LABOR AND THE CONSTITUTION Social justice is "neither communism, nor despotism, nor atomism, nor anarchy," but

the Humanization of laws and the equalization of social and economic forces by the State so that justice in its rational and objectively secular conception may at least be approximated. Social justice means the promotion of the welfare of all the people, the adoption by the Government of measures calculated to insu re economic stability of all the competent elements of society, through the main tenance of a proper economic and social equilibrium in the interrelations of the members of the community, constitutionally, through the adoption of measures le gally justifiable, or extra-constitutionally, through the exercise of powers und erlying the existence of all governments on the time-honored principle of salus populi est suprema lex. (Calalang vs. Williams [G.R. No. L-47800, 02 December 1 940]) The State is bound under the Constitution to afford full protection to labor and when conflicting interests of labor and capital are to be weighed on the scales of social justice the heavier influence of the latter should be counterbalanced with the sympathy and compassion the law accords the less privileged workingman . This is only fair if the worker is to be given the opportunity and the right t o assert and defend his cause not as a subordinate but as part of management wit h which he can negotiate on even plane. Thus labor is not a mere employee of cap ital but its active and equal partner. (Fuente vs. NLRC [G.R. No. 110017, 02 Jan uary 1997]) The cause of social justice is not served by upholding the interest of petitione rs in disregard of the right of private respondents. Social justice ceases to be an effective instrument for the "equalization of the social and economic forces " by the State when it is used to shield wrongdoing. While it is true that compa ssion and human consideration should guide the disposition of cases involving te rmination of employment since it affects one's source or means of livelihood, it should not be overlooked that the benefits accorded to labor do not include com pelling an employer to retain the services of an employee who has been shown to be a gross liability to the employer. It should be made clear that when the law tilts the scale of justice in favor of labor, it is but a recognition of the inh erent economic inequality between labor and management. The intent is to balance the scale of justice; to put the two parties on relatively equal positions. The re may be cases where the circumstances warrant favoring labor over the interest s of management but never should the scale be so tilted if the result is an inju stice to the employer, Justicia remini regarda est (Justice is to be denied to n one). (Jamer vs. NLRC [G.R. No. 112630, 05 September 1997]) It is true the Constitution regards labor as "a primary social economic force." But so does it declare that it "recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to needed invest ment." The Constitution bids the State to "afford full protection to labor." But it is equally true that "the law, in protecting the right's of the laborer, aut horizes neither oppression nor self-destruction of the employer." And it is oppr ession to compel the employer to continue in employment one who is guilty or to force the employer to remain in operation when it is not economically in his int erest to do so. (Serrano vs. NLRC [G.R. No. 117040, 27 January 2000]) EMPLOYER-EMPLOYEE RELATIONSHIP Importance of the existence of an employment relation A basic factor underlying the exercise of rights under the Labor Code is status of employment. The question of whether employer-employee relationship exists is a primordial consideration before extending labor benefits under the workmen's c ompensation, social security, medicare, termination pay and labor relations law. It is important in the determination of who shall be included in a proposed bar gaining unit because it is the sine qua non, the fundamental and essential condi tion that a bargaining unit be composed of employees. Failure to establish this juridical relationship between the union members and the employer affects the le gality of the union itself. It means the ineligibility of the union members to p resent a petition for certification election as well as to vote therein. (La Sue

rte vs. Director [123 SCRA 679]) Tests for the existence of Employer-Employee Relationship South West Disaster Co ntrol In determining the existence of employer-employee relationship, the following el ements are generally considered, namely: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the pow er to control the employees' conduct-although the latter is the most important e lement. (35 Am. Jur. 445). [T]o determine whether a person who performs work for another is the latter's em ployee or an independent contractor, the National Labor Relations relies on 'the right to control' test. Under this test an employer-employee relationship exist where the person for whom the services are performed reserves the right to cont rol not only the end to be achieved, but also the manner and means to be used in reaching the end. (LVN vs. Philippine Musicians Guild [G.R. No. 12582] citing U nited Insurance Company, 108, NLRB No. 115.) [T]he relationship between jeepney owners/operators on one hand and jeepney driv ers on the other under the boundary system is that of employer-employee and not of lessor-lessee. We explained that in the lease of chattels, the lessor loses c omplete control over the chattel leased although the lessee cannot be reckless i n the use thereof, otherwise he would be responsible for the damages to the less or. In the case of jeepney owners/operators and jeepney drivers, the former exer cise supervision and control over the latter. The management of the business is in the owner's hands. The owner as holder of the certificate of public convenien ce must see to it that the driver follows the route prescribed by the franchisin g authority and the rules promulgated as regards its operation. Now, the fact th at the drivers do not receive fixed wages but get only that in excess of the socalled "boundary" they pay to the owner/operator is not sufficient to withdraw t he relationship between them from that of employer and employee. We have applied by analogy the abovestated doctrine to the relationships between bus owner/oper ator and bus conductor, auto-calesa owner/operator and driver, and recently betw een taxi owners/operators and taxi drivers. Hence, petitioners are undoubtedly e mployees of private respondent because as taxi drivers they perform activities w hich are usually necessary or desirable in the usual business or trade of their employer. (Jardin vs. NLRC [G.R. No. 119268, 23 February 2000]) The case of Pajarillo vs. SSS, invoked by the public respondent as authority for the ruling that a "joint fishing venture" existed between private respondent an d petitioners is not applicable in the instant case. There is neither light of c ontrol nor actual exercise of such right on the part of the boat-owners in the P ajarillo case, where the Court found that the pilots therein are not under the o rder of the boat-owners as regards their employment; that they go out to sea not upon directions of the boat-owners, but upon their own volition as to when, how long and where to go fishing; that the boat-owners do not in any way control th e crew-members with whom the former have no relationship whatsoever; that they s imply join every trip for which the pilots allow them, without any reference to the owners of the vessel; and that they only share in their own catch produced b y their own efforts. The aforementioned circumstances obtaining in Pajarillo do not exist in the inst ant case. The conduct of the fishing operations was undisputably shown by the te stimony of Alipio Ruga, the patron/pilot of 7/B Sandyman II, to be under the con trol and supervision of private respondent's operations manager. Matters dealing on the fixing of the schedule of the fishing trip and the time to return to the fishing port were shown to be the prerogative of private respondent. While perf orming the fishing operations, petitioners received instructions via a single-si de band radio from private respondent's operations manager who called the patron /pilot in the morning. They are told to report their activities, their position, and the number of tubes of fish-catch in one day. Clearly thus, the conduct of the fishing operations was monitored by private respondent thru the patron/pilot of 7/B Sandyman II who is responsible for disseminating the instructions to the crew members. (Ruga vs. NLRC [G.R. No. L-72654-61, 22 January 1990])

The business venture operated under Geminesse Enterprise did not result in an em ployer-employee relationship between petitioners and private respondent. While i t is true that the receipt of a percentage of net profits constitutes only prima facie evidence that the recipient is a partner in the business, the evidence in the case at bar controverts an employer-employee relationship between the parti es. In the first place, private respondent had a voice in management of the affa irs of the sales force. Secondly, petitioner Tocao s admissions militate against a n employer-employee relationship. She admitted that, like her who owned Geminess e Enterprise, private respondent only received commissions and transportation an d representation allowances and not a fixed salary. If indeed petitioner Tocano was private respondent s employer, it is difficult to believe that they shall rece ive the same income in the business. In a partnership, each partner must share i n the profits and losses of the venture, except that the industrial partner shal l not be liable for losses. As an industrial partner, private respondent had the right to demand for a formal accounting of the business and to receive her shar e in the profit. (Tocao vs. CA [G.R. No. 127405, 04 October 2000]) The barbershop claims it had no control over its barbers. The power to control r efers to the existence of the power and not necessarily to the actual exercise t hereof, nor is it essential for the employer to actually supervise the performan ce of duties of the employee. It is enough that the employer has the right to ex ercise the power. As to the control test, the following facts indubitably reveal t hat the respondent company wielded control over the work performance of petition ers; in that (1) they worked in the barber shop owned and operated by the respon dents; (2) that they were required to report daily and observe definite hours of work; (3) they were not free to accept other employment elsewhere but devoted t heir full time working at the New Looks Barber Shop for all the fifteen (15) yea rs they have worked until April 15, 1995; (4) that some have worker with respond ent s since the early 1960 s; (5) that petitioner Patricia Nas was instructed by the respondents to watch the other six (6) petitioners in their daily task. Certai nly, respondent company was clothed with the power to dismiss any or all of them for just and vald cause. Petitioners were unarguably performing work necessary and desiriable in the business of respondent company. (Corporal vs. NLRC [G.R. N o. 129315, 02 October 2000]) Labor Only Contractor vis--vis an Independent Contractor In LEGITIMATE JOB CONTRACTING, no employer-employee relationship exists between the employees of the job contractor and the principal employer. Even then, the p rincipal employer becomes jointly and severally liable with the job contractor f or the payment of the employees' wages whenever the contractor fails to pay the same. In such case, the law creates an employer-employee relationship between th e principal employer and the job contractor's employees for a limited purpose, t hat is, to ensure that the employees are paid their wages. Other than the paymen t of wages, the principal employer is not responsible for any claim made by the employees. On the other hand, in LABOR-ONLY CONTRACTING, an employer-employee relationship is created by law between the principal employer and the employees of the laboronly contractor. In this case, the labor-only contractor is considered merely an agent of the principal employer. The principal employer is responsible to the e mployees of the labor-only contractor as if such employees had been directly emp loyed by the principal employer. The principal employer therefore becomes solida rily liable with the labor-only contractor for all the rightful claims of the em ployees. (PCI Automation vs. NLRC [GR No. 115920, 1996] Basis of Liability The distinction between Articles 106 and 107 was in the fact that Article 106 de als with "labor-only" contracting. Here, by operation of law, the contractor is merely considered as an agent of the employer, who is deemed "responsible to the workers to the same extent as if the latter were directly employed by him." On the other hand, Article 107 deals with "job contracting." In the latter situatio n, while the contractor himself is the direct employer of the employees, the emp

loyer is deemed, by operation of law, as an indirect employer. In other words, the phrase "not an employer" found in Article 107 must be read i n conjunction with Article 106. A contrary interpretation would render the provi sions of Article 107 meaningless considering that everytime an employer engages a contractor, the latter is always acting in the interest of the former, whether directly or indirectly, in relation to his employees. It should be recalled that a finding that a contractor is a "labor-only" contrac tor is equivalent to declaring that there is an employer-employee relationship b etween the owner of the project and the employees of the "labor-only" contractor (Associated Anglo-American Tobacco Corp. v. Clave, G.R. No. 50915, 30 August 19 90, 189 SCRA 127; Industrial Timber Corp. v. NLRC, G.R. No. 83616, 20 January 19 89, 169 SCRA 341). This is evidently because, as heretofore stated, the "laboronly" contractor is considered as a mere agent of an employer. In contrast, in "job contracting," no employer-employee relationship exists between the owner an d the employees of his contractor. The owner of the project is not the direct em ployer but merely an indirect employer, by operation of law, of his contractor's employees. (Baguio vs. NLRC [G.R. No. 79004, 04 October 1991]) Requisites for allowable job contracting: (I ARM Free Capital) 1. INDEPENDENT business. 2. according to his own ACCOUNT. 3. Under his own RESPONSIBILITY. 4. According to his own METHOD of conducting business. 5. Free from the control of the principal except as to the result. 6. Sufficient Capital or investment in the form of tools, equipment, materi als, work premises (TEM Work). More importantly, the petitioners, individually or collectively, did not have su bstantial capital or investment in the form of tools, equipment, work premises a nd other materials which is necessary in the conduct of the business of the resp ondent company. What the petitioners owned were only combs, scissors, razors, na nothing else. By no standard can these be co il cutters, nail polishers, nippers nsidered substantial capital necessary to operate a barbershop. (Corporal vs. NL RC [G.R. No. 129315, 02 October 2000]) Substantial Capital or Investment The Neri and Fuji Xerox cases [I]n the case of Neri vs. NLRC, we held that in order to be considered as a job contractor it is enough that a contractor has substantial capital. In other word s, once substantial capital established it is no longer necessary for the contra ctor to show evidence that it has investment in the form of tools, equipment, ma chineries, work premises, among others. The rational for this is that Article 10 6 of the Labor Code does not require that the contractor possess both substantia l capital and investment in the form of tools, equipment, machineries, work prem ises, among others. The decision of the Court in Neri, thus, states: Respondent BCC need not prove that it made investments in the form of tools, equ ipment, machineries, work premises, among others, because it has established tha t it has sufficient capitalization. The Labor Arbiter and the NLRC both determin ed that BCC had a capital stock of P1 million fully subscribed and paid for. BCC is therefore a highly capitalized venture and cannot be deemed engaged in "labo r-only" contracting. However, in declaring that Building Care Corporation ("BCC") was an independent contractor, the Court considered not only the fact that it had substantial capit alization. The Court noted that BCC carried on an independent business and under took the performance of its contract according to its own manner and method, fre e from the control and supervision of its principal in all matters except as to the results thereof. The Court likewise mentioned that the employees of BCC were engaged to perform specific special services for its principal. Thus, the Court ruled that BCC was an independent contractor. The Court further clarified the import of the Neri decision in the subsequent ca se of Philippine Fuji Xerox Corporation vs. NLRC. In the said case, petitioner F uji Xerox implored the Court to apply the Neri doctrine to its alleged job-contr

actor, Skillpower, Inc., and declare the same as an independent contractor. Fuji Xerox alleged that Skillpower, Inc. was a highly capitalized venture registered with the Securities and Exchange Commission, the Department of Labor and Employ ment, and the Social Security System with assets exceeding P5,000,000.00 possess ing at least 29 typewriters, office equipment and service vehicles, and its own pool of employees with 25 clerks assigned to its clients on a temporary basis. D espite the evidence presented by Fuji Xerox the Court refused to apply the Neri case and explained: Petitioners cite the case of Neri v. NLRC, in which it was held that the Buildin g Care Corporation (BCC) was an independent contractor on the basis of finding t hat it had substantial capital, although there was no evidence that it had inves tments in the form of tools, equipment, machineries and work premises. But the C ourt in that case considered not only the capitalization of the BCC but also the fact that BCC was providing specific special services (radio/telex operator and janitor) to the employer; that in another case, the Court had already found tha t BCC was an independent contractor; that BCC retained control over the employee s and the employer was actually just concerned with the end-result; that BCC had the power to reassign the employees and their deployment was not subject to the approval of the employer; and that BCC was paid in lump sum for the services it rendered. These features of that case make it distinguishable from the present one. (Vinoya vs. NLRC [G.R. No. 126586, 02 February 2000]) Liability of indirect employer for unpaid salaries/wages The joint and several liability of the employer or principal was enacted to ensu re compliance with the provisions of the Code, principally those on statutory mi nimum wage. The contractor or subcontractor is made liable by virtue of his or h er status as a direct employer, and the principal as the indirect employer of th e contractor's employees. This liability facilitates, if not guarantees, payment of the workers' compensation, thus, giving the workers ample protection as mand ated by the 1987 Constitution. This is not unduly burdensome to the employer. Sh ould the indirect employer be constrained to pay the workers, it can recover wha tever amount it had paid in accordance with the terms of the service contract be tween itself and the contractor. Withal, fairness likewise dictates that the indirect employer should not, howeve r, be held liable for wage differentials incurred while the complainants were as signed to other companies. Under these cited provisions of the Labor Code, shoul d the contractor fail to pay the wages of its employees in accordance with law, the indirect employer, is jointly and severally liable with the contractor, but such responsibility should be understood to be limited to the extent of the work performed under the contract, in the same manner and extent that he is liable t o the employees directly employed by him. This liability of petitioner covers th e payment of the workers' performance of any work, task, job or project. So long as the work, task, job or project has been performed for indirect employer's be nefit or on its behalf, the liability accrues for such period even if, later on, the employees are eventually transferred or reassigned elsewhere. We repeat: The indirect employer's liability to the contractor's employees exten ds only to the period during which they were working for the petitioner, and the fact that they were reassigned to another principal necessarily ends such respo nsibility. The principal is made liable to his indirect employees, because it ca n protect itself from irresponsible contractors by withholding such sums and pay ing them directly to the employees or by requiring a bond from the contractor or subcontractor for this purpose. (Rosewood Processing, Inc. vs. NLRC [G.R. Nos. 116476-84, 21 May 1998]) Liability of indirect employer for unpaid backwages and separation pay Similarly, the solidary liability for payment of back wages and separation pay i s limited, under Article 106, "to the extent of the work performed under the con tract"; under Article 107, to "the performance of any work, task, job or project "; and under Article 109, to "the extent of their civil liability under this Cha pter [on payment of wages]."

These provisions cannot apply to the indirect employer, considering that the com plainants were no longer working for or assigned to it when they were illegally dismissed. Furthermore, an order to pay back wages and separation pay is investe d with a punitive character, such that an indirect employer should not be made l iable without a finding that it had committed or conspired in the illegal dismis sal. The liability arising from an illegal dismissal is unlike an order to pay the st atutory minimum wage, because the workers' right to such wage is derived from la w. The proposition that payment of back wages and separation pay should be cover ed by Article 109, which holds an indirect employer solidarily responsible with his contractor or subcontractor for "any violation of any provision of this Code ," would have been tenable if there were proof there was none in this case that the principal/employer had conspired with the contractor in the acts giving ris e to the illegal dismissal. (Rosewood Processing, Inc. vs. NLRC [G.R. Nos. 11647 6-84, 21 May 1998]) Liability of indirect employer for statutory wage increases [T]he liability of the petitioner to reimburse the respondent only arises if and when contractor actually pays its employees the increases granted by Wage Order Nos. 5 and 6. Payment, which means not only the delivery of money but also the performance, in any other manner, of the obligation, is the operative fact which will entitle either of the solidary debtors to seek reimbursement for the share which corresponds to each of the debtors. (Lapanday Agricultural Development Co rp. vs. CA [G.R. No. 112139, 31 January 2000]) Jurisdiction of labor courts [W]here the claim to the principal relief sought is to be resolved not by refere nce to the Labor Code or other labor relations statute or a collective bargainin g agreement but by the general civil law, the jurisdiction over the dispute belo ngs to the regular courts of justice and not to the Labor Arbiter and the NLRC. In such situations, resolution of the dispute requires expertise, not in labor m anagement relations nor in wage structures and other terms and conditions of emp loyment, but rather in the application of the general civil law. Clearly, such c laims fall outside the area of competence or expertise ordinarily ascribed to La bor Arbiters and the NLRC and the rationale for granting jurisdiction over such claims to these agencies disappears. (SMC vs. NLRC [G.R. No. 80774, 161 SCRA 719 ]) [P]etitioner seeks protection under the civil laws and claims no benefits under the labor Code. The primary relief sought is for liquidated damages for breach o f a contractual obligation. The other items demanded are not labor benefits dema nded by workers generally taken cognizance of in labor disputes, such as payment of wages, overtime compensation or separation pay. The items claimed are the na tural consequences flowing from breach of an obligation, intrinsically a civil d ispute. (Singapore Airlines vs. Pao [G.R. No. 47739]) Petitioner filed the third-party claim before the court a quo by reason of a wri t of execution issued by the NLRC-CAR Sheriff against a property to which it cla ims ownership. The writ was issued to enforce and execute the commission's decis ion in NLRC Case No. 0165 (Illegal Dismissal and ULP) against Green Mountain Far m, Roberto Ongpin and Almus Alabe. Ostensibly the complaint before the trial court was for the recovery of possessi on and injunction, but in essence it was an action challenging the legality or p ropriety of the levy vis-a-vis the alias writ of execution, including the acts p erformed by the Labor Arbiter and the Deputy Sheriff implementing the writ. The complainant was in effect a motion to quash the writ of execution of a decision rendered on a case properly within the jurisdiction of the Labor Arbiter, to wit : Illegal Dismissal and ULP. Considering the factual setting, it is then logical to conclude that the subject matter of the third party claim is but an incident of the labor case, a matter beyond the jurisdiction of regional trial courts. Precedents abound confirming the rule that said courts have no labor jurisdictio n to act on labor cases or various incidents arising therefrom, including the ex

ecution of decisions, awards or orders. Jurisdiction to try and adjudicate such cases pertains exclusively to the proper labor official concerned under the Depa rtment of Labor and Employment. To hold otherwise is to sanction split jurisdict ion which is obnoxious to the orderly administration of justice. Petitioner failed to realize that by filing its third-party claim with the deput y sheriff, it submitted itself to the jurisdiction of the Commission acting thro ugh the Labor Arbiter. It failed to perceive the fact that what it is really con troverting is the decision of the Labor arbiter and not the act of the deputy sh eriff in executing said order issued as a consequence of said decision rendered. Jurisdiction once acquired is not lost upon the instance of the parties but cont inues until the case is terminated. Whatever irregularities attended the issuanc e and execution of the alias writ of execution should be referred to the same ad ministrative tribunal which rendered the decision. This is because any court whi ch issued a writ of execution has the inherent power, for the advancement of jus tice, to correct errors of its ministerial officers and to control its own proce sses. (Deltaventures Resources, Inc. vs. Cabato [G.R. No. 118216, 09 March 2000 ]) Labor Dispute "Labor dispute" includes any controversy or matter concerning terms or condition s of employment or the association or representation of persons in negotiating, fixing, maintaining, changing or arranging the terms and conditions of employmen t, regardless of whether the disputants stand in the proximate relation of emplo yer and employee. [Article 212 (l) of the Labor Code] While it is SMC's submission that no employer-employee relationship exists betwe en itself, on the one hand, and the contractual workers of Lipercon and D'Rite o n the other, a labor dispute can nevertheless exist "regardless of whether the d isputants stand in the proximate relationship of employer and employee" (Article 212 [1], Labor Code, supra) provided the controversy concerns, among others, th e terms and conditions of employment or a "change" or "arrangement" thereof (i bid). Put differently, and as defined by law, the existence of a labor dispute i s not negative by the fact that the plaintiffs and defendants do not stand in th e proximate relation of employer and employee. That a labor dispute, as defined by the law, does exist herein is evident. At bo ttom, what the Union seeks is to regularize the status of the employees contract ed by Lipercon and D'Rite in effect, that they be absorbed into the working unit of SanMig. This matter definitely dwells on the working relationship between s aid employees vis-a-vis SanMig. Terms, tenure and conditions of their employment and the arrangement of those terms are thus involved bringing the matter within the purview of a labor dispute. Further, the Union also seeks to represent thos e workers, who have signed up for Union membership, for the purpose of collectiv e bargaining. SanMig, for its part, resists that Union demand on the ground that there is no employer-employee relationship between it and those workers and bec ause the demand violates the terms of their CBA. Obvious then is that representa tion and association, for the purpose of negotiating the conditions of employmen t are also involved. In fact, the injunction sought by SanMig was precisely also to prevent such representation. Again, the matter of representation falls withi n the scope of a labor dispute. Neither can it be denied that the controversy be low is directly connected with the labor dispute already taken cognizance of by the NCMB-DOLE. Whether or not the Union demands are valid; whether or not SanMig's contracts wi th Lipercon and D'Rite constitute "labor-only" contracting and, therefore, a reg ular employer-employee relationship may, in fact, be said to exist; whether or n ot the Union can lawfully represent the workers of Lipercon and D'Rite in their demands against SanMig in the light of the existing CBA; whether or not the noti ce of strike was valid and the strike itself legal when it was allegedly instiga ted to compel the employer to hire strangers outside the working unit; those ar e issues the resolution of which call for the application of labor laws, and San Mig's cause's of action in the Court below are inextricably linked with those is sues. (SMC Employee Union-PTGWO vs. Hon. Bersamira [G.R. No. 87700, 1990])

MANAGEMENT PREROGATIVES An owner of a business enterprise is given considerable leeway in managing his b usiness because it is deemed important to society as a whole that he should succ eed. Our law, therefore, recognizes certain rights as inherent in the management of business enterprises. These rights are collectively called management prerog atives or acts by which one directing a business is able to control the variable s thereof so as to enhance the chances of making a profit. "Together, they may b e taken as the freedom to administer the affairs of a business enterprise such t hat the costs of running it would be below the expected earnings or receipts. In short, the ELBOW ROOM IN THE QUEST FOR PROFITS." (Chu vs. NLRC [G.R. No. 106107 , 02 June 1994]) It is noteworthy to state that an employer is free to manage and regulate, accor ding to his own discretion and judgment, all phases of employment, which include s hiring, work assignments, working methods, time, place and manner of work, sup ervision of workers, working regulations, transfer of employees, lay-off of work ers, and the discipline, dismissal and recall of work. While the law recognizes and safeguards this right of an employer to exercise what are clearly management prerogatives, such right should not be abused and used as a tool of oppression against labor. The company's prerogatives must be EXERCISED IN GOOD FAITH and wi th due regard to the rights of labor. A priori, they are not absolute prerogativ es but are SUBJECT TO LEGAL LIMITS, COLLECTIVE BARGAINING AGREEMENTS and the GEN ERAL PRINCIPLES OF FAIR PLAY AND JUSTICE. The power to dismiss an employee is a recognized prerogative that is inherent in the employer's right to freely manage and regulate his business. Corollarily, a n employer cannot rationally be expected to retain the employment of a person wh ose lack of morals, respect and loyalty to his employer, regard for his employer 's rules and appreciation of the dignity and responsibility of his office, has s o plainly and completely been bared. He may not be compelled to continue to empl oy such person whose continuance in the service will patently be inimical to his employer's interest. The right of the company to dismiss an employee is a measu re of self-protection. Such right, however, is subject to regulation by the Stat e, basically in the exercise of its paramount police power. Thus, the dismissal of employees must be made within the parameters of the law and pursuant to the b asic tenets of equity, justice and fairplay. It must not be done arbitrarily and without just cause. (Philippine-Singapore Transit vs. NLRC [GR No. 95449, Augus t 1997]) Reorganization The free will of management to conduct its own business affairs to achieve its p urpose cannot be denied (Abbot Laboratories v. NLRC, G.R. No. 76959, October 12, 1987, 154 SCRA 713). Even as the law is solicitous of the welfare of employees, it must also protect the right of an employer to exercise what are clearly mana gement prerogatives. Hence, management is not precluded from undertaking a reorg anization within the company or entering into mergers with other companies to me et the demands of the enterprise. In such cases, the company has the prerogative to abolish managerial and confidential positions or create new ones as the nece ssity for them requires. (Yap vs. Ichong [G.R. No. L-51314, 21 June 1990]) Obedience to Company Rules and Regulations This Court fails to see, however, how these objections and accusations justify t he deliberate and obdurate refusal of the sales representatives to obey the mana gement's simple requirement for submission by all Premise Sales Representatives (PSRs) of individual reports or memoranda requiring reflecting target revenues w hich is all that GTE basically required and which it addressed to the employees concerned no less than six (6) times. The Court fails to see how the existence of objections made by the union justify the studied disregard, or wilful disobed ience by the sales representatives of direct orders of their superior officers t o submit reports. Surely, compliance with their superiors' directives could not have foreclosed their demands for the revocation or revision of the new sales po licies or rules; there was nothing to prevent them from submitting the requisite

reports with the reservation to seek such revocation or revision. To sanction disregard or disobedience by employees of a rule or order laid down by management, on the pleaded theory that the rule or order is unreasonable, ill egal, or otherwise irregular for one reason or another, would be disastrous to t he discipline and order that it is in the interest of both the employer and his employees to preserve and maintain in the working establishment and without whic h no meaningful operation and progress is possible. Deliberate disregard or diso bedience of rules, defiance of management authority cannot be countenanced. This is not to say that the employees have no remedy against rules or orders they re gard as unjust or illegal. They may object thereto, ask to negotiate thereon, br ing proceedings for redress against the employer before the Ministry of Labor. B ut until and Unless the rules or orders are declared to be illegal or improper b y competent authority, the employees ignore or disobey them at their peril. It i s impermissible to reverse the process: suspend enforcement of the orders or rul es until their legality or propriety shall have been subject of negotiation, con ciliation, or arbitration. (GTE Directories vs. Sanchez [G.R. No. 76219, 27 May 1991]) Transfers The situation here presented is of an employer transferring an employee to anoth er office in the exercise of what it took to be sound business judgment and in a ccordance with pre-determined and established office policy and practice, and of the latter having what was believed to be legitimate reasons for declining that transfer, rooted in considerations of personal convenience and difficulties for the family. Under these circumstances, the solution proposed by the employee he rself, of her voluntary termination of her employment and the delivery to her of corresponding separation pay, would appear to be the most equitable. Certainly, the Court cannot accept the proposition that when an employee opposes his emplo yer's decision to transfer him to another work place, there being no bad faith o r underhanded motives on the part of either party, it is the employee's wishes t hat should be made to prevail. In adopting that proposition by way of resolving the controversy, the respondent NLRC gravely abused its discretion. (PT & T vs. Laplana [G.R. No. 76645, 23 July 1991]) [T]he Court has recognized and upheld the prerogative of management to transfer an employee from one office to another within the business establishment provide d that there is no demotion in rank or a diminution of his salary, benefits and other privileges. This is a privilege inherent in the employer's right to contro l and manage its enterprise effectively. Even as the law is solicitous of the em ployees' welfare, it cannot ignore the right of the employer to exercise what ar e clearly and obviously management prerogatives. The freedom of management to co nduct its business operations to achieve its purpose cannot be denied. But like all other rights, there are limits. The managerial prerogative to trans fer personnel must be exercised without grave abuse of discretion and putting to mind the basic elements of justice and fair play. HAVING THE RIGHT SHOULD NOT B E CONFUSED WITH THE MANNER IN WHICH THAT RIGHT MUST BE EXERCISED. Thus it cannot be used as a subterfuge by the employer to rid himself of an undesirable worker . Nor when the real reason is to penalize an employee for his union activities a nd thereby defeat his right to self-organization. But the transfer can be upheld when there is no showing that it is unnecessary, inconvenient and prejudicial t o the displaced employee . The reassignment of Halili and Magno to Manila is legally indefensible on severa l grounds. Firstly, it was grossly inconvenient to private respondents. They are working students. When they received the transfer memorandum directing their re location to Manila within seven days from notice, classes had already started. T he move from Tarlac to Manila at such time would mean a disruption of their stud ies. Secondly, there appears to be no genuine business urgency that necessitated their transfer. As well pointed out by private respondents' counsel, the fabric ation of aluminum handles for ice boxes does not require special dexterity. Many workers could be contracted right in Manila to perform that particular line of work. (Yuco Chemicals vs. Minster of Labor [G.R. No. L-75656, 1991])

Waiver of Management Prerogatives Possible; CBA provision to the contrary Section 2, Article II of the CBA expressly provides that: Sec. 2. In the exercise of its functions of management, the COMPANY shall have t he sole and exclusive right and power, among other things, to direct the operati ons and the working force of its business in all respects; to be the sole judge in determining the capacity or fitness of an employee for the position or job to which he has been assigned; to schedule the hours of work, shifts and work sche dules; to require work to be done in excess of eight hours or Sundays or holiday s as the exigencies of the service may require; to plan, schedule, direct, curta il and control factory operations and schedules of production; to introduce and install new or improved methods or facilities; to designate the work and the emp loyees to perform it; to select and hire new employees; to train new employees a nd improve the skill and ability of employees from one job to another or form on e shift to another; to classify or reclassify employees; and to make such change s in the duties of its employees as the COMPANY may see fit or convenient for th e proper conduct of its business. Verily and wisely, management retained the prerogative, whenever exigencies of t he service so require, to change the working hours of its employees. And as long as such prerogative is exercised in good faith for the advancement of the emplo yer's interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, this Court will u phold such exercise (Union Carbide Labor Union vs. Union Carbide [215 SCRA 554]) Imposition of Penalty; A commensurate penalty for an offense [W]hile Clarete may be guilty of violation of company rules, we find the penalty of dismissal imposed upon him by respondent Caltex too harsh and unreasonable. As enunciated in Radio Communications of the Philippines, Inc. v. National Labor Relations Commission, supra, "such a penalty (of dismissal) must be commensurat e with the act, conduct or omission imputed to the employee and imposed in conne ction with the employer's disciplinary authority" (at p. 667). Even when there e xist some rules agreed upon between the employer and employee on the subject of dismissal, we have ruled in Gelmart Industries Phils., Inc. v. National Labor Re lations Commission, 176 SCRA 295 (1989), that the same cannot preclude the State from inquiring on whether its rigid application would work too harshly on the e mployee. (Caltex Refinery vs. NLRC [ G.R. No. 102993, 14 July 1995]) Application of; With minor infractions, first violations and length of service. Mary Johnston Hospital v. NLRC, where the employee had a heated argument with th e department head, the Court held that since the incident was her first offense during her seventeen (17) years of employment the penalty of termination was not commensurate with the act committed. Manila Electric Company v. NLRC, where the employee was declared guilty of breac h of trust and violation of company rules the penalty of dismissal was not meted to him considering his twenty (20) years of service without any previous deroga tory record and his two (2) commendations for honesty from the company. Dolores v. NLRC, where the employee absented herself without permission from her superior, the Court ruled that the penalty of dismissal was too severe consider ing her twenty-one (21) years of service with the company and it appearing that it was her first offense. Philippine Telegraph and Telephone Corporation v. NLRC, where the employee was a djudged guilty of tampering a receipt, the Court ruled that the imposition of th e supreme penalty of dismissal would certainly be very harsh and disproportionat e to the infraction committed, especially after noting that it was his first off ense after seven (7) long years of satisfactory service. Radio Communications of the Philippines, Inc. v. NLRC, where the employee was fo und guilty of misappropriating company funds and withholding messages for transm ission, the Court ruled that in view of the employee's continuous service of ten (10) years with the company the penalty of dismissal for the minor infractions would be unduly harsh and grossly disproportionate.

