Collective Bargaining (Art 250-259)

#101 General Milling Corp vs CA GR 146728, Feb 11, 2004

[G.R. No. 146728. February 11, 2004]

GENERAL MILLING CORPORATION, petitioner, vs. HON. COURT OF APPEALS, GENERAL MILLING
CORPORATION INDEPENDENT LABOR UNION (GMC-ILU), and RITO
MANGUBAT, respondents.

DECISION
QUISUMBING, J.:

Before us is a petition for certiorari assailing the decision[1] dated July 19, 2000, of the Court of Appeals in CA-
G.R. SP No. 50383, which earlier reversed the decision[2] dated January 30, 1998 of the National Labor Relations
Commission (NLRC) in NLRC Case No. V-0112-94.
The antecedent facts are as follows:
In its two plants located at Cebu City and Lapu-Lapu City, petitioner General Milling Corporation (GMC)
employed 190 workers. They were all members of private respondent General Milling Corporation Independent Labor
Union (union, for brevity), a duly certified bargaining agent.
On April 28, 1989, GMC and the union concluded a collective bargaining agreement (CBA) which included the
issue of representation effective for a term of three years. The CBA was effective for three years retroactive to
December 1, 1988. Hence, it would expire on November 30, 1991.
On November 29, 1991, a day before the expiration of the CBA, the union sent GMC a proposed CBA, with a
request that a counter-proposal be submitted within ten (10) days.
As early as October 1991, however, GMC had received collective and individual letters from workers who stated
that they had withdrawn from their union membership, on grounds of religious affiliation and personal
differences. Believing that the union no longer had standing to negotiate a CBA, GMC did not send any counter-
proposal.
On December 16, 1991, GMC wrote a letter to the unions officers, Rito Mangubat and Victor Lastimoso. The
letter stated that it felt there was no basis to negotiate with a union which no longer existed, but that management was
nonetheless always willing to dialogue with them on matters of common concern and was open to suggestions on how
the company may improve its operations.
In answer, the union officers wrote a letter dated December 19, 1991 disclaiming any massive disaffiliation or
resignation from the union and submitted a manifesto, signed by its members, stating that they had not withdrawn
from the union.
On January 13, 1992, GMC dismissed Marcia Tumbiga, a union member, on the ground of incompetence. The
union protested and requested GMC to submit the matter to the grievance procedure provided in the CBA. GMC,
however, advised the union to refer to our letter dated December 16, 1991. [3]
Thus, the union filed, on July 2, 1992, a complaint against GMC with the NLRC, Arbitration Division, Cebu
City. The complaint alleged unfair labor practice on the part of GMC for: (1) refusal to bargain collectively; (2)
interference with the right to self-organization; and (3) discrimination. The labor arbiter dismissed the case with the
recommendation that a petition for certification election be held to determine if the union still enjoyed the support of
the workers.
The union appealed to the NLRC.
 On January 30, 1998, the NLRC set aside the labor arbiters decision. Citing Article 253-A of the Labor Code, as
amended by Rep. Act No. 6715,[4] which fixed the terms of a collective bargaining agreement, the NLRC ordered
GMC to abide by the CBA draft that the union proposed for a period of two (2) years beginning December 1, 1991,
the date when the original CBA ended, to November 30, 1993. The NLRC also ordered GMC to pay the attorneys
fees.[5]
In its decision, the NLRC pointed out that upon the effectivity of Rep. Act No. 6715, the duration of a CBA,
insofar as the representation aspect is concerned, is five (5) years which, in the case of GMC-Independent Labor Union
was from December 1, 1988 to November 30, 1993. All other provisions of the CBA are to be renegotiated not later
than three (3) years after its execution. Thus, the NLRC held that respondent union remained as the exclusive
bargaining agent with the right to renegotiate the economic provisions of the CBA. Consequently, it was unfair labor
practice for GMC not to enter into negotiation with the union.
The NLRC likewise held that the individual letters of withdrawal from the union submitted by 13 of its members
from February to June 1993 confirmed the pressure exerted by GMC on its employees to resign from the union. Thus,
the NLRC also found GMC guilty of unfair labor practice for interfering with the right of its employees to self-
organization.
With respect to the unions claim of discrimination, the NLRC found the claim unsupported by substantial
evidence.
On GMCs motion for reconsideration, the NLRC set aside its decision of January 30, 1998, through a resolution
dated October 6, 1998. It found GMCs doubts as to the status of the union justified and the allegation of coercion
exerted by GMC on the unions members to resign unfounded. Hence, the union filed a petition for certiorari before
the Court of Appeals. For failure of the union to attach the required copies of pleadings and other documents and
material portions of the record to support the allegations in its petition, the CA dismissed the petition on February 9,
1999. The same petition was subsequently filed by the union, this time with the necessary documents. In its resolution
dated April 26, 1999, the appellate court treated the refiled petition as a motion for reconsideration and gave the
petition due course.
On July 19, 2000, the appellate court rendered a decision the dispositive portion of which reads:

WHEREFORE, the petition is hereby GRANTED. The NLRC Resolution of October 6, 1998 is hereby SET
ASIDE, and its decision of January 30, 1998 is, except with respect to the award of attorneys fees which is hereby
deleted, REINSTATED.[6]

A motion for reconsideration was seasonably filed by GMC, but in a resolution dated October 26, 2000, the CA
denied it for lack of merit.
Hence, the instant petition for certiorari alleging that:
I
THE COURT OF APPEALS DECISION VIOLATED THE CONSTITUTIONAL RULE THAT NO
DECISION SHALL BE RENDERED BY ANY COURT WITHOUT EXPRESSING THEREIN
CLEARLY AND DISTINCTLY THE FACTS AND THE LAW ON WHICH IT IS BASED.
II
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN REVERSING THE
DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION IN THE ABSENCE OF ANY
FINDING OF SUBSTANTIAL ERROR OR GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OR EXCESS OF JURISDICTION.
III
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN NOT APPRECIATING THAT THE
NLRC HAS NO JURISDICTION TO DETERMINE THE TERMS AND CONDITIONS OF A
COLLECTIVE BARGAINING AGREEMENT.[7]
 Thus, in the instant case, the principal issue for our determination is whether or not the Court of Appeals acted
with grave abuse of discretion amounting to lack or excess of jurisdiction in (1) finding GMC guilty of unfair labor
practice for violating the duty to bargain collectively and/or interfering with the right of its employees to self-
organization, and (2) imposing upon GMC the draft CBA proposed by the union for two years to begin from the
expiration of the original CBA.
On the first issue, Article 253-A of the Labor Code, as amended by Rep. Act No. 6715, states:

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 execution....

The law mandates that the representation provision of a CBA should last for five years. The relation between
labor and management should be undisturbed until the last 60 days of the fifth year. Hence, it is indisputable that when
the union requested for a renegotiation of the economic terms of the CBA on November 29, 1991, it was still the
certified collective bargaining agent of the workers, because it was seeking said renegotiation within five (5) years
from the date of effectivity of the CBA on December 1, 1988. The unions proposal was also submitted within the
prescribed 3-year period from the date of effectivity of the CBA, albeit just before the last day of said period. It was
obvious that GMC had no valid reason to refuse to negotiate in good faith with the union. For refusing to send a
counter-proposal to the union and to bargain anew on the economic terms of the CBA, the company committed an
unfair labor practice under Article 248 of the Labor Code, which provides that:

ART. 248. Unfair labor practices of employers. It shall be unlawful for an employer to commit any of the
following unfair labor practice:

...

(g) To violate the duty to bargain collectively as prescribed by this Code;

...

Article 252 of the Labor Code elucidates the meaning of the phrase duty to bargain collectively, thus:

ART. 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....

We have held that the crucial question whether or not a party has met his statutory duty to bargain in good faith
typically turn$ on the facts of the individual case. [8] There is no per se test of good faith in bargaining.[9] Good faith
or bad faith is an inference to be drawn from the facts. [10] The effect of an employers or a unions actions individually
is not the test of good-faith bargaining, but the impact of all such occasions or actions, considered as a whole. [11]
Under Article 252 abovecited, both parties are required to perform their mutual obligation to meet and convene
promptly and expeditiously in good faith for the purpose of negotiating an agreement. The union lived up to this
obligation when it presented proposals for a new CBA to GMC within three (3) years from the effectivity of the
original CBA. But GMC failed in its duty under Article 252. What it did was to devise a flimsy excuse, by questioning
the existence of the union and the status of its membership to prevent any negotiation.
It bears stressing that the procedure in collective bargaining prescribed by the Code is mandatory because of the
basic interest of the state in ensuring lasting industrial peace. Thus:
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 proposals. The other party shall make a reply thereto not later than ten (10) calendar days from
receipt of such notice.(Underscoring supplied.)

GMCs failure to make a timely reply to the proposals presented by the union is indicative of its utter lack of
interest in bargaining with the union. Its excuse that it felt the union no longer represented the workers, was mainly
dilatory as it turned out to be utterly baseless.
We hold that GMCs refusal to make a counter-proposal to the unions proposal for CBA negotiation is an
indication of its bad faith. Where the employer did not even bother to submit an answer to the bargaining proposals
of the union, there is a clear evasion of the duty to bargain collectively. [12]
Failing to comply with the mandatory obligation to submit a reply to the unions proposals, GMC violated its
duty to bargain collectively, making it liable for unfair labor practice. Perforce, the Court of Appeals did not commit
grave abuse of discretion amounting to lack or excess of jurisdiction in finding that GMC is, under the circumstances,
guilty of unfair labor practice.
Did GMC interfere with the employees right to self-organization? The CA found that the letters between
February to June 1993 by 13 union members signifying their resignation from the union clearly indicated that GMC
exerted pressure on its employees. The records show that GMC presented these letters to prove that the union no
longer enjoyed the support of the workers. The fact that the resignations of the union members occurred during the
pendency of the case before the labor arbiter shows GMCs desperate attempts to cast doubt on the legitimate status of
the union. We agree with the CAs conclusion that the ill-timed letters of resignation from the union members indicate
that GMC had interfered with the right of its employees to self-organization. Thus, we hold that the appellate court
did not commit grave abuse of discretion in finding GMC guilty of unfair labor practice for interfering with the right
of its employees to self-organization.
Finally, did the CA gravely abuse its discretion when it imposed on GMC the draft CBA proposed by the union
for two years commencing from the expiration of the original CBA?
The Code provides:

ART. 253. Duty to bargain collectively when there exists a collective bargaining agreement. ....It shall be the
duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the
existing agreement during the 60-day period [prior to its expiration date] and/or until a new agreement is reached by
the parties. (Underscoring supplied.)

The provision mandates the parties to keep the status quo while they are still in the process of working out their
respective proposal and counter proposal. The general rule is that when a CBA already exists, its provision shall
continue to govern the relationship between the parties, until a new one is agreed upon. The rule necessarily
presupposes that all other things are equal. That is, that neither party is guilty of bad faith. However, when one of the
parties abuses this grace period by purposely delaying the bargaining process, a departure from the general rule is
warranted.
In Kiok Loy vs. NLRC,[13] we found that petitioner therein, Sweden Ice Cream Plant, refused to submit any
counter proposal to the CBA proposed by its employees certified bargaining agent. We ruled that the former had
thereby lost its right to bargain the terms and conditions of the CBA. Thus, we did not hesitate to impose on the erring
company the CBA proposed by its employees union - lock, stock and barrel. Our findings in Kiok Loy are similar to
the facts in the present case, to wit:

petitioner Companys 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
objection thereto.[14]

Likewise, in Divine Word University of Tacloban vs. Secretary of Labor and Employment,[15] petitioner therein,
Divine Word University of Tacloban, refused to perform its duty to bargain collectively. Thus, we upheld the unilateral
imposition on the university of the CBA proposed by the Divine Word University Employees Union. We said further:

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 action which bespeak its insincerity, it has forfeited whatever
rights it could have asserted as an employer.[16]

Applying the principle in the foregoing cases to the instant case, it would be unfair to the union and its members
if the terms and conditions contained in the old CBA would continue to be imposed on GMCs employees for the
remaining two (2) years of the CBAs duration. We are not inclined to gratify GMC with an extended term of the old
CBA after it resorted to delaying tactics to prevent negotiations. Since it was GMC which violated the duty to bargain
collectively, based on Kiok Loy and Divine Word University of Tacloban, it had lost its statutory right to negotiate or
renegotiate the terms and conditions of the draft CBA proposed by the union.
We carefully note, however, that as strictly distinguished from the facts of this case, there was no pre-existing
CBA between the parties in Kiok Loy and Divine Word University of Tacloban. Nonetheless, we deem it proper to
apply in this case the rationale of the doctrine in the said two cases. To rule otherwise would be to allow GMC to have
its cake and eat it too.
Under ordinary circumstances, 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 allowed to resort with impunity to schemes
feigning negotiations by going through empty gestures. [17] Thus, by imposing on GMC the provisions of the draft
CBA proposed by the union, in our view, the interests of equity and fair play were properly served and both parties
regained equal footing, which was lost when GMC thwarted the negotiations for new economic terms of the CBA.
The findings of fact by the CA, affirming those of the NLRC as to the reasonableness of the draft CBA proposed
by the union should not be disturbed since they are supported by substantial evidence. On this score, we see no cogent
reason to rule otherwise. Hence, we hold that the Court of Appeals did not commit grave abuse of discretion amounting
to lack or excess of jurisdiction when it imposed on GMC, after it had committed unfair labor practice, the draft CBA
proposed by the union for the remaining two (2) years of the duration of the original CBA. Fairness, equity, and social
justice are best served in this case by sustaining the appellate courts decision on this issue.
WHEREFORE, the petition is DISMISSED and the assailed decision dated July 19, 2000, and the resolution
dated October 26, 2000, of the Court of Appeals in CA-G.R. SP No. 50383, are AFFIRMED. Costs against petitioner.
SO ORDERED.
#101a Union of Filipro Emp vs Nestle Phils GR 158930-31, Aug 22, 2006
UN IO N O F F I L IP RO EM PLO Y E ES - G. R. No . 1 5 8 9 3 0 - 3 1
DR U G, FOOD AN D A L LI E D
IN DU S TR I E S UN IO N S - K I L US AN G
M AYO UN O ( U FE - DF A - K M U) ,
Petit io n er,

- ve rs u s -

NE S T L P H I L IPP I N ES ,
IN CO R PO R A T ED,
Re spo n de nt .

