Tirol

Topic: Excluded from the coverage of employees' right to self-organization

54. Cooperative Rural Bank of Davao City, Inc. v. Ferrer-Calleja
COOPERATIVE RURAL BANK OF DAVAO CITY, INC. vs. PURA FERRER-CALLEJA,
DIRECTOR, BUREAU OF LABOR RELATIONS, MOLE, MANILA; FELIZARDO T. SERAPIO,
MED-ARBITER DESIGNATE, REGIONAL OFFICE NO. XI, MOLE, DAVAO CITY; and
FEDERATION OF FREE WORKERS
Doctrine: A cooperative, therefore, is by its nature different from an ordinary business concern,
being run either by persons, partnerships, or corporations. Its owners and/or members are the
ones who run and operate the business while the others are its employees. An employee
therefore of such a cooperative who is a member and co-owner thereof cannot invoke the right
to collective bargaining for certainly an owner cannot bargain with himself or his co-owners.
Action Sequence: i.e. PCE filed before Davao City Regional Office (granted) → Appeal
dismissed → MR denied → SC
Facts:
● Petitioner Cooperative Rural Bank of Davao City, Inc. is a cooperative banking
corporation operating in Davao City. It is owned in part by the Government and its
employees are members and co-owners of the same. The petitioner has around 16 rank-
and-file employees.
● As of August, 1986, there was no existing CBA between said employees and the
establishment.
● Private respondent Federation of Free Workers is a labor organization registered with
the DOLE. It is interested in representing said employees for purposes of collective
bargaining.
● Federation of Free Workers filed with the Davao City Regional Office of the then Ministry
of Labor and Employment a verified PCE among the rank-and-file employees of the
petitioner. This petition was granted.
● Cooperative Rural Bank filed an Appeal Memorandum and sought a reversal of the
Order of the Med-Arbiter. It argues that (1) a cooperative is not covered by the Rules
governing certification elections inasmuch as it is not an institution operating for profit,
and (2) two of the alleged rank-and-file employees seeking the certification election are
managerial employees disqualified from joining concerted labor activities. In sum,
Cooperative Rural Bank insists that its employees are disqualified from forming labor
organizations for purposes of collective bargaining.
● Federation of Free Workers filed a "Motion to Dismiss the Appeal." Cooperative Rural
Bank filed its opposition.
● BLR Director Pura Ferrer-Calleja: issued a Resolution affirming the Order of the Med-
Arbiter and dismissing the Appeal:
○ Being a member of a cooperative organization does not preclude one from
forming or joining a labor union provided that such person or persons are not
among those disqualified by law. Nowhere in the records can we find any piece
of evidence showing that the signatories in the petition are among those
disqualified to form or join a union.
 ○ It did not give credence to the allegation that 2of the signatories are managerial
employees since no evidence was shown.
● Cooperative Rural Bank filed an MR. It called attention to an Opinion rendered by then
Solicitor General and Minister of Justice Estelito P. Mendoza dated August 14, 1981,
which stated that employees of an electric cooperative who are themselves
members/co-owners of the same cannot form or join labor organizations for purposes of
collective bargaining.
● MR was denied. Hence this petition.
Issue: Whether employees of a cooperative who are members/co-owners of the same cannot
form or join labor organizations for purposes of collective bargaining.
Ruling: YES.
Under Section 2 of P.D. No. 175, a cooperative is defined to mean "organizations composed
primarily of small producers and of consumers who voluntarily join together to form business
enterprises which they themselves own, control, and patronize."
While cooperatives may exercise the same rights and privileges given to persons, partnership
and corporations provided under existing laws, operate business enterprises of all kinds,
establish rural banks, etc., such cooperatives enjoy such privileges as: (1) tax exemptions, (2)
preferential right to supply rice, corn and other grains, and other commodities produced by them
to State agencies administering price stabilization program, and (3) in appropriate cases,
exemption from application of minimum wage law.
A cooperative, therefore, is by its nature different from an ordinary business concern, being run
either by persons, partnerships, or corporations. Its owners and/or members are the ones who
run and operate the business while the others are its employees. As above stated, irrespective
of the number of shares owned by each member they are entitled to cast one vote each in
deciding upon the affairs of the cooperative. Their share capital earn limited interests. They
enjoy special privileges as — exemption from income tax and sales taxes, preferential right to
supply their products to State agencies and even exemption from the minimum wages laws.
An employee therefore of such a cooperative who is a member and co-owner thereof cannot
invoke the right to collective bargaining for certainly an owner cannot bargain with himself or his
co-owners. In the opinion of August 14, 1981 of the Solicitor General he correctly opined that
employees of cooperatives who are themselves members of the cooperative have no right to
form or join labor organizations for purposes of collective bargaining for being themselves co-
owners of the cooperative.
However, in so far as it involves cooperatives with employees who are not members or co-
owners thereof, certainly such employees are entitled to exercise the rights of all workers to
organization, collective bargaining, negotiations and others as are enshrined in the Constitution
and existing laws of the country.
Dispositive: Petition is hereby GRANTED and the resolution of public respondent Pura Ferrer-
Calleja, Director, Bureau of Labor Relations, of February 11, 1987 is hereby MODIFIED to the
effect that only the rank and file employees of petitioner who are not its members or co-owners
are entitled to self-organization, collective bargaining, and negotiations, while the other
employees who are members or co-owners thereof can not enjoy such right.
Albino
Topic: Included in the right to labor organization & Right to choose to form or join a union or
workers’ association belongs to workers themselves
55. Samahan ng mga Manggagawa sa Hanjin v. BLR, Hanjin
Doctrines:

 Right to self-organization includes right to form a union, workers ' association and labor
management councils
 Right to choose whether to form or join a union or workers' association belongs to
workers themselves
Action Sequence: Hanjin filed an action to cancel Samahan’s registration with DOLE > DOLE
ordered the cancellation of registration > BLR reversed > CA ordered the cancellation > SC
reinstated the decision of BLR
Facts:

 Samahan filed an application for registration of its name “Samahan ng Mga

Manggagawa sa Hanjin Shipyard” (it is an association) with the DOLE.
 Granted and was issued a certificate of registration.
 Hanjin filed a petition with DOLE praying the cancellation of registration of Samahan:
o Its members did not fall under any of the types of workers enumerated in the
second sentence of Article 243 (they are not ambulant, intermittent, itinerant,
rural workers, self-employed, and without definite employers)
o Samahan committed a misrepresentation in connection with the list of members
and/or voters who took part in the ratification of their constitution and by-laws in
its application for registration.
 DOLE Regional Director:
o Ruled in favor of Hanjin.
o In the preamble of the Samahan’s constitution, there was an admission that all of
its members were employees of Hanjin.
o Ordered the cancellation of the registration of the Samahan.
 Bureau of Labor Relations:
o Reversed the ruling of the RD
o The law clearly afforded the right to self-organization to all workers including
those without definite employers
o As an expression of the right to self-organization, industrial, commercial and self-
employed workers could form a workers' association if they so desired but
subject to the limitation that it was only for mutual aid and protection
o There was no misrepresentation because “sa Hanjin” was intended to describe a
place
o Directed the Samahan to remove the words “Hanjin Shipyard” from its name
 Court of Appeals
o Ordered the reinstatement of the Regional Director’s decision.

Issue 1: WON the employees can form an association?

Ruling 1: YES

 The right to self-organization connotes unionism. Workers, however, can also

form and join a workers' association as well as labor-management councils (LMC)
 The right to self-organization includes the right to form, join or assist labor organizations
fer the purpose of collective bargaining through representatives of their own choosing
and to engage in lawful concerted activities for the same purpose for their mutual aid
and protection. This is in line with the policy of the State to foster the free and voluntary
organization of a strong and united labor movement as well as to make sure that
workers participate in policy and decision-making processes affecting their rights, duties
and welfare
 The right to form a union or association or to self-organization comprehends two notions,
to wit: (a) the liberty or freedom, that is, the absence of restraint which guarantees that
the employee may act for himself without being prevented by law; and (b) the power, by
virtue of which an employee may, as he pleases, join or refrain from joining an
association
 A labor organization has two broad rights: (1) to bargain collectively and (2) to deal with
the employer concerning terms and conditions of employment.
o To bargain collectively is a right given to a union once it registers itself with the
DOLE.
o Dealing with the employer, on the other hand, is a generic description of
interaction between employer and employees concerning grievances, wages,
work hours and other terms and conditions of employment, even if the
employees' group is not registered with the DOLE
 A union refers to any labor organization in the private sector organized for
collective bargaining and for other legitimate purpose, while a workers'
association is an organization of workers formed for the mutual aid and protection
of its members or for any legitimate purpose other than collective bargaining
 Remember, for labor unions and LMC the existence of ER-EE relationship is needed.
 Remember, for worker’s association, the existence of employer-employee relationship is
not mandatory. What the law simply requires is that the members of the workers'
association, at the very least, share the same interest. The very definition of a workers'
association speaks of "mutual aid and protection."
Issue 2: WON the employees may be compelled to form a labor union instead of a worker’s
association?
Ruling 2: NO

 Hanjin argues that the members of Samahan have definite employers, hence, they
should have formed a union instead of a workers' association.
 There is no provision in the Labor Code that states that employees with definite
employers may form, join or assist unions only.
 The right to form a workers' association is not exclusive to ambulant, intermittent
and itinerant workers
 Right to choose whether to form or join a union or workers' association belongs
to workers themselves
  The right to form or join a labor organization necessarily includes the right to refuse or
refrain from exercising the said right. It is self-evident that just as no one should be
denied the exercise of a right granted by law, so also, no one should be compelled to
exercise such a conferred right.
 Also inherent in the right to self-organization is the right to choose whether to form a
union for purposes of collective bargaining or a workers' association for purposes of
providing mutual aid and protection.
(Copied from Loreine’s digest) Issue 3: Whether or not there is misrepresentation on the part
of Samahan to warrant cancellation of registration?
Ruling 3: NO

 NO, there is no misrepresentation on the part of Samahan to warrant cancellation of

registration. In this case, Samahan's registration was cancelled not because its
members were prohibited from forming a workers' association but because they
allegedly committed misrepresentation for using the phrase, "KAMI, ang mga
Manggagawa sa HANJIN Shipyard." Jurisprudence (please see Notes) provides that
misrepresentation, to be a ground for the cancellation of the certificate of registration,
must be done maliciously and deliberately. Further, the mistakes appearing in the
application or attachments must be grave or refer to significant matters. The details as to
how the alleged fraud was committed must also be indubitably shown. In the case at bar,
there is no deliberate or malicious intent to commit misrepresentation on the part of
Samahan. The use of such words "KAMI, ang mga Manggagawa sa HANJIN Shipyard"
in the preamble of the Constitution and by-laws did NOT constitute misrepresentation so
as to warrant the cancellation of Samahan's certificate of registration. Hanjin failed to
indicate how this phrase constitutes a malicious and deliberate misrepresentation.
Neither was there any showing that the alleged misrepresentation was serious in
character. Misrepresentation is a devious charge that cannot simply be entertained by
mere surmises and conjectures.Even granting arguendo that Samahan' s members
misrepresented themselves as employees or workers of Hanjin, said misrepresentation
does not relate to the adoption or ratification of its constitution and by-laws or to the
election of its officers.
Dispositive: WHEREFORE, the petition is PARTIALLY GRANTED. The July 4, 2013 Decision
and the January 28, 2014 Resolution of the Court of Appeals are hereby REVERSED and SET
ASIDE. The September 6, 2010 Resolution of the Bureau of Labor Relations, as modified by its
November 28, 2011 Resolution, is REINSTATED. SO ORDERED.
Balboa

Topic: Test of supervisory or managerial status

56. ClientLogic v Castro

CLIENTLOGIC PHILIPPINES, INC. (now known as SITEL),

JOSEPH VELASQUEZ, IRENE ROA and RODNEY SPIRES vs. BENEDICT CASTRO
Doctrine: The test of “supervisory” or “managerial status” depends on whether a person
possesses authority to act in the interest of his employer and whether such authority is not
merely routinary or clerical in nature, but requires the use of independent judgment.
Action Sequence: ID case by Castro > LA ruled there was ID w/ money claims > NLRC ruled
no ID but did not make a finding for the money claims > CA affirmed no ID but awarded money
claims > SC affirmed
Facts:

 Castro was a call center agent for SITEL (formerly ClientLogic) who eventually became
a “Coach.”
 A “Coach” is a team supervisor who is in charge of dealing with customer complaints
which could not be resolved by call center agents.
 Castro noticed that his call center agents would make the excuse that they would visit
the company clinic to leave their work stations.
 Castro then sent an email to the clinic’s personnel to request for the agents’ medical
consultations, but the clinic denied this request.
 Castro received a notice requiring him to explain why he should not be penalized for: 1)
violating the Company Policy on Direct Deposit Bank Info Request and 2) for the request
on medical records of his agents. He gave the excuse for no. 1 that the customer
begged him to access the account and for no. 2, he merely requested for a patient
tracker and not medical records.
 On Jan. 22, 2007, SITEL then posted a notice of vacancy for Castro’s position. On Feb.
12, 2007, SITEL sent Castro a notice of termination.
 Castro filed a complaint for ID.
 The LA ruled in favor of Castro and awarded money claims (OT, rest day pay, NSD,
holiday pay).
 The NLRC reversed the LA but did not rule on the money claims.
 The CA upheld the NLRC ruling that there was no illegal dismissal and retained the
award of money claims because Castro was not a managerial employee nor part of the
managerial staff.
Issue: whether Castro is a managerial employee (Note that Castro did not appeal the ruling of
the CA finding that there was no ID. only SITEL appealed, thus the sole issue is with regard to
the money claims.)
Ruling: No, Castro is not a managerial employee.

Article 212(m) of the Labor Code defines a managerial employee as “one who is vested with
powers or prerogatives to lay down and execute management policies and/or to hire, transfer,
suspend, lay-off, recall, discharge, assign or discipline employees, or to effectively recommend
such managerial actions.

The test of “supervisory” or “managerial status” depends on whether a person

possesses authority to act in the interest of his employer and whether such authority is
not merely routinary or clerical in nature, but requires the use of independent judgment.
The position held by respondent and its concomitant duties failed to hurdle this test.
As a coach or team supervisor respondent’s main duty was to deal with customer complaints
which could not be handled or solved by call center agents. If the members of his team could
not meet the needs of a customer, they passed the customer’s call to respondent.
This job description does not indicate that respondent can exercise the powers and prerogatives
equivalent to managerial actions which require the customary use of independent judgment.
There is no showing that he was actually conferred or was actually exercising the following
duties attributable to a “member of the managerial staff,” viz.:
1) The primary duty consists of the performance of work directly related to management of
policies of their employer;
2) Customarily and regularly exercise discretion and independent judgment;
3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty
consists of management of the establishment in which he is employed or subdivision thereof; or
(ii) execute under general supervision work along specialized or technical lines requiring special
training, experience, or knowledge; or (iii) execute, under general supervision, special
assignment and tasks; and 4) Who do not devote more than 20 percent of their hours worked in
a work week to activities which are not directly and closely related to the performance of the
work described in paragraphs (1), (2), and (3) above.”

As correctly observed by the CA and the LA, these duties clearly pertained to “Division
Managers/Department Managers/Supervisors,” which respondent was not as he was merely a
team supervisor. Petitioners themselves described respondent as “the superior of a call center
agent; he heads and guides a specific number of agents, who form a team.”

Respondent is thus entitled to his claims for holiday pay, service incentive leave pay, overtime
pay and rest day pay.

Dispositive: WHEREFORE, premises considered, the Petition is hereby DENIED.

Balce
Topic: Confidential employees’ ineligibility to join, form and assist any labor organization
57. METROLAB INDUSTRIES, INC. V. CONFESSOR

METROLAB INDUSTRIES, INC., petitioner,

vs.
HONORABLE MA. NIEVES ROLDAN-CONFESOR, in her capacity as Secretary of the
Department of Labor and Employment and METRO DRUG CORPORATION EMPLOYEES
ASSOCIATION - FEDERATION OF FREE WORKERS, respondents.

G.R. No. 108855, February 28, 1996

Ponente: KAPUNAN, J.

Doctrine: Although Article 245 of the Labor Code 20 limits the ineligibility to join, form and
assist any labor organization to managerial employees, jurisprudence has extended this
prohibition to confidential employees or those who by reason of their positions or nature of work
are required to assist or act in a fiduciary manner to managerial employees and hence, are
likewise privy to sensitive and highly confidential records.
Action Sequence: Notice of strike -> SOLE assumed jurisdiction -> Metrolab laid off 94
employees (SOLE declared as illegal) -> new CBA was entered -> Metrolab laid off 73
employees (SOLE also declared as illegal)-> Motion for execution by the Union -> Petition for
certiorari with application for issuance of a TRO by Metrolab -> SC modified the SOLE’s
decision.
FACTS:

 Private respondent Metro Drug Corporation Employees Association-Federation of Free

Workers (Union) is a labor organization representing the rank and file employees of
petitioner Metrolab Industries, Inc. (Metrolab) and Metro Drug, Inc.
 The CBA between Metrolab and the Union expired. The negotiations for a new CBA,
however, ended in a deadlock.
 The Union filed a notice of strike against Metrolab and Metro Drug Inc. The parties
failed to settle their dispute despite the conciliation efforts of the NCMB (National
Conciliation and Mediation Board).
 Secretary of Labor and Employment issued an assumption order of jurisdiction over
the entire labor dispute. The Companies and the Union were likewise directed to cease
and desist from committing any and all acts that might exacerbate the situation. He later
issued an order resolving all the disputed items in the CBA and ordered the parties
involved to execute a new CBA.
 The Union filed a MR. During the pendency of the MR, Metrolab laid off 94 of its rank
and file employees.
 The Union filed a motion for a cease and desist order to enjoin Metrolab from
implementing the mass layoff, alleging that such act violated the prohibition against
committing acts that would exacerbate the dispute as specifically directed in the
assumption order.
 Metrolab contended that the layoff was temporary and in the exercise of its management
prerogative.
 Thereafter, on various dates, Metrolab recalled some of the laid off workers on a
temporary basis due to availability of work in the production lines.
 Acting Secretary of Labor Confesor issued a resolution declaring the layoff of
Metrolab’s 94 rank and file workers illegal and ordered their reinstatement with full
backwages.
 Metrolab filed a Partial MR alleging that the layoff did not aggravate the dispute since no
untoward incident occurred as a result thereof. It, likewise, filed a motion for clarification
regarding the constitution of the bargaining unit covered by the CBA.
 After exhaustive negotiations, the parties entered into a new CBA. The execution,
however, was without prejudice to the outcome of the issues raised in the
reconsideration and clarification motions submitted for decision to the Secretary of
Labor.
 Pending the resolution of the aforestated motions, on 2 October 1992, Metrolab laid off
73 of its employees on grounds of redundancy due to lack of work which the union again
promptly opposed. Labor Secretary Confesor again issued a cease and desist order.
Metrolab moved for a reconsideration.
 Labor Secretary Confesor issued the assailed Omnibus Resolution containing (1) the
denial of Metrolab’s MR on the ruling that the layoff of the 94 employees is illegal; (2) to
incorporate in their respective collective bargaining agreements the clarifications herein
contained; and (3) the denial of Metrolab’s MR on the ruling that layoff of 73 employees
tended to exacerbate the dispute.
  Labor Secretary Confesor also ruled that executive secretaries are excluded from the
closed-shop provision of the CBA, not from the bargaining unit.
 The Union filed a motion for execution. Metrolab opposed. Hence, the present petition
for certiorari with application for issuance of a TRO.

ISSUE:
Whether or not executive secretaries are excluded from the closed-shop provision of the CBA,
not from the bargaining unit. (NO) / WON executive secretaries should be included in the
bargaining unit of rank and file employees. (NO)
RULING:
NO. The Court concurs with Metrolab contention that executive secretaries of the General
Manager and the executive secretaries of the Quality Assurance Manager, Product
Development Manager, Finance Director, Management System Manager, Human Resources
Manager, Marketing Director, Engineering Manager, Materials Manager and Production
Manager, who are all members of the company’s Management Committee should not only be
exempted from the closed-shop provision but should be excluded from membership in the
bargaining unit of the rank and file employees as well on grounds that their executive
secretaries are confidential employees, having access to vital labor information.
Although Article 245 of the Labor Code 20 limits the ineligibility to join, form and assist any labor
organization to managerial employees, jurisprudence has extended this prohibition to
confidential employees or those who by reason of their positions or nature of work are required
to assist or act in a fiduciary manner to managerial employees and hence, are likewise privy to
sensitive and highly confidential records.
In the case of National Association of Trade Union-Republic Planters Bank Supervisors Chapter
v. Torres, the Court declared that a confidential employee is one entrusted with confidence on
delicate matters, or with the custody, handling, or care and protection of the employer's
property. While Art. 245 of the Labor Code singles out managerial employees as ineligible to
join, assist or form any labor organization, under the doctrine of necessary implication,
confidential employees are similarly disqualified.
In the latest case of Pier 8 Arrastre & Stevedoring Services, Inc. vs. Roldan-Confesor, the Court
ruled that legal secretaries are neither managers nor supervisors. Their work is basically
routinary and clerical. However, they should be, differentiated from rank-and-file employees
because they are tasked with, among others, the typing of legal documents, memoranda and
correspondence, the keeping of records and files, the giving of and receiving notices, and such
other duties as required by the legal personnel of the corporation. Legal secretaries therefore
fall under the category of confidential employees.
Doctrine of necessary implication: Every statute is understood, by implication, to
contain all such provisions as may be necessary to effectuate its object and purpose, or
to make effective rights, powers, privileges or jurisdiction which it grants, including all
such collateral and subsidiary consequences as may be fairly and logically inferred from
its terms. Ex necessitate legis.
Finally, confidential employees cannot be classified as rank and file. As previously discussed,
the nature of employment of confidential employees is quite distinct from the rank and file, thus,
warranting a separate category. Excluding confidential employees from the rank and file
bargaining unit, therefore, is not tantamount to discrimination.
Forming part of the bargaining unit, the executive secretaries stand to benefit from any
agreement executed between the Union and Metrolab. Such a scenario, thus, gives rise
to a potential conflict between personal interests and their duty as confidential
employees to act for and in behalf of Metrolab. They do not have to be union members to
affect or influence either side.
DISPOSITIVE PORTION:
WHEREFORE, premises considered, the petition is partially GRANTED. The resolutions of
public respondent Secretary of Labor dated 14 April 1992 and 25 January 1993 are hereby
MODIFIED to the extent that executive secretaries of petitioner Metrolab's General Manager
and the executive secretaries of the members of its Management Committee are excluded from
the bargaining unit of petitioner's rank and file employees.

NOTES:
The rationale behind the exclusion of confidential employees from the bargaining unit of the
rank and file employees and their disqualification to join any labor organization:
Philips Industrial Development v. NLRC: By the very nature of their functions, they assist and
act in a confidential capacity to, or have access to confidential matters of, persons who exercise
managerial functions in the field of labor relations. As such, the rationale behind the ineligibility
of managerial employees to form, assist or join a labor union equally applies to them.
Bulletin Publishing Co., Inc. vs. Hon. Augusto Sanchez: The rationale for this inhibition has been
stated to be, because if these managerial employees would belong to or be affiliated with a
Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of
interests. The union can also become company-dominated with the presence of managerial
employees in Union membership.
Golden Farms, Inc. vs. Ferrer-Calleja: This rationale holds true also for confidential employees
such as accounting personnel, radio and telegraph operators, who having access to confidential
information, may become the source of undue advantage. Said employees may act as a spy or
spies of either party to a collective bargaining agreement. This is specially true in the present
case where the petitioning Union is already the bargaining agent of the rank-and-file employees
in the establishment. To allow the confidential employees to join the existing Union of the rank-
and-file would be in violation of the terms of the Collective Bargaining Agreement wherein this
kind of employees by the nature of their functions/positions are expressly excluded.
ISSUE 2:
Whether or not public respondent Labor Secretary committed grave abuse of discretion and
exceeded her jurisdiction in declaring the subject layoffs instituted by Metrolab illegal on
grounds that these unilateral actions aggravated the conflict between Metrolab and the Union
who were, then, locked in a stalemate in CBA negotiations.
RULING 2:
NO, because the Secretary of Labor is expressly given the power under the Labor Code to
assume jurisdiction and resolve labor disputes involving industries indispensable to national
interest. The disputed injunction is subsumed under this special grant of authority.
Art. 263 (g) of the Labor Code specifically provides that:
xxx xxx xxx
(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or
lockout in an industry indispensable to the national interest, the Secretary of Labor and
Employment may assume jurisdiction over the dispute and decide it or certify the same to the
Commission for compulsory arbitration. Such assumption or certification shall have the effect of
automatically enjoining the intended or impending strike or lockout as specified in the
assumption or certification order. If one has already taken place at the time of assumption or
certification, all striking or locked out employees shall immediately return to work and the
employer shall immediately resume operations and readmit all workers under the same terms
and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment
or the Commission may seek the assistance of law enforcement agencies to ensure compliance
with this provision as well as with such orders as he may issue to enforce the same.

Chua
Topic: Confidential employees’ ineligibility to join, form and assist any labor organization
58. Tunay na Pagkakaisa ng Manggagawa sa Asia Brewery v. Asia Brewery, Inc.
Tunay na Pagkakaisa ng Manggagawa sa Asia Brewery v. Asia Brewery, Inc., G.R. No.
162025, Aug. 3, 2010
Doctrine: Although Article 245 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.
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. 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.
Confidential employees are defined as those who (1) assist or act in a confidential capacity, (2)
to persons who formulate, determine, and effectuate management policies in the field of labor
relations. The two (2) 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."
Action Sequence: Grievance Machinery (not settled) -> NCMB Voluntary Arbitrator (for BLMA)
-> CA (for ABI) -> SC (for BLMA)
Facts: Asia Brewery Inc. (ABI) entered into a CBA, effective from Aug. 1, 1997 to July 31, 2002,
with Bisig at Lakas ng mga Manggagawa sa Asia-Independent (BLMA-INDEPENDENT). On
Oct. 3, 2000, ABI and BLMA sighed a renegotiated CBA effective from August 1, 200 to July 31,
2003.
Section 2 of the CBA provides that the bargaining unit shall be comprised of all regular rank-
and-file daily-paid employees of ABI, but expressly excluded confidential Quality Control Staff,
among others, from the coverage of the bargaining unit.
Dispute arose when ABI’s management stopped deducting union dues from 81 employees,
particularly 18 QA Sampling Inspectors/Inspectresses and Machine Gauge Technician, 20
checkers at the Materials Department of the Administration Division, Full Goods Department of
the Brewery Division and Packaging Division, and secretaries/clerks under their division
managers.
BLMA brought the matter to the grievance machinery, claiming ABI’s actions restrained the
employees’ right to self-organization. The parties failed to amicably settle the controversy, and
BLMA lodged a complaint before the NCMB to resolve the issue.
The Voluntary Arbitrator sustained BLMA, finding that the employees were rank-and-file as their
functions were merely routinary and clerical, since the positions of the checkers and
secretaries / clerks were not managerial or supervisory based on their duties and
responsibilities, while the functions of the inspectors/inspectresses and technician did not
consider them as quality control staff who were excluded from the CBA.
The CA reversed the Voluntary Arbitrator, finding that they were excluded from the coverage of
the CBA.
Issue 1: Whether the employees were confidential employees who were properly excluded from
the coverage of the CBA
Ruling 1: NO.
Preliminary Discussion
Although Article 245 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. 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. 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.
In Philips Industrial Development, Inc. v. NLRC, this Court held that petitioner’s "division
secretaries, all Staff of General Management, Personnel and Industrial Relations Department,
Secretaries of Audit, EDP and Financial Systems" are confidential employees not included
within the rank-and-file bargaining unit.
In Pier 8 Arrastre & Stevedoring Services, Inc. v. Roldan-Confesor, we declared that legal
secretaries who are tasked with, among others, the typing of legal documents, memoranda and
correspondence, the keeping of records and files, the giving of and receiving notices, and such
other duties as required by the legal personnel of the corporation, fall under the category of
confidential employees and hence excluded from the bargaining unit composed of rank-and-file
employees.
Also considered having access to "vital labor information" are the executive secretaries of
the General Manager and the executive secretaries of the Quality Assurance Manager, Product
Development Manager, Finance Director, Management System Manager, Human Resources
Manager, Marketing Director, Engineering Manager, Materials Manager and Production
Manager.
Secretaries / Clerks
In the present case, the CBA expressly excluded "Confidential and Executive Secretaries"
from the rank-and-file bargaining unit, for which reason ABI seeks their disaffiliation from
petitioner. However, perusal of the job descriptions of these secretaries/clerks reveals
that their assigned duties and responsibilities involve routine activities of recording and
monitoring, and other paper works for their respective departments while secretarial
tasks such as receiving telephone calls and filing of office correspondence appear to
have been commonly imposed as additional duties.
There are several secretaries/clerks for each division, performing mostly routine and clerical
tasks, and ABI failed to indicate who among these numerous secretaries/clerks have access to
confidential data relating to management policies that could give rise to potential conflict of
interest with their Union membership. Thus, the rationale under our previous rulings for the
exclusion of executive secretaries or division secretaries would have little or no significance
considering the lack of or very limited access to confidential information of these
secretaries/clerks.
Sampling Inspectors/Inspectresses and Gauge Machine Technician
While the sampling inspectors/inspectresses and gauge machine technician are part of the
Quality Control Staff who, under the express terms of the CBA, fall under a distinct category,
they are not confidential employees. Their job descriptions show that they perform routine and
mechanical tasks preparatory to the delivery of the finished products. While it may be argued
that quality control extends to post-production phase – proper packaging of the finished
products -- no evidence was presented by the respondent to prove that these daily-paid
checkers actually form part of the company’s Quality Control Staff who as such "were exposed
to sensitive, vital and confidential information about [company’s] products" or "have knowledge
of mixtures of the products, their defects, and even their formulas" which are considered ‘trade
secrets’. Thus, they may not be considered as confidential employees under the category of
Quality Control Staff who were expressly excluded from the CBA of the rank-and-file bargaining
unit.
On Confidential Employees
Confidential employees are defined as those who (1) assist or act in a confidential capacity, (2)
to persons who formulate, determine, and effectuate management policies in the field of labor
relations. The two (2) 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."
There is no showing in this case that the secretaries/clerks and checkers assisted or acted in a
confidential capacity to managerial employees and obtained confidential information relating to
labor relations policies. And even assuming that they had exposure to internal business
operations of the company, respondent claimed, this is not per se ground for their exclusion in
the bargaining unit of the daily-paid rank-and-file employees. Not being confidential employees,
the secretaries/clerks and checkers are not disqualified from membership in the Union of
respondent’s rank-and-file employees
Issue 2: Whether ABI is guilty of Unfair Labor Practice
Ruling 2: NO.
Unfair labor practice refers to "acts that violate the workers’ right to organize." The prohibited
acts are related to the workers’ right to self-organization and to the observance of a CBA. For a
charge of unfair labor practice to prosper, it must be shown that ABI was motivated by ill will,
"bad faith, or fraud, or was oppressive to labor, or done in a manner contrary to morals, good
customs, or public policy, and, of course, that social humiliation, wounded feelings or grave
anxiety resulted from ABI’s act in discontinuing the union dues deduction from those employees
it believed were excluded by the CBA. Considering that the herein dispute arose from a simple
disagreement in the interpretation of the CBA provision on excluded employees from the
bargaining unit, respondent cannot be said to have committed unfair labor practice that
restrained its employees in the exercise of their right to self-organization, nor have thereby
demonstrated an anti-union stance.
Dispositive: Petition is granted. The checkers and secretaries/clerks of respondent company
are hereby declared rank-and-file employees who are eligible to join the Union of the rank-and-
file employees.
Ignacio
Topic: Effect of reversal on appeal of LA’s order of reinstatement
59. WENPHIL v. ABING
[G.R. No. 207983. April 7, 2014.]
 WENPHIL CORPORATION, petitioner, vs. ALMER R. ABING and
ANABELLE M. TUAZON, respondents.
Doctrine:

 The Court reaffirms the prevailing principle that even if the order of reinstatement of the
Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to
reinstate and pay the wages of the dismissed employee during the period of appeal until
reversal by the higher court.
o It settles the view that the Labor Arbiter's order of reinstatement is immediately
executory, and the employer has to either re-admit them to work under the same
terms and conditions prevailing prior to their dismissal, or to reinstate them in the
payroll, and that failing to exercise the options in the alternative, employer must
pay the employee's salaries.
 The period for computing the backwages due to the respondents during the period of
appeal should end on the date that a higher court reversed the labor arbitration ruling of
illegal dismissal. In this case, the higher court which first reversed the NLRC's ruling was
not the SC but rather the CA.
Action Sequence: LA ruled illegal dismissal> NLRC affirmed> CA annulled the decision > SC
affirmed with modification
Facts:

 This case stemmed from a complaint for illegal dismissal filed by the respondents
against Wenphil.
 On December 8, 2000, LA Bartolabac ruled that the respondents had been illegally
dismissed by Wenphil.
o According to the LA, the allegation of serious misconduct against the
respondents had no factual and legal basis.
o Hence, LA Bartolabac ordered Wenphil to immediately reinstate the respondents
as well as pay backwages. Wenphil appealed to the NLRC. In the meantime, the
respondents moved for the immediate execution of the LA’s decision.
 On October 29, 2001, Wenphil and the respondents entered into a compromise
agreement before LA Bartolabac.
o They agreed to the respondents’ payroll reinstatement while Wenphil’s appeal
with the NLRC was ongoing, as well as pay the accumulated salaries and credit
the respective salaries of the respondents to their ATM payroll accounts until
such time that the questioned decision of LA Bartolabac is either modified,
amended or reversed by the NLRC.
 The NLRC affirmed LA Bartolabac’s decision with modifications.
o Instead of ordering the respondents’ reinstatement, the NLRC directed Wenphil
to pay the respondents their respective separation pay. Wenphil filed an MR, but
this was denied.
 Wenphil appealed CA via a petition for certiorari. The CA reversed the NLRC’s finding
that the respondents had been illegally dismissed. According to the CA, there was
enough evidence to show that the respondents had been guilty of serious misconduct;
thus, their dismissal was for a valid cause. The respondents' MR was denied.
  On appeal to the SC via Rule 45, the SC denied the respondents petition and affirmed
the CA’s decision. The respondents did not file any motion for reconsideration to
question the SC’s decision; thus, the decision became final and executory.
 Sometime after the SC’s decision became final and executory, the respondents filed with
LA Bartolabac a motion for computation and issuance of writ of execution.
o The respondents asserted in this motion that although the CA’s ruling on the
absence of illegal dismissal (as affirmed by the SC) was adverse to them, under
the law and settled jurisprudence, they were still entitled to backwages from the
time of their dismissal until the NLRC’s decision finding them to be illegally
dismissed was reversed with finality.
 The LA Bartolabac granted the respondents’ motion (the computed period was
from February 15, 2002 to November 8, 2002). [Since the NLRC’s decision finding
the respondents illegally dismissed became final and executory on February 28,
2002]
 Both parties appealed to the NLRC to question LA Bartolabac’s order.
 Wenphil argued that the respondents were no longer entitled to payment of backwages
in view of the compromise agreement they executed.
o According to Wenphil, the compromise agreement provided that Wenphil’s
obligation to pay the respondents’ backwages should cease as soon as LA
Bartolabac’s decision was "modified, amended or reversed" by the NLRC.
o Since the NLRC modified the LA’s ruling by ordering the payment of separation
pay in lieu of reinstatement, then the respondents, under the terms of the
compromise agreement, were entitled to backwages only up to the finality of the
NLRC decision.
 On the other hand, the respondents questioned in their appeal the determined period for
the computation of their backwages; they posited that the period for payment should
end, not on November 8, 2002, but on February 14, 2007, since the SC’s decision which
upheld the CA’s ruling became final and executory on February 15, 2007. The NLRC
denied such appeals.
 The CA reversed the NLRC rulings and prescribed a different computation period. In
arriving at this conclusion, the CA cited the case of Pfizer v. Velasco where this Court
ruled that even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it
is obligatory on the part of the employer to reinstate and pay the dismissed employee’s
wages during the period of appeal until reversal by the higher court. The CA construed
this "higher court" to be the CA, not the SC. The CA reasoned out that it was a "higher
court" than the NLRC when it reversed the NLRC’s rulings; thus, the period for
computation should end when it promulgated its decision reversing that of the NLRC,
and not on the date when the SC affirmed its decision.
First Issue: Whether or not the respondents are entitled to the payment of backwages despite
the modification by the NLRC of the LA’s decision in accordance with the compromise
agreement between the parties?
Ruling: YES.

 Under the Labor Code, the decision of the Labor Arbiter reinstating a dismissed or
separated employee, insofar as the reinstatement aspect is concerned, shall
immediately be executory, even pending appeal. The employee shall either be admitted
 back to work under the same terms and conditions prevailing prior to his dismissal or
separation, or at the option of the employer, merely reinstated in the payroll.
 Since the decision is immediately executory, it is the duty of the employer to comply with
the order of reinstatement, which can be done either actually or through payroll
reinstatement. As provided under Article 223 of the Labor Code, this immediately
executory nature of an order of reinstatement is not affected by the existence of an
ongoing appeal. The employer has the duty to reinstate the employee in the interim
period until a reversal is decreed by a higher court or tribunal.
o In the case of payroll reinstatement, even if the employer's appeal turns the tide I
its favor, the reinstated employee has no duty to return or reimburse the salary
he received during the period that the lower court or tribunal's governing decision
was for the employee's illegal dismissal. Otherwise, the situation would run
counter to the immediately executory nature of an order of reinstatement.
 On October 29, 2001, while Wenphil's appeal with the NLRC was pending, it entered
into a compromise agreement with the respondents. In this agreement, Wenphil
committed to reinstate the respondents in its payroll. However, the commitment came
with a condition: Wenphil stipulated that its obligation to pay the wages due to the
respondents would cease if the decision of the LA would be "modified, amended or
reversed" by the NLRC.
 Thus, when the NLRC rendered its decision on the appeal affirming the LA's finding that
the respondents were illegally dismissed,but modifying the award of reinstatement to
payment of separation pay, Wenphil stopped paying the respondents' wages.
 It is important to emphasize that reinstatement and backwages are two separate reliefs
available to an illegally dismissed employee. The normal consequences of a finding that
an employee has been illegally dismissed are:
1. first, that the employee becomes entitled to reinstatement to his former position
without loss of seniority rights; and
2. second, the payment of backwages covers the period running from his illegal
dismissal up to his actual reinstatement. These two reliefs are not inconsistent
with one another and the labor arbiter can award both simultaneously.
 Moreover, the relief of separation pay may be granted in lieu of reinstatement but it
cannot be a substitute for the payment of backwages.
 In instances where reinstatement is no longer feasible because of strained relations
between the employee and the employer, separation pay should be granted. In effect, an
illegally dismissed employee should be entitled to either reinstatement – if viable, or
separation pay if reinstatement is no longer be viable, plus backwages in either instance.
Second Issue: Whether or not the CA erred in computing the award of backwages?
Ruling: NO.

 The CA, in setting aside the NLRC's rulings, relied on the case of Pfizer v. Velasco
where we ruled that the backwages of the dismissed employee should be granted during
the period of appeal until reversal by a higher court. Since the first CA decision which
found that the respondents had not been illegally dismissed was promulgated on August
27, 2003, then the reversal by the higher court was effectively made on August 27, 2003.
 The CA is correct. The period for computing the backwages due to the respondents
during the period of appeal should end on the date that a higher court reversed the labor
 arbitration ruling of illegal dismissal. In this case, the higher court which first reversed the
NLRC's ruling was not the SC but rather the CA. In this light, the CA was correct when it
found that that the period of computation should end on August 27, 2003. The date when
the SC's decision became final and executory need not matter as the rule in Roquero,
Garcia and Pfizer merely referred to the date of reversal, not the date of the ultimate
finality of such reversal.
Dispositive:
WHEREFORE, in light of these considerations, we hereby DENY the petition. The Court
of Appeals' decision dated August 31, 2012 and resolution dated June 20, 2013, which annulled
and set aside the March 26, 2010 decision and September 15, 2010 resolution of the NLRC, are
hereby AFFIRMED with MODIFICATION. The period for the computation of backwages of
respondents Almer R. Abing and Anabelle M. Tuazon should be from February 16, 2002 until
August 27, 2003, when the Court of Appeals promulgated its decision reversing the NLRC's
finding of illegal dismissal. No costs.
Side Note:
Manotok
Topic: When reinstatement order may be appealed/modified
60. Abalos v. Philex Mining Corporation
JANE C. ABALOS, BERNARDO A. BAMBICO, MANUEL G. MALAG, WILFREDO R.
SOTELO, PERCIVAL B. AGRITO, RICHARD M. BALAN-EG, and EDGARDO S. NILLO
petitioners, vs. PHILEX MINING CORPORATION, respondent.
Doctrine: Both the voluntary arbitrator and the Court of Appeals found that reinstatement is no
longer possible due to the fact that respondent has been continuously suffering business losses
and reducing the number of its employees pending litigation, and so the positions held by
petitioners were abolished as a cost-cutting measure. Despite our sympathy for the workers’
plight, however, we find no legal support for their opposition to the conclusion and findings of
the voluntary arbitrator and the Court of Appeals. On record, there is no showing that the
abolition of the petitioners’ positions was capricious or whimsical.
Action Sequence: Illegal dismissal case filed by petitioners > VA ordered reinstatement > Entry
of judgment made > Philex filed a motion to offer separation pay instead of reinstatement > VA
granted the motion > CA affirmed > SC affirmed
Facts:
● A manpower audit conducted by Philex Mining revealed that 241 of its employees were
redundant.
● Philex undertook a retrenchment program that resulted in the termination of petitioners’
employment.
● Petitioners filed a case for illegal dismissal against Philex.
● It was submitted for arbitration through a submission agreement through the NCMB.
● VA: ordered Philex to reinstate petitioners.
● Philex appealed to SC but was remanded to CA.
● CA: dismissed for lack of merit
 o we rule that, while there was indeed a valid reason for retrenchment, the means
employed were disadvantageous, thus inequitable, to the affected workers. The
fact that these workers signed quitclaims and received their separation pay would
not estop them from seeking reinstatement.
● Philex filed a petition for review on certiorari to SC but was denied.
● Entry of judgment was made on April 27, 1998.
● Philex filed a manifestation and motion for leave to offer separation pay to petitioners,
in lieu of reinstatement before the VA.
o Philex has been continuously suffering business losses and so the
positions held by petitioners were abolished as cost-cutting measure.
o Philex alleged that petitioners’ positions no longer existed and that there arose
strained relations between the parties that effectively barred reinstatement.
● VA: granted the motion.
● CA: affirmed the decision of the VA granting the motion for leave to offer separation pay
instead of reinstatement.
Issue: Whether the supervening events are grave enough to warrant a modification in the
execution of the judgment.
Ruling: YES
Petitioners aver that when the March 5, 1994 order directing their reinstatement became final
and executory, Arbitrator Valdez no longer had jurisdiction to modify the same. According to
them, an order that has become final and executory can no longer be modified or altered.
The general rule is that an award that is final and executory cannot be amended or
modified anymore. Nothing is more settled in law than that once a judgment attains
finality it thereby becomes immutable and unalterable. However, this rule is subject to
exceptions. One exception is that where facts and/or events transpire after a decision
has become executory, which facts and/or events present a supervening cause or reason
which renders the final and executory decision no longer enforceable.
Both the voluntary arbitrator and the Court of Appeals found that reinstatement is no longer
possible due to the fact that respondent has been continuously suffering business losses
and reducing the number of its employees pending litigation, and so the positions held
by petitioners were abolished as a cost-cutting measure. Petitioners argue, however, that
"to excuse the respondent from reinstating the petitioners would be to allow it to do indirectly
what it was not allowed to do directly – the retrenchment of the petitioners." They add that what
is so scheming about this ploy is that respondent now tries to justify its refusal to reinstate the
petitioners "by its very own act of abolishing their positions.”
Despite our sympathy for the workers’ plight, however, we find no legal support for their
opposition to the conclusion and findings of the voluntary arbitrator and the Court of Appeals.
On record, there is no showing that the abolition of the petitioners’ positions was capricious or
whimsical. The appellate court, as well as the voluntary arbitrator, based their decisions on
applicable law and the evidence. As confirmed by the appellate court, the voluntary arbitrator
also found that petitioners’ reinstatement had become not only inappropriate but also
impossible.
Thus, in this case, absent a showing of an error of law committed by the court below, or of
whimsical or capricious exercise of its judgment, or a demonstrable lack of basis for its
conclusions, we may not disturb its factual findings, much less reverse its judgment outright.
Dispositive: WHEREFORE, the instant petition is DENIED. The decision dated July 30, 1999 of
the Court of Appeals in CA-G.R. SP No. 50167, sustaining the order dated December 11, 1998
of the Arbitrator of the National Conciliation and Mediation Board, Cordillera Administrative
Region, Baguio City, is AFFIRMED. No pronouncement as to costs.
Sira
Topic: Essence of unfair labor practice
61. Baptista, et al v. Villanueva, et al
G.R. No. 194709, July 31, 2013

Doctrine: In essence, ULP relates to the commission of acts that transgress the workers’ right
to organize.
Action Sequence: Labor Arbiter (respondents guilty of ULP) -> NLRC (reversed LA) -> CA
(affirmed NLRC)-> SC (sustained CA, not guilty of ULP)
FACTS:
1. Petitioners were former union members of Radio Philippines Network Employees Union
(RPNEU), a legitimate labor organization and the sole & exclusive bargaining agent of
the rank-and-file employees of Radio Philippines Network (RPN).
2. Respondents were the union’s elected officers and members.
3. On April 26, 2005, on suspicion of union mismanagement, petitioners filed a complaint
for impeachment with their union president (Siozon), before the executive board of
RPN. The complaint was eventually abandoned. The same was later re-lodged but this
time against all the union officers and members of RPNE before the DOLE. They also
filed various petitions for audit covering the period 2000 to 2004.
4. Thereafter, 2 complaints dated May 26, 2005 and May 27, 2005 were filed against
petitioners and several others for alleged violation of the union’s Constitution and
By-Laws. Months after, a different group of union members filed a 3 rd complaint against
petitioners and 12 others before the Chairman of RPNEU’s Committee on Grievance
and Investigation (the Committee) citing as grounds the commission of an act which
violates RPNEU Constitution and By-Laws, specifically Art. IX, Section 2.2 for joining or
forming a union outside the 60 days period and Art. 9, Section 2.5 for urging or
advocating that a member start an action in any court of justice or external investigative
body against the Union or its officer w/o 1st exhausting all internal remedies upon to him
or available in accordance with the CBL.
5. Petitioners then received a memorandum notice from Chairman Salinas requesting them
to answer the complaint and attend a scheduled hearing.
6. Petitioners, through an exchange of communications, denied the charges imputed
against them and contested the procedure adopted by the Committee in its investigation.
7. On November 9, 2005, the Committee submitted their recommendation of expulsion
from the union to RPNEU’s BoD. On December 21, the recommendation was affirmed
and petitioners as well as 12 others were expelled from union membership through a
Board Resolution.
 8. On December 27, petitioners were served an expulsion notice from the union which was
to take effect on December 29.
9. On January 2, petitioners and 12 others wrote to RPNEU’s President and BoD that their
expulsion was an ultra vires act because due process was violated since they were not
able to physically confront their complainants.
10. On January 24, RPNEU’s officers informed their company of the expulsion of petitioners
and 122 others and requested the management to serve them notices of termination
from employment in compliance with their CBA’s union security clause. On Feb 17,
petitioners were informed of their termination from employment effective March 20.
11. Aggrieved, petitioners filed 3 separate complaints for ULP against respondents which
were later consolidated, questioning the legality of their expulsion from the union and
their subsequent termination from employment.
RULING OF THE LOWER COURTS:
1. The LA ruled in favor of petitioners and found respondents guilty of ULP pursuant to
Article 249(a) and (b) of the LC. The LA clarified that only the union officers of RPNEU
could be held responsible for ULP, so they exonerated six of the original defendants who
were mere union members. The LA also ordered the reinstatement of petitioners.
2. Respondents appealed to the NLRC.
3. The NLRC set aside the LA decision and dismissed the complaint for ULP for lack
of merit. The NLRC found that petitioners filed a suit calling for the impeachment of the
officers and members of the EB w/o 1st resorting to internal remedies available under its
own Consti and Bylaws. The NLRC also found reinstatement improper because the
legality of the membership expulsion was not raised in the proceedings and hence,
beyond LA jurisdiction.
4. The MR filed by petitioners was denied.
5. The CA sustained the NLRC decision. It stated that the termination of employment by
virtue of a union security clause was recognized in PH jurisdiction. MR denied.
6. Thus, the present appeal.
ISSUES:
1. Whether or not the respondents are guilty of ULP
2. Whether or not petitioners were denied due process
RULING:
1. No, respondents are not guilty of ULP. Article 247 of the LC provides that: Concept of
unfair labor practice and procedure for prosecution thereof.––Unfair labor practices
violate the constitutional right of workers and employees to self-organization, are inimical
to the legitimate interests of both labor and management, including their right to bargain
collectively and otherwise deal with each other in an atmosphere of freedom and mutual
respect, disrupt industrial peace and hinder the promotion of healthy and stable labor-
management relations. In essence, ULP relates to the commission of acts that
transgress the workers’ right to organize. In the present case, petitioners claimed
that respondents committed ULP by violating paragraphs (a) and (b) of Article 249 of the
LC, to wit:
(a) To restrain or coerce employees in the exercise of their rights to self-
organization. However, a labor organization shall have the right to prescribe its
own rules with respect to the acquisition or retention of membership:
 (b) To cause or attempt to cause an employer to discriminate against an
employee, including discrimination against an employee with respect to whom
membership in such organization has been denied or to terminate an employee
on any ground other than the usual terms and conditions under which
membership or continuation of membership is made available to other members;

For a charge of ULP against a labor organization to prosper, the onus probandi rests
upon the party alleging it to prove or substantiate such claims by the requisite
quantum of evidence. In labor cases, as in other administrative proceedings,
substantial evidence or such relevant evidence as a reasonable mind might
accept as sufficient to support a conclusion is required. Moreover, it is indubitable
that all the prohibited acts constituting unfair labor practice should materially relate to the
workers' right to self-organization.

Unfortunately, petitioners failed to discharge the burden required to prove the charge of
ULP against the respondents. Aside from their self-serving allegations, petitioners were
not able to establish how they were restrained or coerced by their union in a way that
curtailed their right to self-organization. The records likewise failed to sufficiently show
that the respondents unduly persuaded management into discriminating against
petitioners. other than to bring to its attention their expulsion from the union, which in
turn, resulted in the implementation of their CBA' s union security clause. As earlier
stated, petitioners had the burden of adducing substantial evidence to support its
allegations of ULP, which burden they failed to discharge. In fact, both the NLRC and the
CA found that petitioners were unable to prove their charge of ULP against the
respondents.

2. No, petitioners were not denied due process. Petitioners argue that the procedure
that should have been followed by the respondents in resolving the charges against
them was Article 17, Sec. 2, Settlement of Internal Disputes which requires members to
put their grievance in writing to be submitted to their union president, who shall strive to
have the parties settle their differences amicable. They maintained that any form of
grievance would be referred only to the committee upon failure of the parties to settle
amicably. However, the charges against petitioners were not mere internal squabbles
but violations which demand proper investigation because if proven, would constitute
grounds for their expulsion from the Union. Thus, it should be Article X, Section 1 which
should apply:

SECTION 1. Charge against any member or officer of the Union shall be

submitted to the Board of Directors (BOD) in writing, which shall refer the same,
if necessary, to the committee on Grievance and Investigation. The Committee
shall hear any charge and subsequently, forward its finding and recommendation
to the BOD. The BOD has the power to approve or nullify the recommendation of
the Committee on Grievance and Investigation based on the merit of the appeal.

Further, any procedural flaw in the proceedings was deemed cured when petitioners
were given the opportunity to be heard. Due process, as a constitutional precept, is
satisfied when a person was notified of the charge against him and was given the
opportunity to explain or defend himself. In admin proceedings, the filing of charges and
giving reasonable opportunity for the person so charged to answer the accusations
 against him constitute the minimum requirements of due process. The essence of due
process is simply to be heard or as applied in admin proceedings, an opportunity to
explain one’s side or an opportunity to seek a reconsideration of the action or ruling
complained of.

Likewise, mere absence of a one-on-one confrontation between petitions and their

complainants does not automatically affect the validity of the proceedings before the
Committee.

Lastly, workers and employers’ organizations shall have the right to draw up their
constitutions and rules. In this case, RPNEU’s Constitution expressly mandates that
before a party is allowed to seek intervention of the court, it is a pre-condition that he
should have availed of all the internal remedies w/in the organization. In this, petitioners
violated the same when they filed petitions for impeachment against their union officers
and for audit before the DOLE w/o exhausting all internal remedies. Thus, they were
expelled from the union.

DISPOSITIVE PORTION: WHEREFORE, the petition is DENIED. The March 9, 2010 Decision
and the December 1, 2010 Resolution of the Court of Appeals in CA-G.R. SP No. 105027 are
AFFIRMED

62. T & H SHOPFITTERS CORPORATION/GIN QUEEN CORPORATION vs.

T & H SHOPFITTERS CORPORATION/GIN QUEEN WORKERS UNION
G.R. No. 191714 | February 26, 2014
Ponente: J. Mendoza
Topic: Test of Interference and Coercion

DOCTRINE:
The test of whether an employer has interfered with and coerced employees in the exercise of
their right to self-organization, that is, whether the employer has engaged in conduct which, it
may reasonably be said, tends to interfere with the free exercise of employees’ rights; and that it
is not necessary that there be direct evidence that any employee was in fact intimidated or
coerced by statements of threats of the employer if there is a reasonable inference that anti-
union conduct of the employer does have an adverse effect on self-organization and collective
bargaining.

ACTION SEQUENCE: LA (dismissed) → NLRC (reversed LA) → CA (affirmed the NLRC)

FACTS:
● 2004 -- T&H Shopfitters Corporation/ Gin Queen Corporation workers Union (THS-GQ
Union) and 22 other respondents all of whom are officers and/or members of THS-GQ
union, filed their Complaint for ULP by way of union busting, and Illegal Lockout, with
moral and exemplary damages and attorney’s fees, against T&H Shopfitters Corporation
(T&H Shopfitters) and Gin Queen Corporation (Gin Queen) (petitioners) before the LA.
Respondent union treated T&H Shopfitters and Gin Queen as a single entity and their
sole employer.
● BACKSTORY:
● To improve working conditions, respondents and other employees of petitioners held
their first formal meeting in Nov 2003 to discuss the formation of a union.
● The next day, 17 employees were barred from entering petitioners’ factory premises
located in Zambales and ordered to transfer to T&H Shopfitters’ warehouse at Subic Bay
Freeport Zone (SBFZ) purportedly because of its expansion. Later, the 17 employees
were repeatedly ordered to go on forced leave due to the unavailability of work.
● The DOLE issued a certificate of registration in favor of THS-GQ Union.
● Respondents contended that the affected employees were not given regular work
assignments, while subcontractors were continuously hired to perform their functions.
● Respondents sought the assistance of the NCMB.
o Petitioners agreed to give priority to regular employees in the distribution of work
assignments. However, respondents argue that petitioners never complied with
its commitment but instead hired contractual workers.
● Union filed a petition for certification election. An order was issued to hold the
certification election in both T&H Shopfitters and Gin Queen, which was scheduled.
● Meanwhile, through a memorandum, petitioner Ben Huang (Huang), Director for Gin
Queen, informed its employees of the expiration of the lease contract between Gin
Queen and its lessor in Castillejos, Zambales and announced the relocation of its office
and workers to Cabangan, Zambales. Some of the respondents, who visited the site
in Cabangan, discovered that it was a "talahiban" or grassland. Later, the said
union officers and members were made to work as grass cutters in Cabangan,
under the supervision of a certain Barangay Captain Greg Pangan.
● The employees assigned in Cabangan did not report for work. The THS-GQ Union
president was made to explain why he should not be terminated for insubordination. The
other employees who likewise failed to report in Cabangan were suspended.
● Petitioners sponsored a field trip to Iba, Zambales, for its employees. The officers and
members of the THS-GQ Union were purportedly excluded from the field trip. On the
evening of the field trip, a certain Angel Madriaga, a sales officer of petitioners,
campaigned against the union in the forthcoming certification election.
● The following day, the employees were escorted from the field trip to the polling center in
Zambales to cast their votes (including those located in the SBFZ plant). Due to the
heavy pressure exerted by petitioners, the votes for "no union" prevailed.
● The THS-GQ Union filed its protest with respect to the certification election
proceedings.
o Respondents averred that the following week after the certification elections were
held, petitioners retrenched THG-GQ Union officers and members assigned at
the Zambales plant. Respondents claimed that the work weeks of those
employees in the SBFZ plant were drastically reduced to only 3 days in a month.
● Gin Queen claimed that it is a corporation separate and distinct from T&H Shopfitters,
stressed that respondents were all employees. Gin Queen claimed that due to the
decrease in orders from its customers, they had to resort to cost cutting measures to
avoid anticipated financial losses. It assigned work on a rotational basis. The employees,
 who opposed its economic measures, were merely motivated by spite in filing the
complaint for ULP against it.
● Gin Queen explained that its transfer from Castillejos, Zambales to Cabangan,
Zambales was a result of the expiration of its lease agreement with its lessor. Since the
Cabangan site was bare and still required construction, Gin Queen offered work, to
employees who opted to stay, on rotation as well.

LABOR ARBITER
● Dismissed respondents’ complaint and all their money claims for lack of merit.
Complainants failed to show that the rotation of work for them is considered an unfair
labor practice and considered a ‘Lockout’.
NLRC
● Reversed the LA decision and ruled in favor of respondents. Petitioners committed ULP
acts consisting in interfering with the exercise of the employees’ right to self-organization
(specifically, sponsoring a field trip on the day preceding the certification election,
warning the employees of dire consequences should the union prevail, and escorting
them to the polling center) and discriminating in regard to conditions of employment in
order to discourage union membership (assigning union officers and active union
members as grass cutters on rotation basis).

COURT OF APPEALS
● Affirmed the NLRC decision.

ISSUE: W/N petitioner Gin Queen Corp is liable to respondents for ULP. YES

HELD:
● YES. Petitioners are being accused of violations of paragraphs (a), (c), and (e) of Article
257 (formerly Article 248) of the LC: (a) To interfere with, restrain or coerce employees
in the exercise of their right to self-organization; (c) To contract out services or functions
being performed by union members when such will interfere with, restrain, or coerce
employees in the exercise of their right to self-organization; (e) To discriminate in regard
to wages, hours of work, and other terms and conditions of employment in order to
encourage or discourage membership in any labor organization.
● The concept of ULP is embodied in Article 256 provides: Unfair labor practices
violate the constitutional right of workers and employees to self-organization, are inimical
to the legitimate interests of both labor and management, including their right to bargain
collectively and otherwise deal with each other in an atmosphere of freedom and mutual
respect, disrupt industrial peace and hinder the promotion of healthy and stable labor-
management relations
o ULP relates to the commission of acts that transgress the workers’ right to
organize. As specified in Article 257and Article 258 of the Labor Code, the
prohibited acts must necessarily relate to the workers' right to self-organization
● Insular Life Assurance Co., Ltd. Employees Association NATU v. Insular Life
Assurance Co. Ltd.,-- The test of whether an employer has interfered with and coerced
 employees in the exercise of their right to self-organization, that is, whether the employer
has engaged in conduct which, it may reasonably be said, tends to interfere with the free
exercise of employees’ rights; and that it is not necessary that there be direct evidence
that any employee was in fact intimidated or coerced by statements of threats of the
employer if there is a reasonable inference that anti-union conduct of the employer does
have an adverse effect on self-organization and collective bargaining.
● The questioned acts of petitioners that constitute interference:
1. sponsoring a field trip to Zambales for its employees, to the exclusion of
union members, before the scheduled certification election;
2. the active campaign by the sales officer of petitioners against the union
prevailing as a bargaining agent during the field trip;
3. escorting its employees after the field trip to the polling center;
4. the continuous hiring of subcontractors performing respondents’ functions;
5. Assigning union members to the Cabangan site to work as grass cutters;
and
6. the enforcement of work on a rotational basis for union members.
● Taken together, the various acts of petitioners support the conclusion that such
were all orchestrated to restrict respondents’ free exercise of their right to self-
organization.
● Petitioners’ undisputed actions prior and immediately before the scheduled certification
election, while seemingly innocuous, unduly meddled in the affairs of its employees in
selecting their exclusive bargaining representative.
● In Holy Child Catholic School v. Hon. Patricia Sto. Tomas -- A certification election
was the sole concern of the workers, save when the employer itself had to file the
petition, but even after such filing, its role in the certification process ceased and became
merely a bystander.
● Petitioners had no business persuading and/or assisting its employees in their legally
protected independent process of selecting their exclusive bargaining representative.
The fact and peculiar timing of the field trip sponsored by petitioners for its employees
not affiliated with THS-GQ Union, although a positive enticement, was undoubtedly
extraneous influence designed to impede respondents in their quest to be certified. This
cannot be countenanced.
● Not content with achieving a "no union" vote in the certification election, petitioners
launched a vindictive campaign against union members by assigning work on a
rotational basis while subcontractors performed the latter’s functions regularly. Worse,
some of the respondents were made to work as grass cutters in an effort to dissuade
them from further collective action.
● Petitioners' bare denial of some of the complained acts and unacceptable explanations,
cannot prevail over respondents' detailed narration of the events that transpired. In
Labor cases, the quantum of proof necessary is substantial evidence, or that amount of
relevant evidence as a reasonable mind might accept as adequate to support a
conclusion.
Tirol
Topic: Espionage or Surveillance
63. The Insular Life Assurance Co., Ltd., Employees Association-NATU v. The Insular Life
Assurance Co., Ltd.
THE INSULAR LIFE ASSURANCE CO., LTD., EMPLOYEES ASSOCIATION-NATU, FGU
INSURANCE GROUP WORKERS and EMPLOYEES ASSOCIATION-NATU, and INSULAR
 LIFE BUILDING EMPLOYEES ASSOCIATION-NATU v. THE INSULAR LIFE ASSURANCE
CO., LTD., FGU INSURANCE GROUP, JOSE M. OLBES and COURT OF INDUSTRIAL
RELATIONS
Doctrine: It has been held in a great number of decisions at espionage by an employer of union
activities, or surveillance thereof, are such instances of interference, restraint or coercion of
employees in connection with their right to organize, form and join unions as to constitute unfair
labor practice.
Action Sequence: CIR (ULP) → Complained dismissed → MR denied →
Facts: The (1) Insular Life Assurance Co., Ltd., Employees Association-NATU, (2) FGU
Insurance Group Workers & Employees Association-NATU, and (3) Insular Life Building
Employees Association-NATU (the Unions), while still members of the Federation of Free
Workers (FFW), entered into separate CBAs with the Insular Life Assurance Co., Ltd. and the
FGU Insurance Group (the Companies).
The Unions jointly submitted proposals to the Companies for a modified renewal of their
respective collective bargaining contracts which were then due to expire in 15 days (on
September 30, 1957). The parties mutually agreed and to make whatever benefits could be
agreed upon retroactively effective October 1, 1957.
Negotiations were conducted on the Union's proposals but there was a deadlock on the issue of
union shop. The Unions thus filed a notice of strike for "deadlock on collective bargaining."
Several conciliation conferences were held under the auspices of the Department of Labor
wherein the conciliators urged the Companies to make reply to the Unions' proposals.
However, the Companies did not make any counter-proposals but, instead, insisted that the
Unions first drop their demand for union security, promising money benefits if this was done.
Hence, petitioner Insular Life Building Employees Association-NATU dropped this particular
demand. Respondent Insular Life Assurance Co. still refused to make any counter-proposals.
The Companies likewise asked the 2 other unions to drop their union security demand,
otherwise the Companies "would no longer consider themselves bound by the commitment to
make money benefits retroactive to October 1, 1957." The remaining two petitioner unions
likewise dropped their demand for union shop.
The parties negotiated on the labor demands but with no satisfactory result due to a stalemate
on the matter of salary increases. Forthwith the Unions voted to declare a strike in protest
against what they considered the Companies' ULPs.
The Unions went on strike and picketed the offices of the Insular Life Building at Plaza Moraga.
The Companies through their acting manager and president, the respondent Jose M. Olbes,
sent to each of the strikers a letter to urge them to desist from joining the strike and return to
work. The Unions, however, continued on strike, with the exception of a few unionists who were
convinced to desist by the aforesaid letter.
From the date the strike was called until it was called off, some management men tried to break
thru the Unions' picket lines. Representatives of the Companies, tried to penetrate the picket
lines in front of the Insular Life Building. However, a fight ensued because of this.
The Companies then filed criminal charges against the strikers with the City Fiscal's Office of
Manila. During the pendency of the said cases in the fiscal's office, the Companies likewise filed
a petition for injunction with damages with the CFI-Manila which granted such petition. On the
same date, the Companies sent individually to the strikers a letter stating that they cannot hold
the strikers' positions for long and that they will continue to operate with or without them. They
gave an ultimatum to return to work until June 2, 1958.
All of the more than 120 criminal charges filed against the members of the Unions, except 3,
were dismissed by the fiscal's office and by the courts. These 3 cases involved "slight physical
injuries" against one striker and "light coercion" against two others. At any rate, because of the
issuance of the writ of preliminary injunction and the ultimatum of the Companies, the striking
employees decided to call off their strike and to report back to work.
However, before readmitting the strikers, the Companies required them not only to secure
clearances from the City Fiscal's Office of Manila but also to be screened by a management
committee. The screening committee initially rejected 83 strikers with pending criminal charges.
However, all non-strikers with pending criminal charges which arose from the breakthrough
incident were readmitted immediately by the Companies without being required to secure
clearances from the fiscal's office.
Subsequently, when practically all the strikers had secured clearances from the fiscal's office,
the Companies readmitted only some but refused readmission to 34 officials and members of
the Unions who were most active in the strike, on the ground that they committed "acts inimical
to the interest of the respondents," without however stating the specific acts allegedly
committed.
The CIR prosecutor filed a complaint for ULP against the Companies under Republic Act 875.
The complaint specifically charged the Companies with (1) interfering with the members of the
Unions in the exercise of their right to concerted action, by sending out individual letters to them
urging them to abandon their strike and return to work, with a promise of benefits; and (2)
discriminating against the members of the Unions as regards readmission to work after the
strike on the basis of their union membership and degree of participation in the strike.
The CIR dismissed the Unions' complaint for lack of merit. MR by the Unions was denied.
Hence, this petition for review.
Issue: Whether the Companies committed unjustifiable interference in the union activities,
tantamount to ULP.
Ruling: YES.
On Espionage (Main Topic)
The lower Court justified the constructive dismissal of Florencio Ibarra allegedly because he
committed acts inimical to the interest of the respondents when, as president of the FGU
Workers and Employees Association-NATU, he advised the strikers that they could use force
and violence to have a successful picket and that picketing was precisely intended to prevent
the non-strikers and company clients and customers from entering the Companies' buildings.
Even if this were true, the record discloses that the picket line had been generally peaceful.
Besides, the only evidence presented by the Companies regarding Ibarra's participation in the
strike was the testimony of one Rodolfo Encarnacion, a former member of the board of directors
of the petitioner FGU Insurance Group Workers and Employees Union-NATU, who became a
"turncoat" and who likewise testified as to the union activities. For under the circumstances,
there is good ground to believe that Encarnacion was made to spy on the actvities of the union
members. This act of the respondents is considered unjustifiable interference in the union
activities of the petitioners and is unfair labor practice.
It has been held in a great number of decisions at espionage by an employer of union activities,
or surveillance thereof, are such instances of interference, restraint or coercion of employees in
connection with their right to organize, form and join unions as to constitute unfair labor practice.
Nothing is more calculated to interfere with, restrain and coerce employees in the exercise of
their right to self-organization than such activity even where no discharges result. The
information obtained by means of espionage is in valuable to the employer and can be used in a
variety of cases to break a union." The unfair labor practice is committed whether the espionage
is carried on by a professional labor spy or detective, by officials or supervisory employees of
the employer, or by fellow employees acting at the request or direction of the employer, or an
ex-employee.
Strike Breaking – Offered reinstatement and attempted to bribe strikers with comfortable cots,
free coffee, etc, OT Pay and arrangements for their families so that they would abandon their
strike and return to work
Acts Violative of Right to Org – offer of xmas bonus to loyal employees shortly after the union
requested to bargain, promise of benefits if strikers abandon their strikes.
Test of interference – whether the employer has engaged in conduct which may reasonably be
said to tend to interfere with the free exercise of the employees’ right. Direct evid not necessary,
but a reasonable inference that the anti-union conduct has an adverse effect on self org and
collective bargaining
Test of whether an employer has interfered with and coerced employees in the exercise of their
right to self–organization, that is, whether the employer has engaged in conduct which, it may
reasonably be said, tends to interfere with the free exercise of employees’ rights; and that it is
not necessary that there be direct evidence that any employee was in fact intimidated or
coerced by statements of threats of the employer if there is a reasonable inference that anti–
union conduct of the employer does have an adverse effect on self–organization and collective
bargaining.
On Interference (in general) – totality of conduct
The respondents contend that the sending of the letters constituted a legitimate exercise of their
freedom of speech. The SC did not agree. The said letters were directed to the striking
employees individually — by registered special delivery mail at that — without being coursed
through the Unions which were representing the employees in the collective bargaining.
It is an unfair labor practice for an employer operating under a collective bargaining agreement
to negotiate or to attempt to negotiate with his employees individually in connection with
changes in the agreement. And the basis of the prohibition regarding individual bargaining with
the strikers is that although the union is on strike, the employer is still under obligation to
bargain with the union as the employees' bargaining representative.
When the respondents offered reinstatement and attempted to "bribe" the strikers with
"comfortable cots," "free coffee and occasional movies," "overtime" pay for "work performed in
excess of eight hours," and "arrangements" for their families, so they would abandon the strike
and return to work, they were guilty of strike-breaking and/or union-busting and, consequently,
of unfair labor practice. It is equivalent to an attempt to break a strike for an employer to offer
reinstatement to striking employees individually, when they are represented by a union, since
the employees thus offered reinstatement are unable to determine what the consequences of
returning to work would be.
Dispositive: Petition GRANTED.