Bonotan v. NLRC, where the employee shouted at the operations manager, the Court ruled that since the employee has been with the company for twenty-six (26) yea rs and nowhere in the records did it appear that she committed any previous viol ation of company rules and regulations, dismissal from work would be too severe a penalty under the circumstances. Tanduay Distillery Labor Union v. NLRC, where the employees were found guilty of eating while at work, the Court ruled that inasmuch as they had served the comp any without any record of violation or infraction of company rules and regulatio ns prior to the incident for periods ranging from 16 to 26 years, respectively, the dismissal meted out on them was too harsh a penalty. EMPLOYEE CLASSIFICATION AND/OR STATUS Regular, Casual and Seasonal employees Regular and casual employment. - The provisions of written agreement to the cont rary notwithstanding and regardless of the oral agreements of the parties, an em ployment shall be deemed to be regular where the employee has been engaged to pe rform activities which are usually necessary or desirable in the usual business or trade of the employer except where the employment has been fixed for a specif ic project or undertaking, the completion or termination of which has been deter mined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who has rendered at least one year of se rvice, whether such service is continuous or broken, shall be considered a regul ar employee with respect to the activity in which he is employed and his employm ent shall continue while such activity exists. (Article 280 of the Labor Code) [A]n employment shall be deemed regular if the employee performs activities usua lly necessary or desirable in the usual business and trade of the employer OR if the employee has rendered at least one (1) year of service, whether the service be continuous or broken. Ferrochrome Phils. vs. NLRC, 236 SCRA 315 G.R. 105538 [5 September 1994] The primary standard, therefore, of determining a regular employment is the reas onable connection between the particular activity performed by the employee in r elation to the usual business or trade of the employer. THE TEST IS WHETHER THE FORMER IS USUALLY NECESSARY OR DESIRABLE IN THE USUAL BUSINESS OR TRADE OF THE E MPLOYER. 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 eviden ce of the necessity if not indispensability of that activity to the business. He nce, the employment is also considered regular, but ONLY WITH RESPECT TO SUCH AC TIVITY AND WHILE SUCH ACTIVITY EXISTS. (De Leon vs. NLRC [G.R. No. 70705, 21 Aug ust 1989]) [T]he second paragraph of Article 280 relates only to casual employees and is no t applicable to those who fall within the definition of said Article's first par agraph, i.e., project employees. The familiar grammatical rule is that a proviso is to be construed with reference to the immediately preceding part of the prov ision to which it is attached, and not to other sections thereof, unless the cle ar legislative intent is to restrict or qualify not only the phrase immediately preceding the proviso but also earlier provisions of the statute or even the sta tute itself as a whole. No such intent is observable in Article 280 of the Labor Code. The second paragraph of Art. 280 demarcates as "casual" employees, all other emp loyees who do not fall under the definition of the preceding paragraph. The prov iso, in said second paragraph, deems as regular employees those "casual" employe es who have rendered at least one year of service regardless of the fact that su ch service may be continuous or broken. (Mercado, Sr. vs. NLRC [G.R. No. 79869, 05 September 1991])

In the case at bar, while it may appear that the work of the petitioner is seaso nal, inasmuch as petitioners have served the company for many years, a number fo r over 20 years, performing services which are necessary and indispensable to LU TORCO s business, serve as badges of regular employment. Moreover, the fact that p etitioners do not work continuously for one whole year but only for the duration of the tobacco season does not detract from considering them in regular employm ent since in a litany of cases this Court has already settled that seasonal empl oyees who are called to work from time to time and are temporarily laid off duri ng off-season are not separated from service in said period, but merely consider ed on leave until re-employed. Private respondent s reliance on the case of Mercado vs. NLRC is misplaced conside ring that since in said case of Mercado, although respondent company therein con sistently availed of the services of the petitioners therein from year to year, it was clear that petitioners therein were not in respondent company s regular emp loy. Petitioners therein performed different phases of agricultural work in a gi ven year. However, during that period, they were free to contract services to wo rk for other farm owners, as in fact they did. Thus, the Court ruled in that cas e that their employment would naturally end upon completion of each project or p hase of farm work for which they have been contracted. All the foregoing considered, the public respondent NLRC in the case at bar erre d in its total affirmance of the dismissal of the consolidated complaint, for se paration pay, against private respondents LUTORCO and See Lin Chan considering t hat petitioners are regular seasonal employees entitled to the benefits of Artic le 283 of the Labor Code which applies to closure or cessation of an establishme nt or undertaking, whether it be a complete or partial cessation of business ope ration. (Abasolo vs. NLRC [G.R. No. 118475, 29 November 2000]) Probationary Employees Probationary employment. - Probationary employment shall not exceed six months f rom the date the employee started working, unless it is covered by an apprentice ship 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 standard s made known by the employer to the employee at the time of his engagement. An e mployee who is allowed to work after a probationary period shall be considered a regular employee. (Article 281 of the Labor Code) [A] probationary employee, as understood under Article 282 of the Labor Code, is one who is on trial by an employer during which the employer determines whether or not he is qualified for permanent employment. A probationary appointment is made to afford the employer an opportunity to observe the fitness of a probation er while at work, and to ascertain whether he will become a proper and efficient employee. The word "PROBATIONARY", as used to describe the period of employment , IMPLIES THE PURPOSE OF THE TERM OR PERIOD, BUT NOT ITS LENGTH. Being in the nature of a "trial period" the essence of a probationary period of employment fundamentally lies in the purpose or objective sought to be attained by both the employer and the employee during said period. The length of time is immaterial in determining the correlative rights of both in dealing with each ot her during said period. While the employer, as stated earlier, observes the fitn ess, propriety and efficiency of a probationer to ascertain whether he is qualif ied for permanent employment, the probationer, on the other, seeks to prove to t he employer, that he has the qualifications to meet the reasonable standards for permanent employment. It is well settled that the employer has the right or is at liberty to choose wh o will be hired and who will be denied employment. In that sense, it is within t he exercise of the right to select his employees that the employer may set or fi x a probationary period within which the latter may test and observe the conduct of the former before hiring him permanently. xxx xxx xxx As the law now stands, Article 281 of the Labor Code gives ample authority to th e employer to terminate a probationary employee for a just cause or when he fail

s 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. There is no thing under Article 281 of the Labor Code that would preclude the employer from extending a regular or a permanent appointment to an employee once the employer finds that the employee is qualified for regular employment even before the expi ration of the probationary period. Conversely, if the purpose sought by the empl oyer is neither attained nor attainable within the said period, Article 281 does not likewise preclude the employer from terminating the probationary employment on justifiable causes as in the instant case. (International Catholic Migration vs. NLRC [G.R. 72222, 30 January 1989]) This is by no means to assert that the security of tenure protection of the cons titution does not apply to probationary employees. The Labor code has wisely pro vided for such a case thus: "The termination of employment of probationary emplo yees and those employed with a fixed period shall be subject to such regulations as the Secretary of Labor may prescribe to prevent the circumvention of the rig ht of the employees to be secured in their employment as provided herein." There is no question here, as noted in the assailed order of Presidential Executive A ssistant Clave, that petitioners did not enjoy a permanent status. During such p eriod they could remain in their positions and any circumvention of their of the rights, in accordance with the statutory statutory scheme, subject to inquiry a nd therafter correction by the Department of Labor. Thus there was the safeguard as to the duration of their employment being respected. To that extent, their t enure was secure. The moment, however, the period expired in accordance with con tracts freely entered into, they could no longer invoke the constitutional prote ction. (Biboso vs. Victorias Milling [G.R. No. L-44360, 31 March 1977]) [T]he extension of Dequila's probation was ex gratia, an act of liberality on th e part of his employer affording him a second chance to make good after having i nitially failed to prove his worth as an employee. Such an act cannot now unjust ly 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. The law, surely, was never meant to produce such an inequitable result. By voluntarily agreeing (the extension was with Dequila's written consent) to an extension of the probationary period, Dequila in effect waived any benefit atta ching to the completion of said period if he still failed to make the grade duri ng the period of extension. The Court finds nothing in the law which by any fair interpretation prohibits such a waiver. And no public policy protecting the emp loyee and the security of his tenure is served by prescribing voluntary agreemen ts which, by reasonably extending the period of probation, actually improve and further a probationary employee's prospects of demonstrating his fitness for reg ular employment. (Mariwasa vs. Leodegario [G.R. No. 74246, 26 January 1989]) Generally, the probationary period of employment is limited to six (6) months. T he 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 w hen the same is required by the nature of work to be performed by the employee. In the latter case, there is recognition of the exercise of managerial prerogati ves in requiring a longer period of probationary employment, such as in the pres ent case where the probationary period was set for eighteen (18) months, i.e. fr om May 1980 to October 1981, especially where the employee must learn a particul ar kind of work such as selling, or when the job requires certain qualifications , skills, experience or training. Policy Instruction No. 11 of the Minister of Labor and Employment has clarified any and all doubts on the period of probationary employment. It states as follow s: Probationary Employment has been the subject of misunderstanding in some quarter . Some people believe six (6) months is the probationary period in all cases. On the other hand employs who have already served the probationary period are some times required to serve again on probation. Under the Labor Code, six (6) months is the general probationary period but the probationary period is actually the period needed to determine fitness for the j ob. This period, for lack of a better measurement is deemed to be the period nee

ded to learn the job. The purpose of this policy is to protect the worker at the same time enable the employer to make a meaningful employee selection. This purpose should be kept in mind in enforcing this provision of the Code. This issuance shall take effect i mmediately. In the case at bar, it is shown that private respondent Company needs at least e ighteen (18) months to determine the character and selling capabilities of the p etitioners as sales representatives. The Company is engaged in advertisement and publication in the Yellow Pages of the PLDT Telephone Directories. Publication of solicited ads are only made a year after the sale has been made and only then win the company be able to evaluate the efficiency, conduct, and selling abilit y of its sales representatives, the evaluation being based on the published ads. Moreover, an eighteen month probationary period is recognized by the Labor Unio n in the private respondent company, which is Article V of the Collective Bargai ning Agreement,... xxx xxx xxx And as indicated earlier, the very contracts of employment signed and acquiesced to by the petitioners specifically indicate that "the company hereby employs th e employee as telephone sales representative on a probationary status for a peri od of eighteen (18) months, i.e. from May 1980 to October 1981, inclusive. This stipulation is not contrary to law, morals and public policy. (Ver Buiser vs. GT E Directories [G.R. No. L-63316, 1984]) Managerial employees and supervisory employees "Managerial employee" is one who is vested with powers or prerogatives to lay do wn and execute management policies and/or to hire, transfer, suspend, lay-off, r ecall, discharge, assign or discipline employees. Supervisory employees are thos e who, in the interest of the employer, effectively recommend such managerial ac tions if the exercise of such authority is not merely routinary or clerical in n ature but requires the use of independent judgment. All employees not falling wi thin any of the above definitions are considered rank-and-file employees for pur poses of this Book. [Article 212 (m), of the Labor Code] The grave abuse of discretion committed by public respondent is at once apparent . Art. 212, par. (m), of the Labor Code is explicit. A managerial employee is (a ) one who is vested with powers or prerogatives to lay down and execute manageme nt policies, or to hire, transfer, suspend, lay off, recall, discharge, assign o r discipline employees; or (b) one who is vested with both powers or prerogative s. A supervisory employee is different from a managerial employee in the sense t hat the supervisory employee, in the interest of the employer, effectively recom mends such managerial actions, if the exercise of such managerial authority is n ot routinary in nature but requires the use of independent judgment. Ranged against these definitions and after a thorough examination of the evidenc e submitted by both parties, we arrive at a contrary conclusion. Branch Managers , Cashiers and Controllers of respondent Bank are not managerial employees but s upervisory employees. The finding of public respondent that bank policies are la id down and/or executed through the collective action of these employees is simp ly erroneous. His discussion on the division of their duties and responsibilitie s does not logically lead to the conclusion that they are managerial employees, as the term is defined in Art. 212, par. (m). (NATU-RPB vs. Torres (G.R. No. 934 68, 20 December 1994]) [A] thorough dissection of the job description of the concerned supervisory empl oyees and section heads show that they are not actually managerial but only supe rvisory employees since they do not lay down company policies. PICOP s contention that the subject section heads and unit managers exercise the authority to hire and fire is ambiguous and quite misleading for the reason that any authority the y my exercise is not supreme but merely advisory in character. Theirs is not a f inal determination of the company policies inasmuch as any action taken by them on matters relating to hiring, promotion, transfer, suspension and termination o f employees is still subject to confirmation and approval of their respective su perior. Thus, where such power, which is in effect recommendatory in character,

is subject to evaluation, review and final action by the department heads and ot her higher executives of the company, the same, although present, is not effecti ve and not an exercise of independent judgment as required by law. (PICOP vs. La guesma [G.R. No. 101738, 12 April 2000]) FIRST-LINE MANAGERS The lowest level in an organization at which individuals are responsible for the work of others is called first-line or first-level manageme nt. First-line managers direct operating employees only; they do not supervise o ther managers. Examples of first-line managers are the "foreman" or production s upervisor in a manufacturing plant, the technical supervisor in a research depar tment, and the clerical supervisor in a large office. First-level managers are o ften called supervisors. MIDDLE MANAGERS The term middle management can refer to more than one level in a n organization. Middle managers direct the activities of other managers and some times also those of operating employees. Middle managers' principal responsibili ties are to direct the activities that implement their organizations' policies a nd to balance the demands of their superiors with the capacities of their subord inates. A plant manager in an electronics firm is an example of a middle manager . TOP MANAGERS Composed of a comparatively small group of executives, top manageme nt is responsible for the overall management of the organization. It establishes operating policies and guides the organization's interactions with its environm ent. Typical titles of top managers are "chief executive officer," "president," and "senior vice-president." Actual titles vary from one organization to another and are not always a reliable guide to membership in the highest management cla ssification. As can be seen from this description, a distinction exists between those who hav e the authority to devise, implement and control strategic and operational polic ies (top and middle managers) and those whose task is simply to ensure that such policies are carried out by the rank-and-file employees of an organization (fir st-level managers/supervisors). What distinguishes them from the rank-and-file e mployees is that they act in the interest of the employer in supervising such ra nk-and-file employees. "Managerial employees" may therefore be said to fall into two distinct categorie s: the "managers" per se, who compose the former group described above, and the "supervisors" who form the latter group. Whether they belong to the first or the second category, managers, vis-a-vis employers, are, likewise, employees. xxx xxx xxx Earlier in this opinion, reference was made to the distinction between managers per se (top managers and middle managers) and supervisors (first-line managers). That distinction is evident in the work of the route managers which sets them a part from supervisors in general. Unlike supervisors who basically merely direct operating employees in line with set tasks assigned to them, route managers are responsible for the success of the company's main line of business through mana gement of their respective sales teams. Such management necessarily involves the planning, direction, operation and evaluation of their individual teams and are as which the work of supervisors does not entail. (United Pepsi Cola Supervisory Union vs. Laguesma [288 SCRA 15, 1998]) [A] thorough dissection of the job description of the concerned supervisory empl oyees and section heads indisputably show that they are not actually managerial but supervisory employees since they do not lay down company policies. PICOP s con tention that the subject section heads and unit managers exercise the authority to hire and fire is ambiguous and misleading for the reason that any authority t hey exercise is not supreme but merely advisory in character. Theirs is not a fi nal determination of the company policies inasmuch as any action taken by them o n matters relative to hiring, promotion, transfer, suspension and termination of employees is still subject to the confirmation and approval by their respective supervisor. Thus, where power, which is in effect recommendatory in character, is subject to evaluation, review and final action by department heads and other higher executives of the company, the same, although present, is not effective a nd not an exercise of independent judgment as required by law. (PICOP vs. Lagues

ma [G.R. No. 101738, 12 April 2000]) Term employment The question immediately provoked by a reading of Article 319 is whether or not a voluntary agreement on a fixed term or period would be valid where the employe e "has been engaged to perform activities which are usually necessary or desirab le in the usual business or trade of the employer." The definition seems a non s equitur. From the premise that the duties of an employee entail "activities whic h are usually necessary or desirable in the usual business or trade of the emplo yer the" conclusion does not necessarily follow that the employer and employee s hould be forbidden to stipulate any period of time for the performance of those activities. There is nothing essentially contradictory between a definite period of an employment contract and the nature of the employee's duties set down in t hat contract as being "usually necessary or desirable in the usual business or t rade of the employer." The concept of the employee's duties as being "usually ne cessary or desirable in the usual business or trade of the employer" is not syno nymous with or identical to employment with a fixed term. Logically, THE DECISIV E DETERMINANT IN TERM EMPLOYMENT SHOULD NOT BE THE ACTIVITIES THAT THE EMPLOYEE IS CALLED UPON TO PERFORM, BUT THE DAY CERTAIN AGREED UPON BY THE PARTIES FOR TH E COMMENCEMENT AND TERMINATION OF THEIR EMPLOYMENT RELATIONSHIP, A DAY CERTAIN B EING UNDERSTOOD TO BE "THAT WHICH MUST NECESSARILY COME, ALTHOUGH IT MAY NOT BE KNOWN WHEN." Seasonal employment, and employment for a particular project are me rely instances employment in which a period, where not expressly set down, neces sarily implied. xxx xxx xxx There can of course be no quarrel with the proposition that where from the circu mstances it is apparent that periods have been imposed to preclude acquisition o f tenurial security by the employee, they should be struck down or disregarded a s contrary to public policy, morals, etc. But where no such intent to circumvent the law is shown, or stated otherwise, where the reason for the law does not ex ist, e.g., where it is indeed the employee himself who insists upon a period or where the nature of the engagement is such that, without being seasonal or for a specific project, a definite date of termination is a sine qua non, would an ag reement fixing a period be essentially evil or illicit, therefore anathema? Woul d such an agreement come within the scope of Article 280 which admittedly was en acted "to prevent the circumvention of the right of the employee to be secured i n . . . (his) employment?" As it is evident from even only the three examples already given that Article 28 0 of the Labor Code, under a narrow and literal interpretation, not only fails t o exhaust the gamut of employment contracts to which the lack of a fixed period would be an anomaly, but would also appear to restrict, without reasonable disti nctions, the right of an employee to freely stipulate with his employer the dura tion of his engagement, it logically follows that such a literal interpretation should be eschewed or avoided. The law must be given a reasonable interpretation , to preclude absurdity in its application. Outlawing the whole concept of term employment and subverting to boot the principle of freedom of contract to remedy the evil of employer's using it as a means to prevent their employees from obta ining security of tenure is like cutting off the nose to spite the face or, more relevantly, curing a headache by lopping off the head. xxx xxx xxx Accordingly, and since the entire purpose behind the development of legislation culminating in the present Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent circumvention of the employee's right to be secure in his tenure, the clause in said article indiscriminately and complet ely ruling out all written or oral agreements conflicting with the concept of re gular employment as defined therein should be construed to refer to the substant ive evil that the Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It should have no application to instances wh ere a fixed period of employment was agreed upon knowingly and voluntarily by th e parties, without any force, duress or improper pressure being brought to bear

upon the employee and absent any other circumstances vitiating his consent, or w here it satisfactorily appears that the employer and employee dealt with each ot her on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. Unless thus limited in its purview, the law woul d be made to apply to purposes other than those explicitly stated by its framers ; it thus becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and unintended consequences. (Brent School vs. Zamora (G.R. No. L-484 94, 05 February 1990]) The private respondent's intention is obvious. It is remarkable that neither the NLRC nor the Solicitor General recognized it. There is no question that the pur pose behind these individual contracts was to evade the application of the labor laws by making it appear that the drivers of the trucking company were not its regular employees. Under these arrangements, the private respondent hoped to be able to terminate t he services of the drivers without the inhibitions of the Labor Code. All it had to do was refuse to renew the agreements, which, significantly, were uniformly limited to a six-month period. No cause had to be established because such renew al was subject to the discretion of the parties. In fact, the private respondent did not even have to wait for the expiration of the contract as it was there pr ovided that it could be "earlier terminated at the option of either party." By this clever scheme, the private respondent could also prevent the drivers fro m becoming regular employees and thus be entitled to security of tenure and othe r benefits, such as a minimum wage, cost-of-living allowances, vacation and sick leaves, holiday pay, and other statutory requirements. The private respondent a rgues that there was nothing wrong with the affidavit because all the affiant ac knowledged therein was full payment of the amount due him under the agreement. V iewed in this light, such acknowledgment was indeed not necessary at all because this was already embodied in the vouchers signed by the payee-driver. But the a ffidavit, for all its seeming innocuousness, imported more than that. What was i nsidious about the document was the waiver the affiant was unwarily making of th e statutory rights due him as an employee of the trucking company. xxx xxx xxx The Court looks with stern disapproval at the contract entered into by the priva te respondent with the petitioner (and who knows with how many other drivers). T he agreement was a clear attempt to exploit the unwitting employee and deprive h im of the protection of the Labor Code by making it appear that the stipulations of the parties were governed by the Civil Code as in ordinary private transacti ons. They were not, to be sure. The agreement was in reality a contract of emplo yment into which were read the provisions of the Labor Code and the social justi ce policy mandated by the Constitution. It was a deceitful agreement cloaked in the habiliments of legality to conceal the selfish desire of the employer to rea p undeserved profits at the expense of its employees. The fact that the drivers are on the whole practically unlettered only makes the imposition more censurabl e and the avarice more execrable. (Cielo vs. NLRC [G.R. No. 78693, 28 January 19 91]) [T]he two guidelines, by which fixed contracts of employments can be said NOT to circumvent security of tenure, are either: 1. The fixed period of employment was KNOWINGLY AND VOLUNTARILY AGREED UPON by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent ; or: 2. It satisfactorily appears that the employer and employee DEALT WITH EACH OTHER ON MORE OR LESS EQUAL TERMS with no moral dominance whatever being exerci sed by the former on the latter. (PNOC vs. NLRC [G.R. No. 97747, 31 March 1993]) It is apparent from Brent School that the critical consideration is the presence or absence of a substantial indication that the period specified in an employme nt agreement was designed to circumvent the security of tenure of regular employ

ees which is provided for in Articles 280 and 281 of the Labor Code. This indica tion must ordinarily rest upon some aspect of the agreement other than the mere specification of a fixed term of the ernployment agreement, or upon evidence ali unde of the intent to evade. Examining the provisions of paragraphs 5 and 6 of the employment agreement betwe en petitioner PIA and private respondents, we consider that those provisions mus t be read together and when so read, the fixed period of three (3) years specifi ed in paragraph 5 will be seen to have been effectively neutralized by the provi sions of paragraph 6 of that agreement. Paragraph 6 in effect took back from the employee the fixed three (3)-year period ostensibly granted by paragraph 5 by r endering such period in effect a facultative one at the option of the employer P IA. For petitioner PIA claims to be authorized to shorten that term, at any time and for any cause satisfactory to itself, to a one-month period, or even less b y simply paying the employee a month's salary. Because the net effect of paragra phs 5 and 6 of the agreement here involved is to render the employment of privat e respondents Farrales and Mamasig basically employment at the pleasure of petit ioner PIA, the Court considers that paragraphs 5 and 6 were intended to prevent any security of tenure from accruing in favor of private respondents even during the limited period of three (3) years, and thus to escape completely the thrust of Articles 280 and 281 of the Labor Code. (Pakistan Air Lines vs. Ople [G.R. N o. 61594, 28 September 1990]) Project employees [W]here the employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engage ment of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. (1st paragraph of Article 280 of the Labor Code) A project employee has been defined to be one whose employment has been fixed fo r a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee, . . . . (Mercado, Sr. vs. NLRC [G.R. No. 79869, 05 September 1991]) 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. FIRSTLY, a project could refer to a particular job or undertaking that is WITHIN THE REGU LAR OR USUAL BUSINESS OF THE EMPLOYER company, but which is distinct and separat e, and identifiable as such, from the other undertakings of the company. Such jo b or undertaking begins and ends at determined or determinable times. The typica l example of this first type of project is a particular construction job or proj ect 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 domes tic 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 determ ined and made known to the employees at the time of employment, are properly tre ated as "project employees," and their services may be lawfully terminated at co mpletion of the project. The term "project" could also refer to, SECONDLY, a particular job or undertakin g that is NOT WITHIN THE REGULAR BUSINESS OF THE CORPORATION. Such a job or unde rtaking must also be identifiably separate and distinct from the ordinary or reg ular 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." (ALU-TUCP vs. NLRC [G.R. No. 109902, 02 August 1994]) As an electrical contractor, the private respondent depends for its business on the contracts it is able to obtain from real estate developers and builders of b uildings. Since its work depends on the availability of such contracts or "proje cts," necessarily the duration of the employment of its work force is not perman ent but co-terminus with the projects to which they are assigned and from whose payrolls they are paid. It would be extremely burdensome for their employer who,

like them, depends on the availability of projects, if it would have to carry t hem as permanent employees and pay them wages even if there are no projects for them to work on. We hold, therefore, that the NLRC did not abuse its discretion in finding, based on substantial evidence in the records, that the petitioners a re only project workers of the private respondent. (Cartagenas vs. Romago Electr ic [G.R. No. 82973, 1989]) [P]etitioner relies on Policy Instruction No. 20 which was issued by then Secret ary Ople to stabilize employer-employee relations in the construction industry t o support his contention that workers in the construction industry may now be co nsidered regular employees after their long years of service with private respon dent. The pertinent provision of Policy Instruction No. 20 reads: Members of a work pool from which a construction company draws its project emplo yees, if considered employees of the construction company while in the work pool , are non-project employees or employees for an indefinite period. If they are e mployed in a particular project, the completion of the project or of any phase t hereof will not mean severance of employer-employee relationship. Respondent Commission correctly observed in its decision that complainants, one of whom petitioner, failed to consider the requirement in Policy Instruction No. 20 that to qualify as member of a work pool, the worker must still be considere d an employee of the construction company while in the work pool. In other words , there must be proof to the effect that petitioner was under an obligation to b e always available on call of private respondent and that he was not free to off er his services to other employees. Unfortunately, petitioner miserably failed t o introduce any evidence of such nature during the times when there were no proj ect. (Fernandez vs. NLRC [G.R. No. 106090, 28 February 1994]) Confidential Employees Confidential employees are those who (1) ASSIST OR ACT IN A CONFIDENTIAL CAPACIT Y, in regard (2) TO PERSONS WHO FORMULATE, DETERMINE, AND EFFECTUATE MANAGEMENT POLICIES [specifically in the field of LABOR RELATIONS]. The two criteria are cu mulative, 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 superior officer; and that officer must handle the prescribed responsib ilities relating to labor relations. (Sugbuanon Rural Bank, Inc. vs. Laguesma [G .R. No. 116194, 02 February 2000]) Granting arguendo that an employee has access to confidential labor relations in formation but such is merely incidental to his duties and knowledge thereof is n ot necessary in the performance of such duties, said access does not render the employee a confidential employee. If access to confidential labor relations info rmation is to be a factor in the determination of an employee's confidential sta tus, such information must relate to the employer's labor relations policies. Th us, an employee of a labor union, or of a management association, must have acce ss to confidential labor relations information with respect to his employer, the union, or the association, to be regarded a confidential employee, and knowledg e of labor relations information pertaining to the companies with which the unio n deals, or which the association represents, will not cause an employee to be e xcluded from the bargaining unit representing employees of the union or associat ion." "Access to information which is regarded by the employer to be confidentia l from the business standpoint, such as financial information or technical trade secrets, will not render an employee a confidential employee. (SMC vs. Laguesma [G.R. No. 110399, 15 August 1997]) Teachers The acquisition of security of tenure by the teacher in the manner indicated sig nifies that he shall thenceforth have the right to remain in employment as such teacher until he reaches the compulsory retirement age in accordance with the ru les of the school or the law. That tenure, once acquired, cannot be adversely af fected or defeated by requiring the teacher to execute contracts stipulating the termination of his employment upon the expiration of a fixed period or term. Co ntracts of that sort are anathema and will be struck down as null and void.

Now, a teacher may also be appointed as a department head or administrative offi cer of the school, e.g., as member of the school's governing council, as college dean or assistant dean, as high school's principal, as college secretary. Excep t in the case of a clear and explicit agreement to the contrary, the acceptance by a teacher of an administrative position offered to him or to which he might h ave aspired, does not operate as a relinquishment or loss by him of his security of tenure as a faculty member; he retains his tenure as a teacher during all th e time that he occupies the additional position of department head or administra tive officer of the school. Indeed, the agreement between him and the school may very well include a provision for him to continue teaching even on a part-time basis. xxx xxx xxx A distinction should thus be drawn between the teaching staff of private educati onal institutions, on one hand teachers, assistant instructors, assistant profe ssors, associate professors, full professors and department or administrative h eads or officials on the other college or department secretaries, principals, d irectors, assistant deans, deans. The teaching staff, the faculty members, may a nd should acquire tenure in accordance with the rules and regulations of the DEC S and the school's own rules and standards. On the other hand, teachers appointe d to serve as administrative officials do not normally and should not expect to, acquire a second or additional tenure. The acquisition of such an additional te nure is not normal, is the exception rather than the rule, and should therefore be clearly and specifically provided by law or contract. (La Salette of Santiago, Inc. vs. NLRC [195 SCRA 80, 1991]) RIGHT TO SELF-ORGANIZATION As to Government Employees and Employees of GOCCs with original charters EXECUTIVE ORDER NO. 180 (Effective: 01 June 1987) PROVIDING GUIDELINES FOR THE EXERCISE OF THE RIGHT TO RGANIZE OF GOVERNMENT EMPL OYEES, CREATING A PUBLIC SECTOR LABOR- MANAGEMENT COUNCIL, AND FOR OTHER PURPOSE S The scope of the constitutional right to self-organization of "government employ ees" above mentioned, was defined and delineated in Executive Order No. 180. Acc ording to this Executive Order, the right of self-organization does indeed perta in to all "employees of all branches, subdivisions, instrumentalities and agenci es of the Government, including government-owned or controlled corporations with original charters;" such employees "shall not be discriminated against in respe ct of their employment by reason of their membership in employees' organizations or participation in the normal activities of their organization x x (and their) employment shall not be subject to the condition that they shall not join or sh all relinquish their membership in the employees' organizations. However, the concept of the government employees' right of self-organization di ffers significantly from that of employees in the private sector. The latter's r ight of self-organization, i.e., "to form, join or assist labor organizations fo r purposes of collective bargaining," admittedly includes the right to deal and negotiate with their respective employers in order to fix the terms and conditio ns of employment and also, to engage in concerted activities for the attainment of their objectives, such as strikes, picketing, boycotts. But the right of GOVE RNMENT EMPLOYEES to "form, join or assist employees organizations of their own c hoosing" under Executive Order No. 180 is not regarded as existing or available for "purposes of collective bargaining," but simply "FOR THE FURTHERANCE AND PRO TECTION OF THEIR INTERESTS." In other words, the right of Government employees to deal and negotiate with th eir respective employers is not quite as extensive as that of private employees. Excluded from negotiation by government employees are the "terms and conditions of employment ... that are fixed by law," it being only those terms and conditi ons not otherwise fixed by law that "may be subject of negotiation between the d uly recognized employees' organizations and appropriate government authorities," And while EO No. 180 concedes to government employees, like their counterparts

in the private sector, the right to engage in concerted activities, including th e right to strike, the executive order is quick to add that those activities mus t be exercised in accordance with law, i.e. are subject both to "Civil Service L aw and rules" and "any legislation that may be enacted by Congress," that "the r esolution of complaints, grievances and cases involving government employees" is not ordinarily left to collective bargaining or other related concerted activit ies, but to "Civil Service Law and labor laws and procedures whenever applicable ;" and that in case "any dispute remains unresolved after exhausting all availab le remedies under existing laws and procedures, the parties may jointly refer th e dispute to the (Public Sector Labor-Management) Council for appropriate action ." What is more, the Rules and Regulations implementing Executive Order No. 180 explicitly provide that since the "terms and conditions of employment in the gov ernment, including any political subdivision or instrumentality thereof and gove rnment-owned and controlled corporations with original charters are governed by law, the employees therein shall not strike for the purpose of securing changes thereof. On the matter of limitations on membership in labor unions of government employe es, Executive Order No. 180 declares that "high level employees whose functions are normally considered as policy making or managerial, or whose duties are of a highly confidential nature shall not be eligible to join the organization of ra nk-and-file government employees. A "high level employee" is one "whose function s are normally considered policy determining, managerial or one whose duties are highly confidential in nature. A managerial function refers to the exercise of powers such as: 1. To effectively recommend such managerial actions; 2. To formu late or execute management policies and decisions; or 3. To hire, transfer, susp end, lay off, recall, dismiss, assign or discipline employees. (Arizala vs. CA [G.R. Nos. 43633-34, 14 September 1990]) I. COVERAGE Section 1. This Executive Order applies to all employees of all branches, s ubdivisions, instrumentalities, and agencies, of the Government, including gover nment-owned or controlled corporations with original charters. For this purpose, employees, covered by this Executive Order shall be referred to as "government employees". Section 2. All government employees can form, join or assist employees' org anizations of their own choosing for the furtherance and protection of their int erests. They can also form, in conjunction with appropriate government authoriti es, labor-management committees, works councils and other forms of workers' part icipation schemes to achieve the same objectives. Section 3. High-level employees whose functions are normally considered as policy-making or managerial or whose duties are of a highly confidential nature shall not be eligible to join the organization of rank-and-file government emplo yees. Section 4. The Executive Order shall not apply to the members of the Armed Forces of the Philippines, including police officers, policemen, firemen and jai l guards. II. PROTECTION OF THE RIGHT TO ORGANIZE Section 5. Government employees shall not be discriminated against in respe ct of their employment by reason of their membership in employees' organizations or participation in the normal activities of their organization. Their employme nt shall not be subject to the condition that they shall not join or shall relin quish their membership in the employees' organizations. Section 6. Government authorities shall not interfere in the establishment, functioning or administration of government employees' organizations through ac ts designed to place such organizations under the control of government authorit y. III. REGISTRATION OF EMPLOYEES' ORGANIZATION Section 7. Government employees' organizations shall register with the Civi

l Service Commission and the Department of Labor and Employment. The application shall be filed with the Bureau of Labor Relations of the Department which shall process the same in accordance with the provisions of the Labor Code of the Phi lippines, as amended. Applications may also be filed with the Regional Offices o f the Department of Labor and Employment which shall immediately transmit the sa id applications to the Bureau of Labor Relations within three (3) days from rece ipt thereof. Section 8. Upon approval of the application, a registration certificate be issued to the organization recognizing it as a legitimate employees' organizatio n with the right to represent its members and undertake activities to further an d defend its interest. The corresponding certificates of registration shall be j ointly approved by the Chairman of the Civil Service Commission and Secretary of Labor and Employment. IV. SOLE AND EXCLUSIVE EMPLOYEES' REPRESENTATIVES Section 9. The appropriate organizational unit shall be the employers unit consisting of rank-and-file employees unless circumstances otherwise require. Section 10. The duly registered employees' organization having the support o f the majority of the employees in the appropriate organizational unit shall be designated as the sole and exclusive representative of the employees. Section 11. A duly registered employees' organization shall be accorded volu ntary recognition upon a showing that no other employees' organization is regist ered or is seeking registration, based on records of the Bureau of Labor Relatio ns, and that the said organizations has the majority support of the rank-and-fil e employees in the organizational unit. Section 12. Where there are two or more duly registered employees' organizat ions in the appropriate organizational unit, the Bureau of Labor Relations shall , upon petition, order the conduct of a certification election and shall certify the winner as the exclusive representative of the rank-and-file employees in sa id organization unit. V. TERMS AND CONDITIONS OF EMPLOYMENT IN GOVERNMENT SERVICES Section 13. Terms and conditions of employment or improvements thereof, exce pt those that are fixed by law, may be the subject of negotiations between duly recognized employees' organizations and appropriate government authorities. Government employees. - The terms and conditions of employment of all government employees, including employees of government-owned and controlled corporations, shall be governed by the Civil Service Law, rules and regulations. Their salari es shall be standardized by the National Assembly as provided for in the new con stitution. However, there shall be no reduction of existing wages, benefits and other terms and conditions of employment being enjoyed by them at the time of th e adoption of this Code. (Article 276 of the Labor Code.) Government employees may, therefore, through their unions or associations, eithe r petition the Congress for the betterment of the terms and conditions of employ ment which are within the ambit of legislation or negotiate with the appropriate government agencies for the improvement of those which are not fixed by law. If there be any unresolved grievances, the dispute may be referred to the Public S ector Labor - Management Council for appropriate action. But employees in the ci vil service may not resort to strikes, walk-outs and other temporary work stoppa ges, like workers in the private sector, to pressure the Government to accede to their demands. As now provided under Sec. 4, Rule III of the Rules and Regulati ons to Govern the Exercise of the Right of Government- Employees to Self- Organi zation, which took effect after the instant dispute arose, "[t]he terms and cond itions of employment in the government, including any political subdivision or i nstrumentality thereof and government- owned and controlled corporations with or iginal charters are governed by law and employees therein shall not strike for t he purpose of securing changes thereof." (SSSEA vs. CA [G.R. No. 85279, 28 July 1989]) VI. PEACEFUL CONCERTED ACTIVITIES AND STRIKES

Section 14. The Civil Service laws and rules governing concerted activities and strikes in the government service shall be observed, subject to any legislat ion that may be enacted by Congress. [T]o implement the constitutional guarantee of the right of government employees to organize, the President issued E.O. No. 180 which provides guidelines for th e exercise of the right to organize of government employees. In Section 14 there of, it is provided that "[t]he Civil Service law and rules governing concerted a ctivities and strikes in the government service shall be observed, subject to an y legislation that may be enacted by Congress." The President was apparently ref erring to Memorandum Circular No. 6, s. 1987 of the Civil Service Commission und er date April 21, 1987 which, "prior to the enactment by Congress of applicable laws concerning strike by government employees ... enjoins under pain of adminis trative sanctions, all government officers and employees from staging strikes, d emonstrations, mass leaves, walk-outs and other forms of mass action which will result in temporary stoppage or disruption of public service." The air was thus cleared of the confusion. At present, in the absence of any legislation allowing government employees to strike, recognizing their right to do so, or regulating the exercise of the right, they are prohibited from striking, by express provis ion of Memorandum Circular No. 6 and as implied in E.O. No. 180. [At this junctu re, it must be stated that the validity of Memorandum Circular No. 6 is not at i ssue]. But are employees of the SSS covered by the prohibition against strikes? The Court is of the considered view that they are. Considering that under the 19 87 Constitution "[t]he civil service embraces all branches, subdivisions, instru mentalities, and agencies of the Government, including government-owned or contr olled corporations with original charters" [Art. IX(B), Sec. .2(l) see also Sec. 1 of E.O. No. 180 where the employees in the civil service are denominated as " government employees"] and that the SSS is one such government-controlled corpor ation with an original charter, having been created under R.A. No. 1161, its emp loyees are part of the civil service [NASECO v. NLRC, G.R. Nos. 69870, 1988] and are covered by the Civil Service Commission's memorandum prohibiting strikes. T his being the case, the strike staged by the employees of the SSS was illegal. ( SSSEA vs. CA [G.R. No. 85279, 28 July 1989]) We now come to the case before us. Petitioners, who are public schoolteachers an d thus government employees, do not seek to establish that they have a right to strike. Rather, they tenaciously insist that their absences during certain dates in September 1990 were a valid exercise of their constitutional right to engage in peaceful assembly to petition the government for a redress of grievances. Th ey claim that their gathering was not a strike; therefore, their participation t herein did not constitute any offense. MPSTA vs. Laguio 36 and ACT vs. Cario, 37 in which this Court declared that "these 'mass actions' were to all intents and purposes a strike; they constituted a concerted and unauthorized stoppage of, or absence from, work which it was the teachers' duty to perform, undertaken for e ssentially economic reasons," should not principally resolve the present case, a s the underlying facts are allegedly not identical. Strike, as defined by law, means any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute. 38 A labor d ispute includes any controversy or matter concerning terms and conditions of emp loyment; or the association or representation of persons in negotiating, fixing, maintaining, changing or arranging the terms and conditions of employment, rega rdless of whether the disputants stand in the proximate relation of employers an d employees. 39 With these premises, we now evaluate the circumstances of the in stant petition. It cannot be denied that the mass action or assembly staged by the petitioners r esulted in the non-holding of classes in several public schools during the corre sponding period. Petitioners do not dispute that the grievances for which they s ought redress concerned the alleged failure of public authorities essentially, their "employers" to fully and justly implement certain laws and measures inten ded to benefit them materially, (Jacinto vs. CA [G.R. No. 124540, 14 November 199 7])

