon management to show
that the dismissal of its worker was based on a just cause. When an employer exercises its power to terminate an
employee by enforcing the union security clause, it needs to determine and prove the following: (1) the union
security clause is applicable; (2) the union is requesting for the enforcement of the union security provision in the
CBA; and (3) there is sufficient evidence to support the decision of the union to expel the employee from the union.
14

In this case, the resolution thereof hinges on whether PICOP was able to show sufficient evidence to support the
decision of the union to expel private respondents from it.

PICOP basically contends that private respondents were justly terminated from employment for campaigning,
supporting and signing a petition for the certification of FFW, a rival union, before the 60-day "freedom period" and
during the effectivity of the CBA. Their acts constitute an act of disloyalty against the union which is valid cause for
termination pursuant to the Union Security Clause in the CBA.

The Court finds Itself unable to agree. ADEacC

Considering the peculiar circumstances, the Court is of the view that the acts of private respondents are not enough
proof of a violation of the Union Security Clause which would warrant their dismissal. PICOP failed to show in detail
how private respondents campaigned and supported FFW. Their mere act of signing an authorization for a petition
for certification election before the freedom period does not necessarily demonstrate union disloyalty. It is far from
being within the definition of "acts of disloyalty" as PICOP would want the Court to believe. The act of "signing an
authorization for a petition for certification election" is not disloyalty to the union per se considering that the petition
for certification election itself was filed during the freedom period which started on March 22, 2000.

Moreover, as correctly ruled by the CA, the records are bereft of proof of any contemporaneous acts of resignation
or withdrawal of union membership or non-payment of union dues. Neither is there proof that private respondents
joined FFW. The fact is, private respondents remained in good standing with their union, NAMAPRI-SPFL. This point
was settled in the case of PICOP Resources, Incorporated (PRI) v. Anacleto L. Tañeca, 15 where it was written:

However, as to the third requisite, we find that there is no sufficient evidence to support the decision of PRI to
terminate the employment of the respondents.

PRI alleged that respondents were terminated from employment based on the alleged acts of disloyalty they
committed when they signed an authorization for the Federation of Free Workers (FFW) to file a Petition for
Certification Election among all rank-and-file employees of PRI. It contends that the acts of respondents are a
violation of the Union Security Clause, as provided in their Collective Bargaining Agreement.

We are unconvinced.

We are in consonance with the Court of Appeals when it held that the mere signing of the authorization in support of
the Petition for Certification Election of FFW on March 19, 20 and 21, or before the "freedom period," is not sufficient
ground to terminate the employment of respondents inasmuch as the petition itself was actually filed during the
freedom period. Nothing in the records would show that respondents failed to maintain their membership in good
standing in the Union. Respondents did not resign or withdraw their membership from the Union to which they
belong. Respondents continued to pay their union dues and never joined the FFW. TIDaCE

Significantly, petitioner's act of dismissing respondents stemmed from the latter's act of signing an authorization
letter to file a petition for certification election as they signed it outside the freedom period. However, we are
constrained to believe that an "authorization letter to file a petition for certification election" is different from an
actual "Petition for Certification Election." Likewise, as per records, it was clear that the actual Petition for
Certification Election of FFW was filed only on May 18, 2000. Thus, it was within the ambit of the freedom period
which commenced from March 21, 2000 until May 21, 2000. Strictly speaking, what is prohibited is the filing of a
petition for certification election outside the 60-day freedom period. This is not the situation in this case. If at all, the
signing of the authorization to file a certification election was merely preparatory to the filing of the petition for
certification election, or an exercise of respondents' right to self-organization. 16

Finally, PICOP insists that Article 253 of the Labor Code applies in this case, not Article 256 thereof. The Court agrees
with the CA that its argument is misplaced. This issue was tackled and settled in the same PICOP Resources,
Incorporated (PRI) v. Tañeca case, to wit:

Moreover, PRI anchored their decision to terminate respondents' employment on Article 253 of the Labor Code
which states that "it shall be the duty of both parties to keep the status quo and to continue in full force and effect
the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is
reached by the parties." It claimed that they are still bound by the Union Security Clause of the CBA even after the
expiration of the CBA; hence, the need to terminate the employment of respondents.

Petitioner's reliance on Article 253 is misplaced.

The provision of Article 256 of the Labor Code is particularly enlightening. It reads:

Article 256. Representation issue in organized establishments. — In organized establishments, when a verified
petition questioning the majority status of the incumbent bargaining agent is filed before the Department of Labor
and Employment within the sixty-day period before the expiration of a collective bargaining agreement, the Med-
Arbiter shall automatically order an election by secret ballot when the verified petition is supported by the written
consent of at least twenty-five percent (25%) of all the employees in the bargaining unit to ascertain the will of the
employees in the appropriate bargaining unit. To have a valid election, at least a majority of all eligible voters in the
unit must have cast their votes. The labor union receiving the majority of the valid votes cast shall be certified as the
exclusive bargaining agent of all the workers in the unit. When an election which provides for three or more choices
results in no choice receiving a majority of the valid votes cast, a run-off election shall be conducted between the
labor unions receiving the two highest number of votes: Provided, That the total number of votes for all contending
unions is at least fifty per cent (50%) of the number of votes cast. TADCSE

At the expiration of the freedom period, the employer shall continue to recognize the majority status of the
incumbent bargaining agent where no petition for certification election is filed.

Applying the same provision, it can be said that while it is incumbent for the employer to continue to recognize the
majority status of the incumbent bargaining agent even after the expiration of the freedom period, they could only
do so when no petition for certification election was filed. The reason is, 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. The provision for status quo is
conditioned on the fact that no certification election was filed during the freedom period. Any other view would
render nugatory the clear statutory policy to favor certification election as the means of ascertaining the true
expression of the will of the workers as to which labor organization would represent them.

In the instant case, four (4) petitions were filed as early as May 12, 2000. In fact, a petition for certification election
was already ordered by the Med-Arbiter of DOLE Caraga Region on August 23, 2000. Therefore, following Article 256,
at the expiration of the freedom period, PRI's obligation to recognize NAMAPRI-SPFL as the incumbent bargaining
agent does not hold true when petitions for certification election were filed, as in this case.
Moreover, the last sentence of Article 253 which provides for automatic renewal pertains only to the economic
provisions of the CBA, and does not include representational aspect of the CBA. An existing CBA cannot constitute a
bar to a filing of a petition for certification election. When there is a representational issue, the status quo provision
in so far as the need to await the creation of a new agreement will not apply. Otherwise, it will create an absurd
situation where the union members will be forced to maintain membership by virtue of the union security clause
existing under the CBA and, thereafter, support another union when filing a petition for certification election. If we
apply it, there will always be an issue of disloyalty whenever the employees exercise their right to self-organization.
The holding of a certification election is a statutory policy that should not be circumvented, or compromised.

Time and again, we have ruled that we adhere to the policy of enhancing the welfare of the workers. Their freedom
to choose who should be their bargaining representative is of paramount importance. The fact that there already
exists a bargaining representative in the unit concerned is of no moment as long as the petition for certification
election was filed within the freedom period. What is imperative is that by such a petition for certification election
the employees are given the opportunity to make known of who shall have the right to represent them thereafter.
Not only some, but all of them should have the right to do so. What is equally important is that everyone be given a
democratic space in the bargaining unit concerned. ECaTDc

We will emphasize anew that the power to dismiss is a normal prerogative of the employer. This, however, is not
without limitations. The employer is bound to exercise caution in terminating the services of his employees especially
so when it is made upon the request of a labor union pursuant to the Collective Bargaining Agreement. Dismissals
must not be arbitrary and capricious. Due process must be observed in dismissing an employee, because it affects not
only his position but also his means of livelihood. Employers should, therefore, respect and protect the rights of their
employees, which include the right to labor. 17

Considering that private respondents were illegally dismissed, basic law provides that they shall be entitled to the
benefit of full backwages and reinstatement unless the latter is no longer viable, in which case, a grant of separation
pay shall be awarded equivalent to one month salary for every year of service.

. . . Under Republic Act No. 6715, employees who are illegally dismissed are entitled to full backwages, inclusive of
allowances and other benefits, or their monetary equivalent, computed from the time their actual compensation was
withheld from them up to the time of their actual reinstatement. But if reinstatement is no longer possible, the
backwages shall be computed from the time of their illegal termination up to the finality of the decision . . . . 18

Private respondents are also entitled to an award of attorney's fees equivalent to 10% of the total monetary award as
they were compelled to litigate in order to seek redress for their illegal dismissal.

WHEREFORE, the petition is DENIED.

SO ORDERED.
[G.R. No. 155109. March 14, 2012.]

C. ALCANTARA & SONS, INC., petitioner, vs. COURT OF APPEALS, LABOR ARBITER ANTONIO M. VILLANUEVA,
LABOR ARBITER ARTURO L. GAMOLO, SHERIFF OF NLRC RAB-XI-DAVAO CITY, NAGKAHIUSANG MAMUMUO SA
ALSONS-SPFL (NAMAAL-SPFL), FELIXBERTO IRAG, JOSHUA BARREDO, ERNESTO CUARIO, EDGAR MONDAY,
EDILBERTO DEMETRIA, HERMINIO ROBILLO, ROMULO LUNGAY, MATROIL DELOS SANTOS, BONERME MATURAN,
RAUL CANTIGA, EDUARDO CAMPUSO, RUDY ANADON, GILBERTO GABRONINO, BONIFACIO SALVADOR, CIRILO
MINO, ROBERTO ABONADO, WARLITO MONTE, PEDRO ESQUIERDO, ALFREDO TROPICO, DANILO MEJOS, HECTOR
ESTUITA, BARTOLOME CASTILLANES, EDUARDO CAPUYAN, SATURNINO CAGAS, ALEJANDRO HARDER, EDUARDO
LARENA, JAIME MONTEDERAMOS, ERMELANDO BASADRE, REYNALDO LIMPAJAN, ELPIDIO LIBRANZA, TEDDY
SUELO, JOSE AMOYLIN, TRANQUILINO ORALLO, CARLOS BALDOS, MANOLITO SABELLANO, CARMELITO TOBIAS,
PRIMITIVO GARCIA, JUANITO ALDEPOLLA, LUDIVICO ABAD, WENCISLAO INGHUG, RICARDO ALTO, EPIFANIO
JARABAY, FELICIANO AMPER, ALEXANDER JUDILLA, ROBERTO ANDRADE, ALFREDO LESULA, JULIO ANINO, BENITO
MAGPUSAO, PEDRO AQUINO, EDDIE MANSANADES, ROMEO ARANETA, ARGUILLAO MANTICA, CONSTANCIO
ARNAIZ, ERNESTO HOTOY, JUSTINO ASCANO, RICARDO MATURAN, EDILBERTO YAMBAO, ANTONIO MELARGO,
JESUS BERITAN, ARSENIO MELICOR, DIOSDADO BONGABONG, LAURO MONTENEGRO, CARLITO BURILLO, LEO
MORA, PABLO BUTIL, ARMANDO GUCILA, JEREMIAH CAGARA, MARIO NAMOC, CARLITO CAL, GERWINO
NATIVIDAD, ROLANDO CAPUYAN, EDGARDO ORDIZ, LEONARDO CASURRA, PATROCINIO ORTEGA, FILEMON CESAR,
MARIO PATAN, ROMEO COMPRADO, JESUS PATOC, RAMON CONSTANTINO, ALBERTO PIELAGO, SAMUEL DELA
LLANA, NICASIO PLAZA, ROSALDO DAGONDON, TITO GUADES, BONIFACIO DINAGUDOS, PROCOPIO RAMOS, JOSE
EBORAN, ROSENDO SAJOL, FRANCISCO EMPUERTO, PATRICIO SALOMON, NESTOR ENDAYA, MARIO SALVALEON,
ERNESTO ESTILO, BONIFACIO SIGUE, VICENTE FABROA, JAIME SUCUAHI, CELSO HUISO, ALEX TAUTO-AN,
SATURNINO YAGON, CLAUDIO TIROL, SULPECIO GAGNI, JOSE TOLERO, FERVIE GALVEZ, ALFREDO TORALBA and
EDUARDO GENELSA, respondents.

[G.R. No. 155135. March 14, 2012.]

NAGKAHIUSANG MAMUMUO SA ALSONS-SPFL (NAMAAL-SPFL), FELIXBERTO IRAG, JOSHUA BARREDO, ERNESTO

CUARIO, EDGAR MONDAY, EDILBERTO DEMETRIA, HERMINIO ROBILLO, ROMULO LUNGAY, MATROIL DELOS
SANTOS, BONERME MATURAN, RAUL CANTIGA, EDUARDO CAMPUSO, RUDY ANADON, GILBERTO GABRONINO,
BONIFACIO SALVADOR, CIRILO MINO, ROBERTO ABONADO, WARLITO MONTE, PEDRO ESQUIERDO, ALFREDO
TROPICO, DANILO MEJOS, HECTOR ESTUITA, BARTOLOME CASTILLANES, EDUARDO CAPUYAN, SATURNINO CAGAS,
ALEJANDRO HARDER, EDUARDO LARENA, JAIME MONTEDERAMOS, ERMELANDO BASADRE, REYNALDO LIMPAJAN,
ELPIDIO LIBRANZA, TEDDY SUELO, JOSE AMOYLIN, TRANQUILINO ORALLO, CARLOS BALDOS, MANOLITO
SABELLANO, CARMELITO TOBIAS, PRIMITIVO GARCIA, JUANITO ALDEPOLLA, LUDIVICO ABAD, WENCISLAO
INGHUG, RICARDO ALTO, EPIFANIO JARABAY, FELICIANO AMPER, ALEXANDER JUDILLA, ROBERTO ANDRADE,
ALFREDO LESULA, JULIO ANINO, BENITO MAGPUSAO, PEDRO AQUINO, EDDIE MANSANADES, ROMEO ARANETA,
ARGUILLAO MANTICA, CONSTANCIO ARNAIZ, ERNESTO HOTOY, JUSTINO ASCANO, RICARDO MATURAN,
EDILBERTO YAMBAO, ANTONIO MELARGO, JESUS BERITAN, ARSENIO MELICOR, DIOSDADO BONGABONG, LAURO
MONTENEGRO, CARLITO BURILLO, LEO MORA, PABLO BUTIL, ARMANDO GUCILA, JEREMIAH CAGARA, MARIO
NAMOC, CARLITO CAL, GERWINO NATIVIDAD, ROLANDO CAPUYAN, JUANITO NISNISAN, AURELIO CARIN, PRIMO
OPLIMO, ANGELITO CASTANEDA, EDGARDO ORDIZ, LEONARDO CASURRA, PATROCINIO ORTEGA, FILEMON CESAR,
MARIO PATAN, ROMEO COMPRADO, JESUS PATOC, RAMON CONSTANTINO, MANUEL PIAPE, ROY CONSTANTINO,
ALBERTO PIELAGO, SAMUEL DELA LLANA, NICASIO PLAZA, ROSALDO DAGONDON, TITO GUADES, BONIFACIO
DINAGUDOS, PROCOPIO RAMOS, JOSE EBORAN, ROSENDO SAJOL, FRANCISCO EMPUERTO, PATRICIO SALOMON,
NESTOR ENDAYA, MARIO SALVALEON, ERNESTO ESTILO, BONIFACIO SIGUE, VICENTE FABROA, JAIME SUCUAHI,
CELSO HUISO, ALEX TAUTO-AN, SATURNINO YAGON, CLAUDIO TIROL, SULPECIO GAGNI, JOSE TOLERO, FERVIE
GALVEZ, ALFREDO TORALBA and EDUARDO GENELSA, petitioners, vs. C. ALCANTARA & SONS, INC., EDITHA I.
ALCANTARA, ATTY. NELIA A. CLAUDIO, CORNELIO E. CAGUIAT, JESUS S. DELA CRUZ, ROLANDO Z. ANDRES and JOSE
MA. MANUEL YRASUEGUI, respondents.

[G.R. No. 179220. March 14, 2012.]

NAGKAHIUSANG MAMUMUO SA ALSONS-SPFL (NAMAAL-SPFL), AND ITS MEMBERS whose names are listed below,
petitioners, vs. C. ALCANTARA & SONS, INC., respondent.

RESOLUTION

PERALTA, J p:

For resolution are the (1) Motion for Partial Reconsideration 1 filed by C. Alcantara & Sons, Inc. (CASI) and (2) Motion
for Reconsideration 2 filed by Nagkahiusang Mamumuo sa Alsons-SPFL (the Union) and the Union officers 3 and their
striking members 4 of the Court's Decision 5 dated September 29, 2010. In a Resolution 6 dated December 13, 2010,
the parties were required to submit their respective Comments. After several motions for extension, the parties
submitted the required comments. Hence, this resolution.

For a proper perspective, we state briefly the facts of the case.

The negotiation between CASI and the Union on the economic provisions of the Collective Bargaining Agreement
(CBA) ended in a deadlock prompting the Union to stage a strike, 7 but the strike was later declared by the Labor
Arbiter (LA) to be illegal having been staged in violation of the CBA's no strike-no lockout provision. 8 Consequently,
the Union officers were deemed to have forfeited their employment with the company and made them liable for
actual damages plus interest and attorney's fees, while the Union members were ordered to be reinstated without
backwages there being no proof that they actually committed illegal acts during the strike. 9

Notwithstanding the provision of the Labor Code mandating that the reinstatement aspect of the decision be
immediately executory, the LA refused to reinstate the dismissed Union members. On November 8, 1999, the NLRC
affirmed the LA decision insofar as it declared the strike illegal and ordered the Union officers dismissed from
employment and liable for damages but modified the same by considering the Union members to have been validly
dismissed from employment for committing prohibited and illegal acts. 10
On petition for certiorari, the Court of Appeals (CA) annulled the NLRC decision and reinstated that of the LA.
Aggrieved, CASI, the Union and the Union officers and members elevated the matter to this Court. The cases were
docketed as G.R. Nos. 155109 and 155135. 11

During the pendency of the cases, the affected Union members (who were ordered reinstated) filed with the LA a
motion for reinstatement pending appeal and the computation of their backwages. Instead of reinstating the Union
members, the LA awarded separation pay and other benefits. 12 On appeal, the NLRC denied the Union members'
claim for separation pay, accrued wages and other benefits. 13 When elevated to the CA, the appellate court held
that reinstatement pending appeal applies only to illegal dismissal cases under Article 223 of the Labor Code and not
to cases under Article 263. 14 Hence, the petition by the Union and its officers and members in G.R. No. 179220.
EcHAaS

G.R. Nos. 155109, 155135, and 179220 were consolidated. On September 29, 2010, the Court rendered a decision
the dispositive portion of which reads:

WHEREFORE, the Court DENIES the petition of the Nagkahiusang Mamumuo sa Alsons-SPFL and its officers and
members in G.R. No. 155135 for lack of merit, and REVERSES and SETS ASIDE the decision of the Court of Appeals in
CA-G.R. SP 59604 dated March 20, 2002. The Court, on the other hand, GRANTS the petition of C. Alcantara & Sons,
Inc. in G.R. 155109 and REINSTATES the decision of the National Labor Relations Commission in NLRC CA M-004996-
99 dated November 8, 1999.

Further, the Court PARTIALLY GRANTS the petition of the Nagkahiusang Mamumuo sa Alsons-SPFL and their
dismissed members in G.R. No. 179220 and ORDERS C. Alcantara & Sons, Inc. to pay the terminated Union members
backwages for four (4) months and nine (9) days and separation pays equivalent to one-half month salary for every
year of service to the company up to the date of their termination, with interest of 12% per annum from the time this
decision becomes final and executory until such backwages and separation pays are paid. The Court DENIES all other
claims.

SO ORDERED. 15

The Court agreed with the CA on the illegality of the strike as well as the termination of the Union officers, but
disagreed with the CA insofar as it affirmed the reinstatement of the Union members. The Court, instead, sustained
the dismissal not only of the Union officers but also the Union members who, during the illegal strike, committed
prohibited acts by threatening, coercing, and intimidating non-striking employees, officers, suppliers and customers;
obstructing the free ingress to and egress from the company premises; and resisting and defying the implementation
of the writ of preliminary injunction issued against the strikers. 16
The Court further held that the terminated Union members, who were ordered reinstated by the LA, should have
been immediately reinstated due to the immediate executory nature of the reinstatement aspect of the LA decision.
In view, however, of CASI's, failure to reinstate the dismissed employees, the Court ordered CASI to pay the
terminated Union members their accrued backwages from the date of the LA decision until the eventual reversal by
the NLRC of the order of reinstatement. 17 In addition to the accrued backwages, the Court awarded separation pay
as a form of financial assistance to the Union members equivalent to one-half month salary for every year of service
to the company up to the date of their termination. 18

Not satisfied, CASI filed a Motion for Partial Reconsideration of the above decision based on the following grounds:

I.