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

NE S T L P H I L IPP I N ES , IN CO RPO RA T ED G. R. No . 1 5 8 9 4 4 - 4 5
Petit io n er,

P rese n t:
- ve rs u s -

P ANG ANIB AN, C.J .

C ha irp er so n,
UN IO N O F F I L IP RO EM PLO Y E ES - YN AR ES - S ANT IAGO
DR U G, FOOD AN D A L LI E D AU ST RI A - M ART IN E Z,
IN DU S TR I E S UN IO N S - K I L US AN G C ALLEJ O , S R ., a nd
M AYO UN O ( U FE - DF A - K M U) , CH IC O - N AZAR IO , JJ .
Re spo n de nt .

P ro mul g at ed :

Au g u s t 2 2 , 2 0 0 6
x------------------------------------------------------------------------- x

D E C I S I O N

CH I CO - NA ZA R IO , J .:

Th e Ca se

B efo r e t he Co ur t ar e t wo ( 2 ) p eti tio n s fo r re v ie w o n ce rt io ra r i u nd e r R ul e 4 5 o f t he

R ul e s o f Co ur t , a s a me n d ed . B o t h se e k t o a n n ul and s et as id e t he j o i n t: ( 1 ) Dec i sio n [ 1 ] d ated 2 7

Feb ruary 2 0 0 3 , and ( 2 ) Reso lu tio n [ 2 ] d ated 2 7 J une 2 0 0 3 , o f the Co urt o f Ap p eals in CA - G . R .

SP No . 6 9 8 0 5 [ 3 ] a nd No . 7 1 5 4 0 . [ 4 ]

G. R. No . 1 5 8 9 3 0 - 3 1 wa s fi led b y U nio n o f Fi li p ro E mp lo ye es Dr u g, F o o d and Al li ed

Ind u str ie s U nio n s Ki l u sa n g Ma yo U no (U F E - D F A- KM U) a ga i n st Ne st l P h il ip p i n es ,

Inco rp o rat ed ( Ne st l) se ek i n g t he r e ver se o f t h e Co u rt o f Ap p e al s Dec is io n i n so far a s t h e

lat ter s fai l ur e to ad j ud g e N e stl g u il t y o f u n fa ir lab o r p ra ct ice is co n ce rned , as we l l as t h e

Re so l utio n o f 2 7 J u ne 2 0 0 3 d en yi n g it s P art ia l Mo tio n fo r Re co ns id er at io n ; G. R . No . 1 5 8 9 4 4 -

4 5 wa s i n s ti t uted b y Ne s tl a g ai n st U FE - DF A- K M U s i mi lar l y see k i n g to a n n u l a nd se t a sid e t he

Dec is io n a nd Re so l u tio n o f t he Co ur t o f Ap p e al s d ec lari n g 1 ) t he Re tire me nt P l a n a val id

co ll ect i ve b ar g ai n i n g i s s ue ; a nd 2 ) t he s co p e o f a s s u mp t io n o f j uri s d ict io n p o wer o f t h e

Secr et ar y o f t he DO LE to b e li mi t ed to t h e re so l u tio n o f q ue s tio n s a nd ma tt ers p ert ai n i n g

me rel y to t h e gr o u nd r u le s o f t h e co ll ec ti ve b ar ga i ni n g ne go t i atio n s to b e co nd u cted b e t we e n

th e p ar ti es .

In a s mu c h a s t h e ca se s in vo l ve t h e s a me set o f p ar ti es ; aro se fro m t h e sa me s et o f

circ u ms t a nc es , i. e. , fr o m s e ver a l Or d er s i s s ued b y t h e n Se cret ar y o f t h e D ep ar t me n t o f Lab o r

and E mp lo y me n t ( DO L E) , H o n. P a t ri cia A. Sto . T o mas, re sp e ct i n g h er as s u mp tio n o f

j uri sd i ct io n o ver t he lab o r d i sp ute b e t we e n N e st l a nd U FE -D F A- K MU, Alab a n g a nd C ab u yao

Di v is io n s; [ 5 ] a nd li k e wi s e as sa il t h e sa me D eci s i o n a nd Re so l u tio n o f t h e Co urt o f Ap p ea l s, t h e

Co ur t o rd er ed t he co n so lid a tio n o f t h e t wo p e ti ti o n s. [ 6 ]

Th e Fa ct s

Fro m t h e r eco r d a nd t h e p lead i n gs fil ed b y t he p arti es , we c ul l t h e fo l l o wi n g ma ter ia l

fa ct s i n t h i s ca se :

O n 4 Ap r i l 2 0 0 1 , i n co n s id er a tio n o f t he i mp e nd i n g e xp ir at io n o f t he e xi s ti n g co l lec ti v e

b arg ai n i n g a g r ee me n t ( C B A) b e t we e n Ne st l a nd UFE - D F A- KM U [ 7 ] o n 5 J u ne 2 0 0 1 , [ 8 ] i n a l et ter

d eno mi n a ted a s a L et te r o f I n ten t , t h e P re sid e n ts o f t he Al ab a n g a nd C ab u ya o D i vi s io ns o f

UFE - D F A- KM U, Er ne s t o P asco a nd Dio sd ad o F o rt u na, re sp e ct i vel y, i n fo r med Ne st l o f t he ir

intent to o p en o ur new Co llective B argaining Nego tiatio n fo r the y ear 2 0 0 1 -2 0 0 4 x x x as ear l y

as J u ne 2 0 0 1 . [ 9 ]

In a le tt er [ 1 0 ] d at ed 1 0 Ap r i l 2 0 0 1 , N es tl ac k no wl ed g ed rec eip t o f t h e afo re me n tio n ed

let ter. I t a lso i n fo r med UFE - D F A- KM U t h at i t wa s p rep ar i n g i t s o wn co u n ter -p ro p o s al a nd

p ro p o sed gr o u nd r ul es t ha t s ha ll go v er n t h e co n d uc t o f t he co l lec ti ve b a rga i ni n g ne go t ia tio n s.

O n 2 9 M a y 2 0 0 1 , i n a no t her le tt er ad d r es sed to t h e U FE - DF A- K MU ( C ab u yao Di v i sio n),

Ne st l u nd er sco r ed it s p o si tio n t hat u n il a te ra l g ra n t s, o n e - ti me co mp a n y g ra n t s, co mp a n y -

in it ia t ed p o lic ie s a n d p ro g ra m s, wh ich in c lu d e, b u t a re n o t l im ited to th e R et i rem en t Pla n ,

In cid en ta l S t ra ig h t Du t y Pa y a n d Ca l lin g Pa y Pre miu m, a re b y th e i r v ery n a tu re n o t p ro p e r

su b j ect s o f C BA n eg o t i a tio n s a n d th e re fo re sh a ll b e e xc lu d ed th e ref r o m . [ 1 1 ] I n ad d it io n, it

clar i fi ed t ha t wi t h t h e clo s ur e o f t he Al ab a n g P l a nt, t he CB A ne go tia tio n s wi l l o nl y b e

ap p li cab l e to t he co ver ed e mp lo ye e s o f t he C a b u yao P la nt ; h e nce, t he Cab u ya o D i vi s io n o f

UFE - D F A- KM U b e ca me t he so l e b ar g ai n i n g u ni t i n vo l ved i n t he s ub j ec t CB A ne go t ia tio n s.

T her ea f ter , d ia lo g ue b et we e n t he co mp a n y a nd t he u n io n e n s u ed .

In a le tte r d a ted 1 4 Au g u st 2 0 0 1 , Ne st l, cl ai mi n g to h a ve rea c hed a n i m p as se i n s aid

d ialo g u e, r eq ue s ted [ 1 2 ] t he Nat io na l Co n ci li atio n a nd M ed ia tio n B o ard (NC MB ), Re gio n a l

O ffi ce No . I V, I mu s , C a vi te, to co nd uc t p r e ve nt i ve med iat io n p ro ceed i n g s b e t we e n it a nd U FE -

DF A- K MU. Ne st l all e ge d t ha t d e sp i te fi ftee n (1 5 ) mee ti n g s b e t we e n t he m , t h e p a rt ie s fai led to

reac h a n y a gr e e me n t o n th e p ro p o sed C BA . T h e req u es t wa s d o c ke ted a s N CM B - RBI V - CAB -

PM- 0 8 - 0 3 5 - 0 1 .

Co nc il ia tio n p r o ceed i n g s ne v ert h ele s s p ro v ed i n eff ec ti ve . Co mp l ai n i n g, in e s se nc e, o f

b arg ai n i n g d ead lo c k p er tai n i n g to e co no mi c i s s u es, i.e . , re tire me nt (p la n ), p an el co mp o s it io n,

co s ts a nd at te nd a nc e, a nd CB A, [ 1 3 ] U FE - DF A- KMU fi led a No t ice o f S tr ike [ 1 4 ] o n 3 1 Oc to b er

2 0 0 1 wi t h t he N CMB d o ck eted as N CM B - RBIV - LAG - NS - 1 0 - 0 3 7 - 0 1 . O n e wee k lat er, o r o n 0 7

No ve mb er 2 0 0 1 , a no t h er No ti ce o f S tr ike [ 1 5 ] wa s fi led b y t he U FE - DF A - K MU d o c ke ted

as NCMB - RBIV - LA G- NS - 1 1 - 1 0 - 0 3 9 - 0 1 , this time p red icated o n Nestls alleged unfair lab o r

p ract ice s i.e. , b a r gai n i n g i n b ad f ai t h i n t hat i t wa s se tt i n g p r e -co nd i tio n s i n t he g ro u nd r u le s

b y r e fu si n g to i nc l ud e t he i s s ue o f t h e Re ti re me nt P la n i n t h e CB A ne go tia tio n s. A s tri k e vo te

wa s t h e n co nd uct ed b y U FE - DF A- K MU o n 2 2 No ve mb er 2 0 0 1 . T he re s ul t wa s a n o ver wh el mi n g

ap p ro v al o f t he d ec i sio n to ho ld a str i ke. [ 1 6 ]

O n 2 6 No v e mb er 2 0 0 1 , i n vi e w o f t he lo o mi n g str i ke, Ne s tl fil ed wi th t he D O LE

a Pe ti tio n fo r A s su mp ti o n o f Ju r i sd ic tio n , [ 1 7 ] d o ck eted as OS - AJ -0 0 2 3 -0 1 , fu nd a me n tal l y

p ra yi n g t h at t he S ecr etar y o f t h e D O LE, Ho n. P at rici a A. S to . T o ma s, as s u me j uri sd ic tio n o ver

th e c urr e nt lab o r d i sp ute as ma n d a ted b y Art icl e 2 6 3 (g) o f t he Lab o r Co d e , as a me nd ed , t h ereb y

effec ti ve l y e nj o i n i n g a n y i mp e nd i n g str i ke a t t h e Ne s tl Cab u yao P la n t i n La g u na.

O n 2 9 No ve mb er 2 0 0 1 , Sec . S to . T o ma s i s s ued an O rd e r [ 1 8 ] i n O S - AJ -0 0 2 3 -0 1 , N C MB -

RB IV - C AV -P M -0 8 -0 3 5 - 0 1 , N CMB - RB I V - LAG - NS -1 0 -0 3 7 -0 1 & NC MB - RB I V - LAG - N S -1 1 -

1 0 -0 3 9 -0 1 as s u mi n g j ur isd ic tio n o ve r t he s ub j ec t lab o r d i sp ut e b et we e n t h e p ar tie s,

th e fa llo t he r eo f st at i n g th at :

CO N SI DE RI N G T HE F OR EG OIN G, t h is O ffic e her eb y

as s u me s j ur isd ic tio n o ver t h e l ab o r d i sp ut e a t t h e Ne st l
P hi lip p i ne s , I nc . ( Cab u yao P la nt) p urs u a nt to Artic le 2 6 3 ( g ) o f
th e Lab o r Co d e, as a me n d ed .