It has long been settled that the mass actions of September/October 1990 staged by Metro Manila public school teachers amounted to a strike in every sense of th e term, constituting, as they did, "concerted and unauthorized stoppage of or ab sence from, work which it was the teachers" duty to perform, undertaken for esse ntially economic reasons." The claim that the teachers involved in the 1990 mass actions were merely exercising their constitutional right to peaceful assembly was already rejected in Gan vs. Civil Service Commission. MPSTA vs. Laguio [G.R. No. 95445, 06 August 1991]) [T]he claim that the teachers were thereby denied their rights to peaceably asse mble and petition the government for redress of grievances reasoning that this c onstitutional liberty to be upheld like any other liberty, must be exercised wit hin reasonable limits so as not to prejudice the public welfare. But the school teachers in the case of the 1990 mass actions did not exercise their constitutio nal rights within reasonable limits. On the contrary, they committed acts prejud icial to the best interest of the service by staging the mass protest on regular school days, abandoning their classes and refusing to go back even after they h ad been ordered to do so, Had the teachers availed of their free-time recess, af ter classes, weekends or holidays to dramatize their grievances and to dialogue with the proper authorities within bounds of the law, no one not the DECS, the C SC or even the Supreme Court could have held them liable for their participation in the mass action. (Gan vs. CSC [G.R. No. 110717, 14 December 1993]) VII. PUBLIC SECTOR LABOR-MANAGEMENT COUNCIL Section 15. A Public Sector Labor Management Council, hereinafter referred t o as the Council, is hereby constituted to be composed of the following: 1) Chairman, Civil Service Commission - Chairman 2) Secretary, Department of Labor and Employment - Vice Chairman 3) Secretary, Department of Finance - Member 4) Secretary, Department of Justice - Member 5) Secretary, Department of Budget and Management - Member The Council shall implement and administer the provisions of this Executive Orde r. For this purpose, the Council shall promulgate the necessary rules and regula tions to implement this Executive Order. Since NPDC is a government agency, its employees are covered by civil service ru les and regulations (Sec. 2, Article IX, 1987 Constitution). Its employees are c ivil service employees (Sec. 14, Executive Order No. 180). While NPDC employees are allowed under the 1987 Constitution to organize and joi n unions of their choice, there is as yet no law permitting them to strike. In c ase of a labor dispute between the employees and the government, Section 15 of E xecutive Order No. 180 dated June 1, 1987 provides that the Public Sector LaborManagement Council, not the Department of Labor and Employment, shall hear the d ispute. Clearly, the Court of Appeals and the lower court erred in holding that the labor dispute between the NPDC and the members of the NPDSA is cognizable by the Department of Labor and Employment. (Republic vs. CA [G.R. No. 87676, 20 De cember 1989]) It is futile for the petitioners to assert that the subject labor dispute falls within the exclusive jurisdiction of the NLRC and, hence, the Regional Trial Cou rt had no jurisdiction to issue a writ of injunction enjoining the continuance o f the strike. The Labor Code itself provides that terms and conditions of employ ment of government employees shall be governed by the Civil Service Law, rules a nd regulations [Art. 276]. More importantly, E.O. No. 180 vests the Public Secto r Labor - Management Council with jurisdiction over unresolved labor disputes in volving government employees [Sec. 16]. Clearly, the NLRC has no jurisdiction ov er the dispute. This being the case, the Regional Trial Court was not precluded, in the exercise of its general jurisdiction under B.P. Blg. 129, as amended, from assuming juri sdiction over the SSS's complaint for damages and issuing the injunctive writ pr ayed for therein. Unlike the NLRC, the Public Sector Labor - Management Council has not been granted by law authority to issue writs of injunction in labor disp

utes within its jurisdiction. Thus, since it is the Council, and not the NLRC, t hat has jurisdiction over the instant labor dispute, resort to the general court s of law for the issuance of a writ of injunction to enjoin the strike is approp riate. (SSSEA vs. CA [G.R. No. 85279, 28 July 1989]) VIII. SETTLEMENT OF DISPUTES Section 16. The Civil Service and labor laws and procedures, whenever applic able, shall be followed in the resolution of complaints, grievances and cases in volving government employees. In case any dispute remains unresolved after exhau sting all the available remedies under existing laws and procedures, the parties may jointly refer the dispute to the Council, for appropriate action. IX. EFFECTIVITY Section 17. This Executive Order shall take effect immediately. As to Members of a cooperative A cooperative, therefore, is by its nature different from an ordinary business c oncern being run either, by persons, partnerships or corporations. Its owners an d/or members are the ones who run and operate the business while the others are its employees. As above stated, irrespective of the name of shares owned by its members they are entitled to cast one vote each in deciding upon the affair of t he cooperative. Their share capital earn limited interests, They enjoy special p rivileges as exemption from income tax and sales taxes, preferential right to su pply their products to State agencies and even exemption from minimum wage 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 corectly opined that employees of cooperatives who are the mselves members of the cooperative have no right to form or join labor organizat ions 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 member s or co-owners thereof, certainly such employees are entitled to exercise the ri ghts of all workers to organization, collective bargaining, negotiations and oth ers as are enshrined in the Constitution and existing laws of the country. (Coop erative Rural Bank of Davao City vs. Ferrer-Calleja [G.R. No. 77951, 26 Septembe r 1988] As to Managerial Employees Ineligibility of managerial employees to join any labor organization; right of s upervisory employees. - Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for me mbership in a labor organization of the rank-and-file employees but may join, as sist or form separate labor organizations of their own. (Article 245 of the Labo r Code) The reasons for the disqualification of a managerial employee from joining or as sisting a labor organization is applied also to confidential employees thru the doctrine of necessary implication, wherein the SC took into consideration the ra tionale behind the disqualification of managerial employees expressed in Bulleti n Publishing Corporation v. Sanchez, thus: "... if these managerial employees wo uld 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 c an also become company-dominated with the presence of managerial employees in Un ion membership." In the collective bargaining process, managerial employees are supposed to be on the side of the employer, to act as its representatives, and t o see to it that its interests are well protected. The employer is not assured o f such protection if these employees themselves are union members. Collective ba rgaining in such a situation can become one-sided. Unionization of confidential employees for the purpose of collective bargaining would mean the extension of t

he law to persons or individuals who are supposed to act "in the interest of" th e employers. It is not farfetched that in the course of collective bargaining, t hey might jeopardize that interest which they are duty-bound to protect. (NATU-R PB vs. Torres [G.R. No. 93468, 29 December 1994]) As to Confidential Employees We have decreed as disqualified from bargaining with management in case of Bulle tin Publishing Co. Inc. vs. Hon. Augusto Sanchez (144 SCRA 628) reiterating here in the rationale for such ruling as follows: if these managerial employees would belong to or be affiliated with a Union, the latter might not be assured of the ir loyalty to the Union in view of evident conflict of interests or that the Uni on can be company-dominated with the presence of managerial employees in Union m embership. A managerial employee is defined under Art. 212 (k) of the new Labor Code as "one who is vested with powers or prerogatives to lay down and execute m anagement policies and/or to hire, transfer, suspend, lay-off, recall, discharge , assign or discipline employees, or to effectively recommend such managerial ac tions. All employees not falling within this definitions are considered rank-and -file employees for purposes of this Book." (Golden Farms vs. Calleja [G.R. No. 78755, 19 July 1989]) Art. 245 of the Labor Code does not directly prohibit confidential employees fro m engaging in union activities. However, under the doctrine of necessary implica tion, the disqualification of managerial employees equally applies to confidenti al employees. The confidential-employee rule justifies exclusion of confidential employees because in the normal course of their duties they become aware of man agement policies relating to labor relations. It must be stressed, however, that when the employee does not have access to confidential labor relations informat ion, there is no legal prohibition against confidential employees from forming, assisting, or joining a union. (Sugbuanon Rural Bank, Inc. vs. Laguesma [G.R. No . 116194, 02 February 2000]) The exclusion from bargaining units of employees who, in the normal course of th eir duties, become aware of management policies relating to labor relations is a principal objective sought to be accomplished by the ''confidential employee ru le." The broad rationale behind this rule is that employees should not be placed in a position involving a potential conflict of interests. "Management should n ot be required to handle labor relations matters through employees who are repre sented by the union with which the company is required to deal and who in the no rmal performance of their duties may obtain advance information of the company's position with regard to contract negotiations, the disposition of grievances, o r other labor relations matters." (SMC vs. Laguesma [G.R. No. 110399, 15 August 1997]) As to Supervisory Employees The rationale for the amendment is the government's recognition of the right of supervisors to organize with the qualification that they shall not join or assis t in the organization of rank-and-file employees. The reason behind the Industri al Peace Act provision on the same subject matter has been adopted in the presen t statute. The interests of supervisors on the one hand, and the rank-and-file e mployees on the other, are separate and distinct. The functions of supervisors, being recommendatory in nature, are more identified with the interests of the em ployer. The performance of those functions may, thus, run counter to the interes ts of the rank-and-file. xxx xxx xxx Thus, if the intent of the law is to avoid a situation where supervisors would m erge with the rank and-file or where the supervisors' labor organization would r epresent conflicting interests, then a local supervisors' union should not be al lowed to affiliate with the national federation of union of rank-and-file employ ees where that federation actively participates in union activity in the company . xxx xxx xxx The prohibition against a supervisors' union joining a local union of rank-and-f

ile is replete with jurisprudence. The Court emphasizes that the limitation is n ot confined to a case of supervisors wanting to join a rank-and-file local union . The prohibition extends to a supervisors' local union applying for membership in a national federation the members of which include local unions of rank-and-f ile employees. The intent of the law is clear especially where, as in the case a t bar, the supervisors will be co-mingling with those employees whom they direct ly supervise in their own bargaining unit. (Atlas Lithographic vs. Laguesma [205 SCRA]) As to Security Guards Section 6 of E.O. No. 111, enacted on 24 December 1986, repealed the original pr ovisions of Article 245 of the Labor Code, reading as follows: Art. 245. Ineligibility of security personnel to join any labor organizati on. Security guards and other personnel employed for the protection and securit y of the person, properties and premises of the employer shall not be eligible f or membership, in any labor organization. and substituted it with the following provision: Art. 245. Right of employees in the public service. By virtue of such repeal and substitution, security guards became eligible for m embership in any labor organization. (Philips Industrial vs. NLRC [G.R. No. 889 57, 25 June 1992]) Right to Unionize vs. Freedom of Religion Both the Constitution and Republic Act No. 875 recognize freedom of association. Section 1 (6) of Article III of the Constitution of 1935, as well as Section 7 of Article IV of the Constitution of 1973, provide that the right to form associ ations or societies for purposes not contrary to law shall not be abridged. Sect ion 3 of Republic Act No. 875 provides that employees shall have the right to se lf-organization and to form, join of assist labor organizations of their own cho osing for the purpose of collective bargaining and to engage in concerted activi ties for the purpose of collective bargaining and other mutual aid or protection . What the Constitution and the Industrial Peace Act recognize and guarantee is the "right" to form or join associations. Notwithstanding the different theories propounded by the different schools of jurisprudence regarding the nature and c ontents of a "right", it can be safely said that whatever theory one subscribes to, a right comprehends at least two broad notions, namely: first, LIBERTY OR FR EEDOM, i.e., the absence of legal restraint, whereby an employee may act for him self without being prevented by law; and second, POWER, whereby an employee may, as he pleases, join or refrain from Joining an association. It is, therefore, t he employee who should decide for himself whether he should join or not an assoc iation; and should he choose to join, he himself makes up his mind as to which a ssociation he would join; and even after he has joined, he still retains the lib erty and the power to leave and cancel his membership with said organization at any time. It is clear, therefore, that the RIGHT TO JOIN A UNION INCLUDES THE RI GHT TO ABSTAIN FROM JOINING ANY UNION. Inasmuch as what both the Constitution an d the Industrial Peace Act have recognized, and guaranteed to the employee, is t he "right" to join associations of his choice, it would be absurd to say that th e law also imposes, in the same breath, upon the employee the duty to join assoc iations. The law does not enjoin an employee to sign up with any association. The right to refrain from joining labor organizations recognized by Section 3 of the Industrial Peace Act is, however, limited. The legal protection granted to such right to refrain from joining is withdrawn by operation of law, where a lab or union and an employer have agreed on a closed shop, by virtue of which the em ployer may employ only member of the collective bargaining union, and the employ ees must continue to be members of the union for the duration of the contract in order to keep their jobs. Thus Section 4 (a) (4) of the Industrial Peace Act, b efore its amendment by Republic Act No. 3350, provides that although it would be an unfair labor practice for an employer "to discriminate in regard to hire or tenure of employment or any term or condition of employment to encourage or disc ourage membership in any labor organization" the employer is, however, not precl

uded "from making an agreement with a labor organization to require as a conditi on of employment membership therein, if such labor organization is the represent ative of the employees". By virtue, therefore, of a closed shop agreement, befor e the enactment of RA No. 3350, if any person, regardless of his religious belie fs, wishes to be employed or to keep his employment, he must become a member of the collective bargaining union. Hence, the right of said employee not to join t he labor union is curtailed and withdrawn. To that all-embracing coverage of the closed shop arrangement, Republic Act No. 3350 introduced an exception, when it added to Section 4 (a) (4) of the Industri al Peace Act the following proviso: "but such agreement shall not cover members of any religious sects which prohibit affiliation of their members in any such l abor organization". Republic Act No. 3350 merely excludes ipso jure from the app lication and coverage of the closed shop agreement the employees belonging to an y religious sects which prohibit affiliation of their members with any labor org anization. What the exception provides, therefore, is that members of said relig ious sects cannot be compelled or coerced to join labor unions even when said un ions have closed shop agreements with the employers; that in spite of any closed shop agreement, members of said religious sects cannot be refused employment or dismissed from their jobs on the sole ground that they are not members of the c ollective bargaining union. It is clear, therefore, that the assailed Act, far f rom infringing the constitutional provision on freedom of association, upholds a nd reinforces it. It does not prohibit the members of said religious sects from affiliating with labor unions. It still leaves to said members the liberty and t he power to affiliate, or not to affiliate, with labor unions. If, notwithstandi ng their religious beliefs, the members of said religious sects prefer to sign u p with the labor union, they can do so. If in deference and fealty to their reli gious faith, they refuse to sign up, they can do so; the law does not coerce the m to join; neither does the law prohibit them from joining; and neither may the employer or labor union compel them to join. Republic Act No. 3350, therefore, d oes not violate the constitutional provision on freedom of association. (Victori ano vs. Elizalde [G.R. No. L-25246, September 1974]) Under Section 4(a), paragraph 4, of Republic Act No. 875 (IPA), prior to its ame ndment by Republic Act No. 3350, the employer was not precluded "from making an agreement with a labor organization to require as a condition of employment memb ership therein, if such labor organization is the representative of the employee s." On June 18, 1961, however, Republic Act No. 3350 was enacted, introducing an amendment to paragraph (4) subsection (a) of section 4 of Republic Act No. 875, as follows: ... "but such agreement shall not cover members of any religious se cts which prohibit affiliation of their members in any such labor organization". (Victoriano vs. Elizalde [G.R. No. L-25246, 12 September 1974]) 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 c ollective interest of all the employees, consistent with equity to the employer, indicate to be the best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law. (University of t he Philippines vs. Ferrer-Calleja [G.R. No. 96189, 14 July 1992]) Factors to be considered in determining the proper bargaining unit: (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; (4) Employment status, such as temporary, seasonal probationary employees; a nd (5) Other factors: the history, extent and type of organization of employees in other plants of the same employer, or other employers in the same industry; the skill, wages, work, and working conditions of the employees; the desires of the employees; the eligibility of the employees for membership in the union or u

nions involved; and the relationship between the unit or units proposed and the employer's organization, management, and operation. One Company One Union Policy We see no need for the formation of another union in PHILTRANCO. The qualified m embers of the KASAMA KO may join the NAMAWU-MIF if they want to be union members , and to be consistent with the one-union, one-company policy of the Department of Labor and Employment, and the laws it enforces. As held in the case of Genera l Rubber and Footwear Corp. v. Bureau of Labor Relations (155 SCRA 283 [1987]): ... It has been the policy of the Bureau to encourage the formation of an employ er unit 'unless circumstances otherwise require. The proliferation of unions in an employer unit is discouraged as a matter of policy unless there are compellin g reasons which would deny a certain class of employees the right to self-organi zation for purposes of collective bargaining. This case does not fall squarely w ithin the exception. xxx xxx xxx It is natural in almost all fairly sized companies to have groups of workers dis charging different functions. No company could possibly have all employees perfo rming exactly the same work. Variety of tasks is to be expected. It would not be in the interest of sound labor-management relations if each group of employees assigned to a specialized function or section would decide to break away from th eir fellow-workers and form their own separate bargaining unit. We cannot allow one unit for typists and clerks, one unit for accountants, another unit for mess engers and drivers, and so on in needless profusion. Where shall the line be dra wn? The questioned decision of the public respondent can only lead to confusion , discord and labor strife. (Philtranco Service Enterprises vs. BLR [G.R. No. 85 343, 28 June 1989]) LABOR ORGANIZATIONS Labor Organization, "Labor organization" means any union or association of employees which exists in whole or in part for the purpose of collective bargaining or of dealing with em ployers concerning terms and conditions of employment. (Article 212 (g) of the Labor Code) Legitimate Labor Organization, "Legitimate labor organization" means any labor organization duly registered wit h the Department of Labor and Employment, and includes any branch or local there of. (Article 212 (h) of the Labor Code) Registration Requirement In PAFLU vs. Sec. of Labor, 27 SCRA 40, We had occasion to interpret Section 23 of R.A. No. 875 (Industrial Peace Act) requiring of labor unions registration by the Department of Labor in order to qualify as "LEGITIMATE LABOR ORGANIZATION," and We said: The theory to the effect that Section 23 of Republic Act No. 875 unduly curtails the freedom of assembly and association guaranteed in the Bill of Rights is dev oid of factual basis. The registration prescribed in paragraph (b) of said secti on 17 is not a limitation to the right of assembly or association, which may be exercised with or without said registration. The latter is merely a condition si ne qua non for the acquisition of legal personality by labor organizations, asso ciations or unions and the possession of the 'rights and privileges granted by l aw to legitimate labor organizations.' The Constitution does not guarantee these rights and privileges, much less said personality, which are mere statutory cre ations, for the possession and exercise of which registration is required to pro tect both labor and the public against abuses, fraud, or impostors who pose as o rganizers, although not truly accredited agents of the union they purport to rep resent. Such requirement is a valid exercise of the police power, because the ac tivities in which labor organizations, associations and union or workers are eng aged affect public interest, which should be protected.

Simply put, the Amigo Employees Union (Independent) Which petitioners claim to r epresent, not being a legitimate labor organization, may not validly present rep resentation issues. Therefore, the act of petitioners cannot be considered a leg itimate exercise of their right to self-organization. Hence, We affirm and reite rate the rationale explained in Phil Association of Free Labor Unions vs. Sec. o f Labor case, supra, in order to protect legitimate labor and at the same time m aintain discipline and responsibility within its ranks. (Villar vs. Inciong [G.R . No. L-50283-84, 20 April 1983]) Ordinarily, a labor organization acquires legitimacy only upon registration with the BLR. Under Article 234 (Requirements of Registration): Any applicant labor organization, association or group of unions or workers shal l acquire legal personality and shall be entitled to the rights and privileges g ranted by law to legitimate labor organizations upon issuance of the certificate of registration based on the following requirements: (a) Fifty-pesos (P50.00) registration fee; (b) The names of its officers, their addresses, the principal address of the labor organization, the minutes of the organizational meeting and the list of t he workers who participated in such meetings; (c) The names of all its members comprising at least twenty 20% percent of a ll the employees in the bargaining unit where it seek to operate; (d) If the applicant has been in existence for one or more years, copies , o f its annual financial reports; and (e) Four copies of the constitution and by-laws of the applicant union, the minutes of its adoption or ratification and the list of the members who particip ated in it. xxx xxx xxx Absent compliance with these mandatory requirements, the local or chapter does n ot become a legitimate labor organization. (Progressive Development vs. Secretary [G.R. No. 96425, 04 February 1992]) By virtue of DEPARTMENT ORDER NO. 9, SERIES OF 1997, however, the documents need ed to be submitted by a local or chapter have been reduced to the following: (a) A charter certificate issued by the federation or national union indicat ing the creation or establishment of the local/chapter; (b) The names of the local/chapter's officers, their addresses, and the prin cipal office of the local/chapter; (c) The local/chapter's constitution and by-laws; provided that where the lo cal/chapter's constitution and by-laws is the same as that of the federation or national union, this fact shall be indicated accordingly. All the foregoing supporting requirements shall be certified under oath by the S ecretary or Treasurer of the local/chapter and attested by its President. Since Department Order No. 9 has done away with the submission of books of accou nt as a requisite for registration, Pagpalain's only recourse now is to have sai d order declared null and void. It premises its case on the principles laid down in Progressive and Protection Technology. First, Pagpalain maintains that Depar tment Order No. 9 is illegal, allegedly because it contravenes the above-mention ed rulings of this Court. Citing Article 8 of the Civil Code, which provides tha t [j]udicial decisions applying or interpreting the laws or the Constitution sha ll form a part of the legal system of the Philippines," Pagpalain declares the t wo cases part of the law of the land which, under the third paragraph of Article 7 of the Civil Code, may not be supplanted by mere regulation. (Pagpalain Haule rs, Inc. vs. Trajano [G.R. No. 133215, 15 July 1999]) Role of Constitution and By-Laws [T]he Constitution and By-laws of an organization serve as a contract that binds its members. (Oca vs. Trajano [G.R. No. 76189, 08 August 1991]) (The labor organization owes its personality to the state, and when such persona lity was granted, it was granted under the conditions laid down in the documenta ry requirements submitted. The constitution and by-laws of the organization are part and parcel of the documents submitted, hence the terms and conditions set f orth therein must be complied with.)

When the Constitution and by-laws of both unions dictated the remedy for intra-u nion dispute, such as petitioner's complaint against private respondents for una uthorized or illegal disbursement of unions funds, this should be resorted to be fore recourse can be made to the appropriate administrative or judicial body, no t only to give the grievance machinery or appeals' body of the union the opportu nity to decide the matter by itself, but also to prevent unnecessary and prematu re resort to administrative or judicial bodies. Thus, a party with an administra tive remedy must not merely initiate the prescribed administrative procedure to obtain relief, but also pursue it to its appropriate conclusion before seeking j udicial intervention. This rule clearly applies to the instant case. The underly ing principle of the rule on exhaustion of administrative remedies rests on the presumption that when the administrative body, or grievance machinery, as in thi s case, is afforded a chance to pass upon the matter, it will decide the same co rrectly. Petitioner's premature invocation of public respondent's intervention i s fatal to his cause of action. Evidently, when petitioner brought before the DOLE his complaint charging privat e respondents with unauthorized and illegal disbursement of union funds, he over looked or deliberately ignored the fact that the same is clearly dismissible for non-exhaustion of administrative remedies. Thus, public respondent Bienvenido E . Laguesma, in dismissing petitioner's complaint, committed no grave abuse of di scretion. (Diamonon vs. DOLE [G.R. No. 108951, 07 March 2000]) Right of Local to Disaffiliate from the Federation The right of a local union to disaffiliate from its mother federation is well-se ttled. A local union, being a separate and voluntary association, is free to ser ve the interest of all its members including the freedom to disaffiliate when ci rcumstances warrant. This right is consistent with the constitutional guarantee of freedom of association (Volkschel Labor Union v. Bureau of Labor Relations, N o. L-45824, June 19, 1985, 137 SCRA 42). xxx xxx xxx The inclusion of the word NATU after the name of the local union THEU in the reg istration with the Department of Labor is merely to stress that the THEU is NATU 's affiliate at the time of the registration. It does not mean that the said loc al union cannot stand on its own. Neither can it be interpreted to mean that it cannot pursue its own interests independently of the federation. A local union o wes its creation and continued existence to the will of its members and not to t he federation to which it belongs. When the local union withdrew from the old federation to join a new federation, it was merely exercising its primary right to labor organization for the effecti ve enhancement and protection of common interests. In the absence of enforceable provisions in the federation's constitution preventing disaffiliation of a loca l union a local may sever its relationship with its parent (People's Industrial and Commercial Employees and Workers Organization (FFW) v. People's Industrial a nd Commercial Corporation, No. 37687, March 15, 1982, 112 SCRA 440). xxx xxx xxx Further, there is no merit in the contention of the respondents that the act of disaffiliation violated the union security clause of the CBA and that their dism issal as a consequence thereof is valid. A perusal of the collective bargaining agreements shows that the THEU-NATU, and not the NATU federation, was recognized as the sole and exclusive collective bargaining agent for all its workers and e mployees in all matters concerning wages, hours of work and other terms and cond itions of employment (pp. 667-706, Rollo). Although NATU was designated as the s ole bargaining agent in the check-off authorization form attached to the CBA, th is simply means it was acting only for and in behalf of its affiliate. The NATU POSSESSED THE STATUS OF AN AGENT WHILE THE LOCAL UNION REMAINED THE BASIC PRINCI PAL UNION WHICH ENTERED INTO CONTRACT WITH THE RESPONDENT COMPANY. When the THEU disaffiliated from its mother federation, the former did not lose its legal per sonality as the bargaining union under the CBA. (Tropical Hut Employees Union vs . Tropical Hut [181 SCRA 173, 1990])

CERTIFICATION ELECTIONS Nature of It is thus of the very essence of the regime of industrial democracy sought to b e attained through the collective bargaining process that there be no obstacle t o the freedom Identified with the exercise of the right to self-organization. La bor is to be represented by a union that can express its collective will. In the event, and this is usually the case, that there is more than one such group fig hting for that privilege, a certification election must be conducted. That is th e teaching of a recent decision, under the new Labor Code, United Employees Unio n of Gelmart Industries v. Noriel. There is this relevant excerpt: "The institut ion of collective bargaining is, to recall Cox a prime manifestation of industri al democracy at work. The two parties to the relationship, labor and management, make their own rules by coming to terms. That is to govern themselves in matter s that really count. As labor, however, is composed of a number of individuals, it is indispensable that they be represented by a labor organization of their ch oice. Thus may be discerned how crucial is a certification election. So our deci sions from the earliest case of PLDT Employees Union v. PLDT Co. Free Telephone Workers Union to the latest, Philippine Communications Electronics & Electricity Workers' Federation (PCWF) v. Court of Industrial Relations, have made clear." An even later pronouncement in Philippine Association of Free Labor Unions v. Bu reau of Labor Relations speaks similarly: "Petitioner thus appears to be woefull y lacking in awareness of the significance of a certification election for the c ollective bargaining process. It is the fairest and most effective way of determ ining which labor organization can truly represent the working force. It is a fu ndamental postulate that the will of the majority, if given expression in an hon est election with freedom on the part of the voters to make their choice, is con trolling. No better device can assure the institution of industrial democracy wi th the two parties to a business enterprise, management and labor, establishing a regime of self rule." (FOITAF vs. Noriel [G.R. No. L-41937, 06 July 1976]) In any case, this Court notes that it is petitioner, the employer, which has off ered the most tenacious resistance to the holding of a certification election am ong its monthly-paid rank-and-file employees. This must not be so, for the choic e of a collective bargaining agent is the sole concern of the employees. The onl y exception to this rule is where the employer has to file the petition for cert ification election pursuant to Article 258 of the Labor Code because it was requ ested to bargain collectively, which exception finds no application in the case before us. Its role in a certification election has aptly been described in Trad e Unions of the Philippines and Allied Services (TUPAS) v. Trajano, as that of a mere by-stander. It has no legal standing in a certification election as it can not oppose the petition or appeal the Med-Arbiter's orders related thereto. An e mployer that involves itself in a certification election lends suspicion to the fact it wants to create a company union. This Court should be the last agency to lend support to such an attempt at interference with a purely internal affair o f labor. While employers may rightfully be notified or informed of petitions of such natu re, they should not, however, be considered parties thereto with the concomitant right to oppose it. Sound policy dictates that they should maintain a strictly hands-off policy. It bears stressing that no obstacle must be placed to the holding of certificati on elections, for it is a statutory policy that should not be circumvented. The certification election is the most democratic and expeditious method by which th e laborers can freely determine the union that shall act as their representative in their dealings with the establishment where they are working. It is the appr opriate means whereby controversies and disputes on representation may be laid t o rest, by the unequivocal vote of the employees themselves. Indeed, it is the k eystone of industrial democracy. (San Miguel vs. Laguesma [G.R. No. 116172, 10 O ctober 1996]) This Court has always stressed that a certification proceeding is not a litigati on, in the sense in which this term is ordinarily understood, but an investigati

on of a non-adversary, fact finding character in which the Court of Industrial R elations plays the part of a disinterested investigator seeking merely to ascert ain the desires of employees as to the matter of their representation (NLU vs. G o Soc and Sons, 23 SCRA 436; Benguet Consolidated, Inc. vs. Bobok Lumber Jack As s'n., L-11029, May 23, 1958; Bulakena Restaurant vs. C.I.R., 45 SCRA 95; LVN Pic tures, Inc. vs. Philippine Musicians Guild (FFW) and C.I.R., 1 SCRA 132). The decision in a certification election case, by the very nature of such procee ding, is not such as to foreclose all further disputes as to the existence or no n-existence of an employer-employee relationship between SSI and private respond ents herein. It is an established doctrine that for res adjudicata to apply, the following requisites must concur: .. Clearly implicit in these requirements is t hat the action or proceedings in which is issued the prior judgment that would ope rate in bar of a subsequent action between the same parties for the same cause, be adversarial, or contentious as distinguished from an ex parte hearing or proc eeding of which the party seeking relief has given legal notice to the other par ty and afforded the latter an opportunity to contest it, and a certification ele ction is not such a proceeding. A certification election is not a litigation in th e sense in which this term is understood, but a mere investigation of a non-adve rsary, fact-finding character, in which the investigating agency plays the part of a disinterested investigator seeking merely to ascertain the desires of the e mployees as to the matter of their representation. (Sandoval Shipyards vs. Pepit o [G.R. No. 143428, 25 June 2001]) [V]erification of a pleading is a formal, not jurisdictional requisite. Even if verification is lacking and the pleading is formally defective, the courts may dispense with the requirement in the interest of justice and order of correction of the pleading accordingly. Generally, technical and rigid rules of procedure are not binding in labor cases; and this rule is specifically applied in certifi cation election proceedings, which are non-litigious but merely investigative an d non-adversarial in character (National Mines vs. Secretary [G.R. No. 106446, 1 6 November 1993]) Direct Certification We rule, however, that the direct certification ordered by respondent Secretary is not proper. By virtue of Executive Order No. 111, which became effective on M arch 4, 1987, the direct certification originally allowed under Article 257 of t he Labor Code has apparently been discontinued as a method of selecting the excl usive bargaining agent of the workers. This amendment affirms the superiority of the certification election over the direct certification which is no longer ava ilable now under the change in said provision. (Central Negros vs. Secretary [G. R. No. 94045, 13 September 1991]) Voluntary Recognition The petition has no merit. Ordinarily, in an unorganized establishment like the SMC Calasiao Beer Region, it is the union that files a petition for a certificat ion election if there is no certified bargaining agent for the workers in the es tablishment. If a union asks the employer to voluntarily recognize it as the bar gaining agent of the employees, as the petitioner did, it in effect asks the emp loyer to certify it as the bargaining representative of the employees a certific ation which the employer has no authority to give, for it is the employees' prer ogative (not the employer's) to determine whether they want a union to represent them, and, if so, which one it should be. (IBM vs. Ferrer-Calleja [G.R. No. 846 85, 23 February 1990]) Consent Election To resolve the issue of union representation at the Universal Robina Textile pla nt, what was agreed to be held at the company's premises and which became the ro ot of this controversy, was a consent election, not a certification election. It is unmistakable that the election held on November 15, 1990 was a consent ele ction and not a certification election. It was an agreed one, the purpose being merely to determine the issue of majority representation of all the workers in t

he appropriate collective bargaining unit. It is a separate and distinct process and has nothing to do with the import and effort of a certification election. ( Algire vs. De Mesa [G.R. No. 97622, 19 October 1994]) Certification Election Proceedings The right to refuse to join or be represented by any labor organization is recog nized not only by law but also in the rules drawn up for implementation thereof. The original Rules on Certification promulgated by the defunct CIR required tha t the ballots to be used at a certification election to determine which of two o r more competing labor unions would represent the employees in the appropriate b argaining unit should contain, aside from the names of each union, an alternativ e choice of the employee voting, to the effect that he desires not to which of t wo or more competing labor unions would represent the employees in the appropria te bargaining unit should contain, aside from the names of each union, an altern ative choice of the employee voting, to the effect that he desires not to be rep resented by any union. And where only one union was involved, the ballots were r equired to state the question "Do you desire to be represented by said union?" as regards which the employees voting would mark an appropriate square, one ind icating the answer, "Yes" the other, "No." xxx xxx xxx Withal, neither the quoted provision nor any other in the Omnibus Implementing R ules expressly bars the inclusion of the choice of "NO UNION" in the ballots. In deed it is doubtful if the employee's alternative right NOT to form, join or ass ist any labor organization or withdraw or resign from one may be validly elimina ted and he be consequently coerced to vote for one or another of the competing u nions and be represented by one of them. Besides, the statement in the quoted pr ovision that "(i)f only one union is involved, the voter shall make his cross or check in the square indicating "YES" or "NO," is quite clear acknowledgment of the alternative possibility that the "NO" votes may outnumber the "YES" votes i ndicating that the majority of the employees in the company do not wish to be re presented by any union in which case, no union can represent the employees in co llective bargaining. And whether the prevailing "NO" votes are inspired by consi derations of religious belief or discipline or not is beside the point, and may not be inquired into at all. The purpose of a certification election is precisely the ascertainment of the wi shes of the majority of the employees in the appropriate bargaining unit: to be or not to be represented by a labor organization, and in the affirmative case, b y which particular labor organization. If the results of the election should dis close that the majority of the workers do not wish to be represented by any unio n, then their wishes must be respected, and no union may properly be certified a s the exclusive representative of the workers in the bargaining unit in dealing with the employer regarding wages, hours and other terms and conditions of emplo yment. The minority employees who wish to have a union represent them in collect ive bargaining can do nothing but wait for another suitable occasion to petition for a certification election and hope that the results will be different. They may not and should not be permitted, however, to impose their will on the majori ty who do not desire to have a union certified as the exclusive workers' benefit in the bargaining unit upon the plea that they, the minority workers, are being denied the right of self-organization and collective bargaining. As repeatedly stated, the right of self-organization embraces not only the right to form, join or assist labor organizations, but the concomitant, converse right NOT to form, join or assist any labor union. (Reyes vs. Trajano [G.R. No. 84433, 02 June 199 2]) Who can vote in CE Proceedings In a certification election all rank-and-file employees in the appropriate barga ining unit are entitled to vote. This principle is clearly stated in Art. 255 of the Labor Code which states that the "labor organization designated or selected by the majority of the employees in an appropriate bargaining unit shall be the exclusive representative of the employees in such unit for the purpose of colle

ctive bargaining." Collective bargaining covers all aspects of the employment re lation and the resultant CBA negotiated by the certified union binds all employe es in the bargaining unit. Hence, all rank-and-file employees, probationary or p ermanent, have a substantial interest in the selection of the bargaining represe ntative. The Code makes no distinction as to their employment status as basis fo r eligibility in supporting the petition for certification election. The law ref ers to "all" the employees in the bargaining unit. All they need to be eligible to support the petition is to belong to the "bargaining unit." (Airtime Speciali sts, Inc. vs. Ferrer-Calleja [G.R. No. 80612-16, 29 December 1989]) At any rate, it is now well-settled that employees who have been improperly laid off but who have a present, unabandoned right to or expectation of re-employmen t, are eligible to vote in certification elections. Thus, and to repeat, if the dismissal is under question, as in the case now at bar whereby a case of illegal dismissal and/or unfair labor practice was filed, the employees concerned could still qualify to vote in the elections. (Phil. Fruits And Vegetables vs. Torres [G.R. No. 92391, 03 July 1992]) Close of Election Proceedings [T]he phrase "close of election proceedings" as used in Sections 3 and 4 of the pertinent Implementing Rules refers to that period from the closing of the polls to the counting and tabulation of the votes as it could not have been the inten tion of the Implementing Rules to include in the term "close of the election pro ceedings" the period for the final determination of the challenged votes and the canvass thereof, as in the case at bar which may take a very long period. Thus , if a protest can be formalized within five days after a final determination an d canvass of the challenged votes have been made, it would result in an undue de lay in the affirmation of the employees' expressed choice of a bargaining repres entative. (Phil. Fruits and Vegetables vs. Torres [G.R. No. 92391, 03 July 1992 ]) Bars to Certification Election (1) CONTRACT BAR RULE - during the existence of a collective bargaining agre ement except within the freedom period; 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. Otherwise put, the rule pro hibits 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 t o ensure stability in the relationships of the workers and the management by pre venting frequent modifications of any collective bargaining agreement earlier en tered into by them in good faith and for the stipulated original period. (ALU-TU CP v. Trajano, G.R. No. 77539, April 12, 1989, 172 SCRA 49, citing ATU v. Trajan o, G.R. No. L-75321, 20 June 1988, 162 SCRA 318) In order to allow the employer to validly suspend the bargaining process theremu st be a valid petition for certification election raising a legitimate represent ation issue. Hence, mere filing of a petition for certification election does no t ipso facto justify the negotiation by the employer. The petition must comply w ith the provisions of the Labor Code and its Implementing Rules. Foremost is tha t a petition for certification election must be filed during the sixty day freed om period. The Contract Bar Rule under Section 3, Rule XI, Book V, of the Omnibus Rules Implementing the Labor Code, provides that: . If a collective bargaining ag reement has been duly registered in accordance with Article 231 of the Code, a p etition for certification election or motion for intervention can only be entert ained within sixty (60) days prior to the expiry date of such agreement. The rule is based on Article 232, in relation to Articles 253, 253-A and 256 of the Labo r Code. No petition for certification election for any representation issue may be filed after the lapse of the sixty-day freedom period. The old CBA is extende d until a new CBA shall have been validly executed. Hence, the contract bar rule still applies. The purpose is to ensure stability in the relationship of the wo

rkers and the company by preventing frequent modifications of any CBA earlier en tered into by them in good faith and for the stipulated original period. (Colegi o de San Juan de Letran vs. Association of Employees and Faculty of Letran [G.R. No. 14171, 18 September 2000]) [A] contract does not operate as a bar to representation proceedings, where it i s shown that because of a schism in the union the contract can no longer serve t o promote industrial stability, and the direction of the election is in the inte rest of industrial stability as well as in the interest of the employees' right in the selection of their bargaining representatives. Basic to the contract bar rule is the proposition that the delay of the right to select representatives ca n be justified only where stability is deemed paramount. Excepted from the contr act bar rule are certain types of contracts which do not foster industrial stabi lity, such as contracts where the Identity of the representative is in doubt. An y stability derived from such contracts must be subordinated to the employees' f reedom of choice because it does not establish the type of industrial peace cont emplated by the law. (Firestone Tire & Rubber Company Employees Union vs. Estrel la [G.R. No. L-45513-14, 06 January 1978]) The receipt by petitioner's "supervisor" employees of certain benefits under the CBA between BUKLOD and petitioner is not sufficient to deny the petition for ce rtification election filed by the labor organization formed by the excluded empl oyees. It is not equivalent to and does not compensate for the denial of the rig ht of the excluded employees to self-organization and collective bargaining. We concur with the findings of the Undersecretary of Labor, thus: It is not disputed that the members of both petitioning unions NSBPI and NEMPEBP I are excluded from the coverage of the existing CBA entered into between the re spondent BPI and BUKLOD. Thus, respondent BPI being privy to the said exclusion has to accept the inescapable consequences of its act of depriving the excluded employees of their right to self-organization for the purpose of collective barg aining. We find immaterial and irrelevant the allegation of hereby respondent BP I to the effect that the benefit being enjoyed by the rank and file employees co vered by the existing CBA are extended/accorded to the excluded employees. Indee d, what is crucial and of paramount consideration is the fact that the excluded rank and file employees are afforded the right to bargain collectively. The Supreme Court in the cases of General Rubber vs. BLR and Manila Bay Spinning Mills vs. Hon. Pura Ferrer-Calleja, ruled that the employees excluded from the coverage of the CBA, who not being excluded by law, have the right to bargain co llectively. Further, the Supreme Court aptly stated that: The allegation that some benefits under the existing CBA were extended to the mo nthly paid employees, even if true will not preclude them from entering into a C BA of their own. Neither is the inconvenience that may befall petitioner for hav ing to administer two CBAs an excuse for depriving the monthly paid employees of their constitutionally guaranteed right to collective bargaining. The petition for certification election cannot likewise be deterred by the "cont ract-bar rule," which finds no application in the present case. The petitioning union NSBPI is not questioning the majority status of Buklod as the incumbent ba rgaining agent of petitioner's rank and file employees. The petition for certifi cation election is addressed to a separate bargaining unit the excluded employe es of petitioner. (Mirpuri vs. CA [G.R. No. 114508, 19 November 1999]) (2) CERTIFICATION YEAR BAR RULE - within one (1) year from the date of issua nce of declaration of a final certification election result; or It is evident that the prohibition imposed by law on the holding of a certificat ion election "within one year from the date of issuance of declaration of a fina l certification election result in this case, from February 27, 1981, the date o f the Resolution declaring NAFLU the exclusive bargaining representative of rank -and-file workers of VIRON can have no application to the case at bar. That oneyear period-known as the "certification year" during which the certified union i s required to negotiate with the employer, and certification election is prohibi ted has long since expired. (Kaisahan Ng Manggagawang vs. Trajano [G.R. No. 7581 0, 09 September 1991])