Albino
Topic: Interference by way of Discriminatory Dismissal
64. SMC v. NLRC, LA, Ilaw at Buklod ng Manggagawa
Doctrine: ULP were committed in the form of discriminatory dismissal where only unionists
were permanently dismissed. Discrimination of employees based on union membership is an
act which amounts to interference in the employee’s exercise of their right of self-organization.
Action Sequence: ID & ULP case against SMC > SMC filed a motion to dismiss > LA denied
the motion > NLRC affirmed the denial > SC
Facts:

 Private respondents are employees of SMC and are bona fide officers and members of
Ilaw at Buklod ng Manggagawa.
 Private respondets were served a Memorandum from SMC VP to the effect that they
had to be separated from the service on the ground of "redundancy or excess personnel.
 Union opposed the dismissal and asked for a dialogue. A dialogue was held.
 However, even before the conclusion of the dialogue another memorandum was issued
informing private respondents that they would be dismissed from work effective as of the
close of business hours of November 2. They were indeed dismissed.
 Private respondents filed a complaint for illegal dismissal and ULP. The complaint
alleges:
o Private respondents are active & militant members in the affairs and activities of
union.
o The work being performed by the individual complainants are being contracted
out by the respondent company, and, therefore, deprives individual complainants
of their right to work and it constitutes a criminal violation of existing laws.
 SMC filed a motion to dismiss.
 o LA had no jurisdiction over the subject matter
o LA must defer consideration of the unfair labor practice complaint until after the
parties have gone through the grievance procedure provided for in the existing
Collective Bargaining Agreement
 SMC argues that according to its CBA, the “wages, hours of work,
conditions of employment and/or employer-employee relations shall be
settled by arbitration.”
 Labor Arbiter: denied the motion.
 NLRC: dismissed the appeal filed by SMC.
Issue 1: WON the LA has jurisdiction over the case?
Ruling 1: YES

 Article 217 provides that termination disputes, together with unfair labor practices, are
matters falling under the original and exclusive jurisdiction of the Labor Arbiter.
 The sole exception to the above rule can be found under Article 262 of the same Code
which provides for voluntary arbitration or panel of voluntary arbitration if there is an
agreement between the parties.
 Here, there is no agreement between SMC and the respondent union that would state in
unequivocal language that petitioners and the respondent union conform to the
submission of termination disputes and unfair labor practices to voluntary arbitration.
 Consistent with the general rule under Article 217 (a) of the Labor Code, the Labor
Arbiter properly has jurisdiction over the complaint filed by the respondent union for
illegal dismissal and ULP.
 SMC also failed to prove that the respondent union requested for a reconsideration or
review of the management decision to dismiss the private respondents.
o The filing of a request for reconsideration by the respondent union, which is the
condition sine qua non to categorize the termination dispute and the ULP
complaint as a grievable dispute, was decidedly absent in the case at bench.
 SMC also argues that the dispute involves the interpretation of the CBA which divests
the LA of jurisdiction.
o NO. There is no connection whatsoever between SMC's management
prerogative to effect the discharges and the interpretation or implementation of
Articles III and IV of the CBA. The only relevant provision under Article III that
may need interpretation or implementation is Section 2 which was cited herein.
 The dispute does not involve company personnel policies as well.
o Company personnel policies are guiding principles stated in broad, long-range
terms that express the philosophy or beliefs of an organization's top authority
regarding personnel matters. They deal with matters affecting efficiency and well
being of employees and include, among others, the procedure in the
administration of wages, benefits, promotions, transfer and other personnel
movements which are usually not spelled out in the collective agreement.
o The questioned discharges due to alleged redundancy can hardly be considered
company personnel policies and therefore need not directly be subject to the
grievance machinery nor to voluntary arbitration.
Issue 2: WON the complaint alleges a genuine case for ULP?
Ruling 2: YES

 Jurisprudence provides that ULP were committed in the form of discriminatory

dismissal where only unionists were permanently dismissed.
 Discrimination of employees based on union membership is an act which
amounts to interference in the employee’s exercise of their right of self-
organization.
 Here, all of the dismissed employees were officers and members of their respective
unions, and their employers failed to give a satisfactory explanation as to why this group
of employees was singled out.
 It may be the case that employees other than union members may have been
terminated also by petitioner SMC on account of its redundancy program. If that is true,
the discharges may really be for a bona fide authorized cause under Article 283.
 On the other hand, it is also possible that such may only be a clever scheme of the
petitioner company to camouflage its real intention of discriminating against union
members particularly the private respondents.
 In any case, these matters will be best ventilated in a hearing before the Labor Arbiter.
 Therefore, SC cannot hold SMC guilty of the ULP charge because that is the task of the
LA.
 However, based on the circumstances surrounding this case and settled jurisprudence
on the subject, the complaint filed by the private respondents on February 25, 1991
alleges facts sufficient to constitute a bona fide case of ULP, and therefore properly
cognizable by the Labor Arbiter.
Dispositive: WHEREFORE, the instant petition is DISMISSED for lack of merit and the
resolutions of the National Labor Relations Commission dated August 11, 1992 and October 29,
1992 are hereby AFFIRMED.
Balboa
Topic: outsourcing as ULP
65. Bankard Inc. v NLRC
BANKARD, INC., vs. NATIONAL LABOR RELATIONS COMMISSION-FIRST DIVISION,
PAULO BUENCONSEJO, BANKARD EMPLOYEES UNION-AWATU
Doctrine: Contrary to the findings and conclusions of both the NLRC and the CA, there was no
proof that the program was meant to encourage the employees to disassociate themselves from
the Union or to restrain them from joining any union or organization. There was no showing that
it was intentionally implemented to stunt the growth of the Union or that Bankard discriminated,
or in any way singled out the union members who had availed of the retirement package under
the MRP.
Action Sequence:
1. Union filed NOS with NCMB > SOLE certified the dispute to NLRC
2. Union filed NOS with NCMB > SOLE certified the dispute to NLRC
NLRC ruled there was UP > CA upheld > SC reversed.
Facts:

 Bankard Employees Union filed before the NCMB its first Notice of Strike alleging
commission of ULP by Bankard.

1) job contractualization; 2) outsourcing/contracting-out jobs; 3) manpower rationalizing

program; and 4) discrimination.

 The DOLE certified the labor dispute to the NLRC.

 The Union then declared a CBA bargaining deadlock.
 The following day, the Union filed its second NOS. The SOLE again assumed jurisdiction
and certified the labor dispute to the NLRC.
 The Union, despite the orders enjoining them from conducting a strike or lockout, went
on strike.
 Bankard insists that the job contractualization or outsourcing or contracting-out of jobs
was a legitimate exercise of management prerogative. It had to implement new policies
and programs, one of which was the Manpower Rationalization Program (MRP). The
MRP was an invitation to the employees to tender their voluntary resignation, with
entitlement to separation pay equivalent to at least two (2) months salary for every year
of service. Those eligible under the company’s retirement plan would still receive
additional pay. Thereafter, majority of the Phone Center and the Service Fulfilment
Division availed of the MRP. Thus, Bankard contracted an independent agency to
handle its call center needs.
 The NLRC ruled that there was ULP. The CA upheld this ruling as Bankard’s program
effectively limited the growth of the Union as it enticed employees to resign.

Issue: whether Bankard is guilty of ULP

Ruling: No, Bankard is not guilty of ULP.
An employer may only be held liable for unfair labor practice if it can be shown that his acts
affect in whatever manner the right of his employees to self-organize.
Art. 248. Unfair labor practices of employers.—It shall be unlawful for an employer to commit
any of the following unfair labor practice:
xxxx
(c) To contract out services or functions being performed by union members when such will
interfere with, restrain or coerce employees in the exercise of their rights to self-organization;
As a result of the MRP, the number of union members was reduced, and the number of
contractual employees, who were never eligible for union membership for lack of qualification,
increased.c
Contrary to the findings and conclusions of both the NLRC and the CA, there was no proof that
the program was meant to encourage the employees to disassociate themselves from the Union
or to restrain them from joining any union or organization. There was no showing that it was
intentionally implemented to stunt the growth of the Union or that Bankard discriminated, or in
any way singled out the union members who had availed of the retirement package under the
MRP.
True, the program might have affected the number of union membership because of the
employees’ voluntary resignation and availment of the package, but it does not necessarily
follow that Bankard indeed purposely sought such result. It must be recalled that the MRP was
implemented as a valid cost-cutting measure, well within the ambit of the so-called management
prerogatives. Bankard contracted an independent agency to meet business exigencies. In the
absence of any showing that Bankard was motivated by ill will, bad faith or malice, or that it was
aimed at interfering with its employees’ right to self-organize, it cannot be said to have
committed an act of unfair labor practice.
Contracting out of services is an exercise of business judgment or management prerogative.
Absent any proof that management acted in a malicious or arbitrary manner, the Court will not
interfere with the exercise of judgment by an employer.

Dispositive: WHEREFORE, the petition is GRANTED.

Balce
Topic: Run-away Shop as ULP
67. Complex Electronics Employees Association (CEEA) v. NLRC

COMPLEX ELECTRONICS EMPLOYEES ASSOCIATION (CEEA) represented by its union

president CECILIA TALAVERA, GEORGE ARSOLA, MARIO DIAGO AND SOCORRO
BONCAYAO, petitioners,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION, COMPLEX ELECTRONICS
CORPORATION, IONICS CIRCUIT, INC., LAWRENCE QUA, REMEDIOS DE JESUS,
MANUEL GONZAGA, ROMY DELA ROSA, TERESITA ANDINO, ARMAN CABACUNGAN,
GERRY GABANA, EUSEBIA MARANAN and BERNADETH
GACAD, respondents.

G.R. No. 121315 July 19, 1999

Ponente: KAPUNAN, J.

Doctrine: A “runaway shop” is defined as an industrial plant moved by its owners from
one location to another to escape union labor regulations or state laws, but the term is
also used to describe a plant removed to a new location in order to discriminate against
employees at the old plant because of their union activities. It is one wherein the employer
moves its business to another location or it temporarily closes its business for anti-union
purposes. A “runaway shop” in this sense, is a relocation motivated by anti-union animus rather
than for business reasons.
Action Sequence: Complaint with LA for unfair labor practice, illegal closure/illegal lockout,
money claims. -> LA ordered reinstatement -> NLRC set aside LA’s ruling -> SC affirmed
NLRC’s decision.
FACTS:

 Complex Electronics Corporation (Complex) was engaged in the manufacture of

electronic products. The customers were foreign-based companies with different product
lines and specifications requiring the employment of workers with specific skills for each
product line.
 The rank-and-file workers of Complex were organized into a union known as the
Complex Electronics Employees Association (Union).

 One of Complex’s customers, Lite-On Philippines Electronics Co., requested it to lower

its price by 10% as it was 50% higher than the rate in Mainland China. Such request was
not feasible as they were already incurring losses at the present prices of their products.

 Complex regretfully informed the employees that it was left with no alternative but to
close down the operations of the Lite-On Line. Union, on the other hand, pushed for a
retrenchment pay equivalent to one (1) month salary for every year of service, which
Complex refused.
 On March 13, 1992, Complex filed a notice of closure of the Lite-On Line with the
Department of Labor and Employment (DOLE) and the retrenchment of the 97 affected
employees.
 On March 25, 1993, the Union filed a notice of strike with the NCMB.
 On the night of April 6, 1992, the machinery, equipment and materials being used
for production at Complex were pulled out from the company premises and
transferred to the premises of Ionics Circuit, Inc. (Ionics), resulting to a total
closure of Complex.
 Fearful that the machinery, equipment and materials would be rendered inoperative and
unproductive due to the impending strike of the workers, the customers ordered their
pull-out and transfer to Ionics. Complex was compelled to cease operations.
 The Union the filed a complaint with LA for unfair labor practice, illegal closure/illegal
lockout, money claims. The Union alleged that the pull-out of the machinery, equipment
and materials from the company premises, which resulted to the sudden closure of the
company was in violation of the Labor Code and the existing CBA. Ionics was impleaded
as a party defendant because the officers and management personnel of Complex were
also holding office at Ionics with Lawrence Qua as the President of both companies.
 According to Union, there is a clear ground to pierce the veil of corporate fiction. It claims
that business has not ceased at Complex but was merely transferred to Ionics, a
runaway shop.
 LA RULING: LA ordered respondents to reinstate the 531 employees to their former
position and to pay said complainants-employees the aggregate backwages until their
actual reinstatement. That if reinstatement is not feasible, they are also liable to pay
complainants-employees their separation pay to be computed at the rate of one (1)
month pay for every year of service. The respondents are also jointly and solidarily liable
for moral damages and exemplary damage.
 NLRC RULING: NLRC set aside labor arbiter’s decision, ordering Complex to pay
complainants equivalent to one month pay in lieu of notice and separation pay
equivalent to one month pay for every year of service and a fraction of six months
 considered as one whole year. Respondents Ionics and Lawrence Qua were excluded
as parties solidarily liable with Complex.

ISSUE:
Whether or not there was Unfair Labor Practice (ULP). (NO)
RULING:
NO. A “runaway shop” is defined as an industrial plant moved by its owners from one
location to another to escape union labor regulations or state laws, but the term is also
used to describe a plant removed to a new location in order to discriminate against
employees at the old plant because of their union activities. It is one wherein the employer
moves its business to another location or it temporarily closes its business for anti-union
purposes. A “runaway shop” in this sense, is a relocation motivated by anti-union animus rather
than for business reasons.
In this case, however, Ionics was NOT set up merely for the purpose of transferring the
business of Complex. At the time the labor dispute arose at Complex, Ionics was already
existing as an independent company. It has been in existence since July 5, 1984. It cannot,
therefore, be said that the temporary closure in Complex and its subsequent transfer of
business to Ionics was for anti-union purposes. The Union failed to show that the primary
reason for the closure of the establishment was due to the union activities of the employees.
The mere fact that one or more corporations are owned or controlled by the same or single
stockholder is not a sufficient ground for disregarding separate corporate personalities. 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.
Based on the foregoing, there was no ULP.

DISPOSITIVE PORTION:
WHEREFORE, premises considered, the assailed decision of the NLRC is AFFIRMED.

NOTES:
ISSUE 2: Whether or not there is illegal lockout or illegal dismissal.
RULING 2: NO. Lockout is the temporary refusal of employer to furnish work as a result
of an industrial or labor dispute.
In the case at bar, there was a complete cessation of the business operations at Complex not
because of the labor dispute. Before the labor dispute, Complex had already informed the
employees that they would be closing the Lite-On Line. The employees, however, demanded for
a separation pay equivalent to one (1) month salary for every year of service which Complex
refused to give. When Complex filed a notice of closure of its Lite-On Line, the employees filed
a notice of strike which greatly alarmed the customers of Complex and this led to the pull-out of
their equipment, machinery and materials from Complex, and Complex was unable to continue
its business. It was left with no other choice except to shut down the entire business. The
closure, therefore, was not motivated by the union activities of the employees, but rather by
necessity since it can no longer engage in production without the much needed materials,
equipment and machinery.
Ignacio
Topic: Union Security Clauses
68. BPI v. BPI-EMPLOYEES UNION DAVAO
[G.R. No. 164301. August 10, 2010.]
BANK OF THE PHILIPPINE ISLANDS, petitioner, vs. BPI
EMPLOYEES UNION-DAVAO CHAPTER-FEDERATION OF UNIONS IN
BPI UNIBANK, respondent.

Doctrine:

● "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.
o There is union shop when all new regular employees are required to join the
union within a certain period for their continued employment.
o 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.
o A closed-shop 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.
● When certain employees are obliged to join a particular union as a requisite for
continued employment, as in the case of Union Security Clauses, this condition is a valid
restriction of the freedom or right not to join any labor organization because it is in favor
of unionism.
● All employees in the bargaining unit covered by a Union Shop Clause in their CBA with
management are subject to its terms.
o However, under law and jurisprudence, the following kinds of employees are
exempted from its coverage, namely:
1. Employees who at the time the union shop agreement takes effect are
bona fide members of a religious organization which prohibits its
members from joining labor unions on religious grounds.
 2. Employees already in the service and already members of a union other
than the majority at the time the union shop agreement took effect.
3. Confidential employees who are excluded from the rank-and-file
bargaining unit.
4. Employees excluded from the union shop by express terms of the
agreement.
● Indeed, a union security clause in a CBA should be interpreted to give meaning and
effect to its purpose, which is to afford protection to the certified bargaining agent and
ensure that the employer is dealing with a union that represents the interests of the
legally mandated percentage of the members of the bargaining unit.
● The union shop clause offers protection to the certified bargaining agent by ensuring that
future regular employees who (a) enter the employ of the company during the life of the
CBA; (b) are deemed part of the collective bargaining unit; and (c) whose number will
affect the number of members of the collective bargaining unit will be compelled to join
the union.
Action Sequence: Grievance Committee unresolved> VA ruled in favor of BPI: FEBTC
employees not covered by USC; MR denied> CA reversed > SC affirmed CA
Facts:
● On March 23, 2000, the BSP approved the Articles of Merger executed on January 20,
2000 by and between BPI, herein petitioner, and FEBTC. This Article and Plan of Merger
was approved by the Securities and Exchange Commission on April 7, 2000.
● Pursuant to the Article and Plan of Merger, all the assets and liabilities of FEBTC were
transferred to and absorbed by BPI as the surviving corporation.
● FEBTC employees, including those in its different branches across the country, were
hired by petitioner as its own employees, with their status and tenure recognized and
salaries and benefits maintained.
● Respondent BPI Employees Union-Davao Chapter-Federation of Unions in BPI Unibank
is the exclusive bargaining agent of BPI's rank and file employees in Davao City.
● The former FEBTC rank-and-file employees in Davao City did not belong to any labor
union at the time of the merger.
● Prior to the effectivity of the merger, or on March 31, 2000, respondent Union invited
said FEBTC employees to a meeting regarding the Union Shop Clause (Article II,
Section 2) of the existing CBA between petitioner BPI and respondent Union.
● After the meeting called by the Union, some of the former FEBTC employees joined the
Union, while others refused. Later, however, some of those who initially joined retracted
their membership.
● Respondent Union then sent notices to the former FEBTC employees who refused to
join, as well as those who retracted their membership, and called them to a hearing
regarding the matter.
● When these former FEBTC employees refused to attend the hearing, the president of
the Union requested BPI to implement the Union Shop Clause of the CBA and to
terminate their employment pursuant thereto.
● After two months of management inaction on the request, respondent Union informed
petitioner BPI of its decision to refer the issue of the implementation of the Union Shop
Clause of the CBA to the Grievance Committee.
 ● However, the issue remained unresolved at this level and so it was subsequently
submitted for voluntary arbitration by the parties.
● The VA ruled in favor of petitioner BPI's interpretation that the former FEBTC employees
were not covered by the Union Security Clause of the CBA between the Union and the
Bank on the ground that the said employees were not new employees who were hired
and subsequently regularized, but were absorbed employees "by operation of law"
because the "former employees of FEBTC can be considered assets and liabilities of the
absorbed corporation."
● The Voluntary Arbitrator concluded that the former FEBTC employees could not be
compelled to join the Union, as it was their constitutional right to join or not to join any
organization. MR denied.
● Respondent then appealed the Voluntary Arbitrator's decision to the Court of Appeals.
● The Court of Appeals reversed and set aside the Decision of the Voluntary Arbitrator.
Likewise, the Court of Appeals denied the MR by the petitioner.
o CA agrees with the voluntary arbitrator that the ABSORBED employees are
distinct and different from NEW employees BUT only in so far as their
employment service is concerned. The distinction ends there.
o The CA is persuaded that the similarities of "new" and "absorbed" employees far
outweighs the distinction between them. The similarities lies on the following, to
wit: (a) they have a new employer; (b) new working conditions; (c) new terms of
employment and; (d) new company policy to follow. As such, they should be
considered as "new" employees for purposes of applying the provisions of the
CBA regarding the "union-shop" clause.
Issue: Whether or not the former FEBTC employees that were absorbed by petitioner upon the
merger between FEBTC and BPI should be covered by the Union Shop Clause found in the
existing CBA between petitioner and respondent Union. (Y)
Ruling: YES.
● Section 2, Article II of the CBA provides:
o New employees falling within the bargaining unit as defined in Article I of this
Agreement, who may hereafter be regularly employed by the Bank shall, within
thirty (30) days after they become regular employees, join the Union as a
condition of their continued employment. It is understood that membership in
good standing in the Union is a condition of their continued employment with the
Bank.
● Section 2, Article II of the CBA is silent as to how one becomes a "regular employee" of
the BPI for the first time. There is nothing in the said provision which requires that a
"new" regular employee first undergo a temporary or probationary status before being
deemed as such under the union shop clause of the CBA.
● It is the policy of the State to promote unionism to enable the workers to negotiate with
management on the same level and with more persuasiveness than if they were to
individually and independently bargain for the improvement of their respective
conditions.
● In other words, the purpose of a union shop or other union security arrangement is to
guarantee the continued existence of the union through enforced membership for the
benefit of the workers.
● All employees in the bargaining unit covered by a Union Shop Clause in their CBA with
management are subject to its terms.
o However, under law and jurisprudence, the following kinds of employees are
exempted from its coverage, namely:
1. Employees who at the time the union shop agreement takes effect are
bona fide members of a religious organization which prohibits its
members from joining labor unions on religious grounds.
2. Employees already in the service and already members of a union other
than the majority at the time the union shop agreement took effect.
3. Confidential employees who are excluded from the rank-and-file
bargaining unit.
4. Employees excluded from the union shop by express terms of the
agreement.
● When certain employees are obliged to join a particular union as a requisite for
continued employment, as in the case of Union Security Clauses, this condition is a valid
restriction of the freedom or right not to join any labor organization because it is in favor
of unionism.
● In this case, petitioner insists that the term "new employees," as the same is used in the
Union Shop Clause of the CBA at issue, refers only to employees hired by BPI as non-
regular employees who later qualify for regular employment and become regular
employees, and not those who, as a legal consequence of a merger, are allegedly
automatically deemed regular employees of BPI. However, the CBA does not make a
distinction as to how a regular employee attains such a status. Moreover, there is
nothing in the Corporation Law and the merger agreement mandating the automatic
employment as regular employees by the surviving corporation in the merger.
● Verily, we agree with the Court of Appeals that there are no substantial differences
between a newly hired non-regular employee who was regularized weeks or months
after his hiring and a new employee who was absorbed from another bank as a regular
employee pursuant to a merger, for purposes of applying the Union Shop Clause. Both
employees were hired/employed only after the CBA was signed.
● It is but fair that similarly situated employees who enjoy the same privileges of a CBA
should be likewise subject to the same obligations the CBA imposes upon them. A
contrary interpretation of the Union Shop Clause will be inimical to industrial peace and
workers' solidarity.
● Indeed, a union security clause in a CBA should be interpreted to give meaning and
effect to its purpose, which is to afford protection to the certified bargaining agent and
ensure that the employer is dealing with a union that represents the interests of the
legally mandated percentage of the members of the bargaining unit.
● The union shop clause offers protection to the certified bargaining agent by ensuring that
future regular employees who (a) enter the employ of the company during the life of the
CBA; (b) are deemed part of the collective bargaining unit; and (c) whose number will
affect the number of members of the collective bargaining unit will be compelled to join
the union.
● Such compulsion has legal effect, precisely because the employer by voluntarily entering
into a union shop clause in a CBA with the certified bargaining agent takes on the
responsibility of dismissing the new regular employee who does not join the union.
 ● Plainly, the restrictive interpretation of the union shop clause would place the certified
union's very existence at the mercy and control of the employer. Relevantly, only BPI,
the employer appears to be interested in pursuing this case. The former FEBTC
employees have not joined BPI in this appeal.
● Laws and jurisprudence promote unionism and afford certain protections to the certified
bargaining agent in a unionized company because a strong and effective union
presumably benefits all employees in the bargaining unit since such a union would be in
a better position to demand improve benefits and conditions of work from the employer.
● In the case at bar, since the former FEBTC employees are deemed covered by the
Union Shop Clause, they are required to join the certified bargaining agent, which
supposedly has gathered the support of the majority of workers within the bargaining unit
in the appropriate certification proceeding. Their joining the certified union would, in fact,
be in the best interests of the former FEBTC employees for it unites their interests with
the majority of employees in the bargaining unit. It encourages employee solidarity and
affords sufficient protection to the majority status of the union during the life of the CBA
which are the precisely the objectives of union security clauses, such as the Union Shop
Clause involved herein.
Dispositive:
WHEREFORE, the petition is hereby DENIED, and the Decision dated September 30,
2003 of the Court of Appeals is AFFIRMED, subject to the thirty (30) day notice requirement
imposed herein. Former FEBTC employees who opt not to become union members but who
qualify for retirement shall receive their retirement benefits in accordance with law, the
applicable retirement plan, or the CBA, as the case may be.
Additional Notes: ABSORBED FEBTC EMPLOYEE ARE NEITHER ASSETS NOR
LIABILITIES
● Absorbed FEBTC Employees are Neither Assets nor Liabilities.
● In legal parlance, however, human beings are never embraced in the term "assets and
liabilities."
● Moreover, BPI's absorption of former FEBTC employees was neither by operation of law
nor by legal consequence of contract. There was no government regulation or law that
compelled the merger of the two banks or the absorption of the employees of the
dissolved corporation by the surviving corporation. Had there been such law or
regulation, the absorption of employees of the non-surviving entities of the merger would
have been mandatory on the surviving corporation.
● In the present case, the merger was voluntarily entered into by both banks presumably
for some mutually acceptable consideration. In fact, the Corporation Code does not also
mandate the absorption of the employees of the non-surviving corporation by the
surviving corporation in the case of a merger.
● Assets and liabilities, in this instance, should be deemed to refer only to property rights
and obligations of FEBTC and do not include the employment contracts of its personnel.
● A corporation cannot unilaterally transfer its employees to another employer like chattel.
Certainly, if BPI as an employer had the right to choose who to retain among FEBTC's
employees, FEBTC employees had the concomitant right to choose not to be absorbed
by BPI.
 ● Even though FEBTC employees had no choice or control over the merger of their
employer with BPI, they had a choice whether or not they would allow themselves to be
absorbed by BPI. Certainly nothing prevented the FEBTC's employees from resigning or
retiring and seeking employment elsewhere instead of going along with the proposed
absorption.
Manotok
Topic: Agency Fees
69. Del Pilar Academy vs. Del Pilar Academy Employees Union
[G.R. No. 170112. April 30, 2008.]
DEL PILAR ACADEMY, EDUARDO ESPEJO and ELISEO OCAMPO, JR., petitioners, vs.
DEL PILAR ACADEMY EMPLOYEES UNION, respondent.

Doctrine:
● When so stipulated in a collective bargaining agreement or authorized in writing by the
employees concerned, the Labor Code and its Implementing Rules recognize it to be the
duty of the employer to deduct the sum equivalent to the amount of union dues, as
agency fees, from the employees’ wages for direct remittance to the union.
● No requirement of written authorization from the non-union employees is needed to
effect a valid check off. Article 248(e) makes it explicit that Article 241, paragraph (o),
requiring written authorization is inapplicable to non-union members, especially in this
case where the non-union employees receive several benefits under the CBA.

Action Sequence: UNION files ULP case > LA dismisses > UNION appeals > NLRC affirms LA
ruling > MR of UNION denied > CA via certiorari > CA affirms with modification NLRC > MR of
DEL PILAR denied > PETITION for review on certiorari in SC > Petition is denied.

Facts:
● Respondent Del Pilar Academy Employees Union (the UNION) is the certified collective
bargaining representative of teaching and non-teaching personnel of petitioner Del Pilar
Academy (DEL PILAR), an educational institution operating in Imus, Cavite.
● The UNION and DEL PILAR entered into a Collective Bargaining Agreement (CBA)
granting salary increase and other benefits to the teaching and non-teaching staff.
● The UNION then assessed agency fees from non-union employees, and requested DEL
PILAR to deduct said assessment from the employees’ salaries and wages. DEL PILAR,
however, refused to effect deductions claiming that the non-union employees were not
amenable to it. It justified the non-deduction of the agency fees by the absence of
individual check off authorization from the non-union employees.
● In September 1997, the UNION negotiated for the renewal of the CBA. DEL PILAR,
however, refused to renew the same unless the provision regarding entitlement to two
(2) months summer vacation leave with pay will be amended by limiting the same to
teachers, who have rendered at least three (3) consecutive academic years of
satisfactory service. The UNION objected to the proposal claiming diminution of benefits.
DEL PILAR refused to sign the CBA, resulting in a deadlock. As regards the proposal to
 amend the provision on summer vacation leave with pay, DEL PILAR alleged that the
proposal cannot be considered unfair for it was done to make the provision of the CBA
conformable to the DECS’ Manual of Regulations for Private Schools. The UNION filed a
case for unfair labor practice with the Labor Arbiter.
● LA:
o DEL PILAR’s unwarranted fear re-individual dues without authorization for non-
union members has no basis in fact or in law. For receipt of CBA benefits brought
about by the CBA negotiated, they are duty bound to pay agency fees which may
lawfully be deducted sans individual check-off authorization. Being recipients of
said benefits, they should share and be made to pay the same considerations
imposed upon the union members. DEL PILAR, therefore, was in error in
refusing to deduct corresponding agency fees which lawfully belongs to the
union.
o Anent the proposal to decrease the coverage of the 11th and 12th month
vacation with pay, we do not believe that such was done in bad faith but rather in
an honest attempt to make perfect procession following the DECS’ Manuals.
o We do not believe that a finding of unfair labor practice can be had considering
the lack of evidence on record that said acts were done to undermine the union
or stifle the member’s right to self organization or that there was bad faith.
● NLRC: upheld the UNION’s right to agency fee, but did not consider DEL PILAR’s failure
to deduct the same an unfair labor practice
● CA:
o Like the Arbiter and the NLRC, the CA upheld the UNION’s right to collect
agency fees from non-union employees, but did not adjudge DEL PILAR liable
for unfair labor practice.
o However, it ordered DEL PILAR to deduct agency fees from the salaries of non-
union employees.

Issue: Whether the UNION is entitled to collect agency fees from non-union members (YES)
and if so, whether an individual written authorization is necessary for a valid check off (NO).
Ruling: The UNION has the right to collect agency fees. No requirement of written authorization
from the non-union employees is needed to effect a valid check off.
● The collection of agency fees in an amount equivalent to union dues and fees, from
employees who are not union members, is recognized by Article 248(e) of the Labor
Code. Article 248(e) makes it explicit that Article 241, paragraph (o),14 requiring written
authorization is inapplicable to non-union members, especially in this case where the
non-union employees receive several benefits under the CBA.
● When so stipulated in a collective bargaining agreement or authorized in writing by the
employees concerned, the Labor Code and its Implementing Rules recognize it to be the
duty of the employer to deduct the sum equivalent to the amount of union dues, as
agency fees, from the employees’ wages for direct remittance to the union. The system
is referred to as check off. No requirement of written authorization from the non-union
employees is necessary if the non-union employees accept the benefits resulting from
the CBA.
● The grant of annual salary increase is not the only provision in the CBA that benefited
the non-union employees. The UNION has negotiated for other benefits, namely,
 limitations on teaching assignments to 23 hours per week, additional compensation for
overload units or teaching assignments in excess of the 23 hour per week limit, and
payment of longevity pay. It also negotiated for entitlement to summer vacation leave
with pay for two (2) months for teaching staff who have rendered six (6) consecutive
semesters of service. For the non-teaching personnel, the UNION worked for their
entitlement to fifteen (15) days leave with pay. These provisions in the CBA surely
benefited the non-union employees, justifying the collection of, and the UNION’s
entitlement to, agency fees.
Dispositive: WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court
of Appeals in CA-G.R. SP No. 86868, are AFFIRMED. SO ORDERED.
Sira
Topic: Case analogous to Article 259 (f)
70. Mabeza vs. NLRC
NORMA MABEZA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, PETER
NG/HOTEL SUPREME, respondents
G.R. No. 118506, April 18, 1997
Doctrine: The actuation of respondent (dismissing petitioner for refusing to go the prosecutor’s
office for her affidavit) is analogous to the situation in paragraph (f) of Article 248 of the Labor
Code which distinctly makes it unfair labor practice "to dismiss, discharge or otherwise prejudice
or discriminate against an employee for having given or being about to give testimony" under
the Labor Code.
Action Sequence: LA (petitioner’s complaint was dismissed; dismissal was valid)->NLRC
(affirmed LA)-> SC (petitioner was illegally dismissed)
Facts:

 Petitioner contends that around the 1st week of May 1991, she and her co-employees at
the Hotel Supreme in Baguio City were asked by the hotel’s management to sign an
instrument attesting to the latter’s compliance w/ minimum wage and other labor
standard provisions of law.
 The instrument was labelled a Joint Affidavit, contents copied below:

o “We, SYLVIA IGANA, HERMINIGILDO AQUINO, EVELYN OGOY, MACARIA

JUGUETA, ADELAIDA NONOG, NORMA MABEZA, JONATHAN PICART and
JOSE DIZON, all of legal ages (sic), Filipinos and residents of Baguio City, under
oath, depose and say:

 1. That we are employees of Mr. Peter L. Ng of his Hotel Supreme

situated at No. 416 Magsaysay Ave., Baguio City.

 2. That the said Hotel is separately operated from the Ivy's Grill and
Restaurant;
  3. That we are all (8) employees in the hotel and assigned in each
respective shifts;

 4. That we have no complaints against the management of the Hotel

Supreme as we are paid accordingly and that we are treated well.

 5. That we are executing this affidavit voluntarily without any force or

intimidation and for the purpose of informing the authorities concerned
and to dispute the alleged report of the Labor Inspector of the Department
of Labor and Employment conducted on the said establishment on
February 2, 1991.

o IN WITNESS WHEREOF, we have hereunto set our hands this 7th day of May,
1991 at Baguio City, Philippines.”

 Petitioner signed the affidavit but refused to go to the City Prosecutor’s Office to swear
the veracity and contents of the affidavit as instructed by management. The affidavit was
still submitted the Regional Office of the DOLE.
 As can be seen in the affidavit, it was drawn by management for the sole purpose of
refuting findings of the labor inspector of DOLE in an inspection of respondent’s
establishment on February 2, 1991 which was adverse to the private respondent.
 The same day that petitioner refused to go to the City Prosecutor’s Office, petitioner
averred that she was ordered by hotel management to turn over the keys to her living
quarters and remove her belongings.
 She then reluctantly filed a leave of absence from her job which was denied by
management. When she attempted to return to work on May 10, 1991, the hotel’s
cashier informed her that she should not report to work and instead continue with her
unofficial leave of absence.
 Three days after, petitioner filed a complaint for illegal dismissal before the
Arbitration Board of the NLRC. In addition to her complaint for illegal dismissal, she
alleged underpayment of wages, non-payment of holiday pay, and other monetary
benefits
 Respondent Ng alleged before the LA that petitioner surreptitiously left her job without
notice to the management and that she actually abandoned her work. He maintained
that there was no basis for the money claims for underpayment and other benefits since
these were paid in the form of facilities to petitioner and other employees.
 Private respondent referred to the Affidavit of May 7, 1991 asserting that the employees
had no problems w/ management. Eleven months after the original complaint,
respondent raised a new ground , loss of confidence, which was supported by a criminal
complaint for qualified theft.
 The LA rendered a decision dismissing petitioner’s complaint on the ground of loss
of confidence, for stealing a blanket, a piece bedsheet, 1 piece thermos and 2 pieces
towel.
 On appeal, the NLRC affirmed the LA decision.
 Hence, the present petitioner.
(Main issue is issue no. 2)
ISSUE 1: Whether or not petitioner was illegally dismissed
RULING 1: Yes, petitioner was illegally dismissed.

 It is settled that in termination cases the employer bears the burden of proof to show that
the dismissal is for just cause, the failure of which would mean that the dismissal is not
justified and the employee is entitled to reinstatement.
 Private respondent initially claimed that petitioner abandoned her job when she failed to
return to work on May 8, 1991. He also belatedly included a complaint for loss of
confidence, supporting his charges that petitioner stole from hotel property.
 However, the evidence showed that the circumstances upon which respondent anchored
his claim that petitioner abandoned her job was not enough to constitute just cause to
sanction her termination from services under Article 283 of the Labor Code. For there to
be abandonment, there must be concurrence of two things: 1) lack of intention to work
and 2) presence of overt acts signifying the employee’s intention not to work.
 In this case, petitioner tried to file a leave of absence when she learned that the hotel
management was displeased with her refusal to attest to the affidavit. Thus, this shows
that she had the intention to return to work after the period of her leave of absence shall
have expired. Further, mere absence of 1 or 2 days would not be enough to sustain such
claim.
 Finally, loss of confidence should ideally apply only to cases involving employees
occupying positions of trust and confidence or to those situations where the employee is
routinely charged with the care and custody of the employer's money or property. To the
first class belong managerial employees, i.e., those vested with the powers or
prerogatives to lay down management policies and/or to hire, transfer, suspend, lay-off,
recall, discharge, assign or discipline employees or effectively recommend such
managerial actions; and to the second class belong cashiers, auditors, property
custodians, etc., or those who, in the normal and routine exercise of their functions,
regularly handle significant amounts of money or property.
 In this case, an ordinary chambermaid who has to sign out for linen and other hotel
property from the property custodian each day and who has to account for each and
every towel or bedsheet utilized by the hotel's guests at the end of her shift would not fall
under any of these two classes of employees for which loss of confidence, if ably
supported by evidence, would normally apply.
 Also, the Court has repeatedly held that loss of confidence should not be simulated in
order to justify what would otherwise be, under the provisions of law, an illegal dismissal.
"It should not be used as a subterfuge for causes which are illegal, improper and
unjustified. It must be genuine, not a mere afterthought to justify an earlier action taken
in bad faith." 
 In the case at bar, the suspicious delay in private respondent's filing of qualified theft
charges against petitioner long after the latter exposed the hotel's scheme (to avoid its
obligations as employer under the Labor Code) by her act of filing illegal dismissal
charges against the private respondent would hardly warrant serious consideration of
loss of confidence as a valid ground for dismissal. Notably, the Solicitor General has
himself taken a position opposite the public respondent and has observed that If
petitioner had really committed the acts charged against her by private respondents
 (stealing supplies of respondent hotel), private respondents should have confronted her
before dismissing her on that ground. Private respondents did not do so. In fact, private
respondent Ng did not raise the matter when petitioner went to see him on May 9, 1991,
and handed him her application for leave. It took private respondents 52 days or up to
July 4, 1991 before finally deciding to file a criminal complaint against petitioner, in an
obvious attempt to build a case against her.

ISSUE 2: Whether or not the dismissal of petitioner constitutes unfair labor practice

RULING 2: Yes, the dismissal of petitioner constitutes unfair labor practice.

 The pivotal question in any case where unfair labor practice on the part of the employer
is alleged is whether or not the employer has exerted pressure, in the form of restraint,
interference or coercion, against his employee's right to institute concerted action for
better terms and conditions of employment. Without doubt, the act of compelling
employees to sign an instrument indicating that the employer observed labor standards
provisions of law when he might have not, together with the act of terminating or
coercing those who refuse to cooperate with the employer's scheme constitutes unfair
labor practice. The first act clearly preempts the right of the hotel's workers to seek
better terms and conditions of employment through concerted action.

 The Court agreed with the Solicitor General’s observation that the actuation of
respondent is analogous to the situation in paragraph (f) of Article 248 of the
Labor Code which distinctly makes it unfair labor practice "to dismiss, discharge
or otherwise prejudice or discriminate against an employee for having given or
being about to give testimony" under the Labor Code.

 For in not giving positive testimony in favor of her employer, petitioner had reserved not
only her right to dispute the claim and proffer evidence in support thereof but also to
work for better terms and conditions of employment.

 For refusing to cooperate with the private respondent's scheme, petitioner was obviously
held up as an example to all of the hotel's employees, that they could only cause trouble
to management at great personal inconvenience. Implicit in the act of petitioner's
termination and the subsequent filing of charges against her was the warning that they
would not only be deprived of their means of livelihood, but also possibly, their personal
liberty.

Other issues:

 The Court found that the LA only relied upon figures furnished by private respondent
own accountant, w/o corroborative evidence. The Court held that petitioner is entitled to
the payment of the deficiency in her wages equivalent to the full wage applicable from
May 13, 1988 up to the date of her illegal dismissal.

 Additionally, petitioner is entitled to payment of service incentive leave pay, emergency

cost of living allowance, night differential pay, and 13th month pay for the periods
alleged by the petitioner as the private respondent has never been able to adduce proof
that petitioner was paid the aforestated benefits.
  The Court, however, departed from the settled rule that an employee who is unjustly
dismissed from work normally should be reinstated without loss of seniority rights and
other privileges. Owing to the strained relations between petitioner and private
respondent, allowing the former to return to her job would only subject her to
possible harassment and future embarrassment. In the instant case, separation pay
equivalent to one month's salary for every year of continuous service with the private
respondent would be proper, starting with her job at the Belfront Hotel.

 In addition to separation pay, backwages are in order. Pursuant to R.A. 6715 and our
decision in Osmalik Bustamante, et al. vs. National Labor Relations
Commission, 33 petitioner is entitled to full backwages from the time of her illegal
dismissal up to the date of promulgation of this decision without qualification or
deduction.

 Finally, in dismissal cases, the law requires that the employer must furnish the employee
sought to be terminated from employment with two written notices before the same may
be legally effected. The first is a written notice containing a statement of the cause(s) for
dismissal; the second is a notice informing the employee of the employer's decision to
terminate him stating the basis of the dismissal. During the process leading to the
second notice, the employer must give the employee ample opportunity to be heard and
defend himself, with the assistance of counsel if he so desires.

 Given the seriousness of the second cause (qualified theft) of the petitioner's dismissal,
it is noteworthy that the private respondent never even bothered to inform petitioner of
the charges against her. Neither was petitioner given the opportunity to explain the loss
of the articles. It was only almost two months after petitioner had filed a complaint for
illegal dismissal, as an afterthought, that the loss was reported to the police and added
as a supplemental answer to petitioner's complaint. Clearly, the dismissal of petitioner
without the benefit of notice and hearing prior to her termination violated her
constitutional right to due process.

DISPOSITIVE:

 Commission dated April 24, 1994 is REVERSED and SET ASIDE, with costs. For clarity,
the economic benefits due the petitioner are hereby summarized as follows:

o 1) Deficiency wages and the applicable ECOLA from May 13, 1988 up to the
date of petitioner's illegal dismissal;

o 2) Service incentive leave pay; night differential pay and 13th month pay for the
same period;

o 3) Separation pay equal to one month's salary for every year of petitioner's
continuous service with the private respondent starting with her job at the
Belfront Hotel;

o 4) Full backwages, without qualification or deduction, from the date of petitioner's

illegal dismissal up to the date of promulgation of this decision pursuant to our
ruling in Bustamante vs. NLRC. 34
 o 5) P1,000.00.

o ORDERED.

71. KIOK LOY, doing business under the name and style SWEDEN ICE CREAM PLANT, v.
NLRC and PAMBANSANG KILUSAN NG PAGGAWA (KILUSAN)
G.R. No. L-54334. January 22, 1986

DOCTRINE: Collective bargaining which is defined as negotiations towards a collective

agreement, is one of the democratic frameworks under the New Labor Code, designed to
stabilize the relation between labor and management and to create a climate of sound and
stable industrial peace. It is a mutual responsibility of the employer and the Union and is
characterized as a legal obligation. So much so that Article 249, par. (g) of the Labor Code
makes it an unfair labor practice for an employer to refuse “to meet and convene promptly and
expeditiously in good faith for the purpose of negotiating an agreement with respect to wages,
hours of work, and all other terms and conditions of employment including proposals for
adjusting any grievance or question arising under such an agreement and executing a contract
incorporating such agreement, if requested by either party.”

ACTION SEQUENCE: LA (ruled in favor of the union) → NLRC (affirmed; ruled in favor of
union) → SC (affirmed; ruled in favor of union)

FACTS:
● In a certification election held on October 3, 1978, the Pambansang Kilusan ng Paggawa
(Union), a legitimate labor federation, won and was subsequently certified in a resolution
dated November 29, 1978 by the BLR as the sole and exclusive bargaining agent of the
rank-and-file employees of Sweden Ice Cream Plant (Company)
● The Company’s motion for reconsideration of the said resolution was denied on January
25, 1978.
● December 7, 1978 - The Union furnished 4 the Company with 2 copies of its proposed
collective bargaining agreement.
○ At the same time, it requested the Company for its counter proposals, Eliciting no
response to the aforesaid request, the Union again wrote the Company
reiterating its request for collective bargaining negotiations and for the Company
to furnish them with its counter proposals.
○ Both requests were ignored and remained unacted upon by the Company.
● February 14, 1979 - filed a "Notice of Strike", with the BLR on ground of unresolved
economic issues in collective bargaining.
● Conciliation proceedings then followed during the thirty-day statutory cooling-off period.
● But all attempts towards an amicable settlement failed, prompting the BLR to certify the
case to the NLRC for compulsory arbitration.

LABOR ARBITER
 ● Set the initial hearing for April 29, 1979.
● For failure of the parties to submit their respective position papers as required, the said
hearing was cancelled and reset to another date.
● Meanwhile, the Union submitted its position paper. The Company did not, and instead
requested for a resetting which was granted.
● The Company was directed anew to submit its financial statements for the years 1976,
1977, and 1978.
● The case was further reset to May 11, 1979 due to the withdrawal of the Company’s
counsel of record, Atty. Rodolfo dela Cruz.
● On May 24, 1978, Atty. Fortunato Panganiban formally entered his appearance as
counsel for the Company only to request for another postponement allegedly for the
purpose of acquainting himself with the case. Meanwhile, the Company submitted its
position paper on May 28, 1979.
● When the case was called for hearing on June 4, 1979 as scheduled, the Company’s
representative, Mr. Ching, who was supposed to be examined, failed to appear. Atty.
Panganiban then requested for another postponement which the labor arbiter denied.
● He also ruled that the Company has waived its right to present further evidence and,
therefore, considered the case submitted for resolution.
● On July 18, 1979 -LA Andres Fidelino submitted its report to the NLRC On July 20,
1979, the NLRC.

NLRC
● Declared respondent Sweden Ice Cream is hereby declared guilty of unjustified refusal
to bargain, in violation of Section (g) Article 248 (now Article 249), of P.D. 442, as
amended.
● Further, the draft proposal for a collective bargaining agreement sent by the Union to the
Company and which is hereby found to be reasonable under the premises, is hereby
declared to be the collective agreement which should govern the relationship between
the parties herein.

COMPANY’S ARGUMENTS:
● Its right to procedural due process has been violated when it was precluded from
presenting further evidence in support of its stand and when its request for further
postponement was denied.
● The NLRC’s finding of unfair labor practice for refusal to bargain is not supported by law
and the evidence considering that it was only on May 24. 1979 when the Union furnished
them with a copy of the proposed Collective Bargaining Agreement and it was only then
that they came to know of the Union’s demands
● The Collective Bargaining Agreement approved and adopted by the NLRC is
unreasonable and lacks legal basis.

ISSUE: W/N the NLRC acted without or in excess of its jurisdiction or with grave abuse of
discretion amounting to lack of jurisdiction in rendering the challenged decision. (NO)

HELD:
● THE COMPANY IS GUILTY OF ULP.
● Collective bargaining which is defined as negotiations towards a collective agreement,
is one of the democratic frameworks under the New Labor Code, designed to stabilize
the relation between labor and management and to create a climate of sound and stable
industrial peace.
● It is a mutual responsibility of the employer and the Union and is characterized as
a legal obligation. So much so that Art 249, par. (g) of the Labor Code makes it an
unfair labor practice for an employer to refuse "to meet and convene promptly and
expeditiously in good faith for the purpose of negotiating an agreement with respect to
wages, hours of work, and all other terms and conditions of employment including
proposals for adjusting any grievance or question arising under such an agreement and
executing a contract incorporating such agreement, if requested by either party."
● While it is a mutual obligation of the parties to bargain, the employer, however, is
not under any legal duty to initiate contract negotiation.
● The mechanics of collective bargaining is set in motion only when the following
jurisdictional preconditions are present, namely, (1) possession of the status of majority
representation of the employees’ representative in accordance with any of the means of
selection or designation provided for by the Labor Code; (2) proof of majority
representation; and (3) a demand to bargain under Article 251, par. (a) of the New Labor
Code all of which preconditions are undisputedly present in the instant case.
● From the overall conduct of the company in relation to the task of negotiation,
there can be no doubt that the Union has a valid cause to complain against its
(Company’s) attitude, the totality of which is indicative of the latter’s disregard of,
and failure to live up to, what is enjoined by the Labor Code — to bargain in good
faith.
● It has been established that (1) respondent Union was a duly certified bargaining agent;
(2) it made a definite request to bargain, accompanied with a copy of the proposed
Collective Bargaining Agreement, to the Company not only once but twice which were
left unanswered and unacted upon; and (3) the Company made no counter proposal
whatsoever all of which conclusively indicate lack of a sincere desire to negotiate. 8 A
Company’s refusal to make a counter proposal if considered in relation to the entire
bargaining process, may indicate bad faith and this is specially true where the Union’s
request for a counter proposal is left unanswered.
● Even during the period of compulsory arbitration before the NLRC, petitioner Company’s
approach and attitude — stalling the negotiation by a series of postponements, non-
appearance at the hearing conducted, and undue delay in submitting its financial
statements, lead to no other conclusion except that it is unwilling to negotiate and reach
an agreement with the Union. Petitioner has not at any instance, evinced good faith or
willingness to discuss freely and fully the claims and demands set forth by the Union
much less justify its opposition thereto.
● Herald Delivery Carriers Union (PAFLU) v. Herald Publications - the rule had been
laid down that "unfair labor practice is committed when it is shown that the respondent
employer, after having been served with a written bargaining proposal by the petitioning
Union, did not even bother to submit an answer or reply to the said proposal. This
doctrine was reiterated anew in Bradman v. CIR wherein it was further ruled that "while
the law does not compel the parties to reach an agreement, it does contemplate that
both parties will approach the negotiation with an open mind and make a reasonable
effort to reach a common ground of agreement."
● Considering the various postponements granted in its behalf, the claimed denial
of due process appeared totally bereft of any legal and factual support. Petitioner
had not even honored respondent Union with any reply to the latter’s successive letters,
all geared towards bringing the Company to the bargaining table. It did not even bother
 to furnish or serve the Union with its counter proposal despite persistent requests made
therefor.
● It is not obligatory upon either side of a labor controversy to precipitately accept or agree
to the proposals of the other. But an erring party should not be tolerated and allowed
with impunity to resort to schemes feigning negotiations by going through empty
gestures. More so, as in the instant case, where the intervention of the National Labor
Relations Commission was properly sought for after conciliation efforts undertaken by
the BLR failed. The instant case being a certified one, it must be resolved by the NLRC
pursuant to the mandate of P.D. 873, as amended, which authorizes the said body to
determine the reasonableness of the terms and conditions of employment embodied in
any Collective Bargaining Agreement. To that extent, utmost deference to its findings of
reasonableness of any Collective Bargaining Agreement as the governing agreement by
the employees and management must be accorded due respect by this Court.

DISPOSITIVE: WHEREFORE, the instant petition is DISMISSED.

Albino
Topic: Effect of Labor Contracts on Transferee of Business
73. Associated Labor Unions-VIMCONTU v. NLRC
Doctrine: As a general rule, there is no law requiring a bona fide purchaser of the assets of an
on-going concern to absorb in its employ the employees of the latter. However, although the
purchaser of the assets or enterprise is not legally bound to absorb in its employ the employees
of the seller of such assets or enterprise, the parties are reliable to the employees if the
transaction between the parties is colored or clothed with bad faith. The sale or disposition must
be motivated by good faith as an element of exemption from liability.

Action Sequence: complaint for ULP > LA dismissed > NLRC affirmed LA > SC affirmed > no
ULP
Facts:

 A CBA was entered into between Associated Labor Unions-VIMCONTU and Mobil Oil
Philippines for 3 years from April 1, 1982 until March 31, 1985.
 August 5, 1983: respondent J.P. Bailiux, President of Mobil Oil Philippines, Inc. sent
letters to the employees, notifying them of the termination of their services because of
the sale of the respondent firm.
 The employees accepted their checks for separation pay and signed quit-claims under
protest.
 Caltex was impleaded as additional respondent because of its acquisition of the entire
marketing and distribution assets of Mobil Oil Philippines.
 Mobil Philippines, Inc. was also made a respondent in view of a metropolitan daily
newspaper announcement that Mobil Oil Philippines, Inc. will continue to do business
under the corporate name of Mobil Philippines, Inc.
 The union charge Mobil Oil Philippines and J.P. Bailiux with unfair labor practice for
violating their collective bargaining agreement which states:
 “This Agreement shall be binding upon the parties hereto and their successors and
assigns, and may be assigned by the company without the previous approval of the
Union. However, the latter will be notified of such assignment when it occurs.”
 Here, the unions were not notified officially of such assignment to Caltex Philippines.
o Caltex purchased Mobil Petroleum’s USA shareholdings in Mobil Oil Philippines,
Inc. (MOPI).
o MOPI then filed an amended articles of incorporation providing that its corporate
term would cease. Eventually, MOPI actually closed and ceased operations.
 Labor Arbiter: dismissed the complaint on the ground that the union has knowledge of
the impending sales and closure of the firm in a series of negotiations/meetings.
o As to the liability of Caltex, LA ruled that although Caltex is bound by the
agreement, the rights and interests or benefits that may have been earned during
the remaining term of the CBA have been satisfied by MOPI when the employees
accepted their respective checks and executed quitclaims.
 NLRC: affirmed the dismissal of the case.
Issue 1: WON Mobil Oil Ph is guilty of unfair legal practice? (NO)
Ruling 1: NO

 The termination of the employees was caused by the cessation of MOPI’s business
operations in the country.
 The written notice to terminate that is required to be given by either party to the other
relates to notice to terminate the CBA at the end of the original three-year, period or any
subsequent year thereafter, in the absence of which written notice, the duration of the
CBA would be automatically extended for one (1) year periods.
 What is involved in instant Petition is not, however, the termination of the CBA itself,
considering that the sale by Mobil Pet of its wholly owned subsidiary MOPI to Caltex.
 Since actual notice was given to all of MOPI's employees, including, of course, the
employees who were members of petitioner unions, such notice may also be regarded
as effectively the notice to the unions contemplated by the CBA
 Art. 284. 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 top 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
redundany, the worker affected thereby shall be entitled to a separation pay equivalent
to 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 closure 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 least one-half (½) 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.
 Three (3) requirements must be established in respect of cessation of business
operations of an employer company not due to business reverses, namely:
 o (a) service of a written notice to the employees and to the MOLE at least one (1)
month before the intended date thereof - MOPI's employee and the MOLE were
notified in writing that the employees' service would cease as a result of MOPI’s
withdrawal from business
o (b) the cessation of or withdrawal from business operation must be bona fide in
character; and
o (c) payment to the employees of termination pay amounting to at least one-half
(½) month pay for each year of service, or one (1) month pay, which is higher -
termination pay to the package given by MOPI to all its employees far exceeded
the minimum requirement of one-half (½) month pay for every year of service
(they were given 2.25 months per year) laid down in Article 284 which shows that
the cessation of business operations by MOPI was a bona fide one.
 The establishment of MPI with the same Directors who had served as such in MOPI and
the hiring of some former MOPI employees for the purpose of settling and winding up
the affairs of MOPI, does not detract from the bona fide character of MOPI's dissolution
and withdrawal from business.
 MPI's residual business consisting of the marketing of chemicals, aviation and marine
fuels as well as exports, all of which constituted a fraction of the prior business of MOPI,
similarly does not argue against the bona fide character of the corporate reorganization
which here took place.
 Considering that the withdrawal of business of MOPI is bona fide, Caltex may not
be said to have stepped into the picture as an assignee of the CBA because of the
very fact of such closure.
 Unless expressly assumed, labor contracts such as are not enforceable against a
transferee of an enterprise, labor contracts being in personam, thus binding only
between the parties.
 As a general rule, there is no law requiring a bona fide purchaser of the assets of
an on-going concern to absorb in its employ the employees of the latter.
 However, although the purchaser of the assets or enterprise is not legally bound
to absorb in its employ the employees of the seller of such assets or enterprise,
the parties are reliable to the employees if the transaction between the parties is
colored or clothed with bad faith.
 The sale or disposition must be motivated by good faith as an element of
exemption from liability.
Dispositive: WHEREFORE, both Petitions for certiorari are DISMISSED for lack of merit.
Balce
Topic: The National Conciliation and Mediation Board
75. Tabigue v. INTERCO

UANITO TABIGUE, ALEX BIBAT, JECHRIS DASALLA, ANTONIO TANGON, ROLANDO

PEDRIGAL, DANTE MAUL, ALFREDO IDUL, EDGAR RAMOS, RODERICK JAVIER, NOEL
PONAYO, ROMEL ORAPA, REY JONE, ALMA PATAY, JERIC BANDIGAN, DANILO
JAYME, ELENITA S. BELLEZA, JOSEPHINE COTANDA, RENE DEL MUNDO, PONCIANO
ROBUCA, and MARLON MADICLUM, petitioners,
vs.
 INTERNATIONAL COPRA EXPORT CORPORATION (INTERCO), respondent.

G.R. No. 183335, December 23, 2009

Ponente: CARPIO MORALES, J.