Acco r d i n gl y, a n y str i ke o r lo c ko u t i s h ereb y e nj o in ed . T h e

p ar ti es ar e d i r ec ted to c eas e a nd d e si s t fro m co m mi t ti n g a n y ac t
th at mi g h t le ad to t he fur t her d et erio r at io n o f t he c urr e nt l ab o r
r ela tio n s si t ua tio n.

T he p a r t ie s a r e fu rt he r d irec ted to mee t a nd co n ve n e fo r

th e d is c us s io n o f t he u ni o n p ro p o sal s a nd c o mp a n y co u n ter -
p r o p o sa ls b e fo r e t he N a tio na l Co n ci lia tio n a nd Med i at io n B o a rd
( N CMB ) wh o i s her eb y d es i g nat ed a s t he d e le g ate / fac il it ato r o f
th i s O f f ic e fo r t hi s p ur p o se. T he N CMB s ha ll r e p o rt to t hi s O ffice
th e r e s ul t s o f t hi s a tte m p t at co n ci lia tio n a n d d e li mi ta tio n o f t he
is s ue s wi t hi n t hi r t y ( 3 0 ) d a ys fro m t he p ar ti e s rece ip t o f t h is
Or d er , i n no ca se la ter t ha n De c e mb e r 3 1 , 2 0 0 1 . I f no set tl e me n t
o f a ll t he is s u es i s r ea c h ed , t hi s O ffi ce s ha ll t her ea ft er d e fi ne t h e
o ut s ta nd i n g i s s ue s a nd o rd er t h e fil i n g o f p o s it io n p ap ers fo r a
r u li n g o n t he mer i t s.
 UFE -DFA- KM U so ught r eco nsid eratio n [ 1 9 ] o f the ab o veq uo ted Assu mp t io n of

J uri sd ict io n Or d er o n t h e a ss er t io n t h at :

i. Ar ti cl e 2 6 3 ( g) o f t h e Lab o r Co d e , as a me n d ed , i s i n v al id a nd
u nco n s t i t ut io nal as it i s i n d ero ga tio n o f t he p ro v is io n s d ea li n g o n
p r o tec tio n to l ab o r , so cia l j u st ic e, t h e b il l o f r i g ht s, a nd , ge ner al l y
accep ted p r i nc ip le o f i n t ern at io na l l a w;

ii. c o mp ul so r y a r b itr a tio n as a mo d e o f d isp u te se tt le me n t p ro vi d ed fo r

in t h e Lab o r Co d e a nd s o urc ed fro m t h e 1 9 3 5 a n d 1 9 7 3 co n st it u tio n s ha s
b ee n d i sc ar d ed a nd d el e ted b y t h e N e w C har ter wh ic h i n st it u ted i n i ts
st ead fr ee co ll ec ti ve b ar ga i ni n g ;

iii . t ha t I LO co nd e mn s t he co n ti n uo u s e xe rci se b y t he Secr eta r y o f Lab o r

o f t he p o wer o f co mp u ls o r y arb i tra tio n ;

iv . gr a nt i n g t hat th e l a w i s va lid , t he S e cret ar y ha s u nco n s ti t ut i o na ll y

ap p li ed t h e l a w;

v. t ha t t he co mp an y i s a b u si n e ss e nt erp r is e no t b elo n g i n g to a n i nd u str y

ind i sp e n sab le to t h e na tio na l i n ter es t co n s id er in g t h at it i s o nl y o ne
a mo n g a n u mb er o f c o mp a n ie s i n t he co u n t r y p ro d uc i n g mi l k a nd
n ut r i tio na l p r o d u ct s; t h at t he Cab u ya o p l a nt i s o nl y o ne o f t h e si x (6 )
Ne st le p la n t s i n t he co u ntr y a nd co u ld rel y o n it s hi g h l y
au to ma ted C a ga ya n d e O ro p la n t fo r b u ffer sto c k s;

vi . t ha t t he S ecr e tar y ac ted wi t h g ra ve ab u se o f d i scre tio n i n i s s u in g t he

as sa iled o r d er wi t ho ut t he b e ne fit o f a p r io r no t ice a nd i nq u ir y.

In t he in te rr eg n u m , t he u ni o n i nterp o s ed a mo ti o n fo r e xte n s io n o f t i m e [ 2 0 ] to fil e it s

p o si tio n p ap er as d ir e ct e d b y t he As s u mp t io n o f J uri sd ict io n Ord er o f 2 9 No ve mb er 2 0 0 1 .

In a n O rd e r [ 2 1 ] d a ted 1 4 J an u ar y 2 0 0 2 , Sec . Sto . T o ma s d e n ied t he a fo r eq uo ted mo tio n

fo r r eco n sid er a tio n i n t h is wi s e:

T hi s i s no t t he fir s t t i me t ha t t h is O ffi ce had o cca sio n to re so l v e t h e

gro u nd s a nd ar g u me n t s n o w b ei n g ra is ed x x x. I n a mo re re ce n t ca se I n re : lab o r
d isp u te at T o yo ta Mo to r P hi lip p i ne s Co rp o r atio n x x x t h is O ffice r ul ed :

T he co n s tit u tio n al it y o f t he p o we r o f t he Se cret ar y o f

Lab o r u nd er Ar t ic le 2 6 3 ( g) o f t he Lab o r Co d e to a s s u me
j ur i sd i ct io n o v er a lab o r d isp u te i n a n i nd u s tr y ind is p e n sab l e to
th e na tio n al i nt er e st h a s b e e n up he ld a s a n e x erci se o f p o l ice
p o wer o f t he co ns ti t ut io n. x x x.

x x x x
 As r uled b y the Sup r eme Co urt in the P hiltread case:

Ar t icl e 2 6 3 ( g ) o f t he L ab o r Co d e d o es no t v io l ate
th e wo r ker s co n s ti t utio n al r i g ht to str i ke.

x x x x x x

T he fo r e go i n g art ic le clea rl y d o e s no t i n ter fere

wi t h t he wo r k ers r i g ht to s tri ke b u t me r el y
r eg u la te s it, wh e n i n t he e xer ci se o f s uc h r i g ht ,
na tio n al i nt er e st s wi ll b e a ffe cted .

O n 1 5 J a n uar y 2 0 0 2 , d e s p ite t he i nj u n ct io n [ 2 2 ] co nt ai n ed i n Se c. Sto . T o mas As s u mp tio n

o f J uri sd ict io n Or d er a n d co n ci lia tio n e ffo rt s b y t h e N C MB , t he e mp lo ye e me mb ers o f U FE -

DF A- K MU at t he Ne s tl Cab u ya o P la n t we n t o n s tri ke .

O n 1 6 J a n uar y 2 0 0 2 , i n co ns id er at io n o f t he ab o ve, Se c. Sto . T o ma s is s ued yet

ano t her O rd e r [ 2 3 ] d ir e ct i n g: ( 1 ) t he me mb er s o f U FE - D F A- KM U to re tu rn - to - wo rk wi t hi n

t we n t y- fo ur ( 2 4 ) ho ur s fr o m r ece ip t o f s uc h Ord er ; (2 ) Ne s tl to a cc ep t b a ck a ll re t ur ni n g

wo r ker s u nd er t he s a m e t er ms a nd co nd it io ns e xi s ti n g p rec ed i n g to t he str i ke; (3 ) b o t h

p arti es to c ea s e a n d d es is t fr o m co m mi tt i n g act s i n i mi ca l to t h e o n - go i n g co nc il iat io n

p ro ceed i n gs lead i n g to t he f ur t her d eter io ra tio n o f t h e s it u at i o n; a nd (4 ) th e su b m i ss io n o f th ei r

re sp e cti ve p o s it io n p a p e r s wi t h i n t e n (1 0 ) d a ys f ro m rece ip t t he reo f.

No t wi t hs ta nd i n g t he Re t u rn - To - Wo rk O rd e r , t he me mb er s o f UFE - D F A - K MU co n ti n u ed

wi t h t h eir s tr i ke a nd r e f u sed to go b ac k to wo r k as i n s tr uc ted . T h us , Se c. S to . T o ma s so u g h t

th e a s si s ta nc e o f t h e P hi lip p i n e N at io na l P o li ce (P NP ) fo r t he e n fo rc e me nt o f sa id o rd er.

At t he he ar i n g c al led o n 7 F eb r uar y 2 0 0 2 , N es tl a nd U FE - DF A- K M U fil ed t hei r

resp ect i ve p o si tio n p ap e r s. I n i t s p o s it io n p ap er , [ 2 4 ] N e st l ad d re s sed se v eral is s ue s a ll e ged l y

p erta i ni n g to t he c ur r e n t l ab o r d i sp u te, i.e. , e co no mi c p ro v i sio n s o f t he CB A a s we ll as t he

no n - i ncl u s io n o f t he i s s ue o f t he R et ire me n t P l an i n t he co lle ct i ve b ar ga i ni n g ne go tia tio n s.

UFE - D F A- KM U, i n co nt r as t, li mi t ed it se l f to ta c kl i n g t he so l ita r y is s ue o f wh e t her o r no t t he

retir e me n t p la n wa s a ma nd ato r y s ub j ec t i n it s CB A ne go t ia tio n s wi t h t h e co mp a n y o n t he

co ntentio n that the Or d er o f Assu mp tio n o f J urisd ictio n co vers o nly the issue o f Retire m e n t

P la n. [ 2 5 ]

O n 8 F eb r uar y 2 0 0 2 , Ne st l mo ved t ha t U FE - D F A- K MU b e d ec lared to ha v e wa i ved it s

ri g ht to p r es e nt a r g u me n ts r esp ect i n g t h e o t her i s s ue s ra is ed b y t he co mp a n y o n t h e g ro u nd t ha t

th e la tt er c ho s e to li mi t i t sel f to d is c u ss i n g o nl y o ne (1 ) i s s ue. S ec. Sto . T o ma s, i n

an O rd e r [ 2 6 ] d at ed 1 1 Fe b r ua r y 2 0 0 2 , ho we ver, d id no t se e fi t to gra n t sai d mo tio n. S h e i n s tead

allo wed U FE - DF A- K M U t he c h a nce to te nd er i t s s ta nd o n t he o t h er i ss u e s ra i sed b y N es tl b ut

no t co ver ed b y it s i n it ia l p o s it io n p ap er p ap er b y wa y o f a S u p p l em en ta l Po s it io n Pa p e r.

UFE - D F A- KM U a f ter war d fi led s e vera l p lead in g s : (1 ) a n Urg en t Mo tio n to F il e a

Rep ly d at ed 1 3 Feb r u ar y 2 0 0 2 ; ( 2 ) a Mo t io n fo r T im e to F ile S u p p lem en ta l Po si tio n

Pa p erd ated 2 2 Feb r uar y 2 0 0 2 ; a nd ( 3 ) a Ma n ife s t a tio n w ith Mo tio n fo r R eco n s id e ra t io n o f t h e

Ord er d a ted Feb ru a ry 1 1 , 2 0 0 2 d at ed 2 7 Feb r u a r y 2 0 0 2 . T he la tt er p l ea d in g wa s a n ab so l ute

co n trad ic tio n o f t he s ec o nd o ne p r a yi n g fo r ad d itio n al t i me to fi le t h e s ub j ec t s up p le me n ta l

p o si tio n p ap er . I n sa id Ma n i fe sta tio n , U FE - DF A- K MU e xp la i ned t h at it real ized t hat t he Ord er

o f Feb r u ar y 1 1 , 2 0 0 2 ap p ear s to b e co ntr ar y to l a w a nd j uri sp r ud e nce a n d is no t i n co n fo r mi t y

wi t h e xi st i n g l a ws a nd th e e v id e nce o n r eco rd , [ 2 7 ] a s t he Se cret ar y o f t he DO LE co uld o n l y

as s u me j uri sd i ct io n o v e r th e i ss u es me n t io ned in t he no t ice o f str i ke s ub j e c t o f t he c urr e nt

d isp u te. [ 2 8 ] UFE - D F A- K MU t he n we n t o n to c lar i fy t ha t t he A me nd ed No tic e o f Str i ke d id no t

cit e, a s o n e o f t h e gr o u n d s, t he CB A d ead lo c k.

O n 8 Mar c h 2 0 0 2 , S ec. Sto . T o ma s d e n ied t h e m o tio n fo r re co ns id er at io n o f U FE - D F A-

KMU .

Fr u str a ted wi t h t he f o r ego i n g t ur n o f e ve n ts, U FE -D F A- K MU fil ed a p et it io n

fo r ce rt io ra r i [ 2 9 ] wi t h ap p lic at io n fo r t he i s s ua n c e o f a t e mp o rar y r es tra i n in g o rd er o r a wr it o f

p reli mi nar y i nj u nct io n b efo r e t h e Co urt o f Ap p e a ls. T he p et it io n wa s p r ed ica ted o n t he q ue s tio n

o f wh e t her o r no t t h e DO LE Secr eta r y co m mi tted gra ve ab u se o f d is cret io n i n i s s ui n g t h e

Ord er s o f 1 1 Feb r u ar y 2 0 0 2 a nd 8 M arc h 2 0 0 2 .