(3) DEADLOCK BAR RULE - during the existence of a bargaining deadlock to whi ch an incumbent or certified bargaining agent is a party and which had been subm itted to conciliation or arbitration or had become the subject of a valid notice of strike or lockout. A "deadlock" is defined as the "counteraction of things producing entire stoppag e: a state of inaction or neutralization caused by the opposition of persons or of factions (as in government or a voting body): standstill." There is a deadloc k if there is a "complete blocking or stoppage resulting from the action of equa l and opposed forces; as, the deadlock of a jury or legislature." The word is sy nonymous with the word impasse which, within the meaning of the American federal labor laws, "presupposes reasonable efforts at good faith bargaining which, des pite noble intentions, does not conclude in a agreement between the parties." (D ivine Word University of Tacloban vs. Secretary [G. R. No. 91915, 11 September 1 992]) The Deadlock Bar Rule simply provides that a petition for certification election can only be entertained if there is no pending bargaining deadlock submitted to conciliation or arbitration or had become the subject of a valid notice of stri ke or lockout. The principal purpose is to ensure stability in the relationship of the workers and the management. (NACUSIP-TUCP vs. Trajano [G.R. No. L-67485, 10 April 1992]) Prejudicial Question; When applicable to certification election proceedings Under settled jurisprudence, the pendency of a formal charge of company dominati on is a prejudicial question that, until decided, bars proceedings for a certifi cation election, the reason being that the votes of the members of the dominated union would not be free. (United CMC Textile Workers Union vs. BLR [G.R. No. L51337, 22 March 1984]) COLLECTIVE BARGAINING AND ADMINISTRATION OF AGREEMENT It is important to determine whether or not a particular labor organization is l egitimate since legitimate labor organizations have exclusive rights under the l aw which cannot be exercised by non-legitimate unions, one of which is the right to be certified as the exclusive representative of all the employees in an appr opriate collective bargaining unit for purposes of collective bargaining. (San M iguel Foods, Inc. vs. Laguesma [G.R. No. 116172, 10 October 1996]) A collective bargaining agreement (CBA), as used in Article 252 of the Labor Cod e, refers to a contract executed upon request of either the employer or the excl usive bargaining representative incorporating the agreement reached after negoti ations with respect to wages, hours of work and all other terms and conditions o f employment, including proposals for adjusting any grievances or questions aris ing under such agreement. While the terms and conditions of a CBA constitute the law between the parties, it is not, however, an ordinary contract to which is applied the principles of l aw governing ordinary contracts. A CBA, as a labor contract within the contempla tion of Article 1700 of the Civil Code of the Philippines which governs the rela tions between labor and capital, is not merely contractual in nature but impress ed with public interest, thus, it must yield to the common good. As such, it mus t be construed liberally rather than narrowly and technically, and the courts mu st place a practical and realistic construction upon it, giving due consideratio n to the context in which it is negotiated and purpose which it is intended to s erve. (Davao Integrated Port Stevedoring Services vs. Abarquez [G.R. No. 102132 , 19 March 1993]) [T]he general rule laid out in Fernando vs. Angat Labor Union (5 SCRA 248 [1962] , that a collective bargaining agreement is a contract in personam and, therefor (E. Razon, Inc. vs. Secretary e, not enforceable against the successor-employer, [G.R. No. 85867, 13 May 1993]) It appears that the procedural requirement of filing the CBA within 30 days from date of execution under Article 231 was not met. The subject CBA was executed o n November 28, 1989. It was ratified on December 8, 1989, and then filed with DO

LE for registration purposes on March 14, 1990. Be that as it may, the delay in the filing of the CBA was sufficiently explained, i.e., there was an inter-union conflict on who would succeed to the presidency of ILO-PHILS. The CBA was regis tered by the DOLE only on May 4, 1990. It would be injudicious for us to assume, as what petitioner did, that the said CBA was filed only on April 30, 1990, or five (5) days before its registration, on the unsupported surmise that it was do ne to suit the law that enjoins Regional Offices of Dole to act upon an applicat ion for registration of a CBA within five (5) days from its receipt thereof. In the absence of any substantial evidence that DOLE officials or personnel, in col lusion with private respondent, had antedated the filing date of the CBA, the pr esumption on regularity in the performance of official functions hold. More importantly, non-compliance with the cited procedural requirement should no t adversely affect the substantive validity of the CBA between ILO-PHILS and the Transunion Corporation-Glassware Division covering the company's rank and file employees. A collective bargaining agreement is more than a contract. It is high ly impressed with public interest for it is an essential instrument to promote i ndustrial peace. Hence, it bears the blessings not only of the employer and empl oyees concerned but even the DOLE. To set it aside on technical grounds is not c onducive to the public good. (TUCP vs. Laguesma, G.R. No. 95013, 1994]) Duty to Bargain Collectively Meaning of duty to bargain collectively. - The duty to bargain collectively mean s the performance of a mutual obligation to meet and convene promptly and expedi tiously in good faith for the purpose of negotiating an agreement with respect t o wages, hours of work and all other terms and any grievances or questions arisi ng under such agreement and executing a contract incorporating such agreements i f requested by either party, but such duty does not compel any party to agree to a proposal or to make any concession. (Article 252 of the Labor Code) Collective bargaining which is defined as negotiations towards a collective agre ement, 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 Artic le 249, par. (g) of the Labor Code makes it an unfair labor practice for an empl oyer 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, a nd all other terms and conditions of employment including proposals for adjustin g any grievance or question arising under such an agreement and executing a cont ract 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 p reconditions are present, namely, (1) possession of the status of majority repre sentation of the employees' representative in accordance with any of the means o f 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. xxx xxx xxx The case at bar is not a case of first impression, for in the Herald Delivery Ca rriers Union (PAFLU) vs. Herald Publications the rule had been laid down that "u nfair 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. Th is doctrine was reiterated anew in Bradman vs. CIR wherein it was further ruled that "while the law does not compel the parties to reach an agreement, it does c ontemplate that both parties will approach the negotiation with an open mind and make a reasonable effort to reach a common ground of agreement. (Kiok Loy vs. N LRC [G.R. No. L-54334, 22 January 1986]) It is essential to the right of a putative bargaining agent to represent the emp

loyees that it be the delegate of a majority of the employees and, conversely, a n employer is under duty to bargain collectively only when the bargaining agent is representative of the majority of the employees. A natural consequence of the se principles is that the employer has the right to demand of the asserted barga ining agent proof of its representation of its employees. Having the right to de monstration of this fact, it is not an 'unfair labor practice' for an employer t o refuse to negotiate until the asserted bargaining agent has presented reasonab le proof of majority representation. It is necessary however, that such demand b e made in good faith and not merely as a pretext or device for delay or evasion. The employer's right is however to reasonable proof. ... ... Although an employer has the undoubted right to bargain with a bargaining ag ent whose authority has been established, without the requirement that the barga ining agent be officially certified by the NLRB as such, if the informally prese nted evidence leaves a real doubt as to the issue, the employer has a right to d emand a certification and to refuse to negotiate until such official certificati on is presented." (LAKAS vs. Marcelo Enterprises [G.R. No. L-38258, 19 November 1982] citing Roth enberg) We hold that there existed no duty to bargain collectively with the complainant LAKAS on the part of said companies. And proceeding from this basis, it follows that all acts instigated by complainant LAKAS such as the filing of the Notice of strike on June 13, 1967 (although later withdrawn) and the 'two strikes of Se ptember 4, 1967 and November 7, 1967 were calculated , designed and intended to compel the respondent Marcelo Companies to recognize or bargain with it notwiths tanding that it was an uncertified union, or in the case of respondent Marcelo T ire and Rubber Corporation, to bargain with it despite the fact that the MUEWA o f Paulino Lazaro vas already certified as the sole bargaining agent in said resp ondent company. These concerted activities executed and carried into effect at t he instigation and motivation of LAKAS ire all illegal and violative of the empl oyer's basic right to bargain collectively only with the representative supporte d by the majority of its employees in each of the bargaining units. This Court i s not unaware of the present predicament of the employees involved but much as W e sympathize with those who have been misled and so lost their jobs through hast y, ill-advised and precipitate moves, We rule that the facts neither substantiat e nor support the finding that the respondent Marcelo Companies are guilty of un fair labor practice. (LAKAS vs. Marcelo Enterprises [G.R. No. L-38258, 19 Novemb er 1982]) [I]n a situation like this where the issue of legitimate representation in dispu te is viewed for not only by one legitimate labor organization but two or more, there is every equitable ground warranting the holding of a certification electi on. In this way, the issue as to who is really the true bargaining representativ e of all the employees may be firmly settled by the simple expedient of an elect ion. (PAFLU vs. The Bureau of Labor Relations [69 SCRA 132]) The inference that respondents did not refuse to bargain collectively with the c omplaining union because they accepted some of the demands while they refused th e others even leaving open other demands for future discussion is correct, espec ially so when those demands were discussed at a meeting called by respondents th emselves precisely in view of the letter sent by the union on April 29, 1960. It is true that under Section 14 of Republic Act 875 whenever a party serves a wri tten notice upon the employer making some demands the latter shall reply thereto not later than 10 days from receipt thereof, but this rendition is merely proce dural and as such its non-compliance cannot be deemed to be an act of unfair lab or practice. The fact is that respondents did not ignore the letter sent by the union so much so that they called a meeting to discuss its demands, as already s tated elsewhere. (National Union of Restaurant Workers vs. CIR [G.R. No. L-20044 , 30 April 1964]) Duration of a CBA Art. 253-A. Terms of a Collective Bargaining Agreement. Any Collective Bargaini ng Agreement that the parties may enter into shall, insofar as the representatio

n aspect is concerned, be for a term of five (5) years. No petition questioning the majority status of the incumbent bargaining agent shall be entertained and n o certification election shall be conducted by the Department of Labor and Emplo yment outside of the sixty-day period immediately before the date of expiry of s uch five year term of the Collective Bargaining Agreement. All other provisions of the Collective Bargaining Agreement shall be renegotiated not later than thre e (3) years after its execution. Any agreement on such other provisions of the C ollective 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 Barga ining Agreement, shall retroact to the day immediately following such date. If a ny 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 renegotiatio n of the collective bargaining agreement, the parties may exercise their rights under this Code. Article 253-A is a new provision. This was incorporated by Section 21 of Republi c Act No. 6715 (the Herrera-Veloso Law) which took effect on March 21, 1989. Thi s new provision states that the CBA has a term of five (5) years instead of thre e 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 th ree (3) years after its execution. The "representation aspect" refers to the ide ntity and majority status of the union that negotiated the CBA as the exclusive bargaining representative of the appropriate bargaining unit concerned. "All oth er provisions" simply refers to the rest of the CBA, economic as well as non-eco nomic provisions, except representation. xxx xxx xxx From the aforesaid discussions, the legislators were more inclined to have the p eriod of effectivity for three (3) years insofar as the economic as well as noneconomic provisions are concerned, except representation. Obviously, the framers of the law wanted to maintain industrial peace and stabil ity by having both management and labor work harmoniously together without any d isturbance. Thus, no outside union can enter the establishment within five (5) y ears and challenge the status of the incumbent union as the exclusive bargaining agent. Likewise, the terms and conditions of employment (economic and non-econo mic) cannot be questioned by the employers or employees during the period of eff ectivity of the CBA. The CBA is a contract between the parties and the parties m ust respect the terms and conditions of the agreement. Notably, the framers of t he law did not give a fixed term as to the effectivity of the terms and conditio ns of employment. It can be gleaned from their discussions that it was left to t he parties to fix the period. (SMC vs. Confesor [G.R. No. 111262, 19 September 1 996]) The signing of the CBA is not determinative of the question whether "the agreeme nt was entered into within six months from the date of expiry of the term of suc h other provisions as fixed in such collective bargaining agreement" within the contemplation of Art. 253-A. As already stated, on November 12, 1992, the Union sent the Company a notice of deadlock in view of their inability to reconcile their positions on the main iss ues, particularly on wages. The Union filed a notice of strike. However, on Dece mber 18, 1992, in a conference called by the NCMB, the Union and the Company agr eed on a number of provisions of the CBA, including the provision on wage increa se, leaving only the issue of retirement to be threshed out. In time, this, too, was settled, so that in his record of the January 14, 1993 conference, the MedArbiter noted that "the issues raised by the notice of strike had been settled a nd said notice is thus terminated." It would therefore seem that at that point, there was already a meeting of the minds of the parties, which was before the Fe bruary 1993 end of the six-month period provided in Art. 253-A. The fact that no agreement was then signed is of no moment. Art. 253-A refers me rely to an "agreement" which, according to Black's Law Dictionary is "a coming t ogether of minds; the coming together in accord of two minds on a given proposit ion." This is similar to Art. 1305 of the Civil Code's definition of "contract" as "a meeting of minds between two persons."

The two terms, "agreement" and "contract," are indeed similar, although the form er is broader than the latter because an agreement may not have all the elements of a contract. As in the case of contracts, however, agreements may be oral or written. Hence, even without any written evidence of the CBA made by the partie s, a valid agreement existed in this case from the moment the minds of the parti es met on all matters they set out to discuss. (Mindanao Terminal & Brokerage v s. Roldan-Confessor [G.R. No. 111809, 05May 1997]) The Court in the January 27, 1999 Decision, stated that the CBA shall be "effect ive for a period of 2 years counted from December 28, 1996 up to December 27, 19 99." Parenthetically, this actually covers a three-year period. Labor laws are s ilent as to when an arbitral award in a labor dispute where the Secretary had as sumed jurisdiction by virtue of Article 263 (g) of the Labor Code shall retroact . In general, a CBA negotiated within six months after the expiration of the exi sting CBA retroacts to the day immediately following such date and if agreed the reafter, the effectivity depends on the agreement of the parties. On the other h and, the law is silent as to the retroactivity of a CBA arbitral award or that g ranted not by virtue of the mutual agreement of the parties but by intervention of the government. Despite the silence of the law, the Court rules herein that C BA arbitral awards granted after six months from the expiration of the last CBA shall retroact to such time agreed upon by both employer and the employees or th eir union. Absent such an agreement as to retroactivity, the award shall retroac t to the first day after the six-month period following the expiration of the la st day of the CBA should there be one. In the absence of a CBA, the Secretary's determination of the date of retroactivity as part of his discretionary powers o ver arbitral awards shall control. It is true that an arbitral award cannot per se be categorized as an agreement v oluntarily entered into by the parties because it requires the interference and imposing power of the State thru the Secretary of Labor when he assumes jurisdic tion. However, the arbitral award can be considered as an approximation of a col lective bargaining agreement which would otherwise have been entered into by the parties. The terms or periods set forth in Article 253-A pertains explicitly to a CBA. But there is nothing that would prevent its application by analogy to an arbitral award by the Secretary considering the absence of an applicable law. U nder Article 253-A: "(I)f any such agreement is entered into beyond six months, the parties shall agree on the duration of retroactivity thereof." In other word s, the law contemplates retroactivity whether the agreement be entered into befo re or after the said six-month period. The agreement of the parties need not be categorically stated for their acts may be considered in determining the duratio n of retroactivity. In this connection, the Court considers the letter of petiti oner's Chairman of the Board and its President addressed to their stockholders, which states that the CBA "for the rank-and-file employees covering the period D ecember 1, 1995 to November 30, 1997 is still with the Supreme Court," as indica tive of petitioner's recognition that the CBA award covers the said period. Earl ier, petitioner's negotiating panel transmitted to the Union a copy of its propo sed CBA covering the same period inclusive. In addition, petitioner does not dis pute the allegation that in the past CBA arbitral awards, the Secretary granted retroactivity commencing from the period immediately following the last day of t he expired CBA. Thus, by petitioner's own actions, the Court sees no reason to r etroact the subject CBA awards to a different date. The period is herein set at two (2) years from December 1, 1995 to November 30, 1997. (MERALCO vs. Quisumbin g [G.R. No. 127598, 22 February 2000]) Effect of Failure to Bargain Collectively A thorough study of the records reveals that there was no "reasonable effort at good faith bargaining" specially on the part of the University. Its indifferent towards collective bargaining inevitably resulted in the failure of the parties to arrive at an agreement. As it was evident that unilateral moves were being un dertaken only by the DWUEU-ALU, there was no "'counteraction" of forces or an im passe to speak of. While collective bargaining should be initiated by the union, there is a corresponding responsibility on the part of the employer to respond

in some manner to such acts. This is a clear from the provisions of the Labor Co de Art 250(a) of which states: xxx xxx xxx Hence, petitioner's contention that the DWUEU-ALU's proposals may not be unilate rally imposed on it on the ground that a collective bargaining agreement is a co ntract wherein the consent of both parties is indispensable is devoid of merit. A similar argument had already been disregarded in the case of Kiok Loy v. NLRC, where we upheld the order of the NLRC declaring the unions draft CBA proposal a s the collective agreement which should govern the relationship between the part ies. Kiok Loy v. NLRC is applicable in the instant case considering that the fac t therein have also been indubitably established in this case. These factors are : (a) the union is the duly certified bargaining agent; (b) it made a definite r equest to bargain submitted its collective bargaining proposals, and (c) the Uni versity made no further proposal whatsoever. As we said in Kiok Loy v. NLRC, [a] company's refusal to make counter proposal if considered in relation to the ent ire bargaining process, may indicate bad faith and this is especially true where the Union's request for a counter proposal is left unanswered." Moreover, the C ourt added in the same case that "it is not obligatory upon either side of a lab or controversy to precipitately accept or agree to the proposal of the other. Bu t an erring party should not be tolerated and allowed with impunity to resort to schemes feigning negotiations by going through empty gestures." (Divine Word U niversity of Tacloban vs. Secretary [G. R. No. 91915, 11 September 1992]) Any provision in the CBA is deemed to be a bilateral agreement, hence subject to negotiation The company's contention that its retirement plan is non-negotiable, is not well -taken. The NLRC correctly observed that the inclusion of the retirement plan in the collective bargaining agreement as part of the package of economic benefits extended by the company to its employees to provide them a measure of financial security after they shall have ceased to be employed in the company, reward the ir loyalty, boost their morale and efficiency and promote industrial peace, give s "A CONSENSUAL CHARACTER" to the plan so that it may not be terminated or modif ied at will by either party (Nestle Phil., Inc. vs. NLRC [G.R. No. 91231, 04 Feb ruary 1991] ADMINISTRATION OF THE CBA; GRIEVANCE AND VOLUNTARY ARBITRATION COMPULSORY ARBITRATION is a system whereby the parties to a dispute are compelle d by the government to forego their right to strike and are compelled to accept the resolution of their dispute through arbitration by a third party. The essenc e of arbitration remains since a resolution of a dispute is arrived at by resort to a disinterested third party whose decision is final and binding on the parti es, but in compulsory arbitration, such a third party is normally appointed by t he government. Under VOLUNTARY ARBITRATION, on the other hand, referral of a dispute by the par ties is made, pursuant to a voluntary arbitration clause in their collective agr eement, to an impartial third person for a final and binding resolution. Ideally , arbitration awards are supposed to be complied with by both parties without de lay, such that once an award has been rendered by an arbitrator, nothing is left to be done by both parties but to comply with the same. After all, they are pre sumed to have freely chosen arbitration as the mode of settlement for that parti cular dispute. Pursuant thereto, they have chosen a mutually acceptable arbitrat or who shall hear and decide their case. Above all, they have mutually agreed to de bound by said arbitrator's decision. In the Philippine context, the parties to a CBA are required to include therein provisions for a machinery for the resolution of grievances arising from the int erpretation or implementation of the CBA or company personnel policies. For thi s purpose, parties to a CBA shall name and designate therein a voluntary arbitra tor or a panel of arbitrators, or include a procedure for their selection, prefe rably from those accredited by the NCMB. Article 261 of the Labor Code according ly provides for exclusive original jurisdiction of such voluntary arbitrator or

panel of arbitrators over (1) the interpretation or implementation of the CBA an d (2) the interpretation or enforcement of company personnel policies. Article 2 62 authorizes them, but only upon agreement of the parties, to exercise jurisdic tion over other labor disputes. (Luzon Development Bank vs. Association [G.R. No . 120319, 06 October 1995]) The terms and conditions of a collective bargaining contract constitute the law between the parties. Those who are entitled to its benefits can invoke its provi sions. In the event that an obligation therein imposed is not fulfilled, the agg rieved party has the right to go to court for redress. Nor does it suffice as a defense that the claim is made on behalf of non-members of intervenor ALU, for i t is a well-settled doctrine that the benefits of a collective bargaining agreem ent extend to the laborers and employees in the collective bargaining unit, incl uding those who do not belong to the chosen bargaining labor organization. Any o ther view would be a discrimination on which the law frowns. It is appropriate t hat such should be the case. As was held in United Restauror's Employees v. Torr es, this Court speaking through Justice Sanchez, "the right to be the exclusive representative of all the employees in an appropriate collective bargaining unit is vested in the labor union 'designated or selected' for such purpose 'by the majority of the employees' in the unit concerned." If it were otherwise, the hig hly salutory purpose and objective of the collective bargaining scheme to enable labor to secure better terms in employment condition as well as rates of pay wo uld be frustrated insofar as non-members are concerned, deprived as they are of participation in whatever advantages could thereby be gained. The labor union th at gets the majority vote as the exclusive bargaining representative does not ac t for its members alone. It represents all the employees in such a bargaining un it. It is not to be indulged in any attempt on its part to disregard the rights of non-members. Yet that is what intervenor labor union was guilty of, resulting in the complaint filed on behalf of the laborers, who were in the ranks of plai ntiff Mactan Labor Union. (Mactan Workers Union vs. Don Ramon Aboitiz [G.R. No. L-30241, 1972]) In formulating the "substitutionary" doctrine, the only consideration involved w as the employees' interest in the existing bargaining agreement. The agent's int erest never entered the picture. In fact, the justification for said doctrine w as: ... that the majority of the employees, as an entity under the statute, is the t rue party in interest to the contract, holding rights through the agency of the union representative. Thus, any exclusive interest claimed by the agent is defea sible at the will of the principal.... Stated otherwise, the "SUBSTITUTIONARY" DOCTRINE only provides that the employee s cannot revoke the validly executed collective bargaining contract with their e mployer by the simple expedient of changing their bargaining agent. And it is in the light of this that the phrase "said new agent would have to respect said co ntract" must be understood. It only means that the employees, thru their new bar gaining agent, cannot renege on their collective bargaining contract, except of course to negotiate with management for the shortening thereof. The "substitutionary" doctrine, therefore, cannot be invoked to support the cont ention that a newly certified collective bargaining agent automatically assumes all the personal undertakings like the no-strike stipulation here in the collect ive bargaining agreement made by the deposed union. When BBWU bound itself and i ts officers not to strike, it could not have validly bound also all the other ri val unions existing in the bargaining units in question. BBWU was the agent of t he employees, not of the other unions which possess distinct personalities. To c onsider UNION contractually bound to the no-strike stipulation would therefore v iolate the legal maxim that res inter alios nec prodest nec nocet. (Benguet vs. BCI Employees [G.R. No. L-24711, 30 April 1968]) The reference to a Grievance Machinery and Voluntary Arbitrators for the adjustm ent or resolution of grievances arising from the interpretation or implementatio n of their CBA and those arising from the interpretation or enforcement of compa ny personnel policies is mandatory. The law grants to voluntary arbitrators orig inal and exclusive jurisdiction to hear and decide all unresolved grievances ari

sing from the interpretation or implementation of the Collective Bargaining Agre ement and those arising from the interpretation or enforcement of company person nel policies (Article 261 of the Labor Code). The procedure introduced in RA 6715 of referring certain grievances originally a nd exclusively to the grievance machinery and when not settled at this level, to a panel of voluntary arbitrators outlined in CBA's does not only include grieva nces arising from the interpretation or implementation of the CBA but applies as well to those arising from the implementation of company personnel policies. No other body shall take cognizance of these cases. xxx xxx xxx In the instant case, however, We hold that the Labor Arbiter and not the Grievan ce Machinery provided for in the CBA has the jurisdiction to hear and decide the complaints of the private respondents. While it appears that the dismissal of t he private respondents was made upon the recommendation of PSSLU pursuant to the union security clause provided in the CBA, We are of the opinion that these fac ts do not come within the phrase "grievances arising from the interpretation or implementation of (their) Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies," the jurisdict ion of which pertains to the Grievance Machinery or thereafter, to a voluntary a rbitrator or panel of voluntary arbitrators. Article 260 of the Labor Code on gr ievance machinery and voluntary arbitrator states that "(t)he parties to a Colle ctive Bargaining Agreement shall include therein provisions that will ensure the mutual observance of its terms and conditions. They shall establish a machinery for the adjustment and resolution of grievances arising from the interpretation or implementation of their Collective Bargaining Agreement and those arising fr om the interpretation or enforcement of company personnel policies." It is furth er provided in said article that the parties to a CBA shall name or designate th eir respective representatives to the grievance machinery and if the grievance i s not settled in that level, it shall automatically be referred to voluntary arb itrators (or panel of voluntary arbitrators) designated in advance by the partie s. It need not be mentioned that the parties to a CBA are the union and the comp any. Hence, only disputes involving the union and the company shall be referred to the grievance machinery or voluntary arbitrators. In the instant case, both the union and the company are united or have come to a n agreement regarding the dismissal of private respondents. No grievance between them exists which could be brought to a grievance machinery. The problem or dis pute in the present case is between the union and the company on the one hand an d some union and non-union members who were dismissed, on the other hand. The di spute has to be settled before an impartial body. The grievance machinery with m embers designated by the union and the company cannot be expected to be impartia l against the dismissed employees. Due process demands that the dismissed worker s grievances be ventilated before an impartial body. Since there has already bee n an actual termination, the matter falls within the jurisdiction of the Labor A rbiter. (Sanyo Phil. Workers Union-PSSLU vs. Canizares [G.R. No. 101619, 08 July 1992]) [T]ermination cases fall under the original and exclusive jurisdiction of the La bor Arbiter. It should be noted, however, that in the opening there appears the phrase: "Except as otherwise provided under this Code . . . ." It is paragraph ( c) of the same Article which respondent Commission has erroneously interpreted a s giving the voluntary arbitrator jurisdiction over the illegal dismissal case. However, Article 217 (c) should be read in conjunction with Article 261 of the L abor Code which grants to voluntary arbitrators original and exclusive jurisdict ion 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 personel policies. Note the phrase "unresolved grievances." In the case at bar, the termination of petitioner is n ot an unresolved grievance. The stance of the Solicitor General in the Sanyo case is totally the reverse of its posture in the case at bar. In Sanyo, the Solicitor General was of the view that a distinction should be made between a case involving "interpretation or im

plementation of Collective Bargaining Agreement" or interpretation or "enforceme nt" of company personel policies, on the one hand and a case involving terminati on, on the other hand. It argued that the dismissal of the private respondents d oes not involve an "interpretation or implementation" of a Collective Bargaining Agreement or "interpretation or enforcement" of company personel policies but i nvolves "termination." The Solicitor General further said that where the dispute is just in the interpretation, implementation or enforcement stage, it may be r eferred to the grievance machinery set up the Collective Bargaining Agreement or by voluntary arbitration. Where there was already actual termination, i.e., vio lation of rights, it is already cognizable by the Labor Arbiter. We fully agree with the theory of the Solicitor General in the Sanyo case, which is radically a pposite to its position in this case. Moreover, the dismissal of petitioner does not fall within the phrase "grievance arising from the interpretation or implementation of collective bargaining agre ement and those arising from the interpretation or enforcement of company person el policies," the jurisdiction of which pertains to the grievance machinery or t hereafter, to a voluntary arbitrator or panel of voluntary arbitrators. It is to be stressed that under Article 260 of the Labor Code, which explains the functi on of the grievance machinery and voluntary arbitrator. "(T)he parties to a Coll ective Bargaining Agreement shall include therein provisions that will ensure th e mutual observance of its terms and conditions. They shall establish a machiner y for the adjustment and resolution of grievances arising from the interpretatio n or implementation of their CBA and those arising from the interpretation or en forcement of company personel policies." Article 260 further provides that the p arties to a CBA shall name or designate their respective representative to the g rievance machinery and if the grievance is unsettled in that level, it shall aut omatically be refered to the voluntary arbitrators designated in advance by the parties to a CBA of the union and the company. It can thus be deduced that only disputes involving the union and the company shall be referred to the grievance machinery or voluntary arbitrators. (Maneja vs. NLRC [G.R. No. 124013, 05 June 1998] It should be explained that "company personnel policies" are guiding principles stated in broad, long-range terms that express the philosophy or beliefs of an o rganization'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 oth er personnel movements which are usually not spelled out in the collective agree ment. The usual source of grievances, however, are the rules and regulations gov erning disciplinary actions. (Maneja vs. NLRC [G.R. No. 124013, 05 June 1998] [T]he award of a Voluntary Arbitrator is final and executory after ten (10) cale ndar days from receipt of the award by the parties. There was a time when the aw ard of a Voluntary Arbitrator relating to money claims amounting to more than P 100,000.00 or forty percent (40%) of the paid-up capital of the employer (whiche ver was lower), could be appealed to the National Labor Relations Commission upo n the grounds of (a) abuse of discretion; or (b) gross incompetence, presumably of the arbitrator. This is no longer so today although, of course, certiorari wi ll lie in appropriate cases. A petition for certiorari under Rule 65 of the Revi sed Rules of Court will lie only where a grave abuse of discretion or an act wit hout or in excess of jurisdiction on the part of the Voluntary Arbitrator is cle arly shown. It must be borne in mind that the writ of certiorari is an extraordi nary remedy and that certiorari jurisdiction is not to be equated with appellate jurisdiction. In a special civil action of certiorari, the Court will not engag e in a review of the facts found nor even of the law as interpreted or applied b y the Arbitrator unless the supposed errors of fact or of law are so patent and gross and prejudicial as to amount to a grave abuse of discretion or an excess d e pouvoir on the part of the Arbitrator. The Labor Code and its Implementing Rul es thus clearly reflect the important public policy of encouraging recourse to v oluntary arbitration and of shortening the arbitration process by rendering the arbitral award non- appealable to the NLRC. The result is that a voluntary arbit ral award may be modified and set aside only upon the same grounds on which a de

cision of the NLRC itself may be modified or set aside, by this Court. (Sime Dar by vs. Magsalin [G.R. No. 90426, 15 December 1989]) The Union erred in filing a motion for reconsideration of the decision dated Jul y 12, 1988. So did the respondent Voluntary Arbitrator in entertaining the motio n and vacating his first decision. When the parties submitted their grievance to arbitration, they expressly agreed that the decision of the Voluntary Arbitrator would be final, executory and ina ppealable. In fact, even without this stipulation, the first decision had alread y become so by virtue of Article 263 of the Labor Code making voluntary arbitrat ion awards or decisions final and executory. (Imperial Textile Mills, Inc. vs. S ampang [G.R. No. 94960, 08 March 1993]) Levy;Check-Off A check-off is a process or device whereby the employer, on agreement with the u nion recognized as the proper bargaining representative, or on prior authorizati on from its employees, deducts union dues or agency fees from the latter's wages and remits them directly to the union. Its desirability to a labor organization is quite evident; by it, it is assured of continuous funding. Indeed, this Cour t has acknowledged that the system of check-off is primarily for the benefit of the union and, only indirectly, of the individual laborers. When so stipulated i n a collective bargaining agreement, or authorized in writing by the employees c oncerned the Labor Code and its Implementing Rules recognize it to be the duty o f the employer to deduct sums equivalent to the amount of union dues from the em ployees' wages for direct remittance to the union, in order to facilitate the co llection of funds vital to the role of the union as representative of employees in a bargaining unit if not, indeed, to its very existence. And it may be mentio ned in this connection that the right to union dues deducted pursuant to a check -off, pertains to the local union which continues to represent the employees und er the terms of a CBA, and not to the parent association from which it has disaf filiated. The legal basis of check-off is thus found in statute or in contract. Statutory limitations on check-offs generally require written authorization from each empl oyee to deduct wages; however, a resolution approved and adopted by a majority t o the union members at a general meeting will suffice when the right to check-of f has been recognized by the employer, including collection of reasonable assess ments in connection with mandatory activities of the union, or other special ass essments and extraordinary fees. Authorization to effect a check-off of union dues is co-terminous with the union affiliation or membership of employees. On the other hand, the collection of ag ency 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. No requi rement of written authorization from the non-union employee is imposed. The empl oyee's acceptance of benefits resulting from a collective bargaining agreement j ustifies the deduction of agency fees from his pay and the union's entitlement t hereto. In this aspect, the legal basis of the union's right to agency fees is n either contractual nor statutory, but quasi-contractual, deriving from the estab lished principle that non-union employees may not unjustly enrich themselves by benefiting from employment conditions negotiated by the bargaining union. No provision of law makes the employer directly liable for the payment to the la bor organization of union dues and assessments that the former fails to deduct f rom its employees' salaries and wages pursuant to a check-off stipulation. The e mployer's failure to make the requisite deductions may constitute a violation of a contractual commitment for which it may incur liability for unfair labor prac tice. But it does not by that omission, incur liability to the union for the agg regate of dues or assessments uncollected from the union members, or agency fees for non-union employees. Check-offs in truth impose an extra burden on the employer in the form of additi onal administrative and bookkeeping costs. It is a burden assumed by management at the instance of the union and for its benefit, in order to facilitate the col lection of dues necessary for the latter's life and sustenance. But the obligati

