Labrel 104-195

GOVERNING LAW
VOL. 200, AUGUST 8, 1991
399
Oca, Jr. vs. Trajano
G.R. No. 76189. August 8, 1991.*
ROBERTO M. OCA, JR., ET AL.,** and PHILIPPINE TRANSPORT AND GENERAL WORKERS
ORGANIZATION (PTGWOOCA GROUP), petitioners, vs. CRESENCIANO B. TRAJANO, Director of the BLR-
MOLE, ANDRES, L. DINGLASAN, JR., ET AL.*** and PHILIPPINE TRANSPORT AND GENERAL WORKERS
ORGANIZATION (PTGWO-DINGLASAN GROUP) and CARLOS T. RULLAMAS (PTGWO-III), respondents.
Labor Law; Election of Officers; Cancellation of a labor union’s certificate; Due process; Case at Bar;
For the cancellation of a labor union’s certificate of authority under Art. 239 of the Labor Code, the
causes provided therein must be substantially proved, with the requisite notices given and hearings
held.—From the foregoing, it is apparent that respondent Labor Director’s refusal to declare the
validity of the election of officers of either parties is not tainted with abuse of
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* THIRD DIVISION.
** Referring to the other federation officers elected at the convention held at the Army and Navy Club
in Manila.
*** Referring to the other set of federation officers elected at the convention held at the Magsaysay
Hall, SSS Building, Q.C.
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SUPREME COURT REPORTS ANNOTATED
discretion. However, that part of the decision which ordered the parties to “secure new registration
certificates as Philippine Transport and General Workers Organization (PTGWO)-Oca and Philippine
Transport and General Workers Organization (PTGWO)-Dinglasan, within thirty (30) days from receipt
of this decision” is without basis. No provision in the Labor Code sanctions such an act. For the
cancellation of a labor union’s certificate of authority under Article 239 of the Labor Code, the causes
provided therein must be substantially proved, with the requisite notices given and hearings held. In
this case, such elementary elements of due process were not observed.
PETITION for certiorari to review the decision of the Bureau of Labor Relations.
The facts are stated in the opinion of the Court.
D.T. Dagum, Jr. and P.T. De Quiroz for petitioners.
Isidro D. Amoroso for respondent Carlos T. Rullamas.
A.B. Serquina and Lagman for private respondents.
FERNAN, C.J.:
“United we stand, divided we fall,” could very well have been the motto of the Philippine Transport and
General Workers Organization (PTGWO). Founded in the 1950’s by one of the Philippine labor
movement’s leading pillars, the late Roberto Oca, Sr., the labor organization encompasses a good
number of affiliate unions and is one of the founding members of the Trade Union Congress of the
Philippines. But just like good things and good times, good organizations also come to an end. This case
chronicles PTGWO’s story.
During the 11th PTGWO national convention held on April 22, 1979, herein private respondent Andres L.
Dinglasan, Jr. was elected National President while herein petitioner Roberto M. Oca, Jr. was elected
National Executive Vice President. Their terms of office were both for three (3) years.
On February 26, 1982, Dinglasan convened an executive board meeting to thresh out the mechanics of
the national convention of PTGWO for that year. Of the thirty three (33) voting members of the board,
thirty one (31) were present. However, before the body could agree on the date of the convention, a
number of participants questioned the qualifications of some members to sit on the board. To cut the
heated argument
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VOL. 200, AUGUST 8, 1991
401
then ensuing, the meeting was adjourned. Thereafter, Oca and some members of the board left the
conference hall.
Nonetheless, the nineteen (19) members who remained asked Dinglasan to reconvene the meeting,
which he did. This body passed, among others, a resolution to hold the national convention on April 18,
1982. On the other hand, Oca and his group, in a special board meeting on March 19, 1982, decided to
hold their convention on April 4, 1982; thereby prompting Dinglasan and his group in their board
meeting of April 1, 1982 to advance their convention date also to April 4, 1982.
Hence, on April 4, 1982, the groups of Dinglasan and Oca held their respective conventions at different
venues and elected their own set of officers.
On April 15, 1982, PTGWO and Dinglasan filed a petition with the Bureau of Labor Relations to declare
the convention and election of officers held by the Oca group as illegal, null and void.1
Pending resolution of the dispute, PTGWO-III, a group of fifteen (15) local unions headed by Carlos T.
Rullamas and identified with the Dinglasan faction, moved to intervene for the reason that its members
had allegedly already “seceded” from the camp of Dinglasan. Intervenor prayed that it be permitted to
use the name PTGWO or, in the alternative, to allow the three factions to operate independently of each
other.
On May 15, 1986, herein respondent Director Cresenciano B. Trajano rendered a decision, declaring
both conventions of doubtful validity. Finding that the rift between the two (2) factions had become
unbridgeable so that a convention to unify them might not be a workable solution, respondent Director
concluded that there was no other alternative but to recognize the “sad fact that the PTGWO, once a
monolithic labor federation, has to be split into two: PTGWO-Oca and PTGWO-Dinglasan.”2 He went
further to say that “with the division of PTGWO into Dinglasan and Oca wings on 4 April 1982, PTGWO
ceased to exist as PTGWO.”3 On this basis, he disposed thus:4
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1 BLR Case No. 08-82.
2 Annex “A-1”, Petition, p. 16, Rollo.
3 Annex “A-2”, Petition, p. 17, Rollo.
4 Ibid.
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“WHEREFORE, the petition and motion above-referred to should be, as they are hereby dismissed. The
groups of Roberto M. Oca, Jr. and Andres L. Dinglasan, Jr. are hereby ordered to secure new registration
certificates as Philippine Transport and General Workers Organization (PTGWO)-Oca and Philippine
Transport and General Workers Organization (PTGWO)-Dinglasan, respectively, within thirty (30) days
from receipt of this Decision. Intervenor PTGWO-III is allowed to register as a separate labor federation
under a different name, but after compliance with the requirements of registration under the Labor
Code.
“SO DECIDED.”
Feeling aggrieved by the decision, all the parties filed their respective motions for reconsideration. On
July 22, 1986, Director Trajano issued an Order denying the motion for reconsideration filed by Oca, Jr.5
The record does not indicate whether the motion for reconsideration filed by Dinglasan, Jr. and the
intervenor were resolved.
Alleging grave abuse of discretion amounting to lack of jurisdiction on the part of the BLR Director,
Roberto Oca, Jr., et al. and PTGWO-Oca are now before Us by way of this petition for certiorari.
Petitioners and private respondents both assail the conclusion reached by respondent BLR Director that
PTGWO has ceased to exist as PTGWO. Each side, however, insists on the validity of its convention, and
consequently, its right to continue using the name PTGWO and to operate under PTGWO’s Registration
Permit No. 1194-MM-IP with all the privileges and benefits appurtenant thereto.
The crux of the petition hinges on the validity of either group’s election of officers. On the other hand,
the latter depends upon the validity of the respective Executive Board Meetings and National
Conventions called.
Elementary is the rule that the Constitution and By-laws of an organization serve as a contract that binds
its members. In this instance, the pertinent provisions of the Constitution and By-Laws are as follows:6
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5 Annex “B”, Petition, p. 18, Rollo.
6 pp. 290-293, Rollo.
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VOL. 200, AUGUST 8, 1991
403
ARTICLE VII—NATIONAL CONVENTION
Section 24. DATE AND PLACE OF CONVENTION—The National Convention shall hold (sic) every three
years at a time during the first half of April, the inclusive dates, time, place to be fixed by (sic) National
Executive Board which shall be at least sixty (60) days before its holding.
Section 34. SPECIAL CONVENTIONS—On fifteen (15) days notice, special conventions may be called by
the National Executive Board, or upon petition of affiliates whose combined membership represent
majority of the entire membership of the organization as evidenced by the reports of the National
Secretary to the last Convention.
ARTICLE VIII—THE NATIONAL EXECUTIVE BOARD

Section 38. INTERIM AUTHORITY—Between Conventions, supreme authority, subject to the general
policies (sic) down by the Convention, shall be exercised by the National Executive Board.
Section 39. COMPOSITION—The National Executive Board shall be composed of the National President,
1st National Executive Vice President for General Workers, 2nd National Executive Vice President for
Transport, four (4) National Vice Presidents for General Workers, four (4) National Vice Presidents for
Transport, a National Secretary, National Treasurer, ten (10) National Executive Board (sic) for General
Workers, ten (10 National Executive Board (sic) for Transport, and all the appointive officers which shall,
however, have no vote.
Section 40. MEETINGS AND QUORUM—The National Executive Board shall normally meet immediately
after the close of the regular convention and at least once every quarter thereafter, or upon call of the
National President, at his initiative or upon petition of at least one-fourth (1/4) of its members, for a
special meeting. A majority of the members of the National Executive Board shall constitute a quorum
to transact business.
Section 46. APPOINTIVE OFFICERS—The officers to be appointed by the National President subject to
confirmation by the National Executive Board shall be:
a) Two National Assistant Secretaries, one each for Transport and General Workers;
The presence of a quorum during petitioner Oca’s and respondent Dinglasan’s respective Board
meetings is questionable. As
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404
found by the public respondent Director7:
“x x x In both meetings the quorum requirement (majority of the members of the national executive
board (Section 40, Article VIII, PTGWO Constitution)—33, elective and approximately 36, appointive
(Section 39, Article VIII in relation to section 46, Article IX, PTGWO Constitution) has not been met.”
Moreover, petitioner Oca’s Board Meeting and subsequent Convention were tainted with invalidity. The
call for “a special Board meeting to fix the special convention” made by the National Secretary, Johnny
Oca, was anomalous since only the National President of the Union was empowered to call a special
Board Meeting, “at his own initiative or upon petition of at least one fourth (1/4) of the Board
members.”
Petitioner argues that section 40 of the By-Laws provides alternately and successively for:
a. The National Executive Board shall normally meet immediately after the close of the regular
convention;
b. At least once every quarter thereafter;
c. Or upon call of the National President at his initiative;
d. Or upon petition of at least 1/4 of its members for a special meeting.8
Petitioner has apparently misread section 40. An analysis of the cited section shows that what alternates
are the instances when the Board shall meet, not the authority as to who can call for such meeting. It
would seem that petitioner has confused this discretionary power properly lodged in the President with
that of the Secretary’s ministerial duty to “call” or inform the Board members of a forthcoming meeting.
Considering the anomalous “call” for a special meeting made by the National Secretary, matters taken
up during said special meeting, such as the calling of a national convention, are likewise tainted.
Still further, both Conventions were in violation of the sixtyday requirement imposed by section 24 of
the By-Laws. Said section clearly provides that the National Convention’s dates,
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7 Annex “A-1”, supra.
8 pp. 274-275, Rollo.
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VOL. 200, AUGUST 8, 1991
405
time and place shall be fixed by the National Executive Board which shall be at least sixty (60) days
before the holding.9 As succinctly found by the public respondent Labor Director:10
“x x x On this score alone, the validity of the conventions called by petitioner and respondents on 4 April
1982 is subject to question. The group headed by petitioner (Dinglasan) fixed the final date of the
convention barely three (3) days before the holding, while respondents (Oca) did so only sixteen (16)
days prior to their convention.”
The word used in the underscored phrase is “shall.” According to Webster’s Third International
Dictionary of the English Language—the word “shall” means “ought to, must, x x x obligation—used to
express a command or exhortation, used in laws, regulations or directives to express what is
mandatory.”11 Thus, it was imperative for both petitioners and private respondents to strictly follow
the command therein with respect to the period for calling a National Convention.
From the foregoing, it is apparent that respondent Labor Director’s refusal to declare the validity of the
election of officers of either parties is not tainted with abuse of discretion. However, that part of the
decision which ordered the parties to “secure new registration certificates as Philippine Transport and
General Workers Organization (PTGWO)-Oca and Philippine Transport and General Workers
Organization (PTGWO)-Dinglasan, within thirty (30) days from receipt of this decision” is without basis.
No provision in the Labor Code sanctions such an act. For the cancellation of a labor union’s certificate
of authority under Article 239 of the Labor Code, the causes provided therein must be substantially
proved, with the requisite notices given and hearings held. In this case, such elementary elements of
due process were not observed.
In lieu thereof, reliance should have been made on the Union Constitution and By-laws. Sections 38 and
4712 provide:
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9 Italics ours.
10 Annex “A-1”, supra.
11 As cited in Baranda vs. Gustillo, 165 SCRA 757.
12 pp. 292-293, Rollo, Emphasis ours.
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406
Section 38. INTERIM AUTHORITY—Between conventions, supreme authority, subject to the general
policies down (sic) by the Convention, shall be exercised by the National Executive Board.
Section 47. TERMS OF OFFICE—The elective officers shall be installed at the Convention at which they
were elected and shall serve until their successors shall have been elected and qualified and duly
installed at the next National Convention. The tenure of office of appointive officers shall expire with
each national convention and may be removed only under the provisions of Section 41, Article VIII of
this Constitution.
Since we have ruled that the Conventions/Board Meetings of both petitioners and private respondents
are tainted, then it necessarily follows that the incumbent officers constituting the National Executive
Board are entitled to remain in office, until their successors have been elected, qualified and duly
installed at a National Convention.
It appears from the manifestations filed by the parties that pending resolution of this case, the two (2)
factions had been able to negotiate collective bargaining agreements with various companies.
Considering that these CBA’s were entered into in good faith, each faction acting in the honest belief
that it is entitled to operate as the legitimate PTGWO and so as not to disturb the rights, benefits and
privileges accorded by the CBA’s to the parties therein, the CBA’s entered into by PTGWODinglasan and
PTGWO-Oca are recognized as valid and binding until their respective expiry dates.
WHEREFORE, premises considered, the decision of public respondent is hereby MODIFIED. The Bureau
of Labor Relations is directed to supervise the election of officers of the Philippine Transport and
General Workers Organization within sixty (60) days from finality of this decision, without prejudice to
the right of any group of workers or unions to secede and to form their own or to affiliate with another
federation. The collective bargaining agreements entered into by PTGWODinglasan and PTGWO-Oca are
recognized as valid and binding until their respective expiry dates. This decision is immediately
executory. No costs.
SO ORDERED.
Gutierrez, Jr., Feliciano, Bidin and Davide, Jr., JJ., concur.
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VOL. 200, AUGUST 9, 1991
407
Ancheta vs. Court of Appeals
Decision modified.
Note.—No denial of due process to employers where they were given opportunity to present evidence
but failed to appear at the scheduled hearings. (Divine Word High School vs. National Labor Relations
Commission, 143 SCRA 346.)
——o0o——
© Copyright 2017 Central Book Supply, Inc. All rights reserved. Oca, Jr. vs. Trajano, 200 SCRA 399, G.R.
No. 76189 August 8, 1991
RIGHTS AND OBLIGATIONS OF MEMBERS
410
Ferrer vs. National Labor Relations Commission
G.R. No. 100898. July 5, 1993.*
ALEX FERRER, RAFAEL FERRER, HENRY DIAZ, DOMINGO BANCOLITA, GIL DE GUZMAN, and FEDERATION
OF DEMOCRATIC LABOR UNIONS, (FEDLU), petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION
(SECOND DIVISION), HUI KAM CHANG (In his capacity as General Manager of Occidental Foundry
Corporation), OCCIDENTAL FOUNDRY CORPORATION, MACEDONIO S. VELASCO (In his capacity as
representative of the Federation of Free Workers), GENARO CAPITLE, JESUS TUMAGAN, ERNESTO
BARROGA, PEDRO LLENA, GODOFREDO PACHECO, MARCELINO CASTILLO, GEORGE IGNAS, PIO
DOMINGO, and JAIME BAYNADO, respondents.
Labor Law; Labor Unions; Collective Bargaining; A CBA provision for a closed shop is a valid form of
union security and it is not a restriction on the right or freedom of association guaranteed by the
Constitution.—A CBA is the law between the company and the union and compliance therewith is
mandated by the express policy to give
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* THIRD DIVISION.
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VOL. 224, JULY 5, 1993
411
protection to labor. Said policy should be given paramount consideration unless otherwise provided
for by law (Meycauayan College vs. Drilon, 185 SCRA 50 [1990]). A CBA provision for a closed shop is a
valid form of union security and it is not a restriction on the right or freedom of association
guaranteed by the Constitution (Lirag Textile Mills, Inc. vs. Blanco, 109 SCRA 87 [1981]). However, in
the implementation of the provisions of the CBA, both parties thereto should see to it that no right is
violated or impaired.
Same; Same; Same; Due Process; The manner in which the dismissal was enforced left much to be
desired in terms of respect for the right of petitioners to procedural due process.—In the case at bar,
while it is true that the CBA between OFC and the SAMAHAN provided for the dismissal of employees
who have not maintained their membership in the union, the manner in which the dismissal was
enforced left much to be desired in terms of respect for the right of petitioners to procedural due
process.
Same; Same; Same; Same; Same; The SAMAHAN should have observed its own constitution and by-
laws by giving petitioner an opportunity to air their side and explain their moves.—No hearing
(“pandinig”) was ever conducted by the SAMAHAN to look into peti-tioners’ explanation of their
moves to oust the union leadership under Capitle, or their subsequent affiliation with FEDLU. While it
is true that petitioners’ actions might have precipitated divisiveness and, later, showed disloyalty to
the union, still, the SAMAHAN should have observed its own constitution and by-laws by giving
petitioners an opportunity to air their side and explain their moves. If, after an investigation the
petitioners were found to have violated union rules, then and only then should they be subjected to
proper disciplinary measures.
Same; Same; Same; Same; The need for a company investigation is founded on the consistent ruling of
the Court that the twin requirements of notice and hearing which are essential elements of due
process must be met in employment-termination cases.—The need for a company investigation is
founded on the consistent ruling of this Court that the twin requirements of notice and hearing which
are essential elements of due process must be met in employment-termination cases. The employee
concerned must be notified of the employer’s intent to dismiss him and of the reason or reasons for
the proposed dismissal. The hearing affords the employee an opportunity to answer the charge or
charges against him and to defend himself therefrom before dismissal is effected.
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412
Same; Same; Same; Same; Even if no hearing is conducted, the requirement of due process would
have been met where a chance to explain a party’s side of the controversy had been accorded him.—
Observance to the letter of company rules on investigation of an employee about to be dismissed is
not mandatory. It is enough that there is due notice and hearing before a decision to dismiss is made
(Mendoza vs. NLRC, 195 SCRA 606 [1991]). But even if no hearing is conducted, the requirement of
due process would have been met where a chance to explain a party’s side of the controversy had
been accorded him.
Same; Same; Same; Same; The need for the observance of an employee’s right to procedural due
process in termination cases cannot be overemphasized.—If an employee may be considered illegally
dismissed because he was not accorded fair investigation (Hellenic Philip-pine Shipping vs. Siete, 195
SCRA 179 [1991]), the more reason there is to strike down as an inexcusable and disdainful rejection
of due process a situation where there is no investigation at all (See: Collegio del Sto. Niño vs. NLRC,
197 SCRA 611 [1991]; Artex Development Co., Inc. vs. NLRC, 187 SCRA 611 [1990]). The need for the
observance of an employee’s right to procedural due process in termination cases cannot be
overemphasized. After all, one’s employment, profession, trade, or calling is a “property right” and
the wrongful interference therewith gives rise to an actionable wrong (Callanta vs. Carnation
Philippines, Inc., 145 SCRA 268 [1986]). Verily, a man’s right to his labor is property within the
meaning of constitutional guarantees which he cannot be deprived of without due process.
Same; Same; Same; Same; While the law recognizes the right of an employer to dismiss employees in
warranted cases, it frowns upon arbitrariness as when employees are not accorded due process.—
While the law recognizes the right of an employer to dismiss employees in warranted cases, it frowns
upon arbitrariness as when employees are not accorded due process (Tan, Jr. vs. NLRC, 183 SCRA 651
[1990]). Thus, the prerogatives of the OFC to dismiss petitioners should not have been whimsically
done for it unduly exposed itself to a charge of unfair labor practice for dismissing petitioners in line
with the closed shop provision of the CBA, without a proper hearing.
Same; Same; Same; Same; While termination of employment is traditionally considered a

management prerogative, it is not an absolute prerogative subject as it is to limitations founded in
law, the CBA or general principles of fair play and justice.—Neither can the manner of dismissal be
considered within the ambit of managerial prerogatives,
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VOL. 224, JULY 5, 1993
413
for while termination of employment is traditionally considered a management prerogative, it is not

an absolute prerogative subject as it is to limitations founded in law, the CBA, or general principles of
fair play and justice.
Same; Same; Same; The right of a local union to disaffiliate from a federation in the absence of any
provision in the federation’s constitution preventing disaffiliation of a local union is legal.—
Parenthetically, the right of a local union to disaffiliate from a federation in the absence of any
provision in the federation’s constitution preventing disaffiliation of a local union is legal (People’s
Industrial and Commercial Employees and Workers Org. (FFW) vs. People’s Industrial and Commercial
Corp., 112 SCRA 440 [1982]). Such right is consistent with the constitutional guarantee of freedom of
association.
Same; Dismissal; Benefits; A legally dismissed employee may now be paid his back wages, allowances,
and other benefits for the entire period he was out of work subject to the rule enunciated before the
Mercury Drug Rule which is that the employer may, however, deduct any amount which the employee
may have earned during the period of his illegal termination.—A legally dismissed employee may now
be paid his back wages, allowances, and other benefits for the entire period he was out of work
subject to the rule enunciated before the Mercury Drug Rule, which is that the employer may,
however, deduct any amount which the employee may have earned during the period of his illegal
termination (East Asiatic Company, Ltd. vs. Court of Industrial Relations, 40 SCRA 521 [1971]).
Computation of full back wages and presentation of proof as to income earned elsewhere by the
illegally dismissed employee after his termination and before actual reinstatement should be
ventilated in the execution proceedings before the Labor Arbiter concordant with Section 3, Rule 8 of
the 1990 new Rules of Procedure of the National Labor Relations Commission.
PETITION for certiorari of the decision of the National Labor Relations Commission.
Generosa P. Jacinto and Raymundo D. Mallilin for private respondents.
MELO, J.:
The petition for certiorari before us seeks to annul and set

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414
aside: (a) the decision dated June 20, 1991 of the Second Division of the National Labor Relations
Commission (NLRC) (Penned by Commissioner Rustico L. Diokno and concurred in by Presiding
Commissioner Edna Bonto-Perez and Commissioner Domingo H. Zapanta) which affirmed in toto the
decision of April 5, 1990 of Labor Arbiter Eduardo J. Carpio dismissing the complaint for illegal dismissal
and unfair labor practice on the ground that both the company and the union merely complied with the
collective bargaining agreement provision sanctioning the termination of any employee who fails to
retain membership in good standing with the union; and (b) the NLRC resolution denying the motion for
the reconsideration of said decision (NLRC NCR Case No. 00-10-04855-89).
Petitioners were regular and permanent employees of the Occidental Foundry Corporation (OFC) in
Malanday, Valenzuela, Metro Manila which was under the management of Hui Kam Chang. As piece
workers, petitioners’ earnings ranged from P110 to P140 a day. They had been in the employ of OFC for
about ten years at the time of their dismissal in 1989 (p. 38, Rollo).
On January 5, 1989, the Samahang Manggagawa ng Occiden-tal Foundry Corporation-FFW (SAMAHAN)

and the OFC entered into a collective bargaining agreement (CBA) which would be effective for the
three-year period between October 1, 1988 and September 30, 1991 (Memorandum for OFC and Hui
Kam Chang, p. 6, Rollo; p. 551). Article II thereof provides for a union security clause thus:
Section 1—The company agrees that all permanent and regular factory workers in the company who are
members in good standing of the union or who thereafter may become members, shall as a condition of
continued employment, maintain their membership in the union in good standing for the duration of
the agreement.
xxx xxx xxx
Section 3—The parties agree that failure to retain membership in good standing with the UNION shall be
ground for the operation of paragraph 1 hereof and the dismissal by the company of the aforesaid
employee upon written request by the union. The aforesaid request shall be accompanied by a verified
carbon original of the Board of (sic) Resolution by the UNION signed by at least a majority of its officers/
directors. (p. 562, Rollo.)
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VOL. 224, JULY 5, 1993
415

On May 6, 1989, petitioner Alex Ferrer and the SAMAHAN, filed in the Department of Labor and
Employment (DOLE), a complaint for the expulsion from SAMAHAN of the following officers: Genaro
Capitle (president), Jesus Tumagan (vice-presi-dent), Godofredo Pacheco (auditor), and Marcelino
Pacheco (board member) (Case No. NCR-00-M-89-11-01). The complaint was founded on said officers’
alleged inattentiveness to the economic demands of the workers. However, on September 4, 1989,
petitioners Diaz and Alex Ferrer withdrew the petition (p. 590, Rollo).
On September 10, 1989, petitioners conducted a special elec-tion of officers of the SAMAHAN (pp. 205
& 583, Rollo). Said election was, however, later questioned by the FFW. Nonetheless, the elected set of
officers tried to dissuade the OFC from remitting union dues to the officers led by Capitle who were
allied with the FFW. Later, however, Romulo Erlano, one of the officers elected at the special election,
manifested to the DOLE that he was no longer objecting to the remittance of union dues to the officers
led by Capitle. Petitioners’ move to stage a strike based on economic demands was also later disowned
by members of the SAMAHAN.
The intraunion squabble came to a head when, on September 11, 1989, a resolution expelling
petitioners from the SAMAHAN was issued by the aforesaid union officials headed by Capitle, together
with board members George Ignas, Pio Domingo, and Jaime Baynado (pp. 286 & 599, Rollo). The
following day, Capitle sent OFC the following letter:
12 September 1989
Mr. Hui Kam Chang
General Manager
Malanday, Valenzuela
Metro Manila
Dear Mr. Chang:
In compliance with Article II, Sec. 3 of the Union Security Clause as enunciated in our Collective
Bargaining Agreement, I would like you to dismiss the following employees on the ground of failure to
retain
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416
membership in good standing:
1. Alex Ferrer
2. Gil de Guzman
3. Henry Diaz
4. Domingo Bancolita
5. Rafael Ferrer, Jr.
Attached herewith is the verified carbon original of the Board Resolution of the union signed by the
majority of its officers/directors.
Thank you very much.
Very truly yours,
(Sgd.)
GENARO CAPITLE
President
(p. 66, Rollo.)
Although petitioners received this letter weeks after its date, it appears that on that same date, they
had learned about their dismissal from employment as shown by the letter also dated September 13,
1989 which they sent the Federation of Democratic Labor Unions (FEDLU). They volunteered therein to
be admitted as members of the FEDLU and requested that they be represented (“katawanin”) by said
federation before the DOLE in the complaint which they intended to file against the union (SAMAHAN),
the FFW and the company for illegal dismissal, reinstatement, and other benefits in accordance with law
(p. 74, Rollo).
Thereafter, on various dates, petitioners sent individual letters to Hui Kam Chang professing innocence
of the charges levelled against them by the SAMAHAN and the FFW and pleading that they be reinstated
(pp. 69-73, Rollo). Their letters appear to have elicited no response.
Thus, contending that their dismissal was without cause and in utter disregard of their right to due
process of law, petitioners, through the FEDLU, filed a complaint for illegal dismissal and unfair labor
practice before the NLRC against Hui Kam Chang, OFC, Macedonio S. Velasco (as representative of the
FFW), the FFW, and the SAMAHAN officers headed by Capitle (p. 75,
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VOL. 224, JULY 5, 1993
417
Rollo).
In due course, after the case was ventilated through position papers and other documents, the labor
arbiter rendered a decision dismissing petitioners’ complaint (pp. 79-89, Rollo). He found that in
dismissing petitioners, OFC was “merely complying with the mandatory provisions of the CBA—the law
between it and the union.” He added:
To register compliance with the said covenant, all that is necessary is a written request of the union
requesting dismissal of the employees who have failed to retain membership in good standing with the
union. The matter or question, therefore, of determining why and how did complainants fail to retain
membership in good standing is not for the company to inquire via formal investigation. By having the
request of the union, a legal presumption that the request was born out of a formal inquiry by the union
that subject employees failed to retain membership in good standing, failed to exist. This means
generally that where a valid closed shop or similar agreement is in force with respect to a particular
bargaining unit as in the case a quo, the employer shall refuse to employ any person unless he is a
member of the majority union and the employer shall dismiss employees who fail to retain their
membership in the majority union. This must be deemed a just cause recognized by law and
jurisprudence. The effect is discrimination to encourage membership in other unions. (pp. 86-87, Rollo.)
Hence, the labor arbiter concluded, the dismissal of petitioners was an exercise of legitimate
management prerogative which cannot be considered as an unfair labor practice. On whether the
SAMAHAN and the FFW could be held liable for illegal dismissal and unfair labor practice, the arbiter
opined that since there was no employer-employee relationship between petitioners and respondent
unions, the complaint against the latter has no factual and legal bases, because petitioners “should not
have confused expulsion from membership in the union as one and the same incident to their
subsequent employment termination.”
Consequently, petitioners appealed to the NLRC on the grounds that there was prima facie evidence of
abuse of discretion on the part of the labor arbiter and that he committed serious errors in his findings
of facts.
On June 20, 1991, the NLRC rendered the herein questioned decision affirming in toto the decision of
the labor arbiter. Petitioners’ motion for the reconsideration of the NLRC decision
418
418
having been denied, they resorted to the instant petition for certiorari which presents the issue of
whether or not respondent Commission gravely abused its discretion in affirming the decision of the
labor arbiter which is allegedly in defiance of the elementary principles of procedural due process as the
petitioners were summarily dismissed from employment without an investigation having been
conducted by the OFC on the veracity of the allegation of the SAMAHAN-FFW that they violated the
CBA.
A CBA is the law between the company and the union and compliance therewith is mandated by the
express policy to give protection to labor. Said policy should be given paramount consideration unless
otherwise provided for by law (Meycauayan College vs. Drilon, 185 SCRA 50 [1990]). A CBA provision for
a closed shop is a valid form of union security and it is not a restriction on the right or freedom of
association guaranteed by the Constitution (Lirag Textile Mills, Inc. vs. Blanco, 109 SCRA 87 [1981]).
However, in the implementation of the provisions of the CBA, both parties thereto should see to it that
no right is violated or impaired. In the case at bar, while it is true that the CBA between OFC and the
SAMAHAN provided for the dismissal of employees who have not maintained their membership in the
union, the manner in which the dismissal was enforced left much to be desired in terms of respect for
the right of petitioners to procedural due process.
In the first place, the union has a specific provision for the permanent or temporary “expulsion” of its
erring members in its constitution and by-laws (“saligang batas at alituntunin”). Under the heading
membership and removal (“pag-aanib at pagtitiwalag”), it states:
SEC. 4. Ang sinumang kasapi ay maaring itwalag (sic) ng Samahan pangsamantala o tuluyan sa
pamamgitan (sic) ng tatlo’t ikaapat (3/4) na bahagi ng dami ng bilang ng Pamunuang Tagapagpaganap.
Pagkaraan lamang sa pandinig sa kanyang kaso. Batay sa sumusunod:
(a) Sinumang gumawa ng mga bagay bagay na labag at lihis sa patakaran ng Samahan.
(b) Sinumang gumawa ng mga bagay na maaring ikabuwag ng Samahan.
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VOL. 224, JULY 5, 1993
419
(c) Hindi paghuhulog ng butaw sa loob ng tatlong buwan na walang sakit o Doctor’s Certificate.
(d) Hindi pagbibigay ng abuloy na itinatadhana ng Samahan.
(e) Sinumang kasapi na natanggal sa kapisanan at gustong sumapi uli ay magpapanibago ng bilang, mula
sa taon ng kanyang pagsapi uli sa Samahan. (Italics supplied; Ibid., p. 177).
No hearing (“pandinig”) was ever conducted by the SAMAHAN to look into petitioners’ explanation of
their moves to oust the union leadership under Capitle, or their subsequent affiliation with FEDLU.
While it is true that petitioners’ actions might have precipitated divisiveness and, later, showed
disloyalty to the union, still, the SAMAHAN should have observed its own constitution and by laws by
giving petitioners an opportunity to air their side and explain their moves. If, after an investigation the
Here lies the distinction between the facts of this case and that of Cariño vs. NLRC (185 SCRA 177
[1990]) upon which the Solicitor General heavily relies in supporting the stand of petitioners. In Cariño,
the erring union official was given the chance to answer the complaints against him before an
investigating committee created for that purpose. On the other hand, herein petitioners were not given
even one opportunity to explain their side in the controversy. This procedural lapse should not have
been overlooked considering the union security provision of t he CBA.
What aggravated the situation in this case is the fact that OFC itself took for granted that the SAMAHAN
had actually conducted an inquiry and considered the CBA provision for the closed shop as self-
operating that, upon receipt of a notice that some members of the SAMAHAN had failed to maintain
their membership in good standing in accordance with the CBA, it summarily dismissed petitioners. To
make matters worse, the labor arbiter and the NLRC shared the same view in holding that “(t)he matter
or question, therefore, of determining why and how did complainants fail to retain membership in good
standing is not for the company to inquire via formal investigation” (pp. 87 & 135, Rollo). In this regard,
the following words of my learned brother, Mr. Justice Feliciano, in the Resolution in Cariño are apt:
420
420
4. Turning now to the involvement of the Company in the dismissal of petitioner Cariño, we note that
the Company upon being formally advised in writing of the expulsion of petitioner Cariño from the
Union, in turn simply issued a termination letter to Cariño, the termination being made effective the
very next day. We believe that the Company should have given petitioner Cariño an opportunity to
explain his side of the controversy with the Union. Notwithstanding the Union’s Security Clause 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 in impeaching and expelling petitioner Cariño . . .
xxx
xxx
xxx
5. We conclude that the Company had failed to accord to petitioner Cariño the latter’s right to
procedural due process. The right of an employee to be informed 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 from 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. (pp. 186 & 189.)
The need for a company investigation is founded on the consistent ruling of this Court that the twin
requirements of notice and hearing which are essential elements of due process must be met in
employment-termination cases. The employee concerned must be notified of the employer’s intent to
dismiss him and of the reason or reasons for the proposed dismissal. The hearing affords the employee
an opportunity to answer the charge or charges against him and to defend himself therefrom before
dismissal is effected (Kwikway Engineering Works vs. NLRC, 195 SCRA 526 [1991]; Salaw vs. NLRC, 202
SCRA 7 [1991]). Observance to the letter of company rules on investigation of an employee about to be
dismissed is not mandatory. It is enough that there is due notice and hearing before a decision to
dismiss is made (Mendoza vs. NLRC, 195 SCRA 606 [1991]). But even if no hearing is conducted, the
requirement of due process would have been met where a chance to explain a party’s side of the
controversy had been accorded him (Philippine Airlines, Inc.
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VOL. 224, JULY 5, 1993
421
vs. NLRC, 198 SCRA 748 [1991]).
If an employee may be considered illegally dismissed because he was not accorded fair investigation
(Hellenic Philippine Shipping vs. Siete, 195 SCRA 179 [1991]), the more reason there is to strike down as
an inexcusable and disdainful rejection of due process a situation where there is no investigation at all
(See: Collegio del Sto. Nino vs. NLRC, 197 SCRA 611 [1991]; Artex Development Co., Inc. vs. NLRC, 187
SCRA 611 [1990]). The need for the observance of an employee’s right to procedural due process in
termination cases cannot be overemphasized. After all, one’s employment, profession, trade, or calling
is a “property right” and the wrongful interference therewith gives rise to an actionable wrong (Callanta
vs. Carnation Philippines, Inc., 145 SCRA 268 [1986]). Verily, a man’s right to his labor is property within
the meaning of constitutional guarantees which he cannot be deprived of without due process
(Batangas Laguna Tayabas Bus Co. vs. Court of Appeals, 71 SCRA 470 [1976]).
[1990]). Thus, the prerogatives of the OFC to dismiss petitioners should not have been whimsically done
for it unduly exposed itself to a charge of unfair labor practice for dismissing petitioners in line with the
closed shop provision of the CBA, without a proper hearing (Tropical Hut Employees’ Union-CGW vs.
Tropical Hut Food Market, Inc., 181 SCRA 173 [1990]; citing Binalbagan-Isabela Sugar Co., Inc. (BISCOM)
vs. Philippine Association of Free Labor Unions (PAFLU), 8 SCRA 700 [1983]). Neither can the manner of
dismissal be considered within the ambit of managerial prerogatives, for while termination of
employment is traditionally considered a management prerogative, it is not an absolute prerogative
subject as it is to limitations founded in law, the CBA, or general principles of fair play and justice
(University of Sto. Tomas vs. NLRC, 190 SCRA 758 [1990]).
Under rule XIV, Sections 2, 5, and 6 of the rules implementing Batas Pambansa Blg. 130, the OFC and the
SAMAHAN should solidarily indemnify petitioners for the violation of their right to procedural due
process (Great Pacific Life Assurance Corporation vs. NLRC, 187 SCRA 694 [1990], citing Wenphil vs.
NLRC,
422
422
170 SCRA 69 [1989], Cariño vs. NLRC, supra). However, such penalty may be imposed only where the
termination of employment is justified and not when the dismissal is illegal as in this case where the
damages are in the form of back wages.
As earlier discussed, petitioners’ alleged act of sowing disunity among the members of the SAMAHAN
could have been ventilated and threshed out through a grievance procedure within the union itself. But
resort to such procedure was not pursued. What actually happened in this case was that some
members, including petitioners, tried to unseat the SAMAHAN leadership headed by Capitle due to the
latter’s alleged inattention to petitioners’ demands for the implementation of the P25-wage increase
which took effect on July 1, 1989. The intraunion controversy was such that petitioners even requested
the FFW to intervene to facilitate the enforcement of the said wage increase (Petition, p. 54; p. 55,
Rollo).
Petitioners sought the help of the FEDLU only after they had learned of the termination of their
employment upon the recommendation of Capitle. Their alleged application with federations other than
the FFW (Labor Arbiter’s Decision, pp. 4-5; pp. 82-83, Rollo) can hardly be considered as disloyalty to the
SAMAHAN, nor may the filing of such applications denote that petitioners failed to maintain in good
standing their membership in the SAMAHAN. The SAMAHAN is a different entity from FFW, the
federation to which it belonged. Neither may it be inferred that petitioners sought disaffiliation from the
FFW for petitioners had not formed a union distinct from that of the SAMAHAN. Parenthetically, the
right of a local union to disaffiliate from a federation in the absence of any provision in the federation’s
constitution preventing disaffiliation of a local union is legal (People’s Industrial and Commercial
Employees and Workers Org. (FFW) vs. People’s Industrial and Commercial Corp., 112 SCRA 440 [1982]).
Such right is consistent with the constitutional guarantee of freedom of association. (Tropical Hut Em-
ployees’ Union-CGW vs. Tropical Hut Food Market, Inc., 181 SCRA 173 [1990]).
Hence, while petitioners’ act of holding a special election to oust Capitle, et al. may be considered as an
act of sowing disunity among the SAMAHAN members, and, perhaps, disloyalty to the union officials,
which could have been dealt with by the union as
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VOL. 224, JULY 5, 1993
423
a disciplinary matter, it certainly cannot be considered as constituting disloyalty to the union. Faced with
a SAMAHAN leadership which they had tried to remove as officials, it was but a natural act of self-
preservation that petitioners fled to the arms of the FEDLU after the union and the OFC had tried to
terminate their employment. Petitioners should not be made accountable for such an act.
With the passage of Republic Act No. 6715 which took effect on March 21, 1989, Article 279 of the Labor
Code was amended to read as follows:
Security of Tenure.—In cases of regular employment, the employer shall not terminate the services of
an employee except for a just cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the time of his
actual reinstatement.
and as implemented by Section 3, Rule 8 of the 1990 New Rules of Procedure of the National Labor
Relations Commission, it would seem that the Mercury Drug Rule (Mercury Drug Co., Inc. vs. Court of
Industrial Relations, 56 SCRA 694 [1974]) which limited the award of back wages of illegally dismissed
workers to three (3) years “without deduction or qualification” to obviate the need for further
proceedings in the course of execution, is no longer applicable.
A legally dismissed employee may now be paid his back wages, allowances, and other benefits for the
entire period he was out of work subject to the rule enunciated before the Mercury Drug Rule, which is
that the employer may, however, deduct any amount which the employee may have earned during the
period of his illegal termination (East Asiatic Company, Ltd. vs. Court of Industrial Relations, 40 SCRA 521
[1971]). Computation of full back wages and presentation of proof as to income earned elsewhere by
the illegally dismissed employee after his termination and before actual reinstatement should be
424
424
Inasmuch as we have ascertained in the text of this discourse that the OFC whimsically dismissed
petitioners without proper hearing and has thus opened OFC to a charge of unfair labor practice, it
ineluctably follows that petitioners can receive their back wages computed from the moment their
compensation was withheld after their dismissal in 1989 up to the date of actual reinstatement. In such
a scenario, the award of back wages can extend beyond the 3-year period fixed by the Mercury Drug
Rule depending, of course, on when the employer will reinstate the employees.
It may appear that Article 279 of the Labor Code, as amended by Republic Act No. 6715, has made the
employer bear a heavier burden than that pronounced in the Mercury Drug Rule, but perhaps Republic
Act No. 6715 was enacted precisely for the employer to realize that the employee must be immediately
restored to his former position, and to impress the idea that immediate reinstatement is tantamount to
a cost-saving measure in terms of overhead expense plus incremental productivity to the company
which lies in the hands of the employer.
WHEREFORE, the decision appealed from is hereby SET ASIDE and private respondents are hereby
ordered to reinstate petitioners to their former or equivalent positions without loss of seniority rights,
and with full back wages, inclusive of allowances and other benefits or their monetary equivalent,
pursuant to Article 279 of the Labor Code, as amended by Republic Act No. 6715.
SO ORDERED.
Feliciano (Chairman), Bidin, Davide, Jr. and Romero, JJ., concur.
Decision set aside.
Note.—The determination of the existence and sufficiency of just cause must be exercised with fairness
and in good faith and after observing due process (Gubac vs. National Labor Relations Commission, 187
SCRA 412).
——o0o——
425
© Copyright 2017 Central Book Supply, Inc. All rights reserved. Ferrer vs. National Labor Relations
Commission, 224 SCRA 410, G.R. No. 100898 July 5, 1993
No. L-24864. April 30, 1985.*
FORTUNATO HALILI, doing business under the name and style HALILI TRANSIT (substituted by EMILIA
DE VERA DE HALILI), petitioner, vs. COURT OF INDUSTRIAL RELATIONS and HALILI BUS DRIVERS and
CONDUCTORS UNION (PTGWO), respondents.
No. L-27773. April 30, 1985.*
EMILIA DE VERA VDA. DE HALILI, petitioner, vs. COURT OF INDUSTRIAL RELATIONS and HALILI BUS
DRIVERS AND CONDUCTORS UNION (PTGWO), respondents.
No. L-38655. April 30, 1985.*
FELICIDAD M. TOLENTINO, et al., petitioners, vs. COURT OF INDUSTRIAL RELATIONS, et al., respondents.
No. L-30110. April 30, 1985.*
EMILIA DE VERA VDA. DE HALILI, petitioner, vs.
_______________
* EN BANC.
113
VOL. 136, APRIL 30, 1985
113
Halili vs. Court of Industrial Relations
HALILI BUS DRIVERS AND CONDUCTORS UNION-PTGWO and COURT OF INDUSTRIAL RELATIONS,
respondents.
Administrative Law; Labor Law, Requisites for validity of administrative proceedings.—This Court, as
earlier stated, nullified said orders dated September 23, 1982 and February 9, 1983 of Labor Arbiter
Valenzuela as violative of the due process clause. It is a settled rule that in administrative
proceedings, or cases coming before administrative tribunals exercising quasi-judicial powers, due
process requires not only notice and hearing, but also the consideration by the administrative tribunal
of the evidence presented; the existence of evidence to support the decision; its substantiality; a
decision based thereon or at least contained in the record and disclosed to the parties; such decision
by the administrative tribunal resting on its own independent consideration of the law and facts of
the controversy; and such decision acquainting the parties with the various issues involved and the
reasons therefor (Ang Tibay vs. Court, 69 Phil. 635, cited on p. 84, Philippine Constitution Law,
Fernando, 1984 ed.).
Attorneys; Labor Law; Act of counsel of filing a motion in the Supreme Court for authority to sell
property in question which he acknowledged that he has no authority, a violation.—Significantly,
Atty. Pineda’s act of filing a motion with this Court on December 1, 1982 praying for authority to sell
was by itself an admission on his part that he did not possess the authority to sell the property and
that this Court was the proper body which had the power to grant such authority.
Same; Same; Counsel knew the Labor Arbiter has no authority to authorize sale of property at bar
Only the final orders or decisions of a Labor Arbiter or NLRC may be implemented.—He could not and
did not even wait for such valid authority but instead previously obtained the same from the labor
arbiter whom he knew was not empowered to so authorize. Under Article 224 (a) of the Labor Code,
only final decisions or awards of the NLRC, the Labor Arbiter, or compulsory or voluntary arbitrators
may be implemented or may be the subject of implementing orders by aforenamed body or officers.
Same; Same; A 30% to 45% attorney’s lien on award to union members is exorbitant.—The 45%
attorney’s lien on the award of those union members who were no longer working and the 30% lien
114
114
on the benefits of those who were still working as provided for in the alleged retainer’s contract are
very exorbitant and unconscionable in view of Section 11, Rule VIII of Book III which explicitly
provides: “Sec. 11. Attorney’s fees.—Attorney’s fees on any judicial or administrative proceedings for
the recovery of wages shall not exceed 10% of the amount awarded. The fees may be deducted from
the total amount due the winning party.”
Same; Same; Donation of a portion of attorney’s fees to the Union is improper.—The amount of
P101,856,00 which Atty. Pineda donated to the Union and which actually corresponds to 5% of the
total 35% attorney’s fees taken from the proceeds (p. 263, L-24864, rec.) appears improper since it
amounts to a rebate or commission. This amount was subsequently treated as union miscellaneous
operating expenses without the consent of the general membership.
Same; Same; The pleadings show a deceitful pattern on the part of Atty. Pineda who alternatively
signed on behalf of “J.C. Espinas” and Associates” or “B.C. Pineda” as lone counsel.—A deeper scrutiny
of the pleadings in L-24864 notably indicates a fraudulent or deceitful pattern in the actuations of
Atty. Pineda. Thus, in his motion for execution of judgment filed on September 18, 1965 in this, he
signed for and in behalf of “J.C. Espinas & Associates” (p. 323, rec.). In his manifestation dated
December 10, 1968, he signed as “B.C. Pineda,” lone counsel for petitioner (p. 327, rec.); and yet, he
carried the address of Espinas & Associates at 716 G. Puyat Building, Escolta.
Same; Same; Sale; The Court’s resolution which made null and void the orders for authority to sell
issued by Arbiter Valenzuela makes the sale of the Union property illegal.—In view of Our resolution
of October 18, 1983, which set aside as null and void the questioned orders dated September 23, 1982
and February 9, 1983 issued by Arbiter Raymundo Valenzuela, the sale of the Union property and the
distribution of the proceeds therefrom had been effected without authority and, therefore, illegal.
Consequently, Atty. Pineda and Arbiter Valenzuela become liable for their unauthorized acts.
Contempt; Labor Law; Contempt, defined.—Contempt of court is a defiance of the authority, justice or
dignity of the court; such conduct as tends to bring the authority and administration of the law into
disrespect or to interfere with or prejudice parties litigant or their witnesses during litigation (12 Am.
jur 389, cited in 14 SCRA 813).
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115
Same; Same; Contempt powers inherent in all courts.—This Court has thus repeatedly declared that
the power to punish for contempt is inherent in all courts and is essential to the preservation of order
in judicial proceedings and to the enforcement of judgments, orders, and mandates of the court, and
consequently, to the due administration of justice (Slade Perkins vs. Director of Prisons, 58 Phil. 271;
In re Kelly, 35 Phil. 944; Commissioner of Immigration vs. Cloribel, 20 SCRA 1241; Montalban vs.
Canonoy, 38 SCRA 1).
Same; Same; Criminal contempt and civil contempt, defined and distinguished.—In the matter of
exercising the power to punish contempts, this Court enunciated in the Slade Perkins case that “the
exercise of the power to punish contempts has a twofold aspect, namely (1) the proper punishment of
the guilty party for his disrespect to the court or its order; and (2) to compel his performance of some
act or duty required of him by the court which he refuses to perform. Due to this twofold aspect of
the exercise of the power to punish them, contempts are classified as civil or criminal. A civil
contempt is the failure to do something ordered to be done by a court or a judge for the benefit of the
opposing party therein; and a criminal contempt, is conduct directed against the authority and dignity
of a court or of a judge, as in unlawfully assailing or discrediting the authority or dignity of a court or
of a judge, or in doing a duly forbidden act. Where the punishment imposed, whether against a party
to a suit or a stranger, is wholly or primarily to protect or vindicate the dignity and power of the court,
either by fine payable to the government or by imprisonment, or both, it is deemed a judgment in a
criminal case. Where the punishment is by fine directed to be paid to a party in the nature of damages
for the wrong inflicted, or by imprisonment as a coercive measure to enforce the performance of
some act for the benefit of the party or in aid of the final judgment or decree rendered in his behalf,
the contempt judgment will, if made before final decree, be treated as in the nature of an
interlocutory order, or, if made after final decree, as remedial in nature, and may be reviewed only on
appeal from the final decree, or in such other mode as is appropriate to the review of judgments in
civil cases. x x x x x x x x x The question of whether the contempt committed is civil or criminal, does
not affect the jurisdiction or the power of a court to punish the same.
Attorneys; Court may suspend or debar a lawyer whose acts show his unfitness to continue as a
member of the Bar.—The Court may suspend or disbar a lawyer for any conduct on his part showing
his unfitness for the confidence and trust which characterize the at-
116
116
torney and client relations, and the practice of law before the courts, or showing such a lack of
personal honesty or of good moral character as to render him unworthy of public confidence (7 C.J.S.
733).
Same; Statutory grounds for disbarment are not a limitation to the court’s power in this respect.—It is
a well-settled rule that the statutory grounds for disbarment or suspension are not to be taken as a
limitation on the general power of the courts in this respect. The inherent powers of the court over its
officers cannot be restricted (In re Pelaez, 44 Phil. 567).
Same; Criminal Law; An attorney may be criminally liable for breach of professional duty.—The
aforequoted criminal sanction for unprofessional conduct of an attorney is without prejudice to
proper administrative action, such as disbarment or suspension of attorneys (p. 503, Criminal Law
Annotated, Padilla, 1972 Ed.).
Same; Same; Labor Law; A labor arbiter who acts beyond his authority may be prosecuted before the
Tanodbayan and held liable for disbarment.—Labor Arbiter Raymundo Valenzuela should be made to
answer for having acted without or beyond his authority in proper administrative charges. He could
also be prosecuted before the Tanodbayan under the provisions of the Anti-Graft Law. Independently
of his liabilities as a government officer, he could be the subject of disbarment proceedings under
Section 27, Rule 138 of the Revised Rules of Court.
Same; Same; A private attorney may be held liable criminally under the Anti-Graft Act for knowingly
inducing a public official to commit an offense.—Atty. Benjamin Pineda could also be held liable under
Section 4(b) of R.A. No. 3019 (Anti-Graft and Corrupt Practices Act) which makes it unlawful for any
person knowingly to induce or cause any public official to commit any of the offenses defined in
Section 3 of said act. Section 3 enumerates the corrupt practices which public officers may be
prosecuted for. Atty. Pineda knowingly induced or caused Labor Arbiter Valenzuela to issue the
questioned orders without or beyond the latter’s authority and to which orders the former was not
entitled, considering that he was not the sole and proper representative.
Contempt; Manila Banking Corporation could no longer be held in contempt after it obeyed the
Court’s orders.—The Manila Banking Corporation (Cubao Branch) per manifestation and motion dated
October 28, 1983 and reiterated on November 10, 1983, had transmitted
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117
to the NLRC the remaining balance of P417,380.64 and P2,022.70 for the account of the Union and
Atty. Pineda, respectively. This turnover of the aforecited amounts is a sufficient compliance with Our
restraining order and resolution of September 13, 1983 and hence, the Manila Banking Corporation
can no longer be liable for contempt of court.
Contempt; Labor Law; The Union is dropped from the contempt charge in view of its explanation.—In
the same motion, Mr. Capuno clarifies that with regard to attorneys’ fees, Atty. Pineda made the
Union officers believe that he would be the one to pay the fees of Attys. Espinas and Lopez for which
reason, the 35% increased fees was approved by the Union’s board in good faith. The Union likewise
confirms that Atty. Pineda came into the picture only when he was assigned by Atty. Espinas in 1965
to execute the CIR decision which, thru Atty. Espinas’ handling, was upheld by this Court in L-24864 in
1968. The Union officers were aware that Atty. Espinas was the principal counsel even after Atty.
Pineda’s assignment. They also knew of the original contract for 20% attorney’s fees which was
increased to 35% by Atty. Pineda upon the arrangement that with the increase, he would answer for
the payment of Attys. Espinas and Lopez’ fees and for necessary representation expenses. Acting on
the aforesaid motion, this Court in its resolution of August 28, 1964, dropped the Union and its
officers from the within contempt charge.
RESOLUTION
MAKASIAR, J.:
Before Us for resolution is the urgent motion to cite Atty. Benjamin C. Pineda, Ricardo Capuno and
Manila Bank (Cubao Branch) in contempt for the alleged continued failure of aforenamed parties to
comply with the temporary mandatory restraining order issued by this Court on September 1, 1983 and
with the resolution dated September 13, 1983 which again directed Atty. Pineda and union
administrator Capuno to comply with the aforesaid mandatory restraining order and which ordered the
Manila Bank to transfer the funds allocated for the workers to the NLRC (p. 376, L-24864, rec.; p. 301,
L027773 rec.).
The issuance of the temporary mandatory restraining order stemmed from the questioned orders of
September 23, 1982
118
118
and February 9, 1983 issued by Labor Arbiter Raymundo Valenzuela in Case No. 1099-V before the NLRC
which orders respectively allowed the sale of the property awarded to satisfy or answer for the claims of
the union members in these four cases and authorized the distribution of the proceeds of the purchase.
For a better appreciation of the aforesaid motion for contempt, We must recall certain prefatory facts
which the Solicitor General has so aptly summed up. Thus:
“The above-entitled cases involve disputes regarding claims for overtime of more than five hundred bus
drivers and conductors of Halili Transit. Litigation initially commenced with the filing of a complaint for
overtime with the defunct Court of Industrial Relations on August 20, 1958 docketed as CIR Case No.
1099-V. The disputes were eventually settled when the contending parties reached an Agreement on
December 23, 1974, the pertinent portions of which are as follows:
“ ‘WHEREAS, in the face of this strong urging on the part of the Supreme Court Justices upon the parties
to put an immediate end to this case by amicable settlement, the parties repeatedly came to
conference, conscientiously explored all avenues of settlement, and finaly arrived at the tentative
agreement (tentative because of the condition that the same be sanctioned by the court in the estate
case) whereby the Administratrix would transfer to the employees title to that tract of land, covered by
TCT No. 36389, containing an area of approximately 33,952 square meters, situated in the Barrio of San
Bartolome, Municipality of Caloocan, Province of Rizal, and pay in addition the cash amount of
P25,000.00 in full and final satisfaction of all the claims and causes of action of all of the employees
against the estate of Fortunato F. Halili, subject of CIR Case No. 1099-V.
xxx xxx xxx
“ ‘NOW, THEREFORE, for and in consideration of the foregoing and of the covenants, stipulations and
undertakings hereinafter contained, the parties have agreed as follows:
“ ‘1. The UNION, its officers and members-claimants relative to CIR Case No. 1099-V, shall withdraw and
dismiss with prejudice Case No. 1099-V filed by the UNION in behalf of
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119
its members-claimants before the Court of Industrial Relations and all its incidents thereto.
“ ‘2. The ESTATE shall deliver or cause to be delivered to the UNION the following:
“ ‘(a) Deed of Transfer of a parcel of land situated in Barrio San Bartolome, Caloocan City, containing an
area of THIRTY-THREE THOUSAND NINE HUNDRED FIFTY-TWO (33,952) Square Meters, more or less, and
covered by Transfer Certificate of Title No. 35389 of the Registry of Deeds of Rizal, to be made, upon
authority and approval granted by the Court of First of Rizal, Branch IV, at Quezon City, in Proc. No. Q-
10852 in the name of the Halili Bus Drivers & Conductors Union (PTGWO), free from any and all liens,
encumbrances, and any and all claims whatsoever.
“ ‘(b) Negotiable Check for TWENTY-FIVE THOUSAND (P25,000.00) PESOS in the name of Dom ingo D.
Cabading, President of the UNION.
“ ‘3. The transfer of the above-described parcel of land and receipt of the amount of P25,000.00
constitute the full and final satisfaction of the claims and award in said CIR Case No. 1099-V, as well as
any and all attorney’s liens in said case, for and in consideration of which the UNION members-claimants
in CIR Case No. 1099-V by these presents now and forever release and quitclaim Halili Enterprises, Halili
Transit, Fortunato F. Halili, his estate, heirs and successors by reason of CIR Case No. 1099-V, it being
their intention that they be absolutely, completely and finally absolved and released from any and all
liability in said case, including attorneys’ liens, the transfer of the property and payment of the amount
hereinabove stated constituting for all intents and purposes a full, final and complete settlement and
satisfaction of the award in CIR Case No. 1099-V and all incidents thereto.
“ ‘4. The UNION and its undersigned officers hereby warrant that the UNION is a duly registered labor
organization and that in a special meeting called for the purpose they were duly authorized on
December 22, 1974, by all the members-claimants in CIR Case No. 1099-V to sign this Memorandum of
Agreement with Release and Quitclaim which was unanimously approved and ratified by said members
claimants as evidenced by a Resolution dated December 22,
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1974, a copy of which is attached hereto and made a part hereof as Annex “B”, and hereby jointly and
severally hold the estate and heirs of Fortunato F. Halili free and harmless from, and undertake to
indemnify them for, any and all liability for any claims by members of the UNION, their heirs, assigns and
agents relating to CIR Case No. 1099-V or attorneys’ liens in connection therewith’ (69 SCRA 509-510).
“On January 6, 1975, pursuant to the Agreement, the administratrix of the estate of Fortunato F. Halili
executed a Deed of Conveyance of Real Property, transferring the aforementioned parcel of land to the
Halili Bus and Conductors Union (PTGWO) in trust for the members of the union claimants. The parcel of
land was eventually registered in the name of the Union on February 14, 1975. Hence, on February 10,
1976, the contending parties moved for the dismissal of G.R. No. L-30110 and G.R. No. L-38655, which
this Honorable Court granted on February 27, 1976 (69 SCRA 505). The two other cases, G.R. No. L-
24864 and G.R. No. L-27773, were previously disposed of on February 26, 1968 and December 28, 1970,
respectively (22 SCRA 785, and 36 SCRA 522).
“On August 9, 1982, the Union, through Atty. Benjamin C. Pineda, filed an urgent motion with the
Ministry of Labor and Employment (MOLE) requesting for authority to sell and dispose of the property.
The motion was granted in an order dated September 23, 1982. A prospective buyer, the Manila
Memorial Park Cemetery, Inc. expressed its misgivings on the authority of the Union to sell the property
in view of sec. 66 of PD 1529 which requires no less than an order from a court of competent jurisdiction
as authority to sell property in trust. So, Atty. Pineda filed a motion with the Supreme Court on
December 1, 1982 requesting for authority to sell the property. This Honorable Court, however, merely
noted the motion in a resolution dated December 8, 1982.
“Nevertheless, Atty. Pineda, without authority from the Supreme Court but relying on the earlier
authority given him by the Ministry of Labor, filed another urgent motion with the latter, praying that
the Union be authorized to sell the lot to the Manila Memorial Park Cemetery, Inc. and to make
arrangements with it such that payment will be advanced for the real estate taxes inclusive of penalties,
attorney’s lien which is equivalent to a thirty-five percent (35%) of the total purchase price, and home
developer’s fee of P69,000.00. Apparently, the prospective purchaser had decided to withdraw its
objection regarding the Union’s authority to sell. In an Order dated February 9, 1983, Labor Arbiter
Raymundo R. Valen-
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121
zuela granted the motion. So, the sale was finally consummated on June 7, 1983, resulting in the
execution of an escrow agreement on June 8, 1983 wherein the purchase price was deposited under
escrow with the Manila Bank-Cubao Branch. The Bank then released the amounts due the claimants in
accordance with the escrow agreement” (pp. 352-356, L-24864 rec.).
The dispositive portion in L-24864 is re-stated hereunder:
“WHEREFORE, the appealed order and resolution en banc are hereby affirmed and the Court of
Industrial Relations is hereby enjoined to make a judicial determination of the union membership of the
claimants, while the Examining Division of said court shall proceed with its computation of the
compensable hours of work rendered by, and the corresponding compensation payable to, the drivers
and conductors admitted by both parties to be union members since October 1, 1956 and those
contended by the union to be such members but disputed by the employer. No costs. So ordered” (p.
186, L-24864 rec.).
When Atty. Jose C. Espinas (herein movant and alleged original counsel for the Union) learned of the
sale and apportionment of the proceeds from past Union president Amado Lopez, he requested Labor
Arbiter Raymundo Valenzuela to allow him to look into the records of Case No. 1099-V. The latter,
however, told him that the records of the aforecited case were missing. Thereupon, Atty. Espinas
requested Director Pascual Reyes of the NLRC to locate the records (p. 356, L-24864 rec.).
Hence, Atty. Espinas filed the urgent motion with prayer for a temporary mandatory restraining order
on August 26, 1983 and the supplement thereto on August 29, 1983 (pp. 215, 227, L-24864 rec.).
On August 30, 1983, the records of Case No. 1099-V were finally found and Atty. Espinas was dully
informed of the development.
The above two motions question the legality of the orders dated September 23, 1982 and February 9,
1983 issued by Labor Arbiter Raymundo Valenzuela in Case No. 1099-V before the NLRC which
authorized the sale of the awarded property and the distribution of the proceeds from such purchase. .
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122
Movants Union and counsel Espinas upon filing of the motions urgently pray of this Court to:
1. Require Atty. Benjamin C. Pineda to deposit with the NLRC the amount of P712,992.00 paid to him or
deposited to his account at Manila Bank, Cubao Branch, allegedly representing 35% attorney’s fees on
the sale of 33,952 square meters of the lot registered in the name of the Union;
2. Require the Halili Drivers and Conductors Union through Domingo Cabading or any of his
representatives to deposit with the NLRC the 6% alleged union expenses paid to them or similarly
deposited to their account;
3. Implead with leave of court the Manila Bank-Cubao Branch to require the said bank to prevent further
withdrawals of amount deposited in the name of Atty. Pineda and/or the Halili Drivers and Conductors
Union or any of its officers and to turn over any remaining deposits to the NLRC for proper disposition;
4. Should Atty. Pineda and the Union officers have already withdrawn the deposits or parts thereof,
require them to post a bond in the equivalent amounts of 35% (attorney’s fees), 6% (union expenses),
and 5% (broker’s fee) respectively of the total proceeds of the sale of the property, solidarily (p. 219, L-
24864 rec.; p. 160, L-27773 rec.).
Likewise, and after due consideration of the merits, movants prayed that—
1. the order of Arbiter Valenzuela dated February 9, 1983 be nullified insofar as it allows Atty. Pineda
35% attorney’s fees;
2. the NLRC be directed to locate the records of Case No. 1099-V or reconstitute the same and
thereafter to equitably dispose 20% as fees to all lawyers who participated in the proceedings and any
excess amounts to be again distributed to the workers; and
3. these cases be remanded to the NLRC with instructions as above-stated and that the proper penalty
be
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imposed on those involved and who have acted fraudulently and illegally (p. 220, L-24864 rec.; p. 165, L-
27773 rec.).
The succeeding pleadings and developments which are common to all these cases are now presented
chronologically.
On August 29, 1983, Atty. Espinas, for himself and members of the respondent Union, filed a
supplement to urgent motion stating that the prayers in the urgent motion of August 26, 1983 are
reiterated and praying for the nullification of Arbiter Valenzuela’s order not only on the award of
attorney’s fees but also on the allowance of payment of “union obligations” not previously authorized
nor approved by the NLRC (p. 227, L-24864, rec.; p. 176, L-27773 rec.).
In its resolution dated September 1, 1983, this Court impleaded the Manila Bank, Cubao Branch as party
respondent and directed the issuance of a temporary mandatory restraining order (p. 234, L-24864 rec.
& p. 187, L-27773 rec.). This Court correspondingly issued a temporary mandatory restraining order on
the same date which enjoined Atty. Benjamin C. Pineda or his agents or any person acting in his stead to
deposit with the NLRC the amount of P712,992.00 paid to him or deposited in his account at Manila
Bank, Cubao Branch allegedly representing 35% attorney’s fees on the sale of 33,952 square meters of
the lot registered in the name of Halili Drivers and Conductors Union; directed the Union thru Domingo
Cabading or his agents to deposit with the NLRC 6% alleged union expenses paid to the Union or
similarly deposited to its account; and ordered the NLRC and Manila Bank, Cubao Branch, or their agents
or persons in their stead not to allow withdrawals of amounts deposited in the name of Atty. Benjamin
C. Pineda and/or the Union or any of its officers (p. 235, L-24864; p. 188, L-27773 rec.).
On September 6, 1983, respondent Union, thru Atty. Pineda, filed its comment, in compliance with the
resolution of September 1, 1983, on the urgent motion and the supplement thereto both filed by
counsel Espinas, alleging therein that the subject matter sought to be enjoined or mandated by the
restraining order ceased to exist rendering the same moot and
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academic, and thus praying for the dismissal of the said motion and the supplement thereto (p. 237, L-
24864 rec.; p. 191, L-27773 rec.).
On September 7, 1983, Atty. Pedro Lopez, an original associate of Atty. Espinas, filed his motion for
leave to intervene, with the submission that the lawyers involved should only divide 20% fees as per the
workers’ contract and the rest refunded by Atty. Pineda and the alleged “union officers” for
redistribution to the members (p. 265, L-24864, rec.; p. 219, L-27773 rec.).
Atty. Espinas, in behalf of the workers, filed a manifestation and motion to require Atty. Pineda and the
union to comply with the temporary mandatory restraining order on September 9, 1983, with prayer
that the Manila Bank be ordered to transfer the funds allocated for the workers to the NLRC, which
should be instructed to pay the workers upon proper identification (without prejudice to additional
shares) or to mail such amounts by money order or manager’s check to the workers’ addresses as
furnished to the NLRC (p. 274, L-24864, rec.; p. 231, L-27773 rec.).
On September 12, 1983, petitioner filed a manifestation in compliance with the resolution of September
2, 1983 stating, among other things, that its liability had been completely extinguished with the approval
of the Memorandum of Agreement with Release and Quitclaim in L-38655 and L-30110; that said
agreement operated as an absolute and complete release of petitioner from any liability to the Union;
and that petitioner had not been given any notice of any proceedings respecting cases subsequent to
the promulgation of the decisions aforestated (p. 281, L-24864, rec.; p. 237, L-27773 rec.).
Counsel Espinas (for the workers involved) filed his reply to comments of respondent Union on
September 14, 1983 praying for this Court to:
1. nullify the order of February 9, 1983 issued by Arbiter Raymundo Valenzuela in CIR Case No. 1099-V
and others connected therewith regarding the distribution of proceeds of the sale of the land belonging
to the members-claimants for lack of due process and for being contrary to law;
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125
Pineda as illegal and unconscionable and in disregard of other lawyers in the case;
3. require reimbursement to the members—from the Union P101,856.00 allocated without their
consent as Union expenses; P101,856 unreceipted brokers’ fees less P4,020.40 expenses for the transfer
of title; to refund the 1% of the net proceeds, P9,596.18, for named claimants; and to secure a refund of
P308,000.00 from the P712,992.00 fees of Atty. Pineda (the excess of 20% fees for all lawyers);
4. subject the balance of P404,992.00 of the remainder of Atty. Pineda’s 35% fees for distribution among
the three lawyers as may be determined by the NLRC; and
5. should this Court so decides, fix the fees (p. 285, L-24864 rec.; p. 240, L-27773 rec.).
On September 13, 1983, the Solicitor General filed his comment on the urgent motion and the
supplement thereto dated August 25, 1983 and August 29, 1983, respectively with the
recommendations that (1) the orders of Arbiter Valenzuela dated September 23, 1982 and February 9,
1983 be nullified for having been issued without due process; (2) the case must be remanded to the
NLRC for further proceedings; and (3) the temporary restraining order issued by this Court on
September 1, 1983 be maintained, pending final resolution by the NLRC (p. 351, L-24864 rec.).
The Solicitor General, on October 6, 1983, filed his manifestation and motion in lieu of comment on the
motion of Atty. Pedro Lopez for leave to intervene in L-24864 and L-27773 (p. 360, L-24864 rec.; p. 289,
L-27773 rec.).
On October 6, 1983, counsel Espinas filed his comment on the intervention of Atty. Pedro Lopez wherein
he offers no objection to the latter’s intervention and states that said counsel is also entitled to
attorney’s fees in accordance with his participation (p. 364, L-24864 rec.; p. 292, L-27773 rec.).
Atty. Pineda filed his comment and manifestation on October 7, 1983, in compliance with the resolution
of September 13, 1983, alleging therein that as per Retainer’s Contract dated January 1, 1967, he
handled Case No. 1099-V before the Court 125
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126

of Industrial Relations alone. On the mandatory restraining order, Atty. Pineda claims that as of October
4, 1983, he had a balance of P2,022.70 in his account with the Manila Bank (p. 370, L-24864 rec.; p. 295,
L-27773 rec.).
In its resolution dated October 18, 1983, this Court (1) set aside as null and void the orders of
September 23, 1982 and February 9, 1983 of Arbiter Raymundo R. Valenzuela; (2) allowed the
intervention of Atty. Pedro Lopez; (3) directed the Manila Bank (Cubao Branch), Atty. Benjamin Pineda,
and the Halili Drivers and Conductors Union through Domingo Cabading or any of his representatives, to
comply with the temporary mandatory restraining order issued on September 1, 1983 and the
resolution dated September 13, 1983, within ten [10] days from receipt thereof; and (4) remanded these
cases to the NLRC for further proceedings (p. 374, L-24864 rec.; p. 299, L-27773 rec.).
The day before or on October 17, 1983, Sergio de Pedro, as representative of the workers and assisted
by Atty. Espinas, thus filed the urgent motion to cite Atty. Pineda, Ricardo Capuno and Manila Bank
(Cubao Branch) in contempt, alleging therein that after two letters dated October 6 and October 14,
1983 to the NLRC which inquired as to whether or not compliance with the restraining order had been
made, the Commission certified that as of October 14, 1983, no deposits had been effected by the
parties so directed (p. 376, L-24864 rec.; p. 301, L-27773 rec.).
In its manifestation and motion filed on November 2, 1983, respondent Manila Banking Corporation
(Rustan-Cubao Branch), in compliance with this Court’s resolution of September 13, 1983, stated that it
transmitted or paid to the NLRC the amount of P417,380.64 under Cashier’s Check No. 34084190 for the
account of the Union and P2,022.70 under Cashier’s Check No. 34084191 for the account of Atty. Pineda
and thus prayed therein that the aforesaid transmittals be deemed as sufficient compliance with the
aforecited resolution and that the urgent motion to cite respondents in contempt dated October 17,
1983 be considered moot and academic (p. 390, L-24864 rec.).
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127
On November 8, 1983, respondent Atty. Pineda filed his manifestation and motion in lieu of comment,
in compliance with this Court’s resolution of October 20, 1983, stating that he and respondent Union
thereby adopt the aforecited manifestation and motion of respondent Manila Banking Corporation and
thus prayed that since they have complied with this Court’s resolution of September 13, 1983, the
urgent motion to cite them for contempt be considered moot and academic (p. 394, L-24864 rec.; p.
310, L-27773 rec.).
On November 10, 1983, respondent Manila Banking Corporation filed another manifestation and motion
in lieu of comment, by way of compliance with the Court’s resolution of October 20, 1983 with prayer
that its previous manifestation and motion dated October 28, 1983 and filed on November 2, 1983 be
considered as sufficient compliance with the resolution of September 13, 1983 which would render the
urgent motion to cite respondents in contempt moot and academic (p. 396, L-24864 rec.; p. 312, L-
27773 rec.).
On the foregoing manifestations and motions, representative Sergio de Pedro, with the assistance of
Atty. Espinas, filed a comment on November 16, 1983 wherein he alleged that out of the P2,037,120.00
purchase price, only P1,940,127.29 was deposited with the Manila Bank; that Atty. Pineda has yet to
return the balance of P710,969.30; and that the Union has still to account for P111,452.18 (p. 399, L-
24864 rec.; p. 315, L-27773 rec.).
On December 14, 1983, respondent Union filed its reply to Mr. de Pedro’s above unsigned comment
therein stating among other things that the alleged missing amount of P96,992.71 was used for the
payment of outstanding real estate taxes on real property of said Union covered by TCT No. 205755 and
that the amount of P2,022,70 only was remitted by Manila Bank to the NLRC for the account of Atty.
Pineda (p. 323, L-27773 rec.).
On December 20, 1983, Mr. de Pedro and Atty. Espinas, for the workers involved, filed their rejoinder to
the comment of Atty. Pineda and Mr. Capuno reiterating therein their plea to declare Atty. Pineda and
Mr. Capuno in contempt of court and to mete out the proper penalty (p. 328, L-27773 rec.).
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128
The Manila Banking Corporation filed its compliance with the Court resolution of November 22, 1983 on
February 3, 1984, praying that its report to the NLRC on the amount of withdrawals be considered as
sufficient compliance with the said resolution (p. 343, L-27773 rec.).
Atty. Espinas filed his comment and motion on March 15, 1984, stating among other things that as per
report of the Manila Bank to the NLRC, Atty. Pineda has not yet complied with the said order. He thus
moved that Atty. Pineda be required to post a bond on the undeposited balance in the amounts of
P710,969.30 and that Mr. Capuno be also required to post a bond before the NLRC on the undeposited
balance of P52,236.04 during the pendency of the motion for contempt (p. 373, L-27773 rec.).
On April 4, 1984, Mr. Sergio de Pedro filed his reply to the aforesaid comment of the Union
administrator and Atty. Pineda stating therein that there are still questions to be resolved on the merits
before the NLRC and hence, prays that Arbiter Antonio Tirona be required to continue hearing the
merits of the case pending in the said Commission (p. 377, L-27773 rec.).
Before We resolve the motion for contempt, certain crucial facts which have surfaced and which
precipitated Our issuance of the resolution of October 18, 1983 declaring the two questioned orders of
Arbiter Valenzuela as null and void, must be retraced.
Then Union President Amado Lopez, in a letter dated August 21, 1958, informed J.C. Espinas and
Associates that the general membership of the said Union had authorized a 20% contingent fee for the
law firm based on whatever amount would be awarded the Union (p. 267, L-24864 rec.).
Atty. Jose C. Espinas, the original counsel, established the award of 897 workers’ claim in the main cases
before the defunct CIR and the Supreme Court. In L-24864, the Notice of Judgment of this Court dated
February 26, 1968 was served on Messrs. J.C. Espinas & Associates (p. 188, L-24864 rec.). In L-27773, the
Notice of Judgment dated December 29, 1970 was sent to Atty. B.C. Pineda & Associates under same
address—716 Puyat Bldg., Suit 404 at Escolta, Manila (p. 147,
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L-27773 rec.). Note that this is the same address of Atty. J.C. Espinas & Associates.
When Atty. Pineda appeared for the Union in these cases, still an associate of the law firm, his
appearance carried the firm name “B.C. Pineda and Associates,” giving the impression that he was the
principal lawyer in these cases.
Atty. Pineda joined the law firm of Atty. Espinas in 1965 when these cases were pending resolution. He
always held office in the firm’s place at Puyat Building, Escolta until 1974, except in 1966 to 1967 when
he transferred to the Lakas ng Manggagawa Offices. During this one-year stint at the latter office, Atty.
Pineda continued handling the case with the arrangement that he would report the developments to
the Espinas firm. When he rejoined the law firm in 1968, he continued working on these cases and using
the Puyat Building office as his address in the pleadings.
When Atty. Pineda rejoined the Espinas firm in 1968, he did not reveal to his partners (he was made the
most senior partner) that he had a retainer’s contract entered into on January 1, 1967 which allegedly
took effect in 1966. He stayed with the law firm until 1974 and still did not divulge the 1967 retainer’s
contract. Only the officers of the Union knew of the contract.
The alleged retainer’s contract between Atty. Pineda and the Union appears anomalous and even illegal
as well as unethical considering that—
1. The contract was executed only between Atty. Pineda and the officers of the Union chosen by about
125 members only. It was not a contract with the general membership. Only 14% of the total
membership of 897 was represented. This violates Article 242 (d) of the Labor Code which provides:
“The members shall determine by secret ballot, after due deliberation, any question of major policy
affecting the entire membership of the organization, unless the nature of the organization or force
majeure renders such secret ballot impractical, in which case the board of directors of the organization
may make the decision in behalf of the general membership” (emphasis supplied).
2. The contingent fee of 30% for those who were still work-
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ing with Halili Transit and the 45% fee for those who were no longer working worked to the prejudice of
the latter group who should and were entitled to more benefits. Thus, too, when the alleged retainer’s
contract was executed in 1967, the Halili Transit had already stopped operations in Metro Manila. By
then, Atty. Pineda knew that all the workers would be out of work which would mean that the 45%
contingent fee would apply to all.
3. The contract which retroactively took effect on January 1, 1966, was executed when Atty. Espinas was
still handling the appeal of Halili Transit in the main case before the Supreme Court. Atty. Pineda would
have but did not substitute himself in place of Atty. Espinas or the law firm on the basis of such contract.
4. When Atty. Pineda filed his motion for approval of his attorney’s lien with Arbiter Valenzuela on
February 8, 1983, he did not attach the retainer’s contract.
5. The retainer’s contract was not even notarized (p. 248, L-24864 rec.).
The Manila Memorial Park Cemetery, Inc., as the prospective buyer, initially expressed its misgivings
over the authority of the Union to sell subject property conformably with Section 66 of P.D. No. 1529,
which requires an order from a court of competent jurisdiction authorizing the sale of a property in
trust. The pertinent portion of Section 66 provides:
“No instruments which transfers or mortgages or in any way deals with registered land in trust shall be
registered, unless the enabling power thereto is expressly conferred in the trust instrument, or unless a
final judgment or order of a court of competent jurisdiction has construed the instrument in favor of the
power, in which case a certified copy of such judgment or order may be registered.”
The decision of aforenamed purchaser to stop questioning the Union’s authority to sell and the
expeditious manner by which Arbiter Valenzuela granted Atty. Pineda’s motion for such authority to sell
the property make the entire transaction dubious and irregular.
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Thus, without notice to the other lawyers and parties, Atty. Pineda commenced the proceeds before the
NLRC with the filing of a motion and manifestation on August 9, 1982 with Arbiter Valenzuela of the
NLRC Office of the Labor Ministry wherein he asked for authority to sell the property. On September 23,
1983 or just over a month, Arbiter Valenzuela approved the motion per order of the same date. Notably,
only Atty. Pineda and the lawyers of the purchaser were informed of such order.
On February 4, 1983, again without notice to Atty. Espinas and Atty. Lopez, Atty. Pineda filed a motion
with Arbiter Valenzuela wherein he asked for authority to distribute the proceeds of the sale of the
property. This distribution would include his attorney’s fee which was allegedly the subject of a
retainer’s contract entered into between him and the alleged Union officers. On February 9, 1983, or
barely five days from the day the motion was filed, Arbiter Valenzuela, without informing the other
lawyers and relying exclusively on the unverified motion of Atty. Pineda (the records of the case were
not on hand), approved the said motion which authorized the apportionment.
This Court, as earlier stated, nullified said orders dated September 23, 1982 and February 9, 1983 of
Labor Arbiter Valenzuela as violative of the due process clause. It is a settled rule that in administrative
proceedings, or cases coming before administrative tribunals exercising quasi-judicial powers, due
process requires not only notice and hearing, but also the consideration by the administrative tribunal of
the evidence presented; the existence of evidence to support the decision; ils substantiality; a decision
based thereon or at least contained in the record and disclosed to the parties; such decision by the
administrative tribunal resting on its own independent consideration of the law and facts of the
controversy; and such decision acquainting the parties with the various issued involved and the reasons
therefor (Ang Tibay vs. Court, 89 Phil. 635, cited on p. 84, Philippine Constitutional Law, Fernando, 1984
ed.).
Significantly, Atty. Pineda’s act of filing a motion with this Court on December 1, 1982 praying for
authority to sell was by
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itself an admission on his part that he did not possess the authority to sell the property and that this
Court was the proper body which had the power to grant such authority. He could not and did not even
wait for such valid authority but instead previously obtained the same from the labor arbiter whom he
knew was not empowered to so authorize. Under Article 224 (a) of the Labor Code, only final decisions
or awards of the NLRC, the Labor Arbiter, or compulsory or voluntary arbitrators may be implemented
or may be the subject of implementing orders by aforenamed body or officers.
When Atty. Espinas discovered the sale of the property, he went to Arbiter Valenzuela to look into the
transaction who told him that the records of CIR Case No. 1099-V were missing. It took director Pascual
Reyes of the NLRC to locate the records.
The 45% attorney’s lien on the award of those union members who were no longer working and the
30% lien on the benefits of those who were still working as provided for in the alleged retainer’s
contract are very exorbitant and unconscionable in view of Section 11, Rule VIII of Book III which
explicitly provides:
“Sec. 11. Attorney’s fees.—Attorney’s fees on any judicial or administrative proceedings for the recovery
of wages shall not exceed 10% of the amount awarded. The fees may be deducted from the total
amount due the winning party.”
The amount of P101,856.00 which Atty. Pineda donated to the Union and which actually corresponds to
5% of the total 35% attorney’s fees taken from the proceeds (p. 263, L-24864, rec.) appears improper
since it amounts to a rebate or commission. This amount was subsequently treated as union
miscellaneous operating expenses without the consent of the general membership.
Thus, in the case of Amalgamated Laborers’ Association vs. Court of Industrial Relations (L-23467, 22
SCRA 1267 [March 27, 1968]), We declared:
“We strike down the alleged oral agreement that the union president should share in the attorney’s
fees. Canon 34 of Legal
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Ethics condemns this arrangement in terms clear and explicit. It says: ‘No division of fees for legal
services is proper, except with another lawyer, based upon a division of service or responsibility.’ The
union president is not the attorney for the laborers. He may seek compensation only as such president.
An agreement whereby a union president is allowed to share in attorney’s fees is immoral. Such a
contract we emphatically reject. It cannot be justified.
“A contingent fee contract specifying the percentage of recovery an attorney is to receive in a suit
‘should be reasonable under all the circumstances of the case, including the risk and uncertainty of the
compensation, but should always be subject to the supervision of a court, as to its reasonableness.’ ”
(italics supplied).
A deeper scrutiny of the pleadings in L-24864 notably indicates a fraudulent or deceitful pattern in the
actuations of Atty. Pineda. Thus, in his motion for execution of judgment filed on September 18, 1965 in
this case, he signed for and in behalf of “J.C. Espinas & Associates” (p. 323, rec.). In his manifestation
dated December 10, 1968, he signed as “B.C. Pineda,” lone counsel for petitioner (p. 327, rec.); and yet,
he carried the address of Espinas & Associates at 716 G. Puyat Building, Escolta.
However, in the October 29, 1968 resolution of this Court, a copy thereof was served on “Messrs. J.C.
Espinas, B.C. Pineda, J.J. dela Rosa & Associates” at Puyat Building, Escolta (p. 324, rec.). In the notice of
judgment dated December 29, 1970, this Court addressed the said pleading to “Attys. B.C. Pineda &
Associates” with the same Puyat Building address (p. 325, rec.). Notably also, then Union President
Amado Lopez addressed his letter dated August 21, 1958 to “J.C. Espinas & Associates” wherein he
informed the latter that the general membership of the Union had authorized them a 20% contingent
fee on whatever award would be given the workers (p. 267, rec.).
The Manila Banking Corporation (Cubao Branch) has manifested that it turned over to the NLRC the
amount of P417,380.64 for the Union’s account, which appears to be the balance of P950,021.76
corresponding to the net proceeds for distribution to the workers after deducting P525,480.40, the total
payments to claimants. The amount of P417,380.64 ap-
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pears lacking, since accurately computed, the balance should be P424,541.36.
However, the Union has yet to account for P101,856.00, the 5% donation or share from Atty. Pineda’s
attorney’s fee of 35%.
For the account of Atty. Pineda, the Manila Banking Corporation has remitted to the NLRC the amount
of P2,022.70 only. This means that Atty. Pineda is still accountable for the amount of P710,969.30. He is
directed to return the amount of P712,992.00 representing the 35% attorney’s fees he unlawfully
received.
In view of Our resolution of October 18, 1983, which set-aside as null and void the questioned orders
dated September 23, 1982 and February 9, 1983 issued by Arbiter Raymundo Valenzuela, the sale of the
Union property and the distribution of the proceeds therefrom had been effected without authority
and, therefore, illegal Consequently, Atty. Pineda and Arbiter Valenzuela become liable for their
unauthorized acts.
Atty. Pineda should be cited for indirect contempt under paragraphs (b), (c) and (d) of Section 3, Rule 71
of the Revised Rules of Court. The said paragraphs read thus:
“Sec. 3. Indirect contempts to be punished after charge and hearing.—x x x xxx xxx
“(b) Disobedience of or resistance to a lawful writ, process, order, judgment, or command of a court, or
injunction granted by a court or judge, including the act of a person who, after being dispossessed or
ejected from any real property by the judgment or process of any court of competent jurisdiction, enters
or attempts or induces another to enter into or upon such real property, for the purpose of executing
acts of ownership or possession, or in any manner disturbs the possession given to the person adjudged
to be entitled thereto;
“(c) Any abuse of or any interference with the process or proceedings of a court not constituting direct
contempt under section 1 of this rule;
“(d) Any improper conduct tending, directly or indirectly to impede, obstruct, or degrade the
administration of justice.”
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Contempt of court is a defiance of the authority, justice or dignity of the court; such conduct as tends to
bring the authority and administration of the law into disrespect or to interfere with or prejudice parties
litigant or their witnesses during litigation (12 Am. jur 389, cited in 14 SCRA 813).
Contempt of court is defined as a disobedience to the court by acting in opposition to its authority,
justice and dignity. It signifies not only a willful disregard or disobedience of the court’s orders, but such
conduct as tends to bring the authority of the court and the administration of law into disrepute or in
some manner to impede the due administration of justice (17 C.J.S. 4).
This Court has thus repeatedy declared that the power to punish for contempt is inherent in all courts
and is essential to the preservation of order in judicial proceedings and to the enforcement of
judgments, orders, and mandates of the court, and consequently, to the due administration of justice
(Slade Perkins vs. Director of Prisons, 58 Phil. 271; In re Kelly, 35 Phil. 944; Commissioner of Immigration
vs. Cloribel, 20 SCRA 1241; Montalban vs. Canonoy, 38 SCRA 1).
In the matter of exercising the power to punish contempts, this Court enunciated in the Slade Perkins
case that “the exercise of the power to punish contempts has a twofold aspect, namely (1) the proper
punishment of the guilty party for his disrespect to the court or its order; and (2) to compel his
performance of some act or duty required of him by the court which he refuses to perform. Due to this
twofold aspect of the exercise of the power to punish them, contempts are classified as civil or criminal.
A civil contempt is the failure to do something ordered to be done by a court or a judge for the benefit
of the opposing party therein; and a criminal contempt, is conduct directed against the authority and
dignity of a court or of a judge, as in unlawfully assailing or discrediting the authority or dignity of the
court or judge, or in doing a duly forbidden act. Where the punishment imposed, whether against a
party to a suit or a stranger, is wholly or primarily to protect or vindicate the dignity and power of the
court, either by fine payable to the government or by imprisonment, or both, it is deemed a judgment in
a criminal case. Where the
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punishment is by fine directed to be paid to a party in the nature of damages for the wrong inflicted, or
by imprisonment as a coercive measure to enforce the performance of some act for the benefit of the
party or in aid of the final judgment or decree rendered in his behalf, the contempt judgment will, if
made before final decree, be treated as in the nature of an interlocutory order, or, if made after final
decree, as remedial in nature, and may be reviewed only on appeal from the final decree, or in such
other mode as is appropriate to the review of judgments in civil cases. x x x x x x x x x The question of
whether the contempt committed is civil or criminal, does not affect the jurisdiction or the power of a
court to punish the same. x x x x x x x x x” (58 Phil. 271, 272).
For civil contempt, Section 7, Rule 71 of the Revised Rules of Court explicitly provides:
“Sec. 7, Rule 71. Imprisonment until order obeyed. When the contempt consists in the omission to do an
act which is yet in the power of the accused to perform, he may be imprisoned by order of a superior
court until he performs it.”
Thus, in the case of Harden vs. Director of Prisons (L-2349, 81 Phil. 741 [Oct. 22, 1948]), where petitioner
was confined in prison for contempt of court, this Court, in denying the petition and resolving the
question of petitioner’s indefinite confinement, had the occasion to apply and clarify the aforequoted
provision in the following tenor:
“The penalty complained of is neither cruel, unjust nor excessive. In Ex-parte Kemmler, 136 U.S. 436, the
United States Supreme Court said that ‘punishments are cruel when they involve torture or a lingering
death, but the punishment of death is not cruel, within the meaning of that word as used in the
constitution. It implies there something inhuman and barbarous, something more than the
extinguishment of life.’
“The punishment meted out to the petitioner is not excessive. It is suitable and adapted to its objective;
and it accords with section 7, Rule 64 of the Rules of Court which provides that ‘when the contempt
consists in the omission to do an act which is yet in the power of the accused to perform, he may be
imprisoned by order of a
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superior court until he performs it.’
“If the term of imprisonment in this case is indefinite and might last through the natural life of the
petitioner, yet by the terms of the sentence the way is left open for him to avoid serving any part of it by
complying with the orders of the court, and in this manner put an end to his incarceration. In these
circumstances, the judgment cannot be said to be excessive or unjust. (Davis vs. Murphy [1947], 188 P.,
229-231.) As stated in a more recent case (De Wees [1948], 210 S.W., 2d, 145-147), ‘to order that one
be imprisoned for an indefinite period in a civil contempt is purely a remedial measure. Its purpose is to
coerce the contemner to do an act within his or her power to perform. He must have the means by
which he may purge himself of the contempt.’ The latter decision cites Staley vs. South Jersey Realty Co.,
83 N.J. Eq., 300, 90 A., 1042, 1043, in which the theory is expressed in this language:
“ ‘In a “civil contempt” the proceeding is remedial, it is a step in the case the object of which is to coerce
one party for the benefit of the other party to do or to refrain from doing some act specified in the order
of the court. Hence, if imprisonment be ordered, it is remedial in purpose and coercive in character, and
to that end must relate to something to be done by the defendant by the doing of which he may
discharge himself. As quaintly expressed, the imprisoned man “carries the keys to his prison in his own
pocket” ’ ” (pp. 747-748).
Likewise, American courts had long enunciated these rul ings:
“The commitment of one found in contempt of a court order only until the contemnor shall have purged
himself of such contempt by complying with the order is a decisive characteristic of civil contempt.
Maggio v. Zeitz, 333 US 56, 92 L. ed. 476, 68 S Ct 401.”
“Civil or quasi-criminal contempt is contemplated by a statute providing that if any person refused to
obey or perform any rule, order, or judgment of court, such court shall have power to fine and imprison
such person until the rule, order, or judgment shall be complied with. Evans v. Evans, 193 Miss 468, 9 So
2d. 641.” (17 Am. Jur. 2d).
The reason for the inherent power of courts to punish for contempt is that respect of the courts
guarantees the stability of the judicial institution. Without such guarantee said in-
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138
stitution would be resting on a very shaky foundation (Salcedo vs. Hernandez, 61 Phil. 724; Cornejo vs.
Tan, 85 Phil. 722).
Likewise, Atty. Pineda should be subject to disbarment proceedings under Section 27 of Rule 138 of the
Revised Rules of Court which provides:
“Sec. 27. Attorneys removed or suspended by Supreme Court on what grounds.—A member of the bar
may be removed or suspended from his office as attorney by the Supreme Court for any deceit,
malpractice, or other gross misconduct in such office, grossly immoral conduct, or by reason of his
conviction of a crime involving moral turpitude, or for any violation of the oath which he is required to
take before admission to practice, or for a willful disobedience of any lawful order of a superior court, or
for corruptly or willfully appearing as an attorney for a party to a case without authority so to do. The
practice of soliciting cases at law for the purpose of gain, either personally or through paid agents or
brokers, constitutes malpractice.”
The Court may suspend or disbar a lawyer for any conduct on his part showing his unfitness for the
confidence and trust which characterize the attorney and client relations, and the practice of law before
the courts, or showing such a lack of personal honesty or of good moral character as to render him
unworthy of public confidence (7 C.J.S. 733).
It is a well-settled rule that the statutory grounds for disbarment or suspension are not to be taken as a
limitation on the general power of the courts in this respect. The inherent powers of the court over its
officers cannot be restricted (In re Pelaez, 44 Phil. 567).
Finally, Atty. Pineda could be prosecuted for betrayal of trust by an attorney under Article 209 of the
Revised Penal Code. Said article provides:
“Art. 209. Betrayal of trust by an attorney or solicitor, Revelation of secrets.—In addition to the proper
administrative action, the penalty of prision correccional in its minimum period, or a fine ranging from
200 to 1,000 pesos, or both, shall be imposed upon any attorney-at-law or solicitor (procurador judicial)
who, by any malicious breach of professional duty or inexcusable negligence or ignorance, shall
prejudice his client, or reveal any of the secrets of the
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139
latter learned by him in his professional capacity” (italics supplied).
The aforequoted criminal sanction for unprofessional conduct of an attorney is without prejudice to
proper administrative action, such as disbarment or suspension of attorneys (p. 503, Criminal Law
Annotated, Padilla, 1972 Ed.).
Labor Arbiter Raymundo Valenzuela should be made to answer for having acted without or beyond his
authority in proper administrative charges. He could also be prosecuted before the Tanodbayan under
the provisions of the Anti-Graft Law. Independently of his liabilities as a government officer, he could be
the subject of disbarment proceedings under Section 27, Rule 138 of the Revised Rules of Court.
Atty. Benjamin Pineda could also be held liable under Section 4(b) of R.A. No. 3019 (Anti-Graft and
Corrupt Practices Act) which makes it unlawful for any person knowingly to induce or cause any public
official to commit any of the offenses defined in Section 3 of said act. Section 3 enumerates the corrupt
practices which public officers may be prosecuted for. Atty. Pineda knowingly induced or caused Labor
Arbiter Valenzuela to issue the questioned orders without or beyond the latter’s authority and to which
orders the former was not entitled, considering that he was not the sole and proper representative.
The Manila Banking Corporation (Cubao Branch) per manifestation and motion dated October 28, 1983
and reiterated on November 10, 1983, had transmitted to the NLRC the remaining balance of
P417,380.64 and P2,022.70 for the account of the Union and Atty. Pineda, respectively. This turnover of
the aforecited amounts is a sufficient compliance with Our restraining order and resolution of
September 13, 1983 and hence, the Manila Banking Corporation can no longer be liable for contempt of
court.
Very recently, on August 23, 1984, respondent Union, thru Acting Administrator Ricardo Capuno, filed its
motion to drop Halili Bus Drivers and Conductors Union from the contempt charge in view of these
reasons:
1. The Manila Bank has already turned over to the NLRC the amount of P59,716.14 which represents the
re-
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140
maining balance of 5% earmarked for Union expenses incurred in the case aside from the amounts
deposited in escrow for the workers. The amount of P42,140.00 was spent legitimately by the Union for
administration purposes relative to the subject property. The Union asserts that it is ready and willing to
account for all expenses and withdrawals from the bank before the NLRC.
2. The alleged 5% donation of Atty. Pineda to the Union taken from the 35% attorneys’ fees was given to
and received by then President Domingo Cabading alone, who thereafter left for the United States.
3. The 1% allocated for unknown claimants or those not previously listed in the amount of P9,596.18 can
easily be accounted for by the Union before the NLRC.
In the same motion, Mr. Capuno clarifies that with regard to attorneys’ fees, Atty. Pineda made the
Union officers believe that he would be the one to pay the fees of Attys. Espinas and Lopez for which
reason, the 35% increased fees was approved by the Union’s board in good faith. The Union likewise
confirms that Atty. Pineda came into the picture only when he was assigned by Atty. Espinas in 1965 to
execute the CIR decision which, thru Atty. Espinas’ handling, was upheld by this Court in L-24864 in
1968. The Union officers were aware that Atty. Espinas was the principal counsel even after Atty.
Pineda’s assignment. They also knew of the original contract for 20% attorney’s fees which was
increased to 35% by Atty. Pineda upon the arrangement that with the increase, he would answer for the
payment of Attys. Espinas and Lopez’ fees and for necessary representation expenses (p. 450, L-24864
rec.).
Acting on the aforesaid motion, this Court in its resolution of August 28, 1964, dropped the Union and
its officers from the within contempt charge (p. 455, L-24864 rec.).
WHEREFORE, ATTY. BENJAMIN PINEDA IS HEREBY FOUND GUILTY OF INDIRECT CONTEMPT OF COURT
FOR WHICH HE IS HEREBY SENTENCED TO IMPRISONMENT IN THE MANILA CITY JAIL UNTIL THE ORDERS
OF THIS COURT DATED SEPTEMBER 1 AND SEPTEMBER 13, 1983 ARE COM-
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141
Floresca vs. Philex Mining Corporation
PLIED WITH.
ATTY. BENJAMIN PINEDA IS ALSO DIRECTED TO SHOW CAUSE WHY HE SHOULD NOT BE DISBARRED
UNDER RULE 138 OF THE REVISED RULES OF COURT.
LET COPIES OF THIS RESOLUTION AND THE RESOLUTION OF OCTOBER 18, 1983 BE FURNISHED THE
MINISTRY OF LABOR AND THE TANODBAYAN FOR APPRORIATE ACTION.
SO ORDERED.
Fernando, C.J., Teehankee, Aquino, Melencio-Herrera, Escolin, De la Fuente, Cuevas and Alampay, JJ.,
concur. Concepcion, Jr., Plana, Relova and Gutierrez, Jr., JJ., no part.
Abad Santos, J., I reserve my vote.
Atty. Pineda guilty of indirect contempt of court.
——o0o——
© Copyright 2017 Central Book Supply, Inc. All rights reserved. Halili vs. Court of Industrial Relations,
136 SCRA 112, No. L-24864, No. L-27773, No. L-38655, No. L-30110 April 30, 1985
710
Palacol vs. Ferrer-Calleja
G.R. No. 85333. February 26, 1990.*
CARMELITO L. PALACOL, ET AL., petitioners, vs. PURA FERRER-CALLEJA, Director of the Bureau of
Labor Relations, MANILA CCBPI SALES FORCE UNION, and COCA-COLA BOTTLERS (PHILIPPINES), INC.,
respondents.
Labor Standards; Labor Relations; Collective Bargaining; Special Assessments; Strict compliance with
legal requirements regarding special assessments must be observed.—The respondent-Union brushed
aside the defects pointed out by petitioners in the manner of compliance with the legal requirements
as “insignificant technicalities.” On the contrary, the failure of the Union to comply strictly with the
requirements set out by the law invalidates the questioned special assessment. Substantial
compliance is not enough in view of the fact that the special assessment will diminish the
compensation of the
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* FIRST DIVISION.
711
VOL. 182, FEBRUARY 26, 1990
711
union members. Their express consent is required, and this consent must be obtained in accordance
with the steps outlined by law, which must be followed to the letter. No shortcuts are allowed.
Same; Same; Same; Same; Written resolution of a majority of all members of the union at a general
membership meeting, required for validity of levy of a special assessment.—As earlier outlined by
petitioners, the Union obviously failed to comply with the requirements of paragraph (n). It held local
membership meetings on separate occasions, on different dates and at various venues, contrary to
the express requirement that there must be a general membership meeting. The contention of the
Union that “the local membership meetings are precisely the very general meetings required by law”
is untenable because the law would not have specified a general membership meeting had the
legislative intent been to allow local meetings in lieu of the latter. It submitted only minutes of the
local membership meetings when what is required is a written resolution adopted at the general
meeting. Worse still, the minutes of three of those local meetings held were recorded by a union
director and not by the union secretary. The minutes submitted to the Company contained no list of
the members present and no record of the votes cast. Since it is quite evident that the Union did not
comply with the law at every turn, the only conclusion that may be made therefrom is that there was
no valid levy of the special assessment pursuant to paragraph (n) of Article 241 of the Labor Code.
Same; Same; Same; Same; Withdrawal of individual authorization is equivalent to no authorization at

all; The law does not require that the disauthorization must be in individual form.—Paragraph (o) on
the other hand requires an individual written authorization duly signed by every employee in order
that a special assessment may be validly checked-off. Even assuming that the special assessment was
validly levied pursuant to paragraph (n), and granting that individual written authorizations were
obtained by the Union, nevertheless there can be no valid check-off considering that the majority of
the union members had already withdrawn their individual authorizations. A withdrawal of individual
authorizations is equivalent to no authorization at all. Hence, the ruling in Galvadores that “no check-
offs from any amounts due employees may be effected without an individual written authorization
signed by the employees x x x” is applicable. The Union points out, however, that said
disauthorization are not valid for being collective in form, as they are “mere bunches of randomly
procured signatures, under loose sheets of paper.” The contention deserves no merit for the simple
reason that the documents containing
712
712
the disauthorization have the signatures of the union members. The Court finds these retractions to
be valid. There is nothing in the law which requires that the disauthorizations must be in individual
form.
Same; Same; Same; Same; Payment of services rendered by union officers, not to be taken from
special assessments but from regular union dues.—Of the stated purposes of the special assessment,
as embodied in the board resolution of the Union, only the collection of a special fund for labor and
education research is mandated, as correctly pointed out by the Union. The two other purposes,
namely, the purchase of vehicles and other items for the benefit of the union officers and the general
membership, and the payment of services rendered by union officers, consultants and others, should
be supported by the regular union dues, there being no showing that the latter are not sufficient to
cover the same. The last stated purpose is contended by petitioners to fall under the coverage of
Article 222 (b) of the Labor Code. The contention is impressed with merit. Article 222 (b) prohibits
attorney’s fees, negotiation fees and similar charges arising out of the conclusion of a collective
bargaining agreement from being imposed on any individual union member. The collection of the
special assessment partly for the payment for services rendered by union officers, consultants and
others may not be in the category of “attorney’s fees or negotiation fees.” But there is no question
that it is an exaction which falls within the category of a “similar charge,” and, therefore, within the
coverage of the prohibition in the aforementioned article.
PETITION for certiorari to review the order of the Bureau of Labor Relations Commission.
Wellington B. Lachica for petitioners.
Adolpho M. Guerzon for respondent Union.
GANCAYCO, J.:
Can a special assessment be validly deducted by a labor union from the lump-sum pay of its members,
granted under a collective bargaining agreement (CBA), notwithstanding a subsequent disauthorization
of the same by a majority of the union members? This is the main issue for resolution in the instant
petition for certiorari.
As gleaned from the records of the case, the pertinent facts are as follows:
713

713
On October 12, 1987, the respondent Manila CCBPI Sales Force Union (hereinafter referred to as the
Union), as the collective bargaining agent of all regular salesmen, regular helpers, and relief helpers of
the Manila Plant and Metro Manila Sales Office of the respondent Coca-Cola Bottlers (Phil-ippines), Inc.
(hereinafter referred to as the Company) concluded a new collective bargaining agreement with the
latter.1 Among the compensation benefits granted to the employees was a general salary increase to be
given in lump-sum including recomputation of actual commissions earned based on the new rates of
increase.
On the same day, the president of the Union submitted to the Company the ratification by the union
members of the new CBA and authorization for the Company to deduct union dues equivalent to P10.00
every payday or P20.00 every month and, in addition, 10% by way of special assessment, from the CBA
lump-sum pay granted to the union members. The last one among the aforementioned is the subject of
the instant petition.
As embodied in the Board Resolution of the Union dated September 29, 1987, the purpose of the special
assessment sought to be levied is “to put up a cooperative and credit union; purchase vehicles and other
items needed for the benefit of the officers and the general membership; and for the payment for
services rendered by union officers, consultants and others.”2 There was also an additional proviso
stating that the “matter of allocation x x x shall be at the discretion of our incumbent Union President.”
This “Authorization and CBA Ratification” was obtained by the Union through a secret referendum held
in separate local membership meetings on various dates.3 The total membership of the Union was
about 800. Of this number, 672 members originally authorized the 10% special assessment, while 173
opposed the same.4
Subsequently however, one hundred seventy (170) members of the Union submitted documents to the
Company stating that
_______________
1 Page 4, Rollo.
2 Page 10, Rollo.
3 Page 96, Rollo.
4 Page 34, Rollo.
714
714

although they have ratified the new CBA, they are withdrawing or disauthorizing the deduction of any
amount from their CBA lump-sum. Later, 185 other union members submitted similar documents
expressing the same intent. These members, numbering 355 in all (170 + 185), added to the original
oppositors of 173, turned the tide in favor of disauthorization for the special assessment, with a total of
528 objectors and a remainder of 272 supporters.5
On account of the above-mentioned disauthorization, the Company, being in a quandary as to whom to

remit the payment of the questioned amount, filed an action for interpleader with the Bureau of Labor
Relations in order to resolve the conflicting claims of the parties concerned. Petitioners, who are regular
rank-and-file employees of the Company and bona fide members of the Union, filed a motion/complaint
for intervention therein in two groups of 161 and 94, respectively. They claimed to be among those
union members who either did not sign any individual written authorization, or having signed one,
subsequently withdrew or retracted their signatures therefrom.
Petitioners assailed the 10% special assessment as a violation of Article 241(o) in relation to Article
222(b) of the Labor Code.
Article 222(b) provides as follows:
“ART. 222. Appearances and Fees.—
xxx xxx xxx
(b) No attorney’s fees, negotiation fees or similar charges of any kind arising from any collective
bargaining negotiations or conclusion of the collective agreement 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
sort to the contrary shall be null and void.”
On the other hand, Article 241(o) mandates that:
“ART. 241. Rights and conditions of membership in a labor organization.—
xxx xxx xxx
(o) Other than for mandatory activities under the Code, no
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5 Page 35, Rollo.
715
715
special assessments, attorney’s fees, negotiation fees or any other extraordinary fees may be checked
off from any amount due to an employee without an individual written authorization duly signed by the
employee. The authorization should specifically state the amount, purpose and beneficiary of the
deduction;”
As authority for their contention, petitioners cited Galva-dores v. Trajano,6 wherein it was ruled that no
check-offs from any amount due employees may be effected without individual written authorizations
duly signed by the employees specifically stating the amount, purpose, and beneficiary of the deduction.
In its answer, the Union countered that the deductions not only have the popular indorsement and
approval of the general membership, but likewise complied with the legal requirements of Article 241
(n) and (o) of the Labor Code in that the board resolution of the Union imposing the questioned special
assessment had been duly approved in a general membership meeting and that the collection of a
special fund for labor education and research is mandated.
Article 241(n) of the Labor Code states that—
“ART. 241. Rights and conditions of membership in a labor organization.—
xxx xxx xxx
(n) No special assessment or other extraordinary fees may be levied upon the members 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 including the list of all members present, the votes cast, the purpose of the
special assessment or fees and the recipient of such assessments or fees. The record shall be attested to
by the president;”
Med-Arbiter Manases T. Cruz ruled in favor of petitioners in an order dated February 15, 1988 whereby
he directed the Company to remit the amount it had kept in trust directly to the rank-and-file personnel
without delay.
On appeal to the Bureau of Labor Relations, however, the
_______________
6 144 SCRA 138 (1986).
716
716

order of the Med-Arbiter was reversed and set aside by the respondent-Director in a resolution dated
August 19, 1988 upholding the claim of the Union that the special assessment is authorized under
Article 241(n) of the Labor Code, and that the Union has complied with the requirements therein.
Hence, the instant petition.
Petitioners allege that the respondent-Director committed a grave abuse of discretion amounting to lack
or excess of jurisdiction when she held Article 241(n) of the Labor Code to be the applicable provision
instead of Article 222(b) in relation to Article 241(o) of the same law.
According to petitioners, a cursory examination and comparison of the two provisions of Article 241
reveals that paragraph (n) cannot prevail over paragraph (o). The reason advanced is that a special
assessment is not a matter of major policy affecting the entire union membership but is one which
concerns the individual rights of union members.
Petitioners further assert that assuming arguendo that Article 241(n) should prevail over paragraph (o),
the Union has nevertheless failed to comply with the procedure to legitimize the questioned special
assessment by: (1) presenting mere minutes of local membership meetings instead of a written
resolution; (2) failing to call a general membership meeting; (3) having the minutes of three (3) local
membership meetings recorded by a union director, and not by the union secretary as required; (4)
failing to have the list of members present included in the minutes of the meetings; and (5) failing to
present a record of the votes cast.7 Petitioners concluded their argument by citing Galvadores.
After a careful review of the records of this case, We are convinced that the deduction of the 10%
special assessment by the Union was not made in accordance with the requirements provided by law.
Petitioners are correct in citing the ruling of this Court in Galvadores which is applicable to the instant
case. The principle “that employees are protected by law from unwarranted practices that diminish their
compensation without their knowl-
_______________
7 Page 12, Rollo.
717
717
edge and consent”8 is in accord with the constitutional principle of the State affording full protection to
labor.9
The respondent-Union brushed aside the defects pointed out by petitioners in the manner of
compliance with the legal requirements as “insignificant technicalities.” On the contrary, the failure of
the Union to comply strictly with the requirements set out by the law invalidates the questioned special
assessment. Substantial compliance is not enough in view of the fact that the special assessment will
diminish the compensation of the union members. Their express consent is required, and this consent
must be obtained in accordance with the steps outlined by law, which must be followed to the letter. No
shortcuts are allowed.
The applicable provisions are clear. The Union itself admits that both paragraphs (n) and (o) of Article
241 apply. Paragraph (n) refers to “levy” while paragraph (o) refers to “check-off” of a special
assessment. Both provisions must be complied with. Under paragraph (n), the Union must submit to the
Company a written resolution of a majority of all the members at a general membership meeting duly
called for the purpose. In addition, the secretary of the organization must record the minutes of the
meeting which, in turn, must include, among others, the list of all the members present as well as the
votes cast.
As earlier outlined by petitioners, the Union obviously failed to comply with the requirements of
paragraph (n). It held local membership meetings on separate occasions, on different dates and at
various venues, contrary to the express requirement that there must be a general membership meeting.
The contention of the Union that “the local membership meetings are precisely the very general
meetings required by law”10 is untenable because the law would not have specified a general
membership meeting had the legislative intent been to allow local meetings in lieu of the latter.
It submitted only minutes of the local membership meetings when what is required is a written
resolution adopted at the general meeting. Worse still, the minutes of three of those local
_______________
8 Emphasis supplied.
9 Section 3, Article XIII, 1987 Constitution.
10 Page 105, Rollo.
718
718
meetings held were recorded by a union director and not by the union secretary. The minutes submitted
to the Company contained no list of the members present and no record of the votes cast. Since it is
quite evident that the Union did not comply with the law at every turn, the only conclusion that may be
made therefrom is that there was no valid levy of the special assessment pursuant to paragraph (n) of
Article 241 of the Labor Code.
Paragraph (o) on the other hand requires an individual written authorization duly signed by every
employee in order that a special assessment may be validly checked-off. Even assuming that the special
assessment was validly levied pursuant to paragraph (n), and granting that individual written
authorizations were obtained by the Union, nevertheless there can be no valid check-off considering
that the majority of the union members had already withdrawn their individual authorizations. A
withdrawal of individual authorizations is equivalent to no authorization at all. Hence, the ruling in
Galvadores that “no check-offs from any amounts due employees may be effected without an individual
written authorization signed by the employees x x x” is applicable.
The Union points out, however, that said disauthorizations are not valid for being collective in form, as
they are “mere bunches of randomly procured signatures, under loose sheets of paper.”11 The
contention deserves no merit for the simple reason that the documents containing the disauthorizations
have the signatures of the union members. The Court finds these retractions to be valid. There is
nothing in the law which requires that the disauthorization must be in individual form.
Moreover, it is well-settled that “all doubts in the implementation and interpretation of the provisions
of the Labor Code x x x shall be resolved in favor of labor.”12 And as previously stated, labor in this case
refers to the union members, as employees of the Company. Their mere desire to establish a separate
bargaining unit, albeit uproven, cannot be construed against them in relation to the legality of the
questioned special assessment. On the contrary, the same may even be taken to
_______________
11 Pages 108-109, Rollo.
12 Article 4, Labor Code.
719
719
reflect their dissatisfaction with their bargaining representative, the respondent-Union, as shown by the
circumstances of the instant petition, and with good reason.
The Med-Arbiter correctly ruled in his Order that:
“The mandate of the majority rank and file have (sic) to be respected considering they are the ones
directly affected and the realities of the high standards of survival nowadays. To ignore the mandate of
the rank and file would enure to destabilizing industrial peace and harmony within the rank and file and
the employer’s fold, which we cannot countenance.
Moreover, it will be recalled that precisely union dues are collected from the union members to be
spent for the purposes alluded to by respondent. There is no reason shown that the regular union dues
being now implemented is not sufficient for the alleged expenses. Furthermore, the rank and file have
spoken in withdrawing their consent to the special assessment, believing that their regular union dues
are adequate for the purposes stated by the respondent. Thus, the rank and file having spoken and, as
we have earlier mentioned, their sentiments should be respected.”
Of the stated purposes of the special assessment, as embodied in the board resolution of the Union,
only the collection of a special fund for labor and education research is mandated, as correctly pointed
out by the Union. The two other purposes, namely, the purchase of vehicles and other items for the
benefit of the union officers and the general membership, and the payment of services rendered by
union officers, consultants and others, should be supported by the regular union dues, there being no
showing that the latter are not sufficient to cover the same.
The last stated purpose is contended by petitioners to fall under the coverage of Article 222 (b) of the
Labor Code. The contention is impressed with merit. Article 222 (b) prohibits attorney’s fees,
negotiations fees and similar charges arising out of the conclusion of a collective bargaining agreement
from being imposed on any individual union member. The collection of the special assessment partly for
the payment for services rendered by union officers, consultants and others may not be in the category
of “attorney’s fees or negotiations fees.” But there is no question that it is an exaction which falls within
the
720
720
category of a “similar charge,” and, therefore, within the coverage of the prohibition in the
aforementioned article. There is an additional proviso giving the Union President unlimited discretion to
allocate the proceeds of the special assessment. Such a proviso may open the door to abuse by the
officers of the Union considering that the total amount of the special assessment is quite considerable—
P1,027,694.33 collected from those union members who originally authorized the deduction, and
P1,267,863.39 from those who did not authorize the same, or subsequently retracted their
authorizations.13 The former amount had already been remitted to the Union, while the latter is being
held in trust by the Company.
The Court, therefore, strikes down the questioned special assessment for being a violation of Article
241, paragraphs (n) and (o), and Article 222 (b) of the Labor Code.
WHEREFORE, the instant petition is hereby GRANTED. The Order of the Director of the Bureau of Labor
Relations dated August 19, 1988 is hereby REVERSED and SET ASIDE, while the order of the Med-Arbiter
dated February 17, 1988 is reinstated, and the respondent Coca-Cola Bottlers (Philippines), Inc. is hereby
ordered to immediately remit the amount of P1,267,863.39 to the respective union members from
whom the said amount was withheld. No pronouncement as to costs. This decision is immediately
executory.
SO ORDERED.
Narvasa, Griño-Aquino and Medialdea, JJ., concur.
Cruz, J., No part. Related to one of the counsel.
Petition granted; order reversed and set aside.
Note.—A clause in a collective bargaining agreement providing that “The company will deduct the Union
agency fee from the wages of workers who are not members of the Union, provided the aforesaid
workers authorize the company to make such deductions in writing or if no such authorization is given, if
a competent court directs the company to make such deduc-tion,” is not a permissible form of union
security. (National
_______________
13 Page 5, Rollo.
721
721
Republic vs. Court of Appeals
Brewery and Allied Industries Labor Union of the Philippines vs. San Miguel Brewery, Inc., L-18170,
August 31, 1963, 8 SCRA 805.)
——o0o——
© Copyright 2017 Central Book Supply, Inc. All rights reserved. Palacol vs. Ferrer-Calleja, 182 SCRA 710,
G.R. No. 85333 February 26, 1990
42
Volkschel Labor Union vs. Bureau of Labor Relations
No. L-45824. June 19, 1985.*
VOLKSCHEL LABOR UNION, petitioner, vs. BUREAU OF LABOR RELATIONS, ASSOCIATED LABOR UNION
FOR METAL WORKERS, DMG, INC., PEOPLE’S CAR, INC., KARBAYAN, INC., and RTC TRADING, INC.,
respondents.
Labor Law; Unions; Disaffiliation; Constitutional Law; Right of a local union to disaffiliate from its
mother union; Freedom of local union to serve the interest of all its members, including the freedom
to disaffiliate; Right to disaffiliate is consistent with the constitutional guarantee of freedom of
association.—The right of a local union to disaffiliate from its mother union is well-settled. In previous
cases, it has been repeatedly held that a local union, being a separate and voluntary association, is
free to serve the interest of all its members including the freedom to disaffiliate when circumstances
warrant. This right is consistent with the Constitutional guarantee of freedom of association (Article
IV, Section 7, Philippine Constitution).
Same; Same; Same; Same; One union for every industry policy should not violate the constitutional
mandate of protecting labor and the workers’ right to self organization; Workingmen’s welfare, the
paramount consideration in the implementation of the Labor Code and its implementing regulations;
Restricting the right to self-organization due to the existence of a collective bargaining agreement
would go against the spirit of the labor law.—In reversing the
________________
* SECOND DIVISION.
43
VOL. 137, JUNE 19, 1985
43
Med-Arbiter’s resolution, respondent Bureau declared: the Department of Labor is set on a task to
restructure the labor movement to the end that the workers will unite themselves along industry
lines. Carried to its complete fruition, only one union for every industry will remain to bargain
collectively for the workers. The clear policy therefore even now is to conjoin workers and worker
groups, not to dismember them. This policy is commendable. However, we must not lose sight of the
constitutional mandate of protecting labor and the workers’ right to self-organization. In the
implementation and interpretation of the provisions of the Labor Code and its implementing
regulations, the workingman’s welfare should be the primordial and paramount consideration. In the
case at bar, it would go against the spirit of the labor law to restrict petitioner’s right to self-
organization due to the existence of the CBA. We agree with the Med-Arbiter’s opinion that “A
disaffiliation does not disturb the enforceability and administration of a collective agreement; it does
not occasion a change of administrators of the contract nor even an amendment of the provisions
thereof.” But nowhere in the record does it appear that the contract entered into by the petitioner
and ALUMETAL prohibits the withdrawal of the former from the latter.
Same; Same; Same; Same; Check-off; Obligation of employee to pay union dues is co-terminous with
his affiliation or membership; A contract between an employee and the parent organization as
bargaining agent for employees, terminated by the disaffiliation of the local union.—This now brings
us to the second issue. Under Section 3, Article I, of the CBA, the obligation of the respondent
companies to deduct and remit dues to ALUMETAL is conditioned on the individual check-off
authorization of petitioner’s members. In other words, ALUMETAL is entitled to receive the dues from
respondent companies as long as petitioner union is affiliated with it and respondent companies are
authorized by their employees (members of petitioner union) to deduct union dues. Without said
affiliation, the employer has no link to the mother union. The obligation of an employee to pay union
dues is co-terminous with his affiliation or membership. “The employees’ check-off authorization,
even if declared irrevocable, is good only as long as they remain members of the union concerned.” A
contract between an employer and the parent organization as bargaining agent for the employees is
terminated by the disaffiliation of the local of which the employees are members. Respondent
companies therefore were wrong in continuing the check-off in favor of respondent federation since
they were duly notified of the disaffiliation and of petitioner’s members having already rescinded
their check-off authorization.
44
44
Same; Same; Same; Same; Same; Entitlement by local union which has disaffiliated and continued to
represent the employees of an employer to check-off dues under a collective bargaining contract.—
Suffice it to state that respondent federation is not entitled to union dues payments from petitioner’s
members. “A local union which has validly withdrawn from its affiliation with the parent association
and which continues to represent the employees of an employer is entitled to the check-off dues
under a collective bargaining contract.”
PETITION for certiorari to review the resolutions of the Bureau of Labor Relations.
Ignacio P. Lacsina for petitioner.
William D. Dichoso for respondent DMG, Inc.
Abraham B. Drapiza for private respondent.
CUEVAS, J.:
Petition for certiorari to review the Resolutions dated January 25, 1977 and March 14, 1977 of the
Bureau of Labor Relations.
On April 25, 1977, however, a Supplemental Petition was filed seeking the issuance of—
(1) A preliminary mandatory injunction commanding respondents to return to petitioner the union dues
amounting to about P55,000.00 lawfully pertaining to it but illegally levied upon, collected and handed
over by respondent Bureau, acting through the NLRC sheriff, to respondent Associated Labor Union for
Metalworkers, with the collusion of respondents DMG, Inc., Karbayan, Inc. and RTC Machineries, Inc.;
(2) A preliminary restraining order prohibiting respondents from making further delivery to respondent
Associated Labor Union for Metalworkers of Union dues collected or to be collected through check-off
from the wages of petitioner’s members by respondents, DMG, Inc., Karbayan, Inc., RTC Machineries,
Inc., and People’s Car, Inc., under or by virtue of the questioned writ
45
VOL. 137, JUNE 19, 1985
45
of execution issued by respondent Bureau, dated April 4, 1977.
Petitioner was once affiliated with the Associated Labor Union for Metal Workers (ALUMETAL for short).
On August 1, 1975, both unions, using the name Volkschel Labor Union-Associated Labor Union for
Metal Workers, jointly entered into a collective bargaining agreement with respondent companies. One
of the subjects dealt with is the payment of union dues which is provided for in Section 3, Article I, of the
CBA, which reads:
“Section 3. CHECK-OFF.—The COMPANY agrees to make payroll deductions not oftener than twice a
month of UNION membership dues and such special assessments fees or fines as may be duly
authorized by the UNION, provided that the same is covered by the individual check-off authorization of
the UNION members. All said deductions shall be promptly transmitted within five (5) days by the
COMPANY to the UNION Treasurer. The COMPANY shall prepare two (2) checks. One (1) check will be
under the name of the local union as their local fund including local special assessment funds and the
other check will be for the ALU Regional Office regarding the remittance of the UNION dues deduction.”
On March 10, 1976, a majority of petitioner’s members decided to disaffiliate from respondent
federation in order to operate on its own as an independent labor group pursuant to Article 241
(formerly Article 240) of the Labor Code of the Philippines, the pertinent portion of which reads:
“Incumbent affiliates of existing federations or national unions may disaffiliate only for the purpose of
joining a federation or national union in the industry or region in which it properly belongs or for the
purpose of operating as an independent labor group.”
Accordingly, a resolution was adopted and signed by petitioner’s members revoking their check-off
authorization in favor of ALUMETAL and notices thereof were served on ALUMETAL and respondent
companies.
Confronted with the predicament of whether or not to continue deducting from employees’ wages and
remitting union
46
46
dues to respondent ALUMETAL which wrote respondent companies advising them to continue
deducting union dues and remitting them to said federation, respondent companies sought the legal
opinion of the respondent Bureau as regards the controversy between the two unions. On November
11, 1976, Med-Arbiter George A. Eduvalla of respondent Bureau rendered a Resolution which in effect
found the disaffiliation legal but at the same time gave the opinion that petitioner’s members should
continue paying their dues to ALUMETAL in the concept of agency fees.1
From the said Resolution of the Med-Arbiter both petitioner and respondent ALUMETAL appealed to the
Director of respondent Bureau. Petitioner contended that the Med-Arbiter’s opinion to the effect that
petitioner’s members remained obligated to pay dues to respondent ALUMETAL was inconsistent with
the dispositive finding that petitioner’s disaffiliation from ALUMETAL was valid. ALUMETAL, on the other
hand, assailed the Resolution in question asserting that the disaffiliation should have been declared
contrary to law.
On January 25, 1977, respondent Bureau, through its Acting Director, Francisco L. Estrella, REVERSED the
Med-Arbiter’s Resolution, and declared that the Bureau recognized “the continued affiliation of
Volkschel Labor Union with the Associated Labor Union for Metal Workers.”2
Petitioner appealed the Acting Director’s Resolution to the Secretary of Labor (now Minister of Labor
and Employment) who, treating the appeal as a Motion for Reconsideration, referred the same back to
respondent Bureau, On March 14, 1977, the Bureau denied the appeal for lack of merit.
Hence, the instant petition.
Meanwhile, on April 4, 1977, on motion of ALUMETAL, the then Acting Secretary of Labor, Amado Gat
Inciong, issued a writ of execution commanding the Sheriff of the National Labor Relations Commission
“to enforce and execute the order
________________
1 Annex “A”, Pages 2-3.
2 Annex “C”, Page 3.
47
VOL. 137, JUNE 19, 1985

47
of January 25, 1977, which has become final and executory.3 Pursuant thereto, the NLRC Sheriff
enforced and implemented the Order of January 25, 1977, as a result of which respondent companies
turned over and handed to respondent federation the union dues and other assessments in accordance
with the check-off provision of the CBA.
From the pleadings filed and arguments of counsel, the following issues present themselves for this
Court’s resolution.
Is petitioner union’s disaffiliation from respondent federation valid?
II
Do respondent companies have the right to effect union dues collections despite revocation by the
employees of the check-off authorization? and
III
Is respondent federation entitled to union dues payments from petitioner union’s members
notwithstanding their disaffiliation from said federation?
We resolve the first issue in the affirmative.
The right of a local union to disaffiliate from its mother union is well-settled. In previous cases, it has
been repeatedly held that a local union, being a separate and voluntary association, is free to serve the
interest of all its members including the freedom to disaffiliate when circumstances warrant.4 This right
is consistent with the Constitutional guarantee of freedom of association (Article IV, Section 7, Philippine
Constitution).
________________
3 Annex “A”, Supplemental Petition.
4 Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, 66 SCRA 512; People’s Industrial &
Commercial Employees and Workers Organization (FFW) v. People’s Industrial & Commercial
Corporation, 112 SCRA 440.
48
48
Petitioner contends that the disaffiliation was not due to any opportunist motives on its part. Rather it
was prompted by the federation’s deliberate and habitual dereliction of duties as mother federation
towards petitioner union. Employees’ grievances were allegedly left unattended to by respondent
federation to the detriment of the employees’ rights and interests.
In reversing the Med-Arbiter’s resolution, respondent Bureau declared: the Department of Labor is set
on a task to restructure the labor movement to the end that the workers will unite themselves along
industry lines. Carried to its complete fruition, only one union for every industry will remain to bargain
collectively for the workers. The clear policy therefore even now is to conjoin workers and worker
groups, not to dismember them.5 This policy is commendable. However, we must not lose sight of the
constitutional mandate of protecting labor and the workers’ right to self-organization. In the
implementation and interpretation of the provisions of the Labor Code and its implementing
regulations, the workingman’s welfare should be the primordial and paramount consideration. In the
case at bar, it would go against the spirit of the labor law to restrict petitioner’s right to self-organization
due to the existence of the CBA. We agree with the Med-Arbiter’s opinion that “A disaffiliation does not
disturb the enforceability and administration of a collective agreement; it does not occasion a change of
administrators of the contract nor even an amendment of the provisions thereof.”6 But nowhere in the
record does it appear that the contract entered into by the petitioner and ALUMETAL prohibits the
withdrawal of the former from the latter.
This now brings us to the second issue. Under Section 3, Artide I, of the CBA, the obligation of the
respondent companies to deduct and remit dues to ALUMETAL is conditioned on the individual check-
off authorization of petitioner’s members. In other words, ALUMETAL is entitled to receive the dues
from respondent companies as long as petitioner union is affiliated with it and respondent companies
are authorized by their
________________
5 Annex “C”, Page 2.
6 Annex “A”, Page 2.
49
VOL. 137, JUNE 19, 1985
49

employees (members of petitioner union) to deduct union dues. Without said affiliation, the employer
has no link to the mother union. The obligation of an employee to pay union dues is coterminous with
his affiliation or membership. “The employees’ check-off authorization, even if declared irrevocable, is
good only as long as they remain members of the union concerned.”7 A contract between an employer
and the parent organization as bargaining agent for the employees is terminated by the disaffiliation of
the local of which the employees are members.8 Respondent companies therefore were wrong in
continuing the check-off in favor of respondent federation since they were duly notified of the
disaffiliation and of petitioner’s members having already rescinded their check-off authorization.
With the view we take on those two issues, we find no necessity in dwelling further on the last issue.
Suffice it to state that respondent federation is not entitled to union dues payments from petitioner’s
members. “A local union which has validly withdrawn from its affiliation with the parent association and
which continues to represent the employees of an employer is entitled to the check-off dues under a
collective bargaining contract.”9
WHEREFORE, the Resolutions of the Bureau of Labor Relations of January 25, 1977 and March 14, 1977
are REVERSED and SET ASIDE. Respondent ALUMETAL is ordered to return to petitioner union all the
union dues enforced and collected through the NLRC Sheriff by virtue of the writ of execution dated
April 4, 1977 issued by respondent Bureau.
No costs.
SO ORDERED.
Makasiar, Aquino, Concepcion, Jr., Abad Santos and Escolin, JJ., concur.
________________
7 Phil. Federation of Petroleum Workers v. Court of Industrial Relations, 37 SCRA 711.
8 51 C.J.S. 865 (citing Textile Workers Union of America, C.I.O. versus Bellman Brook Bleaching
Company).
50
50
Espiritu vs. Court of Appeals
Resolution reversed and set aside.
Notes.—The purpose of a certification election is to give employees true representation in their

collective bargaining with an employer. (Confederation of Citizens Labor Union vs. Noriel, 116 SCRA
694.)
Local union and local members have the right to disaffiliate from federation in the absence of a
provision in the federation’s by laws prohibiting disaffiliation. (People’s Industrial and Commercial
Employees’ Workers Organization vs. People’s Industrial and Commercial Corporation, 112 SCRA 440.)
One who petitions the courts for an early union election cannot afterwards be heard to claim, after an
election was actually held wherein the other party’s ticket won, except for one slot, that said election is
null and void because of a policy of the Ministry of Labor that the term of union officers should be three
years and not less. (San Miguel Corporation Employees’ Union vs. Noriel, 103 SCRA 185.)
——o0o——
© Copyright 2017 Central Book Supply, Inc. All rights reserved. Volkschel Labor Union vs. Bureau of
Labor Relations, 137 SCRA 42, No. L-45824 June 19, 1985
VOL. 304, MARCH 11, 1999
489
ABS-CBN Supervisors Employees Union Members vs.
ABS-CBN Broadcasting Corporation
G.R. No. 106518. March 11, 1999.*
ABS-CBN SUPERVISORS EMPLOYEES UNION MEMBERS, petitioner, vs. ABS-CBN BROADCASTING

CORP., HERBERT RIVERA, ALBERTO BERBON, CINDY MUÑOZ, CELSO JAMBALOS, SALVADOR DE VERA,
ARNULFO ALCAZAR, JAKE MADERAZO, GON CARPIO, OSCAR LANDRITO, FRED GARCIA, CESAR LOPEZ
and RUBEN BARRAMEDA, respondents.
Labor Law; Certiorari; Motions for Reconsideration; Statutory Construction; Pleadings and Practice;
Section 8, Rule VIII, Book V of the Omnibus Rules Implementing the Labor Code, providing that the
decision of the Secretary of Labor shall be final and executory, cannot be construed to mean that the
decision of the Secretary cannot be reconsidered since the same is reviewable by writ of certiorari
under Rule 65.—Section 8, Rule VIII, Book V of the Omnibus Rules Implementing the Labor Code,
provides: “The Secretary shall have fifteen (15) calendar days within which to decide the appeal from
receipt of the records of the case. The decision of the Secretary shall be final and inappealable.”
[Italics supplied]. (Comment, p. 101) The aforecited provision cannot be construed to mean that the
Decision of the public respondent cannot be reconsidered since the same is reviewable by writ of
certiorari under Rule 65 of the Rules of Court. As a rule, the law requires a motion for reconsideration
to enable the public respondent to correct his mistakes, if any.
Same; Same; Same; Same; Administrative Law; Exhaustion of Administrative Remedies; A party
aggrieved by a decision of the Secretary of Labor must be allowed to move for a reconsideration of
the same so that he can bring a special civil action for certiorari before the Supreme Court.—So also,
considering that a decision of the Secretary of Labor is subject to judicial review only through a special
civil action of certiorari and, as a rule, cannot be resorted to without the aggrieved party having
exhausted administrative remedies through a motion for reconsideration, the aggrieved party, must
be allowed to move for a reconsideration of the same so that he can bring a special civil action for
certiorari before the Supreme Court.
_______________
* THIRD DIVISION.
490
490
Same; Estoppel; The active participation of a party against whom an action was brought, coupled with
his failure to object to the jurisdiction of the court or quasi-judicial body where the action is pending,
is tantamount to an invocation of that jurisdiction and a willingness to abide by the resolution of the
case and will bar said party from later on impugning the court or body’s jurisdiction.—It appears that
the petitioners filed with the public respondent a Motion for Early Resolution dated June 24, 1992,
averring that private respondents’ Motion for Reconsideration did not contain substantial factual or
legal grounds for the reversal of subject decision. Consequently, petitioners are now estopped from
raising the issue sought for resolution. In Alfredo Marquez vs. Secretary of Labor, the Court said: “x x x
The active participation of the party against whom the action was brought, coupled with his failure to
object to the jurisdiction of the court or quasi-judicial body where the action is pending, is
tantamount to an invocation of that jurisdiction and a willingness to abide by the resolution of the
case and will bar said party from later on impugning the court or body’s jurisdiction.”
Same; Check-Offs; Words and Phrases; A check-off is a process or device whereby the employer, on
agreement with the Union, recognized as the proper bargaining representative, or on prior
authorization from its employees, deducts union dues or agency fees from the latter’s wages and
remits them directly to the union; The system of check-off is primarily for the benefit of the Union and
only indirectly, for the individual employees.—“A check-off is a process or device whereby the
employer, on agreement with the Union, recognized as the proper bargaining representative, or on
prior authorization from its employees, deducts union dues or agency fees from the latter’s wages and
remits them directly to the union.” Its desirability in a labor organization is quite evident. It is assured
thereby of continuous funding. As this Court has acknowledged, the system of check-off is primarily
for the benefit of the Union and only indirectly, for the individual employees.
Same; Same; The legal basis of check-off is found in statutes or in contracts.—The legal basis of check-
off is found in statutes or in contracts. The statutory limitations on check-offs are found in Article 241,
Chapter II, Title IV, Book Five of the Labor Code.
491
VOL. 304, MARCH 11, 1999
491
Same; Same; Article 222 (b) of the Labor Code prohibits the payment of attorney’s fees only when it is
effected through forced contributions from the workers from their own funds as distinguished from
the union funds.—And this court elucidated the object and import of the said provision of law in Bank
of Philippine Islands Employees Union—Association Labor Union (BPIEU-ALU) vs. National Labor
Relations Commission: “The Court reads the afore-cited provision (Article 222 [b] of the Labor Code)
as prohibiting the payment of attorney’s fees only when it is effected through forced contributions
from the workers from their own funds as distinguished from the union funds. x x x”
Same; Same; Requisites before special assessment for Union’s incidental expenses, attorney’s fees
and representation expenses may be considered valid.—Noticeably, Article 241 speaks of three (3)
requisites that must be complied with in order that the special assessment for Union’s incidental
expenses, attorney’s fees and representation expenses, as stipulated in Article XII of the CBA, be valid
and upheld namely: (1) authorization by a written resolution of the majority of all the members at the
general membership meeting duly 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 employee
concerned.
Same; Same; The amount of check-off to be deducted is uncertain where although not fixed, it is
determinable.—Petitioner’s contention that the amount to be deducted is uncertain is not persuasive
because the check-off authorization clearly stated that the sum to be deducted is equivalent to ten
percent (10%) of all and whatever benefits may accrue under the CBA. In other words, although the
amount is not fixed, it is determinable.
Same; Same; No deductions may be taken from the workers who did not sign any check-off
authorization.—Premises studiedly considered, we are of the irresistible conclusion and, so find, that
the ruling in BPIEU-ALU vs. NLRC that (1) the prohibition against attorney’s fees in Article 222,
paragraph (b) of the Labor Code applies only when the payment of attorney’s fees is effected through
forced contributions from the workers; and (2) that no deductions must be taken from the workers
who did not sign the check-off authorization, applies to the case under consideration.
492
492

SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.
Camacho and Associates for petitioners.
Makalintal, Barot, Torres & Ibarra for private respondent.
PURISIMA, J.:
At bar is a special civil action for Certiorari1 seeking the reversal of the Order2 dated July 31, 1992 of
public respondent Department of Labor and Employment Undersecretary Bienvenido E. Laguesma3 in
Case No. NCR-OD-M-90-07-037.
From the records on hand, it can be gathered, that:
On December 7, 1989, the ABS-CBN Supervisors Employees Union (“the Union”), represented by
respondent Union Officers, and ABS-CBN Broadcasting Corporation (“the Company”) signed and
concluded a Collective Bargaining Agreement with the following check-off provision, to wit:
“Article XII—The [C]ompany agrees to advance to the Union a sum equivalent to 10% of the sum total of
all the salary increases and signing bonuses granted to the Supervisors under this Collective Bargaining
Agreement and upon signing hereof to cover the Union’s incidental expenses, including attorney’s fees
and representation
_________________
1 The nature of the petition is ambiguous as it is worded, as follows: “This is a petition for review on
certiorari under Rule 45/65 of the Revised Rules of Court . . . .” The Court, however, resolved to treat the
petition as one under Rule 65 in the interest of justice, equity and fairplay. (Salazar vs. NLRC, 256 SCRA
273 [1996]).
2 “Annex A,” Petition; Rollo, 28-33.
3 Public respondent Bienvenido E. Laguesma is not named in the case title but his Order dated 31 July
1992 is subject of this case. Petitioner’s counsel, Atty. Manuel N. Camacho had impressed to this Court
his inadequacy and incompetency of procedural law and he is hereby sternly warned that a repetition of
a similar display of lack of legal skills will be dealt with more severely.
493
VOL. 304, MARCH 11, 1999

493
expenses for its organization and (sic) preparation and conduct hereof, and such advance shall be
deducted from the benefits granted herein as they accrue.”
On September 19, 1990, Petitioners4 filed with the Bureau of Labor Relations, DOLE-NCR, Quezon City, a
Complaint against the Union Officers5 and ABS-CBN Broadcasting Corporation, praying that (1) the
special assessment of ten percent (10%) of the sum total of all salary increases and signing bonuses
granted by respondent Company to the members of the Union be declared illegal for failure to comply
with the Labor Code, as amended, particularly Article 241, paragraphs (g), (n), and (o); and in utter
violation of the Constitution and By-Laws of the ABS-CBN Supervisors Employees Union; (2) respondent
Company be ordered to suspend further deductions from petitioners’ salaries for their shares thereof.
In their Answers, respondent Union Officers and Company prayed for the dismissal of the Complaint for
lack of merit. They argued that the check-off provision is in accordance with law as majority of the Union
members individually executed a written authorization giving the Union Officers and the Company a
blanket authority to deduct subject amount.
_________________
4 Namely: Corina Sanchez, Ma. Angelica Lazo, Nicolas Belleza, Rogelio I. Gomez, Abraham Alhambra,
Adelaida M. Espiritu, Servillano Caoagdan, Arlene Sinsuan, David Fabros, Adoracion G. Camacho, Beverly
S. Fernandez, Adora L. Jacila, Teresita C. Estrella, Josefino M. Sta. Ana, Emilia F. Guilalas, Albert L.
Brillantes, Rodolfo Tapel, Zoilo Gonzales, Ernesto Balingit, Victoriano Rasido, Isabelo C. Albarracin, Cesar
M. Solidum, Leonora V. Buenaventura, Roberto Saura, Diosdado Ricafrente, Alfon Marquez III, Rosario
Villa, Gus Abelgas, Stephanie Quirino, Victor L. Lima, Erlindo Alvarado, Atanacio Pascua, Edgar Padil,
Rizal C. Benjamin, Edgardo Ramos, Santos Bautista, Manuel Manio, Eladio Aligora, W. Osinsao, Neil A.
Ocampo, Maria Teresita F. Naval, Claude Vitug and Isagani Oro.
5 Namely: Herbert R. Rivera, Alberto Berbon, Cindy Muñoz, Celso Jambalos, Salvador De Vera, Arnulfo
Alcazar, Jake Maderazo, Gon Carpio, Oscar Landrito, Fred Garcia, Cesar Lopez, Ruben Barrameda.
494
494
On January 21, 1991, Med-Arbiter Rasidali C. Abdullah issued the following Order:6
“WHEREFORE, premises considered, judgment is hereby rendered:
a) declaring the special assessment of 10% of the sum total of CBA benefits as illegal;
b) ordering respondents union officers to refund to the complainants and other union members the
amount of Five Hundred Thousand Pesos (P500,000.00) advanced by the respondent Company as part
of the 10% sum total of CBA benefits without unnecessary delay;
c) ordering the respondent company to stop and desist from further making advances and deductions
from the union members’ salaries their share in the advances already made to the union;
d) ordering the respondent Company to remit directly to the complainants and other union members
the amount already deducted from the union members’ salaries as part of their share in the advances
already made to the union and which it had kept in trust during the pendency of this case; and
e) directing the respondents union officers and respondent Company to submit report on the
compliance thereof.
SO ORDERED.”
On appeal, respondent DOLE Undersecretary Bienvenido E. Laguesma handed down a Decision7 on July
1, 1991, disposing as follows:
“WHEREFORE, the appeals are hereby denied, the Order of the Med-Arbiter is affirmed en toto.”
On July 5, 1991, the aforesaid Decision was received by the respondent Union Officers and respondent
Company. On July 13, 1991, they filed their Motion for Reconsideration stating, inter alia that the
questioned ten percent (10%) special as-
__________________
6 “Annex C,” Petition; Rollo, 41-56.
7 “Annex B,” Petition; Rollo, pp. 34-40.
495
VOL. 304, MARCH 11, 1999
495
sessment is valid pursuant to the ruling in Bank of the Philippine Islands Employee Union-ALU vs. NLRC.8
On July 31, 1992, Undersecretary B. E. Laguesma issued an Order;9 resolving, thus:

“WHEREFORE, the Decision dated 01 July 1991 is hereby SET ASIDE. In lieu thereof, a new one is hereby
entered DISMISSING the Complaint/Petition for lack of merit.”
Hence, the present petition seeking to annul and set aside the above-cited Order of public respondent
Undersecretary B. E. Laguesma, for being allegedly tainted with grave abuse of discretion amounting to
lack of jurisdiction.
Did the public respondent act with grave abuse of discretion in issuing the challenged Order reversing
his own Decision of July 1, 1991? Such is the sole issue posited, which we resolve in the negative. The
petition is unmeritorious.
Petitioners claim10 that the Decision of the Secretary of Labor and Employment dated July 1, 1991,
affirming in toto the Order of Med-Arbiter Rasidali Abdullah dated January 31, 1991, cannot be a subject
of a motion for reconsideration because it is final and unappealable pursuant to Section 8, Rule VIII,
Book V of the Omnibus Rule Implementing the Labor Code. It is further argued that the only remedy of
the respondent Union Officers is to file a petition for certiorari with this Court.
Section 8, Rule VIII, Book V of the Omnibus Rules Implementing the Labor Code, provides:
“The Secretary shall have fifteen (15) calendar days within which to decide the appeal from receipt of
the records of the case. The decision of the Secretary shall be final and inappealable.” [Italics supplied].
(Comment, p. 101)
________________
8 171 SCRA 556.
9 “Annex A,” Petition; Rollo, 28-33.
10 See: Petition, p. 9; Rollo, 15.
496
496
The aforecited provision cannot be construed to mean that the Decision of the public respondent
cannot be reconsidered since the same is reviewable by writ of certiorari under Rule 65 of the Rules of
Court. As a rule, the law requires a motion for reconsideration to enable the public respondent to
correct his mistakes, if any. In Pearl S. Buck Foundation, Inc. vs. NLRC,11 this Court held:
“Hence, the only way by which a labor case may reach the Supreme Court is through a petition for
certiorari under Rule 65 of the Rules of Court alleging lack or excess of jurisdiction or grave abuse of
discretion. Such petition may be filed within a reasonable time from receipt of the resolution denying
the motion for reconsideration of the NLRC decision.” [Italics supplied].
Clearly, before a petition for certiorari under Rule 65 of the Rules of Court may be availed of, the filing of
a motion for reconsideration is a condition sine qua non to afford an opportunity for the correction of
the error or mistake complained of.
So also, considering that a decision of the Secretary of Labor is subject to judicial review only through a
special civil action of certiorari and, as a rule, cannot be resorted to without the aggrieved party having
exhausted administrative remedies through a motion for reconsideration, the aggrieved party, must be
allowed to move for a reconsideration of the same so that he can bring a special civil action for certiorari
before the Supreme Court.12
Furthermore, it appears that the petitioners filed with the public respondent a Motion for Early
Resolution13 dated June 24, 1992, averring that private respondents’ Motion for Reconsideration did
not contain substantial factual or legal
__________________
11 182 SCRA 446 [1990]; Rodrigo Bordeos, et al. vs. NLRC, 262 SCRA 424 [1996].
12 Due to ambiguous nature of this petition, the Court restrained itself to discuss the failure of herein
petitioners to file a motion for reconsideration before the sala of public respondent to have the assailed
Order dated July 31, 1992 reconsidered.
13 See: private respondents’ “Rejoinder,” p. 3; Rollo, 133-144.
497
VOL. 304, MARCH 11, 1999
497
grounds for the reversal of subject decision. Consequently, petitioners are now estopped from raising
the issue sought for resolution. In Alfredo Marquez vs. Secretary of Labor,14 the Court said:
“x x x The active participation of the party against whom the action was brought, coupled with his failure
to object to the jurisdiction of the court or quasi-judicial body where the action is pending, is
tantamount to an invocation of that jurisdiction and a willingness to abide by the resolution of the case
and will bar said party from later on impugning the court or body’s jurisdiction.”
What is more, it was only when the public respondent issued the Order adverse to them that the
petitioners raised the question for the first time before this Court. Obviously, it is a patent afterthought
which must be abhorred.
Petitioners also argued that the check-off provision in question is illegal because it was never submitted
for consideration and approval to “all the members at a general membership meeting called for the
purpose”; and further alleged that the formalities mandated by Art. 241, paragraphs (n) and (o) of the
Labor Code, as amended, were not complied with.
“A check-off is a process or device whereby the employer, on agreement with the Union, recognized as
the proper bargaining representative, or on prior authorization from its employees, deducts union dues
or agency fees from the latter’s wages and remits them directly to the union.”15 Its desirability in a
labor organization is quite evident. It is assured thereby of continuous funding. As this Court has
acknowledged, the system of check-off is primarily for the benefit of the Union and only indirectly, for
the individual employees.
The legal basis of check-off is found in statutes or in contracts.16 The statutory limitations on check-offs
are found in
________________
14 171 SCRA 337, 346.
15 Holy Cross of Davao College, Inc. vs. Joaquin, 263 SCRA 358 [1996].
16 Ibid., p. 368.
498
498
Article 241, Chapter II, Title IV, Book Five of the Labor Code, which reads:
“Rights and conditions of membership in a labor organization—The following are the rights and
conditions of membership in a labor organization: x x x
(g) No officer, agent, or member of a labor organization shall collect any fees, dues, or other
contributions in its behalf or make any disbursement of its money or funds unless he is duly authorized
pursuant to its constitution and by-laws.
xxx
(n) No special assessment or other extraordinary fees may be levied upon the members of a labor
organization unless authorized by a written resolution of a majority of all the members of a general
membership meeting duly called for the purpose. The secretary of the organization shall record the
minutes of the meeting including 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 shall be attested to
by the president.
(o) Other than for mandatory activities under the Code, no special assessments, attorney’s fees,
negotiation fees or any other extraordinary fees may be checked off from any amount due to an
employee without an individual written authorization duly signed by the employee. The authorization
should specifically state the amount, purpose and beneficiary of the deductions. [Italics supplied]
Article 241 of the Labor Code, as amended, must be read in relation to Article 222, paragraph (b) of the
same law, which states:
“No attorney’s fees, negotiation fees or similar charges of any kind arising from collective bargaining
negotiations or conclusion of the collective agreement 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 sort to the
contrary shall be null and void.” [Italics supplied]
499
VOL. 304, MARCH 11, 1999
499
And this court elucidated the object and import of the said provision of law in Bank of Philippine Islands
Employees Union-Association Labor Union (BPIEU-ALU) vs. National Labor Relations Commission:17
“The Court reads the afore-cited provision (Article 222 [b] of the Labor Code) as prohibiting the payment
of attorney’s fees only when it is effected through forced contributions from the workers from their own
funds as distinguished from the union funds. x x x”
Noticeably, Article 241 speaks of three (3) requisites that must be complied with in order that the
special assessment for Union’s incidental expenses, attorney’s fees and representation expenses, as
stipulated in Article XII of the CBA, be valid and upheld namely: (1) authorization by a written resolution
of the majority of all the members at the general membership meeting duly 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 employee concerned.
After a thorough review of the records on hand, we find that the three (3) requisites for the validity of
the ten percent (10%) special assessment for Union’s incidental expenses, attorney’s fees and
representation expenses were met.
It can be gleaned that on July 14, 1989, the ABS-CBN Supervisors Employee Union held its general
meeting, whereat it was agreed that a ten percent (10%) special assessment from the total economic
package due to every member would be checked-off to cover expenses for negotiation, other
miscellaneous expenses and attorney’s fees. The minutes of the said meeting were recorded by the
Union’s Secretary, Ma. Carminda M. Munoz, and noted by its President, Herbert Rivera.18
_______________
17 171 SCRA 556, 569.
18 See: p. 205, “Memorandum,” Solicitor General; Rollo, 193-213; Records, pp. 391-393.
500
500
On May 24, 1991, said Union held its General Membership Meeting, wherein majority of the members
agreed that “in as much as the Union had already paid Atty. P. Pascual the amount of P500,000.00, the
same must be shared by all the members until this is fully liquidated.”19
Eighty-five (85) members of the same Union executed individual written authorizations for check-off,
thus:
“Towards that end, I hereby authorize the Management and/or Cashier of ABS-CBN BROADCASTING
CORPORATION to deduct from my salary the sum of P30.00 per month as my regular union dues and
said Management and/or Cashier are further authorize (sic) to deduct a sum equivalent to 10% of all and
whatever benefits that will become due to me under the COLLECTIVE BARGAINING AGREEMENT (CBA)
that may be agreed upon by the UNION and MANAGEMENT and to apply the said sum to the advance
that Management will make to our Union for incidental expenses such as attorney’s fees,
representations and other miscellaneous expenses pursuant to Article XII of the proposed CBA.”20
Records do not indicate that the aforesaid check-off authorizations were executed by the eighty-five
(85) Union members under the influence of force or compulsion. There is, then, the presumption that
such check-off authorizations were executed voluntarily by the signatories thereto. Petitioner’s
contention that the amount to be deducted is uncertain21 is not persuasive because the check-off
authorization clearly stated that the sum to be deducted is equivalent to ten percent (10%) of all and
whatever benefits may accrue under the CBA. In other words, although the amount is not fixed, it is
determinable.
Petitioners further contend that Article 241 (n) of the Labor Code, as amended, on special assessments,
contemplates a
_________________
19 Ibid., p. 206; Minutes of General Membership Meeting; May 24, 1991.
20 Ibid.; Records, pp. 289-374.
21 Petition, p. 13; Rollo, 19.
501
VOL. 304, MARCH 11, 1999
501
general meeting after the conclusion of the collective bargaining agreement.
Subject Article does not state that the general membership meeting should be called after the
conclusion of a collective bargaining agreement. Even granting ex gratia argumenti that the general
meeting should be held after the conclusion of the CBA, such requirement was complied with since the
May 24, 1991 General Membership Meeting was held after the conclusion of the Collective Bargaining
Agreement, which was signed and concluded on December 7, 1989.
Considering that the three requisites aforesaid for the validity of a special assessment were observed or
met, we uphold the validity of the ten percent (10%) special assessment authorized in Article XII of the
CBA.
We also concur in the finding by public respondent that the Bank of the Philippine Islands Employees
Union-ALU vs. NLRC22 is apposite in this case. In BPIEU-ALU, the petitioners, impugned the Order of the
NLRC, holding that the validity of the five percent (5%) special assessment for attorney’s fees is contrary
to Article 222, paragraph (b) of the Labor Code, as amended. The court ratiocinated, thus:
“The Court reads the aforecited provision as prohibiting the payment of attorney’s fees only when it is
effected through forced contributions from the workers from their own funds as distinguished from the
union funds. The purpose of the provision is to prevent imposition on the workers of the duty to
individually contribute their respective shares in the fee to be paid the attorney for his services on
behalf of the union in its negotiations with the management. x x x” [Italics supplied]
However, the public respondent overlooked the fact that in the said case, the deduction of the
stipulated five percent (5%) of the total economic benefits under the new collective bargaining
agreement was applied only to workers who gave their individual signed authorizations. The Court
explained:
______________
22 Supra, p. 11.
502
502
“x x x And significantly, the authorized deductions affected only the workers who adopted and signed
the resolution and who were the only ones from whose benefits the deductions were made by BPI. No
similar deductions were taken from the other workers who did not sign the resolution and so were not
bound by it.” [Italics supplied]
While the court also finds merit in the finding by the public respondent that Palacol vs. Ferrer-Calleja23
is inapropos in the case under scrutiny, it does not subscribe to public respondent’s reasoning—that
Palacol should not be retroactively applied to the present case in the interest of justice, equity and
fairplay.24 The inapplicability of Palacol lies in the fact that it has a different factual milieu from the
present case. In Palacol, the check-off authorization was declared invalid because majority of the Union
members had withdrawn their individual authorizations, to wit:
“Paragraph (o) on the other hand requires an individual written authorization duly signed by every
employee in order that special assessment may be validly checked-off. Even assuming that the special
assessment was validly levied pursuant to paragraph (n), and granting that individual written
authorizations were obtained by the Union, nevertheless there can be no valid check-off considering
that the majority of the Union members had already withdrawn their individual authorizations. A
withdrawal of individual authorization is equivalent to no authorization at all.” x x x [Italics supplied]
In this case, majority of the Union members gave their individual written check-off authorizations for the
ten percent (10%) special assessment. And they have never withdrawn their individual written
authorizations for check-off.
There is thus cogent reason to uphold the assailed Order, it appearing from the records of the case that
twenty (20)25 of
___________________
23 182 SCRA 710.
24 Order dated 31 July 1992; Rollo, 32.
25 Namely: Corina Sanchez, Ma. Angelica Lazo, Isagani Oro, Albert Brillantes, Ernesto Balingit, Victoriano
Rizaldo, Isabelo Al-
503
VOL. 304, MARCH 11, 1999
503
the forty-two (42) petitioners executed a Compromise Agreement26 ratifying the controversial check-off
provision in the CBA.
Premises studiedly considered, we are of the irresistible conclusion and, so find, that the ruling in BPIEU-
ALU vs. NLRC that (1) the prohibition against attorney’s fees in Article 222, paragraph (b) of the Labor
Code applies only when the payment of attorney’s fees is effected through forced contributions from
the workers; and (2) that no deductions must be taken from the workers who did not sign the check-off
authorization, applies to the case under consideration.
WHEREFORE, the assailed Order, dated July 31, 1992, of DOLE Undersecretary B. E. Laguesma is
AFFIRMED except that no deductions shall be taken from the workers who did not give their individual
written check-off authorization. No pronouncement as to costs.
SO ORDERED.
Romero (Chairman), Vitug, Panganiban and Gonzaga-Reyes, JJ., concur.
Order affirmed, but no deduction shall be taken from workers who did not give written check-off
authorization.
Note.—The legal basis of the union’s right to agency fees is neither contractual nor statutory, but quasi-
contractual, deriving from the established principle that non-union employees may not unjustly enrich
themselves by benefiting from employment conditions negotiated by the bargaining union. (Holy Cross
of Davao College, Inc. vs. Joaquin, 263 SCRA 358 [1996])
——o0o——
__________________
barracin, Cesar Solidum, Roberto Saura, Alfon Marquez III, Rosario Villa, Gus Abelgas, Victor Lima,
Erlindo Alvarado, Atanacio Pascual, Edgar Padil, Santos Bautista, Manuel Manio, W. Osinsao and Claude
Vitug.
26 “Annex 39”; Rollo, 78-80.
504
© Copyright 2017 Central Book Supply, Inc. All rights reserved. ABS-CBN Supervisors Employees Union
Members vs. ABS-CBN Broadcasting Corporation, 304 SCRA 489, G.R. No. 106518 March 11, 1999
804
Litton Mills Employees Asso.-Kapatiran vs. Ferrer-Calleja
No. L-78061. November 24, 1988.*
LITTON MILLS EMPLOYEES ASSOCIATION-KAPATIRAN AND ROGELIO ABONG, petitioners, vs.

HONORABLE PURA FERRER-CALLEJA, in her capacity as Director of the Bureau of Labor Relations,
RODOLFO UMALI AND LITTON MILLS, INC., respondents.
Labor Law; Union; Joining a federation is one ground for losing membership in the union.—One of the
grounds for losing membership in the union, as aforestated, is by joining a federation. There is no
dispute in the present case that GATCORD is a labor federation, to which respondent Umali affiliated
the petitioner-union, as evidenced by the mimeographed leaflets he caused to be distributed among
the union-members, urging them to continue affiliating with GATCORD, the Pledge of Allegiance of
newly appointed Shop Steward Norberto David, and the letter of Umali to LMI, dated 20 August 1986,
the last two (2) being attested to by GATCORD's National President Timoteo Aranjuez, and the fact
that the letter dated 20 August 1986 was writen on paper with GATCORD's letterhead. Also, the
affiliation of the petitioner-union with GATCORD was affirmed by Umali himself, when he presented
the alleged 700 signatures of union-members who supported his move of affiliating the union (LMEA-
K) with GATCORD. Hence, it cannot be denied that Umali did not only propose the affiliation, but in
fact affiliated the petitioner-union with GATCORD, in contravention of the above-cited prohibition in
Section 5, Article IV of the petitioner-union's Constitution and By-Laws.
Same; Same; Same; Court finds that the affiliation of petitionerunion with GATCORD was done by
Umali without the support of the majority of the union membership.—This Court takes notice of the
fact that in all of the pleadings submitted by respondent Umali, he never bothered to refute the
charge of the petitioners as to the questioned 161 signatures; neither has he denied that the union
members who opposed the affiliation were more than those who supported it. Hence, this Court finds
that the affiliation of the petitioner-union with GATCORD was done by Umali without the support of
the majority of the union membership.
Same; Same; Same; Same; The affiliation of petitioner-union with GATCORD converted the former's
status from that of an inde-
________________
* SECOND DIVISION.
805
VOL. 167, NOVEMBER 24, 1988

805
pendent union to that of a local of a labor federation.—Furthermore, the Court notes that the
collective bargaining agreement of the petitioner-union (LMEA-K) with LMI was to expire only on 31
October 1987, whereas, Umali affiliated the union around August 1986, or about 14 months before
the expiration of said CBA. The affiliation of the petition-union with GATCORD converted the former's
status from that of an independent union to that of a local of a labor federation. Such change in status
not only affects the identity of the petitioner-union but also its powers, duties and privileges, for as a
local, it will have to contend with and consult the federation, in matters affecting the union.
Same; Same; Same; Same; Same; Affiliation with a federation is a major modification in the status of
the petitioner-union.—The act of affiliating with a federation is a major modification in the status of
the petitioner-union. And such act is a violation of the rule that no modification of the CBA can be
made during its existence, unless either party serves written notice to terminate or modify the
agreement at least sixty (60) days prior to its expiration dated. Hence, there was a violation of the
existing CBA on the part of Umali.
Same; Same; Impeachment; Procedure to be followed in the impeachment of a union officer.—As to

the impeachment of a union officer, Section 2, Article XV of the petitioner-union's Constitution and
By-Laws provides the procedures to be followed, to wit: (1) Impeachment should be initiated by
petition signed by at least 30% of all bonafide members of the union, and addressed to the Chairman
of the Executive Board; (b) A general membership meeting shall be convened by the Board Chairman
to consider the impeachment of an officer; (c) Before any impeachment vote is finally taken, the
union officer against whom impeachment charges have been filed shall be given ample opportunity to
defend himself; and (d) A majority of all the members of the union shall be required to impeach or
recall union officers.
Same; Same; Same; Same; Procedure was not followed by the petitioners when they impeached
Umali.—It clearly appears that the above cited procedure was not followed by the petitioners when
they impeached Umali. To be sure, there was difficulty on the part of the petitioners in complying
with the required procedure for impeachment, considering that the petition to impeach had to be
addressed to the Chairman of the Executive Board of the Union, and that the majority membership
which would decide on the impeachment had to be convened only upon call of the Chairman of the
Executive Board
806
806
who in the case at bar, happened to be respondent Umali himself.

Same; Same; Same; Same; Same; Petitioners should have shown substantial compliance with the
impeachment procedure.—Nevertheless, despite the practical difficulties in complying with the said
procedure, petitioners should have shown substantial compliance with said impeachment procedure,
by giving Umali ample opportunity to defend himself, as contrasted to an outright impeachment, right
after he failed to appear before the first and only investigation scheduled on 27 August 1986 in the
Litton Canteen.
PETITION for certiorari with preliminary injunction to review the decision of the Bureau of Labor
Relations.
Paterno D. Menzon Law Office for petitioners.
The Solicitor General for public respondent.
Ferdinand M. Casis for private respondent Umali.
Marquinez, Juanitas, Perez, Gonzales, Bolos & Associates for respondent, Litton Mills, Inc.
PADILLA, J.:
This is a petition for review on certiorari, with prayer for preliminary injunction, seeking to prevent
private respondent Rodolfo Umali from affiliating the petitioner-union, Litton Mills Employees
Association-Kapatiran (LMEA-K, for short), with the National Union of Garments, Textile Cordage and
General Workers of the Philippines (GATCORD, for short), and to enjoin the latter or any of its
representatives from representing petitioner-union in any capacity whatsoever. The petition also seeks
to declare as null and void petitionerunion's affiliation with GATCORD: that LMEA-K union President,
Rodolfo Umali, be declared impeached, and that respondent company, Litton Mills, Inc. (LMI, for short)
be ordered by this Court to terminate Umali from his employment.
Petitioner-union, LMEA-K, is a legitimate labor organization in the respondent company, LMI, while
individual petitioner, Rogelio Abong, and individual respondent, Rodolfo Umali, are the vice-president,
respectively, of LMEA-K.
The facts of the case are as follows:
On 14 August 1986, without the knowledge and approval of
807
807

the general membership of LMEA-K, Umali "Affiliated" petitioner-union with the federation of
GATCORD. This is evidenced by the Pledge of Allegiance signed by the union's newly appointed shop
steward, Norberto David, dated 14 August 1986, which was attested to by Timoteo Aranjuez,
GATCORD's President, as inducting officer.1
Umali then caused mimeographed leaflets to be distributed to the union-members, urging them to
continue affiliating with GATCORD, at the same time maligning petitioner-union's legal counsel Paterno
D. Menzon, as well as Messrs. Badillo and Abong, the former and incumbent vice-president of
petitioner-union.2
As a consequence, a majority of the union-members, numbering 725,3 out of a total membership of

1,100, more or less, opposed the affiliation of LMEA-K with GATCORD, and expressly manifested their
intention to remain as an independent-union, in a statement, "Sama-Samang Kapasiyahan", dated 18
August 1986,4 which, among others, also authorized petitioner Abong to take appropriate steps against
respondent Umali, including impeachment, should the latter continue the affiliation of the petitioner-
union with GATCORD.
Despite the opposition of a majority of the union membership to the petitioner-union's affiliation with
GATCORD, Umali continued with it, as evidenced by a letter he wrote to LMI, dated 20 August 1986,
which was written on paper with the letterhead of GATCORD printed on it. The said letter, which was in
reference to the number of workers of LMI who were to be given regular appointments, and those who
were to be terminated and replaced, was again attested to by Timoteo Aranjuez, GATCORD's National
President.5
Thereafter, Abong and the majority of the elected union officers signed a letter, dated 24 August 1986,
addressed to Umali, accusing him of disloyalty by reasons of his affiliation with GATCORD, and advising
him to appear before them on
_______________
1 Petition, Annex "A", Rollo, p. 11.
2 Id., Annex "B", Rollo, p. 12.
3 Decision of the Med-Arbiter, Rollo, pp. 34, 36.
4 Petition, Annex "C", Rollo, p. 13.
5 Id., Annex "D", Rollo, p. 14.
808
808

27 August 1986 at 2:00 p.m. in the company canteen, to refute the charge of disloyalty against him. The
same letter warned Umali that his failure to attend said meeting would be interpreted as an admission
on his part of the charge levelled against him. Umali did not show up at the appointed confrontation of
27 August 1986.
Consequently, the majority of the union officers, led by Abong, voted to impeach Umali, who was
informed of this fact by letter, dated 30 August 1986, addressed to him, with copy furnished Mr. James
Go, the senior vice-president of LMI. Abong also wrote the latter, informing him, of Umali's
impeachment, and invoking the provision of the collective bargaining agreement on union security, i.e.,
that the petitionerunion may request LMI to dismiss an impeached officer or members of the union.
The company's position on the request of the petitioners, as stated in its letter to the petitioners, dated
10 September 1986, was that the petitioners should first comply with the provision of the CBA, to wit:
"An employee who is expelled from the Union for cause shall, upon demand by the Union, be
terminated from employment, provided that all pertinent requirements of the Ministry of Labor and
Employment are first complied with; provided that the Union shall hold the company free from any
liability that may arise due to said termination."5-a
In other words, LMI required the petitioners to first thresh out the matter with the proper office of the
Department of Labor and Employment, before it could act on petitioners' request to terminate Umali
from his employment with LMI.
On 25 September 1986, petitioners lodged a complaint against Umali and LMI before the med-arbiter
section of the National Capital Region of the Department of Labor and Employment, docketed as NCR-
LRD-M-9-718-86, praying that, after notice and hearing, an order be issued declaring as valid the
impeachment of Rodolfo Umali and that respondent company be ordered to comply with Sec. 5, par. b
Article IV of the CBA, by
_______________
5-a Rollo, p. 18.
809
809
terminating the employment of Umali, and proclaiming Rogelio Abong, the union's vice-president, as the
new president of the union.6
Umali filed his answer, after which petitioners filed their reply averring that Umali's open defiance of the
will of the majority of the union members for the union to remain an independent union, and Umali's
contention that the majority wanted to affiliate with GATCORD, without submitting up to that time any
evidence to support such contention were clear evidence of his disloyalty to petitioner-union, for which
he ought to be impeached. Thereafter, petitioners filed a Supplemental Reply stating, among others,
that of the 700 signatures of union members eventually submitted by Umali, as belonging to those who
supported affiliation with GATCORD, a) 111 signatures were forged or faked signatures, b) 6 were those
of resigned employees, and c) 44 were by those who signed 2 or 3 times, summing up to a total of 161
signatures that should be excluded from Umali's submission of 700 affirming signatures, thereby leaving
only 539 signatures in favor of affiliation with GATCORD.
Aside from averring unauthorized affiliation of LMEA-K with GATCORD, petitioner-union (LMEA-K)
alleged in its supplemental reply that the mere use by Umali of falsified signatures of union members
was enough reason for his expulsion as president of LMEA-K.
On 15 November 1986, Med-Arbiter Residali Abdullah issued an order declaring that the issue of
affiliation cannot be dealt with in the complaint filed by petitioners, and that the impeachment of Umali
was null and void.
The Med-Arbiter found no valid ground to sustain the impeachment of Rodolfo Umali as president of the
petitionerunion, since Umali was not afforded his right to due process, his impeachment having been
approved without compliance with the procedure laid down in the petitioner-union's constitution and
by-laws. The Med-Arbiter also considered the petitioner-union's "Sama-Samang Kapasiyahan" as mere
declarations of some union members opposing the proposed affiliation of the union with GATCORD, and
stating their preference to
_______________
6 Decision of Med-Arbiter, Rollo, p. 32.
810
810
remain an independent union, but not as a petition charging respondent Umali with a specific offense
against the union.
The Med-Arbiter further held that the letter-decision of the petitioner-union which impeached
respondent Umali was bereft of any legal merit, because the non-appearance of Umali at the first
scheduled meeting of 27 August 1986 cannot be legally construed as an admission on his part of the
charges levelled against him. The Med-Arbiter then held thus:
"Again, even on the assumption that respondent Umali urged the general membership of the
complainant union to join with him in his move to affiliate the union.with the federation but [sic] such
act on the part of Rodolfo Umali cannot to our mind be considered union disloyalty to warrant his
removal from office and his expulsion from the union. It should be noted that Litton Mills Employees
Association-KAPATIRAN is an independent registered labor organization without any affiliation. So that,
respondent Umali cannot be held liable under Par. (b), Section 5, Art. IV of the union's constitution and
by-laws as he was only trying to affiliate the union with the federation for reason, perhaps, to avail [sic]
the services and assistance of the federation and not organizing or joining another labor union,
Organizing or joining another labor union is different from affiliation of the union. The former implies
abandonment of the union membership as what the [sic] respondent Umali did. On this score,
respondent Umali cannot be stripped of his membership much less to remove him (sic) from the union
presidency. xxx.
"As to the second issue, it appearing that the impeachment of respondent Umali is adjudged to be
without valid ground, the union security clause of the existing CBA does not apply. Hence, the prayer of
the complainants to terminate the employment of Rodolfo Umali with Litton Mills, Inc. should not be
given due course."7
Petitioners appealed the Med-Arbiter's order to the public respondent, who, in a Resolution, dated 13
February 1987, dismissed the appeal for lack of merit, and affirmed in toto the order of the Med-Arbiter,
dated 17 November 1986. Petitioner's motion for reconsideration was denied in an order dated 1 April
1987.
Hence, the present recourse.
_______________
7 Rollo, pp. 38-39.
811
811
The controversy, in the case at bar stems from respondent Umali's act of affiliating the petitioner-union
with GATCORD, which caused the union officers to impeach Umali for disloyalty to the union. The
impeachment is anchored on a provision in the petitioner-union's Constitution and By-Laws, which reads
as follows:
"Art. IV, Section 5. Membership may be lost under the following grounds:
xxx xxx xxx
b) Organizing or joining another labor union or any federation.
xxx xxx x x x"7-a (Italics supplied)
One of the grounds for losing membership in the union, as aforestated, is by joining a federation. There
is no dispute in the present case that GATCORD is a labor federation, to which respondent Umali
affiliated the petitioner-union as evidenced by mimeographed leaflets he caused to be distributed
among the union-members, urging them to continue affiliating with GATCORD, the Pledge of Allegiance
of newly-appointed Shop Steward Norberto David, and the letter of Umali to LMI, dated 20 August 1986,
the last two (2) being attested to by GATCORD's National President Timoteo Aranjuez, and the fact that
the letter dated 20 August 1986 was written on paper with GATCORD's letterhead. Also, the affiliation of
the petitionerunion with GATCORD was affirmed by Umali himself, when he presented the alleged 700
signatures of union-members who supported his move of affiliating the union (LMEA-K) with GATCORD.
Hence, it cannot be denied that Umali did not only propose the affiliation, but in fact affiliated the
petitionerunion with GATCORD, in contravention of the above-cited prohibition in Section 5, Article IV of
the petitioner-union's Constitution and By-Laws.
And yet, if the act of Umali in affiliating the petitioner-union with GATCORD, is with the consent of a
majority of the union membership, then any violation of the petitioner-union's
_______________
7-a Rollo, p. 57.
812
812
Constitution and By-Laws becomes of little consequence. It will appear in such case that the union itself
has ratified the act of affiliation. It will be noted that Umali, albeit belatedly, presented the signatures of
700 members of the union, as proof of the support he had from them for the union's affiliation with
GATCORD.
On the other hand, petitioners presented 725 signatures, or 65.9% of the entire union membership, who
signed the "SamaSamang Kapasiyahan", as proof of those who opposed the affiliation, in addition to
petitioners' allegation that out of the 700 signatures presented by Umali, 161 signatures were either
forged or faked, twice or thrice written, or signatures of already resigned employees.
This Court takes notice of the fact that in all of the pleadings submitted by respondent Umali, he never
bothered to refute the charge of the petitioners as to the questioned 161 signatures; neither has he
denied that the union members who opposed the affiliation were more than those who supported it.
Hence, this Court finds that the affiliation of the petitionerunion with GATFORD was done by Umali
without the support of the majority of the union membership.
Furthermore, the Court notes that the collective bargaining agreement of the petitioner-union (LMEA-K)
with LMI was to expire only on 31 October 1987, whereas, Umali affiliated the union around August
1986, or about 14 months before the expiration of said CBA. The affiliation of the petitioner-union with
GATCORD converted the former's status from that of an independent union to that of a local of a labor
federation. Such change in status not only affects the identity of the petitionerunion but also its powers,
duties and privileges, for as a local, it will have to contend with and consult the federation, in matters
affecting the union.
The act of affiliating with a federation is a major modification in the status of the petition-union. And
such act is a violation of the rule that no modification of the CBA can be made during its existence,
unless either party serves written notice to terminate or modify the agreement at least sixty (60) days
prior to its expiration date.8 Hence, there was a violation
_______________
8 Article 253, Labor Code.
813
813
of the existing CBA, on the part of Umali.
As to the impeachment of a union officer, Section 2, Article XV of the petitioner-union's Constitution and
By-Laws provides the procedures to be followed, to wit: (1) Impeachment should be initiated by petition
signed by at least 30% of all bona fide members of the union, and addressed to the Chairman of the
Executive Board; (b) A general membership meeting shall be convened by the Board Chairman to
consider the impeachment of an officer; (c) Before any impeachment vote is finally taken, the union
officer against whom impeachment charges have been filed shall be given ample opportunity to defend
himself; and (d) A majority of all the members of the union shall be required to impeach or recall union
officers.
It clearly appears that the above cited procedure was not followed by the petitioners when they
impeached Umali. To be sure, there was difficulty on the part of the petitioners in complying with the
required procedure for impeachment, considering that the petition to impeach had to be addressed to
the Chairman of the Executive Board of the Union, and that the majority membership which would
decide on the impeachment had to be convened only upon call of the Chairman of the Executive Board
who, in the case at bar, happened to be respondent Umali himself.
Nevertheless, despite the practical difficulties in complying with the said procedure, petitioners should
have shown substantial compliance with said impeachment procedure, by giving Umali ample
opportunity to defend himself, as contrasted to an outright impeachment, right after he failed to appear
before the first and only investigation scheduled on 27 August 1986 in the Litton Canteen.
The above conclusions notwithstanding, the Court believes that the union-members themselves know
what is best for them, i.e., whether they still want respondent Umali as their Union President, and
whether they wish to affiliate their union with GATCORD. And, the best and most appropriate means of
ascertaining the will of the union members is through a certification election.
Consistent with the foregoing observations, it appears from the record that a group of employees
headed by petitioner Rogelio Abong broke away from the petitioner-union and formed
814
814
a new union, called Litton Mills Workers Union, and that in a certification election that followed, said
Litton Mills Workers Union, headed by petitioner Abong, was chosen as the collective bargaining agent.9
Because of this supervening event, it now appears clear that the majority of the heretofore members of
petitioner-union (LMEA-K) do not wish respondent Umali to continue as their president; neither do they
wish their union to be affiliated with the GATCORD federation. Consequently, the issues in this petition
have become moot and academic.
The Manifestation of the petitioners, dated 9 October 1987, after informing the Court of the election of
the Litton Mills Workers union headed by petitioner Abong, as the collective bargaining representative
in LMI, reiterates the prayer that respondent Umali be considered and declared as impeached. This issue
has, to the mind of the Court, likewise become moot and academic for it is inconceivable that Umali will
be retained as president of the new collective bargaining agent, the Litton Mills Workers Union, while
Umali's continued presidency of LMEA-K., as a minority union if still existing in LMI, has ceased to be of
any moment in the instant case.
WHEREFORE, the petition is DENIED for having become moot and academic. Without pronouncement as
to costs.
SO ORDERED.
Melencio-Herrera, (Chairman), Paras, Sarmiento and Regalado, JJ., concur.
Petition denied.
Note.—Employees's right to form unions to protect their interest is statutory and constitutionally
recognized. (Vassar Industries Employees Union (VIEU) vs. Estrella, 82 SCRA 280).
——o0o——
_______________
9 Rollo, p. 114. This information is contained in a Manifestation, dated 9 October 1987, filed by counsel
for the petitioners, served on all the parties, and unrebutted by respondents.
815
© Copyright 2017 Central Book Supply, Inc. All rights reserved. Litton Mills Employees Asso.-Kapatiran
vs. Ferrer-Calleja, 167 SCRA 804, No. L-78061 November 24, 1988
VOL. 144, SEPTEMBER 23, 1986
245
Villaor vs. Trajano
No. L-69188. September 23, 1986.*
MIGUEL J. VILLAOR and CECILIO V. BAUTISTA, petitioners, vs. HON. CRESENCIANO B. TRAJANO, in his
capacity as Director, Bureau of Labor Relations of the Ministry of Labor and Employment; OCTAVIO A.
PINEDA, RAFAEL SAMSON, EDUARDO C. FLORA, MARIO S. SANTOS and CARLOS BANDALAN,
respondents.
Labor Law; Jurisdiction; The Bureau of Labor Relations has jurisdiction to resolve election disputes in
labor unions.—From the aforequoted provisions, it is safe to conclude that the freedom of the unions
from interference from the government presupposes that there is no inter-union or intra-union
conflict. In the instant case, there is no question that there is an intra-union conflict.
Same; Same; The petitioners are deemed to have exhausted the administrative remedies prescribed
in the union by-laws by reason of the refusal of the Board of Directors to approve the Special Board of
Inquiry that is to investigate the election protest.—The Board of Inquiry, created by the President, has
the sole power to investigate cases involving acts committed by any officer, member of the Board or
member of the Association that the power of the Board to remove or discipline any union officer,
including the President himself or the COMELEC members cannot be exercised until the Board of
Inquiry submits its report and recommendation based on their findings on the acts complained of
after due investigation. With this as a premise, petitioners claim that in their Reply and Opposition
dated
_______________
* SECOND DIVISION.
246
246
Villaor vs. Trajano
September 14, 1984, in connection with the three (3) consolidated cases before Med-Arbiter
Napoleon V. Fernando, Nos. NLR-LRD-M-6-185484, NLR-LRD-M6-156-84 and NLR-LRD-N-6-204-84, they
called attention to the fact that they have exhausted administrative remedies provided in the PALEA
Charter—On May 17, 1984, PALEA President Miguel J. Villaor created the Special Board of Inquiry and
appointed Rey Taggueg, as chairman, Ildefonso Medina and Rodolfo de Guzman, as members,
however, the Board refused to approve the newly created Special Board of Inquiry for fear that they
themselves may be the first to be subjected to investigation for the acts complained of in Case No.
NCR-LRD-M-6-156-84. This claim of petitioners was never denied by the private respondents.
Accordingly, there is no question that the Med-Arbiter rightly exercised jurisdiction over the case.
Same; Private respondent Santos is bound by his conceding to the election of Villaor made before
filing the protest at bar.—From the aforequoted provision, as opined by the Solicitor General, “once a
candidate concedes the election, he is precluded from filing a protest.” Private respondent Mario S.
Santos, prior to filing his election protest, in his letter of March 6, 1984 to herein petitioner Miguel J.
Villaor, had already unequivocably conceded the position of president to the latter.
Same; The acts of PALEA’s Comelec of ordering the opening of ballot boxes and ordering a special
election without hearing were in violation of the union’s by-laws.—Likewise, from the aforequoted
provision, it is mandatory for the PALEA COMELEC to set the election protest for appropriate hearing
on the issues raised before it could finally resolve the case. In the instant case, it is undisputed that
the PALEA COMELEC, without conducting any formal hearing on the issues raised, on the basis of the
pleadings of the parties, informed the parties in a letter dated April 23, 1984 that the ballot boxes in
the questioned precincts would be opened and their voters’ list retrieved on April 25, 1984 at 10:00 in
the morning. Likewise, on April 27, 1984, the PALEA COMELEC, without the benefit of formal hearing,
resolved the election protest by setting aside the proclamation dated February 25, 1984 of Miguel J.
Villaor as PALEA President, Cecilio V. Bautista as Vice-President, and Ernesto P. Galang as Secretary;
directing the canvassing of the segregated ballots in precincts 1, 4, and 4-A; and directing the holding
of a special election in Cebu and Mactan on May 4, 1984.
Same; The order by PALEA’s Comelec for a special election
247
247
Villaor vs. Trajano
while the Med-Arbiter is hearing the protest shows its partiality.—The holding of the May 4, 1984
special election, when its legality is still pending determination by the Med-Arbiter, therefore, further
shows the partiality of the respondent PALEA COMELEC members.
PETITION to review the decision of the Bureau of Labor Relations.

Wenceslao C. Laureta for petitioners.
Bernardino Julve for private respondents.
Porter Puguon for public respondent.
PARAS, J.:
This is a petition to review on certiorari the November 14, 1984 decision of respondent BLR Director
Cresenciano B. Trajano in BLR Case No. A-182-84, entitled “Miguel J. Villaor, et al., Petitioners vs.
Octavio Pineda, et al., Respondents, and Mario S. Santos, et al., Intervenor,” setting aside the
MedArbiter’s Orders of June 27, 1984 and August 1, 1984.
The Philippine Air Lines Employees’ Association (PALEA) is the bargaining agent of the workers in the
Philippine Air Lines (PAL). The union has a Board of Directors composed of the president, vice-president,
secretary, treasurer and 17 directors elected for a term of three (3) years by members in “good
standing” on the last Thursday of February of the election year. It has also a Commission on Election
(COMELEC) whose members sit for a term of three (3) years. At present, the COMELEC is composed of
herein respondents Octavio Pineda, as chairman, and Rafael Samson and Edwardo Flora, as members.
The then incumbent president and vice-president were herein respondents Mario S. Santos and Carlos
Bandalan, respectively.
On February 17-23, 1984, in Metro Manila and on February 20, 1984 in Cebu/Mactan area, PALEA held
its election for National Officers. Herein petitioner Miguel J. Villaor won the election over respondent
Mario S. Santos for the presidency, Villaor obtaining 1,954 votes to Santos’ 1,809 votes, or a dif-
248
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Villaor vs. Trajano
ference of 145 votes. Likewise, herein petitioner Cecilio V. Bautista won against Carlos V. Bandalan for
the position of vice-president, Bautista garnering 1,264 votes as against Bandalan’s 1,220 votes, or a
difference of 44 votes. They were proclaimed on February 25, 1984.
Subsequently, the defeated candidates—respondent Mario S. Santos, for president; respondent Carlos
V. Bandalan, for vice-president; and Antonio Josue, for secretary, filed their election protests with the
PALEA COMELEC within the 30 day reglementary period, as provided under the Constitution and By-
Laws of the Association, on the grounds that (1) a number of votes in precincts 1, 4 and 4-A were
segregated and not counted; and (2) a substantial number of PALEA members in Cebu/Mactan area
were not able to vote on February 20, 1984 by reason of the voting days having been reduced from two
(February 20-21, 1984) to just one day (February 20, 1984). Respondent Mario S. Santos filed his protest
on March 12, 1984; respondent Carlos Bandalan filed his protest on February 27, 1984; and Antonio
Josue on March 14, 1984, before PALEA COMELEC composed of the herein other respondents.
Meanwhile, on March 6, 1984, respondent Mario S. Santos sent petitioner Miguel J. Villaor a letter, the
body of which reads—
“We formally turnover to you PALEA’s CBA proposals in the ongoing PAL-PALEA CBA negotiations. Other
pertinent records are either accompanying these proposals or on file with the office.
“Other PALEA properties, including the President’s car and another vehicle, shall also be turned over to
you at the appropriate time.
“On the CBA negotiation, we would like to inform you that we are filing a manifestation with the
Director-Bureau of Labor Relations in order to withdraw PALEA’s declaration of deadlock. This will give
you and the other officers-elect a free hand to continue with the PAL-PALEA CBA negotiation.
“As we have the common objective of protecting and promoting the interests of our members, we wish
you all the luck and best of everything for our members and our union.”
249
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Villaor vs. Trajano
On April 17, 1984, petitioners filed their joint Comment/Answer to the election protests cases, and two
(2) basic issues were joined, to wit:
1. Whether or not the more than 40 to 47 ballots cast by alleged qualified PALEA members in Precincts
1, 4 and 4-A which were segregated and invalidated actually resulted in the disenfranchisement of said
PALEA voters; and
2. Whether or not the qualified PALEA voters in the Cebu/Mactan areas were deprived of their right to
vote as a result of the sudden change from the two day traditional election days in previous years to just
one day.
On the basis of the election protests and the Comment/Answer thereto, respondent PALEA COMELEC
members, in a letter dated April 25, 1984, informed the parties that the ballot boxes in the questioned
precincts would be opened and their voters list retrieved on April 25, 1984 at 10:00 in the morning.
On April 24, 1984, herein petitioners Miguel J. Villaor and Cecilio V. Bautista, and Ernesto P. Galang filed
a complaint/petition with the Regional Office of the Ministry of Labor and Employment (MOLE) against
the PALEA COMELEC members, seeking their disqualification from their/positions as such on the ground
of alleged partiality for the protestants. The Regional Office summoned the parties to appear before
Med-Arbiter Renato D. Parungao “on the 25th of April at 9:30 a.m.”
On April 25, 1984, herein petitioners Miguel J. Villaor and Cecilio V. Bautista, and respondent PALEA
COMELEC member Edwardo C. Flora appeared before the Med-Arbiter who issued an Order “enjoining
the respondents from opening the ballot boxes subject of the controversy.” On the same day, at 10:30
a.m. respondents Octavio Pineda and Rafael Samson proceeded to open the ballot boxes.
On April 27, 1984, respondents, sitting en banc, resolved the election protests, the dispositive portion of
which reads—
“WHEREFORE, AND IN VIEW OF ALL THE FOREGOING, THE PALEA COMELEC HEREBY RESOLVES, AS IT
250
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Villaor vs. Trajano
HEREBY RESOLVED—
“1. To set aside the proclamation dated February 25, 1984 of Miguel J. Villaor as PALEA President, Cecilio
V. Bautista as Vice-President and Ernesto P. Galang as Secretary;
“2. To count the segregated votes of qualified PALEA members, as verified, in Precincts 1, 4 and 4-A. The
counting shall be held on May 4, 1984 at 1300 H at the PALEA COMELEC Office;
“3. To hold a special election on May 4, 1984 from 0500 H to 1700 H, in Cebu/Mactan to allow PALEA
members, not able to vote on February 20, 1984, to cast their votes for the positions of President, Vice-
President and Secretary; and
“4. To proclaim the winning candidates for PALEA President, Vice-President and Secretary immediately
after the election, counting and canvassing of votes as hereinabove indicated.
SO RESOLVED.”
On May 3, 1984, petitioners filed a motion with the MedArbiter to cite COMELEC members for
contempt, to suspend them from office, and to annul their Resolution of April 27, 1984 “for being issued
without jurisdiction.” On the same day, a notice was issued directing the parties and the petitioners’
counsel to appear for hearing at 1:30 p.m. on May 3 and 4, 1984. On the May 3, 1984 scheduled hearing,
none of the parties appeared, and on the May 4, 1984 scheduled hearing, only the petitioners’ counsel
appeared.
In conformity with the Resolution of April 27, 1984, respondents PALEA COMELEC members counted the
segregated ballots in precincts 1, 4 and 4-A on May 4, 1984 and likewise held on said date a special
election in Cebu/Mactan area. As a result of the election of May 4, 1984, Mario S. Santos, Carlos V.
Bandalan and Ernesto Galang, were proclaimed on May 5, 1984 as the duly elected President, Vice-
President and Secretary respectively by PALEA COMELEC.
On May 8, 1984, Petitioner Miguel J. Villaor filed a motion to annul the May 4, 1984 election and the
proclamation of the winners contending that these were “premature” as no action had yet been taken
on the motion to declare the April 27, 1984 Resolution void. On May 31, 1984, the respondents filed
their omnibus
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Villaor vs. Trajano
answer to the petition and the subsequent motions filed by the petitioners.
On the same date, May 31, 1984, herein respondents Mario S. Santos and Carlos V. Bandalan filed their
Notice To Admit Intervention (Record, p. 128) in the case filed by Villaor, et al. against the PALEA
COMELEC members. The intervention was allowed when therein petitioners withdrew their opposition
thereto. The intervenors likewise manifested that they were adopting the position paper filed by the
respondents therein as their own.
On June 5, 1984, petitioners filed a motion for injunction alleging that Mario S. Santos and “his cohorts”
had inveigled the Board of Directors to adopt a resolution including Santos in the union panel and that
as a result thereof, the PAL refused to continue negotiating with the union.
On June 8, 1984, herein respondents Mario S. Santos and Carlos V. Bandalan filed their answer in
intervention alleging that they were duly proclaimed officers of the union and the ones recognized by
the Board of Directors.
On the same day, June 8, 1984, the Med-Arbiter issued a temporary restraining order “enjoining the
respondents and the intervenors to cease and desist from acting as PALEA President, Vice-President and
Secretary in order to maintain the status quo prevailing prior to the filing of the instant petition.” The
Med-Arbiter furthermore directed them to show cause why injunction should not be granted in favor of
the petitioners. The intervenors filed an opposition on June 19, 1984.
On June 27, 1984, the Med-Arbiter issued a writ of preliminary injunction (Ibid., pp. 116417) “enjoining
both the respondents and intervenors to cease and desist from further committing the acts complained
of until the intra-union conflict and all its attendant incidents are finally resolved.” Moreover, the Med-
Arbiter declared that “Miguel J. Villaor remains as President of the Philippine Airlines Employees’
Association (PALEA) unless ordered otherwise.”
The Med-Arbiter, after hearing, issued an Order dated August 1, 1984, (Ibid, pp. 119-127) the dispositive
portion of which reads—
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Villaor vs. Trajano
“WHEREFORE, premises considered the petition is hereby granted and let an order issue, as it is hereby
issued:
“a) Declaring respondents Octavio Pineda, Rafael Samson and Edwardo Flora as disqualified from their
office as chairman and members, respectively, of the PALEA Commission on Elections and ordering them
to desist from further performing their functions as Comelec officers;
“b) Declaring as null and void Resolution dated 27 April 1984, promulgated ex-parte in complete
violation of Sec. 6, Article XIX of the PALEA Constitution and By-laws;
“c) Declaring the special election conducted by the respondents (PALEA Comelec) on 4 May 1984 as
invalid and that the results thereof, proclaiming Mario S. Santos, Carlos V. Bandalan, as President and
Vice-President, respectively, as likewise declared null and void;
“d) The writ of preliminary injunction dated 27 June 1984, enjoining intervenors Mario S. Santos and
Carlos V. Bandalan as President and Vice-President, of PALEA, but, also from interfering with the on-
going CBA negotiations between the PAL Management and PALEA and also from interfering in any
manner with the operation of the activities of PALEA, shall continue to remain binding and effective until
this intra-union conflict and its attendant aspects are finally resolved and terminated, in which case the
said injunctive writ shall likewise be dissolved.”
Therein respondent PALEA COMELEC members and intervenors Mario S. Santos and Carlos V. Bandalan
appealed the said Order of the Med-Arbiter to the Bureau of Labor Relations (BLR).
BLR Director Cresenciano B. Trajano, in a decision dated November 14, 1984, (Ibid., pp. 33-42) set aside
the Med-Arbiter’s Orders of June 27, 1984 and August 1, 1984, and at the same time dismissed the
petition of Miguel J. Villaor and Cecilio V. Bautista for lack of merit. Hence, the instant petition (Ibid., pp.
56-115).
The First Division of this Court, in a Resolution dated January 16, 1985, resolved without giving due
course to the petition to require the respondents to comment within ten (10) days from notice thereof
(Ibid., p. 203). In compliance with the said Resolution, private respondents
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Villaor vs. Trajano
filed their comment (Ibid., pp. 237-247) on March 18, 1985.
On March 28, 1985, petitioners filed their “Reply” to the comment filed by the private respondents.
On March 29, 1985, the Solicitor General filed his comment. In the same, the Solicitor General
concluded that it is his opinion that respondent BLR Director committed reversible error in setting aside
the Med-Arbitef’s Orders, and recommended that the instant petition be given due course.
Petitioners, in compliance with the Resolution of the First Division of this Court dated April 22, 1985
(Ibid., p. 273) filed on May 17, 1985 their “Reply” to the “Comment” filed by the Solicitor General.
Public respondent, in compliance with the June 16, 1985 Resolution of the First Division of this Court,
filed his comment (Ibid., pp. 327-374) on August 8, 1985.
The First Division of this Court, in a Resolution dated August 26, 1985 (Ibid., p. 374-a) resolved (a) to give
due course to the petition; and (b) to require the parties to submit simultaneous memoranda within
thirty (30) days from notice.
Petitioners filed their memorandum (Ibid., pp. 391-435) on October 28, 1985; Private respondents filed
their memorandum (Ibid., pp. 438-464) on November 5, 1985; and public respondent, in a “Motion”
dated November 19, 1985 (Ibid., pp. 462-464), respectfully moved that the comment he has filed be
treated and considered as memorandum. Said motion was granted by the First Division of this Court in
its Resolution of January 13, 1986 (Ibid., p. 476).
The sole issue in this case is—
Whether or not the decision of public respondent Bureau of Labor Relations Director issued on
November 14, 1984 was promulgated with grave abuse of discretion amounting to lack of jurisdiction.
In his Decision of November 14, 1984 (p. 7, Ibid., p. 39), Public respondent BLR Director Cresenciano B.
Trajano, in reversing Med-Arbiter Renato D. Parungo’s ruling disqualifying therein respondents as
members of the PALEA COM-
254
254
Villaor vs. Trajano
ELEC, stressed that the Philippine Constitution assures the right of workers to self-organization and this
right implies the freedom of unions from interference by employers and the government; that it
includes the right of unions to elect their officers in full freedom and guarantee that the government
refrains from any interference which would restrict this right or impede its lawful exercise; and that “It
shall be unlawful for any person,” Article 247 of the Labor Code states, “to unduly interfere with
employees and workers in their exercise of the right to self-organization.” With the foregoing as his
premise, he opined that the right of self-organization is impaired when the government dissolves a
union COMELEC and proceeds to resolve an election protest pending before it.
In this connection, attention is invited to Article 226 of the Labor Code, which reads—
“ART. 226. Bureau of Labor Standards.—The Bureau of Labor Relations and the Labor Code relations
divisions of the regional offices of the Department of Labor (now the Ministry of Labor and Employment)
shall have original and exclusive 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 arising from or affecting labor-
management relations in all workplaces whether agricultural or non-agricultural, except those arising
from the implementation of collective bargaining agreements which shall be the subject of grievance
procedure and/or voluntary arbitration.”
as supplemented by Policy Instruction No. 6—relating to the distribution of jurisdiction over labor
cases—
“x x x xxx xxx
“3. The following cases are under the exclusive original jurisdiction of the Med-Arbiter Section of the
Regional Office:
xxx xxx xxx
“b) Intra-union cases.”
From the aforequoted provisions, it is safe to conclude that the freedom of the unions from interference
from the government presupposes that there is no inter-union or intra-union conflict. In the instant
case, there is no question that there is an intraunion conflict.
255
255
Villaor vs. Trajano
Public respondent further opined that the COMELEC should have been allowed to discharge its functions
without prejudice to the right of petitioners to apply for relief from the Board of Directors. He averred
that under the union constitution, the Board has the power to remove or discipline, by three-fourths’
votes, any union officer including the president himself or the members of the COMELEC, and
accordingly concluded that only after the remedy failed could the petitioners be allowed to bring their
case to the Med-Arbiter. In short, the petitioners should first exhaust administrative remedies before
bringing their case to the Med-Arbiter.
Anent this opinion of public respondent, petitioners averred that pursuant to Section 4 of Article VII of
the PALEA Constitution and By-Laws, which reads;
“Section 4—As a fact-finding body, the Chairman and members of the Board of Inquiry (created by the
President) shall have the sole power to conduct investigation on involving an act specified under Article
18, Section of this Constitution committed by any officer, member of the board or members of the
Association and submit thereto reports and recommendations based on their findings to the Board of
Directors who shall have the sole power to render decisions and impose penalty to whoever is guilty.”
The Board of Inquiry, created by the President, has the sole power to investigate cases involving acts
committed by any officer, member of the Board or member of the Association that the power of the
Board to remove or discipline any union officer, including the President himself or the COMELEC
members cannot be exercised until the Board of Inquiry submits its report and recommendation based
on their findings on the acts complained of after due investigation. With this as a premise, petitioners
claim that in their Reply and Opposition dated September 14, 1984, in connection with the three (3)
consolidated cases before Med-Arbiter Napoleon V. Fernando, Nos. NLR-LRD-M-6-185-184, NLR-LRD-
M6-156-84 and NLR-LRD-N-6-204-84, they called attention to the fact that they have exhausted
administrative remedies provided in the PALEA Charter—On May 17, 1984, PALEA President Miguel J.
Villaor created the Special Board of Inquiry and ap-
256
256
Villaor vs. Trajano
Rodolfo de Guzman, as members, however, the Board refused to approve the newly created Special
Board of Inquiry for fear that they themselves may be the first to be subjected to investigation for the
acts complained of in Case No. NCR-LRD M-6-156-84. This claim of petitioners was never denied by the
private respondents.
Accordingly, there is no question that the Med-Arbiter rightly exercised jurisdiction over the case.
Section 6 of Article XIX of the PALEA Constitution provides:
“Sec. 6. In cases where a situation arises, whereby the losing candidate does not concede to the result of
the election, he may, if he so desires, submit in writing, his protest to the Commission on Election within
30 days after the proclamation of the winning candidates and the Commission on Election, sitting en
banc, shall hear and decide such protest. x x x.
From the aforequoted provision, as opined by the Solicitor General, “once a candidate concedes the
election, he is precluded from filing a protest.” Private respondent Mario S. Santos, prior to filing his
election protest, in his letter of March 6, 1984 to herein petitioner Miguel J. Villaor, had already
unequivocably conceded the position of president to the latter.
Likewise, from the aforequoted provision, it is mandatory for the PALEA COMELEC to set the election
protest for appropriate hearing on the issues raised before it could finally resolve the case. In the instant
case, it is undisputed that the PALEA COMELEC, without conducting any formal hearing on the issues
raised, on the basis of the pleadings of the parties, informed the parties in a letter dated April 23, 1984
that the ballot boxes in the questioned precincts would be opened and their voters’ list retrieved on
April 25, 1984 at 10:00 in the morning. Likewise, on April 27, 1984, the PALEA COMELEC, without the
benefit of formal hearing, resolved the election protest by setting aside the proclamation dated
February 25, 1984 of Miguel J. Villaor as PALEA President, Cecilio V. Bautista as Vice-President, and
Ernesto P. Galang as Secretary; directing the canvassing of the segregated ballots SUPREME COURT
REPORTS ANNOTATED
257
257
Villaor vs. Trajano
in precincts 1, 4, and 4-A; and directing the holding of a special election in Cebu and Mactan on May 4,
1984.
Besides, it appears that respondents Octavio Pineda and Rafael Samson intentionally disregarded the
summons of Med-Arbiter Renato D. Parungo to appear before him at 9:00 a.m. on April 25, 1984 so that
they can carry out their plan to open the ballot boxes. Please note that the herein petitioners alleged
that Med-Arbiter Parungo issued a restraining order enjoining the respondents, as PALEA COMELEC
members, to refrain from proceeding with their plan to open the ballot boxes. Said restraining order was
personally served on respondent Edwardo Flora who immediately called the PALEA office and after
respondent Octavio Pineda was on the phone, Flora informed him, in the presence of Med-Arbiter
Parungo, about the restraining order served upon them. Notwithstanding said information, respondents
Pineda and Samson went ahead and opened the ballot boxes as planned. This allegation of petitioners
was never denied by the respondents. Respondent PALEA COMELEC members, likewise disregarded
Med-Arbiter Renato D. Parungo’s notice for them to appear for hearing at 1:30 p.m. on May 3 and 4,
1984.
The May 4, 1984 special election in Cebu and Mactan is without factual and legal justification. As aptly
observed by the Solicitor General, the same was resorted to only to accommodate the herein other
private respondents—
“There is absolutely no justification for calling the said May 4, 1984 election. There is no law which
allows ‘piece meal’ elections. Obviously, such move was resorted to by the PALEA Comelec to
accommodate defeated candidates for president and vice-president in the February 20, 1984 election,
Mario and Carlos Bandalan (respondent herein), and enable them to overcome the winning margin of
winning candidates therein, Villaor and Bautista (herein petitioners), who won by only 145 and 44 votes,
respectively.
It is the contention of the protestants that a great number of PALEA members were deprived of their
right to vote because it had been the tradition since 1969 to hold election in Cebu and Mactan for two
days; and that the holding of elections for only one day was done without notice to all PALEA members
258
258

Villaor vs. Trajano
in said station. On the other hand, it is the contention of the petitioners that the change was agreed
upon by all the candidates concerned in a conference held at SMCD Office, Nichols Field, on February
20, 1982. On said controversy, while public respondent found for the protestants, the Solicitor General
is for the petitioners. Be that as it may, it is a fact that the PALEA COMELEC issued on February 15, 1984
a bulletin announcing that the elections in that area would be only on February 20, 1984. Hence, it
cannot be said that the voters therein were not duly notified. In addition to this, worth mentioning is the
comment of the Solicitor General, which reads:
“x x x. Besides, we do not see how these 103 members could have failed to know about the one-day
election. It was held within the office premises, and, surely, they must have been told of such fact by the
other members who voted in the election. It would appear that these 193 members simply did not
bother to vote for one reason or another. And we do not see the necessity of holding a two-day election
in said areas with only 500 members, and hold a one-day election in Metro Manila area which has about
4,000 members. That it is the tradition to hold a two-day election in said areas is not a valid argument.
Tradition can always be overturned, as what happened in the instant case.”
The holding of the May 4, 1984 special election, when its legality is still pending determination by the
Med-Arbiter, therefore, further shows the partiality of the respondent PALEA COMELEC members.
WHEREFORE, the assailed decision of respondent BLR Director is hereby SET ASIDE and the Orders of
June 27, 1984 and August 1, 1984 of Med-Arbiter Renato D. Parungo are hereby REVIVED.
SO ORDERED.
Feria (Chairman), Fernan, Alampay and Gutierrez, Jr., JJ., concur.
Decision set aside and orders revived.
——o0o——
259
© Copyright 2017 Central Book Supply, Inc. All rights reserved. Villaor vs. Trajano, 144 SCRA 245, No. L-
69188 September 23, 1986
VOL. 211,JULY27,1992
843
Pepsi-Cola Sales and Advertising Union vs. Secretary of Labor
G.R. No. 97092. July 27, 1992.*
PEPSI-COLA SALES AND ADVERTISING UNION, petitioner, vs. HON. SECRETARY OF LABOR and
ROBERTO ALISASIS, respondents.
Labor Law; Words and Phrases; Jurisdiction; A union member’s claim under the union benefit plan is
an intra-union conflict under the med-arbiter’s jurisdiction.—No definition is given by law of these
precise terms, “intra-union and inter-union conflicts.” It is known, however, that “intra-” and “inter-”
are both combining forms, prefixes—the first, “intra-,” meaning “within, inside of [intramural,
intravenous];” and the other, “inter-,” denoting “1. between or among: the second element is singular
in form [interstate] 2. with or on each other (or one another), together, mutual, reciprocal, mutually,
or reciprocally [interact].” An intra-union conflict would therefore refer to a conflict within or inside a
labor union, and an inter-union controversy or dispute, one occurring or carried on between or among
unions. In this sense, the controversy between Alisasis and his union, PSAU—respecting the former’s
rights under the latter’s “Mutual Aid Plan”—would be an intra-union conflict under Article 226 of the
Labor Code and hence, within the exclusive, original jurisdiction of the MedArbiter of the Bureau of
Labor Relations whose decision, it may additionally be mentioned, is appealable to the Secretary of
Labor.
Same; Same; Same.—Certainly, said controversy is not one of those within the jurisdiction of the
Labor Arbiters in accordance with Article 217 of the Code, it not being an unfair labor practice case, or
a termination dispute, or one involving wages, rates of pay, hours of work and other terms and
conditions of employment (which is “accompanied with a claim for reinstatement”), or one for
damages arising from the employer-employee relations, or one for a violation of Article 264 of the
Code, or any other claim arising from employer-employee relations, or from the interpretation or
implementation of a collective bargaining agreement or of company personnel policies.
Same; A union member dismissed for a valid cause though his dismissal was arbitrary, cannot claim
any benefit from his labor union’s mutual aid and benefit plan.—It was merely “the manner in which
such a dismissal from employment was effected x x (that was
__________________
*SECOND DIVISION.
844
844
deemed as) not in accordance with law, (there having been) failure to comply with the notice
requirement under Batas Pambansa Blg. 130 on termination of employees.” That imperfection is,
however, a circumstance quite distinct from the existence of what the NLRC has clearly and expressly
conceded to be a “valid and lawful cause in the dismissal of complainant by respondent.” And this is
precisely the reason why, as already pointed out, the NLRC declined to accord to Alisasis all the
remedies or reliefs usually attendant upon an illegal termination of employment—e.g., reinstatement,
award of damages—although requiring payment by the employer of the sum of P1,000.00 simply on
account of its failure “to comply with the notice requirement under Batas Pambansa Blg. 130 on
termination of employees.”
Same; Same.—The petitioner union (PSAU) was therefore quite justified in considering Alisasis as a
“member dismissed for cause,” and hence disqualified under its amended by-laws to claim any
“Benefit or return of contributions x x under any circumstances, x x.” The ruling to the contrary of the
Med-Arbiter and the Secretary of Labor Employment must thus be set aside as tainted with grave
abuse of discretion.
PETITION for certiorari to review the order and resolution of the secretary of Labor and Employment.
Gilbert P. Lorenzo, for petitioner.
Florante M. Yambot, for private respondent.
NARVASA, C.J.:
In its Decision in G.R. No. 80587 (Wenphil Corporation v. NLRC), promulgated on February 8, 1989,1 this
Court2 laid down the doctrine governing an illegal dismissal case where the employee satisfactorily
establishes that his employment was terminated without due process—i.e., without written notice to
him of the charges against him and without according him opportunity to defend himself personally or
through a representative—but the employer nevertheless proves the exis-
_________________
1170 SCRA 69.
2First Division, per Gancayco, J., who has since retired.
845
VOL. 211,JULY27,1992
845
tence of just cause for the employee’s dismissal. The controlling principle in such a case is that since the
employee’s dismissal was for just cause, he is entitled neither to reinstatement or back wages nor
separation pay or salaries for the unexpired portion of his contract, being entitled only to the salaries
earned up to the last day of employment; at the same time, however, as a general proposition, the
employer is obliged, on account of its failure to comply with the requirements of due process in
terminating the services of the employee, to pay damages to the latter fixed at P1,000.00, a sum
deemed adequate for the purpose.
This doctrine, which has since been reaffirmed by this Court,3 applies in the case at bar, in resolution of
the issue of whether or not the private respondent, Roberto Alisasis, may be considered to have been
dismissed for just cause within the meaning of the charter papers organizing and governing a mutual aid
program of which he was a participant.
From 1964 until sometime about 1985, Alisasis was an employee of the Pepsi-Cola Bottling Co., Inc. and
later, of the Pepsi-Cola Products (Philippines) Inc., after the latter had bought out the former.4 He was
also a member of the labor organization of all regular route and truck salesmen and truck helpers of the
company—the Pepsi Cola Sales & Advertising Union (PSAU)—from June 1, 1965 up to the termination of
his employment in 1985.5 As a member of the PSAU, he was also a participant in the “Mutual Aid Plan”
set up by said union sometime in 1980. During the entire period of his employment, there were
regularly deducted from his wages the amounts corresponding to union dues as well as contributions to
the fund of the Mutual Aid Plan.6
On May 7, 1986, Alisasis filed with the NLRC Arbitration Branch, Capital Region, Manila, a complaint for
illegal dismissal against Pepsi-Cola, Inc.7 This resulted in a judgment by
_________________
3SEE Seahorse Maritime Corp. v. NLRC, 173 SCRA 390 (1980); Kwikway Engineering Works v. NLRC, 195
SCRA 526 (1991).
4Rollo, pp. 37-38.
5Id., pp. 25, 32-33.
6Id., pp. 25, 55.
7Docketed as NLRC NCR Case No. 5-1794-86.
846
846
the Labor Arbiter dated January 25, 1988 declaring him to have been illegally dismissed and ordering the
employer to reinstate him “to his former position without loss of seniority rights and with full
backwages for one (1) year from the time he was not allowed to report for work x x.”8 The judgment
was subsequently affirmed with modification by the Fourth Division of the NLRC dated December 29,
1989,9 disposing of the appeal as follows:10
“In view therefore of the foregoing considerations, the decision appealed from is hereby modified in the
sense that the order for respondent to reinstate complainant is hereby set aside. The rest of the
decision shall stand.”
The deletion of the relief of reinstatement was justified by the NLRC in the following manner:11
“Certainly, with the actuations of complainant, respondent had ample reason or enough basis then to
lose trust and confidence in him. Complainant, being a salesman, should be considered to have occupied
a position of responsibility so that, if respondent had lost trust and confidence in him, the former could
validly and legally terminate the services of the latter (Lamaan Trading, Inc. vs. Leodegario, Jr., G.R.
73245, September 30, 1986).
However, although there was valid and lawful cause in the dismissal of complainant by respondent, the
manner in which it was effected was not in accordance with law. Complainant was not given written
notice by respondent but was only verbally advised, thru its Field Sales Manager, sometime in May 1985
that he should not report for work anymore, obviously, because there was a charge against him. Andthis
is what makes the dismissal of complainant arbitrary and illegal for failure to comply with the notice
requirement under Batas Pambansa Blg. 130 on termination of employees.
Ordinarily, when the dismissal of an employee is declared unjustified or illegal, he is entitled to

reinstatement and backwages (Art. 279 of the Labor Code). However, in the instant case, considering
that
_________________
8Rollo, p. 37.
9Id., pp. 37-44.
10Italics supplied.
11Rollo, pp. 42-43—Italics supplied.
847
VOL. 211,JULY27,1992
847
respondent had already lost trust and confidence in complainant which is founded on a reasonable
ground, as discussed earlier, there is no point in requiring respondent to reinstate complainant to his
former position. To do so would be tantamount to compelling the management to employ someone
whom it can no longer trust, which is oppressive.”
It appears that both Alisasis and Pepsi-Cola, Inc. accepted the NLRC’s verdict and complied therewith;
that Pepsi-Cola gave Alisasis back wages for one (1) year; and that Alisasis issued the corresponding
quitclaim and considered himself separated from his employment.
Alisasis thereafter asked his labor organization, PSAU, to pay him monetary benefits in accordance with
Section 3, Article X of the “Amended By-Laws of the Mutual Aid Plan of the Pepsi-Cola Sales &
Advertising Union (U.O.E.F.),12 in an amount equal to “One (P1.00) Peso per year of service multiplied
by the number of member(s) * *.”13 PSAU demurred, invoking in its turn Section 1, Article XII of the
same amended by-laws, declaring as disqualified from any entitlement to the PLAN and x x (from any)
Benefit or return of contributions x x under any circumstances,”inter alia, “(a)ny member dismissed for
cause.”14
Alisasis thereupon filed a complaint against the union, PSAU, with the Med Arbitration Unit, National
Capital Region, Department of Labor and Employment, to compel the latter to pay him his claimed
benefits.15 The principal defenses alleged by PSAU were that Alisasis was disqualified to claim any
benefits under the Mutual Aid Plan, supra; and that the Med-Arbiter had no original jurisdiction over the
case since Alisasis’ claim for financial assistance was not among the cases cognizable by Med-Arbiters
under the law “such as representation cases, internal union and inter-union disputes x x (or) a violation
of the union’s constitution and by-laws and the rights and conditions of membership in a labor
organization.”16 After due pro-
________________
12Id., pp. 45-54.
13Id., p. 51.
14Id., p. 52.
15The complaint was filed on January 17, 1990, and was docketed as Case No. NCR-Od-M-90-01-037.
16Rollo, p. 6.
848
848
ceedings, the Med-Arbiter promulgated an Order on April 16, 1990, ruling that he had jurisdiction and
“ordering respondent x x (PSAU) to pay complainant Roberto Alisasis x x his claim for financial assistance
under the Mutual Aid Fund of the union.” PSAU appealed to the Secretary of Labor and Employment
who, by Resolution dated July 25, 1990, denied the appeal but reduced the Med-Arbiters’ award from
P18,669.00 to P17,886.00.17 Nullification of the Med-Arbiter’s Order of April 16, 1990 and the
respondent Secretary’s Resolution of July 25, 1990 is the prayer sought by the petitioner in the special
civil action of certiorari at bar.
Resolving first the issue of whether or not the case at bar is within the original jurisdiction of the Med-
Arbiter of the Bureau of Labor Relations, the Court holds that it is.
The jurisdiction of the Bureau of Labor Relations and its Divisions is set forth in the first paragraph of
Article 226 of the Labor Code, as amended, viz.:
“ART.226. Bureau of Labor Relations.—The Bureau of Labor Relations and the Labor Relations Divisions
in the regional offices of the Department of Labor shall have original and exclusive 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, grievances or problems arising from or affecting labor management relations in all
workplaces whether agricultural or non-agricultural, except those arising from the implementation or
interpretation of collective bargaining agreements which shall be the subject of grievance procedure
and/or voluntary arbitration.
“x x x.”
It is evident that the case at bar does not concern a dispute, grievance or problem “arising from or
affecting labor-management relations.” So, if it is to be deemed as coming within the Med-Arbiter’s
jurisdiction, it will have to be as either an “intraunion” or “inter-union” conflict.
No definition is given by law of these precise terms, “intraunion and inter-union conflicts.” It is known,
however, that “intra-” and “inter-” are both combining forms, prefixes—the
_______________
17Id., p. 26, Annex D, petition.
849
VOL. 211,JULY27,1992
849
first, “intra-,” meaning “within, inside of [intramural, intravenous];” and the other, “inter-,” denoting “1.
between or among: the second element is singular in form [interstate] 2. with or on each other (or one
another), together, mutual, reciprocal, mutually, or reciprocally [interact].”18 An intra-union conflict
would therefore refer to a conflict within or inside a labor union, and an inter-union controversy or
dispute, one occurring or carried on between or among unions. In this sense, the controversy between
Alisasis and his union, PSAU—respecting the former’s rights under the latter’s “Mutual Aid Plan”—would
be an intra-union conflict under Article 226 of the Labor Code and hence, within the exclusive, original
jurisdiction of the Med-Arbiter of the Bureau of Labor Relations whose decision, it may additionally be
mentioned, is appealable to the Secretary of Labor.
Certainly, said controversy is not one of those within the jurisdiction of the Labor Arbiters in accordance
with Article 217 of the Code, it not being an unfair labor practice case, or a termination dispute, or one
involving wages, rates of pay, hours of work and other terms and conditions of employment (which is
“accompanied with a claim for reinstatement”), or one for damages arising from the employer-
employee relations, or one for a violation of Article 264 of the Code, or any other claim arising from
employer-employee relations, or from the interpretation or implementation of a collective bargaining
agreement or of company personnel policies.
The second issue relates to the character of Alisasis’ dismissal from employment. The Court holds that
Alisasis had
_________________
18Webster’s New World Dictionary of the American Language, Second College Edition. Webster’s Third
New International Dictionary, 1986 ed., describes “inter-” as a “prefix xx (signifying) 1: between, among,
in the midst [intermediate] [interspace] 2: mutual, reciprocal [intermarry [intermesh [interrelation]
[interwine] 3: between or among the parts of [intercostal] [interdental] 4: carried on between
[intercollegiate] [intercommunication] [international] 5: occurring between: intervening [interglacial]
[intertidal] 6: shared by or derived from two or more [interdepartmental] [interfaith] 7: between the
limits of: within [intertropical]—”intra” as another prefix meaning 1a: within___esp. in adjectives
formed from adjectives [intraglacial] [intravaginal] [intracellular] [intra-European] [intracosmical] x x x.”
850
850
indeed been “dismissed for cause.” His employer had established this factual proposition by competent
evidence to the satisfaction of both the Labor Arbiter and the National Labor Relations Commission. In
the latter’s view, and in its own words, “Certainly, with the actuations of complainant, x x (Alisasis’
employer) had ample reason or enough basis then to lose trust and confidence in him x x x considering
that (said employer) had already lost trust and confidence in complainant which is founded on a
reasonable ground, as discussed earlier, (and therefore) there is no point in requiring respondent to
reinstate complainant to his former position x x (as to) do so would be tantamount to compelling the
management to employ someone whom it can no longer trust, which is oppressive.”
It was merely “the manner in which such a dismissal from employment was effected x x (that was
deemed as) not in accordance with law, (there having been) failure to comply with the notice
requirement under Batas Pambansa Blg. 130 on termination of employees.” That imperfection is,
however, a circumstance quite distinct from the existence of what the NLRC has clearly and expressly
conceded to be a “valid and lawful cause in the dismissal of complainant by respondent.” And this is
precisely the reason why, as already pointed out, the NLRC declined to accord to Alisasis all the
remedies or reliefs usually attendant upon an illegal termination of employment—e.g., reinstatement,
award of damages—although requiring payment by the employer of the sum of P1,000.00 simply on
account of its failure “to comply with the notice requirement under Batas Pambansa Blg. 130 on
termination of employees.” The situation is on all fours with that in the Wenphil Corporation Case,19
cited in this opinion’s opening paragraph, in which the following pronouncements, among others, were
made:
“Thus in the present case, where the private respondent, who appears to be of violent temper, caused
trouble during office hours and even defied his superiors as they tried to pacify him, should not be
_________________
19170 SCRA 67, 76; italics and parenthetical insertions supplied. The doctrine has since been applied to
other cases: SEE footnote 3,supra.
851
VOL. 211,JULY27,1992
851
rewarded with re-employment and back wages. It may encourage him to do even worse and will render
a mockery of the rules 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 (employer) must nevertheless be held to account for failure to extend to private
respondent his right to an investigation before causing his dismissal. x x 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 x x (respondent) from employment. Considering the circumstances of this case petitioner
(employer) must indemnify the private respondent (employee) 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.”
The petitioner union (PSAU) was therefore quite justified in considering Alisasis as a “member dismissed
for cause,” and hence disqualified under its amended by-laws to claim any “Benefit or return of
contributions x x under any circumstances, x x.” The ruling to the contrary of the Med-Arbiter and the
Secretary of Labor and Employment must thus be set aside as tainted with grave abuse of discretion.
WHEREFORE, the petition is granted and the writ of certiorari prayed for issued, NULLIFYING and
SETTING ASIDE the challenged Order of the Med-Arbiter dated April 16, 1990 and the Resolution of the
respondent Secretary of Labor and Employment dated July 25, 1990, and DIRECTING THE DISMISSAL of
Alisasis’ complaint in NLRC Case No. NCR-Od-M-90-01-037, without pronouncement as to costs.
SO ORDERED.
Padilla, Regalado and Nocon, JJ., concur.
Paras, J., Retired as of July 4, 1992.
Petition granted; order and resolution nullified and set aside.
Note.—Labor arbiters have adjudicative powers to try and decide, or hear and determine any claims
brought before them for recovery of wages, simple money claims, and other benefits
852
852
Bernardo, Jr. vs. Mejia
(Baritua vs. Secretary of the Department of Labor and Employment, 204 SCRA 332).
——o0o——
© Copyright 2017 Central Book Supply, Inc. All rights reserved. Pepsi-Cola Sales and Advertising Union
vs. Secretary of Labor, 211 SCRA 843, G.R. No. 97092 July 27, 1992
VOL. 165, AUGUST 31, 1988
239
Rodriguez vs. Director, Bureau of Labor Relations
Nos. L-76579-82. August 31, 1988.*
BENEDICTO RODRIGUEZ, etc., petitioner vs. HON. DIRECTOR, BUREAU OF LABOR RELATIONS, CARLOS
GALVADORES and LIVI MARQUEZ, respondents.
No. L-80504. August 31, 1988.*
REY C. SUMANGIL, VIRGILIO V. HERNANDEZ, et al., petitioners, vs. MANOLITO PARAN, ROSALINDA DE
GUZMAN, FREE TELEPHONE WORKERS UNION, PHILIPPINE LONG DISTANCE TELEPHONE CO., and HON.
PURA FERRER-CALLEJA, respondents.
Labor; Unions; General elections for union officers; Elections for union officers which were attended
by grave irregularities, held invalid.—A review of the record fails to disclose any grave abuse of
discretion tainting the adjudgment of respondent Director of Labor Relations that the general
elections for union officers held in 1986 were attended by grave irregularities, rendering the elections
invalid. That finding must thus be sustained. The dates for provincial elections were set for July 14 to
18, 1986. But they were in fact held on July 21 and 22, 1986, without prior notice to all voting
members, and without ground rules duly prescribed therefor. The elections in Metro Manila were
conducted under no better circumstances. It was held on July 25, 1986 in disregard and in defiance of
the temporary restraining order properly issued by the Med-Arbiter on July 23, 1986, notice of which
restraining order had been regularly served on the same date, as the proofs adequately show, on both
the Union President, Manolito Paran, and the Chairman of the Union COMELEC, Benedicto Rodriguez.
Moreover, as in the case of the provincial elections, there were no ground rules or guidelines set for
the Metro Manila elections. Undue haste, lack of adequate safeguards to ensure integrity of the
voting, and absence of notice of the dates of balloting, thus attended the elections in the provinces
and in Metro Manila. They cannot but render the proceedings void.
Same; Same; Same; Free and honest elections are indispensable to the enjoyment by employees and
workers of their right to self-organization; The right would be diluted if the election is not fairly
________________
* FIRST DIVISION.
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and honestly conducted.—It goes without saying that free and honest elections are indispensable to
the enjoyment by employees and workers of their constitutionally protected right to self-
organization. That right “would be diluted if in the choice of the officials to govern x x (union) affairs,
the election is not fairly and honestly conducted,” and the labor officers concerned and the courts
have the duty “to see to it that no abuse is committed by any official of a labor organization in the
conduct of its affairs.”
Same; Same; Same; The assent of 30% of the union membership is not a factor in the acquisition of
jurisdiction by the Bureau of Labor Relations over all inter-union and intra-union conflicts, and all
disputes, grievances or problems arising from labor-management relations; Use of the permissive
word “may” in Article 242 of the Labor Code.—The respondent Director’s ruling, however, that the
assent of 30% of the union membership, mentioned in Article 242 of the Labor Code, was mandatory
and essential to the filing of a complaint for any violation of rights and conditions of membership in a
labor organization (such as the arbitrary and oppressive increase of union dues here complained of),
cannot be affirmed and will be reversed. The very article relied upon militates against the proposition.
It states that a report of a violation of rights and conditions of membership in a labor organization
may be made by “(a)t least thirty percent (30%) of all the members of a union or “any member or
members specially concerned.” The use of the permissive “may” in the provision at once negates the
notion that the assent of 30% of all the members is mandatory. More decisive is the fact that the
provision expressly declares that the report may be made, alternatively by “any member or members
specially concerned.” And further confirmation that the assent of 30% of the union members is not a
factor in the acquisition of jurisdiction by the Bureau of Labor Relations is furnished by Article 226 of
the same Labor Code, which grants original and exclusive jurisdiction to the Bureau, and the Labor
Relations Division in the Regional Offices of the Department of Labor, over “all inter-union and intra-
union conflicts, and all disputes, grievances or problems arising from or affecting labor management
relations,” making no reference whatsoever to any such 30%-support requirement. Indeed, the
officials mentioned are given the power to act “on all inter-union and intra-union conflicts (1) “upon
request of either or both parties” as well as (2) “at their own initiative.”
Same; Same; Same; Petition to nullify the union elections clearly involved an intra-union conflict over
which jurisdiction could be assumed by the Labor Relations Director or the Med-Arbiters.—
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241
These considerations apply equally well to controversies over elections. In the cases at bar, the
petition to nullify the 1986 union elections could not be deemed defective because it did not have the
assent of 30% of the union membersip. The petition clearly involved an intra-union conflict—one
directly affecting the right of suffrage of more than 800 union members and the integrity of the union
elections—over which, as the law explicitly provides, jurisdiction could be assumed by the Labor
Relations Director or the Med-Arbiters “at their own initiative” or “upon request of either or both
parties.”
Same; Same; Same; Union Dues; The resolution of the union’s Legislative Council increasing the union
dues is illegal and void because it does not bear the signature of at least two-thirds of the members of
the Council as required by the union’s constitution and by-laws, and the absence of proper ratification
of the resolution by a majority of the general union membership at a plebiscite.—As regards the final
issue concerning the increase of union dues, the respondent Director found that the resolution of the
union’s Legislative Council to this effect does not bear the signature of at least two-thirds (2/3) of the
members of the Council, contrary to the requirement of the union constitution and bylaws; and that
proof is wanting of proper ratification of the resolution by a majority of the general union
membership at a plebiscite called and conducted for that purpose again in violation of the
constitution and by laws. The resolution increasing the union dues must therefore be struck down, as
illegal and void, arbitrary and oppressive. The collection of union dues at the increased rates must be
discontinued; and the dues thus far improperly collected must be refunded to the union members or
held in trust for disposition by them in accordance with their charter and rules, in line with this
Court’s ruling in a parallel situation.

Conrado Leaño for petitioner in G.R No. 76579-82 and private respondent in G.R. No. 80504.
King and Adorio Law Offices for petitioners in G.R. No. L-80504.
Potenciano Flores for private respondent Marquez in G.R. No. 76579-82.
The Solicitor General for public respondent.
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NARVASA, J.:
The above entitled special civil actions of certiorari were separately instituted but have been
consolidated because they involve disputes among employees of the Philippines Long Distance
Telephone Company (PLDT), who are members of the same union, the Free Telephone Workers Union
(FTWU). The disputes concern the validity of the general elections for union officers in 1986, and the
increase of union dues adopted and put into effect by the incumbent officers subsequent to said
elections.
G.R. Nos. 76579-82: Controversy Respecting Elections of Officers
Assailed by the petitioners in G.R. No. 76579-82 are (1) the decision dated October 10, 1986 of the
Director of Labor Relations (BLR) annulling the elections of officers of the labor union above mentioned,
FTWU, and (2) the resolution dated October 30, 1986, denying their motion for reconsideration of the
decision.
The union’s by-laws provide for the election of officers every three (3) years, in the month of July.
Pursuant thereto, the union’s Legislative Council set the provincial elections for its officers on July 14 to
18, 1986, and those for Metro Manila on July 25, 1986.
The same Council also quite drastically raised the fees for the filing of certificates of candidates which
had therefore ranged from P75.00 to P100.00. The filing fee for each candidate for president of the
labor organization was increased to P3,000; that for each candidate for vice-president, secretary-
general, treasurer and auditor, to P2,000.00; and that for assistant secretary, assistant treasurer and
assistant auditor, to P1,000.00 each.
Bureau of Labor Relations Cases: Nos. LRD-M-7-503-86 & LRD-M-7-504-86
Although the increased fees were paid in due course by the candidates, no less than two complaints
were filed with the
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243
Bureau of Labor Relations for their invalidation as excessive, prohibitive and arbitrary. One, docketed as
Case No. LRD-M-7-503-86, was presented by Rey Sumangil, a candidate for president, and the members
of his slate. The other, Case No. LRD-M-7-504-86, was filed by Carlos Galvadores, also a presidential
candidate, and his group. Impleaded as respondents in both complaints were Benedicto Rodriguez, the
Chairman of the Commission on Elections of the union, and the incumbent union officers, headed by the
president, Manolito Paran. Acting on the complaints, the Med-Arbiter issued on July 8, 1986 a
restraining order against the enforcement of the new rates of fees.
Other BLR Cases: Nos. LRD-M-7-557-86 and LRD-M-7-559-86
It appears that notwithstanding the cases questioning the candidates’ fees, the elections for the
provinces of Visayas and Mindanao and certain areas of Luzon were nevertheless held on July 21 and 22,
1986, which are dates different from those specified by the Legislative Council (i.e., July 14 to 18, 1986).
The validity of the elections was very shortly challenged on the ground of lack of (1) due notice and (2)
adequate ground rules. Carlos Galvadores and his fellow candidates filed on July 22, 1986 a petition with
the BLR, docketed as Case No. LRD-M-7-557-86, praying that the Union’s COMELEC be directed to
promulgate ground rules for the conduct of the provincial elections. On the day following, Livi Marquez,
a candidate for vice-president, together with other candidates in his ticket, filed another petition against
the same Union COMELEC and Manolito Paran, the union president—docketed as Case No. LRD-M-7-
559-86—seeking to restrain the holding of the elections scheduled on July 25, 1986 in the Metro Manila
are until (1) ground rules therefor had been formulated and made known to all members of the labor
organization, and (2) the issue of the filing fees had been finally decided. In connection with these
complaints, a temporary restraining order was issued on July 23, 1986 prohibiting the holding of
elections on July 25, 1986.
The restraining order notwithstanding, the Union COME-
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LEC proceeded with the general elections in all the PLDT branches in Metro Manila on July 25, 1986. It
then reported that as of July 15, 1986 the number of qualified voters was 9,429 of which 6,903 actually
voted, the percentage of turn-out being 73%, and that those who obtained the highest number of votes
for the various elective positions were:
Manolito Paran
President
3,030 votes
Eduardo de Leon
1st Vice-President
2,185 votes
Efren de Lima
2nd Vice-President
2,806 votes
Roger Rubio
Secretary General
2,462 votes
Virgilio Tulay
Asst. Sec. General
2,924 votes
Rosalinda de Guzman
Treasurer
2,659 votes
Filmore Dalisay
Asst. Treasurer
2,525 votes
Damiana Yalung
Auditor
2,942 votes
Jaime Pineda
Asst. Auditor
3,082 votes
Livi Marquez and Carlos Galvadores, and their respective groups, forthwith filed separate motions
praying that the COMELEC be declared guilty of contempt for defying the temporary restraining order,
and for the nullification not only of the Metro Manila elections of July 25, 1986 but also the provincial
elections of July 21 and 22, 1986.
The four (4) cases were jointly decided by Med-Arbiter Rasidali Abdullah on August 28, 1986. His
judgment denied the petitions to nullify the elections, as well as the motion for contempt, but
invalidated the increase in rates of filing fees for certificates of candidacies. The judgment accorded
credence to the Union COMELEC’s averment that it had not received the restraining order on time. It
took account, too, of the fact that the turn-out of voters was 73%, much higher than the turn-out of 62%
to 63% in prior elections, which fact, in the MedArbiter’s view was a clear manifestation of the union
members’ desire to go ahead with the elections and express their will therein.
This judgment was however overturned by the Officer-in-Charge of Labor Relations, on appeal
seasonably taken. The OIC’s decision, dated October 10, 1986 nullified the general elections in the
provinces and Metro Manila on the ground of (1) lack of notice to the candidates and voters, (2) failure
to disseminate the election ground rules to all parties concerned,
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245
and (3) disregard of the temporary restraining order of the Med-Arbiter. The decision stressed the
following points:1
“The undue haste with which the questioned general elections were held raises doubts as to its validity.
In its desire to conduct the elections as scheduled, the respondents unwittingly disregarded mandatory
procedural requirements. The respondents’ pretensions that the appellants were duly furnished with
the ground rules/guide-lines of the general elections and that the same were properly disseminated to
the qualified voters of the union are not supported by the records.
“x x x x
“Moreover, the Union’s Comelec did not follow the schedule of election outlined in the guidelines.
Specifically, the guidelines fixed the elections in Visayas-Mindanao on July 14, 16 and 18, 1986, in
Northern Luzon, on July 16, 17, 18 and 21, 1986 and in Southern Luzon on July 16, 17 and 18, 1986
(records, pp. 67-70). Surprisingly, however, the Union’s Comelec conducted the elections in Northern
and Southern Luzon on July 21, and 22, 1986 and in Visayas-Mindanao on July 25, 1986 without proper
notice to the appellants.
“Accordingly, the unwarranted failure of the Union’s Comelec to duly furnish the appellants the
guidelines and properly disseminate the same to the voters, and the holding of the elections not in
accordance with the schedule set by the guidelines and in open defiance of the July 23, 1986 Restraining
Order, precipitated an uncalled for confusion among the appellants’ supporters and unduly prevented
them from adopting the appropriate electoral safeguards to protect their interests. Under the
circumstances, this Office is constrained to invalidate the general elections held on July 21, 22 and 25,
1986 and declare the results thereof null and void.
“Furthermore, only 6,903 out of the 9,426 qualified voters trooped to the polls during the July 21, 22
and 25, 1986 general elections. Considering the closeness of the result of the elections, the 2,056
qualified voters, if they were able to cast their votes, could have drastically altered the results of the
elcetions. But more important, the disenfranchisement of the remaining 27% qualififed voters is a
curtailment of Trade Unionism implicitly ordained in the worker’s right to self-organization explicitly
protected by the Constitution.
“x x x x
“The submission of the respondents that they did not receive a copy of the injunctive order is
completely rebuffed by the records. It
_______________
1 Rollo, pp. 68-69.
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246
appears that the same was received and signed by a certain Cenidoza for respondent Manolito Paran at
4:30 P.M. of July 23, 1986 and by respondent Benedicto Rodriguez himself, also on July 23, 1986 at 4:30
P.M. In the case of Manolitao Paran, the restraining order in question was served at his office/postal
address at Rm. 310 Regina Bldg., Escolta, Manila.”
It is this decision of the BLR Officer-in-Charge which is the subject of the certiorari actions filed in this
Court by Benedicto Rodriguez, the chairman of the Union COMELEC, and docketed as G.R. Nos. 76579-
82. He claims the decision was rendered with grave abuse of discretion considering that (a) the Med-
Arbiter had found no fraud or irregularity in the elections; (b) the election was participated in by more
than 73% of the entire union membership; and (c) the petition for nullity was not supported by 30% of
the general membership.
G.R. No. 80504: Controversy Respecting Labor Union Dues
The terms of office of the old officers (Manolito Paran, et al.) ended in August, 1986. However, the new
set of officers (headed by the same Manolito Paran) apparently could not assume office under a new
term because of the proceedings assailing the validity of the elections pending before the Bureau of
Labor Relations. What happened was that the old officers continued to exercise the functions of their
respective offices under the leadership of Manolito Paran.
On January 17, 1987, the Legislative Council of the union passed a resolution which generated another
controversy. That resolution increased the amount of the union dues from P21.00 to P50.00 a month. It
was then presented to the general membership for ratification at a referendum called for the purpose.
Rey Sumangil and his followers objected to the holding of the referendum. When their objection went
unheeded, they and their supporters, all together numbering 829 or so, boycotted the referendum and
formally reiterated their protest against it. Subsequently the union officers announced that the
referendum has resulted in a ratification of the increased union dues.
On March 1, 1987 Manolito Paran requested the PLDT to deduct the union dues at the new, increased
rates, from the
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salaries of all union members and dispense with their individual written authorizations therefor. PLDT
acceded to the request and effected the check-off of the increased dues for the payroll period from
March 1 to March 15, 1987.
BLR Case No. NCR-OD-M-7-3-206-87
Once again Rey Sumangil and his followers hied themselves off to the Bureau of Labor Relations. They
filed a petition on March 26, 1987 challenging the resolution for the increase in union dues, docketed as
BLR Case No. NCR-OD-M-73-206-87. They contended that since the terms of the members of the
Legislative Council who approved the resolution had already expired in August, 1986, and their
reelection had been nullified by the Bureau, they had no authority to act as members of the council;
consequently, it could not be said that the resolution for the increase of union dues had been approved
by 2/3 vote of the Council members, as provided by the union constitution and by laws; hence, the
resolution was void. They further contended that there had been no valid ratification of the resolution
because the plebiscite had been “rigged.”
Once again Rey Sumangil and his group were unsuccessful in proceedings at the level of the Med-
Arbiter. The latter denied their petition on the ground of lack of support of at least 30% of all members
of the union, citing Article 242 of the Labor Code which reads as follows:
“Art. 242.—Rights and conditions of membership in a labor organization.—x x Any violation of the above
rights and conditions of membership shall be a ground for cancellation of union registration and
expulsion of officer from office, whichever is appropriate. At least thirty percent (30%) of all the
members of a union or any member or members specially concerned may report such violation to the
Bureau. The Bureau shall have the power to hear and decide any reported violation to mete the
appropriate penalty.”
Again Sumangil and his group went up on appeal to the Director of Labor Relations, before whom they
raised the issue of whether or not the petition in fact had the support of at least 30% of the members,
and said 30%-support was indeed a condition sine qua non for acquisition by the Med-Arbiters (in
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248
the Labor Relations Division in a Regional Office of the MOLE) of jurisdiction over the case. Again
Sumangil and his followers were successful in their appeal.
On July 1, 1987 the Director of Labor Relations rendered a decision reversing that of the Med-Arbiter.
The Director ordered the cessation of the collection of the twenty-nine peso increase and the return of
the amounts already collected. In the first place, according to her, the petition was supported by 6,022
signatures, a number comprising more than 30% of the total membership of the union (10,413). In the
second place, the Director ruled, even assuming the contrary, the lack of 30%-support will not preclude
the BLR from taking cognizance of the petition where there is a clear violation of the rights and
conditions of union membership because Article 226 of the Labor Code, expressly confers on it the
authority to act on all intra-union and inter-union conflicts and grievances affecting labor and
management relations, at the instance of either or both parties. The provision cited reads as follows:
“Art. 226.—Bureau of Labor Relations.—The Bureau of Labor Relations and the Labor Relations division
in the Regional Offices of the Department of Labor shall have original and exclusive 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, grievances or problems arising from or affecting labor management relations xx.”
As regards Article 242 of the Labor Code, relied upon by the Med-Arbiter, the Director expressed the
view that the 30%-support therein provided is not mandatory, and is not a condition precedent to the
valid presentation of a grievance before the Bureau of Labor Relations. The Director ruled, finally, that
Sumangil and the other union members had a valid grievance calling for redress, since the record
disclosed no compliance with the requirement that the resolution for the increase of union dues be
passed by at least 2/3 vote of the members of the Legislative Council and be ratified by a majority of the
entire membership at a plebiscite.
But not long afterwards, the Director reversed herself. The Manggagawa sa Komunikasyon sa Pilipinas
(MKP)—with which Paran’s Union, the FTWU, is affiliated—intervened in the case
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VOL. 165, AUGUST 31, 1988
249
and moved for reconsideration of her decision. By resolution dated October 1, 1987, the Director set
aside her decision of July 1, 1987 and entered a new one dismissing the petition of Sumangil and
company, in effect affirming the Med-Arbiter’s order. The Director opined that the intervenor (MKP)
was correct in its contention that there was no 30%-membership-support for the petition, since only 829
members had signed their support therefor, as correctly found by the Med-Arbiter, and because of this,
the BLR never acquired jurisdiction over the case. According to her:2
“The rationale for such requirement is not difficult to discern. It is to make certain that there is a prima
facie case against prospective respondents whether it be the union or its officers and thus forestall
nuisance or harassment petitions/complaints. The requirement was intended to shield the union from
destabilization and paralyzation coming from adventurous and ambitious members or non-members
engaged in union politics under the guise of working for the union welfare.
“x x As found out by the Med-Arbiter in the Office of origin all signatures except that of 829 were
obtained without the knowledge of the signatories. At this point we cannot permit 829 members to
‘rock the boat.’ so to speak, of a union which has at present ten thousand four hundred and thirteen
(10,413) passengers.”
In an effort to set aside this reversing resolution of the Labor Relations Director, Rey Sumangil and his
group have come to this Court via the instant special civil action of certiorari. In their petition they insist
that the support of 30% of the union membership is not a jurisdictional requirement for the ventilation
of their grievance before the BLR; and assuming the contrary, they have proven that 3,50l workers had
in fact joined in the petition, constituting 33% of the total membership. They also emphasize the validity
of their grievance, drawing attention to the absence of the requisite 2/3 vote essential for validity of any
resolution increasing the rates of union dues, and the doubtful result of the referendum at which the
resolution had allegedly been ratified.
Three issues are thus presented to the Court in these cases.
________________
2 Rollo, pp. 21-22.
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250
The first involves the validity of the 1986 general elections for union officers; the second, whether or not
30%-membership support is indispensable for acquisition of jurisdiction by the Bureau of Labor
Relations of a complaint for alleged violation of rights and conditions of union members; and third, the
validity of the increase in union dues.
The General Elections of 1986
A review of the record fails to disclose any grave abuse of discretion tainting the adjudgment of
respondent Director of Labor Relations that the general elections for union officers held in 1986 were
attended by grave irregularities, rendering the elections invalid. That finding must thus be sustained.
The dates for provincial elections were set for July 14 to 18, 1986. But they were in fact held on July 21
to 22, 1986, without prior notice to all voting members, and without ground rules duly prescribed
therefor. The elections in Metro Manila were conducted under no better circumstances. It was held on
July 25, 1986 in disregard and in defiance of the temporary restraining order properly issued by the
Med-Arbiter on July 23, 1986, notice of which restraining order had been regularly served on the same
date, as the proofs adequately show, on both the Union, President, Manolito Paran, and the Chairman
of the Union COMELEC, Benedicto Rodriguez. Moreover, as in the case of the provincial elections, there
were no ground rules or guidelines set for the Metro Manila elections. Undue haste, lack of adequate
safeguards to ensure integrity of the voting, and absence of notice of the dates of balloting, thus
attended the elections in the provinces and in Metro Manila. They cannot but render the proceedings
void.
The claim that there had been a record-breaking voter turnout of 73%, even if true, cannot purge the
elections of their grave infirmities. The elections were closely contested. For example, in the presidential
contest, Manolito Paran appeared to have won over Rey Sumangil by only 803 votes, and in the vice-
presidential race, Eduardo de Leon won over Dominador Munar by only 204 votes. These results would
obviously have been affected by the ballots of the 2,056 voters who had been unable to cast their votes
because of lack of notice of actual
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dates of the elections.
It goes without saying that free and honest elections are indispensable to the enjoyment by employees
and workers of their constitutionally protected right to self-organization. That right “would be diluted if
in the choice of the officials to govern x x (union) affairs, the election is not fairly and honestly
conducted,” and the labor officers concerned and the courts have the duty “to see to it that no abuse is
committed by any official of a labor organization in the conduct of its affairs.”3
The Matter of 30%-Support for Complaints for Violations of Union Membership Rights
The respondent Director’s ruling, however, that the assent of 30% of the union membership, mentioned
in Article 242 of the Labor Code, was mandatory and essential to the filing of a complaint for any
violation of rights and conditions of membership in a labor organization (such as the arbitrary and
oppressive increase of union dues here complained of), cannot be affirmed and will be reversed. The
very article relied upon militates against the proposition. It states that a report of a violation of rights
and conditions of membership in a labor organization may be made by “(a)t least thirty percent (30%) of
all the members of a union or any member or members specially concerned.”4 The use of the
permissive “may” in the provision at once negates the notion that the assent of 30% of all the members
is mandatory. More decisive is the fact that the provision expressly declares that the report may be
made, alternatively by “any member or members specially concerned.” And further confirmation that
the assent of 30% of the union members is not a factor in the acquisition of jurisdiction by the Bureau of
Labor Relations is furnished by Article 226 of the same Labor Code, which grants original and exclusive
jurisdiction to the Bureau, and the Labor Relations Division in the Regional Offices of the Department of
Labor, over “all interunion and intra-union conflicts, and all disputes, grievances or problems arising
from or affecting labor management rela-
________________
3 Pasudeco v. BLR, 101 SCRA 732.
4 Italics supplied.
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tions,” making no reference whatsoever to any such 30%-support requirement. Indeed, the officials
mentioned are given the power to act “on all inter-union and intra-union conflicts (1) “upon request of
either or both parties” as well as (2) ”at their own initiative.” There can thus be no question about the
capacity of Rey Sumangil and his group of more than eight hundred, to report and seek redress in an
intra-union conflict involving a matter they are specially concerned, i.e., the rates of union dues being
imposed on them.
These considerations apply equally well to controversies over elections. In the cases at bar, the petition
to nullify the 1986 union elections could not be deemed defective because it did not have the assent of
30% of the union membership. The petition clearly involved an intra-union conflict—one directly
affecting the right of suffrage of more than 800 union members and the integrity of the union
elections—over which, as the law explicitly provides, jurisdiction could be assumed by the Labor
Relations Director or the Med-Arbiters “at their own initiative” or “upon request of either or both
parties.”
The assumption of jurisdiction by the Med-Arbiter and the Labor Relations Director over the cases at bar
was entirely proper. It was in fact their duty to do so, given the facts presented to them. So this Court
has had occasion to rule:5
“The labor officials should not hesitate to enforce strictly the law and regulations governing trade unions
even if that course of action would curtail the so-called union autonomy and freedom from government
interference.
“For the protection of union members and in order that the affairs of the union may be administered
honestly, labor officials should be vigilant and watchful in monitoring and checking the administration of
union affairs.
“Laxity, permissiveness, neglect and apathy in supervising and regulating the activities of union officials
would result in corruption and oppression. Internal safeguards within the union can easily be ignored or
swept aside by abusive, arrogant and unscrupulous union officials to the prejudice of the members.
“It is necessary and desirable that the Bureau of Labor Relations and the Ministry of Labor should
exercise close and constant supervision over labor unions, particularly the handling of their funds, so as
to forestall abuses and venalities.”
_______________
5 Duyag v. Inciong, 98 SCRA 522, 533.
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253
As regards the final issue concerning the increase of union dues, the respondent Director found that the
resolution of the union’s Legislative Council to this effect6 does not bear the signature of at least two-
thirds (2/3) of the members of the Council, contrary to the requirement of the union constitution and
by-laws; and that proof is wanting of proper ratification of the resolution by a majority of the general
union membership at a plebiscite called and conducted for that purpose, again in violation of the
constitution and by-laws. The resolution increasing the union dues must therefore be struck down, as
illegal and void, arbitrary and oppressive. The collection of union dues at the increased rates must be
discontinued; and the dues thus far improperly collected must be refunded to the union members or
held in trust for disposition by them in accordance with their charter and rules, in line with this Court’s
ruling in a parallel situation,7 viz:
“. . . All amounts already collected must be credited accordingly in favor of the respective members
either for their future legal dues or other assessments or even delinquencies, if any. And if this
arrangement regarding the actual refund of what might be excessive dues is not acceptable to the
majority of the members, the matter may be decided in a general meeting called for the purpose.”
WHEREFORE, in G.R. Nos. 76579-82, the petition for certiorari is DISMISSED, no grave abuse of
discretion or other serious error having been shown in the decision of the respondent Director of Labor
Relations, said decision—ordering the holding of new elections for officers of the Free Telephone
Workers Union—being on the contrary in accord with the facts and the law, but in the G.R. No. 80504,
the petition for certiorari is granted, the challenged order dated October 1, 1987 is set aside, and the
decision of July 1, 1987 of the Labor Relations Director reinstated, modified only as to the treatment of
the excess collections which shall be disposed of in the manner herein indicated. Costs against petitioner
in G.R. Nos. 76579-82 and private respondents (except the PLDT) in G.R. No. 80504.
________________
6 Resolution No. 87-02, January 17, 1987.
7 San Miguel Corporation v. Noriel, 103 SCRA 185.
254
254
Unitran/Bachelor Express, Inc. vs. Olvis
Cruz, Gancayco, Griño-Aquino and Medialdea, JJ., concur.
Petition dismissed.
Note.—Certification election is invalid because certain irregularities such as that (1) The workers on the
night shift and same as those in the afternoon shift were not able to vote, so much so that out of 1,010
votes only 692 voted and about 318 failed to vote; (2) the secrecy of the ballot was not safeguarded; (3)
the election supervisors were remiss in their duties and were apparently “intimidated” by a union
representative; and (4) the participating unions were overzealous in wooing the employees to vote in
their favor by resorting to such tactics as giving free tricycle rides & T-shirts. (Confederation of Citizens
Labor Union (CCLU) vs. Novel, 116 SCRA 694.)
——o0o——
© Copyright 2017 Central Book Supply, Inc. All rights reserved. Rodriguez vs. Director, Bureau of Labor
Relations, 165 SCRA 239, Nos. L-76579-82, No. L-80504 August 31, 1988
CERTIFICATION ELECTION PROCEEDINGS
GENERALLY
ROLE OF EMPLOYER
G.R. No. 101730. June 17, 1993.*
PHILIPPINE TELEGRAPH AND TELEPHONE CORPORATION, petitioner, vs. HON. BIENVENIDO E.

LAGUESMA and PT&T SUPERVISORY EMPLOYEES UNION-APSOTEU, respondents.
Labor Law; Certification Election; Supervisory Employees; Case at Bar; Since no certified bargaining
agent represented the supervisory employees, PT&T may be deemed an unorganized establishment
within the purview of Art. 257 of the Labor Code.—The applicable provision of law in the case at bar is
Art. 257 of the Labor Code. It reads—“Art. 257.
________________
18 Decision of the Court of Appeals, Rollo, p. 40.
* FIRST DIVISION.
453
VOL. 223, JUNE 17, 1993
453
Phil. Telegraph and Telephone Corp. vs. Laguesma
Petitions in unorganized establishments.—In any establishment where there is no certified bargaining

agent, a certification election shall automatically be conducted by the Med-Arbiter upon the filing of a
petition by a legitimate labor organization” (italics supplied). The supervisory employees of PT&T did
not yet have a certified bargaining agent to represent them at the time the UNION, which is a
legitimate labor organization duly registered with the Department of Labor and Employment, filed the
petition for certification election. Since no certified bargaining agent represented the supervisory
employees, PT&T may be deemed an unorganized establishment within the purview of Art. 257 of the
Labor Code.
Same; Same; Same; It is a well settled rule that an employer has no standing to question a
certification election since it is the sole concern of the workers, unless the former filed the
certification election itself pursuant to Art. 258 of the Labor Code.—It is well-settled that an employer
has no standing to question a certification election since this is the sole concern of the workers. The
only exception to this rule is where the employer has to file the petition for certification election itself
pursuant to Art. 258 of the Labor Code because it was requested to bargain collectively. But, other
than this instance, the choice of a collective bargaining agent is purely the internal affair of labor.
PETITION for review on certiorari of the decision of the Undersecretary of Labor.
Leonard U. Sawal for private respondent.
BELLOSILLO, J.:
Can a petition for certification election filed by supervisory employees of an unorganized

establishment—one without a certified bargaining agent—be dismissed on the ground that these
employees are actually performing managerial functions?
This is the issue for consideration in this petition for certiorari and mandamus, with prayer for the
issuance of a temporary restraining order, of the Resolution of 11 June 19911 of then Acting Secretary of
Labor and Employment Nieves D. Confesor
________________
1 Annex “A”, Petition; Rollo, pp. 22-26.
454
454
dismissing the appeal from the Order of 11 December 19902 of the Med-Arbiter which granted the
petition for certification election, and of the Order of 15 August 19913 denying reconsideration.
On 22 October 1990, private respondent PT&T Supervisory Employees Union-APSOTEU (UNION, for
brevity) filed a petition before the Industrial Relations Division of the Department of Labor and
Employment praying for the holding of a certification election among the supervisory employees of
petitioner Philippine Telegraph & Telephone Corporation (PT&T, for brevity). On 29 October 1990,
UNION amended its petition to include the allegation that PT&T was an unorganized establishment
employing roughtly 100 supervisory employees from whose ranks will constitute the bargaining unit
sought to be established.
On 22 November 1990, PT&T moved to dismiss the petition for certification election on the ground that
UNION members were performing managerial functions and thus were not merely supervisory
employees. Moreover, PT&T alleged that a certified bargaining unit already existed among its rank-and-
file employees which barred the filing of the petition.
On 27 November 1990, respondent UNION opposed the motion to dismiss, contending that under the
Labor Code supervisory employees are not eligible to join the labor organization of the rank-and-file
employees although they may form their own.
On 4 December 1990, PT&T filed its reply to the opposition and manifested that it is the function of an
employee which is determinative of whether said employee is a managerial or supervisory employee.
On 11 December 1990, the Med-Arbiter granted the petition and ordered that “a certification election x
x x (be) conducted among the supervisory personnel of the Philippine Telegraph & Telephone
Corporation (PT&T).”4 Petitioner PT&T appealed to the Secretary of Labor and Employment.
On 24 May 1991, PT&T filed its supplemental appeal and attached copies of the job descriptions and
employment service records of these supervisory employees, including samples of
________________
2 Annex “G”, Petition; Rollo, pp. 28-30.