 Meanwhi le, in an attemp t to finall y reso lve the crip p ling lab o r d isp ute b etwee n th e

p arti es , t he n Ac ti n g Secr et ar y o f t h e DO LE, Ho n . Art uro D . B r io n , ca me o ut wi t h

an O rd e r [ 3 0 ] d at ed 0 2 Ap r il 2 0 0 2 , i n t he ma i n, r u li n g t hat :

a. we her eb y r eco g n iz e t ha t t h e p re se n t R etir e me n t P la n at t he

Ne st l Cab u yao P la nt i s a u n il at eral gra n t t h at th e p ar ti es ha ve e xp re s sl y so
reco g ni zed s ub seq ue n t t o t he S up re me Co ur ts r ul i n g i n Ne st l, Ph i ls. I n c. v s.
N LR C, G.R . No . 9 0 2 3 1 , Feb ru a r y 4 , 1 9 9 1 , a nd i s t here fo re no t a ma n d ato r y
s ub j ect fo r b ar g ai n i n g;

b . t he U nio n s c har g e o f u n fai r lab o r p rac ti ce ag ai n st t h e Co mp a n y is

her eb y d i s mi s s ed fo r lac k o f meri t;

c. t he p ar ti e s a r e d ir e ct ed to sec ur e t he b e st a p p lic ab le ter ms o f t he

rece n tl y co nc l ud ed CB s b et wee n Ne s tl P h il s. I nc. a nd it ei g h t (8 ) o t her
b arg ai n i n g u ni t s, a nd to ad o p t t he se as t he ter ms a nd co nd i tio n s o f t he
Ne st l Cab u yao P la nt CB A;

d . al l u n io n d e ma nd s th at ar e no t co v ered b y t he p ro vi sio n s o f
th e CB As o f t he o t her ei g ht (8 ) b ar ga i ni n g u n it s i n t he Co mp a n y are her eb y
d en ied ;

e. al l e xi s ti n g p r o vi s io n s o f t he e xp ir ed Ne st l Cab u yao P la n t CB A
wi t h o ut a n y co u nt er p ar t i n t h e CB As o f t h e o t h er e i g ht b ar g ai n i n g u n it s i n t he
Co mp a n y ar e her eb y o r d er ed ma i nta i ned a s p ar t o f t h e ne w Ne st l Cab u ya o P la nt
CB A;

f. t he p ar tie s s h al l e x ec u te t he ir CB A wi t h i n t hir t y (3 0 ) d a ys fro m r ece ip t

o f t hi s Or d er , f ur ni s hi n g t hi s O ffi ce a co p y o f t h e s i g ned Ag re e me nt ;

g. t hi s CB A s ha ll, i n so far a s r ep re se n tat io n is co n cer ned , b e fo r a t er m

o f fi ve ( 5 ) ye ar s; a ll o t h er p r o v i sio n s s ha ll b e r e ne go ti ated no t l at er t ha n t h ree
(3 ) ye ar s a f ter it s e f fe ct i ve d a te wh i c h s ha ll b e D ece mb e r 5 , 2 0 0 1 (o r o n t he firs t
d a y s i x mo n t hs a ft er t h e ex p ir a tio n o n J u ne 4 , 2 0 0 1 o f t he s up erced ed C B A).

No t s u r p r i si n g l y , U FE - DF A- K MU mo ved to rec o n sid er t he a fo req uo ted p o si tio n o f t h e

DO LE.

O n 6 Ma y 2 0 0 2 , t he S e cr et ar y o f t h e DO LE, H o n. S to . T o mas , i s s ued t he l as t o f t he

as sa iled O rd er s. [ 3 1 ] T h i s o r d er r e so l v ed to d e n y t he p re ced i n g mo tio n fo r reco n s id era tio n o f

UFE - D F A- KM U.
 Und aunted still, UFE -DFA-K MU , fo r the seco nd time, went to the Co urt o f Ap p ea l s
li ke wi se vi a a p et it io n fo r ce r tio ra ri se e ki n g t o a n n u l, o n t he gro u n d o f gra v e ab u se o f
d is cret io n, t he Or d er s o f 0 2 Ap r i l 2 0 0 2 a nd 0 6 M a y 2 0 0 2 o f t h e Secr eta r y o f t he DO LE.

T he Co ur t o f Ap p e al s, a cti n g o n t h e t wi n p e ti tio n s fo r c er tio ra ri , d ete r m in ed t he is s u es

in fa vo r o f UFE - D F A- K MU i n a j o i nt De ci sio n d ated 2 7 F eb r uar y 2 0 0 3 . T he d isp o s it i ve p ar t
th ereo f s ta te s t h at :

W HE RE FO RE, i n v ie w o f t h e fo re go i n g , t here b ei n g gra ve ab u se o n t h e

p art o f t h e p ub li c r esp o nd e n t i n i ss u i n g al l t he as sa iled Ord er s, b o t h p e tit io n s
are her eb y G R ANT ED. T he a ss ai led Ord er s d a te d Feb r uar y 1 1 , 2 0 0 1 , a n d Marc h
8 , 2 0 0 1 ( C A - G . R. SP No . 6 9 8 0 5 ), a s we l l a s t h e Ord er s d a ted Ap ri l 2 , 2 0 0 2 and
Ma y 6 , 2 0 0 2 ( C A - G. R. S P No . 7 1 5 4 0 ) o f t h e Secr etar y o f Lab o r a nd E mp l o yme n t
in t he ca se e n ti tled : I N RE : LAB O R D ISP UT E AT NE ST L E P HI LIP P IN ES IN C.
(C AB UY AO F ACT O R Y ) u nd e r O S - AJ -0 0 2 3 -0 1 (N CMB - RB IV - C AV - P M-0 8 -
0 3 5 -0 1 , N C MB - RB I V - LAG - N S -1 0 -0 3 7 -0 1 , N C MB -RB I V - LAG - NS -1 1 -1 0 -
0 3 9 0 1 ) ar e h er eb y AN N U LLE D a nd S ET AS ID E. P ri va te re sp o nd e nt i s h ereb y
d irec ted to r e s u me t h e C B A ne go t ia tio n s wi t h t h e p et it io ner. [ 3 2 ]

Di s sat i s fi ed , both p ar ti es s ep ara te l y mo ved fo r t he r eco n s id era tio n of

th e ab o v eq uo ted d ec i sio n wi t h N e st l b a si ca ll y a s sai li n g t ha t p art o f t h e d eci s io n fi nd i n g t he
DO LE S ecre tar y to h a ve gr a v el y ab u sed her d i scr etio n wh e n s h e r ul ed t h a t t h e Ret ire me nt P la n
is no t a v al id i s s ue fo r c o lle ct i ve b ar ga i ni n g n e g o tia tio n s ; wh i le U FE - D F A- K MU q ue st io n s, i n
es se n ce, t he ap p el la te co ur ts d ec is io n i n ab so l v i n g Ne st l o f t he c h ar ge o f u n fa ir lab o r p r act ic e.

T he p ar ti e s e f fo r t s wer e al l fo r na u g h t a s t h e C o ur t o f Ap p e al s s to o d p at i n it s ear lie r

p ro no u nc e me n t s a nd d e n ied t he mo tio n s fo r re co n sid erat io n i n a j o i n t R e so l u tio n d a ted 2 7 J u ne
2003.

He nce , t h e se p et it io ns fo r r e vi e w o n ce r tio ra r i s ep ara te l y fil ed b y t h e p ar tie s. S aid

p eti tio n s wer e o r d er ed c o n so l id a ted i n a S up re m e Co u rt Re so l ut io n d a te d 2 9 Mar c h 2 0 0 4 .

Th e I s su e s

UFE - D F A- KM U s p e ti tio n f o r re v ie w d o c ket ed a s G. R. No . 1 5 8 9 3 0 -3 1 , i s p red ic ated o n

th e fo llo wi n g al le ged er r o r s:

I.
 T HE CO U RT OF AP P E ALS C OM MIT T ED A S ERI OU S E R R O R O F LAW IN
NOT HO LDI NG T H AT RE SP ON DE NT IS G UI LT Y O F U NF AI R LAB O R
P R ACT I C E I N RE F USI NG T O P R O CEE D W IT H T HE CB A N EG OT I AT IONS
UN LES S P ET I T I ONE R FI RST AD MIT S T H AT T HE R ET IRE MENT P LAN IN
T HE C OMP ANY I S A N ON - CB A M AT T ER ; a nd

II.

T HE CO NT ENT I ON T HAT T HE RE I S N O E VID EN CE OF U NF AI R

LAB O R P R ACT I CE ON RE SP O NDE NT NE ST LÉ ’S P ART AND T H AT
P ET IT I ONE R DI D N O T R AI S E T HE IS S UE OF U LP IN IT S AR G U MENT S
B EFO R E T HE CO U RT OF AP P E ALS I S GR O S S LY E R RO NEO U S. [ 3 3 ]

W her ea s i n G. R. No . 1 5 8 9 4 4 -4 5 , p e ti tio ner Ne st l ch al le n ge s t he co n cl u sio n o f t he Co ur t

o f Ap p ea l s o n t he b a s is o f t he fo llo wi n g i s s ue s:

I.

W HET HE R OR N OT T HE C OU RT O F AP P E ALS CO MMIT T ED S ERI OU S

ER R O R I N HO LDI NG T H AT T HE P OW E RS GR ANT ED T O T HE SE C R ET ARY
OF LAB O R T O RE S O LV E N AT IO N AL IN T EREST DISP UT ES UN DE R
ART I C LE 2 6 3 ( G) OF T HE LAB O R CO DE M AY B E LI MIT ED B Y A ( SE CO ND )
NOT I C E O F ST RI KE; a nd

II.

W HET HE R OR N OT T HE C OU RT O F AP P E ALS CO MMIT T ED S ERI OU S

ER R O R I N AN NU LI N G T HE SE C RET ARY OF LAB O R S J U DG MENT O N T HE
RET I R EME NT P LAN I SS UE W HI CH W AS ME RE LY A P ART O F T HE
CO MP LET E RE SO LUT I ON OF T HE LAB O R DI S P UT E. [ 3 4 ]

O n t he wh o l e, t h e co n so l id a ted c as es o n l y ra is e t hr ee (3 ) fu nd a me n tal i ss u es fo r
d elib era tio n b y t hi s Co u r t, t h at i s, wh et h er o r n o t t he Co urt o f Ap p e al s co m mi tted re ver s ib l e
erro r, f ir s t, i n f i nd i n g t he Secr etar y o f Lab o r and E mp lo y me n t to h a v e gra v el y ab u sed h er
d is cret io n i n her p r o no u nc e me n t t ha t t h e Re ti re me nt P la n wa s no t a p ro p er s ub j ec t to b e
in cl ud ed i n t he CB A n ego ti at io ns b et wee n t h e p art ie s; h e nce , no n - n ego ti ab le ; se co nd , i n
ho l d i n g t ha t t h e a s s u mp tio n p o wer s o f t he S ecr etar y o f Lab o r a nd E mp lo y me nt s ho u ld h a ve
b ee n li mi ted mer el y to th e gr o u nd s al le ged i n t he s eco nd No tic e o f S tr ik e; a nd th i rd , i n no t
ru li n g t h at Ne st l wa s g u ilt y o f u n f air lab o r p ra c tic e d e sp i te a lle g ed l y se tti n g a p re -co nd it io n
to b argaining the no n -incl u s io n o f the Retireme nt P lan as an issue in the co llective b argai n i n g
ne go ti at io ns .

Th e Co u rt s Ru l in g

Fo re mo s t fo r o ur r e so l u t io n is t h e mat ter o f t he n o n - i ncl u s io n o f t he R et ir e me nt P la n i n

th e CB A ne go t ia tio n s b e t we e n N es tl a nd UF E -D F A - KM U ( Cab u ya o D i vi sio n) .