Doctrine: Article 260 of the Labor Code, the parties to a CBA shall name or designate their
respective representatives to the grievance machinery and if the grievance is unsettled in that
level, it shall automatically be referred to the voluntary arbitrators designated in advance by
parties to a CBA. Consequently, only disputes involving the union and the company shall
be referred to the grievance machinery or voluntary arbitrators.
Action Sequence: Notice of Preventive Mediation before NCMB -> Letter of Union President
presented before NCMB stating that petitioners are not authorized to represent Union -> Notcie
to Arbitrate by Union -> Demand to submit the issues to VA is not granted by NCMB -> CA
dismissed the petition -> SC denied the petition.
FACTS:
● Petitioner Juanito Tabigue and his 19 co-petitioners, all employees of respondent
INTERCO, filed a Notice of Preventive Mediation with the DOLE –NCMB against
respondent, for violation of CBA and failure to sit on the grievance conference/meeting.
● As the parties failed to reach a settlement before the NCMB, petitioners requested to
elevate the case to voluntary arbitration. The NCMB thus set a date for the parties to
agree on a Voluntary Arbitrator.
● Before the parties could finally meet, respondent presented before the NCMB a letter of
Genaro Tan, president of the union, addressed to respondent’s plant manager Engr.
Paterno C. Tangente, stating that petitioners are not duly authorized by the board or the
officers to represent the union, hence all actions, representations or agreements made
by these people with the management will not be honored or recognized by the union.
Respondent thus moved to dismiss petitioners’ complaint for lack of jurisdiction.
● Petitioners sent Tan and Tangente a Notice to Arbitrate, furnishing the NCMB with a
copy thereof, which notice respondent opposed.
● NCMB: The NCMB Director concluded that the demand of petitioners to submit the
issues to voluntary arbitration CANNOT BE GRANTED. He thus advised petitioners
to avail of the compulsory arbitration process to enforce their rights.
● NCMB Director Yosores wrote petitioner Alex Bibat and Tangente of the lack of
willingness of both parties to submit to voluntary arbitration, which willingness is a pre-
requisite to submit the case thereto; and that under the CBA, the union is an
indispensable party to a voluntary arbitration but that since Tan informed
respondent that the union had not authorized petitioners to represent it, it would
be absurd to bring the case to voluntary arbitration.
● Upon MR, the NCMB Director stated that the NCMB has no rule-making power to decide
on issues as it only facilitates settlement among the parties to labor disputes.
● CA RULING: CA dismissed the petition for review. It stated that considering that
NCMB is not a quasi-judicial agency exercising quasi-judicial functions but merely a
conciliatory body for the purpose of facilitating settlement of disputes between parties, its
decisions or that of its authorized officer cannot be appealed either through a petition for
review under Rule 43 or under Rule 65 of the Revised Rules of Court.
ISSUE 1:
Whether or not the unsettled grievances should be referred to voluntary arbitration as called for
in the CBA. (NO)
RULING 1:
No. Petitioners have not been duly authorized to represent the union. Apropos is this
Court’s pronouncement in Atlas Farms, Inc. v. National Labor Relations Commission, viz:
x x x Pursuant to Article 260 of the Labor Code, the parties to a CBA shall name or
designate their respective representatives to the grievance machinery and if the
grievance is unsettled in that level, it shall automatically be referred to the voluntary
arbitrators designated in advance by parties to a CBA. Consequently, only disputes
involving the union and the company shall be referred to the grievance machinery or
voluntary arbitrators.
Clutching at straws, petitioners invoke the first paragraph of Article 255 of the Labor Code which
states:
Art. 255. The labor organization designated or selected by the majority of the employees
in an appropriate collective bargaining unit shall be the exclusive representative of the
employees in such unit for the purpose of collective bargaining. However, an individual
employee or group of employees shall have the right at any time to present grievances
to their employer.
To petitioners, the immediately quoted provision "is meant to be an exception to the
exclusiveness of the representative role of the labor organization/union."
However, the Court held that the right of any employee or group of employees to, at any
time, present grievances to the employer does not imply the right to submit the same to
voluntary arbitration.
ISSUE 2:
Whether or not the final judgments, decisions, resolutions, orders, or awards of NCMB is
appealable by petition for review to the CA. (NO)
RULING 2:
NO. Rule 43 of the Rules of Court under which petitioners filed their petition before the Court of
Appeals applies to awards, judgments, final orders or resolutions of or authorized by any quasi-
judicial agency in the exercise of its quasi-judicial functions.
An agency is said to be exercising judicial function where it has the power to determine what the
law is and what the legal rights of the parties are, and then undertakes to determine these
questions and adjudicate upon the rights of the parties. Quasi-judicial function is a term which
applies to the action, discretion, etc. of public administrative officers or bodies, who are required
to investigate facts or ascertain the existence of facts, hold hearings, and draw conclusions from
them as a basis for their official action and to exercise discretion of a judicial nature.
Given NCMB’s following functions (please refer to notes), as enumerated in Section 22 of
Executive Order No. 126 (the Reorganization Act of the Ministry of Labor and Employment), it
cannot be considered a quasi-judicial agency. Hence, the final judgments, decisions,
resolutions, orders, or awards of NCMB are not appealable by petition for review to the CA.

DISPOSITIVE PORTION:
WHEREFORE, the petition is DENIED.

NOTES:
Functions of NCMB, as enumerated in Section 22 of Executive Order No. 126 (the
Reorganization Act of the Ministry of Labor and Employment):
(a) Formulate policies, programs, standards, procedures, manuals of operation and guidelines
pertaining to effective mediation and conciliation of labor disputes;
(b) Perform preventive mediation and conciliation functions;
(c) Coordinate and maintain linkages with other sectors or institutions, and other government
authorities concerned with matters relative to the prevention and settlement of labor disputes;
(d) Formulate policies, plans, programs, standards, procedures, manuals of operation and
guidelines pertaining to the promotion of cooperative and non-adversarial schemes, grievance
handling, voluntary arbitration and other voluntary modes of dispute settlement;
(e) Administer the voluntary arbitration program; maintain/update a list of voluntary arbitrations;
compile arbitration awards and decisions;
(f) Provide counseling and preventive mediation assistance particularly in the administration of
collective agreements;
(g) Monitor and exercise technical supervision over the Board programs being implemented in
the regional offices; and
(h) Perform such other functions as may be provided by law or assigned by the Minister.

Chua
Topic: Effect of Pending Petition for Cancellation of Union Registration on Collective Bargaining
76. Digitel v. DEU
Digital Telecommunications Philippines, Inc. v. Digital Employees Union (DEU), Arcelo
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
Doctrine: 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, 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.
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 is that at the time of the filing of the petition for certification election or CBA process,
the union still had the personality to file a petition for certification or to ask for a CBA negotiation.
Action Sequence:
(1) Refusal to bargain: NCMB -> Labor Secretary -> NLRC -> CA -> SC
(2) Petition for cancellation: RD -> BLR
Facts: Digitel Employees Union (Union), the exclusive bargaining agent of all rank and file
employees of Digitel in 1994, commenced CBA negotiations with Digitel, which resulted in a
bargaining deadlock. The union threatened to go on strike, but Acting Labor Secretary
Bienvenido Laguesma assumed jurisdiction and directed the parties to execute a CBA.
However, no CBA was forged, and the union later became dormant.
10 years later, in Sept. 2004, Digitel received from Esplana, identifying himself as president of
the Union, containing a list of the officers. However, Digitel was reluctant to negotiate and
demanded that the Union show compliance with its Constitution and By-laws on union
membership and election of officers.
In Nov. 2004, Esplana and his group filed a case for Preventive Mediation before the NCMB for
violation of the duty to bargain, and later filed a notice of strike. Labor Secretary Patricia Sto.
Tomas assumed jurisdiction over the dispute.
Meanwhile, Digiserv (a non-profit enterprise engaged in call center servicing) filed an
Establishment Termination Report with DOLE stating it will cease its operation, affecting at least
100 employees, 42 of whom are members of the Union. Esplana and his group filed another
notice of strike for union busting, illegal lock-out and violation of the assumption order.
In May 2005, the Secretary of Labor ordered the second notice of strike subsumed by the
previous Assumption Order.
In March 2005, Digitel filed a petition with the BLR for the cancellation of the Union’s registration
for (1) failure to file required reports from 1994-2004, (2) misrepresentation of alleged officers,
(3) membership composed of rank and file, supervisory and managerial employees, and (4)
having a substantial number of union members who are not Digitel employees.
In May 2005, the DOLE RD dismissed the petition for cancellation of union registration, claiming
it had no jurisdiction over the issue of non-compliance with reportorial requirements, that digital
failed to adduce evidence of misrepresentation and mixing non-Digitel employees, and that the
inclusion of supervisory and managerial employees with the rank and file employees is not a
ground for cancellation of the Union’s certificate of registration. Digitel’s appeal with the BLR
was dismissed for lack of merit.
In July 2005, the Secretary of Labor directed Digitel to commence CBA negotiation, and certified
the issues on ULP for compulsory arbitration to the NLRC. Digitel filed an MR raising the
pending petition for the cancellation of the union’s certificate of registration, but was denied. In
Oct. 2005, Digitel filed a petition assailing the Orders of the DOLE Secretary with the CA.
The NLRC dismissed the unfair labor practice charge against Digitel but declared the dismissal
of 13 Digiserv employees as illegal, and ordered their reinstatement, which was reduced to 9 by
virtue of quitclaims signed by 4 employees. Digitel filed another petition with the CA challenging
the NLRC Decision, arguing that Digiserv employees are not employees of Digitel
The CA upheld the order for Digitel to commence negotiations 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. It also sustained the finding that Digiserv is engaged in labor-only
contracting. Digitel’s MR was denied, hence the present petition for review on certiorari.
Main Issue: Whether the Secretary of Labor erred in issuing the assumption order despite the
pendency of the petition for cancellation of union registration
Ruling 1: NO. The pendency of a petition for cancellation of union registration does not
preclude collective bargaining.
In Capitol Medical Center v. Trajano, the court ruled:
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 (NUBE v. Ministry of Labor), 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.
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 is that at the time of the filing of the petition for certification election or CBA process,
the union still had the personality to file a petition for certification or to ask for a CBA negotiation.
Issue 2: Whether Digiserv is a legitimate contractor
Ruling 2: NO.
There is no showing that first, Digiserv has substantial investment in the form of capital,
equipment or tools. The NLRC, as echoed by the Court of Appeals, did not find substantial
Digiserv’s authorized capital stock of One Million Pesos (₱ 1,000,000.00). It pointed out that
only Two Hundred Fifty Thousand Pesos (₱ 250,000.00) of the authorized capital stock had
been subscribed and only Sixty-Two Thousand Five Hundred Pesos (₱ 62,500.00) had been
paid up. There was no increase in capitalization for the last ten (10) years. 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.
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. Considering that Digiserv has been found to be
engaged in labor-only contracting, the dismissed employees are deemed employees of Digitel.
Issue 3: Whether there was a valid dismissal.
Ruling 3: NO.
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 ó 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.
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 ₱ 163,624.00 and ₱
164,055.00, respectively. 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. 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.
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.
Digitel defied the assumption order by abruptly closing down Digiserv. 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 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.
Nevertheless, the closure remains a foregone conclusion. There is no finding 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.
Thus, the employees cannot be reinstated to I-tech. It is likewise impossible for the employees
to be reinstated because Digiserv has been closed and no longer exists. Thus, 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.
Finally, an illegally dismissed employee should be awarded moral and exemplary damages as
their dismissal was tainted with unfair labor practice. We award moral damages in the amount of
₱ 10,000.00 and likewise awarded ₱ 5,000.00 as exemplary damages for each dismissed
employee.
Dispositive: Petition is denied.
Ignacio
Topic: Effect of Pending Petition for Cancellation of Union Registration on Collective Bargaining:
Effect of Amended or Extended Term of CBA on Representation Status of Bargaining Agent.

77. FVC v. SNM-FVC

[G.R. No. 176249. November 27, 2009.]

FVC LABOR UNION-PHILIPPINE TRANSPORT AND GENERAL

WORKERS ORGANIZATION (FVCLU-PTGWO), petitioner, vs. SAMASAMANG
NAGKAKAISANG MANGGAGAWA SA FVC-SOLIDARITY OF
INDEPENDENT AND GENERAL LABOR ORGANIZATIONS (SANAMAFVC-
SIGLO), respondent.

Doctrine:
 While the parties may agree to extend the CBA's original five-year term together with all
other CBA provisions, any such amendment or term in excess of five years will not carry
with it a change in the union's exclusive collective bargaining status.
 By express provision of the above-quoted Article 253-A, the exclusive bargaining status
cannot go beyond five years and the representation status is a legal matter not for the
workplace parties to agree upon.
o In other words, despite an agreement for a CBA with a life of more than five
years, either as an original provision or by amendment, the bargaining union's
exclusive bargaining status is effective only for five years and can be challenged
within sixty (60) days prior to the expiration of the CBA's first five years.

Action Sequence: Med-Arb dismissed PCE > DOLE Sec Sto Tomas reversed Med-Arb,
ordered the conduct of CE > DOLE Acting Sec Imson reversed and dismissed the PCE; MR
denied > CA reversed and reinstated first decision of DOLE Sec Sto Tomas > SC affirmed

Facts:
 On December 22, 1997, the petitioner FVCLU-PTGWO — the recognized bargaining
agent of the rank-and-file employees of the FVC Philippines, Incorporated (company) —
signed a five-year collective bargaining agreement (CBA) with the company.
 o The five-year CBA period was from February 1, 1998 to January 30, 2003.
 At the end of the 3rd year of the five-year term and pursuant to the CBA, FVCLU-
PTGWO and the company entered into the renegotiation of the CBA and modified,
among other provisions, the CBA's duration.
o Article XXV, Section 2 of the renegotiated CBA provided that "this re-negotiation
agreement shall take effect beginning February 1, 2001 and until May 31, 2003"
thus extending the original five-year period of the CBA by four (4) months.
 On January 21, 2003, nine (9) days before the January 30, 2003 expiration of the
originally agreed five-year CBA term, the respondent SANAMA-SIGLO filed before the
Department of Labor and Employment a petition for certification election for the same
rank-and-􀀽le unit covered by the FVCLU-PTGWO CBA.
 FVCLU-PTGWO moved to dismiss the petition on the ground that the certification
election petition was filed outside the freedom period or outside of the sixty (60) days
before the amended expiration of the CBA on May 31, 2003.
 Med-Arbiter Arturo V. Cosuco dismissed the petition on the ground that it was filed
outside the 60-day period counted from the May 31, 2003 expiry date of the amended
CBA.
 SANAMA-SIGLO appealed the Med-Arbiter's Order to the DOLE Secretary and
sustained SANAMA-SIGLO's position, thereby setting aside the decision of the Med-
Arbiter. She ordered the conduct of a certification election in the company.
 FVCLU-PTGWO moved for the reconsideration of the Secretary's decision.
 DOLE Acting Secretary Manuel G. Imson granted the motion; he set aside the August 6,
2003 DOLE decision and dismissed the petition as the Med-Arbiter's Order of June 17,
2003 did.
o RATIONALE: Since these SANAMA-SIGLO members fully accepted and in fact
received the benefits arising from the amendments, the Acting Secretary
rationalized that they also accepted the extended term of the CBA and cannot
now file a petition for certification election based on the original CBA expiration
date.
 SANAMA-SIGLO sought relief from the CA through a petition for certiorari under Rule 65
of the Rules of Court based on the GAD the Labor Secretary committed when she
reversed her earlier decision calling for a certification election.
 The CA found SANAMA-SIGLO's petition meritorious on the basis of the applicable law
and the rules, as interpreted in the congressional debates. It set aside the challenged
DOLE Secretary decisions and reinstated her earlier ruling calling for a certification
election.
o RATIONALE: While the parties may renegotiate the other provisions (economic
and non-economic) of the CBA, this should not affect the five-year representation
aspect of the original CBA.

Issue: Whether or not the CA erred in ruling that SANAMA-SIGLO validly filed its petition for
certification election in relation to the original term of the CBA? (N)
Ruling: NO. The CA was correct in its decision, although no petition for certification election be
enforced due to the VOLUNTARY DESISTANCE of SANAMA-SIGLO to pursue it further.

 FVCLU-PTGWO has taken the view that its exclusive representation status should fully
be in step with the term of the CBA and that this status can be challenged only within 60
days before the expiration of this term.
o Thus, when the term of the CBA was extended, its exclusive bargaining status
was similarly extended so that the freedom period for the filing of a petition for
certification election should be counted back from the expiration of the amended
CBA term.
 We hold this FVCLU-PTGWO position to be correct, but only with respect to the original
five-year term of the CBA which, by law, is also the effective period of the union's
exclusive bargaining representation status.
 While the parties may agree to extend the CBA's original five-year term together with all
other CBA provisions, any such amendment or term in excess of five years will not carry
with it a change in the union's exclusive collective bargaining status.
 By express provision of the above-quoted Article 253-A, the exclusive bargaining status
cannot go beyond five years and the representation status is a legal matter not for the
workplace parties to agree upon.
o In other words, despite an agreement for a CBA with a life of more than five
years, either as an original provision or by amendment, the bargaining union's
exclusive bargaining status is effective only for five years and can be challenged
within sixty (60) days prior to the expiration of the CBA's first five years.
 In the present case, the CBA was originally signed for a period of five years, i.e., from
February 1, 1998 to January 30, 2003, with a provision for the renegotiation of the CBA's
other provisions at the end of the 3rd year of the five-year CBA term. Prior to January
30, 2001 the workplace parties sat down for renegotiation but instead of confining
themselves to the economic and non-economic CBA provisions, also extended the life of
the CBA for another four months, i.e., from the original expiry date on January 30, 2003
to May 30, 2003.
 This negotiated extension of the CBA term has no legal effect on the FVCLU-
PTGWO's exclusive bargaining representation status which remained effective
only for five years ending on the original expiry date of January 30, 2003.
o Thus, sixty days prior to this date, or starting December 2, 2002, SANAMA-
SIGLO could properly file a petition for certification election. Its petition, filed on
January 21, 2003 or nine (9) days before the expiration of the CBA and of
FVCLU-PTGWO's exclusive bargaining status, was seasonably filed.
 We thus find no error in the appellate court's ruling reinstating the DOLE order for the
conduct of a certification election. If this ruling cannot now be given effect, the only
reason is SANAMA-SIGLO's own desistance; we cannot disregard its manifestation that
the members of SANAMA themselves are no longer interested in contesting the
exclusive collective bargaining agent status of FVCLU-PTGWO. This recognition is fully
in accord with the Labor Code's intent to foster industrial peace and harmony in the
workplace.
Dispositive:

WHEREFORE, premises considered, we AFFIRM the correctness of the challenged

Decision and Resolution of the Court of Appeals and accordingly DISMISS the petition, but
nevertheless DECLARE that no certification election, pursuant to the underlying petition for
certification election filed with the Department of Labor and Employment, can be enforced as
this petition has effectively been abandoned.
Manotok

Topic: Period of Renegotiated Terms of “all other provisions” of the CBA

78. San Miguel Corporation Employees Union-PTGWO vs. Confesor

[G.R. No. 111262. September 19, 1996.]

SAN MIGUEL CORPORATION EMPLOYEES UNIONPTGWO, represented by its President

RAYMUNDO HIPOLITO, JR., petitioner, vs. HON. MA. NIEVES D. CONFESOR, Secretary of
Labor, Dept. of Labor & Employment, SAN MIGUEL CORPORATION, MAGNOLIA
CORPORATION (Formerly, Magnolia Plant) and SAN MIGUEL FOODS, INC. (Formerly, B-
Meg Plant), respondents.

Doctrine: The legislators were more inclined to have the period of effectivity for three (3) years
insofar as the economic as well as non-economic provisions are concerned, except
representation.

Action Sequence: Union declares deadlock > Notice of Strike was filed > Strike vote conducted
> Private respondents file a petition with the Secretary of Labor > Secretary of Labor issues
order > SPECIAL CIVIL ACTION in the Supreme Court. Certiorari. > Petition Dismissed.

Facts:

● On June 28, 1990, petitioner-union San Miguel Corporation Employees Union-PTGWO

entered into a Collective Bargaining Agreement (CBA) with private respondent San
Miguel Corporation (SMC) to take effect upon the expiration of the previous CBA or on
June 30, 1989.
● In a letter dated August 13, 1991, SMC management informed its employees that the
company which was composed of four operating divisions namely: (1) Beer, (2)
Packaging, (3) Feeds and Livestocks, (4) Magnolia and Agribusiness would undergo a
restructuring.
● Effective October 1, 1991, Magnolia and Feeds and Livestock Division were spun-off
and became two separate and distinct corporations: Magnolia Corporation (Magnolia)
and San Miguel Foods, Inc. (SMFI). Notwithstanding the spin-offs, the CBA remained in
force and effect.
 ● After June 30, 1992, the CBA was renegotiated in accordance with the terms of the CBA
and Article 253-A of the Labor Code. During the negotiations, the petitioner-union
insisted that the bargaining unit of SMC should still include the employees of the spun-
off corporations: Magnolia and SMFI; and that the renegotiated terms of the CBA shall
be effective only for the remaining period of two years or until June 30, 1994
● SMC, on the other hand, contended that the members/employees who had moved to
Magnolia and SMFI, automatically ceased to be part of the bargaining unit at the SMC.
Furthermore, the CBA should be effective for three years in accordance with Art. 253-A
of the Labor Code.
● Unable to agree on these issues with respect to the bargaining unit and duration of the
CBA, petitioner-union declared a deadlock. A Notice of Strike was filed against SMC.
SMC requested the National Conciliation and Mediation Board (NCMB) to conduct
preventive mediation. No settlement was arrived at despite several meetings held
between the parties. A strike vote was conducted which resulted in a “yes vote” in favor
of a strike. Private respondents SMC, Magnolia and SMFI filed a petition with the
Secretary of Labor praying that the latter assume jurisdiction over the labor dispute in a
vital industry. As prayed for, the Secretary of Labor assumed jurisdiction over the labor
dispute.
● After the parties submitted their respective position papers, the Secretary of Labor
issued the assailed order directing, among others, that the renegotiated terms of the
CBA shall be effective for the period of three (3) years from June 30, 1992; and that
such CBA shall cover only the employees of SMC and not of Magnolia and SMFI.
● Dissatisfied, petitioner-union now comes to this Court questioning this Order of the
Secretary of Labor.

Issue:

1. Whether or not the duration of the renegotiated terms of the CBA is to be effective for three
years or for only two years; (THREE YEARS)
2. Whether or not the bargaining unit of SMC includes also the employees of Magnolia and
SMFI. (NO)

Ruling:

1. Whether or not the duration of the renegotiated terms of the CBA is to be effective for three
years or for only two years.

The effectivity of the renegotiated terms of the CBA shall be for three (3) years.
● Article 253-A is a new provision. This was incorporated by Section 21 of Republic Act
No. 6715 (the Herrera-Veloso Law) which took effect on March 21, 1989. This new
provision states that the CBA has a term of five (5) years instead of three years, before
the amendment of the law as far as the representation aspect is concerned. All other
provisions of the CBA shall be negotiated not later than three (3) years after its
execution. The “representation aspect” refers to the identity and majority status of the
 union that negotiated the CBA as the exclusive bargaining representative of the
appropriate bargaining unit concerned. “All other provisions” simply refers to the rest of
the CBA, economic as well as non-economic provisions, except representation.
● As the Secretary of Labor herself observed in the instant case, the law is clear and
definite on the duration of the CBA insofar as the representation aspect is concerned,
but is quite ambiguous with the terms of the other provisions of the CBA. It is a cardinal
principle of statutory construction that the Court must ascertain the legislative intent for
the purpose of giving effect to any statute.
● The framers of the law wanted to maintain industrial peace and stability by having both
management and labor work harmoniously together without any disturbance. Thus, no
outside union can enter the establishment within five (5) years and challenge the status
of the incumbent union as the exclusive bargaining agent. Likewise, the terms and
conditions of employment (economic and non-economic) can not be questioned by the
employers or employees during the period of effectivity of the CBA. The CBA is a
contract between the parties and the parties must respect the terms and conditions of
the agreement. Notably, the framers of the law did not give a fixed term as to the
effectivity of the terms and conditions of employment. It can be gleaned from their
discussions that it was left to the parties to fix the period.
● In the instant case, it is not difficult to determine the period of effectivity for the non-
representation provisions of the CBA. Taking it from the history of their CBAs, SMC
intended to have the terms of the CBA effective for three (3) years reckoned from the
expiration of the old or previous CBA which was on June 30, 1989.

2. Whether or not the bargaining unit of SMC includes also the employees of Magnolia and
SMFI.

NO. There is no merit in petitioner-union’s assertion that the employees of Magnolia and
SMFI should still be considered part of the bargaining unit of SMC.
● Magnolia and SMFI were spun-off to operate as distinct companies on October 1, 1991.
Management saw the need for these transformations in keeping with its vision and long
term strategy. The transformation of the companies was a management prerogative and
business judgment which the courts cannot look into unless it is contrary to law, public
policy or morals. Neither can we impute any bad faith on the part of SMC so as to justify
the application of the doctrine of piercing the corporate veil. Magnolia and SMFI became
distinct entities with separate juridical personalities. Thus, they cannot belong to a single
bargaining unit.
● Moreover, in determining an appropriate bargaining unit, the test of grouping is mutuality
or commonality of interests. The employees sought to be represented by the collective
bargaining agent must have substantial mutual interests in terms of employment and
working conditions as evinced by the type of work they performed.
o Considering the spin-offs, the companies would consequently have their
respective and distinctive concerns in terms of the nature of work, wages, hours
of work and other conditions of employment. Interests of employees in the
different companies perforce differ. SMC is engaged in the business of beer
 manufacturing. Magnolia is involved in the manufacturing and processing of dairy
products while SMFI is involved in the production of feeds and the processing of
chicken. The nature of their products and scales of business may require
different skills which must necessarily be commensurated by different
compensation packages. The different companies may have different volumes of
work and different working conditions. For such reason, the employees of the
different companies see the need to group themselves together and organize
themselves

Dispositive: WHEREFORE, the petition is DISMISSED for lack of merit. The Temporary
Restraining Order issued on March 29, 1995 is lifted. SO ORDERED.

[T]here are various factors which must be satisfied and considered in determining the proper
constituency of a bargaining unit. No one particular factor is itself decisive of the determination.
The weight accorded to any particular factor varies in accordance with the particular question or
questions that may arise in a given case. What are these factors?

Rothenberg mentions a good number, but the most pertinent to our case are:
1. Will of the employees (Globe Doctrine);
2. Affinity and unit of employees' interest, such as substantial similarity of work and duties,
or similarity of compensation and working conditions;
3. Prior collective bargaining history; and
4. Employment status, such as temporary, seasonal and probationary employees
Sira
Topic: Retroactivity of Arbitral Awards
79. Manila Central Line Corporation vs. Manila Central Line Free Workers Union-National
Federation of Labor and the NLRC
MANILA CENTRAL LINE CORPORATION, petitioner, vs. MANILA CENTRAL LINE FREE
WORKERS UNION-NATIONAL FEDERATION OF LABOR and the NATIONAL LABOR
RELATIONS COMMISSION, respondents.
G.R. No. 109383 June 15, 1998
Doctrine:
Action Sequence: LA (directed the parties to enter into a new CBA)->NLRC (affirmed LA)-> SC
(petition dismissed for lack of merit)
FACTS:

 This case arose out of a collective bargaining deadlock between petitioner and private
respondent.
 The parties’ CBA had expired on March 15, 1989. As the parties failed to reach a new
agreement, private respondent sought the aid of the NCMB on October 30, 1989, but the
deadlock remained unresolved.
  On February 9, 1990, respondent filed a Petition for Compulsory Arbitration. At the initial
hearing before the LA, the parties declared that conciliation efforts before the NCMB had
terminated and it was their desire to submit the case for compulsory arbitration.
 On September 28, 1990, the LA rendered a decision embodying provisions for a
new CBA. The LA directed petitioner Union and respondent Company to execute and
formalize their new 5-year CBA retroactive to the date of expiry of the 1986-1989 CBA
by adopting the provisions in the LA decision.
 Petitioner appealed, but its appeal was denied by the NLRC.
 Hence, the present petitioner.
ISSUE 1: Whether or not the Labor Arbiter has jurisdiction over the case
RULING 1: Yes, the Labor Arbiter has jurisdiction.

 Despite the fact that it agreed with the union to submit their dispute to the labor arbiter
for arbitration, petitioner contends that the policy of the law now is to encourage resort to
conciliation and voluntary arbitration as Art. 250 (e) of the Labor Code provides.
 Indeed, the Labor Code formerly provided that if the parties in collective bargaining fail to
reach an agreement, the Bureau of Labor Relations should call them to conciliation
meetings and, if its efforts were not successful, certify the dispute to a labor arbiter for
compulsory arbitration.
 But this was changed by R.A. No. 6715 which took effect on March 21, 1989. Art. 250(e)
of the Labor Code now provides that if efforts at conciliation fail, the Board shall
"encourage the parties to submit their case to a voluntary arbitrator." With specific
reference to cases involving deadlocks in collective bargaining, Art. 262 provides:
Jurisdiction over other labor disputes. — The Voluntary Arbitrator or panel of Voluntary
Arbitrators, upon agreement of the parties, shall also hear and decide all other labor
disputes including unfair labor practices and bargaining deadlocks.
 This is what the parties did in this case. After the Board failed to resolve the bargaining
deadlock between the parties, the union filed a petition for compulsory arbitration in the
Arbitration Branch of the NLRC. It does not matter that the person chosen as arbitrator is
a labor arbiter who, under Art. 217 of the Labor Code, is charged with the compulsory
arbitration of certain labor cases. There is nothing in the law that prohibits these labor
arbiters from also acting as voluntary arbitrators as long as the parties agree to have him
hear and decide their dispute.
 Moreover, petitioner must be deemed to be estopped from questioning the authority of
the LA to act as voluntary arbitrator and render a decision in this case. Petitioner agreed,
together with the union, to refer their dispute for arbitration to him. It was only after a
decision was rendered that petitioner raised the question of lack of jurisdiction. Even the,
petitioner did so only for the first time in a "supplemental memorandum of appeal" to the
NLRC.
ISSUE 2: Whether or not the findings of the LA and the NLRC are correct
RULING 2: Yes, the findings of the LA and NLRC are correct and the issues were
exhaustively discussed.

 Findings of the LA and the NLRC are generally held to be binding, and even final, so
long as they are substantially supported by evidence in the record of the case. This is
 specially so where, as here, the agency and a subordinate one which heard the case in
the first instance are in full agreement as to the facts.
 The decisions of both the NLRC and the labor arbiter contain an exhaustive discussion
of the issues, belying petitioner's claim that they did not fully consider the evidence and
appreciate what it claims are the "dire economics straits" it is in. This is evident from the
the labor arbiter's order dated September 28, 1990, which the NLRC adopted.
 Specifically, the following were the issues raised:
o Commission for drivers, conductors and conductresses shall be 10% and 8%,
respectively, of their gross collections. In addition, as incentive pay, it proposed
that drivers, conductors and conductresses shall be entitled to incentive pay for
certain quotas.
 A look at the parties' proposal and counter-proposal shows that the union
was demanding that the rate of commission to be increased to 10% and
8% from the old rate of 8% and 6% or an increase of 2%, while that of the
company effectively increased the rate by .5% to make the rate at 8.5%
and 6.5%.
 To the mind of this arbitrator, he deems it proper and fair for both parties,
to adopt the quota as proposed by the respondent and the rate for the
incentive pay as proposed by the union. It is believe (sic) that such is fair
and reasonable because as appearing in the parties' proposal and
counter-proposal, it would seem that they are trying to out-wit each other.
o Insofar as the "fixed income employees" are concerned, they proposed that they
should be granted a salary/wage increase.
 Another issue where the parties are in statements (sic) is the matter of
increase in the salary and wages of the fixed income employees covered
by the CBA. The LA chose to adopt the increase as provided under the
old CBA , that is, P6.00 for the first year, P5.00 for the second year and
P4.00 for the third year.
o Petitioner contends, however, that the labor arbiter has a duty to indicate in his
order every relevant proof necessary to show that the opposing party's evidence
is superior to that of petitioner. This is not so. The quantum of proof required in
proceeding before administrative agencies is "substantial evidence," not
overwhelming or preponderant evidence. The quoted portion of the labor arbiter's
order shows that the proposals of the parties as well as petitioner's order shows
that the proposals of the parties as well as petitioner's financial statements were
carefully considered by him in arriving at his judgment. As the Solicitor General
states:
o The increase in commission rate will not really affect the income of the
COMPANY. By their very nature, commissions will only be given to the
employees if the COMPANY receives income. They are given in the form of
incentives or encouragement so that employees would be inspired to put a little
more industry on their particular tasks. This is unlike salaries and wages which
are fixed amounts and which should be given to the employees regardless of
whether the COMPANY is making any collection or not. Therefore, the
employees are merely asking a percentage of the earnings of the COMPANY,
which they, through their efforts, helped produce.
 o As regards the incentive pay increase, the COMPANY's financial position was
also taken into consideration. It appears that the COMPANY and the UNION
were trying to outwit each other in their respective proposals. Thus, the position
adopted by the Labor Arbiter — increasing the quota and the amount of incentive
— is a middle ground which is fair to both parties.
o The increase in salaries and wages was premised on the findings of the Labor
Arbiter that the COMPANY was not on the verge of financial collapse and that an
increase would be mandated, particularly taking into consideration the inflation or
increase in the cost of living the subsequently years after the CBA was finalized.
In adopting the wage increase rates provided in the old CBA, the financial
condition of the COMPANY as well as the needs of the employees were taken
into consideration.
ISSUE 3: Whether or not the LA acted contrary to Article 253-A of the Labor Code when it
ordered the new CBA to be effective on March 15, 1989 (expiry date of the old CBA)
RULING 3: No, the LA did not act contrary to the Labor Code.

 Art. 253-A of the Labor Code states, among others, that:

o Any agreement on such other provisions of the Collective Bargaining Agreement
entered into within six (6) months from the date of expiry of the term of such
other provisions as fixed in such Collective Bargaining Agreement, shall retroact
to the day immediately following such date. If any such agreement is entered into
beyond six months, the parties shall agree on the duration of retroactivity thereof.
In case of a deadlock in the negotiation of the collective bargaining agreement,
the parties may exercise their rights under this Code.
 Art. 253-A refers to collective bargaining agreements entered into by the parties as a
result of their mutual agreement. The CBA in this case, on the other hand, is part of
an arbitral award. As such, it may be made retroactive to the date of expiration of
the previous agreement. As held In St. Luke's Medical Center, Inc. v. Torres:
o Finally, the effectivity of the Order of January 28, 1991, must retroact to the date
of the expiration of the previous CBA, contrary to the position of petitioner. Under
the circumstances of the case, Article 253-A cannot be properly applied to herein
case. As correctly stated by public respondent in his assailed Order of April 12,
1991 dismissing petitioner's Motion for Reconsideration —
 Anent the alleged lack of basis for the retroactivity provisions awarded,
we would stress that the provision of law invoked by the Hospital, Article
253-A of the Labor Code, speaks of agreements by and between the
parties, and not arbitral awards..
o Therefore, in the absence of a specific provision of law prohibiting retroactivity of
the effectivity of arbitral awards issued by the Secretary of Labor pursuant to
Article 263(g) of the Labor Code, such as herein involved, public respondent is
deemed vested with plenary and discretionary powers to determine the effectivity
thereof.
 Indeed, petitioner has not shown that the question of effectivity was not included in the
general agreement of the parties to submit their dispute for arbitration. To the contrary,
as the order of the labor arbiter states, this question was among those submitted for
arbitration by the parties:
 o As regards the "Effectivity and Duration" clause, the company proposes that the
collective bargaining agreement shall take effect only upon its signing and shall
remain in full force and effect for a period of five years. The union proposes that
the agreement shall take effect retroactive to March 15, 1989, the expiration date
of the old CBA.
 And after an evaluation of the parties' respective contention and argument thereof, it is
believed that of the union is fair and reasonable. It is the observation of the Arbitrator
that in almost subsequent CBAs, the effectivity of the renegotiated CBA, usually and
most often is made effective retroactive to the date when the immediately proceeding
CBA expires so as to give a semblance of continuity. Hence, for this particular case, it is
believed that there is nothing wrong adopting the stand of the union, that is that this CBA
be made retroactive effective March 15, 1989.
ISSUE 4: Whether or not the LA disregarded many provisions of the old CHA which the parties
had retained, improved, and agreed upon w/ the result that the CBA finalized by the LA did not
reflect the true intention of the parties
RULING 4: Petitioner did not specify the provisions of the old CBA which were disregarded by
the labor arbiter. TArticle 253-A of the Labor Code applies only to agreements between parties.
Therefore, in the absence of a specific provision of law prohibiting retroactivity of the effectivity
of arbitral awards issued by the Secretary of Labor pursuant to Article 263(g) of the Labor Code,
such as herein involved, public respondent (NLRC) is deemed vested with plenary and
discretionary powers to determine the effectivity thereof. It is the observation of the Arbitrator
that in almost subsequent CBAs, the effectivity of the renegotiated CBA, usually and most often
is made effective retroactive to the date when the immediately proceeding CBA expires so as to
give a semblance of continuity. hus, this allegation should be dismissed.
DISPOSITIVE: WHEREFORE, the petition is DISMISSED for lack of merit.
80. ASSOCIATED TRADE UNIONS (ATU) v. HON. TRAJANO, (Director of the BLR) MOLE,
BALIWAG TRANSIT, INC. and TRADE UNIONS OF THE PHILIPPINES AND ALLIED
SERVICES (TUPAS) — WFTU
[G.R. No. L-75321. June 20, 1988.]
DOCTRINE: Under Executive Order No. 111, the consent requirement for a petition for
certification election applies only to unorganized establishments and has been reduced to only
20%.
FACTS:
● March 25, 1986 - the private respondent union (TUPAS) filed with the Malolos labor
office of the MOLE a petition for certification election at the Baliwag Transit, Inc. among
its rank-and-file workers.
● Despite opposition from Associated Trade Unions (ATU), the petition was granted by the
med-arbiter on May 14, 1986, and a certification election was ordered "to determine the
exclusive bargaining agent (of the workers) for purposes of collective bargaining with
respect to (their) terms and conditions of employment." On appeal, this order was
sustained by the respondent Director of Labor Relations.
 ● ATU appealed to the SC claiming that the said orders are tainted with grave abuse of
discretion and so should be reversed. On August 20, 1986, the SC issued a TRO that
has maintained the status quo among the parties.
● ATU claims that TUPAS’ petition for certification election is defective because (1) at the
time it was filed, it did not contain the signatures of 30% of the workers, to signify their
consent to the certification election; and (2) it was not allowed under the contract-bar
rule because a new collective bargaining agreement had been entered into by ATU with
the company on April 1, 1986.
● TUPAS contends that the 30% consent requirement has been substantially complied
with, the workers’ signatures having been subsequently submitted and admitted. As for
the contract-bar rule, its position is that the collective bargaining agreement, besides
being vitiated by certain procedural defects, was concluded by ATU with the
management only on April 1, 1986 after the filing of the petition for certification election
on March 25, 1986.
● The initial issues have become moot and academic because the 30% consent required
under then Section 258 of the Labor Code is no longer in force owing to the amendment
of this section by Executive Order No. 111, which became effective on March 4, 1987.

ISSUE: W/N the certificate of election is defective. NO.

● The applicable provision in the case at bar is Article 256 because Baliwag Transit, Inc. is
an organized establishment. Under this provision, the petition for certification
election need no longer carry the signatures of the 30% of the workers consenting
to such petition as originally required under Article 258.
● The present rule provides that as long as the petition contains the matters required in
Section 2, Rule 5, Book V of the Implementing Rules and Regulations, as amended by
Section 6, Implementing Rules of E.O No. 111, the med-arbiter "shall automatically
order" an election by secret ballot "to ascertain the will of the employees in the
appropriate bargaining unit." The consent requirement is now applied only to
unorganized establishments under Article 257, and at that, significantly, has been
reduced to only 20%.
● The petition must also fail on the second issue which is based on the contract-bar rule
under Section 3, Rule 5, Book V of the IRR. This rule simply provides that a petition for
certification election or a motion for intervention can only be entertained within sixty days
prior to the expiry date of an existing collective bargaining agreement. The rule prohibits
the filing of a petition for certification election during the existence of a collective
bargaining agreement except within the freedom period, as it is called, when the said
agreement is about to expire. The purpose, obviously, is to ensure stability in the
relationships of the workers and the management by preventing frequent modifications
of any collective bargaining agreement earlier entered into by them in good faith and for
the stipulated original period.
● ATU insists that its collective bargaining agreement concluded by it with Baliwag Transit,
Inc. on April 1, 1986, should bar the certification election sought by TUPAS as this would
disturb the said new agreement. Moreover, the agreement had been ratified on April 3,
 1986, by a majority of the workers and is plainly beneficial to them because of the many
generous concessions made by the management.
● Besides pointing out that its petition for certification election was filed within the freedom
period and five days before the new collective bargaining agreement was concluded by
ATU with Baliwag Transit, Inc. TUPAS contends that the said agreement suffers from
certain fatal procedural flaws. Specifically, the CBA was not posted for at least five days
in two conspicuous places in the establishment before ratification, to enable the workers
to clearly inform themselves of its provisions. Moreover, the CBA submitted to the MOLE
did not carry the sworn statement of the union secretary, attested by the union president,
that the CBA had been duly posted and ratified, as required by Section 1, Rule 9, Book
V of the Implementing Rules and Regulations. These requirements being mandatory,
non-compliance therewith rendered the said CBA ineffective.
● The Court will not rule on the merits and/or defects of the new CBA and shall only
consider the fact that it was entered into at a time when the petition for certification
election had already been filed by TUPAS and was then pending resolution. The said
CBA cannot be deemed permanent, precluding the commencement of negotiations by
another union with the management. In the meantime however, so as not to deprive the
workers of the benefits of the said agreement, it shall be recognized and given effect on
a temporary basis, subject to the results of the certification election. The agreement may
be continued in force if ATU is certified as the exclusive bargaining representative of the
workers or may be rejected and replaced in the event that TUPAS emerges as the
winner.
● The certification election is the most democratic forum for the articulation by the workers
of their choice of the union that shall act on their behalf in the negotiation of a collective
bargaining agreement with their employer. Exercising their suffrage through the medium
of the secret ballot, they can select the exclusive bargaining representative that,
emboldened by their confidence and strengthened by their support, shall fight for their
rights at the conference table. That is how union solidarity is achieved and union power
is increased in the free society. Hence, rather than being inhibited and delayed, the
certification election should be given every encouragement under the law, that the will of
the workers may be discovered and, through their freely chosen representatives,
pursued and realized.

DISPOSITIVE: WHEREFORE, the petition is DENIED. The temporary restraining order of

August 20, 1986, is LIFTED. Cost against the petitioner.

Tirol
Topic: Requirement on Posting of CBA
81. Associated Trade Unions (ATU) v. Ferrer-Calleja
ASSOCIATED LABOR UNIONS (ALU) v. HON. PURA FERRER-CALLEJA, as Director of
the Bureau of Labor Relations, Ministry of Labor and Employment; PHILIPPINE SOCIAL
 SECURITY LABOR UNION (PSSLU); SOUTHERN PHILIPPINES FEDERATION OF LABOR
(SPFL) and GAW TRADING, INC.
Doctrine: The purpose of the requirement is precisely to inform the employees in the bargaining
unit of the contents of said agreement so that they could intelligently decide whether to accept
the same or not. The assembly of the members of ALU wherein the agreement in question was
allegedly explained does not cure the defect. The contract is intended for all employees and not
only for the members of the purported representative alone.
Action Sequence: Med-Arbiter granted PCE > BLR Director Trajano granted MR and set aside
Med-Arbiter decision > BLR Director Ferrer-Calleja granted MR, revered Director Trajano’s
decision
Facts: The associated Labor Unions (ALU) informed GAW Trading that majority of the latter's
employees have authorized ALU to be their SEBA, and requested GAW Trading for a
conference for the execution of an initial CBA. GAW Trading responded, indicating its
recognition of ALU as the SEBA for the majority of its employees and for which it set the time for
the conference. On the following day, ALU on behalf of the majority of the employees of GAW
Trading signed and executed the CBA.
In the meantime, the Southern Philippines Federation of Labor (SPFL) together with
Nagkahiusang Mamumuo sa GAW (NAMGAW) undertook a Strike after it failed to get the
management of GAW Trading to sit for a conference respecting its demands presented on the
same day in an effort to pressure GAW Trading to make a turnabout of its standing recognition
of ALU as the SEBA of its employee. GAW Trading filed a petition for TRO against the strike.
The Labor Arbiter held such strike as illegal.
GAW Lumad Labor Union (GALLU-PSSLU) Federation filed a Certification Election petition but
as found by the Med-Arbiter, it failed to comply with the subscription requirement. Hence, it was
merely considered an intervenor until compliance thereof in the other petition for direct
recognition as bargaining agent filed by southern Philippines Federation of Labor (SPFL).
In the meantime, the CBA executed by ALU and GAW Trading was duly filed with the Ministry of
Labor and Employment in Cebu City.
Nevertheless, Med-Arbiter Candido M. Cumba ruled for the holding of a certification election in
all branches of GAW Trading in Cebu City, as to which ALU filed a MR which was treated as an
appeal on that questioned Order for which reason the entire record of subject certification case
was forwarded to the BLR. BLR Director Trajano granted ALU's appeal (MR) and set aside the
questioned Med-Arbiter Order, on the ground that the CBA has been effective and valid and the
contract bar rule applicable.
SPFL and Philppine Social Security Labor Union (PSSLU) sought reconsideration. The decision
of then Director Trajano was thereafter reversed by respondent director. Hence, this petition.
Public respondent ordered the holding of a certification election ruling that the "contract bar rule"
relied upon by her predecessor does not apply in the present case. According to the decision of
said respondent, the CBA involved herein is defective because it "was not duly submitted in
accordance with Section I, Rule IX, Book V of the Implementing Rules of Batas Pambansa Blg.
130." It was further observed that "there is no proof tending to show that the CBA has been
posted in at least 2 conspicuous places in the 1 establishment at least five days before its
ratification and that it has been ratified by the majority of the employees in the bargaining unit."
Issue 1: Whether the CBA was defective.
Ruling 1: YES.
The CBA in question is indeed defective hence unproductive of the legal effects attributed to it
by the former director in his decision which was subsequently and properly reversed.
The mechanics of collective bargaining are set in motion only when the following jurisdictional
preconditions are present:
1. Possession of the status of majority representation by the employees' representative in
accordance with any of the means of selection and/or designation provided for by the
Labor Code;
2. Proof of majority representation; and
3. A demand to bargain under Article 251, paragraph (a), of the New Labor Code.
Standing as SEBA:
In the present case, the standing of petitioner as an exclusive bargaining representative is
dubious. It may be recalled that respondent company merely indicated that it was "not against
the desire of (its) workers" and required petitioner to present proof that it was supported by the
majority thereof in a meeting to be held on the same date. The only express recognition of
petitioner as said employees' bargaining representative is in the CBA entered into 2 days
thereafter. Evidently, there was precipitate haste on the part of respondent company in
recognizing petitioner union, which recognition appears to have been based on the self-serving
claim of the latter that it had the support of the majority of the employees in the bargaining unit.
Furthermore, at the time of the supposed recognition, the employer was obviously aware that
there were other unions existing in the unit. The unusual promptitude in the recognition of
petitioner union by respondent company as the exclusive bargaining representative of the
workers in GAW Trading, Inc. under the fluid and amorphous circumstances then obtaining, was
decidedly unwarranted and improvident.
Even in cases where it was the then Minister of Labor himself who directly certified the union as
the bargaining representative, this Court voided such certification where there was a failure to
properly determine with legal certainty whether the union enjoyed a majority representation. In
such a case, the holding of a certification election at a proper time would not necessarily be a
mere formality as there was a compelling reason not to directly and unilaterally certify a union.
Requirement on Posting CBA:
An additional infirmity of the CBA involved was the failure to post the same in at least 2
conspicuous places in the establishment at least five days before its ratification. Petitioners
reasoning was that "because of the real existence of the illegal strike staged by SPFL in all the
stores of GAW Trading, Inc. it had become impossible to comply with the posting requirement in
so far as the realization of tits purpose is concerned as there were no impartial members of the
unit who could be appraised of the CBA's contents. " This justification is puerile and
unacceptable.
In the first place, the posting of copies of the CBA is the responsibility of the employer which can
easily comply with the requirement through a mere mechanical act. The fact that there were "no
impartial members of the unit" is immaterial.
The purpose of the requirement is precisely to inform the employees in the bargaining unit of the
contents of said agreement so that they could intelligently decide whether to accept the same or
not. The assembly of the members of ALU wherein the agreement in question was allegedly
explained does not cure the defect. The contract is intended for all employees and not only for
the members of the purported representative alone.
It may even be said that the need to inform the non-members of the terms thereof is more
exigent and compelling since, in all likelihood, their contact with the persons who are supposed
to represent them is limited. Moreover, to repeat, there was an apparent and suspicious hurry in
the formulation and finalization of said collective bargaining accord. In the aforementioned letter
where respondent company required petitioner union to present proof of its support by the
employees, the company already suggested that petitioner ALU at the same time submit the
proposals that it intended to embody in the projected agreement.
Repudiation by Workers
Another potent reason for annulling the disputed collective bargaining is the finding of
respondent director that 181 of the 281 workers who "ratified" the same now " strongly and
vehemently deny and/or repudiate the alleged negotiations and ratification of the CBA."
Although petitioner claims that only 7 of the repudiating group of workers belong to the total
number who allegedly ratified the agreement, nevertheless such substantiated contention
weighed against the factual that the controverted contract will not promote industrial stability.
Contract Bar Rule
The inapplicability of the contract bar rule is further underscored by the fact that when the
disputed agreement was filed before the Labor Regional Office on May 27, 1986, a petition for
certification election had already been filed on May 19, 1986. Although the petition was not
supported by the signatures of 30% of the workers in the bargaining unit, the same was enough
to initiate said certification election.
Dispositive: WHEREFORE, the order of the public respondent for the conduct of a certification
election among the rank-and-file workers of respondent GAW Trading Inc. is AFFIRMED. The
temporary restraining order issued in this case pursuant to the Resolution of March 25, 1987 is
hereby lifted.

Albino
Topic: Injunction of illegal strike
82. San Miguel Corporation v. NLRC, Ilaw at Buklod ng Manggagawa (IBM)
Doctrine: It bears stressing that Article 264(a) of the Labor Code explicitly states that a
declaration of strike without first having filed the required notice is a prohibited activity, which
may be prevented through an injunction in accordance with Article 254.
Action Sequence: IBM Notice of strike to NCMB > NCMB converted it to preventive mediation
case > SMC filed an injunction case > NLRC denied the injunction > SC granted the injunction
Facts:

 SMC and IBM (exclusive bargaining agent of SMC’s daily-paid rank and file employees
executed a CBA. Under the CBA:
o SMC and IBM agreed to submit all disputes to grievance and arbitration
proceedings.
o It also included a mutually enforceable no-strike no-lockout agreement.
 IBM filed with the NCMB a notice of strike through its VP (Colomeda group) and
President (Galvez group) for allegedly committing: (1) illegal dismissal of union
members, (2) illegal transfer, (3) violation of CBA, (4) contracting out of jobs being
performed by union members, (5) labor-only contracting, (6) harassment of union
officers and members, (7) non-recognition of duly-elected union officers, and (8) other
acts of unfair labor practice.
 SMC then filed a Motion for Severance of Notices of Strike with Motion to Dismiss, on
the grounds that the notices raised non-strikeable issues and that they affected four
corporations (SMC, Magnolia-Nestle, San Miguel Foods, San Miguel Juices) which are
separate and distinct from each other.
 NCMB: found that the real issues involved are non-strikeable and since it is only SMC
that was impleaded, it issued separate letter-orders to both union groups,
converting their notices of strike into preventive mediation case for the 4 different
companies in order to evolve voluntary settlement of the disputes.
 While preventive mediation conferences were ongoing, both groups filed with the NCMB
a notice of holding a strike vote.
 In both notices, NCMB issued a letter again advising them that by virtue of the PAL v.
Drilon ruling, their notice of strike is deemed not to have been filed, consequently
invalidating any subsequent strike for lack of compliance with the notice requirement.
 Nevertheless, IBM went on strike.
 The strike paralyzed the operations of SMC causing it losses allegedly worth P29.98
million.
 SMC filed with NLRC an amended Petition for Injunction with Prayer for the Issuance of
TRO, Free Ingress and Egress Order and Deputization Order.
 NLRC: issued a TRO directing free ingress to and egress from petitioner’s plants,
without prejudice to the union’s right to peaceful picketing and continuous hearings on
the injunction case.
 Then, SMC entered into a MOA with the union calling for a lifting of the picket lines and
resumption of work in exchange of "good faith talks."
 IBM then moved to reconsider the issuance of the TRO and sought to dismiss the
injunction case as a result of the signed MOA.
 SMC opposed and submitted copies of flyers being circulated by IBM as proof of the
union’s alleged threat the revive the strike.
 NLRC: denied the petition for injunction for lack of factual basis and found that that the
circumstances at the time did not constitute or no longer constituted an actual or
threatened commission of unlawful acts.
Issue: WON the petition for injunction should have been granted? (YES)
Ruling: YES

 The LC provides that no temporary or permanent injunction or restraining order in any

case involving or growing out of labor disputes shall be issued by any court or other
entity except as otherwise provided in Articles 218 and 264 of the Labor Code:
o 218: confers upon the NLRC the power to "enjoin or restrain actual and
threatened commission of any or all prohibited or unlawful acts, or to require the
performance of a particular act in any labor dispute which, if not restrained or
performed forthwith, may cause grave or irreparable damage to any party or
render ineffectual any decision in favor of such party.
o 264: when the labor organization or the employer engages in any of the
"prohibited activities" enumerated in Article 264.
 Pursuant to Article 218 (e), the coercive measure of injunction may also be used to
restrain an actual or threatened unlawful strike.
 In one case, it was ruled that the NLRC committed grave abuse of discretion when it
denied the petition for injunction to restrain the union from declaring a strike based on
non-strikeable grounds; and in another, it is the legal duty and obligation of the NLRC to
enjoin a partial strike.
 Here, SMC sought a permanent injunction to enjoin the IBM’s strike.
 A strike is considered as the most effective weapon in protecting the rights of the
employees to improve the terms and conditions of their employment.
 However, to be valid, a strike must be pursued within legal bounds.
 One of the procedural requisites under Art. 263 is the filing of a valid notice of strike with
the NCMB. Imposed for the purpose of encouraging the voluntary settlement of disputes,
this requirement has been held to be mandatory, the lack of which shall render a strike
illegal.
 NCMB converted IBM’s notices into preventive mediation as it found that the real
issues raised are non-strikeable. Such order is in pursuance of the NCMB’s duty to
exert "all efforts at mediation and conciliation to enable the parties to settle the dispute
amicably," and in line with the state policy of favoring voluntary modes of settling labor
disputes. The said conversion has the effect of dismissing the notices of strike
filed by respondent. As held in PAL v. Drilon, a strike is illegal for lack of a valid notice
of strike in view of NCMB’s conversion of the notice into a preventive mediation case.
 When the NCMB ordered the preventive mediation, IBM had thereupon lost the
notices of strike it had filed. Subsequently, however, it still defiantly proceeded with
the strike while mediation was ongoing, and notwithstanding the letter-advisories of
NCMB warning it of its lack of notice of strike.
 Such disregard of the mediation proceedings was a blatant violation of the Implementing
Rules, which explicitly oblige the parties to bargain collectively in good faith and prohibit
them from impeding or disrupting the proceedings.
 The NLRC, however, did not enjoin the unlawful strike despite the effect of converting
the notice to preventive mediation case.
 Additionally, NLRC ruled that there was a lack of factual basis in issuing the injunction.
Contrary to the NLRC’s finding, we find that at the time the injunction was being sought,
there existed a threat to revive the unlawful strike as evidenced by the flyers then being
 circulated by the IBM-NCR Council which led the union which was not even denied by
IBM.
 It bears stressing that Article 264(a) of the Labor Code39 explicitly states that a
declaration of strike without first having filed the required notice is a prohibited
activity, which may be prevented through an injunction in accordance with Article
254.
 Clearly, public respondent should have granted the injunctive relief to prevent the grave
damage brought about by the unlawful strike.
 As to SMC’s allegation of violation of the no-strike provision in the CBA, jurisprudence
has enunciated that such clauses only bar strikes which are economic in nature, but not
strikes grounded on unfair labor practices.
Dispositive: WHEREFORE, the instant petition is hereby GRANTED. The decision and
resolution of the NLRC in Injunction Case No. 00468-94 are REVERSED and SET ASIDE.
Petitioner and private respondent are hereby directed to submit the issues raised in the
dismissed notices of strike to grievance procedure and proceed with arbitration proceedings as
prescribed in their CBA, if necessary. No pronouncement as to costs.
Balboa
Topic: Innocent Bystander’s Entitlement to Injunction
82. MSF v CA

MSF Tire and Rubber, Inc. vs. Court of Appeals and Philtread Tire Workers’ Union
Doctrine: Thus, an “innocent bystander,” who seeks to enjoin a labor strike, must satisfy the
court that aside from the grounds specified in Rule 58 of the Rules of Court, it is entirely
different from, without any connection whatsoever to, either party to the dispute and, therefore,
its interests are totally foreign to the context thereof.
Action Sequence: Union filed a notice of strike with NCMB > Philtread filed a notice of lockout
> SOLE assumed jurisdiction and enjoined the parties from the strike and lockout > Philtread
entered into a MOA with MSF > MSF asked union to desist which the union refused > MSF filed
an injunction > RTC granted > CA on petcert overturned > SC sustained CA
Facts:

 A labor dispute arose between Philtread and the union and as a result, the Union filed a
notice of strike in the NCMB-NCR.
 The Union charged Philtread with ULP and union-busting for violation of the provisions
of the CBA. This was followed by picketing and the holding of assemblies by the Union
outside the gate of Philtread’s plant
 Philtread filed a notice of lock-out which it then carried out.
 The SOLE assumed jurisdiction and certified the dispute for compulsory arbitration. She
enjoined the parties from striking and locking out.
 During the pendency of the dispute, Philtread entered into a MOA with Siam Tyre, a
subsidiary of Siam Cement.
 Under the agreement,
 o Philtread’s plant and equipment would be sold to a new company (petitioner MSF
Tire and Rubber, Inc.), 80% of which would be owned by Siam Tyre and 20% by
Philtread,
o while the land on which the plant was located would be sold to another company
(Sucat Land Corporation), 60% of which would be owned by Philtread and 40%
by Siam Tyre.
 The Union was informed of the purchase of the plant by petitioner. MSF then asked the
union to desist from picketing.
 The Union refused the request. MSF filed a complaint for injunction with damages
against the Union before the RTC.
 The Union moved to dismiss for lack of jurisdiction. It insisted that the parties were
involved in a labor dispute and MSF was a mere alter ego of Philtread and not an
innocent bystander.
 The RTC at first denied MSF’s petition but eventually granted the injunction upon
reconsideration. It ordered the Union to desist from conducting their assembly.
 The CA granted the Union petition for certiorari and ordered the trial court to dismiss the
case for lack of jurisdiction.
Issue 1: whether the Union is guilty of forum shopping when it did not disclose the pendency of
the NCMB proceeding in its certification of non-forum shopping

Ruling 1: NO. Petitioner was a party to the proceedings before the National Conciliation and
Mediation Board in which an order, dated September 8, 1994, was issued by then Secretary of
Labor Nieves Confesor, enjoining any strike or lockout by the parties.
It was petitioner which initiated the action for injunction before the trial court. Aggrieved by the
injunctive order issued by the lower court, the Union was forced to file a petition for review
before the Court of Appeals. We cannot understand why petitioner should complain that no
mention of the pendency of the arbitration case before the labor department was made in the
certificate of non-forum shopping attached to the Union’s petition in the Court of Appeals. The
petition of the Union in the Court of Appeals was provoked by petitioner’s action in seeking
injunction from the trial court when it could have obtained the same relief from the Secretary of
Labor.
Issue 2: whether MSF showed a clear legal right to the issuance of the writ of injunction under
the innocent bystander rule

Ruling 2: NO. Petitioner asserts that its status as an “innocent bystander” with respect to the
labor dispute between Philtread and the Union entitles it to a writ of injunction from the civil
courts and that the appellate court erred in not upholding its corporate personality as
independent of Philtread’s.

In PAFLU v Cloribel, it was held that While peaceful picketing is entitled to protection as an
exercise of free speech, we believe the courts are not without power to confine or localize the
sphere of communication or the demonstration to the parties to the labor dispute, including
those with related interest, and to insulate establishments or persons with no industrial
connection or having interest totally foreign to the context of the dispute. Thus the right may be
regulated at the instance of third parties or “innocent bystanders” if it appears that the inevitable
result of its exercise is to create an impression that a labor dispute with which they have no
connection or interest exists between them and the picketing union or constitute an invasion of
their rights.

Thus, an “innocent bystander,” who seeks to enjoin a labor strike, must satisfy the court that
aside from the grounds specified in Rule 58 of the Rules of Court, it is entirely different from,
without any connection whatsoever to, either party to the dispute and, therefore, its
interests are totally foreign to the context thereof.

In the case at bar, petitioner cannot be said not to have such connection to the dispute. As
correctly observed by the appellate court:
Coming now to the case before us, we find that the “negotiation, contract of sale, and the post
transaction” between Philtread, as vendor, and Siam Tyre, as vendee, reveals a legal relation
between them which, in the interest of petitioner, we cannot ignore. To be sure, the
transaction between Philtread and Siam Tyre, was not a simple sale whereby Philtread
ceased to have any proprietary rights over its sold assets. On the contrary, Philtread
remains as 20% owner of private respondent and 60% owner of Sucat Land Corporation
which was likewise incorporated in accordance with the terms of the Memorandum of
Agreement with Siam Tyre, and which now owns the land were subject plant is located. This,
together with the fact that private respondent uses the same plant or factory; similar or
substantially the same working conditions; same machinery, tools, and equipment; and
manufacture the same products as Philtread, lead us to safely conclude that private
respondent’s personality is so closely linked to Philtread as to bar its entitlement to an injunctive
writ.

Although, as petitioner contends, the corporate fiction may be disregarded where it is used to
defeat public convenience, justify wrong, protect fraud, defend crime, or where the corporation
is used as a mere alter-ego or business conduit, it is not these standards but those of the
“innocent bystander” rule which govern whether or not petitioner is entitled to an injunctive writ.

Dispositive: WHEREFORE, petition is hereby DENIED and the decision of the Court of
Appeals is AFFIRMED.
Balce
Topic: Factors in Determining Appropriate Bargaining Unit
84. Holy Child Catholic School v. Sto. Tomas

HOLY CHILD CATHOLIC SCHOOL, petitioner,

vs.
HON. PATRICIA STO. TOMAS, in her official capacity as Secretary of the Department of
Labor and Employment, and PINAG-ISANG TINIG AT LAKAS NG ANAKPAWIS – HOLY
CHILD CATHOLIC SCHOOL TEACHERS AND EMPLOYEES LABOR UNION (HCCS-TELU-
PIGLAS), respondents.

G.R. No. 179146, July 23, 2013

Ponente: PERALTA, J.

Doctrine: In determining the proper collective bargaining unit and what unit would be
appropriate to be the collective bargaining agency, the Court, in the seminal case of Democratic
Labor Association v. Cebu Stevedoring Company, Inc., mentioned several factors that should
be considered, to wit:
(1) will of employees (Globe Doctrine);
(2) affinity and unity of employees' interest, such as substantial similarity of work and
duties, or similarity of compensation and working conditions;
(3) prior collective bargaining history; and
(4) employment status, such as temporary, seasonal and probationary employees.
The test of the grouping is community or mutuality of interest, 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."

Action Sequence: Petition for Certification Election (PCE) –-> PCE denied by Med-Arbiter ->
PCE SOLE reversed the decision and ordered the issuance of 2 CEs -> CA dismissed the
petition -> SC denied the petition.

FACTS:

 On May 31, 2002, a petition for certification election was filed by private respondent
Pinag-Isang Tinig at Lakas ng Anakpawis Holy Child Catholic School Teachers and
Employees Labor Union (HCCS-TELUPIGLAS).
 In its Comment and Position Paper, petitioner raised that the members of the union are a
mixture of managerial, supervisory, and rank-and-file employees as three (3) are vice-
principals, one (1) is a department head/supervisor, and eleven (11) are coordinators. It
is likewise a mixture of teaching and non-teaching personnel. It insisted that, for not
being in accord with Article 245 of the Labor Code, private respondent is an illegitimate
labor organization lacking in personality to file a petition for certification election.
 MED-ARBITER: The Med Arbiter denied the petition for certification election on the
ground that the bargaining unit is inappropriate.
 SOLE: Private respondent appealed to the SOLE and the latter reversed the ruling of
the med arbiter and ordered two certification elections, one among teaching personnel
and another for non- teaching personnel.
 CA: Petitioner filed a petition for certiorari before the CA with prayer for Temporary
Restraining Order and Preliminary Injunction. The CA dismissed the petition and ruled
that the vice-principals, coordinators and department heads are not managerial nor
supervisory employees. Anent the alleged mixture of teaching and non-teaching
personnel, the CA agreed with petitioner that the nature of the formers work does not
coincide with that of the latter.

ISSUE:
Whether or not the petition for certification election should have been dismissed on the ground
that private respondent is not qualified to file such petition for its failure to qualify as a legitimate
labor organization, the basic qualification of which is the representation of an appropriate
bargaining unit. (NO)
RULING:
NO. The concepts of a union and of a legitimate labor organization are different from, but
related to, the concept of a bargaining unit. A bargaining unit has been 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 interests of all the employees, consistent with equity to the
employer, indicated to be best suited to serve reciprocal rights and duties of the parties under
the collective bargaining provisions of the law."
In determining the proper collective bargaining unit and what unit would be appropriate to be the
collective bargaining agency, the Court, in the seminal case of Democratic Labor Association v.
Cebu Stevedoring Company, Inc., mentioned several factors that should be considered, to wit:
(1) will of employees (Globe Doctrine);
(2) affinity and unity of employees' interest, such as substantial similarity of work and
duties, or similarity of compensation and working conditions;
(3) prior collective bargaining history; and
(4) employment status, such as temporary, seasonal and probationary employees.