IT IS RESPECTFULLY SUBMITTED THAT A PRECEDENT SETTING RULING OF THIS HONORABLE COURT IN ESCARIO V.
NLRC [G.R. No. 160302, 27 SEPTEMBER 2010] — PARTICULARLY ON THE PROPER APPLICATION OF ARTICLES 264 AND
279 OF THE LABOR CODE — SUPPORTS THE AFFIRMATION AND NOT THE REVERSAL OF THE FINDINGS OF THE COURT
OF APPEALS ["CA"], AND NEGATES THE ENTITLEMENT TO ACCRUED WAGES OF THE UNION MEMBERS WHO
COMMITTED ILLEGAL ACTS DURING THE ILLEGAL STRIKE, NOTWITHSTANDING THAT THE LABOR ARBITER AWARDED
THE SAME.

II.

IT IS RESPECTFULLY SUBMITTED THAT THIS HONORABLE COURT ERRED WHEN IT RESOLVED TO GRANT SEPARATION
PAY TO THE UNION MEMBERS WHO COMMITTED ILLEGAL ACTS DURING THE ILLEGAL STRIKE CONSIDERING THAT
JURISPRUDENCE CITED TO JUSTIFY THE GRANT OF SEPARATION PAY DO NOT APPLY TO THE PRESENT CASE AS IT
APPLIES ONLY TO DISMISSALS FOR A JUST CAUSE. 19 CDcHSa

The Union, its officers and members likewise filed their separate motion for reconsideration assailing the Court's
conclusions that: (1) the strike is illegal; (2) that the officers of the Union and its appointed shop stewards
automatically forfeited their employment status when they participated in the strike; (3) that the Union members
committed illegal acts during the strike and are deemed to have lost their employment status; and (4) that CASI is
entitled to actual damages and attorney's fees. 20 They also fault the Court in not finding that: (1) CASI and its
officers are guilty of acts of unfair labor practice or violation of Article 248 of the Labor Code; (2) the lockout declared
by the company is illegal; (3) CASI and its officers committed acts of discrimination; (4) CASI and its officers violated
Article 254 of the Labor Code; and (5) CASI and its officers are liable for actual, moral, and exemplary damages to the
Union, its officers and members. 21
Simply stated, CASI only questions the propriety of the award of backwages and separation pay, while the Union, its
officers and members seek the reversal of the Court's conclusions on the illegality of the strike, the validity of the
termination of the Union officers and members, and the award of actual damages and attorney's fees as well as the
denial of their counterclaims against CASI.

After a careful review of the records of the case, we find it necessary to reconsider the Court's September 29, 2010
decision, but only as to the award of separation pay.

The LA, the NLRC, the CA and the Court are one in saying that the strike staged by the Union, participated in by the
Union officers and members, is illegal being in violation of the no strike-no lockout provision of the CBA which
enjoined both the Union and the company from resorting to the use of economic weapons available to them under
the law and to instead take recourse to voluntary arbitration in settling their disputes. 22 We, therefore, find no
reason to depart from such conclusion.

Article 264 (a) of the Labor Code lays down the liabilities of the Union officers and members participating in illegal
strikes and/or committing illegal acts, to wit:

ART. 264.PROHIBITED ACTIVITIES. —

(a). . .

Any worker whose employment has been terminated as a consequence of an unlawful lockout shall be entitled to
reinstatement with full backwages. Any Union officer who knowingly participates in an illegal strike and any worker
or Union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have
lost his employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute
sufficient ground for termination of his employment, even if a replacement had been hired by the employer during
such lawful strike.

Thus, the above-quoted provision sanctions the dismissal of a Union officer who knowingly participates in an illegal
strike or who knowingly participates in the commission of illegal acts during a lawful strike. 23 In this case, the Union
officers were in clear breach of the above provision of law when they knowingly participated in the illegal strike. 24

As to the Union members, the same provision of law provides that a member is liable when he knowingly participates
in the commission of illegal acts during a strike. We find no reason to reverse the conclusion of the Court that CASI
presented substantial evidence to show that the striking Union members committed the following prohibited acts:
cIETHa

a.They threatened, coerced, and intimidated non-striking employees, officers, suppliers and customers;

b.They obstructed the free ingress to and egress from the company premises; and

c.They resisted and defied the implementation of the writ of preliminary injunction issued against the strikers. 25

The commission of the above prohibited acts by the striking Union members warrants their dismissal from
employment.

As clearly narrated earlier, the LA found the strike illegal and sustained the dismissal of the Union officers, but
ordered the reinstatement of the striking Union members for lack of evidence showing that they committed illegal
acts during the illegal strike. This decision, however, was later reversed by the NLRC. Pursuant to Article 223 26 of the
Labor Code and well-established jurisprudence, 27 the decision of the LA reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, pending appeal. 28 The
employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal
or separation, or, at the option of the employee, merely reinstated in the payroll. 29 It is obligatory on the part of the
employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the
higher court. 30 If the employer fails to exercise the option of re-admitting the employee to work or to reinstate him
in the payroll, the employer must pay the employee's salaries during the period between the LA's order of
reinstatement pending appeal and the resolution of the higher court overturning that of the LA. 31 In this case, CASI
is liable to pay the striking Union members their accrued wages for four months and nine days, which is the period
from the notice of the LA's order of reinstatement until the reversal thereof by the NLRC. 32

Citing Escario v. National Labor Relations Commission (Third Division), 33 CASI claims that the award of the four-
month accrued salaries to the Union members is not sanctioned by jurisprudence. In Escario, the Court categorically
stated that the strikers were not entitled to their wages during the period of the strike (even if the strike might be
legal), because they performed no work during the strike. The Court further held that it was neither fair nor just that
the dismissed employees should litigate against their employer on the latter's time. 34 In this case, however, the
four-month accrued salaries awarded to the Union members are not the backwages referred to in Escario. To be
sure, the awards were not given as their salaries during the period of the strike. Rather, they constitute the
employer's liability to the employees for its failure to exercise the option of actual reinstatement or payroll
reinstatement following the LA's decision to reinstate the Union members as mandated by Article 223 of the Labor
Code adequately discussed earlier. In other words, such monetary award refers to the Union members' accrued
salaries by reason of the reinstatement order of the LA which is self-executory pursuant to Article 223. 35 We,
therefore, sustain the award of the four-month accrued salaries.
Finally, as regards the separation pay as a form of financial assistance awarded by the Court, we find it necessary to
reconsider the same and delete the award pursuant to prevailing jurisprudence.

Separation pay may be 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. 36 It 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. 37 It is oriented towards the immediate future, the transitional
period the dismissed employee must undergo before locating a replacement job. 38 As a general rule, when just
causes for terminating the services of an employee exist, the employee is not entitled to separation pay because
lawbreakers should not benefit from their illegal acts. 39 The rule, however, is subject to exceptions. 40 The Court, in
Philippine Long Distance Telephone Co. v. NLRC, 41 laid down the guidelines when separation pay in the form of
financial assistance may be allowed, to wit:

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.
aDACcH

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 . . . . 42

We had the occasion to resolve the same issue in Toyota Motor Phils. Corp. Workers Association (TMPCWA) v.
National Labor Relations Commission. 43 Following the declaration that the strike staged by the Union members is
illegal, the Union officers and members were considered validly dismissed from employment for committing illegal
acts during the illegal strike. The Court affirmed the CA's conclusion that the commission of illegal acts during the
illegal strike constituted serious misconduct. 44 Hence, the award of separation pay to the Union officials and
members was not sustained. 45

Indeed, we applied social justice and equity considerations in several cases to justify the award of financial
assistance. In Piñero v. National Labor Relations Commission, 46 the Court declared the strike to be illegal for failure
to comply with the procedural requirements. We, likewise, sustained the dismissal of the Union president for
participating in said illegal strike. Considering, however, that his infraction is not so reprehensible and unscrupulous
as to warrant complete disregard of his long years of service, and considering further that he has no previous
derogatory records, we granted financial assistance to support him in the twilight of his life after long years of
service. 47 The same compassion was also applied in Aparente, Sr. v. NLRC 48 where the employee was declared to
have been validly terminated from service after having been found guilty of driving without a valid driver's license,
which is a clear violation of the company's rules and regulations. 49 We, likewise, awarded financial assistance in
Salavarria v. Letran College 50 to the legally dismissed teacher for violation of school policy because such infraction
neither amounted to serious misconduct nor reflected that of a morally depraved person.

However, in a number of cases cited in Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. National Labor
Relations Commission, 51 we refrained from awarding separation pay or financial assistance to Union officers and
members who were separated from service due to their participation in or commission of illegal acts during the
strike. 52 In Pilipino Telephone Corporation v. Pilipino Telephone Employees Association (PILTEA), 53 the strike was
found to be illegal because of procedural infirmities and for defiance of the Secretary of Labor's assumption order.
Hence, we upheld the Union officers' dismissal without granting financial assistance. In Sukhotai Cuisine and
Restaurant v. Court of Appeals, 54 and Manila Diamond Hotel and Resort, Inc. (Manila Diamond Hotel) v. Manila
Diamond Hotel Employees Union, 55 the Union officers and members who participated in and committed illegal acts
during the illegal strike were deemed to have lost their employment status and were not awarded financial
assistance.

In Telefunken Semiconductors Employees Union v. Court of Appeals, 56 the Court held that the strikers' open and
willful defiance of the assumption order of the Secretary of Labor constitute serious misconduct and reflective of
their moral character, hence, granting of financial assistance to them cannot be justified. In Chua v. National Labor
Relations Commission, 57 we disallowed the award of financial assistance to the dismissed employees for their
participation in the unlawful and violent strike which resulted in multiple deaths and extensive property damage
because it constitutes serious misconduct on their part.

Here, not only did the Court declare the strike illegal, rather, it also found the Union officers to have knowingly
participated in the illegal strike. Worse, the Union members committed prohibited acts during the strike. Thus, as we
concluded in Toyota, Telefunken, Chua and the other cases cited above, we delete the award of separation pay as a
form of financial assistance.

WHEREFORE, premises considered, the motion for reconsideration of the Union, its officers and members are DENIED
for lack of merit, while the motion for partial reconsideration filed by C. Alcantara & Sons, Inc. is PARTLY
GRANTED.The Decision of the Court dated September 29, 2010 is hereby PARTLY RECONSIDERED by deleting the
award of separation pay.

SO ORDERED.
[G.R. Nos. 184903-04. October 10, 2012.]

DIGITAL TELECOMMUNICATIONS PHILIPPINES, INC., petitioner, vs. DIGITEL EMPLOYEES UNION (DEU), ARCEO
RAFAEL A. ESPLANA, ALAN D. LICANDO, FELICITO C. ROMERO, JR., ARNOLD D. GONZALES, REYNEL FRANCISCO B.
GARCIA, ZOSIMO B. PERALTA, REGINO T. UNIDAD and JIM L. JAVIER, respondents.

DECISION

PEREZ, J p:

This treats of the petition for review filed by Digital Telecommunications Philippines, Inc. (Digitel) assailing the 18
June 2008 Decision 1 and 9 October 2008 Resolution of the Court of Appeals 10th Division in CA-G.R. SP No. 91719,
which affirms the Order of the Secretary of Labor and Employment directing Digitel to commence Collective
Bargaining Agreement (CBA) negotiations and in CA-G.R. SP No. 94825, which declares the dismissal of affected
Digitel employees as illegal.

The facts, as borne by the records, follow.

By virtue of a certification election, Digitel Employees Union (Union) became the exclusive bargaining agent of all
rank and file employees of Digitel in 1994. The Union and Digitel then commenced collective bargaining negotiations
which resulted in a bargaining deadlock. The Union threatened to go on strike, but then Acting Labor Secretary
Bienvenido E. Laguesma assumed jurisdiction over the dispute and eventually directed the parties to execute a CBA.
2

However, no CBA was forged between Digitel and the Union. Some Union members abandoned their employment
with Digitel. The Union later became dormant. AICDSa

Ten (10) years thereafter or on 28 September 2004, Digitel received from Arceo Rafael A. Esplana (Esplana), who
identified himself as President of the Union, a letter containing the list of officers, CBA proposals and ground rules. 3
The officers were respondents Esplana, Alan D. Licando (Vice-President), Felicito C. Romero, Jr. (Secretary), Arnold D.
Gonzales (Treasurer), Reynel Francisco B. Garcia (Auditor), Zosimo B. Peralta (PRO), Regino T. Unidad (Sgt. at Arms),
and Jim L. Javier (Sgt. at Arms).

Digitel was reluctant to negotiate with the Union and demanded that the latter show compliance with the provisions
of the Union's Constitution and By-laws on union membership and election of officers.
On 4 November 2004, Esplana and his group filed a case for Preventive Mediation before the National Conciliation
and Mediation Board based on Digitel's violation of the duty to bargain. On 25 November 2004, Esplana filed a notice
of strike.

On 10 March 2005, then Labor Secretary Patricia A. Sto. Tomas issued an Order 4 assuming jurisdiction over the labor
dispute.

During the pendency of the controversy, Digitel Service, Inc. (Digiserv), a non-profit enterprise engaged in call center
servicing, filed with the Department of Labor and Employment (DOLE) an Establishment Termination Report stating
that it will cease its business operation. The closure affected at least 100 employees, 42 of whom are members of the
herein respondent Union.

Alleging that the affected employees are its members and in reaction to Digiserv's action, Esplana and his group filed
another Notice of Strike for union busting, illegal lock-out, and violation of the assumption order. AHcCDI

On 23 May 2005, the Secretary of Labor ordered the second notice of strike subsumed by the previous Assumption
Order. 5

Meanwhile, on 14 March 2005, Digitel filed a petition with the Bureau of Labor Relations (BLR) seeking cancellation of
the Union's registration on the following grounds: 1) failure to file the required reports from 1994-2004; 2)
misrepresentation of its alleged officers; 3) membership of the Union is composed of rank and file, supervisory and
managerial employees; and 4) substantial number of union members are not Digitel employees. 6

In a Decision dated 11 May 2005, the Regional Director of the DOLE dismissed the petition for cancellation of union
registration for lack of merit. The Regional Director ruled that it does not have jurisdiction over the issue of non-
compliance with the reportorial requirements. He also held that Digitel failed to adduce substantial evidence to
prove misrepresentation and the mixing of non-Digitel employees with the Union. Finally, he declared that the
inclusion of supervisory and managerial employees with the rank and file employees is no longer a ground for
cancellation of the Union's certificate of registration. 7

The appeal filed by Digitel with the BLR was eventually dismissed for lack of merit in a Resolution dated 9 March
2007, thereby affirming the 11 May 2005 Decision of the Regional Director.
CA-G.R. SP No. 91719

In an Order dated 13 July 2005, the Secretary of Labor directed Digitel to commence the CBA negotiation with the
Union. Thus:

WHEREFORE, all the foregoing premises considered, this Office hereby orders:

1.DIGITEL to commence collective bargaining negotiation with DEU without further delay; and,

2.The issue of unfair labor practice, consisting of union-busting, illegal termination/lockout and violation of the
assumption of jurisdiction, specifically the return-to-work aspect of the 10 March 2005 and 03 June 2005 orders, be
CERTIFIED for compulsory arbitration to the NLRC. 8

Digitel moved for reconsideration on the contention that the pendency of the petition for cancellation of the Union's
certificate of registration is a prejudicial question that should first be settled before the DOLE could order the parties
to bargain collectively. On 19 August 2005, then Acting Secretary Manuel G. Imson of DOLE denied the motion for
reconsideration, affirmed the 13 July 2005 Order and reiterated the order directing parties to commence collective
bargaining negotiations. 9

On 14 October 2005, Digitel filed a petition, docketed as CA-G.R. SP No. 91719, before the Court of Appeals assailing
the 13 July and 19 August 2005 Orders of the DOLE Secretary and attributing grave abuse of discretion on the part of
the DOLE Secretary for ordering Digitel to commence bargaining negotiations with the Union despite the pendency of
the issue of union legitimacy. DCASEc

CA-G.R. SP No. 94825

In accordance with the 13 July 2005 Order of the Secretary of Labor, the unfair labor practice issue was certified for
compulsory arbitration before the NLRC, which, on 31 January 2006, rendered a Decision dismissing the unfair labor
practice charge against Digitel but declaring the dismissal of the 13 employees of Digiserv as illegal and ordering their
reinstatement. The Union manifested that out of 42 employees, only 13 remained, as most had already accepted
separation pay. The dispositive portion of the Decision reads:

WHEREFORE, premises considered, the charge of unfair labor practice is hereby DISMISSED for lack of merit.
However, the dismissal of the remaining thirteen (13) affected employees is hereby declared illegal and DIGITEL is
hereby ORDERED to reinstate them to their former position with full backwages up to the time they are reinstated,
computed as follows:

xxx xxx xxx. 10

Upon motion for reconsideration filed by Digitel, four (4) affected employees, namely Ma. Loreta Eser, Marites
Jereza, Leonore Tuliao and Aline G. Quillopras, were removed from entitlement to the awards pursuant to the deed
of quitclaim and release which they all signed. 11

In view of this unfavorable decision, Digitel filed another petition on 9 June 2006 in CA-G.R. SP No. 94825 before the
Court of Appeals, challenging the above NLRC Decision and Resolution and arguing mainly that Digiserv employees
are not employees of Digitel.

Ruling of the Court of Appeals

On 18 June 2008, the Tenth Division of the Court of Appeals consolidated the two petitions in CA-G.R. SP No. 91719
and CA-G.R. SP No. 94825, and disposed as follows: ECISAD

WHEREFORE, the petition in CA-G.R. SP No. 91719 is DISMISSED. The July 13, 2005 Order and the August 19, 2005
Resolution of the DOLE Secretary are AFFIRMED in toto. With costs.

The petition in CA-G.R. SP No. 94825 is partially GRANTED, with the effect that the assailed dispositions must be
MODIFIED, as follows:

1)In addition to the order directing reinstatement and payment of full backwages to the nine (9) affected employees,
Digital Telecommunications Philippines, Inc. is furthered ORDERED, should reinstatement is no longer feasible, to pay
separation pay equivalent to one (1) month pay, or one-half (1/2) month pay for every year of service, whichever is
higher.

2)The one hundred thousand (PhP100,000.00) peso-fine imposed on Digital Telecommunications Philippines, Inc. is
DELETED. No costs. 12
The Court of Appeals upheld the Secretary of Labor's Order for Digitel to commence CBA negotiations with the Union
and emphasized that the pendency of a petition for the cancellation of a union's registration does not bar the holding
of negotiations for a CBA. The Court of Appeals sustained the finding that Digiserv is engaged in labor-only
contracting and that its employees are actually employees of Digitel.

Digitel filed a motion for reconsideration but was denied in a Resolution dated 9 October 2008.

Hence, this petition for review on certiorari. TCSEcI

Digitel argues that the Court of Appeals seriously erred when it condoned the act of the Secretary of Labor in issuing
an assumption order despite the pendency of an appeal on the issue of union registration. Digitel maintains that it
cannot be compelled to negotiate with a union for purposes of collective bargaining when the very status of the
same as the exclusive bargaining agent is in question.

Digitel insists that had the Court of Appeals considered the nature of the activities performed by Digiserv, it would
reach the conclusion that Digiserv is a legitimate contractor. To bolster its claim, Digitel asserts that the affected
employees are registered with the Social Security System, Pag-ibig, Bureau of Internal Revenue and Philhealth with
Digiserv as their employer. Digitel further contends that assuming that the affected Digiserv employees are
employees of Digitel, they were nevertheless validly dismissed on the ground of closure of a department or a part of
Digitel's business operation.

The three issues raised in this petition are: 1) whether the Secretary of Labor erred in issuing the assumption order
despite the pendency of the petition for cancellation of union registration; 2) whether Digiserv is a legitimate
contractor; and 3) whether there was a valid dismissal.

The pendency of a petition

for cancellation of union

registration does not preclude

collective bargaining.