on to pay union dues and agency fees obviously devolves not upon the employer, b ut the individual employee. It is a personal obligation not demandable from the employer upon default or refusal of the employee to consent to a check-off. The only obligation of the employer under a check-off is to effect the deductions an d remit the collections to the union. The principle of unjust enrichment necessa rily precludes recovery of union dues or agency fees from the employer, these be ing, to repeat, obligations pertaining to the individual worker in favor of the bargaining union. Where the employer fails or refuses to implement a check-off a greement, logic and prudence dictate that the union itself undertake the collect ion of union dues and assessments from its members (and agency fees from non-uni on employees); this, of course, without prejudice to suing the employer for unfa ir labor practice. Holy Cross of Davao vs. Joaquin [G.R. No. 110007, 18 October 1996]) Art. 241 has three (3) requisites for the validity of the special assessment for union's incidental expenses, attorney's fees and representation expenses. These are: (1) authorization by a written resolution of the majority of all the members at the general membership meeting called for the purpose; (2) secretary's record of the minutes of the meeting; and (3) individual written authorization for check off duly signed by the employ ees concerned. (Gabriel vs. Secretary [G.R. No. 115949, 16 March 2000]) No [n] 241special Requisites Provision assessment or other extraordinary fees may be levied upon the members Article of a labor organization unless authorized by a written resolution of a majority of all the members at a general membership meeting duly called for the purpose. The secretary of the organization shall record the minutes of the meeting inclu ding the list of all members present, the votes cast, the purpose of the special assessment or fees and the recipient of such assessment or fees. The record sha A be attested assessment via a written resolution of the majority of all the me lllevy/special to by the president mbers in a general membership meeting duly called for the purpose with the secre tary recording the minutes of the meeting, list of members as well as the votes Other 241 [o] cast. than for mandatory activities under the Code, no special assessment, attor ney's fees, negotiation fees or any other extraordinary fees may be checked off from any amount due an employee without an individual written authorization duly signed by the employee. The authorization should specifically state the amount, Nocheck-off fees, negotiation fees or similar signed of any kind arising 222attorney'sbeneficiary of the deduction; Apurpose andvia individual written authorizationcharges by every employee. from [b] any collective bargaining negotiations or conclusion of the collective agreemen t shall be imposed on any individual member of the contracting union: Provided, however, That attorney's fees may be charged against union funds in an amount to be agreed upon by the parties. Any contract, agreement or arrangement of any so Prohibits attorney's fees, null and void. rt to the contrary shall benegotiations fees and similar charges arising out of the conclusion of a collective bargaining agreement from being imposed on any in dividual union member. Enforcement of Union Security Clause; Obligation of Employer Turning now to the involvement of the Company in the dismissal of petitioner Car io we note that the Company upon being formally advised in writing of the expulsi on of petitioner Carino from the Union, in turn simply issued a termination lett er to Cario, the termination being made effective the very next day. We believe t hat the Company should have given petitioner Carino an opportunity to explain hi s side of the controversy with the Union. Notwithstanding the Unions Security Cl ause in the CBA, the Company should have reasonably satisfied itself by its own inquiry that the Union had not been merely acting arbitrarily and capriciously i n impeaching and expelling petitioner Cario. From what was already discussed abov e, it is quite clear that had the Company taken the trouble to investigate the a cts and proceedings of the Union, it could have very easily determined that the Union had not acted arbitrarily in impeaching and expelling from its ranks petit ioner Cario. The Company offered the excuse that the Union had threatened to go o n strike if its request had not been forthwith granted. Assuming that such a thr eat had in fact been made, if a strike was in fact subsequently called because t he Company had insisted on conducting its own inquiry, the Court considers that

such would have been prima facie an illegal strike. The Company also pleaded tha t for it to inquire into the lawfulness of the acts of the Union in this regard would constitute interference by the Company in the administration of Union affa irs. We do not believe so. xxx xxx xxx 5. We conclude that the Company had failed to accord to petitioner Cario the latter's right to procedural due process. The right of an employee to be inform ed of the charges against him and to reasonable opportunity to present his side in a controversy with either the Company or his own Union, is not wiped away by a Union Security Clause or a Union Shop Clause in a CBA. An employee is entitled to be protected not only from a company which disregards his rights but also fr om his own Union the leadership of which could yield to the temptation of swift and arbitrary expulsion from membership and hence dismissal from his job. (Cario vs. NLRC [G.R. No. 91086, 08 May 1990]) UNFAIR LABOR PRACTICE Of Employers Indeed, it is an unfair labor practice for an employer operating under a collect ive bargaining agreement to negotiate or to attempt to negotiate with his employ ees individually in connection with changes in the agreement. And the basis of t he prohibition regarding individual bargaining with the strikers is that althoug h the union is on strike, the employer is still under obligation to bargain with the union as the employees' bargaining representative (Melo Photo Supply Corpor ation vs. National Labor Relations Board, 321 U.S. 332). xxx xxx xxx The test of whether an employer has interfered with and coerced employees within the meaning of subsection (a) (1) is whether the employer has engaged in conduc t which it may reasonably be said tends to interfere with the free exercise of e mployees' rights under section 3 of the Act, and it is not necessary that there be direct evidence that any employee was in fact intimidated or coerced by state ments of threats of the employer if there is a reasonable inference that anti-un ion conduct of the employer does have an adverse effect on self-organization and collective bargaining. (Francisco, Labor Laws 1956, Vol. II, p. 323, citing NLR B v. Ford, C.A., 1948, 170 F2d 735). Besides, the letters, exhibits A and B, should not be considered by themselves a lone but should be read in the light of the preceding and subsequent circumstanc es surrounding them. The letters should be interpreted according to the "TOTALIT Y OF CONDUCT DOCTRINE," ... whereby the culpability of an employer's remarks were to be evaluated not on ly on the basis of their implicit implications, but were to be appraised against the background of and in conjunction with collateral circumstances. Under this "doctrine" expressions of opinion by an employer which, though innocent in thems elves, frequently were held to be culpable because of the circumstances under wh ich they were uttered, the history of the particular employer's labor relations or anti-union bias or because of their connection with an established collateral plan of coercion or interference. (Rothenberg on Relations, p. 374, and cases c ited therein.) (Insular Life Assurance Co., Ltd., Employees Assoc. vs. Insular Life [G.R. No. L -25291, 1971]) An employer is not denied the privilege of interrogating its employees as to the ir union affiliation, provided the same is for a legitimate purpose and assuranc e is given by the employer that no reprisals would be taken against unionists. N onetheless, any employer who engages in interrogation does so with notice that h e risks a finding of unfair labor practice if the circumstances are such that hi s interrogation restrains or interferes with employees in the exercise of their rights to self-organization. (Blue Flash Express Co., Inc., 109 NLRB 591.) xxx xxx xxx The rule in this jurisdiction is that subjection by the company of its employees to a series of questionings regarding their membership in the union or their un ion activities, in such a way as to hamper the exercise of free choice on their

part, constitutes unfair labor practice (Scoty's Department Store vs. Micaller, 52 O.G. 5119). PHILSTEAM's aforestated interrogation squarely falls under this r ule. (Phil. Steam Navigation Co. vs. Phil. Officers Guild [G.R. No. L-20667/69, 29 October 1965]) [I]t can be established that the true and basic inspiration for the employer's a ct is derived from the employee's union affiliations or activities, the assignme nt by the employer or another reason, whatever its semblance of validity, is una vailing. Thus, it has been held that the facts disclosed that the employer's act s in discharging employees were actually prompted by the employers 'improper int erest in the affected employee's improper interest in the affected employee's un ion affiliations and activities, even though the employer urged that his acts we re predicated on economic necessity, desire to give employment to more needy per sons, lack of work, cessation of operations, refusal to work overtime, refusal o f non-union employees to work with union employees, seasonal lay-off, libelous r emarks against management, violation of company rules. (Visayan Bicycle, Mfg., C o., Inc. vs. NLU [G.R. No. L-19997, 19 May 1965] citing Rothenberg on Labor Rela tions) The petitioner further claims that it could not have committed the unfair labor practice charge for dismissing some of its employees due to their alleged union activities because the alleged dismissal took place more than four (4) months be fore the organizational meeting of the union and more than one (1) year before a ctual registration of said union with the Labor Organization Division of the BLR . The contention is without merit. Under Article 248(a) of the Labor Code of the P hilippines, "to interfere with, restrain, or coerce employees in their exercise of the right to self-organization" is an unfair labor practice on the part of th e employer. Paragraph (d) of said Article also considers it an unfair labor prac tice for an employer "to initiate, dominate, assist or otherwise interfere with the formation or administration of any labor organization, including the giving of financial or other support to it. In this particular case, the private respon dents were dismissed or their services were terminated, because they were solici ting signatures in order to form a union within the plant. (Judric Canning Corp. vs. Inciong [G.R. No. L-51494, 19 August 1982]) Respondent court thus correctly held that: "(T)o the mind of the Court, whether or not the Pines Hotel incurred losses is of no moment. The fact that management granted Christmas bonus to its employees, the same should have been divided equ ally as it has been done before. Aside from the Christmas bonus of 50% that was allocated to the Manila Hotel employees, some of them were granted year-end bonu s while the employees of the Pines Hotel did not receive any year-end bonus. Thi s is a clear case of discrimination, it appearing that there is no union at the Manila Hotel or the Taal Vista Lodge and considering further that lately respond ents had always been beset with demands for better living conditions from the co mplainant union as well as strikes being staged by the union." (Manila Hotel Co. vs. CIR, [G.R. No. L-30139, 28 September 1972]) Under the CBA between the parties that was in force and effect from May 1, 1985 to April 30,1988 it was agreed that the "bargaining unit" covered by the CBA "co nsists of all regular or permanent employees, below the rank of assistant superv isor, Also expressly excluded from the term "appropriate bargaining unit" are al l regular rank and file employees in the office of the president, vice-president , and the other offices of the company personnel office, security office, corpo rate affairs office, accounting and treasurer department . It is to this class of employees who were excluded in the "bargaining unit" and who do not derive benefits from the CBA that the profit sharing privilege was ex tended by petitioner. There can be no discrimination committed by petitioner thereby as the situation of the union employees are different and distinct from the non-union employees. Indeed, discrimination per se is not unlawful. There can be no discrimination wh ere the employees concerned are not similarly situated. (Wise & Co., Inc., vs. Wise & Co. Employees Union [G.R. No. L-87672, 13 October 1989]) The case before us does not pertain to any controversy involving discrimination

of employees but only the issue of whether the change of work schedule, which ma nagement deems necessary to increase production, constitutes unfair labor practi ce. As shown by the records, the change effected by management with regard to wo rking time is made to apply to all factory employees engaged in the same line of work whether or not they are members of private respondent union. Hence, it can not be said that the new scheme adopted by management prejudices the right of pr ivate respondent to self-organization. xxx xxx xxx While the Constitution is committed to the policy of social justice and the prot ection of the working class, it should not be supposed that every dispute will b e automatically decided in favor of labor. Management also has rights which, as such, are entitled to respect and enforcement in the interest of simple fair pla y. Although this Court has inclined more often than not toward the worker and ha s upheld his cause in his conflicts with the employer, such favoritism has not b linded the Court to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and the applicable law and do ctrine. (Sime Darby Pilipinas, Inc. vs. NLRC [G.R. No. 119205, 15 April 1998]) Petitioner's appeal must be dismissed. It is speciously grounded on mere form ra ther than the realities of the case. In form, respondent court gently treated pe titioner's scheme to deprive the fifteen drivers and helpers of their rightful s tatus as employees and did not denounce it as a betrayal of the salutary purpose and objective of the Industrial Peace Act, but instead remarked that since the grant of employees' benefits hinged on the court's decision on their status as s uch employees, petitioner "could not have been guilty of refusal to bargain in a ccordance with the Act." The reality, however, is that respondent court expressl y found that "in truth and in fact, (petitioner) corporation is the "employer" o f the driver or helper and not the salesman or propagandist who is merely expres sly authorized by the former to engage such services." Petitioner's failure to c omply with its duty under the collective bargaining agreement to extend the priv ileges, rights and benefits thereof to the drivers and helpers as its actual emp loyees clearly amounted to the commission of an unfair labor practice. And conse quently respondent court properly ordered in, its judgment that said drivers and helpers "should be given and/or extended all the privileges, rights and benefit s that are given to all the other regular employees retroactive as of the effect ivity of the first agreement of March 14, 1962 up to the present." In ordering, respondent court but discharging its function under section 5(c) of the Act, sup ra, to order the cessation of an unfair labor practice and "take such affirmativ e action as will effectuate the policies of this Act." Failure on petitioner's part to live up in good faith to the terms of its collec tive bargaining agreement by denying the privileges and benefits thereof to the fifteen drivers and helpers through its device of trying to pass them off as "em ployees" of its salesmen and propagandists was a serious violation of petitioner 's duty to bargain collectively and constituted unfair labor practice in any lan guage. As succinctly stated by Mr. Justice Castro on Republic Savings Bank vs. C IR, in unfair labor practice cases, "(T)he question is whether the (respondent) committed the act charged in the complaint. If it did, it is of no consequence e ither as a matter of procedure or of substantive law, what the act is denominate d whether as a restraint, interference or coercion, as some members of the Cour t believe it to be, or as a discriminatory discharge as other members think it i s, or as refusal to bargain as some other members view it, or even as a combinat ion of any or all of these." (Alhambra Industries, Inc. vs. CIR [G.R. No. L-2598 4, 30 October 1970]) In the bargaining process, the workers and employer shall be represented by thei r exclusive bargaining representatives. The labor organization designated or sel ected by the majority of employees in an appropriate collective bargaining unit, shall be the exclusive representative of the employees in such unit for the pur pose of collective bargaining. In the case at bar, it is the ALU which is the ex clusive bargaining representative of BALMAR employees and as such it has the rig ht and duty to bargain collectively with BALMAR. The duty to bargain collectively means the performance of a mutual obligation to

meet and convene promptly and expeditiously in good faith for the purpose of ne gotiating an agreement with respect to wages, hours of work and all other terms and conditions or employment including proposals for adjusting any grievance or questions arising under such agreement if requested by either party but such dut y does not compel any party to agree to a proposal or to make any concession (Ar t. 252, Labor Code, as amended). Procedurally, ALU sent a letter to BALMAR, attaching therewith its proposals for collective bargaining agreement. In reply, BALMAR refused to negotiate with ALU allegedly because` it received a copy of a letter purportedly written on Novemb er 12, 1982 by one Johnny Luces, who claimed to be the president of Balmar Farms Employees Association, informing the Labor Regional Director that more than a m ajority of them would like to negotiate directly with their employer BALMAR. The re is no showing, however, that said letter was favorably acted upon, much less, is there an order superseding the Med-Arbiter's order of October 27, 1982 certi fying ALU as the sole and exclusive bargaining representative of the rank and fi le workerks of BALMAR. BALMAR cannot also invoke good faith in refusing to negotiate with ALU, consider ing that the latter has been certified as the exclusive bargaining representativ e of BALMAR rank and file employees. As observed by the SolGen, BALMAR'S pretens e that majority of its rank and file employees disaffiliated simply because of a letter it received to that effect, all the more sustains the finding of bad fai th for it is not for the petitioner BALMAR to question which group is the collec tive bargaining representative of its rank and file employees. (Balmar Farms, I nc. vs. NLRC [G.R. No. 73504, 15 October 1991]) Of Employees This Court has held that a closed-shop is a valid form of union security, and su ch a provision in a collective bargaining agreement is not a restriction of the right of freedom of association guaranteed by the Constitution. (Lirag Textile M ills, Inc. vs. Blanco, 109 SCRA 87; Manalang vs. Artex Development Company, Inc. , 21 SCRA 561). The Court stresses, however, that union security clauses are also governed by la w and by principles of justice, fair play, and legality. Union security clauses cannot be used by union officials against an employer, much less their own membe rs, except with a high sense of responsibility, fairness, prudence, and judiciou sness. A union member may not be expelled from her union, and consequently from her job , for personal or impetuous reasons or for causes foreign to the closed-shop agr eement and in a manner characterized by arbitrariness and whimsicality. (Manila Mandarin Employees Union vs. NLRC [G.R. No. 76989, 29 September 1987]) When the Union struck and picketed on January 16, 1965, it might have been true that the Union commanded a majority of Sulo's employees. Without need of certifi cation, it could, under such circumstances, conclude a collective bargaining agr eement with Sulo. But it is not disputed that on October 4, 1965, i.e., shortly after this case was filed on September 18, 1965, a consent election was held. No t controverted, too, is the fact that, in that consent election, SELU defeated t he Union, petitioner herein. Because of this, SELU was certified to the Sulo man agement as the "collective bargaining representative of the employees ... for co llective bargaining purposes as regards wages, hours of work, rates of pay and/o r such other terms and conditions of employment allowed them by law." The consent election, it should be noted, was ordered by CIR pursuant to the Uni on's petition for direct certification docketed as Case 1455-MC and a similar pe tition for certification filed by SELU docketed as Case 1464-MC. Verily, the Uni on can no longer demand collective bargaining. For, it became the minority union . As matters stand, said right properly belongs to SELU, which commands the majo rity. By law, the right to be the exclusive representative of all the employees in an appropriate collective bargaining unit is vested in the labor union "desig nated or selected" for such purpose "by the majority of the employees" in the un it concerned. SELU has the right as well as the obligation to hear, voice out an d seek remedies for the grievances of all Sulo employees, including employees wh

o are members of petitioner Union, regarding the "rates of pay, wages, hours of employment, or other conditions of employment." (United Restauror's vs. Torres [ G.R. No. L-24993, 18 December 1968]) STRIKES, LOCKOUTS and CONCERTED ACTIONS A LOCKOUT mans the temporary refusal of the employer to furnish work as a result of an industrial or labor dispute. (Article 212 [p] of the Labor Code) A STRIKE, considered as the most effective weapon of labor, is defined as any te mporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute. A labor dispute includes any controversy or matter concerning terms or conditions of employment or the association or representatio n of persons in negotiating, fixing, maintaining, changing or arranging the term s and conditions of employment, regardless of whether or not the disputants stan d in the proximate relation of employers and employees. (Gold City Integrated Po rt Service, Inc. vs. NLRC [G.R. No. 103560, 06 July 1995]) A strike is "any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute." It is the most preeminent of th e economic weapons of workers which they unsheathe to force management to agree to an equitable sharing of the joint product of labor and capital. Undeniably, s trikes exert some disquieting effects not only on the relationship between labor and management but also on the general peace and progress of society. Our laws thus regulate their exercise within reasons by balancing the interests of labor and management together with the overarching public interest. (Lapanday Workers Union vs. NLRC [G.R. Nos. 95494-97, 07 September 1995]) Some of the limitations on the exercise of the right of strike are provided for in paragraphs (c) and (f) of Article 263 of the Labor Code, as amended, supra. T hey provide for the procedural steps to be followed before staging a strike fili ng of notice of strike, taking of strike vote, and reporting of the strike vote result to the Department of Labor and Employment. (Lapanday Workers Union vs. NL RC [G.R. Nos. 95494-97, 07 September 1995]) Requisites for a lawful lockout [T]he requisites for a valid lockout are as follows: 1. a notice of intention to declare a lockout has been filed with the Depar tment of Labor; 2. at least 30 days has elapsed since the filing of notice before the locko ut is declared; 3. an impasse has resulted in the negotiations; and 4. the lockout is not discriminatory. (San Pablo Oil Factory vs. CIR [6 SCRA 628]) It is not herein controverted that the complainants were locked out or denied wo rk by the respondent Company. Under Republic Act 875, however, for the discrimin ation by reason of union membership to be considered an unfair labor practice, t he same must have been committed to courage or discourage such membership in the union. This cannot be said of the act of the Company complained of. As clearly established by the evidence, its refusal to all complainants to work and require ment that the latter stay out of the premises in the meantime (perhaps while the strike was still going on at the factory) was borne out of the Company's justif ied apprehension and fear that sabotage might be committed in the warehouse wher e the products machinery and spare parts were stored, as has been the case in Bi nangonan. It has never been shown that the act of the Company was intended to in duce the complain ants to renounce their union-membership or as a deterrent for non-members to affiliate therewith, nor as a retaliatory measure for activities in the union or in furtherance of the cause of the union. (Rizal Cement Workers Union vs. Madrigal Co. [G.R. No. L-19767, 30 April 1964]) Requisites for a Lawful Strike [T]he requisites for a valid strike are as follows: 1. a notice of strike filed with the Department of Labor at least 30 days b efore the intended date thereof 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 tha t purpose; 3. notice given to the Department of Labor and Employment of the results of the voting at least 7 days before the intended strike. These requirements are mandatory. (First City Interlink vs. Confesor [G.R. No. 106316, 05 May 1997]) Purposes of strike notice and strike-vote report. In requiring a strike notice a nd a cooling-off period, the avowed intent of the law is to provide an opportuni ty for mediation and conciliation. It thus directs the MOLE "to exert all effort s at mediation and conciliation to effect a voluntary settlement" during the coo ling-off period. As applied to the CAC-NFSW dispute regarding the 13th month pay , MOLE intervention could have possibly induced CAC to provisionally give the 13 th month pay in order to avert great business loss arising from the project stri ke, without prejudice to the subsequent resolution of the legal dispute by compe tent authorities; or mediation/conciliation could have convinced NFSW to at leas t postpone the intended strike so as to avoid great waste and loss to the sugar central, the sugar planters and the sugar workers themselves, if the strike woul d coincide with the mining season. So, too, the 7-day strike-vote report is not without a purpose. As pointed out b y the Solicitor General: Many disastrous strikes have been staged in the past based merely on the insiste nce of minority groups within the union. The submission of the report gives assu rance 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. (NFSW vs. Ovejera [G.R. No. L-59743, 13 May 1982]) The SEVEN (7) DAY WAITING PERIOD is intended to give the Department of Labor and Employment an opportunity to verify whether the projected strike really carries the imprimatur of the majority of the union members. The need for assurance tha t majority of the union members support the strike cannot be gainsaid. Strike is usually the last weapon of labor to compel capital to concede to its bargaining demands or to defend itself against unfair labor practices of management. It is a weapon that can either breathe life to or destroy the union and its members i n their struggle with management for a more equitable due of their labors. The d ecision to wield the weapon of strike must, therefore, rest on a rational basis, free from emotionalism, unswayed by the tempers and tantrums of a few hotheads, and firmly focused on the legitimate interest of the union which should not, ho wever, be antithetical to the public welfare. Thus, our laws require the decisio n to strike to be the consensus of the majority for while the majority is not in fallible, still, it is the best hedge against haste and error. In addition, a ma jority vote assures the union it will go to war against management with the stre ngth derived from unity and hence, with better chance to succeed. (Lapanday Work ers Union vs. NLRC [G.R. Nos. 95494-97, 07 September 1995]) When the law says "the labor union may strike" should the dispute "remain unsett led until the lapse of the requisite number of days (cooling-off period) from th e 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 char acter 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 r esults of the voting "at least seven (7) days before the intended strike, subjec t to the (prescribed) cooling-off period." It must be stressed that the requirem ents of cooling-off period and 7-day strike ban must both be complied with, alth ough the labor union may take a strike vote and report the same within the statu tory cooling-off period. If only the filing of the strike notice and the strike-vote report would be deem ed mandatory, but not the waiting periods so specifically and emphatically presc ribed by law, the purposes (hereafter discussed) for which the filing of the str ike notice and strike-vote report is required would not be achieved, as when a s trike is declared immediately after a strike notice is served, or when as in th e instant case the strike-vote report is filed with MOLE after the strike had a

ctually commenced Such interpretation of the law ought not and cannot be counten anced. It would indeed be self-defeating for the law to imperatively require the filing on a strike notice and strike-vote report without at the same time makin g the prescribed waiting periods mandatory. (NFSW vs. Ovejera [G.R. No. L-59743 , 13 May 1982]) Assumption of Jurisdiction Article 263 (g) of the Labor Code does not violate the workers' constitutional r ight to strike. The section provides in part, viz.: When in his opinion, there exists a labor dispute causing or likely to cause a s trike or lockout in an industry indispensable to the national interest, the Secr etary of Labor and Employment may assume jurisdiction over the dispute and decid e it or certify the same to the Commission for compulsory arbitration. . The foregoing article clearly does not interfere with the workers' right to stri ke but merely regulates it, when in the exercise of such right, national interes ts will be affected. The rights granted by the Constitution are not absolute. Th ey are still subject to control and limitation to ensure that they are not exerc ised arbitrarily. The interests of both the employers and employees are intended to be protected and not one of them is given undue preference. (PTWU vs. CONFES OR [G.R. No. 117169, 12 March 1997]) The Labor Code vests upon the Secretary of Labor the discretion to determine wha t industries are indispensable to national interest. Thus, upon the determinatio n of the Secretary of Labor that such industry is indispensable to the national interest, it will assume jurisdiction over the labor dispute of said industry. T he assumption of jurisdiction is in the nature of police power measure. This is done for the promotion of the common good considering that a prolonged strike or lockout can be inimical to the national economy. The Secretary of Labor acts to maintain industrial peace. Thus, his certification for compulsory arbitration i s not intended to impede the workers' right to strike but to obtain a speedy set tlement of the dispute. (PTWU vs. Confesor [G.R. No. 117169, 12 March 1997]) The intervention of the Secretary of Labor was therefore necessary to settle the labor dispute which had lingered and which had affected both respondent company and petitioner union. Had it not been so, the deadlock will remain and the situ ation will remain uncertain. Thus, it cannot be deemed that the Secretary of Lab or had acted with grave abuse of discretion in issuing the assailed order as she had a well-founded basis in issuing the assailed order. It is significant at th is point to point out that grave abuse of discretion implies capricious and whim sical exercise of judgment. Thus, an act may be considered as committed in grave abuse of discretion when the same was performed in a capricious or whimsical ex ercise of judgment which is equivalent to lack of jurisdiction. The abuse of dis cretion must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform a duty enjoined by law, or to act at all in c ontemplation of law, as where the power is exercised in an arbitrary and despoti c manner by reason of passion or personal hostility. (PTWU vs. Confesor [G.R. No . 117169, 12 March 1997] citing International Pharmaceuticals, Inc. vs. Secretar y of Labor) [T]he fact remains that under the circumstances the Secretary had the power and the duty to assume jurisdiction over the labor dispute and, corollary to the ass umption of jurisdiction, issue a return-to-work order. Given this factual and le gal backdrop, no grave abuse of discretion can be attributed to the Secretary. ( PSBA-Manila vs. Noriel [G.R. No. 80648, 15 August 1988]) A strike that is undertaken despite the issuance by the Secretary of Labor of an assumption or certification order becomes a prohibited activity and thus illega l, pursuant to the second paragraph of Art. 264 of the Labor Code as amended. Th e Union officers and members, as a result, are deemed to have lost their employm ent status for having knowingly participated in an illegal act. (Zamboanga Wood Products, Inc. v. NLRC [G.R. 82088, 13 October1989]) Incidental Issues [T]he fundamental normative rule that jurisdiction is the authority to bear and

determine a cause the right to act in a case. However, this should be distinguis hed from the exercise of jurisdiction. The authority to decide a case at all and not the decision rendered therein is what makes up jurisdiction. Where there is jurisdiction over the person and the subject matter, the decision of all other questions arising in the case is but an exercise of that jurisdiction. [T]he 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 in 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 include and extend to all questions and controversies arising therefrom, including case s over which the Labor Arbiter has exclusive jurisdiction. (International Pharma ceuticals, Inc. v. Secretary [G.R. Nos. 92981-83, 09 January 1992]) Before the Secretary of Labor and Employment may take cognizance of an issue whi ch is merely incidental to the labor dispute, therefore, the same must be involv ed in the labor disputed itself, or otherwise submitted to him for resolution. I f it was not, as was the case in PAL v. Secretary or Labor and Employment, supra , and he nevertheless acted on it, that assumption of jurisdiction is tantamount to a grave abuse of discretion. Otherwise, the ruling in International Pharmace uticals, Inc. v. Secretary of Labor and Employment, supra, will apply. The submission of an incidental issue of a labor dispute, in assumption and/or c ertification cases, to the Secretary of Labor for his resolution is thus one of the instances referred to whereby the latter may exercise concurrent jurisdictio n together with the Labor Arbiters. (St. Scholastica's College vs. Torres [G.R. No. 100158, 02 June 1992]) Return to Work Order Once the Secretary of Labor assumes jurisdiction over, or certifies for compulso ry arbitration, a labor dispute adversely affecting the national interest, the l aw mandates that if a strike or lockout has already taken place at the time of a ssumption or certification, "all striking or locked out employees shall immediat ely return to work and the employer shall immediately resume operations and rea dmit all workers under the same terms and conditions prevailing before the strik e." [Art. 263 (g), Labor Code, as amended.] Far from erring, the Acting Secretar y, in issuing the return to work order, merely implemented the clear mandates of the law. Thus, the contention that error attended the issuance of such order i s without any legal basis. (PSBA - Manila vs. Noriel [G.R. No. 80648, 15 August 1988]) Article 263 (g) of the Labor Code provides that if a strike has already taken pl ace at the time of assumption, "all striking . . . employees shall immediately r eturn to work." This means that by its very terms, a return-to-work order is imm ediately effective and executory notwithstanding the filing of a motion for reco nsideration. It must be strictly complied with even during the pendency of any p etition questioning its validity. After all, the assumption and/or certification order is issued in the exercise of respondent Secretary's compulsive power of a rbitration and, until set aside, must therefore be immediately complied with. (S t. Scholastica's vs. Torres [G.R. No. 100158, 02 June 1992]) To say that its (return-to-work order) effectivity must wait affirmance in a mot ion for reconsideration is not only to emasculate it but indeed to defeat its im port, for by then the deadline fixed for the return to work would, in the ordina ry course, have already passed and hence can no longer be affirmed insofar as th e time element is concerned. (PALEA vs. PAL) The respective liabilities of striking union officers and members who failed to immediately comply with the return-to-work order is outlined in Art. 264 of the Labor Code which provides that any declaration of a strike or lockout after the Secretary of Labor and Employment has assumed jurisdiction over the labor disput e is considered an illegal act. Any worker or union officer who knowingly partic ipates in a strike defying a return-to-work order may, consequently, "be declare d to have lost his employment status." (St. Scholastica's vs. Torres [G.R. No. 1 00158, 02 June 1992])

[T]he underlying principle embodied in Art. 264(g) on the settlement of labor di sputes is that assumption and certification orders are executory in character an d are to be strictly complied with by the parties even during the pendency of an y petition questioning their validity. This extraordinary authority given to the Secretary of Labor is aimed at arriving at a peaceful and speedy solution to la bor disputes, without jeopardizing national interests. Regardless therefore of their motives, or the validity of their claims, the stri king workers must cease and/or desist from any and all acts that tend to, or und ermine this authority of the Secretary of Labor, once an assumption and/or certi fication order is issued. They cannot, for instance, ignore return-to-work order s, citing unfair labor practices on the part of the company, to justify their ac tions. (UFE vs. Nestle Phil., Inc. [G.R. No. 88710-13, 19 December 1990]) [T]he return-to-work order not so much confers a right as it imposes a duty; and while as a right it may be waived, it must be discharged as a duty even against the worker's will. Returning to work in this situation is not a matter of optio n 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. That is the real reason such return can be compelled. So imperative is the order in fact that it is not even considered violative of the right against involuntary servitude. The worker can of course give up his work, thus severing his ties with the company, if he does not want to obey the order; but the order must be obeyed if he wants to ret ain his work even if his inclination is to strike. (Sarmiento vs. Tuico [G.R. N o. 75271-73, 27 June 1988]) We also wish to point out that an assumption and/or certification order of the S ecretary of Labor automatically results in a return-to-work of all striking work ers, whether or not a corresponding order has been issued by the Secretary of La bor. Thus, the striking workers erred when they continued with their strike alle ging absence of a return-to-work order. Article 264(g) is clear. Once an assumpt ion/certification order is issued, strikes are enjoined, or if one has already t aken place, all strikers shall immediately return to work. (UFE vs. Nestle Phil. , Inc. [G.R. No. 88710-13, 19 December 1990]) Liabilities for an Illegal Strike A UNION OFFICER who knowingly participates in an illegal strike and any worker o r union officer who knowingly participates in the commission of illegal acts dur ing a strike may be declared to have lost their employment status. An ordinary S TRIKING WORKER cannot be terminated for mere participation in an illegal strike. There must be proof that he committed illegal acts during a strike. A union off icer, on the other hand, may be terminated from work when he knowingly participa tes in an illegal strike, and like other workers, when he commits an illegal act during a strike. (Gold City Integrated Port Service, Inc. vs. NLRC [G.R. No. 10 3560, 06 July 1995]) [I]f the existence of force (acts of violence) while the strike lasts is not per vasive and widespread, nor consistently and deliberately resorted to as a matter of policy, responsibility for serious acts of violence should be individual and not collective. (Shell Oil Workers Union vs. Shell Company Of The Phil. [G.R. N o. L-30658-59, 31 March 1976]) Nevertheless, we are constrained to uphold the respondent Secretary's ruling tha t responsibility for these illegal acts must be on an individual and not collect ive basis. Therefore, although the strike was illegal because of the commission of illegal acts, only the union officers and strikers who engaged in violent, il legal and criminal acts against the employer are deemed to have lost their emplo yment status. Union members who were merely instigated to participate in the ill egal strike should be treated differently. (First City Interlink Transportation Co., Inc., vs. Roldan-Confesor [G.R. No. 106316, 05 May 1997]) Thus, although rejecting that PNOC and its subsidiaries were guilty of discrimin ation, the NLRC reiterated the policy enunciated in several labor cases "that a strike does not automatically carry the stigma of illegality even if no unfair l abor practice were committed by the employer. It suffices if such a belief in go

od faith is entertained by labor as the inducing factor for staging a strike." I ndeed, the presumption of legality prevails even if the allegation of unfair lab or practice is subsequently found to be untrue, provided that the union and its members believed in good faith in the truth of such averment. (PNOC Dockyard vs. NLRC [G.R. No. 118223, 26 June 1998]) Injunction The right to picket as a means of communicating the facts of a labor dispute is a phrase of the freedom of speech guaranteed by the constitution. If peacefully carried out, it cannot be curtailed even in the absence of employer-employee rel ationship. The right is, however, not an absolute one. While peaceful picketing is entitled to protection as an exercise of free speech, we believe that courts are not wit hout power to confine or localize the sphere of communication or the demonstrati on to the parties to the labor dispute, including those with related interest, a nd 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 appear s that the inevitable result of its exercise is to create an impression that a l abor dispute with which they have no connection or interest exists between them and the picketing union or constitute an invasion of their rights. In one case d ecided by this Court, we upheld a trial court's injunction prohibiting the union from blocking the entrance to a feed mill located within the compound of a flou r mill with which the union had a dispute. Although sustained on a different gro und, no connection was found other than their being situated in the same premise s. It is to be noted that in the instances cited, peaceful picketing has not bee n totally banned but merely regulated. And in one American case, a picket by a l abor union in front of a motion picture theater with which the union had a labor dispute was enjoined by the court from being extended in front of the main entr ance of the building housing the theater wherein other stores operated by third persons were located. (PAFLU vs. Cloribel [L-25878, 28 March 1969]) Among the powers expressly conferred on the Commission by Article 218 is the pow er to "enjoin or restrain any actual or threatened commission of any or all proh ibited 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 o f such party . . ." (IBM vs. NLRC, [G.R. No. 91980, 27 June 1991] As a rule such restraining orders or injunctions do not issue ex parte, but only after compliance with the following requisites, to wit: a) a hearing held "after due and personal notice thereof has been served, i n such manner as the Commission shall direct, to all known persons against whom relief is sought, and also to the Chief Executive and other public officials of the province or city within which the unlawful acts have been threatened or comm itted charged with the duty to protect complainant's property;" b) reception at the hearing of "testimony of witnesses, with opportunity fo r cross-examination, in support of the allegations of a complaint made under oat h," as well as "testimony in opposition thereto, if offered . . .; c) a finding of fact by the Commission, to the effect: (1) That prohibited or unlawful acts have been threatened and will be commit ted and will be continued unless restrained, but no injunction or temporary rest raining order shall be issued on account of any threat, prohibited or unlawful a ct, except against the person or persons, association or organization making the threat or committing the prohibited or unlawful act or actually authorizing or ratifying the same after actual knowledge thereof; (2) That substantial and irreparable injury to complainant's property will f ollow; (3) That as to each item of relief to be granted, greater injury will be inf licted upon complainant by the denial of relief than will be inflicted upon defe ndants by the granting of relief;