The test of the grouping is community or mutuality of interest, 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."
Petitioner appears to have confused the concepts of membership in a bargaining unit and
membership in a union. In emphasizing the phrase "to the exclusion of academic employees"
stated in U.P. v. Ferrer-Calleja, petitioner believed that the petitioning union could not admit
academic employees of the university to its membership. But such was not the intention of the
Supreme Court.
A bargaining unit is a group of employees sought to be represented by a petitioning union. Such
employees need not be members of a union seeking the conduct of a certification election. A
union certified as an exclusive bargaining agent represents not only its members but also other
employees who are not union members.
In the same manner, the teaching and non-teaching personnel of petitioner school must form
separate bargaining units. Thus, the order for the conduct of two separate certification elections,
one involving teaching personnel and the other involving non-teaching personnel.
It should be stressed that in the subject petition, private respondent union sought the conduct of
a certification election among all the rank-and-file personnel of petitioner school. Since the
decision of the Supreme Court in the U.P. case prohibits us from commingling teaching and
non-teaching personnel in one bargaining unit, they have to be separated into two separate
bargaining units with two separate certification elections to determine whether the employees in
the respective bargaining units desired to be represented by private respondent.
DISPOSITIVE PORTION:
WHEREFORE, the petition is DENIED. The April 18, 2007 Decision and July 31, 2007,
Resolution of the Court of Appeals in CA-G.R. SP No. 76175, which affirmed the December 27,
2002 Decision of the Secretary of the Department of Labor and Employment that set aside the
August 10, 2002 Decision of the Med-Arbiter denying private respondent's petition for
certification election are hereby AFFIRMED.

NOTES:
Following the doctrine laid down in Kawashima and SMCC-Super, it must be stressed that
petitioner cannot collaterally attack the legitimacy of private respondent by praying for the
dismissal of the petition for certification election:

Except when it is requested to bargain collectively, an employer is a mere bystander to any

petition for certification election; such proceeding is non-adversarial and merely investigative, for
the purpose thereof is to determine which organization will represent the employees in their
collective bargaining with the employer. The choice of their representative is the exclusive
concern of the employees; the employer cannot have any partisan interest therein; it cannot
interfere with, much less oppose, the process by filing a motion to dismiss or an appeal from it;
not even a mere allegation that some employees participating in a petition for certification
election are actually managerial employees will lend an employer legal personality to block the
certification election. The employer's only right in the proceeding is to be notified or informed
thereof.

The determination of whether union membership comprises managerial and/or supervisory

employees is a factual issue that is best left for resolution in the inclusion-exclusion
proceedings.

In case of alleged inclusion of disqualified employees in a union, the proper procedure for an
employer like petitioner is to directly file a petition for cancellation of the union’s certificate of
registration due to misrepresentation, false statement or fraud under the circumstances
enumerated in Article 239 of the Labor Code, as amended.54 To reiterate, private respondent,
having been validly issued a certificate of registration, should be considered as having acquired
juridical personality which may not be attacked collaterally.

Indeed, the purpose of a certification election is precisely to ascertain the majority of the
employees’ choice of an appropriate bargaining unit – to be or not to be represented by a labor
organization and, if in the affirmative case, by which one.
Chua
Topic: Factors in Determining Appropriate Bargaining Unit
85. Belyca Corporation v. Ferrer-Calleja
Belyca Corporation v. Ferrer-Calleja, G.R. No. 77395, Nov. 29, 1988
Doctrine: A proper bargaining unit maybe said to be a group of employees of a given employer,
comprised of all or less than all of the entire body of employees, which the collective interests of
all the employees, consistent with equity to the employer, indicate to be best suited to serve
reciprocal rights and duties of the parties under the collective bargaining provisions of the law.
Among the factors considered are: (1) will of employees (Glove Doctrine); (2) affinity and unity
of employee's interest, such as substantial similarity of work and duties or similarity of
compensation and working conditions; (3) prior collective bargaining history; and (4)
employment status, such as temporary, seasonal and probationary employees.
The test of proper grouping – community and mutuality of interest (substantial mutual interest
test)
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.
Action Sequence: LA -> BLR -> SC
Facts: On June 3, 1986, Associated Labor Union (ALU)-TUCP, a legitimate labor organization
duly registered with the Ministry of Labor and Employment, filed a petition for direct certification
as the sole and exclusive bargaining agent of all the rank and file employees/workers of the
Livestock and Agro Division of Belyca Corporation, a corporation engaged in the business of
poultry raising, piggery and planting of agricultural crops such as corn, coffee and various
vegetables, employing approximately 205 rank and file employees/workers. In case of doubt on
its majority representation, it sought for the issuance of an order authorizing the immediate
holding of a certification election.
Belyca opposed the petition and contended that the bargaining unit must include all the workers
in its integrated business concerns ranging from piggery, poultry, to supermarts and cinemas so
as not to split an otherwise single bargaining unit into fragmented bargaining units.
The Labor Arbiter granted the certification election. Belyca appealed to the BLR, which denied
the appeal and MR. Belyca filed a petition for certiorari and prohibition with preliminary
injunction with the SC. A TRO was issued and the SC gave due course to the petition.
Issue 1: Whether the proposed bargaining unit is an appropriate bargaining unit
Ruling 1: YES.
The Labor Code does not specifically define what constitutes an appropriate collective
bargaining unit. Article 256 of the Code provides: 
Art. 256. Exclusive bargaining representative.—The labor organization designated or
selected by the majority of the employees in an appropriate collective bargaining unit
 shall be exclusive representative of the employees in such unit for the purpose of
collective bargaining. However, an individual employee or group of employee shall have
the right at any time to present grievances to their employer.
According to Rothenberg, a proper bargaining unit maybe said to be a group of employees of a
given employer, comprised of all or less than all of the entire body of employees, which the
collective interests of all the employees, consistent with equity to the employer, indicate to be
best suited to serve reciprocal rights and duties of the parties under the collective bargaining
provisions of the law.
Among the factors considered in Democratic Labor Association v. Cebu Stevedoring Co. Inc.
are: "(1) will of employees (Glove Doctrine); (2) affinity and unity of employee's interest, such as
substantial similarity of work and duties or similarity of compensation and working conditions; (3)
prior collective bargaining history; and (4) employment status, such as temporary, seasonal and
probationary employees".
Under the circumstances of that case, the Court stressed the importance of the fourth factor and
sustained the trial court's conclusion that two separate bargaining units should be formed in
dealing with respondent company, one consisting of regular and permanent employees and
another consisting of casual laborers or stevedores. Otherwise stated, temporary employees
should be treated separately from permanent employees. But more importantly, this Court laid
down the test of proper grouping, which is community and mutuality of interest.
In Alhambra Cigar and Cigarette Manufacturing Co. v. Alhambra Employees' Association, where
the employment status was not at issue but the nature of work of the employees concerned, the
Court stressed the importance of the second factor otherwise known as the substantial-mutual-
interest test and found no reason to disturb the finding of the lower Court that the employees in
the administrative, sales and dispensary departments perform work which has nothing to do
with production and maintenance, unlike those in the raw leaf, cigar, cigarette and packing and
engineering and garage departments and therefore community of interest which justifies the
format or existence as a separate appropriate collective bargaining unit.
PLASLU v. CIR et al. reiterated the above rulings, holding that among the factors to be
considered are: employment status of the employees to be affected, that is the positions and
categories of work to which they belong, and the unity of employees' interest such as
substantial similarity of work and duties.
In any event, whether importance is focused on the employment status or the mutuality of
interest of the employees concerned, "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.”
Hence, following the substantial-mutual-interest test, the Court ruled in LVN Pictures v.
Philippine Musicians Guild that there is a substantial difference between the work performed by
musicians and that of other persons who participate in the production of a film which suffice to
show that they constitute a proper bargaining unit.
In the present case, the employees of the livestock and agro division of petitioner corporation
perform work entirely different from those performed by employees in the supermarts and
cinema. Among others, the noted difference are: their working conditions, hours of work, rates
of pay, including the categories of their positions and employment status. As stated by petitioner
corporation in its position paper, due to the nature of the business in which its livestock-agro
division is engaged, very few of its employees in the division are permanent, the overwhelming
majority of which are seasonal and casual and not regular employees. Definitely, they have very
little in common with the employees of the supermarts and cinemas. To lump all the employees
of petitioner in its integrated business concerns cannot result in an efficacious bargaining unit
comprised of constituents enjoying a community or mutuality of interest. Undeniably, the rank
and file employees of the livestock-agro division fully constitute a bargaining unit that satisfies
both requirements of classification according to employment status and of the substantial
similarity of work and duties which will ultimately assure its members the exercise of their
collective bargaining rights.
Issue 2: Whether the statutory requirement that 30% (now 20%) of the employees in the
proposed bargaining unit ask for a certification election had been strictly complied with
Ruling 2: Yes.
Belyca employs more or less 205 rank-and-file employees, has no duly existing CBA, and there
has been no certification election in the proposed bargaining unit within the last 12 months prior
the filing of the petition, and there is no contending union requesting for certification as the sole
and exclusive bargaining representative in the proposed bargaining unit. 124 employees or
workers, more than a majority of the rank-and—file employees in the proposed bargaining unit,
had signed membership with ALU and expressed written consent and authorization. Thus, the
statutory requirement under Art. 258 has been met.
Belyca contended that 4 employees resigned, 6 withdrew their membership, 5 were retrenched,
12 were dismissed, and 100 abandoned their work. However, the Memorandum of its personnel
officer showed that 119 employees were on strike, and that there is a complaint for unfair labor
practice and illegal dismissal filed by the union for the dismissal of its president, vice president
and 3 other active members of the union, later amended to include 138 others.
Under Art. 257 of the Labor Code, once the statutory requirement is met, the Director of Labor
Relations has no choice but to call a certification election. Once the requirement is met, any
doubt cast on the authenticity of signatures to the petition for holding a certification election
cannot be a bar to its being granted. Once the required percentage requirement has been
reached, the employees' withdrawal from union membership taking place after the filing of the
petition for certification election will not affect said petition.
Until a decision, final in character, has been issued declaring the strike illegal and the mass
dismissal or retrenchment valid, the strikers cannot be denied participation in the certification
election notwithstanding, the vigorous condemnation of the strike and the fact that the picketing
were attended by violence. Under the foregoing circumstances, it does not necessarily follow
that the strikers in question are no longer entitled to participate in the certification election on the
theory that they have automatically lost their jobs. 
Finally, as a general rule, a certification election is the sole concern of the workers. The only
exception is where the employer has to file a petition for certification election pursuant to Art.
259 of the Labor Code because the latter was requested to bargain collectively. But thereafter
the role of the employer in the certification process ceases. The employer becomes merely a
bystander
There is no showing that the instant case falls under the above mentioned exception. However,
petitioner corporation from the outset has actively participated and consistently taken the
position of adversary in the petition for direct certification as the sole and exclusive bargaining
representative and/or certification election filed by ALU to the extent of filing this petition for
certiorari in this Court. Considering that a petition for certification election is not a litigation but a
mere investigation of a non-adversary character to determining the bargaining unit to represent
the employees and its only purpose is to give the employees true representation in their
collective bargaining with an employer, there appears to be no reason for the employer's
objection to the formation of subject union, much less for the filing of the petition for a
certification election.
Dispositive: Petition is denied.

Ignacio
Topic: Employer as Bystander
86. MSF v CA

[G.R. No. 128632. August 5, 1999.]

MSF TIRE AND RUBBER, INC., petitioner, vs. COURT OF APPEALS and PHILTREAD TIRE
WORKERS' UNION, respondents.
Doctrine:

 While peaceful picketing is entitled to protection as an exercise of free speech, we

believe the courts are not without power to confine or localize the sphere of
communication or the demonstration to the parties to the labor dispute, including those
with related interest, and to insulate establishments or persons with no industrial
connection or having interest totally foreign to the context of the dispute.
o Thus, the right may be regulated at the instance of third parties or "innocent
bystanders" if it appears that the inevitable result of its exercise is to create an
impression that a labor dispute with which they have no connection or interest
exists between them and the picketing union or constitute an invasion of their
rights.
Action Sequence: NCMB certified the dispute for compulsory arbitration, enjoined strike and
lockout | During pendency of labor dispute | RTC denied injunction; on MR granted injunction >
CA reversed > SC affirmed CA
Facts:

 The Union charged Philtread with ULP and union-busting for violation of the provisions
of the CBA.
o Because of this, the Union filed a notice of strike in the NCMB-NCR. This was
followed by picketing and the holding of assemblies by the Union outside the
gate of Philtread’s plant.
o For their part, Philtread filed a notice of lock-out which it then carried out.
 The SOLE assumed jurisdiction and certified the dispute for compulsory arbitration. She
enjoined the parties from striking and locking out.
 During the pendency of the dispute, Philtread entered into a MOA with Siam Tyre, a
subsidiary of Siam Cement.
o Under the agreement, Philtread’s plant and equipment would be sold to a new
company (petitioner MSF Tire and Rubber, Inc.), 80% of which would be owned
by Siam Tyre and 20% by Philtread, while the land on which the plant was
located would be sold to another company (Sucat Land Corporation), 60% of
which would be owned by Philtread and 40% by Siam Tyre.
 The Union was informed of the purchase of the plant by petitioner. Petitioner, MSF then
asked the union to desist from picketing.
 The Union refused the request.
 MSF filed a complaint for injunction with damages against the Union before the RTC.
 The Union moved to dismiss for lack of jurisdiction. It insisted that the parties were
involved in a labor dispute and MSF was a mere alter ego of Philtread and not an
innocent bystander.
 The RTC at first denied MSF’s petition but eventually granted the injunction upon
reconsideration. It ordered the Union to desist from conducting their assembly.
 The CA granted the Union petition for certiorari and ordered the trial court to dismiss the
case for lack of jurisdiction.
 Hence, this petition for review, alleging the following:
o That the CA erred in reversing the injunction order by the RTC [TOPIC]
o That the CA erred in not dismissing the Union’s petitions for false certification of
non-forum shopping
Issue:
Whether or not petitioner, MSF is entitled to an issuance of the writ of injunction under
the innocent bystander rule. (N)

Ruling:

 Petitioner asserts that its status as an “innocent bystander” with respect to the labor
dispute between Philtread and the Union entitles it to a writ of injunction from the civil
courts and that the appellate court erred in not upholding its corporate personality as
independent of Philtread’s.
 In PAFLU v Cloribel, it was held that:
o The right to picket as a means of communicating the facts of a labor dispute is a
phase of the freedom of speech guaranteed by the constitution. If peacefully
 carried out, it cannot be curtailed even in the absence of employer-employee
relationship. THE RIGHT IS, HOWEVER, NOT AN ABSOLUTE ONE.
 While peaceful picketing is entitled to protection as an exercise of free speech, we
believe the courts are not without power to confine or localize the sphere of
communication or the demonstration to the parties to the labor dispute, including those
with related interest, and to insulate establishments or persons with no industrial
connection or having interest totally foreign to the context of the dispute.
o Thus, the right may be regulated at the instance of third parties or
"innocent bystanders" if it appears that the inevitable result of its exercise
is to create an impression that a labor dispute with which they have no
connection or interest exists between them and the picketing union or
constitute an invasion of their rights.
 An “innocent bystander,” who seeks to enjoin a labor strike, must satisfy the court that
aside from the grounds specified in Rule 58 of the Rules of Court, it is entirely different
from, without any connection whatsoever to, either party to the dispute and, therefore,
its interests are totally foreign to the context thereof.
 However, in the case at bar, petitioner cannot be said not to have such connection to
the dispute.
o As correctly observed by the appellate court, the “negotiation, contract of sale,
and the post transaction” between Philtread, as vendor, and Siam Tyre, as
vendee, reveals a legal relation between them which, in the interest of petitioner,
we cannot ignore.
o The transaction between Philtread and Siam Tyre, was not a simple sale
whereby Philtread ceased to have any proprietary rights over its sold assets.
o On the contrary, Philtread remains as 20% owner of private respondent and
60% owner of Sucat Land Corporation which was likewise incorporated in
accordance with the terms of the Memorandum of Agreement with Siam Tyre,
and which now owns the land were subject plant is located.
o This, together with the fact that private respondent uses the same plant or
factory; similar or substantially the same working conditions; same machinery,
tools, and equipment; and manufacture the same products as Philtread, lead us
to safely conclude that private respondent’s personality is so closely linked to
Philtread as to bar its entitlement to an injunctive writ.
 Although, as petitioner contends, the corporate fiction may be disregarded where it is
used to defeat public convenience, justify wrong, protect fraud, defend crime, or where
the corporation is used as a mere alter-ego or business conduit, it is not these standards
but those of the “innocent bystander” rule which govern whether or not petitioner is
entitled to an injunctive writ.
 Since petitioner is not an "innocent bystander", the trial court's order, dated July 2, 1996,
is a patent nullity, the trial court having no jurisdiction to issue the writ of injunction.
Dispositive:

WHEREFORE, petition is hereby DENIED and the decision of the Court of Appeals is
AFFIRMED.
Additional Note: (Whether or not Union was guilty of forum shopping)
  NO. Petitioner was a party to the proceedings before the National Conciliation and
Mediation Board in which an order, dated September 8, 1994, was issued by then
Secretary of Labor Nieves Confesor, enjoining any strike or lockout by the parties.
 It was petitioner which initiated the action for injunction before the trial court. Aggrieved
by the injunctive order issued by the lower court, the Union was forced to file a petition
for review before the Court of Appeals. We cannot understand why petitioner should
complain that no mention of the pendency of the arbitration case before the labor
department was made in the certificate of non-forum shopping attached to the Union’s
petition in the Court of Appeals. The petition of the Union in the Court of Appeals was
provoked by petitioner’s action in seeking injunction from the trial court when it could
have obtained the same relief from the Secretary of Labor.

Manotok
Topic: Disputes to be Referred to the Grievance Machinery or Voluntary Arbitration
75. Tabigue v. INTERCO

UANITO TABIGUE, ALEX BIBAT, JECHRIS DASALLA, ANTONIO TANGON, ROLANDO

PEDRIGAL, DANTE MAUL, ALFREDO IDUL, EDGAR RAMOS, RODERICK JAVIER, NOEL
PONAYO, ROMEL ORAPA, REY JONE, ALMA PATAY, JERIC BANDIGAN, DANILO
JAYME, ELENITA S. BELLEZA, JOSEPHINE COTANDA, RENE DEL MUNDO, PONCIANO
ROBUCA, and MARLON MADICLUM, petitioners,
vs.
INTERNATIONAL COPRA EXPORT CORPORATION (INTERCO), respondent.

G.R. No. 183335, December 23, 2009

Doctrine: Only disputes involving the union and the company shall be referred to the grievance
machinery or voluntary arbitrators. The right of any employee or group of employees to, at any
time, present grievances to the employer does not imply the right to submit the same to
voluntary arbitration.
Action Sequence: Notice of Preventive Mediation > NCMB denies > CA dismisses > SC denies
FACTS:
● Petitioner Juanito Tabigue and his 19 co-petitioners are all employees of respondent
INTERCO. They filed a Notice of Preventive Mediation with the DOLE –NCMB against
respondent, for violation of CBA and failure to sit on the grievance conference/meeting.
● The parties failed to reach a settlement before the NCMB. Petitioners request to elevate
the case to voluntary arbitration.
● Respondent presents before the NCMB a letter of Genaro Tan, president of the union.
According to Tan, petitioners are not duly authorized by the board or the officers to
represent the union and all actions, representations or agreements made by these
people with the management will not be honored or recognized by the union.
Respondent moves to dismiss petitioners’ complaint for lack of jurisdiction.
 ● Petitioners send a Notice to Arbitrate.
● NCMB: The demand of petitioners to submit the issues to voluntary arbitration CANNOT
BE GRANTED.
o Both parties lack the willingness to submit to voluntary arbitration, which
willingness is a pre-requisite to submit the case thereto
o Under the CBA, the union is an indispensable party to a voluntary arbitration. The
union had not authorized petitioners to represent it.
● CA: dismissed the petition for review
o NCMB is not a quasi-judicial agency exercising quasi-judicial functions but
merely a conciliatory body for the purpose of facilitating settlement of disputes
between parties
o NCMB decisions or that of its authorized officer cannot be appealed either
through a petition for review under Rule 43 or under Rule 65 of the Revised
Rules of Court.

ISSUE: Whether or not the unsettled grievances should be referred to voluntary arbitration as
called for in the CBA. (NO)
RULING: No.

 Only disputes involving the union and the company shall be referred to the grievance
machinery or voluntary arbitrators.
o In Atlas Farms, Inc. v. National Labor Relations Commission: Pursuant to Article
260 of the Labor Code, the parties to a CBA shall name or designate their
respective representatives to the grievance machinery and if the grievance is
unsettled in that level, it shall automatically be referred to the voluntary arbitrators
designated in advance by parties to a CBA. Consequently, only disputes
involving the union and the company shall be referred to the grievance
machinery or voluntary arbitrators.
o Here, Petitioners have not been duly authorized to represent the union.
 The right of any employee or group of employees to, at any time, present grievances to
the employer does not imply the right to submit the same to voluntary arbitration.
o Petitioners invoke the first paragraph of Article 255 of the Labor Code which
states: Art. 255. “The labor organization designated or selected by the majority of
the employees in an appropriate collective bargaining unit shall be the exclusive
representative of the employees in such unit for the purpose of collective
bargaining. However, an individual employee or group of employees shall have
the right at any time to present grievances to their employer.” To petitioners, the
immediately quoted provision "is meant to be an exception to the exclusiveness
of the representative role of the labor organization/union."
o The argument of Petitioner is untenable. The Court held that the right of any
employee or group of employees to, at any time, present grievances to the
employer does not imply the right to submit the same to voluntary arbitration.
DISPOSITIVE PORTION: WHEREFORE, the petition is DENIED.
Sira
Topic: Jurisdiction of Voluntary Arbitrators in Cases Involving OFWs where there is a CBA

88. Estate of Dulay vs. Aboitiz Jebsen Maritime, Inc.

ESTATE OF NELSON R. DULAY, represented by his wife MERRIDY JANE P.

DULAY, Petitioner,
vs.
ABOITIZ JEBSEN MARITIME, INC. and GENERAL CHARTERERS, INC., Respondents.
G.R. No. 172642, June 13, 2012

DOCTRINE: 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.

ACTION SEQUENCE: LA (ruled in favor of petitioner, assumed jurisdiction)-> NLRC Ruling

(affirmed LA Ruling but said death is not work-related) -> CA Ruling (denied petition for review;
LA has no jurisdiction) -> SC (LA has no jurisdiction; jurisdiction is with the VA)

FACTS:
 Nelson Dulay was employed (initially as seaman and then as bosun) by respondent
General Charterers (GCI), a subsidiary of co-petitioner Aboitiz Jebsen Maritime, Inc
since 1986. From September 3, 1999 until July 19, 2000, Nelson was detailed in
petitioner’s vessel (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, claimed for death benefits through the grievance
procedure of the CBA between AMOSUP and GCI.

 However, on January 29, 2001, the grievance procedure was declared deadlocked as
respondents refused to grant the benefits sought by the widow.

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

 On March 8, 2001, Joven Mar, Nelson’s brother, received PHP20,000 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 USD90,000 pursuant to Article
20(A)(1) of the CBA. Merridy Jane averred that the USD20,000 received by Joven Mar
should be considered advance payment of the total claim of USD90,000.
 Meanwhile, respondents asserted that the NLRC had no jurisdiction over the
action on account of the absence of employer-employee relationship between GCI
& Nelson at the time of the latter’s death. They alleged that Nelson had no claims
against petitioners for sick leave allowance/medical benefit by reason of the completion
of his contract with GCI.

 Respondents further alleged that petitioner is not entitled to death benefits because
respondents 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. Respondents admitted liability only w/ respect to article 20(A)(2) of the CBA,
which was already discharged

 LA Ruling: In favor of the petitioner (widow)

o It took cognizance of the case by virtue of Article 217(a) of paragraph 6 of the

Labor and Code and existence of reasonable connection between the employer-
employee relations and the claim asserted.

 Article 217(a): (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.

 NLRC Ruling:

o Affirmed the LA 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 (meaning,
work-related)

 CA Ruling: The CA granted the appeal.

o 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.

 MR was denied by the CA. Hence, the instant petition.

 Petitioner’s arguments

o Petitioner contends that Section 10 of Republic Act (R.A.) 8042 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, amending Article 217 (c) of the Labor Code which confers
jurisdiction upon voluntary arbitrators over interpretation or implementation of
collective bargaining agreements and interpretation or enforcement of company
personnel policies.
  Respondent’s arguments

o 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. 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 xxx

ISSUE: Whether or not the CA erred in ruling that the LA had no jurisdiction over the case

RULING: NO, the CA did not err. The LA had no jurisdiction over the case. The
jurisdiction is with the Voluntary Arbitrator.

 A careful reading of RA 8042 would 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 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.

 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.

 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:

o 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.

 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.

 In addition, the Court also pointed out that the quoted provisions of the CBA are in
consonance with Rule VII, Section 7 of the present Omnibus Rules and Regulations
Implementing Migrant Workers and Overseas Filipinos Act, 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."

 Also, 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:

o 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.

 It is clear from the above that the 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.

 Finally, 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."

DISPOSITIVE PORTION:

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.

Tirol
Topic: Guidelines on Arts. 224, 274, and 275
90. UST Faculty Union v. UST
UNIVERSITY OF SANTO TOMAS FACULTY UNION v. UNIVERSITY OF STO. TOMAS
Doctrine: [See guidelines provided by San Jose v. NLRC case below.]
Action Sequence: LA ruled in favor of USTFU  NLRC affirmed  CA reversed
Facts: In 2007, USTFU demanded from UST remittance totaling to ₱65M, representing
deficiency in its contribution to the medical and hospitalization fund of UST’s faculty members.
USTFU also sent UST a letter accompanied by a summary of its claims pursuant to their 1996-
2001 CBA.
UST's Rector, Fr. Arceo, informed USTFU that the aforesaid benefits were not meant to be
given annually but rather as a one-time allocation or contribution to the fund. USTFU reiterated
its position that UST is obliged to remit to the fund, its contributions not only for the years 1996-
1997 but also for the subsequent years, but to no avail.
Thus, USTFU filed against UST, a complaint for ULP before the arbitration branch of the NLRC.
UST sought the dismissal of the complaint on the ground of lack of jurisdiction. It contended that
the case falls within the exclusive jurisdiction of the voluntary arbitrator or panel of voluntary
arbitrators because it involves the interpretation and implementation of the provisions of the
CBA; and the conflict between the herein parties must be resolved as grievance under the CBA
and not as ULP. UST’s motion to dismiss was denied.
According to UST, the parties had, in the past, concluded several CBAs for the mutual benefit of
the union members and UST, and one of these agreements was the 1996-2001 CBA. It is
undisputed that one of the economic benefits granted by UST under the said CBA was the
Hospitalization Fund.
USTFU added that the amount of ₱4M was agreed to be paid by UST to the Hospitalization
Fund annually for the 4th and 5th year of their CBA, pursuant to the parties’ MOA which
embodied the renegotiated economic provisions of the said CBA. USTFU explained that the
rationale is that the economic benefits under the said CBA like the Hospitalization and Medical
Benefits Fund, are sourced from the tuition fee increases and pursuant thereto, UST is obligated
to remit the amount of ₱2M (and Hospitalization and Medical Benefits Fund) not only in the first
year of the CBA but also in the subsequent years because the said amount became an integral
part of the current or existing tuition fee. USTFU claimed that the tuition fee increases once
integrated to the old amount of tuition fee becomes and remains an integral part of the existing
tuition fee.
On the other hand, UST claimed that it religiously complied with the economic provisions of the
1996-2001 CBA particularly its obligation to remit to the Hospitalization and Medical Benefits
Fund as the renegotiated economic provisions under the MOA. It claimed that it was never the
intention of the parties to the CBA that the amounts deposited to the Hospitalization fund for
each year shall be carried over to the succeeding years.
UST maintained that the present dispute should not be treated as ULP but should be resolved
as a grievance under the CBA and referred to a Voluntary Arbitrator.
LA ruled in favor of USTFU. The LA classified USTFU’s complaint as one for ULP, claims for
sliding in of funds to hospitalization and medical benefits under the CBA, damages and
attorney’s fee with prayer for slide-in and restoration of medical benefits under the CBA. The LA
ruled that UST was not able to comply with the 1996-2001 CBA. However, despite UST’s
alleged non-compliance, the LA ruled that UST did not commit ULP. The failure of UST to slide
in yearly the ₱2M hospitalization fund is not violation of the CBA but an error in the
interpretation of the provision of the CBA.
NLRC denied UST’s appeal and subsequent MR. The NLRC pointed out that UST’s refusal to
comply, despite repeated demands, with the CBA’s economic provisions is tantamount to a
gross and flagrant violation. Thus, the present case properly falls under the LA’s original
jurisdiction as well as the NLRC’s appellate jurisdiction.
CA found grave abuse of discretion on the part of NLRC and granted UST’s petition. The CA set
aside the decisions of the NLRC and the LA, without prejudice to the refiling of USTFU’s
complaint in the proper forum. The CA denied USTFU’s MR.
Issue: Whether the VA had jurisdiction.
Ruling: Yes.
Art. 224 of the Labor Code provides that the Labor Arbiter shall refer to the grievance machinery
and voluntary arbitration as provided in the CBA those cases that involve the interpretation of
said agreements. Article 274 of the Labor Code further provides that all unresolved grievances
arising from the interpretation or implementation of the CBA, including violations of said
agreement, are under the original and exclusive jurisdiction of the voluntary arbitrator or panel of
voluntary arbitrators. Excluded from this original and exclusive jurisdiction is gross violation of
the CBA, which is defined in Article 274 as "flagrant and/or malicious refusal to comply with the
economic provisions" of the CBA.
San Jose v. NLRC provides guidelines for understanding Articles 217, 261, and 262:
1. The jurisdiction of the Labor Arbiter and Voluntary Arbitrator or Panel of Voluntary
Arbitrators over the cases enumerated in Articles 217, 261, and 262 can possibly include
money claims in one form or another.
2. The cases where the Labor Arbiters have original and exclusive jurisdiction are
enumerated in Article 217, and that of the Voluntary Arbitrator or Panel of Voluntary
Arbitrators in Article 261.
3. The original and exclusive jurisdiction of Labor Arbiters is qualified by an exception as
indicated in the introductory sentence of Article 217 (a), to wit:
Art. 217. Jurisdiction of Labor Arbiters ... (a) Except as otherwise provided under
this Code the Labor Arbiter shall have original and exclusive jurisdiction to hear
and decide ... the following cases involving all workers..."
The phrase "Except as otherwise provided under this Code" refers to the following
exceptions:
A. Art. 217. Jurisdiction of Labor Arbiters…(c) Cases arising from the
interpretation or implementation of collective bargaining agreement and those
arising from the interpretation or enforcement of company procedure/policies
shall be disposed of by the Labor Arbiter by referring the same to the grievance
machinery and voluntary arbitrator as may be provided in said agreement.
B. Art. 262. Jurisdiction over other labor disputes. – The Voluntary Arbitrator or
panel of Voluntary Arbitrators, upon agreement of the parties, shall also hear and
decide all other labor disputes including unfair labor practices and bargaining
deadlocks.
Parenthetically, the original and exclusive jurisdiction of the Labor Arbiter for money
claims is limited only to those arising from statutes or contracts other than a CBA. The
Voluntary Arbitrator or Panel of Voluntary Arbitrators will have original and exclusive
jurisdiction over money claims "arising from the interpretation or implementation of the
Collective Bargaining Agreement and, those arising from the interpretation or
enforcement of company personnel policies," under Article 261.
4. The jurisdiction of Voluntary Arbitrator or Panel of Voluntary Arbitrators is provided for
in Arts. 274 and 275 of the Labor Code.
1. A close reading of Article 274 indicates that the original and exclusive
jurisdiction of Voluntary Arbitrator or Panel of Voluntary Arbitrators is limited only
to:
"... 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... 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 asgrievances
under the Collective Bargaining Agreement. x x x."
2. Voluntary Arbitrators or Panel of Voluntary Arbitrators, however, can exercise
jurisdiction over any and all disputes between an employer and a union and/or
individual worker as provided for in Article 275.
"Art. 275. Jurisdiction over other labor disputes. - The voluntary arbitrator or
panel of voluntary arbitrators, upon agreement of the parties, shall also hear and
decide all other labor disputes including unfair labor practices and bargaining
deadlocks."
The jurisdiction of the Voluntary Arbitrator or Panel of Voluntary Arbitrators under Article 275
must be voluntarily conferred upon by both labor and management. The labor disputes referred
to in the same Article 275 can include all those disputes mentioned in Article 224 over which the
Labor Arbiter has original and exclusive jurisdiction.
Here, the NLRC correctly ruled that the LA had no jurisdiction to hear and decide petitioner’s
money-claim underpayment of retirement benefits, as the controversy between the parties
involved an issue "arising from the interpretation or implementation" of a provision of the
collective bargaining agreement. The Voluntary Arbitrator or Panel of Voluntary Arbitrators has
original and exclusive jurisdiction over the controversy under Article 274 of the Labor Code, and
not the Labor Arbiter.
Despite the allegation that UST refused to comply with the economic provisions of the CBA, we
cannot characterize UST’s refusal as "flagrant and/or malicious." Indeed, UST’s literal
interpretation of the CBA was, in fact, what led USTFU to file its complaint.
DISPOSITIVE: WHEREFORE, we DENY the petition.
Albino
Topic: Jurisdiction over “Other Labor Disputes”
91. Viviero v. CA, Hammonia Marine Services, Hanseatic Shipping Co,
Doctrine: The phrase "all other labor disputes" may include termination disputes provided that
the agreement between the Union and the Company states "in unequivocal language that [the
parties] conform to the submission of termination disputes and unfair labor practices to voluntary
arbitration." Ergo, it is not sufficient to merely say that parties to the CBA agree on the principle
that "all disputes" should first be submitted to a Voluntary Arbitrator. There is a need for an
express stipulation in the CBA that illegal termination disputes should be resolved by a
Voluntary Arbitrator or Panel of Voluntary Arbitrators, since the same fall within a special class
of disputes that are generally within the exclusive original jurisdiction of Labor Arbiters by
express provision of law. Absent such express stipulation, the phrase "all disputes" should be
construed as limited to the areas of conflict traditionally within the jurisdiction of Voluntary
Arbitrators.
Action Sequence: ID at union > Grievance failed > Complaint at POEA > Transferred to LA >
LA dismissed the case for lack of jurisdiction > NLRC reversed LA > CA reversed NLRC > SC:
LA has jurisdiction
Facts:

 Vivero, seaman, is a member of the Associated Marine Officers and Seamen's Union of
the Philippines (AMOSUP). The CBA entered into by AMOSUP and the private
respondents provide for a grievance procedure:
o Section 4. If the grievance cannnot be resolved under the provision of Section 3,
the decision of the Master shall govern at sea x x x x in foreign ports and until the
vessel arrives at a port where the Master shall refer such dispute to either the
COMPANY or the UNION in order to resolve such dispute. It is understood,
however, if the dispute could not be resolved then both parties shall avail of the
grievance procedure.
 o Section 5: Creating a Grievance Committee to be composed of two COMPANY
REPRESENTATIVES and two LABOR REPRESENTATIVES.
o Section 6: Any grievance, dispute or misunderstanding concerning x x x any
breach of the Employment Contract, or any dispute arising from the meaning or
the application of the provision of this Agreement or a claim of violation thereof or
any complaint that any such crewmembers may have against the COMPANY x x
x shall be brought to the attention of the GRIEVANCE COMMITTEE before either
party takes any action, legal or otherwise.
o Section 7: if the same cannot be settled by the COMMITTEE or if the
COMMITTEE fails to act on the dispute within the 7-day period herein provided,
the same shall be referred to a VOLUNTARY ARBITRATION COMMITTEE.
 Vivero was hired as Chief Officer of the vessel MV Sunny Prince for 10 months.
 However, after just one month, he was repatriated because of very poor performance
and conduct, refusal to perform his job, refusal to report to the Captain or the vessel’s
Engineers or cooperate with other ship officers about the problem in cleaning the cargo
holds or of the shipping pump and his dismal relations with the Captain of the vessel.
 Viviero filed a complaint for illegal dismissal at AMOSUP. Then, grievance proceedings
were conducted. However, they failed to reach and settle the dispute.
 Viviero then filed a complaint with POEA.
 Private respondents (employers) filed a Motion to Dismiss on the ground that the POEA
had no jurisdiction over the case considering petitioner Vivero's failure to refer it to a
Voluntary Arbitration Committee in accordance with the CBA between the parties.
 Upon the enactment of RA 8042, the case was transferred to the Adjudication Branch of
NLRC.
 Labor Arbiter: dismissed the complaint for want of jurisdiction because the CBA
provided for the referral to a VA.
 NLRC: set aside the ruling of the LA since petitioner had exhausted his remedy by
submitting his case to the Grievance Committee of AMOSUP.
 CA: ruled in favor of private respondents ruling that the CBA "is the law between the
parties and compliance therewith is mandated by the express policy of the law."
o Viviero should have followed the provision in the CBA requiring the submission of
the dispute to the VA once the Grievance Committee failed to settle the
controversy.
 Viviero agues that: his complaint for illegal dismissal was undeniably a termination
dispute and did not, in any way, involve an "interpretation or implementation of collective
bargaining agreement" or "interpretation" or "enforcement" of company personnel
policies. Thus, it should fall within the original and exclusive jurisdiction of the NLRC and
its Labor Arbiter.
 Private respondents argue that: the case is clearly one "involving the proper
interpretation and implementation of the Grievance Procedure found in the Collective
Bargaining Agreement (CBA) between the parties.
Issue: Who has jurisdiction? LA
Ruling: LA has jurisdiction over the case.
 Article 217 (now 224) provides the original and exclusive jurisdiction of Labor Arbiters
which includes termination disputes.
 However, any or all of these cases may, by agreement of the parties, be submitted to a
Voluntary Arbitrator or Panel of Voluntary Arbitrators for adjudication. This is provided by
Articles 261 (274) and 262 (275) LC. Article 262 provides:
“The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the
parties, shall also hear and decide all other labor disputes including unfair labor
practices and bargaining deadlocks.”
 The argument of private respondents that t the issue involves the proper interpretation
and implementation of the Grievance Procedure found in the CBA is UNTENABLE.
 The case is primarily a termination dispute. It is clear that he was challenging the legality
of his dismissal for lack of cause and lack of due process. The issue of whether there
was proper interpretation and implementation of the CBA provisions comes into play
only because the grievance procedure provided for in the CBA was not observed after
he sought his Union’s assistance in contesting his termination. Thus, the question to be
resolved necessarily springs from the primary issue of whether there was a valid
termination; without this, then there would be no reason to invoke the need to interpret
and implement the CBA provisions properly.
 In the case of SMC v. NLRC, SC held that the phrase "all other labor disputes" may
include termination disputes provided that the agreement between the Union and
the Company states "in unequivocal language that [the parties] conform to the
submission of termination disputes and unfair labor practices to voluntary
arbitration." Ergo, it is not sufficient to merely say that parties to the CBA agree on
the principle that "all disputes" should first be submitted to a Voluntary Arbitrator.
There is a need for an express stipulation in the CBA that illegal termination
disputes should be resolved by a Voluntary Arbitrator or Panel of Voluntary
Arbitrators, since the same fall within a special class of disputes that are generally
within the exclusive original jurisdiction of Labor Arbiters by express provision of
law. Absent such express stipulation, the phrase "all disputes" should be
construed as limited to the areas of conflict traditionally within the jurisdiction of
Voluntary Arbitrators, i.e., disputes relating to contract-interpretation, contract-
implementation, or interpretation or enforcement of company personnel policies. Illegal
termination disputes - not falling within any of these categories - should then be
considered as a special area of interest governed by a specific provision of law.
 Here, while the parties did agree to make termination disputes the proper subject of
voluntary arbitration, such submission remains discretionary upon the parties. A perusal
of the CBA provisions on grievance procedure shows it is the general agreement of the
parties to refer grievances, disputes or misunderstandings to a grievance committee,
and henceforth, to a voluntary arbitration committee.
o “ x x x The Master shall refer the case/dispute upon reaching port and if not
satisfactorily settled, the case/dispute may be referred to the grievance
machinery or procedure hereinafter provided.”
 The use of the word "may" shows the intention of the parties to reserve the right to
submit the illegal termination dispute to the jurisdiction of the Labor Arbiter, rather than
to a Voluntary Arbitrator. Petitioner validly exercised his option to submit his case to a
Labor Arbiter when he filed his Complaint before the proper government agency.
  Further, the dispute was never brought to a Voluntary Arbitrator for resolution.
 It may be observed that under Policy Instruction No. 56 of the Secretary of Labor,
"termination cases arising in or resulting from the interpretation and
implementation of collective bargaining agreements and interpretation and
enforcement of company personnel policies which were initially processed at the
various steps of the plant-level Grievance Procedures under the parties' collective
bargaining agreements fall within the original and exclusive jurisdiction of the
voluntary arbitrator pursuant to Art. 217 (c) and Art. 261 of the Labor Code; and, if
filed before the Labor Arbiter, these cases shall be dismissed by the Labor Arbiter
for lack of jurisdiction and referred to the concerned NCMB Regional Branch for
appropriate action towards an expeditious selection by the parties of a Voluntary
Arbitrator or Panel of Arbitrators based on the procedures agreed upon in the
CBA.”
 BUT… the instant case is a termination dispute falling under the original and exclusive
jurisdiction of the Labor Arbiter, and does not specifically involve the application,
implementation or enforcement of company personnel policies contemplated in Policy
Instruction No. 56.
 Policy Instruction No. 56 does not apply in the case at bar. In any case, private
respondents never invoked the application of Policy Instruction No. 56 in their Position
Papers, neither did they raise the question in their Motion to Dismiss.
Dispositive: WHEREFORE, the Decision of the Court of Appeals is SET ASIDE and the case is
remanded to the Labor Arbiter to dispose of the case with dispatch until terminated considering
the undue delay already incurred.
Balboa

Topic: Defiance of Assumption Order/Return to Work Order

92. Manila Hotel Employees Association v Manila Hotel Corporation

MANILA HOTEL EMPLOYEES ASSOCIATION vs. MANILA HOTEL CORPORATION

Doctrine: Defiance of the assumption order or a return-to-work order by a striking employee,
whether a union officer or a member, is an illegal act and, therefore, a valid ground for loss of
employment status.
Action Sequence: MHEA filed a notice of strike > SOLE certified the dispute to NLRC > MHEA
held a strike > NLRC issued return-to-work order > only 6 union members obeyed > NLRC ruled
that the strike was illegal > PetCert to CA which upheld the ruling that the strike was illegal > SC
affirmed
Facts:

 MHEA filed a notice of strike with the NCMB office against Manila Hotel. The SOLE
certified the labor dispute to the NLRC for compulsory arbitration. The order enjoined an
strike or lockout and were ordered to cease and desist from omitting any acts that may
exacerbate the situation.
 MHEA conducted a strike despite the order.
  The NLRC conducted several conferences. After the strike, Manila Hotel filed a
complaint with prayer for injunction and/or TRO alleging that MHEA conducted an illegal
strike.
 The NLRC issued an order and directed the striking workers to return to work
immediately and the hotel to accept them. MHEA then reported to the NLRC that only 6
strikers returned to work and were deemed reinstated. In response to this, MHEA filed
an urgent manifestation and motion to set aside order and alleged that the MR
questioning the validity of the order of the SOLE was still pending before the SOLE. The
said MR prevent the Order of the SOLE from becoming final and executory. It argued
that the NLRC did not acquire jurisdiction.
 The NLRC eventually ruled that the strike by MHEA was illegal. It determined that only
the union officers were deemed to have lost their employment. The NLRC awarded
severance pay to the other strikers as it did not show that they were notified of the
return-to-work order. The union then argued that its individual members were entitled to
reinstatement.
 On petition for certiorari, the CA deleted the severance pay.

Issue: whether the union members are entitled to reinstatement

Ruling: No. The petition is substantially infirm. MHEA members seek their reinstatement after
participating in an illegal strike, that is, a strike that was conducted after receiving an Order of
assumption by the SOLE certifying the dispute to the NLRC for compulsory arbitration. Worse
still, the strikers failed to comply with the return-to-work Order, issued by the NLRC, despite
receipt thereof.

ART. 263. STRIKES, PICKETING, AND LOCKOUTS

xxxx
(g) When, in his opinion there exists a labor dispute causing or likely to cause a strike or lockout
in an industry indispensable to the national interest, the Secretary of Labor and Employment
may assume jurisdiction over the dispute and decide it or certify the same to the Commission for
compulsory arbitration. Such assumption or certification shall have the effect of automatically
enjoining the intended or impending strike or lockout as specified in the assumption or
certification order. xxx

More to the point, the Court has consistently ruled in a long line of cases spanning several
decades that once the SOLE 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.
Defiance of the assumption order or a return-to-work order by a striking employee, whether a
union officer or a member, is an illegal act and, therefore, a valid ground for loss of employment
status.

The allegation that the strikers relied on their honest belief that the filing of a Motion for
Reconsideration of the Order, issued by the SOLE on 24 November 1999, entitled them to
participate in a strike, cannot be sustained. In the case of St. Scholastica’s College v. Torres,
the Court reiterated the rule that a return-to-work order is immediately executory
notwithstanding the filing of a motion for reconsideration. It must be strictly complied with even
during the pendency of any petition questioning its validity. Returning to work in this situation is
not a matter of option or voluntariness but of obligation. The worker must return to his job
together with his co-workers so the operations of the company can be resumed and it can
continue serving the public and promoting its interest. This extraordinary authority given to the
Secretary of Labor is aimed at arriving at a peaceful and speedy solution to labor disputes,
without jeopardizing national interests. Regardless therefore of their motives, or the validity of
their claims, the striking workers must cease and/or desist from any and all acts that tend to, or
undermine this authority of the Secretary of Labor, once an assumption and/or certification order
is issued. They cannot, forinstance, ignore return-to-work orders, citing unfair labor practices on
the part of the company, to justify their action.

MHEA claims that the Court should consider as a mitigating circumstance the fact that they held
the strike three months after filing their notice of strike. Such detail is irrelevant. What is crucial
is that they were apprised of the assumption order of the SOLE wherein they were enjoined
from carrying out a strike.

MHEA cannot lean on the doctrine in the case of PNOC Dockyard and Engineering Corporation
v. National Labor Relations Commission. The Court, in the aforecited case, ruled that there was
no valid service of the certification order which prohibited any strike or lockout since the said
order was served on the guard on duty instead of the president of the union who was authorized
to receive the same. As a result, the strike undertaken after the issuance of the said order was
considered legal, hence cannot effectively terminate the employment of workers who joined the
strike. In the present case, not only were the union officers apprised of the order, a copy of the
same was served on the picket lines.

Dispositive: Petition DENIED.

Balce
Topic: Requirements for a Valid Strike
93. Pilipino Telephone Corp. v. PILTEA

G.R. No. 160058 June 22, 2007

PILIPINO TELEPHONE CORPORATION, petitioner,

vs.
PILIPINO TELEPHONE EMPLOYEES ASSOCIATION (PILTEA), PELAGIO S. BRIONES II,
GEORGE L. DE LEON, LECEL M. FIDEL, AUGUSTO C. FRANCISCO, OLIVER B. ANTONIO,
RONALDO B. CORONEL, CHRISTOPHER L. HERRERA and GEM TORRES, respondents.

x-----------------------------x

G.R. No. 160094 June 22, 2007

PILIPINO TELEPHONE EMPLOYEES ASSOCIATION (PILTEA), PELAGIO S. BRIONES II,

GEORGE L. DE LEON, and GEM TORRES, petitioners,
vs.
 NATIONAL LABOR RELATIONS COMMISSION and PILIPINO TELEPHONE
CORPORATION, respondents.

Ponente: PUNO, C.J.

Doctrine:

Article 263 of the Labor Code, as amended by R.A. No. 6715, and Rule XXII, Book V of
the Omnibus Rules Implementing the Labor Code outline the following procedural
requirements for a valid strike, to wit:

1. A notice of strike, with the required contents, should be filed with the DOLE,
specifically the Regional Branch of the NCMB, copy furnished the employer of
the union;
2. A cooling-off period must be observed between the filing of notice and the actual
execution of the strike thirty (30) days in case of bargaining deadlock and fifteen
(15) days in case of unfair labor practice. However, in the case of union busting
where the union's existence is threatened, the cooling-off period need not be
observed.
3. xxx xxx xxx
4. Before a strike is actually commenced, a strike vote should be taken by secret
balloting, with a 24-hour prior notice to NCMB. The decision to declare a strike
requires the secret-ballot approval of majority of the total union membership in
the bargaining unit concerned.
5. The result of the strike vote should be reported to the NCMB at least 7 days
before the intended strike or lockout, subject to the cooling-off period.

It is settled that these requirements are mandatory in nature and failure to comply
therewith renders the strike illegal.

Action Sequence: Notice of Strike –-> petition for Consolidated Assumption of Jurisdiction with
the Office of the Secretary of Labor (granted) -> Second Notice of Strike -> petition to declare
the Union's strike illegal -> LA declared the strike illegal -> NLRC affirmed in toto -> CA affirmed
that the strike is illegal -> SC denied the petition.
FACTS:

 The CBA between the Union and Pilipino Telephone Corporation (the Company) was
due to expire on December 31, 1997. On October 30, 1997, the Union submitted to the
Company its proposals for the renegotiation of the non-representation aspects of their
CBA. As there was a standstill on several issues, the parties submitted their dispute to
the National Conciliation and Mediation Board (NCMB) for preventive mediation. The
conciliation proceedings before the NCMB failed.
 On July 13, 1998, the Union filed a Notice of Strike with the NCMB for unfair labor
practice due to the alleged acts of "restraint and coercion of union members and
interference with their right to self-organization" committed by the Company's Revenue
Assurance Department (RAD) Manager Rosales and its Call Center Department
Manager, Manny Alegado.
  The Company filed a petition for Consolidated Assumption of Jurisdiction with the Office
of the Secretary of Labor. Secretary Laguesma issued an Order enjoining any strike or
lockout, whether actual or intend. Furthermore, the parties are directed to cease and
desist from committing any or all acts that might exacerbate the situation.
 The Union filed a second Notice of Strike with the NCMB on the grounds of: a) union
busting, for the alleged refusal of the Company to turn over union funds; and b) the mass
promotion of union members during the CBA negotiation, allegedly aimed at excluding
them from the bargaining unit during the CBA negotiation. On the same day, the Union
went on strike.
 On September 9, 1998, Secretary Laguesma directed the striking Union officers and
members to return to work within 24 hours from receipt of the Order and for the
Company to accept all strikers under the same terms and conditions of employment prior
to the strike. The Union and its members complied.
 On December 7, 1998, the Company filed with the NLRC a petition to declare the
Union's September 4, 1998 strike illegal.
 NLRC RULING: LA Mangandog declared that the strike conducted by PILTEA is
declared illegal. The Labor Arbiter found the strike illegal for having been conducted in
defiance of Secretary Laguesma's August 14, 1998 assumption order and for non-
compliance with the procedural requirements for the conduct of a strike under the Labor
Code and its implementing rules.
 LA RULING: On appeal, the NLRC affirmed the decision of the Labor Arbiter in toto.
 CA RULING: CA held that finding of illegality of the September 4, 1998 strike STANDS.

ISSUE:

 Whether or not the strike was illegal. (YES)

RULING:

 YES. Article 263 of the Labor Code, as amended by R.A. No. 6715, and Rule XXII, Book
V of the Omnibus Rules Implementing the Labor Code outline the following procedural
requirements for a valid strike, to wit:
1. A notice of strike, with the required contents, should be filed with the DOLE,
specifically the Regional Branch of the NCMB, copy furnished the employer of
the union;
2. A cooling-off period must be observed between the filing of notice and the actual
execution of the strike thirty (30) days in case of bargaining deadlock and fifteen
(15) days in case of unfair labor practice. However, in the case of union busting
where the union's existence is threatened, the cooling-off period need not be
observed.
3. xxx xxx xxx
4. Before a strike is actually commenced, a strike vote should be taken by secret
balloting, with a 24-hour prior notice to NCMB. The decision to declare a strike
requires the secret-ballot approval of majority of the total union membership in
the bargaining unit concerned.
5. The result of the strike vote should be reported to the NCMB at least 7 days
before the intended strike or lockout, subject to the cooling-off period.
 It is settled that these requirements are mandatory in nature and failure to comply
therewith renders the strike illegal.
 In the case at bar, the Union staged the strike on the same day that it filed its
second notice of strike. The Union violated the sevenday strike ban. This
 requirement should be observed to give the Department of Labor and Employment
(DOLE) an opportunity to verify whether the projected strike really carries the approval of
the majority of the union members.
 The Court agreed that there was no union busting which would warrant the non-
observance of the coolingoff period.
o To constitute union busting under Article 263 of the Labor Code, there must be:
1) a dismissal from employment of union officers duly elected in accordance with
the union constitution and bylaws; and 2) the existence of the union must be
threatened by such dismissal.
o In the case at bar, the second notice of strike filed by the Union merely assailed
the mass promotion of its officers and members during the CBA negotiations.
Surely, promotion is different from dismissal.
 The contention of the Union and its officers that the finding of unfair labor practice by the
CA precludes the ruling that the strike was illegal is unmeritorious.
o The refusal of the Company to turn over the deducted contingency funds to the
union does not justify the disregard of the mandatory sevenday strike ban and
the 15-day coolingoff period.
 Article 264 of the Labor Code provides: 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.
 Clearly then, the issues which were made as grounds for the second notice of strike, viz,
the mass promotion of the union members and officers and the nonremittance of the
deducted contingency fees, were already existing when the Secretary of Labor assumed
jurisdiction over the entire labor dispute between the Company and the Union.
 Hence, the strike was illegal.

DISPOSITIVE PORTION:
IN VIEW WHEREOF, the petition in G.R. No. 160094 is DENIED. The petition in G.R. No.
160058 is GRANTED. The Decision and Resolution of the CA in CA-G.R. SP No. 59799 dated
September 20, 2002 and September 17, 2003, respectively, are REVERSED and the Decision
and Resolution of the NLRC dated February 29, 2000 and April 28, 2000, respectively, are
REINSTATED.

NOTES:

 As to the penalty of the officers: The effects of illegal strikes, as outlined in Article 264
of the LC, make a distinction between ordinary workers and union officers who
participate therein. Under established jurisprudence, a union officer may be terminated
from employment for knowingly participating in an illegal strike. The fate of union
members is different. Mere participation in an illegal strike is not a sufficient ground for
termination of the services of the union members. An ordinary striking worker or union
member cannot, as a rule, be terminated for mere participation in an illegal strike; there
must be proof that he committed illegal acts during the strike.
o It bears emphasis that the strike staged by the Union in the instant case was
illegal for its procedural infirmities and for defiance of the Secretary's assumption
order. The CA, the NLRC and the Labor Arbiter were unanimous in finding that
 bad faith existed in the conduct of the subject strike when the union defied the
Order of the Sec of Labor. The imposition of the penalty of dismissal is warranted
 It cannot be overemphasized that strike, as the most preeminent economic weapon of
the workers to force management to agree to an equitable sharing of the joint product of
labor and capital, exert some disquieting effects not only on the relationship between
labor and management, but also on the general peace and progress of society and
economic well-being of the State. This weapon is so critical that the law imposes the
supreme penalty of dismissal on union officers who irresponsibly participate in an illegal
strike and union members who commit unlawful acts during a strike.
 The responsibility of the union officers, as main players in an illegal strike, is greater than
that of the members as the union officers have the duty to guide their members to
respect the law. The policy of the state is not to tolerate actions directed at the
destabilization of the social order, where the relationship between labor and
management has been endangered by abuse of one party's bargaining prerogative, to
the extent of disregarding not only the direct order of the government to maintain the
status quo, but the welfare of the entire workforce though they may not be involved in
the dispute. The grave penalty of dismissal imposed on the guilty parties is a natural
consequence, considering the interest of public welfare.

Ignacio

Topic: Mandatory Notices

95. CAPITOL MEDICAL v. NLRC

[G.R. No. 147080. April 26, 2005.]

CAPITOL MEDICAL CENTER, INC., petitioner, vs. NATIONAL LABOR

RELATIONS COMMISSION, JAIME IBABAO, JOSE BALLESTEROS,
RONALD CENTENO, NARCISO SARMIENTO, EDUARDO CANAVERAL,
SHERLITO DELA CRUZ, SOFRONIO COMANDAO, MARIANO GALICIA,
RAMON MOLOD, CARMENCITA SARMIENTO, HELEN MOLOD, ROSA
COMANDAO, ANGELITO CUIZON, ALEX MARASIGAN, JESUS CEDRO,
ENRICO ROQUE, JAY PERILLA, HELEN MENDOZA, MARY GLADYS
GEMPEROSO, NINI BAUTISTA, ELENA MACARUBBO, MUSTIOLA
SALVACION DAPITO, ALEXANDER MANABE, MICHAEL EUSTAQUIO,
ROSE AZARES, FERNANDO MANZANO, HENRY VERA CRUZ, CHITO
MENDOZA, FREDELITA TOMAYAO, ISABEL BRUCAL, MAHALKO
LAYACAN, RAINIER MANACSA, KAREN VILLARENTE, FRANCES
ACACIO, LAMBERTO CONTI, LORENA BEACH, JUDILAH RAVALO,
DEBORAH NAVE, MARILEN CABALQUINTO, EMILIANA RIVERA, MA.
ROSARIO URBANO, ROWENA ARILLA, CAPITOL MEDICAL CENTER
EMPLOYEES ASSOCIATION-AFW, GREGORIO DEL PRADO, ARIEL
ARAJA, and JESUS STA. BARBARA, JR., respondents.
Doctrine:
 In National Federation of Labor v. NLRC, the Court enumerated the notices required by
Article 263 of the Labor Code and the Implementing Rules, which include the 24-hour
prior notice to the NCMB:
1. A notice of strike, with the required contents, should be filed with the DOLE,
specifically the Regional Branch of the NCMB, copy furnished the employer of
the union;
 2. A cooling-off period must be observed between the filing of notice and the actual
execution of the strike thirty (30) days in case of bargaining deadlock and fifteen
(15) days in case of unfair labor practice. However, in the case of union busting
where the union's existence is threatened, the cooling-off period need not be
observed.
3. Before a strike is actually commenced, a strike vote should be taken by secret
balloting, with a 24-hour prior notice to NCMB. The decision to declare a strike
requires the secret-ballot approval of majority of the total union membership in
the bargaining unit concerned.
4. The result of the strike vote should be reported to the NCMB at least seven (7)
days before the intended strike or lockout, subject to the cooling-off period.

Action Sequence: LA declared strike illegal > NLRC reversed > CA affirmed NLRC > SC
reversed, reinstated LA decision

Facts:
 The petitioner’s refusal to negotiate for a collective bargaining agreement (CBA) resulted
in a union-led strike. The Sec. of Labor and Employment rendered a decision Directing
the management of the Capitol Medical Center to negotiate a CBA with the Capitol
Medical Center Employees Association-Alliance of Filipino Workers, the certified
bargaining agent of the rank-and-file employees. Pursuant thereto, the Union requested
for a meeting to discuss matters pertaining to a negotiation for a CBA but was refused.
 Instead of filing a motion with the SOLE for the enforcement of the resolutions of
Undersecretary Laguesma as affirmed by this Court, the Union filed a Notice of Strike on
October 29, 1997 with the National Conciliation and Mediation Board (NCMB), serving a
copy thereof to the petitioner.  The Union alleged as grounds for the projected strike the
following acts of the petitioner: (a) refusal to bargain; (b) coercion on employees; and (c)
interference/ restraint to self-organization.
 Petitioner asserted that the strike was illegal that no voting had taken place on
November 10, 1997; moreover, no notice of such voting was furnished to the NCMB at
least twenty-four (24) hours prior to the intended holding of the strike vote.
 Labor Arbiter Facundo L. Leda rendered a Decision on December 23, 1998 in favor of
the petitioner, and declared the strike staged by the respondents illegal.
o The Labor Arbiter ruled that no voting had taken place on November 10, 1997;
o moreover, no notice of such voting was furnished to the NCMB at least twenty-
four (24) hours prior to the intended holding of the strike vote.
o According to the Labor Arbiter, the affidavits of the petitioner's employees who
alleged that no strike vote was taken, and supported by the affidavit of the
overseer of the parking lot and the security guards, must prevail as against the
minutes of the strike vote presented by the respondents.
o The Labor Arbiter also held that considering Article 263(9) of the Labor Code, the
respondent Union should have filed a motion for a writ of execution of the
resolution of Undersecretary Laguesma which was affirmed by this Court instead
of staging a strike.
 The respondents appealed the decision to the NLRC which rendered a Decision on June
14, 1999, granting their appeal and reversing the decision of the Labor Arbiter.
o The NLRC ruled that under Section 7, Rule XXII of DOLE Order No. 9, Series of
1997, absent a showing that the NCMB decided to supervise the conduct of a
 secret balloting and informed the union of the said decision, or that any such
request was made by any of the parties who would be affected by the secret
balloting and to which the NCMB agreed, the respondents were not mandated to
furnish the NCMB with such notice before the strike vote was conducted.
 CA affirmed NLRC.
Issue: Whether or not the CA erred in affirming the NLRC ruling declaring the subject strike
legal? (Y)

Ruling: YES. The CA erred, the strike was illegal.

 In National Federation of Labor v. NLRC, the Court enumerated the notices required by
Article 263 of the Labor Code and the Implementing Rules, which include the 24-hour
prior notice to the NCMB:
1. A notice of strike, with the required contents, should be filed with the DOLE,
specifically the Regional Branch of the NCMB, copy furnished the employer of
the union;
2. A cooling-off period must be observed between the filing of notice and the actual
execution of the strike thirty (30) days in case of bargaining deadlock and fifteen
(15) days in case of unfair labor practice. However, in the case of union busting
where the union's existence is threatened, the cooling-off period need not be
observed.
3. Before a strike is actually commenced, a strike vote should be taken by secret
balloting, with a 24-hour prior notice to NCMB. The decision to declare a strike
requires the secret-ballot approval of majority of the total union membership in
the bargaining unit concerned.
4. The result of the strike vote should be reported to the NCMB at least seven (7)
days before the intended strike or lockout, subject to the cooling-off period.
 The requirement of giving notice of the conduct of a strike vote to the NCMB at least 24
hours before the meeting for the said purpose is designed to
a. Inform the NCMB of the intent of the union to conduct a strike vote;
b. Give the NCMB ample time to decide on whether or not there is a need to
supervise the conduct of the strike vote to prevent any acts of violence and/or
irregularities attendant thereto; and
c. Should the NCMB decide on its own initiative or upon the request of an
interested party including the employer, to supervise the strike vote, to give it
ample time to prepare for the deployment of the requisite personnel, including
peace officers if need be.
 In this case, the respondent Union failed to comply with the 24-hour prior notice
requirement to the NCMB before it conducted the alleged strike vote meeting on
November 10, 1997.
 Likewise, conformably to Article 264 of the Labor Code of the Philippines and Section 7,
Rule XXII of the Omnibus Rules Implementing the Labor Code, no labor organization
shall declare a strike unless supported by a majority vote of the members of the union
obtained by secret ballot in a meeting called for that purpose. The requirement is
mandatory and the failure of a union to comply therewith renders the strike illegal.
 We agree with the finding of the Labor Arbiter that no secret balloting to strike wa
conducted by the respondent Union on November 10, 1997 at the parking lot in front of
the hospital, at the corner of Scout Magbanua Street and Panay Avenue, Quezon City.
  The respondents failed to prove the existence of a parking lot in front of the hospital
other than the parking lot across from it.
 Indeed, of those who purportedly voted in a secret voting executed their separate
affidavits that no secret balloting took place on November 10, 1997, and that even if they
were not members of the respondent Union, were asked to vote and to sign attendance
papers.

Dispositive: IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decisions of
the Court of Appeals and NLRC are SET ASIDE AND REVERSED. The Decision of the Labor
Arbiter is REINSTATED. No costs. SO ORDERED.

Topic: Application of “No Work, No Pay” during Strikes

Phil. Diamond Hotel and Resort, Inc. (Manila Diamond Hotel) v. Manila diamond Hotel
Employees Union
G.R. No. 158075 | June 30, 2006

Doctrine: Union officers who stage and participate in an illegal strike are subject to dismissal
while ordinary striking workers cannot be dismissed for mere participation in an illegal strike—
there must be proof that they committed illegal acts during the strike.

Action Sequence: PCE in DOLE > DOLE denies CE > Notice of Strike in NCMB > Petition for
Injunction in NLRC > Petition to declare strike illegal > SOLE assumption of jurisdiction and
certified dispute to NLRC > NLRC declares strike illegal > CA affirmed with modification > SC >
Case remanded.