The first issue raised by Digitel is not novel. It is well-settled that the pendency of a petition for cancellation of union
registration does not preclude collective bargaining.
The 2005 case of Capitol Medical Center, Inc. v. Hon. Trajano 13 is apropos. The respondent union therein sent a
letter to petitioner requesting a negotiation of their CBA. Petitioner refused to bargain and instead filed a petition for
cancellation of the union's certificate of registration. Petitioner's refusal to bargain forced the union to file a notice of
strike. They eventually staged a strike. The Secretary of Labor assumed jurisdiction over the labor dispute and
ordered all striking workers to return to work. Petitioner challenged said order by contending that its petition for
cancellation of union's certificate of registration involves a prejudicial question that should first be settled before the
Secretary of Labor could order the parties to bargain collectively. When the case eventually reached this Court, we
agreed with the Secretary of Labor that the pendency of a petition for cancellation of union registration does not
preclude collective bargaining, thus: SDaHEc

That there is a pending cancellation proceeding against the respondent Union is not a bar to set in motion the
mechanics of collective bargaining. If a certification election may still be ordered despite the pendency of a petition
to cancel the union's registration certificate (National Union of Bank Employees vs. Minister of Labor, 110 SCRA 274),
more so should the collective bargaining process continue despite its pendency. We must emphasize that the
majority status of the respondent Union is not affected by the pendency of the Petition for Cancellation pending
against it. Unless its certificate of registration and its status as the certified bargaining agent are revoked, the Hospital
is, by express provision of the law, duty bound to collectively bargain with the Union. 14

Trajano was reiterated in Legend International Resorts Limited v. Kilusang Manggagawa ng Legenda (KML-
Independent). 15 Legend International Resorts reiterated the rationale for allowing the continuation of either a CBA
process or a certification election even during the pendency of proceedings for the cancellation of the union's
certificate of registration. Citing the cases of Association of Court of Appeals Employees v. Ferrer-Calleja 16 and
Samahan ng Manggagawa sa Pacific Plastic v. Hon. Laguesma, 17 it was pointed out at the time of the filing of the
petition for certification election — or a CBA process as in the instant case — the union still had the personality to file
a petition for certification — or to ask for a CBA negotiation — as in the present case.

Digiserv is a labor-only contractor.

Labor-only contracting is expressly prohibited by our labor laws. Article 106 of the Labor Code defines labor-only
contracting as "supplying workers to an employer [who] 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
person are performing activities which are directly related to the principal business of such employer."

Section 5, Rule VIII-A, Book III of the Omnibus Rules Implementing the Labor Code (Implementing Rules), as amended
by Department Order No. 18-02, expounds on the prohibition against labor-only contracting, thus:

Section 5.Prohibition against labor-only contracting. — Labor-only contracting is hereby declared prohibited. For this
purpose, labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits,
supplies or places workers to perform a job, work or service for a principal, and any of the following elements are
present: TcEaAS

i)The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or
service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are
performing activities which are directly related to the main business of the principal; or

ii)The contractor does not exercise the right to control over the performance of the work of the contractual
employee.

The foregoing provisions shall be without prejudice to the application of Article 248 (c) of the Labor Code, as
amended.

xxx xxx xxx

The "right to control" shall refer to the right reserved to the person for whom, the services of the contractual workers
are performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching
that end.

The law and its implementing rules allow contracting arrangements for the performance of specific jobs, works or
services. Indeed, it is management prerogative to farm out any of its activities, regardless of whether such activity is
peripheral or core in nature. However, in order for such outsourcing to be valid, it must be made to an independent
contractor because the current labor rules expressly prohibit labor-only contracting. 18

After an exhaustive review of the records, there is no showing that first, Digiserv has substantial investment in the
form of capital, equipment or tools. Under the Implementing Rules, substantial capital or investment refers to
"capital stocks and subscribed capitalization in the case of corporations, tools, equipment, implements, machineries
and work premises, actually and directly used by the contractor or subcontractor in the performance or completion
of the job, work or service contracted out." The NLRC, as echoed by the Court of Appeals, did not find substantial
Digiserv's authorized capital stock of One Million Pesos (P1,000,000.00). It pointed out that only Two Hundred Fifty
Thousand Pesos (P250,000.00) of the authorized capital stock had been subscribed and only Sixty-Two Thousand Five
Hundred Pesos (P62,500.00) had been paid up. There was no increase in capitalization for the last ten (10) years. 19

Moreover, in the Amended Articles of Incorporation, as well as in the General Information Sheets for the years 1994,
2001 and 2005, the primary purpose of Digiserv is to provide manpower services. In PCI Automation Center, Inc. v.
National Labor Relations Commission, 20 the Court made the following distinction: "the legitimate job contractor
provides services while the labor-only contractor provides only manpower. The legitimate job contractor undertakes
to perform a specific job for the principal employer while the labor-only contractor merely provides the personnel to
work for the principal employer." The services provided by employees of Digiserv are directly related to the business
of Digitel, as rationalized by the NLRC in this wise: ASTcaE

It is undisputed that as early as March 1994, the affected employees, except for two, were already performing their
job as Traffic Operator which was later renamed as Customer Service Representative (CSR). It is equally undisputed
that all throughout their employment, their function as CSR remains the same until they were terminated effective
May 30, 2005. Their long period of employment as such is an indication that their job is directly related to the main
business of DIGITEL which is telecommunication[s]. Because, if it was not, DIGITEL would not have allowed them to
render services as Customer Service Representative for such a long period of time. 21

Furthermore, Digiserv does not exercise control over the affected employees. The NLRC highlighted the fact that
Digiserv shared the same Human Resources, Accounting, Audit and Legal Departments with Digitel which manifested
that it was Digitel who exercised control over the performance of the affected employees. The NLRC also relied on
the letters of commendation, plaques of appreciation and certification issued by Digitel to the Customer Service
Representatives as evidence of control.

Considering that Digiserv has been found to be engaged in labor-only contracting, the dismissed employees are
deemed employees of Digitel.

Section 7 of the Implementing Rules holds that labor-only contracting would give rise to: (1) the creation of an
employer-employee relationship between the principal and the employees of the contractor or sub-contractor; and
(2) the solidary liability of the principal and the contractor to the employees in the event of any violation of the Labor
Code.

Accordingly, Digitel is considered the principal employer of respondent employees.

The affected employees were

illegally dismissed.

In addition to finding that Digiserv is a labor-only contractor, records teem with proof that its dismissed employees
are in fact employees of Digitel. The NLRC enumerated these evidences, thus: aTcESI
That the remaining thirteen (13) affected employees are indeed employees of DIGITEL is sufficiently established by
the facts and evidence on record.

It is undisputed that the remaining affected employees, except for two (2), were already hired by DIGITEL even
before the existence of DIGISERV. (The other two (2) were hired after the existence of DIGISERV). The UNION
submitted a sample copy of their appointment paper (Annex "A" of UNION's Position Paper, Records, Vol. 1, p. 100)
showing that they were appointed on March 1, 1994, almost three (3) months before DIGISERV came into existence
on May 30, 1994 (Annex "B", Ibid, Records, Vol. 1, p. 101). On the other hand, not a single appointment paper was
submitted by DIGITEL showing that these remaining affected employees were hired by DIGISERV.

It is equally undisputed that the remaining, affected employees continuously held the position of Customer Service
Representative, which was earlier known as Traffic Operator, from the time they were appointed on March 1, 1994
until they were terminated on May 30, 2005. The UNION alleges that these Customer Service Representatives were
under the Customer Service Division of DIGITEL. The UNION's allegation is correct. Sample of letter of
commendations issued to Customer Service Representatives (Annexes "C" and "C-1" of UNION's Position Paper,
Records, p. 100 and 111) indeed show that DIGITEL has a Customer Service Division which handles its Call Center
operations.

Further, the Certificates issued to Customer Service Representative likewise show that they are employees of DIGITEL
(Annexes "C-5", "C-6" - "C-7" of UNION's Position Paper, Records, Vol. l, pp. 115 to 117), Take for example the
"Service Award" issued to Ma. Loretta C. Esen, one of the remaining affected employees (Annex "C-5", Supra). The
"Service Award" was signed by the officers of DIGITEL — the VP-Customer Services Division, the VP-Human Resources
Division and the Group Head-Human Resources Division. It was issued by DIGITEL to Esen thru the above named
officers "In recognition of her seven (7) years continuous and valuable contributions to the achievement of Digitel's
organization objectives". It cannot be gainsaid that it is only the employer that issues service award to its employees.
22 (Emphasis not supplied) ACTIHa

As a matter of fact, even before the incorporation of Digiserv, the affected employees were already employed by
Digitel as Traffic Operators, later renamed as Customer Service Representatives.

As an alternative argument, Digitel maintains that the affected employees were validly dismissed on the grounds of
closure of Digiserv, a department within Digitel.

In the recent case of Waterfront Cebu City Hotel v. Jimenez, 23 we referred to the closure of a department or division
of a company as retrenchment. The dismissed employees were undoubtedly retrenched with the closure of Digiserv.
For a valid retrenchment, the following elements must be present:

(1)That retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not
merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent as
perceived objectively and in good faith by the employer;

(2)That the employer served written notice both to the employees and to the Department of Labor and Employment
at least one month prior to the intended date of retrenchment;

(3)That the employer pays the retrenched employees separation pay equivalent to one (1) month pay or at least 1/2
month pay for every year of service, whichever is higher;

(4)That the employer exercises its prerogative to retrench employees in good faith for the advancement of its
interest and not to defeat or circumvent the employees' right to security of tenure; and

(5)That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be
retained among the employees, such as status, efficiency, seniority, physical fitness, age, and financial hardship for
certain workers. 24

Only the first 3 elements of a valid retrenchment had been here satisfied. Indeed, it is management prerogative to
close a department of the company. Digitel's decision to outsource the call center operation of the company is a valid
reason to close down the operations of a department under which the affected employees were employed. Digitel
cited the decline in the volume of transaction of operator-assisted call services as supported by Financial Statements
for the years 2003 and 2004, during which Digiserv incurred a deficit of P163,624.00 and P164,055.00, respectively.
25 All affected employees working under Digiserv were served with individual notices of termination. DOLE was
likewise served with the corresponding notice. All affected employees were offered separation pay. Only 9 out of the
45 employees refused to accept the separation pay and chose to contest their dismissal before this Court. TDSICH

The fifth element regarding the criteria to be observed by Digitel clearly does not apply because all employees under
Digiserv were dismissed. The instant case is all about the fourth element, that is, whether or not the affected
employees were dismissed in good faith. We find that there was no good faith in the retrenchment.

Prior to the cessation of Digiserv's operations, the Secretary of Labor had issued the first assumption order to enjoin
an impending strike. When Digiserv effected the dismissal of the affected employees, the Union filed another notice
of strike. Significantly, the Secretary of Labor ordered that the second notice of strike be subsumed by the previous
assumption order. Article 263 (g) of the Labor Code provides:

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 the compliance with this provision as well as with such orders as he may issue to enforce the same.

The effects of the assumption order issued by the Secretary of Labor are two-fold. It enjoins an impending strike on
the part of the employees and orders the employer to maintain the status quo.

There is no doubt that Digitel defied the assumption order by abruptly closing down Digiserv. The closure of a
department is not illegal per se. What makes it unlawful is when the closure is undertaken in bad faith. In St. John
Colleges, Inc. v. St. John Academy Faculty and Employees Union, 26 bad faith was evidenced by the timing of and
reasons for the closure and the timing of and reasons for the subsequent opening. There, the collective bargaining
negotiations between St. John and the Union resulted in a bargaining deadlock that led to the filing of a notice of
strike. The labor dispute was referred to the Secretary of Labor who assumed jurisdiction. Pending resolution of the
dispute, St. John closed the school prompting the Union to file a complaint for illegal dismissal and unfair labor
practice. The Union members alleged that the closure of the high school was done in bad faith in order to get rid of
the Union and render useless any decision of the SOLE on the CBA deadlocked issues. We held that closure was done
to defeat the affected employees' security of tenure, thus: TcIHDa

The determination of whether SJCI acted in bad faith depends on the particular facts as established by the evidence
on record. Bad faith is, after all, an inference which must be drawn from the peculiar circumstances of a case. The
two decisive factors in determining whether SJCI acted in bad faith are (1) the timing of, and reasons for the closure
of the high school, and (2) the timing of, and the reasons for the subsequent opening of a college and elementary
department, and, ultimately, the reopening of the high school department by SJCI after only one year from its
closure.

Prior to the closure of the high school by SJCI, the parties agreed to refer the 1997 CBA deadlock to the SOLE for
assumption of jurisdiction under Article 263 of the Labor Code. As a result, the strike ended and classes resumed.
After the SOLE assumed jurisdiction, it required the parties to submit their respective position papers. However,
instead of filing its position paper, SJCI closed its high school, allegedly because of the "irreconcilable differences
between the school management and the Academy's Union particularly the safety of our students and the financial
aspect of the ongoing CBA negotiations." Thereafter, SJCI moved to dismiss the pending labor dispute with the SOLE
contending that it had become moot because of the closure. Nevertheless, a year after said closure, SJCI reopened its
high school and did not rehire the previously terminated employees.

Under these circumstances, it is not difficult to discern that the closure was done to defeat the parties' agreement to
refer the labor dispute to the SOLE; to unilaterally end the bargaining deadlock; to render nugatory any decision of
the SOLE; and to circumvent the Union's right to collective bargaining and its members' right to security of tenure. By
admitting that the closure was due to irreconcilable differences between the Union and school management,
specifically, the financial aspect of the ongoing CBA negotiations, SJCI in effect admitted that it wanted to end the
bargaining deadlock and eliminate the problem of dealing with the demands of the Union. This is precisely what the
Labor Code abhors and punishes as unfair labor practice since the net effect is to defeat the Union's right to collective
bargaining. 27 (Emphasis not supplied) CASTDI

As in St. John, bad faith was manifested by the timing of the closure of Digiserv and the rehiring of some employees
to Interactive Technology Solutions, Inc. (I-tech), a corporate arm of Digitel. The assumption order directs employees
to return to work, and the employer to reinstate the employees. The existence of the assumption order should have
prompted Digitel to observe the status quo. Instead, Digitel proceeded to close down Digiserv. The Secretary of Labor
had to subsume the second notice of strike in the assumption order. This order notwithstanding, Digitel proceeded to
dismiss the employees.

The timing of the creation of I-tech is dubious. It was incorporated on 18 January 2005 while the labor dispute within
Digitel was pending. I-tech's primary purpose was to provide call center/customer contact service, the same service
provided by Digiserv. It conducts its business inside the Digitel office at 110 E. Rodriguez Jr. Avenue, Bagumbayan,
Quezon City. The former head of Digiserv, Ms. Teresa Taniega, is also an officer of I-tech. Thus, when Digiserv was
closed down, some of the employees presumably non-union members were rehired by I-tech.

Thus, the closure of Digiserv pending the existence of an assumption order coupled with the creation of a new
corporation performing similar functions as Digiserv leaves no iota of doubt that the target of the closure are the
union member-employees. These factual circumstances prove that Digitel terminated the services of the affected
employees to defeat their security of tenure. The termination of service was not a valid retrenchment; it was an
illegal dismissal of employees.

It needs to be mentioned too that the dismissal constitutes an unfair labor practice under Article 248 (c) of the Labor
Code which refers to contracting out services or functions being performed by union members when such will
interfere with, restrain or coerce employees in the exercise of their rights to self-organization. At the height of the
labor dispute, occasioned by Digitel's reluctance to negotiate with the Union, I-tech was formed to provide, as it did
provide, the same services performed by Digiserv, the Union members' nominal employer. SEcAIC
Under Article 279 of the Labor Code, an illegally dismissed employee is entitled to backwages and reinstatement.
Where reinstatement is no longer viable as an option, as in this case where Digiserv no longer exists, separation pay
equivalent to one (1) month salary, or one-half (1/2) month pay for every year of service, whichever is higher, should
be awarded as an alternative. 28 The payment of separation pay is in addition to payment of backwages. 29

Indeed, while we have found that the closure of Digiserv was undertaken in bad faith, badges thereof evident in the
timing of Digiserv's closure, hand in hand, with I-tech's creation, the closure remains a foregone conclusion. There is
no finding, and the Union makes no such assertion, that Digiserv and I-tech are one and the same corporation. The
timing of Digiserv's closure and I-tech's ensuing creation is doubted, not the legitimacy of I-tech as a business process
outsourcing corporation providing both inbound and outbound services to an expanded local and international
clientele. 30

The finding of unfair labor practice hinges on Digitel's contracting-out certain services performed by union member-
employees to interfere with, restrain or coerce them in the exercise of their right to self-organization.

We have no basis to direct reinstatement of the affected employees to an ostensibly different corporation. The
surrounding circumstance of the creation of I-tech point to bad faith on the part of Digitel, as well as constitutive of
unfair labor practice in targeting the dismissal of the union member-employees. However, this bad faith does not
contradict, much less negate, the impossibility of the employees' reinstatement because Digiserv has been closed
and no longer exists.

Even if it is a possibility that I-tech, as though Digitel, can absorb the dismissed union member-employees as I-tech
was incorporated during the time of the controversy with the same primary purpose as Digiserv, we would be hard
pressed to mandate the dismissed employees' reinstatement given the lapse of more than seven (7) years. ACaDTH

This length of time from the date the incident occurred to its resolution 31 coupled with the demonstrated
litigiousness of the disputants: (1) with all sorts of allegations thrown by either party against the other; (2) the two
separate filings of a notice of strike by the Union; (3) the Assumption Orders of the DOLE; (4) our own finding of
unfair labor practice by Digitel in targeting the union member-employees, abundantly show that the relationship
between Digitel and the union member-employees is strained. Indeed, such discordance between the parties can
very well be a necessary consequence of the protracted and branched out litigation. We adhere to the oft-quoted
doctrine that separation pay may avail in lieu of reinstatement if reinstatement is no longer practical or in the best
interest of the parties. 32

Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to
reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates the
employee from what could be a highly oppressive work environment. On the other hand, it releases the employer
from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. 33
Finally, an illegally dismissed employee should be awarded moral and exemplary damages as their dismissal was
tainted with unfair labor practice. 34 Depending on the factual milieu, jurisprudence has awarded varying amounts as
moral and exemplary damages to illegally dismissed employees when the dismissal is attended by bad faith or fraud;
or constitutes an act oppressive to labor; or is done in a manner contrary to good morals, good customs or public
policy; or if the dismissal is effected in a wanton, oppressive or malevolent manner. 35

In Nueva Ecija I Electric Cooperative, Inc. (NEECO I) Employees Association v. National Labor Relations Commission,
we intoned:

Unfair labor practices violate the constitutional rights of workers and employees to self-organization, are inimical to
the legitimate interests of both labor and management, including their right to bargain collectively and otherwise
deal with each other in an atmosphere of freedom and mutual respect; and disrupt industrial peace and hinder the
promotion of healthy and stable labor-management relations. As the conscience of the government, it is the Court's
sworn duty to ensure that none trifles with labor rights. 36

We awarded moral damages in the amount of P10,000.00 and likewise awarded P5,000.00 as exemplary damages for
each dismissed employee.

In the recent case of Purefoods Corporation v. Nagkakaisang Samahang Manggagawa ng Purefoods Rank-and-File, 37
we awarded the aggregate amount of P500,000.00 as moral and exemplary damages to the illegally dismissed union
member-employees which exact number was undetermined. acAIES

In the case at hand, with the Union's manifestation that only 13 employees remain as respondents, as most had
already accepted separation pay, and consistent with our finding that Digitel committed an unfair labor practice in
violation of the employees' constitutional right to self-organization, we deem it proper to award each of the illegally
dismissed union member-employees the amount of P10,000.00 and P5,000.00 as moral and exemplary damages,
respectively.

WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 91719 is AFFIRMED,
while the Decision in CA-G.R. SP No. 94825 declaring the dismissal of affected union member-employees as illegal is
MODIFIED to include the payment of moral and exemplary damages in amount of P10,000.00 and P5,000.00,
respectively, to each of the thirteen (13) illegally dismissed union-member employees.
Petitioner Digital Telecommunications Philippines, Inc. is ORDERED to pay the affected employees backwages and
separation pay equivalent to one (1) month salary, or one-half (l/2) month pay for every year of service, whichever is
higher.

Let this case be REMANDED to the Labor Arbiter for the computation of monetary claims due to the affected
employees.

SO ORDERED.
[G.R. No. 160138. January 16, 2013.]

AUTOMOTIVE ENGINE REBUILDERS, INC. (AER), ANTONIO T. INDUCIL, LOURDES T. INDUCIL, JOCELYN T. INDUCIL
and MA. CONCEPCION I. DONATO, petitioners, vs. PROGRESIBONG UNYON NG MGA MANGGAGAWA SA AER,
ARNOLD VILLOTA, FELINO E. AGUSTIN, RUPERTO M. MARIANO II, EDUARDO S. BRIZUELA, ARNOLD S. RODRIGUEZ,
RODOLFO MAINIT, JR., FROILAN B. MADAMBA, DANILO D. QUIBOY, CHRISTOPHER R. NOLASCO, ROGER V.
BELATCHA, CLEOFAS B. DELA BUENA, JR., HERMINIO P. PAPA, WILLIAM A. RITUAL, ROBERTO CALDEO, RAFAEL
GACAD, JAMES C. CAAMPUED, ESPERIDION V. LOPEZ, JR., FRISCO M. LORENZO, JR., CRISANTO LUMBAO, JR., and
RENATO SARABUNO, respondents.

[G.R. No. 160192. January 16, 2013.]