(4) That complainant has no adequate remedy at law; and (5) That the public officers charged with the duty to protect complainant's property are unable or unwilling to furnish adequate protection. However, a temporary restraining order may be issued ex parte under the followin g conditions: a) the complainant "shall also allege that, unless a temporary restraining order shall be issued without notice, a substantial and irreparable injury to co mplainant's property will be unavoidable; b) there is "testimony under oath, sufficient, if sustained, to justify the Commission in issuing a temporary injunction upon hearing after notice;" c) the "complainant shall first file an undertaking with adequate security in an amount to be fixed by the Commission sufficient to recompense those enjoin ed for any loss, expense or damage caused by the improvident or erroneous issuan ce of such order or injunction, including all reasonable costs, together with a reasonable attorney's fee, and expense of defense against the order or against t he granting of any injunctive relief sought in the same proceeding and subsequen tly denied by the Commission;" and d) the "temporary restraining order shall be effective for no longer than t wenty (20) days and shall become void at the expiration of said twenty (20) days . (IBM vs. NLRC, [G.R. No. 91980, 27 June 1991] Liability of Employer for backwages [T]he distinction earlier made between discriminatorily dismissed employees and those who struck, albeit in protest against the company's unfair labor practice. Discriminatorily dismissed employees received backpay from the date of the act of discrimination, that is from the day of their discharge. On this score, the a ward of backpay to Gaddi, Andrada and the salesmen may be justified. The salesme n, as already stated, were practically locked out when they were ordered to put their trucks in the garage; they did not voluntarily strike. (See Macleod & Co. of the Phil. v. Progressive Federation of Labor, G.R. No. L-7887, May 31, 1955) Hence, the award of backwages. In contrast, the rest of the employees struck as a voluntary act of protest agai nst what they considered unfair labor practices of the company. The stoppage of their work was not the direct consequence of the company's unfair labor practice . Hence their economic loss should not be shifted to the employer. (See Dinglasa n v. National Labor Union, G.R. No. L-14183, Nov. 28, 1959) As explained by the National Labor Relations Board in the case of American Manufacturing Co., NLRB 4 43, "When employees voluntarily go on strike, even if in protest against unfair labor practices, it has been our policy not to award them backpay during the str ike. However, when the strikers abandon the strike and apply for reinstatement d espite the unfair labor practices and the employer either refuses to reinstate t hem or imposes upon their reinstatement new conditions that constitute unfair la bor practices, We are of the opinion that the considerations impelling our refus al to award backpay are no longer controlling. Accordingly, We hold that where, as in this case, an employer refuses to reinstate strikers except upon their acc eptance of the new conditions that discriminate against them because of their un ion membership or activities, the strikers who refuse to accept the conditions a nd are consequently refused reinstatement are entitled to be made whole for any losses of pay they may have suffered by reason of the respondent's discriminator y acts." (Quoted in Teller, 2 Labor Disputes and Collective Bargaining, Sec. 371 , pp. 997-998) (Cromwell Commercial Employees vs. CIR [G.R. No. L-19778, 30 Sept ember 1964]) TERMINATION OF EMPLOYMENT By Employee (a) An employee may terminate without just cause the employee-employer relations hip by serving a written notice on the employer at least one month in advance. T he employer upon whom no such notice was served may hold the employee liable for damages. (b) An employee may put an end to the relationship without serving any notic

e on the employer for any of the following just causes: (1) Serious insult by the employer or his representative on the honor and pe rson of the employee; (2) Inhuman and unbearable treatment accorded the employee by the employer o r his representative; (3) Commission of a crime or offense by the employer or his representative a gainst the person of the employee or any of the immediate members of his family; and (4) Other causes analogous to any of the foregoing. (Article 285 of the Labor Code) Resignation The Court cannot uphold and give weight to private respondent's resignation lett er which appears to have been written and submitted at the instance of petitione r. Its form is of the company's and its wordings are more of a waiver and quitcl aim. Moreover, the supposed resignation was not acknowledged before a notary pub lic. Petitioner's failure to deny that Sugarland is its sister company and that petitioner absorbed Sugarland's security contract and security personnel assumes overriding significance over the resignation theorized upon, evincing petitione r's design to ignore or violate labor laws through the use of the veil of corpor ate personality. The Court cannot sanction the practice of some companies which, shortly after a worker has become a regular employee, effects the transfer of t he same employee to another entity whose owners are the same, or identical, in o rder to deprive subject employee of the benefits and protection he is entitled t o under the law. (A' Prime Security Services, Inc. vs. NLRC [G.R. No. 107320, 19 January 2000]) By Employer Under Section 1, Rule XIV of the Implementing Rules and Regulations of the Labor Code, the dismissal of an employee must be for a just or authorized cause and a fter due process. The two requirements of this legal provision are: 1. The legality of the act of dismissal, that is, dismissal under the groun d provided under Article 282 (Just Causes) or Articles 283 and 284 (Authorized C auses) of the Labor Code; and 2. The legality in the manner of dismissal, that is, with observance of the procedural requirements of notice and hearing. Just Cause An employer may terminate an employment for any of the following just 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 h is employer or duly authorized representative; (d) Commission of a crime or offense by the employee against the person of h is employer or any immediate member of his family or his duly authorized represe ntative; and (e) Other causes analogous to the foregoing. (Article 282 of the Labor Code) To be lawful, the cause for termination must be a serious and grave malfeasance to justify the deprivation of a means of livelihood. This is merely in keeping w ith the spirit of our Constitution and laws which lean over backwards in favor o f the working class, and mandate that every doubt must be resolved in their favo r. (Hongkong & Shanghai Banking Corp. vs. NLRC [G.R. No. 116542, 30 July 1996]) In labor-management relations, there can be no higher penalty than dismissal fro m employment. Dismissal severs employment ties and could well be the economic de ath sentence of an employee. Dismissal prejudices the socio-economic well being of the employee's family and threatens the industrial peace. Due to its far reac

hing implications, our Labor Code decrees that an employee cannot be dismissed, except for the most serious causes. The overly concern of our laws for the welfa re of employees is in accord with the social justice philosophy of our Constitut ion. (Cebu Filveneer vs. NLRC [G.R. No. 126601, 24 February 1998] Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; [I]n order that an employer may terminate an employee on the ground of willful d isobedience to the former's orders, regulations or instructions, it must be esta blished that the said orders, regulations or instructions are (a) reasonable and lawful, (b) sufficiently known to the employee, and (c) in connection with the duties which the employee has been engaged to discharge. (Manebo vs. NLRC [G.R. No. 107721, 10 January 1994]) Misconduct is improper or wrong conduct. It is the transgression of some establi shed and definite rule of action, a forbidden act, a dereliction of duty, willfu l in character, and implies wrongful intent and not mere error in judgment. The misconduct to be serious within the meaning of the Act must be of such a grave a nd aggravated character and not merely trivial or unimportant. Such misconduct, however serious, must, nevertheless, be in connection with the employee's work t o constitute just cause for his separation. In this case however, the misconduct has no relation to the work of petitioners; hence, not a valid ground. (Cosep v s. NLRC [G.R. No. 124966, 16 June 1998]) Serious misconduct in the form of drunkenness and disorderly and violent behavio r, habitual neglect of duty, and insubordination or willful disobedience of the lawful order of his superior officer, are just causes for the dismissal of an em ployee. [Seahorse Maritime Corporation vs. NLRC [173 SCRA 390, 1989]) [W]here a violation of company policy or breach of company rules and regulations was found to have been tolerated by management, then the same could not serve a s a basis for termination (Tide Water Associated Oil Co. v. Victory Employees [8 5 PHIL 166, 1949]) The employee admits that she had asked someone to punch-in her time card because at that time she was doing an errand for one of the company s officers, Richard T an, and that was with the permission of William Chua. She maintains that she did it in good faith believing that she was anyway accommodating the request of a c ompany executive and done for the benefit of the company with the acquiescence o f her boss. Besides, the practice was apparently tolerated as the employees were not getting any reprimand for doing so. (Philippine Aeolus Automotive vs. NLRC [G.R. No. 124617, 29 April 2000]) Such dismissal, in our view, was too harsh a penalty for an unintentional infrac tion, not to mention that it was his first offense committed without malice, and committed also by others who were not equally penalized. It is clear that the alleged false entry in private respondent's DTR was actuall y the result of having logged his scheduled time-out in advance on July 31, 1994 . But it appears that when he timed in, he had no idea that his work schedule (n ight shift) would be cancelled. When it was confirmed at 10:00 p.m. that there w as no "butchering" of tuna to be done, those who reported for work were allowed to go home, including private respondent. In fact, Filoteo even obtained permiss ion to leave from the Assistant Production Manager. Considering the factory practice which management tolerated, we are persuaded th at Filoteo, in his rush to catch the service vehicle, merely forgot to correct h is initial time-out entry. Nothing is shown to prove he deliberately falsified h is daily time record to deceive the company. The NLRC found that even management 's own evidence reflected that a certain Felix Pelayo, a co-worker of private re spondent, was also allowed to go home that night and like private respondent log ged in advance 7:00 a.m. as his time-out. This supports Filoteo's claim that it was common practice among night-shift workers to log in their usual time-out in advance in the daily time record. (Permex vs. NLRC [G.R. No. 125031, 24 January 2000]) The act of private respondent in asking a co-employee to punch-in her time card although a violation of company rules, likewise does not constitute serious misc

onduct. Firstly, it was done in good faith considering that she was asked by an officer to perform a task outside the office, which is for the benefit of the co mpany, with the consent of the plant manager. Secondly, it eas her first time to commit such infraction during her five (5)-year service in the company. Finally , the company did not lose anything by reason thereof as the offense was immedia tely known and corrected. (Philippine Aeolus Automotive vs. NLRC [G.R. No. 12461 7, 29 April 2000]) An ordinary employee, quite understandably, examines her pay slip every time she receives her salary. But we cannot always expect the employee to go further as to determine if her overtime pay, which is not much anyway, was properly compute d up to the last centavo or whether the overtime pay pertained to a particular d ay the work was rendered. The amount in controversy was only P254.90. Considerin g the employee s salary was not fixed as it fluctuated from time to time due to va rying amounts of tips, commissions and overtime pay received, it would not have been right to assume always that the employee would examine every detail of the computation of her salary. Needless to say, the same should not be laid solely o n the employee because the mistake is not hers alone. The mistake resulted from the collective laxity of petitioner s accounting personnel and inadvertence on the part of the respondent. (Shangri-La Hotel vs. Dialogo [G.R. No. 141900, 20 Apri l 2001]) Gross and habitual neglect by the employee of his duties; Sleeping on the job Petitioner's reliance on the authorities it cited that sleeping on the job is al ways a valid ground for dismissal, is misplaced. The authorities cited involved security guards whose duty necessitates that they be awake and watchful at all t imes inasmuch as their function, to use the words in Luzon Stevedoring Corp. v. CIR, is "to protect the company from pilferage or loss." Accordingly, the doctri ne laid down in those cases is not applicable to the case at bar. While an employer enjoys a wide latitude of discretion in the promulgation of po licies, rules and regulations on work-related activities of the employees, those directives, however, must always be fair and reasonable, and the corresponding penalties, when prescribed, must be commensurate to the offense involved and to the degree of the infraction. In the case at bar, the dismissal meted out on pri vate respondent for allegedly sleeping on the job, under the attendant circumsta nces, appears to be too harsh a penalty, considering that he was being held liab le for first time, after nine (9) long years of unblemished service, for an alle ged offense which caused no prejudice to the employer, aside from absence of sub stantiation of the alleged offense. The authorities cited by petitioner are also irrelevant for the reason that there is no evidence on the depravity of conduct , willfulness of the disobedience, or conclusiveness of guilt on the part of pri vate respondent. Neither was it shown that private respondent's alleged negligen ce or neglect of duty, if any, was gross and habitual. Thus, reinstatement is ju st and proper. (VH Manufacturing, Inc. vs. NLRC [G.R. No. 130957, 19 January 2000]) Abandonment For abandonment to constitute a valid cause for termination of employment, there must be a deliberate unjustified refusal of the employee to resume his employme nt. This refusal must be clearly shown. Mere absence is not sufficient; it must be accompanied by overt acts pointing to the fact that the employee simply does not want to work anymore. (Davies, Inc. vs. NLRC [G.R. No. 106915, 31 August 199 3]) As found by the Labor Arbiter, private respondent's physician advised him to res t for 30 days before reporting back for work in order to recuperate. Private res pondent heeded this advise and even exceeded the number of days recommended by h is doctor for his recuperation. In fact, he reported back for work 50 days after his operation. This would clearly show that private respondent was ready to ass ume his responsibilities considering that he had fully recovered from the operat ion. Furthermore, the filing of a complaint for illegal dismissal by private res

pondent is inconsistent with the allegation of petitioners that he had abandoned his job. Surely, an employee's posture will be illogical if he abandons his wor k and then immediately files an action for his reinstatement (Remerco Garments v . Minister, 135 SCRA 167 [1985]). We have consistently ruled that a charge of abandonment is totally inconsistent with the immediate filing of a complaint for illegal dismissal. (Icawat vs.NLRC [GR No. 133573, 2002]) Undeniable is the over-reliance of both the Labor Arbiter and the NLRC on the no tion that the filing of a complaint for illegal dismissal is inconsistent with t he employer's defense of abandonment by the employee of his work. While the burd en of refuting a complaint for illegal dismissal is upon the employer, fair play as well requires that, where the employer proffers substantial evidence of the fact that it had not, in the first place, terminated the employee but simply lai d him off due to valid reasons, neither the Labor Arbiter nor the NLRC may simpl y ignore such evidence on the pretext that the employee would not have filed the complaint for illegal dismissal if he had not indeed been dismissed. This is cl early a non sequitur reasoning that can never validly take the place of the evid ence of both the employer and the employee. xxx xxx xxx The Labor Arbiter and the NLRC similarly answered the question with the alleged truism: private respondent filed the complaint for illegal dismissal because he was illegally dismissed. We, however, believe that private respondent's motivati on in filing the complaint for illegal dismissal despite his refusal to return t o work, is revealed by the following averment in his position paper before the L abor Arbiter: Before delving into the issues of the above entitled case, complainant would lik e to request the Honorable Commissioner to take judicial notice of the fabricate d and manufactured criminal case filed by the respondents in retaliation to the institution of this case and in fact the latter had confronted the former to dro p this case in exchange of the dropping of the fabricated and manufactured crimi nal case. (Arc-Men Food Industries vs. NLRC [G.R. No. 113721, 07 May 1997]) In this case, the following circumstances clearly manifest private respondent's intention to sever his ties with petitioners. First, private respondent even bra gged to his co-workers his plan to quit his job at Cesar's Palace Barbershop and Massage Clinic as borne out by the affidavit executed by his former co-workers. Second, he surrendered the shop's keys and took away all his things from the sh op. Third, he did not report anymore to the shop without giving any valid and ju stifiable reason for his absence. Fourth, he immediately sought a regular employ ment in another barbershop, despite previous assurance that he could remain in p etitioners' employ. Fifth, he filed a complaint for illegal dismissal without pr aying for reinstatement. Moreover, public respondent's assertion that the institution of the complaint fo r illegal dismissal manifests private respondent's lack of intention to abandon his job is untenable. The rule that abandonment of work is inconsistent with the filing of a complainant for illegal dismissal is not applicable in this case. S uch rule applies where the complainant seeks reinstatement as a relief. Corollar ily, it has no application where the complainant does not pray for reinstatement and just asks for separation pay instead as in the present case. It goes withou t saying that the prayer for separation pay, being the alternative remedy to rei nstatement, contradicts private respondent's stance. (Jo vs. NLRC [G.R. No. 1216 05, 02 February 2000]) [T]he evidence on record indubitably shows that Leonardo abandoned his work with the respondents. As sufficiently established by respondents, complainant, after being pressed by respondent to present the customer regarding his unauthorized solicitation of sideline work from the latter and whom he claims to be his aunt, he never reported back to work anymore. This finding is further bolstered by th e fact that after he left the respondent, he got employed with Dennis Motors Cor poration as Air-Con Mechanic . It must be stressed that while Leonardo alleges that he was illegally dismissed from his employment by the respondents, surprisingly he never stated any reason

why the respondents would want to ease him out from his job. Moreover, why did i t take him ten (10) long months to file his case if he indeed was aggrieved by t he respondents. All the above facts clearly point that the filing of the case is a mere afterthought on the part of complainant Leonardo. (Leonardo vs. NLRC [G. R. No. 125303, 16 June 2000]) Excessive absences In the case at bench, it is undisputed that respondent Edwin P. Sabuya had withi n a span of almost six (6) years been repeatedly admonished, warned and suspende d for incurring excessive unauthorized absences. Worse, he was not at home but w as out driving a pedicab to earn extra income when the company nurse visited his residence after he filed an application for sick leave. Such conduct of respond ent Edwin P. Sabuya undoubtedly constitutes gross and habitual neglect of duties . (Worldwide Papermills vs. NLRC [G.R. No. 113081, 12 May 1995]) Fraud or willful breach by the employee of the trust reposed in him by his emplo yer or duly authorized representative; Loss of confidence as a ground for dismissal does not entail proof beyond reason able doubt of the employee's misconduct. It is enough that there be "some basis" for such loss of confidence or that "the employer has reasonable grounds to bel ieve, if not to entertain the moral conviction that the employee concerned is re sponsible for the misconduct and that the nature of his participation therein re ndered him absolutely unworthy of the trust and confidence demanded by his posit ion" (Reyes vs. Zamora, 90 SCRA 92, 111 [1979]; Galsim vs. PNB, 29 SCRA 293 [196 9]) To be a valid ground for dismissal, loss of trust and confidence must be based o n a willful breach of trust. And, as realistically stressed by the Solicitor Gen eral, unless based on a ground provided by law and supported by substantial evid ence, dismissal will be disallowed, for what is at stake is not only the employe e's position, but also his means of livelihood. Considering that private respond ent was acting in good faith, his dismissal would run counter to such establishe d doctrinal rulings. (PCI Bank vs. NLRC [G.R. No. 114920, 23 August 1995]) The employee s failure to detect and report to the respondent company the fraudule nt activities in her division as well as her failure to give a satisfactory expl anation on the irregularities constitute fraud or willful breach of trust reposed on her by her employer or duly authorized representative one of the just causes in terminating employment as provided for under paragraph c, Article 283 of the Labor Code, as amended. Concomitantly, the employee s actuations betrayed the utmo st trust and confidence reposed upon her by the respondent company. We cannot, t herefore, compel private respondents to retain the employment of the employee wh o is shown to be lacking in candor, honesty and efficiency required of her posit ion. (Nokom vs. NLRC [G.R. No. 140043, 18 July 2000]) We have consistently held that loss of confidence is a recognized ground for the discharge of an employee from employment. But such ground must be founded on fa cts established by substantial evidence. The burden of establishing such facts a s reasonably cause loss of confidence in an employee such facts are reasonably g enerate belief by the employer that the employee was connected with some miscond uct and the nature of his participation therein is such as to render him unworth y of trust and confidence demanded of his position is on the employer. In this c ase, the records are bereft of any showing that private respondent Jemina is res ponsible, solely or partly, for the loss of the P100,000.00 in the vault of peti tioner Bank's Binondo Branch. Both the Labor Arbiter and the NLRC analyzed the e mployer's proofs and came to the reasoned conclusion that they did not adequatel y demonstrate Jemina's connection with the said loss. True, Jemina is a possible suspect. After all, the cash operations of the branch were under his control an d supervision. He had joint custody with the Branch Manager over all cash and pr operties inside the vault. He had access to the vault where the monies of the ba nk were kept. Indeed, petitioner Bank has every reason to suspect Jemina for the P100,000.00 shortage in its vault. But suspicion has never been a valid ground for the dismissal of an employee. The employee's fate cannot, in justice, be hin

ged upon conjectures and surmises. (Pilipinas Bank vs. NLRC [G.R. No. 101372, 13 November 1992]) That it was so can easily be seen from the memorandum sent to private respondent by Delia M. Oficial, the branch supervisor of the company, with the reminder, i n the words of the latter, that "you're fully aware that the company is not acce pting married women employee (sic), as it was verbally instructed to you." Again , in the termination notice sent to her by the same branch supervisor, private r espondent was made to understand that her severance from the service was not onl y by reason of her concealment of her married status but, over and on top of tha t, was her violation of the company's policy against marriage ("and even told yo u that married women employees are not applicable [sic] or accepted in our compa ny.") Parenthetically, this seems to be the curious reason why it was made to ap pear in the initiatory pleadings that petitioner was represented in this case on ly by its said supervisor and not by its highest ranking officers who would othe rwise be solidarily liable with the corporation. Verily, private respondent's act of concealing the true nature of her status fro m PT & T could not be properly characterized as willful or in bad faith as she w as moved to act the way she did mainly because she wanted to retain a permanent job in a stable company. In other words, she was practically forced by that very same illegal company policy into misrepresenting her civil status for fear of b eing disqualified from work. While loss of confidence is a just cause for termin ation of employment, it should not be simulated. It must rest on an actual breac h of duty committed by the employee and not on the employer's caprices. Furtherm ore, it should never be used as a subterfuge for causes which are improper, ille gal, or unjustified. (PT&T vs. NLRC [G.R. No. 118978, 23 May 1997]) [T]he rules on termination of employment, penalties for infractions, and resort to concerted actions, insofar as managerial employees are concerned, are not nec essarily the same as those applicable to termination of employment of ordinary e mployees. Employers, generally, are allowed a wider latitude of discretion in te rminating the employment of managerial personnel or those of similar rank perfor ming functions which by their nature require the employer's trust and confidence , than in the case of ordinary rank-and-file employees (Cruz vs. Medina [1989]). As regards a managerial employee, moreover, mere existence of a basis for believ ing that such employee has breached the trust of his employer would suffice for dismissal. Proof beyond reasonable doubt is not required, it being sufficient th at there is some basis for such loss of confidence, such as when the employer ha s reasonable ground to believe that the employee concerned is responsible for th e purported misconduct, and the nature of his participation therein renders him unworthy of the trust and confidence demanded by his position. In the case at bar, petitioner, is tasked to perform key functions; he is bound by an exacting work ethic. He should have realized that his position requires th e full trust and confidence of his employer in every exercise of managerial disc retion insofar as the conduct of his employer's business is concerned. However, as found a quo, he committed acts which betrayed the trust and confidence repose d on him by tampering with very sensitive equipment at the joint terminal facili ty. In doing so, he exposed the terminal complex and the residents in adjacent c ommunities to the danger of a major disaster that may be caused by tank explosio ns and conflagration. Verily, he committed acts inimical to the interest of his employer which is mandated by law to observe extraordinary diligence in its oper ations to ensure the safety of the public. Indeed, we are constrained to conclud e that petitioner's admitted infraction as well his past violation of safety reg ulations is more than sufficient ground for respondent company to terminate the employment of petitioner. (Deles vs. NLRC [G.R. No. 121348, 09 March 2000]) A perusal of RCPI's dismissal notice reveals that it merely stated a conclusion to the effect that the withholding was deliberately done to hide alleged malvers ation or misappropriation without, however, stating the circumstances in support thereof. It further mentioned that the position of cashier requires utmost trus t and confidence but failed to allege the breach of trust on the part of petitio ner and how the alleged breach was committed. On the assumption that there was i ndeed a breach, there is no evidence that petitioner was a managerial employee o

f respondent RCPI. It should be facts noted that the term 'trust and managerial employees. It may not even be presumed that when there is a shortage, there is a lso a corresponding breach of trust. Cash shortages in a cashier's work may happ en, and when there is no proof that the same was deliberately done for a fraudul ent or wrongful purpose, it cannot constitute breach of trust so as to render th e dismissal from work invalid. (Farrol vs. CA [G.R. No. 133259, 10 February 2000 ]) Commission of a crime or offense by the employee against the person of his emplo yer or any immediate member of his family or his duly authorized representative; Petitioners cannot downgrade the seriousness of their offenses. They committed f alsifications. These are crimes punished by the Revised Penal Code itself. Their commission constitutes serious misconduct. Nor can petitioners avoid liability by claiming that the SN Forms are not company records but SSS documents. Their u se is covered by Item No. 12 of the Schedule of Offenses and Penalties which pr ovides ". . . knowingly using falsified record or document." Petitioners knew th at the commission of this offense is punishable by dismissal in view of its seri ousness. They cannot therefore complain of its harshness. (Farrol vs. NLRC [G.R. No. 133259, 10 February 2000]) Other causes analogous to the foregoing. In the case of Nadura vs. Benguet Consolidated Inc., this Court speaking through Justice Arsenio Dizon held inter alia that a cursory reading of Section 1, R.A. 1787, which enumerates the just causes for which an employer may terminate an e mployment with a definite period, is sufficient to convince anyone that illness cannot be included as an analogous cause "by any stretch of the imagination." (S oriano vs. PNR [G.R. No. L-43224, 23 August 1978) 'The employer cannot rightfully dismiss the employee who is sick even if he comp lies with the requirement of the Act as to the service of the required notice or payment of the corresponding separation pay, because sickness is not willful or voluntary on the part of the employee.' (Eugenio Nadura v. Benguet Consolidated , Inc. [G.R. No. L-17780, 24 August 1962]) (Hence to constitute an analogous cause under Article 282 of the Labor Code, the a ct must be willful and voluntary on the part of the employee [and illness is not ]) We cannot but agree with PEPSI that "gross inefficiency" falls within the purvie w of "other causes analogous to the foregoing," the constitutes, therefore, just cause to terminate an employee under Article 282 of the Labor Code. One is anal ogous to another if it is susceptible of comparison with the latter either in ge neral or in some specific detail; or has a close relationship with the latter. " Gross inefficiency" is closely related to "gross neglect," for both involve spec ific acts of omission on the part of the employee resulting in damage to the emp loyer or to his business. (Lim vs. NLRC [G.R. No. 118434, 26 July 1996]) Totality of Infractions Petitioner also assails the severity of the penalty imposed upon him alleging th at he should have merited a suspension only considering his past performance. Unfortunately, petitioner does not appear to be a first offender. Aside from the infractions he was found to have committed, it appears that petitioner falsifie d the truth when he made a false report about the incident to private respondent SMC to cover up for his misdeeds. Moreover on previous occasions, petitioner co mmitted violations of company rules and regulations concerning pricing as a sale sman of the company in a way that is detrimental to his employer. On one occasio n, he failed to remit collections, so that in 1986, he was suspended for thirty days. Thus, the totality of the infractions that petitioner has committed justif ies the penalty of dismissal. (Mendoza vs. NLRC [G.R. No. 94294, 22 March 1991]) Habituality In other words, considerations of first offense and length of service are oversh

adowed by the seriousness of the offense. As to whether an offense is minor or s erious will have to be determined according to the peculiar facts of each case. And to a shipping company engaged in the transportation of passengers and cargoe s any delay of its vessels may greatly affect its business and reputation and ex pose the company to unmitigated lawsuits for breach of contract and damages. (Vi lleno vs. NLRC [G.R. No. 108153, 26 December 1995]) Where the totality of the evidence was sufficient to warrant the dismissal of th e employees the law warrants their dismissal without making any distinction betw een a first offender and a habitual delinquent. Under the law, respondent Minist er is duly mandated to equally protect and respect not only the labor or workers ' side but also the management and/or employers' side. The law, in protecting th e rights of the laborer, authorizes neither oppression nor self-destruction of t he employer. (Colgate-Palmolive Philippines, Inc. v. Ople) Sexual Harassment REPUBLIC ACT NO. 7877 [15 February 1995] AN ACT DECLARING SEXUAL HARASSMENT UNLAWFUL IN THE EMPLOYMENT, EDUCATION OR TRAI NING ENVIRONMENT, AND FOR OTHER PURPOSES Section 1. Title. This Act shall be known as the "Anti-Sexual Harassment A ct of 1995." Section 2. Declaration of Policy. The State shall value the dignity of eve ry individual, enhance the development of its human resources, guarantee full re spect for human rights, and uphold the dignity of workers, employees, applicants for employment, students or those undergoing training, instruction or education . Towards this end, all forms of sexual harassment in the employment, education or training environment are hereby declared unlawful. Section 3. Work Education or Training-related Sexual Harassment Defined. W ork, education of training-related sexual harassment is committed by an employer , employee, manager, supervisor, agent of the employer, teacher, instructor, pro fessor, coach, trainor, or any other person who, having authority, influence or moral ascendancy over another in a work or training or education environment, de mands, requests or otherwise requires any sexual favor from the other, regardles s of whether the demand, request or requirement for submission is accepted by th e object of said Act. (a) In a work-related or employment environment, sexual harassment is commit ted when: (1) The sexual favor is made as a condition in the hiring or in the employme nt, re-employment or continued employment of said individual, or in granting sai d individual favorable compensation, terms, conditions, promotions, or privilege s; or the refusal to grant the sexual favor results in limiting, segregating or classifying the employee which in any way would discriminate, deprive or diminis h employment opportunities or otherwise adversely affect said employee; (2) The above acts would impair the employee's rights or privileges under ex isting labor laws; or (3) The above acts would result in an intimidating, hostile, or offensive en vironment for the employee. (b) In an education or training environment, sexual harassment is committed: (1) Against one who is under the care, custody or supervision of the offende r; (2) Against one whose education, training, apprenticeship or tutorship is en trusted to the offender; (3) When the sexual favor is made a condition to the giving of a passing gra de, or the granting of honors and scholarships, or the payment of a stipend, all owance or other benefits, privileges or considerations; or (4) When the sexual advances result in an intimidating, hostile or offensive environment for the student, training or apprentice. Any person who directs or induces another to commit any act of sexual harassment as herein defined, or who cooperates in the commission thereof by another witho ut which it would not have been committed, shall also be held liable under this Act.

Section 4. Duty of the Employer or Head of Office in a Work-related, Educat ion or Training Environment. It shall be the duty of the employer or the head o f the work-related, educational or training environment or institution, to preve nt or deter the commission of acts of sexual harassment and to provide the proce dures for the resolution, settlement or prosecution of acts of sexual harassment . Towards this end, the employer or head of office shall: (a) Promulgate appropriate rules and regulations in consultation with an joi ntly approved by the employees or students or trainees, through their duly desig nated representatives, prescribing the procedure for the investigation of sexual harassment cases and the administrative sanctions therefor. Administrative sanctions shall not be a bar to prosecution in the proper courts for unlawful acts of sexual harassment. The said rules and regulations issued pursuant to this sub-section (a) shall inc lude, among others, guidelines on proper decorum in the workplace and educationa l or training institutions. (b) Create a committee on decorum and investigation of cases on sexual haras sment. The committee shall conduct meetings, as the case may be, with officers a nd employees, teachers, instructors, professors, coaches, trainors and students or trainees to increase understanding and prevent incidents of sexual harassment . It shall also conduct the investigation of alleged cases constituting sexual h arassment. In the case of a work-related environment, the committee shall be composed of at least one (1) representative each from the management, the union, if any, the e mployees form the supervisory rank, and from the rank and file employees. In the case of the educational or training institution, the committee shall be c omposed of at least one (1) representative from the administration, the trainors , teachers, instructors, professors or coaches and students or trainees, as the case may be. The employer or head of office, educational or training institution shall dissem inate or post a copy of this Act for the information of all concerned. Section. Liability of the Employer, Head of Office, Educational or Traini ng Institution. The employer or head of office, educational or training institu tion shall be solidarity liable for damages arising from the acts of sexual hara ssment committed in the employment, education or training environment if the emp loyer or head of office, educational or training institution is informed of such acts by the offended party and no immediate action is taken thereon. Section 6. Independent Action for Damages. Nothing in this Act shall precl ude the victim of work, education or training-related sexual harassment from ins tituting a separate and independent action for damages and other affirmative rel ief. Section 7. Penalties. Any person who violates the provisions of this Act s hall, upon conviction, be penalized by imprisonment of not less than one (1) mon th nor more than six (6) months, or a fine of not less than Ten thousand pesos ( P10,000) nor more than Twenty thousand pesos (P20,000) or both such fine and imp risonment at the discretion of the court. Any action arising from the violation of the provisions of this Act shall prescr ibe in three (3) years. With the finding that there is no substantial evidence of the imputed immoral ac ts, it follows that the alleged violation of the Code of Ethics governing school teachers would have no basis. Private respondent utterly failed to show that pe titioner took advantage of her position to court her student. If the two eventua lly fell in love, despite the disparity in their ages and academic levels, this only lends substance to the truism that the heart has reasons of its own which r eason does not know. But, definitely, yielding to this gentle and universal emot ion is not to be so casually equated with immorality. The deviation of the circu mstances of their marriage from the usual societal pattern cannot be considered as a defiance of contemporary social mores. It would seem quite obvious that the avowed policy of the school in rearing and educating children is being unnecessarily bannered to justify the dismissal of p etitioner. This policy, however, is not at odds with and should not be capitaliz

ed on to defeat the security of tenure granted by the Constitution to labor. In termination cases, the burden of proving just and valid cause for dismissing an employee rests on the employer and his failure to do so would result in a findin g that the dismissal is unjustified. (Chua-Qua vs. Clave [G.R. No. 49549, 30 August 1990]) Authorized Causes Closure of establishment and reduction of personnel. - The employer may also ter minate the employment of any employee due to the installation of labor-saving de vices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the pur pose of circumventing the provisions of this title, by serving a written notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installatio n of labor-saving devices or redundancy, the worker affected thereby shall be en titled to a separation pay equivalent to at least one (1) month pay or to at lea st one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operatio ns of establishment or undertaking not due to serious business losses or financi al reverses, the separation pay shall be equivalent to one (1) month pay or at l east 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. (Art icle 283 of the Labor Code) Disease as ground for termination. - An employer may terminate the services of a n employee who has been found to be suffering from any disease and whose continu ed employment is prohibited by law or is prejudicial to his health as well as th e health of his co-employees: Provided, That he is paid separation pay equivalen t to at least one month salary or to one-half month salary for every year of ser vice, whichever is greater, a fraction of at least six months being considered a s one whole year. (Article 284 of the Labor Code) Authorized causes for the termination of employment: (a) installation of labor-saving devices; (b) redundancy; (c) retrenchment to prevent losses; and (d) closing or cessation of operation of the establishment or undertaking un less the closing is for the purpose of circumventing the provisions of law. (e) disease which renders continued employment prohibited by law or prejudic ial to his health or to the health of his fellow employees. Installation of labor-saving devices The installation of labor-saving devices contemplates the installation of machin ery to effect economy and efficiency in its method of production. (Edge Apparel, Inc. vs. NLRC [G.R. No. 121314, 12 February 1998] citing Phil. Sheet Metal Work ers' Union vs. Court of Industrial Relations [83 Phil. 453]) Redundancy Redundancy exists where the services of an employee are in excess of what would reasonably be demanded by the actual requirements of the 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 serv ice previously manufactured or undertaken by the enterprise. An employer has no legal obligation to keep on the payroll employees more than the number needed fo r the operation of the business. (Edge Apparel, Inc. vs. NLRC [G.R. No. 121314, 12 February 1998]) The prerogative of management to conduct its own business affairs to achieve its purposes cannot be denied. Management is at liberty, absent any malice on its p art, to abolish positions which it deems no longer necessary (Great Pacific Life vs. NLRC, 188 SCRA 139 [1990]).