Facts:

 The Manila Diamond Hotel Employees Union filed a Petition for Certification Election
 The DOLE denies petition for failure to comply with legal requirements.
 Francis Mendoza (Mendoza) is an outlet cashiers employed by the Hotel. He failed to
remit the P71,692.50 at the end of his duty. According to Mendoza, Jose Leonardo B.
Kimpo (the union president) signed the daily cash remittance report and dropped
remittances. Kimpo, on the other hand, informed that he was not aware of any standard
procedure for remitting cash collections. Mendoza was suspended for one week and re-
assigned to the Cost Control Department.
 The Union notified the Hotel of its intention to negotiate. The Hotel did not recognize the
union as the exclusive bargaining agent in the absence of any certification by the DOLE.
The Union clarified that it sought to bargain "for its members only," and declared that the
refusal to bargain would prompt the union to engage in concerted activities.
  The Union filed a Notice of Strike with the NCMB on the ground of unfair labor practice
because the Hotel refused to bargain with it and the rank-and-file employees were being
harassed and prevented from joining the union.
 In the conciliation conferences before NCMB, the union demanded the holding of a
consent election. The Hotel agreed, provided the union followed the procedure under the
law. The Hotel requested that the election be held in January 1998.
 In the meantime, Kimpo filed a complaint for ULP against the Hotel. In November 29,
1997, the union suddenly went on strike. On the next day, the National Union of Workers
in the Hotel, Restaurant and Allied Industries (NUWHRAIN) joined the strike and openly
extended its support to the union.
 The Hotel filed a petition for injunction before the NLRC to enjoin further commission of
illegal acts by the strikers. The NLRC issued TRO directing the strikers to immediately
"cease and desist from obstructing the free ingress and egress from the Hotel premises."
 The workers refused to dismantle the tent they put up at the employee’s entrance to the
Hotel, prompting the Hotel’s security guards to dismantle the same during which the
strikers as well as the guards were hit by rocks coming from the direction of the
construction site at the nearby Land Bank Plaza, resulting to physical injuries to some of
them.
 The Hotel filed a petition to declare the strike illegal.
 SOLE assumed jurisdiction and certified the dispute to the NLRC for compulsory
arbitration, and directing the striking officers and members to return to work within 24
hours and the Hotel to accept them back under the same terms and conditions prevailing
before the strike.
 The Hotel filed MR. SOLE modified its decision by directing Hotel to just reinstate the
strikers to its payroll, and ordering that all cases between the parties arising out of the
labor disputes which were pending before different LA be consolidated with the case
earlier certified to the NLRC for compulsory arbitration.
 The NLRC declares that the strike was illegal and that the union officers and members
who were reinstated to the Hotel’s payroll were deemed to have lost their employment
status.
 The CA declares the strike illegal and its officers to have lost their employment status. It
modified the NLRC Resolution, however, by ordering the reinstatement with back wages
of union members.

Issue: Whether the strike is illegal? (YES)

Held: YES. The strike is ILLEGAL.

 Only the labor organization designated or selected by the majority of the employees in
an appropriate collective bargaining unit is the exclusive representative of the employees
in such unit for the purpose of collective bargaining. Here, the union is not the exclusive
 representative of the majority of the employees of petitioner, hence, it could not demand
from petitioner the right to bargain collectively in their behalf.
 The union’s reliance on Art. 242 of the LC is misplaced, for not every legitimate labor
organization possesses the rights mentioned therein. Article 242 (a) must be read in
relation to above-quoted Article 255.
o The goal of the DOLE is geared towards "a single employer wide unit which is
more to the broader and greater benefit of the employees working force." The
philosophy is to avoid fragmentation of the bargaining unit so as to strengthen
the employees’ bargaining power with the management.
o Hence, the Hotel’s refusal to bargain with respondent cannot be considered a
ULP to justify the staging of the strike.
 The Hotel did not prevent or intimidate some workers from joining the union before,
during or after the strike. Since it is the union who alleges that unfair labor practices
were committed by the Hotel, the burden of proof is on the union to prove its allegations
by substantial evidence.
 The events that transpired prior to the strike that the Union staged on November 29,
1997. It is beyond argument that a conciliatory meeting was still scheduled to be held on
December 1, 1997 before the NCMB. In this conciliatory meeting, Union could have
substantiated and presented additional evidences.
 The Union violated Article 264 which proscribes the staging of a strike on the ground of
ULP during the pendency of cases involving the same grounds for the strike.
 The photographs taken during the strike, as well as the Ocular Inspection Report of the
NLRC representative, show that the strikers, with the use of ropes and footed placards,
blockaded the driveway to the Hotel’s points of entrance and exit, making it burdensome
for guests and prospective guests to enter the Hotel, thus violating Article 264 (e) of the
Labor Code which provides: ART. 264 (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.
o Furthermore, the photographs indicate that indeed the strikers held noise barrage
and threatened guests with bodily harm. Exploding firecrackers were also used,
causing the guests to panic and transfer to other areas of the Hotel.
 It is doctrinal that the exercise of the right of private sector employees to strike is not
absolute. Thus Section 3 of Article XIII of the Constitution, provides: It shall guarantee
the rights of all workers to self-organization, collective bargaining and negotiations and
peaceful concerted activities, including the right to strike in accordance with law.
 Even if the purpose of a strike is valid, the strike may still be held illegal where the
means employed are illegal. Thus, the employment of violence, intimidation, restraint or
coercion in carrying out concerted activities which are injurious to the rights to property
renders a strike illegal. And so is picketing or the obstruction to the free use of property
or the comfortable enjoyment of life or property, when accompanied by intimidation,
threats, violence, and coercion as to constitute nuisance.
 The union officers should be dismissed for staging and participating in the illegal strike,
following paragraph 3, Art. 264(a) of the Labor Code which provides that "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 strike may be declared to
have lost his employment status.”
o An ordinary striking worker cannot, thus be dismissed for mere participation in an
illegal strike. There must be proof that he committed illegal acts during a strike,
unlike a union officer who may be dismissed by mere knowingly participating in
an illegal strike and/or committing an illegal act during a strike.
 The Hotel failed to establish by convincing and substantial evidence that these union
members who participated in the illegal strike committed illegal acts. Consequently, they
cannot be terminated from service for their participation in an illegal strike.

Dispositive: WHEREFORE, the Decision dated November 21, 2002 of the Court of Appeals is,
in light of the foregoing ratiocinations, AFFIRMED with MODIFICATION in that only those
members of the union who did not commit illegal acts during the course of the illegal strike
should be reinstated but without backwages. The case is, therefore, REMANDED to the Labor
Arbiter, through the NLRC, which is hereby directed to, with dispatch, identify said members and
to thereafter order petitioner to reinstate them, without backwages or, in the alternative, if
reinstatement is no longer feasible, that they be given separation pay at the rate of One (1)
Month pay for every year of service. SO ORDERED.
Sira
Topic: Concept of slowdown

97. Interphil Laboratories Employees Union-FFW v. Interphil Laboratories Inc.

INTERPHIL LABORATORIES EMPLOYEES UNION-FFW, ENRICO GONZALES and MA.

THERESA MONTEJO, petitioners,
vs.
INTERPHIL LABORATORIES, INC., AND HONORABLE LEONARDO A. QUISUMBING,
SECRETARY OF LABOR AND EMPLOYMENT, respondents.
G.R. No. 142824, December 19, 2001

DOCTRINE: Slowdown is a "strike on the installment plan;" as a willful reduction in the rate of
work by concerted action of workers for the purpose of restricting the output of the employer, in
relation to a labor dispute; as an activity by which workers, without a complete stoppage of
work, retard production or their performance of duties and functions to compel management to
grant their demands. The Court also agrees that such a slowdown is generally condemned as
inherently illicit and unjustifiable, because while the employees "continue to work and remain at
their positions and accept the wages paid to them," they at the same time "select what part of
their allotted tasks they care to perform of their own volition or refuse openly or secretly, to the
employer's damage, to do other work;" in other words, they "work on their own terms."

ACTION SEQUENCE: LA (forwarded recommendation to SOLE [Secretary of Labor by then])->

SOLE (found petitioner guilty of illegal strike) -> CA (affirmed ruling of SOLE) -> SC (petitioner
guilty of illegal strike)

FACTS:
 Petitioner is the SEBA of the rank-and-file employees of respondent (a company
engaged in the business of manufacturing pharmaceutical products.) They had a CBA
effective from 1 August 1990 to 31 July 1993.
 Prior to the expiration of the CBA (sometime in February 1993), Salazar (VP for HR of
respondent company) was approached by Nestor Ocampo, union president, and
Hernando Clemente, a union director. The 2 union officers inquired about the company’s
stand regarding the duration of the CBA which was set to expire in a few months.
 VP Salazar told the union officers that the matter could be best discussed during the
formal negotiations w/c would start soon.
 In March 1993, Ocampo and Clemente again approach Salazar and inquired about the
CBA status but received the same reply from Salazar.
 In April 1993, Ocampo requested for a meeting to discuss the duration and effectivity of
the CBA.
 Salazar acceded and a meeting was held on 15 April 1993 where the union officers
asked whether Salazar would be amenable to make the new CBA effective for 2 years
starting 1 August 1993.
 However, Salazar declared that it would still be premature to discuss the matter and that
the company could not make a decision at the moment.
 The next day, all the rank-and-file employees of the company refused to follow
their 2-shift work schedule from 6 AM to 6 PM and from 6 PM to 6 AM (12-hour
shifts). At 2 AM and 2 PM, respectively, the employees stopped working and left
their workplace w/o sealing the containers and securing the raw materials they
were working on.
 When Salazar inquired about the reason for their refusal to follow their normal schedule,
the employees told him to ask the union officers. Thus, Salazar immediately asked for a
meeting w/ union officers. In the meeting, Enrico Gonzales, a union director, told Salazar
that employees would only return to their normal work schedule if the company would
agree to their demands as to the effectivity and duration of the new CBA.
 Salazar again told them to discuss during formal renegotiations of the CBA. Since the
union was unsatisfied w/ the company’s answer, the overtime boycott continued. In
addition, the employees started to engage in a work slowdown campaign during the time
they were working, thus substantially delaying the production of the company.
 On May 14, 1993, petitioner submitted w/ respondent its CBA proposal, and the latter
filed its counter-proposal.
 On September 3, 1993, respondent filed w/ the NLRC a petition to declare illegal petition
union’s overtime boycott and work slowdown w/c according to respondent amounted to
illegal strike. It was referred to LA Caday.
 On October 22, 1993, respondent filed w/ the NCMB an urgent request for preventive
mediation aimed to help the parties in their CBA negotiations.
 The parties failed to arrive at an agreement. Thus, on November 15, 1993, respondent
filed w/ the Office of the SOLE a petition for assumption of jurisdiction.
 On January 24, 1994, petitioner filed w/ the NCMB a Notice of Strike citing ULP allegedly
committed by respondent company.
 On February 12, 1994, the union staged a strike.
 Then, on February 14, 1994, SOLE Confesor issued an assumption order over the labor
dispute and issued an order directing respondent company to immediately accept all
striking workers, including the 53
 On 14 February 1994, Secretary of Labor Nieves Confesor issued an assumption order
over the labor dispute.
 o Secretary Confesor issued an order directing respondent company to
"immediately accept all striking workers, including the fifty-three (53) terminated
union officers, shop stewards and union members back to work under the same
terms and conditions prevailing prior to the strike, and to pay all the unpaid
accrued year end benefits of its employees in 1993."
o Petitioner union was directed to "strictly and immediately comply with the return-
to-work orders issued by (the) Office x x x The same order pronounced that "(a)ll
pending cases which are direct offshoots of the instant labor dispute are hereby
subsumed herewith.
 Meanwhile, the case before LA Caday continued.
 Petitioner file motion to consolidate the case before LA Caday and consolidate the case
with the labor dispute pending before the SOLE. LA complied and held the proceeding
before him in abeyance.
 However, on 06 June 1994, Acting Labor Secretary Jose S. Brillantes, after finding that
the issues raised would require a formal hearing and the presentation of evidentiary
matters, directed Labor Arbiters Caday and M. Sol del Rosario to proceed with the
hearing of the cases before them and to thereafter submit their report and
recommendation to his office.
 LA Recommendation to the SOLE
o Declared the overtime boycott and work slowdown as illegal strike, and the union
officers who led the boycott and slowdown to have lost their employment status;
and
o Petitioner guilty of ULP for violating the then existing CBA w/c prohibits the union
or any employee during the existence of the CBA from staging a strike or
engaging in slowdown or interruption of work and ordering them to cease &
desist from further committing the alleged illegal acts.
 Court of Appeals:
o Dismissed the petition.

ISSUE 1: [related to the topic] Whether or not the respondent engaged in overtime
boycott and work slowdown from April 16, 1993 to March 7, 1994 both amounting to
illegal strike

RULING 1: Yes, respondents were engaged in illegal strike.

 It is undisputed that members of the union by their own volition decided not to render
overtime services in April 1993. Petitioner union even admitted this in its Memorandum
filed with the Court of Appeals, as well as in the petition before this Court, which both
stated that "(sometime in April 1993, members of herein petitioner, on their own volition
and in keeping with the regular working hours in the Company x x x decided not to
render overtime". Such admission confirmed the allegation of respondent company that
petitioner engaged in "overtime boycott" and "work slowdown" which, to use the words of
Labor Arbiter Caday, was taken as a means to coerce respondent company to yield to
its unreasonable demands.
 More importantly, the "overtime boycott" or "work slowdown" by the employees
constituted a violation of their CBA, which prohibits the union or employee, during the
existence of the CBA, to stage a strike or engage in slowdown or interruption of work. 
 In Ilaw at Buklod ng Manggagawa vs. NLRC, this Court ruled:
  “The concerted activity in question would still be illicit because contrary to
the workers' explicit contractual commitment "that there shall be no
strikes, walkouts, stoppage or slowdown of work, boycotts, secondary
boycotts, refusal to handle any merchandise, picketing, sit-down strikes of
any kind, sympathetic or general strikes, or any other interference with
any of the operations of the COMPANY during the term of x x x (their
collective bargaining) agreement."
o What has just been said makes unnecessary resolution of SMC's argument that
the workers' concerted refusal to adhere to the work schedule in force for the last
several years, is a slowdown, an inherently illegal activity essentially illegal even
in the absence of a no-strike clause in a collective bargaining contract, or statute
or rule. The Court is in substantial agreement with the petitioner's concept of a
slowdown as a "strike on the installment plan;" as a willful reduction in the rate of
work by concerted action of workers for the purpose of restricting the output of
the employer, in relation to a labor dispute; as an activity by which workers,
without a complete stoppage of work, retard production or their performance of
duties and functions to compel management to grant their demands. The Court
also agrees that such a slowdown is generally condemned as inherently illicit and
unjustifiable, because while the employees "continue to work and remain at their
positions and accept the wages paid to them," they at the same time "select what
part of their allotted tasks they care to perform of their own volition or refuse
openly or secretly, to the employer's damage, to do other work;" in other words,
they "work on their own terms."
 Here, petitioner’s refusal to render overtime and campaign for work slowdown was
proven when the productivity report from the previous year was achieved when
employees regularly rendered OT work. Thus, the slowdown and overtime boycott
committed by the employees resulted in financial losses to the company and damaged
its reputation.
 Therefore, petitioners were engaged in illegal strike.

ISSUE 2: Whether or not the Secretary of Labor and Employment has jurisdiction to rule
on the illegal strike committed petitioner

RULING 2: Yes, the Secretary of Labor and Employment has jurisdiction over the case.
 The issues of overtime boycott and work slowdown amounting to illegal strike before LA
Caday are intertwined w the labor dispute before the Labor Secretary. In fact, petitioner
even asked LA Caday to suspend the proceedings before him and consolidate the same
w/ the case before the Secretary. While the Acting Secretary ordered LA Caday to
continue w/ the hearing of the illegal strike case, the parties acceded and participated in
the proceedings knowing fully well that there was also a directive for LA Caday to submit
his report and recommendation to the Secretary. Thus, the subsequent participation of
petitioner in the continuation of the hearing was in effect an affirmation of the jurisdiction
of the Secretary.
 In International Pharmaceutical, Inc. vs. Hon. Secretary of Labor and Associated Labor
Union (ALU):
o The Secretary was explicitly granted by Article 263(g) of the Labor Code the
authority to assume jurisdiction over a labor dispute causing or likely to cause a
strike or lockout on an industry indispensable to the national interest, and decide
the same accordingly. Necessarily, this authority to assume jurisdiction over the
said labor dispute must include and extend to all questions and controversies
 arising therefrom, including cases over which the labor arbiter has exclusive
jurisdiction.

ISSUE 3: Whether or not the LA and CA disregarded the parol evidence rule when they
upheld the allegation of respondent company that the work schedule of its employees
was from 6 AM to 6 PM and from 6 PM to 6 AM

RULING 3: No, the LA and CA did not disregard the parol evidence rule.

 According to the petitioner, the provisions of their CBA on working hours clearly stated
that the normal working hours were from 7:30 AM to 4:30 PM.
 Petitioner underscored that the regular work hours was only 8 hours. It further contended
that the LA as well as the CA should not have admitted any other evidence contrary to
what was stated in the CBA.
 The reliance on the parol evidence rule is misplaced.
 In labor cases pending before the Commission or the Labor Arbiter, the rules of
evidence prevailing in courts of law or equity are not controlling.Rules of procedure and
evidence are not applied in a very rigid and technical sense in labor cases.Hence, the
Labor Arbiter is not precluded from accepting and evaluating evidence other than, and
even contrary to, what is stated in the CBA.
 According to the CBA, the parties stipulated: Section 1. Regular Working Hours — A
normal workday shall consist of not more than eight (8) hours. The regular working hours
for the Company shall be from 7:30 A.M. to 4:30 P.M. The schedule of shift work shall be
maintained; however the company may change the prevailing work time at its discretion,
should such change be necessary in the operations of the Company. All employees
shall observe such rules as have been laid down by the company for the purpose of
effecting control over working hours.
 It is evident from the foregoing provision that the working hours may be changed, at the
discretion of the company, should such change be necessary for its operations, and
that the employees shall observe such rules as have been laid down by the company. In
the case before us, Labor Arbiter Caday found that respondent company had to adopt a
continuous 24-hour work daily schedule by reason of the nature of its business and the
demands of its clients. It was established that the employees adhered to the said work
schedule since 1988. The employees are deemed to have waived the eight-hour
schedule since they followed, without any question or complaint, the two-shift schedule
while their CBA was still in force and even prior thereto. The two-shift schedule
effectively changed the working hours stipulated in the CBA. As the employees assented
by practice to this arrangement, they cannot now be heard to claim that the overtime
boycott is justified because they were not obliged to work beyond eight hours.

ISSUE 4: Whether not the proposition of respondent in extending substantial separation

package to some officers of petitioner amounted to condonation of illegal acts they
committed

RULING 4: No, the substantial separation package does not mean condonation.

 Respondent company correctly postured that at the time these union officers obtained
their separation benefits, they were still considered employees of the company. Hence,
the company was merely complying with its legal obligations. Respondent company
could have withheld these benefits pending the final resolution of this case. Yet,
 considering perhaps the financial hardships experienced by its employees and the
economic situation prevailing, respondent company chose to let its employees avail of
their separation benefits. The Court views the gesture of respondent company as an act
of generosity for which it should not be punished.

DISPOSITIVE PORTION:

WHEREFORE, the petition is DENIED DUE COURSE and the 29 December 1999 decision of
the Court of Appeals is AFFIRMED.

Tirol
Topic: Valid Picketing
99. Phimco Industries, Inc. v. Phimco Industries Labor Association (PILA)
PHIMCO INDUSTRIES, INC. vs. PHIMCO INDUSTRIES LABOR ASSOCIATION (PILA), and
ERLINDA VAZQUEZ, RICARDO SACRISTAN, LEONIDA CATALAN, MAXIMO PEDRO,
NATHANIELA DIMACULANGAN, RODOLFO MOJICO, ROMEO CARAMANZA, REYNALDO
GANITANO, ALBERTO BASCONCILLO, and RAMON FALCIS, in their capacity as officers
of PILA, and ANGELITA BALOSA, DANILO BANAAG, ABRAHAM CADAY, ALFONSO
CLAUDIO, FRANCISCO DALISAY, ANGELITO DEJAN, PHILIP GARCES, NICANOR
ILAGAN, FLORENCIO LIBONGCOGON, NEMESIO MAMONONG, TEOFILO MANALILI,
ALFREDO PEARSON, MARIO PEREA, RENATO RAMOS, MARIANO ROSALES, PABLO
SARMIENTO, RODOLFO TOLENTINO, FELIPE VILLAREAL, ARSENIO ZAMORA, DANILO
BALTAZAR, ROGER CABER, REYNALDO CAMARIN, BERNARDO CUADRA, ANGELITO
DE GUZMAN, GERARDO FELICIANO, ALEX IBAÑEZ, BENJAMIN JUAN, SR., RAMON
MACAALAY, GONZALO MANALILI, RAUL MICIANO, HILARIO PEÑA, TERESA
PERMOCILLO, ERNESTO RIO, RODOLFO SANIDAD, RAFAEL STA. ANA, JULIAN TUGUIN
and AMELIA ZAMORA, as members of PILA

Doctrine: Protected picketing does not extend to blocking ingress to and egress from the
company premises.
Facts: PHIMCO is a corporation engaged in the production of matches. Respondent Phimco
Industries Labor Association (PILA) is the duly authorized bargaining representative of
PHIMCO’s daily-paid workers. The 47 individually named respondents are PILA officers and
members.
When the last CBA was about to expire, PHIMCO and PILA negotiated for its renewal. The
negotiation resulted in a deadlock on economic issues, mainly due to disagreements on salary
increases and benefits. Hence, PILA filed with the NCMB a Notice of Strike on the ground of the
bargaining deadlock. 7 days later, the union conducted a strike vote; a majority of the union
members voted for a strike as its response to the bargaining impasse. PILA filed the strike vote
results with the NCMB. 35 days later, PILA staged a strike.
PHIMCO filed with the NLRC a petition for preliminary injunction and TRO to enjoin the strikers
from preventing – through force, intimidation and coercion – the ingress and egress of non-
striking employees into and from the company premises.
The NLRC issued an ex-parte TRO, effective for 20 days. PHIMCO then sent a letter to 36
union members, directing them to explain within 24 hours why they should not be dismissed for
the illegal acts they committed during the strike. 3 days later, those 36 union members were
informed of their dismissal.
PILA filed a complaint for ULP and illegal dismissal (illegal dismissal case) with the NLRC. Then
Acting Labor Secretary Brillantes assumed jurisdiction over the labor dispute, and ordered all
the striking employees (except those who were handed termination papers stated earlier) to
return to work within 24 hours from receipt of the order. The Secretary ordered PHIMCO to
accept the striking employees, under the same terms and conditions prevailing prior to the
strike. On the same day, PILA ended its strike.
PHIMCO filed a Petition to Declare the Strike Illegal (illegal strike case) with the NLRC, with a
prayer for the dismissal of PILA officers and members who knowingly participated in the illegal
strike. PHIMCO claimed that the strikers prevented ingress to and egress from the PHIMCO
compound, thereby paralyzing PHIMCO’s operations. PILA countered that they complied with all
the legal requirements for the staging of the strike, they put up no barricade, and conducted
their strike peacefully, in an orderly and lawful manner, without incident.
LA (illegal strike case): Found the strike illegal. PILA committed prohibited acts during the
strike by blocking the ingress to and egress from PHIMCO’s premises and preventing the non-
striking employees from reporting for work. LA observed that it was not enough that the picket of
the strikers was a moving picket, since the strikers should allow the free passage to the
entrance and exit points of the company premises. Thus, LA declared that the respondent
employees, PILA officers and members, have lost their employment status. PILA appealed.
NLRC: Set aside LA decision. It did not give weight to PHIMCO’s evidence, and relied instead
on the respondents’ evidence showing that the union conducted a peaceful moving picket.
PHIMCO filed a MR in the illegal strike case.
LA (illegal dismissal case): Ruled the respondents’ dismissal as illegal, and ordered their
reinstatement with payment of backwages. PHIMCO appealed. The cases were then
consolidated.
NLRC (consolidated case): Ruled totally in the union’s favor. It dismissed the appeal of the
illegal dismissal case, and denied PHIMCO’s MR in the illegal strike case. The NLRC found that
the picket conducted by the striking employees was not an illegal blockade and did not obstruct
the points of entry to and exit from the company’s premises; the pictures submitted by the
respondents revealed that the picket was moving, not stationary. With respect to the illegal
dismissal charge, the NLRC observed that the striking employees were not given ample
opportunity to explain their side. Thus, the NLRC affirmed the decision of the LA in the illegal
dismissal case. It ruled out reinstatement because of the damages sustained by the company
brought about by the strike. PHIMCO filed a MR of the consolidated decision. Without waiting
for the result of its motion for reconsideration, PHIMCO elevated its case to the CA through a
petition for certiorari under Rule 65.
CA: Dismissed PHIMCO’s petition for certiorari. The CA noted that the NLRC findings, that the
picket was peaceful and that PHIMCO’s evidence failed to show that the picket constituted an
illegal blockade or that it obstructed the points of entry to and exit from the company premises,
were supported by substantial evidence.
Hence this petition.
Issue: Whether the strike was illegal.
Ruling: YES. To be legitimate, a strike should not be detrimental to public welfare, and must be
pursued within legal bounds. The right to strike as a means of attaining social justice is never
meant to oppress or destroy anyone, least of all, the employer. Procedurally, for a strike to be
valid, it must comply with Article 26316 of the Labor Code, which requires that: (a) a notice of
strike be filed with the DOLE 30 days before the intended date thereof, or 15 days in case of
unfair labor practice; (b) a strike vote be approved by a majority of the total union membership in
the bargaining unit concerned, obtained by secret ballot in a meeting called for that purpose;
and (c) a notice be given to the DOLE of the results of the voting at least seven days before the
intended strike.
These requirements are mandatory, and the union’s failure to comply renders the strike illegal.
In the present case, the respondents fully satisfied the legal procedural requirements; a strike
notice was filed, a strike vote was reached, notification of the strike vote was filed with the
DOLE, and the actual strike was launched thereafter.
Despite the validity of the purpose of a strike and compliance with the procedural requirements,
a strike may still be held illegal where the means employed are illegal. The means become
illegal when they come within the prohibitions under Article 264(e) of the Labor Code which
provides that 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.
In this case, while the strike had not been marred by actual violence and patent intimidation, the
picketing that respondent PILA officers and members undertook as part of their strike activities
effectively blocked the free ingress to and egress from PHIMCO’s premises, thus preventing
non-striking employees and company vehicles from entering the PHIMCO compound.
While the picket was moving, it was maintained so close to the company gates that it virtually
constituted an obstruction, especially when the strikers joined hands or were moving in circles,
hand-to-shoulder, as shown by the photographs, that, for all intents and purposes, blocked the
free ingress to and egress from the company premises. In fact, on closer examination, it could
be seen that the respondents were conducting the picket right at the company gates. The
obstructive nature of the picket was aggravated by the placement of benches, with strikers
standing on top, directly in front of the open wing of the company gates, clearly obstructing the
entry and exit points of the company compound.
In this manner, the picketers violated Article 264(e) of the Labor Code. To strike is to withhold or
to stop work by the concerted action of employees as a result of an industrial or labor dispute.
While a strike focuses on stoppage of work, picketing focuses on publicizing the labor dispute
and its incidents to inform the public of what is happening in the company struck against. A
picket simply means to march to and from the employer’s premises, usually accompanied by the
display of placards and other signs making known the facts involved in a labor dispute. It is a
strike activity separate and different from the actual stoppage of work. Protected picketing does
not extend to blocking ingress to and egress from the company premises. That the picket was
moving, was peaceful and was not attended by actual violence may not free it from taints of
illegality if the picket effectively blocked entry to and exit from the company premises.
Dispositive: WHEREFORE, in light of all the foregoing, we hereby REVERSE and SET ASIDE
the decision dated February 10, 2004 and the resolution dated December 12, 2005 of the Court
of Appeals in CA-G.R. SP No. 70336, upholding the rulings of the National Labor Relations
Commission.

Albino
Topic: General/Sympathy Strike
100. Biflex Phils. Inc. Labor Union and Filflex Industrial and Manufacturing Labor Union
(labor unions) v. Filflex and Biflex (employers)
Doctrine: Stoppage of work due to welga ng bayan is in the nature of a general strike, an
extended sympathy strike. It affects numerous employers including those who do not have a
dispute with their employees regarding their terms and conditions of employment. Employees
who have no labor dispute with their employer but who, on a day they are scheduled to work,
refuse to work and instead join a welga ng bayan commit an illegal work stoppage.
Action Sequence: LA: illegal strike > NLRC: legal strike > CA: illegal strike > SC: illegal strike
Facts:

 Petitioners are the officers of Biflex (Phils.) Inc. Labor Union and Filflex Industrial and
Manufacturing Labor Union, the bargaining agents in Biflex and Filflex respectively.
 They are affiliated with National Federation of Labor Unions (NAFLU).
 Biflex and Filflex are sister companies engaged in the garment business and situated in
one compound with a common entrance.
 On 10/24/1990, the labor sector staged a welga ng bayan to protest the accelerating
prices of oil. On the same day, the petitioner unions, led by their officers, staged a work
stoppage which lasted for several days.
 Biflex and Filflex filed a petition to declare the work stoppage illegal for failure to comply
with procedural requirements.
 During the work stoppage, they put up tents, tables and chairs in front of the main gate
of respondents’ premises ALLEGEDLY for the convenience of union members who
reported every morning to check if the management would allow them to report for work.
 On 11/13/1990, Biflex and Filflex resumed their operations.
 Petitioner unions, claiming that they were illegally locked out by respondents, assert that
aside from the fact that the welga ng bayan rendered it difficult to get a ride and the
apprehension that violence would erupt between those participating in the welga and the
authorities, respondents’ workers were prevented from reporting for work.
  The unions also assert that Biflex and Filflex were "slighted" by the workers’ no-show,
and as a punishment, the workers as well as petitioners were barred from entering the
company premises.
 The unions are claiming that they filed a notice of strike.
 Biflex and Filflex maintain that the work stoppage was illegal since the following
requirements for the staging of a valid strike were not complied with: (1) filing of notice of
strike; (2) securing a strike vote, and (3) submission of a report of the strike vote to the
Department of Labor and Employment.
 Labor Arbiter: strike was illegal and the officers are declared to have lost their
employment.
 NLRC: reversed the ruling of the LA holding that there was no strike to speak of as no
labor or industrial dispute existed between the parties.
 Court of Appeals: reversed the ruling of NLRC and reinstated that of the LA for failure
to comply with the legal requirements of a valid strike.
Issue: WON the work stoppage is legal? (N)
Ruling: NO. Therefore, the work stoppage was illegal.

 Stoppage of work due to welga ng bayan is in the nature of a general strike, an extended
sympathy strike. It affects numerous employers including those who do not have a
dispute with their employees regarding their terms and conditions of employment.
 Employees who have no labor dispute with their employer but who, on a day they are
scheduled to work, refuse to work and instead join a welga ng bayan commit an illegal
work stoppage.
 Even if petitioners’ joining the welga ng bayan were considered merely as an exercise of
their freedom of expression, freedom of assembly or freedom to petition the government
for redress of grievances, the exercise of such rights is not absolute.
 For the protection of other significant state interests such as the "right of enterprises to
reasonable returns on investments, and to expansion and growth" must also be
considered, otherwise, oppression or self-destruction of capital in order to promote the
interests of labor would be sanctioned.
 And it would give imprimatur to workers’ joining demonstrations/rallies even before
affording the employer an opportunity to make the necessary arrangements to
counteract the implications of the work stoppage on the business, and ignore the novel
"principle of shared responsibility between workers and employers" aimed at fostering
industrial peace.
 There being no showing that petitioners notified respondents of their intention, or that
they were allowed by respondents, to join the welga ng bayan, their work stoppage is
beyond legal protection.
 As to the illegal lockout contention of the unions:
o The union did not file a protest with the management or a complaint.
o As the Labor Arbiter observed, "the inaction of [petitioners] betrays the weakness
of their contention for normally a locked-out union will immediately bring
management before the bar of justice.
 Even assuming that in staging the strike, petitioners had complied with legal formalities,
the strike would just the same be illegal, for by blocking the free ingress to and egress
 from the company premises, they violated Article 264(e) of the Labor Code which
provides that "no person engaged in picketing shall … obstruct the free ingress to or
egress from the employer’s premises for lawful purposes, or obstruct public
thoroughfares.
 Petitioners, being union officers, should thus bear the consequences of their acts of
knowingly participating in an illegal strike (loss of employment status).
Dispositive: WHEREFORE, the petition is DENIED.
Balboa
Topic: General Strike/Sympathy Strike
101. SAMAHANG MANGGAGAWA SA SULPICIO LINES, INC.-NAFLU v SULPICIO LINES
SAMAHANG MANGGAGAWA SA SULPICIO LINES, INC.-NAFLU, RODOLFO ALINDATO,
ROQUE TAN, JESSIE LIM, SUSAN TOPACIO, LYDDA PASCUAL, BERNARDO
ALCANTARA, GELACIO DESQUITADO, RODRIGO AVELINO, LEONARDO ANDRADE,
DANILO CHUA, AMANDO EUGENIO, CALVIN LOPEZ, ANDRES BASCO, JR., and CIRILO
ALON, petitioners, vs. SULPICIO LINES, INC.
Doctrine: Invoking compassion, the union pleads that its officers who participated in the one-
day strike should not be dismissed as the business activities of respondent were not interrupted,
much less paralyzed. It is worth reiterating that the strike is illegal for failure of petitioner to
submit the strike vote to the Department of Labor and Employment at least seven (7) days prior
thereto. Also, petitioner failed to prove that respondent company committed any unfair labor
practice. Amid this background, the participation of the union officers in an illegal strike forfeits
their employment status.
Action Sequence: Union filed notice of strike with NCMB > SOLE assumed jurisdiction > union
filed another notice of strike > union conducted a strike vote > SOLE issued return-to-work order
and certified the dispute to the NLRC > NLRC ruled that the strike was illegal > CA affirmed >
SC affirmed
Facts:

 Sulpicio Lines and the Union executed a CBA with a term of five years. After 3 years, the
parties started negotiation on the CBA’s economic provisions, but the negotiation
remained at stalemate.
 The Union filed with the NCMB a notice of strike du to collective bargaining deadlock.
Respondent filed with the SOLE a petition praying that the Labor Secretary assume
jurisdiction which the SOLE did on March 23, 1994.
 On May 20, 1994, petitioner filed with the NCMB a second notice of strike alleging that
the company committed acts of ULP amounting to union busting. It immediately
conducted a strike vote. Thus, on May 20, 1994, about 9:30 o’clock in the morning, 167
rank-and-file employees, officers and members of petitioner, did not report for work and
instead gathered in front of Pier 12, North Harbor at Manila.
 On May 20, 1994, the SOLE issued an order directing the striking employees to return to
work; and certifying the labor dispute to the National Labor Relations Commission
(NLRC) for compulsory arbitration.
  The company filed with the NLRC a complaint for illegal strike/clearance for termination.
The NLRC eventually declared the strike illegal. It also dismissed the union’s petition.
 The CA upheld the ruling of the NLRC.

Issue: whether the strike conducted by the union was illegal

Ruling: Yes, the strike was illegal.
Following are the Implementing Guidelines of the above provisions issued by the Department of
Labor and Employment:
1.A strike shall be filed with the Department of Labor and Employment at least 15 days if the
issues raised are unfair labor practice or at least 30 days if the issue involved bargaining
deadlock. 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;
2.The strike shall be supported by a majority vote of the members of the union obtained by
secret ballot in a meeting called for the purpose; and
3.A strike vote shall be reported to the Department of Labor and Employment at least seven (7)
days before the intended strike. There is no showing that the petitioner union observed the 7-
day strike ban; and that the results of the strike vote were submitted by petitioners to the
Department of Labor and Employment at least seven (7) days before the strike.
We thus hold that for failing to comply with the mandatory requirements of Article 263 (c) and (f)
of the Labor Code, the strike mounted by petitioner union on May 20, 1994 is illegal.
n Gold City Integrated Port Service, Inc. vs. NLRC,9 we stressed that ‘the language of the law
leaves no room for doubt that the cooling-off period and the seven-day strike ban after the
strike-vote report were intended to be mandatory.”
But petitioner insists that the strike can still be declared legal for it was done in good faith, being
in response to what its officers and members honestly perceived as unfair labor practice or
union busting committed by respondent.
We explained in National Federation of Labor vs. NLRC11 that “with the enactment of Republic
Act No. 6715 which took effect on March 21, 1989, the rule now is that such requirements as
the filing of a notice of strike, strike vote, and notice given to the Department of Labor are
mandatory in nature. Thus, even if the union acted in good faith in the belief that the company
was committing an unfair labor practice, if no notice of strike and a strike vote were conducted,
the said strike is illegal.”
The Union then argues that what transpired was not a strike but a one-day work absence o a
simple act of absenteeism. We are not convinced. A strike, as defined in Article 212 (o) of the
Labor Code, as amended, means “any temporary stoppage of work by the concerted action of
employees as a result of an industrial or labor dispute.” 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.
The basic elements of a strike are present in the case at bar. First, petitioner’s officers and
members numbering 167, in a concerted manner, did not report for work on May 20, 1994;
second, they gathered in front of respondent’s office at Pier 12, North Harbor at Manila to
participate in a strike voting conducted by petitioner; and third, such union activity was an
aftermath of petitioner’s second notice of strike by reason of respondent’s unfair labor
practice/s. Clearly, what transpired then was a strike because the cessation of work by
petitioner’s concerted action resulted from a labor dispute.
Invoking compassion, the union pleads that its officers who participated in the one-day strike
should not be dismissed as the business activities of respondent were not interrupted, much
less paralyzed. It is worth reiterating that the strike is illegal for failure of petitioner to submit the
strike vote to the Department of Labor and Employment at least seven (7) days prior thereto.
Also, petitioner failed to prove that respondent company committed any unfair labor practice.
Amid this background, the participation of the union officers in an illegal strike forfeits their
employment status.

Dispositive: Petition DENIED.

Balce
Topic: Cooling-off and 7-Day Strike Ban
102. National Federation of Sugar Workers (NFSW) v. Ovejera

G.R. No. L-59743, May 31, 1982

NATIONAL FEDERATION OF SUGAR WORKERS (NFSW), petitioner,

vs.
ETHELWOLDO R. OVEJERA, CENTRAL AZUCARERA DE LA CARLOTA (CAC), COL.
ROGELIO DEINLA, as Provincial Commander, 3311st P.C. Command, Negros Occidental,
respondents.

Ponente: PLANA, C.J.

Doctrine: It must be stressed that the requirements of cooling-off period and 7-day strike ban
must both be complied with, although the labor union may take a strike vote and report the
same within the statutory cooling-off period.

Purposes of strike notice and strike-vote report. In requiring a strike notice and a cooling-off
period, the avowed intent of the law is to provide an opportunity for mediation and conciliation. It
thus directs the MOLE "to exert all efforts at mediation and conciliation to effect a voluntary
settlement" during the cooling-off period.

So, too, the 7-day strike-vote report is not without a purpose. As pointed out by the Solicitor
General — Many disastrous strikes have been staged in the past based merely on the
insistence of minority groups within the union. The submission of the report gives assurance
that a strike vote has been taken and that, if the report concerning it is false, the majority of the
members can take appropriate remedy before it is too late.
Action Sequence: NSFW filed Notice of Strike before MOLE Regional Office –-> a report of the
strike-vote was filed byNFSW with MOLE -> Petition to declare the strike illegal by CAC -> LA
declared the strike illegal -> SC affirmed that the strike is illegal
FACTS:

 NFSW has been the bargaining agent of Central Azucarera de la Carlota (CAC) rank
and file employees and has concluded with CAC a collective bargaining agreement
effective February 16, 1981 — February 15, 1984.Under Art. VII, Sec. 5 of the said CBA
—
o Bonuses — The parties also agree to maintain the present practice on the grant
of Christmas bonus,milling bonus, and amelioration bonus to the extent as the
latter is required by law.
 On November 28, 1981, NFSW struck allegedly to compel the payment of the 13th
month pay under PD 851, in addition to the Christmas, milling and amelioration bonuses
being enjoyed by CAC workers.
 To settle the strike, a compromise agreement was concluded between CAC and NFSW
on November 30,1981.
 On January 22, 1982, NFSW filed with the Ministry of Labor and Employment (MOLE)
Regional Office in Bacolod City a notice to strike based on non-payment of the 13th
month pay. Six days after, NFSW struck.
 One day after the commencement of the strike, or on January 29, 1982, a report of the
strike-vote was filed by NFSW with MOLE.
 On February 8, 1982, CAC filed a petition with the Regional Arbitration Branch VI-
A,MOLE, at Bacolod City to declare the strike illegal, principally for being violative of
Batas Pambansa Blg. 130, thatis, the strike was declared before the expiration of the 15-
day cooling-off period for unfair labor practice (ULP) strikes, and the strike was staged
before the lapse of seven days from the submission to MOLE of the result of the strike-
vote.
 LA RULING: Labor Arbiter Ovejera declared the NFSW strike illegal.
 On February 26, 1982, the NFSW — by passing the NLRC — filed the instant Petition
for prohibition alleging that Labor Arbiter Ovejera, CAC and the PC Provincial
Commander of Negros Occidental were threatening to immediately enforce the February
20, 1982 decision which would violate fundamental rights of the petitioner.

ISSUE:
 Whether or not the strike was illegal. (YES)

RULING:

 YES. Articles 264 and 265 of the Labor Code, insofar as pertinent, read:
 Art. 264, Strikes, picketing and lockouts. —
(c) In cases of bargaining deadlocks, the certified or duly recognized bargaining
representative may file a notice of strike with the Ministry (of Labor and
Employment) at least thirty (30) days before the intended date thereof. In cases
of unfair labor practices, the period of notice shall be shortened to fifteen (15)
days;
 (d) During the cooling-off period, it shall be the duty of the voluntary settlement.
Should the dispute remain unsettled until the lapse of the requisite number of
days from the mandatory filing of the notice, the labor union may strike or the
employer may declare a lockout.

(f) x x x
In every case, the union of the employer shall furnish the Ministry the results of
the voting at least seven (7) days before the intended strike or lockout, subject to
the cooling-off period herein provided.

 ART. 265. Prohibited activities. — It shall be unlawful for any labor organization or
employer to 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.

xxx

 It must be stressed that the requirements of cooling-off period and 7-day strike ban
must both be complied with, although the labor union may take a strike vote and
report the same within the statutory cooling-off period.

 In the case at bar, the NFSW declared the strike six (6) days after filing a strike notice,
i.e., before the lapse of the mandatory cooling-off period. It also failed to file with the
MOLE before launching the strike a report on the strike-vote, when it should have filed
such report "at least seven (7) days before the intended strike." Under the
circumstances, the Court is perforce constrained to conclude that the strike staged by
petitioner is not in conformity with law.

DISPOSITIVE PORTION:

WHEREFORE, the petition isdismissed for lack of merit. No costs.

NOTES:
When the law says "the labor union may strike" should the dispute "remain unsettled until the
lapse of the requisite number of days (cooling-off period) from the filing of the notice," the
unmistakable implication is that the union may not strike before the lapse of the cooling-off
period. Similarly, the mandatory character of the 7-day strike ban after the report on the strike-
vote is manifest in the provision that "in every case," the union shall furnish the MOLE with the
results of the voting "at least seven (7) days before the intended strike, subject to the
(prescribed) cooling-off period." It must be stressed that the requirements of cooling-off period
and 7-day strike ban must both be complied with, although the labor union may take a strike
vote and report the same within the statutory cooling-off period.
Purposes of strike notice and strike-vote report. In requiring a strike notice and a cooling-off
period, the avowed intent of the law is to provide an opportunity for mediation and conciliation. It
thus directs the MOLE "to exert all efforts at mediation and conciliation to effect a voluntary
settlement" during the cooling-off period.

So, too, the 7-day strike-vote report is not without a purpose. As pointed out by the Solicitor
General — Many disastrous strikes have been staged in the past based merely on the
insistence of minority groups within the union. The submission of the report gives assurance
that a strike vote has been taken and that, if the report concerning it is false, the majority of the
members can take appropriate remedy before it is too late.

Waiting period after strike notice and strike-vote report, valid regulation of right to strike. — To
quote Justice Jackson in International Union vs. Wisconsin Employment Relations Board, 336
U.S. 245, at 259 —

The right to strike, because of its more serious impact upon the public interest, is more
vulnerable to regulation than the right to organize and select representatives for lawful
purposes of collective bargaining ...
The cooling-off period and the 7-day strike ban after the filing of a strike- vote report, as
prescribed in Art. 264 of the Labor Code, are reasonable restrictions and their imposition
is essential to attain the legitimate policy objectives embodied in the law. We hold that
they constitute a valid exercise of the police power of the state.
Chua
Topic: What encompasses the term strike
103. Toyota v. NLRC
Toyota Motors Phils. Corp. Workers Association (TMPCWA) v. NLRC, G.R. No. 158786 &
158789, Oct. 19, 2007
Doctrine: 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 controlling. The term "strike" has been elucidated to
encompass not only concerted work stoppages, but also slowdowns, mass leaves, sit-downs,
attempts to damage, destroy, or sabotage plant equipment and facilities, and similar activities.
Facts: TMPCWA (the Union) is the sole and exclusive bargaining agent of all Toyota rank and
file employees. On Feb. 14, 1999, the Union filed a petition for certiorari election which the
NCMB. The Med-Arbiter denied the petition, but the DOLE Secretary granted the petition on
appeal. Toyota’s MR was denied, the certification election was conducted, and the Med-Arbiter
certified the Union as the SEBA of all Toyota rank and file employees. Toyota appealed the
Order of the Med-Arbiter to the DOLE Secretary.
Meanwhile the Union submitted its CBA proposals to Toyota, which refused to negotiate
pending its appeal. The union filed a notice of strike on Jan. 16, 2001 based on Toyota’s refusal
to bargain. In Feb. 5, 2001, the notice of strike was converted into a preventive mediation case
since the issue of whether the Union is the SEBA was still unresolved by the DOLE Secretary.
On Feb. 21, 2001, the parties were required to attend a hearing before the BLR in relation to the
exclusion of alleged supervisory employees from the votes cast during the certification election,
but the hearing was reset to Feb. 22. On Feb. 21, 135 Union officers and members failed to
render the required OT work and instead marched to and picketed in fron of the BLR Office. The
Union also requested that its members be allowed to absent on Feb. 22 to attend the hearing
and instead work on their next scheduled rest day, but the request was denied by Toyota. On
Feb. 22 and 23, more than 200 employees staged mass actions in front of the BLR and DOLE
offices to protest the anti-union stance of Toyota. Due to the absences, Toyota was unable to
meet its production goals, resulting in losses of Pho 53,849,991.
On Feb. 27, Toyota sent individual letters to 360 employees requiring them to explain why they
should not be dismissed for their obstinate defiance of the company’s directive to render
overtime work on Feb. 21, for their failure to report for work on Feb. 22 and 23, 2001, and for
their participation in the concerted actions which severely disrupted and paralyzed the plant’s
operations. Meanwhile, a Manifesto was circulated by the Union urging its members to
participate in a strike/picket and to abandon their posts. The next day, the Union filed another
notice of strike for union busting amounting to ULP. On March 1, the Union submitted an
explanation in compliance with the notices sent to erring employees, explaining their exercise of
the constitutional right to peaceably assemble and to petition the government for redress of
grievances.
On March 16, Toyota sent notices of termination and terminated 227 employees for participation
in concerted actions in violation of its Code of Conduct and for misconduct under Art. 282 of the
Labor Code. In response, the Union went on strike on March 17. From March 28 to April 12,
they barricaded the gates of Toyota’s Bicutan and Sta. Rosa plants and prevented workers from
entering the plants.
On March 29, Toyota filed with the NLRC a petition for injunction with prayer for TRO seeking
free ingress to and egress from its plants. On April 5, the NLRC issued a TRO. Toyota also filed
a petition to declare the strike illegal and pray for the dismissal of erring Union officers, directors
and members.
On April 10, the DOLE Secretary assumed jurisdiction and certified the case to the NLRC,
ordering striking workers to return to work and Toyota to accept the returning employees or put
them under payroll reinstatement. Parties were also enjoined from committing acts that may
worsen the situation. The Union ended the strike on April 12 and the union members and
officers tried to return to work on April 16, but Toyota opted for payroll reinstatement.
The Union filed an MR of the DOLE Secretary’s certification order but was denied. A petition for
certiorari was filed before the CA, which was later denied.
On May 23, several payroll-reinstated members of the union staged a protest rally in front of
Toyota’s Bicutan Plant bearing placards and streamers. On May 28, 44 Union members staged
another protest action, while 29 picketed in front of the Sta. Rosa plant’s main entrance. On
June 5, the Union filed another notice of strike, and a second notice of strike on June 18.
Despite repeated orders, the Union failed to submit its position paper. On Aug. 9, the NLRC
rendered a decision declaring the strikes illegal for failure to comply with the procedural
requirements of a valid strike and for staging strikes after the DOLE Secretary assumed
jurisdiction over the dispute, and ordering the dismissal of the employees who participated in the
Feb. 21-23 strike, but awarding them severance compensation. Both parties filed petitions for
certiorari with the CA, which recalled the severance compensation, but reinstated the severance
compensation on motion for reconsideration.
Issue 1: Whether the mass actions committed by the Union are illegal strikes
Ruling 1: YES.
The Union argued that the protest was not directed at Toyota but towards the Government
(DOLE and BLR), and was not a strike as contemplated in the Labor Code. It fails to convince.
A strike means any temporary stoppage of work by the concerted action of employees as a
result of an industrial or labor dispute. A labor dispute, in turn, includes any controversy or
matter concerning terms or conditions of employment or the association or representation of
persons in negotiating, fixing, maintaining, changing, or arranging the terms and conditions of
employment, regardless of whether the disputants stand in the proximate relation of the
employer and the employee.
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 controlling. The term "strike" has been elucidated to encompass
not only concerted work stoppages, but also slowdowns, mass leaves, sit-downs, attempts to
damage, destroy, or sabotage plant equipment and facilities, and similar activities.
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. The purported reason for these protest actions was to safeguard their
rights against any abuse which the med-arbiter may commit against their cause. However, the
Union failed to advance convincing proof that the med-arbiter was biased against them. The
acts of the med-arbiter in the performance of his duties are presumed regular.
These concerted actions resulted in the temporary stoppage of work causing the latter
substantial losses. Thus, without the requirements for a valid strike having been complied with,
we were constrained to consider the strike staged on such dates as illegal and all employees
who participated in the concerted actions to have consequently lost their employment status.
Although the respondent union admittedly made earnest representations with the company to
hold a mass protest before the BLR, together with their officers and members, the denial of the
request by the management should have been heeded and ended their insistence to hold the
planned mass demonstration.
The February 21 to 23, 2001 concerted actions were undertaken without satisfying the
prerequisites for a valid strike under Art. 263 of the Labor Code. The Union failed to comply with
the following requirements: (1) a notice of strike filed with the DOLE 30 days before the intended
date of strike, or 15 days in case of unfair labor practice; (2) strike vote approved by a majority
of the total union membership in the bargaining unit concerned obtained by secret ballot in a
meeting called for that purpose; and (3) notice given to the DOLE of the results of the voting at
least seven days before the intended strike. These requirements are mandatory and the failure
of a union to comply with them renders the strike illegal. It also violated Toyota’s Code of
Conduct which prohibits inciting or participating in riots, disorders, alleged strikes or concerted
actions detrimental to Toyota’s interest.
With respect to the strikes committed from March 17 to April 12, 2001, those were initially legal
as the legal requirements were met. However, on March 28 to April 12, 2001, the Union
barricaded the gates of the Bicutan and Sta. Rosa plants and blocked the free ingress to and
egress from the company premises. Toyota employees, customers, and other people having
business with the company were intimidated and were refused entry to the plants.
These strikes were illegal because unlawful means were employed. The acts of the Union
officers and members are in palpable violation of Art. 264(e), which proscribes acts of violence,
coercion, or intimidation, or which obstruct the free ingress to and egress from the company
premises. Undeniably, the strikes from March 28 to April 12, 2001 were illegal.
The rallies held on May 23 and 28 are also considered illegal strikes. The Union and its
members picketed and performed concerted actions in front of the Company premises, a patent
violation of the assumption of jurisdiction and certification Order of the DOLE Secretary, which
ordered the parties "to cease and desist from committing any act that might lead to the
worsening of an already deteriorated situation." While there are no work stoppages, the pickets
and concerted actions outside the plants have a demoralizing and even chilling effect on the
workers inside the plants and can be considered as veiled threats of possible trouble to the
workers when they go out of the company premises after work and of impending disruption of
operations to company officials and even to customers in the days to come.
Art. 264(a) 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. Thus,
they should be terminated. Art. 264(a) also provides that a member is liable when he knowingly
participates in an illegal act during a strike, regardless of whether the strike is legal. However,
an ordinary member cannot be terminated for mere participation in an illegal strike.
227 employees joined the Feb. 21-23 rallies and refused to render overtime work or report to
work. The strike was deemed illegal and in violation of Toyota’s Code of Conduct. In the March
28 to April 12 strikes, illegal acts of coercion or intimidation and obstructing free ingress to or
egress from the company premises were committed by the rallying employees. These
employees were identified in the Position Paper and through photos. Lastly, though on payroll
reinstatement, strikers staged protests on May 23 and 28. Under Art. 263(g), it is clear that
strikers who violate the assumption/certification Order may suffer dismissal from work.
Issue 2: Whether separation pay should be awarded to Union members who participated in the
illegal strikes
Ruling 2: NO.
The general rule is that when just causes for terminating the services of an employee under Art.
282 of the Labor Code exist, the employee is not entitled to separation pay. The apparent
reason behind the forfeiture of the right to termination pay is that lawbreakers should not benefit
from their illegal acts. The dismissed employee, however, is entitled to "whatever rights, benefits
and privileges [s/he] may have under the applicable individual or collective bargaining
agreement with the employer or voluntary employer policy or practice"65 or under the Labor
Code and other existing laws. This means that the employee, despite the dismissal for a valid
cause, retains the right to receive from the employer benefits provided by law, like accrued
service incentive leaves. With respect to benefits granted by the CBA provisions and voluntary
management policy or practice, the entitlement of the dismissed employees to the benefits
depends on the stipulations of the CBA or the company rules and policies.
As in any rule, there are exceptions. One exception where separation pay is given even though
an employee is validly dismissed is when the court finds justification in applying the principle of
social justice well entrenched in the 1987 Constitution.
In PLDT v. NLRC, 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.
The Union members are not entitled to separation pay. In a slew of cases, the Court 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 strikes.
Thus, the award of separation pay to the Union officials and members in the instant petitions
cannot be sustained.
Ignacio
Topic: Special Provisions: Procedural Due Process

104. PEREZ v. PT&T

[G.R. No. 152048. April 7, 2009.]

FELIX B. PEREZ and AMANTE G. DORIA, petitioners, vs.

PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY and
JOSE LUIS SANTIAGO, respondents.
Doctrine:
 In sum, the following are the guiding principles in connection with the hearing
requirement in dismissal cases:
1. “Ample opportunity to be heard" means any meaningful opportunity (verbal or
written) given to the employee to answer the charges against him and submit
evidence in support of his defense, whether in a hearing, conference or some
other fair, just and reasonable way.
2. A formal hearing or conference becomes mandatory only when requested by the
employee in writing or substantial evidentiary disputes exist or a company rule or
practice requires it, or when similar circumstances justify it.
 3. The "ample opportunity to be heard" standard in the Labor Code prevails over
the "hearing or conference" requirement in the implementing rules and
regulations.

Action Sequence: LA dismissal was illegal and due process violated > NLRC reversed > CA
affirmed the legality of the dismissal but ruled that due process was violated > SC set aside CA
and LA decision reinstated but modified award

Facts:

 Petitioners Felix B. Perez and Amante G. Doria were employed by respondent Philippine
Telegraph and Telephone Company (PT&T) as shipping clerk and supervisor,
respectively, in PT&T's Shipping Section, Materials Management Group.
 Acting on an alleged unsigned letter regarding anomalous transactions at the Shipping
Section, respondents formed a special audit team to investigate the matter.
o It was discovered that the Shipping Section jacked up the value of the freight
costs for goods shipped and that the duplicates of the shipping documents
allegedly showed traces of tampering, alteration and superimposition.
 On September 3, 1993, petitioners were placed on preventive suspension for 30 days for
their alleged involvement in the anomaly.
o Their suspension was extended for 15 days twice. (a total of 30 days additional)
 On October 29, 1993, a memorandum was issued by the respondents dismissing the
petitioners and a subsequent filing of relevant criminal charges.
 On November 9, 1993, petitioners filed a complaint for illegal suspension and illegal
dismissal.
 The LA found that the 30-day extension of petitioners' suspension and their subsequent
dismissal were both illegal. He ordered respondents to pay petitioners their salaries
during their 30-day illegal suspension, as well as to reinstate them with backwages and
13th month pay.
 The NLRC reversed the decision of the LA, ruling that the petitioners were dismissed for
just cause, that they were accorded due process, and that they were illegally suspended
for only 15 days.
 The CA affirmed the NLRC decision insofar as petitioners' illegal suspension for 15 days
and dismissal for just cause were concerned. However, it found that petitioners were
dismissed without due process.
Issue: Whether or not the petitioners were dismissed without due process? (Y)

Ruling: YES. CA decision is reversed and LA decision was reinstated.

 SUBSTANTIVE [JUST CAUSE WAS NOT SUBSTANTIATED]

o No just cause for the dismissal.
o Respondents’ evidence is insufficient to clearly and convincingly establish the
facts from which the loss of confidence resulted.  Other than their bare
allegations and the fact that such documents came into petitioners’ hands at
 some point, respondents should have provided evidence of petitioners’ functions,
the extent of their duties, the procedure in the handling and approval of shipping
requests and the fact that no personnel other than petitioners were involved. The
alterations on the shipping documents could not reasonably be attributed to
petitioners because it was never proven that petitioners alone had control of or
access to these documents.
o Willful breach by the employee of the trust reposed in him by his employer or
duly authorized representative is a just cause for termination. However, loss of
confidence should not be simulated. It should not be used as a subterfuge for
causes which are improper, illegal or unjustified. Loss of confidence may not be
arbitrarily asserted in the face of overwhelming evidence to the contrary. It must
be genuine, not a mere afterthought to justify an earlier action taken in bad faith.
o The burden of proof rests on the employer to establish that the dismissal is for
cause in view of the security of tenure that employees enjoy under the
Constitution and the Labor Code. The employer’s evidence must clearly and
convincingly show the facts on which the loss of confidence in the employee may
be fairly made to rest. It must be adequately proven by substantial evidence.
Respondents failed to discharge this burden.
 DUE PROCESS [VIOLATED]
o Respondents' illegal act of dismissing petitioners was aggravated by their failure
to observe due process.
o To meet the requirements of due process in the dismissal of an employee, an
employer must furnish the worker with 2 written notices:
 A written notice specifying the grounds for termination and giving to said
employee a reasonable opportunity to explain his side and
 Another written notice indicating that, upon due consideration of all
circumstances, grounds have been established to justify the employer’s
decision to dismiss the employee.
o Petitioners were neither apprised of the charges against them nor given a chance
to defend themselves. They were simply and arbitrarily separated from work and
served notices of termination in total disregard of their rights to due process and
security of tenure. Respondents failed to comply with the two-notice requirement
for terminating employees.
 LENGTHY DISCUSSION ON MISCELLANEOUS PROVISION ON AMPLE
OPPORTUNITY TO BE HEARD vs. FORMAL HEARING (TOPIC)
o THE SC PASSED UPON THE ISSUE OF WHETHER FORMAL HEARING IS
NEEDED TO SATISFY THE REQUIREMENT OF OPPORTUNITY TO BE
HEARD because petitioners mentioned that due process was not observed in
the absence of a hearing in which they could have explained their side and
refuted the evidence against them.
o However, the SC emphasized that there is no need for a hearing or conference.
o We note a marked difference in the standards of due process to be followed as
prescribed in the Labor Code and its implementing rules.
o The SC notes a marked difference in the standards of due process to be followed
as prescribed in the Labor Code and its implementing rules.
  The Labor Code provides that an employer must provide the
employee ample opportunity to be heard and to defend himself with the
assistance of his representative if he so desires. 
 The omnibus rules implementing the Labor Code, on the other
hand, require a hearing and conference during which the employee
concerned is given the opportunity to respond to the charge, present his
evidence or rebut the evidence presented against him. 
o In case of conflict, the law prevails over the administrative regulations
implementing it. The authority to promulgate implementing rules proceeds from
the law itself.  To be valid, a rule or regulation must conform to and be consistent
with the provisions of the enabling statute. As such, it cannot amend the law
either by abridging or expanding its scope.
o Article 277(b) of the Labor Code provides that, in cases of termination for a just
cause, an employee must be given “ample opportunity to be heard and to defend
himself.” 
 Thus, the opportunity to be heard afforded by law to the employee is
qualified by the word “ample” which ordinarily means “considerably more
than adequate or sufficient.” In this regard, the phrase “ample opportunity
to be heard” can be reasonably interpreted as extensive enough to cover
actual hearing or conference. To this extent, Section 2(d), Rule I of the
Implementing Rules of Book VI of the Labor Code is in conformity with
Article 277(b).
o Nonetheless, Section 2(d), Rule I of the Implementing Rules of Book VI of
the Labor Code should not be taken to mean that holding an actual hearing
or conference is a condition  sine qua non for compliance with the due
process requirement in termination of employment.
 The test for the fair procedure guaranteed under Article 277(b) cannot be
whether there has been a formal pretermination confrontation between
the employer and the employee. The “ample opportunity to be heard”
standard is neither synonymous nor similar to a formal hearing.
o The standard for the hearing requirement, ample opportunity, is couched in
general language revealing the legislative intent to give some degree of
flexibility or adaptability to meet the peculiarities of a given situation. To
confine it to a single rigid proceeding such as a formal hearing will defeat its
spirit.
o Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code itself
provides that the so-called standards of due process outlined therein shall be
observed “substantially,” not strictly.
 This is a recognition that while a formal hearing or conference is ideal, it
is not an absolute, mandatory or exclusive avenue of due process.
o Therefore, while the phrase “ample opportunity to be heard” may in fact include
an actual hearing, it is not limited to a formal hearing only. The existence of an
actual, formal “trial-type” hearing, although preferred, is not absolutely necessary
to satisfy the employee’s right to be heard.
o In sum, the following are the guiding principles in connection with the hearing
requirement in dismissal cases:
 1. “Ample opportunity to be heard" means any meaningful opportunity
(verbal or written) given to the employee to answer the charges against
him and submit evidence in support of his defense, whether in a hearing,
conference or some other fair, just and reasonable way.
2. A formal hearing or conference becomes mandatory only when requested
by the employee in writing or substantial evidentiary disputes exist or a
company rule or practice requires it, or when similar circumstances justify
it.
3. The "ample opportunity to be heard" standard in the Labor Code prevails
over the "hearing or conference" requirement in the implementing rules
and regulations.
o

Dispositive:

WHEREFORE, the petition is hereby GRANTED. The decision of the Court of Appeals
dated January 29, 2002 in CA-G.R. SP No. 50536 finding that petitioners Felix B. Perez and
Amante G. Doria were not illegally dismissed but were not accorded due process and were
illegally suspended for 15 days, is SET ASIDE.

The decision of the labor arbiter dated December 27, 1995 in NLRC NCR CN. 11-
06930-93 is hereby AFFIRMED with the MODIFICATION that petitioners should be paid their
separation pay in lieu of reinstatement.

SO ORDERED.

Additional Notes: (PETITIONERS WERE ILLEGALLY SUSPENDED FOR 30 DAYS)

 An employee may be validly suspended by the employer for just cause provided by law.
 Such suspension shall only be for a period of 30 days, after which the employee shall
either be reinstated or paid his wages during the extended period.
 In this case, petitioners contended that they were not paid during the two 15-day
extensions, or a total of 30 days, of their preventive suspension.
 Respondents failed to adduce evidence to the contrary. Thus, we uphold the ruling of the
labor arbiter on this point.

Additional Notes: (SEPARATION PAY IN LIEU OF REINSTATEMENT)

  Where the dismissal was without just or authorized cause and there was no due
process, Article 279 of the Labor Code, as amended, mandates that the employee is
entitled to reinstatement without loss of seniority rights and other privileges and full
backwages, inclusive of allowances, and other benefits or their monetary equivalent
computed from the time the compensation was not paid up to the time of actual
reinstatement.
 In this case, however, reinstatement is no longer possible because of the length of time
that has passed from the date of the incident to final resolution. Fourteen years have
transpired from the time petitioners were wrongfully dismissed. To order reinstatement at
this juncture will no longer serve any prudent or practical purpose.