3 Annex “B”, Petition; Rollo, pp. 28-30.
4 Annex “G”, Petition, p. 3; Rollo, p. 52.
455
VOL. 223, JUNE 17, 1993
455
memoranda and notices they made which purportedly illustrate their exercise of management
prerogatives. On 31 May 1991, petitioner submitted more job descriptions to further bolster its
contention.
On 11 June 1991, then Acting Secretary of Labor and Employment Nieves R. Confesor denied petitioner’s
appeal for lack of merit. However, she did not rule on the additional evidence presented by PT&T.
Instead, she directed that the evidence “should be scrutinized and x x x considered during the
exclusioninclusion proceedings where the employees who should be part of the bargaining unit x x x will
be determined.”5
On 15 August 1991, respondent Undersecretary of Labor and Employment Bienvenido E. Laguesma

denied reconsideration of the resolution dismissing the appeal. Hence, the instant petition anchored on
the ground that public respondent committed grave abuse of discretion in failing to rule on the
additional evidence submitted by petitioner which would have buttressed its contention that there were
no supervisory employees in its employ and which, as a consequence, would have barred the holding of
a certification election.
The petition is devoid of merit.
The applicable provision of law in the case at bar is Art. 257 of the Labor Code. It reads—
“Art. 257. Petitions in unorganized establishments.—In any establishment where there is no certified
bargaining agent, a certification election shall automatically be conducted by the Med-Arbiter upon the
filing of a petition by a legitimate labor organization” (italics supplied).
The supervisory employees of PT&T did not yet have a certified bargaining agent to represent them at
the time the UNION, which is a legitimate labor organization duly registered with the Department of
Labor and Employment,6 filed the petition for certification election. Since no certified bargaining agent
represented the supervisory employees, PT&T may be deemed an unorganized establishment within the
purview of Art. 257 of the Labor Code.
________________
5 Annex “A”, Petition, p. 3; Rollo, p. 25.
6 Rollo, p. 32.
456
456
The fact that petitioner’s rank-and-file employees were already represented by a certified bargaining
agent does not make PT&T an organized establishment vis-a-vis the supervisory employees. After all,
supervisory employees are “not x x x eligible for membership in a labor organization of the rank-and-file
employees.”7
Consequently, the Med-Arbiter, as sustained by public respondent, committed no grave abuse of

discretion in granting the petition for certification election among the supervisory employees of
petitioner PT&T because Art. 257 of the Labor Code provides that said election should be automatically
conducted upon filing of the petition. In fact, Sec. 6 of Rule V, Book V, of the Implementing Rules and
Regulations makes it mandatory for the Med-Arbiter to order the holding of a certification election. It
reads—
“Sec. 6. Procedure.—Upon receipt of a petition, the Regional Director shall assign the case to a Med-
Arbiter for appropriate action. The Med-Arbiter, upon receipt of the assigned petition, shall have twenty
(20) working days from submission of the case for resolution within which to dismiss or grant the
petition.
In a petition filed by a legitimate organization involving an unorganized establishment, the Med-Arbiter

shall immediately order the conduct of a certification election x x x” (italics supplied)
Furthermore, PT&T did not possess the legal personality to file a motion to dismiss the petition for
certification election even if based on the ground that its supervisory employees are in reality
managerial employees. It is well-settled that an employer has no standing to question a certification
election8 since this is the sole concern of the workers.9 The only exception to this rule is
________________
7 Art. 245. Ineligibility of managerial employees to join any labor organization; right of supervisory
employees.—Managerial employees are not eligible to join, assist or form any labor organization.
Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file
employees but may join, assist or form separate labor organizations of their own (italics supplied).
8 California Manufacturing Corporation v. Laguesma, G.R. No. 97020, 8 June 1992, 209 SCRA 606.
9 Asian Design and Manufacturing Corporation v. Calleja, G.R.
457
VOL. 223, JUNE 17, 1993
457
where the employer has to file the petition for certification election itself pursuant to Art. 25810 of the
Labor Code because it was requested to bargain collectively. But, other than this instance, the choice of
a collective bargaining agent is purely the internal affair of labor.11
What PT&T should have done was to question the inclusion of any disqualified employee in the
certification election during the exclusion-inclusion proceedings before the representation officer.
Indeed, this is precisely the purpose of the exclusion-inclusion proceedings, i.e., to determine who
among the employees are entitled to vote and be part of the bargaining unit sought to be certified.
Then Acting Secretary Nieves D. Confesor therefore did not abuse her discretion when she opted not to
act upon the additional evidence presented by petitioner PT&T. For, the holding of a certification
election in an unorganized establishment is mandatory and must immediately be ordered upon petition
by a legitimate labor organization, which is the case here.
At any rate, the additional evidence presented by petitioner failed to sufficiently show that the
supervisory employees who sought to be included in the bargaining unit were in fact performing
managerial functions. On the contrary, while these supervisory employees did exercise independent
judgment which is not routinary or clerical in nature, their authority was merely recommendatory in
character. In all instances, they were still accountable for their actions to a superior officer, i.e., their
respective superintendents. The Solicitor General succinctly puts it thus—
“A perusal of petitioner’s annexes x x x would readily show that the power of said supervisors in matters
relating to the exercise of
________________
No. 77415, 29 June 1989, 174 SCRA 477.
10 Art. 258. When an employer may file petition.—When requested to bargain collectively, an employer
may petition the Bureau for an election. If there is no existing certified collective bargaining agreement
in the unit, the Bureau shall, after hearing, order a certification election x x x.
11 Trade Unions of the Philippines and Allied Services v. Trajano, G.R. No. 61153, 17 January 1983, 120
SCRA 64.
458
458

prerogatives for or against rank-and-flle employees is not absolute but merely recommendatory in
character. Note that their reports recommending or imposing disciplinary action against rank-and-file
employees always bore the concurrence of one or two superiors x x x and the job descriptions x x x
clearly stated that these supervisors directly reported to a superior and were accountable to the
latter”12 (italics supplied).
As the Med-Arbiter himself noted, “it is incredible that only rank-and-file and managerial employees are
the personnel of respondent firm, considering the line of service it offers to the public”13 and the fact
that it employed 2,500 employees, more or less, all over the country.
A word more. PT&T alleges that respondent UNION is affiliated with the same national federation
representing its rank-and-file employees. Invoking Atlas Lithographic Services, Inc. v. Laguesma,14 PT&T
seeks the disqualification of respondent UNION. Respondent, however, denied it was affiliated with the
same national federation of the rank-and-file employees union, the Associated Labor Union or ALU. It
clarified that the PT&T Supervisory Employees Union is affiliated with Associated Professional,
Supervisory Office, Technical Employees Union or APSOTEU, which is a separate and distinct national
federation from ALU.
IN VIEW OF THE FOREGOING, the Petition for Certiorari and Mandamus with prayer for the issuance of a
temporary restraining order is DENIED.
Costs against petitioner.
SO ORDERED.
Cruz (Chairman), Griño-Aquino and Quiason, JJ., concur.
Petition denied.
Note.—An employer has no legal personality to oppose petition for certification election (California
Manufacturing Corp. vs.
_______________
12 Comment, p. 5; Rollo, p. 164.
13 Annex “G”, Petition, p. 2; Rollo, p. 51.
14 G.R. No. 96566, 6 January 1992, 205 SCRA 12.
459
VOL. 223, JUNE 17, 1993
459
Town Savings and Loan Bank, Inc. vs. Court of Appeals
Laguesma, 209 SCRA 606).

——o0o——
© Copyright 2017 Central Book Supply, Inc. All rights reserved. Phil. Telegraph and Telephone Corp. vs.
Laguesma, 223 SCRA 452, G.R. No. 101730 June 17, 1993
Judgment affirmed in toto.
Notes.—There is no treachery if the attack was preceded by a heated argument. (People vs. Gasper, 225
SCRA 189 [1993])
Where treachery not adequately proved, accused could only be convicted of homicide. (People vs.
Manlulu, 231 SCRA 701 [1994])
——o0o——
G.R. No. 116172. October 10, 1996.*
SAN MIGUEL FOODS, INC.-CEBU B-MEG FEED PLANT, petitioner, vs. HON. BIENVENIDO E. LAGUESMA,
Undersecretary of DOLE and ILAW AT BUKLOD NG MANGGAGAWA (IBM), respondents.
Labor Law; Unions; Words and Phrases; “Legitimate Labor Organization,” Defined.—Article 212(h) of
the Labor Code defines a legitimate labor organization as “any labor organization duly registered with
the Department of Labor and Employment, and includes any branch or local thereof.” It is important
to determine whether or not a particular labor organization is legitimate since legitimate labor
organizations have exclusive rights under the law 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
appropriate collective bargaining unit for purposes of collective bargaining.
Same; Same; Ordinarily, a labor organization attains the status of legitimacy only upon the issuance in
its name of a Certificate of Registration by the Bureau of Labor Relations.—The pertinent question,
therefore, must be asked: When does a labor organization acquire legitimacy? Ordinarily, a labor
organization attains the
_______________
* FIRST DIVISION.
69
VOL. 263, OCTOBER 9, 1996
69
San Miguel Foods, Inc.-Cebu B-Meg Feed Plant vs. Languesma

status of legitimacy only upon the issuance in its name of a Certificate of Registration by the Bureau of
Labor Relations pursuant to Articles 234 and 235 of the Labor Code.
Same; Same; When an unregistered union becomes a branch, local or chapter of a federation, some of
the requirements for registration mentioned in Arts. 234 and 235 of the Labor Code are no longer
required.—The foregoing procedure is not the only way by which a labor union may become
legitimate, however. When an unregistered union becomes a branch, local or chapter of a federation,
some of the aforementioned requirements for registration are no longer required. Section 3, Rule II,
Book V of the Implementing Rules of the Labor Code governs the procedure for union affiliation.
Same; Same; Certification Elections; The choice of a collective bargaining agent is the sole concern of
the employees; An employer that involves itself in a certification election lends suspicion to the fact
that it wants to create a company union.—In any case, this Court notes that it is petitioner, the
employer, which has offered the most tenacious resistance to the holding of a certification election
among its monthly-paid rank-and-file employees. This must not be so, for the choice of a collective
bargaining agent is the sole concern of the employees. The only exception to this rule is where the
employer has to file the petition for certification election pursuant to Article 258 of the Labor Code
because it was requested to bargain collectively, which exception finds no application in the case
before us. Its role in a certification election has aptly been described in Trade 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 cannot oppose the petition or appeal the Med-Arbiter’s orders
related thereto. An employer that involves itself in a certification election lends suspicion to the fact
that 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 of labor.
Same; Same; Same; While employers may rightfully be notified or informed of petitions for
certification election, they should not, however, be considered parties thereto with the concomitant
right to oppose it.—While employers may rightfully be notified or informed of petitions of such
nature, 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.
70
70
Same; Same; Same; The certification election is the most democratic and expeditious method by
which the laborers can freely determine the union that shall act as their representative in their
dealings with the establishment.—It bears stressing that no obstacle must be placed to the holding of
certification elections, for it is a statutory policy that should not be circumvented. The certification
election is the most democratic and expeditious method by which the 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 appropriate means whereby controversies and disputes on representation may be
laid to rest, by the unequivocal vote of the employees themselves. Indeed, it is the keystone of
industrial democracy.
Same; Same; Same; What is required to be certified under oath by the secretary or treasurer and
attested to by the local’s president are the “constitution and by-laws, a statement on the set of
officers, and the books of accounts” of the organization — the charter certificate issued by the mother
union need not be certified under oath.—Petitioner next asseverates that the Charter Certificate
submitted by the private respondent was defective in that it was not certified under oath and
attested to by the organization’s secretary and President. Petitioner is grasping at straws. Under our
ruling in the Progressive Development Corporation case, what is required to be certified under oath
by the secretary or treasurer and attested to by the local’s president are the “constitution and by-
laws, a statement on the set of officers, and the books of accounts” of the organization. The charter
certificate issued by the mother union need not be certified under oath by the secretary or treasurer
and attested to by the local’s president.
Certiorari; The Supreme Court is definitely not the proper venue to consider a factual issue as it is not
a trier of facts.—This is a factual issue which petitioner should have raised before the Med-Arbiter so
as to allow the private respondent ample opportunity to present evidence to the contrary. This Court
is definitely not the proper venue to consider this matter for it is not a trier of facts. It is noteworthy
that petitioner did not challenge the legal personality of the federation in the proceedings before the
Med-Arbiter. Nor was this issue raised in petitioner’s appeal to the Office of the Secretary of Labor
and Employment. This matter is being raised for the first time in this petition. An issue which was
neither alleged in the
71
71
pleadings nor raised during the proceedings below cannot be ventilated for the first time before this
Court. It would be offensive to the basic rule of fair play, justice and due process.
Same; Certiorari is a remedy narrow in its scope and inflexible in character — it is not a general utility
tool in the legal workshop.—Certiorari is a remedy narrow in its scope and inflexible in character. It is
not a general utility tool in the legal workshop. Factual issues are not a proper subject for certiorari, as
the power of the Supreme Court to review labor cases is limited to the issue of jurisdiction and grave
abuse of discretion. It is simply unthinkable for the public respondent Undersecretary of Labor to have
committed grave abuse of discretion in this regard when the issue as to the legal personality of the
private respondent IBM Federation was never interposed in the appeal before said forum.
Labor Law; It bears stressing that labor legislation seeks in the main to protect the interest of the
members of the working class and it should never be used to subvert their will.—The certification
election sought to be stopped by petitioner is, as of now, fait accompli. The monthly paid rank-and-
file employees of SMFI have already articulated their choice as to who their collective bargaining
agent should be. In the certification election held on August 20, 1994, the SMFI workers chose IBM at
SMFI to be their sole and exclusive bargaining agent. This democratic decision deserves utmost
respect. Again, it bears stressing that labor legislation seeks in the main to protect the interest of the
members of the working class. It should never be used to subvert their will.
Estenzo, Torrente, Paloma and Solon for petitioner.
Danilo L. Pilapil for private respondent.
HERMOSISIMA, JR., J.:
This is a petition for certiorari under Rule 65 to review and set aside two Resolutions of Mediator-Arbiter
Achilles V. Manit, dated January 5, 1994 and April 6, 1994, and the
72
72
affirmation Order on appeal of the public respondent, Undersecretary Bienvenido E. Laguesma of the
Department of Labor and Employment. The petition below was entitled: “In Re: Petition for Direct
Certification as the Sole and Exclusive Bargaining Agent of All Monthly Paid Employees of SMFI-Cebu B-
Meg Feeds Plant,” docketed as OS-MA-A-3-51-94 (R0700-9309-RU-036).
The essential facts are not disputed.
On September 24, 1993, a petition for certification election among the monthly-paid employees of the
San Miguel Foods, Inc.-Cebu B-Meg Feeds Plant was filed by private respondent labor federation Ilaw at
Buklod ng Manggagawa (IBM, for brevity) before Med-Arbiter Achilles V. Manit, alleging, inter alia, that
it is a legitimate labor organization duly registered with the Department of Labor and Employment
(DOLE) under Registration Certificate No. 5369-IP. SMFI-Cebu B-Meg Feeds Plant (SMFI, for brevity),
herein petitioner, is a business entity duly organized and existing under the laws of the Philippines which
employs roughly seventy-five (75) monthly paid employees, almost all of whom support the present
petition. It was submitted in said petition that there has been no certification election conducted in
SMFI to deter-mine the sole and exclusive bargaining agent thereat for the past two years and that the
proposed bargaining unit, which is SMFI’s monthly paid employees, is an unorganized one. It was also
stated therein that petitioner IBM (herein private respondent) has already complied with the mandatory
requirements for the creation of its local or affiliate in SMFI’s establishment.
On October 25, 1993, herein petitioner SMFI filed a Motion to Dismiss the aforementioned petition
dated September 24, 1993 on the ground that a similar petition remains pending between the same
parties for the same cause of action before Med-Arbiter Achilles V. Manit.
SMFI was referring to an evidently earlier petition, docketed as CE CASE NO R0700-9304-RU-016, filed
on April 28, 1993 before the office of Med-Arbiter Manit. Indeed, both petitions involved the same
parties, cause of action and relief
73
73
being prayed for, which is the issuance of an order by the Med-Arbiter allowing the conduct of a
certification election in SMFI’s establishment. The contention is that the judgment that may be rendered
in the first petition would be determinative of the outcome of the second petition, dated September 24,
1993.
On December 2, 1993, private respondent IBM filed its Opposition to SMFI’s Motion to Dismiss
contending, among others, that the case referred to by SMFI had already been resolved by Med-Arbiter
Manit in his Resolution and Order dated July 26, 19931 and September 2, 1993,2 respectively, wherein
IBM’s first petition for certification election was denied mainly due to IBM’s failure to comply with
certain mandatory requirements of the law. This denial was affirmed by the Med-Arbiter in another
Order dated November 12, 19933 wherein the Resolutions dated July 26, 1993 and September 2, 1993
were made to stand. Thus, IBM argues that there having been no similar petition pending before Med-
Arbiter Manit, another petition for certification election may be refiled as soon as the said requirements
are met. These requirements were finally satisfied before the second petition for certification election
was brought on September 24, 1993.
On January 5, 1994, Med-Arbiter Manit, this time, granted the second petition for certification election
of private respondent IBM in this wise:
“Let, therefore, a certification election be conducted among the monthly paid rank and file employees
of SMFI-CEBU B-MEG FEEDS PLANT at Lo-oc, Mandaue City. The choices shall be: YES — for IBM AT
SMFI-CEBU B-MEG; and NO — for No Union.
The parties are hereby notified of the pre-election conference which will take place on January 17, 1994
at 3:00 o’clock in the afternoon to set the date and time of the election and to thresh out
_______________
1 Rollo, pp. 52-53.
2 Rollo, pp. 67-69.
3 Rollo, p. 83.
74
74
the mechanics thereof. On said date and time the respondent is directed to submit the payroll of its
monthly paid rank and file employees for the month of June 1993 which shall be the basis for the list of
the eligible voters. The petitioner is directed to be ready to submit a list of the monthly paid rank and
file employees of SMFI-CEBU B-MEG FEEDS PLANT when the respondent fails to submit the required
payroll.
SO ORDERED.”4
Petitioner SMFI appealed the foregoing Order to the Secretary of Labor and Employment alleging that
the Med-Arbiter erred in directing the conduct of certification election considering that the local or
chapter of IBM at SMFI is still not a legitimate labor organization with a right to be certified as the
exclusive bargaining agent in petitioner’s establishment based on two grounds: (1) the authenticity and
due execution of the Charter Certificate submitted by IBM in favor of its local at SMFI cannot yet be
ascertained as it is still not known who is the legitimate and authorized representative of the IBM
Federation who may validly issue said Charter Certificate; and (2) a group of workers or a local union
shall acquire legal personality only upon the issuance of a Certificate of Registration by the Bureau of
Labor Relations under Article 234 of the Labor Code, which IBM at SMFI did not possess.
In a resolution dated April 6, 1994, public respondent Undersecretary Bienvenido Laguesma, by

authority of the Secretary of Labor and Employment, denied petitioner’s appeal, viz.:
“WHEREFORE, the appeal is hereby denied for lack of merit and the Order of the Med-Arbiter is hereby
affirmed.
Let the records of this case be forwarded to the Regional Office of origin for the immediate conduct of
certification election subject to the usual pre-election conference.
SO RESOLVED.”5
_______________
4 Rollo, pp. 31-32.
5 Rollo, p. 40.
75
75
Thereafter, a Motion for Reconsideration was filed which was also denied by the public respondent in
his Order dated May 24, 1994.6
Hence, the instant petition interposing the following justifications:
“1) THE HONORABLE UNDERSECRETARY BIENVENIDO E. LAGUESMA GRAVELY ABUSED HIS DISCRETION
WHEN HE ARBITRARILY RULED THAT ‘A LOCAL OR CHAPTER OF A LABOR FEDERATION, LIKE
RESPONDENT IBM, NEED NOT OBTAIN A CERTIFICATE OF REGISTRATION FROM THE BUREAU OF LABOR
RELATIONS TO ACQUIRE LEGAL PERSONALITY,’ WHEN ARTICLE 234 OF THE LABOR CODE OF THE
PHILIPPINES AND SECTION 3 OF RULE II OF BOOK V OF THE RULES IMPLEMENTING THE LABOR CODE, AS
AMENDED, CLEARLY PROVIDES THAT A GROUP OF WORKERS OR A LOCAL UNION SHALL ACQUIRE LEGAL
PERSONALITY ONLY UPON THE ISSUANCE OF THE CERTIFICATE OF REGISTRATION BY THE BUREAU OF
LABOR RELATIONS; AND,
2) THE HONORABLE UNDERSECRETARY BIENVENIDO E. LAGUESMA GRAVELY ABUSED HIS DISCRETION

WHEN HE PREMATURELY AND ARBITRARILY RULED THAT RESPONDENT IBM IS A LEGITIMATE LABOR
ORGANIZATION WHEN THE AUTHENTICITY AND DUE EXECUTION OF THE CHARTER CERTIFICATE
SUBMITTED BY RESPONDENT IBM CANNOT YET BE ASCERTAINED BECAUSE IT IS STILL NOT KNOWN WHO
ARE THE LEGITIMATE OFFICERS OF THE IBM FEDERATION WHO MAY VALIDLY ISSUE SAID CHARTER
CERTIFICATE AS THE CASE FILED TO RESOLVE THE ISSUE ON WHO ARE THE LEGITIMATE OFFICERS OF THE
IBM FEDERATION IS STILL PENDING RESOLUTION BEFORE THIS HONORABLE SUPREME COURT.”7
The petition has no merit.
Petitioner asserts that IBM at SMFI is not a legitimate labor organization notwithstanding the fact that it
is a local or chapter of the IBM Federation. This is so because under
_______________
6 Rollo, p. 42.
7 Rollo, p. 20.
76
76
Article 234 of the Labor Code, any labor organization shall acquire legal personality only upon the
issuance of the Certificate of Registration by the Bureau of Labor Relations.
We do not agree.
I
Article 212(h) of the Labor Code defines a legitimate labor organization as “any labor organization duly
registered with the Department of Labor and Employment, and includes any branch or local thereof.”
It is important to determine whether or not a particular labor organization is legitimate since legitimate
labor organizations have exclusive rights under the law 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
appropriate collective bargaining unit for purposes of collective bargaining. These rights are found under
Article 242 of the Labor Code, to wit:
“ART. 242. Rights of legitimate labor organizations.—A legitimate labor organization shall have the
right:
(a) To act as the representative of its members for the purpose of collective bargaining;
(b) To be certified as the exclusive representative of all the employees in an appropriate collective
bargaining unit for purposes of collective bargaining;
(c) To be furnished by the employer, upon written request, with his annual audited financial
statements, including the balance sheet and the profit and loss statement, within thirty (30) calendar
days from the date of receipt of the request, after the union has been duly recognized by the employer
or certified as the sole and exclusive bargaining representative of the employees in the bargaining unit,
or within sixty (60) calendar days before the expiration of the existing collective bargaining agreement,
or during the collective bargaining negotiation;
(d) To own property, real or personal, for the use and benefit of the labor organization and its
members;
(e) To sue and be sued in its registered name; and
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(f) To undertake all other activities designed to benefit the organization and its members, including
cooperative, housing welfare and other projects not contrary to law.
x x x x x x x x x.”
The pertinent question, therefore, must be asked: When does a labor organization acquire legitimacy?
Ordinarily, a labor organization attains the status of legitimacy only upon the issuance in its name of a
Certificate of Registration by the Bureau of Labor Relations pursuant to Articles 234 and 235 of the
Labor Code, viz.:
“ART. 234. Requirements of registration.—Any applicant labor organization, association or group of
unions or workers shall acquire legal personality and shall be entitled to the rights and privileges granted
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 meetings and the list of the workers who participated in such meetings;
(c) The names of all its members comprising at least twenty percent (20%) of all the employees in the
bargaining unit where it seeks to operate;
(d) If the applicant union has been in existence for one or more years, copies of its annual financial
reports; and
(e) Four (4) copies of the constitution and by-laws of the applicant union, minutes of its adoption or
ratification, and the list of the members who participated in it.
ART. 235. Action on application.—The Bureau shall act on all applications of registration within thirty
(30) days from filing.
All requisite documents and papers shall be certified under oath by the secretary or the treasurer of the
organization, as the case may be, and attested to by its president.”
The foregoing procedure is not the only way by which a labor union may become legitimate, however.
When an un--
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registered union becomes a branch, local or chapter of a federation, some of the aforementioned
requirements for registration are no longer required.8 Section 3, Rule II, Book V of the Implementing
Rules of the Labor Code governs the procedure for union affiliation, the relevant portions of which
provide:
“Sec. 3. Union Affiliation: Direct Membership with National Union.—An affiliate of a labor federation
or national union may be a local or chapter thereof or an independently registered union.
(a) The labor federation or national union concerned shall issue a charter certificate indicating the
creation or establishment of a local or chapter, copy of which shall be submitted to the Bureau of Labor
Relations within thirty (30) days from issuance of such charter certificate.
(b) An independently registered union shall be considered an affiliate of a labor federation or national
union after submission to the Bureau of the contract or agreement of affiliation within thirty (30) days
after its execution.
xxx xxx xxx
(e) The local or chapter of a labor federation or national union shall have and maintain a constitution
and by-laws, set of officers and books of accounts. For reporting purposes, the procedure governing the
reporting of independently registered unions, federations or national unions shall be observed.”
Paragraph (a) refers to a local or chapter of a federation which did not undergo the rudiments of
registration while paragraph (b) refers to an independently registered union which affiliated with a
federation. Implicit in the foregoing differentiation is the fact that a local or chapter need not be
independently registered. By force of law (in this case, Article 212 [h]), such local or chapter becomes a
legitimate labor organization upon compliance with the aforementioned
_______________
8 Progressive Development Corporation v. Secretary, Department of Labor and Employment, 205 SCRA
802, 810 [1992].
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provisions of Section 39 (a) and (e), without having to be issued a Certificate of Registration in its favor
by the BLR.
The cases of Lopez Sugar Corporation v. Secretary of Labor and Employment,10 Phoenix Iron and Steel
Corporation v. Secretary of Labor and Employment,11 and Protection Technology, Inc. v. Secretary,
Department of Labor and Employment,12 all going back to our landmark holding in Progressive
Development Corporation v. Secretary, Department of Labor and Employment,13 unequivocably laid
down the rule, thus:
“A local or chapter therefore becomes a legitimate labor organization only upon submission of the
following to the BLR:
1) A charter certificate, within 30 days from its issuance by the labor federation or national union, and
2) The constitution and by-laws, a statement on the set of officers, and the books of accounts all of
which are certified under oath by the secretary or treasurer, as the case may be, of such local or
chapter, and attested to by its president.
Absent compliance with these mandatory requirements, the local or chapter does not become a
legitimate labor organization.”
Corollarily, the satisfaction of all these requirements by the local or chapter shall vest upon it the status
of legitimacy with all its concomitant statutory privileges, one of which is the right to be certified as the
exclusive representative of all the employees in an appropriate bargaining unit.
In the case at bench, public respondent Bienvenido E. Laguesma, in affirming the finding of the Med-
Arbiter that IBM at SMFI is a legitimate labor organization,14 made the following material
pronouncements amply supported by the records:
_______________
9 Ibid.
10 247 SCRA 1, 8 [1995].
11 244 SCRA 173, 177 [1995].
12 242 SCRA 99, 106 [1995].
13 Supra.
14 Rollo, p. 31.
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“[t]he resolution of the issue raised by the respondent on whether or not petitioner is a legitimate labor
organization will depend on the documents submitted by the petitioner in the second petition.
A close scrutiny of the records shows that at the time of the filing of the subject petition on 24
September 1993 by the petitioner Ilaw at Buklod ng Manggagawa, for and in behalf of its local affiliate
IBM at SMFI-CEBU B-MEG, the latter has been clothed with the status and/or character of a legitimate
labor organization. This is so, because on 19 July 1993, petitioner submitted to the Bureau of Labor
Relations (BLR), this Department, the following documents: charter certificate, constitution and by-laws,
names and addresses of the union officers and a certification of the union’s secretary on the non-
availability of the union’s Books of Accounts. Said documents (except the charter certificate) are
certified under oath and attested to by the local union’s secretary and President, respectively.”15
Petitioner SMFI does not dispute the fact that IBM at SMFI has complied with the second set of
requirements, i.e., constitution, by-laws, et al. What is controverted is the non-compliance with the
requirement as to the charter certificate which must be submitted to the BLR within thirty (30) days
from its issuance by the labor federation. While the presence of a charter certificate is conceded,
petitioner maintains that the validity and authenticity of the same cannot yet be ascertained as it is still
not known who is the legitimate and authorized representative of the IBM Federation who may validly
issue said charter certificate in favor of its local, IBM at SMFI. According to petitioner, there are two (2)
contending sets of officers of the IBM Federation at the time the charter certificate was issued in favor
of IBM at SMFI, the faction of Mr. Severino O. Meron and that of Mr. Edilberto B. Galvez.
On this point, public respondent, in upholding the legitimate status of IBM at SMFI, backed up by the
Solicitor General, had this to say:
_______________
15 Rollo, pp. 37-38.
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“The contention of the respondent that unless and until the issue on who is the legitimate national
president, of the Ilaw at Buklod ng Manggagawa is resolved, the petitioner cannot claim that it has a
valid charter certificate necessary for it to acquire legal personality is untenable. We wish to stress that
the resolution of the said issue will not in any way affect the validity of the charter certificate issued by
the IBM in favor of the local union. It must be borne in mind that the said charter certificate was issued
by the IBM in its capacity as a labor organization, a juridical entity which has a separate and distinct legal
personality from its members. When as in this case, there is no showing that the Federation acting as a
separate entity is questioning the legality of the issuance of the said charter certificate, the legality of
the issuance of the same in favor of the local union is presumed. This, notwithstanding the alleged
controversy on the leadership of the federation.”16
We agree with this position of the public respondent and the Solicitor General. In addition, private
respondent’s Comment to this petition indicates that in the election of officers held to determine the
representatives of IBM, the faction of Mr. Meron lost to the group of Mr. Edilberto Galvez, and the latter
was acknowledged as the duly elected IBM National President.17 Thus, the authority of Mr. Galvez to
sign the charter certificate of IBM at SMFI, as President of the IBM Federation,18 can no longer be
successfully questioned. A punctilious examination of the records presents no evidence to the contrary
and petitioner, instead of squarely refuting this point, skirted the issue by insisting that the mere
presence of two contending factions in the IBM prevents the issuance of a valid and authentic charter
certificate in favor of IBM at SMFI. This averment of petitioner simply does not deserve any merit.
II
In any case, this Court notes that it is petitioner, the employer, which has offered the most tenacious
resistance to the
_______________
16 Rollo, pp. 38-39.
17 Rollo, p. 118.
18 Rollo, p. 78.
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holding of a certification election among its monthly-paid rank-and-file employees. This must not be so,
for the choice of a collective bargaining agent is the sole concern of the employees.19 The only
exception to this rule is where the employer has to file the petition for certification election pursuant to
Article 25820 of the Labor Code because it was requested to bargain collectively,21 which exception
finds no application in the case before us. Its role in a certification election has aptly been described in
Trade Unions of the Philippines and Allied Services (TUPAS) v. Trajano,22 as that of a mere by-stander. It
has no legal standing in a certification election as it cannot oppose the petition or appeal the Med-
Arbiter’s orders related thereto. An employer that involves itself in a certification election lends
suspicion to the fact that it wants to create a company union.23 This Court should be the last agency to
lend support to such an attempt at interference with a purely internal affair of labor.24
While employers may rightfully be notified or informed of petitions of such nature, they should not,
however, be considered parties thereto with the concomitant right to oppose it.
_______________
19 R. Transport Corporation v. Laguesma, 227 SCRA 826, 833 [1993].
20 ART. 258. When an employer may file petition.—When requested to bargain collectively, an
employer may petition the Bureau for an election. If there is no existing certified collective bargaining
agreement in the unit, the Bureau shall, after hearing, order a certification election.
All certification cases shall be decided within twenty (20) working days.
The Bureau shall conduct a certification election within twenty (20) days in accordance with the rules
and regulations prescribed by the Secretary of Labor and Employment.
21 Phil. Telegraph and Telephone Corp. v. Laguesma, 223 SCRA 452, 456-457 [1993].
22 120 SCRA 64, 66 [1983].
23 Philippine Scout Veterans Security and Investigation Agency v. Torres, 224 SCRA 682, 690 [1993].
24 Consolidated Farms, Inc. v. Noriel, 84 SCRA 469, 473 [1978].
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Sound policy dictates that they should maintain a strictly hands-off policy.25
It bears stressing that no obstacle must be placed to the holding of certification elections,26 for it is a
statutory policy that should not be circumvented.27 The certification election is the most democratic
and expeditious method by which the laborers can freely determine the union that shall act as their
representative in their dealings with the establishment where they are working.28 It is the appropriate
means whereby controversies and disputes on representation may be laid to rest, by the unequivocal
vote of the employees themselves.29 Indeed, it is the keystone of industrial democracy.30
III
Petitioner next asseverates that the Charter Certificate submitted by the private respondent was
defective in that it was not certified under oath and attested to by the organization’s secretary and
President.
_______________
25 Philippine Scout Veterans Security and Investigation Agency, supra.
26 Trade Unions of the Philippines v. Laguesma, 233 SCRA 565, 571 [1994], citing Warren Manufacturing
Workers Union v. Bureau of Labor Relations, 159 SCRA 387 [1988]; General Textiles Allied Workers
Association v. Director of Bureau of Labor Relations, 84 SCRA 430 [1978]; Philippine Association of Free
Labor Unions v. Bureau of Labor Relations, 69 SCRA 132 [1976].
27 Ibid., citing Belyca Corporation v. Ferrer-Calleja, 168 SCRA 184 [1988]; Philippine Airlines Employees’
Association (PALEA) v. Ferrer-Calleja, 162 SCRA 426 [1988]; George and Peter Lines, Inc. v. Associated
Labor Unions (ALU), 134 SCRA 82 [1986].
28 Port Workers Union of the Phils. (PWUP) v. Laguesma, 207 SCRA 329, 333 [1992], citing National
Association of Free Trade Unions v. Bureau of Labor Relations, 164 SCRA 12 [1988].
29 Trade Unions of the Philippines, supra, at 572, citing PALEA v. Ferrer-Calleja, 162 SCRA 426, 431
[1988].
30 Ibid.
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Petitioner is grasping at straws. Under our ruling in the Progressive Development Corporation31 case,
what is required to be certified under oath by the secretary or treasurer and attested to by the local’s
president are the “constitution and by-laws, a statement on the set of officers, and the books of
accounts” of the organization. The charter certificate issued by the mother union need not be certified
under oath by the secretary or treasurer and attested to by the local’s president.
IV
Petitioner, in its Reply to public respondent’s Comment, nevertheless calls the attention of this court to
the fact that, contrary to the assertion of private respondent IBM that it is a legitimate labor federation
and therefore has the capacity and authority to create a local or chapter at SMFI, the Chief of the Labor
Organizations Division of the Bureau of Labor Relations — Manila had allegedly issued a certification last
January 17, 1995 to the effect that private respondent is not a legitimate labor federation.32
This is a factual issue which petitioner should have raised before the Med-Arbiter so as to allow the
private respondent ample opportunity to present evidence to the contrary. This Court is definitely not
the proper venue to consider this matter for it is not a trier of facts. It is noteworthy that petitioner did
not challenge the legal personality of the federation in the proceedings before the Med-Arbiter. Nor was
this issue raised in petitioner’s appeal to the Office of the Secretary of Labor and Employment. This
matter is being raised for the first time in this petition. An issue which was neither alleged in the
pleadings nor raised during the proceedings below cannot be ventilated for the first time before this
Court. It would be offensive to the basic rule of fair play, justice and due process.33 Certiorari is a
remedy narrow in its
_______________
31 Supra, at 813.
32 Rollo, p. 162.
33 C. Alcantara & Sons, Inc. v. NLRC, 229 SCRA 109, 115 [1994], citing Medida v. C.A., 208 SCRA 887
[1992].
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scope and inflexible in character. It is not a general utility tool in the legal workshop.34 Factual issues
are not a proper subject for certiorari, as the power of the Supreme Court to review labor cases is
limited to the issue of jurisdiction and grave abuse of discretion.35 It is simply unthinkable for the public
respondent Undersecretary of Labor to have committed grave abuse of discretion in this regard when
the issue as to the legal personality of the private respondent IBM Federation was never interposed in
the appeal before said forum.
Finally, the certification election sought to be stopped by petitioner is, as of now, fait accompli. The
monthly paid rank-and-file employees of SMFI have already articulated their choice as to who their
collective bargaining agent should be. In the certification election held on August 20, 1994,36 the SMFI
workers chose IBM at SMFI to be their sole and exclusive bargaining agent. This democratic decision
deserves utmost respect. Again, it bears stressing that labor legislation seeks in the main to protect the
interest of the members of the working class. It should never be used to subvert their will.37
WHEREFORE, the petition is DENIED. Costs against petitioner.
SO ORDERED.
Bellosillo, Vitug and Kapunan, JJ., concur.
Padilla (Chairman), J., No part, on account of interests in San Miguel Group of companies.
Petition denied.
_______________
34 Herrera, Oscar M., Remedial Law, Volume III, 1996 ed., p. 164.
35 Oscar Ledesma and Company v. National Labor Relations Commission, 246 SCRA 47, 51 [1995].
36 Rollo, p. 127.
37 Trade Unions of the Philippines, supra. San Miguel Foods, Inc.-Cebu B-Meg Feed Plant vs. Languesma,
263 SCRA 68, G.R. No. 119417 October 9, 1996
274
Air Line Pilots Association of the Philippines vs. Court of Industrial Relations
No. L-33705. April 15, 1977.*
AIR LINE PILOTS ASSOCIATION OF THE PHILIPPINES (GASTON GROUP), petitioner, vs. THE COURT OF
INDUSTRIAL RELATIONS and AIR LINES PILOTS ASSOCIATION OF THE PHILIPPINES (GOMEZ GROUP),
respondents.
No. L-35206. April 15, 1977.*
CESAR CHAVEZ, JUR., FRANCISCO ACHONDOA, SERAFIN ADVINCULA, MAXIMO R. AFABLE, ALFREDO
AGBULOS, SOLOMON A. HERRERA, NEMESIO ALMARIO, JULIUS AQUINO, RENE ARELLANO, CARLITO
ARRIBE, FERNANDO AYUBO, GENEROSO BALTAZAR, EDDIE BATONGMALAQUE, URSO D. BELLO,
TOMAS BERNALES, RUDOLFO BIDES, AUGUSTO BLANCO, HORACIO BOBIS, ROMEO B. BONTUYAN.
ANTONINO E. BUENAVENTURA, PEDRO BUÑI, ISABELO BUSTAMANTE, JOSE BUSTAMANTE, RICARDO
BUSTAMANTE, ERNESTO D. BUZON, TRANQUILINO CABE, ISIDORO CALLEJA, CESAR CAÑETA,
FERNANDO CARAG, ROGELIO CASINO, JOSE CASTILLO, NICANOR CASTILLO, RAFAEL CASTRO, JOSE DE
LA CONCEPCION, CARLOS CRUZ, WILFREDO CRUZ, MAGINOO CUSTODIO, TOMAS DE LARA, JOSE DE
LEON, BENJAMIN DELFIN, GREGORIO DELGADO, IRINEO DEROTAS, DUMAGUIN, BENEDICTO
FELICIANO, RODRIGO FRIAS, JOSE GIL, ANTONIO GOMEZ, ROBERTO GONZALEZ, BIENVENIDO
GOROSPE, AMADO R. GULOY,
_______________
* EN BANC
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VOL. 76, APRIL 15, 1977
275
JOSE GUTIERREZ, ANTONIO IBARRETA, MUSSOLINI IGNACIO, ROBERTO INIGO, MATIAS JABIER,
ROGELIO JARAMILLO, HARRY JISON, ALBERTO JOCSON, VALENTIN LABATA, JAIME LACSON, JORGE
LACSON, FRANCISCO LANSANG, MENANDRO LAUREANO, JESUS LAQUINDANUM, LEONARDO LONTOC,
RAUL LOPEZ, RENE LORENZO, OSBORNE LUCERO, ARISTON LUISTRO, MANUEL LUKBAN, VIRGILIO
MABABA, MARIANO MAGTIBAY, EDGARDO MAJARAIS, EMILIO MALLARE, LEONCIO MANARANG,
ALFREDO MARBELLA, ALFREDO MARTINEZ, EDILBERTO MEDINA, CLEMENTE MIJARES, EDMUNDO
MISA, CONRADO MONTALBAN, FERNANDO NAVARRETE, EUGENIO NAVEA, ERNESTO TOMAS,
NIERRAS, PATROCINIO OBRA, VICTORINO ORGULLO, CLEMENTE PACIS, CESAR PADILLA, ROMEO
PAJARILLO, RICARDO PANGILINAN, CIRILO PAREDES, AMANDO PARIS, ALBERTO PAYUMO, PEDRO
PENERA, FRANCISCO PEPITO, ADOLFO PEREZ, DOMINGO POLOTAN, EDUARDO RAFAEL, SANTOS
RAGAZA, TEODORO RAMIREZ, RAFAEL RAVENA, ANTONIO REYES, GREGORIO RODRIGUEZ, LEONARDO
SALCEDO, HENRY SAMONTE, PAQUITO SAMSON, ARTHUR B. SANTOS, ARTURO T. SANTOS ANGELES
SARTE, VALERIANO SEGURA, RUBEN SERRANO, LINO SEVERINO, ANGEL SEVILLA, BENJAMIN SOLIS,
PATROCINIO TAN, RAFAEL TRIAS, EDGARDO VELASCO, LORETO VERGEIRE, RUBEN VICTORINO,
ALEXANDER VILLACAMPA, CAMILO VILLAGONZALO, BAYANI VILLANUEVA, RIZAL VILLANUEVA,
ROMULO VILLANUEVA, ROLANDO VILLANUEVA, CARLOS VILLAREAL, and ALFONSO SAPIRAIN, AND
OTHERS and AIR LINE PILOTS ASSOCIATION OF THE PHILIPPINES (GASTON), petitioners, vs. THE
HONORABLE JUDGES ARSENIO I. MARTINEZ. AMANDO C. BUGAYONG and JOAQUIN M. SALVADOR of
the COURT OF INDUSTRIAL RELATIONS, BEN HUR GOMEZ, claiming to represent AIR LINE PILOTS
ASSOCIATION OF THE PHILIPPINES, CARLOS ORTIZ AND OTHERS, and PHILIPPINE AIR LINES, INC.,
respondents.
Labor law; A certification proceeding is not a litigation, but an investigation of a non-adversary, fact-
finding character.—This Court
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276
has always stressed that a certification proceeding is not a litigation, in the sense in which this term is
ordinarily understood, but an investigation of a non-adversary, fact-finding character in which the
Court of Industrial Relations plays the part of a disinterested investigator seeking merely to ascertain
the desires of employees as to the matter of their representation. Such being the nature of a
certification proceeding, we find no cogent reason that should prevent the industrial court, in such a
proceeding, from inquiring into and satisfying itself about matter which may be relevant and crucial,
though seemingly beyond the purview of such a proceeding, to the complete realization of the well-
known purposes of a certification case.
Same; Industrial Court should be allowed ample discretion in securing disclosure of facts in a
certification case.—Such a situation may arise, as it did in the case at bar, where a group of pilots of a
particular airline anticipating their forced retirement or resignation on account of strained relations
with the airline arising from unfulfilled economic demands, decided to adopt an amendment to their
organization’s constitution and by-laws in order to enable them to retain their membership standing
therein even after the termination of their employment with the employer concerned. The industrial
court definitely should be allowed ample discretion to secure a disclosure of circumstances which will
enable it to act fairly in a certification case.
Same; When adoption of amendment to a union’s by-laws is legal.—We have made a careful
examination of the records of L-33705 and we find the adoption of the resolution introducing the
questioned amendment to be in substantial compliance with the ALPAP constitution and by-laws.
Indeed, there is no refutation of the fact that 221 out of the 270 members of ALPAP did cast their
votes in favor of the said amendment on October 30, 1970 at the ALPAP general membership
meeting.
Same; The term “labor organization” as defined by RA 875 is not limited to the employees of a
particular employer.—This Court cannot likewise subscribe to the restrictive interpretation made by
the court below of the term “labor oganization,” which Section 2(e) of R.A. 875 defines as “any union
or association of employees which exists, in whole or in part, for the purpose of collective bargaining
or of dealing with employers concerning terms and conditions of employment.” The absence of the
condition which the court below would attach to the statutory concept of a labor organization, as
being limited to the employees of a particular employer, is quite evident from the law. The emphasis
of the Industrial Peace Act is clearly on the purposes for which a union or association of employees is
established rather than
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277
that membership therein should be limited only to the employees of a particular employer. Trite to
say, under Section 2(h) of R.A. 875 “representative” is defined as including “a legitimate labor
organization or any officer or agent of such organization, whether or not employed by the employer
or employee whom he represents.” It cannot be overemphasized likewise that a labor dispute can
exists “regardless of whether the disputants stand in the proximate relation of employer and
employee.”
Same; When election of a set of officers by minority group in a union not binding.—Moreover, this
Court cannot hold as valid and binding the election of Ben Hur Gomez as President of ALPAP. He was
elected at a meeting of only 45 ALPAP members called just one day after the election of Felix C.
Gaston as President of ALPAP who, as shown, received a majority of 180 votes out of a total
membership of 270.
Same; A labor union may authorize a segment thereof to bargain collectively with the employer and in
the exercise of such authority to have custody of the union’s fund and office and make use of the
unions name.—In our opinion, it is perfectly within the powers and prerogatives of a labor
organization, through its duly elected officers, to authorized a segment of that organization to bargain
collectively with a particular employer, particularly where those constituting the segment share a
common and distinguishable interest, apart from the rest of their fellow union members, on matters
that directly affect the terms and conditions of their particular employment. As the circumstances
pertinent to the case at bar presently stand, ALPAP (Gaston) has extended recognition to ALPAP
(Gomez) to enter and conclude collective bargaining contracts with PAL. Having given ALPAP (Gomez)
this authority, it would be clearly unreasonable on the part of ALPAP (Gaston) to disallow the former
a certain use of the office, funds and name of ALPAP when such use is necessary or would be required
to enable ALPAP (Gomez) to exercise, in a proper manner, its delegated authority to bargain
collectively with PAL. Clearly, an intelligently considered adjustment of grievances and integration of
the diverse and varying interests that not infrequently and, often, unavoidably permeate the
membership of a labor organization, will go a long way, in achieving peace and harmony within the
ranks of ALPAP. Of course, in the eventuality that the pilots presently employed by PAL and who
subscribe to the leadership of Ben Hur Gomez should consider it to their better interest to have their
own separate office, name and union funds, nothing can prevent them from setting up a separate
labor union. In that eventuality, whatever vested rights, interest or participation they may have in the
assets, including cash funds, of ALPAP as a result of their
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278
membership therein should properly be liquidated in favor of such withdrawing members of the
association.
Same; Non-compliance with the rule that all issues in a certified labor dispute should be ventilated in
the case where the same was docketed is not an error or jurisdiction.—While it is correct, as
submitted by ALPAP (Gaston), that in the 1971 case of Philippine Federation of Petroleum Workers
(PFPW) vs. CIR (37 SCRA 716) this Court held that in a certified labor dispute all issues involved in the
same should be determined in the case where the certified dispute was docketed and that the parties
should not be permitted to isolate other germane issues or demands and reserve them for
determination in the other cases pending before other branches of the industrial court,
noncompliance with this rule is at best an error in procedure, rather than of jurisdiction, which is not
beyond the power of this Court to review where sufficient reason exist, a situation not obtaining in
the case at bar.
Same; Employees who voluntarily retired and/or resigned from employment are not entitled to
reinstatement.—After a thoroughgoing study of the records of these two consolidated petitions, this
Court finds that the matter of the reinstatement of the pilots who retired or resigned from PAL was
ventilated fully and adequately in the certification case in all its substantive aspects, including the
allegation of the herein petitioners that they were merely led to believe in good faith that in retiring
or resigning from PAL they were simply exercising their rights to engage in concerted activity. In the
light of the circumstances thus found below, it can be safely concluded that the mass retirement and
resignation action of the herein petitioners was intentionally planned to abort the effects of the
October 7, 10 and 19, 1970 return-to-work orders of the industrial court (which they, in fact, ignored
for more than a week) by placing themselves beyond the jurisdictional control of the said court
through the umbrella of the constitutional prohibition against involuntary servitude, thereby enabling
them to pursue their main pressure objective of grounding most, if not all, PAL flight operations.
Clearly, the powers given to the industrial court in a certified labor dispute will be meaningless and
useless to pursue where its jurisdiction cannot operate.
Same; Same.—We cannot consequently disagree with the court a quo when it concluded that the
actuations of the herein petitioners after they retired and resigned en masse—their retrieval of
deposits and other funds from the ALPAP Cooperative Credit Union on the ground that they have
already retired or resigned, their employment with another airline, the filing of a civil suit for the
recovery of their
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279
retirement pay where they invoked the provision against involuntary servitude to obtain payment
thereof, and their repeated manifestations before the industrial court that their retirement and
resignation were not sham, but voluntary and intentional—are, in the aggregate, indubitable
indications that the said pilots did retire/resign from PAL with full awareness of the likely
consequences of their acts. Their protestations of good faith, after nearly a year of underscoring the
fact that they were no longer employed with PAL, cannot but appear to a reasonable mind as a late
and regrettable ratiocination.
Same; “Strike” as used in the statute means temporary stoppage of work.—Parenthetically, contrary
to ALPAP (Gaston)’s argument that the pilots’ retirement/resignation was a legitimate concerted
activity, citing Section 2(1) of the Industrial Peace Act which defines “strike” as “any temporary
stoppage of work by the concerted action of employees as a result of an industrial dispute,” it is
worthwhile to observe that as the law defines it, a strike means only a “temporary stoppage of work.”
What the mentioned pilots did, however, cannot be considered, in the opinion of this Court, as mere
“temporary stoppage of work.” What they contemplated was evidently a permanent cut-off of
employment relationship with their erstwhile employer, the Philippine Air Lines.
Same; Same; A legitimate concerted activity cannot be used to circumvent judicial orders or be tossed
around like a plaything.—A legitimate concerted activity is a matter that cannot be used to
circumvent judicial orders or be tossed around like a plaything. Definitely, neither employers nor
employees should be allowed to make a judicial authority a now-you’ve-got-it-now-you-don’t affair.
The courts cannot hopefully effectuate and vindicate the sound policies of the Industrial Peace Act
and all our labor laws if employees, particularly those who on account of their highly advance
technical background and relatively better life status are far above the general working class
spectrum, will be permitted to defy and invoke the jurisdiction of the courts whenever the alternative
chosen will serve to feather their pure and simple economic demands.
PETITIONS for certiorari of the resolutions of the Court of Industrial Relations.
J. C. Espinas & Associates for petitioner (Gaston Group).
Jose K. Manguiat, Jr. for respondent Court, et al.
E. Morabe & Associates for respondent (Gomez Group).
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CASTRO, C.J.:
These are two petitions for certiorari (L-33705 and L-35206), consolidated for purposes of decision
because they involve more or less the same parties and interlocking issues.
In L-33705 the petitioner Air Line Pilots Association of the Philippines (Gaston group) maintains that the
Court of Industrial Relations acted without jurisdiction in passing upon (1) the question of which, in a
certification proceeding, between the set of officers elected by the group of Philippine Air Lines pilots
headed by Captain Felix Gaston, on the one hand, and the set of officers elected by the group headed by
Captain Ben Hur Gomez, on the other, is the duly elected set of officers of the Air Line Pilots Association
of the Philippines, and (2) the question of which, between the two groups, is entitled to the name, office
and funds of the said Association.
In L-35206 the individual petitioners (numbering 127) and the Air Line Pilots Association of the
Philippines (hereinafter referred to as ALPAP) (Gaston) maintain that the industrial court acted without
jurisdiction and with grave abuse of discretion in promulgating its resolution dated June 19, 1972 which
suspended the hearing of the said petitioners’ plea below for reinstatement and/or return to work in
the Philippine Air Lines (hereinafter referred to as PAL) or, alternatively, the payment of their retirement
and/or separation pay, as the case may be, until this Court shall have decided L-33705.
L-33705
On January 2, 1971, the Air Line Pilots Association of the Philippines, represented by Ben Hur Gomez
who claimed to be its President, filed a petition with the Court of Industrial Relations praying for
certification as the sole and exclusive collective bargaining representative of “all the pilots now under
employment by the Philippine Air Lines, Inc. and are on active flight and/or operational assignments.”
The petition which was docketed in the sala of Judge Joaquin M. Salvador as Case 2939-MC was opposed
in the name of the same association by Felix C. Gaston (who also claimed to be its President) on the
ground that the industrial court has no jurisdiction over the subject-matter of the petition “because a
certification proceeding in the Court of Industrial Relations is not the proper forum for the
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adjudication of the question as to who is the lawful president of a legitimate labor organization.”
On May 29, 1971, after hearing the petition, Judge Salvador rendered a decision certifying the—
“. . . ALPAP composed only of pilots employed by PAL with Capt. Ben Hur Gomez as its president, as the
sole and exclusive bargaining representative of all the pilots employed by PAL and are on active flights
and/or operational assignments, and as such is entitled to all the rights and privileges of a legitimate
labor organization, including the right to its office and its union funds.”
The following circumstances were cited by Judge Salvador to justify the conclusions reached by him in
his decision, namely:
(a) that there has been no certification election within the period of 12 months prior to the date the
petition for certification was filed;
(b) that the PAL entered into a collective bargaining agreement with ALPAP for “pilots in the employ of
the Company” only for the duration of the period from February 1, 1969 to January 31, 1972;
(c) that PAL pilots belonging to the Gaston group, in defiance of court orders issued in Case 101-IPA(B)
(see L-35206, infra) retired/resigned en masse from the PAL and accompanied this with actual acts of
not reporting for work;
(d) that the pilots affiliated with the Gaston group tried to retrieve their deposits and other funds from
the ALPAP Cooperative Credit Union on the ground that they have already retired/resigned from PAL;
(e) that some of the members of the Gaston group joined another airline after their
retirement/resignation;
(f) that the Gaston group claimed before the industrial court that the order enjoining them from retiring
or resigning constituted a violation of the prohibition against involuntary servitude (see L-35206, infra);
and
(g) that the contention that the mass retirement or resignation was merely an involuntary protest by
those affiliated with the Gaston group is not borne out by the evidence as, aside from their
aforementioned acts, the said group of pilots even filed a civil complaint against the PAL in which the
cessation of their employment with PAL was strongly stressed by them.
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It appears that prior to the filing of the certification petition below, a general ALPAP membership
meeting was held on October 30, 1970, at which 221 out of 270 members adopted a resolution
amending ALPAP’s constitution and by-laws by providing in a new section thereof that—
“Any active member who shall be forced to retire or forced to resign or otherwise terminated for union
activities as solely determine by the Association shall have the option to either continue to be and
remain as an active member in good standing or to resign in writing his active membership with the
Association. . .”
According to ALPAP (Gaston), the foregoing amendment was adopted “In anticipation of the fact that
they may be forced to resign or retire because of their ‘union activities.’ ” At this period of time, PAL and
ALPAP were locked in a labor dispute certified by the President to the industrial court and docketed as
Case 101-IPA(B) (see L-35206, infra).
On December 12, 1970, despite a no-work-stoppage order of the industrial court, a substantial majority
of ALPAP members filed letters of retirement/resignation from the PAL.
Thereafter, on December 18-22, 1970, an election of ALPAP officers was held, resulting in the election of
Felix C. Gaston as President by 180 votes. Upon the other hand, on December 23, 1970, about 45 pilots
who did not tender their retirement or resignation with PAL gathered at the house of Atty. Morabe and
elected Ben Hur Gomez as ALPAP President.
On June 3, 1971, ALPAP (Gaston) filed an opposition in Case 101-IPA(B) to an urgent ex parte motion of
the PAL to enjoin the members of ALPAP from retiring or resigning en masse. It was claimed by ALPAP
(Gaston that—
“1. Insofar as herein oppositors are concerned, the allegations of respondent that their ‘resignations’
and ‘retirements’ are sham resignations and retirements and that ‘There is no honest or genuine desire
to terminate the employee relationship with PAL’ are completely false. Their bona fide intention to
terminate their employer-employee relationship with PAL is conclusively shown by the fact that they
have not sought reinstatement in or re-employment by PAL and also by the fact that they are either
seeking employment in another airline company;
“2. Respondent in effect recognized such bona fide intention of the herein oppositors as shown by the
fact that it accepted said resignations and retirements and did not initiate any contempt
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proceedings against them; and
“3. The action of herein oppositors in filing their resignations and retirements was a legitimate exercise
of their legal and constitutional rights and the same, therefore, cannot be considered as a valid ground
to deprive them of benefits which they had already earned including, among others, retirement benefits
to which they are entitled under the provisions of an existing contract between petitioner and
respondent. Such deprivation would constitute impairment of the obligations of contract.”
On June 15, 1971, the industrial court en banc, acting on a motion for reconsideration filed by ALPAP
(Gaston) in Case 2939-MC against the decision of Judge Salvador, denied the same. The said court’s
resolution was then appealed to this Court (L-33705).
L-35206
On October 3, 1970, the President of the Philippines certified a labor dispute between members of
ALPAP and the PAL to the Court of Industrial Relations. The dispute which had to do with union
economic demands was docketed as Case No. 101-IPA(B) and was assigned to Judge Ansberto P.
Paredes.
On October 7, 1970, after conferring with both parties for two days, Judge Paredes issued a return-to-
work order, the pertinent portions of which read as follows:
“PALEA and ALPAP, their officers and members, and all employees who have joined the present strikes
which resulted from the labor disputes certified by the President to the Court, or who have not reported
for work as a result of the strikes, are hereby ordered forthwith to call off the strikes and lift the picket
lines . . . and return to work not later than Friday, October 9, 1970, and management to admit them
back to work under the same terms and conditions of employment existing before the strikes, including
what has been earlier granted herein.
“PAL is ordered not to suspend, dismiss or lay-off any employee as a result of these strikes. Read into
this order is the provision of Section 19, C.A. 103, as amended, for the guidance of the parties.
“x x x
“Failure to comply with any provision of this Order shall constitute contempt of court, and the employee
failing or refusing to work by October 9, 1970, without justifiable cause, shall immediately be replaced
by PAL, and may not be reinstated without prior Court
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order and on justifiable grounds.”
On October 10, 1970, Judge Paredes, having been informed that the strikes had not been called off,
issued another order directing the strikers to lift their pickets and return to work and explaining that his
order of October 7, 1970 partook of the nature of amandatory injunction under the doctrine laid down
in Philippine Association of Free Labor Unions (PAFLU) vs. Hon. Joaquin M. Salvador, et al., (L-29471 and
L-29487, September 28, 1968).
The strike, however, continued until the industrial court en banc denied, on October 19, 1970, ALPAP’s
motion for reconsideration of the said orders.
On October 22, 1970, the strikers returned to work, except (according to the PAL) two pilots, one of
them being Felix C. Gaston who allegedly refused to take the flights assigned to him. Due to his refusal,
among other reasons, PAL terminated Gaston’s services on October 27, 1970. His dismissal was reported
to the industrial court on October 29, 1970. Thereafter, the court a quo set the validity of Gaston’s
dismissal for hearing, but, on several occasions, he refused to submit his side before the hearing
examiner, claiming that his case would be prosecuted through the proper forum at the proper time.
On November 24, 1970, the PAL filed an urgent ex parte motion with the industrial court to enjoin the
members of ALPAP from proceeding with their intention to retire or resign en masse. On November 26,
1970, Judge Paredes issued an order commanding ALPAP members—
“. . . not to strike or in any way cause any stoppage in the operation and service of PAL, under pain of
dismissal and forfeiture of rights, and privileges accruing to their respective employments should they
disregard this Order; and PAL is also ordered not to lockout any of such members and officers of ALPAP
under pain of contempt and cancellation of its franchise.”
ALPAP filed a motion for the reconsideration of the foregoing order claiming, among others, that it
subjected them to involuntary servitude:
“It is crystal-clear that the disputed Order in effect compels the members of petitioner to work against
their will. Stated differently, the members of petitioner association are being perced or forced by the
Trial Court to be in a state of slavery for the benefit of respondent corporation. In this regard, therefore,
the Trial Court grossly violated
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a constitutional mandate which states:
“No involuntary servitude in any form shall exist except as a punishment for crime whereof the party
shall have been duly convicted.’ (Article III, Section 1 (13)).
“The constitutional provision does not provide any condition as to the cause or causes of the
unwillingness to work. Suffice it to say that an employee for whatever reason of his own, cannot be
compelled and forced to work against his will.”
The court a quo, however, denied the foregoing motion for reconsideration on December 11, 1970.
Just the same, on December 12, 1970, a substantial majority of the members of ALPAP staged a mass
resignation and/or retirement from PAL:
“In vigorous protest to your provocative harrassment, unfair labor tactics, the contemptuous lockout of
our co-members and your vicious and vindictive attitude towards labor most exemplified by the illegal
termination of the services of our President, Capt. Felix C. Gaston. . .”
The mentioned individual letters of retirement/resignation were accepted by PAL on December 14,
1970, with the caveat that the pilots concerned will not be entitled to any benefit or privilege to which
they may otherwise be entitled by reason of their employment with the PAL, as the pilots’ acts
constituted a violation of the November 26, 1970 order of the industrial court.
On December 28, 1970, Ben Hur Gomez, alleging that he was elected President of ALPAP by its members
who did not join the mass resignation and retirement, filed a motion in Case 101-IPA (B) praying that he
be allowed to represent the ALPAP (which was theretofore represented by Capt. Felix Gaston) becuase
the pilots who retired or resigned from PAL ceased to be employees thereof and no longer have any
interest in the subject-matter of the said case. This was later converted into a motion to intervene on
February 9, 1971.
On September 1, 1971, Felix Gaston filed a motion for contempt against PAL stating that his dismissal
from PAL on October 27, 1970 was without just cause and in violation of the Order of the industrial
court dated October 7, 1970 as well as section 19 of C.A. 103. He prayed that he be reinstated.
On October 23, 1971, twenty-one pilots who filed their retirement from PAL filed a petition in the
industrial court
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praying also that they be readmitted to PAL or, failing so, that they be allowed to retire with the benefits
provided for under the PAL Retirement Plan or, if they are not yet eligible to retire under said Plan, that
they be given separation pay. In their petition for reinstatement, said pilots (who were later joined by
other pilots similarly situated) alleged, inter alia—
“1. That they are some of the employees of the respondent company and members of the petitioner
union who resigned en masse or retired en masse from the respondent after having been led to believe
in good faith by Capt. Felix Gaston who was then the uncontested president of the petitioner union and
their counsel that such a mass resignation or mass retirement was a valid exercise of their right to
protest the dismissal of Capt. Gaston in connection with the certified dispute that was pending before
the Court.
“2. That later on they came to know that such a mass resignation or mass recrement was enjoined by
this Honorable Court ‘under the pain of dismissal and forfeiting of rights and privileges accruing to their
respective employment if they disregarded such order of injunction.
“3. That they did not deliberately disregard such injunction order and if they failed to comply with it
within a reasonable time, it was because they were made to believe and assured by their leader that
such resignation or retirement was a lawful exercise of concerted action; that the full consequences of
such act was not explained to them by counsel; and, in addition, they were told that those who returned
to the company would be expelled from the union, and suffer the corresponding penalty.
“x x x.”
ALPAP (Gomez) opposed the foregoing petitions. In this connection, the records disclose that on August
20, 1971, 89 of the pilots who retired en masse from PAL filed a complaint with the Court of First
Instance of Manila in Case 15084 for the recovery of retirement benefits due them under the PAL
Retirement Plan. The complaint was dismissed by the trial court on PAL’s motion. The records, however,
do not disclose the reason for the said dismissal.
On December 23, 1971, Judge Paredes issued an order deferring action on the motion to dismiss the
petitions for reinstatement on the ground that the matters alleged in the said petitions would required
the submission of proof. ALPAP (Gomez) filed a motion for reconsideration of this order but the
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same was denied by the industrial court en banc for being pro forma.
On February 1, 1972, ALPAP (Gaston) joined and consolidated the mentioned petitions for
reinstatement. The same was opposed by both PAL and ALPAP (Gomez).
On March 24, 1972, ALPAP (Gomez) filed a motion to suspend the proceedings in Case 101-IPA(B) until
the prejudicial question of who should prosecute the main case (Case 101-IPA) is resolved. On April 18,
1972, Judge Paredes issued an order deferring the hearing of the main case until this Court shall have
decided L-33705, but allowing other matters, including the consolidated petition for reinstatement, to
be heard.
On May 5, 1972, ALPAP (Gomez) filed another motion to suspend the hearing on the mentioned petition
for reinstatement on the ground that this Court’s decision in L-33705 should be awaited. ALPAP (Gaston)
opposed that motion on the ground that the matter had already been denied twice and the order
setting the case for hearing was merely interlocutory. On May 15, 1972, Judge Paredes denied the said
motion to suspend the hearing on the petition for reinstatement “unless a countermanding Order is
issued by a higher Court.”
On May 18, 1972, ALPAP (Gomez) filed a motion for reconsideration of Judge Paredes’ order, alleging
that employee status of those who resigned or retired en masse was an issue in the mentioned Case
2939-MC the decision on which is still pending consideration before this Court in L-33705.
On June 19, 1972, the industrial court en banc passed a resolution reversing Judge Paredes’ order on the
ground that the question of the employee status of the pilots who were seeking reinstatement with PAL
has already been raised squarely in Case 2939-MC and resolved by the said tribunal which found that
the said pilots have already lost their employee status as a consequence of their resignations and/or
retirements from PAL which had been duly accepted by the latter.
DISCUSSION
In its brief before this Court, ALPAP (Gaston) states that it does not question the recognition extended
by PAL to ALPAP (Gomez) as the collective bargaining agent of all PAL pilots on
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active flight duty. Neither does it dispute the assumption by ALPAP (Gomez) of the authority to manage
and administer the collective bargaining agreement between ALPAP and PAL (which at any rate had
expired on January 31, 1972) nor the right of ALPAP (Gomez) to negotiate and conclude any other
collective bargaining agreement with PAL. What it disputes, however, is the authorization given by the
industrial court to ALPAP (Gomez), in a certification proceeding, to take over the corporate name, office
and funds of ALPAP.
This Court has always stressed that a certification proceeding is not a litigation, in the sense in which this
term is ordinarily understood, but an investigation of a non-adversary, fact-finding character in which
the Court of Industrial Relations plays the part of a disinterested investigator seeking merely to ascertain
the desires of employees as to the matter of their representation (National Labor Union vs. Go Soc and
Sons, 23 SCRA 436; Benguet Consolidated, Inc. vs. Bobok Lumber Jack Ass’n., L-11029, May 23, 1958;
Bulakena Restaurant and Caterer vs. C.I.R., 45 SCRA 95; LVN Pictures, Inc. vs. Philippine Musicians Guild
(FFW) and C.I.R., 1 SCRA 132). Such being the nature of a certification proceeding, we find no cogent
reason that should prevent the industrial court, in such a proceeding, from inquiring into and satisfying
itself about matters which may be relevant and crucial, though seemingly beyond the purview of such a
proceeding, to the complete realization of the well-known purposes of a certification case.
Such a situation may arise, as it did in the case at bar, where a group of pilots of a particular airline,
allegedly anticipation their forced retirement or resignation on account of strained relations with the
airline arising from unfulfilled economic demands, decided to adopt an amendment to their
organization’s constitution and by-laws in order to enable them to retain their membership standing
therein even after the termination of their employment with the employer concerned. The industrial
court definitely should be allowed ample discretion to secure a disclosure of circumstances which will
enable it to act fairly in a certification case.
This Court nonetheless finds, after a close and dispassionate study of the facts on record, that the
industrial court’s conclusion, that the mentioned amendment to the ALPAP constitution and by-laws is
illegal (a) because it was not adopted in accordance with the procedure prescribed and (b) because
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members of a labor organization cannot adopt an amendment to their fundamental charter so as to

include non-employees (of PAL) as members, is erroneous.
We have made a careful examination of the records of L-33705 and we find the adoption of the
resolution introducing the questioned amendment to be in substantial compliance with the ALPAP
constitution and by-laws. Indeed, there is no refutation of the fact that 221 out of the 270 members of
ALPAP did cast their votes in favor of the said amendment on October 30, 1970 at the ALPAP general
membership meeting.
This Court cannot likewise subscribe to the restrictive interpretation made by the court below of the
term “labor organization,” which Section 2(e) of R.A. 875 defines as “any union or association of
employees which exists, in whole or in part, for the purpose of collective bargaining or of dealing with
employers concerning terms and conditions of employment.” The absence of the condition which the
court below would attach to the statutory concept of a labor organization, as being limited to the
employees of a particular employer, is quite evident from the law. The emphasis of the Industrial Peace
Act is clearly on the purposes for which a union or association of employees is established rather than
that membership therein should be limited only to the employees of a particular employer. Trite to say,
under Section 2(h) of R.A. 875 “representative” is defined as including “a legitimate labor organization
or any officer or agent of such organization, whether or not employed by the employer or employee
whom he represents.” It cannot be overemphasized likewise that a labor dispute can exist “regardless of
whether the disputants stand in the proximate relation of employer and employee.” (Section 2(j), R.A.
875).
There is, furthermore, nothing in the constitution and bylaws of ALPAP which indubitably restricts
membership therein to PAL pilots alone.1 Although according to ALPAP
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1 Section 2(a), Article II of the ALPAP Constitution and By-Laws provides: “Any person of lawful age and
good moral character who serves as an air line pilot, i.e., first pilot or captain, co-pilot or first officer,
reserve pilot or reserve captain, or has served in these capacities in an air line transportation company,
shall be eligible for membership in the Association in accordance with the stipulations in this Section and
elsewhere in the Constitution and by-laws.”
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(Gomez there has never been an instance when a non-PAL pilot became a member of ALPAP, the
complete lack of any such precondition for ALPAP membership cannot but be interpreted as an
unmistakable authority for the association to accept pilots into its fold though they may not be under
PAL’s employ.
The fundamental assumptions relied upon by the industrial court as bases for authorizing ALPAP
(Gomez) to take over the office and funds of ALPAP being, in this Court’s opinion, erroneous, and, in the
absence of any serious dispute that on December 18-22, 1970 Felix C. Gaston, and four other pilots,
were elected by the required majority of ALPAP members as officers of their association, this Court
hereby rules that the mentioned authorization to ALPAP (Gomez) to take over the office, funds and
name of ALPAP was done with grave abuse of discretion.
Moreover, this Court cannot hold as valid and binding the election of Ben Hur Gomez as President of
ALPAP. He was elected et a meeting of only 45 ALPAP members called just one day after the election of
Felix C. Gaston as President of ALPAP who, as shown, received a majority of 180 votes out of a total
membership of 270. Under the provisions of section 4, article III of the Constitution and By-Laws of
ALPAP, duly elected officers of that association shall remain in office for ac least one year:
“The term of office of the officers of the Association shall start on the first day of the fiscal year of the
Association. It shall continue for one year or until they are reelected or until their successors have been
elected or appointed and takes office in accordance with the Constitution and by-laws.”
While this Court considers the ruling of the court below, on the matter of who has the exclusive rights to
the office, funds and name of ALPAP, as having been erroneously made, we cannot hold, however, that
those belonging to the group of ALPAP (Gomez) do not possess any right at all over the office, funds and
name of ALPAP of which they are also members.
In our opinion, it is perfectly within the powers and prerogatives of a labor organization, through its duly
elected officers, to authorize a segment of that organization to bargain collectively with a particular
employer, particularly where those constituting the segment share a common and distinguishable
interest, apart from the rest of their fellow union members, on
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matters that directly affect the terms and conditions of their particular employment. As the
circumstances pertinent to the case at bar presently stand, ALPAP (Gaston) has extended recognition to
ALPAP (Gomez) to enter and conclude collective bargaining contracts with PAL. Having given ALPAP
(Gomez) this authority, it would be clearly unreasonable on the part of ALPAP (Gaston) to disallow the
former a certain use of the office, funds and name of ALPAP when such use is necessary or would be
required to enable ALPAP (Gomez) to exercise, in a proper manner, its delegated authority to bargain
collectively with PAL. Clearly, an intelligently considered adjustment of grievances and integration of the
diverse and varying interests that not infrequently and, often, unavoidably permeate the membership of
a labor organization, will go a long way, in achieving peace and harmony within the ranks of ALPAP. Of
course, in the eventuality that the pilots presently employed by PAL and who subscribe to the leadership
of Ben Hur Gomez should consider it to their better interest to have their own separate office, name and
union funds, nothing can prevent them from setting up a separate labor union. In that eventuality,
whatever vested rights, interest or participation they may have in the assets, including cash funds, of
ALPAP as a result of their membership therein should properly be liquidated in favor of such
withdrawing members of the association.
On the matter of whether the industrial court also abuse its authority for allowing ALPAP (Gomez) to
appropriate the ALPAP name, it does not appear that the herein petitioner has shown below any
exclusive franchise or right to the use of that name. Hence, there is no proper basis for correcting the
action taken by the court below on this regard.
L-35206
The threshold issue posed in L-35206 is whether the Court of Industrial Relations acted without
jurisdiction and with grave abuse of discretion in promulgating the resolution dated June 19, 1972
suspending hearings on the mentioned petition for reinstatement until this Court shall have decided L-
33705.
We find no merit to the charge made.
While it is correct, as submitted by ALPAP (Gaston), that in the 1971 case of Philippine Federation of
Petroleum Workers
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(PFPW) vs. CIR (37 SCRA 716) this Court held that in a certified labor dispute all issues involved in the
same should be determined in the case where the certified dispute was docketed and that the parties
should not be permitted to isolate other germane issues or demands and reserve them for
determination in the other cases pending before other branches of the industrial court, non-compliance
with this rule is at best an error in procedure, rather than of jurisdiction, which is not beyond the power
of this Court to review where sufficient reasons exists, a situation not obtaining in the case at bar.
After a thoroughgoing study of the records of these two consolidated petitions, this Court finds that the
matter of the reinstatement of the pilots who retired or resigned from PAL was ventilated fully and
adequately in the certification case in all its substantive aspects, including the allegation of the herein
petitioners that they were merely led to believe in good faith that in retiring or resigning from PAL they
were simply exercising their rights to engage in concerted activity. In the light of the circumstances thus
found below, it can be safely concluded that the mass retirement and resignation action of the herein
petitioners was intentionally planned to abort the effects of the October 7, 10 and 19, 1970 return-to-
work orders of the industrial court (which they, in fact, ignored for more than a week) by placing
themselves beyond the jurisdictional control of the said court through the umbrella of the constitutional
prohibition against involuntary servitude, thereby enabling them to pursue their main pressure
objective of grounding most, if not all, PAL flight operations. Clearly, the powers given to the industrial
court in a certified labor dispute will be meaningless and useless to pursue where its jurisdiction cannot
operate.
We cannot consequently disagree with the court a quo when it concluded that the actuations of the
herein petitioners after they retired and resigned en masse —their retrieval of deposits and other funds
from the ALPAP Cooperative Credit Union on the ground that they have already retired or resigned,
their employment with another airline, the filing of a civil suit for the recovery of their retirement pay
where they invoked the provision against involuntary servitude to obtain payment thereof, and their
repeated manifestations before the industrial court that their retirement and resignation were not
sham, but voluntary and intentional—are, in the aggregate, indubitable
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indications that the said pilots did retire/resign from PAL with full awareness of the likely consequences
of their acts. Their protestations of good faith, after nearly a year of underscoring the fact that they
were no longer employed with PAL, cannot but appear to a reasonable mind as a late and regrettable
ratiocination.
Parenthetically, contrary to ALPAP (Gaston)’s argument that the pilots’ retirement/resignation was a
legitimate concerted activity, citing Section 2(1) of the Industrial Peace Act which defines “strike” as
“any temporary stoppage of work by the concerted action of employees as a result of an industrial
dispute,” it is worthwhile to observe that as the law defines it, a strike means only a “temporary
stoppage of work.” What the mentioned pilots did, however, cannot be considered, in the opinion of
this Court, as mere “temporary stoppage of work.” What they contemplated was evidently a permanent
cut-off of employment relationship with their erstwhile employer, the Philippine Air Lines. In any event,
the dispute below having been certified as existing in an industry indispensable to the national interest,
the said pilots’ rank disregard for the compulsory orders of the industrial court and their daring and
calculating venture to disengage themselves from that court’s jurisdiction, for the obvious purpose of
satisfying their narrow economic demands to the prejudice of the public interest, are evident badges of
bad faith.
A legitimate concerted activity is a matter that cannot be used to circumvent judicial orders or be tossed
around like a plaything. Definitely, neither employers nor employees should be allowed to make of
judical authority a now-you’ve-got-it-now-you-don’t affair. The courts cannot hopefully effectuate and
vindicate the sound policies of the Industrial Peace Act and all our labor laws if employees, particularly
those who on account of their highly advanced technical background and relatively better life status are
far above the general working class spectrum, will be permitted to defy and invoke the jurisdiction of
the courts whenever the alternative chosen will serve to feather their pure and simple economic
demands.
ACCORDINGLY, in L-33705 the resolution of the Court of Industrial Relations dated June 15, 1971
upholding the decision of Judge Joaquin M. Salvador dated May 29, 1971 is hereby modified in
accordance with the foregoing opinion. Felix C. Gaston or whoever may be the incumbent President of
ALPAP
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is hereby ordered to give to any member withdrawing his membership from ALPAP whatever right,
interest or participation such member may have in the assets, including cash funds, of ALPAP as a result
of his membership in that association.
In L-35206, the petition assailing the resolution of the Court of Industrial Relations dated June 19, 1972,
is hereby dismissed for lack of merit insofar as the petitioners’ allegations of their right to reinstatement
with PAL is concerned. With reference to the alternative action, re: payment of their claims for
retirement or separation pay, the Secretary of Labor, in accordance with the applicable procedure
prescribed by law, is hereby ordered to determine whether such claim is in order, particularly in view of
the caveat made by PAL, in accepting the petitioners’ individual letters of retirement/resignation, that
said petitioners shall not be entitled to any benefit or privilege to which they may otherwise be entitled
by reason of their employment with PAL as the former’s acts constituted a violation of the order of the
industrial court dated November 26, 1970.
Without costs in both instances.
Barredo, Makasiar, Antonio, Muñoz Palma, Concepcion Jr., and Martin, JJ.,concur. Fernando, J.,
concurs in the opinion of the Chief Justice in L-33705 and in the opinion of Justice Teehankee in L-35206.
Teehankee, J., files a separate opinion.

Aquino, J., did not take part.
SEPARATE OPINION
TEEHANKEE, J.:
In L-33705, a certification proceeding, I concur with the ruling1 that there is nothing in the law which
supports respondent court’s restrictive interpretation that would limit membership in a labor
organization to the employees of a particular employer, (for such an archaic view would be practically a
death blow to the cause of unionism and would
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1 At page 14, decision.
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295
fragment unions into as many employers that there may be); and that specifically in the case of ALPAP
(Air Line Pilots Association of the Philippines) there is nothing in its Constitution and by-laws that would
restrict its membership to Philippine Air Lines, Inc. (PAL) pilots alone. (Obviously, the organizational set
up was for ALPAP as a union to be composed of all airline pilots in the Philippines regardless of
employer, patterned after the ALPAP (Air Line Pilots Association) in the United States which has a
reputed membership of 46,000 with locals established by the members at their respective companies of
employment).
The Court therefore properly upheld the election of the Gaston faction by a clear majority of the ALPAP
membership (221 out of 270) as against the Gomez faction of 45 members; recognized Gaston’s election
as president of ALPAP as against the rump election of Gomez to the same position; and ruled out
respondent court’s action of authorizing the Gomez faction to take over the office, funds and name of
ALPAP as a grave abuse of discretion and a nullity.
Of course, only the pilots actually in the employ of the PAL to the exclusion of those who had resigned
or retired or otherwise been separated from its employment could take part in the PAL certification
election. Under normal circumstances, the ALPAP as the duly organized labor union (composed of both
factions) would manage and administer the collective bargaining agreement arrived at between
employer and employees.
But this did not hold true in the present case, since in effect the Gomez faction consisting of pilots who
continued in the employ of PAL and did not follow the action of the majority composing the Gaston
faction of resigning and retiring en masse from their employment separated themselves from ALPAP and
were granted separate recognition by PAL as the ALPAP (Gomez) faction constituting the exclusive
collective bargaining representation for the pilots who continued in its employ. The original union ALPAP
as headed by Gaston on concedes this and makes it quite clear in its brief that it does not question the
recognition extended by PAL to the Gomez faction nor the latter’s right to manage and administer the
collective bargaining agreement and to negotiate and conclude any other collective bargaining
agreement with PAL.
The actual dispute was thus reduced to whether the Gomez
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296
faction in separating themselves from ALPAP as headed by Gaston could take over and appropriate the
corporate name, office and funds of ALPAP, as authorized by respondent court.
Such take-over or appropriation of ALPAP by the Gomez faction could not be validly done nor authorized
by respondent court, as now ruled by this Court. But since ALPAP does recognize the right of the Gomez
faction to separate and secede from ALPAP and for the members of the Gomez faction composed of
pilots who have remained in the employ of PAL to form thier own union, the Court’s judgment has
ordered ALPAP as headed by Gaston as the recognized president thereof or his duly elected successor to
give to any withdrawing member, i.e. the members of the Gomez faction “whatever right, interest or
participation such member may have in the assets, including cash funds of ALPAP as a result of his
membership in that association.”
I take this to mean that ALPAP is thereby ordered to liquidate the membership of each withdrawing
member (although ALPAP is a non-stock association) and give him the equivalent of the net book value
in cash of his aliquot share in the net assets of ALPAP as of the date of withdrawal de facto of the Gomez
faction which may be fixed as December 23, 1970, the date when Ben Hur Gomez was elected as
president of his faction by ALPAP members who did no join the mass resignation or retirement. I believe
that in fairness the equivalent value of any use made by the Gomez faction of the ALPAP office and
funds from and after their date of withdrawal (which obviously was in and for their own exclusive
interest and benefit) should in turn be offset against whatever may be determined to be the collective
value of their ALPAP membership as of the date of their withdrawal on December 23, 1970.
In L-35206, the judgment penned by the Chief Justice rejects the petitioners-pilots’ petition for
readmission to PAL and their grounds in support thereof, inter alia, that they were led to believe in good
faith by their union president Gaton and their counsel that their mass resignation and retirement were a
valid exercise of their right to protest the dismissal of Gaston notwithstanding the pendency of their
certified dispute in the industrial court, that they were assured by their leader that it was a lawful
exercise of concerted action, that the full consequences of such act were not explained to them by
counsel
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297
and that they had so acted under threat of expulsion from the union (which appear to be borne out by
the fact that within the year after finally appreciating the full consequences of their illconceived mass
protest retirement and resignation they sought to withdraw the same and petitioned for readmission in
line with the return-to-work orders).
The principal ground for the Court’s judgment cannot be faulted, to wit, that such action of mass
retirement and resignation which plainly intended to abort the effects of the industrial court’s return-to-
work orders and to place petitionerspilots beyond the court’s jurisdictional control, after the President
had certified the labor dispute thereto for compulsory arbitration in the public interest, could not be
sanctioned nor tolerated since “clearly, the powers given to the industrial court in a certified labor
dispute will be meaningless and useless to pursue where its jurisdiction cannot operate.”2
Still, since the industrial court en banc set aside Judge Paredes’ orders to receive proof on the pilots’
petitions for reinstatement on the basis inter alia of the Gomez faction’s contention that the prejudicial
question of who of the two factions should prosecute the main case (the labor dispute) should first be
resolved in the certification case pending as Case L-33705 before this Court3 and since the matters
raised in the petition for reinstatement were quite serious and did required the submission of proof as
held by Judge Paredes in the December 23, 1971 order, the question of merit of the pilots’ rank-and-file
petitions for reinstatement could perhaps have been deferred and likewise remanded to the National
Labor Relations Commission—since after all their alternative prayer for payment of their claims for
retirement or separation pay is being remanded to the National Labor Relations Commission “to
determine whether such claim is in order” by receiving the proof of the parties—and such proof covers
the very same matters raised as supporting grounds and reasons in the petitions for reinstatement.
After all, if the pilots duly substantiated with convincing proof their allegations in support of their
petitions for reinstatement that they had been misled and/or coerced by their leader and counsel into
presenting their mass retirement
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298
and resignation without the full consequences having been explained to them the pilots would be in the
same situation of rank-and-file members of a union who engage in an illegal strike, in which case under
this Court’s liberal and compassionate doctrine, only the leaders (and those who actually resorted to
violence which is of no application here) would receive the capital of dismissal—unless this Court were
somehow to make an exception of the pilots and exclude them from the application of this established
doctrine because “of their highly advanced technical background and relatively better life status—far
above the general working class spectrum.”4
Withal, the Court’s decision requires the National Labor Relations Commission with reference to the
pilots’ alternative claims for retirement or separation pay “to determine whether such claim is in order,
particularly in view of the caveat made by PAL, in accepting the petitioners’ individual letters of
retirement/resignation, that said petitioners shall not be entitled to any benefit or privilege to which
they may otherwise be entitled by reason of their employment with PAL as the former’s acts constituted
a violation of the order of the industrial court dated November 26, 1970.”
The said November 26, 1970 order commanded ALPAP members “not to strike or in any way cause any
stoppage in the operation and service of PAL, under pain of dismissal and forfeiture of rights and
privileges accruing to their respective employments should they disregard this Order; and PAL is also
ordered not to lockout any of such members and officers of ALPAP under pain of contempt and
cancellation of its franchise.”
I venture to suggest as a specific guideline5 for the National Labor Relations Commission’s consideration
(in order to expedite settlement of the case and assuage the anxieties of petitioners and their families)
that the pending question appears to be one of law, whose resolution would not be affected by the
proof that may be submitted to the said commission upon remand of the case.
_______________
5 See also writer’s suggested guidelines in his separate opinion in PCIB vs. Escolin, 56 SCRA 266, 405
(1974) and 67 SCRA 202, 204 (Sept. 30, 1975) re Resolution on motions for reconsideration.
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299
The question of law is: was it within the industrial court’s power as provided in Judge Paredes’ above-
quoted order to order “forfeiture of rights and privileges accruing to their respective employments”
should they disregard his return-to-work order? It should be noted that the PAL in accepting the letters
of retirement/resignation made the caveat that the pilots concerned would forfeit any retirement
benefit or privilege that they would otherwise be entitled to by reason of their employment with PAL, as
their acts constituted a violation of the cited return-to-work order, thus indicating that were it not for
such order, PAL would have no basis for imposing any forfeiture of earned retirement privileges since it
was in turn accepting the pilots’ retirement and resignation.
If the industrial court had no such power to order forfeiture of the pilots’ retirement/resignation
privileges and benefits for violation of its return to work order, then there would be no legal basis for
the denial of such retirement privileges and benefits.
That the industrial court had such power is open to grave doubts. For disregard and violation of the
return to work order, the industrial court could impose the capital penalty of dismissal from
employment. True, the pilots carried out an ill-advised mass retirement/resignation to abort the effects
of the return-to-work order but the effectiveness of the penalty of dismissal is borne out by the fact that
within the year the pilots had come to realize and regret the futility of their act and were seeking
readmission. Then again, the industrial Court had the power of contempt—it could have declared the
mass retirement illegal as this Court has in fact so declared and used its coercive power of contempt
under Rule 71, section 7 by requiring imprisonment of the petitioners until they purged themselves of
contempt by complying with the return-to-work order.
But to declare the forfeiture of retirement privileges and benefits which the petitioners had earned and
would otherwise be entitled to by reason of their years of employment of PAL appears to be beyond the
coercive as well as punitive powers of the industrial court—in the same way that is threatened
cancellation of PAL’s franchise as granted by Congress for violation of the lockout prohibition aspect of
the same order was beycnd its powers.
The end result, then, would be that assuming that petitioners
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300
had willfully violated the return-to-work order of November 26, 1970 and had not been misled into
presenting their mass retirement/resignation, such violation could not legally result in a forfeiture of
their retirement privileges and benefits as decreed in the order since such forfeiture was beyond the
industrial court’s power and authority. Their loss of employment and the denial of their readmission
certainly constitute sufficient punishment and vindication of the court’s authority. All the more so would
such non-forfeiture of earned retirement privileges and benefits be in consonance with fairness and
equity should the pilots duly establish the factual averments of their cited petition for readmission and
for payment of their said privileges and benefits.
In L-33705, resolution modified. In L-35206, petition dismissed.

Notes.—Illegally laid employees are entitled to leave benefits during the period of their layoff in
addition to back wages. (Philippine Air Lines, Inc. vs. Philippine Airlines Employees Association, 19 SCRA
483; Philippine Sugar Institute vs. Court of Industrial Relations, 19 SCRA 471).
The existence of a valid cause for dismissal negatives the claim that an employee was dismissed for
union activities because the idea of dismissal, as an unfair labor practice, is incompatible with dismissal
for a just cause. (Ormoc Sugar Co., Inc. vs. OSCO Workers’Fraternity Labor Union, 1 SCRA 21).
An employer is entitled to fire employees for a just cause and challenging a superior officer to a flight is
a sufficient ground for such dismissal as a measure of self-protection of the employer whose interest
was jeopardized thereby. (Mindanao Rapid Co., Inc. vs. Omandam, 42 SCRA 250).
Reinstatement refers to a restoration to a state from which one has been removed, or a return to the
position from which one was taken out. Reinstatement presupposes that the previous position from
which one had been removed still exists, or that there is an unfilled position more or less of similar
nature as the one previously occupied by the employee. (Philippine Engineering Corporation vs. Court of
Industrial Relations, 41 SCRA 89). Reinstatement is not possible anymore where the position formerly
held is no longer available. The law cannot exact compliance with what is impossible. (Ibid.).
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301
Secretary of Justice vs. Marcos
The burden is upon the petitioner union to show before the respondent court that reinstatement of the
employees concerned is justified in spite of their failure to comply strictly with the return-to-work order,
or that the refusal of the respondent employer to reinstate them constitutes unjust discrimination.
(Philippine Air Lines Employees’ Association vs. PAL, 38 SCRA 373).
——o0o—— Air Line Pilots Association of the Philippines vs. Court of Industrial Relations, 76 SCRA 274,
No. L-33705, No. L-35206 April 15, 1977
484
Reyes vs. Trajano
G.R. No. 84433. June 2, 1992.*
ALEXANDER REYES, ALBERTO M. NERA, EDGARDO M. GECA, and 138 others, petitioners, vs.
CRESENCIANO B. TRAJANO, as Officer-in-Charge, Bureau of Labor Relations, Med-Arbiter PATERNO
ADAP, and TRI-UNION EMPLOY-EES UNION, et al., respondents.
Labor Law; Words and Phrases; The right to self-organization includes the right not to form or join a
union.—Logically, the right NOT to join, affiliate with, or assist any union, and to disaffiliate or resign
from a labor organization, is subsumed in the right to join, affiliate with, or assist any union, and to
maintain membership therein. The right to form or join a labor organization necessarily includes the
right to refuse or refrain from exercising said right. It is self-evident that just as no one should be
denied the exercise of a right granted by law, so also, no one should be compelled to exercise such a
conferred right. The fact that a person has opted to acquire membership in a labor union does not
preclude his subsequently opting to renounce such membership.
Same; Same; Same.—The purpose of a certification election is precisely the ascertainment of the
wishes of the majority of the employees in the appropriate bargaining unit: to be or not to be
represented by a labor organization, and in the affirmative case, by which particular labor
organization. If the results of the election should disclose that the majority of the workers do not wish
to be represented by any union, then their wishes must be respected, and no union may properly be
certified as the exclusive representative of the workers in the bargaining unit in dealing with the
employer regarding wages, hours and other terms and conditions of employment. The minority
employees—who wish to have a union represent them in collective bargaining—can do nothing but
wait for another suitable occasion to petition for a certification election and hope that the results will
be different. They may not and should not be permitted, however, to impose their will on the
majority—who do not desire to have a union certified as the exclusive workers' benefit in the
bargaining unit—upon the plea that they, the minority workers, are being denied the right of self-
organization and collective bargaining. As repeatedly stated, the right of self-organization embraces
not only the right to form, join or
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* SECOND DIVISION.
485
VOL. 209, JUNE 2, 1992
485
Reyes vs. Trajano
assist labor organizations, but the concomitant, converse right NOT to form, join or assist any labor
union.
Same; INK employees have the right to participate in a certification election and vote for "No
Union."—That the INK employees, as employees in the same bargaining unit in the true sense of the
term, do have the right of self-organization, is also in truth beyond question, as well as the fact that
when they voted that the employees in their bargaining unit should be represented by "NO UNION,"
they were simply exercising that right of self-organization, albeit in its negative aspect. The
respondents' argument that the petitioners are disqualified to vote because they "are not constituted
into a duly organized labor union"—"but members of the INK which prohibits its followers, on
religious grounds, from joining or forming any labor organization"—and "hence, not one of the unions
which vied for certification as sole and exclusive bargaining representative," is specious. Neither law,
administrative rule nor jurisprudence requires that only employees affiliated with any labor
organization may take part in a certification election. On the contrary, the plainly discernible
intendment of the law is to grant the right to vote to all bona fide employees in the bargaining unit,
whether they are members of a labor organization or not,
Same; Failure to take part in previous elections no bar to right to participate in future elections.—
Neither does the contention that petitioners should be denied the right to vote because they "did not
participate in previous certification elections in the company for the reason that their religious beliefs
do not allow them to form, join or assist labor organizations," persuade acceptance. No law,
administrative rule or precedent prescribes forfeiture of the right to vote by reason of neglect to
exercise the right in past certification elections. In denying the petitioners' right to vote upon these
egregiously fallacious grounds, the public respondents exercised their discretion whimsically,
capriciously and oppressively and gravely abused the same.
Eliseo M. Cruz for petitioners.
Potenciano Flores, Jr. for private respondents.
486
486
Reyes vs. Trajano
NARVASA, C.J.:
The officer-in-charge of the Bureau of Labor Relations (Hon. Cresenciano Trajano) sustained the denial
by the Med Arbiter of the right to vote of one hundred forty-one (141) members of the "Iglesia ni Kristo"
(INK), all employed in the same company, at a certification election at which two (2) labor organizations
were contesting the right to be the exclusive representative of the employees in the bargaining unit.
That denial is assailed as having been done with grave abuse of discretion in the special civil action of
certiorari at bar, commenced by the INK members adversely affected thereby.
The certification election was authorized to be conducted by the Bureau of Labor Relations among the
employees of TriUnion Industries Corporation on October 20, 1987. The competing unions were the Tri-
Union Employees Union-Organized Labor Association in Line Industries and Agriculture (TUEUOLALIA),
and Trade Union of the Philippines and Allied Services (TUPAS). Of the 348 workers initially deemed to
be qualified voters, only 240 actually took part in the election, conducted under the supervision of the
Bureau of Labor Relations, Among the 240 employees who cast their votes were 141 members of the
lNK.
The ballots provided for three (3) choices. They provided for votes to be cast, of course, for either of the
two (2) contending labor organizations, (a) TUPAS and (b) TUEU-OLALIA; and, conformably with
established rule and practice,1 for (c) a third choice: "NO UNION."
The final tally of the votes showed the following results;
TUPAS
TUEU-OLALIA
95
NO UNION
SPOILED
CHALLENGED
141
The challenged votes were those cast by the 141 INK members. They were segregated and excluded
from the final count in
________________
1 SEE footnote 5, infra.
487
VOL. 209, JUNE 2, 1992
487
Reyes vs. Trajano
virtue of an agreement between the competing unions, reached at the pre-election conference, that the
INK members should not be allowed to vote "because they are not members of any union and refused
to participate in the previous certification elections."
The INK employees promptly made known their protest to the exclusion of their votes. They filed a
petition to cancel the election alleging that it "was not fair" and the result thereof did "not reflect the
true sentiments of the majority of the employees." TUEU-OLALIA opposed the petition. It contended
that the petitioners "do not have legal personality to protest the results of the election," because "they
are not members of either contending unit, but ** of the INK" which prohibits its followers, on religious
grounds, from joining or forming any labor organization **."
The Med-Arbiter saw no merit in the INK employees' petition. By Order dated December 21, 1987, he
certified the TUEUOLALIA as the sole and exclusive bargaining agent of the rank-and-file employees. In
that Order he decided the fact that "religious belief was (being) utilized to render meaningless the rights
of the non-members of the Iglesia ni Kristo to exercise the rights to be represented by a labor
organization as the bargaining agent," and declared the petitioners as "not possessed of any legal
personality to institute this present cause of action" since they were not parties to the petition for
certification election.
The petitioners brought the matter up on appeal to the Bureau of Labor Relations. There they argued
that the MedArbiter had "practically disenfranchised petitioners who had an overwhelming majority,"
and "the TUEU-OLALIA certified union cannot be legally said to have been the r esult of a valid election
where at least fifty-one percent of all eligible voters in the appropriate bargaining unit shall have cast
their votes." Assistant Labor Secretary Cresenciano B. Trajano, then Officer-in-Charge of the Bureau of
Labor Relations, denied the appeal in his Decision of July 22, 1988. He opined that the petitioners are
"bereft of legal personality to protest their alleged disenfranchisement" since they "are not constituted
into a duly of ganized labor union, hence, not one of the unions which vied for certification as sole and
exclusive bargaining represen-
488
488
Reyes vs. Trajano
tative." He also pointed out that the petitioners "did not participate in previous certification elections in
the company for the reason that their religious beliefs do not allow them to form, join or assist labor
organizations."
It is this Decision of July 22,1988 that the petitioners would have this Court annul and set aside in the
present special civil action of certiorari.
The Solicitor General having expressed concurrence with the position taken by the petitioners, public
respondent NLRC was consequently required to file, and did thereafter file, its own comment on the
petition. In that comment it insists that "if the workers who are members of the Iglesia ni Kristo in the
exercise of their religious belief opted not to join any labor organization as a consequence of which they
themselves can not have a bargaining representative, then the right to be represented by a bargaining
agent should not be denied to other members of the bargaining unit."
Guaranteed to all employees or workers is the "right to selforganization and to form, join, or assist labor
organizations of their own choosing for purposes of collective bargaining." This is made plain by no less
than three provisions of the Labor Code of the Philippines.2 Article 243 of the Code provides as follows:3
ART. 243. Coverage and employees right to self-organization.—All persons employed in commercial,
industrial and agricultural enterprises and in religious, charitable, medical, or educational institutions
whether operating for profit or not, shall have the right to self-organization and to form, join, or assist
labor organizations of their own choosing for purposes of collective bargaining. Ambulant, intermittent
and itinerant workers, self-employed people, rural workers and those without any definite employers
may form labor organizations for their mutual aid and protection.
Article 248 (a) declares it to be an unfair labor practice for an employer. among others. to "interfere
with? restrain or coerce employees in the exercise of their right to self-organization." Similarly, Article
249 (a) makes it an unfair labor practice for a
_______________
2 As amended inter alia by R.A. Nos. 6715, 6725 and 6727.
3 Italics supplied.
489
VOL. 209, JUNE 2, 1992
489
Reyes vs. Trajano
labor organization to "restrain or coerce employees in the exercise of their rights to self-organization
xx."
The same legal proposition is set out in the Omnibus Rules Implementing the Labor Code, as amended,
as might be expected. Section 1, Rule II (Registration of Unions), Book V (Labor Relations) of the
Omnibus Rules provides as follows:4
"SEC. 1. Who may join unions; exception.—All persons employed in commercial, industrial and
agricultural enterprises, including employees of government corporations established under the
Corporation Code as well as employees of religious, medical or educational institutions, whether
operating for profit or not, except managerial employees, shall have the right to self-organization and to
form, join or assist labor organizations for purposes of collective bargaining. Ambulant, intermittent and
itinerant workers, self-employed people, rural workers and those without any definite employers may
form labor organizations for their mutual aid and protection.
x x x x."
The right of self-organization includes the right to organize or affiliate with a labor union or determine
which of two or more unions in an establishment to join, and to engage in concerted activities with co-
workers for purposes of collective bargaining through representatives of their own choosing, or for their
mutual aid and protection, i.e., the protection, promotion, or enhancement of their rights and
interests.5
Logically, the right NOT to join, affiliate with, or assist any union, and to disaffiliate or resign from a labor
organization, is subsumed in the right to join, affiliate with, or assist any union, and to maintain
membership therein. The right to form or join a labor organization necessarily includes the right to
refuse or refrain from exercising said right. It is self-evident that just as no one should be denied the
exercise of a right granted by law, so also, no one should be compelled to exercise such a conferred
right. The fact that a person has opted to acquire membership in a labor union does not preclude his
subsequently opting to
_______________
4 Italics supplied.
5 ART. 247, Labor Code, as amended; SEE Fernandez and Quiazon, Law of Labor Relations, p. 162,
490
490
Reyes vs. Trajano
renounce such membership.6
As early as 1974 this Court had occasion to expatiate on these self-evident propositions in Victoriano v.
Elizalde Rope Workers' Union, et al.,7 viz.:
"x x What the Constitution and Industrial Peace Act recognize and guarantee is the 'right' to form or join
associations. Notwithstanding the different theories propounded by the different schools of
jurisprudence regarding the nature and contents of a 'right/ it can be safely said that whatever theory
one subscribes to, a right comprehends at least two broad notions, namely: first, liberty or freedom, i.e.,
the absence of legal restraint, whereby an employee may act for himself without being prevented by
law; second, power, whereby an employee may, as he pleases, join or refrain from joining an
association. It is therefore the employee who should decide for himself whether he should join or not an
association; and should he choose to join, he himself makes up his mind as to which association he
would join; and even after he has joined, he still retains the liberty and the power to leave and cancel his
membership with said organization at any time (Pagkakaisa Samahang Manggagawa ng San Miguel
Brewery vs. Enriquez, et al, 108 Phil 1010, 1019). It is clear, therefore, that the right to join a union
includes the right to abstain from joining any union (Abo, et al. vs. PHILAME [KG] Employees Union, et al,
L19912, January 20, 1965, 13 SCRA 120, 123, quoting Rothenberg, Labor Relations). Inasmuch as what
both the Constitution and the Industrial Peace Act have recognized, and guaranteed to the employee, is
the 'right' to join associations of his choice, it would be absurd to say that the law also imposes, in the
same breath, upon the employee the duty to join associations. The law does not enjoin an employee to
sign up with any association."
The right to refuse to join or be represented by any labor organization is recognized not only by the law
but also in the
_______________
6 To be sure, the right not to join a union, or discontinue membership therein, is subject to certain
qualifications or exceptions as e.g., when there is a closed shop or similar agreement in effect in the
establishment, although it has been held that such agreements are not applicable to any religious sect
which prohibits affiliation of their members in any labor organization (Sec. 4(a), R.A. 875 [The Industrial
Peace Act], as amended by R.A. No. 3350)
7 59 SCRA 54, 66-67 (1974).
491
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Reyes vs. Trajano
rules drawn up for implementation thereof. The original Rules on Certification promulgated by the
defunct Court of Industrial Relations required that the ballots to be used at a certification election to
determine which of two or more competing labor unions would represent the employees in the
appropriate bargaining unit should contain, aside from the names of each union, an alternative choice of
the employee voting, to the effect that he desires not to be represented by any union.8 And where only
one union was involved, the ballots were required to state the question—"Do you desire to be
represented by said union?"—as regards which the employees voting would mark an appropriate
square, one indicating the answer, "Yes," the other, "No."
To be sure, the present implementing rules no longer explicitly impose the requirement that the ballots
at a certification election include a choice for "NO UNION." Section 8 (Rule VI, Book V of the Omnibus
Rules) entitled "Marking and canvassing of votes," pertinently provides that:
"xx (a) The voter must write a cross (X) or a check (/) in the square opposite the union of his choice. If
only one union is involved, the voter shall make his cross or check in the square indicating 'YES' or 'NO.'
x x x x."
Withal, neither the quoted provision nor any other in the Omnibus Implementing Rules expressly bars
the inclusion of that choice of "NO UNION" in the ballots. Indeed, it is doubtful if the employee's
alternative right NOT to form, join or assist any labor organization or withdraw or resign from one may
be validly eliminated and he be consequently coerced to vote for one or another of the competing
unions and be represented by one of them. Besides, the statement in the quoted provision that "(i)f only
one union is involved, the voter shall make his cross or check in the square indicating 'YES' or 'NO,' is
quite clear acknowledgment of the alternative possibility that the "NO" votes may outnumber the "YES"
votes—indicating that the
______________
8 SEE Fernandez & Quiazon, op. cit, pp. 499-501.
492
492
Reyes vs. Trajano
majority of the employees in the company do not wish to be represented by any union—in which case,
no union can represent the employees in collective bargaining. And whether the prevailing "NO" votes
are inspired by considerations of religious belief or discipline or not is beside the point, and may not be
inquired into at all.
The purpose of a certification election is precisely the ascertainment of the wishes of the majority of the
employees in the appropriate bargaining unit: to be or not to be represented by a labor organization,
and in the affirmative case, by which particular labor organization, If the results of the election should
disclose that the majority of the workers do not wish to be represented by any union, then their wishes
must be respected, and no union may properly be certified as the exclusive representative of the
workers in the bargaining unit in dealing with the employer regarding wages, hours and other terms and
conditions of employment. The minority employees—who wish to have a union represent them in
collective bargaining—can do nothing but wait for another suitable occasion to petition for a
certification election and hope that the results will be different. They may not and should not be
permitted, however, to impose their will on the majority—who do not desire to have a union certified as
the exclusive workers' benefit in the bargaining unit—upon the plea that they, the minority workers, are
being denied the right of self-organization and collective bargaining, As repeatedly stated, the right of
self-organization embraces not only the right to form, join or assist labor organizations, but the
concomitant, converse right NOT to form, join or assist any labor union.
That the INK employees, as employees in the same bargaining unit in the true sense of the term, do
have the right of selforganization, is also in truth beyond question, as well as the fact that when they
voted that the employees in their bargaining unit should be represented by "NO UNION," they were
simply exercising that right of self-organization, albeit in its negative aspect.
The respondents' argument that the petitioners are disqualified to vote because they "are not
constituted into a duly organized labor union"—"but members of the INK which prohibits its followers,
on religious grounds, from joining or forming any
493
VOL. 209, JUNE 2, 1992
493
Reyes vs. Trajano
labor organization"—and "hence, not one of the unions which vied for certification as sole and exclusive
bargaining representative," is specious. Neither law, administrative rule nor jurisprudence requires that
only employees affiliated with any labor organization may take part in a certification election. On the
contrary, the plainly discernible intendment of the law is to grant the right to vote to all bona fide
employees in the bargaining unit, whether they are members of a labor organization or not. As held in
Airtime Specialists, Inc. v. Ferrer-Calleja.9
"In a certification election all rank-and-file employees in the appropriate bargaining unit are entitled to
vote. This principle is clearly stated in Art. 255 of the Labor Code which states that the 'labor
organization designated or selected by the majority of the employees in an appropriate bargaining unit
shall be the exclusive representative of the employees in such unit for the purpose of collective
bargaining.' Collective bargaining covers all aspects of the employment relation and the resultant CBA
negotiated by the certified union binds all employees in the bargaining unit. Hence, all rank-and-file
employees, probationary or permanent, have a substantial interest in the selection of the bargaining
representative. The Code makes no distinction as to their employment status as basis for eligibility in
supporting the petition for certification election, The law refers to 'all' the employees in the bargaining
unit. All they need to be eligible to support the petition is to belong to the 'bargaining unit.'"
Neither does the contention that petitioners should be denied the right to vote because they "did not
participate in previous certification elections in the company for the reason that their religious beliefs do
not allow them to form, join or assist labor organizations," persuade acceptance. No law, administrative
rule or precedent prescribes forfeiture of the right to vote by reason of neglect to exercise the right in
past certification elections. In denying the petitioners' right to vote upon these egregiously fallacious
grounds, the public respondents exercised their discretion whimsically, capriciously and oppressively
and gravely abused the same.
WHEREFORE, the petition for certiorari is GRANTED; the
_______________
9 180 SCRA 749, 754 (1989).
494
494

San Miguel Corporation vs. NLRC
Decision of the then Officer-in-Charge of the Bureau of Labor Relations dated December 21, 1987
(affirming the Order of the Med-Arbiter dated July 22, 1988) is ANNULLED and SET ASIDE; and the
petitioners are DECLARED to have legally exercised their right to vote, and their ballots should be
canvassed and, if validly and properly made out, counted and tallied for the choices written therein.
Costs against private respondents.
SO ORDERED.
Paras, Padilla and Regalado, JJ., concur.
Nocon, J., On leave.
Petition granted; decision annulled and set aside.
Notes.—Employees' right to form union to protect their interest in statutorily and constitutionally
recognized (Vassar Industries Employees Union (VIEU) vs. Estrella, 82 SCRA 280).
The right of employees to join any labor organization is protected by the Constitution (Ibid, 82 SCRA
280).
——o0o—— Reyes vs. Trajano, 209 SCRA 484, G.R. No. 84433 June 2, 1992
VOL. 211, JULY 3, 1992
95
Philippine Fruits and Vegetables Industries, Inc. vs. Torres
G.R. No. 92391. July 3, 1992.*
PHILIPPINE FRUITS AND VEGETABLE INDUSTRIES, INC., petitioner, vs. HON. RUBEN D. TORRES, in his
capacity as Secretary of the Department of Labor and Employment and TRADE UNION OF THE
PHILIPPINES AND ALLIED SERVICES (TUPAS), respondents.
Labor Law; Words and Phrases; Meaning of “Close of election proceedings.”—As explained correctly
by the Solicitor General, the 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 intention of the Implementing Rules to include in
the term “close of the election proceedings” 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 and canvass of the challenged
votes have been made, it would result in an undue
__________________
*SECOND DIVISION.
96
96
delay in the affirmation of the employees’ expressed choice of a bargaining representative.
Same; One-day deficiency in giving notice of holding of certification election is insignificant where
compelling majority took part in election.—Petitioner would likewise bring into issue the fact that the
notice of certification election was posted only on December 12, 1988 or four days before the
scheduled elections on December 16, 1988, instead of the five-day period as required under Section 1
of Rule VI, Book V of the Implementing Rules. But it is not disputed that a substantial number, or 291
of 322 qualified voters, of the employees concerned were informed, thru the notices thus posted, of
the elections to be held on December 16, 1988, and that such employees had in fact voted accordingly
on election day. Viewed thus in the light of the substantial participation in the elections by voter-
employees, and further in the light of the all-too settled rule that in interpreting the Constitution’s
protection to labor and social justice provisions and the labor laws and rules and regulations
implementing the constitutional mandate, the Supreme Court adopts the liberal approach which
favors the exercise of labor rights, We find the lack of one day in the posting of notices insignificant,
and hence, not a compelling reason at all in nullifying the elections.
Same; Employees who may vote in certification election.—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-employment, 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.
Same; Employer has no role in certification election except when asked to bargain collectively under
the “Bystander Rule.”___And finally, the Court would wish to stress once more the rule which it has
consistently pronounced in many earlier cases that a certification election is the sole concern of the
workers and the employer is regarded as nothing more than a bystander with no right to interfere at
all in the election. The only exception here is where the employer has to file a petition for certification
election pursuant to Article 258 of the Labor Code because it is requested to bargain collectively. Thus,
upon the score alone of the “Bystander Rule”, the instant petition would have been dismissed
outright.
97
VOL.211,JULY 3,1992
97

PETITION for review on certiorari of the resolution of the Secretary of Labor and Employment.
Alfredo L. Bentulan for private respondent (TUPAS).
PARAS, J.:
This petition for review on certiorari with prayer for the issuance of a temporary restraining order
and/or preliminary injunction assails the following:
(1)The Resolution dated December 12, 1989 of public respondent Secretary of Labor1 affirming on
appeal the Order dated March 7, 1989 issued by Med-Arbiter Danilo T. Basa, and certifying private
respondent Trade Union of the Philippines and Allied Services (or TUPAS) as the sole and exclusive
bargaining agent of all regular rank-and-file and seasonal workers at Philippine Fruits and Vegetable
Industries, Inc. (or PFVII), petitioner herein; and
(2)The Order dated February 8, 1990 issued by public respondent Secretary of Labor2 denying
petitioner’s Urgent Motion for Reconsideration.
Petitioner PFVII contends the questioned resolution and order are null and void as they are contrary to
law and have been issued with grave abuse of discretion, and having no other plain, speedy and
adequate remedy in the ordinary course of law, it filed with this Court the petition now at hand.
The facts of the case are well-stated in the Comment filed by the Solicitor General, and are thus
reproduced hereunder, as follows:
“On October 13, 1988, Med-Arbiter Basa issued an Order granting the petition for Certification election
filed by the Trade Union of the Philippines and Allied Services (TUPAS). Said order directed the holding
of a certification election among the regular and seasonal workers of the Philippine Fruits and
Vegetables, Inc. (p. 42, NLRC, Records).
________________
1.Then Secretary of Labor Franklin M. Drilon.
2Then Secretary of Labor Ruben D. Torres.
98
98

“After a series of pre-election conferences, all issues relative to the conduct of the certification election
were threshed out except that which pertains to the voting qualifications of the hundred ninety four
(194) workers enumerated in the lists of qualified voters submitted by TUPAS.
“After a late submission by the parties of their respective position papers, Med-Arbiter Basa issued an
Order dated December 9, 1988 allowing 184 of the 194 questioned workers to vote, subject to
challenge, in the certification election to be held on December 16, 1989. Copies of said Order were
furnished the parties (p. 118, NLRC, Records) and on December 12, 1988 the notice of certification
election was duly posted. One hundred sixty eight (168) of the questioned workers actually voted on
election day.
“In the scheduled certification election, petitioner objected to the proceeding, through a Manifestation
(p. 262, NLRC, Records) filed with the Representation Officer before the close of the election
proceedings. Said Manifestation pertinently reads:
‘The posting of the list of eligible voters authorized to participate in the certification election was short
of the five (5) days provided by law considering that it was posted only on December 12, 1988 and the
election was held today, December 16, 1988 is only four days prior to the scheduled certification
election.’
“By agreement of petitioner and TUPAS, workers whose names were inadvertently omitted in the list of
qualified voters were allowed to vote, subject to challenge (p. 263, NLRC, Records). Thirty eight of them
voted on election day.
“Initial tally of the election results excluding the challenged votes showed the following:
Total No. of the Votes
...............................................
291
Yes votes
....................................................................
40
No votes
.....................................................................
38
Spoiled
.......................................................................
Challenged (Regular)
..............................................
38
Total No. of Votes Cast
.........................................
123
“On January 6, 1989, Management and TUPAS agreed to have the 36 challenged votes of the regular
rank-and-file employees opened and a canvass thereof showed:
Yes votes
........................................................................
20
No votes
.........................................................................
14
99
VOL.211,JULY 3,1992
99
Spoiled
.......................................................................
Total
................................................................
38
“Added to the initial election results of December 16, 1988, the canvass of results showed:
Yes
...............................................................................
60
No
................................................................................
52
Spoiled
.......................................................................
11
Total
................................................................
123
“Based on the foregoing results, the yes votes failed to obtain the majority of the votes cast in said
certification election, hence, the necessity of opening the 168 challenged votes to determine the true
will of the employees.
“On January 20, 1989, petitioner filed a position paper arguing against the opening of said votes mainly
because said voters are not regular employees nor seasonal workers for having allegedly rendered work
for less than 180 days.
“Trade Union of the Philippines and Allied Services (TUPAS), on the other hand, argued that the
employment status of said employees has been resolved when Labor Arbiter Ricardo N. Martinez, in his
Decision dated November 26, 1988 rendered in NLRC Case No. SubRab-01-09-7-0087-88, declared that
said employees were illegally dismissed.
“In an Order dated February 2, 1989 (pp. 278-280, NLRC, Records) Med-Arbiter Basa ordered the
opening of said 168 challenged votes upon his observation that said employees were illegally dismissed
in accordance with the foregoing Decision of Labor Arbiter Martinez. As canvassed, the results showed:
Yes votes
....................................................................
165
No votes
.....................................................................
Spoiled
.......................................................................
Total
................................................................
168
“On February 23, 1989, petitioner formally filed a Protest (pp. 284-287, NLRC, Records) claiming that the
required five day posting of notice was not allegedly complied with and that the list of qualified voters
so posted failed to include fifty five regular workers agreed upon by the parties as qualified to vote. The
Protest further alleged that voters who were ineligible to vote were allowed to vote.
100
100
“Med-Arbiter Basa, in his Order dated March 7, 1989, dismissed said Protest which Order was affirmed
on appeal in the Resolution dated December 12, 1989 of then Secretary of Labor, Franklin Drillon.
“Petitioner’s Motion for Reconsideration was denied for lack of merit in public respondent’s Order dated
February 28, 1990.” (pp. 84-88, Rollo)3
The instant petition has, for its Assignment of Errors, the following:
(1)The Honorable Secretary of Labor and Employment acted with grave abuse of discretion amounting
to lack of jurisdiction and committed manifest error in upholding the certification of TUPAS as the sole
bargaining agent mainly on an erroneous ruling that the protest against the canvassing of the votes cast
by 168 dismissed workers was filed beyond the reglementary period.
(2)The Honorable Secretary of Labor committed an abuse of discretion in completely disregarding the
issue as to whether or not non-regular seasonal workers who have long been separated from
employment prior to the filing of the petition for certification election would be allowed to vote and
participate in a certification election.4
The Court finds no merit in the petition.
For it is to be noted that the formal protest of petitioner PFVII was filed beyond the reglementary
period. A close reading of Sections 3 and 4, Rule VI, Book V of the Implementing Rules of the Labor Code,
which read as follows:
“Section3. Representation officer may rule on any-on-the-spot questions.—The Representation officer

may rule on any on-the-spot question arising from the conduct of the election. The interested party may
however, file a protest with the representation officer before the close of the proceedings.
“Protests not so raised are deemed waived. Such protest shall be contained in the minutes of the
proceedings.” (italics supplied)
“Section4. Protest to be decided in twenty (20) working days.—Where the protest is formalized before
the med-arbiter within five (5) days after the close of the election proceedings, the med-arbiter
_______________
3Rollo, pp. 84-88.
4Ibid., at p. 9.
101
VOL.211,JULY 3,1992
101
shall decide the same within twenty (20) working days from the date of formalization. If not formalized
within the prescribed period, the protest shall be deemed dropped. The decision may be appealed to
the Bureau in the same manner and on the same grounds as provided under Rule V.” (Italics supplied)
would readily yield, as a matter of procedure, the following requirements in order that a protest filed
thereunder would prosper, to wit:
(1)The protest must be filed with the representation officer and made of record in the minutes of the
proceedings before the close of election proceedings, and
(2)The protest must be formalized before the Med-Arbiter within five (5) days after the close of the
election proceedings.
The records before Us quite clearly disclose the fact that petitioner, after filing a manifestation of
protest on December 16, 1988, election day, only formalized the same on February 20, 1989, or more
than two months after the close of election proceedings (i.e., December 16, 1988). We are not
persuaded by petitioner’s arguments that election proceedings include not only casting of votes but
necessarily includes canvassing and appreciation of votes cast and considering that the canvassing and
appreciation of all the votes cast were terminated only on February 16, 1989, it was only then that the
election proceedings are deemed closed, and thus, when the formal protest was filed on February 20,
1989, the five-day period within which to file the formal protest still subsisted and its protest was
therefore formalized within the reglementary period.5
As explained correctly by the Solicitor General, the 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 intention of the Implementing
Rules to include in the term “close of the election proceedings” 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
_________________
5Rollo, pp. 66-67; Annex “I” of the Petition.
102
102
long period.6 Thus, if a protest can be formalized within five days after a final determination and
canvass of the challenged votes have been made, it would result in an undue delay in the affirmation of
the employees’ expressed choice of a bargaining representative.7
Petitioner would likewise bring into issue the fact that the notice of certification election was posted
only on December 12, 1988 or four days before the scheduled elections on December 16, 1988, instead
of the five-day period as required under Section 1 of Rule VI, Book V of the Implementing Rules. But it is
not disputed that a substantial number, or 291 of 322 qualified voters, of the employees concerned
were informed, thru the notices thus posted, of the elections to be held on December 16, 1988, and that
such employees had in fact voted accordingly on election day. Viewed thus in the light of the substantial
participation in the elections by voter-employees, and further in the light of the all-too settled rule that
in interpreting the Consti-tution’s protection to labor and social justice provisions and the labor laws and
rules and regulations implementing the constitutional mandate, the Supreme Court adopts the liberal
approach which favors the exercise of labor rights,8 We find the lack of one day in the posting of notices
insignificant, and hence, not a compelling reason at all in nullifying the elections.
As regards the second assignment of error, the public respondent Secretary of Labor did not completely
disregard the issue as to the voting rights of the alleged separated employees for precisely, he affirmed
on appeal the findings of the Med-Arbiter when he ruled
“The election results indicate that TUPAS obtained majority of the valid notes cast in the election—60
plus 165, or total of 225 votes out of a possible total of 291.
WHEREFORE, premises considered, the appeal is hereby denied and the Med-Arbiter’s order dated 7
March 1989 affirmed. Petitioner TUPAS is hereby certified as the sole and exclusive bargaining
_________________
6Rollo, p. 91; Comment of the Solicitor General, p. 8.
7Ibid., Id.
8Manila Electric Company vs. NLRC, G.R. No. 78763, July 12, 1989.
103
VOL. 211, JULY 3, 1992
103

agent of all regular rank-and-file and seasonal workers at Philippine Fruits and Vegetable Industries,
Inc.”9 (p. 26, Rollo)
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-employment, are eligible to vote in certification
elections.10 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.11 And finally, the Court would wish to stress once more the rule which it
has consistently pronounced in many earlier cases that a certification election is the sole concern of the
workers and the employer is regarded as nothing more than a bystander with no right to interfere at all
in the election. The only exception here is where the employer has to file a petition for certification
election pursuant to Article 258 of the Labor Code because it is requested to bargain collectively. Thus,
upon the score alone of the “Bystander Rule”, the instant petition would have been dismissed outright.
WHEREFORE, the petition filed by Philippine Fruits and Vegetable Industries, Inc. (PFVII) is hereby
DISMISSED for lack of merit.
SO ORDERED.
Narvasa (C.J., Chairman), Padilla, Regalado and Nocon, JJ., concur.
Petition dismissed.
Note.—The purpose of certification election is to give the employees true representation in their
collective bargaining with an employer (Balmar Farms, Inc. vs. NLRC, 202 SCRA 648).
——o0o——
______________
9 Rollo, p. 26; Annex “B”, p. 5.
10 Rothenberg on Labor Relations, p. 548.
11 Samahang Manggagawa ng Via Mare vs. Noriel, 98 SCRA 507.
104 Philippine Fruits and Vegetables Industries, Inc. vs. Torres, 211 SCRA 95, G.R. No. 92391 July 3, 1992
VOL. 246, JULY 14, 1995
365
Militante vs. National Labor Relations Commission
G.R. No. 113448. July 14, 1995.*

DANILO Q. MILITANTE, BERNARDINO O. TEJADA, MIGUEL C. SALONGA, ALEJANDRO FRANCISCO,
EFREN AYAG, LORENZO ABAREDES, OSCAR ABLANIDA, REYNALDO ACIERTO, NORBERTO AFABLE,
CESAR AGARAO, ARCANGEL ALCOY, ROQUE ALDE, ANACLETO ALDON, JUANITO ALEJANDRIA,
ERNESTO ALMARINES, MAMERTO ANCIRO, TRONILO ANDAYA, JOSE ANG, AMADOR APILADO,
WILSON AGUILAR, TOMAS AQUINO, ORLANDO ARANDA, RAMON ARCALES, ROMEO ARGUELLES,
VIRGILIO ARAGO, SOFRONIO ARIETA, RAYMUNDO ARMADA, FERNANDO AROMIN, SALVADOR
ASPIRAS, JULIAN AUX, RODOLFO ABARILLES, SANTOS ARCENILLA, ROSENDO AGUINALDO, ROMEO
ABLANIDA, CELSO ALAC, INIGO ABANG, DANIEL BABICA, BONIFACIO BAJADE, PEPITO BALBERO,
ROMEO BALBERO, APOLONIO BALDIVIA, LEONARDO BALTES, PEDRO BALTES, JAIME BANGKAYA,
NARCISO BANGOT, DOMINGO BARALLAS, BASILIO BARERA, MANUEL BENEBE, EDILBERTO BERMUDEZ,
ARTEMIO BETANIO, NICOLAS BIATON, GREGORIO BONIFACIO, ANDRES BOQUIREN, SANTIAGO
BRECINO, JACINTO BUHAY, RUBEN BUNAO, MANUELITO BUSA, PABLITO BUSTILLO, ARTEMIO
BATILARAN, ANGELO BALTES, DIONISIO BORRES, FELICIANO CABALQUINTO, DOMINGO CABENELA,
JR., LEONCIO CAINDOY, CONRADO CALCES, MARIANO CALLA, RODEL CALLA, ABELARDO CAMBARE,
PACIANO CAMIO, GIL CARANTO, SOLOMON CASTANEDA, JESUS CAWILI, AN-
_______________
* FIRST DIVISION.
366
366
TONIO CAYETANO, CESAR CELIS, JOSE CENETA, CECILIO CES, ROMEO CES, BENTIO CHING, JOSE
COLAPO, ROMULO CONDE, SANTOS CONDE, WIFREN CORTEZ, SOFRONIO COSE, GENARO COSMOD,
EDUARDO CUNANAN, LEODEGARO CURITANA, SALVADOR CUSTODIO, LUCIANO CUTOR, RUBEN
CARINO, ANTONIO CAANGAY, FORTUNATO CALIZON, HERMINIO CADIZ, ERNANI CALALAS, PERFECTO
CABALLERO, DANTE DAANG, FLORENTE DACQUEL, BENJAMIN DATILES, ROBERTO DE CASTRO,
REYNALDO DE DUQUE, ANTHONY DE LA CRUZ, ROLANDO DE LA CRUZ, ROGELIO DE LA ROSA, OSCAR
DEL CASTILLO, VICENTE DE LEON, LAMBERTO DE LOS REYES, RENATO DE LOS SANTOS, JOSE DEL RIO,
CONRADO DEL ROSARIO, ERNESTO DERECHO, MANUEL DESIDERIO, LAUREANO DEYMOS, REYNALDO
DIAZ, CESAR DIEGOR, EDGARDO DIMAANDAL, RENATO DIZON, VIRGILIO DIZON, ANTONIO
DOMINGUEZ, GODOFREDO DURANTE, JULIAN DOLOGIN, RUBEN DE LOS REYES, WILDREDO ECHAGUE,
ELEAZAR EDAR, RODOLFO ELIANG, LUIS ENRIQUEZ, BIENVENDIO ESPALLARDO, JOVENCIO ESPANOL,
EDUARDO ESPINO, REYNALDO ESPINOSA, WILFREDO ESPINOSA, NORBERTO ESTANIL, PRUDENTE
ESTO, LEOCADIO ESTRADA, HENRY EVANGELISTA, JOEY ELARDO, RUBEN FABILLAR, MARIO FELICIANO,
FORFIRIO FERMO, ALEJANDRO FRANCISCO, ARSENIO FUENTES, BASILIO FUERTES, LORETO FULO,
ANDRES FLORENDO, EUGENIO FRANCISCO, ROSENDO FRANCISCO, NAPOLEON FERNANDEZ, TEOTIMO
GALERA, EFREN GAN, MANUEL GARCIA, TEOFILO GARCIA, AGAPITO GARON, ROGELIO GEBANA,
FLORENCIO GLORIA, ANTONIO GONZAGA, JR., ALEXANDER GONZALES, OSCAR GORGOD, TROADIO
GALBISO, JESSE GUIRREY, LUDUVICO GARINGO, CARLITO DUARTE, ALLAN HARTPENCE, BONIFACIO
HEARY, MAURO HERMO, ROGELIO HICETA, ROGELIO HIDALGO, ROLANDO GOJAR, ANTONIO
DONGSAL, JUAN INANO, JOSE INGALLA, PEDRO IRONAN, LEONARDO ISIP, RENATO ISIP, ARTEMIO
JALDO, LEVY JARQUE, PEDRO JASMIN, JAIME JAVIER, LITO LABABO, WILSON LACRA, JOSE LAGUILLES,
ERNESTO LAPIRA, ALFRED LAPUT, JOVITO LASAN, NARCISO LAZARTE, JUANITO LEGASPI,
367
VOL. 246, JULY 14, 1995
367
VALENZUELA LEVISITO, JUANITO LISTANA, LUDUVICO LLAGAS, ROMEO LLENOS, PABLO LOPEZ, JR.,
ISAIAS LOVERIA, ROMEO LOZADA, FLORO LUMAGBAS, CESAR LUMIARES, OLIMPIO LUPOS, RICARDO
MABUTI, JOSE LASALA, ROMEO LADROMA, JAIME JACA, DANIEL LIBERATO, JR., ADRIANO MADISON,
DAMIL MADRID, VIRGILIO MAGTALAS, PASCUAL MAHAYHAY, EMILIANO MALIT, JR., DONALD
MAMALLAS, PEDRO MANANON, SUERLITO MANAO, MAXIMO MANUTA, APOLINARIO MARENTES,
RAYMUNDO MARTORILLAS, LEONARDO MENDOZA, ROBERTO MERCADO, ROMEO MERCADO, JOSE
MESA, JOSE MIJARES, GODOFREDO MILANES, JESUS MIRANDA, ARTURO MISAJON, RODOLFO MOGO,
JOSE MOLINO, JUANITO MONTES, BALTAZAE MORERA, ROMEO MANICDAO, ALEJANDRO MIRANDA,
DELFIN MAALLO, ANTONIO MORENO, EMMANUEL MACUTAY, PEDRO MANZANO, TERESITO MIJARES,
FELIPE MEKITPIKIT, FRANCISCO JAVIER, FRANCIS NAMOCATCAT, BENJAMIN NARAG, VIRGILIO
NARBARTE, ERIBERTO NASAYAO, ARESTIDES NAVIDAD, COSME NESIO, LUCIO NIDEA, ERNESTO
NIEGAS, EPIFANIO NINO, DOMINGO NOLASCO, RICARDO NARZOLES, ROQUE NONATO, ALFREDO
NAUTAN, MAXIMO OBREGON, FULGENCIO ONSE, ANTERO ORATE, WILFREDO ORBE, RENTO ORIA,
EDUARDO ORCILLA, HERNANI OPEDA, FREDDIE PALAAD, RODRIGO PARRENO, SULPICIO PAWAAN,
RODOLFO PACANAN, GUILLERMO PADILLA, TEODORICO PAGAL, ANTONIO PALACIO, BENJAMIN
PALAROAN, JOSE PALENCIA, FRANCISCO PALMERO, ROBERTO PALOMATA, ROMEO PALOMIA, DANILA
PAMINTUAN, FLORENTINO PAMOR, PROCESO PANGAN, CRESTINO PASCUA, ROMEO PATIAG, GENESIS
PEREZ, ELIGIO PINEDA, FELIX PIGUERRO, VICTORINO PLANA, DAVID POLIQUIT, RAYMUNDO PUSPUS,
RODOLFO MORALEDA, BARTOLOME GUIAMBAO, RANILLO QUINTANA, HECTOR NAVALASCA,
EVARISTO RABINO, PABLO RACE, RAMON RAPI, JESUS RAVILLAS, ROMEO RAZON, WILFREDO RECOCO,
REYNALDO REGALADO, REONARDO REYNES, SERGERONIMO RICALDE, FRANCISCO RIVERA, RUBEN
RIVERA, LIBERATO ROBLES, MANUEL ROGEL, ERNESTO ROSATASE, RUBEN
368
368

ROS, PEDRO ROXAS, PACIFICO RUIZ, FELIX RUNES, REYNALDO RAMOS, PETRONILO REYES, SALVADOR
MONTANEZ, ADELIO SAGUID, ANTONIO SALES, RONNIE SAPIO, REYNALDO SANTOS, RUFO SALISI,
ALFREDO SAYSON, JOSELITO SAPIO, KIEL SABASAN, JUAN SABLON, ALFREDO SACOLLES, NOLITO
SADIWA, RIZAL SAGUID, DIODANTE SAILOG, FREDERICO SALAS, JAIME SALCEDO, LAUREANO
SALGADO, MENANDRO SALISI, GRACIANO SALUZA, MIGUEL SAMARINGA, CRISOSTOMO SANICO,
MARIANO SANICO, CARLITO SANTOS, MARCELO SANTOS, EDUARDO SANTUELE, OSCAR SANTUELE,
LEONARDO SAPUNGAN, LUDUVICO SARANILLO, CONRADO SEBASTIAN, ROMUALDO SELUDO,
RODOLFO SILLOGO, EMMANUEL SODSOD, ERNESTO SOLLEZA, FEDERICO SORIANO, JOSE SUMASTRE,
EDGAR TABON, IGNACIO TAMPOL, RUBEN TAN, DOMINADOR TARA, LIBERATO TATAD, ALEJANDRO
TECSON, FRANCISCO TELOMEROS, PEDRO TEMPLORA, JR., REYNALDO TIERRA, JORGE TINIO, JR.,
LEOPOLDO TOLENTINO, MANUEL TOMBUCON, DIOLITO TORRENUEVA, OSCAR TRIBUNAL, ERNESTO
TUAZON, VICENTE TERADO, LEONARDO VELASQUEZ, NESTOR VENDIVIL, FELIPE VERSOSA, DIMETRIO
VERGARA, JUANITO VELARDE, MARIO VENDIVIL, WILFREDO VERDEJO, CARLOS VERGARA, ARTURO
VILLAFLOR, JOVENCIO VILLAFLOR, CARLOS VILLA-FUERTO, JOSE VILLARDO, RAUL VILLAREAL,
MARCELO VINAS, RUBEN VISEN, RODRIGO VISITO, BENEDICTO YTANG, EDUARDO ZINAMAAN,
LEVISTO VALENZUELA, BERNARDINO TEJADA, FEDERICO ALBURO, SEVERINO ASUNO, JOSE AREGLO,
ANTONIO TEJERA, RENATO ABALAYAN, ALBERTO BETANIO, SANTOS ARSINELIA, WILFREDO BALTAZAR,
PEDRO APOLONIO, MANUEL CASPI, MAXIMO CUESTA, EDUARDO DAGUMAN, JULIO DE LEON,
REYNALDO DE LA CRUZ, ADRIANO DE LA CRUZ, VICTOR ESPINA, ROBERTO ELIZALDE, CARLOS
ESTABILLO, GERONIMO FERNANDEZ, WILFREDO GILOK, JAYSON GARILAO, ROMULADO GERNA,
CHARLES HODGES, SOFRONIO ESPERAS, LOWELL ILACIO, ROBERTO HERBUELA, JOEL NAMORO,
DOMINGO SALON, ESTEBENSON SALOMON, EDUARDO NOLIDO, ESPIDIO
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VOL. 246, JULY 14, 1995
369
SAPIANDANTE, MODESTO TERCIO, ARTURO LOTERTE, LORETO TAYAM, ROBERTO RIZALDE, MARIO
OCAMPO, PEDRO DANCHEZ, EDUARDO VILLARUEL, PASTOR LOZANO, MACARIO PETATE, and
LORENZO ABLETES, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, GOLDEN TAXI CAB
COMPANY, LORENZO ZAMORA, DOÑA NENA ZAMORA and DOÑA PACING ZAMORA, respondents.
Actions; Res Judicata; Elements of Res Judicata.—Res Judicata has the following elements: (1) that the
previous judgment has become final; (2) that the prior judgment was rendered by a court having
jurisdiction over the subject matter and the parties; (3) that the first judgment was rendered on the
merits; and (4) that there was substantial identity of parties, subject matter and causes of action, as
between the prior and subsequent actions (Diwa v. Donato, 234 SCRA 608 [1994]).
Same; Same; Labor Law; Administrative Law; Substantial Evidence; Factual findings of quasi-judicial
agencies like the NLRC, which have acquired expertise because their jurisdiction is confined to specific
matters, are generally accorded not only respect but, at times, finality if such findings are supported
by substantial evidence.—We cannot simply disregard these factual findings made by the Labor
Arbiter, as well as the conclusion arrived at by NLRC, inasmuch as the same are supported by the
records of the case and in accord with law and jurisprudence. In Five J Taxi v. National Labor Relations
Commission, 235 SCRA 556 (1994), we ruled: “This Court has repeatedly declared that the factual
findings of quasi-judicial agencies like the NLRC, which have acquired expertise because their
jurisdiction is confined to specific matters, are generally accorded not only respect but, at times,
finality if such findings are supported by substantial evidence. Where, however, such conclusions are
not supported by the evidence, they must be struck down for being whimsical and capricious and,
therefore, arrived at with abuse of discretion.”
Same; Same; Same; Collective Bargaining; Unions; The labor organization designated or selected by
the majority of the employees in an appropriate collective bargaining unit shall be the exclusive
representative of the employees in such unit for the purpose of collective bargaining.—The legal
conclusion of the Labor Arbiter and NLRC on the binding effect of the judgment in the NLRC NCR CA
No. 003194-92 on petitioners finds support in Article 255 of the Labor Code of the Philippines, as
amended. Said article provides: “Exclusive bargaining
370
370
representation and workers participation in policy and decision making.—The labor organization
designated or selected by the majority of the employees in an appropriate collective bargaining unit
shall be the exclusive representative of the employees in such unit for the purpose of collective
bargaining. x x x.”
Same; Same; Same; Same; Same; Parties; Where a union certified as the exclusive bargaining agent in
a bargaining unit had previously filed a case in representation not only of its members but also of the
members of a rival union, the latter’s members cannot subsequently claim that they were not parties
in the earlier case.—Inasmuch as GTEWU-ANGLO was certified as the exclusive bargaining agent in the
consent election conducted on March 17, 1989, petitioners cannot now claim that they were not
parties in the first case filed by GTEWU-ANGLO, which represented not only PACIWU-TUCP but also
GTEWU-ANGLO. Hence, all the requisites of res judicata being present, said principle should be made
to apply, thus barring any subsequent action such as the consolidated cases subject of this petition.
Enrico Berbano for petitioners.
Pablo Cruz for private respondents.
QUIASON, J.:
This is a petition for certiorari to reverse the Decision of the National Labor Relations Commission
(NLRC) in NLRC NCR CA No. 004908-93, affirming the order of the Labor Arbiter which dismissed, for
having been barred by prior judgment, NLRC-NCR Cases Nos. 00-01-00618-93, 00-03-01784-93, and 00-
03-02073-93.
The Golden Taxi Employees and Workers Union-ANGLO (GTEWU-ANGLO), represented by Ernesto
Serrano, as union president, filed a case against respondent Golden Taxi Cab Co. (Company) and/or
Lorenzo Zamora and Jose Zamora (NLRC-NCR Case No. 00-05-02875-90) for illegal lock-out, violation of
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VOL. 246, JULY 14, 1995
371
B.P. Blg. 130, as amended by R.A. No. 6715, unfair labor practice, and payment of actual, moral and
exemplary damages and attorney’s fees. In his decision, Labor Arbiter Patricio P. Libo-on found that the
closure of respondent company was illegal, and ordered private respondents to pay the members of
GTEWU-ANGLO P22,947,200.00 as separation pay and the equivalent of 10% of the award as attorney’s
fees (Rollo, p. 48). Upon appeal, NLRC in NLRC NCR CA No. 003194-92, reversed the decision of the
Labor Arbiter and in lieu thereof directed private respondents to pay, as financial assistance, the
workers named in the list attached to its decision the amount of P5,646,699.50 plus P564,669.95 as
attorney’s fees (Rollo, p. 69).
On January 25, 1993, a complaint was filed by Danilo Q. Militante against Lorenzo Zamora, Doña Nena
Zamora and Doña Pacing Zamora for illegal lockout, illegal dismissal, non-remittance of SSS deduction,
deduction for burial benefits, non-payment of premium pay for rest day, thirteenth-month pay and
separation pay with a prayer for reinstatement, upgrading of SSS payments, payment of separation pay,
thirteenth-month pay and premium pay for rest day (NLRC NCR Case No. 00-01-00618-93).
On March 9, 1993, another complaint was filed by Miguel C. Salonga against respondent Company,
Lorenzo Zamora, Doña Nena Zamora and Doña Pacing Zamora, for illegal dismissal and non-payment of
retirement benefits with a prayer for payment of retirement benefits and other benefits (NLRC NCR Case
No. 00-03-01784-93).
On March 15, 1993, private respondents filed a motion to dismiss the complaints on the grounds of res
judicata and prescription, arguing that the NLRC decision in NLRC NCR CA No. 003194-92 barred these
subsequent complaints.
On March 19, 1993, another complaint was filed against respondent company, Lorenzo Zamora, Doña
Nena Zamora and Doña Pacing Zamora by Bernardino O. Tejada again for illegal lockout, illegal
deductions of SSS and burial benefits, illegal dismissal, non-payment of separation pay, holiday pay and
thirteenth-month pay, and payment of moral damages and attorney’s fees with a prayer for upgrading
of SSS payments, payment of separation pay, thirteenth-month pay, premium pay for rest day,
attorney’s fees, moral damages, holiday pay and reimbursement
372
372
of illegal deductions (NLRC NCR CA No. 00-03-02073-93).
On April 28, 1993, Labor Arbiter Ramon V. C. Reyes issued an order dismissing the three consolidated
cases on the ground of bar by prior judgment. Upon appeal (NLRC NCR CA No. 004908-93), NLRC
rendered a decision dismissing the appeal for lack of merit. Hence, this petition.
II
Petitioners argue that NLRC acted with grave abuse of discretion, amounting to lack or excess of
jurisdiction: (1) in holding that petitioner’s causes of action are barred by the prior final judgment in
NLRC NCR CA No. 003194-92 despite the lack of jurisdiction of NLRC over the complaint therein and the
lack of identity of parties, subject matter, and cause of action between the two cases; (2) in not holding
that the decision in the previous case did not prejudice but even entitled petitioners, who are members
of the exclusive bargaining representative Philippine Agricultural Commercial ands Industrial Workers
Union-Trade Union Congress of the Philippines (PACIWU-TUCP), to the award of financial assistance; and
(3) in failing to comply with its duty to use every and all reasonable means to ascertain speedily and
without regard to technicalities of law or procedure the facts in each case.
III
We find no grave abuse of discretion committed by NLRC in applying the principle of res judicata in NLRC
NCR CA No. 004908-93 (NCR No. 00-01-00618-93; 00-03-01784-93; 00-03-02073-93), subject of this
petition by reason of the previous judgment rendered in NLRC NCR CA No. 003194-92 (NLRC NCR Case
No. 00-05-02875-90).
Res Judicata has the following elements: (1) that the previous judgment has become final; (2) that the
prior judgment was rendered by a court having jurisdiction over the subject matter and the parties; (3)
that the first judgment was rendered on the merits; and (4) that there was substantial identity of
parties, subject matter and causes of action, as between the prior and subsequent actions (Diwa v.
Donato, 234 SCRA 608 [1994]).
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373
It is undisputed that the NLRC decision in NLRC NCR CA No. 003194-92 was decided on the merits and
has already become final.
Petitioners insist, however, that they, being members of the rival union PACIWU-TUCP, were not parties
in the first case filed by GTEWU-ANGLO (Rollo, p. 12). Such claim is not supported by the records of the
case. The Labor Arbiter’s decision in the subsequent consolidated cases, which was affirmed by NLRC,
states:
“It is not disputed that on May 27, 1990, the date the company filed its notice of closure with the
Department of Labor and Employment, copy furnished the complainant Union, the said Union was
already ‘certified’ (in fact more than a year earlier after winning the March 17, 1989 Consent election) as
‘the exclusive bargaining agent of all the rank and file employees’ of respondent company . The effect of
such a certification brought about the legal mandate that henceforth, complainant Union ‘shall be the
exclusive representative’ (Art. 255, Labor Code) of all the ‘rank and file employees (take note, not just
the union members) of respondent company not only for the purpose of entering into a collective
bargaining agreement’ on ‘terms and conditions of employment’ (Arts. 251, 252, ibid), but also in the
matter of ‘rights, benefits and welfare’ (Art. 255, ibid) of the said represented workers. x x x” (Rollo, p.
41).
In their opposition to respondents’ motion to dismiss filed in NLRC NCR Case No. 00-01-00618-93,
petitioners apprised the Labor Arbiter thus:
“For the information of the Honorable Labor Arbiter, the herein mentioned case was initiated by Ernesto
Serrano who was the union president of GTEWU-ANGLO for and in behalf of all the workers and
employees of the Golden Taxi Co. numbering about 1,649, whether or not the worker is a member of
the union as the law on this point is clear that as the winner of the certification/consent Election on
March 17, 1989, GTEWU-ANGLO, became the exclusive bargaining agent of all the rank and file
employees of the respondent company. x x x” (Rollo, p. 103).
Petitioners further explained in said opposition:
“What happened in this case was that, while the herein mentioned case was first filed before the
Arbitration Branch of this Honor-
374
374
able Commission and assigned to the Honorable Labor Arbiter PATRICIO LIBO-ON, all the workers of
respondent company were complainants until the case was decided in complainants’ favor, but when
the herein mentioned case was elevated on appeal by respondent company to the First Division of the
Honorable Commission and was decided on 20 November 1992, the complainants in this instant case
were no longer included, hence, this instant complaint” (Rollo, p. 104).
In the first case (NLRC NCR CA No. 003194-92), NLRC resolved two issues insofar as the award is
concerned: (1) the determination of the employees who are to receive financial assistance; and (2) the
amount they are entitled to receive. In conclusion, NLRC took out those who no longer worked with
respondent company before its closure, and favored only those who actively pursued the case. It limited
the award of financial assistance only to those mentioned in the list attached to its decision resulting in
the exclusion from the benefits of petitioners.
We cannot simply disregard these factual findings made by the Labor Arbiter, as well as the conclusion
arrived at by NLRC, inasmuch as the same are supported by the records of the case and in accord with
law and jurisprudence. In Five J Taxi v. National Labor RelationsCommission, 235 SCRA 556 (1994), we
ruled:
“This Court has repeatedly declared that the factual findings of quasi-judicial agencies like the NLRC,
which have acquired expertise because their jurisdiction is confined to specific matters, are generally
accorded not only respect but, at times, finality if such findings are supported by substantial evidence.
Where, however, such conclusions are not supported by the evidence, they must be struck down for
being whimsical and capricious and therefore, arrived at with abuse of discretion” (at p. 560).
The legal conclusion of the Labor Arbiter and NLRC on the binding effect of the judgment in the NLRC
NCR CA No. 003194-92 on petitioners finds support in Article 255 of the Labor Code of the Philippines,
as amended. Said article provides:
“Exclusive bargaining representation and workers participation in policy and decision making.—The
labor organization designated or
375
VOL. 246, JULY 14, 1995
375
selected by the majority of the employees in an appropriate collective bargaining unit shall be the
exclusive representative of the employees in such unit for the purpose of collective bargaining. x x x.”
Inasmuch as GTEWU-ANGLO was certified as the exclusive bargaining agent in the consent election
conducted on March 17, 1989, petitioners cannot now claim that they were not parties in the first case
filed by GTEWU-ANGLO, which represented not only PACIWU-TUCP but also GTEWU-ANGLO. Hence, all
the requisites of res judicata being present, said principle should be made to apply, thus barring any
subsequent action such as the consolidated cases subject of this petition.
The Solicitor General, in his comment filed for NLRC, observes that with the exception of the complaint
docketed as NLRC NCR No. 00-03-01784-93, charging private respondents with illegal dismissal and non-
payment of retirement benefits, the other two complaints contained monetary claims such as non-
remittance of SSS deduction and deductions for burial benefits, non-payment of holiday pay and
thirteenth-month pay. However, inasmuch as these claims were neither raised nor determined in the
first case, even indirectly, petitioners cannot be said to be precluded from filing and pursuing these
claims. We agree with the Solicitor General.
WHEREFORE, the petition is DISMISSED, without prejudice to petitioners’ right to submit before the
Labor Arbiter all the unresolved money claims.
SO ORDERED.
Padilla (Chairman), Davide, Jr. and Kapunan, JJ., concur.
Bellosillo, J., On leave.
Petition dismissed.
Notes.—For res judicata to apply, absolute identity of parties is not required because substantial
identity is sufficient. (Development Bank of the Philippines vs. Pundogar, 218 SCRA 118 [1993]).
Once a case has been decided one way, then another case involving exactly the same point at issue
should be decided in the
376
376
Sulpicio Lines, Inc. vs. Court of Appeals
same manner. (Tay Chun Suy vs. Court of Appeals, 229 SCRA 151 [1994]).
——o0o—— Militante vs. National Labor Relations Commission, 246 SCRA 365, G.R. No. 113448 July 14,
1995
VOL. 359, JUNE 25, 2001
555
Sandoval Shipyards, Inc. vs. Pepito
FREDELINO SOCO, ALBERTO MONIVA, FLAVIANO CANETE, JOSE JUDILLA, ARNULFO TRADIO, PRIMO
AUMAN, ALEJANDRO TAPDASAN, GERRY CALVO, MARLON ABELLAR, MANOLO VILLEGAS, BONIFACIO
CANO, RODELIO MONDEJAR, RICARDO IBALE, PAULINO LABRA, ANTONIO ALINSUG, PIO CAPAROSO,
MAXIMO PANUGAN, SILVESTRE IGOT, DANILO CASAS, ROLIE BENOLA, RUDINO MOLATO, LEONARDO
QUIMOD, ELPIDIO LINAO, AURELIO GOC-ONG, NESTOR BASAKA, RODRIGO AUMAN, ILUMINADO
ABUCAY, ANASTAGIO TRADIO, JR., EDUARDO SUGAROL, JUAN FORMINTIRA, ROSENDO SOCO, JIMMY
MONDIEGO, CELSO JUDAYA, MARCIAL GONZAGA, APOLONIO ARCENAL, SIMEON ANTOLIJAO,
MARCELO SUGAROL, ERNESTO SENO, MARIO BASAKA, GORGONIO CUYOS, ROGELIO EDAR, JAIME
IBALE, PATRICIO CANO, FELIX SARME, WILFREDO CANTERO, LORETO JUDAYA, CARIS MUSOR, RICKY
ERMAC, LUIS MONLEON, CIRILO AGUIPO, PEDRO QUINAPONDON, CHRISTOPHER JUDAYA, GERRY
AUMAN, ALFIN IGOT, NELSON ALIVIO, LIMUEL LIBERIAGA, DANILO MAQUILAN, DANIEL RIVERA,
ROMEO BASAKA, PAULINO FLORES, JUAN CODENERA, SEVERINO GOMEZ, EDUARDO IBALE, RONITO
CAPAROSO, GALO IBALE, ALEJANDRE MULIG, EUSTAQUIO DIOLA, EUDILO LAURON, ALEXANDER
AGUIPO, GILBERTO DESUCATAN, CRISPULO ENTERINA, FLORINTINO CODINERO, SAMUEL AUMAN,
MARGARITO LABISTE, SERGIO SOCO, SILVERIO IBALE, JOSELITO SUGAROL, GARY IBALE, NONITO
GARBO, LORETO PEPITO, ANRITO MONARES, NICANOR CUYOS, OSCAR ALIMPO-OS, REYNALDO
PEPITO, PEDRO VILLEGAS, JR., REY HENDERSON, JOSE ALEX MAGLASANG, and the HONORABLE COURT
OF APPEALS, respondents.span>h1>
Remedial Law; Judgments; Res Judicata; Court’s pronouncement in the Manila Golf case that the
decision in a certification election case does
_______________
* FIRST DIVISION.
556
556
not foreclose further dispute regarding the existence or non-existence of an employer-employee

relationship not an obiter dictum.—Our pronouncement in the Manila Golf case that the decision in a
certification election case, by the very nature of such proceeding, does not foreclose further dispute
regarding the existence or non-existence of an employer-employee relationship, was not obiter
dictum as petitioners suggest, but rather was part of the resolution of the main issue in said case.
Same; Same; Same; Requisites for res judicata to apply.—It is established doctrine that for res
adjudicata to apply, the following requisites must concur: (1) the former judgment or order must be
final; (2) the court which rendered said judgment or order must have jurisdiction over the subject
matter and the parties; (3) said judgment or order must be on the merits; and (4) there must be
between the first and second actions identity of parties, subject matter and cause of action
PETITION for review on certiorari of a decision of the Court of Appeals.span>
The facts are stated in the opinion of the Court.span>
Sycipi>span>, i>Salazari>span>, i>Hernandez & Gatmaitan
and Lapinid & Lapinidi>span> for petitioners.
Laoi>span>, i>Cenizai>span>, i>Canei>span>, i>Zaragoza Law Officesi>span> for private respondents.
KAPUNANspan>, Ji>.:
Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure.
Petitioners assail the Decision of the Court of Appeals, Former Fifteenth Division, dated December 20,
1999 in CA-G.R. SP Nospan>. 51729span>,<a
href="#p359scra8960556001">1sup>a>Frisco Pepito, et
al., Petitioners, vs. National Labor Relations Commission (4th Division) and Sandoval Shipyard, Inc. et al.,
Respondents.span>span> and its resolution, dated May 15, 2000 denying petitioners’ motion for
reconsideration.
Sometime in 1992, the National Federation of Labor (NFL) filed with the Department of Labor and
Employment (DOLE) a petition
_______________
1 Frisco Pepito, et al., Petitioners, vs. National Labor Relations Commission (4th Division) and Sandoval
Shipyard, Inc. et al., Respondents.
557span>
VOL. 359, JUNE 25, 2001
557
for certification election, alleging that its members, which included private respondents Prisco Pepito, et
al., were regular employees of petitioner Sandoval Shipyards, Inc. (SSI). Finding that the NFL members
were rank-and-file employees of SSI, the Med-Arbiter issued an order directing that a certification
election be held.
However, in a Resolution dated 25 November 1992, then Undersecretary Bienvenido Laguesma reversed
the Med-Arbiter’s Order and ruled that there was a valid subcontracting agreement between SSI and its
subcontractors, and that nospan> employer-
employee relationship existed between SSI and private respondents, since the latter were the
employees of the subcontractors.2sup>a>See Resolution
of Undersecretary Bienvenido Laguesma dated November 25, 1992, Rollo, pp. 56-67.span>span>
In 1993, several cases for illegal dismissal were filed by private respondents against SSI and its President,
petitioner Vicente Sandoval. Private respondents alleged that they were employees of SSI and that
sometime in 1985, some sections of the company were temporarily closed while others remained open.
Later, some of them were told to secure a Mayor’s Permit and then were made parties to contracts with
SSI stipulating that they were labor-only contractors. They averred further that after they organized a
workers’ union in 1992 to protect themselves against SSI’s persistent violation of labor standards, the
company did not allow them to report for work. Consequently, SSI’s employees, including private
respondents, went on strike on March 26, 1992. On April 6, 1992, SSI accepted its employees back to
work, except those who were identified as officers and members of the union. The company claimed
that these persons were not its employees but those of the contractors. In their complaint, private
respondents prayed for reinstatement with backwages, damages and attorney’s fees.
On December 27, 1996, the Labor Arbiter rendered its Decision in the illegal dismissal cases. He found
that while private respondents were illegally dismissed, they were not entitled to reinstatement with
backwages, damages and attorney’s fees. The Labor Arbiter ruled that there was nospan> employer-employee relationship between SSI and
private respondents, reasoning that said issue
_______________
2 See Resolution of Undersecretary Bienvenido Laguesma dated November 25, 1992, Rollo, pp. 56-67.
558
has been laid to rest in the November 25, 1992 resolution of Undersecretary Laguesma in the
certification election case.3sup>a>Decision of
Labor Arbiter Dominador A. Almirante dated December 27, 1996, Id., at 73.span>span>
Private respondents then appealed the decision of the Labor Arbiter to the National Labor Relations
Commission (NLRC), which affirmed the Labor Arbiter’s decision.4sup>a>Decision of the
National Labor Relations Commission dated December 10, 1997, Id., at 81-91.span>span>
Not satisfied with the decision of the NLRC, private respondents appealed the same to the Court of
Appeals. The appellate court reversed the decision of the NLRC and held that SSI is the direct employer
of private respondents.5sup>a>Decision of the
Court of Appeals dated December 20, 1999, Id., at 33-36.span>span> Petitioners filed a motion for
reconsideration but the same was denied for lack of merit.6sup>a>Resolution of
the Court of Appeals dated May 15, 2000, Id., at 39.span>span>
Hence, the present appeal. Petitioners contend that the Court of Appeals erred in applying this Court’s
pronouncement in Manila Golf
& Country Club us. Intermediate Appellate Courti>span>7sup>a>37 SCRA 207
(1994).span>span> that a decision in a certification election case regarding the existence of an
employer-employee relationship does not foreclose all further dispute between the parties as to the
existence or non-existence of such relationship. They contend that such pronouncement is obiter
dictumi> since the issue involved therein was whether or not the persons rendering caddying services
for the golf club’s members and their guests in the club’s courses or premises are employees of Manila
Golf and Country Club and therefore within the compulsory coverage of the Social Security System, not
the correctness of the Med-Arbiter’s finding in the certification election case that nospan> employer-employee relationship existed between the
golf club and the caddies.8sup>a>Petition, Rollo,
pp. 15-16.span>span>
The Court does not agree with petitioner.
Our pronouncement in the Manila Golf casei> that the decision in a certification election case, by the
very nature of such proceeding,
_______________
3 Decision of Labor Arbiter Dominador A. Almirante dated December 27, 1996, Id., at 73.
4 Decision of the National Labor Relations Commission dated December 10, 1997, Id., at 81-91.
5 Decision of the Court of Appeals dated December 20, 1999, Id., at 33-36.
6 Resolution of the Court of Appeals dated May 15, 2000, Id., at 39.
7 37 SCRA 207 (1994).
8 Petition, Rollo, pp. 15-16.
VOL. 359, JUNE 25, 2001
559
does not foreclose further dispute regarding the existence or nonexistence of an employer-employee
relationship, was not obiter dictumi> as petitioners suggest, but rather was part of the resolution of
the main issue in said case.
Manila Golfi> involved three separate proceedings initiated by a group of caddies against Manila Golf
and Country Club, Inc.: (1) a petition for certification election; (2) a petition for compulsory arbitration;
and (3) a petition for compulsory social security coverage. In the certification election proceeding, the
Med-Arbiter found that an employer-employee relationship existed between the golf club and the
caddies. On the other hand, the petition for compulsory arbitration was dismissed by the Labor Arbiter
upon finding that nospan> employer-
employee relationship existed between Manila Golf and the caddies, which dismissal was later affirmed
by the NLRC. The Social Security Commission also dismissed the caddies’ petition for compulsory social
security coverage, stating that the caddies were not employees of the golf club, but this ruling was later
reversed by the Intermediate Appellate Court.9sup>a>Manila Golf and
Country Club, Inc. vs. IAC, supra, at 211-214.span>span>
One of the questions in said case which this Court had to address in order to resolve the main issue was
which of the three proceedings should be recognized as being decisive of the issue regarding the
existence of an employer-employee relationship. It was in this context that the questioned
pronouncement in said case was made.
Clearly, such pronouncement was not obiter dictumi> since the determination as to whether the
finding of the Med-Arbiter in the certification election case operates as res adjudicata,i> or bar by
prior judgment, was necessary in resolving the main issue therein.
The Court of Appeals correctly applied the ruling in Manila Golf & Country Club vs. IACi>span> that “however
final it may become, the decision in a certification election case, by the very nature of such proceeding,
is not such as to foreclose all further dispute as to the existence, or non-existence of an employer-
employee relationship”10sup>a>Id, at
214.span>span> between SSI and private respondents herein.
_______________
9 Manila Golf and Country Club, Inc. vs. IAC, supra, at 211-214.
10 Id, at 214.
560
It is established doctrine that for res adjudicatai> to

apply, the following requisites must concur: (1) the former judgment or order must be final; (2) the
court which rendered said judgment or order must have jurisdiction over the subject matter and the
parties; (3) said judgment or order must be on the merits; and (4) there must be between the first and
second actions identity of parties, subject matter and cause of action.11sup>a>Saura vs.
Saura, Jr., 313 SCRA 465, 476 (1999).span>span>p>
This Court further explained in the Manila Golfi> case:
Clearly, implicit in these requisites is that the action or

proceedings in which is issued the “prior Judgment” that would operate in bar of a subsequent action
between the same parties for the same cause, be adversarial,i> or contentious, “one having opposing
parties; (is) contested, as distinguished from an ex parte hearing or proceeding.i> * * * of which the
party seeking relief has given legal notice to the other party and afforded the latter an opportunity to
contest it,” and a certification case is not such a proceeding, as this Court has already ruled:p><div
class="block-rw extract-rw" id="p359scra9930560003" title="Block General">“A certification proceeding is not a litigation in the sense in which this term
is commonly understood, but a mere investigation of a non-adversary, fact-finding character, in which
the investigating agency plays the part of a disinterested investigator seeking merely to ascertain the
desires of the employees as to the matter of their representation. The court enjoys a wide discretion in
determining the procedure necessary to insure the fair and free choice of bargaining representatives by
the employees.” (Citations omitted.)12sup>a>Manila Golf
and Country Club, Inc. vs. IAC, supra, at 215; see also National Labor Union vs. Go Soc & Sons, 23
SCRA 431, 436 (1968); George Peter Lines, Inc. vs. Court of Appeals, 134 SCRA 82, 85 (1985); Arguellez
vs. Young, 153 SCRA 690, 699 (1987); ...span>span>p>div>Considering
the foregoing, both the Labor Arbiter and the NLRC therefore erred in relying on the pronouncement of
then Undersecretary Laguesma in the certification proceeding that there was nospan> employer-employee relationship between SSI and
private respondents.p>
_______________
11 Saura vs. Saura, Jr., 313 SCRA 465, 476 (1999).
12 Manila Golf and Country Club, Inc. vs. IAC, supra, at 215; see also National Labor Union vs. Go Soc &
Sons, 23 SCRA 431, 436 (1968); George Peter Lines, Inc. vs. Court of Appeals, 134 SCRA 82, 85 (1985);
Arguellez vs. Young, 153 SCRA 690, 699 (1987); Associated Labor Union vs. Calleja, 179 SCRA 127, 130-
131 (1989); Port Workers Union of the Philippines vs. Undersecretary of Labor and Employment, 207
SCRA 329, 335 (1992).
VOL. 359, JUNE 25, 2001
561
Moreover, the appellate court found that: (1) the so-called subcontractors do not have a license to
engage in subcontracting; (2) the salaries of private respondents are actually paid by SSI and are given to
the subcontractors who in turn give the salaries to the private respondents; (3) it was SSI which hired
the private respondents and placed them under their respective subcontractors; andi> (4) private
respondents use SSI’s tools and equipment in their work.13sup>a>See Decision
of the Court of Appeals, Rollo, pp. 34-36; TSN of the proceedings before the Labor Arbiter, November 9,
1995, Id., at 163-170.span>span>
Based on these findings, the Court of Appeals was correct in declaring that the alleged subcontractors
are in effect “labor-only” contractors and are thus mere agents of petitioner SSI. The last paragraph of
Article 106 of the Labor Code is clear on this point:
There is “labor-only” contracting where the person

supplying workers to an employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and the workers recruited and placed by such
person are performing activites which are directly related to the principal business of such employer. In
such cases, the person or intermediary shall be considered merely as an agent of the employer who shall
be responsible to the workers in the same manner and extent as if the latter were directly employed by
him.p>
The appellate court properly noted that the issue as to whether private respondents were illegally
dismissed, which was resolved in the affirmative by the Labor Arbiter, was not appealed by petitioners.
Such ruling has therefore attained finality. Thus, SSI, as the direct employer of private respondents, is
liable to either reinstate them and pay them backwages or to pay them separation pay. However,
because there is not enough evidence on this matter, there is a need to remand the case to the Labor
Arbiter for further proceedings to determine whether or not there are jobs still available for private
respondents in SSI.
WHEREFORE, the petition is hereby DISMISSED and the decision of

respondent Court of Appeals is hereby AFFIRMED.span>
_______________
13 See Decision of the Court of Appeals, Rollo, pp. 34-36; TSN of the proceedings before the Labor
Arbiter, November 9, 1995, Id., at 163-170.
562
Re: Report on the Judicial Audit Conducted in the RTC, Brs. 87 & 98, Quezon City
SO ORDERED.
Puno, Pardo and Ynares-Santiago, JJ., concur.
Davide, Jr. (C.J.), No part; a party was a former client when I was still in the private practice of law.
Petition dismissed, judgment affirmedi>.span>
Note.—Res judicata applies only where judgment on the merit is finally rendered on the first complaint.
(Cruz vs. Court of Appeals, 309 SCRA 714 [1999])
——o0o—— Sandoval Shipyards, Inc. vs. Pepito, 359 SCRA 555, G.R. No. 143428 June 25, 2001
OTHER KINDS OF RECOGNITION OF EMPLOYEE REPRESENTATIVES
DIRECT CERTIFICATION
584
Central Negros Electric Cooperative, Inc. vs. Sec. of DOLE
G.R. No. 94045. September 13, 1991.*
CENTRAL NEGROS ELECTRIC COOPERATIVE, INC. (CENECO), petitioner, vs. HONORABLE SECRETARY,
DEPARTMENT OF LABOR AND EMPLOYMENT, and CENECO UNION OF RATIONAL EMPLOYEES (CURE),
respondents.
Labor Law; Labor Organization; Collective Bargaining; Petitioner deemed to have submitted the issue
of membership withdrawal from the cooperative to the jurisdiction of the med-arbiter and now
estopped
________________
* SECOND DIVISION.
585
585
from questioning that same jurisdiction which it invoked in its motion to dismiss after obtaining an
adverse ruling thereon.—From a perusal of petitioner’s motion to dismiss filed with the med-arbiter,
it becomes readily apparent that the sole basis for petitioner’s motion is the illegality of the
employees’ membership in respondent union despite the fact that they allegedly are still members of
the cooperative. Petitioner itself adopted the aforesaid argument in seeking the dismissal of the
petition for certification election filed with the medarbiter, and the finding made by the latter was
merely in answer to the arguments advanced by petitioner. Hence, petitioner is deemed to have
submitted the issue of membership withdrawal from the cooperative to the jurisdiction of the med-
arbiter and it is now estopped from questioning that same jurisdiction which it invoked in its motion
to dismiss after obtaining an adverse ruling thereon.
Same; Same; Same; Argument of CENECO that the withdrawal was merely to subvert the ruling of the
Court in the Batangas case is without merit.—The argument of CENECO that the withdrawal was
merely to subvert the ruling of this Court in the BATANGAS case is without merit. The case referred to
merely declared that employees who are at the same time members of the cooperative cannot join
labor unions for purposes of collective bargaining. However, nowhere in said case is it stated that
member-employees are prohibited from withdrawing their membership in the cooperative in order to
join a labor union.
Same; Same; Same; The right to join an organization necessarily includes the equivalent right that to
join the same.—It appears that the Articles of Incorporation of CENECO do not provide any ground for
withdrawal from membership which accordingly gives rise to the presumption that the same may be
done at any time and for whatever reason. In addition, membership in the cooperative is on a
voluntary basis. Hence, withdrawal therefrom cannot be restricted unnecessarily. The right to join an
organization necessarily includes the equivalent right not to join the same.
Same; Same; Same; Constitutional Law; The avowed policy of the state to afford full protection to
labor and to promote the primacy of free collective bargaining mandates that the employees’ right to
form and join unions for the purposes of collective bargaining be accorded the highest
consideration.—The right of the employees to self-organization is a compelling reason why their
withdrawal from the cooperative must be allowed. As pointed out by CURE, the resignation of the
member-employees is an expression of their preference for union
586
586
membership over that of membership in the cooperative. The avowed policy of the State to afford full
protection to labor and to promote the primacy of free collective bargaining mandates that the
employees’ right to form and join unions for purposes of collective bargaining be accorded the highest
consideration.
Same; Same; Same; Where a union has filed a petition for certification election, the mere fact that no
opposition is made does not warrant a direct certification.—We have said that where a union has filed
a petition for certification election, the mere fact that no opposition is made does not warrant a direct
certification.
Same; Same; Same; The most effective way of determining which labor organization can truly
represent the working force is by certification election.—While there may be some factual variances,
the rationale therein is applicable to the present case in the sense that it is not alone sufficient that a
union has the support of the majority. What is equally important is that everyone be given a
democratic space in the bargaining unit concerned. The most effective way of determining which
labor organization can truly represent the working force is by certification election.
SPECIAL CIVIL ACTION for certiorari to review the order of the Secretary of the Department of Labor and
Employment.
Enrique S. Tabino for petitioner.
Edmundo G. Manlapao for private respondent.
REGALADO, J.:
In this special civil action for certiorari, petitioner Central Negros Electric Cooperative, Inc. (CENECO)
seeks to annul the order1 issued by then Acting Secretary of Labor Bienvenido E. Laguesma on June
6,1990, declaring the projected certification election unnecessary and directing petitioner CENECO to
continue recognizing private respondent CENECO Union of Rational Employees (CURE) as the sole and
exclusive bargaining representative of all the rank-and-file employees of petitioner’s
________________
1 Annex A, Petition; Rollo, 20.
587
587
electric cooperative for purposes of collective bargaining.
It appears from the records that on August 15, 1987, CENECO entered into a collective bargaining
agreement with CURE, a labor union representing its rank-and-file employees, providing for a term of
three years retroactive to April 1, 1987 and extending up to March 31, 1990. On December 28,1989,
CURE wrote CENECO proposing that negotiations be conducted for a new collective bargaining
agreement (CBA).
On January 18, 1990, CENECO denied CURE’s request on the ground that, under applicable decisions of
the Supreme Court, employees who at the same time are members of an electric cooperative are not
entitled to form or join a union.2 Prior to the submission of the proposal for CBA renegotiation, CURE
members, in a general assembly held on December 9, 1989, approved Resolution No. 35 whereby it was
agreed that “all union members shall withdraw, aw, retract, or recall the union members’ membership
from Central Negros Electric Cooperative, Inc. in order to avail (of) the full benefits under the existing
Collective Bargaining Agreement entered into by and between CENECO and CURE, and the supposed
benefits that our union may avail (of) under the renewed CBA."3 This was ratified by 259 of the 362
union members. CENECO and the Department of Labor and Employment, Bacolod District, were
furnished copies of this resolution.
However, the withdrawal from membership was denied by CENECO on February 27, 1990 under
Resolution No. 90 “for the reason that the basis of withdrawal is not among the grounds covered by
Board Resolution No. 5023, dated November 22,1989 and that said request is contrary to Board
Resolution No. 5033 dated December 13, 1989, x x x."4
By reason of CENECO’s refusal to renegotiate a new CBA. CURE filed a petition for direct recognition or
for certification election, supported by 282 or 72% of the 388 rank-and-file employees in the bargaining
unit of CENECO.
CENECO filed a motion to dismiss on the ground that there
________________
2 Annex J., id., ibid., 108.
3 Annex 4, Comment of CURE; ibid., 139.

4 Annex I, Petition; ibid., 107.
588
588
are legal constraints to the filing of the certification election, citing the ruling laid down by this Court in
Batangas I Electric Cooperative Labor Union vs. Romeo A Young,5 (BATANGAS case) to the effect that
“employees who at the same time are members of an electric cooperative are not entitled to form or
join unions for purposes of collective bargaining agreement, for certainly an owner cannot bargain with
himself or his coowners.”
Med-Arbiter Felizardo T. Serapio issued an order,6 granting the petition for certification election which,
in effect, was a denial of CENECO’s motion to dismiss, and directing the holding of a certification
election between CURE and No Union/ CENECO appealed to the Department of Labor and Employment
which issued the questioned order modifying the aforestated order of the med-arbiter by directly
certifying CURE as the exclusive bargaining representative of the rank-and-file employees of CURE.
Hence, this petition.
Petitioner CENECO argues that respondent Secretary committed a grave abuse of discretion in not
applying to the present case the doctrine enunciated in the BATANGAS case that employees of an
electric cooperative who at the same time are members of the electric cooperative are prohibited from
forming or joining labor unions for purposes of a collective bargaining agreement. While CENECO
recognizes the employees’ right to self-organization, it avers that this is not absolute. Thus, it opines that
employees of an electric cooperative who at the same time are members thereof are not allowed to
form or join labor unions for purposes of collective bargaining. However, petitioner does not hesitate to
admit that the prohibition does not extend to employees of an electric cooperative who are not
members of the cooperative.
The issue, therefore, actually involves a determination of whether or not the employees of CENECO who
withdrew their membership from the cooperative are entitled to form or join CURE for purposes of the
negotiations for a collective bargain-
________________
5 167 SCRA 136 (1988).
6 Annex F, id.; ibid., 80.
589
589
ing agreement proposed by the latter.
As culled from the records, it is the submission of CENECO that the withdrawal from membership in the
cooperative and, as a consequence, the employees’ acquisition of membership in the union cannot be
allowed for the following reasons:
1. It was made as a subterfuge or to subvert the ruling in the BATANGAS case:
2. To allow the withdrawal of the members of CENECO from the cooperative without justifiable reason
would greatly affect the objectives and goals of petitioner as an electric cooperative;
3. The Secretary of Labor, as well as the Med-Arbiter, has no jurisdiction over the issue of the
withdrawal from membership which is vested in the National Electrification Administration (NEA) which
has direct control and supervision over the operations of electric cooperatives; and
4. Assuming that the Secretary has jurisdiction, CURE failed to exhaust administrative remedies by. not
referring the matter of membership withdrawal to the NEA,
The petition is destitute of merit; certiorari will not lie.
We first rule on the alleged procedural infirmities affecting the instant case. CENECO avers that the
med-arbiter has no jurisdiction to rule on the issue of withdrawal from membership of its employees in
the cooperative which, it claims, is properly vested in the NEA which has control and supervision over all
electric cooperatives.
From a perusal of petitioner’s motion to dismiss filed with the med-arbiter, it becomes readily apparent
that the sole basis for petitioner’s motion is the illegality of the employees’ membership in respondent
union despite the fact that they allegedly are still members of the cooperative. Petitioner itself adopted
the aforesaid argument in seeking the dismissal of the petition for certification election filed with the
med-arbiter, and the finding made by the latter was merely in answer to the arguments advanced by
petitioner. Hence, petitioner is deemed to have submitted the issue of membership withdrawal from
the cooperative to the jurisdiction of the med-arbiter and it is now estopped from questioning that
same jurisdiction which it invoked in its motion to dismiss after obtaining an adverse ruling thereon.
590
590
Under Article 256 of the Labor Code, to have a valid certification election at least a majority of all eligible
voters in the unit must have cast their votes. It is apparent that incidental to the power of the med-
arbiter to hear and decide representation cases is the power to determine who the eligible voters are. In
so doing, it is axiomatic that the med-arbiter should determine the legality of the employees’
membership in the union. In the case at bar, it obviously becomes necessary to consider first the
propriety of the employees’ membership withdrawal from the cooperative before a certification
election can be had.
Lastly, it is petitioner herein who is actually questioning the propriety of the withdrawal of its members
from the cooperative. Petitioner could have brought the matter before the NEA if it wanted to and if
such remedy had really been available, and there is nothing to prevent it from doing so. It would be
absurd to fault the employees for the neglect or laxity of petitioner in protecting its own interests.
The argument of CENECO that the withdrawal was merely to subvert the ruling of this Court in the
BATANGAS case is without merit. The case referred to merely declared that employees who are at the
same time members of the cooperative cannot join labor unions for purposes of collective bargaining.
However, nowhere in said case is it stated that member-em-ployees are prohibited from withdrawing
their membership in. the cooperative in order to join a labor union.
As discussed by the Solicitor General, Article I, Section 9 of the Articles of Incorporation and By-Laws of
CENECO provides that “any member may withdraw from membership upon compliance with such
uniform terms and conditions as the Board may prescribe.” The same section provides that upon
withdrawal, the member is merely required to surrender his membership certificate and he is to be
refunded his membership fee less any obligation that he has with the cooperative. There appears to be
no other condition or requirement imposed upon a withdrawing member. Hence, there is no just cause
for petitioner’s denial of the withdrawal from membership of its employees who are also members of
the union.7
________________
7 Rollo, 167–170.
591
591
The alleged board resolutions relied upon by petitioner in denying the withdrawal of the members
concerned were never presented nor their contents disclosed either before the med-arbiter or the
Secretary of Labor if only to prove the ratiocination for said denial. Furthermore, CENECO never averred
noncompliance with the terms and conditions for withdrawal, if any. It appears that the Articles of
Incorporation of CENECO do not provide any ground for withdrawal from membership which
accordingly gives rise to the presumption that the same may be done at any time and for whatever
reason. In addition, membership in the cooperative is on a voluntary basis. Hence, withdrawal
therefrom cannot be restricted unnecessarily. The right to join an organization necessarily includes the
equivalent right not to join the same.
The right of the employees to self-organization is a compelling reason why their withdrawal from the
cooperative must be allowed. As pointed out by CURE, the resignation of the member-employees is an
expression of their preference for union membership over that of membership in the cooperative. The
avowed policy of the State to afford full protection to labor and to promote the primacy of free
collective bargaining mandates that the employees’ right to form and join unions for purposes of
collective bargaining be accorded the highest consideration.
Membership in an electric cooperative which merely vests in the member a right to vote during the
annual meeting becomes too trivial and insubstantial vis-a-vis the primordial and more important
constitutional right of an employee to join a union of his choice. Besides, the 390 employees of CENECO,
some of whom have never been members of the cooperative, represent a very small percentage of the
cooperative’s total membership of 44,000. It is inconceivable how the withdrawal of a negligible number
of members could adversely affect the business concerns and operations of CENECO.
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 March 4, 1987, the direct certification originally
allowed under Article 257 of the Labor Code has apparently been discontinued as a method of selecting
the exclusive bargaining agent of the workers. This amendment affirms the superiority of the
certification election over the
592
592
direct certification ;which is no longer available now under the change in said provision.8
We have said that where a union has filed a petition for certification election, the mere fact that no
opposition is made does not warrant a direct certification.9 In said case which has similar features to
that at bar, wherein the respondent Minister directly certified the union, we held that:
“x x x As pointed out by petitioner in its petition, what the respondent Minister achieved in rendering
the assailed orders was to make a mockery of the procedure provided under the law for representation
cases because: x x x (c) By directly certifying a Union without sufficient proof of majority representation,
he has in effect arrogated unto himself the right, vested naturally in the employees to choose their
collective bargaining representative. (d) He has in effect imposed upon the petitioner the obligation to
negotiate with a union whose majority representation is under serious question; This is highly irregular
because while the Union enjoys the blessing of the Minister, it does not enjoy the blessing of the
employees. Petitioner is therefore under threat of being held liable for refusing to negotiate with a
union whose right to bargaining status has not been legally established.”
While there may be some factual variances, the rationale therein is applicable to the present case in the
sense that it is not alone sufficient that a union has the support of the majority. What is equally
important is that everyone be given a democratic space in the bargaining unit concerned. The most
effective way of determining which labor organization can truly represent the working force is by
certification election.10
WHEREFORE, the questioned order for the direct certification of respondent CURE as the bargaining
representative of the employees of petitioner CENECO is hereby ANNULLED and SET ASIDE. The med-
arbiter is hereby ordered to conduct a certification election among the rank-and-file employees of
________________
8 National Association of Free Trade Unions (NAFTU-TUCP) vs. Bureau of Labor Relations (BLR), et al.,
164 SCRA 12 (1988),
9 Colgate Palmolive Philippines, Inc. vs. Ople, et al., 163 SCRA 323 (1988).
10 Associated Labor Unions (ALU) vs. Ferrer-Calleja, etc., et al., 179 SCRA (1989).
593
593
Davao City Water District vs. Civil Service Commission
CENECO with CURE and No Union as the choices therein.
SO ORDERED.
Melencio-Herrera (Chairman), Paras and Padilla, JJ., concur.
Sarmiento, J., On leave.
Order annulled and set aside.
Note.—Employees of a cooperative who are members-co-owners have no right to collective bargaining

(San Jose Electric Service Cooperative, Inc. (SAJELCO) vs. Ministry of Labor and Employment, 173 SCRA
697).
——o0o—— Central Negros Electric Cooperative, Inc. vs. Sec. of DOLE, 201 SCRA 584, G.R. No. 94045
September 13, 1991
VOLUNTARY RECOGNITION
OL. 182, FEBRUARY 23, 1990
561
Ilaw at Buklod ng Manggagawa vs. Ferrer-Calleja
G.R. No. 84685. February 23, 1990.*
ILAW AT BUKLOD NG MANGGAGAWA (IBM) LOCAL NO. 56, petitioner, vs. HON. PURA FERRER-
CALLEJA, in her capacity as Director, BUREAU OF LABOR RELATIONS, and SAN MIGUEL CORPORATION,
respondents.
Labor Law; The employer has no authority to certify a local union as exclusive collective bargaining
representative.—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 certification election if there is no
certified bargaining agent for the workers in the establishment. If a union asks the employer to
voluntarily recognize it as the bargaining agent of the employees, as the petitioner did, it in effect asks
the employer to certify it as the bargaining representative of the employees—a certification which the
employer has no authority to give, for it is the employees’ prerogative (not the em-ployer’s) to
determine whether they want a union to represent them, and, if so, which one it should be.
SPECIAL CIVIL ACTION for certiorari to review the orders of the Bureau of Labor Relations.
E.N.A. Cruz & Associates for petitioner.
Siguion Reyna, Montecillo & Ongsiako for private respondent.
GRIÑO-AQUINO, J.:
This is a special civil action of certiorari with a prayer for the
_______________
* FIRST DIVISION.
562
562

issuance of a writ of preliminary injunction to annul the orders dated February 22, 1988 and June 23,
1988, of the Med-Arbiter and the Bureau of Labor Relations (BLR), respectively, for the holding of a
certification election in the Calasiao Beer Region of the San Miguel Corporation.
On September 7, 1987, petitioner Union, formerly registered with the Labor Organization Division of the
Bureau of Labor Relations, as the San Miguel Corporation Sales Force Union Calasiao Beer Region-IBM
Local No. 56, a local union of Ilaw at Buklod ng Manggagawa (IBM), which is a national union, requested
San Miguel Corporation for voluntary recognition as the sole and exclusive bargaining representative of
all the covered employees which consist of the monthly-and daily-paid employees of the Calasiao Sales
Office, now Dagupan Sales Office. As the territorial coverage of the Calasiao Beer Region embraces the
regional sales office and the six (6) sales offices in Calasiao, Carmen, Alaminos, Tarlac, Cabanatuan and
San Isidro, SMC denied the union’s request and instead, suggested that it avail of a certification election.
So, on November 27, 1987, SMC, through its North-Central Luzon Sales Operations Manager, filed a
petition for certification election among the sales personnel of the Region only, excluding the daily-paid
and monthly-paid employees, but including the sales offices of the entire beer region.
The Union filed a motion to dismiss alleging that the petition for certification election was premature as
it did not ask SMC to bargain collectively with it. It cited Article 258 of the Labor Code which provides:
“ART. 258. When an employer may file petition.—When requested to bargain collectively, an employer
in the unit, the Bureau shall, after hearing, order a certification election.
“All certification cases shall be decided within twenty (20) working days.
“The Bureau shall conduct a certification election within twenty (20) days in accordance with the rules
and regulations prescribed by the Secretary of Labor.”
On February 22, 1988, the Med-Arbiter issued an order, the
563
563
dispositive portion of which reads as follows:
“IN VIEW OF ALL THE FOREGOING, let therefore, a certification election be conducted among the sales
force personnel of the SMC-North Central Luzon Beer Region covering the following sales offices:
Dagupan City, Carmen, Alaminos, Tarlac, Cabanatuan and San Isidro, within twenty (20) days from
receipt hereof with the following choices:
“1. San Miguel Corporation Sales Force Labor Union Cala-siao Beer Region—Ilaw at Bukod ng
Manggagawa (IBM) Local No. 56;
“2. No union.
Parties are hereby directed to attend a pre-election conference which shall be called by this Office one
(1) week before the actual conduct of said election, with corresponding notices to be sent to them.” (p.
6, Rollo.)
Petitioner appealed the order to the Bureau of Labor Relations (BLR) which denied the appeal on June
23, 1988 for lack of merit. Hence, this petition for certiorari alleging that the Director of the BLR gravely
abused her discretion in ordering the holding of a certification election. Parenthetically, the certification
election was actually conducted on September 19, 1988 resulting in “NO UNION” as the winner.
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 certification election if there is no certified bargaining
agent for the workers in the establishment. If a union asks the employer to voluntarily recognize it as
the bargaining agent of the employees, as the petitioner did, it in effect asks the employer to certify it as
the bargaining representative of the employees—a certification which the employer has no authority to
give, for it is the employees’ prerogative (not the employer’s) to determine whether they want a union
to represent them, and, if so, which one it should be.
The petitioner’s request for voluntary recognition as the bargaining representative of the employees
was in effect a request to bargain collectively, or the first step in that direction, hence, the employer’s
request for a certification election was in accordance with Article 258 of the Labor Code, and the public
respondents did not abuse their discretion in granting the request.
564
564
Lim vs. Court of Appeals
WHEREFORE, the petition for certiorari is dismissed for lack of merit. Costs against the petitioner.
SO ORDERED.
Narvasa, Gancayco and Medialdea, JJ., concur.
Petition dismissed.
Notes.—The Labor Code grants original and exclusive jurisdiction over the conciliation and mediation of
disputes, grievances or problems in the regional offices of DOLE. (Montoya vs. Escayo, 171 SCRA 442.)
In the case of Democratic Labor Association vs. Cebu Steve-doring Co, Inc., the Court laid down the test
of proper grouping which is community and mutuality of interest. (Belyca Corp. vs. Ferrer-Calleja, 168
SCRA 184.)
——o0o—— Ilaw at Buklod ng Manggagawa vs. Ferrer-Calleja, 182 SCRA 561, G.R. No. 84685 February
23, 1990
CONSENT ELECTION
VOL. 237, OCTOBER 19, 1994
647
Algire vs. De Mesa
G.R. No. 97622. October 19, 1994.*
CATALINO ALGIRE and OTHER OFFICERS OF UNIVERSAL ROBINA TEXTILE MONTHLY SALARIED
EMPLOYEES UNION (URTMSEU), petitioners, vs. REGALADO DE MESA, et al., and HON. SECRETARY OF
LABOR, respondents.
Labor Relations; Consent Election; Consent election is an agreed one, the purpose being merely to
determine the issue of majority representation of all the workers in the appropriate collective
bargaining unit.—It is unmistakable that the election held on November 15, 1990 was a consent
election and not a certification election. It was an agreed
_______________
* THIRD DIVISION.
648
648
Algire vs. De Mesa
one, the purpose being merely to determine the issue of majority representation of all the workers in
the 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.
Same; Certification Election; The choice by the majority of employees of the union officers that should
best represent them in the collective bargaining negotiations should be achieved through the
democratic process of an election.—In any event, the choice by the majority of employees of the
union officers that should best represent them in the forthcoming collective bargaining negotiations
should be achieved through the democratic process of an election, the proper forum where the true
will of the majority may not be circumvented but clearly defined. The workers must be allowed to
freely express their choice once and for all in a determination where everything is open to their sound
judgment and the possibility of fraud and misrepresentation is minimized, if not eliminated, without
any unnecessary delay and/or maneuvering.
PETITION for certiorari to nullify and set aside a decision of the Secretary of Labor.
C.A. Montano Law Office for petitioner.
Cabio and Ravanes Law Offices and Jaime D. Lauron for private respondents.
ROMERO, J.:
This petition for certiorari seeks to nullify and set aside the decision dated January 31, 1991 of the
Secretary of Labor which reversed on appeal the Order dated December 20, 1990 issued by Med-arbiter
Rolando S. de la Cruz declaring petitioners as the duly-elected officers of the Universal Robina Textile
Monthly Salaried Employees Union (URTMSEU) as well as the Order dated March 5, 1991 denying
petitioner Catalino Algire’s motion for reconsideration.
The case arose out of the election of the rightful officers to represent the union in the Collective
Bargaining Agreement (CBA) with the management of Universal Robina Textile at its plant in Km. 50, Bo.
San Cristobal, Calamba, Laguna.
649
VOL. 237, OCTOBER 19, 1994
649
Algire vs. De Mesa
Universal Robina Textile Monthly Salaried Employees Union, (URTMSEU), through private respondent
Regalado de Mesa, filed on September 4, 1990 a petition for the holding of an election of union officers
with the Arbitration Branch of the Department of Labor and Employment (DOLE). Acting thereon,
DOLE’s med-arbiter Rolando S. de la Cruz issued an Order dated October 19, 1990 directing that such an
election be held.
In the pre-election conference, it was agreed that the election by secret ballot be conducted on
November 15, 1990 between petitioners (Catalino Algire, et al.) and private respondents (Regalado de
Mesa, et al.) under the supervision of DOLE through its duly appointed representation officer.
The official ballot contained the following pertinent instructions:
“Nais kong pakatawan sa grupo ni:
1. Mark check (/) or cross (x) inside the box specified above who among the two contending parties you
desire to be represented for the purpose of collective bargaining.
2. This is a secret ballot. Don’t write any other markings.”1
The results of the election were as follows:

Lino Algire group
133
Regalado de Mesa group
133
Spoiled
_____
Total votes cast
272
On November 19, 1990, Catalino Algire filed a Petition and/or Motion (RO 400-9009-AU-002), which
DOLE’s Med-Arbitration unit treated as a protest, to the effect that one of the ballots wherein one voter
placed two checks inside the box opposite the phrase “Lino Algire and his officers,” hereinafter referred
to as
_______________
1 Annex “A,” Rollo, p. 25.
650
650
Algire vs. De Mesa
the “questioned ballot,” should not have been declared spoiled, as the same was a valid vote in their
favor. The group argued that the two checks made even clearer the intention of the voter to exercise his
political franchise in favor of Algire’s group.
During the scheduled hearing thereof, both parties agreed to open the envelope containing the spoiled
ballots and it was found out that, indeed, one ballot contained two (2) checks in the box opposite
petitioner Algire’s name and his officers.
On December 20, 1990, med-arbiter de la Cruz issued an Order declaring the questioned ballot valid,
thereby counting the same in Algire’s favor and accordingly certified petitioner’s group as the union’s
elected officers.2
Regalado de Mesa, et al. appealed from the decision of the medarbiter to the Secretary of Labor in Case
No. OS-A-1-37-91 (RO 400-9009-AU-002). On January 31, 1991, the latter’s office granted the appeal and
reversed the aforesaid Order. In its stead, it entered a new one ordering “the calling of another election
of officers of the Universal Robina Textile Monthly Salaried Employees Union (URTMSEU), with the same
choices as in the election of 15 November, 1990, after the usual pre-election conference.”3
Director Maximo B. Lim of the Industrial Relations Division, Regional Office No. IV of the DOLE set the
hearing for another pre-election conference on March 22, 1991, reset to April 2, 1991, and finally reset
to April 5, 1991.
Catalino Algire’s group filed a motion for reconsideration of the Order. It was denied for lack of merit
and the decision sought to be reconsidered was sustained.
Algire, et al. filed this petition on the following issues:
“(1) the Secretary of Labor erred in applying Sections 1 and 8 (6), Rule VI, Book V of the Rules and
Regulations implementing the Labor Code to the herein case, considering that the case is an intra-union
activity, which act constitutes a grave abuse in the exercise of authority amounting to lack of
jurisdiction.
(2) the assailed decision and order are not supported by law and evidence.”
_______________
2 Rollo, pp. 26-31.
3 Rollo, pp. 32-33.
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VOL. 237, OCTOBER 19, 1994
651
Algire vs. De Mesa
with an ex-parte motion for issuance of a temporary restraining order, alleging that the assailed decision
of the office of the Secretary of Labor as public respondent is by nature immediately executory and the
holding of an election at any time after April 5, 1991, would render the petition moot and academic
unless restrained by this Court.
On April 5, 1991, we issued a temporary restraining order enjoining the holding of another election of
union officers pursuant to the January 31, 1991 decision.4
There is no merit in the petition.
The contention of the petitioner is that a representation officer (referring to a person duly authorized to
conduct and supervise certification elections in accordance with Rule VI of the Implementing Rules and
Regulations of the Labor Code) can validly rule only on on-the-spot questions arising from the conduct of
the elections, but the determination of the validity of the questioned ballot is not within his
competence. Therefore, any ruling made by the representation officer concerning the validity of the
ballot is deemed an absolute nullity because—such is the allegation—it was done without or in excess of
his functions amounting to lack of jurisdiction.
To resolve the issue of union representation at the Universal Robina Textile plant, what was agreed to
be held at the company’s premises and which became the root 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 election 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 the 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.5
The ruling of DOLE’s representative in that election that the questioned ballot is spoiled is not based on
any legal provision or rule justifying or requiring such action by such officer but simply in pursuance of
the intent of the parties, expressed in the written
_______________
4 Rollo, p. 41.
5 Warren Manufacturing Workers Union v. Bureau of Labor Relations, G.R. No. 76185, March 30, 1988,
159 SCRA 387.
652
652
Algire vs. De Mesa
instructions contained in the ballot, which is to prohibit unauthorized markings thereon other than a
check or a cross, obviously intended to identify the votes in order to preserve the sanctity of the ballot,
which is in fact the objective of the contending parties.
If indeed petitioner’s group had any opposition to the representation officer’s ruling that the questioned
ballot was spoiled, it should have done so seasonably during the canvass of votes. Its failure or inaction
to assail such ballot’s validity shall be deemed a waiver of any defect or irregularity arising from said
election. Moreover, petitioners even question at this stage the clear instruction to mark a check or cross
opposite the name of the candidate’s group, arguing that such instruction was not clear, as two checks
“may be interpreted that a voter may vote for Lino Algire but not with (sic) his officers or vice-versa,”6
notwithstanding the fact that a pre-election conference had already been held where no such question
was raised.
In any event, the choice by the majority of employees of the union officers that should best represent
them in the forthcoming collective bargaining negotiations should be achieved through the democratic
process of an election, the proper forum where the true will of the majority may not be circumvented
but clearly defined. The workers must be allowed to freely express their choice once and for all in a
determination where everything is open to their sound judgment and the possibility of fraud and
misrepresentation is minimized, if not eliminated, without any unnecessary delay and/or maneuvering.
WHEREFORE, the petition is DENIED and the challenged decision is hereby AFFIRMED.
SO ORDERED.
Bidin (Acting Chairman), Melo and Vitug, JJ., concur.
Feliciano, J., On leave.
Petition denied, judgment affirmed.
Note.—Consent election is a separate, distinct process, and has nothing to do with the import and effect
of a certification
_______________
6 Rollo, p. 10 of Memorandum on p. 107.
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VOL. 237, OCTOBER 19, 1994
653
People vs. Flores
election. Neither does it shorten the terms of an existing collective bargaining agreement nor entitle the
participants therewith to immediately re-negotiate a new agreement, although it does not preclude
workers from exercising their right to choose their sole and exclusive bargaining representative within
the freedom period. (Warren Manufacturing Workers Union vs. Bureau of Labor Relations, 159 SCRA
387 [1988])
——o0o—— Algire vs. De Mesa, 237 SCRA 647, G.R. No. 97622 October 19, 1994
RUN OFF ELECTION
694
Confederation of Citizens Labor Unions vs. Noriel
No. L-56902. September 21, 1982.*
CONFEDERATION OF CITIZENS LABOR UNIONS (CCLU) and REDSON EMPLOYEES AND LABORERS
ASSOCIATION, petitioners, vs. Hon. CARMELO C. NORIEL, Officer-in-Charge of the Bureau of Labor
Relations, MARGARITA C. ENRIQUEZ, Election Supervisor of the Ministry of Labor and Employment,
ASSOCIATED LABOR UNIONS (ALU) and REDSON TEXTILE MANUFACTURING CORPORATION,
respondents.
Labor Law; Circumstances showing irregularities in the holding of the certification election sufficient
to invalidate the same.—We hold that the certification election is invalid because of certain
irregularities such as that (1) the workers on the night shift (ten p.m. to six a.m.) and some of those in
the afternoon shift were not able to vote, so much so that out of 1,010 voters only 692 voted and
about 318 failed to vote (p. 88, Rollo); (2) the secrecy of the ballot was not safeguarded; (3) the
election supervisors were remiss in their duties and were apparently “intimidated” by a union
representative and (4) the participating unions were overzealous in wooing the employees to vote in
their favor by resorting to such tactics as giving free tricycle rides and T-shirts.
Same; Purpose of a certification election.—The purpose of a certification election is to give employees

“true representation in their collective bargaining with an employer.” (51 C.J.S. 969) That purpose was
not achieved in the run-off election because many employees or union members were not able to
vote and the employer, through apathy or deliberate intent, did not render assistance in the holding
of the election. It should be noted that ALU’S written protest (later withdrawn) was based on the
same grounds invoked by CCLU in its protest. That fact alone should have alerted to disregard the
technicality that CCLU’S protest was not filed on time.
_______________
* SECOND DIVISION.
695
695
SPECIAL CIVIL ACTIONS of certiorari and prohibition to review the resolutions of the Officer-In-Charge of
the Bureau of Labor Relations.
Oliver B. Gesmundo for petitioners.
Solicitor General Estelito P. Mendoza, Asst. Solicitor General Ramon A. Barcelona and Solicitor Dennis
M. Taningco for respondents.
AQUINO, J.:
These special civil actions of certiorari and prohibition deal with the alleged irregular holding of a
certification election.
Petitioner Confederation of Labor Unions (CCLU) was one of the four unions wanting to be certified as
the collective bargaining representative of the employees in the Redson Textile Manufacturing
Corporation with place of business at Brixton Hill Street, Capitolyo, Pasig, Metro Manila. Its co-
petitioner, the Redson Employees and Laborers Association, is a CCLU local in the said corporation.
The other unions aspiring to become the collective bargaining representative were the National Union
of Garments Textile and General Workers of the Philippines (GATCORD), the National Trade Union
(NATU) and the Associated Labor Unions (ALU).
On August 7, 1980, a certification election was held in the premises of the corporation from eight-
twenty in the morning to five-thirty in the afternoon. Out of the 831 votes cast, CCLU garnered 356
votes; ALU, 338 votes; NATU, 82 votes and GATCORD, 42 votes. Eight votes were spoiled and five votes
were challenged or segregated.
As no union obtained a majority vote, CCLU and ALU, which had the two largest number of votes, agreed
in a pre-election conference on September 2, 1980 that a run-off election would be held on November
6, 1980 from six o’clock in the morning to six o’clock in the evening. CCLU requested that the
certification election be conducted for two days but ALU objected to that request.
696
696
On November 6, 1980, Margarita C. Enriquez, Reynaldo F. de Luna and one Francisco, three election
supervisors from the Ministry of Labor and Employment, arrived at around seven o’clock in the morning
near the Redson Textile compound but they were not allowed by the security guard to enter the
company premises in spite of the heavy rain. So, after consulting through the phone with their chief, a
certain Attorney Padilla, the said election supervisors decided to hold the certification election “outside
the premises of the company in a small store outside of the annex building” (Annex C, Rollo, p. 27). They
used as ballot box “an improvised carton box.” The union representatives did not object to the
improvised polling place and ballot box.
Voting started at eleven o’clock. During the election and just before it was closed at six-thirty in the
evening, the ALU representative, Sebastian P. Taneo, executed a written protest or manifestation,
alleging that the management of Redson Textile did not allow the run-off election to be held within its
premises; that the company prevented fifty percent of the workers from voting by not allowing them to
get out of the company premises and inducing them to work overtime; that its security guards
“manhandled” the ALU vice-president and that their “active intervention” caused “chaos and confusion”
for around thirty minutes; that the company refused to furnish election paraphernalia like the polling
place and the ballot box and that the election supervisors declared the election closed in spite of ALU’s
objection.
Taneo prayed that the votes should not be counted, that another day be scheduled for the continuation
of the election and that the company be ordered to allow its workers to vote (Rollo, pp. 29-35).
At around seven-thirty in the evening, the votes cast were canvassed. Of the 692 votes cast, ALU got 366
votes as against CCLU’s 313 votes, or a margin of 53 votes. There were 1,010 voters. Because ALU won,
its representative, Taneo, withdrew his protest or manifestation by writing on the minutes of the
proceeding that his protest or manifestation was withdrawn “before the close of the proceedings”. On
the
697
697
other hand, the CCLU representatives refused to sign the minutes of the election.
On the following day, November 7, CCLU through its representative, Juan L. Fresnoza, filed with the
Bureau of Labor Relations a protest wherein he prayed that the November 6 certification election as
well as the “continuation of the election” on November 7 be annulled.
Fresnoza alleged that the previous day’s certification election was irregular and disorderly because (a)
no booths were provided for by the company; (b) the election started much later than the hour agreed
upon by the parties, and (c) ALU distributed white T-shirts printed with “ALU TAYO”, gave free tricycle
rides to ALU voters and hired around fifteen husky men and around twenty-five women who “forced”
voters to vote for ALU.
According to Fresnoza, when he and Oscar Sanchez, the acting president of Redson Employees and
Laborers Association (RELA-CCLU), protested against those activities before election supervisor
Margarita C. Enriquez, the latter allegedly retorted, “Wala akong magagawa, magagalit na naman si Mr.
Taneo” (Rollo, pp. 36-37).
On November 10, 1980, Fresnoza and Sanchez filed with the Bureau of Labor Relations a joint affidavit
attesting to what transpired during the certification election as alleged in the aforesaid protest and
added therein that when they protested before the election supervisors, the latter told them to “place
their protest in writing so that they (supervisors) could consolidate the protests in their election report”
(Rollo, pp. 38-39).
On February 19, 1981, CCLU informed the Bureau of Labor Relations that the election was conducted
without regard to the provisions of section 6, Rule VI, Book V of the Rules and Regulations Implementing
the Labor Code.
Carmelo C. Noriel. Officer-in-Charge of the Bureau of Labor Relations, in his resolution of February 26,
1981, dismissed CCLU’s protest for lack of merit. He observed that CCLU failed to submit the pleadings
and evidences required in the hearing on January 19, 1981 and that CCLU failed to file a protest either
“before or during the election proceeding” and,
698
698
therefore, pursuant to section 3, Rule VI, Book V of the aforementioned rules, CCLU is deemed to have
waived its right to protest.
Noriel in his resolution of March 26, 1981, denying CCLU’s motion for reconsideration, certified ALU as
the exclusive bargaining representative of the employees in Redson Textile Manufacturing Corporation.
On June 6, 1981 CCLU and RELA-CCLU filed the instant petition for certiorari and prohibition to annul the
certification election. They complained that the certification election was conducted in violation of the
following provisions of Rule VI, Book V of the Rules and Regulations Implementing the Labor Code:
“SEC. 6. Duties of representation officer.—Before the actual voting commences the representation
officer shall inspect the polling place, the ballot boxes, and the polling booths to insure secrecy of
balloting. The parties shall be given opportunity to witness the inspection proceedings. After the
examination of the ballot box, the representation officer shall lock it with three keys one of which he
shall keep and the rest forthwith given one each to the employer’s representative and the
representative of the labor organization. If more than one union is involved, the holder of the third shall
be determined by drawing of lots. The key shall remain in the possession of the representation officer
and the parties during the entire proceedings and thereafter until all the controversies concerning the
conduct of the election shall have been definitely resolved.”
The Solicitor General in his comment contends that the certification election should be upheld because
CCLU, by not filing a protest with the election supervisor before the close of the election proceeding,
waived its right to protest (Sec. 3, Rule VI, Book V of Implementing Rules and Regulations).
We hold that the certification election is invalid because of certain irregularities such as that (1) the
workers on the night shift (ten p.m. to six a.m.) and some of those in the afternoon shift were not able
to vote, so much so that out of 1,010 voters only 692 voted and about 318 failed to vote (p. 88, Rollo);
(2) the secrecy of the ballot was not safeguarded; (3) the election supervisors were remiss in their duties
and were apparently
699
699
“intimidated” by a union representative and (4) the participating unions were overzealous in wooing the
employees to vote in their favor by resorting to such tactics as giving free tricycle rides and T-shirts.
The purpose of a certification election is to give the employees “true representation in their collective
bargaining with an employer” (51 C.J.S. 969). That purpose was not achieved in the run-off election
because many employees or union members were not, able to vote and the employer, through apathy
or deliberate intent, did not render assistance in the holding of the election.
It should be noted that ALU’s written protest (later withdrawn) was based on the same grounds invoked
by CCLU in its protest. That fact alone should have alerted Noriel to disregard the technicality that
CCLU’s protest was not filed on time.
WHEREFORE, the resolutions of the Officer-in-Charge of the Bureau of Labor Relations dated February
26 and March 19, 1981 are hereby set aside. Another run-off certification election should be conducted
inside the premises of Redson Textile Manufacturing Corporation. The management is ordered to allow
all its employees to participate in the certification election and to assist in the holding of an orderly
election. The election supervisors or representation officers are also enjoined to fulfill their duties under
the Labor Code and the rules and regulations implementing the same.
SO ORDERED.
Barredo (Chairman), Concepcion, Jr., Abad Santos and De Castro, JJ., concur.
Guerrero and Escolin, JJ., did not take part.
Resolutions set aside.
Notes.—Workers should be given the opportunity to participate in a certification election.

(Confederation of Citizens Labor Union vs. Noriel, 98 SCRA 474.)
700
700
Arevalo vs. Quilatan
Holding of certification elections is a clear statutory policy that should not be circumvented. (Associated
Trade Unions-ATU vs. Noriel 89 SCRA 264.)
Certification election may be ordered where a union’s right to continue as union representative is
seriously being assailed. (National Organization of Trade Union vs. Secretary of Labor, 90 SCRA 462.)
——o0o—— Confederation of Citizens Labor Unions vs. Noriel, 116 SCRA 694, No. L-56902 September
21, 1982
BARS TO CERTIFICATION ELECTION
18
National Congress of Unions in the Sugar Industry of the Philippines vs. Trajano
G.R. No. 67485. April 10, 1992.*
NATIONAL CONGRESS OF UNIONS IN THE SUGAR INDUSTRY OF THE PHILIPPINES (NACUSIP)-TUCP,

petitioner, vs. DIR. CRESENCIANO B. TRAJANO, BUREAU OF LABOR RELATIONS, MINISTRY OF LABOR
AND EMPLOYMENT, MANILA, FEDERATION OF UNIONS OF RIZAL (FUR)-TUCP AND CALINOG REFINERY
CORPORATION (NASUREFCO), respondents.
Labor Law; Labor Unions; Certification Election; A representation question may not be entertained if a
bargaining deadlock to which an incumbent or certified bargaining agent is a party had been
submitted to conciliation or arbitration before filing of a petition for certification election.—The clear
mandate of the aforequoted section is that a petition for certification election may be filed at any
time, in the absence of a collective bargaining agreement. Otherwise put, the rule prohibits the filing
of a petition for certification election in the following cases: (1) during the existence of a collective
bargaining agreement except within the freedom period; (2) within one (1) year from the date of
issuance of declaration of a final certification election result; or (3) during the existence of a
bargaining deadlock to which an incumbent or certified bargaining agent is a party and which had
been submitted to conciliation or arbitration or had become the subject of a valid notice of strike or
lockout. 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 strike or lockout. The principal purpose is to ensure stability in
the relationship of the workers and the management.
Courts; Jurisdictions; Certiorari; The writ of certiorari issues for the correction of errors of jurisdiction
only on grave abuse of discretion amounting to lack or excess of jurisdiction.—A director of the
Bureau of Labor Relations, by the nature of his functions, acts in a quasi-judicial capacity. We find no
reason why his decision should be beyond this Court’s review. Administrative officials, like the
director of the Bureau of Labor Relations are presumed to act in accordance with law
_____________
* FIRST DIVISION.
19
VOL. 208, APRIL 10, 1992
19
but this Court will not hesitate to pass upon their work where there is a showing of abuse of authority
or discretion in their official acts or when their decisions or orders are tainted with unfairness or
arbitrariness. Noteworthy is the fact that a certification was issued by Executive Labor Arbiter
Celerino Grecia II on October 21, 1982 certifying that the petition for deadlock in RAB Case No. VI-
0220-82 was forwarded to the Executive Labor Arbiter for compulsory arbitration (see Rollo, p. 19).
The respondent Director erred in finding that the order issued by the Med-Arbiter dismissing the
petition for certification election was irregular and was merely based on information.
Zoilo V. Dela Cruz, Jr., Beethoven R. Buenaventura and Ruben B. Garcia for petitioner.
Gualberto D. Balla for private respondent Federation of Unions of Rizal.
MEDIALDEA, J.:
This petition for certiorari seeks to annul and set aside the decision rendered by the respondent Director
Cresenciano B. Trajano of the Bureau of Labor Relations, Ministry of Labor and Employment, dated
November 18, 1983 affirming the order of Med-Arbiter Demetrio Correa dated May 2, 1983 giving due
course to the petition for certification election filed by private respondent Federation of Unions of Rizal
(FUR)-TUCP; and the order dated March 21, 1984 denying the motion for reconsideration for lack of
merit.
The antecedent facts are as follows:
Petitioner National Congress of Unions in the Sugar Industry of the Philippines (NACUSIP)-TUCP is the
certified exclusive bargaining representative of the rank and file workers of Calinog Refinery
Corporation. Private respondent Federation of Unions of Rizal (FUR)-TUCP is a labor organization duly
registered with the Department of Labor and Employment while private respondent Calinog Refineries
Employees Union (CREU)-NACUSIP is the certified exclusive bargaining representative of the rank and
file workers of the private respondent
20
20
Calinog Refinery Corporation by virtue of the certification election held on March 30, 1981.
On June 21, 1982, petitioner union filed a petition for deadlock in collective bargaining with the Ministry
of Labor and Employment (now Department of Labor and Employment). In order to obviate friction and
tension, the parties agreed to submit the petition for deadlock to compulsory arbitration on July 14,
1982 and was docketed as RAB Case No. VI-0220-82.
On July 21, 1982, private respondent FUR-TUCP filed with the Regional Office No. VI, MOLE (now DOLE),
Iloilo City a petition for certification election among the rank and file employees of private respondent
company, alleging that: (1) about forty-five percent (45%) of private respondent company’s employees
had disaffiliated from petitioner union and joined private respondent union; (2) no election had been
held for the past twelve (12) months; and (3) while petitioner union had been certified as the sole
collective bargaining agent, for over a year it failed to conclude a collective bargaining agreement with
private respondent company. Petitioner union filed a motion to intervene in the petition for certification
election filed by private respondent union.
By order dated July 23, 1982, the Acting Med-Arbiter Pacifico V. Militante dismissed the petition for
certification election for lack of merit since the petition is barred by a pending bargaining deadlock.
On August 25, 1982, private respondent union filed an appeal to the Bureau of Labor Relations, Manila.
The Bureau of Labor Relations through respondent Director Cresenciano B. Trajano rendered a decision
on September 30, 1982 setting aside the order of the Acting Med-Arbiter and remanding the case to
Regional Office VI, Iloilo City for hearing and reception of evidence.
On May 2, 1983, Honorable Med-Arbiter Demetrio Correa issued an order in LRD Case No. 4293 giving
due course to the petition of private respondent FUR-TUCP and ordering that an election be held within
20 days from receipt of the order.
From the order of Med-Arbiter Correa, petitioner interposed an appeal to the Bureau of Labor Relations.
During the pendency of the appeal or on September 10, 1983,
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VOL. 208, APRIL 10, 1992

21
a collective bargaining agreement was entered and executed by the management of the National Sugar
Refineries Co., Inc. and petitioner union and was subsequently ratified by a majority of the rank and file
employees. On the basis of the concluded CBA, the Honorable Executive Labor Arbiter Celerino Grecia II
issued an award dated September 12, 1983 adopting the submitted agreement as the CBA between the
parties.
On November 18, 1983, respondent Director Trajano rendered a decision affirming with qualification
the order of MedArbiter Correa dated May 2, 1983, the pertinent portions of which provide as follows:
“It appears that the Calinog Refinery Employees UnionNACUSIP-TUCP no longer commands the support
of the majority of the employees. This observation is buttressed by the fact that more than seventy five
percent (75%) of the workers have disaffiliated from the intervenor and joined the ranks of the
petitioner. Thus, intervenor’s status as sole and exclusive bargaining representative is now of doubtful
validity.
“For the above-mentioned reason, we stand obliged to resort to the most expeditious, practical and
democratic option open to us, that is, the conduct of a certification election. Through this forum, the
true sentiments of the workers as to which labor organization deserves their loyalty can be fairly
ascertained. In any event, it is our view that the 10 September 1983 collective agreement should be
respected by the union that shall prevail in the election not only because it is an arbitration award but
also because substantial benefits are provided thereunder. Otherwise stated, the winning union shall
administer said agreement. In passing, it may be pointed out that CAREFCO has been included as one of
the contending parties in the election. We feel that it is error for the acting Med-Arbiter to do so
considering that the company is a mere bystander in this representation dispute.
“WHEREFORE, as above qualified, the Order dated 2 May 1983 is affirmed.
“SO DECIDED.” (Rollo, pp. 40-41)
From the decision of respondent Director Trajano, petitioner filed a motion for reconsideration dated
December 6, 1983.
The respondent Director in his order dated March 21, 1984 denied the motion for reconsideration for
lack of merit and affirmed the Bureau’s decision of November 18, 1983.
22
22

This Court in a resolution dated December 10, 1984 resolved to grant the urgent motion of petitioner for
the issuance of a restraining order and issued a temporary restraining order enjoining the respondents
from conducting and holding the certification election on December 17, 1984 among the rank and file
employees of respondent company (see Rollo, p. 99).
Petitioner maintains that respondent Director Trajano committed grave abuse of discretion amounting
to lack of jurisdiction when it rendered a decision affirming the order of MedArbiter Correa finding that
the deadlock is “nothing but a mere subterfuge to obstruct the exercise of the workers of their
legitimate right to self-organization, a last minute maneuver to deny the workers the exercise of their
constitutional rights” (Rollo, p. 28) and ordering a certification election among the rank and file workers
of respondent company.
Furthermore, petitioner stresses that the finding that the contract (deadlock) bar rule has no room for
application in the instant case, runs counter to the provision of Section 3 of the Rules Implementing
Batas Pambansa Blg. 130 which prohibits the filing of a petition for certification election during the
pendency of a bargaining deadlock.
In conformity with the petitioner’s contentions, the Solicitor General insists that the respondent
Director has acted arbitrarily in issuing the assailed decision and order. In addition, it argues that the
CBA concluded on September 10, 1983 has a life span of three (3) years and constitutes a bar to the
petition for certification election pursuant to Section 3 of the Rules Implementing Batas Pambansa Blg.
130.
The pivotal issue therefore, is whether or not a petition for certification election may be filed during the
pendency of a bargaining deadlock submitted to arbitration or conciliation.
After a careful review of the records of this case, the Court finds the petition meritorious and holds that
the respondent Director gravely abused his discretion when he affirmed the order of Med-Arbiter
Correa calling for a certification election among the rank and file workers of private respondent
company.
The law on the matter is Section 3, Book V, Rule V of the
23
VOL. 208, APRIL 10, 1992
23
Omnibus Rules Implementing the Labor Code, to wit:
“Sec. 3. When to file.—In the absence of a collective bargaining agreement duly registered in
accordance with Article 231 of the Code, a petition for certification election may be filed at any time.
However, no certification election may be held within one year from the date of issuance of a final
certification election result. Neither may a representation question be entertained if, before the filing of
a petition for certification election, a bargaining deadlock to which an incumbent or certified bargaining
agent is a party had been submitted to conciliation or arbitration or had become the subject of valid
notice or strike or lockout.
“If a collective bargaining agreement has been duly registered in accordance with Article 231 of the
Code, a petition for certification election or a motion for intervention can only be entertained within
sixty (60) days prior to the expiry date of such agreement.”
The clear mandate of the aforequoted section is that a petition for certification election may be filed at
any time, in the absence of a collective bargaining agreement. Otherwise put, the rule prohibits the
filing of a petition for certification election in the following cases:
(1) during the existence of a collective bargaining agreement except within the freedom period;
(2) within one (1) year from the date of issuance of declaration of a final certification election result; or
(3) during the existence of a bargaining deadlock to which an incumbent or certified bargaining agent is
a party and which had been submitted to conciliation or arbitration or had become the subject of a valid
notice of strike or lockout.
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 strike or lockout. The principal purpose is to ensure stability in the
relationship of the workers and the management.
In the case at bar, a bargaining deadlock was already submitted to arbitration when private respondent
FUR-TUCP filed a petition for certification election. The same petition was dismissed for lack of merit by
the Acting Med-Arbiter in an order
24
24
dated July 23, 1982 on the sole ground that the petition is barred by a pending bargaining deadlock.
However, respondent Director set aside the same order and subsequently affirmed an order giving due
course to the petition for certification election and ordering that an election be held.
The law demands that the petition for certification election should fail in the presence of a then pending
bargaining deadlock.
A director of the Bureau of Labor Relations, by the nature of his functions, acts in a quasi-judicial
capacity. We find no reason why his decision should be beyond this Court’s review. Administrative
officials, like the director of the Bureau of Labor Relations are presumed to act in accordance with law
but this Court will not hesitate to pass upon their work where there is a showing of abuse of authority or
discretion in their official acts or when their decisions or orders are tainted with unfairness or
arbitrariness.
Noteworthy is the fact that a certification was issued by Executive Labor Arbiter Celerino Grecia II on
October 21, 1982 certifying that the petition for deadlock in RAB Case No. VI-0220-82 was forwarded to
the Executive Labor Arbiter for compulsory arbitration (see Rollo, p. 19). The respondent Director erred
in finding that the order issued by the Med-Arbiter dismissing the petition for certification election was
irregular and was merely based on information.
All premises considered, the Court is convinced that the assailed decision and order of the respondent
Director is tainted with arbitrariness that would amount to grave abuse of discretion.
ACCORDINGLY, the petition is GRANTED; the decision dated November 18, 1983 and order dated March
21, 1984 of the respondent Director Cresenciano B. Trajano are hereby nullified and the order of Med-
Arbiter Militante dated July 23, 1982 dismissing the petition for certification election is hereby
reinstated.
SO ORDERED.
Narvasa (C.J.), Cruz and Griño-Aquino, JJ., concur.
Bellosillo, J., On leave.
25
VOL. 208, APRIL 10, 1992
25
Red V Coconut Products, Ltd. vs. Leogardo, Jr.
Petition granted; decision and order nullified.
Note.—Factual findings of National Labor Relations Commission are not correctible by certiorari but by
ordinary appeal. (Manila Hotel Corp. v. NLRC, 141 SCRA 169.)
——o0o—— National Congress of Unions in the Sugar Industry of the Philippines vs. Trajano, 208 SCRA
18, G.R. No. 67485 April 10, 1992
503
Capitol Medical Center Alliance of Concerned Employees-
Unified Filipino Service Workers vs. Laguesma
G.R. No. 118915. February 4, 1997.*
CAPITOL MEDICAL CENTER ALLIANCE OF CONCERNED EMPLOYEES-UNIFIED FILIPINO SERVICE

WORKERS, (CMC-ACE-UFSW), petitioners, vs. HON. BIENVENIDO E. LAGUESMA, Undersecretary of the
Department of Labor and Employment; CAPITOL MEDICAL CENTER EMPLOYEES ASSOCIATION-
ALLIANCE OF FILIPINO WORKERS AND CAPITOL MEDICAL CENTER INCORPORATED AND DRA. THELMA
CLEMENTE, President, respondents.
Actions; Due Process; Pleadings and Practice; A party cannot merely anchor its position on erroneous
names—typographical errors which cannot materially alter the substance and merit of an assailed
resolution—just to attain a reversal of said resolution.—Petitioner alleges that public respondent
Undersecretary Laguesma denied it due process when it ruled against the holding of a certification
election. It further claims that the denial of due process can be gleaned from the manner by which the
assailed resolution was written, i.e., instead of the correct name of the mother federation UNIFIED, it
was referred to as UNITED; and that the respondent union’s name CMCEA-AFW was referred to as
CMCEA-AFLO. Petitioner maintains that such errors indicate that the assailed resolution was prepared
with “indecent haste.” We do not subscribe to petitioner’s contention. The errors pointed to by
petitioner can be classified as mere typographical errors which cannot materially alter the substance
and merit of the assailed resolution. Petitioner
_______________
* FIRST DIVISION.
504
504
cannot merely anchor its position on the aforementioned erroneous’ names just to attain a reversal of
the questioned resolution. As correctly observed by the Solicitor General, petitioner is merely
“nitpicking, vainly trying to make a monumental issue out of a negligible error of the public
respondent.”
Same; Same; A party cannot complain of denial of due process when it failed to file its opposition to
oppose the other party’s appeal—Petitioner also assails public respondents’ findings that the former
“capitalize (sic) on the ensuing delay which was caused by the hospital and which resulted in the non-
conclusion of a CBA within the certification year.” It further argues that the denial of its motion for a
fair hearing was a clear case of a denial of its right to due process. Such contention of petitioner
deserves scant consideration. A perusal of the record shows that petitioner failed to file its opposition
to oppose the grounds for respondent union’s appeal. It was given an opportunity to be heard but lost
it- when it refused to file an appellee’s memorandum.
Labor Law; Certification Elections; Collective Bargaining; Even if one year had lapsed since the time of
declaration of a final certification result, and there is no collective bargaining deadlock, there is no
grave abuse of discretion committed by the DOLE when it ruled against another certification election
filed by another union where the delay in forging of the CBA could not be attributed to the fault of the
union who won the earlier certification election.—While it is true that, in the case at bench, one year
had lapsed since the time of declaration of a final certification result, and that there is no collective
bargaining deadlock, public respondent did not commit grave abuse of discretion when it ruled in
respondent union’s favor since the delay in the forging of the CBA could not be attributed to the fault
of the latter, A scrutiny of the records will further reveal that after respondent union was certified as
the bargaining agent of CMC, it invited the employer hospital to the bargaining table by submitting its
economic proposal for a CBA However, CMC refused to negotiate with respondent union and instead
challenged the latter’s legal personality through a petition for cancellation of the certificate of
registration which eventually reached this Court. The decision affirming the legal status of respondent
union should have left CMC with no other recourse but to bargain collectively, but still it did not.
Respondent union was left with no other recourse but to file a notice of strike against CMC for unfair
labor practice with the
505
505
National Conciliation and Mediation Board. This eventually led to a strike on April 15, 1993.
Same; Same; Same; Words and Phrases; “Deadlock,” Defined.—In the case of Divine Word University
of Tacloban v. Secretary of Labor and Employment, we had the occasion to define what a deadlock is,
viz: “A ‘deadlock’ is x x x the counterclaim of things producing entire stoppage; x x x. There is a
deadlock when there is a complete blocking or stoppage resulting from the action of equal and
opposed forces x x x. The word is synonymous with the word impasse, which x x x ‘presupposes
reasonable effort at good faith bargaining which, despite noble intentions, does not conclude in
agreement between the parties.'"
Same; Same; Same; Same.—If the law proscribes the conduct of a certification election when there is
a bargaining deadlock submitted to conciliation or arbitration, with more reason should it not be
conducted if, despite attempts to bring an employer to the negotiation table by the certified
bargaining agent, there was “no reasonable effort in good faith” on the part of the employer to
bargain collectively.
Same; Same; Same; Same; Section 3, Rule V, Book V of the Implementing Rules of the Labor Code
should be interpreted liberally so as to include a circumstance, e.g. where a CBA could not be
concluded due to the failure of one party to willingly perform its duty to bargain collectively.—This is
what is strikingly different between the Kaisahan case and the case at bench for in the latter case,
there was proof that the certified bargaining agent, respondent union, had taken an action to legally
coerce the employer to comply with its statutory duty to bargain collectively, i.e., charging the
employer with unfair labor practice and conducting a strike in protest against the employer’s refusal
to bargain. It is only just and equitable that the circumstances in this case should be considered as
similar in nature to a “bargaining deadlock” when no certification election could be held. This is also
to make sure that no floodgates will be opened for the circumvention of the law by unscrupulous
employers to prevent any certified bargaining agent from negotiating a CBA. Thus, Section 3, Rule V,
Book V of the Implementing Rules should be interpreted liberally so as to include a circumstance, e.g.
where a CBA could not be concluded due to the failure of one party to willingly perform its duty to
bargain collectively.
506
506
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari and Prohibition.
Bayani G. Diwa for petitioner.
Edgar R. Martir for private respondent.
HERMOSISIMA, JR., J.:
This petition for certiorari and prohibition seeks to reverse and set aside the Order dated November 18,
1994 of public respondent Bienvenido E. Laguesma, Undersecretary of the Department of Labor and
Employment, in Case No. OS-A136–941 which dismissed the petition for certification election filed by
petitioner for lack of merit and further directed private respondent hospital to negotiate a collective
bargaining agreement with respondent union, Capitol Medical Center Employees Association-Alliance of
Filipino Workers.
The antecedent facts are undisputed.
On February 17, 1992, Med-Arbiter Rasidali C. Abdullah issued an Order which granted respondent
union’s petition for certification election among the rank-and-file employees of the Capitol Medical
Center.2 Respondent CMC appealed the Order to the Office of the Secretary by questioning the legal
status of respondent union’s affiliation with the Alliance of Filipino Workers (AFW). To correct any
supposed infirmity in its legal status, respondent union registered itself independently and withdrew the
petition which had earlier been granted. Thereafter, it filed another petition for certification election.
On May 29, 1992, Med-Arbiter Manases T. Cruz issued an order granting the petition for certification
election.3 Respondent CMC again appealed to the Office of the Secretary which
_______________
1 NCR-00-M-9403–052.
2 Rollo, pp. 145–153.
3 Rollo, pp. 154–158.
507
507
affirmed4 the Order of the Med-Arbiter granting the certification election.
On December 9, 1992, elections were finally held with respondent union garnering 204 votes, 168 in
favor of no union and 8 spoiled ballots out of a total of 380 votes cast. Thereafter, on January 4, 1993,
Med-Arbiter Cruz issued an Order certifying respondent union as the sole and exclusive bargaining
representative of the rank-and-file employees at CMC.5
Unsatisfied with the outcome of the elections, respondent CMC again appealed to the Office of the
Secretary of Labor which appeal was denied on February 26, 1993.6 A subsequent motion for
reconsideration filed by respondent CMC was likewise denied on March 23, 1993.7
Respondent CMC’s basic contention was the supposed pendency of its petition for cancellation of
respondent union’s certificate of registration in Case No. NCR-OD-M-92211–028. In the said case, Med-
Arbiter Paterno Adap issued an Order dated February 4, 1993 which declared respondent union’s
certificate of registration as null and void.8 However, this order was reversed on appeal by the Officer-
in-Charge of the Bureau of Labor Relations in her Order issued on April 13, 1993. The said Order
dismissed the motion for cancellation of the certificate of registration of respondent union and declared
that it was not only a bona fide affiliate or local of a federation (AFW), but a duly registered union as
well. Subsequently, this case reached this Court in Capitol Medical Center, Inc. v. Hon. Perlita Velasco,
G.R. No. 110718, where we issued a Resolution dated December 13, 1993, dismissing the petition of
CMC for failure to sufficiently show that public respondent committed grave abuse of discretion.9 The
motion
_______________
4 Rollo, pp. 164–169.
5 Rollo, pp. 172–173.
6 Rollo, pp. 174–176.
7 Rollo, pp. 177–178.
8 Rollo, pp. 199–203.
9 Rollo, p. 281.
508
508
for reconsideration filed by CMC was likewise denied in our Resolution dated February 2, 1994.10
Thereafter, on March 23, 1994, we issued an entry of judgment certifying that the Resolution dated
December 13, 1993 has become final and executory.11
Respondent union, after being declared as the certified bargaining agent of the rank-and-file employees
of respondent CMC by Med-Arbiter Cruz, presented economic proposals for the negotiation of a
collective bargaining agreement (CBA). However, respondent CMC contended that CBA negotiations
should be suspended in view of the Order issued on February 4, 1993 by Med-Arbiter Adap declaring the
registration of respondent union as null and void. In spite of the refusal of respondent CMC, respondent
union still persisted in its demand for CBA negotiations, claiming that it has already been declared as the
sole and exclusive bargaining agent of the rank-and-file employees of the hospital.
Due to respondent CMC’s refusal to bargain collectively, respondent union filed a notice of strike on
March 1, 1993. After complying with the other legal requirements, respondent union staged a strike on
April 15, 1993. On April 16, 1993, the Secretary of Labor assumed jurisdiction over the case and issued
an order certifying the same to the National Labor Relations Commission for compulsory arbitration
where the said case is still pending.12
It is at this juncture that petitioner union, on March 24, 1994, filed a petition for certification election
among the regular rank-and-file employees of the Capitol Medical Center, Inc. It alleged in its petition
that: 1) three hundred thirty one (331) out of the four hundred (400) total rank-and-file employees of
respondent CMC signed a petition to conduct a certification election; and 2) that the said employees are
withdrawing their authorization for the said union to represent them as they have joined and formed
the union Capitol Medi-
_______________
10 Rollo, p. 282.
11 Rollo, p. 283.
12 Rollo, pp, 209–210.
509
VOL. 267, FEBRUARY .4, 1997
509
cal Center Alliance of Concerned Employees (CMC-ACE). They also alleged that a certification election
can now be conducted as more that 12 months have lapsed since the last certification election was held.
Moreover, no certification election was conducted during the twelve (12) months prior to the petition,
and no collective bargaining agreement has as yet been concluded between respondent union and
respondent CMC despite the lapse of twelve months from the time the said union was voted as the
collective bargaining representative.
On April 12, 1994, respondent union opposed the petition and moved for its dismissal. lt contended that
it is the certified bargaining agent of the rank-and-file employees of the Hospital, which was confirmed
by the Secretary of Labor and Employment and by this Court. It also alleged that it was not remiss in
asserting its right as the certified bargaining agent for it continuously demanded the negotiation of a
CBA with the hospital despite the latter’s avoidance to bargain collectively. Respondent union was even
constrained to strike on April 15, 1993, where the Secretary of Labor intervened and certified the
dispute for compulsory arbitration. Furthermore, it alleged that majority of the signatories who
supported the petition were managerial and confidential employees and not members of the rank-and-
file, and that there was no valid disaffiliation of its members, contrary to petitioner’s allegations.
Petitioner, in its rejoinder, claimed that there is no legal impediment to the conduct of a certification
election as more than twelve (12) months had lapsed since respondent union was certified as the
exclusive bargaining agent and no CBA was as yet concluded. It also claimed that the other issues raised
could only be resolved by conducting another certification election.
In its surrejoinder, respondent union alleged that the petition to conduct a certification election was
improper, immoral and in manifest disregard of the decisions rendered by the Secretary of Labor and by
this Court. It claimed that CMC employed legal obstructionisms” in order to let twelve
510
510
months pass without a CBA having been concluded between them so as to pave the way for the entry of
petitioner union. On May 12,1994, Med-Arbiter Brigida Fadrigon, issued an Order granting the petition
for certification election among the rank-and-file employees.13 It ruled that the issue was the majority
status of respondent union. Since no certification election was held within one year from the date of
issuance of a final certification election result and there was no bargaining deadlock between
respondent union and the employees that had been submitted to conciliation or had become the
subject of a valid notice of strike or lock out, there is no bar to the holding of a certification election.14
Respondent union appealed from the said Order, alleging that the Med-Arbiter erred in granting the
petition for certification election and in holding that this case falls under Section 3, Rule V, Book V of the
Rules Implementing the Labor Code.15 It also prayed that the said provision must not be applied strictly
in view of the facts in this case.
Petitioner union did not file any opposition to the appeal.
On November 18, 1994, public respondent rendered a Resolution granting the appeal.16 He ratiocinated
that while the petition was indeed filed after the lapse of one year from the time of declaration of a final
certification result, and that no bargaining deadlock had been submitted for conciliation or arbitration,
respondent union was not remiss on its right to enter into a CBA for it was the CMC which refused to
bargain collectively.17
CMC and petitioner union separately filed motions for reconsideration of the said Order.
CMC contended that in certification election proceedings, the employer cannot be ordered to bargain
collectively with a
_______________
13 Rollo, pp. 26–31.
14 Ibid.
15 Rollo, pp. 71–77.
16 Rollo, pp. 33–41.
17 Ibid.
511
511
union since the only issue involved is the determination of the bargaining agent of the employees.
Petitioner union claimed that to completely disregard the will of the 331 rank-and-file employees for a
certification election would result in the denial of their substantial rights and interests. Moreover, it
contended that public respondent’s “indictment” that petitioner “capitalize (sic) on the ensuing delay
which was caused by the Hospital, x x x” was unsupported by the facts and the records.
On January 11, 1995, public respondent issued a Resolution which denied the two motions for
reconsideration, hence this petition.18
The pivotal issue in this case is whether or not public respondent committed grave abuse of discretion in
dismissing the petition for certification election, and in directing the hospital to negotiate a collective
bargaining agreement with the said respondent union.
Petitioner alleges that public respondent Undersecretary Laguesma denied it due process when it ruled
against the holding of a certification election. It further claims that the denial of due process can be
gleaned from the manner by which the assailed resolution was written, i.e., instead of the correct name
of the mother federation UNIFIED, it was referred to as UNITED; and that the respondent union’s name
CMCEA-AFW was referred to as CMCEA-AFLO. Petitioner maintains that such errors indicate that the
assailed resolution was prepared with “indecent haste.”
We do not subscribe to petitioner’s contention.
The errors pointed to by petitioner can be classified as mere typographical errors which cannot
materially alter the substance and merit of the assailed resolution.
Petitioner cannot merely anchor its position on the aforementioned erroneous’ names just to attain a
reversal of the questioned resolution. As correctly observed by the Solicitor General, petitioner is merely
“nit-picking, vainly trying to
________________
18 Rollo, pp. 43–44.