Moreover, the records of the present case clearly show that respondent court's d ecision is amply supported by evidence and it did not err in its findings, inclu ding the reason for the retrenchment: When defendant-appellant was faced with the world-wide recession of the airline industry resulting in a slow down in the company's growth particularly in the re gional operation (Asian Area) where the Airbus 300 operates. It had no choice bu t to adopt cost cutting measures, such as cutting down services, number of frequ encies of flights, and reduction of the number of flying points for the A-300 fl eet. As a result, defendant-appellant had to lay off A-300 pilots, including pla intiff-appellee, which it found to be in excess of what is reasonably needed. All these considered, we find sufficient factual and legal basis to conclude tha t petitioner's termination from employment was for an authorized cause, for whic h he was given ample notice and opportunity to be heard, by respondent company. No error nor grave abuse of discretion, therefore, could be attributed to respon dent appellate court. (Laureano vs. CA [G.R. No. 114776, 02February 2000]) Retrenchment Retrenchment, is used interchangeably with the term "lay-off." It is the termina tion of employment initiated by the employer through no fault of the employee's and without prejudice to the latter, resorted to by management during periods of business recession, industrial depression, or seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of materials, conversion of the pla nt for a new production program or the introduction of new methods or more effic ient machinery, or of automation. Simply put, it is an act of the employer of di smissing employees because of losses in the operation of a business, lack of wor k, and considerable reduction on the volume of his business, a right consistentl y recognized and affirmed by this Court. (Sebuguero vs. NLRC [G.R. No. 115394, 27 September 1995]) [T]here are three basic requisites for a valid retrenchment: (1) the retrenchment is necessary to prevent losses and such losses are prov en; (2) written notice to the employees and to the Department of Labor and Emplo yment at least one month prior to the intended date of retrenchment; and (3) payment of separation pay equivalent to one month pay or at least 1/2 mo nth pay for every year of service, whichever is higher. As for the FIRST REQUISITE, whether or not an employer would imminently suffer s erious or substantial losses for economic reasons is essentially a question of f act for the Labor Arbiter and the NLRC to determine. Here, both the Labor Arbite r and the NLRC found that the private respondent was suffering and would continu e to suffer serious losses, thereby justifying the retrenchment of some of its e mployees, including the petitioners. We are not prepared to disregard this findi ng of fact. It is settled that findings of quasi-judicial agencies which have ac quired expertise in the matters entrusted to their jurisdiction are accorded by this Court not only with respect but with finality if they are supported by Subs tantial Evidence. . The REQUIREMENT OF NOTICE to both the employees concerned and the Department of Labor and Employment (DOLE) is mandatory and must be written and given at least one month before the intended date of retrenchment. In this case, it is undisput ed that the petitioners were given notice of the temporary lay-off. There is, ho wever, no evidence that any written notice to permanently retrench them was give n at least one month prior to the date of the intended retrenchment. The NLRC fo und that GTI conveyed to the petitioners the impossibility of recalling them due to the continued unavailability of work. But what the law requires is a written notice to the employees concerned and that requirement is mandatory. The notice must also be given at least one month in advance of the intended date of retren chment to enable the employees to look for other means of employment and therefo re to ease the impact of the loss of their jobs and the corresponding income. Th at they were already on temporary lay-off at the time notice should have been gi ven to them is not an excuse to forego the one-month written notice because by t his time, their lay-off is to become permanent and they were definitely losing t

heir employment. There is also nothing in the records to prove that a written notice was ever giv en to the DOLE as required by law. GTI's position paper, offer of exhibits, Comm ent to the Petition, and Memorandum in this case do not mention of any such writ ten notice. The law requires two notices one to the employee/s concerned and ano ther to the DOLE not just one. The notice to the DOLE is essential because the r ight to retrench is not an absolute prerogative of an employer but is subject to the requirement of law that retrenchment be done to prevent losses. The DOLE is the agency that will determine whether the planned retrenchment is justified an d adequately supported by facts. With respect to the PAYMENT OF SEPARATION PAY, the NLRC found that GTI offered t o give the petitioners their separation pay but that the latter rejected such of fer which was accepted only by 22 out of the 38 original complainants in this ca se. As to when this offer was made was not, however, proven. All that the partie s, the Labor Arbiter and the NLRC stated in their respective pleadings and decis ions was that the offer and payment were made during the pendency of the illegal dismissal case with the Labor Arbiter. But with or without this offer of separa tion pay, our conclusion would remain the same: that the retrenchment of the pet itioners is defective in the face of our finding that the required notices to bo th the petitioners and the DOLE were not given. (Sebuguero vs. NLRC [G.R. No. 11 5394, 27 September 1995]) In its ordinary connotation, the phrase "TO PREVENT LOSSES" means that retrenchm ent or termination of the services of some employees is authorized to be underta ken by the employer sometime before the anticipated losses are actually sustaine d or realized. It is not, in other words, the intention of the lawmaker to compe l the employer to stay his hand and keep all his employees until after losses sh all have in fact materialized. If such an intent were expressly written into the law, that law may well be vulnerable to constitutional attack as unduly taking property from one man to be given to another. At the other end of the spectrum, it seems equally clear that not every asserted possibility of loss is sufficient legal warrant for the reduction of personnel. In the nature of things, the possibility of incurring losses is constantly pres ent, in greater or lesser degree, in the carrying on of business operations, sin ce some, indeed many, of the factors which impact upon the profitability or viab ility of such operations may be substantially outside the control of the employe r. (Revidad vs. NLRC [G.R. No. 111105, 27 June 1995]) Anent the mandatory written notice to be filed with the labor department one mon th before retrenchment, we are of the considered opinion that the proceedings ha d before the voluntary arbitrator, where both parties were given the opportunity to be heard and present evidence in their favor, constitute substantial complia nce with the requirement of the law. The purpose of this notice requirement is t o enable the proper authorities to ascertain whether the closure of the business is being done in good faith and is not just a pretext for evading compliance wi th the just obligations of the employer to the affected employees. In fact, the voluntary arbitration proceedings more than satisfied the intendment of the law considering that the parties were accorded the benefit of a hearing, in addition to the right to present their respective position papers and documentary eviden ce. (Revidad vs. NLRC [G.R. No. 111105, 27 June 1995]) Retrenchment, in contrast to redundancy, is an economic ground to reduce the num ber of employees. In order to be justified, the termination of employment by rea son of retrenchment must be due to business losses or reverses which are serious , actual and real. Not every loss incurred or expected to be incurred by the emp loyer will justify retrenchment, since, in the nature of things, the possibility of incurring losses is constantly present, in greater or lesser degree, in carr ying on the business operations. Retrenchment is normally resorted to by managem ent during periods of business reverses and economic difficulties occasioned by such events as recession, industrial depression, or seasonal fluctuations. It is an act of the employer of reducing the work force because of losses in the oper ation of the enterprise, lack of work, or considerable reduction on the volume o f business. Retrenchment is, in many ways, a measure oflast resort when other le

ss drastic means have been tried and found to be inadequate. A lull caused by la ck of orders or shortage of materials must be of such nature as would severely a ffect the continued business operations of the employer to the detriment of all and sundry if not properly addressed. The institution of "new methods or more ef ficient machinery, or of automation" is technically a ground for termination of employment by reason of installation of labor-saving devices but where the intro duction of these methods is resorted to not merely to effect greater efficiency in the operations of the business but principally because of serious business re verses and to avert further losses, the device could then verily be considered o ne of retrenchment. (Edge Apparel, Inc. vs. NLRC [G.R. No. 121314, 12 February 1 998]) Granting that the 16 May 1988 termination was a retrenchment scheme, and the 31 July 1988 and the 28 February 1989 were due to closure, the law requires the gra nting of the same amount of separation benefits to the affected employees in any of the cases. The respondent argued that the giving of more separation benefit to the second and third batches of employees separated was their expression of g ratitude and benevolence to the remaining employees who have tried to save and m ake the company viable in the remaining days of operations. This justification i s not plausible. There are workers in the first batch who have rendered more yea rs of service and could even be said to be more efficient than those separated s ubsequently, yet they did not receive the same recognition. Understandably, thei r being retained longer in their job and be not included in the batch that was f irst terminated, was a concession enough and may already be considered as favor granted by the respondents to the prejudice of the complainants. As it happened, there are workers in the first batch who have rendered more years in service bu t received lesser separation pay, because of that arrangement made by the respon dents in paying their termination benefits. . . Clearly, there was impermissible discrimination against the private respondents in the payment of their separation benefits. The law requires an employer to ext end equal treatment to its employees. It may not, in the guise of exercising man agement prerogatives, grant greater benefits to some and less to others. Managem ent prerogatives are not absolute prerogatives but are subject to legal limits, collective bargaining agreements, or general principles of fair play and justice (UST vs. NLRC, 190 SCRA 758). Article 283 of the Labor Code, as amended, protec ts workers whose employment is terminated because of closure of the establishmen t or reduction of personnel ((Businessday Information vs. NLRC [G.R. No. 103575, 05 April 1993]) Although, as a general rule, Respondent company has the prerogative and right to resort to temporary lay-off, such right is likewise limited to a period of six (6) months applying Art. 286 of the Labor Code on suspension of employer-employe e relationship not exceeding six (6) months. In this case, respondent company was justified in the temporary lay-off of some of its employees. However, Respondent company should have recalled them after th e end of the six month period or at the least reasonably informed them (complain ants) that the Respondent company is still not in a position to recall them due to the continuous drop of demand in the export market (locally or internationall y), thereby extending the temporary lay-off with a definite period of recall and if the same cannot be met, then the company should implement retrenchment and p ay its employees separation pay. Failing in this regard, respondent company chos e not to recall nor send notice to the complainants after the lapse of the six ( 6) month period. Hence, there is in this complaint a clear case of constructive dismissal. While there is a valid reason for the temporary lay-off, the same is also limited to a duration of six months. Thereafter the employees, complainants herein, are entitled under the law (Art. 286) to be recalled back to work. As r esult thereof, the temporary lay-off of the complainants from January 22, 1991 ( date of lay-off) to July 22, 1991 is valid, however, thereafter complainants are already entitled to backwages, in view of constructive dismissal, due to the fa ct that they were no longer recalled back to work. Complainants cannot be placed on temporary lay-off forever. The limited period of six (6) months is based pro visionally too prevent circumvention on the right to security of tenure and to p

revent grave abuse of discretion on the part of the employer. However, since dur ing the trial it was proven, as testified by the Vice-President for marketing an d personnel manager, that the lack of work and selection of personnel continued to persist and considering the antagonism and hostility displayed by both litiga nts, as observed by this Arbiter, during the trial of this case and in view of t he strained relations between the parties, reinstatement of the complainants wou ld not be prudent. (Sebuguero vs. NLRC [G.R. No. 115394, 27 September 1995]) Closure Under Article 283 of the Labor Code, the closure of a business establishment or reduction of personnel is a ground for the termination of the services of any em ployee unless the closing or retrenching is for the purpose of circumventing the provision of the law. But while business reverses can be a just cause for termi nating employees, these must be sufficiently proved by the employer. The case of Sugar Lopez Corporation v. Federation of Free Workers, lays down the general standards under which an employer may retrench or reduce the number of his employees. FIRSTLY, the losses expected should be substantial and not merely de minimis in extent. If the loss purportedly sought to be forestalled by retre nchment is clearly shown to be insubstantial and inconsequential in character, t he bonafide nature of the retrenchment would appear to be seriously in question. SECONDLY, the substantial loss apprehended must be reasonably imminent, as such imminence can be perceived objectively and in good faith by the employer. There should, in other words, be a certain degree of urgency for the retrenchment, wh ich is after all a drastic recourse with serious consequences for the livelihood of the employees retired or otherwise laid-off. Because of the far-reaching nat ure of the retrenchment, it must, THIRDLY, be reasonably necessary and likely to effectively prevent the expected losses. LASTLY, but certainly not the least important, the alleged losses if already inc urred, and the expected imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence. (Balasbas vs. NLRC [G.R. No. 85286, 24 August 1992]) Article 283 of the Labor Code, however, speaks of a permanent retrenchment as op posed to a temporary lay-off as is the case here. There is no specific provision of law which treats of a temporary retrenchment or lay-off and provides for the requisites in effecting it or a period or duration therefor. These employees ca nnot forever be temporarily laid-off. To remedy this situation or fill the hiatu s, Article 286 may be applied but only by analogy to set a specific period that employees may remain temporarily laid-off or in floating status. Six months is t he period set by law that the operation of a business or undertaking may be susp ended thereby suspending the employment of the employees concerned. The temporar y lay-off wherein the employees likewise cease to work should also not last long er than six months. After six months, the employees should either be recalled to work or permanently retrenched following the requirements of the law, and that failing to comply with this would be tantamount to dismissing the employees and the employer would thus be liable for such dismissal. (Sebuguero vs. NLRC [G.R. No. 115394, 27 September 1995]) We note that Section 2 of Rule XIV quoted above requires the notice to specify " the particular acts or omissions constituting the ground for his dismissal", a r equirement which is obviously applicable where the ground for dismissal is the c ommission of some act or omission falling within Article 282 of the Labor Code. Again, Section 5 gives the employee the right to answer and to defend himself ag ainst "the allegations stated against him in the notice of dismissal". It is suc h allegations by the employer and any counter-allegations that the employee may wish to make that need to be heard before dismissal is effected. Thus, Section 5 may be seen to envisage charges against an employee constituting one or more of the just causes for dismissal listed in Article 282 of the Labor Code. Where, a s in the instant case, the ground for dismissal or termination of services does not relate to a blameworthy act or omission on the part of the employee, there a ppears to us no need for an investigation and hearing to be conducted by the emp

loyer who does not, to begin with, allege any malfeasance or non-feasance on the part of the employee. In such case, there are no allegations which the employee should refute and defend himself from. Thus, to require petitioner Wiltshire to hold a hearing, at which private respondent would have had the right to be pres ent, on the business and financial circumstances compelling retrenchment and res ulting in redundancy, would be to impose upon the employer an unnecessary and in utile hearing as a condition for legality of termination. (Wiltshire File Co., I nc. vs. NLRC [G.R. No. 82249, 07 February 1991]) Broadly speaking, there appears no complete dissolution of petitioner's business undertaking but the relocation of petitioner's plant to Batangas, in our view, amounts to cessation of petitioner's business operations in Makati. It must be s tressed that the phrase "closure or cessation of operation of an establishment o r undertaking not due to serious business losses or reverses" under Article 283 of the Labor Code includes both the complete cessation of all business operation s and the cessation of only part of a company's business. In Philippine Tobacco Flue-Curing & Redrying Corp. vs. NLRC, a company transferred its tobacco process ing plant in Balintawak, Quezon City to Candon, Ilocos Sur. The company therein did not actually close its entire business but merely relocated its tobacco proc essing and redrying operations to another place. Yet, this Court considered the transfer as closure not due to serious business losses for which the workers are entitled to separation pay. There is no doubt that petitioner has legitimate reason to relocate its plant be cause of the expiration of the lease contract on the premises it occupied. That is its prerogative. But even though the transfer was due to a reason beyond its control, petitioner has to accord its employees some relief in the form of sever ance pay. Thus, in E. Razon, Inc. vs. Secretary, petitioner therein provides arr astre services in all piers in South Harbor, Manila, under a management contract with the Philippine Ports Authority. Before the expiration of the term of the c ontract, the PPA cancelled the said contract resulting in the termination of emp loyment of workers engaged by petitioner. Obviously, the cancellation was not so ught, much less desired by petitioner. Nevertheless, this Court required petitio ner therein to pay its workers separation pay in view of the cessation of its ar rastre operations. (Cheniver Deco Print Technics Corporation vs. NLRC [G.R. No. 122876, 17 February 2000]) It is clear that Article 283 of the Labor Code applies in cases of closures of e stablishment and reduction of personnel. The peculiar circumstances in the case at bar, however, involves neither the closure of an establishment nor a reductio n of personnel as contemplated under the aforesaid article. When the Patalon Coc onut Estate was closed because a large portion of the estate was acquired by DAR pursuant to CARP, the ownership of that large portion of the estate was precise ly transferred to PEARA and ultimately to the petitioners as members thereof and as agrarian lot beneficiaries. Hence, Article 283 of the Labor Code is not appl icable to the case at bench. Even assuming, arguendo, that the situation in this case were a closure of the b usiness establishment called Patalon Coconut Estate of private respondents, stil l the petitioners/employees are not entitled to separation pay. The closure cont emplated under Article 283 of the Labor Code is a unilateral and voluntary act o n the part of the employer to close the business establishment as may be gleaned from the wording of the said legal provision that "The employer may also termin ate the employment of any employee due to. . .". The use of the word "may," in a statute, denotes that it is directory in nature and generally permissive only. The "plain meaning rule" or verba legis in statutory construction is thus applic able in this case. Where the words of a statute are clear, plain and free from a mbiguity, it must be given its literal meaning and applied without attempted int erpretation. In other words, Article 283 of the Labor Code does not contemplate a situation w here the closure of the business establishment is forced upon the employer and u ltimately for the benefit of the employees. (NFL vs. NLRC [G.R. No. 127718, 02 M arch 2000]) Broadly speaking, there appears no complete dissolution of petitioner's business

undertaking but the relocation of petitioner's plant to Batangas, in our view, amounts to cessation of petitioner's business operations in Makati. It must be s tressed that the phrase "closure or cessation of operation of an establishment o r undertaking not due to serious business losses or reverses" under Article 283 of the Labor Code includes both the complete cessation of all business operation s and the cessation of only part of a company's business. In Philippine Tobacco Flue-Curing & Redrying Corp. vs. NLRC, a company transferred its tobacco process ing plant in Balintawak, Quezon City to Candon, Ilocos Sur. The company therein did not actually close its entire business but merely relocated its tobacco proc essing and redrying operations to another place. Yet, this Court considered the transfer as closure not due to serious business losses for which the workers are entitled to separation pay. (Cheniver Deco Print Technics Corporation vs. NLRC [G.R. No. 122876, 17 February 2000]) Disease The applicable rule on the ground for dismissal invoked against him is Section 8 , Rule I, Book VI, of the Rules and Regulations Implementing the Labor Code read ing as follows: Sec. 8. Disease as a ground for dismissal. Where the employee suffers from a di sease and his continued employment is prohibited by law or prejudicial to his he alth or to the health of his co-employees, the employer shall not terminate his employment unless there is a certification by a competent public health authorit y that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment. If the dis ease or ailment can be cured within the period, the employer shall not terminate the employee but shall ask the employee to take a leave. The employer shall rei nstate such employee to his former position immediately upon the restoration of his normal health. The record does not contain the certification required by the above rule. The me dical certificate offered by the petitioner came from its own physician, who was not a "competent public health authority," and merely stated the employee's dis ease, without more. We may surmise that if the required certification was not pr esented, it was because the disease was not of such a nature or seriousness that it could not be cured within a period of six months even with proper medical tr eatment. If so, dismissal was unquestionably a severe and unlawful sanction. (Cebu Royal Plant vs. Deputy Minister Of Labor [G.R. No. L-58639, 12 August 1987 ]) Due Process The essence of due process is simply an opportunity to be heard, or as applied t o administrative proceedings, an opportunity to explain one's side or an opportu nity to seek a reconsideration of the action or ruling complained of. A formal or trial-type hearing is not at all times and in all instances essentia l. The requirements are satisfied where the parties are fair and reasonable oppo rtunity to explain their side of the controversy at hand. What is frowned upon i s the absolute lack of notice and hearing .. (Stayfast Philippines Corp. vs. NLRC [218 SCRA 596, 1993]) A formal trial-type hearing is not at all times and in all instances essential t o due process. It is enough that the parties are given a fair and reasonable opp ortunity to explain their respective sides of the controversy and to present sup porting evidence on which a fair decision can be based. According to Llora Motor s Inc. vs. Drilon, this type of hearing is not even mandatory in cases of compla inants lodged before the Labor Arbiter. And in Sajonas vs. NLRC, we observed as follows: Finally, on the matter of due process which petitioners claim was denied them by private respondents during the investigation which led to their dismissal, we a gree with respondents that although the aforesaid investigations were not conduc ted in the manner of a regular trial in court, the elements of due process, name ly the right to be informed of the charges, to be present and to be heard, were accorded petitioners. In said investigations, petitioners freely and voluntarily

answered the questions and even made further statements in their defense during the concluding stages thereof. (Aberia vs. NLRC [G.R. No. 102023, 06 November 1 992]) "AMPLE OPPORTUNITY" connotes every kind of assistance that management must accor d the employee to enable him to prepare adequately for his defense including leg al representation. (Manebo vs. NLRC [G.R. No. 107721, 10 January 1994]) The record of this case is bereft of any indication that a hearing or other gath ering was in fact held where private respondent Calangi was given a reasonable o pportunity to confront his accuser(s) and to defend against the charges made by the latter. Petitioner Corporation's "prior consultation" with the labor union w ith which private respondent Calangi was affiliated, was legally insufficient. S o far as the record shows, neither petitioner nor the labor union actually advis ed Calangi of the matters at issue. The Memorandum of petitioner's Personnel Man ager certainly offered no helpful particulars. It is important to stress that th e rights of an employee whose services are sought to be terminated to be informe d beforehand of his proposed dismissal (or suspension) as well as of the reasons therefor, and to be afforded an adequate opportunity to defend himself from the charges levelled against him, are rights PERSONAL TO THE EMPLOYEE. Those rights were not satisfied by petitioner Corporation's obtaining the consent of or cons ulting with the labor union; such consultation or consent was not a substitute f or actual observance of those rights of private respondent Calangi. The employee can waive those rights, if he so chooses, but the union cannot waive them for h im. That the private respondent simply 'kept silent" all the while, is not adequ ate to show an effective waiver of his rights. Notice and opportunity to be hea rd must be accorded by an employer even though the employee does not affirmative ly demand them. (Century Textile Mills, Inc. vs. NLRC [G.R. No. 77859, 25 May 19 88]) WENPHIL Doctrine The Court holds that the policy of ordering the reinstatement to the service of an employee without loss of seniority and the payment of his wages during the pe riod of his separation until his actual reinstatement but not exceeding three (3 ) years without qualification or deduction, when it appears he was not afforded due process, although his dismissal was found to be for just and authorized caus e in an appropriate proceeding in the Ministry of Labor and Employment, should b e re-examined. It will be highly prejudicial to the interests of the employer to impose on him the services of an employee who has been shown to be guilty of th e charges that warranted his dismissal from employment. Indeed, it will demorali ze the rank and file if the undeserving, if not undesirable, remains in the serv ice. Thus in the present case, where the private respondent, who appears to be of vio lent temper, caused trouble during office hours and even defied his superiors as they tried to pacify him, should not be rewarded with re-employment and back wa ges. It may encourage him to do even worse and will render a mockery of the rule s of discipline that employees are required to observe. Under the circumstances the dismissal of the private respondent for just cause should be maintained. He has no right to return to his former employer. However, the petitioner must nevertheless be held to account for failure to exte nd to private respondent his right to an investigation before causing his dismis sal. The rule is explicit as above discussed. The dismissal of an employee must be for just or authorized cause and after due process. Petitioner committed an i nfraction of the second requirement. Thus, it must be imposed a sanction for its failure to give a formal notice and conduct an investigation as required by law before dismissing petitioner from employment. Considering the circumstances of this case petitioner must indemnify the private respondent the amount of P1,000. 00. The measure of this award depends on the facts of each case and the gravity of the omission committed by the employer. (WENPHIL vs. NLRC [G.R. No. 80587, 08 February 1989]) WENPHIL Doctrine abandoned by Serrano vs. NLRC

In sum, we hold that if in proceedings for reinstatement under Art. 283, it is s hown that the termination of employment was due to an authorized cause, then the employee concerned should not be ordered reinstated even though there is failur e to comply with the 30-day notice requirement. Instead, he must be granted sepa ration pay in accordance with Art. 283, xxx xxx xxx If the employee's separation is without cause, instead of being given separation pay, he should be reinstated. In either case, whether he is reinstated or only granted separation pay, he should be paid full backwages if he has been laid off without written notice at least 30 days in advance. On the other hand, with respect to dismissals for cause under Art. 282, if it is shown that the employee was dismissed for any of the just causes mentioned in s aid Art. 282, then, in accordance with that article, he should not be reinstated . However, he must be paid backwages from the time his employment was terminated until it is determined that the termination of employment is for a just cause b ecause the failure to hear him before he is dismissed renders the termination of his employment without legal effect. (Serrano vs. NLRC [G.R. No. 117040, 27 January 2000]) Violation of procedural due process not a violation of the Due Process Clause of the Constitution Violation of Notice Requirement Not a Denial of Due Process The cases cited by both Justices Puno and Panganiban refer, however, to the deni al of due process by the State, which is not the case here. There are three reas ons why, on the other hand, violation by the employer of the notice requirement cannot be considered a denial of due process resulting in the nullity of the emp loyee's dismissal or layoff. The FIRST is that the Due Process Clause of the Constitution is a limitation on governmental powers. It does not apply to the exercise of private power, such as the termination of employment under the Labor Code. This is plain from the text of Art. III, 1 of the Constitution, viz.: "No person shall be deprived of life, liberty, or property without due process of law. . . ." The reason is simple: On ly the State has authority to take the life, liberty, or property of the individ ual. The purpose of the Due Process Clause is to ensure that the exercise of thi s power is consistent with what are considered civilized methods. The SECOND REASON is that notice and hearing are required under the Due Process Clause before the power of organized society are brought to bear upon the indivi dual. This is obviously not the case of termination of employment under Art. 283 . Here the employee is not faced with an aspect of the adversary system. The pur pose for requiring a 30-day written notice before an employee is laid off is not to afford him an opportunity to be heard on any charge against him, for there i s none. The purpose rather is to give him time to prepare for the eventual loss of his job and the DOLE an opportunity to determine whether economic causes do e xist justifying the termination of his employment. Even in cases of dismissal under Art. 282, the purpose for the requirement of no tice and hearing is not to comply with Due Process Clause of the Constitution. T he time for notice and hearing is at the trial stage. Then that is the time we s peak of notice and hearing as the essence of procedural due process. Thus, compl iance by the employer with the notice requirement before he dismisses an employe e does not foreclose the right of the latter to question the legality of his dis missal. As Art. 277(b) provides, "Any decision taken by the employer shall be wi thout prejudice to the right of the worker to contest the validity or legality o f his dismissal by filing a complaint with the regional branch of the National L abor Relations Commission." Indeed, to contend that the notice requirement in the Labor Code is an aspect of due process is to overlook the fact that Art. 283 had its origin in Art. 302 of the Spanish Code of Commerce of 1882 which gave either party to the employer-em ployee relationship the right to terminate their relationship by giving notice t o the other one month in advance. In lieu of notice, an employee could be laid o ff by paying him a mesada equivalent to his salary for one month. 28 This provis

ion was repealed by Art. 2270 of the Civil Code, which took effect on August 30, 1950. But on June 12, 1954, R.A. No. 1052, otherwise known as the Termination P ay Law, was enacted reviving the mesada. On June 21, 1957, the law was amended b y R.A. No. 1787 providing for the giving of advance notice or the payment of com pensation at the rate of one-half month for every year of service. The Termination Pay Law was held not to be a substantive law but a regulatory me asure, the purpose of which was to give the employer the opportunity to find a r eplacement or substitute, and the employee the equal opportunity to look for ano ther job or source of employment. Where the termination of employment was for a just cause, no notice was required to be given to the, employee. 30 It was only on September 4, 1981 that notice was required to be given even where the dismiss al or termination of an employee was for cause. This was made in the rules issue d by the then Minister of Labor and Employment to implement B.P. Blg. 130 which amended the Labor Code. And it was still much later when the notice requirement was embodied in the law with the amendment of Art. 277(b) by R.A. No. 6715 on Ma rch 2, 1989. It cannot be that the former regime denied due process to the emplo yee. Otherwise, there should now likewise be a rule that, in case an employee le aves his job without cause and without prior notice to his employer, his act sho uld be void instead of simply making him liable for damages. The THIRD REASON why the notice requirement under Art. 283 can not be considered a requirement of the Due Process Clause is that the employer cannot really be e xpected to be entirely an impartial judge of his own cause. This is also the cas e in termination of employment for a just cause under Art. 282 (i.e., serious mi sconduct or willful disobedience by the employee of the lawful orders of the emp loyer, gross and habitual neglect of duties, fraud or willful breach of trust of the employer, commission of crime against the employer or the latter's immediat e family or duly authorized representatives, or other analogous cases). Justice Puno disputes this. He says that "statistics in the DOLE will prove that many cases have been won by employees before the grievance committees manned by impartial judges of the company." The grievance machinery is, however, differen t because it is established by agreement of the employer and the employees and c omposed of representatives from both sides. That is why, in Batangas Laguna Taya bas Bus Co. v. Court of Appeals, which Justice Puno cites, it was held that "Sinc e the right of [an employee] to his labor is in itself a property and that the l abor agreement between him and [his employer] is the law between the parties, hi s summary and arbitrary dismissal amounted to deprivation of his property withou t due process of law." But here we are dealing with dismissals and layoffs by em ployers alone, without the intervention of any grievance machinery. Accordingly in Montemayor v. Araneta University Foundation, although a professor was dismiss ed without a hearing by his university, his dismissal for having made homosexual advances on a student was sustained, it appearing that in the NLRC, the employe e was fully heard in his defense. (Serrano vs. NLRC [G.R. No. 117040, 27 January 2000]) Effect of Lack of Notice; Termination INEFFECTUAL Lack of Notice Only Makes Termination Ineffectual Not all notice requirements are requirements of due process. Some are simply par t of a procedure to be followed before a right granted to a party can be exercis ed. Others are simply an application of the Justinian precept, embodied in the C ivil Code, to act with justice, give everyone his due, and observe honesty and g ood faith toward one's fellowmen. Such is the notice requirement in Arts. 282-28 3. The consequence of the failure either of the employer or the employee to live up to this precept is to make him liable in damages, not to render his act (dis missal or resignation, as the case may be) void. The measure of damages is the a mount of wages the employee should have received were it not for the termination of his employment without prior notice. If warranted, nominal and moral damages may also be awarded. We hold, therefore, that, with respect to Art. 283 of the Labor Code, the employ er's failure to comply with the notice requirement does not constitute a denial of due process but a mere failure to observe a procedure for the termination of

employment which makes the termination of employment merely INEFFECTUAL. It is s imilar to the failure to observe the provisions of Art. 1592, in relation to Art . 1191, of the Civil Code in rescinding a contract for the sale of immovable pro perty. Under these provisions, while the power of a party to rescind a contract is implied in reciprocal obligations, nonetheless, in cases involving the sale o f immovable property, the vendor cannot exercise this power even though the vend ee defaults in the payment of the price, except by bringing an action in court o r giving notice of rescission by means of a notarial demand. Consequently, a not ice of rescission given in the letter of an attorney has no legal effect, and th e vendee can make payment even after the due date since no valid notice of resci ssion has been given. Indeed, under the Labor Code, only the absence of a just cause for the terminati on of employment can make the dismissal of an employee illegal. xxx xxx xxx Thus, only if the termination of employment is not for any of the causes provide d by law is it illegal and, therefore, the employee should be reinstated and pai d backwages. To contend, as Justices Puno and Panganiban do, that even if the te rmination is for a just or authorized cause the employee concerned should be rei nstated and paid backwages would be to amend Art. 279 by adding another ground f or considering a dismissal illegal. What is more, it would ignore the fact that under Art. 285, if it is the employee who fails to give a written notice to the employer that he is leaving the service of the latter, at least one month in adv ance, his failure to comply with the legal requirement does not result in making his resignation void but only in making him liable for damages. This disparity in legal treatment, which would result from the adoption of the theory of the mi nority cannot simply be explained by invoking resident Ramon Magsaysay's motto t hat "he who has less in life should have more in law." That would be a misapplic ation of this noble phrase originally from Professor Thomas Reed Powell of the H arvard Law School. Justice Panganiban cites Pepsi-Cola Bottling Co. v. NLRC, in support of his view that an illegal dismissal results not only from want of legal cause but also fr om the failure to observe "due process." The Pepsi-Cola case actually involved a dismissal for an alleged loss of trust and confidence which, as found by the Co urt, was not proven. The dismissal was, therefore, illegal, not because there wa s a denial of due process, but because the dismissal was without cause. The stat ement that the failure of management to comply with the notice requirement "tain ts the dismissal with illegality" was merely a dictum thrown in as additional gr ounds for holding the dismissal to be illegal. Given the nature of the violation, therefore, the appropriate sanction for the f ailure to give notice is the payment of backwages for the period when the employ ee is considered not to have been effectively dismissed or his employment termin ated. The sanction is not the payment alone of nominal damages as Justice Vitug contends. (Serrano vs. NLRC [G.R. No. 117040, 27 January 2000]) Effect of Lack of Notice: backwages until determination of just cause Validity of Petitioner's Layoff Not Affected by Lack of Notice We agree with our esteemed colleagues, Justices Puno and Panganiban, that we sho uld rethink the sanction of fine for an employer's disregard of the notice requi rement. We do not agree, however, that disregard of this requirement by an emplo yer renders the dismissal or termination of employment null and void. Such a sta nce is actually a reversion to the discredited pre-Wenphil rule of ordering an e mployee to be reinstated and paid backwages when it is shown that he has not bee n given notice and hearing although his dismissal or layoff is later found to be for a just or authorized cause. Such rule was abandoned in Wenphil because it i s really unjust to require an employer to keep in his service one who is guilty, for example, of an attempt on the life of the employer or the latter's family, or when the employer is precisely retrenching in order to prevent losses. The need is for a rule which, while recognizing the employee's right to notice b efore he is dismissed or laid off, at the same time acknowledges the right of th e employer to dismiss for any of the just causes enumerated in Art. 282 or to te

rminate employment for any of the authorized causes mentioned in Arts. 283-284. If the Wenphil rule imposing a fine on an employer who is found to have dismisse d an employee for cause without prior notice is deemed ineffective in deterring employer violations of the notice requirement, the remedy is not to declare the dismissal void if there are just or valid grounds for such dismissal or if the t ermination is for an authorized cause. That would be to uphold the right of the employee but deny the right of the employer to dismiss for cause. Rather, the re medy is to order the payment to the employee of full backwages from the time of his dismissal until the court finds that the dismissal was for a just cause. But , otherwise, his dismissal must be upheld and he should not be reinstated. This is because his dismissal is ineffectual. For the same reason, if an employee is laid off for any of the causes in Arts. 2 83-284, i.e., installation of a labor-saving device, but the employer did not gi ve him and the DOLE a 30-day written notice of termination in advance, then the termination of his employment should be considered ineffectual and he should be paid backwages. However, the termination of his employment should not be conside red void but he should simply be paid separation pay as provided in Art. 283 in addition to backwages. (Serrano vs. NLRC [G.R. No. 117040, 27 January 2000]) Corporate Liability A corporate officer is not personally liable for the money claims of discharged corporate employees unless he acted with evident malice and bad faith in termina ting their employment. There is no evidence in this case that Locsin acted in ba d faith or with malice in carrying out the retrenchment and eventual closure of the company, hence, he may not be held personally and solidarily liable with the company for the satisfaction of the judgment in favor of the retrenched employe es. (Businessday vs. NLRC [G.R. No. 103575, 05 April 1993]) This is not a case of dismissal. The situation is that of a corporate office hav ing been declared vacant, and of TAN's not having been elected thereafter. The m atter of whom to elect is a prerogative that belongs to the Board, and involves the exercise of deliberate choice and the faculty of discriminative selection. G enerally speaking, the relationship of a person to a corporation, whether as off icer or agent or employee, is not determined by the nature of the services perfo rmed, but by the incidents of the relationship as they actually exist. We agree with petitioners, however, that the NLRC erred in holding Centeno joint ly and severally liable with MAM. A corporation, being a juridical entity, may a ct only through its directors, officers and employees. Obligations incurred by t hem, acting as such corporate agents, are not theirs but the direct accountabili ties of the corporation they represent. True, solidary liabilities may at times be incurred but only when exceptional circumstances warrant such as, generally, in the following cases: 1. When directors and trustees or, in appropriate cases, the officers of a corporation (a) vote for or assent to patently unlawful acts of the corporation; (b) act in bad faith or with gross negligence in directing the corporate aff airs; (c) are guilty of conflict of interest to the prejudice of the corporation, its stockholders or members, and other persons. 2. When a director or officer has consented to the issuance of watered stoc ks or who, having knowledge thereof, did not forthwith file with the corporate s ecretary his written objection thereto. 3. When a director, trustee or officer has contractually agreed or stipulat ed to hold himself personally and solidarily liable with the Corporation. 4 When a director, trustee or officer is made, by specific provision of la w, personally liable for his corporate action. In labor cases, for instance, the Court has held corporate directors and officer s solidarily liable with the corporation for the termination of employment of em ployees done with malice or in bad faith. (MAM Realty vs. NLRC [G.R. No. 114787 , 02 June 1995])