Sira
Topic: Effect of Failure to Comply with Due Process

106. Agabon vs. NLRC

JENNY M. AGABON and VIRGILIO C. AGABON, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), RIVIERA HOME IMPROVEMENTS,
INC. and VICENTE ANGELES, respondents.
G.R. No. 158693, November 17, 2004

DOCTRINE: Where the dismissal is for a just cause, as in the instant case, the lack of statutory
due process should not nullify the dismissal, or render it illegal, or ineffectual. However, the
employer should indemnify the employee for the violation of his statutory rights, as ruled in Reta
v. National Labor Relations Commission. The indemnity to be imposed should be stiffer to
discourage the abhorrent practice of "dismiss now, pay later," which we sought to deter in the
Serrano ruling. The sanction should be in the nature of indemnification or penalty and should
depend on the facts of each case, taking into special consideration the gravity of the due
process violation of the employer.

ACTION SEQUENCE: LA (declared dismissal as illegal) -> NLRC (reversed the LA decision)-
>CA (ruled that dismissal was legal)-> SC (Dismissal was for just cause but due process was
not observed; petitioners are liable for nominal damages)

FACTS:
 Respondent Riviera Home Improvements, Inc. is engaged in the business of selling and
installing ornamental and construction materials.
 It employed petitioners as gypsum board and cornice installers on January 2, 1992 until
February 23, 1999 when they were dismissed for abandonment of work.
 Petitioners filed a complaint for illegal dismissal and payment of money claims.
o Petitioners’ arguments:
 Asserted that they were dismissed because the private respondent
refused to give them assignments unless they agreed to work on a
"pakyaw" basis when they reported for duty on February 23, 1999. They
did not agree on this arrangement because it would mean losing benefits
as Social Security System (SSS) members.
  Petitioners also claimed that private respondent did not comply with the
twin requirements of notice and hearing.
o Respondent’s arguments:
 Private respondent maintained that petitioners were not dismissed but
had abandoned their work.
 In fact, private respondent sent two letters to the last known addresses of
the petitioners advising them to report for work.(NOTE: no written notice
and hearing) Private respondent's manager even talked to petitioner
Virgilio Agabon by telephone sometime in June 1999 to tell him about the
new assignment at Pacific Plaza Towers involving 40,000 square meters
of cornice installation work. However, petitioners did not report for work
because they had subcontracted to perform installation work for another
company.
 Petitioners also demanded for an increase in their wage to P280.00 per
day. When this was not granted, petitioners stopped reporting for work
and filed the illegal dismissal case.
 LA: declared the dismissals illegal and ordered private respondent to pay the monetary
claims, in lieu of reinstatement.
 NLRC: reversed the LA decision because it found that the petitioners had abandoned
their work and were not entitled to backgwages and separation pay. Other money claims
awarded by the LA were also denied for lack of evidence.
 CA: ruled that the dismissal of the petitioners was not illegal because they had
abandoned their employment and were already working for another employer.
 Hence, this petition for review on the sole issue of whether petitioners were illegally
dismissed.

ISSUE:

1. Whether or not petitioners’ dismissal was for just cause (YES)

2. Whether or not respondents observed due process (NO)

RULING:

Petitioners’ dismissal was for just cause but due process was not observed. Thus,
petitioners are entitled to nominal damages, but their dismissal remains valid.

1. Petitioners were dismissed for a just and valid cause, i.e. abandonment.
 Abandonment is the deliberate and unjustified refusal of an employee to resume his
employment. It is a form of neglect of duty, hence, a just cause for termination of
employment by the employer. For a valid finding of abandonment, these two factors
should be present: (1) the failure to report for work or absence without valid or justifiable
reason; and (2) a clear intention to sever employer-employee relationship, with the
second as the more determinative factor which is manifested by overt acts from which it
may be deduced that the employees has no more intention to work. The intent to
discontinue the employment must be shown by clear proof that it was deliberate and
unjustified.
 In this case, facts showed that petitioners really abandoned their work. In February
1999, petitioners were frequently absent having subcontracted for an installation work for
another company. Subcontracting for another company clearly showed the intention to
sever the employer-employee relationship with private respondent. This was not the first
 time they did this. In January 1996, they did not report for work because they were
working for another company. Private respondent at that time warned petitioners that
they would be dismissed if this happened again. Petitioners disregarded the warning and
exhibited a clear intention to sever their employer-employee relationship.

2. Due process was not observed.

 The procedure for terminating an employee is found in Book VI, Rule I, Section 2(d) of
the Omnibus Rules Implementing the Labor Code: Standards of due process:
requirements of notice. – In all cases of termination of employment, the following
standards of due process shall be substantially observed:
o For termination of employment based on just causes as defined in Article 282 of
the Code:
 A written notice served on the employee specifying the ground or grounds
for termination, and giving to said employee reasonable opportunity within
which to explain his side;
 A hearing or conference during which the employee concerned, with the
assistance of counsel if the employee so desires, is given opportunity to
respond to the charge, present his evidence or rebut the evidence
presented against him; and
 A written notice of termination served on the employee indicating that
upon due consideration of all the circumstances, grounds have been
established to justify his termination.
o In case of termination, the foregoing notices shall be served on the
employee's last known address (NOT COMPLIED WITH)
 Procedurally, (1) if the dismissal is based on a just cause under Article 282, the
employer must give the employee two written notices and a hearing or opportunity to be
heard if requested by the employee before terminating the employment: a notice
specifying the grounds for which dismissal is sought a hearing or an opportunity to be
heard and after hearing or opportunity to be heard, a notice of the decision to dismiss;
and (2) if the dismissal is based on authorized causes under Articles 283 and 284, the
employer must give the employee and the Department of Labor and Employment written
notices 30 days prior to the effectivity of his separation.
 From the foregoing rules four possible situations may be derived: (1) the dismissal is for
a just cause under Article 282 of the Labor Code, for an authorized cause under Article
283, or for health reasons under Article 284, and due process was observed; (2) the
dismissal is without just or authorized cause but due process was observed; (3) the
dismissal is without just or authorized cause and there was no due process; and (4) the
dismissal is for just or valid cause.
 In this case, the situation squarely falls under the fourth situation. The dismissal should
be upheld because it was established that the petitioners abandoned their jobs to work
for another company. Private respondent, however, did not follow the notice
requirements and instead argued that sending notices to the last known
addresses would have been useless because they did not reside there anymore.
Unfortunately for the private respondent, this is not a valid excuse because the law
mandates the twin notice requirements to the employee's last known address. Thus, it
should be held liable for non-compliance with the procedural requirements of due
process.

EFFECT OF NONCOMPLIANCE WITH DUE PROCESS: RESPONDENT IS LIABLE TO

PETITIONERS FOR NOMINAL DAMAGES
  Due process under the Labor Code, like Constitutional due process, has two aspects:
substantive, i.e., the valid and authorized causes of employment termination under the
Labor Code; and procedural, i.e., the manner of dismissal.
 It must be stressed that in the present case, the petitioners committed a grave offense,
i.e., abandonment, which, if the requirements of due process were complied with, would
undoubtedly result in a valid dismissal.
 Where the dismissal is for a just cause, as in the instant case, the lack of statutory
due process should not nullify the dismissal, or render it illegal, or ineffectual.
However, the employer should indemnify the employee for the violation of his
statutory rights, as ruled in Reta v. National Labor Relations Commission. The
indemnity to be imposed should be stiffer to discourage the abhorrent practice of
"dismiss now, pay later," which we sought to deter in the Serrano ruling. The
sanction should be in the nature of indemnification or penalty and should depend
on the facts of each case, taking into special consideration the gravity of the due
process violation of the employer.
 An employee who is clearly guilty of conduct violative of Article 282 should not be
protected by the Social Justice Clause of the Constitution. Social justice, as the term
suggests, should be used only to correct an injustice.
 Under the Civil Code, nominal damages is adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant, may be vindicated or recognized,
and not for the purpose of indemnifying the plaintiff for any loss suffered by him.
o Viernes v. National Labor Relations Commissions, an employer is liable to pay
indemnity in the form of nominal damages to an employee who has been
dismissed if, in effecting such dismissal, the employer fails to comply with the
requirements of due process. The Court, after considering the circumstances
therein, fixed the indemnity at P2,590.50, which was equivalent to the employee's
one month salary. This indemnity is intended not to penalize the employer but to
vindicate or recognize the employee's right to statutory due process which was
violated by the employer.
 The violation of the petitioners' right to statutory due process by the private respondent
warrants the payment of indemnity in the form of nominal damages. The amount of such
damages is addressed to the sound discretion of the court, taking into account the
relevant circumstances. Considering the prevailing circumstances in the case at bar, we
deem it proper to fix it at P30,000.00. We believe this form of damages would serve to
deter employers from future violations of the statutory due process rights of employees.
At the very least, it provides a vindication or recognition of this fundamental right granted
to the latter under the Labor Code and its Implementing Rules.

DISCUSSION ON PREVIOUS CASES ON EMPLOYMENT TERMINATION

 Prior to 1989: the rule was that a dismissal or termination is illegal if the employee was
not given any notice.
 After the 1989 case of Wenphil Corp. v. National Labor Relations Commission, the
rule thus evolved: where the employer had a valid reason to dismiss an employee but
did not follow the due process requirement, the dismissal may be upheld but the
employer will be penalized to pay an indemnity to the employee. This became known
as the Wenphil or Belated Due Process Rule.
 On January 27, 2000, in Serrano, the rule on the extent of the sanction was
changed. The Court held that the violation by the employer of the notice requirement in
 termination for just or authorized causes was not a denial of due process that will nullify
the termination. However, the dismissal is ineffectual and the employer must pay full
backwages from the time of termination until it is judicially declared that the dismissal
was for a just or authorized cause. We concluded that the imposition of penalty by way
of damages for violation of the notice requirement was not serving as a deterrent.
Hence, we now required payment of full backwages from the time of dismissal until the
time the Court finds the dismissal was for a just or authorized cause. Serrano was
confronting the practice of employers to "dismiss now and pay later" by imposing full
backwages.
 However, the cold that Serrano did not consider the full meaning of Article 279 of
the Labor Code which states:
o ART. 279. Security of Tenure. – In cases of regular employment, the employer
shall not terminate the services of an employee except for a just cause or when
authorized by this Title. An employee who is unjustly dismissed from work shall
be entitled to reinstatement without loss of seniority rights and other privileges
and to his full backwages, inclusive of allowances, and to his other benefits or
their monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement.
 This means that the termination is illegal only if it is not for any of the justified or
authorized causes provided by law. Payment of backwages and other benefits, including
reinstatement, is justified only if the employee was unjustly dismissed.
 After carefully analyzing the consequences of the divergent doctrines in the law on
employment termination, we believe that in cases involving dismissals for cause but
without observance of the twin requirements of notice and hearing, the better rule is to
abandon the Serrano doctrine and to follow Wenphil by holding that the dismissal was
for just cause but imposing sanctions on the employer. Such sanctions, however, must
be stiffer than that imposed in Wenphil. By doing so, this Court would be able to achieve
a fair result by dispensing justice not just to employees, but to employers as well.
 The constitutional policy to provide full protection to labor is not meant to be a sword to
oppress employers. The commitment of this Court to the cause of labor does not prevent
us from sustaining the employer when it is in the right, as in this case.32 Certainly, an
employer should not be compelled to pay employees for work not actually performed
and in fact abandoned.
 The employer should not be compelled to continue employing a person who is
admittedly guilty of misfeasance or malfeasance and whose continued employment is
patently inimical to the employer. The law protecting the rights of the laborer authorizes
neither oppression nor self-destruction of the employer.
 This is not to say that the Court was wrong when it ruled the way it did
in Wenphil, Serrano and related cases. Social justice is not based on rigid formulas set
in stone. It has to allow for changing times and circumstances.
 Justice in every case should only be for the deserving party. It should not be presumed
that every case of illegal dismissal would automatically be decided in favor of labor, as
management has rights that should be fully respected and enforced by this Court. As
interdependent and indispensable partners in nation-building, labor and management
need each other to foster productivity and economic growth; hence, the need to weigh
and balance the rights and welfare of both the employee and employer.
 HENCE, the present rule discussed above.

DISPOSITIVE PORTION:
WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of the Court of
Appeals dated January 23, 2003, in CA-G.R. SP No. 63017, finding that petitioners' Jenny and
Virgilio Agabon abandoned their work, and ordering private respondent to pay each of the
petitioners holiday pay for four regular holidays from 1996 to 1998, in the amount of P6,520.00,
service incentive leave pay for the same period in the amount of P3,255.00 and the balance of
Virgilio Agabon's thirteenth month pay for 1998 in the amount of P2,150.00 is AFFIRMED with
the MODIFICATION that private respondent Riviera Home Improvements, Inc. is
further ORDERED to pay each of the petitioners the amount of P30,000.00 as nominal
damages for non-compliance with statutory due process.

Industrial Timber Corporation v. Ababon et al.

G.R. No. 164518 | January 25, 2006
Ponente: J. Ynares-Santiago
Topic: Factors in Determining Nominal Damages in Termination Disputes

DOCTRINE:
In the determination of the amount of nominal damages which is addressed to the sound
discretion of the court, several factors are taken into account: (1) the authorized cause invoked,
whether it was a retrenchment or a closure or cessation of operation of the establishment due to
serious business losses or financial reverses or otherwise; (2) the number of employees to be
awarded; (3) the capacity of the employers to satisfy the awards, taken into account their
prevailing financial status as borne by the records; (4) the employer’s grant of other termination
benefits in favor of the employees; and (5) whether there was a bona fide attempt to comply
with the notice requirements as opposed to giving no notice at all.

FACTS:
● These are two consolidated petitions for review under Rule 45, RoC.
● Aug. 30, 1985 - Industrial Plywood Group Corporation (IPGC) (Lessor) is the owner of a
plywood plant located in Butuan City, which leased the same to Industrial Timber
Corporation (ITC) (Lessee) for a period of five years. Thereafter, ITC commenced
operation of the plywood plant and hired 387 workers.
● March 16, 1990 -- ITC notified the DOLE and its workers that effective March 19, 1990 it
will undergo a "no plant operation" due to lack of raw materials and will resume only after
it can secure logs for milling.
● Meanwhile, IPGC notified ITC of the expiration of the lease contract in August 1990 and
its intention not to renew the same
● ITC notified the DOLE and its workers of the plant’s shutdown due to the non-renewal.
This fact and the alleged lack of logs for milling constrained ITC to lay off all its workers
until further notice. This was followed by a final notice of closure or cessation of business
 operations with an advice for all the workers to collect the benefits due them under the
law and CBA.
● IPGC took over the plywood plant after it was issued a Wood Processing Plant Permit,
which included the anti-pollution permit, by the DENR coincidentally on the same day the
ITC ceased operation of the plant
● This prompted Virgilio Ababon, et al. to file a complaint against ITC and IPGC for illegal
dismissal, unfair labor practice and damages.
○ They alleged, among others, that the cessation of ITC’s operation was intended
to bust the union and that both corporations are one and the same entity being
controlled by one owner.
● DECISION OF THE LABOR ARBITER - LA Petilla rendered a decision which refused to
pierce the veil of corporate fiction for lack of evidence to prove that it was used to
perpetuate fraud or illegal act; upheld the validity of the closure; and ordered ITC to pay
separation pay of ½ month for every year of service.
● Ababon, et al. appealed to the NLRC.
● DECISION OF THE NLRC - the NLRC set aside the decision of the Labor Arbiter and
ordered the reinstatement of the employees to their former positions, and the payment of
full back wages, damages and attorney’s fees.
● ITC and IPGC filed a Motion for Reconsideration. However, it was dismissed for being
filed out of time. Thus, they filed a Petition for Relief from Resolution, which was treated
as a second motion for reconsideration by the NLRC and dismissed for lack of merit.
● From said dismissal, petitioners filed a Notice of Appeal with the Supreme Court.
● SUPREME COURT - dismissed the Notice of Appeal for being a wrong mode of appeal
from the NLRC decision. On the other hand, the NLRC granted the Second Petition for
Relief and set aside all its prior decision and resolutions.
● Virgilio Ababon, et al. filed a Petition for Certiorari with the Supreme Court. However,
pursuant to our ruling in St. Martin’s Funeral Home v. NLRC, we referred the petition to
the Court of Appeals for appropriate action and disposition
● COURT OF APPEALS - set aside the decision of the NLRC, and ruled against ITC and
IPGC.

ISSUE:

1. W/N Ababon, et. al. were illegally dismissed due to the closure of ITC’s business (NO)

HELD:

1. NO, Ababon, et. al. were not illegally dismissed. The right to close the operation of an
establishment or undertaking is one of the authorized causes in terminating employment
of workers, the only limitation being that the closure must not be for the purpose of
circumventing the provisions on termination of employment under the LC.
● ART. 283, LC. 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.1awphi1.net In case of retrenchment to prevent
losses and in cases of closures or cessation of operations of establishment or
undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to one (1) month pay or to at least one-half
(1/2) month pay for every year of service, whichever is higher. A fraction of at
least six (6) months shall be considered one (1) whole year.
● Hence, a partial or total closure or cessation of operations of establishment
or undertaking may either be due to serious business losses or financial
reverses or otherwise.
1. Serious Business Losses - the employer must sufficiently and
convincingly prove its allegation of substantial losses,
2. Financial Reverses - the employer can lawfully close shop
anytime as long as cessation of or withdrawal from business
operations was 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.
● Just as no law forces anyone to go into business, no law can compel
anybody to continue the same. It would be stretching the intent and spirit of the
law if a court interferes with management's prerogative to close or cease its
business operations just because the business is not suffering from any loss or
because of the desire to provide the workers continued employment.
● In sum, under Article 283 of the LC, three requirements are necessary for a valid
cessation of business operations:
1. Service of a written notice to the employees and to the DOLE at least one
month before the intended date thereof;
2. The cessation of business must be bona fide in character; and
3. Payment to the employees of termination pay amounting to one month
pay or at least one-half month pay for every year of service, whichever is
higher.
● In these consolidated cases, the Court finds that ITC’s closure or cessation of
business was done in good faith and for valid reasons.
● The decision to permanently close business operations was arrived at after a
suspension of operation for several months due to lack of raw materials used for
milling operations, the expiration of the anti-pollution permit in April 1990, and the
termination of the lease contract with IPGC in August 1990.
● In Shoppers Gain Supermarket v. National Labor Relations Commission, we held
that the non-renewal of petitioner corporation’s lease contract and its consequent
 closure and cessation of operations may be considered an event beyond
petitioner’s control, in the nature of a force majeure situation. As such, it amounts
to an authorized cause for termination of the private respondents.

2. W/N Ababon, et.al are entitled to separation pay, backwages, and other monetary
awards. (NO)
2. NO. Having established that ITC’s closure of the plywood plant was done in good faith
and that it was due to causes beyond its control, the conclusion is inevitable that said
closure is valid.
● Consequently, Ababon, et al. could not have been illegally dismissed to be
entitled to full backwages. Thus, we find it no longer necessary to discuss the
issue regarding the computation of their backwages.
● However, they are entitled to separation pay equivalent to one month pay or at
least one-half month pay for every year of service, whichever is higher.

In a March 14, 2006 ITC and IPCG filed a Motion for Partial Reconsideration seeking to
delete or reduce the nominal damages awarded to each employee, considering that it had
ceased operations of its business and that the award involves a huge amount considering that
there are 97 workers.

HELD: In the determination of the amount of nominal damages which is addressed to the sound
discretion of the court, several factors are taken into account:

1. the authorized cause invoked, whether it was a retrenchment or a closure or cessation of

operation of the establishment due to serious business losses or financial reverses or
otherwise;
2. the number of employees to be awarded;
3. the capacity of the employers to satisfy the awards, taken into account their prevailing
financial status as borne by the records;
4. the employer’s grant of other termination benefits in favor of the employees; and
5. whether there was a bona fide attempt to comply with the notice requirements as
opposed to giving no notice at all.

● IN THIS CASE, there was valid authorized cause considering the closure or cessation of
ITC’s business which was done in good faith and due to circumstances beyond ITC’s
control.
● Moreover, ITC had ceased to generate any income since its closure on August 17, 1990.
Several months prior to the closure, ITC experienced diminished income due to high
production costs, erratic supply of raw materials, depressed prices, and poor market
conditions for its wood products.
● It appears that ITC had given its employees all benefits in accord with the CBA upon
their termination.
 ● Thus, considering the circumstances obtaining in the case at bar, The Court deem it
wise and just to reduce the amount of nominal damages to be awarded for each
employee to P10,000.00 each instead of P50,000.00 each.

Tirol
Topic: Factors in Determining Nominal Damages in Termination Disputes
108. Ababon v. CA
VIRGILIO ABABON, IGNACIO ABACAJEN, ANGELINA ABAY-ABAY, EDITH ABREA,
SAMUEL ABREA, BIENVENIDO ACILO, RODRIGO ACILO, VICTOR ACILO, ARTURO
ADVINCULA, GERTRUDES AMPARO, MILA ARQUITA, VIRGILIO ANTONIO, PRUDENCIO
ARQUITA, ALBERT ATON, WARLITA AUDITA, ALICIA AWITAN, LEOPOLDO AYATON,
ARTURO BALBOTEN, DANILO BANATE, LOLITA BATAN, RAMIL BUTALON, CARMELITA
CAINGLES, VICENTE CAHARIAN, BENEDICTA CAJIPE, FELIPE CALLANO, ALFREDO
CARILLO, NILA CARILLO, ALGIER CORBETA, GREGORIO DABALOS, TERESITA
DABALOS, VENERANDO DALAUTA, RICARDO DANGCULOS, MONTANO DAPROSA,
LUISITO DIAZ, FELIZARDO DUMULAO, EDITHA DUMANON, ALFREDO FAELNAR, RAUL
FORTUN, MAXIMO GALLA, ANGELES GALUPO, PERFECTO GAMBE, VIRGINITA
GANGCA, RUPERTO GORGONIO, ROMEO HERRERO, SERGIO HOR-HORO, FRANCISCO
IBARRA, ABRAHAM JALE, DANDY LABITAD, ANTONINA LAMBANG, ERNESTO LAUSA,
VICTORIA LOOD, NEMESIO LOPE, JR., ESCARLITO MADLOS, MARCOS MAKINANO,
REMEGIO MAKINANO, VICENTE MAKINANO, REYNALDO MAHUSAY, HELEN MARATAS,
ELIZABETH MENDOZA, GUILBERTA MONTEROSO, GILDA NAVALTA, PILAR NAVARRO,
SIMPORIANO NUÑEZ, JR., ELISEO ORONGAN, ARMANDO OROPA, ASUNCION OROPA,
JOSE EDWIN OROPA, BALDEMAR PAGALAN, BARTOLOME PAGALAN, DAMASO
PALOMA, MANALO PLAZA, JEREMIAS PELAEZ, FRANCISCO PICARDAL, HERMINIA
PUBLICO, ROMULO QUINTOS, FIDEL QUITA, FELICIANO RANADA, RODOLFO RARU,
LEAN CILDRIC RODRIGUEZ, SAMUEL SAROMINES, NATIVIDAD SIGNAR, CHERRIE SON,
SAMUEL TAGUPA, VICTOR TAGUPA, BRIGIDA TABANAO, PEDRO TABANAO,
ROBERTO TABANAO, MARIA TAN, RONNIE TAN, TOLENTINO TEE, ROGELIO TAMADA,
MINDA TUMAOB, and ROBERTO TUTOR, Petitioners,
vs.
THE HONORABLE COURT OF APPEALS, INDUSTRIAL TIMBER CORPORATION,
INDUSTRIAL PLYWOOD GROUP CORPORATION, TOMAS TANGSOC, JR., LORENZO
TANGSOC and TOMAS TAN, Respondents.

Doctrine: Where the dismissal is based on an authorized cause under Article 283 of the Labor
Code but the employer failed to comply with the notice requirement, the sanction should be stiff
as the dismissal process was initiated by the employer’s exercise of his management
prerogative, as opposed to a dismissal based on a just cause under Article 282 with the same
procedural infirmity where the sanction to be imposed upon the employer should be tempered
as the dismissal process was, in effect, initiated by an act imputable to the employee.
Facts: Industrial Plywood Group Corporation (IPGC) is the owner of a plywood plant located at
Agusan, Butuan City, leased to Industrial Timber Corporation (ITC) for a period of five years.
Thereafter, ITC commenced operation of the plywood plant and hired 387 workers.
ITC notified DOLE and its workers that it will undergo a "no plant operation" due to lack of raw
materials and will resume only after it can secure logs for milling. Meanwhile, IPGC notified ITC
of the expiration of the lease contract and its intention not to renew the same. ITC thus notified
the DOLE and its workers of the plant’s shutdown due to the non-renewal of anti-pollution permit
that expired. This fact and the alleged lack of logs for milling constrained ITC to lay off all its
workers until further notice. This was followed by a final notice of closure or cessation of
business operations with advice for all the workers to collect the benefits due them under the
law and CBA.
IPGC took over the plywood plant after it was issued a Wood Processing Plant Permit, which
included the anti-pollution permit, by the DENR coincidentally on the same day the ITC ceased
operation of the plant. This prompted Virgilio Ababon, et al. to file a complaint against ITC and
IPGC for illegal dismissal, ULP and damages. They alleged, among others, that the cessation of
ITC’s operation was intended to bust the union and that both corporations are one and the same
entity being controlled by one owner.
LA: (1) Refused to pierce the veil of corporate fiction for lack of evidence to prove that it was
used to perpetuate fraud or illegal act, (2) upheld the validity of the closure, and (3) ordered ITC
to pay separation pay of ½ month for every year of service. Ababon, et al. appealed to the
NLRC.
NLRC: Set aside the decision of the Labor Arbiter and ordered the reinstatement of the
employees to their former positions, and the payment of full back wages, damages and
attorney’s fees.
ITC and IPGC's motions for reconsideration were denied, however the NLRC granted their
Second Petition for Relief and set aside all its prior decision and resolutions (*shortened this
part because there were procedural infirmities). Virgilio Ababon, et al. filed a Petition for
Certiorari with the Supreme Court. However, pursuant to the St. Martin’s Funeral Home v.
NLRC ruling, it was referred to the CA.
CA: Ruled in favor of Ababon (reinstated the first NLRC decision).
Issue 1: Whether Ababon, et al. were illegally dismissed due to the closure of ITC’s business
Ruling 1: NO.
The right to close the operation of an establishment or undertaking is one of the authorized
causes in terminating employment of workers, the only limitation being that the closure must not
be for the purpose of circumventing the provisions on termination of employment embodied in
the Labor Code.
In sum, under Article 283 of the Labor Code, three requirements are necessary for a valid
cessation of business operations: (a) service of a written notice to the employees and to the
DOLE at least one month before the intended date thereof; (b) the cessation of business must
be bona fide in character; and (c) payment to the employees of termination pay amounting to
one month pay or at least one-half month pay for every year of service, whichever is higher.
In these consolidated cases, the SC found that ITC’s closure or cessation of business was done
in good faith and for valid reasons. The records reveal that the decision to permanently close
business operations was arrived at after a suspension of operation for several months
precipitated by lack of raw materials used for milling operations, the expiration of the anti-
pollution permit in April 1990, and the termination of the lease contract with IPGC in August
1990 over the plywood plant at Agusan, Pequeño, Butuan City.
Having established that ITC’s closure of the plywood plant was done in good faith and that it
was due to causes beyond its control, the conclusion is inevitable that said closure is valid.
Consequently, Ababon, et al. could not have been illegally dismissed to be entitled to full
backwages. However, they are entitled to separation pay equivalent to one month pay or at
least one-half month pay for every year of service, whichever is higher.
Issue 2 (Main): Whether Ababon, et al. are entitled to separation pay, backwages, and other
monetary awards.
Ruling 2: YES.
Although the closure was done in good faith and for valid reasons, ITC did not comply with the
notice requirement. While an employer is under no obligation to conduct hearings before
effecting termination of employment due to authorized cause, however, the law requires that it
must notify the DOLE and its employees at least one month before the intended date of closure.
In the case at bar, ITC notified its employees and the DOLE of the ‘no plant operation’ due to
lack of raw materials. This was followed by a ‘shut down’ notice due to the expiration of the anti-
pollution permit. However, this shutdown was only temporary as ITC assured its employees that
they could return to work once the renewal is acted upon by the DENR. Later, the ITC sent its
employees a final notice of closure or cessation of business operations to take effect on the
same day it was released. This falls short of the notice requirement for termination of
employment due to authorized cause considering that the DOLE was not furnished and the
notice should have been furnished both the employees and the DOLE at least one month before
the intended date of closure.
The unfairness of declaring illegal or ineffectual dismissals for valid or authorized causes but not
complying with statutory due process may have far-reaching consequences. This would
encourage frivolous suits, where even the most notorious violators of company policy are
rewarded by invoking due process. This also creates absurd situations where there is a just or
authorized cause for dismissal but a procedural infirmity invalidates the termination. Let us take
for example a case where the employee is caught stealing or threatens the lives of his co-
employees or has become a criminal, who has fled and cannot be found, or where serious
business losses demand that operations be ceased in less than a month. Invalidating the
dismissal would not serve public interest. It could also discourage investments that can
generate employment in the local economy.
Where the dismissal is based on an authorized cause under Article 283 of the Labor Code but
the employer failed to comply with the notice requirement, the sanction should be stiff as the
dismissal process was initiated by the employer’s exercise of his management prerogative, as
opposed to a dismissal based on a just cause under Article 282 with the same procedural
infirmity where the sanction to be imposed upon the employer should be tempered as the
dismissal process was, in effect, initiated by an act imputable to the employee.
In light of the factual circumstances of the cases at bar, it is found to be wise and reasonable to
award P50,000.00 to each employee as nominal damages.
Dispositive: WHEREFORE, in view of the foregoing, the October 21, 2002 Decision of the
Court of Appeals in CA-GR. SP No. 51966, which set aside the May 24, 1995 Decision of the
NLRC, as well as the July 16, 2004 Resolution denying ITC’s motion for reconsideration, are
hereby REVERSED. The May 24, 1995 Decision of the NLRC reinstating the decision of the
Labor Arbiter finding the closure or cessation of ITC’s business valid, is AFFIRMED with the
MODIFICATIONS that ITC is ordered to pay separation pay equivalent to one month pay or to
at least one-half month pay for every year of service, whichever is higher, and P50,000.00 as
nominal damages to each employee.

Balce
Topic: Security of Tenure – Article 294
102. Dagasdas v. Grand Placement and General Services Corporation

G.R. No. 205727, Jan. 18, 2017

RUTCHER T. DAGASDAS, Petitioner,

vs.
GRAND PLACEMENT AND GENERAL SERVICES CORPORATION, Respondent.

Ponente: DEL CASTILLO, J.

Doctrine: While our Civil Code recognizes that parties may stipulate in their contracts such
terms and conditions as they may deem convenient, these terms and conditions must not be
contrary to law, morals, good customs, public order or policy. The above-cited clause is contrary
to law because as discussed, our Constitution guarantees that employees, local or overseas,
are entitled to security of tenure. To allow employers to reserve a right to terminate employees
without cause is violative of this guarantee of security of tenure.
Action Sequence: Illegal dismissal before LA –-> LA dismissed the case for lack of merit ->
NLRC ruled that Dagasdas was illegally dismissed -> CA set aside NLRC and reinstated LA
decision -> SC ruled that there is illegal dismissal
FACTS:
● Grand Placement and General Services Corp. (GPGS) is a licensed recruitment agency
in the Philippines while Saudi Aramco is its counterpart in Saudi Arabia. While, Industrial
& Management Technology Methods Co. Ltd. is the principal of GPGS, a company
existing in Saudi Arabia.
● November 2007, GPGS, for and on behalf of ITM, employed Dagasdas as Network
Technician. He was to be deployed in Saudi Arabia under a one-year contract with a
monthly salary of Saudi Riyal 5,112.00. His Job Offer indicated that he was accepted by
Aramco and ITM for the position of "Supt."
● Dagasdas claimed that although his position under his contract was a Network
Technician, he actually applied for and was engaged as a Civil Engineer. He was made
to show that he had a position of a Network Technician for the purpose of securing a
visa for Saudi because ITM could not support a visa application for Civil Engineers.
● February 8, 2008: Dagasdas arrived in Saudi Arabia. He signed with ITM a new contract,
stipulated that they contracted him as Superintendent within the scope of his abilities
with salary of SR 5,112.00 and allowance of SR 2, 045.00 per month. Under this
contract, Dagasdas shall be placed under a three-month probationary period; and, this
new contract shall cancel all contracts prior to its date from any source.
● Feb 11, 2008: While working in Khurais Saudi Arabia, he was given tasks for Mechanical
Engineers which were not within the scope of the job he applied for. Dagasdas raised his
concern to his supervisor and he was transferred to the Civil Engineering Dept, was
temporarily given a position as Civil Construction Engineer and was issued an ID good
for one month.
● March 9, 2008: Dagasdas was directed to exit the worksite but Rashid H. Siddiqui
(Siddiqui), the Site Coordinator Manager, advised him to remain in the premises and
promised to secure him the position he applied for. However, before Dagasdas’ case
was investigated, Siddiqui had severed his employment with ITM.
● April 2008: Dagasdas returned to Al-Khobar and stayed at the ITM Office. ITM gave him
a termination notice indicating that his last day of work was on April 30, 2008. He was
DISMISSED pursuant to clause 17.4.3 of his contract: ITM has reserved the right to
terminate any employee within the three-month probationary period without need of any
notice to the employee
● Before his repatriation, Dagasdas signed a Statement of Quitclaim with Final
Settlement. It stated that ITM paid him all the salaries and benefits for his services from
February 11, 2008 to April 30, 2008 in the total amount of SR7,156.80, and ITM was
relieved from all financial obligations due to Dagasdas.
● Upon return to the PH, Dagasdas filed an illegal dismissal case against GPGS, ITM and
Aramco
o Accused them of misrepresentation, resulted in the mismatch in the work
assigned to him.
o Claim was supported by exchanged of e-mail establishing that GPGS ITM and
Aramco were aware of the job mismatch that had befallen him.
o He maintained that GPGS, ITM, and Aramco merely invented “imaginary
cause/s” to terminate him.
o dismissed without cause and due process of law
● GPGS, ITM AND ARAMCO: Dagasdas was legally dismissed.
o Dagasdas was aware that he was employed as Network Technician but he could
not perform his work in accordance with the standards of his employer.
 o Dagasdas was informed of his poor performance, and he conformed to his
termination as evidenced by his quitclaim.
o Dagasdas was only a probationary employee since he worked for ITM for less
than three months
● LA RULING: dismissed the case for lack of merit.
o LA pointed out that when Dagasdas signed his new employment contract in
Saudi Arabia, he accepted its stipulations, including the fact that he had to
undergo probationary status
o This new contract was more advantageous for Dagasdas as his position was
upgraded to that of a Superintendent, and he was likewise given an allowance of
SR2,045.00 aside from his salary of SR5,112.00 per month. This new contract is
NOT prohibited by law.
● NLRC RULING: Dagasdas was illegally dismissed
o Dagasdas, who was a Civil Engineering graduate, was “recruited on paper” by
GPGS as Network Technician but the real understanding between the parties
was to hire him as Superintendent
o The NLRC added that Dagasdas should not be made to suffer the consequences
of the miscommunication between GPGS and ITM considering that the
government obligates employment agencies recruiting Filipinos for overseas
work to “select only medically and technically qualified recruits.
o MR: DENIED
● CA RULING: set aside NLRC and reinstated LA decision
o It stressed that Dagasdas left the Philippines pursuant to his employment
contract indicating that he was to work as a Network Technician; when he arrived
in Saudi Arabia and signed a new contract for the position of a Superintendent,
the agreement was with no participation of GPGS, and said new contract was
only between Dagasdas and ITM

ISSUE:
● Whether or not Dagasdas was validly dismissed from work. (NO)

RULING:
● NO. In this case, prior to his deployment and while still in the Philippines, Dagasdas was
made to sign a POEA-approved contract with GPGS, on behalf of ITM; and, upon arrival
in Saudi Arabia, ITM made him sign a new employment contract. Nonetheless, this new
contract, which was used as basis for dismissing Dagasdas, is void.

● Dagasdas' new contract is in clear violation of his right to security of tenure.

● Under the Labor Code of the Philippines the following are the just causes for dismissing
an employee:
 ARTICLE 297. [282] Termination by Employer. - An employer may terminate an
employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of
his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or
duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized representative;
and
(e) Other causes analogous to the foregoing.
However, per the notice of termination given to Dagasdas, ITM terminated him for
violating clause 17.4.3 of his new contract, viz.:
17.4 The Company reserves the right to terminate this agreement without serving any
notice to the Consultant in the following cases:
xxxx
17.4.3 If the Consultant is terminated by the company or its client within the probation
period of 3 months.
● Based on the foregoing, there is no clear justification for the dismissal of Dagasdas other
than the exercise of ITM's right to terminate him within the probationary period. While
our Civil Code recognizes that parties may stipulate in their contracts such terms
and conditions as they may deem convenient, these terms and conditions must
not be contrary to law, morals, good customs, public order or policy. The above-
cited clause is contrary to law because as discussed, our Constitution guarantees
that employees, local or overseas, are entitled to security of tenure. To allow
employers to reserve a right to terminate employees without cause is violative of
this guarantee of security of tenure.
● Moreover, even assuming that Dagasdas was still a probationary employee when he
was terminated, his dismissal must still be with a valid cause. As regards a probationary
employee, his or her dismissal may be allowed only if there is just cause or such reason
to conclude that the employee fails to qualify as regular employee pursuant to
reasonable standards made known to the employee at the time of engagement.
● Here, ITM failed to prove that it informed Dagasdas of any predetermined standards
from which his work will be gauged. In the contract he signed while still in the
Philippines, Dagsadas was employed as Network Technician; on the other hand, his
new contract indicated that he was employed as Superintendent. However, no job
description - or such duties and responsibilities attached to either position - was adduced
in evidence. It thus means that the job for which Dagasdas was hired was not definite
from the beginning.
 ● Indeed, Dagasdas was not sufficiently informed of the work standards for which his
performance will be measured. Even his position based on the job title given him was
not fully explained by his employer. Simply put, ITM failed to show that it set and
communicated work standards for Dagasdas to follow, and on which his efficiency (or
the lack thereof) may be determined.
DISPOSITIVE PORTION:

● WHEREFORE, the Petition is GRANTED. The Decision dated September 26, 2012 and
Resolution dated January 28, 2013 of the Court of Appeals in CA-G.R. SP No. 115396
are REVERSED and SET ASIDE. Accordingly, the March 29, 2010 and June 2, 2010
Resolutions of the National Labor Relations Commission in NLRC LAC OFW-L-02-
000071-10 are REINSTATED.
NOTES:
● To ensure that employers will not abuse their prerogatives, the same is tempered by
security of tenure whereby the employees are guaranteed substantive and procedural
due process before they are dismissed from work.
● Security of tenure remains even if employees, particularly the overseas Filipino workers
(OFW), work in a different jurisdiction. Since the employment contracts of OFWs are
perfected in the Philippines, and following the principle of lex loci contractus (the law of
the place where the contract is made), these contracts are governed by our laws,
primarily the Labor Code of the Philippines and its implementing rules and regulations.
At the same time, our laws generally apply even to employment contracts of OFWs as
our Constitution explicitly provides that the State shall afford full protection to labor,
whether local or overseas. Thus, even if a Filipino is employed abroad, he or she is
entitled to security of tenure, among other constitutional rights.
Chua
Topic: Reliefs in Illegal Dismissal
112. Reyes v. RP Guardians
Reyes v. RP Guardians Security Agency, Inc., G.R. No. 193756, April 10, 2013
Doctrine: An employee who is unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges, and to his full backwages, inclusive of
allowances and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld up to the time of actual reinstatement. If reinstatement is not
possible, however, the award of separation pay is proper.
Backwages and reinstatement are separate and distinct reliefs given to an illegally dismissed
employee in order to alleviate the economic damage brought about by the employee’s
dismissal. "Reinstatement is a restoration to a state from which one has been removed or
separated" while "the payment of backwages is a form of relief that restores the income that
was lost by reason of the unlawful dismissal." Therefore, the award of one does not bar the
other.
The normal consequences of illegal dismissal are reinstatement without loss of seniority rights,
and payment of backwages computed from the time compensation was withheld up to the date
of actual reinstatement. Where reinstatement is no longer viable as an option, separation pay
equivalent to one (1) month salary for every year of service should be awarded as an
alternative.
The entitlement of the dismissed employee to separation pay of one month for every year of
service should not be confused with Section 6.5 (4) of DOLE D.O. No. 14 which grants a
separation pay of one-half month for every year service.
Action Sequence: Labor Arbiter rule for petitioners -> NLRC rule for petitioners -> CA rule for
petitioners -> CA modified petitioners’ entitlement on MR -> SC modified CA’s decision
Facts: Petitioners were hired by RP Guardians Security as security guards deployed to Banco
de Oro. RP’s security contract with Banco Filipino was terminated, and petitioners were asked
to turn over their duties and responsibilities and were placed on floating status. After a few
months, the filed a complaint for constructive dismissal.
The LA, NLRC and CA ruled in favor of petitioners. However, on MR, the CA reduced the
computation of the separation pay from one month pay per year of service to one-half month
pay for every year of service, reduced the refund of trust fund contribution from ₱60 to ₱30, and
deleted the award of backwages and attorney’s fees. Petitioners appealed the decision.
Issue 1: Whether petitioners were constructively dismissed.
Ruling 1: YES. The LA, the NLRC and the CA were one in their conclusion that respondent was
guilty of illegal dismissal when it placed petitioners on floating status beyond the reasonable six-
month period after the termination of their service contract with Banco de Oro.
Temporary displacement or temporary off-detail of security guard is, generally, allowed in a
situation where a security agency’s client decided not to renew their service contract with the
agency and no post is available for the relieved security guard. Nonetheless, when the floating
status lasts for more than six (6) months, the employee may be considered to have been
constructively dismissed.
Issue 2: Whether petitioners are entitled to separation pay, backwages, refund of trust fund
contribution, and attorney’s fees.
Ruling 2: YES.
An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss
of seniority rights and other privileges, and to his full backwages, inclusive of allowances and to
his other benefits or their monetary equivalent computed from the time his compensation was
withheld up to the time of actual reinstatement. If reinstatement is not possible, however, the
award of separation pay is proper.
Backwages and reinstatement are separate and distinct reliefs given to an illegally dismissed
employee in order to alleviate the economic damage brought about by the employee’s
dismissal. "Reinstatement is a restoration to a state from which one has been removed or
separated" while "the payment of backwages is a form of relief that restores the income that
was lost by reason of the unlawful dismissal." Therefore, the award of one does not bar the
other.
The normal consequences of respondents’ illegal dismissal, then, are reinstatement without loss
of seniority rights, and payment of backwages computed from the time compensation was
withheld up to the date of actual reinstatement. Where reinstatement is no longer viable as an
option, separation pay equivalent to one (1) month salary for every year of service should be
awarded as an alternative.
Furthermore, the entitlement of the dismissed employee to separation pay of one month for
every year of service should not be confused with Section 6.5 (4) of DOLE D.O. No. 14 which
grants a separation pay of one-half month for every year service.
In this case, respondent would have been liable for reinstatement and payment of backwages.
Reinstatement, however, was no longer feasible because, as found by the LA, respondent had
already ceased operation of its business.25 Thus, backwages and separation pay, in the
amount of one month for every year of service, should be paid in lieu of reinstatement.
Petitioners are also entitled to attorney’s fees because they were compelled to file an action for
the recovery of their lawful wages and other benefits and, in the process, incurred expenses. It
was also found that the amount deducted for the trust fund contribution from each petitioner
varies, so its computation should be remanded to the LA.
Dispositive: Petition is granted.
Manotok
114. Equitable Banking Corporation (now known as Equitable-PCI Bank) v. Ricardo Sadac,
G.R. No. 164772, June 8, 2006

DOCTRINE: Article 279 mandates that an employee’s full backwages shall be inclusive of
allowances and other benefits or their monetary equivalent.A salary increase can be interpreted
as either an allowance or a benefit.Salary increases are not akin to allowances or benefits, and
cannot be confused with either. Allowances and benefits are granted to the employee apart or
separate from, and in addition to the wage or salary. In contrast, salary increases are amounts
which are added to the employee’s salary as an increment thereto for varied reasons deemed
appropriate by the employer.

ACTION SEQUENCE: ACTION SEQUENCE: Motion for Execution of SC Decision ruling

respondent was illegally dismissed -> LA affirmed Sacad’s computation -> NLRC reverses ->
CA reverses NLRC’s decision and rules in favor of respondent -> SC partially grants
FACTS:
● Respondent Sadac was appointed as Vice-President of the Legal Department of
petitioner Equitable Banking Corporation effective Aug. 1, 1981, and subsequently
General Counsel on Dec. 8, 1981.
● On June 26, 1989, nine lawyers of petitioner Bank’s Legal Department in a letter-petition
to the Chairman of the Board of Directors, accused respondent Sadac of abusive
conduct and petitioned for a change of leadership of the department.
● On the ground of lack of confidence, under the rules of client and lawyer relationship,
petitioner Bank instructed Sadac to deliver all materials in his custody in all cases in
which the latter was appearing as its counsel of record.
 ● Sadac requested for a full hearing and formal investigation but the same remained
unheeded.
● Sadac filed a complaint for illegal dismissal with damages against petitioner Bank and
individual members of the Board of Directors thereof.
● After learning of the filing of the complaint, petitioner Bank terminated the services of
Sadac. On Aug. 10, 1989, he was removed from his office and ordered disentitled to any
compensation and other benefits.
● The LA dismissed the complaint, but it was reversed by the NLRC who ruled that
Sadac’s dismissal was illegal.
● The Supreme Court held that Sadac’s dismissal was illegal.
o It did not accept the petitioner Bank’s reliance on Sect. 26, Rule 138 of the Rules
of Court, claiming that the association between the parties was one of a client-
lawyer relationship, and, thus it could terminate at any time the services of
Sadac.
o It did not find that Sadac’s dismissal was grounded on any of the causes stated
in Art. 282 of the Labor Code. The Bank also disregarded the procedural
requirements in terminating Sadac’s employment as so required by the IRR.
● The Supreme Court ordered the payment of Sadac’s backwages form termination of
employment until turning 60 years of age (in 1995) and, thereupon, to retirement benefits
in accordance with law. He shall also be paid an additional amount of P 5,000.
● Sadac moved for the Execution of the judgment. Per his computation, the total amount
of the monetary award is P 6,030,456.59, representing his backwages and other
benefits, including the general increases which he should have earned during the period
of his illegal termination.
o He based his claim on Art. 279 of the Labor Code and earlier jurisprudence
which holds that it is the obligation of the employer to pay an illegally dismissed
employee the whole amount of the salaries or wages, plus all other benefits and
bonuses and general increases to which he would have been normally entitled
had he not been dismissed; and therefore, salary increases should be deemed a
component in the computation of backwages. Moreover, he contended that his
check-up benefit, clothing allowance, and cash conversion of vacation leaves
must be included in the computation of his backwages.
● Petitioner Bank disputed Sadac’s computation. Per its computation, the amount of
monetary award due Sadac is P 2,981,442.98 only, to the exclusion of the latter’s
general salary increases and other claimed benefits which were unsubstantiated.
o It cited cases holding that an unqualified award of backwages means that the
employee is paid at the wage rate at the time of his dismissal. Furthermore,
petitioner Bank argued before the Labor Arbiter that the award of salary
differentials is not allowed, the established rule being that upon reinstatement,
illegally dismissed employees are to be paid their backwages without deduction
and qualification as to any wage increases or other benefits that may have been
received by their co-workers who were not dismissed or did not go on strike.
ISSUES:
1. WON general salary increases should be added as part of backwages – NO
2. WON respondent Sadac is entitled to check-up benefit, clothing allowance and cash
conversion of vacation leaves notwithstanding that respondent did not present any evidence to
prove entitlement to these claim – NO

RULING:

1. NO, general salary increases should not be included as part of backwages.

Article 279 LC, as amended by Section 34 of RA No. 6715, provides:
ART. 279. Security of Tenure.—In cases of regular employment, the employer
shall not terminate the services of an employee except for a just cause or when
authorized by this Title. An employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other privileges and to
his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from
him up to the time of his actual reinstatement.
Article 279 mandates that an employee’s full backwages shall be inclusive of allowances and
other benefits or their monetary equivalent. Contrary to the ruling of the Court of Appeals, we do
not see that a salary increase can be interpreted as either an allowance or a benefit. Salary
increases are not akin to allowances or benefits, and cannot be confused with either. The term
“allowances” is sometimes used synonymously with “emoluments,” as indirect or contingent
remuneration, which may or may not be earned, but which is in the nature of compensation, and
sometimes in the nature of reimbursement. Allowances and benefits are granted to the
employee apart or separate from, and in addition to the wage or salary. In contrast, salary
increases are amounts which are added to the employee’s salary as an increment thereto for
varied reasons deemed appropriate by the employer. Salary increases are not separate grants
by themselves but once granted, they are deemed part of the employee’s salary. To extend the
coverage of an allowance or a benefit to include salary increases would be to strain both the
imagination of the Court and the language of law. As aptly observed by the NLRC, “to otherwise
give the meaning other than what the law speaks for by itself, will open the floodgates to various
interpretations.” Indeed, if the intent were to include salary increases as basis in the
computation of backwages, the same should have been explicitly stated in the same manner
that the law used clear and unambiguous terms in expressly providing for the inclusion of
allowances and other benefits.
The base figure to be used in the computation of backwages is pegged at the wage rate at the
time of the employee’s dismissal, inclusive of regular allowances that the employee had been
receiving such as the emergency living allowances and the 13th month pay mandated under the
law.
2. NO, Sadac is not entitled to check-up benefit, clothing allowance and cash conversion of
vacation leaves for failure to present any evidence to prove entitlement.

Based on the records, respondent’s benefits are monthly rice subsidy, tuition fee allowance per
year, and medicine allowance per year. Contained nowhere is an acknowledgment of herein
claimed benefits, namely, check-up benefit, clothing allowance, and cash conversion of vacation
leaves. The rule is, he who alleges, not he who denies, must prove. Mere allegations by
respondent Sadac does not suffice in the absence of proof supporting the same.

DISPOSITIVE PORTION:
Petition is PARTIALLY GRANTED in the sense that in the computation of the backwages,
respondent Sadac’s claimed prospective salary increases, check-up benefit, clothing allowance,
and cash conversion of vacation leaves are excluded. The petition is PARTIALLY DENIED
insofar as we AFFIRMED the grant of attorney’s fees equal to ten percent (10%) of all the
monetary award and the imposition of twelve percent (12%) interest per annum on the
outstanding balance.
Sira
Topic: Concept of backwages

106. Paguio v. PLDT Co.

ALFREDO S. PAGUIO, petitioner,
vs.
PHILIPPINE LONG DISTANCE TELEPHONE CO., INC., ENRIQUE D. PEREZ,
RICARDO P. ZARATE, ISABELO FERIDO, and RODOLFO R. SANTOS, respondents.

DOCTRINE: Backwages are granted on grounds of equity to workers for earnings lost due to
their illegal dismissal from work. They are a reparation for the illegal dismissal of an employee
based on earnings which the employee would have obtained, either by virtue of a lawful decree
or order, as in the case of a wage increase under a wage order, or by rightful expectation, as in
the case of one’s salary or wage. The outstanding feature of backwages is thus the degree of
assuredness to an employee that he would have had them as earnings had he not been illegally
terminated from his employment.

ACTION SEQUENCE: LA (transfer was valid) -> NLRC (reversed LA decision, transfer was
illegal) -> CA (affirmed NLRC decision but deleted award of the 16% salary increase) - > SC
(affirmed CA decision)

FACTS:

 Petitioner was appointed as head of PLDT’s Garnet Exchange on October 1, 1994. He

reported to the Head of the Greater Metro Manila East Center, one of respondent’s
herein.
 PLDT then implemented the Greater Metro Manila Network Performance Assessment
program covering 27 exchanges of the 5 centers. Petitioner wrote to respondent saying
that the assessments are unfair. So, respondent Santos sent petitioner a blank
assessment form for him to rate himself but Santos erased the rating and gave him a
lower score.
 On January 17, 1997, respondent Santos issued a memorandum reassigning
petitioner to a position in the Office of the GMM East Center Head for Special
Assignments. Petitioner protested the transfer and asked for the deferment of his
reassignment pending resolution of the charges.
 Petitioner also filed w/ respondent Ferido a complaint against respondent Santos for
grave abuse of discretion and manipulation. As no immediate action was taken by
Ferido, petitioner elevated the matter to respondent Perez, Senior EVP and COO of
PLDT.
 Respondent affirmed the action of Santos transferring him to any group in the company
that may need his services. Ferido further indicated that the reassignment is based on
 Santos’ well-founded conclusion that petitioner is not a team player and cannot accept
decisions of management already arrived at, short of insubordination.
 Respondent Perez affirmed the action taken by respondent Ferido and explained to
petitioner that his transfer was not in the nature of a disciplinary action that required
compliance w/ the process of investigation, confrontation, and evaluation before it can
be implemented and that the same was not done in bad faith.
 As a result, petitioner filed a complaint for illegal demotion and damages against
respondents.
 LA: dismissed the complaint on the ground that petitioner’s transfer was an exercise of a
management prerogative and there was no showing that the same amounted to a
demotion in rank and privileges.
 NLRC: reversed the LA decision.
o First, petitioner was only presenting in good faith his criticism on the way the
performance of his divisions was rated and ranked. It was to help his team see its
deficiencies and for improvement. Thus, he was trying to build teammanship.
o Second, petitioner’s transfer involved a diminution of his alary and benefits. He
was transferred to a functionless position.
o Hence, the NLRC Decision: WHEREFORE, premises considered, the Appeal
is PARTIALLY GRANTED. Accordingly, the Decision appealed is hereby
modified to the effect that complainant-appellant Alfredo S. Paguio was
illegally transferred; and that respondent-appellee PLDT is DIRECTED to
reassign him to his former position without loss of seniority rights and other
privileges and to pay him the amount of Three Hundred Eighty Four
Thousand Pesos (P384,000.00) equivalent to sixteen percent (16%) of his
monthly salary representing wage increase starting January, 1997.
 NLRC denied MR. PLDT filed a special civil action for certiorari in the CA.
 CA: upheld the NLRC decision that petitioner’s transfer was not justified by the
circumstances. However, it deleted the award for salary increase.
o It noted that petitioner was well intentioned in criticizing the management of the
company and that even as he criticized the management decisions petitioner
nevertheless complied with them.
o As regards petitioner’s transfer, the appeals court said while it is true that private
respondent’s re-assignment did not involve a diminution of salary, however,
petitioners have not disputed that he was actually placed on a "frozen status," as
he was assigned to a functionless position, with no office and staff, and without
any opportunity to get any promotion or wage increase as he does not have any
performance to speak of because there is no work assigned to him.
o Respondents argue that reinstatement of private respondent to his former
position is no longer feasible because the same was abolished on August 16,
1998 as a result of the consolidation of the Garnet and Cubao Exchanges to form
the Ortigas Exchange. Considering the fact that the transfer of private
respondent was illegal, petitioners are obliged to reinstate private
respondent to an equivalent position of Senior Manager with the same
salary, rank, privileges and other benefits.
o Nonetheless, the Court of Appeals found no basis for the award of salary
increases to petitioner since the salary increase is periodically granted to
employees based on performance and accomplishments. The fact that
private respondent had previously been granted salary increases by reason of
his outstanding performance does not automatically give rise to the presumption
 that if he was allowed to stay as Head of Garnet Exchange, his performance
would continue to be outstanding.
 PLDT no longer appealed the decision of the CA.
 Present appeal is brought by petitioner.
o Petitioner bases his right to the award of P384,000.00 equivalent to 16% of
his monthly salary increase starting from January 1997 on the fact that,
throughout his employment until his illegal transfer in 1997, he had been
consistently given by the company annual salary increases on account of
his above average or outstanding performance.
o He claims that his contemporaries now occupy higher positions as they had been
promoted several times during the course of this case. Thus, even if he ranked
higher and performed better than they during the past years, petitioner has now
been left behind career-wise. Petitioner averred that this would not have taken
place had he not been illegally transferred. He argues that justice and equity
requires that he be given the monetary award deleted by the Court of Appeals
from the decision of the NLRC.

ISSUES:

 Whether or not petitioner is entitled to an amount equal to 16% of his monthly salary
increase during the period of his demotion (NO)
 Whether or not petition is entitled to reinstatement (YES)

RULING:

 No, petitioner is not entitled to an amount equal to 16% of his monthly salary
increase during the period of his demotion.
o Undeniably, this particular award which petitioner is seeking is not based on any
wage order or decree but on an employee’s performance during a certain period,
as evaluated according to a specified criteria. Petitioner claims that there is a
high probability that he would have been granted the increase had he not been
transferred from the Garnet Exchange of respondent PLDT. Petitioner likens
his claim to that for backwages in illegal dismissal cases.
o Backwages are granted on grounds of equity to workers for earnings lost due to
their illegal dismissal from work. They are a reparation for the illegal dismissal of
an employee based on earnings which the employee would have obtained, either
by virtue of a lawful decree or order, as in the case of a wage increase under a
wage order, or by rightful expectation, as in the case of one’s salary or wage.
The outstanding feature of backwages is thus the degree of assuredness to an
employee that he would have had them as earnings had he not been illegally
terminated from his employment.
o In this case, however, petitioner’s claim is based simply on expectancy or
his assumption that because in the past he had been consistently rated for
his outstanding performance and his salary correspondingly increased, it
is probable that he would similarly have been given high ratings and salary
increases but for his transfer to another position in the company. This
contention is based merely on speculation.
o Furthermore, it assumes that in the other position to which he had been
transferred petitioner had not been given any performance evaluation. As held by
 the Court of Appeals, however, the mere fact that petitioner had been previously
granted salary increases by reason of his excellent performance does not
necessarily guarantee that he would have performed in the same manner and,
therefore, qualify for the said increase later. What is more, his claim is
tantamount to saying that he had a vested right to remain as Head of the Garnet
Exchange and given salary increases simply because he had performed well in
such position, and thus he should not be moved to any other position where
management would require his services.
o Notwithstanding the foregoing, the Court held that petitioner is entitled to
damages. Under Article 21 of the Civil Code, any person who wilfully
causes loss or injury to another in a manner that is contrary to morals,
good customs or public policy shall compensate the latter for the damage.
 The illegal transfer of petitioner to a functionless office was clearly an
abuse by respondent PLDT of its right to control the structure of its
organization. The right to transfer or reassign an employee is decidedly
an employer’s exclusive right and prerogative.21 In several cases,
however, we have ruled that such managerial prerogative must be
exercised without grave abuse of discretion, bearing in mind the basic
elements of justice and fair play.
o Petitioner is entitled to an award of moral and exemplary damages. The Court
has held that in determining entitlement to moral damages, it suffices to prove
that the claimant has suffered anxiety, sleepless nights, besmirched reputation
and social humiliation by reason of the act complained of. Exemplary damages,
on the other hand, are granted in addition to moral damages "by way of example
or correction for the public good. Furthermore, as petitioner was compelled to
litigate and incur expenses to enforce and protect his rights, he is entitled to an
award of attorney’s fees.
 Yes, petitioner is entitled to reinstatement.
o With the finding that the transfer was illegal, petitioner is entitled to be reinstated
to his former, or a substantially equivalent, position without loss of seniority
rights. Reinstatement contemplates a restoration to a position from which one
has been removed or separated so that the employee concerned may resume
the functions of the position he already held.This position would be Senior
Manager Level 2, the position he occupied before he was illegally transferred.
o Respondent PLDT claims that, as a result of a major organizational change when
Manuel Pangilinan became president of the company, the position of petitioner
as Staff Executive of GMM Network Sector was now renamed as Staff Executive
of GMM Operations. Petitioner, on the other hand, argues that his former position
has been abolished as a result of the consolidation of the Garnet and Cubao
Exchanges to form the Ortigas Exchange. He further added that granting him the
very same position would not do so much in vindicating him since most of his
contemporaries have already surpassed him in ranking, having been promoted to
higher positions during the pendency of this case.
o Reinstatement, to which petitioner is lawfully entitled, must be given full
effect and must restore petitioner to his rightful place in the present
organizational structure of respondent company approximating his status
before he was illegally transferred. As the position no longer exists,
petitioner should be restored to an equivalent position.

DISPOSITIVE PORTION:
WHEREFORE, the decision of the Court of Appeals is AFFIRMED with the MODIFICATION that
respondents are hereby ORDERED to pay petitioner P50,000.00 as moral
damages, P20,000.00 as exemplary damages and attorney’s fees equivalent to 10% of the
amount to which petitioner is entitled in this case. Costs against respondents.

SO ORDERED.

Balboa
Topic: constructive dismissal
119. Meatworld v Hechanova

MEATWORLD INTERNATIONAL, INC. v DOMINIQUE A. HECHANOVA

Doctrine: Constructive dismissal is defined as a “cessation of work because continued
employment is rendered impossible, unreasonable or unlikely.” Similarly, there is constructive
dismissal “when an act of clear discrimination, insensibility or disdain by an employer has
become so unbearable to the employee leaving him with no option but to forego with his
continued employment.” Simply put, it is a “dismissal in disguise or an act amounting to
dismissal but made to appear as if it were not.”
Action Sequence: SENA form filled out by resp > referred to NLRC > LA ruled there was ID >
NLRC upheld > CA upheld > SC upheld
Facts:

 Hechanova was suspended for violating the regulation of SM Hypermarket and

prohibiting employees of concessionaires from tasting food peddled by some
promodizers. When he tried to return after his suspension, he was told that there was no
available outlet yet.
 He was thereafter reassigned to Robinsons Place but was relieved from his assignment
and was told to report to the office for a performance evaluation. When he reported for
work, he was told to come back instead on January 10. When he came back, he was
told that Romadia, the supervisor, would text him when to come back.
 On January 12, Romadia told Hechanova that he could report for work anytime, so
Hechanova reported at 1 PM.
 Hechanova was scolded by Alcoreza, the VP of Meatworld for not coming in early and
said, “Mag resign ka nalag or tatanggalin ka namin.” Romadia told him that she would
text him but he did not receive any text.
 He decided to ask for help from Tulfo and Tullfo gave him a referral letter to the DOLE.
He then filled out a SeNA form for illegal dismissal and was referred to the NLRC.
 In response, meatworld said that it did not dismiss Hechanova as it was him who failed
to report to work. He was banned from all Puregold branches for urinating in the storage
room where fresh food items were kept, among other infractions. Meatworld alleged that
Hechanova was told to report to work on January 6, but then he was late so he was told
to return the following day. The vacancy that he was supposed to fill was no longer
available. He barged into Meatworld’s office to demand new assignment. Since he came
 in late again, Alcoreza was of the impression that he was no longer interested to work.
he was issued three memoranda asking him to explain in writing why no disciplinary
action should be taken against him, but he never reported.
 The LA ruled that there was ID. NLRC affirmed. Both ID with backwages and separation
pay. The CA upheld the NLRC.
Issue: whether there was ID
Ruling: YES,

In this case, records show that in November 2010 respondent was suspended for one week
because of his undertime on October 31, 2010 and November 5, 2010 and his absence on
November 1, 2010. Immediately after his suspension, he was placed on preventive suspension
for three days for sampling food products. After his preventive suspension, respondent reported
to the office but was told that there was no available outlet. After more than a week of making
follow-ups, respondent was assigned at Robinsons Place Manila.
Less than a month later, petitioner told respondent to report to the office on January 6, 2011 as
his assignment at Robinsons Place Manila was only temporary. Respondent reported to the
office on January 6, 10, and 13, 2011 but was told that there was no available outlet. On
January 13, 2011, the last time respondent went to the office of petitioner, he was scolded by
Alcoreza for arriving late and was told to resign, otherwise, he would be dismissed. All these
factual circumstances, taken together, led the NLRC to conclude that petitioner was giving
respondent a hard time in order to make his employment unbearable, and eventually, force him
to resign. Unfortunately, instead of resigning, respondent sought the help of Tulfo who referred
him to DOLE. With these findings, the NLRC sustained the ruling of the Labor Arbiter that
respondent was illegally dismissed.
There was constructive dismissal

After a careful review of the instant Petition, the Court finds that although there was no actual
dismissal, the failure of petitioner to assign respondent to a specific branch without any
justifiable reason constituted illegal constructive dismissal.
Constructive dismissal is defined as a “cessation of work because continued employment is
rendered impossible, unreasonable or unlikely.” Similarly, there is constructive dismissal “when
an act of clear discrimination, insensibility or disdain by an employer has become so unbearable
to the employee leaving him with no option but to forego with his continued employment.”
Simply put, it is a “dismissal in disguise or an act amounting to dismissal but made to appear as
if it were not.”