512
512
make a monumental issue out of a negligible error of the public respondent."19
Petitioner also assails public respondents’ findings that the former “capitalize (sic) on the ensuing delay
which was caused by the hospital and which resulted in the non-conclusion of a CBA within the
certification year."20 It further argues that the denial of its motion for a fair hearing was a clear case of a
denial of its right to due process.
Such contention of petitioner deserves scant consideration.
A perusal of the record shows that petitioner failed to file its opposition to oppose the grounds for
respondent union’s appeal.
It was given an opportunity to be heard but lost it when it refused to file an appellee’s memorandnm.
Petitioner insists that the circumstances prescribed in Section 3, Rule V, Book V of the Rules
Implementing the Labor Code where a certification election should be conducted, viz: (1) that one year
had lapsed since the issuance of a final certification result; and (2) that there is no bargaining deadlock
to which the incumbent or certified bargaining agent is a party has been submitted to conciliation or
arbitration, or had become the subject of a valid notice of strike or lockout, are present in this case. It
further claims that since there is no evidence on record that there exists a CBA deadlock, the law
allowing the conduct of a certification election after twelve months must be given effect in the interest
of the right of the workers to freely choose their sole and exclusive bargaining agent.
While it is true that, in the case at bench, one year had lapsed since the time of declaration of a final
certification result, and that there is no collective bargaining deadlock, public respondent did not
commit grave abuse of discretion when it ruled in respondent union’s favor since the delay in
________________
19 Rollo, p. 351.
20 Rollo, p. 14.
513

513
Unified Filipino Service Workers us. Laguesma
the forging of the CBA could not be attributed to the fault of the latter.
A scrutiny of the records will further reveal that after respondent union was certified as the bargaining
agent of CMC, it invited the employer hospital to the bargaining table by submitting its economic
proposal for a CBA. However, CMC refused to negotiate with respondent union and instead challenged
the latter’s legal personality through a petition for cancellation of the certificate of registration which
eventually reached this Court. The decision affirming the legal status of respondent union should have
left CMC with no other recourse but to bargain collectively, but still it did not. Respondent union was
left with no other recourse but to file a notice of strike against CMC for unfair labor practice with the
National Conciliation and Mediation Board. This eventually led to a strike on April 15, 1993.
Petitioner union on the other hand, after this Court issued an entry of judgment on March 23, 1994,
filed the subject petition for certification election on March 24, 1994, claiming that twelve months had
lapsed since the last certification election.
Was there a bargaining deadlock between CMC and respondent union, before the filing of petitioner of
a petition for certification election, which had been submitted to conciliation or had become the subject
of a valid notice of strike or lockout?
In the case of Divine Word University of Tacloban v. Secretary of Labor and Employment,21 we had the
occasion to define what a deadlock is, viz:
“A ‘deadlock’ is x x x the counterclaim of things producing entire stoppage; x x x. There is a deadlock

when there is a complete blocking or stoppage resulting from the action of equal and opposed forces x x
x. The word is synonymous with the word impasse, which x x x ‘presupposes reasonable effort at good
faith bargaining which,
_______________
21 213 SCRA 759 (1992).
514
514
despite noble intentions, does not conclude in agreement between the parties.’ "
Although there is no “deadlock” in its strict sense as there is no “counteraction” of forces present in this
case nor “reasonable effort at good faith bargaining,” such can be attributed to CMC’s fault as the
bargaining proposals of respondent union were never answered by CMC. In fact, what happened in this
case is worse than a bargaining deadlock for CMC employed all legal means to block the certification of
respondent union as the bargaining agent of the rank-andfile; and used it as its leverage for its failure to
bargain with respondent union. Thus, we can only conclude that CMC was unwilling to negotiate and
reach an agreement with respondent union. CMC has not at any instance shown willingness to discuss
the economic proposals given by respondent union.22
As correctly ratiocinated by public respondent, to wit:
“For herein petitioner to capitalize on the ensuing delay which was caused by the hospital and which
resulted in the non-conclusion of a CBA within the certification year, would be to negate and render a
mockery of the proceedings undertaken before this Department and to put an unjustified premium on
the failure of the respondent hospital to perform its duty to bargain collectively as mandated in Article
252 of the Labor Code, as amended, which states.”
“Article 252. Meaning of duty to bargain collectively—the duty to bargain collectively means the
performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for
the purpose of negotiating an agreement with respect to wages, hours of work and all other terms and
conditions of employment including proposals for adjusting any grievance or questions arising under
such agreement and executing a contract incorporating such agreements if requested by either party
but such duty does not compel any party to agree to a proposal or to make any concession.”
________________
22 Cf. Kiok Loy v. National Labor Relations Commission, 141 SCRA 179 (1987).
515
515
The duly certified bargaining agent, CMCEA-AFW, should not be made to further bear the brunt flowing
from the respondent hospital’s reluctance and thinly disguised refusal to bargain.23
If the law proscribes the conduct of a certification election when there is a bargaining deadlock
submitted to conciliation or arbitration, with more reason should it not be conducted if, despite
attempts to bring an employer to the negotiation table by the certified bargaining agent, there was “no
reasonable effort in good faith” on the part of the employer to bargain collectively.
In the case of Kaisahan ng Manggagawang Pilipino vs. Trajano, 201 SCRA 453 (1991), penned by Chief
Justice Andres R. Narvasa, the factual milieu of which is similar to this case, this Court allowed the
holding of a certification election and ruled that the one year period known as the “certification year”
has long since expired. We also ruled, that:
“x x x prior to the filing of the petition for election in this case, there was no such ‘bargaining deadlock x
x (which) had been submitted to conciliation or arbitration or had become the subject of a valid notice
of strike or lockout.’ To be sure, there are in the record assertions by NAFLU that its attempts to bring
VIRON to the negotiation table had been unsuccessful because of the latter’s recalcitrance, and
unfulfilled promises to bargain collectively; but there is no proof that it had taken any action to legally
coerce VIRON to comply with its statutory duty to bargain collectively. It could have charged VIRON with
unfair labor practice; but it did not. It could have gone on a legitimate strike in protest against VIRON’s
refusal to bargain collectively and compel it to do so; but it did not. There are assertions by NAFLU, too,
that its attempts to bargain collectively had been deayed by continuing challenges to the resolution
pronouncing it the sole bargaining representative in VIRON; but there is no adequate substantiation
thereof, or of how it did in fact prevent initiation of the bargaining process between it and VIRON.24
________________
23 Rollo, p. 40.
24 Italics supplied.
516
516
Although the statements pertinent to this case are merely obiter, still the fact remains that in the
Kaisahan case, NAFLU was counselled by this Court on the steps that it should have undertaken to
protect its interest, but which it failed to do so.
This is what is strikingly different between the Kaisahan case and the case at bench for in the latter case,
there was proof that the certified bargaining agent, respondent union, had taken an action to legally
coerce the employer to comply with its statutory duty to bargain collectively, i.e., charging the employer
with unfair labor practice and conducting a strike in protest against the employer’s refusal to bargain.25
It is only just and equitable that the circumstances in this case should be considered as similar in nature
to a “bargaining deadlock” when no certification election could be held. This is also to make sure that no
floodgates will be opened for the circumvention of the law by unscrupulous employers to prevent any
certified bargaining agent from negotiating a CBA. Thus, Section 3, Rule V, Book V of the Implementing
Rules should be interpreted liberally so as to include a circumstance, e.g. where a CBA could not be
concluded due to the failure of one party to willingly perform its duty to bargain collectively.
The order for the hospital to bargain is based on its failure to bargain collectively with respondent union.
WHEREFORE, the Resolution dated November 18, 1994 of public respondent Laguesma is AFFIRMED and
the instant petition is hereby DISMISSED.
SO ORDERED.
Padilla (Chairman), Bellosillo, Vitug and Kapunan, JJ., concur.
Resolution affirmed, petition dismissed.
________________
25 Kaisahan ng Manggagawang Pilipino v. Trajano, 201 SCRA 453 (1991).
517
517
Sy vs. Mongcupa
Note.—A decision in a certification case does not foreclose all further dispute between the parties as to
the existence, or non-existence, of employer-employee relationship between them. (Manila Golf &
Country Club, Inc. vs. Intermediate Appellate Court, 237 SCRA 207 [1994])
——o0o—— Capitol Medical Center Alliance of Concerned Employees-Unified Filipino Service Workers
vs. Laguesma, 267 SCRA 503, G.R. No. 118915 February 4, 1997
178
Associated Labor Union (ALU) vs. Ferrer-Calleja
G.R. No. 77282. May 5, 1989. *
ASSOCIATED LABOR UNIONS (ALU), petitioner, vs. HON. PURA FERRER-CALLEJA, as Director of the
Bureau of Labor Relations, Ministry of Labor and Employment; PHILIPPINE SOCIAL SECURITY LABOR
UNION (PSSLU); SOUTHERN PHILIPPINES FEDERATION OF LABOR (SPFL); and GAW TRADING, INC.,
respondents.
Labor Law; Labor Relations; Unions; Collective Bargaining; Certification election; Mechanics of
collective bargaining are set in motion only when the jurisdictional preconditions have been complied
with. ___ We have previously held that the mechanics of collective bargaining are set in motion only
when the following jurisdictional preconditions are present, namely, (1) possession of the status of
majority representation by the employees’ representative in accordance with any of the means of
selection and/or designation provided for by the Labor Code; (2) proof of majority representation; and
(3) a demand to bargain under Article 251, paragraph (a) of the New Labor Code. In the present case,
the standing of petitioner as an exclusive bargaining representative is dubious, to say the least. It may
be recalled that respondent company, in a letter dated May 12, 1986 and addressed to petitioner,
merely indicated that it was “not against the desire of (its) workers” and required petitioner to
present proof that it was supported by the majority thereof in a meeting to be held on the same date.
The only express recognition of petitioner as said employees’ bargaining representative that We see
in the records is in the collective bargaining agreement entered into two days thereafter. Evidently,
there was precipitate haste on the part of respondent company in recognizing petitioner union, which
recognition appears to have been based on the self-serving claim of the latter that it had the support
of the majority of the employees in the bargaining unit. Furthermore, at the time of the supposed
recognition, the employer was obviously aware that there were other unions existing in the unit. As
earlier stated, respondent company’s letter is dated May 12, 1986 while the two other unions,
Southern Philippine Federation of Labor (hereafter, SPFL) and Philippine Social Security Labor Union
(PSSLU, for short), went on strike earlier on May 9, 1986. The unusual promptitude in the recognition
of petitioner union by respondent company as
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* SECOND DIVISION.
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179

the exclusive bargaining representative of the workers in GAW Trading, Inc., under the fluid and
amorphous circumstances then obtaining, was decidedly unwarranted and improvident.
Same; Same; Same; Same; Same; Failure to properly determine with legal certainty whether the union
enjoyed majority representation may be a ground to nullify the certification. ___ It bears mention that
even in cases where it was the then Minister of Labor himself who directly certified the union as the
bargaining representative, this Court voided such certification where there was a failure to properly
determine with legal certainty whether the union enjoyed a majority representation. In such a case,
the holding of a certification election at a proper time would not necessarily be a mere formality as
there was a compelling reason not to directly and unilaterally certify a union.
Same; Same; Same; Same; Same; Failure to post the Collective Bargaining Agreement in at least 2
conspicuous places in the establishment is an additional infirmity. ___ An additional infirmity of the
collective bargaining agreement involved was the failure to post the same in at least two (2)
conspicuous places in the establishment at least five days before its ratification. Petitioner’s
rationalization was that “(b)ecause of the real existence of the illegal strike staged by SPFL in all the
stores of GAW Trading, Inc. it had become impossible to comply with the posting requirement in so
far as the realization of its purpose is concerned as there were no impartial members of the unit who
could be apprised of the CBA’s contents.” This justification is puerile and unacceptable. In the first
place, the posting of copies of the collective bargaining agreement is the responsibility of the
employer which can easily comply with the requirement through a mere mechanical act. The fact that
there were “no impartial members of the unit” is immaterial. The purpose of the requirement is
precisely to inform the employees in the bargaining unit of the contents of said agreement so that
they could intelligently decide whether to accept the same or not. The assembly of the members of
ALU wherein the agreement in question was allegedly explained does not cure the defect.
Same; Same; Same; Same; Same; Contract Bar Rule; Repudiation made by some of the workers of the
alleged negotiation and ratification of the CBA is a ground to annul the same. ___ Another potent
reason for annulling the disputed collective bargaining agreement is the finding of respondent
director that one hundred eighty-one (181) of the two hundred eighty-one (281) workers who
“ratified” the same now “strongly
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and vehemently deny and/or repudiate the alleged negotiation and ratification of the CBA”. Although
petitioner claims that only seven (7) of the repudiating group of workers belong to the total number
who allegedly ratified the agreement, nevertheless such unsubstantiated contention weighed against
the factual findings of the respondent director cannot negate the fact that the controverted contract
will not promote industrial stability. The Court has long since declared that: “x x x Basic to the
contract bar rule is the proposition that the delay of the right to select representatives can be justified
only where stability is deemed paramount. Excepted from the contract bar rule are certain types of
contracts which do not foster industrial stability, such as contracts where the identity of the
representative is in doubt. Any stability derived from such contracts must be subordinated to the
employees’ freedom of choice because it does not establish the type of industrial peace contemplated
by the law.”
Same; Same; Technical rules of procedure do not strictly apply in the adjudication of labor disputes.
___ At this juncture, petitioner should be reminded that the technical rules of procedure do not
strictly apply in the adjudication of labor disputes. Consequently, its objection that the evidence with
respect to the aforesaid repudiation of the supposed collective bargaining agreement cannot be
considered for the first time on appeal to the Bureau of Labor Relations should be disregarded,
especially considering the weighty significance thereof.
SPECIAL CIVIL ACTION for certiorari and prohibition to review the decision of the Director of the Bureau
of Labor Relations.
Romeo S. Occeñ a, Leonard U. Sawal, Edgemelo C. Rosales and Ernesto Carreon for petitioner.
Henrick F. Gingoyon for respondent SPFL.
Wenifredo L. Orcullo for respondent Southern Philippines Federation of Labor.
Miguel A. Enrique, Jr. for respondent GAW Trading, Inc.
REGALADO, J.:
Petitioner Associated Labor Unions (ALU, for brevity) instituted this special civil action for certiorari and
prohibition to
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181
overturn the decision of the respondent director 1 dated December 10, 1986, which ordered the holding
of a certification election among the rank-and-file workers of the private respondent GAW Trading, Inc.
The averments in the basic petition therefor, which succinctly but sufficiently detail the relevant factual
antecedents of this proceeding, justify their being quoted in full, thus:
“1. The Associated Labor Unions (ALU) thru its Regional Vice-President Teofanio C. Nunez, in a Letter
dated May 7, 1986 (ANNEX C) informed GAW Trading, Inc. that majority of the latter’s employees have
authorized ALU to be their sole and exclusive bargaining representative, and requested GAW Trading
Inc., in the same Letter for a conference for the execution of an initial Collective Bargaining Agreement
(CBA);
“2. GAW Trading Inc. received the Letter of ALU aforesaid on the same day of May 7, 1986 as
acknowledged thereunder and responded (sic) ALU in a Letter dated May 12, 1986 (Annex D) indicating
its recognition of ALU as the sole and exclusive bargaining agent for the majority of its employees and
for which it set the time for conference and/or negotiation at 4:00 P.M. on May 12, 1986 at the Pillsbury
Office, Aboitiz Building, Juan Luna Street, Cebu City;
“3. On the following day of May 13, 1986, per Transmittal Letter on even date (ANNEX E) ALU’s
Chairman of the Negotiating Panel furnished GAW Trading Inc. ten (10) final copies of the Collective
Bargaining Agreement for Comment, or otherwise, for signing;
“4. On May 15, 1986, ALU in behalf of the majority of the employees of GAW Trading Inc. and GAW
Trading Inc. signed and executed the Collective Bargaining Agreement (ANNEX F) x x x.
“5. In the meantime, at about 1:00 P.M. of May 9, 1986, the Southern Philippines Federation of Labor
(SPFL) together with Nagkahiusang Mamumuo sa GAW (NAMGAW) undertook a x x x Strike x x x after it
failed to get the management of GAW Trading Inc. to sit for a conference respecting its demands
presented at 11:00 A.M. on the same day in an effort to pressure GAW Trading Inc. to make a turnabout
of its standing recognition of ALU as the sole and exclusive bargaining representative of its employees,
as to which strike GAW Trading Inc. filed a petition for Restraining Order/Preliminary Injunction, dated
June 1, 1986 (Annex H) and which strike Labor Arbi t e r
_______________
1 Rollo, 25-27; Annex A. Petition.
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Bonifacio B. Tumamak held as illegal in a Decision dated August 5, 1986 (ANNEX I);
“6. On May 19, 1986, GAW Lumad Labor Union (GALLU-PSSLU) Federation x x x filed a Certification
Election petition (ANNEX J), but, as found by Med-Arbiter Candido M. Cumba in its (sic) Order dated
June 11, 1986 (ANNEX K) , without having complied (sic) the subscription requirement for which it was
merely considered an intervenor until compliance thereof in the other petition for direct recognition as
bargaining agent filed on May 28, 1986 by Southern Philippines Federation of Labor (SPFL) as found in
the same Order (ANNEX K) ;
7 . In the meantime, the Collective Bargaining Agreement executed by ALU and GAW Trading Inc.
(ANNEX F) was duly filed on May 27, 1986 with the Ministry of Labor and Employment in Region VII,
Cebu City;
“8. Nevertheless, Med-Arbiter Candido M. Cumba in his Order of June 11, 1986 (Annex K ) ruled for the
holding of a certification election in all the branches of GAW Trading Inc. in Cebu City, as to which ALU
filed a Motion for Reconsideration dated June 19, 1986 (ANNEX L) which was treated as an appeal on
that questioned Order for which reason the entire record of subject certification case was forwarded to
the Director, Bureau of Labor Relations, Ministry of Labor and Employment, Manila (ANNEX M);
“9. Bureau of Labor Relations Director Cresenciano B. Trajano, rendered a Decision on August 13, 1986
(Annex B) granting ALU’s appeal (Motion for Reconsideration) and set aside the questioned Med-Arbiter
Order of June 11, 1986 (Annex K ), on the ground that the CBA has been effective and valid and the
contract bar rule applicable;
“10. But the same Decision of Director Cresenciano B. Trajano was sought for reconsideration both by
Southern Philippines Federation of Labor (SPFL) on August 26, 1986 (ANNEX N) supplemented by the
‘SUBMISSION OF ADDITIONAL EVIDENCE’ dated September 29, 1986 (ANNEX O), and Philippine Social
Security Labor Union (PSSLU) on October 2, 1986 (ANNEX P), which were opposed by both GAW Trading,
Inc. on September 2, 1986 (ANNEX Q) and ALU on September 12, 1986 (ANNEX R);” 2
The aforesaid decision of then Director Trajano was thereafter reversed by respondent director in her
aforecited decision which is now assailed in this action. A motion for reconsidera-
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2 Ibid., 8-11.
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183
tion of ALU 3 appears to have been disregarded, hence, its present resort grounded on grave abuse of
discretion by public respondent.
Public respondent ordered the holding of a certification election, ruling that the “contract bar rule”
relied upon by her predecessor does not apply in the present controversy. According to the decision of
said respondent, the collective bargaining agreement involved herein is defective because it “was not
duly submitted in accordance with Section I, Rule IX , Book V of the Implementing Rules of Batas
Pambansa Blg. 130.” It was further observed that “(t)here is no proof tending to show that the CBA has
been posted in at least two conspicuous places in the establishment at least five days before its
ratification and that it has been ratified by the majority of the employees in the bargaining unit.”
We find no reversible error in the challenged decision of respondent director. A careful consideration of
the facts culled from the records of this case, especially the allegations of petitioner itself as
hereinabove quoted, yields the conclusion that the collective bargaining agreement in question is
indeed defective, hence unproductive of the legal effects attributed to it by the former director in his
decision which was subsequently and properly reversed.
We have previously held that the mechanics of collective bargaining are set in motion only when the
following jurisdictional preconditions are present, namely, (1) possession of the status of majority
representation by the employees’ representative in accordance with any of the means of selection
and/or designation provided for by the Labor Code; (2) proof of majority representation; and (3) a
demand to bargain under Article 251, paragraph (a), of the New Labor Code. 4 In the present case, the
standing of petitioner as an exclusive bargaining representative is dubious, to say the least. It may be
recalled that respondent company, in a letter dated May 12, 1986 and ad dressed to
_______________
3 Ibid., 11; Annex S, Petition.
4 K iok Loy vs. National Labor Relations Commission, 141 SCRA 179, l85 (1986).
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184
petitioner, merely indicated that it was “not against the desire of (its) workers” and required petitioner
to present proof that it was supported by the majority thereof in a meeting to be held on the same date.
5 The only express recognition of petitioner as said employees’ bargaining representative that We see in
the records is in the collective bargaining agreement entered into two days thereafter. 6 Evidently, there
was precipitate haste on the part of respondent company in recognizing petitioner union, which
recognition appears to have been based on the self-serving claim of the latter that it had the support of
the majority of the employees in the bargaining unit. Furthermore, at the time of the supposed
recognition, the employer was obviously aware that there were other unions existing in the unit. As
earlier stated, respondent company’s letter is dated May 12, 1986 while the two other unions, Southern
Philippine Federation of Labor (hereafter, SPFL) and Philippine Social Security Labor Union (PSSLU, for
short), went on strike earlier on May 9, 1986. The unusual promptitude in the recognition of petitioner
union by respondent company as the exclusive bargaining representative of the workers in GAW
Trading, Inc. under the fluid and amorphous circumstances then obtaining, was decidedly unwarranted
and improvident.
It bears mention that even in cases where it was the then Minister of Labor himself who directly
certified the union as the bargaining representative, this Court voided such certification where there
was a failure to properly determine with legal certainty whether the union enjoyed a majority
representation. In such a case, the holding of a certification election at a proper time would not
necessarily be a mere formality as there was a compelling reason not to directly and unilaterally certify a
union. 7
An additional infirmity of the collective bargaining agreement involved was the failure to post the same
in at least two (2) conspicuous places in the establishment at least five days
_______________
5 Rollo, 9, 34; Annex D, Petition.
6 Ibid., 37.
7 Colgate Palmolive Philippines, Inc. vs. Hon. Blas F. Ople, et al., G.R. No. 73691, June 30, 1988.
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before its ratification. 8 Petitioner’s rationalization was that “(b)ecause of the real existence of the
illegal strike staged by SPFL in all the stores of GAW Trading, Inc. it had become impossible to comply
with the posting requirement in so far as the realization of its purpose is concerned as there were no
impartial members of the unit who could be apprised of the CBA’s contents.” 9 This justification is
puerile and unacceptable.
In the first place, the posting of copies of the collective bargaining agreement is the responsibility of the
employer which can easily comply with the requirement through a mere mechanical act. The fact that
there were “no impartial members of the unit” is immaterial. The purpose of the requirement is
precisely to inform the employees in the bargaining unit of the contents of said agreement so that they
could intelligently decide whether to accept the same or not. The assembly of the members of ALU
wherein the agreement in question was allegedly explained does not cure the defect. The contract is
intended for all the employees and not only for the members of the purported representative alone. It
may even be said that the need to inform the non-members of the terms thereof is more exigent and
compelling since, in all likelihood, their contact with the persons who are supposed to represent them is
limited. Moreover, to repeat, there was an apparent and suspicious hurry in the formulation and
finalization of said collective bargaining accord. In the aforementioned letter where respondent
company required petitioner union to present proof of its support by the employees, the company
already suggested that petitioner ALU at the same time submit the proposals that it intended to embody
in the projected agreement. This was on May 12, 1986, and promptly on the following day the
negotiating panel furnished respondent company final copies of the desired agreement which, with
equal dispatch, was signed on May 15, 1986.
Another potent reason for annulling the disputed collective bargaining agreement is the finding of
respondent director that
_______________
8 Sec. 1(a), Rule IX , Book V, Implementing Rules of B.P. 130.
9 Rollo, 16.
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186
one hundred eighty-one (181) of the two hundred eighty-one (281) workers who “ratified” the same
now “strongly and vehemently deny and/or repudiate the alleged negotiation and ratification of the
CBA.” 10 Although petitioner claims that only seven (7) of the repudiating group of workers belong to
the total number who allegedly ratified the agreement, nevertheless such unsubstantiated contention
weighed against the factual findings of the respondent director cannot negate the fact that the
controverted contract will not promote industrial stability. The Court has long since declared that:
“x x x Basic to the contract bar rule is the proposition that the delay of the right to select representatives
can be justified only where stability is deemed paramount. Excepted from the contract bar rule are
certain types of contracts which do not foster industrial stability, such as contracts where the identity of
the representative is in doubt. Any stability derived from such contracts must be subordinated to the
by the law.” 11
At this juncture, petitioner should be reminded that the technical rules of procedure do not strictly
apply in the adjudication of labor disputes. 12 Consequently, its objection that the evidence with respect
to the aforesaid repudiation of the supposed collective bargaining agreement cannot be considered for
the first time on appeal to the Bureau of Labor Relations should be disregarded, especially considering
the weighty significance thereof.
Both petitioner and private respondent GAW Trading, Inc. allege that the employees of the latter are
now enjoying the benefits of the collective bargaining agreement that both parties had forged.
However, We cannot find sufficient evidence of record to support this contention. The only evidence
cited by petitioner is the supposed payment of union fees by s aid em-
________________
10 Ibid., 27.
11 Firestone Tire & Rubber Company Employees Union, etc. vs. Estrella, etc., et al. 81 SCRA 49, 54
(1978).
12 Art. 221, Labor Code, as amended.
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187
ployees, a premise too tenuous to sustain the desired conclusion. Even the actual number of workers in
the respondent company is not clear from the records. Said private respondent claims that it is two
hundred eighty-one (281) 13 but petitioner suggests that it is more than that number. The said parties
should be aware that this Court is not an adjudicator of facts. Worse, to borrow a trite but apt phrase,
they would heap the Ossa of confusion upon the Pelion of uncertainty and still expect a definitive ruling
on the matter thus confounded.
Additionally, the inapplicability of the contract bar rule is further underscored by the fact that when the
disputed agreement was filed before the Labor Regional Office on May 27, 1986, a petition for
certification election had already been filed on May 19, 1986. Although the petition was not supported
by the signatures of thirty percent (30% ) of the workers in the bargaining unit, the same was enough to
initiate said certification election.
WHEREFORE, the order of the public respondent for the conduct of a certification election among the
rank-and-file workers of respondent GAW Trading Inc. is AFFIRMED. The temporary restraining order
issued in this case pursuant to the Resolution of March 25, 1987 is hereby lifted.
SO ORDERED.
Melencio-Herrera, Paras, Padilla and Sarmiento, JJ., concur.
Order affirmed.
Note. ___ In interpreting the protection to labor and social justice provisions of the Constitution and the
labor laws on rules and regulations implementing the constitutional mandates, the Supreme Court has
always adopted the liberal approach which favors the exercise of labor rights. ( Adamson and Adamson,
Inc. vs. Court of Industrial Relations, 127 SCRA 268.)
——o0o—— Associated Labor Union (ALU) vs. Ferrer-Calleja, 173 SCRA 178, G.R. No. 77282 May 5, 1989
VOL. 81, JANUARY 6, 1978
49
Firestone Tire & Rubber Company Employees Union vs. Estrella
Nos. L-45513-14. January 6, 1978.*
IN THE MATTER OF PETITION FOR DIRECT CERTIFICATION OR CERTIFICATION ELECTION. FIRESTONE

TIRE & RUBBER COMPANY EMPLOYEES’ UNION (FEU), petitioner, vs. THE HON. FRANCISCO L.
ESTRELLA, as Acting Director of the Bureau of Labor Relations, FIRESTONE TIRE & RUBBER COMPANY
OF THE PHILIPPINES and ASSOCIATED LABOR UNIONS (ALU), respondents.
FIRESTONE TIRE & RUBBER COMPANY EMPLOYEES UNION, represented by Romulo Ramos as
President, petitioner, vs. THE HON. FRANCISCO L. ESTRELLA, as Acting Director of the Bureau of Labor
Relations, and ASSOCIATED LABOR UNIONS (ALU), respondents.
Labor law; Contracts which do not foster industrial stability are exempt from the contract-bar rule as
when there is a substantial schism or disaffiliation by employees from the present bargaining agent.—
It seems to be the better view that a contract does not operate as a bar to representation
proceedings, where it is shown that because of a schism in the union the contract can no longer
promote industrial stability, and the direction of the election is in the interest 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
can be justified only where stability is deemed paramount. Excepted from the contract bar rule are
certains of contract which do not foster industrial stability, such as contracts where the identity of the
representative is in doubt. Any stability derived from such contracts must be subordinated to the
by the law. In the case at bar, it is doubtful if any contract that may have been entered into between
respondent ALU and respondent company will foster stability in the bargaining unit, in view of the
fact that a substantial number of the employees therein
______________
*SECOND DIVISION.
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50
have resigned from ALU and joined petitioner FEU. At any rate, this is a matter that must be finally
determined by means of a certification election.
Same; Only a certified CBA will serve to bar a certification election.—It appearing that the extension
of the life of the collective bargaining agreement for a period of one year was not certified by the
Bureau of Labor Relations, it cannot, therefore, also bar the certification election. Only a certified
collective bargaining agreement would serve as a bar to such election.
PETITIONS for certiorari to review the resolutions of the Acting Director of the Bureau of Labor
Relations.
Avelino D. Latosa for petitioner.
Venerando B. Briones for private respondent.
ANTONIO, J.:
Petition to set aside two Resolutions issued by respondent Acting Director Francisco L. Estrella of the
Bureau of Labor Relations in BLR Cases Nos. A-070-76 and 2106-76.
The petition alleges that on June 21, 1973, the National Labor Relations Commission certified a three-
year collective bargaining agreement between respondents Associated Labor Union (ALU) and Firestone
Tire & Rubber Company of the Philippines. Said collective bargaining agreement was to be effective
from February 1, 1973 to January 31, 1976.
On February 1, 1974, the afore-mentioned respondents entered into a “Supplemental Agreement”

extending the life of the collective bargaining agreement for one year, making it effective up to January
31, 1977. The extension was not ratified by the covered employees nor submitted to the Department of
Labor for certification.
Within the sixty-day period prior to the original expiry date of the agreement, some 233 out of about
400 rank-and-file employees of respondent Company resigned from respondent ALU. Subsequently, the
number of these employees who resigned from the union was increased to 276 and, by way of letter to
the Director of the Bureau of Labor Relations, they requested for the issuance of a certificate of
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51
registration in favor of petitioner Firestone Tire & Rubber Company Employees’ Union (FEU). On January
28, 1976, Registration Permit No. 8571-IP was issued to petitioner FEU.
On February 10, 1976, ten (10) days after the original expiry date of the collective bargaining agreement,
petitioner FEU filed a petition with the Bureau of Labor Relations for direct certification or certification
election,1 with the written consent of 308 employees, or 77% of the 400-man bargaining unit.
On February 20, 1976, respondent ALU filed with the Bureau of Labor Relations a petition for the
cancellation of the registration certificate of petitioner FEU,2 alleging that at the time of FEU’s
registration, respondent ALU was the recognized and certified collective bargaining agent in the unit,
and that FEU had not submitted the required sworn statement that there is no recognized or certified
collective bargaining agent therein.
On February 23, 1976, respondent ALU prayed for the dismissal of R04-MED-143-76 on the grounds,
among others, that it has a pending petition for the cancellation of FEU’s registration certificate and that
there is an existing collective bargaining agreement, due to expire on January 31, 1977, which
constitutes a valid bar to the holding of a certification election.
Respondent Company likewise opposed the holding of a certification election on the ground, however,
that the petition therefor was filed late, considering that it was filed ten (10) days after the expiry date
of the collective bargaining agreement.
On April 6, 1976, the Med-Arbiter issued an Order granting the petition for certification election.
Respondents ALU and the Company filed separate appeals from the order before the Bureau of Labor
Relations.
The Order of the Med-Arbiter was affirmed by the Honorable Director Carmelo C. Noriel on September
23, 1976, and Motions for Reconsideration were filed by ALU and the Company on October 11, 1976.
On January 25, 1977, respondent Acting BLR Director Francisco L. Estrella issued a Resolution reversing
the Order of the Med-Arbiter which was affirmed by Director Noriel, and holding:
______________
1Case No. R04-MED-143-76, renumbered BLR Case No. A-070-76.
2BLR Case No. 2106-76.
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“* * * that there indeed exists a prejudicial question involving the very legal personality of the petitioner
union. In BLR Case No. 2106-76, the validity of the registration certificate of petitioner is at issue. It is
therefore obvious that the present representation question should wait for the final disposition of the
issue on petitioner’s legal personality, if only to forestall what may prove to be unnecessary
proceedings.”3
The issue of whether or not there was an existing collective bargaining agreement which serves as a bar
to the holding of a certification election was not resolved by respondent Acting Director Francisco L.
Estrella.
On June 8, 1976, BLR Case No. 2106-76 for the cancellation of petitioner FEU’s certificate of registration
was dismissed by the Med-Arbiter. Respondents ALU and the Company appealed to the Bureau of Labor
Relations, but the appeals were dismissed by Director Carmelo C. Noriel. Motions for Reconsideration
were filed by the same respondents and on January 25, 1977, respondent Acting Director Francisco L.
Estrella entered a Resolution reversing the decision of Director Noriel and revoking the certificate of
registration of petitioner FEU. Respondent Acting Director Estrella ruled that according to Section 4,
Rule II, Book V of the Rules of Implementing the Labor Code, no union may be registered when there is
in the bargaining unit a recognized or certified collective bargaining agent. The Acting Director found
that there was such a bargaining agent in the unit (ALU), and that there was in fact a collective
bargaining agreement which was yet to expire on January 31, 1977. On that score, it was held that FEU’s
application for registration was premature, and that it should have waited for the expiration of the
collective bargaining agreement.
The two Resolutions issued by Respondent Acting Director Francisco L. Estrella are subject of the instant
petition for review by way of certiorari.
It is petitioner’s contention that the issue of whether or not there was an existingcontract or collective
bargaining agreement to validly bar the holding of a certification election should have been resolved by
respondent Acting Director in BLR Case No. A-070-76, as it was already intertwined with the issue of
petitioner’s legal personality as assailed in BLR Case No. 2106-76, According to petitioner, “if the
______________
3Annex “B”, Petition, p. 27, Rollo.
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petition for certification election in this case is not barred by the contract in question, then the
registration certificate of petitioner, acquired as it was within the sixty-day freedom period of such
contract must, of necessity, be likewise not barred or denied as premature.” Likewise, petitioner alleges
that “there being no pronouncement on the applicability of the ‘contract bar’ rule in this case, the
cancellation of the registration certificate of petitioner is devoid of legal basis, hence it was done by the
respondent BLR Acting Director in grave abuse of discretion.”
Further, it is petitioner’s stand that the Acting Director erred in concluding that the collective bargaining
agreement was to expire on January 31, 1977, for which reason he held that petitioner’s application for
registration was premature. The expiry date of January 31, 1977, according to petitioner, was
unauthorized because the extension of the contract for a period of one year was not certified by the
Department of Labor and was “used to foil the constitutional right of the workers to self-organization
and to engage in collective bargaining.”
The petition prays that the Resolutions of respondent Acting Director, both dated January 25, 1977, be
set aside, and the orders/decisions of Director Carmelo C. Noriel, dated September 23, 1976 and
October 8, 1976, be affirmed.
Respondent Firestone Tire and Rubber Company of the Philippines filed its Comment to the instant
petition, contending, mainly, that petitioner FEU had no legal personality as a union because its non-
compliance with Section 4, Rule II, Book V of the Rules and Regulations Implementing the Labor Code is
sufficient ground for the cancellation of its registration certificate.
Respondent ALU likewise filed its Comment, reiterating the contention that FEU had no legal personality
to ask for a direct certification or certification election because its certificate of registration was
obtained fraudulently and has, in fact, been cancelled.
In the meantime, due to the fact that the collective bargaining agreement had already expired,
respondent ALU demanded that respondent Company negotiate with it for a new agreement. The
Company requested for specific advice on the proper course of action from the Department of Labor. In
response to the request, the Department answered that “in the absence of any adjudication from
competent authority and in accordance with existing jurisprudence
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* * * there is no legal impediment for (the) Company to negotiate a new collective bargaining
agreement with the Associated Labor Unions.”
Accordingly, a new collective bargaining agreement was entered into between ALU and the Company on
April 1, 1977.
It appears that on January 31, 1977, FEU filed with Regional Office No. 4 Case No. R04-MED-808-77, a
petition for direct certification/certification election, utilizing its questioned Registration Permit No.
8571-IP, dated January 26, 1976.
We find this petition meritorious. In BLR Case No. 2160-76, Director Carmelo C. Noriel, resolving the
pivotal issue of whether or not the failure of FEU to submit “a sworn statement * * * to the effect that
there is no recognized or certified collective bargaining agent in the bargaining unit concerned” warrants
the revocation of its registration, said:
“This Bureau answers in the negative.

*** *** ***
“* * * notwithstanding the existence of a certified or recognized collective bargaining agent, the policy
of this Office sanctions a registration of new union during the freedom period especially if it has become
apparent that a substantial number of union members has decided to form a new labor organization, as
aptly illustrated in the case at bar. If the rule were otherwise, no recourse whatsoever shall be accorded
to members of a bargaining unit who would like to make a free choice of their bargaining
representative, thereby placing the constitutional rights of the workers to self-organization and
collective bargaining in mockery, if not, in utter illusion.”
This view is supported by precedents, it seems to be the better view that a contract does not operate as
a bar to representation proceedings, where it is shown that because of a schism in the union the
contract can no longer serve to promote industrial stability, and the direction of the election is in the
interest of industrial stability as well as in the interest of the employees’ right in the selection of their
bargaining representatives.4 Basic to the contract bar rule is the proposition that the delay of the right
to select representatives can be justified only where stability is deemed paramount. Excepted from the
contract bar rule are certain types of contracts which do not foster industrial stability, such as contracts
where the identity of
______________
4Re: Hershey Chocolate Corp., 121 NLRB 901.
55
55
the representative is in doubt. Any stability derived from such contracts must be subordinated to the
by the law.5
In the case at bar, it is doubtful if any contract that may have been entered into between respondent
ALU and respondent Company will foster stability in the bargaining unit, in view of the fact that a
substantial number of the employees therein have resigned from ALU and joined petitioner FEU. At any
rate, this is a matter that must be finally determined by means of a certification election.
In Foamtex Labor Union-TUPAS vs. Noriel,6 We said:
“* * * The question of whether or not the disaffiliation was validly made appears not to be of much
significance, considering that the petition for direct certification is supported by eighty (80) out of a total
of one hundred twenty (120) of the rank and file employees of the unit. Pursuant to Article 256 of the
Labor Code, if there is any reasonable doubt as to whom the employees have chosen as their
representative for the purpose of collective bargaining, the Bureau shall order a secret ballot election to
be conducted by the Bureau to ascertain who is the freely chosen representative of the employees
concerned, * * *’. It is very clear from the aforementioned circumstances that there is actually a
reasonable doubt as to whom the employees have chosen as their representative for the purpose of
collective bargaining.
“As to whether or not the disaffiliation was actually and validly made, or whether Foamtex Labor Union
of respondent Belga is the true collective bargaining representative of the employees are questions that
need not be resolved independently of each other. Such questions may be answered once and for all the
moment is determined, by means of the secret ballot election, the union to which the majority of the
employees have really reposed their allegiance. The important factor here is the true choice of the
employees, and the most expeditious and effective manner of determining this is by means of the
certification election, as it is for this very reason that such procedure has been incorporated in the law.
To order that a separate secret ballot election be conducted for the purpose of determining the
question of policy, i.e., whether or not the majority of the employees desire to disaffiliate from the
mother union, would be merely a circuitous way of ascertaining the majority’s true choice.
______________
5Re: Paragon Products Corporation, 134 NLRB 662.
672 SCRA 371, 376-378.
56
56
As observed PAFLU v. Bureau of Labor Relations (69 SCRA 132, 139), a certification election for the
collective bargaining process ‘is one of the fairest and most effective way of determining which labor
organization can truly represent the working force. It is a fundamental postulate that the will of the
majority, if given in an honest election with freedom on the part of the voters to make their choice, is
controlling. No better device can assure the institution of industrial democracy with the two parties to a
business enterprise, management and labor, establishing a regime of self-rule.’ ”
Similarly, in Philippine Labor Alliance Council (PLAC) vs. Bureau of Labor Relations, et al.,7 it was held
that once the fact of disaffiliation has been demonstrated beyond doubt, a certification election is the
most expeditious way of determining which labor organization is to be the exclusive bargaining
representative.
It appearing that the extension of the life of the collective bargaining agreement for a period of one year
was not certified by the Bureau of Labor Relations, it cannot, therefore, also bar the certification
election. Only a certified collective bargaining agreement would serve as a bar to such election.8
Corollarily, therefore, petitioner’s application for registration was not premature, as it need not have
waited for the expiration of the one-year extension, the agreement having expired on January 31, 1976.
WHEREFORE, the instant petition for certiorari is granted. The two Resolutions, both dated January 25,
1977 in BLR Cases Nos. A-060-76 and 2106-76 are hereby REVERSED and set aside. Costs against private
respondents.
Barredo (Actg. Chairman), Aquino, Concepcion Jr. and Guerrero, JJ., concur.
Fernando (Chairman) and Santos, JJ., are on leave.
Guerrero, J., was designated to sit in the Second Division.
Petition granted.
______________
775 SCRA 162.
8Foamtex Labor Union-TUPAS vs. Noriel, supra, pp. 377-378.
57
57
Notes.—The law allows a petition for certification to be filed within a reasonable period before the
renewal of an existing bargaining agreement. (Compania Maritima vs. Compania Maritima Labor Union,
43 SCRA 464).
When a labor organization objects to the participation in a certification election of a company-

dominated union and as a result, a complaint for unfair labor practice case against the employer is filed,
the status of the latter union must be first cleared in such a proceeding before the voting could take
place. (B. F. Goodrich Philippines, Inc. vs. B. F. Goodrich Confidential and Salaried Employees Union-
NATU, 49 SCRA 532).
The NLRC may require a collective bargaining agreement to be certified by it before the agreement
could be a bar to any certification election. (Confederation of Citizens Labor Unions vs. National Labor
Relations Commission, 60 SCRA 450).
Substantial benefits due from an existing collective bargaining agreement do not preclude the holding of
a certification election; nor may any damage result from a certification election be a bar to such election
whose principal purpose is to ascertain the desires of the employees as to their collective bargaining
representative. (Confederation of Citizens Labor Unions vs. National Labor Relations Commission, 60
SCRA 450).
An agreement entered into by the company with a union not chosen by all the employees of said
company in a certification election is not binding on the other employees not members of said union.
(Sta. Cecilia Sawmills, Inc. vs. Court of Industrial Relations, 10 SCRA 433).
A general allegation that workers were threatened, coerced, and intimidated to vote for respondent
union, without anything to indicate the number of workers involved, without the supporting affidavit of
any of them, and without an offer to introduce their testimony or any of them will be deemed
insufficient to warrant the invalidation of the certification election in question. (Acoje Workers Union vs.
National Mines and Allied Workers’ Union (NAMAWU), 7 SCRA 730).
——o0o——
58 Firestone Tire & Rubber Company Employees Union vs. Estrella, 81 SCRA 49, Nos. L-45513-14 January
6, 1978
316
United CMC Textile Workers Union vs. Bureau of Labor Relations
No. L-51337. March 22, 1984.*
UNITED CMC TEXTILE WORKERS UNION, petitioner, vs. BUREAU OF LABOR RELATIONS, HON.
CARMELO NORIEL, PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS, (JULY CONVENTION),
respondents.
Labor Law; Certification Election; Prejudicial Question; Pendency of a formal charge of company
domination, a prejudicial question that bars proceedings for a certification election; Reason.—Under
settled jurisprudence, the pendency of a formal charge of company domination is a prejudicial
question that, until decided, bars proceedings for a certification election, the reason being that the
votes of the members of the dominated union would not be free. The ULP Case herein was filed on
August 31, 1978, or anterior to the Certification Case, which was presented on September 5, 1978. The
pendency of the charge was known to respondent public official by virtue of the Motion to Dismiss
filed by petitioner as intervenor in the Certification Case. No allegation has been made that said ULP
Case was instituted in bad faith to forestall the Certification Case.
Same; Same; Same; Same; Rationale for suspension of certification election proceedings.—The
rationale for the suspension of the election proceedings has been further amplified as follows: What is
settled law, dating from the case of Standard Cigarette Workers’ Union v. Court of Industrial Relations
(101 Phil. 126), decided in 1957, is that if it were a labor organization objecting to the
_______________
* FIRST DIVISION.
317
VOL. 128, MARCH 22, 1984
317
participation in a certification election of a company-dominated union, as a result of which a

complaint for an unfair labor practice case against the employer was filed, the status of the latter
union must be first cleared in such a proceeding before such voting could take place. In the language
of Justice J.B.L. Reyes as ponente: ‘As correctly pointed out by Judge Lanting in his dissenting opinion
on the denial of petitioner’s motion for reconsideration, a complaint for unfair labor practice may be
considered a prejudicial question in a proceeding for certification election when it is charged therein
that one or more labor unions participating in the election are being aided, or are controlled, by the
company or employer. The reason is that the certification election may lead to the selection of an
employer-dominated or company union as the employees’ bargaining representative, and when the
court finds that said union is employer-dominated in the unfair labor practice case, the union selected
would be decertified and the whole election proceedings would be rendered useless and nugatory.’
(Ibid., 128).
PETITION to review the resolution of the Bureau of Labor Relations.
MELENCIO-HERRERA, J.:
The question to resolve is whether or not public respondent acted with grave abuse of discretion in
affirming the Order of the Med-Arbiter calling for a certification election despite: (a) the pendency of an
unfair labor practice case filed by petitioner charging respondent PAFLU as being company-dominated;
(b) the existence of a deadlock in negotiations for renewal of the collective bargaining agreement
between petitioner and the Central Textile Mills, Inc. (CENTEX, for short); and (c) a reasonable doubt as
to whether the 30% requirement for holding a certification election has been met.
Petitioner is a legitimate labor organization, the incumbent collective bargaining representative of all
rank and file workers of CENTEX since 1956. Respondent PAFLU is also a legitimate labor organization
seeking representation as the bargaining agent of the rank and file workers of CENTEX.
318
318
On August 31, 1978, petitioner filed a complaint for Unfair Labor Practice (R4-LRD-C-8-1493-78) (the ULP
Case, for brevity) against CENTEX and PAFLU alleging that CENTEX had “helped and cooperated in the
organization of the Central Textile Mills, Inc. Local PAFLU by allowing the organizing members of the
PAFLU to solicit signatures of employees of the company who are members of the complainant union to
disaffiliate from complainant union and join the respondent PAFLU, during company time and inside the
company premises on August 21, 1978 and the following days thereafter.”1
While the ULP Case was pending, PAFLU, on September 5, 1978, filed a Petition for Certification Election
(R4-LRD-M-9-432-78) (the Certification Case, for short) among the rank and file workers of CENTEX,
alleging that: 1) there has been no certification election during the 12 months period prior to the filing
of the petition; 2) the petition is supported by signatures of 603 workers, or more than 30% of the rank
and file workers of CENTEX; 3) the collective bargaining agreement between CENTEX and petitioner will
expire on October 31, 1978; 4) the petition is filed within the 60-day-freedom-period immediately
preceding the expiration of the CBA, and 5) there is no legal impediment to the filing of the petition.2
Petitioner intervened in the Certification Case and filed a Motion to Dismiss on September 27, 1978 on
the grounds that: 1) the ULP Case charging that PAFLU is a company-dominated union is a prejudicial
question and bars the holding of the certification election; and 2) PAFLU failed to comply with the 30%
requirement for mandatory certification election since only 440 of the 603 are valid signatures and that
719 signatories are required as constitutive of 30% of the rank and file workers totalling 2,397 and not
1,900 as alleged by PAFLU.3
_______________
1 p. 22, Rollo.
2 pp. 11-12, ibid.
3 pp. 15-21, ibid.
319
VOL. 128, MARCH 22, 1984
319
On October 16, 1978, petitioner filed a Notice of Strike with the Bureau of Labor Relations for deadlock
in the CBA negotiations with CENTEX. The parties having failed to effect a conciliation, the Labor
Minister assumed jurisdiction on November 9, 1978 in Case No. AJML-033-784 (referred to hereafter as
the Deadlock Case).
A Supplemental Motion to Dismiss in the Certification Case was filed by petitioner on December 7, 1978
alleging that the Labor Minister had already taken cognizance of the deadlock in the CBA negotiations
and constituted an impediment to the holding of a certification election.5
On December 18, 1978, in the Deadlock Case, the Deputy Minister of Labor released a Decision directing
petitioner and CENTEX to execute and sign a CBA to take effect on November 1, 1978 up to October 30,
1981 based on the guidelines enumerated therein, and to furnish the Office of the Minister of Labor
with a signed copy of the renewed agreement not later than January 31, 1979.6
On January 23, 1979, in the Certification Case, the Med-Arbiter issued an Order for the holding of a
certification election among CENTEX rank and file workers, whereby qualified voters could choose either
PAFLU or petitioner as the collective bargaining representative or No Union at all.7 This was affirmed by
respondent Director of the Bureau of Labor Relations on appeal, in the challenged Resolution, dated
May 25, 1979, stating that: 1) the Bureau has discretion to order certification election where several
unions are contending for representation and when there is doubt as to whether the 30% requirement
has been met; and 2) to preclude the filing of a petition for certification election the notice of strike for
deadlock in CBA negotiations must occur prior to the petition.8
_______________
4 p. 32, ibid.
5 p. 130, ibid.
6 pp. 32-34, ibid.
7 pp. 35-37, ibid.
8 pp. 47-48, ibid.
320
320
A Motion for Reconsideration filed by petitioner was denied for lack of merit in the Resolution of August
20, 19799, also assailed herein.
Hence, this petition, on the general proposition that public respondent has committed serious error of
law and acted with grave abuse of discretion, and that petitioner has no plain and adequate remedy in
the ordinary course of law. We issued a Temporary Restraining Order enjoining the conduct of the
certification election, and eventually gave the Petition due course.
The issues raised are: (1) is the pendency of the ULP Case charging a participating union in the
certification election proceedings as company-dominated a prejudicial question to the conduct of the
election? (2) Does the decision in the Deadlock Case directing the parties to execute a CBA have the
effect of barring the certification election? (3) Does respondent Director have the discretion to call for a
certification election even if the 30% consent requirement is lacking?
The case can be resolved on the basis of the first issue alone, which must be answered in the
affirmative. Under settled jurisprudence, the pendency of a formal charge of company domination is a
prejudicial question that, until decided, bars proceedings for a certification election10, the reason being
that the votes of the members of the dominated union would not be free.11 The ULP Case herein was
filed on August 31, 1978, or anterior to the Certification Case, which was presented on September 5,
1978. The pendency of the charge was known to respondent public official by virtue of the Motion to
Dismiss filed by petitioner as intervenor in the Certification Case. No allegation has been made that said
ULP Case was instituted in bad faith to forestall the Certification Case. The following ruling is thus
squarely in point:
_______________
9 pp. 49-55, ibid.
10 Standard Cigarette Workers Union vs. Court of Industrial Relations, 101 Phil. 126 (1957).
11 Manila Paper Mills Employees vs. Court of Industrial Relations, 104 Phil. 10 (1958).
321
VOL. 128, MARCH 22, 1984
321
“There is no assertion that such complaint was flimsy, or made in bad faith or filed purposely to forestall
the certification election. So, no reason existed for the Industrial Court to depart from its established
practice of suspending the election proceeding. And this seems to be accepted rule in the law of labor
relations, the reason being, in the words of Mr. Justice Montemayor, ‘if there is a union dominated by
the company, to which some of the workers belong, an election among workers and employees of the
company would not reflect the true sentiment and wishes of the said workers and employees because
the votes of the members of the dominated union would not be free.’ (Manila Paper Mills Employees vs.
Court of Industrial Relations, 104 Phil. 10).
“And we have held, through Mr. Justice J.B.L. Reyes, that such charge of company domination is a
prejudicial question that until decided, shall suspend or bar proceedings for certification election.
(Standard Cigarette Workers’ Union vs. Court of Industrial Relations, 101 Phil. 126).
“Indeed, if as a result of the Pelta’s complaint in Case No. 255-ULP, the Workers Union should be
ordered dissolved as a company-dominated union, any election held in the meantime would be a waste
of energy and money to all parties concerned.”12
The rationale for the suspension of the election proceedings has been further amplified as follows:
“What is settled law, dating from the case of Standard Cigarette Workers’ Union v. Court of Industrial
Relations (101 Phil. 126), decided in 1957, is that if it were a labor organization objecting to the
participation in a certification election of a company-dominated union, as a result of which a complaint
for an unfair labor practice case against the employer was filed, the status of the latter union must be
first cleared in such a proceeding before such voting could take place. In the language of Justice J.B.L.
Reyes as ponente: ‘As correctly pointed out by Judge Lanting in his dissenting opinion on the denial of
petitioner’s motion for reconsideration, a complaint for unfair labor practice may be considered a
prejudicial question in a proceeding for certification election when it is charged therein that one or more
labor unions participating in the election are being aided,
_______________
12 Acoje Mines Employees and Acoje United Workers Union vs. Acoje Labor Union and Acoje Mining
Co., 104 Phil. 814 at 816 & 817 (1958).
322
322
or are controlled, by the company or employer. The reason is that the certification election may lead to
the selection of an employer-dominated or company union as the employees’ bargaining representative,
and when the court finds that said union is employer-dominated in the unfair labor practice case, the
union selected would be decertified and the whole election proceedings would be rendered useless and
nugatory.’ (Ibid., 128). The next year, the same jurist had occasion to reiterate such doctrine in Manila
Paper Mills Employees and Workers Association v. Court of Industrial Relations (104 Phil. 10 [1958]),
thus: ‘We agree with the CIR on the reasons given in its order that only a formal charge of company
domination may serve as a bar to and stop a certification election, the reason being that if there is a
union dominated by the Company, to which some of the workers belong, an election among the workers
and employees of the company would not reflect the true sentiment and wishes of the said workers and
employees from the standpoint of their welfare and interest, because as to the members of the
company dominated union, the vote of the said members in the election would not be free. It is equally
true, however, that the opposition to the holding of a certification election due to a charge of company
domination can only be filed and maintained by the labor organization which made the charge of
company domination, because it is the entity that stands to lose and suffer prejudice by the certification
election, the reason being that its members might be overwhelmed in the voting by the other members
controlled and dominated by the Company,’ (Ibid., 15). It is easily understandable why it should be thus.
There would be an impairment of the integrity of the collective bargaining process if a company-
dominated union were allowed to participate in a certification election. The timid, the timorous, and the
faint-hearted in the ranks of labor could easily be tempted to cast their votes in favor of the choice of
management. Should it emerge victorious, and it becomes the exclusive representative of labor at the
conference table, there is a frustration of the statutory scheme. It takes two to bargain. There would be
instead a unilateral imposition by the employer. There is need therefore to inquire as to whether a labor
organization that aspires to be the exclusive bargaining representative is company-dominated before
the certification election.”13
_______________
13 B. F. Goodrich Philippines, Inc. vs. B. F. Goodrich (Marikina Factory) Confidential & Salaried
Employees Union-NATU, 49 SCRA 532 at 538-540 (1973).
323
VOL. 128, MARCH 22, 1984
323
With the suspension of the certification proceedings clearly called for by reason of a prejudicial
question, the necessity of passing upon the remaining issues is obviated.
WHEREFORE, the Resolution of August 20, 1979 issued by public respondent affirming the Order of the
Med-Arbiter, dated January 23, 1979, calling for a certification election is hereby REVERSED and SET
ASIDE. The Temporary Restraining Order heretofore issued by this Court shall continue to be in force
and effect until the status is cleared of respondent Philippine Association of Free Labor Unions (July
Convention) in Case No. R4-LRD-M-9-432-78 entitled “In the Matter of Certification Election Among
Rank and File Workers of Central Textile Mills, Inc., Philippine Association of Free Labor Unions,
Petitioner, United CMC Textile Workers Union, Intervenor.”
No costs.
SO ORDERED.
Plana, Relova, Gutierrez, Jr., and De la Fuente, JJ., concur.
Teehankee, J., is on official leave.
Resolution reversed and set aside.
Notes.—Director of Labor Relations may order a certification even if less than 30% of the employees ask
for a certification election. (Eastland Manufacturing Company, Inc. vs. Noriel, 111 SCRA 674.)
Clear majority of workers of a union who have not only ratified the collective bargaining agreement of
their union but affirmed their membership therein renders unnecessary the holding of the petition for
the certification election despite written support of 30% of workers of the rival union. (Trade Unions of
the Philippines and Allied Services vs. Inciong, 115 SCRA 847.)
The purpose of a certification election is to give employees
324
324
Lecaroz vs. Sandiganbayan
true representation in their collective bargaining with an employer. (Confederation of Citizens Labor
Union vs. Noriel 116 SCRA 694.)
——o0o—— United CMC Textile Workers Union vs. Bureau of Labor Relations, 128 SCRA 316, No. L-
51337 March 22, 1984
802
Progressive Development Corporation vs. Secretary, Department of Labor and Employment
G.R. No. 96425. February 4,1992.*
PROGRESSIVE DEVELOPMENT CORPORATION, petitioner, vs. THE HONORABLE SECRETARY,

DEPARTMENT OF LABOR AND EMPLOYMENT, MED-ARBITER EDGARDO DELA CRUZ, AND
PAMBANSANG KILUSAN NG PAGGAWA (KILUSAN)-TUCP, respondents.
Labor Law; Labor Organization; Certification Election; Court has repeatedly stressed that the holding
of a certification election is based on a statutory policy that cannot be circumvented.—The Court has
repeatedly stressed that the holding of a certification election is based on a statutory policy that
cannot be circumvented. (Airtime Specialists, Inc. v. Ferrer-Calleja, 180 SCRA 749 [1989]; Belyca
Corporation v. Ferrer-Calleja, 168 SCRA 184 [1988]; George and Peter Lines, Inc.
_______________
* THIRD DIVISION.
803

803
v. Associated Labor Unions, 134 SCRA 82 [1986]). The workers must be allowed to freely express their
choice in a determination where everything is open to their sound judgment and the possibility of
fraud and misrepresentation is eliminated.
Same; Same; Same; Article 242 enumerates the exclusive rights of a legitimate labor organization
among which is the right to be certified as the exclusive representative of all the employees in an
appropriate collective bargaining unit for purposes of collective bargaining.—But while Article 257
cited by the Solicitor General directs the automatic conduct of a certification election in an
unorganized establishment, it also requires that the petition for certification election must be filed by
a legitimate labor organization. Article 242 enumerates the exclusive rights of a legitimate labor
organization among which is the right to be certified as the exclusive representative of all the
employees in an appropriate collective bargaining unit for purposes of collective bargaining.
Same; Same; Same; Legitimate labor organization defined.—Meanwhile, Article 212(h) defines a
legitimate labor organization as "any labor organization duly registered with the DOLE and includes
any branch or local thereof." (Italics supplied) Rule I, Section 1(j), Book V of the Implementing Rules
likewise defines a legitimate labor organization as "any labor organization duly registered with the
DOLE and includes any branch, local or affiliate thereof."
Same; Same; Same; Same; A labor organization acquires legitimacy only upon registration with the
BLR.—Ordinarily, a labor organization acquires legitimacy only upon registration with the BLR.
Same; Same; Same; Same; Same; When an unregistered union becomes a branch, local or chapter of a
federation, some of the aforementioned requirements for registration are no longer required.—But
when an unregistered union becomes a branch, local or chapter of a federation, some of the
aforementioned requirements for registration are no longer required.
Same; Same; Same; Same; Same; Same; The intent of the law in imposing lesser requirements in the
case of a branch or local of a registered federation or national union is to encourage the affiliation of a
local union with a federation, or national union in order to increase the local union's bargaining
powers respecting terms and conditions of
804
804
labor.—Undoubtedly, the intent of the law in imposing lesser requirements in the case of a branch or
local of a registered federation or national union is to encourage the affiliation of a local union with a
federation or national union in order to increase the local union's bargaining powers respecting terms
and conditions of labor.
Same; Same; Same; Same; Same; Same; The certification and attestation requirements are preventive
measures against the commission of fraud.—The certification and attestation requirements are
preventive measures against the commission of fraud. They likewise afford a measure of protection to
unsuspecting employees who may be lured into joining unscrupulous or fly-by-night unions whose
sole purpose is to control union funds or to use the union for dubious ends.
Same; Same; Same; Same; Same; Same; Requirements before a local or chapter becomes a legitimate
labor organization.—A local or chapter therefore becomes a legitimate labor organization only upon
submission of the following to the BLR: 1) A charter certificate, within 30 days from its issuance by the
labor federation or national union, and 2) The constitution and by-laws, a statement on the set of
officers, and the books of accounts all of which are certified under oath by the secretary or treasurer,
as the case may be, of such local or chapter, and attested to by its president. Absent compliance with
these mandatory requirements, the local or chapter does not become a legitimate labor organization.
Same; Same; Same; Same; Same; Same; Same; Failure of the secretary of PDEU-Kilusan to certify the
required documents under oath is fatal to its acquisition of a legitimate status.—In the case at bar, the
failure of the secretary of PDEU-Kilusan to certify the required documents under oath is fatal to its
acquisition of a legitimate status.
Same; Same; Same; Same; Same; Same; Where the petition for certification election was filed by the
federation which is merely an agent, the petition is deemed to be filed by the chapter, the principal
which must be a legitimate labor organization.—At this juncture, it is important to clarify the
relationship between the mother union and the local union. In the case of Liberty Cotton Mills
Workers Union v. Liberty Cotton Mills, Inc., 66 SCRA 512 [1975]), the Court held that the mother
union, acting for and in behalf of its affiliate, had the status of an agent while the local union
remained the basic unit of the association, free to serve the common interest of all its members
805
805
subject only to the restraints imposed by the constitution and by-laws of the association. Thus, where
as in this case the petition for certification election was filed by the federation which is merely an
agent, the petition is deemed to be filed by the chapter, the principal, which must be a legitimate
labor organization. The chapter cannot merely rely on the legitimate status of the mother union.
PETITION for certiorari to review the resolution and orders of the Secretary of Department of Labor and
Employment.
Beltran, Bacungan & Candoy for petitioner.

Jimenez & Associates co-counsel for petitioner.
GUTIERREZ, JR., J.:
The controversy in this case centers on the requirements before a local or chapter of a federation may
file a petition for certification election and be certified as the sole and exclusive bargaining agent of the
petitioner's employees.
Petitioner Progressive Development Corporation (PDC) filed this petition for certiorari to set aside the
following:
1) Resolution dated September 5, 1990, issued by respondent Med-Arbiter Edgardo dela Cruz, directing
the holding of a certification election among the regular rank-and-file employees of PDC;
2) Order dated October 12,1990, issued by the respondent Secretary of Labor and Employment, denying
PDC's appeal; and
3) Order dated November 12, 1990, also issued by the respondent Secretary, denying the petitioner's
Motion for Reconsideration.
On June 19,1990, respondent Pambansang Kilusan ng Paggawa (KILUSAN)-TUCP (hereinafter referred to

as Kilusan) filed with the Department of Labor and Employment (DOLE) a petition for certification
election among the rank-and-file employees of the petitioner alleging that it is a legitimate labor
federation and its local chapter, Progressive Development Employees Union, was issued charter
certificate No. 90-6-1153. Kilusan claimed that there was no existing collective bar-
806
806
gaining agreement and that no other legitimate labor organization existed in the bargaining unit.
Petitioner PDC filed its motion to dismiss dated July 11,1990 contending that the local union failed to
comply with Rule II, Section 3, Book V of the Rules Implementing the Labor Code, as amended, which
requires the submission of: (a) the constitution and by-laws; (b) names, addresses and list of officers
and/or members; and (c) books of accounts.
On July 16,1990, respondent Kilusan submitted a rejoinder to PDC's motion to dismiss claiming that it
had submitted the necessary documentary requirements for registration, such as the constitution and
by-laws of the local union, and the list of officers/members with their addresses. Kilusan further averred
that no books of accounts could be submitted as the local union was only recently organized.
In its "Supplemental Position Paper" dated September 3, 1990, the petitioner insisted that upon
verification with the Bureau of Labor Relations (BLR), it found that the alleged minutes of the
organizational meeting was unauthenticated, the list of members did not bear the corresponding
signatures of the purported members, and the constitution and by-laws did not bear the signatures of
the members and was not duly subscribed. It argued that the private respondent therefore failed to
substantially comply with the registration requirements provided by the rules. Additionally, it prayed
that MedArbiter Edgardo dela Cruz inhibit himself from handling the case for the reason that he
allegedly had prejudged the same.
In his September 5, 1990 resolution, Med-Arbiter dela Cruz held that there was substantial compliance
with the requirements for the formation of a chapter. He further stated that mere issuance of the
charter certificate by the federation was sufficient compliance with the rules. Considering that the
establishment is unorganized, he maintained that a certification election should be conducted to resolve
the question of representation.
Treating the motion for reconsideration filed by PDC as an appeal to the Office of the Secretary,
Undersecretary Laguesma held that the same was merely a "reiteration of the issues already ventilated
in the proceedings before the Med-Arbiter,
807
807
specifically, the matter involving the formal organization of the chapter." (Rollo, p. 20) PDC's motion for
reconsideration from the aforementioned ruling was likewise denied. Hence, this petition.
In an order dated February 25, 1991, the Court resolved to issue a temporary restraining order enjoining
the public respondents from carrying out the assailed resolution and orders or from proceeding with the
certification election. (Rollo, pp. 37-39)
It is the petitioner's contention that a labor organization (such as the Kilusan) may not validly invest the
status of legitimacy upon a local or chapter through the mere expedient of issuing a charter certificate
and submitting such certificate to the BLR (Rollo, p. 85) Petitioner PDC posits that such local or chapter
must at the same time comply with the requirement of submission of duly subscribed constitution and
by laws, list of officers and books of accounts. (Rollo, p. 35) PDC points out that the constitution and by-
laws and list of officers submitted were not duly subscribed. Likewise, the petitioner claims that the
mere filing of the aforementioned documents is insufficient; that there must be due recognition or
acknowledgment accorded to the local or chapter by the BLR through a certificate of registration or any
communication emanating from it. (Rollo, p. 86)
The Solicitor General, in behalf of the public respondents, avers that there was substantial compliance
with the requirements for the formation of a chapter. Moreover, he invokes Article 257 of the Labor
Code which mandates the automatic conduct by the Med-Arbiter of a certification election in any
establishment where there is no certified bargaining agent.
The Court has repeatedly stressed that the holding of a certification election is based on a statutory
policy that cannot be circumvented. (Airtime Specialists, Inc. v. Ferrer-Calleja, 180 SCRA 749 [1989];
Belyca Corporation v. Ferrer-Calleja, 168 SCRA 184 [1988]; George and Peter Lines, Inc. v. Associated
Labor Unions, 134 SCRA 82 [1986]). The workers must be allowed to freely express their choice in a
determination where everything is open to their sound judgment and the possibility of fraud and
misrepresentation is eliminated.
808
808
But while Article 257 cited by the Solicitor General directs the automatic conduct of a certification
election in an unorganized establishment, it also requires that the petition for certification election must
be filed by a legitimate labor organization. Article 242 enumerates the exclusive rights of a legitimate
labor organization among which is the right to be certified as the exclusive representative of all the
employees in an appropriate collective bargaining unit for purposes of collective bargaining.
Meanwhile, Article 212(h) defines a legitimate labor organization as "any labor organization duly
registered with the DOLE and includes any branch or local thereof." (Italics supplied) Rule I, Section 1(j),
Book V of the Implementing Rules likewise defines a legitimate labor organization as "any labor
organization duly registered with the DOLE and includes any branch, local or affiliate thereof." (Italics
supplied)
The question that now arises is: when does a branch, local or affiliate of a federation become a
legitimate labor organization?
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 shall acquire legal
personality and shall be entitled to the rights and privileges granted 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 meetings and the list of the workers who participated in such meetings;
(c) The names of all its members comprising at least twenty 20% percent of all the employees in the
bargaining unit where it seeks to operate;
(d) If the applicant has been in existence for one or more years, copies of 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 participated in it."
809
809
And under Article 235 (Action on Application):
"The Bureau shall act on all applications for registration within thirty (30) days from filing.
All requisite documents and papers shall be certified under oath by the secretary or the treasurer of the
organization, as the case may be, and attested to by its president."
Moreover, section 4 of Rule II, Book V of the Implementing Rules requires that the application should be
signed by at least twenty percent (20%) of the employees in the appropriate bargaining unit and be
accompanied by a sworn statement of the applicant union that there is no certified bargaining agent or,
where there is an existing collective agreement duly submitted to the DOLE, that the application is filed
during the last sixty (60) days of the agreement.
The respondent Kilusan questions the requirements as too stringent in their application but the purpose
of the law in prescribing these requisites must be underscored. Thus, in Philippine Association of Free
Labor Unions v. Secretary of Labor, 27 SCRA 40 (1969), the Court declared:
"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 devoid of factual basis. The registration
prescribed in paragraph (b) of said section 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 sine qua non
for the acquisition of legal personality by labor organizations, associations or unions and the possession
of the "rights and privileges granted by law to legitimate labor organizations." The Constitution does not
guarantee these rights and privileges, much less said personality, which are mere statutory creations, for
the possession and exercise of which registration is required to protect both labor and the public against
abuses, fraud, or impostors who pose as organizers, although not truly accredited agents of the union
they purport to represent. Such requirement is a valid exercise of the police power, because the
activities in which labor organizations, associations and unions of workers are engaged affect public
interest, which should be protected. Furthermore, the obligation to submit financial statements, as a
condition for the non-cancellation of a certificate of registration, is a reasonable
810
810

regulation for the benefit of the members of the organization, considering that the same generally
solicits funds or membership, as well as oftentimes collects, on behalf of its members, huge amounts of
money due to them or to the organization." (Italics supplied)
But when an unregistered union becomes a branch, local or chapter of a federation, some of the
aforementioned requirements for registration are no longer required. The provisions governing union
affiliation are found in Rule II, Section 3, Book V of the Implementing Rules, the relevant portions of
which are cited below:
"SEC. 3. Union affiliation; direct membership with national union.—An affiliate of a labor federation or
national union may be a local or chapter thereof or an independently registered union.
a) The labor federation or national union concerned shall issue a charter certificate indicating the
creation or establishment of a local or chapter, copy of which shall be submitted to the Bureau of Labor
Relations within thirty (30) days from issuance of such charter certificate.
b) An independently registered union shall be considered an affiliate of a labor federation or national

union after submission to the Bureau of the contract or agreement of affiliation within thirty (30) days
after its execution.
xxx xxx xxx
e) The local or chapter of a labor federation or national union shall have and maintain a constitution and
by laws, set of officers and books of accounts. For reporting purposes, the procedure governing the
reporting of independently registered unions, federations or national unions shall be observed."
Paragraph (a) refers to a local or chapter of a federation which did not undergo the rudiments of
registration while paragraph (b) refers to an independently registered union which affiliated with a
federation. Implicit in the foregoing differentiation is the fact that a local or chapter need not be
independently registered. By force of law (in this case, Article 212[h]), such local or chapter becomes a
legitimate labor organization upon compliance with the aforementioned provisions of Section 3.
Thus, several requirements that are otherwise required for union registration are omitted, to wit:
811
811
1) The requirement that the application for registration must be signed by at least 20% of the employees
in the appropriate bargaining unit;
2) The submission of officers' addresses, principal address of the labor organization, the minutes of
organizational meetings and the list of the workers who participated in such meetings;
3) The submission of the minutes of the adoption or ratification of the constitution and by laws and the
list of the members who participated in it.
Undoubtedly, the intent of the law in imposing lesser requirements in the case of a branch or local of a
registered federation or national union is to encourage the affiliation of a local union with a federation
or national union in order to increase the local union's bargaining powers respecting terms and
conditions of labor.
The petitioner maintains that the documentary requirements prescribed in Section 3(c), namely: the
constitution and bylaws, set of officers and books of accounts, must follow the requirements of law.
Petitioner PDC calls for the similar application of the requirement for registration in Article 235 that all
requisite documents and papers be certified under oath by the secretary or the treasurer of the
organization and attested to by the president.
In the case at bar, the constitution and by-laws and list of officers submitted to the BLR, while attested
to by the chapter's president, were not certified under oath by the secretary. Does such defect warrant
the withholding of the status of legitimacy to the local or chapter?
In the case of union registration, the rationale for requiring that the submitted documents and papers
be certified under oath by the secretary or treasurer, as the case may be, and attested to by the
president is apparent. The submission of the required documents (and payment of P50.00 registration
fee) becomes the Bureau's basis for approval of the application for registration. Upon approval, the
labor union acquires legal personality and is entitled to all the rights and privileges granted by the law to
a legitimate labor organization. The employer naturally needs assurance that the union it is dealing with
is a bona-fide organization, one which has not submitted
812
812
false statements or misrepresentations to the Bureau. The inclusion of the certification and attestation
requirements will in a marked degree allay these apprehensions of management. Not only is the
issuance of any false statement and misrepresentation a ground for cancellation of registration (see
Article 239 (a), (c) and (d)); it is also a ground for a criminal charge of perjury.
The certification and attestation requirements are preventive measures against the commission of
fraud. They likewise afford a measure of protection to unsuspecting employees who may be lured into
joining unscrupulous or fly-by-night unions whose sole purpose is to control union funds or to use the
union for dubious ends.
In the case of union affiliation with a federation, the documentary requirements are found in Rule II,
Section 3(e), Book V of the Implementing Rules, which we again quote as follows:
"(c) The local or chapter of a labor federation or national union shall have and maintain a constitution
and by-laws, set of officers and books of accounts. For reporting purposes, the procedure governing the
reporting of independently registered unions, federations or national unions shall be observed." (Italics
supplied)
Since the "procedure governing the reporting of independently registered unions" refers to the
certification and attestation requirements contained in Article 235, paragraph 2, it follows that the
constitution and by-laws, set of officers and books of accounts submitted by the local and chapter must
likewise comply with these requirements. The same rationale for requiring the submission of duly
subscribed documents upon union registration exists in the case of union affiliation. Moreover, there is
greater reason to exact compliance with the certification and attestation requirements because, as
previously mentioned, several requirements applicable to independent union registration are no longer
required in the case of the formation of a local or chapter. The policy of the law in conferring greater
bargaining power upon labor unions must be balanced with the policy of providing preventive measures
against the commission of fraud.
813
813
A local or chapter therefore becomes a legitimate labor organization only upon submission of the
following to the BLR:
1) A charter certificate, within 30 days from its issuance by the labor federation or national union, and
2) The constitution and by-laws, a statement on the set of officers, and the books of accounts all of
which are certified under oath by the secretary or treasurer, as the case may be, of such local or
chapter, and attested to by its president.
Absent compliance with these mandatory requirements, the local or chapter does not become a
legitimate labor organization.
In the case at bar, the failure of the secretary of PDEUKilusan to certify the required documents under
oath is fatal to its acquisition of a legitimate status.
We observe that, as borne out by the facts in this case, the formation of a local or chapter becomes a
handy tool for the circumvention of union registration requirements. Absent the institution of
safeguards, it becomes a convenient device for a small group of employees to foist a not-so-desirable
federation or union on unsuspecting co-workers and pare the need for wholehearted voluntariness
which is basic to free unionism. The records show that on June 16, 1990, Kilusan met with several
employees of the petitioner. Excerpts of the "Minutes of the Organizational/General Membership
Meeting of Progressive Development Employees Union (PDEU)-Kilusan", are quoted below:
"The meeting was formally called to order by Bro. Jose V. Paningao, KILUSAN secretary for organization
by explaining to the general membership the importance of joining a union. He explained to the
membership why they should join a union, and briefly explained the ideology of the Pambansang Kilusan
ng Paggawa-TUCP as a democratically based organization and then read the proposed Constitution and
By-Laws, after which said Constitution and By-Laws was duly and unanimously ratified after some
clarification.
Bro. Jose Parungao was also unanimously voted by the group to act as the chairman of the COMELEC in
holding the organizational election of officers of the Union.
Bro. Parungao, officially opened the table for the nomination of candidates after which the election of
officers followed by secret
814
814
balloting and the following were the duly elected officers." (Original Record, p. 25)
The foregoing shows that Kilusan took the initiative and encouraged the formation of a union which
automatically became its chapter. On June 18,1990, Kilusan issued a charter certificate in favor of PDEU-
KILUSAN (Records, page 1). It can be seen that Kilusan was moving very fast.
On June 19,1990, or just three days after the organizational meeting, Kilusan filed a petition for
certification election (Records, pages 2 and 3) accompanied by a copy each of the charter certificate,
constitution and by-laws and minutes of the organizational meeting. Had the local union filed an
application for registration, the petition for certification election could not have been immediately filed.
The applicant union must first comply with the "20% signature" requirement and all the other requisites
enumerated in Article 234. Moreover, since under Article 235 the BLR shall act on any application for
registration within thirty (30) days from its filing, the likelihood is remote that, assuming the union
complied with all the requirements, the application would be approved on the same day it was filed.
We are not saying that the scheme used by the respondents is per se illegal for precisely, the law allows
such strategy. It is not this Court's function to augment the requirements prescribed by law in order to
make them wiser or to allow greater protection to the workers and even their employer. Our only
recourse is, as earlier discussed, to exact strict compliance with what the law provides as requisites for
local or chapter formation.
It may likewise be argued that it was Kilusan (the mother union) and not the local union which filed the
petition for certification election and, being a legitimate labor organization, Kilusan has the personality
to file such petition.
At this juncture, it is important to clarify the relationship between the mother union and the local union.
In the case of Liberty Cotton Mills Workers Union v. Liberty Cotton Mills Inc., 66 SCRA 512 [1975]), the
Court held that the mother union, acting for and in behalf of its affiliate, had the status of an agent while
the local union remained the basic unit of the association, free to serve the common interest of all its
members
815
815
subject only to the restraints imposed by the constitution and by-laws of the association. Thus, where as
in this case the petition for certification election was filed by the federation which is merely an agent;
the petition is deemed to be filed by the chapter, the principal, which must be a legitimate labor
organization. The chapter cannot merely rely on the legitimate status of the mother union.
The Court's conclusion should not be misconstrued as impairing the local union's right to be certified as
the employees' bargaining agent in the petitioner's establishment. We are merely saying that the local
union must first comply with the statutory requirements in order to exercise this right. Big federations
and national unions of workers should take the lead in requiring their locals and chapters to faithfully
comply with the law and the rules instead of merely snapping union after union into their folds in a
furious bid with rival federations to get the most number of members.
WHEREFORE, the petition is GRANTED. The assailed resolution and orders of respondents Med-Arbiter
and Secretary of Labor and Employment, respectively, are hereby SET ASIDE. The temporary restraining
order dated February 25, 1991 is made permanent.
SO ORDERED.
Feliciano, Bidin, Davide, Jr. and Romero, JJ., concur.
Petition granted. Resolution and orders set aside.
Note.—The employer has no authority to certify a local union as exclusive collective bargaining
representative. (Ilaw at Buklod ng Manggagawa vs. Ferrer-Calleja, 182 SCRA 561.)
——o0o——
Progressive Development Corporation vs. Secretary, Department of Labor and Employment, 205 SCRA
802, G.R. No. 96425 February 4, 1992
COLLECTIVE BARGAINING AND ADMINISTRATION OF AGREEMENT
CBA
586
Trade Unions of the Philippines vs. Laguesma
G.R. No. 95013. September 21, 1994.*
TRADE UNIONS OF THE PHILIPPINES/FEBRUARY SIX MOVEMENT (TUPAS/FSM), petitioner, vs. HON.
BIENVENIDO LAGUESMA, TRANSUNION CORPORATION-GLASS DIVISION, AND INTEGRATED LABOR
ORGANIZATION (ILOPHILIPPINES), respondents.
Labor Law; Certiorari; Appeal; This court is not a trier of facts and it is not its function to examine and
evaluate the probative value of all evidence presented to the concerned tribunal which formed the
basis of its impugned decision, resolution or order.—The argument deserves scant consideration. It is
elementary that the special civil action for certiorari under Rule 65 of the Revised Rules of Court can
be availed of to nullify or modify the proceedings before the concerned tribunal, board, or officer
exercising judicial functions who has acted without or in excess of its jurisdiction or with grave abuse
of discretion and there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary
course of law. This Court is not a trier of facts and it is not its function to examine and evaluate the
probative value of all evidence presented to the concerned tribunal which formed the basis of its
impugned decision, resolution or order. Following this hoary rule, it is inappropriate to review the
factual findings of the Med-Arbiter and the Secretary of Labor, regarding the date of filing of the CBA
on March 14,
_______________
* SECOND DIVISION.
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587
1990 prior to the filing of the petition for certification election; the company’s voluntary recognition
and DOLE’s certification of ILO-PHILS. as the sole and exclusive bargaining representative of the rank-
and-file employees of Transunion Corporation-Glassware Division; and the subsequent registration of
the CBA. They are binding on this Court as they are supported by substantial evidence. In contrast,
petitioner’s bare allegation pertaining to the “antedating” of the date of filing of the CBA is
unsubstantiated and based purely on conjectures.
Same; Certification Election; Collective Bargaining Agent; The certification of ILO-PHILS. “as the sole
and exclusive bargaining agent of the rank-and-file workers of Transunion-Glassware Division” means
it shall remain as such during the existence of the CBA to the exclusion of other labor organizations.—
It is crystal clear from the records that the rank-and-file employees of private respondent’s Glassware
Division are, at present, represented by ILO-PHILS. Hence, petitioner’s reliance on the March 22, 1990
Certification issued by Director Bautista, Jr., is misplaced. The existence and filing of their CBA was
confirmed in a Certification, dated April 24, 1990, issued by Director Romeo A. Young of DOLE—
Region IV. The certification of ILO-PHILS. “as the sole and exclusive bargaining agent of the rank-and-
file workers of TransunionGlassware Division,” means it shall remain as such during the existence of
the CBA, to the exclusion of other labor organizations, including petitioner, and no petition
questioning the majority status of the incumbent bargaining agent shall be entertained, nor shall
certification election be conducted, outside of the sixty-day freedom period immediately before the
expiry date of the five-year term of the CBA.
Same; Same; Same; Presumption of Regularity of Official Functions; In the absence of any substantial
evidence that DOLE officials or personnel, in collusion with private respondent, had antedated the
filing date of the CBA, the presumption on regularity in the performance of official functions holds.—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 on November 28, 1989. It was ratified
on December 8, 1989, and then filed with DOLE 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 ILOPHILS. The CBA was registered 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 done to suit the law that enjoins Regional Offices of DOLE to act upon an
application for
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588
absence of any substantial evidence that DOLE officials or personnel, in collusion with private
respondent, had antedated the filing date of the CBA, the presumption on regularity in the
performance of official functions holds.
Same; Same; Same; Collective Bargaining Agreement; Non-compliance with the cited procedural
requirement should not adversely affect the substantive validity of the CBA.—More importantly, non-
compliance with the cited procedural requirement should not 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
highly impressed with public interest for it is an essential instrument to promote industrial peace.
Hence, it bears the blessings not only of the employer and employees concerned but even the
Department of Labor and Employment. To set it aside on technical grounds is not conducive to the
public good.
PETITION for review of a resolution of the Secretary of Labor.
Alar, Comia, Manalo and Associates Law Offices for petitioner.
Arcaya & Associates for Transunion Corp.-Glass Division.
Francisco A. Mercado, Jr. for Integrated Labor Organization (ILO-Phils.)
PUNO, J.:
Petitioner Trade Unions of the Philippines-February Six Movement (TUPAS-FSM) seeks the reversal of
the Resolution, dated July 25, 1990, rendered by then Secretary of Labor and Employment Ruben D.
Torres, in OS-MA-A-5-167-90, which dismissed the petition for certification election filed by petitioner
TUPASFSM for being prematurely filed.1
The controlling facts, as culled from the records, are as follows:
_______________
1 Annex “A” of Petition; Rollo, p. 20; reiterated by the Order dated August 23, 1990 denying petitioner’s
motion for reconsideration.
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589
On March 23, 1990, TUPAS-FSM filed a petition for certification election with the Regional Office No. IV
of the Department of Labor and Employment (DOLE), for the purpose of choosing a bargaining
representative for the rank-and-file employees of Transunion Corporation’s industrial plant, situated in
Canlubang, Laguna, known as the Transunion Corporation-Glassware Division. Petitioner had then
secured a Certification, dated March 22, 1990, issued by Tomas B. Bautista, Jr., Director IV of DOLE
(Region IV), that “Transunion Corporation” has no existing collective bargaining agreement with any
labor organization.2
It appears, however, that before the filing of said petition, or on November 15, 1989, Integrated Labor
Organization (ILO-Phils.) was duly certified by DOLE as the sole and exclusive bargaining agent of the
rank-and-file employees of Transunion Corpora-tion-Glassware Division.3 On November 28, 1989, a
collective bargaining agreement (CBA) was then forged between Transunion-Glassware Division and ILO-
Phils covering the company’s rank-and-file employees. The CBA, with a five-year term from December 1,
1989 to December 1, 1994, was ratified by a great majority of the rank-and-filers on December 8, 1989.4
In the meantime, the President of ILO-PHILS. died. An inter-union
_________________
2 Annex “B” of Petition; Rollo, p. 26.
3 The Order dated November 15, 1989 of Med-Arbiter Rolando S. dela Cruz, reads:
“O R D E R
“Considering PSSLU’s (Philippine Social Security Labor Union) manifestation during the conference on
July 27, 1989, that it is withdrawing from further participation in this (petition for certification election)
case, and the Company’s Manifestation filed on October 13, 1989 stating, among others, that it is
voluntarily recognizing petitioner ILO as the sole and exclusive bargaining agent of its rank-and-file
workers, let the Integrated Labor Organization (ILO-PHILS.) be, as it is hereby CERTIFIED as the sole and
exclusive bargaining agent of the rank-and-file workers of Transunion Corporation-Glassware Division.
“SO ORDERED.”
4 Annex “C” of Petition; Rollo, p. 27; See also Annexes “D” and “E”, Comment (Transunion Corporation-
Glassware Division); Rollo, pp. 84-94.
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590
conflict followed and the subject CBA was filed with DOLE, for registration purposes, only on March 14,
1990, more or less, three (3) months from its execution. Finally, on May 4, 1990, the Certification of
Registration was issued by DOLE through Regional Director Romeo A. Young.5
ILO-Phils., intervened in the certification election proceedings initiated by TUPAS-FSM. It opposed the
petition in view of the existing CBA between ILO and the Transunion CorporationGlassware Division. It
stressed that the petition for certification election should be entertained only during the freedom
period, or sixty days before the expiration of the CBA. Med-Arbiter Rolando S. dela Cruz dismissed the
petition on the ground of prematurity.
TUPAS-FSM appealed contending: (1) that pursuant to Article 231 of the Labor Code, CBAs shall be filed
with the Regional Office of the DOLE within thirty (30) days from the date of signing thereof; (2) that
said requirement is mandatory, although it would not affect the enforceability of the CBA as between
the parties thereto; and (3) since the CBA was filed outside the 30-day period specified under Article 231
of the Labor Code, the prohibition against certification election under Article 232 of the same Code
should not apply to third parties such as petitioner.
As stated earlier, the Secretary of Labor and Employment affirmed the impugned Order of the Med-
Arbiter, ruling that the belated submission of the CBA was excusable and that the requirement of the
law was substantially complied with upon the filing of a copy of the CBA prior to the filing of the petition
for certification election. TUPAS-FSM then filed a motion for reconsideration, but it was also denied.
Hence, this petition for certiorari where petitioner alleged:
GRAVE ABUSE OF DISCRETION ON THE PART OF THE PUBLIC RESPONDENTS AMOUNTING TO LOSS OF
JURISDICTION; and
THE RESOLUTION IS CONTRARY TO THE FACTS AND THE LAW.
The petition lacks merit.
Petitioner raises both factual and legal issues in this present petition.
_____________
5 Rollo, p. 27.
591
591
First, the factual issues. Relying on the March 22, 1990 DOLE Certification issued by Director Bautista, Jr.,
supra, petitioner insists there was no existing CBA between Transunion Corporation and any labor
organization when it filed its petition for certification election on March 23, 1990. To further strengthen
its position, petitioner charges that the filing of the CBA was antedated to March 14, 1990, to make it
appear that the same was already existing and filed before the filing of the petition for certification
election. Petitioner also claims that since Article 231 of the Labor Code mandates DOLE to act on the
CBA filed in its office within five (5) days from date of filing thereof, the subject CBA was filed on April
30, 1990, or five (5) days before its registration on May 4, 1990.
The argument deserves scant consideration. It is elementary that the special civil action for certiorari
under Rule 65 of the Revised Rules of Court can be availed of to nullify or modify the proceedings before
the concerned tribunal, board, or officer exercising judicial functions who has acted without or in excess
of its jurisdiction or with grave abuse of discretion and there is no appeal, nor any plain, speedy, and
adequate remedy in the ordinary course of law. This Court is not a trier of facts and it is not its function
to examine and evaluate the probative value of all evidence presented to the concerned tribunal which
formed the basis of its impugned decision, resolution or order.6 Following this hoary rule, it is
inappropriate to review the factual findings of the Med-Arbiter and the Secretary of Labor, regarding the
date of filing of the CBA on March 14, 1990 prior to the filing of the petition for certification election; the
company’s voluntary recognition and DOLE’s certification of ILO-PHILS. as the sole and exclusive
bargaining representative of the rank-and-file employees of Transunion Corporation-Glassware Division;
and the subsequent registration of the CBA. They are binding on this Court as they are supported by
substantial evidence. In contrast, petitioner’s bare allegation pertaining to the “antedating” of the date
of filing of the CBA is unsubstantiated and based purely on conjectures.
_______________
6 Valdez, Jr., et al., v. Comelec, G.R. No. 85129, January 31, 1989, En Banc, Minute Resolution.
592
592
It is crystal clear from the record that the rank-and-file employees of private respondent’s Glassware
Division are, at present, represented by ILO-PHILS. Hence, petitioner’s reliance on the March 22, 1990
Certification issued by Director Bautista, Jr., is misplaced. The existence and filing of their CBA was
confirmed in a Certification, dated April 24, 1990, issued by Director Romeo A. Young of DOLE-Region
IV.7 The certification of ILO-PHILS. “as the sole and exclusive bargaining agent of the rank-and-file
workers of Transunion-Glassware Division,” means it shall remain as such during the existence of the
CBA, to the exclusion of other labor organizations, including petitioner, and no petition questioning the
majority status of the incumbent bargaining agent shall be entertained, nor shall certification election
be conducted, outside of the sixty-day freedom period immediately before the expiry date of the five-
year term of the CBA.8
We now resolve the legal issue. Petitioner points out that the subject CBA was filed beyond the 30-day
period prescribed under Article 231 of the Labor Code. It also insists that under Article 232 of the Labor
Code, the prohibition on the filing of a petition for certification election applies when the CBA had been
duly registered and, in this case, since the CBA was not registered in accordance with the Art. 231, the
prohibition will not apply. We disagree.
Articles 231 and 232 of the Labor Code read:
“Art. 231.—Registry of unions and file of collective agreements.—xxx.
“Within thirty (30) days from the execution of a Collective Bargaining Agreement, the parties shall
submit copies of the same directly to the Bureau or the Regional Office of the Department of Labor and
Employment for registration accompanied with verified proofs of its posting in two conspicuous places
in the place of work and ratification by the majority of all the workers in the bargaining unit. The Bureau
or Regional Office shall act upon the application for registration of such Collective Bargaining Agreement
within five (5) days from receipt thereof. The Regional Offices shall furnish the Bureau with a copy of the
Collective Bargaining Agreement within five (5) days from its submission.
_______________
7 Rollo, p. 112.
8 Article 253-A, Labor Code, as amended by RA 6715.
593
593
“x x x.”
“Art. 232.—Prohibition on Certification Election.—The Bureau shall not entertain any petition for
certification election or any other action which may disturb the administration of duly registered
existing collective bargaining agreements affecting the parties except under Articles 253, 253-A and 256
of this Code.”
Corollary thereto, Article 253-A of the same Code reads:
“Art. 253-A.—Any Collective Bargaining Agreement that the parties may enter into shall, insofar as the
representation 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 no certification election shall be
conducted by the Department of Labor and Employment outside the sixty-day period immediately
before the date of expiry of such five year term of the Collective Bargaining Agreement. x x x.”
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 on November 28, 1989. It was ratified on
December 8, 1989, and then filed with DOLE 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 registered 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 done to
suit the law that enjoins Regional Offices of DOLE to act upon an application 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 collusion with private respondent, had antedated the filing date of the CBA, the
presumption on regularity in the performance of official functions holds.
More importantly, non-compliance with the cited procedural requirement should not adversely affect
the substantive validity of the CBA between ILO-PHILS and the Transunion CorporationGlassware
Division covering the company’s rank and file employees. A collective bargaining agreement is more
than a contract.
594
594
instrument to promote industrial peace. Hence, it bears the blessings not only of the employer and
employees concerned but even the Department of Labor and Employment. To set it aside on technical
grounds is not conducive to the public good.
IN VIEW WHEREOF, the impugned July 25, 1990 Resolution, and August 23, 1990 Order of Secretary
Ruben D. Torres and Undersecretary Bienvenido E. Laguesma, respectively, in OS-MA-A-5-167-90, is
AFFIRMED in toto. Costs against petitioner.
SO ORDERED.
Narvasa (C.J., Chairman), Padilla, Regalado and Mendoza, JJ., concur.
Petition affirmed in toto.
Notes.—Rule provides that no certification election may be held within one year from the date of
issuance of a final certification election result. (R. Transport Corporation vs. Laguesma, 227 SCRA 826
[1993])
Article 242 of the Labor Code enumerates the exclusive rights of a legitimate labor organization among
which is the right to be certified as the exclusive representative of all the employees in an appropriate
collective bargaining unit for purposes of collective bargaining. (Progressive Development Corporation
vs. Secretary, Department of Labor and Employment, 205 SCRA 802 [1992])
——o0o—— Trade Unions of the Philippines vs. Laguesma, 236 SCRA 586, G.R. No. 95013 September
21, 1994
VOL. 220, MARCH 19, 1993
197
Davao Integrated Port Stevedoring Services us. Abarquez
G.R. No. 102132. March 19, 1993.*
DAVAO INTEGRATED PORT STEVEDORING SERVICES, petitioner, vs. RUBEN V. ABARQUEZ, in his
capacity as an accredited Voluntary Arbitrator and THE ASSOCIATION OF TRADE UNIONS (ATU-TUCP),
respondents.
Labor Law; CBA defined.—A collective bargaining agreement (CBA), as used in Article 252 of the Labor
Code, refers to a contract executed upon request of either the employer or the exclusive bargaining
representative incorporating the agreement reached after negotiations with respect to wages, hours
of work and all other terms and conditions of employment, including proposals for adjusting any
grievances or questions arising under such agreement.
Same; CBA not an ordinary contract.—While the terms and conditions of a CBA constitute the law
between the parties, it is not,
_____________
5 People vs. Pacalso Mat-an, G.R. No. 91115, December 29, 1992, citing People vs. Natan, 193 SCRA 355
(1991).
* THIRD DIVISION.
198
198
Davao Integrated Port Stevedoring Services vs. Abarquez
however, an ordinary contract to which is applied the principles of law governing ordinary contracts.
A CBA, as a labor contract within the contemplation of Article 1700 of the Civil Code of the Philippines
which governs the relations between labor and capital, is not merely contractual in nature but
impressed with public interest, thus, it must yield to the common good. As such, it must be construed
liberally rather than narrowly and technically, and the courts musts place a practical and realistic
construction upon it, giving due consideration to the context in which it is negotiated and purpose
which it is intended to serve.
Same; Nature of sick leave benefits.—Sick leave benefits, like other economic benefits stipulated in
the CBA such as maternity leave and vacation leave benefits, among others, are by their nature,
intended to be replacements for regular income which otherwise would not be earned because an
employee is not working during the period of said leaves. They are non-contributory in nature, in the
sense that the employees contribute nothing to the operation of the benefits. By their nature, upon
agreement of the parties, they are intended to alleviate the economic condition of the workers.
Same; Intermittent field workers who are members of a regular pool are entitled to sick leave benefits
under the CBA at bar.—After a careful examination of Section 1 in relation to Section 3, Article VIII of
the 1989 CBA in light of the facts and circumstances attendant in the instant case, we find and so hold
that the last sentence of Section 1, Article VIII of the 1989 CBA, invoked by petitioner-company does
not bar the regular intermittent workers from the privilege of commutation or conversion to cash of
the unenjoyed portion of their sick leave with pay benefits, if qualified. For the phrase "herein sick
leave privilege," as used in the last sentence of Section 1, refers to the privilege of having a fixed 15-
day sick leave with pay which, as mandated by Section 1, only the non-intermittent workers are
entitled to. This fixed 15-day sick leave with pay benefit should be distinguished from the variable
number of days of sick leave, not to exceed 15 days, extended to intermittent workers under Section 3
depending on the number of hours of service rendered to the company, including overtime pursuant
to the schedule provided therein. It is only fair and reasonable for petitioner-company not to stipulate
a fixed 15-day sick leave with pay for its regular intermittent workers since, as the term "intermittent"
implies, there is irregularity in their work-days. Reasonable and practical interpretation must be
placed on contractual provisions. Interpretatio fienda est ut res magis valeat quam pereat. Such
interpretation is to be adopted, that the thing may continue to have efficacy rather than fail.
199
VOL. 220, MARCH 19, 1993
199
Same; An employer may not unilaterally withdraw benefits enjoyed for a long time by its
employees.—Whatever doubt there may have been early on was clearly obliterated when petitioner-
company recognized the said privilege and paid its intermittent workers the cash equivalent of the
unenjoyed portion of their sick leave with pay benefits during the lifetime of the CBA of October 16,
1985 until three (3) months from its renewal on April 15, 1989. Well-settled is it that the said privilege
of commutation or conversion to cash, being an existing benefit, the petitioner-company may not
unilaterally withdraw, or diminish such benefits. It is a fact that petitioner-company had, on several
instances in the past, granted and paid the cash equivalent of the unenjoyed portion of the sick leave
benefits of some intermittent workers. Under the circumstances, these may be deemed to have
ripened into company practice or policy which cannot be peremptorily withdrawn.
Same; Voluntary arbitrator may order grant of benefits as part of his authority to interpret a CBA.—
Moreover, petitioner-company's objection to the authority of the Voluntary Arbitrator to direct the
commutation of the unenjoyed portion of the sick leave with pay benefits of intermittent workers in
his decision is misplaced. Article 261 of the Labor Code is clear. The questioned directive of the herein
public respondent is the necessary consequence of the exercise of his arbitral power as Voluntary
Arbitrator under Article 261 of the Labor Code "to hear and decide all unresolved grievances arising
from the interpretation or implementation of the Collective Bargaining Agreement." We, therefore,
find that no grave abuse of discretion was committed by public respondent in issuing the award
(decision). Moreover, his interpretation of Sections 1 and 3, Article VIII of the 1989 CBA cannot be
faulted with and is absolutely correct.
PETITION for review on certiorari of the award issued by the Voluntary Arbitrator.
Libron, Gaspar & Associates for petitioner.
Bansalan B. Metilla for Association of Trade Unions (ATU-TUCP).
ROMERO, J.:
In this petition for certiorari, petitioner Davao Integrated Port
200
200
Services Corporation seeks to reverse the Award1 issued on September 10, 1991 by respondent Ruben
V. Abarquez, in his capacity as Voluntary Arbitrator of the National Conciliation and Mediation Board,
Regional Arbitration Branch XI in Davao City in Case No. AC-211-BX1-10-003-91 which directed
petitioner to grant and extend the privilege of commutation of the unenjoyed portion of the sick leave
with pay benefits to its intermittent field workers who are members of the regular labor pool and the
present regular extra pool in accordance with the Collective Bargaining Agreement (CBA) executed
between petitioner and private respondent Association of Trade Unions (ATU-TUCP), from the time it
was discontinued and henceforth.
The facts are as follows:
Petitioner Davao Integrated Port Stevedoring Services (petitioner-company) and private respondent
ATU-TUCP (Union), the exclusive collective bargaining agent of the rank and file workers of petitioner-
company, entered into a collective bargaining agreement (CBA) on October 16, 1985 which, under
Sections 1 and 3, Article VIII thereof, provide for sick leave with pay benefits each year to its employees
who have rendered at least one (1) year of service with the company, thus:
"ARTICLE VIII
Section 1. Sick Leaves—The Company agrees to grant 15 days sick leave with pay each year to every
regular non-intermittent worker who already rendered at least one year of service with the company.
However, such sick leave can only be enjoyed upon certification by a company designated physician, and
if the same is not enjoyed within one year period of the current year, any unenjoyed portion thereof,
shall be converted to cash and shall be paid at the end of the said one year period. And provided
however, that only those regular workers of the company whose work are not intermittent, are entitled
to the herein sick leave privilege.
xxx xxx xxx
_____________
1 Annex "E," Petition, pp. 39-43, Rollo. Article 262-A of the Labor Code used the terms "decision, order
or award" in describing the decision of the voluntary arbitrator. There is no significance attached to the
use of term "award" by public respondent contrary to petitioner's apprehension.
201
VOL. 220, MARCH 19, 1993
201
Section 3.—All intermittent field workers of the company who are members of the Regular Labor Pool
shall be entitled to vacation and sick leaves per year of service with pay under the following schedule
based on the number of hours rendered including overtime, to wit:
Hours of Service Per
Calendar Year
Vacation
Leave
Sick Leave
Less than 750
NII
NII
751—825
6 days
6 days
826- 900
7
901- 925
926—1,050
1,051—1,125
10
10
1,126-1,200
11
11
1,201—1,275
12
12
1,276—1,350
13
13
1,351—1,425
14
14
1,426—1,500
15
15
The conditions for the availment of the herein vacation and sick leaves shall be in accordance with the
above provided Sections 1 and 2 hereof, respectively."
Upon its renewal on April 15, 1989, the provisions for sick leave with pay benefits were reproduced
under Sections 1 and 3, Article VIII of the new CBA, but the coverage of the said benefits was expanded
to include the "present Regular Extra Labor Pool as of the signing of this Agreement." Section 3, Article
VIII, as revised, provides, thus:
"Section 3—All intermittent field workers of the company who are members of the Regular Labor Pool
and present Regular Extra Labor Pool as of the signing of his agreement shall be entitled to vacation and
sick leaves per year of service with pay under the following schedule based on the number of hours
rendered including overtime, to wit:
Hours of Service Per
Calendar Year
Vacation Leave
Sick Leave
Less than 750
NII
NII
751—825
6 days
6 days
826- 900
202
202
901—925
926—1,050
9
1,051—1,125
10
10
1,126-1,200
11
11
1,201—1,275
12
12
1,276—1,350
13
13
1,351—1,425
14
14
1,426—1,500
15
15
The conditions for the availment of the herein vacation and sick leaves shall be in accordance with the
above provided Sections 1 and 2 hereof, respectively."
During the effectivity of the CBA of October 16, 1985 until three (3) months after its renewal on April 15,
1989, or until July 1989 (a total of three (3) years and nine (9) months), all the field workers of petitioner
who are members of the regular labor pool and the present regular extra labor pool who had rendered
at least 750 hours up to 1,500 hours were extended sick leave with pay benefits. Any unenjoyed portion
thereof at the end of the current year was converted to cash and paid at the end of the said one-year
period pursuant to Sections 1 and 3, Article VIII of the CBA. The number of days of their sick leave per
year depends on the number of hours of service per calendar year in accordance with the schedule
provided in Section 3, Article VIII of the CBA.
The commutation of the unenjoyed portion of the sick leave with pay benefits of the intermittent
workers or its conversion to cash was, however, discontinued or withdrawn when petitioner-company
under a new assistant manager, Mr. Benjamin Marzo (who replaced Mr. Cecilio Beltran, Jr. upon the
latter's resignation in June 1989), stopped the payment of its cash equivalent on the ground that they
are not entitled to the said benefits under Sections 1 and 3 of the 1989 CBA.
The Union objected to the said discontinuance of commutation or conversion to cash of the unenjoyed
sick leave with pay benefits of petitioner's intermittent workers contending that it is a deviation from
the true intent of the parties that negotiated the CBA; that it would violate the principle in labor laws
that benefits already extended shall not be taken away and that it would result in discrimination
between the non-intermittent and the intermittent workers of the petitioner-company.
203
VOL. 220, MARCH 19, 1993
203
Upon failure of the parties to amicably settle the issue on the interpretation of Sections 1 and 3, Article
VIII of the 1989 CBA, the Union brought the matter for voluntary arbitration before the National
Conciliation and Mediation Board, Regional Arbitration Branch XI at Davao City by way of complaint for
enforcement of the CBA. The parties mutually designated public respondent Ruben Abarquez, Jr. to act
as voluntary arbitrator.
After the parties had filed their respective position papers,2 public respondent Ruben Abarquez, Jr.
issued on September 10, 1991 an Award in favor of the Union ruling that the regular intermittent
workers are entitled to commutation of their unenjoyed sick leave with pay benefits under Sections 1
and 3 of the 1989 CBA, the dispositive portion of which reads:
"WHEREFORE, premises considered, the management of the respondent Davao Integrated Port
Stevedoring Services Corporation is hereby directed to grant and extend the sick leave privilege of the
commutation of the unenjoyed portion of the sick leave of all the intermittent field workers who are
members of the regular labor pool and the present extra pool in accordance with the CBA from the time
it was discontinued and henceforth.
SO ORDERED."
Petitioner-company disagreed with the aforementioned ruling of public respondent, hence, the instant
petition.
Petitioner-company argued that it is clear from the language and intent of the last sentence of Section 1,
Article VIII of the 1989 CBA that only the regular workers whose work are not intermittent are entitled
to the benefit of conversion to cash of the unenjoyed portion of sick leave, thus: "x x x And provided,
however, that only those regular workers of the Company whose work are not intermittent are entitled
to the herein sick leave privilege."
Petitioner-company further argued that while the intermittent workers were paid the cash equivalent of
their unenjoyed sick leave with pay benefits during the previous management of Mr. Beltran who
misinterpreted Sections 1 and 3 of Article VIII of the 1985 CBA, it was well within petitioner-company's
rights
_____________
2 pp. 24-38, Rollo.
204
204
to rectify the error it had committed and stop the payment of the said sick leave with pay benefits. An
error in payment, according to petitioner-company, can never ripen into a practice.
We find the arguments unmeritorious.
A collective bargaining agreement (CBA), as used in Article 252 of the Labor Code, refers to a contract
executed upon request of either the employer or the exclusive bargaining representative incorporating
the agreement reached after negotiations with respect to wages, hours of work and all other terms and
conditions of employment, including proposals for adjusting any grievances or questions arising under
such agreement.
While the terms and conditions of a CBA constitute the law between the parties,3 it is not, however, an
ordinary contract to which is applied the principles of law governing ordinary contracts.4 A CBA, as a
labor contract within the contemplation of Article 1700 of the Civil Code of the Philippines which
governs the relations between labor and capital, is not merely contractual in nature but impressed with
public interest, thus, it must yield to the common good. As such, it must be construed liberally rather
than narrowly and technically, and the courts must place a practical and realistic construction upon it,
giving due consideration to the context in which it is negotiated and purpose which it is intended to
serve.5
It is thus erroneous for petitioner to isolate Section 1, Article VIII of the 1989 CBA from the other related
section on sick leave with pay benefits, specifically Section 3 thereof, in its attempt to justify the
discontinuance or withdrawal of the privilege of commutation or conversion to cash of the unenjoyed
portion of the sick leave benefit to regular intermittent workers. The manner they were deprived of the
privilege previously recognized and extended to them by petitioner-company during the lifetime of
_____________
3 Meycauayan College v. Drilon, 185 SCRA 50 (1990); Kapisanan ng mga Manggagawa sa La Suerte-
FOITAF v. Noriel, G.R. No. L-45475, June 20, 1977, 77 SCRA 414; Mactan Workers Union v. Aboitiz, G.R.
No. L-30241, June 30, 1972, 45 SCRA 577.
4 Transportation-Communication Employees Union v. Union P.R. Co., 385 US 157, 17 L Ed 2d 264, 87 S Ct

369; John Wiley & Sons, Inc. v. Livingston, 376 US 543, 11 L Ed 2d 898, 84 S Ct 909.
5 48A Am Jur 2d, s. 1800, pp. 255-256.
205
VOL. 220, MARCH 19, 1993
205
the CBA of October 16, 1985 until three (3) months from its renewal on April 15, 1989, or a period of
three (3) years and nine (9) months, is not only tainted with arbitrariness but likewise discriminatory in
nature. Petitioner-company is of the mistaken notion that since the privilege of commutation or
conversion to cash of the unenjoyed portion of the sick leave with pay benefits is found in Section 1,
Article VIII, only the regular non-intermittent workers and no other can avail of the said privilege
because of the proviso found in the last sentence thereof.
It must be noted that the 1989 CBA has two (2) sections on sick leave with pay benefits which apply to
two (2) distinct classes of workers in petitioner's company, namely: (1) the regular non-intermittent
workers or those workers who render a daily eight-hour service to the company and are governed by
Section 1, Article VIII of the 1989 CBA; and (2) intermittent field workers who are members of the
regular labor pool and the present regular extra labor pool as of the signing of the agreement on April
15, 1989 or those workers who have irregular working days and are governed by Section 3, Article VIII of
the 1989 CBA.
It is not disputed that both classes of workers are entitled to sick leave with pay benefits provided they
comply with the conditions set forth under Section 1 in relation to the last paragraph of Section 3, to
wit: (1) the employee-applicant must be regular or must have rendered at least one year of service with
the company; and (2) the application must be accompanied by a certification from a company-
designated physician.
Sick leave benefits, like other economic benefits stipulated in the CBA such as maternity leave and
vacation leave benefits, among others, are by their nature, intended to be replacements for regular
income which otherwise would not be earned because an employee is not working during the period of
said leaves.6 They are non-contributory in nature, in the sense that the employees contribute nothing to
the operation of the benefits.7 By their nature, upon agreement of the parties, they are intended to
alleviate the economic condition of the workers.
______________
6 Singapore Airlines Local Employees Association v. NLRC, G.R. No. L-65786, July 16, 1984, 130 SCRA 472.
7 Nestlé Philippines, Inc. v. NLRC, G.R. No. 921231, February 4, 1991, 193 SCRA 504.
206
206
After a careful examination of Section 1 in relation to Section 3, Article VIII of the 1989 CBA in light of
the facts and circumstances attendant in the instant case, we find and so hold that the last sentence of
Section 1, Article VIII of the 1989 CBA, invoked by petitioner-company does not bar the regular
intermittent workers from the privilege of commutation or conversion to cash of the unenjoyed portion
of their sick leave with pay benefits, if qualified. For the phrase "herein sick leave privilege," as used in
the last sentence of Section 1, refers to the privilege of having a fixed 15-day sick leave with pay which,
as mandated by Section 1, only the non-intermittent workers are entitled to. This fixed 15-day sick leave
with pay benefit should be distinguished from the variable number of days of sick leave, not to exceed
15 days, extended to intermittent workers under Section 3 depending on the number of hours of service
rendered to the company, including overtime pursuant to the schedule provided therein. It is only fair
and reasonable for petitioner-company not to stipulate a fixed 15-day sick leave with pay for its regular
intermittent workers since, as the term "intermittent" implies, there is irregularity in their work-days.
Reasonable and practical interpretation must be placed on contractual provisions. Interpretatio fienda
est ut res magis valeat quam pereat. Such interpretation is to be adopted, that the thing may continue
to have efficacy rather than fail.8
We find the same to be a reasonable and practical distinction readily discernible in Section 1, in relation
to Section 3, Article VIII of the 1989 CBA between the two classes of workers in the company insofar as
sick leave with pay benefits are concerned. Any other distinction would cause discrimination on the part
of intermittent workers contrary to the intention of the parties that mutually agreed in incorporating
the questioned provisions in the 1989 CBA.
Public respondent correctly observed that the parties to the CBA clearly intended the same sick leave
privilege to be accorded the intermittent workers in the same way that they are both
_____________
8 Singapore Airlines Local Employees Association v. NLRC, supra, citing Martin v. Sheppard, 102 S Co.
2nd p. 1036; Adamowski v. Bard, AC Pa. 193F 2s p. 578.
207
VOL. 220, MARCH 19, 1993

207
given the same treatment with respect to vacation leaves—non-commutable and non-cumulative. If
they are treated equally with respect to vacation leave privileges, with more reason should they be on
par with each other with respect to sick leave privileges.9 Besides, if the intention were otherwise,
during its renegotiation, why did not the parties expressly stipulate in the 1989 CBA that regular
intermittent workers are not entitled to commutation of the unenjoyed portion of their sick leave with
pay benefits?
Whatever doubt there may have been early on was clearly obliterated when petitioner-company
recognized the said privilege and paid its intermittent workers the cash equivalent of the unenjoyed
portion of their sick leave with pay benefits during the lifetime of the CBA of October 16, 1985 until
three (3) months from its renewal on April 15, 1989. Well-settled is it that the said privilege of
commutation or conversion to cash, being an existing benefit, the petitioner-company may not
unilaterally withdraw, or diminish such benefits.10 It is a fact that petitioner-company had, on several
instances in the past, granted and paid the cash equivalent of the unenjoyed portion of the sick leave
benefits of some, intermittent workers.11 Under the circumstances, these may be deemed to have
ripened into company practice or policy which cannot be peremptorily withdrawn.12
Moreover, petitioner-company's objection to the authority of the Voluntary Arbitrator to direct the
commutation of the unenjoyed portion of the sick leave with pay benefits of intermittent workers in his
decision is misplaced. Article 261 of the Labor Code is clear. The questioned directive of the herein
public respondent is the necessary consequence of the exercise of his arbitral power as Voluntary
Arbitrator under Article 261 of the Labor Code "to hear and decide all unresolved grievances arising
______________
9 p. 43, Rollo.
10 Article 100, Labor Code of the Philippines; Nestlé Philippines, Inc. v. NLRC, G.R. No. 91231, February
4, 1991, 193 SCRA 504; Tiangco, et. al. v. Leogardo, G.R. No. L-57636, May 16, 1983, 122 SCRA 267.
11 p. 29, Rollo; p. 36, Rollo.
12 Republic Planters Bank v. NLRC, G.R. No. L-79488, September 30, 1988, 166 SCRA 197.
208
208
Office of the Court Administrator vs. Villar-Nool

from the interpretation or implementation of the Collective Bargaining Agreement." We, therefore, find
that no grave abuse of discretion was committed by public respondent in issuing the award (decision).
Moreover, his interpretation of Sections 1 and 3, Article VIII of the 1989 CBA cannot be faulted with and
is absolutely correct.
WHEREFORE, in view of the foregoing, the petition is DISMISSED. The award (decision) of public
respondent dated September 10, 1991 is hereby AFFIRMED. No costs.
SO ORDERED.
Feliciano (Acting Chairman), Bidin, Davide, Jr., and Melo, JJ., concur.
Gutierrez, Jr., J., On terminal leave.
Petition dismissed. Award affirmed.
Note.—Collective Bargaining which is defined as negotiations toward a collective agreement, is one of

the democratic framework 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 (Kiok Loy vs. National
Labor Relations Commission, 141 SCRA 179).
—o0o— Davao Integrated Port Stevedoring Services vs. Abarquez, 220 SCRA 197, G.R. No. 102132
March 19, 1993
G.R. No. 85867. May 13, 1993.*
E. RAZON, INC. [Formerly known as Metro Port Services, Inc.], petitioner, vs. THE HONORABLE
SECRETARY OF LABOR AND EMPLOYMENT (DOLE) and MARINA PORT SERVICES, INC. (MARINA),
respondents.
Labor Law; Labor Contracts; Collective Bargaining Agreements; Collective Bargaining Agreements
unenforceable against persons not parties thereto.—Proceeding from the 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, therefore, not enforceable against the successor-employer, Secretary
Drilon brushed aside MPSI’s contention that MARINA assumed the obligation to pay MPSI’s workers
their separation pay when, upon the termination of MPSI’s contract with PPA, MARINA took over the
arrastre operations.
Same; Same; Same.—As such, when MARINA rehired the ERI/ MPSI employees, it had all the right to
consider them as new ones. On the other hand, ERI/MPSI, to whom years of service had been
rendered by its suddenly jobless employees, had the corresponding obligation to grant them what is
theirs under the law and the collective bargaining agreement. After all, a collective bargaining
agreement is the law
_______________
* THIRD DIVISION.
2
E. Razon, Inc. vs. Secretary of Labor and Employment
between the parties (Plastic Town Center Corporation vs. NLRC, 172 SCRA 580 [1989]; Roche [Phil.] vs.
NLRC, 178 SCRA 386 [1989], and compliance therewith is mandated by the express policy of the law
(Meycauayan College vs. Drilon, 185 SCRA 50 [1990]).
Same; Separation pay when required.—Under Article 283 of the Labor Code, separation pay is
required where the termination of employment relationship is occasioned by the “cessation of
operations” of an establishment. The said article, therefore, puts the burden of paying separation pay
on ERI/MPSI, the employer for whom services had been rendered by the employees who were
separated from employment in view of the cessation of its business operations by the cancellation of
its management contract with the PPA.
PETITION for certiorari to annul and set aside the orders of the then Secretary of Labor.
Cruz, Durian, Agabin, Atienza, Alday & Tuason for petitioner.
Abad & Associates for Marina Port Services, Inc.
MELO, J.:
The petition for certiorari before us seeks to annul and set aside: (a) the order of May 31, 1988 of the
then Secretary of the Department of Labor and Employment directing the Metro Port Services, Inc., now
known as E. Razon, Inc., to satisfy fully the separation pay of its employees at the rate agreed upon in
the Agreement of November 3, 1987; and (b) the order of November 21, 1988, denying the motion for
the reconsideration of the said earlier order (BLR-NS-10-499-87).
Petitioner E. Razon, Inc. (ERI) is a corporation organized in 1962 principally to bid for the right to operate
arrastre services in Manila. Through public bidding on January 18, 1974, ERI and the government,
through the Philippine Ports Authority (PPA), executed a management contract covering all the piers in
South Harbor, Manila for a term of five years renewable for another five years (p. 127, Rollo; Decision of
June 22, 1987 in G.R. No. 75197, “E. Razon, Inc., et al. vs. Philippine Ports Authority, et al.”).
VOL. 222, MAY 13, 1993

3
ERI became Metro Port Services, Inc. (MPSI) in 1978 when parties close to then President Marcos,
specifically his brother-in-law, Alfredo “Bejo” Romualdez, allegedly coerced Enrique Razon, who owned
93% of ERI's equity, into endorsing in blank stock certificates covering 60% of such equity. Upon the
expiration of the management contract in 1978, it was extended to June 30, 1980. The PPA then
executed a new contract with ERI/MPSI for a term of eight (8) years beginning July 1, 1980 (p. 129,
Rollo).
On July 19, 1986 or two years before the expiration of the eight-year term, the PPA cancelled the
management contract for alleged violations thereof. PPA took over the cargo-handling operations as
well as all the equipment of MPSI (p. 138, Rollo).
Two days later or on July 21, 1986, the PPA issued Permit No. 104286 for cargo-handling services to
Marina Port Services, Inc. (MARINA) (p. 78, Rollo). The permit, which was to take effect for a one-year
period or until July 20, 1987,1 contained the following pertinent paragraph as part of the additional
terms and conditions appended as Annex B to the permit:
7. Labor and personnel of previous operator, except those positions of trust and confidence, shall be
absorbed by grantee. Labor or employees benefits provided for under existing CBA shall likewise be
honored. (p. 79, Rollo.)
Thus, MARINA began operating the arrastre services and required all workers of ERI/MPSI to accomplish
individual information sheets. Weeks later, the bulk of the 2,700 employees concerned discovered that
they had been hired by MARINA as new employees effective July 21, 1986. Hence, they clamored for the
payment of their separation pay but both the MARINA and ERI/MPSI refused to be liable therefor. In a
bid to prevent disruption of work, PPA authorized MARINA to deduct P2,000,000.00 from the amount
due the MPSI as MARINA’s rentals for MPSI equipment, as partial payment of the employees’ separation
pay (p. 138, Rollo).
Still dissatisfied, the employees who were members of the Associated Workers Union (AWU) filed a
notice of strike on
______________
1 The contract was renewed on March 10, 1987 and was to last for eight years (p. 153, Rollo).

October 12, 1987. This move prompted the PPA, MARINA, ERI, and representatives of the AWU,
Associated Port Checkers Workers Union (APCWU), Associated Skilled and Technical Employees Union
(ASTEU), and Marina Management Employees (MARINE ME) to meet and forge an Agreement on
November 3, 1987 for the “immediate and reasonable resolution of the long standing claim of
separation benefits which resulted in impending labor strikes”. (p. 51, Rollo.) The Agreement provided
that the separation benefits would be computed at “one (1) month for every year of service”. (pp. 51
and 192, Rollo.) Another provision of the Agreement stated:
4. That Metro Port Services, Inc. and MARINA without admitting liability of the labor claims of the
workers agreed that PPA through MARINA shall disburse the amount of P5 million directly to the
workers. Said amount partakes of the nature of rental subject to the determination of the fair and
reasonable rental of equipment from the date of take-over of MARINA and of the fair market value
thereof by independent appraiser mutually agreed by PPA, MARINA, and Metro Port Services, Inc. (p.
192, Rollo.)
Although the Agreement specifically stated that the remaining balance of the separation benefits shall
be paid in full before December 24, 1987, the workers went on strike on December 22, 1987 because
they were apprehensive that the said benefits would not be paid as the appraisal of the pieces of
equipment and machinery of MPSI had not been completed. The members of the AWU were joined by
the APCWU, the ASTEU, and the MARINA ME (p. 139, Rollo).
The MPSI then requested the Secretary of Labor and Employment to immediately assume jurisdiction
over the dispute to prevent paralyzation of the vital operations of the Port of Manila. Invoking Article
263(g) of the Labor Code, then Secretary of Labor Franklin M. Drilon issued the order of December 23,
1987 holding that the labor dispute was “imbued with national interest” and ordering the striking
workers to return to work within 24 hours and the management to accept them back. He also directed
the parties to comply faithfully with the Agreement of November 3, 1987 and, pending the appraisal of
the reasonable rental and market value of the MPSI equipment, the amount of P5 million which the
Presidential Commission on Good Govern-
VOL. 222, MAY 13, 1993
ment (PCGG) had committed to unfreeze from the account of MPSI was made available. He also directed
the National Conciliation and Mediation Board to form a committee to monitor and assist in the
implementation of the November 3, 1987 Agreement (Annex “A” to Petition; pp. 51-55, Rollo).
The separation pay of the workers was later taken from the proceeds of the sale to PPA of ERI cargo-
handling equipment and the rentals from July 21, 1986 to January 29, 1988 of MARINA for the said
equipment (Petition, pp. 6-7; pp. 24-25, Rollo).
On May 31, 1988, Secretary Drilon issued the herein assailed order answering in the negative the
question of whether or not MARINA assumed liability for the separation pay under Paragraph 7 of the
Additional Terms and Conditions annexed to PPA Permit No. 104286. Proceeding from the 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, therefore, not enforceable against the successor-employer, Secretary Drilon
brushed aside MPSI’s contention that MARINA assumed the obligation to pay MPSI’s workers their
separation pay then, upon the termination of MPSI’s contract with PPA, MARINA took over the arrastre
operations. He emphasized a “seemingly minor but rather crucial point” thus: “The present dispute
crystallized not from a normal business take-over, i.e., through sale or merger of a business enterprise,
but from cancellation of contract which was subsequently upheld valid by the Supreme Court. The
Agreement which now binds MARINA to assume obligations to the workers is not between the two
business enterprises but arose from the Permit to Operate issued by the PPA to MARINA. . .”
Secretary Drilon rationalized that Paragraph 7 would only have been perceived by the parties as
applicable prospectively since “MARINA had then yet to start its operations” and because Paragraph 14
of the same permit states that MARINA shall be responsible for “all obligations, liabilities or claims
arising out of any transaction or undertakings in connection with their cargo handling operations as of
the actual date of transfer thereof.” Accordingly, he opined that “the satisfaction of any workers’ claims
is an undertaking connected with “MARINA’s actual cargo handling operations” and, therefore, its
obligations should commence only “as of the actual takeover.” Corollarily, he stated
that “compensation for loss of employment from the entity to whom past services have been rendered
should be forthcoming.” He disposed of the case thus:
WHEREFORE, IN VIEW OF THE FOREGOING, this Office hereby directs the Metro Port Services, Inc. to
pay the remaining balance due to the workers in full satisfaction of their separation pay at the rate
earlier agreed upon by the parties as embodied in the Agreement of November 3, 1987.
SO ORDERED. (pp. 140-141, Rollo.)
MPSI and AWU moved for the reconsideration of said order on the ground that certain vital facts on
record had not been considered. On November 21, 1988, however, Secretary Drilon denied said motions
(p. 159, Rollo). Hence, the instant petition for certiorari filed by E. Razon, Inc. which had apparently
renounced the use of the name MPSI.
Claiming that it is a sequestered corporation as ownership of 60% of its shares of stock is still in litigation
at the Sandiganbayan and that, should said court rule that the shares of stock mentioned belong to the
government, “it would not be the petitioner that would lose the millions of pesos paid to the workers”
(p. 20, Rollo), petitioner charges the then Secretary of Labor and Employment with grave abuse of
discretion amounting to excess of jurisdiction in: (a) refusing to hold that MARINA became its successor-
employer on July 20, 1986 and, therefore bound itself to honor the workers’ rights to security of tenure
and seniority privileges, despite the provision of Paragraph 7 of the permit to operate; (b) making a
“strained interpretation” of said permit to absolve MARINA from paying separation pay; (c) refusing to
hold that MARINA discontinued and, therefore, terminated the employment of the workers when it
absorbed them as new employees; (d) holding petitioner liable for separation pay notwithstanding the
fact that it never dismissed or separated said workers, and (e) failing to hold MARINA liable for
separation pay and to order MARINA to reimburse petitioner the amounts paid from its assets and funds
(pp. 12-13, Petition; pp. 31-32, Rollo).
There appears to be no quarrel over the issue of whether or not separation pay should be paid to the
workers of ERI/MPSI. The controversy actually is: which of the contending corporations, petitioner
ERI/MPSI or private respondent MARINA, should
VOL. 222, MAY 13, 1993
pay such benefit to the employees concerned.
Separation or severance pay is an allowance usually based on length of service that is payable to an
employee on severance except usually in case of disciplinary discharge, or as compensation due an
employee upon the severance of his employment status with the employer (Marcopper Mining
Corporation vs. NLRC, 200 SCRA 167 [1991]). Under Article 283 of the Labor Code, separation pay is
required where the termination of employment relationship is occasioned by the “cessation of
operations” of an establishment. The said article, therefore, puts the burden of paying separation pay
on ERI/MPSI, the employer for whom services had been rendered by the employees who were
separated from employment in view of the cessation of its business operations by the cancellation of its
management contract with the PPA. Petitioner, however, argues otherwise and would shift liability for
separation pay to MARINA on the strength of Paragraph 7 of the additional terms and conditions
appended to the permit to operate granted to MARINA.
Paragraph 7 aforequoted provides that the employees of the “previous operator”, meaning ERI/MPSI,
shall be “absorbed” by the permit “grantee”, meaning MARINA, and the benefits given the same
employees under the “existing CBA” shall be “honored”. A key in the interpretation of this paragraph is
the word “absorb” which is synonymous with the words “assimilate” or “incorporate” and which, in
business parlance, means “to take over” (Webster’s Third New International Dictionary, 1966 Ed., p. 7).
As such, it appears at first blush, that an “absorbing” employer shall be responsible for all the benefits
accruing to the “absorbed” employees.
The circumstances of this case, however, do not warrant the conclusion that, by “absorbing” the
ERI/MPSI employees, MARINA took the place of the ERI/MPSI as an employer as if there had been no
interruption in the employer-employee relationship between ERI/MPSI and its employees and,
therefore, MARINA should assume all responsibilities of ERI/MPSI. For, while in Marina Port Services,
Inc. vs. NLRC (193 SCRA 420 [1991]), the Court opined that by virtue of Paragraph 7, security guards of
the MPSI did become employees of MARINA, the undeniable fact is that, by the termination of its
management contract with the PPA, ERI/MPSI ceased to be an employer. Admittedly, the conse-
quent separation from the employment of its employees was not of the ERI/MPSI’s own making.
However, it may not validly lay such consequence on the lap of MARINA which, like itself, had no hand in
the termination of the management contract by the PPA. The fact that a couple of days later, the PPA,
without public bidding, issued to MARINA, a permit to operate, does not imply that MARINA stepped
into the shoes of ERI/MPSI as if there were absolute identity between them. Parenthetically, the issue of
the legality of the cancellation of MPSI’s permit to operate was laid to rest in E. Razon, Inc. vs. Philippine
Ports Authority (151 SCRA 233 [1987]).
By absorbing ERI/MPSI employees and honoring the terms and conditions in the collective bargaining
agreement between ERI/MPSI and the employees, MARINA did not assume the responsibility of
ERI/MPSI to pay separation pay to its employees. As correctly put by public respondent, Paragraph 7,
insofar as it refers to employees’ benefits, should be applied prospectively with respect to MARINA. This
conclusion is supported by Paragraph 14 of Permit No. 104286 granted to MARINA which states:
14. Grantee shall be responsible for all obligations, liabilities or claims arising out of any transactions or
undertakings in connection with their cargo handling operations as of the actual date of transfer thereof
to grantee.” (Italics supplied.)
MARINA might have been impelled not only by compassion for the employees but also by their tested
skills in hiring them back upon their separation from the employment of ERI/MPSI. It should be recalled,
however, there is no law that requires the purchaser to absorb the employees of the selling corporation
(San Felipe Neri School of Mandaluyong, Inc. vs. NLRC, 201 SCRA 478 [1991], citing MDII Supervisors and
Confidential Employees Association (FFW) vs. Presidential Assistant on Legal Affairs, 79 SCRA 40 [1977]).
As such, when MARINA rehired the ERI/MPSI employees, it had all the right to consider them as new
ones. On the other hand, ERI/MPSI, to whom years of service had been rendered by its suddenly jobless
employees, had the corresponding obligation to grant them what is theirs under the law and the
collective bargaining agreement. After all, a collective bargaining agreement is the law between the
parties (Plastic
VOL. 222, MAY 13, 1993

9
Town Center Corporation vs. NLRC, 172 SCRA 580 [1989]; Roche [Phil] vs. NLRC, 178 SCRA 386 [1989],
and compliance therewith is mandated by the express policy of the law (Meycauayan College vs. Drilon,
185 SCRA 50 [1990]).
The situation in this case is completely different from that obtaining in Filipinas Port Services, Inc. vs.
NLRC (200 SCRA 773 [1991]), where the petitioner was obligated “not only to absorb the workers of the
dissolved companies but also to include the length of service earned by the absorbed employees with
their former employers as well” because said case involved a merger of different companies into a single
company as a result of the PPA’s integration of stevedoring/arrastre services. On the other hand, in the
case at bar, there is no privity of contract between ERI/MPSI and MARINA so as to make the latter a
common or even substitute employer that it should be burdened with the obligations of the former.
WHEREFORE, the petition is hereby DISMISSED and the assailed orders AFFIRMED, with costs against
petitioner.
SO ORDERED.
Petition dismissed. Assailed orders affirmed.
Notes.—Labor contracts are not enforceable against a transferee of an enterprise, labor contracts being
in personam, thus binding only between the parties. (Associated Labor Unions-VIMCONTU vs. National
Labor Relations Commission, 204 SCRA 913).
Petitioner’s contentions that private respondents are not entitled to separation pay on the ground that
there was no termination of the latter’s employment but a mere change of ownership in the assets and
properties of the school is untenable. (San Felipe Neri School of Mandaluyong, Inc. vs. National Labor
Relations Commission, 201 SCRA 478).
——o0o—— E. Razon, Inc. vs. Secretary of Labor and Employment, 222 SCRA 1, G.R. No. 85867 May 13,
1993
668
Liberty Flour Mills Employees vs. Liberty Flour Mills, Inc.
G.R. Nos. 58768-70. December 29, 1989.*
LIBERTY FLOUR MILLS EMPLOYEES, ANTONIO EVARISTO and POLICARPIO BIASCAN, petitioners, vs.
LIBERTY FLOUR MILLS, INC. PHILIPPINE LABOR ALLIANCE COUNCIL (PLAC) and NATIONAL LABOR
RELATIONS COMMISSION, (NLRC), respondents.
Labor; Arbitration; Jurisdiction; Petitioners are estopped from raising objections against the choice of
the voluntary arbitrator.—We find there was no such violation as the choice of the voluntary
arbitrator was not limited to Bacuñgan although he was probably the first preference. Moreover, the
petitioners are estopped from raising this objection now because they did not seasonably interpose it
and instead willingly submitted to Cabal’s jurisdiction when he undertook to hear their complaint.
Same; Same; Same; Supreme Court; Exception to finality of judgment; Decision of voluntary
arbitrator, final and unappealable.—In sustaining Laber Arbiter Lomabao, the NLRC agreed that the
decision of Voluntary Arbiter Cabal was final and unappealable under Article 262-A of the Labor Code
and so could no longer be reviewed by it. True enough. However, it is equally true that the same
decision is not binding on this Court, as we held in Oceanic Bic Division (FFW) v. Romero and
reiterated in Mantrade/FMMC Division Employees and Workers Union v. Bacuñgan. The rule as
announced in these cases is reflected in the following statements: In spite of statutory provisions
making “final” the decision of certain administrative agencies, we have taken cognizance of petitions
questioning these decisions where want of jurisdiction, grave abuse of discretion, violation of due
process, denial of substantial justice, or erroneous interpretation of the law were brought to our
attention.
_______________
* FIRST DIVISION.
669
VOL. 180, DECEMBER 29, 1989
669
Same; Emergency allowances under PD 525; Allowances absorbed by the wage increase required
under the CBA.—The Court holds that such allowances are indeed absorbed by the wage increases
required under the agreement.
Same; Same; Same; Same; The company falls under par. (a) of Sec. 5 of LOI 174 which has a
capitalization of more than P1 million and must pay a minimum allowance of P50.00 a month;
Amount of allowance already covered by the increases under the CBA.—It is not denied that the
company falls under paragraph (a), as it has a capitalization of more than P1 million, and so must pay
a minimum allowance of P50.00 a month. This amount is clearly covered by the increases prescribed
in the CBA, which required a monthly increase (on the basis of 30 days) of P60.00 for 1974, to be
increased by P30.00 in 1975 (to P90.00) and another P30.00 in 1976 (to P120.00). The first increase in
1974 was already above the minimum allowance of P50.00, which was exceeded even more with the
increases of P1.00 for each of the next two years.
Same; Same; Same; Same; Interpretation; Sec. 15 of PD 525 should be related to the other sections to
give effect to the intent and spirit of the decree; Under Sec. 15, any benefit over and above the
prescribed allowances may still be agreed upon by the employees and the employer.—Obviously, this
section should not be read in isolation but must be related to the other sections above-quoted, to give
effect to the intent and spirit of the decree. The meaning of the section simply is that any benefit over
and above the prescribed allowances may still be agreed upon by the employees and the employer or,
if already granted, may no longer be withdrawn or diminished.
Same; Same; Same; Same; No benefits are being waived under Sec. 2 of the CBA; Benefits are already
included in the wage increase; The law considers the increases as equivalent to or in lieu of the
emergency allowance granted by PD 525.—While the principle is correct, the application is not, for
there are no benefits being waived under the provision. The benefits are already included in the wage
increases. It is the law itself that considers these increases, under the conditions prescribed in LOI No.
174, as equivalent to, or in lieu of, the emergency allowance granted by P.D. No. 525.
Same; Same; Same; No waiver of increases as petitioners are not entitled to the additional P50.00
allowance.—In fact, the company agreed to grant the emergency allowance even before the
obligation was imposed by the government. What the petitioners claim they are
670
670
being made to waive is the additional P50.00 allowance but the truth is that they are not entitled to
this because they are already enjoying the stipulated increases. There is no waiver of these increases.
Same; Same; Same; Same; Difference between the stipulated wage increase and the statutory
minimum wage will be paid by the company.—Moreover, Section 2 provides that the wage increase
shall be considered payment of any statutory increase of the minimum wage “as far as it will go,”
which means that any amount not covered by such wage increase will have to be made good by the
company. In short, the difference between the stipulated wage increase and the statutory minimum
wage will have to be paid by the company notwithstanding and, indeed, pursuant to the said article.
There is no waiver as to this.
Same; Same; Same; CBA; An uncertified CBA duly filed and submitted to the Bureau of Labor Relations
is certifiable for having complied with all the requirements for certification.—In its challenged
decision, the public respondent held that in demanding the dismissal of Evaristo and Biascan, PLAC
had acted prematurely because the 1974 CBA providing for union shop and pursuant to which the two
petitioners were dismissed had not yet been certified. The implication is that it was not yet in effect
and so could not be the basis of the action taken against the two petitioners. This conclusion is
erroneous. It disregards the ruling of this Court in Tanduay Distillery Labor Union v. NLRC, were we
held; The fact, therefore, that the Bureau of Labor Relations (BLR) failed to certify or act on TDLU’s
request for certification of the CBA in question is of no moment to the resolution of the issues
presented in this case. The BLR itself found in its order of July 8,1982, that the “(un)certified CBA was
duly filed and submitted on October 29, 1980, to last until June 30, 1982 is certifiable for having
complied with all the requirements for certification.”
Same; Same; Same; Same; The certification of the CBA by the Bureau of Labor Relations is not
required for its validity; Once a CBA is duly entered and signed by the parties, it becomes effective as
between the parties whether or not the same has been certified by the Bureau.—Evidence on record
show that after the cancellation of the registration certificate of the Federation of Democratic Labor
Unions, no other union contested the exclusive representation of the Philippine Labor Alliance Council
(PLAC), consequently, there was no more legal impediment that stood on the way as to the validity
and enforceability of the provisions of the collective bargaining agreement entered into by and
between respondent corporation and respondent
671
671
union. The certification of the collective bargaining agreement by the Bureau of Labor Relations is not
required to put a stamp of validity to such contract. Once it is duly entered into and signed by the
parties, a collective bargaining agreement becomes effective as between the parties regardless of
whether or not the same has been certified by the BLR.
Same; Same; Same; Same; Claim for backwages by two employees who have been readmitted to the
union, not allowed; Union shop clause validly enforced against them and justified the termination of
their services.—The petitioners say that the reinstatement issue of Evaristo and Biascan has become
academic because the former has been readmitted and the latter has chosen to await the resolution
of this case. However, they still insist on the payment of their back wages on the ground that their
dismissal was illegal. This claim must be denied for the reason already given. The union shop clause
was validly enforced against them and justified the termination of their services.
Same; Same; Same; Policy of the State to promote unionism; Constitutional guarantee of right to self
organization, collective bargaining and negotiations and peaceful concerted actions including the right
to strike.—It is the policy of the State to promote unionism to enable the workers to negotiate with
management on the same level and with more persuasiveness than if they were to individually and
independently bargain for the improvement of their respective conditions. To this end, the
Constitution guarantees to them the rights “to self-organization, collective bargaining and
negotiations and peaceful concerted actions including the right to strike in accordance with law.”
There is no question that these purposes could be thwarted if every worker were to choose to go his
own separate way instead of joining his co-employees in planning collective action and presenting a
united front when they sit down to bargain with their employers. It is for this reason that the law has
sanctioned stipulations for the union shop and the closed shop as a means of encouraging the workers
to join and support the labor union of their own choice as their representative in the negotiation of
their demands and the protection of their interest vis a vis the employer.
Same; Same; Same; Same; Court would have preferred to resolve the case in favor of petitioners but
the law and the facts are against them.—The Court would have preferred to resolve this case in favor
of the petitioners, but the law and the facts are against them. For all the concern of the State, for the
well-being of the worker, we must at all times conform to the requirements of the law as long as such
law has not been shown to be violative of the Constitution. No such violation has been shown here.
672
PETITION for certiorari to review the resolution of the National Labor Relations Commission.
Julius A. Magno for petitioners.
De Leon, Diokno & Associates for respondent Liberty Flour Mills, Inc.
CRUZ, J.:
In this petiton for certiorari, the resolution of the public respondent dated August 3, 1978, is faulted for:
(a) affirming the decision of the labor arbiter dismissing the employees’ claim for emergency allowance
for lack of jurisdiction; and (b) modifying the said decision by disallowing the award of back wages to
petitioners Policarpio Biascan and Antonio Evaristo.
The basic facts are as follows:
On February 6, 1974, respondent Philippine Labor Alliance Council (PLAC) and respondent Liberty Flour
Mills, Inc. entered into a three-year collective bargaining agreement effective January 1, 1974, providing
for a daily wage increase of P2.00 for 1974, P1.00 for 1975 and another P1.00 for 1976. The agreement
contained a compliance clause, which will be explained later in this opinion. Additionally, the parties
agreed to establish a union shop by imposing “membership in good standing for the duration of the CBA
as a condition for continued employment” of workers.1
On October 18, 1974, PLAC filed a complaint against the respondent company for non-payment of the
emergency cost-of-living allowance under P.D. No. 525.2 A similar complaint was filed on March 4, 1975,
this time by the petitioners, who apparently were already veering away from PLAC.3
On March 20, 1975, petitioners Evaristo and Biascan, after organizing a union called the Federation of
National Demo-
_______________
1 Rollo, p. 166.
2 Ibid.
3 Id., p. 167.
673
673
cratic Labor Unions, filed with the Bureau of Labor Relations a petition for certification election among
the rank-and-file employees of the respondent company.4 PLAC then expelled the two for disloyalty and
demanded their dismissal by the respondent company, which complied on May 20, 1975.5
The objection of Evaristo and Biascan to their termination were certified for compulsory arbitration and
assigned to Labor Arbiter Apolinario N. Lomabao, Jr. Meanwhile, the claims for emergency allowance
were referred for voluntary arbitration to Edmundo Cabal, who eventually dismissed the same on the
ground that the allowances were already absorbed by the wage increases. This latter case was
ultimately also certified for compulsory arbitration and consolidated with the termination case being
heard by Lomabao. His decision was, on appeal, dealt with by the NLRC as above stated,6 and the
motion for reconsideration was denied on August 26, 1981.7
At the outset, we note that the petitioners are taking an ambivalent position concerning the CBA
concluded in 1974. While claiming that this was entered into in bad faith and to forestall the payment of
the emergency allowances expected to be decreed, they nonetheless invoke the same agreement to
support their contention that their complaint for emergency allowances was invalidly referred to
voluntary arbitrator Cabal rather than Froilan M. Bacuñgan.
We find there was no such violation as the choice of the voluntary arbitrator was not limited to
Bacuñgan although he was probably the first preference. Moreover, the petitioners are estopped from
raising this objection now because they did not seasonably interpose it and instead willingly submitted
to Cabal’s jurisdiction when he undertook to hear their complaint.
In sustaining Labor Arbiter Lomabao, the NLRC agreed that the decision of Voluntary Arbiter Cabal was
final and unappealable under Article 262-A of the Labor Code and so could no longer be reviewed by it.
True enough. However, it is equally true that the same decision is not binding on this Court, as we
_______________
4 Id., p. 25.
5 Id., p. 54.
6 Id., p. 108.
7 Id., p. 116.
674
674
held in Oceanic Bic Division (FFW) v. Romero8 and reiterated in Mantrade/FMMC Division Employees
and Workers Union v. Bacuñgan.9 The rule as announced in these cases is reflected in the following
statements:
In spite of statutory provisions making “final” the decision of certain administrative agencies, we have
taken cognizance of petitions questioning these decisions where want of jurisdiction, grave abuse of
discretion, violation of due process, denial of substantial justice, or erroneous interpretation of the law
were brought to our attention.
xxx
A voluntary arbitrator by the nature of her functions acts in a quasi-judicial capacity. There is no reason
why her decisions involving interpretation of law should be beyond this Court’s review. Administrative
officials are presumed to act in accordance with law and yet we do not hesitate to pass upon their work
where a question of law is involved or where a showing of abuse of authority or discretion in their
official acts is properly raised in petitions for certiorari.
Accordingly, the validity of the voluntary arbiter’s finding that the emergency allowance sought by the
petitioners are already absorbed in the stipulated wage increases will now be examined by the Court
itself.
The position of the company is that the emergency allowance required by P.D. No. 525 is already
covered by the wage increases prescribed in the said CBA. Furthermore, pursuant to its Article VIII, such
allowances also include all other statutory minimum wage increases that might be decreed during the
lifetime of the said agreement.
That agreement provided in Section 2 thereof as follows:
Section 2. The wage increase in the amounts and during the period above set forth shall, in the event of
any statutory increase of the minimum wage, either as allowance or as basic wage, during the life of this
Agreement, be considered compliance and payment of such required statutory increase as far as it will
go and under no circumstances will it be cumulative nor duplication to the differential amount involved
consequent to such statutory wage increase.
_______________
8 130 SCRA 392.
9 144 SCRA 510.
675
675
The Court holds that such allowances are indeed absorbed by the wage increases required under the
agreement. This is because Section 6 of the Interpretative Bulletin on LOI No. 174 specifically provides:
Sec. 6. Allowances under LOI.—All allowances, bonuses, wage adjustments and other benefits given by
employers to their employees shall be treated by the Department of Labor as in substantial compliance
with the minimum standards set forth in LOI No. 174 if:
(a) they conform with at least the minimum allowances scales specified in the immediately preceding
Section; and
(b) they are given in response to the appeal of the President in his speech on 4 January 1974,orto
countervail the quantum jump in the cost of living as a result of the energy crisis starting in November
1973, or pursuant to Presidential Decree No. 390; Provided, That the payment is retroactive to 18
February 1974 or earlier.
The allowances and other benefits may be granted unilaterally by the employer or through collective
bargaining, and may be paid at the same time as the regular wages of the employees.
Allowances and other benefits which are not given in substantial compliance with the LOI as interpreted
herein shall not be treated by the Department of Labor as emergency allowances in the contemplation
of the LOI unless otherwise shown by sufficient proof. Thus, without such proof, escalation clauses in
collective bargaining agreements concluded before the appeal of the President providing for automatic
or periodic wage increases shall not be considered allowances for purposes of the LOI. (Emphasis
supplied.)
The “immediately preceding section” referred to above states:
SEC. 5. Determination of Amount of Allowances.—In determining the amount of allowances that should
be given by employers to meet the recommended minimum standards, the LOI has classified employers
into three general categories. As an implementation policy, the Department of Labor shall consider as
sufficient compliance with the scales of allowances recommended by the LOI if the following monthly
allowances are given by employers:
(a) P50.00 or higher where the authorized capital stock of the corporation, or the total assets in the case
of other undertakings, exceeds P1 million;
(b) P30.00 or higher where the authorized capital stock of the corporation, or the total assets in the case
of other undertakings, is not less than P100,000.00 but not more than P1 million; and
676
676
(c) P15.00 or higher where the authorized capital stock or total assets, as the case may be, is less than
P100,000.00.
It is not denied that the company falls under paragraph (a), as it has a capitalization of more than P1
million,10 and so must pay a minimum allowance of P50.00 a month. This amount is clearly covered by
the increases prescribed in the CBA, which required a monthly increase (on the basis of 30 days) of
P60.00 for 1974, to be increased by P30.00 in 1975 (to P90.00) and another P30.00 in 1976 (to P120.00).
The first increase in 1974 was already above the minimum allowance of P50.00, which was exceeded
even more with the increases of P1.00 for each of the next two years.
Even if the basis used were 26 days a month (excluding Sundays), the conclusion would remain
unchanged as the raise in wage would be P52.00 for 1974, which amount was increased to P78.00 in
1975 and to P104.00 in 1976.
But the petitioners contend that the wage increases were the result of negotiation undertaken long
before the promulgation of P.D. No. 525 and so should not be considered part of the emergency
allowance decreed. In support of this contention, they cite Section 15 of the Rules implementing P.D.
No. 525, providing as follows:
Nothing herein shall prevent the employer and his employees, from entering into any agreement with
terms more favorable to the employees than those provided herein, or be construed to sanction the
diminution of any benefits granted to the employees under existing laws, agreements, and voluntary
practice.
Obviously, this section should not be read in isolation but must be related to the other sections above-
quoted, to give effect to the intent and spirit of the decree. The meaning of the section simply is that
any benefit over and above the prescribed allowances may still be agreed upon by the employees and
the employer or, if already granted, may no longer be withdrawn or diminished.
The petitioners also maintain that the above-quoted Section 2 of CBA is invalid because it constitutes a
waiver by the laborers
_______________
10 Rollo, pp. 39, 44 and 50.
677
677
of future benefits that may be granted them by law. They contend this cannot be done because it is
contrary to public policy.
While the principle is correct, the application is not, for there are no benefits being waived under the
provision. The benefits are already included in the wage increases. It is the law itself that considers
these increases, under the conditions prescribed in LOI No. 174, as equivalent to, or in lieu of, the
emergency allowance granted by P.D. No. 525.
In fact, the company agreed to grant the emergency allowance even before the obligation was imposed
by the government. What the petitioners claim they are being made to waive is the additional P50.00
allowance but the truth is that they are not entitled to this because they are already enjoying the
stipulated increases. There is no waiver of these increases.
Moreover, Section 2 provides that the wage increase shall be considered payment of any statutory
increase of the minimum wage “as far as it will go,” which means that any amount not covered by such
wage increase will have to be made good by the company. In short, the difference between the
stipulated wage increase and the statutory minimum wage will have to be paid by the company
notwithstanding and, indeed, pursuant to the said article. There is no waiver as to this.
Curiously, Article 2 was produced verbatim in the collective bargaining agreement concluded by the
petitioners with the company in 1977 after PLAC had been replaced by the new labor union formed by
petitioners Evaristo and Biascan.11 It is difficult to understand the petitioners’ position when they blow
hot and cold like this.
Coming now to the second issue, we find that it must also be resolved against the petitioners.
Evaristo and Biascan claim they were illegally dismissed for organizing another labor union opposed to
PLAC, which they describe as a company union. Arguing that they were only exercising the right to self
organization as guaranteed by the Constitution, they insist they are entitled to the back wages which the
NLRC disallowed while affirming their reinstatement.
_______________
11 Ibid., p. 94.
678
678
In its challenged decision, the public respondent held that in demanding the dismissal of Evaristo and
Biascan, PLAC had acted prematurely because the 1974 CBA providing for union shop and pursuant to
which the two petitioners were dismissed had not yet been certified.12 The implication is that it was not
yet in effect and so could not be the basis of the action taken against the two petitioners. This
conclusion is erroneous. It disregards the ruling of this Court in Tanduay Distillery Labor Union v.
NLRC,13 were we held:
The fact, therefore, that the Bureau of Labor Relations (BLR) failed to certify or act on TDLU’s request for
certification of the CBA in question is of no moment to the resolution of the issues presented in this
case. The BLR itself found in its order of July 8, 1982, that the “(un)certified CBA was duly filed and
submitted on October 29,1980, to last until June 30, 1982 is certifiable for having complied with all the
requirements for certification.” (Emphasis supplied.)
The CBA concluded in 1974 was certifiable and was in fact certified on April 11, 1975. It bears stressing
that Evaristo and Biascan were dismissed only on May 20, 1975, more than a month after the said
certification.
The correct view is that expressed by Commissioner Cecilio P. Seno in his concurring and dissenting
opinion,14 viz.:
I cannot however subscribe to the majority view that the “dismissal of complainants Biascan and
Evaristo, x x x was, to say the least, a premature action on the part of the respondents because at the
time they were expelled by PLAC the contract containing the union security clause upon which the
action was based was yet to be certified and the representation status of the contracting union was still
in question.
Evidence on record show that after the cancellation of the registration certificate of the Federation of
Democratic Labor Unions, no other union contested the exclusive representation of the Philippine Labor
Alliance Council (PLAC), consequently, there was no more legal impediment that stood on the way as to
the validity and enforceability of the provisions of the collective bargaining agreement entered into
_______________
12 Id., pp. 110-111.
13 149 SCRA 470.
14 Rollo, p. 106.
679
679
by and between respondent corporation and respondent union. The certification of the collective
bargaining agreement by the Bureau of Labor Relations is not required to put a stamp of validity to such
contract. Once it is duly entered into and signed by the parties, a collective bargaining agreement
becomes effective as between the parties regardless of whether or not the same has been certified by
the BLR.
To be fair, it must be mentioned that in the certification election held at the Liberty Flour Mills, Inc. on
December 27, 1976, the Ilaw at Buklod ng Manggagawa, with which the union organized by Biascan and
Evaristo was affiliated, won overwhelmingly with 441 votes as against the 5 votes cast for PLAC.15
However, this does not excuse the fact that the two disaffiliated from PLAC as early as March 1975 and
thus rendered themselves subject to dismissal under the union shop clause in the CBA.
The petitioners say that the reinstatement issue of Evaristo and Biascan has become academic because
the former has been readmitted and the latter has chosen to await the resolution of this case. However,
they still insist on the payment of their back wages on the ground that their dismissal was illegal. This
claim must be denied for the reasons already given. The union shop clause was validly enforced against
them and justified the termination of their services.
It is the policy of the State to promote unionism to enable the workers to negotiate with management
on the same level and with more persuasiveness than if they were to individually and independently
bargain for the improvement of their respective conditions. To this end, the Constitution guarantees to
them the rights “to self-organization, collective bargaining and negotiations and peaceful concerted
actions including the right to strike in accordance with law.” There is no question that these purposes
could be thwarted if every worker were to choose to go his own separate way instead of joining his co-
employees in planning collective action and presenting a united front when they sit down to bargain
with their employers. It is for this reason that the law has sanctioned stipulations for the union
_______________
15 Ibid., p. 84.
680
680
Icao vs. Apalisok
shop and the closed shop as a means of encouraging the workers to join and support the labor union of
their own choice as their representative in the negotiation of their demands and the protection of their
interest vis-a-vis the employer.
The Court would have preferred to resolve this case in favor of the petitioners, but the law and the facts
are against them. For all the concern of the State, for the well-being of the worker, we must at all times
conform to the requirements of the law as long as such law has not been shown to be violative of the
Constitution. No such violation has been shown here.
WHEREFORE, the petition is DISMISSED, without any pronouncement as to costs. It is so ordered.

Narvasa, Gancayco, Griño-Aquino and Medialdea, JJ., concur.
Petition dismissed.
Note.—Arbitration proceedings before the NLRC are no longer necessary if the striking workers have
been permanently replaced either because they had been constrained to defy the return-to-work order
or had been dismissed for failure to meet the prescribed work load. (NFLU vs. NLRC, 139 SCRA 589)
——o0o—— Liberty Flour Mills Employees vs. Liberty Flour Mills, Inc., 180 SCRA 668, G.R. Nos. 58768-70
December 29, 1989
268
Metropolitan Bank & Trust Company Employees Union-ALU-TUCP vs. National Labor Relations
Commission
G.R. No. 102636. September 10, 1993.*
METROPOLITAN BANK & TRUST COMPANY EMPLOYEES UNION-ALU-TUCP and ANTONIO V.

BALINANG, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (2nd Division) and
METROPOLITAN BANK & TRUST COMPANY, respondents.
Labor Law; National Labor Relations Commission; Wages; The issue of whether or not a wage
distortion exists as a consequence of the grant of a wage increase to certain employees is a question
of fact the determination of which is the statutory function of the NLRC.—The issue of whether or not
a wage distortion exists as a consequence of the grant of a wage increase to certain employees, we
agree, is, by and large, a question of fact the determination of which is the statutory function of the
NLRC. Judicial review of labor cases, we may add, does not go beyond the evaluation of the sufficiency
of the evidence upon which the labor officials’ findings rest. As such, factual findings of the NLRC are
generally accorded not only respect but also finality provided that its decisions are supported by
substantial evidence and devoid of any taint of unfairness or arbitrariness. When, however, the
members of the same labor tribunal are not in accord on those aspects of a case, as in this case, this
Court is well cautioned not to be as so conscious in passing upon the sufficiency of the evidence, let
alone the conclusions derived therefrom.
Same; Same; Same; Same; In mandating an adjustment, the law did not require that there be an
elimination or total abrogation of quantitative wage or salary differences, a severe contraction
thereof is enough.—The definition of “wage distortion,” aforequoted, shows that such distortion can
so exist when, as a result of an increase in the prescribed wage rate, an “elimination or severe
contraction of intentional quantitative differences in wage or salary rates” would occur “between and
among employee groups in an establishment as to effectively obliterate the distinctions embodied in
such wage structure based on skills, length of service, or other logical bases of differentiation.” In
mandating an adjustment, the law did not require that there be an elimination or total abrogation of
quantitative wage or salary differences; a severe contraction thereof is enough. As has been aptly
_______________
* THIRD DIVISION.
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269
Commission
observed by Presiding Commissioner Edna Bonto-Perez in her dissenting opinion, the contraction
between personnel groupings comes close to eighty-three (83%), which cannot, by any stretch of
imagination, be considered less than severe.
Same; Same; Same; Same; Same; The Solicitor General has correctly emphasized that the intention of
the parties, whether the benefits under a collective bargaining agreement should be equated with
those granted by law or not unless there are compelling reasons otherwise must prevail and be given
effect.—The “intentional quantitative differences” in wage among employees of the bank has been
set by the CBA to about P900 per month as of 01 January 1989. It is intentional as it has been arrived
at through the collective bargaining process to which the parties are thereby concluded. The Solicitor
General, in recommending the grant of due course to the petition, has correctly emphasized that the
intention of the parties, whether the benefits under a collective bargaining agreement should be
equated with those granted by law or not, unless there are compelling reasons otherwise, must
prevail and be given effect.
PETITION for certiorari to review the decision of the National Labor Relations Commission.
The facts are stated in the resolution of the Court.
Gilbert P. Lorenzo for petitioners.
Marcial G. dela Fuente for private respondents.
RESOLUTION
VITUG, J.:
In this petition for certiorari, the Metropolitan Bank & Trust Company Employees Union-ALU-TUCP
(MBTCEU) and its president, Antonio V. Balinang, raise the issue of whether or not the implementation
by the Metropolitan Bank and Trust Company of Republic Act No. 6727, mandating an increase in pay of
P25 per day for certain employees in the private sector, created a distortion that would require an
adjustment under said law in the wages of the latter’s other various groups of employees.
On 25 May 1989, the bank entered into a collective bargaining agreement with the MBTCEU, granting a
monthly P900 wage
270
270
Commission
increase effective 01 January 1989, P600 wage increase effective 01 January 1990, and P200 wage
increase effective 01 January 1991. The MBTCEU had also bargained for the inclusion of probationary
employees in the list of employees who would benefit from the first P900 increase but the bank had
adamantly refused to accede thereto. Consequently, only regular employees as of 01 January 1989 were
given the increase to the exclusion of probationary employees.
Barely a month later, or on 01 July 1989, Republic Act 6727, “an act to rationalize wage policy
determination by establishing the mechanism and proper standards therefor, x x x fixing new wage
rates, providing wage incentives for industrial dispersal to the countryside, and for other purposes,”
took effect. Its provisions, pertinent to this case, state.
“SEC. 4. (a) Upon the effectivity of this Act, the statutory minimum wage rates of all workers and
employees in the private sector, whether agricultural or non-agricultural, shall be increased by twenty
five pesos (P25) per day, x x x: Provided, That those already receiving above the minimum wage rates up
to one hundred pesos (P100.00) shall also receive an increase of twenty-five pesos (P25.00) per day, x x
x.
xxx xxx xxx
(d) If expressly provided for and agreed upon in the collective bargaining agreements, all increases in the
daily basic wage rates granted by the employers three (3) months before the effectivity of this Act shall
be credited as compliance with the increases in the wage rates prescribed herein, provided that, where
such increases are less than the prescribed increases in the wage lates under this Act, the employer shall
pay the difference. Such increase shall not include anniversary wage increases, merit wage increase and
those resulting from the regularization or promotion of employees.
Where the application of the increases in the wage rates under this Section results in distortions as
defined under existing laws in the wage structure within an establishment and gives rise to a dispute
therein, such dispute shall first be settled voluntarily between the parties and in the event of a deadlock,
the same shall be finally resolved through compulsory arbitration by the regional branches of the
National Labor Relations Commission (NLRC) having jurisdiction over the workplace.
It shall be mandatory for the NLRC to conduct continuous hearings and decide any dispute arising under
this Section within twenty
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Commission
(20) calendar days from the time said dispute is formally submitted to it for arbitration. The pendency of
a dispute arising from a wage distortion shall not in any way delay the applicability of the increase in the
wage rates prescribed under this Section.”
Pursuant to the above provisions, the bank gave the P25 increase per day, or P750 a month, to its
probationary employees and to those who had been promoted to regular or permanent status before
01 July 1989 but whose daily rate was P100 and below. The bank refused to give the same increase to its
regular employees who were receiving more than P100 per day and recipients of the P900 CBA increase.
Contending that the bank’s implementation of Republic Act 6727 resulted in the categorization of the
employees into (a) the probationary employees as of 30 June 1989 and regular employees receiving
P100 or less a day who had been promoted to permanent or regular status before 01 July 1989, and (b)
the regular employees as of 01 January 1989, whose pay was over P100 a day, and that, between the
two groups, there emerged a substantially reduced salary gap, the MBTCEU sought from the bank the
correction of the alleged distortion in pay. In order to avert an impending strike, the bank petitioned the
Secretary of Labor to assume jurisdiction over the case or to certify the same to the National Labor
Relations Commission (NLRC) under Article 263 (g) of the Labor Code.1 The parties ultimately agreed to
refer the issue for compulsory arbitration to the NLRC.
The case was assigned to Labor Arbiter Eduardo J. Carpio. In his decision of 05 February 1991, the labor
arbiter disagreed with
_______________
1 This provision states:
“(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an
industry indispensable to the national interest, the Secretary of Labor and Employment may assume
jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory
arbitration. Such assumption or certification shall have the effect of automatically enjoining the
intended or impending strike or lockout as specified in the assumption or certification order. x x x.”
272
272

Commission
the bank’s contention that the increase in its implementation of Republic Act 6727 did not constitute a
distortion because “only 143 employees or 6.8% of the bank’s population of a total of 2,108 regular
employees” benefited. He stressed that “it is not necessary that a big number of wage earners within a
company be benefited by the mandatory increase before a wage distortion may be considered to have
taken place,” it being enough, he said, that such increase “result(s) in the severe contraction of an
intentional quantitative difference in wage rates between employee groups.”
The labor arbiter concluded that since the “intentional quantitative difference” in wage or salary rates
between and among groups of employees is not based purely on skills or length of service but also on
“other logical bases of differentiation, a P900.00 wage gap intentionally provided in a collective
bargaining agreement as a quantitative difference in wage between those who WERE regular employees
as of January 1, 1989 and those who WERE NOT as of that date, is definitely a logical basis of
differentiation (that) deserves protection from any distorting statutory wage increase.” Otherwise, he
added, “a minimum wage statute that seeks to uplift the economic condition of labor would itself
destroy the mechanism of collective bargaining which, with perceived stability, has been labor’s
constitutional and regular source of wage increase for so long a time now.” Thus, since the “subjective
quantitative difference” between wage rates had been reduced from P900.00 to barely P150.00,
correction of the wage distortion pursuant to Section 4(c) of the Rules Implementing Republic Act 6727
should be made.
The labor arbiter disposed of the case, thus:
WHEREFORE, premises considered, the respondent is hereby directed to restore to complainants and
their members the Nine Hundred (P900.00) Pesos CBA wage gap they used to enjoy over non-regular
employees as of January 1, 1989 by granting them a Seven Hundred Fifty (P750.00) Pesos monthly
increase effective July 1, 1989.
SO ORDERED.”2
_______________
2 Rollo, pp. 35-37.
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Commission
The bank appealed to the NLRC. On 31 May 1991, the NLRC Second Division, by a vote of 2 to 1,
reversed the decision of the Labor Arbiter. Speaking through Commissioners Rustico L. Diokno and
Domingo H. Zapanta, the NLRC said:
“x x x a wage distortion can arise only in a situation where the salary structure is characterized by
intentional quantitative differences among employee groups determined or fixed on the basis of skills,
length of service, or other logical basis of differentiation and such differences or distinctions are
obliterated or contracted by subsequent wage increases (In Re: Labor Dispute at the Bank of the
Philippine Islands, NCMB-RB-7-11-096-89, Secretary of Labor and Employment, February 18, 1991).
As applied in this case, We noted that in the new wage salary structure, the wage gaps between Levels 6
and 7 levels 5 and 6, and levels 6 and 7 (sic) were maintained. While there is a noticeable decrease in
the wage gap between Levels 2 and 3, Levels 3 and 4, and Levels 4 and 5, the reduction in the wage gaps
between said levels is not significant as to obliterate or result in severe contraction of the intentional
quantitative differences in salary rates between the employee groups. For this reason, the basic
requirement for a wage distortion to exist does not appear in this case. Moreover, there is nothing in
the law which would justify an across-the-board adjustment of P750.00 as ordered by the Labor Arbiter.
WHEREFORE, premises considered, the appealed decision is hereby set aside and a new judgment is
hereby entered, dismissing the complaint for lack of merit.
SO ORDERED.”3
In her dissent, Presiding Commissioner Edna Bonto-Perez opined:
“There may not be an obliteration nor elimination of said quantitative distinction/difference aforecited
but clearly there is a contraction. Would such contraction be severe as to warrant the necessary
correction sanctioned by the law in point, RA 6727? It is my considered view that the quantitative
intended distinction in pay between the two groups of workers in respondent company was contracted
by more than fifty (50%) per cent or in particular by more or less eighty-three (83%)
_______________
3 Ibid., pp. 49-50.
274
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Commission
percent hence, there is no doubt that there is an evident severe contraction resulting in the complained
of wage distortion.
Nonetheless, the award of P750.00 per month to all of herein individual complainants as ordered by the
Labor Arbiter below, to my mind is not the most equitable remedy at bar, for the same would be an
across the board increase which is not the intention of RA 6727. For that matter, herein complainants
cannot by right claim for the whole amount of P750.00 a month or P25.00 per day granted to the
workers covered by the said law in the sense that they are not covered by the said increase mandated
by RA 6727. They are only entitled to the relief granted by said law by way of correction of the pay scale
in case of distortion in wages by reason thereof.
Hence, the formula offered and incorporated in Wage Order No. IV-02 issued on 21 May 1991 by the
Regional Tripartite Wages and Productivity Commission for correction of pay scale structures in cases of
wage distortion as in this case at bar which is:
Minimum Wage
=% x
Prescribed
Distortion
___________
Actual Salary
Increased
Adjustment
would be the most equitable and fair under the circumstances obtaining in this case.
For this very reason, I register my dissent from the majority opinion and opt for the modification of the
Labor Arbiter’s decision as afore-discussed.”4
The MBTCEU filed a motion for the reconsideration of the decision of the NLRC; having been denied, the
MBTCEU and its president filed the instant petition for certiorari, charging the NLRC with grave abuse of
discretion by its refusal (a) “to acknowledge the existence of a wage distortion in the wage or salary
rates between and among the employee groups of the respondent bank as a result of the bank’s partial
implementation” of Republic Act 6727 and (b) to give due course to its claim for an across-the-board
P25 increase under Republic Act No. 6727.5
We agree with the Solicitor General that the petition is impressed with merit.6
_______________
4 Ibid., pp. 55-56.
5 Ibid., p. 12.
6 Manifestation in Lieu of Comments, p. 1; Rollo, p. 134.
275
275
Commission
The term “wage distortion”, under the Rules Implementing Republic Act 6727, is defined, thus:
“(p) Wage Distortion means a situation where an increase in prescribed wage rates results in the
elimination or severe contraction of intentional quantitative differences in wage or salary rates between
and among employee groups in an establishment as to effectively obliterate the distinctions embodied
in such wage structure based on skills, length of service, or other logical bases of differentiation.”
The issue of whether or not a wage distortion exists as a consequence of the grant of a wage increase to
certain employees, we agree, is, by and large, a question of fact the determination of which is the
statutory function of the NLRC.7 Judicial review of labor cases, we may add, does not go beyond the
evaluation of the sufficiency of the evidence upon which the labor officials’ findings rest.8 As such,
factual findings of the NLRC are generally accorded not only respect but also finality provided that its
decisions are supported by substantial evidence and devoid of any taint of unfairness or arbitrariness.9
When, however, the members of the same labor tribunal are not in accord on those aspects of a case, as
in this case, this Court is well cautioned not to be as so conscious in passing upon the sufficiency of the
evidence, let alone the conclusions derived therefrom.
In this case, the majority of the members of the NLRC, as well as its dissenting member, agree that there
is a wage distortion arising from the bank’s implementation of the P25 wage increase; they do differ,
however, on the extent of the distortion that can warrant the adoption of corrective measures required
by the law.
_______________
7 Cardona v. NLRC, G.R. No. 89007, March 11, 1991, 195 SCRA 92.
8 Philippine Overseas Drilling and Oil Development Corporation v. Ministry of Labor, G.R. No. 55703,
November 27, 1986, 146 SCRA 79, 88.
9 Artex Development Co., Inc. v. NLRC, G.R. No. 65045, July 20, 1990, 187 SCRA 611, 615; Five J Taxi v.
NLRC, G.R. No. 100138, August 5, 1992, 212 SCRA 225.
276
276
Commission
The definition of “wage distortion,”10 aforequoted, shows that such distortion can so exist when, as a
result of an increase in the prescribed wage rate, an “elimination or severe contraction of intentional
quantitative differences in wage or salary rates” would occur “between and among employee groups in
an establishment as to effectively obliterate the distinctions embodied in such wage structure based on
skills, length of service, or other logical bases of differentiation.” In mandating an adjustment, the law
did not require that there be an elimination or total abrogation of quantitative wage or salary
differences; a severe contraction thereof is enough. As has been aptly observed by Presiding
Commissioner Edna Bonto-Perez in her dissenting opinion, the contraction between personnel
groupings comes close to eightythree (83%), which cannot, by any stretch of imagination, be considered
less than severe.
The “intentional quantitative differences” in wage among employees of the bank has been set by the
CBA to about P900 per month as of 01 January 1989. It is intentional as it has been arrived at through
the collective bargaining process to which the parties are thereby concluded.11 The Solicitor General, in
recommending the grant of due course to the petition, has correctly emphasized that the intention of
the parties, whether the benefits under a collective bargaining agreement should be equated with those
granted by law or not, unless there are compelling reasons otherwise, must prevail and be given
effect.12
In keeping then with the intendment of the law and the agreement of the parties themselves, along with
the often repeated rule that all doubts in the interpretation and implementation of labor laws should be
resolved in favor of labor,13 we must approximate an acceptable quantitative difference between and
_______________
10 This is now under Art. 124 of the Labor Code as amended by Rep. Act 6727.
11 Plastic Town Center Corporation v. NLRC G.R. No. 81176, April 19, 1989, 172 SCRA 580, 585.
12 Filipinas Golf & Country Club, Inc. v. NLRC G.R. No. 61918, August 23, 1989, 176 SCRA 625, 632.
13 International Pharmaceuticals, Inc. v. Secretary of Labor G.R. Nos. 92981-83, January 9, 1992, 205
SCRA 59.
277
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Commission
among the CBA agreed work levels. We, however, do not subscribe to the labor arbiter’s exacting
prescription in correcting the wage distortion. Like the majority of the members of the NLRC, we are also
of the view that giving the employees an across-the-board increase of P750 may not be conducive to the
policy of encouraging “employers to grant wage and allowance increases to their employees higher than
the minimum rates of increases prescribed by statute or administrative regulation,” particularly in this
case where both Republic Act 6727 and the CBA allow a credit for voluntary compliance. As the Court,
through Associate Justice Florentino Feliciano, also pointed out in Apex Mining Company, Inc. v. NLRC:14
“x x x. (T)o compel employers simply to add on legislated increases in salaries or allowances without
regard to what is already being paid, would be to penalize employers who grant their workers more
than the statutorily prescribed minimum rates of increases. Clearly, this would be counter-productive so
far as securing the interests of labor is concerned. x x x.”
We find the formula suggested then by Commissioner Bonto-Perez, which has also been the standard
considered by the regional Tripartite Wages and Productivity Commission for the correction of pay scale
structures in cases of wage distortion,15 to well be the appropriate measure, to balance the respective
contentions of the parties in this instance. We also view it as being just and equitable.
WHEREFORE, finding merit in the instant petition for certio-rari, the same is GRANTED DUE COURSE, the
questioned NLRC decision is hereby SET ASIDE and the decision of the labor arbiter is REINSTATED
subject to the MODIFICATION that the wage distortion in question be corrected in accordance with the
formula expressed in the dissenting opinion of Presiding Commissioner Edna Bonto-Perez. This decision
is immediately
______________
14G.R. No. 86200, February 25, 1992, 206 SCRA 497, 501.
15See: Employers Confederation of the Philippines v. National Wages and Productivity Commission, G.R.
No. 96169, September 24, 1991, 201 SCRA 759, 767.
278
278
Blaquera vs. Civil Service Commission
executory.
SO ORDERED.
Bidin, Romero and Melo, JJ., concur.
Feliciano, J., (Chairman), On Leave.
Petition granted due course.
Note.—Findings of fact of the NLRC are conclusive and will not be disturbed by the Supreme Court
(Union of Filipro Employees vs. National Labor Relations Commission, 192 SCRA 414).
——o0o—— Metropolitan Bank & Trust Company Employees Union-ALU-TUCP vs. National Labor
Relations Commission, 226 SCRA 268, G.R. No. 102636 September 10, 1993
171
Samahang Manggagawa sa Top Form Manufacturing United Workers of the Philippines (SWTFM-UWP)
vs. NLRC
G.R. No. 113856. September 7, 1998.*
SAMAHANG MANGGAGAWA SA TOP FORM MANUFACTURING-UNITED WORKERS OF THE PHILIPPINES

(SMTFM-UWP), its officers and members, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION,
HON. JOSE G. DE VERA and TOP FORM MANUFACTURING PHIL., INC., respondents.
Labor Law; Collective Bargaining Agreements; Minutes; If there was indeed a promise or undertaking
on the part of the employer to obligate itself to grant an automatic across-the-board wage increase,
the union should have requested or demanded that such “promise or undertaking” be incorporated in
the CBA; A union may not validly claim that a proposal embodied in the Minutes of the negotiation
_______________
* THIRD DIVISION.
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Samahang Manggagawa Top Form Manufacturing-United Workers of the Philippines (SWTFM-UWP) vs.
NLRC
forms part of the CBA that it finally entered into with the employer.—The basic premise of this
argument is definitely untenable. To start with, if there was indeed a promise or undertaking on the
part of private respondent to obligate itself to grant an automatic across-the-board wage increase,
petitioner union should have requested or demanded that such “promise or undertaking” be
incorporated in the CBA. After all, petitioner union has the means under the law to compel private
respondent to incorporate this specific economic proposal in the CBA. It could have invoked Article
252 of the Labor Code defining “duty to bargain,” thus, the duty includes “executing a contract
incorporating such agreements if requested by either party.” Petitioner union’s assertion that it had
insisted on the incorporation of the same proposal may have a factual basis considering the
allegations in the aforementioned joint affidavit of its members. However, Article 252 also states that
the duty to bargain “does not compel any party to agree to a proposal or make any concession.” Thus,
petitioner union may not validly claim that the proposal embodied in the Minutes of the negotiation
forms part of the CBA that it finally entered into with private respondent.
Same; Same; Same; A CBA is not an ordinary contract but one impressed with public interest; Only
provisions embodied in the CBA should be so interpreted and complied with—where a proposal raised
by a contracting party does not find print in the CBA, it is not a part thereof and the proponent has no
claim whatsoever to its implementa-tion.—The CBA is the law between the contracting parties—the
collective bargaining representative and the employer-company. Compliance with a CBA is mandated
by the expressed policy to give protection to labor. In the same vein, CBA provisions should be
“construed liberally rather than narrowly and technically, and the courts must place a practical and
realistic construction upon it, giving due consideration to the context in which it is negotiated and
purpose which it is intended to serve.” This is founded on the dictum that a CBA is not an ordinary
contract but one impressed with public interest. It goes without saying, however, that only provisions
embodied in the CBA should be so interpreted and complied with. Where a proposal raised by a
contracting party does not find print in the CBA, it is not a part thereof and the proponent has no
claim whatsoever to its implementation.
Same; Same; Same; The union’s contention that the Minutes of the collective bargaining negotiation
meeting forms part of the entire
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vs. NLRC
agreement is pointless—the Minutes reflects the proceedings and discussions undertaken in the
process of bargaining for worker benefits in the same way that the minutes of court proceedings show
what transpired therein; If an employer promised something in the negotiations, such promise could
only be demandable in law if incorporated in the CBA.—Hence, petitioner union’s contention that the
Minutes of the collective bargaining negotiation meeting forms part of the entire agreement is
pointless. The Minutes reflects the proceedings and discussions undertaken in the process of
bargaining for worker benefits in the same way that the minutes of court proceedings show what
transpired therein. At the negotiations, it is but natural for both management and labor to adopt
positions or make demands and offer proposals and counter-proposals. However, nothing is
considered final until the parties have reached an agreement. In fact, one of management’s usual
negotiation strategies is to “x x x agree tentatively as you go along with the understanding that
nothing is binding until the entire agreement is reached.” If indeed private respondent promised to
continue with the practice of granting across-the-board salary increases ordered by the government,
such promise could only be demandable in law if incorporated in the CBA.
Same; Same; Same; Where a proposal was never embodied in the CBA, the promise has remained just
that, a promise, the implementation of which cannot be validly demanded under the law.—By making
such promise, private respondent may not be considered in bad faith or at the very least, resorting to
the scheme of feigning to undertake the negotiation proceedings through empty promises. As earlier
stated, petitioner union had, under the law, the right and the opportunity to insist on the foreseeable
fulfillment of the private respondent’s promise by demanding its incorporation in the CBA. Because
the proposal was never embodied in the CBA, the promise has remained just that, a promise, the
implementation of which cannot be validly demanded under the law.
Same; Same; With the execution of a CBA, bad faith bargaining can no longer be imputed upon any of
the parties thereto.—With the execution of the CBA, bad faith bargaining can no longer be imputed
upon any of the parties thereto. All provisions in the CBA are supposed to have been jointly and
voluntarily incorporated therein by the parties. This is not a case where private respondent exhibited
an indifferent attitude towards collective bargaining because the nego-
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tiations were not the unilateral activity of petitioner union. The CBA is proof enough that private
respondent exerted “reasonable effort at good faith bargaining.”
Same; Same; Bad faith cannot be inferred from a party’s insistence on the inclusion of a particular
substantive provision unless it concerns trivial matters or is obviously intolerable.—Indeed, the
adamant insistence on a bargaining position to the point where the negotiations reach an impasse
does not establish bad faith. Neither can bad faith be inferred from a party’s insistence on the
inclusion of a particular substantive provision unless it concerns trivial matters or is obviously
intolerable. “The question as to what are mandatory and what are merely permissive subjects of
collective bargaining is of significance on the right of a party to insist on his position to the point of
stalemate. A party may refuse to enter into a collective bargaining contract unless it includes a desired
provision as to a matter which is a mandatory subject of collective bargaining; but a refusal to
contract unless the agreement covers a matter which is not a mandatory subject is in substance a
refusal to bargain about matters which are mandatory subjects of collective bargaining; and it is no
answer to the charge of refusal to bargain in good faith that the insistence on the disputed clause was
not the sole cause of the failure to agree or that agreement was not reached with respect to other
disputed clauses.”
Same; Same; Company Practice; A single instance may not be considered an established company
practice.—We agree with the Labor Arbiter and the NLRC that no benefits or privileges previously
enjoyed by petitioner union and the other employees were withdrawn as a result of the manner by
which private respondent implemented the wage orders. Granted that private respondent had
granted an across-the-board increase pursuant to Republic Act No. 6727, that single instance may not
be considered an established company practice. Petitioner union’s argument in this regard is actually
tied up with its claim that the implementation of Wage Orders Nos. 01 and 02 by private respondent
resulted in wage distortion.
Same; Wage Distortions; Administrative Law; Evidence; The issue of whether or not a wage distortion
exists is a question of fact that is within the jurisdiction of the quasi-judicial tribunals.—The issue of
whether or not a wage distortion exists is a question of fact that is
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vs. NLRC
within the jurisdiction of the quasi-judicial tribunals below. Factual findings of administrative agencies
are accorded respect and even finality in this Court if they are supported by substantial evidence.
Same; The Supreme Court is guided by the goal of attaining industrial peace by the proper application
of the law—it cannot favor one party, be it labor or management, in arriving at a just solution to a
controversy if the party has no valid support to its claims; It is not within the Supreme Court’s power
to rule beyond the ambit of the law.—In the resolution of labor cases, this Court has always been
guided by the State policy enshrined in the Constitution that the rights of workers and the promotion
of their welfare shall be protected. The Court is likewise guided by the goal of attaining industrial
peace by the proper application of the law. It cannot favor one party, be it labor or management, in
arriving at a just solution to a controversy if the party has no valid support to its claims. It is not within
this Court’s power to rule beyond the ambit of the law.
SPECIAL CIVIL ACTION in the Supreme Court.

Potenciano A. Flores, Jr. for petitioners.
ROMERO, J.:
The issue in this petition for certiorari is whether or not an employer committed an unfair labor practice
by bargaining in bad faith and discriminating against its employees. The charge arose from the
employer’s refusal to grant across-the-board increases to its employees in implementing Wage Orders
Nos. 01 and 02 of the Regional Tripartite Wages and Productivity Board of the National Capital Region
(RTWPBNCR). Such refusal was aggravated by the fact that prior to the issuance of said wage orders, the
employer allegedly promised at the collective bargaining conferences to implement any government-
mandated wage increases on an across-the-board basis.
Petitioner Samahang Manggagawa sa Top Form Manufacturing-United Workers of the Philippines

(SMTFM) was the
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certified collective bargaining representative of all regular rank and file employees of private respondent
Top Form Manufacturing Philippines, Inc. At the collective bargaining negotiation held at the Milky Way
Restaurant in Makati, Metro Manila on February 27, 1990, the parties agreed to discuss unresolved
economic issues. According to the minutes of the meeting, Article VII of the collective bargaining
agreement was discussed. The following appear in said Minutes:
“ARTICLE VII. Wages
Section 1.—Defer—
Section 2.—Status quo
Section 3. Union proposed that any future wage increase given by the government should be
implemented by the company across-the-board or non-conditional.
Management requested the union to retain this provision since their sincerity was already proven when
the P25.00 wage increase was granted across-the-board. The union acknowledges management’s
sincerity but they are worried that in case there is a new set of management, they can just show their
CBA. The union decided to defer this provision.”1
In their joint affidavit dated January 30, 1992,2 union members Salve L. Barnes, Eulisa Mendoza, Lourdes
Barbero and Concesa Ibañez affirmed that at the subsequent collective bargaining negotiations, the
union insisted on the incorporation in the collective bargaining agreement (CBA) of the union proposal
on “automatic across-the-board wage increase.” They added that:
“11. On the strength of the representation of the negotiating panel of the company and the above
undertaking/promise made by its negotiating panel, our union agreed to drop said proposal relying on
the undertakings made by the officials of the company who negotiated with us, namely, Mr. William
Reynolds, Mr. Samuel Wong and Mrs. Remedios Felizardo. Also, in the past years, the company
_______________
1 Annex D to Petition; Rollo, pp. 71-74.
2 Annex K to Petition; Rollo, pp. 139-143.
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177

vs. NLRC
has granted to us government mandated wage increases on across-the-board basis.”
On October 15, 1990, the RTWPB-NCR issued Wage Order No. 01 granting an increase of P17.00 per day
in the salary of workers. This was followed by Wage Order No. 02 dated December 20, 1990 providing
for a P12.00 daily increase in salary.
As expected, the union requested the implementation of said wage orders. However, they demanded
that the increase be on an across-the-board basis. Private respondent refused to accede to that
demand. Instead, it implemented a scheme of increases purportedly to avoid wage distortion. Thus,
private respondent granted the P17.00 increase under Wage Order No. 01 to workers/employees
receiving salary of P125.00 per day and below. The P12.00 increase mandated by Wage Order No. 02
was granted to those receiving the salary of P140.00 per day and below. For employees receiving salary
higher than P125.00 or P140.00 per day, private respondent granted an escalated increase ranging from
P6.99 to P14.30 and from P6.00 to P10.00, respectively.3
On October 24, 1991, the union, through its legal counsel, wrote private respondent a letter demanding
that it should “fulfill its pledge of sincerity to the union by granting an across-the-board wage increases
(sic) to all employees under the wage orders.” The union reiterated that it had agreed to “retain the old
provision of CBA” on the strength of private respondent’s “promise and assurance” of an across-the-
board salary increase should the government mandate salary increases.4 Several conferences between
the parties notwithstanding, private respondent adamantly maintained its position on the salary
increases it had granted that were purportedly designed to avoid wage distortion.
Consequently, the union filed a complaint with the NCR NLRC alleging that private respondent’s act of
“reneging on
_______________
3 NLRC Resolution of April 29, 1993, p. 2; Rollo, p. 61.
4 Annex E to Petition; Rollo, pp. 80-81.
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its undertaking/promise clearly constitutes an act of unfair labor practice through bargaining in bad
faith.” It charged private respondent with acts of unfair labor practices or violation of Article 247 of the
Labor Code, as amended, specifically “bargaining in bad faith,” and prayed that it be awarded actual,
moral and exemplary damages.5 In its position paper, the union added that it was charging private
respondent with “violation of Article 100 of the Labor Code.”6
Private respondent, on the other hand, contended that in implementing Wage Orders Nos. 01 and 02, it
had avoided “the existence of a wage distortion” that would arise from such implementation. It
emphasized that only “after a reasonable length of time from the implementation” of the wage orders
“that the union surprisingly raised the question that the company should have implemented said wage
orders on an across-the-board basis.” It asserted that there was no agreement to the effect that future
wage increases mandated by the government should be implemented on an across-the-board basis.
Otherwise, that agreement would have been incorporated and expressly stipulated in the CBA. It quoted
the provision of the CBA that reflects the parties’ intention to “fully set forth” therein all their
agreements that had been arrived at after negotiations that gave the parties “unlimited right and
opportunity to make demands and proposals with respect to any subject or matter not removed by law
from the area of collective bargaining.” The same CBA provided that during its effectivity, the parties
“each voluntarily and unqualifiedly waives the right, and each agrees that the other shall not be
obligated, to bargain collectively, with respect to any subject or matter not specifically referred to or
covered by this Agreement, even though such subject or matter may not have been within the
knowledge or contemplation of either or both of the parties at the time they negotiated or signed this
Agreement.”7
_______________
5 Annex F to Petition; Rollo, pp. 75-78.

6 Rollo, p. 93.
7 Ibid., p. 95.
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179

vs. NLRC
On March 11, 1992, Labor Arbiter Jose G. de Vera rendered a decision dismissing the complaint for lack
of merit.8 He considered two main issues in the case: (a) whether or not respondents are guilty of unfair
labor practice, and (b) whether or not the respondents are liable to implement Wage Orders Nos. 01
and 02 on an across-the-board basis. Finding no basis to rule in the affirmative on both issues, he
explained as follows:
“The charge of bargaining in bad faith that the complainant union attributes to the respondents is bereft
of any certitude inasmuch as based on the complainant union’s own admission, the latter vacillated on
its own proposal to adopt an across-the-board stand or future wage increases. In fact, the union
acknowledges the management’s sincerity when the latter allegedly implemented Republic Act 6727 on
an across-the-board basis. That such union proposal was not adopted in the existing CBA was due to the
fact that it was the union itself which decided for its deferment. It is, therefore, misleading to claim that
the management undertook/promised to implement future wage increases on an across-the-board basis
when as the evidence shows it was the union who asked for the deferment of its own proposal to that
effect.
The alleged discrimination in the implementation of the subject wage orders does not inspire belief at all
where the wage orders themselves do not allow the grant of wage increases on an across-the-board
basis. That there were employees who were granted the full extent of the increase authorized and some
others who received less and still others who did not receive any increase at all, would not ripen into
what the complainants termed as discrimination. That the implementation of the subject wage orders
resulted into an uneven implementation of wage increases is justified under the law to prevent any
wage distortion. What the respondents did under the circumstances in order to deter an eventual wage
distortion without any arbitral proceedings is certainly commendable.
The alleged violation of Article 100 of the Labor Code, as amended, as well as Article XVII, Section 7 of
the existing CBA as herein earlier quoted is likewise found by this Branch to have no basis in fact and in
law. No benefits or privileges previously enjoyed
_______________
8 Ibid., p. 53.
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NLRC
by the employees were withdrawn as a result of the implementation of the subject orders. Likewise, the
alleged company practice of implementing wage increases declared by the government on an across-
the-board basis has not been duly established by the complainants’ evidence. The complainants
asserted that the company implemented Republic Act No. 6727 which granted a wage increase of
P25.00 effective July 1, 1989 on an across-the-board basis. Granting that the same is true, such isolated
single act that respondents adopted would definitely not ripen into a company practice. It has been said
that ‘a sparrow or two returning to Capistrano does not a summer make.’
Finally, on the second issue of whether or not the employees of the respondents are entitled to an
across-the-board wage increase pursuant to Wage Orders Nos. 01 and 02, in the face of the above
discussion as well as our finding that the respondents correctly applied the law on wage increases, this
Branch rules in the negative.
Likewise, for want of factual basis and under the circumstances where our findings above are adverse to
the complainants, their prayer for moral and exemplary damages and attorney’s fees may not be
granted.”
Not satisfied, petitioner appealed to the NLRC that, in turn, promulgated the assailed Resolution of April
29, 19939 dismissing the appeal for lack of merit. Still dissatisfied, petitioner sought reconsideration
which, however, was denied by the NLRC in the Resolution dated January 17, 1994. Hence, the instant
petition for certiorari contending that:
-A-
THE PUBLIC RESPONDENTS GROSSLY ERRED IN NOT DECLARING THE PRIVATE RESPONDENTS GUILTY OF
ACTS OF UNFAIR LABOR PRACTICES WHEN, OBVIOUSLY, THE LATTER HAS BARGAINED IN BAD FAITH
WITH THE UNION AND HAS VIOLATED THE CBA WHICH IT EXECUTED WITH THE HEREIN PETITIONER
UNION.
_______________
9 Penned by Presiding Commissioner Edna Bonto-Perez and concurred in by Commissioners Domingo H.

Zapanta and Rogelio I. Rayala.
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vs. NLRC
-B-
THE PUBLIC RESPONDENTS SERIOUSLY ERRED IN NOT DECLARING THE PRIVATE RESPONDENTS GUILTY
OF ACTS OF DISCRIMINATION IN THE IMPLEMENTATION OF NCR WAGE ORDER NOS. 01 AND 02.
-C-
THE PUBLIC RESPONDENTS SERIOUSLY ERRED IN NOT FINDING THE PRIVATE RESPONDENTS GUILTY OF
HAVING VIOLATED SECTION 4, ARTICLE XVII OF THE EXISTING CBA.
-D-
THE PUBLIC RESPONDENTS GRAVELY ERRED IN NOT DECLARING THE PRIVATE RESPONDENTS GUILTY OF
HAVING VIOLATED ARTICLE 100 OF THE LABOR CODE OF THE PHIL-IPPINES, AS AMENDED.
-E-
ASSUMING, WITHOUT ADMITTING THAT THE PUBLIC RESPONDENTS HAVE CORRECTLY RULED THAT THE
PRIVATE RESPONDENTS ARE GUILTY OF ACTS OF UNFAIR LABOR PRACTICES, THEY COMMITTED SERIOUS
ERROR IN NOT FINDING THAT THERE IS A SIGNIFICANT DISTORTION IN THE WAGE STRUCTURE OF THE
RESPONDENT COMPANY.
-F-
THE PUBLIC RESPONDENTS ERRED IN NOT AWARDING TO THE PETITIONERS HEREIN ACTUAL, MORAL,
AND EXEMPLARY DAMAGES AND ATTORNEY’S FEES.
As the Court sees it, the pivotal issues in this petition can be reduced into two, to wit: (a) whether or not
private respondent committed an unfair labor practice in its refusal to grant across- the-board wage
increases in implementing Wage Orders Nos. 01 and 02, and (b) whether or not there was a significant
wage distortion of the wage structure in private respondent as a result of the manner by which said
wage orders were implemented.
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With respect to the first issue, petitioner union anchors its arguments on the alleged commitment of
private respondent to grant an automatic across-the-board wage increase in the event that a statutory
or legislated wage increase is promulgated. It cites as basis therefor, the aforequoted portion of the
Minutes of the collective bargaining negotiation on February 27, 1990 regarding wages, arguing
additionally that said Minutes forms part of the entire agreement between the parties.
The basic premise of this argument is definitely untenable. To start with, if there was indeed a promise
or undertaking on the part of private respondent to obligate itself to grant an automatic across-the-
board wage increase, petitioner union should have requested or demanded that such “promise or
undertaking” be incorporated in the CBA. After all, petitioner union has the means under the law to
compel private respondent to incorporate this specific economic proposal in the CBA. It could have
invoked Article 252 of the Labor Code defining “duty to bargain,” thus, the duty includes “executing a
contract incorporating such agreements if requested by either party.” Petitioner union’s assertion that it
had insisted on the incorporation of the same proposal may have a factual basis considering the
allegations in the aforementioned joint affidavit of its members. However, Article 252 also states that
the duty to bargain “does not compel any party to agree to a proposal or make any concession.” Thus,
petitioner union may not validly claim that the proposal embodied in the Minutes of the negotiation
forms part of the CBA that it finally entered into with private respondent.
The CBA is the law between the contracting parties10—the collective bargaining representative and the
employer-company. Compliance with a CBA is mandated by the expressed policy to give protection to
labor.11 In the same vein,
_______________
10 Marcopper Mining Corporation v. NLRC, 325 Phil. 618, 632 (1996).
11 Meycauayan College v. Drilon, G.R. No. 81144, May 7, 1990, 185 SCRA 50, 56 citing Art. 3 of the Labor
Code.
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vs. NLRC
CBA provisions should be “construed liberally rather than narrowly and technically, and the courts must
place a practical and realistic construction upon it, giving due consideration to the context in which it is
negotiated and purpose which it is intended to serve.”12 This is founded on the dictum that a CBA is not
an ordinary contract but one impressed with public interest.13 It goes without saying, however, that
only provisions embodied in the CBA should be so interpreted and complied with. Where a proposal
raised by a contracting party does not find print in the CBA,14 it is not a part thereof and the proponent
has no claim whatsoever to its implementation.
Hence, petitioner union’s contention that the Minutes of the collective bargaining negotiation meeting
forms part of the entire agreement is pointless. The Minutes reflects the proceedings and discussions
undertaken in the process of bargaining for worker benefits in the same way that the minutes of court
proceedings show what transpired therein.15 At
_______________
12 Marcopper Mining Corporation v. NLRC, supra, at p. 634.
13 Art. 1700 of the Civil Code provides: “The relations between capital and labor are not merely
contractual. They are so impressed with public interest that labor contracts must yield to the common
good. Therefore, such contracts are subject to the special laws on labor unions, collective bargaining,
strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects.”
14 Art. 252 of the Labor Code provides that the duty to bargain collectively “means the performance of
a mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of
negotiating an agreement with respect to wages, hours of work and all other terms and conditions of
employment including proposals for adjusting any grievances or questions arising under such agreement
and executing a contract incorporating such agreements if requested by either party but such duty does
not compel any party to agree to a proposal or to make any concession. Notably, however, the first
paragraph of Sec. 13 of Rep. Act No. 875, the Industrial Peace Act, provides the execution of a written
contract incorporating the collective bargaining agreement as part of the parties’ duty to bargain
collectively.
15 While the “minutes” kept by the judge are not the memorial of the judgment, and are not records
required by law to be kept, they
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NLRC
the negotiations, it is but natural for both management and labor to adopt positions or make demands
and offer proposals and counter-proposals. However, nothing is considered final until the parties have
reached an agreement. In fact, one of management’s usual negotiation strategies is to “x x x agree
tentatively as you go along with the understanding that nothing is binding until the entire agreement is
reached.”16 If indeed private respondent promised to continue with the practice of granting across-the-
board salary increases ordered by the government, such promise could only be demandable in law if
incorporated in the CBA.
Moreover, by making such promise, private respondent may not be considered in bad faith or at the
very least, resorting to the scheme of feigning to undertake the negotiation proceedings through empty
promises. As earlier stated, petitioner union had, under the law, the right and the opportunity to insist
on the foreseeable fulfillment of the private respondent’s promise by demanding its incorporation in the
CBA. Because the proposal was never embodied in the CBA, the promise has remained just that, a
promise, the implementation of which cannot be validly demanded under the law.
Petitioner’s reliance on this Court’s pronouncements17 in Kiok Loy v. NLRC18 is, therefore, misplaced. In
that case, the employer refused to bargain with the collective bargaining representative, ignoring all
notices for negotiations and requests for counter proposals that the union had to resort to
_______________
constitute legal evidence of what was adjudged, and as such may serve as the foundation for the
correction of errors of the clerk in the performance of his duty. The minutes are only evidence of what
was done (27 WORDS AND PHRASES 425 citing State ex rel. Sheridan Pub. Co. v. Goodrich, 140 S.W. 629,
630, 159 Mo. App. 422, citing Kreisel v. Snavely, 115 S.W. 1060, 135 Mo. App. 158).
16 William G. Caphs and Robert A. Graney, “The Technique of Labor-Management Negotiations,”

University of Illinois Law Forum, Summer 1955, p. 293 cited in C.A. AZUCENA, THE LABOR CODE WITH
COMMENTS AND CASES, Vol. II, 1993 ed., p. 228.
17 Petitioners’ Memorandum, pp. 18-20.
18 G.R. No. 54334, January 22, 1986, 141 SCRA 179.
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185

vs. NLRC
conciliation proceedings. In that case, the Court opined that “(a) Company’s refusal to make counter-
proposal, if considered in relation to the entire bargaining process, may indicate bad faith and this is
specially true where the Union’s request for a counter-proposal is left unanswered.” Considering the
facts of that case, the Court concluded that the company was “unwilling to negotiate and reach an
agreement with the Union.”19
In the case at bench, however, petitioner union does not deny that discussion on its proposal that all
government-mandated salary increases should be on an across-the-board basis was “deferred,”
purportedly because it relied upon the “undertaking” of the negotiating panel of private respondent.20
Neither does petitioner union deny the fact that “there is no provision of the 1990 CBA containing a
stipulation that the company will grant across-the-board to its employees the mandated wage increase.”
They simply assert that private respondent committed “acts of unfair labor practices by virtue of its
contractual commitment made during the collective bargaining process.”21 The mere fact, however,
that the proposal in question was not included in the CBA indicates that no contractual commitment
thereon was ever made by private respondent as no agreement had been arrived at by the parties.
Thus:
“Obviously the purpose of collective bargaining is the reaching of an agreement resulting in a contract
binding on the parties; but the failure to reach an agreement after negotiations continued for a
reasonable period does not establish a lack of good faith. The statutes invite and contemplate a
collective bargaining contract, but they do not compel one. The duty to bargain does not include the
obligation to reach an agreement. x x x.”22
_______________
19 Ibid., at pp. 185 & 186.
20 Petitioners’ Memorandum, pp. 14-15.
21 Ibid., p. 17.
22 51 C.J.S. 910.
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NLRC
With the execution of the CBA, bad faith bargaining can no longer be imputed upon any of the parties
thereto. All provisions in the CBA are supposed to have been jointly and voluntarily incorporated therein
by the parties. This is not a case where private respondent exhibited an indifferent attitude towards
collective bargaining because the negotiations were not the unilateral activity of petitioner union. The
CBA is proof enough that private respondent exerted “reasonable effort at good faith bargaining.”23
Indeed, the adamant insistence on a bargaining position to the point where the negotiations reach an
impasse does not establish bad faith. Neither can bad faith be inferred from a party’s insistence on the
inclusion of a particular substantive provision unless it concerns trivial matters or is obviously
intolerable.24
“The question as to what are mandatory and what are merely permissive subjects of collective
bargaining is of significance on the right of a party to insist on his position to the point of stalemate. A
party may refuse to enter into a collective bargaining contract unless it includes a desired provision as to
a matter which is a mandatory subject of collective bargaining; but a refusal to contract unless the
agreement covers a matter which is not a mandatory subject is in substance a refusal to bargain about
matters which are mandatory subjects of collective bargaining; and it is no answer to the charge of
refusal to bargain in good faith that the insistence on the disputed clause was not the sole cause of the
failure to agree or that agreement was not reached with respect to other disputed clauses.”25
On account of the importance of the economic issue proposed by petitioner union, it could have refused
to bargain and to enter into a CBA with private respondent. On the other hand, private respondent’s
firm stand against the pro-
_______________
23 Divine Word University of Tacloban v. Secretary of Labor and Employment, G.R. No. 91915,
September 11, 1992, 213 SCRA 759, 773.
24 Ibid., at p. 910.
25 Ibid., at pp. 912-913.
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vs. NLRC
posal did not mean that it was bargaining in bad faith. It had the right “to insist on (its) position to the
point of stalemate.” On the part of petitioner union, the importance of its proposal dawned on it only
after the wage orders were issued after the CBA had been entered into. Indeed, from the facts of this
case, the charge of bad faith bargaining on the part of private respondent was nothing but a belated
reaction to the implementation of the wage orders that private respondent made in accordance with
law. In other words, petitioner union harbored the notion that its members and the other employees
could have had a better deal in terms of wage increases had it relentlessly pursued the incorporation in
the CBA of its proposal. The inevitable conclusion is that private respondent did not commit the unfair
labor practices of bargaining in bad faith and discriminating against its employees for implementing the
wage orders pursuant to law.
The Court likewise finds unmeritorious petitioner union’s contention that by its failure to grant across-
the-board wage increases, private respondent violated the provisions of Section 5, Article VII of the
existing CBA26 as well as Article 100 of the Labor Code. The CBA provision states:
“Section 5. The COMPANY agrees to comply with all the applicable provisions of the Labor Code of the
Philippines, as amended, and all other laws, decrees, orders, instructions, jurisprudence, rules and
regulations affecting labor.”
Article 100 of the Labor Code on prohibition against elimination or diminution of benefits provides that
“(n)othing in this Book shall be construed to eliminate or in any way diminish supplements, or other
employee benefits being enjoyed at the time of promulgation of this Code.”
We agree with the Labor Arbiter and the NLRC that no benefits or privileges previously enjoyed by
petitioner union and the other employees were withdrawn as a result of the manner by which private
respondent implemented the wage
_______________
26 Petitioner’s Memorandum, p. 35.
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188
NLRC
orders. Granted that private respondent had granted an across-the-board increase pursuant to Republic
Act No. 6727, that single instance may not be considered an established company practice. Petitioner
union’s argument in this regard is actually tied up with its claim that the implementation of Wage Orders
Nos. 01 and 02 by private respondent resulted in wage distortion.
The issue of whether or not a wage distortion exists is a question of fact27 that is within the jurisdiction
of the quasi-judicial tribunals below. Factual findings of administrative agencies are accorded respect
and even finality in this Court if they are supported by substantial evidence.28 Thus, in Metropolitan
Bank and Trust Company, Inc. v. NLRC, the Court said:
“The issue of whether or not a wage distortion exists as a consequence of the grant of a wage increase
to certain employees, we agree, is, by and large, a question of fact the determination of which is the
statutory function of the NLRC. Judicial review of labor cases, we may add, does not go beyond the
evaluation of the sufficiency of the evidence upon which the labor officials’ findings rest. As such, the
factual findings of the NLRC are generally accorded not only respect but also finality provided that its
decisions are supported by substantial evidence and devoid of any taint of unfairness or arbitrariness.
When, however, the members of the same labor tribunal are not in accord on those aspects of a case, as
in this case, this Court is well cautioned not to be as so conscious in passing upon the sufficiency of the
evidence, let alone the conclusions derived therefrom.”29
_______________
27 Manila Mandarin Employees Union v. NLRC, G.R. No. 108556, November 19, 1996, 264 SCRA 320, 336
citing Associate Labor Unions-TUCP v. NLRC, G.R. No. 109328, August 16, 1994, 235 SCRA 395;
Metropolitan Bank and Trust Co. Employees Union-ALU-TUCP v. NLRC, G.R. No. 102636, September 10,
1993, 226 SCRA 268; Cardona v. NLRC, G.R. No. 89007, March 11, 1991, 195 SCRA 92.
28 Philippine Savings Bank v. NLRC, 330 Phil. 106 (1996).
29 Supra, at p. 275.
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vs. NLRC
Unlike in above-cited case where the Decision of the NLRC was not unanimous, the NLRC Decision in this
case which was penned by the dissenter in that case, Presiding Commissioner Edna Bonto-Perez,
unanimously ruled that no wage distortions marred private respondent’s implementation of the wage
orders. The NLRC said:
“On the issue of wage distortion, we are satisfied that there was a meaningful implementation of Wage
Orders Nos. 01 and 02. This debunks the claim that there was wage distortion as could be shown by the
itemized wages implementation quoted above. It should be noted that this itemization has not been
successfully traversed by the appellants. x x x.”30
The NLRC then quoted the labor arbiter’s ruling on wage distortion.
We find no reason to depart from the conclusions of both the labor arbiter and the NLRC. It is apropos
to note, moreover, that petitioner’s contention on the issue of wage distortion and the resulting
allegation of discrimination against the private respondent’s employees are anchored on its dubious
position that private respondent’s promise to grant an across-the-board increase in government-
mandated salary benefits reflected in the Minutes of the negotiation is an enforceable part of the CBA.
In the resolution of labor cases, this Court has always been guided by the State policy enshrined in the
Constitution that the rights of workers and the promotion of their welfare shall be protected.31 The
Court is likewise guided by the goal of attaining industrial peace by the proper application of the law. It
cannot favor one party, be it labor or management, in arriving at a just solution to a controversy if the
party has no valid support to its claims. It is not within this Court’s power to rule beyond the ambit of
the law.
_______________
30 Rollo, p. 66.
31 Sec. 18, Art. II, 1987 Constitution.
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190
People vs. Ferrer
WHEREFORE, the instant petition for certiorari is hereby DISMISSED and the questioned Resolutions of
the NLRC AFFIRMED. No costs.
SO ORDERED.
Narvasa (C.J., Chairman), Kapunan and Purisima, JJ., concur.
Petition dismissed, resolutions affirmed.
Note .—When the Union enters into a new collective bargaining agreement with the employer,
providing for wage increases, it is deemed to thereby settle any remaining question of wage distortion,
since the subject of wages and wage distortions are plainly and unavoidably an economic issue and the
proper subject of collective bargaining. (Manila Mandarin Employees Union vs. National Labor Relations
Commission, 264 SCRA 320 [1996])
——o0o—— Samahang Manggagawa sa Top Form Manufacturing - United Workers of the Philippines
(SWTFM-UWP) vs. NLRC, 295 SCRA 171, G.R. No. 113856 September 7, 1998
DUTY TO BARGAIN COLLECTIVELY
422
Lakas ng Manggagawang Makabayan vs. Marcelo Enterprises
No. L-38258. November 19, 1982.*
LAKAS NG MANGGAGAWANG MAKABAYAN (LAKAS), petitioner, vs. MARCELO ENTERPRISES and

MARCELO TIRE & RUBBER CORP., MARCELO RUBBER AND LATEX PRODUCTS, MARCELO STEEL
CORPORATION, MARCELO CHEMICAL & PIGMENT CORP., POLARIS MARKETING CORPORATION and
THE COURT OF INDUSTRIAL RELATIONS, respondents.
No. L-38260. November 19, 1982.*

MARCELO TIRE & RUBBER CORPORATION, MARCELO RUBBER & LATEX PRODUCTS, INC., MARCELO
STEEL CORPORATION, POLARIS MARKETING CORPORATION, MARCELO CHEMICAL AND PIGMENT
CORP., MARCELO ENTERPRISES, under which name or style they are also known, petitioners, vs.
LAKAS NG MANGGAGAWANG MAKABAYAN (LAKAS) AND THE HONORABLE COURT OF INDUSTRIAL
RELATIONS, respondents.
Labor Law; There is no evidence that the management of Marcelo group of companies was guilty of
ULP in asking the returning strikers to fill up forms on when they are available for work.—Hence,
anent the second issue of whether or not the com-
________________
* SECOND DIVISION.
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423
plaint for unfair labor practice can be sustained, this Court rules in favor of the respondent Marcelo
Companies and consequently, the appealed Decision is reversed. This reversal is inevitable after this
Court has pored through the voluminuous records of the case as well as after applying the established
jurisprudence and the law on the matters raised.We are not unmindful of the plight of the employees
in this case but We consider it oppressive to grant their petition in G.R.No.L-38258, for not only is
there no evidence which shows that the respondent Marcelo Companies were seeking for an
opportunity to discharge these employees for union activities, or to discriminate against them
because of such activities, but there is affirmative evidence to establish the contrary conclusion.
Same; Management’s suggestion that union file necessary complaint in court in view of fact that there
are several unions claiming to represent employees does not constitute failure or refusal to bargain in
good faith to said union’s demands.—Contrary to the pretensions of complainant LAKAS, the
respondent Marcelo Companies did not ignore the demand for collective bargaining contained in its
letter of June 20, 1967. Neither did the companies refuse to bargain at all. What it did was to apprise
LAKAS of the existing conflicting demands for recognition as the bargaining representative in the
appropriate units involved, and suggested the settlement of the issue by means of the filing of a
petition for certification election before the Court of Industrial Relations. This was not only the legally
approved procedure but was dictated by the fact that there was indeed a legitimate representation
issue. PSSLU, with whom the existing CB As were entered into, was demanding of respondent
companies to collectively bargain with it; so was Paulino Lazaro of MUEWA, J.C. Espinas & Associates
for MACATIFU and the MFWU, and the complainant LAKAS for MULU which we understand is the
aggrupation of MACATIFU, MFWU and UNWU. On top of all of these, Jose Roque of UNWU
disauthorized the PSSLU from representing his union; and similarly, Augusto Carreon of MACATIFU
itself informed management as late as July 11, 1967 or after the demand of LAKAS that no group
representing his Union “is not authorized and should not be entertained.”
Same; Where there exists a legitimate issue as to which of several unions is the legitimate
representative of employees, it is ULP for one of the unions to stage a strike and demand that
employer sit down with it for collective bargaining.—The clear facts of the case as hereinbefore
restated indisputably show that a legitimate
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424
representation issue confronted the respondent Marcelo Companies. In the face of these facts and in
conformity with the existing jurisprudence, 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 September 4, 1967 and November 7, 1967 were
calculated, designed and intended to compel the respondent Marcelo Companies to recognize or
bargain with it notwithstanding that it was an uncertified union, or in the case of respondent Marcelo
Tire and Rubber Corporation, to bargain with it despite the fact that the MUEWA of Paulino Lazaro
was already certified as the sole bargaining agent in said respondent company. These concerted
activities executed and carried into effect at the instigation and motivation of LAKAS are all illegal and
violative of the employer’s basic right to bargain collectively only with the representative supported
by the majority of its employees in each of the bargaining units. This Court is not unaware of the
present predicament of the employees involved but much as We sympathize with those who have
been misled and so lost then-jobs through hasty, ill-advised and precipitate moves, We rule that the
facts neither substantiate nor support the finding that the respondent Marcelo Companies are guilty
of unfair labor practice.
Same; Employer not guilty of bad faith where it not with union’s officers and offered suggestions on
how to resolve their dif-ferences.—It is also evident from the records that the charge of bargaining in
bad faith imputed to the respondent companies, is hardly credible. In fact, such charge is valid as only
against the complainant LAKAS. The parties had a total of five (5) conferences for purposes of
collective bargaining. It is worth considering that the first strike of September 4, 1967 was staged less
than a week after the fourth CBA conference and without any benefit of any previous strike notice. In
this connection, it must be stated that the notice of strike filed on June 13, 1967 could not have been
the strike notice for the first strike because it was already withdrawn on July 14, 1967. Thus, from
these stated facts can be seen that the first strike was held while the parties were in the process of
negotiating. Nor can it be sustained that the respondent Marcelo Companies bargained in bad faith
since there were proposals offered by them, but the complainant LAKAS stood pat on its position that
all of their economic demands should be met and that all of these demands should be granted in all of
the respondent Marcelo Companies. The companies’ refusal to ac-
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425
cede to the demands of LAKAS appears to be justified since there is no showing that these companies
were in the same state of financial and economic affairs. There is reason to believe that the first strike
was staged only for the purpose of compelling the respondent Marcelo Companies to accede to the
inflexible demands of the complainant LAKAS. The records further establish that after the resumption
of normal operations following the first strike and the consequent Return-to-work Agreement, the
striking unions led by complainant LAKAS and the management of the respondent Marcelo Companies
resumed their bargaining negotiations. And that on October 13, 1967, complainant LAKAS sent the
final drafts of the collective bargaining proposals for MFWU and UNWU. The second strike of
November 7, 1967 was then staged immediately after which strike, as before, was again lacking of a
strike notice. All of these facts show that it was complainant LAKAS, and not the respondent Marcelo
Companies, which refused to negotiate in the pending collective bargaining process. All that the facts
show is that the bargaining position of complainant LAKAS was inflexible and that it was in tine with
this uncompromising attitude that the strikes were declared, significantly after notice that
management did not or could not meet all of their 17-points demand.
Same; Employer may be justified in requiring a reasonable scheduling of working hours of returning
striking employees and inquiring into their time availabilities.—But We are more impressed and are
persuaded to accept as true the contention of the respondent Marcelo Companies that the
aforestated requirement was only for purposes of proper scheduling of the start of work for each
returning strikers. It must be noted that as a consequence of the two strikes which were both
attended by widespread acts of violence and vandalism, the businesses of the respondent companies
were completely paralyzed. It would hardly be justiciable to demand of the respondent companies to
readmit all the returning workers in one big force or as each demanded readmission. There were
machines that were not in operating condition because of long disuse during the strikes. Some of the
machines needed more than one worker to operate them so that in the absence of the needed team
of workers, the start of work by one without his teammates would necessarily be useless, and the
company would be paying for his time spent doing no work. Finally, We take judicial cognizance of the
fact that companies whose businesses were completely paralyzed by major strikes cannot resume
operations at once and in the same state or force as before the strikes.
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426

Same; Same.—But what strikes Us most in lending credence to respondents’ allegation that Exhibit
“49” was not meant to screen the strikers, is the fact that all of the returning strikers who filled up the
form were scheduled for work and consequently started with their jobs.It is only those strikers who
refused or failed to fill-up the required form, like the herein complaining employees, who were not
scheduled for work and consequently have not been re-employed by the respondent Marcelo
Companies. Even if there was a sincere belief on their part that the requirement of Exhibit “49” was a
ruse at “screening” them, this fear would have been dispelled upon notice of the fact that each and all
of their co-strikers who filled up the required form were in fact scheduled for work and started to
work. The stoppage of their work was not, therefore, the direct consequence of the respondent
companies’ complained act. Hence, their economic loss should not be shifted to the employer.
Same; Right to engage in concerted activities is not an absolute one.—It was never the state policy nor
Our judicial pronouncement that the employees’ rights to self-organization and to engage in
concerted activities for mutual aid and protection, are absolute or be upheld under all circumstances.
Same; Action; A labor union cannot bring an action on behalf of employees who are members of
another union even if said employees signed the complaint.—Firstly, LAKAS cannot bring any action
for and in behalf of the employees who were members of MUEWA because, as intimated earlier in
this Decision, the said local union was never an affiliate of LAKAS. What appears clearly from the
records is that it was Augusto Carreon and his followers who joined LAKAS, but then Augusto Carreon
was not the recognized president of MUEWA and neither he nor his followers can claim any legitimate
representation of MUEWA. Apparently, it is this split faction of MUEWA, headed by Augusto Carreon,
who is being sought to be represented by LAKAS. However, it cannot do so because the members
constituting this split faction of MUEWA were still members of MUEWA which was on its own right a
duly registered labor union. Hence, any suit to be brought for and in behalf of them can be made only
by MUEWA, and not LAKAS. It appearing then that Augusto Carreon and his cohorts did not disaffiliate
from MUEWA nor signed any individual affiliation with LAKAS, LAKAS bears no legal interest in
representing MUEWA or any of its members.
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427
Same; Same.—Nor will the lower court’s opinion be availing with respect to the complaining
employees belonging to UNWU and MFWU. Although it is true, as alleged by LAKAS, that when it filed
the charge on December 26, 1967, the officers of the movant unions were not yet then the officers
thereof, nevertheless, the moment MFWU and UNWU separated from and disaffiliated with LAKAS to
again exercise its rights as independent local unions, registered before as such, they are no longer
affiliates of LAKAS, as what transpired here. Naturally, there would no longer be any reason or
occasion for LAKAS to continue representing them. Notable is the fact that the members purportedly
represented by LAKAS constitute the mere minority of the movant unions, as may be inferred from
the allegations of the movant unions as well as the counter-allegations of LAKAS filed below. As such,
they cannot prevail or dictate upon the will of the greater majority of the unions to which they still
belong, it appearing that they never disaffiliated from their unions; or stated in another way, they are
bound by the action of the greater majority.
Same; Same; Where a union brought suit in behalf of employees it was not authorized to represent,
the proper remedy is to drop the union as party to the action and place the names of the employees
instead.—This is not to say that the complaining employees were without any venue for redress.
Under the aforestated considerations, the respondent court should have directed the amendment of
the complaint by dropping LAKAS as the complainant and allowing the suit to be further prosecuted in
the individual names of those who had grievances. A class suit under Rule 3, Section 12 of the Rules of
Court is authorized and should suffice for the purpose.
Same; Same; Appeals; Supreme Court may cure defect of inclusion/non-inclusion of proper parties
even on appeal—In fairness to the complaining employees, however, We treated their Motion for
Reconsideration of the Decision subject of appeal as curing the defect of the complaint as the said
motion expressly manifested their collective desire to pursue the complaint for and in their own
behalves and disauthorizing LAKAS’ counsel from further representing them. And We have also
treated their petition before Us in the same manner, disregarding the fact that LAKAS remained the
petitioning party, as it appears from the verification that the petition in L-38258 was for and in behalf
of the complaining employees. The merits of their petition, however, fall short of substantiating the
charge of unfair labor practice against the respondent Marcelo Companies. On the other hand, the
appeal of the Marcelo Companies in L-38260 must be upheld and sustained.
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428
SEPARATE APPEALS by certiorari from the decision of the Court of Industrial Relations.
GUERRERO, J.:
Separate appeals by certiorari from the Decision of the Court of Industrial Relations (Manila) dated July
20, 1973, as well as the Resolution of the court en banc dated January 24, 1974 denying the
reconsideration thereof rendered in ULP Case No. 4951 entitled, “Lakas ng Manggagawang Makabayan,
Petitioner, versus Marcelo Enterprises and Marcelo Tire and Rubber Corporation, Marcelo Rubber and
Latex Products, Marcelo Steel Corporation, Polaris Marketing Corporation, and Marcelo Chemical and
Pigment Corporation, Respondents.”
The antecedent facts as found by the respondent Court of Industrial Relations embodied in the appealed
Decision are correct, supported as they are by the evidence on record. Nevertheless, We find it
necessary to make a re-statement of the facts that are integrated and inter-related, drawn from the
voluminuous records of these cases which are herein jointly decided, since it would only be from a
statement of all the relevant facts of the cases made in all fullness, collectively and comprehensively,
can the intricate issues posed in these appeals be completely and judiciously resolved.
It appears that prior to May 23, 1967, the date which may be stated as the start of the labor dispute
between Lakas ng Manggagawang Makabayan (hereinafter referred to as complainant LAKAS) and the
management of the Marcelo Tire and Rubber Corporation, Marcelo Rubber and Latex Products, Inc.,
Polaris Marketing Corporation, Marcelo Chemical and Pigment Corporation, and the Marcelo Steel
Corporation (Nail Plan) (hereinafter referred to as respondent Marcelo Companies) the Marcelo
Companies had existing collective bargaining agreements (CBAs) with the local unions then existing
within the appropriate bargaining units, viz: (1) the respondent Marcelo Tire and Rubber Corporation,
with the Marcelo Camelback Tire and Foam Union (MACATIFU); (2) the
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VOL. 118, NOVEMBER 19. 1982
429
respondent Marcelo Rubber and Latex Products, Inc., with the Marcelo Free Workers Union (MFWU);
and (3) the respondent Marcelo Steel Corporation with the United Nail Workers Union (UNWU). These
existing CBAs were entered into by and between the parties while the aforestated local unions were
then affiliated with a national federation, the Philippine Social Security Labor Union (PSSLU).
It is well to note from the records that when the aforestated CBAs of the said local unions were nearing
their respective expiration dates (March 15, 1967) for MACATIFU and UNWU, and June 5, 1967 for
MFWU), the general situation within the ranks of labor was far from united. The MACATIFU in
respondent Marcelo Tire and Rubber Corporation, then headed by Augusto Carreon, did not enjoy the
undivided support of all the workers of the respondent corporation, as there existed a rival union, the
Marcelo United Employees and Workers Association (MUEWA) whose president was then Paulino
Lazaro. As events would later develop, the members of the MACATIFU of Augusto Carreon joined the
MUEWA of Paulino Lazaro, after the latter filed a petition for direct certification which was granted by
the industrial court’s Order of July 5, 1967 recognizing and certifying MUEWA as the sole and exclusive
bargaining representative of all the regular workers of the respondent corporation. The union rivalry
between MACATIFU and MUEWA did not, however, end with the Order of July 5, 1967, but more than
ever developed into a more pressing problem of union leadership because Augusto Carreon also claimed
to be the president of the MUEWA by virtue of the affiliation of his MACATIFU members with MUEWA.
The records also reveal that even the ranks of MFWU in respondent Marcelo Rubber and Latex Products,
Inc. was divided between those supporting Ceferino Ramos and Cornelio Dizon who both claimed the
presidency in said union. Only the UNWU in respondent Marcelo Steel Corporation was then enjoying
relative peace as Jose Roque was solely recognized as the union’s president. The events that followed
are hereinafter stated in chronological order for a clearer understanding of the present situation.
On March 14, 1967, the management of respondent Marcelo
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430
Steel Corporation received a letter requesting the negotiation of a new CBA together with a draft
thereof, from the PSSLU president, Antonio Diaz, for and in behalf of UNWU whose CBA was to expire
the following day. Similar letters and proposals were, likewise, sent to the management of respondent
Marcelo Tire and Rubber Corporation for and in behalf of MACATIFU, and to respondent Marcelo
Rubber and Latex Products for and in behalf of MFWU, whose respective CBAs were both to expire on
June 5, 1967.
However, on that very same day of March 14, 1967, the management of respondent Marcelo Tire and
Rubber Corporation received a letter from the UNWU president, Jose Roque, disauthorizing the PSSLU
from representing his union.
Then, on April 14, 1967, Paulino Lazaro of MUEWA requested negotiation of a new CBA with respondent
Marcelo Tire and Rubber Corporation, submitting therewith his union’s own proposals.
Again, on May 3, 1967, the management of respondents Marcelo Tire and Rubber Corporation and
Marcelo Rubber and Latex Products, Inc., received another letter requesting negotiation of new CBAs
also for and in behalf of the MACATIFU and the MFWU from J.C. Espinas & Associates.
Finally, on May 23, 1967, the management of all the respondent Marcelo Companies received a letter
from Prudencio Jalandoni, the alleged president of the complainant LAKAS. In this letter of May 23,
1967, the complainant LAKAS informed management of the affiliation of the Marcelo United Labor
Union (MULU) with it. Included therein was a 17-points demand for purposes of the requested collective
bargaining with management.
Confronted with a problem of whom to recognize as the bargaining representative of all its workers, the
management of all the respondent Marcelo Companies understandably dealt with the problem in this
wise, viz: (1) it asked proof of authority to represent the MFWU and the MACATIFU from J.C. Espinas &
Associates; and (2) in a letter dated May 25, 1967, it apprised PSSLU, Paulino Lazaro of MUEWA and
complainant LAKAS of the fact of the existing conflicting demands
431

431
for recognition as the bargaining representative in the appropriate units involved, consequently
suggesting to all to settle the question by filing a petition for certification election before the Court of
Industrial Relations, with an assurance that the management will abide by whatever orders the
industrial court may issue thereon.
PSSLU demurred to management’s stand and informed them of its intention to file an unfair labor
practice case because of management’s refusal to bargain with it, pointedly stating that it was with the
PSSLU that the existing CBAs were entered into. Again, as events later developed, on or about the
middle of August 1981, PSSLU filed a Notice of Strike which became the subject of conciliation with the
respondent companies. In the case of MUEWA, Paulino Lazaro threatened that his union will declare a
strike against respondent Marcelo Tire and Rubber Corporation. On the other hand, complainant LAKAS
for MULU filed on June 13, 1967 before the Bureau of Labor Relations a Notice of Strike against all the
respondent Marcelo Companies, alleging as reasons therefor harassment of union officers and members
due to union affiliation and refusal to bargain. This aforestated Notice of Strike was, however,
withdrawn on July 14, 1967.
In the meantime, as stated earlier in this Decision, the MUEWA filed a petition for direct certification
before the industrial court. There being no other union or interested person appearing before the court
except the MUEWA, and finding that MUEWA represented more than the majority of the workers in
respondent Marcelo Tire and Rubber Corporation, the court granted the petition and by Order of July 5,
1967, certified MUEWA of Paulino Lazaro as the sole and exclusive bargaining representative of all the
regular workers in said respondent.
On July 11, 1967, Augusto Carreon of MACATIFU wrote the management of respondent Marcelo Tire
and Rubber Corporation expressly stating that no one was yet authorized to submit proposals for and in
behalf of the union for the renewal of its CBA, adding that “(a)ny group representing our Union is not
authorized and should not be entertained.”
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432
On July 14, 1967, as earlier stated, the Notice of Strike filed by complainant LAKAS was withdrawn
pursuant to a Memorandum Agreement signed on the same day by management and LAKAS.
Thereafter, or on July 20, 1967, letters of proposal for collective bargaining were sent by Prudencio
Jalandoni of LAKAS to all the respondent Marcelo companies. In answer thereto, management wrote
two (2) letters, both dated July 24, 1967, addressed to Jalandoni, expressing their conformity to sit down
in conference on the points to be negotiated as soon as LAKAS can present evidence of authority to
represent the employees of respondent corporations in said conference. The records disclose that it was
in the atmosphere of constant reservation on the part of management as to the question of
representation recognition that complainant LAKAS and management sat down for CBA negotiations.
The first conference was held on August 14, 1967, followed by one on August 16, 1967 whereby
management, in formal reply to union’s economic demands, stated its willingness to give pay
adjustments and suggested renewal of other provisions of the old CBAs. A third conference was set
although no one from LAKAS or the local unions appeared. On August 29, 1967, the fourth conference
was held where, from a letter dated August 30, 1967 from Jose Delfin of Management to Jose B. Roque
of UNWU, can be inferred that in the conference of August 29, 1967, the management with respect to
respondent Marcelo Steel Corporation, agreed to give pay adjustments from P0.15 to P0.25 to
meritorious cases only, and to increase its contribution to the retirement fund from 1-112%to 3%
provided the employees’ contribution will be increased from 1% to 2%. Management likewise suggested
the renewal of the other provisions of the existing CBA. Management’s offers were not accepted by
complainant LAKAS who insisted on the grant of all its economic demands and in all of the Marcelo
Companies.
As it would later appear during the trial of the ULP case below, and as found as a fact by the respondent
court, only the economic proposals of complainant LAKAS were the matters taken up in all these CBA
conferences.
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433
Less than a week after the fourth CBA conference, or on September 4, 1967, the complainant LAKAS
declared a strike against all the respondent Marcelo Companies. Acts of violence and vandalism
attended the picketing. Ingress and egress at the respondents’ premises were successfully blocked. One
worker, Plaridel Tiangco, was manhandled by the strikers and was hospitalized. Windows of the
Chemical Plant were badly damaged. As a consequence, ten (10) strikers were later charged before the
Municipal Court of Malabon, Rizal, four of whom were convicted while the others were at large.
On September 13, 1967, the respondent Marcelo Companies obtained a writ of preliminary injunction
from the Court of First Instance of Rizal enjoining the strikers from preventing the ingress and egress at
the respondents’ premises. The following day, a “Return to Work Agreement” (Exhibit “A”) was
executed by and among the management, represented by Jose P. Marcelo and Jose A. Delfin, and the
local unions, together with complainant LAKAS, represented by Prudencio Jalandoni for LAKAS, Jose B.
Roque for UNWU, Cornelio Dizon for MFWU and Augusto Carreon for MUEWA, the representations of
the latter two, however, being expressly subjected by management to non-recognition. Aside from
providing for the immediate lifting of the picket lines, the agreement, more pertinently provides, to wit,
“4. The management agrees to accept all employees who struck without discrimination or harassment
consistent with an orderly operation of its various plants, provided it is understood that management
has not waived and shall continue to exercise freely its rights and prerogatives to punish, discipline and
dismiss its employees in accordance with law and existing rules and regulations that cases filed in court
will be allowed to take their normal course.”
By virtue of this agreement, the respondent Marcelo Companies resumed operations and the strikers
went back to work. As found by the respondent court, all strikers were admitted back to work, except
four (4) namely, Wilfredo Jarquio, Leonardo Sakdalan, Jesus Lim and Arlington Glodeviza, who chose not
to report for work because of the criminal charges filed against them before the municipal court of
Malabon
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434
and because of the administrative investigation conducted by management in connection with the acts
of violence and vandalism committed during the September 4 strike. Together with Jesus Lim, three
other strikers who reported for work and were admitted, namely, Jose Roque, Alfredo Cabel and Ramon
Bataycan, were convicted in said criminal case.
After the resumption of normal business, the management of the respondent Marcelo Companies, the
complainant LAKAS together with the local unions resumed their bargaining negotiations subject to the
conditions earlier mentioned. On October 4, 1967, the parties met and discussed the bargaining unit to
be covered by the CBA in case one is entered into, union shop arrangement, check-off, waiver of the
employer of the notice requirement in case of employees’ separation, separation pay in cash equivalent
to 12-days pay for every year of service, retirement plan, and one or two years duration of the CBA. It
was also agreed in that meeting not to negotiate with respect to respondent Marcelo Tire and Rubber
Corpora-don inasmuch as a CBA had already been entered into by management with the MUEWA of
Paulino Lazaro, the recently certified union in said respondent.
Finally, on October 13, 1967, the negotiations reached its final stage when the management of
respondents Marcelo Rubber and Latex Products, Inc. and Marcelo Steel Corporation gave the
complainant LAKAS a copy of management’s drafts of the collective bargaining proposals for MFWU and
UNWU, respectively.
Unexpectedly and without filing a notice of strike, complainant LAKAS declared another strike against
the respondent Marcelo Companies on November 7, 1967, resulting in the complete paralyzation of the
business of said respondents. Because of this second strike, conciliation conferences were again set by
the Conciliation Service Division of the Department of Labor on November 8, November 23, and
December 4, 1967. On the last aforementioned date, however, neither complainant LAKAS nor the local
unions appeared.
Instead, on December 13, 1967, Prudencio Jalandoni of complainant LAKAS, in behalf of the striking
unions, coursed a letter (Exhibit “B”) to Jose P. Marcelo of management advis-
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ing that, “on Monday, December 18, 1967, at 7:00 o’clock in the morning, all your striking workers and
employees will return to work under the same terms and conditions of employrnent before the strike.”
The letter was attested to by Cornelio Dizon for MFWU, Jose Roque for UNWU and Augusto Carreon for
MUEWA. On December 15, 1967, the Bureau of Labor Relations was informed by the complainant LAKAS
who requested for the Bureau’s representative to witness the return of the strikers to their jobs.
The records reveal that in the meantime, prior to December 13, 1967, some of the strikers started going
back to work and were admitted; and that as early as December 4, 1967, the management started
posting notices at the gates of the respective premises of the respondents for strikers to return back to
work. Similar notices were also posted on December 18 and December 27, 1967
Upon their return, the reporting strikers were requested to fill up a certain form (Exhibit “49”) wherein
they were to indicate the date of their availability for work in order that they may be scheduled.
According to the respondent Marcelo Companies, this requirement was asked of the strikers for
legitimate business reasons within management prerogative. Several of the strikers filled up the
required form and were accordingly scheduled for work. The remaining others, led and supported by
complainant LAKAS, refused and insisted that they be all admitted back to work without complying with
the aforestated requirement, alleging that the same constituted a “screening” of the striking workers. As
matters stood, Management refused to forego the requirement; on the other hand, the remaining
strikers demanded to be readmitted without filing up the form for scheduling.
These then constitute the factual background when the complainant LAKAS, represented by its counsel,
Atty. Benjamin C. Pineda, on December 26, 1967, filed before the respondent court a charge for unfair
labor practice against the respondent. Marcelo Companies, alleging non-readmission of the striking
members of the three (3) affiliated local unions despite the unconditional offer to return to work after
the strike of November 7, 1967. Based on the allegations of the foregoing
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charge and after a preliminary investigation conducted by the acting Prosecutor of said respondent
court, the acting Chief Prosecutor, Atty. Antonio Tria Tirona, filed on February 12, 1968 the instant
complaint under authority of Section 5(b) of Republic Act 875, otherwise known as the Industrial Peace
Act.
The Complaint below alleges, among others, to wit:

“1. That complainant is a legitimate labor organization, with its affiliates, namely: Marcelo Free Workers
Union, United Nail Workers Union, and Marcelo United Employees Unions, whose members listed in
Annexes “A”, “B”, and “C” of this complaint are considered employees of respondent within the
meaning of the Act;
“2. x x x
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“3. That individual complainants listed in Annexes “ A ”, “B “, and “C” of this complaint are members of
the Marcelo United Employees and Workers Association, Marcelo Free Workers Union, and United Nail
Workers Union, respectively; that the members of the Marcelo United Employees and Workers Union
are workers of respondent Marcelo Tire and Rubber Corporation; that the members of the Marcelo Free
Workers Union compose the workers of the Marcelo Rubber and Latex Products, Polaris Marketing
Corporation, and the members of the United Nail Workers Union compose the workers of the Marcelo
Steel Corporation (Nail Plant);
“4. That each of the aforesaid local unions, before their affiliation with the complainant union LAKAS,
had a collective bargaining agreement with respondents; that after the expiration of the collective
bargaining agreement above-mentioned and after the abovementioned local unions affiliated with the
complainant LAKAS, the said federation sent to respondents’ president, Jose P. Marcelo, on May 23,
1967, a letter, requesting for a negotiation for collective bargaining, together with union proposals
thereof, but respondents refused;
“5. That after respondents knew of the affiliation of the aforementioned local unions with the LAKAS,
the said respondents, thru their officers and agents began harassing the union members, discriminated
against them by transferring some of its officers and members from one section to another in such a
way that their work was reduced to manual labor, and by suspending them without
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437
justifiable cause, in spite of long years of service with said respondents;
“6. That as a result of the abovementioned unfair labor practice of respondents, and after complainant
sent communication thereto, protesting against the acts of the above-mentioned, complainant decided
to stage a strike on September 4, 1967, after filing a notice of strike with the Department of Labor;
“7. That on September 14, 1967, however, Jose P. Marcelo, and Jose A. Delfin, president and vice-
president of the respondents, respectively, on one hand and the presidents of the three local unions
above-mentioned and the national president of complainant union on the other, entered into a Return-
to-Work Agreement, providing among others, as follows:
‘4. The management agrees to accept all employees who struck without discrimination or harassment
consistent with an orderly operation of its various plants provided it is understood that management
has not waived and shall continue to exercise freely its rights and prerogatives to punish, discipline and
dismiss its employees in accordance with law and existing rules and regulations and that cases filed in
Court will be allowed to take their normal course.’
“8. That, contrary to the above Return-to-Work agreement, and in violation thereof, respondents
refused to admit the members of the three striking local unions; that in admitting union members back
to work, they were screened in spite of their long employment with respondent, but respondents gave
preference to the casual employees;
“9. That, because of the refusal of the respondents to accept some union members, in violation of the
above-mentioned Return-to-Work agreement and refusal of respondents to bargain in good faith with
complainant, the latter, together with the members of the three local unions above-mentioned, again
staged a strike on November 7, 1967;
“10. That on December 13, 1967, complainant sent a letter to respondents that the members of the
striking unions abovementioned offered to return to work on December 18, 1967 without any condition,
but respondents likewise refused, and still continue to refuse to reinstate them up to the present;
“11. That hereto attached are the list of names of the members of the three local unions above-
mentioned who were not admitted
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back to work by respondents, marked as Annexes “A”, “B”, and “G” and made as an integral part of this
complaint;
“12. That the union members listed in Annexes “A”, “B”, and “C” hereof were not able to secure
substantial employment in spite of diligent efforts exerted by them;
“13. That the above unfair labor practice acts of respondents are in violation of Section 4, subsections 1,
4 and 6 in relation to Sections 13, 14 and 15 of Republic Act No. 875.”
The complaint prayed “that after due hearing, judgment be rendered, declaring respondents guilty of
unfair labor practice, and
“(a) Ordering respondents to cease and desist from further committing the acts complained of;
“(b) Ordering respondents to comply with the Return-to-work agreement dated September 14, 1967,
and to admit back to work the workers listed in annexes “A”, “B” and “C” hereof, with back wages,
without, loss of seniority rights and privileges thereof;
“(c) Ordering respondents to bargain in good faith with complainant union; and
“(d) Granting complainant and its complaining members thereof such other affirmative reliefs and
remedies equitable and proper, in order to effectuate the policies of the Industrial Peace Act.”
On March 16, 1968, after an Urgent Motion for Extension of Time to File Answer, the respondents filed
their Answer denying the material allegations of the Complaint and alleging as affirmative defenses,
“I. That the Collective Bargaining Agreement between respondent Marcelo Steel Corporation and the
United Nail Workers Union expired on March 15, 1967; The Collective Bargaining Agreement between
the United Rubber Workers Union (which eventually became the Marcelo Free Workers Union) and the
respondent Marcelo Rubber and Latex Products, Inc., expired on June 5, 1967; the Collective Bargaining
Agreement between Marcelo Camelback Tire and Foam Union and the Marcelo Tire and Rubber
Corporation expired on June 5, 1967;
“II. That on May 23, 1967, one Mr. Prudencio Jalandoni of complainant addressed a communication to
Mr. Jose P. Marcelo of
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respondents informing him of the alleged affiliation of the Marcelo United Labor Union with
complainant and submitting a set of collective bargaining proposal to which counsel for respondents
replied suggesting that a petition for certification election be filed with the Court of Industrial Relations
in view of the several demands for representation recognition;
“III. That the transfers of workers from one job to another were made in accordance with needs of the
service. Respondents afforded union officers and members affected by the transfers the privilege to
watch out for vacancies and select positions they prefer to be in. No suspensions without justifiable
cause were made as alleged in the Complaint;
“IV. That between May 23, 1967, the date of their first demand for negotiations, and September 4,
1967, the start of the first strike, proposals and counter-proposals were had. Respondents are not aware
of whether or not a notice of strike was filed with the Court of Industrial Relations;
“V. That Mr. Jose P. Marcelo is the President of Marcelo Rubber and Latex Products, Inc., Marcelo Tire
and Rubber Corporation, and Marcelo Steel Corporation, while Mr. Jose A. Delfin is the acting Personnel
Manager of respondent Marcelo Rubber and Latex Products, Inc., Marcelo Tire and Rubber Corporation,
Marcelo Steel Corporation and Marcelo Chemical and Pigment Corporation;
“VI That respondents did not refuse to admit members of the striking union. Only four (4) workers who
had criminal cases filed against them voluntarily failed to report to the Personnel Department for
administrative investigation;
“VII. That after September 14, 1967, all workers of the different respondent corporations returned to
work except the four mentioned in the preceding paragraph hereof who have pending criminal cases;
between September 14, 1967, and November 7, 1967 another strike was declared without justifiable
cause;
“VIII. That on November 28, 1967, respondent obtained an injunction from the Court of First Instance of
Rizal, Caloocan City Branch, against the illegal picketing of the local unions; in the first week of
December, 1967, the striking workers began returning to work; on December 13, 1967, a letter was
received from complainant advising respondents that its striking workers were calling off, lifting the
picket line and returning to work, that from the first week of December, 1967, respondents invited the
striking workers desiring to return to work to fill out an information sheet stating therein their readiness
to work and the exact dates they were available so that pro-
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per scheduling could be done; a number of workers showed no interest in reporting to work;
management posted in the Checkpoint, Bulletin Boards, and the gates notices calling all workers to
return to work but a number of workers obviously were not interested in returning anymore;
“IX. That respondents posted several times lists of names of workers who had not returned to work with
the invitation to return to work, but they did not return to work;
“X. That a number of workers in the list Annexes “A”, “B” and “C” have resigned after they found more
profitable employment elsewhere;
“XI. That the local unions referred to in the Complaint if they ever had affiliated with complainant union
had subsequently disaffiliated therefrom;
“XII. That the strikes called and declared by the striking unions were illegal;
“XIII. That the local unions were bargaining in bad faith with respondents,”
and praying for the dismissal of the Complaint as well as for the declaration of illegality of the two (2)
strikes called by the striking unions.
Thereafter, the trial commenced. Then on October 24, 1968, a development occurred which gave a
peculiar aspect to the case at bar. A Manifestation and Motion signed by the respective officers and
members of the MUEWA, headed by Paulino Lazaro, was filed by the said union, alleging, to wit,
“1. That the above-entitled case purportedly shows that the Marcelo United Employees and Workers
Association is one of the Complainants being represented by the Petitioner Lakas ng Manggagawang
Makabayan (LMM);
“2. That it likewise appears in the above-entitled case that the services of the herein Petitioner was
sought by a certain Augusto Carreon together with his cohorts who are not members of the Marcelo
United Employees and Workers Association much less connected with the Marcelo Tire and Rubber
Corporation wherein the Marcelo United Employees and Workers Association has an existing Collective
Bargaining Agreement;
“3. That to set the records of this Honorable Court straight, the undersigned officers and members of
the Marcelo United
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Employees and Workers Association respectfully manifest that the aforesaid organization has no
complaint whatsoever against any of the Marcelo Enterprises;
“4. x x x
“5. x x x, the Complaint filed by the Petitioner in the aboveentitled case in behalf of the Marcelo United
Employees and Workers Association is without authority from the latter and therefore the officers
and/or representatives of the petitioning labor organization should be cited for Contempt of Court;
“6. x x x, the Complaint filed by the Petitioner in the aboveentitled case in behalf of the Marcelo United
and Employees and Workers Association should be considered as withdrawn;
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x x x.”
This was followed by another Manifestation and Motion filed on November 6, 1968 and signed by the
officers and members of the UNWU, headed by its President, Juan Balgos, alleging, to wit,
“1. That the above-entitled case purportedly shows that the United Nail Workers Union is being
represented by the Petitioner Lakas ng Manggagawang Makabayan for the alleged reason that the
former is one of the affiliates of the latter;
“2. That on January 15, 1968, all the Officers and members of the United Nail Workers Union
disaffiliated from the herein Petitioning labor organization for the reason that Petitioning labor
organization could not serve the best interest of the Officers and members of the United Nail Workers
Union and as such is a stumbling block to a harmonious labor-management relations within all the
Marcelo enterprises; x x x
“3. That the filing of the above-entitled case by the herein Petitioning labor organization was made over
and above the objections of the officers and members of the United Nail Workers Union;
“4. That in view of all the foregoing, the Officers and members of the United Nail Workers Union do
hereby disauthorize the Petitioner of the above-entitled case (Re: Lakas ng Manggagawang Makabayan)
from further representing the United Nail Workers Union in the above-entitled case;
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“5. That in view further of the fact that the filing of the aboveentitled case was made over and above the
objections of the Officers and members of the United Nail Workers Union, the latter therefore manifest
their intention to cease and desist as they hereby ceased and desisted from further prosecuting the
above-entitled case in the interest of a harmonius labor-management relation within the Marcelo
Enterprises;
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x x x.”
Likewise, a Manifestation and Motion signed by the Officers and members of the MFWU, headed by its
president, Benjamin Manaol, dated October 28, 1968 and filed November 6, 1968, stated the same
allegations as the Manifestation and Motion filed by the UNWU quoted above, except that the
disaffiliation of the MFWU from LAKAS was made effective January 25, 1968. The Resolutions of
Disaffiliation of both MFWU and UNWU were attached to these Manifestations.
On November 19, 1968, complainant LAKAS filed an Opposition to these Manifestations and Motions,
materially alleging that, to wit:
“1. That complainants respectfully stated that when Charge No. 2265 was filed on December 26, 1967 in
this case, giving rise to the instant complaint, the alleged officers of the union-movants were not yet
officers on the filing of said Charge No. 2265, x x x
“2. That the alleged officers and members who signed the three (3) Manifestations and Motions are the
very employees who were accepted back to work by the respondents during the strike by the
complainants on September 4, 1967 and November 7, 1967; and the said alleged officers and members
who signed the said manifestations and motions are still working up to the present in the
establishments of the respondents.
“3. That precisely because of the acceptance back to work of these alleged officers and members of the
union-movants, and the refusal of respondents to accept back to work all the individual complainants in
this case mentioned in Annexes “A”, “B” and “C” of the instant complaint, inspite of the offer to return
to work by the complainants herein made to the respondents without any conditions at the time of the
strike, as per complainants’ letter of December 13,
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1967 (Exh. “B”. for the complainants), which fact precisely gave rise to the filing of this case.
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x x x.”
On January 31, 1969, after the submission of their respective Memoranda on the motions asking for the
dismissal and withdrawal of the complaint, the Court of Industrial Relations issued an Order deferring
the resolution of the Motions until after the trial on the merits. To this Order, two separate Motions for
Reconsideration were filed by the respondent companies and the movant-unions, which motions were,
however, denied by the court en banc by its Resolution dated March 5, 1969.
After the trial onthe merits of the case, and after submission by the parties of their respective
memoranda, the respondent court rendered on July 20, 1973 the Decision subject of these petitions. On
the motions for dismissal or withdrawal of the complaint as prayed for by MUEWA, UNWU and MFWU,
the respondent court denied the same on the ground that the instant case was filed by the Lakas ng
Manggagawang Makabayan for and in behalf of the individual employees concerned and not for the
movants who were not authorized by said individual complainants to ask for the dismissal. On the merits
of the case, while the Decision contained opinions to the effect that the respondent Marcelo Companies
were not remiss in their obligation to bargain, and that the September 4, 1967 strike as well as the
November 7, 1967 strike, were economic strikes, and were, therefore, illegal because of lack of the
required notices of strike before the strikes were declared in both instances, the Decision, nevertheless,
on the opinion that the “procedure of scheduling adopted by the respondents was in effect a screening
of those who were to be readmitted,” declared respondent Marcelo Companies guilty of unfair labor
practice in discriminating against the employees named in Annexes “A”, “B”, and “C” by refusing to
admit them back to work while other strikers were admitted back to work after the strike of November
7, 1967. The dispositive portion of the appealed Decision states, to wit,
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“WHEREFORE, in view of all the foregoing, respondents should be, as they are hereby, declared guilty of
unfair labor practice only for the discrimination on terms or conditions of employment as hereinbefore
discussed in connection with the return of the strikers-complainants back to work after the second
strike, and, therefore, ordered to pay the individual complainants appearing in Annexes “A”, “B” and “C”
of the Complaint, except Arlington Glodeviza, Jesus Lim, Wilfredo Jarquio, Leonardo Sakdalan, Jose
Roque, Alfredo Cabel, and those still working, were dismissed for cause, whose contracts expired or who
had resigned as above indicated, their back wages from December 18, 1967but only up to June 29, 1970
when this case was submitted for decision, without reinstatement, minus their earnings elsewhere for
the same period.
“As to those who died without having been reemployed, the back wages shall be from December 18,
1967 up to the date of then-demise, as indicated in the body of this Decision, but not beyond June 20,
1970, likewise less their earnings elsewhere.
“The Chief Auditing Examiner of this Court, or his duly authorized representative, is hereby directed to
proceed to the premises of respondent companies to examine their books, payrolls, vouchers and other
pertinent papers or documents as may be necessary to compute the back wages due the individual
complainant in line with this Decision, and to submit his Report thereon not later than twenty (20) days
after completion of such examination for further disposition of the Court.
SO ORDERED.”
On August 9, 1973, counsel for respondent Marcelo Companies filed a Motion for Reconsideration of
the above Decision assigning as errors, to wit,
“I. The trial court erred in not finding that complainant Lakas ng Manggagawang Makabayan (Lakas) has
no authority to file and/or to prosecute the Complaint against respondents in representation of the local
unions and/or individual complainants and/or members of local unions in their individual capacities and
in not dismissing the complaint on that ground upon motions of the local unions concerned and/or their
members.
II. The trial court erred in finding that respondent discriminated against individual complainants who
were not readmitted to work after the November 7, 1967 strike while others were able to return to their
former employment and in holding that the
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procedure adopted by respondents was in effect a screening of those who were readmitted and in
finding respondents guilty of unfair labor practice by reason thereof.”
On August 14, 1973, the individual complainants who had earlier disauthorized the counsel of record,
Atty. Benjamin Pineda, from further representing them and from amicably settling their claims, on their
own behalf filed their arguments in support of their Motion for Reconsideration, through a newly
retained counsel, Atty. Pablo B. Castillon. Assigned as errors are, to wit,
“I. The findings of the trial court excluding some of the employees from the aforementioned Decision as
well as from the benefits resulting therefrom is not in accordance with law and the facts.
“II. The findings of the trial court declaring the strikes of September 4 and November 7, 1967 as illegal
for being an economic strike is not in accordance with law and the facts adduced in this case.
“III. The Honorable trial court in ordering the reduction of the back wages, without reinstatement,
appears to have departed from the substantial evidence rule and established jurisprudence.”
By Resolution of January 24, 1974, the Court en banc denied the two (2) Motions for Reconsideration
filed by both the respondent Marcelo Companies and the individual complainants. On February 19, 1974
and on February 20, 1974, both parties filed their respective Notices of Appeals. Hence, these petitions.
In L-38258, the petition filed by complainant Lakas ng Manggagawang Makabayan (LAKAS), the following
were assigned as reversible errors, to wit,
I. The respondent court erred in finding the strikes of September 4 and November 7, 1967 to be
economic strikes and declaring the said strikes illegal for non-compliance with the procedural
requirement of Section 14(d) of Republic Act 875, although its illegality was condoned or waived
because of the Return-to-Work agreement on the first strike, and the discriminatory rehiring of the
striking employees after the second strike.
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II. The respondent court erred in denying reinstatement to the striking complainants in Case No. 4951-
ULP, and limiting the computation of their backwages from December 18, 1967 to June 29, 1970 only,
despite its findings of unfair labor practice against private respondents herein as a consequence of the
discriminatory rehiring of the striking employees after the November 7, 1967 strike.
III. The respondent court erred in excluding the other individual complainants, except those who are still
working, those who resigned on or before December 18, 1967, and those whose employment contract
expired, and denying to these individual complainants the benefits resulting therefrom.
On the other hand, in L-38260 which is the petition filed by respondents Marcelo Enterprises, Marcelo
Tire and Rubber Corporation, Marcelo Rubber & Latex Products, Marcelo Steel Corporation, Marcelo
Chemical & Pigment Corporation, and Polaris Marketing Corporation, the following is the alleged
assignment of errors, to wit,
I. Respondent court erred in not finding that respondent Lakas ng Manggagawang Makabayan (LAKAS)
had no authority to file and/or to prosecute the complaint against the petitioners herein in
representation of the local unions and/or individual complainants and/or members of local unions in
their individual capacities and in not dismissing the complaint in Case No. 4951-ULP of respondent court
on that ground upon motions of the local unions concerned and/or their officers and members.
II. Respondent court erred in finding that petitioners herein discriminated against individual
complainants in Case No. 4951-ULP of respondent court who were not readmitted to work after the
November 7, 1967 strike, while others were able to return to their former employment and in holding
that the procedure adopted by petitioners herein was in effect a screening of those who were
readmitted and in finding petitioners herein guilty of unfair labor practice by reasons thereof.
III. Respondent court erred in rendering judgment ordering petitioners herein to pay individual
complainants in Case No. 4951ULP of respondent court backwages from December 18, 1967, to June 29,
1970, minus their earnings elsewhere, except those who have resigned, those who have been dismissed
for cause, those whose contracts have expired and those who are already working.
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IV. Respondent court erred in holding that petitioners herein have waived their right to declare the
strikes of September 4, 1967 and November 7, 1967, illegal.
From the aforecited assignments of errors respectively made in both petitions “before Us, We find that
there are only two basic issues posed for Our resolution, viz: (1) whether or not the complaint filed by
LAKAS against the Marcelo Companies can be sustained, in view of the alleged fact that its authority to
file and prosecute the same has been squarely raised in issue at the first instance before the respondent
court; and (2) whether or not the Marcelo Companies are guilty of unfair labor practice, for which they
should be made liable for backwages and be obliged to reinstate the employees appearing in Annexes
“A”, “B”, and “C” of the complaint, taking into consideration the prayer of LAKAS anent the correct
payment of said backwages and the non-exclusion of some employees from the benefits arising from
the appealed Decision.
The first issue poses a procedural question which We shall dwell on after a resolution of the second
issue, this latter issue being of greater significance to the correct determination of the rights of all
parties concerned as it treats of the merits of the present petitions.
Hence, anent the second issue of whether or not the complaint for unfair labor practice can be
sustained, this Court rules in favor of the respondent Marcelo Companies and consequently, the
appealed Decision is reversed. This reversal is inevitable after this Court has pored through the
voluminuous records of the case as well as after applying the established jurisprudence and the law on
the matters raised. We are not unmindful of the plight of the employees in this case but We consider it
oppressive to grant their petition in G.R. No. L-38258 for not only is there no evidence which shows that
the respondent Marcelo Companies were seeking for an opportunity to discharge these employees for
union activities, or to discriminate against them because of such activities, but there is affirmative
evidence to establish the contrary conclusion.
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The present controversy is a three-sided conflict, although focus has been greatly placed upon an
alleged labor dispute between complainant LAKAS and the respondent Marcelo Companies. It would
bear emphasizing, however, that what had been patently disregarded by the respondent industrial court
and the parties alike, is the fact that LAKAS had never been the bargaining representative of any and all
of the local unions then existing in the respondent Marcelo Companies.
Contrary to the pretensions of complainant LAKAS, the respondent Marcelo Companies did not ignore
the demand for collective bargaining contained in its letter of June 20, 1967. Neither did the companies
refuse to bargain at all. What it did was to apprise LAKAS of the existing conflicting demands for
recognition as the bargaining representative in the appropriate units involved, and suggested the
settlement of the issue by means of the filing of a petition for certification election before the Court of
Industrial Relations. This was not only the legally approved procedure but was dictated by the fact that
there was indeed a legitimate representation issue. PSSLU, with whom the existing CBAs As were
entered into, was demanding of respondent companies to collectively bargain with it; so was Paulino
Lazaro of MUEWA, J.C. Espinas & Associates for MACATIFU and the MFWU, and the complainant LAKAS
for MULU which we understand is the aggrupation of MACATIFU, MFWU and UNWU. On top of all of
these, Jose Roque of UNWU disauthorized the PSSLU from representing his union; and similarly, Augusto
Carreon of MACATIFU itself informed management as late as July 11, 1967 or after the demand of LAKAS
that no group representing his Union “is not authorized and should not be entertained.”
Indeed, what We said in Philippine Association of Free Labor Unions (PAFLU) vs. The Bureau of Labor
Relations, 69 SCRA 132, applies as well to this case.
“x x x, in a situation like this where the issue of legitimate representation in dispute 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 election. In this way, the issue as to who is really the true bargaining
representative of all the
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employees may be firmly settled by the simple expedient of an election.”
The above-cited case gives the reason for the need of determining once and for all the true choice of
membership as to who should be their bargaining representative, which is that, “(E)xperience teaches
us, one of the root causes of labor or industrial disputes is the problem arising from a questionable
bargaining representative entering into CBA concerning terms and conditions of employment.”
Respecting the issue of representation and the right of the employer to demand reasonable proof of
majority representation on the part of the supposed or putative bargaining agent, the commentaries in
Rothenberg on Labor Relations, pp. 429-431, are forceful and persuasive, thus:
“It is essential to the right of a putative bargaining agent to represent the employees that it be the
delegate of a majority of the employees and, conversely, an employer is under duty to bargain
collectively only when the bargaining agent is representative of the majority of the employees. A natural
consequence of these principles is that the employer has the right to demand of the asserted bargaining
agent proof of its representation of its employees. Having the right to demonstration of this fact, it is
not an ‘unfair labor practice’ for an employer to refuse to negotiate until the asserted bargaining agent
has presented reasonable proof of majority representation. It is necessary however, that such demand
be 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 . x x x
“x x x Although an employer has the undoubted right to bargain with a bargaining agent whose authority
has been established, without the requirement that the bargaining agent be officially certified by the
National Labor Relations Board as such, if the informally presented evidence leaves a real doubt as to
the issue, the employer has a right to demand a certification and to refuse to negotiate until such official
certification is presented.”
The clear facts of the case as hereinbefore restated indusputably show that a legitimate representation
issue confronted the respondent Marcelo Companies. In the face of these facts and in conformity with
the existing jurisprudence,
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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 September 4, 1967 and November 7, 1967 were calculated, designed and intended to compel the
respondent Marcelo Companies to recognize or bargain with it notwithstanding that it was an
uncertified union, or in the case of respondent Marcelo Tire and Rubber Corporation, to bargain with it
despite the fact that the MUEWA of Paulino Lazaro was already certified as the sole bargaining agent in
said respondent company. These concerted activities executed and carried into effect at the instigation
and motivation of LAKAS are all illegal and violative of the employer’s basic right to bargain collectively
only with the representative supported by the majority of its employees in each of the bargaining units.
This Court is not unaware of the present predicament of the employees involved but much as We
sympathize with those who have been misled and so lost their jobs through hasty, illadvised and
precipitate moves, We rule that the facts neither substantiate nor support the finding that the
respondent Marcelo Companies are guilty of unfair labor practice.
There are also other facts which this Court cannot ignore. The complaint of LAKAS charge that after their
first strike of September 4, 1967, management and the striking employees entered into a Return-to-
Work Agreement but that it was violated by the respondent companies who “refused to admit the
members of the three striking local unions x x x and gave preference to the casual employees.” (No. 8,
Complaint). It is also alleged that the strike of November 7, 1967 was staged “because of the refusal of
the respondents to accept some union members x x x and refusal of respondents to bargain in good
faith with complainant” (No. 9, Complaint). We find however, that in making these charges, complainant
LAKAS lacked candor, truth and fidelity towards the courts.
It is a fact found by the respondent court, and as revealed by the records of the case, that the
respondent Marcelo Companies did not violate the terms of the Return-to-Work Agree-
451
451
ment negotiated after the first strike. All of the strikers were admitted back to work except four (4) who
opted not to report for work because of the administrative investigation conducted in connection with
the acts of violence perpetrated during the said strike.
It is also evident from the records that the charge of bargaining in bad faith imputed to the respondent
companies, is hardly credible. In fact, such charge is valid as only against the complainant LAKAS. The
parties had a total of five (5) conferences for purposes of collective bargaining. It is worth considering
that the first strike of September 4, 1967 was staged less than a week after the fourth CBA conference
and without any benefit of any previous strike notice. In this connection, it must be stated that the
notice of strike filed on June 13, 1967 could not have been the strike notice for the first strike because it
was already withdrawn on July 14, 1967. Thus, from these stated facts can be seen that the first strike
was held while the parties were in the process of negotiating. Nor can it be sustained that the
respondent Marcelo Companies bargained in bad faith since there were proposals offered by them, but
the complainant LAKAS stood pat on its position that all of their economic demands should be met and
that all of these demands should be granted in all of the respondent Marcelo Companies. The
companies’ refusal to accede to the demands of LAKAS appears to be justified since there is no showing
that these companies were in the same state of financial and economic affairs. There is reason to
believe that the first strike was staged only for the purpose of compelling the respondent Marcelo
Companies to accede to the inflexible demands of the complainant LAKAS. The records further establish
that after the resumption of normal operations following the first strike and the consequent Return-to-
work Agreement, the striking unions led by complainant LAKAS and the management of the respondent
Marcelo Companies resumed their bargaining negotiations. And that on October 13, 1967, complainant
LAKAS sent the final drafts of the collective bargaining proposals for MFWU and UNWU. The second
strike of November 7, 1967 was then staged immediately after which strike, as before, was again lacking
of a srike notice. All of these facts show that it was complainant
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452
LAKAS, and not the respondent Marcelo Companies, which refused to negotiate in the pending
collective bargaining process. All that the facts show is that the bargaining position of complainant
LAKAS was inflexible and that it was in line with this uncompromising attitude that the strikes were
declared, significantly after notice that management did not or could not meet all of their 17-points
demand.
Respondent court, upholding the contention of petitioner LAKAS that after the second strike, the
respondent Marcelo Companies, despite the strikers’ unconditional offer to return to work, refused to
readmit them without “screening” which LAKAS insists to be “discriminatory hiring of the striking
employees,” declared that although the two strikes were illegal, being economic strikes held in violation
of the strike notice requirement, nevertheless held the Marcelo Companies guilty of unfair labor
practice in discriminating against the complaining employees by refusing to readmit them while other
strikers were admitted back to work. We do not agree.
It is the settled jurisprudence that it is an unfair labor practice for an employer not to reinstate, or
refuse re-employment to, members of union who abandon their strike and make unconditional offer to
return to work.1 As indeed Exhibit “B” presents an unconditional offer of the striking employees to
return to work under the same terms and conditions of employment before the strike, the question
then confronting Us is whether or not on the part of the respondent companies, there was refusal to
reinstate or re-employ the strikers.
We find as a fact that the respondent Marcelo Companies did not refuse to reinstate or re-employ the
strikers, as a consequence of which We overrule the finding of unfair labor practice against said
companies based on the erroneous conclusion of the respondent court. It is clear from the records that
even before the unconditional offer to return to work contained in Exhibit “B” was made, the repondent
Marcelo Companies had already posted notices for the strikers to return back to work.
________________
1 People’s Bank & Trust Company Employees Union, et al. vs. CIR, et al., 69 SCRA 10; Cromwell
Commercial Employees and Laborers Union (PTUC) vs. CIR, et al., 12 SCRA 124.
453
453
It is true that upon their return, the strikers were required to fill up a form (Exhibit “49”) wherein they
were to indicate the date of their availability for work. But We are more impressed and are persuaded
to accept as true the contention of the respondent Marcelo Companies that the aforestated
requirement was only for purposes of proper scheduling of the start of work for each returning striker. It
must be noted that as a consequence of the two strikes which were both attended by widespread acts
of violence and vandalism, the businesses of the respondent companies were completely paralyzed. It
would hardly be justiciable to demand of the respondent companies to readmit all the returning
workers in one big force or as each demanded readmission. There were machines that were not in
operating condition because of long disuse during the strikes. Some of the machines needed more than
one worker to operate them so that in the absence of the needed team of workers, the start of work by
one without his teammates would necessarily be useless, and the company would be paying for his time
spent doing no work. Finally, We take judicial cognizance of the fact that companies whose businesses
were completely paralyzed by major strikes cannot resume operations at once and in the same state or
force as before the strikes.
But what strikes Us most in lending credence to respondents’ allegation that Exhibit “49” was not meant
to screen the strikers, is the fact that all of the returning strikers who filled up the form were scheduled
for work and consequently started with their jobs. It is only those strikers who refused or failed to fill-up
the required form, like the herein complaining employees, who were not scheduled for work and
consequently have not been re-employed by the respondent Marcelo Companies. Even if there was a
sincere belief on their part that the requirement of Exhibit “49” was a ruse at “screening” them, this fear
would have been dispelled upon notice of the fact that each and all of their co-strikers who filled up the
required form were in fact scheduled for work and started to work. The stoppage of their work was not,
therefore, the direct consequence of the respondent companies’ complained act. Hence, their economic
loss should not be shifted to
454
454
the employer.
It was never the state policy nor Our judicial pronouncement that the employees’ right to self-
organization and to engage in concerted activities for mutual aid and protection, are absolute or be
upheld tinder all circumstances. Thus, in the case of Royal Interocean Lines, et al. vs. CIR,3 We cited
these authorities giving adequate panoply to the rights of employer, to wit;
“The protection of workers’ right to self-organization in no way interfere with employer’s freedom to
enforce such rules and orders as are necessary to proper conduct of his businesses, so long as
employer’s supervision is not for the purpose of intimidating or coercing his employees with respect to
their self-organization and representation. (National Relations Board vs. Hudson Motor Car Co., CC. A.,
1942, 123 F 2d. 528).”
“It is the function of the court to see that the rights of selforganization and collective bargaining
guaranteed by the Act are amply secured to the employee, but in its effort to prevent the prescribed
unfair labor practice, the court must he mindful of the welfare of the honest employer (Martel Mills
Corp. vs. M.L.R.L., CC. A., 1940, 11471 F 2d. 264).”
In Pagkakaisang Itinataguyod ng mga Manggagawa sa Ang Tibay (PIMA), Eliseo Samson, et al. vs. Ang
Tibay, Inc., et al.,L-22273, May 16, 1967, 20 SCRA 45, We held that the exaction, by the employer, from
the strikers returning to work, of a promise not to destroy company property and not to commit acts of
reprisal against union members who did not participate in the strike, cannot be considered an unfair
labor practice because it was not intended to discourage union membership. It was an act of a self-
preservation designed to insure peace and order in the employer’s premises. It was also held therein
that what the Industrial Peace Act regards as an unfair labor practice is the discrimination committed by
the employer in regard to tenure of employment for the purpose of encouraging or discouraging union
membership.
________________
2 See Dinglasan vs. National Labor Union, L-14183, November 28, 1959.
3 109 Phil. 900 (1960).
455
455
In the light of the above ruling and taking the facts and circumstances of the case before Us in relation
to the requirement by the respondent companies in the filling up of Exhibit “49”, We hold and rule that
the requirement was an act of selfpreservation, designed to effect cost-savings as well as to insure
peace and order within their premises. Accordingly, the petition in G. R. No. L-38258 should be
dismissed, it having failed to prove, substantiate and justify the unfair labor practice charges against the
respondent Marcelo Companies.
Now to the procedural question posed in the first issue brought about by the respondent court’s denial
of the motions to withdraw the complaint respectively filed by MUEWA, UNWU and MFWU. In their
petition (G.R. L-38260) the respondent Marcelo Companies maintain that the respondent court erred in
not dismissing the complaint even as it knew fully well that the very authority of LAKAS to represent the
labor unions who had precisely disaffiliated from the LAKAS, was open to serious question and was
being ventilated before it. On the other hand, the respondent court rationalized the denial of the
aforestated motions to withdraw by holding that the complaint was filed by LAKAS on behalf of the
individual employees whose names were attached to the complaint and hence, that the local unions
who were not so authorized by these individual employees, cannot withdraw the said complaint. The
lower court’s opinion is erroneous.
Firstly, LAKAS cannot bring any action for and in behalf of the employees who were members of
MUEWA because, as intimated earlier in this Decision, the said local union was never an affiliate of
LAKAS. What appears clearly from the records is that it was Augusto Carreon and his followers who
joined LAKAS, but then Augusto Carreon was not the recognized president of MUEWA and neither he
nor his followers can claim any legitimate representation of MUEWA. Apparently, it is this split faction of
MUEWA, headed by Augusto Carreon, who is being sought to be represented by LAKAS. However, it
cannot do so because the members constituting this split faction of MUEWA were still members of
MUEWA which was on its own right a duly registered labor union. Hence, any suit to be brought for and
in behalf of them can be
456
456
made only by MUEWA, and not LAKAS. It appearing then that Augusto Carreon and his cohorts did not
disaffiliate from MUEWA nor signed any individual affiliation with LAKAS, LAKAS bears no legal interest
in representing MUEWA or any of its members.
Nor will the lower court’s opinion be availing with respect to the complaining employees belonging to
UNWU and MFWU. Although it is true, as alleged by LAKAS, that when it filed the charge on December
26, 1967, the officers of the movant unions were not yet then the officers thereof, nevertheless, the
moment MFWU and UNWU separated from and disaffiliated with LAKAS to again exercise its rights as
independent local unions, registered before as such, they are no longer affiliates of LAKAS, as what
transpired here. Naturally, there would no longer be any reason or occasion for LAKAS to continue
representing them. Notable is the fact that the members purportedly represented by LAKAS constitute
the mere minority of the movant unions, as may be inferred from the allegations of the movant unions
as well as the counter-allegations of LAKAS filed below. As such, they cannot prevail or dictate upon the
will of the greater majority of the unions to which they still belong, it appearing that they never
disaffiliated from their unions; or stated in another way, they are bound by the action of the greater
majority.4
In NARIC Workers’ Union vs. CIR,5 We ruled that, “(a) labor union would go beyond the limits of its
legitimate purposes if it is given the unrestrained liberty to prosecute any case even for employees who
are not members of any union at all. A suit brought by another in representation of a real party in
interest is defective.” Under the uncontroverted facts obtaining herein, the aforestated ruling is
applicable, the only difference being that, here, a labor federation seeks to represent members of a
registered local union never affiliated with it and members of registered local unions which, in the
course of the proceedings before the industrial court, disaffiliated from it.
________________
4 National Labor Union vs. Ang Bisig ng P.M.C., L-12575, May 13, 1959.
5 3 SCRA 804.
457
457
This is not to say that the complaining employees were without any venue for redress. Under the
aforestated considerations, the respondent court should have directed the amendment of the complaint
by dropping LAKAS as the complainant and allowing the suit to be further prosecuted in the individual
names of those who had grievances. A class suit under Rule 3, Section 12 of the Rules of Court is
authorized and should suffice for the purpose.
In fairness to the complaining employees, however, We treated their Motion for Reconsideration of the
Decision subject of appeal as curing the defect of the complaint as the said motion expressly manifested
their collective desire to pursue the complaint for and in their own behalves and disauthorizing LAKAS’
counsel from further representing them. And We have also treated their petition before Us in the same
manner, disregarding the fact that LAKAS remained the petitioning party, as it appears from the
verification that the petition in L38258 was for and in behalf of the complaining employees. The merits
of their petition, however, fall short of substantiating the charge of unfair labor practice against the
respondent Marcelo Companies. On the other hand, the appeal of the Marcelo Companies in L-38260
must be upheld and sustained.
WHEREFORE, upon the foregoing considerations, the petition in L-38258 is dismissed and the petition in
L-38260 is granted. The decision of the Court of Industrial Relations is hereby REVERSED and SET ASIDE
and a new judgment is rendered holding that the respondent Marcelo Companies are not guilty of unfair
labor practice.
No costs.
SO ORDERED.
Makasiar (Chairman), Concepcion, Jr., Abad Santos, De Castro and Escolin,JJ., concur.
Aquino, J.,in the result.
Petition in L-38258 dismissed and petition in L-38260 granted.
458
458
People vs. Cardenas
Notes.—By failure to report for work with petitioner when she had an opportunity to do so and leaving
instead for abroad with intent to work there, private respondent must be deemed to have effectively
waived reinstatement. (East Asiatic Co., Ltd vs. Court of Industrial Relations,40 SCRA 521.)
If the employer’s improper conduct was an initial cause of the strike, all the strikers are entitled to
reinstatement and the dismissal of replacement employees whenever necessary. (Insular Life Ass. Co.,
Ltd. Employees Association-NATU vs. Insular Life Assurance Co., Ltd., 37 SCRA 244.)
——o0o——
Lakas ng Manggagawang Makabayan vs. Marcelo Enterprises, 118 SCRA 422, No. L-38258, No. L-38260
November 19, 1982
VOL. 10, APRIL 30, 1064
843
National Union of Restaurant Workers (PTUC) vs. Court of Industrial Relations
No. L-20044. April 30, 1964.
NATIONAL UNION OF RESTAURANT WORKERS (PTUC), petitioner, vs. COURT OF INDUSTRIAL