PROGRESIBONG UNYON NG MGA MANGGAGAWA SA AER, ARNOLD VILLOTA, FELINO E. AGUSTIN, RUPERTO M.
MARIANO II, EDUARDO S. BRIZUELA, ARNOLD S. RODRIGUEZ, RODOLFO MAINIT, JR., FROILAN B. MADAMBA,
DANILO D. QUIBOY, CHRISTOPHER R. NOLASCO, ROGER V. BELATCHA, CLEOFAS B. DELA BUENA, JR., HERMINIO P.
PAPA, WILLIAM A. RITUAL, ROBERTO CALDEO, RAFAEL GACAD, JAMES C. CAAMPUED, ESPERIDION V. LOPEZ, JR.,
FRISCO M. LORENZO, JR., CRISANTO LUMBAO, JR., and RENATO SARABUNO, petitioners, vs. AUTOMOTIVE ENGINE
REBUILDERS, INC., and ANTONIO T. INDUCIL, respondents.

RESOLUTION

MENDOZA, J p:

For resolution is the Motion for Partial Reconsideration filed by Progresibong Unyon Ng Mga Manggagawa Sa AER
(Unyon) which questioned the Court's July 13, 2011 Decision insofar as it failed to award backwages to fourteen (14)
of its members. The decretal portion of the decision reads:

WHEREFORE, the petitions are DENIED. Accordingly, the complaining employees should be reinstated without
backwages. If reinstatement is no longer feasible, the concerned employees should be given separation pay up to the
date set for their return in lieu of reinstatement. 1

In arriving at said determination, the Court found out both parties were at fault or in pari delicto and must bear the
consequences of their own wrongdoing. 2 Thus, it decreed that the striking employees must be restored to their
respective positions prior to the illegal strike and illegal lockout. TcEDHa

Records disclose that this labor controversy started when both parties filed charges against each other, blaming the
other party for violating labor laws. Thirty-two (32) employees filed and signed a complaint, 3 dated February 18,
1999, against Automotive Engine Rebuilders, Inc. (AER). The complaint prayed that AER be declared guilty of Unfair
Labor Practices, Illegal Dismissal, Illegal Suspension, and Run-away shop; that the complainants be reinstated; and
that they be paid "full backwages and without loss of seniority rights and privileges, payment of wages during
suspension, plus moral and exemplary damages and attorney's fees." 4

The names of the 32 complaining employees are as follows:

1.Felino Agustin

2.Ruperto Mariano II

3.Eduardo Brizuela

4.Otilio Rabino

5.Arnold Rodriguez

6.Froilan Madamba

7.Ferdinand Flores

8.Jonathan Taborda

9.Rodolfo Mainit, Jr.

10.Danilo Quiboy

11.Christopher Nolasco
12.Roger Belatcha

13.Claud Moncel

14.Cleofas dela Buena, Jr.

15.Edwin Mendoza

16.Herminio Papa

17.Oscar Macaranas

18.William Ritual

19.Roberto Caldeo

20.Rafael Gacad

21.James Caampued

22.Esperidion Lopez, Jr.

23.Frisco Lorenzo, Jr.

24.Bernardino Acosta, Jr.

25.Benson Pingol
26.Tammy Punsalan

27.Edward Ferrancol

28.Crisanto Lumbao, Jr.

29.Arnold Villota

30.Menching Mariano, Jr.

31.Carlos Carolino

32.Renato Sarabuno

Out of the 32, six (6) resigned and signed waivers and quitclaims, namely:

1.Oscar Macaranas

2.Bernardino Acosta

3.Ferdinand Flores

4.Benson Pingol

5.Otillo Rabino

6.Jonathan Taborda
On the other hand, the earlier complaint 5 filed by AER against Unyon and eighteen (18) of its members for illegal
concerted activities prayed that, after notice and hearing, judgment be rendered as follows:

1.Finding respondents guilty of unfair labor practice and illegal concerted activity;

2.Finding respondents guilty of abandonment of work, serious misconduct, gross disrespect, commission of felonies
against the complainant and their respective officers, threats, coercion and intimidation;

3.Penalizing complainants with dismissal and/or termination of employment; and

4.Adjudging respondents to be jointly and solidarily liable to complainant for moral damages in the sum of
P500,000.00, exemplary damages in the sum of P500,000.00 and attorney's fees and costs.

The names of the 18 workers charged with illegal strike by AER are as follows:

1.Felino Agustin

2.Eduardo Brizuela

3.Otilio Rabino

4.Ferdinand Flores

5.Jonathan Taborda

6.Rodolfo Mainit, Jr.

7.Christopher Nolasco
8.Claud Moncel

9.Cleofas dela Buena

10.Herminio Papa

11.Oscar Macaranas

12.William Ritual

13.Rafael Gacad

14.James Caampued

15.Benson Pingol

16.Frisco Lorenzo, Jr.

17.Bernardino Acosta, Jr.

18.Esperidion Lopez, Jr.

AER likewise suspended seven (7) union members who tested positive for illegal drugs, namely:

1.Froilan Madamba

2.Arnold Rodriguez
3.Roberto Caldeo

4.Roger Bilatcha

5.Ruperto Mariano

6.Edwin Fabian

7.Nazario Madala

Out of the seven (7) suspended employees, only Edwin Fabian and Nazario Madala were allowed by AER to report
back to work. The other five (5) suspended employees were not admitted by AER without first submitting the
required medical certificate attesting to their fitness to work.

On August 9, 2001, after the parties submitted their respective position papers, 6 the Labor Arbiter (LA) rendered a
decision 7 in favor of Unyon by directing AER to reinstate the concerned employees but without backwages effective
October 16, 2001. Both parties filed their respective appeals 8 with the National Labor Relations Commission (NLRC).
SETaHC

On March 5, 2002, the NLRC issued its Resolution 9 modifying the LA decision by setting aside the order of
reinstatement as it ruled out illegal dismissal. The NLRC likewise ruled that the concerned employees had no valid
basis in conducting a strike. On April 19, 2002, Unyon filed a motion for reconsideration 10 insisting, among others,
that AER was guilty of unfair labor practice, illegal suspension and illegal dismissal. Unyon also argued that since AER
charged only 18 of the 32 employees with illegal strike, the employees who were not included in the said charge
should have been admitted back to work by AER. Unyon also claimed that there was no allegation that these
employees, who were not included in AER's charge for illegal strike, were involved in the January 28, 1999 incident.
11

After the denial of their motion for reconsideration, Unyon and the concerned employees filed a petition 12 before
the Court of Appeals (CA). Unyon reiterated its argument that AER should admit back to work those excluded from its
list of 18 employees charged with illegal strike. 13

On June 27, 2003, the CA rendered a decision, 14 the dispositive portion of which reads, as follows:
WHEREFORE, premises considered, the petition is GRANTED. Respondents are hereby directed to reinstate the
petitioners effective immediately but without backwages, except those who were tested positive for illegal drugs and
have failed to submit their respective medical certificates.

On October 1, 2003, ruling on the motion for partial reconsideration filed by Unyon, the CA rendered the assailed
Amended Decision, 15 ordering the immediate reinstatement of all the suspended employees without backwages.
Thus,

WHEREFORE, the partial motion for reconsideration is GRANTED insofar as the reinstatement of the suspended
employees is concerned. This Court's decision dated June 27, 2003 is hereby MODIFIED. Private respondents are
hereby directed to reinstate all petitioners immediately without backwages.

Unsatisfied, both parties filed the present consolidated petitions. Unyon argued that the CA erred in not awarding
backwages to the suspended employees who were ordered reinstated. AER, on the other hand, argued that the CA
erred in ordering the reinstatement of the suspended employees.

On July 13, 2011, this Court rendered a decision, 16 the dispositive portion of which reads, as follows:

WHEREFORE, the petitions are DENIED. Accordingly, the complaining employees should be reinstated without
backwages. If reinstatement is no longer feasible, the concerned employees should be given separation pay up to the
date set for their return in lieu of reinstatement.

Unyon filed the subject Motion for Partial Reconsideration 17 questioning the Court's July 13, 2011 Decision insofar
as it failed to award backwages to fourteen (14) of its members.

Unyon argues that backwages should have been awarded to the 14 employees who were excluded from the
complaint filed by AER and that the latter should have reinstated them immediately because they did not have any
case at all.

AER was directed to file its comment. Its Comment, 18 however, failed to address the issue except to say that the
motion for partial reconsideration was pro-forma.
After going over the records again, the Court holds that only nine (9) of the fourteen (14) excluded employees
deserve to be reinstated immediately with backwages.

Records disclose that thirty-two (32) employees filed a complaint for illegal suspension and unfair labor practice
against AER. Out of these 32 workers, only eighteen (18) of them were charged by AER with illegal strike leaving
fourteen (14) of them excluded from its complaint. The names of these 14 employees are as follows:

1.Ruperto Mariano II

2.Arnold Rodriguez

3.Froilan Madamba

4.Danilo Quiboy

5.Roger Belatcha

6.Edwin Mendoza

7.Roberto Caldeo

8.Tammy Punsalan

9.Edward Ferrancol

10.Crisanto Lumbao, Jr.

11.Arnold Villota
12.Menching Mariano, Jr.

13.Carlos Carolino

14.Renato Sarabuno

Technically, as no charges for illegal strike were filed against these 14 employees, they cannot be among those found
guilty of illegal strike. They cannot be considered in pari delicto. They should be reinstated and given their
backwages. aEAIDH

Out of these 14 employees, however, five (5) failed to write their names and affix their signatures in the Membership
Resolution 19 attached to the petition filed before the CA, authorizing Union President Arnold Villota to represent
them. It must be noted that Arnold Villota signed as the Affiant in the Verification and Certification by virtue of the
Membership Resolution. 20 The names of these 5 employees are:

1.Edwin Mendoza

2.Tammy Punzalan

3.Edward Ferrancol

4.Menching Mariano, Jr.

5.Carlos Carolina

Because of their failure to affix their names and signatures in the Membership Resolution, Edwin Mendoza, Tammy
Punzalan, Edward Ferrancol, Menching Mariano, Jr. and Carlos Carolina cannot be granted the relief that Unyon
wanted for them in its Motion for Partial Reconsideration. Only the following nine (9) employees who signed their
names in the petition can be granted the relief prayed for therein, namely:

1.Ruperto Mariano II
2.Arnold Rodriguez

3.Froilan Madamba

4.Danilo Quiboy

5.Roger Belatcha

6.Roberto Caldeo

7.Crisanto Lumbao, Jr.

8.Arnold Villota

9.Renato Sarabuno

These excluded nine (9) workers, who signed their names in their petition before the CA, deserve to be reinstated
immediately and granted backwages. It is basic in jurisprudence that illegally dismissed workers are entitled to
reinstatement with backwages plus interest at the legal rate. 21

As stated in the Amended Decision of the CA, which the Court effectively affirmed after denying the petition of both
parties, the reinstatement shall be "without prejudice to the right of private respondent AER to subject them for
further medical check-up to determine if subject petitioners are drug dependents." 22

WHEREFORE, the Motion for Partial Reconsideration filed by Progresibong Unyon Ng Mga Manggagawa Sa AER is
GRANTED only insofar as the nine (9) employees are concerned, namely: Ruperto Mariano II, Arnold Rodriguez,
Froilan Madamba, Danilo Quiboy, Roger Belatcha, Roberto Caldeo, Crisanto Lumbao, Jr., Arnold Villota, and Renato
Sarabuno.
Accordingly, the July 13, 2011 Decision is hereby MODIFIED in that the aforementioned nine (9) workers are entitled
to be reinstated and granted backwages with interest at the rate of six percent (6%) per annum which shall be
increased to twelve percent (12%) after the finality of this judgment.

SO ORDERED.
[G.R. Nos. 178222-23. September 20, 2010.]

MANILA MINING CORP. EMPLOYEES ASSOCIATION-FEDERATION OF FREE WORKERS CHAPTER, SAMUEL G. ZUÑIGA,
in his capacity as President, petitioners, vs. MANILA MINING CORP. and/or ARTEMIO F. DISINI, President, RENE F.
CHANYUNGCO, (SVP-Treasurer), RODOLFO S. MIRANDA, (VP-Controller), VIRGILIO MEDINA (VP), ATTY. CRISANTO
MARTINEZ (HRD), NIGEL TAMLYN (Resident Manager), BRYAN YAP (VP), FELIPE YAP (Chairman of the Board), and
the NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), respondents.

DECISION

PEREZ, J p:

This petition for review on certiorari seeks a reversal of the 30 June 2006 Decision 1 of the Court of Appeals in CA-
G.R. SP No. 86073 and its Resolution 2 in the same case dated 30 May 2007. IEHaSc

Respondent Manila Mining Corporation (MMC) is a publicly-listed corporation engaged in large-scale mining for gold
and copper ore. MMC is required by law to maintain a tailings containment facility to store the waste material
generated by its mining operations. Consequently, MMC constructed several tailings dams to treat and store its
waste materials. One of these dams was Tailings Pond No. 7 (TP No. 7), which was constructed in 1993 and was
operated under a permit issued by the Department of Environment and Natural Resources (DENR), through its
Environmental Management Bureau (EMB) in Butuan City, Agusan del Norte. 3

On 10 January 2000, eleven (11) rank-and-file employees of MMC, who later became complainants before the labor
arbiter, attended the organizational meeting of MMC-Makati Employees Association-Federation of Free Workers
Chapter (Union). On 3 March 2000, the Union filed with the Department of Labor and Employment (DOLE) all the
requirements for its registration. The Union acquired its legitimate registration status on 30 March 2000.
Subsequently, it submitted letters to MMC relating its intention to bargain collectively. On 11 July 2001, the Union
submitted its Collective Bargaining Agreement (CBA) proposal to MMC.

Upon expiration of the tailings permit on 25 July 2001, DENR-EMB did not issue a permanent permit due to the
inability of MMC to secure an Environmental Compliance Certificate (ECC). An essential component of an ECC is social
acceptability or the consent of the residents in the community to allow TP No. 7 to operate, which MMC failed to
obtain. 4 Hence, it was compelled to temporarily shut down its mining operations, resulting in the temporary lay-off
of more than 400 employees in the mine site.

On 30 July 2001, MMC called for the suspension of negotiations on the CBA with the Union until resumption of
mining operations. 5
Among the employees laid-off, complainants Samuel Zuñiga, Myrna Maquio, Doroteo Torre, Arsenio Mark Perez,
Edmundo Galvez, Diana Ruth Rellores, Jonathan Araneta, Teresita Lagman, Reynaldo Anzures, Gerardo Opena, and
Edwin Tuazon, together with the Union filed a complaint before the labor arbiter 6 on even date praying for
reinstatement, recognition of the Union as the sole and exclusive representative of its rank-and-file employees, and
payment of moral and exemplary damages and attorney's fees. 7 IDATCE

In their Position Paper, 8 complainants challenged the validity of their lay-off on the averment that MMC was not
suffering from business losses. They alleged that MMC did not want to bargain collectively with the Union, so that
instead of submitting their counterproposal to the CBA, MMC decided to terminate all union officers and active
members. Petitioners questioned the timing of their lay-off, and alleged that first, there was no showing that cost-
cutting measures were taken by MMC; second, no criteria were employed in choosing which employees to lay-off;
and third, the individuals laid-off were those who signed the attendance sheet of the union organizational meeting.
Petitioners likewise claimed that they were denied due process because they were not given a 30-day notice
informing them of the lay-off. Neither was the DOLE informed of this lay-off, as mandated by law. 9

Respondents justified the temporary lay-off as bona fide in character and a valid management prerogative pending
the issuance of the permit to continuously operate TP No. 7.

The labor arbiter ruled in favor of MMC and held that the temporary shutdown of the mining operation, as well as
the temporary lay-off of the employees, is valid. 10

On appeal, the National Labor Relations Commission (NLRC) modified the judgment of the labor arbiter and ordered
the payment of separation pay equivalent to one month pay for every year of service. It ratiocinated that the
temporary lay-off, which exceeded more than six (6) months, had the effect of severance of the employer-employee
relationship. The dispositive portion of the Decision read:

WHEREFORE, the assailed decision is, as it is hereby, Vacated and Set Aside and a new one entered ordering
respondent Manila Mining Corporation to pay the individual complainants their separation pay computed as follows:

1. Samuel G. [Z]uñiga From

Feb. 1, 1995 to July 27, 2001 = 7 yrs. P14,300/mo. P14,300 x 7 yrs. x 1/2 P50,050.00

2. Myrna Maquio
From March 1992 to July 27, 2001 = 9 yrs. P14,000/mo. P14,000 x 9 yrs. x 1/2 P63,000.00

3. Doroteo J. Torre

From July 1983 to July 27, 2001 = 18 yrs. P10,000/mo. P10,000 x 18 yrs. x 1/2 90,000.00

4. Arsenio Mark M. Perez

From June 1996 to July 27, 2001 = 5 yrs. P9,500/mo. P9,500 x 5 yrs. x 1/2 P23,750.00

5. Edmundo M. Galvez

From June 1997 to July 27, 2001 = 4 yrs. P9,500/mo. P9,500 x 4 yrs. x 1/2 19,000.00

6. Jonathan Araneta

From March 1992 to July 27, 2001 = 9 yrs. P15,500/mo. P15,500 x 9 yrs. x ½ P69,750.00

7. Teresita D. Lagman

From August 1980 to July 27, 2001 = 20 yrs. P10,900/mo. P10,900 x 20 yrs. x 1/2 P109,000.00

8. Gerardo Opena

From October 1997 to July 27, 2001 = 4 yrs. P8,250/mo. P8,250 x 4 yrs. x 1/2 P16,500.00

9. Edwin Tuazon

From August 1994 to July 27, 2001 = 8 yrs. P7,000/mo. P7,000 x 8 yrs. x 1/2 P28,000.00

—————

Grand Total

P469,050.00
=========

In addition respondent company is hereby ordered to pay attorney's fees to complainants equivalent to 10% of the
award. 11

In an Order 12 dated 31 May 2004, the NLRC affirmed its Resolution.

Dissatisfied, both parties separately filed their petitions for certiorari with the Court of Appeals, docketed as CA-G.R.
SP No. 86073 and CA G.R. SP No. 86163. STIHaE

The two petitions were consolidated upon motion by MMC in a Resolution dated 3 February 2005.

In its Decision dated 30 June 2006, the Court of Appeals modified the NLRC ruling, thus:

WHEREFORE, the instant petition is partially GRANTED and the challenged Resolution dated August 29, 2003 of public
respondent National Labor Relations Commission in NLRC NCR CA No. 033111-(CA No. 033111-02) is MODIFIED
insofar as it holds MMC liable to pay the Union attorney’s fees equivalent to 10% of the award, which portion of the
questioned decision is now SET ASIDE.

The monetary award of separation pay is maintained, but is MODIFIED from one (1) month pay for every year of
service to ONE-HALF (1/2) MONTH PAY for every year of service, a fraction of at least six (6) months being considered
as one (1) whole year. 13

Both parties filed their respective motions for reconsideration but in a Resolution dated 30 May 2007, the Court of
Appeals denied the motions for lack of merit. 14

Only the Union elevated the case to this Court via the instant petition for review on certiorari. The Union attributes
bad faith on the part of MMC in implementing the temporary lay-off resulting in the complainants' constructive
dismissal. The Union alleges that the failure to obtain a permit to operate TP No. 7 is largely due to failure on the part
of MMC to comply with the DENR-EMB's conditions. 15
The Union claims that the temporary lay-off was effected without any proper notice to the DOLE as mandated by
Article 283 of the Labor Code. It further maintains that MMC did not observe the jurisprudential criteria in the
selection of the employees to be laid-off. 16

The Union insists that MMC is guilty of unfair labor practice when it unilaterally suspended the negotiation for a CBA.
The Union avers that the lay-off and subsequent termination of complainants were due to the formation of the union
at MMC. 17

MMC defends the temporary lay-off of the employees as valid and done in the exercise of management prerogative.
It concedes that upon expiration of the 6-month period, coupled with losses suffered by MMC, the complainants
were constructively dismissed. However, MMC takes exception to the application of Article 286 of the Labor Code in
that the 6-month period cannot and will not apply to the instant case in order to consider the employees terminated
and to support the payment of separation pay. MMC explains that the 6-month period does not refer to a situation
where the employer does not have any control over the nature, extent and period of the temporary suspension of
operations. MMC adds that the suspension of MMC's operations is left primarily to the discretion of the DENR-EMB,
which has the authority to issue MMC’s permit to operate TP No. 7. 18

MMC further submits that where the closure is due to serious business losses, such as in this case where the
aggregate losses amounted to over P880,000,000.00, the law does not impose any obligation upon the employer to
pay separation benefits. 19

With respect to the charge of unfair labor practice, MMC avers that it merely deferred responding to the Union’s
letter-proposal until the resumption of its mining operations. It went to claim further that the employment
relationship between the parties was suspended at the time the request to bargain was made. 20 EATCcI

The issue of MMC's temporary suspension of business operations resulting in the temporary lay-off of some of its
employees was squarely addressed by the labor tribunals and the Court of Appeals. They sustained in unison the
validity of the temporary suspension, as well as the temporary lay-off.