In this case, petitioner admits that after relieving respondent from his assignment at Robinsons
Place Manila on January 5, 2011, it failed to assign him to a new branch. However, to justify its
failure, petitioner claims that there was no available post as the vacancy which respondent was
supposed to fill was no longer available since he failed to report on January 6, 2011. Petitioner
later clarified that respondent did report to the office on January 6, 2011 but that he arrived late,
and thus was not given the assignment. Petitioner also claims it was having a hard time finding
a new branch as respondent was already banned at SM Hypermarket Muntinlupa, Market!
Market!, and all Puregold supermarkets.
The Court finds petitioner’s justification unacceptable.
It was incumbent upon petitioner to prove that respondent was banned at SM Hypermarket
Muntinlupa, Market! Market!, and all Puregold supermarkets, and that there was no available
branch for respondent. Unfortunately, petitioner failed to prove both. Except for a Memorandum
from SM Hypermarket stating that respondent was no longer allowed to be assigned at the
Muntinlupa branch, no other evidence was presented by petitioner to show the respondent was
also banned at Market! Market! and at all Puregold supermarkets and that all posts were indeed
taken. As evidence, petitioner submitted several memoranda it issued against respondent.
These, however, do not prove petitioner’s allegation that there are no available posts for
respondent. If at all, it only shows that petitioner considered respondent an undesirable
employee due to his various infractions. Such infractions, however, are not sufficient to prove
that there are no available posts for respondent.
Dispositive: Petition DENIED.
Ignacio

Topic: Regular and Casual Employment – Article 295

122. E Ganzon v. NLRC

[G.R. No. 123769. December 22, 1999.]

E. GANZON, INC., petitioner, vs. NATIONAL LABOR RELATIONS

COMMISSION (Third Division), RENE PERMARAN, NERIO
VALENZUELA, RODRIGO PRADO, MARIO PLAQUIA, ERNESTO
MATEO, ROMMEL NAADAT, ARTEMIO AGOSTO, SALVADOR
URBANOZO, CESAR CASTILLO and PONCIANO DEL ROSARIO, respondents.

Doctrine:
 Article 280 of the Labor Code classifies regular employees into two (2) kinds:
1. Regular employees by nature of work, and
2. Regular employees by year of service.
 The primary standard of determining a regular employment is the reasonable connection
between the particular activity performed by the employee in relation to the usual
business or trade of the employer.
o The test is whether the former is usually necessary or desirable in the usual
business or trade of the employer.
o The connection can be determined by considering the nature of the work
performed and its relation to the scheme of the particular business or trade in its
entirety.
 Also, if the employee has been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the law deems the repeated and
continuing need for its performance as sufficient evidence of the necessity if not
indispensability of that activity to the business.
o Hence, the employment is also considered regular, but only with respect to such
activity and while such activity exists.

Action Sequence: LA regular employees > NLRC affirmed > SC affirmed, reversed money
awards
Facts:
 Petitioner E. Ganzon, Inc., is engaged in the construction business. It manufactures its
own building materials, e.g., slab runners, acropos, jack bases, window grills, pulleys,
sliding doors and all kinds of aluminum products. It has its own machine shop, five (5)
mixer trucks, tower cranes, alimak, elevator shaft, and others.
 On 9 January 1991, twenty-two (22) employees of petitioner E. Ganzon, Inc. filed a
complaint against the company for illegal deduction, non-payment of overtime pay, legal
holiday, pay premium pay for holiday and rest day, service incentive leave pay,
vacation/sick leave pay and 13th month pay.
 On 25 January 1991 all the complainants, many of whom are private respondents
herein, were dismissed from employment thus prompting them to amend their complaint
to include the charge of illegal dismissal.
 Subsequently however, eight (8) of the complainants signed a Release and Quitclaim;
consequently, they moved for the dismissal of the complaint insofar as they were
concerned. Their motion was granted.
 The remaining fourteen (14) complainants who did not sign the release and Quitclaim
were hired on various dates for different positions and salaries.
 Complainants claimed that during the period of their employment insurance premiums
were deducted from their salaries without their consent, and they were not given
overtime pay for work performed ten (10) hours a day, legal holiday pay, premium pay
for holiday and rest day, five (5) days incentive leave pay despite having rendered
services for more than a year, vacation/sick leave pay and 13th month pay.
 They claimed further that when they reported for work on 25 January 1991 the security
guards of petitioner informed them: "Hindi na kayo puedeng pumasok/magtrabaho dito,
'yan ang order galing sa itaas."
 Petitioner countered that the complainants were all contractual, project, temporary or
casual employees as evidenced by their employment contracts expressly providing that
the acceptance of their services was based on the need for their skill such that upon
completion of the project and/or when reduction of the workforce was necessary, their
services would be terminated. Their employment contracts were renewed every three (3)
months. Petitioner denied having dismissed the complainants from employment but that
their employment contracts expired on 25 January 1991.
 The Labor Arbiter ruled as follows: (a) the remaining complainants were declared regular
employees of petitioner; (b) petitioner was declared guilty of illegal dismissal; (c) ordered
reinstatement, among others.
 On appeal, Emiliano Telacas, Gildardo Migabon and Jimmy Cañete moved for the
dismissal of their complaint on account of their having subsequently executed a Release
and Quitclaim. Public respondent National Labor Relations Commission granted the
motion; consequently, the number of complainants was further reduced to eleven (11).
 The decision of the Labor Arbiter was affirmed subject to the modification that the
awards of overtime pay to Ernesto Mateo, Artemio Agosto and Cesar Castillo were
deleted for being unsubstantiated.
Issue: Whether or not respondents are regular employees of petitioner? (Y)

Ruling: YES. The decision of the NLRC is affirmed subject to the modification of reversing the
awarded money claims due to prescription.
  Petitioner insists that private respondents were contractual and/or project employees, as
borne by their respective employment contracts, the durations of their employments
being coterminous with the projects to which they were assigned. The SC disagrees.
 Article 280 of the Labor Code classifies regular employees into two (2) kinds:
1. Regular employees by nature of work, and
2. Regular employees by year of service.
 The primary standard of determining a regular employment is the reasonable connection
between the particular activity performed by the employee in relation to the usual
business or trade of the employer.
o The test is whether the former is usually necessary or desirable in the usual
business or trade of the employer.
o The connection can be determined by considering the nature of the work
performed and its relation to the scheme of the particular business or trade in its
entirety.
 Also, if the employee has been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the law deems the repeated and
continuing need for its performance as sufficient evidence of the necessity if not
indispensability of that activity to the business.
o Hence, the employment is also considered regular, but only with respect to such
activity and while such activity exists.
 In this case, petitioner is engaged in the construction business and manufactures its own
building materials. Private respondents were made to sign employment contracts
purportedly as project employees but which were renewed every three (3) months, for
more than a year.
o It is clear that respondents’ tasks were usually necessary or desirable in the
usual business or trade of the respondent company.
o There can be no escape from the conclusion that the complainants were regular
employees of the respondent as provided by Article 280.
 The Labor Arbiter correctly ruled that the supposed fixed periods of employment of
private respondents as stated in their employment contracts precluded their acquisition
of tenurial security.
o It is apparent that periods have been imposed to preclude the acquisition of
tenurial security by the employee, they should be struck down as . . . contrary to
public policy, morals, good custom or public order.

Dispositive:

The assailed Decision of the NLRC is MODIFIED in that with respect to the amended
complaint of 25 January 1991 the entitlement to legal holiday pay of private respondents
Ernesto Mateo, Rommel Naadat, Rodrigo Prado and Ernesto Guerra and to service incentive
leave pay of the same private respondents, except Ernesto Guerra, is limited to three (3) years
from the date of the amended complaint. SO ORDERED.

Additional Notes: WITH REGARD TO THE MONEY CLAIMS

 All money claims arising from employer-employee relationship shall be filed within three
(3) years from the time the cause of action accrued, otherwise, they shall be forever
barred.
 And so, petitioner assails the award of holiday pay for more than thirty (30) days to
Ernesto Mateo, Rommel Naadat, Rodrigo Prado and Ernesto Guerra, and more than
 fifteen (15) days of service incentive leave pay to the same employees except Ernesto
Guerra.
 We agree with petitioner in this regard that the Labor Arbiter should not have awarded
such money claims that went beyond three (3) years.
 There are ten (10) regular holidays 9 and five (5) days of service incentive leave in a
year.
o At most, private respondents can only claim thirty (30)-day holiday pay and
fifteen (15)-day service incentive leave pay with respect to their amended
complaint of 25 January 1991. Any other claim is now barred by prescription.

Manotok

Topic: Project Employment (D.O 19, series of 1993)

UNIVERSAL ROBINA V. ACIBO

[G.R. No. 199388. September 3, 2014.]

Doctrine:

Action Sequence: LA dismiss complaint > NLRC reversed > CA affirmed

Facts:
 Universal Robina Sugar Milling Corporation (UR) is a domestic corporation engaged in
the sugar cane milling business; Cabati is UR’s Business Unit General Manager.
 The complainants were employees of UR. They were hired on various dates (between
February 1988 and April 1996) and on different capacities, i.e., drivers, crane operators,
bucket hookers, welders
 At the start of their respective engagements, the complainants signed contracts of
employment for a period of one (1) month or for a given season.
 UR repeatedly hired the complainants to perform the same duties and, for every
engagement, required the latter to sign new employment contracts for the same duration
of one month or a given season.
 Such employees filed a complaint for regularization
 Labor Arbiter’s Ruling: Complaint was dismissed for lack of merit. They were
seasonal/project workers. They were required to perform, for a definite period, phases of
UR’s several projects that were not at all directly related to its main operations.
 NLRC’s Ruling: Reversed the LA’s ruling; it declared the complainants as regular UR
employees and granted their monetary claims under the CBA. NLRC pointed out that the
complainants performed activities which were usually necessary and desirable in the
usual trade or business of URSUMCO, and had been repeatedly hired for the same
undertaking every season.
 CA’s Ruling: It affirmed the NLRC’s ruling finding the complainants to be regular
employees of UR, but deleted the grant of monetary benefits under the CBA. The CA
pointed out that the primary standard for determining regular employment is the
reasonable connection between a particular activity performed by the employee vis-à-vis
the usual trade or business of the employer. CA noted that the petitioners failed to prove
 that they gave the complainants opportunity to work elsewhere during the off-season,
which opportunity could have qualified the latter as seasonal workers. On the claim for
CBA benefits, the CA, however, ruled that the complainants were not entitled to receive
them. The CA pointed out that while the complainants were considered regular, albeit
seasonal, workers, the CBA- covered regular employees of UR were performing tasks
needed by the latter for the entire year with no regard to the changing sugar milling
season.
Issue: Whether or not respondents are regular employees of petitioner. (YES)

Ruling: YES. Respondents are REGULAR SEASONAL WORKERS of UR.

 Seasonal employment operates much in the same way as project employment, albeit it
involves work or service that is seasonal in nature or lasting for the duration of the
season. As with project employment, although the seasonal employment arrangement
involves work that is seasonal or periodic in nature, the employment itself is not
automatically considered seasonal so as to prevent the employee from attaining regular
status.
 To exclude the asserted seasonal employee from those classified as regular employees,
the employer must show that: (1) the employee must be performing work or services that
are seasonal in nature; and (2) he had been employed for the duration of the season.
 Hence, when the “seasonal” workers are continuously and repeatedly hired to perform
the same tasks or activities for several seasons or even after the cessation of the
season, this length of time may likewise serve as badge of regular employment. In fact,
even though denominated as “seasonal workers,” if these workers are called to work
from time to time and are only temporarily laid off during the off-season, the law does not
consider them separated from the service during the off-season period. The law simply
considers these seasonal workers on leave until re-employed.
 The nature of the employment depends on the nature of the activities to be performed by
the employee, considering the nature of the employer’s business, the duration and
scope to be done, and, in some cases, even the length of time of the performance and
its continued existence.
 The respondents were regularly and repeatedly hired to perform the same tasks year
after year. This regular and repeated hiring of the same workers (two different sets) for
two separate seasons has put in place, principally through jurisprudence, the system of
regular seasonal employment in the sugar industry and other industries with a similar
nature of operations. Under the system, the plantation workers or the mill employees do
not work continuously for one whole year but only for the duration of the growing of the
sugarcane or the milling season. Their seasonal work, however, does not detract from
considering them in regular employment since in a litany of cases, this Court has already
settled that seasonal workers who are called to work from time to time and are
temporarily laid off during the off-season are not separated from the service in said
period, but are merely considered on leave until re-employment.
 Regular seasonal employees, like the respondents in this case, should not be confused
with the regular employees of the sugar mill such as the administrative or office
personnel who perform their tasks for the entire year regardless of the season.

Dispositive: WHEREFORE, premises considered, the petition is PARTIALLY GRANTED.

Except for the denial of the respondents’ claim for CBA benefits, the November 29, 2007
decision and the January 22, 2009 resolution of the Court of Appeals are SET ASIDE. The
complaint is DISMISSED for lack of merit.

Sira
Topic: Regular and Casual Employment – Article 295

124. Bernardo vs. NLRC

[G.R. No. 122917. July 12, 1999]

MARITES BERNARDO, ELVIRA GO DIAMANTE, REBECCA E. DAVID, DAVID P.

PASCUAL, RAQUEL ESTILLER, ALBERT HALLARE, EDMUND M. CORTEZ, JOSELITO O.
AGDON GEORGE P. LIGUTAN JR., CELSO M. YAZAR, ALEX G. CORPUZ, RONALD M.
DELFIN, ROWENA M. TABAQUERO, CORAZON C. DELOS REYES, ROBERT G. NOORA,
MILAGROS O. LEQUIGAN, ADRIANA F. TATLONGHARI, IKE CABANDUCOS, COCOY
NOBELLO, DORENDA CANTIMBUHAN, ROBERT MARCELO, LILIBETH Q. MARMOLEJO,
JOSE E. SALES, ISABEL MAMAUAG, VIOLETA G. MONTES, ALBINO TECSON, MELODY
V. GRUELA, BERNADETH D. AGERO, CYNTHIA DE VERA, LANI R. CORTEZ, MA. ISABEL
B. CONCEPCION, DINDO VALERIO, ZENAIDA MATA, ARIEL DEL PILAR, MARGARET
CECILIA CANOZA, THELMA SEBASTIAN, MA. JEANETTE CERVANTES, JEANNIE RAMIL,
ROZAIDA PASCUAL, PINKY BALOLOA, ELIZABETH VENTURA, GRACE S. PARDO &
RICO TIMOSA, Petitioners v. NATIONAL LABOR RELATIONS COMMISSION & FAR EAST
BANK AND TRUST COMPANY, Respondents.

DOCTRINE: The Magna Carta for Disabled Persons mandates that a qualified disabled
employee should be given the same terms and conditions of employment as a qualified
able-bodied person. Specifically, Section 5 of the law provides that: No disabled person
shall be denied access to opportunities for suitable employment. A qualified disabled
employee shall be subject to the same terms and conditions of employment, and the
same compensation privileges, benefits, fringe benefits, incentives or allowances as a
qualified able bodied person. The fact that the employees were qualified disabled person
necessarily removes the employment contracts from the ambit of Article 80 and thus,
their rights are covered by Article 280 of the Labor Code on Regular and Casual
Employment.

ACTION SEQUENCE: LA and NLRC (petitioners were not regular employees) -> SC
(petitioners were regular employees)

FACS:

 Complainants numbering 43 are deaf-mutes who were hired on various periods from
1988 to 1993 by respondent Far East Bank and Trust Co. as Money Sorters and
Counters through a uniformly worded agreement called Employment Contract for
Handicapped Workers. The contract states that:

o The contract was entered into in compliance with Article 80 of the Labor Code
which states:
  ART. 80. Employment agreement. Any employer who employs
handicapped workers shall enter into an employment agreement with
them, which agreement shall include:

 (a) The names and addresses of the handicapped workers to be

employed;

 (b) The rate to be paid the handicapped workers which shall be not less
than seventy five (75%) per cent of the applicable legal minimum wage;

 (c) The duration of employment period; and

 (d) The work to be performed by handicapped workers.

 The employment agreement shall be subject to inspection by the

Secretary of Labor or his duly authorized representatives.

o That the Bank agrees to employ and train the employee as money sorter and
counter;

o That the employee shall perform functions related to money sorting and counting;

o That the employee shall undergo a training period of one month, after which the
bank shall determine w/n he/she should be allowed to finish the remaining term
of the contract;

o That the employee is entitled to an initial compensation of P118 per day and that
the employee will be given an additional 125% of his daily rate or 130% OT pay
for work done during ordinary days and Saturday or rest day, respectively.

o That the standard hiring requirements were not applied in the case of the
employee.

o Among other provisions.

 The employees’ contracts were renewed every 6 months and by the time the present
case arose, there were already 56 deaf-mutes who were hired by the bank. Their
contracts eventually ended and they question why they were not treated as regular
employees and considered the end of their contracts as illegal dismissal.

 Petitioners arguments:

o They should be considered regular employees because their task as money

sorters and counters were necessary and desirable to the business of
respondent bank. They further alleged that their contracts served merely to
preclude the application of Article 280 and to bar them from becoming regular
employees.
  Disclaiming that complainants were regular employees, respondent Bank maintained

o that complainants who are a special class of workers under Article 80 were hired
temporarily under a special employment arrangement which was a result of
overtures made by some civil and political personalities to the Bank

o that they were hired due to pakiusap w/c must be considered in the light of the
context of the Bank’s philosophy as well as its working environment w/c is to
maintain the strengthen corps of professionals trained and qualified officers and
regular employees who were baccalaureate degree holders from excellent
schools

o that it adopted the special program to help tide over a group of handicapped
workers such as deaf-mutes like complainants who could do manual work for the
Bank

 LA: ruled that petitioners could not be deemed regular employees under Article 280 of
the Labor Code.

 NLRC: affirmed the LA

o The NLRC gave due credence to the conclusion that complainants were hired as
an accommodation to the recommendation of civic oriented personalities whose
employmets were covered by the Employment Contracts w/ special provisions on
duration of contract as specified under Article 80. Hence, the terms of the
contract shall be deemed law between the parties.

o Further, the NLRC held that the Magna Carta for Disables Persons was not
applicable.

ISSUE 1:

 Whether or not petitioners are regular employees

RULING 1: Yes, petitioners (except 16 of them who did not perform the tasks for more than 6
months) are regular employees.

 The Magna Carta for Disabled Persons mandates that a qualified disabled employee
should be given the same terms and conditions of employment as a qualified able-
bodied person. Specifically, Section 5 of the law provides that: No disabled person shall
be denied access to opportunities for suitable employment. A qualified disabled
employee shall be subject to the same terms and conditions of employment, and the
same compensation privileges, benefits, fringe benefits, incentives or allowances as a
qualified able bodied person. The fact that the employees were qualified disabled person
necessarily removes the employment contracts from the ambit of Article 80 and thus,
their rights are covered by Article 280 of the Labor Code on Regular and Casual
Employment.
  The test of w/n an employee is regular was laid down in De Leon vs. NLRC: The
primary standard, therefore, of determining regular employment is the reasonable
connection between the particular activity performed by the employee in relation
to the usual trade or business of the employer. The test is whether the former is
usually necessary or desirable in the usual business or trade of the employer. The
connection can be determined by considering the nature of the work performed and its
relation to the scheme of the particular business or trade in its entirety. Also if the
employee has been performing the job for at least one year, even if the
performance is not continuous and merely intermittent, the law deems repeated
and continuing need for its performance as sufficient evidence of the necessity if
not indispensability of that activity to the business. Hence, the employment is
considered regular, but only with respect to such activity, and while such activity exists.

 In this case, the task of counting and sorting bills is necessary and desirable to the
business of the bank. The fact that more were hired and the renewal of their contracts
further proved the fact that their work was necessary for the business of the bank.

 Therefore, petitioners are regular employees.

ISSUE 2: Whether or not the employment contract which provided for a period of 6 months of
employment was valid

RULING 2: No, the employment contract was not valid.

 As held by the Court, Articles 280 and 281 of the Labor Code put an end to the
pernicious practice of making permanent casuals of our lowly employees by the simple
expedient of extending to them probationary appointments, ad infinitum.15 The contract
signed by petitioners is akin to a probationary employment, during which the bank
determined the employees fitness for the job. When the bank renewed the
contract after the lapse of the six-month probationary period, the employees
thereby became regular employees.16 No employer is allowed to determine
indefinitely the fitness of its employees.

 As regular employees, the twenty-seven petitioners are entitled to security of tenure; that
is, their services may be terminated only for a just or authorized cause. Because
respondent failed to show such cause, these twenty-seven petitioners are deemed
illegally dismissed and therefore entitled to back wages and reinstatement without
loss of seniority rights and other privileges. Considering the allegation of
respondent that the job of money sorting is no longer available because it has
been assigned back to the tellers to whom it originally belonged, petitioners are
hereby awarded separation pay in lieu of reinstatement.

 Likewise, the Brent Ruling is inapplicable in this case. In the Brent vs. Zamora case, the
Court upheld the fixed term employment contract because the parties entered into the
contract on equal footing. In this case, the term limit was premised on the fact that
petitioners were disabled. While it is valid under Article 80, the same cannot be upheld
because being qualified disabled employees, they are now covered by Article 280 of the
Labor Code. As held by the Court, Articles 280 and 281 of the Labor Code put an end to
the pernicious practice of making permanent casuals of our lowly employees by the
simple expedient of extending to them probationary appointments, ad infinitum. The
 contract signed by petitioners is akin to a probationary employment, during which
the bank determined the employees fitness for the job. When the bank renewed
the contract after the lapse of the six-month probationary period, the employees
thereby became regular employees No employer is allowed to determine indefinitely
the fitness of its employees.

 Finally, the argument of the Bank that petitioners were merely accommodated
employees also does not change the nature of their employment. The employee is
regular because of the nature of the work and length of service, not because of the
mode or even the reason for hiring them.

DISPOSITIVE PORTION:

WHEREFORE, premises considered, the Petition is hereby GRANTED. The June 20, 1995
Decision and the August 4, 1995 Resolution of the NLRC are REVERSED and SETASIDE.
Respondent Far East Bank and Trust Company is hereby ORDERED to pay back wages and
separation pay to each of the following twenty-seven (27) petitioners, namely, Marites
Bernardo, Elvira Go Diamante, Rebecca E. David, David P. Pascual, Raquel Estiller, Albert
Hallare, Edmund M. Cortez, Joselito O. Agdon, George P. Ligutan Jr., Lilibeth Q. Marmolejo,
Jose E. Sales, Isabel Mamauag, Violeta G. Montes, Albino Tecson, Melody V. Gruela,
Bernadeth D. Agero, Cynthia de Vera, Lani R. Cortez, Ma. Isabel B. Concepcion, Margaret
Cecilia Canoza, Thelma Sebastian, Ma. Jeanette Cervantes, Jeannie Ramil, Rozaida Pascual,
Pinky Baloloa, Elizabeth Ventura and Grace S. Pardo. The NLRC is hereby directed to compute
the exact amount due each of said employees, pursuant to existing laws and regulations, within
fifteen days from the finality of this Decision. No costs.

Tirol
Topic: Regular Employee v. Independent Contractor
126. Sonza v. ABS-CBN Broadcasting Corp.
JOSE Y. SONZA vs. ABS-CBN BROADCASTING CORPORATION
Doctrine: The control test is the most important test our courts apply in distinguishing an
employee from an independent contractor. This test is based on the extent of control the hirer
exercises over a worker. The greater the supervision and control the hirer exercises, the more
likely the worker is deemed an employee. The converse holds true as well – the less control the
hirer exercises, the more likely the worker is considered an independent contractor.
Action Sequence: Complaint to NLRC 🡪 Labor Arbiter Denied Complaint 🡪 NLRC Denied
Appeal 🡪 CA Dismissed the case 🡪 SC petition for review on certiorari
Facts: ABS-CBN signed an Agreement with the Mel and Jay Management and Development
Corporation (MJMDC). MJMDC agreed to provide SONZA’s services exclusively to ABS-CBN
as talent for radio and television. The Agreement listed the services SONZA would render to
ABS-CBN. ABS-CBN was represented by its corporate officers while MJMDC was represented
by SONZA, as President and General Manager, and Carmela Tiangco
SONZA wrote a letter to ABS-CBN’s President, Eugenio Lopez III: “Mr. Sonza irrevocably
resigned in view of recent events concerning his programs and career.” Mr. Sonza informed us
that he is waiving and renouncing recovery of the remaining amount stipulated in paragraph 7 of
the Agreement but reserves the right to seek recovery of the other benefits under said
Agreement.”
SONZA filed a complaint against ABS-CBN before the Department of Labor and Employment,
National Capital Region in Quezon City. SONZA complained that ABS-CBN did not pay his
salaries, separation pay, service incentive leave pay, 13th month pay, signing bonus, travel
allowance and amounts due under the Employees Stock Option Plan (ESOP). But ABS-CBN
continued to remit SONZA’s monthly talent fees through his account at PCIBank.
ABS-CBN filed a MTD on the ground that no employer-employee relationship existed between
the parties. SONZA filed an Opposition to the motion on 19 July 1996.
LA dismissed the complaint for lack of jurisdiction. The reason behind the decision was that
there was no employee-employer relationship. SONZA appealed to the NLRC.
NLRC rendered a Decision affirming the Labor Arbiter’s decision. SONZA filed a MR, which the
NLRC denied. SONZA appealed to the NLRC, which affirmed the Labor Arbiter’s decision. His
MR was likewise denied.
Hence, this petition. SONZA argues that Policy Instruction No. 40 issued by then Minister of
Labor Blas Ople on 8 January 1979 finally settled the status of workers in the broadcast
industry. Under this policy, the types of employees in the broadcast industry are the station and
program employees.
Issue 1: Whether Sonza is a regular employee (program employee as per Policy Instruction 40).
Ruling 1: NO. Sonza is an independent contractor.
Although Philippine labor laws and jurisprudence define clearly the elements of an employer-
employee relationship, this is the first time that the Court will resolve the nature of the
relationship between a television and radio station and one of its "talents." There is no case law
stating that a radio and television program host is an employee of the broadcast station.
Policy Instruction No. 40 is a mere executive issuance which does not have the force and effect
of law. There is no legal presumption that Policy Instruction No. 40 determines SONZA’s status.
A mere executive issuance cannot exclude independent contractors from the class of service
providers to the broadcast industry. The classification of workers in the broadcast industry into
only two groups under Policy Instruction No. 40 is not binding on this Court, especially when the
classification has no basis either in law or in fact.
Hence, the Court ruled that Sonza, as an independent contractor.
The elements of an employer-employee relationship are: (a) the selection and engagement of
the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s
power to control the employee on the means and methods by which the work is
accomplished.The last element, the so-called "control test", is the most important element.
A. Selection and Engagement of Employee: ABS-CBN engaged SONZA’s services to co-
host its television and radio programs because of SONZA’s peculiar skills, talent and celebrity
status.
Independent contractors often present themselves to possess unique skills, expertise or talent
to distinguish them from ordinary employees. The specific selection and hiring of SONZA,
because of his unique skills, talent and celebrity status not possessed by ordinary employees, is
a circumstance indicative, but not conclusive, of an independent contractual relationship. If
SONZA did not possess such unique skills, talent and celebrity status, ABS-CBN would not
have entered into the Agreement with SONZA but would have hired him through its personnel
department just like any other employee.
B. Payment of Wages: ABS-CBN directly paid SONZA his monthly talent fees with no part of
his fees going to MJMDC. SONZA asserts that this mode of fee payment shows that he was an
employee of ABS-CBN. SONZA also points out that ABS-CBN granted him benefits and
privileges "which he would not have enjoyed if he were truly the subject of a valid job contract."
All the talent fees and benefits paid to SONZA were the result of negotiations that led to the
Agreement. If SONZA were ABS-CBN’s employee, there would be no need for the parties to
stipulate on benefits such as "SSS, Medicare, and 13th month pay" which the law automatically
incorporates into every employer-employee contract. Whatever benefits SONZA enjoyed arose
from contract and not because of an employer-employee relationship. Obviously, SONZA acting
alone possessed enough bargaining power to demand and receive such huge talent fees for his
services. The power to bargain talent fees way above the salary scales of ordinary employees is
a circumstance indicative, but not conclusive, of an independent contractual relationship.
C. Power of Dismissal: For violation of any provision of the Agreement, either party may
terminate their relationship. SONZA failed to show that ABS-CBN could terminate his services
on grounds other than breach of contract, such as retrenchment to prevent losses as provided
under labor laws. During the life of the Agreement, ABS-CBN agreed to pay SONZA’s talent
fees as long as "AGENT and Jay Sonza shall faithfully and completely perform each condition of
this Agreement." Even if it suffered severe business losses, ABS-CBN could not retrench
SONZA because ABS-CBN remained obligated to pay SONZA’s talent fees during the life of the
Agreement. This circumstance indicates an independent contractual relationship between
SONZA and ABS-CBN.
D. Power of Control: The control test is the most important test our courts apply in
distinguishing an employee from an independent contractor. This test is based on the extent of
control the hirer exercises over a worker. The greater the supervision and control the hirer
exercises, the more likely the worker is deemed an employee. The converse holds true as well –
the less control the hirer exercises, the more likely the worker is considered an independent
contractor.
ABS-CBN engaged SONZA’s services specifically to co-host the "Mel & Jay" programs. ABS-
CBN did not assign any other work to SONZA. To perform his work, SONZA only needed his
skills and talent. How SONZA delivered his lines, appeared on television, and sounded on radio
were outside ABS-CBN’s control. SONZA did not have to render eight hours of work per day.
The Agreement required SONZA to attend only rehearsals and tapings of the shows, as well as
pre- and post-production staff meetings. ABS-CBN could not dictate the contents of SONZA’s
script.
ABS-CBN was not involved in the actual performance that produced the finished product of
SONZA’s work. ABS-CBN did not instruct SONZA how to perform his job. ABS-CBN merely
reserved the right to modify the program format and airtime schedule "for more effective
programming." ABS-CBN’s sole concern was the quality of the shows and their standing in the
ratings. Clearly, ABS-CBN did not exercise control over the means and methods of performance
of SONZA’s work.
SONZA insists that the "exclusivity clause" in the Agreement is the most extreme form of control
which ABS-CBN exercised over him.
This argument is futile. Being an exclusive talent does not by itself mean that SONZA is an
employee of ABS-CBN. Even an independent contractor can validly provide his services
exclusively to the hiring party. In the broadcast industry, exclusivity is not necessarily the same
as control. The hiring of exclusive talents is a widespread and accepted practice in the
entertainment industry.
Dispositive: WHEREFORE, we DENY the petition. The assailed Decision of the Court of
Appeals dated 26 March 1999 in CA-G.R. SP No. 49190 is AFFIRMED. Costs against
petitioner.

Albino
Topic: Probationary Employment - Article 296
Mariwasa Manufacturing, Inc. v. Hon. Vicente Leogardo, Joaquin Dequila
Doctrine: Generally, the probationary period of employment is limited to six (6) months. The
exception to this general rule is when the parties to an employment contract may agree
otherwise.
Action Sequence: Illegal dismissal case before the NCR Director > NCR Director dismissed
(dismissal was legal) > Ministry of Labor reversed (dismissal was illegal) > SC: dismissal was
legal
Facts:

 Dequila was hired on probation by petitioner Mariwasa Manufacturing as a general utility

worker.
 Upon the expiration of the probationary period of six months, Dequila was informed by
his employer that his work had proved unsatisfactory and had failed to meet the required
standards.
 To give him a chance to improve his performance and qualify for regular employment,
Mariwasa extended his probation period for another three months WITH HIS CONSENT
instead of dispensing with his service.
 His performance did not improve.
 Mariwasa terminated his employment at the end of the extended period.
 Dequila filed with the Ministry of Labor against Mariwasa a complaint for illegal
dismissal.
  It was dismissed by the NCR Director who ruled that the termination of Dequila's
employment was in the circumstances justified.
 The Minister of Labor reversed the decision of the NCR Director and held that
Dequila was already a regular employee at the time of his dismissal and could not
have been lawfully dismissed for failure to meet company standards as a probationary
worker.
Issue: WON the employer and employee may by agreement extend the probationary period of
employment beyond the six months?
Ruling: YES

 Article 282 (now 296) provides: Probationary employment shall not exceed six (6)
months from the date the employee started working, unless it is covered by an
apprenticeship agreement stipulating a longer period. The services of an employee who
has been engaged on a probationary basis may be terminated for a just cause or when
he fails to qualify as a regular employee in accordance with reasonable standards made
known by the employer to the employee at the time of his engagement. An employee
who is allowed to work after probationary period shall be considered a regular
employee.
 An extension may lawfully be covenanted, notwithstanding the seemingly restrictive
language of the cited provision.
 In the case of Buiser v. Leogardo Jr., the court held that:
o Generally, the probationary period of employment is limited to six (6)
months. The exception to this general rule is when the parties to an
employment contract may agree otherwise, such as when the same is
established by company policy or when the same is required by the nature of
work to be performed by the employee.
 The only difference of the Buiser case and this case is that: the former involved an
eighteen-month probationary period stipulated in the original contract of employment,
whereas the latter refers to an extension agreed upon at or prior to the expiration of the
statutory six-month period, is hardly such as to warrant or even suggest a different ruling
here.
 In both cases the parties' agreements in fact resulted in extensions of the period
prescribed by law.
 That in this case the inability of the probationer to make the grade became apparent only
at or about the end of the six-month period, hence an extension could not have been
pre-arranged as was done in Buiser assumes no adverse significance, given the lack of
any indication that the extension to which Dequila gave his agreement was a mere
stratagem of petitioners to avoid the legal consequences of a probationary period
satisfactorily completed.
 The extension of Dequila's probation was ex gratia, an act of liberality on the part of his
employer affording him a second chance to make good after having initially failed to
prove his worth as an employee. Such an act cannot now unjustly be turned against said
employer's account to compel it to keep on its payroll one who could not perform
according to its work standards.
  By voluntarily agreeing to an extension of the probationary period, Dequila in effect
waived any benefit attaching to the completion of said period if he still failed to make the
grade during the period of extension.
Dispositive: WHEREFORE, the petition is granted. The orders of the public respondent
complained of are reversed and set aside. Private respondent's complaint against petitioners for
illegal dismissal and violation of Presidential Decrees 928 and 1389 is dismissed for lack of
merit, without pronouncement as to costs.
Balboa
Topic: Probationary employment

128. Abbott Laboratories, Philippines vs. Alcaraz

ABBOTT LABORATORIES, PHILIPPINES, CECILLE A. TERRIBLE, EDWIN D. FEIST,

MARIA OLIVIA T. YABUTMISA, TERESITA C. BERNARDO, AND ALLAN G. ALMAZAR,
petitioners, vs. PEARLIE ANN F. ALCARAZ, respondent.
Doctrine: In other words, the employer is made to comply with two (2) requirements when
dealing with a probationary employee: first, the employer must communicate the regularization
standards to the probationary employee; and second, the employer must make such
communication at the time of the probationary employee’s engagement. If the employer fails to
comply with either, the employee is deemed as a regular and not a probationary employee.
Action Sequence: ID case was filed > LA dismissed > NLRC reversed, finding ID > CA upheld
NLRC > SC reversed
Facts: (lifted from Labor I digest)
Abbott Laboratories, Philippines (Abbott) caused the publication in a major broadsheet
newspaper of its need for a Medical and Regulatory Affairs Manager. Alcaraz - who was then a
Regulatory Affairs and Information Manager at Aventis Pasteur Philippines, Incorporated
(another pharmaceutical company like Abbott) showed interest and submitted her application.
In Abbotts offer sheet, it was stated that Alcaraz was to be employed on a probationary basis.
Later that day, she accepted the said offer and received an electronic mail (e-mail) from Abbotts
Recruitment Officer, petitioner Teresita C. Bernardo (Bernardo), confirming the same. Attached
to Bernardos e-mail were Abbotts organizational chart and a job description of Alcaraz’s work.
During Alcarazs pre-employment orientation, petitioner Allan G. Almazar (Almazar), Hospiras
Country Transition Manager, briefed her on her duties and responsibilities as Regulatory Affairs
Manager. Petitioner Kelly Walsh (Walsh), Manager of the Literature Drug Surveillance Drug
Safety of Hospira, will be her immediate supervisor. Petitioner Maria Olivia T. Yabut-Misa
(Misa), Abbotts Human Resources (HR) Director, sent Alcaraz an e-mail which contained an
explanation of the procedure for evaluating the performance of probationary employees.
During the course of her employment, Alcaraz noticed that some of the staff had disciplinary
problems. Thus, she would reprimand them for their unprofessional behavior such as non-
observance of the dress code, moonlighting, and disrespect of Abbott officers. However,
Alcarazs method of management was considered by Walsh to be "too strict."
Alcaraz was called to a meeting with Walsh and Terrible, Abbotts former HR Director, where
she was informed that she failed to meet the regularization standards for the position of
Regulatory Affairs Manager. Walsh, Almazar, and Bernardo personally handed to Alcaraz a
letter stating that her services had been terminated effective May 19, 2005. The letter detailed
the reasons for Alcarazs termination. Alcaraz felt that she was unjustly terminated from her
employment and thus, filed a complaint for illegal dismissal and damages against Abbott and its
officers, namely, Misa, Bernardo, Almazar, Walsh, Terrible, and Feist. She claimed that she
should have already been considered as a regular and not a probationary employee given
Abbotts failure to inform her of the reasonable standards for her regularization upon her
engagement as required under Article 295of the Labor Code.
LA dismissed Alcarazs complaint for lack of merit. The LA rejected Alcaraz’s argument that she
was not informed of the reasonable standards to qualify as a regular employee. The NLRC
reversed the findings of the LA and ruled that there was no evidence showing that Alcaraz had
been apprised of her probationary status and the requirements which she should have complied
with in order to be a regular employee. On appeal, CA affirmed the NLRC decision. Hence, this
petition.
Issue 1: whether Alcaraz was sufficiently informed of the reasonable standards to qualify her as
a regular employee
Ruling 1: YES.

The services of an employee who has been engaged on probationary basis may be terminated
for any of the following: (a) a just or (b) an authorized cause; and (c) when he fails to qualify as
a regular employee in accordance with reasonable standards prescribed by the employer.
Section 6(d), Rule I, Book VI of the Implementing Rules of the Labor Code provides that if the
employer fails to inform the probationary employee of the reasonable standards upon which the
regularization would be based on at the time of the engagement, then the said employee shall
be deemed a regular employee.

In other words, the employer is made to comply with two (2) requirements when dealing with a
probationary employee: first, the employer must communicate the regularization standards to
the probationary employee; and second, the employer must make such communication at the
time of the probationary employee’s engagement. If the employer fails to comply with either, the
employee is deemed as a regular and not a probationary employee.
Keeping with these rules, an employer is deemed to have made known the standards that would
qualify a probationary employee to be a regular employee when it has exerted reasonable
efforts to apprise the employee of what he is expected to do or accomplish during the trial
period of probation. This goes without saying that the employee is sufficiently made aware of his
probationary status as well as the length of time of the probation. The exception to the foregoing
is when the job is self-descriptive in nature.

Here, Abbott clearly conveyed to Alcaraz her duties and responsibilities as Regulatory Affairs
Manager prior to, during the time of her engagement, and the incipient stages of her
employment. The publication indicated both the position and the duties and responsibilities
attendant to the position. The offer sheet also stated that Alcaraz was to be employed on a
probationary status. She also signed an employment contract to that effect. She was sent the
organizational structure and job description through e-mail, a pre-employment orientation, and
was sent Abbot’s Code of Conduct and performance modules. She also previously worked for
another pharmaceutical company and admitted to have an extensive training and background.

In this regard, it must be observed that the assessment of adequate duty performance is in the
nature of a management prerogative which when reasonably exercised — as Abbott did in this
case — should be respected.

A different procedure is applied when terminating a probationary employee; the usual two-notice
rule does not govern. Section 2, Rule I, Book VI of the Implementing Rules of the Labor Code
states that “[i]f the termination is brought about by the x x x failure of an employee to meet the
standards of the employer in case of probationary employment, it shall be sufficient that a
written notice is served the employee, within a reasonable time from the effective date of
termination.”
As the records show, Alcaraz’s dismissal was effected through a letter dated May 19, 2005
which she received on May 23, 2005 and again on May 27, 2005. Stated therein were the
reasons for her termination, i.e., that after proper evaluation, Abbott determined that she failed
to meet the reasonable standards for her regularization considering her lack of time and people
management and decision-making skills, which are necessary in the performance of her
functions as Regulatory Affairs Manager.
Issue 2: whether Alcaraz was validly terminated
Ruling 2: YES.

Nonetheless, despite the existence of a sufficient ground to terminate Alcaraz’s employment

and Abbott’s compliance with the Labor Code termination procedure, it is readily apparent that
Abbott breached its contractual obligation to Alcaraz when it failed to abide by its own procedure
in evaluating the performance of a probationary employee. Veritably, a company policy partakes
of the nature of an implied contract between the employer and employee. Company personnel
policies create an obligation on the part of both the employee and the employer to abide by the
same.

Records show that Abbott’s PPSE procedure mandates, inter alia, that the job performance of a
probationary employee should be formally reviewed and discussed with the employee at least
twice: first on the third month and second on the fifth month from the date of employment.
Abbott is also required to come up with a Performance Improvement Plan during the third month
review to bridge the gap between the employee’s performance and the standards set, if any. In
addition, a signed copy of the PPSE form should be submitted to Abbott’s HRD as the same
would serve as basis for recommending the confirmation or termination of the probationary
employment.

In this case, it is apparent that Abbott failed to follow the above-stated procedure in evaluating
Alcaraz. For one, there lies a hiatus of evidence that a signed copy of Alcaraz’s PPSE form was
submitted to the HRD. It was not even shown that a PPSE form was completed to formally
assess her performance. Neither was the performance evaluation discussed with her during the
third and fifth months of her employment. Nor did Abbott come up with the necessary
Performance Improvement Plan to properly gauge Alcaraz’s performance with the set company
standards.
While it is Abbott’s management prerogative to promulgate its own company rules and even
subsequently amend them, this right equally demands that when it does create its own policies
and thereafter notify its employee of the same, it accords upon itself the obligation to faithfully
implement them.

In this light, while there lies due cause to terminate Alcaraz’s probationary employment for her
failure to meet the standards required for her regularization, and while it must be further pointed
out that Abbott had satisfied its statutory duty to serve a written notice of termination, the fact
that it violated its own company procedure renders the termination of Alcaraz’s employment
procedurally infirm, warranting the payment of nominal damages.

Anent the proper amount of damages to be awarded, the Court observes that Alcaraz’s
dismissal proceeded from her failure to comply with the standards required for her
regularization. As such, it is undeniable that the dismissal process was, in effect, initiated by an
act imputable to the employee, akin to dismissals due to just causes under Article 296 of the
Labor Code. Therefore, the Court deems it appropriate to fix the amount of nominal damages at
the amount of P30,000.00, consistent with its rulings in both Agabon and Jaka

Dispositive: Petition GRANTED.

Notes: It is hornbook principle that personal liability of corporate directors, trustees or officers
attaches only when: (a) they assent to a patently unlawful act of the corporation, or when they
are guilty of bad faith or gross negligence in directing its affairs, or when there is a conflict of
interest resulting in damages to the corporation, its stockholders or other persons; (b) they
consent to the issuance of watered down stocks or when, having knowledge of such issuance,
do not forthwith file with the corporate secretary their written objection; (c) they agree to hold
themselves personally and solidarily liable with the corporation; or (d) they are made by specific
provision of law personally answerable for their corporate action.
A judicious perusal of the records show that other than her unfounded assertions on the matter,
there is no evidence to support the fact that the individual petitioners herein, in their capacity as
Abbott’s officers and employees, acted in bad faith or were motivated by ill will in terminating
Alcaraz’s services. The fact that Alcaraz was made to resign and not allowed to enter the
workplace does not necessarily indicate bad faith on Abbott’s part since a sufficient ground
existed for the latter to actually proceed with her termination.
Ignacio

Topic: Project Employment (D.O 19, series of 1993)

131. OMNI HAULING v. BON

[G.R. No. 199388. September 3, 2014.]

OMNI HAULING SERVICES, INC., LOLITA FRANCO, and

ANICETO FRANCO, petitioners, vs. BERNARDO BON, ROBERTO
TORTOLES, ROMEO TORRES, RODELLO * RAMOS, RICARDO
DELOS SANTOS, JUANITO BON, ELENCIO ARTASTE, **
 CARLITO VOLOSO, ROMEL TORRES, ROBERT AVILA,
EDUARDO BAUTISTA, MARTY VOLOSO, OSCAR JABEL, RICKY
AMORANTO, BERNARD OSINAGA, EDUARDO BON, JERRY
EDUARCE, and FEDERICO BRAZIL, respondents.
.
Doctrine:
 The principal test for determining whether particular employees are properly
characterized as "project employees" as distinguished from "regular employees," is
whether or not the employees were assigned to carry out a "specific project or
undertaking," the duration and scope of which were specified at the time they were
engaged for that project.
 The project could either be:
1. A particular job or undertaking that is within the regular or usual business of the
employer company, but which is distinct and separate, and identifiable as such,
from the other undertakings of the company; or
2. A particular job or undertaking that is not within the regular business of the
corporation.
 In order to safeguard the rights of workers against the arbitrary use of the word "project"
to prevent employees from attaining a regular status, employers claiming that their
workers are project employees should not only prove that the duration and scope of the
employment was specified at the time they were engaged, but also that there was
indeed a project.

Action Sequence: LA ruled respondents were project employees > NLRC affirmed > CA
reversed > SC affirmed the CA decision

Facts:
 Petitioner Omni Hauling Services, Inc. (Omni), a company owned by petitioners Lolita
and Aniceto Franco (petitioners), was awarded a one (1) year service contract 6 by the
local government of Quezon City to provide garbage hauling services for the period July
1, 2002 to June 30, 2003.
o For this purpose, Omni hired respondents as garbage truck drivers and paleros
who were then paid on a per trip basis.
 When the service contract was renewed for another year, or for the period July 1, 2003
to June 30, 2004, petitioners required each of the respondents to sign employment
contracts which provided that they will be "rehired" only for the duration of the same
period.
 However, respondents refused to sign the employment contracts, claiming that they
were regular employees since they were engaged to perform activities which were
necessary and desirable to Omni's usual business or trade.
 For this reason, Omni terminated the employment of respondents which, in turn, resulted
in the filing of cases for illegal dismissal, nonpayment of ECOLA and 13th month pay,
and actual, moral, and exemplary damages.
 During the mandatory conference before the Labor Arbiter (LA), Omni offered to re-
employ respondents on the condition that they sign the employment contracts but
respondents refused such offer.
 The LA ruled in favor of petitioners, finding that respondents were not illegally dismissed.
 o The LA found that respondents, at the time of their engagement, were informed
that their employment will be limited for a specific period of one year and was co-
terminus with the service contract with the Quezon City government.
o Thus, respondents were not regular but merely project employees whose hiring
was solely dependent on the aforesaid service contract.
o As a result, respondents' contracts with Omni expired upon the service contract's
expiration on June 30, 2003.
 The NLRC affirmed the LA's ruling in toto.
 The CA reversed and set aside the NLRC's earlier pronouncements.
o It held that the NLRC failed to consider the glaring fact that no contract of
employment exists to support petitioners' allegation that respondents are fixed
term (or properly speaking, project) employees.
o In view of the fact that no other evidence was offered to prove the supposed
project employment, petitioners' failure to present an employment contract puts
into serious doubt the allegation that the employees, i.e. , respondents, were
properly informed at the onset of their employment status as project employees.
o Besides, the CA pointed out that at the time respondents were asked to sign the
employment contracts, they already became regular employees by operation of
law.
Issue: Whether or not the CA erred in ruling that the respondents were regular employees of
Omni Hauling? (N)

Ruling: NO. Respondents are regular employees of Omni Hauling.

 A project employee is assigned to a project which begins and ends at determined or
determinable times.
o Unlike regular employees who may only be dismissed for just and/or authorized
causes under the Labor Code, the services of employees who are hired as
"project employees" may be lawfully terminated at the completion of the project.
 According to jurisprudence, the principal test for determining whether particular
employees are properly characterized as "project employees" as distinguished from
"regular employees," is whether or not the employees were assigned to carry out a
"specific project or undertaking," the duration and scope of which were specified at the
time they were engaged for that project.
 The project could either be:
1. A particular job or undertaking that is within the regular or usual business of the
employer company, but which is distinct and separate, and identifiable as such,
from the other undertakings of the company; or
2. A particular job or undertaking that is not within the regular business of the
corporation.
 In order to safeguard the rights of workers against the arbitrary use of the word "project"
to prevent employees from attaining a regular status, employers claiming that their
workers are project employees should not only prove that the duration and scope
of the employment was specified at the time they were engaged, but also that
there was indeed a project.
o Even though the absence of a written contract does not by itself grant regular
status to respondents, such a contract is evidence that respondents were
informed of the duration and scope of their work and their status as project
employees.
  In this case, records are bereft of any evidence to show that respondents were made to
sign employment contracts explicitly stating that they were going to be hired as project
employees, with the period of their employment to be co-terminus with the original period
of Omni's service contract with the Quezon City government.
 Neither is petitioners' allegation that respondents were duly apprised of the project-
based nature of their employment supported by any other evidentiary proof.
 Thus, the logical conclusion is that respondents were not clearly and knowingly informed
of their employment status as mere project employees, with the duration and scope of
the project specified at the time they were engaged.
o As such, the presumption of regular employment should be accorded in their
favor pursuant to Article 280 of the Labor Code which provides that "[employees]
who have rendered at least one year of service, whether such service is
continuous or broken [— as respondents in this case —] shall be considered as
[regular employees] with respect to the activity in which [they] are employed and
[their] employment shall continue while such activity actually exists."
 Add to this the obvious fact that respondents have been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of Omni, i.e. ,
garbage hauling, thereby confirming the strength of the aforesaid conclusion.
 The determination that respondents are regular and not merely project employees
resultantly means that their services could not have been validly terminated at the
expiration of the project, or, in this case, the service contract of Omni with the Quezon
City government.
 As regular employees, it is incumbent upon petitioners to establish that respondents had
been dismissed for a just and/or authorized cause. However, petitioners failed in this
respect; hence, respondents were illegally dismissed.

Dispositive:

WHEREFORE, the petition is DENIED. The Decision dated May 27, 2011 and the
Resolution dated November 11, 2011 of the Court of Appeals in CA-G.R. SP. No. 111413 are
hereby AFFIRMED. SO ORDERED.

Additional Notes:

Sira
Topic: Project Employment (Department Order No. 19, series of 1993

133. ALU-TUCP vs. NLRC

G.R. No. 109902 August 2, 1994

ALU-TUCP, Representing Members: ALAN BARINQUE, with 13 others, namely: ENGR.

ALAN G. BARINQUE, ENGR. DARRELL LEE ELTAGONDE, EDUARD H. FOOKSON, JR.,
ROMEO R. SARONA, RUSSELL GACUS, JERRY BONTILAO, EUSEBIO MARIN, JR.,
LEONIDO ECHAVEZ, BONIFACIO MEJOS, EDGAR S. BONTUYAN, JOSE G. GARGUENA,
JR., OSIAS B. DANDASAN, and GERRY I. FETALVERO, petitioners,

vs.
 NATIONAL LABOR RELATIONS COMMISSION and NATIONAL STEEL CORPORATION
(NSC), respondents.

DOCTRINE: In the realm of business and industry, we note that "project" could refer to one or
the other of at least two (2) distinguishable types of activities.

o Firstly, a project could refer to a particular job or undertaking that is within the
regular or usual business of the employer company, but which is distinct and
separate, and identifiable as such, from the other undertakings of the company.
Such job or undertaking begins and ends at determined or determinable times.
The typical example of this first type of project is a particular construction job or
project of a construction company. A construction company ordinarily carries out
two or more discrete identifiable construction projects: e.g., a twenty-five- storey
hotel in Makati; a residential condominium building in Baguio City; and a
domestic air terminal in Iloilo City. Employees who are hired for the carrying out
of one of these separate projects, the scope and duration of which has been
determined and made known to the employees at the time of employment, are
properly treated as "project employees," and their services may be lawfully
terminated at completion of the project.

o Secondly, project could refer to a particular job or undertaking that is not within

the regular business of the corporation. Such a job or undertaking must also be
identifiably separate and distinct from the ordinary or regular business operations
of the employer. The job or undertaking also begins and ends at determined or
determinable times. The case at bar presents what appears to our mind as a
typical example of this kind of "project."

ACTION SEQUENCE: LA, NLRC, and SC all ruled that petitioners are project employees

FACTS:

 Petitioners plead that they had been employed by respondent NSC in connection with its
Five Year Expansion Program (FAYEP I & II) 1 for varying lengths of time when they
were separated from NSC's service. On 5 July 1990, petitioners filed separate
complaints for unfair labor practice, regularization and monetary benefits with the NLRC,
Sub-Regional Arbitration Branch XII, Iligan City.

 Petitioners’ argument:

o They were regular, not project employees

o Petitioners argue that they are "regular" employees of NSC because: (i) their jobs
are "necessary, desirable and work-related to private respondent's main
business, steel-making"; and (ii) they have rendered service for six (6) or more
years to private respondent NSC. 4

 Respondent’s argument:
 o Claimed that petitioners are project employees as they were employed to
undertake a specific project – NSC’s Five Year Expansion (FAYEP I & II)

 Labor Arbiter: declared petitioners "regular project employees who shall continue their
employment as such for as long as such [project] activity exists," but entitled to the
salary of a regular employee pursuant to the provisions in the collective bargaining
agreement. It also ordered payment of salary differentials. 

 NLRC: modified the LA’s decision.

o It affirmed the LA’s holding that petitioners were project employees since they
were hired to perform work in specific undertaking — the Five Years Expansion
Program, the completion of which had been determined at the time of their
engagement and which operation was not directly related to the business of steel
manufacturing.

o The NLRC, however, set aside the award to petitioners of the same benefits
enjoyed by regular employees for lack of legal and factual basis.

ISSUE: Whether or not petitioners are project employees

RULING: Yes, petitioners are project employees.

 It is evidently important to become clear about the meaning and scope of the term
"project" in the present context. The "project" for the carrying out of which "project
employees" are hired would ordinarily have some relationship to the usual business of
the employer. Exceptionally, the "project" undertaking might not have an ordinary or
normal relationship to the usual business of the employer. In this latter case, the
determination of the scope and parameters of the "project" becomes fairly easy. It is
unusual (but still conceivable) for a company to undertake a project which has absolutely
no relationship to the usual business of the company; thus, for instance, it would be an
unusual steel-making company which would undertake the breeding and production of
fish or the cultivation of vegetables.

 From the viewpoint, however, of the legal characterization problem here presented to the
Court, there should be no difficulty in designating the employees who are retained or
hired for the purpose of undertaking fish culture or the production of vegetables as
"project employees," as distinguished from ordinary or "regular employees," so long as
the duration and scope of the project were determined or specified at the time of
engagement of the "project employees." 7 For, as is evident from the provisions of Article
280 of the Labor Code, quoted earlier, the principal test for determining whether
particular employees are properly characterized as "project employees" as distinguished
from "regular employees," is whether or not the "project employees" were assigned to
carry out a "specific project or undertaking," the duration (and scope) of which were
specified at the time the employees were engaged for that project.

 In the realm of business and industry, we note that "project" could refer to one or the
other of at least two (2) distinguishable types of activities.
 o Firstly, a project could refer to a particular job or undertaking that is within the
regular or usual business of the employer company, but which is distinct and
separate, and identifiable as such, from the other undertakings of the company.
Such job or undertaking begins and ends at determined or determinable times.
The typical example of this first type of project is a particular construction job or
project of a construction company. A construction company ordinarily carries out
two or more discrete identifiable construction projects: e.g., a twenty-five- storey
hotel in Makati; a residential condominium building in Baguio City; and a
domestic air terminal in Iloilo City. Employees who are hired for the carrying out
of one of these separate projects, the scope and duration of which has been
determined and made known to the employees at the time of employment, are
properly treated as "project employees," and their services may be lawfully
terminated at completion of the project.

o Secondly, project could refer to a particular job or undertaking that is not within

the regular business of the corporation. Such a job or undertaking must also be
identifiably separate and distinct from the ordinary or regular business operations
of the employer. The job or undertaking also begins and ends at determined or
determinable times. The case at bar presents what appears to our mind as a
typical example of this kind of "project."

 In this case, NSC undertook the ambitious Five Year Expansion Program I and II with
the ultimate end in view of expanding the volume and increasing the kinds of products
that it may offer for sale to the public. The Five Year Expansion Program had a number
of component projects: e.g., (a) the setting up of a "Cold Rolling Mill Expansion Project";
(b) the establishment of a "Billet Steel-Making Plant" (BSP); (c) the acquisition and
installation of a "Five Stand TDM"; and (d) the "Cold Mill Peripherals Project." 

 Instead of contracting out to an outside or independent contractor the tasks

of constructing the buildings with related civil and electrical works that would house the
new machinery and equipment, the installation of the newly acquired mill or plant
machinery and equipment and the commissioning of such machinery and equipment,
NSC opted to execute and carry out its Five Year Expansion Projects "in house,"
as it were, by administration. The carrying out of the Five Year Expansion Program (or
more precisely, each of its component projects) constitutes a distinct undertaking
identifiable from the ordinary business and activity of NSC. Each component project, of
course, begins and ends at specified times, which had already been determined by the
time petitioners were engaged. We also note that NSC did the work here involved — the
construction of buildings and civil and electrical works, installation of machinery and
equipment and the commissioning of such machinery — only for itself. Private
respondent NSC was not in the business of constructing buildings and installing
plant machinery for the general business community, i.e., for unrelated, third
party, corporations. NSC did not hold itself out to the public as a construction
company or as an engineering corporation.

 Which ever type of project employment is found in a particular case, a common basic
requisite is that the designation of named employees as "project employees" and their
assignment to a specific project, are effected and implemented in good faith, and not
merely as a means of evading otherwise applicable requirements of labor laws.
  Thus, the particular component projects embraced in the Five Year Expansion Program,
to which petitioners were assigned, were distinguishable from the regular or ordinary
business of NSC which, of course, is the production or making and marketing of steel
products. During the time petitioners rendered services to NSC, their work was limited to
one or another of the specific component projects which made up the FAYEP I and II.

 Here, the employment of each "project worker" is dependent and co-terminous with the
completion or termination of the specific activity or undertaking [for which] he was hired
which has been pre-determined at the time of engagement. Since, there is no showing
that they (13 complainants) were engaged to perform work-related activities to the
business of respondent which is steel-making, there is no logical and legal sense of
applying to them the proviso under the second paragraph of Article 280 of the Labor
Code, as amended

 Finally, the fact that petitioners’ service to NSC of more than six (6) years does not
qualify them as regular employees. The simple fact that the employment of petitioners as
project employees had gone beyond one (1) year, does not detract from, or legally
dissolve, their status as project employees.  The second paragraph of Article 280 of the
Labor Code, quoted above, providing that an employee who has served for at least one
(1) year, shall be considered a regular employee, relates to casual employees, not to
project employees. In the case of Mercado, Sr. vs. National Labor Relations
Commission,  this Court ruled that the proviso in the second paragraph of Article 280
relates only to casual employees and is not applicable to those who fall within the
definition of said Article's first paragraph, i.e., project employees.

DISPOSITIVE PORTION:

ACCORDINGLY, in view of the foregoing, the Petition for Certiorari is hereby DISMISSED for
lack of merit. The Resolutions of the NLRC dated 8 January 1993 and 15 February 1993 are
hereby AFFIRMED. No pronouncement as to costs.

SO ORDERED.

Tirol
Topic: Project Employment
135. Maraguinot, Jr. v. NLRC
ALEJANDRO MARAGUINOT, JR. and PAULINO ENERO v. NATIONAL LABOR
RELATIONS COMMISSION (SECOND DIVISION) composed of Presiding Commissioner
RAUL T. AQUINO, Commissioner ROGELIO I. RAYALA and Commissioner VICTORIANO
R. CALAYCAY (Ponente), VIC DEL ROSARIO and VIVA FILMS
Doctrine: Once a project or work pool employee has been: (1) continuously, as opposed to
intermittently, re-hired by the same employer for the same tasks or nature of tasks; and (2)
these tasks are vital, necessary and indispensable to the usual business or trade of the
employer, then the employee must be deemed a regular employee, pursuant to Article 280 of
the Labor Code and jurisprudence. However, the length of time during which the employee was
continuously re-hired is not controlling, but merely serves as a badge of regular employment.
Action Sequence: LA ruled in favor of the Petitioners as regular employees --> NLRC reversed
the ruling
Facts: Petitioner Maraguinot was employed as part of the filming crew who was then
designated as assistant electrician 4 months later and later on promoted as an electrician.
Meanwhile, petitioner Enero was employed as part of the shooting crew. Petitioners' tasks
consisted of loading, unloading and arranging movie equipment in the shooting area as
instructed by the cameraman, returning the equipment to Viva Films' warehouse, assisting in
the "fixing" of the lighting system, and performing other tasks that the cameraman and/or
director may assign.
They requested for an adjustment of their salary in accordance with the minimum wage law.
Their supervisors informed that Mr. Vic del Rosario would only agree to the increase if they
signed a blank employment contract. However, they refused to sign the blank contract
Enero was then forced to go on leave and Maraguinot was dropped from the company payroll
for a period of time. They were asked again to sign a blank employment contract, but they
refused and were subsequently terminated.
The petitioner filed an illegal dismissal case before the LA. Viva Films claim they are only in the
business of the distribution and exhibition of movies not in the making of them. On the other
hand, the private respondent Vic del Rosario is an assistant producer. Viva asserts that they
contract producers to produce or make movies for private respondents and that the petitioners
are project employees of the producers who act as independent contractors. Essentially they
assert that there is no employer-employee relationship between viva and the petitioners.
LA decided that the producer cannot be considered as an independent contractor but should be
seen as a labor-only contractor as such as a mere agent of the real employer, VIVA. The
petitioners were doing activities which are necessary and essential to the business of the
respondents making them regular employees.
NLRC reversed the decision of the LA ruling that the petitioners were project employees thus
making their dismissal valid.
Hence, this petition.
Issue 1: Whether the petitioners were project employees.
Ruling 1: NO. They acquired the status of regular employees.
Private respondents contend that petitioners were project employees whose employment was
automatically terminated with the completion of their respective projects. Petitioners assert that
they were regular employees who were illegally dismissed.
However, private respondents admitted that petitioners were part of a work pool while
petitioners were initially hired possibly as project employees, they had attained the status of
regular employees in view of VIVA’s conduct.
A project employee or a member of a work pool may acquire the status of a regular employee
when the following concur:
1)There is a continuous rehiring of project employees even after cessation of a project;
and
2)The tasks performed by the alleged “project employee” are vital, necessary and
indispensable to the usual business or trade of the employer.
However, the length of time during which the employee was continuously re-hired is not
controlling, but merely serves as a badge of regular employment.
In the instant case, the evidence on record shows that petitioner Enero was employed for a total
of 2 years and engaged in at least 18 projects, while petitioner Maraguinot was employed for
some 3 years and worked on at least 23 projects.
As petitioners had already gained the status of regular employees, their dismissal was
unwarranted, for the cause invoked by private respondents for petitioners’ dismissal, viz.,
completion of project, was not, as to them, a valid cause for dismissal under Article 282 of the
Labor Code. As such, petitioners are now entitled to back wages and reinstatement, without
loss of seniority rights and other benefits that may have accrued.
To rule otherwise would allow circumvention of labor laws in industries not falling within the
ambit of Policy Instruction No. 20/Department Order No. 19 (Construction business, etc.), hence
allowing the prevention of acquisition of tenurial security by project or work pool employees who
have already gained the status of regular employees by the employer’s conduct.
Nevertheless, this ruling does not mean that simply because an employee is a project or work
pool employee even outside the construction industry, he is deemed, ipso jure, a regular
employee. All that we hold today is that once a project or work pool employee has been: (1)
continuously, as opposed to intermittently, re-hired by the same employer for the same tasks or
nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual business
or trade of the employer, then the employee must be deemed a regular employee, pursuant to
Article 280 of the Labor Code and jurisprudence. To rule otherwise would allow circumvention of
labor laws in industries not falling within the ambit of Policy Instruction No. 20/Department Order
No. 19, hence allowing the prevention of acquisition of tenurial security by project or work pool
employees who have already gained the status of regular employees by the employer's
conduct.
Dispositive: WHEREFORE, the instant petition is GRANTED. The assailed decision of the
National Labor Relations Commission in NLRC NCR CA No. 006195-94 dated 10 February
1995, as well as its Resolution dated 6 April 1995, are hereby ANNULLED and SET ASIDE for
having been rendered with grave abuse of discretion, and the decision of the Labor Arbiter in
NLRC NCR Case No. 00-07-03994-92 is REINSTATED, subject, however, to the modification
above mentioned in the computation of back wages.