RELATIONS, ET AL., respondents.
Labor relations; Unfair labor practice; Reply to written demands; Failure to reply not as such as an act
of unfair labor practice.—The condition under Section 14, Rep. Act No. 875, requiring the employer to
reply within 10 days from receipt of a written notice making demands, is merely procedural, and as
such its non-compliance cannot be deemed to be an act of unfair labor practice.
Same; Same; Interference with right of self-organization; Person unauthorized by management.—

Where there is no evidence to show that the alleged counter-proposals, the nature of which would
indicate coercion interfering with the right of the employees to self-organization, were made by a
person authorized to represent management, the claim of the complaining union of coercion has no
basis.
Same; Same; Claim of dismissal of employee for union activities properly discredited.—The lower
court properly discredited the claim that an employee was dismissed for union activities where it
appears that other employees more active than him in the organization of the union were retained
and there was evidence to show that it was his employer's fear for her (the employer's) life on
account of the threats made on her and the hatred that he had against her, being always together in
her car driven by him during business routine, that prompted his dismissal.
PETITION for review of a decision of the Court of Industrial Relations.
844
844
Alejandro C. Villavieja for petitioner.
Padilla Law Office for respondents.
BAUTISTA ANGELO, J.:
On June 9, 1960, a complaint for unfair labor practice was lodged against the owners of Tres Hermanas
Restaurant, particularly Mrs. Felisa Herrera, on the ground, among others, that respondents refused to
bargain collectively with the complaining union; respondents made a counter-proposal in the sense that
they would bargain with said union and would accept its demands if the same would become a company
union, and one Martin Briones, an employee, was separated from the -service because he was found to
be the organizer and adviser of the complaining union.
After respondents had filed their answer, wherein they denied the charges of unfair labor practice filed
against them, Judge Emiliano C. Tabigne, who was assigned to act on the complaint, received the
evidence, and on July 28, 1961, rendered decision exonerating respondents. He found that the charges
were not proven and dismissed the complaint.
The case was taken to the court en banc, where in a split decision the court affirmed the decision of
Judge Tabigne. The case is now before us on a petition for review.
The important findings indings of the court a quo which are now disputed by the union are: (1)
respondents did not refuse to bargain collectively with the union as in fact they met its members with
the only particularity that they were not able to accept all the demands of the union; (2) respondents
did not interfere, coerce or restrain their employees in the exercise of their right to join the complaining
union; and (3) the dismissal of Martin Briones was due to the concern of Mrs. Herrera for her life on
account of the hatred that Briones had entertained against her, she being always with him in the car he
used to drive during their business
845
VOL. 10, APRIL 30, 1964
845
routine. It is claimed that Judge Tabigne committed a grave abuse of discretion in making the above
findings.
Anent the first issue, the court a quo found that in the letter sent by the union to respondents
containing its demands marked in the case as Exhibit 1, there appears certain marks, opposite each
demand, such as a check for those demands to which Mrs. Felisa Herrera was agreeable, a cross
signifying the disapproval of Mrs. Herrera, and a circle regarding those demands which were left open
for discussion on some future occasion that the parties may deem convenient. Such markings were
made during the discussion of the demands in the meeting called by respondents on May 3, 1960 at
their restaurant in Quezon City. The court a quo concluded that the fact that respondent Herrera had
agreed to some of the demands shows that she did not refuse to bargain collectively with the
complaining union.
We can hardly dispute this finding, for it finds support in the evidence. The inference that respondents
did not refuse to bargain collectively with the complaining union because they accepted some of the
demands while they refused the others even leaving open other demands for future discussion is
correct, especially so when those demands were discussed at a meeting called by respondents
themselves precisely in view of the letter sent by the union on April 29, 1960. It is true that under
Section 11 of Republic Act 875 whenever a party serves a written 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 procedural and as such its noncompliance cannot be deemed to be an act of unfair
labor 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 stated elsewhere.
It is contended that respondents refused to bargain with the complaining union as such even if they
called a meeting
846
846

of its officers and employees thereby concluding that they did not desire to enter into a bargaining
agreement with said union. This conclusion has no rational relation with the main premise of the union
for it is belied by the fact that respondents did actually agree and bargain with the representatives of
the union. While it is true that respondents denied the capacity of the complaining union to bargain
collectively with the respondents this is because they were of the impression that before a union could
have that capacity it must first be certified by the Court of Industrial Relations as the duly authorized
bargaining unit, as in fact this is what they stated in their answer to the petition for certification filed by
said union before the Court of Industrial Relations (See Case No. 763-MC). In said case, another union
known as the International Labor and Marine Union of the Philippines claimed to represent the majority
of the employees of respondent restaurant, and this is what it alleged in a letter sent to the manager of
respondents dated May 25, 1962.
Anent the second issue, the claim of the complaining union has also no basis. This is premised on a
document marked Exhibit C which contains certain alleged counterproposals tendered to complainant
union the nature of which would apparently indicate that respondents made use of coercion which
interferes with the right of the employees to self-organization. On this document certain notations were
made by one Ernesto Tan which are indeed derogatory and which were allegedly made by him upon
instructions of respondent Felisa Herrera. Thus, the pertinent notation on which the union relies is one
which states that respondent Herrera would be willing to recognize the union "if union would become
company union". which would indeed show that Mrs. Herrera interfered with the employees' right to
self-organization. But respondents denied that they ever authorized Ernesto Tan to make such notation
or to represent them in the negotiations, for he was merely a bookkeeper whose duties were confined
to the keeping and examination of their books of
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VOL. 10, APRIL 30, 1964
847
accounts and sales invoices. It appears that he was not even invited to the meeting but merely
volunteered to be present and made those notations on his own account and initiative. The court a quo
gave credence to this stand of respondents, as can be seen in the following finding: 'There is no
evidence to show that Ernesto Tan was authorized to represent management in the meeting held on
May 3, 1960, and that Ernesto Tan, being a mere bookkeeper of respondents, he is not a part of
management although he is the nephew of Mrs. Herrera." We are not prepared to disturb this finding of
the court a quo.
Finally, it is alleged in connection with the third issue that respondent Herrera dismissed Martin Briones
without sufficient cause other than his being the organizer and adviser of the complaining union. It
however appears from the very testimony of Martin Briones that he is not the only one who organized
the complaining union but together with Galicano Apiz, Pablo Cabreros and Juan Morales, with the
particularity that, as Briones himself had intimated, Apiz, Cabreros and Morales were more active than
himself in organizing the union so much so that they were appointed officers of that union. And yet,
Apiz, Cabreros and Morales were never touched and continued to be employed in respondents'
restaurant. For this reason, the court a quo discredited the claim that Briones was dismissed because of
union activities but rather because of the threats he made on Mrs. Herrera, as communicated to her by
her sister Aureata. The following is the finding made by the court a quo on this point: "If it is the union
activities of complainant's members that Mrs. Herrera did not like, Apiz, Cabreros and Morales should
have been dismissed by her also, because said persons were more active than Briones in the
organization of the union. Verily, it was not the union activities of Martin Briones that prompted Mrs.
Herrera to dismiss him, but her fear for the safety of her life on account of the smouldering embers of
hatred that the former had against the latter, the said persons being always together in her car driven
by Briones
848
848
during business routine." This finding finds support in the evidence.
On the strength of the foregoing considerations, we find no justification for disturbing the findings of
the court a quo which led to the dismissal of the complaint under consideration.
WHEREFORE, the decision appealed from is affirmed. No costs.
Bengzon, C.J., Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala and Makalintal, JJ.,
concur.
Padilla, J., took no part.
Decision affirmed. National Union of Restaurant Workers (PTUC) vs. Court of Industrial Relations, 10
SCRA 843, No. L-20044 April 30, 1964
VOL. 141, JANUARY 22, 1986
179
Kiok Loy vs. NLRC
No. L-54334. January 22, 1986.*
KIOK LOY, doing business under the name and style SWEDEN ICE CREAM PLANT, petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC) and PAM-BANSANG KILUSAN NG PAGGAWA
(KILUSAN), respondents.
Labor Law; Unfair Labor Practice; Collective Bargaining Agreement; Collective bargaining, concept
of.—Collective bargaining which is defined as negotiations towards a collective agreement, is one of
the democratic frameworks under the New Labor Code, designed to stabilize the relation between
labor and management and to create a climate of sound and stable industrial peace. It is a mutual
responsibility of the employer and the Union and is characterized as a legal obligation. So much so
that Article 249, par. (g) of the Labor Code makes it an unfair labor practice for an employer to refuse
“to
________________
* SECOND DIVISION.
180
180
Kiok Loy vs. NLRC
meet and convene promptly and expeditiously in good faith for the purpose of negotiating an
agreement with respect to wages, hours of work, and all other terms and conditions of employment
including proposals for adjusting any grievance or question arising under such an agreement and
executing a contract incorporating such agreement, if requested by either party.”
Same; Same; Same; Same; Preconditions for setting in motion mechanics of collective bargaining.—
While it is a mutual obligation of the parties to bargain, the employer, however, is not under any legal
duty to initiate contract negotiation. The mechanics of collective bargaining is set in motion only
when the following jurisdictional preconditions are present, namely, (1) possession of the status of
majority representation of the employees’ representative in accordance with any of the means of
selection or designation provided for by the Labor Code; (2) proof of majority representation; and (3)
a demand to bargain under Article 251, par. (a) of the New Labor Code . . . . all of which preconditions
are undisputedly present in the instant case.
Same; Same; Same; Same; Company’s refusal to make counter-proposal to the union’s proposed
collective bargaining agreement, an indication of its bad faith.—We are in total conformity with
respondent NLRC’s pronouncement that petitioner Company is GUILTY of unfair labor practice. It has
been indubitably established that (1) respondent Union was a duly certified bargaining agent; (2) it
made a definite request to bargain, accompanied with a copy of the proposed Collective Bargaining
Agreement, to the Company not only once but twice which were left unanswered and unacted upon;
and (3) the Company made no counter proposal whatsoever all of which conclusively indicate lack of a
sincere desire to negotiate. A Company’s refusal to make counter proposal if considered in relation to
the entire bargaining process, may indicate bad faith and this is specially true where the Union’s
request for a counter proposal is left unanswered. Even during the period of compulsory arbitration
before the NLRC, petitioner Company’s approach and attitude—stalling the negotiation by a series of
postponements, non-appearance at the hearing conducted, and undue delay in submitting its
financial statements, lead to no other conclusion except that it is unwilling to negotiate and reach an
agreement with the Union. Petitioner has not at any instance, evinced good faith or willingness to
discuss freely and fully the claims and demands set forth by the Union much less justify its opposition
thereto.
181
VOL. 141, JANUARY 22, 1986
181
Kiok Loy vs. NLRC
Same; Same; Same; Same; When unfair labor practice, committed; Case at bar.—The case at bar is not
a case of first impression, for in the Herald Delivery Carriers Union (PAFLU) vs. Herald Publications the
rule had been laid down that “unfair labor practice is committed when it is shown that the
respondent employer, after having been served with a written bargaining proposal by the petitioning
Union, did not even bother to submit an answer or reply to the said proposal. This doctrine was
reiterated anew in Bradman vs. Court of Industrial Relations wherein it was further ruled that “while
the law does not compel the parties to reach an agreement, it does contemplate that both parties will
approach the negotiation with an open mind and make a reasonable effort to reach a common ground
of agreement”.
Same; Same; Same; Due process; Denial of due process, not a case of, where the employer’s failure to
be heard was due to the various postponements granted to it and failure to reply to the union’s
successive letters to bring the company to the bargaining table.—Petitioner’s aforesaid submittal
failed to impress Us. Considering the various postponements granted in its behalf, the claimed denial
of due process appeared totally bereft of any legal and factual support. As herein earlier stated,
petitioner had not even honored respondent Union with any reply to the latter’s successive letters, all
geared towards bringing the Company to the bargaining table. It did not even bother to furnish or
serve the Union with its counter proposal despite persistent requests made therefor. Certainly, the
moves and over-all behavior of petitioner-company were in total derogation of the policy enshrined in
the New Labor Code which is aimed towards expediting settlement of economic disputes. Hence, this
Court is not prepared to affix its imprimatur to such an illegal scheme and dubious maneuvers.
Same; Same; Same; Employer should not be allowed with impunity to resort to schemes feigning
negotiations by going through empty gestures; Findings of NLRC of reasonableness of any collective
bargaining agreement, accorded respect.—We agree with the pronouncement that it is not obligatory
upon either side of a labor controversy to precipitately accept or agree to the proposals of the other.
But an erring party should not be tolerated and allowed with impunity to resort to schemes feigning
negotiations by going through empty gestures. More so, as in the instant case, where the intervention
of the National Labor Relations Commission was properly sought for after conciliation efforts
undertaken by the BLR failed.
182
182
Kiok Loy vs. NLRC
The instant case being a certified one, it must be resolved by the NLRC pursuant to the mandate of P.D.
873, as amended, which authorizes the said body to determine the reasonableness of the terms and
conditions of employment embodied in any Collective Bargaining Agreement. To that extent, utmost
deference to its findings of reasonableness of any Collective Bargaining Agreement as the governing
agreement by the employees and management must be accorded due respect by this Court.
Ablan and Associates for petitioner.
Abdulcadir T. Ibrahim for private respondent.
CUEVAS, J.:
Petition for CERTIORARI to annul the decision1 of the National Labor Relations Commission (NLRC)
dated July 20, 1979 which found petitioner Sweden Ice Cream guilty of unfair labor practice for
unjustified refusal to bargain, in violation of par. (g) of Article 2492 of the New Labor Code,3 and
declared the draft proposal of the Union for a collective bargaining agreement as the governing
collective bargaining agreement between the employees and the management.
The pertinent background facts are as follows:
In a certification election held on October 3, 1978, the Pam-bansang Kilusan ng Paggawa (Union for
short), a legitimate labor federation, won and was subsequently certified in a resolution dated
November 29, 1978 by the Bureau of Labor Relations as the sole and exclusive bargaining agent of the
rank-and-file employees of Sweden Ice Cream Plant (Company for short). The Company’s motion for
reconsideration of the said resolution was denied on January 25, 1978.
________________
2 Previously Article 248 renumbered as Article 249 by Batas Pambansa Blg. 70, May 1, 1980.
3 P.D. 442, as amended.
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VOL. 141, JANUARY 22, 1986
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Kiok Loy vs. NLRC
Thereafter, and more specifically on December 7, 1978, the Union furnished4 the Company with two
copies of its proposed collective bargaining agreement. At the same time, it requested the Company for
its counter proposals. Eliciting no response to the aforesaid request, the Union again wrote the
Company reiterating its request for collective bargaining negotiations and for the Company to furnish
them with its counter proposals. Both requests were ignored and remained unacted upon by the
Company.
Left with no other alternative in its attempt to bring the Company to the bargaining table, the Union, on
February 14, 1979, filed a “Notice of Strike”, with the Bureau of Labor Relations (BLR) on ground of
unresolved economic issues in collective bargaining.5
Conciliation proceedings then followed during the thirty-day statutory cooling-off period. But all
attempts towards an amicable settlement failed, prompting the Bureau of Labor Relations to certify the
case to the National Labor Relations Commission (NLRC) for compulsory arbitration pursuant to
Presidential Decree No. 823, as amended. The labor arbiter, Andres Fidelino, to whom the case was
assigned, set the initial hearing for April 29, 1979. For failure however, of the parties to submit their
respective position papers as required, the said hearing was cancelled and reset to another date.
Meanwhile, the Union submitted its position paper. The Company did not, and instead requested for a
resetting which was granted. The Company was directed anew to submit its financial statements for the
years 1976, 1977, and 1978.
The case was further reset to May 11, 1979 due to the withdrawal of the Company’s counsel of record,
Atty. Rodolfo dela Cruz. On May 24, 1978, Atty. Fortunato Panganiban formally entered his appearance
as counsel for the Company only to request for another postponement allegedly for the purpose of
acquainting himself with the case. Meanwhile, the Company submitted its position paper on May 28,
1979.
When the case was called for hearing on June 4, 1979 as
_________________
4 Thru a letter attached thereto to BLR Resolution.
5 BLR-S-2-692-79.
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Kiok Loy vs. NLRC
scheduled, the Company’s representative, Mr. Ching, who was supposed to be examined, failed to
appear. Atty. Panganiban then requested for another postponement which the labor arbiter denied. He
also ruled that the Company has waived its right to present further evidence and, therefore, considered
the case submitted for resolution.
On July 18, 1979, labor arbiter Andres Fidelino submitted its report to the National Labor Relations
Commission. On July 20, 1979, the National Labor Relations Commission rendered its decision, the
dispositive portion of which reads as follows:
“WHEREFORE, the respondent Sweden Ice Cream is hereby declared guilty of unjustified refusal to
bargain, in violation of Section (g) Article 248 (now Article 249), of P.D. 442, as amended. Further, the
draft proposal for a collective bargaining agreement (Exh. “E”) hereto attached and made an integral
part of this decision, sent by the Union (Private respondent) to the respondent (petitioner herein) and
which is hereby found to be reasonable under the premises, is hereby declared to be the collective
agreement which should govern the relationship between the parties herein.
SO ORDERED.” (Words in parenthesis supplied)
Petitioner now comes before Us assailing the aforesaid decision contending that the National Labor
Relations Commission acted without or in excess of its jurisdiction or with grave abuse of discretion
amounting to lack of jurisdiction in “rendering the challenged decision. On August 4, 1980, this Court
dismissed the petition for lack of merit. Upon motion of the petitioner, however, the Resolution of
dismissal was reconsidered and the petition was given due course in a Resolution dated April 1, 1981.
Petitioner Company now maintains that its right to procedural due process has been violated when it
was precluded from presenting further evidence in support of its stand and when its request for further
postponement was denied. Petitioner further contends that the National Labor Relations Commission’s
finding of unfair labor practice for refusal to bargain is not supported by law and the evidence
considering that it was only on May 24, 1979 when the Union furnished them with a copy of the
proposed Collective Bargaining Agree-
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VOL. 141, JANUARY 22, 1986
185
Kiok Loy vs. NLRC
ment and it was only then that they came to know of the Union’s demands; and finally, that the
Collective Bargaining Agreement approved and adopted by the National Labor Relations Commission is
unreasonable and lacks legal basis.
The petition lacks merit. Consequently, its dismissal is in order.
Collective bargaining which is defined as negotiations towards a collective agreement,6 is one of the
democratic frameworks under the New Labor Code, designed to stabilize the relation between labor and
management and to create a climate of sound and stable industrial peace. It is a mutual responsibility of
the employer and the Union and is characterized as a legal obligation. So much so that Article 249, par.
(g) of the Labor Code makes it an unfair labor practice for an employer to refuse “to meet and convene
promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to
wages, hours of work, and all other terms and conditions of employment including proposals for
adjusting any grievance or question arising under such an agreement and executing a contract
incorporating such agreement, if requested by either party.”
While it is a mutual obligation of the parties to bargain, the employer, however, is not under any legal
duty to initiate contract negotiation.7 The mechanics of collective bargaining is set in motion only when
the following jurisdictional preconditions are present, namely, (1) possession of the status of majority
representation of the employees’ representative in accordance with any of the means of selection or
designation provided for by the Labor Code; (2) proof of majority representation; and (3) a demand to
bargain under Article 251, par. (a) of the New Labor Code . . . . all of which preconditions are
undisputedly present in the instant case.
From the over-all conduct of petitioner company in relation to the task of negotiation, there can be no
doubt that the Union has a valid cause to complain against its (Company’s) attitude,
________________
6 Pampanga Bus Co. vs. Pambusco Employees, 68 Phil. 541.
7 National Labor Relations Board vs. Columbian Enameling & Stamping Co., 306 U.S. 292 ‘83 L. Ed. 660,
59 Ct 501 (1939).
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Kiok Loy vs. NLRC
the totality of which is indicative of the latter’s disregard of, and failure to live up to, what is enjoined by
the Labor Code—to bargain in good faith.
We are in total conformity with respondent NLRC’s pronouncement that petitioner Company is GUILTY
of unfair labor practice. It has been indubitably established that (1) respondent Union was a duly
certified bargaining agent; (2) it made a definite request to bargain, accompanied with a copy of the
proposed Collective Bargaining Agreement, to the Company not only once but twice which were left
unanswered and unacted upon; and (3) the Company made no counter proposal whatsoever all of which
conclusively indicate lack of a sincere desire to negotiate.8 A Company’s refusal to make counter
proposal if considered in relation to the entire bargaining process, may indicate bad faith and this is
specially true where the Union’s request for a counter proposal is left unanswered.9 Even during the
period of compulsory arbitration before the NLRC, petitioner Company’s approach and attitude—stalling
the negotiation by a series of postponements, non-appearance at the hearing conducted, and undue
delay in submitting its financial statements, lead to no other conclusion except that it is unwilling to
negotiate and reach an agreement with the Union. Petitioner has not at any instance, evinced good faith
or willingness to discuss freely and fully the claims and demands set forth by the Union much less justify
its opposition thereto.10
The case at bar is not a case of first impression, for in the Herald Delivery Carriers Union (PAFLU) vs.
Herald Publica-tions11 the rule had been laid down that “unfair labor practice is committed when it is
shown that the respondent employer, after having been served with a written bargaining proposal by
_______________
8 National Labor Relations Board vs. George Piling & Sons Co., 119 F. (2nd) 32.
9 Teller, II Labor Disputes & Collective Bargaining 889, citing Glove Cotton Mills vs. NLRB, 103 F. (2nd)
91.
10 Herald Delivery Carriers Union (PAFLU) vs. Herald Publications, Inc., 55 SCRA 713 (1974), citing NLRB
vs. Piling & Sons, Co., 119 F. (2nd) 32 (1941).
11 55 SCRA 713 (1974).
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VOL. 141, JANUARY 22, 1986
187
Kiok Loy vs. NLRC

the petitioning Union, did not even bother to submit an answer or reply to the said proposal This
doctrine was reiterated anew in Bradman vs. Court of Industrial Relations12 wherein it was further ruled
that “while the law does not compel the parties to reach an agreement, it does contemplate that both
parties will approach the negotiation with an open mind and make a reasonable effort to reach a
common ground of agreement”.
As a last-ditch attempt to effect a reversal of the decision sought to be reviewed, petitioner capitalizes
on the issue of due process claiming, that it was denied the right to be heard and present its side when
the Labor Arbiter denied the Company’s motion for further postponement.
Petitioner’s aforesaid submittal failed to impress Us. Considering the various postponements granted in
its behalf, the claimed denial of due process appeared totally bereft of any legal and factual support. As
herein earlier stated, petitioner had not even honored respondent Union with any reply to the latter’s
successive letters, all geared towards bringing the Company to the bargaining table. It did not even
bother to furnish or serve the Union with its counter proposal despite persistent requests made
therefor. Certainly, the moves and overall behavior of petitioner-company were in total derogation of
the policy enshrined in the New Labor Code which is aimed towards expediting settlement of economic
disputes. Hence, this Court is not prepared to affix its imprimatur to such an illegal scheme and dubious
maneuvers.
Neither are WE persuaded by petitioner-company’s stand that the Collective Bargaining Agreement
which was approved and adopted by the NLRC is a total nullity for it lacks the company’s consent, much
less its argument that once the Collective Bargaining Agreement is implemented, the Company will face
the prospect of closing down because it has to pay a staggering amount of economic benefits to the
Union that will equal if not exceed its capital. Such a stand and the evidence in support thereof should
have been presented before the Labor Arbiter which is the proper forum for the purpose.
_________________
12 78 SCRA 10 (1977), citing Prof. Archibald Cox, “The Duty to Bargain in Good Faith”, 71 Harv. Law Rev.
1401, 1405 (1934).
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Kiok Loy vs. NLRC
We agree with the pronouncement that it is not obligatory upon either side of a labor controversy to
precipitately accept or agree to the proposals of the other. But an erring party should not be tolerated
and allowed with impunity to resort to schemes feigning negotiations by going through empty
gestures.13 More so, as in the instant case, where the intervention of the National Labor Relations
Commission was properly sought for after conciliation efforts undertaken by the BLR failed. The instant
case being a certified one, it must be resolved by the NLRC pursuant to the mandate of P.D. 873, as
amended, which authorizes the said body to determine the reasonableness of the terms and conditions
of employment embodied in any Collective Bargaining Agreement. To that extent, utmost deference to
its findings of reasonableness of any Collective Bargaining Agreement as the governing agreement by
the employees and management must be accorded due respect by this Court.
WHEREFORE, the instant petition is DISMISSED. The temporary restraining order issued on August 27,
1980, is LIFTED and SET ASIDE.
No pronouncement as to costs.
SO ORDERED.
Concepcion, Jr., (Chairman), Abad Santos, Escolin and Alampay, JJ., concur.
Petition dismissed. Order lifted and set aside.
Notes.—A certification election is the sole concern of the workers. The only exception is where
employer has to file a petition for certification election pursuant to Article 259 of the Labor Code
because it was requested to bargain collectively. Thereafter the role of the employer in the certification
process ceases. It becomes merely a bystander. (Trade Union of the Philippines and Allied Services vs.
Trajano, 120 SCRA 64.)
________________
13 Rothenberg on Labor Relations, p. 435, citing NLRB vs. Boss Mfg. Co., 107 F. (2nd) 574; NLRB vs.
Sunshine Mining Co., 110 F (2nd) 780; NLRB vs. Condenser Corp., 128 F. (2nd) 67.
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VOL. 141, JANUARY 27, 1986
189
Samonte vs. Court of Appeals
Collective bargaining agreement constitutes the law between the parties. (Fegurin vs. National Labor
Relations Commission, 120 SCRA 910.)
A mere minority cannot file a petition for union disaffilia-tion even within the prescribed 50-day period
before the expiry of an existing CBA. (Villar vs. Inciong, 121 SCRA 444.)
——o0o—— Kiok Loy vs. NLRC, 141 SCRA 179, No. L-54334 January 22, 1986
81
San Miguel Corporation Employees Union-PTGWO vs. Confesor
G.R. No. 111262. September 19, 1996.*
SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, represented by its President RAYMUNDO

HIPOLITO, JR., petitioner, vs. HON. MA. NIEVES D. CONFESOR, Secretary of Labor, Dept. of Labor &
Employment, SAN MIGUEL CORPORATION, MAGNOLIA CORPORATION (Formerly, Magnolia Plant) and
SAN MIGUEL FOODS, INC. (Formerly, B-Meg Plant), respondents.
Labor Law; Labor Unions; Collective Bargaining; Legislators inclined to have the effectivity of the CBA
for three (3) years insofar as the economic as well as non-economic provisions are concerned.—From
the aforesaid discussions, the legislators were more inclined to have the period of effectivity for three
(3) years insofar as the economic as well as non-economic provisions are concerned, except
representation.
_______________
* FIRST DIVISION.
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82
Same; Same; Same; No grave abuse of discretion on the part of the Secretary of Labor in ruling that
the effectivity of the renegotiated terms of the CBA shall be for three (3) years.—Thus, we do not find
any grave abuse of discretion on the part of the Secretary of Labor in ruling that the effectivity of the
renegotiated terms of the CBA shall be for three (3) years.
Same; Same; Same; No merit in petitioner-union’s assertion that the employees of Magnolia and SMFI
should still be considered part of the bargaining unit of SMC.—With respect to the second issue, there
is, likewise, no merit in petitioner-union’s assertion that the employees of Magnolia and SMFI should
still be considered part of the bargaining unit of SMC.
Same; Same; Same; Transformation of the companies is a managerial prerogative and business
judgment which the courts can not look into unless it is contrary to law, public policy or morals.—
Undeniably, the transformation of the companies was a management prerogative and business
judgment which the courts can not look into unless it is contrary to law, public policy or morals.
Neither can we impute any bad faith on the part of SMC so as to justify the application of the doctrine
of piercing the corporate veil. Ever mindful of the employees’ interests, management has assured the
concerned employees that they will be absorbed by the new corporations without loss of tenure and
retaining their present pay and benefits according to the existing CBAs.
Same; Same; Same; Magnolia and SMFI became distinct entities with separate juridical
personalities.—Indubitably, therefore, Magnolia and SMFI became distinct entities with separate
juridical personalities. Thus, they can not belong to a single bargaining unit as held in the case of
Diatagon Labor Federation Local 110 of the ULGWP v. Ople.
Same; Same; Same; The employees sought to be represented by the collective bargaining agent must
have substantial mutual interests in terms of employment and working conditions as evinced by the
type of work they performed.—Moreover, in determining an appropriate bargaining unit, the test of
grouping is mutuality or commonality of interests. The employees sought to be represented by the
collective bargaining agent must have substantial mutual interests in terms of employment and
working conditions as evinced by the
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type of work they performed. Considering the spin-offs, the companies would consequently have their
respective and distinctive concerns in terms of the nature of work, wages, hours of work and other
conditions of employment.
Same; Same; Same; It would then be best to have separate bargaining units for the different
companies where the employees can bargain separately according to their needs and according to
their own working conditions.—Interests of employees in the different companies perforce differ.
SMC is engaged in the business of beer manufacturing. Magnolia is involved in the manufacturing and
processing of dairy products while SMFI is involved in the production of feeds and the processing of
chicken. The nature of their products and scales of business may require different skills which must
necessarily be commensurated by different compensation packages. The different companies may
have different volumes of work and different working conditions. For such reason, the employees of
the different companies see the need to group themselves together and organize themselves into
distinctive and different groups. It would then be best to have separate bargaining units for the
different companies where the employees can bargain separately according to their needs and
according to their own working conditions.
Raymundo G. Hipolito III for petitioner.
Siguion Reyna, Montecillo & Ongsiako for San Miguel Foods, Inc.
Romulo P. Atencia for Efren Carreon.
FFW Legal Center for intervenor.
KAPUNAN, J.:
This is a petition for certiorari assailing the Order of the Secretary of Labor rendered on February 15,
1993 involving a labor dispute at San Miguel Corporation.
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84
On June 28, 1990, petitioner-union San Miguel Corporation Employees Union-PTGWO entered into a
Collective Bargaining Agreement (CBA) with private respondent San Miguel Corporation (SMC) to take
effect upon the expiration of the previous CBA or on June 30, 1989.
This CBA provided, among others, that:
ARTICLE XIV
DURATION OF AGREEMENT
SECTION 1. This Agreement which shall be binding upon the parties hereto and their respective
successors-in-interest, shall become effective and shall remain in force and effect until June 30, 1992.
SEC. 2. In accordance with Article 253-A of the Labor Code as amended, the term of this Agreement
insofar as the representation aspect is concerned, shall be for five (5) years from July 1, 1989 to June 30,
1994. Hence, the freedom period for purposes of such representation shall be sixty (60) days prior to
June 30, 1994.
SEC. 3. Sixty (60) days prior to June 30, 1992 either party may initiate negotiations of all provisions of
this Agreement, except insofar as the representation aspect is concerned. If no agreement is reached in
such negotiations, this Agreement shall nevertheless remain in force up to the time a subsequent
agreement is reached by the parties.1
In keeping with their vision and long term strategy for business expansion, SMC management informed
its employees in a letter dated August 13, 19912 that the company which was composed of four
operating divisions namely: (1) Beer, (2) Packaging, (3) Feeds and Livestocks, (4) Magnolia and
Agribusiness would undergo a restructuring.3
Effective October 1, 1991, Magnolia and Feeds and Livestock Division were spun-off and became two
separate and distinct corporations: Magnolia Corporation (Magnolia) and
_______________
1 Rollo, p. 56.
2 Id., at 541.
3 Id., at 211.
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San Miguel Foods, Inc. (SMFI). Notwithstanding the spin-offs, the CBA remained in force and effect.
After June 30, 1992, the CBA was renegotiated in accordance with the terms of the CBA and Article 253-
A of the Labor Code. Negotiations started sometime in July, 1992 with the two parties submitting their
respective proposals and counterproposals.
During the negotiations, the petitioner-union insisted that the bargaining unit of SMC should still include
the employees of the spun-off corporations: Magnolia and SMFI; and that the renegotiated terms of the
CBA shall be effective only for the remaining period of two years or until June 30, 1994.
SMC, on the other hand, contended that the members/employees who had moved to Magnolia and
SMFI, automatically ceased to be part of the bargaining unit at the SMC. Furthermore, the CBA should
be effective for three years in accordance with Art. 253-A of the Labor Code.
Unable to agree on these issues with respect to the bargaining unit and duration of the CBA, petitioner-
union declared a deadlock on September 29, 1990.
On October 2, 1992, a Notice of Strike was filed against SMC.
In order to avert a strike, SMC requested the National Conciliation and Mediation Board (NCMB) to
conduct preventive mediation. No settlement was arrived at despite several meetings held between the
parties.
On November 3, 1992, a strike vote was conducted which resulted in a “yes vote” in favor of a strike.
On November 4, 1992, private respondents SMC, Magnolia and SMFI filed a petition with the Secretary
of Labor praying that the latter assume jurisdiction over the labor dispute in a vital industry.
As prayed for, the Secretary of Labor assumed jurisdiction over the labor dispute on November 10,
1992.4 Several con-
_______________
4 Id., at 9.
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ciliation meetings were held but still no agreement/settlement was arrived at by both parties.
After the parties submitted their respective position papers, the Secretary of Labor issued the assailed
Order on February 15, 1993 directing, among others, that the renegotiated terms of the CBA shall be
effective for the period of three (3) years from June 30, 1992; and that such CBA shall cover only the
employees of SMC and not of Magnolia and SMFI.
Dissatisfied, petitioner-union now comes to this Court questioning this Order of the Secretary of Labor.
Subsequently, on March 30, 1995,5 petitioner-union filed a Motion for Issuance of a Temporary
Restraining Order or Writ of Preliminary Injunction to enjoin the holding of the certification elections in
the different companies, maintaining that the employees of Magnolia and SMFI fall within the
bargaining unit of SMC.
On March 29, 1995, the Court issued a resolution granting the temporary restraining order prayed for.6
Meanwhile, an urgent motion for leave to intervene7 in the case was filed by the Samahan ng Malayang
Manggagawa-San Miguel Corporation-Federation of Free Workers (SMM-SMC-FFW) through its
authorized representative, Elmer S. Armando, alleging that it is one of the contending parties adversely
affected by the temporary restraining order.
The Intervenor cited the case of Daniel S.L. Borbon v. Hon. Bienvenido B. Laguesma,8 G.R. No. 101766,
March 5, 1993, where the Court recognized the separation of the employees of Magnolia from the SMC
bargaining unit. It then prayed for the lifting of the temporary restraining order.
Likewise, Efren Carreon, Acting President of the SMCEU-PTGWO, filed a petition for the
withdrawal/dismissal of the petition considering that the temporary restraining order
_______________
5 Id., at 1048.
6 Id., at 1125.
7 Id., at 1166.
8 219 SCRA 605 (1993).
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jeopardized the employee’s right to conclude a new CBA. At the same time, he challenged the legal
personality of Mr. Raymundo Hipolito, Jr. to represent the Union as its president when the latter was
already officially dismissed from the company on October 4, 1994.
Amidst all these pleadings, the following primordial issues arise:
1) Whether or not the duration of the renegotiated terms of the CBA is to be effective for three years or
for only two years; and
2) Whether or not the bargaining unit of SMC includes also the employees of Magnolia and SMFI.
Petitioner-union contends that the duration for the non-representation provisions of the CBA should be
coterminous with the term of the bargaining agency which in effect shall be for the remaining two years
of the current CBA, citing a previous decision of the Secretary of Labor on December 14, 1992 in the
matter of the labor dispute at Philippine Refining Company.9
However, the Secretary of Labor, in her questioned Order of February 15, 1993 ruled that the
renegotiated terms of the CBA at SMC should run for a period of three (3) years. We agree with the
Secretary of Labor. Pertinent to the first issue is Art. 253-A of the Labor Code as amended which reads:
ART. 253-A. Terms of a Collective Bargaining Agreement.—Any Collective Bargaining Agreement that the
parties may enter into shall, insofar as the representation 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 no certification election shall be conducted by the Department of Labor and
Employment outside of the sixty-day period immediately before the date of expiry of such five year term
of the Collective Bargaining Agreement. All other provisions of the Collective Bargaining Agreement shall
be renegotiated not later than three (3) years after its exe-
_______________
9 OS-AJ-0031-92 NCMB-NCR-NS-08-563-92, December 14, 1992, Annex “B,” Rollo, p. 33.
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cution. Any agreement on such other provisions of the Collective Bargaining Agreement entered into
within six (6) months from the date of expiry of the term of such other provisions as fixed in such
Collective Bargaining Agreement, shall retroact to the day immediately following such date. If any such
agreement is entered into beyond six months, the parties shall agree on the duration of retroactivity
thereof. In case of a deadlock in the renegotiation of the collective bargaining agreement, the parties
may exercise their rights under this Code. (Italics supplied.)
Article 253-A is a new provision. This was incorporated by Section 21 of Republic Act No. 6715 (the
Herrera-Veloso Law) which took effect on March 21, 1989. This new provision states that the CBA has a
term of five (5) years instead of three years, before the amendment of the law as far as the
representation aspect is concerned. All other provisions of the CBA shall be negotiated not later than
three (3) years after its exe-cution. The “representation aspect” refers to the identity and majority
status of the union that negotiated the CBA as the exclusive bargaining representative of the
appropriate bargaining unit concerned. “All other provisions” simply refers to the rest of the CBA,
economic as well as non-economic provisions, except representation.10
As the Secretary of Labor herself observed in the instant case, the law is clear and definite on the
duration of the CBA insofar as the representation aspect is concerned, but is quite ambiguous with the
terms of the other provisions of the CBA. It is a cardinal principle of statutory construction that the
Court must ascertain the legislative intent for the purpose of giving effect to any statute. The history of
the times and state of the things existing when the act was framed or adopted must be followed and the
conditions of the things at the time of the enactment of the law should be considered to determine the
legislative intent.11 We look into the discussions leading to the passage of the law:
_______________
10 C.A. Azucena, Labor Law Handbook, 718 (1995 Edition).
11 De los Santos v. Mallari, 87 Phil. 289 (1950); Gomez Garcia v. Hipolito, 2 Phil. 732 (1903).
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THE CHAIRMAN (REP. VELASCO): . . . the CBA, insofar as the economic provisions are concerned . . .
THE CHAIRMAN (SEN. HERRERA): Maximum of three years?
THE CHAIRMAN (REP. VELOSO): Maximum of three years.
THE CHAIRMAN (SEN. HERRERA): Present practice?

THE CHAIRMAN (REP. VELOSO): In other words, after three years puwede nang magnegotiate in that
CBA for the remaining two years.
THE CHAIRMAN (SEN. HERRERA): You can negotiate for one year, two years or three years but assuming
three years which, I think, that’s the likelihood. . . .
THE CHAIRMAN (REP. VELOSO): Yes.
THE CHAIRMAN (SEN. HERRERA): Three years, the new union, assuming there will be a change of agent,
at least he has one year to administer and to adjust, to develop rapport with the management. Yan ang
importante.
You know, for us na nagne-negotiate, ang hazard talaga sa negotiation, when we negotiate with
somebody na hindi natin kilala, then, we are governed by our biases na ito ay destroyer ng Labor; ang
mga employer, ito bayaran ko lang ito okay na.
‘Yan ang nangyayari, but let us give that allowance for one year to let them know.
Actually, ang thrust natin ay industrial peace, and there can be no industrial peace if you encourage
union to fight each other. ‘Yan ang problema.12
xxx xxx xxx
HON. ISIDRO: Madali iyan, kasi these two periods that are mentioned in the CBA seem to provide some
doubts later on in the implementation. Sabi kasi rito, insofar as representation issue is concerned, seven
years ang lifetime...
HON. CHAIRMAN HERRERA: Five years.
HON. ISIDRO: Five years, all the others three years.
HON. CHAIRMAN HERRERA: No. Ang three years duon sa terms and conditions, not later than three
years.
HON. ISIDRO: Not later than three years, so within three years you have to make a new CBA.
HON. CHAIRMAN HERRERA: Yes.
______________
12 Joint Congressional Conference Committee on Senate Bill No. 530 and House Bill No. 11524,
December 14, 1988.
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90

HON. ISIDRO: That is again for purposes of renewing the terms, three years na naman iyan—then, seven
years . . .
HON. CHAIRMAN HERRERA: Not later than three years.
HON. ISIDRO: Assuming that they usually follow the period—three years nang three years, but under
this law with respect to representation—five years, ano? Now, after three years, nagkaroon ng bagong
terms, tapos na iyong term, renewed na iyong terms, ang karapatan noon sa representation issue
mayroon pang two years left.
HON. CHAIRMAN HERRERA: One year na lang because six years nang lahat, three plus three.
HON. ISIDRO: Hindi, two years pa rin ang natitira, eh. Three years pa lang ang natatapos. So, another
CBA was formed and this CBA mayroon na naman siyang bagong five years with respect to
representation issue.
HON. CHAIRMAN HERRERA: Hindi. Hindi na. Ganito iyan. Iyong terms and conditions for three years.
HON. ISIDRO: Yes.
HON. CHAIRMAN HERRERA: On the third year you can start negotiating to change the terms and
conditions.
HON. ISIDRO: Yes.
HON. CHAIRMAN HERRERA: Assuming you will follow the practice. . . .
HON. ISIDRO: Oo.
HON. CHAIRMAN HERRERA: But on the fifth year, ang representation status now can be questioned, so
baka puwedeng magkaroon ng certification election. If the incumbent union loses, then the new union
administers the contract for one year to give him time to know his counterpart—the employer, before
he can negotiate for a new term. Iyan ang advantage.
HON. ISIDRO: Kasi, when the CBA has only a three-year lifetime with respect to the terms and conditions
and then, so you have to renew that in three years—you renew for another three years, mayroon na
naman another five years iyong ano . . .
HON. ANIAG: Hindi, ang natitira duon sa representation two years na lang.
HON. CHAIRMAN HERRERA: Two years na lang sa representation.
HON. ANIAG: So that if they changed the union, iyong last year . . . .
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HON. CHAIRMAN HERRERA: Iyon lang, that you have to administer the contract. Then, voluntary
arbitration na kayo and then mayroon ka nang probisyon “retroact on the date of the expiry date.”
Pagnatalo ang incumbent unyon, mag-aassume ang new union, administer the contract. As far as the
term and condition, for one year, and that will give him time and the employer to know each other.
HON. JABAR: Boy, let us be realistic. I think if a new union wins a certification election, it would not want
to administer a CBA which has not been negotiated by the union itself.
HON. CHAIRMAN HERRERA: That is not true, Hon. This is true because what is happening now in the
country is that the term ng contract natin, duon din mage-expire ang representation. Iyon ang nangyari.
That is where you have the gulo. Ganoon ang nangyari. So, ang nangyari diyan, pag-mayroon
certification election, expire ang contract, ano ang usual issue—company union. I can you (sic) give you
more what the incumbent union is giving. So ang mangyayari diyan, pag-negotiate mo hardline na agad.
HON. CHAIRMAN VELOSO: Mon, for four years?
HON. ISIDO: Ang tingin ko lang dito, iyong distinction between the terms and the representation
aspect—why do we have to distinguish between three and five? What’s wrong with having a uniform
expiration period?
HON. CHAIRMAN HERRERA: Five years.
HON. ISIDRO: Puro three years.
HON. CHAIRMAN HERRERA: That is what we are trying to avoid because ang reality diyan, Mart,
pagpasok mo sa kumpanya, mag-ne-negotiate ka ng six months, that’s the average, aabot pa minsan ng
one year. Pagkatapos ng negotiation mo, signing kayo. There will be an allowed period of one year. Third
year na, uumpisahan naman ang organizations, papasok na ang ibang unyon because the reality in Trade
Union committee, they organize, we organize. So, actually, you have only industrial peace for one year,
effective industrial peace. That is what we are trying to change. Otherwise, we will continue to
discourage the investors and the union will never grow because every other year it has to use its
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money for the certification election. Ang grabe pang practice diyan, mag-a-advance ang federation for
three years union dues para panggastos lang sa certification election. That is what we are trying to
avoid.
HON. JABAR: Although there are unions which really get advances.
HON. CHAIRMAN HERRERA: Pag nag-survey tayo sa mga unyon, ganoon ang mangyayari. And I think our
responsibility here is to create a legal framework to promote industrial peace and to develop
responsible and fair labor movement.
HON. CHAIRMAN VELOSO: In other words, the longer the period of the effectivity . . .
xxx
HON. CHAIRMAN VELOSO: (continuing) . . . in other words, the longer the period of effectivity of the
CBA, the better for industrial peace.
HON. CHAIRMAN HERRERA: representation status
HON. CHAIRMAN VELOSO: Only on—
HON. CHAIRMAN HERRERA:—the representations.
HON. CHAIRMAN VELOSO: But on the economic issues.
HON. CHAIRMAN HERRERA: You have to review that. The parties will have to review that.
HON. CHAIRMAN VELOSO: At least on second year.
HON. CHAIRMAN HERRERA: Not later than 3 years ang karamihan ng mga, mag-negotiate when the
company is—(interrupted)13
xxx
From the aforesaid discussions, the legislators were more inclined to have the period of effectivity for
three (3) years insofar as the economic as well as non-economic provisions are concerned, except
representation.
Obviously, the framers of the law wanted to maintain industrial peace and stability by having both
management and labor work harmoniously together without any disturbance. Thus, no outside union
can enter the establishment within five (5) years and challenge the status of the incumbent union as the
exclusive bargaining agent. Likewise, the terms and
_______________
13 Conference Committee on Labor, December 15, 1988.
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conditions of employment (economic and non-economic) can not be questioned by the employers or
employees during the period of effectivity of the CBA. The CBA is a contract between the parties and the
parties must respect the terms and conditions of the agreement.14 Notably, the framers of the law did
not give a fixed term as to the effectivity of the terms and conditions of employment. It can be gleaned
from their discussions that it was left to the parties to fix the period.
In the instant case, it is not difficult to determine the period of effectivity for the non-representation
provisions of the CBA. Taking it from the history of their CBAs, SMC intended to have the terms of the
CBA effective for three (3) years reckoned from the expiration of the old or previous CBA which was on
June 30, 1989, as it provides:
SECTION 1. This Agreement which shall be binding upon the parties hereto and their respective
successors-in-interest, shall become effective and shall remain in force and effect until June 30, 1992.
The argument that the PRC case is applicable is indeed misplaced. We quote with favor the Order of the
Secretary of Labor in the light of SMC’s peculiar situation as compared with PRC’s company situation.
It is true that in the Philippine Refining Company case (OS-AJ-0031-91 (sic), Labor Dispute at Philippine
Refining Company), we ruled that the term of the renegotiated provisions of the CBA should coincide
with the remaining term of the agency. In doing so, we placed premium on the fact that PRC has only
two (2) unions and no other union had yet executed a renewed term of 3 years. Nonetheless, in ruling
for a shortened term, we were guided by our considered perception that the said term would improve,
rather than ruin, the general welfare of both the workers and the company. It is equally true that once
the economic provisions of the CBA expire, the residual representative status of the union is effective
for only 2
_______________
14 Henson v. Intermediate Appellate Court, 148 SCRA 11 (1987).
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more years. However, if circumstances warrant that the contract duration which it is soliciting from the
company for the benefit of the workers, shall be a little bit longer than its lifespan, then this Office
cannot stand in the way of a more ideal situation. We must not lose sight of the fact that the primordial
purpose of a collective contract is to promote industrial harmony and stability in the terms and
conditions of employment. To our mind, this objective cannot be achieved without giving due
consideration to the peculiarities and unique characteristics of the employer. In the case at bar, there is
no dispute that the mother corporation (SMC) spun-off two of its divisions and thereby gave birth to two
(2) other entities now known as Magnolia Corporation and San Miguel Foods, Inc. In order to effect a
smooth transition, the companies concerned continued to recognize the existing unions as the
bargaining agents of their respective bargaining units. In the meantime, the other unions in these
companies eventually concluded their CBA negotiations on the remaining term and all of them agreed
on a 3-year cycle. Notably, the following CBAs were forged incorporating a term of 3-years on the
renegotiated provisions, to wit:
1. SMC—daily-paid employees union (IBM)
2. SMFI—monthly-paid employees and daily-paid employees at the Cabuyao Plant.
There is a direct link between the voluntary recognition by the company of the continuing
representative status of the unions after the aforementioned spin-offs and the stand of the company for
a 3-year renegotiated cycle when the economic provisions of the existing CBAs expired, i.e., to maintain
stability and avoid confusion when the umbilical cord of the two divisions were severed from their
parent. These two cannot be considered independently of each other for they were intended to
reinforce one another. Precisely, the company conceded to face the same union notwithstanding the
spin-offs in order to preserve industrial peace during the infancy of the two corporations. If the union
would insist on a shorter renegotiated term, then all the advantages gained by both parties in this
regard, would have gone to naught. With this in mind, this office feels that it will betray its mandate
should we order the parties to execute a 2-year renegotiated term for then chaos and confusion, rather
than tranquility, would be the order of the day. Worse, there is a strong likelihood that such a ruling
might spawn discontent and possible mass actions against the company coming from the other unions
who had already agreed to a 3-year renegotiated terms. If this happens, the
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purpose of this Office’s intervention into the parties’ controversy would have been defeated.15
The issue as to the term of the non-representation provisions of the CBA need not be belabored
especially when we take note of the Memorandum of the Secretary of Labor dated February 24, 1994
which was mentioned in the Resolution of Undersecretary Bienvenido Laguesma on January 16, 1995 in
the certification election case involving the SMC employees.16 In said memorandum, the Secretary of
Labor had occasion to clarify the term of the renegotiated terms of the CBA vis-a-vis the term of the
bargaining agent, to wit:
As a matter of policy the parties are encourages (sic) to enter into a renegotiated CBA with a term which
would coincidde (sic) with the aforesaid five (5) year term of the bargaining representative.
In the event however, that the parties, by mutual agreement, enter into a renegotiated contract with a
term of three (3) years or one which does not coincide with the said 5-year term, and said agreement is
ratified by majority of the members in the bargaining unit, the subject contract is valid and legal and
therefore, binds the contracting parties. The same will however not adversely affect the right of another
union to challenge the majority status of the incumbent bargaining agent within sixty (60) days before
the lapse of the original five (5) year term of the CBA.
Thus, we do not find any grave abuse of discretion on the part of the Secretary of Labor in ruling that the
effectivity of the renegotiated terms of the CBA shall be for three (3) years.
With respect to the second issue, there is, likewise, no merit in petitioner-union’s assertion that the
employees of Magnolia and SMFI should still be considered part of the bargaining unit of SMC.
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15 Rollo, pp. 28-30.
16 Attached as Annex “G” (Rollo, p. 1108) to the Motion for Temporary Restraining Order/Preliminary
Injunction (Rollo, p. 1048).
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Magnolia and SMFI were spun-off to operate as distinct companies on October 1, 1991. Management
saw the need for these transformations in keeping with its vision and long term strategy as it explained
in its letter addressed to the employees dated August 13, 1991:
x x x As early as 1986, we announced the decentralization program and spoke of the need for structures
that can react fast to competition, a changing environment, shorter product life cycles and shifts in
consumer preference. We further stated in the 1987 Annual Report to Stockholders that San Miguel’s
businesses will be more autonomous and self sufficient so as to better acquire and master new
technologies, cope with a labor force with different expertises and expectations, and master and satisfy
the changing needs of our customers and end-consumers. As subsidiaries, Magnolia and FLD will gain
better industry focus and flexibility, greater awareness of operating results, and speedier, more
responsive decision making.
xxx
We only have to look at the experience of Coca-Cola Bottlers Philippines, Inc., since this company was
organized about ten years ago, to see the benefits that arise from restructuring a division of San Miguel
into a more competitive organization. As a stand-alone enterprise, CCBPI engineered a dramatic
turnaround and has sustained its sales and market share leadership ever since.
We are confident that history will repeat itself, and the transformation of Magnolia and FLD will be
successful as that of CCBPI.17
Undeniably, the transformation of the companies was a management prerogative and business
judgment which the courts can not look into unless it is contrary to law, public policy or morals. Neither
can we impute any bad faith on the part of SMC so as to justify the application of the doctrine of
piercing the corporate veil.18 Ever mindful of the employees’ interests, management has assured the
concerned employees that they will be absorbed by the new corporations without
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17 Rollo, p. 211.
18 See Indophil Textile Mill Workers Union v. Calica, 205 SCRA 697 (1992).
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loss of tenure and retaining their present pay and benefits according to the existing CBAs.19 They were
advised that upon the expiration of the CBAs, new agreements will be negotiated between the
management of the new corporations and the bargaining representatives of the employees concerned.
As a result of the spin-offs:
1. Each of the companies are run by, supervised and controlled by different management teams
including separate human resource/personnel managers.
2. Each Company enforces its own administrative and operational rules and policies and are not
dependent on each other in their operations.
3. Each entity maintains separate financial statements and are audited separately from each other.20
Indubitably, therefore, Magnolia and SMFI became distinct entities with separate juridical personalities.
Thus, they can not belong to a single bargaining unit as held in the case of Diatagon Labor Federation
Local 110 of the ULGWP v. Ople.21 We elucidate:
The fact that their businesses are related and that the 236 employees of Georgia Pacific International
Corporation were originally employees of Lianga Bay Logging Co., Inc. is not a justification for
disregarding their separate personalities. Hence, the 236 employees, who are now attached to Georgia
Pacific International Corporation, should not be allowed to vote in the certification election at the Lianga
Bay Logging Co., Inc. They should vote at a separate certification election to determine the collective
bargaining representative of the employees of Georgia Pacific International Corporation.
Petitioner-union’s attempt to include the employees of Magnolia and SMFI in the SMC bargaining unit
so as to have
______________
19 Id., at 211, 213.
20 Id., at 23.
21 101 SCRA 534 (1980).
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a bigger mass base of employees has, therefore, no more valid ground.
Moreover, in determining an appropriate bargaining unit, the test of grouping is mutuality or

commonality of interests. The employees sought to be represented by the collective bargaining agent
must have substantial mutual interests in terms of employment and working conditions as evinced by
the type of work they performed.22 Considering the spin-offs, the companies would consequently have
their respective and distinctive concerns in terms of the nature of work, wages, hours of work and other
conditions of employment. Interests of employees in the different companies perforce differ. SMC is
engaged in the business of beer manufacturing. Magnolia is involved in the manufacturing and
processing of dairy products23 while SMFI is involved in the production of feeds and the processing of
chicken.24 The nature of their products and scales of business may require different skills which must
necessarily be commensurated by different compensation packages. The different companies may have
different volumes of work and different working conditions. For such reason, the employees of the
different companies see the need to group themselves together and organize themselves into distinctive
and different groups. It would then be best to have separate bargaining units for the different
companies where the employees can bargain separately according to their needs and according to their
own working conditions.
We reiterate what we have explained in the case of University of the Philippines v. Ferrer-Calleja25 that:
[T]here are various factors which must be satisfied and considered in determining the proper
constituency of a bargaining unit. No one particular factor is itself decisive of the determination. The
weight accorded to any particular factor varies in accordance with the particular question or questions
that may arise in a given case. What
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22 San Miguel Corporation v. Laguesma, 231 SCRA 595 (1994).
23 Rollo, p. 286.
24 Id., at 451.
25 211 SCRA 451 (1992).
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are these factors? Rothenberg mentions a good number, but the most pertinent to our case are: (1) will
of the employees (Globe Doctrine); (2) affinity and unit of employees’ interest, such as substantial
similarity of work and duties, or similarity of compensation and working conditions; (3) prior collective
bargaining history; and (4) employment status, such as temporary, seasonal and probationary
employees. x x.
xxx
An enlightening appraisal of the problem of defining an appropriate bargaining unit is given in the 10th
Annual Report of the National Labor Relations Board wherein it is emphasized that the factors which
said board may consider and weigh in fixing appropriate units are: the history, extent and type of
organization of employees; the history of their collective bargaining; the history, extent and type of
organization of employees in other plants of the same employer, or other employees 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 unions involved; and the relationship
between the unit or units proposed and the employer’s organization, management, and operation. x x.
x x In said report, it is likewise emphasized that the basic test in determining the appropriate bargaining
unit is that a unit, to be appropriate, must affect a grouping of employees who have substantial, mutual
interests in wages, hours, working conditions and other subjects of collective bargaining (citing Smith on
Labor Laws, 316-317; Francisco, Labor Laws, 162). x x.
Finally, we take note of the fact that the separate interests of the employees of Magnolia and SMFI from
those of SMC has been recognized in the case of Daniel Borbon v. Laguesma.26 We quote:
Even assuming in gratia argumenti that at the time of the election they were regular employees of San
Miguel, nonetheless, these workers are no longer connected with San Miguel Corporation in any
manner because Magnolia has ceased to be a division of San Miguel Corporation and has been formed
into a separate corporation
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26 Supra.
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with a personality of its own (p. 305, Rollo). This development, which was brought to our attention by
private respondents, necessarily renders moot and academic any further discourse on the propriety of
the elections which petitioners impugn via the present recourse (p. 319, Rollo).
In view of all the foregoing, we do not find any grave abuse of discretion on the part of the Secretary of
Labor in rendering the assailed Order.
WHEREFORE, the petition is DISMISSED for lack of merit. The Temporary Restraining Order issued on
March 29, 1995 is lifted.
SO ORDERED.
Bellosillo, Vitug and Hermosisima, Jr., JJ., concur.
Padilla (Chairman), J., No part, in view of stock investments in SMC.
Petition dismissed.
Note.—Although a Collective Bargaining Agreement has expired, it continues to have legal effects as
between the parties until a new CBA has been entered into. (Pier 8 Arrastre and Stevedoring Services,
Inc. vs. Roldan-Confesor, 241 SCRA 294 [1995])
——o0o——
101 San Miguel Corporation Employees Union-PTGWO vs. Confesor, 262 SCRA 81, G.R. No. 111262
September 19, 1996
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161
Mindanao Terminal and Brokerage Service, Inc. vs. Roldan-Confesor
G.R. No. 111809. May 5, 1997.*
MINDANAO TERMINAL AND BROKERAGE SERVICE, INC., petitioner, vs. HON. MA. NIEVES
ROLDANCONFESOR, in her capacity as Secretary of Labor and Employment, and ASSOCIATED LABOR
UNIONS (ALU-TUCP), respondents.
Labor Law; Collective Bargaining Agreements; The signing of the CBA is not determinative of the
question whether the “agreement was entered into within six months from the date of expiry of the
term of such other provisions as fixed in such collective bargaining agree-ment” within the
contemplation of Art. 253-A of the Labor Code where the parties already had a meeting of the minds
before the end of the said six-month period.—The signing of the CBA is not determinative of the
question whether “the agreement was entered into within six months from the date of expiry of the
term of such 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 issues, particularly
on wages . The Union filed a notice of strike. However, on December 18, 1992, in a conference called
by the NCMB, the Union and the Company agreed on a number of provisions of the CBA, including the
provision on wage increase, 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 Med-Arbiter noted that “the
issues raised by the notice of strike had been settled and said notice is thus terminated.” It would
therefore seem that at that point, there
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* SECOND DIVISION.
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was already a meeting of the minds of the parties, which was before the February 1993 end of the six-
month period provided in Art. 253-A.
Same; Same; Words and Phrases; “Agreement,” Defined.—The fact that no agreement was then
signed is of no moment. Art. 253-A refers merely to an “agreement” which, according to Black’s Law
Dictionary is “a coming together of minds; the coming together in accord of two minds on a given
proposition.” This is similar to Art. 1305 of the Civil Code’s definition of “contract” as “a meeting of
minds between two persons.”
Same; Same; Same; Same; Contracts; The two terms, “agreement” and “contract,” are indeed similar,
although the former is broader than the latter because an agreem ent may not have all the elements
of a contract; Even without any written evidence of the CBA made by the parties, a valid agreement
exists from the moment the minds of the parties meet on all matters they set out to discuss.—The
two terms, “agreement” and “contract,” are indeed similar, although the former 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
Collective Bargaining Agreement made by the parties, a valid agreement existed in this case from the
moment the minds of the parties met on all matters they set out to discuss. As Art. 1315 of the Civil
Code states: Contracts are perfected by mere consent, and from that moment, the parties are bound
not only to the fulfillment of what has been expressly stipulated but also to all the consequences
which, according to their nature, may be in keeping with good faith, usage and law.
Same; Same; Assumption of Jurisdiction; In the absence of a specific provision of law prohibiting
retroactivity of the effectivity of arbitral awards issued by the Secretary of Labor, he is deemed vested
with plenary and discretionary powers to determ ine the effectivity thereof.—In St. Luke’s Medical
Center, Inc. v. Torres, a deadlock also developed during the CBA negotiations between management
and the union. The Secretary of Labor ass umed jurisdiction and ordered the retroaction of their CBA
to the date of expiration of the previous CBA. As in this case, it was alleged that the Secretary of Labor
gravely abused his discretion in making his award retroactive. In dismissing this contention this Court
held: Therefore, in the absence of a specific provision of law prohibiting retroactivity of the effectiv-
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163
ity of arbitral awards issued by the Secretary of Labor pursuant to Article 263(g) of the Labor Code,
such as herein involved, public respondent is deemed vested with plenary and discretionary powers
to determine the effectivity thereof.
Same; Same; Crediting of wage increases in the CBA as compliance with mandated increases is the
exception rather than the rule, for the general rule is that such increases are over and above any
increase that may be granted by law or wage order.—With respect to the issue of the creditability of
the fourth and fifth year wage increases, the Court takes cognizance of the fact that the question was
raised by the Company only when the six-month period was almost over and all that was left to be
done by the parties was to sign their agreement. Before that, the Company did not qualify its position.
It should have known that crediting of wage increas es in the CBA as compliance with future
mandated increas es is the exception rather than the rule. For the general rule is that s uch increases
are over and above any increase that may be granted by law or wage order. As held in Meycauayan
College v. Drilon: Increments to the laborers ’ financial gratification, be they in the form of salary
increases or changes in the salary scale are aimed at one thing—improvement of the economic
predicament of the laborers. As such they should be viewed in the light of the State’s avowed policy
to protect labor. Thus, having entered into an agreement with its employees, an employer may not be
allowed to renege on its obligation under a collective bargaining agreement should, at the same time,
the law grant the employees the same or better terms and conditions of employment. Employee
benefits derived from law are exclus ive of benefits arrived at through negotiation and agreement
unless otherwise provided by the agreement itself or by law.
Froilan M. Bacungan & Associates for petitioner.
Seno, Mendoza and Associates Law Offices for private respondent.

MENDOZA, J.:
This is a petition for certiorari to set aside the order of respondent Honorable Secretary of Labor and
Employment,
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declaring (1) wage increases granted by petitioner to its employees not creditable as compliance by the
company with future mandated wage increases, and (2) the increases to be retroactiv e, in the case of
the fourth year wage increase, to August 1, 1992 to be implemented until July 31, 1993 and, in the case
of the fifth year wage increase, to August 1, 1993 to be implemented until the expiration of the CBA on
July 31, 1994.
Petitioner Mindanao Terminal and Brokerage Service, Inc., (hereafter referred to as the Company) and
respondent Associated Labor Unions, (hereafter referred to as the Union) entered into a collective
bargaining agreement for a period of five (5) years, starting on August 1, 1989 and ending July 31, 1994.
On the third year of the CBA on August 1, 1992, the Company and the Union met to renegotiate the
provisions of the CBA for the fourth and fifth years. The parties, however, failed to resolve some of their
differences, as a result of which a deadlock developed.
On November 12, 1992, a formal notice of deadlock was sent to the Company on the following issues: w
ages, vacation leave, sick leave, hospitalization, optional retirement, 13th month pay and signing bonus.
On November 18, 1992, the Company announced a cost-cutting or retrenchment program.
Charging unfair labor practice and citing the deadlock in the negotiations, the Union filed, on December
3, 1992, a notice of strike with the National Conciliation and Mediation Board (NCMB).
On December 18, 1992, as a result of a conference called by the NCMB, the Union and the Company
went back to the bargaining table and agreed on the following provisions:
a. Wage Increase (Article V, Section 2, CBA)—P3.00/day for the fourth year of the CBA and P3.00/day for
the fifth year of the CBA;
b. Vacation and Sick Leaves (Article VII, Section 1(c), CBA)—1,100 hours of aggregate service instead of
the existing, 1,500 hours
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165
within a year to be entitled to leave benefits but subject to reversion to the previous CBA if majority of
the gangs average eight (8) vessels a m onth;
c. Hospitalization (Article VIII, Section 1, CBA)—Maximum aggregate of 1,100 hours instead of the 1,500
hours and up to be entitled to the benefit of P2,500.00 with the lower brackets adjusted accordingly but
subject to revers ion to the previous CBA if majority of the gangs average eight (8) vessels a month;
d. 13th Month Pay (Article XIII, Section 1, CBA)—Average of six (6) vessels ins tead of the existing eight
(8) vessels to be entitled to eleven (11) days basic pay but subject to revers ion to the previous CBA if
majority of the gangs average eight (8) vessels a month;
e. Signing bonus; and
f. Seniority.
The agreement left only one issue for resolution of the parties, namely, retirement. Even this issue was
soon settled as the parties met before the NCMB on January 14, 1993 and then agreed on an improved
Optional Retirement Clause by giving the employees the option to retire after rendering eighteen (18)
years of service instead of the previous twenty (20) years, and granting the employees retirement
benefits equivalent to sixteen (16) days for every year of service. Thus, as the Med-Arbiter noted in the
record of the January 14, 1993 conference, “the issues raised by the notice of strike had been settled
and said notice is thus terminated.”
But no sooner had he stated this than the Company claimed that the wage increases w hich it had
agreed to give the employees should be creditable as compliance with future mandated wage increases.
In addition, it maintained that such increases should not be retroactive.
Reacting to this development, the Union again filed a Notice of Strike on January 28, 1993, with the
NCMB. On March 7, 1993, the Union staged a strike.
The NCMB tried to settle the issues of creditability and retroactivity, calling for this purpose a
conciliation conference on March 9, 1993. As conciliation proved futile, the Company petitioned
respondent Secretary of Labor and Employment (hereafter Secretary of Labor) to assume jurisdiction
over the
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dispute. On March 10, 1993, respondent assumed jurisdiction over the dispute and ordered the parties
to submit their respective position papers on the two unresolved issues.
After submission by the parties of their position papers, the Secretary of Labor issued an Order dated
May 14, 1993, ordering the Company and the Union to incorporate into their existing collective
bargaining agreement all improvements reached by them in the course of renegotiations. The Secretary
of Labor held that the wage increases for the fourth and fifth years of the CBA were not to be credited
as compliance with future mandated increases. In addition, the fourth year wage increase was to be
retroactive to August 1992 and was to be implemented until July 31, 1993, while the fifth year wage
increase was to take effect on August 1, 1993 until the expiration of the CBA.1
On May 31, 1993, the Company sought reconsideration of the May 14, 1993 order. The motion was
denied for lack of merit by the Secretary of Labor in a resolution dated July 7, 1993. Hence, this petition
for certiorari, alleging grave abuse of discretion on the part of respondent Secretary of Labor.
The petitioner contends that respondent erred in making the fourth year wage increase retroactive to
August 1, 1992. It denies the power of the Secretary of Labor to decree retroaction of th e wag e
increases, as the respondent herself had stated in her order subject of this petition, that it had been
more than six (6) months since the expiration of the third anniversary of the CBA and, therefore, the
automatic renewal clause of Art. 253-A of the Labor Code had no application. Although petitioner
originally opposed giving retroactive effect to their agreement, it subsequently modified its stand and
agreed that the fourth year wage increase and the other provisions of the CBA be made retroactive to
the date the Secretary of Labor assumed jurisdiction of the dispute on March 10, 1993.
The petition is without merit. Art. 253-A of the Labor Code reads:
_______________
1 Rollo, p. 28.
167
VOL. 272, MAY 5, 1997
167
Terms of a collective bargaining agreement.—Any Collective Bargaining Agreement that the parties may
enter into shall, insofar as the representation 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 no
certification election shall be conducted by the Department of Labor and Employment outside of the
sixty-day period immediately before the date of expiry of such five year term of the Collective
Bargaining Agreement. All other provis ions of the Collective Bargaining Agreement shall be
renegotiated not later than three (3) years after its execution. Any agreement on such other provisions
of the Collective Bargaining Agreement entered into within six (6) months from the date of expiry of the
term of s uch other provisions as fixed in such Collective Bargaining Agreement, shall retroact to the day
immediately following such date. If any such agreement is entered into beyond six months, the parties
shall agree on the duration of retroactivity thereof. In case of a deadlock in the renegotiation of the
collective bargaining agreement, the parties may exercise their rights under this Code.
The respondent indeed stated in her order of May 14, 1993 that “this case is clearly beyond the scope of
the automatic renewal clause,”2 but she also stated in the same order that “the parties have reached an
agreement on all the renegotiated provisions of the CBA” on January 14, 1993, i.e., within six (6) months
of the expiration of the third year of the CBA.
The signing of the CBA is not determinative of the question whether “the agreement was entered into
within six months from the date of expiry of the term of such 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 issues,3 particularly on wages. The U nion fil ed a n
ot ice of strike. Howev er, on December 18, 1992, in a conference called by the NCMB, the Union and
the Company agreed on a number of provisions of
______________
2 Id., p. 25.
3 Respondent’s Comment, p. 2; Rollo, p. 103.
168
168
the CBA, including the provision on wage increase,4 leaving only the issue of retirem ent to be threshed
out. In time, this, too, was settled, so that in his record of the January 14, 1993 conference, the Med-
Arbiter noted that “the issues raised by the notice of strike had been settled and 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 February 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 merely to an
“agreement” which, according to Black’s Law Dictionary is “a coming together of minds; the coming
together in accord of two minds on a given proposition.”5 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 former is broader than the
latter because an agreem ent may not have all the elements of a contract. As in the case of contracts,
however, agreements may be oral or written.6 Hence, even without any written evidence of the
Collective Bargaining Agreement made by the parties, a valid agreement existed in this case from the
moment the minds of the parties met on all matters they set out to discuss. As Art. 1315 of the Civil
Code states:
Contracts are perfected by mere consent, and from that moment, the parties are bound not only to the
fulfillment of what has been expressly stipulated but also to all the consequences which, according to
their nature, may be in keeping with good faith, usage and law.
The Secretary of Labor found that “as early as January 14, 1993, well w ithin the six (6) month period
provided by law,
______________
4 Ibid.
5 BLACK’S LAW DICTIONARY 62 (5th ed., 1979).
6 Royal Lines, Inc. v. Court of Appeals, 143 SCRA 609 (1986).
169
VOL. 272, MAY 5, 1997
169
the Com pany and the Union have perfected their agreement.”7 The claim of petitioner to the contrary
notwithstanding, this is a finding of an administrative agency which, in the absence of evidence to the
contrary, must be affirmed.
Moreover, the order of the Secretary of Labor may be considered in the nature of an arbitral award,
pursuant to Art. 263(g) of the Labor Code, and, therefore, binding on the parties. After all, the Secretary
of Labor assumed jurisdiction over the dispute because petitioner asked the Secretary of Labor to do so
after the NCMB failed to make the parties come to an agreement. It is also conceded that the industry in
w hich the petitioner is engaged is vital to the national interest. As stated in the Order issued by the
Secretary of Labor on March 10, 1993:8
The services being provided by the Company evidently reflect their indispensability to the normal
operations of the Davao City Pier where millions of crates and boxes of goods are loaded and unloaded
monthly. The current disruption, therefore, of the Com-pany’s services, if allowed to continue, will cause
serious prejudice and damages to the agricultural exporters, the cargo handlers , the vessel owners, the
foreign buyers of agricultural products and the entire business sector in the area. These considerations
and the dispute’s implications on the national economy warrant the intervention by this Office to
exercise its power under Article 263(g) of the Labor Code, as amended.
In St. Luke’s Medical Center, Inc. v. Torres,9 a deadlock also developed during the CBA negotiations
between management and the union. The Secretary of Labor assumed jurisdiction and ordered the
retroaction of their CBA to the date of expiration of the previous CBA. As in this case, it was alleged that
the Secretary of Labor gravely abused his discretion in making his award retroactive. In dismissing this
contention this Court held:
_______________
7 Respondent’s Comment, p. 8; Rollo, p. 109.
8 Rollo, p. 53.
9 223 SCRA 779 (1993).
170
170
Therefore, in the absence of a specific provision of law prohibiting retroactivity of the effectivity of
arbitral awards issued by the Secretary of Labor pursuant to Article 263(g) of the Labor Code, such as
herein involved, public respondent is deemed vested with plenary and discretionary powers to
determine the effectivity thereof.
This case is controlled by the ruling in that case.
With respect to the issue of the creditability of the fourth and fifth year wage increases, the Court takes
cognizance of the fact that the question was raised by the Company only when the six-month period
was almost over and all that was left to be done by the parties was to sign their agreement. Before that,
the Company did not qualify its position. It should have known that crediting of wage increases in the
CBA as compliance with future mandated increases is the exception rather than the rule. For the general
rule is that such increases are over and above any increase that may be granted by law or wage order.
As held in Meycauayan College v. Drilon:10
Increments to the laborers’ financial gratification, be they in the form of salary increases or changes in
the salary scale are aimed at one thing—improvement of the economic predicament of the laborers. As
such they should be viewed in the light of the State’s avowed policy to protect labor. Thus, having
entered into an agreement with its employees, an employer may not be allowed to renege on its
obligation under a collective bargaining agreement s hould, at the same time, the law grant the
employees the s ame or better terms and conditions of employment. Employee benefits derived from
law are exclusive of benefits arrived at through negotiation and agreement unless otherwise provided
by the agreement itself or by law.
For making a belated issue of “creditability,” petitioner is correctly said to have “delay[ed] the
agreement beyond the six (6) month period so as to minimize its expenses to the detriment of its
workers” and its conduct to smack of “bad faith
_______________
10 185 SCRA 50 (1990).
171
VOL. 272, MAY 5, 1997
171
and [to run counter] to the good faith required in Collective Bargaining.”11 If petitioner wanted to be
given credit for the wage increases in the event of future mandated wage increases, it should have
expressly stated its reservation during the early part of the CBA negotiations.
WHEREFORE, the instant petition is hereby DISMISSED for lack of merit.
SO ORDERED.
Regalado (Chairman), Romero, Puno and Torres, Jr., JJ., concur.
Petitioner dismissed.
Notes.—The public policy which allows crediting of increases in w ages granted by employers within a
specified time against statutorily prescribed increases in minimum wages requires recognition and
validation of wage increases given by employers either unilaterally or as a result of collective bargaining
negotiations in the effort to correct wage distortions. (National Federation of Labor vs. National Labor
Relations Commission, 234 SCRA 311 [1994])
In the Philippine context, the parties to a Collective Bargaining Agreement are required to include
therein provisions for a machinery for the resolution of grievances arising from the interpretation or
implementation of the CBA or company personnel policies. (Luzon Development Bank vs. Association of
Luzon Development Bank Employees, 249 SCRA 162 [1995])
——o0o—— Mindanao Terminal and Brokerage Service, Inc. vs. Roldan-Confesor, 272 SCRA 161, G.R.
No. 111809 May 5, 1997
VOL. 374, JANUARY 23, 2002
471
University of the Immaculate Concepcion, Inc. vs. Secretary of Labor and Employment
G.R. No. 146291. January 23, 2002.*
UNIVERSITY OF THE IMMACULATE CONCEPCION, INC., petitioner, vs. THE HON. SECRETARY OF LABOR
AND EMPLOYMENT, UNIVERSITY OF THE IMMACULATE CONCEPCION TEACHING AND NON-TEACHING
EMPLOYEES UNION-FFW, respondents.
Remedial Law; Certiorari; In an appeal via certiorari, Court may not review the findings of fact of the
Court of Appeals; Questions of fact cannot be raised in an appeal via certiorari before the Supreme
Court and are not proper for its consideration.—The issue raised involves a re-examination of the
factual findings of the Court of Appeals. In an appeal via certiorari, we may not review the findings of
fact of the Court of Appeals. When supported by substantial evidence, the findings of fact of the Court
of Appeals are conclusive and binding on the parties and are not reviewable by this Court, unless the
case falls under any of the exceptions to the rule. Petitioner failed to prove that the case falls within
the exceptions. It is not our function to review, examine and evaluate or weigh the probative value of
the evidence presented. A question of fact would arise in such event.Questions of fact cannot be
raised in an appeal via certiorari before the Supreme Court and are not proper for its consideration.
Same; Same; Court of Appeals did not err in finding that there was still no new collective bargaining
agreement because the parties had not reached a meeting of the minds.—Nevertheless, we find that
the Court of Appeals did not err in finding that there was still no new collective bargaining agreement
because the parties had not reached a meeting of the minds. A collective bargaining agreement (CBA)
refers to the negotiated contract between a legitimate labor organization and the employer
concerning wages, hours of work and all other terms and conditions of employment in a bargaining
unit, including mandatory provisions for grievances and arbitration machineries. As in all other
contracts, there must be clear indications that the parties reached a meeting of the minds.
PETITION for review on certiorari of a decision of the Court of Appeals.
Padilla Law Office for petitioner.
_______________
* FIRST DIVISION.
472
472
Alfredo C. Olvida representative of respondent Union.
PARDO, J.:
The Case
In this appeal via certiorari, petitioner seeks to set aside the decision of the Court of Appeals,1 which
dismissed the University’s petition and affirmed the orders of the Secretary of Labor and Employment2
directing the parties to execute a collective bargaining agreement embodying the dispositions therein
and all items agreed upon by the parties, and ruling that the strike declared by the union on 20 January
1995 was valid.
The Facts
The facts, as found by the Court of Appeals, are as follows:
“Petitioner (University of the Immaculate Concepcion, Inc.) is a non-stock, non-profit educational

institution with campuses at Fr. Selga St., and Bonifacio St., Davao City. On two (2) occasions, specifically
on May 14, 1994 and May 28, 1994, petitioner and the Union, through the auspices of the National
Conciliation and Mediation Board (NCMB), met to negotiate a CBA.
“On June 20, 1994, the Union filed with the NCMB a Notice of Strike, the first in a series of three (3)
notices of strike, alleging deadlock in the CBA negotiations and unfair labor practices on the part of the
petition in the form of “mass termination of teaching and non-teaching employees, interference with
union activities, discrimination, and harassments.” (Annex “8” of Annex “A”, Petition). Petitioner denied
the allegations in its Motion to Strike Out Notice of Strike (Annex “9” of Annex “A”, Petition).
“During the parties’ conciliation conference before the NCMB on July 20, 1994, petitioner and the Union
reached an agreement on some issues. The salient portion of the minutes of the proceedings reads:
_______________
1 In CA-G.R. SP No. 55670, promulgated on October 11, 2000, Garcia, J., ponente, Brawner and Reyes,
Jr., JJ., concurring.
2 Dated October 8, 1998 and September 10, 1999, respectively, OS-AJ-003-95 (NCMB-RBXI-NS-12-028-
94; NCMB-RBXI-NS-03-004-95).
473
VOL. 374, JANUARY 23, 2002
473
‘I. ECONOMIC ISSUE
‘The parties agree to the economic package to be granted to the workers as increase in the amount
equivalent to:
‘1st year: 75% of increment increase of Tuition Fees
‘3rd year: 80%—do—
‘2nd year: 80%—do—
‘This settles the economic issue of this notice of strike.
‘II. NON-ECONOMIC ISSUES:
‘A. UNION RECOGNITION and SECURITY
‘Agreement: Both Parties agreed on the following:
‘1. That future employees hired after the signing of this CBA shall become members of the Union after
having become regular employees.
‘2. That provisions providing sanction will be removed.
‘B. WORKING SCHEDULE
‘Agreement: Both parties agree as follows:
‘1. Item (b) is removed.
‘2. Item (c) is adopted/agreed by the parties.
‘C. SALARIES and WAGES:
‘Agreement: Both parties agree as follows:
‘1. There will be Rank and Tenure Committee which management will establish by department. In every
committee, the union will be represented by 2-members who will be chosen by the union.
‘On the coverage of the bargaining unit, further consultations will be made on the proposed exclusion of
secretaries, registrar, accounting employees, guidance counselor.
‘The parties agree to set another conference on July 26, 1994 at 9:00 A.M.’ (Annex “16” of Annex “A”,
petition).
“In a subsequent conciliation conference of July 26, 1994, petitioner and the Union agreed to submit to
voluntary arbitration the issue concerning the exclusion of confidential employees from the collective
bargaining unit. The minutes of that conference state:
‘As a resolution to the issue left of the case, the parties agree that the positions which management
sought to be excluded from the bargaining unit be submitted to Voluntary Arbitration.
474
474
‘This case is deemed settled and closed’ (Annex “17” of Annex “A”, Petition).
“On November 8, 1994, the panel of voluntary arbitrators rendered a decision excluding the secretaries,
registrars, cashiers, guidance counselors and the chief of the accounting department of the petitioner
from the coverage of the bargaining unit (Annex “41” of Annex “A”, Petition).
“Twenty (20) days later, or on November 28, 1994, petitioner presented to the Union a draft of the CBA.
After a study thereof, the Union rejected the draft on the ground that the manner of computing the net
incremental proceeds has yet to be agreed upon by the parties (Annexes “23”, “23-A” and “24” of Annex
“A”, Petition).
“In its letter to the Union dated December 12, 1994, petitioner insists that the Union was bound to
comply with the terms contained in the draft-CBA since said draft allegedly embodies all the items
agreed upon by the parties during the conciliation sessions held by the NCMB (Annex “25” of Annex “A”,
Petition).
“On December 9, 1994, the Union filed its Second Notice of Strike with the NCMB, therein alleging
bargaining deadlock on “allocation of 5% (CBA) and distribution/computation of 70% incremental
proceeds (RA 6728)”, and unfair labor practice by the petitioner in the form of “harassments, union
busting and correct implementation of COLA,” (Annex “26-A” of Annex “A”, Petition)
“On December 12, 1994, or barely three (3) days after the Union’s filing of its Second Notice of Strike,
petitioner terminated the employment of union member Gloria Bautista. Later, or on December 27,
1994, petitioner likewise terminated the employment of union board member Corazon Fernandez.
(Comment, p. 8). As a consequence, Bautista and Fernandez filed their complaints for illegal dismissal
before the Regional Arbitration Branch No. XI of the National Labor Relations Commission based in
Davao City (Annex “28” of Annex “A”, Petition; p. 5 of Annex “B”, Petition).
“On January 4, 1995, petitioner filed with the NLRC Regional Arbitration Branch No. XI in Davao City a
complaint against the Union and its officers for unfair labor practices based on the following grounds:
‘(a) refusing to answer in writing, and within ten days required by law, [petitioner’s] cba proposals;
‘(b) refusing to bargain in good faith, by declaring a deadlock in the cba negotiations after just two days
of negotiations, even if there were so many issues unresolved and still to be discussed at the bargaining
table;
‘(c) refusing to comply with its promise to submit the final draft of the CBA agreed upon in the NCMB,
and when presented by
475
VOL. 374, JANUARY 23, 2002
475
the draft prepared by the [petitioner], refusing to sign the same, on the ground that there was still a
deadlock in the CBA negotiations, even if its notice of strike by reason of the CBA deadlock had already
been ‘settled and closed;
‘(d) blatantly violating the aforesaid CBA, by resorting to another notice of strike, even if the aforesaid
CBA includes a no strike, no lockout clause, a grievance procedure and voluntary arbitration of any
grievance the union may have, thus directly circumventing the aforesaid procedures as regards the
interpretation of the CBA and RA 6728 provisions on the net incremental proceeds of a tuition fee
increase; and
‘(e) blatantly violating the aforesaid CBA, by filing a complaint for illegal dismissal of Ms. Gloria Bautista
in the Regional Arbitration Branch without resorting to the grievance procedure and voluntary
arbitration in the CBA.’ (Annex 29 of Annex “A” of Petition).
“The complaint, docketed as NLRC Case No. RAB-XI-01, was elevated by the NLRC Regional Arbitration
Branch to the Secretary of Labor (Annex “29” of Annex “A”, Petition).
“The conciliation conference called by the NCMB on January 4, 1995 failed to bridge the differences
between the parties. Thereafter, the NCMB in Region XI conducted a strike-vote balloting, the outcome
of which reveals that majority of the union members voted in favor of the holding of a strike. True
enough, on January 20, 1995, the Union went on strike.
“Three days later, or on January 23, 1995, the Secretary of Labor issued an order assuming jurisdiction
over the labor dispute which was docketed as OS-AJ-003-95. Dispositively, the order reads:
‘WHEREFORE, ABOVE PREMISES CONSIDERED, and pursuant to Article 263 (g) of the Labor Code, as
amended, this Office hereby assumes jurisdiction over the entire labor dispute at University of the
Immaculate Concepcion College.
‘Accordingly, all workers are directed to return to work within twenty-four (24) hours upon receipt of
this Order and for management to accept them back under the same terms and conditions prior to the
strike.
‘Parties are further directed to cease and desist from committing any or all acts that might exacerbate
the situation.
‘Finally, the parties are hereby directed to submit their respective position papers within ten (10) days
from receipt hereof.
476
476
‘SO ORDERED.’ (Annex “G” to private respondent’s COMMENT.)
“In time, the Union filed a Motion for Reconsideration of the aforementioned order to seek a categorical
declaration from the Secretary that the return-to-work order also covered Bautista and Fernandez
inasmuch as the two (2) were dismissed during the pendency of the notice of strike.
“Before the Labor Secretary could act on the motion, petitioner suspended five (5) union members for
failing to report to work within the period specified by the Secretary of Labor. Petitioner, invoking the
ruling of the voluntary arbitrators that certain classes of employees cannot be a part of the bargaining
unit, also terminated the employment of twelve union members—supposedly holders of confidential
positions—for refusing to resign from the Union.
“On March 10, 1995, the Union filed its Third Notice of Strike, therein alleging mass termination of
employees, continuous intimidation of union members and defiance by the petitioner of the January 23,
1995 Order of the Secretary of Labor.
“On March 28, 1995, the respondent Secretary of Labor issued an order resolving the issues raised by
the Union in its Motion for Reconsideration and Notice of Strike. Dispositively, the order reads:
‘WHEREFORE, THE ABOVE-PREMISES CONSIDERED, the directives contained in the order dated 23
January 1995 is hereby reiterated.
‘The notice of strike filed on 10 March 1995, is hereby consolidated with the dispute subject of the
above Order.
‘The effects of the suspension and termination of the following union members:
1.
Agapito Renomeron
8.
Jovita Mamburan
2.
Rodolfo Andon
9.
Alma Villacarlos
3.
Delfa Diapuez
10.
Josie Boston
4.
Melanie de la Rosa
11.
Paulina Palma Gil
5.
Angelina Abadilla
12.
Gemma Galope
6.
Leilan Concon
13.
Leak Cruza
7.
Mary Ann de Ramos
14.
Zenaida Canoy
are hereby suspended pending determination of the legality thereof by this Office. Accordingly, they
should likewise be accepted back to work under the same terms and conditions prevailing prior to the
work stoppage.
‘SO ORDERED.’ (see pp. 5-6 of Annex “B”, Petition)
477
VOL. 374, JANUARY 23, 2002
477
“Petitioner filed three (3) successive Motions for Partial Reconsideration, all of which were denied by
the same public respondent. Dissatisfied, petitioner went to the Supreme Court on a petition for
certiorari, which was referred to another Division of this Court.
“The assailed order of October 8, 1998 of the Secretary of Labor narrated the succeeding events, thus:
‘On 27 February 1997,Conciliator-Mediators Mario F. Santos and Leodegario M. Teodoro went to Davao
City to help the parties to come up with a settlement regarding their labor dispute. During the
conciliation held in the afternoon of the same day, the Union stated that there was no CBA to speak of
because what were agreed upon during the conciliation conference on 26 July 1994, did not reflect the
true intention of the parties and there was misunderstanding on the economic package. The Union
manifested to reopen the negotiation of all the proposals including those that were previously agreed
upon. The Union proposed to negotiate for the following items:
‘Economic Issues
‘1. Salary;
SY 94-95-P 800.00
SY 95-96- 900.00
SY 96-97- 1,000.00
‘2. Substitution pay;
‘3. Honorarium pay;
‘4. Retirement pay;
‘5. Promotion and lay-off;
‘6. Staff development;
‘7. Health and insurance coverage; and
‘8. Hospital assistance
‘Non-Economic Issues
‘1. Dismissal of Gloria Bautista and Corazon Fernandez;
‘2. Dismissal of Helen Jinon and Roselier Saga;
‘3. Suspension of seven (7) union members for 7 days; and
‘4. Union security
‘During the conciliation held in the morning of 28 February 1997, the University contended that an
agreement was reached during the conciliation conferences on 20 and 26 July 1994. Nevertheless, the
University presented two (2) options for negotiation namely:
478
478
‘1. Negotiate a new five (5) year CBA effective SY 97-98; or
‘2. Sign and implement the CBA for three (3) years and reopen for the last two (2) years the economic
provisions.
‘The parties failed to reach an agreement in any of their respective proposals. They therefore requested
this Office to resolve the instant labor dispute. On 26 February 1998, the Union filed an Urgent Motion
to Resolve the Above-Entitled Case. This Office received the said Motion on 09 March 1998.’ (Annex “B”,
Petition).
“Finding the strike staged by the Union to be legal, the Secretary of Labor resolved the labor dispute
between the petitioner and the Union by directing the parties to execute a collective bargaining
agreement. The pertinent portion of the challenged order reads:
‘We cannot grant the Union’s proposal to re-open the negotiation. Guided by the agreements reached
by the parties, this Office finds the following dispositions just and equitable.
‘COLLECTIVE BARGAINING DEADLOCK
‘Salary Increases
‘1st year –75% of increment increase of tuition fee
‘2nd year–80% of increment increase of tuition fee
‘3rd year –80% of increment increase of tuition fee
‘To avoid differences of opinion in the distribution of these salary increases to the covered employees,
the same shall be distributed in accordance with DECS Order No. 15, Series of 1992.
‘LEGALITY/ILLEGALITY OF THE STRIKE
‘The strike undertaken by the Union on January 1995, was a valid exercise of the workers’ rights under
the Labor Code. The Union observed the mandatory requirements/procedures for a valid strike and the
issues raised in the Notice of Strike i.e., bargaining deadlock and ULP are strikeable issues specifically
provided under Article 263 (c) of the Labor Code.
‘WHEREFORE, premises considered, the University and the Union are directed to execute a collective
bargaining agreement (CBA) embodying the dispositions contained herein as well as all items agreed
upon by the parties. The CBA shall be effective for five (5) years starting SY 1995-96, subject to
renegotiation of the economic provisions for the last two (2) years. Further, we rule that the strike
declared by the Union on 20 January 1995, is in accordance with the mandatory requirements of the
law, hence, valid.
479
VOL. 374, JANUARY 23, 2002
479
‘SO ORDERED.’ (Annex “B”, Petition).
“Petitioner filed a Manifestation and Motion for Partial Reconsideration (Annex “C”, Petition). The Union
also filed its motion for partial reconsideration, arguing that the issue of the legality of the termination
of employment of two (2) employees, namely, Roseller Saga and Helen Jinon, was not resolved in the
order sought to be reconsidered. Both motions for reconsideration were denied by the Secretary of
Labor in his Resolution of September 10, 1999 (Annex “D”, Petition).”3
Subsequently, petitioner filed with the Court of Appeals a petition for review assailing the ruling of the
Secretary of Labor and Employment.
On October 11, 2000, the Court of Appeals promulgated a decision affirming the orders of the Secretary
of Labor and Employment.4
Hence, this appeal.5
The Issue
The issue raised is whether the Court of Appeals erred in affirming the orders of the Secretary of Labor
and Employment.
The Court’s Ruling
We deny the petition.
The issue raised involves a re-examination of the factual findings of the Court of Appeals. In an appeal
via certiorari, we may not review the findings of fact of the Court of Appeals.6 When sup-
_______________
3 Petition, Annex “E”, Rollo, pp. 484-499, at pp. 485-494.
4 Petition, Annex “E”, Rollo, pp. 484-499.
5 Petition filed on February 1, 2001. On June 27, 2001, we gave due course to the petition (Rollo, pp.
560-561).
6 Cristobal v. Court of Appeals, 353 Phil. 320, 326; 291 SCRA 122 [1998]; Sarmiento v. Court of Appeals,
353 Phil. 834, 845-846; 291 SCRA 656 [1998]; Concepcion v. Court of Appeals, 324 SCRA 85 [2000], citing
Congregation of the Religious of the Virgin Mary v. Court of Appeals, 353 Phil. 591, 597; 291 SCRA 385
[1998] and Sarmiento v. Court of Appeals, supra; Arriola v. Mahilum, 337 SCRA 464, 469 [2000]; Estate
of the Late
480
480
ported by substantial evidence, the findings of fact of the Court of Appeals are conclusive and binding on
the parties and are not reviewable by this Court,7 unless the case falls under any of the exceptions to
the rule.8
Petitioner failed to prove that the case falls within the exceptions.9 It is not our function to review,
examine and evaluate or weigh the probative value of the evidence presented.10 A question of fact
would arise in such event.11 Questions of fact cannot be raised in an appeal via certiorari before the
Supreme Court and are not proper for its consideration.12
Nevertheless, we find that the Court of Appeals did not err in finding that there was still no new
collective bargaining agreement because the parties had not reached a meeting of the minds.
A collective bargaining agreement (CBA) refers to the negotiated contract between a legitimate labor
organization and the employer concerning wages, hours of work and all other terms and conditions of
employment in a bargaining unit, including mandatory provisions for grievances and arbitration
machineries.13 As in all
_______________
Mena Bolanos v. Court of Appeals, G.R. No. 122950, November 20, 2000, 345 SCRA 125.
7 Atillo III v. Court of Appeals, 334 Phil. 546, 555; 266 SCRA 596 [1997].
8 Cebu Shipyard and Engineering Works, Inc. v. William Lines, Inc., 366 Phil. 439, 452; 306 SCRA 762
[1999].
9 Rivera v. Court of Appeals, 348 Phil. 734, 743; 284 SCRA 673 [1998].
10 Trade Unions of the Philippines v. Laguesma, 236 SCRA 586, 591 [1994].
11 Trade Union of the Philippines v. Laguesma, supra, Note 10; Cheesman v. Intermediate Appellate
Court, 193 SCRA 93 [1991]; Ramos v. Pepsi Cola Bottling Co., 125 Phil. 701; 19 SCRA 289 [1967]; Pilar
Dev. Corp. v. Intermediate Appellate Court, 146 SCRA 215 [1986]; Arroyo v. Beaterio del Santissimo
Rosario de Molo, 132 Phil. 9; 23 SCRA 525 [1968]; Bernardo v. Court of Appeals, 216 SCRA 224 [1992].
12 Hi-Precision Steel Center, Inc. v. Lim Kim Steel Builders, Inc., 228 SCRA 397 [1993]; Navarro v.
Commission on Elections, 228 SCRA 596 [1993].
13 Manila Fashions v. National Labor Relations Commission, 332 Phil. 121; 264 SCRA 104 [1996].
481
VOL. 374, JANUARY 23, 2002
481
other contracts, there must be clear indications that the parties reached a meeting of the minds.
In this case, no CBA could be concluded because of what the union perceived as illegal deductions from
the 70% employees’ share in the tuition fee increase from which the salary increases shall be charged.
Also, the manner of computing the net incremental proceeds was yet to be agreed upon by the parties.
Petitioner insisted that a new collective bargaining agreement was concluded through the conciliation
proceeding before the NCMB on all issues specified in the notice of strike. Although it is true that the
university and the union may have reached an agreement on the issues raised during the collective
bargaining negotiations, still no agreement was concluded by them because, among other reasons, the
DOLE Secretary, who assumed jurisdiction on January 23, 1995 only was set to resolve the distribution of
the salary increase of the covered employees. The Court of Appeals found that “there are many items in
the draft-CBA that were not even mentioned in the minutes of the July 20, 1994 conference.”14
Considering the parties failed to reach an agreement regarding certain items of the CBA, they still have
the duty to negotiate a new collective bargaining agreement in good faith, pursuant to the applicable
provisions of the Labor Code.
The Fallo
WHEREFORE, the Court DENIES the petition and enjoins the parties to comply with the directive of the
Secretary of Labor and Employment to negotiate a collective bargaining agreement in good faith.
No costs.
SO ORDERED.
Davide, Jr. (C.J., Chairman), Puno, Kapunan and Ynares-Santiago, JJ., concur.
Petition denied. University of the Immaculate Concepcion, Inc. vs. Secretary of Labor and Employment,
374 SCRA 471, G.R. No. 146291 January 23, 2002
759
Divine Word University of Tacloban vs. Secretary of Labor and Employment
G.R. No. 91915. September 11, 1992.*
DIVINE WORD UNIVERSITY OF TACLOBAN, petitioner, vs. SECRETARY OF LABOR AND EMPLOYMENT
and DIVINE WORD UNIVERSITY EMPLOYEES UNION-ALU, respondents.
Labor Laws; Bargaining Representatives; Certification election; Role of employer.—xxx [Petitioner’s

undue interest in the resolution of the DWU-IFEU’s motion for intervention becomes significant since
a certification election is the sole concern of employees except where the employer itself has to file a
petition for certification election. But once an employer has filed said petition, as the petitioner did in
this case, its active role ceases and it becomes a mere bystander. Any uncalled-for concern on the part
of the employer may give rise to the suspicion that it is batting for a company union.
Same; Same; Same; Same; Bargaining deadlock presupposes reasonable effort at good faith
bargaining.—xxx [A]n employer who is requested to bargain collectively may file a petition for
certification election any time except upon a clear showing that one of these two instances exists: (a)
the petition is filed within one year from the date of issuance of a final certification election result or
(b) when a bargaining deadlock had been submitted to conciliation or arbitration or had become the
subject of a valid notice of strike or lockout. While there is no question that the petition for
certification election was filed by the herein petitioner after almost four years from the time of the
certification election and, therefore, there is no question as to the timeliness of the petition, the
problem appears to lie in the fact that the Secretary of Labor had found that a bargaining deadlock
exists. A “deadlock” is defined as the “counteraction of things producing entire stoppage: a state of
inaction or of neutralization caused by the opposition of persons or of factions (as in government or a
voting body): standstill.” There is a deadlock when there is a “complete blocking or stoppage resulting
from the action of equal and opposed forces; as, the deadlock of a jury or legislature.” The word is
synonymous with the word impasse which, within the meaning of the American federal labor laws,
“presupposes reasonable effort at good faith bargaining which,
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* THIRD DIVISION.
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despite noble intentions, does not conclude in agreement between the parties.” 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 attitude towards collective bargaining inevitably resulted in the
failure of the parties to arrive at an agreement.
PETITION for certiorari to review the orders of the Secretary of Labor and Employment.
Generosa R. Jacinto for petitioner.
Joji L. Barrios for private respondent.
ROMERO, J.:
Assailed in this petition for certiorari for being violative of the “constitutional right of employees to self-
organization which includes the right to form, join or assist labor organizations of their own choosing for
purposes of collective bargaining,”1 are the Orders of May 23, 1989 and January 17, 1990 issued by then
Secretary of Labor and Employment Franklin M. Drilon and Acting Secretary of Labor and Employment
Dionisio D. de la Serna, respectively.
Culled from the records are the following facts which led to the filing of the instant petition:
On September 6, 1984, Med-Arbiter Bienvenido C. Elorcha certified the Divine Word University
Employees Union (DWUEU) as the sole and exclusive bargaining agent of the Divine Word University
(University for brevity). On March 7, 1985, DWUEU submitted its collective bargaining proposals. On
March 26, 1985, the University replied and requested a preliminary conference to be held on May 28,
1985. However, two days before the scheduled conference or on May 26, 1985, DWUEU’s resigned vice-
president Mr. Brigido Urminita (or Urmeneta) wrote a letter addressed to the University unilaterally
withdrawing the CBA proposals. Consequently, the pre-
______________
1 Petition, p. 3; Rollo, p. 4.
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liminary conference was cancelled.2

After almost three years, or on March 11, 1988, DWUEU, which had by then affiliated with the
Associated Labor Union,3 requested a conference with the University for the purposes of continuing the
collective bargaining negotiations.4 Not having heard from the University, DWUEU-ALU sent a follow-up
letter on March 23, 1988 reiterating its request for a conference and warning the University against
committing acts of interference through its various meetings with both the academic and non-academic
employees regarding their union affiliation and activities. Despite the letter, the University persisted in
maintaining silence.
On April 25, 1988, DWUEU-ALU filed with the National Conciliation and Mediation Board of the
Department of Labor and Employment a notice of strike on the grounds of bargaining deadlock and
unfair labor practice acts, specifically, refusal to bargain, discrimination and coercion on (sic)
employees.5 The conferences which were held after the filing of the notice of strike led to the
conclusion of an agreement between the University and DWUEU-ALU on May 10, 1988 with the
following terms:
“1. Union will submit their (sic) CBA proposals on Friday, May 13, 1988 for whatever action management
will take.
2. Union and management agrees (sic) to sit down and determine (sic) the number of employees that
will represent their bargaining unit.
3. Conciliation proceedings is (sic) temporarily suspended until the parties inform this office of further
development.
4. The issues of discrimination: re Ms. Colinayo and Ms. Cinco Flores is settled.
5. Issue (sic) on coercion and refusal to bargain shall be subject of continuing dialogue.
_____________
2 Rollo, p. 101.
3 DWUEU became an affiliate of ALU on February 9, 1988 upon the issuance of Charter Certificate No.
347, Rollo, p. 73.
4 DWUEU-ALU’s Comment, p. 2; Rollo, p. 298.
5 Annex “A” of Petition; Rollo, p. 63.
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6. Atty. Jacinto shall be given 10 days notice in the next conciliation meeting.”6
However, it turned out that an hour before the May 10, 1988 agreement was concluded, the University
had filed a petition for certification election with the Region VIII office of the Department of Labor and
Employment.7
On the other hand, on May 19, 1988, DWUEU-ALU, consonant with the agreement, submitted its
collective bargaining proposals. These were ignored by the University. Thereafter, through the National
Conciliation and Mediation Board (NCMB) of Region VIII, marathon conciliation conferences were
conducted but to no avail. Hence, on August 25, 1988, then Secretary of Labor Franklin M. Drilon,
exercising his powers under Art. 263(g) of the Labor Code, issued an Order assuming jurisdiction over
the labor dispute and directing all striking workers to report back to work within twenty-four (24) hours
and the management to accept them back under the same terms and conditions prevailing prior to the
work stoppage. The Secretary also designated the NCMB to hear the case and to submit its report
thereon.8
On the same day, Med-Arbiter Rodolfo S. Milado, acting on the University’s petition for certification
election, issued an Order directing the conduct of a certification election to be participated in by
DWUEU-ALU and “no-union,” after he found the petition to be “well-supported in fact and in law.”9
Said Order prompted the DWUEU-ALU to file with the Secretary of Labor an urgent motion seeking to
enjoin Milado from further acting on the matter of the certification election. On September 20, 1988,
the Labor Secretary granted said motion and directed Milado to hold in abeyance any and all
certification election proceedings at the University pending the resolution of the labor dispute.10 The
Labor Secretary’s Order,
______________
6 Annex “B-1” of Petition; Rollo, p. 66.
7 Annex “B” of Petition; Rollo, pp. 64-65.
8 Annex “C” of Petition; Rollo, pp. 67-69.
9 Annex “D” of Petition; Rollo, pp. 70-77.
10 Annex “E” of Petition; Rollo, p. 78-79.
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predicated on his extraordinary powers under Art. 263(g) of the Labor Code, conformed with this Court’s
Resolution of October 29, 1987 in the Bulletin Today cases (G.R. Nos. 79276 and 79883) where the issue
of strong disagreement among the parties on the question of representation was deemed subsumed in
the labor dispute certified for compulsory arbitration. The Secretary added:
“Underscoring the necessity to conform with this settled doctrine is the fact that the dispute over which
this Office assumed jurisdiction arose from the alleged continued refusal by the University to negotiate a
CBA with the Union despite the latter’s certification as exclusive bargaining agent in 1984. Necessarily
related thereto is the representativity issue raised by the University in its certification election petition.
The resolution of these issues in one proceeding is, in the words of the Supreme Court, ‘meet and
proper in view of the very special circumstances obtaining in this case, and will prevent split jurisdiction
and that multiplicity of proceedings which the law abhors’ (24 December 1987 [should be December 17,
1987] resolution of the Supreme Court in the Bulletin Today cases, supra).
Moreover, to allow a certification election to proceed at this point in time might further rupture the
already strained labor-management relations pervading at the University. The assumption order issued
by this Office merely served as a temporary bend to hold together such a fragile relationship. More
importantly, the projected election hastily decreed would preempt the proper resolution of the issues
raised and pursued so zealously by the employees that prompted them to stage their strike.”11
The NCMB of Region VIII conducted hearings on the case from October 17-18, 1988. On October 26,
1988, the Divine Word University Independent Faculty and Employees Union (DWUIFEU), which was
registered earlier that day, filed a motion for intervention alleging that it had “at least 20% of the rank
and file employees” of the University.12
Exercising once again his extraordinary powers under Art. 263(g) of the Labor Code, the Secretary
consolidated “the entire
______________
11 Id.
12 Annex “G” of Petition; Rollo, pp. 97-98.
764
764
labor dispute including all incidents arising therefrom, or necessarily related thereto” in his Order of
May 23, 198913 and the following cases were “subsumed or consolidated to the labor dispute”: the
petition for certification election docketed as MED-ARB-Case No. 5-04-88, the DWUEU’s complaint
docketed as NLRC Case No. 8-0321-88, and the University’s complaint docketed as NLRC Case No. 8-
0323-88. Thus, in said Order of May 23, 1989, the Secretary of Labor resolved these issues: “(1) whether
there was refusal to bargain and an impasse in bargaining; (2) whether the complaints for unfair labor
practices against each other filed by both parties, including the legality of the strike with the NLRC,
which later on was subsumed by the assumption Order, are with merits; and, (3) whether or not the
certification election can be passed upon by this Office.”
On the first issue, the Secretary of Labor said:
“It is a matter of record that when the Union filed its Notice of Strike (Exh. A) two of the issues it raised
were bargaining deadlock and refusal to bargain. It is also worth mentioning that the CBA proposals by
the Union were submitted on March 7, 1985 (Exh. 9) after Med-Arbiter Bienvenido Elorcha issued a
certification election Order dated September 6, 1984 (Exh. 4). An examination of the CBA proposals
submitted by the Union to the University showed there was (sic) some negotiations that has (sic) taken
place as indicated on the handwritten notations made in the CBA proposal (Exh. F). The said proposals
include among others, union scope, union recognition, union security, union rights, job security,
practices and privileges, terms and conditions of work, leave of absence, hours of work, compensation
salary and wages, workers’ rights and safety, workers’ education, retirement longevity pay, strike and
lockouts and grievance machinery.
The said CBA proposals were indorsed by DWU President to Atty. Generosa R. Jacinto, Divine Word
University legal counsel together with a copy of the Union CBA proposals. The submission of the CBA
proposals and the reply letter of the DWU counsel, dated March 26, 1985 to the Union indicated that
the CBA negotiations process was set into motion. DWU’s counsel even suggested that the preliminary
conference between the union and the university be sched-
______________
13 Annex “H” of Petition; Rollo, pp. 100-104.
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765
uled on 28 May 1985 at 2:30 P.M. which unfortunately did not take place due to the alleged withdrawal
of the CBA proposals.
Undeniably, the Union and the DWU have not been able to conclude a CBA since its certification on 6
September 1984 by then Med-Arbiter Bienvenido Elorcha. But the non-conclusion of a CBA within one
year, as in this case, does not automatically authorize the holding of a certification election when it
appears that a bargaining deadlock issue has been submitted to conciliation by the certified bargaining
agent. The records show that the Notice of Strike was filed by the Union on 25 April 1988, citing
bargaining deadlock as one of the grounds (Annex ‘I’), while the Petition for Certification Election was
filed by the DWU on 10 May 1988. The filing of the notice of strike was precipitated by the University’s
act of not replying to the Union’s letters of March 11 and March 23, 1988.
This being the case, Section 3, Rule V, Book V of the Rules Implementing the Labor Code applies and we
quote:
‘Sec. 3. When to file. In the absence of a collective bargaining agreement submitted in accordance with
Article 231 of the Code, a petition for certification election may be filed at any time. However, no
certification election may be held within one year from the date of issuance of declaration of a final
certification election result. Neither may a representation question be entertained it (sic) before the
filing of a petition for certification election, a bargaining deadlock to which an incumbent or certified
bargaining agent is a party has been submitted to conciliation or arbitration or had become the subject
of a valid notice of strike or lockout.’
Clearly, a bargaining deadlock exists and as a matter of fact this is being conciliated by the National
Conciliation and Mediation Board at the time the University filed its Petition for Certification Election on
10 May 1988. In fact the deadlock remained unresolved and was in fact mutually agreed upon to be
conciliated further by the NCMB as per items 1 and 5 of the ‘Agreement’ (Exhibit ‘L’).
The aforequoted rule clearly barred the Med-Arbiter from further entertaining the petition for
certification election. Furthermore, the various communications sent to the University by the Union
prior to the filing of the notice of strike was enough opportunity for the former to raise fche issue of
representation if it really casts doubt to the majority status of the Union. More importantly, if DWU
indeed doubted the status of the union, how come it entered into an agreement with the latter on May
10, 1988. Apparently, the move to file the petition on the same day was an afterthought on the part of
the University which
766
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this Office considers as fatal.”14
The same Order dismissed not only the case filed by DWUEU-ALU for unfair labor practice on the ground
of the union’s failure to prove the commission of the unfair labor practice acts specifically complained of
(NLRC Case No. 8-0321-88) but also the complaint filed by the University for unfair labor practices and
illegal strike for “obvious lack of merit brought about by its utter failure to submit evidence” (NLRC Case
No. 8-0323-88).
Citing the Bulletin Today cases, the said Order pronounced as untenable the University’s claim that the
assumption Order earlier issued by the Office of the Secretary of Labor merely held in abeyance the
holding of a certification election and that the representation issue was not deemed consolidated by
virtue of the said assumption Order. Accordingly, the Order has this dispositive portion:
“WHEREFORE, ALL THE FOREGOING PREMISES CONSIDERED, the Divine Word University of Tacloban and
the Divine Word University Employees Union are hereby directed to enter into a collective bargaining
agreement by adopting the Union’s CBA proposals sent to the DWU President on 19 May 1988 (Exhibit
‘6’). DWU is hereby warned that any unwarranted delay in the execution of the collective bargaining
agreement will be construed as an unfair labor practice act. Moreover, the petition for certification
election filed by the University is hereby dismissed for lack of merit and the Order of Med-Arbiter
Rodolfo Milado set aside. Likewise, NLRC CASES Nos. 8-0321-88 and 8-0323 filed by the Union and the
DWU, respectively, are hereby dismissed for lack of merit.
SO ORDERED.”15
The University filed a motion for the reconsideration of said Order. It was opposed by the DWUEU-ALU.
However, since on May 5, 1989 the DWUEU-ALU had filed a second notice of strike charging the
University with violation of the return-to-work order of the Secretary of Labor and unfair labor practices
______________
14 Ibid., pp. 102-103.
15 Ibid., p. 104.
767
767
such as dismissal of union officers, coercion of employees and illegal suspension,16 the Office of the
Secretary called for a series of conciliation and mediation conferences between the parties. At the July
5, 1989 conference, the University agreed to submit its proposals on how to settle amicably the labor
dispute on or before July 17, 1989.
On said date, however, the University failed to appear. Instead, its representative phoned in a request
for the resetting of the conference purportedly because its Board of Directors had failed to muster a
quorum. Hence, after so informing ALU’s Eastern Visayas Vice-President, the conference was
rescheduled for July 19, 1989. The University once again failed to appear.
In view of the University’s intransigence, the DWUEU-ALU pursued its second notice of strike on
November 24, 1989. Four days later, the University filed with the Office of the Secretary of Labor a
motion praying that said Office assume jurisdiction over the dispute or certify the same to the NLRC for
compulsory arbitration on the ground that the strike affected not only the University but also its other
academic and non-academic employees, the students and their parents. On December 4, 1989, the
Office of the Secretary of Labor received a Resolution passed by the students of the University urging
said Office’s assumption of jurisdiction over the labor dispute and the earliest resolution of the case.
Consequently, on December 29, 1989, Secretary Drilon issued an Order reiterating the August 25, 1988
Order which assumed jurisdiction over the labor dispute. He ordered all striking workers to return to
work within 24 hours and the University to accept them back under the same terms and conditions of
employment; deemed the issues raised in the May 5, 1989 notice of strike as “subsumed in this case”;
ordered the Director of Regional Office No. VIII to hear the issues raised in said noticeof strike and to
submit his findings and recommendations within ten days from submission of the case by the parties,
and enjoined the parties to cease and desist from any
______________
16 Rollo, p. 177.
768
768
act that may “aggravate the employer-employee relationship.” On January 17, 1990, Acting Secretary of
Labor Dionisio L. de la Serna, “dismissed” for lack of merit the University’s motion for reconsideration
and affirmed the Order of May 23, 1989. He noted the fact that the March 7, 1985 collective bargaining
proposals of the DWUEU had not been validly withdrawn as the union’s vice-president had resigned and
the withdrawal was signed only by three of the eight members of the Executive Board of said union.
Granting that the withdrawal was valid, the Acting Secretary believed that it did not “exculpate the
University from the duty to bargain with the Union” because the collective bargaining processes had
been “set in motion from the time the CBA proposals was (sic) received by the University until the
impasse took place on account of its failure to reply to the Union’s letters pursuing its CBA proposals
dated March 11 and 23, 1988.”
On the University’s assertion that no negotiations took place insofar as the March 7, 1985 collective
bargaining proposals are concerned, the Acting Secretary found that:
“x x x. The records indicate otherwise. Conciliation meetings were conducted precisely to discuss the
CBA proposals the Union submitted to the University on March 7, 1985. As a matter of fact, the
University admitted the existence of the deadlock when a provision was incorporated in the agreement
it signed on May 10, 1988 with the Union which reads:
‘a. That on the matter of Bargaining Deadlock—
1. Union will submit their (renewed) CBA proposals on Friday May 13,1988 for whatever action
management will take.
2. Union and Management agree to sit down and determine the number of employees that will
represent (constitute) their bargaining unit;
x x x’
On account of the deadlock regarding the March 7, 1985 CBA proposals, it was agreed that the Union
submit a renewed CBA proposal which it did on May 19, 1988. The records indicate that no response
was made by the University. The uncooperative posture of the University to respond and continue with
the negotiations could very well be explained when one (1) hour prior to the start of the conciliation on
May 10, 1988, the University filed a Petition for
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769
Certification with (sic) Regional Office. The surreptitious filing of the petition and at the same time
cunningly entering into an agreement which required the Union to submit a renewed CBA proposal, is
patently negotiating in bad faith. The University should have candidly and timely raised the issue of
representation, if it believed that such issue was valid, not by entering into an agreement. The May 10,
1988 Agreement only served to falsely heighten the expectations of the Union and this Office that a
mutually acceptable settlement of the dispute was in the offing. This Office cannot tolerate such
actuations by the University.”17
The Acting Secretary then concluded that for reneging on the agreement of May 10, 1988 and for its
“reluctance and subscription to legal delay,” the University should be “declared in default.” He also
maintained that since under the circumstances the University cannot claim deprivation of due process,
the Office of the Secretary of Labor may rightfully impose the Union’s May 19, 1988 collective
bargaining agreement proposals motu proprio. On the University’s contention that the motion for
intervention of the DWU-IFEU was not resolved, the Acting Secretary ruled that said motion was in
effect denied when the petition for certification election filed by the University was dismissed in the
Order of May 23, 1989.
Hence, the University had recourse to instant petition.
In its petition for certiorari and prohibition with preliminary injunction filed on February 9, 1990, the
University raises as grounds therefor the following:
“A. Respondent Secretary committed grave and patent abuse of discretion amounting to lack of
jurisdiction in issuing his order dated 17 January 1990 finally denying petitioner’s motion for
reconsideration in the face of the order dated 29 December 1989 and subsequent acts of DOLE official
subsuming the second notice of strike with the first notice of strike.
B. In the absence of a certified CBA and there having been no certification election held in petitioner
unit for more than five (5) years, a certification election is mandatory.
C. Respondent Secretary committed grave and patent abuse of
_______________
17 Rollo, pp. 201-202.
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discretion in issuing his orders dated 23 May 1988 and 17 January 1990 disregarding evidence on record,
provisions of law and established jurisprudence.
D. Petitioner was denied due process.”18
Citing the dispositive portion of the December 29, 1989 Order of the Secretary of Labor which states
that the issues raised in the May 5, 1989 notice of strike “are ordered subsumed in this case” and
elaborating on the meaning of the word “subsume,” i.e., “to include within a larger class, group, order,
etc.,”19 the petitioner University argues that the Secretary of Labor “cannot resolve petitioner’s and
(intervenor) DWU-IFEU’s motions for reconsideration (in the NS. 1) of the Order dated 23 May 1989
until the proceedings in the subsumed NS. 2 are terminated.” It opines that since the Regional Director
is an extension of the Secretary of Labor, the latter should have waited for the recommendation of the
former on the issues in notices of strike Nos. 1 and 2 before he issued the Order of January 17, 1990.
We agree with the Acting Secretary of Labor’s observation that the motion for intervention had in effect
been denied by the dismissal of the petition for certification election in the May 23, 1989 Order. The sub
silencio treatment of the motion for intervention in said Order does not mean that the motion was
overlooked. It only means, as shown by the findings of facts in the same Order, that there was no
necessity for the holding of a certification election wherein the DWU-IFEU could participate. In this
regard, petitioner’s undue interest in the resolution of the DWU-IFEU’s motion for intervention becomes
significant since a certification election is the sole concern of employees except where the employer
itself has to file a petition for certification election. But once an employer has filed said petition, as the
petitioner did in this case, its active role ceases and it becomes a mere bystander. Any uncalled-for
concern on the part of the employer may give rise to the suspicion that it is
______________
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batting for a company union.20
Petitioner’s contention that the Acting Secretary of Labor should have deferred the issuance of the
Order of January 17, 1990 until after his receipt of the Regional Director’s recommendation on the
notices of strike is, under the circumstances, untenable. Ideally, a single decision or order should settle
all controversies resulting from a labor dispute. This is in consonance with the principle of avoiding
multiplicity of suits. However, the exigencies of a case may also demand that some matters be threshed
out and resolved ahead of the others. Any contrary interpretation of the Secretary of Labor’s powers
under Art. 263(g) of the Labor Code on this matter would only result in confusion and delay in the
resolution of the manageable aspects of the labor dispute.
In this case, resolution of the motion for reconsideration at the earliest possible time was urgently
needed to set at rest the issues regarding the first notice of strike, the certification election and the
unfair labor practice cases filed by the University and the DWUEU-ALU. The nature of the business of the
University demanded immediate and effective action on the part of the respondent public officials.
Otherwise, not only the contending parties in the dispute would be adversely affected but more
importantly, the studentry and their parents. It should be emphasized that on January 17, 1990, the
second notice of strike could not have been resolved as yet considering that at that time, Regional
Director Teddy S. Cabeltes was still conducting the conference between the parties in pursuance of the
directive in the Order of December 19, 1989. The Secretary, or for that matter, the Acting Secretary,
could not have intended the efforts of the Regional Director to be inutile or fruitless. Thus, when he set
aside the issues raised in the second notice of strike, the Acting Secretary was acting in accordance with
the exigencies of the circumstances of the case. Hardly can it be said to be an abuse of his discretion.
On the issue of whether or not a certification election should
______________
20 See; Trade Unions of the Philippines and Allied Services v. Trajano, G.R. No. 61153, January 17, 1983,
120 SCRA 64, 66.
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have been ordered by the Secretary of Labor, pertinent are the following respective provisions of the
Labor Code and Rule V, Book V of the Implementing Rules and Regulations of the same Code:
“ART. 258. When an employer may file petition.—When requested to bargain collectively, an employer
in the unit, the Bureau shall, after hearing, order a certification election.
All certification cases shall be decided within twenty (20) working days.
The Bureau shall conduct a certification election within twenty (20) days in accordance with the rules
and regulations prescribed by the Secretary of Labor.
Sec. 3. When to file.—In the absence of a collective bargaining agreement duly registered in accordance
with Article 231 of the Code, a petition for certification election may be filed at any time. However, no
certification election may be held within one year from the date of issuance of a final certification
election result. Neither may a representation question be entertained if, before the filing of a petition
for certification election, a bargaining deadlock to which an incumbent or certified bargaining agent is a
party had been submitted to conciliation or arbitration or had become the subject of valid notice of
strike or lockout. (Italics supplied)
If a collective bargaining agreement has been duly registered in accordance with Article 231 of the Code,
a petition for certification election or a motion for intervention can only be entertained within sixty (60)
days prior to the expiry date of such agreement.”
These provisions make it plain that in the absence of a collective bargaining agreement, an employer
who is requested to bargain collectively may file a petition for certification election any time except
upon a clear showing that one of these two instances exists: (a) the petition is filed within one year from
the date of issuance of a final certification election result or (b) when a bargaining deadlock had been
submitted to conciliation or arbitration or had become the subject of a valid notice of strike or lockout.
While there is no question that the petition for certification election was filed by the herein petitioner
after almost four
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years from the time of the certification election and, therefore, there is no question as to the timeliness
of the petition, the problem appears to lie in the fact that the Secretary of Labor had found that a
bargaining deadlock exists.
A “deadlock” is defined as the “counteraction of things producing entire stoppage: a state of inaction or
of neutralization caused by the opposition of persons or of factions (as in government or a voting body):
standstill.”21 There is a deadlock when there is a “complete blocking or stoppage resulting from the
action of equal and opposed forces; as, the deadlock of a jury or legislature.”22 The word is synonymous
with the word impasse23 which, within the meaning of the American federal labor laws, “presupposes
reasonable effort at good faith bargaining which, despite noble intentions, does not conclude in
agreement between the parties.”24
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 attitude 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 undertaken only by the DWUEU-ALU, there was no “counteraction” of forces or an impasse
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 clear from the
provisions of the Labor Code Art. 250(a) of which states:
“ART. 250. Procedure in collective bargaining.—The following procedures shall be observed in collective
bargaining:
(a) When a party desires to negotiate an agreement, it shall serve a written notice upon the other party
with a statement of its
_______________
21 Webster’s Third New International Dictionary, 1986 Ed., p. 580.
22 Webster’s New Twentieth Century Dictionary, 2nd Ed., p. 465.
23 William C. Burton’s Legal Thesaurus, 1980 Ed., p. 133.
24 N.L.R.B. v. Bancroft, 635 F.2d 492 (1981).
774
774
proposals. The other party shall make a reply thereto not later than ten (10) calendar days from receipt
of such notice.
(b) Should differences arise on the basis of such notice and reply, either party may request for a
conference which shall begin not later than ten (10) calendar days from the date of request.
(c) If the dispute is not settled, the Board shall intervene upon request of either or both parties or at its
own initiative and immediately call the parties to conciliation meetings. The Board shall have the power
to issue subpoenas requiring the attendance of the parties to such meetings. It shall be the duty of the
parties to participate fully and promptly in the conciliation meetings the Board may call;
(d) During the conciliation proceedings in the Board, the parties are prohibited from doing any act which
may disrupt or impede the early settlement of the disputes; and
(e) The Board shall exert all efforts to settle disputes amicably and encourage the parties to submit their
case to a voluntary arbitrator.”
Considering the procedure outlined above, the Court cannot help but notice that the DWUEU was not
entirely blameless in the matter of the delay in the bargaining process. While it is true that as early as
March 7, 1985, said union had submitted its collective bargaining proposals and that, its subsequent
withdrawal by the DWUEU vice-president being unauthorized and therefore ineffective, the same
proposals could be considered as subsisting, the fact remains that said union remained passive for three
years. The records do not show that during this three-year period, it exerted any effort to pursue
collective bargaining as a means of attaining better terms of employment.
It was only after its affiliation with the ALU that the same union, through the ALU Director for
Operations, requested an “initial conference” for the purpose of collective bargaining.25 That the
DWUEU abandoned its collective bargaining proposals prior to its affiliation with ALU is further
confirmed by the fact that in the aforequoted May 10, 1988 agreement with the University, said Union
bound itself to submit a new set of proposals on May 13, 1988. Under the circumstances, the agree-
______________
25 Rollo, p. 154.
775
775
ment of May 10, 1988 may as well be considered the written notice to bargain referred to in the
aforequoted Art. 250(a) of the Labor Code, which thereby set into motion the machinery for collective
bargaining, as in fact, on May 19, 1988, DWUEU-ALU submitted its collective bargaining proposals.
Be that as it may, the Court is not inclined to rule that there has been a deadlock or an impasse in the
collective bargaining process. As the Court earlier observed, there has not been a “reasonable effort at
good faith bargaining” on the part of the University. While DWUEU-ALU was opening all possible
avenues for the conclusion of an agreement, the record is replete with evidence on the University’s
reluctance and thinly disguised refusal to bargain with the duly certified bargaining agent, such that the
inescapable conclusion is that the University evidently had no intention of bargaining with it. Thus, while
the Court recognizes that technically, the University has the right to file the petition for certification
election as there was no bargaining deadlock to speak of, to grant its prayer that the herein assailed
Orders be annulled would put an unjustified premium on bad faith bargaining.
Bad faith on the part of the University is further exemplified by the fact that an hour before the start of
the May 10, 1988 conference, it surreptitiously filed the petition for certification election. And yet
during said conference, it committed itself to “sit down” with the Union. Obviously, the University tried
to preempt the conference which would have legally foreclosed its right to file the petition for
certification election. In so doing, the University failed to act in accordance with Art. 252 of the Labor
Code which defines the meaning of the duty to bargain collectively as “the performance of a mutual
obligation to meet and convene promptly and expeditiously in good faith.” Moreover, by filing the
petition for certification election while agreeing to confer with the DWUEU-ALU, the University violated
the mandate of Art. 19 of the Civil Code that “(e)very person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.”
Moreover, the University’s unscrupulous attitude towards the DWUEU-ALU is also betrayed by its
belated questioning of
776
776
the status of the said union. The communications between them afforded the University ample
opportunity to raise the issue of representation if indeed it was doubtful of the DWUEU-ALU’s status as
a majority union, but it failed to do so. On the other hand, in the agreement of May 10, 1988, the
University even agreed “to sit down and determine the number of employees that will represent their
bargaining unit.” This clearly indicates that the University recognized the DWUEU-ALU as the bargaining
representative of the employees and is, therefore, estopped from questioning the majority status of the
said union.
Hence, petitioner’s contention that the DWUEU-ALU’s proposals may not be unilaterally imposed on it
on the ground that a collective bargaining agreement is a contract 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,26 where we upheld the order of the NLRC declaring the union’s draft CBA proposal as the
collective agreement which should govern the relationship between the parties. Kiok Loy v. NLRC is
applicable in the instant case considering that the facts 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
request to bargain and submitted its collective bargaining proposals, and (c) the University made no
counter proposal whatsoever. As we said in Kiok Loy, “[a] company’s refusal to make counter proposal if
considered in relation to the entire bargaining process, may indicate bad faith and this is especially true
where the Union’s request for a counter proposal is left unanswered.”27 Moreover, the Court added in
the same case that “it is not obligatory upon either side of a labor controversy to precipitately accept or
agree to the proposals of the other. But an erring party should not be tolerated and allowed with
impunity to resort to schemes feigning negotiations by going through empty gestures.”28
_______________
26 G.R. No. 54334, January 22, 1986, 141 SCRA 179.
27 Ibid., p. 186.
28 Ibid., p. 188.
777
777
People vs. Casinillo
That being the said case, the petitioner may not validly assert that its consent should be a primordial
consideration in the bargaining process. By its acts, no less than its inaction which bespeak its
insincerity, it has forfeited whatever rights it could have asserted as an employer. We, therefore, find it
superfluous to discuss the two other contentions in its petition.
WHEREFORE, the instant petition is hereby DISMISSED for lack of merit. This decision is immediately
executory. Costs against the petitioner.
SO ORDERED.
Bidin, Davide, Jr. and Melo, JJ., concur.
Gutierrez, Jr., J., On official leave.
Petition dismissed; decision immediately executory.
Note.—Employer is not a party in a certification election; such activity is the sole concern of the workers
(Rizal Workers Union vs. Ferrer-Calleja, 186 SCRA 431).
——o0o—— Divine Word University of Tacloban vs. Secretary of Labor and Employment, 213 SCRA 759,
G.R. No. 91915 September 11, 1992
504
Nestlé Philippines, Inc. vs. NLRC
G.R. No. 91231. February 4, 1991.*
NESTLÉ PHILIPPINES, INC., petitioner, vs. THE NATIONAL LABOR RELATIONS COMMISSION and UNION
OF FILIPRO EMPLOYEES, respondents.
Labor Law; Evidence; Court agrees with the NLRC’s finding that the Retirement Plan was a collective
bargaining issue right from the start.—The Court agrees with the NLRC’s finding that the Retirement
Plan was “a collective bargaining issue right from the start” (p. 109, Rollo) for the improvement of the
existing Retirement Plan was one of the original CBA proposals submitted by the UFE on May 8, 1987
to Arthur Gilmour, president of Nestlé Philippines. The union’s original proposal was to modify the
existing plan by including a provision for early retirement. The company did not question the validity
of that proposal as a collective bargaining issue but merely offered to maintain the existing non-
contributory retirement plan which it believed to be still adequate for the needs of its employees, and
competitive with those existing in the industry. The union thereafter modified its proposal, but the
company was adamant. Consequently, the impassé on the retirement plan became one of the issues
certified to the NLRC for compulsory arbitration.
Same; Same; Same; The company’s contention that its retirement plan is non-negotiable is not well-
taken.—The company’s contention
_______________
* FIRST DIVISION.
505
505
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 their loyalty, boost their
morale and efficiency and promote industrial peace, gives “a consensual character” to the plan so that
it may not be terminated or modified at will by either party.
Same; Same; Same; Fact that the retirement plan is non-contributory does not make it a non-issue in
the CBA negotiations.—The fact that the retirement plan is non-contributory, i.e., that the employees
contribute nothing to the operation of the plan, does not make it a non-issue in the CBA negotiations.
As a matter of fact, almost all of the benefits that the petitioner has granted to its employees under
the CBA—salary increases, rice allowances, midyear bonuses, 13th and 14th month pay, seniority pay,
medical and hospitalization plans, health and dental services, vacation, sick & other leaves with pay—
are non-contributory benefits. Since the retirement plan has been an integral part of the CBA since
1972, the Union’s demand to increase the benefits due the employees under said plan, is a valid CBA
issue.
Same; Same; Same; Petitioner’s contention that employees have no vested or demandable right to a
non-contributory retirement plan has no merit; Reason.—The petitioner’s contention, that employees
have no vested or demandable right to a non-contributory retirement plan, has no merit for
employees do have a vested and demandable right over existing benefits voluntarily granted to them
by their employer. The latter may not unilaterally withdraw, eliminate or diminish such benefits.
Same; Same; NLRC’s resolution of the bargaining deadlock between Nestlé and its employees.—The
NLRC’s resolution of the bargaining deadlock between Nestlé and its employees is neither arbitrary,
capricious, nor whimsical. The benefits and concessions given to the employees were based on the
NLRC’s evaluation of the union’s demands, the evidence adduced by the parties, the financial capacity
of the Company to grant the demands, its longterm viability, the economic conditions prevailing in the
country as they affect the purchasing power of the employees as well as its concommitant effect on
the other factors of production, and the recent trends in the industry to which the Company belongs
(p. 57, Rollo). Its decision is not vitiated by abuse of discretion.
506
506
Siguion Reyna, Montecillo & Ongsiako for petitioner.
Banzuela, Flores, Miralles, Rañeses, Sy, Taquio & Associates for private respondent.
GRIÑO-AQUINO, J.:
Nestlé Philippines, Inc., by this petition for certiorari, seeks to annul, on the ground of grave abuse of
discretion, the decision dated August 8, 1989 of the National Labor Relations Commission (NLRC),
Second Division, in Cert. Case No. 0522 entitled, “In Re: Labor Dispute of Nestlé Philippines, Inc.” insofar
as it modified the petitioner’s existing non-contributory Retirement Plan.
Four (4) collective bargaining agreements separately covering the petitioner’s employees in its:
1. Alabang/Cabuyao factories;
2. Makati Administration Office. (Both Alabang/ Cabuyao factories and Makati office were represented
by the respondent, Union of Filipro Employees [UFE]);
3. Cagayan de Oro Factory represented by WATU; and
4. Cebu/Davao Sales Offices represented by the Trade Union of the Philippines and Allied Services
(TUPAS), all expired on June 30, 1987.
Thereafter, UFE was certified as the sole and exclusive bargaining agent for all regular rank-and-file
employees at the petitioner’s Cagayan de Oro factory, as well as its Cebu/Davao Sales Office.
In August, 1987, while the parties, were negotiating, the employees at Cabuyao resorted to a
“slowdown” and walk-outs prompting the petitioner to shut down the factory. Marathon collective
bargaining negotiations between the parties ensued.
On September 2, 1987, the UFE declared a bargaining deadlock. On September 8, 1987, the Secretary of
Labor assumed jurisdiction and issued a return to work order. In spite of that order, the union struck,
without notice, at the Alabang/Cabuyao factory, the Makati office and Cagayan de Oro factory on Sep-
507
507
tember 11, 1987 up to December 8, 1987. The company retaliated by dismissing the union officers and
members of the negotiating panel who participated in the illegal strike. The NLRC affirmed the
dismissals on November 2, 1988.
On January 26, 1988, UFE filed a notice of strike on the same ground of CBA deadlock and unfair labor
practices. However, on March 30, 1988, the company was able to conclude a CBA with the union at the
Cebu/Davao Sales Office, and on August 5, 1988, with the Cagayan de Oro factory workers. The union
assailed the validity of those agreements and filed a case of unfair labor practice against the company
on November 16, 1988.
After conciliation efforts of the National Conciliation and Mediation Board (NCMB) yielded negative
results, the dispute was certified to the NLRC by the Secretary of Labor on October 28, 1988.
After the parties had filed their pleadings, the NLRC issued a resolution on June 5, 1989, whose
pertinent disposition regarding the union’s demand for liberalization of the company’s retirement plan
for its workers, provides as follows:
“xxx xxx xxx.
“7. Retirement Plan
“The company shall continue implementing its retirement plan modified as follows:
“a) for fifteen years of service or less—an amount equal to 100% of the employee’s monthly salary for
every year of service;
“b) more than 15 but less than 20 years—125% of the employee’s monthly salary for every year of
service;
“c) 20 years or more—150% of the employee’s monthly salary for every year of service.” (pp. 58-59,
Rollo.)
Both parties separately moved for reconsideration of the decision.
On August 8, 1989, the NLRC issued a resolution denying the motions for reconsideration. With regard
to the Retirement Plan, the NLRC held:
“Anent management’s objection to the modification of its Retirement Plan, We find no cogent reason to
alter our previous decision on this matter.
508
508
“While it is not disputed that the plan is non-contributory on the part of the workers, this does not
automatically remove it from the ambit of collective bargaining negotiations. On the contrary, the plan
is specifically mentioned in the previous bargaining agreements (Exhibits ‘R-1’ and ‘R-4’), thereby
integrating or incorporating the provisions thereof to the agreement. By reason of its incorporation, the
plan assumes a consensual character which cannot be terminated or modified at will by either party.
Consequently, it becomes part and parcel of CBA negotiations.
“However, We need to clarify Our resolution on this issue. When we increased the emoluments in the
plan, the conditions for the availment of the benefits set forth therein remain the same.” (p. 32, Rollo.)
On December 14, 1989, the petitioner filed this petition for certiorari, alleging that since its retirement
plan is non-contributory, it (Nestlé) has the sole and exclusive prerogative to define the terms of the
plan “because the workers have no vested and demandable rights thereunder, the grant thereof being
not a contractual obligation but merely gratuitous. At most the company can only be directed to
maintain the same but not to change its terms. It should be left to the discretion of the company on how
to improve or modify the same” (p. 10, Rollo).
The Court agrees with the NLRC’s finding that the Retirement Plan was “a collective bargaining issue
right from the start” (p. 109, Rollo) for the improvement of the existing Retirement Plan was one of the
original CBA proposals submitted by the UFE on May 8, 1987 to Arthur Gilmour, president of Nestlé
Philippines. The union’s original proposal was to modify the existing plan by including a provision for
early retirement. The company did not question the validity of that proposal as a collective bargaining
issue but merely offered to maintain the existing non-contributory retirement plan which it believed to
be still adequate for the needs of its employees, and competitive with those existing in the industry. The
union thereafter modified its proposal, but the company was adamant. Consequently, the impassé on
the retirement plan become one of the issues certified to the NLRC for compulsory arbitration.
The company’s contention that its retirement plan is non-negotiable, is not well-taken. The NLRC
correctly observed that
509
509
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 their loyalty, boost their
morale and efficiency and promote industrial peace, gives “a consensual character” to the plan so that it
may not be terminated or modified at will by either party (p. 32, Rollo).
The fact that the retirement plan is non-contributory, i.e., that the employees contribute nothing to the
operation of the plan, does not make it a non-issue in the CBA negotiations. As a matter of fact, almost
all of the benefits that the petitioner has granted to its employees under the CBA—salary increases, rice
allowances, midyear bonuses, 13th and 14th month pay, seniority pay, medical and hospitalization
plans, health and dental services, vacation, sick & other leaves with pay—are non-contributory benefits.
Since the retirement plan has been an integral part of the CBA since 1972, the Union’s demand to
increase the benefits due the employees under said plan, is a valid CBA issue. The deadlock between the
company and the union on this issue was resolvable by the Secretary of Labor, or the NLRC, after the
Secretary had assumed jurisdiction over the labor dispute (Art. 263, subparagraph [i] of the Labor Code).
The petitioner’s contention, that employees have no vested or demandable right to a non-contributory
retirement plan, has no merit for employees do have a vested and demandable right over existing
benefits voluntarily granted to them by their employer. The latter may not unilaterally withdraw,
eliminate or diminish such benefits (Art. 100, Labor Code; Tiangco, et al. vs. Hon. Leogardo, et al., 122
SCRA 267).
This Court ruled similarly in Republic Cement Corporation vs. Honorable Panel of Arbitrators, G.R. No.
89766, Feb. 19, 1990:
“x x x. Petitioner’s claim that retirement benefits, being non-contributory in nature, are not proper
subjects for voluntary arbitration is devoid of merit. The expired CBA previously entered into by the
parties included provisions for the implementation of a ‘Retirement and Separation Plan.’ It is only to be
expected that the parties would seek a renewal or an improvement of said item in the new CBA. In
510
510
fact, the parties themselves expressly included retirement benefits among the economic issues to be
resolved by voluntary arbitration. Petitioner is estopped from now contesting the validity of the
increased award granted by the arbitrators.” (p. 145, Rollo.)
The NLRC’s resolution of the bargaining deadlock between Nestlé and its employees is neither arbitrary,
capricious, nor whimsical. The benefits and concessions given to the employees were based on the
NLRC’s evaluation of the union’s demands, the evidence adduced by the parties, the financial capacity of
the Company to grant the demands, its longterm viability, the economic conditions prevailing in the
country as they affect the purchasing power of the employees as well as its concommitant effect on the
other factors of production, and the recent trends in the industry to which the Company belongs (p. 57,
Rollo). Its decision is not vitiated by abuse of discretion.
WHEREFORE, the petition for certiorari is dismissed, with costs against the petitioner.
SO ORDERED.
Narvasa (Chairman), Gancayco and Medialdea, JJ., concur. Cruz, J., No part. Related to petitioner’s
counsel.
Petition dismissed.
Note.—Under Section 15 of Presidential Decree No. 529, any benefit over and above the prescribed
allowances may still be agreed upon by the employees and employer. (Liberty Flour Mills Employees vs.
Liberty Flour Mills, Inc., 180 SCRA 668.)
——o0o—— Nestlé Philippines, Inc. vs. NLRC, 193 SCRA 504, G.R. No. 91231 February 4, 1991
ADMINISTRATION OF THE CBA; GRIEVANCE AND VOLUNTARY ARBITRATION
VOL. 45, JUNE 30, 1972
577
Mactan Workers Union vs. Aboitiz
56
MACTAN WORKERS UNION and TOMAS FERRER, as President thereof, plaintiffs-appellees, vs. DON
RAMON ABOITIZ, President, Cebu Shipyard & Engineering Works, Inc.; EDDIE LIM, as Treasurer; JESUS
DIAGO, Superintendent of the aforesaid corporation; WILFREDO VIRAY, as Resident Manager of the
Shipyard & Engineering Works, Inc.; and the CEBU SHIPYARD & ENGINEERING WORKS, INC,
defendants-appellees; ASSOCIATION LABOR UNION, intervenor-appellant.
Industrial Peace Act; Collective bargaining agreement; Effect of.—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 provisions. In the event that an obligation therein imposed is not fulfilled, the
aggrieved party has the right to go to court for redress.
Some; Same; Collective bargaining agreement benefits extend even to non-union members.—It is a
well-settled doctrine that the benefits of a collective bargaining agreement extend to the laborers and
employees in the collective bargaining unit, including those who do not belong to the chosen
bargaining labor organization.
Same; Same; Enforcement of collective bargaining agreement cognizable by ordinary courts.—Section

88 of the Judiciary Act in providing for the original jurisdiction of city courts in civil cases provides: “In
all civil actions, including those mentioned in Rules fifty-nine and sixty-two (now Rules 57 and 60) of
the Rules of Court, arising in his municipality or city, and not
578
578
exclusively cognizable by the Court of First Instance, the municipal judge and the judge of a city court
shall have exclusive original jurisdiction where the value of the subject matter or amount of the
demand does not exceed ten thousand pesos, exclusive of interests and costs.” The amount claimed
by plaintiff on behalf of its members was P4,035.82 and if the damages and attorneys’ fees be added,
the total sum was less than P10,000.00. It is true that if an element of unfair labor practice may be
discerned in a suit for the enforcement of a collective bargaining contract, then the matter is solely
cognizable by the Court of Industrial Relations. It is equally true that as of the date the lower court
decision was rendered, the question of such enforcement had been held to be for the regular courts
to pass upon.
APPEAL from a decision of the Court of First Instance of Cebu. Borromeo, J .
Seno, Mendoza & Associates for intervenor-appellant.
Andales Law Office for plaintiffs-appellees.
Pedro B. Uy Calderon for defendants-appellees.
FERNANDO, J.:
The dispute in this appealed decision from the Court of First Instance of Cebu on questions of law is
between plaintiff Mactan Workers Union1 and intervenor Associated Labor Union. The former in its
complaint on behalf of seventy-two of its members working in defendant corporation, Cebu Shipyard
and Engineering Works, Inc.2 did file a money claim in the amount of P4,035.82 representing the second
installment of a profit-sharing agreement under a collective bargaining contract entered into between
such business firm and intervenor labor union as the exclusive collective bargaining representative of its
workers The plaintiff was successful both in the City Court of Lapulapu where such complaint was first
started as well as in the Court of First Instance of Cebu. It is from the deci-
________________
1Its President, Tomas Ferrer, was joined as co-plaintiff

2Its President, Ramon Aboitiz, its Treasurer Eddie Lim, its Superintendent, Jesus Diago and Resident
Manager, Wil Viray, were joined as co-defendants
579
VOL. 45, JUNE 30, 1972
579
sion of the latter court, rendered on February 22, 1968, that this appeal was interposed by intervenor
Associated Labor Union. It must have been an awareness on appellant’s part that on the substantive
aspect, the claim of plaintiff to what was due its members under such collective bargaining agreement
was meritorious that led it to rely on alleged procedural obstacles for the reversal sought. Intervenor,
however, has not thereby dented the judgment. As will be more fully explained, there are no applicable
procedural doctrines that stand in the way of plaintiff’s suit. We affirm.
The facts are not in dispute. According to the decision: “From the evidence presented it appears that the
defendant Cebu Shipyard & Engineering Works, Inc. in Lapulapu City is employing laborers and
employees belonging to two rival labor unions. Seventy-two of these employees or laborers whose
names appear in the complaint are affiliated with the Mactan Workers Union while the rest are
members of the intervenor Associated Labor Union. On November 28, 1964, the defendant Cebu
Shipyard & Engineering Works, Inc. and the Associated Labor Union entered into a ‘Collective Bargaining
Agreement’* * * the pertinent part of which, Article XIII thereof, [reads thus]:’ * * *. The [Company]
agrees to give a profit-sharing bonus to its employees and laborers to be taken from ten per cent (10%)
of its net profits or net income derived from the direct operation of its shipyard and shop in Lapu-Lapu
City and after deducting the income tax and the bonus annually given to its General Manager and the
Superintendent and the members of the Board of Directors and Secretary of the Corporation, to be
payable in two (2) installments, the first installment being payable in March and the second installment
in June, each year out of the profits in agreement. In the computation of said ten per cent (10%) to [be]
distributed as a bonus among the employees and laborers of the [Company] in proportion to their
salaries or wages, only the income derived by the [Company] from the direct operation of its shipyard
and shop in Lapulapu City, as stated herein-above-commencing from the earnings during the year 1964,
shall be included. Said profit-shar-
580
580
ing bonus shall be paid by the [Company] to [Associated Labor Union] to be delivered by the latter to the
employees and laborers concerned and it shall be the duty of the Associated Labor Union to furnish and
deliver to the [Company] the corresponding receipts duly signed by the laborers and employees entitled
to receive the profit-sharing bonus within a period of sixty (60) days from the date of receipt by [it] from
the [Company] of the profit-sharing bonus. If a laborer or employee of the [Company] does not want to
accept the profit-sharing bonus which the said employees or laborer is entitled under this Agreement, it
shall be the duty of the [Associated Labor Union] to return to the money received by [it] as profit-
sharing bonus to the [Company] with a period of sixty (60) days from the receipt by the [Union] from the
[Company] of the said profit-sharing bonus.’”3 The decision went on to state: “In compliance with the
said collective bargaining agreement, in March, 1965 the defendant Cebu Shipyard & Engineering
Works, Inc. delivered to the ALU for distribution to the laborers or employees working with the
defendant corporation to the profit-sharing bonus corresponding to the first installment for the year
1965. Again in June 1965 the defendant corporation delivered to the Associated Labor Union the profit-
sharing bonus corresponding to the second installment for the 1965. The members of the Mactan
Workers Union failed to receive their shares in the second installment of bonus because they did not like
to go to the office of the ALU to collect their shares. In accordance with the terms of the collective
bargaining after 60 days, the uncollected shares of the plaintiff union members was returned by the ALU
to the defendant corporation. At the same time the defendant corporation was advised by the ALU not
to deliver the said amount to the members of the Mactan Workers Union unless ordered by the Court,
otherwise the ALU will take such step to protect the interest of its members * * *. Because this warning
given by the intervenor union the defendant corporation did not pay to the plaintiffs the sum of
P4,035.82 which was returned by the Associated Labor Union, but instead, deposited the said
________________
3 Decision, Record on Appeal, pp. 95-97.
581
VOL. 45, JUNE 30, 1972
581
amount with the Labor Administrator. For the recovery of this amount this case was filed with the lower
court.”4
The dispositive portion of such decision follows: “[Wherefore], judgment is hereby rendered ordering
the defendants to deliver to the Associated Labor Union the sum of P4,-035.82 for distribution to the
employees of the defendant corporation who are members of the Mactan Workers Union; and ordering
the intervenor Associated Labor Union, immediately after receipt of the said amount, to pay the
members of the Mactan Workers Union their corresponding shares in the profit-sharing bonus for the
second installments for the year 1965.”5
It is from such a decision that an appeal was taken by intervenor Associated Labor Union. As is quite
apparent on the face of such judgment, the lower court did nothing except to require literal compliance
with the terms of a collective bargaining contract. Nor, as will be hereafter discussed, has any weakness
thereof been demonstrated on the procedural questions raised by appellant. To repeat, we have to
affirm.
1. 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 provisions. In the event that an obligation therein
imposed is not fulfilled, the aggrieved party has the right to go to court for redress.6 Nor does it suffice
as a defense that the claim is made on behalf of non-members of intervenor Associated Labor Union, for
it is a well-settled doctrine that the benefits of a collective bargaining agreement extend to the laborers
and employees in the collective bargaining unit, including those who do not belong to the chosen
bargaining labor organization.7 Any other view would be a dis-
_______________
4 Ibid, pp. 97-98.
5Ibid, p. 100.
6 Cf. Article 1159 and Articles 1700-1702 of the Civil Code. Also Shell Oil Workers Union v. Shell
Company of the Philippines, L-28607, May 31, 1971, 39 SCRA 276.
7 Cf. Rivera v. San Miguel Brewery, Inc., L-26197, July 20, 1968 24 SCRA 86. Citing Leyte Land
Transportation v. Leyte Fanners’ and Laborers’ Union, 80 Phil. 842 (1948); Land Set-
582
582
crimination on which the law frowns. It is appropriate that such should be the case. As was held in
United Restauror’s Employees and Labor Union v. Torres,8 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.”9 If it were otherwise, the highly 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 would be frustrated insofar as non-members are concerned, deprived as they are of
participation in whatever advantages could thereby be gained. The labor union that gets the majority
vote as the exclusive bargaining representative does not act for its members alone. It represents all the
employees in such a bargaining unit. 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 plaintiff Mactan Labor Union.
The outcome was not at all unexpected. The right being clear all that had to be done was to see to its
enforcement. Nor did the lower court in the decision now on appeal, require-anything else other than
that set forth in the collective bargaining agreement. All that was done was to have the covenants
therein contained as to the profit-sharing scheme carried out and respected. It would be next to
impossible for intervenor Associated Labor Union to point to any feature thereof that could not in any
wise be objected to as repugnant to the provisions of the collective bargaining contract. Certainly the
lower court, as did the City Court of Lapulapu, restricted itself to compelling the parties to abide by what
was agreed upon. How then can the appealed decision be impugned?
_______________
tlement and Development Corporation v. Caledonia Pile Workers’ Union, 90 Phil. 817 (1952); Price
Stabilization Corporation v. Prisco Workers’ Union, 104 Phil. 1066 (1958) and International Oil Factory
Workers Union v. Martinez, 110 Phil. 595 (1960).
8 L-24993, December 18, 1968, 26 SCRA 435.
9 Ibid, p. 440.
583
VOL. 45, JUNE 30, 1972
588
2. Intervenor Associated Labor Union, laboring under such a predicament had perforce to rely on what it
considered procedural lapses. It would assail the alleged lack of a cause of action, of jurisdiction of the
City Court of Lapulapu and of personality of the Mactan Workers Union to represent its members. There
is no merit to such an approach. The highly sophistical line of argument followed in its brief as appellant
does not carry a persuasive ring. What is apparent is that intervenor was hard put to prop up what was
inherently a weak, not to say an indefensible, stand. The impression given is that of a litigant clutching at
straws.
How can the allegation of a lack of a cause of action be taken seriously when precisely there was a right
violated on the part of the members of plaintiff Mactan Workers Union, a grievance that called for
redress? The assignment of error that the City Court of Lapulapu was bereft of jurisdiction is singularly
unpersuasive. The amount claimed by plaintiff Mactan Workers Union on behalf of its members was
P4,035.82 and if the damages and attorney’s fees be added, the total sum was less than P10,000.00.
Section 88 of the Judiciary Act in providing for the original jurisdiction of city courts in civil cases
provides: “In all civil actions, including those mentioned in Rules fifty-nine and sixty-two (now Rules 57
and 60) of the Rules of Court, arising in his municipality or city, and not exclusively cognizable by the
Court of First Instance, the municipal judge and the judge of a city court shall have exclusive original
jurisdiction where the value of the subject matter or amount of the demand does not exceed ten
thousand pesos, exclusive of interests and costs.”10 It is true that if an element of unfair labor practice
may be discerned in a suit for the enforcement of a collective bargaining contract, then the matter is
solely cognizable by the Court of Industrial Relations.11 It is equally true that as of the date the
________________
10 Section 88 of the Judiciary Act, Republic Act 296 (1948).
11 Cf. Republic Savings Bank v. Court of Industrial Relations, L-20303, Sept. 27, 1967, 21 SCRA 226;
Security Bank Employees Union v. Security Bank and Trust Co,, L-28536, April 30 1968 23 SCRA 503;
Alhambra Industries, Inc. v. Court of Industrial Relations, L-25984, Oct. 30. 1970. 35 SCRA 550.
584
584
lower court decision was rendered, the question of such enforcement had been held to be for the
regular courts to pass upon.12 Counsel for intervenor Associated Labor Union was precisely the
petitioner in one of the decisions of this Court, Seno v. Mendoza,13 where such a doctrine was
reiterated. In the language of Justice Makalintal, the ponente: “As the issue involved in the instant case,
although arising from a labor dispute, does not refer to one affecting an industry which is indispensable
to the national interest and certified by the President to the Industrial Court, nor to minimum wage
under the Minimum Wage Law, or to hours of employment under the Eight-Hour Labor Law, nor to an
unfair labor practice, but seeks the enforcement of a provision of the collective bargaining agreement, *
* *, jurisdiction pertains to the ordinary courts and not to the Industrial Court.”14 There was only a half-
hearted attempt, if it could be called that, to lend credence to the third error assigned, namely that
plaintiff Mactan Workers Union could not file the suit on behalf of its members. That is evident by
intervenor Associated Labor Union devoting only half a page in its brief to such an assertion. It is easy to
see why it should be thus. On its face, it certainly appeared to be oblivious of how far a labor union can
go, or is expected to, in the defense of the rights of its rank and file. There was an element of surprise,
considering that such a contention came from a labor organization, which under normal condition
should be the last to lay itself open to a charge that it is not averse to denigrating the effectiveness of
labor unions.
3. This brings us to one last point. It is quite understandable that labor unions in their campaign for
membership, for acquiring ascendancy in any shop, plant, or
________________
12 Cf. Dee Cho Lumber Workers’ Union v. Dee Cho Lumber Co 101 Phil 417 (1957); Philippine Sugar
Institute v. Court of Industrial Relations, 106 Phil. 401 (1959); Elizalde Paint and Oil Factory v. Bautista,
110 Phil. 49 (1960); National Mines and Allied Workers Union v. Phil. Iron Mines Inc L-19372, of
Industrial Relations, L-17838, Aug. 1966, 17 SCRA 882.
13 L-20565, Nov. 29, 1967, 21 SCRA 1124

14 Ibid, p. 1131.
585
VOL. 45, JUNE 30, 1972
585
industry would do what lies in their power to put down competing groups. The struggle is likely to be
marked with bitterness, no quarter being given or expected on the part of either side. Nevertheless, it is
not to be forgotten that what is entitled to constitutional protection is labor, or more specifically the
working men and women, not labor organizations. The latter are merely the instrumentalities through
which their welfare may be promoted and fostered. That is the raison d’etre of labor unions. The utmost
care should be taken then, lest in displaying an unyielding, intransigent attitude on behalf of their
members, injustice be committed against opposing labor organizations. In the final analysis, they alone
are not the sole victims, but the labor movement itself, which may well be the recipient of a crippling
blow. Moreover, while it is equally understandable that their counsel would take advantage of every
legal doctrine deemed applicable or conjure up any defense that could serve their cause, still, as officers
of the court, there should be an awareness that resort to such a technique does result in clogged
dockets, without the least justification especially so if there be insistence on flimsy and insubstantial
contentions just to give some semblance of plausibility to their pleadings. Certainly, technical virtuosity,
or what passes for it, is no substitute for an earnest and sincere desire to assure that there be justice
according to law. That is a creed to which all members of the legal profession, labor lawyers not
excluded, should do their best to live by.
WHEREFORE, the decision of the lower court of February 22, 1968 is affirmed. Costs against Associated
Labor Union.
Concepcion, CJ., Reyes, J.BL., Makalintal, Zaldivar, Castro, Teehankee, Barredo, Makasiar and Antonio,
JJ., concur.
Decision affirmed.
Notes.—a) No concurrent jurisdiction between the Court of First Instance and the Court of Industrial
Relations.—Labor disputes arising out of an unfair labor practice com-
586
586
Eastern Textile Mills, Inc. vs. Court of Industrial Relations

mitted by any of the parties do not present a question of concurrent jurisdiction between the Court of
First Instance and the Industrial Court. (Veterans Security Free Workers Union vs. Cloribel, 31 SCRA 297).
b) Jurisdiction of the Court of First Instance.—The Court of First Instance has jurisdiction over the
enforcement of the contractual obligations arising from a collective bargaining agreement. (National
Brewery & Allied Industrial Labor Union vs. Cloribel, 20 SCRA 1083.) Mactan Workers Union vs. Aboitiz,
45 SCRA 577, No. L-30241 June 30, 1972
391
Juat vs. Court of Industrial Relations
No. L-20764. November 29, 1965.
SANTOS JUAT, petitioner, vs. COURT OF INDUSTRIAL RELATIONS, BULAKLAK PUBLICATIONS and JUAN
EVANGELISTA, respondents.
Collective bargaining agreement; Closed-shop proviso; Employees bound.—The closed-shop proviso'

of a collective bargaining agreement entered into between an employer and a duly authorized Iabor
union is- applicable not only to the employees or laborers that are employed after the collective
bargaining agreement had been entered into but also to old employees who are not members of any
labor union at the time the said collective bargaining agreement was entered into. In other words, if
an employee or laborer is already a member of labor union different from the contracting labor
unions said employee or worker cannot be obliged to become a member of that union as a condition
for his continued employment, Upon the other hand, if said employee or worker is a non-member of
any labor union, he can be compelled to join the contracting labor union, and his refusal to do so
would constitute a justifiable basis for dismissal.
PETITION to review by certiorari a decision and a resolution of the Court of Industrial Relations.
Vicente T. Ocampo for petitioner.
Mariano B. Tuason for respondent Court of Industrial Relations.
Rufo B. Albor for other respondents.
ZALDIVAR, J.:
This is a petition for certiorari to review the decision dated August 15, 1982 and the resolution en banc
dated October 30, 1962, of the Court of Industrial Relations in Its Case No. 2889-ULP.
After investigating charges of unfair labor practice filed by petitioner Santos Juat before the Court of
Industrial Relations against respondents Bulaklak Publications and its Executive Officer, Acting
Prosecutor Alberto Cruz
392
392
of the Court of industrial Relations filed a complaint, docketed as Case No. 2889-ULP, charging Bulaklak
Publications and/or Juan N. Evangelista of unfair labor practice within the meaning of Section 4 (a)
subsections 1, 4 and 5 of Republic Act 875, alleging, among: others, that complainant Santos Juat was an
employee of the respondent company since August 1953; that on or about July 15, 1960, and on several
occasions thereafter, complainant Santos Juat was asked by his respondent employer to join the
Busocope Labor Union, but he refused to do so; that respondent employer suspended him without
justifiable cause; that two separate cases were filed by complainant against the respondents—one on
March 13, 1961 for unfair labor practice, and another on March 18, 1961 for payment of wages for
overtime work and work 021 Sundays and holidays, the filing of which cases had come to the knowledge
of the respondents; that on March 15 1961, respondent employer dismissed him from the service
without justifiable cause and that from the time of his dismissal up to the filing of the complaint he had
not found any substantial employment for himself,
In their answer, dated August 3, 1961, respondent alleged, among others, that complainant Santos Juat
was suspended for cause; that while Case No, 1462-V was filed with the Court of Industrial Relations on
March 13, 1961, the same came to the knowledge of respondents only when they received the
summons and a copy of the petition on March 24, 1961, and while case No. 2789-ULP was filed on April
3, 1961, the same became known to respondents long after the employer-employee relationship
between respondent employer and Santos Juat had been terminated, so that the suspension of the
complainant on March 1, 1961 and his subsequent separation from the. service were not acts of reprisal
because of the filing of those two cases; that it was complainant Juat who had caused his separation
when he Ignored the letter sent to him by Juan N. Evangelista, executive officer of respondent company,
requiring him to report for work; that the principal reason why complainant refused to work with
respondent company was because he was occupied with his work in
393
393
the Juat Printing Press Co, of which he was a stockholder and the treasurer. Respondent company
thereby made a counterclaim for damages because of complainant's having filed an unwarranted and
malicious action against it
On August 15, 1902, after hearing, Associate Judge Baltazar N. Villanueva of the Court of Industrial
Relations rendered a decision dismissing the complaint but made no pronouncement regarding
respondent's counterclaim.
Petitioner filed a motion for reconsideration of the decision. and in a resolution dated October 30, 1962,
the Court of Industrial Relations en banc denied the motion for reconsideration, Hence, this petition for
certiorari to review said decision and resolution.
The facts of this case may best be gathered from the findings and conclusions of the Court of Industrial
Relations in its decision, as follows:
"On December 1, 1959, a collective bargaining agreement was entered into between the Bulaklak
Publications and the BUSOCOPE LABOR UNION, to remain in effect for 3 years, and renewable for
another term of 3 years. Section 4 of said agreement contains a closed shop proviso. On December 27,
1980, said Section 4 of said agreement was amended to read as follows;
'All employees and/or workers who on January 1, 1960 are members of the Union in good standing in
accordance with its Constitution and By-Laws and all members who become members after that date
shall, as a condition of employment, maintain their membership in the Union for the duration of this
Agreement All employees and/or workers who on January 1, 1961 are not yet members of the Union
shall, as a condition of maintaining their employment, become members of such union'.
"It is clear that it was by virtue of the above-mentioned closed shop provision of the collective
bargaining agreement between the Busocope Labor Union and the Bulaklak Publications that the
management of the latter required Santos Juat to become a member of the former. In requiring Santos
Juat to become a member of said Union, it was only obeying the law between the parties, which is their
394
394
"Because of the refusal of Santos Juat to become a member of said Union, Mr. Juan N. Evangelista, the
executive officer of respondent company, suspended him for 15 days. After the expiration of the
suspension of Santos Juat, Mr. Evangelista addressed a letter to the former, ordering him to report back
for duty, and in spite of said letter, Santos Juat did not report for work, consequently, Santos Juat was
dropped from the service of the company. Juat could afford not to report for duty because he has his
own business by the name of JUAT PRINTING PRESS CO., INC. The refusal of Santos Juat to become a
member of the Busocope Labor Union as well as his refusal to report for work when ordered by his
superior officer, shows the lack of respect on the part of Santos Juat toward his superior officer. With
such attitude, the continuation in the service of the company of Santos Juat is indeed inimical to the
interest of his employer.
"The charge of complainant to the effect that on March 13, 1961, he filed a petition with this Court
against respondent company which was docketed as Case No. 1462-V is of no moment, because
according to the decision 01 the Supreme Court in Case G.R. No. L-11745, Royal Interocean Lines, et al.
vs. Hon. Court of Industrial Relations, et al., promulgated October 31, 1960, it was- held that an
'employee's having- filed charges or having given testimony or being- about to give testimony has no
relation to union activities. With respect to Case No. 2789-ULP, Mr. Evangelista stated that he did not
know anything about its having been filed in Court."
It is now contended by the petitioner before this Court that:
1. The Court of Industrial Relations erred, or committed a grave abuse of discretion, when it applied to
the petitioner the collective bargaining agreement with closed shop proviso between the respondent
Bulaklak Publications and the Busocope Labor Union, he being an old employee;
2. The Court of Industrial Relations erred, or committed a grave abuse of discretion, in holding that the
respondent Bulaklak Publications did not commit unfair labor practice when it dismissed petitioner for
his refusal to join the Busocope Labor Union; and
3. The Court of Industrial Relations committed a grave abuse of discretion when it dismissed the
complaint of petitioner because its allegations are not supported by substantial evidence.
The contentions of the petitioner are without merit. The closed-shop proviso in a collective bargaining
agree-
395
395
ment between employer and employee is sanctioned by law. The pertinent provision of the law, in this
connection, says:
"Provided, that nothing in this Act or in any Act or statute of the Republic of the Philippines shall
preclude an employer from making an agreement with a labor organization to require as a condition of
employment membership therein, if such labor organization is the representative of the employees as
provided in said section twelve; x x x " (Section 4, subsection [a] par. 4 of Republic Act No. 875, known as
the Industrial Peace Act).
The validity of a closed-shop agreement has been upheld by this Court. In one particular case this Court
held:
"There is no need for us to take sides, and give reasons because our Congress, in the exercise of its
policy-making power, has chosen to approve the closed-shop, when it legalized in Sec. 4, sub-section (a)
paragraph 4 of Republic Act 875 (Magna Charta of Labor) 'any agreement of the employer with a labor
organization requiring membership in such organization as condition of employment,' provided such
labor organization properly represents the employees" (National Labor Union vs. Aguinaldo's Echague,
et al., G.R, No. L-7358, May 31, 1955.)
The foregoing pronouncement of this Court had been reiterated in the cases of Tolentino, et al. vs.
Angeles, et al., G.R., No. L-8150, May 30, 1956; Ang Malayang Manggagawa Ng Ang Tibay Enterprises, et
al., vs. Ang Tibay, et al., G.R. No. L-8259, Dec. 23, 1957; Confederated Sons of Labor vs. Anakan Lumber
Co., et al., G.R, No. L-12503, April 20, 1980; Bacolod-Murcia Milling Co., et al. vs, National Employees
Workers Security Union, 53 O.G. 615.
A closed-shop agreement has been considered as one form of union security whereby only union
members can be hired and workers must remain union members as a condition of continued
employment. The requirement for employees or workers to become members of a union as a condition
for employment redounds to the benefit and advantage of said employees because by holding out to
loyal members a promise of employment in the closed-shop the union wields group solidarity. In fact, it
is said that "the
396
396
closed-shop contract is the most prized achievement of unionism" (National Labor Union vs.
Aguinaldo's-Echague, Inc. et al., supra).
Coming now to the closed-shop proviso of the collective bargaining, agreement between the
respondent Bulaklak Publications and the Busocope Labor Union, it is clearly provided that "All
employees and/or workers who on January 1, 1961 are not yet members of the Union shall, as condition
of maintaining their employment, become ,members of such Union." The question now before Us is
whether the above-quoted proviso of the said collective bargaining agreement applies to the petitioner
Santos Juat. The contention of said petitioner is that the said proviso cannot apply, and should not be
applied to him because he is an old employee of the Bulaklak Publications. It is not disputed that
petitioner had been employed with the Bulaklak Publications since 1953, and the collective bargaining
agreement embodying the closed-shop proviso in question was entered into only on December 1, 1959
and amended on December 27, 1960. It has been established, however, that said petitioner was not a
member of' any labor union when that collective bargaining agreement was entered into, and in fact he
had never been a member of any labor union.
This Court had categorically held in the case of Freeman Shirt Manufacturing Co., Inc., et al. vs. Court of
Industrial Relations, et al., G.R. No. L- 16561, Jan. 28, 1961, that the closed-shop proviso of a collective
bargaining agreement entered into between an employer and a duly authorized labor union is
applicable not only to the employees or laborers that are employed after the collective bargaining
agreement had been entered into but also to old employees who are not members of any labor union at
the time the said collective bargaining agreement was entered into. In other words, if an employee or
laborer is already a member of a labor union different from the union that entered into a collective
bargaining agreement with the employer providing for a closed-shop, said employee or worker cannot
be obliged to become a member
397
397
of that union which had entered into a collective bargaining agreement with the employer as a condition
for his continued employment This Court in that Freeman case made this clear pronouncement:
"The closed-shop agreement authorized under Sec. 4 subsec. a(4) of the Industrial Peace Act above-
quoted should, however, apply only to persons to be hired or to employees who are not yet members of
any labor organization. It is inapplicable to those already in the service who are members of another
union, To hold otherwise, i.e., that the employees in a company who are members of a minority union
may be compelled to disaffiliate from their union and join the majority or contracting union, would
render nugatory the right of all employees to selforganization and to form, joint or assist labor
organizations of their own choosing, a right guaranteed by the Industrial Peace Act (sec. 3, Rep. Act No.
875) as well as by the Constitution (Art. III, see. 1[6]).
"Section 12 of the Industrial Peace Act, providing that when there is reasonable doubt as to who the
employees have chosen as their representative the Industrial Court can order a certification election,
would also become useless. For once a union has been certified by the court and enters into a collective
bargaining agreement with the employer a closed-shop clause applicable to all employees be they union
or non-union members, the question of majority representation among the members would be closed
forever. Certainly, there can no longer exist any petition for certification election, since eventually the
majority or contracting union will become a perpetual labor union. This alarming result could not have
been the intention of Congress. The Industrial Peace Act was enacted precisely for the promotion of
unionism in this country." (Italics supplied)
The above-quoted ruling was reaffirmed by this Court in its decision in the case of Findlay Miller Timber
Co. vs. PLASLU, et al., G.R. Nos, L-18217 & L-18222, Sept 29, 1962.
It should be declared, therefore, as a settled doctrine, that the closed-shop proviso of a collective
bargaining' agreement entered into between an employer and a duly authorized labor union applies,
and should be applied, to old employees or workers who are non-members of any labor union at the
time the collective bargaining agreement was entered into- In other words, the old employees or
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398

workers can be obliged by his employer to join the labor union which had entered into a collective
bargaining agreement that provides for a closed-shop as a condition for his continuance in his
employment, otherwise his refusal to join the contracting labor union would constitute a justifiable basis
for his dismissal.
It being established by the evidence that petitioner Santos Juat, although an old employee of the
respondent Bulaklak Publications, was not a member of any labor union at the time when the collective
bargaining agreement in question was entered into he could be obliged by the respondent Bulaklak
Publications to become a member of the Busocope Labor Union. And because petitioner refused to join
the Busocope Labor Union respondent Bulaklak Publications was justified in dismissing him from the
service on the ground that he had refused to join said union.
We, therefore, hold that the respondent Court of Industrial Relations did not err, nor did it commit a
grave abuse of discretion, when it decided that the respondent Bulaklak Publications did not commit
unfair labor practice when it dismissed petitioner because of his refusal to join the Busocope labor
union. Moreover, as found by the respondent Court of Industrial Relations, petitioner Santos Juat had
furnished another ground for his dismissal—and that was because he refused to return to work after the
end of his suspension even when he was ordered to do so by his employer, the respondent Bulaklak
Publications. The respondent Court of Industrial Relations further found that the reason why the
petitioner did not want to return to work was because he was already working in his own establishment
known as the "Juat Printing Press Co. Inc." of which he was a stockholder and the treasurer.
Neither "did the respondent Court of Industrial Relations commit a grave abuse of discretion when it
dismissed the complaint on the ground that the petitioner had not adduced substantial evidence to
support the allegations in
399
399
Uy vs. Republic
the complaint. We have carefully examined the records, and we believe that the factual findings of the
respondent court should not be disturbed.
IN VIEW OF THE FOREGOING, the decision and resolution appealed from are affirmed, with costs against
the petitioner.
Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Dizon, Regala, Makalintal and Bengzon, J.P.,
JJ., concur.
Barrera, J., took no part.
Decision and resolution affirmed.

Note.—See the annotation under Victorias Milling Co., Inc. vs. V ictorias-Manapla, Workers
Organization-PAFLU, entitled "Basic Concepts on Collective Bargaining," 9 SCRA 163 and the annotation
under Cebu Portland Co vs. Cement Workers Union, entitled "Employer's Duty to Bargain Collectively,"
23 SCRA 516.
_____________ Juat vs. Court of Industrial Relations, 15 SCRA 391, No. L-20764 November 29, 1965
858
Rizal Labor Union, et al. vs. Rizal Cement Co., Inc., et al.
No. L-19779. July 30, 1966.
RIZAL LABOR UNION, CARLOS SANTOS, EDILBERTO REYES, TEOFENES MINGUILLAN, APRONIANO
CELAJES, AUGUSTO RAYMUNDO, CELESTINO RINO, EDMUNDO GARCIA, JOSE EVANCHES, MELENCIO
ENRIQUEZ, PEDRO ANTAZO, BENJAMIN ONGKIATCO, FELIX ADSUARA, GREGORIO YUNZAL and
VICENTE-INAMAC, petitioners vs. RIZAL CEMENT COMPANY, INC., JUAN DE LEON, RODOLFO
FAUSTINO, BlNANGONAN LABOR UNION LOCAL 104, FlLOMENO PRUDON, NICANOR MEYCACAYAN,
MACARIO CENIDOZA, APOLONIO SUMALDE, LOTARIO BATAN, FRANCISCO
________________
3 Ngo Bun vs. Republic, G.R. No. L-15518, Nov. 29, 1961.
4 Lim Siong vs. Republic, G.R. No. L-12668, April 30, 1959.
859
VOL. 17, JULY 30, 1966
859
EVANGELISTA, DOMINGO PUBLICO, Hon. ARSENIO MARTINEZ, Judge, Court of Industrial Relations,
Hon. EMILIANO TABIGNE, Judge, Court of Industrial Relations, and Hon. AMANDO BUGAYONG, Judge,
Court of Industrial Relations, respondents.
Labor law; Industrial Peace Act; Collective bargaining agreement; Dismissal of employee under closed-
shop agreement.—In order that the discharge of an employee pursuant to a closed-shop agreement
may be considered justified, it must first be shown that the said agreement is valid.
Same; Stipulation for closed-shop must be unequivocal.—In order that an employer may be bound,
under a collective bargaining agreement to dismiss employees for non-union membership, the
stipulation to that effect must be so clear and unequivocal as to leave no room for doubt thereon. An
undertaking of that nature is so harsh that it must be strictly construed, and doubts must be resolved
against the existence of closed shop.
Same; Limited closed-shop agreement; Unfair labor practice.—The provision in the collective
bargaining agreement, that “the employer agrees to have in its employ only members in good
standing of the union” and that the “employer agrees not to have in its employ nor to hire any new
employee or laborer unless he is a member in good standing of the union” provides only for a limited
closed-shop. Said stipulation does not affect the right of the company to retain those already working
on or before the date of the agreement, or those hired or empIoyed subsequently thereto, while they
were members of the union, but who, thereafter, resign or are expelled therefrom. Therefore, where
the company employed fifteen union members and later, said 15 employees were “expelled from the
union because they formed another union, and the company dismissed them, upon petition of the old
union, the company and the old union are guilty of unfair labor practice. The collective bargaining
agreement did not justify the dismissal of the said 15 employees simply because they had ceased to
be members of the old union. The said dismissed employees were ordered reinstated with back wages
to be paid solidarily by the company and the union.
PETITION for review by certiorari of a resolution of the Court of Industrial Relations.
Pedro A. Lopez for petitioner. ;
Bausa, Ampil & Suarez for respondent Rizal Cement Co., Inc.
860
860
Mariano B. Tuazon for respondent Court of Industrial Relations.
A.V. Villacorta for respondent Union.
BARRERA, J.:
This is a petition filed by the Rizal Labor Union for the review of the resolution of the Court of Industrial
Relations en banc (in Case No. 16115-ULP), dismissing the petition for unfair labor practice filed against
the Binangonan Labor Union, Local 104 and the Rizal Cement Company.
On February 13, 1958, Carlos Santos and 14 other employees of the Rizal Cement Company, while still
members of the Binangonan Labor Union Local 104, formed and organized the Rizal Labor Union. The
company was notified thereof on March 18, 1958. Prior to this date or on March 15, 1958, Carlos Santos
and Teofines Minguillan, president and secretary, respectively, of the newly-organized Rizal Labor
Union, received identical letters from the Binangonan Labor Union, requiring them to explain in 48
hours why they should not be expelled for disloyalty. Although Santos and Minguillan requested for the
convocation of a general meeting of the members of the Binangonan Labor Union to explain their side,
the 15 organizers of the new union were expelled from their original union on March 21, 1958. On the
same day, it demanded the dismissal of the expelled members from employment, which the company
did on March 22, 1958.
The dismissed employees went to the Court of Industrial Relations charging the Company and.the’
Binangonan Labor Union with unfair labor practices. Said respondents answered the charges by
referring to the alleged closed-shop proviso in the subsisting: collective bargaining agreement between
them. After due hearing, the trial judge rendered a decision holding that the supposed closedshop
proviso, while valid, was inadequate to justify the dismissal of complainants from employment. The
company was thus ordered to reinstate them and both respondents were directed to pay, jointly and
severally, the complainants their back wages. Upon respondents’ motion for reconsideration, the
judgment of the trial Judge was reversed by the court en banc. The dismissal of complainants was
861
VOL. 17, JULY 30, 1966
861
found to be justified by the closed shop proviso of the collective bargaining agreement, although they
were declared entitled to separation pay. Complainants filed the present petition for review.
The only issue presented in this case is whether the dismissal of the complaining 15 employees was
justified or not. The resolution of this question hinges on the validity and adequacy of the supposed
closed-shop proviso of the collective bargaining contract between respondent Company and respondent
union. For, it is axiomatic that in order that the discharge of an employee pursuant to a closed-shop
agreement may be considered justified, it must first be shown that the said agreement is valid. The
provisions of the contract relied by respondents read as follows:
“The EMPLOYER agrees to have in its employ and to employ only members in good standing of the
UNION in all its branches, units, plants, quarries, warehouses, docks, etc. The UNION agrees to furnish at
all time the laborers, employees and all technical helps that the EMPLOYER may require. EMPLOYER,
however, reserves its right to accept or reject where they fail to meet its requirements.” (Article I, Sec.
5.)
“The EMPLOYER agrees not to have in its employ nor to hire any new employee or laborer unless he is a
member of good standing of the UNION, and a bona fide holder of a UNION (NWB) card, provided such
new employee or laborer meets the qualifications required by the EMPLOYER." (Article VII, Sec. 1-d).
The trial Judge construed the first, Article 1, Section 5, as applicable to those already on the job at the
time the agreement was entered into in 1954,1 while Article VII, Section 1-(d) as applicable to those
getting employment thereafter. However, while the trial Judge ruled that the aforequoted pertinent
provision of the collective bargaining agreement does not prescribe the period within which the
employees must remain as members of good standing of the union, and therefore the dismissal of the
complainants after they were expelled from the union was unjustified, the court en banc ruled that the
word “employ” as used in the proviso (-"to have in its employ and to employ only members in good
standing of the union”) means “to
________________
1 This contract was allegedly automatically renewed. At any rate, this is now in issue in this case.
862
862
Rizal Labor Union, et al. vs. Rizal Cement Co., Inc., et at.
retain in service”, “to suffer or permit to work”, “to keep at work”. In short, the court en banc would
read in the provision the employer’s assent to retain in the service or to keep at work only those union
members of good standing. We incline to uphold the stand of the trial judge.
In one case,2 this Court ruled that a proviso in the collective bargaining contract which reads:
“That the UNION shall have the exclusive right and privilege to supply the COMPANY with such laborers,
employees and workers as are necessary in the logging, mechanical, etc. x x x and that the COMPANY
agrees to employ or hire in any of its departments only such person or persons who are members of the
UNION".
does not establish a “closed-shop” agreement. Thus, we held:
“Inasmuch as Article II above quoted does not provide that employees ‘must continue to remain
members in good standing’ of respondent union ‘to keep their jobs/ the collective bargaining agreement
between them does not establish a ‘closed shop/ except in a very limited sense, namely, that the
laborers, employees and workers engaged by the company after the signing of the agreement on
January 23, 1955, must be members of respondent union. The agreement does not affect the right of
the company to retain those already working therefor on or before said date, or those hired or
employed subsequently thereto, while they were members of respondent union, but Who, thereafter,
resign or are expelled therefrom.
“In order that an employer may be deemed bound, under a collective bargaining agreement, to dismiss
employees for non-union membership, the stipulation to this effect must be so clear and unequivocal as
to leave no room for doubt thereon. An undertaking of this nature is so harsh that it must be strictly
construed, and doubts must be; resolved against the existence of ‘closed shop’. Referring particularly to
the abovequoted Article II, we note that the same establishes the exclusive right of respondent union to
‘supply’ laborers, etc., and limits the authority of the company to ‘employ or hire’ them. In other words,
it requires that the laborers, employees and workers hired or employed by the company be members of
respondent union at the time of the commencement of the employer-employee relation. Membership
in respondent union is not a condition for the continuation of said relation or for the retention of a
laborer or employee engaged either before said agreement or while he was a member of said union.”
________________
2 Confederated Sons of Labor vs. Anakan Lumber Company, et al., G.R. No. L-12503, April 29, 1960,
863
VOL. 17, JULY 30, 1966
863
Social Security System vs. Davac, et al.
There being no substantial difference between the wording of the provision involved in this case and
that construed in the aforementioned case, we find no reason for the adoption of a different ruling
herein.
For the foregoing reason, the resolution of the respondent Court en banc is hereby set aside.
Respondents Company and union are declared guilty of unfair labor practice as charged, and they are
ordered to reinstate the complainants, and pay jointly and severally, their back wages from the date of
their dismissal until they are reinstated by the respondent Company minus whatever they may have
earned elsewhere during the period of their dismissal. Without costs. So ordered.
Chief Justice Concepcion and Justices J.B.L. Reyes, Dizon, Regala, J.P. Bengzon, Zaldivar and Castro,
concur. Mr. Justice Makalintal took no part.
Resolution set aside.
_____________ Rizal Labor Union, et al. vs. Rizal Cement Co., Inc., et al., 17 SCRA 858, No. L-19779 July
30, 1966
410
G.R. No. 100898. July 5, 1993.*
ALEX FERRER, RAFAEL FERRER, HENRY DIAZ, DOMINGO BANCOLITA, GIL DE GUZMAN, and
FEDERATION OF DEMOCRATIC LABOR UNIONS, (FEDLU), petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION (SECOND DIVISION), HUI KAM CHANG (In his capacity as General Manager of Occidental
Foundry Corporation), OCCIDENTAL FOUNDRY CORPORATION, MACEDONIO S. VELASCO (In his
capacity as representative of the Federation of Free Workers), GENARO CAPITLE, JESUS TUMAGAN,
ERNESTO BARROGA, PEDRO LLENA, GODOFREDO PACHECO, MARCELINO CASTILLO, GEORGE IGNAS,
PIO DOMINGO, and JAIME BAYNADO, respondents.
Labor Law; Labor Unions; Collective Bargaining; A CBA provision for a closed shop is a valid form of
union security and it is not a restriction on the right or freedom of association guaranteed by the
Constitution.—A CBA is the law between the company and the union and compliance therewith is
mandated by the express policy to give
_______________
* THIRD DIVISION.
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VOL. 224, JULY 5, 1993
411
protection to labor. Said policy should be given paramount consideration unless otherwise provided
for by law (Meycauayan College vs. Drilon, 185 SCRA 50 [1990]). A CBA provision for a closed shop is a
valid form of union security and it is not a restriction on the right or freedom of association
guaranteed by the Constitution (Lirag Textile Mills, Inc. vs. Blanco, 109 SCRA 87 [1981]). However, in
the implementation of the provisions of the CBA, both parties thereto should see to it that no right is
violated or impaired.
Same; Same; Same; Due Process; The manner in which the dismissal was enforced left much to be
desired in terms of respect for the right of petitioners to procedural due process.—In the case at bar,
while it is true that the CBA between OFC and the SAMAHAN provided for the dismissal of employees
who have not maintained their membership in the union, the manner in which the dismissal was
enforced left much to be desired in terms of respect for the right of petitioners to procedural due
process.
Same; Same; Same; Same; Same; The SAMAHAN should have observed its own constitution and by-
laws by giving petitioner an opportunity to air their side and explain their moves.—No hearing
(“pandinig”) was ever conducted by the SAMAHAN to look into peti-tioners’ explanation of their
moves to oust the union leadership under Capitle, or their subsequent affiliation with FEDLU. While it
is true that petitioners’ actions might have precipitated divisiveness and, later, showed disloyalty to
the union, still, the SAMAHAN should have observed its own constitution and by-laws by giving
petitioners an opportunity to air their side and explain their moves. If, after an investigation the
Same; Same; Same; Same; The need for a company investigation is founded on the consistent ruling of
the Court that the twin requirements of notice and hearing which are essential elements of due
process must be met in employment-termination cases.—The need for a company investigation is
founded on the consistent ruling of this Court that the twin requirements of notice and hearing which
are essential elements of due process must be met in employment-termination cases. The employee
concerned must be notified of the employer’s intent to dismiss him and of the reason or reasons for
the proposed dismissal. The hearing affords the employee an opportunity to answer the charge or
charges against him and to defend himself therefrom before dismissal is effected.
412
412
Same; Same; Same; Same; Even if no hearing is conducted, the requirement of due process would
have been met where a chance to explain a party’s side of the controversy had been accorded him.—
Observance to the letter of company rules on investigation of an employee about to be dismissed is
not mandatory. It is enough that there is due notice and hearing before a decision to dismiss is made
(Mendoza vs. NLRC, 195 SCRA 606 [1991]). But even if no hearing is conducted, the requirement of
due process would have been met where a chance to explain a party’s side of the controversy had
been accorded him.
Same; Same; Same; Same; The need for the observance of an employee’s right to procedural due
process in termination cases cannot be overemphasized.—If an employee may be considered illegally
dismissed because he was not accorded fair investigation (Hellenic Philip-pine Shipping vs. Siete, 195
SCRA 179 [1991]), the more reason there is to strike down as an inexcusable and disdainful rejection
of due process a situation where there is no investigation at all (See: Collegio del Sto. Niño vs. NLRC,
197 SCRA 611 [1991]; Artex Development Co., Inc. vs. NLRC, 187 SCRA 611 [1990]). The need for the
observance of an employee’s right to procedural due process in termination cases cannot be
overemphasized. After all, one’s employment, profession, trade, or calling is a “property right” and
the wrongful interference therewith gives rise to an actionable wrong (Callanta vs. Carnation
Philippines, Inc., 145 SCRA 268 [1986]). Verily, a man’s right to his labor is property within the
meaning of constitutional guarantees which he cannot be deprived of without due process.
Same; Same; Same; Same; While the law recognizes the right of an employer to dismiss employees in
warranted cases, it frowns upon arbitrariness as when employees are not accorded due process.—
[1990]). Thus, the prerogatives of the OFC to dismiss petitioners should not have been whimsically
done for it unduly exposed itself to a charge of unfair labor practice for dismissing petitioners in line
with the closed shop provision of the CBA, without a proper hearing.
Same; Same; Same; Same; While termination of employment is traditionally considered a

management prerogative, it is not an absolute prerogative subject as it is to limitations founded in
law, the CBA or general principles of fair play and justice.—Neither can the manner of dismissal be
considered within the ambit of managerial prerogatives,
413
VOL. 224, JULY 5, 1993
413
for while termination of employment is traditionally considered a management prerogative, it is not

an absolute prerogative subject as it is to limitations founded in law, the CBA, or general principles of
fair play and justice.
Same; Same; Same; The right of a local union to disaffiliate from a federation in the absence of any
provision in the federation’s constitution preventing disaffiliation of a local union is legal.—
Parenthetically, the right of a local union to disaffiliate from a federation in the absence of any
provision in the federation’s constitution preventing disaffiliation of a local union is legal (People’s
Industrial and Commercial Employees and Workers Org. (FFW) vs. People’s Industrial and Commercial
Corp., 112 SCRA 440 [1982]). Such right is consistent with the constitutional guarantee of freedom of
association.
Same; Dismissal; Benefits; A legally dismissed employee may now be paid his back wages, allowances,
and other benefits for the entire period he was out of work subject to the rule enunciated before the
Mercury Drug Rule which is that the employer may, however, deduct any amount which the employee
may have earned during the period of his illegal termination.—A legally dismissed employee may now
be paid his back wages, allowances, and other benefits for the entire period he was out of work
subject to the rule enunciated before the Mercury Drug Rule, which is that the employer may,
however, deduct any amount which the employee may have earned during the period of his illegal
termination (East Asiatic Company, Ltd. vs. Court of Industrial Relations, 40 SCRA 521 [1971]).
Computation of full back wages and presentation of proof as to income earned elsewhere by the
illegally dismissed employee after his termination and before actual reinstatement should be
PETITION for certiorari of the decision of the National Labor Relations Commission.
Generosa P. Jacinto and Raymundo D. Mallilin for private respondents.
MELO, J.:
The petition for certiorari before us seeks to annul and set
414
414
aside: (a) the decision dated June 20, 1991 of the Second Division of the National Labor Relations
Commission (NLRC) (Penned by Commissioner Rustico L. Diokno and concurred in by Presiding
Commissioner Edna Bonto-Perez and Commissioner Domingo H. Zapanta) which affirmed in toto the
decision of April 5, 1990 of Labor Arbiter Eduardo J. Carpio dismissing the complaint for illegal dismissal
and unfair labor practice on the ground that both the company and the union merely complied with the
collective bargaining agreement provision sanctioning the termination of any employee who fails to
retain membership in good standing with the union; and (b) the NLRC resolution denying the motion for
the reconsideration of said decision (NLRC NCR Case No. 00-10-04855-89).
Petitioners were regular and permanent employees of the Occidental Foundry Corporation (OFC) in
Malanday, Valenzuela, Metro Manila which was under the management of Hui Kam Chang. As piece
workers, petitioners’ earnings ranged from P110 to P140 a day. They had been in the employ of OFC for
about ten years at the time of their dismissal in 1989 (p. 38, Rollo).
On January 5, 1989, the Samahang Manggagawa ng Occiden-tal Foundry Corporation-FFW (SAMAHAN)

and the OFC entered into a collective bargaining agreement (CBA) which would be effective for the
three-year period between October 1, 1988 and September 30, 1991 (Memorandum for OFC and Hui
Kam Chang, p. 6, Rollo; p. 551). Article II thereof provides for a union security clause thus:
Section 1—The company agrees that all permanent and regular factory workers in the company who are
members in good standing of the union or who thereafter may become members, shall as a condition of
continued employment, maintain their membership in the union in good standing for the duration of
the agreement.
xxx xxx xxx
Section 3—The parties agree that failure to retain membership in good standing with the UNION shall be
ground for the operation of paragraph 1 hereof and the dismissal by the company of the aforesaid
employee upon written request by the union. The aforesaid request shall be accompanied by a verified
carbon original of the Board of (sic) Resolution by the UNION signed by at least a majority of its officers/
directors. (p. 562, Rollo.)
415
VOL. 224, JULY 5, 1993
415
On May 6, 1989, petitioner Alex Ferrer and the SAMAHAN, filed in the Department of Labor and
Employment (DOLE), a complaint for the expulsion from SAMAHAN of the following officers: Genaro
Capitle (president), Jesus Tumagan (vice-presi-dent), Godofredo Pacheco (auditor), and Marcelino
Pacheco (board member) (Case No. NCR-00-M-89-11-01). The complaint was founded on said officers’
alleged inattentiveness to the economic demands of the workers. However, on September 4, 1989,
petitioners Diaz and Alex Ferrer withdrew the petition (p. 590, Rollo).
On September 10, 1989, petitioners conducted a special elec-tion of officers of the SAMAHAN (pp. 205
& 583, Rollo). Said election was, however, later questioned by the FFW. Nonetheless, the elected set of
officers tried to dissuade the OFC from remitting union dues to the officers led by Capitle who were
allied with the FFW. Later, however, Romulo Erlano, one of the officers elected at the special election,
manifested to the DOLE that he was no longer objecting to the remittance of union dues to the officers
led by Capitle. Petitioners’ move to stage a strike based on economic demands was also later disowned
by members of the SAMAHAN.
The intraunion squabble came to a head when, on September 11, 1989, a resolution expelling
petitioners from the SAMAHAN was issued by the aforesaid union officials headed by Capitle, together
with board members George Ignas, Pio Domingo, and Jaime Baynado (pp. 286 & 599, Rollo). The
following day, Capitle sent OFC the following letter:
12 September 1989
Mr. Hui Kam Chang
General Manager
Malanday, Valenzuela
Metro Manila
Dear Mr. Chang:
In compliance with Article II, Sec. 3 of the Union Security Clause as enunciated in our Collective
Bargaining Agreement, I would like you to dismiss the following employees on the ground of failure to
retain
416
416
membership in good standing:
1. Alex Ferrer
2. Gil de Guzman
3. Henry Diaz
4. Domingo Bancolita
5. Rafael Ferrer, Jr.
Attached herewith is the verified carbon original of the Board Resolution of the union signed by the
majority of its officers/directors.
Very truly yours,
(Sgd.)
GENARO CAPITLE
President
(p. 66, Rollo.)
Although petitioners received this letter weeks after its date, it appears that on that same date, they
had learned about their dismissal from employment as shown by the letter also dated September 13,
1989 which they sent the Federation of Democratic Labor Unions (FEDLU). They volunteered therein to
be admitted as members of the FEDLU and requested that they be represented (“katawanin”) by said
federation before the DOLE in the complaint which they intended to file against the union (SAMAHAN),
the FFW and the company for illegal dismissal, reinstatement, and other benefits in accordance with law
(p. 74, Rollo).
Thereafter, on various dates, petitioners sent individual letters to Hui Kam Chang professing innocence
of the charges levelled against them by the SAMAHAN and the FFW and pleading that they be reinstated
(pp. 69-73, Rollo). Their letters appear to have elicited no response.
Thus, contending that their dismissal was without cause and in utter disregard of their right to due
process of law, petitioners, through the FEDLU, filed a complaint for illegal dismissal and unfair labor
practice before the NLRC against Hui Kam Chang, OFC, Macedonio S. Velasco (as representative of the
FFW), the FFW, and the SAMAHAN officers headed by Capitle (p. 75,
417
VOL. 224, JULY 5, 1993
417
Rollo).
In due course, after the case was ventilated through position papers and other documents, the labor
arbiter rendered a decision dismissing petitioners’ complaint (pp. 79-89, Rollo). He found that in
dismissing petitioners, OFC was “merely complying with the mandatory provisions of the CBA—the law
between it and the union.” He added:
To register compliance with the said covenant, all that is necessary is a written request of the union
requesting dismissal of the employees who have failed to retain membership in good standing with the
union. The matter or question, therefore, of determining why and how did complainants fail to retain
membership in good standing is not for the company to inquire via formal investigation. By having the
request of the union, a legal presumption that the request was born out of a formal inquiry by the union
that subject employees failed to retain membership in good standing, failed to exist. This means
generally that where a valid closed shop or similar agreement is in force with respect to a particular
bargaining unit as in the case a quo, the employer shall refuse to employ any person unless he is a
member of the majority union and the employer shall dismiss employees who fail to retain their
membership in the majority union. This must be deemed a just cause recognized by law and
jurisprudence. The effect is discrimination to encourage membership in other unions. (pp. 86-87, Rollo.)
Hence, the labor arbiter concluded, the dismissal of petitioners was an exercise of legitimate
management prerogative which cannot be considered as an unfair labor practice. On whether the
SAMAHAN and the FFW could be held liable for illegal dismissal and unfair labor practice, the arbiter
opined that since there was no employer-employee relationship between petitioners and respondent
unions, the complaint against the latter has no factual and legal bases, because petitioners “should not
have confused expulsion from membership in the union as one and the same incident to their
subsequent employment termination.”
Consequently, petitioners appealed to the NLRC on the grounds that there was prima facie evidence of
abuse of discretion on the part of the labor arbiter and that he committed serious errors in his findings
of facts.
On June 20, 1991, the NLRC rendered the herein questioned decision affirming in toto the decision of
the labor arbiter. Petitioners’ motion for the reconsideration of the NLRC decision
418
418

having been denied, they resorted to the instant petition for certiorari which presents the issue of
whether or not respondent Commission gravely abused its discretion in affirming the decision of the
labor arbiter which is allegedly in defiance of the elementary principles of procedural due process as the
petitioners were summarily dismissed from employment without an investigation having been
conducted by the OFC on the veracity of the allegation of the SAMAHAN-FFW that they violated the
CBA.
A CBA is the law between the company and the union and compliance therewith is mandated by the
express policy to give protection to labor. Said policy should be given paramount consideration unless
otherwise provided for by law (Meycauayan College vs. Drilon, 185 SCRA 50 [1990]). A CBA provision for
a closed shop is a valid form of union security and it is not a restriction on the right or freedom of
association guaranteed by the Constitution (Lirag Textile Mills, Inc. vs. Blanco, 109 SCRA 87 [1981]).
However, in the implementation of the provisions of the CBA, both parties thereto should see to it that
no right is violated or impaired. In the case at bar, while it is true that the CBA between OFC and the
SAMAHAN provided for the dismissal of employees who have not maintained their membership in the
union, the manner in which the dismissal was enforced left much to be desired in terms of respect for
the right of petitioners to procedural due process.
In the first place, the union has a specific provision for the permanent or temporary “expulsion” of its
erring members in its constitution and by-laws (“saligang batas at alituntunin”). Under the heading
membership and removal (“pag-aanib at pagtitiwalag”), it states:
SEC. 4. Ang sinumang kasapi ay maaring itwalag (sic) ng Samahan pangsamantala o tuluyan sa
pamamgitan (sic) ng tatlo’t ikaapat (3/4) na bahagi ng dami ng bilang ng Pamunuang Tagapagpaganap.
Pagkaraan lamang sa pandinig sa kanyang kaso. Batay sa sumusunod:
(a) Sinumang gumawa ng mga bagay bagay na labag at lihis sa patakaran ng Samahan.
(b) Sinumang gumawa ng mga bagay na maaring ikabuwag ng Samahan.
419
VOL. 224, JULY 5, 1993
419
(c) Hindi paghuhulog ng butaw sa loob ng tatlong buwan na walang sakit o Doctor’s Certificate.
(d) Hindi pagbibigay ng abuloy na itinatadhana ng Samahan.
(e) Sinumang kasapi na natanggal sa kapisanan at gustong sumapi uli ay magpapanibago ng bilang, mula
sa taon ng kanyang pagsapi uli sa Samahan. (Italics supplied; Ibid., p. 177).
No hearing (“pandinig”) was ever conducted by the SAMAHAN to look into petitioners’ explanation of
their moves to oust the union leadership under Capitle, or their subsequent affiliation with FEDLU.
While it is true that petitioners’ actions might have precipitated divisiveness and, later, showed
disloyalty to the union, still, the SAMAHAN should have observed its own constitution and by laws by
giving petitioners an opportunity to air their side and explain their moves. If, after an investigation the
Here lies the distinction between the facts of this case and that of Cariño vs. NLRC (185 SCRA 177
[1990]) upon which the Solicitor General heavily relies in supporting the stand of petitioners. In Cariño,
the erring union official was given the chance to answer the complaints against him before an
investigating committee created for that purpose. On the other hand, herein petitioners were not given
even one opportunity to explain their side in the controversy. This procedural lapse should not have
been overlooked considering the union security provision of t he CBA.
What aggravated the situation in this case is the fact that OFC itself took for granted that the SAMAHAN
had actually conducted an inquiry and considered the CBA provision for the closed shop as self-
operating that, upon receipt of a notice that some members of the SAMAHAN had failed to maintain
their membership in good standing in accordance with the CBA, it summarily dismissed petitioners. To
make matters worse, the labor arbiter and the NLRC shared the same view in holding that “(t)he matter
or question, therefore, of determining why and how did complainants fail to retain membership in good
standing is not for the company to inquire via formal investigation” (pp. 87 & 135, Rollo). In this regard,
the following words of my learned brother, Mr. Justice Feliciano, in the Resolution in Cariño are apt:
420
420
4. Turning now to the involvement of the Company in the dismissal of petitioner Cariño, we note that
the Company upon being formally advised in writing of the expulsion of petitioner Cariño from the
Union, in turn simply issued a termination letter to Cariño, the termination being made effective the
very next day. We believe that the Company should have given petitioner Cariño an opportunity to
explain his side of the controversy with the Union. Notwithstanding the Union’s Security Clause 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 in impeaching and expelling petitioner Cariño . . .
xxx
xxx
xxx
5. We conclude that the Company had failed to accord to petitioner Cariño the latter’s right to
procedural due process. The right of an employee to be informed 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 from 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. (pp. 186 & 189.)
The need for a company investigation is founded on the consistent ruling of this Court that the twin
requirements of notice and hearing which are essential elements of due process must be met in
employment-termination cases. The employee concerned must be notified of the employer’s intent to
dismiss him and of the reason or reasons for the proposed dismissal. The hearing affords the employee
an opportunity to answer the charge or charges against him and to defend himself therefrom before
dismissal is effected (Kwikway Engineering Works vs. NLRC, 195 SCRA 526 [1991]; Salaw vs. NLRC, 202
SCRA 7 [1991]). Observance to the letter of company rules on investigation of an employee about to be
dismissed is not mandatory. It is enough that there is due notice and hearing before a decision to
dismiss is made (Mendoza vs. NLRC, 195 SCRA 606 [1991]). But even if no hearing is conducted, the
requirement of due process would have been met where a chance to explain a party’s side of the
controversy had been accorded him (Philippine Airlines, Inc.
421
VOL. 224, JULY 5, 1993
421
vs. NLRC, 198 SCRA 748 [1991]).
If an employee may be considered illegally dismissed because he was not accorded fair investigation
(Hellenic Philippine Shipping vs. Siete, 195 SCRA 179 [1991]), the more reason there is to strike down as
an inexcusable and disdainful rejection of due process a situation where there is no investigation at all
(See: Collegio del Sto. Nino vs. NLRC, 197 SCRA 611 [1991]; Artex Development Co., Inc. vs. NLRC, 187
SCRA 611 [1990]). The need for the observance of an employee’s right to procedural due process in
termination cases cannot be overemphasized. After all, one’s employment, profession, trade, or calling
is a “property right” and the wrongful interference therewith gives rise to an actionable wrong (Callanta
vs. Carnation Philippines, Inc., 145 SCRA 268 [1986]). Verily, a man’s right to his labor is property within
the meaning of constitutional guarantees which he cannot be deprived of without due process
(Batangas Laguna Tayabas Bus Co. vs. Court of Appeals, 71 SCRA 470 [1976]).
[1990]). Thus, the prerogatives of the OFC to dismiss petitioners should not have been whimsically done
for it unduly exposed itself to a charge of unfair labor practice for dismissing petitioners in line with the
closed shop provision of the CBA, without a proper hearing (Tropical Hut Employees’ Union-CGW vs.
Tropical Hut Food Market, Inc., 181 SCRA 173 [1990]; citing Binalbagan-Isabela Sugar Co., Inc. (BISCOM)
vs. Philippine Association of Free Labor Unions (PAFLU), 8 SCRA 700 [1983]). Neither can the manner of
dismissal be considered within the ambit of managerial prerogatives, for while termination of
employment is traditionally considered a management prerogative, it is not an absolute prerogative
subject as it is to limitations founded in law, the CBA, or general principles of fair play and justice
(University of Sto. Tomas vs. NLRC, 190 SCRA 758 [1990]).
Under rule XIV, Sections 2, 5, and 6 of the rules implementing Batas Pambansa Blg. 130, the OFC and the
SAMAHAN should solidarily indemnify petitioners for the violation of their right to procedural due
process (Great Pacific Life Assurance Corporation vs. NLRC, 187 SCRA 694 [1990], citing Wenphil vs.
NLRC,
422
422
170 SCRA 69 [1989], Cariño vs. NLRC, supra). However, such penalty may be imposed only where the
termination of employment is justified and not when the dismissal is illegal as in this case where the
damages are in the form of back wages.
As earlier discussed, petitioners’ alleged act of sowing disunity among the members of the SAMAHAN
could have been ventilated and threshed out through a grievance procedure within the union itself. But
resort to such procedure was not pursued. What actually happened in this case was that some
members, including petitioners, tried to unseat the SAMAHAN leadership headed by Capitle due to the
latter’s alleged inattention to petitioners’ demands for the implementation of the P25-wage increase
which took effect on July 1, 1989. The intraunion controversy was such that petitioners even requested
the FFW to intervene to facilitate the enforcement of the said wage increase (Petition, p. 54; p. 55,
Rollo).
Petitioners sought the help of the FEDLU only after they had learned of the termination of their
employment upon the recommendation of Capitle. Their alleged application with federations other than
the FFW (Labor Arbiter’s Decision, pp. 4-5; pp. 82-83, Rollo) can hardly be considered as disloyalty to the
SAMAHAN, nor may the filing of such applications denote that petitioners failed to maintain in good
standing their membership in the SAMAHAN. The SAMAHAN is a different entity from FFW, the
federation to which it belonged. Neither may it be inferred that petitioners sought disaffiliation from the
FFW for petitioners had not formed a union distinct from that of the SAMAHAN. Parenthetically, the
right of a local union to disaffiliate from a federation in the absence of any provision in the federation’s
constitution preventing disaffiliation of a local union is legal (People’s Industrial and Commercial
Employees and Workers Org. (FFW) vs. People’s Industrial and Commercial Corp., 112 SCRA 440 [1982]).
Such right is consistent with the constitutional guarantee of freedom of association. (Tropical Hut Em-
ployees’ Union-CGW vs. Tropical Hut Food Market, Inc., 181 SCRA 173 [1990]).
Hence, while petitioners’ act of holding a special election to oust Capitle, et al. may be considered as an
act of sowing disunity among the SAMAHAN members, and, perhaps, disloyalty to the union officials,
which could have been dealt with by the union as
423
VOL. 224, JULY 5, 1993
423
a disciplinary matter, it certainly cannot be considered as constituting disloyalty to the union. Faced with
a SAMAHAN leadership which they had tried to remove as officials, it was but a natural act of self-
preservation that petitioners fled to the arms of the FEDLU after the union and the OFC had tried to
terminate their employment. Petitioners should not be made accountable for such an act.
With the passage of Republic Act No. 6715 which took effect on March 21, 1989, Article 279 of the Labor
Code was amended to read as follows:
Security of Tenure.—In cases of regular employment, the employer shall not terminate the services of
an employee except for a just cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the time of his
actual reinstatement.
and as implemented by Section 3, Rule 8 of the 1990 New Rules of Procedure of the National Labor
Relations Commission, it would seem that the Mercury Drug Rule (Mercury Drug Co., Inc. vs. Court of
Industrial Relations, 56 SCRA 694 [1974]) which limited the award of back wages of illegally dismissed
workers to three (3) years “without deduction or qualification” to obviate the need for further
proceedings in the course of execution, is no longer applicable.
A legally dismissed employee may now be paid his back wages, allowances, and other benefits for the
entire period he was out of work subject to the rule enunciated before the Mercury Drug Rule, which is
that the employer may, however, deduct any amount which the employee may have earned during the
period of his illegal termination (East Asiatic Company, Ltd. vs. Court of Industrial Relations, 40 SCRA 521
[1971]). Computation of full back wages and presentation of proof as to income earned elsewhere by
the illegally dismissed employee after his termination and before actual reinstatement should be
424
424
Inasmuch as we have ascertained in the text of this discourse that the OFC whimsically dismissed
petitioners without proper hearing and has thus opened OFC to a charge of unfair labor practice, it
ineluctably follows that petitioners can receive their back wages computed from the moment their
compensation was withheld after their dismissal in 1989 up to the date of actual reinstatement. In such
a scenario, the award of back wages can extend beyond the 3-year period fixed by the Mercury Drug
Rule depending, of course, on when the employer will reinstate the employees.
It may appear that Article 279 of the Labor Code, as amended by Republic Act No. 6715, has made the
employer bear a heavier burden than that pronounced in the Mercury Drug Rule, but perhaps Republic
Act No. 6715 was enacted precisely for the employer to realize that the employee must be immediately
restored to his former position, and to impress the idea that immediate reinstatement is tantamount to
a cost-saving measure in terms of overhead expense plus incremental productivity to the company
which lies in the hands of the employer.
WHEREFORE, the decision appealed from is hereby SET ASIDE and private respondents are hereby
ordered to reinstate petitioners to their former or equivalent positions without loss of seniority rights,
and with full back wages, inclusive of allowances and other benefits or their monetary equivalent,
pursuant to Article 279 of the Labor Code, as amended by Republic Act No. 6715.
SO ORDERED.
Decision set aside.
Note.—The determination of the existence and sufficiency of just cause must be exercised with fairness
and in good faith and after observing due process (Gubac vs. National Labor Relations Commission, 187
SCRA 412).
——o0o—— Ferrer vs. National Labor Relations Commission, 224 SCRA 410, G.R. No. 100898 July 5,
1993
428
Malayang Samahan ng mga Manggagawa
sa M. Greenfield vs. Ramos
G.R. No. 113907. February 28, 2000.*
MALAYANG SAMAHAN NG MGA MANGGAGAWA SA M. GREENFIELD (MSMG-UWP), ITS PRESIDENT

BEDA MAGDALENA VILLANUEVA, MARIO DAGANIO, DONATO GUERRERO, BELLA P. SANCHEZ, ELENA
TOBIS, RHODA TAMAYO, LIWAYWAY MALLILIN, ELOISA SANTOS, DOMINADOR REBULLO, JOSE IRLAND,
TEOFILA QUEJADA, VICENTE SAMONTINA, FELICITAS DURIAN, ANTONIO POLDO, ANGELINA TUGNA,
SALVADOR PE-
_______________
* THIRD DIVISION.
429
429
NALOSA, LUZVIMINDA TUBIG, ILUMINADA RIVERA, ROMULO SUMILANG, NENITA BARBELONIA, LEVI
BASILIA, RICARDO PALAGA, MERCY ROBLES, LEODEGARIO GARIN, DOMINGO ECLARINAL, MELCHOR
GALLARDO, MARCELO GARIN, ROSALINA BAUTISTA, MARY ANN TALIGATOS, ALEJANDRO SANTOS,
ANTONIO FRAGA, LUZ GAPULTOS, MAGDALENA URSUA, EUGENIO ORDAN, LIGAYA MANALO, PEPITO
DELA PAZ, PERLITA DIMAQUIAT, MYRNA VASQUEZ, FLORENTINA SAMPAGA, ARACELI FRAGA, MAXIMINA
FAUSTINO, MARINA TAN, OLIGARIO LOMO, PRECILA EUSEBIO, SUSAN ABOGANO, CAROLINA
MANINANG, GINA GLIFONIA, OSCAR SOTTO, CELEDONA MALIGAYA, EFREN VELASQUEZ, DELIA ANOVER,
JOSEPHINE TALIMORO, MAGDALENA TABOR, NARCISA SARMIENTO, SUSAN MACASIEB, FELICIDAD
SISON, PRICELA CARTA, MILA MACAHILIG, CORAZON NUNALA, VISITACION ELAMBRE, ELIZABETH
INOFRE, VIOLETA BARTE, LUZVIMINDA VILLOSA, NORMA SALVADOR, ELIZABETH BOGATE, MERLYN
BALBOA, EUFRECINA SARMIENTO, SIMPLICIA BORLEO, MATERNIDAD DAVID, LAILA JOP, POTENCIANA
CULALA, LUCIVITA NAVARRO, ROLANDO BOTIN, AMELITA MAGALONA, AGNES CENA, NOLI BARTOLAY,
DANTE AQUINO, HERMINIA RILLON, CANDIDA APARIJADO, LYDIA JIMENEZ, ELIZABETH ANOCHE, ALDA
MURO, TERESA VILLANUEVA, TERESITA RECUENCO, ELIZA SERRANO, ESTELLA POLINAR, GERTRUDES
NUNEZ, FELIPE BADIOLA, ROSLYN FERNANDEZ, OSCAR PAGUTA, NATIVIDAD BALIWAS, ELIZABETH
BARCIBAL, CYNTHIA ESTELLER, TEODORA SANTOS, ALICIA PILAR, MILA PATENO, GLORIA CATRIZ, MILA
MACAHILIG, ADELAIDA DE LEON, ROSENDO EDILO, ARSENIA ESPIRITU, NUMERIANO CABRERA,
CONCEPSION ARRIOLA, PAULINA DIMAPASOK, ANGELA SANGCO, PRESILA ARIAS, ZENAIDA NUNES,
EDITHA IGNACIO, ROSA GUIRON, TERESITA CANETA, ALICIA ARRO, TEOFILO RUWETAS, CARLING
AGCAOILI, ROSA NOLASCO, GERLIE PALALON, CLAUDIO DIRAS, LETICIA ALBOS, AURORA ALUBOG, LOLITA
ACALEN,
430
430
GREGORIO ALIVIO GUILLERMO ANICETA, ANGELIE ANDRADA, SUSAN ANGELES, ISABELITA AURIN,
MANUELA AVELINA, CARLING AGCAOILI, TERESITA ALANO, LOLITA AURIN, EMMABETH ARCIAGA,
CRESENCIA ACUNA, LUZVIMINDA ABINES, FLORENCIA ADALID, OLIVIA AGUSTIN, EVANGELINE ALCORAN,
ROSALINA ALFERES, LORNA AMANTE, FLORENTINA AMBITO, JULIETA AMANONCO, CARMEN AMARILLO,
JOSEFINA AMBAGAN, ZENAIDA ANAYA, MARIA ANGLO, EDITHA ANTA ZO, MARY JANE ANTE, ANDREA
AQUINO, ROWENA ARABIT, MARIETA ARAGON, REBECCA ARCENA, LYDIA ARCIDO, FERNANDO ARENAS,
GREGORIO ARGUELLES, EDITHA ARRIOLA, EMMA ATIENZA, EMMA ATIENZA, TEODY ATIENZA, ELIZABETH
AUSTRIA, DIOSA AZARES, SOLIDA AZAINA, MILAGROS BUAG, MARIA BANADERA, EDNALYN BRAGA,
OFELIA BITANGA, FREDISMINDA BUGUIS, VIOLETA BALLESTEROS, ROSARIO BALLADJAY, BETTY BORIO,
ROMANA BAUTISTA, SUSARA BRAVO, LILIA BAHINGTING, ENIETA BALDOZA, DAMIANA BANGCORE,
HERMINIA BARIL, PETRONA BARRIOS, MILAGROS BARRAMEDA, PERLA BAUTISTA, CLARITA BAUTISTA,
ROSALINA BAUTISTA, ADELINA BELGA, CONSOLACION BENAS, MARIA BEREZO, MERCEDES BEREBER,
VIOLETA BISCOCHO, ERNESTO BRIONES, ALVINA BROSOTO, AGUSTINA BUNYI, CARMEN BUGNOT,
ERLINDA BUENAFLOR, LITA BAQUIN, CONSEJO BABOL, CRISANTA BACOLOD, CELIA DE BACTAT, MAZIMA
BAGA, ELENA BALADAD, ROSARIO BALADJAY, AMALIA BALAGTAS, ANITA BALAGTAS, MARIA BALAKIT,
RUFINA BALATAN, REBECCA BALDERAMA, AMELIA BALLESTER, BELEN BARQUIO, BERNANDITA
BASILIDES, HELEN BATO, HELEN BAUTISTA, ROMANA BAUTISTA, ALMEDA BAYTA, AVELINA BELAYON,
NORMA DE BELEN, THELMA DE BELEN, JOCELYN BELTRAN, ELENA BENITEZ, VIRGINIA BERNARDINO,
MERLINA BINUYAG, LINA BINUYA, BLESILDA BISNAR, SHIRLEY BOLIVAR, CRESENTACION MEDLO,
JOCELYN BONIFACIO, AMELIA BORBE, AMALIA BOROMEO,
431
431
ZENAIDA BRAVO, RODRIGO BEULDA, TERESITA MENDEZ, ELENA CAMAN, LALIANE CANDELARIA, MARRY
CARUJANO, REVELINA CORANES, MARITESS CABRERA, JUSTINA OLAZADA, APOLONIA DELA CRUZ,
VICTORIA CRUZ, JOSEFINA DELA CRUZ, MARITESS CATANGHAL, EDNA CRUZ, LUCIA DE CASTRO, JOSIE
CARIASO, OFELIA CERVANTES, MEDITA CORTADO, AMALIA CASAJEROS, LUCINA CASTILIO, EMMA
CARPIO, ANACORITA CABALES, YOLANDA CAMO, MILA CAMAZUELA, ANITA CANTO, ESTELA CANCERAN,
FEMENCIA CANCIO, CYNTHIA CAPALAD, MERLE CASTILLO, JESUSA CASTRO, CECILIA CASTILLO, SILVERITA
CASTRODES, VIVIAN CELLANO, NORMA CELINO, TERESITA CELSO, GLORIA COLINA, EFIPANIA
CONSTANTINO, SALVACION CONSULTA, MEDITA CORTADO, AIDA CRUZ, MARISSA DELA CRUZ, EDITO
CORCILLES, JELYNE CRUZ, ROSA CORPOS, ROSITA CUGONA, ELSIE CABELLES, EMMA CADUT, VICTORIA
CALANZA, BARBARA CALATA, IMELDA CALDERON, CRISTINA CALIDGUID, EMMALINDA CAMALON, MARIA
CAMERINO, CARMENCITA CAMPO, CONNIE CANEZO, LOURDES CAPANANG, MA. MILAGROS CAPILI,
MYRNA T. CAPIRAL, FLOR SAMPAGA, SUSAN B. CARINO, ROSARIO CARIZON, VIRGINIA DEL CARMEN,
EMMA CARPIO, PRESCILA CARTA, FE CASERO, LUZ DE CASTRO, ANNA CATARONGAN, JOSEFINA
CASTISIMO, JOY MANALO, EMMIE CAWALING, JOVITA CARA, MARINA CERBITO, MARY CAREJANO,
ESTELA R. CHAVEZ, CONCEPCION PARAJA, GINA CLAUDIO, FLORDELIZA CORALES, EDITO CORCIELER,
ROSA C. CORROS, AMELIA CRUZ, JELYNE CRUZ, WILFREDO DELA CRUZ, REINA CUEVAS, MARILOU
DEJECES, JOSEPHINE DESACULA, EDITHA DEE, EDITHA DIAZ, VIRGIE DOMONDON, CELSA DOROPAW,
VIOLETA DUMELINA, MARIBEL DIMATATAC, ELBERTO DAGANIO, LETECIA DAGOHOY, DINDO DALUZ,
ANGELITA DANTES, GLORIA DAYO, LUCIA DE CASTRO, CARLITA DE GUZMAN, CARMEN DELA CRUZ,
MERCY DE LEON, MARY DELOS REYES, MARIETA DEPILO, MATILDE DIBLAS, JULIETA DIMAYUGA,
TEODORA DI-
432
432
MAYUGA, YOLANDA DOMDOM, LUCITA DONATO, NELMA DORADO, RITA DORADO, SUSAN DUNTON,
HERMINIA SAN ESTEBAN, AMALI EUGENIO, OLIVIA EUSOYA, ERNESTO ESCOBIN, EVELYN ESCUREL, LYDIA
ESCOBIN, VICENTE E. ELOIDA, ELENA EGAR, GLORIA ERENO, NORMA ESPIRIDION, ARSENIA ESPIRITU,
AURORA ESTACIO, DEMETRIA ESTONELO, MILAGROS FONSEGA, LYDIA FLORENTINO, JULIA FARABIER,
TRINIDAD FATALLA, IMELDA FLORES, JESSINA FRANCO, MA. CRISTINA FRIJAS, ESPECTACION FERRER,
BERDENA FLORES, LEONILA FRANCISCO, BERNARDA FAUSTINO, DOLORES FACUNDO, CRESTITA
FAMILARAN, EMELITA FIGUERAS, MA. VIRGINIA FLORENDO, AURORA FRANCISCO, MA. JESUSA
FRANCISCO, NENITA FUENTES, MARILOU GOLINGAN, JUANITA GUERRERO, LYDIA GUEVARRA, SOCORRO
GONZAGA, PATRICIA GOMEO, ROSALINDA GALAPIN, CARMELITA GALVEZ, TERESA GLE, SONIA
GONZALES, PRIMITA GOMEZ, THERESA GALUA, JOSEFINA GELUA, BRENDA GONZAGA, FLORA
GALLARDO, LUCINDA GRACILLA, VICTORIA GOZUM, NENITA GAMAO, EDNA GARCIA, DANILO GARCIA,
ROSARIO GIRAY, ARACELI GOMEZ, JOEMARIE GONZAGA, NELIA GONZAGA, MARY GRACE GOZON,
CARMEN GONZALES, MERLITA GREGORIO, HERMINIA GONZALES, CARLITA DE GUZMAN, MODESTA
GABRENTINA, EDITHA GADDI, SALVACIO GALIAS, MERLINDA GALIDO, MELINDA GAMIT, JULIETA GARCIA,
EMELITA GAVINO, CHARITO GILLIA, GENERA GONEDA, CRESTITA GONZALES, HERMINIA GONZALES,
FRANCISCA GUILING, JULIAN HERNANDEZ, GLECERIA HERRADURA, SUSANA HIPOLITO, NERISSA HAZ,
SUSAN HERNAEZ, APOLONIA ISON, SUSAN IBARRA, LUDIVINA IGNACIO, CHOLITA INFANTE, JULIETA
ITURRIOS, ANITA IBO, MIRASOL INGALLA, JULIO JARDINIANO, MERLITA JULAO, JULIETA JULIAN,
MARIBETH DE JOSE, JOSEPHINE JENER, IMELDA JATAP. JULIETA JAVIER, SALOME JAVIER, VICTORIA
JAVIER, SALVACION JOMOLO, EDNA JARNE, LYDIA JIMENEZ, TERESITA DE JUAN, MARILYN LUARCA
433
433
ROSITA LOSITO, ROSALINA LUMAYAG, LORNA LARGA, CRESTETA DE LEON, ZENAIDA LEGASPI, ADELAIDA
LEON, IMELDA DE LEON, MELITINA LUMABI, LYDIA LUMABI, ASUNCION LUMACANG, REGINA LAPIADRIO,
MELANIA LUBUGUAN, EVANGELINE LACAP, PELAGIA LACSI, LORNA LAGUI, VIRGIE LAITAN, VIRGINIA LEE,
CRESTELITA DE LEON, FELICISIMA LEONERO, DIOSA LOPE, ANGELITA LOPEZ, TERESITA LORICA, JUANITA
MENDIETA, JUANITA MARANQUEZ, JANET MALIFERO, INAS MORADOS, MELANIE MANING, LUCENA
MABANGLO, CLARITA MEJIA, IRENE MENDOZA, LILIA MORTA, VIGINIA MARAY, CHARITO MASINAHON,
FILMA MALAYA, ROSITA MATIBAG, LORENZA MLINA, SABINA DEL MUNDO, EDITHA MUYCO, NARCISA
MABEZA, MA. FE MACATANGAY, CONCEPCION MAGDARAOG, IMELDA MAHIYA, ELSA MALLARI, LIGAYA
MANAHAN, SOLEDA MANLAPAS, VIRGINIA MAPA, JOSEI MARCOS, LIBRADA MARQUEZ, VIRGINIA MAZA,
JULIANITA MENDIETA, EDILBERTA MENDOZA, IRENE MERCADO, HELEN MEROY, CRISTINA MEJARES,
CECILIA MILLET, EMELITA MINON, JOSEPHINE MIRANA, PERLITA MIRANO, EVANGELINE MISBAL,
ELEANOR MORALES, TERESITA MORILLA, LYDIA NUDO, MYRIAM NAVAL, CAROLINA NOLIA, ALICIA
NUNEZ, MAGDALENA NAGUIDA, ELSA NICOL, LILIA NACIONALES, MA. LIZA MABO, REMEDIOS NIEVES,
MARGARITA NUYLAN, TERESITA NIEVES, PORFERIA NARAG, RHODORA NUCASA, CORAZON OCRAY, LILIA
OLIMPO, VERONA OVERENCIA, FERMIN OSENA, FLORENCIA OLIVAROS, SOLEDAD OBEAS, NARISSA
OLIVEROS, PELAGIA ORTEGA, SUSAN ORTEGA, CRISTINA PRENCIPE, PURITA PENGSON, REBECCA
PACERAN, EDNA PARINA, MARIETA PINAT, EPIFANIA PAJERLAN, ROSALINA PASIBE, CECILIA DELA PAZ,
LORETA PENA, APOLONIA PALCONIT, FRANCISCO PAGUIO, LYDIA PAMINTAHON, ELSIE PACALDO,
TERESITA PADILLA, MYRNA PINEDA, MERCEDITA PEREZ, NOVENA PORLUCAS, TERESITA PODPOD,
ADORACION PORNOBI, ALICIA PERILLO, HELEN JOY PENDAL, LOURDES PACHECO, LUZVIMINDA PA-
434
434
GALA, LORETA PAGAPULAN, FRANCISCO PAGUIO, PRISCO PALACA, FLORA PAMINTUAN, NOEMI
PARISALES, JOSEPHINE PATRICIO, CRISTINA PE BENITO, ANGELA PECO, ANGELITA PENA, ESTER
PENONES, NORMA PEREZ, MAURA PERSEVERANCIA, MARINA PETILLA, JOSIE PIA, ZULVILITA PIODO,
REBECCA PACERAN, CLARITA POLICARPIO, MAXIMO POTENTO, PORFIRIO POTENTO, FLORDELIZA
PUMARAS, FERNANDO QUEVEDO, JULIANA QUINDOZA, CHARITO QUIROZ, CARMELITA ROSINO,
RODELIA RAYONDOYON, FLORENCIA RAGOS, REBECCA ROSALES, ROSALYN RIVERO, FRANCISCO RUIZ,
FRANCIA ROSERO, EMELY RUBIO, EDILBERTO RUIO, JUANA RUBY, RAQUEL REYES, MERCY ROBLES,
ESTELA RELANO, ROSITA REYES, NIMFA RENDON, EPIFANIO RAMIRO, MURIEL REALCO, BERNARDITA
RED, LEONITA RODIL, BENITA REBOLA, DELMA REGALARIO, LENY REDILLAS, JULIETA DELA ROSA,
FELICITAS DELA ROSA, SUSAN RAFALLO, ELENA RONDINA, NORMA RACELIS, JOSEPHINE RAGEL,
ESPERANZA RAMIREZ, LUZVIMINDA RANADA, CRISTINA RAPINSAN, JOCELYN RED, ORLANDO REYES,
TERESITA REYES, ANGELITA ROBERTO, DELIA ROCHA, EDLTRUDES ROMERO, MELECIA ROSALES, ZENAIDA
ROTAO, BELEN RUBIS, FE RUEDA, SYLVIA SONGCAYAWON, CRISTINA SANANO, NERCISA SARMIENTO,
HELEN SIBAL, ESTELITA SANTOS, NORMA SILVESTRE, DARLITA SINGSON, EUFROCINA SARMIENTO,
MYRNA SAMSON, EMERLINA SADIA, LORNA SALAZAR, AVELINA SALVADOR, NACIFORA SALAZAR, TITA
SEUS, MARIFE SANTOS, GRACIA SARMIENTO, ANGELITA SUMANGIL, ELIZABETH SICAT, MA. VICTORIA
SIDELA, ANALITA SALVADOR, MARITES SANTOS, VIRGINIA SANTOS, THELMA SARONG, NILDA SAYAT,
FANCITA SEGUNDO, FYNAIDA SAGUI, EDITHA SALAZAR, EDNA SALZAR, EMMA SALENDARIO, SOLEDAD
SAMSON, EDNA SAN DIEGO, TERESITA SAN GABRIEL, GERTRUDES SAN JOSE, EGLECERIA OSANCHEZ,
ESTRELLA SANCHEZ, CECILIA DELOS SANTOS, LUISA SEGOVIA, JOCELYN SENDING, ELENA SONGALIA, FE
435
435
LICITAS SORIANO, OFELIA TIBAYAN, AIDA TIRNIDA, MONICA TIBAYAN, CRISTETA TAMBARAN, GLORIA
TACDA, NENVINA, FELINA TEVES, ANTONINA DELA TORRE, MAXIMA TANILON, NENA TABAT, ZOSIMA
TOLOSA, MARITA TENOSO, IMELDA TANIO, LUZ TANIO, EVANGELINE TAYO, JOSEFINA TINGTING,
ARSENIA TISOY, MAGDALENA TRAJANO, JOSEFINA UBALDE, GINA UMALI, IRMA VALENZUELA, FELY
VALDEZ, PAULINA VALEZ, ROSELITA VALLENTE, LOURDES VELASCO, AIDA VILLA, FRANCISCA VILLARITO,
ZENAIDA VISMONTE, DELIA VILLAMIEL, NENITA VASQUEZ, JOCELYN VILLASIS, FERMARGARITA VARGAS,
CELIA VALLE, MILA CONCEPCION VIRAY, DOMINGA VALDEZ, LUZVIMINDA VOCINA, MADELINE VIVERO,
RUFINA VELASCO, AUREA VIDALEON, GLORIA DEL VALLE, THELMA VALLOYAS, CYNTHIA DELA VEGA,
ADELA VILLAGOMEZ, TERESITA VINLUAN, EUFEMIA VITAN, GLORIA VILLAFLORES, EDORACION VALDEZ,
ANGELITA VALDEZ, ILUMINADA VALENCI, MYRNA VASQUEZ, EVELYN VEJERAMO, TEODORA VELASQUEZ,
EDAN VILLANUEVA, PURITA VILLASENOR, SALVADOR WILSON, EMELINA YU, ADELFA YU, ANA ABRIGUE,
VIRGINIA ADOBAS, VICTORIA ANTIPUESTO, MERCEDITA CASTILLO, JOCELYN CASTRO, CREMENIA DELA
CRUZ, JOSEPHINE IGNACIO, MELITA ILILANGOS, LIGAYA LUMAYAT, DELIA LUMBES, ROSITA LIBRADO,
DELIA LAGRAMADA, GEMMA MAGPANTAY, EMILY MENDOZA, FIDELA PANGANIBAN, LEONOR RIZALDO,
ILUMINDA RIVERA, DIVINA SAMBAYAN, ELMERITA SOLAYAO, NANCY SAMALA, JOSIE SUMARAN,
LUZVIMINDA ABINES, ALMA ACOL, ROBERTO ADRIATICO, GLORIA AGUINALDO, ROSARIO ALEYO,
CRISTETA ALEJANDRO, LILIA ALMOGUERA, CARMEN AMARILLO, TRINIDAD ARDANIEL, CERINA
AVENTAJADO, ZENAIDA AVAYA, LOLITA ARABIS, MARIA ARSENIA, SOFIA AGUINALDO, SALVE ABAD,
JOSEFINA AMBANGAN, EMILIA AQUINO, JOSEFINA AQUINO, JULIANA AUSAN, AMERCIANA ACOSTA,
CONCEPCION ALEROZA, DIANA ADOVOS, FELY ADVINCULA, SEOMINTA ARIAS, JOSE
436
436
PHINE ARCEDE, NORMA AMISTOSO, PRESENTACION ALONOS, EMMA ATIENZA, LEONIDA AQUINO,
ANITA ARILLON, ADELAIDA ARELLANO, NORMA AMISTOSO, JOSEPHINE ARCEDE, SEMIONITA ARIAS,
JOSEFINA BANTUG, LOLITA BARTE, HERMINIA BASCO, MARGARITA BOTARDO, RUFINO BUGNOT, LOLITA
BUSTILLO, ISABEL BALAKIT, ROSARIO BARRERO, TESSIE BALBOS, NORMA BENISANO, GUILLERMA
BRUGES, BERNADETTE BARTOLOME, SHIRLEY BELMONTE, MERONA BELZA, AZUCENA BERNALES, JOSE
BASCO, NIMPHA BANTOG, BENILDA BUBAN, REGINA BUBAN, SALOME BARRAMEDA, IRENE BISCO,
FELICITAS BAUTISTA, VIOLETA BURA, LINA BINUYA, BIBIANA BAARDE, ELSA BAES, ANASTACIA BELONZO,
SONIA BENOYO, ELIZABETH BACUNGAN, PATRICIA BARRAMEDA, ERLINDA BARCELONA, EMMA BANICO,
APOLONIA BUNAO, LUCITA BOLEA, PACIFICA BARCELONA, EDITHA BASIJAN, RENITA BADAMA, ELENA
BALADAD, CRESENCIA BAJO, BERNADITA BASILID, MELINDA BEATO, YOLANDA BATANES, EDITHA
BORILLA, ANITA BAS, ELSA CALIPUNDAN, MARIA CAMERINO, VIRGINIA CAMPOSANO, MILAGROS CAPILI,
CARINA CARINO, EUFEMIA CASIHAN, NENITA CASTRO, FLORENCIA CASUBUAN, GIRLIE CENTENO,
MARIANITA CHIQUITO, IMELDA DELA CRUZ, TEODOSIA CONG, TEOFILA CARACOL, TERESITA CANTA,
IRENEA CUNANAN, JULITA CANDILOSAS, VIOLETA CIERES, MILAGROS DELA CRUZ, FLOREPES CAPULONG,
CARMENCITA CAMPO, MARILYN CARILLO, RUTH DELA CRUZ, RITA CIJAS, LYDIA CASTOR, VIRGIE
CALUBAD, EMELITA CABERA, CRISTETA CRUZ, ERLINDA COGADAS, IMELDA CALDERON, SUSIE LUZ CEZAR,
ESTELA CHAVEZ, NORMA CABRERA, ELDA DAGATAN, LEONISA DIMACUNA, ERNA DUGTONG,
FLORDELISA DIGMA, VIRGILIO DADIOS, LOLITA DAGTA, ADELAIDA DORADO, CELSA DATUMANONG,
VIRGINIA DOCTOLERO, EDNA SAN DIEGO, JULIETA DANG, JULIETA DORANTINAO, LOLITA DAGANO,
JUDITH DIAZ, MARIA ENICANE, MARITA ESCARDE, ENRIMITA ESMAYOR, ROSARIO EPIRITU, REMEDIOS
EMBOLTORIO,
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437
IRENE ESTUITA, TERESITA ERESE, ERMELINDA ELEZO, MARIA ESTAREJA, MERLITA ESQUERRA, YOLANDA
FELICITAS, FRUTO FRANCIA, MARTHA FRUTO, LILIA FLORES, SALVACION FORTALESA, JUDITH FAJARDO,
SUSANA FERNANDO, EDWIN FRANCISCO, NENITA GREGORY, ROSA CAMILO, MARIVIC GERRARDO,
CHARITA GOREMBALEM, NORMA GRANDE, DOLORES GUTIERREZ, CHARLIE GARCIA, LUZ GALVEZ,
ADELAIDA GAMILLA, LUZ GAPULTOS, ERLINDA GARCIA, HELEN GARCIA, ERLINDA GAUDIA, FRANCISCA
GUILING, MINTA HERRERA, ASUNCION HONOA, JUAN HERNANDEZ, LUCERIA ANNA MAE HERNANDEZ,
JULIANA HERNANDEZ, EDITHA IGNACIO, ANITA INOCENCIO, EULALIA INSORIO, ESTELITA IRLANDA,
MILAGROS IGNACIO, LINDA JABONILLO, ADELIMA JAEL, ROWENA JARABJO, ROBERT JAVILINAR, CLARITA
JOSE, CARMENCITA JUNDEZ, SOFIA LALUCIS, GLORIA LABITORIA, ANGELITA LODES, ERLINDA LATOGA,
EVELYN LEGASPI, ROMEO LIMCHOCO, JESUS LARA, ESTRELLA DE LUNA, LORETA LAREZA, JOSEPHINE
ALSCO, MERCY DE LEON, CONSOLACION LIBAO, MARILYN LIWAG, TERESITA LIZAZO, LILIA MACAPAGAL,
SALVACION MACAREZA, AMELIA MADO, TERESITA MADRIAGA, JOVITA MAGNAYE, JEAN MALABAD,
FRANCISCA MENDOZA, NELCITA MANGANTANG, TERESITA NELLA, GENEROZA MERCADO, CRISTETA
MOJANA, BERNARDA MONGADO, LYDIA MIRANDA, ELISA MADRILEJOS, LOIDA MAGSINO, AMELIA
MALTO, JULITA MAHIBA, MYRNA MAYORES, LUISA MARAIG, FLORENCIA MARAIG, EMMA MONZON,
IMELDA MAGDANGAN, VICTORIA MARTIN, NOEMI MANGUILLO, BASILIZA MEDINA, VICTORIO
MERCADO, ESTELA MAYPA, EMILIA MENDOZA, LINA MAGPANTAY, FELICIANA MANLOLO, ELENA
MANACOP, WILMA MORENO, JUANA MENDOZA, EVELYN DEL MUNDO, ROSIE MATUTINA, MATILDE
MANALO, TERESITA MENDEZ, FELIPINA MAGONCIA, MARIA MANZANO, LIGAYA MANALO, LETICIA
MARCHA, MARINA MANDIGMA, LETICIA MANDASOC, PRESCILLA MAR-
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438
TINEZ, JULIA MENDOZA, PACITA MAGALLANES, ANGELINA MARJES, SHIRLEY MELIGRITO, IRENE
MERCADO, ELISA MAATUBANG, MARCELINA NICOLAS, AGUSTINA NICOLAS, ROSA NOLASCO, WILMA
NILAYE, VIOLETA ORACION, ANGELA OSTAYA, JUANITA OSAYOS, MAGDALENA OCAMPO, MARDIANA
OCTA, ROSELA OPAO, LIBRADA OCAMPO, YOLANDA OLIVER, MARCIA ORLANDA, PAGDUNAN, RITA
PABILONA, MYRA PALACA, BETHLEHEM PALINES, GINA PALIGAR, NORMA PALIGAR, DELMA PEREZ,
CLAUDIA PRADO JULIE PUTONG, LUDIVINA PAGSALINGAN, MERLYN PANALIGAN, VIOLETA
PANAMBITAN, NOREN PAR, ERLINDA PARAGAS, MILA PARINO, REBECCA PENAFLOR IMELDA
PENAMORA, JERMICILLIN PERALTA, REBECCA PIAPES, EDITHA PILAR, MAROBETH PILLADO, DIOSCORO
PIMENTEL, AURORA LAS PINAS, EVANGELINA PINON, MA. NITA PONDOC, MA. MERCEDES PODPOD,
ANGELITO PANDEZ, LIGAYA PIGTAIN, LEONILA QUIAMBAO, ELENA QUINO, MARITESS QUIJANO, CHOLITA
REBUENO, LOLITA REYES, JOCELYN RAMOS, ROSITA RAMIREZ, ELINORA RAMOS, ISABEL RAMOS,
ANNABELLE RESURRECCION, EMMA REYES, ALILY ROXAS, MARY GRACE DELOS REYES, JOCELYN DEL
ROSARIO, JOSEFINA RABUSA, ANGELITA ROTAIRO, SAMCETA ROSETA, EDERLINA RUIZ, ZENAIDA
ROSARIO, BENITA REBOLA, ROSITA REVILLA, ROSITA SANTOS, ROWENA SALAZAR, EMILYN SARMIENTO,
ANA SENIS, ELOISA SANTOS, NARCISA SONGLIAD, ELMA SONGALIA, AMPARA SABIO, JESSIE SANCHEZ,
VIVIAN SAMILO, GLORIA SUMALINOG, ROSALINA DELOS SANTOS, MARIETA SOMBRERO, HELEN
SERRETARIO, TEODORO SULIT, BELLA SONGUINES, LINDA SARANTAN, ESTELLA SALABAR, MILAGROS
SISON, GLORIA TALIDAGA, CECILIA TEODORO, ROMILLA TUAZON, AMELITA TABULAO, MACARIA TORRES,
LUTGARDA TUSI, ESTELLA TORREJOS, VICTORIA TAN, MERLITA DELA VEGA, WEVINA ORENCIA,
REMEDIOS BALECHA, TERESITA TIBAR, LACHICA LEONORA, JULITA YBUT, JOSEFINA ZABALA, WINNIE
ZALDARIAGA, BENHUR
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439

ANTENERO, MARCELINA ANTENERO, ANTONINA ALAPAN, EDITHA ANTOZO, ROWENA ARABIT, ANDRA
AQUINO, TERESITA ANGULO, MARIA ANGLO, MYRNA ALBOS, ELENITA AUSTRIA, ANNA ABRIGUE,
VIRGINIA ADOBAS, VICTORIA ANTIPUESTO, REMEDIOS BOLECHE, MACARIA BARRIOS, THELMA BELEN,
ESTELLA BARRETTO, JOCELYN CHAVEZ, VIRGINIA CAPISTRANO, BENEDICTA CINCO, YOLLY CATPANG,
REINA CUEVAS, VICTORIA CALANZA, FE CASERO, ROBERTA CATALBAS, LOURDES CAPANANG, CLEMENCIA
CRUZ, JOCELYN COSTO, MERCEDITA CASTILLO, EDITHA DEE, LUCITA DONATO, NORMA ESPIRIDION,
LORETA FERNANDEZ, AURORA FRANCISCO, VILMA FAJARDO, MODESTA GABRENTINA, TERESITA
GABRIEL, SALVACION GAMBOA, JOSEPHINE IGNACIO, SUSAN IBARRA, ESPERANZA JABSON, OSCAR
JAMBARO, ROSANNA JARDIN, CORAZON JALOCON, ZENAIDA LEGASPI, DELIA LAGRAMADA, ROSITA
LIBRANDO, LIGAYA LUMAYOT, DELIA LUMBIS, LEONORA LANCHICA, RELAGIA LACSI, JOSEFINA LUMBO,
VIOLETA DE LUNA, EVELYN MADRID, TERESITA MORILLA, GEMMA MAGPANTAY, EMILY MENDOZA,
IRENEA MEDINA, NARCISA MABEZA, ROSANNA MEDINA, DELIA MARTINEZ, ROSARIO MAG-ISA, EDITHA
MENDOZA, EDILBERTA MENDOZA, FIDELA PANGANIBAN, OFELIA PANGANIBAN, AZUCENA POSTGO,
LOURDES PACHECO, LILIA PADILLA, MARISSA PEREZ, FLORDELIZA PUMARES, LUZ REYES, NORMA
RACELIS, LEONOR RIZALDO, JOSIE SUMASAR, NANCY SAMALA, EMERLITA SOLAYAO, MERCEDITA
SAMANIEGO, BLANDINA SIMBULAN, JOCELYN SENDING, LUISITA TABERRERO, TERESITA TIBAR,
ESTERLINA VALDEZ, GLORIA VEJERANO, ILUMINADA VALENCIA, MERLITA DELA VEGA, VIRGIE LAITAN,
JULIET VILLARAMA, LUISISTA OCAMPO, NARIO ANDRES, ANSELMA TULFO, GLORIA MATEO, FLANIA
MENDOZA, CONNIE CANGO, EDITHA SALAZAR, MYRNA DELOS SANTOS, TERESITA SERGIO, CHARITO
GILLA, FLORENTINA HERNAEZ, BERNARDINO VIRGINIA, AMPO ANACORITA, SYLVIA
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POASADAS, ESTRELLA ESPIRITU, CONCORDIA LUZURIAGA, MARINA CERBITO, EMMA REYES, NOEMI
PENISALES, CLARITA POLICARPIO, BELEN BANGUIO, HERMINIA ADVINCULA, LILIA MORTA, REGINA
LAPIDARIO, LORNA LARGA, TERESITA VINLUAN, MARITA TENOSO, NILDS SAYAT, THELMA SARONG,
DELMA REGALIS, SUSAN RAFAULO, ELENA RONDINA, MYRNA PIENDA, VIOLETA DUMELINA, FLORENCIA
ADALID, FILMA MELAYA, ERLINDA DE BAUTISTA, MATILDE DE BLAS, DOLORES FACUNDO, REBECCA
LEDAMA, MA. FE MACATANGAY, EMELITA MINON, NORMA PAGUIO, ELIZA VASQUEZ, GLORIA
VILLARINO, MA. JESUS FRANCISCO, TERESITA. GURPIDO, LIGAYA MANALO, FE PINEDA, MIRIAM OCMAR,
LUISA SEGOVIA, TEODY ATIENZA, SOLEDA AZCURE, CARMEN DELA CRUZ, DEMETRIA ESTONELO, MA.
FLORIDA LOZANO, IMELDA MAHIYA, EDILBERTA MENDOZA, SYLVIA POSADAS, SUSANA ORTEGA,
JOSEPHINE D. TALIMORO, TERESITA LORECA, ARSENIA TISOY, LIGAYA MANALO, TERESITA GURPIO, FE
PINEDA, and MARIA JESUS FRANCISCO, petitioners, vs. HON. CRESENCIO J. RAMOS, NATIONAL LABOR
RELATIONS COMMISSION, M. GREENFIELD (B), INC., SAUL TAWIL, CARLOS T. JAVELOSA, RENATO C.
PUANGCO, WINCEL LIGOT, MARCIANO HALOG, GODOFREDO PACENO, SR., GERVACIO CASILLANO,
LORENZO ITAOC, ATTY. GODOFREDO PACENO, JR., MARGARITO CABRERA, GAUDENCIO RACHO,
SANTIAGO IBANEZ, AND RODRIGO AGUILING, respondents.
Labor Law; National Labor Relations Commission; There is nothing irregular in the temporary
designation of an NLRC Commissioner from one division to complete another division, for the law
empowers the Chairman to make temporary assignments whenever the required concurrence is not
met; The territorial divisions of the National Labor Relations Commission do not confer exclusive
jurisdiction to each division and are merely designed for administrative efficiency.—–It must be
remembered that during the pendency of the case in the First Division of the NLRC, one of the three
commissioners, Commissioner Romeo Putong, retired, leaving Chairman Bartolome Carale and
Commissioner Vicente Veloso III. Subsequently,
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Commissioner Veloso inhibited himself from the case because the counsel for the petitioners was his
former classmate in law school. The First Division was thus left with only one commissioner. Since the
law requires the concurrence of two commissioners to arrive at a judgment or resolution, the
Commission was constrained to temporarily designate a commissioner from another division to
complete the First Division. There is nothing irregular at all in such a temporary designation for the law
empowers the Chairman to make temporary assignments whenever the required concurrence is not
met. The law does not say that a commissioner from the first division cannot be temporarily assigned to
the second or third division to fill the gap or vice versa. The territorial divisions do not confer exclusive
jurisdiction to each division and are merely designed for administrative efficiency.
Same; Collective Bargaining Agreements; Union Security Clauses; Due Process; Although union security
clauses embodied in the collective bargaining agreement may be validly enforced and dismissals
pursuant thereto may likewise be valid, this does not erode the fundamental requirement of due
process.—–This ruling of the NLRC is erroneous. Although this Court has ruled that union security
clauses embodied in the collective bargaining agreement may be validly enforced and that dismissals
pursuant thereto may likewise be valid, this does not erode the fundamental requirement of due
process. The reason behind the enforcement of union security clauses which is the sanctity and
inviolability of contracts cannot override one’s right to due process.
Same; Same; Same; Same; An employer cannot rely merely upon a labor federation’s allegations in
terminating union officers expelled by the federation for allegedly committing acts of disloyalty and lor
inimical to the interest of the federation and in violation of its Constitution and By-Laws—the company
must also inquire into the cause of the expulsion and whether or not the federation had sufficient
grounds to effect the same.—–In the case under scrutiny, petitioner union officers were expelled by the
federation for allegedly committing acts of disloyalty and/or inimical to the interest of ULGWP and in
violation of its Constitution and By-laws. Upon demand of the federation, the company terminated the
petitioners without conducting a separate and independent investigation. Respondent company did not
inquire into the cause of the expulsion and whether or not the federation had sufficient grounds to
effect
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the same. Relying merely upon the federation’s allegations, respondent company terminated petitioners
from employment when a separate inquiry could have revealed if the federation had acted arbitrarily
and capriciously in expelling the union officers. Respondent company’s allegation that petitioners were
accorded due process is belied by the termination letters received by the petitioners which state that
the dismissal shall be immediately effective.
Same; Same; Same; Same; The right of an employee to be informed 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 collective bargaining
agreement.—–As held in the aforecited case of Carino, “the right of an employee to be informed 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
collective bargaining agreement. An employee is entitled to be protected not only from a company
which disregards his rights but also from his own union the leadership of which could yield to the
temptation of swift and arbitrary expulsion from membership and mere dismissal from his job.”
Same; Same; Same; Same; Even assuming that a federation had valid grounds to expel union officers,
due process requires that these union officers be accorded a separate hearing by the company.—–
While respondent company may validly dismiss the employees expelled by the union for disloyalty
under the union security clause of the collective bargaining agreement upon the recommendation by
the union, this dismissal should not be done hastily and summarily thereby eroding the employees’ right
to due process, self-organization and security of tenure. The enforcement of union security clauses is
authorized by law provided such enforcement is not characterized by arbitrariness, and always with due
process. Even on the assumption that the federation had valid grounds to expel the union officers, due
process requires that these union officers be accorded a separate hearing by respondent company.
Same; Same; Same; Intra-Union Disputes; Illegal Dismissal; While it is true that the issue of expulsion of
local union officers is originally between the local union and the federation, hence, intraunion in
character, the issue is later on converted into a termination
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dispute when the company dismisses the union officers from work without the benefit of a separate
notice and hearing; Notwithstanding the fact that the dismissal was at the instance of a labor federation
which undertook to hold the company free from any liability resulting from such a dismissal, the
company may still be held liable if it was remiss in its duty to accord the would-be dismissed employees
their right to be heard on the matter.—–In its decision, public respondent also declared that if
complainants (herein petitioners) have any recourse in law, their right of action is against the federation
and not against the company or its officers, relying on the findings of the Labor Secretary that the issue
of expulsion of petitioner union officers by the federation is a purely intra-union matter. Again, such a
contention is untenable. While it is true that the issue of expulsion of the local union officers is originally
between the local union and the federation, hence, intra-union in character, the issue was later on
converted into a termination dispute when the company dismissed the petitioners from work without
the benefit of a separate notice and hearing. As a matter of fact, the records reveal that the termination
was effective on the same day that the termination notice was served on the petitioners, x x x Thus,
notwithstanding the fact that the dismissal was at the instance of the federation and that it undertook
to hold the company free from any liability resulting from such a dismissal, the company may still be
held liable if it was remiss in its duty to accord the would-be dismissed employees their right to be heard
on the matter.
Same; Same; Same; Same; Jurisdiction; The issue of whether or not the federation had reasonable
grounds to expel the petitioner union officers is properly within the original and exclusive jurisdiction of
the Bureau of Labor Relations, being an intra-union conflict.—–Although the issue of whether or not the
federation had reasonable grounds to expel the petitioner union officers is properly within the original
and exclusive jurisdiction of the Bureau of Labor Relations, being an intra-union conflict, this Court
deems it justifiable that such issue be nonetheless ruled upon, as the Labor Arbiter did, for to remand
the same to the Bureau of Labor Relations would be to intolerably delay the case.
Same; Evidence; The Supreme Court will not uphold erroneous conclusions of the National Labor
Relations Commission as when it finds insufficient or insubstantial evidence on record to support those
factual; findings, or when it is perceived that far too much is con-
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eluded, inferred or deduced from the bare or incomplete facts appearing of record.—–It is well-settled
that findings of facts of the NLRC are entitled to great respect and are generally binding on this Court,
but it is equally well-settled that the Court will not uphold erroneous conclusions of the NLRC as when
the Court finds insufficient or insubstantial evidence on record to support those factual findings. The
same holds true when it is perceived that far too much is concluded, inferred or deduced from the bare
or incomplete facts appearing of record.
Same; Unions; Disaffiliations; Freedom of Association; A local union has the right to disaffiliate from its
mother union or declare its autonomy, and such disaffiliation cannot be considered disloyalty; In the
absence of specific provisions in the federation’s constitution prohibiting disaffiliation or the declaration
of autonomy of a local union, a local union may dissociate from its parent union.—–A local union has the
right to disaffiliate from its mother union or declare its autonomy. A local union, being a separate and
voluntary association, is free to serve the interests of all its members including the freedom to
disaffiliate or declare its autonomy from the federation to which it belongs when circumstances
warrant, in accordance with the constitutional guarantee of freedom of association, x x x Thus, a local
union which has affiliated itself with a federation is free to sever such affiliation anytime and such
disaffiliation cannot be considered disloyalty. In the absence of specific provisions in the federation’s
constitution prohibiting disaffiliation or the declaration of autonomy of a local union, a local may
dissociate with its parent union.
Same; Same; Strikes; Unfair Labor Practices; Even if the allegations of unfair labor practice are
subsequently found out to be untrue, the presumption of legality of the strike prevails.—–On the
submission that the strike was illegal for being grounded on a non-strikeable issue, that is, the intra-
union conflict between the federation and the local union, it bears reiterating that when respondent
company dismissed the union officers, the issue was transformed into a termination dispute and
brought respondent company into the picture. Petitioners believed in good faith that in dismissing them
upon request by the federation, respondent company was guilty of unfair labor practice in that it
violated the petitioner’s right to self-organization. The strike was staged to protest respondent
company’s act of dismissing the union officers. Even if the allegations of unfair
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labor practice are subsequently found out to be untrue, the presumption of legality of the strike
prevails.
Same; Same; Same; Same; No Strike, No Lockout Clause; A no strike, no lockout provision can only be
invoked when the strike is economic in nature, i.e., to force wage or other concessions from the
employer which he is not required by law to grant.—–Another reason why the Labor Arbiter declared
the strike illegal is due to the existence of a no strike, no lockout provision in the CBA. Again, such a
ruling is erroneous. A no strike, no lock out provision can only be invoked when the strike is economic
in nature, i.e. to force wage or other concessions from the employer which he is not required by law
to grant. Such a provision cannot be used to assail the legality of a strike which is grounded on unfair
labor practice, as was the honest belief of herein petitioners. Again, whether or not there was indeed
unfair labor practice does not affect the strike.
Same; Same; Same; Where violence was committed on both sides during a strike, such violence
cannot be a ground for declaring the strike as illegal.—–On the allegation of violence committed in the
course of the strike, it must be remembered that the Labor Arbiter and the Commission found that
“the parties are agreed that there were violent incidents x x x resulting to injuries to both sides, the
union and management.” The evidence on record show that the violence cannot be attributed to the
striking employees alone for the company itself employed hired men to pacify the strikers. With
violence committed on both sides, the management and the employees, such violence cannot be a
ground for declaring the strike as illegal.
Same; Abandonment; Requisites.—–Jurisprudence holds that for abandonment of work to exist, it is

essential (1) that the employee must have failed to report for work or must have been absent without
valid or justifiable reason; and (2) that there must have been a clear intention to sever the employer-
employee relationship manifested by some overt acts. Deliberate and unjustified refusal on the part
of the employee to go back to his work post and resume his employment must be established.
Absence must be accompanied by overt acts unerringly pointing to the fact that the employee simply
does not want to work anymore. And the burden of proof to show that there was unjustified refusal
to go back to work rests on the employer.
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Same; Same; The filing of a complaint for illegal dismissal is inconsistent with the allegation of
abandonment.—–This Court has ruled that an employee who took steps to protest his lay-off cannot
be said to have abandoned his work. The filing of a complaint for illegal dismissal is inconsistent with
the allegation of abandonment. In the case under consideration, the petitioners did, in fact, file a
complaint when they were refused reinstatement by respondent company.
Same; Union Security Clauses; Unfair Labor Practices; Due Process; Dismissals pursuant to union
security clauses are valid and legal subject only to the requirement of due process; Dismissal of an
employee by the company pursuant to a labor union’s demand in accordance with a union security
agreement does not constitute unfair labor practice.—–Anent public respondent’s finding that there
was no unfair labor practice on the part of respondent company and federation officers, the Court
sustains the same. As earlier discussed, union security clauses in collective bargaining agreements, if
freely and voluntarily entered into, are valid and binding. Corrolarily, dismissals pursuant to union
security clauses are valid and legal subject only to the requirement of due process, that is, notice and
hearing prior to dismissal. Thus, the dismissal of an employee by the company pursuant to a labor
union’s demand in accordance with a union security agreement does not constitute unfair labor
practice.
Same; Corporation Law; Company officials cannot be held personally liable for damages on account of
the employees’ dismissal because the employer corporation has a personality separate and distinct
from its officers who merely acted as its agents.—–The Court is of the opinion, and so holds, that
respondent company officials cannot be held personally liable for damages on account of the
employees’ dismissal because the employer corporation has a personality separate and distinct from
its officers who merely acted as its agents.
Same; Illegal Dismissal; Backwages; An employee who is dismissed, whether or not for just or
authorized cause but without prior notice of his termination, is entitled to full backwages from the
time he was terminated until the decision in his case becomes final, when the dismissal was for cause;
and in case the dismissal was without just or valid cause, the backwages shall be computed from the
time of his dismissal until his actual reinstatement.—–In Ruben Serrano vs.
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Malayang Samahan ng mga Manggagawa sa M. Greenfield vs. Ramos
NLRC and Isetann Department Store (G.R. No. 117040, January 27, 2000), the Court ruled that an
employee who is dismissed, whether or not for just or authorized cause but without prior notice of his
termination, is entitled to full backwages from the time he was terminated until the decision in his
case becomes final, when the dismissal was for cause; and in case the dismissal was without just or
valid cause, the backwages shall be computed from the time of his dismissal until his actual
reinstatement. In the case at bar, where the requirement of notice and hearing was not complied
with, the aforecited doctrine laid down in the Serrano case applies.
Potenciano A. Flores, Jr. for petitioners.
Gonzales, Batiller, Biloz & Associates for respondents C. Javelosa and R. Caoleng.
Angara, Abello, Concepcion, Regala & Cruz for respondents Company and its Officers.
PURISIMA, J.:
At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court to annul the decision of the
National Labor Relations Commission in an unfair labor practice case instituted, by a local union against
its employer company and the officers of its national federation.
The petitioner, Malayang Samahan ng mga Manggagawa sa M. Greenfield, Inc., (B) (MSMG), hereinafter
referred to as the “local union,” is an affiliate of the private respondent, United Lumber and General
Workers of the Philippines (ULGWP), referred to as the “federation.” The collective bargaining
agreement between MSMG and M. Greenfield, Inc. names the parties as follows:
“This agreement made and entered into by and between:
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M. GREENFIELD, INC. (B) a corporation duly organized in accordance with the laws of the Republic of the
Philippines with office address at Km. 14, Merville Road, Parañaque, Metro Manila, represented in this
act by its General Manager, Mr. Carlos T. Javelosa, hereinafter referred to as the Company;
- and -
MALAYANG SAMAHAN NG MGA MANGGAGAWA SA M. GREENFIELD (B) (MSMG)/UNITED LUMBER AND