We agree. The lay-off is neither illegal nor can it be considered as unfair labor practice.

Despite all efforts exerted by MMC, it did not succeed in obtaining the consent of the residents of the community
where the tailings pond would operate, one of the conditions imposed by DENR-EMB in granting its application for a
permanent permit. It is precisely MMC's faultless failure to secure a permit which caused the temporary shutdown of
its mining operations. As aptly put by the Court of Appeals:
The evidence on record indeed clearly shows that MMC’s suspension of its mining operations was bonafide and the
reason for such suspension was supported by substantial evidence. MMC cannot conduct mining operations without
a tailings disposal system. For this purpose, MMC operates TP No. 7 under a valid permit from the Department of
Environment and Natural Resources (DENR) through its Environmental Management Bureau (EMB). In fact, a
"Temporary Authority to Construct and Operate" was issued on January 25, 2001 in favor of MMC valid for a period
of six (6) months or until July 25, 2001. The NLRC did not dispute MMC's claim that it had timely filed an application
for renewal of its permit to operate TP No. 7 but that the renewal permit was not immediately released by the DENR-
EMB, hence, MMC was compelled to temporarily shutdown its milling and mining operations. Here, it is once
apparent that the suspension of MMC’s mining operations was not due to its fault nor was it necessitated by financial
reasons. Such suspension was brought about by the non-issuance of a permit for the continued operation of TP No. 7
without which MMC cannot resume its milling and mining operations. . . . . 21 [Emphasis supplied.]

Unfair labor practice cannot be imputed to MMC since, as ruled by the Court of Appeals, the call of MMC for a
suspension of the CBA negotiations cannot be equated to "refusal to bargain."

Article 252 of the Labor Code defines the phrase "duty to bargain collectively," to wit:

ARTICLE 252.Meaning of duty to bargain collectively. — The duty to bargain collectively means the performance of a
mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an
agreement with respect to wages, hours of work and all other terms and conditions of employment including
proposals for adjusting any grievances or questions arising under such agreements [and executing a contract
incorporating such agreements] if requested by either party but such duty does not compel any party to agree to a
proposal or to make any concession.

For a charge of unfair labor practice to prosper, it must be shown that the employer was motivated by ill-will, bad
faith or fraud, or was oppressive to labor. The employer must have acted in a manner contrary to morals, good
customs, or public policy causing social humiliation, wounded feelings or grave anxiety. While the law makes it an
obligation for the employer and the employees to bargain collectively with each other, such compulsion does not
include the commitment to precipitately accept or agree to the proposals of the other. All it contemplates is that
both parties should approach the negotiation with an open mind and make reasonable effort to reach a common
ground of agreement. 22

The Union based its contention on the letter request by MMC for the suspension of the collective bargaining
negotiations until it resumes operations. 23 Verily, it cannot be said that MMC deliberately avoided the negotiation.
It merely sought a suspension and in fact, even expressed its willingness to negotiate once the mining operations
resume. There was valid reliance on the suspension of mining operations for the suspension, in turn, of the CBA
negotiation. The Union failed to prove bad faith in MMC's actuations. ITDSAE
Even as we declare the validity of the lay-off, we cannot say that MMC has no obligation at all to the laid-off
employees. The validity of its act of suspending its operations does not excuse it from paying separation pay.

MMC seeks refuge in Article 286 which provides:

ART. 286.When employment not deemed terminated. — The bona fide suspension of the operation of a business or
undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty
shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position
without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the
resumption of operations of his employer or from his relief from the military or civic duty.

Article 286 of the Labor Code allows the bona fide suspension of operations for a period not exceeding six (6)
months. During the suspension, an employee is not deemed terminated. As a matter of fact, the employee is entitled
to be reinstated once the employer resumes operations within the 6-month period. However, Article 286 is silent
with respect to the rights of the employee if the suspension of operations lasts for more than 6 months. Thus is bred
the issue regarding the responsibility of MMC toward its employees.

MMC subscribes to the view that for purposes of determining employer responsibility, an employment should
likewise not be deemed terminated, should the suspension of operation go beyond six (6) months as long as the
continued suspension is due, as in this case, to a cause beyond the control of the employer.

We disagree.

As correctly elucidated upon by the Court of Appeals:

We observe that MMC was forced by the circumstances, hence, it resorted to a temporary suspension of its mining
and milling operations. It is clear that MMC had no choice. It would be well to reiterate at this juncture that the
reason for such suspension cannot be attributed to DENR-EMB. It is thus, evident, that the MMC declared temporary
suspension of operations to avert further losses. 24

The decision to suspend operation ultimately lies with the employer, who in its desire to avert possible financial
losses, declares, as here, suspension of operations.

Article 283 of the Labor Code applies to MMC and it provides:

ARTICLE 283.Closure of establishment and reduction of personnel. — The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the
purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of
Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the
installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay
equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is
higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment
or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one
(1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least
six (6) months shall be considered one (1) whole year. AHEDaI

Said provision is emphatic that an employee, who was dismissed due to cessation of business operation, is entitled to
the separation pay equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service,
whichever is higher. And it is jurisprudential that separation pay should also be paid to employees even if the closure
or cessation of operations is not due to losses. 25

The Court is not impressed with the claim that actual severe financial losses exempt MMC from paying separation
benefits to complainants. In the first place, MMC did not appeal the decision of the Court of Appeals which affirmed
the NLRC's award of separation pay to complainants. MMC's failure had the effect of making the awards final so that
MMC could no longer seek any other affirmative relief. In the second place, the non-issuance of a permit forced MMC
to permanently cease its business operations, as confirmed by the Court of Appeals. Under Article 283, the employer
can lawfully close shop anytime as long as cessation of or withdrawal from business operations is bona fide in
character and not impelled by a motive to defeat or circumvent the tenurial rights of employees, and as long as he
pays his employees their termination pay in the amount corresponding to their length of service. 26 The cessation of
operations, in the case at bar is of such nature. It was proven that MMC stopped its operations precisely due to
failure to secure permit to operate a tailings pond. Separation pay must nonetheless be given to the separated
employees.

Finding no cogent reason to disturb its ruling, we affirm the Decision of the Court of Appeals.

BASED ON THE FOREGOING, the petition is DENIED. The Decision of the Court of Appeals is AFFIRMED. No costs.

SO ORDERED.
[G.R. No. 167291. January 12, 2011.]

PRINCE TRANSPORT, INC. and MR. RENATO CLAROS, petitioners, vs. DIOSDADO GARCIA, LUISITO GARCIA,
RODANTE ROMERO, REX BARTOLOME, FELICIANO GASCO, JR., DANILO ROJO, EDGAR SANFUEGO, AMADO
GALANTO, EUTIQUIO LUGTU, JOEL GRAMATICA, MIEL CERVANTES, TERESITA CABANES, ROE DELA CRUZ, RICHELO
BALIDOY, VILMA PORRAS, MIGUELITO SALCEDO, CRISTINA GARCIA, MARIO NAZARENO, DINDO TORRES, ESMAEL
RAMBOYONG, ROBETO * MANO, ROGELIO BAGAWISAN, ARIEL SANCHEZ, ESTAQULO VILLAREAL, NELSON
MONTERO, GLORIA ORANTE, HARRY TOCA, PABLITO MACASAET and RONALD GARCITA, respondents.

DECISION

PERALTA, J p:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court praying for the annulment
of the Decision 1 and Resolution 2 of the Court of Appeals (CA) dated December 20, 2004 and February 24, 2005,
respectively, in CA-G.R. SP No. 80953. The assailed Decision reversed and set aside the Resolutions dated May 30,
2003 3 and September 26, 2003 4 of the National Labor Relations Commission (NLRC) in CA No. 029059-01, while the
disputed Resolution denied petitioners' Motion for Reconsideration.

The present petition arose from various complaints filed by herein respondents charging petitioners with illegal
dismissal, unfair labor practice and illegal deductions and praying for the award of premium pay for holiday and rest
day, holiday pay, service leave pay, 13th month pay, moral and exemplary damages and attorney's fees.

Respondents alleged in their respective position papers and other related pleadings that they were employees of
Prince Transport, Inc. (PTI), a company engaged in the business of transporting passengers by land; respondents were
hired either as drivers, conductors, mechanics or inspectors, except for respondent Diosdado Garcia (Garcia), who
was assigned as Operations Manager; in addition to their regular monthly income, respondents also received
commissions equivalent to 8 to 10% of their wages; sometime in October 1997, the said commissions were reduced
to 7 to 9%; this led respondents and other employees of PTI to hold a series of meetings to discuss the protection of
their interests as employees; these meetings led petitioner Renato Claros, who is the president of PTI, to suspect that
respondents are about to form a union; he made known to Garcia his objection to the formation of a union; in
December 1997, PTI employees requested for a cash advance, but the same was denied by management which
resulted in demoralization on the employees' ranks; later, PTI acceded to the request of some, but not all, of the
employees; the foregoing circumstances led respondents to form a union for their mutual aid and protection; in
order to block the continued formation of the union, PTI caused the transfer of all union members and sympathizers
to one of its sub-companies, Lubas Transport (Lubas); despite such transfer, the schedule of drivers and conductors,
as well as their company identification cards, were issued by PTI; the daily time records, tickets and reports of the
respondents were also filed at the PTI office; and, all claims for salaries were transacted at the same office; later, the
business of Lubas deteriorated because of the refusal of PTI to maintain and repair the units being used therein,
which resulted in the virtual stoppage of its operations and respondents' loss of employment.

Petitioners, on the other hand, denied the material allegations of the complaints contending that herein respondents
were no longer their employees, since they all transferred to Lubas at their own request; petitioners have nothing to
do with the management and operations of Lubas as well as the control and supervision of the latter's employees;
petitioners were not aware of the existence of any union in their company and came to know of the same only in
June 1998 when they were served a copy of the summons in the petition for certification election filed by the union;
that before the union was registered on April 15, 1998, the complaint subject of the present petition was already
filed; that the real motive in the filing of the complaints was because PTI asked respondents to vacate the bunkhouse
where they (respondents) and their respective families were staying because PTI wanted to renovate the same.

Subsequently, the complaints filed by respondents were consolidated.

On October 25, 2000, the Labor Arbiter rendered a Decision, 5 the dispositive portion of which reads as follows:

WHEREFORE, judgment is hereby rendered:

1.Dismissing the complaints for Unfair Labor Practice, non-payment of holiday pay and holiday premium, service
incentive leave pay and 13th month pay;

Dismissing the complaint of Edgardo Belda for refund of boundary-hulog;

2.Dismissing the complaint for illegal dismissal against the respondents Prince Transport, Inc. and/or Prince Transport
Phils. Corporation, Roberto Buenaventura, Rory Bayona, Ailee Avenue, Nerissa Uy, Mario Feranil and Peter
Buentiempo;

3.Declaring that the complainants named below are illegally dismissed by Lubas Transport; ordering said Lubas
Transport to pay backwages and separation pay in lieu of reinstatement in the following amount:

Complainants Backwages Separation Pay

(1) Diosdado Garcia P222,348.70 P79,456.00

(2) Feliciano Gasco, Jr. 203,350.00 54,600.00

(3) Pablito Macasaet 145,250.00 13,000.00

(4) Esmael Ramboyong 221,500.00 30,000.00

(5) Joel Gramatica 221,500.00 60,000.00

(6) Amado Galanto 130,725.00 29,250.00

(7) Miel Cervantes 265,800.00 60,000.00

(8) Roberto Mano 221,500.00 50,000.00

(9) Roe dela Cruz 265,800.00 60,000.00

(10) Richelo Balidoy 130,725.00 29,250.00

(11) Vilma Porras 221,500.00 70,000.00

(12) Miguelito Salcedo 265,800.00 60,000.00

(13) Cristina Garcia 130,725.00 35,100.00

(14) Luisito Garcia 145,250.00 19,500.00

(15) Rogelio Bagawisan 265,800.00 60,000.00

(16) Rodante H. Romero 221,500.00 60,000.00

(17) Dindo Torres 265,800.00 50,000.00

(18) Edgar Sanfuego 221,500.00 40,000.00

(19) Ronald Gacita 221,500.00 40,000.00

(20) Harry Toca 174,300.00 23,400.00

(21) Amado Galanto 130,725.00 17,550.00

(22) Teresita Cabañes 130,725.00 17,550.00

(23) Rex Bartolome 301,500.00 30,000.00

(24) Mario Nazareno 221,500.00 30,000.00

(25) Eustaquio Villareal 145,250.00 19,500.00

(26) Ariel Sanchez 265,800.00 60,000.00

(27) Gloria Orante 263,100.00 60,000.00

(28) Nelson Montero 264,600.00 60,000.00

(29) Rizal Beato 295,000.00 40,000.00

(30) Eutiquio Lugtu 354,000.00 48,000.00

(31) Warlito Dickensomn 295,000.00 40,000.00

(32) Edgardo Belda 354,000.00 84,000.00

(33) Tita Go 295,000.00 70,000.00

(34) Alex Lodor 295,000.00 50,000.00

(35) Glenda Arguilles 295,000.00 40,000.00

(36) Erwin Luces 354,000.00 48,000.00

(37) Jesse Celle 354,000.00 48,000.00

(38) Roy Adorable 295,000.00 40,000.00

(39) Marlon Bangcoro 295,000.00 40,000.00

(40) Edgardo Bangcoro 354,000.00 36,000.00

4.Ordering Lubas Transport to pay attorney's fees equivalent to ten (10%) of the total monetary award; and

6. *Ordering the dismissal of the claim for moral and exemplary damages for lack merit.

SO ORDERED. 6

The Labor Arbiter ruled that petitioners are not guilty of unfair labor practice in the absence of evidence to show that
they violated respondents' right to self-organization. The Labor Arbiter also held that Lubas is the respondents'
employer and that it (Lubas) is an entity which is separate, distinct and independent from PTI. Nonetheless, the Labor
Arbiter found that Lubas is guilty of illegally dismissing respondents from their employment.

Respondents filed a Partial Appeal with the NLRC praying, among others, that PTI should also be held equally liable as
Lubas.

In a Resolution dated May 30, 2003, the NLRC modified the Decision of the Labor Arbiter and disposed as follows:

WHEREFORE, premises considered, the appeal is hereby PARTIALLY GRANTED. Accordingly, the Decision appealed
from is SUSTAINED subject to the modification that Complainant-Appellant Edgardo Belda deserves refund of his
boundary-hulog in the amount of P446,862.00; and that Complainants-Appellants Danilo Rojo and Danilo Laurel
should be included in the computation of Complainants-Appellants claim as follows:

Complainants Backwages Separation Pay

41. Danilo Rojo P355,560.00 P48,000.00

42. Danilo Laurel P357,960.00 P72,000.00

As regards all other aspects, the Decision appealed from is SUSTAINED.

SO ORDERED. 7

Respondents filed a Motion for Reconsideration, but the NLRC denied it in its Resolution 8 dated September 26,
2003.

Respondents then filed a special civil action for certiorari with the CA assailing the Decision and Resolution of the
NLRC.

On December 20, 2004, the CA rendered the herein assailed Decision which granted respondents' petition. The CA
ruled that petitioners are guilty of unfair labor practice; that Lubas is a mere instrumentality, agent conduit or
adjunct of PTI; and that petitioners' act of transferring respondents' employment to Lubas is indicative of their intent
to frustrate the efforts of respondents to organize themselves into a union. Accordingly, the CA disposed of the case
as follows:

WHEREFORE, the Petition for Certiorari is hereby GRANTED. Accordingly, the subject decision is hereby REVERSED
and SET ASIDE and another one ENTERED finding the respondents guilty of unfair labor practice and ordering them to
reinstate the petitioners to their former positions without loss of seniority rights and with full backwages.

With respect to the portion ordering the inclusion of Danilo Rojo and Danilo Laurel in the computation of petitioner's
claim for backwages and with respect to the portion ordering the refund of Edgardo Belda's boundary-hulog in the
amount of P446,862.00, the NLRC decision is affirmed and maintained.

SO ORDERED. 9
Petitioners filed a Motion for Reconsideration, but the CA denied it via its Resolution 10 dated February 24, 2005.

Hence, the instant petition for review on certiorari based on the following grounds:

THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN GIVING DUE COURSE TO THE RESPONDENTS'
PETITION FOR CERTIORARI

1.THE COURT OF APPEALS SHOULD HAVE RESPECTED THE FINDINGS OF THE LABOR ARBITER AND AFFIRMED BY THE
NLRC

2.ONLY ONE PETITIONER EXECUTED AND VERIFIED THE PETITION

3.THE COURT OF APPEALS SHOULD NOT HAVE GIVEN DUE COURSE TO THE PETITION WITH RESPECT TO
RESPONDENTS REX BARTOLOME, FELICIANO GASCO, DANILO ROJO, EUTIQUIO LUGTU, AND NELSON MONTERO AS
THEY FAILED TO FILE AN APPEAL TO THE NLRC

THE COURT OF APPEALS SERIOUSLY ERRED IN DECLARING THAT PETITIONERS PRINCE TRANSPORT, INC. AND MR.
RENATO CLAROS AND LUBAS TRANSPORT ARE ONE AND THE SAME CORPORATION AND THUS, LIABLE IN SOLIDUM
TO RESPONDENTS.

THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN ORDERING THE REINSTATEMENT OF
RESPONDENTS TO THEIR PREVIOUS POSITION WHEN IT IS NOT ONE OF THE ISSUES RAISED IN RESPONDENTS'
PETITION FOR CERTIORARI. 11
Petitioners assert that factual findings of agencies exercising quasi-judicial functions like the NLRC are accorded not
only respect but even finality; that the CA should have outrightly dismissed the petition filed before it because in
certiorari proceedings under Rule 65 of the Rules of Court it is not within the province of the CA to evaluate the
sufficiency of evidence upon which the NLRC based its determination, the inquiry being limited essentially to whether
or not said tribunal has acted without or in excess of its jurisdiction or with grave abuse of discretion. Petitioners
assert that the CA can only pass upon the factual findings of the NLRC if they are not supported by evidence on
record, or if the impugned judgment is based on misapprehension of facts — which circumstances are not present in
this case. Petitioners also emphasize that the NLRC and the Labor Arbiter concurred in their factual findings which
were based on substantial evidence and, therefore, should have been accorded great weight and respect by the CA.

Respondents, on the other hand, aver that the CA neither exceeded its jurisdiction nor committed error in re-
evaluating the NLRC's factual findings since such findings are not in accord with the evidence on record and the
applicable law or jurisprudence.

The Court agrees with respondents.

The power of the CA to review NLRC decisions via a petition for certiorari under Rule 65 of the Rules of Court has
been settled as early as this Court's decision in St. Martin Funeral Homes v. NLRC. 12 In said case, the Court held that
the proper vehicle for such review is a special civil action for certiorari under Rule 65 of the said Rules, and that the
case should be filed with the CA in strict observance of the doctrine of hierarchy of courts. Moreover, it is already
settled that under Section 9 of Batas Pambansa Blg. 129, as amended by Republic Act No. 7902, the CA — pursuant to
the exercise of its original jurisdiction over petitions for certiorari — is specifically given the power to pass upon the
evidence, if and when necessary, to resolve factual issues. 13 Section 9 clearly states:

xxx xxx xxx

The Court of Appeals shall have the power to try cases and conduct hearings, receive evidence and perform any and
all acts necessary to resolve factual issues raised in cases falling within its original and appellate jurisdiction, including
the power to grant and conduct new trials or further proceedings. . . .

However, equally settled is the rule that factual findings of labor officials, who are deemed to have acquired expertise
in matters within their jurisdiction, are generally accorded not only respect but even finality by the courts when
supported by substantial evidence, i.e., the amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion. 14 But these findings are not infallible. When there is a showing that they were
arrived at arbitrarily or in disregard of the evidence on record, they may be examined by the courts. 15 The CA can
grant the petition for certiorari if it finds that the NLRC, in its assailed decision or resolution, made a factual finding
not supported by substantial evidence. 16 It is within the jurisdiction of the CA, whose jurisdiction over labor cases
has been expanded to review the findings of the NLRC. 17
In this case, the NLRC sustained the factual findings of the Labor Arbiter. Thus, these findings are generally binding on
the appellate court, unless there was a showing that they were arrived at arbitrarily or in disregard of the evidence
on record. In respondents' petition for certiorari with the CA, these factual findings were reexamined and reversed by
the appellate court on the ground that they were not in accord with credible evidence presented in this case. To
determine if the CA's reexamination of factual findings and reversal of the NLRC decision are proper and with
sufficient basis, it is incumbent upon this Court to make its own evaluation of the evidence on record. 18

After a thorough review of the records at hand, the Court finds that the CA did not commit error in arriving at its own
findings and conclusions for reasons to be discussed hereunder.