The fact that complainant is a corporate officer, an elective position under the corporate by-laws and her non-election is an intra-corporate controversy cogniz able by the SEC and not by the NLRC, petitioner bank can no longer raise the iss ue of jurisdiction under the principle of estoppel. The bank participated in the proceedings from start to finish. It filed its position paper with the Labor Ar biter. When the decision of the Labor Arbiter was adverse to it, the bank appeal ed to the NLRC. When the NLRC decided in its favor, the bank said nothing about jurisdiction. Even before the CA, it never questioned the proceedings on the gro und of lack of jurisdiction. It was only when the CA ruled in favor of public re spondent did it raise the issue of jurisdiction. The bank actively participated in the proceedings before the Labor Arbiter, the NLRC and the CA. While it is tr ue that jurisdiction over the subject matter of a case may be raised at any time of the proceedings, this rule presupposes that laches or estoppel never superve ned. (Prudential Bank vs. Reyes [G.R. No. 141093, 20 February 2001 Sale/Merger or Consolidation Where such transfer of ownership is in good faith, the transferee is under no le gal duty to absorb the transferor employees as there is no law compelling such a bsorption. The most that the transferee may do, for reasons of public policy and social justice, is to give preference to the qualified separated employees in t he filling of vacancies in the facilities of the purchaser. (Manlimos vs. NLRC [ G.R. No. 113337, 02 March 1995]) The rule is that unless expressly assumed, labor contracts such as employment co ntracts and collective bargaining agreements are not enforceable against a trans feree of an enterprise, labor contracts being in personam, thus binding only bet ween the parties. A labor contract merely creates an action in personally and do es not create any real right which should be respected by third parties. This co nclusion draws its force from the right of an employer to select his employees a nd to decide when to engage them as protected under our Constitution, and the sa me can only be restricted by law through the exercise of the police power. As a general rule, there is no law requiring a bona fide purchaser of 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 employers of the seller of such assets or enterpris e, the parties are liable to the employees if the transaction between the partie s is colored or clothed with bad faith. (Sundowner Dev. Corp. vs. Drilon [G.R. No. 82341, 06 December 1989]) We disagree with the Labor Arbiter's reliance on the case of Mobil Employees Ass ociation vs. NLRC. The NLRC was correct in holding that Mobil was not applicable because Mobil involved the termination of employment under Article 283 (before Article 284) of the Labor Code and not termination of employment as a result of the change of corporate ownership, as in the case of private respondent Super Ma hogany Plywood Corporation. In Mobil, the original employer; Mobil Oil Philippin es, Inc., completely withdrew from business and was even dissolved. In the case at bar, there was only a change of ownership of Super Mahogany Plywood Corporati on which resulted in a change of ownership. In short, the corporation itself, as a distinct and separate juridical entity, continues to exist. The issue of whet her there was a closing or cessation of business operations which could have ope rated as a just cause for the termination of employment was not material. The ch ange in ownership of the management was done bona fide and the petitioners did n ot for any moment before the filing of their complaints raise any doubt on the m otive for the change. On the contrary, upon being informed thereof and of their eventual termination from employment, they freely and voluntarily accepted their separation pay and other benefits and individually executed the Release or Waiv er which they acknowledged before no less than a hearing officer of the DOLE. (M anlimos vs. NLRC [G.R. No. 113337, 02 March 1995]) Special Circumstances Constructive Dismissal CONSTRUCTIVE DISMISSAL as a quitting because continued employment is rendered im

possible, unreasonable or unlikely; as, an offer involving a demotion in rank an d a diminution in pay. (Philippine Japan Active Carbon Corporation vs. NLRC) There is a constructive dismissal when the reassignment of an employee involves a demotion in rank or a diminution in pay (Lemery Savings and Loan Bank v. Natio nal Labor Relations Commission, 205 SCRA 492 [1992]; Philippine Japan Active Car bon Corporation v. National Labor Relations Commission, 171 SCRA 164 [1989]). In the case at bench, the demotion of private respondent is tantamount to constr uctive dismissal. One does not need to stretch his imagination to distinguish th e work of a security guard and that of a common agricultural laborer in a sugar plantation. Likewise, there was a diminution of salary, for a security guard is paid on a monthly basis while a laborer in the sugar plantation is paid either o n a daily or piece work basis. Laborers do not work year round but only when nee ded and on off-season months, they are not required to work at all. (Oscar Ledes ma & Co. vs. NLRC [G.R. No. 110930, 13 July 1995]) Preventive Suspension Sections 3 and 4, Rule XIV, Book V of the Omnibus Rules Implementing the Labor C ode, Termination of Employment, provide: Sec. 3. Preventive suspension. The employer may place the worker concerned under preventive suspension if his continued employment poses a serious and imminent threat to the life or property of the employer or of his co-workers. Sec. 4. Period of suspension. No preventive suspension shall last longer than 30 days. The employer shall thereafter reinstate the worker in his former or in a substantially equivalent position of the employer may extend the period of suspension provided that during the period of extension, he pays the wages an d other benefits due to the worker. In such case, the worker shall not be bound to reimburse the amount paid to him during the extension if the employer decides , after completion of the hearing, to dismiss the worker. Section 4, Rule XIV, Book V of the Omnibus Rules provides that preventive suspen sion cannot be more than the maximum period of 30 days. Hence, after the 30-day period of suspension beyond the maximum period amounts to constructive dismissal . (Hyatt Taxi Services vs. Catinoy [G.R. No. 143204, 26 June 2001]) Burden of Proof in Labor Cases Private respondent's documentary evidence showing the culpability of petitioners should prevail over petitioners' uncorroborated explanations and self-serving d enials regarding their involvement in the pilferages. All administrative determi nations require only substantial proof and not clear and convincing evidence. Pr oof beyond reasonable doubt of the employee's misconduct is not required, it bei ng sufficient that there is some basis for the same or that the employer has rea sonable ground to believe that the employee is responsible for the misconduct, a nd his participation therein renders him unworthy of the trust and confidence de manded by his position. Thus, petitioners cannot assert that the public responde nt closed its eyes to their evidence. The latter's findings are supported by sub stantial evidence which goes beyond the minimum evidentiary support required by law. (Segismundo vs. NLRC [G.R. No. 112203, 13 December 1994]) The fact that Santos neglected to substantiate his claim for night shift differe ntials is not prejudicial to his cause. After all, the burden of proving payment rests on petitioner NSC. Santos' allegation of non-payment of this benefit, to which he is by law entitled, is a negative allegation which need not be supporte d by evidence unless it is an essential part of his cause of action. It must be noted that his main cause of action is his illegal dismissal, and the claim for night shift differential is but an incident of the protest against such dismissa l. Thus, the burden of proving that payment of such benefit has been made rests upon the party who will suffer if no evidence at all is presented by either part y. National Semiconductor (HK) Distribution, Ltd. vs. NLRC [G.R. No. 123520, 26 June 1998]) The reason for this rule is that the pertinent personnel files, payrolls, record s, remittance and other similar documents which will show that overtime, differe ntials, service incentive leave and other claims of workers have been paid are n

ot in the possession of the worker but in the custody and absolute control of th e employer. Thus, in choosing not to present evidence to prove that it had paid all the monetary claims of petitioners, HI-TECH failed once again to discharge t he onus probandi. Consequently, we have no choice but to award those claims to p etitioners. (Villar vs. NLRC [G.R. No. 130935, 11 May 2009]) Quitclaims The requisites of a valid quitclaim are: That (a) It was voluntarily entered into by the parties; (b) There was no fraud or deceit on the part of any of the parties; (c) The consideration of the quitclaim is credible and reasonable; and, (d) 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 . Not all waivers and quitclaims are invalid as against public policy. If the agre ement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of a change of mind. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of settlement are unconscionab le on its face, that the law will step in to annul the questionable transaction. But where it is shown that the person making the waiver did so voluntarily, wit h full understanding of what he was doing, and the consideration for the quitcla im is credible and reasonable, the transaction must be recognized as a valid and binding undertaking. (Periquet v. NLRC) "Dire necessity" is not an acceptable ground for annulling the releases, especia lly since it has not been shown that the employees had been forced to execute th em. It has not even been proven that the considerations for the quitclaims were unconscionably low and that the petitioners had been tricked into accepting them . (Veloso v. DOLE) First, even if a clear majority of the union members agreed to a settlement with the employer, the union has no authority to compromise the individual claims of members who did not consent to such settlement. Rule 138 Section 23 of the 1964 Revised Rules of Court requires a special authority before an attorney may comp romise his client's litigation. "The authority to compromise cannot lightly be p resumed and should be duly established by evidence." In the case at bar, minority union members did not authorize the union to compro mise their individual claims. Absent a showing of the union's special authority to compromise the individual claims of private respondents for reinstatement and back wages, there is no valid waiver of the aforesaid rights. As private respon dents did not authorize the union to represent them not bound by the terms there of. (Golden Donuts, Inc. vs. NLRC [G.R. Nos. 113666-68, 19 January 2000]) The mere fact that the employee was not physically coerced or intimidated does n ot necessarily imply that he freely or voluntarily consented to the terms of the quitclaim. Under Article 1330 of the Civil Code, consent may be vitiated not on ly through intimidation or violence but also by mistake, undue influence or frau d. Moreover, it is the employer and not the employee who has the burden of provi ng that the quitclaim was voluntarily entered into. (Philippine Carpet Employees Association vs. PCMC [G.R. No.140269-70, 14 September 2000]) Reliefs under the Labor Code Reinstatement plus backwages Since private respondent's dismissal was for just and valid cause, the order of public respondent for the reinstatement of private respondent with award of back wages has no factual and legal basis. (PAL vs. NLRC [G.R. No. 126805, 16 March 2 000]) [A]n employee who is unjustly dismissed is entitled to his full backwages comput ed from the time his compensation was withheld from him up to the time of his re instatement. Mere offer to reinstate a dismissed employee, given the circumstanc es in this case, is not enough. If petitioner were sincere in its intention to r einstate private respondent, petitioner should have at the very least reinstated

him in its payroll right away. We are thus constrained to conclude that private respondent should be paid by petitioner not only the sum of P26,866.64 awarded by the NLRC, but the petitioner should be held liable for the entire amount of b ackwages due the private respondent from the day he was illegally dismissed up t o the date of his reinstatement. Only then could observance of labor laws be pro moted and social justice upheld. (Condo Suite Club Travel, Inc. vs. NLRC [G.R. N o. 125671, 28 January 2000]) We agree that no full backwages from the time their pay was withheld up to the t ime of actual reinstatement can be ordered paid to petitioners. R.A. No. 6715, w hich amended Art. 279 of the Labor Code by requiring that an employee who is ill egally dismissed shall be paid "his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his c ompensation was withheld from him up to the time of his actual reinstatement," h as no retroactive effect and does not apply to cases of illegal dismissal taking place before its effectivity on March 21, 1989. Since petitioners were dismisse d in 1987, they cannot demand payment of full backwages until they were actually reinstated. BALLADARES vs. NLRC G.R. No. 111342 [19 June 1995] Strained relations "Strained relations," as amplified in Employee's Association of the Philippine A merican Life Insurance Company v. NLRC, 199 SCRA 628 [1991], must be of such a n ature or degree as to preclude reinstatement. But, where the differences betwee n the parties are neither personal nor physical, nor serious, then there is no r eason why the illegally dismissed employee should not be reinstated rather than simply given separation pay and backwages. More so if the cause of the perceived 'strained relations' is the filing of a complaint for illegal dismissal. (Kunti ng vs. NLRC [G.R. No. 101427, 08 November 1993]) A careful scrutiny of the records of the case at bench, however, readily disclos es the existence of strained relationship between the petitioner and private res pondents. Firstly, petitioner consistently refused to re-admit private respondents in his establishment. Petitioner even replaced private respondents with a new set of wo rkers to perform the tasks of private respondents; Moreover, although petitioner ostensibly argued in his supplemental motion for reconsideration that reinstate ment should have been the proper remedy in the case at bench on his premise that the existence of strained relationship was not adequately established, yet peti tioner never sincerely intended to effect the actual reinstatement of private re spondents. For if petitioner were to pursue further the entire logic of his argu ment, the prayer in his supplemental motion for reconsideration should have cont ained not just the mere deletion of the award of separation pay, but precisely, the reinstatement of private respondents. Quite obviously then, notwithstanding petitioner's argument for reinstatement he was only interested in the deletion o f the award of separation pay to private respondents. xxx xxx xxx And secondly, private respondents themselves, from the very start, had already i ndicated their aversion to their continued employment in petitioner's establishm ent. The very filing of their second case before Labor. (Congson vs. NLRC [G.R. No. 114250, 05 April 1995]) As the Court held in Globe-Mackay Cable and Radio Corporation v. NLRC, 206 SCRA 701 [1992], citing]; Sibal v. Notre Dame of Greater Manila, 182 SCRA 538 [1990]: Obviously, the principle of "strained relations" cannot be applied indiscriminat ely. Otherwise reinstatement can never be possible simply because some hostility is invariably engendered between the parties as a result of litigation. That i s human nature. Besides, no strained relations should arise from a valid and legal act of assert ing one's right; otherwise an employee who shall assert his right could be easil y separated from the service, by merely paying his separation pay on the pretext that his relationship with his employer had already been strained. (Anscor Tra nsport and Terminals v. NLRC [190 SCRA 147, 1990])

Moral and exemplary damages Private respondent is not entitled to the recovery of moral damages since these are recoverable only where the dismissal of the employee was attended by bad fai th or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy. (Spartan Security Detective A gency, Inc. v. NLRC [213 SCRA 528, 1992]) Unfair labor practices violate the constitutional rights of workers and employee s to self-organization, are inimical to the legitimate interests of both labor a nd management, including their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect; and disrupt indu strial peace and hinder the promotion of healthy and stable labor-management rel ations. As the conscience of the government, it is the Court's sworn duty to ens ure that none trifles with labor rights. For this reason, we find it proper in this case to impose moral and exemplary da mages on private respondent. However, the damages awarded by the labor arbiter, to our mind, are excessive. In determining the amount of damages recoverable, th e business, social and financial position of the offended parties and the busine ss and financial position of the offender are taken into account. It is our view that herein private respondents had not fully acted in good faith. However, we are cognizant that a cooperative promotes the welfare of its own members. The ec onomic benefits filter to the cooperative members. Either equally or proportiona lly, they are distributed among members in correlation with the resources of the association utilized. Cooperatives help promote economic democracy and support community development. Under these circumstances, we deem it proper to reduce mo ral damages to only P10,000.00 payable by private respondent NEECO I to each ind ividual petitioner. We also deem it sufficient for private respondent NEECO I to pay each individual petitioner P5,000.00 to answer for exemplary damages, based on the provisions of Articles 2229 and 2232 of the Civil Code. (Nueva Ecija I E lectric Cooperative, Inc. vs. NLRC [G.R. No. 116066, 24 January 2000]) Separation Pay Finally, we hold that the contention of Sweet Lines that separation pay and back wages are inconsistent with each other is not well-taken. Separation pay is gra nted where reinstatement is no longer advisable because of strained relations be tween the employee and the employer. Back wages represent compensation that shou ld have been earned but were not collected because of the unjust dismissal. The bases for computing the two are different, the first being usually the length of the employee's service and the second the actual period when he was unlawfully prevented from working. We have ordered the payment of both in proper case as otherwise the employee mig ht be deprived of benefits justly due him. Thus, if an employee who has worked o nly one year is sustained by the labor court after three years from his unjust d ismissal, granting him separation pay only would entitle him to only one month s alary. There is no reason why he should not also be paid three years back wages corresponding to the period when he could not return to his work or could not fi nd employment elsewhere. (Lim vs. NLRC [G.R. No. 79907, 16 March 1989]) There should be no question that where it comes to such valid but not iniquitous causes as failure to comply with work standards, the grant of separation pay to the dismissed employee may be both just and compassionate, particularly if he h as worked for some time with the company. For example, a subordinate who has irr econcilable policy or personal differences with his employer may be validly dism issed for demonstrated loss of confidence, which is an allowable ground. A worki ng mother who has to be frequently absent because she has also to take care of h er child may also be removed because of her poor attendance, this being another authorized ground. It is not the employee's fault if he does not have the necess ary aptitude for his work but on the other hand the company cannot be required t o maintain him just the same at the expense of the efficiency of its operations. He too may be validly replaced. Under these and similar circumstances, however, the award to the employee of separation pay would be sustainable under the soci al justice policy even if the separation is for cause.

But where the cause of the separation is more serious than mere inefficiency, th e generosity of the law must be more discerning. There is no doubt it is compass ionate to give separation pay to a salesman if he is dismissed for his inability to fill his quota but surely he does not deserve such generosity if his offense is misappropriation of the receipts of his sales. This is no longer mere incomp etence but clear dishonesty. A security guard found sleeping on the job is doubt less subject to dismissal but may be allowed separation pay since his conduct, w hile inept, is not depraved. But if he was in fact not really sleeping but sleep ing with a prostitute during his tour of duty and in the company premises, the s ituation is changed completely. This is not only inefficiency but immorality and the grant of separation pay would be entirely unjustified. We hold that henceforth separation pay shall be allowed as a measure of social j ustice only in those instances where the employee is validly dismissed for cause s other than serious misconduct or those reflecting on his moral character. Wher e the reason for the valid dismissal is, for example, habitual intoxication or a n offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give the dismissed employe e separation pay, or financial assistance, or whatever other name it is called, on the ground of social justice. A contrary rule would, as the petitioner correctly argues, have the effect of re warding rather than punishing the erring employee for his offense. And we do not agree that the punishment is his dismissal only and that the separation pay has nothing to do with the wrong he has committed. Of course it has. Indeed, if the employee who steals from the company is granted separation pay even as he is va lidly dismissed, it is not unlikely that he will commit a similar offense in his next employment because he thinks he can expect a little leniency if he is agai n found out. This kind of misplaced compassion is not going to do labor in gener al any good as it will encourage the infiltration of its ranks by those who do n ot deserve the protection and concern of the Constitution. (PLDT vs. NLRC [G.R. No. 80609, 23 August 1988]) Thus, petitioner pointed out that the SEC's order suspending all claims against it pending before any other court, tribunal or body was pursuant to the rehabili tation receivership proceedings. Such order was necessary to enable the rehabili tation receiver to effectively exercise its powers free from any judicial or ext ra-judicial interference that might unduly hinder the rescue of the distressed c ompany. Since receivership proceedings have ceased and petitioner's rehabilitati on receiver and liquidator, Ledesma Saludo & Associates, has been given the impr imatur to proceed with corporate liquidation, the cited order of the Securities and Exchange Commission has been rendered functus officio. Thus, there is no leg al impediment for the execution of the decision of the Labor Arbiter for the pay ment of separation pay. Considering that petitioner's monetary obligation to private respondent is long overdue and that petitioner has signified its willingness to comply with such ob ligation by entering into an agreement with private respondent as to the amount and manner of payment, petitioner can not delay satisfaction of private responde nt's claim. However, due to events subsequent to the filing of this petition, pr ivate respondent must present its claim with the rehabilitation receiver and liq uidator of petitioner, subject to the rules on preference of credits. (Alemar's Sibal & Sons, Inc. vs. NLRC [G.R. No. 114761, 19 January 2000]) It must be emphasized that the right of employee to demand separation pay and ba ckwages is always premised on the fact that the employee was terminated either l egally of illegally. The award of backwages belongs to an illegally dismissed em ployee by direct provision of law and it is awarded on grounds of equity for ear nings which a worker or employee has lost due to illegal dismissal. Separation pay, on the other hand, is awarded as an alternative to illegal dismissed employ ees where reinstatement is no longer possible. (Jo Cinema vs. Abellana [G.R. No. 132837, 28 June 2001]) Financial Assistance With regards to the award of financial assistance to petitioner, We find that th

e same is not justified. Petitioner's willful disobedience of the orders of her employer constitutes serious misconduct. As We held in the case of Del Monte Phi ls., Inc. vs. NLRC, "henceforth, separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral charac ter". Hence, the employer, CLUB, may not be required to give the petitioner sepa ration pay, or financial assistance, or whatever other name it is called, on the ground of social justice. (Aguilar vs. NLRC [G.R. No. 100878, 02 December 1992] ) Neither could we allow the award of P5,000.00 as financial assistance on equitab le consideration as decreed by the labor arbiter. As we have consistently held i n previous cases, such monetary award is justified only in those instances where the employee is validly dismissed for causes other than serious misconduct or t hose adversely affecting his moral character. Thus, if the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral t urpitude, like theft, fraud, falsification or illicit sexual relations with a fe llow worker, separation pay or financial assistance, or by whatever other name i t is called, may not be allowed. (PAL vs. NLRC [G.R. No. 126805, 16 March 2000]) Retirement In the instant case, the complaints of private respondents were still being reso lved on the labor arbiter level when R.A. No. 7641 took effect. However, it was quite clear, and both the Labor Arbiter and the NLRC so held, that private respo ndents had ceased to be employees of petitioner, by reason of voluntary resignat ion, before the statute went into effect. Moreover, it appears that private resp ondents did not qualify for the benefits of R.A. No. 7641 under the terms of thi s law itself. The Court notes that when private respondents filed their complain ts more than one (1) year after they had been allegedly illegally dismissed, res pondent Ausan, Jr. was fifty-seven (57) years old while respondent Alanan was si xty (60) years old. That would make Ausan, Jr. fifty-five (55) years old and Ala nan fifty-eight (58) years old at the time their services with petitioner were e nded by their resignation. Since the record does not show any retirement plan or collective bargaining agreement providing for retirement benefits to petitioner 's employees, the applicable retirement age is the optional retirement age of si xty (60) years according to Article 287, which would qualify the retiree to reti rement benefits equivalent to one-half (1/2) month's salary for every year of se rvice. Unfortunately, at the time private respondents stopped working for petiti oner, they had not yet reached the age of sixty (60) years. We stress, however, that there is nothing to prevent petitioner from voluntarily giving private respondents some financial assistance on an ex gratia basis. (CJ C Trading, Inc. vs. NLRC [G.R. No. 115884, 20 July 1995]) Worker preference Worker preference in case of bankruptcy. - In the event of bankruptcy or liquida tion of an employer's business, his workers shall enjoy first preference as rega rds their unpaid wages and other monetary claims, any provision of law to the co ntrary notwithstanding. Such unpaid wages and monetary claims shall be paid in f ull before the claims of the Government and other creditors may be paid. (Articl e 110 of the Labor Code) (1) Article 110 of the Labor Code, as amended, must be viewed and read in co njunction with the provisions of the Civil Code on concurrence and preferences o f credits; (2) The aforesaid provisions of the Civil Code, including Article 110 of the Labor Code, require judicial proceedings in rem in adjudication of creditors' c laims against the debtor's assets to become operative; (3) Republic Act No. 6715 has the effect of expanding the "worker preference " to cover not only unpaid wages but also other monetary claims of laborers, to which even claims of the Government must be deemed subordinate; and (4) The amendatory provisions of Republic Act 6715, which took effect on 21 March 1989, should only be given prospective application.

(DBP vs. NLRC [G.R. No. 86227, 19 January 1994]) PD No. 902-A is clear that all actions for claims against corporations, partnersh ips or associations under management or receivership pending before any court, t ribunal, board or body shall be suspended accordingly. The law did not make any e xception in favor of labor claims. The justification for the automatic stay of all pending actions for claims is to enable the management committee or the rehabilitation receiver to effectively e xercise its/his powers free from any judicial or extrajudicial interference that might unduly hinder or prevent the rescue of the debtor company. To allow such ac tions to continue would only add to the burden of the management committee or re habilitation receiver, whose time, effort and resources would be wasted in defen ding claims against the corporation instead of being directed towards its restru cturing and rehabilitation. Thus, the labor case would defeat the purpose of the automatic stay. To rule otherwise would open the floodgates to numerous claims and would defeat the rescue efforts of the management committee. (Rubberworld vs . NLRC [305 SCRA 721]) JURISDICTION Regional Director Recovery of wages, simple money claims and other benefits. Upon complaint of any interested party, the Regional Director of the Department of Labor and Employme nt or any of the duly authorized hearing officers of the Department is empowered , through summary proceeding and after due notice, to hear and decide any matter involving the recovery of wages and other monetary claims and benefits, includi ng legal interest, owing to an employee or person employed in domestic or househ old service or househelper under this Code, arising from employer-employee relat ions: Provided, That such complaint does not include a claim for reinstatement: Provided, further, That the aggregate money claims of each employee or househelp er do not exceed five thousand pesos (P5,000). The Regional Director or hearing officer shall decide or resolve the complaint within thirty (30) calendar days f rom the date of the filing of the same. Any sum thus recovered on behalf of any employee or househelper pursuant to this Article shall be held in a special depo sit account by, and shall be paid, on order of the Secretary of Labor and Employ ment or the Regional Director directly to the employee or househelper concerned. Any such sum not paid to the employee or househelper, because he cannot be loca ted after diligent and reasonable effort to locate him within a period of three (3) years, shall be held as a special fund of the Department of Labor and Employ ment to be used exclusively for the amelioration and benefit of workers. Any decision or resolution of the Regional Director or hearing officer pursuant to this provision may be appealed on the same grounds provided in Article 223 of this Code, within five (5) calendar days from receipt of a copy of said decisio n or resolution, to the National Labor Relations Commission which shall resolve the appeal within ten (10) calendar days from the submission of the last pleadin g required or allowed under its rules. The Secretary of Labor and Employment or his duly authorized representative may supervise the payment of unpaid wages and other monetary claims and benefits, in cluding legal interest, found owing to any employee or househelper under this Co de. (Article 129 of the Labor Code) Labor Arbiter Jurisdiction of Labor Arbiters and the Commission. (a) Except as otherwise provi ded under this Code, the Labor Arbiters shall have original and exclusive jurisd iction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricu ltural or non-agricultural: (1) Unfair labor practice cases; (2) Termination disputes; (Subject to Art 261 - VA's jurisdiction over unbre solved grievance from CBA/company personel policies) (3) If accompanied with a claim for reinstatement, those cases that workers

may file involving wages, rate of pay, hours of work and other terms and conditi ons of employment; (4) Claims for actual, moral, exemplary and other forms of damages arising f rom the employer-employee relations; (5) Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and (6) Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims arising from employer-employee relations, i ncluding those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00), whether or not accompanied with a cla im for reinstatement. (b) The Commission shall have exclusive appellate jurisdiction over all cases de cided by Labor Arbiters. (c) Cases arising from the interpretation or implementation of collective bargai ning agreements and those arising from the interpretation or enforcement of comp any personnel policies shall be disposed of by the Labor Arbiter by referring th e same to the grievance machinery and voluntary arbitration as may be provided i n said agreements. (Article 217 of the Labor Code) Money Claims. - Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the origin al and exclusive jurisdiction to hear and decide, within ninety (90) calendar da ys after the filing of the complaint, the claims arising out of an employer-empl oyee 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. The liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be joint and several. This provisi on shall be incorporated in the contract for overseas employment and shall be a condition precedent for its approval. The performance bond to be filed by the r ecruitment/placement agency, as provided by law, shall be answerable for all mon ey claims or damages that may be awarded to the workers. If the recruitment/pla cement agency is a juridical being, the corporate officers and directors and par tners as the case may be, shall themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims and damages. xxx xxx xxx In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the worker shall be entitled to the full re imbursement of his placement fee with interest at twelve percent (12%) per annum , plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less. xxx xxx xxx (Section 10 of Republic Act No. 8042 [Migrant Workers and Overseas Filipinos Act of 1995]) Bureau of Labor Relations The Bureau of Labor Relations and the Labor Relations Divisions in the regional offices of the Department of Labor and Employment shall have original and exclus ive authority to act, at their own initiative or upon request of either or both parties, on all inter-union and intra-union conflicts, and all disputes, grievan ces or problems arising from or affecting labor-management relations in all work places whether agricultural or non-agricultural, except those arising from the i mplementation or interpretation of collective bargaining agreements which shall be the subject of grievance procedure and/or voluntary arbitration. The Bureau shall have fifteen (15) calendar days to act on labor cases before it , subject to extension by agreement of the parties. (Article 226 of the Labor Co de) Clearly, the Secretary of Labor and Employment has no jurisdiction to entertain the appeal of ABBOTT. The appellate jurisdiction of the Secretary of Labor and E mployment is limited only to a review of cancellation proceedings decided by the BLR in the exercise of its exclusive and original jurisdiction. The Secretary o

f Labor and Employment has no jurisdiction over decisions of the BLR rendered in the exercise of its appellate power to review the decision of the Regional Dire ctor in a petition to cancel the union's certificate of registration, said decis ions being final and inappealable. xxx xxx xxx It is clear then that the Secretary of Labor and Employment did not commit grave abuse of discretion in not acting an ABBOTT's appeal. The decisions of the BLR on cases brought before it on appeal from the Regional Director are final and ex ecutory. Hence, the remedy of the aggrieved party is to seasonably avail of the special civil action of certiorari under Rule 65 of the Rules of Court. (Abbott Laboratories vs. Abbott Laboratories Employees Union [G.R. No. 131374, 26 Janua ry 2000.) Voluntary arbitrator The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original a nd exclusive jurisdiction to hear and decide all unresolved grievances arising f rom the interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel po licies referred to in the immediately preceding Article. Accordingly, violations of a Collective Bargaining Agreement, except those which are gross in character , shall no longer be treated as unfair labor practice and shall be resolved as g rievances under the Collective Bargaining Agreement. For purposes of this Articl e, gross violations of a Collective Bargaining Agreement shall mean flagrant and /or malicious refusal to comply with the economic provisions of such agreement. The Commission, its Regional Offices and the Regional Directors of the Departmen t of Labor and Employment shall not entertain disputes, grievances or matters un der the exclusive and original jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators and shall immediately dispose and refer the same to th e grievance machinery or voluntary arbitration provided in the collective bargai ning agreement. (Article 261 of the Labor Code) Appeal From Labor Arbiter to NLRC Article 221 of the Labor Code mandates that technical rules of evidence in court s of law shall not be controlling in any of the proceedings before the Commissio n or the Labor Arbiters. Further, the Commission is required to use every reason able means to ascertain the facts without regard to technicalities or procedure. Technical rules may be relaxed to prevent miscarriage of justice. They must not be allowed to stand in the way of equitably and completely resolving the rights and obligations of the parties. In the case at bar, petitioner had the opportunity to rebut the truth of these a dditional documents. Respondent NLRC, on appeal, correctly accorded weight to th ese documents considering their nature and character. These were daily time reco rds, certifications from the postmaster, etc., whose trustworthiness can be reli ed upon. (Caete vs. NLRC [G.R. No. 114161, 23 November 1995]) Grounds for Appeal (a) If there is prima facie evidence of abuse of discretion on the part of t he Labor Arbiter; (b) If the decision, order or award was secured through fraud or coercion, i ncluding graft and corruption; (c) If made purely on questions of law; and (d) If serious errors in the findings of facts are raised which would cause grave or irreparable damage or injury to the appellant. Grave Abuse of Discretion The phrase "grave abuse of discretion amounting to lack or excess of jurisdictio n" has settled meaning in the jurisprudence of procedure. It means such capricio us and whimsical exercise of judgment by the tribunal exercising judicial or qua

si-judicial power as to amount to lack of power. (Arroyo vs. De Venecia [277 SCR A 268, (1997]) Private respondent, after receiving a copy of the labor arbiter's decision, wrot e the labor arbiter who rendered the decision and expressed dismay over the judg ment. Neither notice of appeal was filed nor cash or surety bond was posted by p rivate respondent. Nevertheless, the labor tribunal took cognizance of the lette r from private respondent and treated said letter as private respondent's appeal . In a certiorari action before this Court, we ruled that the labor tribunal act ed with grave abuse of discretion in treating a mere letter from private respond ent as private respondent's appeal in clear violation of the rules on appeal pre scribed under Section 3(a), Rule VI of the Rules of Procedure of NLRC. (Garcia v s. NLRC [264 SCRA 261, 1996]) The labor arbiter committed grave abuse of discretion when he failed to resolve immediately by written order a motion to dismiss on the ground of lack of jurisd iction and the supplemental motion to dismiss as mandated by Section 15 of Rule V of the New Rules of Procedure of the NLRC. Philippine Airlines Inc. vs. NLRC [ 263 SCRA 638, 1996]) The NLRC gravely abused its discretion by allowing and deciding an appeal withou t an appeal bond having been filed as required under Article 223 of the Labor Co de. (Unicane Workers Union-CLUP vs. NLRC [261 SCRA 573, 1996]) The labor arbiter gravely abused its discretion in disregarding the rule governi ng position papers. In this case, the parties have already filed their position papers and even agreed to consider the case submitted for decision, yet the labo r arbiter still admitted a supplemental position paper and memorandum, and by ta king into consideration, as basis for his decision, the alleged facts adduced th erein and the documents attached thereto. (Maebo vs. NLRC [229 SCRA 240, 1994]) The NLRC gravely abused its discretion in treating the motion to set aside judgm ent and writ of execution as a petition for relief of judgment. In doing so, pub lic respondent had, without sufficient basis, extended the reglementary period f or filing petition for relief from judgment contrary to prevailing rule and case law. (Gesulgon vs. NLRC [219 SCRA 561, 1993]) Appeal Bond Appeal. Decisions, awards, or orders of the Labor Artiber are final and executo ry unless appealed to the Commission by any or both parties within ten (10) cale ndar days from receipt of such decisions, awards, or orders. Such appeal may be entertained only on any of the following grounds: xxx xxx xxx In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputabl e bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. (Article 223 of the Labor Code ) The requirement that the employer post a cash or surety bond to perfect its/his appeal is apparently intended to assure the workers that if they prevail in the case, they will receive the money judgment in their favor upon the dismissal of the employer's appeal. It was intended to discourage employers from using an app eal to delay, or even evade, their obligation to satisfy their employee's just a nd lawful claims. (Viron Garments Mfg., Co. vs. NLRC [G.R. No. 97357, 18 March 1 992]) There is a clear distinction between the filing of an appeal within the reglemen tary period and its perfection. The latter may transpire after the end of the re glementary period for filing the appeal. Under Article 223 of the Labor Code, an appeal to the NLRC from the decisions, a wards or orders of the Labor Arbiter must be made "within ten (10) calendar days from receipt of such decisions, awards or orders." Under Section 3(a) of Rule V I of the New Rules of Procedure of the NLRC, the appeal fees must be paid and th e memorandum of appeal must be filed within the ten-day reglementary period. Neither the Labor Code nor its implementing rules specifically provide for a sit uation where the appellant moves for a reduction of the appeal bond.

Inasmuch as in practice the NLRC allows the reduction of the appeal bond upon mo tion of appellant and on meritorious grounds, it follows that a motion to that e ffect may be filed within the reglementary period for appealing. Such motion may be filed in lieu of a bond which amount is being contested. In the meantime, th e appeal is not deemed perfected and the Labor Arbiter retains jurisdiction over the case until the NLRC has acted on the motion and appellant has filed the bon d as fixed by the NLRC. (Star Angel Handicraft vs. NLRC [G.R. No. 108914, 20 Sep tember 1994]) The precipitate filing of this special civil action for certiorari without first moving for reconsideration of the assailed judgment of NLRC warrants the outrig ht dismissal of this case. As we consistently held in numerous cases, a motion f or reconsideration is indispensable for it affords the NLRC an opportunity to re ctify errors or mistakes it might have committed before resort to the courts can be had. It is settled that certiorari will lie only if there is no appeal or any other p lain, speedy and adequate remedy in the ordinary course of law against acts of p ublic respondent. 5 In the case at bar, the plain and adequate remedy expressly provided by law was a motion for reconsideration of the impugned decision, based on palpable or patent errors, to be made under oath and filed within ten (10) d ays from receipt of the questioned judgment of the NLRC, a procedure which is ju risdictional. Hence, original action of certiorari, as in this case will not pro sper. Further, not having filed a motion for reconsideration within the ten-day reglem entary period, the questioned order, resolution or decision of NLRC, becomes fin al and executory after ten (10) calendar days from receipt thereof. Thus, as reg ards petitioner, the decision of NLRC became final and executory on December 7, 1995. Consequently, the merits of the case can no longer be reviewed to determin e if the respondent NLRC could be faulted of grave abuse of discretion. (Lagera vs. NLRC [G.R. No. 123636, 31 March 2000]) Generally, certiorari as a special civil action will not lie unless a motion for reconsideration is filed before the respondent tribunal to allow it an opportun ity to correct its imputed errors. However, the following have been recognized a s exceptions to the rule: Where 1. The order is a patent nullity, as where the court a quo has no jurisdict ion; 2. The questions raised in the certiorari proceedings have been duly raised and passed upon by the lower court, or are the same as those raised and passed upon in the lower court; 3. There is an urgent necessity for the resolution of the question and any further delay would prejudice the Government or of the petitioner or the subject matter of the action is perishable; 4. Under the circumstances, a motion for reconsideration would be useless; 5. Petitioner is deprived of due process and there is extreme urgency of re lief; 6. In a criminal case, relief from an order of arrest is urgent and the gra nting of such relief by the trial court is improbable; 7. The proceedings in the lower court are a nullity for lack of due process ; 8. The proceedings was ex parte or on which the petitioner had no opportuni ty to object; and 9. The issue raised is one purely of law or where public interest is involv ed. (Abraham vs. NLRC [G.R. No. 143823, 06 March 2001]) From NLRC to Court of Appeals A review of the legislative records on the antecedents of R.A. No. 7902 persuade s us that there may have been an oversight in the course of the deliberations on the said Act or an imprecision in the terminology used therein. In fine, Congre ss did intend to provide for judicial review of the adjudications of the NLRC in labor cases by the Supreme Court, but there was an inaccuracy in the term used

for the intended mode of review. This conclusion which we have reluctantly but p rudently arrived at has been drawn from the considerations extant in the records of Congress, more particularly on Senate Bill No. 1495 and the Reference Commit tee Report on S. No. 1495/H. No. 10452. The Court is, therefore, of the considered opinion that ever since appeals from the NLRC to the Supreme Court were eliminated, the legislative intendment was th at the special civil action of certiorari was and still is the proper vehicle fo r judicial review of decisions of the NLRC. The use of the word "appeal" in rela tion thereto and in the instances we have noted could have been a lapsus plumae because appeals by certiorari and the original action for certiorari are both mo des of judicial review addressed to the appellate courts. The important distinct ion between them, however, and with which the Court is particularly concerned he re is that the special civil action of certiorari is within the concurrent origi nal jurisdiction of this Court and the Court of Appeals; whereas to indulge in t he assumption that appeals by certiorari to the Supreme Court are allowed would not subserve, but would subvert, the intention of Congress as expressed in the s ponsorship speech on Senate Bill No. 1495. Therefore, all references in the amended Section 9 of B.P. No. 129 to supposed a ppeals from the NLRC to the Supreme Court are interpreted and hereby declared to mean and refer to petitions for certiorari under Rule 65. Consequently, all suc h petitions should hence forth be initially filed in the Court of Appeals in str ict observance of the doctrine on the hierarchy of courts as the appropriate for um for the relief desired. (St. Martin Funeral Home vs. NLRC [G.R. No. 130866, 16 September 1998]) Miscellaneous [C]OMPULSORY ARBITRATION has been defined both as "the process of settlement of labor disputes by a government agency which has the authority to investigate and to make an award which is binding on all the parties," and as mode of arbitrati on where the parties are "compelled to accept the resolution of their dispute th rough arbitration by the a third party." (Reformist Union Of R.B. Liner vs. NLRC [G.R. No. 120482, 27 January 1997]) [C]OMPROMISE AGREEMENT, an agreement between two or more persons, who, for preve nting or putting an end to a lawsuit, adjust their difficulties by mutual consen t in the manner which they agree on, and which everyone of them prefers to the h ope of gaining, balanced by the danger of losing. (Reformist Union Of R.B. Liner vs. NLRC [G.R. No. 120482, 27 January 1997]) WAGE DISTORTION means a situation where an increase in prescribed wage rates res ults in the elimination or severe contradiction of intentional quantitative diff erences in wage or salary rates between and among employee groups in an establis hment as to effectively obliterate the distinctions embodied in such wage struct ure based on skills, length of service, or other logical bases of differentiatio n. (Rules Implementing Republic Act 6727) SUBSTANTIAL EVIDENCE means that amount of relevant evidence which a reasonable m ind might accept as adequate to justify a conclusion. (Sebuguero vs. NLRC [G.R. No. 115394, 27 September 1995]) MERCURY DRUG RULE which limited the award of back wages of illegally dismissed w orkers to three (3) years "without deduction or qualification" to obviate the ne ed for further proceedings in the course of execution. (Mercury Drug Co., Inc. v s. Court of Industrial Relations, 56 SCRA 694 [1974]) HOLD OVER PRINCIPLE states that it shall be the duty of both parties to keep the status quo and continue in full force and effect the terms and conditions of th e existing CBA during the 60-day freedom period and/or until a new agreement is reached by the parties. (Meralco vs. Secretary of Labor [G.R. No. 127598, 01 Aug ust 2000]) ?? ?? ??

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