GENERAL WORKERS OF THE PHILIPPINES (ULGWP), a legitimate labor organization with address at Suite
404, Trinity Building , T.M. Kalaw Street, Manila, represented in this act by a Negotiating Committee
headed by its National President, Mr. Godofredo Paceno, Sr., referred to in this Agreement as the
UNION.”1
The CBA includes, among others, the following pertinent provisions:
Article II—–Union Security
Section 1. Coverage and Scope.—–All employees who are covered by this Agreement and presently
members of the UNION shall remain members of the UNION for the duration of this Agreement as a
condition precedent to continued employment with the COMPANY.
xxx xxx
xxx xxx
Section 4. Dismissal.—–Any such employee mentioned in Section 2 hereof, who fails to maintain his
membership in the UNION for non-payment of UNION dues, for resignation and for violation of UNION’S
Constitution and By-Laws and any new employee as defined in Section 2 of this Article shall upon
written notice of such failure to join or to maintain membership in the UNION and upon written
recommendation to the COMPANY by the UNION, be dismissed from the employment by the COMPANY;
provided, however, that the UNION shall hold the COMPANY free and blameless from any and all
liabilities that may arise should the dismissed employee
________________
1Rollo, p. 29.
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question, in any manner, his dismissal; provided, further that the matter of the employee’s dismissal
under this Article may be submitted as a grievance under Article XIII and, provided, finally, that no such
written recommendation shall be made upon the COMPANY nor shall COMPANY be compelled to act
upon any such recommendation within the period of sixty (60) days prior to the expiry date of this
Agreement conformably to law.”
Article IX
Section 4. Program Fund.—–The Company shall provide the amount of P10,000.00 a month for a
continuing labor education program which shall be remitted to the Federation x x x.”2
On September 12, 1986, a local union election was held under the auspices of the ULGWP wherein the
herein petitioner, Beda Magdalena Villanueva, and the other union officers were proclaimed as winners.
Minutes of the said election were duly filed with the Bureau of Labor Relations on September 29, 1986.
On March 21, 1987, a Petition for Impeachment was filed with the national federation ULGWP by the
defeated candidates in the aforementioned election.
On June 16, 1987, the federation conducted an audit of the local union funds. The investigation did not
yield any unfavorable result and the local union officers were cleared of the charges of anomaly in the
custody, handling and disposition of the union funds.
The 14 defeated candidates filed a Petition for Impeachment/Expulsion of the local union officers with
the DOLE NCR on November 5, 1987, docketed as NCR-OD-M-11-780-87. However, the same was
dismissed on March 2, 1988, by Med-Arbiter Renato Parungo for failure to substantiate the charges and
to present evidence in support of the allegations.
On April 17, 1988, the local union held a general membership meeting at the Caruncho Complex in
Pasig. Several union members failed to attend the meeting, prompting the
________________
2Ibid., pp. 30-31, pp. 823-824.
450
450
Executive Board to create a committee tasked to investigate the non-attendance of several union
members in the said assembly, pursuant to Sections 4 and 5, Article V of the Constitution and By-Laws of
the union, which read:
“Seksyon 4. Ang mga kinukusang hindi pagdalo o hindi paglahok sa lahat ng hakbangin ng unyon ng
sinumang kasapi o pinuno ay maaaring maging sanhi ng pagtitiwalag o pagpapataw ng multa ng hindi
hihigit sa P50.00 sa bawat araw na nagkulang.
Seksyon 5. Ang sinumang dadalo na aalis ng hindi pa natatapos ang pulong ay ituturing na pagliban at
maparusahan ito ng alinsunod sa Article V, Seksyong 4 ng Saligang Batas na ito. Sino mang kasapi o
opisyales na mahuli ang dating sa takdang oras ng di lalampas sa isang oras ay magmumulta ng P25.00
at babawasin sa sahod sa pamamagitan ng salary deduction at higit sa isang oras ng pagdating ng huli ay
ituturing na pagliban.3
On June 27, 1988, the local union wrote respondent company a letter requesting it to deduct the union
fines from the wages/salaries of those union members who failed to attend the general membership
meeting. A portion of the said letter stated:
“x x x xxx xxx
In connection with Section 4 Article II of our existing Collective Bargaining Agreement, please deduct the
amount of P50.00 from each of the union members named in said annexes on the payroll of July 2-8,
1988 as fine for their failure to attend said general membership meeting.”4
In a Memorandum dated July 3, 1988, the Secretary General of the national federation, Godofredo
Paceño, Jr. disapproved the resolution of the local union imposing the P50.00 fine. The union officers
protested such action by the Federation in a Reply dated July 4, 1988.
________________
3 Rollo, p. 34.
4 Rollo, p. 35.
451
451
On July 11, 1988, the Federation wrote respondent company a letter advising the latter not to deduct
the fifty-peso fine from the salaries of the union members requesting that:
“x x x any and all future representations by MSMG affecting a number of members be first cleared from
the federation before corresponding action by the Company.”5
The following day, respondent company sent a reply to petitioner union’s request in a letter, stating that
it cannot deduct fines from the employees’ salary without going against certain laws. The company
suggested that the union refer the matter to the proper government office for resolution in order to
avoid placing the company in the middle of the issue.
The imposition of P50.00 fine became the subject of bitter disagreement between the Federation and
the local union culminating in the latter’s declaration of general autonomy from the former through
Resolution No. 10 passed by the local executive board and ratified by the general membership on July
16, 1988.
In retaliation, the national federation asked respondent company to stop the remittance of the local
union’s share in the education funds effective August 1988. This was objected to by the local union
which demanded that the education fund be remitted to it in full.
The company was thus constrained to file a Complaint Interpleader with a Petition for Declaratory Relief
with the Med-Arbitration Branch of the Department of Labor and Employment, docketed as Case No.
OD-M-8-435-88. This was resolved on October 28, 1988, by Med-Arbiter Anastacio Bactin in an Order,
disposing thus:
“WHEREFORE, premises considered, It is hereby ordered:
1. That the United Lumber and General Workers of the Philippines (ULGWP) through its local union
officers shall administer the collective bargaining agreement (CBA).
________________
5 Ibid., p. 40.
452
452
2. That petitioner company shall remit the P10,000.00 monthly labor education program fund to the
ULGWP subject to the condition that it shall use the said amount for its intended purpose.
3. That the Treasurer of the MSMG shall be authorized to collect from the 356 union members the
amount of P50.00 as penalty for their failure to attend the general membership assembly on April 17,
1988.
However, if the MSMG Officers could present the individual written authorizations of the 356 union
members, then the company is obliged to deduct from the salaries of the 356 union members the
P50.00 fine.”6
On appeal, Director Pura-Ferrer Calleja issued a Resolution dated February 7, 1989, which modified in
part the earlier disposition, to wit:
“WHEREFORE, premises considered, the appealed portion is hereby modified to the extent that the
company should remit the amount of five thousand pesos (P5,000.00) of the P10,000.00 monthly labor
education program fund to ULGWP and the other P5,000.00 to MSMG, both unions to use the same for
its intended purpose.”7
Meanwhile, on September 2, 1988, several local unions (Top Form, M. Greenfield, Grosby, Triumph
International, General Milling, and Vander Hons chapters) filed a Petition for Audit and Examination of
the federation and education funds of ULGWP which was granted by Med-Arbiter Rasidali Abdullah on
December 25, 1988 in an Order which directed the audit and examination of the books of account of
ULGWP.
On September 30, 1988, the officials of ULGWP called a Special National Executive Board Meeting at
Nasipit, Agusan del Norte where a Resolution was passed placing the MSMG under trusteeship and
appointing respondent Cesar Clarete as administrator.
________________
6 Rollo, p. 47.
7 Ibid., p. 48.
453
453
On October 27, 1988, the said administrator wrote the respondent company informing the latter of its
designation of a certain Alfredo Kalingking as local union president and “disauthorizing” the incumbent
union officers from representing the employees. This action by the national federation was protested by
the petitioners in a letter to respondent company dated November 11, 1988.
On November 13, 1988, the petitioner union officers received identical letters from the administrator
requiring them to explain within 72 hours why they should not be removed from their office and
expelled from union membership.
On November 26, 1988, petitioners replied:
(a) Questioning the validity of the alleged National Executive Board Resolution placing their union under
trusteeship;
(b) Justifying the action of their union in declaring a general autonomy from ULGWP due to the latter’s
inability to give proper educational, organizational and legal services to its affiliates and the pendency of
the audit of the federation funds;
(c) Advising that their union did not commit any act of disloyalty as it has remained an affiliate of
ULGWP;
(d) Giving ULGWP a period of five (5) days to cease and desist from further committing acts of coercion,
intimidation and harassment.8
However, as early as November 21, 1988, the officers were expelled from the ULGWP. The termination
letter read:
“Effective today, November 21, 1988, you are hereby expelled from UNITED LUMBER AND GENERAL
WORKERS OF THE PHILIPPINES (ULGWP) for committing acts of disloyalty and/or acts inimical to the
interest and violative to the Constitution and bylaws of your federation.
You failed and/or refused to offer an explanation inspite of the time granted to you.
________________
8 Rollo, pp. 1522-1523.
454
454

Since you are no longer a member of good standing, ULGWP is constrained to recommend for your
termination from your employment, and provided in Article II, Section 4, known as UNION SECURITY, in
the Collective Bargaining Agreement.”9
On the same day, the federation advised respondent company of the expulsion of the 30 union officers
and demanded their separation from employment pursuant to the Union Security Clause in their
collective bargaining agreement. This demand was reiterated twice, through letters dated February 21
and March 4, 1989, respectively, to respondent company.
Thereafter, the Federation filed a Notice of Strike with the National Conciliation and Mediation Board to
compel the company to effect the immediate termination of the expelled union officers.
On March 7, 1989, under the pressure of a threatened strike, respondent company terminated the 30
union officers from employment, serving them identical copies of the termination letter reproduced
below:
We received a demand letter dated 21 November 1988 from the United Lumber and General Workers of
the Philippines (ULGWP) demanding for your dismissal from employment pursuant to the provisions of
Article II, Section 4 of the existing Collective Bargaining Agreement (CBA). In the said demand letter,
ULGWP informed us that as of November 21, 1988, you were expelled from the said federation “for
committing acts of disloyalty and/or acts inimical to the interest of ULGWP and violative to its
Constitution and By-laws particularly Article V, Sections 6, 9, and 12, Article XIII, Section 8.”
In subsequent letters dated 21 February and 4 March 1989, the ULGWP reiterated its demand for your
dismissal, pointing out that notwithstanding your expulsion from the federation, you have continued in
your employment with the company in violation of Secs. 1 and 4 of Article II of our CBA, and of existing
provisions of law.
In view thereof, we are left with no alternative but to comply with the provisions of the Union Security
Clause of our CBA. Ac-
________________
9 Ibid., pp. 1523-1524.
455
455

cordingly, we hereby serve notice upon you that we are dismissing you from your employment with M.
Greenfield, Inc., pursuant to Sections 1 and 4, Article II of the CBA effective immediately.”10
On that same day, the expelled union officers assigned in the first shift were physically or bodily brought
out of the company premises by the company’s security guards. Likewise, those assigned to the second
shift were not allowed to report for work. This provoked some of the members of the local union to
demonstrate their protest for the dismissal of the said union officers. Some union members left their
work posts and walked out of the company premises.
On the other hand, the Federation, having achieved its objective, withdrew the Notice of Strike filed
with the NCMB.
On March 8, 1989, the petitioners filed a Notice of Strike with the NCMB, DOLE, Manila, docketed as
Case No. NCMB-NCR-NS-03-216-89, alleging the following grounds for the strike:
(a) Discrimination
(b) Interference in union activities
(c) Mass dismissal of union officers and shop stewards
(d) Threats, coercion and intimidation
(e) Union busting
The following day, March 9, 1989, a strike vote referendum was conducted and out of 2,103 union
members who cast their votes, 2,086 members voted to declare a strike.
On March 10, 1989, the thirty (30) dismissed union officers filed an urgent petition, docketed as Case
No. NCMB-NCR-NS-03-216-89, with the Office of the Secretary of the Department of Labor and
Employment praying for the suspension of the effects of their termination from employment. However,
the petition was dismissed by then Secretary Franklin Drilon on April 11, 1989, the pertinent portion of
which stated as follows:
________________
10 Rollo, pp. 58-59.
456
456
“At this point in time, it is clear that the dispute at M. Greenfield is purely an intra-union matter. No
mass lay-off is evident as the terminations have been limited to those allegedly leading the secessionist
group leaving MSMG-ULGWP to form a union under the KMU. x x x
xxx xxx xxx
WHEREFORE, finding no sufficient jurisdiction to warrant the exercise of our extraordinary authority
under Article 277 (b) of the Labor Code, as amended, the instant Petition is hereby DISMISSED for lack of
merit.
SO ORDERED.”11
On March 13 and 14, 1989, a total of 78 union shop stewards were placed under preventive suspension
by respondent company. This prompted the union members to again stage a walk-out and resulted in
the official declaration of strike at around 3:30 in the afternoon of March 14, 1989. The strike was
attended with violence, force and intimidation on both sides resulting to physical injuries to several
employees, both striking and non-striking, and damage to company properties.
The employees who participated in the strike and allegedly figured in the violent incident were placed
under preventive suspension by respondent company. The company also sent return-to-work notices to
the home addresses of the striking employees thrice successively, on March 27, April 8 and April 31,
1989, respectively. However, respondent company admitted that only 261 employees were eventually
accepted back to work. Those who did not respond to the return-to-work notice were sent termination
letters dated May 17, 1989, reproduced below:
M. Greenfield Inc., (B)
Km. 14, Merville Rd., Parañaque, M.M.
May 17, 1989
xxx
On March 14, 1989, without justifiable cause and without due notice, you left your work assignment at
the prejudice of the Com-
_______________
11 Rollo, p. 937.
457
457
pany’s operations. On March 27, April 11, and April 21, 1989, we sent you notices to report to the
Company. Inspite of your receipt of said notices, we have not heard from you up to this date.
Accordingly, for your failure to report, it is construed that you have effectively abandoned your
employment and the Company is, therefore, constrained to dismiss you for said cause.
Very truly yours,
M. GREENFIELD, INC., (B)
By:
WENZEL STEPHEN LIGOT
Asst. HRD Manager”12
On August 7, 1989, the petitioners filed a verified complaint with the Arbitration Branch, National
Capital Region, DOLE, Manila, docketed as Case No. NCR-00-09-04199-89, charging private respondents
of unfair labor practice which consists of union busting, illegal dismissal, illegal suspension, interference
in union activities, discrimination, threats, intimidation, coercion, violence, and oppression.
After the filing of the complaint, the lease contracts on the respondent company’s office and factory at
Merville Subdivision, Parañaque expired and were not renewed. Upon demand of the owners of the
premises, the company was compelled to vacate its office and factory.
Thereafter, the company transferred its administration and account/client servicing department at AFP-
RSBS Industrial Park in Taguig, Metro Manila. For failure to find a suitable place in Metro Manila for
relocation of its factory and manufacturing operations, the company was constrained to move the said
departments to Tacloban, Leyte. Hence, on April 16, 1990, respondent company accordingly notified its
employees of a temporary shutdown in operations. Employees who were interested in relocating to
Tacloban were advised to enlist on or before April 23, 1990.
________________
12 Rollo, p. 837.
458
458
The complaint for unfair labor practice was assigned to Labor Arbiter Manuel Asuncion but was
thereafter reassigned to Labor Arbiter Cresencio Ramos when respondents moved to inhibit him from
acting on the case.
On December 15, 1992, finding the termination to be valid in compliance with the union security clause
of the collective bargaining agreement, Labor Arbiter Cresencio Ramos dismissed the complaint.
Petitioners then appealed to the NLRC. During its pendency, Commissioner Romeo Putong retired from
the service, leaving only two commissioners, Commissioner Vicente Veloso III and Hon. Chairman
Bartolome Carale in the First Division. When Commissioner Veloso inhibited himself from the case,
Commissioner Joaquin Tanodra of the Third Division was temporarily designated to sit in the First
Division for the proper disposition of the case.
The First Division affirmed the Labor Arbiter’s disposition. With the denial of their motion for
reconsideration on Janu-ary 28, 1994, petitioners elevated the case to this Court, attributing grave
abuse of discretion to public respondent NLRC in:
I. UPHOLDING THE DISMISSAL OF THE UNION OFFICERS BY RESPONDENT COMPANY AS VALID;
II. HOLDING THAT THE STRIKE STAGED BY THE PETITIONERS AS ILLEGAL;
III. HOLDING THAT THE PETITIONER EMPLOYEES WERE DEEMED TO HAVE ABANDONED THEIR WORK
AND HENCE, VALIDLY DISMISSED BY RESPONDENT COMPANY AND
IV. NOT FINDING RESPONDENT COMPANY AND RESPONDENT FEDERATION OFFICERS GUILTY OF ACTS
OF UNFAIR LABOR PRACTICE.
Notwithstanding the several issues raised by the petitioners and respondents in the voluminous
pleadings presented before the NLRC and this Court, they revolve around and
459
459
proceed from the issue of whether or not respondent company was justified in dismissing petitioner
employees merely upon the labor federation’s demand for the enforcement of the union security clause
embodied in their collective bargaining agreement.
Before delving into the main issue, the procedural flaw pointed out by the petitioners should first be
resolved.
Petitioners contend that the decision rendered by the First Division of the NLRC is not valid because
Commissioner Tanodra, who is from the Third Division, did not have any lawful authority to sit, much
less write the ponencia, on a case pending before the First Division. It is claimed that a commissioner
from one division of the NLRC cannot be assigned or temporarily designated to another division because
each division is assigned a particular territorial jurisdiction. Thus, the decision rendered did not have any
legal effect at all for being irregularly issued.
Petitioners’ argument is misplaced. Article 213 of the Labor Code in enumerating the powers of the
Chairman of the National Labor Relations Commission provides that:
“The concurrence of two (2) Commissioners of a division shall be necessary for the pronouncement of a
judgment or resolution. Whenever the required membership in a division is not complete and the
concurrence of two (2) commissioners to arrive at a judgment or resolution cannot be obtained, the
Chairman shall designate such number of additional Commissioners from the other divisions as may be
necessary.”
It must be remembered that during the pendency of the case in the First Division of the NLRC, one of the
three commissioners, Commissioner Romeo Putong, retired, leaving Chairman Bartolome Carale and
Commissioner Vicente Veloso III. Subsequently, Commissioner Veloso inhibited himself from the case
because the counsel for the petitioners was his former classmate in law school. The First Division was
thus left with only one commissioner. Since the law requires the concurrence of two commissioners to
arrive at a judgment or resolution, the Commission was constrained to
460
460
temporarily designate a commissioner from another division to complete the First Division. There is
nothing irregular at all in such a temporary designation for the law empowers the Chairman to make
temporary assignments whenever the required concurrence is not met. The law does not say that a
commissioner from the first division cannot be temporarily assigned to the second or third division to fill
the gap or vice versa. The territorial divisions do not confer exclusive jurisdiction to each division and are
merely designed for administrative efficiency.
Going into the merits of the case, the court finds that the Complaint for unfair labor practice filed by the
petitioners against respondent company which charges union busting, illegal dismissal, illegal
suspension, interference in union activities, discrimination, threats, intimidation, coercion, violence, and
oppression actually proceeds from one main issue which is the termination of several employees by
respondent company upon the demand of the labor federation pursuant to the union security clause
embodied in their collective bargaining agreement.
Petitioners contend that their dismissal from work was effected in an arbitrary, hasty, capricious and
illegal manner because it was undertaken by the respondent company without any prior administrative
investigation; that, had respondent company conducted prior independent investigation it would have
found that their expulsion from the union was unlawful similarly for lack of prior administrative
investigation; that the federation cannot recommend the dismissal of the union officers because it was
not a principal party to the collective bargaining agreement between the company and the union; that
public respondents acted with grave abuse of discretion when they declared petitioners’ dismissals as
valid and the union strike as illegal and in not declaring that respondents were guilty of unfair labor
practice.
Private respondents, on the other hand, maintain that the thirty dismissed employees who were former
officers of the federation have no cause of action against the company, the termination of their
employment having been made upon the
461
461
demand of the federation pursuant to the union security clause of the CBA; the expelled officers of the
local union were accorded due process of law prior to their expulsion from their federation; that the
strike conducted by the petitioners was illegal for noncompliance with the requirements; that the
employees who participated in the illegal strike and in the commission of violence thereof were validly
terminated from work; that petitioners were deemed to have abandoned their employment when they
did not respond to the three return to work notices sent to them; that petitioner labor union has no
legal personality to file and prosecute the case for and on behalf of the individual employees as the right
to do so is personal to the latter; and that, the officers of respondent company cannot be liable because
as mere corporate officers, they acted within the scope of their authority.
Public respondent, through the Labor Arbiter, ruled that the dismissed union officers were validly and
legally terminated because the dismissal was effected in compliance with the union security clause of
the CBA which is the law between the parties. And this was affirmed by the Commission on appeal.
Moreover, the Labor Arbiter declared that notwithstanding the lack of a prior administrative
investigation by respondent company, under the union security clause provision in the CBA, the
company cannot look into the legality or illegality of the recommendation to dismiss by the union and
the obligation to dismiss is ministerial on the part of the company.13
This ruling of the NLRC is erroneous. Although this Court has ruled that union security clauses embodied
in the collective bargaining agreement may be validly enforced and that dismissals pursuant thereto
may likewise be valid, this does not erode the fundamental requirement of due process. The reason
behind the enforcement of union security clauses
________________
13 Decision of the Labor Arbiter, p. 16 (p. 197 of Rollo).
462
462
which is the sanctity and inviolability of contracts14 cannot override one’s right to due process.
In the case of Cariño vs. National Labor Relations Commission,15 this Court pronounced that while the
company, under a maintenance of membership provision of the collective bargaining agreement, is
bound to dismiss any employee expelled by the union for disloyalty upon its written request, this
undertaking should not be done hastily and summarily. The company acts in bad faith in dismissing a
worker without giving him the benefit of a hearing.
“The power to dismiss is a normal prerogative of the employer. However, this is not without limitation.
The employer is bound to exercise caution in terminating the services of his employees especially so
when it is made upon the request of a labor union pursuant to the Collective Bargaining Agreement, x x
x. Dismissals must not be arbitrary and capricious. Due process must be observed in dismissing an
employee because it affects not only his position but also his means of livelihood. Employers should
respect and protect the rights of their employees, which include the right to labor.”
In the case under scrutiny, petitioner union officers were expelled by the federation for allegedly
committing acts of disloyalty and/or inimical to the interest of ULGWP and in violation of its Constitution
and By-laws. Upon demand of the federation, the company terminated the petitioners without
conducting a separate and independent investigation. Respondent company did not inquire into the
cause of the expulsion and whether or not the federation had sufficient grounds to effect the same.
Relying merely upon the federation’s allegations, respondent company terminated petitioners from
employment when a separate inquiry could have revealed if the federation had acted arbitrarily and
capriciously in expelling the union officers. Respondent company’s allegation that
________________
14 Tanduay Distillery Labor Union vs. NLRC, 149 SCRA 470 citing Victoria’s Milling Co., Inc. vs. Victorias-
Manapla Workers’ Organization, 9 SCRA 154.
15 G.R. No. 91086, 8 May 1990, 185 SCRA 177.
463
463

petitioners were accorded due process is belied by the termination letters received by the petitioners
which state that the dismissal shall be immediately effective.
As held in the aforecited case of Cariño, “the right of an employee to be informed 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 collective bargaining
agreement. An employee is entitled to be protected not only from a company which disregards his rights
but also from his own union the leadership of which could yield to the temptation of swift and arbitrary
expulsion from membership and mere dismissal from his job.”
While respondent company may validly dismiss the employees expelled by the union for disloyalty
under the union security clause of the collective bargaining agreement upon the recommendation by
the union, this dismissal should not be done hastily and summarily thereby eroding the employees’ right
to due process, self-organization and security of tenure. The enforcement of union security clauses is
authorized by law provided such enforcement is not characterized by arbitrariness, and always with due
process.16 Even on the assumption that the federation had valid grounds to expel the union officers,
due process requires that these union officers be accorded a separate hearing by respondent company.
In its decision, public respondent also declared that if complainants (herein petitioners) have any
recourse in law, their right of action is against the federation and not against the company or its officers,
relying on the findings of the Labor Secretary that the issue of expulsion of petitioner union officers by
the federation is a purely intra-union matter.
Again, such a contention is untenable. While it is true that the issue of expulsion of the local union
officers is originally between the local union and the federation, hence, intra-
________________
16 Sanyo Philippines Workers Union-PSSLU vs. Canizares, 211 SCRA 361.
464
464
union in character, the issue was later on converted into a termination dispute when the company
dismissed the petitioners from work without the benefit of a separate notice and hearing. As a matter of
fact, the records reveal that the termination was effective on the same day that the termination notice
was served on the petitioners.
In the case of Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc.,17 the Court held the
company liable for the payment of backwages for having acted in bad faith in effecting the dismissal of
the employees.
“x x x Bad faith on the part of the respondent company may be gleaned from the fact that the petitioner
workers were dismissed hastily and summarily. At best, it was guilty of a tortious act, for which it must
assume solidary liability, since it apparently chose to summarily dismiss the workers at the union’s
instance secure in the union’s contractual undertaking that the union would hold it 'free from any
liability’ arising from such dismissal.”
Thus, notwithstanding the fact that the dismissal was at the instance of the federation and that it
undertook to hold the company free from any liability resulting from such a dismissal, the company may
still be held liable if it was remiss in its duty to accord the would-be dismissed employees their right to
be heard on the matter.
Anent petitioners contention that the federation was not a principal party to the collective bargaining
agreement between the company and the union, suffice it to say that the matter was already ruled upon
in the Interpleader case filed by respondent company. Med-Arbiter Anastacio Bactin thus ruled:
After a careful examination of the facts and evidences presented by the parties, this Officer hereby
renders its decision as follows:
1.) It appears on record that in the Collective Bargaining Agreement (CBA) which took effect on July 1,
1986, the contracting
________________
17 90 SCRA 391.
465
465
parties are M. Greenfield, Inc. (B) and Malayang Samahan ng Mga Manggagawa sa M. Greenfield, Inc.
(B) (MSMG)/United Lumber and General Workers of the Philippines (ULGWP). However, MSMG was not
yet a registered labor organization at the time of the signing of the CBA. Hence, the union referred to in
the CBA is the ULGWP.”18
Likewise on appeal, Director Pura Ferrer-Calleja put the issue to rest as follows:
It is undisputed that ULGWP is the certified sole and exclusive collective bargaining agent of all the
regular rank-and-file workers of the company, M. Greenfield, Inc. (pages 31-32 of the records).
It has been established also that the company and ULGWP signed a 3-year collective bargaining
agreement effective July 1, 1986 up to June 30, 1989.19
Although the issue of whether or not the federation had reasonable grounds to expel the petitioner
union officers is properly within the original and exclusive jurisdiction of the Bureau of Labor Relations,
being an intra-union conflict, this Court deems it justifiable that such issue be nonetheless ruled upon,
as the Labor Arbiter did, for to remand the same to the Bureau of Labor Relations would be to
intolerably delay the case.
The Labor Arbiter found that petitioner union officers were justifiably expelled from the federation for
committing acts of disloyalty when it “undertook to disaffiliate from the federation by charging ULGWP
with failure to provide any legal, educational or organizational support to the local. x x x and declared
autonomy, wherein they prohibit the federation from interfering in any internal and external affairs of
the local union.”20
It is well-settled that findings of facts of the NLRC are entitled to great respect and are generally binding
on this Court,
________________
18 Rollo, p. 199.
19 Ibid.
20 Rollo, p. 200.
466
466
but it is equally well-settled that the Court will not uphold erroneous conclusions of the NLRC as when
the Court finds insufficient or insubstantial evidence on record to support those factual findings. The
same holds true when it is perceived that far too much is concluded, inferred or deduced from the bare
or incomplete facts appearing of record.21
In its decision, the Labor Arbiter declared that the act of disaffiliation and declaration of autonomy by
the local union was part of its “plan to take over the respondent federation.” This is purely conjecture
and speculation on the part of public respondent, totally unsupported by the evidence. A local union has
the right to disaffiliate from its mother
union or declare its autonomy. A local union, being a separate and voluntary association, is free to serve
the interests of all its members including the freedom to disaffiliate or declare its autonomy from the
federation to which it belongs when circumstances warrant, in accordance with the constitutional
guarantee of freedom of association.22
The purpose of affiliation by a local union with a mother union or a federation
“x x x is to increase by collective action the bargaining power in respect of the terms and conditions of
labor. Yet the locals remained the basic units of association, free to serve their own and the common
interest of all, subject to the restraints imposed by the Constitution and By-Laws of the Association, and
free also to renounce the affiliation for mutual welfare upon the terms laid down in the agreement
which brought it into existence.”23
Thus, a local union which has affiliated itself with a federation is free to sever such affiliation anytime
and such disaffiliation cannot be considered disloyalty. In the absence of
________________
21 Bontia vs. NLRC, 255 SCRA 167.
22 Volkschel vs. Bureau of Labor Relations, 137 SCRA 42.
23 Tropical Hut Employees’ Union-CGW vs. Tropical Hut Food Market, Inc, 181 SCRA 173; Adamson, Inc.
vs. CIR, 127 SCRA 268; Liberty Cotton Mills Worker Union vs. Liberty Cotton Mills, Inc., 66 SCRA 512.
467
467
specific provisions in the federation’s constitution prohibiting disaffiliation or the declaration of

autonomy of a local union, a local may dissociate with its parent union.24
The evidence on hand does not show that there is such a provision in ULGWP’s constitution.
Respondents’ reliance upon Article V, Section 6, of the federation’s constitution is not right because said
section, in fact, bolsters the petitioner union’s claim of its right to declare autonomy:
Section 6. The autonomy of a local union affiliated with ULGWP shall be respected insofar as it pertains
to its internal affairs, except as provided elsewhere in this Constitution.
There is no disloyalty to speak of, neither is there any violation of the federation’s constitution because
there is nothing in the said constitution which specifically prohibits disaffiliation or declaration of
autonomy. Hence, there cannot be any valid dismissal because Article II. Section 4 of the union security
clause in the CBA limits the dismissal to only three (3) grounds, to wit: failure to maintain membership in
the union (1) for non-payment of union dues, (2) for resignation; and (3) for violation of the union’s
Constitution and By-Laws.
To support the finding of disloyalty, the Labor Arbiter gave weight to the fact that on February 26, 1989,
the petitioners declared as vacant all the responsible positions of ULGWP, filled these vacancies through
an election and filed a petition for the registration of UWP as a national federation. It should be pointed
out, however, that these occurred after the federation had already expelled the union officers. The
expulsion “was effective November 21, 1988.” Therefore, the act of establishing a different federation,
entirely separate from the federation which expelled them, is but a normal retaliatory reaction to their
expulsion.
________________
24 Ferrer vs. National Labor Relations Commission, 224 SCRA 410; People’s Industrial and Commercial
Employees and Workers Organization (FFW) vs. People’s Industrial and Commercial Corp., 112 SCRA
440.
468
468
With regard to the issue of the legality or illegality of the strike, the Labor Arbiter held that the strike
was illegal for the following reasons: (1) it was based on an intra-union dispute which cannot properly
be the subject of a strike, the right to strike being limited to cases of bargaining deadlocks and unfair
labor practice (2) it was made in violation of the “no strike, no lock-out” clause in the CBA, and (3) it was
attended ‘with violence, force and intimidation upon the persons of the company officials, other
employees reporting for work and third persons having legitimate business with the company, resulting
to serious physical injuries to several employees and damage to company property.
On the submission that the strike was illegal for being grounded on a non-strikeable issue, that is, the
intra-union conflict between the federation and the local union, it bears reiterating that when
respondent company dismissed the union officers, the issue was transformed into a termination dispute
and brought respondent company into the picture. Petitioners believed in good faith that in dismissing
them upon request by the federation, respondent company was guilty of unfair labor practice in that it
violated the petitioner’s right to self-organization. The strike was staged to protest respondent
company’s act of dismissing the union officers. Even if the allegations of unfair labor practice are
subsequently found out to be untrue, the presumption of legality of the strike prevails.25
Another reason why the Labor Arbiter declared the strike illegal is due to the existence of a no strike, no
lockout provision in the CBA. Again, such a ruling is erroneous. A no strike, no lock out provision can only
be invoked when the strike is economic in nature, i.e. to force wage or other concessions from the
employer which he is not required by law to grant.26 Such a provision cannot be used to assail the
legality
________________
25 Master Iron Labor Union vs. National Labor Relations Commission, 219 SCRA 47.
26 Panay Electric Company, Inc. vs. NLRC, 248 SCRA 688; People’s Industrial and Commercial Employees
and Workers Or
469
469
of a strike which is grounded on unfair labor practice, as was the honest belief of herein petitioners.
Again, whether or not there was indeed unfair labor practice does not affect the strike.
On the allegation of violence committed in the course of the strike, it must be remembered that the
Labor Arbiter and the Commission found that “the parties are agreed that there were violent incidents x
x x resulting to injuries to both sides, the union and management.”27 The evidence on record show that
the violence cannot be attributed to the striking employees alone for the company itself employed hired
men to pacify the strikers. With violence committed on both sides, the management and the employees,
such violence cannot be a ground for declaring the strike as illegal.
With respect to the dismissal of individual petitioners, the Labor Arbiter declared that their refusal to
heed respondent’s recall to work notice is a clear indication that they were no longer interested in
continuing their employment and is deemed abandonment. It is admitted that three return to work
notices were sent by respondent company to the striking employees on March 27, April 11, and April 21,
1989 and that 261 employees who responded to the notice were admitted back to work.
However, jurisprudence holds that for abandonment of work to exist, it is essential (1) that the
employee must have failed to report for work or must have been absent without valid or justifiable
reason and (2) that there must have been a clear intention to sever the employer-employee relationship
manifested by some overt acts.28 Deliberate and unjustified refusal on the part of the employee to go
back to his work post
_______________
ganization (FFW) vs. PIC Corp., 112 SCRA 440; Consolidated Labor Association of the Philippines vs.
Marsman and Co., Inc., 11 SCRA 589; Master Iron Labor Union vs. NLRC, 219 SCRA 47; Phil. Metal
Foundries, Inc. vs. CIR, 90 SCRA 135.
27 Decision of the Labor Arbiter, Rollo, p. 203.
28 Philippine Advertising Counselors, Inc. vs. National Labor Relations Commission, 263 SCRA 395;
Balayan Colleges vs. National Labor Relations Commission, 255 SCRA 1.
470
470
and resume his employment must be established. Absence must be accompanied by overt acts
unerringly pointing to the fact that the employee simply does not want to work any-more.29 And the
burden of proof to show that there was unjustified refusal to go back to work rests on the employer.
In the present case, respondents failed to prove that there was a clear intention on the part of the
striking employees to sever their employer-employee relationship. Although admittedly the company
sent three return to work notices to them, it has not been substantially proven that these notices were
actually sent and received by the employees. As a matter of fact, some employees deny that they ever
received such notices. Others alleged that they were refused entry to the company premises by the
security guards and were advised to secure a clearance from ULGWP and to sign a waiver, Some
employees who responded to the notice were allegedly told to wait for further notice from respondent
company as there was lack of work.
Furthermore, this Court has ruled that an employee who took steps to protest his lay-off cannot be said
to have abandoned his work.30 The filing of a complaint for illegal dismissal is inconsistent with the
allegation of abandonment. In the case under consideration, the petitioners did, in fact, file a complaint
when they were refused reinstatement by respondent company.
Anent public respondent’s finding that there was no unfair labor practice on the part of respondent
company and federa-tion officers, the Court sustains the same. As earlier discussed, union security
clauses in collective bargaining agreements, if freely and voluntarily entered into, are valid and binding.
Corrolarily, dismissals pursuant to union security
_______________
29 Nueva Ecija I Electric Cooperative, Inc. vs. Minister of Labor, 184 SCRA 25, 30.
30 Bontia vs. National Labor Relations Commission, 255 SCRA 167; Batangas Laguna Tayabas Bus
Company vs. NLRC, 212 SCRA 792; Jackson Building Condominium Corporation vs. NLRC, 246 SCRA 329.
471
471
clauses are valid and legal subject only to the requirement of due process, that is, notice and hearing
prior to dismissal. Thus, the dismissal of an employee by the company pursuant to a labor union’s
demand in accordance with a union security agreement does not constitute unfair labor practice.31
However, the dismissal was invalidated in this case because of respondent company’s failure to accord
petitioners with due process, that is, notice and hearing prior to their termination. Also, said dismissal
was invalidated because the reason relied upon by respondent Federation was not valid. Nonetheless,
the dismissal still does not constitute unfair labor practice.
Lastly, the Court is of the opinion, and so holds, that respondent company officials cannot be held
personally liable for damages on account of the employees’ dismissal because the employer corporation
has a personality separate and distinct from its officers who merely acted as its agents.
It has come to the attention of this Court that the 30-day prior notice requirement for the dismissal of
employees has been repeatedly violated and the sanction imposed for such violation enunciated in
Wenphil Corporation vs. NLRC32 has become an ineffective deterrent. Thus, the Court recently
promulgated a decision to reinforce and make more effective the requirement of notice and hearing, a
procedure that must be observed before termination of employment can be legally effected.
In Ruben Serrano vs. NLRC and Isetann Department Store (G.R. No. 117040, January 27, 2000), the Court
ruled that an employee who is dismissed, whether or not for just or authorized cause but without prior
notice of his termination, is entitled to full backwages from the time he was terminated until the
decision in his case becomes final, when the dismissal was for cause; and in case the dismissal was
without just or valid
_______________
31 Tanduay Distillery Labor Union vs. NLRC, 149 SCRA 470; Seno vs. Mendoza, 21 SCRA 1124.
32 170 SCRA 69 (1989).
472
472

cause, the backwages shall be computed from the time of his dismissal until his actual reinstatement. In
the case at bar, where the requirement of notice and hearing was not complied with, the aforecited
doctrine laid down in the Serrano case applies.
WHEREFORE, the Petition is GRANTED; the decision of the National Labor Relations Commission in Case
No. NCR-00-09-04199-89 is REVERSED and SET ASIDE; and the respondent company is hereby ordered to
immediately reinstate the petitioners to their respective positions. Should reinstatement be not
feasible, respondent company shall pay separation pay of one month salary for every year of service.
Since petitioners were terminated without the requisite written notice at least 30 days prior to their
termination, following the recent ruling in the case of Ruben Serrano vs. National Labor Relations
Commission and Isetann Department Store, the respondent company is hereby ordered to pay full
backwages to petitioner-employees while the Federation is also ordered to pay full backwages to
petitioner-union officers who were dismissed upon its instigation. Since the dismissal of petitioners was
without cause, backwages shall be computed from the time the herein petitioner employees and union
officers were dismissed until their actual reinstatement. Should reinstatement be not feasible, their
backwages shall be computed from the time petitioners were terminated until the finality of this
decision. Costs against the respondent company.
SO ORDERED.
Gonzaga-Reyes, J., concur.
Melo (Chairman), J., In the result.
Vitug, J., I reiterate my separate opinion in Serrano vs. NLRC (G.R. 117040, 27 Jan. 2000).
Panganiban, J., I reiterate my separate opinion in Serrano vs. NLRC, G.R. 117040, Jan. 27, 2000.
Petition granted, judgment reversed and set aside.
473
473
Marcos vs. Sandiganbayan
Notes.—–The presumption of legality of strikes prevails even if the allegation of employer unfair labor
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 and Engineering Corporation vs. National Labor
While an act or decision of an employer may be unfair, certainly not every unfair act or decision
constitutes unfair labor practice (ULP) as defined and enumerated under Article 248 of the Labor Code.
(Great Pacific Life Employees Union vs. Great Pacific Life Assurance Corporation, 303 SCRA 113 [1999])
—–—–o0o—–—– Malayang Samahan ng mga Manggagawa sa M. Greenfield vs. Ramos, 326 SCRA 428,
G.R. No. 113907 February 28, 2000
VOL. 23, APRIL 30, 1968
465
Benguet Consolidated, Inc. vs. BCI Employees & Workers
Union-PAFLU
No. L-24711. April 30, 1968.
BENGUET CONSOLIDATED, INC., plaintiff-appellant, vs. BCI EMPLOYEES & WORKERS UNION-PAFLU,
PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS, ClPRIANO ClD and JUANITO GARCIA, defendants-
appellees.
Labor law; “Principle of substitution”, meaning of.—The principle of substitution, formulated by the
National Labor Relations Board, counterpart of our Court of Industrial Relations, means that where
there occurs a shift in employees’ union allegiance after the execution of a collective bargaining
contract with their employer, the employees can change their agent—the labor union, but the
collective bargaining contract which in still subsisting, continues to bind the employees up to its
expiration date. They may, however, bargain for the shortening of said expiration date. And the only
consideration for the “substitutionary” doctrine is the employees’ interest in the existing bargaining
agreement; the agent’s (Union’s) interest never enters into the picture.
Same; Same; Under “substitutionary doctrine”, employees cannot renege on their collective
bargaining contract; Exception.—The “substitutionary doctrine” provides that the employees cannot
revoke the validly executed collective bargaining contract with their employer by the simple
expedient of changing their bargaining agent. The new agent must respect the contract. The
employees, thru their new bargaining agent, cannot renege on the collective bargaining contract,
except to negotiate with management for the shortening hereof.
Same; Same; Same; New collective bargaining agent does not automatically assume all personal
undertakings of deposed union; Substitutionary doctrine, held inapplicable.—The “Substitutionary
doctrine” cannot be invoked to support the claim that a newly certified collective bargaining agent
automatically assumes all personal undertakings, such as the no-strike stipulation in this case,
assumed by the deposed union. When the BBWU bound itself and its officers not to strike, it could not
bind all the rival unions because the BBWU was the agent only of the employees, not of the other
unions which possess distinct personalities.
Same; Same; Same; Same; Liability of labor union or
466
466
Union-PAFLU
board or committee members for non-fulfillment of collective bargaining contract.—Under Art. 1704
of the Civil Code, in collective bargaining, the labor union or members of the board or committee
signing the contract shall be liable for non-fulfillment thereof. Where the defendants are not
signatories to the contract, nor are they participants thereof, there can be no liability on their own.
Damages; No liability for damages of labor union, officers or members, in absence of clear proof; Rule
of vicarious liability, Repealed.—The rule now is that for a labor union and/or its officers and
members to be liable, there must be clear proof of actual participation in, or authorization or
ratification of the illegal acts. The rule of “vicarious liability” has since the passage of Republic Act 875
been expressly legislated out.
Agency; Everything binding on agent duly authorized binds principal, not vice-versa.—Everything that
is binding on a duly authorized agent, acting as such, is binding on the principal; not vice-versa, unless
there is a mutual agency, or unless the agent expressly binds himself to the party with whom he
contracts, Art. 1897, Civil Code. As here, BBWU the previous agent was the one that expressly bound
itself to the other party, Benguet, Union, the new agent did not assume the undertaking of BBWU.
APPEAL from a judgment of the Court of First Instance of Manila.
Ross, Selph, Del Rosario, Bito & Misa for plaintiffappellant.
Cipriano Cid & Associates for defendants-appellees.
BENGZON, J.P., J.:
The contending parties in this case—Benguet Consolidated, Inc., (“BENGUET”) on the one hand, and on
the other, BCI Employees & Workers Union (“UNION”) and the Philippine Association of Free Labor
Unions (“PAFLU”)—do not dispute the following factual set-tings established by the lower court.
On June 23, 1959, the Benguet-Balatoc Workers Union (“BBWU”), for and in behalf of all BENGUET
employees in its mines and milling establishment located at Balatoc, Antamok and Acupan. Municipality
of Itogon.
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VOL. 23, APRIL 30, 1968
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Union-PAFLU
Mt. Province, entered into a Collective Bargaining Contract, Exh. “Z” (“CONTRACT”) with BENGUET.
Pursuant to its very terms, said CONTRACT became effective for a period of four and a half (4–1/2)
years, or from June 23, 1959 to December 23, 1963. It likewise embodied a No-Strike, No-Lockout
clause.1
About three years later, or on April 6, 1962, a certification election was conducted by the Department of
Labor among all the rank and file employees of BENGUET in the same collective bargaining units. UNION
obtained more than 50% of the total number of votes, defeating BBWU, and accordingly, the Court of
Industrial Relations, on August 18, 1962, certified UNION as the sole and exclusive collective bargaining
agent of all BENGUET employees as regards rates of pay, wages, hours of work and such other terms and
conditions of employment allowed them by law or contract.
Subsequently, separate meetings were conducted on November 22, 23 and 24, 1962 at Antamok,
Balatoc and Acupan Mines respectively by UNION. The result thereof was the approval by UNION
members of a resolution2 directing its president to file a notice of strike against BENGUET for:
“1. [Refusal] to grant any amount as monthly living allowance for the workers;
“2. Violation of Agreements reached in conciliation meetings among which is the taking down of
investigation [sic] and statements of employees without the presence of union representative;
“3. Refusal to dismiss erring executive after affidavits had been presented, thereby company showing
[sic] bias and partiality to company personnel;
“4. Discrimination against union members in the enforcement of disciplinary actions.”
The Notice of Strike3 was filed 011 December 28, 1962. Three months later, in the evening of March 2,
1963,
_______________
1 Clause XVIII, entitled “INDUSTRIAL PEACE,” pars. B and C.
2 Exhibit “2”.
3 Neither of the parties presented this Notice as evidence.
468
468
Union-PAFLU
UNION members who were BENGUET employees in the mining camps at Acupan, Antamok and Balatoc,
went on strike. Regarding the conduct of the strike, the trial court reports:4
“x x x Picket lines were formed at strategic points within the premises of the plaintiff. The picketers, by
means of threats and intimidation, and in some instances by the use of force and violence, prevented
passage thru the picket lines by personnel of the plaintiff who were reporting for work. Human blocks
were formed on points of entrance to working areas so that even vehicles could not pass thru, while the
officers of the plaintiff were not allowed for sometime to leave the ‘staff’ area.
“The strikers forming picket lines bore placards with the letters BBWU-PAFLU written thereon. As a
general rule, the picketers were unruly, aggressive and uttered threatening remarks to staff members
and non-strikers who desire to pass thru the picket lines. On some occasions, the picketers resorted to
violence by pushing back the car wherein staff officers were riding who would like to enter the mine
working area. The picketers lifted one side of the vehicle and were in the act of overturning it when they
were prevented from doing so by the timely intervention of PC soldiers, who threw tear gas bombs to
make the crowd disperse. Many of the picketers were apprehended by the PC soldiers and criminal
charges for grave coercion were filed against them before the Court of First Instance of Baguio. Two of
the strike leaders and twenty-two picketers, however, were found guilty of light coercion while nineteen
other accused were acquitted.
“There was a complete stoppage of work during the strike in all the mines. After two weeks elapsed,
repair and maintenance of the water pump was allowed by the strikers and some of the staff members
were permitted to enter the mines, who inspected the premises in the company of PC soldiers to
ascertain the extent of the damage to the equipment and losses of company property.”
x x x x
On May 2, 1963, the parties agreed to end the raging dispute. Accordingly, BENGUET and UNION
executed the AGREEMENT, Exh. 1. PAFLU placed its conformity thereto and said agreement was
attested to by the Director of the Bureau of Labor Relations. About a year later or on January 29, 1964, a
collective bargaining con-
_______________
4 Record on Appeal, pp. 40–41.
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VOL. 23, APRIL 30, 1968
469
Union-PAFLU
tract was finally executed between UNION-PAFLU and BENGUET.5
Meanwhile, as a result, allegedly, of the strike staged by UNION and its members, BENGUET had to incur
expenses for the rehabilitation of mine openings, repair of mechanical equipment, cost of pumping
water out of the mines, value of explosives, tools and supplies lost and/or destroyed, and other
miscellaneous expenses, all amounting to P1,911,363.83. So, BENGUET sued UNION, PAFLU and their
respective Presidents to recover said amount in the Court of First Instance of Manila, on the sole
premise that said defendants breached their undertaking in the existing CONTRACT not to strike during
the effectivity thereof.
In answer to BENGUET’s complaint, defendants unions and their respective presidents put up the
following defenses: (1) they were not bound by the CONTRACT which BBWU, the defeated union, had
executed with BENGUET; (2) the strike was due, inter alia, to unfair labor practices of BENGUET; and (3)
the strike was lawful and in the exercise of the legitimate rights of UNION-PAFLU under Republic Act
875.
Issues having been joined, trial commenced. On February 23, 1965, the trial court rendered judgment
dismissing the complaint on the ground that the CONTRACT, particularly the No-Strike clause, did not
bind defendants. The latters’ counterclaim was likewise denied. Failing to get a reconsideration of said
decision, BENGUET interposed the present appeal.
The several errors assigned by BENGUET basically ask three questions:
(1) Did the Collective Bargaining Contract executed between BENGUET and BBWU on June 23, 1959 and
effective until December 23, 1963 automatically bind UNION-PAFLU upon its certification, on August 18,
1962, as sole bargaining representative of all BENGUET employees ?
_______________
5 See Exhibit “3”.
470
470
Benguet Consolidated, Inc. vs. BCl Employees & Workers
Union-PAFLU
(2) Are defendants labor unions and their respective presidents liable for the illegal acts committed
during the course of the strike and picketing by some union members ?
(3) Are defendants liable to pay the damages claimed by BENGUET?
In support of an affirmative answer to the first question, BENGUET first invokes the so-called “Doctrine
of Substitution” referred to in General Maritime Stevedores’ Union v. South Sea Shipping Lines, L-14689,
July 26, 1960. There it was remarked:
x x x x
“We also hold that where the bargaining contract is to run for more than two years, the principle of
substitution may well be adopted and enforced by the CIR to the effect that after two years of the life of
a bargaining agreement, a certification election may be allowed by the CIR; that if a bargaining agent
other than the union or organization that executed the contract, is elected, said new agent would have
to respect said contract, but that it may bargain with the management for the shortening of the life of
the contract if it considers it too long, or refuse to renew the contract pursuant to an automatic renewal
clause.” (Italics for emphasis)
x x x x
The submission utterly fails to persuade Us. The above-quoted pronouncement was obiter dictum. The
only issue in the General Maritime Stevedores’ Union case was whether a collective bargaining
agreement which had practically run for 5 years constituted a bar to certification proceedings. We held
it did not and accordingly directed the court a quo to order certification elections. With that, nothing
more was necessary for the disposition of the case. Moreover, the pronouncement adverted to was
rather premature. The possible certification of a union different from that which signed the bargaining
contract was a mere contingency then since the elections were still to be held. Clearly, the Court was
not called upon to rule on possible effects of such proceedings on the bargaining agreement.6
But worse, BENGUET’s reliance upon the Principle of
_______________
6 See Buklod ng Saulog Transit v. Casalla, 99 Phil. 16.
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VOL. 23, APRIL 30, 1968
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Union-PAFLU
Substitution is totally misplaced. This principle, formulated by the NLRB7 as its initial compromise
solution to the problem facing it when there occurs a shift in employees’ union allegiance after the
execution of a bargaining contract with their employer, merely states that even during the effectivity of
a collective bargaining agreement executed between employer and employees thru their agent, the
employees can change said agent but the contract continues to bind them up to its expiration date. They
may bargain however for the shortening of said expiration date.8
In formulating the “substitutionary” doctrine, the only consideration involved was the employees’
interest in the existing bargaining agreement. The agent’s interest never entered the picture. In fact, the
justification9 for said doctrine was:
“x x x that the majority of the employees, as an entity under the statute, is the true party in interest to
the contract, holding rights through the agency of the union representative. Thus, any exclusive interest
claimed by the agent is defeasible at the will of the principal. x x x” (Italics for emphasis)
Stated otherwise, the “substitutionary” doctrine only provides that the employees cannot revoke the
validly executed collective bargaining contract with their employer 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 contract” must be understood. It only means that the employees, thru their new bargaining
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 contention that a newly
certified
______________
7 National Labor Relations Board, counterpart of our Court of Industrial Relations.
8 See: “CHANGE OF BARGAINING REPRESENTATIVE DURING THE LIFE OF A COLLECTIVE AGREEMENT

UNDER THE WAGNER ACT”, Note appearing in 51 Yale Law Journal, 465.
9 51 Yale Law Journal, 465.
472
472
Union-PAFLU
collective bargaining agent automatically assumes all the personal undertakings—like the no-strike
stipulation here—in the collective bargaining agreement made by the deposed union. When BBWU
bound itself and its officers not to strike, it could not have validly bound also all the other rival unions
existing in the bargaining units in question. BBWU was the agent of the employees, not of the other
unions which possess distinct personalities. To consider UNION contractually bound to the no-strike
stipulation would therefore violate the legal maxim that res inter alios acta alios nec prodest nec
nocet.10
Of course, UNION, as the newly certified bargaining agent, could always voluntarily assume all the
personal undertakings made by the displaced agent. But as the lower court found, there was no showing
at all that, prior to the strike,11 UNION formally adopted the existing CONTRACT as its own and assumed
all the liabilities imposed by the same upon BBWU.
BENGUET also alleges that UNION is now in estoppel to claim that it is not contractually bound by the
CONTRACT for having filed on September 28, 1962, in Civil Case No. 1150 of the Court of First Instance
of Baguio, entitled “Bobok Lumber Jack Ass’n. vs. Benguet Consoli-dated, Inc. and BCI Employees
Workers Union-PAFLU”12 a motion praying for the dissolution of the ex parte writ of preliminary
injunction issued therein. wherein the following appears:
“In that case, the CIR transferred the contractual rights of the BBWU to the defendant union. One of
such rights transferred was the right to the modified union-shop—checked off
________________
10 77 C.J.S. 275.
11 After the end of the strike, UNION agreed, in the return-to-work Agreement executed on May 2.
1963. to respect the CONTRACT for the remaining period of effectivity thereof.
12 This was an action brought by one of the defeated unions seeking a declaratory judgment that
UNION cannot enter into an agreement with BENGUET to continue the modified union shop embodied
in the CONTRACT and praying that, pendente lite, BENGUET be restrained from effecting any union
checkoff in UNION’s favor.
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VOL. 23, APRIL 30, 1968
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Union-PAFLU
union dues arrangement now under injunction.
“The collective bargaining contract mentioned in the plaintiff’s complaint did not expire by the mere fact
that the defendant union was certified as bargaining agent in place of the BBWU. The Court of Industrial
Relations in the case above mentioned made it clear that the collective bargaining contract would be
respected unless and until the parties act otherwise. In effect, the defendant union by act of subrogation
took the place of the BBWU as the UNION referred to in the contract.” (Stressed for emphasis)
There is no estoppel. UNION did not assert the above statement against BENGUET to force it to rely
upon the same to effect the union check-off in its favor. UNION and BENGUET were together as co-
defendants in said Civil Case No. 1150. Rather, the statement was directed against Bobok Lumber Jack
Ass’n., plaintiff therein, to weaken its cause of action. Moreover, BENGUET did not rely upon said
statement. What prompted Bobok Lumber Jack Ass’n. to file the complaint for declaratory relief was the
fact that “x x x the defendants [UNION and BENGUET] are planning to agree to the continuation of a
modified union shop in the three camps mentioned above without giving the employees concerned the
opportunity to express their wishes on the matter x x x.” BENGUET even went further in its answer filed
on Oc. tober 18, 1962, by asserting that “x x x defendants have already agreed to the continuation of the
modified union shop provision in the collective bargaining agreement x x x ”.13
Neither can we accept BENGUET’s contention that the inclusion of said aforequoted motion in the
record on appeal filed in said Civil Case No. 1150, now on appeal before Us docketed as case No. L-
24729, refutes UNION’s allegation that it has subsequently abandoned its stand against Bobok Lumber
Jack Ass’n., in said case. The mere appearance of such motion in the record on appeal is but a
compliance with the procedural requirement of Rule 41, Sec. 6, of the Rules of Court, that all matters
necessary for a proper understanding of the issues in-
_______________
13 See Record on Appeal in L-24729, pp. 6, 56.
474
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Union-PAFLU
volved be included in the record on appeal. This therefore cannot be taken as a rebuttal of the UNION’s
explanation.
There is nothing then, in law as well as in fact, to support plaintiff BENGUET’s contention that
defendants are contractually bound by the CONTRACT. And the stand taken by the trial court all the
more becomes unassailable in the light of Art. 1704 of the Civil Code providing that:
“In the collective bargaining, the labor union or members of the board or committee signing the
contract shall be liable for non-fulfillment thereof.” (Stressed for emphasis)
There is no question, defendants were not signatories nor participants in the CONTRACT.
Lastly, BENGUET contends, citing Clause II in connection with Clause XVIII of the CONTRACT, that since
all the employees, as principals, continue being bound by the no-strike stipulation until the CONTRACT’s
expiration, UNION, as their agent, must necessarily be bound also pursuant to the Law on Agency. This is
untenable. The way We understand it, everything binding on a duly authorized agent, acting as such, is
binding on the principal; not vice-versa, unless there is a mutual agency, or unless the agent expressly
binds himself to the party with whom he contracts. As the Civil Code decrees it:14
“The agent who acts as such is not personally liable to the party with whom he contracts, unless he
expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice
of his powers.” (Stressed for emphasis)
Here, it was the previous agent who expressly bound itself to the other party, BENGUET. UNION, ‘the
new agent, did not assume this undertaking of BBWU.
In view of all the foregoing, We see no further necessity of delving further into the other less important
points raised by BENGUET in connection with the first question.
______________
14 Art. 1897.
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VOL. 23, APRIL 30, 1968
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Union-PAFLU
On the second question, it suffices to consider, in answer thereto, that the rule of vicarious liability has,
since the passage of Republic Act 875, been expressly legislated out.15 The standing rule now is that for
a labor union and/or its officials and members to be liable, there must be clear proof of actual
participation in, or authorization or ratification of the illegal acts.16 While the lower court found that
some strikers and picketers resorted to intimidation and actual violence, it also found that defendants
presented uncontradicted evidence that before and during the strike, the strike leaders had time and
again warned the strikers not to resort to violence but to conduct peaceful picketing only.17 Assuming
that the strikers did not heed these admonitions coming from their leaders, the failure of the union
officials to go against the erring union members pursuant to the UNION and PAFLU constitutions and by-
laws exposes, at the most, only a flaw or weakness in the defense which, however, cannot be the basis
for plaintiff BENGUET to recover.
Lastly, paragraph VI of the Answer18 sufficiently traverses the material allegations in paragraph VI of the
Complaint,19 thus precluding a fatal admission on defendants’ part. The purpose behind the rule
requiring specific denial is obtained: defendants have set forth the
________________
15 Sec. 9 (c), Republic Act 875.
16 Rothenberg on LABOR RELATIONS, p. 202.
17 Record on Appeal, p. 48.

18 “They deny the allegations in paragraph VI. (1) The picketing and strike of defendants were
conducted peacefully, properly and without fraud or violence; (2) It was the plaintiff that caused untold
harm and damages to the defendants by unlawfully violating and breaking up the strike and picketing;”
19 “That in furtherance and in connection with the strike illegally and unlawfully called, declared and
enforced by defendants, the said defendants conspiring and confabulating together ordered, caused and
directed the strikers to conduct picketing within the property of plaintiff, and by means of force,
violence and intimidation prevented, stopped, and obstructed officials of plaintiff company from going
to the different offices, working areas and underground tunnels of plain
476
476
Union-PAFLU
matters relied upon in support of their denial. Paragraph VI of the Answer may not be a model pleading,
but it suffices for purposes of the rule. Pleadings should, after all, be liberally construed.20
Since defendants were not contractually bound by the no-strike clause in the CONTRACT, for the simple
reason that they were not parties thereto, they could not be liable for breach of contract to plaintiff. The
lower court therefore correctly absolved them from liability.
WHEREFORE, the judgment of the lower court appealed from is hereby affirmed. No costs. So ordered.
Dizon, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.
Makalintal, J. reserves his vote.
Concepcion, C.J., is on leave.
Reyes, J.B.L., Actg. C.J., did not take part.
Judgment affirmed.
Notes.—With reference to the question of estoppel in the foregoing case, it must be noted that the
allegations, statements, or admissions contained in a pleading are conclusive as against the pleader. A
party cannot subsequently take a position contradictory to, or inconsistent with, his pleadings (McDaniel
vs. Apacible, 44 Phil. 248; Cunanan vs. Amparo, 80 Phil. 227).
The rule against vicarious liability was applied in Consolidated Labor Association of the Philippines vs.
Marsman & Company, L-17038, July 31, 1964, and Philippine Education Company vs. CIR, 97 Phil. 967, in
which it was held that where the illegal acts committed during a strike were isolated and it does not
appear that they were authorized or impliedly sanctioned by the union, the strikers who were innocent
of and did not participate in the illegal acts
________________
tiff company thus preventing them from doing and performing maintenance work and taking such other
measures to prevent or minimize damages to plaintiff’s property;”
20 Rule 6, Sec. 15, Rules of Court.
477
VOL. 23, APRIL 30, 1968
477
Melliza vs. City of Iloilo
should not be punished by being deprived of their right to reinstatement.
______________ Benguet Consolidated, Inc. vs. BCI Employees & Workers Union-PAFLU, 23 SCRA 465,
No. L-24711 April 30, 1968
268
Vivero vs. Court of Appeals
G.R. No. 138938. October 24, 2000.*
CELESTINO VIVERO, petitioner, vs. COURT OF APPEALS, HAMMONIA MARINE SERVICES, and
HANSEATIC SHIPPING CO., LTD., respondents.
Labor Law; Voluntary Arbitrations; Collective Bargaining Agreements; Illegal Dismissals; Jurisdiction;
Words and Phrases; Absent an express stipulation in the CBA, the phrase “all disputes” should be
construed as limited to the areas of conflict traditionally within the jurisdiction of Voluntary
Arbitrators, i.e., disputes relating to contract-interpretation, contract-implementation, or
interpretation or enforcement of company personnel policies—illegal termination disputes in the
absence of an express CBA provision, do not fall within any of these categories, and are within the
exclusive original jurisdiction of Labor Arbiters by express provision of law.—In San Miguel Corp. v.
National Labor Relations Commission this Court held that the phrase “all other labor disputes” may
include termination disputes provided that the agreement between the Union and the Company
states “in unequivocal language that [the parties] conform to the submission of termination disputes
and unfair labor practices to voluntary arbitration.” Ergo, it is not sufficient to merely say that parties
to the CBA agree on the principle that “all disputes” should first be submitted to a Voluntary
Arbitrator. There is a need for an express stipulation in the CBA that illegal termination disputes
should be resolved by a Voluntary Arbitrator or Panel of Voluntary Arbitrators, since the same fall
within a special class of disputes that are generally within the exclusive original jurisdiction of Labor
Arbiters by express provision of law. Absent such express stipulation, the phrase “all disputes” should
be construed as limited to the areas of conflict traditionally within the jurisdiction of Voluntary
Arbitrators, i.e., disputes relating to contract-interpretation, contract-implementation, or
interpretation or enforcement of company personnel policies. Illegal termination disputes—not falling
within any of these categories—should then be considered as a special area of interest governed by a
specific provision of law.
Same; Same; Same; The use of the word “may” shows the intention of the parties to reserve the right
to submit the illegal termination dispute to the jurisdiction of the Labor Arbiter, rather than to a
Voluntary Arbitrator-—In this case, however, while the parties did agree to make termination
disputes the proper subject of voluntary arbitration, such submission
_________________
* SECOND DIVISION.
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VOL. 344, OCTOBER 24, 2000
269
remains discretionary upon the parties. A perusal of the CBA provisions shows that Sec. 6, Art. XII
(Grievance Procedure) of the CBA is the general agreement of the parties to refer grievances, disputes
or misunderstandings to a grievance committee, and henceforth, to a voluntary arbitration
committee, x x x The use of the word “may” shows the intention of the parties to reserve the right to
submit the illegal termination dispute to the jurisdiction of the Labor Arbiter, rather than to a
Voluntary Arbitrator. Petitioner validly exercised his option to submit his case to a Labor Arbiter when
he filed his Complaint before the proper government agency.
Same; Same; Same; When the parties have validly agreed on a procedure for resolving grievances and
to submit a dispute to voluntary arbitration then that procedure should be strictly observed.—The
CBA clarifies the proper procedure to be followed in situations where the parties expressly stipulate
to submit termination disputes to the jurisdiction of a Voluntary Arbitrator or Panel of Voluntary
Arbitrators. For when the parties have validly agreed on a procedure for resolving grievances and to
submit a dispute to voluntary arbitration then that procedure should be strictly observed. Non-
compliance therewith cannot be excused, as petitioner suggests, by the fact that he is not well-versed
with the “fine prints” of the CBA. It was his responsibility to find out, through his Union, what the
provisions of the CBA were and how they could affect his rights.
Same; Same; Same; Grievance Procedure; Where under the CBA, both Union and the employer are
responsible for selecting an impartial arbitrator or for convening an arbitration committee, yet neither
made a move towards this end, the employee should not be deprived of his legitimate recourse
because of the refusal of both Union and the employer to follow the grievance procedure.—After the
grievance proceedings have failed to bring about a resolution, AMOSUP, as agent of petitioner, should
have informed him of his option to settle the case through voluntary arbitration. Private respondents,
on their part, should have timely invoked the provision of their CBA requiring the referral of their
unresolved disputes to a Voluntary Arbitrator once it became apparent that the grievance machinery
failed to resolve it prior to the filing of the case before the proper tribunal. The private respondents
should not have waited for nine (9) months from the filing of their Position Paper with the POEA
before it moved to dismiss the case purportedly for lack of jurisdiction. As it is, private respondents
are deemed to have waived their right to question the procedure followed by petitioner, assuming
that they have the right to do so. Under their CBA, both Union and respondent companies are
responsible for selecting an impartial arbitrator or for convening an arbitration committee; yet, it is
apparent that neither made a move towards this end. Consequently,
270
270
petitioner should not be deprived of his legitimate recourse because of the refusal of both Union and
respondent companies to follow the grievance procedure.
Ricafrente, Aguirre, Sanvicente and Cacho Law Firm for petitioner.
Dollete, Blanco, Ejercito and Associates for private respondents.
BELLOSILLO, J.:
CELESTINO VIVERO, in this petition for review, seeks the reversal of the Decision of the Court of Appeals
of 26 May 1999 setting aside the Decision of the National Labor Relations Commission of 28 May 1998
as well as its Resolution of 23 July 1998 denying his motion for its reconsideration, and reinstating the
decision of the Labor Arbiter of 21 January 1997.
Petitioner Vivero, a licensed seaman, is a member of the Associated Marine Officers and Seamen’s
Union of the Philippines (AMOSUP). The Collective Bargaining Agreement entered into by AMOSUP and
private respondents provides, among others—
ARTICLE XII
GRIEVANCE PROCEDURE
xxxx
Sec. 3. A dispute or grievance arising in connection with the terms and provisions of this Agreement shall
be adjusted in accordance with the following procedure:
1. Any seaman who feels that he has been unjustly treated or even subjected to an unfair consideration
shall endeavor to have said grievance adjusted by the designated representative of the unlicensed
department abroad the vessel in the following manner:
A. Presentation of the complaint to his immediate superior.
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VOL. 344, OCTOBER 24, 2000
271
B. Appeal to the head of the department in which the seaman involved shall be employed.
C. Appeal directly to the Master.
Sec. 4. If the grievance cannot be resolved under the provision of Section 3, the decision of the Master
shall govern at sea x x x x in foreign ports and until the vessel arrives at a port where the Master shall
refer such dispute to either the COMPANY or the UNION in order to resolve such dispute. It is
understood, however, if the dispute could not be resolved then both parties shall avail of the grievance
procedure.
Sec. 5. In furtherance of the foregoing principle, there is hereby created a GRIEVANCE COMMITTEE to be
composed of two COMPANY REPRESENTATIVES to be designated by the COMPANY and two LABOR
REPRESENTATIVES to be designated by the UNION.
Sec. 6. Any grievance, dispute or misunderstanding concerning any ruling, practice, wages or working
conditions in the COMPANY, or any breach of the Employment Contract, or any dispute arising from the
meaning or the application of the provision of this Agreement or a claim of violation thereof or any
complaint that any such crewmembers may have against the COMPANY, as well as complaint which the
COMPANY may have against such crewmembers shall be brought to the attention of the GRIEVANCE
COMMITTEE before either party takes any action, legal or otherwise.
Sec. 7. The COMMITTEE shall resolve any dispute within seven (7) days from and after the same is
submitted to it for resolution and if the same cannot be settled by the COMMITTEE or if the COMMITTEE
fails to act on the dispute within the 7-day period herein provided, the same shall be referred to a
VOLUNTARY ARBITRATION COMMITTEE.
An “impartial arbitrator” will be appointed by mutual choice and consent of the UNION and the
COMPANY who shall hear and decide the dispute or issue presented to him and his decision shall be
final and unappealable x x x x1
As found by the Labor Arbiter—
Complainant was hired by respondent as Chief Officer of the vessel “M.V. Sunny Prince” on 10 June
1994 under the terms and conditions, to wit:
Duration of Contract ...................................
10 months
_______________
1 Rollo, pp. 34-35.
272
272
Basic Monthly Salary ........................................
US $1,100.00
Hours of Work .....................................................
44 hrs./week
Overtime ............................................................
495 lump O.T.
Vacation leave with pay ...............................
US $220.00/mo.
On grounds of very poor performance and conduct, refusal to perform his job, refusal to report to the
Captain or the vessel’s Engineers or cooperate with other ship officers about the problem in cleaning the
cargo holds or of the shipping pump and his dismal relations with the Captain of the vessel, complainant
was repatriated on 15 July 1994.
On 01 August 1994, complainant filed a complaint for illegal dismissal at Associated Marine Officers’ and
Seaman’s Union of the Philippines (AMOSUP) of which complainant was a member. Pursuant to Article
XII of the Collective Bargaining Agreement, grievance proceedings were conducted; however, parties
failed to reach and settle the dispute amicably, thus, on 28 November 1994, complainant filed [a]
complaint with the Philippine Overseas Employment Administration (POEA).2
The law in force at the time petitioner filed his Complaint with the POEA was EO No. 247.3
While the case was pending before the POEA, private respondents filed a Motion to Dismiss on the
ground that the POEA had no jurisdiction over the case considering petitioner Vivero’s failure to refer it
to a Voluntary Arbitration Committee in accordance with the CBA between the parties. Upon the
enactment of RA 8042, the Migrant Workers and Overseas Filipinos Act of 1995, the case was
transferred to the Adjudication Branch of the National Labor Relations Commission. f
______________
2 Id., pp. 49-50.
3 Sec. 3, par. (d), of EO No. 247, the “Reorganization Act of the Philippine Overseas Employment
Administration” (24 July 1987) provides—
“Sec. 3. Powers and Functions.—x x x x (d) Exercise original and exclusive jurisdiction to hear and decide
all claims arising out of an employee-employer relationship or by virtue of any law or contract involving
Filipino workers for overseas employment including the disciplinary cases; and all pre-employment cases
which are administrative in character involving or arising out of violation of requirement laws, rules and
regulations including money claims arising therefrom, or violation of the conditions for issuance of
license or authority to recruit workers x x x x
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VOL. 344, OCTOBER 24, 2000
273
On 21 January 1997 Labor Arbiter Jovencio LI. Mayor, Jr., on the basis of the pleadings and documents
available on record, rendered a decision dismissing the Complaint for want of jurisdiction.4 According to
the Labor Arbiter, since the CBA of the parties provided for the referral to a Voluntary Arbitration
Committee should the Grievance Committee fail to settle the dispute, and considering the mandate of
Art. 261 of the Labor Code on the original and exclusive jurisdiction of Voluntary Arbitrators, the Labor
Arbiter clearly had no jurisdiction over the case.5
Petitioner (complainant before the Labor Arbiter) appealed the dismissal of his petition to the NLRC. On
28 May 1998 the NLRC set aside the decision of the Labor Arbiter on the ground that the record was
clear that petitioner had exhausted his remedy by submitting his case to the Grievance Committee of
AMOSUP. Considering however that he could not obtain any settlement he had to ventilate his case
before the proper forum, i.e., the Philippine Overseas Employment Administration.6 The NLRC further
held that the contested portion in the CBA providing for the intercession of a Voluntary Arbitrator was
not binding upon petitioner since both petitioner and private respondents had to agree voluntarily to
submit the case before a Voluntary Arbitrator or Panel of Voluntary Arbitrators. This would entail
expenses as the Voluntary Arbitrator chosen by the parties had to be paid. Inasmuch however as
petitioner chose to file his Complaint originally with POEA, then the Labor Arbiter to whom the case was
transferred would have to take cognizance of the case.7
The NLRC then remanded the case to the Labor Arbiter for further proceedings. On 3 July 1998
respondents filed a Motion for Reconsideration which was denied by the NLRC on 23 July 1998.
Thus, private respondents raised the case to the Court of Appeals contending that the provision in the
CBA requiring a dispute which remained unresolved by the Grievance Committee to be referred to a
Voluntary Arbitration Committee, was mandatory in
________________
4 Id., p. 53.
5 Rollo, p. 66.
6 Id., p. 60.
7 Id., p. 61.
274
274
character in view of the CBA between the parties. They stressed that “since it is a policy of the state to
promote voluntary arbitration as a mode of settling labor disputes, it is clear that the public respondent
gravely abused its discretion in taking cognizance of a case which was still within the mantle of the
Voluntary Arbitration Commitee’s jurisdiction.”8
On the other hand, petitioner argued—
(A)s strongly suggested by its very title, referral of cases of this nature to the Voluntary Arbitration
Committee is voluntary in nature. Otherwise, the committee would not have been called Voluntary
Arbitration Committee but rather, a Compulsory Arbitration Committee. Moreover, if the referral of
cases of similar nature to the Voluntary Arbitration Committee would be deemed mandatory by virtue
of the provisions in the CBA, the [NLRC] would then be effectively deprived of its jurisdiction to try, hear
and decide termination disputes, as provided for under Article 217 of the Labor Code. Lastly,
[respondents] ought to be deemed to have waived their right to question the procedure followed by
[petitioner], considering that they have already filed their Position Paper before belatedly filing a Motion
to Dismiss x x x x9
But the Court of Appeals ruled in favor of private respondents. It held that the CBA “is the law between
the parties and compliance therewith is mandated by the express policy of the law.”10 Hence, petitioner
should have followed the provision in the CBA requiring the submission of the dispute to the Voluntary
Arbitration Committee once the Grievance Committee failed to settle the controversy.11 According to
the Court of Appeals, the parties did not have the choice to “volunteer to refer the dispute to the
Voluntary Arbitrator or a Panel of Arbitrators when there was already an agreement requiring them to
do so. “Voluntary Arbitration” means that it is binding because of a prior agreement or contract, while
“Compulsory Arbitration” is when the law declares the dispute
_______________
8 Rollo, p. 66.
9 Rollo, p. 67.
10 E. Razon, Inc. v. Secretary of Labor and Employment, G.R. No. 85867, 13 May 1993, 222 SCRA 1, 8
[1993].
11 Rollo, p. 69.
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VOL. 344, OCTOBER 24, 2000
275
subject to arbitration, regardless of the consent or desire of the parties.12
The Court of Appeals further held that the Labor Code itself enumerates the original and exclusive
jurisdiction of the Voluntary Arbitrator or Panel of Voluntary Arbitrators, and prohibits the NLRC and the
Regional Directors of the Department of Labor and Employment (DOLE) from entertaining cases falling
under the same.13 Thus, the fact that private respondents filed their Position Paper first before filing
their Motion to Dismiss was immaterial and did not operate to confer jurisdiction upon the Labor
Arbiter, following the well-settled rule that jurisdiction is determined by law and not by consent or
agreement of the parties or by estoppel.14
Finally, the appellate court ruled that a case falling under the jurisdiction of the Labor Arbiter as
provided under Art. 217 of the Labor Code may be lodged instead with a Voluntary Arbitrator because
the law prefers, or gives primacy, to voluntary arbitration instead of compulsory arbitration.15
Consequently, the contention that the NLRC would be deprived of its jurisdiction to try, hear and decide
termination disputes under Art. 217 of the Labor Code, should the instant dispute be referred to the
Voluntary Arbitration Committee, is clearly bereft of merit.16 Besides, the Voluntary Arbitrator, whether
acting solely or in a panel, enjoys in law the status of a quasi-judicial agency independent of, and apart
from, the NLRC since his decisions are not appealable to the latter.17
_______________
12 Id., p. 70, citing II Azucena, THE LABOR CODE WITH COMMENTS AND CASES 277 (1993).
13 Id., p. 70.
14 Tolentino v. Court of Appeals, G.R. No. 123445, 6 October 1997, 280 SCRA 226, 234 [1997].
15 Labor Code, Art. 211, par. (a) provides that: “It is the policy of the State to promote and emphasize
the primacy of free collective bargaining and negotiations, including voluntary arbitration, mediation
and conciliation, as modes of settling labor or industrial disputes.”
16 Rollo, p. 70.
17 Id., p 70; see Luzon Development Bank v. Association of Luzon Development Bank Employees, G.R.
No. 120319, 6 October 1995, 249 SCRA 162, 168-69, citing Labor Code, Art. 262-A, in relation to Labor
Code, Art. 217 (b) and (c), as amended by RA 6715, Sec. 9.
276
276
Celestino Vivero, in his petition for review assailing the Decision of the Court of Appeals, alleges that the
appellate court committed grave abuse of discretion in holding that a Voluntary Arbitrator or Panel of
Voluntary Arbitrators, and not the Adjudication Branch of the NLRC, has jurisdiction over his complaint
for illegal dismissal. He claims that his complaint for illegal dismissal was undeniably a termination
dispute and did not, in any way, involve an “interpretation or implementation of collective bargaining
agreement” or “interpretation” or “enforcement” of company personnel policies. Thus, it should fall
within the original and exclusive jurisdiction of the NLRC and its Labor Arbiter, and not with a Voluntary
Arbitrator, in accordance with Art. 217 of the Labor Code.
Private respondents, on the other hand, allege that the case is clearly one “involving the proper
interpretation and implementation of the Grievance Procedure found in the Collective Bargaining
Agreement (CBA) between the parties”18 because of petitioner’s allegation in his claim/assistance
request form submitted to the Union, to wit:
NATURE OF COMPLAINT
3. Illegal Dismissal—Reason: (1) That in this case it was the master of M.V. SUNNY PRINCE Capt.
Andersen who created the trouble with physical injury and stating false allegation; (2) That there was no
proper procedure of grievance; (3) No proper notice of dismissal.
Is there a Notice of dismissal? x Yes or ___ No
What date? 11 July 1994
Is there a Grievance Procedure observed? ___ Yes or x No19
Private respondents further allege that the fact that petitioner sought the assistance of his Union
evidently shows that he himself was convinced that his Complaint was within the ambit of the
jurisdiction of the grievance machinery and subsequently by a Panel of Voluntary Arbitrators as provided
for in their CBA, and as explicitly mandated by Art. 261 of the Labor Code.20
_______________
18 Id., p. 74.
19 Id., p. 23.
20 Id., p. 74.
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VOL. 344, OCTOBER 24, 2000
277
Thus, the issue is whether the NLRC is deprived of jurisdiction over illegal dismissal cases whenever a
CBA provides for grievance machinery and voluntary arbitration proceedings. Or, phrased in another
way, does the dismissal of an employee constitute a “grievance between the parties,” as defined under
the provisions of the CBA, and consequently, within the exclusive original jurisdiction of the Voluntary
Arbitrators, thereby rendering the NLRC without jurisdiction to decide the case?
On the original and exclusive jurisdiction of Labor Arbiters, Art. 217 of the Labor Code provides—
Art. 217. Jurisdiction of Labor Arbiters and the Commission.—(a) Except as otherwise provided under
this Code, the Labor Arbiters shall have original and exclusive jurisdiction 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
agricultural or nonagricultural: (1) Unfair labor practice cases; (2) Termination disputes; (3) If
accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of
pay, hours of work and other terms and conditions of employment; (4) Claims for actual, moral,
exemplary and other forms of damages arising from 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, including those of persons in
domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00)
regardless of whether accompanied with a claim for reinstatement.
(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.
(c) Cases arising from the interpretation of collective bargaining agreements and those arising from the
interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter
by referring the same to the grievance machinery and voluntary arbitration as may be provided in said
agreements (emphasis supplied).
However, any or all of these cases may, by agreement of the parties, be submitted to a Voluntary
Arbitrator or Panel of Voluntary
278
278
Arbitrators for adjudication. Articles 261 and 262 of the Labor Code provide—
Art. 261. Jurisdiction of Voluntary Arbitrators or Panel of Voluntary Arbitrators.—The Voluntary

Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and
decide all unresolved grievances arising from the interpretation or implementation of the Collective
Bargaining Agreement and those arising from the interpretation or enforcement of company personnel
policies referred to in the immediately preceding article. Accordingly, violations of a Collective
Bargaining Agreement, except those which are gross in character, shall no longer be treated as unfair
labor practice and shall be resolved as grievances under the Collective Bargaining Agreement. For
purposes of this article, gross violations of Collective Bargaining Agreement shall mean flagrant and/or
malicious refusal to comply with the economic provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors of the Department of Labor and
Employment shall not entertain disputes, grievances or matters under the exclusive and original
jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately dispose
and refer the same to the Grievance Machinery or Voluntary Arbitration provided in the Collective
Bargaining Agreement.
Art. 262. Jurisdiction Over Other Labor Disputes.—The Voluntary Arbitrator or panel of Voluntary
Arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes including
unfair laber practices and bargaining deadlocks (emphasis supplied).
Private respondents attempt to justify the conferment of jurisdiction over the case on the Voluntary
Arbitrator on the ground that the issue involves the proper interpretation and implementation of the
Grievance Procedure found in the CBA. They point out that when petitioner sought the assistance of his
Union to avail of the grievance machinery, he in effect submitted himself to the procedure set forth in
the CBA regarding submission of unresolved grievances to a Voluntary Arbitrator.
The argument is untenable. The case is primarily a termination dispute. It is clear from the
claim/assistance request form submitted by petitioner to AMOSUP that he was challenging the legality
of his dismissal for lack of cause and lack of due process. The issue of whether there was proper
interpretation and implementation of
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279
the CBA provisions comes into play only because the grievance procedure provided for in the CBA was
not observed after he sought his Union’s assistance in contesting his termination. Thus, the question to
be resolved necessarily springs from the primary issue of whether there was a valid termination; without
this, then there would be no reason to invoke the need to interpret and implement the CBA provisions
properly.
In San Miguel Corp. v. National Labor Relations Commission 21 this Court held that the phrase “all other
labor disputes” may include termination disputes provided that the agreement between the Union and
the Company states “in unequivocal language that [the parties] conform to the submission of
termination disputes and unfair labor practices to voluntary arbitration.”22 Ergo, it is not sufficient to
merely say that parties to the CBA agree on the principle that “all disputes” should first be submitted to
a Voluntary Arbitrator. There is a need for an express stipulation in the CBA that illegal termination
disputes should be resolved by a Voluntary Arbitrator or Panel of Voluntary Arbitrators, since the same
fall within a special class of disputes that are generally within the exclusive original jurisdiction of Labor
Arbiters by express provision of law. Absent such express stipulation, the phrase “all disputes” should be
construed as limited to the areas of conflict traditionally within the jurisdiction of Voluntary Arbitrators,
i.e., disputes relating to contract-interpretation, contract-implementation, or interpretation or
enforcement of company personnel policies. Illegal termination disputes—not falling within any of these
categories—should then be considered as a special area of interest governed by a specific provision of
law.
In this case, however, while the parties did agree to make termination disputes the proper subject of
voluntary arbitration, such submission remains discretionary upon the parties. A perusal of the CBA
provisions shows that Sec. 6, Art. XII (Grievance Procedure) of the CBA is the general agreement of the
parties to refer grievances, disputes or misunderstandings to a grievance committee, and henceforth, to
a voluntary arbitration committee. The f
_______________
21 G.R. No. 108001, 15 March 1996, 255 SCRA 133.
22 Id., p. 137.
280
280
requirement of specificity is fulfilled by Art. XVII (Job Security) where the parties agreed—
Sec. 1. Promotion, demotion, suspension, dismissal or disciplinary action of the seaman shall be left to
the discretion of the Master, upon consultation with the Company and notification to the Union. This
not-withstanding, any and all disciplinary action taken on board the vessel shall be provided for in
Appendix “B” of this Agreement x x x x23
Sec. 4. x x x x Transfer, lay-off or discipline of seamen for incompetence, inefficiency, neglect of work,
bad behavior, perpetration of crime, drunkenness, insubordination, desertion, violation of x x x
regulations of any port touched by the Company’s vessel/s and other just and proper causes shall be at
Master’s discretion x x x in the high seas or foreign ports. The Master shall refer the case/dispute upon
reaching port and if not satisfactorily settled, the case/dispute may be referred to the grievance
machinery or procedure hereinafter provided (emphasis supplied).24
The use of the word “may” shows the intention of the parties to reserve the right to submit the illegal
termination dispute to the jurisdiction of the Labor Arbiter, rather than to a Voluntary Arbitrator.
Petitioner validly exercised his option to submit his case to a Labor Arbiter when he filed his Complaint
before the proper government agency.
Private respondents invoke Navarro III v. Damasco 25 wherein the Court held that “it is the policy of the
state to promote voluntary arbitration as a mode of settling disputes.”26 It should be noted, however,
that in Navarro III all the parties voluntarily submitted to the jurisdiction of the Voluntary Arbitrator
when they filed their respective position papers and submitted documentary evidence before him.
Furthermore, they manifested during the
_______________
23 The aforesaid Appendix B provides for a Table of Offenses and Maximum Penalties, where the
offense of insubordination, which includes “any acts of disobedience to lawful orders of a superior
officer” is punished with the maximum penalty of dismissal; Rollo, p. 46.
24 Rollo, pp. 36-37.
25 G.R. No. 101875, 14 July 1995, 246 SCRA 260.
26 Id., p. 264, citing Manguiat, MECHANISMS OF VOLUNTARY ARBITRATION IN LABOR DISPUTES, pp. 2-6
(1978).
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initial conference that they were not questioning the authority of the Voluntary Arbitrator.27 In the case
at bar, the dispute was never brought to a Voluntary Arbitrator for resolution; in fact, petitioner
precisely requested the Court to recognize the jurisdiction of the Labor Arbiter over the case. The Court
had held in San Miguel Corp. v. NLRC 28 that neither officials nor tribunals can assume jurisdiction in the
absence of an express legal conferment. In the same manner, petitioner cannot arrogate into the
powers of Voluntary Arbitrators the original and exclusive jurisdiction of Labor Arbiters over unfair labor
practices, termination disputes, and claims for damages, in the absence of an express agreement
between the parties in order for Art. 262 of the Labor Code to apply in the case at bar. In other words,
the Court of Appeals is correct in holding that Voluntary Arbitration is mandatory in character if there is
a specific agreement between the parties to that effect. It must be stressed however that, in the case at
bar, the use of the word “may” shows the intention of the parties to reserve the right of recourse to
Labor Arbiters.
The CBA clarifies the proper procedure to be followed in situations where the parties expressly stipulate
to submit termination disputes to the jurisdiction of a Voluntary Arbitrator or Panel of Voluntary
Arbitrators. For when the parties have validly agreed on a procedure for resolving grievances and to
submit a dispute to voluntary arbitration then that procedure should be strictly observed. Non-
compliance therewith cannot be excused, as petitioner suggests, by the fact that he is not well-versed
with the “fine prints” of the CBA. It was his responsibility to find out, through his Union, what the
provisions of the CBA were and how they could affect his rights. As provided in Art. 241, par. (p), of the
Labor Code—
(p) It shall be the duty of any labor organization and its officers to inform its members on the provisions
of its constitution and by-laws, collective bargaining agreement, the prevailing labor relations system
and all their rights and obligations under existing labor laws.
_____________
27 See Note 25, p. 264.
28 See Note 20, pp. 143-144.
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282

In fact, any violation of the rights and conditions of union membership is a “ground for cancellation of
union registration or expulsion of officer from office, whichever is appropriate. At least thirty percent
(30%) of all the members of a union or any member or members especially concerned may report such
violation to the Bureau [of Labor Relations] x x x”29
It may be observed that under Policy Instruction No. 56 of the Secretary of Labor, dated 6 April 1993,
“Clarifying the Jurisdiction Between Voluntary Arbitrators and Labor Arbiters Over Termination Cases
and Providing Guidelines for the Referral of Said Cases Originally Filed with the NLRC to the NCMB,”
termination cases arising in or resulting from the interpretation and implementation of collective
bargaining agreements and interpretation and enforcement of company personnel policies which were
initially processed at the various steps of the plant-level Grievance Procedures under the parties’
collective bargaining agreements fall within the original and exclusive jurisdiction of the voluntary
arbitrator pursuant to Art. 217 (c) and Art. 261 of the Labor Code; and, if filed before the Labor Arbiter,
these cases shall be dismissed by the Labor Arbiter for lack of jurisdiction and referred to the concerned
NCMB Regional Branch for appropriate action towards an expeditious selection by the parties of a
Voluntary Arbitrator or Panel of Arbitrators based on the procedures agreed upon in the CBA.
As earlier stated, the instant case is a termination dispute falling under the original and exclusive
jurisdiction of the Labor Arbiter, and does not specifically involve the application, implementation or
enforcement of company personnel policies contemplated in Policy Instruction No. 56. Consequently,
Policy Instruction No. 56 does not apply in the case at bar. In any case, private respondents never
invoked the application of Policy Instruction No. 56 in their Position Papers, neither did they raise the
question in their Motion to Dismiss which they filed nine (9) months after the filing of their Position
Papers. At this late stage of the proceedings, it would not serve the ends of justice if this case is referred
back to a Voluntary Arbitrator considering that both the AMOSUP and private respondents have
submitted to the jurisdiction of the Labor Arbiter by
________________
29 Labor Code, Art. 241 (p).
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283
filing their respective Position Papers and ignoring the grievance procedure set forth in their CBA.
After the grievance proceedings have failed to bring about a resolution, AMOSUP, as agent of petitioner,
should have informed him of his option to settle the case through voluntary arbitration. Private
respondents, on their part, should have timely invoked the provision of their CBA requiring the referral
of their unresolved disputes to a Voluntary Arbitrator once it became apparent that the grievance
machinery failed to resolve it prior to the filing of the case before the proper tribunal. The private
respondents should not have waited for nine (9) months from the filing of their Position Paper with the
POEA before it moved to dismiss the case purportedly for lack of jurisdiction. As it is, private
respondents are deemed to have waived their right to question the procedure followed by petitioner,
assuming that they have the right to do so. Under their CBA, both Union and respondent companies are
responsible for selecting an impartial arbitrator or for convening an arbitration committee;30 yet, it is
apparent that neither made a move towards this end. Consequently, petitioner should not be deprived
of his legitimate recourse because of the refusal of both Union and respondent companies to follow the
grievance procedure.
WHEREFORE, the Decision of the Court of Appeals is SET ASIDE and the case is remanded to the Labor
Arbiter to dispose of the case with dispatch until terminated considering the undue delay already
incurred.
SO ORDERED.
Mendoza, Quisumbing, Buena and De Leon, Jr., JJ., concur.
Judgment set aside, case remanded to the Labor Arbiter for further proceedings.
Notes.—What are subject of the grievance procedure for adjustment and resolution are grievances
arising from the interpretation or implementation of the collective bargaining agreement, not
______________
30 Rollo, p. 35.
284
284
Santos vs. Heirs of Jose P. Mariano & Erlinda Mariano-Villanueva
violations of the Code of Employee Discipline. (Navarro III vs. Damasco, 246 SCRA 260 [1995])
Discharges due to alleged redundancy can hardly be considered company personnel policies and
therefore need not directly be subject to the grievance machinery nor to voluntary arbitration. (San
Miguel Corporation vs. National Labor Relations Commission, 255 SCRA 133 [1996])
——o0o—— Vivero vs. Court of Appeals, 344 SCRA 268, G.R. No. 138938 October 24, 2000
VOL.211,JULY 8,1992
361
Sanyo Philippine Workers Union-PSSLU vs. Cañizares
G.R. No. 101619. July 8, 1992.*
SANYO PHILIPPINES WORKERS UNION-PSSLU LOCAL CHAPTER NO. 109 AND/OR ANTONIO DIAZ, PSSLU
NATIONAL PRESIDENT, petitioners, vs. HON. POTENCIANO S. CAÑIZARES, in his capacity as Labor
Arbiter; BERNARDO YAP, RENATO BAYBON, SALVADOR SOLIBEL, ALLAN MISTERIO, EDGARDO
TANGKAY, LEONARDO DIONISIO, ARNEL SALVO, REYNALDO RICOHERMOSO, BENITO VALENCIA,
GERARDO LASALA AND ALEXANDER ATANASIO, respondents.
Labor Law; Collective Bargaining Agreement; Dismissal; Enforcement of the union security clause in
the CBA is authorized by law provided that enforcement should not be characterized by arbitrariness
and always with due process.—It was provided in the CBA executed between PSSLU and Sanyo that a
member’s voluntary resignation from membership, willful refusal to pay union dues and his/her form-
_______________
*FIRST DIVISION.
362
362
ing, organizing, joining, supporting, affiliating or aiding directly or indirectly another labor union shall
be a cause for it to demand his/her dismissal from the company. The demand for the dismissal and
the actual dismissal by the company on any of these grounds is an enforcement of the union security
clause in the CBA. This act is authorized by law provided that enforcement should not be
characterized by arbitrariness (Manila Mandarin Employee Union v. NLRC, G.R. No. 76989, 29 Sept.
1987, 154 SCRA 368) and always with due process.
Same; Same; Same; The law grants to voluntary arbitrators original and exclusive jurisdiction to hear
and decide all unresolved grievances arising from the interpretation or implementation of the
Collective Bargaining Agreement and those arising from the interpretation or enforcement of
company personnel policies.—The reference to a Grievance Machinery and Voluntary Arbitrators for
the adjustment or resolution of grievances arising from the interpretation or implementation of their
CBA and those arising from the interpretation or enforcement of company personnel policies is
mandatory. The law grants to voluntary arbitrators original and exclusive jurisdiction to hear and
Bargaining Agreement and those arising from the interpretation or enforcement of company
personnel policies.
Same; Same; Same; Procedure of referring certain grievances originally and exclusively to the
grievance machinery and to a panel of voluntary arbitrators include not only grievances arising from
the interpretation or implementation of the CBA but applies as well to those arising from the
implementation of company personnel policies.—The procedure introduced in RA 6715 of referring
certain grievances originally and 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 grievances arising
from the interpretation or imple-mentation 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.
PETITION to review the orders of the National Labor Relations Commission.
Benito P. Fabie for petitioners.
Froilan M. Bacungan & Associates for private respon-
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VOL.211,JULY 8,1992
363
dents.
Janette Bassig Chua for Sanyo Phils., Inc.
MEDIALDEA, J.:
This petition seeks to nullify: 1) the order of respondent Labor Arbiter Potenciano Cañizares dated
August 6, 1991 deferring the resolution of the motion to dismiss the complaint of private respondents
filed by petitioner Sanyo Philippines Workers Union-PSSLU Local Chapter No. 109 (PSSLU, for brevity) on
the ground that the labor arbiter had no jurisdiction over said complaint and 2) the order of the same
respondent clarifying its previous order and ruling that it had jurisdiction over the case.
PSSLU had an existing CBA with Sanyo Philippines Inc. (Sanyo, for short) effective July 1, 1989 to June 30,
1994. The same CBA contained a union security clause which provided:
“Section2. All members of the union covered by this agreement must retain their membership in good
standing in the union as condition of his/her continued employment with the company. The union shall
have the right to demand from the company the dismissal of the members of the union by reason of
their voluntary resignation from membership or willful refusal to pay the Union Dues or by reasons of
their having formed, organized, joined, affiliated, supported and/or aided directly or indirectly another
labor organization, and the union thus hereby guarantees and holds the company free and harmless
from any liability whatsoever that may arise consequent to the implementation of the provision of this
article.” (pp. 5-6, Rollo)
In a letter dated February 7, 1990, PSSLU, through its national president, informed the management of
Sanyo that the following employees were notified that their membership with PSSLU were cancelled for
anti-union, activities, economic sabotage, threats, coercion and intimidation, disloyalty and for joining
another union: Benito Valencia, Bernardo Yap, Arnel Salvo, Renato Baybon, Eduardo Porlaje, Salvador
Solibel, Conrado Sarol, Angelito Manzano, Allan Misterio, Reynaldo Ri-cohermoso, Mario Ensay and
Froilan Plamenco. The same letter informed Sanyo that the same employees refused to submit
364
364
themselves to the union’s grievance investigation committee (p. 53, Rollo). It appears that many of
these employees were not members of PSSLU but of another union, KAMAO.
On February 14, 1990, some officers of KAMAO, which included Yap, Salvo, Baybon, Solibel, Valencia,
Misterio and Ricohermoso executed a pledge of cooperation with PSSLU promising cooperation with the
latter union and among others, respecting, accepting and honoring the CBA between Sanyo and
specifically:
“1. That we shall remain officers and members of KAMAO until we finally decide to rejoin Sanyo Phil.
Workers Union-PSSLU;
“2. That henceforth, we support and cooperate with the duly elected union officers of Sanyo Phil.
Workers Union-PSSLU in any and all its activities and programs to insure industrial peace and harmony;
“3. That we collectively accept, honor, and respect the Collective Bargaining Agreement entered into
between Sanyo Phil. Inc. and Sanyo Phil. Workers Union-PSSLU dated February 7, 1990;
“4. That we collectively promise not to engage in any activities inside company premises contrary to law,
the CBA and existing policies;
“5. That we are willing to pay our individual agency fee in accordance with the provision of the Labor
Code, as amended;
“6. That we collectively promise not to violate this pledge of cooperation.” (p. 55, Rollo)
On March 4, 1991, PSSLU through its national and local presidents, wrote another letter to Sanyo
recommending the dismissal of the following non-union workers: Bernardo Yap, Arnel Salvo, Renato
Baybon, Reynaldo Ricohermoso, Salvador Solibel, Benito Valencia, and Allan Misterio, allegedly because:
1) they were engaged and were still engaging in anti-union activities; 2) they willfully violated the pledge
of cooperation with PSSLU which they signed and executed on February 14, 1990; and 3) they
threatened and were still threatening with bodily harm and even death the officers of the union (pp. 37-
38, Rollo).
Also recommended for dismissal were the following union members who allegedly joined, supported
and sympathized with a minority union, KAMAO: Gerardo Lasala, Legardo
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VOL.211,JULY 8,1992
365
Tangkay, Alexander Atanacio, and Leonardo Dionisio.
The last part of the said letter provided:
“The dismissal of the above-named union members is without prejudice to receive (sic) their
termination pay if management decide (sic) to grant them benefits in accordance with law. The union
hereby holds the company free and harmless from any liability that may arise consequent to the
implementation by the company of our recommendations for the dismissal of the above-mentioned
workers.
“It is however suggested that the Grievance Machinery be convened pursuant to Section 3, Article XV of
the Collective Bargaining Agreement (CBA) before their actual dismissal from the company.” (p.
38,Rollo)
Pursuant to the above letter of the union, the company sent a memorandum to the same workers
advising them that:
“As per the attached letter from the local union President SPWU and the federation President, PSSLU,
requesting management to put the herein mentioned employees on preventive suspension, effective
immediately, preliminary to their subsequent dismissal, please be informed that the following
employees are under preventive suspension effective March 13, 1991 to wit:
1. Bernardo Yap
2. Renato Baybon
3. Salvador Solibel
4. Allan Misterio
5. Edgardo Tangkay
6. Leonardo Dionisio
7. Arnel Salvo
8. Reynaldo Ricohermoso
9. Benito Valencia
10. Gerardo Lasala
11. Alexander Atanacio
“The above listed employees shall not be allowed within company premises without the permission of
management.
“As per request of the union’s letter to management, should the listed employees fail to appeal the
decision of the union for dismissal, then effective March 23, 1991, said listed employees shall be
considered dismissed from the company.” (p. 39, Rollo)
366
366
The company received no information on whether or not said employees appealed to PSSLU. Hence, it
considered them dismissed as of March 23, 1991 (p. 40, Rollo).
On May 20, 1991, the dismissed employees filed a complaint (pp. 32-35, Rollo) with the NLRC for illegal
dismissal. Named respondents were PSSLU and Sanyo.
On June 20, 1991, PSSLU filed a motion to dismiss the complaint alleging that the Labor Arbiter was
without jurisdiction over the case, relying on Article 217 (c) of P.D. 442, as amended by Section 9 of
Republic Act No. 6715 which provides that cases arising from the interpretation or implementation of
the collective bargaining agreements shall be disposed of by the labor arbiter by referring the same to
the grievance machinery and voluntary arbitration.
The complainants opposed the motion to dismiss complaint on these grounds: 1) the series of
conferences before the National Conciliation and Mediation Board had been terminated; 2) the NLRC
Labor Arbiter had jurisdiction over the case which was a termination dispute pursuant to Article 217 (2)
of the Labor Code; and 3) there was nothing in the CBA which needs interpretation or implementation
(pp. 44-46, Rollo).
On August 7, 1991, the respondent Labor Arbiter issued the first questioned order. It held that:
“x x x.
“While there are seemingly contradictory provisions in the aforecited article of the Labor Code, the
better interpretation will be to give effect to both, and termination dispute being clearly spelled as
falling under the jurisdiction of the Labor Arbiter, the same shall be respected. The jurisdiction of the
grievance machinery and voluntary arbitration shall cover other controversies.
“However, the resolution of the instant issue shall be suspended until both parties have fully presented
their respective positions and the said issue shall be included in the final determination of the
abovecaptioned case.
“WHEREFORE, the instant Motions to Dismiss are hereby held pending.
“Consequently, the parties are hereby directed to submit their position papers and supporting
documents pursuant to Section 2, Rule VII of the Rules of the Commission on or before the hearing on
the merit of this case scheduled on August 29, 1991 at 11:00 a.m.” (p. 23, Rollo)
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367
On August 27, 1991, PSSLU filed another motion to resolve motion to dismiss complaint with a prayer
that the Labor Arbiter resolve the issue of jurisdiction.
On September 4, 1991, the respondent Labor Arbiter issued the second questioned order which held
that it was assuming jurisdiction over the complaint of private respondents, in effect, holding that it had
jurisdiction over the case.
On September 19, 1991, PSSLU filed this petition alleging that public respondent Labor Arbiter cannot
assume jurisdiction over the complaint of public respondents because it had no jurisdiction over the
dispute subject of said complaint. It is their submission that under Article 217(c) of the Labor Code, in
relation to Article 261 thereof, as well as Policy Instruction No. 6 of the Secretary of Labor, respondent
Arbiter has no jurisdiction and authority to take cognizance of the complaint brought by private
respondents which involves the implementation of the union security clause of the CBA. The function of
the Labor Arbiter under the same law and rule is to refer this case to the grievance machinery and
voluntary arbitration.
In its comment, private respondents argue that Article 217(a) 2 and 4 of the Labor Code is explicit, to
wit:
“ART.217. Jurisdiction of the Labor Arbiters and the Commission.
“a) Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive
jurisdiction to hear and decide x x x the following cases involving all workers,
x x x:
“x x x
“2) Termination disputes,

“x x x
“4) Claims for actual, moral, exemplary and other forms of damages arising from the employer-
employee relations.”
The private respondents also claimed that insofar as Salvo, Baybon, Ricohermoso, Solibel, Valencia,
Misterio and Lasala were concerned, they joined another union, KAMAO during the freedom period
which commenced on May 1, 1989 up to June 30, 1989 or before the effectivity of the July 1, 1989 CBA.
Hence, they are not covered by the provisions of the CBA between Sanyo and PSSLU. Private
respondents Tanghay, Atanacio and
368
368
Dionisio admit that in September 1989, they resigned from KAMAO and rejoined PSSLU (pp. 66(a)-68,
Rollo).
For its part, public respondent, through the Office of the Solicitor General, is of the view that a
distinction should be made between a case involving “interpretation or implementation of collective
bargaining agreement or “interpretation” or “enforcement” of company personnel policies, on the one
hand and a case involving termination, on the other hand. It argued that the case at bar does not involve
an “interpretation or implementation” of a collective bargaining agreement or “interpretation or
enforcement” of company policies but involves a “termination.” Where the dispute is just in the
interpretation, imple-mentation or enforcement stage, it may be referred to the grievance machinery
set up in the CBA or by voluntary arbitration. Where there was already actual termination, i.e., violation
of rights, it is already cognizable by the Labor Arbiter.
Article 217 of the Labor Code defines the jurisdiction of the Labor Arbiter.
“Article217. Jurisdiction of Labor Arbiters and the Commission. a) Except as otherwise provided under
this Code the Labor Arbiters shall have original and exclusive jurisdiction 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 agricultural or
non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages,
rates of pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from 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;
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all
other claims, arising from employer-employee relations, including those of persons in domestic or
household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of
whether accompanied with a claim for reinstatement.
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VOL.211,JULY 8,1992
369
(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.
(c) Cases arising from the interpretation or implementation of collective bargaining agreements and
those arising from the interpretation or enforcement of company personnel policies shall be disposed of
by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may
be provided in said agreements.”
It is clear from the above article that termination cases fall under the jurisdiction of the Labor Arbiter. It
should be noted however that said article at the outset excepted from the said provision cases
otherwise provided for in other provisions of the same Code, thus the phrase “Except as otherwise
provided under this Code x x x.” Under paragraph (c) of the same article, it is expressly provided that
“cases arising from the interpretation or implementation of collective bargaining agreements and those
arising from the interpretation and enforcement of company personnel policies shall be disposed of by
the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be
provided in said agreements.
It was provided in the CBA executed between PSSLU and Sanyo that a member’s voluntary resignation
from membership, willful refusal to pay union dues and his/her forming, organizing, joining, supporting,
affiliating or aiding directly or indirectly another labor union shall be a cause for it to demand his/her
dismissal from the company. The demand for the dismissal and the actual dismissal by the company on
any of these grounds is an enforcement of the union security clause in the CBA. This act is authorized by
law provided that enforcement should not be characterized by arbitrariness (Manila Mandarin
Employee Union v. NLRC, G.R. No. 76989, 29 Sept. 1987, 154 SCRA 368) and always with due process
(Tropical Hut Employees Union v. Tropical Food Market, Inc., L-43495-99, Jan. 20, 1990).
The reference to a Grievance Machinery and Voluntary Arbitrators for the adjustment or resolution of
grievances arising from the interpretation or implementation of their CBA and those arising from the
interpretation or enforcement of company personnel policies is mandatory. The law grants to voluntary
arbitrators original and exclusive jurisdiction to hear and
370
370
policies (Art. 261, Labor Code).
In its order of September 4, 1991, respondent Labor Arbiter explained its decision to assume jurisdiction
over the complaint, thus:
“The movants failed to show (1) the provisions of the CBA to be implemented, and (2) the grievance
machinery and voluntary arbitrator already formed and properly named. What self-respecting judge
would ‘refer a case from his responsibility to a shadow? To whom really and specifically shall the case be
indorsed or referred? In brief, they could have shown the (1) existence of the grievance machinery and
(2) its being effective.
“Furthermore, the aforecited law merely directs the ‘referral’ cases. It does not expressly confer
jurisdiction on the grievance machinery or voluntary arbitration panel, created or to be created. Article
260 of the Labor Code describes the formation of the grievance and voluntary arbitration. All this of
course shall be on voluntary basis. Is there another meaning of voluntary arbitration? (The herein
complainant have strongly opposed the motion to dismiss. Would they go willingly to the grievance
machinery and voluntary arbitration which are installed by their opponents if directed to do so?)” (p. 26,
Rollo)
The failure of the parties to the CBA to establish the grievance machinery and its unavailability is not an
excuse for the Labor Arbiter to assume jurisdiction over disputes arising from the implementation and
enforcement of a provision in the CBA. In the existing CBA between PSSLU and Sanyo, the procedure and
mechanics of its establishment had been clearly laid out as follows:
“ARTICLEXV—GRIEVANCE MACHINERY
“Section1. Whenever any controversy should arise between the company and the union as to the
interpretation or application of the provision of this agreement, or whenever any difference shall exist
between said parties relative to the terms and conditions of employment, an earnest effort shall be
made to settle such controversy in substantially the following manner:
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371
“First Step. (Thru Grievance) The dispute shall initially be resolved by conference between the
management to be represented by the Management’s authorized representatives on the one hand, and
the Union to be represented by a committee composed of the local union president and one of the local
union officer appointed by the local union president, on the other hand within three days from date of
concurrence of grievance action. In the absence of the local union president, he (shall) appoint another
local union officer to take over in his behalf. Where a controversy personally affects an employee, he
shall not be allowed to be a member of the committee represented by the union.
Second Step. (Thru Arbitrator mutually chosen) Should such dispute remain unsettled after twenty (20)
days from the first conference or after such period as the parties may agree upon in specified cases, it
shall be referred to an arbitrator chosen by the consent of the company and the union. In the event of
failure to agree on the choice of voluntary arbitrator, the National Conciliation and Mediation Board,
Department of Labor and Employment shall be requested to choose an Arbitrator in accordance with
voluntary arbitration procedures.
“Section2. The voluntary Arbitrator shall have thirty (30) days to decide the issue presented to him and
his decision shall be final, binding and executory upon the parties. He shall have no authority to add or
subtract from and alter any provision of this agreement. The expenses of voluntary arbitration including
the fee of the arbitrator shall be shared equally by the company and the union. In the event the
arbitrator chosen either by the mutual agreement of the company and the union by (the) way of
voluntary arbitration or by the National Conciliation and Mediation Board (NCMB) failed to assume his
position, died, become disabled or any other manner failed to function and or reach a decision, the
company and the union shall by mutual agreement choose another arbitrator; in the event of failure to
agree on the choice of a new voluntary arbitrator, the matter shall again be referred back to the NCMB
who shall be requested again to choose a new arbitrator as above provided. Any grievance not elevated
or processed as above provided within the stipulated period shall be deemed settled and terminated.
“Section3. It is hereby agreed that decisions of the union relative to their members, for implementation
by the COMPANY, should be resolved for review thru the Grievance Machinery; and management be
invited to participate in the Grievance procedure to be undertaken by the union relative to (the) case of
the union against members.” (pp. 134-135, Rollo)
372
372
All that needs to be done to set the machinery into motion is to call for the convening thereof. If the
parties to the CBA had not designated their representatives yet, they should be ordered to do so.
The procedure introduced in RA 6715 of referring certain grievances originally and 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 grievances 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. The last paragraph of Article 261 enjoins other bodies from
assuming jurisdiction thereof:
“The commission, its Regional Offices and the Regional Directors of the Department of Labor and
jurisdiction of the Voluntary Arbitrator or panel of voluntary arbitrators and shall immediately dispose
and refer the same to the grievance machinery or voluntary arbitration provided in the Collective
Bargaining Agreement.”
In the instant case, however, We hold that the Labor Arbiter and not the Grievance 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 the 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 facts 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 jurisdiction of which pertains to the Grievance Machinery or thereafter, to a
voluntary arbitrator or panel of voluntary arbitrators. Article 260 of the Labor Code on grievance
machinery and voluntary arbitrator states that “(t)he parties to a Collective 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
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373
Agreement and those arising from the interpretation or enforcement of company personnel policies”. It
is further provided in said article that the parties to a CBA shall name or designate their respective
representatives to the grievance machinery and if the grievance is not settled in that level, it shall
automatically be referred to voluntary arbitrators (or panel of voluntary arbitrators) designated in
advance by the parties. It need not be mentioned that the parties to a CBA are the union and the
company. 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 an agreement regarding
the dismissal of private respondents. No grievance between them exists which could be brought to a
grievance machinery. The problem or dispute in the present case is between the union and the company
on the one hand and some union and non-union members who were dismissed, on the other hand. The
dispute has to be settled before an impartial body. The grievance machinery with members designated
by the union and the company cannot be expected to be impartial against the dismissed employees.
Due process demands that the dismissed workers grievances be ventilated before an impartial body.
Since there has already been an actual termination, the matter falls within the jurisdiction of the Labor
Arbiter.
ACCORDINGLY, the petition is DISMISSED. Public respondent Labor Arbiter is directed to resolve the
complaints of private respondents immediately.
SO ORDERED.
Cruz (Chairman), Griño-Aquino and Bellosillo, JJ., concur.
Petition dismissed.
Note.—The decision of a voluntary arbitrator chose by the parties is final, executory and not appealable
(Eternit Employees and Workers Union vs. De Veyra, 189 SCRA 752).
——o0o——
374 Sanyo Philippine Workers Union-PSSLU vs. Cañizares, 211 SCRA 361, G.R. No. 101619 July 8, 1992
G.R. No. 99266. March 2, 1999.*
SAN MIGUEL CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, SECOND
DIVISION, AND SAN MIGUEL CORPORATION EMPLOYEES UNION (SMCEU)-PTGWO, respondents.
Labor Law; Collective Bargaining; Words and Phrases; Collective Bargaining Deadlock is defined as
“the situation between the labor and the management of the company where there is failure in the
collective bargaining negotiations resulting in a stalemate.”—Collective Bargaining Deadlock is
defined as “the situation between the labor and the management of the company where there is
failure in the collective bargaining negotiations resulting in a stalemate.” This situation, is non-
existent in the present case since there is a Board assigned on the third level (Step 3) of the grievance
machinery to resolve the conflicting views of the parties. Instead of asking the Conciliation Board
composed of five representatives each from the company and the union, to decide the conflict,
petitioner de-
___________________
* THIRD DIVISION.

clared a deadlock, and thereafter, filed a notice of strike. For failing to exhaust all the steps in the
grievance machinery and arbitration proceedings provided in the Collective Bargaining Agreement,
the notice of strike should have been dismissed by the NLRC and private respondent union ordered to
proceed with the grievance and arbitration proceedings.
Same; Same; Grievance Procedure; A labor union, in abandoning the grievance proceedings and
stubbornly refusing to avail of the remedies under the CBA, violates the mandatory provisions of the
collective bargaining agreement.—As regards the alleged violation of the CBA, we hold that such a
violation is chargeable against the private respondent union. In abandoning the grievance proceedings
and stubbornly refusing to avail of the remedies under the CBA, private respondent violated the
mandatory provisions of the collective bargaining agreement.
Same; Management Prerogatives; Abolition of departments or positions in the company is one of the
recognized management prerogatives.—Abolition of departments or positions in the company is one
of the recognized management prerogatives. Noteworthy is the fact that the private respondent does
not question the validity of the business move of petitioner. In the absence of proof that the act of
petitioner was ill-motivated, it is presumed that petitioner San Miguel Corporation acted in good
faith. In fact, petitioner acceded to the demands of the private respondent union by redeploying most
of the employees involved.
Same; Strikes; Where the employer has evinced its willingness to negotiate the fate of the remaining
employees affected by the abolition of office, there is no ground to sustain the notice of strike filed by
a labor union.—So also, in filing complaint with the NLRC, petitioner prayed that the private
respondent union be compelled to proceed with the grievance and arbitration proceedings. Petitioner
having evinced its willingness to negotiate the fate of the remaining employees affected, there is no
ground to sustain the notice of strike of the private respondent union. All things studiedly considered,
we are of the ineluctable conclusion, and so hold, that the NLRC gravely abused its discretion in
dismissing the complaint of petitioner SMC for the dismissal of the notice of strike, issuance of a
temporary restraining order, and an order compelling the respondent union to settle the dispute
under the grievance machinery of their CBA.
VOL. 304, MARCH 2, 1999
The facts are stated in the opinion of the Court. Roco, Bunag, Kapunan, Migallos & Jardeleza for
petitioner.
Romeo C. Lagman for private respondent.
PURISIMA, J.:
At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court, assailing the Resolution1 of
the National Labor Relations Commission in NLRC NCR CASE NO. 00094-90, which dismissed the
complaint of San Miguel Corporation (SMC), seeking to dismiss the notice of strike given by the private
respondent union and to compel the latter to comply with the provisions of the Collective Bargaining
Agreement (CBA)2 on grievance machinery, arbitration, and the no-strike clause, with prayer for the
issuance of a temporary restraining order.
The antecedent facts are as follows:
In July 1990, San Miguel Corporation, alleging the need to streamline its operations due to financial
losses, shut down some of its plants and declared 55 positions as redundant, listed as follows: seventeen
(17) employees in the Business Logistics Division (“BLD”), seventeen (17) in the Ayala Operations Center
(AOC), and eighteen (18) in the Magnolia-Manila Buying Station (“Magnolia-MBS”).3 Consequently, the
private respondent union filed several grievance cases for the said retrenched employees, praying for
the redeployment of the said employees to the other divisions of the company.
_____________
1 Dated April 16, 1991; Rollo, pp. 183-184.
2 Annex “A” of Petition.
3 Complaint Annex “F”; Rollo, p. 53.
The grievance proceedings were conducted pursuant to Sections 5 and 8, Article VIII of the parties’ 1990
Collective Bargaining Agreement providing for the following procedures, to wit:
Sec. 5. Processing of Grievance.—Should a grievance arise, an earnest effort shall be made to settle the
grievance expeditiously in accordance with the following procedures:
Step 1.—The individual employee concerned and the Union Directors, or the Union Steward shall, first
take up the employee’s grievance orally with his immediate superior. If no satisfactory agreement or
adjustment of the grievance is reached, the grievance shall, within twenty (20) working days from the
occurrence of the cause or event which gave rise to the grievance, be filed in writing with the
Department Manager or the next level superior who shall render his decision within ten (10) working
days from the receipt of the written grievance. A copy of the decision shall be furnished the Plant
Personnel Officer.
Step 2.—If the decision in Step 1 is rejected, the employee concerned may elevate or appeal this in
writing to the Plant Manager/Director or his duly authorized representative within twenty (20) working
days from the receipt of the Decision of the Department Manager. Otherwise, the decision in Step 1
shall be deemed accepted by the employee.
The Plant Manager/Director assisted by the Plant Personnel Officer shall determine the necessity of
conducting grievance meetings. If necessary, the Plant Manager/Director and the Plant Personnel
Officer shall meet the employee concerned and the Union Director/Steward on such date(s) as may be
designated by the Plant Manager. In every plant/office, Grievance Meetings shall be scheduled at least
twice a month.
The Plant Manager shall give his written comments and decision within ten (10) working days after his
receipt of such grievance or the date of submission of the grievance for resolution, as the case may be. A
copy of his Decision shall be furnished the Employee Relations Directorate.
Step 3.—If no satisfactory adjustment is arrived at Step 2, the employee may appeal the Decision to the
Conciliation Board as provided under Section 6 hereof, within fifteen (15) working days from the date of
receipt of the decision of the Plant Man-
VOL. 304, MARCH 2, 1999
ager/Director or his designate. Otherwise, the decision in Step 2 shall be deemed accepted by the
employee.
The Conciliation Board shall meet on the grievance in such dates as shall be designated by the
Division/Business Unit Manager or his representative. In every Division/Business Unit, Grievance
Meetings of the Conciliation Board shall be scheduled at least once a month.
The Conciliation Board shall have fifteen (15) working days from the date of submission of the grievance
for resolution within which to decide on the grievance.
Sec. 6. Conciliation Board.—There shall be a conciliation Board per Business Unit or Division. Every
Conciliation Board shall be composed of not more than five (5) representatives each from the Company
and the Union. Management and the Union may be assisted by their respective legal counsels.
In every Division/Business Unit, the names of the Company and Union representatives to the
Conciliation Board shall be submitted to the Division/Business Unit Manager not later than January of
every year. The Conciliation Board members shall act as such for one (1) year until removed by the
Company or the Union, as the case may be.”
xxx
Sec. 8. Submission to Arbitration.—If the employee or Union is not satisfied with the Decision of the
Conciliation Board and desires to submit the grievance to arbitration, the employee or the Union shall
serve notice of such intention to the Company within fifteen (15) working days after receipt of the
Board’s decision. If no such written notice is received by the Company within fifteen (15) working days,
the grievance shall be considered settled on the basis of the company’s position and shall no longer be
available for arbitration.”4
During the grievance proceedings, however, most of the employees were redeployed, while others
accepted early retirement. As a result only 17 employees remained when the parties proceeded to the
third level (Step 3) of the grievance
___________________
4 Annex “A,” Petition; Collective Bargaining Agreement, pp. 18-19.
procedure. In a meeting on October 26, 1990, petitioner informed private respondent union that if by
October 30, 1990, the remaining 17 employees could not yet be redeployed, their services would be
terminated on November 2, 1990. The said meeting adjourned when Mr. Daniel S. L. Borbon II, a
representative of the union, declared that there was nothing more to discuss in view of the deadlock.5
On November 7, 1990, the private respondent filed with the National Conciliation and Mediation Board
(NCMB) of the Department of Labor and Employment (DOLE) a notice of strike on the following grounds:
a) bargaining deadlock; b) union busting; c) gross violation of the Collective Bargaining Agreement (CBA),
such as non-compliance with the grievance procedure; d) failure to provide private respondent with a
list of vacant positions pursuant to the parties side agreement that was appended to the 1990 CBA; and
e) defiance of voluntary arbitration award. Petitioner on the other hand, moved to dismiss the notice of
strike but the NCMB failed to act on the motion.
On December 21, 1990, petitioner SMC filed a complaint6 with the respondent NLRC, praying for: (1) the
dismissal of the notice of strike; (2) an order compelling the respondent union to submit to grievance
and arbitration the issue listed in the notice of strike; (3) the recovery of the expenses of litigation.
On April 16, 1991, respondent NLRC came out with a minute resolution dismissing the complaint;
holding, thus:
“NLRC NCR IC NO. 000094-90, entitled San Miguel Corporation, Complainant-versus-San Miguel
Corporation Employees UnionPTWO (SMCEU), Respondent.—Considering the allegations in the
complaint to restrain Respondent Union from declaring a strike and to enforce mutual compliance with
the provisions of the collective bargaining agreement on grievance machinery, and the no-strike clause,
with prayer for issuance of temporary restraining order, and
____________________
5 Annex “B-3,” Petition; Rollo, p. 31.
6 Annex “F,” Petition; Rollo, pp. 48-65.
VOL. 304, MARCH 2, 1999
the evidence adduced therein, the Answer filed by the respondent and the memorandum filed by the
complainant in support of its application for the issuance of an injunction, the Second Division, after due
deliberation, Resolved to dismiss the complaint for lack of merit.”7
Aggrieved by the said resolution, petitioner found its way to this court via the present petition,
contending that:
“I
IT IS THE POSITIVE LEGAL DUTY OF RESPONDENT NLRC TO COMPEL ARBITRATION AND TO ENJOIN A
STRIKE IN VIOLATION OF A NO STRIKE CLAUSE.
II
INJUNCTION IS THE ONLY IMMEDIATE, EFFECTIVE SUBSTITUTE FOR THE DISASTROUS ECONOMIC
WARFARE THAT ARBITRATION IS DESIGNED TO AVOID.”8
On June 3, 1991, to preserve the status quo, the Court issued a Resolution9 granting petitioner’s prayer
for the issuance of a Temporary Restraining Order.
The Petition is impressed with merit.
Rule XXII, Section I, of the Rules and Regulations Implementing Book V the Labor Code,10 reads:
“Section 1. Grounds for strike and lockout.—A strike or lockout may be declared in cases of bargaining
deadlocks and unfair labor practices. Violations of the collective bargaining agreements, except flagrant
and/or malicious refusal to comply with its economic provisions, shall not be considered unfair labor
practice and shall not be strikeable. No strike or lockout may be declared on grounds
___________________
7 Annex “J,” Petition; Rollo, p. 183.
8 Rollo, p. 14.
9 Rollo, p. 185.
10 As amended by D.O. No. 09 which took effect on June 21, 1997.
involving inter-union and intra-union disputes or on issues brought to voluntary or compulsory

arbitration.”
In the case under consideration, the grounds relied upon by the private respondent union are non-
strikeable. The issues which may lend substance to the notice of strike filed by the private respondent
union are: collective bargaining deadlock and petitioner’s alleged violation of the collective bargaining
agreement. These grounds, however, appear more illusory than real.
Collective Bargaining Deadlock is defined as “the situation between the labor and the management of
the company where there is failure in the collective bargaining negotiations resulting in a stalemate.”11
This situation, is non-existent in the present case since there is a Board assigned on the third level (Step
3) of the grievance machinery to resolve the conflicting views of the parties. Instead of asking the
Conciliation Board composed of five representatives each from the company and the union, to decide
the conflict, petitioner declared a deadlock, and thereafter, filed a notice of strike. For failing to exhaust
all the steps in the grievance machinery and arbitration proceedings provided in the Collective
Bargaining Agreement, the notice of strike should have been dismissed by the NLRC and private
respondent union ordered to proceed with the grievance and arbitration proceedings. In the case of
Liberal Labor Union vs. Phil. Can Co.,12 the court declared as illegal the strike staged by the union for
not complying with the grievance procedure provided in the collective bargaining agreement, ruling
that:
“x x x the main purpose of the parties in adopting a procedure in the settlement of their disputes is to
prevent a strike. This procedure must be followed in its entirety if it is to achieve its objective. x x x
strikes held in violation of the terms contained in the collective bargaining agreement are illegal,
specially when they provide for
____________________
11 Tayag & P. F. Jardiniano, Dictionary of Philippine Labor Terms, p. 36.
12 91 Phil. 72.
VOL. 304, MARCH 2, 1999
conclusive arbitration clauses. These agreements must be strictly adhered to and respected if their ends
have to be achieved. x x x”13
As regards the alleged violation of the CBA, we hold that such a violation is chargeable against the
private respondent union. In abandoning the grievance proceedings and stubbornly refusing to avail of
the remedies under the CBA, private respondent violated the mandatory provisions of the collective
bargaining agreement.
Abolition of departments or positions in the company is one of the recognized management

prerogatives.14 Noteworthy is the fact that the private respondent does not question the validity of the
business move of petitioner. In the absence of proof that the act of petitioner was ill-motivated, it is
presumed that petitioner San Miguel Corporation acted in good faith. In fact, petitioner acceded to the
demands of the private respondent union by redeploying most of the employees involved; such that
from an original 17 excess employees in BLD, 15 were successfully redeployed. In AOC, out of the 17
original excess, 15 were redeployed. In the Magnolia-Manila Buying Station, out of 18 employees, 6
were redeployed and only 12 were terminated.15
So also, in filing complaint with the NLRC, petitioner prayed that the private respondent union be
compelled to proceed with the grievance and arbitration proceedings. Petitioner having evinced its
willingness to negotiate the fate of the remaining employees affected, there is no ground to sustain the
notice of strike of the private respondent union.
All things studiedly considered, we are of the ineluctable conclusion, and so hold, that the NLRC gravely
abused its discretion in dismissing the complaint of petitioner SMC for the dismissal of the notice of
strike, issuance of a temporary
__________________
13 Id., pp. 77-78, citing: Shop N. Save vs. Retail Food Clerks Union (1940) Cal. Super. Ct. CCT. Tab. Case
91-18675; 2 A. L. R. Ann., 2nd Series, pp. 1278-1282.
14 Dangan vs. NLRC, et al., 127 SCRA 706, p. 713.
15 Complaint Annex “A”; Rollo, p. 54.
10
10
restraining order, and an order compelling the respondent union to settle the dispute under the
grievance machinery of their CBA.
WHEREFORE, the instant petition is hereby GRANTED. Petitioner San Miguel Corporation and private
respondent San Miguel Corporation Employees Union-PTGWO are hereby directed to complete the third
level (Step 3) of the Grievance Procedure and proceed with the Arbitration proceedings if necessary. No
pronouncement as to costs.
SO ORDERED.
Romero (Chairman) and Gonzaga-Reyes, JJ., concur.
Vitug, J., Abroad on official business.
Panganiban, J., On leave.
Petition granted, petitioner and respondent ordered to complete grievance procedure and proceed to
arbitration proceedings.
Notes.—Discharges due to alleged redundancy can hardly be considered company personnel policies
and therefore need not directly be subject to the grievance machinery nor to voluntary arbitration. (San
Miguel Corporation vs. National Labor Relations Commission, 255 SCRA 133 [1996])
Where the dispute is just in the interpretation, implementation or enforcement stage, it may be
referred to the grievance machinery set up in the Collective Bargaining Agreement or by voluntary
arbitration, but where there is already actual termination, i.e., violation of rights, it is already cognizable
by the Labor Arbiter. (Maneja vs. National Labor Relations Commission, 290 SCRA 603 [1998])
——o0o—— San Miguel Corporation vs. NLRC, 304 SCRA 1, G.R. No. 99266 March 2, 1999
VOL. 290, JUNE 5, 1998
603
Maneja vs. National Labor Relations Commission
G.R. No. 124013. June 5, 1998.*
ROSARIO MANEJA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and MANILA
MIDTOWN HOTEL, respondents.
Labor Law; Jurisdiction; Labor Arbiters; Voluntary Arbitration; Grievance Procedure; Collective
Bargaining Agreements; Dismissal of Employees; Termination cases fall under the original and
exclusive jurisdiction of the Labor Arbiters, not voluntary arbitrators.—As can be seen from the
aforequoted Article, termination cases fall under the original and exclusive jurisdiction of the Labor
Arbiter. It should be noted, however, that in the opening paragraph there appears the phrase: “Except
as otherwise provided under this Code x x x.” It is paragraph (c) of the same Article which respondent
Commission has erroneously interpreted as giving the voluntary arbitrator jurisdiction over the illegal
dismissal case. However, Article 217(c) should be read in conjunction with Article 261 of the Labor
Code which grants to voluntary arbitrators original and exclusive jurisdiction to hear and decide all
unresolved grievances
________________
* SECOND DIVISION.
604
604
arising from the interpretation or implementation of the collective bargaining agreement and those
arising from the interpretation or enforcement of company personnel policies. Note the phrase
“unresolved grievances.” In the case at bar, the termination of petitioner is not an unresolved
grievance.
Same; Same; Same; Same; Same; Same; Same; Where the dispute is just in the interpretation,
implementation or enforcement stage, it may be referred to the grievance machinery set up in the
Collective Bargaining Agreement or by voluntary arbitration, but where there is already actual
termination, i.e., violation of rights, it is already cognizable by the Labor Arbiter.—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 implementation of Collective Bargaining Agreement” or interpretation or
“enforcement” of company personnel policies, on the one hand and a case involving termination, on
the other hand, It argued that the dismissal of the private respondents does not involve an
“interpretation or implementation” of a Collective Bargaining Agreement or “interpretation or
enforcement” of company personnel policies but involves “termination.” The Solicitor General further
said that where the dispute is just in the interpretation, implementation or enforcement stage, it may
be referred to the grievance machinery set up in the Collective Bargaining Agreement or by voluntary
arbitration. Where there was already actual termination, i.e., violation 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 opposite to its position in this case.
Same; Same; Same; Same; Same; Same; Same; Only disputes involving the union and the company
shall be referred to the grievance machinery or voluntary arbitrators.—Moreover, the dismissal of
petitioner does not fall within the phrase “grievances arising from the interpretation or
implementation of collective bargaining agreement and those arising from the interpretation or
enforcement of company personnel policies,” the jurisdiction of which pertains to the grievance
machinery or thereafter, 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 function of the grievance machinery and
voluntary arbitrator, “(T)he parties to a Collective Bargaining Agreement shall include therein
provisions that will ensure
605
VOL. 290, JUNE 5, 1998
605
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 from the interpretation or enforcement of
company personnel policies.” Article 260 further provides that that parties to a CBA shall name or
designate their respective representative to the grievance machinery and if the grievance is unsettled
in that level, it shall automatically be referred to the voluntary arbitrators designated in advance by
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.
Same; Same; Same; Same; Same; Same; Words and Phrases; “Company Personnel Policies,”
Explained.—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 organization’s top authority
regarding personnel matters. They deal with matters affecting efficiency and well-being of employees
and include, among others, the procedure in the administration of wages, benefits, promotions,
transfer and other personnel movements which are usually not spelled out in the collective
agreement. The usual source of grievances, however, are the rules and regulations governing
disciplinary actions.
Same; Same; Pleadings and Practice; Estoppel; The issue of jurisdiction is mooted by a party’s active
participation in the proceedings.—Clearly, estoppel lies. The issue of jurisdiction was mooted by
herein private respondent’s active participation in the proceedings below. In Marquez vs. Secretary of
Labor, the Court said: “x x x. The active participation of the party against whom the action was
brought, coupled with his failure to object to the jurisdiction of the court or quasi-judicial body where
the action is pending, is tantamount to an invocation of that jurisdiction and a willingness to abide by
the resolution of the case and will bar said party from later on impugning the court or body’s
jurisdiction.”
Same; Dismissals; Requisites for Valid Dismissal.—The requisites of a valid dismissal are (1) the
dismissal must be for any of the causes expressed in Article 282 of the Labor Code, and (2) the
employee must be given an opportunity to be heard and to defend himself. The substantive and
procedural laws must be strictly complied
606
606
with before a worker can be dismissed from his employment because what is at stake is not only the
employee’s position but his livelihood.
Same; Same; Social Justice; Presumption of Good Faith; Our norms of social justice demand that we
credit employees with the presumption of good faith in the performance of their duties.—Given the
factual circumstances of the case, we cannot deduce dishonesty from the act and omission of
petitioner. Our norms of social justice demand that we credit employees with the presumption of
good faith in the performance of their duties, especially petitioner who has served private respondent
since 1985 up to 1990 without any tinge of dishonesty and was even named “Model Employee” for
the month of April, 1989.
Same; Same; Dismissal must be based on a clear and not on an ambiguous or ambivalent ground—any
ambiguity or ambivalence on the ground relied upon by an employer in terminating the services of an
employee denies the latter his full right to contest its legality.—Petitioner has been charged with a
very serious offense—dishonesty. This can irreparably wreck her life as an employee for no employer
will take to its bosom a dishonest employee. Dismissal is the supreme penalty that can be meted to an
employee and its imposition cannot be justified where the evidence is ambivalent. It must, therefore,
be based on a clear and not on an ambiguous or ambivalent ground. Any ambiguity or ambivalence on
the ground relied upon by an employer in terminating the services of an employee denies the latter
his full right to contest its legality. Fairness cannot countenance such ambiguity or ambivalence.
Same; Same; Due Process; Well-settled is the dictum that the twin requirements of notice and hearing
constitute the essential elements of due process in the dismissal of employees.—Well-settled is the
dictum that the twin requirements of notice and hearing constitute the essential elements of due
process in the dismissal of employees. It is a cardinal rule in our jurisdiction that the employer must
furnish the employee with two written notices before the termination of employment can be
effected: (a) the first apprises the employee of the particular acts or omissions for which his dismissal
is sought; and, (b) the second informs the employee of the employer’s decision to dismiss him. The
requirement of a hearing, on the other
607
VOL. 290, JUNE 5, 1998
607
hand, is complied with as long as there was an opportunity to be heard, and not necessarily that an
actual hearing was conducted.
Same; Same; Same; Consultations or conferences may not be a substitute for the actual holding of a
hearing.—An examination of the record reveals that no hearing was ever conducted by private
respondent before petitioner was dismissed. While it may be true that petitioner submitted a written
explanation, no hearing was actually conducted before her employment was terminated. She was not
accorded the opportunity to fully defend herself. Consultations or conferences may not be a
substitute for the actual holding of a hearing. Every opportunity and assistance must be accorded to
the employee by the management to enable him to prepare adequately for his defense, including
legal representation. Considering that petitioner denied having allegedly taken the second P500.00
deposit of the Japanese guest which was eventually found; and, having made the alteration of the
date on the second RLDC merely to reflect the true date of the transaction, these circumstances
should have at least warranted a separate hearing to enable petitioner to fully ventilate her side.
Absent such hearing, petitioner’s right to due process was clearly violated.
Same; Same; Same; A worker’s employment is property in the constitutional sense.—It bears stressing
that a worker’s employment is property in the constitutional sense. He cannot be deprived of his work
without due process of law. Substantive due process mandates that an employee can only be
dismissed based on just or authorized causes. Procedural due process requires further that he can
only be dismissed after he has been given an opportunity to be heard. The import of due process
necessitates the compliance of these two aspects.
Same; Same; Damages; Where the termination of the services of an employee is attended by fraud or
bad faith on the part of the employer, as when the latter knowingly made false allegations of a
supposed valid cause when none existed, moral and exemplary damages may be awarded in favor of
the former.—The award of moral and exemplary damages to petitioner is also warranted where there
is lack of due process in effecting the dismissal. Where the termination of the services of an employee
is attended by fraud or bad faith on the part of the employer, as when the latter knowingly made false
allegations of a supposed valid cause when none existed, moral
608
608
and exemplary damages may be awarded in favor of the former. The anti-social and oppressive abuse
of its right to investigate and dismiss its employees constitute a violation of Article 1701 of the New
Civil Code which prohibits acts of oppression by either capital or labor against the other, and Article
21 on human relations. The grant of moral damages to the employees by reason of such conduct on
the part of the company is sanctioned by Article 2219, No. 10 of the Civil Code, which allows recovery
of such damages in actions referred to in Article 21.
Raissa H. Jajurie for petitioner.
Marasigan & Valerio-Padilla Law Office for private respondent.
MARTINEZ, J.:
Assailed in this petition for certiorari under Rule 65 of the Revised Rules of Court are the Resolution1
dated June 3, 1994 of the respondent National Labor Relations Commission in NLRC NCR-00-10-05297-
90, entitled “Rosario Maneja, Complainant vs. Manila Midtown Hotel, Respondent,” which dismissed the
illegal dismissal case filed by petitioner against private respondent company for lack of jurisdiction of
the Labor Arbiter over the case; and its Resolution2 dated October 20, 1995 denying petitioner’s motion
for reconsideration.
Petitioner Rosario Maneja worked with private respondent Manila Midtown Hotel beginning January,
1985 as a telephone operator. She was a member of the National Union of Workers in Hotels,
Restaurants and Allied Industries
_______________
1 Penned by Presiding Commissioner Bartolome S. Carale and concurred in by Commissioner Vicente

S.E. Veloso and Commissioner Alberto R. Quimpo (on leave), First Division.
2 Ibid.
609
VOL. 290, JUNE 5, 1998

609
(NUWHRAIN) with an existing Collective Bargaining Agreement (CBA) with private respondent.
In the afternoon of February 13, 1990, a fellow telephone operator, Rowena Loleng, received a Request
for Long Distance Call (RLDC) form and a deposit of P500.00 from a page boy of the hotel for a call by a
Japanese guest named Hirota Ieda. The call was unanswered. The P500.00 deposit was forwarded to the
cashier. In the evening, Ieda again made an RLDC and the page boy collected another P500.00 which was
also given to the operator Loleng. The second call was also unanswered. Loleng passed on the RLDC to
petitioner for follow-up. Petitioner monitored the call.
On February 15, 1990, a hotel cashier inquired about the P1,000.00 deposit made by Ieda. After a
search, Loleng found the first deposit of P500.00 inserted in the guest folio while the second deposit was
eventually discovered inside the folder for cancelled calls with deposit and official receipts.
When petitioner saw that the second RLDC form was not time-stamped, she immediately placed it
inside the machine which stamped the date “February 15, 1990.” Realizing that the RLDC was filed 2
days earlier, she wrote and changed the date to February 13, 1990. Loleng then delivered the RLDC and
the money to the cashier. The second deposit of P500.00 by Ieda was later returned to him.
On March 7, 1990, the chief telephone operator issued a memorandum3 to petitioner and Loleng
directing the two to explain the February 15 incident. Petitioner and Loleng thereafter submitted their
written explanation.4
On March 20, 1990, a written report5 was submitted by the chief telephone operator, with the
recommendation that the offenses committed by the operators concerned covered violations of the
Offenses Subject to Disciplinary Actions (OSDA):
_______________
3 Annex “D” of Respondent’s Memorandum; Rollo, p. 105.
4 Annex “E” of Complainant’s Position Paper; Rollo, p. 59; Annex “E” of Respondent’s Memorandum;
Rollo, p. 106.
5 Annex “F” of Respondent’s Memorandum; Rollo, pp. 107-108.
610
610

(1) OSDA 2.01: forging, falsifying official document(s), and (2) OSDA 1.11 culpable carelessness-
negligence or failure to follow specific instruction(s) or established procedure(s).
On March 23, 1990, petitioner was served a notice of dismissal6 effective April 1, 1990. Petitioner
refused to sign the notice and wrote therein “under protest.”
Meanwhile, a criminal case7 for Falsification of Private Documents and Qualified Theft was filed before
the Office of the City Prosecutor of Manila by private respondent against Loleng and petitioner.
However, the resolution recommending the filing of a case for estafa was reversed by 2nd Asst. City
Prosecutor Virgilio M. Patag.
On October 2, 1990, petitioner filed a complaint for illegal dismissal against private respondent before
the Labor Arbiter. The complaint was later amended to include a claim for unpaid wages, unpaid
vacation leave conversion and moral damages.
Position papers were filed by the parties. Thereafter, the motion to set the case for hearing filed by
private respondent was granted by the Labor Arbiter and trial on the merits ensued.
In his decision8 dated May 29, 1992, Labor Arbiter Oswald Lorenzo found that the petitioner was
illegally dismissed. However, in the decision the Labor Arbiter stated that:
“Preliminarily, we hereby state that on the face of the instant complaint, it is one that revolves on the
matter of the implementation and interpretation of existing company policies, which per the last par. of
Art. 217 of the Labor Code, as amended, is one within the jurisdictional ambit of the grievance
procedure under the CBA and thereafter, if unresolved, one proper for voluntary arbitration. This
observation is re-entrenched by the fact, that complainant claims
_______________
6 Annex “F” of Complainant’s Position Paper; Rollo, p. 60.
7 Entitled “Manila Midtown Hotel, Complainant, vs. Rowena Loleng y Sanares, et al., Respondents.”
8 Annex “I” of Petition; Rollo, pp. 133-144.
611
VOL. 290, JUNE 5, 1998
611
she is a member of NUWHRAIN with an existing CBA with respondent hotel.
On this score alone, this case should have been dismissed outright.”9
Despite the aforequoted preliminary statement, the Labor Arbiter still assumed jurisdiction “since Labor
Arbiters under Article 217 of the same Labor Code, are conferred original and exclusive jurisdiction of all
termination case (sic).” The dispositive portion of the decision states that:
“WHEREFORE, premises considered, judgment is hereby rendered as follows:
(1) Declaring complainant’s dismissal by respondent hotel as illegally effected;
(2) Ordering respondent to immediately reinstate complainant to her previous position without loss of
seniority rights;
(3) Ordering further respondent to pay complainant the full backwages due her, which is computed as
follows:
3/23/90-10/31/90=7.26/mos.
P2,540 x 7.26/mos.
P18,440.40
11/1/90-1/7/91=2.23/mos.
P3,224.16 x 2.23/mos.
7,189.87
1/8/91-4/29/92=15.7/mos.
P3,589.16 x 15.7/mos.
56,349.89
P81,980.08
(4) Moreover, respondent is ordered to pay the 13th month pay due the complainant in the amount of
P6,831.67 including moral and exemplary damages of P15,000.00 and P10,000.00 respectively, as well as
attorney’s fees equivalent to ten (10) percent of the total award herein in the amount of P11,381.17;
(5) Finally, all other claims are hereby dismissed for lack of merit.
“SO ORDERED.”
_______________
9 Rollo, p. 136.
612
612
Private respondent appealed the decision to the respondent commission on the ground inter alia that
the Labor Arbiter erred in “assuming jurisdiction over the illegal dismissal case after finding that the case
falls within the jurisdictional ambit of the grievance procedure under the CBA, and if unresolved, proper
for voluntary arbitration.”10 An Opposition11 was filed by petitioner.
In the assailed Resolution12 dated June 3, 1994, respondent NLRC dismissed the illegal dismissal case for
lack of jurisdiction of the Labor Arbiter because the same should have instead been subjected to
voluntary arbitration.
Petitioner’s motion for reconsideration13 was denied by respondent NLRC for lack of merit.
In this petition for certiorari, petitioner ascribes to respondent NLRC grave abuse of discretion in—
1. Ruling that the Labor Arbiter was without jurisdiction over the illegal dismissal case;
2. Not ruling that private respondent is estopped by laches from questioning the jurisdiction of the
Labor Arbiter over the illegal dismissal case;
3. Reversing the decision of the Labor Arbiter based on a technicality notwithstanding the merits of the
case.
Petitioner contends that Article 217(a)(2) and (c) relied upon by respondent NLRC in divesting the labor
arbiter of jurisdiction over the illegal dismissal case, should be read in conjunction with Article 26114 of
the Labor Code. It is the view
_______________
10 Annex “J” of Petition; Rollo, pp. 145-155.
11 Annex “K” of Petition; Rollo, pp. 157-164.
12 See note 1; Annex “A” of Petition; Rollo, pp. 28-32.
13 Annex “B” of Petition; Rollo, pp. 33-39.
14 Article 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators.—The Voluntary

Bargaining Agreement
613
VOL. 290, JUNE 5, 1998
613
of petitioner that termination cases arising from the interpretation or enforcement of company
personnel policies pertaining to violations of Offenses Subject to Disciplinary Actions (OSDA), are under
the jurisdiction of the voluntary arbitrator only if these are unresolved in the plant-level grievance
machinery. Petitioner insists that her termination is not an unresolved grievance as there has been no
grievance meeting between the NUWHRAIN union and the management. The reason for this, petitioner
adds, is that it has been a company practice that termination cases are not anymore referred to the
grievance machinery but directly to the labor arbiter.
In its comment, private respondent argues that the Labor Arbiter should have dismissed the illegal
dismissal case outright after finding that it is within the jurisdictional ambit of the grievance procedure.
Moreover, private respondent states that the issue of jurisdiction may be raised at any time and at any
stage of the proceedings even on appeal, and is not in estoppel by laches as contended by the
petitioner.
For its part, public respondent, through the Office of the Solicitor General, cited the ruling of this Court
in Sanyo Philippines Workers Union-PSSLU vs. Cañizares 15 in dismissing the case for lack of jurisdiction
of the Labor Arbiter.
The legal issue in this case is whether or not the Labor Arbiter has jurisdiction over the illegal dismissal
case.
The respondent Commission, in holding that the Labor Arbiter lacks jurisdiction to hear the illegal
dismissal case, cited as basis therefor Article 217 of the Labor Code, as amended by Republic Act No.
6715. It said:
“While it is conceded that under Article 217(a), Labor Arbiters shall have original and exclusive
jurisdiction over cases involving “termination disputes,” the Supreme Court, in a fairly recent case ruled:
_______________
and those arising from the interpretation or enforcement of company personnel policies referred to in
the immediately preceding article.
15 211 SCRA 361 [1992].
614
614

‘The procedure introduced in RA 6715 of referring certain grievances originally and exclusively to the
grievance machinery, and when not settled at this level, to a panel of voluntary arbitrators outlined in
CBAs does not only include grievances 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. x x x.’ (Sanyo vs. Cañizares, 211 SCRA 361, 372)”16
We find that the respondent Commission has erroneously interpreted the aforequoted portion of our
ruling in the case of Sanyo, as divesting the Labor Arbiter of jurisdiction in a termination dispute.
Article 217 of the Labor Code gives us the clue as to the jurisdiction of the Labor Arbiter, to wit:
Article 217. Jurisdiction of Labor Arbiters and the Commission.—a) Except as otherwise provided under
this Code the Labor Arbiters shall have original and exclusive jurisdiction 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 agricultural or
non-agricultural:
1. Unfair labor practices cases;
relations;
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all
other claims,
_______________
16 Resolution of respondent commission dated June 3, 1994; Rollo, pp. 28-32.
615
VOL. 290, JUNE 5, 1998
615

arising from employer-employee relations, including those of persons in domestic or household service,
involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied
with a claim for reinstatement.
b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.
c) Cases arising from the interpretation or implementation of collective bargaining agreements and
those arising from the interpretation or enforcement of company personnel policies shall be disposed of
by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may
be provided in said agreements.”
As can be seen from the aforequoted Article, termination cases fall under the original and exclusive
jurisdiction of the Labor Arbiter. It should be noted, however, that in the opening paragraph there
appears the phrase: “Except as otherwise provided under this Code x x x.” It is paragraph (c) of the same
Article which respondent Commission has erroneously interpreted as giving the voluntary arbitrator
jurisdiction over the illegal dismissal case.
However, Article 217(c) should be read in conjunction with Article 261 of the Labor Code which grants to
voluntary arbitrators original and exclusive jurisdiction to hear and decide all unresolved grievances
arising from the interpretation or implementation of the collective bargaining agreement and those
arising from the interpretation or enforcement of company personnel policies. Note the phrase
“unresolved grievances.” In the case at bar, the termination of petitioner is not 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 implementation of Collective Bargaining Agreement” or interpretation or
“enforcement” of company personnel policies, on the one hand and a case involving termination, on the
other hand. It argued that the dismissal of the private respondents does not involve an “interpretation
or implementation” of a Collec-
616
616
tive Bargaining Agreement or “interpretation or enforcement” of company personnel policies but

involves “termination.” The Solicitor General further said that where the dispute is just in the
interpretation, implementation or enforcement stage, it may be referred to the grievance machinery set
up in the Collective Bargaining Agreement or by voluntary arbitration. Where there was already actual
termination, i.e., violation of rights, it is already cognizable by the Labor Arbiter.17 We fully agree with
the theory of the Solicitor General in the Sanyo case, which is radically opposite to its position in this
case.
Moreover, the dismissal of petitioner does not fall within the phrase “grievances arising from the
interpretation or implementation of collective bargaining agreement and those arising from the
interpretation or enforcement of company personnel policies,” the jurisdiction of which pertains to the
grievance machinery or thereafter, 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 function of the grievance
machinery and voluntary arbitrator, “(T)he parties to a Collective 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 from the interpretation or
enforcement of company personnel policies.” Article 260 further provides that that parties to a CBA
shall name or designate their respective representative to the grievance machinery and if the grievance
is unsettled in that level, it shall automatically be referred to the voluntary arbitrators designated in
advance by 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.18
_______________
17 Sanyo, supra.
18 Ibid.
617
VOL. 290, JUNE 5, 1998
617
In the case at bar, the union does not come into the picture, not having objected or voiced any dissent
to the dismissal of the herein petitioner. The reason for this, according to petitioner is that “the practice
in said Hotel in cases of termination is that the latter cases are not referred anymore to the grievance
committee;” and that “the terminated employee who wishes to question the legality of his termination
usually goes to the Labor Arbiter for arbitration, whether the termination arose from the interpretation
or enforcement of the company personnel policies or otherwise.”19
As we ruled in Sanyo, “Since there has been an actual termination, the matter falls within the
jurisdiction of the Labor Arbiter.” The aforequoted doctrine is applicable foursquare in petitioner’s case.
The dismissal of the petitioner does not call for the interpretation or enforcement of company
personnel policies but is a termination dispute which comes under the jurisdiction of the Labor Arbiter.
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 organization’s top authority regarding
personnel matters. They deal with matters affecting efficiency and well-being of employees and include,
among others, the procedure in the administration of wages, benefits, promotions, transfer and other
personnel movements which are usually not spelled out in the collective agreement. The usual source of
grievances, however, are the rules and regulations governing disciplinary actions.20
The case of Pantranco North Express, Inc. vs. NLRC 21 sheds further light on the issue of jurisdiction
where the Court cited the Sanyo case and quoted the decision of therein Labor Arbiter Olairez in this
manner:
_______________
19 Petition, Rollo, p. 15.
20 San Miguel Corp. vs. National Labor Relations Commission, G.R. No. 108001, March 15, 1996, 255
SCRA 133, 140; citing C.A. Azucena, The Labor Code With Comments And Cases, Vol. II, 1993 ed., p. 272.
21 G.R. No. 95940, July 24, 1996, 259 SCRA 161, 167-168.
618
618
“In our honest opinion we have jurisdiction over the complaint on the following grounds:
First, this is a complaint of illegal dismissal of which original and exclusive jurisdiction under Article 217
has been conferred to the Labor Arbiters. The interpretation of the CBA or enforcement of the company
policy is only corollary to the complaint of illegal dismissal. Otherwise, an employee who was on AWOL,
or who committed offenses contrary to the personnel policies (sic) can no longer file a case of illegal
dismissal because the discharge is premised on the interpretation or enforcement of the company
policies (sic).
Second. Respondent voluntarily submitted the case to the jurisdiction of this labor tribunal. It adduced
arguments to the legality of its act, whether such act may be retirement and/or dismissal, and prayed
for reliefs on the merits of the case. A litigant cannot pray for reliefs on the merits and at the same time
attacks (sic) the jurisdiction of the tribunal. A person cannot have one’s cake and eat it too. x x x.”
As to the second ground, petitioner correctly points out that respondent NLRC should have ruled that
private respondent is estopped by laches in questioning the jurisdiction of the Labor Arbiter.
Clearly, estoppel lies. The issue of jurisdiction was mooted by herein private respondent’s active
participation in the proceedings below. In Marquez vs. Secretary of Labor,22 the Court said:
“x x x. The active participation of the party against whom the action was brought, coupled with his
failure to object to the jurisdiction of the court or quasi-judicial body where the action is pending, is
tantamount to an invocation of that jurisdiction and a willingness to abide by the resolution of the case
and will bar said party from later on impugning the court or body’s jurisdiction.”
_______________
22 171 SCRA 337, 346; cited in Stolt-Nielsen Marine Services (Phils.), Inc. vs. NLRC, G.R. No. 105396,
November 19, 1996, 264 SCRA 307, 319.
619
VOL. 290, JUNE 5, 1998
619
In the assailed Resolution,23 respondent NLRC cited La Naval Drug Corporation vs. Court of Appeals 24
in holding that private respondent is not in estoppel. Thus,
“The operation of the principle of estoppel on the question of jurisdiction seemingly depends upon
whether the lower court actually had jurisdiction or not. If it had no jurisdiction, but the case was tried
and decided upon the theory that it had jurisdiction, the parties are not barred, on appeal, from
assailing such jurisdiction, for the same ‘must exist as a matter of law, and may not be conferred by
consent of the parties or by estoppel’ (5 C.J.S., 861-863). However, if the lower court had jurisdiction,
and the case was heard and decided upon a given theory, such, for instance, as that the court had no
jurisdiction, the party who induced it to adopt such theory will not be permitted, on appeal, to assume
an inconsistent position-that the lower court had jurisdiction. Here, the principle of estoppel applies.
The rule that jurisdiction is conferred by law, and does not depend upon the will of the parties, has no
bearing thereon.” (Italics ours)
Again, the respondent NLRC has erroneously interpreted our ruling in the La Naval case. Under the said
ruling, estoppel lies in this case. Private respondent is estopped from questioning the jurisdiction of the
Labor Arbiter before the respondent NLRC having actively participated in the proceedings before the
former. At no time before or during the trial on the merits did private respondent assail the jurisdiction
of the Labor Arbiter. Private respondent took the cue only from the preliminary statement in the
decision of the Labor Arbiter, which was a mere obiter, and raised the issue of jurisdiction before the
Commission. It was then too late. Estoppel had set in.
Turning now to the merits of the case, We uphold the ruling of the Labor Arbiter that petitioner was
illegally dismissed.
The requisites of a valid dismissal are (1) the dismissal must be for any of the causes expressed in Article
282 of the
_______________
23 Annex “C” of Petition; Rollo, pp. 41-42.
24 236 SCRA 78.

620
620
Labor Code,25 and (2) the employee must be given an opportunity to be heard and to defend himself.26
The substantive and procedural laws must be strictly complied with before a worker can be dismissed
from his employment because what is at stake is not only the employee’s position but his livelihood.27
Petitioner’s dismissal was grounded on culpable carelessness, negligence and failure to follow specific
instruction(s) or established procedure(s) under OSDA 1.11; and, having forged or falsified official
document(s) under OSDA 2.01.
Private respondent blames petitioner for failure to follow established procedure in the hotel on a
guest’s request for long distance calls. Petitioner, however, explained that the usual or established
procedures are not followed by the operators and hotel employees when circumstances warrant. For
instance, the RLDC forms and the deposits are brought by the page boy directly to the operators instead
of the cashiers if the
_______________
25 Article 282 of the Labor Code provides:
ART. 282. Termination by employer.—An employer may terminate an employment for any of the
following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or duly authorized representative, and
(e) Other causes analogous to the foregoing.
26 Midas Touch Food Corp. vs. NLRC, G.R. No. 111639, July 29, 1996, 259 SCRA 652, 657; citing Mapalo
vs. NLRC, 233 SCRA 266; Pizza Hut/Progressive Development Corp. vs. NLRC, G.R. No. 117059, January
29, 1996, 252 SCRA 531, 535 citing Mapalo vs. NLRC, supra.
27 Midas Touch Food Corp. vs. NLRC, supra., 657.
621
VOL. 290, JUNE 5, 1998
621
latter are busy and cannot attend to the same. Furthermore, she avers that the telephone operators are
not conscious of the serial numbers in the RLDCs and at times, the used RLDCs are recycled. Even the
page boys do not actually check the serial numbers of all RLDCs in one batch, except for the first and the
last.
On the charge of taking of the money by petitioner, it is to be noted that the second P500.00 deposit
made by the Japanese guest Ieda was later discovered to be inserted in the folder for cancelled calls
with deposit and official receipts. Thus, there exists no basis for personal appropriation by the petitioner
of the money involved. Another reason is the alleged tampering of RLDC No. 862406.28 While petitioner
and her co-operator Loleng admitted that they indeed altered the date appearing therein from February
15, 1990 to February 13, the same was purposely made to reflect the true date of the transaction
without any malice whatsoever on their part.
As pointed out by Labor Arbiter Oswald B. Lorenzo, thus:
“The specifics of the grounds relied by respondent hotel’s dismissal of complainant are those stated in
Annex ‘F’ of the latter’s POSITION PAPER, which is the Notice of Dismissal, notably:
1. OSDA 2.01—Forging, falsifying official document(s)
2. OSDA 1.11—Culpable negligence or failure to follow specific instruction(s) or established procedure(s)
On this score, we are persuaded by the complainant’s arguments that under OSDA 1.11, infractions of
this sort is not without qualifications, which is, that the alleged culpable carelessness, negligence or
failure to follow instruction(s) or established procedure(s), RESULTING IN LOSS OR DAMAGE TO
COMPANY PROPERTY. From the facts obtaining in this case, there is no quantum of proof whatsoever,
except the general allegations in respondent’s POSITION PAPER and other pleadings that loss or damage
to company property resulted from the charged infraction. To our mind, this is where labor tribunals
should come in and help correct
_______________
28 Annex “C” of Private Respondent’s Position Paper; Rollo, p. 90.
622
622

interpretation of company policies which in the enforcement thereof wreaks havoc to the constitutional
guarantee of security of tenure. Apparently, the exercise of little flexibility by complainant and co-
employees which is predicated on good faith should not be taken against them and more particularly
against the complainant herein. In this case, to sustain the generalized charge of respondent hotel under
OSDA 1.11 would unduly be sanctioning the imposition of too harsh a penalty—which is dismissal.
In the same tenor, the respondent’s charge under OSDA 1.11 on the alleged falsification of private
document is also with a qualification, in that the alleged act of falsification must have been done ‘IN
SUCH A WAY AS TO MISLEAD THE USER(S) THEREOF, Again, based on the facts of the complained act,
there appeared on one to have been misled on the change of date from RLDC #862406 FROM 15 TO 13
February 1990.
As a matter of fact, we are in agreement with the jurisprudence cited by VIRGILIO M. PATAG, the 2nd
Asst. City Prosecutor of the City of Manila, who exculpated complainant MANEJA from the charges of
falsification of private documents and qualified theft under IS No. 90-11083 and marked Annex ‘H’ of
complainant’s POSITION PAPER, when he ruled that an altercation which makes the document speak the
truth cannot be the foundation of a criminal action. As to the charge of qualified theft, we too are of the
finding, like the city prosecutor above-mentioned that there was no evidence on the part of MANEJA to
have unlawfully taken the P500.00 either from the hotel or from guest IEDA on 13 February 1990 and
moreover, we too, find no evidence that complainant MANEJA had the intention to profit thereby nor
had misappropriated the P500.00 in question.”29
Given the factual circumstances of the case, we cannot deduce dishonesty from the act and omission of
petitioner. Our norms of social justice demand that we credit employees with the presumption of good
faith in the performance of their duties,30 especially petitioner who has served private respondent since
1985 up to 1990 without any tinge of dishonesty
_______________
29 Decision of Labor Arbiter; Rollo, pp. 140-141.
30 Pizza Hut/Progressive Development Corp. vs. NLRC, supra., 539.
623
VOL. 290, JUNE 5, 1998
623
and was even named “Model Employee” for the month of April, 1989.31
Petitioner has been charged with a very serious offense—dishonesty. This can irreparably wreck her life
as an employee for no employer will take to its bosom a dishonest employee. Dismissal is the supreme
penalty that can be meted to an employee and its imposition cannot be justified where the evidence is
ambivalent.32 It must, therefore, be based on a clear and not on an ambiguous or ambivalent ground.
Any ambiguity or ambivalence on the ground relied upon by an employer in terminating the services of
an employee denies the latter his full right to contest its legality. Fairness cannot countenance such
ambiguity or ambivalence.33
An employer can terminate the services of an employee only for valid and just causes which must be
supported by clear and convincing evidence. The employer has the burden of proving that the dismissal
was indeed for a valid and just cause.34 Failure to do so results in a finding that the dismissal was
unjustified.35
Finding that there was no just cause for dismissal of petitioner, we now determine if the rudiments of
due process have been duly accorded to her.
Well-settled is the dictum that the twin requirements of notice and hearing constitute the essential
elements of due process in the dismissal of employees. It is a cardinal rule in our
_______________
31 Rollo, pp. 91-92.
32 Pizza Hut/Progressive Development Corp. vs. NLRC, supra., 540.
33 Pantranco North Express, Inc. vs. NLRC, G.R. No. 114333, January 24, 1996, 252 SCRA 237, 243-244.
34 Philippine Long Distance Telephone Company vs. NLRC, et al., G.R. No. 99030, July 31, 1997.
35 Uy vs. National Labor Relations Commission, G.R. No. 117983, September 6, 1996, 261 SCRA 505,
512; citing Labor Code, Article 277(b); Golden Donuts, Inc. vs. National Labor Relations Commission, 230
SCRA 153 [1994]; Reyes & Lim Co., Inc. vs. National Labor Relations Commission, 201 SCRA 772, 775
[1991].
624
624
jurisdiction that the employer must furnish the employee with two written notices before the
termination of employment can be effected: (a) the first apprises the employee of the particular acts or
omissions for which his dismissal is sought; and, (b) the second informs the employee of the employer’s
decision to dismiss him. The requirement of a hearing, on the other hand, is complied with as long as
there was an opportunity to be heard, and not necessarily that an actual hearing was conducted.36
In the case at bar, petitioner and her co-operator Loleng were issued a memorandum on March 7, 1990.
On March 11, 1990, they submitted their written explanation thereto. On March 20, 1990, a written
report was made with a recommendation that the offenses committed by them were covered by OSDA
1.11 and 2.01. Thereafter, on March 23, 1990, petitioner was served with a notice of dismissal for said
violations effective April 1, 1990.
An examination of the record reveals that no hearing was ever conducted by private respondent before
petitioner was dismissed. While it may be true that petitioner submitted a written explanation, no
hearing was actually conducted before her employment was terminated. She was not accorded the
opportunity to fully defend herself.
Consultations or conferences may not be a substitute for the actual holding of a hearing. Every
opportunity and assistance must be accorded to the employee by the management to enable him to
prepare adequately for his defense, including legal representation.37 Considering that petitioner denied
having allegedly taken the second P500.00 deposit of the Japanese guest which was eventually found;
and, having made the alteration of the date on the second RLDC merely to reflect the true date of the
transaction, these circumstances should have at least warranted a separate hearing to enable petitioner
to fully ventilate her side. Absent
_______________
36 Pono vs. NLRC, et al., G.R. No. 118860, July 17, 1997.
37 Ibid.
625
VOL. 290, JUNE 5, 1998
625
such hearing, petitioner’s right to due process was clearly violated.38
It bears stressing that a worker’s employment is property in the constitutional sense. He cannot be
deprived of his work without due process of law. Substantive due process mandates that an employee
can only be dismissed based on just or authorized causes. Procedural due process requires further that
he can only be dismissed after he has been given an opportunity to be heard. The import of due process
necessitates the compliance of these two aspects.
Accordingly, we hold that the labor arbiter did not err in awarding full backwages in view of his finding
that petitioner was dismissed without just cause and without due process.
We ruled in the case of Bustamante vs. NLRC 39 that the amount of backwages to be awarded to an
illegally dismissed employee must be computed from the time he was dismissed to the time he is
actually reinstated, without deducting the earnings he derived elsewhere pending the resolution of the
case.
Petitioner is likewise entitled to the thirteenth-month pay. Presidential Decree No. 851, as amended by
Memorandum Order No. 28, provides that employees are entitled to the thirteenth-month pay benefit
regardless of their designation and irrespective of the method by which their wages are paid.40
The award of moral and exemplary damages to petitioner is also warranted where there is lack of due
process in effecting the dismissal.
______________
38 Ibid.
39 G.R. No. 111651, November 28, 1996, cited in the case of Philippine Long Distance Telephone
Company vs. NLRC, et al., G.R. No. 99030, July 13, 1997; Mabeza vs. NLRC, Hotel Supreme, et al., G.R.
No. 118506, April 18, 1997.
40 Jackson Building Condominium Corporation vs. National Labor Relations Commission, G.R. No.
111515, July 14, 1995, 246 SCRA 329, 333.
626
626
Where the termination of the services of an employee is attended by fraud or bad faith on the part of
the employer, as when the latter knowingly made false allegations of a supposed valid cause when none
existed, moral and exemplary damages may be awarded in favor of the former.41
The anti-social and oppressive abuse of its right to investigate and dismiss its employees constitute a
violation of Article 1701 of the New Civil Code which prohibits acts of oppression by either capital or
labor against the other, and Article 21 on human relations. The grant of moral damages to the
employees by reason of such conduct on the part of the company is sanctioned by Article 2219, No. 10
of the Civil Code, which allows recovery of such damages in actions referred to in Article 21.42
The award of attorney’s fees amounting to ten percent (10%) of the total award by the labor arbiter is
justified under Article 111 of the Labor Code.
WHEREFORE, premises considered, the petition is GRANTED and the assailed resolutions of the
respondent National Labor Relations Commission dated June 3, 1994 and October 20, 1995 are hereby
REVERSED AND SET ASIDE. The decision dated May 29, 1992 of the Labor Arbiter is therefore
REINSTATED.
SO ORDERED.
Regalado (Chairman) and Puno, JJ., concur.

Melo, J., On leave.
Mendoza, J., In the result.
Petition granted, resolutions reversed and set aside. Decision of Labor Arbiter reinstated.
_______________
41 Lirag Textile Mills, Inc. vs. Court of Appeals, et al., 63 SCRA 374, 385, April 14, 1975.
42 Philippine Refining Co., Inc. vs. Garcia, 81 SCRA 107, September 27, 1966.
627
VOL. 290, JUNE 5, 1998
627
People vs. Feloteo
Notes.—A meeting merely for the purpose of informing an employee about her questionable “work
report,” and to serve her a written notice detailing her infractions in her “work sheet” is not the hearing
contemplated by law. (Pono vs. National Labor Relations Commission, 275 SCRA 611 [1997])
While it is true that the essence of due process is simply an opportunity to be heard or, as applied in
administrative proceedings, an opportunity to explain one’s side, meetings in the nature of consultation
and conferences, however, may not be valid substitutes for the proper observance of notice and hear-
ing. (Equitable Banking Corporation vs. National Labor Relations Commission, 273 SCRA 352 [1997])
——o0o—— Maneja vs. National Labor Relations Commission, 290 SCRA 603, G.R. No. 124013 June 5,
1998
VOL. 395, JANUARY 20, 2003
451
Ludo & Luym Corporation vs. Saornido
G.R. No. 140960. January 20, 2003.*
LUDO & LUYM CORPORATION, petitioner, vs. FERDINAND SAORNIDO as voluntary arbitrator and
LUDO EMPLOYEES UNION (LEU) representing 214 of its officers and members, respondents.
Labor Law; Arbitration; Jurisdiction; Words and Phrases; The jurisdiction of the Labor Arbiter and the
Voluntary or Panel of Voluntary Arbitrators over the cases enumerated in the Labor Code, Articles
217, 261 and 262, can possibly include money claims in one form or another; Compulsory 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 a
mode of arbitration where the parties are compelled to accept the resolution of their dispute through
arbitration by a third party.”—In construing the above provisions, we held in San Jose vs. NLRC, that
the jurisdiction of the Labor Arbiter and the Voluntary Arbitrator or Panel of Voluntary Arbitrators
over the cases enumerated in the Labor Code, Articles 217, 261 and 262, can possibly include money
claims in one form or another. Comparatively, in Reformist Union of R.B. Liner, Inc. vs. NLRC,
compulsory 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 a mode of arbitration where the parties are compelled to accept the resolution
of their dispute through arbitration by a third party (emphasis supplied).” While a voluntary arbitrator
is not part of the governmental unit or labor department’s personnel, said arbitrator renders
arbitration services provided for under labor laws.
_______________
* SECOND DIVISION.
452
452
Same; Same; Same; Regularization; While the arbitrator is expected to decide only those questions
expressly delineated by the submission agreement, he can assume that he has the necessary power to
make a final settlement since arbitration is the final resort for the adjudication of disputes; Even if the
submission agreement mentioned only the determination of the date of regularization, law and
jurisprudence give the voluntary arbitrator enough leeway of authority as well as adequate
prerogative to accomplish the reason for which the law on voluntary arbitration was created—speedy
labor justice—and to settle, once and for all, the ultimate question of whether the employees are
entitled to higher benefits.—Generally, the arbitrator is expected to decide only those questions
expressly delineated by the submission agreement. Nevertheless, the arbitrator can assume that he
has the necessary power to make a final settlement since arbitration is the final resort for the
adjudication of disputes. The succinct reasoning enunciated by the CA in support of its holding, that
the Voluntary Arbitrator in a labor controversy has jurisdiction to render the questioned arbitral
awards, deserves our concurrence, thus: In general, the arbitrator is expected to decide those
questions expressly stated and limited in the submission agreement. However, since arbitration is the
final resort for the adjudication of disputes, the arbitrator can assume that he has the power to make
a final settlement. Thus, assuming that the submission empowers the arbitrator to decide whether an
employee was discharged for just cause, the arbitrator in this instance can reasonably assume that his
powers extended beyond giving a yes-or-no answer and included the power to reinstate him with or
without back pay. x x x By the same token, the issue of regularization should be viewed as two-tiered
issue. While the submission agreement mentioned only the determination of the date or
regularization, law and jurisprudence give the voluntary arbitrator enough leeway of authority as well
as adequate prerogative to accomplish the reason for which the law on voluntary arbitration was
created—speedy labor justice. It bears stressing that the underlying reason why this case arose is to
settle, once and for all, the ultimate question of whether respondent employees are entitled to higher
benefits. To require them to file another action for payment of such benefits would certainly
undermine labor proceedings and contravene the constitutional mandate providing full protection to
labor.
Same; Same; Same; Administrative Law; basic is the rule that findings of fact of administrative and
quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific
matters, are generally accorded not only great respect but even finality.—As regards petitioner’s
contention that the money claim in this case is barred by prescription, we hold that this contention is
without merit. So is petitioner’s stance that the benefits claimed by the respondents, i.e., sick leave,
vacation leave and 13th month pay, had already prescribed, considering the three-year period for the
institution of monetary claims. Such
453
VOL. 395, JANUARY 20, 2003
453
determination is a question of fact which must be ascertained based on the evidence, both oral and
documentary, presented by the parties before the Voluntary Arbitrator. In this case, the Voluntary
Arbitrator found that prescription has not as yet set in to bar the respondents’ claims for the
monetary benefits awarded to them. Basic is the rule that findings of fact of administrative and quasi-
judicial bodies, which have acquired expertise because their jurisdiction is confined to specific
matters, are generally accorded not only great respect but even finality. Here, the Voluntary
Arbitrator received the evidence of the parties first-hand. No compelling reason has been shown for
us to diverge from the findings of the Voluntary Arbitrator, especially since the appellate court
affirmed his findings, that it took some time for respondent employees to ventilate their claims
because of the repeated assurances made by the petitioner that it would review the company records
and determine therefrom the validity of the claims, without expressing a categorical denial of their
claims.
Same; Prescription; Estoppel; It will be the height of injustice if the Court will brush aside the
employee’s claims on a mere technicality, especially when it is the employer’s own action that
prevented them from interposing the claims within the prescribed period.—Indeed, as the Court of
Appeals concluded, under the equitable principle of estoppel, it will be the height of injustice if we
will brush aside the employees’ claims on a mere technicality, especially when it is petitioner’s own
action that prevented them from interposing the claims within the prescribed period.
Baduel, Espina & Associates for petitioner.
Arnado and Associates for private respondent.
QUISUMBING, J.:
This petition for review on certiorari seeks to annul and set aside the decision1 of the Court of Appeals
promulgated on July 6, 1999 and its Order denying petitioner’s motion for reconsideration in CA-G.R. SP
No. 44341.
The relevant facts as substantially recited by the Court of Appeals in its decision are as follows:
_______________
1 Rollo, pp. 29-34. Penned by Associate Justice Angelina Sandoval-Gutierrez, former Associate Justice of
the CA.
454
454
Petitioner LUDO & LUYM CORPORATION (LUDO for brevity) is a domestic corporation engaged in the
manufacture of coconut oil, corn starch, glucose and related products. It operates a manufacturing plant
located at Tupas Street, Cebu City and a wharf where raw materials and finished products are shipped
out.
In the course of its business operations, LUDO engaged the arrastre services of Cresencio Lu Arrastre
Services (CLAS) for the loading and unloading of its finished products at the wharf. Accordingly, several
arrastre workers were deployed by CLAS to perform the services needed by LUDO.
These arrastre workers were subsequently hired, on different dates, as regular rank-and-file employees
of LUDO every time the latter needed additional manpower services. Said employees thereafter joined
respondent union, the LUDO Employees Union (LEU), which acted as the exclusive bargaining agent of
the rank-and-file employees.
On April 13, 1992, respondent union entered into a collective bargaining agreement with LUDO which
provides certain benefits to the employees, the amount of which vary according to the length of service
rendered by the availing employee.
Thereafter, the union requested LUDO to include in its members’ period of service the time during
which they rendered arrastre services to LUDO through the CLAS so that they could get higher benefits.
LUDO failed to act on the request. Thus, the matter was submitted for voluntary arbitration.
The parties accordingly executed a submission agreement raising the sole issue of the date of
regularization of the workers for resolution by the Voluntary Arbitrator.
In its decision dated April 18, 1997, the Voluntary Arbitrator ruled that: (1) the respondent employees
were engaged in activities necessary and desirable to the business of petitioner, and (2) CLAS is a labor-
only contractor of petitioner.2 It disposed of the case thus:
“WHEREFORE, in view of the foregoing, this Voluntary Arbitrator finds the claims of the complainants
meritorious and so hold that:
a. the 214 complainants, as listed in the Annex A, shall be considered regular employees of the
respondents six (6) months from the first day of service at CLAS;
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2 Id., at pp. 60-61.
455
VOL. 395, JANUARY 20, 2003
455
b. the said complainants, being entitled to the CBA benefits during the regular employment, are
awarded a) sick leave, b) vacation leave & c) annual wage and salary increases during such period in the
amount of FIVE MILLION SEVEN HUNDRED SEVEN THOUSAND TWO HUNDRED SIXTY ONE PESOS AND
SIXTY ONE CENTAVOS (P5,707,261.61) as computed in “Annex A”;
c. the respondents shall pay attorney’s fees of ten (10) percent of the total award;
d. an interest of twelve (12) percent per annum or one (1) percent per month shall be imposed to the
award from the date of promulgation until fully paid if only to speed up the payment of these long over
due CBA benefits deprived of the complaining workers.
Accordingly, all separation and/or retirement benefits shall be construed from the date of regularization
aforementioned subject only to the appropriate government laws and other social legislation.
SO ORDERED.”3
In due time, LUDO filed a motion for reconsideration, which was denied. On appeal, the Court of
Appeals affirmed in toto the decision of the Voluntary Arbitrator, thus:
“WHEREFORE, finding no reversible error committed by respondent voluntary arbitrator, the instant
petition is hereby DISMISSED.
SO ORDERED.”4
Hence this petition. Before us, petitioner raises the following issues:
WHETHER OR NOT BENEFITS CONSISTING OF SALARY INCREASES, VACATION LEAVE AND SICK LEAVE
BENEFITS FOR THE YEARS 1977 TO 1987 ARE ALREADY BARRED BY PRESCRIPTION WHEN PRIVATE
RESPONDENTS FILED THEIR CASE IN JANUARY 1995;
II
WHETHER OR NOT A VOLUNTARY ARBITRATOR CAN AWARD BENEFITS NOT CLAIMED IN THE
SUBMISSION AGREEMENT.5
_______________
3 Id., at p. 63.
4 Id., at p. 33.
5 Id., at pp. 10-11.
456
456

Petitioner contends that the appellate court gravely erred when it upheld the award of benefits which
were beyond the terms of submission agreement. Petitioner asserts that the arbitrator must confine its
adjudication to those issues submitted by the parties for arbitration, which in this case is the sole issue
of the date of regularization of the workers. Hence, the award of benefits by the arbitrator was done in
excess of jurisdiction.6
Respondents, for their part, aver that the three-year prescriptive period is reckoned only from the time
the obligor declares his refusal to comply with his obligation in clear and unequivocal terms. In this case,
respondents maintain that LUDO merely promised to review the company records in response to
respondents’ demand for adjustment in the date of their regularization without making a categorical
statement of refusal.7 On the matter of the benefits, respondents argue that the arbitrator is
empowered to award the assailed benefits because notwithstanding the sole issue of the date of
regularization, standard companion issues on reliefs and remedies are deemed incorporated. Otherwise,
the whole arbitration process would be rendered purely academic and the law creating it inutile.8
The jurisdiction of Voluntary Arbitrator or Panel of Voluntary Arbitrators and Labor Arbiters is clearly
defined and specifically delineated in the Labor Code. The pertinent provisions of the Labor Code, read:
Art. 217. Jurisdiction of Labor Arbiters and the Commission.—(a) Except as otherwise provided under
this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within
even in the absence of stenographic notes, the following cases involving all workers, whether
agricultural or nonagricultural:
_______________
6 Id., at p. 16.
7 Id., at pp. 97-98.
8 Id., at pp. 99-101.
457
VOL. 395, JANUARY 20, 2003
457
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wage,
relations;
xxx
Art. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators.—The Voluntary

policies referred to in the immediately preceding article. Accordingly, violations of a Collective
Bargaining Agreement, except those which are gross in character, shall no longer be treated as unfair
labor practice and shall be resolved as grievances under the Collective Bargaining Agreement. For
purposes of this article, gross violations of Collective Bargaining Agreement shall mean flagrant and/or
malicious refusal to comply with the economic provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors of the Department of Labor and
jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately dispose
and refer the same to the Grievance Machinery or Voluntary Arbitration provided in the Collective
Bargaining Agreement.
Art. 262. Jurisdiction over other labor disputes.—The Voluntary Arbitrator or panel of Voluntary
Arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes including
unfair labor practices and bargaining deadlocks.”
In construing the above provisions, we held in San Jose vs. NLRC,9 that the jurisdiction of the Labor
Arbiter and the Voluntary Arbitrator or Panel of Voluntary Arbitrators over the cases enumerated in the
Labor Code, Articles 217, 261 and 262, can possibly include money claims in one form or another.10
Comparatively, in Reformist Union of R.B. Liner, Inc. vs. NLRC,11 compulsory arbitration has been
defined both as “the process of settlement of labor disputes by a government agency which has the
authority
_______________
9 294 SCRA 336 (1998).
10 Supra note 9 at 348.
11 266 SCRA 713 (1997).
458
458

to investigate and to make an award which is binding on all the parties, and as a mode of arbitration
where the parties are compelled to accept the resolution of their dispute through arbitration by a third
party (emphasis supplied).”12 While a voluntary arbitrator is not part of the governmental unit or labor
department’s personnel, said arbitrator renders arbitration services provided for under labor laws.
Generally, the arbitrator is expected to decide only those questions expressly delineated by the
submission agreement. Nevertheless, the arbitrator can assume that he has the necessary power to
make a final settlement since arbitration is the final resort for the adjudication of disputes.13 The
succinct reasoning enunciated by the CA in support of its holding, that the Voluntary Arbitrator in a
labor controversy has jurisdiction to render the questioned arbitral awards, deserves our concurrence,
thus:
In general, the arbitrator is expected to decide those questions expressly stated and limited in the
submission agreement. However, since arbitration is the final resort for the adjudication of disputes, the
arbitrator can assume that he has the power to make a final settlement. Thus, assuming that the
submission empowers the arbitrator to decide whether an employee was discharged for just cause, the
arbitrator in this instance can reasonably assume that his powers extended beyond giving a yes-or-no
answer and included the power to reinstate him with or without back pay.
In one case, the Supreme Court stressed that “xxx the Voluntary Arbitrator had plenary jurisdiction and
authority to interpret the agreement to arbitrate and to determine the scope of his own authority
subject only, in a proper case, to the certiorari jurisdiction of this Court. The Arbitrator, as already
indicated, viewed his authority as embracing not merely the determination of the abstract question of
whether or not a performance bonus was to be granted but also, in the affirmative case, the amount
thereof.
By the same token, the issue of regularization should be viewed as two-tiered issue. While the
submission agreement mentioned only the determination of the date or regularization, law and
jurisprudence give the voluntary arbitrator enough leeway of authority as well as adequate prerogative
to accomplish the reason for which the law on voluntary arbi-
_______________
12 Supra note 11, at 723.
13 Rollo, pp. 31-32 citing C.A. Azucena, The Labor Code, With Comments and Cases, 1993 Ed., p. 283 and
Sime Darby Pilipinas, Inc. vs. Magsalin, G.R. No. 90426, 180 SCRA 177, 183 (1989).
459
VOL. 395, JANUARY 20, 2003
459

tration was created—speedy labor justice. It bears stressing that the underlying reason why this case
arose is to settle, once and for all, the ultimate question of whether respondent employees are entitled
to higher benefits. To require them to file another action for payment of such benefits would certainly
undermine labor proceedings and contravene the constitutional mandate providing full protection to
labor.14
As regards petitioner’s contention that the money claim in this case is barred by prescription, we hold
that this contention is without merit. So is petitioner’s stance that the benefits claimed by the
respondents, i.e., sick leave, vacation leave and 13th month pay, had already prescribed, considering the
three-year period for the institution of monetary claims.15 Such determination is a question of fact
which must be ascertained based on the evidence, both oral and documentary, presented by the parties
before the Voluntary Arbitrator. In this case, the Voluntary Arbitrator found that prescription has not as
yet set in to bar the respondents’ claims for the monetary benefits awarded to them. Basic is the rule
that findings of fact of administrative and quasi-judicial bodies, which have acquired expertise because
their jurisdiction is confined to specific matters, are generally accorded not only great respect but even
finality.16 Here, the Voluntary Arbitrator received the evidence of the parties first-hand. No compelling
reason has been shown for us to diverge from the findings of the Voluntary Arbitrator, especially since
the appellate court affirmed his findings, that it took some time for respondent employees to ventilate
their claims because of the repeated assurances made by the petitioner that it would review the
company records and determine therefrom the validity of the claims, without expressing a categorical
denial of their claims. As elucidated by the Voluntary Arbitrator:
The respondents had raised prescription as defense. The controlling law, as ruled by the High Court, is:
_______________
14 Ibid.
15 Labor Code, ART. 291. Money claims.—All money claims arising from employer-employee relation
accruing during the effectivity of this Code shall be filed within three (3) year from the time that cause of
action accrues; otherwise they shall be forever barred.
xxx
16 Conti vs. NLRC, G.R. No. 119253, 271 SCRA 114, 122 (1997).
460
460
“The cause of action accrues until the party obligated refuses x x x to comply with his duty. Being
warded off by promises, the workers not having decided to assert [their] right[s], [their] causes of action
had not accrued . . . ” (Citation omitted.)
Since the parties had continued their negotiations even after the matter was raised before the
Grievance Procedure and the voluntary arbitration, the respondents had not refused to comply with
their duty. They just wanted the complainants to present some proofs. The complainant’s cause of
action had not therefore accrued yet. Besides, in the earlier voluntary arbitration case aforementioned
involving exactly the same issue and employees similarly situated as the complainants’, the same
defense was raised and dismissed by Honorable Thelma Jordan, Voluntary Arbitrator.
In fact, the respondents’ promised to correct their length of service and grant them the back CBA
benefits if the complainants can prove they are entitled rendered the former in estoppel, barring them
from raising the defense of laches or prescription. To hold otherwise amounts to rewarding the
respondents for their duplicitous representation and abet them in a dishonest scheme against their
workers.17
Indeed, as the Court of Appeals concluded, under the equitable principle of estoppel, it will be the
height of injustice if we will brush aside the employees’ claims on a mere technicality, especially when it
is petitioner’s own action that prevented them from interposing the claims within the prescribed period.
WHEREFORE, the petition is DENIED. The appealed decision of the Court of Appeals in CA-G.R. SP No.
44341 and the resolution denying petitioner’s motion for reconsideration, are AFFIRMED. Costs against
petitioner.
SO ORDERED.
Bellosillo (Chairman), Mendoza, Austria-Martinez and Callejo, Sr., JJ., concur.
Petition denied, judgment and resolution affirmed.
Notes.—Discharges due to alleged redundancy can hardly be considered company personnel policies
and therefore need not directly be subject to the grievance machinery nor to voluntary
_______________
17 Rollo, pp. 61-62.
461
VOL. 395, JANUARY 20, 2003
461
People vs. Macalaba
arbitration. (San Miguel Corporation vs. National Labor Relations Commission, 255 SCRA 133 [1996])
Absent an express stipulation in the CBA, the phrase “all disputes” should be construed as limited to the
areas of conflict traditionally within the jurisdiction of Voluntary Arbitrators, i.e., disputes relating to
contract-interpretation, contract-implementation, or interpretation or enforcement of company
personnel policies—illegal termination disputes do not fall within any of these categories, within a
special class of disputes that are generally within the exclusive original jurisdiction of Labor Arbiters by
express provision of law. (Vivero vs. Court of Appeals, 344 SCRA 268 [2000])
——o0o—— Ludo & Luym Corporation vs. Saornido, 395 SCRA 451, G.R. No. 140960 January 20, 2003
177
Sime Darby Pilipinas, Inc. vs. Magsalin
G.R. No. 90426. December 15, 1989.*
SIME DARBY PILIPINAS, INC., petitioners, vs. DEPUTY ADMINISTRATOR BUENAVENTURA C. MAGSALIN
as Voluntary Arbitrator and the SIME DARBY EMPLOYEES ASSOCIATION, respondents.
Labor Laws; Voluntary Arbitration; Certiorari; The award of a Voluntary Arbitrator is final and
executory after ten calendar days from receipt of the award by the parties; When certiorari will lie
against an award of a voluntary arbitrator; Remedies.—One point needs to be stressed at the outset:
the award of a Voluntary Arbitrator is final and executory after ten (10) calendar days from receipt of
the award by the parties. There was a time when the award of a Voluntary Arbitrator relating to
money claims amounting to more than P100,000.00 or forty percent (40%) of the paid-up capital of
the employer (whichever was lower), could be appealed to the National Labor Relations Commission
upon 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 will lie in appropriate cases. A petition for
certiorari under Rule 65 of the Revised Rules of Court will lie only where a grave
_______________
* THIRD DIVISION.
178
178
abuse of discretion or an act without or in excess of jurisdiction on the part of the Voluntary
Arbitrator is clearly shown. It must be borne in mind that the writ of certiorari is an extraordinary
remedy and that certiorari jurisdiction is not to be equated with appellate jurisdiction. In a special civil
action of certiorari, the Court will not engage in a review of the facts found nor even of the law as
interpreted or applied by 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 excés de pouvoir on the part of
the Arbitrator. The Labor Code and its Implementing Rules thus clearly reflect the important public
policy of encouraging recourse to voluntary arbitration and of shortening the arbitration process by
rendering the arbitral award non-appealable to the NLRC. The result is that a voluntary arbitral award
may be modified and set aside only upon the same grounds on which a decision of the NLRC itself may
be modified or set aside, by this Court.
Same; Same; Jurisdiction; Performance Bonus; The voluntary arbitrator had plenary jurisdiction and
authority to interpret the agreement, to arbitrate and to determine the scope of his own authority.—
It is thus essential to stress that the Voluntary Arbitrator had plenary jurisdiction and authority to
interpret the agreement to arbitrate and to determine the scope of his own authority subject only, in
a proper case, to the certiorari jurisdiction of this Court. The Arbitrator, as already indicated, viewed
his authority as embracing not merely the determination of the abstract question of whether or not a
performance bonus was to be granted but also, in the affirmative case, the amount thereof.
Same; Same; Same; Same; The award of the Voluntary Arbitrator of a bonus amounting to 75% of the
basic salary cannot be said to be arbitrary or capricious; Reasons.—The Voluntary Arbitrator, upon the
other hand, explicitly considered the net earnings of petitioner Sime Darby in 1988 (P100,000,000.00)
and in the first semester of 1989 (P95,377,507.00) as well as the increase in the company’s retained
earnings from P265,729,826.00 in 1988 to P324,370,372.00 as of 30 June 1989. Thus, the Arbitrator
impliedly or indirectly took into account the return on stockholders’ investment realized for the fiscal
year 1988-1989. It should also be noted that the relevant CBA provision does not specify a minimum
rate of return on investment (ROD which must be realized before any particular amount of bonus may
or should be declared by the company. The Voluntary Arbitrator also took into account, again in an
indirect manner, the performance of Sime Darby’s employees by referring in his award to “the total
labor cost incurred by
179
179
the Company”: “This Arbitrator, however, is well aware that any effort in this regard must be
tempered and balanced as against the need to sustain the continued validity of Sime Darby Pilipinas,
Inc. in accordance with the constitutional provision which recognizes ‘the right of enterprise to
reasonable returns on investment and to expansion and growth.’ Furthermore, any award to be
rendered must likewise take into account the total labor cost incurred by the Company. It should not
merely be confined to those pertaining to the members of the Sime Darby Employees Association but
necessarily include that which shall be paid and granted to all other employees of Sime Darby this
year.” (Italics supplied) On balance, we believe and so hold that the award of the Voluntary Arbitrator
of a bonus amounting to seventy-five percent (75%) of the basic monthly salary cannot be said to be
merely arbitrary or capricious or to constitute an excés de pouvoir.
PETITION for certiorari to review the decision of the Deputy Administrator of the National Conciliation
and Mediation Board.
Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for petitioner.
Cezar F. Maravilla, Jr. for private respondent.
FELICIANO, J.:
The Petition for Certiorari before us assails the award of Voluntary Arbitrator Buenaventura Magsalin
dated 17 August 1989 which directed petitioner Sime Darby Pilipinas, Inc. (Sime Darby) to pay the
members of private respondent Sime Darby Employees Association (SDEA) a perfomance bonus
equivalent to seventy-five percent (75%) of their monthly basic pay for the year 1988-1989.
On 13 June 1989, petitioner Sime Darby and private respondent SDEA executed a Collective Bargaining
Agreement (CBA) providing, among others, that:
“Article X, Section 1. A performance bonus shall be granted, the amount of which [is] to be determined
by the Company depending on the return of [sic] capital investment as reflected in the annual financial
statement.”
180
180
On 31 July 1989, the Sime Darby Salaried Employees Association-ALU (SDSEA-ALU) wrote petitioner
demanding the implementation of a provision identical to the above contained in their own CBA with
petitioner. Subsequently, petitioner called both respondent SDEA and SDEA-ALU to a meeting wherein
the former explained that it was unable to grant the performance bonus corresponding to the fiscal year
1988-1989 on the ground that the workers’ performance during said period did not justify the award of
such bonus. On 27 July 1989, private respondent SDEA filed with the National Conciliation and
Mediation Board (NCMB) an urgent request for preventive conciliation between private respondent and
petitioner.
On 1 August 1989, the parties were called to a conciliation meeting and in such meeting, both parties
agreed to submit their dispute to voluntary arbitration. Their agreement to arbitrate stated, among
other things, that they were “submitting the issue of performance bonus to voluntary arbitration” and
that “the decision/award of the voluntary arbitrator shall be respected and implemented by the parties
as final and executory, in accordance with the law.”1
On 14 August 1989, petitioner filed its position paper which aimed to show that the performance of the
members of respondent union during the year was below the production goals or targets set by Sime
Darby for 1988-1989 and below previous years’ levels for which reason the performance bonus could
not be granted. Petitioner there referred to the following performance indicators: a) number of tires
produced; b) degree of wastage of production materials; and c) number of pounds of tires produced per
man hour. On that same day, 14 August 1989, petitioner manifested before the Voluntary Arbitrator
that it would file a Reply to the union’s Position Paper submitted on 10 August 1989 not later than 18
August 1989.
However, before petitioner could submit its Reply to the union’s Position Paper, the Voluntary
Arbitrator on 17 August 1989 issued an award which declared respondent union entitled to a
performance bonus equivalent to 75% of the monthly basic pay of its members. In that award, the
Voluntary Arbitrator held that a reading of the CBA provision on the performance bonus
_______________
1 Annex “B” of the Petition, Rollo p. 29; italics supplied.
181
181
would show that said provision was mandatory hence the only issue to be resolved was the amount of
performance bonus. The Voluntary Arbitrator further stated that petitioner company’s financial
statements as of 30 June 1988 revealed retained earnings in the amount of P324,370,372.32. From the
foregoing, the Voluntary Arbitrator concluded that petitioner company could well afford to give
members of respondent union a substantial performance bonus. The Voluntary Arbitrator also stated
that there was evidence to show that the company has given performance bonuses to its managerial
and non-unionized employees as well as to monthly paid workers of the year 1988-1989.
Petitioner filed a motion for reconsideration which motion was not entertained by the Voluntary
Arbitrator upon the ground that under the ruling of this Court in Solidbank v. Bureau of Labor Relations,
(G.R. No. 64926, promulgated 8 October 1984; unpublished) he, the Voluntary Arbitrator, had
automatically lost jurisdiction over the arbitration case upon the issuance of the award.
In this Petition for Certiorari, petitioner mainly argues that respondent Voluntary Arbitrator gravely
abused his discretion in holding that the grant of performance bonus was mandatory and that the only
issue before him was the amount of the bonus. It is contended that since a performance bonus is a “gift”
based on the company’s performance, the same is not justified when the company’s performance has
been poor. Petitioner claims that during the fiscal year of 1988-1989, the company performed poorly as
shown by the decline in tire production for the said year as well as the increase of the rate of wastage of
production materials, and also by the decrease in the number of tires produced per man hour.
Petitioner also argues that even if a performance bonus were justified, the Voluntary Arbitrator gravely
abused his discretion in giving an award of 75% of the monthly basic rate without any evidence of the
basis used in arriving at such an award. It is insisted that under the relevant CBA provision, the company
determines the amount of the bonus if the same be justified. Petitioner also alleged that respondent
Arbitrator gravely erred when he based the award on the company’s retained earnings the level of
which represents earnings accumulated during prior years and not merely during the fiscal year 1988-
1989.
182
182
On 8 November 1989, the Court temporarily restrained the enforcement of the Voluntary Arbitrator’s
award to prevent the petition at bar becoming moot and academic.
We are not persuaded by petitioner’s arguments.
One point needs to be stressed at the outset: the award of a Voluntary Arbitrator is final and executory
after ten (10) calendar days from receipt of the award by the parties.2 There was a time when the award
of a Voluntary Arbitrator relating to money claims amounting to more than P100,000.00 or forty percent
(40%) of the paid-up capital of the employer (whichever was lower), could be appealed to the National
Labor Relations Commission upon the grounds of: (a) abuse of discretion; or (b) gross incompetence,
presumably of the arbitrator.3 This is no longer so today although, of course, certiorari will lie in
appropriate cases. A petition for certiorari under Rule 65 of the Revised Rules of Court will lie only
where a grave abuse of discretion or an act without or in excess of jurisdiction on the part of the
Voluntary Arbitrator is clearly shown. It must be borne in mind that the writ of certiorari is an
extraordinary remedy and that certiorari jurisdiction is not to be equated with appellate jurisdiction. In a
special civil action of certiorari, the Court will not engage in a review of the facts found nor even of the
law as interpreted or applied by 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 excés de pouvoir on the part
of the Arbitrator.4 The Labor Code and its Implementing Rules thus clearly reflect the important public
policy of encouraging recourse to voluntary arbitration and of shortening the arbitration process by
rendering the arbitral award non-appealable to the NLRC. The result is that a voluntary arbitral award
may be modified and set aside only upon the same grounds on which a decision of the NLRC itself may
be modified or set aside, by this Court.
_______________
2 Article 262-A, Labor Code, as amended by Republic Act No. 6715.
3 Section 5, Rule XI of Book No. V, Rules Implementing the Labor Code.

4 It is in this sense that Oceanic Bic Division (FFW) v. Romero, 130 SCRA 392 (1984) and
Mantrade/FMMC Division Employees and Workers Union v. Bacungan, 144 SCRA 510 (1986) are to be
understood.
183
183
Examination of the pleadings in the instant Petition shows that two (2) principal issues are raised: The
first is whether or not the Voluntary Arbitrator acted with grave abuse of discretion or without or in
excess of jurisdiction in passing upon both the question of whether or not a performance bonus is to be
granted by petitioner Sime Darby to the private respondents and the further question of the amount
thereof. The second is whether or not the award by the Arbitrator of a performance bonus amounting to
seventy five percent (75%) of the basic monthly salary of members of private respondent union itself
constituted a grave abuse of discretion or an act without or in excess of jurisdiction. We consider these
issues seriatim.
1. In respect of the first issue, petitioner Sime Darby urges that the Arbitrator gravely abused his
discretion in passing upon not only the question of whether or not a performance bonus is to be granted
but also, in the affirmative case, the matter of the amount thereof. The position of petitioner, to the
extent we can understand it, is that the Arbitrator was authorized to determine only the question of
whether or not a performance bonus was to be granted, the second question being reserved for
determination by the employer Sime Darby. We noted earlier that in their agreement to arbitrate, the
parties submitted to the Voluntary Arbitrator “the issue of performance bonus.” The language of the
agreement to arbitrate may be seen to be quite cryptic. There is no indication at all that the parties to
the arbitration agreement regarded “the issue of performance bonus” as a two-tiered issue, only one
tier of which was being submitted to arbitration. Possibly, Sime Darby’s counsel considered that issue as
having dual aspects and intended in his own mind to submit only one of those aspects to the Arbitrator;
if he did, however, he failed to reflect his thinking and intent in the arbitration agreement.
It is thus essential to stress that the Voluntary Arbitrator had plenary jurisdiction and authority to
interpret the agreement to arbitrate and to determine the scope of his own authority subject only, in a
proper case, to the certiorari jurisdiction of this Court. The Arbitrator, as already indicated, viewed his
authority as embracing not merely the determination of the abstract question of whether or not a
performance bonus was to be granted but also, in the affirmative case, the amount thereof. The
Arbitrator
184
184

said in his award:
At this juncture, it would not be amiss to emphasize to the parties that the matter of performance
bonus necessarily includes not only the determination of the existence of the right of the union to this
benefit but also the amount thereof. This conclusion arises from a perusal of the terms of the
submission agreement entered into by Sime Darby Pilipinas, Inc. and Sime Darby Employees Association
which limited the voluntary arbitration only with regard to submission of position papers of the parties,
disposition and rendition of the award. Nary (sic) a trace of qualification as to the sole issue of
performance bonus may be gleaned from a review of said agreement.
With that as a timely reminder, this Arbitrator now proceeds to resolve the issues herein submitted for
resolution. Without doubt, the Sime Darby Employees Association is entitled to performance bonus. This
conclusion arises from an analysis of the imperative terms of the CBA provision on production bonus,
hereinunder reproduced, to wit:
“A performance bonus shall be granted the amount of which to be determined by the Company
depending on the return of capital investment as reflected in the annual financial statements.”5 (Italics
supplied)
Analysis of the relevant provisions of the CBA between the parties and examination of the record of the
instant case lead us to the conclusion that the Arbitrator’s reading of the scope of his own authority
must be sustained.
Article X, Section 1 of the CBA is, grammatically speaking, cast in mandatory terms: “A performance
bonus shall be granted x x x.” The CBA provision goes on, however, immediately to say that the amount
of the performance bonus “[is] to be determined by the Company.” Thus, notwithstanding the literal or
grammatical tenor of Article X, Section 1, as a practical matter, only the issue relating to the amount of
the bonus to be declared appears important. Not much reflection is needed to show that the critical
issue is the scope of authority of the company to determine the amount of any bonus to be granted. If
the company’s discretionary authority were to be regarded as unlimited and if the company may declare
in any event a merely nominal bonus, the use of mandatory language in Article X, Section 1, would
_______________
5 Rollo, p. 27.
185
185

seem largely illusory and cosmetic in effect. Alternatively, even if one were to disregard the use of
“shall” rather than “may” in Article X, Section 1, the question of whether or not a performance bonus is
to be granted, still cannot realistically be dissociated from the intensely practical issue of the amount of
the bonus to be granted. It is noteworthy that petitioner Sime Darby itself did not spend much time
discussing as an abstract question whether or not the grant of a performance bonus is per se obligatory
upon the company. Petitioner instead focused upon the production performance of the company’s
employees as bearing upon the appropriateness of any amount of bonus. Further, if petitioner Sime
Darby’s argument were to be taken seriously, one must conclude that the parties to the arbitration
agreement intended to refer only a theoretical and practically meaningless issue to the Voluntary
Arbitrator, a conclusion that we find thoroughly unacceptable.
2. We turn then to the issue of whether or not the Voluntary Arbitrator gravely abused his discretion or
acted without or in excess of jurisdiction in awarding an amount equivalent to seventy-five percent
(75%) of the basic monthly pay of members of respondent union. Petitioner Sime Darby contends that
that award is devoid of factual basis. We understand this contention to be that the Arbitrator did not
apply the relevant CBA provision.
Once more, we are not persuaded by petitioner’s contention.
Article X, Section 1 of the CBA does not in express terms identify whose performance is to appraised in
determining an appropriate amount to be awarded as performance bonus. The Court considers that it is
the performance of the company as a whole, and not merely the production or manufacturing
performance of its employees, which is relevant in that determination. The CBA provision refers to the
return on investment of the company (ROI). The return on the stockholders’ investment, as we
understand it, relates basically to the net profits shown by the company and therefore to many more
factors than simply the extent to which production targets were achieved or the rise and fall of the
manufacturing efficiency ratios. Among those factors would be the cost of production, the quality of the
products, the cost of money, the debt-equity ratio, the cost of sales, the level of taxes due and payable,
the gross revenues realized, and so forth.
186
186
We note upon the other hand, that petitioner’s counsel failed to discuss at all before the Voluntary
Arbitrator the rate of return on stockholders’ investment achieved by Sime Darby for the year 1988-
1989; as earlier noted, counsel confined his argument and the evidence submitted by him to the
number of tires produced, the decrease in the rate of wastage of manufacturing materials, and the
productivity of the work force measured in terms of the number of tires produced per man hour.
The Voluntary Arbitrator, upon the other hand, explicitly considered the net earnings of petitioner Sime
Darby in 1988 (P100,000,000.00) and in the first semester of 1989 (P95,377,507.00) as well as the
increase in the company’s retained earnings from P265,729,826.00 in 1988 to P324,370,372.00 as of 30
June 1989. Thus, the Arbitrator impliedly or indirectly took into account the return on stockholders’
investment realized for the fiscal year 1988-1989. It should also be noted that the relevant CBA
provision does not specify a minimum rate of return on investment (ROI) which must be realized before
any particular amount of bonus may or should be declared by the company.
The Voluntary Arbitrator also took into account, again in an indirect manner, the performance of Sime
Darby’s employees by referring in his award to “the total labor cost incurred by the Company”:
“This Arbitrator, however, is well aware that any effort in this regard must be tempered and balanced as
against the need to sustain the continued viability of Sime Darby Pilipinas, Inc. in accordance with the
constitutional provision which recognizes ‘the right of enterprise to reasonable returns on investment
and to expansion and growth.’ Furthermore, any award to be rendered must likewise take into account
the total labor cost incurred by the Company. It should not merely be confined to those pertaining to
the members of the Sime Darby Employees Association but necessarily include that which shall be paid
and granted to all other employees of Sime Darby this year.”6 (Italics supplied)
On balance, we believe and so hold that the award of the Voluntary Arbitrator of a bonus amounting to
seventy-five
_______________
6 Rollo, p. 28.
187
187
percent (75%) of the basic monthly salary cannot be said to be merely arbitrary or capricious or to
constitute an excés de pouvoir.
The remaining assertions of petitioner Sime Darby relating to denial of procedural due process by the
Voluntary Arbitrator, consisting of failure to wait for petitioner’s announced Reply (basically reiterative
and amplificatory in nature) to the union’s Position Paper and of alleged failure to consider evidence
submitted by petitioner, do not require extended consideration; they are evidently bereft of merjt.
WHEREFORE, the Petition for Certiorari is DISMISSED for lack of merit. The Temporary Restraining Order
issued on 8 November 1989 is hereby LIFTED. This Decision is immediately executory. Costs against
petitioner.
SO ORDERED.
Fernan (C.J.), Gutierrez, Jr., Bidin and Cortés, JJ., concur.
Petition dismissed.
Notes.—Decisions of voluntary arbitrators are given the highest respect and generally accorded finality.
(Mantrade / FMMC Division of Employees and Workers Union vs. Bacungan, 144 SCRA 510.)
Decisions of voluntary arbitrators are subject to judicial review. (Mantrade / FMMC Division Employees
and Workers Union vs. Bacungan, 144 SCRA 510.)
——o0o——
188 Sime Darby Pilipinas, Inc. vs. Magsalin, 180 SCRA 177, G.R. No. 90426 December 15, 1989
OL. 219, MARCH 8, 1993
651
Imperial Textile Mills, Inc. vs. Sampang
G.R. No. 94960. March 8, 1993.*
IMPERIAL TEXTILE MILLS, INC. petitioner, vs. HON. VLADIMIR P.L. SAMPANG and IMPERIAL TEXTILE
MILLSMONTHLY EMPLOYEES ASSOCIATION (ITM-MEA), respondents.
Labor Law; Arbitration; Article 263 of the Labor Code makes voluntary arbitration awards or decisions
final and executory.—When the parties submitted their grievance to arbitration, they expressly
agreed that the decision of the Voluntary Arbitration would be final, executory and inappealable. In
fact, even without this stipulation, the first decision had already become so by virtue of Article 263 of
the Labor Code making voluntary arbitration awards or decisions final and executory.
Same; Same; Same; A Voluntary Arbitrator lost jurisdiction over the case submitted to him the
moment he rendered his decision—In. the case of The Consolidated Bank & Trust Corporation
(SOLIDBANK) v. Bureau of Labor Relations, et al., this Court held that the Voluntary Arbitrator lost
jurisdiction over the case submitted to him the moment he rendered his decision. Therefore, he could
no longer entertain a motion for reconsideration of the decision for its reversal or modification
PETITION for certiorari to annul the decision of the National Labor Relations Commission.
Batino, Angala, Salud & Fabia Law Offices for petitioner.
Carlo A. Domingo for private respondent.
CRUZ, J.:
On March 20, 1987, petitioner Imperial Textile Mills, Inc. (the Company, for brevity) and respondent
Imperial Textile Mills-Monthly Employees Association (the Union, for brevity) entered into a collective
bargaining agreement providing across-
_______________
* FIRST DIVISION.
652
652
the-board salary increases and other benefits retroactive to November 1, 1986.
On August 21, 1987, they executed another agreement on the job classification and wage
standardization plan. This was also to take effect retroactively on November 1, 1986.
A dispute subsequently arose in the interpretation of the two agreements. The parties then submitted it
to arbitration and designated public respondent Vladimir P.L. Sampang as the Voluntary Arbitrator. The
understanding was that his decision would be final, executory and inappealable.1
The Company maintained that the wage of a particular employee subject of possible adjustment on base
pay should be the pay with the first year CBA increase already integrated therein.
The Union argued that the CBA increase should not be included in adjusting the wages to the base pay
level, as it was separate and distinct from the increases resulting from the job classification and
standardization scheme.
On July 12, 1988, the Voluntary Arbitrator rendered a decision upholding the formula used by the
Company.
The Union filed a motion for reconsideration which was opposed by the Company.
On December 14, 1988, after a conference with the parties, the Voluntary Arbitrator rendered another
decision, this time in favor of the Union.
On January 20, 1989, the Company appealed to the NLRC. The appeal was dismissed for lack of
jurisdiction. The reason was that the original rule allowing appeal if the Voluntary Arbitrator's award was
more than P100,000.00 had already been repealed by BP 130. Moreover, under Article 262-A of the
Labor Code, as amended, awards or decisions of voluntary arbitrators become final and executory after
calendar 10 days from notice thereof to the parties.
The Company then came to this Court in this petition for certiorari under Rule 65 of the Rules of Court.
The Court has deliberated on the arguments of the parties in light of the established facts and the
applicable law and
________________
1 Original Records, p. 1.
653
VOL. 219, MARCH 8, 1993
653
finds for the Company.
The Union erred in filing a motion for reconsideration of the decision dated July 12, 1988. So did the
respondent Voluntary Arbitrator in entertaining the motion 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 inappealable. In fact, even without this stipulation,
the first decision had already become so by virtue of Article 263 of the Labor Code making voluntary
arbitration awards or decisions final and executory.
The philosophy underlying this rule was explained by Judge Freedman in the case of La Vale Plaza, Inc.,
v. R.S. Noonan, Inc.,2 thus:
It is an equally fundamental common law principle that once an arbitrator has made and published a
final award, his authority is exhausted and he is functus officio and can do nothing more in regard to the
subject matter of the arbitration. The policy which lies behind this is an unwillingness to permit one who
is not a judicial officer and who acts informally and sporadically, to re-examine a final decision which he
has already rendered, because of the potential evil of outside communication and unilateral influence
which might affect a new conclusion. The continuity of judicial office and the tradition which surround
judicial conduct is lacking in the isolated activity of an arbitrator, although even here the vast increase in
the arbitration of labor disputes has created the office of the specialized provisional arbitrator.
(Washington-Baltimore N.G., Loc. 35 v. Washington Post Co., 442 F. 2d 1234 [1971], pp. 12381239)
In the case of The Consolidated Bank & Trust Corporation (SOLIDBANK) v. Bureau of Labor Relations, et
al.,3 this Court held that the Voluntary Arbitrator lost jurisdiction over the case submitted to him the
moment he rendered his decision. Therefore, he could no longer entertain a motion for reconsideration
of the decision for its reversal or modification. Thus:
_________________
2 Fernandez, Labor Arbitration, 1975 ed., p. 380.
3 G.R. No. 64926, October 15, 1984.
654
654
By modifying the original award, respondent arbitrator exceeded his authority as such, a fact he was
well aware of, as shown by his previous Resolution of Inhibition wherein he refused to act on the
Union's motion for reconsideration of the award or decision. Thus, respondent arbitrator emphatically
ruled:
"It would be well to remind the Parties in this case that the arbitration law or jurisprudence on the
matter is explicit in its stand against revocation and amendment of the submission agreement and the
arbitration award once such has been made. The rationale behind this is that:
"An award should be regarded as the judgment of a court of last resort, so that all reasonable
presumptions should be ascertained in its favor and none to overthrow it. Otherwise, arbitration
proceedings, instead of being a quick and easy mode of obtaining justice, would be merely an
unnecessary step in the course of litigation, causing delay and expenses, but not finally settling anything.
Notwithstanding the natural reluctance of the courts to interfere with matters determined by the
arbitrators, they will do so in proper cases where the law ordains them." (Arbitration, Manguiat, citing
U.S. v. Gleason, 175 US 588)
The power and authority of the Voluntary Arbitrator to act in the case commences from his
appointment and acceptance to act as such under the submission agreement of the Parties and
terminates upon his rendition of his decision or award which is accorded the benefits of the doctrine of
res judicata as in judgments of our regular courts of law. Since the power and authority of the arbitrator
to render a valid award, order or resolution rest upon the continuing mutual consent of the parties, and
there is none shown here, the Voluntary Arbitrator has no choice but to decline to rule on the pleadings
submitted by the parties. (Emphasis supplied)
It is true that the present rule makes the voluntary arbitration award final and executory after ten
calendar days from receipt of the copy of the award or decision by the parties.4 Presumably, the
decision may still be reconsidered by the Voluntary Arbitrator on the basis of a motion for
reconsideration duly filed during that period. Such a provision, being procedural, may be applied
retroactively to pending actions as
________________
4 Article 262-A, Labor Code, as amended by R.A. 6715.
655
VOL. 219, MARCH 8, 1993

655
we have held in a number of cases.5 However, it cannot be applied to a case in which the decision had
become final before the new provision took effect, as in the case at bar.6 R.A. 6715, which introduced
amended Article 262-A of the Labor Code, became effective on March 21, 1989. The first decision of the
Voluntary Arbitrator was rendered on July 12,1988, when the law in force was Article 263 of the Labor
Code, which provided that:
Voluntary arbitration awards or decisions shall be final, unappealable, and executory.
The above-quoted provision did not expressly fix the time when the Voluntary Arbitrator's decision or
award would become final. We have held, however, that it would assume the attribute of finality upon
its issuance, subject only to judicial review in appropriate cases.7
The public respondent exceeded his authority when he acted on the Union's motion for reconsideration
and reversed his original decision. Corollarily his second decision dated December 14, 1988, having been
rendered in violation of law, must be considered null and void and of no force and effect whatsoever.8
WHEREFORE, the decision of the Voluntary Arbitrator dated December 14, 1988, is SET ASIDE for lack of
jurisdiction and his decision dated July 12, 1988, is REINSTATED.
SO ORDERED.
Griño-Aquino, Bellosillo and Quiason, JJ., concur,
Decision set aside.
__________________
5 Enrile v. CFI, 36 Phil. 574; Hosana v. Diomano and Diomano, 56 Phil. 741; Laguio v. Gamet, 171 SCRA
392)
6 People v. Sumilang, 77 Phil. 764.
7 Consolidated Bank & Trust Corp. (SOLIDBANK) v. Bureau of Labor Relations, supra.
8 Ibid., Cayena v. NLRC, 194 SCRA 134; Egypt Air Local Employees Association NTUIA-Transphil Tupas v.
NLRC, et al., G.R. No. 98933.
656
656
People vs. Manalo

Note.—The decision of a voluntary arbitrator chose by the parties is final, executory and not appealable
(Eternit Employees and Workers Union vs. De Veyra, 189 SCRA 752).
——o0o—— Imperial Textile Mills, Inc. vs. Sampang, 219 SCRA 651, G.R. No. 94960 March 8, 1993
VOL. 161, MAY 9, 1988 fs
151
Continental Marble Corp. vs. NLRC
No. L-43825. May 9, 1988.*
CONTINENTAL MARBLE CORP. and FELIPE DAVID, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION (NLRC); ARBITRATOR JOSE T. COLLADO and NASAYAO, respondents.
Administrative Law; Doctrine of exhaustion of administrative remedies cannot be invoked in case

where the NLRC decides a case without or in excess of its jurisdiction, or with grave abuse of
discretion.—The private respondent, Rodito Nasayao, in his Answer to the petition, also claims that
the case is premature for non-exhaustion of administrative remedies. He contends that the decision of
the respondent Commission should have been first appealed by petitioners to the Secretary of Labor,
and, if they are not satisfied with his decision, to appeal to the President of the Philippines, before
resort is made to the Court. The contention is without merit. The doctrine of exhaustion of
administrative remedies cannot be invoked in this case, as contended. In the recent case of John
Clement Consultants, Inc. versus National Labor Relations Commission, the Court said: “As is well
known, no law provides for an appeal from decisions of the National Labor Relations Commission;
hence, there can be no review and reversal on appeal by higher authority of its factual or legal
conclusions. When, however, it decides a case without or in excess of its jurisdiction, or with grave
abuse of discretion, the party thereby adversely affected may obtain a review and nullification of that
decision by this Court through the extraordinary writ of certiorari. Since, in this case, it appears that
the Commission has indeed acted without jurisdiction and with grave abuse of discretion in taking
cognizance of a belated appeal sought to be taken from a decision of Labor Arbiter and thereafter
reversing it, the writ of certiorari will issue to undo those acts, and do justice to the aggrieved party.”
Same; Same; Courts; Findings of fact of a voluntary arbitrator, not supported by evidence or by the
law are subject to review by the Supreme Court.—We also find no merit in the contention of Rodito
Nasayao that only questions of law, and not findings of fact of a voluntary arbitrator may be reviewed
by the Court, since the findings of fact of the voluntary arbitrator are conclusive upon the Court. While
the Court has accorded great respect for, and finality to, findings of fact of a voluntary arbitrator and
administrative agencies which have acquired expertise in their respective fields, like the Labor Depart-
_______________
* SECOND DIVISION.
152
152
ment and the National Labor Relations Commission, their findings of fact that the conclusions drawn
therefrom have to be supported by substantial evidence. In the instant case, the finding of the
voluntary arbitrator that Rodito Nasayao was an employee of the petitioner corporation is not
supported by the evidence or by the law.
Labor Laws; Elements of employer-employee relationship.—Most of all, the element of control is

lacking. In Brotherhood Labor Unity Movement in the Philippines vs. Zamora, the Court enumerated
the factors in determining whether or not an employer-employee relationship exists, to wit: “In
determining the existence of an employeremployee relationship, the elements that are generally
considered are the following: (a) the selection and engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; and (d) the employer’s power to control the employee with respect
to the means and methods by which the work is to be accomplished. It is the so-called ‘control test’
that is the most important element (Investment Planning Corp. of the Phils. vs. The Social Security
System, 21 SCRA 924; Mafinco Trading Corp. v. Ople, supra, and Rosario Brothers, Inc. v. Ople, 131
SCRA 72)."
Same; Same; Absent the power to control the employee with respect to the means and methods by
which his work was to be accomplished, there was no employee-employer relationship between the
parties; Case at bar.—In the instant case, it appears that the petitioners had no control over the
conduct of Rodito Nasayao in the performance of his work. He decided for himself on what was to be
done and worked at his own pleasure. He was not subject to definite hours or conditions of work and,
in turn, was compensated according to the results of his own effort. He had a free hand in running the
company and its business, so much so, that the petitioner Felipe David did not know, until very much
later, that Rodito Nasayao had collected old accounts receivables, not covered by their agreement,
which he converted to his own personal use. It was only after Rodito Nasayao had abandoned the
plant following discovery of his wrong-doings, that Felipe David assumed management of the plant.
Absent the power to control the employee with respect to the means and methods by which his work
was to be accomplished, there was no employer-employee relationship between the parties. Hence,
there is no basis for an award of unpaid salaries or wages to Rodito Nasayao.
PETITION for mandamus, prohibition and certiorari with preliminary injunction to review decision of the
National Labor Relations Commission.
153
VOL. 161, MAY 9, 1988
153

The facts are stated in the opinion of the Court
Benito P. Fabie for petitioners.
Narciso C. Parayno, Jr. for respondents.
PADILLA, J.:
In this petition for mandamus, prohibition and certiorari with preliminary injunction, petitioners seek to
annul and set aside the decision rendered by the respondent Arbitrator Jose T. Collado, dated 29
December 1975, in NLRC Case No. LR6151, entitled: “Rodito Nasayao, complainant, versus Continental
Marble Corp. and Felipe David, respondents,” and the resolution issued by the respondent Commission,
dated 7 May 1976, which dismissed herein petitioners’ appeal from said decision.
In his complaint before the NLRC, herein private respondent Rodito Nasayao claimed that sometime in
May 1974, he was appointed plant manager of the petitioner corporation, with an alleged compensation
of P3,000.00, a month, or 25% of the monthly net income of the company, whichever is greater, and
when the company failed to pay his salary for the months of May, June, and July 1974, Rodito Nasayao
filed a complaint with the National Labor Relations Commission, Branch IV, for the recovery of said
unpaid salaries. The case was docketed therein as NLRC Case No. LR-6151.
Answering, the herein petitioners denied that Rodito Nasayao was employed in the company as plant
manager with a fixed monthly salary of P3,000.00. They claimed that the undertaking agreed upon by
the parties was a joint venture, a sort of partnership, wherein Rodito Nasayao was to keep the
machinery in good working condition and, in return, he would get the contracts from end-users for the
installation of marble products, in which the company would not interfere. In addition, private
respondent Nasayao was to receive an amount equivalent to 25% of the net profits that the petitioner
corporation would realize, should there be any. Petitioners alleged that since there had been no profits
during said period, private respondent was not entitled to any amount.
The case was submitted for voluntary arbitration and the parties selected the herein respondent Jose T.
Collado as voluntary arbitrator. In the course of the proceedings, however, the
154
154
herein petitioners challenged the arbitrator’s capacity to try and decide the case fairly and judiciously
and asked him to desist from further hearing the case. But, the respondent arbitrator refused. In due
time, or on 29 December 1975, he rendered judgment in favor of the complainant, ordering the herein
petitioners to pay Rodito Nasayao the amount of P9,000.00, within 10 days from notice.1
Upon receipt of the decision, the herein petitioners appealed to the National Labor Relations
Commission on grounds that the labor arbiter gravely abused his discretion in persisting to hear and
decide the case notwithstanding petitioners’ request for him to desist therefrom: and that the appealed
decision is not supported by evidence.2
On 18 March 1976, Rodito Nasayao filed a motion to dismiss the appeal on the ground that the decision
of the voluntary arbitrator is final, unappealable, and immediately executory;3 and, on 23 March 1976,
he filed a motion for the issuance of a writ of execution.4
Acting on the motions, the respondent Commission, in a resolution dated 7 May 1976, dismissed the
appeal on the ground that the decision appealed from is final, unappealable and immediately executory,
and ordered the herein petitioners to comply with the decision of the voluntary arbitrator within 10
days from receipt of the resolution.5
The petitioners are before the Court in the present recourse. As prayed for, the Court issued a
temporary restraining order, restraining herein respondents from enforcing and/or carrying out the
questioned decision and resolution.6
The issue for resolution is whether or not the private respondent Rodito Nasayao was employed as plant
manager of petitioner Continental Marble Corporation with a monthly salary of P3,000.00 or 25% of its
monthly income, whichever is greater, as claimed by said respondent, or entitled to receive only an
amount equivalent to 25% of net profits, if any, that the
_______________
1 Rollo, p. 15.
2 Id., p. 23.
3 Id., p. 43.
4 Id., p. 47.
5 Id., p. 51.
6 Id., p. 55.
155
VOL. 161, MAY 9, 1988
155
company would realize, as contended by the petitioners.
The respondent arbitrator found that the agreement between the parties was for the petitioner
company to pay the private respondent, Rodito Nasayao, a monthly salary of P3,000.00, and,
consequently, ordered the company to pay Rodito Nasayao the amount of P9,000.00 covering a period
of three (3) months, that is, May, June and July 1974.
The respondent Rodito Nasayao now contends that the judgment or award of the voluntary arbitrator is
final, unappealable and immediately executory, and may not be reviewed by the Court. His contention is
based upon the provisions of Art. 262 of the Labor Code, as amended.
The petitioners, upon the other hand, maintain that “where there is patent and manifest abuse of
discretion, the rule on unappealability of awards of a voluntary arbitrator becomes flexible and it is the
inherent power of the Courts to maintain the people’s faith in the administration of justice.”
The question of the finality and unappealability of a decision and/or award of a voluntary arbitrator had
been laid to rest in Oceanic Bic Division (FFW) vs. Romero,7 and reiterated in Mantrade /FMMC Division
Employees and Workers Union vs. Bacungan.8 The Court therein ruled that it can review the decisions of
voluntary arbitrators, thus—
“We agree with the petitioner that the decisions of voluntary arbitrators must be given the highest
respect and as a general rule must be accorded a certain measure of finality. This is especially true
where the arbitrator chosen by the parties enjoys the first rate credentials of Professor Flerida Ruth
Pineda Romero, Director of the U.P. Law Center and an academician of unquestioned expertise in the
field of Labor Law. It is not correct, however, that this respect precludes the exercise of judicial review
over their decisions. Article 262 of the Labor Code making voluntary arbitration awards final,
inappealable, and executory except where the money claims exceed P1 00,000,00 or 40% of paid-up
capital of the employer or where there is abuse of discretion or gross incompetence refers to appeals to
the National Labor Relations Commission and not to judicial review.
“Inspite of statutory provisions making ‘final’ the decisions of certain administrative agencies, we have
taken cognizance of petitions
_______________
7 G.R. No. L-43890, July 16, 1984, 130 SCRA 392.
8 G.R. No. L-48437, Sept. 30, 1986, 144 SCRA 510.
156
156
questioning these decisions where want of jurisdiction, grave abuse of discretion, violation of due
process, denial of substantial justice, or erroneous interpretation of the law were brought to our
attention. There is no provision for appeal in the statute creating the Sandiganbayan but this has not
precluded us from examining decisions of this special court brought to us in proper petitions. x x x”
The Court further said:
“A voluntary arbitrator by the nature of her functions acts in a quasi-judicial capacity. There is no reason
why her decisions involving interpretation of law should be beyond this Court’s review. Administrative
officials are presumed to act in accordance with law and yet we do not hesitate to pass upon their work
where a question of law is involved or where a showing of abuse of authority or discretion in their
official acts is properly raised in petitions for certiorari.”
The foregoing pronouncements find support in Section 29 of Republic Act No. 876, otherwise known as
the Arbitration Law, which provides:
“Sec. 29. Appeals.—An appeal may be taken from an order made in a proceeding under this Act, or from
a judgment entered upon an award through certiorari proceedings, but such appeals shall be limited to
questions of law. The proceedings upon such an appeal, including the judgment thereon shall be
governed by the Rules of Court in so far as they are applicable.”
The private respondent, Rodito Nasayao, in his Answer to the petition,9 also claims that the case is
premature for non-exhaustion of administrative remedies. He contends that the decision of the
respondent Commission should have been first appealed by petitioners to the Secretary of Labor, and, if
they are not satisfied with his decision, to appeal to the President of the Philippines, before resort is
made to the Court.
The contention is without merit. The doctrine of exhaustion of administrative remedies cannot be
invoked in this case, as contended. In the recent case of John Clement Consultants, Inc. versus National
Labor Relations Commission,10 the Court said:
“As is well known, no law provides for an appeal from decisions of the National Labor Relations
Commission; hence, there can be no
_______________
9 Rollo, pp. 69, 76.
10 G.R. No. 72096, January 29,1988.
157
VOL. 161, MAY 9, 1988
157
Continental Marble Corp. us. NLRC
review and reversal on appeal by higher authority of its factual or legal conclusions. When, however, it
decides a case without or in excess of its jurisdiction, or with grave abuse of discretion, the party
thereby adversely affected may obtain a review and nullification of that decision by this Court through
the extraordinary writ of certiorari. Since, in this case, it appears that the Commission has indeed acted
without jurisdiction and with grave abuse of discretion in taking cognizance of a belated appeal sought
to be taken from a decision of Labor Arbiter and thereafter reversing it, the writ of certiorari will issue to
undo those acts, and do justice to the aggrieved party.”
We also find no merit in the contention of Rodito Nasayao that only questions of law, and not findings of
fact of a voluntary arbitrator may be reviewed by the Court, since the findings of fact of the voluntary
arbitrator are conclusive upon the Court.
While the Court has accorded great respect for, and finality to, findings of fact of a voluntary
arbitrator11 and administrative agencies which have acquired expertise in their respective fields, like
the Labor Department and the National Labor Relations Commission,12 their findings of fact and the
conclusions drawn therefrom have to be supported by substantial evidence. In that instant case, the
finding of the voluntary arbitrator that Rodito Nasayao was an employee of the petitioner corporation is
not supported by the evidence or by the law.
On the other hand, we find the version of the petitioners to be more plausible and in accord with human
nature and the ordinary course of things. As pointed out by the petitioners, it was illogical for them to
hire the private respondent Rodito Nasayao as plant manager with a monthly salary of P3,000.00, an
amount which they could ill-afford to pay, considering that the business was losing, at the time he was
hired, and that they were about to close shop in a few months’ time.
Besides, there is nothing in the record which would support the claim of Rodito Nasayao that he was an
employee of the petitioner corporation. He was not included in the company payroll, nor in the list of
company employees furnished the Social Security System.
_______________
11 Oceanic Bic Division (FFW) vs. Romero, supra.
12 Franklin Baker Company of the Philippines vs. Trajano, G.R. No 75039, Jan. 28,1988, and cases cited.
158
158
Most of all, the element of control is lacking, In Brotherhood Labor Unity Movement in the Philippines
vs. Zamora,13 the Court enumerated the factors in determining whether or not an employer-employee
relationship exists, to wit:
“In determining the existence of an employer-employee relationship, the elements that are generally
considered are the following: (a) the selection and engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; and (d) the employer’s power to control the employee with respect to
the means and methods by which the work is to be accomplished. It is the so-called ‘control test’ that is
the most important element (Investment Planning Corp. of the Phils. vs. The Social Security System, 21
SCRA 924; Mafinco Trading Corp. v. Ople, supra, and Rosario Brothers, Inc. v. Ople, 131 SCRA 72)."
In the instant case, it appears that the petitioners had no control over the conduct of Rodito Nasayao in
the performance of his work. He decided for himself on what was to be done and worked at his own
pleasure. He was not subject to definite hours or conditions of work and, in turn, was compensated
according to the results of his own effort. He had a free hand in running the company and its business,
so much so, that the petitioner Felipe David did not know, until very much later, that Rodito Nasayao
had collected old accounts receivables, not covered by their agreement, which he converted to his own
personal use. It was only after Rodito Nasayao had abandoned the plant following discovery of his
wrong-doings, that Felipe David assumed management of the plant.
Absent the power to control the employee with respect to the means and methods by which his work
was to be accomplished, there was no employer-employee relationship between the parties. Hence,
there is no basis for an award of unpaid salaries or wages to Rodito Nasayao.
WHEREFORE, the decision rendered by the respondent Jose T. Collado in NLRC Case No. LR-6151,
entitled: “Rodito Nasayao, complainant, versus Continental Marble Corp. and Felipe David,
respondents,” on 29 December 1975, and the resolution issued by the respondent National Labor
Relations Commission in said case on 7 May 1976, are REVERSED and SET
_______________
13 G.R. No. L-48645, Jan. 7, 1987, 147 SCRA 49, 54, See also: Bautista vs. Inciong, G.R, No. 52824, March
16,1988.
159
VOL. 161, MAY 9, 1988
159
Umali vs. Coquia
ASIDE and another one entered DISMISSING private respondent’s complaint. The temporary restraining
order heretofore issued by the Court is made permanent. Without costs,
SO ORDERED.
Yap (C.J.), Melencio-Herrera, Paras and Sarmiento, JJ., concur.
Decision and resolution reversed and set aside.
Notes.—Administrative remedies need not be exhausted where issue is purely a legal and constitutional
one. (Malabanan vs. Ramento, 129 SCRA 359.)
Decisions of voluntary arbitrators are subject to judicial review. (Mantrade /FMMC Division Employees
and Workers Union vs. Bacungan, 144 SCRA 510.)
.——oOo——
Continental Marble Corp. vs. NLRC, 161 SCRA 151, No. L-43825 May 9, 1988
162
Luzon Development Bank vs. Association of Luzon Development Bank Employees
G.R. No. 120319. October 6, 1995.*
LUZON DEVELOPMENT BANK, petitioner, vs. ASSOCIATION OF LUZON DEVELOPMENT BANK

EMPLOYEES and ATTY. ESTER S. GARCIA in her capacity as VOLUNTARY ARBITRATOR, respondents.
Labor Law; Arbitration; Words and Phrases; “Arbitration,” Defined.—In labor law context, arbitration
is the reference of a labor dispute to an impartial third person for determination on the basis of
evidence and arguments presented by such parties who have bound themselves to accept the
decision of the arbitrator as final and binding.
Same; Same; Same; Arbitration may be classified as either compulsory or voluntary.—Arbitration may
be classified, on the basis of the obligation on which it is based, as either compulsory or voluntary.
Same; Same; Same; “Compulsory Arbitration,” Explained .—Compulsory arbitration is a system

whereby the parties to a dispute are compelled 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
essence 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 parties, but in compulsory arbitration, such a
third party is normally appointed by the government.
Same; Same; Same; “Voluntary Arbitration,” Explained.—Under voluntary arbitration, on the other
hand, referral of a dispute by the
_______________
* EN BANC.
163
163

parties is made, pursuant to a voluntary arbitration clause in their collective agreement, to an
impartial third person for a final and binding resolution.
Same; Same; Collective Bargaining Agreements; In the Philippine context, the parties to a Collective
Bargaining Agreement are required to include therein provisions for a machinery for the resolution of
grievances arising from the interpretation or implementation of the CBA or company personnel
policies.—In the Philippine context, the parties to a Collective Bargaining Agreement (CBA) are
required to include therein provisions for a machinery for the resolution of grievances arising from the
interpretation or implementation of the CBA or company personnel policies. For this purpose, parties
to a CBA shall name and designate therein a voluntary arbitrator or a panel of arbitrators, or include a
procedure for their selection, preferably from those accredited by the National Conciliation and
Mediation Board (NCMB).
Same; Same; Administrative Law; The voluntary arbitrator, whether acting solely or in a panel, enjoys
in law the status of a quasijudicial agency but independent of, and apart from, the NLRC since his
decisions are not appealable to the latter.—In Volkschel Labor Union, et al. v. NLRC, et al., on the
settled premise that the judgments of courts and awards of quasi-judicial agencies must become final
at some definite time, this Court ruled that the awards of voluntary arbitrators determine the rights of
parties; hence, their decisions have the same legal effect as judgments of a court. In Oceanic Bic
Division (FFW), et al. v. Romero, et al., this Court ruled that “a voluntary arbitrator by the nature of
her functions acts in a quasi-judicial capacity.” Under these rulings, it follows that the voluntary
arbitrator, whether acting solely or in a panel, enjoys in law the status of a quasi-judicial agency but
independent of, and apart from, the NLRC since his decisions are not appealable to the latter.
Same; Same; Same; Words and Phrases; Governmental “Agency” or “Instrumentality,” Explained.—An
“instrumentality” is anything used as a means or agency. Thus, the terms governmental “agency” or
“instrumentality” are synonymous in the sense that either of them is a means by which a government
acts, or by which a certain government act or function is performed. The word “instrumentality,” with
respect to a state contemplates an authority to which the state delegates governmental power for the
performance of a state function.
164
164
Same; Same; B.P. 129; Jurisdiction; Appeals; The voluntary arbitrator performs a state function
pursuant to a governmental power delegated to him under the provisions therefor in the Labor Code
and he falls, therefore, within the contemplation of the term “instrumentality” in Sec. 9 of B.P. 129.—
The voluntary arbitrator no less performs a state function pursuant to a governmental power
delegated to him under the provisions therefor in the Labor Code and he falls, therefore, within the
contemplation of the term “instrumentality” in the aforequoted Sec 9 of B.P. 129. The fact that his
functions and powers are provided for in the Labor Code does not place him within the exceptions to
said Sec. 9 since he is a quasi-judicial instrumentality as contemplated therein. It will be noted that,
although the Employees Compensation Commission is also provided for in the Labor Code, Circular
No. 1-91, which is the forerunner of the present Revised Administrative Circular No. 1-95, laid down
the procedure for the appealability of its decisions to the Court of Appeals under the foregoing
rationalization, and this was later adopted by Republic Act No. 7902 in amending Sec. 9 of B.P. 129.
Same; Same; Same; Same; Same; The decision or award of the voluntary arbitrator or panel of
arbitrators should be appealed to the Court of Appeals.—A fortiori, the decision or award of the
voluntary arbitrator or panel of arbitrators should likewise be appealable to the Court of Appeals, in
line with the procedure outlined in Revised Administrative Circular No. 1-95, just like those of the
quasi-judicial agencies, boards and commissions enumerated therein.
Arbitration Law (RA 876); Under the Arbitration Law, the award or decision of the voluntary arbitrator
is equated with that of the Regional Trial Courts.—In the same vein, it is worth mentioning that under
Section 22 of Republic Act No. 876, also known as the Arbitration Law, arbitration is deemed a special
proceeding of which the court specified in the contract or submission, or if none be specified, the
Regional Trial Court for the province or city in which one of the parties resides or is doing business, or
in which the arbitration is held, shall have jurisdiction. A party to the controversy may, at any time
within one (1) month after an award is made, apply to the court having jurisdiction for an order
confirming the award and the court must grant such order unless the award is vacated, modified or
corrected. In effect, this equates the award or decision of the voluntary arbitrator with that of the
regional trial court. Consequently, in a petition for certiorari from that award or decision, the Court of
Appeals must be deemed to have concurrent jurisdiction with the Supreme Court. As a matter of
policy, this Court shall henceforth remand to the Court of Appeals petitions of this nature for proper
disposition.
165
165
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari and Prohibition.
Eusebio P. Navarro, Jr. and Adolfo R. Fandalian for petitioner.
Ester S. Garcia for and in her own behalf.
Napoleon Banzuela, Jr. for private respondents.
ROMERO, J.:
From a submission agreement of the Luzon Development Bank (LDB) and the Association of Luzon
Development Bank Employees (ALDBE) arose an arbitration case to resolve the following issue:
“Whether or not the company has violated the Collective Bargaining Agreement provision and the
Memorandum of Agreement dated April 1994, on promotion.”
At a conference, the parties agreed on the submission of their respective Position Papers on December
1-15, 1994. Atty. Ester S. Garcia, in her capacity as Voluntary Arbitrator, received ALDBE’s Position Paper
on January 18, 1995. LDB, on the other hand, failed to submit its Position Paper despite a letter from the
Voluntary Arbitrator reminding them to do so. As of May 23, 1995 no Position Paper had been filed by
LDB.
On May 24, 1995, without LDB’s Position Paper, the Voluntary Arbitrator rendered a decision disposing
as follows:
“WHEREFORE, finding is hereby made that the Bank has not adhered to the Collective Bargaining
Agreement provision nor the Memorandum of Agreement on promotion.”
Hence, this petition for certiorari and prohibition seeking to set aside the decision of the Voluntary
Arbitrator and to prohibit her from enforcing the same.
166
166
In labor law context, arbitration is the reference of a labor dispute to an impartial third person for
determination on the basis of evidence and arguments presented by such parties who have bound
themselves to accept the decision of the arbitrator as final and binding.
Arbitration may be classified, on the basis of the obligation on which it is based, as either compulsory or
voluntary.
Compulsory arbitration is a system whereby the parties to a dispute are compelled 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.1 The essence 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 parties, but in
compulsory arbitration, such a third party is normally appointed by the government.
Under voluntary arbitration, on the other hand, referral of a dispute by the parties is made, pursuant to
a voluntary arbitration clause in their collective agreement, to an impartial third person for a final and
binding resolution.2 Ideally, arbitration awards are supposed to be complied with by both parties
without delay, 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 presumed to have freely chosen arbitration
as the mode of settlement for that particular dispute. Pursuant thereto, they have chosen a mutually
acceptable arbitrator who shall hear and decide their case. Above all, they have mutually agreed to be
bound by said arbitrator’s decision.
In the Philippine context, the parties to a Collective Bargaining Agreement (CBA) are required to include
therein provisions for a machinery for the resolution of grievances arising from the interpretation or
implementation of the CBA or company personnel policies.3 For this purpose, parties to a CBA shall
name and designate therein a voluntary arbitrator or a panel of arbitrators, or include a procedure for
their selection, preferably from those
_____________
1 Seide, A Dictionary of Arbitration (1970).
2 Ibid.
3 Art. 260, Labor Code.
167
167
accredited by the National Conciliation and Mediation Board (NCMB). Article 261 of the Labor Code
accordingly provides for exclusive original jurisdiction of such voluntary arbitrator or panel of arbitrators
over (1) the interpretation or implementation of the CBA and (2) the interpretation or enforcement of
company personnel policies. Article 262 authorizes them, but only upon agreement of the parties, to
exercise jurisdiction over other labor disputes.
On the other hand, a labor arbiter under Article 217 of the Labor Code has jurisdiction over the following
enumerated cases:
“x x x. (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and
exclusive jurisdiction 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 agricultural or non-agricultural:
relations;
6. Except claims for Employees’ Compensation, Social Security, Medicare and maternity benefits, all
other claims, arising from employer-employee relations, including those of persons in domestic or
household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of
whether accompanied with a claim for reinstatement.
xxx xxx x x x”
It will thus be noted that the jurisdiction conferred by law on a voluntary arbitrator or a panel of such
arbitrators is quite limited compared to the original jurisdiction of the labor arbiter and the appellate
jurisdiction of the National Labor Relations Commis-
168
168
sion (NLRC) for that matter.4 The state of our present law relating to voluntary arbitration provides that
“(t)he award or decision of the Voluntary Arbitrator x x x shall be final and executory after ten (10)
calendar days from receipt of the copy of the award or decision by the parties,”5 while the “(d)ecision,
awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any
or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders.”6 Hence,
while there is an express mode of appeal from the decision of a labor arbiter, Republic Act No. 6715 is
silent with respect to an appeal from the decision of a voluntary arbitrator.
Yet, past practice shows that a decision or award of a voluntary arbitrator is, more often than not,
elevated to the Supreme Court itself on a petition for certiorari,7 in effect equating the voluntary
arbitrator with the NLRC or the Court of Appeals. In the view of the Court, this is illogical and imposes an
unnecessary burden upon it.
In Volkschel Labor Union, et al. v. NLRC, et al.,8on the settled premise that the judgments of courts and
awards of quasijudicial agencies must become final at some definite time, this Court ruled that the
awards of voluntary arbitrators determine the rights of parties; hence, their decisions have the same
legal effect as judgments of a court. In Oceanic Bic Division (FFW), et al. v. Romero, et al.,9 this Court
ruled that “a voluntary arbitrator by the nature of her functions acts in a quasi-judicial capacity.” Under
these rulings, it follows that the voluntary arbitrator, whether acting solely or in a panel, enjoys in law
the status of a quasi-judicial agency but independent of, and apart from, the
_______________

5 Art. 262-A, par. 4, Labor Code.
7 Oceanic Bic Division (FFW), et al. v. Romero, et al., 130 SCRA 392 (1984); Sime Darby Pilipinas, Inc. v.
Magsalin, et al., 180 SCRA 177 (1989).
8 98 SCRA 314 (1980).
9 Supra.
169
169
NLRC since his decisions are not appealable to the latter.10
Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides that the Court of Appeals shall
exercise:
“x x x x x x x x x (3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions,
orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or
commissions, including the Securities and Exchange Commission, the Employees’ Compensation
Commission and the Civil Service Commission, except those falling within the appellate jurisdiction of
the Supreme Court in accordance with the Constitution, the Labor Code of the Philippines under
Presidential Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the third
paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.
xxx xxx x x x”
Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators may not strictly be
considered as a quasijudicial agency, board or commission, still both he and the panel are
comprehended within the concept of a “quasi-judicial instrumentality.” It may even be stated that it was
to meet the very situation presented by the quasi-judicial functions of the voluntary arbitrators here, as
well as the subsequent arbitrator/arbitral tribunal operating under the Construction Industry Arbitration
Commission,11 that the broader term “instrumentalities” was purposely included in the above-quoted
provision.
An “instrumentality” is anything used as a means or agency.12 Thus, the terms governmental “agency”
or “instrumentality” are synonymous in the sense that either of them is a means by which a government
acts, or by which a certain government act or function is performed.13 The word “instrumentality,” with
re-
_________________
10 Art. 262-A, in relation to Art. 217 (b) and (c), Labor Code, as amended by Sec. 9, R.A. 6715.
11 Executive Order No. 1008.
12 Laurens Federal Sav. And Loan Ass’n, v. South Carolina Tax Commission, 112 S.E. 2d 716, 719, 236 S.C.
2.
13 Govt. of P.I. v. Springer, et al., 50 Phil. 259, 334 (1927).
170
170
spect to a state, contemplates an authority to which the state delegates governmental power for the
performance of a state function.14 An individual person, like an administrator or executor, is a judicial
instrumentality in the settling of an estate,15 in the same manner that a sub-agent appointed by a
bankruptcy court is an instrumentality of the court,16 and a trustee in bankruptcy of a defunct
corporation is an instrumentality of the state.17
The voluntary arbitrator no less performs a state function pursuant to a governmental power delegated
to him under the provisions therefor in the Labor Code and he falls, therefore, within the contemplation
of the term “instrumentality” in the aforequoted Sec. 9 of B.P. 129. The fact that his functions and
powers are provided for in the Labor Code does not place him within the exceptions to said Sec. 9 since
he is a quasi-judicial instrumentality as contemplated therein. It will be noted that, although the
Employees’ Compensation Commission is also provided for in the Labor Code, Circular No. 1-91, which is
the forerunner of the present Revised Administrative Circular No. 1-95, laid down the procedure for the
appealability of its decisions to the Court of Appeals under the foregoing rationalization, and this was
later adopted by Republic Act No. 7902 in amending Sec. 9 of B.P. 129.
A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should likewise be
appealable to the Court of Appeals, in line with the procedure outlined in Revised Administrative
Circular No. 1-95, just like those of the quasi-judicial agencies, boards and commissions enumerated
therein.
This would be in furtherance of, and consistent with, the original purpose of Circular No. 1-91 to provide
a uniform procedure for the appellate review of adjudications of all quasi-judicial entities18 not
expressly excepted from the coverage of Sec. 9 of
_____________
14 Ciulla v. State, 77 N.Y.S. 2d 545, 550, 191 Misc. 528.
15 In re Turncock’s Estate, 300 N.W. 155, 156, 238 Wis. 438.