In fi nd i n g t he Se cr et ar y o f t he DO LE to ha ve gr av el y ab u sed her d i scre t io n i n h o ld i n g

th at t he R et ir e me n t P l a n is n o t a va lid CB A i s s u e, t he Co urt o f Ap p e al s exp la i ned t hat :

Alt h o u g h t he U n io n, t hr u i t s P res id e nt Dio s d ad o Fo rt u n a, s i g ned a

Me mo r a nd u m o f Ag r ee me n t d a ted Oc to b er 8 , 1 9 9 8 to g et her wi t h t he p riv ate
resp o nd e nt wh i c h c lear l y sta te s t h at t h e Co mp a n y a gr ee to e x te nd t h e f o l lo wi n g
u ni la ter al gr a n t s wh i c h s hal l no t fo r m p art o f t h e CB A (c it at io n o mi t ted )
ho we ver , t he sa me d o c u me n t mad e a p ro vi so t h at re fere n ce o n t he R et i re me nt
P la n i n t h e CB A si g n ed o n J ul y 4 , 1 9 9 5 , s h all b e mai n ta i ned , x x x t h u s, t h i s
Co ur t i s o f t he b e li e f a n d so ho ld s t ha t t he Re tir e me nt P l a n i s s ti ll a va li d CB A
is s ue , h e nce, it co u ld no t b e ar g ued t h at t h e tr ue in te n tio n o f t he p a rt ie s is t h a t
th e Re tir e me n t P la n , a lt ho u g h r e ferr ed i n t he C B A, wo u ld no t i n a n y wa y fo r m
p art o f t h e CB A ( c it at io n o mi tted ) a s it co u ld b e c lear l y i n ferr ed b y t h i s Co ur t
th at it is to b e u sed a s a n i n te gr al p a rt o f t h e C B A a nd to b e u sed as a t o p ic fo r
fu t ur e b ar ga i ni n g , i n co n so na nc e wi t h t he r u li n g o f t he S up re me Co ur t in t h e
p rev io u s Ne st l C as e t ha t t he Re tir e me n t P l a n wa s a co l lec ti ve b ar g ai n i n g i s s ue
ri g ht fr o m t h e s tar t. [ 3 5 ]

In fil i n g t he p r es e nt p et itio n , N es tl e i s o f t h e vi e w t hat a fter t he 1 9 9 1 S up re me Co ur t

Dec is io n wa s p r o mu l g a ted , t her e wa s o b v io u sl y a n a gree me nt b y t he p art ie s to no lo n ger
co n s id er t he Re tir e me n t P la n a s a ne go ti ab l e i te m s ub j ec t to b ar gai n i n g. Ra t her, s aid b e n e fi t
wo u ld b e re g ar d ed a s a u ni la ter al gr a n t o u t sid e th e a mb it o f n e go t ia tio n . Ne st l j u st i fie s s uc h
co n te n tio n b y d ir ect i n g th e Co ur ts at te n tio n to th e Gro u nd R ul es fo r 1 9 9 8 Al ab a n g/ C ab u yao
Fac to ri es CB A N e go t ia ti o n ( c it at io n o mi tt ed ) si g ned b y it a nd t h e rep r es e nt at i ve s o f UF E -D F A-
KMU wh ere b o t h sid es exp r e ss ly r eco g ni ze d N e st l s p r ero gat i ve to i nit i ate u ni la tera l g ra nt s
wh ic h are no t ne go tiab l e. I t l i ke wi se ci ted t he Me mo ra nd u m o f Ag re e me n t [ 3 6 ] e n tered i n t o b y
th e p ar ti es o n 0 8 Oc to b er 1 9 9 8 , wh i c h a lso ca t eg o r ica l ly r e ferr ed to t h e R et ire me n t P la n as
o ne o f t h e u ni la ter a l g r an t s a ll ud ed to i n t h e a fo re me n tio n ed G ro u n d R u le s. Ne st le t he n
co n cl ud ed t ha t:

I nd e ed , t he fo r e go i n g u n co n tro ver ted d o c u me n ts ver y c l ear l y e st ab l is h ed

th e c lear a gr e e me nt o f t he p art ie s, a fter t he 1 9 9 1 S up re me Co urt Dec i sio n, to
 remo ve the Retir eme n t P lan fr o m the sco p e o f b argainin g nego tiatio n , and leav e
th e ma tt er up o n t he so l e i ni tia ti v e a nd d i scre tio n o f Ne s tl. [ 3 7 ]

In co nt r a st, U FE - D F A- KMU p o si t s t hat t h ere is no t h i n g i n ei t her o f th e d o c u me n ts

ab o v ecl ai me d t ha t p r o v e s t ha t it a gr eed to tre at t he Re tir e me n t P l a n as a u ni la ter al gra n t o f t h e
co mp a n y wh i c h is o u t sid e t he sco p e o f t he CB A and h e nce, n o t a p ro p er s ub j ect o f b ar ga i ni n g.
It e xp la i ned t ha t t he MO A a ll ud ed to b y N es tl mere l y sp e a k s o f th e i mp ro ve men t [ 3 8 ] o r
th e rev ie w fo r th e imp ro vemen t [ 3 9 ] o f t he c ur re nt Ret ire me n t P la n a nd no t hi n g el se. U FE - D F A-
KMU ra tio na li ze s t h at :

Had t he o b j ect i ve o f t he p art ie s b ee n to co n sid e r t he Re tir e me n t P l a n as

no t a s ub j ec t fo r co l lec ti ve b ar ga i ni n g , t h e y wo u ld ha ve s ta ted so i n cat e go r ica l
ter ms . Or , t he y co u ld ha ve d el eted t he s aid b e ne fit fro m t h e CB A.

U n fo r t u n ate l y fo r p e tit io ner , t h e d o c u me nt s rel ie d up o n b y it d o no t s ta te

th at t he Re tir e me n t P la n is no lo n ger a b ar ga i na b le i te m. T he sa id b e ne fit wa s
no t al so r e mo ved o r d e l eted fro m t h e CB A.

I f e v er , wh a t wa s u n il ate rall y gr a nted b y p e ti tio n er co mp a n y a s ap p e ari n g

o n t he ab o ve - st ated le tt er a nd MO A we re t he i mp ro v e me n ts o n t h e Ret ire me n t
P la n. T h e R eti r e me n t P l an co u ld no t h a ve b ee n u ni la ter al l y gra n ted b y t he said
let ter a nd M O A s i nce t he s aid P l a n p red a te s t h e s aid let ter a nd M O A b y o ve r
t wo d ecad e s.

UFE - D F A- KM U co n cl ud es t ha t [ s]i n ce t he R et ire me n t P l a n d id no t d eri v e it s e xi st e nce

fro m t h e le tte r a nd M O A x x x, t he n at ur e o f t he Re tir e me n t P l a n wa s no t a lt ered o r c ha n ged
b y t he s ub seq ue n t i ss u a nc e b y p e ti tio ne r co mp a n y o f t he s aid l et ter a nd MO A. T h e R et ire me n t
P la n re ma i ned a CB A i t e m wh i c h i s a p ro p er s u b j ect o f co l lec ti v e b ar g ai ni n g p urs u a nt to t he
1 9 9 1 ru li n g o f t h is Ho n o r ab le Co ur t. [ 4 0 ]

W e a gr e e.

T he p r e s e nt i ss u e is no t o ne o f fir st i mp r es sio n . I n Ne s tl Ph i lip p in e s, In c. v.

N LR C, [ 4 1 ] ir o n ica ll y i n v o lv i n g t he sa me p ar ti es h erei n, t h is Co u rt h as had th e o c ca sio n to a ffir m
th at a re tir e me n t p l a n i s co ns e ns u al i n na t ure.

B y wa y o f b a c k gr o u nd , th e p a rt ie s t h ere i n re so r ted to a s lo wd o wn a nd wa l k ed o ut o f
th e fa cto r y p r o mp t i n g t he ma na g e m e n t to s h u t d o wn it s o p er at io n s. Co l le ct i ve b a r gai n i n g
ne go ti at io ns wer e co nd u cted b ut a d ead lo c k wa s s ub seq ue n tl y d e clar ed . T he Sec ret ar y o f Lab o r
assumed j ur isd ictio n o ver the lab o r d isp ute and issued a return -to - wo r k o rd er. T he N LR C
th ere a fte r i s s ued i t s r e s o lu tio n mo d i fyi n g Ne s tl s e x i st i n g no n - co ntr ib ut o r y R et ire me n t P la n.
T he co mp a n y f iled a p e tit io n fo r c e rt io ra r i a lle gi n g gr a ve ab u se o f d is cret io n o n t he p ar t o f
th e N LR C a s N es tl wa s a r g u i n g t h at si n ce it s Re ti re me nt P la n is no n - co ntr ib u to r y, it s ho u ld b e
a no n - i ss u e i n CB A ne g o tia tio n s. Ne st l had t h e so le a nd e xc l us i ve p r er o ga ti v e to d e fi ne t h e
ter ms o f t he p la n a s t he e mp lo ye es had no v es te d and d e ma nd ab le ri g h t s th ereo n t h e gra n t o f
s uc h no t b ei n g a co n tr a ct ua l o b l i ga tio n b ut s i m p l y gra t ui to us . I n a r u li n g co ntr ar y to N es tl s
p o si tio n, t h is Co u r t, t hr o u g h Mad a me J us ti ce Gr io - Aq u i no , d e clar ed t h at :

T he co mp a n ys [ Ne st l] co n te n tio n t h at it s r etir e me n t p la n i s no n -
ne go ti ab le , is no t we l l -t ak e n. T he N LR C co rre ct l y o b ser ved t h at t he i nc lu sio n
o f th e r et i rem en t p la n in th e co lle ct ive b a rg a i ni ng a g reem en t a s p a rt o f th e
p a ck a g e o f eco no m ic b enef it s ex t end ed b y t he co m p a ny to i t s em p lo yee s to
p ro v id e t h e m a mea s ur e o f fi n a nc ial se c uri t y a ft er t he y s hal l ha ve c ea se d to b e
e mp lo yed i n t he co mp a n y, r e ward t h ei r lo ya l t y, b o o st t h eir mo r ale a nd e ffici e nc y
and p r o mo te i nd u str ia l p eace, g iv e s a co ns en s ua l cha ra cte r to t he p la n so t ha t
it m a y no t b e te rm i na te d o r m o d ifi ed a t w il l b y eit he r p a r ty (c it at io n o mi t ted ).

The f a ct tha t t he r et ir em ent p la n i s no n - co n tr ib u to ry , i.e. , t ha t t h e

e mp lo ye es co nt r ib u te n o th i n g to t h e o p er at io n o f t he p la n, d o e s no t m a k e i t a
no n- i ss ue in t he C B A ne g o tia t io ns . As a ma t ter o f fac t, a l mo s t al l o f t he b en e fi ts
th at t he p et it io ner h as gr an ted to it s e mp lo ye es u nd er t he CB A sa lar y i nc r ea se s,
rice al lo wa n ce s, mi d ye ar b o n u s es, 1 3 t h a nd 1 4 t h mo n t h p a y, se n io ri t y p a y,
med ic al a nd ho sp ita li za t io n p l a n s, h eal t h a nd d e nt al ser vi ce s, v aca tio n , si c k &
o th er lea v es wi t h p a y a r e no n -co n trib u to r y b e n e fit s. Si nc e t he ret i rem ent p la n
ha s b ee n a n i n teg ra l p a rt o f t he C B A si nc e 1 9 7 2 , t he Un io ns d em a nd to
inc r ea s e t he b e nef i t s d u e th e em p lo yee s u nd e r s a id p la n, is a va lid C B A is su e .
x x x

x x x x

x x x [ E] m p lo yee s d o ha ve a ve s ted a nd d em a nd a b le rig ht o ve r ex i st ing

b enef it s vo l u nta ri ly g r a nt ed to th em b y t he ir em p lo ye r. T he la t te r m a y no t
un ila te ra l ly w it hd ra w, elim i na te o r d im in is h su ch b e nefi t s ( Art. 1 0 0 , Lab o r
Co d e ; o t h er c it at io n o mi tted ) . [E mp h as es s up p li e d .] [ 4 2 ]

In t he ca s e at b ar , i t ca n no t b e d e n ied t h at t he C B A t ha t wa s ab o ut to e x p ire a t t ha t t i me
co n ta i ned p r o vi sio n s r e s p ect i n g t he R et ire me n t P la n. As t h e la tte r b e n e fit wa s al read y s ub j e ct
o f t he e x i st i n g CB A, t h e me mb e r s o f U FE -D F A - KM U we re o nl y e xer ci si n g t he ir p rero g at i ve
to b ar ga i n o r r en eg o t ia t e fo r t h e i mp ro ve me n t o f t he ter ms o f t h e Re ti re me nt P la n j u st li k e
th e y wo uld fo r al l t h e o t her eco no mic , a s we ll a s no n - eco no mi c b e ne fit s p rev io u sl y e nj o yed b y
th e m. P rec is e l y, t he p u r p o se o f co l lec ti v e b ar ga in i n g i s t he a cq ui si tio n o r a tta i n me n t o f t he
b es t p o s sib le co v e na n ts o r ter ms r el at i n g to eco no mi c a nd no n -e co no mi c b en e fi t s gr a nt ed b y
e mp lo yer s a nd d ue t h e e mp lo yee s. T he Lab o r Co d e ha s a ct ua ll y i mp o s ed as a mu t u al o b l i ga tio n
o f b o th p ar ties, this d uty to b ar gain co llectivel y. T he d uty to b argain co llectivel y is
cate go ric al l y p r e scr ib ed b y Ar t ic le 2 5 2 o f t he s a id co d e. It s tat e s:

AR T. 2 5 2 . M E AN IN G OF DU TY TO B A R G AI N C OLL E CT I V ELY . T h e d u t y to
b arg ai n co l lec ti v el y me an s t he p er fo r ma nc e o f a mu t ua l o b l i ga tio n to me et a nd
co n f er p r o mp tl y a nd e xp ed it io u sl y a nd i n g o o d fai t h fo r t he p ur p o se o f
ne go ti at i n g a n a gr e e me nt wi t h re sp e ct to wa g e s, ho ur s o f wo r k, a nd a ll o t h er
ter ms a nd co nd i tio n s o f e mp lo y me n t i nc l ud i n g p ro p o sa l s f o r ad j u st i n g a n y
gr ie va n ce s o r q ue st io n s ar i si n g u nd er s u c h a gre e me nt a nd e xe c ut i n g a c o nt rac t
in co r p o r a ti n g s uc h a gr e e me nt i f req ue s ted b y e it her p art y, b u t s u c h d u t y d o es
no t co mp e l a n y p ar t y to agr ee to a p ro p o s al o r to ma ke a n y co nc es s io n.