Firstly, petitioners posit that the petition filed with the CA is fatally defective, because the attached verification and
certificate against forum shopping was signed only by respondent Garcia.

The Court does not agree.

While the general rule is that the certificate of non-forum shopping must be signed by all the plaintiffs in a case and
the signature of only one of them is insufficient, the Court has stressed that the rules on forum shopping, which were
designed to promote and facilitate the orderly administration of justice, should not be interpreted with such absolute
literalness as to subvert its own ultimate and legitimate objective. 19 Strict compliance with the provision regarding
the certificate of non-forum shopping underscores its mandatory nature in that the certification cannot be altogether
dispensed with or its requirements completely disregarded. 20 It does not, however, prohibit substantial compliance
therewith under justifiable circumstances, considering especially that although it is obligatory, it is not jurisdictional.
21

In a number of cases, the Court has consistently held that when all the petitioners share a common interest and
invoke a common cause of action or defense, the signature of only one of them in the certification against forum
shopping substantially complies with the rules. 22 In the present case, there is no question that respondents share a
common interest and invoke a common cause of action. Hence, the signature of respondent Garcia is a sufficient
compliance with the rule governing certificates of non-forum shopping. In the first place, some of the respondents
actually executed a Special Power of Attorney authorizing Garcia as their attorney-in-fact in filing a petition for
certiorari with the CA. 23

The Court, likewise, does not agree with petitioners' argument that the CA should not have given due course to the
petition filed before it with respect to some of the respondents, considering that these respondents did not sign the
verification attached to the Memorandum of Partial Appeal earlier filed with the NLRC. Petitioners assert that the
decision of the Labor Arbiter has become final and executory with respect to these respondents and, as a
consequence, they are barred from filing a petition for certiorari with the CA.

With respect to the absence of some of the workers' signatures in the verification, the verification requirement is
deemed substantially complied with when some of the parties who undoubtedly have sufficient knowledge and
belief to swear to the truth of the allegations in the petition had signed the same. Such verification is deemed a
sufficient assurance that the matters alleged in the petition have been made in good faith or are true and correct,
and not merely speculative. Moreover, respondents' Partial Appeal shows that the appeal stipulated as
complainants-appellants "Rizal Beato, et al.", meaning that there were more than one appellant who were all
workers of petitioners.

In any case, the settled rule is that a pleading which is required by the Rules of Court to be verified, may be given due
course even without a verification if the circumstances warrant the suspension of the rules in the interest of justice.
24 Indeed, the absence of a verification is not jurisdictional, but only a formal defect, which does not of itself justify a
court in refusing to allow and act on a case. 25 Hence, the failure of some of the respondents to sign the verification
attached to their Memorandum of Appeal filed with the NLRC is not fatal to their cause of action.

Petitioners also contend that the CA erred in applying the doctrine of piercing the corporate veil with respect to
Lubas, because the said doctrine is applicable only to corporations and Lubas is not a corporation but a single
proprietorship; that Lubas had been found by the Labor Arbiter and the NLRC to have a personality which is separate
and distinct from that of PTI; that PTI had no hand in the management and operation as well as control and
supervision of the employees of Lubas.

The Court is not persuaded.

On the contrary, the Court agrees with the CA that Lubas is a mere agent, conduit or adjunct of PTI. A settled
formulation of the doctrine of piercing the corporate veil is that when two business enterprises are owned,
conducted and controlled by the same parties, both law and equity will, when necessary to protect the rights of third
parties, disregard the legal fiction that these two entities are distinct and treat them as identical or as one and the
same. 26 In the present case, it may be true that Lubas is a single proprietorship and not a corporation. However,
petitioners' attempt to isolate themselves from and hide behind the supposed separate and distinct personality of
Lubas so as to evade their liabilities is precisely what the classical doctrine of piercing the veil of corporate entity
seeks to prevent and remedy.

Thus, the Court agrees with the observations of the CA, to wit:
As correctly pointed out by petitioners, if Lubas were truly a separate entity, how come that it was Prince Transport
who made the decision to transfer its employees to the former? Besides, Prince Transport never regarded Lubas
Transport as a separate entity. In the aforesaid letter, it referred to said entity as "Lubas operations." Moreover, in
said letter, it did not transfer the employees; it "assigned" them. Lastly, the existing funds and 201 file of the
employees were turned over not to a new company but a "new management." 27

The Court also agrees with respondents that if Lubas is indeed an entity separate and independent from PTI why is it
that the latter decides which employees shall work in the former?

What is telling is the fact that in a memorandum issued by PTI, dated January 22, 1998, petitioner company admitted
that Lubas is one of its sub-companies. 28 In addition, PTI, in its letters to its employees who were transferred to
Lubas, referred to the latter as its "New City Operations Bus." 29

Moreover, petitioners failed to refute the contention of respondents that despite the latter's transfer to Lubas of
their daily time records, reports, daily income remittances of conductors, schedule of drivers and conductors were all
made, performed, filed and kept at the office of PTI. In fact, respondents' identification cards bear the name of PTI.

It may not be amiss to point out at this juncture that in two separate illegal dismissal cases involving different groups
of employees transferred by PTI to other companies, the Labor Arbiter handling the cases found that these
companies and PTI are one and the same entity; thus, making them solidarily liable for the payment of backwages
and other money claims awarded to the complainants therein. 30

Petitioners likewise aver that the CA erred and committed grave abuse of discretion when it ordered petitioners to
reinstate respondents to their former positions, considering that the issue of reinstatement was never brought up
before it and respondents never questioned the award of separation pay to them.

The Court is not persuaded.

It is clear from the complaints filed by respondents that they are seeking reinstatement. 31

In any case, Section 2 (c), Rule 7 of the Rules of Court provides that a pleading shall specify the relief sought, but may
add a general prayer for such further or other reliefs as may be deemed just and equitable. Under this rule, a court
can grant the relief warranted by the allegation and the proof even if it is not specifically sought by the injured party;
the inclusion of a general prayer may justify the grant of a remedy different from or together with the specific
remedy sought, if the facts alleged in the complaint and the evidence introduced so warrant. 32
Moreover, in BPI Family Bank v. Buenaventura, 33 this Court ruled that the general prayer is broad enough "to justify
extension of a remedy different from or together with the specific remedy sought." Even without the prayer for a
specific remedy, proper relief may be granted by the court if the facts alleged in the complaint and the evidence
introduced so warrant. The court shall grant relief warranted by the allegations and the proof even if no such relief is
prayed for. The prayer in the complaint for other reliefs equitable and just in the premises justifies the grant of a
relief not otherwise specifically prayed for. 34 In the instant case, aside from their specific prayer for reinstatement,
respondents, in their separate complaints, prayed for such reliefs which are deemed just and equitable.

As to whether petitioners are guilty of unfair labor practice, the Court finds no cogent reason to depart from the
findings of the CA that respondents' transfer of work assignments to Lubas was designed by petitioners as a
subterfuge to foil the former's right to organize themselves into a union. Under Article 248 (a) and (e) of the Labor
Code, an employer is guilty of unfair labor practice if it interferes with, restrains or coerces its employees in the
exercise of their right to self-organization or if it discriminates in regard to wages, hours of work and other terms and
conditions of employment in order to encourage or discourage membership in any labor organization.

Indeed, evidence of petitioners' unfair labor practice is shown by the established fact that, after respondents'
transfer to Lubas, petitioners left them high and dry insofar as the operations of Lubas was concerned. The Court
finds no error in the findings and conclusion of the CA that petitioners "withheld the necessary financial and logistic
support such as spare parts, and repair and maintenance of the transferred buses until only two units remained in
running condition." This left respondents virtually jobless.

WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of Appeals, dated
December 20, 2004 and February 24, 2005, respectively, in CA-G.R. SP No. 80953, are AFFIRMED.

SO ORDERED.
[G.R. No. 170054. January 21, 2013.]

GOYA, INC., petitioner, vs. GOYA, INC. EMPLOYEES UNION-FFW, respondent.

DECISION

PERALTA, J p:

This petition for review on certiorari under Rule 45 of the Rules of Civil Procedure seeks to reverse and set aside the
June 16, 2005 Decision 1 and October 12, 2005 Resolution 2 of the Court of Appeals in CA-G.R. SP No. 87335, which
sustained the October 26, 2004 Decision 3 of Voluntary Arbitrator Bienvenido E. Laguesma, the dispositive portion of
which reads:

WHEREFORE, judgment is hereby rendered declaring that the Company is NOT guilty of unfair labor practice in
engaging the services of PESO.

The company is, however, directed to observe and comply with its commitment as it pertains to the hiring of casual
employees when necessitated by business circumstances. 4

The facts are simple and appear to be undisputed.

Sometime in January 2004, petitioner Goya, Inc. (Company), a domestic corporation engaged in the manufacture,
importation, and wholesale of top quality food products, hired contractual employees from PESO Resources
Development Corporation (PESO) to perform temporary and occasional services in its factory in Parang, Marikina
City. This prompted respondent Goya, Inc. Employees Union-FFW (Union) to request for a grievance conference on
the ground that the contractual workers do not belong to the categories of employees stipulated in the existing
Collective Bargaining Agreement (CBA). 5 When the matter remained unresolved, the grievance was referred to the
National Conciliation and Mediation Board (NCMB) for voluntary arbitration. AIHECa

During the hearing on July 1, 2004, the Company and the Union manifested before Voluntary Arbitrator (VA)
Bienvenido E. Laguesma that amicable settlement was no longer possible; hence, they agreed to submit for
resolution the solitary issue of "[w]hether or not [the Company] is guilty of unfair labor acts in engaging the services
of PESO, a third party service provider[,] under the existing CBA, laws[,] and jurisprudence." 6 Both parties thereafter
filed their respective pleadings.
The Union asserted that the hiring of contractual employees from PESO is not a management prerogative and in
gross violation of the CBA tantamount to unfair labor practice (ULP). It noted that the contractual workers engaged
have been assigned to work in positions previously handled by regular workers and Union members, in effect
violating Section 4, Article I of the CBA, which provides for three categories of employees in the Company, to wit:

Section 4.Categories of Employees. — The parties agree on the following categories of employees:

(a)Probationary Employee. — One hired to occupy a regular rank-and-file position in the Company and is serving a
probationary period. If the probationary employee is hired or comes from outside the Company (non-Goya, Inc.
employee), he shall be required to undergo a probationary period of six (6) months, which period, in the sole
judgment of management, may be shortened if the employee has already acquired the knowledge or skills required
of the job. If the employee is hired from the casual pool and has worked in the same position at any time during the
past two (2) years, the probationary period shall be three (3) months.

(b)Regular Employee. — An employee who has satisfactorily completed his probationary period and automatically
granted regular employment status in the Company. cSaCDT

(c)Casual Employee. — One hired by the Company to perform occasional or seasonal work directly connected with
the regular operations of the Company, or one hired for specific projects of limited duration not connected directly
with the regular operations of the Company.

It was averred that the categories of employees had been a part of the CBA since the 1970s and that due to this
provision, a pool of casual employees had been maintained by the Company from which it hired workers who then
became regular workers when urgently necessary to employ them for more than a year. Likewise, the Company
sometimes hired probationary employees who also later became regular workers after passing the probationary
period. With the hiring of contractual employees, the Union contended that it would no longer have probationary
and casual employees from which it could obtain additional Union members; thus, rendering inutile Section 1, Article
III (Union Security) of the CBA, which states:

Section 1.Condition of Employment. — As a condition of continued employment in the Company, all regular rank-
and-file employees shall remain members of the Union in good standing and that new employees covered by the
appropriate bargaining unit shall automatically become regular employees of the Company and shall remain
members of the Union in good standing as a condition of continued employment.

The Union moreover advanced that sustaining the Company's position would easily weaken and ultimately destroy
the former with the latter's resort to retrenchment and/or retirement of employees and not filling up the vacant
regular positions through the hiring of contractual workers from PESO, and that a possible scenario could also be
created by the Company wherein it could "import" workers from PESO during an actual strike.

In countering the Union's allegations, the Company argued that: (a) the law expressly allows contracting and
subcontracting arrangements through Department of Labor and Employment (DOLE) Order No. 18-02; (b) the
engagement of contractual employees did not, in any way, prejudice the Union, since not a single employee was
terminated and neither did it result in a reduction of working hours nor a reduction or splitting of the bargaining unit;
and (c) Section 4, Article I of the CBA merely provides for the definition of the categories of employees and does not
put a limitation on the Company's right to engage the services of job contractors or its management prerogative to
address temporary/occasional needs in its operation. DISHEA

On October 26, 2004, VA Laguesma dismissed the Union's charge of ULP for being purely speculative and for lacking
in factual basis, but the Company was directed to observe and comply with its commitment under the CBA. The VA
opined:

We examined the CBA provision [Section 4, Article I of the CBA] allegedly violated by the Company and indeed the
agreement prescribes three (3) categories of employees in the Company and provides for the definition, functions
and duties of each. Material to the case at hand is the definition as regards the functions of a casual employee
described as follows:

Casual Employee — One hired by the COMPANY to perform occasional or seasonal work directly connected with the
regular operations of the COMPANY, or one hired for specific projects of limited duration not connected directly with
the regular operations of the COMPANY.

While the foregoing agreement between the parties did eliminate management's prerogative of outsourcing parts of
its operations, it serves as a limitation on such prerogative particularly if it involves functions or duties specified
under the aforequoted agreement. It is clear that the parties agreed that in the event that the Company needs to
engage the services of additional workers who will perform "occasional or seasonal work directly connected with the
regular operations of the COMPANY," or "specific projects of limited duration not connected directly with the regular
operations of the COMPANY", the Company can hire casual employees which is akin to contractual employees. If we
note the Company's own declaration that PESO was engaged to perform "temporary or occasional services" (See the
Company's Position Paper, at p. 1), then it should have directly hired the services of casual employees rather than do
it through PESO. ISDHEa

It is evident, therefore, that the engagement of PESO is not in keeping with the intent and spirit of the CBA provision
in question. It must, however, be stressed that the right of management to outsource parts of its operations is not
totally eliminated but is merely limited by the CBA. Given the foregoing, the Company's engagement of PESO for the
given purpose is indubitably a violation of the CBA. 7
While the Union moved for partial reconsideration of the VA Decision, 8 the Company immediately filed a petition for
review 9 before the Court of Appeals (CA) under Rule 43 of the Revised Rules of Civil Procedure to set aside the
directive to observe and comply with the CBA commitment pertaining to the hiring of casual employees when
necessitated by business circumstances. Professing that such order was not covered by the sole issue submitted for
voluntary arbitration, the Company assigned the following errors:

THE HONORABLE VOLUNTARY ARBITRATOR EXCEEDED HIS POWER WHICH WAS EXPRESSLY GRANTED AND LIMITED
BY BOTH PARTIES IN RULING THAT THE ENGAGEMENT OF PESO IS NOT IN KEEPING WITH THE INTENT AND SPIRIT OF
THE CBA. 10

THE HONORABLE VOLUNTARY ARBITRATOR COMMITTED A PATENT AND PALPABLE ERROR IN DECLARING THAT THE
ENGAGEMENT OF PESO IS NOT IN KEEPING WITH THE INTENT AND SPIRIT OF THE CBA. 11

On June 16, 2005, the CA dismissed the petition. In dispensing with the merits of the controversy, it held: SDIaHE

This Court does not find it arbitrary on the part of the Hon. Voluntary Arbitrator in ruling that "the engagement of
PESO is not in keeping with the intent and spirit of the CBA." The said ruling is interrelated and intertwined with the
sole issue to be resolved that is, "Whether or not [the Company] is guilty of unfair labor practice in engaging the
services of PESO, a third party service provider[,] under existing CBA, laws[,] and jurisprudence." Both issues concern
the engagement of PESO by [the Company] which is perceived as a violation of the CBA and which constitutes as
unfair labor practice on the part of [the Company]. This is easily discernible in the decision of the Hon. Voluntary
Arbitrator when it held:

. . . While the engagement of PESO is in violation of Section 4, Article I of the CBA, it does not constitute unfair labor
practice as it (sic) not characterized under the law as a gross violation of the CBA. Violations of a CBA, except those
which are gross in character, shall no longer be treated as unfair labor practice. Gross violations of a CBA means
flagrant and/or malicious refusal to comply with the economic provisions of such agreement. . . .

Anent the second assigned error, [the Company] contends that the Hon. Voluntary Arbitrator erred in declaring that
the engagement of PESO is not in keeping with the intent and spirit of the CBA. [The Company] justified its
engagement of contractual employees through PESO as a management prerogative, which is not prohibited by law.
Also, it further alleged that no provision under the CBA limits or prohibits its right to contract out certain services in
the exercise of management prerogatives.
Germane to the resolution of the above issue is the provision in their CBA with respect to the categories of the
employees:

xxx xxx xxx

A careful reading of the above-enumerated categories of employees reveals that the PESO contractual employees do
not fall within the enumerated categories of employees stated in the CBA of the parties. Following the said
categories, [the Company] should have observed and complied with the provision of their CBA. Since [the Company]
had admitted that it engaged the services of PESO to perform temporary or occasional services which is akin to those
performed by casual employees, [the Company] should have tapped the services of casual employees instead of
engaging PESO. ADTEaI

In justifying its act, [the Company] posits that its engagement of PESO was a management prerogative. It bears
stressing that a management prerogative refers to the right of the employer to regulate all aspects of employment,
such as the freedom to prescribe work assignments, working methods, processes to be followed, regulation
regarding transfer of employees, supervision of their work, lay-off and discipline, and dismissal and recall of work,
presupposing the existence of employer-employee relationship. On the basis of the foregoing definition, [the
Company's] engagement of PESO was indeed a management prerogative. This is in consonance with the
pronouncement of the Supreme Court in the case of Manila Electric Company vs. Quisumbing where it ruled that
contracting out of services is an exercise of business judgment or management prerogative.

This management prerogative of contracting out services, however, is not without limitation. In contracting out
services, the management must be motivated by good faith and the contracting out should not be resorted to
circumvent the law or must not have been the result of malicious arbitrary actions. In the case at bench, the CBA of
the parties has already provided for the categories of the employees in [the Company's] establishment. [These]
categories of employees particularly with respect to casual employees [serve] as limitation to [the Company's]
prerogative to outsource parts of its operations especially when hiring contractual employees. As stated earlier, the
work to be performed by PESO was similar to that of the casual employees. With the provision on casual employees,
the hiring of PESO contractual employees, therefore, is not in keeping with the spirit and intent of their CBA.
(Citations omitted) 12

The Company moved to reconsider the CA Decision, 13 but it was denied; 14 hence, this petition.

Incidentally, on July 16, 2009, the Company filed a Manifestation 15 informing this Court that its stockholders and
directors unanimously voted to shorten the Company's corporate existence only until June 30, 2006, and that the
three-year period allowed by law for liquidation of the Company's affairs already expired on June 30, 2009. Referring
to Gelano v. Court of Appeals, 16 Public Interest Center, Inc. v. Elma, 17 and Atienza v. Villarosa, 18 it urged Us,
however, to still resolve the case for future guidance of the bench and the bar as the issue raised herein allegedly
calls for a clarification of a legal principle, specifically, whether the VA is empowered to rule on a matter not covered
by the issue submitted for arbitration.

Even if this Court would brush aside technicality by ignoring the supervening event that renders this case moot and
academic 19 due to the permanent cessation of the Company's business operation on June 30, 2009, the arguments
raised in this petition still fail to convince Us. DTIcSH

We confirm that the VA ruled on a matter that is covered by the sole issue submitted for voluntary arbitration.
Resultantly, the CA did not commit serious error when it sustained the ruling that the hiring of contractual employees
from PESO was not in keeping with the intent and spirit of the CBA. Indeed, the opinion of the VA is germane to, or,
in the words of the CA, "interrelated and intertwined with," the sole issue submitted for resolution by the parties.
This being said, the Company's invocation of Sections 4 and 5, Rule IV 20 and Section 5, Rule VI 21 of the Revised
Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings dated October 15, 2004 issued by the
NCMB is plainly out of order.