16 In re Brown Co., D.C. Me., 36 F. Supp. 275, 277.
17 Gagne v. Brush, D.C.N.H., 30 F. Supp. 714, 716.
18 First Lepanto Ceramics, Inc. v. CA, et al., 231 SCRA 30 (1994).
171
171
B.P. 129 by either the Constitution or another statute. Nor will it run counter to the legislative
intendment that decisions of the NLRC be reviewable directly by the Supreme Court since, precisely, the
cases within the adjudicative competence of the voluntary arbitrator are excluded from the jurisdiction
of the NLRC or the labor arbiter.
In the same vein, it is worth mentioning that under Section 22 of Republic Act No. 876, also known as
the Arbitration Law, arbitration is deemed a special proceeding of which the court specified in the
contract or submission, or if none be specified, the Regional Trial Court for the province or city in which
one of the parties resides or is doing business, or in which the arbitration is held, shall have jurisdiction.
A party to the controversy may, at any time within one (1) month after an award is made, apply to the
court having jurisdiction for an order confirming the award and the court must grant such order unless
the award is vacated, modified or corrected.19
In effect, this equates the award or decision of the voluntary arbitrator with that of the regional trial
court. Consequently, in a petition for certiorari from that award or decision, the Court of Appeals must
be deemed to have concurrent jurisdiction with the Supreme Court. As a matter of policy, this Court
shall henceforth remand to the Court of Appeals petitions of this nature for proper disposition.
ACCORDINGLY, the Court resolved to REFER this case to the Court of Appeals.
Padilla, Regalado, Davide, Jr., Bellosillo, Puno, Vitug, Kapunan, Mendoza, Francisco and Hermosisima,
Jr., JJ., concur.
Narvasa (C.J.) and Melo, J., On leave.
Feliciano, J., In the result.
Case referred to the Court of Appeals.
_____________
19 Section 23, R.A. No. 876.
172
172
Cordova vs. Labayen
Notes.—Parties to sales contracts and/or bills of lading are bound by arbitration clauses thereat.
(Puromines, Inc. vs. Court of Appeals, 220 SCRA 281 [1993])
Interpretation by arbitrators which is a faithful application of the provisions of the Agreement does not
have the effect of creating a new contract. (Adamson vs. Court of Appeals, 232 SCRA 602 [1994])
——o0o——
© Copyright 2017 Central Book Supply, Inc. All rights reserved. Luzon Development Bank vs. Association
of Luzon Development Bank Employees, 249 SCRA 162, G.R. No. 120319 October 6, 1995
UNFAIR LABOR PRACTICE
244
The Insular Life Assurance Co., Ltd., Employees Association-NATU vs. The Insular Life Assurance Co.,
Ltd.
No. L-25291. January 30, 1971.
THE INSULAR LIFE ASSURANCE CO., LTD., EMPLOYEES ASSOCIATION-NATU, FGU INSURANCE GROUP
WORKERS & EMPLOYEES ASSOCIATION-NATU, and INSULAR LIFE BUILDING EMPLOYEES
ASSOCIATION-NATU, petitioners, vs. THE INSULAR LIFE ASSURANCE CO., LTD., FGU INSURANCE
GROUP,JOSE M. OLBES and COURT OF INDUSTRIAL RELATIONS, respondents.
Labor law; Collective bargaining; Unfair labor practice; Notifying absent employees individually during
strike by employer.—The act of an employer in notifying absent employees individually during a strike
following unproductive efforts at collective bargaining that the plant would be operated the next day
and that their jobs were open for them should they want to come in has been held to be an unfair
labor practice, as an active interference with the right of collective bargaining through dealing with
the employees individually instead of through their collective bargaining representatives.
Same; Same; Same; When employer negotiates or attempts to negotiate with his employees
individually in connection with changes in the agreement is unfair labor practice.—It is an unfair labor
practice for an employer operating under a collective bargaining agreement to negotiate or attempt
to negotiate with his employees individually in connection with changes in the agreement. And the
basis of the prohibition regarding individual bargaining with the strikers is that although the
245
245
The Insular Life Assurance Co., Ltd., Employees Association-NATU vs. The Insular Life Assurance Co., Ltd.
union is on strike, the employer is still under obligation to bargain with the union as the employees’
bargaining representative.
Same; Same; When act of company president in writing letters to strikers urging them to return to
work is an interference with the right to collective bargaining; Individual solicitation is also
interference.—Some such similar actions are illegal as constituting unwarranted acts of interference.
Thus, the act of a company president in writing letters to the strikers, urging their return to work on
terms inconsistent with their union membership, was adjudged as a constituting interference with the
exercise of his employee’s right to collective bargaining. It is likewise an act of interference for the
employer to send a letter to all employees notifying them to return to work at a time specified
therein, otherwise new employees would be engaged to perform their jobs. Individual solicitation of
the employees or visiting their homes, with the employer or his representative urging the employees
to cease union activity or cease striking, constitutes unfair labor practice. All the above-detailed
activities are unfair practices because they tend to undermine the concerted activity of the
employees, an activity to which they are entitled free from the employer’s molestation.
Constitutional law; Freedom of speech; When free speech protection under the Constitution is
inapplicable.—Moreover, since exhibit A is a letter containing promises of benefits to the employees
in order to entice them to return to work, it is not protected by the free speech provisions of the
Constitution. The same is true with exhibit B since it contained threats to obtain replacements for the
striking employees in the event they did not report for work on June 2, 1952. The free speech
protection under the Constitution is inapplicable where the expression of opinion by the employer of
his agent contains a promise of benefit, or threats, or reprisal.
Labor law; Unfair labor practice; When strike-breaking or union-busting is unfair labor practice.—
When the respondent offered reinstatement and attempted to “bribe” the strikers with “comfortable
cots,” free coffee and occasional movies,” “overtime” pay for “work performed in excess of eight
hours,” and ‘‘arrangements” for their families, so they would abandon the strike and return to work,
they were guilty of strike-breaking and/or union-busting and, consequently, of unfair labor practice. It
is equivalent to an attempt to break a strike for an employer to offer reinstatement to striking
employees individually, when they are represented by a union, since the em-
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ployees thus offered reinstatement are unable to determine what the consequences of returning to
work would be.
Same: Collective bargaining; Labor unions; Acts violative of right to organize, form and join labor
organizations.—Violative of the rights to organize, form and join labor organizations are the following
acts: the offer of a Christmas bonus to all “loyal” employees of a company shortly after the making of
a request by the union to bargain; wage increases given for the purpose of mollifying employees after
the employer has refused to bargain with the union, or for the purpose of inducing striking employees
to return to work; the employer’s promises of benefits in return for the strikers’ abandonment of their
strike in support of the union; and the employer’s statement, made about 6 weeks after the strike
started, to a group of strikers in a restaurant to the effect that if the strikers returned to work, they
would receive new benefits in the form of hospitalization, accident insurance, profit-sharing, and a
new building to work in.
Same; Unfair labor practice; Employer’s interference; Test of whether an employer has interfered with
and coerced em-ployees.—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 conduct
which it may reasonably be said tends to interfere with the free exercise of employees’ right 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 statements of threats of the employer if there is a reasonable inference
that anti-union conduct of the employer does have an adverse effect on self-organization and
collective bargaining.
Same; Same; The letters should be interpreted according to the totality of conduct doctrine.—The
letters, exhibits A and B, should not be considered by themselves alone but should be read in the light
of the preceding and subsequent circumstances surrounding. The letter should be interpreted
according to the “totality of conduct doctrine,” whereby the culpability of an employer’s remarks
were to be evaluated not only 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 themselves, frequently were held to
be culpable because of the circumstances under which 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.
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Same; Same; Discrimination practiced by the companies.— Our point of inquiry should therefore be
directed at whether they also complied with the second condition. It is not denied that when the
strikers reported for work on June 2, 1958, 63 members of the Unions were refused readmission
because they had pending criminal charges. However, despite the fact that they were able to secure
their respective clearances 34 officials and union members were still refused readmission on the
alleged ground that they committed acts inimical to the Companies. It is beyond dispute, however,
that non-strikers who also had criminal charges pending against them in fiscal’s office, arising from
the same incidents whence the criminal charges against the strikers evolved, were readily readmitted
and were not required to secure clearances. This is a clear act of discrimination practiced by the
Companies in the process of rehiring and is therefore a violation of sec. 4(a) (4) of the Industrial Peace
Act.
Same; Same; Discrimination in dismissal of employees constitutes waiver of employer’s right to

dismiss.—So is there an unfair labor practice where the employer, although authorized by the Court of
Industrial Relations to dismiss the employees who participated in an illegal strike, dismissed only the
leaders of the strikers, such dismissal being evidence of discrimination against those dismissed and
constituting a waiver of the employer’s right to dismiss the striking employees and condonation of the
fault committed by them.
Same; Same; Delayed reinstatement of employees constitutes discrimination.—Delayed

reinstatement is a form of discrimination, as is having the machinery of reinstatement in the hands of
employees hostile to the strikers, and reinstating a union official who formerly worked in a unionized
plant, to a job in another mill, which was imperfectly organized.
Same; Same; When failure to report for work after notice to return does not constitute abandonment
nor bar reinstatement—At any rate, it has been held that mere failure to report for work after notice
to return, does not constitute abandonment nor bar reinstatement. In one case, the U.S. Supreme
Court held that the taking back of six of eleven men constituted discrimination although the five
strikers who were not reinstated, all of whom were prominent in the union and in the strike, reported
for work at various times during the next three days, but were told that there were no opening.
Constitutional law; Freedom of speech; When a statement made is but an expression of free speech
protected by the Constitution.—Being a union man and one of the strikers,
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Tongos was expected to reveal the whole truth on whether or not the respondent Companies were
justified in refusing to accede to union demands. After all, not being one of the supervisors, he was
not a part of management. And his statement if indeed made, is but an expression of free speech
protected by the Constitution.
Labor law; Right to strike; When heated altercations and occasional blows exchanged on the picket
line do not affect or diminish the right to strike.—We think it must be conceded that some disorder is
unfortunately quite usual in any extensive or long drawn out strike. A strike is essentially a battle
waged with economic weapons. Engaged in it are human beings whose feelings are stirred to the
depths. Rising passions call forth hot words. Hot words lead to blows on the picket line. The
transformation from economic to physical combat by those engaged in the contest is difficult to
prevent even when cool heads direct the fight. Violence of this nature, however much it is to be
regretted, must have been in the contemplation of the Congress when it provided in Section 13 of Act
29 USCA Sec. 163, that nothing therein should be construed so as to interfere with or impede or
diminish in any way the right to strike. If this were not so, the rights afforded to employees by the Act
would indeed be illusory. We accordingly recently held that it was not intended by the Act that minor
disorders of this nature would deprive a striker of the possibility of reinstatement.
Same; Unfair labor practice; Spying of the union activities is unfair labor practice.—Under the
circumstances, there is good ground to believe that Encarnacion was made to spy on the activities of
the union members. This act of the respondents is considered unjustifiable interference in the union
activities of the petitioners and is unfair labor practice.
Same; Back wages; Strikers are entitled for back pay when strikes arise from unfair labor practice.—
The lower court should have ordered the reinstatement of the officials and members of the Unions,
with full back wages from June 2, 1958 to the date of their actual reinstatement to their usual
employment. Because all too clear from the factual and environmental milieu of this case, coupled
with settled decisional law, is that the Unions went on strike because of the unfair labor practices
committed by the respondents, and that when the strikers reported back for work—upon the
invitation of the respondents—they were discriminatory dismissed. The members and officials of the
Unions therefore are entitled to reinstatement with back pay.
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Same: Reinstatement; The fact that positions of union members were already filled by replacements is
not a defense to reinstatement.—Where the employers’ unfair labor practice caused or contributed to
the strike or where the lock-out by the employer constitutes an unfair labor practice, the employer
cannot successfully urge as a defense that the striking or locked-out employee’s position has been
filled by replacement. Under such circumstances, if no job sufficiently and satisfactorily comparable to
that previously held by the aggrieved employee can be found, the employer must discharge the
replacement employee, if necessary, to restore the striking or locked-out worker to his old
comparable position, x x x If the employer’s improper conduct was an initial cause of the strike, all the
strikers are entitled to reinstatement and the dismissal of replacement employees wherever
necessary.
Same; Back pay; Computation; What date should the backpay payable to the unionists be
computed.—It is now a settled doctrine that strikers who are entitled to reinstatement are not
entitled to back pay during the period of the strike, even though it is caused by an unfair labor
practice. However, if they offer to return to work under the same conditions just before the strike, the
refusal to re-employ or the imposition of conditions amounting to unfair labor practice is a violation
of section 4 (a) (4) of the Industrial Peace Act and the employer is liable for backpay from the date of
the offer. We have likewise ruled that discriminatorily dismissed employees must receive backpay
from the date of the act of discrimination, that is, from the date of their discharge.
Same; Separation pay; Republic, Act 1052 construed.— While Republic Act No. 1052 authorizes a
commercial establishment to terminate the employment of its employee by serving notice on him one
month in advance, or, in the absence thereof, by paying him one month compensation from the date
of the termination of his employment, such Act does not give to the employer a blanket authority to
terminate the employment regardless of the cause or purpose behind such termination. Certainly, it
cannot be made use of as a cloak to circumvent a final order of the court or a scheme to trample upon
the right of an employee who has been the victim of an unfair labor practice.
Same; Supreme Court decisions and rulings; Duty of courts, judges and lawyers to reproduce or copy
the same word-for-word and punctuation mark-for-punctuation mark.—We must articulate our firm
view that in citing this Court’s decisions
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and rulings, it is the bounden duty of courts, judges and lawyers to reproduce or copy the same word-
for-word and punctuation mark-for-punctuation mark. Indeed, there is a salient and salutary reason
why they should do this. Only from this Tribunal’s decisions and rulings do all other courts, as well as
lawyers and litigants, take their bearings. This is because the decisions referred to in article 8 of the
Civil Code which reads, “Judicial decisions applying or interpreting the laws or the Constitution shall
form a part of the legal system of the Philippines,” are only those enunciated by this Court of last
resort. We said in no uncertain terms in Miranda, et al. vs. Imperial, et al. (77 Phil. 1066) that “[O]nly
the decisions of this Honorable Court establish jurisprudence or doctrines in this jurisdiction.” Thus,
ever present is the danger that if not faithfully and exactly quoted, the decisions and rulings of this
Court may lose their proper and correct meaning, to the detriment of other courts, lawyers and the
public who may thereby be misled. But if inferior courts and members of the bar meticulously
discharge their duty to check and recheck their citations of authorities culled not only from this
Court’s decisions but from other sources and make certain that they are verbatim reproductions down
to the last word and punctuation mark, appellate courts will be precluded from acting on
misinformation, as well as be saved precious time in finding out whether the citations are correct.
APPEAL by certiorari to review a decision and a resolution of the Court of Industrial Relations.
Lacsina, Lontok & Perez and Luis F. Aquino for petitioners.
Francisco de los Reyes for respondent Court of Industrial Relations.

Araneta, Mendoza & Papa for other respondents.
CASTRO, J .:
Appeal, by certiorari to review a decision and a resolution en banc of the Court of Industrial Relations
dated August 17, 1965 and October 20, 1965, respectively, in Case 1698-ULP.
The Insular Life Assurance Co., Ltd., Employees Association-NATU, FGU Insurance Group Workers &
Employees
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Association-NATU, and Insular Life Building Employees Association-NATU (hereinafter referred to as the
Unions), while still members of the Federation of Free Workers (FFW), entered into separate collective
bargaining agreements with the Insular Life Assurance Co., Ltd. and the FGU Insurance Group
(hereinafter referred to as the Companies) .
Two of the lawyers of the Unions then were Felipe Enaje and Ramon Garcia; the latter was formerly the
secretary-treasurer of the FFW and acting president of the Insular Life/FGU unions and the Insular Life
Building Employees Association. Garcia, as such acting president, in a circular issued in his name and
signed by him, tried to dissuade the members of the Unions from disaffiliating with the FFW and joining
the National Association of Trade Unions (NATU), to no avail.
Enaje and Garcia soon left the FFW and secured employment with the Anti-Dummy Board of the
Department of Justice. Thereafter, the Companies hired Garcia in the latter part of 1956 as assistant
corporate secretary and legal assistant in their Legal Department, and he was soon receiving P900 a
month, or P600 more than he was receiving from the FFW. Enaje was hired on or about February 19,
1957 as personnel manager of the Companies, and was likewise made chairman of the negotiating panel
for the Companies in the collective bargaining with the Unions.
In a letter dated September 16, 1957, the Unions jointly submitted proposals to the Companies for a
modified renewal of their respective collective bargaining contracts which were then due to expire on
September 30, 1957. The parties mutually agreed, and to make whatever benefits could be agreed upon
retroactively effective October 1, 1957.
Thereafter, in the months of September and October 1957 negotiations were conducted on the Union’s
proposals, but these were snagged by a deadlock on the issue of union shop, as a result of which the
Unions filed on January 27, 1958 a notice of strike for “deadlock on collective bargain-
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ing.” Several conciliation conferences were held under the auspices of the Department of Labor wherein
the conciliators urged the Companies to make reply to the Unions’ proposals en toto so that the said
Unions might consider the feasibility of dropping their demand for union security in exchange for other
benefits. However, the Companies did not make any counter-proposals but, instead, insisted that the
Unions first drop their demand for union security, promising money benefits if this was done.
Thereupon, and prior to April 15, 1958, the petitioner Insular Life Building Employees Association-NATU
dropped this particular demand, and requested the Companies to answer its demands, point by point,
en toto. But the respondent Insular Life Assurance Co. still refused to make any counter-proposals. In a
letter addressed to the two other Unions by the joint management of the Companies, the former were
also asked to drop their union security demand, otherwise the Companies “would no longer consider
themselves bound by the commitment to make money benefits retroactive to October 1, 1957.” By a
letter dated April 17, 1958, the remaining two petitioner unions likewise dropped their demand for
union shop. April 25, 1958 then was set by the parties to meet and discuss the remaining demands.
From April 25 to May 6, 1958, the parties negotiated on the labor demands but with no satisfactory
result due to a stalemate on the matter of salary increases. On May 13, 1958 the Unions demanded
from the Companies final counter-proposals on their economic demands, particularly on salary
increases. Instead of giving counter-proposals, the Companies on May 15, 1958 presented facts and
figures and requested the Unions to submit a workable formula which would justify their own proposals,
taking into account the financial position of the former. Forthwith the Unions voted to declare a strike in
protest against what they considered the Companies’ unfair labor practices.
Meanwhile, eighty-seven (87) unionists were reclassified as supervisors without increase in salary nor in
responsibility while negotiations were going on in the Department of Labor after the notice to strike was
served on the Companies. These employees resigned from the Unions.
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On May 20, 1958 the Unions went on strike and picketed the offices of the Insular Life Building at Plaza
Moraga.
On May 21, 1958 the Companies through their acting manager and president, the respondent Jose M.
Olbes (hereinafter referred to as the respondent Olbes), sent to each of the strikers a letter (exhibit A)
quoted verbatim as follows:
“We recognize it is your privilege both to strike and to conduct picketing.
“However, if any of you would like to come back to work voluntarily, you may:
“1. Advise the nearest police officer or security guard of your intention to do so.
“2. Take your meals within the office.
“3. Make a choice whether to go home at the end of the day or to sleep nights at the office where
comfortable cots have been prepared.
“4. Enjoy free coffee and occasional movies.
“5. Be paid overtime for work performed in excess of eight hours.
“6. Be sure arrangements will be made for your families.
“The decision to make is yours—whether you still believe in the motives of the strike or in the fairness of
the Management.”
The Unions, however, continued on strike, with the exception of a few unionists who were convinced to
desist by the aforesaid letter of May 21, 1958.
From the date the strike was called on May 21, 1958, until it was called off on May 31, 1958, some
management men tried to break thru the Unions’ picket lines. Thus, on May 21, 1958 Garcia, assistant
corporate secretary, and Vicente Abella, chief of the personnel records section, respectively of the
Companies, tried to penetrate the picket lines in front of the Insular Life Building. Garcia, upon
approaching the picket line, tossed aside the placard of a picketer, one Paulino Bugay; a fight ensued
between them, in which both suffered injuries. The Companies organized three bus-loads of employees,
including a photographer,
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who with the said respondent Olbes, succeeded in penetrating the picket lines in front of the Insular Life
Building, thus causing injuries to the picketers and also to the strike-breakers due to the resistance
offered by some picketers.
Alleging that some non-strikers were injured and with the use of photographs as evidence, the
Companies then filed criminal charges against the strikers with the City Fiscal’s Office of Manila. During
the pendency of the said cases in the fiscal’s office, the Companies likewise filed a petition for injunction
with damages with the Court of First Instance of Manila which, on the basis of the pendency of the
various criminal cases against striking members of the Unions, issued on May 31, 1958 an order
restraining the strikers, until further orders of the said court, from stopping, impeding, obstructing, etc.
the free and peaceful use of the Companies’ gates, entrance and driveway and the free movement of
persons and vehicles to and from, out and in, of the Companies’ building.
On the same date, the Companies, again through the respondent Olbes, sent individually to the strikers
a letter (exhibit B), quoted hereunder in its entirety:
“The first day of the strike was last 21 May 1958.
“Our position remains unchanged and the strike has made us even more convinced of our decision.
“We do not know how long you intend to stay out, but we cannot hold your positions open for long. We
have continued to operate and will continue to do so with or without you.
“If you are still interested in continuing in the employ of the Group Companies, and if there are no
criminal charges pending against you, we are giving you until 2 June 1958 to report for work at the home
office. If by this date you have not yet reported, we may be forced to obtain your replacement.
“Before, the decisions was yours to make.
“So it is now.”
Incidentally, all of the more than 120 criminal charges filed against the members of the Unions, except
three (3),
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were dismissed by the fiscal’s office and by the courts. These three cases involved “slight physical
injuries” against one striker and “light coercion” against two others.
At any rate, because of the issuance of the writ of preliminary injunction against them as well as the
ultimatum of the Companies giving them until June 2, 1958 to return to their jobs or else be replaced,
the striking employees decided to call off their strike and to report back to work on June 2, 1958.
However, before readmitting the strikers, the Companies required them not only to secure clearances
from the City Fiscal’s Office of Manila but also to be screened by a management committee among the
members of which were Enage and Garcia. The screening committee initially rejected 83 strikers with
pending criminal charges. However, all non-strikers with pending criminal charges which arose from the
breakthrough incident were readmitted immediately by the Companies without being required to
secure clearances from the fiscal’s office. Subsequently, when practically all the strikers had secured
clearances from the fiscal’s office, the Companies readmitted only some but adamantly refused
readmission to 34 officials and members of the Unions who were most active in the strike, on the
ground that they committed “acts inimical to the interest of the respondents,” without however stating
the specific acts allegedly committed. Among those who were refused readmission are Emiliano
Tabasondra, vice president of the Insular Life Building Employees’ AssociationNATU; Florencio Ibarra,
president of the FGU Insurance Group Workers & Employees Association-NATU; and Isagani Du Timbol,
acting president of the Insular Life Assurance Co., Ltd. Employees Association-NATU. Some 24 of the
above number were ultimately notified months later that they were being dismissed retroactively as of
June 2, 1958 and given separation pay checks computed under Rep. Act 1787, while others (ten in
number) up to now have not been readmitted although there have been no formal dismissal notices
given to them.
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On July 29, 1958 the CIR prosecutor filed a complaint for unfair labor practice against the Companies
under Republic Act 875. The complaint specifically charged the Companies with (1) interfering with the
members of the Unions in the exercise of their right to concerted action, by sending out individual
letters to them urging them to abandon their strike and return to work, with a promise of comfortable
cots, free coffee and movies, and paid overtime, and, subsequently, by warning them that if they did not
return to work on or before June 2, 1958, they might be replaced; and (2) discriminating against the
members of the Unions as regards readmission to work after the strike on the basis of their union
membership and degree of participation in the strike.
On August 4, 1958 the Companies filed their answer denying all the material allegations of the
complaint, stating special defenses therein, and asking for the dismissal of the complaint.
After trial on the merits, the Court of Industrial Relations, through Presiding Judge Arsenio Martinez,
rendered on August 17, 1965 a decision dismissing the Unions’ complaint for lack of merit. On August
31, 1965 the Unions seasonably filed their motion for reconsideration of the said decision, and their
supporting memorandum on September 10, 1965. This was denied by the Court of Industrial Relations
en banc in a resolution promulgated on October 20, 1965.
Hence, this petition for review, the Unions contending that the lower court erred:
1.
In not finding the Companies guilty of unfair labor practice in sending out individually to the strikers the
letters marked Exhibits A and B;
2.
In not finding the Companies guilty of unfair labor practice for discriminating against the striking
members of the Unions in the matter of readmission of employees after the strike;
3.
In not finding the Companies guilty of unfair labor practice for dismissing officials and members of the
Unions without giving them the benefit of investigation
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and the opportunity to present their side in regard to activities undertaken by them in the legitimate
exercise of their right to strike; and
4.
In not ordering the reinstatement of officials and members of the Unions, with full back wages, from
June 2, 1958 to the date of their actual reinstatement to their usual employment,
I. The respondents contend that the sending of the letters, exhibits A and B, constituted a legitimate
exercise of their freedom of speech. We do not agree. The said letters were directed to the striking
employees individually—by registered special delivery mail at that—without being coursed through the
Unions which were representing the employees in the collective bargaining.
“The act of an employer in notifying absent employees individually during a strike following
unproductive efforts at collective bargaining that the plant would be operated the next day and that
their jobs were open for them should they want to come in has been held to be an unfair labor practice,
as an active interference with the right of collective bargaining through dealing with the employees
individually instead of through their collective bargaining representatives.” (31 Am. Jur. 563, citing NLRB
v. Montgomery Ward & Co. [CA 9th] 133 F2d 676, 146 ALR 1045)
Indeed, it is an unfair labor practice for an employer operating under a collective bargaining agreement
to negotiate or to attempt to negotiate with his employees individually in connection with changes in
the agreement. And the basis of the prohibition regarding individual bargaining with the strikers is that
although the union is on strike, the employer is still under obligation to bargain with the union as the
employees’ bargaining representative (Melo Photo Supply Corporation vs. National Labor Relations
Board, 321 U.S. 332).
Indeed, some such similar actions are illegal as constituting unwarranted acts of interference. Thus, the
act of a company president in writing letters to the strikers, urging their return to work on terms
inconsistent with their union membership, was adjudged as constituting interference with the exercise
of his employees’ right to
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collective bargaining (Lighter Publishing, CCA 7th, 133 F2d 621). It is likewise an act of interference for
the employer to send a letter to all employees notifying them to return to work at a time specified
therein, otherwise new employees would be engaged to perform their jobs. Individual solicitation of the
employees or visiting their homes, with the employer or his representative urging the employees to
cease union activity or cease striking, constitutes unfair labor practice. All the above-detailed activities
are unfair labor practices because they tend to undermine the concerted activity of the employees, an
activity to which they are entitled free from the employer’s molestation.1
Moreover, since exhibit A is a letter containing promises of benefits to the employees in order to entice
them to return to work, it is not protected by the free speech provisions of the Constitution (NLRB v.
Clearfield Cheese Co., Inc., 213 F2d 70). The same is true with exhibit B since it contained threats to
obtain replacements for the striking employees in the event they did not report for work on June 2,
1958. The free speech protection under the Constitution is inapplicable where the expression of opinion
by the employer or his agent contains a promise of benefit, or threats, or reprisal (31 Am. Jur. 544; NLRB
vs. Clearfield Cheese Co., Inc., 213 F2d 70; NLRB vs. Goigy Co., 211 F2d 533, 35 ALR 2d 422).
Indeed, when the respondents offered reinstatement and attempted to “bribe” the strikers with
“comfortable cots,” “free coffee and occasional movies,” “overtime” pay for “work performed in excess
of eight hours,” and “arrangements” for their families, so they would abandon the strike and return to
work, they were guilty of strike-breaking and/or union-busting and, consequently, of unfair labor
practice. It is equivalent to an attempt to break a strike for an employer to offer reinstatement to
striking em-
_______________
1 Cf. Chicago Apparatus Company, 12 NLRB 1002; Fruehauf Trailer Co., 1 NLRB 68; Remington Rand, Inc.,
2 NLRB 626; Metropolitan Engineering Co., 4 NLRB 542; Ritzwoller Company, 11 NLRB 79; American Mfg.
Co., 5 NLRB 443; Ralph A. Fruendich, Inc., 2 NLRB 802).
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ployees individually, when they are represented by a union, since the employees thus offered
reinstatement are unable to determine what the consequences of returning to work would be.
Likewise violative of the right to organize, form and join labor organizations are the following acts: the
offer of a Christmas bonus to all “loyal” employees of a company shortly after the making of a request
by the union to bargain; wage increases given for the purpose of mollifying employees after the
employer has refused to bargain with the union, or for the purpose of inducing striking employees to
return to work; the employer’s promises of benefits in return for the strikers’ abandonment of their
strike in support of their union; and the employer’s statement, made about 6 weeks after the strike
started, to a group of strikers in a restaurant to the effect that if the strikers returned to work, they
would receive new benefits in the form of hospitalization, accident insurance, profit-sharing, and a new
building to work in.2
Citing paragraph 5 of the complaint filed by the acting prosecutor of the lower court which states that
“the officers and members of the complainant unions decided to call off the strike and return to work on
June 2, 1958 by reason of the injunction issued by the Manila Court of First Instance,” the respondents
contend that this was the main cause why the strikers returned to work and not the letters, exhibits A
and B. This assertion is without merit. The circumstance that the strikers later decided to return to work
ostensibly on account of the injunctive writ issued by the Court of First Instance of Manila cannot alter
the intrinsic quality of the letters, which were calculated, or which tended, to interfere with the
employees’ right to engage in lawful concerted activity in the form of a strike. Interference constituting
unfair labor practice will not cease to be such simply because it was susceptible of being
_______________
2 See Robert Bros., Inc., 8 NLRB 925; Hercules Campbell Body, Inc., 7 NLRB 431; Aronson Printing Co., 13
NLRB 799; E.A. Laboratories, Inc., 88 NLRB 673; Star Beef Company, 92 NLRB 1018; Jackson Press, Inc.,
96 NLRB 132.
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thwarted or resisted, or that it did not proximately cause the result intended. For success of purpose is
not, and should not, be the criterion in determining whether or not a prohibited act constitutes unfair
labor practice.
“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 conduct which it may reasonably be said
tends to interfere with the free exercise of employees’ 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
statements of threats of the employer if there is a reasonable inference that anti-union conduct of the
employer does have an adverse effect on self-organization and collective bargaining.” (Francisco, Labor
Laws 1956, Vol. II, p. 323, citing NLRB v. Ford, C.A., 1948, 170 F2d 735).
Besides, the letters, exhibits A and B, should not be considered by themselves alone but should be read
in the light of the preceding and subsequent circumstances surrounding them. The letters should be
interpreted according to the “totality of conduct doctrine,”
“xxx whereby the culpability of an employer’s remarks were to be evaluated not only 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 themselves, frequently were held to be culpable because of the circumstances under which
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 cited therein.)
It must be recalled that previous to the petitioners’ submission of proposals for an amended renewal of
their respective collective bargaining agreements to the respondents, the latter hired Felipe Enage and
Ramon Garcia, former legal counsel of the petitioners, as personnel manager and assistant corporate
secretary, respectively, with attractive compensations. After the notice to strike was served on the
Companies and negotiations were in progress in the Department of Labor, the respondents reclassified
87 employees as supervisors without increase in salary or in responsibility, in effect compelling these
employees to
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resign from their unions. And during the negotiations in the Department of Labor, despite the fact that
the petitioners granted the respondents’ demand that the former drop their demand for union shop and
in spite of urgings by the conciliators of the Department of Labor, the respondents adamantly refused to
answer the Unions’ demands en toto. Incidentally, Enage was the chairman of the negotiating panel for
the Companies in the collective bargaining between the former and the Unions. After the petitioners
went to strike, the strikers were individually sent copies of exhibit A, enticing them to abandon their
strike by inducing them to return to work upon promise of special privileges. Two days later, the
respondents, thru their president and manager, respondent Jose M. Olbes, brought three truckloads of
non-strikers and others, escorted by armed men, who, despite the presence of eight entrances to the
three buildings occupied by the Companies, entered thru only one gate less than two meters wide and
in the process, crashed thru the picket line posted in front of the premises of the Insular Life Building.
This resulted in injuries on the part of the picketers and the strike-breakers. Then the respondents
brought against the picketers criminal charges, only three of which were not dismissed, and these three
only for slight misdemeanors. As a result of these criminal actions, the respondents were able to obtain
an injunction from the court of first instance restraining the strikers from stopping, impeding,
obstructing, etc. the free and peaceful use of the Companies’ gates, entrance and driveway and the free
movement of persons and vehicles to and from, out and in, of the Companies’ buildings. On the same
day that the injunction was issued, the letter, Exhibit B, was sent—again individually and by registered
special delivery mail—to the strikers, threatening them with dismissal if they did not report for work on
or before June 2, 1958. But when most of the petitioners reported for work, the respondents thru a
screening committee—of which Ramon Garcia was a member—refused to admit 63 members of the
Unions on the ground of “pending criminal charges.” However, when almost all were cleared of criminal
charges by the fiscal’s office, the respondents adamantly refused admission to 34 officials
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and union members. It is not, however, disputed that all-non-strikers with pending criminal charges
which arose from the breakthrough incident of May 23, 1958 were readmitted immediately by the
respondents. Among the nonstrikers with pending criminal charges who were readmitted were
Generoso Abella, Enrique Guidote, Emilio Carreon, Antonio Castillo, Federico Barretto, Manuel Chuidian
and Nestor Cipriano. And despite the fact that the fiscal’s office found no probable cause against the
petitioning strikers, the Companies adamantly refused admission to them on the pretext that they
committed “acts inimical to the interest of the respondents,” without stating specifically the inimical
acts allegedly committed. They were soon to admit, however, that these alleged inimical acts were the
same criminal charges which were dismissed by the fiscal and by the courts.
Verily, the above actuations of the respondents before and after the issuance of the letters, exhibits A
and B, yield the clear inference that the said letters formed of the respondents scheme to preclude if
not destroy unionism within them.
To justify the respondents’ threat to dismiss the strikers and secure replacements for them in order to
protect and continue their business, the CIR held the petitioners’ strike to be an economic strike on the
basis of exhibit 4 (Notice of Strike) which states that there was a “deadlock in collective bargaining” and
on the strength of the supposed testimonies of some union men who did not actually know the very
reason for the strike. It should be noted that exhibit 4, which was filed on January 27, 1958, states, inter
alia:
“TO:
BUREAU OF LABOR RELATIONS
DEPARTMENT OF LABOR
MANILA
“Thirty (30) days from receipt of this notice by the Office, this [sic] unions intends to go on strike against
“THE INSULAR LIFE ASSURANCE CO., LTD.
Plaza Moraga, Manila
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“THE FGU INSURANCE GROUP
“INSULAR LIFE BUILDING ADMINISTRATION
for the following reason: DEADLOCK IN COLLECTIVE BARGAINING, x x x”
However, the employees did not stage the strike after the thirty-day period, reckoned from January 27,
1958. This simply proves that the reason for the strike was not the deadlock on collective bargaining nor
any lack of economic concessions. By letter dated April 15, 1958, the respondents categorically stated
what they thought was the cause of the “Notice of Strike,” which so far as material, reads:
“3.
Because you did not see fit to agree with our position on the union shop, you filed a notice of strike with
the Bureau of Labor Relations on 27 January 1958, citing ‘deadlock in collective bargaining’ which could
have been for no other issue than the union shop.” (exhibit 8, letter dated April 15, 1958.)
The strike took place nearly four months from the date the said notice of strike was filed. And the actual
and main reason for the strike was, “When it became crystal clear the management double crossed or
will not negotiate in good faith, it is tantamount to refusal collectively and considering the unfair labor
practice in the meantime being committed by the management such as the sudden resignation of some
unionists and [who] became supervisors without increase in salary or change in responsibility, such as
the coercion of employees, decided to declare the strike.” (tsn., Oct. 14, 1958, p. 14.) The truth of this
assertion is amply proved by the following circumstances: (1) it took the respondents six (6) months to
consider the petitioners’ proposals, their only excuse being that they could not go on with the
negotiations if the petitioners did not drop the demand for union shop (exh. 7, respondents’ letter dated
April 7, 1958); (2) when the petitioners dropped the demand for union shop, the respondents did not
have a counter-offer to the petitioners’ demands. Sec. 14 of Rep. Act
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875 required the respondents to make a reply to the petitioners’ demands within ten days from receipt
thereof, but instead they asked the petitioners to give a “well reasoned, workable formula which takes
into account the financial position of the group companies.” (tsn., Sept. 8, 1958, p. 62; tsn., Feb. 26,
1969, p. 49.)
II. Exhibit H imposed three conditions for readmission of the strikers, namely: (1) the employee must be
interested in continuing his work with the group companies; (2) there must be no criminal charges
against him; and (3) he must report for work on June 2, 1958, otherwise he would be replaced. Since the
evidence shows that all the employees reported back to work at the respondents’ head office on June 2,
1953, they must be considered as having complied with the first and third conditions.
Our point of inquiry should therefore be directed at whether they also complied with the second
condition. It is not denied that when the strikers reported for work on June 2, 1958, 63 members of the
Unions were refused readmission because they had pending criminal charges. However, despite the fact
that they were able to secure their respective clearances 34 officials and union members were still
refused readmission on the alleged ground that they committed acts inimical to the Companies. It is
beyond dispute, however, that non-strikers who also had criminal charges pending against them in the
fiscal’s office, arising from the same incidents whence the criminal charges against the strikers evolved,
were readily readmitted and were not required to secure clearances. This is a clear act of discrimination
practiced by the Companies in the process of rehiring and is therefore a violation of sec. 4 (a) (4) of the
Industrial Peace Act.
The respondents did not merely discriminate against all the strikers in general. They separated the
active from the less active unionists on the basis of their militancy, or lack of it, on the picket lines.
Unionists belonging to the first category were refused readmission even after they were able to secure
clearances from the competent authorities with respect to the criminal charges filed against
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them. It is significant to note in this connection that except for one union official who deserted his union
on the second day of the strike and who later participated in crashing through the picket lines, not a
single union officer was taken back to work. Discrimination undoubtedly exists where the record shows
that the union activity of the rehired strikers has been less prominent than that of the strikers who were
denied reinstatement.
“So is there an unfair labor practice where the employer, although authorized by the Court of Industrial
Relations to dismiss the employees who participated in an illegal strike, dismissed only the leaders of the
strikers, such dismissal being evidence of discrimination against those dismissed and constituting a
waiver of the employer’s right to dismiss the striking employees and a condonation of the fault
committed by them.” (Carlos and Fernando, Labor and Social Legislation, p. 62, citing Phil. Air Lines, Inc.
v. Phil. Air Lines Employees Association, L-8197, Oct. 31, 1958.)
It is noteworthy that—perhaps in an anticipatory effort to exculpate themselves from charges of

discrimination in the readmission of strikers returning to work—the respondents delegated the power
to readmit to a committee. But the respondent Olbes had chosen Vicente Abella, chief of the personnel
records section, and Ramon Garcia, assistant corporate secretary, to screen the unionists reporting back
to work. It is not difficult to imagine that these two employees—having been involved in unpleasant
incidents with the picketers during the strike—were hostile to the strikers. Needless to say, the mere act
of placing in the hands of employees hostile to the strikers the power of reinstatement, is a form of
discrimination in rehiring.
“Delayed reinstatement is a form of discrimination in re-hiring, as is having the machinery of

reinstatement in the hands of employees hostile to the strikers, and reinstating a union official who
formerly worked in a unionized plant, to a job in another mill, which was imperfectly organized.”
(Morabe The Law on Strikes, p. 473, citing Sunshine Mining Co., 7 NLRB 1252; Cleveland Worsted Mills,
43 NLRB 545; italics supplied.)
Equally significant is the fact that while the management and the members of the screening committee
admitted
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the discrimination committed against the strikers, they tossed back and around to each other the
responsibility for the discrimination. Thus, Garcia admitted that in exercising for the management the
authority to screen the returning employees, the committee admitted the non-strikers but refused
readmission to the strikers (tsn., Feb. 6, 1962, pp. 15-19, 23-29). Vicente Abella, chairman of the
management’s screening committee, while admitting the discrimination, placed the blame therefor
squarely on the management (tsn., Sept. 20, 1960, pp. 7-8, 14-18). But the management, speaking
through the respondent Olbes, head of the Companies, disclaimed responsibility for the discrimination.
He testified that “The decision whether to accept or not an employee was left in the hands of that
committee that had been empowered to look into all cases of the strikers.” (tsn., Sept. 6, 1962, p. 19.)
Of course, the respondents—through Ramon Garcia—tried to explain the basis for such discrimination
by testifying that strikers whose participation in any alleged misconduct during the picketing was not
serious in nature were readmissible, while those whose participation was serious were not. (tsn., Aug. 4,
1961, pp. 48-49, 56). But even this distinction between acts of slight misconduct and acts of serious
misconduct which the respondents contend was the basis for either reinstatement or discharge, is
completely shattered upon a cursory examination of the evidence on record. For with the exception of
Pascual Esquillo whose dismissal sent to the other strikers cited the alleged commission by them of
simple “acts of misconduct.”
III. Anent the third assignment of error, the record shows that not a single dismissed striker was given
the opportunity to defend himself against the supposed charges against him. As earlier mentioned,
when the striking employees reported back for work on June 2, 1958, the respondents refused to
readmit them unless they first secured the necessary clearances; but when all, except three, were able
to secure and subsequently present the required clearances, the respondents still refused to take them
back. Instead, several of them later received letters from the
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respondents in the following stereotyped tenor:
“This will confirm the termination of your employment with the Insular Life-FGU Insurance Group as of 2
June 1958.
“The termination of your employment was due to the fact that you committed acts of misconduct while
picketing during the last strike. Because this may not constitute sufficient cause under the law to
terminate your employment without pay, we are giving you the amount of P1,930.32 corresponding to
one-half month pay for every year of your service in the Group Company.
“Kindly acknowledge receipt of the check we are sending herewith.
Very truly yours,
(Sgd.) JOSE M. OLBES
“President, Insurance Life
Acting President, FGU.”
The respondents, however, admitted that the alleged “acts of misconduct” attributed to the dismissed
strikers were the same acts with which the said strikers were charged before the fiscal’s office and the
courts. But all these charges except three were dropped or dismissed.
Indeed, the individual cases of dismissed officers and members of the striking unions do not indicate
sufficient basis for dismissal.
Emiliano Tabasondra, vice-president of the petitioner FGU Insurance Group Workers & Employees
Association-NATU, was refused reinstatement allegedly because he did not report for duty on June 2,
1958 and, hence, had abandoned his office. But the overwhelming evidence adduced at the trial and
which the respondents failed to rebut, negates the respondents’ charge that he had abandoned his job.
In his testimony, corroborated by many others, Tabasondra particularly identified the management men
to whom he and his group presented themselves on June 2, 1958. He mentioned the respondent Olbes’
secretary, De Asis, as the one who received them and later directed them—when Olbes refused them an
audience—to Felipe Enage, the Companies’ personnel manager. He likewise catego-
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rically stated that he and his group went to see Enage as directed by Olbes’ secretary. If Tabasondra
were not telling the truth, it would have been an easy matter for the respondents to produce De Asis
and Enage—who testified anyway as witnesses for the respondents on several occasions—to rebut his
testimony. The respondents did nothing of the kind. Moreover, Tabasondra called on June 21, 1958 the
respondents’ attention to his non-admission and asked them to inform him of the reasons therefor, but
instead of doing so, the respondents dismissed him by their letter dated July 10, 1958. Elementary
fairness required that before being dismissed for cause, Tabasondra be given “his day in court.”
At any rate, it has been held that mere failure to report for work after notice to return, does not
constitute abandonment nor bar reinstatement. In one case, the U.S. Supreme Court held that the
taking back of six of eleven men constituted discrimination although the five strikers who were not
reinstated, all of whom were prominent in the union and in the strike, reported for work at various
times during the next three days, but were told that there were no openings. Said the Court:
“x x x The Board found, and we cannot say that its finding is unsupported, that, in taking back six union
men, the respondent’s officials discriminated against the latter on account of their union activities and
that the excuse given that they did not apply until after the quota was full was an afterthought and not
the true reason for the discrimination against them.” (NLRB v. Mackay Radio & Telegraph Co., 304 U.S.
333, 58 Sup. Ct. 904, 82 L. Ed. 1381) (Mathews, Labor Relations and the Law, p. 725, 728)
The respondents’ allegation that Tabasondra should have returned after being refused readmission on
June 2, 1958, is not persuasive. When the employer puts off reinstatement when an employee reports
for work at the time agreed, we consider the employee relieved from the duty of returning further.
Sixto Tongos was dismissed allegedly because he revealed that despite the fact that the Companies
spent more than P80,000 for the vacation trips of officials, they re-
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fused to grant union demands; hence, he betrayed his trust as an auditor of the Companies. We do not
find this allegation convincing. First, this accusation was emphatically denied by Tongos on the witness
stand. Gonzales, president of one of the respondent Companies and one of the officials referred to, took
a trip abroad in 1958. Exchange controls were then in force, and an outgoing traveller on a combined
business and vacation trip was allowed by the Central Bank, per its Circular 52 (Notification to
Authorized Agent Banks) dated May 9, 1952, an allocation of $1,000 or only P2,000, at the official rate of
two pesos to the dollar, as pocket money; hence, this was the only amount that would appear on the
books of the Companies. It was only on January 21, 1962, per its Circular 133 (Notification to Authorized
Agent Banks), that the Central Bank lifted the exchange controls. Tongos could not therefore have
revealed an amount bigger than the above sum. And his competence in figures could not be doubted
considering that he had passed the board examinations for certified public accountants. But assuming
arguendo that Ton-gos indeed revealed the true expenses of Gonzales’ trip—which the respondents
never denied or tried to disprove—his statements clearly fall within the sphere of a unionist’s right to
discuss and advertise the facts involved in a labor dispute, in accordance with section 9(a) (5) of Republic
Act 875 which guarantees the untramelled exercise by striking employees of the right to give “publicity
to the existence of, or the fact involved in any labor dispute, whether by advertising, speaking,
patrolling, or by any method not involving fraud or violence.” Indeed, it is not only the right, it is as well
the duty, of every unionist to advertise the facts of a dispute for the purpose of informing all those
affected thereby. In labor disputes, the combatants are expected to expose the truth before the public
to justify their respective demands. Being a union man and one of the strikers, Tongos was expected to
reveal the whole truth on whether or not the respondent Companies were justified in refusing to accede
to union demands. After all, not being one of the supervisors, he was not a part of management. And his
statement, if indeed made,
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is but an expression of free speech protected by the Constitution.
“Free speech on both sides and for every faction on any side of the labor relation is to me a
constitutional and useful right. Labor is free x x x to turn its publicity on any labor oppression,
substandard wages, employer unfairness, or objectionable working conditions. The employer, too,
should be free to answer and to turn publicity on the records of the leaders of the unions which seek the
confidence of his men. x x x” (Concurring opinion of Justice Jackson in Thomas v. Collins, 323 U.S. 516,
547, 65 Sup. Ct. 315, 89 L. Ed. 430.) (Mathews, Labor Relations and the Law, p. 591.)
The respondents also allege that in revealing certain confidential information, Tongos committed not
only a betrayal of trust but also a violation of the moral principles and ethics of accountancy. But
nowhere in the Code of Ethics for Certified Public Accountants under the Revised Rules and Regulations
of the Board of Accountancy formulated in 1954, is this stated. Moreover, the relationship of the
Companies with Tongos was that of an employer and not a client. And with regard to the testimonies of
Juan Raymundo and Antolin Carillo, both vice-presidents of the Trust Insurance Agencies, Inc. about the
alleged utterances made by Tongos, the lower court should not have given them much weight. The firm
of these witnesses was newly established at that time and was still a ‘‘general agency” of the
Companies. It is not therefore amiss to conclude that they were more inclined to favor the respondents
rather than Tongos.
Pacifico Ner, Paulino Bugay, Jose Garcia, Narciso Daño, Vicente Alsol and Hermenigildo Ramirez, opined
the lower court, were constructively dismissed by non-readmission allegedly because they not only
prevented Ramon Garcia, assistant corporate secretary, and Vicente Abella, chief of the personnel
records section of the Companies, from entering the Companies’ premises on May 21, 1958, but they
also caused bruises and abrasions on Garcia’s chest and forehead—acts considered inimical to the
interest of the respondents. The Unions, upon the other hand, insist that there is complete lack of
evidence that Ner took part in
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pushing Garcia; that it was Garcia who elbowed his way through the picket lines and therefore Ner
shouted “Close up,” which the picketers did; and that Garcia tossed Paulino Bugay’s placard and a fight
ensued between them in which both suffered injuries. But despite these conflicting versions of what
actually happened on May 21, 1958, there are grounds to believe that the picketers are not responsible
for what happened. The picketing on May 21, 1958, as reported in the police blotter, was peaceful (see
Police blotter report, exh. 3 in CA-G.R. No. 25991-R of the Court of Appeals, where Ner was acquitted).
Moreover, although the Companies during the strike were holding offices at the Botica Boie building at
Escolta, Manila; Tuason Building at San Vicente Street, Manila; and Ayala, Inc. offices at Makati, Rizal,
Garcia, the assistant corporate secretary, and Abella, the chief of the personnel records section,
reported for work at the Insular Life Building. There is therefore a reasonable suggestion that they were
sent to work at the latter building to create such an incident and have a basis for filing criminal charges
against the petitioners in the fiscal’s office and applying for injunction from the court of first instance.
Besides, under the circumstances the picketers were not legally bound to yield their grounds and
withdraw from the picket lines. Being where the law expects them to be in the legitimate exercise of
their rights, they had every reason to defend themselves and their rights from any assault or unlawful
transgression. Yet the police blotter, about adverted to, attests that they did not resort to violence.
The heated altercations and occasional blows exchanged on the picket line do not affect or diminish the
right to strike. Persuasive on this point is the following commentary:
“We think it must be conceded that some disorder is unfortunately quite usual in any extensive or long
drawn out strike. A strike is essentially a battle waged with economic weapons. Engaged in it are human
beings whose feelings are stirred to the depths. Rising passions call forth hot words. Hot words lead to
blows on the picket line. The transformation from economic to physical combat by those engaged in the
contest is difficult to prevent even when cool heads direct
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the fight. Violence of this nature, however much it is to be regretted, must have been in the
contemplation of the Congress when it provided in Sec. 13 of Act 29 USCA Sec. 163, that nothing therein
should be construed so as to interfere with or impede or diminish in any way the right to strike. If this
were not so, the rights afforded to employees by the Act would indeed be illusory. We accordingly
recently held that it was not intended by the Act that minor disorders of this nature would deprive a
striker of the possibility of reinstatement.” (Republic Steel Corp. v. N. L. R. B., 107 F2d 472, cited in
Mathews, Labor Relations and the Law, p. 378)
Hence the incident that occurred between Ner, et al. and Ramon Garcia was but a necessary incident of
the strike and should not be considered as a bar to reinstatement. Thus it has been held that:
“Fist-fighting between union and non-union employees in the midst of a strike is no bar to
reinstatement.” (Teller, Labor Disputes and Collective Bargaining, Vol. II, p. 855 citing Stackpole Carbon,
Co. 6 NLRB 171, enforced 105 F2d 167.)
Furthermore, assuming that the acts committed by the strikers were transgressions of law, they amount
only to mere ordinary misdemeanors and are not a bar to reinstatement.
“In cases involving misdemeanors, the board has generally held that unlawful acts are not bar to
reinstatement.” (Teller, Labor Disputes and1 Collective Bargaining, Id., p. 854, citing Ford Motor
Company, 23 NLRB No. 28.)
Finally, it is not disputed that despite the pendency of criminal charges against non-striking employees
before the fiscal’s office, they were readily admitted, but those strikers who had pending charges in the
same office were refused readmission. The reinstatement of the strikers is thus in order.
“[W]here the misconduct, whether in reinstating persons equally guilty with those whose reinstatement
is opposed, or in other ways, gives rise to the inference that union activities rather than misconduct is
the basis of his [employer] objection, the Board has usually required reinstatement” (Teller, supra, p.
853, citing the Third Annual Report of NLRB [1938], p. 211.)
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Lastly, the lower Court justified the constructive dismissal of Florencio Ibarra allegedly because he
committed acts inimical to the interest of the respondents when, as president of the FGU Workers and
Employees Association-NATU, he advised the strikers that they could use force and violence to have a
successful picket and that picketing was precisely intended to prevent the non-strikers and company
clients and customers from entering the Companies’ buildings. Even if this were true, the record
discloses that the picket line had been generally peaceful, and that incidents happened only when
management men made incursions into and tried to break the picket line. At any rate, with or without
the advice of Ibarra, picketing is inherently explosive. For, as pointed out by one author, “The picket line
is an explosive front, charged with the emotions and fierce loyalties of the union-management dispute.
It may be marked by colorful name-calling, intimidating threats or sporadic fights between the pickets
and those who pass the line.” (Mathews, Labor Relations and the Law, p. 752). The picket line being the
natural result of the respondents’ unfair labor practice, Ibarra’s misconduct is at most a misdemeanor
which is not a bar to reinstatement. Besides, the only evidence presented by the Companies regarding
Ibarra’s participation in the strike was the testimony of one Rodolfo Encarnacion, a former member of
the board of directors of the petitioner FGU Insurance Group Workers and Employees Union-NATU, who
became a “turncoat” and who likewise testified as to the union activities of Atty. Lacsina, Ricardo
Villaruel and others (annex C, Decision, p. 27)—another matter which emphasizes the respondents’
unfair labor practice. For under the circumstances, there is good ground to believe that Encarnacion was
made to spy on the activities of the union members. This act of the respondents is considered
unjustifiable interference in the union activities of the petitioners and is unfair labor practice.
“It has been held in a great number of decisions that espionage by an employer of union activities, or
surveillance thereof, are such instances of interference, restraint or coercion of employees in
connection with their right to organize, form and join unions as to constitute unfair labor practice.
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x x x ‘Nothing is more calculated to interfere with, restrain and coerce employees in the exercise of their
right to self-organization than such activity even where no discharges result. The information obtained
by means of espionage is invaluable to the employer and can be used in a variety of cases to break a
union.’ The unfair labor practice is committed whether the espionage is carried on by a professional
labor spy or detective, by officials or supervisory employees of the employer, or by fellow employees
acting at the request or direction of the employer, or an ex-employee, x x x” (Teller, Labor Disputes and
Collective Bargaining, Vol. II, pp. 765-766, and cases cited.)
IV. The lower court should have ordered the reinstatement of the officials and members of the Unions,
with full back wages from June 2, 1958 to the date of their actual reinstatement to their usual
employment. Because all too clear from the factual and environmental milieu of this case, coupled with
settled decisional law, is that the Unions went on strike because of the unfair labor practices committed
by the respondents, and that when the strikers reported back for work—upon the invitation of the
respondents—they were discriminatorily dismissed. The members and officials of the Unions therefore
are entitled to reinstatement with back pay.
“[W]here the strike was induced and provoked by improper conduct on the part of an employer
amounting to an ‘unfair labor practice,’ the strikers are entitled to reinstatement with back pay.”
(Rothenberg on Labor Relations, p. 418.)
“[A]n employee who has been dismissed in violation of the provisions of the Act is entitled to
reinstatement with back pay upon an adjudication that the discharge was illegal.” (Id., citing Waterman
S. S. Corp. v. N. L. R. B., 119 F2d 760; N. L. R. B. v. Richter’s Bakery, 140 F2d 870; N. L. R. B. v. Southern
Wood Preserving Co., 135 F. 2d 606; C. G. Conn, Ltd. v. N. L. R. B., 108 F2d 390; N. L. R. B. v. American
Mfg. Co., 106 F2d 61; N. L. R. B. v. Kentucky Fire Brick Co., 99 F2d 99.)
And it is not a defense to reinstatement for the respondents to allege that the positions of these union
members have already been filled by replacements.
“[W]here the employers’ ‘unfair labor practice’ caused or contributed to the strike or where the ‘lock-
out’ by the employer
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constitutes an ‘unfair labor practice,’ the employer cannot successfully urge as a defense that the
striking or lock-out employees position has been filled by replacement. Under such circumstances, if no
job sufficiently and satisfactorily comparable to that previously held by the aggrieved employee can be
found, the employer must discharge the replacement employee, if necessary, to restore the striking or
locked-out worker to his old or comparable position. x x x If the employer’s improper conduct was an
initial cause of the strike, all the strikers are entitled to reinstatement and the dismissal of replacement
employees wherever necessary; x x x.” (Id., p. 422 and cases cited.)
A corollary issue to which we now address ourselves is, from what date should the backpay payable to
the unionists be computed? It is now a settled doctrine that strikers who are entitled to reinstatement
are not entitled to back pay during the period of the strike, even though it is caused by an unfair labor
practice. However, if they offer to return to work under the same conditions just before the strike, the
refusal to re-employ or the imposition of conditions amounting to unfair labor practice is a violation of
section 4 (a) (4) of the Industrial Peace Act and the employer is liable for backpay from the date of the
offer (Cromwell Commercial Employees and Laborers Union vs. Court of Industrial Relations, L-19778,
Decision, Sept. 30, 1964, 12 SCRA 124; Id., Resolution on motion for reconsideration, 13 SCRA 258; see
also Mathews, Labor Relations and the Law, p. 730 and the cited cases). We have likewise ruled that
discriminatorily dismissed employees must receive backpay from the date of the act of discrimination,
that is, from the date of their discharge (Cromwell Commercial Employees and Laborers Union vs. Court
of Industrial Relations, supra).
The respondents notified the petitioner strikers to report back for work on June 2, 1958, which the latter
did. A great number of them, however, were refused readmission because they had criminal charges
against them pending before the fiscal’s office, although non-strikers who were also facing criminal
indictments were readily readmitted. These strikers who were refused readmission on June 2, 1958 can
thus be categorized as discriminatorily
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dismissed employees and are entitled to backpay from said date. This is true even with respect to the
petitioners Jose Pilapil, Paulino Bugay, Jr. and Jose Garcia, Jr. who were found guilty only of
misdemeanors which are not considered sufficient to bar reinstatement (Teller, Labor Disputes and
Collective Bargaining, p. 854), especially so because their unlawful acts arose during incidents which
were provoked by the respondents’ men. However, since the employees who were denied readmission
have been out of the service of the Companies (for more than ten years) during which they may have
found other employment or other means of livelihood, it is only just and equitable that whatever they
may have earned during that period should be deducted from their back wages to mitigate somewhat
the liability of the company, pursuant to the equitable principle that no one is allowed to enrich himself
at the expense of another (Macleod & Co. of the Philippines v. Progressive Federation of Labor, 97 Phil.
205 [1955]).
The lower court gave inordinate significance to the payment to and acceptance by the dismissed
employees of separation pay. This Court has ruled that while employers may be authorized under
Republic Act 1052 to terminate employment of employees by serving the required notice, or, in the
absence thereof, by paying the required compensation, the said Act may not be invoked to justify a
dismissal prohibited by law, e.g., dismissal for union activities.
“* * * While Republic Act No. 1052 authorizes a commercial establishment to terminate the
employment of its employee by serving notice on him one month in advance, or, in the absence thereof,
by paying him one month compensation from the date of the termination of his employment, such Act
does not give to the employer a blanket authority to terminate the employment regardless of the cause
or purpose behind such termination. Certainly, it cannot be made use of as a cloak to circumvent a final
order of the court or a scheme to trample upon the right of an employee who has been the victim of an
unfair labor practice.” (Yu Ki Lam, et al. v. Nena Micaller, et al., 99 Phil. 904 [1956].)
Finally, we do not share the respondents’ view that the findings of fact of the Court of Industrial
Relations are supported by substantial and credible proof. This Court
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is not therefore precluded from digging deeper into the factual milieu of the case (Union of Philippine
Education Employees v. Philippine Education Company, 91 Phil. 93; Lu Do & Lu Ym Corporation v.
Philippine-Land-Air-Sea Labor Union, 11 SCRA 134 [1964]).
V. The petitioners (15 of them) ask this Court to cite for contempt the respondent Presiding Judge
Arsenio Martinez of the Court of Industrial Relations and the counsel for the private respondents, on the
ground that the former wrote the following in his decision subject of the instant petition for certiorari,
while the latter quoted the same on pages 90-91 of the respondents’ brief:
“* * * Says the Supreme Court in the following decisions:
“ ‘In a proceeding for unfair labor practice, involving a determination as to whether or not the acts of
the employees concerned justified the adoption of the employer of disciplinary measures against them,
the mere fact that the employees may be able to put up a valid defense in a criminal prosecution for the
same acts, does not erase or neutralize the employer’s right to impose discipline on said employees. For
it is settled that not even the acquittal of an employee of the criminal charge against him is a bar to the
employer’s right to impose discipline on its employees, should the act upon which the criminal charge
was based constitute nevertheless an activity inimical to the employer’s interest. ... The act of the
employees now under consideration may be considered as a misconduct which is a just cause for
dismissal.’ (Lopez, Sr., et al. vs. Chronicle Publication Employees Ass’n. et al., G.R. No. L-20179-81,
December 28, 1964.)” (italics supplied)
The two pertinent paragraphs in the above-cited decision* which contained the underscored portions of
the above citation read however as follows:
“Differently as regard the dismissal of Orlando Aquino and Carmelito Vicente, we are inclined to uphold
the action taken by the employer as proper disciplinary measure. A reading of the article which allegedly
caused their dismissal reveals that it really contains an insinuation albeit subtly of the supposed exertion
of political pressure by the Manila Chronicle
_______________
* As reproduced on pp. 123-127 of the mimeographed and paperbound Supreme Court decisions for
December 1964.
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management upon the City Fiscal’s Office, resulting in the nonfiling of the case against the employer. In
rejecting the employer’s theory that the dismissal of Vicente and Aquino was justified, the lower court
considered the article as ‘a report of some acts and omissions of an Assistant Fiscal in the exercise of his
official functions’ and, therefore, does away with the presumption of malice. This being a proceeding for
unfair labor practice, the matter should not have been viewed or gauged in the light of the doctrine on a
publisher’s culpability under the Penal Code. We are not here to determine whether the employees’ act
could stand criminal prosecution, but only to find out whether the aforesaid act justifies the adoption by
the employer of disciplinary measure against them. This is not sustaining the ruling that the publication
in question is qualified privileged, but even on the assumption that this is so, the exempting character
thereof under the Penal Code does not necessarily erase or neutralize its effect on the employer’s
interest which may warrant employment of disciplinary measure. For it must be remembered that not
even the acquittal of an employee, of the criminal charges against him, is a bar to the employer’s right
to impose discipline on its employees, should the act upon which the criminal charges was based
constitute nevertheless an activity inimical to the employer’s interest.
“In the herein case, it appears to us that for an employee to publish his ‘suspicion,’ which actually
amounts to a public accusation, that his employer is exerting political pressure on a public official to
thwart some legitimate activities on the employees, which charge, in the least, would sully the
employer’s reputation, can be nothing but an act inimical to the said employer’s interest. And the fact
that the same was made in the union newspaper does not alter its deleterious character nor shield or
protect a reprehensible act on the ground that it is a union activity, because such end can be achieved
without resort to improper conduct or behavior. The act of the employees now under consideration may
be considered as a misconduct which is a just cause for dismissal.”** (Italics ours)
It is plain to the naked eye that the 60 un-underscored words of the paragraph quoted by the
respondent Judge do not appear in the pertinent paragraph of this Court’s decision in L-20179-81.
Moreover, the first underscored sentence in the quoted paragraph starts with “For it is settled. . .”
whereas it reads, “For it must be remembered. . .,” in this Court’s decision. Finally, the second and last
un-
_______________
** Id., p. 126. (The entire decision may now be found in printed form in 12 SCRA 699-700.)
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derlined sentence in the quoted paragraph of the respondent Judge’s decision, appears not in the same
paragraph of this Court’s decision where the other sentence is, but in the immediately succeeding
paragraph.
This apparent error, however, does not seem to warrant an indictment for contempt against the
respondent Judge and the respondents’ counsels. We are inclined to believe that the misquotation is
more a result of clerical ineptitude than a deliberate attempt on the part of the respondent Judge to
mislead. We fully realize how saddled with many pending cases are the courts of the land, and it is not
difficult to imagine that because of the pressure of their varied and multifarious work, clerical errors
may escape their notice. Upon the other hand, the respondents’ counsel have the prima facie right to
rely on the quotation as it appears in the respondent Judge’s decision, to copy it verbatim, and to
incorporate it in their brief. Anyway, the import of the underscored sentences of the quotation in the
respondent Judge’s decision is substantially the same as, and faithfully reflects, the particular ruling in
this Court’s decision, i.e., that “[N]ot even the acquittal of an employee, of the criminal charges against
him, is a bar to the employer’s right to impose discipline on its employees, should the act upon which
the criminal charges were based constitute nevertheless an activity inimical to the employer’s interest.”
Be that as it may, we must articulate our firm view that in citing this Court’s decisions and rulings, it is
the bounden duty of courts, judges and lawyers to reproduce or copy the same word-for-word and
punctuation mark-for-punctuation mark. Indeed, there is a salient and salutary reason why they should
do this. Only from this Tribunal’s decisions and rulings do all other courts, as well as lawyers and
litigants, take their bearings. This is because the decisions referred to in article 8 of the Civil Code which
reads, “Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the
legal system of the Philippines,” are only those enunciated by this Court of last resort. We said in no
uncertain terms in Miranda, et al. vs. Imperial, et al (77 Phil. 1066) that “[O]nly the
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decisions of this Honorable Court establish jurisprudence or doctrines in this jurisdiction.” Thus, ever
present is the danger that if not faithfully and exactly quoted, the decisions and rulings of this Court may
lose their proper and correct meaning, to the detriment of other courts, lawyers and the public who may
thereby be misled. But if inferior courts and members of the bar meticulously discharge their duty to
check and recheck their citations of authorities culled not only from this Court’s decisions but from
other sources and make certain that they are verbatim reproductions down to the last word and
punctuation mark, appellate courts will be precluded from acting on misinformation, as well as be saved
precious time in finding out whether the citations are correct.
Happily for the respondent Judge and the respondents’ counsel there was no substantial change in the
thrust of this Court’s particular ruling which they cited. It is our view, nonetheless, that for their mistake,
they should be, as they are hereby, admonished to be more careful when citing jurisprudence in the
future.
ACCORDINGLY, the decision of the Court of Industrial Relations dated August 17, 1965 is reversed and
set aside, and another is entered, ordering the respondents to reinstate the dismissed members of the
petitioning Unions to their former or comparatively similar positions, with backwages from June 2, 1958
up to the dates of their actual reinstatements. Costs against the respondents.
Concepcion, C.J., Reyes, J.B.L., Dizon,, Makalintal, Fernando, Teehankee, Barredo, Villamor and
Makasiar, JJ., concur.
Zaldivar, J., did not take part.
Decision reversed and set aside.
Notes. —(a) Case wherein non-reinstatement of striking union members who assaulted fellow workers
who refused to join the strike was held justified.—The foregoing case may be compared or contrasted
with Union of Philippine Education Employees vs. Philippine Education Co., L-7161,
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Uy vs. Republic
May 19, 1955, holding that where the evidence showed that three union members were dismissed by
their employer because of assaults on fellow workers who refused to join in a strike, the action of the
Court of Industrial Relations in declining to order their reinstatement was justified.
(b) When discrimination constitutes unfair labor practice.—Under Republic Act 875, for discrimination
by reason of union membership to be considered unfair labor practice, the same must have been
committed to encourage or discourage such membership in the union (Rizal Cement Workers Union vs.
Madrigal and Company, L-19767, April 30, 1964, 10 SCRA 831).
_______________ The Insular Life Assurance Co., Ltd., Employees Association-NATU vs. The Insular Life
Assurance Co., Ltd., 37 SCRA 244, No. L-25291 January 30, 1971
174
Phil. Steam Navigation Co. vs. Phil. Marine Officers Guild
Nos. L-20667 & L-20669. October 29, 1965.
PHILIPPINE STEAM NAVIGATION Co., petitioner, vs. PHILIPPINE OFFICERS GUILD, ET AL., respondents.
Employer and employee; Unfair labor practice; Right of employer to interrogate its employees as to
their union affiliation.—The rule in this jurisdiction is that subjection by the company of Its employees
to a series of questioning regarding their membership in the union or their union 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).
Same; Same; Strikes; Reinstatement of striking employees.—The striking employees are entitled to
reinstatement, whether or not the strike was the consequence of the employer's unfair labor practice,
unless, where the strike was not the consequence of any unfair labor practice, the employer has hired
others to take the place of the strikers and has promised them continued employment (Cromwell
Commercial Employees and Laborers Union (PTUG) vs. C.I.R., et al, L-19778. September 30, 1964,
citing 2 Teller, LABOR DISPUTES AND COLLECTIVE BARGAINING, Sec. 371, pp. 996-99).
Same; Same; Same; When employer bound to reinstate strikers.—Even if the employer hires others to
replace the strikers, thereby avoiding paralysis of his business, if the strike is against an unfair labor
practice on its part, the employer is bound to reinstate the strikers.
Same; Same; Same; Voluntary offer to return to work without any condition, when relevant.—A
voluntary offer to return to work without any condition is relevant only to the question of payment of
back wages in addition to reinstatement. Since in these cases no back wages were awarded, and the
union has not appealed, said question is not in point.
APPEAL from a decision and resolution of the Court of Industrial Relations.
Lichauco, Picazo & Agcaoili for petitioner.
Beltran & Lacson for respondent Philippine Marine Officers Guild,
BENGZON, J.P., J.:
The present century saw in its opening decades the
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struggle of labor to attain equal footing with capital. Statute after statute was passed in the Philippines
to secure this end. The Philippine Constitution, adopted in 1935, made it plain that the State can
regulate the relation between labor and capital to achieve social justice.1 Following the modem trend,
the lndustrial Peace Act was passed by our Congress to effect equality between labor and capital as
partners in industry.2 Special attention from all three branches of the government was required on the
problems arising in their relation, a relation treated as sui generis. Nonetheless, as was to be expected,
it was not infrequent that capital would seek to preserve and labor to advance its position; the
management would fight to retain old practices and the workers cry for progressive measures;
employers would desire superiority and employees equality. Hence, the continuing disputes regarding
the scope and application of social and labor legislations covering the relations of labor and capital. An
instance is the dispute in the three cases at bar.
The Philippine Steam Navigation Co., Inc., hereafter referred to as PHILSTEAM, is a domestic
corporation, with head offices in Cebu City, engaged in inter-island shipping. In the year 1954 it had 16
vessels, with 8 officers to a vessel, or a total of 128 officers.
Philippine Marine Officers Guild, herein otherwise called PMOG, is a labor union affiliated with the
Federation of Free Workers (FFW), representing, and which represented in 1954, some of PHILSTEAM's
officers.
The Cebu Seamen's Association, CSA for short, is another labor union that represents and likewise
represented in 1954 some of PHILSTEAM's officers.
On June 15, 1954 PMOG sent PHILSTEAM a set of demands with a request for collective bargaining,
PHILSTEAM received the letter embodying the same on June 18, 1954, Subsequently, or on June 29,
1954, PHILSTEAM transmitted its answer to PMOG, requiring the
_______________
1 Art. II, Sec, 5; Art. XIV, Sec. 6, Phil. Constitution.
2 Republic Act 875, effective June 17, 1953.
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latter to first prove its representation of a majority of PHILSTEAM's employees before its demands will
be considered as requested. PHILSTEAM, on the same date, started interrogating and investigating" its
captains, deck officers, and engineers, to find out directly from them if they had joined PMOG or
authorised PMOG to represent them.
A reply was sent by PMOG to the answer of PHILSTEAM, insisting that PHILSTEAM consider its requests
and demands first before requiring' proof of majority representation. This reply was received by
PHILSTEAM 011 July 6, 1954.
PMOG thereafter filed on July 17, 1954 a notice of intention to strike stating as reasons therefor
PHILSTEAM's alleged refusal to bargain and unspecified unfair labor practices. The Department of Labor
brought PHILSTEAM and PMOG to a conference 011 July 30, 1954, without any success.
The CSA had meanwhile also transmitted its own set of demands to PHILSTEAM. On August 16, 1954
PHIL STEAM and CSA met PHILSTEAM therein recognized CSA as representing the majority of its
employees and proceeded to consider CSA's demands.
Another PHILSTEAM-PMOG conference at the Department of Labor was held on August 17, 1954,
likewise to no avail.
Subsequently. on August 24, 1954, PHILSTEAM and CSA signed a collective bargaining agreement. On
the same date, PMOG declared a strike against PHILSTEAM, Although not the subject of the present
appeal, it should also be mentioned that the dispute included two other shipping' companies, namely,
Compañia Maritima and Madrigal Shipping, and that PMOG simultaneously struck against all three
companies.
Around 46 officers of PHILSTEAM joined PMOG's strike; 15 of these later returned to work, leaving 31
PHILSTEAM officers on strike. Pier 4 of the North Harbor of the Port of Manila, where PHILSTEAM ves-
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sels docked, was among the areas picketed during the strike,
A final conference at the Department of Labor between PHILSTEAM and PMOG on October 7, 1954 still
failed to bring the parties to an agreement
The President of the Philippines, on January 14, 1955, certified the dispute among the aforementioned
shipping companies and their employees to the Court of Industrial Relations, as involving national
interest, pursuant to Section 10 of Republic Act 875,
The Court of Industrial Relations held preliminary conferences and on January 18, 1955 issued a return-
to-work order. The same, however, was not enforced in view of an injunction issued by this Court in
another case.3
Several formal complaints were accordingly docketed in the Court of Industrial Relations, as follows:
(1) Case 6-IPA, the dispute certified to the CIR by the President;
(2) Case 617-ULP filed on February 25, 1955 by PMOG against Maritima, et al., for unfair labor practice;
"(3) Case 618-ULP filed on February 25, 1955 by PMOG against PHILSTEAM and CSA, for unfair labor
practice;
(4) Case 646-ULP filed on March 29, 1955 by PMOG against Madrigal Shipping, for unfair labor practice;
(5) Case 672-ULP filed on April 30, 1955 by the Marine Off icers Association of the Philippines4 against
PMOG, for unfair labor practice;
(6) Case 1002-ULP filed on July 6, 1956 by PHILSTEAM against PMOG, for unfair labor practice.
A joint trial was held of all the cases and on December 23, 1962 the Court of Industrial Relations
rendered thereon a single decision, finding in the cases pertinent to this appeal, i.e., where PHILSTEAM
is a party, as follows:
_________________
3 See Resolutions of February 24, 1955 and March 25, 1956, in Cebu Seamen's Association vs. Castillo, et
al., L-8802.
4 A labor union in Compania Maritima.
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(1) Case 618-ULP, PHILSTEAM committed unfair labor practice in having interfered with, restrained and
coerced employees in the exercise of their rights to self-organization;
(2) Case 1002-ULP, PMOG has not been shown to have committed unfair labor practice; and,
(3) Case 6-IPA, the strike of PMOG against PHILSTEAM was justified and lawfully carried out.
Accordingly, it stated in the dispositive portion relative to the above-mentioned cases:
"IN VIEW OF ALL THE FOREGOING, the Court hereby orders;
"2. Philippine Steam Navigation Company, its agents, successors and assigns, to cease and desist from
interrogating and investigating their employees to determine whether they have authorized Philippine
Marine Officers Guild or my other labor organization to represent them for the purpose of collective
bargaining, discouraging or trying to discourage any of such employees from remaining as a member of
Philippine Marine Officers Guild or any other labor organization, and encouraging or trying to encourage
any of such employees to' join Cebu Seamen's Association or any other labor organization, and, in any
manner, interfering with, restraining, or coercing their employees in the exercise of their right to self-
organization and other rights guaranteed in Section 3 of this Act; and offer all of their striking employees
immediate and full reinstatement to their former or substantially equivalent positions, without back
salaries and without prejudice to their seniority or other rights and privileges, unless they have found
substaintially equivalent employment elsewhere during the pendency of this case."
PHILSTEAM moved for reconsideration but the motion was denied on May 18, 1962 by resolution of the
Court of Industrial Relations in banc. The present appeal by PHILSTEAM is from the decision and
resolution en banc in Case 6-IPA, Case 618-ULP and Case 1002-ULP.
Petitioner would contend that the respondent court erred in ordering it to reinstate the PMOG strikers.
In support of this it advances the argument that, first, PHILSTEAM did not commit acts constituting
unfair labor practice; and, second, PMOG's strike was illegal.
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The finding of respondent court in Case 618-ULP, as stated, is that PHlLSTEAM interfered with, coerced,
and restrained employees in their rights to self-organization. The same, if true, is unfair labor practice
(Section 4[a] [1], Republic Act 875).
The acts found by respondent court constituting the foregoing unfair labor practice are: (1) the
interrogation and investigation by PHILSTEAM's supervisory officials of its captains, deck officers and
engineers, to determine whether they had authorized PMOG to act as their bargaining agent; (2) the
subjection of PMOG to vilification; and (3) the participation of PHILSTEAM's pier superintendent in
soliciting membership for a competing union.
PHILSTEAM admits that it initiated and carried out an investigation of its officers as to their membership
in PMOG and whether they had given PMOG authority to represent them in collective bargaining. The
reason for this, PHILSTEAM would, however, aver, was merely to ascertain for itself the existence of a
duty to bargain collectively with PMOG, a step allegedly justified by PMOG's refusal to furnish proof of
majority representation.
The asserted reason for the investigation cannot be sustained. The record discloses that such
investigation was started by PHILSTEAM even before it received PMOG's reply stating a refusal to submit
proof of majority representation. Specifically, the investigation was put under way on June 29, 1954—
the same day PHILSTEAM sent its request that PMOG submit proof of majority representation—
whereas, PHILSTEAM knew of PMOG's refusal to furnish said proof only on July 6, 1954, when it received
PMOG's reply letter. The respondent court, therefore, aptly concluded that PMOG's refusal to submit
evidence showing it represented a majority had nothing to do with PHILSTEAM's decision to carry out
the investigation.
An employer is not denied the privilege of interrogating its employees as to their union affiliation,
provided the same is for a legitimate purpose and assurance is given
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by the employer that no reprisals would be taken against unionists. Nonetheless, any employer who
engages in interrogation does so with notice that he risks a finding of unfair labor practice if the
circumstances are such that his interrogation restrains or interferes with employees in the exercise of
their rights to self-organization. (Blue Flash Express Co., Inc., 109 NLRB 591.)
The respondent court has found that PHILSTEAM's interrogation of its employees bad in fact interfered
with, restrained and coerced the employees in the exercise of their rights to self-organization (Petition,
Annex A, p. 81). Such finding being; upon questions of fact, the same cannot be reversed herein,
because it is fully supported by substantial evidence.
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 union 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 rule.
PMOG's subjection to vilification is likewise borne out by substantial evidence. Santiago Beliso,
PHILSTEAM's purchasing agent, told Luis Feliciano, on August 6, 1954, that PMOG was a "money-asking
union," that "all the members of the FFW are low people" and that CSA "is a good union." Fernando
Guerrero, PHILSTEAM's interisland manager, had authorized Beliso to assist him in his investigation of
PMOG membership. The statement of Beliso was made in the presence of PHILSTEAM office manager
Ernesto Mañeru and PHILSTEAM pier superintendent Jose Perez, and these supervisory officials did
nothing to disavow Beliso's conduct as not intended to represent PHILSTEAM's opinion. PHILSTEAM,
through its supervisory officials, obviously made it appear to Feliciano that Beliso was speaking for or on
behalf of the company, when he made the remarks derogatory to PMOG and favorable to CSA.
PHILSTEAM thereby interfered with Feliciano's right to self-organization.
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Appellant would, however, assert an inconsistency on the part of respondent court in finding that Beliso
was made to appear by PHILSTEAM supervisory officials as acting for them, as testified to by Feliciano,
when said court elsewhere rejected a testimony to this effect by Eugenio Obispo.
Appellant refers to the testimony of Obispo, an engine officer, that he signed up with CSA because
sometime in July 1954 he was intimidated by Santiago Beliso, Obispo's testimony, however, referred to
a different incident, wherein there was no showing that Beliso acted in the presence and with the
apparent approval of high supervisory officials of PHILSTEAM. Furthermore, Obispo's credibility, unlike
that of Feliciano, was put in doubt because he falsely stated that Beliso was an Assistant Manager of
PHILSTEAM. We find no inconsistency or discrimination in the appreciation of the evidence by
respondent court in giving credence to Feliciano, as to one incident, while disbelieving Obispo, as to
another.
Finally, of record also stands the fact that PHILSTEAM pier superintendent Valeriano Teves helped bring:
about the affiliation of Diosdado CapiIitan, a PMOG member, with CSA, by telling him that his joining
with CSA would not affect his PMOG affiliation. This incident was testified to by PHILSTEAM witnesses
themselves. While such a statement, if considered as an isolated remark, may be a harmless expression
of opinion, it in reality amounted to support of CSA's membership solicitation drive, in the light of the
circumstances in which it was made. For it in effect encouraged membership in the competing union
and indorsed CSA's solicitation, at least with respect to Capilitan.
The respondent court absolved PMOG from the charge of unfair labor practice in Case 1002-ULP. The
alleged threats and violence on the part of PMOG strikers were found not sufficiently established by the
evidence. And PHILSTEAM in this appeal no longer argues that said threats and violence were
committed.
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Nonetheless, PHILSTEAM would contend that PMOG's strike was illegal, for the reason that the purpose
of the strike was illegal. It is argued that PMOG staged a strike so as to compel PHILSTEAM to bargain
collectively with it notwithstanding that it was a minority union. First of all, the statement that PMOG is
a minority union is not accurate. Respondent court precisely found that there has been no proof as to
which union, PMOG, CSA or any other, represented the majority of PHILSTEAM employees. For lack of
showing that CSA represented the majority it declared the PHILSTEAM-CSA collective bargaining
agreement null and void. It stated that the parties to the dispute were welcomed to file a petition for
certification election to decide this point.
Secondly, PMOG's strike was in retaliation to PHILSTEAM's unfair labor practice rather than, as
PHILSTEAM would picture it, an attempt to undermine the PHILSTEAM-CSA agreement. For said
agreement was signed only on August 24, 1954 but PMOG filed its notice of strike as early as July 17,
1954. PHILSTEAM's unfair labor practice, consisting in its interference with the employees, rights to self-
organization started on June 29, 1954. It was because of said unlawful act of the employer that the
union struck. The notice of strike in fact mentioned company unfair labor practices as reason for the
intended strike.
From the foregoing it follows that PMOG's strike was for a lawful purpose and, therefore, justified.
As to the question of reinstatement, we have already ruled, in Cromwell Commercial Employees and
Laborers Union (PTUG) vs, C.I.R., et al., L-19778, September 30, 1964, that striking employees are
entitled to reinstatement, whether or not the strike was the consequence of the employer's unfair labor
practice, unless, where the strike was not the consequence of any unfair labor prac tice, the employer
has hired others to take the place of the strikers and has promised them continued employment (2
Teller, LABOR DISPUTES AND COLLECTIVE BARGAINING, Sec. 371, pp. 996-997).
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Diaz vs. Arca
The present strike was the consequence of PHILSTEAM's unfair labor practice, Reinstatement of the
strikers, who have not found substantially equivalent employment elsewhere, therefore follows as a
matter of right, notwithstanding that the employer has hired others to take the place of the strikers for
the purpose of continuing the operation of the plant or the business of the industry (2 Teller, op. cit.,
Sec. 277, p. 754).
Petitioner finally argues that reinstatement was forfeited due to the failure of the strike to paralyze the
company's business or the failure of the employees to offer to return to work voluntarily and without
any condition. As adverted to above, even if the employer hires others to replace the strikers, thereby
avoiding paralysis of his business, if the strike is against an unfair labor practice on its part, the employer
is bound to reinstate the strikers. As to the matter of a voluntary offer to return to work without any
condition the same is relevant only to the question of payment of back wages in addition to
reinstatement. Since in these cases no back wages were awarded and the union has not appealed, said
question is not in point.
WHEREFORE, the decision and resolution appealed from are hereby affirmed, with costs against
petitioner. So ordered.
Bengzon, C.J., Bautista, Angelo, Concepcion, Dizon, Regala, Makalintal and Zaldivar, JJ., concur.
Reyes, J.B.L., J., is on leave.
Decision and resolution affirmed.
______________ Phil. Steam Navigation Co. vs. Phil. Marine Officers Guild, 15 SCRA 174, Nos. L-20667 &
L-20669 October 29, 1965
VOL. 14, MAY 19, 1965
Visayan Bicycle Manufacturing Co., Inc. vs. National Labor Union
No. L-19997. May 19, 1965.

VISAYAN BICYCLE MANUFACTURING CO., INC., petitioner, vs. NATIONAL LABOR UNION and COURT OF
INDUSTRIAL RELATIONS, respondents.
Court of Industrial Relations; Denial of motion to extend period to file arguments not abuse of
discretion.—The denial by the Court of Industrial Relations of a motion to extend the 10-day period to
file arguments in support of a motion for reconsideration, pursuant to its standing rule against such
extension, does not constitute abuse of discretion.
Labor relations; Unfair labor practice; Dismissal due to union activities.—Facts: Two employees were
dismissed for violation of a company rule against fights in the premises or during working hours. It
appears, however, that said employees, who were union officers, were provoked into a prearranged
fight by two recently hired employees pursuant to a strategy of the company designed to provide an
apparently lawful cause for their dismissal, and said dismissed employees had not figured in similar
incidents before or violated company rules in their many years with the company. Held: That this is
unfair labor practice.
PETITION for review of a decision and resolutions of the Court of Industrial Relations.
Mascardo, Mintu & Lazaro Law Offices for petitioner.
Eulogio R. Lerum for respondent National Labor Union.
BENGZON, J.P., J.:
On November 3, 1958, workers in the Visayan Bicycle Manufacturing Co., Inc. formed the Visayan
Bicycle Employees and Workers Union (VIBEMWU). Pedro Evangelista was its president. On November
14, 1958, VIBEMWU and the company signed a collective bargaining agreement. Among other things it
provided for union security, checkoff, wage increases, fifteen days vacation leave and fifteen days sick
leave.
On February 21, 1959, Pedro Evangelista was again elected president, for 1959. Felicisimo Rodiel was
elected board member.
For the year 1960 VIBEMWU, on December 12, 1959, re-elected Pedro Evangelista president and elected
Fulgencio Besana and Felicisimo Rodiel, vice-president and secretary, respectively.
On February 27, 1960, through its executive board headed by Besana, acting as president, VlBEMWU
affiliated with the National Labor Union (NLU). Subsequently, on March 4, 1960, the Constitution and
By-laws of VIBEMWU were amended. On March 9, 1960, another election was held and Besana was
chosen president thereby replacing Evangelista.
On March 17, 1960, the national secretary of NLU, by a letter, informed the company of VIBEMWU’s
affiliation to NLU, and demanded enforcement of the collective bargaining agreement. The company,
however, did not accede to the demand. Consequently, on April 5, 1960, VIBEMWU filed a notice to
strike.
The Department of Labor’s Conciliation Service held several hearings on the union’s demands and strike
notice, but the company still refused.
On April 25, 1960, the company dismissed Besana and Rodiel after they figured, on the same day, in a
fight with two other employees, within the premises and during working hours. Alleging unfair labor
practice, NLU, on behalf of VIBEMWU, as well as of Besana and Rodiel, filed on May 6, 1960 a complaint
against the company in the Court of industrial Relations. The company answered it on
VOL. 14, MAY 19, 1965
May 23, 1960. It stated that the dismissal of Besana and Rodiel was due to violation of a company rule
that penalizes “Inciting or provoking a fight or fighting during working hours or on company premises”.
The Presiding Judge of the Court of Industrial Relations, after trying the case, rendered a decision on
March 3, 1962 in favor of the complainant union. An unfair labor practice, according to said decision,
was committed by the company in dismissing Besana and Rodiel due to their union activities. The
dispositive portion reads:
“This Court finds substantial evidence to sustain the charge against respondent Company in violation of
Section 4(a), paragraphs 1 and 4 of the Industrial Peace Act, and, therefore, orders respondent
Company, its official and/or agents to:
“(1) Cease and desist from interfering, restraining or coercing its employees, in the exercise of their
rights guaranteed by Section 3 of the Act;
“(2) Cease and desist from discriminating against employees in regard to hire or tenure of employment
or any term or condition of employment to encourage or discourage membership in any labor
organization;
“(3) Reinstate Fulgencio Besana and Felicisimo Rodiel to their former or equivalent positions in
respondent Company with backwages from the time of their dismissal on April 25, 1960, up to the time
of their actual reinstatement and with the rights and privileges formerly appertaining thereto, including
seniority;
“To facilitate the proper payment of backwages due them, the Chief of the Examining Division of this
Court and or his; duly designated assistant is hereby directed to examine the payrolls, daily time records
and other pertinent documents relative to complainants Besana’s and Rodiel’s services with respondent
Company, and to submit a corresponding report for further disposition.
“SO ORDERED.”
After receipt of copy of the decision on March 13, 1962, the company filed on March 15, 1962 a motion
for reconsideration. It contained no argument but reserved the “right” to file supporting memorandum
within ten days from March 18, 1962. A motion, however, was filed on March 27, 1962, requesting for
15-day extension of time to file the memorandum.
Visayan Bicycle Manufacturing Co., Inc. vs. National Labor Union.
Adhering to a “no-extension” policy thereon, the Court of Industrial Relations in banc denied, on March
28, 1962, the aforesaid motion for extension to file memorandum. Accordingly, on April 6, 1962, it
further denied the motion for reconsideration.
Following its receipt on July 6, 1962 of the last resolution, the company filed this petition for review on
July 16, 1962.
Petitioner has raised two issues: First, did the Court of Industrial Relations abuse its discretion in denying
the motion for extension of time to file memorandum in support of the motion for reconsideration?
Second, did the company’s dismissal of Besana and Rodiel constitute unfair labor practice?
The first issue has already been settled. The denial by the Court of Industrial Relations of a motion to
extend the 10-day period to file arguments in support of a motion for reconsideration, pursuant to its
standing rule against such extension, does not constitute abuse of discretion.1
Regarding the second issue, the record shows that on April 25, 1960, Besana and Rodiel were provoked
by Saturnino Reyes and Silvestre Pacia into a pre-arranged fight pursuant to a strategy of the company
designed to provide an apparently lawful cause for their dismissal. Reyes and Pacia were hired only
within that week.2 Besana and Rodiel were not shown to have previously figured in similar incidents
before or to have violated company rules and regulations in their many years with the company.3 The
company did not investigate the incident, and its manager, Co Hing, admitted that Besana was dismissed
because he was a “hard-headed leader of the union”. It was this manager who had warned VIBEMWU’s
officers responsible for the affiliation that if they will not withdraw
____________
1 Luzon Stevedoring Co., Inc. vs. CIR, L-16682, July 26, 1963; Manila Metal Caps and Tin Cans
Manufacturing Co. vs. CIR, L-17578. July 31, 1963.
2 April 19, 1960 and Aprl 18, 1960, respectively.
3 Bosana was employed since October 4, 1956; Rodiel, since November, 1957.
VOL. 14, MAY 19, 1965
VIBEMWU from the NLU, he would “take steps in order to dismiss them from work”.
The findings of the Court of Industrial Relations to the foregoing effect are supported by substantial
evidence. No reason obtains to alter the conclusion that Besana and Rodiel were in reality dismissed
because of their union activities and not because of their violation of a company rule against fights in
the premises or during working hours. Furthermore, the so-called violation of company rules having
been brought about by the company itself, thru the recent employment of Saturnino Reyes and Silvestre
Pacia who provoked the fight as above indicated, the same cannot be regarded as a ground to punish
the aforementioned employees.
Such being the case, the dismissal of Besana and Rodiel constituted unfair labor practice under Section
4(a) (1) and (4) of Republic Act 875:
“SEC. 4. Unfair Labor Practices.—“(a) It shall be unfair labor practice for an employer:
“(a) It shall be unfair labor practice for an employer:
“(1) To interfere with, restrain or coerce employees in the exercise of their rights guaranteed in section
three ;4
xxx
“(4) To discriminate in regard to hire or tenure of employment or any term or condition of employment
to encourage or discourage membership in any labor organization: xxx.”
Rothenberg has this to say:
“x x x it can be established that the true and basic inspiration for the employer’s act is derived from the
employee’s union affiliations or activities, the assignment by the employer or another reason, whatever
its semblance of validity, is unavailing. Thus, it has been held that the facts disclosed that the employer’s
acts in discharging employees were actually prompted by the employer’s improper interest in the
affected employee’s union
___________
4 “SEC. 3. Employee’s Right to Self-organization.—Employees shall have the right to self-organization
and to form, join or assist labor organizations of their own choosing for the purpose of collective
bargaining through representatives of their own choosing and to engage in concerted activities for the
purpose of collective bargaining and other mutual aid or protection, xxx.”
10
10
People vs. Marquez
affiliations and activities, even though the employer urged that his acts were predicated on economic
necessity, desire to give employment to more needy persons, lack of work, cessation of operations,
refusal to work overtime, refusal of non-union employees to work with union employees, seasonal lay-
off, libelous remarks against management, violation of company rules.” (Rothenberg on Labor Relations,
pp. 400-401; italics supplied.)
Since the only reason or basis for Besana and Rodiel’s dismissal was in fact their actuation as officers of
VIBEMWU, the dismissal is clearly discriminatory.
It is this inconsiderate act of power that makes a subordinate a rebel; it is this malicious tactic that
forces labor to dislike management; this unjustifiable conduct that creates a gap between management
and labor; and this attitude that makes the laborer hate the officials of the company to the detriment of
all efforts to harmonize management and labor for the benefit of both as envisioned by the Industrial
Peace Act. So plain from the record is the bad faith that attended the company’s deliberate and
calculated act of unfair labor practice that we find in the present appeal an obvious attempt to delay
and carry on a pretense which this Court can ill afford to let go without stern disapproval.
WHEREFORE, the decision and resolutions appealed from are hereby affirmed, with treble costs against
peti tioner. So ordered.
Bengzon, C.J., Bautista Angelo, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala, Makalintal and Zaldivar,
JJ., concur.
Concepcion, J., took no part.
Decision and resolutions affirmed.
———o0o——— Visayan Bicycle Manufacturing Co., Inc. vs. National Labor Union, 14 SCRA 5, No. L-
19997 May 19, 1965
VOL. 115, AUGUST 19, 1982
887
Judric Canning Corporation vs. Inciong

No. L-51494. August 19, 1982.*
JUDRIC CANNING CORPORATION, petitioner, vs. THE HONORABLE AMADO G. INCIONG, in his capacity
as Deputy Minister of Labor, THE HONORABLE FRANCISCO L. ESTRELLA, in his capacity as Director of
Region IV, Ministry of Labor, UNITED LUMBER & GENERAL WORKERS OF THE PHILIPPINES (ULGWP),
NORMA PINEDA, LEONILA MORALES, TERESITA BALMACEDA, VICKY PEÑALOSA, ADELINA VALENZUELA
and JUANITA REPOSAR, respondents.
Labor Law; Unfair Labor Practice; Illegal Dismissal; Abandonment of work by employees inconsistent
with their immediate filing of a complaint for illegal dismissal; Dismissal of employees not for
abandonment from work but due to union activities.—The record shows that after the parties had
submitted their respective position papers, a hearing was held, at the conclusion of which, the
respondent Regional Director found that the private respondents did not abandon their jobs but were
dismissed because of their union activities. This is a finding of fact which may not now be disturbed.
Besides, the private respondents immediately filed a complaint for illegal dismissal, seeking their
reinstatement, on August 24, 1978, soon after their services were terminated on August 19, 1978. It
would be illogical for the private respondents to abandon their work and then immediately file an
action seeking their reinstatement.
Same; Same; Same; Dismissal of employees for soliciting signatures to form a union within the
company constitutes unfair labor practice; Interference with formation of a labor union violative of
employees’ right to self-organization.—In this particular case, the private respondents were
dismissed, or their services were terminated, because they were soliciting signatures in order to form
a union within the plant. x x x For sure, the petitioner corporation is guilty of unfair labor practice in
interfering with the formation of a labor union and retaliating against the employees’ exercise of their
right to self-organization.
Same; Same; Same; Prior clearance with Ministry of Labor for termination of employment not
required for employees with less than one year of service.—Indeed, prior clearance with the Ministry
of
_______________
* SECOND DIVISION
888
888
Labor for the termination of the private respondents is not necessary in this case since the private
respondents have been employed with the petitioner corporation for less than one (1) year.
PETITION to review the order of the Ministry of Labor.

Florante A. Bautista for petitioner.
The Solicitor General for respondent Deputy Minister.
Eduardo G. Araulo for private respondents.
CONCEPCION JR., J.:
Petition for certiorari, with a prayer for the issuance of a writ of preliminary injunction or restraining
order, to annul and set aside the Order issued by the Regional Director of the Ministry of Labor on
November 15, 1978 in Case No. R4-STF—5515-78, entitled: “United Lumber and General Workers of the
Philippines (ULGWP), et al., complainants, versus Judric Canning Corporation, respondents,” which
ordered the herein petitioner to reinstate immediately herein private respondents Norma Pineda, Vicky
Peñalosa, Leonila Morales, Teresita Balmaceda, Adelina Valenzuela, and Juanita Reposar to their former
positions with full backwages from the date of their dismissal up to their actual reinstatement; the
Order issued by the respondent Amado G. Inciong on August 3, 1979, which affirmed the aforestated
order of the Regional Director and dismissed the appeal of the herein petitioner; and the Writ of
Execution issued in said case on September 24, 1979.
The records show that the herein private respondents Norma Pineda, Vicky Peñalosa, Leonila Morales,
Teresita Balmaceda, Adelina Valenzuela, and Juanita Reposar are employees of the petitioner
corporation and are members of the United Lumber and General Workers of the Philippines (ULGWP).
On August 19, 1978, the said complainants were allegedly not allowed to report for work due to their
union activities in soliciting membership in a union yet to be organized in the company and their time
cards were removed from the rack. As a result, the said complainants and their labor union
889
VOL. 115, AUGUST 19, 1982
889
filed a complaint for unfair labor practice against the petitioner with Region IV of the Ministry of Labor,
seeking the reinstatement of the complainants with full backwages.1
The herein petitioner denied having locked out the complainants and claims that the said complainants
failed to report for work and abandoned their positions. The petitioner also denied having knowledge of
the union activities of the complainants until August 30, 1978, when it was served notice of a petition
for direct certification filed by the complainant union.2
After hearing the parties, or on November 15, 1978, the Regional Director of Region IV of the Ministry of
Labor, after finding that the petitioner had dismissed the complainants without valid cause, ordered the
petitioner to immediately reinstate the complainants to their former positions with full backwages from
the date of their dismissal up to their actual reinstatement.3
The petitioner corporation appealed to the Ministry of Labor,4 but its appeal was dismissed for lack of
merit on August 3, 1979.5 Thereafter, a writ of execution was issued on September 24, 1979.6
Hence, the present recourse. As prayed for, a temporary restraining order, restraining the respondents
from enforcing, implementing and/or carrying out the writ of execution dated September 24, 1979, was
issued on November 12, 1979.7
1. The petitioner contends that the Regional Director’s finding, which was affirmed by the respondent
Deputy Minister of Labor, that the petitioner is guilty of unfair labor practice for terminating the services
of the respondent union members due to their alleged union activities, is not supported by the evidence
of record.
_______________
1 Rollo, pp. 39, 41, 43.
2 Id., p. 50.
3 Id., p. 57.
4 Id., p. 59.
5 Id., p. 80.
6 Id, p. 81.
7 Id., p. 107.
890
890
This contention is untenable. The record shows that after the parties had submitted their respective
position papers, a hearing was held, at the conclusion of which, the respondent Regional Director found
that the private respondents did not abandon their jobs but were dismissed because of their union
activities. This is a finding of fact which may not now be disturbed.
Besides, the private respondents immediately filed a complaint for illegal dismissal, seeking their
reinstatement, on August 24, 1978, soon after their services were terminated on August 19, 1978. It
would be illogical for the private respondents to abandon their work and then immediately file an action
seeking their reinstatement.
Moreover, there was no reason at all and none has been suggested by the petitioner, for the private
respondents to abandon their work. No employee with a family to support, like the private respondents,
would abandon their work knowing fully well of the acute unemployment and underemployment
problem and the difficulty of looking for a means of livelihood. As the Solicitor General stated: “To get a
job is difficult; to run from it is foolhardy.”
But, most of all, the petitioner stated that in spite of its position that the private respondents had
abandoned their jobs, it “offered to pay respondent union members severance pay of one (1) month.”8
This is a clear admission of the charge of arbitrary dismissal, for why should the petitioner offer to pay
what it calls “severance pay” if the private respondents were not, indeed, dismissed, or if the petitioner
sincerely believed in the righteousness of its stance?
2. 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 before the organizational meeting of the union and more than one (1)
year before actual registration of said union with the Labor Organization Division of the Bureau of Labor
Relations.
The contention is without merit. Under Article 248(a) of the Labor Code of the Philippines, “to interfere
with, restrain, or
_______________
8 Id., p. 29; par. 10(f) of Petition.
891
VOL. 115, AUGUST 19, 1982
891
coerce employees in their exercise of the right to self-organization” is an unfair labor practice on the
part of the employer. Paragraph (d) of said Article also considers it an unfair labor practice 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 respondents were dismissed, or their services were terminated, because they were soliciting
signatures in order to form a union within the plant. In their affidavit, executed on September 19,
1978,9 the private respondents stated:
“Na kami ay nagkampanya upang papirmahin namin sa ‘membership form’ ng ULGWP ang nakakarami
(majority) sa mga empleyeado at nagharap kami ng petisyon sa Ministri ng Paggawa upang masertify
ang aming unyon sa Case No. R4-LRD-M-8-403-78;
“Na dahil sa aming pagreklamo sa Pangasiwaan na ibigay sa amin ang mga biyaya sa ilalim ng Kodigo ng
Paggawa at dahil sa pagtayo at pagkampaniya namin sa mga empleyeado na sumapi sa unyon ay kami ay
pinag-initan at tinanggal sa trabaho ng Pangasiwaan.”
For sure, the petitioner corporation is guilty of unfair labor practice in interfering with the formation of a
labor union and retaliating against the employees’ exercise of their right to self-organization.
3. Finally, the petitioner claims that the “respondent Regional Director’s finding, which was affirmed by
respondent Deputy Minister of Labor, that the ‘dismissal’ of respondent union members ‘is conclusively
presumed to be without a valid cause’ because petitioner failed to apply for clearance is contrary to the
applicable Rules and Regulations Implementing the Labor Code and is at variance with jurisprudence on
the matter.”
The petitioner obviously refers to the following portion of the Order of the Regional Director dated
November 15, 1978:
“The record shows that complainants Norma Pineda, Vicky Peñalosa, Leonila Morales, Teresita
Balmaceda, Adelina Valenzuela
_______________
9 Id., p. 48.
892
892
and Juanita Reposar were employed by respondent in January, 1978, up to August, 1978. They worked
continuously up to the time that their services were terminated by respondent on the ground of
abandonment. However, respondent did not apply for clearance with this Office to terminate the
services of complainants. Hence, their dismissal is conclusively presumed to be without a valid cause.”
Indeed, prior clearance with the Ministry of Labor for the termination of the private respondents is not
necessary in this case since the private respondents have been employed with the petitioner
corporation for less than one (1) year. Section 1, Rule XIV, Book V of the Implementing Rules and
Regulations provides as follows:
“Section 1. Requirement for shutdown or dismissal.—No employer may shut down his establishment or
dismiss any of his employees with at least one year during the last two years, whether the service is
broken or continuous, without prior clearance issued therefor in accordance with this Rule. Any
provision in a collective agreement dispensing with the clearance requirement shall be null and void.”
However, the questioned order finding the dismissal of the private respondents to be without just cause
is not based upon such absence of prior clearance alone. The respondent Regional Director also found
that the private respondents were dismissed because of their union activities and for the failure of the
petitioners to file a report in lieu of prior clearance, as provided for in Section 11, Rule XIV, Book V of the
Implementing Rules and Regulations. The questioned order further reads, as follows:
“Moreover, we find that complainants did not abandon their job. They were terminated due to the fact
that they actively campaigned and assisted in the organization of their union.
“Therefore, the dismissal of complainants is without valid cause, considering that respondent failed to
justify their action and also have not filed the necessary report as required under the Labor Code.”
The error of the Regional Director in stating that the dismissal of the private respondents was without
just cause in view of the absence of prior clearance from the Ministry of Labor is,
893
VOL. 115, AUGUST 19, 1982
893
thus, not sufficient to warrant a reversal of the questioned order.
WHEREFORE, the petition should be, as it is hereby, DISMISSED. The temporary restraining order
heretofore issued is hereby LIFTED and set ASIDE. With costs against the petitioner.
SO ORDERED.
Barredo (Chairman), Aquino, Guerrero, Abad Santos, De Castro and Escolin, JJ., concur.
Petition dismissed. Order lifted and set aside.
Notes.—Constitutional guarantee of security of tenure applied to dismissals without cause even if

ordered prior to the New Labor Code. (Pepito vs. Secretary of Labor, 96 SCRA 454.)
Proof of illegal dismissal devolved upon claimant himself seeking reinstatement, and for failure to show
proof, the Court of Industrial Relations cannot order his reinstatement. (William Lines, Inc. vs. Lopez, 96
SCRA 593.)
Testimony of a witness which is biased cannot prevail over a disapproved application for indefinite leave
of absence. (Sandoval Shipyards, Inc. vs. Clave, 94 SCRA 472.)
The statutory remedy requiring reinstatement of employees dismissal due to the unfair labor practice of
the employer is not unconstitutional. (Bradman Company, Inc. vs. Court of Appeals, 78 SCRA 10.)
——o0o——
894 Judric Canning Corporation vs. Inciong, 115 SCRA 887, No. L-51494 August 19, 1982
88
Manila Hotel Company vs. Court of Industrial Relations
No. L-30139. September 28, 1972.
MANILA HOTEL COMPANY, petitioner, vs. COURT OF INDUSTRIAL RELATIONS and PINES HOTEL
EMPLOYEES ASS'N. (CUGCO), respondents.
No. L-30755. September 28, 1972.
MANILA HOTEL COMPANY and SOFRONIO G. RIVERA, petitioners, vs. COURT OF INDUSTRIAL
RELATIONS and PINES HOTEL EMPLOYEES ASSOCIATION (CUGCO), respondents.
No. L-30818. September 28, 1972.
MANILA HOTEL COMPANY, petitioner, vs. PINES HOTEL EMPLOYEES ASS'N. (CUGCO) and COURT OF
INDUSTRIAL RELATIONS, respondents.
Labor Law; Circumstances showing unfair discrimination of union members.—Where a company

contrary to previous practice of dividing equally to all employees a certain percentage of its net profits
as Christmas bonus allocated 50% thereof only to its Manila Hotel employees, some of whom were
granted yearend bonus, while its Pines Hotel employees where there exists a labor union did not
receive any year-end bonus; where only 25% of said percentage of net profits was distributed to its
Pines Hotel employees and 25% to its Taal Vista Lodge employees, these circumstances constitute a
clear case of discrim. ination, it appearing that there is no union at the Manila Hotel or the Taal Vista
Lodge and considering further that the company had been besieged with demands for better living
conditions from the union as well as strikes of said union.
89
89
Same; Same; Court may grant affirmative relief,—There being unfair discrimination found in the
distribution of bonuses to its employees, the industrial court's order that the company distribute said
bonus pro rata among all its employees regardless of their place of work, as was consistently done in
previous years, does not constitute reversible error. It is- a proper exercise of its power under section
5 of R.A. 875 to grant affirmative relief whenever it has adjudged the existence of an unfair labor
practice.
Same; Same.—There is unfair and unjust discrimination in the granting of salary adjustments where
the evidence shows that—(a) the management of a hotel company paid the employees of one of its
branch hotels where there is a union the minimum monthly salary for daily workers when said
employees are paid on a monthly basis; (b) where salary adjustments were granted to employees of
one of its branch hotels which was always losing in its operations and where there is no labor
organization in a manner not in accordance with the Interpretative Bulletin of the Bureau of Labor
Standards of the Department of Labor; and (c) the total salary adjustments given every ten of its Pines
Hotel employees where there is a labor union would not even equal the salary adjustments given one
single Manila office employee.
Same; Jurisdiction of industrial court on incidental ques-tions.—Where the industrial court properly
assumed jurisdiction over the dispute between the parties and sanctioned the settlement thereof
offered by the petitioner itself, said court certainly had jurisdiction in all incidents relating to the
implementation and carrying out of the settlement.
Same; Equivalent of preliminary investigation in filing of unfair labor practice charge.—Assuming that
a prior preliminary investigation was necessary to determine the merit of the union's complaint for
unfair labor practice, it cannot be gainsaid that in effect respondent court undertook such preliminary
investigation on its own when it immediately called the parties to a conference and no prejudice
could be said to have been caused to petitioner (company) thereby for the merit of the union
complaint is borne out by the fact that the parties
90
90
promptly arrived at a satisfactory settlement thereof upon petitioner's undertaking to pay retirement
gratuity to all eighty-six affected employees.
Same; Court should take account of employees' accountability before authorizing payment.—It is to
be expected that the court will take the necessary safeguard measures to provide payment of some
accountabilities and outstanding obligations of employees before making payment of the retirement
gratuity pay to the affected employees out of the fund the employer had deposited with the court for
said purpose.
APPEALS by certiorari from the decision, orders and resolutions of the Court of Industrial Relations,
Government Corporate Counsel Leopoldo M. Abellera and Trial Attorney Vicente M. Constantino, Jr.
for petitioners.
J. C. Espinas, B. C. Pineda & Associates and Ramon R. Buenaventura for respondent Union.
TEEHANKEE, J.:
These three appeals by certiorari filed on various dates in 1969 involve the same parties and various
incidents between them, commencing from an unfair labor practice charge originally filed by respondent
union against petitioner company and culminating in supplemental proceedings to enjoin the abrupt
dismissal and termination of employment of all eighty-six employees at the Pines Hotel with its sudden
sale on March 28, 1968 to a third party.
Petitioner-employer has appealed from the cease-and-desist order of respondent court of industrial
relations in its decision in the original unfair labor case as well as from the orders issued by it to enforce
the settlement of the supplemental dispute arising from the sudden sale of the Pines Hotel and the
abrupt dismissal of all its eighty-six employees with the award and payment to them of gratuities as
agreed to by the company itself and embodied in a formal resolution of its board of directors, and from
91
91
the court's en banc resolutions denying reconsideration thereof.
Hence, the Court in giving due course to the last appeal filed by petitioner-employer on August 26, 1969,
and docketed as Case L-30818, ordered per its resolution therein of August 28, 1969 that all the three
cases at bar be jointly taken up and decided, in view of their related nature.
In L-30755, upon proper complaint filed by respondent court's prosecutor at the instance of the union
and after preliminary investigation, an unfair labor practice on six (6) counts was filed against herein
petitioner Manila Hotel Company then engaged in the operation of the Pines Hotel in Baguio City and its
co-petitioner Sofronio G. Rivera as the hotel's then general manager.1 After due hearing, respondent
court dismissed four (4) counts and found said petitioners guilty of unfair labor practice on two (2)
counts, viz, (1) the charge of discrimination in the granting of the 1965 Christmas bonus and (2) the
charge of discrimination in the granting of salary adjustments pursuant to the then newly enacted
Minimum Wage Law, Republic Act 4180, passed on April 21, 1965, and decreeing a two-peso increase in
the daily minimum wage for workers in industrial and commercial establishments from four pesos
(P4.00) to six pesos (P6.00). Respondent court in its decision dated December 16, 1968, accordingly
ordered respondents
"(1) To cease and desist from further committing such unfair labor practice acts;
"(2) To distribute the 1965 Christmas bonus on a 'prorata' basis as having been done in the previous
years; and
"(3) To implement the salary adjustments of all the employees, except the assistant manager of the
Pines Hotel, in accordance with their salary scale in consonance with the minimum monthly salary of
P180.00 as provided for in the New
_______________
1 Docketed as Case No. 4506-ULP of the industrial court, entitled "Pines Hotel Employees Ass'n. (Cugco),
complainant, vs. Manila Hotel Co. and Sofronio G. Rivera, respondents" and filed on May 16, 1966.
92
92
Minimum Wage Law, effective July 1, 1965 until the sale of the Pines Hotel to the Resort Hotels
Corporation."
Their motion for reconsideration having been denied by respondent court's en banc resolution of May
20, 1969, petitioners filed their present appeal on August 11, 1969.
Re L-30139—During the pendency of the unfair labor practice case in the court below (subject of L-
30755, supra), the eighty-six employees of Pines Hotel were stunned when they abruptly received on
March 28, 1968 written notices that the National Development Company as owner of the Pines Hotel
had sold it to the Resort Hotels Corporation on that same date, March 28, 1968, and that since
petitioner Manila Hotel Company's operation of the hotel would cease effective the next day, "(their)
services are hereby terminated as of the close of business hours of March 28, 1968."'
Since the unfair labor practice case, No. 4506-ULP, was still pending before the industrial court,
respondent union forthwith filed with said court on the same date, March 28, 1968, an "Urgent Petition
with prayer for a temporary restraining order"3 complaining of petitioner's actions in bad faith in
abruptly giving them their termination papers (during the very pendency of their case for other unfair
labor practices on its part) in violation of the guarantee of their tenure of employment in their subsisting
collective bargaining agreement while disclaiming at their latest conciliation conference held only twelve
(12) days earlier on March 16, 1968 any knowledge of a reported plan to sell the Pines Hotel.
The union accordingly prayed inter alia that "this case be consolidated with CIR Case No. 4506-ULP" and
that pending consideration of the merits, an ex-parte restraining order be issued against their abrupt
dismissal or termination of services until further orders of respondent court. The union also promptly
established picket lines in protest of the termination of their members without due notice and despite
their pending urgent petition for an injunction or restraining order against such termination.
_______________
2 Annex D of Annex B, petition in L-30139.
3 Annex E, petition in L-30139.

93
93
Respondent court took cognizance of the union's petition which was docketed with the same number as
the original unfair labor practice case as "No. 4506-ULP (1)" and called the parties immediately to a
conference which it set on March 29, and April 2, 1968.4 At the conference and hearing of the union's
urgent petition for injunction, petitioner-employer expressly manifested that it was willing to grant
retirement gratuity to all the employees, and its board of directors met and deliberated on April 4, and
April 8, 1968 to approve the corresponding resolutions.
Hence, petitioner's board expressly approved the payment of such gratuity to "those who have served
for 20 years or more (who) shall be paid in accordance with law" and "(T)hat the basis of computing the
gratuity pay shall be the basic salary as of the day of separation."5 This expressly refers and applies to
the sixteen (16) [out of 86] employees who have twenty years or more of service with petitioner
company and whose gratuity pay has been ordered paid as per respondent court's order of December 5,
1968 in the amounts therein computed.
Notwithstanding petitioner's having deposited with respondent court pursuant to its own offer the sum
of P100, 000.00 through its check on which was written "for payment of gratuity and/or separation pay
and other money claims of the petitioner union," and the union in turn having withdrawn its picket line,
petitioner nevertheless questioned the issuance of said order on grounds of alleged lack of jurisdiction
and impropriety thereof. Its motion for reconsideration having been denied per respondent court's en
banc resolution of January 9, 1969, it filed on February 22, 1969 its appeal, which was docketed as L-
30139.
_______________
4 The General Manager of the National Development Company as owner of the Pines Hotel was called
to the second conference of April 2, 1968, although said company was actually formally impleaded as
party respondent in the Amended Urgent Petition filed by the union on April 3, 1968.
5 Paragraphs 2 and 3 of petitioner's board's deliberations of April 8, 1968, cited in respondent court's
questioned order of December 5, 1968, Annex A, petitioner's brief in L-30139.
94
94

Re L-30818—In connection with the same sale on March 28, 1968 of the Pines Hotel and the abrupt
termination of all its employees as of the same date, petitioner's board of directors had likewise
approved on April 8, 1968 the payment of retirement gratuity to the greater remainder of seventy (70)
[of a total 86] employees who had not completed 20 years of service and were not qualified under the
Retirement Law, R.A. No. 186, at the rate of "one month salary for every year of service, but not
exceeding twelve months"6
Citing the various manifestations in the record of petitioner's willingness to pay such gratuity,
respondent court issued its order of February 27, 1969 for the payment of such gratuity not exceeding
12 months to the remaining seventy (70) employees who have rendered one year to nineteen years of
service to petitioner company. Nevertheless, as in L-30139, petitioner raised the same questions of
jurisdiction and propriety of the industrial court's issuance of said payment order. Its motion for
reconsideration having been denied by respondent court's en banc resolution of May 8,1969, petitioner
filed on August 26, 1969 its herein appeal, docketed as L-30818.
I Re L-30755
1. In the original unfair labor practice case, respondent court found petitioner guilty of discrimination
and unfairness in the distribution of the 1965 Christmas bonus in that it radically departed from its
adopted procedure of distributing pro-rata among all the employees of the Manila Hotel, Taal Vista
Lodge and the Pines Hotel the traditional Christmas bonus (7% of the net profit of the company) as
approved by the Office of the Economic Coordinator which it had followed for the past six or seven
years prior to 1965.
_______________
6 Paragraph 1 of petitioner's board's deliberation of April 8, 1968, cited in respondent court's

questioned order of Feb 27 1969, Annex A, petitioner's brief in L-30818
95
95
The industrial court found that instead 'in the year 1965, the Manila Hotel Company, thru its general
manager, distributed the 7% from the net profit as Christmas bonus in a way that 50% was allotted to
the Manila Hotel employees, 25% to the Taal Vista Lodge employees and the remaining 25% to the Pines
Hotel employees. With this way of distributing the 7% of the net profit amounting to P8,239.73, the
share of the Manila Hotel amounting to P4,119.63, when divided equally among its eight employees,
each will receive P500.00 more or less; the share of the Taal Vista, Lodge amounting to P2,060.05, when
divided equally among its thirty employees, each will receive P 70.00, more or less; while the share of
the Pines Hotel amounting to P2,060.05, when divided equally among its one hundred twenty
employees, each will receive P20.00, as their respective bonus."7
The industrial court stressed that the Pines Hotel employees who were the most numerous "would
receive a lesser bonus than the employees of the Manila Hotel and Taal Vista Lodge where neither is
there any existing labor organization nor the complainant union has any member" and that "(T)wo
employees of the Manila Hotel, namely, Modesto Hilario and Margarita Reyes, were granted a yearend
bonus in the amount of P2,011.55 and P1,645.82, respectively, despite the fact that the latter had been
employed by the company for over a year only, that is in September, 1964."
Petitioner's contention that the giving of the lion's share of the 1965 Christmas bonus to the eight
administrative employees at its Manila office was a valid exercise of discretion on the pretext that "the
head office of the petitioner Manila Hotel realized a net profit for the year 1965 in the amount of
P226,055.42 while the Pines Hotel and the Taal Vista Lodge incurred heavy losses for the same period."8
is shown by the record to be bereft of factual basis. The record clearly shows that the only income from
petitioner's Manila Hotel is derived from the lease of its
_______________
7 Italics supplied.
8 Petitioner's brief in L-30755, pp. 16-17.
96
96
hotel building and facilities to a third party (Mrs. Esperanza Zamora) with the earning of which
petitioner's eight administrative employees at the head office in Manila had nothing to do, whereas the
Pines Hotel and the Taal Vista Lodge were actually operated as such by petitioner company, with the
Pines Hotel at times making actual profits from operations in contrast to the Taal Vista Lodge which
always showed operational losses.
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 equally 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 yearend bonus
while the employees of the Pines Hotel did not receive any year-end bonus. This 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 respondents had always been beset with demands for better living
conditions from the complainant union as well as strikes being staged by the union."
The Court finds that petitioner has failed to show any error in respondent court's decision that
petitioner distribute the bonus pro rata, among all its employees regardless of their place of work, as
was consistently done in the previous years, and that respondent court's order was but a proper
exercise of its power under section 5 of Republic Act 875 to grant affirmative relief whenever it has
adjudged the existence of an unfair labor practice.
2. Respondent court also found petitioner guilty on a second count in the granting of salary adjustments
pursuant to the two-peso increase in the daily minimum wage ordained by the then newly enacted
Republic Act 4180.
On this point, petitioner's contention is that it could not be held guilty of unfair labor practice because
"it is not the herein petitioners who are not agreeable to paying the respondent union members a
minimum salary of P180.00, but the Office of the Economic Coordination for the
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97
reason that the minimum monthly salary for said employees, as prescribed by the Interpretative Bulletin
of the Bureau of Labor Standards of the Department of Labor, is P157. 00."9
The Court finds no error in respondent court's rejection of petitioner's claims, when it held that it
"cannot agree to the contentions of respondents that their failure to implement the New Minimum
Wage Law was due to the interpretative bulletin of the Bureau of Labor Standards of the Department of
Labor, which in the opinion of the Office of the Economic Coordinator should apply to the employees of
the Pines Hotel because the said interpretative bulletin refers to daily wage employees (prescribing a
new minimum monthly salary of P157.00 for daily workers) and not to monthly paid ones (such as the
Pines Hotel employees) and, besides that, this is a mere opinion. Likewise, the contention that the
company finances do not warrant the revision of the salary scales of the Pines Hotel employees is
untenable considering that the employees of the Manila Hotel and some employees of the Taal Vista
Lodge where there is no existing labor organization were given salary adjustments beginning the fiscal
period July 1, 1965, and that despite the alleged financial reverses suffered by the company, the latter
was able to grant year-end bonus to two of its employees, which in effect belies the contention of the
company that they are in a financial strait, Furthermore, the Taal Vista Lodge had always been losing in
its operation while the Pines Hotel makes profits at times. Yet, despite all these, the respondent
company granted salary adjustments to some employees of the former without strictly adhering to the
aforesaid interpretative bulletin, which in the Court's opinion was purposely done to discourage the
members of the complainant union."10
Respondent court's finding of unfair and unjust discrimi-nation in the granting of salary adjustments
pursuant to the two-peso increase ordained by the then new Minimum
_______________
9 Petitioner's brief in L-30755, p. 9.
10 Notes in parentheses supplied.
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98
Wage Law is amply borne out by the record, with the eight (8) employees at the Manila office being
granted a total of P18,000.00 in salary adjustments for the fiscal year July 1, 1965 to June 30, 1966,
whereas eighty (80) regular employees of Pines Hotel received only an aggregate salary adjustment in
the lesser amount of P15,000.00. Stated in another way, the total salary adjustments given every ten
Pines Hotel employees would not even equal the salary adjustment given one single Manila office
employee.
Hence, without in any way turning down or modifying the increases and high salary adjustments which
petitioner saw fit to grant to its Manila office employees, respondent court correctly removed the unfair
discrimination by granting the corresponding affirmative relief to the Pines Hotel employees through
ordering the payment to them by petitioner of the new minimum monthly salary of P180.00 for
monthly-paid employees to which they were entitled under Republic Act 4180.11
II Re L-30139
As above stated, upon filing on March 28, 1968 by the union of its urgent petition with prayer to restrain
their abrupt separation from employment without prior notice by virtue of the sale 011 that same date
of the Pines Hotel to the Resort Hotels Corporation, respondent court took cognizance thereof,
permitted its docketing as a supplemental case of the original unfair labor practice case as "No. 4506-
ULP (1)" and forthwith called the parties to a conference on March 29, and April 2, 1968.
A settlement of such dispute was worked out at such conference with petitioner agreeing to pay
retirement gratuities to all 86 Pines Hotel employees as above mentioned and the union in turn
withdrawing its picket line. Petitioner deposited with respondent court the amount of P100,
_______________
11 Cf. Automotive Parts & Equipment Co, Inc. vs. Lingad, 30 SCRA 248 (Oct. 31, 1969),
99

99
Manila, Hotel Company vs. Court of Industrial Relations
000.00 (per NDC-issued check dated April 5, 1968)12 on account of such gratuity and/or separation pay
and other money claims of the union. An advance equivalent to one month's salary chargeable to any
amount that may be due the employees was given them therefrom in April, 1968. Much later, on
September 5, 1968, respondent court further issued in the same case its order for the payment out of
said deposit to the employees of their accrued leaves. Such order was never questioned or challenged
by petitioner.
On December 5, 1968, respondent court issued its order for the payment of the full gratuity of the
sixteen (16) Pines Hotel employees with twenty (20) years or more of service, stating the premises
thereof as follows:
"After the order dated September 5, 1968 in the aboveentitled case had been satisfied with the actual
payment of the accrued leaves of absences of the members of the complainant union, the other matter
deemed by the Court as the issue to be resolved is the subject of gratuity. This order particularly refers
to those employees with twenty (20) years or above of service.
"The facts on this matter are quite clear and to the point. After the termination of employment of
individual claimants on March 28, 1968, the Board of Directors of the Manila Hotel Company, on April 4,
1968, met, deliberated and decided to extend some monetary benefits to the terminated employees.
The deliberation was formally reduced to writing in a subsequent meeting of the same Board on April 8,
1968. Pertinent portion of the deliberation reads:
'Paragraph 2:—
Those who have served for 20 years or more shall be paid in accordance with law.
'Paragraph 3:—
That the basis of computing the gratuity pay shall be the basic salary as of the day of separation.'
(Exhibit '1-B')
_________________
12 Annex C, Rollo, in L-30139, p. 141.
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100

"The records are also rich with manifestations of the Company's counsel reiterating willingness to pay
gratuity in accordance with law. x x x x
Indeed, the records as well as the evidence is replete with the willingness of the Company to pay
gratuity to the members of the complainant union.
"The records also show that individual claimants herein were extended sometime in April, 1968 an
advance equivalent to one month's salary chargeable against any amount that may be due them (Exhibit
'5')"
As to outstanding hotel bills totalling P1,847.23 which respondent court held to be definitely deductible
against the individual employees who incurred the same, respondent court ruled that it would hold in its
custody the corresponding amount thereof, thus: "(A) s a condition of the payment of the claims of
complainant members, it was resolved by the Board of Directors of the Company that 'a) any amount
due to the Company from any employees shall be deducted before payments including their personal
accounts with the Company/ (Exhibit 'A'). The Company submitted a list of hotel bills which
unfortunately were unsupported with the very evidence of indebtedness. Hence, said hotel bills, though
definitely a deduction from the claims of individual claimant, for very obvious reasons, will not be
disposed of in this order but will be held in abeyance until after sufficient facts are in the Court's
possession for it to treat later on. Meanwhile, the Court will hold in its custody the total amount of hotel
bills."
Accordingly, respondent court ordered as follows:
"IN VIEW OF ALL THE FOREGOING, as manifested and agreed upon by the respondents' counsel, the
Cashier of the Court is hereby ordered to issue, subject to the usual accounting and auditing rules and
regulations, a check in favor of the Pines Hotel Employees Association (CUGCO), complainant herein,
thru its counsel, Atty. Benjamin C. Pineda, in the amount of P75,714,77 representing the net gratuity of
the hereunder
101
101
named employees who have to their credit twenty years of service or above and another check in favor
of J. C. Espinas & B. C. Pineda & Associates, thru Atty. Benjamin C. Pineda, in the amount of P27,139.00
as attorney's fees.
"For the proper guidance of the union president and Atty. Pineda, who are authorized to make
individual distributions of the claims of the employees and who must submit a report or accounting
thereafter within fifteen (15) days from receipt of the total gratuity for those with twenty (20) years of
service or above, less twenty-five per cent attorney's fees and one month advance gratuity, the
individual distribution is as stated hereunder, to wit:
(Note: Follows a list of the names of the sixteen (16) employees, with five (5) columns, giving the total
gratuity due each of them, the 25% attorney's fee deductible therefrom, hotel bills deductible from five
(5) employees accountable therefor, amount of one month's advance gratuity deductible from each
employee, and the net gratuity due each of them.)
"The total hotel bills of P1,847.23 shall remain with the custody of the Court until its further disposition.
There is still a balance of P78,415.57 remaining with the Court out of the initial deposits. And so an
additional amount of P26,285.43 must still be deposited with the Court in order that the full gratuity of
those with twenty years of service or above could be paid. The Company is therefore ordered to deposit
the said amount of TWENTY-SIX THOUSAND TWO HUNDRED EIGHTY-FIVE PESOS AND FORTY-THREE
CENTAVOS (P26.285.43) plus the amount of SIXTY-TWO PESOS AND EIGHTY-SIX CENTAVOS (P62.86)
representing the Court's deposit fee."
Petitioner bases its present appeal from respondent court's order on the strength of the "Opposition
and/or Motion to Dismiss" dated April 28, 1968 that it filed with respondent court on May 2, 1968,13
after the union had filed on April 3, 1968 its "Amended Urgent Petition" of the same date14 formally
impleading the National Development
_________________
13 Annex H, petition in L-30139.
14 Annex G, petition in L-30139.
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102
Company, owner-seller of Pines Hotel, as party respondent.15
Four grounds were stated by petitioner in said "opposition and/or motion to dismiss," as follows:
(1) that the urgent petition states no valid cause of action;
(2) that the respondent Court has no jurisdiction over the subject matter of the petition and over the
respondent;
(3) that the claim set forth in the petition has been paid, waived, abandoned or otherwise extinguished;
and
(4) that the injunction prayed for does not lie against the Company.
The first two grounds are now re-assigned by petitioner as errors on appeal, claiming that respondent
court had no jurisdiction over the case below because "there exists no longer employer-employee
relationship notwithstanding that the case refers to acts of unfair labor practice where no reinstatement
is sought" and that "the lawyer of the respondent union cannot file charge for unfair labor practices
directly with the court, because it is only the prosecutor of the respondent CIR that can file the same
pursuant to sec. 5(b) of Republic Act 875" and that "respondent CIR cannot just issue an order granting
awards without first resolving a motion to dismiss for lack of jurisdiction and/or granting (petitioner) its
right to file its answer to a complaint."16
These alleged errors assigned now by petitioner are actually moot and academic, f or even as of the time
petitioner had filed the same with respondent court on May 2, 1968, it had already recognized
respondent court's valid jurisdiction over the unfair labor complaint raised by the union over the abrupt
termination of services of the Pines Hotel employees and had come to a settlement of the dispute as
________________
15 See fn. 4, supra.
16 Petitioner's brief in L-30139, pp. 3-4.
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103
early as April, 1968 with its agreement to pay retirement gratuity to the employees in two categories
(those with 20 years of service and above, and those with 1 to 19 years of service, supra) and had
deposited with respondent court the sum of P100,000.00 for the purpose. On the other hand, the union,
accepting the settlement, had lifted their picket line and no longer insisted on its members' guarantee of
tenure of employment under their subsisting collective bargaining agreement.
Since the employees' claims had been settled with petitioner's agreement to pay them retirement
gratuity, respondent court certainly had jurisdiction to issue its questioned payment order of December
5, 1968 to implement the very agreement and settlement arrived at by the parties in the case before it.
As a matter of fact, the third-stated ground of petitioner's formal opposition below—which it

completely ignores in the present appeal—was that the union's claim or demand has been paid, waived,
abandoned or otherwise extinguished, citing precisely the policy adopted as early as April 5, 1968 by
petitioner "regarding the payment of gratuity and/or termination pay to said employees," submitting
photostat copy of the board's resolution thereon, recording petitioner's "good faith and earnest desire"
and resolution to deposit P200,000.00 for the purpose and citing union's counsel's conformity to the
settlement and to the proviso "that all pending cases in relation to the present dispute against MHCo,
NDC and Resort Hotels Corporation and its officials shall be withdrawn by the Pines Hotel Employees
Association (Cugco) and its members and to lift the picket lines at the Pines Hotel."17
Such withdrawal of the case could not of course be literally implemented, as petitioner would insinuate.
The union did withdraw its complaint for continued employment of its members despite the sale of the
Pines Hotel and it did lift the picket line, leaving the new owner to go freely about its business. The case
itself had to remain for implemen-
_________________
17 Petitioner's brief in L-30139, Annex C, pp. ix and x.
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104
tation in turn of petitioner's undertaking to pay retirement gratuity to all the 86 Pines Hotel employees
who had lost their jobs, and this is exactly what respondent court has done through its December 5,
1968 payment order. Respondent court having properly assumed jurisdiction over the dispute and
sanctioned the settlement thereof offered by petitioner itself, certainly had unquestioned jurisdiction in
all incidents relating to the implementation and carrying out of the settlement.
Prescinding from the foregoing nevertheless and dealing with the alleged errors which-petitioner has
assigned on appeal, it is obvious that its claim that the union members sought no reinstatement has no
factual basis in the record. The union precisely sought an injunction against the abrupt termination of its
members and claimed that they were entitled to continued employment as guaranteed by their
Petitioner's claim that the union counsel could not file an unfair labor practice charge directly with
respondent court may be correct as far as it goes. What the union had actually filed on March 28, 1968
was a separate "urgent petition with prayer for a restraining order." Respondent court however in effect
granted the union's alternative prayer for consolidation of the new unfair labor practice charge with the
union's pending case No. 4506-ULP. Assuming that a prior preliminary investigation was necessary to
determine the merit of the complaint, it cannot be gainsaid that in effect respondent court undertook
such preliminary investigation on its own when it immediately called the parties to a conference on the
next day, March 29, 1968 and April 2, 1968. No prejudice could be said to have been caused to
petitioner thereby, for the very merit of the union complaint is borne out by the fact that the parties
promptly arrived at a satisfactory settlement thereof upon petitioner's undertaking to pay retirement
gratuity to all eighty-six affected employees. By the same token, respondent court no longer had to
formally rule on petitioner's "opposition and/or motion to dismiss" of May 2, 1968 by virtue of the
earlier settlement reached by the parties in April, 1968, as already shown above.
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105
Only one point apparently not raised by petitioner in its opposition-motion below merits mention, and it
is that payment of the retirement gratuity to the employees directly through the respondent court from
the amount therein deposited by petitioner (and not through the Government Service Insurance System
in accordance with the usual practice) might disregard and not take into account "some
accountabilities" and "outstanding obligations" of said employees.18 It is to be expected that
respondent court will take the necessary safeguard measures to avoid such contingency, by properly
calling in a GSIS representative in charge of the GSIS accounts of said sixteen (16) employees to make
the proper verification before authorizing final payment of the amounts due to them.
III Re L-30818
This appeal involves the last order issued on February 27, 1969 by respondent court for the payment to
the greater remainder of seventy (70) Pines Hotel employees with less than twenty (20) years of service
(and therefore not qualified for gratuity under the Retirement Act, R.A. No. 186) of retirement gratuity
of "one month salary for every year of service, but not exceeding twelve months" as offered and agreed
to by petitioner itself, pursuant to its past practice.
In said order, respondent court, after noting the previous payment of the accrued leaves and one
month's salary advance, and the manifestations of record evidencing petitioner's reiterations of its
willingness to pay such gratuity, as in the case of the sixteen other employees with 20 years or over of
service (in Case L-30139), noted that:
"After the order dated September 5, 1968 in the aboveentitled case had been satisfied with the actual
payments of the accrued leaves of absences of the members of complainant union, the remaining issue
to be determined is the subject of gratuity for those with services ranging from one year to nine
_______________
18 Petitioner's brief in L-30139, p. 23.
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106

teen years. Those with twenty or above years of service were treated in a separate order.
"It appears that the facts are quite clear and not controverted. After the termination of employment of
the individual complainants on March 28, 1968, the Board of Directors of the Manila Hotel Company, on
April 4, 1968 met, deliberated and decided to extend some monetary benefits to the terminated
employees who are incidentally members of complainant union. This deliberation was formally reduced
to writing in a subsequent meeting on April 8, 1968. Pertinent portions of the deliberation reads:
'Paragraph 1—Employees who have rendered one year to nineteen years of services with the Manila
Hotel Company should be paid one month salary for every year of service, but not exceeding 12 months'
(Exh. 1-B)
x x x x x x x
"Finally the company admitted that former employees of the Manila Hotel Company in Manila were
given one month pay for every year of service but not exceeding twelve (12) months when their services
were terminated as a result of the relief of Mr. Zamora in 1954, June 30, 1954, except those employees
who were transferred to the Pines Hotel. (t.s.n., page 122, Aug. 9, 1968)"
Respondent court, as in L-30139, made the same reservation of holding in abeyance settlement of
outstanding hotel bills in the total amount of P2,921.94 against the individual employees liable therefor
until after presentation by petitioner of the necessary evidence.
Respondent court accordingly ordered the following:
"From the evidence, testimonial and documentary, attached herewith is a statement of the claims of the
individual workers including hotel bills, one-month advance pay, and 25% attorney's fees. (Exh. B-2, B-
3)19
__________________
19 The statement attached to this order in L-30818 actually lists, besides the seventy (70) regular
employees (with less than 20 years of service) twenty-two (22) additional "extra regular employees."
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107
"In view of the foregoing, the respondent, Manila Hotel Company, is hereby ordered to deposit with the
Court the amount of P103;856.30 in order to meet the total claims of the workers less their one-month
advance pay."
As already adverted to above, petitioner assigns in this appeal the very same identical errors assigned by
it in Case L-30139, based on its "opposition and/or motion to dismiss" filed on May 2, 1968 with
respondent court.
Accordingly, petitioner's appeal must perforce be rejected for the very same grounds already stated
above with reference to Case L-30139. As in said case L-30139, petitioner has in no manner questioned
or disputed the factual bases and findings of respondent court as to its undertaking and agreement in
the record to pay the retirement gratuity to the employees, by way of settlement of their dispute arising
from the protested abrupt termination of their employment with the sudden sale of the Pines Hotel to a
third party.
Respondent court in issuing the appealed payment order was but acting within its jurisdiction properly
assumed of implementing the very agreement and settlement for payment of retirement gratuity
arrived at by the parties in the case before it.
ACCORDINGLY, the decision, orders and resolutions appealed from are hereby af firmed. With reference
to Case L-30139 involving payment of retirement gratuity to the sixteen (16) qualified employees therein
named, respondent court is directed to make the corresponding verification that their accountabilities
to the Government Service Insurance System as such members-employees are fully discharged before
final payment of the amounts found due to them under the appealed order, herein affirmed, is made.
No costs.
Concepcion, C.J., Zaldivar, Castro, Makasiar, Antonio and Esguerra, JJ., concur.
Makalintal, J., is on official leave.
Fernando, J., concurs except as to the last paragraph in II—re L-30139.
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108
Barredo, J., concurs in separate opinion.
BARREDO, J.: Concurring —
I agree fully with the judgment in this case. The only purpose of this separate concurrence is to
emphasize the fact that the appeals in G.R. Nos. L-30139 and 30818 are completely devoid of merit and
should be declared as frivolous and dilatory. The attack against the decision and orders of the Court of
Industrial Relations involved in said appeals for want of jurisdiction has absolutely no basis.
The record shows that on March 28, 1968, when respondent union filed with the Industrial Court its
"Urgent Petition, with prayer for a temporary restraining order" to enjoin the implementation of the
abrupt termination of the services of its members working at the Pines Hotel, there was pending with
said court an unfair labor practice case, No. 4506-ULP, in which the matter involved was discrimination
in the payment of Christmas bonus and salary adjustments. While it may be true that such abrupt
termination of the services of said union members could be considered independently of the then
pending unfair labor practice case, the developments that swiftly took place after the filing of the
union's petition on March 28, 1968 made resort to the usual procedure in unfair labor practice cases
unnecessary insofar as the matter of such abrupt termination of services was concerned, f or the simple
reason that when the court tried to look into the union's grievance in the conferences of March 29 and
April 2, 1968, the question of whether or not petitioner had committed an unfair labor practice in
relation to the termination of services just mentioned had become moot and academic, considering that
by resolving to grant gratuities to the members concerned, and the latter agreeing thereto, it is as if the
said abrupt termination of services were admitted to be improper and unjustified without granting the
said gratuities. Accordingly, there was no reason anymore for the court to proceed any further.
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109
The pertinent provision of the Industrial Peace Act, Section 5, Paragraphs (a) and (b) read as follows:
"(a) The Court shall have jurisdiction over the prevention of unfair labor practices and is empowered to
prevent any person from engaging in any unfair labor practice. This power shall be exclusive and shall
not be affected by any other means of adjustment or prevention that has been or may be established by
an agreement, code, law or otherwise.
"(b) The Court shall observe the following procedure without resort to mediation and conciliation as
provided in section four of Commonwealth Act Numbered One hundred and three, as amended, or to
any pre-trial procedure. Whenever it is charged by an offended party or his representative that any
person has engaged or is engaging in any such unfair labor practice, the Court or any agency or agent
designated by the Court must investigate such charge and shall have the power to issue and cause to be
served upon such person a complaint stating the charges in that respect and containing a notice of
hearing before the Court or a member thereof, or before a designated Hearing Examiner at the time and
place fixed therein not less than five nor more than ten days after serving the said complaint. The
person complained of shall have the right to file an answer to the complaint and to appear in person
otherwise (but if the Court shall so request, the appearance shall be personal) and give testimony at the
place and time fixed in the complaint. In the discretion of the Court, a member thereof or a Hearing
Examiner, any other person may be allowed to intervene in the said proceeding and to present
testimony. In any such proceeding, the rules of evidence prevailing in courts of law or equity shall not be
controlling and it is the spirit and intention of this Act that the Court and its members and Hearing
Examiners shall use every and all reasonable means to ascertain the facts in each case speedily and
objectively and without regard to technicalities of law or procedure. In rendering its decisions, the Court
shall not be bound solely by the evidence presented during the hearing but may avail itself of all other
means such as (but not limited to) ocular inspections and questioning of well-informed persons which
results must be made a part of the record. In the proceeding before the Court or a Hearing Examiner
thereof, the
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parties shall not be required to be represented by legal counsel and it shall be the duty and obligation of
the Court or Hearing Examiner to examine and cross-examine witnesses on behalf of the parties and to
assist in the orderly presentation of the evidence."
It is true that under these provisions, there is an indication that mediation and conciliation as well as
pre-trial procedure need not be resorted to in unfair labor practice cases, but this is because such
procedures may unnecessarily delay the prevention of the unfair labor practice complained of, contrary
to the spirit of the law. I take it, however, that the very provisions of the section aforequoted to the
effect that "In any such proceeding, the rules of evidence prevailing in courts of law or equity shall not
be controlling and it is the spirit and intention of this Act that the Court and its members and Hearing
Examiners shall use all reasonable means to ascertain the facts in each case speedily and objectively
without regard to technicalities of law or procedure" even to the extent of allowing the Court to base its
decision on matters beyond those presented during the hearing and parties who are non-lawyers to
appear without counsel, viewed properly, do not enjoin the immediate termination of unfair labor
practice case if, for one reason or another, all the parties concerned happen to be before the Court and
after an exchange of views agree on how to fairly settle the case without further proceedings, when by
doing so, as in these cases, the unfair labor practice charged is practically assumed to be true and the
complainants are granted relief which appears to the Court just and consistent with the objective of the
law, under the circumstances obtaining. In other words, my view is that the procedure for unfair labor
practice cases outlined in Paragraph (b) above should be generally followed, but it is not violative of the
law and subversive of the broad jurisdiction of the Industrial Court conferred in Paragraph (a) above for
said Court to adopt in any given case a speedier and more prac-
111
111
tical procedure for accomplishing the purpose of the law and rendering justice to the parties.
Decision, orders and resolutions affirmed.

Notes.—While the management of a business enterprise is normally free to choose whom to employ
and retain within its complement, for purposes of efficiency and greater productivity, employees, on the
other hand, are statutorily protected against any form of unlawful discrimination in the exercise of their
rights to join a union and engage in union activity. Thus, where it is shown or indubitably appears that
the employer's motivation in discharging an employee is due to the latter's union affiliation or concerted
activities, the employer's use of another excuse for such discharge, such as economic retrenchment, lack
of work, violation of company rules, etc. will be unavailing. (See Visayan Bicycle Mfg. Co., Inc. vs.
National Labor Union, L-19997, May 19, 1965). In Talisay-Silay Milling Co., Inc. vs. Court of Industrial
Relations (L-14023 and L-14135, Jan. 30, 1960), it was thus held that the conduct of an employer in
dismissing strikers who were ordered reinstated by the Court of Industrial Relations, allegedly because
of a retrenchment policy adopted by the company and after complying with the 30-day notice of
separation, may be considered discriminatory where the records disclosed that those who were laid off
were precisely the reinstated strikers and the employer never adopted a reasonable basis for
determining the persons to be so separated from the service. Likewise, in National Rice & Corn Corp. vs.
NARIC Workers Union (L-18058, Aug. 30, 1962), it was held that where the employer adjusted the wages
of its employees except those who were the organizers and leaders of the union, the former is guilty of
unfair labor practice under section 4 (a) (4) of the Industrial Peace Act. Unfair discrimination may,
however, exist also where the employer grants the benefits of a collective bargaining agreement only to
union members without any valid reason. In such a case, the employer's acts would constitute undue
discrimination against non-members. (See International Oil Factory Workers Union vs. Judge Martinez,
L-15560, Dec. 31, 1960).
112
© Copyright 2017 Central Book Supply, Manila Hotel Company vs. Court of Industrial Relations, 47 SCRA
88, No. L-30139, No. L-30755, No. L-30818 September 28, 1972
536
Wise and Co., Inc. vs. Wise & Co., Inc. Employees Union
G.R. No. 87672. October 13, 1989.*
WISE AND CO., INC., petitioner, vs. WISE & CO., INC. EMPLOYEES UNION-NATU AND HONORABLE
BIENVENIDO G. LAGUESMA, in his capacity as voluntary Arbitrator, respondents.
Labor Law; Unfair Labor Practice; There can be no discrimination where the employees concerned are
not similarly situated.—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 where the employees concerned
are not similarly situated.
Same; Same; Same; Rule that labor law does not authorize the substitution of judgment of the
employer in the conduct of its business, established.—The Court holds that it is the prerogative of
management to regulate, according to its discretion and judgment, all aspects of employment. This
flows from the established rule that labor law does not authorize the substitution of the judgment of
the employer in the conduct of its business. Such management prerogative may be availed of without
fear of any liability so long as it is exercised in good faith for the advancement of the employers’
interest and not for the purpose of defeating or circumventing the rights of employees under special
laws or valid agreement and are not exercised in a malicious, harsh, oppressive, vindictive or wanton
manner or out of malice or spite.
Same; Same; Same; Same; Grant by petitioner of profit sharing benefits to the employees outside the
bargaining unit falls under the ambit of its managerial prerogative.—The grant by petitioner of profit
sharing benefits to the employees outside the “bargaining unit” falls under the ambit of its managerial
prerogative. It appears to have been done in good faith and without ulterior motive. More so when as
in this case there is a clause in the CBA where the employees are classified into those who are
members of the union and those who are not. In the case of the union members, they derive their
benefits from the terms and conditions of the CBA contract which constitute the law between the
contracting parties. Both the employer and the union members are bound by such agreement.
_______________
* FIRST DIVISION.
537
VOL. 178, OCTOBER 13, 1989
537
PETITION to review the decision of the Voluntary Arbiter, National Conciliation and Mediation Board.
Angara, Abello, Concepcion, Regala & Cruz for petitioner.
GANCAYCO, J.:
The center of controversy in this petition is whether the grant by management of profit sharing benefits
to its non-union member employees is discriminatory against its workers who are union members.
The facts are undisputed. On April 3, 1987 the management issued a memorandum circular introducing
a profit sharing scheme for its managers and supervisors the initial distribution of which was to take
effect March 31, 1988.
On July 3, 1987 the respondent union wrote petitioner through its president asking for participation in
this scheme. This was denied by petitioner on the ground that it had to adhere strictly to the Collective
Bargaining Agreement (CBA).
In the meantime, talks were underway for early negotiation by the parties of the CBA which was due to
expire on April 30, 1988. The negotiation thus begun earlier than the freedom period. On November 11,
1987 petitioner wrote respondent union advising the latter that they were prepared to consider
including the employees covered by the CBA in the profit sharing scheme beginning the year 1987
provided that the ongoing negotiations were concluded prior to December 1987. However, the
collective bargaining negotiations reached a deadlock on the issue of the scope of the bargaining unit.
Conciliation efforts to settle the dispute on 29 March 1988 were made but no settlement was reached.
On March 30, 1988, petitioner distributed the profit sharing benefit not only to managers and
supervisors but also to all other rank and file employees not covered by the CBA. This caused the
respondent union to file a notice of strike alleging that petitioner was guilty of unfair labor practice
because the union members were discriminated against in the grant of the profit sharing benefits.
Consequently, management refused to proceed with the CBA negotiations unless the last notice of
strike was first resolved. The union agreed to postpone discus-
538
538
sions on the profit sharing demand until a new CBA was concluded. After a series of conciliation
conferences, the parties agreed to settle the dispute through voluntary arbitration. After the parties
submitted their position papers, a rejoinder and reply, on March 20, 1989 the voluntary arbitrator
issued an award ordering petitioner to likewise extend the benefits of the 1987 profit sharing scheme to
the members of respondent union.1 Hence, this petition wherein petitioner alleged the following
grounds in support thereof—
“I
THE HONORABLE VOLUNTARY ARBITRATOR ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OR EXCESS OF JURISDICTION WHEN HE ORDERED THE EXTENSION OF PROFIT SHARING
BENEFITS TO THOSE EMPLOYEES COVERED BY THE CBA DESPITE PATENT LACK OF FACTUAL AND LEGAL
BASIS THEREFOR IN THAT—
1. DISCRIMINATION PER SE IS NOT UNLAWFUL ESPECIALLY WHEN THE EMPLOYEES ARE NOT SIMILARLY
SITUATED.
2. THE TERMS AND CONDITIONS STIPULATED IN THE CBA HAVE THE FORCE AND EFFECT OF A LAW
BETWEEN THE PARTIES. PRIVATE RESPONDENT, THEREFORE CANNOT DEMAND, AS A MATTER OF RIGHT,
WHAT IS NOT STIPULATED IN THE CBA.
3. THE ACT OF THE UNION IN NEGOTIATING FOR THE INCLUSION OF THE PROFIT SHARING BENEFIT IN
THE PRESENT CBA IS AN IMPLIED ADMISSION THAT THEY WERE NOT ENTITLED TO IT IN 1987.
II
THE HONORABLE VOLUNTARY ARBITRATOR COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING

TO LACK OR EXCESS OF JURISDICTION WHEN HE MADE THE CLEARLY BASELESS CONCLUSION THAT THE
PETITIONER WAS MOTIVATED BY ITS DESIRE TO DEFEAT OR OTHERWISE PREJUDICE THE BASIC RIGHTS
OF ITS EMPLOYEES.”2
_______________
539
VOL. 178, OCTOBER 13, 1989
539
The petition is impressed with merit.
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 “consists of all regular or permanent
employees, below the rank of assistant supervisor.”3 Also expressly excluded from the term
“appropriate bargaining unit” are all regular rank and file employees in the office of the president, vice-
president, and the other offices of the company—personnel office, security office, corporate affairs
office, accounting and treasury department.4
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 extended 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.5 Indeed, discri-mination per se is not
unlawful. There can be no discrimination where the employees concerned are not similarly situated.
Respondent union can not claim that there is grave abuse of discretion by the petitioner in extending
the benefits of profit sharing to the non-union employees as they are two (2) groups not similarly
situated. These non-union employees are not covered by the CBA. They do not derive and enjoy the
benefits under the CBA.
The contention of the respondent union that the grant to the non-union employees of the profit sharing
benefits was made at a time when there was a deadlock in the CBA negotiation so that apparently the
motive thereby was to discourage such non-union employees from joining the union is not borne by the
record. Petitioner denies this accusation and instead points out that inspite of this benefit extended to
them, some non-union workers actually joined the respondent union thereafter.
Respondent union also decries that no less than the president of the petitioner agreed to include its
members in the coverage of the 1987 profit sharing benefit provided that they would
_______________
3 Article 1, Section 1, CBA; page 4, Rollo.
4 Pages 4-5, Rollo.
5 Caltex Phils. vs. Phil. Labor Organization, Caltex Chapter, 92 Phil. 1014, 1018 (1953).
540
540
agree to an earlier negotiation for the renewal of the CBA which expired in 1988. Be this as it may, since
there was actually a deadlock in the negotiation and it was not resolved and consummated on the
period expected, private respondent can not now claim that petitioner has a duty to extend the profit
sharing benefit to the union members.
The Court holds that it is the prerogative of management to regulate, according to its discretion and
judgment, all aspects of employment. This flows from the established rule that labor law does not
authorize the substitution of the judgment of the employer in the conduct of its business.6 Such
management prerogative may be availed of without fear of any liability so long as it is exercised in good
faith for the advancement of the employers’ interest and not for the purpose of defeating or
circumventing the rights of employees under special laws or valid agreement and are not exercised in a
malicious, harsh, oppressive, vindictive or wanton manner or out of malice or spite.7
The grant by petitioner of profit sharing benefits to the employees outside the “bargaining unit” falls
under the ambit of its managerial prerogative. It appears to have been done in good faith and without
ulterior motive. More so when as in this case there is a clause in the CBA where the employees are
classified into those who are members of the union and those who are not. In the case of the union
members, they derive their benefits from the terms and conditions of the CBA contract which constitute
the law between the contracting parties.8 Both the employer and the union members are bound by
such agreement.
However, the court serves notice that it will not hesitate to strike down any act of the employer that
tends to be discriminatory against union members. It is only because of the peculiar circumstances of
this case showing there is no such intention that this court ruled otherwise.
_______________
6 NLU vs. Insular-Yebana Tobacco Corporation, 2 SCRA 924, 931 (1961); Republic Savings Bank vs. CIR, 21
SCRA 226, 235-236 (1967).
7 PRC vs. Garcia, 18 SCRA 107, 110 (1966); and LVN vs. LVN Employees Association, 35 SCRA 147, 156
(1970).
8 Mactan Workers Union vs. Aboitiz, 45 SCRA 577, 581-582 (1977).
541
VOL. 178, OCTOBER 13, 1989
541
Impao vs. Makilala
WHEREFORE, the petition is GRANTED and the award of respondent Voluntary Arbitrator dated March
20, 1989 is hereby REVERSED AND SET ASIDE being null and void, without pronouncement as to costs.
SO ORDERED.
Narvasa, Cruz, Griño-Aquino and Medialdea, JJ., concur.
Petition granted; award reversed and set aside.
Note.—The benefits of an award can be extended to all workers involved in a dispute, unionists or not
even though not parties to the case, because it is presumed that other workers are also interested in
any increase in salary and other benefits. (National Marketing Corporation vs. Court of Industrial
Relations, L-17804, January 31, 1963, 7 SCRA 125; Manila Railroad Company vs. Court of Industrial
Relations, L-18389, January 31, 1963, 7 SCRA 174.)
——o0o—— Wise and Co., Inc. vs. Wise & Co., Inc. Employees Union, 178 SCRA 536, G.R. No. 87672
October 13, 1989
86

Sime Darby Pilipinas, Inc. vs. NLRC (2nd Division)
G.R. No. 119205. April 15, 1998.*
SIME DARBY PILIPINAS, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (2ND
DIVISION) and SIME DARBY SALARIED EMPLOYEES ASSOCIATION (ALU-TUCP), respondents.
Labor Law; Management Prerogatives; Work Schedules; The right to fix the work schedules of the
employees rests principally on their employer.—We agree, hence, we sustain petitioner. The right to
fix the work schedules of the employees rests principally on their employer. In the instant case
petitioner, as the employer, cites as reason for the adjustment the efficient conduct of its business
operations and its improved production. It rationalizes that while the old work schedule included a
30-minute paid lunch break, the employees could be called upon to do jobs during that period as they
were “on call.” Even if denominated as lunch break, this period could very well be considered as
working time because the factory employees were required to work if necessary and were paid
accordingly for working. With the new work schedule, the employees are now given a one-hour lunch
break without any interruption from their employer. For a full one-hour undisturbed lunch break, the
employees can freely and effectively use this hour not only for eating but also for their rest and
comfort which are conducive to more efficiency and better performance in their work. Since the
employees are no longer required to work during this one-hour lunch break, there is no more need for
them to be compensated for this period. We agree with the
_______________
* FIRST DIVISION.
87
VOL. 289, APRIL 15, 1998
87
Labor Arbiter that the new work schedule fully complies with the daily work period of eight (8) hours
without violating the Labor Code. Besides, the new schedule applies to all employees in the factory
similarly situated whether they are union members or not.
Same; Same; Same; Right to Self-Organization; Where the change effected by management with
regard to working time is made to apply to all factory employees engaged in the same line of work
whether or not they are members of the union, it cannot be said that the new scheme adopted by
management prejudices the right of the union to self-organization.—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 management deems necessary to increase production, constitutes
unfair labor practice. As shown by the records, the change effected by management with regard to
working 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 cannot be said that the new scheme
adopted by management prejudices the right of private respondent to self-organization.
Same; Same; Even as the law is solicitous of the welfare of the employees, it must also protect the
right of an employer to exercise what are clearly management prerogatives; Management retains the
prerogative, whenever exigencies of the service so require, to change the working hours of its
employees.—Every business enterprise endeavors to increase its profits. In the process, it may devise
means to attain that goal. Even as the law is solicitous of the welfare of the employees, it must also
protect the right of an employer to exercise what are clearly management prerogatives. Thus,
management is free to regulate, according to its own discretion and judgment, all aspects of
employment, including hiring, work assignments, working methods, time, place and manner of work,
processes to be followed, supervision of workers, working regulations, transfer of employees, work
supervision, lay off of workers and discipline, dismissal and recall of workers. Further, management
retains the prerogative, whenever exigencies of the service so require, to change the working hours of
its employees. So long as such prerogative is exercised in good faith for the advancement of the
employer’s interest and not for the purpose of defeating or circumventing the rights of the employees
under special laws or under valid agreements, this Court will uphold such exercise.
88
88
Same; Same; Social Justice; Although the Supreme Court has inclined more often than not toward the
worker and has upheld his cause in his conflicts with the employer, such favoritism has not blinded
the Court to the rule that justice is in every case for the deserving, to be dispensed in the light of the
established facts and the applicable law and doctrine.—While the Constitution is committed to the
policy of social justice and the protection of the working class, it should not be supposed that every
dispute will be 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 play. Although this Court has
inclined more often than not toward the worker and has upheld his cause in his conflicts with the
employer, such favoritism has not blinded the Court to the rule that justice is in every case for the
deserving, to be dispensed in the light of the established facts and the applicable law and doctrine.
Ronaldo E. Javier for petitioner.
Seno, Mendoza and Associates for ALU-TUCP.
BELLOSILLO, J.:
Is the act of management in revising the work schedule of its employees and discarding their paid lunch
break constitutive of unfair labor practice?
Sime Darby Pilipinas, Inc., petitioner, is engaged in the manufacture of automotive tires, tubes and other
rubber products. Sime Darby Salaried Employees Association (ALUTUCP), private respondent, is an
association of monthly salaried employees of petitioner at its Marikina factory. Prior to the present
controversy, all company factory workers in Marikina including members of private respondent union
worked from 7:45 a.m. to 3:45 p.m. with a 30-minute paid “on call” lunch break.
On 14 August 1992 petitioner issued a memorandum to all factory-based employees advising all its
monthly salaried
89
VOL. 289, APRIL 15, 1998
89
employees in its Marikina Tire Plant, except those in the Warehouse and Quality Assurance Department
working on shifts, a change in work schedule effective 14 September 1992 thus—
TO: ALL FACTORY-BASED EMPLOYEES
RE: NEW WORK SCHEDULE
Effective Monday, September 14, 1992, the new work schedule of the factory office will be as follows:
7:45 A.M. - 4:45 P.M. (Monday to Friday)
7:45 A.M. - 11:45 A.M. (Saturday).
Coffee break time will be ten minutes only anytime between:
9:30 A.M. - 10:30 A.M. and
2:30 P.M. - 3:30 P.M.
Lunch break will be between:
12:00 NN - 1:00 P.M. (Monday to Friday).
Excluded from the above schedule are the Warehouse and QA employees who are on shifting. Their
work and break time schedules will be maintained as it is now.1
Since private respondent felt affected adversely by the change in the work schedule and discontinuance
of the 30-minute paid “on call” lunch break, it filed on behalf of its members a complaint with the Labor
Arbiter for unfair labor practice, discrimination and evasion of liability pursuant to the resolution of this
Court in Sime Darby International Tire Co, Inc. v. NLRC.2 However, the Labor Arbiter dismissed the
complaint on the ground that the change in the work schedule and the elimination of the 30-minute
paid lunch break of the factory workers constituted a valid exercise of management prerogative and that
the new work schedule, break time and one-hour lunch break did not have the effect of diminishing the
benefits granted to factory workers as the working time did not exceed eight (8) hours.
_______________
1 Rollo, p. 34.
2 G.R. No. 87838, 26 February 1990.
90
90
The Labor Arbiter further held that the factory workers would be unjustly enriched if they continued to
be paid during their lunch break even if they were no longer “on call” or required to work during the
break. He also ruled that the decision in the earlier Sime Darby case3 was not applicable to the instant
case because the former involved discrimination of certain employees who were not paid for their 30-
minute lunch break while the rest of the factory workers were paid; hence, this Court ordered that the
discriminated employees be similarly paid the additional compensation for their lunch break.
Private respondent appealed to respondent National Labor Relations Commission (NLRC) which
sustained the Labor Arbiter and dismissed the appeal.4 However, upon motion for reconsideration by
private respondent, the NLRC, this time with two (2) new commissioners replacing those who earlier
retired, reversed its earlier decision of 20 April 1994 as well as the decision of the Labor Arbiter.5 The
NLRC considered the decision of this Court in the Sime Darby case of 1990 as the law of the case
wherein petitioner was ordered to pay “the money value of these covered employees deprived of lunch
and/or working time breaks.” The public respondent declared that the new work schedule deprived the
employees of the benefits of a time-honored company practice of providing its employees a 30-minute
paid lunch break resulting in an unjust diminution of company privileges prohibited by Art. 100 of the
Labor Code, as amended. Hence, this petition alleging that public respondent committed grave abuse of
discretion amounting to lack or excess of jurisdiction: (a) in ruling that petitioner committed unfair labor
practice in the implementation of the change in the work schedule of its employees from 7:45 a.m.-3:45
p.m. to 7:45 a.m.-4:45 p.m. with one-hour lunch break from 12:00 nn to 1:00 p.m.; (b) in holding that
there was diminution of benefits when the 30-minute paid lunch break
_______________
3 Id.
4 Rollo, p. 70.
5 Rollo, p. 26.
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VOL. 289, APRIL 15, 1998
91
was eliminated; (c) in failing to consider that in the earlier Sime Darby case affirming the decision of the
NLRC, petitioner was authorized to discontinue the practice of having a 30-minute paid lunch break
should it decide to do so; and, (d) in ignoring petitioner’s inherent management prerogative of
determining and fixing the work schedule of its employees which is expressly recognized in the collective
bargaining agreement between petitioner and private respondent.
The Office of the Solicitor General filed in lieu of comment a manifestation and motion recommending
that the petition be granted, alleging that the 14 August 1992 memorandum which contained the new
work schedule was not discriminatory of the union members nor did it constitute unfair labor practice
on the part of petitioner.
We agree, hence, we sustain petitioner. The right to fix the work schedules of the employees rests
principally on their employer. In the instant case petitioner, as the employer, cites as reason for the
adjustment the efficient conduct of its business operations and its improved production.6 It rationalizes
that while the old work schedule included a 30-minute paid lunch break, the employees could be called
upon to do jobs during that period as they were “on call.” Even if denominated as lunch break, this
period could very well be considered as working time because the factory employees were required to
work if necessary and were paid accordingly for working. With the new work schedule, the employees
are now given a one-hour lunch break without any interruption from their employer. For a full one-hour
undisturbed lunch break, the employees can freely and effectively use this hour not only for eating but
also for their rest and comfort which are conducive to more efficiency and better performance in their
work. Since the employees are no longer required to work during this one-hour lunch break, there is no
more need for them to be compensated for this period. We agree with the Labor Arbiter that the new
work schedule fully complies with the daily work period of eight (8) hours without violating the Labor
_______________
6 Rollo, p. 11.
92
92
Code.7 Besides, the new schedule applies to all employees in the factory similarly situated whether they
are union members or not.8
Consequently, it was grave abuse of discretion for public respondent to equate the earlier Sime Darby
case9 with the facts obtaining in this case. That ruling in the former case is not applicable here. The issue
in that case involved the matter of granting lunch breaks to certain employees while depriving the other
employees of such breaks. This Court affirmed in that case the NLRC’s finding that such act of
management was discriminatory and constituted unfair labor practice.
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 management deems necessary to increase
production, constitutes unfair labor practice. As shown by the records, the change effected by
management with regard to working 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 cannot be
said that the new scheme adopted by management prejudices the right of private respondent to self-
organization.
Every business enterprise endeavors to increase its profits. In the process, it may devise means to attain
that goal. Even as the law is solicitous of the welfare of the employees, it must also protect the right of
an employer to exercise what are clearly management prerogatives.10 Thus, management is free to
regulate, according to its own discretion and judgment, all aspects of employment, including hiring,
work assignments, working methods, time, place and manner of work, processes to be followed,
supervision of workers, working regulations,
______________
7 Rollo, p. 36.
8 Rollo, p. 42.
9 See Note 2.
10 San Miguel Brewery Sales Force v. Ople, G.R. No. 53515, 8 February 1989, 170 SCRA 25; Abbot
Laboratories v. NLRC, 154 SCRA 713.
93
VOL. 289, APRIL 15, 1998
93
transfer of employees, work supervision, lay off of workers and discipline, dismissal and recall of
workers.11 Further, management retains the prerogative, whenever exigencies of the service so require,
to change the working hours of its employees. So long as such prerogative is exercised in good faith for
the advancement of the employer’s interest and not for the purpose of defeating or circumventing the
rights of the employees under special laws or under valid agreements, this Court will uphold such
exercise.12
While the Constitution is committed to the policy of social justice and the protection of the working
class, it should not be supposed that every dispute will be 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 play. Although this Court has inclined more often than not toward the worker and has upheld
his cause in his conflicts with the employer, such favoritism has not blinded the Court to the rule that
justice is in every case for the deserving, to be dispensed in the light of the established facts and the
applicable law and doctrine.13
WHEREFORE, the petition is GRANTED. The Resolution of the National Labor Relations Commission
dated 29 November 1994 is SET ASIDE and the decision of the Labor Arbiter dated 26 November 1993
dismissing the complaint against petitioner for unfair labor practice is AFFIRMED.
SO ORDERED.
Davide, Jr. (Chairman), Vitug, Panganiban and Quisumbing, JJ., concur.
Petition granted.
_______________
11 NLU v. Insular Yebana Co., L-15363, 31 July 1961, 2 SCRA 924.
12 Union Carbide Labor Union v. Union Carbide Phils., Inc., G.R. No. 41314, 13 November 1992, 215
SCRA 554.
13 Cruz v. Medina, G.R. No. 73053, 15 September 1989, 177 SCRA 565.
94
94
People vs. Ferras
Notes.—The prerogative of the employer to transfer an employee from one work station to another is
not unlimited. (Gonpu Services Corporation vs. National Labor Relations Commission, 266 SCRA 657
[1997])
While the employer is not precluded from prescribing rules and regulations to govern the conduct of his
employees, these rules and their implementation must be fair, just and reasonable. (Brew Master
International, Inc. vs. National Federation of Labor Unions [NAFLU], 271 SCRA 275 [1997])
It is not the function of the law nor its intent to supplant the prerogative of management in running its
business, such as, to compel the latter to operate at a continuing loss. (Reahs Corporation vs. National
Labor Relations Commission, 271 SCRA 247 [1997])
——o0o——
© Copyright 2017 Central Book S Sime Darby Pilipinas, Inc. vs. NLRC (2nd Division), 289 SCRA 86, G.R.
No. 119205 April 15, 1998
550
Alhambra Industries, Inc. vs. Court of Industrial Relations
No. L-25984. October 30, 1970.
ALHAMBRA INDUSTRIES,INC., petitioner, vs. COURT OF INDUSTRIAL RELATIONS and ALHAMBRA

EMPLOYEES ASSOCIATION (FTUP), respondents.
Labor Laws; Collective Bargaining; Unfair Labor Practice; Employer’s refusal to bargain collectively
constitutes an unfair labor practice.—Failure on petitioner’s part to live up in good faith to the terms
of its collective 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 ‘employees’ of its salesmen and
propagandists was a serious violation of petitioner’s duty to bargain collectively and constituted
unfair labor practice in any language.
APPEAL by certiorari of a decision of the Court of Industrial Relations.
Gambao & Hofileña for petitioner.
A.E. Pacis for respondents.
TEEHANKEE,J.:
Appeal by certiorari from respondent court’s decision in an unfair labor practice case that the fifteen
drivers and helpers not recognized by petitioners are in truth and in fact its employees, and not separate
and independent employees of its salesmen and propagandists, and are therefore entitled retroactively
to all the privileges, rights and benefits provided for all its other regular employees under its collective
bargaining agreement with respondent union.
The complaint for unfair labor practice1 for violation
_______________
1 Case No. 3805-ULP, “Alhambra Employees Ass’n. (FTUP) vs. Alhambra Industries, Inc.”
551
551
of section 4(a) subsections (4) and (6) of the Industrial Peace Act, was filed by the acting prosecutor of
respondent court against petitioner, upon the charges of respondent union that fifteen of the union
members, employed as drivers and helpers of petitioner, were being discriminated against by
petitioner’s not affording them the benefits and privileges enjoyed by all the other employees for no
justifiable reason other than their union membership; and that the union had asked petitioner to
negotiate with respect to said fifteen drivers and helpers who were being excluded from the benefits of
their subsisting collective bargaining agreement, but petitioner refused to do so. The union prayed for a
desistance order and that petitioner be ordered to bargain collectively in good faith and to grant the
drivers and helpers the same benefits and privileges extended to and enjoyed by all its other employees.
In answer, petitioner denied the unfair labor practice imputed to it and countered that the fifteen
drivers and helpers were not its employees, but separate and independent employees of its salesmen
and propagandists who exercised discretion and control over their selection, employment,
compensation, suspension and dismissal.
It is admitted that respondent union is sole and exclusive collective bargaining representative for all the
employees of petitioner and that collective bargaining agreements had been successively signed
between the union and petitioner on March 14, 1962 and on February 18, 1964. Both the union and
petitioner exhausted steps 1 to 3 of the grievance machinery provided in the collective bargaining
agreement with regard to the union’s claim that the benefits thereof should be extended to the fifteen
drivers and helpers and the petitioner’s contrary stand that they were not its “employees.” Hence, as
they could not resolve by conferences this dispute, the union invoked the final step in the grievance
machinery, after written notice thereof, and elevated the issue of the true status of said drivers and
helpers to respondent court through its complaint for unfair labor practice.
552
552
Respondent court in its decision, affirmed by its resolution en banc of April 11, 1966, categorically held
petitioner’s disclaimer of the employee status of the drivers and helpers to be baseless and untenable,
as follows: “In accordance with the ‘memorandum of instructions,’ Exhibit ‘24,' which the respondent
corporation issues to the salesman or propagandist, it is really from here that the latter is authorized by
the former to engage the services of a driver or helper. So that even when the driver or helper does not
apply directly to the respondent corporation for the job but to the salesman or propagandist,
nevertheless, the authority of the salesman or propagandist to employ the driver or helper emanates
from the respondent corporation. It is, therefore, apparent that in truth and in fact, the respondent
corporation is the ‘employer’ of the driver or helper and not the salesman or propagandist who is
merely expressly authorized by the former to engage such services.
“The salary of the driver or helper also comes from the respondent corporation in the form of ‘driver
allowance’ which is appropriated for the purpose. This allowance is given to the salesman or
propagandist who in turn pays the same to the driver or helper for salaries or wages. Of course, we
realize that this mode of paying the salaries or wages of the driver or helper indirectly through the
salesman or propagandist will save the respondent corporation the burden of record keeping and other
similar indirect costs. Nevertheless, it could not be denied that it is the respondent corporation that
pays the wages and salaries of the driver or helper.
“The duties and obligations of the driver or helper do not come from the salesman or propagandist but
are expressly stated by the respondent corporation in the ‘memorandum of instructions.’ He does not
only accompany the salesman or propagandist in all the trips, but also drives or watches the truck which
is the property of the respondent corporation. He also assists the salesman in making deliveries to
different stores and in the preparation of inventories.
553
553
These duties are the dictates of respondent corporation and not of the salesman or propagandist. It is
therefore clear that the terms and conditions of employment of the driver or helper are those fixed and
determined by the respondent corporation. From all the foregoing consideration we are convinced that
the driver or helper is an ‘employee’ of respondent corporation.”
It therefore rendered the following judgment against petitioner:
“IN CONCLUSION, THEREFORE, we rule and so hold that all the fifteen (15) drivers and helpers whose
names are listed in the ‘Partial Stipulation of Facts’ are employees of the respondent Alhambra
Industries, Inc., and as such they should be given and/or extended all the privileges, rights and benefits
that are given to all other regular employees, including those fringe benefits provided for in the
Collective Bargaining agreement signed and concluded between the complainant union and the
respondent corporation, retroactive as of the effectivity of the first agreement of March 14, 1962 up to
the present.”
Petitioner, in this appeal, does not dispute the respondent court’s basic ruling that the fifteen drivers
and helpers are in truth and in fact its employees and that its making use of its salesmen and
propagandists, as the ostensible “employers” of the drivers and helpers was in effect but an elaborate
artifice to deprive the drivers and helpers of their status as employees of petitioner, entitled to enjoy all
the privileges, rights and benefits provided for all other employees under the collective bargaining
agreements.
The lone error assigned by petitioner in its brief is that respondent court “acted in excess of jurisdiction
in entering judgment against petitioner in spite of its finding that the petitioner had not committed any
act of unfair labor practice."2 Petitioner uses as props for this lone assigned error respondent court’s
statements in the body of its decision that (S)ince the grant of benefits to the drivers will depend on a
finding by the Court that they are ‘employees’ of the respondent corporation and not on account
_______________
2 Petitioner’s brief, p. 4.
554
554
of their membership with the complainant union or activities therein, then the charge of discrimination
against the respondent corporation is without basis in fact and in law. Settled is the rule in this
jurisdiction that in order to adjudge an employer of discrimination in accordance with the Act, it must be
due to the union affiliation or activities of the employee concerned” and that “both parties tried their
level best to decide the issue before the Court is the last step provided for in their grievance machinery,
Step No. 4. . . . Since the grant of benefits to the drivers and helpers hinges on the decision of the Court
that they are ‘employees’ of the respondent corporation, then the latter could not have been guilty of
refusal to bargain in accordance with the Act.” Petitioner, invoking section 5(c) of the Industrial Peace
Act,3 thus contends that “it is mandatory upon the respondent court to order the dismissal of the
complaint, once it finds out that no unfair labor practice has been committed” and it should have “left
the parties alone to settle their differences through conciliation, mediation and recourse to the ordinary
courts.”
Petitioner’s appeal must be dismissed. It is speciously grounded on mere form rather than the realities
of the case. In form, respondent court gently treated petitioner’s scheme to deprive the fifteen drivers
and helpers of their rightful status as employees and did not denounce it as a betrayal of the salutary
purpose and objective of the
_______________
3”If, after investigation, the Court shall be of the opinion that any person named in the complaint has
engaged in or is engaging in any unfair labor practice, then the Court shall state its findings of fact and
shall issue and cause to be served on such person an order requiring such person to cease and desist
from such unfair labor practice and take such affirmative action as will effectuate the policies of this Act,
including (but not limited to) reinstatement of employees with or without backpay and including rights
of the employees prior to dismissal including seniority. Such order may further require such person to
post the Court’s order and findings in a place available to all the employees and to make reports from
time to time showing the extent to which the Court’s order has been complied with. If after
investigation the Court shall be of the opinion that no person named in the complaint has engaged in or
is engaging
555
555
Industrial Peace Act,4 but instead remarked that since the grant of employees’ benefits hinged on the
court’s decision on their status as such employees, petitioner “could not have been guilty of refusal to
bargain in accordance with the Act.” The reality, however, is that respondent court expressly found that
“in truth and in fact, (petitioner) corporation is the ‘employer’ of the driver or helper and not the
salesman or propagandist who is merely expressly authorized by the former to engage such services.”
Petitioner’s failure to comply with its duty under the collective bargaining agreement to extend the
privileges, rights and benefits thereof to the drivers and helpers as its actual employees clearly
amounted to the commission of an unfair labor practice. And consequently respondent court properly
ordered in its judgment that said drivers and helpers “should be given and/or extended all the privileges,
rights and benefits that are given to all the other regular employees retroactive as of the effectivity of
the first agreement of March 14, 1962 up to the present.” In so ordering, respondent court was but
discharging its function under section 5(c) of the Act, supra, to order the cessation of an unfair labor
practice and “take such affirmative 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 collective 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 ‘employees’ of its salesmen and propagandists was a serious violation of petitioner’s
duty to bargain collectively and constituted unfair labor practice in any language.5 As in any such unfair
labor practice, then the Court shall state its findings of fact and shall issue an order dismissing the said
complaint. If the complaining party withdraws its complaint, the Court shall dismiss the case.”
_______________
4 See Social Security System vs. Court of Appeals, L-25406, Dec. 24, 1968 (26 SCRA 458).
5 See Security Bank Employees Union vs. Security Bank & Trust Co., L-28536, Apr. 30, 1968 and cases
cited.
556
556
succinctly stated by Mr. Justice Castro in Republic Savings Bank vs. Court of Industrial Relations,6 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 either as a matter of procedure or of substantive law,
what the act is denominated—whether as a restraint, interference or coercion, as some members of the
Court believe it to be, or as a discriminatory discharge as other members think it is, or as refusal to
bargain as some other members view it, or even as a combination of any or all of these.”
ACCORDINGLY, the judgment appealed from is affirmed. The writ of preliminary injunction heretofore
issued on May 17, 1966 is lifted and set aside. With costs against petitioner.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Castro, Fernando and Barredo, JJ., concur.
Villamor, J., did not take part
Makasiar,J., is on leave.
Judgment affirmed.
Notes.—When discrimination amounts to unfair labor practice.—For discrimination by reason of union

membership to be considered an unfair labor practice under Section 4(a) (4) of the Industrial Peace Act,
the same must have been committed to encourage or discourage such membership in the union (Rizal
Cement Workers Union vs. Madrigal & Company, L-19767, April 30, 1964, 10 SCRA 831). If the
company’s refusal to allow complainants to work and its requirement that they stay out of the premises
in the meantime (i.e., while the strike was still going on at the factory) was born out of the company’s
justified apprehension and fear that sabotage might be committed in the warehouse where the
products, machinery and spare parts were stored, the company cannot be held
_______________
6 L-20303, Resolution, October 31, 1967, (21 SCRA 661).
557

557
Gojo vs. Goyala
guilty of unfair labor practice in the absence of showing that this act of the company was intended to
induce the complainants 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 & Company, supra).
In Luzon Stevedoring Corporation vs. Court of Industrial Relations, L-17411, Dec. 31, 1965, 15 SCRA 660,
it was held that the company’s disapproval of an application for leave with pay did not necessarily
indicate discrimination unless it could be shown that such disapproval was due to an employee’s union
membership or activity.
_______________ Alhambra Industries, Inc. vs. Court of Industrial Relations, 35 SCRA 550, No. L-25984
October 30, 1970
648
Balmar Farms, Inc. vs. NLRC
G.R. No. 73504. October 15, 1991.*
BALMAR FARMS, INC., petitioner. vs. NATIONAL LABOR RELATIONS COMMISSION AND ASSOCIATED
LABOR UNIONS (ALU), respondent.
Labor Law; Certification Election; Purpose of certification election is to give the employees true
representation in their collective bargaining with an employer.—The purpose of certification election
is to give the employees true representation in their collective bargaining with an employer
(Confederation of Citizens Labor Union (CCLU) v. Noriel, 116 SCRA 649 [1982]), because certification
election is the most democratic and expeditious method by which the laborers can freely determine
the union that shall act as their representative in their dealing with the establishment where they are
working (National Association of Free Trade Union v. Bureau of Labor Relations, 161 SCRA 246 [1988]).
It is the most effective way of determining which labor organization can truly represent the working
force.
_______________
* SECOND DIVISION.
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649
Same; Constitutional Law; Right to self-organization; Employees have a constitutional right to choose
their own bargaining representative and it is only through certification election that they can obtain
this purpose.—Employees (like the employees in the case at bar) have a constitutional right to choose
their own bargaining representative (Phil. Airlines Employees' Association (PALEA) v. Ferrer-Calleja,
162 SCRA 246 [1988]) and it is only, through certification election that they can obtain this purpose.
Same; Same; Same; Same; The labor-organization designated or selected by the majority of
employees in an appropriate collective bargaining unit shall be the exclusive representative of the
employees in such unit for the purpose of collective bargaining.—In the bargaining process, the
workers and employer shall be represented by their exclusive bargaining representatives. The labor
organization designated or selected by the majority of employees in an appropriate collective
bargaining unit, shall be the exclusive representative of the employees in such unit for the purpose of
collective bargaining. In the case at bar, it is the ALU which is the exclusive bargaining representative
of BALMAR employees and as such it has the right and duty to bargain collectively with BALMAR.
Same; Unfair Labor Practice; Balmar's refusal to bargain collectively with ALU is a clear act of unfair
labor practice.—It can, therefore, be inferred that BALMAR's refusal to bargain collectively with ALU is
a clear act of unfair labor practice. Article 248 (Labor Code, as amended), enumerates unfair labor
practices committed by employers such as for them: "(g) To violate the duty to bargain collectively as
prescribed by this Code."
PETITION for certiorari to review the resolutions of the National Labor Relations Commission.
Rudy G. Agravante for petitioner.
PARAS, J.:
This is a petition for certiorari which seeks to reverse and set aside: (a) the resolution** dated July 31,
1985 by the respondent
_______________
** Penned by Presiding Commissioner Diego Atienza and Commissioners Geronimo Q. Quadra and Cleto
T. Villatuya.
650
650

commission in NLRC Case No. 1114-LR-XI-83 entitled "Associated Labor Unions (ALU) v. Balmar Farms,
Inc. (BALMAR)" which dismissed the petition for lack of merit and affirmed the decision of the Labor
Arbiter dated March 13, 1984, and (b) the resolution dated October 4, 1985 denying the motion for
reconsideration.
The following are the facts of the case:
Petitioner Balmar Farms, Inc. (BALMAR for short) is a corporation duly organized and existing under and
by virtue of the laws of the Philippines, engaged in the planting of bananas with operation of Kapalong,
Davao and address at 60 V. Mapa St., Davao city; while private respondent Associated Labor Union (ALU
for short) is a labor organization duly registered with the Ministry of Labor and Employment (now
Department of Labor and Employment) with Regional Office at 96-B corner Roxas-Artiaga Sts., Davao
City (Rollo, pp. 5-6).
On October 27, 1982, Med-Arbiter Antonio G. Jolejole issued an order certifying the ALU as the sole and
exclusive bargaining representative of the rank and filed workers and employees of BALMAR, Kapalong,
Davao del Norte, it appearing that in the certification election held at the premises of the employer
Balmar on October 19,1982, the ALU obtained the majority of the votes cast (Rollo, p. 26),
Sometime in November, 1982, BALMAR received a copy of the letter dated November 12,1982 signed by
Johnny Y. Luces in his capacity as President of the BALMAR Employees Association, addressed to the
Regional Director, Hon. Eugenio Sagmit, Jr. The letter states that:
"x x x after discussing this matter among ourselves, it was agreed by more than a majority of all that we
disregard ALU in representing us. We do not have any CBA at present. We are in better position to
negotiate directly with management for our working conditions being aware of what are our basic
needs.
"We are filing this with your Office so that you could help us in requesting BALMAR FARMS to negotiate
directly with us and not thru ALU." (Rollo, p. 44).
That on February 8, 1983, ALU sent a letter to BALMAR, attaching therewith their proposals for
collective bargaining agreement (Rollo, pp. 27-30).
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VOL. 202, OCTOBER 15, 1991
651
On February 25, 1983, BALMAR made a reply to the effect that it can not favorably act on their request
for the reason, among others, that it has been furnished a copy of the letter of Mr. Johnny Luces,
president of the Balmar Farms Employees Association, addressed to the Regional Director of the
Ministry of Labor and Employment (MOLE), about their "disaffiliation from ALU" (Rollo, p. 31).
In another letter dated March 1, 1983, ALU answered BALMAR's letter of February 25, 1983 and
requested that it be recognized as the bargaining representative it being certified by the MOLE as the
sole and exclusive bargaining representative of BALMAR's rank and file workers (Rollo, p. 32).
On March 10, 1983, BALMAR replied to ALU's letter of March 1, 1983, stating that the management was
requested by Balmar Farms Employees Association to negotiate with them directly and not with ALU
because ALU has been dis-authorized as the agent of the BALMAR employees. BALMAR further
contended that ALU has to disprove the dis-authorization for only then can BALMAR negotiate with ALU
(Rollo, p. 33).
For alleged refusal to bargain, ALU filed a complaint for unfair labor practice and damages against
BALMAR docketed as NLRC Case No. 1114-LR-XI-83 (Rollo, pp. 22-24).
The parties were required by the Labor Arbiter to submit their position papers. ALU filed its position
paper dated May 18, 1983 (Rollo, pp. 34-38), while BALMAR filed its position paper dated May 20, 1983
(Rollo, pp. 40-42).
On the basis of the position papers submitted by the parties, Labor Arbiter Potenciano S. Canizares, Jr.
rendered a decision dated March 13, 1984, the dispositive portion of which reads:
"WHEREFORE, judgment is hereby rendered:
1. Declaring the respondent Balmar Farms, Inc. guilty of the unfair labor practice acts complained of;
2. Ordering the respondent Balmar Farms, Inc. to cease and desist from further committing unfair labor
practice acts; and
3. Ordering the respondent Balmar Farms, Inc. to bargain collectively in good faith with the complainant
Associated Labor Union, The claim for damages is hereby dismissed for lack of merit." (Rollo, p. 49).
652
652
From the foregoing decision. BALMAR appealed to the National Labor Relations Commission (NLRC) by
filing a Memorandum on Appeal (Rollo, pp. 50-55).
On July 31, 1985, the NLRC rendered its questioned resolution, the dispositive part of which reads:
"WHEREFORE, premises considered, the appeal is as it is hereby DISMISSED for obvious lack of merit and
the appealed Decision affirmed en toto.
SO ORDERED." (Rollo, pp. 19-20).

On September 4, 1985, BALMAR moved for the reconsideration of the resolution of the NLRC (Rollo, pp.
57-59). And on October 4, 1985, the NLRC issued a resolution denying the motion for reconsideration
(Rollo, p. 21).
The pivotal issue in this case is whether or not petitioner BALMAR is guilty of unfair labor practice for
refusing to bargain collectively with ALU.
The record shows that on October 27, 1982, Med-Arbiter Antonio G. Jolejole issued an order certifying
ALU as the sole and exclusive bargaining representative of the rank and file workers and employees of
BALMAR, it appearing that in the certification election held at the premises of the employer BALMAR on
October 19, 1982, ALU obtained the majority of the votes cast.
The purpose of certification election is to give the employees true representation in their collective
bargaining with an employer (Confederation of Citizens Labor Union (CCLU) v. Noriel, 116 SCRA 649
[1982]), because certification election is the most democratic and expeditious method by which the
laborers can freely determine the union that shall act as their representative in their dealing with the
establishment where they are working (National Association of Free Trade Union v. Bureau of Labor
Relations, 161 SCRA 246 [1988]). It is the most effective way of determining which labor organization
can truly represent the working force (PLUM Federation of Industrial and Agrarian Workers, v. Noriel,
119 SCRA 299 [1982]).
Employees (like the employees in the case at bar) have a
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VOL. 202, OCTOBER 15, 1991
653
constitutional right to choose their own bargaining representative (Phil. Airlines Employees' Association
(PALEA) v. FerrerCalleja, 162 SCRA 246 [1988]) and it is only through certification election that they can
obtain this purpose.
In the bargaining process, the workers and employer shall be represented by their exclusive bargaining
representatives. The labor organization designated or selected by the majority of employees in an
appropriate collective bargaining unit, shall be the exclusive representative of the employees in such
unit for the purpose of collective bargaining. In the case at bar, it is the ALU which is the exclusive
bargaining representative of BALMAR employees and as such it has the right 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 negotiating 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
duty does not compel any party to agree to a proposal or to make any concession (Art. 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 November 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
majority of them would like to negotiate directly with their employer BALMAR. There 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 certifying ALU as the sole and exclusive bargaining representative of
the rank and file workers of BALMAR.
BALMAR cannot also invoke good faith in refusing to negotiate with ALU, considering that the latter has
been certified as the exclusive bargaining representative of BALMAR rank and file employees. As
observed by the Solicitor General, BALMAR's pretense that majority of its rank and file employees dis-
654
654
affiliated simply because of a letter it received to that effect, all the more sustains the finding of bad
faith for it is not for the petitioner BALMAR to question which group is the collective bargaining
representative of its rank and file employees.
Balmar's taking side with the rank and file employee who allegedly disaffiliated, renders its stand on the
matter highly suspicious (Rollo, pp. 76-77).
It can, therefore, be inferred that BALMAR's refusal to bargain collectively with ALU is a clear act of
unfair labor practice. Article 248 (Labor Code, as amended), enumerates unfair labor practices
committed by employers such as for them;
"(g) To violate the duty to bargain collectively as prescribed by this Code;"
PREMISES CONSIDERED, the petition is DISMISSED for lack of merit and the assailed resolution is
AFFIRMED.
SO ORDERED.
Padilla and Regalado, JJ., concur.
Melencio-Herrera, J., On Leave.
Petition dismissed, Resolution affirmed.

Note.—An employer has no standing to question a certification election, such concern must come from
the employees themselves. (Asian Design and Manufacturing Corp. vs. FerrerCalleja, 174 SCRA 477.)
——o0o——
Balmar Farms, Inc. vs. NLRC, 202 SCRA 648, G.R. No. 73504 October 15, 1991
UNFAIR LABOR PRACTICE OF LABOR ORGANIZTION
216
Salanga vs. Court of Industrial Relations
No. L-22456. September 27, 1967.
FRANCISCO SALUNGA, petitioner, vs. COURT OF INDUSTRIAL RELATIONS;SAN MIGUEL BREWERY,INC.

& MIGUEL NOEL;NATIONAL BREWERY & ALLIED INDUSTRIES LABOR UNION OF THE PHILIPPINES
(NABAILUP-PAFLU), JOHN DE CATILLO & CIPRIANO CID,respondents.
Labor law; Voluntary associations; State may not compel them to admit any individual as member;
Exception.—Although, generally, a state may not compel ordinary voluntary associations to admit
thereto any given individual, because membership therein may be accorded or withheld as a matter
of privilege, the rule is qualified in respect of labor unions holding a monopoly in the supply of labor,
either in a given locality or as regards a particular employer with which it has a closed-shop
agreement.
Same; Reason for the ride.—The reason is that the closed shop and the union shop cause the
admission requirements of trade unions to become affected with public interest. Likewise, closed-
shop, union shop, or maintenance-of-membership clauses cause the administration of discipline by
unions to be affected with public interest.
Same; Union may not arbitrarily exclude qualified applicants for membership.—It is well settled that
labor unions are not entitled to arbitrarily exclude qualified applicants for membership, and a closed-
shop provision would not justify the employer in discharging, or a union in insisting upon the
discharge of, an employee whom the union thus refuses to admit to membership, without any
reasonable ground therefor. Needless to say, if said unions may be compelled to admit new members
who have the requisite qualifications, with more reason may the law and the courts exercise the
coercive power when the employee involved is a long standing union member who, owing to
provocations of union officers, was impelled to tender his resignation, which he forthwith withdrew
or revoked. Surely,
217
217
Salunga vs. Court of Industrial Relations
he may at least invoke the right of those who seek admission for the first time, and cannot arbitrarily
be denied readmission.
Same; Unfair labor practice; When company was not guilty of unfair labor practice.—In the case at
bar, the company was reluctant—if not unwilling—to discharge petitioner. When the union first
informed it of petitioner’s resignation and urged implementation of Section 3 of the bargaining
contract, the company advised petitioner of its provisions, thereby intimating that he had to
withdraw his resignation in order to keep his employment. Besides, the company notified the union
that it would not take any action on the case and would consider petitioner still a member of the
union. When the latter, thereafter, insisted on petitioner’s discharge, the company still demurred and
explained that it was not taking sides and that its stand was prompted merely by “humane”
considerations, springing from the belief that petitioner had resigned from the union without realizing
its effect upon his employment. And, as the union reiterated its demand, the company notified
petitioner that it had no other alternative but to terminate his employment, and dismissed him from
the service, although with “regret”. Under the circumstances, the company was not “unfair” to
petitioner.
Same; Same; Right of employee dismissed from service due to unfair labor practice.—Having been
dismissed from the service owing to an unfair labor practice on the part of the union, petitioner is
entitled to reinstatement as member of the union and to his former or substantially equivalent
position in the company, without prejudice to his seniority and/or rights and privileges, and with back
pay, which back pay shall be borne exclusively by the union. In the exercise of its sound judgment and
discretion, the lower court may, however, take such measures as it may deem best, including the
power to authorize the company to make deductions for petitioner’s benefit, from the sums due to
the union by way of check off or otherwise.
APPEAL from a resolution of the Court of Industrial Relations.
C. Magat & Associates for petitioner.
Cipriano Cid & Associates and Ponce Enrile, S. Reyna, Montecillo & Belo for respondents.
CONCEPCION, C.J.:
Appeal by petitioner Francisco Salunga from a resolution of the Court of Industrial Relations, sitting en
banc,
218
218
dismissing unfair labor practice charges against the National Brewery and Allied Industries Labor Union
of the Philippines (PAFLU)—hereinafter referred to as the Union—John de Castillo, Cipriano Cid, San
Miguel Brewery, Inc.—hereinafter referred to as the Company—and Miguel Noel.
Petitioner had, since 1948, been an employee of the Company, which, on October 2, 1959, entered with
the Union, of which respondent John de Castillo is the president, into a collective bargaining agreement,
effective up to June 30, 1962. Section 3 thereof reads:
“The company agrees to require as a condition of employment of those workers covered by this
agreement who either are members of the UNION on the date of the signing of this agreement, or may
join the UNION during the effectivity of this agreement, that they shall not voluntarily resign from the
UNION earlier than thirty (30) days before the expiry date of this agreement as provided in Article XIII
hereof, provided, however, that nothing herein contained shall be construed to require the company to
enforce any sanction whatsoever against any employee or worker who fails to retain his membership in
the UNION as hereinbefore stated, for any cause other than voluntary resignation of non-payment of
regular union dues on the part of said employee or worker.” (Exh. 4-A-Union.)
Petitioner was a member of the Union since 1953. For reasons later to be stated, on August 18, 1961, he
tendered his resignation from the Union, which accepted it on August 26, 1961, and transmitted it to
the Company on August 29, 1961, with a request for the immediate implementation of said section 3.
The Company having informed him that his aforementioned resignation would result in the termination
of his employment, in view of said section, petitioner wrote to the Union, on August 31, 1961, a letter
withdrawing or revoking his resignation and advising the Union to continue deducting his monthly union
dues. He, moreover, furnished a copy of this communication to the Company. The latter, in turn,
notified the Union of the receipt of said copy and that “in view thereof, we shall not take any action on
this case and shall consider Mr. Francisco Salunga still a member of your union and continue deducting
his union dues.” On
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219
September 8, 1961, the Union told the Company that petitioner’s membership could not be reinstated
and insisted on his separation from the service, conformably with the stipulation above-quoted. The
Company replied, on September 12, 1961, stating:
“x x x We asked Mr. Salunga if he realized that by resigning from the Union he would in effect be
forfeiting his position in the company. When he answered in the negative, we showed him a copy of our
Collective Bargaining Agreement and called his attention to Sec. 3, Art. II thereof. He then told us that he
did not realize that he would be losing his job if he were to resign from the Union. We did not at any
time ask or urge him to withdraw his resignation; neither are we now asking or insisting that you
readmit him into your membership. We thought that informing him of the consequences of his
resignation from the Union, was the only humane thing to do under the circumstances.
“Nevertheless, if notwithstanding our foregoing clarification you still consider him as having actually
resigned from your organization, and you insist that we dismiss him from the service in accordance with
Sec. 3, Article II of our agreement, we will have no alternative but to do so.” (Exh. E)
In a letter to the Company, dated September 20, 1961, the Union reiterated its request for
implementation of said section 3, for which reason, on September 22, 1961, the Company notified
petitioner that, in view of said letter and the aforementioned section, “we regret we have to terminate
your employment for cause. You are, therefore, hereby notified of your dismissal from the service
effective as of the close of business hours, September 30, 1961.”
Meanwhile, petitioner had sought the intervention of PAFLU’s National President, respondent Cipriano
Cid, to which the Union was affiliated, for a review of the latter’s action. The PAFLU gave due course to
petitioner’s request for review and asked the Company, on September 29, 1961, to defer his dismissal,
for at least two (2) weeks, so that its (PAFLU’s) Executive Board could act on his appeal. On October 6,
1961, respondent Cid advised petitioner that the PAFLU had found no ground to review the action taken
by the Union and that, on the expiration of the 15-day grace granted to him by the Company, the
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220
decision thereof to terminate his services would taka effect.
Thereupon, or on October 11, 1961, petitioner notified the PAFLU that he was appealing to its supreme
authority—the PAFLU National Convention—and requested that action on his case be deferred until
such time as the Convention shall have acted on his appeal, A letter of the same date and tenor was
sent, also, by the petitioner to the Union. Furthermore, he asked the Company to maintain the status
quo, in the meantime. This notwithstanding, at the close of the business hours, on October 15, 1961,
petitioner was discharged from the employment of the Company, through its assistant-secretary and
vice-president, herein respondent Miguel Noel.
At petitioner’s behest, on or about December 7. 1961, a prosecutor of the Court of Industrial Relations
commenced, therefore, the present proceedings, for unfair labor practice, against the Union, its
president, respondent John de Castillo, respondent Cipriano Cid, as PAFLU president, the Company, and
its aforementioned Vice-President, Miguel Noel. In due course, thereafter, the trial Judge rendered a
decision the dispositive part of which reads:
“IN VIEW OF ALL THE FOREGOING, the San Miguel Brewery, Inc. and Miguel Noel and National Brewery
& Allied Industrial Labor Union of the Philippines (PAFLU), John de Castillo, and Cipriano Cid, are hereby
declared guilty of unfair labor practices as charged, and ordered to cease and desist from further
committing such unfair labor practice acts complained of; and as affirmative reliefs:
“(a) The National Brewery & Allied Industries Labor Union of the Philippines (PAFLU), John de Castillo
and Cipriano Cid, their officers and agents, are hereby directed to readmit and to continue the
membership of Francisco Salunga in the membership rolls of the union after paying all union dues, with
all the rights and privileges being enjoyed by bonafide members;
“(b) The San Miguel Brewery, Inc., and Miguel Noel, their officers and agents are hereby directed to
immediately reinstate Francisco Salunga to his former or substantially equivalent position with one-half
back wages, without prejudice, however, to his seniority and/or other rights and privileges; and
“(c) Respondents Union and Company, their respective officers and agents, are likewise directed to post
two copies of this
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decision in conspicuous places in their respective offices or plants for a period of one month, furnishing
this Court with certificate of compliance after the expiration of said period.”
On motion for reconsideration of the respondents, this decision was reversed by the Court of Industrial
Relations sitting en banc with two (2) judges concurring in the result and the trial judge dissenting-—
which dismissed the case. Hence, this appeal by the petitioner.
The appeal is well taken, for, although petitioner had resigned from the Union and the latter had
accepted the resignation, the former had, soon later—upon learning that his withdrawal from the Union
would result in his separation from the Company, owing to the closed-shop provision above referred
to—revoked or withdrawn said resignation, and the Union refused to consent thereto without any just
cause therefor. The Union had not only acted arbitrarily in not allowing petitioner to continue his
membership. The trial Judge found said refusal of the Union officers to be due to his critical attitude
towards certain measures taken or sanctioned by them. As set forth in the decision of the trial Judge:
“x x x Prior to August, 1961, he had been criticizing and objecting to what he believed were illegal or
irregular disbursements of union funds, i.e., allowing Florencio Tirad, a union official, to receive six
months advanced salaries when Tirad went to the United States, which objection he openly manifested
in a meeting of the board of directors and stewards, but instead of receiving favorable response, he
(Salunga) was twitted and felt insulted by the laughter of those present that he would be the next man
to be sent to America; second, granting Ricardo Garcia, union secretary, two months advanced salaries
when preparing for the bar examinations, which objection he broached to union officer Efren Meneses;
third, the union’s additional monthly expense for the salary of a counsel when the PAFLU, their mother
union is well staffed with a number of lawyers who could attend to and handle their cases and other
legal matters, and to which mother union the NABAILUP has been paying a monthly assessment of more
than Pl,000.00; and fourth, giving salary to Charles Mitschek who was dismissed by the company but
denying the same privilege to other similarly situated member-employees. Salunga was later removed
by the union from his position as steward without his knowledge. It also appears that the power of
attorney executed in his favor
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by co-worker Alejandro Miranda for the collection of Miranda’s indebtedness of P60.00 to him (the
latter has certain amount in possession of the Union) was not honored by the union.
xx xx xx xx
“The record is clear that feeling dejected by the inaction of the union officials on his grievances and
objections to what he believed were illegal disbursements of union funds, coupled with the fact that he
was later removed from his position .as a union steward without his knowledge, as well as the fact that
the union did not honor the power of attorney executed in his favor by Alejandro Miranda, a co-worker,
for the collection of Miranda’s indebtedness of P60.00 to him, he submitted his letter of resignation
from the union on August 18, 1961. It must be stated here that no evidence was adduced by the
respondent union to overcome complainant’s testimonies about his objections to the disbursements of
union funds but only tried to elicit from him, on cross examination, that the funds of the union are only
disbursed upon authority of the Executive Board of the union. x x .”
It should be noted that the Court of Industrial Relations en banc did not reverse these findings of fact or
even question the accuracy thereof. What is more, the officers of the Union have, in effect, confirmed
the fact that their refusal to allow the withdrawal of petitioner’s resignation had been due to his
aforementioned criticisms. Indeed said officers tried to justify themselves by characterizing said
criticisms as acts of disloyalty to the Union, which, of course, is not true, not only because the criticism
assailed, not the Union, but certain acts of its officers, and, indirectly, the officers themselves, but also
because the constitution and by-laws of the Union explicitly recognize the right of its members to give
their views on “all transactions made by the Union.” As a consequence, the resolution appealed from
cannot be affirmed without, in effect, nullifying said right which, independently of the constitution and
by-laws of the Union, is part and parcel of the freedom of speech guaranteed in the Constitution of our
Republic, as a condition sine qua non to the sound growth and development of labor organizations and
democratic institutions.
Although, generally, a state may not compel ordinary voluntary associations to admit thereto any given
indiv-
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223
idual, because membership therein may be accorded or withheld as a matter of privilege,1 the rule is
qualified in respect of labor unions holding a monopoly in the supply of labor, either in a given locality,
or as regards a particular employer with which it has a closed-shop agreement.2 The reason is that
“x x x The closed shop and the union shop cause the admission requirements of trade union to become
affected with the public interest. Likewise, a closed shop, a union shop, or maintenance of membership
clauses cause the administration of discipline by unions to be affected with the public interest.”3
Consequently, it is well settled that such unions are not entitled to arbitrarily exclude qualified
applicants for membership, and a closed-shop provision would not justify the employer in discharging,
or a union in insisting upon the discharge of, an employee whom the union thus refuses to admit to
membership, without any reasonable ground therefor.4 Needless to say, if said unions may be
compelled to admit new members, who have the requisite qualifications, with more reason may the law
and the courts exercise the coercive power when the employee involved is a long standing union
member, who, owing to provocations of union officers, was impelled to tender his resignation, which he
forthwith withdrew or revoked. Surely, he may, at least, invoke the rights of those who seek admission
for the first time, and can not arbitrarily be denied readmission.
We cannot agree, however, with the finding of the trial Judge to the effect that the Company was guilty
of unfair labor practice. The Company was reluctant—if not unwilling to discharge the petitioner. When
the Union first informed the Company of petitioner’s resignation and urged implementation of section 3
of the bargaining contract, the Company advised petitioner of the provi-
_______________
1 4 Am. Jur. 462; 31 Am. Jur. 426.
2 31 Am. Jur. 432.
3 Italics ours. Labor Law Cases and Materials, Archibal Cox, pp. 1009-1011. See, also, Williams v.
International Brotherhood of Boiler-Makers, 27 Cal. 2d 586, 165 P 2d 903; James v. Marineship Corp., 25
Cal. 2d 721, 155 P 2d 329.
4 See 31 Am. Jur. 432.
224
224
sions thereof, thereby intimating that he had to withdraw his resignation in order to keep his
employment. Besides, the Company notified the Union that it (the Company) would not take any action
on the case and would consider the petitioner, “still a member” of the Union. When the latter,
thereafter, insisted on petitioner’s discharge, the Company still demurred and explained it was not
taking sides and that its stand was prompted merely by “humane” considerations, springing from the
belief that petitioner had resigned from the Union without realizing its effect upon his employment.
And, as the Union reiterated its demand, the Company notified petitioner that it had no^other
alternative but to terminate his employment, and dismissed him from the service, although with
“regret”. Under these circumstances, the Company was not “unfair” to the petitioner. On the contrary,
it did not merely show a commendable understanding of and sympathy for his plight. It even tried to
help him, although to such extent only as was consistent with its obligation to refrain from interfering in
purely internal affairs of the Union. At the same time, the Company could not safely inquire into the
motives of the Union officers, in refusing to allow the petitioner to withdraw his resignation. Inasmuch
as the true motives were not manifest, without such inquiry, and petitioner had concededly tendered
his resignation of his own free will, the arbitrary nature of the decision of said officers was not such as to
be apparent and to justify the company in regarding said decision unreasonable. Upon the other hand,
the Company can not be blamed for assuming the contrary, for petitioner had appealed to the National
Officers of the PAFLU and the latter had sustained the Union. The Company was justified in presuming
that the PAFLU had inquired into all relevant circumstances, including the motives of the Union Officers.
In finding’, this notwithstanding, that the Company is guilty of unfair labor practice, the trial Judge
seemed to have been unduly influenced by the fact that the former had dismissed the petitioner despite
his announced intention to appeal from the decision of the Union and that of
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225
the Officers of PAFLU to its “supreme authority”, namely, the PAFLU's “National Convention”. In other
words, said Judge felt that the Company should have waited for the action of the national convention
before issuing the notice of dismissal.
There is no evidence, however, that petitioner had really brought this matter to said “Convention”.
Much less is there any proof that the latter had sustained him and reversed the PAFLU officers and the
Union. Thus, the record does not show that petitioner was prejudiced by the Company's failure to
maintain the status quo, after the Union had been sustained by said officers. In fact, petitioner did not
even try to establish that he had submitted to the Company—as he has not introduced in the lower
court—satisfactory proof that an appeal had really been taken by him to the aforementioned
Convention. In short, it was error to hold the Company guilty of unfair labor practice.
Just the same, having been denied readmission into the Union and having been dismissed from the
service owing to an unfair labor practice On the part of the Union, petitioner is entitled to reinstatement
as member of the Union and to his former or substantially equivalent position in the Company, without
prejudice to his seniority and/or rights and privileges, and with back pay, which back pay shall be borne
exclusively by the Union. In the exercise of its sound judgment and discretion, the lower court may,
however, take such measures as it may deem best, including the power to authorize the Company to
make deductions, for petitioner's benefit, from the sums due to the Union, by way of check off or
otherwise, with a view to executing this decision, and, at the same time, effectuating the purposes of
the Industrial Peace Act.
With this modification, the aforementioned decision of the trial Judge is hereby affirmed in all other
respects, and the appealed resolution of the Court of Industrial Relations en banc is reversed, with costs
against respondents, except the Company.
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226
Republic Savings Bank vs. Court of Industrial Relations
Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez Castro, Angeles and Fernando, JJ., concur.
Bengzon, J.P., J., on leave, did not take part.
Decision affirmed.
________________ Salanga vs. Court of Industrial Relations, 21 SCRA 216, No. L-22456 September 27,
1967
435
United Restauror's Employees & Labor Union vs. Torres
No. L-24993. December 18, 1968.
UNITED RESTAUROR'S EMPLOYEES & LABOR UNION-PAFLU, petitioner, vs. HON. GUILLERMO E.
TORRES, as Presiding Judge of Branch VIII, Court of First Instance of Rizal, 7th Judicial District, and the
DELTA DEVELOPMENT CORPORATION, respondents.
436
436
Labor law; Labor union; Collective bargaining unit; In whom vested; Consent election; Case at bar.—A
minority union cannot demand collective bargaining. Said right belongs to the union which commands
the majority. 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 "designated or selected" for such
purpose "by the majority of the employees" in the unit concerned (Sec. 12 [a], Rep. Act No. 875, as
amended). In the case at bar, SELU has the right as well as the obligation to hear, voice out and seek
remedies for the grievances of all Suló employees, including employees who are members of
petitioner Union, regarding the rates of pay, wages, hours of employment, or other conditions of
employment.
The outcome of a consent election cannot be rendered meaningless by a minority group of employees
who had themselves invoked the procedure to settle .the dispute. Those who voted in the consent
election against the labor union that was eventually certif ied are hidebound to the results thereof.
Adherence to the methods laid down by statute f or the settlement of industrial strife is one way of
achieving industrial peace; one such method is certification election (See Sec. 12, Rep. Act No. 875, as
amended).
After the proper bargaining representative is certified, a strike by a minority union to compel an
employer to bargain with it is unlawful. No labor dispute can exist between a minority union and an -
employer in such case (Dangel & Shriber TO 395-396).
Special civil action; Preliminary injunction; Certiorari; Where petition for certiorari to annul writ of
preliminary injunction has become moot and academic because petitioner lost in a consent election
and is no longer a proper collective bargaining unit; Case at bar.—Really, the case at bar has become
moot and academic. When the Union struck and picketed on January 16, 1965, it might have been
true that the Union commanded a majority of Suló employees. Without need of certification it could,
under such circumstances, conclude a collective bargaining agreement with Suló (BISCOM v. PAFLU, L-
18782, Aug. 29, 1963). 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. Not controverted, too, is the fact that, in that
consent election, SELU defeated the Union, petitioner herein Because of this SELU was certified to the
Suló management the collective bargaining representative of the employees/'
ORIGINAL PETITION in the Supreme Court. Certiorari.
437
437
Leonardo C. Fernandez for petitioner.
Ponce Enrile, Siguion Reyna, Montecillo & Belo for respondent Delta Development Corporation.
SANCHEZ, J.:
Certiorari to annul the writ of preliminary injunction issued by the Court of First Instance of Rizal
ordering United Restauror's Employees & Labor Union-PAFLU (Union, for short), its attorneys,
representatives, agents and any person assisting it to "REFRAIN from picketing on the property of
plaintiff Delta Development Corporation within the Makati commercial center."
The case arose from a verified complaint for injunction with prayer for preliminary injunction filed by
Delta Development Corporation (Delta), against the Union on January 16, 1965.1 It is there averred that:
Delta is the owner of the Makati commercial center situated at Makati, Rizal. It is in the business of
leasing portions thereof. The center has its own thoroughfares, pedestrian lanes, parking areas for the
benefit of customers and clients of its lessees. On the other hand, the Union is an association of some
employees of Suló Restaurant, a lessee of Delta. On January 8, 1965, the Union sought permission from
Delta to conduct picketing activities "on the private property of plaintiff surrounding Suló Restaurant."
On January 11, Delta denied the request because it "may be held liable for any incident that may happen
in the picket lines, since the picketing would be conducted on the private property owned by plaintiff."
Despite the denial, the Union picketed on Delta's property surrounding Suló Restaurant on January 16
and continued to conduct said activity. Such act of the Union is violative of the property rights of, and
would cause grea and irreparable injury to, Delta. No employer-employee relationship exists between
Delta and the Union members. Delta then prayed that a writ of preliminary injunction issue and that,
after hearing, such injunction be made permanent.
_______________
1 Civil Case 8524, Court of First Instance of Rizal (Pasig), entitled "Delta Development Corporation.
Plaintiff, versus United (Restauror's) Employees and Labor Union, Defendant."
438
438
As aforesaid, respondent judge issued a writ of preliminary injunction. The Union's move to reconsider
was denied on January 26, 1965.
On January 19, 1965, the Union filed a motion to dismiss on the ground, inter alia, that the court had no
jurisdiction to try the case.
Without awaiting resolution of its motion to dismiss, the Union commenced in this Court the present
original petition for certiorari on September 18, 1965, claiming that respondent judge acted without or
in excess of his jurisdiction in issuing the injunctive writ "as no restraining order could be validly issued
against the right to picket as part of freedom of speech"; that respondent judge issued the questioned
writ "without the benefit of a previous hearing"; that it was issued in violation of Section 9 (d) of
Republic Act 875; that jurisdiction over the case rests with the Court of Industrial Relations (CIR) "for the
same involves acts of unfair labor practice under Sec. 4 (a) of Republic Act 875 in connection with Sec. 5
(a) thereof"; and that there is no appeal nor any plain, speedy and adequate remedy in the ordinary
course of law.
On September 29, 1965, this Court issued a writ of preliminary injunction upon the Union's P1,000.00-
bond.
On October 12, 1965, Delta answered. It alleged, amongst others, that respondent judge validly issued
the injunctive writ in question because the same "never enjoined petitioner from picketing against the
Suló-D & E, Inc. but only from doing their picketing on the private property of respondent who is not in
any way privy to the relationship between Suló-D & E, Inc. and petitioner"; that Republic Act 875 is not
applicable to the case involving as it does an action to protect Delta's property rights; that it has no labor
relation or dispute of any kind with the Union; and that the injunctive writ was issued after due hearing
on January 19, 1965. Delta asked that the present petition be denied.
After the submission of the parties' memoranda in lieu of oral argument, Delta moved to dismiss the
proceeding at bar on the ground that it has become moot and academic. It averred that the Union lost
in the consent election conducted by the Department of Labor on October 4, 1965 in
439
439
CIR Cases 1455-MC and 1464-MC, and thereby also lost its right to picket; and that in said election cases,
a rival union—Suló Employees Labor Union (SELU, for short)—was certified by CIR as the exclusive
bargaining representative of all the employees of Suló Restaurant pursuant to CIR's order of December
23, 1965.
The Union opposed. It argued that the picketing was conducted on or about January 16, 1965, that is,
around 8 months before the consent election on October 4, 1965; and that the issues that triggered the
Union's labor strike of January 16, 1965 are entirely distinct and foreign to the issues in Cases 1455-MC
and 1464-MC.
The petition must be dismissed. Really, the case before us has become moot and academic.
When the Union struck and picketed on January 16, 1965, it might have been true that the Union
commanded a majority of Suló's employees. Without need of certification, it could, under such
circumstances, conclude a collective bargaining agreement with Suló.2 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. Not controverted, too, is the fact that, in that consent election, SELU defeated the Union,
petitioner herein. Because of this, SELU was certified to the Suló management as the "collective
bargaining representative of the employees x x x for collective bargaining purposes as regards wages,
hours of work, rates of pay and/or such other terms and conditions of employment allowed them by
law,"3
The consent election, it should be noted, was ordered by CIR pursuant to the Union's petition for direct
certification docketed as Case 1455-MC and a similar petition for certification filed by SELU docketed as
Case 1464-MC. Verily, the Union can no longer demand collective bargaining. For, it became the
minority union. As matters stand, said right properly belongs to SELU, which com-
_______________
2 Binalbagan-Isabela Sugar Co., Inc. (BISCOM) vs. Philippine Association of Free Labor Unions (PAFLU), L-
18782, August 29, 1963.
3 December 23, 1965 order of Associate Judge Emiliano C. Tabigne in Cases Nos. 1455-MC and 1464-MC,
Annex "A" of Delta's Motion to Dismiss.
440
440
mands the majority. 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 "designated or selected" for such
purpose "by the majority of the employees" in the unit concerned.4 SELU has the right as well as the
obligation to hear, voice out and seek remedies for the grievances of all Suló employees, including
employees who are members of petitioner Union, regarding the "rates of pay, wages, hours of
employment, or other conditions of employment."
Indeed, petitioner Union's concerted activities designed to be recognized as the exclusive bargaining
agent of Suló employees must come to a halt.5 Collective bargaining cannot be the appropriate
objective of petitioning Union's continuation of their concerted activities. The record before us does not
reveal any other legitimate purpose. To allow said Union to continue picketing for the purpose of
drawing the employer to the collective bargaining table would obviously be to disregard the results of
the consent election. To further permit the Union's picketing activities would be to flaunt at the will of
the majority.
The outcome of a consent election cannot be rendered meaningless by a minority group of employees
who had themselves invoked the procedure to settle the dispute. Those who voted in the consent
election against the labor union that was eventually certified are hidebound to the results thereof. Logic
is with this view. By their very act of participating in the election, they are deemed to have acquiesced to
whatever is the consequence of the election. As to those who did not participate in the election, the
accepted theory is that they "are presumed to assent to the expressed will of the majority of those
voting."'6
_______________
4 Sec. 12 (a), Republic Act 875, as amended.
5 "A labor union that is not the exclusive representative of all the employees therefor, may not picket
for closed shop. And a contract provision for collective bargaining governing all employees is valid only
when the majority of the employees have consented to it or have authorized their agents to consent."
Dangel and Shriber, Labor Unions, 1941 ed., p. 90.
6 Allied Workers' Association vs. Court of Industrial Relations, 20 SCRA 364, 367, citing Virginia Ry. Co.
vs. System Federation No, 40 (1937) 300 U.S. 515, 81 L ed. 789.
441
441
Adherence to the methods laid down by statute for the settlement of industrial strife is one way of
achieving industrial peace; one such method is certification election.7 It is the intent and purpose of the
law that this procedure, when adopted and availed of by parties to labor controversies, should end
industrial disputes, not continue them.8 Pertinent is the following observation to which we fully concur:
"Before an election is held by the Board9 to determine which of two rival unions represents a majority
of the employees, one of the unions may call a strike and demand that the employer bargain with it. A
labor dispute will then exist. Nothing in the statute makes it illegal for a minority to strike and thereby
seek to obtain sufficient strength so as to become the sole bargaining agent. But after the Board certifies
the bargaining representative, a strike by a minority union to compel an employer to bargain with it is
unlawful. No labor dispute can exist between a minority union and an employer in such a case."10
Upon the law then, the Union's right to strike and consequently to picket ceased by its defeat in the
consent election. That election occurred during the pendency before this Court of this original petition
for certiorari lodged by the Union the thrust of which is to challenge the power of the Court of First
Instance to enjoin its picketing activities. The Union may not continue to picket. The object of the case
before us is lost.
WE, ACCORDINGLY, vote to dismiss the petition for certiorari as moot and academic, and to dissolve the
writ of preliminary injunction we heretofore issued herein, for being functus oficio.
No costs. So ordered.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal Zaldivar, Castro and Capistrano, JJ., concur.
Fernando, J., concurs in the result.
_______________
7 See: Sec. 12, Republic Act 875, as amended.
8 Floresheim Shoe Store Co. vs. Retail Shoe Salesmen's Union, 42 N.E. 2d 480, 484.
9 Referring to the National Labor Relations Board, the American counterpart of our CIR.
10 Dangel and Shriber, op. cit., pp. 395-396, citing cases; italics supplied.
442
442
Lagman vs. Medina
Petition dismissed; writ of preliminary Injunction dissolved.
Notes.—(a) Propriety of injunction.—See the annotation on "Labor Injunctions," 24 SCRA 331-352.
(b) Legality of strike.—See the annotation under Norton & Harrison Co. & Jackbilt Concrete Blocks Co.
Labor Union (NLU) v. Norton & Harrison Co. & Jackbilt Concrete Blocks Co., Inc., L-18461, Feb. 10, 1967,
19 SCRA 310, 317-327.
_______________ United Restauror's Employees & Labor Union vs. Torres, 26 SCRA 435, No. L-24993
December 18, 1968
368
Manila Mandarin Employees Union vs. NLRC
No. L-76989. September 29,1987.*
MANILA MANDARIN EMPLOYEES UNION, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION,
and MELB A C. BELONCIO, respondents,
Labor; NLRC; Jurisdiction; Where the dispute is not purely intra-union but involves an interpretation
of the collective bargaining agreement and whether or not there was an illegal dismissal, the NLRC has
jurisdiction.—On the issue of the NLRC jurisdiction over the case, the Court finds no grave abuse of
discretion in the NLRC conclusion that the dispute is not purely intra-union but involves an
interpretation of the collective bargaining agreement (CBA) provisions and whether or not there was
an illegal dismissal. Under the CBA, A, membership in the union may be lost through expulsion only if
there is non-payment of dues or a member organizes, joins, or forms another labor organization.
_______________
* THIRD DIVISION.
369
369
Same;Same;Judgments; Findings of facts of quasi-judicial agencies like the NLRC are generally
accorded not only respect but also finality if they are supported by substantial evidence.—lt is a
wellsettled principle that findings of facts quasi-judicial agencies like the NLRC, which have acquired
expertise because their jurisdiction is confined to specific matters, are generally accorded not only
respect but at times even finality if such findings are supported by substantial evidence. (Akay Printing
Press v. Minister of Labor and Employment, 140 SCRA 381; Alba Patio de Makati v. Alba Patio de
Makati Employees Association, 128 SCRA 253; Dangan v, National Labor Relations Commission, 127
SCRA 706; De la Concepcion v. Mindanao Portland Cement Corporation, 127 SCRA 647).
Same; Same; Illegal Dismissal; Reinstatement with backwages to be paid by the union; Dismissal of
employee was through the insistence and demand of the union.—The Hotel would not have
compelled Beloncio to go on forced leave were it not for the union's insistence and demand to the
extent that because of the failure of the hotel to dismiss Beloncio as requested, the union filed a
notice of strike with the Ministry of Labor and Employment on August 17, 1984 on the issue of unfair
labor practice. The hotel was then compelled to put Beloncio on forced leave and to stop payment of
her salary from September 1,1984.
Same; Same; Closed-shop agreement, nature of.—A closed-shop agreement is an agreement whereby
an employer binds himself to hire only members of the contracting union who must continue to
remain members in good standing to keep their jobs. It is "the most prized achievement of unionism."
It adds membership and compulsory dues. By holding out to loyal members a promise of employment
in the closed-shop, it welds group solidarity. (National Labor Union v. Aguinaldo's Echague, Inc., 97
Phil. 184). It is a very effective form of union secretary agreement.
Same; Same; Same; A closed-shop is a valid form of union security.—This Court has held that a closed-
shop is a valid form of union security, and such a provision in a collective bargaining agreement is not
a restriction of the right of freedom of association guaranteed by the Constitution. (Lirag Textile Mills,
Inc. v. Blanco, 109 SCRA 87; Manalang v. Artex Development Company, Inc., 21 SCRA 561).
370
370
Same; Same; Same; Union security clauses cannot be used by union officials against an employer,
much less their own members, except with a high sense of responsibility and fairness.—The Court
stresses, however, that union security clauses are also governed by law 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 members, except with a high sense of responsibility, fairness, prudence, and
judiciousness.
Same; Same; Same, Same; A union member may not be expelled from her union and from her job for
personal reasons or for causes foreign to the closed-shop agreement—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 agreement and in a manner characterized by arbitrariness and
whimsicality.
Same; Same; Same; Same; Union membership does not entitle hotel workers to be sloppy in their
work and inattentive to customers and disrespectful to supervisors.—This is particularly true in this
case where Ms. Beloncio was trying her best to make a hotel bus boy do his work promptly and
courteously so as to serve hotel customers in the coffee shop expeditiously and cheerfully. Union
membership does not entitle waiters, janitors, and other workers to be sloppy in their work,
inattentive to customers, and disrespectful to supervisors. The Union should have disciplined its erring
and troublesome members instead of causing so much hardship to a member who was only doing her
work for the best interests of the employer, all its employees, and the general public whom they
serve,

GUTIERREZ, JR., J.:
This is a petition to review on certiorari the National Labor Relations Commission's (NLRC) decision
which modified the Labor Arbiter's decision and ordered the Manila Mandarin Employees Union to pay
the wages and fringe benefits of Melba C. Beloncio from the time she was placed on forced leave until
she is actually reinstated, plus ten percent (10%) thereof
371
371
as attorney's fees. Manila Mandarin Hotel was ordered to reinstate Beloncio and to pay her whatever
service charges may be due her during that period, which amount would be held in escrow by the hotel.
The petition was filed on January 19, 1987. The private respondent filed her comment on March 7, 1987
while the Solicitor General filed a comment on June 1, 1987 followed by the petitioner's reply on August
22, 1987. We treat the comment as answer and decide the case on its merits.
The facts of the case are undisputed.
Herein private respondent, Melba C. Beloncio, an employee of Manila Mandarin Hotel since 1976 and at
the time of her dismissal, assistant head waitress at the hotel's coffee shop, was expelled from the
petitioner Manila Mandarin Employees Union for acts allegedly inimical to the interests of the union.
The union demanded the dismissal from employment of Beloncio on the basis of the union security
clause of their collective bargaining agreement and the Hotel acceded by placing Beloncio on forced
leave effective August 10,1984.
The union security clause of the collective bargaining agreement provides:
"Section 2. Dismissals,
x x x x x
b) Members of the Union who cease to be such members and/or who fail to maintain their membership
in good standing therein by reason of their resignation from the Union, and/or by reason of their
expulsion from the Union, in accordance with the Constitution and By-Laws of the Union, for non-
payment of union dues and other assessment, for organizing, joining or forming another labor
organization shall, upon written notice of such cessation of membership or failure to maintain
membership in the Union and upon written demand to the company by the Union, be dismissed from
employment by the Company after complying with the requisite due process requirement; x x x" (Italics
supplied)" (Rollo, p. 114)
Two days before the effective date of her forced leave or on August 8, 1984, Beloncio filed a complaint
for unfair labor practice and illegal dismissal against herein petitioner-union
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372
and Manila Mandarin Hotel, Inc. before the NLRC, Arbitration Branch.
Petitioner-union filed a motion to dismiss on grounds that the complainant had no cause of action
against it and the NLRC had no jurisdiction over the subject matter of the complaint.
This motion was denied by the Labor Arbiter.
After the hearings that ensued and the submission of the parties' respective position papers, the Labor
Arbiter held that the union was guilty of unfair labor practice when it demanded the separation of
Beloncio. The union was then ordered to pay all the wages and fringe benefits due to Beloncio from the
time she was on forced leave until actual reinstatement, and to pay P30,000.00 as exemplary damages
and P10,000.00 as attorney's s fees. The charge against the hotel was dismissed.
The Union then appealed to the respondent NLRC which modified the Labor Arbiter's decision as earlier
stated.
A subsequent motion for reconsideration and a second motion for reconsideration were denied.
Hence, this present petition.
The petitioner raises the following assignment of errors:
'THAT RESPONDENT NLRC ERRED IN NOT DECLARING THAT THE PRESENT CONTROVERSY INVOLVED
INTRAUNION CONFLICTS AND THEREFOR IT HAS NO JURISDICTION OVER THE SUB JECT-MATTER
THEREOF.
II
'THAT RESPONDENT NLRC SERIOUSLY ERRED IN HOLDING PETITIONER LIABLE FOR THE PAYMENT OF
PRIVATE RESPONDENT'S SALARY AND FRINGE BENEFITS, AND AWARD OF 10% ATTORNEY'S FEES, AFTER
FINDING AS UNMERITORIOUS HER PRETENDED CLAIMS OR COMPLAINTS FOR UNFAIR LABOR PRACTICE,
ILLEGAL DISMISSAL, AND DAMAGES." (Rollo, pp. 6-9)
373
373
On the issue of the NLRC jurisdiction over the case, the Court finds no grave abuse of discretion in the
NLRC conclusion that the dispute is not purely intra-union but involves an interpretation of the collective
bargaining agreement (CBA) provisions and whether or not there was an illegal dismissal. Under the
CBA, membership in the union may be lost through expulsion only if there is non-payment of dues or a
member organizes, joins, or forms another labor organization, The charge of disloyalty against Beloncio
arose from her emotional remark to a waitress who happened to be a union steward, "Wala akong
tiwala sa Union ninyo." The remark was made in the course of a heated discussion regarding Beloncio's
efforts to make a lazy and recalcitrant waiter adopt a better attitude towards his work.
We agree with the Solicitor General when he noted that:
"x x x The Labor Arbiter explained correctly that '(I)f the only question is the legality of the expulsion of
Beloncio from the Union undoubtedly, the question is one cognizable by the BLR (Bureau of Labor
Relations). But, the question extended to the dismissal of Beloncio or steps leading thereto. Necessarily,
when the hotel decides the recommended dismissal, its acts would be subject to scrutiny. Particularly, it
will be asked whether it violates or not the existing CBA. Certainly, violations of the CBA would be unfair
labor practice.'
" Article 250 of the Labor Code provides the following:
" 'Art. 250. Unfair labor practices of labor organizations.—It shall be unfair labor practice for a labor
organization, its officers, agents or representatives: x x x x x x x x x
" '(b) To cause or attempt to cause an employer to discriminate against an employee, including
discrimination against an employee with respect to whom membership in such organization has been
denied or to terminate an employee on any ground other than the usual terms and conditions under
which membership or continuation of membership is made available to other members.' (Italics
supplied)
Article 217 of the Labor Code also provides:
" 'Art. 217. Jurisdiction of Labor Arbiters and the
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374

Commission.—(a) The Labor Arbiters shall have the originaland exclusive jurisdiction to hear and decide
x x x the following cases involving all workers, whether agricultural or nonagricultural;
" ' (1 ) Unfair labor practice cases; x x x xxx xxx
" '(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor
Arbiters.' " (Rollo, pp. 155-157.)
The petitioner also questions the factual findings of the public respondent on the reasons for Beloncio's
dismissal and, especially, on the argument that she was on forced leave; she was never dismissed; and
not having worked, she deserved no pay.
The Court finds nothing in the records that indicates reversible error, much less grave abuse of
discretion, in the NLRC's findings of facts.
It is a well-settled principle that findings of facts quasijudicial agencies like the NLRC, which have
acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not
only respect but at times even finality if such findings are supported by substantial evidence. (Akay
Printing Press v. Minister of Labor and Employment, 140 SCRA 381; Alba Patio de Makati v. Alba Patio de
Makati Employees Association, 128 SCRA 253; Dangan v. National Labor Relations Commission, 127
SCRA 706; De la Concepcion v. Mindanao Portland Cement Corporation, 127 SCRA 647),
The petitioner now questions the decision of the National Labor Relations Commission ordering the
reinstatement of the private respondent and directing the Union to pay the wages and fringe benefits
which she failed to receive as a result of her forced leave and to pay attorney 's fees.
We find no error in the questioned decision.
The Hotel would not have compelled Beloncio to go on forced leave were it not for the union's
insistence and demand to the extent that because of the failure of the hotel to dismiss
375
375
Beloncio as requested, the union filed a notice of strike with the Ministry of Labor and Employment on
August 17,1984 on the issue of unfair labor practice. The hotel was then compelled to put Beloncio on
forced leave and to stop payment of her salary from September 1,1984.
Furthermore, as provided for in the collective bargaining agreement between the petitioner—the Union
and the Manila Mandarin Hotel, "the Union shall hold the Company free and blameless from any and all
liabilities that may arise" should the employee question the dismissal, as has happened in the case at
bar.
It is natural for a union to desire that all workers in a particular company should be its dues-paying
members. Since it would be difficult to insure 100 percent membership on a purely voluntary basis and
practically impossible that such total membership would continuously be maintained purely on the
merits of belonging to the union. the labor movement has evolved the system whereby the employer is
asked, on the strength of collective action, to enter into what are now familiarly known as "union
security" agreements.
The collective bargaining agreement in this case contains a union security clause—a closed-shop
agreement.
A closed-shop agreement is an agreement whereby an employer binds himself to hire only members of
the contracting union who must continue to remain members in good standing to keep their jobs. It is
"the most prized achievement of unionism." It adds membership and compulsory dues. By holding out
to loyal members a promise of employment in the closed-shop, it welds group solidarity. (National Labor
Union v. Aguinaldo's Echague, Inc., 97 Phil. 184). It is a very effective form of union security agreement.
This Court has held that a closed-shop is a valid form of union security, and such a provision in a
collective bargaining agreement is not a restriction of the right of freedom of association guaranteed by
the Constitution. (Lirag Textile Mills, Inc. v. Blanco, 109 SCRA 87; Manalang v. Artex Development
Company, Inc., 21 SCRA 561).
The Court stresses, however, that union security clauses are
376
376
also governed by law 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 members, except with a high sense of
responsibility, fairness, prudence, and judiciousness.
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 agreement and in a manner characterized by
arbitrariness and whimsicality.
This is particularly true in this case where Ms. Beloncio was trying her best to make a hotel bus boy do
his work promptly and courteously so as to serve hotel customers in the coffee shop expeditiously and
cheerfully. Union membership does not entitle waiters, janitors, and other workers to be sloppy in their
work, inattentive to customers, and disrespectful to supervisors, The Union should have disciplined its
erring and troublesome members instead of causing so much hardship to a member who was only doing
her work for the best interests of the employer, all its employees, and the general public whom they
serve.
WHEREFORE, the petition is hereby DISMISSED. The questioned decision of the National Labor Relations
Commission is AFFIRMED. Costs against the petitioner.
SO ORDERED.
Fernan (Chairman), Feliciano, Bidin and Cortés, JJ., concur.
Petition dismissed Decision affirmed.
Note.—The National Labor Relations Commission committed grave abuse of discretion in authorizing
the company to permanently replace the individual petitioners who fail to return to work (National
Federation of Labor vs. National Labor Relation) for 7 months later found to be without basis is illegal.
(Magtoto vs. National Labor Relations Commission, 140 SCRA 58.)
——oOo—— Manila Mandarin Employees Union vs. NLRC, 154 SCRA 368, No. L-76989. September 29,
1987
STRIKES, LOCKOUTS, AND CONCERTED ACTIONS
VOL. 245, JULY 6, 1995
627
Gold City Integrated Port Service, Inc. vs. National Labor Relations Commission
G.R. No. 103560. July 6, 1995.*
GOLD CITY INTEGRATED PORT SERVICE, INC. (INPORT), petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION (Fifth Division), ADELO EBUNA, EMMANUEL VALMORIDA, RODOLFO PEREZ, ROGER
ZAGADO, MARCOS GANZAN, AND REY VALLE, (WILFREDO DAHAN, ROGELIO VILLAFUERTE, WILFREDO
AMPER, RICARDO ABA, YOLITO AMBUS, FIDEL CALIO, VICENTE CAHATOL, SOTECO CUENCA, NICOLAS
DALAGUAN, BALBINO FAJARDO, ROLANDO JAMILA, RICARDO LAURETO, RUDY LAURETO, QUIRICO
LEJANIO, OSCAR LAPINIG, FELIPE LAURETE, JESUSTUDY OMISOL, ZOSIMO OMISOL, PEDRO SUAREZ,
SATURNINO SISIBAN and MANUEL YANEZ), respondents.
G.R. No. 103599. July 6, 1995.*
ADELO EBUNA, WILFREDO DAHAN, RICARDO LAURETO, REY VALLE, VICENTE CAHATOL, MARCOS
GANZAN,
_______________
* THIRD DIVISION.
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628
RODOLFO PEREZ, ROEL SAA, ROGELIO VILLAFUERTE, MANUEL YANEZ, WILFREDO AMPER, QUIRECO
LEJANO, EMMANUEL VALMORIA, ROLANDO JAMILLA, NICOLAS DALAGUAN, BALBINO FAJARDO,
PEDRO SUAREZ, ELPIDIO ESTROGA, RUBEN PAJO, JESUSTODY OMISOL, RICARDO ABA, FIDEL CALIO,
SATURNINO SESYBAN, RUDY LAURETO, OSCAR LAPINIG, FELIPE LAURENTE, ROGER ZAGADO, SOTECO
CUENCA, FIDEL ESLIT, ZOSIMO OMISOL, ANGEL BERNIDO, and MICHAEL YAGOTYOT, petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION, FIFTH DIVISION, and GOLD CITY INTEGRATED PORT
SERVICES, INC. (INPORT), respondents.
Labor Law; Strikes; A strike is defined as any temporary stoppage of work by the concerted action of
employees as a result of an industrial or labor dispute; What a labor dispute includes.—A strike,
considered as the most effective weapon of labor, is defined as any temporary stoppage of work by
the concerted action of employees as a result of an industrial or labor dispute. A labor dispute
includes any controversy or matter concerning terms or conditions of employment or the association
or representation of persons in negotiating, fixing, maintaining, changing or arranging the terms and
conditions of employment, regardless of whether or not the disputants stand in the proximate
relation of employers and employees.
Same; Same; What transpired on April 30, 1985 was clearly a strike for the cessation of work by
concerted action resulted from a labor dispute.—Private respondents and their co-workers stopped
working and held the mass action on April 30, 1985 to press for their wages and other benefits. What
transpired then was clearly a strike, for the cessation of work by concerted action resulted from a
labor dispute.
Same; Same; Arbiter correctly ruled that the strike was illegal for failure to comply with the
requirements of Article 264 paragraph (c) and (f) of the Labor Code.—The complaint before the Labor
Arbiter involved the legality of said strike. The Arbiter correctly ruled that the strike was illegal for
failure to comply with the requirements of Article 264 (now Article 263) paragraphs (c) and (f) of the
Labor Code.
Same; Same; The language of the law leaves no room for doubt that the cooling-off period and the
seven-day strike ban after the strikevote report were intended to be mandatory.—As we stated in the
case of
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VOL. 245, JULY 6, 1995
629
National Federation of Sugar Workers v. Ovejera, the language of the law leaves no room for doubt
that the cooling-off period and the seven-day strike ban after the strike-vote report were intended to
be mandatory.
Same; Same; The strike on April 30, 1985 was illegal for failure to comply with the requirements of the
law.—From the foregoing, it is patent that the strike on April 30, 1985 was illegal for failure to comply
with the requirements of the law.
Same; Same; Distinction between workers and union officers who participated in illegal strikes.—A
union officer who knowingly participates in an illegal strike and any worker or union officer who
knowingly participates in the commission of illegal acts during a strike may be declared to have lost
their employment status. An ordinary striking worker cannot be terminated for mere participation in
an illegal strike. There must be proof that he committed illegal acts during a strike. A union officer, on
the other hand, may be terminated from work when he knowingly participates in an illegal strike, and
like other workers, when he commits an illegal act during a strike.
Same; Dismissal; Reinstatement; An employee is entitled to reinstatement and to his full backwages
when he is unjustly dismissed.—Under the law, an employee is entitled to reinstatement and to his
full backwages when he is unjustly dismissed.
Same; Same; Same; Reinstatement and backwages are separate and distinct reliefs given to an
illegally dismissed employee.—Rein-statement means restoration to a state or condition from which
one had been removed or separated. Reinstatement and backwages are separate and distinct reliefs
given to an illegally dismissed employee.
Same; Same; Well-settled is it that separation pay shall be allowed only in those instances where the
employee is validly dismissed for causes other than serious misconduct or those reflecting on his
moral character.—Hence, an employee dismissed for causes other than those cited above is not
entitled to separation pay. Well-settled is it that separation pay shall be allowed only in those
instances where the employee is validly dismissed for causes other than serious misconduct or those
reflecting on his moral character.
Same; Same; Backwages; Backwages is a form of relief that restores the income that was lost by
reason of unlawful dismissal.—Back-
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630
wages, on the other hand, is a form of relief that restores the income that was lost by reason of
unlawful dismissal.
Same; Same; Same; There must generally be unjust or illegal dismissal from work, before
reinstatement and backwages may be granted.—It is clear from the foregoing summary of legal
provisions and jurisprudence that there must generally be unjust or illegal dismissal from work, before
reinstatement and backwages may be granted. And in cases where reinstatement is not possible or
when dismissal is due to valid causes, separation pay may be granted.
Same; Same; A worker merely participating in an illegal strike may not be terminated from his
employment.—Under Article 264 of the Labor Code, a worker merely participating in an illegal strike
may not be terminated from his employment. It is only when he commits illegal acts during a strike
that he may be declared to have lost his employment status. Since there appears no proof that these
union members committed illegal acts during the strike, they cannot be dismissed. The striking union
members among private respondents are thus entitled to reinstatement, there being no just cause for
their dismissal.
Same; Same; For knowingly participating in an illegal strike, the law mandates that a union officer
may be terminated from employ-ment.—The fate of private respondent-union officers is different.
Their insistence on unconditional reinstatement or separation pay and backwages is unwarranted and
unjustified. For knowingly participating in an illegal strike, the law mandates that a union officer may
be terminated from employment.
Same; Same; The law, in using the word “may,” grants the employer the option of declaring a union
officer who participated in an illegal strike as having lost his employment.—Notwithstanding the fact
that INPORT previously accepted other union officers and that the screening required by it was
uncalled for, still it cannot be gainsaid that it possessed the right and prerogative to terminate the
union officers from service. The law, in using the word may, grants the employer the option of
declaring a union officer who participated in an illegal strike as having lost his employment.
SPECIAL CIVIL ACTIONS in the Supreme Court. Certiorari.
Arturo C. Ubaub and Abtoralu L. Tongco for Gold City
631
VOL. 245, JULY 6, 1995
631
Integrated Port Service, Inc.
Mariano Carrasco and Edgar S. Cabanlas for petitioners in G.R. No. 103599 and for respondents in
G.R. No. 103560.
ROMERO, J.:
Should separation pay and backwages be awarded by public respondent NLRC to participants of an
illegal strike? This is the core issue to be decided in these two petitions.
Gold City Integrated Port Service, Inc. (INPORT) filed a petition for certiorari against the National Labor
Relations Commission (NLRC) assailing the latter’s decision in “Gold City Integrated Port Services, Inc. v.
Adelo Ebuna, et al.” (NLRC RAB X Case No. 5-0405-85) with twenty-seven private respondents (G.R. No.
103599).1 This petition has been consolidated with G.R. No. 103599 where the petitioners are the
private respondents in instant case and the private respondent is INPORT. For the sake of clarity,
INPORT shall be denominated in the case at bench as the petitioner and the employees as private
respondents.
Instant case arose from the following facts:
Early in the morning of April 30, 1985, petitioner’s employees stopped working and gathered in a mass
action to express their grievances regarding wages, thirteenth month pay and hazard pay. Said
employees were all members of the Macajalar Labor Union-Federation of Free Workers (MLU-FFW) with
whom petitioner had an existing collective bargaining agreement.
Petitioner was engaged in stevedoring and arrastre services at the port of Cagayan de Oro. The strike
paralyzed operations at said port.
_______________
1 Namely, Adelo Ebuna, Wilfredo Dahan, Ricardo Laureto, Rey Valle, Vicente Cahatol, Marcos Ganzan,
Rodolfo Perez, Roel Saa, Rogelio Villafuerte, Manuel Yanez, Wilfredo Amper, Quireco Lejano, Emmanuel
Valmoria, Rolando Jamilla, Nicolas Dalaguan, Balbino Fajardo, Pedro Suarez, Elpidio Estroga, Ruben Pajo,
Jesustody Omisol, Ricardo Aba, Fidel Calio, Saturnino Sesyban, Rudy Laureto, Oscar Lapinig, Felipe
Laurente, Roger Zagado, Soteco Cuenca, Fidel Eslit, Zosimo Omisol, Angel Bernido and Michael Yagotyot.
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632
On the same morning, the strikers filed individual notices of strike (“Kaugalingon nga Declarasyon sa
Pag-Welga”) with the then Ministry of Labor and Employment.
With the failure of conciliation conferences between petitioner and the strikers, INPORT filed a
complaint before the Labor Arbiter for Illegal Strike with prayer for a restraining order/ preliminary
injunction.
On May 7, 1985, the National Labor Relations Commission issued a temporary restraining order.
Thereafter, majority of the strikers returned to work, leaving herein private respondents who continued
their protest.2
Counsel for private respondents filed a manifestation that petitioner required prior screening conducted
by the MLU-FFW before the remaining strikers could be accepted back to work.
Meanwhile, counsel for the Macajalar Labor Union (MLU-FFW) filed a “Motion to Drop Most of the Party
Respondents From the Above Entitled Case.” The 278 employees on whose behalf the motion was filed,
claimed that they were duped or tricked into signing the individual notices of strike. After discovering
this deception and verifying that the strike was staged by a minority of the union officers and members
and without the approval of, or consultation with, majority of the union members, they immediately
withdrew their notice of strike and returned to work.
The petitioner INPORT, not having interposed any objection, the Labor Arbiter, in his decision dated July
23, 1985, granted their prayer to be excluded as respondents in the complaint for illegal strike.
Moreover, petitioner’s complaint was directed against the 31 respondents who did not return to work
and continued with the strike.
For not having complied with the formal requirements in Article 264 of the Labor Code,3 the strike
staged by petitioner’s workers on April 30, 1985 was found by the Labor Arbiter to be
_______________
2 Of the thirty-one remaining strikers, four have already died, leaving the twenty-seven respondents
herein.
3 Now Article 263.
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VOL. 245, JULY 6, 1995
633
illegal.4 The workers who participated in the illegal strike did not, however, lose their employment,
since there was no evidence that they participated in illegal acts. After noting that petitioner accepted
the other striking employees back to work, the Labor Arbiter held that the private respondents should
similarly be allowed to return to work without having to undergo the required screening to be
undertaken by their union (MLU-FFW).
As regards the six private respondents who were union officers, the Labor Arbiter ruled that they could
not have possibly been “duped or tricked” into signing the strike notice for they were active participants
in the conciliation meetings and were thus fully aware of what was going on. Hence, said union officers
should be accepted back to work after seeking reconsideration from herein petitioner.5
The dispositive portion of the decision reads:
“IN VIEW OF THE FOREGOING, it is hereby ordered that the strike undertaken by the officers and
majority union members of Macajalar Labor Union-FFW is ILLEGAL contrary to Article 264 of the Labor
Code, as amended. Our conclusion on the employment status of the illegal strikers is subject to our
discussion above.”6
Both petitioner and private respondents filed motions for reconsideration, which public respondent
NLRC treated as appeals.7
On January 14, 1991, the NLRC affirmed with modification8 the Arbiter’s decision. It held that the
concerted action by the
_______________
4 Decision of Executive Labor Arbiter Ildefonso O. Agbuya, dated July 23, 1985, NLRC RABX Case No. 5-
0405-85. Rollo, p. 57.
5 Decision of the Labor Arbiter, p. 11; Rollo, p. 66.
6 Ibid., p. 66.
7 On May 20, 1987, petitioner filed a Manifestation to the effect that the 32 remaining striking
employees have ceased to be members of the Macajalar Labor Union-FFW, per Certification dated May
15, 1987 by the President of MLU-FFW. Rollo, p. 84.
8 Resolution penned by Presiding Commissioner Musib M. Buat and concurred in by Commissioner Leon
G. Gonzaga, Jr., Commissioner Oscar N. Abella, on leave. Rollo, p. 85.
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634
workers was more of a “protest action” than a strike. Private respondents, including the six union
officers, should also be allowed to work unconditionally to avoid discrimination. However, in view of the
strained relations between the parties, separation pay was awarded in lieu of reinstatement. The
decretal portion of the Resolution reads:
“WHEREFORE, the decision appealed from is Affirmed with modification in accordance with the
foregoing resolution. Complainant INPORT is hereby ordered, in lieu of reinstatement, to pay
respondents the equivalent of twelve (12) months salaries each as separation pay. Complainant is
further ordered to pay respondents two (2) years backwages based on their last salaries, without
qualification or deduction. The appeal of complainant INPORT is Dismissed for lack of merit.”9
Upon petitioner’s motion for reconsideration, public respondent modified the above resolution on
December 12, 1991.10
The Commission ruled that since private respondents were not actually terminated from service, there
was no basis for reinstatement. However, it awarded six months’ salary as separation pay or financial
assistance in the nature of “equitable relief.” The award for backwages was also deleted for lack of
factual and legal basis. In lieu of backwages, compensation equivalent to P1,000.00 was given.
The dispositive portion of the assailed Resolution reads:
“WHEREFORE, the resolution of January 14, 1991 is Modified reducing the award for separation pay to
six (6) months each in favor of respondents, inclusive of lawful benefits as well as those granted under
the CBA, if any, based on the latest salary of respondents, as and by way of financial assistance while the
award for backwages is Deleted and Set Aside. In lieu thereof, respondents are granted compensation
for their sudden loss of employment in the sum of P1,000.00 each. The motion of respondents to
implead PPA as third-party respondent is
_______________
9 Rollo, p. 105.
10 Penned by Presiding Commissioner Musib M. Buat, with Commissioners Oscar N. Abella and Leon G.
Gonzaga, Jr., concurring. Rollo, p. 119.
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VOL. 245, JULY 6, 1995
635
Noted. Except for this modification the rest of the decision sought to be reconsidered shall stand.”11
In the instant petitions for certiorari, petitioner alleges that public respondent Commission committed
grave abuse of discretion in awarding private respondents separation pay and backwages despite the
declaration that the strike was illegal.
On the other hand, private respondents, in their petition, assail the reduction of separation pay and
deletion of backwages by the NLRC as constituting grave abuse of discretion.
They also allege that the Resolution of January 14, 1991 could not be reconsidered after the
unreasonable length of time of eleven months.
Before proceeding with the principal issues raised by the parties, it is necessary to clarify public
respondent’s statements concerning the strike staged by INPORT’s employees.
In its resolution dated January 14, 1991, the NLRC held that the facts prevailing in the case at bench
require a relaxation of the rule that the formal requisites for a declaration of a strike are mandatory.
Furthermore, what the employees engaged in was more of a spontaneous protest action than a
strike.12
Nevertheless, the Commission affirmed the Labor Arbiter’s decision which declared the strike illegal.
A strike, considered as the most effective weapon of labor,13 is defined as any temporary stoppage of
work by the concerted action of employees as a result of an industrial or labor dispute.14 A labor
dispute includes any controversy or matter concerning terms or conditions of employment or the
association or representation of persons in negotiating, fixing, maintaining, changing or arranging the
terms and conditions of employment, regardless of whether or not the disputants stand in the
proximate
_______________
11 Rollo, p. 124.
12 Rollo, pp. 96-98.
13 Bisig ng Manggagawa sa Concrete Aggregates Inc. v. NLRC, G.R. No. 105090, September 16, 1993, 226
SCRA 499; Ilaw at Buklod ng Manggagawa v. NLRC, G.R. No. 91980, June 27, 1991, 198 SCRA 586.
14 Labor Code, Article 212 (o).
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636
relation of employers and employees.15
Private respondents and their co-workers stopped working and held the mass action on April 30, 1985 to
press for their wages and other benefits. What transpired then was clearly a strike, for the cessation of
work by concerted action resulted from a labor dispute.
The complaint before the Labor Arbiter involved the legality of said strike. The Arbiter correctly ruled
that the strike was illegal for failure to comply with the requirements of Article 264 (now Article 263)
paragraphs (c) and (f) of the Labor Code.16
The individual notices of strike filed by the workers did not conform to the notice required by the law to
be filed since they were represented by a union (MLU-FFW) which even had an existing collective
bargaining agreement with INPORT.
Neither did the striking workers observe the strike vote by secret ballot, cooling-off period and reporting
requirements.
As we stated in the case of National Federation of Sugar Workers v. Ovejera,17 the language of the law
leaves no room for doubt that the cooling-off period and the seven-day strike ban
_______________
15 Labor Code, Article 212 (l).