Albino
Topic: Members of a Workpool (Policy Instruction No. 20)
 Abesco Construction and Development Corp. v. Alberto Ramirez, et al.
Doctrine: The principal test for determining whether employees are "project employees" or
"regular employees" is whether they are assigned to carry out a specific project or undertaking,
the duration and scope of which are specified at the time they are engaged for that project.
Such duration, as well as the particular work/service to be performed, is defined in an
employment agreement and is made clear to the employees at the time of hiring.
Action Sequence: Illegal dismissal case filed before LA > LA: respondets are regular
employees and were illegally dismissed > NLRC affirmed > CA denied the appeal of Abesco >
SC: they are regular employees and were illegally dismissed
Facts:

 Abesco was engaged in a construction business.

 Respondents were hired on different dates from 1976 to 1992 either as laborers, road
roller operators, painters or drivers.
 In 1997, respondents filed two separate complaints for illegal dismissal against Abesco
before the LA. They alleged that they were dismissed without a valid reason and without
due process of law.
 Abesco denied liability to respondents and countered that respondents were "project
employees" since their services were necessary only when the company had projects to
be completed. As such, their employment was coterminous with the project to which they
were assigned. Being project employees, they are not entitled to security of tenure and
entitlement to separation pay upon termination from work.
 Labor Arbiter: the dismissal was illegal and declared respondents as regular
employees because they belonged to a "work pool" from which the company drew
workers for assignment to different projects. The respondents were hired and re-hired
over a period of 18 years, hence, they were deemed to be regular employees.
 National Labor Relations Commission: affirmed the ruling of the LA.
 Before the Court of Appeals, Abesco changed its defense into: they were not liable for
illegal dismissal since respondents' services were merely put on hold until the
resumption of their business operations (they were only suspended not terminated).
 The Court of Appeals: dismissed Abesco’s appeal.
Issue 1: Whether respondents were project employees or regular employees? REGULAR.
Ruling 1: Regular employees (but the reasoning of SC **bold** is different from that of the LA)

 Employees (like respondents) who work under different project employment contracts for
several years do not automatically become regular employees; they can remain as
project employees regardless of the number of years they work. Length of service is not
a controlling factor in determining the nature of one's employment.
 Employees who are members of a "work pool" from which a company (like Abesco)
draws workers for deployment to its different projects do not become regular employees
by reason of that fact alone. Members of a "work pool" can either be project employees
or regular employees.
 The principal test for determining whether employees are "project employees" or
"regular employees" is whether they are assigned to carry out a specific project or
 undertaking, the duration and scope of which are specified at the time they are
engaged for that project. Such duration, as well as the particular work/service to
be performed, is defined in an employment agreement and is made clear to the
employees at the time of hiring.
 Here, petitioners did not have that kind of agreement with respondents. Neither
did they inform respondents of the nature of the latter's work at the time of hiring.
Hence, for failure of petitioners to substantiate their claim that respondents were
project employees, we are constrained to declare them as regular employees.
 Abesco cannot belatedly argue that respondents continue to be their employees (so as
to escape liability for illegal dismissal). Before the LA, petitioners staunchly postured that
respondents were only "project employees." However, before the CA, they took a
different stance by insisting that respondents continued to be their employees.
Petitioners' inconsistent and conflicting positions on their true relation with respondents
make it all the more evident that the latter were indeed their regular employees.
Issue 2: Whether respondents were illegally dismissed?
Ruling 2: YES

 Abesco failed to adhere to the "two-notice rule" which requires that workers to be
dismissed must be furnished with: (1) a notice informing them of the particular acts for
which they are being dismissed and (2) a notice advising them of the decision to
terminate the employment
Dispositive: WHEREFORE, the petition is hereby DENIED.
Ignacio

Topic: Termination by Employer – Article 297: Immorality

140. INNOCENTE v. ST. VINCENT FOUNDATION

[G.R. No. 202621. June 22, 2016.]

ZAIDA R. INOCENTE, petitioner, vs. ST. VINCENT

FOUNDATION FOR CHILDREN AND AGING, INC./VERONICA
MENGUITO, respondents.

Doctrine:
 Immorality pertains to a course of conduct that offends the morals of the community.
o It connotes conduct or acts that are willful, flagrant or shameless, and that shows
indifference to the moral standards of the upright and respectable members of
the community.
o Conducts described as immoral or disgraceful refer to those acts that plainly
contradict accepted standards of right and wrong behavior; they are prohibited
because they are detrimental to the conditions on which depend the existence
and progress of human society.
 The determination of whether it exists or has taken place depends on the attendant
circumstances, prevailing norms of conduct, and applicable laws.
 o In other words, it is the totality of the circumstances surrounding the conduct per
se viewed in relation with the conduct generally accepted by society as
respectable or moral, which determines whether the conduct is disgraceful or
immoral.
o The determination of whether a particular conduct is immoral involves:
1. A consideration of the totality of the circumstances surrounding the
conduct; and
2. An assessment of these circumstances in the light of the prevailing norms
of conduct (what the society generally considers moral and respectable
and of the applicable laws).
 Likewise, in determining whether the acts complained of constitute "disgraceful and
immoral" behavior under our laws, the distinction between public and secular morality
on the one hand, and religious morality, on the other hand, should be kept in mind.
o This distinction as expressed — albeit not exclusively — in the law, on the one
hand, and religious morality, on the other, is important because the jurisdiction
of the Court extends only to public and secular morality.

Action Sequence: LA upheld the dismissal of Zaida Inocente > NLRC affirmed > CA affirmed >
SC reversed, ruled that Zaida Inocente was illegally dismissed

Facts:
 Respondent St. Vincent Foundation for Children and Aging, Inc. is a non-stock, non-
profit foundation engaged in providing assistance to children and aging people and
conducting weekly social and educational activities among them. Respondent Veronica
Menguito is St. Vincent's President/Directress.
 In 2000, St. Vincent hired Zaida as Program Assistant; it promoted her as Program
Officer the following year.
o Zaida's duties as program officer included the monitoring and supervising the
implementation of the programs of the foundation, providing training to the staff
and sponsored members, formulating and developing program policies for the
foundation, among others.
 In 2001, Zaida met Marlon D. Inocente. Marlon was then assigned at St. Vincent's
Bataan sub-project. In 2002, Marlon was transferred to St. Vincent's sub-project in
Quezon City.
 Zaida and Marlon became close and soon became romantically involved with each
other.
 In September 2006, St. Vincent adopted the CFCA's Non-Fraternization Policy, which
stated that:
o While CFCA does not wish to interfere with the off-duty and personal conduct of
its employees, to prevent unwarranted sexual harassment claims … employees
who direct and coordinate the work of others are strongly discouraged
from engaging in consensual romantic or sexual relationships with any
employee or volunteer of CFCA.
 Despite St. Vincent's adoption of the Non-Fraternization Policy, Zaida and Marlon
discretely continued their relationship; they kept their relationship private and unknown
to St. Vincent even after Marlon resigned in July 2008.
 On February 19, 2009, Zaida suffered a miscarriage, and while confined at the hospital,
Zaida informed St. Vincent of her situation.
  On May 18, 2009, Zaida received from St. Vincent requiring her to explain in writing why
no administrative action should be taken against her. St. Vincent charged her with
violation of the CFCA Non-Fraternization Policy and of the St. Vincent's Code of Conduct
provisions prohibiting acts against agency interest and policy by indulging in immoral
and indecent act, among others.
 In her May 19, 2009 reply-letter, Zaida defended that: (1) her relationship with Marlon
started long before St. Vincent's Non-Fraternization Policy took effect; (2) Marlon was no
longer connected with St. Vincent since 2008; (3) her relationship with Marlon is not
immoral as they were both of legal age and with no impediments to marry.
 Zaida's explanation failed to convince St. Vincent, and the latter terminated Zaida's
employment for immorality, gross misconduct and violation of St. Vincent's Code of
Conduct.
 Zaida and Marlon were subsequently married on June 23, 2009.
 On July 14, 2009, Zaida filed before the LA her complaint for illegal dismissal, with
prayer for reinstatement, backwages, moral and exemplary damages and litigation
expenses.
 The labor arbiter dismissed Zaida's complaint for lack of basis.
o The LA found that, despite the implementation of the Non-Fraternization Policy in
2006, Zaida maintained and concealed from St. Vincent her relationship with
Marlon.
o Her acts, therefore, could be characterized as an act of dishonesty constituting
willful breach of trust and confidence justifying her dismissal.
 NLRC affirmed the decision of the LA.
 The CA denied Zaida's certiorari petition for lack of merit.
o The CA agreed that Zaida's dismissal was valid, reiterating that Zaida's act of
continuing her relationship with Marlon despite the implementation of the Non-
Fraternization Policy, and without the benefit of marriage, went against the very
policy of promoting Christian values that she was charged to uphold.
o Her subsequent marriage to Marlon did not help her situation as, under the
circumstances, it appeared more of an afterthought intended to circumvent St.
Vincent's rules and code of conduct.
Issue:

Whether or not petitioner was validly dismissed for immorality which amounted to serious
misconduct and willful breach of trust and confidence? (N)

Ruling: NO. Zaida Inocente was illegally dismissed for lack of just cause.

 Immorality pertains to a course of conduct that offends the morals of the community.
o It connotes conduct or acts that are willful, flagrant or shameless, and that shows
indifference to the moral standards of the upright and respectable members of
the community.
o Conducts described as immoral or disgraceful refer to those acts that plainly
contradict accepted standards of right and wrong behavior; they are prohibited
because they are detrimental to the conditions on which depend the existence
and progress of human society.
 The determination of whether it exists or has taken place depends on the attendant
circumstances, prevailing norms of conduct, and applicable laws.
o In other words, it is the totality of the circumstances surrounding the conduct per
se viewed in relation with the conduct generally accepted by society as
respectable or moral, which determines whether the conduct is disgraceful or
immoral.
o The determination of whether a particular conduct is immoral involves:
3. A consideration of the totality of the circumstances surrounding the
conduct; and
4. An assessment of these circumstances in the light of the prevailing norms
of conduct (what the society generally considers moral and respectable
and of the applicable laws).
 Likewise, in determining whether the acts complained of constitute "disgraceful and
immoral" behavior under our laws, the distinction between public and secular morality
on the one hand, and religious morality, on the other hand, should be kept in mind.
o This distinction as expressed — albeit not exclusively — in the law, on the one
hand, and religious morality, on the other, is important because the jurisdiction
of the Court extends only to public and secular morality.
 In this case, we note that both Zaida and Marlon at all times had no impediments to
marry each other.
o They were adults who met at work, dated, fell in love and became sweethearts.
o The intimate sexual relations between them were consensual, borne by their love
for one another and which they engaged in discreetly and in strict privacy.
o They continued their relationship even after Marlon left St. Vincent in 2008.
o They took their marriage vows soon after Zaida recovered from her miscarriage,
thus validating their union in the eyes of both men and God.
 All these circumstances show the sincerity and honesty of the relationship between
Zaida and Marlon. They also show their genuine regard and love for one another — a
natural human emotion that is neither shameless, callous, nor offensive to the opinion of
the upright and respectable members of the secular community.
 While their actions might not have strictly conformed with the beliefs, ways, and mores of
St. Vincent — which is governed largely by religious morality — or with the personal
views of its officials, these actions are not prohibited under any law nor are they contrary
to conduct generally accepted by society as respectable or moral.
 Furthermore, for an employee to be validly dismissed on the ground of serious
misconduct, the employee must:
o First, have committed misconduct or an improper or wrong conduct;
o Second, the misconduct or improper behavior is:
 (a) serious;
 (b) relate to the performance of the employee's duties; and
 (b) show that the employee has become unfit to continue working for the
employer.
 In this case, Zaida's relationship with Marlon is neither illegal nor immoral; it also did not
violate the Non-Fraternization Policy.
o The said policy only discourages, not prohibit, romantic or sexual relationships
among employees or volunteers. Second, misconduct has been defined as
improper or wrong conduct. Morality must be based on secular standards.
o There is nothing wrong about the petitioner's relationship with Marlon - both of
them are of legal age and without legal impediment to marry.
  Moreover, St. Vincent failed to show how Zaida's relationship with Marlon affected her
performance of her duties as a Program Officer and that she has become unfit to
continue working for it, whether for the same position or otherwise. Her dismissal based
on this ground, therefore, is without any factual or legal basis.

Dispositive:

WHEREFORE, in light of these considerations, we hereby GRANT the petition. We REVERSE

and SET ASIDE the decision dated February 27, 2012 and the resolution dated July 11, 2012 of
the Court of Appeals in CA-G.R. SP No. 118576. We declare petitioner Zaida R. Inocente as
illegally dismissed. SO ORDERED.

Additional Notes:

Manotok

Topic:

131. Capin-Cadiz vs. Brent Hospital and Colleges

[G.R. No. 187417, February 24, 2016]

Doctrine:

Action Sequence: LA ruled dismissal was attended with just cause > NLRC affirmed

Facts:
● Christine Joy Capin-Cadiz is the Human Resource Officer of Brent Hospital and
Colleges, Inc. 
● One of the grounds for disciplinary action under Brent's policies is immorality, which is
punishable by dismissal at first offense. Its Employee's Manual of Policies, meanwhile,
enumerates acts of immorality such as scandalous behaviour, acts of lasciviousness
against any person (patient, visitors, co-workers) within hospital premises as a ground
for discipline and discharge. Brent also relied on Section 94 of the Manual of
Regulations for Private Schools (MRPS), which lists "disgraceful or immoral conduct" as
a cause for terminating employment.
● When Cadiz became pregnant out of wedlock, Brent imposed the suspension until such
time that she marries her boyfriend. Brent imposed on Cadiz the condition that she
subsequently contract marriage with her then boyfriend for her to be reinstated. Cadiz
filed with the Labor Arbiter (LA) a complaint for Unfair Labor Practice, Constructive
Dismissal, Non-Payment of Wages and Damages with prayer for Reinstatement.
● Both the LA and the NLRC upheld Cadiz's dismissal as one attended with just cause.
○ According to the LA, "there was just cause therefor, consisting in her engaging in
premarital sexual relations with Carl Cadiz, allegedly her boyfriend, resulting in
her becoming pregnant out of wedlock." The LA deemed said act to be immoral,
which was punishable by dismissal under Brent's rules and which likewise
 constituted serious misconduct under Article 282(a) of the Labor Code. The LA
also opined that since Cadiz was Brent's Human Resource Officer in charge of
implementing its rules against immoral conduct, she should have been the
"epitome of proper conduct."

Issue:
1. Whether marriage may be used as a condition for reinstatement?
2. Whether Cadiz's premarital relations with her boyfriend and the resulting pregnancy out of
wedlock constitute immorality?

Ruling:
1. NO. Brent's condition is coercive, oppressive and discriminatory.
 The Labor Code of the Philippines, provides:
Art. 136. Stipulation against marriage. It shall be unlawful for an employer to require as a
condition of employment or continuation of employment that a woman employee shall not get
married, or to stipulate expressly or tacitly that upon getting married, a woman employee shall
be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise
prejudice a woman employee merely by reason of her marriage.
 With particular regard to women, Republic Act No. 9710 or the Magna Carta of Women
protects women against discrimination in all matters relating to marriage and family
relations, including the right to choose freely a spouse and to enter into marriage only with
their free and full consent.
 Brent's condition is coercive, oppressive and discriminatory. There is no rhyme or reason for
it. It forces Cadiz to marry for economic reasons and deprives her of the freedom to choose
her status, which is a privilege that inheres in her as an intangible and inalienable right. 53
While a marriage or no-marriage qualification may be justified as a "bona fide occupational
qualification," Brent must prove two factors necessitating its imposition, viz: (1) that the
employment qualification is reasonably related to the essential operation of the job involved;
and (2) that there is a factual basis for believing that all or substantially all persons meeting
the qualification would be unable to properly perform the duties of the job.54 Brent has not
shown the presence of neither of these factors. Perforce, the Court cannot uphold the
validity of said condition.
Given the foregoing, Cadiz, therefore, is entitled to reinstatement without loss of seniority rights,
and payment of backwages computed from the time compensation was withheld up to the date
of actual reinstatement. The Court also finds that Cadiz is only entitled to limited backwages,
moral and exemplary damages.

2. NO. Whether a conduct is considered disgraceful or immoral should be made in accordance

with the prevailing norms of conduct, which, as stated in Leus v. St. Scholastica’s College
Westgrove, 748 SCRA 378 (2015), refer to those conducts which are proscribed because they
are detrimental to conditions upon which depend the existence and progress of human society.
The totality of the circumstances of this case does not justify the conclusion that Cadiz
committed acts of immorality. Similar to Leus, Cadiz and her boyfriend were both single and
had no legal impediment to marry at the time she committed the alleged immoral conduct. In
fact, they eventually married on April 15, 2008. Aside from these, the labor tribunals' respective
conclusion that Cadiz's "indiscretion" "scandalized the Brent community" is speculative, at most,
and there is no proof adduced by Brent to support such sweeping conclusion. Even Brent
admitted that it came to know of Cadiz's "situation" only when her pregnancy became manifest.
Brent also conceded that "at the time [Cadiz] and Carl R. Cadiz were just carrying on their
boyfriend-girlfriend relationship, there was no knowledge or evidence by [Brent] that they were
engaged also in premarital sex." This only goes to show that Cadiz did not flaunt her premarital
relations with her boyfriend and it was not carried on under scandalous or disgraceful
circumstances. As declared in Leus, "there is no law which penalizes an unmarried mother by
reason of her sexual conduct or proscribes the consensual sexual activity between two
unmarried persons; that neither does such situation contravene[s] any fundamental state policy
enshrined in the Constitution. "The fact that Brent is a sectarian institution does not
automatically subject Cadiz to its religious standard of morality absent an express statement in
its manual of personnel policy and regulations, prescribing such religious standard as gauge as
these regulations create the obligation on both the employee and the employer to abide by the
same.

Dispositive:

WHEREFORE, the petition is GRANTED. The Resolutions dated July 22, 2008 and February
24, 2009 of the Court of Appeals in CA-G.R. SP No. 02373-M1N are REVERSED and SET
ASIDE, and a NEW ONE ENTERED finding petitioner Christine Joy Capin-Cadiz to have been
dismissed without just cause.

Respondent Brent Hospital and Colleges, Inc. is hereby ORDERED TO PAY petitioner Christine

Joy Capin-Cadiz:

(1) One Hundred Nine Thousand Three Hundred Four Pesos and 40/100 (P109,304.40) as
backwages;

(2) Thirty-Six Thousand Four Hundred Thirty-Four Pesos and 80/100 (P36,434.80) as
separation pay; and

(3) Attorney's fees equivalent to ten percent (10%) of the total award.

The monetary awards granted shall earn legal interest at the rate of six percent (6%) per
annum from the date of the finality of this Decision until fully paid.

SO ORDERED

Sira
Topic: Willful Disobedience

133. ALU-TUCP vs. NLRC

G.R. No. 109902 August 2, 1994

ST. LUKE'S MEDICAL CENTER, INC., PETITIONER

VS.
MARIA THERESA V. SANCHEZ, RESPONDENT

DOCTRINE: For an employee to be validly dismissed on the ground of willful disobedience, the
employer’s orders, regulations, or instructions must be: 1) reasonable and lawful; 2) sufficiently
known to the employee, and 3) in connection with the duties which the employee has been
engaged to discharge.
ACTION SEQUENCE: LA (Sanchez was validly dismissed)-> NLRC and CA (Sanchez was
illegally dismissed)-> SC (Sanchez was validly dismissed)

FACTS:

 Sanchez was hired by St. Luke’s as a Staff Nurse in 2009. She was assigned to the
Pediatric Unit until her termination on July 6, 2011 for her purported violation of
SLMC’s Code of Disciple, particularly Section 1, Rule 1 on Acts of Dishonesty, i.e.
Robbery, Theft, Pilferage, and Misappropriation of Funds.

 Records reveal that at the end of respondent’s shift on May 29, 2011,she was
subjected to the standard inspection procedure by the security personnel, who
found a pouch in her bag which contained an assortment of medical stocks. She
asked if she can return the items but she was not allowed. Instead, she was
brought to the Security Department where she was directed to write an incident
report explaining why she had the items in her possession and also an undated
handwritten letter of apology.

 The Costumer Affairs Division apprised petitioner of the incident, highlighting that
Sanchez expressly admitted that she indeed brought the questioned items.

 In an initial investigation conducted by St. Luke’s and Sanchez was given a notice
to explain.

 Sanchez submitted an Incident Report Addendum explaining that the items came
from the medication drawers of patients who had already been discharged and
that the same has been practiced by the other staff members. She said that the
she would keep the items for immediate use in case replenishment of stocks gets
delayed. On the day of incident, she merely forgot to return the medica stocks
since she got caught up in work.

 Consequently, Sanchez was placed under preventive suspension effective June 3,

2011 until the conclusion of the investigation which, thereafter, she was required
to explain why she should not be terminated from service for acts of dishonesty.

 After the appropriate hearings, she was informed of her termination from
employment.

 Thus, Sanchez filed a complaint for illegal dismissal before the NLRC.

 LA Ruling:

o Sanchez was validly dismissed for intentionally taking the property of

SLMC’s clients for her own personal benefit, which constitutes an act of
dishonesty as provided under SLMC’s Code of Discipline.

 NLRC Ruling:
 o Reversed and set aside the LA Ruling and held that Sanchez was illegally
dismissed.

o The alleged violation was a unique case because keeping excess hospital
stocks was an admitted practice amongst nurses in the Pediatric Unit
which had been tolerated by SLMC management for a long time.

 CA Ruling: Upheld the NLRC ruling.

o It ruled that the offense of Sanchez did not qualify as serious misconduct,
given that:

 the questioned items found in her possession were not SLMC

property since said items were paid for by discharged patients, thus
discounting any material or economic damage on SLMC's part;

 the retention of excess medical supplies was an admitted practice

amongst nurses in the Pediatric Unit which was tolerated by SLMC;

 it was illogical for Sanchez to leave the pouch in her bag since she
would be subjected to a routine inspection;

 Sanchez's lack of intention to bring out the pouch was manifested

by her composed demeanor upon apprehension and offer to return
the pouch to the treatment room; and

 had SLMC honestly believed that Sanchez committed theft or

pilferage, it should have filed the appropriate criminal case, but
failed to do so.

o The CA also held that while SLMC had the management prerogative to
discipline its erring employees, it, however, declared that such right must
be exercised humanely. Considering that there was no indication that
Sanchez’s actions were perpetrated self-interest or for an unlawful
objective, the penalty of dismissal imposed on her was grossly oppressive
and disproportionate to her offense.

ISSUE: Whether or not Sanchez was illegally dismissed

RULING: No, Sanchez was no illegally dismissed.

 The right of an employer to regulate all aspects of employment, aptly called

“management prerogative” gives employers the freedom to regulate, according to their
discretion and best judgment, all aspects of employment, including work assignment,
working methods, processes to be followed, working regulations, transfer of employees,
work supervision, lay-off workers and the discipline, dismissal and recall of workers.

 Among the employer’s management prerogatives is the right to prescribe reasonable

rules and regulations necessary or proper for the conduct of its business or concern, to
 provide certain disciplinary measures to implement said rules and to assure that the
same would be complied with. At the same time, the employee has the corollary duty to
obey all reasonable rules, orders, and instructions of the employer and willful
disobedience thereto, as a general rule, justified termination of the contract of service
and the dismissal of the employee.

 For an employee to be validly dismissed on this ground, the employer’s orders,

regulations, or instructions must be: 1) reasonable and lawful; 2) sufficiently known to
the employee, and 3) in connection with the duties which the employee has been
engaged to discharge.

 In this case, the Court find that Sanchez was validly dismissed by St. Luke’s for her
willful disregard and disobedience of Section 1, Rule 1 of the SLMC Code of Discipline,
which reasonably punishes acts of dishonesty, i.e. theft, pilferage of hospital or co-
employee property or its attempt in any form or manner from the hospital, co-employees,
doctors, visitors and customers with termination from employment. Sanchez was aware
of the policy and despite said knowledge, she still knowingly brought out the subject
medical items with her.

 Further, the fact that St. Luke’s did not suffer actual manage is not material. Nor is the
non-filing of the appropriate criminal charges.

 Therefore, she was legally dismissed.

DISPOSITIVE PORTION:

WHEREFORE, the petition is GRANTED. The Decision dated November 21, 2013 and the
Resolution dated April 4, 2014 of the Court of Appeals in CA-G.R. SP No. 129108 are
REVERSED and SET ASIDE. The Labor Arbiter's Decision dated May 27, 2012 in NLRC Case
No. NCR 07-11042-11 finding respondent Maria Theresa V. Sanchez to have been validly
dismissed by petitioner St. Luke's Medical Center, Inc. is hereby REINSTATED.

Tirol
Topic: Habitual Neglect of Duties
144. Genuino Ice Company, Inc. v. Magpantay
GENUINO ICE COMPANY, INC. vs. ALFONSO S. MAGPANTAY
Doctrine: Neglect of duty, to be a ground for dismissal, must be both gross and habitual. Gross
negligence connotes want of care in the performance of one’s duties. Habitual neglect implies
repeated failure to perform one’s duties for a period of time, depending upon the circumstances.
On the other hand, fraud and willful neglect of duties imply bad faith on the part of the employee
in failing to perform his job to the detriment of the employer and the latter’s business.
Facts: Alfonso Magpantay was employed as a machine operator with Genuino Ice Company,
Inc. from March 1988 to December 1995. On November 18, 1996, he filed against the company
a complaint for illegal dismissal with prayer for moral and exemplary damages. He alleged that
he was dismissed from service effective immediately by virtue of a memorandum, after which he
was not allowed anymore to enter the company premises. Respondent bewailed that his
termination from employment was done without due process.
The company countered that he was not illegally dismissed, since the dismissal was based on a
valid ground, i.e., he led an illegal strike at petitioner’s sister company, Genuino Agro Industrial
Development Corporation, which lasted from November 18 to 22, 1995, resulting in big
operation losses. It also maintained that respondent’s dismissal was made after he was
accorded due process. Magpantay replied that assuming that he led such illegal strike, he could
not be liable therefore because it was done in its sister company which is a separate and
distinct entity from Genuino.
The company initially claimed that Magpantay's acts were tantamount to serious misconduct or
willful disobedience, gross and habitual neglect of duties, and breach of trust. Subsequently, it
amended its position paper to include insubordination among the grounds for his dismissal,
since it came out during respondent’s cross-examination, and the matter was reported only after
the new personnel manager assumed his position in August 1996.
LA: Dismissed the case for lack of merit, finding that the company had valid cause to dismiss
Magpantay, as his act of leading a strike at petitioner’s company for four days, his absence from
work during such time, and his failure to perform his duties during such absence, make up a
cause for habitual neglect of duties, while his failure to comply with petitioner’s order for him to
transfer to the GMA, Cavite Plant constituted insubordination or willful disobedience.
NLRC: On appeal, the NLRC sustained the findings of the LA.
CA: Declaring respondent’s dismissal as illegal. Magpantay’s attitude "has not been proved to
be visited with any wrongdoing", and that his four-day absence does not appear to be both
gross and habitual.
Issue 1: Whether respondent’s four-day absence amounts to a habitual neglect of duty.
Ruling 1: NO.
Neglect of duty, to be a ground for dismissal, must be both gross and habitual. Gross
negligence connotes want of care in the performance of one’s duties. Habitual neglect implies
repeated failure to perform one’s duties for a period of time, depending upon the circumstances.
On the other hand, fraud and willful neglect of duties imply bad faith on the part of the employee
in failing to perform his job to the detriment of the employer and the latter’s business. Thus, the
single or isolated act of negligence does not constitute a just cause for the dismissal of the
employee.
Thus, the Court agrees with the CA that respondent’s four-day absence is not tantamount to a
gross and habitual neglect of duty. As aptly stated by the CA, "While he may be found by the
labor courts to be grossly negligent of his duties, he has never been proven to be habitually
absent in a span of 7 years as GICI’s employee. The factual circumstances and evidence do not
clearly demonstrate that respondent's absences contributed to the detriment of GICI’s
operations and caused irreparable damage to the company."
Petitioner, however, insists that during his four-day absence, respondent was leading an illegal
strike in its sister company. In the first place, there is no showing that the strike held at the
Genuino Agro Industrial Development Corporation is illegal. Except for such bare allegation,
there is a dearth of evidence in this case proving the illegality of said strike.
Issue 2: Whether respondent was validly dismissed on ground of willful disobedience or
insubordination.
Ruling 2: YES.
The rule is that the transfer of an employee ordinarily lies within the ambit of the employer’s
prerogatives. The employer exercises the prerogative to transfer an employee for valid reasons
and according to the requirement of its business, provided the transfer does not result in
demotion in rank or diminution of the employee’s salary, benefits and other privileges.
The company informed Magpantay through a Memorandum that he was being transferred to its
GMA, Cavite operations to fill-up the maintenance position urgently required Due to his refusal
to report to the Cavite plant, the company reiterated its order transferring him in its
Memorandum where he was also warned that his failure to report to the Cavite plant will be
considered as an absence without leave (AWOL) and insubordination. Respondent was
required to comply with the order within 24 hours from receipt, otherwise, disciplinary action will
be imposed on respondent. Respondent replied with a request that he remain in the Otis plant
since a transfer to the Cavite plant will entail additional expenditure and travel time on his part.
The company again wrote respondent inviting him to appear before the Plant Level Investigation
for the latter to be able to clarify his reasons for refusing the transfer. Finally, petitioner issued
its Memorandum dinforming respondent of its decision to terminate his services.
In this case, petitioner’s order for respondent to transfer to the GMA, Cavite Plant is a
reasonable and lawful order was made known to him and pertains to his duties as a machine
operator. There was no demotion involved or diminution of salary, benefits and other privileges,
and in fact, petitioner was even willing to provide respondent with monetary allowance to defray
whatever additional expenses he may incur with the transfer.
Such being the case, respondent cannot adamantly refuse to abide by the order of transfer
without exposing himself to the risk of being dismissed. Hence, his dismissal was for just cause
in accordance with Article 282 (a) of the Labor Code. Consequently, respondent is not entitled
to reinstatement or separation pay and backwages.
Dispositive: WHEREFORE, the petition is GRANTED. The CA Decision dated August 3, 2000
and Resolution dated March 16, 2001 are SET ASIDE, and the NLRC Decision dated June 30,
1999 is REINSTATED.
Albino
Topic: Abandonment
Diamond Taxi v. Llamas, Jr.
Doctrine: "Abandonment is the deliberate and unjustified refusal of an employee to resume his
employment." It is a form of neglect of duty that constitutes just cause for the employer to
dismiss the employee. To constitute abandonment of work, two elements must concur: "(1) x x x
the employee must have failed to report for work or must have been absent without valid or
justifiable reason; and (2) x x x there must have been a clear intention [on the part of the
employee] to sever the employer-employee relationship manifested by some overt act." The
employee’s absence must be accompanied by overt acts that unerringly point to the employee’s
clear intention to sever the employment relationship.
Action Sequence: ID case > LA: dismissed the case for lack of merit > NLRC: dismissed the
MR > CA: constructively dismissed > SC: constructively dismissed
Facts:

 Llamas worked as a taxi driver for petitioner Diamond Taxi.

 Llamas filed before the LA a complaint for illegal dismissal against the petitioners.
 Diamond Taxi denied dismissing Llamas. They claimed that:
o Llamas had been absent without official leave for several days from July 14 to
Aug. 1. They submitted a copy of the attendance logbook to prove that Llamas
had been absent on these cited dates.
o Llamas committed several traffic violations in the years 2000-2005 and that they
had issued him several memoranda for acts of insubordination and refusal to
heed management instructions which constitutes grounds for his termination.
 Llamas, on the other hand argued:
o He e had a misunderstanding with Aljuver Ong, Bryan’s (owner) brother and
operations manager of Diamond Taxi on July 13.
o When he reported for work the next day, July 14, Bryan refused to give him the
key to his assigned taxi cab unless he would sign a prepared resignation letter.
He did not sign the resignation letter.
o He reported for work again on July 15 and 16 but Bryan insisted that he sign the
resignation letter prior to the release of the key to his assigned taxi cab.
o Thus he filed the ID case.
 Labor Arbiter dismissed the complaint for lack of merit and ruled that he was not
dismissed. Rather, Llamas left his job and had been absent for several days without
leave.
 NLRC dismissed Llamas’ MR treated as an appeal for failing to attach the required
certification of non-forum shopping.
 Court of Appeals reversed the NLRC and pointed out that non-compliance with the
requirement on the filing of a certificate of non-forum shopping, while mandatory, may
nonetheless be excused upon showing of manifest equitable grounds proving substantial
compliance.
o CA pointed out that the petitioners failed to prove overt acts showing Llamas’
clear intention to abandon his job. The petitioners placed Llamas in a situation
where he was forced to quit as his continued employment has been rendered
impossible, unreasonable or unlikely, i.e., making him sign a resignation letter as
a precondition for giving him the key to his assigned taxi cab. These acts
amounted to constructive dismissal. Llamas also immediately filed the illegal
 dismissal case that proved his desire to return to work and negates the charge of
abandonment. CA brushed aside the petitioners’ claim that Llamas committed
several infractions that warranted his dismissal. The CA declared that the
petitioners should have charged Llamas for these infractions to give the latter an
opportunity to explain his side.
Issue: Whether Llamas abandoned his job or was constructively dismissed?
Ruling: Constructively dismissed.

 "Abandonment is the deliberate and unjustified refusal of an employee to resume

his employment." It is a form of neglect of duty that constitutes just cause for the
employer to dismiss the employee.
 To constitute abandonment of work, two elements must concur: "(1) x x x the
employee must have failed to report for work or must have been absent without
valid or justifiable reason; and (2) x x x there must have been a clear intention [on
the part of the employee] to sever the employer-employee relationship manifested
by some overt act." The employee’s absence must be accompanied by overt acts
that unerringly point to the employee’s clear intention to sever the employment
relationship. And, to successfully invoke abandonment, whether as a ground for
dismissing an employee or as a defense, the employer bears the burden of proving the
employee’s unjustified refusal to resume his employment. Mere absence of the
employee is not enough.
 Here, Diamond Taxi failed to prove the alleged abandonment. They did not present proof
of some overt act of Llamas that clearly and unequivocally shows his intention to
abandon his job. The only evidence that the petitioners submitted to prove abandonment
were the photocopy of their attendance logbook and the July 15 memorandum that they
served on Llamas regarding the July 13 incident. These pieces of evidence failed to
prove the clear and unequivocal intention, on Llamas’ part, that the law requires to deem
as abandonment Llamas’ absence from work.
 Also, Llamas lost no time in filing the illegal dismissal case against them. To recall, he
filed the complaint on July 18 or only two days from the third time he was refused access
to his assigned taxi cab on July 16. Clearly, Llamas could not be deemed to have
abandoned his work for, as we have previously held, the immediate filing by the
employee of an illegal dismissal complaint is proof enough of his intention to return to
work and negates the employer's charge of abandonment.
 CA, correctly regarded Llamas as constructively dismissed for the petitioners' failure to
prove the alleged just cause -abandonment - for his dismissal.
 Constructive dismissal exists when there is cessation of work because continued
employment is rendered impossible, unreasonable or unlikely. Constructive dismissal is
a dismissal in disguise or an act amounting to dismissal but made to appear as if it were
not. In constructive dismissal cases, the employer is, concededly, charged with the
burden of proving that its conduct and action were for valid and legitimate grounds. The
petitioners' persistent refusal to give Llamas the key to his assigned taxi cab, on the
condition that he should first sign the resignation letter, rendered, without doubt, his
continued employment impossible, unreasonable and unlikely.
Dispositive: WHEREFORE, in light of these considerations, we hereby DENY the petition. We
AFFIRM the decision dated August 13, 2008 and the resolution dated November 27, 2009 of the
Court of Appeals in CA-G.R. CEB-S.P. No. 02623.
Balboa
Topic: Loss of trust and confidence
146. Bravo v Urios College
YOLANDO T. BRAVO vs. URIOS COLLEGE (NOW FATHER SATURNINO URIOS
UNIVERSITY) and/or FR. JOHN CHRISTIAN U. YOUNG

Doctrine: To warrant termination of employment under Article 297(a) of the Labor Code, the
misconduct must be serious or “of such grave and aggravated character.” Trivial and
unimportant acts are not contemplated under Article 297(a) of the Labor Code.
In addition, the misconduct must “relate to the performance of the employee’s duties” that would
render the employee “unfit to continue working for the employer.”
Action Sequence: ID case before ELA > ELA dismissed > NLRC reversed > CA reversed SC
upheld and found there was no ID
Facts:

 Bravo was employed as a part-time teacher by Urios College. In addition to his duties as
a part-time teacher, Bravo was designated as the school’s comptroller from June 1, 2002
to May 31, 2002.
 “[U]nder [the proposed ranking] system by the committee, the position of Comptroller
was classified as an office [h]ead while the position of Vice President for Finance was
classified as [m]iddle [management.” This was presented to Bravo. Bravo sad that “the
position of Comptroller should be classified as a middle management position [because
it was] . . . informally merged with . . . the position of [V]ice [P]resident for [F]inance.” He
also suggested that his salary scale should be upgraded. The committee agreed with
Bravo.
 In the next school year, the same ranking system was used and the position of
Comptroller was classified as middle management.
 In the following school year, Bravo occupied the Comptroller position again and was
designated as a full-time teacher.
 In October 2004, Urios College organized a committee to review the ranking system
implemented during school year 2001-2002. In its report, the committee found that the
ranking system for school year 2001-2002 caused salary distortions among several
employees. There were also discrepancies in the salary adjustments of Bravo and of two
(2) other employees. The committee discovered that “the Comptroller’s Office solely
prepared and implemented the salary adjustment schedule” without prior approval from
the Human Resources Department.
 The committee recommended, among others, that Bravo be administratively charged for
serious misconduct or willful breach of trust under Article 282 of the Labor Code. Bravo
allegedly misclassified several positions and miscomputed his and other employees’
salaries.
  Bravo received a show cause memo requiring him to explain why his services should not
be terminated for his alleged acts of serious misconduct due to the intentional
misclassification/miscomputation of salary (there was overpayment to his salary and
underpayment to one employee).
 Hearings were conducted. Bravo argued that it was not him but the committee who
prepared the ranking system for school year 2001-2002. It was found that Bravo floated
the idea of his salary adjustment which Urios never formally approved. He was found
guilty and was made to return the sum representing overpayment.
 Upon receipt of the notification by Urios College of its decision to terminate his service
for serious misconduct and loss of trust and confidence, Bravo immediately filed an
Illegal Dismissal case before the LA which the LA dismissed.
 The NLRC reversed the LA. It ruled that Bravo received the salary in good faith. Urios
did not afford Bravo the chance to be heard and to defend himself with the assistance of
counsel.
 The CA reversed the NLRC.
Issue 1: whether there was illegal dismissal
Ruling 1: NO.
To warrant termination of employment under Article 297(a) of the Labor Code, the misconduct
must be serious or “of such grave and aggravated character.” Trivial and unimportant acts are
not contemplated under Article 297(a) of the Labor Code.
In addition, the misconduct must “relate to the performance of the employee’s duties” that would
render the employee “unfit to continue working for the employer.”
Recently, this Court has emphasized that the rank-and-file employee’s act must have been
“performed with wrongful intent” to warrant dismissal based on serious misconduct.92 Dismissal
is deemed too harsh a penalty to be imposed on employees who are not induced by any
perverse or wrongful motive despite having committed some form of misconduct.
Thus, to warrant the dismissal from service of a rank-and-file employee under Article 297(a) of
the Labor Code, the misconduct (1) must be serious, (2) should “relate to the performance of
the employee’s duties,” (3) should render the employee “unfit to continue working for the
employer,” and (4) should “have been performed with wrongful intent.”
There is no evidence that the position of Comptroller was officially reclassified as middle
management by respondent. Petitioner’s employment ranking slip, if at all, only constituted proof
of petitioner’s evaluation score. It hardly represented the formal act of respondent in
reclassifying the position of Comptroller. Hence, petitioner could not summarily assign to himself
a higher salary rate without rendering himself unfit to continue working for respondent.
However, it appears that petitioner was neither induced nor motivated by any wrongful intent.
He believed in good faith that respondent had accepted and approved his recommendations on
the proposed ranking scale for school year 2001-2002.
Nevertheless, due to the nature of his occupation, petitioner’s employment may be terminated
for willful breach of trust under Article 297(c), not Article 297(a), of the Labor Code.
A dismissal based on willful breach of trust or loss of trust and confidence under Article 297 of
the Labor Code entails the concurrence of two (2) conditions.
First, the employee whose services are to be terminated must occupy a position of trust and
confidence.
There are two (2) types of positions in which trust and confidence are reposed by the employer,
namely, managerial employees and fiduciary rank-and-file employees.100 Managerial
employees are considered to occupy positions of trust and confidence because they are
“entrusted with confidential and delicate matters.” On the other hand, fiduciary rank-and-file
employees refer to those employees, who, “in the normal and routine exercise of their functions,
regularly handle significant amounts of [the employer’s] money or property.” It must be
emphasized, however, that the nature and scope of work and not the job title or designation
determine whether an employee holds a position of trust and confidence.
The second condition that must be satisfied is the presence of some basis for the loss of trust
and confidence. This means that “the employer must establish the existence of an act justifying
the loss of trust and confidence.”
Set against these parameters, this Court holds that petitioner was validly dismissed based on
loss of trust and confidence. Petitioner was not an ordinary rank-and-file employee. His position
of responsibility on delicate financial matters entailed a substantial amount of trust from
respondent. The entire payroll account depended on the accuracy of the classifications made by
the Comptroller.
Petitioner’s act in assigning to himself a higher salary rate without proper authorization is a clear
breach of the trust and confidence reposed in him.
Issue 2: whether Bravo was deprived of procedural due process
Ruling 2: NO.
Any meaningful opportunity for the employee to present evidence and address the charges
against him or her satisfies the requirement of ample opportunity to be heard. In this case,
respondent complied with all the requirements of procedural due process in terminating
petitioner’s employment. Respondent furnished petitioner a show cause memo stating the
specific grounds for dismissal. The show cause memo also required petitioner to answer the
charges by submitting a written explanation.124 Respondent even informed petitioner that he
may avail the services of counsel. Respondent then conducted a thorough investigation. Three
(3) hearings were conducted on separate occasions.125 The findings of the investigation
committee were then sent to petitioner.126 Lastly, petitioner was given a notice of termination
containing respondent’s final decision.
Issue 3: whether petitioner is entitled to the payment of separation pay, backwages, and
attorney’s fees
Ruling 3: NO. there was just cause for terminating petitioner. There is no basis to award him
separation pay and backwages.

Dispositive: Petition DENIED.

Balce
Topic: Redundancy
147. Philippine National Bank v. Dalmacio

G.R. No. 202308

PHILIPPINE NATIONAL BANK, Petitioner

vs.
JUMELITO T. DALMACIO, Respondent

G.R. No. 202357

JUMELITO T. DALMACIO, Petitioner,

vs.
PHILIPPINE NATIONAL BANK and/or MS. CYNTHIA JAVIER, Respondents.

Ponente: TIJAM, J.

Doctrine: For the implementation of a redundancy program to be valid, however, the employer
must comply with the following requisites: (1) written notice served on both the employees and
the Department of Labor and Employment (DOLE) at least one month prior to the intended date
of termination of employment; (2) payment of separation pay equivalent to at least one month
pay for every year of service; (3) good faith in abolishing the redundant positions; and (4) fair
and reasonable criteria in ascertaining what positions are to be declared redundant and
accordingly abolished, taking into consideration such factors as (a) preferred status; (b)
efficiency; and (c) seniority, among others.

Action Sequence: Illegal dismissal before LA –-> LA ruled that PNB complied with redundancy
program -> NLRC affirmed LA’s decision -> CA affirmed in part-> SC ruled that ruled that PNB
complied with redundancy program.

FACTS:

 The case stemmed from a complaint for illegal dismissal, underpayment of separation
pay and retirement benefits, illegal deduction, nonpayment of provident fund with prayer
for damages and attorney's fees filed by Jumelito T. Dalmacio (Dalmacio) and Emma R.
Martinez (Martinez)4 as a result of their separation from PNB way back September 15,
2005 due to PNB's implemention of its redundancy program. Dalmacio and Martinez
were hired as utility worker and communication equipment operator, respectively, by the
National Service Corporation, a subsidiary of PNB.
 Years later, Dalmacio became an Information Technology (IT) officer of PNB, while
Martinez became a Junior IT Field Analyst.
  LA RULING: LA Romelita N. Rioflorido ruled that PNB complied with the law and
jurisprudence in terminating the services of the complainants on the ground of
redundancy.
 NLRC RULING: On appeal, the NLRC, in its March 30, 2010 Resolution, affirmed the
LA's Decision, and ruled that there is no showing of bad faith on PNB's part in
undertaking the redundancy program. Dalmacio and Martinez's Motion for
Reconsideration having been denied by the NLRC, Dalmacio filed a Petition for
Certiorari with the CA.
 CA RULING: CA affirmed in part the Resolution of the NLRC, and ruled, among others,
that, "principles of justice and fair play call for the modification of the separation package
already received by herein petitioner. x x x the subtraction of the GSIS Gratuity Pay is
inappropriate, therefore the same should be returned to the petitioner."

ISSUE:
 Whether or not PNB validly implemented its redundancy program. (YES)

RULING:

 YES, PNB validly implemented its redundancy program.

 One of the authorized causes for the dismissal of an employee is redundancy. It exists
when the service capability of the workforce is in excess of what is reasonably needed to
meet the demands of the business enterprise. A position is redundant when it is
superfluous, and superfluity of a position or positions could be the result of a number of
factors, such as the overhiring of workers, a decrease in the volume of business or the
dropping of a particular line or service previously manufactured or undertaken by the
enterprise.
 Time and again, it has been ruled that an employer has no legal obligation to keep more
employees than are necessary for the operation of its business. For the implementation
of a redundancy program to be valid, however, the employer must comply with the
following requisites: (1) written notice served on both the employees and the Department
of Labor and Employment (DOLE) at least one month prior to the intended date of
termination of employment; (2) payment of separation pay equivalent to at least one
month pay for every year of service; (3) good faith in abolishing the redundant positions;
and (4) fair and reasonable criteria in ascertaining what positions are to be declared
redundant and accordingly abolished, taking into consideration such factors as (a)
preferred status; (b) efficiency; and (c) seniority, among others.
 In the case at bar, PNB was upfront with its employees about its plan to implement its
redundancy program. As NLRC stated: respondents were able to show substantial proof
that it underwent redundancy program and that complainants herein voluntarily accepted
the Special Redundancy Package offered by respondent bank to its employees. In fact,
they were officially notified of the management's decision to terminate their employment
as early as August 15, 2005 x x x; and Complainants and their union officers were even
consulted of the respondent's decision to terminate its employees on [the] ground of
redundancy between July 29 and August 5, 2005. Complainants agreed and accepted
the decision. x x x.
 Likewise, records show that PNB complied with the procedural requirements. PNB
 served Dalmacio and Martinez Notices of Termination dated August 15, 2005, informing
them that their termination due to redundancy shall be effective September 15, 2005.
PNB also filed an Establishment Termination Report dated August 16, 2005 with the
Regional Office of the DOLE, in order to report complainants' termination.

DISPOSITIVE PORTION:

 WHEREFORE, the petitions are DENIED. The September 21, 2011 Decision of the
Court of Appeals in CA-G.R. SP. No. 115493, is AFFIRMED in toto.

NOTES:

 Generally, deeds of release, waiver or· quitclaims cannot bar employees from
demanding benefits to which they are legally entitled or from contesting the legality of
their dismissal since quitclaims are looked upon with disfavor and are frowned upon as
contrary to public policy. Where, however, the person making the waiver has done so
voluntarily, with a full understanding thereof, and the consideration for the quitclaim is
credible and reasonable, the transaction must be recognized as being a valid and
binding undertaking.
 The requisites for a valid quitclaim are: (1) that there was no fraud or deceit on the part
of any of the parties; (2) that the consideration for the quitclaim is credible and
reasonable; and (3) that the contract is not contrary to law, public order, public policy,
morals or good customs or prejudicial to a third person with a right recognized by law.
 [U]nder the GSIS law, a government employee is required to take off a small part of his
income and remit the same to the GSIS as his monthly contributions. Considering such
mandatory deductions, it is but fitting that such gratuity pay is deemed separate and
distinct from his separation package and should not be deducted therefrom. x x x.
Ignacio

Topic: Closure of Establishment and Reduction of Personnel – Article 298: Closure or Cessation
of Business

149. ZAMBRANO V. PHIL CARPET MANUFACTURING CORP.

[G.R. No. 224099. June 21, 2017.]

ROMMEL M. ZAMBRANO, ROMEO O. CALIPAY, JESUS L.

CHIN, LYNDON B. APOSAGA, BONIFACIO A. CASTAÑEDA,
ROSEMARIE P. FALCUNIT, ROMEO A. FINALLA, LUISITO G.
GELLIDO, JOSE ALLI L. MABUHAY, VICENTE A. MORALES,
RAUL L. REANZARES, DIODITO I. TACUD, ERNAN D.
TERCERO, LARRY V. MUTIA, ROMEO A. GURON, DIOSDADO
S. AZUSANO, BENEDICTO D. GIDAYAWAN, LOWIS M.
LANDRITO, NARCISO R. ASI, TEODULO BORAC, SANTOS J.
CRUZADO, JR., ROLANDO DELA CRUZ, RAYMUNDO, MILA Y.
ABLAY, ERMITY F. GABUCAY, PABLITO M. LACANARIA,
MELCHOR PENAFLOR, ARSENIO B. PICART III, ROMEO M.
 SISON, JOSE VELASCO JR., ERWIN M. VICTORIA, PRISCO J.
ABILO, WILFREDO D. ARANDIA, ALEXANDER Y. HILADO,
JAIME M. CORALES, GERALDINE C. MAUHAY, MAURO P.
MARQUEZ, JONATHAN T. BARQUIN, RICARDO M. CALDERON
JR., RENATO R. RAMIREZ, VIVIAN P. VIRTUDES, DOMINGO P.
COSTANTINO JR., RENATO A. MANAIG, RAFAEL D. CARILLO,
petitioners, vs. PHILIPPINE CARPET MANUFACTURING
CORPORATION/PACIFIC CARPET MANUFACTURING
CORPORATION, DAVID E. T. LIM, and EVELYN LIM FORBES,
respondents.
Doctrine:
 Closure of business is the reversal of fortune of the employer whereby there is a
complete cessation of business operations and/or an actual locking-up of the doors of
establishment, usually due to financial losses.
o Closure of business, as an authorized cause for termination of employment aims
to prevent further financial drain upon an employer who cannot pay anymore his
employees since business has already stopped. In such a case, the employer is
generally required to give separation benefits to its employees, unless the
closure is due to serious business losses.
 In sum, under Article 283 of the Labor Code, three requirements are necessary for a
valid cessation of business operations:
1. Service of a written notice to the employees and to the DOLE at least one month
before the intended date thereof
2. The cessation of business must be bona fide in character, and
3. Payment to the employees of termination pay amounting to one month pay or at
least one-half month pay for every year of service, whichever is higher.

Action Sequence: LA upheld the dismissal due to lawful cause > NLRC affirmed > CA affirmed
> SC affirmed

Facts:
 The petitioners averred that they were employees of private respondent Philippine
Carpet Manufacturing Corporation (Phil Carpet).
 On January 3, 2011, they were notified of the termination of their employment effective
February 3, 2011, on the ground of cessation of operation due to serious business
losses.
 However, they were of the belief that their dismissal was without just cause and in
violation of due process because the closure of Phil Carpet was a mere pretense to
transfer its operations to its wholly owned and controlled corporation, Pacific Carpet
Manufacturing Corporation (Pacific Carpet).
o They claimed that the job orders of some regular clients of Phil Carpet were
transferred to Pacific Carpet; and that from October to November 2011, several
machines were moved from the premises of Phil Carpet to Pacific Carpet.
 In its defense, Phil Carpet countered that it permanently closed and totally ceased its
operations because there had been a steady decline in the demand for its products due
to global recession, stiffer competition, and the effects of a changing market.
o Based on the Audited Financial Statements conducted by SGV & Co., it incurred
losses of P4.1M in 2006; P12.8M in 2007; P53.28M in 2008; and P47.79M in
 2009. As of the end of October 2010, unaudited losses already amounted to
P26.59M.
o Subsequently, the Board of Directors decided to approve the recommendation of
its management to cease manufacturing operations.
o The termination of the petitioners' employment was effective as of the close of
office hours on February 3, 2011.
o Phil Carpet likewise faithfully complied with the requisites for closure or cessation
of business under the Labor Code. The petitioners and the Department of Labor
and Employment (DOLE) were served written notices one (1) month before the
intended closure of the company.
o The petitioners were also paid their separation pay and they voluntarily executed
their respective Release and Quitclaim before the DOLE officials.
 The Labor Arbiter (LA) dismissed the complaints for illegal dismissal and unfair labor
practice.
o It ruled that the termination of the petitioners' employment was due to total
cessation of manufacturing operations of Phil Carpet because it suffered
continuous serious business losses from 2007 to 2010.
o The LA added that the closure was truly dictated by economic necessity as
evidenced by its audited financial statements.
o It observed that written notices of termination were served on the DOLE and on
the petitioners at least one (1) month before the intended date of closure.
o The LA further found that the petitioners voluntarily accepted their separation pay
and other benefits and eventually executed their individual release and quitclaim
in favor of the company.
o Finally, it declared that there was no showing that the total closure of operations
was motivated by any specific and clearly determinable union activity of the
employees.
 The NLRC affirmed the findings of the LA. Aggrieved, the petitioners filed a petition for
certiorari with the CA.
 The CA dismissed the petition for certiorari, ruling that the total cessation of Phil Carpet's
manufacturing operations was not made in bad faith because the same was clearly due
to economic necessity.
o It determined that there was no convincing evidence to show that the regular
clients of Phil Carpet secretly transferred their job orders to Pacific Carpet;
o and that Phil Carpet's machines were not transferred to Pacific Carpet but were
actually sold to the latter after the closure of business as shown by the several
sales invoices and official receipts issued by Phil Carpet. MR DENIED.
Issue:
Whether or not petitioner were validly dismissed from employment for a lawful cause? (Y)

Ruling: YES. Zambrano and others were validly dismissed from employment for a lawful and
authorized cause due to cessation of operations.

 Under Article 298 (formerly Article 283) of the Labor Code, closure or cessation of
operation of the establishment is an authorized cause for terminating an employee:
 o … in cases of closure or cessation of operations of establishment or undertaking
not due to serious business losses or financial reverses, the separation pay shall
be equivalent to at least 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 as one (1) whole year.
 Closure of business is the reversal of fortune of the employer whereby there is a
complete cessation of business operations and/or an actual locking-up of the doors of
establishment, usually due to financial losses.
o Closure of business, as an authorized cause for termination of employment, aims
to prevent further financial drain upon an employer who cannot pay anymore his
employees since business has already stopped.
o In such a case the employer is generally required to give separation benefits to
its employees, unless the closure is due to serious business losses.
 In sum, under Article 283 of the Labor Code, three requirements are necessary for a
valid cessation of business operations:
1. Service of a written notice to the employees and to the DOLE at least one month
before the intended date thereof
2. The cessation of business must be bona fide in character, and
3. Payment to the employees of termination pay amounting to one month pay or at
least one-half month pay for every year of service, whichever is higher.
 In this case, the LA's findings that Phil Carpet suffered from serious business losses
which resulted in its closure were affirmed in toto by the NLRC, and subsequently by the
CA.
o It is a rule that absent any showing that the findings of fact of the labor tribunals
and the appellate court are not supported by evidence on record or the judgment
is based on a misapprehension of facts, the Court shall not examine anew the
evidence submitted by the parties.
o Even after perusal of the records, the Court finds no reason to take exception
from the foregoing rule.
 Phil Carpet continuously incurred losses starting 2007, as shown by the Audited
Financial Statements which were offered in evidence by the petitioners themselves.
o The petitioners, in claiming that Phil Carpet continued to earn profit in 2011 and
2012, disregarded the reason for such income, which was Phil Carpet's act of
selling its remaining inventories. Notwithstanding such income, Phil Carpet
continued to incur total comprehensive losses in the amounts of P9,559,716 and
P12,768,277 for the years 2011 and 2012, respectively.
 Further, even if the petitioners refuse to consider these losses as serious enough to
warrant Phil Carpet's total and permanent closure, it was a business judgment on the
part of the company's owners and stockholders to cease operations, a judgment which
the Court has no business interfering with.
 The only limitation provided by law is that the closure must be "bona fide in
character and not impelled by a motive to defeat or circumvent the tenurial rights
of employees."
o Thus, when an employer complies with the foregoing conditions, the Court
cannot prohibit closure "just because the business is not suffering from any loss
or because of the desire to provide the workers continued employment."
 Finally, Phil Carpet notified DOLE and the petitioners of its decision to cease
manufacturing operations on January 3, 2011, or at least one (1) month prior to the
intended date of closure on February 3, 2011. The petitioners were also given
separation pay equivalent to 100% of their monthly basic salary for every year of service.
Dispositive:

WHEREFORE, the petition is DENIED. The January 8, 2016 Decision and April 11, 2016
Resolution of the Court of Appeals in CA-G.R. SP No. 140663, are AFFIRMED in toto. SO
ORDERED.

Additional Notes:

Sira
Topic: Retirement from Service

151. Cercado vs. UNIPROM

G.R. No. 188154, October 13, 2010

LOURDES A. CERCADO, Petitioner,

vs.
UNIPROM, INC., Respondent.

DOCTRINE: Retirement is the result of a bilateral act of the parties, a voluntary agreement
between the employer and the employee whereby the latter, after reaching a certain age,
agrees to sever his or her employment with the former.Acceptance by the employees of an early
retirement age option must be explicit, voluntary, free, and uncompelled. While an employer
may unilaterally retire an employee earlier than the legally permissible ages under the Labor
Code, this prerogative must be exercised pursuant to a mutually instituted early retirement plan.
In other words, only the implementation and execution of the option may be unilateral, but not
the adoption and institution of the retirement plan containing such option. For the option to be
valid, the retirement plan containing it must be voluntarily assented to by the employees or at
least by a majority of them through a bargaining representative.

ACTION SEQUENCE: LA (Petitioner was illegally dismissed) -> NLRC (Petitioner was
illegally dismissed)-> SC (Petitioner was validly dismissed)

FACTS:

 Petitioner started working for UNIPROM on December 15, 1978 as a ticket seller
assigned at Fiesta Carnival, Araneta Center. She was later on promoted as cashier and
then as clerk typist.

 On April 1, 1980, UNIPROM instated an Employees’ Non-Contributory Retirement Plan

which provides that any participant within 20 years of service, regardless of age, may be
retired at his option or at the option of the company.
 On January 1, 2001, UNIPROM amended the retirement plan in compliance with RA No.
7641.

 Under the revised retirement plan, UNIPROM reserved the option to retire employees
who were qualified to retire under the program.

 Sometime in December 2000, UNIPROM implemented a company-wide early retirement

program for its 41 employees including herein petitioner who, at that time, was 47 years
old, with 22 years of continuous service to the company. She was offered an early
retirement package amounting to PHP171,982 but she rejected it.

 UNIPROM exercised its option under the retirement plan, and decided to retire Cercado
effective at the end of business hours on February 15, 2001. A check of even date in the
amount of PHP100,811 representing her retirement benefits under the regular retirement
package, was issued to her. Cercado refused to accept the check.

 UNIPROM nonetheless pursued its decision and Cercado was no longer given any work
assignment.

 Cercado then filed a complaint for illegal dismissal before the LA alleging that UNIPROM
did not have a bona fide retirement plan and that even if there was, she did not consent
thereto.

 UNPROM argued that Cercado was automatically covered by the retirement plan when
she agreed to the company’s rules and regulations and that her retirement from service
was a valid exercise of a management prerogative.

 LA Ruling

o Petitioner was illegally dismissed. Respondent was ordered to reinstate petitioner

with payment of full backwages.

 NLRC

o Affirmed the LA decision stating that there was no evidence that Cercado
consented to the alleged retirement plan or that she was notified thereof.

 CA

o Set aside the decisions of the LA and the NLRC.

o Found the retirement plan legal and consistent with Article 287 of the Labor Code
which provides that “any employee may be retired upon reaching the retirement
age established in the CBA or other applicable employment contract.”

o It applied the doctrine laid dawn in Progressive Development Corporation where

the phrase “may be retired” was interpreted to mean that an option is given to an
 employer to retire an employee and such option is within the discretion of the
employer to exercise.

o The CA also noted that Cercado cannot feign ignorance of the retirement plan
considering that she was already working with the company when it took effect in
1980.

ISSUE 1: Whether or not UNIPROM has a bona fide retirement plan

RULING 1:

 Retirement is the result of a bilateral act of the parties, a voluntary agreement between
the employer and the employee whereby the latter, after reaching a certain age, agrees
to sever his or her employment with the former.

 Article 287 of the Labor Code, as amended by R.A. No. 7641,13 pegs the age for
compulsory retirement at 65 years, while the minimum age for optional retirement is set
at 60 years. An employer is, however, free to impose a retirement age earlier than the
foregoing mandates. This has been upheld in numerous cases14 as a valid exercise of
management prerogative.

 Further, in Pantranco North Express vs. NLRC, the Court upheld the retirement of
private respondents pursuant to a CBA allowing Pantranco to compulsorily retire
employees upon completing 25 years of service to the company. The Court stressed that
providing in a CBA for compulsory retirement of employees after a certain period of time
is legal and enforceable so long as the parties agree to be governed by such CBA.

 It is axiomatic that a retirement plan giving the employer the option to retire its
employees below the ages provided by law must be assented to and accepted by the
latter. Otherwise, its adhesive imposition will amount to a deprivation of property w/o due
process of law.

 In several cases, the retirement plans in issue were the result of negotiations and
eventual agreement between the employer and the employees. The plan was either
embodied in a CBA or established after consultations and negotiations with the
employees’ bargaining representative. The consent of the employees to be retired even
before the statutory retirement age of 25 years was thus clear and unequivocal.

 In this case, petitioner was retired after having served the company for 22 years,
pursuant to the Retirement Plans. However, no evidence of voluntary acquiescence to
UNIPROM’s early retirement age option can be attributed to the petitioner. The assailed
retirement plan is not embodied in a CBA or in any employment contract or agreement
assented to by petitioner and her co-employees. On the contrary, the Retirement Plan
was unilaterally and compulsorily imposed on them.

 Petitioner was forced to participate in the plan and the only way she could have rejected
the same was to resign or lose her job. Acceptance by the employees of an early
retirement age option must be explicit, voluntary, free, and uncompelled. While an
employer may unilaterally retire an employee earlier than the legally permissible ages
 under the Labor Code, this prerogative must be exercised pursuant to a mutually
instituted early retirement plan. In other words, only the implementation and execution of
the option may be unilateral, but not the adoption and institution of the retirement plan
containing such option. For the option to be valid, the retirement plan containing it must
be voluntarily assented to by the employees or at least by a majority of them through a
bargaining representative.

ISSUE 2: Whether or not petitioner was validly retired pursuant thereto

RULING 2: No, petitioner was not validly retired.

Hence, consistent with the Court’s ruling in Jaculbe, having terminated petitioner merely on the
basis of a provision in the retirement plan which was not freely assented to by her, UNIPROM is
guilty of illegal dismissal. Petitioner is thus entitled to reinstatement without loss of seniority
rights and to full backwages computed from the time of her illegal dismissal in February 16,
2001 until the actual date of her reinstatement. If reinstatement is no longer possible because
the position that petitioner held no longer exists, UNIPROM shall pay backwages as computed
above, plus, in lieu of reinstatement, separation pay equivalent to one-month pay for every year
of service. This is consistent with the preponderance of jurisprudence24 relative to the award of
separation pay in case reinstatement is no longer feasible.

DISPOSITIVE:

WHEREFORE, the petition is GRANTED. The July 31, 2007 Decision and the May 26, 2009
Resolution of the Court of Appeals in CA- G.R. SP No. 87508 are hereby REVERSED and SET
ASIDE. The October 30, 2002 Decision of the Labor Arbiter is REINSTATED, with the
MODIFICATION that the award of backwages shall be computed from the time of her illegal
dismissal until the actual date of her reinstatement. If reinstatement is no longer possible
because the position that petitioner held no longer exists, respondent UNIPROM shall pay
backwages as computed above, plus, in lieu of reinstatement, separation pay equivalent to one-
month pay for every year of service.