Likewise, the Company cannot find solace in its cited case of Ludo & Luym Corporation v. Saornido. 22 In Ludo, the
company was engaged in the manufacture of coconut oil, corn starch, glucose and related products. In the course of
its business operations, it engaged the arrastre services of CLAS for the loading and unloading of its finished products
at the wharf. The arrastre workers deployed by CLAS to perform the services needed were subsequently hired, on
different dates, as Ludo's regular rank-and-file employees. Thereafter, said employees joined LEU, which acted as the
exclusive bargaining agent of the rank-and-file employees. When LEU entered into a CBA with Ludo, providing for
certain benefits to the employees (the amount of which vary according to the length of service rendered), it
requested to include in its members' period of service the time during which they rendered arrastre services so that
they could get higher benefits. The matter was submitted for voluntary arbitration when Ludo failed to act. Per
submission agreement executed by both parties, the sole issue for resolution was the date of regularization of the
workers. The VA Decision ruled that: (1) the subject employees were engaged in activities necessary and desirable to
the business of Ludo, and (2) CLAS is a labor-only contractor of Ludo. It then disposed as follows: (a) the complainants
were considered regular employees six months from the first day of service at CLAS; (b) the complainants, being
entitled to the CBA benefits during the regular employment, were awarded sick leave, vacation leave, and annual
wage and salary increases during such period; (c) respondents shall pay attorney's fees of 10% of the total award; and
(d) an interest of 12% per annum or 1% per month shall be imposed on the award from the date of promulgation
until fully paid. The VA added that all separation and/or retirement benefits shall be construed from the date of
regularization subject only to the appropriate government laws and other social legislation. Ludo filed a motion for
reconsideration, but the VA denied it. On appeal, the CA affirmed in toto the assailed decision; hence, a petition was
brought before this Court raising the issue, among others, of whether a voluntary arbitrator can award benefits not
claimed in the submission agreement. In denying the petition, We ruled:

Generally, the arbitrator is expected to decide only those questions expressly delineated by the submission
agreement. Nevertheless, the arbitrator can assume that he has the necessary power to make a final settlement
since arbitration is the final resort for the adjudication of disputes. The succinct reasoning enunciated by the CA in
support of its holding, that the Voluntary Arbitrator in a labor controversy has jurisdiction to render the questioned
arbitral awards, deserves our concurrence, thus:

In general, the arbitrator is expected to decide those questions expressly stated and limited in the submission
agreement. However, since arbitration is the final resort for the adjudication of disputes, the arbitrator can assume
that he has the power to make a final settlement. Thus, assuming that the submission empowers the arbitrator to
decide whether an employee was discharged for just cause, the arbitrator in this instance can reasonably assume
that his powers extended beyond giving a yes-or-no answer and included the power to reinstate him with or without
back pay. AaSHED

In one case, the Supreme Court stressed that ". . . the Voluntary Arbitrator had plenary jurisdiction and authority to
interpret the agreement to arbitrate and to determine the scope of his own authority subject only, in a proper case,
to the certiorari jurisdiction of this Court. The Arbitrator, as already indicated, viewed his authority as embracing not
merely the determination of the abstract question of whether or not a performance bonus was to be granted but
also, in the affirmative case, the amount thereof.

By the same token, the issue of regularization should be viewed as two-tiered issue. While the submission agreement
mentioned only the determination of the date or regularization, law and jurisprudence give the voluntary arbitrator
enough leeway of authority as well as adequate prerogative to accomplish the reason for which the law on voluntary
arbitration was created — speedy labor justice. It bears stressing that the underlying reason why this case arose is to
settle, once and for all, the ultimate question of whether respondent employees are entitled to higher benefits. To
require them to file another action for payment of such benefits would certainly undermine labor proceedings and
contravene the constitutional mandate providing full protection to labor. 23

Indubitably, Ludo fortifies, not diminishes, the soundness of the questioned VA Decision. Said case reaffirms the
plenary jurisdiction and authority of the voluntary arbitrator to interpret the CBA and to determine the scope of
his/her own authority. Subject to judicial review, the leeway of authority as well as adequate prerogative is aimed at
accomplishing the rationale of the law on voluntary arbitration — speedy labor justice. In this case, a complete and
final adjudication of the dispute between the parties necessarily called for the resolution of the related and incidental
issue of whether the Company still violated the CBA but without being guilty of ULP as, needless to state, ULP is
committed only if there is gross violation of the agreement.

Lastly, the Company kept on harping that both the VA and the CA conceded that its engagement of contractual
workers from PESO was a valid exercise of management prerogative. It is confused. To emphasize, declaring that a
particular act falls within the concept of management prerogative is significantly different from acknowledging that
such act is a valid exercise thereof. What the VA and the CA correctly ruled was that the Company's act of contracting
out/outsourcing is within the purview of management prerogative. Both did not say, however, that such act is a valid
exercise thereof. Obviously, this is due to the recognition that the CBA provisions agreed upon by the Company and
the Union delimit the free exercise of management prerogative pertaining to the hiring of contractual employees.
Indeed, the VA opined that "the right of the management to outsource parts of its operations is not totally
eliminated but is merely limited by the CBA," while the CA held that "[t]his management prerogative of contracting
out services, however, is not without limitation. . . . [These] categories of employees particularly with respect to
casual employees [serve] as limitation to [the Company's] prerogative to outsource parts of its operations especially
when hiring contractual employees." acIHDA

A collective bargaining agreement is the law between the parties:

It is familiar and fundamental doctrine in labor law that the CBA is the law between the parties and they are obliged
to comply with its provisions. We said so in Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa Honda:

A collective bargaining agreement or CBA refers to the negotiated contract between a legitimate labor organization
and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining
unit. As in all contracts, the parties in a CBA may establish such stipulations, clauses, terms and conditions as they
may deem convenient provided these are not contrary to law, morals, good customs, public order or public policy.
Thus, where the CBA is clear and unambiguous, it becomes the law between the parties and compliance therewith is
mandated by the express policy of the law.

Moreover, if the terms of a contract, as in a CBA, are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of their stipulations shall control. . . . . 24

In this case, Section 4, Article I (on categories of employees) of the CBA between the Company and the Union must
be read in conjunction with its Section 1, Article III (on union security). Both are interconnected and must be given
full force and effect. Also, these provisions are clear and unambiguous. The terms are explicit and the language of the
CBA is not susceptible to any other interpretation. Hence, the literal meaning should prevail. As repeatedly held, the
exercise of management prerogative is not unlimited; it is subject to the limitations found in law, collective
bargaining agreement or the general principles of fair play and justice. 25 Evidently, this case has one of the
restrictions — the presence of specific CBA provisions — unlike in San Miguel Corporation Employees Union-PTGWO
v. Bersamira, 26 De Ocampo v. NLRC, 27 Asian Alcohol Corporation v. NLRC, 28 and Serrano v. NLRC 29 cited by the
Company. To reiterate, the CBA is the norm of conduct between the parties and compliance therewith is mandated
by the express policy of the law. 30 cCAIDS

WHEREFORE, the petition is DENIED. The assailed June 16, 2005 Decision, as well as the October 12, 2005 Resolution
of the Court of Appeals, which sustained the October 26, 2004 Decision of the Voluntary Arbitrator, are hereby
AFFIRMED.
SO ORDERED.
[G.R. No. 172642. June 13, 2012.]

ESTATE OF NELSON R. DULAY, represented by his wife MERRIDY JANE P. DULAY, petitioner, vs. ABOITIZ JEBSEN
MARITIME, INC. and GENERAL CHARTERERS, INC., respondents.

DECISION

PERALTA, 1 and Resolution 2 dated July 11, 2005 and April 18, 2006 of the Court of Appeals (CA) in CA-G.R. SP No.
76489.

The factual and procedural antecedents of the case, as summarized by the CA, are as follows:

Nelson R. Dulay (Nelson, for brevity) was employed by [herein respondent] General Charterers, Inc. (GCI), a
subsidiary of co-petitioner [herein co-respondent] Aboitiz Jebsen Maritime, Inc. since 1986. He initially worked as an
ordinary seaman and later as bosun on a contractual basis. From September 3, 1999 up to July 19, 2000, Nelson was
detailed in petitioners' vessel, the MV Kickapoo Belle.

On August 13, 2000, or 25 days after the completion of his employment contract, Nelson died due to acute renal
failure secondary to septicemia. At the time of his death, Nelson was a bona fide member of the Associated Marine
Officers and Seaman's Union of the Philippines (AMOSUP), GCI's collective bargaining agent. Nelson's widow, Merridy
Jane, thereafter claimed for death benefits through the grievance procedure of the Collective Bargaining Agreement
(CBA) between AMOSUP and GCI. However, on January 29, 2001, the grievance procedure was "declared
deadlocked" as petitioners refused to grant the benefits sought by the widow.

On March 5, 2001, Merridy Jane filed a complaint with the NLRC Sub-Regional Arbitration Board in General Santos
City against GCI for death and medical benefits and damages. aIEDAC

On March 8, 2001, Joven Mar, Nelson's brother, received P20,000.00 from [respondents] pursuant to article 20(A)2
of the CBA and signed a "Certification" acknowledging receipt of the amount and releasing AMOSUP from further
liability. Merridy Jane contended that she is entitled to the aggregate sum of Ninety Thousand Dollars ($90,000.00)
pursuant to [A]rticle 20 (A)1 of the CBA . . .

xxx xxx xxx

Merridy Jane averred that the P20,000.00 already received by Joven Mar should be considered advance payment of
the total claim of US$90,000.[00].

[Herein respondents], on the other hand, asserted that the NLRC had no jurisdiction over the action on account of
the absence of employer-employee relationship between GCI and Nelson at the time of the latter's death. Nelson
also had no claims against petitioners for sick leave allowance/medical benefit by reason of the completion of his
contract with GCI. They further alleged that private respondent is not entitled to death benefits because petitioners
are only liable for such "in case of death of the seafarer during the term of his contract pursuant to the POEA
contract" and the cause of his death is not work-related. Petitioners admitted liability only with respect to article
20(A)2 [of the CBA]. . . .

xxx xxx xxx

However, as petitioners stressed, the same was already discharged.

The Labor Arbiter ruled in favor of private respondent. It took cognizance of the case by virtue of Article 217 (a),
paragraph 6 of the Labor Code and the existence of a reasonable causal connection between the employer-employee
relationship and the claim asserted. It ordered the petitioner to pay P4,621,300.00, the equivalent of US$90,000.00
less P20,000.00, at the time of judgment . . .

xxx xxx xxx

The Labor Arbiter also ruled that the proximate cause of Nelson's death was not work-related.

On appeal, [the NLRC] affirmed the Labor Arbiter's decision as to the grant of death benefits under the CBA but
reversed the latter's ruling as to the proximate cause of Nelson's death. 3

Herein respondents then filed a special civil action for certiorari with the CA contending that the NLRC committed
grave abuse of discretion in affirming the jurisdiction of the NLRC over the case; in ruling that a different provision of
the CBA covers the death claim; in reversing the findings of the Labor Arbiter that the cause of death is not work-
related; and, in setting aside the release and quitclaim executed by the attorney-in-fact and not considering the
P20,000.00 already received by Merridy Jane through her attorney-in-fact.

On July 11, 2005, the CA promulgated its assailed Decision, the dispositive portion of which reads as follows: AICDSa
WHEREFORE, in view of the foregoing, the petition is hereby GRANTED and the case is REFERRED to the National
Conciliation and Mediation Board for the designation of the Voluntary Arbitrator or the constitution of a panel of
Voluntary Arbitrators for the appropriate resolution of the issue on the matter of the applicable CBA provision.

SO ORDERED. 4

The CA ruled that while the suit filed by Merridy Jane is a money claim, the same basically involves the interpretation
and application of the provisions in the subject CBA. As such, jurisdiction belongs to the voluntary arbitrator and not
the labor arbiter.

Petitioner filed a Motion for Reconsideration but the CA denied it in its Resolution of April 18, 2006.

Hence, the instant petition raising the sole issue of whether or not the CA committed error in ruling that the Labor
Arbiter has no jurisdiction over the case.

Petitioner contends that Section 10 of Republic Act (R.A.) 8042, otherwise known as the Migrant Workers and
Overseas Filipinos Act of 1995, vests jurisdiction on the appropriate branches of the NLRC to entertain disputes
regarding the interpretation of a collective bargaining agreement involving migrant or overseas Filipino workers.
Petitioner argues that the abovementioned Section amended Article 217 (c) of the Labor Code which, in turn, confers
jurisdiction upon voluntary arbitrators over interpretation or implementation of collective bargaining agreements
and interpretation or enforcement of company personnel policies.

The pertinent provisions of Section 10 of R.A. 8042 provide as follows:

SEC. 10.Money Claims. — Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National
Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety
(90) calendar days after filing of the complaint, the claims arising out of an employer-employee relationship or by
virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral,
exemplary and other forms of damages.

Article 217 (c) of the Labor Code, on the other hand, states that:
xxx xxx xxx

(c)Cases arising from the interpretation or implementation of collective bargaining agreements and those arising
from the interpretation or enforcement of company personnel policies shall be disposed by the Labor Arbiter by
referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements.
cCSHET

On their part, respondents insist that in the present case, Article 217, paragraph (c) as well as Article 261 of the Labor
Code remain to be the governing provisions of law with respect to unresolved grievances arising from the
interpretation and implementation of collective bargaining agreements. Under these provisions of law, jurisdiction
remains with voluntary arbitrators.

Article 261 of the Labor Code reads, thus:

ARTICLE 261.Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. — The Voluntary Arbitrator or
panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved
grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and those
arising from the interpretation or enforcement of company personnel policies referred to in the immediately
preceding article. Accordingly, violations of a Collective Bargaining Agreement, except those which are gross in
character, shall no longer be treated as unfair labor practice and shall be resolved as grievances under the Collective
Bargaining Agreement. For purposes of this article, gross violations of Collective Bargaining Agreement shall mean
flagrant and/or malicious refusal to comply with the economic provisions of such agreement.

The Commission, its Regional Offices and the Regional Directors of the Department of Labor and Employment shall
not entertain disputes, grievances or matters under the exclusive and original jurisdiction of the Voluntary Arbitrator
or panel of Voluntary Arbitrators and shall immediately dispose and refer the same to the Grievance Machinery or
Voluntary Arbitration provided in the Collective Bargaining Agreement.

The petition is without merit.

It is true that R.A. 8042 is a special law governing overseas Filipino workers. However, a careful reading of this special
law would readily show that there is no specific provision thereunder which provides for jurisdiction over disputes or
unresolved grievances regarding the interpretation or implementation of a CBA. Section 10 of R.A. 8042, which is
cited by petitioner, simply speaks, in general, of "claims arising out of an employer-employee relationship or by virtue
of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral,
exemplary and other forms of damages." On the other hand, Articles 217 (c) and 261 of the Labor Code are very
specific in stating that voluntary arbitrators have jurisdiction over cases arising from the interpretation or
implementation of collective bargaining agreements. Stated differently, the instant case involves a situation where
the special statute (R.A. 8042) refers to a subject in general, which the general statute (Labor Code) treats in
particular. 5 In the present case, the basic issue raised by Merridy Jane in her complaint filed with the NLRC is: which
provision of the subject CBA applies insofar as death benefits due to the heirs of Nelson are concerned. The Court
agrees with the CA in holding that this issue clearly involves the interpretation or implementation of the said CBA.
Thus, the specific or special provisions of the Labor Code govern. ACcaET

In any case, the Court agrees with petitioner's contention that the CBA is the law or contract between the parties.
Article 13.1 of the CBA entered into by and between respondent GCI and AMOSUP, the union to which petitioner
belongs, provides as follows:

The Company and the Union agree that in case of dispute or conflict in the interpretation or application of any of the
provisions of this Agreement, or enforcement of Company policies, the same shall be settled through negotiation,
conciliation or voluntary arbitration. The Company and the Union further agree that they will use their best endeavor
to ensure that any dispute will be discussed, resolved and settled amicably by the parties hereof within ninety (90)
days from the date of filing of the dispute or conflict and in case of failure to settle thereof any of the parties retain
their freedom to take appropriate action. 6 (Emphasis supplied)

From the foregoing, it is clear that the parties, in the first place, really intended to bring to conciliation or voluntary
arbitration any dispute or conflict in the interpretation or application of the provisions of their CBA. It is settled that
when the parties have validly agreed on a procedure for resolving grievances and to submit a dispute to voluntary
arbitration then that procedure should be strictly observed. 7

It may not be amiss to point out that the abovequoted provisions of the CBA are in consonance with Rule VII, Section
7 of the present Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas Filipinos Act of
1995, as amended by Republic Act No. 10022, which states that "[f]or OFWs with collective bargaining agreements,
the case shall be submitted for voluntary arbitration in accordance with Articles 261 and 262 of the Labor Code." The
Court notes that the said Omnibus Rules and Regulations were promulgated by the Department of Labor and
Employment (DOLE) and the Department of Foreign Affairs (DFA) and that these departments were mandated to
consult with the Senate Committee on Labor and Employment and the House of Representatives Committee on
Overseas Workers Affairs.

In the same manner, Section 29 of the prevailing Standard Terms and Conditions Governing the Employment of
Filipino Seafarers on Board Ocean Going Vessels, promulgated by the Philippine Overseas Employment
Administration (POEA), provides as follows:
Section 29.Dispute Settlement Procedures. — In cases of claims and disputes arising from this employment, the
parties covered by a collective bargaining agreement shall submit the claim or dispute to the original and exclusive
jurisdiction of the voluntary arbitrator or panel of arbitrators. If the parties are not covered by a collective bargaining
agreement, the parties may at their option submit the claim or dispute to either the original and exclusive jurisdiction
of the National Labor Relations Commission (NLRC), pursuant to Republic Act (RA) 8042, otherwise known as the
Migrant Workers and Overseas Filipinos Act of 1995 or to the original and exclusive jurisdiction of the voluntary
arbitrator or panel of arbitrators. If there is no provision as to the voluntary arbitrators to be appointed by the
parties, the same shall be appointed from the accredited voluntary arbitrators of the National Conciliation and
Mediation Board of the Department of Labor and Employment. DHSEcI

The Philippine Overseas Employment Administration (POEA) shall exercise original and exclusive jurisdiction to hear
and decide disciplinary action on cases, which are administrative in character, involving or arising out of violations of
recruitment laws, rules and regulations involving employers, principals, contracting partners and Filipino seafarers.
(Emphasis supplied)

It is clear from the above that the interpretation of the DOLE, in consultation with their counterparts in the
respective committees of the Senate and the House of Representatives, as well as the DFA and the POEA is that with
respect to disputes involving claims of Filipino seafarers wherein the parties are covered by a collective bargaining
agreement, the dispute or claim should be submitted to the jurisdiction of a voluntary arbitrator or panel of
arbitrators. It is only in the absence of a collective bargaining agreement that parties may opt to submit the dispute
to either the NLRC or to voluntary arbitration. It is elementary that rules and regulations issued by administrative
bodies to interpret the law which they are entrusted to enforce, have the force of law, and are entitled to great
respect. 8 Such rules and regulations partake of the nature of a statute and are just as binding as if they have been
written in the statute itself. 9 In the instant case, the Court finds no cogent reason to depart from this rule.

The above interpretation of the DOLE, DFA and POEA is also in consonance with the policy of the state to promote
voluntary arbitration as a mode of settling labor disputes. 10

No less than the Philippine Constitution provides, under the third paragraph, Section 3, Article XIII, thereof that "[t]he
State shall promote the principle of shared responsibility between workers and employers and the preferential use of
voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to
foster industrial peace."

Consistent with this constitutional provision, Article 211 of the Labor Code provides the declared policy of the State
"[t]o promote and emphasize the primacy of free collective bargaining and negotiations, including voluntary
arbitration, mediation and conciliation, as modes of settling labor or industrial disputes."
On the basis of the foregoing, the Court finds no error in the ruling of the CA that the voluntary arbitrator has
jurisdiction over the instant case.

WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 76489
dated July 11, 2005 and April 18, 2006, respectively, are AFFIRMED.

SO ORDERED. aDHCAE
[G.R. No. 157086. February 18, 2013.]

LEPANTO CONSOLIDATED MINING COMPANY, petitioner, vs. THE LEPANTO CAPATAZ UNION, respondent.

DECISION

BERSAMIN, J p:

Capatazes are not rank-and-file employees because they perform supervisory functions for the management; hence,
they may form their own union that is separate and distinct from the labor organization of rank-and-file employees.

The Case

Lepanto Consolidated Mining Company (Lepanto) assails the Resolution promulgated on December 18, 2002, 1
whereby the Court of Appeals (CA) dismissed its petition for certiorari on the ground of its failure to first file a motion
for reconsideration against the decision rendered by the Secretary of the Department of Labor and Employment
(DOLE); and the resolution promulgated on January 31, 2003, 2 whereby the CA denied Lepanto's motion for
reconsideration.

Antecedents

As a domestic corporation authorized to engage in large-scale mining, Lepanto operated several mining claims in
Mankayan, Benguet. On May 27, 1998, respondent Lepanto Capataz Union (Union), a labor organization duly
registered with DOLE, filed a petition for consent election with the Industrial Relations Division of the Cordillera
Regional Office (CAR) of DOLE, thereby proposing to represent 139 capatazes of Lepanto. 3 HIAEcT

In due course, Lepanto opposed the petition, 4 contending that the Union was in reality seeking a certification
election, not a consent election, and would be thereby competing with the Lepanto Employees Union (LEU), the
current collective bargaining agent. Lepanto pointed out that the capatazes were already members of LEU, the
exclusive representative of all rank-and-file employees of its Mine Division.