F urt h er , Ar t icl e 2 5 3 , a l s o o f t he Lab o r Co d e, d e fi ne s t h e p ara met er o f s aid o b l i ga tio n

wh e n t here alr ead y e x i st s a CB A, v i z:

ART . 2 5 3 . DUT Y T O B AR G AIN CO LLE CT IVE LY W HE N T HER E E XI ST S A

CO LLE CT I VE B AR G AI NI N G AG REE MENT . T he d u t y to b ar ga i n co lle cti v el y
s ha ll al so mea n t h at ei t h er p ar t y s ha ll no t t er mi n ate no r mo d i fy s uc h a gr ee me n t
d ur i n g it s li f et i me. Ho wev er , ei t her p art y c a n ser ve a wr it te n no ti ce to ter mi n at e
o r mo d i f y t h e a gr e e me n t at lea s t si x t y (6 0 ) d a y s p rio r to i t s e xp irat io n d ate. I t
s ha ll b e t he d u t y o f b o t h p ar t ie s to ke ep t he st a tu s q uo a nd to co nt i n ue i n fu ll
fo r ce a nd e f f ec t t he ter ms a nd co nd it io n s o f t h e e x is ti n g a gre e me n t d u ri n g t h e
si x t y d a y p er io d a nd /o r u nt il a ne w a g ree me n t i s reac h ed b y t h e p ar ti es .

An d , i n d e ma nd i n g t h at th e t er ms o f t he Re tir e me n t P l a n b e o p e n ed fo r re ne go t ia tio n,
th e me mb ers o f UF E -D F A - K MU ar e ac ti n g we l l wi t h i n t h eir r i g ht s a s we ha v e, i nd e ed , d ec lar ed
th at t he R et ir e me n t P l a n is co n se n s ua l i n c hara ct er; a nd so , ne go tiab le.

Co nt r ar y to t he cla i m o f Ne s tl t ha t t h e c at e g o rica l me n t io n o f t he t er ms u n ila te ra l

a g ree men t i n t he le tt er a nd t he M O A s i g ned b y t h e rep re se n ta ti ve s o f U FE - DF A - K MU , had , fo r
all i n te n ts a nd p u r p o s es wo r ked to e s to p U FE - D F A - KM U fro m ra i si n g i t as a n i ss u e i n t h e CB A
ne go ti at io ns , o ur r e ad i n g o f t he s a me, sp e ci fica l l y P ara grap h 6 a nd s ub p ara grap h 6 . 2 :

6. Ad d it io na ll y, t he C OMP ANY a gree to e x te n d t he fo llo wi n g u n ila ter a l gra nt s

wh ic h s h al l no t f o r m p ar t o f t h e Co l lec ti v e B ar g ai ni n g Ag re e me n t ( CB A):

x x x x

6 .2 . R e vi e w f o r i mp r o ve me n t o f t he C OMP ANY s Re tir e me n t P l a n

and t he r e f er e nc e o n th e Ret ire me n t P la n i n t h e Co ll ect i ve
B ar g ai n i n g Agr e e me n t si g ned o n 4 J ul y 1 9 9 5 s ha ll b e
ma i nt ai n ed . [ 4 3 ]
hard ly p ersuad es us that the memb er s o f UFE -DFA -K MU have agreed to treat the Retire m e n t
P la n a s a b e ne fi t t he te r ms o f wh i c h are so le l y d ep e nd e nt o n t he i nc li n atio n o f t he Ne s tl a nd
re mo ve t h e s ub j ec t b e n ef it fr o m t he a mb it o f th e CB A. T he c hara ct eriz at io n u n il ate ral l y
i mp o s ed b y Ne st l o n t he Re tir e me n t P la n ca n no t o p erat e to d i ve s t t he e m p lo yee s o f t he ir ve st ed
and d e ma nd ab le r i g h t o v er ex i st i n g b e ne fit s vo l u nt ari l y gra n ted b y t he ir e mp lo yer . [ 4 4 ] B es id e s,
th e co n te n tio n t ha t U FE - DF A- K MU h a s ab a nd o n ed o r fo r sa ke n o ur e arl ie r p ro no u n ce me n t v is -
- v is t he co ns e n s ual n at u r e o f a r e ti r e me n t p l a n i s q ui te i nco n si s te nt wi t h, n a y , i s n e gat ed b y
it s co nd u ct i n d o g ged l y as k i n g fo r a re ne go ti at io n o f s aid b e ne fi t.

W o rt h no t i n g, a t t h is p o i nt , i s t h e fa ct t hat t he a fo req uo ted p ara gr ap h 6 a nd it s s ub p ara gr ap h s,

p arti c ul arl y s ub p ar a gr a p h 6 .2 , h i g hl i g ht s a n u nd e n iab le fac t t hat N es tl reco g n ize s t ha t t h e
Re tir e me n t P la n i s p ar t o f t he e xi st i n g Co l le ct i v e B ar ga i ni n g Ag re e me n t .

Ne st l f ur t h er r a tio na li z es t hat a r ul i n g d ec lar i n g t h e Re tire me nt P la n a v al id CB A

ne go ti at io n is s ue wi l l in sp ir e o t he r b ar g ai n i n g u n it s to d e ma nd fo r g rea ter b e ne fit s i n
acco rd a n ce wi t h t he ir r e sp ec ti v e ap p e ti te s. S u ffi ce it to s a y t ha t t h e co n se n s ua l nat ur e o f t he
Re tir e me n t P la n nei t he r gi v es t he u nio n me m b ers t h e u n fet ter ed ri g ht no r t he u nb r id led
p rero gat i ve to d e ma n d mo r e t h a n wh a t t he co m p an y ca n v iab l y gi v e.

As r e ga r d s t he sco p e o f t he a s s u mp t io n p o wer s o f t he Secr eta r y o f t he D O LE, t h e

ap p el lat e co ur t r ul ed t ha t Sec . Sto . T o ma s as s u m p tio n o f j uri sd ict io n p o we r s s ho u ld h a ve b ee n
li mi ted to t he d i sa gr ee m en t o n t he gro u nd r u le s o f t h e co l lec ti ve b a r gai n in g ne go ti at io n s. T he
Co ur t o f Ap p eal s r e fer r ed to t h e mi n u te s o f t h e mee ti n g h eld o n 3 0 O cto b er 2 0 0 1 . T ha t t h e
rep re se nt at i ve Ne st l wa s r eco r d ed to ha v e s ta ted t hat w e a re st il l d i scu s s in g g ro u n d ru le s a n d
n o t yet o n th e CBA n eg o tia t io n s p ro p er , a d ea d l o ck ca n n o t b e d e cla red , [ 4 5 ] wa s a t el li n g fa ct.
T he Co ur t o f Ap p ea ls, t h u s, d ec lar ed t ha t t h e S e cret ar y s ho u ld no t ha v e ru led o n t h e q u e sti o ns
and i ss u es r el ati v e to t h e s ub st a nt i ve a sp e ct o f t he CB A s i mp l y b eca u se th ere wa s no co n flic t
o n t he CB A ye t. [ 4 6 ]

UFE - D F A- KM U a gr ee s i n t he ab o v e a nd co n te nd s t h at t he req u i si te s o f j ud i ci al i nq uir y

req u ire, fir st a nd fo r e m o st t he p r e se n ce o f a n a ct ua l ca se co ntro v ers y. It t he n co ncl ud e s t ha t
[i] f t he co ur t s o f la w c a n no t a ct a nd d ec id e i n t h e ab se n ce o f a n ac t ua l c ase o r co ntro v er s y, so
s ho uld b e ( si c) a lso t he Ho no r ab l e D O LE S ecre t ar y. [ 4 7 ]

Ne st le, ho we v er , co ntr ad ict s t he p re ced i n g d i sq u i si tio n s o n t h e gro u nd t h a t s uc h re fer ral

to t he mi n u te s o f t h e me eti n g wa s er r o neo u s a nd mi s le ad i n g. I t a ver s t h at th e Co ur t o f Ap p eal s
fa il ed to co ns id er t h e c ir c u ms t a nce s urro u nd i n g s aid ut tera n ce t ha t t h e sta te me n t wa s ma d e
d ur i n g t he p r e ve n ti v e med ia tio n p r o c eed i n g s and t h e U FE -D F A- K MU had no t yet filed a n y
no t ic e o f str i ke. I t f ur t h er e mp ha s ize s t h at it wa s U FE - D F A- KM U wh o firs t a lle g ed b ar g ai n i n g
d ead lo c k a s t he b a s is fo r t he f il i n g o f i ts No tic e o f S t ri k e. Fi n al l y, N e st l c lari fie s t ha t b e fo r e
th e fir s t No tic e o f S tr ik e wa s f il ed , se ver al co n ci lia tio n co n fere n c es had alr ead y b ee n
u nd er ta k e n wh e r e b o t h p ar ti es had e x c ha n ge s o f th eir re sp ec ti v e CB A p r o p o sa ls .

In t h i s, we a gr ee wi t h Ne st l. De cl ari n g t h e S e cret ar y o f t he DO LE to ha v e ac ted wi t h

gra v e ab u se o f d i scr e tio n fo r r u li n g o n s ub s ta nt ial mat ter s o r is s u es a n d no t re str ic ti n g it se l f
me rel y o n t he gr o u nd r u le s, t he ap p e ll at e co u rt and U FE - D F A- KM U wo uld ha v e u s tr eat t he
s ub j ect lab o r d i sp ut e i n a p i e ce me al fa s hio n.

T he p o wer g r a nt ed to t h e Se cr e tar y o f t h e D O LE b y P ara gr ap h ( g) o f Art icl e 2 6 3 o f t he

Lab o r Co d e, to wi t:

AR T. 2 6 3 . S TR I K E S, P I C K ET IN G, AN D L O C K OUT S.

x x x x

( g) W h e n, i n hi s o p i n io n , t her e e x i st s a l ab o r d is p ut e c a u si n g o r l i ke l y to
ca us e a s tr i k e o r lo c ko u t i n a n i nd us tr y i nd i sp e n sab le to t h e na tio n al i nt ere st ,
th e Se cr e tar y o f La b o r a nd E mp lo y me n t ma y a s s u me j u ri sd i ct io n o ver t h e d i sp u te
and d ec id e it o r c er t i f y t he s a me to t he Co m mi s s io n fo r co mp ul so r y arb i t ratio n .
S uc h a ss u mp t io n o r c er t i f ica tio n s hal l ha ve t h e e ffe ct o f a uto mat ica ll y e nj o in i n g
th e i n te nd ed o r i mp e nd i n g str i ke o r lo c ko u t a s sp ec i fi ed i n t h e a ss u mp tio n o r
cert i fi cat io n o r d er . I f o ne h as alr ead y ta ke n p la ce at t he ti me o f a s s u m p tio n o r
cert i fi cat io n, al l s tr i ki n g o r lo c k ed o ut e mp lo y ees s h al l i m me d i at el y r et ur n to
wo r k a nd t he e mp lo yer sh al l i m me d ia te l y re s u me o p erat io n s a nd read mi t a ll
wo r ker s u nd er t h e sa me ter ms a nd co nd it io ns p rev ai li n g b e fo re t he s t ri ke o r
lo c ko ut. T he S ecr etar y o f Lab o r a nd E mp lo y me nt o r t h e Co m mi s s io n m a y see k
th e a s si s ta nc e o f la w en fo r ce me n t a ge nc ie s t o e ns ur e co mp li a nce wit h t hi s
p ro v is io n a s we ll as wi t h s uc h o rd er s a s he ma y is s ue to e n fo rce t he s a m e.

x x x x

au t ho ri ze s her to a s s u m e j ur i sd ict io n o ver a l ab o r d isp u te, ca u si n g o r li ke l y to ca u se a s tri k e

o r lo c ko ut i n a n i nd u s tr y ind i sp e n sab le to t he na t io n al i nt ere st, a nd co rre l ati v el y, to d ec id e t he
sa me .