16 Article 264. Strikes, picketing, and lockouts.—
(c) In cases of bargaining deadlocks, the certified or duly recognized bargaining representative may file a
notice of strike x x x with the Ministry at least thirty (30) days before the intended date thereof. In cases
of unfair labor practices, the period of strike shall be shortened to fifteen (15) days; and in the absence
of a duly certified or recognized bargaining representative, the notice of strike may be filed by any
legitimate labor organization in behalf of its members.
xxx xxx xxx
(f) A decision to declare a strike must be approved by at least two-thirds (2/3) of the total union
membership in the bargaining unit concerned obtained by secret ballot in meetings or referenda. x x x In
every case, the union x x x shall furnish the Ministry the results of the voting at least seven (7) days
before the intended strike x x x, subject to the cooling-off period herein provided. (Italics provided)
17 G.R. No. L-59743, May 31, 1982, 114 SCRA 354.
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VOL. 245, JULY 6, 1995
637
after the strike-vote report were intended to be mandatory.18
Article 265 of the Labor Code reads, inter alia:
“(i)t SHALL be unlawful for any labor organization x x x to declare a strike x x x without first having filed
the notice required in the preceding Article or without the necessary strike vote first having been
obtained and reported to the Ministry.” (Emphasis ours)
In explaining the above provision, we said:
“In requiring a strike notice and a cooling-off period, the avowed intent of the law is to provide an
opportunity for mediation and conciliation. It thus directs the MOLE ‘to exert all efforts at mediation and
conciliation to effect a voluntary settlement’ during the cooling-off period. x x x
xxx xxx xxx
The cooling-off period and the 7-day strike ban after the filing of a strike-vote report, as prescribed in
Art. 264 of the Labor Code, are reasonable restrictions and their imposition is essential to attain the
legitimate policy objectives embodied in the law. We hold that they constitute a valid exercise of the
police power of the state.”19
From the foregoing, it is patent that the strike on April 30, 1985 was illegal for failure to comply with the
requirements of the law.
The effects of such illegal strikes, outlined in Article 265 (now Article 264) of the Labor Code, make a
distinction between workers and union officers who participate therein.
A union officer who knowingly participates in an illegal strike and any worker or union officer who
knowingly participates in the commission of illegal acts during a strike may be declared to have lost their
employment status.20 An ordinary striking worker cannot be terminated for mere participation in an
illegal strike. There must be proof that he committed illegal acts during a strike. A union officer, on the
other hand, may be terminated from work when he knowingly participates in an illegal strike,
_______________
18 Ibid., p. 365.
19 Ibid., at p. 367.
20 Labor Code, Article 265 (now Article 264).
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638
and like other workers, when he commits an illegal act during a strike.
In the case at bench, INPORT accepted the majority of the striking workers, including union officers,
back to work. Private respondents were left to continue with the strike after they refused to submit to
the “screening” required by the company.21
The question to be resolved now is what these remaining strikers, considering the circumstances of the
case, are entitled to receive under the law, if any.
Are they entitled, as they claim, to reinstatement or separation pay and backwages?
In his decision, the Labor Arbiter ordered INPORT to reinstate/accept the remaining workers as well as
to accept the remaining union officers after the latter sought reconsideration from INPORT.22
The NLRC on January 14, 1991, modified the above decision by ordering INPORT to pay private
respondents the equivalent of twelve months in salary as separation pay in lieu of reinstatement and
two years’ backwages.23
On reconsideration, public respondent modified its original award and reduced the separation pay to six
months, deleted the award for backwages and instead awarded P1,000.00 as compensation for their
sudden loss of employment.24
Under the law, an employee is entitled to reinstatement and to his full backwages when he is unjustly
dismissed.25
Reinstatement means restoration to a state or condition from which one had been removed or
separated. Reinstatement and backwages are separate and distinct reliefs given to an illegally
_______________
21 The screening was allegedly requested by the Macajalar Labor Union of petitioner INPORT upon the
belief that a competing union, the National Federation of Labor, influenced its members into staging the
strike. INPORT points out that it agreed to the screening requirement because it merely wanted to avoid
further friction with the union (MLU-FFW). Rollo, pp. 120-121.
22 Rollo, p. 66.
23 Rollo, p. 105.
24 Rollo, p. 124.
25 Labor Code, Article 279.
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VOL. 245, JULY 6, 1995
639
dismissed employee.26
Separation pay is awarded when reinstatement is not possible, due, for instance, to strained relations
between employer and employee.
It is also given as a form of financial assistance when a worker is dismissed in cases such as the
installation of labor saving devices, redundancy, retrenchment to prevent losses, closing or cessation of
operation of the establishment, or in case the employee was found to have been suffering from a
disease such that his continued employment is prohibited by law.27
Separation pay is a statutory right defined as the amount that an employee receives at the time of his
severance from the service and is designed to provide the employee with the wherewithal during the
period that he is looking for another employment.28 It is oriented towards the immediate future, the
transitional period the dismissed employee must undergo before locating a replacement job.29
Hence, an employee dismissed for causes other than those cited above is not entitled to separation
pay.30 Well-settled is it that separation pay shall be allowed only in those instances where the
employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral
charac-
_______________
26 Torillo v. Leogardo, G.R. No. 77205, May 27, 1991, 197 SCRA 471; Indophil Acrylic Mfg. Corp. v. NLRC,
G.R. No. 96488, September 27, 1993, 226 SCRA 723.
27 Labor Code, Articles 283 and 284; Lemery Savings and Loan Bank v. NLRC, G.R. No. 96439, January 27,
1992, 205 SCRA 492; Banco Filipino Savings and Mortgage Bank v. NLRC, G.R. No. 82135, August 20,
1990, 188 SCRA 700.
28 A' Prime Security Services Inc. v. NLRC, G.R. No. 93476, March 19, 1993, 220 SCRA 142 citing PLDT v.
NLRC, 164 SCRA 671, Del Castillo v. NLRC, 176 SCRA 229 and Cosmopolitan Funeral Homes v. Maalat,
187 SCRA 108; Aquino v. NLRC, G.R. No. 87653, February 11, 1992, 206 SCRA 118.
29 Escareal v. NLRC, G.R. No. 99359, September 2, 1992, 213 SCRA 472.
30 Articles 279 and 282; Rule 1, Section 7, Book VI, Omnibus Implementing Rules of the Labor Code.
640
640
ter.31
Backwages, on the other hand, is a form of relief that restores the income that was lost by reason of
unlawful dismissal.32
It is clear from the foregoing summary of legal provisions and jurisprudence that there must generally be
unjust or illegal dismissal from work, before reinstatement and backwages may be granted. And in cases
where reinstatement is not possible or when dismissal is due to valid causes, separation pay may be
granted.
Private respondents contend that they were terminated for failure to submit to the controversial
“screening” requirement. Public respondent Commission took the opposite view and held:
“As the evidence on record will show, respondents were not actually terminated from the service. They
were merely made to submit to a screening committee as a prerequisite for readmission to work. While
this condition was found not wholly justified, the fact remains that respondents who are resistant to
such procedure are partly responsible for the delay in their readmission back to work. Thus, We find
justifiable basis in further modifying our resolution of January 14, 1991 in accordance with the equities
of the case.
We shall therefore recall the award for backwages for lack of factual and legal basis. The award for
separation pay shall likewise (be) reasonably reduced. Normally, severance benefit is granted as an
alternative remedy to reinstatement. And since there is no dismissal to speak of, there is no basis for
awarding reinstatement as a legal remedy. In lieu thereof, We shall grant herein respondents separation
pay as and by way of financial assistance in the nature of an ‘equitable relief.’ ”33
We find that private respondents were indeed dismissed when INPORT refused to accept them back to
work after the former refused to submit to the “screening” process.
_______________
31 PLDT v. NLRC, G.R. No. L-80609, Aug. 23, 1988, 164 SCRA 671; Sampaguita Garments Corp. v. NLRC,
G.R. No. 102406, June 17, 1994, 233 SCRA 260; Cathedral School of Technology, G.R. No. 101483,
October 13, 1992, 214 SCRA 551; Baguio Country Club v. NLRC, G.R. No. 102397, September 4, 1992, 213
SCRA 664.
32 Escareal v. NLRC, 213 SCRA 472.
33 Rollo, p. 123.
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641
Applying the law (Article 264 of the Labor Code) which makes a distinction, we differentiate between
the union members and the union officers among private respondents in granting the reliefs prayed for.
Under Article 264 of the Labor Code, a worker merely participating in an illegal strike may not be
terminated from his employment. It is only when he commits illegal acts during a strike that he may be
declared to have lost his employment status. Since there appears no proof that these union members
committed illegal acts during the strike, they cannot be dismissed. The striking union members among
private respondents are thus entitled to reinstatement, there being no just cause for their dismissal.
However, considering that a decade has already lapsed from the time the disputed strike occurred, we
find that to award separation pay in lieu of reinstatement would be more practical and appropriate.
No backwages will be awarded to private respondent-union members as a penalty for their participation
in the illegal strike. Their continued participation in said strike, even after most of their co-workers had
returned to work, can hardly be rewarded by such an award.
The fate of private respondent-union officers is different. Their insistence on unconditional

reinstatement or separation pay and backwages is unwarranted and unjustified. For knowingly
participating in an illegal strike, the law mandates that a union officer may be terminated from
employment.34
Notwithstanding the fact that INPORT previously accepted other union officers and that the screening
required by it was uncalled for, still it cannot be gainsaid that it possessed the right and prerogative to
terminate the union officers from service. The law, in using the word may, grants the employer the
option of declaring a union officer who participated in an illegal strike as having lost his employment.35
_______________
34 Labor Code, Article 264.
35 Article 264.
(a) x x x Any union officer who knowingly participates in an illegal strike and any worker or union officer
who knowingly
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642
Moreover, an illegal strike which, more often than not, brings about unnecessary economic disruption
and chaos in the workplace should not be countenanced by a relaxation of the sanctions prescribed by
law.
The union officers are, therefore, not entitled to any relief. However, the above disquisition is now
considered moot and academic and cannot be effected in view of a manifestation filed by INPORT dated
May 15, 1987.36 In said Manifestation, it attached a Certification by the President of the Macajalar
Labor Union (MLU-FFW) to the effect that the private respondents/ remaining strikers have ceased to be
members of said union. The MLU-FFW had an existing collective bargaining agreement with INPORT
containing a union security clause. Article 1, Section 2 (b) of the CBA provides:
“The corporation shall discharge, dismiss or terminate any employee who may be a member of the
Union but loses his good standing with the Union and or corporation, upon proper notice of such fact
made by the latter; provided, however, x x x after they shall have received the regular appointment as a
condition for his continued employment with the corporation. x x x”37
Since private respondents (union members) are no longer members of the MLU, they cannot be
reinstated. In lieu of reinstatement, which was a proper remedy before May 1987 when they were
dismissed from the union, we award them separation pay. We find that to award one month salary for
every year of service until 1985, after April of which year they no longer formed part of INPORT’s
productive work force partly through their own fault, is a fair settlement.
_______________
participates in the commission of illegal acts during a strike MAY be declared to have lost his
employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute
sufficient ground for termination of his employment, even if a replacement had been hired by the
employer during such lawful strike.
36 Rollo, p. 84.
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VOL. 245, JULY 6, 1995
643
Finally, there is no merit in INPORT’s statement that a Resolution of the NLRC cannot be modified upon
reconsideration after the lapse of an unreasonable period of time. Under the present circumstances, a
period of eleven months is not an unreasonable length of time. The Resolution of the public respondent
dated January 14, 1991 did not acquire finality in view of the timely filing of a motion for
reconsideration. Hence, the Commission’s modified Resolution issued on December 12, 1991 is valid and
in accordance with law.
In sum, reinstatement and backwages or, if no longer feasible, separation pay, can only be granted if
sufficient bases exist under the law, particularly after a showing of illegal dismissal. However, while the
union members may thus be entitled under the law to be reinstated or to receive separation pay, their
expulsion from the union in accordance with the collective bargaining agreement renders the same
impossible.
The NLRC’s award of separation pay as “equitable relief” and P1,000.00 as compensation should be
deleted, these being incompatible with our findings detailed above.
WHEREFORE, from the foregoing premises, the petition in G.R. No. 103560 (“Gold City Integrated Port
Service, Inc. v. National Labor Relations Commission, et al.”) is GRANTED. One month salary for each
year of service until 1985 is awarded to private respondents who were not union officers as separation
pay. The petition in G.R. No. 103599 (“Adelo Ebuna, et al. v. National Labor Relations Commission, et
al.”) is DISMISSED for lack of merit. No costs.
SO ORDERED
Feliciano (Chairman), Melo, Vitug and Francisco, JJ., concur.
Petition in G.R. No. 103560 granted. Petition in G.R. No. 103599 dismissed.
Note.—Where reinstatement is not a viable remedy, the employer will instead be ordered to pay
separation pay. (Kingsize
644
644

Lopez, Jr. vs. National Labor Relations Commission
Manufacturing Corporation vs. National Labor Relations Commission, 238 SCRA 349 [1994])
———o0o——— Gold City Integrated Port Service, Inc. vs. National Labor Relations Commission, 245
SCRA 627, G.R. No. 103560, G.R. No. 103599 July 6, 1995
95
Lapanday Workers Union vs. National LaborRelations Commission
G.R. Nos. 95494-97. September 7, 1995.*
LAPANDAY WORKERS UNION, ARQUILAO BACOLOD, JOSE ERAD, FERNANDO HERNANDO, EDDIE
ESTRELLA, CIRILO DAYAG, EDUARDO POQUITA, CARLITO PEPITO, RENE ARAO, JUANITO GAHUM,
EMILIANO MAGNO, PERLITO LISONDRA, GREGORIO ALBARAN, ABRAHAM BAYLON, DIONESIO TRUCIO,
TOMAS BASCO AND ROSARIO SINDAY, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION AND
LAPANDAY AGRICULTURAL & DEVELOPMENT CORPORATION, respondents.
LAPANDAY WORKERS UNION, ARQUILAO BACOLOD, ET AL., petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION AND CADECO AGRO DEVELOPMENT PHILS., INC., respondents.
LAPANDAY WORKERS UNION, ARQUILAO BACOLOD, ET AL., petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION AND LAPANDAY AGRICULTURAL & DEVELOPMENT CORPORATION, respondents.
_______________
* SECOND DIVISION.
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96
Lapanday Workers Union vs. National Labor Relations Commission
LAPANDAY WORKERS UNION, TOMAS N. BASCO, ET AL., petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION AND LAPANDAY AGRICULTURAL & DEVELOPMENT CORPORATION, respondents.
Labor Law; Strikes; Strike, Defined; Our laws regulate the exercise of strikes within reasons by
balancing the interests of labor and management together with the overarching public interest.—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 the 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, strikes 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.
Same; Same; Among the limitations on the exercise of the right of strike are the procedural steps to
be followed before staging a strike, which steps are mandatory in character.—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. They provide for the procedural steps to be followed before staging a
strike—filing of notice of strike, taking of strike vote, and reporting of the strike vote result to the
Department of Labor and Employment. In National Federation of Sugar Workers (NFSW) v. Overseas,
et al., we ruled that these steps are mandatory in character.
Same; Same; Strike is a weapon that can either breathe life to or destroy the union and its members in
their struggle with management for a more equitable due of their labors—the decision to wield the
weapon of strike must, therefore, rest on a rational basis.—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 that 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 in their struggle with management for a more equitable due of their
labors. The decision to wield the weapon of strike must, therefore, rest on a rational
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97
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, however, be antithetical to the
public welfare. Thus, our laws require the decision to strike to be the consensus of the majority for
while the majority is not infallible, still, it is the best hedge against haste and error. In addition, a
majority vote assures the union it will go to war against management with the strength derived from
unity and hence, with better chance to succeed.
Same; Same; Illegal Strikes; The penalty of dismissal for participating in an illegal strike is limited only
to the leaders.—We affirm the decision of the public respondent limiting the penalty of dismissal only
to the leaders of the illegal strike, especially the officers of the union who served as its major players.
They cannot claim good faith to exculpate themselves. They admitted knowledge of the law on strike,
including its procedure. They cannot violate the law which ironically was cast to promote their
interest.
Same; Same; Same; Part of our benign consideration for labor is the policy of reinstating rank-and-file
workers who were merely misled in supporting illegal strikes—but they should not be compensated
for services skipped during the illegal strike.—We, likewise, agree with the public respondent that the
union members who were merely instigated to participate in the illegal strike should be treated
differently from their leaders. Part of our benign consideration for labor is the policy of reinstating
rank-and-file workers who were merely misled in supporting illegal strikes. Nonetheless, these
reinstated workers shall not be entitled to backwages as they should not be compensated for services
skipped during the illegal strike.
Florante E. Garcia for petitioners.
J.V. Yap Law Office for private respondents.
PUNO, J. :
Petitioner Lapanday Agricultural Workers’ Union (Union for brevity) and petitioners-workers of
Lapanday Agricultural and Development Corporation and CADECO Agro Development Phil-
98
98
ippines, Inc., seek to reverse the consolidated Decision, dated August 29, 1990,1 rendered by public
respondent National Labor Relations Commission, declaring their strike illegal and ordering the dismissal
of their leaders.
The background of the case:
Private respondents are sister companies engaged in the production of bananas. Their agricultural
establishments are located in Davao City.
On the other hand, petitioner Lapanday Workers’ Union (Union) is the duly certified bargaining agent of
the rank and file employees of private respondents. The Union is affiliated with the KMU-ANGLO. The
other petitioners are all members of the Union.
The records show that petitioner Union has a collective bargaining agreement with private respondents,
covering the period from December 5, 1985 to November 30, 1988. A few months before the expiration
of their CBA, private respondents initiated certain management policies which disrupted the
relationship of the parties.
First, on August 1, 1988, private respondents contracted Philippine Eagle Protectors and Security
Agency, Inc., to provide security services for their business premises located in Lapanday, Bandug,
Callawa, Davao City, and Guising, Davao Del Sur. Their contract also called for the protection of the lives
and limbs of private respondents’ officers, employees and guests within company premises. The Union
branded the security guards posted within the company premises as private respondents’ “goons” and
“special forces.” It also accused the guards of intimidating and harassing their members.
Second, private respondents conducted seminars on Human Development and Industrial Relations
(HDIR) for their managerial and supervisory employees and, later, the rank-and-filers, to promote their
social education and economic growth. Among the topics discussed in the seminar were the mission
statement of the
_______________
1 In Case Nos. RAB-11-09-00612-88, RAB-11-09-00613-88, RAB-11-12-00779-88 and RAB-12-00780-88,

affirming the decision of Labor Arbiter Antonio Villanueva, dated December 12, 1988.
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99
company, corporate values, and the Philippine political spectrum. The Union claimed that the module on
the Philippine political spectrum lumped the ANGLO (Alliance of Nationalist and Genuine Labor
Organization), with other outlawed labor organizations such as the National Democratic Front or other
leftist groups.
These issues were discussed during a labor-management meeting held on August 2, 1988. The labor
group was represented by the Union, through its President, petitioner Arquilao Bacolod, and its legal
counsel. After private respondents explained the issues, the Union agreed to allow its members to
attend the HDIR seminar for the rank-and-filers. Nevertheless, on August 19 and 20, the Union directed
its members not to attend the seminars scheduled on said dates. Earlier on, or on August 6, 1988, the
Union, led by petitioners Arquilao Bacolod and Rene Arao, picketed the premises of the Philippine Eagle
Protectors to show their displeasure on the hiring of the guards.
Worse still, the Union filed on August 25, 1988, a Notice of Strike with the National Conciliation and
Mediation Board (NCMB). It accused the company of unfair labor practices consisting of coercion of
employees, intimidation of union members and union-busting.2 These were the same issues raised by
the Union during the August 2, 1988 labor-management meeting.
On August 29, 1988, the NCMB called a conciliation conference. The conference yielded the following
agreement:
(1) Union officers, including the officials of KMU-ANGLO, and the Executive Director of the NCMB would
attend the HDIR seminar on September 5, 1988; and
(2) A committee shall convene on September 10, 1988, to establish guidelines governing the guards.
The Union officials did attend the September 5, 1988 seminar. While they no longer objected to the
continuation of the seminar, they reiterated their demand for the deletion of the discussion pertaining
to the KMU-ANGLO.
_______________
2 Annex “C” of Petition, Rollo, p. 94.
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100
With the apparent settlement of their differences, private respondents notified the NCMB that there
were no more bases for the notice of strike.
An unfortunate event broke the peace of the parties. On September 8, 1988, Danilo Martinez, a member
of the Board of Directors of the Union, was gunned down in his house in the presence of his wife and
children. The gunman was later identified as Eledio Samson, an alleged member of the new security
forces of private respondents.
On September 9, 1988 , the day after the killing, most of the members of the Union refused to report for
work. They returned to work the following day but they did not comply with the “quota system”
adopted by the management to bolster production output. Allegedly, the Union instructed the workers
to reduce their production to thirty per cent (30%). Private respondents charged the Union with
economic sabotage through slowdown.
On September 14, 1988, private respondents filed separate charges against the Union and its members
for illegal strike, unfair labor practice and damages, with prayer for injunction. These cases were
docketed as Case Nos. RAB-11-09-00612-888 and RAB No. 11-09-00613-88 before Labor Arbiter Antonio
Villanueva.
On September 17, 1988, petitioners skipped work to pay their last respect to the slain Danilo Martinez
who was laid to rest. Again, on September 23, 1988, petitioners did not report for work. Instead, they
proceeded to private respondents’ office at Lanang, carrying placards and posters which called for the
removal of the security guards, the ouster of certain management officials, and the approval of their
mass leave application. Their mass action did not succeed.
In a last ditch effort to settle the deteriorating dispute between the parties, City Mayor Rodrigo Duterte
intervened. Dialogues were held on September 27 and 29, 1988 at the City Mayor’s Office. Again, the
dialogues proved fruitless as private respondents refused to withdraw the cases they earlier filed with
public respondent.
On October 3, 1988, a strike vote was conducted among the members of the Union and those in favor of
the strike won overwhelming support from the workers. The result of the strike
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101
vote was then submitted to the NCMB on October 10, 1988. Two days later, or on October 12, 1988, the
Union struck.
On the bases of the foregoing facts, Labor Arbiter Antonio Villanueva ruled that the Union staged an
illegal strike. The dispositive portion of the Decision, dated December 12, 1988, states:
“CONFORMABLY WITH ALL THE FOREGOING, judgment is hereby rendered:
a) Declaring the strike staged by respondents (petitioners) to be illegal;
b) Declaring the employees listed as respondents in the complaint and those mentioned in page 21 to
have lost their employment status with complainants Lapanday Agricultural and Development
Corporation and Cadeco Agro Development Philippines, Inc.; and
c) Ordering respondents (petitioners in this case) to desist from further committing an illegal strike.”
Petitioners appealed the Villanueva decision to public respondent NLRC.
It also appears that on December 6, 1988, or before the promulgation of the decision of Arbiter
Villanueva, the Union, together with Tomas Basco and 25 other workers, filed a complaint for unfair
labor practice and illegal suspension against LADECO. The case was docketed as Case No. RAB-11-12-
00780-88. On even date, another complaint for unfair labor practice and illegal dismissal was filed by the
Union, together with Arquilao Bacolod and 58 other complainants. This was docketed as Case No. RAB-
11-12-00779-88. These two (2) cases were heard by Labor Arbiter Newton Sancho.
Before the NLRC could resolve the appeal taken on the Villanueva decision in Case Nos. RAB-11-09-
00612-88 and RAB-11-09-00613-88, Labor Arbiter Sancho rendered a decision in the two (2) cases filed
by the Union against private respondents LADECO and CADECO (Case Nos. RAB-11-12-00779-88 and
RAB-11-12-00780-88). The Sancho decision, dated October 18, 1989, declared LADECO and CADECO
guilty of unfair labor practices and illegal dismissal and ordered the reinstatement of the dismissed
employees of private respondents, with backwages and other benefits. Significantly, the Sancho decision
considered
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the refusal of the workers to report for work on September 9, 1988, justified by the circumstance then
prevailing, the killing of Danilo Martinez on September 8, 1988.
Private respondents appealed the Sancho decision, claiming, among others, that labor arbiter Sancho
erred in passing upon the legality of the strike staged by petitioners since said issue had already been
passed upon by the Regional Arbitration Branch and was still on appeal before the NLRC.
Considering that the four (4) cases before it arose from the same set of facts and involved substantially
the same issues, the NLRC rendered a consolidated decision, promulgated on August 29, 1990,
upholding the Villanueva decision in Case Nos. RAB-11-09-00612-88 and RAB-11-09-00613-88. The
dispositive portion of the assailed NLRC decision states:
“WHEREFORE, premises considered, a new judgment is entered in the four consolidated and above-
captioned cases as follows:
“1. The strike staged by the Lapanday Agricultural Workers Union is hereby declared to be (sic) illegal;
“2. As a consequence thereof, the following employees-union officers are declared to have lost their
employment status with Lapanday Agricultural and Development Corporation and CADECO Agro
Development Philippines, to wit: Arquilao Bacolod, Jose Erad, Fernando Hernando, Eldie Estrella, Cerelo
Dayag, Lucino Magadan, Rene Arao, Eduardo Poquita, Juanito Gahum, Emiliano Magno, Perlito Lisondra,
Gregorio Albaron, Abraham Baylon, Dionosio Trocio, Tomas Basco and Rosario Sinday;
“3. However, the individual respondents (union members), being merely rank-and-file employees and
who merely joined the strike declared as illegal, are ordered reinstated but without backwages, the
period they were out of work is deemed the penalty for the illegal strike they staged;
“4. Ordering Lapanday Workers’ Union, its leaders and members, to desist from further committing an
illegal strike; and
“5. Dismissing the complaint for unfair labor practice, illegal suspension and illegal dismissal filed by the
Lapanday Workers Union (LWU)-ANGLO and its members, for lack of merit.
“SO ORDERED.”
Petitioners filed a motion for reconsideration. It did not prosper. Hence, the petition.
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103
Petitioners now claim that public respondent NLRC gravely abused its discretion in: a) declaring that
their activities, from September 9, 1988 to October 12, 1988, were strike activities; and b) declaring that
the strike staged on October 12, 1988 was illegal.
The critical issue is the legality of the strike held on October 12, 1988. The applicable laws are Articles
263 and 264 of the Labor Code, as amended by E.O. No. 111, dated December 24, 1986.3
Paragraphs (c) and (f) of Article 263 of the Labor Code, as amended by E.O. 111, provides:
“(c) In cases of bargaining deadlocks, the duly certified or recognized bargaining agent may file a notice
of strike or the employer may file a notice of lockout with the Ministry at least 30 days before the
intended date thereof. In cases of unfair labor practice, the notice shall be 15 days and in the absence of
a duly certified or recognized bargaining agent, the notice of strike may be filed by any legitimate labor
organization in behalf of its members. However, in case of dismissal from employment of union officers
duly elected in accordance with the union constitution and by-laws, which may constitute union busting
where the existence of the union is threatened, the 15-day cooling-off period shall not apply and the
union may take action immediately.
xxx xxx xxx
“(f) A decision to declare a strike must be approved by a majority of the total union membership in the
bargaining unit concerned, obtained by secret ballot in meetings or referenda called for that purpose. A
decision to declare a lockout must be approved by a majority of the board of directors of the
corporation or association or of the partners in a partnership, obtained by secret ballot in a meeting
called for that purpose. The decision shall be valid for the duration of the dispute based on substantially
the same grounds considered when the strike or lockout vote was taken. The Ministry may, at its own
initiative or upon the request of any affected party, supervise the conduct of secret balloting. In every
case, the union or the employer shall furnish the Ministry the results of the voting at least seven (7) days
before the intended str ike or lockout subject to the cooling-off period herein provided.
_______________
3 The complaint was filed before the effectivity of RA 6715 on March 21, 1989.
104
104

Article 264 of the same Code reads:
“Art. 264. Prohibited activities.—(a) No labor organization or employer shall declare a strike or lockout
without first having bargained collectively in accordance with Title VII of this Book or without first having
filed the notice required in the preceding Article or without the necessary strike or lockout vote first
having been obtained and reported to the Ministry.
xxx xxx xxx
“. . . Any union officer who knowingly participates in an illegal strike and any worker or union officer
who knowingly participates in the commission of illegal acts during a strike may be declared to have lost
his employment status: Provided that mere participation of a worker in a lawful strike shall not
constitute sufficient ground for termination of his employment, even if a replacement had been hired by
the employer during such lawful strike.” (emphasis ours)
A strike is “any temporary stoppage of work by the concerted action of employees as a result of an
industrial or labor dispute.”4 It is the most preeminent of the 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, strikes 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.
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. They provide for the procedural steps to be followed
before staging a strike—filing of notice of strike, taking of strike vote, and reporting of the strike vote
result to the Department of Labor and Employment. In National Federation of Sugar Workers (NFSW) vs.
Overseas, et al.,5 we ruled that these steps are mandatory in character, thus:
_______________
4 Article 212(1) of the Labor Code, as amended.
5 G.R. No. 59743, May 31, 1982, 114 SCRA 354, 365.
105
105
“If only the filing of the strike notice and the strike-vote report would be deemed mandatory, but not
the waiting periods so specifically and emphatically prescribed by law, the purposes (hereafter
discussed) for which the filing of the strike notice and strike-vote report is required cannot be
achieved . . .
xxx xxx xxx
“So too, the 7-day strike-vote report is not without a purpose. As pointed out by the Solicitor General—
‘. . . The submission of the report gives assurance that a strike vote has been taken and that, if the
report concerning it is false, the majority of the members can take appropriate remedy before it is too
late.’
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 that 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 in their struggle with management for a more
equitable due of their labors. The decision 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, however, be antithetical to the
public welfare. Thus, our laws require the decision to strike to be the consensus of the majority for while
the majority is not infallible, still, it is the best hedge against haste and error. In addition, a majority vote
assures the union it will go to war against management with the strength derived from unity and hence,
with better chance to succeed. In Batangas Laguna Tayabas Bus Company vs. NLRC,6 we held:
xxx xxx xxx
“The right to strike is one of the rights recognized and guaranteed by the Constitution as an instrument
of labor for its protection against
_______________
6 G.R. No. 101858, August 21, 1992, 212 SCRA 792, 802.
106
106
exploitation by management. By virtue of this right, the workers are able to press their demands for
better terms of employment with more energy and persuasiveness, poising the threat to strike as their
reaction to employer’s intransigence. The strike is indeed a powerful weapon of the working class. But
precisely because of this, it must be handled carefully, like a sensitive explosive, lest it blow up in the
workers’ own hands. Thus, it must be declared only after the most thoughtful consultation among them,
conducted in the only way allowed, that is, peacefully, and in every case conformably to reasonable
regulation. Any violation of the legal requirements and strictures, x x x, will render the strike illegal, to
the detriment of the very workers it is supposed to protect.
“Every war must be lawfully waged. A labor dispute demands no less observance of the rules, for the
benefit of all concerned.”
Applying the law to the case at bar, we rule that strike conducted by the union on October 12, 1988 is
plainly illegal as it was held within the seven (7) day waiting period provided for by paragraph (f), Article
263 of the Labor Code, as amended. The haste in holding the strike prevented the Department of Labor
and Employment from verifying whether it carried the approval of the majority of the union members. It
set to naught an important policy consideration of our law on strike. Considering this finding, we need
not exhaustively rule on the legality of the work stoppage conducted by the union and some of their
members on September 9 and 23, 1988. Suffice to state, that the ruling of the public respondent on the
matter is supported by substantial evidence.
We affirm the decision of the public respondent limiting the penalty of dismissal only to the leaders of
the illegal strike, especially the officers of the union who served as its major players. They cannot claim
good faith to exculpate themselves. They admitted knowledge of the law on strike, including its
procedure. They cannot violate the law which ironically was cast to promote their interest.
We, likewise, agree with the public respondent that the union members who were merely instigated to
participate in the illegal strike should be treated differently from their leaders. Part of our benign
consideration for labor is the policy of reinstating rank-and-file workers who were merely misled in
supporting illegal
107
107
People vs. Dulatre, Jr.
strikes. Nonetheless, these reinstated workers shall not be entitled to backwages as they should not be
compensated for services skipped during the illegal strike.
IN VIEW WHEREOF, the petition is dismissed for failure to show grave abuse of discretion on the part of
the public respondent. Costs against the petitioners.
SO ORDERED.
Narvasa (C.J., Chairman), Regalado, Mendoza and Francisco, JJ., concur.
Petition dismissed.
Notes.—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 illegal. (Federation of Free Workers vs.
Inciong, 208 SCRA 157 [1992])
Strike is a weapon used by labor in protecting the rights of employees to improve the terms and
conditions of their employment. (Bisig ng Manggagawa sa Concrete Aggregates, Inc. vs. National Labor
——o0o—— Lapanday Workers Union vs. National LaborRelations Commission, 248 SCRA 95, G.R. Nos.
95494-97 September 7, 1995
VOL. 198, JUNE 27, 1991
585
Echeche vs. Court of Appeals
586
Ilaw at Buklod ng Manggagawa vs NLRC
G.R. No. 91980. June 27, 1991.*
ILAW AT BUKLOD NG MANGGAGAWA (IBM), petitioner, vs. NATIONAL LABOR RELATIONS

COMMISSION (First Division), HON. CARMEN TALUSAN and SAN MIGUEL CORPORATION, respondents.
Labor Law; Labor Organizations; Rights of the employees to engage in concerted activities in order to
attain their legitimate objectives guaranteed by the Labor Code.––Among the rights guaranteed to
employees by the Labor Code is that of engaging in concerted activities in order to attain their
legitimate objectives. Article 263 of the Labor Code, as amended, declares that in line with “the policy
of the State to encourage free trade unionism and free collective bargaining, x x (w)orkers shall have
the right to engage in concerted activities for purposes of collective bargaining or for their mutual
benefit and protection.” A similar right to engage in concerted activities for mutual benefit and
protection is tacitly and traditionally recognized in respect of employers.
Same; Same; Same; More common of these concerted activities as far as employees are concerned are
strikes, picketings and boycotts.––The more common of these concerted activities as far as employees
are concerned are: strikes––the temporary stoppage of work as a result of an industrial or labor
dispute; picketing––the marching to and fro at the employer’s premises, usually accompanied by the
display of placards and other signs making known the facts involved in a labor dispute; and boycotts–
–the concerted refusal to patronize an employer’s goods or services and to persuade others to a like
refusal. On the other hand, the counterpart activity that management may licitly undertake is the
lockout––the temporary refusal to furnish work on account of a labor dispute. In this connection, the
same Article 263 provides that the “right of legitimate labor organizations to strike and picket, and of
employer to lockout, consistent with the national interest, shall continue to be recognized and
respected.” The legality of these activities is usually dependent on the legality of the purposes sought
to be attained and the means employed therefor.
Same; Same; Same; Same; The law or contract may however forbids or restricts these joint or
coordinated activities.––It goes with-
_______________
* FIRST DIVISION.
587
VOL. 198, JUNE 27, 1991
587
out saying that these joint or coordinated activities may be forbidden or restricted by law or contract.
In the particular instance of “distortions of the wage structure within an establishment” resulting
from “the application of any prescribed wage increase by virtue of a law or wage order,” Section 3 of
Republic Act No. 6727 prescribes a specific, detailed and comprehensive procedure for the correction
thereof, thereby implicitly excluding strikes or lockouts or other concerted activities as modes of
settlement of the issue.
Same; Remedial Law; Injunctions; Requisites before a restraining order or injunction may be issued
ex-parte.––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, in 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 committed charged with the duty to protect
complainant’s property;” b) reception at the hearing of “testimony of witnesses, with opportunity for
cross-examination, in support of the allegations of a complaint made under oath,” as well as
“testimony in opposition thereto, if offered x x;” c) “a finding of fact by the Commission, to the effect:
(1) That prohibited or unlawful acts have been threatened and will be committed and will be
continued unless restrained, but no injunction or temporary restraining order shall be issued on
account of any threat, prohibited or unlawful act, 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 follow; (3) That as to each item of relief to be granted, greater injury will
be inflicted upon complainant by the denial of relief than will be inflicted upon defendants 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.”
Same; Same; Same; Condition before a temporary restraining order may be issued ex-parte.––
However, a temporary restraining order may be issued ex parte under the following conditions: a) the
complainant “shall also allege that, unless a temporary restraining order shall be issued without
notice, a substantial and irreparable injury to complainant’s property will be unavoidable;” b) there is
“testimony under oath, sufficient, if sustained, to justify the Commis-
588
588
sion 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 enjoined for any loss, expense or damage caused by the improvident or erroneous
issuance 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 the granting of any injunctive
relief sought in the same proceeding and subsequently denied by the Commission;” and d) the
“temporary restraining order shall be effective for no longer than twenty (20) days and shall become
void at the expiration of said twenty (20) days.”
Same; Same; Same; Reception of evidence for the application of a writ of injunction may be delegated
by the commission to any of its Labor Arbiters.––The reception of evidence “for the application of a
writ of injunction may be delegated by the Commission to any of its Labor Arbiters who shall conduct
such hearings in such places as he may determine to be accessible to the parties and their witnesses
and shall submit thereafter his recommendation to the Commission.”
Same; Same; Same; A temporary restraining order had a lifetime of only twenty (20) days and become
void ipso facto at the expiration of that period.––In any event, the temporary restraining order had a
lifetime of only twenty (20) days and became void ipso facto at the expiration of that period.
PETITION for review of a resolution of the National Labor Relations Commission.
Banzuela, Flores, Miralles, Raneses, Sy, Taquio & Associates for petitioner.
Jardeleza Law Offices for private respondents.
NARVASA, J.:
The controversy at bar had its origin in the “wage distortions” affecting the employees of respondent
San Miguel Corporation allegedly caused by Republic Act No. 6727, otherwise known as the Wage
Rationalization Act.
Upon the effectivity of the Act on June 5, 1989, the union known as “Ilaw at Buklod Ng Manggagawa
(IBM)”––said to represent 4,500 employees of San Miguel Corporation, more or
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VOL. 198, JUNE 27, 1991
589
less, “working at the various plants, offices, and warehouses located at the National Capital Region”––
presented to the company a “demand” for correction of the “significant distortion in x x (the workers’)
wages.” In that “demand,” the Union explicitly invoked Section 4 (d) of RA 6727 which reads as follows:
“x x x x x
“(d) x x x x x Where the application of the increases in the wage rates under this Section results in
distortions as defined under existing laws in the wage structure within an establishment and gives rise to
a dispute therein, such dispute shall first be settled voluntarily between the parties and in the event of a
deadlock, the same shall be finally resolved through compulsory arbitration by the regional branches of
the National Labor Relations Commission (NLRC) having jurisdiction over the workplace.
It shall be mandatory for the NLRC to conduct continuous hearings and decide any dispute arising under
this Section within twenty (20) calendar days from the time said dispute is formally submitted to it for
arbitration. The pendency of a dispute arising from a wage distortion shall not in any way delay the
applicability of the increase in the wage rates prescribed under this Section.”
But the Union claims that that “demand was ignored:1
“The x x COMPANY ignored said demand by offering a measly across-the-board wage increase of P7.00
per day, per employee, as against the proposal of the UNION of P25.00 per day, per employee. Later,
the UNION reduced its proposal to P15.00 per day, per employee by way of amicable settlement.
When the x x COMPANY rejected the reduced proposal of the UNION the members thereof, on their
own accord, refused to render overtime services, most especially at the Beer Bottling Plants at Polo,
starting October 16, 1989.”
In this connection, the workers involved issues a joint notice reading as follows:2
_______________
1 Rollo, pp. 13: Petition, p. 12.
2 Id., pp. 47-48, 98.
590
590

“SAMA-SAMANG PAHAYAG: KAMING ARAWANG MANGGAGAWA NG POLO BREWERY PAWANG KASAPI

NG ILAW AT BUKLOD NG MANGGAGAWA (IBM) AY NAGKAISANG NAGPASYA NA IPATUPAD MUNA ANG
EIGHT HOURS WORK SHIFT PANSAMANTALA HABANG HINDI IPINATUTUPAD NG SMC MANAGEMENT
ANG TAMANG WAGE DISTORTION.”
The Union’s position (set out in the petition subsequently filed in this Court, infra) was that the workers’
refusal “to work beyond eight (8) hours everyday starting October 16, 1989” as a legitimate means of
compelling SMC to correct “the distortion in their wages brought about by the implementation of the
said laws (R.A. 6640 and R.A. 6727) to newly-hired employees.”3 That decision to observe the “eight
hours work shift” was implemented on October 16, 1989 by “some 800 daily-paid workers at the Polo
Plant’s production line (of San Miguel Corporation [hereafter, simply SMC]), joined by others at
statistical quality control and warehouse, all members of x x IBM x x.”4 There ensued thereby a change
in the work schedule which had been observed by daily-paid workers at the Polo Plant for the past five
(5) years, i.e., “ten (10) hours for the first shift and ten (10) to fourteen (14) hours for the second shift,
from Mondays to Fridays x x; (and on) Saturdays, x x eight (8) hours for both shifts”––a work schedule
which, SMC says, the workers had “welcomed, and encouraged” because the automatic overtime built
into the schedule “gave them a steady source of extra-income,” and pursuant to which it (SMC)
“planned its production targets and budgets.”5
This abandonment of the long-standing schedule of work and the reversion to the eight-hour shift
apparently caused substantial losses to SMC. Its claim is that there ensued “from 16 October 1989 to 30
November 1989 alone x x work disruption and lower efficiency x x (resulting in turn, in) lost production
of 2,004,105 cases of beer x x; that (i)n “money terms, SMC lost P174,657,598 in sales and P48,904,311
in revenues x x (and the) Government lost excise tax revenue of P42 Million, com-
_______________
3 Id., pp. 27-28.
4 Id., pp. 97 et seq.
5 Id., pp. 96-97.
591
VOL. 198, JUNE 27, 1991
591
puted at the rate of P21 per case collectible at the plant.”6 These losses occurred despite such measures
taken by SMC as organizing “a third shift composed of regular employees and some contractuals,” and
appeals “to the Union members, through letters and memoranda and dialogues with their plant
delegates and shop stewards,” to adhere to the existing work schedule.
Thereafter, on October 18, 1989, SMC filed with the Arbitration Branch of the National Labor Relations
Commission a complaint against the Union and its members “to declare the strike or slowdown illegal”
and to terminate the employment of the union officers and shop stewards. The complaint was docketed
as NLRC-NCR Case No. 00-10-04917.7
Then on December 8, 1989, on the claim that its action in the Arbitration Branch had as yet “yielded no
relief,” SMC filed another complaint against the Union and members thereof, this time directly with the
National Labor Relations Commission, “to enjoin and restrain illegal slowdown and for damages, with
prayer for the issuance of a cease-and-desist and temporary restraining order.”8 Before acting on the
application for restraining order, the NLRC’s First Division first directed SMC to present evidence in
support of the application before a commissioner, Labor Arbiter Carmen Talusan. On December 19,
1989, said First Division promulgated a Resolution on the basis of “the allegations of the petitioner
(SMC) and the evidence adduced ex parte in support of their petition.” The Resolution––
1) authorized the issuance of “a Temporary Restraining Order for a period of twenty (20) days xx upon x
x a cash or surety bond in the amount of P50,000.00 x x DIRECTING the respondents to CEASE and
DESIST from further committing the acts complained about particularly their not complying with the
work schedule established and implemented by the company through the years or at the least since
1984, which schedule appears to have been adhered to by the respondents until October 16, 1989 x x;”
2) “set the incident on injunction for hearing before Labor Arbiter Carmen Talusan on 27 December
1989 x x.”
_______________
6 Id., p. 98.
7 Id., p. 49.
8 Id., pp. 42 et seq.: Annex B of petition.
592
592
The Labor Arbiter accordingly scheduled the incident for hearing on various dates: December 27 and 29,
1989, January 8, 11, 16, and 19, 1990. The first two settings were cancelled on account of the
unavailability of the Union’s counsel. The hearing on January 8, 1990 was postponed also at the instance
of said counsel who declared that the Union refused to recognize the NLRC’s jurisdiction. The hearings
set on January 11, 16 and 19, 1990 were taken up with the cross-examination of SMC’s witness on the
basis of his affidavit and supplemental affidavits. The Union thereafter asked the Hearing Officer to
schedule other hearings. SMC objected. The Hearing Officer announced she would submit a report to
the Commission relative to the extension of the temporary restraining order of December 9, 1989,
supra, prayed for by SMC. Here the matter rested until February 14, 1990, when the Union filed the
petition which commenced the special civil action of certiorari and prohibition at bar.9
In its petition, the Union asserted that:
1) the “central issue xx is the application of the Eight-Hour Labor Law xx (i.e.) (m)ay an employer force
an employee to work everyday beyond eight hours a day?”
2. although the work schedule adopted by SMC with built-in “automatic overtime,”10 “tremendously
increased its production of beer at lesser cost,” SMC had been paying its workers “wages far below the
productivity per employee,” and turning a deaf ear to the Union’s demands for wage increases;
3) the NLRC had issued the temporary restraining order of December 19, 1989 “with indecent haste,
based on ex parte evidence of SMC; and such an order had the effect of “forcing the workers to work
beyond eight (8) hours a day, everyday!!”
4) the members of the NLRC had no authority to act as Commissioners because their appointments had
not been confirmed by the Commission on Appointment; and
5) even assuming the contrary, the NLRC, as an essentially appellate body, had no jurisdiction to act on
the plea for injunction in the
______________
9 Id., pp. 34, 106-107.
10 10 hours for the first shift and 10 to 14 hours for the second shift, from Mondays to Fridays, giving
the workers, according to Management, “a steady source of extra-income,” see footnote 4, supra.
593
VOL. 198, JUNE 27, 1991
593
first instance.
The petition thus prayed:
1) for judgment (a) annulling the Resolution of December 19, 1990; (b) declaring mandatory the
confirmation by the Commission on Appointments of the appointments of National Labor Relations
Commissioners; and (c) ordering the removal “from the 201 files of employees any and all memoranda
or disciplinary action issued/imposed to the latter by reason of their refusal to render overtime work;”
and
2) pending such judgment restraining (a) the NLR Commissioners “from discharging their power and
authority under R.A. 6715 prior to their re-appointment and/or confirmation;” as well as (b) Arbiter
Talusan and the Commission from acting on the matter or rendering a decision or issuing a permanent
injunction therein, or otherwise implementing said Resolution of December 19, 1989.
In traverse of the petition, SMC filed a pleading entitled “Comment with Motion to Admit Comment as
Counter-Petition,” in which it contended that:
1) the workers’ abandonment of the regular work schedule and their deliberate and wilful reduction of
the Polo plant’s production efficiency is a slowdown, which is an illegal and unprotected concerted
activity;
2) against such a slowdown, the NLRC has jurisdiction to issue injunctive relief in the first instance;
3) indeed, the NLRC has “the positive legal duty and statutory obligation to enjoin the slowdown
complained of and to compel the parties to arbitrate xx, (and) to effectuate the important national
policy of peaceful settlement of labor disputes through arbitration;” accordingly, said NLRC “had no legal
choice but to issue injunction to enforce the reciprocal no lockout-no slowdown and mandatory
arbitration agreement of the parties;” and
4) the NLRC “gravely abused its discretion when it refused to decide the application for injunction within
the twenty day period of its temporary restraining order, in violation of its own rules and the repeated
decisions of this xx Court.”
It is SMC’s submittal that the coordinated reduction by the Union’s members of the work time
theretofore willingly and consistently observed by them, thereby causing financial losses
594
594
to the employer in order to compel it to yield to the demand for correction of “wage distortions,” is an
illegal and “unprotected” activity. It is, SMC argues, contrary to the law and to the collective bargaining
agreement between it and the Union. The argument is correct and will be sustained.
Among the rights guaranteed to employees by the Labor Code is that of engaging in concerted activities
in order to attain their legitimate objectives. Article 263 of the Labor Code, as amended, declares that in
line with “the policy of the State to encourage free trade unionism and free collective bargaining, xx
(w)orkers shall have the right to engage in concerted activities for purposes of collective bargaining or
for their mutual benefit and protection.” A similar right to engage in concerted activities for mutual
benefit and protection is tacitly and traditionally recognized in respect of employers.
The more common of these concerted activities as far as employees are concerned are: strikes––the
temporary stoppage of work as a result of an industrial or labor dispute; picketing––the marching to and
fro at the employer’s premises, usually accompanied by the display of placards and other signs making
known the facts involved in a labor dispute; and boycotts––the concerted refusal to patronize an
employer’s goods or services and to persuade others to a like refusal. On the other hand, the
counterpart activity that management may licitly undertake is the lockout––the temporary refusal to
furnish work on account of a labor dispute. In this connection, the same Article 263 provides that the
“right of legitimate labor organizations to strike and picket and of employer to lockout, consistent with
the national interest, shall continue to be recognized and respected.” The legality of these activities is
usually dependent on the legality of the purposes sought to be attained and the means employed
therefor.
It goes without saying that these joint or coordinated activities may be forbidden or restricted by law or
contract. In the particular instance of “distortions of the wage structure within an establishment”
resulting from “the application of any prescribed wage increase by virtue of a law or wage order,”
Section 3 of Republic Act No. 6727 prescribes a specific, detailed and comprehensive procedure for the
correction thereof, thereby implicitly excluding strikes or lockouts or other concerted ac-
595
VOL. 198, JUNE 27, 1991
595
tivities as modes of settlement of the issue. The provision11 states that
“x x the employer and the union shall negotiate to correct the distortions. Any dispute arising from wage
distortions shall be resolved through the grievance procedure under their collective bargaining
agreement and, if it remains unresolved, through voluntary arbitration. Unless otherwise agreed by the
parties in writing, such dispute shall be decided by the voluntary arbitrator or panel of voluntary
arbitrators within ten (10) calendar days from the time said dispute was referred to voluntary
arbitration.
In cases where there are no collective agreements or recognized labor unions, the employers and
workers shall endeavor to correct such distortions. Any dispute arising therefrom shall be settled
through the National Conciliation and Mediation Board and, if it remains unresolved after ten (10)
calendar days of conciliation, shall be referred to the appropriate branch of the National Labor Relations
Commission (NLRC). It shall be mandatory for the NLRC to conduct continuous hearings and decide the
dispute within twenty (20) calendar days from the time said dispute is submitted for compulsory
arbitration.
The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of
any increase in prescribed wage rates pursuant to the provisions of law or Wage Order.
xxxxx.”
The legislative intent that solution of the problem of wage distortions shall be sought by voluntary
negotiation or abitration, and not by strikes, lockouts, or other concerted activities of the employees or
management, is made clear in the rules implementing RA 6727 issued by the Secretary of Labor and
Employment12 pursuant to the authority granted by Section 13 of the Act.13 Section 16, Chapter I of
these implementing rules, after reiterating the policy that wage distortions be first settled voluntarily by
the parties and eventually by compulsory arbi-
_______________
11 Emphasis supplied; SEE also Sec. 4 (d), RA 6727, quoted at page 1, supra.
12 On July 7, 1989, with effect as of July 1, 1989.
13 “SEC. 13. The Secretary of Labor and Employment shall promulgate the necessary rules and
regulations to implement the provisions of this Act.”
596
596
tration, declares that, “Any issue involving wage distortion shall not be a ground for a strike/lockout.”
Moreover, the collective bargaining agreement between the SMC and the Union, relevant provisions of
which are quoted by the former without the latter’s demurring to the accuracy of the quotation,14 also
prescribes a similar eschewal of strikes or other similar or related concerted activities as a mode of
resolving disputes or controversies, generally, said agreement clearly stating that settlement of “all
disputes, disagreements or controversies of any kind” should be achieved by the stipulated grievance
procedure and ultimately by arbitration. The provisions are as follows:
“Section 1. Any and all disputes, disagreements and controversies of any kind between the COMPANY
and the UNION and/or the workers involving or relating to wages, hours of work, conditions of
employment and/or employer-employee relations arising during the effectivity of this Agreement or any
renewal thereof, shall be settled by arbitration in accordance with the procedure set out in this Article.
No dispute, disagreement or controversy which may be submitted to the grievance procedure in Article
IX shall be presented for arbitration unless all the steps of the grievance procedure are exhausted”
(Article V––Arbitration).
“Section 1. The UNION agrees that there shall be no strikes, walkouts, stoppage or slowdown of work,
boycotts, secondary boycotts, refusal to handle any merchandise, picketing, sit-down strikes of any kind,
sympathetic or general strikes, or any other interference with any of the operations of the COMPANY
during the terms of this agreement” (Article VI).
The Union was thus prohibited to declare and hold a strike or otherwise engage in non-peaceful
concerted activities for the settlement of its controversy with SMC in respect of wage distortions, or for
that matter; any other issue “involving or relating to wages, hours of work, conditions of employment
and/ or employer-employee relations.” The partial strike or concerted refusal by the Union members to
follow the five-year-old work schedule which they had therefore been observing, resorted to as a means
of coercing correction of “wage distortions,”
_____________
14 Rollo, p. 101.
597
VOL. 198, JUNE 27, 1991
597
was therefore forbidden by law and contract and, on this account, illegal.
Awareness by the Union of the proscribed character of its members’ collective activities, is clearly
connoted by its attempt to justify those activities as a means of protesting and obtaining redress against
said members working overtime every day from Monday to Friday (on an average of 12 hours), and
every Saturday (on 8-hour shifts),15 rather than as a measure to bring about rectification of the wage
distortions caused by RA 6727––which was the real cause of its differences with SMC. By concealing the
real cause of their dispute with management (alleged failure of correction of wage distortion), and
trying to make it appear that the controversy involved application of the eight-hour labor law, they
obviously hoped to remove their case from the operation of the rules implementing RA 6727 that “Any
issue involving wage distortion shall not be a ground for a strike/lockout.” The stratagem cannot
succeed.
In the first place, that it was indeed the wage distortion issue that principally motivated the Union’s
partial or limited strike is clear from the facts. The work schedule (with “built-in overtime”) had not been
forced upon the workers; it had been agreed upon between SMC and its workers at the Polo Plant and
indeed, had been religiously followed with mutually beneficial results for the past five (5) years. Hence,
it could not be considered a matter of such great prejudice to the workers as to give rise to a
controversy between them and management. Furthermore, the workers never asked, nor were there
ever any negotiations at their instance, for a change in that work schedule prior to the strike. What
really bothered them, and was in fact the subject of talks between their representatives and
management, was the “wage distortion” question, a fact made even more apparent by the joint notice
circulated by them prior to the strike, i.e., that they would adopt the eight-hour work shift in the
meantime pending correction by management of the wage
________________
15 The Union opens its petition in this case with the statement that the “central issue in the case at bar
is the application of the EightHour Labor Law xx (i.e., may) an employer force an employee to work
everyday beyond eight hours a day?”
598
598
distortion (IPATUPAD MUNA ANG EIGHT HOURS WORK SHIFT PANSAMANTALA HABANG HINDI
IPINATUTUPAD NG SMC MANAGEMENT ANG TAMANG WAGE DISTORTION”).
In the second place, even if there were no such legal prohibition, and even assuming the controversy
really did not involve the wage distortions caused by RA 6727, the concerted activity in question would
still be illicit because contrary to the workers’ explicit contractual commitment “that there shall be no
strikes, walkouts, stoppage or slowdown of work, boycotts, secondary boycotts, refusal to handle any
merchandise, picketing, sitdown strikes of any kind, sympathetic or general strikes, or any other
interference with any of the operations of the COMPANY during the term of xx (their collective
bargaining) agreement.”16
What has just been said makes unnecessary resolution of SMC’s argument that the workers’ concerted
refusal to adhere to the work schedule in force for the last several years, is a slowdown, an inherently
illegal activity essentially illegal even in the absence of a no-strike clause in a collective bargaining
contract, or statute or rule. The Court is in substantial agreement with the petitioner’s concept of a
slowdown as a “strike on the installment plan;” as a wilful reduction in the rate of work by concerted
action of workers for the purpose of restricting the output of the employer, in relation to a labor
dispute; as an activity by which workers, without a complete stoppage of work, retard production or
their performance of duties and functions to compel management to grant their demands.17 The Court
also agrees that such a slowdown is generally condemned as inherently illicit and unjustifiable, because
while the employees “continue to work and remain at their positions and accept the wages paid to
them,” they at the same time “select what part of their allotted tasks they care to perform of their own
volition or refuse openly or secretly, to the employer’s damage, to do other work;” in other words, they
“work on their own terms.”18 But whether or not the workers’ activity in question––_their concerted
adoption of a different work schedule
_____________
16 SEE footnote 14 and related text.
17 Rollo, pp. 109-110.
18 Id., pp. 110-112.
599
VOL. 198, JUNE 27, 1991

599
than that prescribed by management and adhered to for several years___constitutes a slowdown need
not, as already stated, be gone into. Suffice it to say that that activity is contrary to the law, RA 6727,
and the parties’ collective bargaining agreement.
The Union’s claim that the restraining order is void because issued by Commissioners whose
appointments had not been duly confirmed by the Commission on Appointments should be as it is
hereby given short shrift, for, as the Solicitor General points out, it is an admitted fact that the members
of the respondent Commission were actually appointed by the President of the Philippines on
November 18, 1989; there is no evidence whatever in support of the Union’s bare allegation that the
appointments of said members had not been confirmed; and the familiar presumption of regularity in
appointment and in performance of official duty exists in their favor.19
Also untenable is the Union’s other argument that the respondent NLRC Division had no jurisdiction to
issue the temporary restraining order or otherwise grant the preliminary injunction prayed for by SMC
and that, even assuming the contrary, the restraining order had been improperly issued. The Court finds
that the respondent Commission had acted entirely in accord with applicable provisions of the Labor
Code.
Article 254 of the Code provides that “No temporary or permanent injunction or restraining order in any
case involving or growing out of labor disputes shall be issued by any court or other entity, except as
otherwise provided in Articles 218 and 264 x x.” Article 264 lists down specific “prohibited activities”
which may be forbidden or stopped by a restraining order or injunction. Article 218 inter alia
enumerates the powers of the National Labor Relations Commission and lays down the conditions under
which a restraining order or preliminary injunction may issue, and the procedure to be followed in
issuing the same.
Among the powers expressly conferred on the Commission by Article 218 is the power to “enjoin or
restrain any actual or threatened commission of any or all prohibited or unlawful acts or to require the
performance of a particular act in any labor dispute which, if not restrained or performed forthwith,
may
_____________
19 Id., pp. 242-243.
600
600

cause grave or irreparable damage to any party or render ineffectual any decision in favor of such party
xx.”
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, in 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 committed charged with the duty to protect complainant’s property;”
b) reception at the hearing of “testimony of witnesses, with opportunity for cross-examination, in

support of the allegations of a complaint made under oath,” as well as “testimony in opposition thereto,
if offered xx;”
c) “a finding of fact by the Commission, to the effect:
(1) That prohibited or unlawful acts have been threatened and will be committed and will be continued
unless restrained, but no injunction or temporary restraining order shall be issued on account of any
threat, prohibited or unlawful act, 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 complain-ant’s property will follow;
(3) That as to each item of relief to be granted, greater injury will be inflicted upon complainant by the
denial of relief than will be inflicted upon defendants 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 following conditions:
a) the complainant “shall also allege that, unless a temporary restraining order shall be issued without
notice, a substantial and irreparable injury to complainant’s property will be unavoidable;”
b) there is “testimony under oath, sufficient, if sustained, to
601
VOL. 198, JUNE 27, 1991
601
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 enjoined for any loss, expense or damage caused by the
improvident or erroneous issuance 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 the granting of
any injunctive relief sought in the same proceeding and subsequently denied by the Commission;” and
d) the “temporary restraining order shall be effective for no longer than twenty (20) days and shall
become void at the expiration of said twenty (20) days.”
The reception of evidence “for the application of a writ of injunction may be delegated by the
Commission to any of its Labor Arbiters who shall conduct such hearings in such places as he may
determine to be accessible to the parties and their witnesses and shall submit thereafter his
recommendation to the Commission.”
The record reveals that the Commission exercised the power directly and plainly granted to it by sub-
paragraph (e) Article 217 in relation to Article 254 of the Code, and that it faithfully observed the
procedure and complied with the conditions for the exercise of that power prescribed in said sub-
paragraph (e). It acted on SMC’s application for immediate issuance of a temporary restraining order ex
parte on the ground that substantial and irreparable injury to its property would transpire before the
matter could be heard on notice; it, however, first direct SMC Labor Arbiter Carmen Talusan to receive
SMC’s testimonial evidence in support of the application and thereafter submit her recommendation
thereon; it found SMC’s evidence adequate and issued the temporary restraining order upon bond. No
irregularity may thus be imputed to the respondent Commission in the issuance of that order.
In any event, the temporary restraining order had a lifetime of only twenty (20) days and became void
ipso facto at the expiration of that period.
In view of the foregoing factual and legal considerations, all irresistibly leading to the basic conclusion
that the concerted acts of the members of petitioner Union in question are viola-
602
602
tive of the law and their formal agreement with the employer, the latter’s submittal, in its counter-
petition that there was, in the premises, a “legal duty and obligation” on the part of the respondent
Commission “to enjoin the unlawful and prohibited acts and omissions of petitioner IBM and the
workers complained of”20––a proposition with which, it must be said, the Office of the Solicitor General
concurs, asserting that the “failure of the respondent commission to resolve the application for a writ of
injunction is an abuse of discretion especially in the light of the fact that the restraining order it earlier
issued had already expired”21–––must perforce be conceded.
WHEREFORE, the petition is DENIED, the counter-petition is GRANTED, and the case is REMANDED to
the respondent Commission (First Division) with instructions to immediately take such action thereon as
is indicated by and is otherwise in accord with, the findings and conclusions herein set forth. Costs
against petitioner.
IT IS SO ORDERED.
Griño-Aquino and Medialdea, JJ., concur.
Cruz, Jr., No part due to close professional relationship with private respondents counsel.
Gancayco, J., On leave.
Petition denied. Counter-petition granted and case remanded to the Commission (First Division).
Note.––Employees enjoy the right to self-organization and to form and join labor organizations of their
own choosing for the purpose of collective bargaining and to engage in concerted activities for their
mutual aid or protection. (Tropical Hut Employees’ Union-CGW vs. Tropical Hut Food Market Inc., 181
SCRA 173.)
––––o0o–––– Ilaw at Buklod ng Manggagawa vs NLRC, 198 SCRA 586, G.R. No. 91980 June 27, 1991
STRIKES
CONCEPT AND SCOPE
88
Associated Labor Union vs. Borromeo
No. L-26461. November 27, 1968.
ASSOCIATED LABOR UNION, petitioner, vs. JUDGE JOSE C. BORROMEO, and ANTONIO LUA doing
business under the name CEBU HOME & INDUSTRIAL SUPPLY, respondents.
Court of Industrial Relations; Jurisdiction; Labor dispute; Nature; Proximate relation of employer and
employee not necessary.—Section 5 (a) of Republic Act No. 875 vests in the CIR exclusive jurisdiction
over the prevention of any unfair labor practice. For an issue "concerning terms, tenure or conditions
of employment, or concerning the association or representation of persons in negotiating, f ixing,
maintaining, changing, or seeking to arrange terms or conditions of employment" to partake of
_______________
21 Supra; italics supplied.
89

89
the nature of a "labor dispute", it is not necessary that "the disputants stand in the proximate relation
of employer and employee" (Sec. 2[j], Rep. Act 875; PAFLU v. Tan, 99 Phil. 854; Associated Watchmen
& Security Union [PTWO], et al. v. U.S. Lines, et al., 101 Phil. 896).
Same; Injunction in labor disputes; Pre-requisites; Non-compliance therewith is fatal to validity of an

injunction; To apply Section 9 of Republic Act 875, it is not indispensable that the persons involved in
the case be "employees of the same employer;" When a person or association shall be held to be a
person participating or interested in a labor dispute.—In order to apply the provisions of Section 9 of
Republic Act 875, governing the conditions under which "any restraining order" or "temporary or
permanent injunction" may issue in any "case involving or growing out of a labor dispute," it is not
indispensable that the persons involved in the case be "employees of the same employer", although
this is the usual case. Section 9 (Par. [f], Sec. 9, R.A. 875) likewise governs cases involving persons: (1)
"who are engaged in the same industry, trade, craft, or occupation"; or (2) "who x x x have direct or
indirect interests therein" or (3) "who are members of the same or an affiliated organization of
employers or employees"; or (4) "when the case involves any conflicting or competing interests in a
'labor dispute' or 'persons participating or interested' therein. Furthermore, "a person or association
shall be held to be a person participating or interested in a labor dispute if relief is sought against him
or it" and "he or it is engaged in the same industry, trade, craft, or occupation in which dispute occurs,
or has a direct or indirect interest therein, or is a member, officer, of agent of any association
composed in whole or in part of employees or employers engaged in such industry, trade, craft, or
occupation" (Par. [f], sub-pars. 1 and 2, Sec. 9, R.A. 875). The conditions enumerated in Section 9 (d)
of Republic Act 875 are the prerequisites to an injunction in labor disputes. Non-compliance therewith
is, as has been repeatedly held, fatal to the validity of said injunction (Seno v. Mendoza, L-20565, Nov.
29, 1967; PAFLU v. Barot, 99 Phil. 1008; Allied Free Workers Union v. Apostol, 102 Phil. 292).
Labor law; Picketing; Against whom peaceful picketing may be carried on; Case at bar.—Picketing may
be carried on not only against the manufacturer but also against a non-union product sold by one in
unity of interest with the manufacturer who is in the same business for profit (Goldfinger v. Feintuch,
11 N. E. 2d 920). A union may picket a retail store selling goods made in non-union factory between
which and the union there is an industrial dispute, provided there is a unity of interest between the
retailer and the manufacturer (31 Am. Jur. 752). As ruled by the Supreme Court of Pennsylvania:
"Where corporate employer had separate plants in Missouri and Pennsylvania, and labor dispute
existed at Missouri plant, but not at
90
90

the Pennsylvania plant, peacef ul picketing at Pennsylvania plant by members of union representing
employees at Missouri plant was not an unfair labor practice as def ined by Labor Management
Relations Act" (American Brake Shoe Co. v. District Lodge 9 of International Association of Machinists,
94 A. 2d 884). In the case at bar, the ALU introduced evidence to the effect that SUGECO products had
been brought to Cebu Home and were being distributed in the latter, as a means to circumvent,
defeat or minimize the adverse effects of the picketing conducted in the SUGECO plant and offices in
Mandaue and Cebu City respectively by ALU. It is true that respondents averred that said products
were purchased by Cebu Home before the strike was declared against SUGECO and that some of said
products were obtained from SUGECO in other parts of the country; but, even if true, these
circumstances did not place the picketing of the Cebu Home beyond the pale of the aforesaid Section
9 of Republic Act No. 875 because, as distributor of SUGECO products, Cebu Home was engaged in the
same trade as SUGECO. Neither does the claim that some SUGECO products marketed by Cebu Home
had come, not from the Mandaue plant, but from other parts of the Philippines, detract from the
applicability of said provisions, considering that ALU had struck against SUGECO and had announced,
as early as March 1, 1966—or 3 days before it struck—its intent to picket "any place where your
business may be found" and that SUGECO in Cebu is a sister company of SUGECO elsewhere in the
Philippines.
Pleading and practice; Jurisdiction of a court, quasi-judicial, or administrative organ; How determined;
Jurisdiction must exist before evidence can be taken.—The jurisdiction of a court or quasi-judicial or
administrative organ is determined by the issues raised by the parties, not by their success or failure
in proving the allegations in their respective pleadings (E. J. Nell Co. v. Cubacub, L-20842, June 23,
1965; Campos Rueda Corp. v. Bautista, L-18453, Sept. 29, 1962). Reception of proof is not a condition
precedent to the assumption of jurisdiction, for precisely jurisdiction must exist before 'evidence can
be taken, since the authority to receive it is in itself an exercise of jurisdiction. To affect the
jurisdiction of said court, or organ, the main requirement is that the issue raised be a genuine one. In
other words, the question posed must be one that is material to the right of action or which could
affect the result of the dispute or controversy (Campos Rueda Corporation v. Bautista, supra).
ORIGINAL ACTION in the Supreme Court. Certiorari and prohibition with preliminary injunction.
Seno, Mendoza, Ruiz & Associates for petitioner.
Diores & Escareal Law Office for respondents.
91
91
CONCEPCION, C.J.:
Original action for certiorari and prohibition, with preliminary injunction, to annul writs of preliminary
injunction issued in Case No. R-9414 of the Court of First In-stance of Cebu, entitled "Cebu Home and
Industrial Supply and Antonio Lua vs. Associated Labor Union", and to restrain the Honorable Jose C.
Borromeo, as Judge of that Court, from hearing said case.
Petitioner herein, Associated Labor Union—hereinafter referred to as ALU—is a duly registered labor
organization. Among the members thereof are employees of Superior Gas and Equipment Company 01
Cebu, Inc.—hereinafter referred to as SUGECO—a domestic corporation with office?. at Juan Luna
Street, Cebu City, and a factory plant in Basak, Mandaue, province of Cebu. On January 1, 1965, ALU and
SUGECO entered into a collective bargaining contract, effective up to January 1, 1966. Negotiations for
the renewal of the contract between ALU and SUGECO were begun prior to the date last mentioned.
While said negotiations were going on, late in February, 1966, twelve (12) SUGECO employees resigned
from ALU. Thereupon, the negotiations stopped. On March 1, 1966, ALU wrote SUGECO requesting that
the twelve (12) resigned employees be not allowed to report for work unless they produced a clearance
from ALU;1 but this request was immediately rejected by SUGECO, upon the ground that it would cause
irreparable injury, that the bargaining contract had lapsed already, and that SUGECO could no longer
demand said clearance from its employees. SUGECO intimated, however, that, should the twelve (12)
men rejoin ALU, negotiations "for the renewal of the collective bargaining contract" could be resumed.
On the same date, ALU wrote SUGECO charging that the latter was bargaining in bad faith and that its
supervisors had campaigned for the resignation of ALU members, as well as serving notice that, unless
these unfair labor practice acts were stopped immediately and a collective bargaining contract between
SUGECO and ALU
________________
1 Said clearance was, presumably, required by the collective bargaining contract.
92
92
forthwith entered into, the latter would declare a strike and establish the corresponding picket lines "in
any place where your business may be found." Counsel for SUGECO replied to the ALU, on March 3,
1966, stating that, with the resignation of the aforementioned ALU members, ALU no longer
represented the majority of the SUGECO employees for purposes of negotiation and recognition.
On March 4, 1966, ALU struck and picketed the SUGECO plant in Mandaue. The next day, March 5,
SUGECO commenced Civil Case No. R-9221 of the Court of First Instance of Cebu, against ALU, to
restrain the same from picketing said plant and the SUGECO offices at Cebu City and elsewhere in the
Philippines. Forthwith, the Honorable Amador E. Gomez, as Judge of the Court of First Instance of Cebu,
Branch II, caused to be issued, ex parte, the writ of preliminary injunction prayed for by SUGECO.
On the same date,2 ALU preferred, in the Court of Industrial Relations—hereinafter referred to as CIR—
unfair labor practice charges against SUGECO, its general manager, Concepcion Y. Lua—hereinafter
referred to as Mrs. Lua—and its two (2) supervisors, alleging, inter alia, that these respondents had
coerced and exerted pressure upon the aforementioned ALU members to resign, as they did resign from
ALU, and that their resignations were seized upon by SUGECO to refuse further negotiations with ALU.
On April 29, 1966, an acting prosecutor of the CIR filed therein against SUGECO the corresponding
complaint for unfair labor practice.3
Meanwhile, ALU had moved for a reconsideration of the order of Judge Gomez, dated March 5, 1966,
sanctioning the issuance of the writ of preliminary injunction against ALU. This motion was later denied
by Judge Jose C. Borromeo, who presided Branch IV of the Court of First Instance of Cebu.4 Hence, on
May 9, 1966, ALU instituted Case No. L-25999 of the Supreme Court, for cer-
________________
2 March 5, 1966.
3 Case No. 400 UCP-Cebu. "The Associated Labor Union, complainant vs. Superior Gas & Equipment Co.
of Cebu, Inc., respondent".
4 Seemingly, as vacation Judge thereof.
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93
tiorari and prohibition, with preliminary injunction, against Judges Gomez and Borromeo and the
SUGECO, and prayed therein that the CFI of Cebu be declared without jurisdiction over the subject-
matter of said Case No. R-9221; that the writ of preliminary injunction therein issued be annulled; that
Judges Gomez and Borromeo be directed to dismiss said case; and that, meanwhile, they be ordered to
desist from further proceedings in said case, and from enforcing the writ aforementioned. On May 16,
1966, we issued the writ of preliminary injunction sought by ALU in L-25999. Subsequently, or on
February 9, 1967, we rendered judgment therein in favor of ALU, annulling the writ of preliminary
injunction issued in said Case No. R-9221, on March 5, 1966, directing respondent Judges to dismiss the
same, and declaring permanent the writ of preliminary injunction issued by us on May 16, 1966.
Soon after the issuance of the latter writ, ALU resumed the picketing of the SUGECO plant in Mandaue.
Moreover, it began to picket the house of Mrs. Lua, SUGECO's general manager, and her husband
Antonio Lua—hereinafter referred to as Mr. Lua—at Abellana Street, Cebu City, and the store of the
Cebu Home and Industrial Supply hereinafter referred to as Cebu Home—at Gonzalez Street, Cebu City.
The Cebu Home, which belongs to and is managed by Mr. Lua, deals in general merchandise, among
which are oxygen, acetytene and cooking gas produced by SUGECO. On June 21, 1966, Cebu Home and
Mr. Lua—hereinafter referred to as respondents—f iled a complaint, docketed as Civil Case No. 9414 of
the CFI of Cebu, against ALU, to restrain the latter from picketing the store and residence
aforementioned and to recover damages. Thereupon, Judge Borromeo issued an order requiring the
ALU to show cause why the writ sought should not be issued. In a memorandum filed on June 25, 1966
and a motion to dismiss dated June 29, 1966, the ALU assailed the Court's jurisdiction to hear the case
upon the ground that it had grown out of a labor dispute. This, notwithstanding, on June 30, 1966, Judge
Borromeo issued
94
94
an order the dispositive part of which reads:
"WHEREFORE, upon filing of a bond by the petitioners5 in the amount of P3,000.00 to answer for
damages which the respondent6 may be entitled, let a writ of preliminary injunction be issued,
restraining the respondent, its officers, employees, agents or persons acting in its behalf:
"1) From picketing the office of the Cebu Home and Industrial Supply in Gonzales Street, Cebu City and
the residence of the petitioner Antonio Lua in Abellana Street, Cebu City;
"2) From preventing the employees of the petitioners from entering inside or going out the office of the
Cebu Home and Industrial Supply and the residence of the petitioner Antonio Lua;
"3) From stopping the car, truck or other vehicles entering or going out the office of Cebu Home and
Industrial Supply and the residence of Antonio Lua;
"4) From preventing the sale and distribution by the petitioners of its merchandise in connection with its
business; and
"5) From performing acts which cause disturbance of the tranquility and privacy of the petitioner and his
family."
On July 4, 1966, respondents herein moved to amend the foregoing order so as to broaden its scope.
Upon the other hand, on July 6, 1966, ALU sought a reconsideration of said order and the lifting of the
writ of preliminary injunction issued on June 30, 1966. Acting upon a motion to amend of respondents
herein, Judge Borromeo issued, on July 22, 1966, another order, from which we quote:
"Considering the evidence presented and the facts stated in the previous order of the Court, it is
believed that the petition is justified and that the acts complained of, if not restrained, will render the
writ of preliminary injunction ineffective.
"WHEREFORE, in connection with the writ of preliminary injunction which was previously issued. the
respondent union, its members, agents or persons acting in its behalf are hereby restrained:
"a) From preventing the petitioners, their employees or representatives from unloading their
merchandise and other supplies coming from Manila or other places and from hauling them from the
waterfront for the purpose of delivering them to the place of the petitioners;
"b) From preventing the petitioners or their representatives from delivering and loading their empty
tanks and
_________________
5 Respondents herein.
6 ALU.
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95
other supplies to the boat or other means of transportation for Manila or other places; and
"c) From preventing, obstructing or molesting the petitioners, their employees or representatives from
performing acts in connection with their business."
On July 25, 1966, Judge Borromeo denied ALU's motion to dismiss Case No. R-9414 and to reconsider his
order and dissolve the writ of preliminary injunction of June 30, 1966. Thereupon, or on August 26,
1966, ALU commenced the present action f or certiorari and prohibition with preliminary injunction, to
annul the writs of preliminary injunction issued, on June 30 and July 22, 1966, in Case No. R-9414 and to
restrain the lower court from hearing the same.
ALU maintains that the lower Court has no jurisdiction over Case No. R-9414 because it had grown out
of a labor dispute, is intimately connected with an unfair air labor practice case pending before the CIR
and involves a strike the injunction against which had already been lifted by the Supreme Court in G.R.
No. L-25999.7 Moreover, ALU claims that even if the lower court had jurisdiction over Case No. R-9414,
the writs of preliminary injunction issued therein are null and void, not only because of said lack of
jurisdiction, but, also, because it failed to observe the requirements of Sec. 9 (f) of Republic Act No. 875,
as well as the provisions of Sec. 9 (d) (5) of the same Act, requiring findings of facts on matters
enumerated therein.
Upon the other hand, respondents argue that the issue in the lower court does not fall within the
jurisdiction of the CIR, there being no employer-employee relationship and "no labor dispute" between
the ALU members and Cebu Home; and that, at any rate, the SUGECO products distributed and sold by
Cebu Home, came, not from the SUGECO plant in Mandaue, but from other parts of the Philippines.
Respondents further deny that the residence of Mr. Lua was being used as a place to store and refill SU-
________________
7 In its "Memorandum for the Respondent" (Annex "H"Petition) dated June 24, 1966, ALU claimed that
"the present action may just be a means of avoiding said Supreme Court injunction and may even be
contemptuous".
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96
GECO gas for resale.
Respondents' pretense is untenable. To begin with, Section 5 (a) of Republic Act No. 8758 vests in the
Court of Industrial Relations exclusive jurisdiction over the prevention of any unfair labor practice.
Moreover, for an issue "concerning terms, tenure or conditions of employment, or concerning the
association or representation of persons in negotiating, fixing, maintaining, changing, or seeking to
arrange terms or conditions of employment" to partake of the nature of a "labor dispute", it is not
necessary that "the disputants stand in the proximate relation of employer and employee."9
Then, again, in order to apply the provisions of Sec. 9 of Republic Act No. 875, governing the conditions
under which "any restraining order" or "temporary or permanent injunction" may issue in any "case
involving or growing out of a labor dispute", it is not indispensable that the persons involved in the case
be "employees of the same employer", although this is the usual case. Sec. 9,10 likewise, governs cases
involving persons: 1) "who are engaged in the same industry, trade, craft, or occupation"; or 2) "who x x
x have direct or indirect interests therein", or 3) "who are members of the same or an affiliated
organization of employers or employees"; or 4) "when the case involves any conflicting or competing
interests in a 'labor dispute' (as hereinbefore defined) or 'persons participating or interested' therein (as
hereinafter defined)". Furthermore, "a person or association shall be held to be a person participating or
interested in a labor dispute if relief is sought against him or it" and "he or it is engaged in the same
industry, trade, craft, or occupation in which such dispute occurs, or has a direct or indirect in-
_________________
8 "SEC. 5 (a) The Court shall have jurisdiction over the prevention of unfair labor practices and is
empowered' to prevent any person from engaging in any unfair labor practice. This power shall be
exclusive and shall not be affected by any other means of adjustment or prevention that has been or
may be established by an agreement, code, law or otherwise."
9 Pursuant to Sec. 2 (j) R.A. No. 875; PAFLU v. Tan, 99 Phil. 854; Associated Watchmen & Security Union
(PTWO) et. al. v. U.S. Lines, et al., 101 Phil. 896,
10 Par. (f) Sec. 9, R.A. 875.
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97
terest therein, or is a member, officer, or agent of any association composed in whole or in part of
employees or employers engaged in such industry, trade, craft, or occupation."11
Now, then there is no dispute regarding the existence of a labor dispute between the ALU and SUGECO-
Cebu; that SUGECO's general manager, Mrs. Lua, is the wife of the owner and manager of Cebu Home,
Antonio Lua; and that Cebu Home is engaged in the marketing of SUGECO products. It is, likewise, clear
that as managing member of the conjugal partnership between him and his wife, Mr. Lua has an interest
in the management by Mrs. Lua of the business of SUGECO and in the success or failure of her
controversy with the ALU, considering that the result thereof may affect the condition of said conjugal
partnership. Similarly, as a distributor of SUGECO products, the Cebu Home has, at least, an indirect
interest in the labor dispute between SUGECO and the ALU and in Case No. R-9221. In other words,
respondents herein have an indirect interest in said labor dispute, for which reason, we find that Section
9 of Republic Act No. 875 squarely applies to Case No. R-9414.
Thus, in Goldfinger v. Feintuch,12 it was held:
"Within the limits of peaceful picketing, however, picketing map be carried on not only against the
manufacturer but against a nonunion product sold by one in unity of interest with the manufacturer
who is in the same business for profit. Where a manufacturer pays less than union wages, both it and
the retailers who sell its products are in a position to undersell competitors who pay the higher scale,
and this may result in unfair reduction of the wages of union members. Concededly the defendant union
would be entitled to picket peacefully the plant of the manufacturer. Where the manufacturer disposes
of the product through retailers in unity of interest with it,13 unless, the union may follow the product
to the place where it is sold and peacefully ask the public to refrain from purchasing it, the union would
be deprived of a fair and proper means of bringing its plea to the attention of the public."
Besides, the ALU introduced evidence to the effect that the SUGECO products had been brought to Cebu
Home
________________
11 Par. (f) sub-pars. (1) and (2), Sec. 9, R.A. 875.
12 11 N.E. 2d 910, 913.

13 Italics ours.
98
98
and were being distributed in the latter, as a means to circumvent, defeat or minimize the adverse
effects of the picketing conducted in the SUGECO plant and offices in Mandaue and Cebu City
respectively by ALU. It is true that respondents averred that said products were purchased by Cebu
Home before the strike was declared against SUGECO and that some of said products were obtained
from SUGECO in other parts of the country; but, even if true, these circumstances did not place the
picketing of the Cebu Home beyond the pale of the aforesaid Section 9 of Republic Act No. 875 because,
as distributor of SUGECO products, Cebu Home was engaged in the same trade as SUGECO. Neither does
the claim that some SUGECO products marketed by Cebu Home had come, not from the Mandaue plant,
but from other parts of the Philippines, detract from the applicability of said provisions, considering that
ALU had struck against SUGECO and had announced, as early as March 1, 1966—or three (3) days before
it struck—its intent to picket "any place where your business may be found" and that SUGECO in Cebu is
a sister company of SUGECO elsewhere in the Philippines.
For, a similar reason, in American Brake Shoe Co. v. District Lodge 9 of International Association of
Machinists,14 the Supreme Court of Pennsylvania ruled:
"Where corporate employer had separate plants in Missouri and Pennsylvania, and labor dispute existed
at Missouri plant, but not at the Pennsylvania plant, peaceful picketing at Pennsylvania plant by
members of union representing employees at Missouri plant was not an unfair labor practice as defined
by Labor Management Relations Act x x x."15
In the language of the American Jurisprudence:16
"It seems now generally agreed that a state cannot either by its common law or by statute prohibit the
peaceful picketing of a place of business solely on the ground that the picketing is carried on by persons
not employed therein. The United States Supreme Court has held that the constitutional guaranty of
free speech is infringed by the judicial policy of a state to
________________
14 94 A. 2d 884.
15 Italics ours.
16 31 Am. Jur. 752.
99
99
forbid peaceful picketing on the ground that it is being conducted by strangers to the employer affected,
that is, by persons not in the relation of employer and employee with him. Rules limiting picketing to the
occasion of a labor dispute are not offended by the act of a union having a grievance against a
manufacturer in picketing a retail establishment in which its products are sold when there is a unity of
interest between the manufacturer and the retailer; this is true even when the shopkeeper is the sole
person required to run his business. And the right of employees on strike at one plant of an employer to
picket another plant of the same employer has been upheld even though some of the employees of the
picketed plant as a result refused to work despite a no-strike agreement. Also, a union may picket a
retail store selling goods made in a nonunion factory between which and the union there is an industrial
dispute, provided there is a unity of interest between the retailer and the manufacturer."17
Apart from the foregoing, it will be recalled that, prior to the expiration of the collective bargaining
contract between ALU and SUGECO, on January 1, 1966, negotiations had started for the renewal of said
contract; that during said negotiations, late in February 1966, twelve (12) SUGECO employees resigned
from ALU, owing—according to charges perferred by ALU and confirmed by a complaint filed by a CIR
prosecutor—to unfair labor practices allegedly committed by SUGECO and its supervisors who, it was
also claimed, had induced and coerced said employees to quit the ALU, which they did; that, thereupon,
SUGECO stopped negotiating with ALU alleging that, with the resignation of said twelve (12) members,
ALU no longer represented a majority of the SUGECO employees; that on March 4, 1966, ALU declared a
strike and picketed the SUGECO plant in Mandaue; that the next day, SUGECO filed Case No. R-9221 of
the CFI of Cebu, which forthwith issued a writ of preliminary injunction restraining ALU from picketing,
not only the plant, but, also, the SUGECO offices elsewhere in the Philippines; that said injunction was
dissolved by the Supreme Court on May 16, 1966;18 and that the premises of respondents herein
_________________
17 Italics ours.
18 This injunction became permanent with the rendition of the decision of the Supreme Court in L-
25999 on February 9, 1967.
100
100

were not picketed until after our injunction was enforced, subsequently to May 16, 1966.
This factual background reveals that, from sometime before January 1, 1966—when negotiations for the
renewal of the collective bargaining agreement between SUGECO and ALU were begun—to sometime
after May 16, 1966,19 or, at least, from late in February 1966—when the aforementioned unfair labor
practices were allegedly committed by SUGECO—to sometime before June 21, 1966,20 there was ample
opportunity to store SUGECO products in respondents' premises. There was, therefore, reasonable
ground for the ALU to believe or suspect that SUGECO was using said premises to circumvent and blunt
the ALU strike and picketing in the SUGECO plant in Mandaue or to defeat or offset the adverse effects
of both.
Respondent Judge seemed to be of the opinion that, for the subject-matter of Case No. 9414 to be
within the exclusive jurisdiction of the CIR, it was necessary to establish, as a fact, the truth of ALU's
contention that respondents' premises were being used as an outlet for SUGECO products.
Such view suffers from a basic flaw. It overlooks the fact that the jurisdiction of a court or quasi-judicial
or administrative organ is determined by the issues raised by the parties, not by their success or failure
in proving the allegations in their respective pleadings.21 Said view would require the reception of
proof, as a condition precedent to the assumption of jurisdiction, when precisely jurisdiction must exist
before evidence can be taken, since the authority to receive it is in itself an exercise of jurisdiction.
________________
19 When the injunction of the Supreme Court was enforced
20 The transcript cited in the Petition for Certiorari (par. 5) stated that "two weeks before, the ALU
picketed his office at F. Gonzales Street, Cebu City; that three days before, they picketed his house and
put up placards in front of his door and examined his car in going in and out and there were many
people watching (t.s.n. Vizcayno, June 23, 1966, pp. 25-26)." This places the date of the picketing of
Cebu Home somewhere on June 9, 1966 and that of the residence of the Luas on June 19 or 20, 1966.
21 E.J. Nell Co. v. Cubacub, L-20842, June 23, 1965; Campos Rueda Corporation v. Bautista, L-18453,
September 29, 1962.
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101
Moreover, it fails to consider that, to affect the jurisdiction of said court, or organ, the main
requirement is that the issue raised be a genuine one. In other words, the question posed must be one
that is material to the right of action or which could af f ect the result of the dispute or controversy.22
Such is, manifestly, the nature of ALU's contention in the lower court, which should have, accordingly,
granted the motion to dismiss and lifted the writs of preliminary injunction complained of.
Finally, respondents herein have not alleged, let alone proved, that the conditions enumerated in
Section 9 (d) of Republic Act No. 875,23 as a prerequisite to an injunction in labor disputes, have been
complied with. Such failure is, as has been repeatedly held,24 fatal to the validity of
_________________
22 Campos Rueda Corporation v. Bautista, L-18453, September 29, 1962.
23 "(d) No Court of the Philippines shall have jurisdiction to issue a temporary or permanent injunction
in any case involving or growing out of a labor dispute, as herein def ined, except after hearing the
testimony of witnesses in open court (with opportunity for cross-examination) in support of the
allegations of a complaint made under oath, and testimony in opposition thereto, if offered, and except
after finding of fact by the Court, to the ef f ect:
(1) That unlawful acts have been threatened and will be committed unless restrained or have been
committed and will be continued unless restrained, but no injunction or temporary restraining order
shall be issued on account of any threat or unlawful act excepting against the person or persons,
association or organization making the threat or committing the unlawful act or actually authorizing or
ratifying the same after actual knowledge thereof;
(2) That substantial and irreparable injury to complainant's property will follow;
(3) That as to each item of relief granted greater injury will be inflicted upon complainant by the denial
of relief than will be inflicted upon defendants 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."
24 Seno v. Mendoza, L-20565, November 29, 1967; PAFLU v. Barot, 99 Phil. 1008; Allied Free Workers
Union v. Apostol, 102 Phil. 292.
102
102
Iloilo Dock & Engineering Co. vs. Workmen's Compensation Commission
said injunction.
WHEREFORE, the orders of respondent Judge dated June 30, and July 22, 1966 and the writs of
preliminary injunction issued in accordance therewith are hereby declared null and void ab initio, with
costs against respondents herein, the Cebu Home and Industrial Supply and Antonio Lua. It is so
ordered.
Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Fernando and Capistrano, JJ., concur.
Orders and writs of preliminary injunction declared null and void.
Note.—See the annotation on "Labor Injunctions," 24 SCRA 331-352.
————— , 26 SCRA 88, No. L-26461 November 27, 1968
122
Bascon vs. Court of Appeals
G.R. No. 144899. February 5, 2004.*
ELIZABETH C. BASCON and NOEMI V. COLE, petitioners, vs. HONORABLE COURT OF APPEALS, METRO
CEBU COMMUNITY HOSPITAL, INC., and GREGORIO IYOY, respondents.
Labor Law; National Labor Relations Commission; Employment; Termination; Just Causes; Gross
Insubordination; Elements; The elements of gross insubordination are the following.—(1)
reasonableness and lawfulness of the order or directive, (2) sufficiency of knowledge on the part of
the employee of such order, and (3) the connection of the order with the duties which the employee
had been engaged to discharge.
Same; Same; Same; Same; Same; Same; Appeals; Resort to judicial review of the decisions of the NLRC
in a special civil action for certiorari under Rule 65 of the Rules of Court is generally limited to the
question of grave abuse of discretion amounting to lack or excess of jurisdiction.—The findings of
facts of the NLRC are deemed binding and conclusive upon the Court. We have repeatedly said that
the Court is not a trier of facts. Thus, resort to judicial review of the decisions of the NLRC in a special
civil action for certiorari under Rule 65 of the Rules of Court is generally limited to the question of
grave abuse of discretion amounting to lack or excess of jurisdiction.
Same; Same; Same; Same; Same; Same; Same; The Court of Appeals can review the factual findings or
the legal conclusions of the National Labor Relations Commission.—In St. Martin Funeral Home v.
NLRC, we held that the special civil action of certiorari is the mode of judicial review of the decisions
of the NLRC either by this Court or the Court of Appeals, but the latter court is the more appropriate
forum in strict observance of the doctrine on the hierarchy of courts and that, in the exercise of this
power, the Court of Appeals can review the factual findings or the legal conclusions of the NLRC.
Same; Same; Same; Same; Same; Same; Requisites; Willful disobedience of the employer’s lawful
orders, as a just cause for dismissal of an employee, envisages the concurrence of at least two
requisites.—Willful disobedience of the employer’s lawful orders, as a just cause for dismissal of an
employee, envisages the concurrence of at least two requisites: (1) the employee’s assailed conduct
must have been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order
violated must have been reasonable, lawful, made known to the employee and must pertain to the
duties which he had been engaged to discharge.
_______________
* SECOND DIVISION.
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123
Same; Same; Same; Same; Same; Same; Not every case of willful disobedience by an employee of a
lawful work-connected order of the employer may be penalized with dismissal.—Not every case of
willful disobedience by an employee of a lawful work-connected order of the employer may be
penalized with dismissal. There must be reasonable proportionality between, on the one hand, the
willful disobedience by the employee and, on the other hand, the penalty imposed therefor.
Same; Same; Same; Same; Doctrine of “Strained Relations”; To protect labor’s security of tenure, we
emphasize that the doctrine of “strained relations” should be strictly applied so as not to deprive an
illegally dismissed employee of his right to reinstatement.—In Quijano v. Mercury Drug Corporation,
we stated that the doctrine of “strained relations” is inapplicable to a situation where the employee
has no say in the operation of the employer’s business. Petitioners herein are nurse and nursing aide,
respectively in MCCH and thus, have no prerogative in the operation of the business. As also held in
the Mercury Drug case: To protect labor’s security of tenure, we emphasize that the doctrine of
“strained relations” should be strictly applied so as not to deprive an illegally dismissed employee of
his right to reinstatement. Every labor dispute almost always results in “strained relations,” and the
phrase cannot be given an overarching interpretation, otherwise, an unjustly dismissed employee can
never be reinstated.
Same; Same; Same; Same; Security of Tenure; The employer’s power to dismiss must be tempered
with the employee’s right to security of tenure.—The employer’s power to dismiss must be tempered
with the employee’s right to security of tenure. Time and again we have said that the preservation of
the lifeblood of the toiling laborer comes before concern for business profits. Employers must be
reminded to exercise the power to dismiss with great caution, for the State will not hesitate to come
to the succor of workers wrongly dismissed by capricious employers.
Caesar A.M. Tabotabo for petitioners.
Arguedo & Associates Law Office for private respondents.
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124
QUISUMBING, J.:
This petition for review on certiorari assails the Court of Appeals’ Decision1 in CA-G.R. SP No. 51690,
dated March 13, 2000, which set aside the decision of the National Labor Relations Commission (NLRC),
4th Division, dated November 25, 1998, in NLRC Case No. V-00234-97. The NLRC had reversed the
judgment of the Labor Arbiter, dated April 24, 1997, in NLRC-RAB-VII Case No. 07-0828-96, which held
valid herein petitioners’ dismissal from employment. Petitioners also challenge the appellate court’s
Resolution,2 dated August 9, 2000, which denied their motion for reconsideration.
The petitioners in the instant case were employees of private respondent Metro Cebu Community
Hospital, Inc. (MCCH) and members of the Nagkahiusang Mamumuo sa Metro Cebu Community Hospital
(NAMA-MCCH), a labor union of MCCH employees. Petitioner Elizabeth C. Bascon had been employed as
a nurse by respondent MCCH since May 1984. At the time of her termination from employment in April
1996, she already held the position of Head Nurse. The other petitioner, Noemi V. Cole, had been
working as a nursing aide with MCCH since August 1974. Both petitioners were dismissed by the
respondent hospital for allegedly participating in an illegal strike.
The instant controversy arose from an intra-union conflict between the NAMA-MCCH and the National
Labor Federation (NFL), the mother federation of NAMA-MCCH. In November 1995, NAMA-MCCH asked
MCCH to renew their Collective Bargaining Agreement (CBA), which was set to expire on December 31,
1995. NFL, however, opposed this move by its local affiliate. Mindful of the apparent intra-union
dispute, MCCH decided to defer the CBA negotiations until there was a determination as to which of
said unions had the right to negotiate a new CBA.
Believing that their union was the certified collective bargaining agent, the members and officers of
NAMA-MCCH staged a series of mass actions inside MCCH’s premises starting February 27, 1996.
_______________
1 Rollo, pp. 34-58; penned by Associate Justice Presbitero J. Velasco, Jr., with Associate Justices Salome
A. Montoya and Bernardo Ll. Salas concurring.
2 Id., at pp. 32-33.
125

125
They marched around the hospital putting up streamers, placards and posters.
On March 13 and 19, 1996, the Department of Labor and Employment (DOLE) office in Region 7 issued
two (2) certifications stating that NAMA-MCCH was not a registered labor organization. This finding,
however, did not deter NAMA-MCCH from filing a notice of strike with the Region 7 Office of the
National Conciliation and Mediation Board (NCMB). Said notice was, however, disregarded by the NCMB
for want of legal personality of the union.
Meanwhile, the MCCH management received reports that petitioners participated in NAMA-MCCH’s
mass actions. Consequently, notices were served on all union members, petitioners included, asking
them to explain in writing why they were wearing red and black ribbons and roaming around the
hospital with placards. In their collective response dated March 18, 1996, the union members, including
petitioners, explained that wearing armbands and putting up placards was their answer to MCCH’s
illegal refusal to negotiate with NAMA-MCCH.
Subsequently, on March 28, 1996, MCCH notified the petitioners that they were to be investigated for
their activities in the mass actions, with the hearings being scheduled on March 28, 1996 and April 1,
1996. Petitioners, however, denied receiving said notices. In a notice dated April 8, 1996, MCCH ordered
petitioners to desist from participating in the mass actions conducted in the hospital premises with a
warning that non-compliance therewith would result in the imposition of disciplinary measures.
Petitioners again claimed they did not receive said order. Petitioners Bascon and Cole were then served
notices terminating their employment effective April 12, 1996 and April 19, 1996, respectively.
The dismissal of petitioners did not deter NAMA-MCCH from staging more mass actions. The means of
ingress to and egress from the hospital were blocked. Employees and patients, including emergency
cases, were harassed, according to MCCH management, which also complained that mass actions held
inside the hospital had created an atmosphere of animosity and violence, aggravating the condition of
ailing patients. Furthermore, the hospital also suffered heavy losses brought about by a notable decline
in the patient admission rates and the refusal of suppliers to extend credit. To address its labor
problems, MCCH sought an injunction from the NLRC on July 9, 1996 in Injunction Case No. V-0006-96.
126
126
Meanwhile, on July 1, 1996, Bascon and Cole filed a complaint for illegal dismissal, docketed as NLRC-
RAB-VII Case No. 07-0828-96. They denied having participated in said mass actions or having received
the notices (1) enjoining them from wearing armbands and putting up placards, with warning that
disciplinary measure would be imposed, and (2) informing them of the schedule of hearing. They admit,
however, to wearing armbands for union identity while nursing patients as per instruction of their union
leaders.
On July 16, 1996, a Temporary Restraining Order (TRO) was duly issued in Injunction Case No. V-0006-
96.
On August 27, 1996, the local government of Cebu City ordered the demolition of the picket staged by
the members of NAMA-MCCH for being both a public nuisance and a nuisance per se.
On September 18, 1996, the injunction was made permanent by an NLRC Resolution in Injunction Case
No. V-0006-96, the fallo of which reads:
“WHEREFORE, premises considered, the petition for injunction is hereby GRANTED enjoining
respondents in the course of their strike/picket from committing the illegal acts mentioned in Article
264 (e) of the Labor Code more particularly the blocking of the free ingress to and egress from petitioner
hospital and from committing threats, coercion and intimidation of the non-striking/picketing
employees/workers reporting for work, vehicles/patients desiring to enter for the purpose of seeking
admission/confinement in petitioner hospital and for such other lawful purpose.
“SO ORDERED.”3
In a Decision4 dated April 24, 1997, the Labor Arbiter found the termination complained of in NLRC-RAB-
VII Case No. 07-0828-96 to be valid and legal, and dismissed the complaint. The Labor Arbiter held that
petitioners were justly dismissed because they actually participated in the illegal mass action. It also
concluded that petitioners received the notices of hearing, but deliberately refused to attend the
scheduled investigation.
Petitioners then appealed the Labor Arbiter’s ruling to the NLRC, 4th Division, which docketed the
appeal as NLRC Case No. V-00234-97.
_______________
3 Rollo, pp. 36, 38.
4 Id., at pp. 97-102.
127
127
In its Decision5 dated November 25, 1998, the NLRC, 4th Division reversed the ruling of the Labor
Arbiter and ordered the reinstatement of petitioners with full backwages. First, it found that petitioners
merely wore armbands for union identity, per instruction of their union officials. Said wearing of
armbands while nursing patients, is a constitutional right, which cannot be curtailed if peacefully carried
out. Second, it ruled that the placards complained of by MCCH did not contain scurrilous, indecent or
libelous remarks. Finally, it concluded that, in a belated but crude attempt to camouflage the illegal
dismissal of petitioners, MCCH merely fabricated the notices allegedly sent to petitioners.
Anent the charge of gross insubordination, the NLRC ruled that petitioners were not guilty thereof,
because the elements thereof had not been sufficiently proven, to wit: (1) reasonableness and
lawfulness of the order or directive, (2) sufficiency of knowledge on the part of the employee of such
order, and (3) the connection of the order with the duties which the employee had been engaged to
discharge.
Unconvinced of the correctness of the NLRC decision, MCCH filed a motion for reconsideration
presenting the following documentary evidence:
1) Affidavits of Paz Velasco, Luciano Quitoy, Joseph Dagatan, and Gina Jumao-as to show that petitioners
were duly served the notices in question;
2) Letter reply of NAMA-MCCH dated March 18, 1996 wherein petitioners, together with the rest of the
union members, collectively acknowledged receipt of the March 15, 1996 directive;
3) Position Paper of terminated co-employees where the receipt of the subject notices were admitted as
well as the commission of the aforementioned protest mass actions; and
4) Appeal of private respondents, who did not join the protest mass action, to the Board of Trustees of
MCCH to show that reinstatement is no longer feasible in view of strained relationship.
On February 4, 1999, the NLRC denied the plea for reconsideration of MCCH.
_______________
5 Id., at p. 125-140.
128
128
Undeterred, MCCH filed a special civil action for certiorari under Rule 65 of the 1997 Rules of Civil
Procedure before the Court of Appeals, docketed as CA-G.R. SP No. 51690.
In its Decision 6 dated March 13, 2000, the Court of Appeals decided CA-G.R. SP No. 51690 as follows:
“WHEREFORE, the petition is granted. The Decision of public respondent NLRC 4th Division dated
November 25, 1998 in NLRC Case No. V-00234-97 is hereby REVERSED and the complaint of private
respondents is dismissed for lack of merit. Petitioner Metro Cebu Community Hospital (MCCH) is
however ordered to pay the private respondents separation pay equivalent to one-half month for every
year of service in the interest of equity.
“No costs.
“SO ORDERED.”7
The appellate court held that Bascon and Cole were validly terminated for their gross insubordination or
willful disobedience as:
1) The order for petitioners to refrain from wearing armbands and putting up placards was legal, fair and
reasonable.
2) The order was connected with the duties, which the petitioners had been engaged to discharge.
3) Said order was sufficiently made known to petitioners as receipt of the same by the latter was
convincingly substantiated by hard evidence.
The appellate court stressed that petitioners’ gross insubordination constituted unlawful acts
undertaken in conjunction with an illegal mass concerted action akin to an illegal strike. Finally, the
Court of Appeals ruled that petitioners’ union activities violated the rights of patients and third parties
such that they were outside the ambit of legality and beyond the mantle of protection of the freedom of
speech.
Hence, the instant case, with the petitioners submitting for resolution the following issues:
_______________
6 Id., at pp. 34-58.
7 Id. at p. 57.
129
129
CAN THE HONORABLE COURT OF APPEALS SUPPLANT ITS FINDINGS OF FACTS WITH THAT OF THE
COMMISSION?
II
CAN THE HONORABLE COURT OF APPEALS REVERSE THE DECISION OF THE COMMISSION ALTHOUGH
THERE IS NO FINDING OF GRAVE ABUSE OF DISCRETION OR LACK OF JURISDICTION?
III
CAN AN EMPLOYEE BE TERMINATED FOR INSUBORDINATION FOR IPSO FACTO NOT SHOWING UP FOR
THE INVESTIGATION?8
Anent the first and second issues, as a general rule, the findings of facts of the NLRC are deemed binding
and conclusive upon the Court. We have repeatedly said that the Court is not a trier of facts. Thus,
resort to judicial review of the decisions of the NLRC in a special civil action for certiorari under Rule 65
of the Rules of Court is generally limited to the question of grave abuse of discretion amounting to lack
or excess of jurisdiction.9 However, where, as in the instant case, the findings of facts of the NLRC
contradict those of the Labor Arbiter, a departure from the general rule is warranted. Thus, the Court
may look into the records of the case and reexamine the questioned findings.10 Where the NLRC and
the Labor Arbiter disagree on their finding of facts, the Court can review the records to determine which
findings should be preferred as more conformable to the evidentiary facts.11
In St. Martin Funeral Home v. NLRC,12 we held that the special civil action of certiorari is the mode of
judicial review of the decisions of the NLRC either by this Court or the Court of Appeals, but the latter
court is the more appropriate forum in strict observance of the doctrine on the hierarchy of courts and
that, in the exercise
_______________
8 Id., at pp. 19-20.
9 Permex, Inc. v. National Labor Relations Commission, 380 Phil. 79, 85; 323 SCRA 121 (2000).
10 See Corporal, Sr. v. National Labor Relations Commission, G.R. No. 129315, 2 October 2000, 341 SCRA
658, 665.
11 Samson v. National Labor Relations Commission, 386 Phil. 669, 681; 330 SCRA 460 (2000).
12 356 Phil. 811; 295 SCRA 494 (1998).
130
130
of this power, the Court of Appeals can review the factual findings or the legal conclusions of the
NLRC.13
With regard to the third issue, note that petitioners were terminated for allegedly participating in an
illegal strike and gross insubordination to the order prohibiting them from wearing armbands and
putting up placards, not for ipso facto failing to show up in the scheduled investigation; Thus, the real
issue is whether or not petitioners were validly terminated for (1) allegedly participating in an illegal
strike and/or (2) gross insubordination to the order to stop wearing armbands and putting up placards.
As to the first ground, Article 264 (a) of the Labor Code provides in part that:
. . . Any union officer who knowingly participates in illegal strike and any worker or union officer who
knowingly participates in the commission of illegal acts during a strike may be declared to have lost his
employment status . . . (Emphasis ours)
Thus, while a union officer can be terminated for mere participation in an illegal strike, an ordinary
striking employee, like petitioners herein, must have participated in the commission of illegal acts during
the strike (italics supplied). There must be proof that they committed illegal acts during the strike.14 But
proof beyond reasonable doubt is not required. Substantial evidence, which may justify the imposition
of the penalty of dismissal, may suffice.
In this case, the Court of Appeals found that petitioners’ actual participation in the illegal strike was
limited to wearing armbands and putting up placards. There was no finding that the armbands or the
placards contained offensive words or symbols. Thus, neither such wearing of armbands nor said putting
up of placards can be construed as an illegal act. In fact, per se, they are within the mantle of
constitutional protection under freedom of speech.
Evidence on record shows that various illegal acts were committed by unidentified union members in
the course of the protracted mass action. And we commiserate with MCCH, patients, and third parties
for the damage they suffered. But we cannot hold petition-
_______________
13 Agustilo v. Court of Appeals, 417 Phil. 218, 227; 364 SCRA 740 (2001).
14 Association of Independent Unions in the Philippines v. National Labor Relations Commission, 364
Phil. 697, 709; 305 SCRA 219 (1999).
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131
ers responsible for acts they did not commit. The law, obviously solicitous of the welfare of the common
worker, requires, before termination may be considered, that an ordinary union member must have
knowingly participated in the commission of illegal acts during a strike.
As regards the appellate court’s finding that petitioners were justly terminated for gross insubordination
or willful disobedience, Article 282 of the Labor Code provides in part:
An employer may terminate an employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work.
However, willful disobedience of the employer’s lawful orders, as a just cause for dismissal of an
employee, envisages the concurrence of at least two requisites: (1) the employee’s assailed conduct
must have been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order
violated must have been reasonable, lawful, made known to the employee and must pertain to the
duties which he had been engaged to discharge.15
In this case, we find lacking the element of willfulness characterized by a perverse mental attitude on
the part of petitioners in disobeying their employer’s order as to warrant the ultimate penalty of
dismissal. Wearing armbands and putting up placards to express one’s views without violating the rights
of third parties, are legal per se and even constitutionally protected. Thus, MCCH could have done well
to respect petitioners’ right to freedom of speech instead of threatening them with disciplinary action
and eventually terminating them.
Neither are we convinced that petitioners’ exercise of the right to freedom of speech should be taken in
conjunction with the illegal acts committed by other union members in the course of the series of mass
actions. It bears stressing that said illegal acts were committed by other union members after
petitioners were already terminated, not during the time that the latter wore armbands and put up
placards.
_______________
15 Dimabayao v. National Labor Relations Commission, 363 Phil. 279, 284; 303 SCRA 655 (1999).
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Finally, even if willful disobedience may be properly appreciated, still, the penalty of dismissal is too
harsh. Not every case of willful disobedience by an employee of a lawful work-connected order of the
employer may be penalized with dismissal. There must be reasonable proportionality between, on the
one hand, the willful disobedience by the employee and, on the other hand, the penalty imposed
therefor.16 In this case, evidence is wanting on the depravity of conduct and willfulness of the
disobedience on the part of petitioners, as contemplated by law. Wearing armbands to signify union
membership and putting up placards to express their views cannot be of such great dimension as to
warrant the extreme penalty of dismissal, especially considering the long years of service rendered by
petitioners and the fact that they have not heretofore been subject of any disciplinary action in the
course of their employment with MCCH.
The termination of petitioners’ employment not being for any of the just or authorized causes, it
constitutes illegal dismissal. Article 279 of the Labor Code, as amended, provides that:
. . . An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the time his compensation was withheld from him
up to the time of his actual reinstatement.
Hence, illegally dismissed employees are entitled to both reinstatement and full backwages as a matter
of course. MCCH alleges that due to strained relations, reinstatement is no longer possible. We disagree.
In Quijano v. Mercury Drug Corporation,17 we stated that the doctrine of “strained relations” is
inapplicable to a situation where the employee has no say in the operation of the employer’s business.
Petitioners herein are nurse and nursing aide, respectively in MCCH and thus, have no prerogative in the
operation of the business. As also held in the Mercury Drug case:
To protect labor’s security of tenure, we emphasize that the doctrine of “strained relations” should be
strictly applied so as not to deprive an illegally dismissed employee of his right to reinstatement. Every
labor
_______________
16 St. Michael’s Institute v. Santos, G.R. No. 145280, 4 December 2001, 371 SCRA 383, 393.
17 354 Phil. 112; 292 SCRA 109 (1998).
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133
dispute almost always results in “strained relations,” and the phrase cannot be given an overarching
interpretation, otherwise, an unjustly dismissed employee can never be reinstated.18
We cannot in our conscience allow MCCH to unjustly deny petitioners their lawful occupation, especially
at this late point in their lives when it would be a near impossibility for them to find another
employment. The employer’s power to dismiss must be tempered with the employee’s right to security
of tenure. Time and again we have said that the preservation of the lifeblood of the toiling laborer
comes before concern for business profits. Employers must be reminded to exercise the power to
dismiss with great caution, for the State will not hesitate to come to the succor of workers wrongly
dismissed by capricious employers.
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 51690
dated March 13, 2000 is REVERSED. Private respondent Metro Cebu Community Hospital is hereby
ordered to reinstate petitioners Noemi V. Cole and Elizabeth C. Bascon without loss of seniority rights
and other privileges and to pay them full backwages, inclusive of allowances, and other benefits
computed from the time they were dismissed up to the time of their actual reinstatement.
No pronouncement as to costs.
SO ORDERED.
Puno (Chairman), Austria-Martinez, Callejo, Sr. and Tinga, JJ., concur.
Petition granted, judgment reversed.
Note.—Unsubstantiated suspicions, accusations and conclusions of employers do not provide legal

justifications for dismissing employees. (Mendoza vs. National Labor Relations Commission, 310 SCRA
846 [1999])
——o0o—— Bascon vs. Court of Appeals, 422 SCRA 122, G.R. No. 144899 February 5, 2004
VOL. 108, OCTOBER 23, 1981
161
Liwayway Pub., Inc. vs. Permanent Concrete Workers Union
No. L-25003. October 23, 1981.*
LIWAYWAY PUBLICATIONS, INC., plaintiff-appellee vs. PERMANENT CONCRETE WORKERS UNION,

Affiliated with the NATIONAL ASSOCIATION OF TRADE UNIONS, HERMOGENES ATRAZO, AQUILINO
DISTOR, BENJAMIN GUTIERREZ, JOSE RAMOS, TIBURCIO MARDO, ERNESTO ALMARIO and DOMINGO
LEANO, defendants-appellants.
Labor Law; Damages; A picketing labor union has no right to prevent employees of another company
from getting in and out of its rented premises, otherwise it will be held liable for damages for its acts
against an innocent by-stander.—We cannot agree that the above rules cited by the appellants are
controlling in the instant case for as We said in Phil. Association of Free Labor Unions (PAFLU), et al.
vs. Tan, 99 Phil. 854, that “with regard to activities that may be enjoined, in order to ascertain what
courts has jurisdiction to issue the injunction, it is necessary to determine the nature of the con-
troversy,” (italics supplied) We find and hold that there is no connection between the appellee
Liwayway Publications, Inc. and the striking Union, nor with the company against whom the strikers
staged the strike, and neither are the acts of the driver of the appellee, its general manager, personnel
manager, the man in-charge of the bodega and other employees of the appellee in reaching the
bodega to obtain newsprint therefrom to feed and supply its publishing business interwoven with the
labor dispute between the striking Union and the Permanent Concrete Products company. If there is a
connection between appellee publishing company and the Permanent Concrete Products company, it
is that both are situated in the same premises, which can hardly be considered as interwoven with the
labor dispute pending in the Court of Industrial Relations between the strikers and their employer.
Same; Leases; Action; The lessor of property is not the proper party in acts of mere trespass
committed by third persons as the lessor in such a case is not liable to answer for damages to the
lessee.—Article 1654 of the New Civil Code cited by the appellants in support of their motion to
dismiss, which obliges the lessor, among others, to maintain the lessee in the peaceful and adequate
enjoyment of the lease for the entire duration of the contract, and
_______________
* FIRST DIVISION
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162
therefore, the appellee publishing company should have brought its complaint against the first
sublessee, Don Ramon Roces, and not against the appellant Union, is not in point. The acts
complained of against the striking union members are properly called mere acts of trespass
(perturbacion de mero hecho) such that following the doctrine laid down in Goldstein vs. Roces, 34
Phil. 562, the lessor shall not be obliged to answer for the mere fact of a trespass (perturbacion de
mero hecho) made by a third person in the use of the estate leased but the lessee shall have a direct
action against the trespasser.
Same; Same; Same.—The obligation of the lessor under Art. 1654, New Civil Code, to maintain the
lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract
arises only when acts, termed as legal trespass (perturbacion de derecho), disturb, dispute, object to,
or place difficulties in the way of the lessee’s peaceful enjoyment of the premises that in some
manner or other cast doubt upon the right of the lessor by virtue of which the lessor himself executed
the lease, in which case the lessor is obliged to answer for said act of trespass.
Leases; Distinction between “simple trespass” and “legal trespass”.—The difference between simple
trespass (perturbacion de mero hecho) and legal trespass (perturbacion de derecho) is simply but
clearly stated in Goldstein vs. Roces case, supra, thus: Briefly, if the act of trespass is not accompanied
or preceded by anything which reveals a real juridic intention on the part of the trespasser, in such
wise that the lessee can only distinguish the material fact, stripped of all legal form or reasons, we
understand it to be trespass in fact only (de mero hecho).
APPEAL from the decision of the Court of First Instance of Manila.
GUERRERO, J.:
This is an appeal from the decision of the Court of First Instance of Manila declaring permanent the writ
of preliminary injunction issued in this case and condemning the defendants (herein appellants) to pay
plaintiff (herein appellee), the amount of P10,152.42 with interest thereon at the legal rate
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163
from the commencement of this action until fully paid, P1,000.00 as attorney’s fees and costs.
The case commenced when Liwayway Publications, Inc. brought an action in the CFI-Manila against
Permanent Concrete Workers Union, et al. for the issuance of a writ of preliminary injunction and for
damages it incurred when its employees were prevented from getting their daily supply of newsprint
from its bodega.
Plaintiff alleged that it is a second sublessee of a part of the premises of the Permanent Concrete
Products, Inc. at 1000 Cordeleria Street, Sta. Mesa, Manila from Don Ramon Roces, a first lessee from
the aforesaid company. The premises of the plaintiff is separated from the compound of Permanent
Concrete Products, Inc. by a concrete and barbed wire fence with its own entrance and road leading to
the national road. This entrance is separate and distinct from the entrance road of the Permanent
Concrete Products, Inc.1
Plaintiff further alleged that it has a bodega for its newsprint in the sublet property which it uses for its
printing and publishing business. The daily supply of newsprint needed to feed its printing plant is taken
from this bodega.
On September 10, 1964, the employees of the Permanent Concrete Products, Inc. who are
representatives and members of the defendant union declared a strike against their company.
On October 3, 1964 for unknown reasons and without legal justification, Permanent Concrete Workers
Union and its members picketed, stopped and prohibited plaintiff’s truck from entering the compound
to load newsprint from its bodega. The union members intimidated and threatened with bodily harm
the employees who were in the truck.
On October 6, 1964, union members stopped and prohibited the general manager, personnel manager,
bodega-in-charge and other employees of the plaintiff from getting newsprint in their bodega.2
_______________
1 Annex A, Exhibit H-4.
2 Annex C, D, E, F, G and H.
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164
Plaintiff made repeated demands to the defendants not to intimidate and threaten its employees with
bodily harm and not to blockade, picket or prohibit plaintiff’s truck from getting newsprint in their
bodega. Defendants refused and continued to refuse to give in to the demands of the plaintiff.
As a consequence thereof, plaintiff rented another bodega during the time members of the defendant
union prevented its employees from entering its bodega in the compound of Permanent Concrete
Products, Inc. and thus incurred expenses both in terms of bodega rentals and in transporting newsprint
from the pier to the temporary bodega.
On December 14, 1964, the lower court issued a writ of preliminary injunction enjoining the defendants
from:
(a) threatening and intimidating plaintiff’s executive officers and their representatives, who are going to
its bodega as well as its employees who are getting newsprint from it;
(b) ordering the defendants and their representatives not to blockade and/or picket the compound and
the gate of the plaintiff;
(c) ordering the defendants not to stop, prohibit, molest and interfere with the free passage of the
plaintiff in going in and out of the bodega .
Defendant union moved to dismiss the complaint on the following grounds:
1. That this case arose out of a labor dispute involving unfair labor practices and, therefore, the Court of
First Instance where this action was brought has no jurisdiction to issue an injunction since this case falls
within the exclusive jurisdiction of the Court of Industrial Relations;
2. That plaintiff is not the real party in interest in whose name the present action may be prosecuted in
accordance with Section 2, Rule 3 of the Rules of Court.
On the first ground, defendants argued that the Court of Industrial Relations is vested with the exclusive
power to issue injunctions in labor disputes involving unfair labor practices and that in the long line of
decisions, the Supreme Court has repeatedly held that ordinary courts do not have jurisdiction
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165

to issue an injunction in any labor dispute particularly when the Court of Industrial Relations has already
acquired jurisdiction over it.
As to the second ground, defendants argue that the real party in interest in this case is the Permanent
Concrete Products, Inc. against whom the defendants’ strike and picket activities were directed and
confined, and they point to cases between the real parties in interest, namely: Permanent Concrete
Products, Inc. on one hand and the Permanent Concrete Workers Union on the other, pending before
the Court of Industrial Relations docketed therein as CIR Case No. 156-Inj., Charge 212-ULP and Charge
No. 1414-M.C.
Plaintiff Liwayway Publications, Inc. opposed the motion, alleging that:
1. There is no employer-employee relationship between the plaintiff and the defendant;
2. There is no labor dispute between them;
3. Plaintiff’s compound is separate and distinct from the compound of the company where the
defendants are employed.
Defendants by way of reply to the abovementioned opposition argued that even if there was no
employer-employee relationship, still the Court of First Instance would have no jurisdiction to issue an
injunction, citing several cases holding that there could be a labor dispute regardless of whether or not
the disputants stand in proximate relation of employer and employee and that peaceful picketing is an
extension of the freedom of speech guaranteed by the Constitution,3 a fundamental right granted to
labor which cannot be enjoined.
Since plaintiff averred in its complaint that “it is a second sublessee of a part of the premises of the
Permanent Concrete Products, Inc. at 1000 Cordeleria Street, Sta. Mesa, Manila from Don Ramon Roces,
first lessee from the aforementioned
_______________
3 Art. 3, Sec. 1, Paragraph 8 of the 1935 Constitution provides: “No law shall be passed abridging the
freedom of speech or of the press or the right of the people to peacefully assemble and petition the
government for redress of grievances.”
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166
company, defendants contend that plaintiff has no cause of action against them but against Don Ramon
Roces under the provisions of Article 1654 of the New Civil Code which obliges the lessor to maintain the
lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract.
On October 22, 1964, the lower court issued an order denying the motion to dismiss and motion to
dissolve the writ of preliminary injunction on the ground that there was no labor dispute between the
plaintiff and defendant of which the Court of Industrial Relations may take cognizance.
On November 16, 1964, the court, on motion of the plaintiff, declared defendants in default. Defendants
prayed for the lifting of the order of default, which plaintiff opposed. In the order of December 16, 1964,
the court denied the motion to lift the order of default, and subsequently defendants’ motion for
reconsideration. Thereafter, the court rendered its decision dated February 16, 1965 which declared
permanent the writ of preliminary injunction and ordered the defendants to pay the plaintiff jointly and
severally the amount of P10,152.42 with interest thereon at legal rate from the commencement of the
action until fully paid, P1,000.00 as attorney’s fees and the costs. Copy of this decision was received by
defendants on July 20, 1965 and forthwith, defendants filed the notice of appeal on July 26, 1965.
On October 12, 1965, Liwayway Publications, Inc. filed with the Supreme Court a petition praying that a
writ of attachment be issued on any sum of money which is owing from the company to the union and
to other defendants to be used to satisfy the judgment in its favor should the same be affirmed by the
Supreme Court.
Defendants filed an opposition to the petition for attachment alleging that even assuming that there is
an amount owing to the union from the company, such would be in the concept of uncollected wages
due the strikers and, therefore, cannot be subject of attachment as provided by Art. 1708 of the New
Civil Code that the laborer’s wages shall not be subject to execution or attachment except for debts
incurred for food, shelter, clothing and for medical attendance.
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The Supreme Court denied the above petition for attachment but without prejudice to the movant
seeking remedy in the Court of First Instance.
The sole issue raised in the instant appeal is whether or not the lower court has jurisdiction to issue a
writ of preliminary injunction considering that there was a labor dispute between Permanent Concrete
Products, Inc. and appellants for alleged unfair labor practices committed by the former.
The first question that strikes Us to be of determinative significance is whether or not this case involves
or has arisen out of a labor dispute. If it does, then with certainty, section 9 of Republic Act 875, the
“Industrial Peace Act”, would apply. If it does not, then the Rules of Court will govern the issuance of the
writ of preliminary injunction because it will not partake the nature of a labor injunction which the lower
court has no jurisdiction to issue.
The record before Us reveals that appellant union and its members picketed the gate leading to
appellee’s bodega. This gate is about 200 meters from the gate leading to the premises of the employer
of the appellants. Appellee is not in any way related to the striking union except for the fact that it is the
sublessee of a bodega in the company’s compound. The picketers belonging to the appellant union had
stopped and prohibited the truck of the appellee from entering the compound to load newsprint from
its bodega, the union members intimidating and threatening with bodily harm the employees of the
appellee who were in the truck. The union members also stopped and prohibited the general manager,
personnel manager including the man in-charge of the bodega and other employees of the Liwayway
Publications, Inc. from getting newsprint in said bodega. The business of the appellee is exclusively the
publication of the magazines Bannawag, Bisaya, Hiligaynon and Liwayway weekly magazines which has
absolutely no relation or connection whatsoever with the cause of the strike of the union against their
company, much less with the terms, conditions or demands of the strikers. In such a factual situation,
the query to be resolved is whether the appellee is a third party or an “innocent by-stander” whose right
has
168
168
been invaded and, therefore, entitled to protection by the regular courts.
At this juncture, it is well to cite and stress the pronouncements of the Supreme Court on the right to
picket. Thus, in the case of Phil. Association of Free Labor Unions (PAFLU) vs. Judge Gaudencio Cloribel,
et al., L-25878, March 28, 1969, 27 SCRA 465, 472, the Supreme Court, speaking thru Justice J.B.L. Reyes,
said:
“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 relationship.
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 without power to confine or localize the sphere
of communication or the demonstration to the parties to the labor dispute, including those with related
interest, and to insulate establishments or persons with no industrial connection or having interest
totally foreign to the context of the dispute. Thus, the right may be regulated at the instance of third
parties or ‘innocent bystanders’ if it appears that the inevitable result of its exercise is to create an
impression that a labor dispute with which they have no connection or interest exists between them and
the picketing union or constitute an invasion of their rights. In one case decided 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 flour mill with which the union had a dispute. Although sustained on a different
ground, no connection was found other than their being situated in the same premises. It is to be noted
that in the instances cited, peaceful picketing has not been totally banned but merely regulated. And in
one American case, a picket by a labor 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 entrance of the
building housing the theater wherein other stores operated by third persons were located.”
The same case state clearly and succinctly the rationalization for the court’s regulation of the right to
picket in the following wise and manner:
“Wellington and Galang are mere ‘innocent bystanders’. They
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169
are entitled to seek protection of their rights from the courts and the courts may, accordingly, legally
extend the same. Moreover, PAFLU’s right to peacefully picket METBANK is not curtailed by the
injunctions issued by respondent judge. The picket is merely regulated to protect the rights of third
parties. And the reason for this is not farfetched. If the law fails to afford said protection, men will
endeavor to safeguard their rights by their own might, take the law in their own hands, and commit acts
which lead to breaches of the law. This should not be allowed to happen.”
It may be conceded that the appellant Union has a labor dispute with the Permanent Concrete Products
company and that the dispute is pending before the Court of Industrial Relations docketed therein as
CIR Case No. 156-Inj., Charge 212-ULP and Charge No. 1414-M.C. Nonetheless, the rule laid down in the
case of National Garment and Textile Workers’ Union (PAFLU) vs. Hon. Hermogenes Caluag, et al., G.R.
No. L-9104, September 10, 1956, cited by the appellants as authority holding that “where the Court of
Industrial Relations has already acquired jurisdiction over two unfair labor practices cases and much
later on as a consequence thereof, the Court of First Instance cannot legally issue a writ of preliminary
injunction against the picketers. Besides, the jurisdiction of the Court of Industrial Relations is exclusive.
(Sec. 5-a, Republic Act 875)” is not controlling, much less applicable to the instant case where the facts
are essentially and materially different.
Neither is the case of SMB Box Factory Workers’ Union vs. Hon. Gustavo Victoriano, et al., G.R. No. L-
12820, Dec. 29, 1957, where We held that “the Court of First Instance cannot take cognizance of an
action for injunction where the issue involved is interwoven with unfair labor practice cases pending in
the Court of Industrial Relations,” nor the rule laid down in Erlanger & Galinger, Inc. vs. Erlanger &
Galinger Employees Association-NATU, G.R. No. L-11907, June 24, 1958, 104 Phil. 17, holding that “even
if no unfair labor practice suit has been filed at all by any of the parties in the Court of Industrial
Relations at the time the present petition for injunction was filed in the court below, still the latter court
would have no jurisdiction to issue the temporary restraining order prayed for if it is
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170

shown to its satisfaction that the labor dispute arose out of unfair labor practices committed by any of
the parties. The parties would still have to institute the proper action in the Court of Industrial Relations,
and there ask for a temporary restraining order under sec. 9 (d) of the Industrial Peace Act.
We cannot agree that the above rules cited by the appellants are controlling in the instant case for as
We said in Phil. Association of Free Labor Unions (PAFLU), et al. vs. Tan, 99 Phil. 854, that “with regard to
activities that may be enjoined, in order to ascertain what court has jurisdiction to issue the injunction,
it is necessary to determine the nature of the controversy” (italics supplied) We find and hold that there
is no connection between the appellee Liwayway Publications, Inc. and the striking Union, nor with the
company against whom the strikers staged the strike, and neither are the acts of the driver of the
appellee, its general manager, personnel manager, the man in-charge of the bodega and other
employees of the appellee in reaching the bodega to obtain newsprint therefrom to feed and supply its
publishing business interwoven with the labor dispute between the striking Union and the Permanent
Concrete Products company. If there is a connection between appellee publishing company and the
Permanent Concrete Products company; it is that both are situated in the same premises, which can
hardly be considered as interwoven with the labor dispute pending in the Court of Industrial Relations
between the strikers and their employer.
The contention of appellants that the court “erred in denying their motion to dismiss on the ground that
the complaint states no cause of action, is likewise without merit.
Article 1654 of the New Civil Code cited by the appellants in support of their motion to dismiss, which
obliges the lessor, among others, to maintain the lessee in the peaceful and adequate enjoyment of the
lease for the entire duration of the contract, and therefore, the appellee publishing company should
have brought its complaint against the first sublessee, Don Ramon Roces, and not against the appellant
Union, is not in point. The acts complained of against the striking union members are properly called
mere acts of trespass (perturbacion de mero hecho) such that following the doctrine laid down
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171
in Goldstein vs. Roces, 34 Phil. 562, the lessor shall not be obliged to answer for the mere fact of a
trespass (perturbation de mero hecho) made by a third person in the use of the estate leased but the
lessee shall have a direct action against the trespasser.
The instant case falls squarely under the provisions of Article 1664 of the New Civil Code which provides
as follows: “Art. 1664. The lessor is not obliged to answer for a mere act of trespass which a third person
may cause on the use of the thing leased; but the lessee shall have a direct action against the intruder.
There is a mere act of trespass when the third person claims no right whatever.”
The Goldstein doctrine had been reiterated in Reyes vs. Caltex (Phil). Inc., 84 Phil. 654; Lo Ching, et al. vs.
Court of Appeals, et al., 81 Phil. 601; Afesa vs. Ayala y Cio, 89 Phil. 292; Vda. de Villaruel, et al. vs. Manila
Motor Co., Inc., et al., 104 Phil. 926; Heirs of B.A. Crumb, et al. vs. Rodriguez, 105 Phil. 391.
The obligation of the lessor under Art. 1654, New Civil Code, to maintain the lessee in the peaceful and
adequate enjoyment of the lease for the entire duration of the contract arises only when acts, termed as
legal trespass (perturbacion de derecho), disturb, dispute, object to, or place difficulties in the way of
the lessee’s peaceful enjoyment of the premises that in some manner or other cast doubt upon the right
of the lessor by virtue of which the lessor himself executed the lease, in which case the lessor is obliged
to answer for said act of trespass.
The difference between simple trespass (perturbacion de mero hecho and legal trespass (perturbacion
de derecho) is simply but clearly stated in Goldstein vs. Roces case, supra, thus:
“Briefly, if the act of trespass is not accompanied or preceded by anything which reveals a really juridic
intention on the part of the trespasser, in such wise that the lessee can only distinguish the material
fact, stripped of all legal form or reasons, we understand it to be trespass in fact only (de mero hecho).”
(pp. 566-567)
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172
WHEREFORE, IN VIEW OF THE FOREGOING, the decision appealed from is hereby AFFIRMED in toto.
Costs against appellants.
SO ORDERED.
Teehankee (Chairman), Makasiar, Fernandez and Melencio-Herrera, JJ., concur.
Decision affirmed.
Notes.—If the strikers act from an unlawful, illegitimate, unjust, unreasonable, or trivial ground, reason
a motive, even if they do so in good faith, and the Court of Industrial Relations, so finds, the strike may
be declared illegal notwithstanding their good faith. (Luzon Stevedoring Corporation vs. Court of
Industrial Relations, 17 SCRA 65).
A strike by a union was considered illegal where it appears that it was declared even before the
employer had answered the union’s demands and it was in violation of an agreement to maintain the
status quo pending resolution of the union’s petition for a certification election and also in violation of a
collective bargaining agreement. (United Seamen’s Union of the Philippines vs. Davao Shipowners
Association, 20 SCRA 1226).
While the doctrine of the Philippine Can Company case had been relaxed where we felt that the legality
of a strike need not be inquired into the situation confronting the Court of Industrial Relations here was
such that a determination of the validity of the strike is crucial to the proper disposition of the matter of
economic demands of striking union for a 21% across-the-board general salary strike. (National Power
Corporation vs. National Power Corporation Employer and Workers Association, 33 SCRA 806; National
Power Corporation, 30 SCRA 806).
The “substitution doctrine” provides that the employees cannot revoke the validly executed CBA with
their employer by the simple expedient of changing their bargaining agent.
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People vs. Capillas
(Benguet Consolidated, Inc. vs. BCI Employees & Workers Union-PAFLU, 23 SCRA 465).
As regards the disorder that allegedly characterized the election, the minutes thereof, that said election
was peaceful is sufficient to refute petitioner’s pretense. (Acoje Workers Union vs. National Mines &
Allied Workers Union, 7 SCRA 730).
Where it appears that illegal acts committed by individual strikers against the company were neither
authorized nor impliedly sanctioned by the union, the other strikers who were innocent of and did not
participate in said acts should not be punished by being deprived of their right of reinstatement.
(Consolidated Labor Assn. of the Philippines vs. Marsman & Co., 11 SCRA 589).
Even if done in good faith, if strikers act for an illegitimate, unjust, or trivial reason, the strike may be
declared illegal notwithstanding their good faith. (Luzon Stevedoring Corp vs. CIR, 17 SCRA 65).
The strikers must have offered to return to work under the same conditions under which they work just
before their strike so that the company’s refusal would have placed on the latter the blame for their
economic loss. (Cromwell Commercial Employees and Laborers Union vs. CIR, 12 SCRA 124).
——o0o—— Liwayway Pub., Inc. vs. Permanent Concrete Workers Union, 108 SCRA 161, No. L-25003
October 23, 1981
784
MSF Tire and Rubber, Inc. vs. Court of Appeals
G.R. No. 128632. August 5, 1999.*
MSF TIRE AND RUBBER, INC., petitioner, vs. COURT OF APPEALS and PHILTREAD TIRE WORKERS’
UNION, respondents.
Remedial Law; Actions; Forum-Shopping; Forum-shopping is the institution of two (2) cases or more
actions or proceedings grounded on the same cause on the supposition that one or the other court
would make a favorable disposition; Instances where there is forum-shopping.—Forum-shopping is
the institution of two (2) or
_________________
22 People v. Prades, supra, cited in People v. Bañago, G.R. No. 128384, June 29, 1999, 309 SCRA 417.
* SECOND DIVISION.
785
VOL. 311, AUGUST 5, 1999
785
more actions or proceedings grounded on the same cause on the supposition that one or the other
court would make a favorable disposition. It is an act of malpractice and is prohibited and condemned
as trifling with courts and abusing their processes. As held in Executive Secretary v. Gordon: Forum-
shopping consists of filing multiple suits involving the same parties for the same cause of action,
either simultaneously or successively, for the purpose of obtaining a favorable judgment. Thus, it has
been held that there is forum-shopping—(1) whenever as a result of an adverse decision in one forum,
a party seeks a favorable decision (other than by appeal or certiorari) in another, or (2) if, after he has
filed a petition before the Supreme Court, a party files another before the Court of Appeals since in
such case he deliberately splits appeals “in the hope that even as one case in which a particular
remedy is sought is dismissed, another case (offering a similar remedy) would still be open, or (3)
where a party attempts to obtain a preliminary injunction in another court after failing to obtain the
same from the original court.
Same; Injunctions; Labor Law; “Innocent bystander” rule stated in Philippine Association of Free Labor
Unions (PAFLU) v. Cloribel.—Petitioner asserts that its status as an “innocent bystander” with respect
to the labor dispute between Philtread and the Union entitles it to a writ of injunction from the civil
courts and that the appellate court erred in not upholding its corporate personality as independent of
Philtread’s. In Philippine Association of Free Labor Unions (PAFLU) v. Cloribel, this Court, through
Justice J.B.L. Reyes, stated the “innocent bystander” rule as follows: The right to picket as a means of
communicating the facts of a labor dispute is a phase of the freedom of speech guaranteed by the
constitution. If peacefully carried out, it can not be curtailed even in the absence of employer-
employee relationship. The right is, however, not an absolute one. While peaceful picketing is entitled
to protection as an exercise of free speech, we believe the courts are not without power to confine or
localize the sphere of communication or the demonstration to the parties to the labor dispute,
including those with related interest, and to insulate establishments or persons with no industrial
connection or having interest totally foreign to the context of the dispute. Thus the right may be
regulated at the instance of third parties or “innocent bystanders” if it appears that the inevitable
result of its exercise is to create an impression that a labor dispute with which they have no
connection or interest exists between them and the picketing union or constitutes an invasion of their
rights.
786
786
Same; Same; Same; Same; An “innocent bystander,” who seeks to enjoin a labor strike, must satisfy
the court that aside from the grounds specified in Rule 58 of the Rules of Court, it is entirely different
from and without any connection whatever to, either party to the dispute and, therefore, its interests
are totally foreign to the context thereof.—An “innocent bystander,” who seeks to enjoin a labor
strike, must satisfy the court that aside from the grounds specified in Rule 58 of the Rules of Court, it
is entirely different from, without any connection whatsoever to, either party to the dispute and,
therefore, its interests are totally foreign to the context thereof. For instance, in PAFLU v. Cloribel,
supra, this Court held that Wellington and Galang were entirely separate entities, different from, and
without any connection whatsoever to, the Metropolitan Bank and Trust Company, against whom the
strike was directed, other than the incidental fact that they are the bank’s landlord and co-lessee
housed in the same building, respectively. Similarly, in Liwayway Publications, Inc. v. Permanent
Concrete Workers Union, this Court ruled that Liwayway was an “innocent bystander” and thus
entitled to enjoin the union’s strike because Liwayway’s only connection with the employer company
was the fact that both were situated in the same premises.
Sycip, Salazar, Hernandez & Gatmaitan for petitioner.
Rene V. Sarmiento for respondent Union.
MENDOZA, J.:
Petitioner seeks a review of the decision1 of the Court of Appeals, dated March 20, 1997, which set
aside the order of the Regional Trial Court of Makati, dated July 2, 1996, in Civil Case No. 95-770,
granting petitioner’s application for a writ of preliminary injunction.
____________________
1 Penned by Associate Justice Fidel P. Purisima and concurred in by Associate Justice Angelina Sandoval
Gutierrez and Associate Justice Conrado M. Vazquez, Jr.
787
VOL. 311, AUGUST 5, 1999
787
A labor dispute arose between Philtread Tire and Rubber Corporation (Philtread) and private
respondent, Philtread Tire Workers’ Union (Union), as a result of which the Union filed on May 27, 1994
a notice of strike in the National Conciliation and Mediation Board—National Capital Region charging
Philtread with unfair labor practices for allegedly engaging in union-busting for violation of the
provisions of the collective bargaining agreement. This was followed by picketing and the holding of
assemblies by the Union outside the gate of Philtread’s plant at Km. 21, East Service Road, South
Superhighway, Muntinlupa, Metro Manila. Philtread, on the other hand, filed a notice of lock-out on
May 30, 1994 which it carried out on June 15, 1994.
In an order, dated September 4, 1994,2 then Secretary of Labor Nieves Confesor assumed jurisdiction
over the labor dispute and certified it for compulsory arbitration. She enjoined the Union from striking
and Philtread from locking out members of the Union.
On December 9, 1994, during the pendency of the labor dispute, Philtread entered into a Memorandum
of Agreement with Siam Tyre Public Company Limited (Siam Tyre), a subsidiary of Siam Cement. Under
the Memorandum of Agreement, Philtread’s plant and equipment would be sold to a new company
(petitioner MSF Tire and Rubber, Inc.), 80% of which would be owned by Siam Tyre and 20% by
Philtread, while the land on which the plant was located would be sold to another company (Sucat Land
Corporation), 60% of which would be owned by Philtread and 40% by Siam Tyre.
This was done and the Union was informed of the purchase of the plant by petitioner. Petitioner then
asked the Union to desist from picketing outside its plant and to remove the banners, streamers, and
tent which it had placed outside the plant’s fence.
___________________
2 Rollo, pp. 60-62.
788
788
As the Union refused petitioner’s request, petitioner filed on May 25, 1995 a complaint for injunction
with damages against the Union and the latter’s officers and directors before the Regional Trial Court of
Makati, Branch 59 where the case was docketed as Civil Case No. 95-770.
On June 13, 1995, the Union moved to dismiss the complaint alleging lack of jurisdiction on the part of
the trial court. It insisted that the parties were involved in a labor dispute and that petitioner, being a
mere “alter ego” of Philtread, was not an “innocent bystander.”
After petitioner made its offer of evidence as well as the submission of the parties’ respective
memoranda, the trial court, in an order, dated March 25, 1996, denied petitioner’s application for
injunction and dismissed the complaint. However, on petitioner’s motion, the trial court, on July 2, 1996,
reconsidered its order, and granted an injunction. Its order read:3
Considering all that has been stated, the motion for reconsideration is granted. The Order dated March
25, 1996 is reconsidered and set aside. Plaintiff’s complaint is reinstated and defendant’s motion to
dismiss is DENIED.
As regards plaintiff’s application for the issuance of a writ of preliminary injunction, the Court finds that
the plaintiff has established a clear and subsisting right to the injunctive relief, hence, the same is
GRANTED. Upon posting by the plaintiff and approval by the Court of a bond in the amount of One
Million (P1,000,000.00) Pesos which shall answer for any damage that the defendants may suffer by
reason of the injunction in the event that the Court may finally adjudge that the plaintiff is not entitled
thereto, let a writ of preliminary injunction issue ordering the defendants and any other persons acting
with them and/or on their behalf to desist immediately from conducting their assembly in the area
immediately outside the plaintiff’s plant at Km. 21 East Service Road, South Superhighway, Muntinlupa,
Metro Manila, and from placing and/or constructing banners, streamers, posters and placards, and/or
tents/ shanties or any other structure, on the fence of, and/or along the
_______________
3 Per Judge Lucia Violago Isnani.
789
VOL. 311, AUGUST 5, 1999
789
sidewalk outside, the said plant premises until further orders from this Court.
SO ORDERED.4
Without filing a motion for reconsideration, the Union filed on August 5, 1996 a petition for certiorari
and prohibition before the Court of Appeals.
On March 20, 1997, the appellate court rendered a decision granting the Union’s petition and ordering
the trial court to dismiss the civil case for lack of jurisdiction. Hence, this petition for review. Petitioner
makes the following arguments in support of its petition:
a. The Court of Appeals erred in not summarily dismissing the Union’s petition for its false certification
of non-forum shopping and the Union’s failure to file a motion for reconsideration before going up to
the Court of Appeals on a petition for certiorari.
b. The Court of Appeals gravely erred in dismissing Civil Case No. 95-770 for lack of jurisdiction and merit
on the alleged ground that MSF did not have a clear and unmistakable right to entitle it to a writ of
preliminary injunction.
c. The Court of Appeals’ pronouncement that it has not touched upon the issue of whether or not
private respondent is a mere innocent bystander to the labor dispute between Philtread and the Union
or upon the issue of whether or not private respondent is a mere dummy or continuity of Philtread is
contrary to its own conclusions in the body of the decision, which conclusions are erroneous.
d. The Court of Appeals gravely abused its discretion when it disallowed the injunction based on
Philtread’s remaining operations in the country and allowed the Union to exercise its right to
communicate the facts of its labor dispute within MSF’s premises, given the percentage of interest
Philtread has in both MSF and the corporation which owns the land bearing said plant.
The issues are (1) whether the Union’s failure to disclose the pendency of NCMB-NCR-NS-05-167-96 in
its certification
_____________________
4 Rollo, pp. 161-162.
790
790

of non-forum shopping and its failure to file a motion for reconsideration of the order, dated July 2,
1996, of the trial court were fatal to its petition for review before the Court of Appeals; and (2) whether
petitioner has shown a clear legal right to the issuance of a writ of injunction under the “innocent
bystander” rule.
First. Forum-shopping is the institution of two (2) or more actions or proceedings grounded on the same
cause on the supposition that one or the other court would make a favorable disposition.5 It is an act of
malpractice and is prohibited and condemned as trifling with courts and abusing their processes.6 As
held in Executive Secretary v. Gordon:7
Forum-shopping consists of filing multiple suits involving the same parties for the same cause of action,
either simultaneously or successively, for the purpose of obtaining a favorable judgment. Thus, it has
been held that there is forum-shopping—
(1) whenever as a result of an adverse decision in one forum, a party seeks a favorable decision (other
than by appeal or certiorari) in another, or
(2) if, after he has filed a petition before the Supreme Court, a party files another before the Court of
Appeals since in such case he deliberately splits appeals “in the hope that even as one case in which a
particular remedy is sought is dismissed, another case (offering a similar remedy) would still be open, or
(3) where a party attempts to obtain a preliminary injunction in another court after failing to obtain the
same from the original court.
In determining whether or not there is forum-shopping, what is important is the vexation caused the
courts and parties-litigant by a party who asks different courts and/or administrative agencies to rule on
the same or related causes and/or grant the same or substantially the same reliefs and in
___________________
5 Solid Homes, Inc. v. Court of Appeals, 271 SCRA 157 (1997).
6 Ibid.
7 G.R. No. 134171, November 18, 1998, 298 SCRA 736.
791
VOL. 311, AUGUST 5, 1999
791
the process creating the possibility of conflicting decisions being rendered by the different fora upon the
same issues.8
Petitioner asserts that the Court of Appeals should have dismissed the Union’s petition for review on the
ground that the certification of non-forum shopping was false and perjurious as a result of the Union’s
failure to mention the existence of NCMB-NCR-NS-05-167-96, a proceeding involving the same parties
and pending before the National Conciliation and Mediation Board.
The argument is without merit. Petitioner was a party to the proceedings before the National
Conciliation and Mediation Board in which an order, dated September 8, 1994, was issued by then
Secretary of Labor Nieves Confesor, enjoining any strike or lockout by the parties.9 It was petitioner
which initiated the action for injunction before the trial court. Aggrieved by the injunctive order issued
by the lower court, the Union was forced to file a petition for review before the Court of Appeals. We
cannot understand why petitioner should complain that no mention of the pendency of the arbitration
case before the labor department was made in the certificate of non-forum shopping attached to the
Union’s petition in the Court of Appeals. The petition of the Union in the Court of Appeals was provoked
by petitioner’s action in seeking injunction from the trial court when it could have obtained the same
relief from the Secretary of Labor.
Indeed, by focusing on the Union’s certification before the appellate court, petitioner failed to notice
that its own certification before the lower court suffered from the same omission for which it faults the
Union. Although the body of petitioner’s complaint mentions NCMB-NCR-NS-05-167-96, its own
certification is silent concerning this matter.10 It is not in keeping with the requirements of fairness for
petitioner to demand strict application of the prohibition against forum-shopping, when it, too, is guilty
of the same omission.
_____________________
8 Golangco v. Court of Appeals, 283 SCRA 493 (1997).
9 Rollo, pp. 60-62.
10 Rollo, p. 58.
792
792
Second. Petitioner asserts that its status as an “innocent bystander” with respect to the labor dispute
between Philtread and the Union entitles it to a writ of injunction from the civil courts and that the
appellate court erred in not upholding its corporate personality as independent of Philtread’s.
In Philippine Association of Free Labor Unions (PAFLU) v. Cloribel,11 this Court, through Justice J.B.L.
Reyes, stated the “innocent bystander” rule as follows:
The right to picket as a means of communicating the facts of a labor dispute is a phase of the freedom of
speech guaranteed by the constitution. If peacefully carried out, it can not be curtailed even in the
absence of employer-employee relationship.
The right is, however, not an absolute one. While peaceful picketing is entitled to protection as an
exercise of free speech, we believe the courts are not without power to confine or localize the sphere of
communication or the demonstration to the parties to the labor dispute, including those with related
interest, and to insulate establishments or persons with no industrial connection or having interest
totally foreign to the context of the dispute. Thus the right may be regulated at the instance of third
parties or “innocent bystanders” if it appears that the inevitable result of its exercise is to create an
impression that a labor dispute with which they have no connection or interest exists between them and
the picketing union or constitute an invasion of their rights. In one case decided 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 flour mill with which the union had a dispute. Although sustained on a different
ground, no connection was found between the two mills owned by two different corporations other
than their being situated in the same premises. It is to be noted that in the instances cited, peaceful
picketing has not been totally banned but merely regulated. And in one American case, a picket by a
labor 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 entrance of the building housing the theater
wherein other stores operated by third persons were located.12 (Emphasis added)
___________________
11 27 SCRA 465 (1969).
12 Id., 472-473.
793
VOL. 311, AUGUST 5, 1999
793
Thus, an “innocent bystander,” who seeks to enjoin a labor strike, must satisfy the court that aside from
the grounds specified in Rule 58 of the Rules of Court, it is entirely different from, without any
connection whatsoever to, either party to the dispute and, therefore, its interests are totally foreign to
the context thereof. For instance, in PAFLU v. Cloribel, supra, this Court held that Wellington and Galang
were entirely separate entities, different from, and without any connection whatsoever to, the
Metropolitan Bank and Trust Company, against whom the strike was directed, other than the incidental
fact that they are the bank’s landlord and co-lessee housed in the same building, respectively. Similarly,
in Liwayway Publications, Inc. v. Permanent Concrete Workers Union,13 this Court ruled that Liwayway
was an “innocent bystander” and thus entitled to enjoin the union’s strike because Liwayway’s only
connection with the employer company was the fact that both were situated in the same premises.
In the case at bar, petitioner cannot be said not to have such connection to the dispute. As correctly
observed by the appellate court:
Coming now to the case before us, we find that the “negotiation, contract of sale, and the post
transaction” between Philtread, as vendor, and Siam Tyre, as vendee, reveals a legal relation between
them which, in the interest of petitioner, we cannot ignore. To be sure, the transaction between
Philtread and Siam Tyre, was not a simple sale whereby Philtread ceased to have any proprietary rights
over its sold assets. On the contrary, Philtread remains as 20% owner of private respondent and 60%
owner of Sucat Land Corporation which was likewise incorporated in accordance with the terms of the
Memorandum of Agreement with Siam Tyre, and which now owns the land were subject plant is
located. This, together with the fact that private respondent uses the same plant or factory; similar or
substantially the same working conditions; same machinery, tools, and equipment; and manufacture the
same products as Philtread, lead us to safely conclude that private respondent’s personality is so closely
linked to Philtread as to bar its entitlement to an injunctive writ. Stated differently, given its close links
with Phil-
__________________
13 108 SCRA 161 (1981).
794
794
tread as to bar its entitlement to an injunctive writ. Stated differently, given its close links with Philtread,
we find no clear and unmistakable right on the part of private respondent to entitle it to the writ of
preliminary injunction it prayed for below.
....
We stress that that in so ruling, we have not touched on the issue of . . . whether or not private
respondent is a mere dummy or continuation of Philtread . . . .14
Although, as petitioner contends, the corporate fiction may be disregarded where it is used to defeat
public convenience, justify wrong, protect fraud, defend crime, or where the corporation is used as a
mere alter-ego or business conduit,15 it is not these standards but those of the “innocent bystander”
rule which govern whether or not petitioner is entitled to an injunctive writ. Since petitioner is not an
“innocent bystander,” the trial court’s order, dated July 2, 1996, is a patent nullity, the trial court having
no jurisdiction to issue the writ of injunction. No motion for reconsideration need be filed where the
order is null and void.16
WHEREFORE, petition is hereby DENIED and the decision of the Court of Appeals is AFFIRMED.
SO ORDERED.
Bellosillo (Chairman), Quisumbing and Buena, JJ., concur.
Petition denied; Reviewed decision affirmed.
Note.—Mere submission of a certification after filing of a motion to dismiss on the ground of non-
compliance thereof does not necessarily operate as a substantial compliance. (Tomarong vs. Lubguban,
269 SCRA 624 [1997])
——o0o—— MSF Tire and Rubber, Inc. vs. Court of Appeals, 311 SCRA 784, G.R. No. 128632 August 5,
1999
VOL. 310, JULY 19, 1999
403
Complex Electronics Employees Association vs. NLRC
G.R. No. 121315. July 19, 1999.*
COMPLEX ELECTRONICS EMPLOYEES ASSOCIATION (CEEA) represented by its union president CECILIA
TALAVERA, GEORGE ARSOLA, MARIO DIAGO AND SOCORRO BONCAYAO, petitioners, vs. THE
NATIONAL LABOR RELATIONS COMMISSION, COMPLEX ELECTRONICS CORPORATION, IONICS CIRCUIT,
INC., LAWRENCE QUA, REMEDIOS DE JESUS, MANUEL GONZAGA, ROMY DELA ROSA, TERESITA
ANDINO, ARMAN CABACUNGAN, GERRY GABANA, EUSEBIA MARANAN and BERNADETH GACAD,
respondents.
G.R. No. 122136. July 19, 1999.*
COMPLEX ELECTRONICS CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION,

COMPLEX ELECTRONICS EMPLOYEES ASSOCIATION (CEEA), represented by Union President, CECILIA
TALAVERA, respondents.
____________________________
* FIRST DIVISION.
404
404
Labor Law; Unfair Labor Practices; Strikes; Words and Phrases; A “runaway shop” is an industrial plant
moved by its owners from one location to another to escape union labor regulations or state laws, but
the term is also used to describe a plant removed to a new location in order to discriminate against
employees at the old plant because of their union activities.—A “runaway shop” is defined as an
industrial plant moved by its owners from one location to another to escape union labor regulations
or state laws, but the term is also used to describe a plant removed to a new location in order to
discriminate against employees at the old plant because of their union activities. It is one wherein the
employer moves its business to another location or it temporarily closes its business for anti-union
purposes. A “runaway shop” in this sense, is a relocation motivated by anti-union animus rather than
for business reasons. In this case, however, Ionics was not set up merely for the purpose of
transferring the business of Complex. At the time the labor dispute arose at Complex, Ionics was
already existing as an independent company. As earlier mentioned, it has been in existence since July
5, 1984. It cannot, therefore, be said that the temporary closure in Complex and its subsequent
transfer of business to Ionics was for anti-union purposes. The Union failed to show that the primary
reason for the closure of the establishment was due to the union activities of the employees.
Same; Corporation Law; Piercing the Veil of Corporate Fiction; The mere fact that one or more
corporations are owned or controlled by the same or single stockholder is not a sufficient ground for
disregarding separate corporate personalities.—The mere fact that one or more corporations are
owned or controlled by the same or single stockholder is not a sufficient ground for disregarding
separate corporate personalities. Thus, in Indophil Textile Mill Workers Union vs. Calica, we ruled
that: [I]n the case at bar, petitioner seeks to pierce the veil of corporate entity of Acrylic, alleging that
the creation of the corporation is a devise to evade the application of the CBA between petitioner
Union and private respondent company. While we do not discount the possibility of the similarities of
the businesses of private respondent and Acrylic, neither are we inclined to apply the doctrine
invoked by petitioner in granting the relief sought. The fact that the businesses of private respondent
and Acrylic are related, that some of the employees of the private respondent are the same persons
manning and providing for auxiliary services to the units of Acrylic, and that the physical plants,
offices
405
VOL. 310, JULY 19, 1999
405
Complex Electronis Employees Association vs. NLRC
and facilities are situated in the same compound, it is our considered opinion that these facts are not
sufficient to justify the piercing of the corporate veil of Acrylic.
Same; Same; Same; To disregard the separate juridical personality of a corporation, the wrongdoing
must be clearly and convincingly established.—Ionics may be engaged in the same business as that of
Complex, but this fact alone is not enough reason to pierce the veil of corporate fiction of the
corporation. Well-settled is the rule that a corporation has a personality separate and distinct from
that of its officers and stockholders. This fiction of corporate entity can only be disregarded in certain
cases such as when it is used to defeat public convenience, justify wrong, protect fraud, or defend
crime. To disregard said separate juridical personality of a corporation, the wrongdoing must be
clearly and convincingly established.
Same; Same; Same; The mere fact that both of the corporations have the same president is not in
itself sufficient to pierce the veil of corporate fiction of the two corporations.—As to the additional
documentary evidence which consisted of a newspaper clipping filed by petitioner Union, we agree
with respondent Ionics that the photo/ newspaper clipping itself does not prove that Ionics and
Complex are one and the same entity. The photo/newspaper clipping merely showed that some
plants of Ionics were recertified to ISO 9002 and does not show that there is a relation between
Complex and Ionics except for the fact that Lawrence Qua was also the president of Ionics. However,
as we have stated above, the mere fact that both of the corporations have the same president is not
in itself sufficient to pierce the veil of corporate fiction of the two corporations.
Same; Unfair Labor Practices; Lockouts; Words and Phrases; Lockout is the temporary refusal of
employer to furnish work as a result of an industrial or labor dispute.—We, likewise, disagree with the
Union that there was in this case an illegal lockout/illegal dismissal. Lockout is the temporary refusal
of employer to furnish work as a result of an industrial or labor dispute. It may be manifested by the
employer’s act of excluding employees who are union members. In the present case, there was a
complete cessation of the business operations at Complex not because of the labor dispute. It should
be recalled that, before the labor dispute, Complex had already informed the employees that they
would be closing the Lite-On Line. The employees, however, demanded for a separation pay
equivalent
406
406
to one (1) month salary for every year of service which Complex refused to give. When Complex filed
a notice of closure of its Lite-On Line, the employees filed a notice of strike which greatly alarmed the
customers of Complex and this led to the pull-out of their equipment, machinery and materials from
Complex. Thus, without the much needed equipment, Complex was unable to continue its business. It
was left with no other choice except to shut down the entire business. The closure, therefore, was not
motivated by the union activities of the employees, but rather by necessity since it can no longer
engage in production without the much needed materials, equipment and machinery.
Same; Same; Same; Management Prerogatives; Closure of Establishment; Whether or not an

employer is incurring great losses, it is still one of the management’s prerogative to close down its
business as long as it is done in good faith.—As to the claim of petitioner Union that Complex was
gaining profit, the financial statements for the years 1990, 1991 and 1992 issued by the auditing and
accounting firm Sycip, Gorres and Velayo readily show that Complex was indeed continuously
experiencing deficit and losses. Nonetheless, whether or not Complex was incurring great losses, it is
still one of the management’s prerogative to close down its business as long as it is done in good faith.
Thus, in Catatista, et al. vs. NLRC and Victorias Milling Co., Inc. we ruled: In any case, Article 283 of the
Labor Code is clear that an employer may close or cease his business operations or undertaking even if
he is not suffering from serious business losses or financial reverses, as long as he pays his employees
their termination pay in the amount corresponding to their length of service. It would indeed, be
stretching the intent and spirit of the law if we were to unjustly interfere in management’s
prerogative to close or cease its business operations just because said business operations or
undertaking is not suffering from any loss.
Same; Corporation Law; In the absence of malice or bad faith, a stockholder or an officer of a
corporation cannot be made personally liable for corporate liabilities.—Going now to the issue of
personal liability of Lawrence Qua, it is settled that in the absence of malice or bad faith, a
stockholder or an officer of a corporation cannot be made personally liable for corporate liabilities. In
the present case, while it may be true that the equipment, materials and machinery were pulled-out
of Complex and transferred to Ionics during the
407
VOL. 310, JULY 19, 1999
407
night, their action was sufficiently explained by Lawrence Qua in his Comment to the petition filed by
the Union.
Same; Closure of Establishment; One-Month Notice Requirement; The purpose of the one-month
notice requirement is to enable the proper authorities to determine after hearing whether such
closure is being done in good faith, i.e., for bona fide business reasons.—The purpose of the notice
requirement is to enable the proper authorities to determine after hearing whether such closure is
being done in good faith, i.e., for bona fide business reasons, or whether, to the contrary, the closure
is being resorted to as a means of evading compliance with the just obligations of the employer to the
employees affected.
Same; Same; Same; While the law acknowledges the management prerogative of closing the business,
it does not, however, allow the business establishment to disregard the requirements of the law.—
While the law acknowledges the management prerogative of closing the business, it does not,
however, allow the business establishment to disregard the requirements of the law. The case of
Magnolia Dairy Products v. NLRC is quite emphatic about this: The law authorizes an employer, like
the herein petitioners, to terminate the employment of any employee due to the installation of labor
saving devices. The installation of these devices is a management prerogative, and the courts will not
interfere with its exercise in the absence of abuse of discretion, arbitrariness, or maliciousness on the
part of management, as in this case. Nonetheless, this did not excuse petitioner from complying with
the required written notice to the employee and to the Department of Labor and Employment (DOLE)
at least one month before the intended date of termination. This procedure enables an employee to
contest the reality or good faith character of the asserted ground for the termination of his services
before the DOLE. The failure of petitioner to serve the written notice to private respondent and to the
DOLE, however, does not ipso facto make private respondent’s termination from service illegal so as
to entitle her to reinstatement and payment of backwages. If at all, her termination from service is
merely defective because it was not tainted with bad faith or arbitrariness and was due to a valid
cause.
Same; Same; Separation Pay; In case of closures or cessation of operation of business establishments
not due to serious business losses or financial reverses, the employees are always given separation
408
408
benefits.—It is settled that in case of closures or cessation of operation of business establishments not
due to serious business losses or financial reverses, the employees are always given separation
benefits. In the instant case, notwithstanding the financial losses suffered by Complex, such was,
however, not the main reason for its closure. Complex admitted in its petition that the main reason
for the cessation of the operations was the pull-out of the materials, equipment and machinery from
the premises of the corporation as dictated by its customers. It was actually still capable of continuing
the business but opted to close down to prevent further losses. Under the facts and circumstances of
the case, we find no grave abuse of discretion on the part of the public respondent in awarding the
employees one (1) month pay for every year of service as termination pay.
Patricio L. Boncayao, Jr. for Complex Electronics Employees Association.
Antonio H. Abad & Associates for Complex Electronics Corporation.
Siguion Reyna, Montecillo & Ongsiako for Ionics Circuit, Incorporated.
KAPUNAN, J.:
These consolidated cases filed by Complex Electronics Employees Association (G.R. No. 121315) and
Complex Electronics Corporation (G.R. No. 122136) assail the Decision of the NLRC dated March 10,
1995 which set aside the Decision of the Labor Arbiter dated April 30, 1993.
The antecedents of the present petitions are as follows:

Complex Electronics Corporation (Complex) was engaged in the manufacture of electronic products. It
was actually a subcontractor of electronic products where its customers gave their job orders, sent their
own materials and consigned their equipment to it. The customers were foreign-based companies
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409
with different product lines and specifications requiring the employment of workers with specific skills
for each product line. Thus, there was the AMS Line for the Adaptive Micro System, Inc., the Heril Line
for Heril Co., Ltd., the Lite-On Line for the Lite-On Philippines Electronics Co., etc.
The rank and file workers of Complex were organized into a union known as the Complex Electronics
Employees Association, herein referred to as the Union.
On March 4, 1992, Complex received a facsimile message from Lite-On Philippines Electronics Co.,
requiring it to lower its price by 10%. The full text reads as follows:
This is to inform your office that Taiwan required you to reduce your assembly cost since it is higher by
50% and no longer competitive with that of mainland China. It is further instructed that Complex Price
be patterned with that of other sources, which is 10% lower.
Please consider and give us your revised rates soon.1
Consequently, on March 9, 1992, a meeting was held between Complex and the personnel of the Lite-
On Production Line. Complex informed its Lite-On personnel that such request of lowering their selling
price by 10% was not feasible as they were already incurring losses at the present prices of their
products. Under such circumstances, Complex regretfully informed the employees that it was left with
no alternative but to close down the operations of the Lite-On Line. The company, however, promised
that:
1)Complex will follow the law by giving the people to be retrenched the necessary 1 month notice.
Hence, retrenchment will not take place until after 1 month from March 09, 1992.
2) The Company will try to prolong the work for as many people as possible for as long as it can by
looking for job slots for them in another line if workload so allows and if their skills are compatible with
the line requirement.
____________________________
1 Rollo, of G.R. No. 122636, p. 270.
410
410
3) The company will give the employees to be retrenched a retrenchment pay as provided for by law i.e.
half a month for every year of service in accordance with Article 283 of the Labor Code of Philippines.2
The Union, on the other hand, pushed for a retrenchment pay equivalent to one (1) month salary for
every year of service, which Complex refused.
On March 13, 1992, Complex filed a notice of closure of the Lite-On Line with the Department of Labor
and Employment (DOLE) and the retrenchment of the ninety-seven (97) affected employees.3
On March 25, 1993, the Union filed a notice of strike with the National Conciliation and Mediation Board
(NCMB).
Two days thereafter, or on March 27, 1993, the Union conducted a strike vote which resulted in a “yes”
vote.
In the evening of April 6, 1992, the machinery, equipment and materials being used for production at
Complex were pulled out from the company premises and transferred to the premises of Ionics Circuit,
Inc. (Ionics) at Cabuyao, Laguna. The following day, a total closure of company operation was effected at
Complex.
A complaint was, thereafter, filed with the Labor Arbitration Branch of the NLRC for unfair labor
practice, illegal closure/illegal lockout, money claims for vacation leave, sick leave, unpaid wages, 13th
month pay, damages and attorney’s fees. The Union alleged that the pull-out of the machinery,
equipment and materials from the company premises, which resulted to the sudden closure of the
company was in violation of Sections 3 and 8, Rule XIII, Book V of the Labor Code of the Philippines4 and
the existing CBA. Ionics was impleaded as a
____________________________
2 Id., at 271.
3 NLRC Decision dated March 10, 1995, rollo of G.R. No. 121315, p. 78.
4 Sec. 3. Notice of strike or lockout.—In cases of bargaining deadlocks, a notice of strike or lockout shall
be filed with the re
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411
party defendant because the officers and management personnel of Complex were also holding office at
Ionics with Lawrence Qua as the President of both companies.
Complex, on the other hand, averred that since the time the Union filed its notice of strike, there was a
significant decline in the quantity and quality of the products in all of the production lines. The delivery
schedules were not met prompting the customers to lodge complaints against them. Fearful that the
machinery, equipment and materials would be rendered inoperative and unproductive due to the
impending strike of the workers, the customers ordered their pull-out and transfer to Ionics. Thus,
Complex was compelled to cease operations.
Ionics contended that it was an entity separate and distinct from Complex and had been in existence
since July 5, 1984 or eight (8) years before the labor dispute arose at Complex. Like Complex, it was also
engaged in the semi-conductor business where the machinery, equipment and materials were
consigned to them by their customers. While admitting that Lawrence Qua, the President of Complex
was also the President of Ionics, the latter denied having Qua as their owner since he had no recorded
subscription of P1,200,000.00 in Ionics as
____________________________
gional branch of the Board at least thirty (30) days before the intended dated thereof, a copy of said
notice having been served on the other party concerned. In case of unfair labor practices, the period of
notice shall be fifteen (15) days. However, in case of unfair labor practice involving the dismissal from
employment of union officers duly elected in accordance with the union constitution and by-laws which
may constitute union-busting where the existence of the union is threatened, the fifteen-day cooling-off
period shall not apply and the union may take action immediately after the strike vote is conducted and
the results thereof submitted to the Department of Labor and Employment.
Sec. 8. Declaration of strike and lockout.—Should the dispute remain unsettled after the lapse of the
requisite number of days from the filing of the notice of strike or lockout and the results of the election
required in the preceding section, the labor union may strike or the employer may lockout its workers.
The regional branch or the Board shall continue mediating and conciliating.
412
412
claimed by the Union. Ionics further argued that the hiring of some displaced workers of Complex was
an exercise of management prerogatives. Likewise, the transfer of the machinery, equipment and
materials from Complex was the decision of the owners who were common customers of Complex and
Ionics.
On April 30, 1993, the Labor Arbiter rendered a decision the dispositive portion of which reads:
WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered ordering the
respondent Complex Electronics Corporation and/or Ionics Circuit Incorporated and/or Lawrence Qua,
to reinstate the 531 above-listed employees to their former position with all the rights, privileges and
benefits appertaining thereto, and to pay said complainants-employees the aggregate backwages
amounting P26,949,891.80 as of April 6, 1993 and to such further backwages until their actual
reinstatement. In the event reinstatement is no longer feasible for reasons not attributable to the
complainants, said respondents are also liable to pay complainantsemployees their separation pay to be
computed at the rate of one (1) month pay for every year of service, a fraction of at least six (6) months
to be considered as one whole year.
Further, the aforenamed three (3) respondents are hereby ordered to pay jointly and solidarily the
complainants-employees an aggregate moral damages in the amount of P1,062,000.00 and exemplary
damages in the aggregate sum of P531,000.00.
And finally, said respondents are ordered to pay attorney’s fees equivalent to ten percent (10%) of
whatever has been adjudicated herein in favor of the complainants.
The charge of slowdown strike filed by respondent Complex against the union is hereby dismissed for
lack of merit.
SO ORDERED.5
Separate appeals were filed by Complex, Ionics and Lawrence Qua before the respondent NLRC which
rendered the questioned decision on March 10, 1995, the decretal portion of which states:
____________________________
5 Rollo of G.R. 121315, pp. 72-73.
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413
WHEREFORE, premises considered, the assailed decision is hereby ordered vacated and set aside, and a
new one entered ordering respondent Complex Electronics Corporation to pay 531 complainants
equivalent to one month pay in lieu of notice and separation pay equivalent to one month pay for every
year of service and a fraction of six months considered as one whole year.
Respondents Ionics Circuit Incorporated and Lawrence Qua are hereby ordered excluded as parties
solidarily liable with Complex Electronics Corporation.
The award of moral damages is likewise deleted for lack of merit.

Respondent Complex, however, is hereby ordered to pay attorney’s fees equivalent to ten (10%)
percent of the total amount of award granted the complainants.
SO ORDERED.6
Complex, Ionics and the Union filed their motions for reconsideration of the above decision which were
denied by the respondent NLRC in an Order dated July 11, 1995.7
Hence these petitions.
In G.R. No. 121315, petitioner Complex Electronics Employees Association asseverates that the
respondent NLRC erred when it:
SET ASIDE THE DECISION DATED APRIL 30, 1993 ISSUED BY THE HON. LABOR ARBITER JOSE DE VERA.
II
EXCLUDED PRIVATE RESPONDENTS IONICS CIRCUITS, INCORPORATED AND LAWRENCE QUA AS PARTIES
SOLIDARILY LIABLE WITH COMPLEX ELECTRONICS CORPORATION.
____________________________
6 Id., at 99-100.
7 Id., at 102-106.
414
414
III
FOUND THAT COMPLEX ELECTRONICS CORPORATION WAS NOT GUILTY OF ILLEGAL CLOSURE AND
ILLEGAL DISMISSAL OF THE PETITIONERS.
IV
REMOVED THE AWARD FOR BACKWAGES, REINSTATEMENT AND DAMAGES IN THE DECISION DATED
APRIL 30, 1993 ISSUED BY THE HON. LABOR ARBITER JOSE DE VERA.8
On the other hand, in G.R. No. 122136, petitioner Complex Electronics Corporation raised the following
issues, to wit:
PUBLIC RESPONDENT NLRC ACTED IN GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR IN

EXCESS OF JURISDICTION IN PROMULGATING ITS DECISION AND ORDER DATED 10 MARCH 1995, AND 11
JULY 1995, RESPECTIVELY, THE SAME BEING IN CONTRAVENTION OF THE EXPRESS MANDATE OF THE
LAW GOVERNING THE PAYMENT OF ONE MONTH PAY IN LIEU OF NOTICE, SEPARATION PAY AND
ATTORNEY’S FEES.
II
THERE IS NO APPEAL, NOR ANY PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY COURSE OF
LAW.9
On December 23, 1996, the Union filed a motion for consolidation of G.R. No. 122136 with G.R. No.
121315.10 The motion was granted by this Court in a Resolution dated June 23, 1997.11
On November 10, 1997, the Union presented additional documentary evidence which consisted of a
newspaper clip-
____________________________
8 Id., at 31.
9 Rollo of G.R. No. 122136, p. 21.
10 Rollo of G.R. No. 121315, pp. 273-274.
11 Rollo of G.R. No. 122136, p. 597.
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415
ping in the Manila Bulletin, dated August 18, 1997 bearing the picture of Lawrence Qua with the
following inscription:
RECERTIFICATION. The Cabuyao (Laguna) operation of Ionic Circuits, Inc. consisting of plants 2, 3, 4 and 5
was recertified to ISO 9002 as electronics contract manufacturer by the TUV, a rating firm with
headquarters in Munich, Germany. Lawrence Qua, Ionics president and chief executive officer, holds the
plaque of recertification presented by Gunther Theisz (3rd from left), regional manager of TUV Products
Services Asia during ceremonies held at Sta. Elena Golf Club. This is the first of its kind in the country
that four plants were certified at the same time.12
The Union claimed that the said clipping showed that both corporations, Ionics and Complex are one
and the same.
In answer to this allegation, Ionics explained that the photo which appeared at the Manila Bulletin issue
of August 18, 1997 pertained only to respondent Ionics’ recertification of ISO 9002. There was no
mention about Complex Electronics Corporation. Ionics claimed that a mere photo is insufficient to
conclude that Ionics and Complex are one and the same.13
We shall first delve on the issues raised by the petitioner Union.
The Union anchors its position on the fact that Lawrence Qua is both the president of Complex and
Ionics and that both companies have the same set of Board of Directors. It claims that business has not
ceased at Complex but was merely transferred to Ionics, a runaway shop. To prove that Ionics was just a
runaway shop, petitioner asserts that out of the 80,000 shares comprising the increased capital stock of
Ionics, it was Complex that owns majority of said shares with P1,200,000.00 as its capital subscription
and P448,000.00 as its paid up investment, compared to P800,000.00 subscription and P324,560.00
paid-up owing to the other stockholders,
____________________________
12 Rollo of G.R. No. 121315, pp. 383-386.
13 Id., at 287-291.
416
416
combined. Thus, according to the Union, there is a clear ground to pierce the veil of corporate fiction.
The Union further posits that there was an illegal lockout/illegal dismissal considering that as of March
11, 1992, the company had a gross sales of P61,967,559 from a capitalization of P1,500,000.00. It even
ranked number thirty among the top fifty corporations in Muntinlupa. Complex, therefore, cannot claim
that it was losing in its business which necessitated its closure.
With regards to Lawrence Qua, petitioner maintains that he should be made personally liable to the
Union since he was the principal player in the closure of the company, not to mention the clandestine
and surreptitious manner in which such closure was carried out, without regard to their right to due
process.
The Union’s contentions are untenable.
A “runaway shop” is defined as an industrial plant moved by its owners from one location to another to
escape union labor regulations or state laws, but the term is also used to describe a plant removed to a
new location in order to discriminate against employees at the old plant because of their union
activities.14 It is one wherein the employer moves its business to another location or it temporarily
closes its business for anti-union purposes.15 A “runaway shop” in this sense, is a relocation motivated
by anti-union animus rather than for business reasons. In this case, however, Ionics was not set up
merely for the purpose of transferring the business of Complex. At the time the labor dispute arose at
Complex, Ionics was already existing as an independent company. As earlier mentioned, it has been in
existence since July 5, 1984. It cannot, therefore, be said that the temporary closure in Complex and its
subsequent transfer of business to Ionics was
____________________________
14 See Textile Workers Union v. Darlington Mfg. Co., 380 US 263, 12 L Ed. 2d 827, 85, S Ct 994.
15 William P. Statsky, WEST’S LEGAL THESAURUS/DICTIONARY, Special Deluxe Edition, p. 671.
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417
for anti-union purposes. The Union failed to show that the primary reason for the closure of the
establishment was due to the union activities of the employees.
The mere fact that one or more corporations are owned or controlled by the same or single stockholder
is not a sufficient ground for disregarding separate corporate personalities. Thus, in Indophil Textile Mill
Workers Union vs. Calica,16 we ruled that:
[I]n the case at bar, petitioner seeks to pierce the veil of corporate entity of Acrylic, alleging that the
creation of the corporation is a devise to evade the application of the CBA between petitioner Union and
private respondent company. While we do not discount the possibility of the similarities of the
businesses of private respondent and Acrylic, neither are we inclined to apply the doctrine invoked by
petitioner in granting the relief sought. The fact that the businesses of private respondent and Acrylic
are related, that some of the employees of the private respondent are the same persons manning and
providing for auxiliary services to the units of Acrylic, and that the physical plants, offices and facilities
are situated in the same compound, it is our considered opinion that these facts are not sufficient to
justify the piercing of the corporate veil of Acrylic.
Likewise, in Del Rosario vs. National Labor Relations Commission,17 the Court stated that substantial
identity of the incorporators of two corporations does not necessarily imply that there was fraud
committed to justify piercing the veil of corporate fiction.
In the recent case of Santos vs. National Labor Relations Commission,18 we also ruled that:
The basic rule is still that which can be deduced from the Court’s pronouncement in Sunio vs. National
Labor Relations Commission, thus:
____________________________
16 205 SCRA 697 (1992).
17 187 SCRA 777 (1990).
18 254 SCRA 673 (1996).
418
418
x x x. Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital
stock of a corporation is not of itself sufficient ground for disregarding the separate corporate
personality.
Ionics may be engaged in the same business as that of Complex, but this fact alone is not enough reason
to pierce the veil of corporate fiction of the corporation. Well-settled is the rule that a corporation has a
personality separate and distinct from that of its officers and stockholders. This fiction of corporate
entity can only be disregarded in certain cases such as when it is used to defeat public convenience,
justify wrong, protect fraud, or defend crime.19 To disregard said separate juridical personality of a
corporation, the wrongdoing must be clearly and convincingly established.20
As to the additional documentary evidence which consisted of a newspaper clipping filed by petitioner
Union, we agree with respondent Ionics that the photo/newspaper clipping itself does not prove that
Ionics and Complex are one and the same entity. The photo/newspaper clipping merely showed that
some plants of Ionics were recertified to ISO 9002 and does not show that there is a relation between
Complex and Ionics except for the fact that Lawrence Qua was also the president of Ionics. However, as
we have stated above, the mere fact that both of the corporations have the same president is not in
itself sufficient to pierce the veil of corporate fiction of the two corporations.
We, likewise, disagree with the Union that there was in this case an illegal lockout/illegal dismissal.
Lockout is the temporary refusal of employer to furnish work as a result of
____________________________
19 Concept Builders, Inc. v. National Labor Relations Commission, 257 SCRA 149 (1996); Philippine
International Bank v. Court of Appeals, 252 SCRA 259 (1996); Yu v. National Labor Relations Commission,
245 SCRA 134 (1995).
20 Matuguina Integrated Wood Products, Inc. v. Court of Appeals, 263 SCRA 490 (1996).
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419
an industrial or labor dispute.21 It may be manifested by the employer’s act of excluding employees
who are union members.22 In the present case, there was a complete cessation of the business
operations at Complex not because of the labor dispute. It should be recalled that, before the labor
dispute, Complex had already informed the employees that they would be closing the Lite-On Line. The
employees, however, demanded for a separation pay equivalent to one (1) month salary for every year
of service which Complex refused to give. When Complex filed a notice of closure of its Lite-On Line, the
employees filed a notice of strike which greatly alarmed the customers of Complex and this led to the
pull-out of their equipment, machinery and materials from Complex. Thus, without the much needed
equipment, Complex was unable to continue its business. It was left with no other choice except to shut
down the entire business. The closure, therefore, was not motivated by the union activities of the
employees, but rather by necessity since it can no longer engage in production without the much
needed materials, equipment and machinery. We quote with approval the findings of the respondent
NLRC on this matter:
At first glance after reading the decision a quo, it would seem that the closure of respondent’s operation
is not justified. However, a deeper examination of the records along with the evidence, would show that
the closure, although it was done abruptly as there was no compliance with the 30-day prior notice
requirement, said closure was not intended to circumvent the provisions of the Labor Code on
termination of employment. The closure of operation by Complex on April 7, 1992 was not without valid
reasons. Customers of respondent alarmed by the pending labor dispute and the imminent strike to be
foisted by the union, as shown by their strike vote, directed respondent Complex to pull-out its
equipment, machinery and materials to other safe bonded warehouse. Respondent being mere con-
____________________________
21 Art. 212 (p), LABOR CODE OF THE PHILIPPINES.

22 Sta. Mesa Slipways & Engineering Co. v. CIR, 48 O.G. 3353, as cited in II C.A. Azucena, THE LABOR
CODE WITH COMMENTS AND CASES, Revised 1993 Ed., p. 296.
420
420
signees of the equipment, machinery and materials were without any recourse but to oblige the
customers’ directive. The pull-out was effected on April 6, 1992. We can see here that Complex’s action,
standing alone, will not result in illegal closure that would cause the illegal dismissal of the complainant
workers. Hence, the Labor Arbiter’s conclusion that since there were only two (2) of respondent’s
customers who have expressed pull-out of business from respondent Complex while most of the
customer’s have not and, therefore, it is not justified to close operation cannot be upheld. The
determination to cease operation is a prerogative of management that is usually not interfered with by
the State as no employer can be required to continue operating at a loss simply to maintain the workers
in employment. That would be taking of property without due process of law which the employer has
the right to resist. (Columbia Development Corp. vs. Minister of Labor and Employment, 146 SCRA 421)
As to the claim of petitioner Union that Complex was gaining profit, the financial statements for the
years 1990, 1991 and 1992 issued by the auditing and accounting firm Sycip, Gorres and Velayo readily
show that Complex was indeed continuously experiencing deficit and losses.23 Nonetheless, whether or
not Complex was incurring great losses, it is still one of the management’s prerogative to close down its
business as long as it is done in good faith. Thus, in Catatista, et al. vs. NLRC and Victorias Milling Co.,
Inc.,24 we ruled:
In any case, Article 283 of the Labor Code is clear that an employer may close or cease his business
operations or undertaking even if he is not suffering from serious business losses or financial reverses,
as long as he pays his employees their termination pay in the amount corresponding to their length of
service. It would indeed, be stretching the intent and spirit of the law if we were to unjustly interfere in
management’s prerogative to close or cease its business operations just because said business
operations or undertaking is not suffering from any loss.
____________________________
23 Records pp. 427-434.
24 247 SCRA 46 (1995).
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421
Going now to the issue of personal liability of Lawrence Qua, it is settled that in the absence of malice or
bad faith, a stockholder or an officer of a corporation cannot be made personally liable for corporate
liabilities.25 In the present case, while it may be true that the equipment, materials and machinery were
pulledout of Complex and transferred to Ionics during the night, their action was sufficiently explained
by Lawrence Qua in his Comment to the petition filed by the Union. We quote:
The fact that the pull-out of the machinery, equipment and materials was effected during nighttime is
not per se an indicia of bad faith on the part of respondent Qua since he had no other recourse, and the
same was dictated by the prevailing mood of unrest as the laborers were already vandalizing the
equipment, bent on picketing the company premises and threats to lock out the company officers were
being made. Such acts of respondent Qua were, in fact, made pursuant to the demands of Complex’s
customers who were already alarmed by the pending labor dispute and imminent strike to be stage by
the laborers, to have their equipment, machinery and materials pull out of Complex. As such, these acts
were merely done pursuant to his official functions and were not, in any way, made with evident bad
faith.26
We perceive no intention on the part of Lawrence Qua and the other officers of Complex to defraud the
employees and the Union. They were compelled to act upon the instructions of their customers who
were the real owners of the equipment, materials and machinery. The prevailing labor unrest
permeating within the premises of Complex left the officers with no other choice but to pull them out of
Complex at night to prevent their destruction. Thus, we see no reason to declare Lawrence Qua
personally liable to the Union.
____________________________
25 AHS/Philippines, Inc. vs. Court of Appeals, 257 SCRA 319 (1996).
26 Rollo of G.R. No. 121315, p. 182.
422
422
Anent the award of damages, we are inclined to agree with the NLRC that there is no basis for such
award. We again quote the respondent NLRC with favor:
By and large, we cannot hold respondents guilty of unfair labor practice as found by the Labor Arbiter
since the closure of operation of Complex was not established by strong evidence that the purpose of
said closure was to interfere with the employees’ right to selforganization and collective bargaining. As
very clearly established, the closure was triggered by the customers’ pull-out of their equipment,
machinery and materials, who were alarmed by the pending labor dispute and the imminent strike by
the union, and as a protection to their interest pulled-out of business from Complex who had no
recourse but to cease operation to prevent further losses. The indiscretion committed by the Union in
filing the notice of strike, which to our mind is not the proper remedy to question the amount of
benefits due the complainants who will be retrenched at the closure of the Lite-On Line, gave a wrong
signal to customers of Complex, which consequently resulted in the loss of employment of not only a
few but to all of the workers. It may be worth saying that the right to strike should only be a remedy of
last resort and must not be used as a show of force against the employer.27
We shall now go to the issues raised by Complex in G.R. No. 122136.
Complex claims that the respondent NLRC erred in ordering them to pay the Union one (1) month pay as
indemnity for failure to give notice to its employees at least thirty (30) days before such closure since it
was quite clear that the employees were notified of the impending closure of the Lite-On Line as early as
March 9, 1992. Moreover, the abrupt cessation of operations was brought about by the sudden pull-out
of the customers which rendered it impossible for Complex to observe the required thirty (30) days
notice.
Article 283 of the Labor Code provides that:
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27 Id., at 97-98.
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423
ART. 283. Closure of establishment and reduction of personnel.—The employer may also terminate the
employment of any employee due to the installation of labor saving devices, redundancy, retrenchment
to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the
closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the
workers and the Ministry of Labor and Employment at least one (1) month before the intended date
thereof. x x x. (Italics ours.)
The purpose of the notice requirement is to enable the proper authorities to determine after hearing
whether such closure is being done in good faith, i.e., for bona fide business reasons, or whether, to the
contrary, the closure is being resorted to as a means of evading compliance with the just obligations of
the employer to the employees affected.28
While the law acknowledges the management prerogative of closing the business, it does not, however,
allow the business establishment to disregard the requirements of the law. The case of Magnolia Dairy
Products v. NLRC29 is quite emphatic about this:
The law authorizes an employer, like the herein petitioners, to terminate the employment of any
employee due to the installation of labor saving devices. The installation of these devices is a
management prerogative, and the courts will not interfere with its exercise in the absence of abuse of
discretion, arbitrariness, or maliciousness on the part of management, as in this case. Nonetheless, this
did not excuse petitioner from complying with the required written notice to the employee and to the
Department of Labor and Employment (DOLE) at least one month before the intended date of
termination. This procedure enables an employee to contest the reality or good faith character of the
asserted ground for the termination of his services before the DOLE.
The failure of petitioner to serve the written notice to private respondent and to the DOLE, however,
does not ipso facto make
____________________________
28 Coca Cola Bottlers (Phils.), Inc. v. NLRC, 194 SCRA 592 (1991).
29 252 SCRA 483 (1996).
424
424
private respondent’s termination from service illegal so as to entitle her to reinstatement and payment
of backwages. If at all, her termination from service is merely defective because it was not tainted with
bad faith or arbitrariness and was due to a valid cause.
The well settled rule is that the employer shall be sanctioned for non-compliance with the requirements
of, or for failure to observe due process in terminating from service its employee. In Wenphil Corp. v.
NLRC, we sanctioned the employer for this failure by ordering it to indemnify the employee the amount
of P1,000.00. Similarly, we imposed the same amount as indemnification in Rubberworld (Phils.), Inc. v.
NLRC, and, Aurelio v. NLRC and Alhambra Industries, Inc. v. NLRC. Subsequently, the sum of P5,000.00
was awarded to an employee in Worldwide Papermills, Inc. v. NLRC, and P2,000.00 in Sebuguero, et al.
v. NLRC, et al. Recently, the sum of P5,000.00 was again imposed as indemnify against the employer. We
see no valid and cogent reason why petitioner should not be likewise sanctioned for its failure to serve
the mandatory written notice. Under the attendant facts, we find the amount of P5,000.00, to be just
and reasonable.
We, therefore, find no grave abuse of discretion on the part of the NLRC in ordering Complex to pay one
(1) month salary by way of indemnity. It must be borne in mind that what is at stake is the means of
livelihood of the workers so they are at least entitled to be formally informed of the management
decisions regarding their employment.30
Complex, likewise, maintains that it is not liable for the payment of separation pay since Article 283 of
the Labor Code awards separation pay only in cases of closure not due to serious business reversals. In
this case, the closure of Complex was brought about by the losses being suffered by the corporation.
We disagree.
Article 283 further provides:
x x x. In case of termination due to the installation of labor saving devices or redundancy, the worker
affected thereby shall be
____________________________
30 PAL v. NLRC, 225 SCRA 301 (1993).
425
VOL. 310, JULY 19, 1999
425
entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay
for every year of service, whichever is higher. In case of retrenchment to prevent losses and in case of
cessation of operations of establishment or undertaking not due to serious business losses or financial
reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month
pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered
one (1) whole year.
It is settled that in case of closures or cessation of operation of business establishments not due to
serious business losses or financial reverses,31 the employees are always given separation benefits.
In the instant case, notwithstanding the financial losses suffered by Complex, such was, however, not
the main reason for its closure. Complex admitted in its petition that the main reason for the cessation
of the operations was the pull-out of the materials, equipment and machinery from the premises of the
corporation as dictated by its customers. It was actually still capable of continuing the business but
opted to close down to prevent further losses. Under the facts and circumstances of the case, we find no
grave abuse of discretion on the part of the public respondent in awarding the employees one (1) month
pay for every year of service as termination pay.
WHEREFORE, premises considered, the assailed decision of the NLRC is AFFIRMED.
SO ORDERED.
Davide, Jr. (C.J., Chairman), Melo, Pardo and YnaresSantiago, JJ., concur.
Assailed decision affirmed.
____________________________
31 North Davao Mining Corp. vs. NLRC, 254 SCRA 721 (1996); See also: State Investment House, Inc. vs.
Court of Appeals, 206 SCRA 348 (1992); Mindanao Terminal and Brokerage Service, Inc. vs. The Hon.
Minister of Labor and Employment, 238 SCRA 77 (1994).
426
426
People vs. Tadeje
Notes.—Where the employer corporation is no longer existing and is unable to satisfy the judgment in
favor of the employee, the officer should be held liable for acting on behalf of the corporation.
(Valderama vs. National Labor Relations Commission, 256 SCRA 466 [1996])
The rule is that obligations incurred by the corporation, acting through its directors, officers and
employees, are its sole liabilities. (Equitable Banking Corporation vs. National Labor Relations
Commission, 273 SCRA 352 [1997])
Where it appears that three business enterprises are owned, conducted and controlled by the same
parties, both law and equity will, when necessary to protect the rights of third persons, disregard the
legal fiction that the three corporations are distinct entities, and treat them as identical. (Tomas Lao
Construction vs. National Labor Relations Commission, 278 SCRA 716 [1997])
——o0o—— Complex Electronics Employees Association vs. NLRC, 310 SCRA 403, G.R. No. 122136 July
19, 1999
688
Panay Electric Company, Inc. vs. National Labor Relations Commission
G.R. No. 102672. October 4, 1995.*
PANAY ELECTRIC COMPANY, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, FOURTH
DIVISION AND PANAY ELECTRIC COMPANY EMPLOYEES AND WORKERS ASSOCIATION, respondents.
Labor Law; National Labor Relations Commission; Findings of Facts; Well settled is the rule that
findings of fact of the National Labor Relations Commission, except when there is grave abuse of
discretion committed by it, are practically conclusive on the Court.—We begin by restating the well-
settled rule that the findings of fact of the NLRC, except when there is a grave abuse of discretion
committed by it, are practically conclusive on this Court. It is only when NLRC’s findings are bereft of
any substantial support from the records that the Court can step in and proceed to make its own and
independent evaluation of the facts.
Same; Collective Bargaining Agreement; Strikes; “No strike, no lock-out” provision in the Collective
Bargaining Agreement (CBA) is a valid stipulation but may be invoked only by employer when the
strike is economic in nature or one which is conducted to force wage or other concessions from the
employer that are not mandated to be granted by the law itself. It would be inapplicable to prevent a
strike which is grounded on unfair labor practice.—The State guarantees the right of all workers to
self-organization, collective bargaining and negotiations,
_______________
* THIRD DIVISION.
689
689
as well as peaceful concerted activities, including the right to strike, in accordance with law. The right
to strike, however, is not absolute. It has heretofore been held that a “no strike, no lock-out”
provision in the Collective Bargaining Agreement (“CBA”) is a valid stipulation although the clause
may be invoked by an employer only when the strike is economic in nature or one which is conducted
to force wage or other concessions from the employer that are not mandated to be granted by the
law itself. It would be inapplicable to prevent a strike which is grounded on unfair labor practice. In
this situation, it is not essential that the unfair labor practice act has, in fact, been committed; it
suffices that the striking workers are shown to have acted honestly on an impression that the
company has committed such unfair labor practice and the surrounding circumstances could warrant
such a belief in good faith.
Same; Same; Same; Strike conducted by the Union is illegal for being in violation of the “no strike, no
lock-out” proviso and for failure to bring the Union’s grievances under the grievance procedure in the
CBA.—In the instant case, the NLRC found Enrique Huyan and Prescilla Napiar, the “principal leaders”
of the strike, not to have acted in good faith. The NLRC said: “It is bad enough that the Union struck
despite the prohibition in the CBA. What is worse is that its principal leaders, Napiar and Huyan,
cannot honestly claim that they were in good faith in their belief that the Company was committing
unfair labor practice. The absence of good faith or the honest belief that the Company is committing
Unfair Labor Practice, therefore, is what inclines us to rule that the strike Practice, therefore, is what
inclines us to rule that the strike conducted by the Union from January 22 to 25, 1991 is illegal for
being in violation of the ‘no strike, no lock-out’ proviso and the failure to bring the union’s grievances
under the grievance procedure in the CBA. It must be borne in mind that prior to the dismissal of
Huyan, there was sufficient time to have the matter of Huyan’s transfer subjected to the grievance
procedure. That the Union considered the procedure an exercise in futility is not reason enough to
disregard the same given the circumstances in this case. Whatever wrong the Union felt the Company
committed cannot be remedied by another wrong on the part of the Union.”
Same; Same; Same; Union Officers; Union officers who were not guilty of “bad faith” in taking part in
the strike or of perpetuating “serious disorders” during the concerted activity were rightfully meted
suspension by the National Labor Relations Commission.—Given its own above findings, the NLRC’s
grant of separation benefits and
690
690
damages to Huyan and Napiar would indeed appear to be unwarranted. Article 264, Title VIII, Book V,
of the Labor Code provides that “(a)ny union officer who knowingly participates in an illegal strike and
any worker or union officer who knowingly participates in the commission of illegal acts during a
strike may be declared to have lost his employment status.” In the case of the other union officers,
however, the NLRC, having found no sufficient proof to hold them guilty of “bad faith ” in taking part
in the strike or of perpetrating “serious disorders ” during the concerted activity, merely decreed
suspension. We see no grave abuse of discretion by the NLRC in this regard and in not thus ordering
the dismissal of said officers.
Same; Judgment; Damages; Moral damages were proper where petitioner company acted arbitrarily
in its decision to transfer Huyan.—Finally, in the case of Huyan, we sustain the NLRC in holding that
he, during the period of his illegal suspension (from 09 November 1990 when he was effectively
suspended until 25 January 1991 when he, along with the striking employees, were directed by the
Secretary of Labor and Employment to return to the work premises), should be entitled to back
salaries and benefits plus moral damages, but in the reduced amount of P10,000.00, in view of the
findings of the NLRC, with which we concur, that petitioner company acted arbitrarily in its decision to
transfer Huyan. Exemplary damages, upon the other hand, are awarded only when a person acts in a
wanton, fraudulent, reckless, oppressive or malevolent manner (Art. 2232, Civil Code). NLRC’s findings
fall short of the underhandedness required so as to justify this award.
Cesar T. Tirol for petitioner.
Van Lovel D. Bedona for private respondents.
VITUG, J.:
In this petition for certiorari, petitioner Panay Electric Company, Inc., seeks to set aside the questioned
resolution of the National Labor Relations Commission (“NLRC”) in granting separation benefits to
Enrique Huyan and Prescilla Napiar, in awarding moral and exemplary damages to Enrique Huyan, and
691
691
in merely sanctioning the suspension, instead of terminating the employment status, of other officers
and members of respondent labor union.
Here following is a factual backdrop of the case.
On 30 October 1990, petitioner Panay Electric Company, Inc., posted in its premises a notice announcing
the need for a “Report Clerk” who could assume the responsibility of gathering accounting and
computer data at its power plant. The position was open to any employee, “with Pay Class V,” of
petitioner company. When nobody applied for the position, the EDP/Personnel Manager recommended
Enrique Huyan who was at the time an Administrative Personnel Assistant at the head office. Huyan was
then also a Vice President of respondent union. The recommendation was approved by the company’s
President and General Manager.
In a letter, dated 09 November 1990, Enrique Huyan informed petitioner that he was not interested in
accepting the new position. He gave the following reasons:
“a. The manner or procedure of implementing this notice of transfer is skeptical since from
Administrative Personnel Assistant to Report Clerk is apparently a demotion in my part.
“b. The position of Report Clerk is Pay Class III per our Organizational Chart.
“c. Being the Vice-President of PECEWA, my transfer would certainly hinder my function in settling labor
matters and other problems with other PECEWA Officers.
“d. Currently, the activation of geothermal power plant in Palimpinon, Negros had gave rise to
additional displaced workers in which my transfer would be another onus to the Power Plant supervisor
and my lack of technical knowhow, I presumed would obstruct the flow of operation in the said
department.”1
On 20 November 1990, the EDP/Personnel Manager required Huyan to explain within 48 hours why no
disciplinary action should be taken against him for gross insubordination and for failure to follow the
General Manager’s approved directive. Even-
_______________
1 Rollo, pp. 50-51.
692
692
tually, on 03 December 1990, Huyan was given a “notice of dismissal” for:
“1. Failure to comply with the GM’s general directive of 11/9/90 to a new assigned task in the Power
Plant;
“2. Failure to comply with your direct superior’s (AO) verbal directive to proceed to the Power Plant
11/10/90 & 11/19/90;
“3. Failure to comply with the undersigned’s, as personnel manager, verbal directive to proceed to the
Power Plant last 11/16/90;
“4. Continued & unauthorized entry & use of the Personnel Section & property from 11/16/90 up to the
present; (and)
“5. Failure to report to your assigned task in the Power Plant for a period of more than seven
consecutive days from November 16, 1990 up to the present.”2
An administrative investigation was conducted; thereafter, Huyan was ordered dismissed effective 10
December 1990.
Respondent union, on 20 December 1990, filed a notice of strike. On 02 January 1990, a strike vote was
taken where 113 out of 149 union members voted; the result showed 108 “yes” votes, 1 “no” vote, and
4 abstentions. On 22 January 1991, the union went on strike. Forthwith, the company filed a petition to
declare the strike illegal. On 25 January 1991, upon receipt of an order from the Secretary of Labor and
Employment certifying the dispute to the NLRC, the union lifted its strike and, on the day following, the
striking employees, including Huyan, reported for work.
In its position paper and memorandum before the NLRC, the union averred that the real reason for
ordering the transfer of Huyan was to penalize him for his union activities, particularly for being the
suspected “Mao,” author of the column “Red Corner,” in the Union’s New Digest which featured an item
on alleged wrongdoings by top company officials at the power plant; that in a letter, dated 10 October
1990, addressed by the Company’s Operation Manager to the General Manager, it was suggested that
an investigation of “Mao’s” real identity be conducted and, once ascertained, to have him dismissed
from the company; that
_______________
2 Rollo, pp. 51-52.
693
693
the company had singled out Huyan for transfer to the power plant; that the Personnel Manager’s
recommendation for such transfer was made without Huyan’s prior knowledge; that upon learning of
his impending reassignment, Huyan requested for a reconsideration but the Personnel Manager did not
bother to reply; that the transfer of Huyan was a demotion; and that, per the Company’s Code Offenses,
the “insubordination” charged was punishable with dismissal only after a fourth commission of the
offense.
Petitioner company, in turn, maintained that Huyan’s inexplicable refusal to assume his new position
was an act of insubordination for which reason he was aptly dismissed; that the company’s directive was
a valid exercise of management prerogative; that in declaring a strike, the Union, including its officers
and members, committed a serious breach of the “no strike, no lock out clause,” of the Collective
Bargaining Agreement (“CBA”); and that during the strike, illegal acts were committed by the union
officers and members, e.g.,—
“a) x x x union director Rey Espinal blocked the service vehicle of PECO collectors Domingo Tabobo and
James Russel Balin, hurled invectives at them and challenged them to fight.
“b) x x x union (vice-president) Prescilla Napiar, together with union member Ma. Teresa Cruz
approached PECO messenger Douglas Legada x x x and snatched from him the envelope containing x x x
passbooks.
“c) when PECO employees Carlos Miguel Borja and Joemar Paloma were on their way to deliver bank
passbook to PECO messengers riding in the car of Willy Hallares, union (vice-president) Prescilla Napiar
blocked their way at the gate and demanded that the car be inspected for PECO bills. An unidentified
union member placed a big stone against the right front tire. Union auditor, Allen Aquino insisted on
inspecting the glove compartment of the car.”3
The NLRC, in its resolution of 18 October 1991, concluded:
“WHEREFORE, in view of all the foregoing, we resolve as follows:
_______________
3 Rollo, p. 276.
694
694
“1. We find the strike conducted by the Union from January 22 to 25, 1991 to be illegal as the same was
staged in violation of the no strike, no lock-out clause in the Collective Bargaining Agreement existing
between the parties and also because the same disregarded the grievance procedure.
“2. Enrique Huyan and Prescilla Napiar are deemed to have lost their employment status but they shall
be entitled to separation benefits under the CBA, or one (1) month pay for every year of service,
whichever is higher. Further, Enrique Huyan shall be paid the wages withheld from him, moral damages
in the sum of TWENTY FIVE THOUSAND (P25,000.00) PESOS and exemplary damages in the amount of
TEN THOUSAND (P10,000.00) PESOS.
“3. Rey Espinal and Allen Aquino are penalized by suspension for THREE (3) months.
“4. The other officers of the Union, namely: Nieva Glenna Abeto, Noel Orquinaza, Alex Atutubo,
Federico Anatado, and Efren Lopez are penalized with suspension for ONE (1) month.
“No pronouncement as to costs.
“SO ORDERED.”4
Petitioner assails NLRC’s decision insofar as it has adjudged monetary awards to private respondents
Huyan and Napiar and in not sanctioning the dismissal of other union officers and members.
We begin by restating the well-settled rule that the findings of fact of the NLRC, except when there is a
grave abuse of discretion committed by it, are practically conclusive on this Court.5 It is only when
NLRC’s findings are bereft of any substantial support from the records that the Court can step in and
proceed to make its own and independent evaluation of the facts.
In rejecting petitioner’s theory, the NLRC, in a carefully considered assessment, said:

“The company’s contention that the decision to transfer Huyan was done in the normal course of
business cannot be sustained in the
_______________
4 Rollo, pp. 70-71.
5 Five J Taxi vs. NLRC, 235 SCRA 556; Inter-Orient Maritime Enterprises, Inc. vs. NLRC, 235 SCRA 268;
Loadstar Shipping Co., Inc. vs. Gallo, 229 SCRA 654.
695
695
light of the attendant circumstances.
“We note that the request of the Company’s Operations Manager which was used as the basis for
Huyan’s transfer was made as early as June 18, 1990 but it was acted only on October 15, 1990 as shown
by the handwritten notations thereon changing the designation of Computer Data Clerk to Report Clerk.
Perhaps, it may only be a pure coincidence that such action came a few days after the Operations
Manager made a strong recommendation to the General Manager to investigate and find out who
‘MAO’ is and to have him dismissed.
“The company argues that, contrary to the Union’s claim, Huyan was not being singled out as shown by
the fact that there was an announcement posted in all bulletin boards of the Company inviting
applications for the position of Report Clerk at the power plant. On its face, this circumstance may
indeed show bona fides on the part of the Company. However, the announcement limited those who
are qualified to employees in the Pay Class V only and there were only 6 or 7 employees in the entire
work force that can qualify. Again, maybe it is purely coincidental that Enrique Huyan was one of those
in the Pay Class V. The point is, what is the logic and rationale behind posting a general announcement
when the Company fully knows that only 6 or 7 out of over a hundred employees can qualify? To Our
mind, the posting of the announcement stands out as evidence of the Company’s attempt to
camouflage its plan to target Huyan. Not only that, even the Company’s EDP/Personnel Manager
admitted in his testimony that only Huyan had the best qualifications among the Pay Class V employees,
thus:
“x x x xxx x x x.
“The conclusion is irresistible that even before the announcement was posted, the Company, or at least
the EDP/Personnel Manager, knew that it was Huyan who will be transferred. After all, when the
Company limited the choice to the Pay Class V employees, it can be assumed that the Company had
already reviewed their qualifications.
“That indeed the plan was directed against Huyan is made more evident by the fact that the
EDP/Personnel Manager did not even discuss the matter of the transfer with Huyan before, and even
after, making his recommendation. This circumstance does not exactly speak well of the way the
personnel policies of the company is being managed. It simply shows that the concern for the well-being
and welfare of its employees is sorely lacking. It reduces the employees to mere pawns that can be
sacrificed whenever the Company or its managers feel like it. We cannot understand why the Company
will dispense with this elementary courtesy on a very important matter affecting the work and even the
future of the employee. This, by itself, is more than sufficient
696
696
evidence to show the arbitrariness of the Company’s decision to transfer Huyan.
“We cannot also blame Huyan if he felt, at that time, that he was being demoted. The announcement
did not state that the position of Report Clerk which was formerly Pay Class III had already been
upgraded to Pay Class V. Of course, it may be argued that because only those employees with Pay Class
V are qualified it follows that the position of Report clerk must be at least Pay Class V. However, it is the
Company’s fault that it did not clarify this matter in the announcement. Perhaps had the EDP/Personnel
Manager discussed the matter with Huyan before reassigning the latter, the misunderstanding could
have been avoided. In fact, from Huyan’s letter to the EDP/ Personnel Manager, it can be deduced that
he did not know about the upgrading of the position. The least that the EDP/Personnel Manager could
have done was to clarify the matter upon receipt of Huyan’s letter. However, it would appear that the
EDP/Personnel Manager was concerned of enforcing his recommendation to transfer Huyan more than
anything else.
“As to the subsequent dismissal of Huyan, the grounds therefor arose out of the disputed transfer.
There was never any official written notice addressed to Huyan concerning his reassignment. The
Company’s evidence consists simply of the approved Memorandum from the EDP/ Personnel Manager
to the General Manager, a copy of which was furnished to the Union and Huyan. Why no official notice
was ever given to Huyan baffles Us. Even granting for the sake of argument that such is a mere
formality, it betrays the insensitivity of the Company for its employee for it expects him to rely on and
act upon a piece of paper that is not even addressed to him. Circumstances like this, no matter how
trivial, indicate the propensity of the Company to disregard the feelings of its employees. To top it all,
the Company saw no need to respond to Huyan’s letter for reconsideration which was courteous and
respectful.
“We grant that Huyan did not comply with the directives of the EDP/Personnel Manager to transfer.
However, We find that his refusal to do so was not without reason or justification. As We see it, Huyan
did not have it in his mind to be defiant, otherwise he would not have written his superior seeking
reconsideration. He had to stand up for his rights and rightly so, considering the treatment he received.
To Our mind, therefore, in the context of the antecedent circumstances there was no serious
misconduct or willful disobedience committed by Huyan that would warrant his dismissal. It is as if he
was provoked into resisting by what he believed was an affront to his dignity as a union officer and as a
human being. Neither could there be abandonment, as
697
697
this concept is understood in termination disputes.
“Be that as it may, we cannot sustain the charge of unfair labor practice against the Company. As
admitted by Huyan and the Union, the principal cause behind this controversy is the Company’s
suspicion that Huyan was ‘MAO.’ That Huyan was the Union vice-president was purely incidental. Put in
another way, any employee who was suspected of being ‘MAO’ would have been the object of the
Company’s moves, irrespective of whether that employee is a union officer or not. Huyan was not
pinpointed because he was a union officer or because the Company is anti-union but rather because of
the suspicion that he wrote the column that caught the ire of the company’s Operations Manager. No
matter how detestable, the resultant moves of the company cannot be considered unfair labor practice.
“On the basis of the foregoing, we rule that while the conduct of the company cannot be strictly
considered an unfair labor practice, still, the exercise of its management prerogative cannot be
sustained. The dismissal of Enrique Huyan, is illegal. Ordinarily, when there is a finding of illegal
dismissal, under Article 279 of the Labor Code, the employee is entitled to reinstatement and the
payment of his backwages. However, in the case at bar, we are of the opinion that reinstatement cannot
be ordered not only because of the strained relationship between the parties herein but also because
Huyan’s conduct as a union officer leaves much to be desired x x x.
“x x x xxx x x x.
“Considering also the motivations and actuations of the company in orchestrating the transfer and
dismissal of Huyan, we shall award Moral Damages in the sum of TWENTY FIVE THOUSAND (P25,000.00)
PESOS, and Exemplary Damages in the amount of TEN THOUSAND (P10,000.00) PESOS. After all Huyan’s
dismissal was tainted with bad faith and the motive of the Company for dismissing Huyan was far from
noble as shown by the circumstances surrounding the dismissal. The Company and its managers are
admonished to change their attitude and manner in dealing with their employees, especially in matters
such as this.
“x x x xxx x x x.
“x x x The absence of good faith or the honest belief that the company is committing Unfair Labor
Practice, therefore, is what inclines us to rule that the strike conducted by the union from January 22 to
25, 1991 is illegal for being in violation of the `no strike, no lock-out’ proviso and the failure to bring the
Union’s grievance under the grievance procedure in the CBA.”6
_______________
6 Rollo, pp. 56-68A.
698
698
The State guarantees the right of all workers to self-organization, collective bargaining and negotiations,
as well as peaceful concerted activities, including the right to strike, in accordance with law.7 The right
to strike, however, is not absolute. It has heretofore been held that a “no strike, no lock-out” provision
in the Collective Bargaining Agreement (“CBA”) is a valid stipulation although the clause may be invoked
by an employer only when the strike is economic in nature or one which is conducted to force wage or
other concessions from the employer that are not mandated to be granted by the law itself.8 It would
be inapplicable to prevent a strike which is grounded on unfair labor practice. In this situation, it is not
essential that the unfair labor practice act has, in fact, been committed; it suffices that the striking
workers are shown to have acted honestly on an impression that the company has committed such
unfair labor practice and the surrounding circumstances could warrant such a belief in good faith.9
In the instant case, the NLRC found Enrique Huyan and Prescilla Napiar, the “principal leaders” of the
strike, not to have acted in good faith. The NLRC said:
“It is bad enough that the Union struck despite the prohibition in the CBA. What is worse is that its
principal leaders, Napiar and Huyan, cannot honestly claim that they were in good faith in their belief
that the Company was committing unfair labor practice. The absence of good faith or the honest belief
that the Company is committing Unfair Labor Practice, therefore, is what inclines us to rule that the
strike conducted by the Union from January 22 to 25, 1991 is illegal for being in violation of the ‘no
strike, no lock-out’ proviso and the failure to bring the union’s grievances under the grievance
procedure in the CBA. It must be borne in mind that prior to the dismissal of Huyan, there was sufficient
time to have the matter of Huyan’s transfer subjected to the grievance procedure. That the Union
considered the
_______________
7 Section 3, Article XIII, of the Constitution.
8 Master Iron Labor Union vs. NLRC, 219 SCRA 47.
9 See People’s Industrial and Commercial Employees and Workers Organization (FFW) vs. People’s
Industrial and Commercial Corporation, 112 SCRA 430, 440.
699
699
procedure an exercise in futility is not reason enough to disregard the same given the circumstances in
this case. Whatever wrong the Union felt the Company committed cannot be remedied by another
wrong on the part of the Union.”10
Given its own above findings, the NLRC’s grant of separation benefits and damages to Huyan and Napiar
would indeed appear to be unwarranted. Article 264, Title VIII, Book V, of the Labor Code provides that
“(a)ny union officer who knowingly participates in an illegal strike and any worker or union officer who
knowingly participates in the commission of illegal acts during a strike may be declared to have lost his
employment status.”
In the case of the other union officers, however, the NLRC, having found no sufficient proof to hold
them guilty of “bad faith ” in taking part in the strike or of perpetrating “serious disorders ” during the
concerted activity, merely decreed suspension. We see no grave abuse of discretion by the NLRC in this
regard and in not thus ordering the dismissal of said officers.
Finally, in the case of Huyan, we sustain the NLRC in holding that he, during the period of his illegal
suspension (from 09 November 1990 when he was effectively suspended until 25 January 1991 when
he, along with the striking employees, were directed by the Secretary of Labor and Employment to
return to the work premises), should be entitled to back salaries and benefits plus moral damages, but
in the reduced amount of P10,000.00, in view of the findings of the NLRC, with which we concur, that
petitioner company acted arbitrarily in its decision to transfer Huyan. Exemplary damages, upon the
other hand, are awarded only when a person acts in a wanton, fraudulent, reckless, oppressive or
malevolent manner (Art. 2232, Civil Code). NLRC’s findings fall short of the underhandedness required
so as to justify this award.
WHEREFORE, all considered, the questioned decision of public respondent NLRC, dated 18 October
1991, is hereby MODIFIED in that the award of separation benefits in favor of Enrique Huyan and
Prescilla Napiar is DELETED; the award to Huyan
_______________
10 Rollo, p. 68-A.
700
700
Olivares vs. Sandiganbayan
of moral damages is REDUCED to P10,000.00; and the grant of exemplary damages is DELETED. The
decision is AFFIRMED in all other respects. No special pronouncement on costs.
SO ORDERED.
Feliciano (Chairman) and Romero, JJ., concur.
Melo, J., On leave.
Judgment affirmed with modification.
Notes.—A no-strike clause in the CBA is applicable only to economic strikes. (Master Icon Labor Union
vs. National Labor Relations Commission, 219 SCRA 47 [1993])
An economic strike is defined as one which is to force wage or other concessions from the employer
which he is not required by law to grant. (Ibid.)
——o0o—— Panay Electric Company, Inc. vs. National Labor Relations Commission, 248 SCRA 688, G.R.
No. 102672 October 4, 1995
REQUISITES FOR A VALID STRIKE
354
National Federation of Sugar Workers (NFSW), vs. Ovejera
No. L-59743. May 31, 1982.*
NATIONAL FEDERATION OF SUGAR WORKERS (NFSW), petitioner, vs. ETHELWOLDO R. OVEJERA,

CENTRAL AZUCARERA DE LA CARLOTA (CAC), COL. ROGELIO DEINLA, as Provincial Commander, 3311st
P.C. Command, Negros Occidental, respondents.
Labor Law; The prescribed cooling-off period and the 7-day strike ban after submission of report of
strike vote are mandatory.—The foregoing provisions hardly leave any room for doubt that the
cooling-off period in Art. 264(c) and the 7-day strike ban after the strike-vote report prescribed in Art.
264(f) were meant to be, and should be deemed, mandatory.
Same; Same.—When the law says “the labor union may strike” should the dispute “remain unsettled
until the lapse of the requisite number of days (cooling-off period) from the mandatory filing of the
notice,’ the unmistakable implication is that the union may not strike before the lapse of the cooling-
off period. Similarly, the mandatory character of the 7-day strike ban after the report on the strike-
vote is manifest in the provision that “in every case,” the union shall furnish the MOLE with the results
of the voting “at least seven (7) days
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* EN BANC.
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before the intended strike, subject to the (prescribed) cooling-off period.” It must be stressed that the
requirements of cooling-off period and 7-day strike ban must both be complied with, although the
labor union may take a strike vote and report the same within the statutory cooling-off period.
Same; The cooling-off and 7-day strike ban provisions of law are reasonable and valid restrictions on
the right to strike.—The cooling-off period and the 7-day strike ban after the filing of a strike-vote
report, as prescribed in Art. 264 of the Labor Code, are reasonable restrictions and their imposition is
essential to attain the legitimate policy objectives embodied in the law. We hold that they constitute
a valid exercise of the police power of the state.
Same; Criminal Law; Settlement of a criminal liability is valid when the law itself authorizes it. A
dispute on the payment of the 13th month pay can be the proper subject of voluntary settlement and
conciliation. Moreover, refusal to give the 13th month pay cannot be said to be clearly a criminal
act.—In the first place, it is at best unclear whether the refusal of CAC to give a 13th month pay to
NFSW constitutes a criminal act. Under Sec. 9 of the Rules and Regulations Implementing Presidential
Decree No. 851. “Non-payment of the thirteenth month pay provided by the Decree and these rules
shall be treated as money claims cases and shall be processed in accordance with the Rules
Implementing the Labor Code of the Philippines and the Rules of the National Labor Relations
Commission.”
Same; Employers already paying the equivalent of the 13th month pay to their employees, such as
Christmas bonuses, are under no legal obligation to pay an additional 13th month pay prescribed
under P.D. 851.—The evident intention of the law, as revealed by the law itself, was to grant an
additional income in the form of a 13th month pay to employees not already receiving the same.
Otherwise put, the intention was to grant some relief—not to all workers—but only to the
unfortunate ones not actually paid a 13th month salary or what amounts to it, by whatever named
called; but it was not envisioned that a double burden would be imposed on the employer already
paying his employees a 13th month pay or its equivalent—whether out of pure generosity or on the
basis of a binding agreement and, in the latter case, regardless of the conditional character of the
grant (such as making the payment dependent on profit), so long as there is actual payment.
Otherwise, what was conceived to be a 13th
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month salary would in effect become a 14th or possibly 15th month pay.
Same; Same.—This view is justified by the law itself which makes no distinction in the grant of
exemption: “Employers already paying their employees a 13th month pay or its equivalent are not
covered by this Decree.” (P.D. 851.)
Same; Same.—Pragmatic considerations also weigh heavily in favor of crediting both voluntary and
contractual bonuses for the purpose of determining liability for the 13th month pay. To require
employers (already giving their employees a 13th month salary or its equivalent) to give a second 13th
month pay would be unfair and productive of undesirable results. To the employer who had acceded
and is already bound to give bonuses to his employees, the additional burden of a 13th month pay
would amount to a penalty for his munificence or liberality. The probable reaction of one so
circumstanced would be to withdraw the bonuses or resist further voluntary grants for fear that if and
when a law is passed giving the same benefits, his prior concessions might not be given due credit;
and this negative attitude would have an adverse impact on the employees.
Fernando, C.J., Qualifiedly concurring and dissenting:
Constitutional Law; Labor Law; Majority opinion’s approach is not sufficient. Statutes, codes
administrative rules and municipal ordinances should he considered in the light of the Constitution with
a view that the powers of the Supreme Court are not thereby eroded.—That for me would not suffice.
Such an approach, to my mind, is quite limited. The standard that should govern is the one supplied by
the Constitution. That is the clear implication of constitutionalism. Anything less would deprive it of its
quality as the fundamental law. It is my submission, therefore, that statutes, codes, decrees,
administrative rules, municipal ordinances and any other jural norms must be construed in the light of
and in accordance with the Constitution. There is this explicit affirmation in the recently decided case of
De la Llana v. Alba sustaining the validity of Batas Pambansa Blg. 129 reorganizing the judiciary: “The
principle that the Constitution enters into and forms part of every act to avoid any unconstitutional taint
must be applied. Nuñez v. Sandiganbayan, promulgated last January, has this relevant excerpt: ‘It is true
that the other Sections of the Decree could have been so worded as to
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357
avoid any constitutional objection. As of now, however, no ruling is called for. The view is given
expression in the concurring and dissenting opinion of Justice Makasiar that in such a case to save the
Decree from the dire fate of invalidity, they must be construed in such a way as to preclude any possible
erosion on the powers vested in this Court by the Constitution. That is a proposition too plain to be
contested. It commends itself for approval.’ ”
Same; Same; The constitutional philosophy is in favor of granting greater social and economic rights to
labor.—Such an approach is even more valid now. As a matter of fact, in the first case after the
applicability of the 1973 Constitution where social and economic rights were involved, this Court in
Alfanta v. Noe, through Justice Antonio, stated: ‘In the environment of a new social order We can do no
less. Thus, under the new Constitution, property ownership has been impressed with a social function.
This implies that the owner has the obligation to use his property not only to benefit himself but society
as well. Hence, it provides under Section 6 of Article II thereof, that in the promotion of social justice,
the State “shall regulate the acquisition, ownership, use, enjoyment, and disposition of private property,
and equitably diffuse property ownership and profits.” The Constitution also ensure that the worker
shall have a just and living wage which should assure for himself and his family an existence worthy of
human dignity and give him opportunities for a better life.’ Such a sentiment find expression in
subsequent opinions.”
Same; Same; Same.—When it is considered that, as pointed out in the opinion of Justice Antonio in
Alfanta, rendered in the first year of the present Constitution, the social justice principle now lends itself
to the equitable diffusion of property ownership and profits, it becomes difficult for me to justify why
any lurking ambiguity in Presidential Decree No. 851 could be construed against the rights of labor. This
Court is not acting unjustly if it promotes social justice. This court is not acting unjustly if it protects
labor. This Court is just being true to its mission of fealty to the Constitution. Under the concept of
separation of powers, while the political branches enact the laws and thereafter enforce them, any
question as to their interpretation, justiciable in character, is for the court, ultimately this Tribunal, to
decide. That is its sworn duty. It cannot be recreant to such a trust. Its role, therefore, is far from
passive.
Labor Law; The majority opinion failed to discuss the consequences of the strike at bar which has been
declared illegal—Now
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358
as to the qualified concurrence. Based on the codal provisions the finding of the illegality of strike is
warranted. That for me does not fully resolved the questions raised by such a declaration. From my
reading of the opinion of the Court, it does not go as far as defining the consequences of such illegal
strike. Again the approach I propose to follow is premised on the two basic mandates of social justice
and protection to labor, for while they are obligations imposed on the government by the fundamental
law, compulsory arbitration as a result of which there could be a finding of illegality is worded in
permissive not in mandatory language. It would be, for me, a departure from principles to which this
Court has long remained committed, if thereby loss of employment, even loss of seniority rights or other
privileges is ultimately incurred. That is still an open question. The decision has not touched on that
basic aspect of this litigation. The issue is not foreclosed.
Teehankee, J.:
I concur in the result.
Barredo, J., concurring:
Courts; Labor Law; Equity; Equity comes in only when the law is inadequate to provide essential
justice.—The Supreme Court is a court of law and of equity at the same time but, understandably, equity
comes in only when law is inadequate to afford the parties concerned the essence of justice, fairness
and square dealing. It is to this basic tenet that I am bound by my oath of office before God and our
people. Having this ideal in mind, the paramount thought that should dominate my actuations is
complete and absolute impartiality in the best light God has given me. Hence, when the aid of the Court
is sought on legal grounds. We can resort to equity only when there is no law that can be properly
applied. My view of the instant case is that it is one of law, not of equity. It is on this fundamental basis
that I have ventured to write this concurrence.
Labor Law; Those employers already giving bonuses to their employees are not obliged to pay the latter
an additional 13th month pay.—I have come to the realization, after mature deliberation, that the
conclusion reached in the opinion of the Chief Justice may not always be consistent with the evident
intent and purpose of Section 2 of P.D. No. 851 which, indeed, unequivocally provides that “(E)mployers
already paying their employees a 13th month pay or its
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equivalent are not covered by this decree”, albeit it does not clarify what it means by the “equivalent” of
the 13th month pay. Such being the case, nothing can be more proper than for everyone to abide by or
at least give due respect to the meaning thereof as has been officially expressed by the usual executive
authority called upon to implement the same, none other than the Ministry of Labor (MOLE, for short),
unless, of course, the understanding of MOLE appears to be manifestly and palpably erroneous and
completely alien to the evident intent of the decree. And Section 3 (e) of the Rules Implementing P.D.
851 issued by MOLE reads thus:
Abad Santos, J., concurring:

Labor Law; The case at bar is different front the Marcopper case.—I concur but lest 1 be accused of
inconsistency because in Marcopper Mining Corporation vs. Ople, et al., No. 51254, June 11, 1981, 105
SCRA 75, I voted to dismiss the petition for lack of merit and as a result Marcopper had to give the 13th-
month pay provided in P.D. No. 851 even as its employees under the CBA had mid-year and end-of-year
bonuses, I have to state that Marcopper and La Carlota have different factual situations.
De Castro, J.:
I join Justice Abad Santos in his separate concurring opinion.
Melencio-Herrera, J., concurring:
Labor Law; The Christmas bonus has a literal religious connection.—The Christmas bonus, as it clearly
denotes, has a literal religious connection, “Christmas” being a term within the Christian religion.
Considering that the Christmas bonus has become obligatory and non-discriminatory in many
jurisdictions, a tendency arose to disassociate that bonus from its religious connotation. Some
countries, with non-christian or “liberal” christian segments, have opted to make the year-end or
Christmas bonus obligatory, and they called it the 13th month pay. It is, perhaps, having our Moslem
brothers in mind that the Government had decided to set up in our country the obligatory payment of
the 13th month pay. Thereby, the orthodox non-christian employee is not subjected to
“discrimination” due to his inability to accept the Christmas bonus because of strict allegiance to his
own faith. It should, therefore, be apparent that “Christmas bonus” and “13th month pay” should be
equated one with the other.
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Same; Administrative Law; An administrative regulation to properly delegated is null and void
However, it may be considered as expressing the executive view is entitled to great weight—PD 851
does not contain a provision for rules and regulations to be promulgated by the Department of Labor
for implementation of the Decree. Notwithstanding, on December 22, 1975, the Department of Labor
issued “Rules and Regulations Implementing Presidential Decree 851”, with the following relevant
provision: x x x When administrative rules and regulations are not properly “delegated”, they cannot
have the force and effect of law.
Same; Same; Same.—Although the rule defining the term “equivalent” as used in PD 851 does not
have the force and effect of law, it can and should be considered as an administrative view entitled to
great weight as it is an interpretation of “equivalent” made by the administrative agency which has
the duty to enforce the Decree.
PETITION for prohibition to review the decision of the National Labor Relations Commission, Br. VI-A,
Bacolod City.
PLANA, J.:
This is a petition for prohibition seeking to annul the decision dated February 20, 1982 of Labor Arbiter
Ethelwoldo R. Ovejera of the National Labor Relations Commission (NLRC) with station at the Regional
Arbitration Branch No. VI-A, Bacolod City, which, among others, declared illegal the ongoing strike of the
National Federation of Sugar Workers (NFSW) at the Central Azucarera de la Carlota (CAC), and to
restrain the implementation thereof.
I.FACTS —
1. NFSW has been the bargaining agent of CAC rank and file employees (about 1200 of more than 2000
personnel) and has concluded with CAC a collective bargaining agreement effective February 16, 1981—
February 15, 1984. Under Art. VII Sec. 5 of the said CBA—
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“Bonuses—The parties also agree to maintain the present practice on the grant of Christmas bonus,
milling bonus, and amelioration bonus to the extent as the latter is required by law.”
The Christmas and milling bonuses amount to 1-1/2 months’ salary.
2. On November 28, 1981, NFSW struck allegedly to compel the payment of the 13th month pay under
PD 851, in addition to the Christmas, milling and amelioration bonuses being enjoyed by CAC workers.
3. To settle the strike, a compromise agreement was concluded between CAC and NFSW on November
30, 1981. Under paragraph 4 thereof—
“The parties agree to abide by the final decision of the Supreme Court in any case involving the 13th
Month Pay Law if it is clearly held that the employer is liable to pay a 13th month pay separate and
distinct from the bonuses already given.”
4. As of November 30, 1981, G.R. No. 51254 (Marcopper Mining Corp. vs. Blas Ople and Amado Inciong,
Minister and Deputy Minister of Labor, respectively, and Marcopper Employees Labor Union, Petition
for Certiorari and Prohibition) was still pending in the Supreme Court. The Petition had been dismissed
on June 11, 1981 on the vote of seven Justices.1 A motion for reconsideration thereafter filed was
denied in a resolution dated December 15, 1981, with only five Justices voting for denial. (3 dissented; 2
reserved their votes: 4 did not take part.)
On December 18, 1981—the decision of June 11, 1981 having become final and executory—entry of
judgment was made.
5. After the Marcopper decision had become final, NFSW renewed its demand that CAC give the 13th
month pay. CAC refused.
6. On January 22, 1982, NFSW filed with the Ministry of Labor and Employment (MOLE) Reginal Office in
Bacolod
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1 105 SCRA 75.
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362
City a notice to strike based on non-payment of the 13th month pay. Six days after, NFSW struck.
7. One day after the commencement of the strike, or on January 29, 1982, a report of the strike-vote
was filed by NFSW with MOLE.
8. On February 8, 1982, CAC filed a petition (R.A.B. Case No. 0110-82) with the Regional Arbitration
Branch VI-A, MOLE, at Bacolod City to declare the strike illegal, principally for being violative of Batas
Pambansa Blg. 130, that is, the strike was declared before the expiration of the 15-day cooling-off period
for unfair labor practice (ULP) strikes, and the strike was staged before the lapse of seven days from the
submission to MOLE of the result of the strike-vote.
9. After the submission of position papers and hearing, Labor Arbiter Ovejera declared the NFSW strike
illegal. The dispositive part of his decision dated February 20, 1982 reads:
“Wherefore, premises considered, judgment is hereby rendered:
“1. Declaring the strike commenced by NFSW on January 28, 1982, illegal;
“2. Directing the Central to resume operations immediately upon receipt hereof;
“3. Directing the Central to accept back to work all employees appearing in its payroll as of January 28,
1982 except those covered by the February 1, 1982 memorandum on preventive suspension but
without prejudice to the said employees’ instituting appropriate actions before this Ministry relative to
whatever causes of action they may have obtained proceeding from said memorandum;
“4. Directing the Central to pay effective from the date of resumption of operations the salaries of those
to be placed on preventive suspension as per February 1, 1982 memorandum during their period of
preventive suspension; and
“5. Directing, in view of the finding that the subject strike is illegal, NFSW, its officers, members, as well
as sympathizers to immediately desist from committing acts that may impair or impede the milling
operations of the Central.
“The law enforcement authorities are hereby requested to assist in the peaceful enforcement and
implementation of this Decision.
“SO ORDERED.”
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10. On February 26, 1982, the NFSW—by passing the NLRC—filed the Instant Petition for prohibition
alleging that Labor Arbiter Ovejera, CAC and the PC Provincial Commander of Negros Occidental were
threatening to immediately enforce the February 20, 1982 decision which would violate fundamental
rights of the petitioner, and praying that—
“WHEREFORE, on the foregoing considerations, it is prayed of the Honorable Court that on the Petition
for Preliminary Injunction, an order, after hearing, issue:
“1. Restraining implementation or enforcement of the Decision of February 20, 1982;
“2. Enjoining respondents to refrain from the threatened acts violative of the rights of strikers and
peaceful picketers;
“3. Requiring maintenance of the status quo as of February 20, 1982, until further orders of the Court;
and on the Main Petition, judgment be rendered after hearing:
“1. Restraining Decision of February 20, 1982 null and void;
“2. Making the preliminary injunction permanent;
“3. Awarding such other relief as may be just in the premises.”
11. Hearing was held, after which the parties submitted their memoranda. No restraining order was
issued.
II.ISSUES —
The parties have raised a number of issues, including some procedural points. However, considering
their relative importance and the impact of their resolution on ongoing labor disputes in a number of
industry sectors, we have decided—in the interest of expediency and dispatch—to brush aside non-
substantial items and reduce the remaining issues to but two fundamental ones:
1. Whether the strike declared by NFSW is illegal the resolution of which mainly depends en the
mandatary or directory character of the cooling-off period and the 7-day strike ban after report to MOLE
of the result of a strike-vote, as prescribed in the Labor Code.
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364
2. Whether under Presidential Decree 851 (13th Month Pay Law), CAC is obliged to give its workers a
13th month salary in addition to Christmas, milling and amelioration bonuses, the aggregate of which
admittedly exceeds by far the disputed 13th month pay. (See petitioner’s memorandum of April 12,
1982, p. 2; CAC memorandum of April 2, 1982, pp. 3-4.) Resolution of this issue requires an examination
of the thrusts and application of PD 851.
III.DISCUSSION—
1. Articles 264 and 265 of the Labor Code, insofar as pertinent, read:
ART. 264. Strikes, picketing and lockouts.—xx xx xx
“(c) In cases of bargaining deadlocks, the certified or duly recognized bargaining representative may file
a notice of strike with the Ministry (of Labor and Employment) at least thirty (30) days before the
intended date thereof. In cases of unfair labor practices, the period of notice shall be shortened to
fifteen (15) days; xx xx xx
xx xx xx
“(e) During the cooling-off period, it shall be the duty of the Ministry to exert all efforts at mediation and
conciliation to effect a voluntary settlement. Should the dispute remain unsettled until the lapse of the
requisite number of days from the mandatory filing of the notice, the labor union may strike or the
employer may declare a lockout.
“(f) A decision to declare a strike must be approved by at least two-thirds (2/3) of the total union
membership in the bargaining unit concerned by secret ballots in meetings or referenda. A decision to
declare a lockout must be approved by at least two-thirds (2/3) of the board of directors of the
employer corporation or association or of the partners in a partnership obtained by secret ballot in a
meeting called for the purpose. The decision shall be valid for the duration of the dispute based on
substantially the same grounds considered when the strike or lockout vote was taken. The Ministry, may
at its own initiative or upon the request of any affected party, supervise the conduct of the secret
balloting. In every case, the union of the employer shall furnish the Ministry the results of the voting at
least seven (7) days before the intended strike or lockout, subject to the cooling-off period herein
provided.” (Italics supplied.)
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National Federation of Sugar Workers (NFSW), vs . Ovejera
“ART. 265. Prohibited activities.—It shall be unlawful for any labor organization or employer to declare a
strike or lockout without first having bargained collectively in accordance with Title VII of this Book or
without first having filed the notice required in the preceding Article or without the necessary strike or
lockout vote first having been obtained and reported to the Ministry.
“It shall likewise be unlawful to declare a strike or lockout alter assumption of jurisdiction by the
President or the Minister or after certification or submission of the dispute to compulsory or voluntary
arbitration or during that pendency of cases involving the same grounds for the strike or lockout.” (Italic
supplied.)
(a)Language of the law.—The foregoing provisions hardly leave any room for doubt that the cooling-off
period in Art. 264(c) and the 7-day strike ban after the strike-vote report prescribed in Art. 264(f) were
meant to be, and should be deemed, mandatory.
When the law says “the labor union may strike” should the dispute “remain unsettled until the lapse of
the requisite number of days (cooling-off period) from the mandatory filing of the notice,” the
unmistakable implication is that the union may not strike before the lapse of the cooling-off period.
Similarly, the mandatory character of the 7-day strike ban after the report on the strike-vote is manifest
in the provision that “in every case,” the union shall furnish the MOLE with the results of the voting “at
least seven (7) days before the intended strike, subject to the (prescribed) cooling-off period.” It must be
stressed that the requirements of cooling-off period and 7-day strike ton must both be complied with,
although the labor union may take a strike vote and report the same within the statutory cooling-off
period.
If only the filing of the strike notice and the strike-vote report would be deemed mandatory, but not the
waiting periods so specifically and emphatically prescribed by law, the purposes (hereafter discussed)
for which the filing of the strike notice and strike-vote report is required would not be achieved, as
when a strike is declared immediately after a strike notice is served, or when—as in the instant case—
the strike-vote report is filed with MOLE after the strike had actually com-
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menced. Such interpretation of the law ought not and cannot be countenanced. 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 making the prescribed waiting periods mandatory.
(b)Purposes of strike notice and strike-vote report—In requiring a strike notice and a cooling-off period,
the avowed intent of the law is to provide an opportunity for mediation and conciliation. It thus directs
the MOLE “to exert all efforts at mediation and conciliation to effect a voluntary settlement“ during the
cooling-off period. As applied to the CAC-NFSW dispute regarding the 13th month pay, MOLE
intervention could have possibly induced CAC to provisionally give the 13th month pay in order to avert
great business loss arising from the project strike, without prejudice to the subsequent resolution of the
legal dispute by competent authorities; or mediation/conciliation could have convinced NFSW to at least
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 would coincide with the milling season.
So, too, the 7-day strike-vote report is not without a purpose. As pointed out by the Solicitor General—
“Many disastrous strikes have been staged in the past based merely on the insistence of minority groups
within the union. The submission of the report gives assurance that a strike vote has been taken and
that, if the report concerning it is false, the majority of the members can take appropriate remedy
before it is too late.” (Answer of public respondents, pp. 17-18.)
If the purpose of the required strike notice and strike-vote report are to be achieved, the periods
prescribed for their attainment must, as aforesaid, be deemed mandatory.
“. . . when a fair interpretation of the statute, which directs acts or proceedings to be done in a certain
way, shows the legislature intended a compliance with such provision to be essential to the validity of
the act or proceeding, or when some antecedent and prerequisite conditions must exist prior to the
exercise of power or must
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be performed before certain other powers can be exercised, the statute must be regarded as
mandatory. So it has been held that, when a statute is founded on public policy [such as the policy to
encourage voluntary settlement of disputes without resorting to strikes], those to whom it applies
should not be permitted to waive its provisions. (82 C.J.S. 873-874. Bracketed words supplied.)
(c)Waiting period after strike notice and strike-vote report, valid regulation of right to strike.—To quote
Justice Jackson in International Union vs. Wisconsin Employment Relations Board, 336 U.S. 245, at 259—
“The right to strike, because of its more serious impact upon the public interest, is more vulnerable to
regulation than the right to organize and select representatives for lawful purposes of collective
bargaining. . .”
The cooling-off period and the 7-day strike ban after the filing of a strike-vote report, as prescribed in
Art. 264 of the Labor Code, arce reasonable restrictions and their imposition is essential to attain the
legitimate policy objectives embodied in the law. We hold that they constitute a valid exercise of the
police power of the state.
(d)State policy on amicable settlement of criminal liability.—Petitioner contends that since the non-
compliance (with PD 851) imputed to CAC is an unfair labor practice which is an offense against the
state, the cooling-off period provided in the Labor Code would not apply, as it does not. apply to ULP
strikes. It is argued that mediation or conciliation in order to settle a criminal offense is not allowed.
In the first place, it is at best unclear whether the refusal of CAC to give a 13th month pay to NFSW
constitutes a criminal act. Under Sec. 9 of the Rules and regulations Implementing Presidential Decree
No. 851—
“Non-payment of the thirteenth-month pay provided by the Decree and these rules shall be treated as
money claims cases and shall be processed in accordance with the Rules Implementing the Labor Code
of the Philippines and the Rules of the National Labor Relations Commission.”
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368
Secondly, the possible dispute settlement, either permanent or temporary, could very well be along
legally permissible lines, as indicated in (b) above or assume the form of measures designed to abort the
intended strike, rather than compromise criminal liability, if any. Finally, amicable settlement of criminal
liability is not inexorably forbidden by law. Such settlement is valid when the law itself clearly authorizes
it. In the case of a dispute on the payment of the 13th month pay, we are not prepared to say that its
voluntary settlement is not authorized by the terms of Art. 264(e) of the Labor Code, which makes it the
duty of the MOLE to exert all efforts at mediation and conciliation to effect a voluntary settlement of
labor disputes.
(e)NFSW strike is illegal.—The NFSW declared the strike six (6) days after filing a strike notice, i.e.,
before the lapse of the mandatory cooling-off period. It also failed to file with the MOLE before
launching the strike a report on the strike-vote, when it should have filed such report “at least seven (7)
days before the intended strike.” Under the circumstances, we are perforce constrained to conclude
that the strike staged by petitioner is not in conformity with law. This conclusion makes it unnecessary
for us to determine whether the pendency of an arbitration case against CAC on the same issue of
payment of 13th month pay [R.A.B. No. 512-81, Regional Arbitration Branch No. VI-A, NLRC, Bacolod
City, in which the National Congress of Unions in the Sugar Industry of the Philippines (NACUSIP) and a
number of CAC workers are the complainants, with NFSW as Intervenor seeking the dismissal of the
arbitration case as regards unnamed CAC rank and file employees] has rendered illegal the above strike
under Art. 265 of the Labor Code which provides:
“It shall likewise be unlawful to declare a strike or lockout after assumption of jurisdiction by the
President or the Minister, or after certification or submission of the dispute to compulsory or voluntary
arbitration or during the pendency of cases involving the same grounds for the strike or lockout.” (Italics
supplied.)
(2)The Second Issue.—At bottom, the NFSW strike arose from a dispute on the meaning and application
of PD 851, with
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NFSW claiming entitlement to a 13th month pay on top of bonuses given by CAC to its workers, as
against the diametrically opposite stance of CAC. Since the strike was just an offshoot of the said
dispute, a simple decision on the legality or illegality of the strike would not spell the end of the NFSW-
CAC labor dispute. And considering further that there are other disputes and strikes—actual and
impending—involving the interpretation and application of PD 851, it is important for this Court to
definitively resolve the problem: whether under PD 851, CAC is obliged to give its workers a 13th month
salary in addition to Christmas, milling and amelioration bonuses stipulated in a collective bargaining
agreement amounting to more than a month’s pay.
Keenly sensitive to the needs of the workingmen, yet mindful of the mounting production cost that are
the woe of capital which provides employment to labor, President Ferdinand E. Marcos issued
Presidential Decree No. 851 on 16 December 1975. Thereunder, “all employers are hereby required to
pay all their employees receiving a basic salary of not more than P1,000 a month, regardless of the
nature of their employment, a 13th month pay not later than December 24 of every year.” Exempted
from the obligation however are:
“Employers already paying their employees a 13th month pay or its equivalent. . . .” (Section 2.)
The evident intention of the law, as revealed by the law itself, was to grant an additional income in the
form of a 13th month pay to employees not already receiving the same. Otherwise put, the intention
was to grant some relief—not to all workers—but only to the unfortunate ones not actually paid a 13th
month salary or what amounts to it, by whatever name called; but it was not envisioned that a double
burden would be imposed on the employer already paying his employees a 13th month pay or its
equivalent—whether out of pure generosity or on the basis of a binding agreement and, in the latter
case, regardless of the conditional character of the grant (such as making the payment dependent on
profit), so long as there is actual payment. Otherwise, what was con-
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370
ceived to be a 13th month salary would in effect become a 14th or possibly 15th month pay.
This view is justified by the law itself which makes no distinction in the grant of exemption: “Employers
already paying their employees a 13th month pay or its equivalent are not covered by this Decree.” (P.D.
851.)
The Rules Implementing P.D. 851 issued by MOLE immediately after the adoption of said law reinforce
this stand, Under Section 3(e) thereof—
“The term its equivalent’ . . . shall include Christmas bonus, mid-year bonus, profit-sharing payments
and other cash bonuses amounting to not less than 1/12th of the basic salary but shall not include cash
and stock dividends, cost of living allowances and all other allowances regularly enjoyed by the
employee, as well as nonmonetary benefits. Where an employer pays less than 1/12th of the
employee’s basic salary, the employer shall pay the difference” (Italics supplied.)
Having been issued by the agency charged with the implementation of PD 851 as its contemporaneous
interpretation of the law, the quoted rule should be accorded great weight.
Pragmatic considerations also weigh heavily in favor of crediting both voluntary and contractual bonuses
for the purpose of determining liability for the 13th month pay. To require employers (already giving
their employees a 13th month salary or its equivalent) to give a second 13th month pay would be unfair
and productive of undesirable results. To the employer who had acceded and is already bound to give
bonuses to his employees, the additional burden of a 13th month pay would amount to a penalty for his
munificence or liberality. The probable reaction of one so circumstanced would be to withdraw the
bonuses or resist further voluntary grants for fear that if and when a law is passed giving the same
benefits, his prior concessions might not be given due credit; and this negative attitude would have an
adverse impact on the employees.
In the case at bar, the NFSW-CAC collective bargaining agreement provides for the grant to CAC workers
of Christmas
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371
bonus, milling bonus and amelioration bonus, the aggregate of which is very much more than a worker’s
monthly pay. When a dispute arose last year as to whether CAC workers receiving the stipulated
bonuses would additionally be entitled to a 13th month pay, NFSW and CAC concluded a compromise
agreement by which they—
“agree(d) to abide by the final decision of the Supreme Court in any case involving the 13th Month Pay
Law if it is clearly held that the employer is liable to pay a 13th month pay separate and distinct from the
bonuses already given.”
When this agreement was forged on November 30, 1981, the original decision dismissing the petition in
the aforecited Mar-copper case had already been promulgated by this Court. On the votes of only 7
Justices, including the distinguished Chief Justice, the petition of Marcopper Mining Corp. seeking to
annul the decision of Labor Deputy Minister Amado Inciong granting a 13th month pay to Marcopper
employees (in addition to mid-year and Christmas bonuses under a CBA) had been dismissed. But a
motion for reconsideration filed by Marcopper was pending as of November 30, 1981. In December
1981, the original decision was affirmed when this Court finally denied the motion for reconsideration.
But the resolution of denial was supported by the votes of only 5 Justices. The Marcopper decision is
therefore a Court decision but without the necessary eight votes to be doctrinal. This being so, it cannot
be said that the Marcopper decision “clearly held” that “the employer is liable to pay a 13th month pay
separate and distinct from the bonuses already given,” within the meaning of the NFSW-CAC
compromise agreement. At any rate, in view of the rulings made herein, NFSW cannot insist on its claim
that its members are entitled to a 13th month pay in addition to the bonuses already paid by CAC.
WHEREFORE, the petition is dismissed for lack of merit. No costs.
SO ORDERED.
Aquino, Guerrero, Escolin, Vasquez, Relova and Gutierrez, JJ., concur.
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372
Fernando, C.J., files a separate opinion of qualified concurrence on the question of the legality of the
strike and of dissent on the interpretation to be accorded Presidential Decree No. 851.
Teehankee, J., in the result.
Barredo, J., I concur with a separate opinion.
Makasiar, J., I concurs in the separate opinion of qualified concurrence as to the illegality of the strike
and of dissent as to the interpretation of Presidential Decree No. 851 submitted by the Chief Justice.
Concepcion, J., is on leave.
Abad Santos, J., see my concurring opinion.
De Castro, J., I join Justice Abad Santos in his separate concurring opinion.
Melencio-Herrera, J., concurs in a separate opinion.
FERNANDO, C.J., concurring with qualifications on the questions of the legality of the strike and
dissenting on the interpretation to be accorded Presidential Decree No. 851 on the thirteenth-month
additional pay:
There is at the outset due acknowledgment on my part of the high quality of craftsmanship in the
opinion of the Court penned by Justice Efren Plana. It is distinguished by its lucidity. There is the imprint
of inevitability in the conclusion reached based on the basic premise that underlies it. So it should be if
the decisive consideration is the language used both of the applicable provisions of the Labor Code,
Article 264 (c), (e) and (f) and Article 265, as well as of Presidential Decree Nos. 851. In that sense, the
decision of the Court can stand the test of scrutiny based on sheer logic.
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That for me would not suffice. Such an approach, to my mind, is quite limited. The standard that should
govern is the one supplied by the Constitution. That is the clear implication of constitutionalism.
Anything less would deprive it of its quality as the fundamental law. It is my submission, therefore, that
statutes, codes, decrees, administrative rules, municipal ordinances and any other jural norms must be
construed in the light of and in accordance with the Constitution. There is this explicit affirmation in the
recently decided case of De la Llana v. Alba sustaining the validity of Batas Pambansa Blg. 129
reorganizing the judiciary: “The principle that the Constitution enters into and forms part of every act to
avoid any unconstitutional taint must be applied. Nuñez v. Sandiganbayan, promulgated last January,
has this relevant excerpt: ‘It is true that the other Sections of the Decree could have been so worded as
to avoid any constitutional objection. As of now, however, no ruling is called for. The view is given
expression in the concurring and dissenting opinion of Justice Makasiar that in such a case to save the
Decree from the dire fate of invalidity, they must be construed in such a way as to preclude any possible
erosion on the powers vested in this Court by the Constitution. That is a proposition too plain to be
contested It commends itself for approval.’ ”1
1. It may not be amiss to start with the dissenting portion of this separate opinion. It is worthwhile to
recall the decision in Marcopper Mining Corporation v. Hon. Blas Ople.2 It came from a unanimous
Court. It is true that only seven Justices signed the opinion, two of the members of this Tribunal, who
participated in the deliberation, Justices Teehankee and Melencio-Herrera having reserved their votes.
Justice Concepcion Jr. was on leave. It is accurate, therefore, to state that Marcopper as stated in Justice
Plana’s opinion, is not doctrinal in character, the necessary eight votes not having been
__________________
1 De La Llana, G. R. No. 57883, was promulgated on March 12, 1982 and Nuñez v. Sandiganbayan, G. R.
Nos. 50581-50617, was promulgated on January 30, 1982.
2 G. R. No. 51254 promulgated on June 11, 1981 is reported in 105 SCRA 75.
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374
obtained. It is a plurality as distinguished from a majority opinion. It is quite apparent, however, that
there was not a single dissenting vote. There was subsequently a motion for reconsideration. This Court
duly weighed the arguments for and against the merit of the unanimous opinion rendered. The
resolution denying the motion for reconsideration was not issued until December 15, 1981 on which
occasion three Justices dissented.3 In the brief resolution denying the option for reconsideration, with
five Justices adhering to their original stand4 it was set forth that such denial was based: “primarily [on]
the reasons that the arguments advanced had been duly considered and found insufficient to call for a
decision other than that promulgated on June 11, 1981, which stands unreversed and unmodified. This
is a case involving the social justice concept, which, as pointed out in Carillo v. Allied Workers
Association of the Philippines involves ‘the effectiveness of the community’s effort to assist the
economically under-privileged. For under existing conditions, without such succor and support, they
might not, unaided, be able to secure justice for themselves.” In an earlier decision, Del Rosario v. De los
Santos, it was categorically stated that the social justice principle ‘is the translation into reality of its
significance as popularized by the late President Magsaysay: He who has less in life should have more in
law.’ ”5 In his dissent, Justice Fernandez took issue on the interpretation of social justice by relying on
the well-known opinion of Justice Laurel in Calalang v. Williams6 and concluded: “It is as much to the
benefit of labor that the petitioner be accorded social justice. For if the mining companies, like the
petitioner, can no longer operate, all the laborers employed by aid company shall be laid-off.”7 To
reinforce such a conclusion, it was further
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3 Justice Fernandez, concurred in by Justices Concepcion Jr. and Guerrero. At that time, of the fourteen
Justices, Justices Teehankee and Barredo reserved their votes and Justices Melencio-Herrera, Ericta,
Plana and Escolin took no part.
4 Fernando, C.J., Makasiar, Aquino, Abad Santos and de Castro, JJ.
5 Resolution dated December 15, 1981, 1.
6 70 Phil. 726 (1940).
7 Resolution dated December 15, 1981, 3.