On May 2, 2000, Med-Arbiter Michaela A. Lontoc of DOLE-CAR issued a ruling to the effect that the capatazes could
form a separate bargaining unit due to their not being rank-and-file employees, 5 viz.: HESAIT
xxx xxx xxx

We agree with petitioner that its members perform a function totally different from the rank-and-file employees. The
word capataz is defined in Webster's Third International Dictionary, 1986 as "a boss", "foreman" and "an overseer".
The employer did not dispute during the hearing that the capatazes indeed take charge of the implementation of the
job orders by supervising and instructing the miners, mackers and other rank-and-file workers under them, assess
and evaluate their performance, make regular reports and recommends (sic) new systems and procedure of work, as
well as guidelines for the discipline of employees. As testified to by petitioner's president, the capatazes are neither
rank-and-file nor supervisory and, more or less, fall in the middle of their rank. In this respect, we can see that indeed
the capatazes differ from the rank-and-file and can by themselves constitute a separate bargaining unit.

While it is claimed by the employer that historically, the capatazes have been considered among the rank-and-file
and that it is only now that they seek a separate bargaining unit such history of affiliation with the rank-and-file
association of LEU cannot totally prevent the capatazes from disaffiliating and organizing themselves separately. The
constitutional right of every worker to self-organization essentially gives him the freedom to join or not to join an
organization of his own choosing.

The fact that petitioner seeks to represent a separate bargaining unit from the rank-and-file employees represented
by the LEU renders the contract bar rule inapplicable. While the collective bargaining agreement existing between
the LEU and the employer covering the latter's rank-and-file employee covers likewise the capatazes, it was testified
to and undisputed by the employer that the capatazes did not anymore participate in the renegotiation and
ratification of the new CBA upon expiration of their old one on 16 November 1998. Their nonparticipation was
apparently due to their formation of the new bargaining unit. Thus, while the instant petition was filed on 27 May
1998, prior to the freedom period, in the interest of justice and in consonance with the constitutional right of
workers to self-organization, the petition can be deemed to have been filed at the time the 60-day freedom period
set in. After all, the petition was still pending and unresolved during this period. HECTaA

WHEREFORE, the petition is hereby granted and a certification election among the capataz employees of the Lepanto
Consolidated Mining Company is hereby ordered conducted, subject to the usual pre-election and
inclusion/exclusion proceedings, with the following choices:

1.Lepanto Capataz Union; and

2.No Union.
The employer is directed to submit to this office within ten (10) days from receipt hereof a copy of the certified list of
its capataz employees and the payroll covering the said bargaining unit for the last three (3) months prior to the
issuance hereof.

SO DECIDED. 6

Lepanto appealed to the DOLE Secretary. 7

On July 12, 2000, then DOLE Undersecretary Rosalinda Dimapilis-Baldoz (Baldoz), acting by authority of the DOLE
Secretary, affirmed the ruling of Med-Arbiter Lontoc, 8 pertinently stating as follows:

xxx xxx xxx

The bargaining unit sought to be represented by the appellee are the capataz employees of the appellant. There is no
other labor organization of capatazes within the employer unit except herein appellant. Thus, appellant is an
unorganized establishment in so far as the bargaining unit of capatazes is concerned. In accordance with the last
paragraph of Section 11, Rule XI, Department Order No. 9 which provides that "in a petition filed by a legitimate labor
organization involving an unorganized establishment, the Med-Arbiter shall, pursuant to Article 257 of the Code,
automatically order the conduct of certification election after determining that the petition has complied with all
requirements under Sections 1, 2 and 4 of the same rules and that none of the grounds for dismissal thereof exists",
the order for the conduct of a certification election is proper. DCAHcT

Finally, as to the issue of whether the Med-Arbiter exhibited ignorance of the law when she directed the conduct of a
certification election when appellee prays for the conduct of a consent election, let it be stressed that appellee seeks
to be recognized as the sole and exclusive bargaining representative of all capataz employees of appellant. There are
two modes by which this can be achieved, one is by voluntary recognition and two, by consent or certification
election. Voluntary recognition under Rule X, Department Order No. 9 is a mode whereby the employer voluntarily
recognizes the union as the bargaining representative of all the members in the bargaining unit sought to be
represented. Consent and certification election under Rules XI and XII of Department Order No. 9 is a mode whereby
the members of the bargaining unit decide whether they want a bargaining representative and if so, who they want it
to be. The difference between a consent election and a certification election is that the conduct of a consent election
is agreed upon by the parties to the petition while the conduct of a certification election is ordered by the Med-
Arbiter. In this case, the appellant withdrew its consent and opposed the conduct of the election. Therefore, the
petition necessarily becomes one of a petition for certification election and the Med-Arbiter was correct in granting
the same. 9
xxx xxx xxx

In the ensuing certification election held on November 28, 2000, the Union garnered 109 of the 111 total valid votes
cast. 10

On the day of the certification election, however, Lepanto presented an opposition/protest. 11 Hence, on February 8,
2001, a hearing was held on Lepanto's opposition/protest. Although the parties were required in that hearing to
submit their respective position papers, Lepanto later opted not to submit its position paper, 12 and contended that
the issues identified during the hearing did not pose any legal issue to be addressed in a position paper. 13

On April 26, 2001, Med-Arbiter Florence Marie A. Gacad-Ulep of DOLE-CAR rendered a decision certifying the Union
as the sole and exclusive bargaining agent of all capatazes of Lepanto. 14 cDHAES

On May 18, 2001, Lepanto appealed the decision of Med-Arbiter Gacad-Ulep to the DOLE Secretary.

By her Resolution dated September 17, 2002, 15 DOLE Secretary Patricia A. Sto. Tomas affirmed the decision dated
April 26, 2001, holding and disposing thus:

Appellant accused Med-Arbiter Ulep of grave abuse of discretion amounting to lack of jurisdiction based on her
failure to resolve appellant's motion to modify order to submit position papers and on rendering judgment on the
basis only of appellee's position paper.

We deny.

Section 5, Rule XXV of Department Order No. 9, otherwise known as the New Rules Implementing Book V of the
Labor Code, states that "in all proceedings at all levels, incidental motions shall not be given due course, but shall
remain as part of the records for whatever they may be worth when the case is decided on the merits".

Further, the motion to modify order to submit position papers filed by appellant is without merit. Appellant claimed
that the issues over which Med-Arbiter Ulep directed the submission of position papers were: (1) failure to challenge
properly; (2) failure (especially of LEU) to participate actively in the proceedings before the decision calling for the
conduct of certification election; and (3) validity of earlier arguments. According to appellant, the first issue was for
appellee LCU to reply to in its position paper, the second issue was for the LEU and the third issue for appellant
company to explain in their respective position paper. It was the position of appellant company that unless the
parties filed their position paper on each of their respective issues, the other parties cannot discuss the issues they
did not raise in the same position papers and have to await receipt of the others' position paper for their appropriate
reply. TDCcAE

Section 9, Rule XI of Department Order No. 9, which is applied with equal force in the disposition of protests on the
conduct of election, states that "the Med-Arbiter shall in the same hearing direct all concerned parties, including the
employer, to simultaneously submit their respective position papers within a non-extendible period of ten days". The
issues as recorded in the minutes of 28 February 2001 hearing before the Med-Arbiter are clear. The parties,
including appellant company were required to submit their respective positions on whether there was proper
challenge of the voters, whether LEU failed to participate in the proceedings, if so, whether it should be allowed to
participate at this belated stage and whether the arguments raised during the pre-election conferences and in the
protests are valid. The parties, including appellant company were apprised of these issues and they agreed thereto.
The minutes of the hearing even contained the statement that "no order will issue" and that "the parties are
informed accordingly". If there is any matter that had to be clarified, appellant should have clarified the same during
the said hearing and refused to file its position paper simultaneously with LCU and LEU. It appears that appellant did
not do so and acquiesced to the filing of its position paper within fifteen days from the date of said hearing.

Neither is there merit in appellant's contention that the Med-Arbiter resolved the protest based solely on appellee
LCU's position paper. Not only did the Med-Arbiter discuss the demerits of appellant's motion to modify order to
submit position papers but likewise the demerits of its protest. We do not, however, agree with the Med-Arbiter that
the protest should be dismissed due to appellant's failure to challenge the individual voters during the election. We
take note of the minutes of the pre-election conference on 10 November 2000, thus:

"It was also agreed upon (by union and management's legal officer) that all those listed will be allowed to vote during
the certification election subject to challenge by management on ground that none of them belongs to the bargaining
unit". (Underscoring supplied)

It is therefore, not correct to say that there was no proper challenge made by appellant company. The challenge was
already manifested during the pre-election conference, specifying that all listed voters were being challenged
because they do not belong to the bargaining unit of capatazes. Likewise, the formal protest filed by appellant
company on the day of the election showed its protest to the conduct of the election on the grounds that (1) none of
the names submitted and included (with pay bracket 8 and 9) to vote qualifies as capataz under the five-point
characterization made in 02 May 2000 decision calling for the conduct of certification election; (2) the
characterization made in the 02 May 2000 decision pertains to shift bosses who constitutes another union, the
Lepanto Local Staff Union; and (3) the names listed in the voters' list are members of another union, the Lepanto
Employees Union. This constitutes proper challenge to the eligibility of all the voters named in the list which includes
all those who cast their votes. The election officer should have not canvassed the ballots and allowed the Med-
Arbiter to first determine their eligibility. SEAHcT
Notwithstanding the premature canvass of the votes, we note that appellant company failed to support its grounds
for challenge with sufficient evidence for us to determine the validity of its claim. No job description of the
challenged voters was submitted by appellant from which we can verify whether the said voters are indeed
disqualified from the alleged five-point characterization made in the 02 May 2000 decision, either before the Med-
Arbiter or on appeal. Neither was the job description of the shift bosses whom appellant company claims pertain to
the alleged five-point characterization submitted for our perusal. The challenge must perforce fail for lack of
evidence. ASaTCE

As to the alleged membership of appellee LCU's member with another union LEU, the issue has been resolved in the
02 May 200[0] decision of Med-Arbiter Lontoc which we affirmed on 12 July 2000.

WHEREFORE, the appeal is hereby DENIED for lack of merit and the decision of the Med-Arbiter dated 26 April 2001,
certifying Lepanto Capataz Union as the sole and exclusive bargaining agent of all capataz workers of Lepanto
Consolidated Mining Company, is AFFIRMED.

SO RESOLVED. 16

Ruling of the CA

Still dissatisfied with the result, but without first filing a motion for reconsideration, Lepanto challenged in the CA the
foregoing decision of the DOLE Secretary through a petition for certiorari.

On December 18, 2002, the CA dismissed Lepanto's petition for certiorari, stating in its first assailed resolution:

Considering that the petitioner failed to file a prior motion for reconsideration of the Decision of the public
respondent before instituting the present petition as mandated by Section 1 of Rule 65 of the 1997 Rules of Civil
Procedure, as amended, the instant "Petition for Certiorari Under Rule 65 with Prayer for Temporary Restraining
Order and Injunction" is hereby DISMISSED.

Well-settled is the rule that the "filing of a petition for certiorari under Rule 65 without first moving for
reconsideration of the assailed resolution generally warrants the petition's outright dismissal. As we consistently held
in numerous cases, a motion for reconsideration by a concerned party is indispensable for it affords the NLRC an
opportunity to rectify errors or mistakes it might have committed before resort to the courts can be had.
It is settled that certiorari will lie only if there is no appeal or any other plain, speedy and adequate remedy in the
ordinary course of law against acts of public respondents. Here, the plain and adequate remedy expressly provided
by law was a motion for reconsideration of the impugned resolution, based on palpable or patent errors, to be made
under oath and filed within ten (10) days from receipt of the questioned resolution of the NLRC, a procedure which is
jurisdictional. Further, it should be stressed that without a motion for reconsideration seasonably filed within the
ten-day reglementary period, the questioned order, resolution or decision of NLRC, becomes final and executory
after ten (10) calendar days from receipt thereof." (Association of Trade Unions (ATU), Rodolfo Monteclaro and Edgar
Juesan vs. Hon. Commissioners Oscar N. Abella, Musib N. Buat, Leon Gonzaga, Jr., Algon Engineering Construction
Corp., Alex Gonzales and Editha Yap. 323 SCRA 50).

SO ORDERED. 17 ITScAE

Lepanto moved to reconsider the dismissal, but the CA denied its motion for reconsideration through the second
assailed resolution. 18

Issues

Hence, this appeal by Lepanto based on the following errors, namely:

THE COURT OF APPEALS ERRED IN SUMMARILY DISMISSING THE PETITION FOR CERTIORARI ON THE GROUND THAT
NO PRIOR MOTION FOR RECONSIDERATION WAS FILED. THE DECISION OF THE SECRETARY BEING FINAL AND
EXECUTORY, A MOTION FOR RECONSIDERATION WAS NOT AN AVAILABLE REMEDY FOR PETITIONER.

II

ON THE MERITS, THE SECRETARY OF LABOR ACTED WITHOUT OR IN EXCESS OF JURISDICTION, [O]R WITH GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN ISSUING THE DECISION DATED
SEPTEMBER 17, 2002, WHEN SHE DELIBERATELY IGNORED THE FACTS AND RULED IN FAVOR OF THE RESPONDENT
UNION, DESPITE HER OWN FINDING THAT THERE HAD BEEN A PREMATURE CANVASS OF VOTES. 19 cSITDa

Lepanto argues that a motion for reconsideration was not an available remedy due to the decision of the DOLE
Secretary being already classified as final and executory under Section 15, Rule XI, Book V of Omnibus Rules
Implementing the Labor Code, as amended by Department Order No. 9, series of 1997; 20 that the Union's petition
for consent election was really a certification election; that the Union failed to give a definite description of the
bargaining unit sought to be represented; and that the capatazes should be considered as rank-and-file employees.

The issues to be resolved are, firstly, whether a motion for reconsideration was a pre-requisite in the filing of its
petition for certiorari; and, secondly, whether the capatazes could form their own union independently of the rank-
and-file employees.

Ruling

The petition for review has no merit.

I.

The filing of the motion for reconsideration

is a pre-requisite to the filing of a petition for

certiorari to assail the decision of the DOLE Secretary

We hold to be untenable and not well taken Lepanto's submissions that: (1) a motion for reconsideration was not an
available remedy from the decision of the DOLE Secretary because of Section 15, Rule XI, Book V of the Omnibus
Rules Implementing the Labor Code, as amended; and (2) the ruling in National Federation of Labor v. Laguesma 21
(recognizing the remedy of certiorari against the decision of the DOLE Secretary to be filed initially in the CA) actually
affirms its position that an immediate recourse to the CA on certiorari is proper even without the prior filing of a
motion for reconsideration.

To start with, the requirement of the timely filing of a motion for reconsideration as a precondition to the filing of a
petition for certiorari accords with the principle of exhausting administrative remedies as a means to afford every
opportunity to the respondent agency to resolve the matter and correct itself if need be. 22 SIEHcA

And, secondly, the ruling in National Federation of Labor v. Laguesma reiterates St. Martin's Funeral Home v. National
Labor Relations Commission, 23 where the Court has pronounced that the special civil action of certiorari is the
appropriate remedy from the decision of the National Labor Relations Commission (NLRC) in view of the lack of any
appellate remedy provided by the Labor Code to a party aggrieved by the decision of the NLRC. Accordingly, any
decision, resolution or ruling of the DOLE Secretary from which the Labor Code affords no remedy to the aggrieved
party may be reviewed through a petition for certiorari initiated only in the CA in deference to the principle of the
hierarchy of courts.

Yet, it is also significant to note that National Federation of Labor v. Laguesma also reaffirmed the dictum issued in St.
Martin's Funeral Homes v. National Labor Relations Commission to the effect that "the remedy of the aggrieved party
is to timely file a motion for reconsideration as a precondition for any further or subsequent remedy, and then
seasonably avail of the special civil action of certiorari under Rule 65 . . . ." 24

Indeed, the Court has consistently stressed the importance of the seasonable filing of a motion for reconsideration
prior to filing the certiorari petition. In SMC Quarry 2 Workers Union-February Six Movement (FSM) Local Chapter No.
1564 v. Titan Megabags Industrial Corporation 25 and Manila Pearl Corporation v. Manila Pearl Independent Workers
Union, 26 the Court has even warned that a failure to file the motion for reconsideration would be fatal to the cause
of the petitioner. 27 Due to its extraordinary nature as a remedy, certiorari is to be availed of only when there is no
appeal, or any plain, speedy or adequate remedy in the ordinary course of law. 28 There is no question that a motion
for reconsideration timely filed by Lepanto was an adequate remedy in the ordinary course of law in view of the
possibility of the Secretary of Justice reconsidering her disposition of the matter, thereby according the relief Lepanto
was seeking.

Under the circumstances, Lepanto's failure to timely file a motion for reconsideration prior to filing its petition for
certiorari in the CA rendered the September 17, 2002 resolution of the DOLE Secretary beyond challenge. CTSAaH

II.

Capatazes are not rank-and-file employees;

hence, they could form their own union

Anent the second issue, we note that Med-Arbiter Lontoc found in her Decision issued on May 2, 2000 that the
capatazes were performing functions totally different from those performed by the rank-and-file employees, and that
the capatazes were "supervising and instructing the miners, mackers and other rank-and-file workers under them,
assess[ing] and evaluat[ing] their performance, mak[ing] regular reports and recommend[ing] new systems and
procedure of work, as well as guidelines for the discipline of employees." 29 Hence, Med-Arbiter Lontoc concluded,
the capatazes "differ[ed] from the rank-and-file and [could] by themselves constitute a separate bargaining unit." 30

Agreeing with Med-Arbiter Lontoc's findings, then DOLE Undersecretary Baldoz, acting by authority of the DOLE
Secretary, observed in the resolution dated July 12, 2000, thus: 31
The bargaining unit sought to be represented by the appellee are the capataz employees of the appellant. There is no
other labor organization of capatazes within the employer unit except herein appellant. Thus, appellant is an
unorganized establishment in so far as the bargaining unit of capatazes is concerned. In accordance with the last
paragraph of Section 11, Rule XI, Department Order No. 9 which provides that "in a petition filed by a legitimate labor
organization involving an unorganized establishment, the Med-Arbiter shall, pursuant to Article 257 of the Code,
automatically order the conduct of certification election after determining that the petition has complied with all
requirements under Sections 1, 2 and 4 of the same rules and that none of the grounds for dismissal thereof exists",
the order for the conduct of a certification election is proper. 32 CDISAc

We cannot undo the affirmance by the DOLE Secretary of the correct findings of her subordinates in the DOLE, an
office that was undeniably possessed of the requisite expertise on the matter in issue. In dealing with the matter, her
subordinates in the DOLE fairly and objectively resolved whether the Union could lawfully seek to be the exclusive
representative of the bargaining unit of capatazes in the company. Their factual findings, being supported by
substantial evidence, are hereby accorded great respect and finality. Such findings cannot be made the subject of our
judicial review by petition under Rule 45 of the Rules of Court, because: DHIETc

. . . [T]he office of a petition for review on certiorari under Rule 45 of the Rules of Court requires that it shall raise
only questions of law. The factual findings by quasi-judicial agencies, such as the Department of Labor and
Employment, when supported by substantial evidence, are entitled to great respect in view of their expertise in their
respective field. Judicial review of labor cases does not go far as to evaluate the sufficiency of evidence on which the
labor official's findings rest. It is not our function to assess and evaluate all over again the evidence, testimonial and
documentary, adduced by the parties to an appeal, particularly where the findings of both the trial court (here, the
DOLE Secretary) and the appellate court on the matter coincide, as in this case at bar. The Rule limits that function of
the Court to review or revision of errors of law and not to a second analysis of the evidence. Here, petitioners would
have us re-calibrate all over again the factual basis and the probative value of the pieces of evidence submitted by
the Company to the DOLE, contrary to the provisions of Rule 45. Thus, absent any showing of whimsical or capricious
exercise of judgment, and unless lack of any basis for the conclusions made by the appellate court may be amply
demonstrated, we may not disturb such factual findings. 33

In any event, we affirm that capatazes or foremen are not rank-and-file employees because they are an extension of
the management, and as such they may influence the rank-and-file workers under them to engage in slowdowns or
similar activities detrimental to the policies, interests or business objectives of the employers. 34

WHEREFORE, the Court DENIES the petition for review for lack of merit, and AFFIRMS the resolutions the Court of
Appeals promulgated on December 18, 2002 and January 31, 2003.

Petitioner to pay the costs of suit.

SO ORDERED.