In t h e ca se a t b ar , t he S e cr et ar y o f t he D O LE s i m p l y r el ied o n t he No t ice s o f S tri k e t ha t

we re fil ed b y UF E -D F A - KM U a s st ated i n h er O rd er o f 0 8 Marc h 2 0 0 2 , t o wi t:
 x x x T he r eco r d s d isclo se that the Unio n filed two No tices o f Strike. T he
Fir s t i s d a ted Oc to b er 3 1 , 2 0 0 1 wh o se gro u nd s a re ci ted v erb a ti m h ere u n d er:

A. B ar g ai ni n g D ead lo c k
1 . Eco no mi c is s ue s ( sp e ci fy)
1 . R et ir e me n t
2 . P an el Co mp o s it io n
3 . Co s ts a nd Att e nd a nc e
4 . CB A

T he s eco nd No t ice o f S t r i ke i s d ated No ve mb er 7 , 2 0 0 1 a nd t h e ci ted gr o u nd is

li ke q uo ted v er b a ti m b el o w:

B . U n fa ir Lab o r P r ac tic es ( sp e ci fy)

B ar g ai n i n g i n b ad fa it h
Set ti n g p r e -co nd it i o n i n th e gro u nd r u le s ( Re tir e me n t is s ue )

No wh er e i n t h e s eco nd No t ice o f Str i ke i s i t i nd i ca ted t h at t h i s No tic e is a n

a me nd me n t to a nd to o k t he p la ce o f t h e firs t No t ice o f Str i ke. I n fa ct, o ur
As s u mp tio n o f J ur i sd ict io n Ord er d ated No v e m b er 2 9 , 2 0 0 1 s p ec i fi cal l y ci ted
th e t wo ( 2 ) No t ic es o f S tr i ke wi t ho ut a n y o b j ec t io n o n t he p ar t o f t he U nio n x
x x. [ 4 8 ]

T hu s, b as ed o n t he No t ice s o f S tr i ke fi led b y UFE - D F A- KM U, t he Se cret ar y o f t he DO LE

ri g ht l y d ecid ed o n ma tt er s o f s ub s ta nc e. F ur t h er, it i s a fac t t ha t d u ri n g t he co nc il ia tio n

me et i n g s b e fo r e t h e N C MB , b u t p r io r to t h e fil in g o f t h e no ti ce s o f s t ri ke, t h e p art ie s h ad

alre ad y d e l ved i n to mat ter s a f fec ti n g t h e mea t o f t he co ll ec ti ve b ar g ai ni n g a g ree me n t. T he

ap p el lat e co ur t s r e lia n c e o n t he st ate me nt [ 4 9 ] o f t he rep re se nt at i ve o f N es tl i n r ul i n g t ha t t he

lab o r d i sp ut e h ad yet to p r o gr es s fro m t he d is c us s io n o f t he gro u n d rul es o f t h e CB A

ne go ti at io ns i s c lea r l y mi s le ad i n g ; he nc e, er ro n eo u s.

Ne ver t he le ss , gr a nt i n g f o r th e s a ke o f ar g u me n t th at t h e mee ti n g s u nd e rta ke n b y t h e

p arti es had no t go n e b e y o nd t h e d is c u ss io n o f t h e gro u nd r ul es , t he i s s ue o f wh e t her o r no t t h e
Secr et ar y o f t he D O LE co u ld d e cid e i s s ue s i nc i d en ta l to t h e s ub j ect lab o r d i sp ute had alr ead y
b ee n a ns wer ed i n t he a f f ir ma ti ve . T h e Se cret ar ys a ss u mp t io n o f j ur i sd ic ti o n p o we r ne ce s sar il y
in cl ud es ma tte r s i nc id e n tal to t he lab o r d i sp ut e, th at i s, is s u es t ha t ar e n ece s sari l y i n vo l ved i n
th e d isp u te i ts el f, no t j u st to t ho se as crib ed i n t h e No tic e o f S tri k e; o r, o t her wi s e s ub mi tt ed to
hi m fo r re so l ut io n. As h e ld i n t he ca se o f In te rn a tio n a l Ph a rma c eu t ica l s , In c. v. S ec. o f La b o r
a n d Emp lo y men t , [ 5 0 ] x x x [ t] h e Sec r et ar y wa s e x p lic it l y gr a nt ed b y Ar ti c le 2 6 3 ( g) o f t he Lab o r
Co d e t he a u t ho r it y to a s s u me j ur i sd i ct io n o ver a lab o r d i sp ute ca u si n g o r li k el y to ca u se a
strike o r lo cko ut in an ind ustr y ind isp ensab le to the natio nal interest, and d ecid e th e s a me
acco rd i n gl y. N ece s sar il y , th i s a u th o ri ty to a ssu m e ju r isd ic tio n o ve r th e sa id la b o r d i sp u te mu st
in clu d e a n d ex ten d to a l l q u e st io n s a n d co n t ro ve r sie s a ri s in g th e re f ro m , in cl ud i n g ca se s o v er
wh ic h t he Lab o r Ar b it er ha s e x cl u s i ve j ur i sd i cti o n. [ 5 1 ] Acco rd i n gl y, e ve n i f no t e x ac tl y o n t he
gro u nd up o n wh i c h t h e No t ice o f S tri k e i s b a se d , t he fact t ha t t h e i s s u e i s i n cid e n ta l to t he
reso l ut io n o f t he s ub j e ct l ab o r d isp u te o r t ha t a sp ec i fic i s s ue had b ee n s ub mi tt ed to t he
Secr et ar y o f t h e DO LE fo r her r e so l u tio n , va lid l y e mp o wer s t h e la tter t o ta k e co g niz a nce o f
and re so l ve t he s a me.

Secr et ar y S to . T o mas c o r r ect l y a s s u med j u ri sd i ctio n o v e r t he q u es tio n s in cid e nta l to

th e c urre n t l ab o r d i sp ut e and t h o s e mat ter s ra i se d b y t h e p art ie s. I n a n y ev e nt, t he q uer y a s to
wh et h er o r no t t he R et i r e me nt P la n is to b e i n cl ud ed i n t h e CB A n e g o tia tio n s b e t we e n t he
p arti es i n el uc tab l y d i cta te s up o n t he Se cr et ar y o f t he DO LE to go i n to t he s ub s ta nt i ve mat ter
o f t he CB A ne go tia tio n s .

Las tl y, t h e t hir d i s s ue p er ta i ns to t h e al le ged re ver s ib le erro r co m mi tt e d b y t he Co ur t

o f Ap p e al s i n ho ld i n g, alb e it i mp lied l y, Ne s tl free a nd c lear fro m a n y u n fa ir lab o r p ra c ti ce.
UFE - D F A- KM U ar g ue s th at Ne st ls r e fu sal to b arg ai n o n a v er y i mp o rta nt CB A eco no mi c
p ro v is io n co ns ti t ut es u n fa ir lab o r p r a cti ce. [ 5 2 ] I t e xp l ai ned t h at Ne s tl s et a s a p reco nd it io n fo r
th e ho ld i n g o f co l lec ti v e b ar g ai n i n g ne go ti at io n s t he no n -i nc l u sio n o f t he i s s ue o f Re tir e me n t
P la n. I n it s wo r d s, r e sp o nd e n t Ne s tl P hi ls ., I nc. i n si s ted t ha t t he U nio n s ho u ld fir st a gr ee t h at
th e re tir e me n t p l a n i s n o t a b ar g ai n i n g i s s ue b e fo r e re sp o nd e n t N es tl wo ul d a gre e to d i sc u s s
o th er i s s ue s i n t h e CB A. [ 5 3 ] I t t h e n co ncl ud ed t ha t th e C o ur t o f Ap p e al s co m mi t ted a l e ga l erro r
in no t r ul i n g t ha t r e sp o nd e n t co mp a n y i s g u il t y o f u n fa ir lab o r p rac ti ce . It al so co m mi t ted a
le ga l erro r i n f ai li n g t o a wa r d d a ma g es to t h e p e ti tio ne r fo r t h e U LP co m mi t ted b y t h e
resp o nd e nt. [ 5 4 ]

Ne st l r e f u te s t he ab o v e ar g u me n t a nd a s ser t s t hat i t wa s o nl y b e fo re t he Co urt

o f Ap p ea l s, a nd i n t h e seco nd P e ti tio n fo r Ce r tio ra ri a t t hat, d id UFE - DF A - K MU r ai se t he
ma tt er o f u n f air l ab o r p r act ice. I t r ea so ned t ha t t he s ub j ec t o f u n fai r l ab o r p rac tic e s ho uld h a ve
b ee n t hre s hed o ut wi t h t he ap p r o p r ia te l ab o r trib u na l. I n j u st i fyi n g t h e fail ur e o f t he Co u rt o f
Ap p ea ls to f i nd it g u il t y o f u n f air lab o r p rac t i ce , it s ta ted t hat :

U nd er t h e cir c u ms ta n ce s, t h ere fo re , t her e wa s no wa y fo r t he Co ur t o f

Ap p ea ls to ma k e a r u li n g o n t h e i ss u es o f u n fair lab o r p ra ct ice a nd d a ma ge s,
si mp l y b ec a u se t h er e was no t h i n g to s up p o r t o r j us ti fy s uc h a ct io n. Alt ho u g h
 p etitio ne r was affo r d ed b y the Secretary the o p p o rtunit y to b e heard and mo r e ,
it si mp l y c ho s e to o mi t t he s aid i ss u es i n t he p ro ceed i n g s b elo w. [ 5 5 ]

W e ar e p er s uad ed .

T he co nc ep t o f u n fa ir l a b o r p ract ic e i s d e fi ned b y t he Lab o r Co d e a s:

AR T. 2 4 7 . CO N CE PT O F U N F AI R L A B OR P R A CT I CE AN D
PR O C ED UR E FO R P R OS E C UT IO N TH E R E O F . U n fa ir lab o r p r ac tic e s v io la te
th e co n s ti t ut io nal r i g h t o f wo r k ers a nd e mp lo ye es to s el f -o r g a niz at i o n, are
in i mi ca l to t he l e gi ti ma te i n tere s ts o f b o t h l ab o r and ma n a ge me nt, i n cl ud i n g
th eir r i g h t to b ar ga i n c o lle ct i vel y a nd o t her wi se d eal wi t h eac h o t her i n a n
at mo sp her e o f fr eed o m and mu t u al r e sp ec t, d isr up t i nd u s tria l p eac e a nd h i nd e r
th e p r o mo tio n o f hea lt h y a n d s tab le lab o r - ma n a ge me n t rel at io ns .

x x x x.

T he sa me co d e l i ke wi se p r o v id e s t he a ct s co n st it ut i n g u n fa ir lab o r p ra ct i ces co m mi tt ed
b y e mp lo ye r s , to wi t:

AR T. 2 4 8 . U N F AI R L A BO R P R A CT IC E S O F E MPLO Y E RS . It s ha ll b e
u nl a wf u l fo r a n e mp lo ye r to co m mi t a n y o f t he fo llo wi n g u n fair lab o r p r a cti ce s:

( a) T o i n ter f er e wit h, re str ai n o r co erce e mp lo yee s i n t he e xer ci se

o f t he ir r i g h t to s el f -o r g an iza tio n ;

(b) T o r eq u ir e a s a co nd it io n o f e mp lo y m en t t ha t a p er so n o r an
e mp lo ye e s ha ll no t j o i n a l ab o r o r ga ni za tio n o r s ha ll wi t hd ra w fro m o ne t o wh i c h
he b elo n g s ;

( c) T o co n tr ac t o u t ser v ice s o r fu nc tio n s b ei n g p er fo r med b y u n io n

me mb er s wh e n s uc h wi ll i nter fere wi t h, r es tra in o r co er ce e mp lo ye e s i n t he
ex er c is e o f t heir r i g h t to se l f -o r ga n iza tio n ;

(d) T o in it ia te, d o mi n at e, a s si s t o r o t her wi s e i nter fere wi t h t h e

fo r ma t io n o r ad mi n is tr a tio n o f a n y lab o r o r ga n i zat io n, i nc l ud i n g t h e g i vi n g o f
fi na nc ia l o r o t h er s up p o r t to it o r i t s o r ga n izer s o r s up p o r ter s;

( e) T o d i scr i mi n at e i n re g ard to wa ge s, h o ur s o f wo r k, a nd o t her

ter ms a nd co nd it io ns o f e mp lo y me n t i n o rd er to e nco ur a ge o r d i s co ur a ge
me mb er s hip i n a n y l ab o r o r ga n iza tio n. No t h i n g i n t h is Co d e o r i n a n y o t her la w
s ha ll sto p t h e p ar t ie s f r o m r eq u iri n g me mb er s hip i n a reco g n ized co l lec ti ve
b arg ai n i n g a ge n t a s a c o nd itio n fo r e mp lo y me n t, e xc ep t t ho se e mp lo ye es wh o
are alr ead y me mb e r s o f ano t her u nio n a t t he t i m e o f t he si g n i n g o f t he c o lle ct i ve
b arg ai n i n g a gr ee me n t.

E mp lo ye es o f a n ap p ro p riat e co l lec ti v e b ar ga i ni n g u n it wh o are no t

me mb er s o f t he r e co g n ized co ll ect i ve b ar g ai n in g a ge nt ma y b e as s e s sed a
rea so nab l e f ee eq u i va le nt to t he d ue s a nd o t h e r fe es p a id b y me mb er s o f t he
reco g ni zed co l lec ti v e b ar g ai n i n g a ge nt , i f s uc h no n - u n io n me mb ers a c cep t t he
 b enefits und er the co llective agreemen t. P ro vid ed , T hat the ind ivi d u a l
au t ho r i za tio n r eq uir ed u nd er Ar tic le 2 4 2 , p ara g r ap h (o ) o f t hi s Co d e s h all no t
ap p l y to t h e no n me mb e r s o f t he r eco g ni zed co lle ct i ve b ar ga i ni n g a ge n t; [T he
arti cl e r e f er r ed to i s 2 4 1 , no t 2 4 2 . C AA]

( f) T o d i s mi s s, d is c har ge, o r o t her wi s e p rej ud i ce o r d i scr i mi n at e

ag ai n st a n e mp lo yee fo r h a vi n g gi ve n o r b ei n g ab o u t to g i ve te st i mo n y u nd er
th i s Co d e ;

( g) To v io la t e t he d u ty to b a rg a i n co l lec tiv ely a s p re s cr ib ed b y

th is Co d e ;

( h) T o p a y n e go t ia tio n o r a tto r n e ys fe e s to th e u n io n o r i t s o fficer s

o r a ge nt s as p ar t o f t h e se tt le me n t o f a n y i s s ue in co l le ct i ve b ar g ai n i n g o r a n y
o th er d isp u te ; o r

( i) T o vio la te a c o lle ct i ve b a r gai n i n g a gr ee me n t.