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stated: “The decision in this case is far reaching. It affects all employers similarly situated as the
petitioner. The natural reaction of employers similarly situated as the petitioner will be to withdraw
gratuities that they have been giving employees voluntarily. In the long run, the laborers will suffer. In
the higher interest of all concerned the contention of the petitioner that the mid-year bonus and
Christmas bonus that it is giving to the laborers shall be applied to the 13th month pay should be
sustained.”8 Such pragmatic consideration is likewise evident in the opinion of the Court in this case. It
is quite obvious from the above resolution of denial that the approach based on the Constitution,
compelling in its character set forth in the opinion of the Court of June 11, 1981, is the one followed by
the members of this Court either adhering to or departing from the previous unanimous conclusion
reached. The main reliance to repeat, is on the social justice provision9 as reinforced by the protection
to labor provision.10 As noted, such concepts were enshrined in the 1935 Constitution.11 The
___________________
8 Ibid.
9 According to Article II, Sec. 6 of the present Constitution; “The State shall promote social justice to
ensure the dignity, welfare, and security of all the people. Towards this end, the State shall regulate the
acquisition, ownership, use, enjoyment, and disposition of private property, and equitably diffuse
property ownership and profits.”
10 According to Article 11, Sec. 9 of the present Constitution: “The State shall afford protection to labor,
promote full employment and equality in employment, ensure equal work opportunities regardless of
sex, race, or creed, and regulate the relations between workers and employers. The state shall assure
the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane
conditions of work. The State may provide for compulsory arbitration.”
11 According to Article II, Sec. 5 of the 1935 Constitution: “The promotion of social justice to insure the
well-being and economic security of all the people should be the concern of the State.” According to
Article XIV, Sec. 6 of the 1935 Constitution: “The State shall afford protection to labor, especially to
working women and minors, and shall regulate the relation between landowner and tenant, and
between labor and capital in industry and in agriculture. The State may provide for compulsory
arbitration.”
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376
opinion pursued the matter further: “Even then, there was a realization of their importance in vitalizing
a regime of liberty not just as immunity from government restraint but as the assumption by the State
of an obligation to assure a life of dignity for all, especially the poor and the needy. The expanded social
justice and protection to labor provisions of the present Constitution lend added emphasis to the
concern for social and economic rights. * * * That was so under the 1935 Constitution. Such an approach
is even more valid now. As a matter of fact, in the first case after the applicability of the 1973
constitution where social and economic rights were involved, this Court in Atlanta v. Noe, through
Justice Antonio, stated: In the environment of a new social order We can do no less. Thus, under the
new Constitution, property ownership has been impressed with a social function. This implies that the
owner has the obligation to use his property not only to benefit himself but society as well. Hence, it
provides under Section 6 of Article II thereof, that in the promotion of social justice, the State “shall
regulate the acquisition, ownership, use, enjoyment, and disposition of private property, and equitably
diffuse property ownership and profits.” The Constitution also ensures that the worker shall have a just
and living wage which should assure for himself and his family an existence worthy of human dignity and
give him opportunity for a better life. Such a sentiment finds expression in subsequent opinions.”12
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12 105 SCRA 75, 84-85. Alfanta v. Noe, L-32362, promulgated on September 19, 1973 is reported in 53
SCRA 76. That portion of the opinion cited appears in page 85. La Mallorca v. Workmen’s Compensation
Commission, L-29315, promulgated on November 28, 1969, a decision under the 1935 Constitution is
reported in 30 SCRA 613. Seven other opinions were cited starting from Chavez v. Zobel, L-25009,
January 17, 1974, 55 SCRA 26; Herald Delivery Carriers Union v. Herald Publications, L-29966, February
28, 1974, 55 SCRA 713; Philippine Air Lines Inc. v. Philippine Airlines Employees Association, L-24626,
June 28, 1974, 57 SCRA 489; Almira v. B. F. Goodrich Philippines Inc., L-34974, July 25, 1974, 58 SCRA
120; Radio Communications of the Philippines v. Philippine Communications Workers Federation, L-
37662, August 30, 1974, 58 SCRA 762; Firestone Employees Asso. v. Firestone Tire and Rubber Co. of the
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National Federation of Sugar Workers (NFSW) , vs. Ovejera
2. It thus becomes apparent, therefore, why predicated on what for me is the significance of the social
justice and the protection to labor mandates of the Constitution, I cannot, with due respect, concur with
my brethren. The stand taken by this Court, I submit, cannot be justified by the hitherto hospitable
scope accorded such provisions. It is to the credit of this Administration that even during the period of
crisis government, the social and economic rights were fully implemented. As a matter of fact, some
critics, not fully informed of the actual state of affairs, would predicate their assessment of its
accomplishments in this sphere on their inaccurate and unsympathetic appraisal of how much success
had been achieved. It is a matter of pride for the Philippines that as far back as her 1935 Constitution,
provisions assuring liberty in its positive sense, enabling her citizens to live a life of humanity and
dignity, were already incorporated. The social and economic rights found therein antedated by thirteen
years the Universal Declaration of Human Rights. When it is considered that, as pointed out in the
opinion of Justice Antonio in Alfanta, rendered in the first year of the present Constitution, the social
justice principle now lends itself to the equitable diffusion of property ownership and profits, it becomes
difficult for me to justify why any lurking ambiguity in Presidential Decree No. 851 could be construed
against the rights of labor. This Court is not acting unjustly if it promotes social justice. This Court is not
acting unjustly if it protects labor. This Court is just being true to its mission of fealty to the Constitution.
Under the concept of separation of powers, while the political branches enact the laws and thereafter
enforce them, any question as to their interpretation, justiciable in character, is for the courts,
ultimately this Tribunal, to decide. That is its sworn duty. It cannot be recreant to such a trust. Its role,
therefore, is far from passive. It may be said further that if the object of statutory construction is in the
well-known language of Learned Hand “proliferation of purpose,” there is warrant for the view that I
espouse. That is to attain its basic objective, namely, to cope with the ravages of inflation. Moreover,
the Decree only benefits the low-salaried employees. There is thus ample warrant for a more liberal
approach. It only remains to be add-
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ed that there was in Marcopper not only a recognition of the administrative determination by the
Minister of Labor as well as the then Deputy Minister of Labor but also an acceptance of the ably-
written memorandum of Solicitor General Mendoza. Hence, to repeat, my inability to concur on this
point with my brethren whose views, as I stated earlier, are deserving of the fullest respect.
3. There is, however—and it must be so recognized—an obstacle to the approach above followed. There
is an agreement both on the part of management and labor in this case quoted in the main opinion to
this effect, “to abide by the final decision of the Supreme Court in any case involving the 13th Month
Pay Law if it is clearly held that the employer is liable to pay a 13th month pay separate and distinct
from the bonuses already given.” Such an obstacle, on further reflection, is not, for me, insurmountable.
The only case then within the contemplation of the parties is Marcopper. With the unanimous opinion
rendered and a subsequent denial of a motion for reconsideration, it would appear that while it lacked
doctrinal force, this Court “clearly held” that there is liability on the part of the employer to pay a 13-
month pay separate and distinct from the bonuses already given. Perhaps the parties, especially labor,
could have been more accurate and more precise. It take comfort from the view expressed by Justice
Cardozo in Wood v. Duff-Gordon:13 “The law has outgrown its primitive stage of formalism when the
precise word was the sovereign talisman, and every slip was fatal it takes a broader view today. A
promise may be lacking, and yet the whole writing may be ‘instinct with an obligation,’ imperfectly
expressed.”14
4. Now as to the qualified concurrence. Based on the codal provisions the finding of the illegality of
strike is warranted. That for me does not fully resolve the questions raised by such Philippines, L-37952,
December 10, 1974, 61 SCRA 338 to E. Lim and Sons Manufacturing Co. v. Court of Industrial Relations,
L-39117, September 25, 1975, 67 SCRA 124.
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13 222 Wy. 88, 118 NE 214 (1917).
14 Ibid., 214.
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a declaration. From my reading of the opinion of the Court, it does not go as far as defining the
consequences of such illegal strike. Again the approach I propose to follow is premised on the two basic
mandates of social justice and protection to labor, for while they are obligations imposed on the
government by the fundamental law, compulsory arbitration as a result of which there could be a
finding of illegality is worded in permissive not in mandatory language. It would be, for me, a departure
from principles to which this Court has long remained committed, if thereby loss of employment, even
loss of seniority rights or other privileges is ultimately incurred. That is still an open question. The
decision has not touched on that basic aspect of this litigation. The issue is not foreclosed. It seems
fitting that this brief concurrence and dissent should end with a relevant excerpt from Free Telephone
Workers Union v. The Minister of Labor:15 “It must be stressed anew, however, that the power of
compulsory arbitration, while allowable under the Constitution and quite understandable in labor
disputes affected with a national interest, to be free from the taint of unconstitutionally, must be
exercised in accordance with the constitutional mandate of protection to labor. The arbiter then is
called upon to take due care that in the decision to be reached, there is no violation of ‘the rights of
workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of
work.’ It is of course manifest that there is such unconstitutional application if a law ‘fair on its face and
impartial in appearance [is] applied and administered by public authority with an evil eye and an
unequal hand.’ It does not even have to go that far. An instance of unconstitutional application would be
discernible if what is ordained by the fundamental law, the protection of labor, is ignored or
disregarded.”16
I am authorized to state that Justice Makasiar joins me in this separate opinion.
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15 G.R. No. 58184, October 30, 1981, 108 SCRA 757.
16 Ibid, 773.
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BARREDO, J., Concurring
At this stage of my tenure in the Supreme Court which is to end in about four months from now, I feel it
is but fitting and proper that I make my position clear and unmistakable in regard to certain principles
that have to be applied to this labor case now before Us. Few perhaps may have noticed it, but the fact
is that in most cases of this nature I have endeavored my very best to fully abide by the part that
pertains to the judiciary in the social justice and protection to labor clauses of the Constitution, not
alone because I consider it as an obligation imposed by the fundamental law of the land but by natural
inclination, perhaps because I began to work as a common worker at the age of thirteen, and I cannot in
any sense be considered as a capitalist or management-inclined just because I happen to have joined,
within the legal bounds of the position I occupy, some business ventures with the more affluent
members of my family and with some good and faithful old time friends. I need not say that I am pro-
labor; I only wish to deny most vehemently that I am anti-labor.
Having been one of the seven members the Court who cosigned with our learned Chief Justice the
Marcopper “decision” and later on reserved my vote when a motion for reconsideration thereof was
filed for me to concur now by merely cosigning the brilliant opinion of our distinguished colleague, Mr.
Justice Plana, is to my mind short of what all concerned might expect from me. For me to merely vote in
support of the judgment herein without any explanation of my peculiar situation does not satisfy my
conscience not to mention that I owe such explanation to those who would all probably be raising their
eyebrows since they must come to feel they could depend on me to always vote in favor of labor.
The Supreme Court is a court of law and of equity at the same time but, understandably, equity comes
in only when law is inadequate to afford the parties concerned the essence of justice, fairness and
square dealing. It is to this basic tenet that I am bound by my oath of office before God and our people.
Having this ideal in mind, the paramount thought that
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should dominate my actuations is complete and absolute impartiality in the best light God has given me.
Hence, when the aid of the Court is sought on legal grounds, We can resort to equity only when there is
no law that can be properly applied. My view of the instant case is that it is one of law, not of equity. It is
on this fundamental basis that I have ventured to write this concurrence.
Looking back at my concurrence in Marcopper, and guided by the observations in the main opinion
herein, as to the doctrinal value of Our decision therein, I have come to the realization, after mature
deliberation, that the conclusion reached in the opinion of the Chief Justice may not always be
consistent with the evident intent and purpose of Section 2 of P.D. No. 851 which, indeed, unequivocally
provides that “(E)mployers already paying their employees a 13th month pay or its equivalent are not
covered by this decree”, albeit it does not clarify what it means by the “equivalent” of the 13th month
pay. Such being the case, nothing can be more proper than for everyone to abide by or at least give due
respect to the meaning thereof as has been officially expressed by the usual executive authority called
upon to implement the same, none other than the Ministry of Labor (MOLE, for short), unless, of course,
the understanding of MOLE appears to be manifestly and palpably erroneous and completely alien to
the evident intent of the decree. And Section 3(e) of the Rules Implementing P.D. 851 issued by MOLE
reads thus:
“The term ‘its equivalent’ as used in paragraph (c) hereof shall include Christmas bonus, midyear bonus,
profit-sharing payments and other cash bonuses amounting to not less than l/12th of the basic salary
but shall not include cash and stock dividends, cost of living allowances and all other allowances
regularly enjoyed by the employee, as well as non-monetary benefits. Where an employer pays less than
l/12th of the employee’s basic salary, the employer shall pay the difference.”
Petitioner National Federation of Sugar, Workers (NFSW, for short) is now before Us with the plea that
because in its agreement with respondent Central Azucarera de la Carlota (CAC, for short) of November
30, 1981 to the effect that:
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382
“The parties agree to abide by the final decision of the Supreme Court in any case involving the 13th
Month Pay Law if it is clearly held that the employer is liable to pay a 13th month pay separate and
distinct from the bonuses already given.” (Par. 4)
and because this Court dismissed, in legal effect, for lack of necessary votes, the petition in the
Marcopper case seeking the setting aside of Deputy Minister Inciong’s decision which considered the
midyear and Christmas bonuses being given to the Marcopper workers as not the equivalent of the 13th
month pay enjoined by P.D. 851, We should now order CAC to pay NFSW members in the same way as
stated in the opinion of the Chief Justice in the Marcopper case.
At first glance, such a pause does appear tenable and plausible. But looking deeper at the precise
wording of the November 30, 1981 agreement between NFSW and CAC abovequoted, the proposition in
the main opinion herein that what must be deemed contemplated in said agreement is that the final
decision of the Supreme Court therein referred to must be one wherein it would be “clearly held that
the employer is liable to pay 13th month pay separate and distinct from the bonuses already given”,
compels concurrence on my part. I find said agreement to be definitely worded. There is no room at all
for doubt as to the meaning thereof. And tested in the light of such unambiguous terminology of the
said agreement, the Marcopper opinion signed by only seven members of this Court, cannot, under the
Constitution and prevailing binding legal norms, unfortunately, have doctrinal worth and cannot be
considered as stare decisis. Hence, it cannot be said to be the “definite” decision of the Supreme Court
the parties (CAC and NFSW) had in mind. Accordingly, it is my considered opinion that NFSW’s plea in
this case is premature and rather off tangent.
I am not unmindful of the possibility or even probability that labor may argue that in signing the
November 30, 1981 agreement, NFSW little cared, for it was not fully informed about what doctrinal
and what is not doctrinal signify in law. Labor may argue that it is enough that Marcopper workers got
their 13th month pay in addition to their bonuses by virtue of
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the denial by this Supreme Court of Marcopper Company’s appeal to US, and NFSW members should
not be left getting less. And it would only be rational to expect labor to invoke in support of their plea no
less than the social justice and protection to labor provisions of the Constitution.
As I have said at the outset, I am about to leave this Court. Nothing could warm my heart and lift my
spirit more than to part with the noble thought that during my tenure of fourteen years in this Supreme
Court. I have given labor the most that it has been within my power to give. But again I must emphasize
that what is constitutionally ordained, and by that I mean also by God and by our country and people, is
for me to jealously guard that the scales of justice are in perfect balance. No fondness for any sector of
society, no love for any man or woman, no adherence to any political party, no feeling for any relative or
friend nor religious consideration or belief should ever induce me to allow it to tilt in the slightest
degree in favor of anyone.
The concept of social justice has been variously explained in previous decisions of this Court. In Talisay
Silay,1 penned by this writer, We went as far as to hold that when it comes to labor-management
relationship, the social justice principle is more pervasive and imperious than police power. It is indeed
consecrated as one of the most valued principles of national policy in the Constitution. (Sec. 6, Art. II) So
also is protection to labor. (Sec. 9, Id.) I am of the firm conviction, however, that these constitutional
injunctions are primarily directed to and are responsibilities of the policy-determining departments of
the government. In the enforcement of said principles, the role of the judiciary is to a certain degree less
active. The courts are supposed to be called upon only to strike down any act or actuation of anyone
violative thereof, and, of course, in case of doubt in any given situation, to resolve the same in favor of
labor. Verily, neither the Supreme Court nor any other court is enjoined to favor labor merely for labor’s
sake, even as the judiciary is duty bound never to place labor at a disadvantage,
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1 G. R. No. L-21304, February 19, 1979.
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for that would not be only unconstitutional but inhuman, contrary to the Universal Declaration of
Human Rights and unpardonably degrading to the dignity of man who has been precisely created in the
image of God. At bottom, the ideal in social justice is precisely to maintain the forces of all the economic
segments of society in undisturbed and undisturbable equilibrium, as otherwise there would be no
justice for anyone of them at all.
In the case at bar, I do not feel at liberty to disregard what the parties have freely agreed upon,
assuming, as I must, that in entering into such agreement both parties were fully aware of their legal
rights and responsibilities. In this connection, I take particular note of the fact that if CAC is a big
financially well conditioned concern, NFSW is not just one ignorant laborer or group of laborers, but a
federation with leaders and lawyers of adequate if not expert knowledge-ability in regard to their rights
and other relevant matters affecting labor. I am satisfied that there is here no occasion to apply the Civil
Code rule regarding vigilance whenever there is inequality in the situations of the parties to an
agreement or transaction.
In conclusion, I concur fully in the main opinion of Justice Plana as regards both issues of illegality of the
strike here in question and the non-applicability hereto of whatever has been said in Marcopper. I have
added the above remarks only to make myself clear on labor-management issues before I leave this
Court, lest there be no other appropriate occasion for me to do so.
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ABAD SANTOS, J., Concurring—
I concur but lest I be accused of inconsistency because in Marcopper Mining Corporation vs. Ople, et al.,
No. 51254, June 11, 1981, 105 SCRA 75, I voted to dismiss the petition for lack of merit and as a result
Marcopper had to give the 13th-month pay provided in P.D. No. 851 even as its employees under the
CBA had mid-year and end-of-year bonuses, I have to state that Marcopper and La Carlota have
different factual situations as follows:
1. In Marcopper, the CBA clearly stated that the company was obligated to “grant mid-year and end-of-
year bonuses to employees following years in which it had profitable operations.” Thus the payment of
the bonuses was contingent upon the realization of profits. If there were no profits, there were to be no
bonuses. Accordingly, it was fair and proper to conclude that Marcopper had not shown that it was
already paying its employees the 13th-month pay or its equivalent as provided in Sec. 2 of P.D. No. 851.
However, in the instant case of La Carlota the obligation of the employer to pay bonuses is not
contingent on the realization of profits. The CBA stipulates that the “parties also agree to maintain the
present practice on the grant of Christmas bonus, milling bonus, and amelioration bonus to the extent
as the latter is required by law.” It can thus be said that La Carlota is already paying the equivalent of the
13th-month pay.
2. In Marcopper, the company’s liability for the 13th-month pay was determined by no less than the
Deputy Minister of Labor, Amado G. Inciong. I have always given much weight to the determination of
officers who are tasked with implementing legislation because their expertise qualifies them in making
authoritative decisions. In the present case of La Carlota, there has been no determination that the
employees are entitled to the 13th-month pay. In fact, a negative conclusion can be implied from the
declaration of Labor Arbiter Ovejera that the labor union’s strike against La Carlota was illegal.
386
386
MELENCIO-HERRERA, J., concurring:
A. The question of law involved in this Petition for Prohibition with Preliminary Injunction is based on
the following relevant facts which are indicated in the record:
1. Prior to December 16, 1975, Central Azucarera de la Carlota (LA CARLOTA, for short), which operates
a sugar mill in La Carlota, Negros Occidental, may be deemed as paying to its employees milling bonus,
amelioration bonus, and Christmas bonus equal at least to a months’ salary.
2. PD 851, effective on the aforementioned date of December 16, 1975, required employers to pay their
employee a 13th month pay, provided the employer was not already paying the said 13th month pay or
its equivalent.
3. On December 22, 1975, the then Department of Labor promulgated a regulation stating that
“Christmas bonus” is an equivalent of the 13th month pay.
4. From 1975 to 1981, LA CARLOTA was not paying 13th month pay on the assumption that the
“Christmas bonus” it was paying was an “equivalent” of the 13th month pay. The employees of LA
CARLOTA and their labor unions had not protested the non-payment of the 13th month pay in addition
to the Christmas bonus.
5. On June 11, 1981, this Court promulgated its Decision in the “Marcopper” case, which involved a
relationship between the “13th month pay” and the “Christmas bonus” being paid by an employer. A
Motion for reconsideration of the Decision was subsequently filed in said case, which was denied only
on December 15, 1981.
6. In the meantime, on November 29, 1981, the National Federation of Sugar Workers (NFSW), as the
labor union representing the majority of employees at LA CARLOTA, staged a strike because LA CARLOTA
had refused to pay the 13th month pay in addition to Christmas bonus. The strike lasted one day as, on
November 30, 1981, LA CARLOTA and, NFSW entered into a settlement agreement, paragraph 4
whereof provided as follows:
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“4. The parties agree to abide by the final decision of the Supreme Court in any case involving the 13th
Month Pay Law if it is dearly held that the employer is liable to pay a 13th Month Pay separate and
distinct from the bonuses already given;”
7. On January 28, 1982, NFSW declared a strike on the ground that, despite the finality of the Marcopper
Decision, LA CARLOTA had refused to grant 13th month pay to its employees, in addition to Christmas
bonus, as agreed upon in the settlement agreement of November 30, 1981.
B. The legal controversy in the matter may be explained as follows:
1. NFSW filed a notice of strike on January 22, 1982, claiming that the contemplated strike was based on
an unfair labor practice, and that it could declare the strike even before the expiration of fifteen (15)
days thereafter. The unfair labor practice relied upon was management’s alleged renegation of the
November 30, 1981 agreement, considering that the finality of the Marcopper Decision had “clearly held
that the employer is liable to pay a 13th month pay separate and distinct from “the Christmas bonus”.
2. On the other hand, LA CARLOTA took the position that the strike was not a ULP strike but an
economic strike subject to a cooling period of thirty (30) days with its attendant requirements.
3. It is clear that the controversy between NFSW and LA CARLOTA substantially hinges on the question
of whether or not the Marcopper Decision has clearly held that a Christmas bonus, in whatsoever form,
should not deter the employer’s obligation to the payment of the 13th month pay.
C. The proceedings in the case below were as follows:
1. On February 4, 1982, LA CARLOTA filed a petition to declare the strike of January 28, 1982 as illegal in
R. A. B. Case No. 110-82 of the Regional Arbitration Branch No. VI-A of the National Labor Commission in
Bacolod City the CASE BELOW).
2. After relatively protracted hearings, respondent Labor Arbiter rendered a Decision declaring illegal
the strike of
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388
January 28, 1982. That is the Decision assailed by NFSW in this instance claiming it to be null and void.
D. Reference to a collateral proceeding may be made at this juncture:
1. It appears that, in LA CARLOTA, there is another labor union under the name of National Congress of
Unions in the Sugar Industry in the Philippines (NACUSIP).
2. On July 30, 1981, NACUSIP filed a complaint in FSD Case No. 1192-81 before R. A. B. No. VI-A in
Bacolod City praying that an Order be issued directing LA CARLOTA to pay 13th month pay to its
employees from the effective date of PD 851 (the COLLATERAL PROCEEDING).
3. On December 4, 1981, NFSW filed a notice to intervene in the COLLATERAL PROCEEDING
4. On January 26, 1982, a Decision was rendered in the COLLATERAL PROCEEDING which, in part, said:
“On the contrary, what this Labor Arbiter is aware of, with which he can take notice, is the policy
declaration of the Honorable Minister of Labor and Employment contained in a telegram addressed to
Asst. Director Dante G. Ardivilla, Bacolod District Office, this Ministry, and disseminated for the
information of this Branch which states, among other things, that where bonuses in CBAs are not
contingent on realization of profit as in the Marcopper case, the decision (of the Supreme Court, re:
Marcopper case), does not apply, and cases thereon should be resolved under the provisions of PD 851
and its implementing rules.”
5. On February 15, 1982, NFSW filed a Motion for Reconsideration of the Decision.
Upon the foregoing exposition, there is justification for an outright dismissal of the Petition for
Prohibition for the simple reason that the strike of January 28, 1982 may not be considered a ULP strike.
When the strike was declared, it could not be validly claimed that there was already a final decision
made by this Court which “clearly held that the employer is liable to pay a 13th month pay separate and
distinct from” the Christmas bonus being paid by LA CARLOTA. However, since the Marcopper Decision
has engendered controversies in
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labor-management relations in several industrial/commercial firms, the Court has resolved to rule on
the merits of the substantial question between LA CARLOTA and NFSW for the public benefit with a
clarification of the Marcopper judgment.
I agree with the proposition taken by the Ministry of Labor and Employment that Christmas bonus, not
contingent on realization of profit as in the Marcoper case, is the equivalent of the 13th month pay. In
regards to the juxtaposition of the terms “13th month pay” and “Christmas bonus” in an amount not
less than a month’s salary, the following may be explained:
Within recent time, it has been usual for an industrial or commercial firm, which has had a successful
year, to grant a bonus to its employees generally denominated before as year-end bonus. A firm usually
knows whether or not it has had a successful year by the middle of December. In case of profitability,
payment of the year-end bonus does not have to await the end of the year, but it is often times given
some days before New Year, generally about Christmas day. Before long, the year-end bonus became
also known as Christmas bonus, following the change of the Christmas gift-giving day from January 6th
to December 25th. Thus, it has been stated: “a less formal use of the bonus concept, which is designed
to reward workers for a successful business year, is the annual or Christmas bonus” (3 Ency. Brit., 918).
Although the original concept of a year-end bonus or Christmas bonus, was that it depended on a
successful year, the bonus, in many instances, has been developed into an obligatory payment as part of
wages and not related to profitability of operations. As part of wages, they are subject to CBA
negotiation. That has been the general trend in the United States and in our country.
“x x x. But where so-called gifts are so tied to the remuneration which employees receive for their work
that they are in fact a part of it, they are in reality wages within the meaning of the Act.
xxx xxx xxx
390
390

In a number of cases an employer has been held required to bargain concerning bonuses, including
regularly given Christmas bonuses.” (48 Am Jur 2d., p. 455).
Moreover, once a Christmas bonus becomes institutionalized, it has to be non-discriminatory. “An

employer violates 29 USC (Sec.) 158(a) (3) where, to discourage union membership, he ceases giving a
Christmas bonus to all employees and gives the bonus only to office and supervisory employees after
unionization of his production and maintenance employees.” (48 Am Jur 2d., p. 420).
The Christmas bonus, as it clearly denotes, has a literal religious connection, “Christmas” being a term
within the Christian religion. Considering that the Christmas bonus has become obligatory and non-
discriminatory in many jurisdictions, a tendency arose to disassociate that bonus from its religious
connotation. Some countries, with non-christian or “liberal” Christian segments, have opted to make the
year-end or Christmas bonus obligatory, and they called it the 13th month pay. It is, perhaps, having our
Moslem brothers in mind that the Government had decided to set up in our country the obligatory
payment of the 13th month pay. Thereby, the orthodox non-christian employee is not subjected to
“discrimination” due to his inability to accept the Christmas bonus because of strict allegiance to this
own faith. It should, therefore, be apparent that “Christmas bonus” and “13th month pay” should be
equated one with the other.
PD 851 does not contain a provision for rules and regulations to be promulgated by the Department of
Labor for implementation of the Decree. Notwithstanding, on December 22, 1975, the Department of
Labor issued “Rules and Regulations Implementing Presidential Decree 851”, with the following relevant
provision:
“The term ‘its equivalent’ as used in paragraph (c) hereof shall include Christmas bonus, mid-year bonus,
profit-sharing payments and other cash bonuses amounting to not less than l/12th of the basic salary
but shall not include cash and stock dividends cost of living allowances and all other allowances regularly
enjoyed by the
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employee, as well as non-monetary benefits. Where an employer pays less than 1/12th of the
employees basic salary, the employer shall pay the difference.”
When administrative rules and regulations are not properly “delegated”, they cannot have the force and
effect of law. It has been stated that:
“Administrative rules and regulations. As discussed in Public Administrative Bodies and Procedure (Sec.)
108, rules and regulations duly promulgated and adopted in pursuance of properly delegated authority
have the force and effect of law where they are legislative in character, hut rules and regulations which
are merely executive or administrative views as to the meaning and construction of the statute are not
controlling on the courts, and cannot alter or extend the plain meaning of a statute, although they are
era-titled to great weight where the statute is ambigous.” (82 C.J.S., pp. 770, 771).
Although the rule defining the term “equivalent” as used in PD 851 does not have the force and effect of
law, it can and should be considered as an administrative view entitled to great weight as it is an
interpretation of “equivalent” made by the administrative agency which has the duty to enforce the
Decree.
In the light of the foregoing views, I concur with the dismissal of the Petition for Prohibition with the
express statements that LA CARLOTA’s Christmas bonus and other bonuses exempts it from giving 13th
month pay to its employees, and that the strike of January 28, 1982 was not a ULP strike and should be
considered illegal even if NFSW had complied with all statutory requirements for the strike.
Petition dismissed.
Notes.—The term “stable economy” should not be invoked as to justify rejection of workers’ claims. The
Constitution does not guarantee viability of business enterprises and profits. (Philippine Apparel
Workers Union vs. NLRC, 106 SCRA 444.)
392
392
There being no actual agreement yet and actual payment of the agreed P0.80 wage increase, there
could have been no “grant” of wage increase by the employer within the contemplation of paragraph (k)
Section 1 of the Implementing Rules of P.D. 1123, to exempt the employer from payment of the
emergency cost of living allowance (ECOLA). (Philippine Apparel Workers Union vs. NLRC, 106 SCRA
444.)
A managerial employee is properly dismissed for serious misconduct or wilfull disobedience of

employer’s orders. (Associated Citizens Bank vs. Ople, 103 SCRA 130.)
A department manager of a bank being a managerial employee and without a fixed period of
employment may be dismissed from his employment without cause. (Bondoc vs. People’s Bank and
Trust Co., 103 SCRA 599.)
Overtime pay and premium for special holiday are considered additional compensation and are
excluded from the definition of basic salary. (San Miguel Corporation vs. Inciong, 103 SCRA 139).
Under Article 257 of the Labor Code PD 442 once the 30% requirement is met the Director of Labor
Relations has no choice but to call a certification election. (Atlas Free Workers Union (AFWU)-PSSLU
Local vs. Noriel, 104 SCRA 565.)
Implementing rules and regulations of the Labor Code must be resolved in favor of labor. (Rambaoa vs.
Workmen’s Compensation Commission, 96 SCRA 275.)
If the object of the law is to be accomplished with a liberal construction, the creation of the relationship
should not be adjudged strictly in accordance with technical rules, but rather according to the actuations
and realities of industrial or business practice. (Uy vs. Workmen’s Compensation Commission, 97 SCRA
255.)
When a union stages on economic strike without complying with the requisite rules on going a prior
notice, said strike is illegal. (Maria Cristina Fertilizer Plant Employees Association vs. Tandaya, 83 SCRA
56.)
Supreme Court has authority to resolve matters not specifically assigned as errors by either parties in
the appeal if
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393
review thereof is essential to just decision of case. (Insular Life Assurance Employees Association-NATU
vs. Insular Life Assurance Co., Ltd., 76 SCRA 50.)
The Supreme Court may pass upon the validity of decision reached by officials in labor controversies in
petitions showing lack of power or arbitrary exercise of authority. (Kapisanan ng mga Manggagawa sa La
Suerte-FOITAF vs. Noriel, 77 SCRA 414.)
——o0o——
National Federation of Sugar Workers (NFSW), vs. Ovejera, 114 SCRA 354, No. L-59743 May 31, 1982
124
First City Interlink Transportation Co., Inc. vs. Roldan-Confesor
G.R. No. 106316. May 5, 1997.*
FIRST CITY INTERLINK TRANSPORTATION CO., INC., doing business under the name and style FIL
TRANSIT, petitioner, vs. THE HONORABLE SECRETARY MA. NIEVES ROLDAN-CONFESOR, in her capacity
as Secretary of Labor and Employment, and NAGKAKAISANG MANGGAGAWA NG FIL TRANSIT-
NATIONAL FEDERATION OF LABOR (NMF-NFL), respondents.
Labor Law; Dismissals; Strikes; Requisites for a valid strike.—Pursuant to Art. 263(c)(f) of the Labor
Code, the requisites for a valid strike are as follows: (1) a notice of strike filed with the Department of
Labor at least 30 days before 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 that 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.
Same; Same; Same; Same; It must be stressed that the requirements of cooling-off period and 7-day
strike ban must both be com-
______________
* SECOND DIVISION.
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125
plied with although the labor union may take a strike vote and report the same within the statutory
cooling-off period.—But, in the case at bar, what is lacking is the strike vote which should have been
reported to the DOLE seven days before staging the strike. The importance of the strike vote and
reporting of the results to the DOLE cannot be gainsaid as it is the Union itself that the law seeks to
protect by ensuring that the majority of its members voted in favor of the strike. As held in National
Federation of Sugar Workers (NFSW) v. Ovejera: When the law says “the labor union may strike”
should the dispute “remain unsettled until the lapse of the requisite number of days (cooling-off
period) from the mandatory filing of the notice,” the unmistakable implication is that the union may
not strike before the lapse of the cooling-off period. Similarly, the mandatory character of the 7-day
strike ban after the report on the strike-vote is manifest in the provision that “in any case,” the union
shall furnish the MOLE with the results of the voting “at least seven (7) days before the intended
strike, subject to the (prescribed) cooling-off period.” It must be stressed that the requirements of
cooling-off period and 7-day strike ban must both be complied with, although the labor union may
take a strike vote and report the same within the statutory cooling-off period.
Same; Same; Same; Union members who were merely instigated to participate in the illegal strike
would be treated differently.—Nevertheless, we are constrained to uphold the respondent Secretary’s
ruling that responsibility for these illegal acts must be on an individual and not collective basis.
Therefore, although the strike was illegal because of the commission of illegal acts, only the union
officers and strikers who engaged in violent, illegal and criminal acts against the employer are deemed
to have lost their employment status. Union members who were merely instigated to participate in
the illegal strike should be treated differently.
Same; Same; Same; Unjustified refusal of the striking employees to return to work and comply with
the employer’s requirement to undergo a medical examination was considered a waiver of their right
to reinstatement.—In Jackbilt Concrete Block Co., Inc. v. Norton & Harrison Co., the unjustified refusal
of the striking employees to return to work and comply with the employer’s requirement to undergo
a medical examination was considered a waiver of their right to reinstatement.
126
126
L. Emmanuel B. Canilao for petitioner.
Ernesto R. Arellano for private respondent.
MENDOZA, J.:
This is a petition for review on certiorari to set aside the order dated July 23, 1992 of the respondent
Secretary of the Department of Labor and Employment, ordering the payment of backwages and
separation pay to striking employees of petitioner First City Interlink Transportation Co., Inc.
Petitioner First City Interlink Transportation Co., Inc., is a public utility corporation doing business under
the name and style Fil Transit. Respondent Nagkakaisang Manggagawa ng Fil Transit-National Federation
of Labor (NM-NFL) is a labor union composed of employees of Fil Transit.
On May 27, 1986, the Fil Transit Employees Union filed a notice of strike with the Bureau of Labor
Relations (BLR) because of alleged unfair labor practice of petitioner. Despite several conciliation
conferences, the parties failed to reach an agreement, so that, on June 17, 1986, the Union went on
strike. As a result several workers were dismissed. The Union filed another notice of strike alleging unfair
labor practice, massive dismissal of union officers and members, coercion of employees and violation of
workers’ rights to self-organization. Conciliation conferences w ere again held but, on July 27, 1986, the
Union again went on strike, lifting their picket only on August 2, 1986.
On September 16, 1986, the then Minister of Labor and Employment, after assuming jurisdiction over
the dispute under Art. 264(g) and Art. 278(b) of the Labor Code, ordered—
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(1) all striking employees including those who were dismissed prior to the June 17, 1986 strike to return
to work within forty-eight (48) hours from receipt of the order; and
(2) petitioner to accept all the returning employees under the same terms and conditions prevailing
previous to the dispute.
On September 22, 1986, petitioner filed a motion for reconsideration and later a supplemental motion
for reconsideration, contending that no strike vote had been obtained before the strike was called and
the result of strike vote was not reported to the Ministry of Labor and Employment. Its motion was,
however, not acted upon for the reason that petitioner had already brought the matter to this Court on
certiorari, resulting in the issuance of a temporary restraining order.
The petition for certiorari was denied and the temporary restraining order was lifted by this Court in its
resolution dated February 23, 1987. On November 24, 1987, the Department of Labor and Employment
issued a writ of execution, ordering the chief of the execution arm of the NLRC to cause the actual and
physical return to work of all striking employees, including those dismissed prior to the June 17, 1986
strike under the same terms and conditions prevailing previous to the dispute, and to secure
certification that the parties have complied with such return to work order.
The Union then filed a motion for the award of backwages in the total amount of P1,364,800.00 for the
period December 9, 1987 up to February 9, 1988 and for the issuance of a writ of execution.
On March 23, 1988, the Sheriff reported in his return that only 66 employees reported back to work and
were accepted by petitioner on condition that they submit certain requirements.
On May 15, 1990 the Secretary of Labor issued the order awarding backwages and the corresponding
writ of execution as follows:
Considering the unreasonable stance adopted by Fil Transit, Inc., vis-a-vis the implementation of the
return to work order, and the consequent denial to the workers of their means of livelihood,
128
128
this office is inclined to grant the union’s prayer for backwages computed from the time the Writ of
Execution was firs t served upon the company. We demur, however, to the amount of P1,364,800.00
backwages as computed by the union. This is a matter which is best discussed and may be the subject of
later proceedings. In the meantime, our paramount concern is the readmission of the workers to
forestall further economic suffering arising from their loss income.
WHEREFORE, in view of the foregoing, the managem ent of Fil Transit, Inc. is ordered to comply strictly
with the return to work directive dated September 16, 1986, as sought to be implemented by the writ of
execution of November 24, 1987. The list of employees attached to the aforementioned writ is hereby
adopted en toto as the sole basis for management’s compliance . . . .1
Petitioner moved for a reconsideration but its motion was denied. In his order dated August 27, 1991,
the Secretary of Labor ruled:
WHEREFORE, premis es considered, the instant motion for reconsideration is hereby DENIED.
The Fil Transit, Inc. and Fil Transit Employees Union NFL are hereby directed to file their position papers
and evidence with this office, within fifteen (15) days from receipt hereof, on the following issues, to
wit:
(a) Amount of backwages due to the workers covered by the Return to Work Order of September 16,
1986 using as basis therefore the list attached to the writ of execution;
(b) The is sues identified in the Assumption Order of September 16, 1986, to wit:
(1) Alleged unfair labor practices, harrasment, coercion, violation of worker’s right to self-organization,
alleged non-payment of ECOLA;
(2) Validity of fines and suspensions;
(3) Validity of charge of wage distortion.
The Order dated 15 May 1990, calling for the compliance with the return to work directive of September
16, 1986 is hereby AFFIRMED.
______________
1 Rollo, p. 168.
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129
No further motions of this same nature shall be entertained.2
Petitioner questioned the order in a petition for certiorari, prohibition and mandamus filed with this
Court which, however, dismissed the petition on September 23, 1991, for lack of showing that the
Secretary of Labor committed a grave abuse of discretion in rendering the questioned order.3
Thereafter, respondent Union submitted its position paper on October 30, 1991 and asked the Secretary
of Labor
1. To declare respondent company guilty of unfair labor practice for its continuous defiance of the
return to work Order issued by the Department of Labor and Employment.
2. To pay complainant backwages from the time they were refused of their reinstatement last 1986.
3. To pay individual complainants their separation pay, in lieu of reinstatement considering that
complainants are no longer interested to go back to Fil Transit.
4. To pay complainant union attorney’s fees; . . .
On the other hand, petitioner First City Interlink Transportation Co., Inc. asked that:
1. The Order of 27th August 1991, be amended, to include, among the issues the question of the legality
or illegality of the strike;
2. Respondent be given an extension of thirty (30) days from today within which to file its position
paper;
3. That after the parties shall have s ubmitted their respective position papers the case be set for
hearing to afford the respondent the opportunity to cross examine the supposed complainants.
Petitioner asked for another extension of the time for submitting its position paper but as of the date of
respondent’s questioned order of July 23, 1992, it had not yet submitted its paper. Without waiting for
the paper, the Secretary of Labor
_______________
2 Id., p. 169.
3 First City Interlink Trans., Inc. v. Torres, G.R. No. 101480, Sept. 23, 1991.
130
130
ruled the strike of the Union legal and awarded backwages and separation pay to the strikers. The
dispositive portion of her decision, dated July 23, 1992, states:
WHEREFORE, premises considered, Fil Transit Co., Inc., is hereby ordered to pay the dismis sed striking
employees the following:
1. Backwages for three (3) years without qualification and deduction; and;
2. Separation pay equivalent to one-half month pay for every year of service in lieu of reinstatement, the
date of this office’s order as the cut-off date.
The Director, Bureau of Working Conditions (BWC), this Department, is hereby directed to immediately
compute the monetary award, as ordered, which computation shall form part of this order.
Hence, this second petition questioning the above order.
The petitioner contends that:
1. The Honorable Respondent Secretary of Labor erred in declaring the strike legal;
2. The strikers, having engaged in violent, illegal and criminal acts, have lost their employment status;
3. The Honorable Secretary erred in declaring that management refused to comply with the Return to
Work Order;
4. The Honorable Secretary erred in disregarding the report of the sheriff;
5. The striking employees are not entitled to backwages;
6. Assuming that backwages could properly be awarded, there was no basis for the amount fixed by the
Secretary of Labor;
7. The judgment against Fil Transit is null and void.
First. Petitioner’s main contention is that the strike called by the Union was illegal. Pursuant to Art.
263(c)(f) of the Labor Code, the requisites for a valid strike are as follows:
(1) a notice of strike filed with the Department of Labor at least 30 days before the intended date
thereof or 15 days in cas e of unfair labor practice;
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(2) strike vote approved by a majority of the total union membership in the bargaining unit concerned,
obtained by secret ballot in a meeting called for that purpose;
(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.4
Petitioner contends that the strike staged by the Union was illegal because no strike vote had been
taken before the strike was called. This matter was raised by petitioner before the Secretary of Labor
and now in this petition. However, in none of the numerous pleadings filed by respondent Union before
this Court, has it been shown that a strike vote had been taken before declaring a strike. As between
petitioner and respondent Union, the latter is in a better position to present proof of such fact. The
Union’s failure to do so raises the strong probability that there was no strike vote taken. The first and
only instance it is mentioned that such a vote had been taken before the strike was called w as in the
order dated July 23, 1992 of the Secretary of Labor in which she stated:
. . . the records show that a notice of strike was filed by the union with the Bureau of Labor Relations
(BLR) on May 27, 1986, and after a failure of s everal conciliation conferences due to management’s
consistent refusal to appear, the union went on strike on June 17, 1986, after a strike vote was
obtained.5 (Emphasis added)
But the Secretary of Labor did not indicate the basis for her statement nor the date the strike vote was
allegedly taken. Neither did she mention whether her office had been notified of the strike vote as
required by law.
For that matter the statement in the same order that a notice of strike had been filed because several
conciliation conferences failed “due to management’s consistent refusal to
_______________
4 Lapanday Workers Union v. NLRC, 248 SCRA 95 (1995); National Federation of Sugar Workers (NFSW)
v. Ovejera, 114 SCRA 354 (1982).
5 Rollo, p. 40.
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132
appear” is contrary to evidence in the record. Annexes E and F of the petition show that management
was duly represented during the conciliation proceeding prior to the strike on June 17, 1986. Annex G
likewise shows that at the conciliation conference held on July 17, 1986, management actively
participated, contrary to the statement in the order of the Secretary of Labor that the failure of the
second set of conciliation conferences was due to management’s refusal to attend.
Moreover, even assuming that a strike vote had been taken, we agree with petitioner that the Union
nevertheless failed to observe the required seven-day strike ban from the date the strike vote should
have been reported to the DOLE up to the time the Union staged the strike on June 17, 1986. As
petitioner contends:
It must be noted in this regard that as shown in the minutes of conciliation conferences (Annex “F”), the
parties met in a conciliation conference on June 13, 1986, four (4) days before the June 17, 1986 strike.
So even if it is conceded that a strike vote was taken, there would have been non-compliance with the
requisite cooling-off period and the 7-day strike ban for the simple reason that between June 13, 1986,
the day the parties met for conciliation conference and June 17, 1986, the day of the strike, there were
only four (4) days.6
It is nonetheless contended by the Solicitor General that “[a] strike inspired by good faith is not illegal
simply because certain requirements were not followed,” citing the case of Ferrer v. CIR.7 The
contention has no merit. In Ferrer, the strikers failed to observe the 30-day coolin g- off p eri od, but this
Court found the strike legal because of the strikers’ belief in good faith that the employer committed
unfair labor practice. But, in the case at bar, w hat is lacking is the strike vote which should have been
reported to the DOLE seven days before staging the strike. The importance of the strike vote and
reporting of the results to the DOLE cannot be gainsaid
_______________
6 Rollo, p. 14.
7 17 SCRA 352 (1966).
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as it is the Union itself that the law seeks to protect by ensuring that the majority of its members voted
in favor of the strike. As held in National Federation of Sugar Workers (NFSW) v. Ovejera:8
When the law says “the labor union may strike” should the dispute “remain unsettled until the lapse of
the requisite number of days (cooling-off period) from the mandatory filing of the notice,” the
unmistakable implication is that the union may not strike before the lapse of the cooling-off period.
Similarly, the mandatory character of the 7-day strike ban after the report on the strike-vote is manifest
in the provision that “in any case,” the union shall furnish the MOLE with the results of the voting “at
least seven (7) days before the intended strike, subject to the (prescribed) cooling-off period.” It must be
stress ed that the requirements of cooling-off period and 7-day strike ban must both be complied with,
although the labor union may take a strike vote and report the same within the statutory cooling-off
period.
Moreover, petitioner is right that good faith can not be invoked by the Union in this case.
As the records will bear out, the private res pondent had clearly acted in bad faith when it went on
strike.
Annex “F” of the petition (June 13, 1986 Minutes of Conciliation Proceedings) attached to the records of
the case, shows that at the time the strike was staged, conciliation meetings were going on. In fact said
Annex “F” reveals that the parties met in a conciliation meeting of June 13, 1986 and agreed to meet
further on June 17, 1986 at 2:00 P.M. (Please see Annex “F”). Instead of meeting with petitioner on the
scheduled conciliation meeting on Juen 17, 1986 as agreed upon, private respondent went on strike.
Certainly, this act of the private respondent cannot be characterized as having been made in good
faith.9
Indeed, there is no finding in this case that petitioner was guilty of the alleged unfair labor practices as
charged by the Union. The award of backwages and separation pay was based solely on the alleged
refusal of petitioner to comply with
_______________
8 114 SCRA 354, 365 (1982).
9 Rollo, p. 121.
134
134
the Return to Work Order—an issue which will be discussed in the latter part of this decision. Hence, the
ruling in Ferrer v. CIR—that the strike staged before the expiration of the 30-day cooling-off period is
not illegal because of what the strikers perceived in good faith to be unfair labor practices of the
employer—does not apply.
Second. Petitioner contends that the strikers, having engaged in violent, illegal, and criminal acts, have
lost their employment status. The Labor Code considers the commission of these acts a “prohibited
activity”10 and any worker or union officer, who knowingly participates in their commission during a
strike, may be declared to have lost his employment status.
Respondent Secretary held that responsibility for such acts should be individual and not collective. In
her questioned order of July 23, 1992, she stated:
It is contended, by the Company, that several acts of violence were allegedly committed by former
employees of the company during the strike. However, in the absence of clear proof that the strikers
committed the s ame by design or policy, only those strikers who committed illegal acts could be held
personally responsible therefor. To our mind, a wholesale dismiss al of the strikers from their
employment on the bas is that the strike was attended by violence, is not warranted in the case at bar.
As held by the Supreme Court in the cas e of FEATI Faculty Club v. FEAU University, et al.; G.R. No. L-
31504, to wit:
Not every form of violence suffices to affix the seal of illegality on a strike as to cause the loss of
employment of the guilty party. Where acts of violence while the strike lasts are sporadic and not
pervasive by design and policy, responsibility therefore is individual and not collective.11
Contrary to respondent Secretary’s finding, the strike declared by the Union was attended by pervasive
and widespread violence. The acts of violence committed were not mere
_______________
10 Labor Code, Art. 264(a)(3).
11 Rollo, p. 31.
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135
isolated incidents which could normally occur during any stri ke. Th e hijacking of Fil-Transit Bus No. 148
at the intersection of EDSA and Quezon Avenue on Sunday, July 27, 1986, three days before the
scheduled conciliation conference, reveals that it was staged in pursuance of a preconceived plan. This
was followed by the barricading of the terminal in Alabang by means of five buses which had also been
hijacked. In the days that followed, the strikers persisted in their violent acts, (1) the hijacking of 26
more buses which resulted in injuries to some employee and panic to the commuters; (2) the puncturing
of tires; (3) the cutting of electric wirings, water hoses and fan belts; and (4) the alleged theft of
expensive equipment such as fuel injections worth P30,000 each. The commission of these illegal acts
was neither isolated nor accidental but deliberately employed to intimidate and harass the employer
and the public. The strikers even resorted to the use of molotov bombs which w ere thrown into the
petitioner’s compound.
Nevertheless, we are constrained to uphold the respondent Secretary’s ruling that responsibility for
these illegal acts must be on an individual and not collective basis. Therefore, although the strike was
illegal because of the commission of illegal acts, only the union officers and strikers who engaged in
violent, illegal and criminal acts against the employer are deemed to have lost their employment status.
Union members who were merely instigated to participate in the illegal strike should be treated
differently.12
Third. As already noted, respondent Secretary awarded backwages on the ground that petitioner had
refused to comply with the Return to Work Order of September 16, 1986.
Petitioner explains that its failure to immediate reinstate the employees was due to the Union’s
insistence on the reinstatement of even those who had been dismissed for cause and had been
dismissed even before the strike held on June 17, 1986. Moreover, by the time the respondent Secretary
issued the questioned order of July 23, 1992, petitioner had
_______________
12 Lapanday Workers Union v. NLRC, 248 SCRA 95.
136
136
already complied with the Return to Work Order. Out of the approximately 60 employees included in
the Return to Work Order of the Secretary of Labor, 66 employees had been admitted back to work. The
rest were not readmitted to work because they simply did not return on March 8, 1988, the date agreed
upon by the parties.
On the other hand, the Union contends that petitioner imposed certain requirements as condition for
reinstatement which amounted to a refusal to comply with the Return to Work Order. These were:
1. Cash Bond of P1,000.00
2. X-Ray, urinalysis and stool results
3. Birth Certificate/Baptismal
4. NBI Clearance
5. Police Clearance
6. Barangay Clearance
7. Residence Certificate
8. High School Diploma/Transcript of records
9. Certification of employment
10. Driver’s/Conductors’/Conductresses’ license
11. Marriage Contract (If married)
12. Pictures 4 1x1 - colored
13. Pictures 4 2x2 - black and white
Some requirements are indeed unreasonable considering that the strikers were not being hired for the
first time but merely being reinstated. Reinstatement connotes a continuity of the employer-employee
relationship as contrasted to an initial employment. Hence, a distinction must be made between
requirements which are valid management prerogatives and those which are unreasonable.
On the other hand, there are certain conditions which are valid. The requirement to submit NBI, Police
and Barangay clearances is reasonable to enable management to determine whether the returning
employees have pending charges of illegal acts especially those committed during the strike. So also is
the requirement to have driver’s and conductor’s/conductress’ license, to enable them to perform their
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137
tasks. The pictures required are necessary for the employer’s personnel records and so can validly be
required.
With respect to the required medical examination, the same can be justified as management
prerogative since it is the employer’s right to ensure that the employees are physically fit to resume the
performance of their duties. This is especially true in this case, because two years had elapsed since the
time of dismissal of the employees. As held in Jackbilt Concrete Block Co., Inc. v. Norton & Harrison
Co.,13 an employer should not be compelled to reinstate an employee who is no longer physically fit for
the job from which he was ousted.
It is true that in Davao Free Workers Front v. CIR,14 it was held that the medical examination could not
be required as a condition for reinstatement, but that is in cases where the employer is guilty of unfair
labor practice. As this Court explained:
To require [employees] to undergo a physical or medical examination as a precondition of reinstatement

or return to work simply because of the long pendency of their case which is due to no fault of theirs
would not only defeat the purpose of the law and the constitutional and statutory mandates to protect
labor but would work to their unfair prejudice as aggrieved parties and give an undue advantage to
employers as the offenders who have the m eans and res ources to wage attrition and withstand the
bane of protracted litigation.
Hence, the aggrieved workers may be subject to periodic physical or medical examination as old
reinstated workers, but not as a precondition to their reinstatement or return to work with the
important cons equence that if they are found to be ill or suffering from some disability, they would be
entitled to all the benefits that the laws and company practices provide by way of compensation,
medical care, disability benefits and gratuities, etc. to employees and workers.15
______________
13 71 SCRA 44, 55 (1976).
14 60 SCRA 408 (1974).
15 Id., pp. 424-425.
138
138

In the present case, although the Union has charged petitioner with unfair labor practice, the matter is
still to be resolved. Hence, the ruling in Davao Free Workers Front v. CIR 16 does not apply.
With respect to some of the requirements (i.e., P1,000, cash bond, birth/baptismal certificate, residence
certificate, high school diploma/transcript of records, certification of employment, and marriage
contract), we agree with respondent Union that these requirements cannot be imposed being more
appropriate for employees who are being hired for the first time. However, the imposition of such
requirements by the employer did not amount to a refusal to admit workers back to work or an illegal
lock-out so as to entitle the workers to the payment of backwages under Art. 264(g) of the Labor Code,
the pertinent portion of which states:
. . . For this purpose, the contending parties are strictly enjoined to comply with such orders,
prohibitions or injunctions as are issued by the Secretary of Labor and Employment or the Commission,
under pain of immediate disciplinary action, including dismissal or loss of employment s tatus or
payment by the locking-out employer of backwages, damages and other affirmative relief, even criminal
prosecution against either or both of them . . .
For the fact is that petitioner after all accepted all returning employees. If there were workers who were
not taken in, they were those who did not return to work on March 8, 1988.
In the Sheriff’s Return dated March 23, 1988, Antonio P. Soriano, Deputy Sheriff, reported:
1. That on 01 March 1988, as per appointment, undersigned together with a number of returning
employees went to the company (FIL TRANSIT, INC.), to discuss the final details of the implementation of
the Order. The parties sat down with Mr. Virgilio M. Aquino, who represented Management. After a
while and upon suggestion of said Mr. Aquino, parties agreed that the employees will return on 18
March 1988, where the returning employees duly covered by and qualified under the Order shall report
for work with Management
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16 Ibid.
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VOL. 272, MAY 5, 1997
139
reiterating its willingness to comply strictly with the said Order of this Honorable Office;
2. . . . However, it appearing [sic] that only sixty-six (66) employees reported back for work, as evidenced
in the yellow pad showing the names and their corresponding signatures. Acting on the same,
Management accepted the returning employees . . .17
....
From the foregoing, undersigned is of the opinion that the Order has been complied with upon
completion of the above-requirements being requested by Management . . .
In Jackbilt Concrete Block Co., Inc. v. Norton & Harrison Co.,18 the unjustified refusal of the striking
employees to return to work and comply with the employer’s requirement to undergo a medical
examination w as considered a waiver of their right to reinstatement.
Consequently, petitioner is not liable for backw ages. Employees, who are not guilty of illegal acts and,
therefore, are entitled to reinstatement would only be entitled to backwages if they were refused
readmission. As none of such employees was refused readmission, no backwages are due from
petitioner. On the other hand, employees who are entitled to be reinstated because they did not take
part in illegal acts w ould be entitled to separation pay in lieu of reinstatement in view of the fact that,
after all the time that this case has been pending, reinstatem ent is no longer feasible. Separation pay
should be computed only up to March 8, 1988, the date when employees were supposed to return as
agreed upon by the parties. Those who failed to return on March 8, 1988, will not be entitled to
separation pay after such date.
In view of the conclusion thus far reached, we find it unnecessary to discuss the other questions raised
in this case.
To summarize, this Court holds that:
1) The respondent Secretary of Labor erred in declaring the strike legal. There is no evidence to show
that a strike
_______________
17 Rollo, p. 34.
18 71 SCRA 44.
140
140
vote had in fact been taken before a strike was called. Even assuming that a strike vote had been taken,
the strike called by the Union was illegal because of nonobservance by the Union of the mandatory
seven-day strike ban counted from the date of the strike vote should have been reported to the
Department of Labor and Employment up to the time the Union staged the strike on June 17, 1986. In
accordance with Art. 264 of the Labor Code, any union officer who knowingly participated in the illegal
strike Is deemed to have lost his employment status.
2) The commission of the illegal acts during the strike rendered it illegal. However, only officers and
leaders of the Union and workers guilty of illegal acts are liable. Such employees are deemed to have
lost their employment status in accordance with Art. 264 of the Labor Code.
3) Petitioner substantially complied with the Return to Work Order. The medical examination, NBI,
Police and Barangay Clearances as well as the driver’s and conductor’s/conductress’ licenses and
photographs required as conditions for reinstatement were reasonable management prerogatives.
However, the other requirements imposed as condition for reinstatement were unreasonable
considering that the employees were not being hired for the first time, although the imposition of such
requirements did not amount to refusal on the part of the employer to comply with the Return to Work
Order or constitute illegal lockout so as to warrant payment of backw ages to the strikers. If at all, it is
the employees’ refusal to return to work that may be deemed a refusal to comply with the Return to
Work Order resulting in loss of their employment status. As both the employer and the employees were,
in a sense, at fault or in pari delicto, the nonreturning employees, provided they did not participate in
illegal acts, should be considered entitled to reinstatement. But since reinstatement is no longer
feasible, they should be given separation pay computed up to March 8, 1988 (the date set for the return
of the employees) in lieu of reinstatement.
4) Because the award of backwages was based on the alleged refusal of the employer to comply with
the Return to
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VOL. 272, MAY 5, 1997
141
Sia vs. Court of Appeals
Work Order, the same should be set aside for being without basis.
WHEREFORE, the questioned order of respondent Secretary of Labor is SET ASIDE. The union officers
who participated in the illegal strike and those who participated in the commission of illegal acts are
deem ed to have lost their employment status. Petitioner is ORDERED to pay the employees who did not
participate in the commission of illegal acts during the strike separation pay.
SO ORDERED.
Regalado (Chairman), Romero, Puno and Torres, Jr., JJ., concur.
Judgment set aside.
Note.—Among the lim itations on the exercise of the right of strike are the procedural steps to be
allowed before staging a strike which steps are mandatory in character. (Lapanday Workers Union vs.
National Labor Relations Commission, 248 SCRA 95 [1995])
——o0o—— First City Interlink Transportation Co., Inc. vs. Roldan-Confesor, 272 SCRA 124, G.R. No.
106316 May 5, 1997
ASSUMPTION OF JURISDICTION; RETURN TO WORK ORDER
VOL. 269, MARCH 12, 1997
393
Philtread Workers Union (PTWU) vs. Confesor
G.R. No. 117169. March 12, 1997.*
PHILTREAD WORKERS UNION (PTWU), MAURICIO BARTOLO, CESAR DAVID, EMMANUEL AGUSTIN,
PECSON BARANDA, NELSON BAGUIO, ROLANDO MATALOG, PEPITO DAMICOG, EDUARDO SANTOS,
ISABELO GALOPE, REYNALDO MALEON, AL PEDRIQUE, BAYANI HERNANDEZ, ROBERT LORESCA,
LEONARDO LACSINA, petitioners, vs. SECRETARY NIEVES R. CONFESOR, NATIONAL LABOR RELATIONS
COMMISSION, GEN. RECAREDO SARMIENTO, PHILIPPINE NATIONAL POLICE, PHILTREAD TIRE &
RUBBER CORPORATION, GERARD BRIMO, HARRY McMILLAN, respondents.
Labor Law; Labor Code; Argument of petitioners that Articles 263 (g) and 264 of the Labor Code do not
have any constitutional foundation is legally inconsequential.—On the issue of the constitutionality of
Article 263 (g) of the Labor Code, the same had already been resolved in Union of Filipro Employees
vs. Nestlé Philippines, Inc., to wit: At any rate, it must be noted that Articles 263 (g) and 264 of the
Labor Code have been enacted pursuant to the police power of the State, which has been defined as
the power inherent in a government to enact laws, within constitutional limits, to promote the order,
safety, health, morals and general welfare of society (People vs. Vera Reyes, 67 Phil. 190). The police
power, together
_______________
* SECOND DIVISION.
394
394
with the power of eminent domain and the power of taxation, is an inherent power of government
and does not need to be expressly conferred by the Constitution. Thus, it is submitted that the
argument of petitioners that Articles 263 (g) and 264 of the Labor Code do not have any constitutional
foundation is legally inconsequential.
Same; Same; Article 263 (g) does not interfere with the workers’ right to strike but merely regulates it
when in the exercise of such right national interests will be affected.—Article 263 (g) of the Labor
Code does not violate the workers’ constitutional right to strike. The section provides in part, viz.:
“When in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an
arbitration. . . .” The foregoing article clearly does not interfere with the workers’ right to strike but
merely regulates it, when in the exercise of such right, national interests will be affected. The rights
granted by the Constitution are not absolute. They are still subject to control and limitation to ensure
that they are not exercised arbitrarily. The interests of both the employers and employees are
intended to be protected and not one of them is given undue preference.
Same; Same; The Secretary of Labor has the discretion to determine what industries are indispensable
to national interest.—The Labor Code vests upon the Secretary of Labor the discretion to determine
what industries are indispensable to national interest. Thus, upon the determination 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. The 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 is not intended to impede the workers’ right
to strike but to obtain a speedy settlement of the dispute.
Same; Same; The Secretary of Labor did not act with grave abuse of discretion in issuing the assailed
order as she had a wellfounded basis in issuing the assailed order.—Thus, it cannot be deemed that
the Secretary of Labor had acted with grave abuse of discretion in issuing the assailed order as she
had a well-founded
395
VOL. 269, MARCH 12, 1997
395
basis in issuing the assailed order. It is significant at this point to point out that grave abuse of
discretion implies capricious and whimsical 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
exercise of judgment which is equivalent to lack of jurisdiction. The abuse of discretion 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 contemplation of law, as where the power is exercised in an
arbitrary and despotic manner by reason of passion or personal hostility.

Cezar F. Maravilla, Jr. for petitioners.
Castillo, Laman, Tan, Pantaleon & San Jose for private respondents.
TORRES, JR., J.:
Petitioners challenge in this petition the order of the Secretary of Labor dated September 8, 1994, the
dispositive portion of which reads:
“WHEREFORE, PREMISES CONSIDERED, this Office hereby certifies the entire labor dispute at Philtread
Tire and Rubber Corporation to the National Labor Relations Commission for compulsory arbitration.
Accordingly, any strike or lockout, whether actual or intended, is hereby strictly enjoined.
All striking workers, except those dismissed employees based on the 15 August 1994 decision of the
Labor Arbiter and those who have been retrenched by the Company and have received separation pay,
are hereby directed to return-to-work within twenty-four (24) hours upon receipt thereof.
The issue involving the retrenched employees who refused to receive separation benefits shall be
included in the certified case.
The parties are further directed to cease and desist from committing any and all acts that might
exacerbate the situation.
396
396
SO ORDERED.”1
The records reveal the following facts:
On May 27, 1994, petitioner Philtread Tire Workers Union (PTWU), filed a notice of strike, docketed as
NCMB-NCR Case No. 05-281-94, on grounds of unfair labor practice, more specifically union busting and
violation of CBA.2 On the other hand, on May 30, 1994, private respondent Philtreat Tire and Rubber
Corporation filed a notice of lockout, docketed as NCMB-NCR Case No. 05-013-94.3 It also filed a
petition to declare illegal the work slowdowns staged by the petitioner Union. Both cases were then
consolidated. Several conciliation meetings were conducted but the parties failed to settle their dispute.
Then on June 15, 1994, private respondent declared a company wide lockout which continued until
August 22, 1994. There were about eighty union members who were consequently dismissed. This also
brought about the filing of the union members of a notice to strike in self-defense in NCMB-NCR Case
No. 05-281-94.4
On August 15, 1994, the National Labor Relations Commission declared the slowdowns illegal, to wit:
“WHEREFORE, premises considered, the petition is hereby GRANTED. The slowdowns engaged in by
respondents are declared illegal and by engaging in such illegal activities, respondents whose names
appear in Annex “A” of the petition are deemed to have lost their employment with petitioner.
However, this Office, as a measure of compassion to the working man, resolves not to order
respondents to pay petitioner the damages the latter prays for. As for the costs and attorney’s fees,
since these were not substantiated by the petitioner, this Office likewise resolves not to award them to
petitioner.
SO ORDERED.”5
_______________
1 Annex “A,” Rollo, pp. 34-36.
2 Annex “C,” Rollo, p. 43.
3 Annex “E,” Rollo, p. 45.
4 Annex “H,” Rollo, pp. 54-56.
5 Decision, Rollo, pp. 137-138.
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VOL. 269, MARCH 12, 1997
397
On August 31, 1994, private respondent corporation requested the Secretary of Labor to assume
jurisdiction over the labor dispute. Hence, on September 8, 1994, Secretary Confesor issued the assailed
order. Petitioners filed a motion for reconsideration of the order but the same was denied on
September 26, 1994 for lack of merit.
Petitioners now challenge the order of the public respondent, raising the following issues: 1) Whether or
not Article 263 (g) of the Labor Code is unconstitutional; and 2) Whether or not public respondent acted
with grave abuse of discretion in issuing the questioned orders.
Petitioners contend that Article 263 (g) of the Labor Code violates the workers’ right to strike which is
provided for by Section 3, Article XIII of the Constitution. The assailed order of the Secretary of Labor,
which enjoins the strike, is an utter interference of the workers’ right to self-organization, to manage
their own affairs, activities and programs, and therefore is illegal. The order is likewise contrary to
Article 3 of the International Labor Organization Convention No. 87, which specifically prohibits public
authorities from interfering in purely union matters, viz.:
“Article 3.
1. Workers’ and Employers’ organizations shall have the right to draw up their constitutions and rules, to
elect their representatives in full freedom, to organize their administration and activities and to
formulate their programs.
2. The public authorities shall refrain from any interference which would restrict this right or impede the
lawful exercise thereof.”6
Petitioners also argue that the assailed order was issued with grave abuse of authority. A cursory
reading of Article 263 (g) allegedly shows that the power of the Secretary of Labor to assume jurisdiction
or to certify a dispute for compulsory arbitration is strictly restricted to cases involving industries that
are indispensable to national interest. Peti-
_______________
6 Petition, Rollo, p. 15.
398
398
tioners posit that the instant labor dispute does not adversely affect the national interest. The tire
industry has long ceased to be a government protected industry and, moreover, Philtread Tire and
Rubber Corporation is not indispensable to the national interest. The strike in Philtread will not
adversely affect the supply of tires in the market and the supply of imported tires is more than sufficient
to meet the market requirements.
On the issue of the constitutionality of Article 263 (g) of the Labor Code, the same had already been
resolved in Union of Filipro Employees vs. Nestlé Philippines, Inc.,7 to wit:
“In the case at bar, no law has ever been passed by Congress expressly repealing Articles 263 and 264 of
the Labor Code. Neither may the 1987 Constitution be considered to have impliedly repealed the said
Articles considering that there is no showing that said articles are inconsistent with the said
Constitution. Moreover, no court has ever declared that the said articles are inconsistent with the 1987
Constitution.
On the contrary, the continued validity and operation of Articles 263 and 264 of the Labor Code has
been recognized by no less than the Congress of the Philippines when the latter enacted into law R.A.
6715, otherwise known as Herrera law, Section 27 of which amended paragraphs (g) and (l) of Article
263 of the Labor Code.
At any rate, it must be noted that Articles 263 (g) and 264 of the Labor Code have been enacted
pursuant to the police power of the State, which has been defined as the power inherent in a
government to enact laws, within constitutional limits, to promote the order, safety, health, morals and
general welfare of society (People vs. Vera Reyes, 67 Phil. 190). The police power, together with the
power of eminent domain and the power of taxation, is an inherent power of government and does not
need to be expressly conferred by the Constitution. Thus, it is submitted that the argument of
petitioners that Articles 263 (g) and 264 of the Labor Code do not have any constitutional foundation is
legally inconsequential.”
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7 192 SCRA 396.
399
VOL. 269, MARCH 12, 1997
399
Article 263 (g) of the Labor Code does not violate the workers’ constitutional right to strike. The section
provides in part, viz.:
“When in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an
arbitration. . . .”
The foregoing article clearly does not interfere with the workers’ right to strike but merely regulates it,
when in the exercise of such right, national interests will be affected. The rights granted by the
Constitution are not absolute. They are still subject to control and limitation to ensure that they are not
exercised arbitrarily. The interests of both the employers and employees are intended to be protected
and not one of them is given undue preference.
The Labor Code vests upon the Secretary of Labor the discretion to determine what industries are
indispensable to national interest. Thus, upon the determination 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. The 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 is not intended to impede the workers’ right to strike but to obtain a speedy
settlement of the dispute. This is well-articulated in International Pharmaceuticals, Inc. v. Secretary of
Labor, in this wise:
“Plainly, Article 263 (g) of the Labor Code was meant to make both the Secretary (or the various regional
directors) and the labor arbiters share jurisdiction, subject to certain conditions. Otherwise, the
Secretary would not be able to effectively and efficiently dispose of the primary dispute. To hold the
contrary may even lead to the absurd and undesirable result wherein the Secretary and the labor
400
400
arbiter concerned may have diametrically opposed rulings. As we have said, “(i)t is fundamental that a
statute is to be read in a manner that would breathe life into it, rather than defeat it.”8
On the second issue raised by the petitioners, We find that the Secretary of Labor did not act with grave
abuse of discretion in issuing the certification for compulsory arbitration. It had been determined by the
Labor Arbiter in NLRC-NCR Case No. 00-05-04156-94 that the work slowdowns conducted by the
petitioner amounted to illegal strikes. It was shown that every time the respondent company failed to
accede to the petitioner’s demands, production always declined. This resulted to the significant drops in
the figures of tires made, cured, and warehoused. However, when the demand of the petitioner union
for the restoration of overtime work was allowed, production improved. The work slowdowns, which
were in effect, strikes on installment basis, were apparently a pattern of manipulating production
depending on whether the petitioner union’s demands were met. These strikes, however, had greatly
affected the respondent company that on November 11, 1994, it had indefinitely ceased operations
because of tremendous financial losses.
We do not agree with the petitioners that the respondent company is not indispensable to national
interest considering that the tire industry has already been liberalized. Philtread supplies 22% of the tire
products in the country. Moreover, it employs about 700 people. As observed by the Secretary of Labor,
viz.:
“The Company is one of the tire manufacturers in the country employing more or less 700 workers. Any
work disruption thereat, as a result of a labor dispute will certainly prejudice the employment and
livelihood of its workers and their dependents. Furthermore, the labor dispute may lead to the possible
closure of the Company and loss of employment to hundreds of its workers. This will definitely
aggravate the already worsening unemployment situation in the country and discourage foreign and
domestic investors from further
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8 205 SCRA 59.
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VOL. 269, MARCH 12, 1997
401
investing in the country. There is no doubt, therefore, that the labor dispute in the Country is imbued
with national interest.
At this point in time when all government efforts are geared towards economic recovery and
development by encouraging both foreign and domestic investments to generate employment, we
cannot afford to derail the same as a result of a labor dispute considering that there are alternative
dispute resolution machineries available to address labor problems of this nature.”9
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 situation will remain uncertain. Thus, it cannot be deemed that the
Secretary of Labor 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 this point to point out that grave
abuse of discretion implies capricious and whimsical 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 exercise of judgment which is equivalent to lack of jurisdiction. The abuse of discretion 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 contemplation of law, as where the power is exercised in an
arbitrary and despotic manner by reason of passion or personal hostility.10
Considering the foregoing premises, we find no merit in the instant petition.
ACCORDINGLY, the assailed order of the Secretary of Labor dated September 8, 1992 is hereby
AFFIRMED.
SO ORDERED.
Regalado (Chairman), Romero, Puno and Mendoza, JJ., concur.
_______________
9 Order, Rollo, p. 35.
10 Litton Mills, Inc. vs. Galleon Trader, Inc., 163 SCRA 489.
402
402
Padilla vs. Court of Appeals

Order affirmed.
Note.—Our laws regulate the exercise of strikes within reason by balancing the interest of labor and
management together with the overarching public interest. (Lapanday Workers Union vs. National Labor
——o0o—— Philtread Workers Union (PTWU) vs. Confesor, 269 SCRA 393, G.R. No. 117169 March 12,
1997
402
Phil. School of Business Administration-Manila vs. Noriel
No. L-80648. August 15, 1988.*
PHILIPPINE SCHOOL OF BUSINESS ADMINISTRATION-MANILA, petitioner, vs. ACTING SECRETARY

CARMELO C. NORIEL of the Department of Labor and Employment, PHILIPPINE SCHOOL OF BUSINESS
ADMINISTRATION EMPLOYEES UNION-FFW CHAPTER, EDGARDO B. REYES, WILLIAM BUCE, RICARDO
ABREU, LEILA ACUNA, MENDY FARRALES, SUSAN CRUZ, CRISTINA PASICOLAN, MODESTO MEJIA,
ERLINDA PINEDA, DANILO SAMAR, NADIA YAMBAO, ANTONETTE SANCHEZ, ANNABELLA YUTUC,
MAXIMO TUNDAG, METODIO OLAHAY, GLORIA PEREZ, FELINO REYES, VIRGINIA ANTONIO, FELIZARDA
SALVIEJO, BENITO ANG, MARIO DIAZ, LOURDES ESPION, ROMELLE TAMAYO, MA. LUISA PALMA,
CARLITO ANTONIO, ERLINDA BESANA, CYNTHIA LANDOY, ELIZABETH MACATULAD, EDNA DELOS
SANTOS, PRISCILLA GARCIA, ASUNCION ALON, MARIFE DE GUZMAN, EMMANUEL AGUSTIN, ENRIQUE
ADALLA and EMILIO ERANA, respondents.
Labor Law; Abuse of Discretion; The premise of petitioner’s argument that Secretary Drilon have acted
on the request of Congressman Ramon J. Jabar is flamed.—The premise of petitioner’s argument,
however, is flawed. Its conclusion that the Acting Secretary’s order was vitiated by a jurisdictional
defect is anchored on the premise that the only basis for, and what impelled him to issue, the order
was Congressman Jabar’s letter to Secretary Drilon. But this is not so. Respondent union petitioned
for its direct certification as sole and exclusive bargaining representative of petitioner’s non-academic
personnel. A notice of strike was filed by respondent union after petitioner allegedly engaged in union
busting, coercion and harassment. Conciliation conferences were held, but to no avail. A strike took
place, thereby causing the disruption of the operations of the school. Thus, petitioner filed a
complaint for unfair labor practice and declaration of illegality of the strike with the National Labor
Relations Commission while some of its students filed a civil case and obtained a temporary
restraining order from the Regional Trial Court. In the subsequent conciliation conferences
petitioner’s representatives failed to attend, leading to an impasse. Given these circumstances, the
_______________
* THIRD DIVISION.
403
VOL. 164, AUGUST 15, 1988
403
existence of an unresolved labor dispute in petitioner’s Manila campus which needed the immediate
attention of the labor authorities certainly cannot be denied.
Same; Same; Same; Acting Secretary Noriel did exactly what he was supposed to do under the Labor
Code.—In the opinion of Acting Secretary Noriel, the labor dispute adversely affected the national
interest, affecting as it did some 9,000 students. He was authorized by law to assume jurisdiction over
the labor dispute, after finding that it adversely affected the national interest. This power is expressly
granted by Art. 263(g) of the Labor Code, as amended by B.P. Blg. 227. Acting Secretary Noriel did
exactly what he was supposed to do under the Labor Code.
Same; Same; Same; Same; Under the circumstances the Acting Secretary had the power and the duty
to assume jurisdiction over the labor dispute; No grave abuse of discretion can be attributed to the
Acting Secretary.—Hence, even if the writing of the letter to Secretary Drilon constituted an
appearance as counsel by Congressman Jabar before a quasi-judicial body (although the Court is not
disposed to agree to such contention), still the fact remains that under the circumstances the Acting
Secretary had the power and the duty to assume jurisdiction over the labor dispute and, corollary to
the assumption of jurisdiction, issue a return-to-work order. Given this factual and legal backdrop, no
grave abuse of discretion can be attributed to the Acting Secretary.
Same; Jurisdiction; Injunctions; That the regular courts have no jurisdiction over labor disputes and to
issue injunctions against strikes is well-settled.—The Regional Trial Court was without jurisdiction
over the subject matter of the case filed by some PSBA students, involving as it does a labor dispute
over which the labor agencies had exclusive jurisdiction. That the regular courts have no jurisdiction
over labor disputes and to issue injunctions against strikes is well-settled. This the Regional Trial Court
recognized when it subsequently corrected its error and dismissed the complaint for damages and
injunction upon respondent union’s motion.
Same; Same; The facts and the law fully support the Acting Secretary’s assumption of jurisdiction over
the labor dispute and the issuance of a return-to-work-order; Contention that the Acting Secretary
favored respondent union when he issued the assailed order cannot be seriously considered.—Then,
as discussed above in connection with petitioner’s first argument, the facts and the law fully
404
404

support the Acting Secretary’s assumption of jurisdiction over the labor dispute and the issuance of a
return-to-work order. It may also be added that due to petitioner’s intransigent refusal to attend the
conciliation conferences called after the union struck, assumption of jurisdiction by the Secretary of
Labor and the issuance of a return-to-work order had become the only way of breaking the deadlock
and maintaining the status quo ante pending resolution of the dispute. The Solicitor General was
correct when he stated that by assuming jurisdiction over the labor dispute, the Acting Secretary of
Labor merely provided for a formal forum for the parties to ventilate their positions with the end in
view of settling the dispute [Rollo, p. 132.] Thus, the contention that the Acting Secretary favored
respondent union when he issued the assailed order cannot be seriously considered.
Same; Same; Same; Acting Secretary in issuing the return-to-work order merely implemented the
clear mandate of the law.—Once the Secretary of Labor assumes jurisdiction over, or certifies for
compulsory arbitration, a labor dispute adversely affecting the national interest, the law mandates
that if a strike or lockout has already taken place at the time of assumption or certification, “all
striking or locked out employees shall immediately return to work and the employer shall
immediately resume operations and readmit all workers under the same terms and conditions
prevailing before the strike.” [Art. 263(g), Labor Code, as amended.] Far from erring, the Acting
Secretary, in issuing the return-to-work order, merely implemented the clear mandate of the law.
Thus, the contention that error attended the issuance of such order is without any legal basis.
Same; Right to self-organization; Workers were just exercising their rights to self-organization and
collective bargaining and negotiation guaranteed them by our Fundamental Law.—In conclusion, the
Court cannot but note the apparent hostility exhibited by petitioner towards respondent union and its
members. Lest it be forgotten, the dispute arose from a petition filed by respondent union to be
directly certified as the sole and exclusive bargaining representative of the non-academic personnel of
PSBA-Manila. By doing so, the workers did not engage in any activity prejudicial, to the legitimate
interests of petitioner, for they were just exercising their rights to self-organization and collective
bargaining and negotiation guaranteed them by our Fundamental Law. The harassment of employees
to dissuade them from supporting respondent union alleged to have been committed by petitioner
was not warranted. But petitioner persisted with its hostile actions against the union members
through
405
VOL. 164, AUGUST 15, 1988
405
both legal and extra-legal channels, taking an undue interest in opposing respondent union’s petition
when it should have been PSBA-AL-GRO-WELL, if at all it had already existed at that time, that should
have done so. That PSBA-AL-GRO-WELL was suspiciously silent all throughout the proceedings before
the labor authorities leaving the fight to petitioner, certainly lends credence to the charge that PSBA-
AL-GRO-WELL was a creation of management.
Same; Same; Same; The choice of employees of who shall be their collective bargaining representative
is the employees exclusive concern.—Time and again the Court has reminded employers that the
choice of their employees of who shall be their collective bargaining representative is the employees’
exclusive concern. Employers have no business dipping their fingers into this matter, unless it was the
employer which filed the petition for certification election after being requested by a union to bargain
collectively or when the contract-bar rule applies. It cannot be otherwise, for the Constitution
guarantees workers their rights to self-organization and collective bargaining and negotiations [Art.
XIII, Sec. 3.], of which the choice of the collective bargaining representative forms an integral part.
PETITION to review the order of the Secretary of Department of Labor and Employment.
Balgos & Perez Law Office for petitioner.
Ma. Vicenta Y. De Guzman for respondent Union and its individually named officers and members.
CORTÉS, J.:
On September 8, 1987, respondent union, alleging the support of the majority of petitioner’s non-
academic personnel in its Manila campus, filed with the Department of Labor and Employment a
petition for direct certification docketed as NLR-OD-M-9-642-87 [Rollo, pp. 18-21.] On September 25,
1987, a notice of strike docketed as BLR-NS-9-423-87 was filed by respondent union with the Bureau of
Labor Relations, alleging union busting, coercion of employees and harassment [Rollo, p. 26.]
Petitioner filed on October 2, 1987, its position paper in NLR-OD-M-9-642-87 praying for the denial of
respondent union’s petition on the ground that it did not represent a majority
406
406
of the non-academic personnel, and in support thereof attached a letter from one Josefino Sacro, who
claimed to represent a group composing the majority [Rollo, pp. 22-25.] However, it was only on
October 8, 1987 that PSBA-AL-GROWELL, the group that Sacro represented, filed its application for
registration as a legitimate labor organization with the Bureau of Labor Relations.
On October 4, 1987, the members of respondent union, by a vote of 36 to 0, decided to go on strike

[Rollo, p. 103.] Several conciliation conferences were held by the Bureau of Labor Relations, but to no
avail. The strike pushed through on October 16, 1987.
A complaint for unfair labor practice and for a declaration of illegality of the strike with a prayer for
preliminary injunction docketed as ULP Case No. 00-10-03666-87 was filed by petitioner against
respondent union in the National Labor Relations Commission on October 19, 1987 [Rollo, pp. 37-44.]
The parties were again called to conciliation conferences, including a scheduled meeting with the
Secretary of Labor and the Director of the Bureau of Labor Relations on November 9, 1987, but
petitioner refused to attend the conferences (Rollo, p. 15.]
While the certification, strike and unfair labor practice cases were pending in the Department of Labor
and Employment, a complaint docketed as Civil Case No. 87-42470 was filed in the Regional Trial Court
of Manila on October 19, 1987 by some PSBA students against petitioner and respondent union and its
members, basically seeking to enjoin respondent union and its members from maintaining and
continuing with their picket and from barricading themselves in front of the school’s main gate [Rollo,
pp. 27-35.] A temporary restraining order enjoining respondent union and its members from picketing
and barricading the school’s main gate was issued by the presiding judge [Rollo, p. 36.] In its answer filed
on October 28, 1987, petitioner joined the plaintiff’s prayer for injunction and included a crossclaim
against respondent union, asking that it be indemnified by respondent union for any damages that may
be assessed against it and awarded P500,000.00 as and for expenses of litigation and attorney’s fees
[Rollo, pp. 96-102.] On November 6, 1987, respondent union filed a motion to dismiss
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VOL. 164, AUGUST 15, 1988
407
the complaint on the premise that the case involves a labor dispute over which the Regional Trial Court
had no jurisdiction [Rollo, pp. 88-91.]
On November 17, 1987, respondent Acting Secretary Noriel issued the assailed order, which we quote in
full:
ORDER
On September 25, 1987, the PSBA Employees Union-FFW filed a Notice of Strike before the Bureau of
Labor Relations on the following grounds:
1. Union busting
2. Coercion of employees
3. Harassment
Several conciliation conferences were held by the Bureau of Labor Relations.
On October 16, 1987, the union struck.

The parties were again called for conciliation conferences including the scheduled meeting with the
Director of Labor Relations and the Secretary of Labor and Employment on November 9, 1987, but still
the management refused to attend the said conferences.
In the meantime, the strike at the school continues.
There is no doubt that the on-going labor dispute at the School adversely affects the national interest.
The School is a duly registered educational institution of higher learning with more or less 9,000
students. The ongoing work stoppage at the School unduly prejudices the students and will entail great
loss in terms of time, effort and money to everyone concerned. More important, it is not amiss to
mention that the school is engaged in the promotion of the physical, intellectual and emotional well-
being of the country’s youth.
WHEREFORE, this Office hereby assumes jurisdiction over the labor dispute at the Philippine School of
Bus. Administration-Manila pursuant to Article 263(g) of the Labor Code, as amended. Accordingly, all
the striking employees are directed to return to work immediately and for the management of PSBA to
accept all the returning employees under the same terms and conditions prevailing prior to the strike.
The parties are strictly enjoined to maintain [the] status quo and to cease and desist from committing
any and all acts that will prejudice either party and aggravate the situation.
The Director, Bureau of Labor Relations is hereby directed to hear and receive evidence of the parties
and to submit her report and recommendation within ten (10) days from submission of the dispute for
resolution.
408
408
SO ORDERED.
Manila, Philippines, 17 November, 1987
(Sgd.) CARMELO C. NORIEL
Acting Secretary
[Rollo, pp. 15-16]
The members of respondent union returned to work but were allegedly prevented by petitioner from
doing so. Consequently, a motion for the issuance of a writ of execution was filed by respondent union
on November 23 1987.
On November 23, 1987, petitioner filed the instant petition, which seeks the nullification of the assailed
order of November 17, 1987 and its enjoinment pending resolution of the case, on the following
grounds:
1. The respondent Secretary acted without or in excess of jurisdiction or with grave abuse of discretion
amounting to lack or excess of jurisdiction over the request for issuance of a return to work order by an
official otherwise disqualified from appearing before him.
2. The respondent Secretary erred in finding that the strike by a minority who had already been
restrained by a court of competent jurisdiction from preventing the school, its faculty and its students
from attending to their usual functions was a fit subject for a return to work order.
3. The respondent Secretary erred when he ordered the petitioner “to accept all the returning
employees under the same terms and conditions prevailing prior to the strike” despite the pendency of
ULP Case No. 00-10-03666-87. [Rollo, pp. 5-6.]
On February 4, 1988, Secretary Drilon issued a writ of execution of the order dated November 17, 1987,
[Rollo, pp. 61-62.] Thus, petitioner filed in this Court on February 8, 1988 an “Urgent Motion to Implead
Secretary Drilon as Additional Respondent and to Restrain Enforcement of Writ of Execution” [Rollo, pp.
57-65], which the Court noted [Rollo, p. 66.]
In the meantime, the complaint in Civil Case No. 87-42470 was dismissed by the Regional Trial Court on
February 10, 1988 for lack of jurisdiction.
After petitioner refused to readmit the striking employees, a motion for the issuance of an alias writ of
execution and motion to cite petitioner in contempt was filed by respondent union
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VOL. 164, AUGUST 15, 1988
409
in the Department of Labor and Employment on February 19, 1988. Secretary Drilon, after petitioner
had complied with his show-cause order, issued an order dated March 30, 1988 ordering petitioner to
pay a fine of P10,000.00 and to immediately readmit the striking employees with full backwages and
benefits computed from November 17, 1987 up to the date of their actual readmission [Rollo, pp. 118-
119.] Thus, petitioner filed in this Court on April 8, 1988 an “Urgent Supplemental Petition and Motion
Reiterating Urgent Motion to Restrain Enforcement of Writ of Execution” seeking the nullification of the
order and the issuance of a restraining order [Rollo, pp. 110-120.]
These are the antecedent and contemporaneous facts. Now, to consider petitioners arguments in
support of the petition.
1. Petitioner makes much of the handwritten letter of Congressman Ramon Jabar, Vice-President of the
Federation of Free Workers, to Secretary Drilon dated October 22, 1987, which reads:
Dear Mr. Secretary,
The bearer is Mr. Rey Malilin of VEGA-FFW, together with our leader, at PSBA which is on strike.
The barricades at PSBA have already been removed, and our members are picketing peacefully,
however, police authorities prohibit them from engaging in peaceful picketing.
They will explain to you everything, Conciliation conferences were held but management refused to
attend.
Possible solution is for you to order a return to work and early certification election.
Very truly yours,
(Sgd.) RAMON J. JABAR
[Rollo, p. 45.]
Petitioner contends that it was “totally improper and without jurisdiction and in grave abuse of his
discretion” for the Secretary to have acted on this request because of the prohibition in Art. VI, Sec. 14
of the Constitution, which provides:
410
410
No Senator or Member of the House of Representatives may personally appear as counsel before any
court of justice or before the Electoral Tribunals, or quasi-judicial and other administrative bodies.
Neither shall he, directly or indirectly, be interested financially in any contract with, or in any franchise
or special privilege granted by the Government, or any subdivision, agency, or instrumentality thereof,
including any government-owned or controlled corporation, or its subsidiary, during his term of office.
He shall not intervene in any matter before any office of the Government for his pecuniary benefit or
where he may be called upon to act on account of his office.
The premise of petitioner’s argument, however, is flawed. Its conclusion that the Acting Secretary’s
order was vitiated by a jurisdictional defect is anchored on the premise that the only basis for, and what
impelled him to issue, the order was Congressman Jabar’s letter to Secretary Drilon. But this is not so.
Respondent union petitioned for its direct certification as sole and exclusive bargaining representative
of petitioner’s non-academic personnel. A notice of strike was filed by respondent union after petitioner
allegedly engaged in union busting, coercion and harassment. Conciliation conferences were held, but to
no avail. A strike took place, thereby causing the disruption of the operations of the school. Thus,
petitioner filed a complaint for unfair labor practice and declaration of illegality of the strike with the
National Labor Relations Commission while some of its students filed a civil case and obtained a
temporary restraining order from the Regional Trial Court. In the subsequent conciliation conferences
petitioner’s representatives failed to attend, leading to an impasse. Given these circumstances, the
existence of an unresolve labor dispute in petitioner’s Manila campus which needed the immediate
attention of the labor authorities certainly cannot be denied.
In the opinion of Acting Secretary Noriel, the labor dispute adversely affected the national interest,
affecting as it did some 9,000 students. He was authorized by law to assume jurisdiction over the labor
dispute, after finding that it adversely affected the national interest. This power is expressly granted by
Art. 263(g) of the Labor Code, as amended by B.P. Blg. 227, which provides:
411
VOL. 164, AUGUST 15, 1988
411
x x x
(g) When in his opinion there exists a labor dispute causing or likely to cause strikes or lockouts
adversely affecting the national interest, such as may occur in but not limited to public utilities,
companies engaged in the generation or distribution of energy, banks, hospitals, and export-oriented
industries, including those within export processing zones, the Minister of Labor and Employment shall
assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory
intended or impending strike or lockout as specified in the assumption or certification order. If one has
already taken place at the time of assumption or certification, all striking or locked out employees shall
immediately return to work and the employer shall immediately resume operations and readmit all
workers under the same terms and conditions prevailing before the strike or lockout. The Minister may
seek the assistance of law enforcement agencies to ensure compliance with this provision as well as
with such orders as he may issue to enforce the same.
The foregoing notwithstanding, the President of the Philippines shall not be precluded from determining
the industries where in his opinion labor disputes may adversely affect the national interest, and from
intervening at any time and assuming jurisdiction over any labor dispute adversely affecting the national
interest in order to settle or terminate the same.
Acting Secretary Noriel did exactly what he was supposed to do under the Labor Code.
Hence, even if the writing of the letter to Secretary Drilon constituted an appearance as counsel by
Congressman Jabar before a quasi-judicial body (although the Court is not disposed to agree to such
contention), still the fact remains that under the circumstances the Acting Secretary had the power and
the duty to assume jurisdiction over the labor dispute and, corrollary to the assumption of jurisdiction,
issue a return-to-work order. Given this factual and legal backdrop, no grave abuse of discretion can be
attributed to the Acting Secretary.
2. Petitioner contends that the Acting Secretary erred when he found that the strike staged by
respondent union and its members, who had already been restrained by the Regional Trial Court from
picketing and barricading the main gate of the school, was a fit subject of a return to work order.
412
412
However, the Court finds that no error was made by the Acting Secretary.
First of all, the Regional Trial Court was without jurisdiction over the subject matter of the case filed by
some PSBA students, involving as it does a labor dispute over which the labor agencies had exclusive
jurisdiction. That the regular courts have no jurisdiction over labor disputes and to issue injunctions
against strikes is well-settled [Art. 254, Labor Code, amended; Leoquinco v. Canada Dry Bottling Co. of
the Phils., Inc. Employees Association, G.R. No. L-28621, February 22, 1971, 37 SCRA 535; Antipolo
Highway Lines Employees Union v. Aquino, G.R. No. L-31785, September 25, 1979, 93 SCRA 225;
Kaisahan ng mga Manggagawa sa La Campana v. Sarmiento, G.R. No. L-47853, November 16, 1984, 133
SCRA 220.] This the Regional Trial Court recognized when it subsequently corrected its error and
dismissed the complaint for damages and injunction upon respondent union’s motion.
Then, as discussed above in connection with petitioner’s first argument, the facts and the law fully
support the Acting Secretary’s assumption of jurisdiction over the labor dispute and the issuance of a
return-to-work order.
It may also be added that due to petitioner’s intransigent refusal to attend the conciliation conferences
called after the union struck, assumption of jurisdiction by the Secretary of Labor and the issuance of a
return-to-work order had become the only way of breaking the deadlock and maintaining the status quo
ante pending resolution of the dispute. The Solicitor General was correct when he stated that by
assuming jurisdiction over the labor dispute, the Acting Secretary of Labor merely provided for a formal
forum for the parties to ventilate their positions with the end in view of settling the dispute [Rollo, p.
132.] Thus, the contention that the Acting Secretary favored respondent union when he issued the
assailed order cannot be seriously considered. A similar charge that certification of a labor dispute and
the issuance of a return-to-work order favored a party was rejected by the Court in United CMC Textile
Workers Union v. Ople [G.R. No. L-62037, January 27, 1983, 120 SCRA 335]:
It is, therefore, error for the petitioners to allege that by the mere
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413
act of certifying a labor dispute for compulsory arbitration and issuing a return to work order, the
Minister of Labor and Employment thereby “enters the picture on the side of the Company,” and
violates the freedom of expression of workers engaged in picketing, “in utter subversion of the
constitutional rights of workers.” As contended by the Solicitor General, “there can be no such
unconstitutional application (of Batas Pambansa Blg. 227) because all that respondent Minister has done
is to certify the labor dispute for arbitration and thereafter personally assume jurisdiction over it. He has
not rendered any decision; he has not favored one party over the other.
With more reason should such a charge be rejected in this case, coming as it does from management,
for as explained by the Court in Free Telephone Workers Union vs. Minister of Labor and Employment
[G.R. No. L-58184, October 30, 1981, 108 SCRA 757], the exercise of the power, to be in full accord with
the Constitution, must be with a view to the protection of labor:
. . . It must be stressed anew, however, that the power of compulsory arbitration, while allowable under
the [1973] Constitution, and quite understandable in labor disputes affected with a national interest, to
be free from the taint of unconstitutionally, must be exercised in accordance with the constitutional
mandate of protection to labor. The arbiter then is called upon to take due care that in the decision to
be reached, there is no violation of “the rights of workers to self-organization, collective bargaining,
security of tenure, and just and humane conditions of work.” [Art. II, Sec. 9, 1973 Constitution.] It is of
course manifest that there is such unconstitutional application if a law “fair on its face and impartial in
appearance [is] applied and administered by a public authority with an evil eye and an unequal hand.”
[Yick Wo v. Hopkins, 118 U.S. 356, 372 (1886).] It does not even have to go that far. An instance of
unconstitutional application would be discernible if what is ordained by the fundamental law, the
protection of law, is ignored or disregarded.
3. Finally, petitioner contends that the Acting Secretary erred when he ordered petitioner to accept all
returning employees under the same terms and conditions prevailing prior to the strike despite the
pendency of the case for unfair labor practice and declaration of illegality of the strike filed by
414
414
petitioner (ULP Case No. 00-10-D-3666-87).
Again, the Court can discern no error on the part of the Acting Secretary.
The case filed by petitioner against respondent union in the National Labor Relations Commission was
not an isolated circumstance, but one in a series of cases filed by the parties. Thus, it cannot be
completely detached from the chain of events that led to the filing of the instant petition in this Court. It
will be recalled that respondent union filed a petition for direct certification, that respondent union filed
a notice of strike, alleging union-busting, coercion and harassment; that petitioner opposed the petition
for direct certification, citing a letter from another group (PSBA-AL-GRO-WELL) that purportedly
represented the majority of petitioner’s non-academic personnel; that conciliation conferences were
held but the dispute remained unresolved; that respondent union conducted a strike vote wherein its
members voted to stage a strike; that respondent union and its members subsequently staged a strike;
that petitioner filed a case against respondent union in the National Labor Relations Commission; that a
civil case was filed and an order was issued by the Regional Trial Court restraining respondent union
from picketing and barricading the main gate of the school; that petitioner refused to attend the
conciliation conferences called by labor authorities during the strike. These circumstances, taken
together, reveal the intensity of the dispute and how it had worsened, which virtually left the Acting
Secretary with no recourse but to assume jurisdiction over it, to prevent the situation from getting out
of hand.
Once the Secretary of Labor assumes jurisdiction over, or certifies for compulsory arbitration, a labor
dispute adversely affecting the national interest, the law mandates that if a strike or lockout has already
taken place at the time of assumption or certification, “all striking or locked out employees shall
workers under the same terms and conditions prevailing before the strike.” [Art. 263(g), Labor Code, as
amended.] Far from erring, the Acting Secretary, in issuing the return-to-work order, merely
implemented the clear mandates of the law. Thus, the conten-
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415
tion that error attended the issuance of such order is without any legal basis.
In conclusion, the Court cannot but note the apparent hostility exhibited by petitioner towards
respondent union and its members. Lest it be forgotten, the dispute arose from a petition filed by
respondent union to be directly certified as the sole and exclusive bargaining representative of the non-
academic personnel of PSBA-Manila. By doing so, the workers did not engage in any activity prejudicial
to the legitimate interests of petitioner, for they were just exercising their rights to self-organization and
collective bargaining and negotiation guaranteed them by our Fundamental Law. The harassment of
employees to dissuade them from supporting respondent union alleged to have been committed by
petitioner was not warranted. But petitioner persisted with its hostile actions against the union
members through both legal and extra-legal channels, taking an undue interest in opposing respondent
union’s petition when it should have been PSBA-AL-GRO-WELL, if at all it had already existed at that
time, that should have done so. That PSBA-AL-GRO-WELL was suspiciously silent all throughout the
proceedings before the labor authorities leaving the fight to petitioner, certainly lends credence to the
charge that PSBA-AL-GRO-WELL was a creation of management.
Petitioner may not have preferred, respondent union as its non-academic personnel’s collective
bargaining representative. But then it had no right to intervene. The choice was for the employees to
make, not petitioner.
Time and again the Court has reminded employers that the choice of their employees of who shall be
their collective bargaining representative is the employees’ exclusive concern. Employers have no
business dipping their fingers into this matter, unless it was the employer which filed the petition for
certification election after being requested by a union to bargain collectively or when the contract-bar
rule applies [Arts. 254 and 232, Labor Code, as amended; Consolidated Farms, Inc. v. Noriel, G.R. No. L-
47752, July 31, 1978, 84 SCRA 469; Filipino Metals Corp. v. Ople, G.R. No. L-43861, September 14, 1981,
107 SCRA 211; Trade Union of the Phils. and Allied Services v. Trajano, G.R. No. L-61153, January 17,
1983, 120
416
416
SCRA 64.] It cannot be otherwise, for the Constitution guarantees workers their rights to self-
organization and collective bargaining and negotiations [Art. XIII, Sec. 3], of which the choice of the
collective bargaining representative forms an integral part.
In the instant case, the undisguised interest of petitioner, an educational institution, in the choice of the
sole and exclusive bargaining agent of its non-academic personnel cannot be ignored. To borrow the
phraseology of the Solicitor General, petitioner has “shown his hand” [Rollo, p. 130.] This much is borne
by the records.
The Court will not be a party to any attempt to deprive workers, or any other person for that matter, of
their constitutionally guaranteed rights. Petitioner’s actions cannot be countenanced in this jurisdiction
if adherence to democratic principles and fealty to the Constitution is to be observed and the rule of law
upheld.
WHEREFORE, the instant petition is hereby DISMISSED and the Order dated November 17, 1987 issued
by Acting Secretary Noriel is AFFIRMED.
Petitioner’s motion to restrain the enforcement of the writ of execution issued by Secretary Drilon on
February 4, 1988 is DENIED. Likewise, the “Urgent Supplemental Petition and Motion Reiterating Urgent
Motion to Restrain Enforcement of Writ of Execution” dated April 7, 1988 is also DENIED.
SO ORDERED.
Fernan (C.J.), Gutierrez, Jr., Feliciano and Bidin, JJ., concur.
Petition dismissed and order affirmed.

Note.—Findings of quasi-judicial agencies generally accorded respect and finality when supported by
substantial evidence. (Dangan vs. National Labor Relations Commission, 127 SCRA 706.)
——o0o——
Phil. School of Business Administration-Manila vs. Noriel, 164 SCRA 402, No. L-80648 August 15, 1988
G.R. No. 151379. January 14, 2005.*
UNIVERSITY OF IMMACULATE CONCEPCION, INC., petitioner, vs. THE HONORABLE SECRETARY OF

LABOR, THE UIC TEACHING AND NON-TEACHING PERSONNEL AND EMPLOYEES UNION, LELIAN
CONCON, MARY ANN DE RAMOS, JOVITA MAMBURAM, ANGELINA ABADILLA, MELANIE DE LA ROSA,
ZENAIDA CANOY, ALMA VILLACARLOS, JOSIE BOSTON, PAULINA PALMA GIL, GEMMA GALOPE, LEAH
CRUZA, DELFA DIAPUEZ, respondent.
Labor Law; Assumption of Jurisdiction; Management Prerogatives; While the Court recognizes the
exercise of management prerogatives and often declines to interfere with the legitimate business
decisions of the employer, this privilege is not absolute but subject to exceptions, such as when the
Secretary of Labor assumes jurisdiction over labor disputes involving industries indispensable to the
national interest.—This Court finds no merit in the UNIVERSITY’s contention. In Metrolab Industries,
Inc. v. Roldan-Confesor, this Court declared that it recognizes the exercise of management
prerogatives and it often declines to interfere with the legitimate business decisions of the employer.
This is in keeping with the general principle embodied in Article XIII, Section 3 of the Constitution,
which is further echoed in Article 211 of the Labor Code. However, as expressed in PAL v. National
Labor Relations Commission, this privilege is not absolute, but subject to exceptions. One of these
excep-
_______________
* FIRST DIVISION.
191
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191
University of Immaculate Concepcion, Inc. vs. Secretary Labor Law
tions is when the Secretary of Labor assumes jurisdiction over labor disputes involving industries
indispensable to the national interest under Article 263(g) of the Labor Code.
Same; Same; One of the substantive evils which Article 263(g) of the Labor Code seeks to curb is the
exacerbation of a labor dispute to the further detriment of the national interest.—When the Secretary
of Labor ordered the UNIVERSITY to suspend the effect of the termination of the individual
respondents, the Secretary did not exceed her jurisdiction, nor did the Secretary gravely abuse the
same. It must be pointed out that one of the substantive evils which Article 263(g) of the Labor Code
seeks to curb is the exacerbation of a labor dispute to the further detriment of the national interest.
Same; Same; Any act committed during the pendency of the dispute that tends to give rise to further
contentious issues or increase the tensions between the parties should be considered an act of
exacerbation and should not be allowed.—Indeed, it is clear that the act of the UNIVERSITY of
dismissing the individual respondents from their employment became the impetus for the UNION to
declare a second notice of strike. It is not a question anymore of whether or not the terminated
employees, the individual respondents herein, are part of the bargaining unit. Any act committed
during the pendency of the dispute that tends to give rise to further contentious issues or increase the
tensions between the parties should be considered an act of exacerbation and should not be allowed.
Same; Same; Return-to-Work Orders; Payroll Reinstatement; Words and Phrases; The phrase “under
the same terms and conditions” makes it clear that the norm is actual reinstatement, not payroll
reinstatement, and this is consistent with the idea that any work stoppage or slowdown in that
particular industry can be detrimental to the national interest.—With respect to the Secretary’s Order
allowing payroll reinstatement instead of actual reinstatement for the individual respondents herein,
an amendment to the previous Orders issued by her office, the same is usually not allowed. Article
263(g) of the Labor Code aforementioned states that all workers must immediately return to work
and all employers must readmit all of them under the same terms and conditions prevailing before
the strike or lockout. The phrase “under the same terms and conditions” makes it clear that the norm
is actual reinstatement. This is consis-
192
192
tent with the idea that any work stoppage or slowdown in that particular industry can be detrimental
to the national interest.
Same; Same; Same; Same; As an exception to the rule, payroll reinstatement must rest on special
circumstances that render actual reinstatement impracticable or otherwise not conducive to attaining
the purposes of the law.—In ordering payroll reinstatement in lieu of actual reinstatement, then
Acting Secretary of Labor Jose S. Brillantes said: Anent the Union’s Motion, we find that superseding
circumstances would not warrant the physical reinstatement of the twelve (12) terminated
employees. Hence, they are hereby ordered placed under payroll reinstatement until the validity of
their termination is finally resolved. As an exception to the rule, payroll reinstatement must rest on
special circumstances that render actual reinstatement impracticable or otherwise not conducive to
attaining the purposes of the law. The “superseding circumstances” mentioned by the Acting
Secretary of Labor no doubt refer to the final decision of the panel of arbitrators as to the confidential
nature of the positions of the twelve private respondents, thereby rendering their actual and physical
reinstatement impracticable and more likely to exacerbate the situation. The payroll reinstatement in
lieu of actual reinstatement ordered in these cases, therefore, appears justified as an exception to the
rule until the validity of their termination is finally resolved. This Court sees no grave abuse of
discretion on the part of the Acting Secretary of Labor in ordering the same. Furthermore, the issue
has not been raised by any party in this case.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
Padilla Law Office for petitioner.
AZCUNA, J.:
This is a petition for review of a decision of the Court of Appeals and the resolution denying
reconsideration thereof. The principal issue to be resolved in this recourse is whether or not the
Secretary of Labor, after assuming jurisdiction over a labor dispute involving an employer and the
certified bar-
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193
gaining agent of a group of employees in the workplace, may legally order said employer to reinstate
employees terminated by the employer even if those terminated employees are not part of the
bargaining unit.
This case stemmed from the collective bargaining negotiations between petitioner University of
Immaculate Concepcion, Inc. (UNIVERSITY) and respondent The UIC Teaching and Non-Teaching
Personnel and Employees Union (UNION). The UNION, as the certified bargaining agent of all rank and
file employees of the UNIVERSITY, submitted its collective bargaining proposals to the latter on February
16, 1994. However, one item was left unresolved and this was the inclusion or exclusion of the following
positions in the scope of the bargaining unit:
a. Secretaries
b. Registrars
c. Accounting Personnel
d. Guidance Counselors1
This matter was submitted for voluntary arbitration. On November 8, 1994, the panel of voluntary
arbitrators rendered a decision, the dispositive portion of which states:
“WHEREFORE, premises considered, the Panel hereby resolves to exclude the above-mentioned
secretaries, registrars, chief of the accounting department, cashiers and guidance counselors from the
coverage of the bargaining unit. The accounting clerks and the accounting staff member are hereby
ordered included in the bargaining unit.”2
The UNION moved for the reconsideration of the above decision. Pending, however, the resolution of its
motion, on December 9, 1994, it filed a notice of strike with the National
_______________
1 Decision of the Office of the Panel of Voluntary Arbitrators, p. 1; Rollo, p. 65.
2 Rollo, p. 71.
194
194
Conciliation and Mediation Board (NCMB) of Davao City, on the grounds of bargaining deadlock and
unfair labor practice. During the thirty (30) day cooling-off period, two union members were dismissed
by petitioner. Consequently, the UNION went on strike on January 20, 1995.
On January 23, 1995, the then Secretary of Labor, Ma. Nieves R. Confesor, issued an Order assuming
jurisdiction over the labor dispute. The dispositive portion of the said Order states:
“WHEREFORE, ABOVE PREMISES CONSIDERED, and pursuant to Article 263 (g) of the Labor Code, as
amended, this Office hereby assumes jurisdiction over the entire labor dispute at the University of the
Immaculate Concepcion College.
Accordingly, all workers are directed to return to work within twenty-four (24) hours upon receipt of this
Order and for Management to accept them back under the same terms and conditions prevailing prior
to the strike.
Parties are further directed to cease and desist from committing any or all acts that might exacerbate
the situation.
Finally, the parties are hereby directed to submit their respective position papers within ten (10) days
from receipt hereof.
SO ORDERED.”3
On February 8, 1995, the panel of voluntary arbitrators denied the motion for reconsideration filed by
the UNION. The UNIVERSITY then furnished copies of the panel’s denial of the motion for
reconsideration and the Decision dated November 8, 1995 to the individual respondents herein:
1. Lelian Concon—Grade School Guidance Counselor
2. Mary Ann de Ramos—High School Guidance Counselor
3. Jovita Mamburam—Secretary to [the] Vice President for Academic Affairs/Dean of College
_______________
3 Order of the Secretary of Labor dated January 23, 1995, p. 2; Rollo, p. 103.
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195
4. Angelina Abadilla—Secretary to [the] Vice President for Academic Affairs/Dean of College
5. Melanie de la Rosa—Secretary to [the] Dean of [the] College of Pharmacy/ Academic Affairs/Dean of

College
6. Zenaida Canoy—Secretary to [the] Vice President for Academic Affairs/Dean of College
7. Alma Villacarlos—Guidance Counselor (College)
8. Josie Boston—Grade School Psychometrician
9. Paulina Palma Gil—Cashier
10. Gemma Galope—High School Registrar
11. Leah Cruza—Guidance Counselor (College)
12. Delfa Diapuez—High School Psychometrician4
Thereafter, the UNIVERSITY gave the abovementioned individual respondents two choices: to resign
from the UNION and remain employed as confidential employees or resign from their confidential
positions and remain members of the UNION. The UNIVERSITY relayed to these employees that they
could not remain as confidential employees and at the same time as members or officers of the Union.
However, the individual respondents remained steadfast in their claim that they could still retain their
confidential positions while being members or officers of the Union. Hence, on February 21, 1995, the
UNIVERSITY sent notices of termination to the individual respondents.
On March 10, 1995, the UNION filed another notice of strike, this time citing as a reason the
UNIVERSITY’s termination of the individual respondents. The UNION alleged that the UNIVERSITY’s act
of terminating the individual respondents is in violation of the Order of the Secretary of Labor dated
January 23, 1995.
On March 28, 1995, the Secretary of Labor issued another Order reiterating the directives contained in
the January 23, 1995 Order. The Secretary also stated therein that the effects
_______________
4 Petition, pp. 5-6; Rollo, pp. 16-17.
196
196
of the termination from employment of these individual respondents be suspended pending the
determination of the legality thereof. Hence, the UNIVERSITY was directed to reinstate the individual
respondents under the same terms and conditions prevailing prior to the labor dispute.
The UNIVERSITY, thereafter, moved to reconsider the aforesaid Order on March 28, 1995. It argued that
the Secretary’s Order directing the reinstatement of the individual respondents would render nugatory
the decision of the panel of voluntary arbitrators to exclude them from the collective bargaining unit.
The UNIVERSITY’s motion was denied by the Secretary in an Order dated June 16, 1995, wherein the
Secretary declared that the decision of the panel of voluntary arbitrators to exclude the individual
respondents from the collective bargaining unit did not authorize the UNIVERSITY to terminate their
employment. The UNIVERSITY filed a second motion for reconsideration, which was again denied in an
Order dated July 19, 1995. Undeterred, the UNIVERSITY filed a third motion for reconsideration. In the
Order dated August 18, 1995, then Acting Secretary Jose S. Brilliantes denied the third motion for
reconsideration, but modified the two previous Orders by adding:
xxx
Anent the Union’s Motion, we find that superseding circumstances would not warrant the physical
reinstatement of the twelve (12) terminated employees. Hence, they are hereby ordered placed under
payroll reinstatement until the validity of their termination is finally resolved.5
xxx
Still unsatisfied with the Order of the Secretary of Labor, the UNIVERSITY filed a petition for certiorari
with this Court on September 15, 1995. However, its petition was re-
_______________
5 Rollo, p. 63.
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197
ferred to the Court of Appeals, following the ruling in St. Martin Funeral Homes v. Court of Appeals.6
On October 8, 2001, the Court of Appeals promulgated its Decision, affirming the questioned Orders of
the Secretary of Labor. The dispositive portion of the Decision states:
“WHEREFORE, the instant petition is DISMISSED for lack of merit.”7
The UNIVERSITY then moved for the reconsideration of the abovementioned Decision,8 but on January
10, 2002, the Court of Appeals denied the motion on the ground that no new matters were raised
therein that would warrant a reconsideration.9
The UNIVERSITY assigns the following error:
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN AFFIRMING THE ORDERS OF THE
SECRETARY OF LABOR THAT SUSPENDED THE EFFECTS OF THE TERMINATION OF TWELVE EMPLOYEES
WHO WERE NOT PART OF THE BARGAINING UNIT INVOLVED IN A LABOR DISPUTE OVER WHICH THE
SECRETARY OF LABOR ASSUMED JURISDICTION.10
The Court of Appeals relied upon the doctrine in St. Scholastica’s College v. Torres.11 In the case therein,
this Court, citing International Pharmaceuticals Incorporated v. The Secretary of Labor,12 declared that:
_______________
6 295 SCRA 494 (1998).
7 Decision of the Court of Appeals, p. 9; Rollo, p. 40.
8 Rollo, pp. 42-46.
9 Rollo, p. 49.
10 Petition, p. 10; Rollo, p. 21 (Emphasis supplied).
11 210 SCRA 565, 570 (1992).
12 205 SCRA 59, 65-66 (1992).
198
198
x x x [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, the authority to assume
jurisdiction over the said labor dispute must include and extend to all questions and controversies
arising therefrom, including cases over which the Labor Arbiter has exclusive jurisdiction.
The UNIVERSITY contends that the Secretary cannot take cognizance of an issue involving employees
who are not part of the bargaining unit. It insists that since the individual respondents had already been
excluded from the bargaining unit by a final and executory order by the panel of voluntary arbitrators,
then they cannot be covered by the Secretary’s assumption order.
This Court finds no merit in the UNIVERSITY’s contention. In Metrolab Industries, Inc. v. Roldan-
Confesor,13 this Court declared that it recognizes the exercise of management prerogatives and it often
declines to interfere with the legitimate business decisions of the employer. This is in keeping with the
general principle embodied in Article XIII, Section 3 of the Constitution,14 which is further echoed in
Article 211 of
_______________
13 254 SCRA 182, 188-189 (1996).
14 Article XIII, Section 3 of the Constitution
Sec. 3.—The State shall afford full protection to labor, local and overseas, organized and unorganized,
and promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations,
and peaceful concerted activities, including the right to strike in accordance with law. They shall be
entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate
in policy and decision-making processes affecting their rights and benefits as may be provided by law.
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199
the Labor Code.15 However, as expressed in PAL v. National
_______________
The State shall promote the principle of shared responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their
mutual compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers, recognizing the right of labor to
its just share in the fruits of production and the right of enterprises to reasonable returns on
investments, and to expansion and growth. (Italics ours)
15 Art. 211. Declaration of Policy.—
A.It is the policy of the State:
(a) To promote and emphasize the primacy of free collective bargaining and negotiations, including
voluntary arbitration, mediation and conciliation, as modes of settling labor or industrial disputes;
(b) To promote free trade unionism as an instrument for the enhancement of democracy and the
promotion of social justice and development;
(c) To foster the free and voluntary organization of a strong and united labor movement;
(d) To promote the enlightenment of workers concerning their rights and obligations as union
members and as employees;
(e) To provide an adequate administrative machinery for the expeditious settlement of labor or
industrial disputes;
(f) To ensure a stable but dynamic and just industrial peace; and
(g) To ensure the participation of workers in decision and policy-making processes affecting their
rights, duties and welfare.
B. To encourage a truly democratic method of regulating the relations between the employers and
employees by means of agreements freely entered into through collective bargaining, no court or
administrative agency or official shall have
200
200
Labor Relations Commission,16 this privilege is not absolute, but subject to exceptions. One of these
exceptions is when the Secretary of Labor assumes jurisdiction over labor disputes involving industries
indispensable to the national interest under Article 263(g) of the Labor Code. This provision states:
(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an
workers under the same terms and conditions prevailing before the strike or lockout. x x x
When the Secretary of Labor ordered the UNIVERSITY to suspend the effect of the termination of the
individual respondents, the Secretary did not exceed her jurisdiction, nor did the Secretary gravely
abuse the same. It must be pointed out that one of the substantive evils which Article 263(g) of the
Labor Code seeks to curb is the exacerbation of a labor dispute to the further detriment of the national
interest. In her Order dated March 28, 1995, the Secretary of Labor rightly held:
It is well to remind both parties herein that the main reason or rationale for the exercise of the
Secretary of Labor and Employment’s power under Article 263(g) of the Labor Code, as amended, is the
maintenance and upholding of the status quo while the dispute is being adjudicated. Hence, the
directive to the parties to refrain from
_______________
the power to set or fix wages, rates of pay, hours of work or other terms and conditions of employment,
except as otherwise provided under this Code. (Italics ours).
16 225 SCRA 301, 308 (1993).
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201

performing acts that will exacerbate the situation is intended to ensure that the dispute does not get
out of hand, thereby negating the direct intervention of this office.
The University’s act of suspending and terminating union members and the Union’s act of filing another
Notice of Strike after this Office has assumed jurisdiction are certainly in conflict with the status quo
ante. By any standards[,] these acts will not in any way help in the early resolution of the labor dispute.
It is clear that the actions of both parties merely served to complicate and aggravate the already
strained labor-management relations.17
Indeed, it is clear that the act of the UNIVERSITY of dismissing the individual respondents from their
employment became the impetus for the UNION to declare a second notice of strike. It is not a question
anymore of whether or not the terminated employees, the individual respondents herein, are part of
the bargaining unit. Any act committed during the pendency of the dispute that tends to give rise to
further contentious issues or increase the tensions between the parties should be considered an act of
exacerbation and should not be allowed.
With respect to the Secretary’s Order allowing payroll reinstatement instead of actual reinstatement for
the individual respondents herein, an amendment to the previous Orders issued by her office, the same
is usually not allowed. Article 263(g) of the Labor Code aforementioned states that all workers must
immediately return to work and all employers must readmit all of them under the same terms and
conditions prevailing before the strike or lockout. The phrase “under the same terms and conditions”
makes it clear that the norm is actual reinstatement. This is consistent with the idea that any work
stoppage or slowdown in that particular industry can be detrimental to the national interest.
_______________
17 Order of the Secretary of Labor dated March 28, 1995, p. 2; Rollo, p. 52.
202
202
In ordering payroll reinstatement in lieu of actual reinstatement, then Acting Secretary of Labor Jose S.
Brillantes said:
“Anent the Union’s Motion, we find that superseding circumstances would not warrant the physical
reinstatement of the twelve (12) terminated employees. Hence, they are hereby ordered placed under
payroll reinstatement until the validity of their termination is finally resolved.”18
As an exception to the rule, payroll reinstatement must rest on special circumstances that render actual
reinstatement impracticable or otherwise not conducive to attaining the purposes of the law.19
The “superseding circumstances” mentioned by the Acting Secretary of Labor no doubt refer to the final
decision of the panel of arbitrators as to the confidential nature of the positions of the twelve private
respondents, thereby rendering their actual and physical reinstatement impracticable and more likely to
exacerbate the situation. The payroll reinstatement in lieu of actual reinstatement ordered in these
cases, therefore, appears justified as an exception to the rule until the validity of their termination is
finally resolved. This Court sees no grave abuse of discretion on the part of the Acting Secretary of Labor
in ordering the same. Furthermore, the issue has not been raised by any party in this case.
WHEREFORE, the Decision of the Court of Appeals dated October 8, 2001 and its Resolution dated
January 10, 2002 in CA-G.R. SP No. 61693 are AFFIRMED.
No costs.
_______________ University of Immaculate Concepcion, Inc. vs. Secretary Labor Law, 448 SCRA 190,
G.R. No. 151379 January 14, 2005
610
Trans-Asia Shipping Lines, Inc.-Unlicensed Crews Employees Union-Associated Labor Unions (Tasli-Alu)
vs. Court of Appeals
G.R. No. 145428. July 7, 2004.*
TRANS-ASIA SHIPPING LINES, INC.-UNLICENSED CREWS EMPLOYEES UNION–ASSOCIATED LABOR

UNIONS (TASLI-ALU) and TRANS-ASIA SHIPPING LINES INC.-DECK AND ENGINE (LICENSED CREW)-
OFFICERS UNION-ASSOCIATION OF PROFESSIONALS, SUPERVISORS, OFFICE AND TECHNICAL
EMPLOYEES UNION (APSOTEU); AND MELCHOR VILLANUEVA, GERARDO SUAN, NESTOR SANCHEZ,
LUCAS APAS, JR., BONIFACIO YSAO, NICASIO CALAPRE, GILBERT SUMALPONG, ARNULFO VICTORIO,
ALBERTO SILVA, NEIL ARNEJO, DANILO JAYA, SOCRATES ALCOS, ARNOLD ARCIPE, JOSEL ARRANGUEZ,
OSCAR ARRANGUEZ, FRANCISCO CUIZON, RAMON ORTEGA, FRANCISCO MANTILLA and MATEO
MARAVILLAS, petitioners, vs. COURT OF APPEALS and TRANS-ASIA SHIPPING LINES, INC., respondents.
Labor Law; Labor Disputes; Arbitration; Strikes; When the Secretary of Labor assumes jurisdiction over
a labor dispute in an industry indispensable to national interest or certifies the same to the NLRC for
compulsory arbitration, such assumption or certification shall have the effect of automatically
enjoining the intended or impending strike or lockout.—A cursory reading of the above provision
shows that when the Secretary of Labor assumes jurisdiction over a labor dispute in an industry
indispensable to national interest or certifies the same to the NLRC for compulsory arbitration, such
assumption or certification shall have the effect of automatically enjoining the intended or impending
strike or lockout. Moreover, if one had already taken place, all striking workers shall immediately
return to work and the employer shall immediately resume operations and readmit all workers under
the same terms and conditions prevailing before the strike or lockout.
Same; Same; Same; Same; Powers granted to the Secretary of Labor under Article 263 (g) of the Labor
Code have been characterized as an exercise of the police power of the State, with the aim of
promoting public good.—The powers granted to the Secretary of Labor under Article 263 (g) of the
Labor Code have been characterized as an exercise of the police power of the State, with the aim of
promoting public good.
_______________
* SECOND DIVISION.
611
VOL. 433, JULY 7, 2004
611
Same; Same; Same; Same; Assumption of jurisdiction over a labor dispute, or the certification of the
same to the NLRC for compulsory arbitration, always co-exists with an order for workers to return to
work immediately and for employers to readmit all workers under the same terms and conditions
prevailing before the strike or lockout.—When the Secretary exercises these powers, he is granted
“great breadth of discretion” in order to find a solution to a labor dispute. The most obvious of these
powers is the automatic enjoining of an impending strike or lockout or the lifting thereof if one has
already taken place. Assumption of jurisdiction over a labor dispute, or as in this case the certification
of the same to the NLRC for compulsory arbitration, always co-exists with an order for workers to
return to work immediately and for employers to readmit all workers under the same terms and
conditions prevailing before the strike or lockout.
Same; Same; Same; Same; Employer’s right to transfer or assign employees from one area of
operation to another is not absolute but subject to limitations imposed by law.—Case law recognizes
the employer’s right to transfer or assign employees from one area of operation to another. This right,
however, is not absolute but subject to limitations imposed by law. Article 263 (g) of the Labor Code
constitutes one such limitation provided by law.
Same; Same; Same; Same; Article 263(g) of the Labor Code constitutes an exception to the
management prerogative of hiring, firing, transfer, demotion and promotion of employees.—To
reiterate, Article 263 (g) of the Labor Code constitutes an exception to the management prerogative of
hiring, firing, transfer, demotion and promotion of employees. And to the extent that Article 263 (g)
calls for the admission of all workers under the same terms and conditions prevailing before the
strike, the respondent is restricted from exercising its generally unbounded right to transfer or
reassign its employees. The respondent is mandated, under the said order, to issue embarkation
orders to the employees to enable them to report to their ship assignments in compliance with the
Order of the Secretary of Labor.
Same; Same; Same; Same; Article 263(g) of the Labor Code requires that the powers thereunder be
exercised only in labor disputes involving industries indispensable to the national interest.—Article
263 (g) of the Labor Code has been enacted pursuant to the police power of the State. Said provision
of law requires that the powers thereunder be exercised only in labor disputes involving industries
indispensable to the national interest.
612
612
Leonard U. Saval for petitioner.
Arguedo & Associates Law Office for private respondent.
CALLEJO, SR., J.:
Before the Court is the petition for review on certiorari filed by Trans-Asia Shipping Lines, Inc.-
Unlicensed Crews Employees Union-Associated Labor Unions (TASLI-ALU), Trans-Asia Shipping Lines,
Inc.-Deck and Engine (Licensed Crew) Officers Union-Associated Professionals, Supervisors, Officers and
Technical Employees Union (TASLI-APSOTEU) and nineteen (19) of their members, seeking to reverse
and set aside the Decision1 dated May 10, 2000 of the Court of Appeals in CA-G.R. SP No. 54393, which
enjoined the Secretary of Labor from implementing his “reinstatement order” pending resolution by the
National Labor Relations Commission (NLRC) of the legality of the individual petitioners’ dismissal from
employment. Likewise sought to be reversed and set aside is the appellate court’s Resolution dated
September 13, 2000 denying the petitioners’ motion for reconsideration.
The case arose from the following factual backdrop:
Respondent Trans-Asia Shipping Lines, Inc. is a domestic corporation engaged in coastwise shipping
services for the transportation of passengers and cargoes. It operates thirteen (13) vessels servicing
seventeen (17) points in the Visayas and Mindanao, including Cagayan de Oro, Ozamis, Zamboanga,
Tagbilaran, Leyte, Masbate, Iloilo and Bacolod, with the Port of Cebu as its base. The respondent
employs 700 employees, more or less.
Petitioner TASLI-ALU is a labor union of the respondent’s rank-and-file employees, while petitioner
TASLI-APSOTEU is a labor union of its supervisory employees. The individual petitioners are members of
these two unions and the respondent’s employees.
On July 6 and 7, 1999, the two unions filed separate notices of strike with the National Conciliation and
Mediation Board, Regional Branch VII (NCMB-RB VII) against the respondent on the ground of unfair
labor practice. Acting thereon and to avert any
_______________
1 Penned by Associate Justice Andres B. Reyes, Jr., with Associate Justices Corona Ibay-Somera and
Oswaldo D. Agcaoili concurring.
613
VOL. 433, JULY 7, 2004
613
work stoppage, then Secretary of Labor Bienvenido E. Laguesma intervened and issued the Order dated
July 20, 1999 certifying the labor dispute to the NLRC for compulsory arbitration pursuant to Article
263(g) of the Labor Code and enjoining any strike or lock-out.2 Further, the parties were directed to
cease and desist from committing any act that would exacerbate the situation. 3
Despite the aforesaid order, the petitioners went on strike on July 23, 1999, paralyzing the respondent’s
operations. The Secretary of Labor was thus constrained to issue the Order dated July 23, 1999 directing
all striking workers “to return to work within twelve (12) hours from receipt of this Order and for the
Company to accept them back under the same terms and conditions prevailing before the strike.”4
On even date, twenty-one (21) of the striking workers, including the individual petitioners, were
dismissed from employment by the respondent for alleged violation of the “cease-and-desist” directive
contained in the Order of July 20, 1999 by waging an illegal strike. The petitioners, through their
respective officers, manifested their willingness to comply with the “return-to-work” order, provided
the twenty-one (21) employees would also be allowed to report back for work. They demanded that the
respondent issue “embarkation orders” to the positions they held prior to the strike before they lift the
pickets and barricades. The respondent refused, claiming that the assignment of an employee to a post
is purely a management prerogative.
The bone of contention between the petitioners, on the one hand, and the respondent, on the other,
hinged on the proper interpretation of the phrase “for the company to accept them back under the
same terms and conditions prevailing before the strike.” The terminated workers asserted that said
phrase must be construed to mean that they be reinstated to their former assignments. The respondent
posited that it refers only to their salary grades, rank and seniority, but cannot encompass the
usurpation of management’s prerogative to determine where its employees are to be assigned nor to
determine their job assignments. Consequently, the strike continued as the parties insisted on their
respective hard-
_______________
2 Rollo, p. 41.
3 Ibid.
4 Id., at p. 44.
614
614
line stance. To aggravate the situation, the Coalition of Shipowners and Arrastre Operators, of which the
respondent is a member, supported the latter by not operating their vessels beginning July 26, 1999.
Recognizing that protracted work disruptions were inimical not only to the parties involved but to the
national interest as well, the Secretary of Labor issued the Order dated July 27, 1999, stating in part:
“WHEREFORE, the dispositions of this Office’s Order dated 23 July 1999 are hereby reiterated. The
striking workers are directed to return to work immediately and the Company to accept them back
under the same terms and conditions of employment prevailing prior to the strike.
The effects of the termination of the twenty-one (21) employees are hereby suspended and
management is likewise directed to reinstate them.
The National Labor Relations Commission (NLRC) is enjoined to hold marathon hearings and terminate
the proceedings within sixty (60) days from start thereof.
This Office likewise reiterates the directive deputizing PNP Regional Director Danilo G. Flores to assist in
the smooth implementation of this Order. The deputization includes: (1) maintenance of free ingress to
and egress from the premises of the Company, specifically the removal of all blockades in the
Company’s entrances and exits; (2) ensuring the maintenance of peace and order; and (3) ensuring the
safety and security of the Company employees who are returning to work in compliance with our
Order.”5
On July 28 and 29, 1999, then NLRC Chairman Rogelio I. Rayala met with the parties. The petitioners
manifested that the 21 employees be issued their respective embarkation orders to the vessels they
were assigned as crew members as a precondition to their reporting for work.6 Chairman Rayala
directed them to comply with the Secretary of Labor’s “return-to-work” order.7 The respondent
consequently reinstated the twenty-one (21) employees. Despite their reinstatement, however, the
respondent continued to refuse to issue the said employees’ “embarkation orders” to their former ship
assignments. The employees, thus, refused to report back for work.
_______________
5 Id., at p. 46.
6 CA Rollo, p. 94.
7 Id., at pp. 42-45.
615
VOL. 433, JULY 7, 2004
615
The respondent forthwith filed with the Court of Appeals (CA) a petition for certiorari alleging grave
abuse of discretion on the part of the Secretary of Labor in issuing the reinstatement order of the
dismissed employees. The said order allegedly constituted an unlawful deprivation of property and
denial of due process for it prevented the respondent from taking disciplinary action and seeking
redress for the huge property losses that it suffered as a result of the petitioners’ illegal mass action.
On August 26, 1999, the CA, through the former Tenth Division, issued a temporary restraining order
enjoining the Secretary of Labor from implementing the reinstatement order contained in his Order of
July 27, 1999. The pertinent portion of the CA resolution reads:
“Meantime, in the interest of substantial justice and national interest, a temporary restraining order is
hereby ISSUED enjoining the implementation of public respondent’s directive for petitioner to reinstate
the terminated workers.”8
On August 30, 1999, bolstered by the temporary restraining order issued by the CA, the respondent
issued a memorandum terminating the employment of the subject twenty-one (21) employees,
including the individual petitioners.
On September 27, 1999, the NLRC, Fourth Division, issued an Order directing the parties to comply
faithfully with the July 20, 1999 Order of the Secretary of Labor.9 The respondent manifested before the
CA that a case was then pending with the NLRC, involving the issue of the legality of the strike and the
individual petitioners’ dismissal. The respondent, thus, prayed that, pending the resolution thereof, a
writ of preliminary injunction be issued to enjoin the NLRC from implementing its Order dated
September 27, 1999 directing the respondent to reinstate or accept back the individual petitioners.
Granting this prayer, the CA, upon the respondent’s filing of a bond in the amount of P1,000,000.00,
promulgated the Resolution dated November 5, 1999, issuing the writ of preliminary injunction and
enjoining the Secretary of Labor, the NLRC, Fourth Division, and their agents and representa-
_______________
8 Id., at p. 27.
9 Id., at pp. 43-46.
616
616
tives from implementing their respective orders directing the reinstatement of the individual
petitioners.10
Thereafter, on May 10, 2000, the appellate court rendered the assailed decision. The appellate court
ruled in favor of the respondent, holding that the petitioners’ demand that they be issued “embarkation
orders” could not be properly considered as “under the same terms and conditions prevailing before the
strike” because the same constituted undue interference with the respondent’s management
prerogative. The CA held that the continuous refusal of the striking workers to comply with the “return-
to-work” order and the violence that erupted during the strike justified the respondent’s position not to
reinstate the dismissed employees. The appellate court, likewise, noted that the striking workers might
resort to sabotaging the operations of the respondent, and thereby endanger the lives of its passengers.
It thus ruled that the respondent’s refusal to reinstate the twenty-one (21) employees who participated
in the illegal strike was a legitimate precautionary measure properly exercised. The dispositive portion of
the assailed decision reads:
“WHEREFORE, the petition is GRANTED; public respondent Secretary of Labor is hereby ENJOINED from
implementing the reinstatement order pending the resolution by the NLRC of the legality of the
dismissal. No costs.
SO ORDERED.”11
The petitioners sought reconsideration of the said decision but the appellate court, in the assailed
Resolution dated September 13, 2000, denied the said motion. Hence, the recourse by the petitioners to
this Court.
The petitioners present for resolution the sole issue:
WHETHER OR NOT PUBLIC RESPONDENT, COURT OF APPEALS, ACTED “CONTRARY TO LAW” WHEN IT
ENJOINED THE SECRETARY OF LABOR IN IMPLEMENTING ITS RETURN-TO-WORK ORDERS, SPECIFICALLY
ORDERS DATED 20 JULY 1999, 23 JULY 1999, AND 27 JULY 2000 (sic), IN CONNECTION WITH LABOR
DISPUTE AT TRANS-ASIA, INC. (NCMB RB VII-NS-07-43-99/07-44-99)12
_______________
10 Id., at pp. 115-118.
11 Rollo, p. 36.
12 Id., at p. 12.
617
VOL. 433, JULY 7, 2004
617
The petition is impressed with merit.
The Orders dated July 20, 1999, July 23, 1999 and July 27, 1999 of the Secretary of Labor, certifying the
labor dispute involving the herein parties to the NLRC for compulsory arbitration, and enjoining the
petitioners to return to work and the respondent to admit them under the same terms and conditions
prevailing before the strike, were issued pursuant to Article 263 (g) of the Labor Code. Said provision
reads:
Art. 263. Strikes, picketing, and lockouts.—. . .
(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an
workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of
Labor and Employment or the Commission may seek the assistance of law enforcement agencies to
ensure compliance with this provision as well as with such orders as he may issue to enforce the same.
A cursory reading of the above provision shows that when the Secretary of Labor assumes jurisdiction
over a labor dispute in an industry indispensable to national interest or certifies the same to the NLRC
for compulsory arbitration, such assumption or certification shall have the effect of automatically
enjoining the intended or impending strike or lockout. Moreover, if one had already taken place, all
striking workers shall immediately return to work and the employer shall immediately resume
operations and readmit all workers under the same terms and conditions prevailing before the strike or
lockout.
The powers granted to the Secretary of Labor under Article 263 (g) of the Labor Code have been
characterized as an exercise of the police power of the State, with the aim of promoting public good:
. . . [I]t must be noted that Articles 263 (g) and 264 of the Labor Code have been enacted pursuant to the
police power of the State, which has been defined as the power inherent in a government to enact laws,
within constitutional limits, to promote the order, safety, health, morals and
618
618
general welfare of the society. The police power, together with the power of eminent domain and the
power of taxation, is an inherent power of government and does not need to be expressly conferred by
the Constitution. . . .13
When the Secretary exercises these powers, he is granted “great breadth of discretion” in order to find a
solution to a labor dispute.14 The most obvious of these powers is the automatic enjoining of an
impending strike or lockout or the lifting thereof if one has already taken place. Assumption of
jurisdiction over a labor dispute, or as in this case the certification of the same to the NLRC for
compulsory arbitration, always co-exists with an order for workers to return to work immediately and
for employers to readmit all workers under the same terms and conditions prevailing before the strike
or lockout.15
The CA, adopting the respondent’s theory, ruled that the phrase “under the same terms and conditions
prevailing before the strike” could not encompass the usurpation of management’s prerogative to
determine where its employees are to be assigned nor to determine their job assignments.
The appellate court committed reversible error in so ruling.
Case law recognizes the employer’s right to transfer or assign employees from one area of operation to
another.16 This right, however, is not absolute but subject to limitations imposed by law. Article 263 (g)
of the Labor Code constitutes one such limitation provided by law.
The case of Metrolab Industries, Inc. v. Roldan-Confesor17 is particularly instructive. In that case, the
Secretary of Labor, pursuant to Article 263 (g) of the Labor Code, assumed jurisdiction over the labor
dispute at Metro Drug, Inc. Pending resolution of said dis-
_______________
13 Philtread Workers Union (PTWU) v. Confesor, 269 SCRA 393 (1997); Union of Filipro Employees v.
Nestlé Philippines, Inc., 192 SCRA 396 (1990).
14 Concurring Opinion of Justice Artemio V. Panganiban in Phimco Industries, Inc. v. Brillantes, 304 SCRA
747 (1999).
15 See Asian Transmission Corporation v. National Labor Relations Commission, 179 SCRA 582 (1989).
16 Lanzaderas v. Amethyst Security and General Services, Inc., 404 SCRA 505 (2003).
17 254 SCRA 182 (1996).
619
VOL. 433, JULY 7, 2004
619
pute, the company laid-off ninety-four (94) of its rank-and-file employees invoking the exercise of
management prerogative. The Secretary of Labor declared the layoff illegal and ordered the company to
reinstate the employees. The Court upheld said order of the Secretary of Labor as it quoted the assailed
resolution therein, viz.:
. . . But it may nevertheless be appropriate to mention here that one of the substantive evils which
Article 263 (g) of the Labor Code seeks to curb is the exacerbation of a labor dispute to the further
detriment of the national interest. When a labor dispute has in fact occurred and a general injunction
has been issued restraining the commission of disruptive acts, management prerogatives must always
be exercised consistently with the statutory objective.18
Likewise apropos is the case of University of Sto. Tomas v. NLRC19 where the Secretary of Labor,
pursuant to Article 263 (g) of the Labor Code, directed the University to “readmit all its faculty members,
including the sixteen (16) union officials, under the same terms and conditions prevailing prior to the
present dispute.”20 Instead of fully complying therewith, the University gave some of the teachers
“substantially equivalent academic assignments without loss in rank, pay or privilege.” The Court ruled
therein that the grant of substantially equivalent academic assignments could not be sustained because
it could not be considered a reinstatement under the same terms and conditions prevailing before the
strike.
In the same manner, the respondent cannot rightfully exercise its management’s prerogative to
determine where its employees are to be assigned or to determine their job assignments in view of the
explicit directive contained in the Orders dated July 23, 1999 and July 27, 1999 of the Secretary of Labor
to accept the striking workers back “under the same terms and conditions prevailing prior to the strike.”
The order simply means that the employees should be returned to their ship assignments as before they
staged their strike. To reiterate, Article 263 (g) of the Labor Code constitutes an exception to the
management prerogative of hiring, firing, transfer, demotion and promotion of employees.21 And to the
extent
_______________
18 Ibid. (Italics ours).
19 190 SCRA 758 (1990).
20 Id., at p. 767.
21 Id., at p. 771.
620
620
that Article 263 (g) calls for the admission of all workers under the same terms and conditions prevailing
before the strike, the respondent is restricted from exercising its generally unbounded right to transfer
or reassign its employees.22 The respondent is mandated, under the said order, to issue embarkation
orders to the employees to enable them to report to their ship assignments in compliance with the
Order of the Secretary of Labor.
As earlier opined, Article 263 (g) of the Labor Code has been enacted pursuant to the police power of
the State. Said provision of law requires that the powers thereunder be exercised only in labor disputes
involving industries indispensable to the national interest.23
That respondent’s business is of national interest is not disputed. It is engaged in coastwise shipping
services for the transportation of passengers and cargoes. Its vessels service various routes in the
Visayas and Mindanao, with the Port of Cebu as its base. As stated by the Secretary of Labor, in his
Order dated July 20, 1999:
It may be recalled that the Port of Cebu has been previously rocked by concerted actions by the unions
and the shipowners and arrastre operators which have resulted in the disruption of port operations.
Said disruptions have seriously affected trade, commerce and transportation to and from said port and
other destinations in the Visayas and Mindanao.
The Company’s operations form part of the chain of shipping services at the Port of Cebu and other
ports. Any work stoppage thereat is certain to have adverse effects on its operations with its
accompanying effects to trade, commerce and transportation. Moreover, a strike could trigger measures
from the coalition of shipowners of which the Company is a member, that could escalate to a situation
disruptive of the tenuous peace currently obtaining at the Port of Cebu.
At this point when efforts of the government are focused in ensuring economic recovery and growth, it
is the primordial concern of this Office to avert unnecessary work stoppages, especially when an
alternative mecha-
_______________
22 Id.
23 See, for example, Philippine School of Business Administration-Manila v. Noriel, 164 SCRA 402 (1988);
Sarmiento v. Tuico, 162 SCRA 676 (1988); Philippine Airlines, Inc. v. Secretary of Labor and Employment,
193 SCRA 223 (1991); International Pharmaceuticals, Inc. v. Secretary of Labor, 205 SCRA 59 (1992);
Philtread Workers Union (PTWU) v. Confesor, supra; Metrolab Industries, Inc. v. Roldan-Confesor, supra.
621
VOL. 433, JULY 7, 2004
621
nism to resolve the differences between the parties exists. The direct intervention of this Office
becomes imperative on account of the magnitude of the adverse effect of any work stoppage at the
Company to the regional and national economy. Under the present state of things, the exercise of this
Office’s power as embodied under Article 263 (g) of the Labor Code, as amended, is warranted.24
The maritime industry is indubitably imbued with national interest. Under the circumstances, the Labor
Secretary correctly intervened in the labor dispute between the parties to this case by certifying the
same to the NLRC for compulsory arbitration and issuing the Orders of July 20, 1999, July 23, 1999 and
July 27, 1999 pursuant to Article 263(g) of the Labor Code.
We note that despite all its protestation of its right to dismiss the individual petitioners for committing
illegal acts during the strike, the respondent is deemed to have waived such right25 when it agreed to
reinstate them and issue their embarkation orders during the conference on July 28 to 29, 1999 held by
the parties with then NLRC Chairman Rayala.26
_______________
24 Rollo, pp. 40- 41.
25 Reformist Union of R.B. Liner, Inc. v. National Labor Relations Commission, 266 SCRA 713 (1997).
26 TSN of the Conference/Hearing on July 29, 1999 reads in part:
CHAIRMAN:
Okay, so we go now for (sic) the other issue. I believe that the issue right now is the compliance or
implementation of the Order of the Secretary dated July 27, 1999, directing for (sic) the suspension on
the aspect of termination and directing the parties to meet at point in time to return to work, and for
the management to accept the workers on the condition prior to the staged strike. May we hear now
from Atty. Mendoza to manifest it on record.
ATTY MENDOZA:
I will give you to . . .
ATTY PEDARIA:
At this point in time, Your Honor, there are no more placards in the premises of the port. The workers of
the TRANS-ASIA are peaceably assembling and waiting for the full implementation of the Order of the
Secretary which we interpret. And as it is clearly stated, remaining the status quo ante which are the
terms and conditions prevailing prior to the strike. All of the workers, including the 21 officers of the two
unions are very
622
622
In fine, absent any showing that there was grave abuse of discretion on the part of the Secretary of
Labor in issuing the said
_______________
ready and awaiting the return of their respective positions which they are (sic) holding prior to the
strike.
CHAIRMAN:
Let me clarify your statement. You are saying now, (1) that the striking employees are now reporting to
work.
ATTY. PEDARIA:
They are ready to report for work, Your Honor, because as we have stated yesterday, there is a
precondition to their actual reporting for work, which is the issuance of the embarkation orders. Absent
the embarkation orders, they cannot validly be considered as part of the crew of the vessel [to] which
they are assigned. So, it is our position at this point in time, that there remains to be performed by the
complete compliance of the Order of the Secretary of Labor. But their intention and desire to work is
already there, Your Honor.
CHAIRMAN:
That is what I am inquiring now.
ATTY. PEDARIA:
Yes, Your Honor.
CHAIRMAN:
Malinaw yan kung ganoon. So, they are reporting now. So, the next act now would be the acceptance on
the part of the management. Linawin natin yan. So, that means also that the picket now is being lifted?
ATTY. PEDARIA:
The people are peaceably assembling.
CHAIRMAN:
No, no, no. If the picket is already lifted? So, we are going to take note of the fact that based on the
manifestation has been effected (sic) is now reporting for work. And as I said the picket line together
with all the placards has (sic) been removed already.
ATTY. PEDARIA:
Yes, Your Honor.
CHAIRMAN:
So, malinaw na yon. Now, inasmuch as there is a manifestation of the union that they are going back to
work, we will now hear from the management.
ATTY. ARGUEDO:
For the management side, Your Honor, we adopt the same manifestation we made yesterday, which
means that manage-
623
VOL. 433, JULY 7, 2004
623
orders, particularly the Order of July 27, 1999, the appellate court patently erred in enjoining him from
implementing the same. By so doing, the appellate court unduly interfered with the powers granted to
the Secretary of Labor under Article 263 (g) of the Labor Code.
WHEREFORE, the petition is GRANTED. The Decision dated May 10, 2000 of the Court of Appeals in CA-
G.R. SP No. 54393 and its Resolution dated September 13, 2000 are REVERSED and SET ASIDE. The Order
of the Secretary of Labor and Employment dated July 27, 1999, is AFFIRMED.
Costs against the petitioners.
SO ORDERED.
Puno (Chairman), Austria-Martinez and Tinga, JJ., concur.
Quisumbing, J., No part due to prior action in DOLE.
Petition granted.
Note.—Where there is no evidence showing that employees committed any illegal act during the strike,
the employer’s failure to reinstate them after the settlement of the strike amounts to illegal dismissal.
(Golden Donuts, Inc. vs. National Labor Relations Commission, 322 SCRA 294 [2000])
——o0o——
_______________
ment, TRANS-ASIA, is willing to accept back those workers who are terminated on condition that it is in
accordance with the Order, so we will be accepting them back to work.
CHAIRMAN:
Very good.
ATTY. ARGUEDO:
And, we also would like to request the terminated workers to report to the office for their assignment.
(CA Rollo, pp. 93-95.)
vs. Court of Appeals, 433 SCRA 610, G.R. No. 145428 July 7, 2004
418
Philippine Long Distance Telephone Co., Inc. vs. Manggagawa ng Komunikasyon sa Pilipinas
G.R. No. 162783. July 14, 2005.*
PHILIPPINE LONG DISTANCE TELEPHONE CO., INC., petitioner, vs. MANGGAGAWA NG

KOMUNIKASYON SA PILIPINAS and the COURT OF APPEALS, respondents.
Remedial Law; Certiorari; In a special civil action of certiorari, the only question that may be raised is
whether or not the respondent has acted without or in excess of jurisdiction or with grave abuse of
discretion.—In a special civil action of certiorari, the only question that may be raised is whether or
not the respondent has acted without or in excess of jurisdiction or with grave abuse of discretion.
This was precisely what was raised by the private respondent in its petition before the Court of
Appeals. The respondent asserted in the court a quo that the Secretary violated the law and
jurisprudence, and exceeded her authority when she expressly prevented from returning to work
those who were terminated due to alleged redundancy while the strike was ongoing.
Labor Law; Labor Code; Secretary of Labor; The wide latitude of discretion given the Secretary under
Art. 263(g) shall and must be within the sphere of law.—When the Secretary exercises the powers
granted by Article 263(g) of the Labor Code, he is, indeed, granted great breadth of discretion.
However, the application of this power is not without limitation, lest the Secretary would be above
the law. Discretion is defined as the act or the liberty to decide, according to the principles of justice
and one’s ideas of what is right and proper under the circumstances, without wilfullness or favor.
Where anything is left to any person to be done according to his discretion, the law intends it must be
done with a sound discretion, and according to law. The discretion conferred upon officers by law is
not a capricious or arbitrary discretion, but an impartial discretion guided and controlled in its
exercise by fixed legal principles. It is not a mental discretion to be exercised ex gratia, but a legal
discretion to be exercised in conformity with the spirit of the law, and in a manner to subserve and
not to impede or defeat the ends of substantial justice. From the foregoing, it is quite apparent that
no matter how broad the exercise of discretion is, the same must be within the confines of
_______________
* SECOND DIVISION.
419
VOL. 463, JULY 14, 2005
419
law. Thus, the wide latitude of discretion given the Secretary under Art. 263(g) shall and must be
within the sphere of law.
Same; Same; Same; When an official bypasses the law on the asserted ground of attaining a laudable
objective, the same will not be maintained if the intendment or purpose of the law would be
defeated.—Time and again, this Court has held that when an official bypasses the law on the asserted
ground of attaining a laudable objective, the same will not be maintained if the intendment or
purpose of the law would be defeated.
Siguion Reyna, Montecillo & Ongsiako for petitioner.
Anonuevo Law Office for private respondent.
Sanidad, Abaya, Te, Viterbo, Enriquez & Tan for private respondent MKP.
CHICO-NAZARIO, J.:
Before Us is a petition for review on certiorari which seeks the reversal and setting aside of the
Decision1 and Resolution2 of the Court of Appeals dated 25 November 2003 and 19 March 2004,
respectively. The said Decision and Resolution nullified the Order of the Secretary of the Department of
Labor and Employment (the Secretary) dated 02 January 2003 in NCMB-NCR-NS-11-405-02 and NCMB-
NCR-NS-11-412-02 which enjoined the strike staged by the private respondent, and ordered the striking
workers to return to work within twenty-four (24) hours, except those who were terminated from
service due to redundancy. The exemption of the
_______________
1 Rollo, pp. 33-41; penned by Associate Justice Andres B. Reyes, Jr., with Associate Justices
Buenaventura J. Guerrero and Regalado E. Maambong concurring.
2 Rollo, p. 43.
420
420
employees who were terminated from service due to redundancy from the return-to-work order is the
hub of the controversy.
The Facts
Petitioner Philippine Long Distance Telephone Co., Inc. (PLDT) is a domestic corporation engaged in the
telecommunications business. Private respondent Manggagawa ng Komunikasyon sa Pilipinas (MKP) is a
labor union of rank and file employees in PLDT.
The members of respondent union learned that a redundancy program would be implemented by the
petitioner. Thereupon it filed a Notice of Strike with the National Conciliation and Mediation Board
(NCMB) on 04 November 2002 (NCMB-NCR-NS-11-405-02).3 The Notice fundamentally contained the
following:
UNFAIR LABOR PRACTICES, to wit:
1. PLDT’s abolition of the Provisioning Support Division. Such action together with the consequent
redundancy of PSD employees and the farming out of the jobs to casuals and contractuals, violates the
duty to bargain collectively with MKP in good faith.
2. PLDT’s unreasonable refusal to honor its commitment before this Honorable Office that it will provide
MKP its comprehensive plan/s with respect to personnel downsizing/reorganization and closure of
exchanges. Such refusal violates its duty to bargain collectively with MKP in good faith.
3. PLDT’s continued hiring of “contractual”, “temporary”, “project” and “casual” employees for regular
jobs performed by union members, resulting in the decimation of the union membership and in the
denial of the right to self-organization to the concerned employees.
4. PLDT’s gross violation of the legal and CBA provisions on overtime work and compensation.
5. PLDT’s gross violation of the CBA provisions on promotions and job grade re-evaluation or
reclassification.
_______________
3 Rollo, pp. 64-65.
421
VOL. 463, JULY 14, 2005
421
On 11 November 2002, another Notice of Strike was filed by the private respondent (NCMB-NCR-NS-11-
412-02), which contained the following:
UNFAIR LABOR PRACTICES, to wit:
1. PLDT’s alleged restructuring of its GMM Operation Services effective December 31, 2002 and its
closure [o]f traffic operations at the Batangas, Calamba, Davao, Iloilo, Lucena, Malolos and Tarlac
Regional Operator Services effective December 31, 2002. These twin moves unjustly imperil the job
security of 503 of MKP’s members and will substantially decimate the parties’ bargaining unit. And in
the light of PLDT’s previous commitment before this Honorable Office that it will provide MKP its
comprehensive plan/s with respect to personnel downsizing/reorganization and closure of exchanges
and of its more recent declaration that the Davao operator services will not be closed, these moves are
treacherous and are thus violative of PLDT’s duty to bargain collectively with MKP in good faith. That
these moves were effected with PLDT paying only lip service to its duties under Art. III, Section 9 of the
parties’ CBA signifies PLDT’s gross violation of said CBA.
A number of conciliation meetings, conducted by the NCMB, National Capital Region, were held
between the parties. However, these efforts proved futile.
On 23 December 2002, the private respondent staged a strike. On 31 December 2002, three hundred
eighty three (383) union members were terminated from service pursuant to PLDT’s redundancy
program.
On 02 January 2003, the Secretary, Patricia Sto. Tomas, issued an Order4 in NCMB-NCR-NS-11-405-02
and NCMB-NCR-NS-11-412-02. Portions of the Order are reproduced hereunder:
PLDT is the largest telecommunications entity in the Philippines whose operations are closely linked with
the country’s other telecommunication companies. It operates the country’s interna-
_______________
4 Rollo, pp. 60-62.
422
422
tional gateway system through which overseas telecommunications are made. Its operations are also
vital to the services of cellular phone companies. The Company employs more or less 13,000 employees,
about 7,000 of whom are members of the union. A work stoppage at PLDT, without doubt, will adversely
affect the smooth operations of PLDT as well as those other telecommunication companies dependent
upon the continuous operations of PLDT to the detriment of the public.
Undoubtedly, PLDT’s operations is impressed with public and national interest as communication plays a
vital role in furtherance of trade, commerce, and industry specially at this time of globalized economy
where information is vital to economic survival. Work stoppage at PLDT will also adversely effect the
ordinary day-to-day life of the public in areas of its franchise. Communication is also a component of
state security.
...
These considerations have in the past guided this Office in consistently exercising its powers under
Article 263(g) of the Labor Code, as amended, in handling labor disputes involving the Philippine Long
Distance Telephone Company and other telecommunications companies.
“WHEREFORE, FOREGOING PREMISES CONSIDERED, this Office hereby CERTIFIES the labor dispute at the
Philippine Long Distance Telephone Company to the National Labor Relations Commission (NLRC) for
compulsory arbitration pursuant to Article 263(g) of the Labor Code as amended.
Accordingly, the strike staged by the Union is hereby enjoined. All striking workers are hereby directed
to return to work within twenty four (24) hours from receipt of this Order, except those who were
terminated due to redundancy.5 The employer is hereby enjoined to accept the striking workers under
the same terms and conditions prevailing prior to the strike. The parties are likewise directed to cease
and desist from committing any act that might worsen the situation.
_______________
5 Emphasis supplied.
423
VOL. 463, JULY 14, 2005
423
A Motion for Partial Reconsideration6 dated 13 January 2003 was filed by the private respondent with
the Office of the Secretary. It alleged that the Order dated 02 January 2003 was issued by the Secretary
with grave abuse of discretion. It contended that the petitioner should have been ordered to admit all
workers under the same terms and conditions prevailing before the strike. Those who were dismissed
pursuant to the petitioner’s redundancy program should not have been excluded. In doing so, the
Secretary, in consequence, prejudged the case and effectively declared the dismissal as valid.
The petitioner filed an Opposition to the “Motion for Partial Reconsideration”7 dated 24 January 2003.
It asserted that Article 263(g) of the Labor Code refers to a discretionary power on the part of the
Secretary, and thus recognizes that the Secretary has broad powers and wide discretion to do as may be
necessary to resolve the labor dispute.
On 24 February 2003, the Secretary issued another Order,8 quoted hereunder:
In the interest of expeditious labor justice and pursuant to the Order of this Office dated January 2, 2003
certifying the instant labor dispute to the National Labor Relations Commission (NLRC), and in order to
avoid any splitting the cause of action and multiplicity of suits, which are obnoxious to the orderly
administration of justice, the Motion for Partial Reconsideration filed by the Union, Manggagawa ng
Komunikasyon sa Pilipinas (MKP) is merely NOTED without action.
WHEREFORE, premises considered, let the Motion for Partial Reconsideration, together with documents
filed in connection thereto, be immediately referred to the NLRC for its appropriate action.
_______________
6 Rollo, pp. 68-75.
7 Rollo, pp. 76-82.
8 Rollo, p. 63.
424
424
Henceforth, this Office shall no longer entertain any motions of similar nature. The parties are hereby
directed to address all their pleadings and motions to the NLRC.”
As the private respondent had no other plain, speedy and adequate remedy in the ordinary course of
law, it filed a petition for certiorari and mandamus9 under Rule 65 of the 1997 Rules on Civil Procedure
before the Court of Appeals. In the main, it argued that Article 263(g) of the Labor Code is very clear that
once a strike is certified to the National Labor Relations Commission (NLRC) for compulsory arbitration,
it is the direct mandate of the law that an employer should readmit all striking workers under the same
terms and conditions prevailing before the strike. It prayed that the Orders of the Secretary dated 02
January 2003 and 24 February 2003 be set aside and, in their place, a new order be rendered directing
PLDT to immediately readmit the alleged redundant employees under the same terms and conditions
prevailing prior to the strike.
The petitioner filed its Comment10 with the Court of Appeals and contended that there was no abuse of
discretion when the Secretary issued the two assailed Orders. The Secretary, it asserted, validly
exercised the plenary powers granted by Article 263(g) of the Labor Code. This proviso, it pointed out,
refers to a discretionary power on the part of the Secretary, and recognizes that the latter has broad
powers and wide discretion to do as may be necessary to resolve the labor dispute.
On 25 November 2003, the Court of Appeals promulgated its Decision, the dispositive portion of which
reads:
“WHEREFORE, premises considered, the Petition is GRANTED and the assailed Order[s] of respondent
Secretary in NCMB-NCR-
_______________
9 CA Rollo, pp. 2-17.
10 CA Rollo, pp. 67-75.
425
VOL. 463, JULY 14, 2005
425
NS-11-405-02 and NCMB-NCR-NS-11-412-02 [are] hereby SET ASIDE and NULLIFIED for being contrary to
law. No costs.”11
A Motion for Reconsideration12 was filed by the petitioner before the Court of Appeals, which was,
however, denied in a Resolution13 dated 19 March 2004.
The petitioner then filed a Petition for Review on Certiorari under Rule 4514 before this Court. The
private respondent was thereafter required to file its Comment, which it did.
On 01 June 2005, the Court gave due course to the petition, and the case was subsequently submitted
for decision.
Assignment of Errors
The petitioner assigns as errors the following:
THE COURT OF APPEALS DID NOT RULE IN ACCORD WITH APPLICABLE DECISIONS OF THIS HONORABLE
COURT, WHICH RECOGNIZE THAT THE SECRETARY’S EXERCISE OF ART. 263(G), LABOR CODE POWERS IS
BROAD, PLENARY AND ENTITLED TO RESPECT.
II
THE COURT OF APPEALS DEPARTED FROM THE USUAL COURSE OF PROCEEDINGS WHEN IT ISSUED THE
WRIT OF CERTIORARI DESPITE (A) THE ABSENCE OF “GRAVE ABUSE OF DISCRETION” BY THE SECRETARY
OF LABOR; AND (B) THE AVAILABILITY OF OTHER RELIEF TO MKP.
III
THE MANIFEST AND GRAVE ERROR OF THE COURT OF APPEALS IS EVIDENT FROM THE DECISION’S
INTERNAL INCONSISTENCIES.
_______________
11 Rollo, p. 41.
12 CA Rollo, pp. 139-154.
13 CA Rollo, p. 196.
14 Rollo, pp. 3-26.
426
426
IV
CONTRARY TO MKP’S ALLEGATIONS THAT IT WAS RENDERED WITH GRAVE ABUSE OF DISCRETION, THE
SECRETARY’S ASSUMPTION ORDER IS PRACTICAL, PRESERVES THE PARTIES’ RIGHTS TO REDRESS, AND IS
NOT UNPRECEDENTED.15
Issues
Culled from the above assignment of errors, the issues that must be addressed by this Court are:
WHETHER OR NOT THE SPECIAL CIVIL ACTION FOR CERTIORARI INSTITUTED BY THE RESPONDENT
BEFORE THE COURT OF APPEALS WAS PROCEDURALLY PRECISE, and
II
WHETHER THE SUBJECT ORDERS OF THE SECRETARY OF THE DEPARTMENT OF LABOR AND
EMPLOYMENT EXCLUDING FROM THE RETURN-TO-WORK ORDER THE WORKERS DISMISSED DUE TO THE
REDUNDANCY PROGRAM OF PETITIONER, ARE VALID OR NOT.
The Court’s Rulings
On the procedural issue
The petitioner is of the view that a special civil action for certiorari which was instituted by the private
respondent before the Court of Appeals was not the proper remedy. It maintained that the Court of
Appeals should have recognized that the Secretary did not abuse her discretion in any way, much less in
a grave and patent, or an arbitrary or despotic manner, or that she somehow exercised her judgment in
a capricious and whimsical way, which is required for the certiorari writ to issue. It also averred that the
private respon-
_______________
15 Rollo, p. 9.
427
VOL. 463, JULY 14, 2005
427
dent had other available reliefs, and that its plainer, speedier and adequate recourse is the proceedings
now underway before the NLRC, to which the Secretary referred the parties’ labor dispute.16
In its answer, the private respondent averred that the special civil action for certiorari filed with the
Court of Appeals was not barred by the supposed other remedy available to MKP. The petitioner, in
propositioning that the private respondent should have pursued its relevant claim before the NLRC, is in
fact wrongly suggesting that the NLRC can decide whether the Secretary had indeed acted in grave
abuse of discretion when she excluded 383 of its members from returning to work in her certification
order.17
We rule that the institution of the special civil action for certiorari before the Court of Appeals was
procedurally sound.
Section 1, Rule 65 of the 1997 Rules on Civil Procedure provides:
Section 1. Petition for certiorari.—When any tribunal, board or officer exercising judicial or quasi-judicial
functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction, and there is no appeal, nor any plain, speedy, and adequate
remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the
proper court, alleging the facts with certainty and praying that judgment be rendered annulling or
modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law
and justice may require.
It is the position of the private respondent that the Secretary committed an error of jurisdiction when
she excluded from her return-to-work order the alleged redundant strikers, which should be corrected
by a special civil action for certiorari. While she has the power to certify the strike to the
_______________
16 Rollo, p. 15.
17 Rollo, p. 137.
428
428
NLRC for compulsory arbitration, she did not have the power to exclude a certain class of strikers from
returning to work. Further, the private respondent contended that in issuing her assailed orders, the
Secretary exceeded her authority.18
The position taken by the private respondent is correct. The special civil action for certiorari was justly
availed of by the private respondent.
In a special civil action of certiorari, the only question that may be raised is whether or not the
respondent has acted without or in excess of jurisdiction or with grave abuse of discretion.19 This was
precisely what was raised by the private respondent in its petition before the Court of Appeals. The
respondent asserted in the court a quo that the Secretary violated the law and jurisprudence, and
exceeded her authority when she expressly prevented from returning to work those who were
terminated due to alleged redundancy while the strike was ongoing.20
The remedy of an aggrieved party in a Decision or Resolution of the Secretary is to timely file a motion
for reconsideration as a precondition for any further or subsequent remedy, and then seasonably file a
special civil action for certiorari under Rule 65 of the 1997 Rules on Civil Procedure.21
This was precisely done by the private respondent.
On the substantive issue
Article 263(g) of the Labor Code, as amended, which is pertinent to the resolution of the case at bar,
provides:
_______________
18 CA Rollo, p. 13.
19 Arceta v. Mangrobang, G.R. No. 152895, 15 June 2004, 432 SCRA 136.
20 CA Rollo, p. 8.
21 University of Immaculate Concepcion v. Secretary of Labor and Employment, G.R. No. 143557, 25
June 2004, 432 SCRA 601, citing National Federation of Labor v. Laguesma, G.R. No. 123426, 10 March
1999, 304 SCRA 405.
429
VOL. 463, JULY 14, 2005
429
Art. 263. Strikes, picketing, and lockouts.—
...
(g) When in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an
workers under the same terms and conditions prevailing before the strike or lockout. (Emphasis
supplied.)
In deciding the case, the Court of Appeals made the following observation:
The phrase “all striking or locked out employees” and “readmit all workers” does not distinguish or
qualify and emphatically is a catch all embracing enumeration of who should be returned to work.
“Where the law does not distinguish, courts should not distinguish (Recaña v. Court of Appeals, 349
SCRA 24 [2001] ).”22
In the main, the petitioner contends that the Court of Appeals gave a narrow and too literal
interpretation of Article 263(g) to justify its reversal of the Secretary’s “qualified” return-to-work Order.
The Court of Appeals erroneously favored a rule of statutory construction: ubi lex non distinguit nec nos
distinguere debemos. Where the law does not distinguish, courts should not distinguish.23
The Secretary’s power, according to the petitioner, is broad and plenary, and is granted great breadth of
discretion. Secretary Sto. Tomas, in issuing the assailed orders, acted with appropriate discretion,
because she was secure in the knowl-
_______________
22 Rollo, p. 39.
23 Rollo, p. 11.
430
430
edge that the courts have recognized her broad and plenary powers under Art. 263(g).
The private respondent, in its Comment, contended that it is untenable for PLDT to stubbornly argue
that the Secretary has such great breadth of discretion that even encompasses her questioned
directives.24 While conceding that the Secretary’s powers under Art. 263(g) may undoubtedly be
plenary and discretionary, the same are not absolute and still subject to the limitations set by law.25
The petition must fail.
When the Secretary exercises the powers granted by Article 263(g) of the Labor Code, he is, indeed,
granted great breadth of discretion. However, the application of this power is not without limitation,
lest the Secretary would be above the law. Discretion is defined as the act or the liberty to decide,
according to the principles of justice and one’s ideas of what is right and proper under the
circumstances, without wilfullness or favor.26 Where anything is left to any person to be done according
to his discretion, the law intends it must be done with a sound discretion, and according to law. The
discretion conferred upon officers by law is not a capricious or arbitrary discretion, but an impartial
discretion guided and controlled in its exercise by fixed legal principles. It is not a mental discretion to be
exercised ex gratia, but a legal discretion to be exercised in conformity with the spirit of the law, and in a
manner to subserve and not to impede or defeat the ends of substantial justice.27 From the foregoing,
it is quite apparent that no matter how broad the exercise of discretion is, the same must be within the
confines of law. Thus, the
_______________
24 Rollo, p. 134.
25 Rollo, p. 135.
26 Lamb v. Phipps, 22 Phil. 488.
27 See dissenting opinion of J. Trent in Lamb v. Phipps, 22 Phil. 488.
431
VOL. 463, JULY 14, 2005
431
wide latitude of discretion given the Secretary under Art. 263(g) shall and must be within the sphere of
law.
Our ruling in the case of Phimco Industries, Inc. v. Brillantes28 was most appropriately and auspiciously
alluded to by the private respondent. In this case we held:
. . . This is precisely why the law sets and defines the standard: even in the exercise of his power of
compulsory arbitration under Article 263(g) of the Labor Code, the Secretary must follow the law. For
“when an overzealous official by-passes the law on the pretext of retaining a laudable objective, the
intendment or purpose of the law will lose its meaning as the law itself is disregarded.”
As Article 263(g) is clear and unequivocal in stating that ALL striking or locked out employees shall
immediately return to work and the employer shall immediately resume operations and readmit ALL
workers under the same terms and conditions prevailing before the strike or lockout, then the
unmistakable mandate must be followed by the Secretary.
In the case of Trans-Asia Shipping Lines, Inc.-Unlicensed Crews Employees Union-Associated Labor
Unions (Tasli-Alu) v. Court of Appeals,29 we held:
. . . Assumption of jurisdiction over a labor dispute, or as in this case the certification of the same to the
NLRC for compulsory arbitration, always co-exists with an order for workers to return to work
immediately and for employers to readmit all workers under the same terms and conditions prevailing
before the strike or lockout.
Time and again, this Court has held that when an official bypasses the law on the asserted ground of
attaining a laud-
_______________
28 G.R. No. 120751, 17 March 1999, 304 SCRA 747, citing Colgate Palmolive Philippines, Inc. v. Ople, G.R.
No. L-73681, 30 June 1988, 163 SCRA 323, 330.
29 G.R. No. 145428, 07 July 2004, 433 SCRA 610, citing Asian Transmission Corporation v. National Labor
Relations Commission, G.R. No. 88725, 22 November 1989, 179 SCRA 582.
432
432

able objective, the same will not be maintained if the intendment or purpose of the law would be
defeated.30
One last piece. Records would show that the strike occurred on 23 December 2002. Article 263(g) directs
that the employer must readmit all workers under the same terms and conditions prevailing before the
strike. Since the strike was held on the aforementioned date, then the condition prevailing before it,
which was the condition present on 22 December 2002, must be maintained.
Undoubtedly, on 22 December 2002, the members of the private respondent who were dismissed due
to alleged redundancy were still employed by the petitioner and holding their respective positions. This
is the status quo that must be maintained.
WHEREFORE, finding no reversible error in the assailed Decision and Resolution of the Court of Appeals
dated 25 November 2003 and 19 March 2004, respectively, both are hereby AFFIRMED. Costs against
petitioner.
SO ORDERED.
Puno (Chairman), Austria-Martinez, Callejo, Sr. and Tinga, JJ., concur.
Assailed decision and resolution affirmed.
Note.—A petition for certiorari under Rule 65 of the Revised Rules of Court is intended to rectify errors
of jurisdiction or grave abuse of discretion. (Leonardo vs. National Labor Relations Commission, 333
SCRA 589 [2000])
——o0o——
_______________
30 Manila Diamond Hotel Employees’ Union v. The Court of Appeals, et al., G.R. No. 140518, 16
December 2004, 447 SCRA 97, citing Colgate-Palmolive Phils., Inc. v. Ople, 163 SCRA 323, 330 (1998).
433 Philippine Long Distance Telephone Co., Inc. vs. Manggagawa ng Komunikasyon sa Pilipinas, 463
SCRA 418, G.R. No. 162783 July 14, 2005
VOL. 210, JUNE 29, 1992
565
St. Scholastica's College vs. Torres
G.R. No. 100158. June 29, 1992.*
ST. SCHOLASTICA’S COLLEGE, petitioner, vs. HON. RUBEN TORRES, in his capacity as SECRETARY OF
LABOR AND EMPLOYMENT, and SAMAHAN NG MANGGAGAWANG PANG-EDUKASYON SA STA.
ESKOLASTIKA-NAFTEU, respondents.
Labor Law; Jurisdiction; Strike; Before the Secretary of Labor and Employment may take cognizance of
an issue which is merely incidental to the labor dispute, the same must be involved in the labor
dispute itself or otherwise submitted to him for resolution.—Before the Secretary of Labor and
Employment may take cognizance of an issue which is merely incidental to the labor dispute,
therefore, the same must be involved in the labor dispute itself, or otherwise submitted to him for
resolution. If it was not, as was the case in PAL v. Secretary of 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 Pharmaceuticals, Inc. v. Secretary of Labor and Employment,
supra, will apply.
Same; Same; Same; A return-to-work order is immediately effective and executory notwithstanding
the filing of a motion for reconsideration.—Article 263 (g) of the Labor Code provides that if a strike
has already taken place at the time of assumption, “all striking x x x employees shall immediately
return to work.” This means that by its
________________
* FIRST DIVISION.
566
566
very terms, a return-to-work order is immediately effective and executory notwithstanding the filing
of a motion for reconsideration (University of Sto. Tomas v. NLRC). It must be strictly complied with
even during the pendency of any petition questioning its validity (Union of Filipro Employees v. Nestlé
Philippines, Inc., supra). After all, the assumption and/or certification order is issued in the exercise of
respondent SECRETARY’s compulsive power of arbitration and, until set aside, must therefore be
immediately complied with.
Same; Same; Same; The assumption of jurisdiction by the Secretary of Labor and Employment over
labor disputes involving academic institutions upheld in Philippine School of Business Administration
vs. Noriel.—Moreover, the assumption of jurisdiction by the Secretary of Labor and Employment over
labor disputes involving academic institutions was already upheld in Philippine School of Business
Administration v. Noriel.
Same; Same; Same; Any worker or union officer who knowingly participates in a strike defying a
return-to-work order may consequently be declared to have lost his employment status.—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 dispute is considered an illegal act. Any worker or union officer who knowingly participates in a
strike defying a return-to-work order may, consequently, “be declared to have lost his employment
status.”
Same; Same; Same; By insisting on staging the restrained strike and defiantly picketing the company
premises to prevent the resumption of operations, strikers have forfeited their right to be readmitted,
having abandoned their positions and so could be validly replaced.—Thus, we held in Sarmiento v.
Tuico, supra, that by insisting on staging the restrained strike and defiantly picketing the company
premises to prevent the resumption of operations, the strikers have forfeited their right to be
readmitted, having abandoned their positions, and so could be validly replaced.
PETITION for certiorari to review the order and resolution of the Secretary of Labor and Employment.
567
VOL. 210, JUNE 29, 1992
567
Ernesto R. Arellano for private respondent.
William T. Chua for petitioner.
BELLOSILLO, J.:
The principal issue to be resolved in this recourse is whether striking union members terminated for
abandonment of work after failing to comply with return-to-work orders of the Secretary of Labor and
Employment (SECRETARY, for brevity) should by law be reinstated.
On 20 July 1990, petitioner St. Scholastica’s College (COLLEGE, for brevity) and private respondent
Samahan ng Manggagawang Pang-Edukasyon sa Sta. Eskolastika-NAFTEU (UNION, for brevity) initiated
negotiations for a first-ever collective bargaining agreement. A deadlock in the negotiations prompted
the UNION to file on 4 October 1990 a Notice of Strike with the Department of Labor and Employment
(DEPARTMENT, for brevity), docketed as NCMB-NCR-NS-10-826-90.
On 5 November 1990, the UNION declared a strike which paralyzed the operations of the COLLEGE.
Affecting as it did the interest of the students, public respondent SECRETARY immediately assumed
jurisdiction over the labor dispute and issued on the same day, 5 November 1990, a return-to-work
order. The following day, 6 November 1990, the UNION was served the Order. On 7 November 1990,
instead of returning to work, the UNION filed a motion for reconsideration of the return-to-work order
questioning inter alia the assumption of jurisdiction by the SECRETARY over the labor dispute.
On 9 November 1990, the COLLEGE sent individual letters to the striking employees enjoining them to
return to work not later than 8:00 o‘clock A.M. of 12 November 1990 and, at the same time, giving
notice to some twenty-three (23) workers that their return would be without prejudice to the filing of
appropriate charges against them. In response, the UNION presented a list of six (6) demands to the
COLLEGE in a dialogue conducted on 11 November 1990. The most important of these demands was the
unconditional acceptance back to work of the striking employees. But these were flatly rejected.
Likewise, on 9 November 1990, respondent SECRETARY denied reconsideration of his return-to-work

order and sternly
568
568
warned the striking employees to comply with its terms. On 12 November 1990, the UNION received the
Order.
Thereafter, particularly on 14 and 15 November 1990, the parties held conciliation meetings before the
National Conciliation and Mediation Board where the UNION pruned down its demands to three (3), viz.:
that striking employees be reinstated under the same terms and conditions before the strike; that no
retaliatory or disciplinary action be taken against them; and, that CBA negotiations be continued.
However, these efforts proved futile as the COLLEGE remained steadfast in its position that any return-
to-work offer should be unconditional.
On 16 November 1990, the COLLEGE manifested to respondent SECRETARY that the UNION continued
to defy his return-to-work order of 5 November 1990 so that “appropriate steps under the said
circumstances” may be undertaken by him.1
On 23 November 1990, the COLLEGE mailed individual notices of termination to the striking employees,
which were received on 26 November 1990, or later. The UNION officers and members then tried to
return to work but were no longer accepted by the COLLEGE.
On 5 December 1990, a Complaint for Illegal Strike was filed against the UNION, its officers and several
of its members before the National Labor Relations Commission (NLRC), docketed as NLRC Case No. 00-
12-06256-90.
The UNION moved for the enforcement of the return-towork order before respondent SECRETARY,
citing “selective acceptance of returning strikers” by the COLLEGE. It also sought dismissal of the
complaint. Since then, no further hearings were conducted.
Respondent SECRETARY required the parties to submit their respective position papers. The COLLEGE
prayed that respondent SECRETARY uphold the dismissal of the employees who defied his return-to-
work order.
On 12 April 1991, respondent SECRETARY issued the assailed Order which, inter alia, directed the
reinstatement of striking UNION members, premised on his finding that no
________________
1 Rollo, p. 44.
569
VOL. 210, JUNE 29, 1992
569
violent or otherwise illegal act accompanied the conduct of the strike and that a fledgling UNION like
private respondent was “naturally expected to exhibit unbridled if inexperienced enthusiasm, in
asserting its existence.”2 Nevertheless, the aforesaid Order held UNION officers responsible for the
violation of the return-to-work orders of 5 and 9 November 1990, correspondingly, sustained their
termination.
Both parties moved for partial reconsideration of the Order, with petitioner COLLEGE questioning the
wisdom of the reinstatement of striking UNION members, and private respondent UNION, the dismissal
of its officers.
On 31 May 1991, in a Resolution, respondent SECRETARY denied both motions. Hence, this Petition for
Certiorari, with Prayer for the Issuance of a Temporary Restraining Order.
On 26 June 1991, We restrained the SECRETARY from enforcing his assailed Orders insofar as they
directed the reinstatement of the striking workers previously terminated.
Petitioner questions the assumption by respondent SECRETARY of jurisdiction to decide on termination

disputes, maintaining that such jurisdiction is vested instead in the Labor Arbiter pursuant to Art. 217 of
the Labor Code, thus—
“Art. 217. Jurisdiction of Labor Arbiters and the Commission.—(a) Except as otherwise provided under
this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within
the following cases involving all workers, whether agricultural or non-agricultural: x x x x 2. Termination
disputes x x x x 5. Cases arising from any violation of Article 264 of this Code, including questions on the
legality of strikes and lock-outs x x x x”
In support of its position, petitioner invokes Our ruling in PAL v. Secretary of Labor and Employment 3
where We held:
“The Labor Secretary exceeded his jurisdiction when he restrained PAL from taking disciplinary
measures against its guilty
________________
2 Ibid., p. 34.
3 G.R. No. 88210, 23 January 1991, 193 SCRA 223.
570
570
employees, for, under Art. 263 of the Labor Code, all that the Secretary may enjoin is the holding of the
strike but not the company’s right to take action against union officers who participated in the illegal
strike and committed illegal acts.”
Petitioner further contends that following the doctrine laid down in Sarmiento v. Tuico 4 and Union of
Filipro Employees v. Nestlé Philippines, Inc.,5 workers who refuse to obey a return-to-work order are
not entitled to be paid for work not done, or to reinstatement to the positions they have abandoned by
reason of their refusal to return thereto as ordered.
Taking a contrary stand, private respondent UNION pleads for reinstatement of its dismissed officers
considering that the act of the UNION in continuing with its picket was never characterized as a “brazen
disregard of successive legal orders”, which was readily apparent in Union of Filipro Employees v. Nestlé
Philippines, Inc., supra, nor was it a willful refusal to return to work, which was the basis of the ruling in
Sarmiento v. Tuico, supra. The failure of UNION officers and members to immediately comply with the
return-to-work orders was not because they wanted to defy said orders; rather, they held the view that
academic institutions were not industries indispensable to the national interest. When respondent
SECRETARY denied their motion for reconsideration, however, the UNION intimated that efforts were
immediately initiated to fashion out a reasonable return-to-work agreement with the COLLEGE, albeit, it
failed.
The issue on whether respondent SECRETARY has the power to assume jurisdiction over a labor dispute
and its incidental controversies, causing or likely to cause a strike or lockout in an industry indispensable
to the national interest, was already settled in International Pharmaceuticals, Inc. v. Secretary of Labor
and Employment.6 Therein, We ruled that:
“x x x [T]he Secretary was explicitly granted by Article 263 (g) of the Labor Code the authority to assume
jurisdiction over a labor
________________
4 Nos. L-75271-73, 27 June 1988, 162 SCRA 676.
5 G.R. Nos. 88710-12, 19 December 1990, 192 SCRA 396.
6 G.R. Nos. 92981-83, 9 January 1992.
571
VOL. 210, JUNE 29, 1992
571
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 controversies arising therefrom, including cases
over which the Labor Arbiter has exclusive jurisdiction.”
And rightly so, for, as found in the aforesaid case, Article 217 of the Labor Code did contemplate of
exceptions thereto where the SECRETARY is authorized to assume jurisdiction over a labor dispute
otherwise belonging exclusively to the Labor Arbiter. This is readily evident from its opening proviso
reading “(e)xcept as otherwise provided under this Code x x x x”
Previously, We held that Article 263 (g) of the Labor Code was broad enough to give the Secretary of
Labor and Employment the power to take jurisdiction over an issue involving unfair labor practice.7
At first glance, the rulings above stated seem to run counter to that of PAL v. Secretary of Labor and
Employment, supra, which was cited by petitioner. But the conflict is only apparent, not real.
To recall, We ruled in the latter case that the jurisdiction of the Secretary of Labor and Employment in
assumption and/or certification cases is limited to the issues that are involved in the disputes or to those
that are submitted to him for resolution. The seeming difference is, however, reconcilable. Since the
matter on the legality or illegality of the strike was never submitted to him for resolution, he was thus
found to have exceeded his jurisdiction when he restrained the employer from taking disciplinary action
against employees who staged an illegal strike.
Before the Secretary of Labor and Employment may take cognizance of an issue which is merely
incidental to the labor dispute, therefore, the same must be involved in the labor dispute itself, or
otherwise submitted to him for resolution. If it was not, as was the case in PAL v. Secretary of Labor and
________________
7 Meycauayan College v. Drilon, G.R. No. 81144, 7 May 1990, 185 SCRA 50.
572
572
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 Pharmaceuticals, Inc. v. Secretary of
Labor and Employment, supra, will apply.
The submission of an incidental issue of a labor dispute, in assumption and/or certification cases, to the
Secretary of Labor and Employment for his resolution is thus one of the instances referred to whereby
the latter may exercise concurrent jurisdiction together with the Labor Arbiters.
In the instant petition, the COLLEGE in its Manifestation, dated 16 November 1990, asked the “Secretary
of Labor to take the appropriate steps under the said circumstances.” It likewise prayed in its position
paper that respondent SECRETARY uphold its termination of the striking employees. Upon the other
hand, the UNION questioned the termination of its officers and members before respondent SECRETARY
by moving for the enforcement of the return-to-work orders. There is no dispute then that the issue on
the legality of the termination of striking employees was properly submitted to respondent SECRETARY
for resolution.
Such an interpretation will be in consonance with the intention of our labor authorities to provide
workers immediate access to their rights and benefits without being inconvenienced by the arbitration
and litigation process that prove to be not only nerve-wracking, but financially burdensome in the long
run. Social justice legislation, to be truly meaningful and rewarding to our workers, must not be
hampered in its application by long-winded arbitration and litigation. Rights must be asserted and
benefits received with the least inconvenience. For, labor laws are meant to promote, not defeat, social
justice (Maternity Children’s Hospital v. Hon. Secretary of Labor).8 After all, Art. 4 of the Labor Code
does state that all doubts in the implementation and interpretation of its provisions, including its
implementing rules and regulations, shall be resolved in favor of labor.
We now come to the more pivotal question of whether strik-
________________
8 G.R. No. 78909, 30 June 1989, 174 SCRA 632.
573
VOL. 210, JUNE 29, 1992
573
ing union members, terminated for abandonment of work after failing to comply strictly with a return-
to-work order, should be reinstated.
We quote hereunder the pertinent provisions of law which govern the effects of defying a return-to-
work order:
1. Article 263 (g) of the Labor Code—
“Art. 263. Strikers, picketing, and lockouts.—x x x x (g) When, in his opinion, there exists a labor dispute
causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the
Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the
same to the Commission for compulsory arbitration. Such assumption or certification shall have the
effect of automatically enjoining the intended or impending strike or lockout as specified in the
assumption or certification order. If one has already taken place at the time of assumption or
certification, all striking or locked out employees shall immediately return to work and the employer
shall immediately resume operations and readmit all workers under the same terms and conditions
prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission may
with such orders as he may issue to enforce the same x x x x” (as amended by Sec. 27, R.A. 6715; italics
supplied).
2. Article 264, same Labor Code—
“Art. 264. Prohibited activities.—a) No labor organization or employer shall declare a strike or lockout
without first having bargained collectively in accordance with Title VII of this Book or without first having
filed the notice required in the preceding Article or without the necessary strike or lockout vote first
having been obtained and reported to the Ministry.
“No strike or lockout shall be declared after assumption of jurisdiction by the President or the Minister
or after certification or submission of the dispute to compulsory or voluntary arbitration or during the
pendency of cases involving the same grounds for the strike or lockout x x x x (italics supplied).
“Any worker whose employment has been terminated as a consequence of an unlawful lockout shall be
entitled to reinstatement with full back wages. Any union officer who knowingly participates in an illegal
strike and any worker or union officer who knowingly
574
574
participates in the commission of illegal acts during a strike may be declared to have lost his
employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute
sufficient ground for termination of his employment, even if a replacement had been hired by the
employer during such lawful strike x x x x” (italics supplied).
3. Section 6, Rule IX, of the New Rules of Procedure of the NLRC (which took effect on 31 August 1990)—
“Section 6. Effects of Defiance.—Non-compliance with the certification order of the Secretary of Labor
and Employment or a return to work order of the Commission shall be considered an illegal act
committed in the course of the strike or lockout and shall authorize the Secretary of Labor and
Employment or the Commission, as the case may be, to enforce the same under pain or loss of
employment status or entitlement to full employment benefits from the locking-out employer or
backwages, damages and/or other positive and/or affirmative reliefs, even to criminal prosecution
against the liable parties x x x x” (italics supplied).
Private respondent UNION maintains that the reason they failed to immediately comply with the return-
to-work order of 5 November 1990 was because they questioned the assumption of jurisdiction of
respondent SECRETARY. They were of the impression that being an academic institution, the school
could not be considered an industry indispensable to national interest, and that pending resolution of
the issue, they were under no obligation to immediately return to work.
This position of the UNION is simply flawed. Article 263 (g) of the Labor Code provides that if a strike has
already taken place at the time of assumption, “all striking x x x employees shall immediately return to
work.” This means that by its very terms, a return-to-work order is immediately effective and executory
notwithstanding the filing of a motion for reconsideration (University of Sto. Tomas v. NLRC).9 It must
be strictly complied with even during the pendency of any petition questioning its validity (Union of
Filipro Employees v. Nestlé Philip-
________________
9 G.R. No. 89920, 18 October 1990, 190 SCRA 759.
575
VOL. 210, JUNE 29, 1992
575

pines, Inc., supra). After all, the assumption and/or certification order is issued in the exercise of
respondent SECRETARY’s compulsive power of arbitration and, until set aside, must therefore be
immediately complied with.
The rationale for this rule is explained in University of Sto. Tomas v. NLRC, supra, citing Philippine
Airlines Employees Association v. Philippine Airlines, Inc.,10 thus—
“To say that its (return-to-work order) effectivity must wait affirmance in a motion for reconsideration is
not only to emasculate it but indeed to defeat its import, for by then the deadline fixed for the return to
work would, in the ordinary course, have already passed and hence can no longer be affirmed insofar as
the time element is concerned.”
Moreover, the assumption of jurisdiction by the Secretary of Labor and Employment over labor disputes
involving academic institutions was already upheld in Philippine School of Business Administration v.
Noriel 11 where We ruled thus:
“There is no doubt that the on-going labor dispute at the school adversely affects the national interest.
The school is a duly registered educational institution of higher learning with more or less 9,000
students. The on-going work stoppage at the school unduly prejudices the students and will entail great
loss in terms of time, effort and money to all concerned. More important, it is not amiss to mention that
the school is engaged in the promotion of the physical, intellectual and emotional well-being of the
country’s youth.”
Respondent UNION’s failure to immediately comply with the return-to-work order of 5 November 1990,
therefore, cannot be condoned.
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
________________
10 38 SCRA 372 (1971).
11 G.R. No. 80648, 15 August 1988, 164 SCRA 402.
576
576
dispute is considered an illegal act. Any worker or union officer who knowingly participates in a strike
defying a return-to-work order may, consequently, “be declared to have lost his employment status.”
Section 6, Rule IX, of the New Rules of Procedure of the NLRC, which provides the penalties for defying a
certification order of the Secretary of Labor or a return-to-work order of the Commission, also reiterates
the same penalty. It specifically states that non-compliance with the aforesaid orders, which is
considered an illegal act, “shall authorize the Secretary of Labor and Employment or the Commission x x
x to enforce the same under pain of loss of employment status.” Under the Labor Code, assumption
and/or certification orders are similarly treated.
Thus, we held in Sarmiento v. Tuico, supra, that by insisting on staging the restrained strike and defiantly
picketing the company premises to prevent the resumption of operations, the strikers have forfeited
their right to be readmitted, having abandoned their positions, and so could be validly replaced.
We recently reiterated this stance in Federation of Free Workers v. Inciong,12 wherein we cited Union
of Filipro Employees v. Nestlé Philippines, Inc., supra, thus—
“A strike undertaken despite the issuance by the Secretary of Labor of an assumption or certification
order becomes a prohibited activity and thus illegal, pursuant to the second paragraph of Art. 264 of the
Labor Code as amended x x x x The union officers and members, as a result, are deemed to have lost
their employment status for having knowingly participated in an illegal act.”
Despite knowledge of the ruling in Sarmiento v. Tuico, supra, records of the case reveal that private
respondent UNION opted to defy not only the return-to-work order of 5 November 1990 but also that of
9 November 1990.
While they claim that after receiving copy of the Order of 9 November 1990 initiatives were immediately
undertaken to fashion out a return-to-work agreement with management, still, the unrebutted evidence
remains that the striking union
________________
12 No. L-49983, 20 April 1992.
577
VOL. 210, JUNE 29, 1992
577
officers and members tried to return to work only eleven (11) days after the conciliation meetings ended
in failure, or twenty (20) days after they received copy of the first return-to-work order on 5 November
1990.
The sympathy of the Court which, as a rule, is on the side of the laboring classes (Reliance Surety &
Insurance Co., Inc. v. NLRC),13 cannot be extended to the striking union officers and members in the
instant petition. There was willful disobedience not only to one but two return-to-work orders.
Considering that the UNION consisted mainly of teachers, who are supposed to be well-lettered and
well-informed, the court cannot overlook the plain arrogance and pride displayed by the UNION in this
labor dispute. Despite containing threats of disciplinary action against some union officers and members
who actively participated in the strike, the letter dated 9 November 1990 sent by the COLLEGE enjoining
the union officers and members to return to work on 12 November 1990 presented the workers an
opportunity to return to work under the same terms and conditions prior to the strike. Yet, the UNION
decided to ignore the same. The COLLEGE, correspondingly, had every right to terminate the services of
those who chose to disregard the return-to-work orders issued by respondent SECRETARY in order to
protect the interests of its students who form part of the youth of the land.
Lastly, the UNION officers and members also argue that the doctrine laid down in Sarmiento v. Tuico,
supra, and Union of Filipro Employees v. Nestlé Philippines, Inc., supra, cannot be made applicable to
them because in the latter two cases, workers defied the return-to-work orders for more than five (5)
months. Their defiance of the return-to-work order, it is said, did not last more than a month.
Again, this line of argument must be rejected. It is clear from the provisions above quoted that from the
moment a worker defies a return-to-work order, he is deemed to have abandoned his job. It is already in
itself knowingly participating in an illegal act. Otherwise, the worker will just simply refuse to return to
his work and cause a standstill in the company
________________
13 G.R. Nos. 86917-18, 25 January 1991, 193 SCRA 365.
578
578
operations while retaining the positions they refuse to discharge or allow the management to fill
(Sarmiento v. Tuico, supra). Suffice it to say, in Federation of Free Workers v. Inciong, supra, the workers
were terminated from work after defying the return-to-work order for only nine (9) days. It is indeed
inconceivable that an employee, despite a return-to-work order, will be allowed in the interim to stand
akimbo and wait until five (5) orders shall have been issued for their return before they report back to
work. This is absurd.
In fine, respondent SECRETARY gravely abused his discretion when he ordered the reinstatement of
striking union members who refused to report back to work after he issued two (2) return-to-work
orders, which in itself is knowingly participating in an illegal act. The Order in question is, certainly,
contrary to existing law and jurisprudence.
WHEREFORE, the Petition for Certiorari is hereby GRANTED. The Order of 12 April 1991 and the
Resolution of 31 May 1991 both issued by respondent Secretary of Labor and Employment are SET
ASIDE insofar as they order the reinstatement of striking union members terminated by petitioner, and
the temporary restraining order We issued on June 26, 1991, is made permanent.
No costs.
SO ORDERED.
Cruz (Chairman), Griño-Aquino and Medialdea, JJ., concur.
Petition granted; order and resolution set aside.
Note.—A strike undertaken despite the issuance by the Secretary of Labor of an assumption or
certification order becomes a prohibited activity and thus, illegal (Union of Filipro Employer vs. Nestlé
Philippines, Inc., 192 SCRA 396).
———o0o———
579
© Copyright 2017 Central Book Supply, Inc. All rights reserved. St. Scholastica's College vs. Torres, 210
SCRA 565, G.R. No. 100158 June 29, 1992
59
International Pharmaceuticals, Inc. vs. Secretary of Labor
G.R. Nos. 92981-83. January 9,1992.*
INTERNATIONAL PHARMACEUTICALS, INC., petitioner, vs. HON. SECRETARY OF LABOR and

ASSOCIATED LABOR UNION (ALU), respondents.
Labor Law; When, in his opinion, there exists a labor dispute causing or likely to cause a strike or
lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment
may assume jurisdiction over the dispute and decide it.—In the present case, the Secretary was
explicitly granted by Article 263(g) of the Labor Code the authority to assume jurisdiction over a labor
dispute causing or likely to cause a strike or lockout 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 controversies arising therefrom,
including cases over which the labor arbiter has exclusive jurisdiction. Moreover, Article 217 of the
Labor Code is not without, but contemplates, exceptions thereto. This is evident from the opening
proviso therein reading "(e)xcept as otherwise provided under this Code x x x." Plainly, Article 263(g)
of the Labor Code was meant to make both the Secretary (or the various regional directors) and the
labor arbiters share jurisdiction, subject to certain conditions. Otherwise, the Secretary would not be
able to effectively and efficiently dispose of the primary dispute. To hold the contrary may even lead
to the absurd and undesirable result wherein the Secretary and the labor arbiter concerned may have
diametrically opposed rulings. As we have said, "(i)t is fundamental that a statute is to be read in a
manner that would breathe life into it, rather than defeat it."
_______________
* SECOND DIVISION.
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60
Same; Construction in favor of labor; All doubts in the implementation and interpretation of the
provisions of this Code (Labor Code), including its implementing rules and regulations, shall be
resolved in favor of labor.—Moreover, the rule is that all doubts in the interpretation and
implementation of labor laws should be resolved in favor of labor. In upholding the assailed orders of
the Secretary, the Court is only giving meaning to this rule. The Court should help labor authorities
provide workers immediate access to their rights and benefits, without being hampered by arbitration
or litigation processes that prove to be not only nerve-wracking, but financially burdensome in the
long run. Administrative rules of procedure should be construed liberally in order to promote their
object and assist the parties, especially the workingman, in obtaining just, speedy, and inexpensive
determination of their respective claims and defenses. By virtue of the assailed orders, the Union and
its members are relieved of the burden of litigating their interrelated cases in different tribunals.
PETITION for review from the order of the Department of Labor and Employment.
E.B. Ramos & Associates for petitioner.
Celso C. Reales for private respondent.
REGALADO, J.:
The issue before us is whether or not the Secretary of the Department of Labor and Employment has the
power to assume jurisdiction over a labor dispute and its incidental controversies, including unfair labor
practice cases, causing or likely to cause a strike or lockout in an industry indispensable to the national
interest.
The operative facts which culminated in the present recourse are undisputed.
Prior to the expiration on January 1, 1989 of the collective bargaining agreement between petitioner
International Pharmaceuticals, Inc. (hereafter, Company) and the Associated Labor Union (Union, for
brevity), the latter submitted to the Company its economic and political demands. These were not met
by the Company, hence a deadlock ensued.
On June 27, 1989, the Union filed a notice of strike with Regional Office No. VII of the National
Conciliation and Media-
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61
tion Board, Department of Labor and Employment, which was docketed as NCMB-RBVII-NS-06-050-89.
After all conciliation efforts had failed, the Union went on strike on August 8,1989 and the Company's
operations were completely paralyzed.
Subsequently, three other labor cases involving the same parties were filed with the National Labor
Relations Commission (NLRC) to wit:
1. International Pharmaceuticals, Inc. vs. Associated Labor Union, NLRC Case No. VII-09-0810-89,1 a
petition for injunction and damages with temporary restraining order filed by the Company against the
Union and some of its members for picketing the Company's establishment in Cebu, Davao, and Metro
Manila allegedly without the required majority of the employees approving and agreeing to the strike
and with simulated strike votes, in direct violation of the provisions of their collective bargaining
agreement and in total and complete defiance of the provisions of the Labor Code;
2.Associated Labor Union vs. International Pharmaceuticals, Inc., et al., NLRC Case No. VII-08-0715-89,2
a complaint for unfair labor practice with prayer for damages and attorney's fees filed by the Union
against the Company, its personnel manager, and the Workers Alliance of Trade Unions (WATU) as a
result of the Company's refusal to include the sales workers in the bargaining unit resulting in a deadlock
in the bargaining negotiations; for coddling the respondent WATU as a separate bargaining agent of the
sales workers despite a contrary ruling of the Med-Arbiter; and undue interference by the Company in
the right of the workers to self-organization through harassment and dispersal of a peaceful picket
during the strike; and
3. International Pharmaceuticals, Inc., et al. vs. Associated Labor Union, NLRC Case No. VII-08-0742-89,3
a petition to declare the strike illegal with prayer for damages filed by the Company alleging, among
others, that the notice of strike filed by the Union with the National Conciliation and Mediation Board
did not conform with the requirements of the Labor Code, and that the Union, in violation of the Labor
Code provisions on the conduct of the strike, totally blockaded and continued to blockade the ingress
and egress of the Company's premises by human barricades, placards, benches and other obstructions,
completely paralyzing its business operations.
_______________
1 Annex "G," Petition; rollo, 41-50.
2 Rollo, 90-102.
3 Annex "H," Petition; rollo, 51-58.
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62
Meanwhile, considering that the Company belongs to an industry indispensable to national interest, it
being engaged in the manufacture of drugs and pharmaceuticals and employing around 600 workers,
then Acting Secretary of Labor, Ricardo C. Castro, invoking Article 263(g) of the Labor Code, issued an
order dated September 26,1989 assuming jurisdiction over the aforesaid case docketed as NCMB-RBVII-
NS-06-050-89 and directing the parties to return to the status quo before the work stoppage. The
decretal portion of the order reads:
"WHEREFORE, PREMISES CONSIDERED, this Office hereby assumes jurisdiction over the labor dispute at
the International Pharmaceuticals, Incorporated pursuant to Article 263(g) of the Labor Code, as
amended.
"Accordingly, all striking workers are hereby directed to return to work and management to accept them
under the same terms and conditions prevailing before the work stoppage, within twenty four (24)
hours from receipt of this Order. Management is directed to post copies of this Order in three (3)
conspicuous places in the company premises.
"The parties are likewise ordered to cease and desist from committing any and all acts that will prejudice
either party and aggravate the situation as well as the normalization of operations.
"SO ORDERED."4
On January 15, 1990, the Union filed a motion in NCMBRBVII-NS-06-050-85, the case over which
jurisdiction had been assumed by the Secretary of Labor and Employment (hereafter referred to as the
Secretary), seeking the consolidation of the three NLRC cases (NLRC Cases Nos. VII-09-081-89, VII-
080715-89, and VII-08-0742-89) with the first stated case.
In an order dated January 31, 1990, Secretary of Labor Ruben D. Torres granted the motion and ordered
the consolidation of the three NLRC cases with NCMB-RBVII-NS-06-050-89, as follows:
"WHEREFORE, finding the Associated Labor Union's Motion to be meritorious, the same is granted and
NLRC Cases Nos. VII-09-
_______________
4 Rollo, 30-31.
63
63
0810-89, VII-08-0715-89 and VII-08-0742-89 are hereby ordered consolidated with the instant
proceedings. The Labor Arbiter handling the same is directed to immediately transmit the records of the
said cases to the Asst. Regional Director, DOLE Regional Office No. 7 who has been designated to hear
and receive the evidence of the parties.
"SO ORDERED."5
The Company's subsequent motion for reconsideration of the order consolidating the cases was denied
by the Secretary on March 5, 1990.6 Thereafter, the Assistant Regional Director of Regional Office No.
VII, as directed, assumed jurisdiction over the consolidated cases and set the same for reception of
evidence.
Petitioner Company now comes to this Court assailing the aforesaid orders and alleging grave abuse of
discretion on the part of the public respondent in the issuance thereof. The Union, as the bargaining
agent of the rank and file workers of the Company, was impleaded as the private respondent.
Petitioner Company submits that the exclusive jurisdiction to hear and decide the three NLRC cases
abovespecified is vested in the labor arbiter as provided in paragraph (a) (1) and (5) of Article 217 of the
Labor Code.
Moreover, petitioner insists that there is nothing in Article 263(g) of the Labor Code which directs the
labor arbiter to hold in abeyance all proceedings in the NLRC cases and await instruction from the
Secretary. Otherwise, so it postulates, Section 6, Rule V of the Revised Rules of the NLRC which is
invoked by the Secretary is null and void since it orders the cessation of all proceedings before the labor
arbiter and orders him to await instructions from the Secretary in labor disputes where the Secretary
has assumed jurisdiction, thereby amending Article 263(g) of the Labor Code by enlarging the
jurisdiction of the Secretary.
Petitioner further contends that, granting arguendo that Section 6, Rule V of the Revised Rules of the
NLRC is in accordance with Article 263(g) of the Labor Code, still the Secretary should not have ordered
the consolidation of the three unfair labor
_______________
5 Rollo, 35.
6 Annex "D," Petition; rollo, 36-37.
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64
practice cases with NCMB-RBVII-NS-06-050-89, since the Secretary assumed jurisdiction only over the
deadlock in the negotiation of the collective bargaining agreement and the petition for contempt as a
result of the said deadlock.
Respondents, on the other hand, assert that the authority to assume jurisdiction over labor disputes,
vested in the Secretary by Article 263(g) of the Labor Code, extends to all questions and incidents arising
therein causing or likely to cause strikes or lockouts in industries indispensable to national interest.
Moreover, respondents counter that Section 6, Rule V of the Revised Rules of the NLRC is in accordance
with Article 263(g) of the Labor Code, notwithstanding the provisions of Article 217 of the Labor Code.
To rule otherwise, they point out, would encourage splitting of jurisdiction, multiplicity of suits, and
possible conflicting findings and decisions which could only result in delay and complications in the
disposition of the labor disputes.
It was also stressed that the three NLRC cases which respondent Secretary ordered consolidated with
the labor dispute over which he had assumed jurisdiction arose from or are directly related to and are
incidents of the said labor dispute.
Finally, respondents invoke the rule that all doubts in the implementation and interpretation of the
Labor Code provisions should be resolved in favor of labor. By virtue of the assailed orders, the Union
and its members were relieved of the burden of having to litigate their interrelated cases in different
fora.
There are three governing labor law provisions which are determinative of the present issue of
jurisdiction, viz.:
1. Article 217(a) (1) and (5) of the Labor Code which provides:
"Art. 217. Jurisdiction of Labor Arbiters and the Commission—(a) Except as otherwise provided under
this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, x x x the
following cases involving all workers. x x x
xxx
of strikes and lockoutsx x x."
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65
2. Article 263(g) of the Labor Code which declares:
"(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an
arbitration. x x x."
3. Section 6, Rule V of the Revised Rules of the NLRC which states:
"Section 6. Disposition of cases.—xxx
Provided, that when the Minister (Secretary) of Labor and Employment has assumed jurisdiction over a
strike or lockout dispute or certified the same to the Commission, the parties to such dispute shall
immediately inform the Minister (Secretary) or the Commission as the case may be, of all cases between
them pending before any Regional Arbitration Branch, and the Labor Arbiter handling the same of such
assumption or certification, whereupon all proceedings before the Labor Arbiter concerning such cases
shall cease and the Labor Arbiter shall await instructions from the Minister (Secretary) or the
Commission."
The foregoing provisions persuade us that the Secretary did not gravely abuse his discretion when he
issued the questioned orders.
As early as 1913, this Court laid down in Herrera vs. Baretto, et al.7 the fundamental normative rule that
jurisdiction is the authority to hear and determine a cause—the right to act in a case. However, this
should be distinguished 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.8
In the present case, the Secretary was explicitly granted by Article 263(g) of the Labor Code the
authority to assume juris-
_______________
7 25 Phil. 245 (1913).
8 De la Cruz vs. Moir, etc., et al., 36 Phil. 213 (1917); Cf. Associated Labor Union, et al., vs. Ramolete,
etc., et al, 13 SCRA 582 (1965).
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66
diction 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 controversies arising
therefrom, including cases over which the labor arbiter has exclusive jurisdiction.
Moreover, Article 217 of the Labor Code is not without, but contemplates, exceptions thereto. This is
evident from the opening proviso therein reading "(e)xcept as otherwise provided under this Code x x
x." Plainly, Article 263(g) of the Labor Code was meant to make both the Secretary (or the various
regional directors) and the labor arbiters share jurisdiction, subject to certain conditions.9 Otherwise,
the Secretary would not be able to effectively and efficiently dispose of the primary dispute. To hold the
contrary may even lead to the absurd and undesirable result wherein the Secretary and the labor arbiter
concerned may have diametrically opposed rulings. As we have said, "(i)t is fundamental that a statute is
to be read in a manner that would breathe life into it, rather than defeat it."10
In fine, the issuance of the assailed orders is within the province of the Secretary as authorized by Article
263(g) of the Labor Code and Article 217(a) (1) and (5) of the same Code, taken conjointly and rationally
construed to subserve the objective of the jurisdiction vested in the Secretary.
Our pronouncement on this point should be distinguished from the situation which obtained and our
consequent ruling in Servando's, Inc. vs. The Secretary of Labor and Employment, et al.11 wherein we
referred to the appropriate labor arbiter a case previously decided by the Secretary. The said case was
declared to be within the exclusive jurisdiction of the labor arbiter since the aggregate claims of each of
the employees involved exceeded P5,000.00. In Servando, the Secretary invoked his visitorial and
enforcement powers to assume jurisdiction over the case, the exclusive and original jurisdiction of which
belongs to
_______________
9 Briad Agro Development Corp. vs. De la Serna, etc., et al., 174 SCRA 524, 532(1989).
10 Id., id., at 533.
11 G.R. No. 85840, June 5, 1991.
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67

the labor arbiter. We said that to uphold the Secretary would empower him, under his visitorial powers,
to hear and decide an employee's claim of more than P5,000.00. We held that he could not do that and
we, therefore, overruled him.
In the present case, however, by virtue of Article 263(g) of the Labor Code, the Secretary has been
conferred jurisdiction over cases which would otherwise be under the original and exclusive jurisdiction
of labor arbiters. There was an existing labor dispute as a result of a deadlock in the negotiation for a
collective bargaining agreement and the consequent strike, over which the Secretary assumed
jurisdiction pursuant to Article 263(g) of the Labor Code. The three NLRC cases were just offshoots of
the stalemate in the negotiations and the strike. We, therefore, uphold the Secretary's order to
consolidate the NLRC cases with the labor dispute pending before him and his subsequent assumption
of jurisdiction over the said NLRC cases for him to be able to competently and efficiently dispose of the
dispute in its totality.
Petitioner's thesis that Section 6, Rule V of the Revised Rules of the NLRC is null and void has no merit.
The aforesaid rule has been promulgated to implement and enforce Article 263(g) of the Labor Code.
The rule is in harmony with the objectives sought to be achieved by Article 263(g) of the Labor Code,
particularly the Secretary's assumption of jurisdiction over a labor dispute and his subsequent
disposition of the same in the most expeditious and conscientious manner. To be able to completely
dispose of a labor dispute, all its incidents would have to be taken into consideration. Clearly, the
purpose of the questioned regulation is to carry into effect the broad provisions of Article 263(g) of the
Labor Code.
By and large, Section 6, Rule V of the Revised Rules of the NLRC is germane to the objects and purposes
of Article 263(g) of the Labor Code, and it is not in contradiction with but conforms to the standards the
latter requires. Thus, we hold that the terms of the questioned regulation are within the statutory
power of the Secretary to promulgate as a necessary implementing rule or regulation for the
enforcement and administration of the Labor Code, in accordance with Article 5 of the same Code.
Besides, to uphold petitioner Company's arguments that the
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68
NLRC cases are alien and totally separate and distinct from the deadlock in the negotiation of the
collective bargaining agreement is to sanction split jurisdiction which is obnoxious to the orderly
administration of justice.12
Moreover, the rule is that all doubts in the interpretation and implementation of labor laws should be
resolved in favor of labor. In upholding the assailed orders of the Secretary, the Court is only giving
meaning to this rule. The Court should help labor authorities provide workers immediate access to their
rights and benefits, without being hampered by arbitration or litigation processes that prove to be not
only nerve-wracking, but financially burdensome in the long run.13 Administrative rules of procedure
should be construed liberally in order to promote their object and assist the parties, especially the
workingman, in obtaining just, speedy, and inexpensive determination of their respective claims and
defenses. By virtue of the assailed orders, the Union and its members are relieved of the burden of
litigating their interrelated cases in different tribunals.
WHEREFORE, there being no grave abuse of discretion committed by the Secretary of Labor and
Employment, the petition at bar is hereby DISMISSED.
SO ORDERED.
Melencio-Herrera (Chairman), Paras and Padilla, JJ., concur.
Nocon, J., No part. Did not take part in the deliberations.
Petition dismissed.
Note.—The power of the Secretary of Labor under Art. 263(g) of the Labor Code, to assume jurisdiction
over a labor dispute tainted with national interest to certify the same for compulsory arbitration, has
not been expressly nor impliedly repealed. (Union of Filipro Employees vs. Nestlé Philippines, Inc., 192
SCRA 396.)
——o0o——
_______________
12 Associated Labor Union vs. Gomez, et al., 19 SCRA 304 (1967).
13 Maternity Children's Hospital vs. Secretary of Labor, 174 SCRA 632, 647 (1989).
69
© Copyright 2017 Central Book Supply, Inc. International Pharmaceuticals, Inc. vs. Secretary of Labor,
205 SCRA 59, G.R. Nos. 92981-83 January 9, 1992
396
Union of Filipro Employees vs. Nestlé Philippines, Inc.
G.R. Nos. 88710-13. December 19, 1990.*
UNION OF FILIPRO EMPLOYEES (UFE), MANUEL L. SARMIENTO, BENJAMIN M. ALTAREJOS, RODOLFO

D. PAGLINAWAN, CARMELITA G. NUQUI, CORAZON Y. SAZON, RODRIGO P. LUCAS, RUDOLPH C.
ARMAS, EDUARDO A. ABELLA, ANGEL A. CANETE, JUANITO T. CAPILI, ADOLFO S. CASTILLO, JR.,
PONCIANO A. CARINGAL, ERIBERTO S. LEONARDO, ADELAIDA B. MIRA, EUGENIA C. NUÑEZ, PAZ B.
SAN JOSE, VENUSITO S. SOLIS, EMMANUEL S. VILLENA, ALFONSO R. RICAFRENTE, MELANIO C. LANTIN,
AMADOR M. MONTOJO, RODOLFO M. MUNSOD, RENATO P. DIAZ, RODRIGO M. URGELLES, CARLOS B.
SAN JOSE, EUSTAQUIO E. BUNYI, NELSON P. CENTENO, SOTERO A. GACUTAN, GUILLERMO G. DE
BORJA, DIONISIO H. NIPALES, EUGENIO S. SAN PEDRO, MANUEL DELA FUENTE, CARLO MEDINA, CESAR
B. PONCE, JORGE B. CASTRO, JR., RICARDO AREVALO, REY M. BEO, FELIX ESGUERRA, REYNALDO
ALMENANZA, MELITON C. ROXAS (as represented by his surviving spouse, MA. CORAZON ROXAS),
ROMEO A. ARANDELA, ISIDRO A. NATIVIDAD, EMILIANO M. SAYAO, CELSO J. CENIDO, PAUL C.
MEJARES, SILVERIO C. PAMPANG, DIONISIO S. CANLOBO, GILBERT C. NOBLE, RODOLFO D.
CALONGCALONG, SR., PEPITO Q. QUITLONG, DIONISIO C. COMPLETO, ANTONIO T. AVELINO,
ANGELITO PAYABYAB, ISAIAS A. RIEZA, DEODITO M. BELARMINO, QUEZON G. MATEO, CARLITO PRE,
CIPRIANO P. LUPEBA, EFREN P. DINSAY, WILDON C. BARROS, SUSAN A. BERRO, MANUEL A. LAVIN,
ROY U. BACONGUIS, JEROME T. FIEL, ANASTACIO G. CABALLERO, JR., ROGELIO E. RAIZ, JOSE T. ISIDTO,
ANGELITO M. ANICIETE, RAUL ROBERTO C. NANQUIL, LIZA T. VILLANUEVA, CESAR S. CRUZ, REYNALDO
L. CALIGUIA, ERNESTO M. SOLOMON, OSCAR G. AGUINALDO, DIEGO P. OLIVA, JAIME D. NILLAS,
ELPIDIO A. HERMOCILLA, DANTE L. ESCOSURA, FEDERICO P. CONTEMPRATO, LAURO C. MAKILING,
RENATO O. MINDANAO, RAFAEL C. TURA AND QUINTIN J. PEDRIDO,
_______________
* FIRST DIVISION.
397
397
JR., petitioners, vs. NESTLÉ PHILIPPINES, INC., NATIONAL LABOR RELATIONS COMMISSION, HON.
EDUARDO G. MAGNO, HON. ZOSIMO T. VASALLO and HON. EVANGELINE S. LUBATON, respondents.
Labor Relations; Unions; Strikes; Compulsory Arbitration; The power of the Secretary of Labor under
Art. 263 (g) of the Labor Code, to assume jurisdiction over a labor dispute tainted with national
interest or to certify the same for compulsory arbitration, has not been expressly, nor impliedly
repealed.—At the outset, UFE questions the power of the Secretary of Labor under Art. 263(g) of the
Labor Code to assume jurisdiction over a labor dispute tainted with national interests, or to certify the
same for compulsory arbitration. UFE contends that Arts. 263 and 264 are based on the 1973
Constitution, specifically Sec. 9 of Art. II thereof, the pertinent portion of which reads: "Sec. 9. x x x.
The State may provide for compulsory arbitration." (p. 801, Rollo) UFE argues that since the aforecited
provision of Sec. 9 is no longer found in the 1987 Constitution, Arts. 263(g) and 264 of the Labor Code
are now "unconstitutional and must be ignored." We are not persuaded. We agree with the Solicitor
General that on the contrary, both provisions are still applicable. We quote: "Article 7 of the New Civil
Code declares that: 'Article 7. Laws are repealed only by subsequent ones, and their violation or non-
observance shall not be excused by disuse or custom or practice to the contrary. x x x.' "In the case at
bar, no law has ever been passed by Congress expressly repealing Articles 263 and 264 of the Labor
Code. Neither may the 1987 Constitution be considered to have impliedly repealed the said Articles
considering that there is no showing that said articles are inconsistent with the said Constitution.
Moreover, no court has ever declared that the said articles are inconsistent with the 1987
Constitution. "On the contrary, the continued validity and operation of Articles 263 and 264 of the
Labor Code has been recognized by no less than the Congress of the Philippines when the latter
enacted into law R.A. 6715, otherwise known as Herrera Law, Section 27 of which amended
paragraphs (g) and (i) of Article 263 of the Labor Code.
Same; Same; Same; Same; Assumption and certification orders are executory in character and are to
be strictly complied with by the parties even during the pendency of any petition questioning their
validity.—UFE completely misses the underlying principle embodied in Art. 264(g) on the settlement
of labor disputes and this is, that assumption and certification orders are executory in character and
are to be strictly complied with by the parties even during the pendency of
398
398
Union of Filipro Employees us. Nestlé Philippines, Inc.
any petition questioning their validity. This extraordinary authority given to the Secretary of Labor is
aimed at arriving at a peaceful and speedy solution to labor disputes, without jeopardizing national
interests. Regardless therefore of their motives, or the validity of their claims, the striking workers
must cease and/or desist from any and all acts that tend to, or undermine this authority of the
Secretary of Labor, once an assumption and/or certification order is issued. They cannot, for instance,
ignore return-to-work orders, citing unfair labor practices on the part of the company, to justify their
actions.
Same; Same; Same; Same; A strike undertaken despite the issuance by the Secretary of Labor of an
assumption or certification order becomes a prohibited activity, and thus, illegal.—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 illegal, pursuant to the second paragraph of Art. 264 of the
Labor Code as amended (Zamboanga Wood Products, Inc. v. NLRC, G.R. 82088, October 13, 1989; 178
SCRA 482). The Union officers and members, as a result, are deemed to have lost their employment
status for having knowingly participated in an illegal act.
Same; Same; Same; Same; Cooling-off period, mandatory in character.—The prescribed mandatory
cooling-off period and then 7day strike and after submission of the report of strike vote at Nestlé's
Makati Offices and Muntinlupa and Cabuyao Plants were not complied with (NLRC-NCR-12-4007-85 &
NCR-1-295-86), while no notice of strike was filed by respondents when they staged the strike at
Nestle's Cagayan de Oro Plant (RABX-2-0047-86) contrary to the pertinent provision of Articles 263
and 264 of the Labor Code, emphasizing that "the mandatory character of these cooling-off periods
has already been categorically ruled upon by the Supreme Court."
PETITION to review the decision of the National Labor Relations Commission.
Banzuela, Flores, Miralles, Raneses, Sy, Taquio & Associates for petitioners.
Siguion Reyna, Montecillo & Ongsiako for private respondent.
MEDIALDEA, J.:
This petition assails the decision of the NLRC, dated Novem-
399
399
ber 2,1988 on the consolidated appeals of petitioners, the dispositive portion of which provides as
follows:
"1. In NLRC Case No. NCR-12-4007-85 and NLRC Case No. NCR-1-295-86—
a. Declaring the strike illegal;
b. Declaring the following respondent union officers, namely; M.L. Sarmiento, B.M. Altarejos, R.D.
Paglinawan, C.G. Nuqui, C.Y. Sazon, R. Armas, E. Abella, A.A. Cañete, A.B. Mira, P.C. Caringal, E.
Leonardo, E.C. Nuñez, P.D. San Jose, E. Villena, A. Ricafrente, M. Lantin, A. Montojo, R. Monsud, R. Diaz,
R. Urgelles, C. San Jose, E. Bunyi, N. Centeno, R. Gacutan, G. de Borja, N. Nipales, E. San Pedro, C. Ponce,
J. Castro, R. Beo, E. Quino, M. Roxas, R. Arandela, W. Ramirez, I. Natividad, S. Pampang, D. Canlobo, R.
Calong-Calong, G. Noble, E. Sayao, C. Cenido, P. Mijares, P. Quitlong, A. Avelino, L. Payabyab, I. Rieza, C.
Pre, D. Belarmino, to have lost their employment status;
c. Ordering the reinstatement of the following respondents-appellants: Juanito Capili, Carlo Medina,
Rodrigo Lucas, Adolfo Castillo, Jr., Venusito Solis, Ricardo Arevalo, Quezon G. Mateo, Jr., Dionisio
Completo, Felix Esguerra, Manuel dela Fuente and Reymundo Almenanza, to their former or equivalent
positions without loss of seniority rights but without backwages;
d. Declaring the union (UFE) guilty of unfair labor practice; and
e. Dismissing the union complaint for unfair labor practice.
2. In RAB-X-2-0047-86, the decision sought to be set aside is AFFIRMED and the individual respondents-
appellants namely: Roy Baconguis, Jerome T. Fiel, Efren P. Dinsay, Anastacio G. Caballero, Susan E.
Berro, Jose T. Isidto, Wilson C. Barros, Rogelio E. Raiz, Manuel A. Lavin, Cipriano P. Lupeba are hereby
declared to have lost their employment status;
3. In NLRC-00-09-0385-87, the challenged decision is likewise AFFIRMED, except as it affects Cesar S.

Cruz, who is ordered reinstated to his former or equivalent position without backwages." (pp. 417-418,
Rollo)
and the resolution dated March 7, 1989, quoted as follows:
"NLRC CASE NO. NCR-12-4007-85 entitled Union of Filipro Employees (UFE), Petitioner-Appellants,
versus, Filipro, Inc., et al., Respondents-Appellees, NLRC CASE NO. NCR-1-295-86 entitled Nestlé Phils.,
Inc., Petitioner-Appellee, versus, Union of Filipro Employees, et al., Respondents-Appellants, NLRC CASE
NO. RAB-X-2-
400
400
0047-86 entitled Nestlé Phils., Inc., Petitioner-Appellee, versus, Cagayan de Oro Filipro Workers Union-
WATU, et al., RespondentsAppellants, NCR-00-09-0385-87 entitled Union of Filipro Employees (UFE) and
its officers, Complainants-Appellants, versus, Nestlé Phils., et al., Respondents-Appellees. The
Commission sitting en banc, after deliberation, resolved to rectify par. 3 of the dispositive portion of our
November 2,1988 resolution by ordering the reinstatement of Quezon G. Mateo, Jr. and Dionisio
Completo to their former or equivalent position without backwages and to deny the motion for
reconsideration filed by appellants UFE and its Officials adversely affected by said resolution." (p. 429,
Rollo)
In a lengthy and voluminous petition, dwelling largely on facts, petitioner Union of Filipro Employees
and 70 union officers and a member (henceforth "UFE") maintain that public respondent NLRC had
acted with grave abuse of discretion in its affirmance of the decisions of the Labor Arbiters a quo,
declaring illegal the strikes staged by UFE.
Respondent NLRC premised its decision on the following sets of facts:

1.In NCR 12-4007-85 and NCR 1-295-86:
UFE filed a notice of strike on November 14, 1985, (BLR-NS11-344-85) with the Bureau of Labor
Relations against Filipro (now Nestlé Philippines, Inc., ["Nestlé"]). On December 4,1988, UFE filed a
complaint for Unfair Labor Practice (ULP) against Nestlé and its officials for violation of the Labor Code
(Art. 94) on Holiday Pay, non-implementation of the CBA provisions (Labor Management Corporation
scheme), Financial Assistance and other unfair labor practice (p. 381, Rollo).
Acting on Nestlé's petition seeking assumption of jurisdiction over the labor dispute or its certification to
the NLRC for compulsory arbitration, then Minister of Labor and Employment Blas F. Ople assumed
jurisdiction over the dispute and issued the following order on December 11, 1985:
"WHEREFORE, this Office hereby assumes jurisdiction over the labor dispute at Filipro, Inc. pursuant to
Article 264(g) of the Labor Code of the Philippines, as amended. In line with this assumption a strike,
lockout, or any other form of concerted action such as slowdowns, sitdowns, noise barrages during
office hours, which tend to
401
401
disrupt company operations, are strictly enjoined.
Let a copy of this Order be published in three (3) conspicuous places inside company premises for strict
compliance of all concerned." (p. 381-382, Rollo)
On December 20, 1985, UFE filed a petition for certiorari with prayer for issuance of temporary
restraining order, with this Court (G.R. No. 73129) assailing the assumption of jurisdiction by the
Minister. Notwithstanding the automatic injunction against any concerted activity, and an absence of a
restraining order, the union members, at the instigation of its leaders, and in clear defiance of Minister
Ople's Order of December 11, 1985, staged a strike and continued to man picket lines at the Makati
Administrative Office and all of Nestlé's factories and warehouses at Alabang, Muntinlupa, Cabuyao,
Laguna, and Cagayan de Oro City. Likewise, the union officers and members distributed leaflets to
employees and passersby advocating a boycott of company products (p. 383, Rollo).
On January 23, 1986, Nestlé filed a petition to declare the strike illegal (NCR-1-295-86) premised on
violation of the CBA provisions on "no strike/no lockout" clause and the grievance machinery provisions
on settlement of disputes.
On January 30, 1986, then Labor Minister Ople issued another Order, with this disposition:
"WHEREFORE, in line with the Order of December 11, 1985, this Office hereby orders all the striking
workers to report for work and the company to accept them under the same terms and conditions
prevailing before the work stoppage within forty eight (48) hours from notice of this Order.
The Director of Labor Relations is designated to immediately conduct appropriate hearings and meetings
and submit his recommendations to enable this Office to decide the issues within thirty (30) days," (p.
383, Rollo)
Despite receipt of the second order dated January 30, 1986, and knowledge of a notice caused to be
published by Nestlé in the Bulletin on February 1,1986, advising all workers to report to work not later
than February 3, 1986, the officers and members of UFE continued with the strike.
On February 4, 1986, the Minister B. Ople denied their
402
402
Union of Filipro Employees us. Nestlé Philippines, Inc.
motion for reconsideration of the return-to-work order portion as follows:
'WHEREFORE, the motion for reconsideration is hereby denied and no further motion of similar nature
shall be entertained.
"The parties are further enjoined from committing acts that will disrupt the peaceful and productive
relations between the parties while the dispute is under arbitration as well as acts considered illegal by
law for the orderly implementation of this Order like acts of coercion, harassment, blocking of public
thoroughfares, ingress and egress to company premises for lawful purposes or those undertaken
without regard to the rights of the other party.
"Police and military authorities are requested to assist in the proper and effective implementation of
this Order." (p. 384, Rollo)
UFE defied the Minister and continued with their strike. Nestlé filed criminal charges against those
involved.
On March 13, 1986, the new Minister of Labor and Employment, Augusto B. Sanchez, issued a
Resolution, the relevant portions of which stated thus:
"This Office hereby enjoins all striking workers to return-to-work immediately and management to
accept them under the same terms and conditions prevailing previous to the work stoppage except as
qualified in this resolution. The management of Nestlé Philippines is further directed to grant a special
assistance as suggested by this Ministry in an order dated 30 January 1986 to all striking employees
covered by the bargaining units at Makati, Alabang, Cabuyao and Cagayan de Oro City in an amount
equivalent to their weighted average monthly basic salary, plus the cash conversion value of the
vacation leave credits for the year 1986, payable not later than five (5) days from the date of the actual
return to work by the striking workers." (p. 385, Rollo)
On March 17, 1986, the strikers returned to work.

On March 31, 1986, We granted UFE's Motion to Withdraw its Petition for Certiorari (G.R. No. 73129) (p.
385, Rollo).
On April 23, 1986, Minister Sanchez rendered a Decision, the dispositive portion of which reads:
"WHEREFORE, the Union charge for unfair labor practices is hereby dismissed for want of merit. Nestlé
Philippines is hereby di-
403
403
rected to make good its promise to grant an additional benefit in the form of bonus equivalent to one
(1) month's gross compensation to all employees entitled to the same in addition to the one-month
weighted average pay granted by this office in the return-to-work Order." (p. 786, Rollo)
On June 6, 1986, Minister Sanchez modified the foregoing decision as follows:
"WHEREFORE, our 23 April 1986 Decision is hereby modified as follows:
"1. Nestlé Philippines is directed to pay the Anniversary bonus equivalent to one month basic salary to
all its employees in lieu of the one month gross compensation previously ordered by this office." (p. 787,
Rollo)
On November 13, 1987, after trial on the merits, Labor Arbiter Eduardo G. Magno issued his decision,
disposing as follows:
"WHEREFORE, judgment is hereby rendered:
"1. Declaring the strike illegal.
"2. Declaring all the respondent union officers, namely: M.L. Sarmiento, R.M. Alterejos, R.D. Paglinawan,
C.G. Nuqui, C.Y. Sazon, R. Lucas, R. Armas, E. Abella, A.A. Cañete, J.T. Capili, A.S. Castillo, Jr., P.C.
Caringal, E. Leonardo, E.B. Mira, E.C. Nuñez, P.D. San Jose, V. Solis, E. Villena, A. Ricafrente, M. Lantin, A.
Mortojo, R. Munsod, R. Diaz, R. Urgelles, C. San Jose, E. Bunyi, N. Centeno, R. Gacutan, G. de Borja, N.
Nipales, E. San Pedro, M. de la Fuente, C. Medina, C. Ponce, J. Castro Jr., R. Arevalo, R. Beo, F. Esguerra,
R. Almenanza, E. Quino, M. Roxas, R. Arandela, W. Ramirez, I. Natividad, S. Pampang, D. Canlobo, G.
Noble, E. Sayao, C. Cenido, F. Mijares, R. CalongCalong, P. Quitlong, D. Completo, A. Avelino, L.
Payabyab, I. Rieza, D. Belarmino, Q. Mateo, and C. Pre to have lost their employment status.
"3. Declaring the union guilty of unfair labor practice; and
"4. Dismissing the Union complaint for unfair labor practice." (pp. 380-381, Rollo)
2.In RAB-X-2-0047-86:
Filipro (Nestlé) and the Cagayan de Oro Filipro Workers Union-WATU, renewed a 3-year contract, made
effective from December 1, 1984 up to June 30, 1987. Petitioners signed the CBA as the duly-elected
officers of the Union.
404
404
On January 19, 1985, the union officers, together with other members of the union sent a letter to
Workers Alliance Trade Unions (WATU), advising them "that henceforth we shall administer the CBA by
ourselves and with the help of the Union of Filipro Employees (UFE) to where we have allied ourselves."
WATU disregarded the unions's advice, claiming to be the contracting party of the CBA. UFE filed a
petition (Case No. CRD-M-88-326-85) for administration of the existing CBAs at Cebu, Davao and
Cagayan de Oro bargaining units against TUPAS and WATU.
From January 22, 1986 to March 14, 1986, the rank and file employees of the company staged a strike at
the instigation of the UFE officers, who had represented themselves as officers.
Nestlé filed a petition to declare the strike illegal. The strikers countered that their strike was legal
because the same was staged pursuant to the notice of strike filed by UFE on November 14, 1985 (BLR-
NS-11-344-85), of which they claim to be members, having disaffiliated themselves from CDO-
FWUWATU.
On November 24, 1987, Executive Labor Arbiter Zosimo Vasallo issued his decision, disposing as follows:
"WHEREFORE, in view of the foregoing, judgment is hereby rendered:
"1. Declaring the strike illegal;
"2. Declaring respondent union guilty of unfair labor practice; and
"3. Declaring the following individual respondent Union officers namely: Roy Y. Baconguis, Jerome T.
Fiel, Efren P. Dinsay, Anastacio G. Caballero, Susan E. Berro, Jose T. Isidto, Wilson C. Barros, Rogelio E.
Raiz, Manuel A. Lavin and Cipriano P. Lupeba to have lost their employment status." (p. 388, Rollo)
3.In NCR-00-09-03285-87
(a) On August 13, 1986, UFE, its officers and members staged a walkout from their jobs, and participated
in the Welga ng Bayan. Nestlé filed a petition to declare the walkout illegal (NLRC Case No. SRB-IV-1831-
87) (p. 392, Rollo);
(b) On September 21,1986, complainants (UFE) again did not proceed to their work, but joined the
picket line in sympathy
405
405
with the striking workers of Southern Textile Mills, which became the subject of an Illegal Strike Petition
(NLRC Case SRB-IV-11831-87) (p. 392, Rollo);
(c) On November 12, 1986, UFE its officers and members just left their work premises and marched
towards Calamba in a demonstration over the slaying of a labor leader, x x x hence a complaint for Illegal
Walkout (NLRC Case No. SRB-IV-183387) was filed by Nestlé (p. 392, Rollo);
(d) On December 4,1986, UFE filed a Notice of Strike with the Bureau of Labor Relations (BLR-NS-12-531-
86) (to protest the unfair labor practices of Nestlé, such as hiring of contractual workers to perform
regular jobs and wage discrimination) (p. 392, Rollo);
(e) On December 23, 1986, then Minister Augusto S. Sanchez certified the labor dispute to the
Commission for compulsory arbitration, strictly enjoining any intended or actual strike or lockout (p.
392, Rollo);
(f) On August 18, 1987, UFE union officers and members at the Cabuyao factory again abandoned their
jobs and just walked out, leaving unfinished products on line and raw materials leading to their spoilage.
The walk-out resulted in economic losses to the company. Nestlé filed a Petition to Declare the Walkout
Illegal. (NLRC Case No. SRB-IV-3-1898-87) (p. 407, Rollo);
(g) On August 21, 1987, UFE union officers and members at the Alabang factory also left their jobs in
sympathy with the walkout staged by their Cabuyao counterparts. Nestlé filed again a Petition to
Declare the Strike Illegal (NLRC-NCR-Case No. 00-08-03003-87) (p. 407, Rollo);
(h) On August 27, 1987, UFE union members at the Alabang and Cabuyao factories, in disregard of the
Memorandum of Agreement entered into by the Union and Management on August 21, 1987, (to exert
their best efforts for the normalization of production targets and standards and to consult each other on
any matter that may tend to disrupt production to attain industrial peace) participated in an indignation
rally in Cabuyao because of the death of two (2) members of PAMANTIC, and in Alabang because one of
their members was allegedly mauled by a policeman during the nationwide strike on August 26, 1987 (p.
408, Rollo);
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406

(i) On September 4, 1987, around 6:00 P.M. all sections at the Alabang factory went on a 20-minute
mealbreak simultaneously, contrary to the agreement and despite admonition of supervisors, resulting
in complete stoppage of their production lines. Responsible officials namely: Eugenio San Pedro, Carlos
Jose, and Cesar Ponce, were suspended from work for six (6) days without pay (p. 408, Rollo);
(j) From September 5 to 8, 1987, at the instigation of UFE union officers, all workers staged a sitdown
strike; and
(k) On September 7, 1987, Cabuyao's culinary section's union members sympathized with the sitdown
strike at Alabang, followed at 12:30 P.M. by the whole personnel of the production line and certain
areas in the Engineering Department. These sitdown strikes at the Alabang and Cabuyao factories
became the subject of two separate petitions to declare the strike illegal (NCR-Case No. 00-09-03168-87
and SRB-IB-9-1903-87, respectively) (p. 408, Rollo);
(1) On September 8, 1987, Hon. F. Drilon issued the following order:
"All the workers are hereby directed to return to work immediately, refrain from resorting to any further
slowdown, sitdown strike, walkout and any other kind of activities that may tend to disrupt the normal
operations of the company. The company is directed to accept all employees and to resume normal
operations.
Parties are likewise directed to cease and desist from committing any and all acts that would aggravate
the situation." (p. 394, Rollo)
(m) Despite the order, UFE staged a strike on September 11, 1987, without notice of strike, strike vote
and in blatant defiance of then Labor Minister Sanchez's certification order dated November 23, 1986
and Secretary Drilon's return-to-work order dated September 8, 1987." (p. 409, Rollo);
(n) Nestlé sent individual letter of termination dated September 14, 1987 dismissing them from the
service effective immediately for knowingly instigating and participating in an illegal strike, defying the
order of the Secretary of Labor, dated September 8, 1987, and other illegal acts (pp. 394-395, Rollo).
On September 22, 1987, UFE filed a complaint for Illegal Dismissal, ULP and damages (NLRC NCR-00-
03285-87). Labor Arbiter Evangeline Lubaton ruled on both issues of dismissal
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407
and strike legality, upon the premise that the issue on validity of the dismissal of the individual
complainants from employment "depends on the resolution of the issue on whether or not the strike
declared by complainants was illegal."
The decision dated January 12,1988, disposed as follows:

"WHEREFORE, in view of the foregoing, judgment is hereby rendered:
1. Dismissing the instant complaint for lack of merit; and
2. Confirming the dismissal of all individual complainants herein as valid and legally justified." (p. 376,
Rollo)
UFE appealed, assailing the three decisions, except that rendered in Case No. NLRC-NCR-12-4007-85
(Complaint for Unfair Labor Practice Against UFE) "because it was already rendered moot and academic
by the return to work agreement and order dated March 10 and 13, 1986, respectively." (p. 49, Rollo)
Upon UFE's subsequent motion, the three appeals were ordered consolidated and elevated to the NLRC
en banc (p, 95, Rollo).
The NLRC affirmed the unanimous decisions of the three labor arbiters which declared the strikes illegal,
premised on the view that "the core of the controversy rests upon the legality of the strikes."
In the petition before Us, UFE assigns several errors (pp. 63321, Rollo), which We have summarized as
follows:
1. that Articles 263 and 264 are no longer good laws, since compulsory arbitration has been curtailed
under the present Constitution.
2. that the question on the legality of the strike was rendered moot and academic when Nestlé
management accepted the striking workers in compliance with the return-to-work order of then
Minister of Labor Augusto Sanchez dated March 13, 1986, (citing the case of Bisayan Land
Transportation Co. v. CIR (102 Phil. 439) and affirmed in the case of Feati University Faculty Club (PAFLU)
v. Feati University, G.R. No. L-31503, August 15, 1974, 58 SCRA 395).
3. that the union did not violate the no-strike/no lockout clause, considering that the prohibition applies
to eco
408
408
nomic strikes, pursuant to Philippine Metal Foundries v. CIR, G.R. No. L-34948-49, May 15, 1979, 90
SCRA 135. UFE, it is claimed, premised their strike on a violation of the labor standard laws or non-
payment of holiday pay, which is, in effect, a violation of the CBA.
4. on the commission of illegal and prohibited acts which automatically rendered the strike illegal, UFE
claimed that there were no findings of specific acts and identities of those participating as to render
them liable (ESSO Phils. v. Malayang Manggagawa sa ESSO, G.R. No. L-36545, January 26, 1977, 75 SCRA
72; Shell Oil Workers Union v. CIR, G.R. No. L-28607, February 12, 1972, 43 SCRA 224). By holding the
officers liable for the illegal acts of coercion, or denial of free ingress and egress, without specifying and
finding out their specific participation therein, the Labor Arbiter resorted to the principle of vicarious
liability which has since been discarded in the case of Benguet Consolidated v. CIR, G.R. No. L-24711,
April 30, 1968, 23 SCRA 465.
We agree with the Solicitor General that the petition failed to show that the NLRC committed grave
abuse of discretion in its affirmance of the decisions of the Labor Arbiters a quo.
At the outset, UFE questions the power of the Secretary of Labor under Art. 263(g) of the Labor Code to
assume jurisdiction over a labor dispute tainted with national interests, or to certify the same for
compulsory arbitration. UFE contends that Arts. 263 and 264 are based on the 1973 Constitution,
specifically Sec. 9 of Art. II thereof, the pertinent portion of which reads:
"Sec. 9. x x x. The State may provide for compulsory arbitration." (p. 801, Rollo)
UFE argues that since the aforecited provision of Sec. 9 is no longer found in the 1987 Constitution, Arts.
263(g) and 264 of the Labor Code are now "unconstitutional and must be ignored."
We are not persuaded. We agree with the Solicitor General that on the contrary, both provisions are still
applicable.
We quote:
409
409
"Article 7 of the New Civil Code declares that:
'Article 7. Laws are repealed only by subsequent ones, and their violation or non-observance shall not be
excused by disuse or custom or practice to the contrary.
x x x.'
"In the case at bar, no law has ever been passed by Congress expressly repealing Articles 263 and 264 of
the Labor Code. Neither may the 1987 Constitution be considered to have impliedly repealed the said
Articles considering that there is no showing that said articles are inconsistent with the said
Constitution. Moreover, no court has ever declared that the said articles are inconsistent with the 1987
Constitution.
"On the contrary, the continued validity and operation of Articles 263 and 264 of the Labor Code has
been recognized by no less than the Congress of the Philippines when the latter enacted into law R.A.
6715, otherwise known as Herrera Law, Section 27 of which amended paragraphs (g) and (i) of Article
263 of the Labor Code.
"At any rate, it must be noted that Articles 263 (g) and 264 of the Labor Code have been enacted
pursuant to the police power of the State, which has been defined as the power inherent in a
Government to enact laws, within constitutional limits, to promote the order, safety, health, morals and
general welfare of society (People vs. Vera Reyes, 67 Phil. 190). The police power, together with the
power of eminent domain and the power of taxation, is an inherent power of government and does not
need to be expressly conferred by the Constitution. Thus, it is submitted that the argument of
petitioners that Articles 263 (g) and 264 of the Labor Code do not have any constitutional foundation is
legally inconsequential." (pp. 801-803, Rollo)
On the issue of the legality of the strike committed, UFE seeks to absolve itself by pointing out qualifying
factors such as motives, good faith, absence of findings on specific participation and/or liability, and
limiting the no-strike provision to economic strikes.
UFE completely misses the underlying principle embodied in Art. 264(g) on the settlement of labor
disputes and this is, that assumption and certification orders are executory in character and are to be
strictly complied with by the parties even during the pendency of any petition questioning their validity.
This extraordinary authority given to the Secretary of Labor is aimed at arriving at a peaceful and speedy
solution to labor
410
410
disputes, without jeopardizing national interests.
Regardless therefore of their motives, or the validity of their claims, the striking workers must cease
and/or desist from any and all acts that tend to, or undermine this authority of the Secretary of Labor,
once an assumption and/or certification order is issued. They cannot, for instance, ignore return-towork
orders, citing unfair labor practices on the part of the company, to justify their actions. Thus, the NLRC in
its decision, re-emphasized the nature of a return-to-work order within the context of Art. 264(g) as
amended by BP Nos. 130 and 227:
"x x x
"One other point that must be underscored is that the return-towork order is issued pending the
determination of the legality or illegality of the strike. It is not correct to say that it may be enforced only
if the strike is legal and may be disregarded if the strike is illegal, for the purpose precisely is to maintain
the status quo while the determination is being made. Otherwise, the workers who contend that their
strike is legal can refuse to return to work to their work and cause a standstill on the company
operations while retaining the positions they refuse to discharge or allow the management to fill.
Worse, they will also claim payment for work not done, on the ground that they are still legally
employed although actually engaged in the activities inimical to their employer's interest. (Italics
supplied)
"This is like eating one's cake and having it too, and at the expense of the management. Such an unfair
situation surely was not contemplated by our labor laws and cannot be justified under the social justice
policy, which is a policy of fairness to both labor and management. Neither can this unseemly
arrangement be sustained under the due process clause as the order, if thus interpreted, would be
plainly oppressive and arbitrary.
"x x x" (p. 415, Rollo)
Also, in the cases of Sarmiento v. Judge Tuico, (G.R. No. 75271-73; Asian Transmission Corporation v.
National Labor Relations Commission, G.R. 77567, 27 June 88,162 SCRA 676). We stated:
"The return to work order does not so much confer 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 option or voluntariness but of
411
411
obligation. The worker must return to his job together with his coworkers so the operations of the
company can be resumed and it can continue serving the public and promoting its interest."
We also wish to point out that an assumption and/or certification order of the Secretary of Labor
automatically results in a return-to-work of all striking workers, whether or not a corresponding order
has been issued by the Secretary of Labor. Thus, the striking workers erred when they continued with
their strike alleging absence of a return-to-work order. Article 264(g) is clear. Once an
assumption/certification order is issued, strikes are enjoined, or if one has already taken place, all
strikers shall immediately return to work.
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 illegal, pursuant to the second paragraph of
Art. 264 of the Labor Code as amended (Zamboanga Wood Products, Inc. v. NLRC, G.R. 82088, October
13, 1989; 178 SCRA 482). The Union officers and members, as a result, are deemed to have lost their
employment status for having knowingly participated in an illegal act.
The NLRC also gave the following reasons:
1. The strike was staged in violation of the existing CBA provisions on "No Strike/No Lockout Clause"
stating that a strike, which is in violation of the terms of the collective bargaining statement, is illegal,
especially when such terms provide for conclusive arbitration clause (Liberal Labor Union vs. Phil. Can
Co., 91 Phil. 72; Phil. Airlines vs. PAL Employees Association, L-8197, October 31, 1958). The main
purpose of such an agreement is to prevent a strike and it must, therefore, be adhered to strictly and
respected if their ends are to be achieved (pp. 397-398, Rollo).
2. Instead of exhausting all the steps provided for in the grievance machinery provided for in the
collective bargaining agreement to resolve the dispute amicably and harmoniously within the plant
level, UFE went on strike (p. 398, Rollo).
3. The prescribed mandatory cooling-off period and then 7-day strike and after submission of the report
of
412
412
strike vote at Nestlé's Makati Offices and Muntinlupa and Cabuyao Plants were not complied with
(NLRC-NCR-124007-85 & NCR-1-295-86), while no notice of strike was filed by respondents when they
staged the strike at Nestlé's Cagayan de Oro Plant (RABX-2-0047-86) contrary to the pertinent provision
of Articles 263 and 264 of the Labor Code, emphasizing that "the mandatory character of these cooling-
off periods has already been categorically ruled upon by the Supreme Court" (National Federation of
Sugar Workers (NFSW) vs. Ovejera, et al., 114 SCRA 354) (p. 402, Rollo).
4. In carrying out the strike, coercion, force, intimidation, violence with physical injuries, sabotage, and
the use of unnecessary and obscene language or epithets were committed by the respondent officials
and members of either UFE or WATU. It is well-settled that a strike conducted in this manner is illegal
(United Seamen's Union vs. Davao Shipowners Association, 20 SCRA 1226). In fact, criminal cases were
filed with the Makati Fiscal's Office (p. 402, Rollo).
Thus, the NLRC correctly upheld the illegality of the strikes and the corresponding dismissal of the
individual complainants because of their "brazen disregard of successive lawful orders of then Labor
Ministers Blas F. Ople, Augusto Sanchez and Labor Secretary Franklin Drilon dated December 11, 1985,
January 30, 1986 and February 4, 1986, respectively, and the cavalier treatment of the provisions of the
Labor Code and the return-towork orders of the Minister (now Secretary) of Labor and Employment, or
Articles 264 and 265 (now renumbered Arts. 263 and 264), providing in part as follows:
"ART. 263. Strikes, picketing and lockouts.—
xxx xxx xxx
"(g) When in his opinion there exists a labor dispute causing or likely to cause strikes or lockouts
adversely affecting the national interest, such as may occur in but not limited to public utilities,
companies engaged in the generation or distribution of energy, banks, hospitals, and export-oriented
industries including those within export processing zones, the Minister of Labor and Employment shall
assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory
413
413
workers under the same terms and conditions prevailing before the strike or lockout. The Minister may
with such orders as he may issue to enforce the same. (Italics supplied)
"The foregoing notwithstanding, the President of the Philippines shall not be precluded from
determining the industries wherein (sic) his opinion labor disputes may adversely affect the national
interest, and from intervening at any time and assuming jurisdiction over any labor dispute adversely
affecting the national interest in order to settle or terminate the same.
xxx xxx xxx
ART. 264. Prohibited activities.—
(a) No labor organization or employer shall declare a strike or lockout without first having bargained
collectively in accordance with Title VII of this Book or without first having filed the notice required in
the preceding Article or without the necessary strike or lockout vote first having been obtained and
reported to the Ministry.
No strike or lockout shall be declared after assumption of jurisdiction by the President or the Minister or
after certification or submission of the dispute to compulsory or voluntary arbitration or during the
pendency of cases involving the same grounds for the strike or lockout. " ([pp. 399-401, Rollo]) (Italics
supplied)
On the alleged lack of jurisdiction of Labor Arbiter Lubaton, NLRC has clarified that the question on the
legality of strike was properly resolved by the Labor Arbiter, not only because the question is perfectly
within the original and exclusive jurisdiction of the Labor Arbiter to adjudicate, but also because the
issue was not subsumed by the Order of Labor Minister Sanchez, dated December 23, 1986, certifying
the Notice of Strike dated December 4, 1986 for compulsory arbitration, further clarifying that the issue
of whether or not the strike staged on September 11, 1987 by UFE and its officials and members was
illegal is a prejudicial question to the issue of whether or not the
414
414
Union of Filipro Employees vs. NLRC
complainants were illegally dismissed. We shall not belabor the issue any further.
ACCORDINGLY, the petition is DISMISSED, and the decision of public respondent NLRC, dated November
2,1988, and its Resolution, dated March 7, 1989, are both AFFIRMED in their entirety. No costs.
SO ORDERED.
Narvasa (Chairman), Gancayco and Griño-Aquino, JJ., concur.
Petition dismissed. Decision and resolution affirmed.
Note.—A strike which continued despite its certification for arbitration violates PD 823. (Arica vs.
Ministry of Labor, 137 SCRA 267.)
——o0o——
© Copyright 2017 Central Book S Union of Filipro Employees vs. Nestlé Philippines, Inc., 192 SCRA 396,
G.R. Nos. 88710-13 December 19, 1990

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GOVERNING LAW

VOL. 200, AUGUST 8, 1991

Oca, Jr. vs. Trajano

G.R. No. 76189. August 8, 1991.*

SUPREME COURT REPORTS ANNOTATED

Oca, Jr. vs. Trajano

D.T. Dagum, Jr. and P.T. De Quiroz for petitioners.

Isidro D. Amoroso for respondent Carlos T. Rullamas.

A.B. Serquina and Lagman for private respondents.

VOL. 200, AUGUST 8, 1991

Oca, Jr. vs. Trajano

1 BLR Case No. 08-82.

2 Annex “A-1”, Petition, p. 16, Rollo.

3 Annex “A-2”, Petition, p. 17, Rollo.

SUPREME COURT REPORTS ANNOTATED

Oca, Jr. vs. Trajano

5 Annex “B”, Petition, p. 18, Rollo.

6 pp. 290-293, Rollo.

VOL. 200, AUGUST 8, 1991

Oca, Jr. vs. Trajano

ARTICLE VII—NATIONAL CONVENTION

ARTICLE VIII—THE NATIONAL EXECUTIVE BOARD

SUPREME COURT REPORTS ANNOTATED

Oca, Jr. vs. Trajano

found by the public respondent Director7:

c. Or upon call of the National President at his initiative;

d. Or upon petition of at least 1/4 of its members for a special meeting.8

7 Annex “A-1”, supra.

8 pp. 274-275, Rollo.

VOL. 200, AUGUST 8, 1991

Oca, Jr. vs. Trajano

10 Annex “A-1”, supra.

11 As cited in Baranda vs. Gustillo, 165 SCRA 757.

12 pp. 292-293, Rollo, Emphasis ours.

SUPREME COURT REPORTS ANNOTATED

Oca, Jr. vs. Trajano

Gutierrez, Jr., Feliciano, Bidin and Davide, Jr., JJ., concur.

VOL. 200, AUGUST 9, 1991

Ancheta vs. Court of Appeals

RIGHTS AND OBLIGATIONS OF MEMBERS

SUPREME COURT REPORTS ANNOTATED

Ferrer vs. National Labor Relations Commission

G.R. No. 100898. July 5, 1993.*

VOL. 224, JULY 5, 1993

Ferrer vs. National Labor Relations Commission

SUPREME COURT REPORTS ANNOTATED

Ferrer vs. National Labor Relations Commission

Same; Same; Same; Same; While termination of employment is traditionally considered a

VOL. 224, JULY 5, 1993

Ferrer vs. National Labor Relations Commission

for while termination of employment is traditionally considered a management prerogative, it is not

The facts are stated in the opinion of the Court.

Generosa P. Jacinto and Raymundo D. Mallilin for private respondents.

The petition for certiorari before us seeks to annul and set

SUPREME COURT REPORTS ANNOTATED

Ferrer vs. National Labor Relations Commission

On January 5, 1989, the Samahang Manggagawa ng Occiden-tal Foundry Corporation-FFW (SAMAHAN)

xxx xxx xxx

VOL. 224, JULY 5, 1993

Ferrer vs. National Labor Relations Commission

Mr. Hui Kam Chang

Dear Mr. Chang:

SUPREME COURT REPORTS ANNOTATED

Ferrer vs. National Labor Relations Commission