T he p r o vi sio n s o f t h e p reced i n g p ara gr ap h no t wi t h st a nd i n g, o n l y t he

o fficer s a nd a ge n ts o f co r p o rat io n s a sso ci at i o n s o r p ar t ner s hip s who ha v e
act ua ll y p ar ti cip a ted , a u tho r iz ed o r ra ti fied u n fa ir lab o r p r ac tic e s s ha ll b e he ld
cri mi n al l y liab le. [ E mp h as is s up p li ed .]

Here i n, Ne st l i s a cc u sed o f v io l at i n g it s d u t y to b arg ai n co l le ct i vel y wh e n it p urp o rt ed l y

i mp o s ed a p r e -co nd it io n to it s a gr e e me n t to d is c us s a nd e n g a ge i n co ll ect i ve b ar g ai n i n g
ne go ti at io ns wi t h UF E - DF A - K MU.

A me ti c ulo u s r e vie w o f th e r eco rd a nd p l ead i n gs o f t h e c as es a t b ar s ho ws t ha t, o f t h e

t wo no t ice s o f s tr i k e fi le d b y U FE -D F A- K MU b e fo r e t he N C MB , it wa s o nl y o n t h e s eco nd t ha t
th e gro u nd o f u n f air la b o r p r ac ti ce wa s al le ged . W o rse, t h e 7 No ve mb er 2 0 0 1 No t ice o f Str i ke
me rel y co n ta i ned a ge ne r al al le g atio n t hat Ne st l co m mi tted u n fair l ab o r p ract ice b y b ar ga i ni n g
in b ad fai t h fo r s u p p o s e d l y set ti n g p r e - co nd i tio n i n t he gro u nd r ul es ( R etir e me n t is s ue) . [ 5 6 ] O n
th e co n trar y, Ne st l, i n it s P o s it io n P ap er, d id no t co n fi ne it se l f to t he i s s u e o f t he no n - i nc l us io n
o f t he Re ti r e me n t P l a n b u t e x te n si v el y d is c u s sed it s st a nce o n o t h er eco no mi c mat ter s
p erta i ni n g to t he CB A.

B as ic is t h e p r i ncip le t h at go o d fai t h i s p re s u me d a nd he wh o a lle g es b a d fai t h ha s t he

d ut y to p ro v e t h e sa me . [ 5 7 ] B y i mp uti n g b ad fai th u nto t he ac t uat io n s o f Ne st l, it wa s UF E -
DF A- K MU, t h er e fo r e, who h ad t h e b urd e n o f p r o o f to p r es e nt s ub s ta nt i al e v id e n ce to s up p o rt
th e a lle g at io n o f u n fa ir lab o r p r a ct ice. A p er u s a l o f t he al le ga tio n s a nd arg u me nt s r ai sed b y
UFE - D F A- KM U i n t he Me mo r a nd u m (i n G. R. No s. 1 5 8 9 3 0 -3 1 ) wi l l r ead i l y d i sc lo se t h at it
fa il ed to d i sc har g e said o n u s p ro b a n d i as t her e i s st il l a ne ed fo r t he p re se n tat io n o f e v id e n ce
o th er t ha n it s b ar e co nte nt io n o f u n fai r lab o r p ra cti ce i n o rd er to ma ke c e rtai n t he p ro p ri et y o r
imp ro p riet y o f the unfair lab o r p r actice charge hurled against Nestl. Und er Rule XIII, Sec. 4 ,
B o o k V o f t he I mp le me n ti n g R u le s o f t he Lab o r Co d e :

x x x . I n c as e s o f u n f air lab o r p r act ic es, t he no ti ce o f st r ik e s ha l l a s fa r

a s p ra ct ica b l e, sta te t he a c ts co m p la in ed o f and t he e ffo r t s to re so lv e t he
d isp u te a mi cab l y. [ E mp ha s is s up p li ed .]

Ex cep t fo r t h e a ss er t io n p ut fo r t h b y U FE - D F A- K MU, ne it h er t he se co nd No t ice o f

Str i ke no r t he r eco r d s o f t he se c as es s ub s ta n ti at e a fi nd i n g o f u n fa ir la b o r p rac ti ce. It i s no t
eno u g h t h at t h e u n io n b e lie v ed t ha t t he e mp lo yer co m mi t ted ac t s o f u n fa i r lab o r p r act ic e wh e n
th e c irc u ms t a nce s cle ar l y ne g ate e ve n a p r ima fa cie s ho wi n g to war ra nt s uc h a b el ie f. [ 5 8 ] I n it s
let ter [ 5 9 ] to U FE -D F A- KMU o f 2 9 Ma y 2 0 0 1 , t ho u g h Ne s tl u nd ers co red i t s p o s it io n
th at u n ila te ra l g ra n t s, o n e - ti me co mp a n y g ra n ts, co mp a n y - in i tia ted p o lic ie s a n d p ro g ra ms ,
wh i ch in clu d e , b u t a re n o t li m ited to th e Re ti r emen t Pla n , In c id en ta l S tra ig h t Du t y Pa y a n d
Ca l lin g Pa y Pr em iu m, a re b y th ei r ve ry n a tu r e n o t p ro p e r su b je ct s o f CBA n eg o tia tio n s a n d
th e refo re sh a ll b e e xc lu d ed th e re f ro m, s u c h at ti tud e i s no t ta nt a mo u nt t o refu sa l to b ar gai n .
T hi s i s es p ec ial l y tr u e whe n it i s v ie we d i n t h e li g ht o f t he fa ct t h at e i g ht o ut o f n i ne b ar g ai n i n g
u ni t s ha v e a ll e ged l y a gr eed to tr ea t t h e Re tir e m en t P l a n a s a u n ila ter al gra n t. Ne s tl, t her e fo re,
ca n no t b e fa u lt ed fo r co n sid er i n g t he sa me b e n e fit as u ni lat era ll y gr a nt e d . T o b e s ure , i t mu s t
b e s ho wn t hat N es tl wa s mo ti v at ed b y il l wi l l, b ad fai t h, o r fra ud , o r wa s o p p re s si v e to l ab o r,
o r d o ne i n a ma n n er co nt r ar y to mo r a ls , go o d c u sto ms , o r p ub li c p o li c y , a nd , o f co urs e, t ha t
so c ial h u mi l ia tio n, wo u nd ed f eel i n g s, o r gra ve a n xie t y re s ul ted x x x [ 6 0 ] i n d i scl ai mi n g
u ni la ter al gr a nt s a s p r o p er s ub j ec t s i n t he ir co ll e cti v e b ar g ai n i n g ne go tia tio n s.

T her e i s no p er se te s t o f go o d fa it h i n b ar ga i ni n g . [ 6 1 ] Go o d fa it h o r b ad fai t h i s a n
in fere n ce to b e d r a wn fr o m t he fac t s, [ 6 2 ] to b e p r eci se, t he cr uci al q ue s ti o n o f wh e t h er o r no t a
p art y h as me t hi s s ta t ut o r y d u t y to b ar g ai n i n go o d fai t h t yp ic al l y t u r n s o n t he fac t s o f t he
ind i vid u al c as e. N ece s sa r il y, a d e ter mi n a tio n o f t he va lid it y o f t h e Ne s tl s p ro p o si tio n i n vo l ve s
an a p p ra is al o f t h e e xer c is e o f i t s ma n a ge me n t p r ero g at i ve.

E mp lo yer s ar e acco r d ed r i g ht s a nd p ri v il e ge s t o as s ur e t h eir s el f -d e te r mi na tio n a nd

ind ep e nd e n ce a nd r ea so nab le r e t ur n o f c ap i tal . [ 6 3 ] T hi s ma ss o f p ri v il e ge s co mp r i se s t he so -
cal led ma na g e me n t p r e r o ga ti v es . [ 6 4 ] I n t h i s c o n ne ct io n, t he r ul e is t h at go o d fa it h i s al wa ys
p res u me d . As lo n g a s t h e co mp a n ys e xer ci se o f t he sa me i s i n go o d fa it h to ad va nc e it s i n ter es t
and no t fo r p ur p o se o f d ef ea ti n g o r circ u mv e nt i n g t he r i g ht s o f e mp lo y ees u nd er t h e l a w o r a
va lid a gre e me n t, s uc h e xer ci se wi ll b e up he ld . [ 6 5 ]
 Co nstr ui n g a rg u en d o that the co ntent o f the afo req uo ted letter o f 2 9 May 2 0 0 1 laid
d o wn a p re -co nd i t io n to it s a g r ee me n t to b ar ga i n wi t h UF E -D F A- KM U, Ne st ls i n cl u sio n i n it s
P o sit io n P ap er o f it s p r o p o sa ls a f f ec ti n g o t he r ma tt er s co vered b y t he CB A co n trad ict s t h e
cla i m o f re f u sa l to b ar ga i n o r b ar ga i ni n g i n b ad fa it h. Ac co rd i n g l y, si n ce UF E -D F A- K MU
fa il ed to p ro f f er s ub sta n tia l e v id e n ce t ha t wo u ld o ver co me t he l e gal p re s u mp tio n o f go o d fai t h
o n t he p a rt o f Ne s tl, t he a war d o f mo ra l a nd e xe mp lar y d a ma ge s i s u na v ail i n g.

It mu s t b e r e me mb er ed at al l ti me s t ha t t he P h i lip p i n e Co n s ti t ut io n, wh ile i n e xo rab l y

co m mi tted to war d s t he p r o tec tio n o f t h e wo r ki n g cla s s fro m e xp lo i tat io n and u n fa ir tr ea t me n t,
ne v ert h ele s s ma n d at e s t he p o l ic y o f so cia l j us ti ce so a s to str i ke a b a la n ce b e t we e n a n a vo we d
p red il ec tio n fo r l ab o r , o n t h e o ne ha nd , a nd t he ma i nt e na nc e o f t he le ga l rig h t s o f cap ita l, t h e
p ro ve rb ia l he n t ha t la ys t he go ld e n e g g, o n t he o th er. I nd eed , we s ho ul d no t b e u n mi n d ful o f
th e le ga l no r m t ha t j us ti ce i s i n e ver y ca se fo r t he d e ser v i n g, to b e d i sp en sed wi t h i n t he li g h t
o f es tab li s hed f ac ts , t h e ap p li ca b l e l a w, a nd e x i s ti n g j uri sp r ud e n ce. [ 6 6 ]

In s u m, fr o m t h e f ac ts a n d e vid e nce e x ta nt i n t h e r eco rd s o f t he se co n so lid ated p et it io n s,

th i s Co urt fi nd s t ha t 1 ) th e Re tir e me n t P la n i s s til l a va lid is s u e fo r he r ei n p ar ti e s co lle ct i ve
b arg ai n i n g ne go ti at io ns ; 2 ) t he Co ur t o f Ap p e al s co m mi tt ed re v ers ib l e er ro r i n li mi t i n g to t he
is s ue o f t he gr o u nd r u le s t he sco p e o f t he p o we r o f t he Secr eta r y o f Lab o r t o a ss u me j uri sd ict io n
o ver t he s ub j ec t lab o r d i sp ut e; a nd 3 ) Ne s tl is n o t g uil t y o f u n fair lab o r p ract ice . As no o t h er
is s ue s ar e a va il i n g, t h is p o n en cia wr i te s fin is to th e p ro tr act ed lab o r d i sp ut e b et we e n Ne s tl a nd
UFE - D F A- KM U ( Cab u y ao D i vi sio n) .

W HE RE FO RE, i n v ie w o f t he fo re go i n g , t h e P e tit io n i n G . R. No . 1 5 8 9 3 0 -3 1 se e ki n g

th at Ne s tl b e d e cla r ed to ha v e co m mi t ted u n fa ir lab o r p rac tic e i n al le ged l y se tt i n g a

p reco nd i tio n to b ar g ai n in g is DENI ED. T h e P eti tio n i n G. R. No . 1 5 8 9 4 4 -4 5 , ho we v er, is

P ART LY G R ANT ED i n th at we RE VE R SE t he r ul i n g o f t h e Co ur t o f Ap p eal s i n C A G. R. SP

No . 6 9 8 0 5 i n so far a s i t r u led t h at t he S ecre tar y o f t h e DO LE gra v el y ab u sed h er d i scre tio n i n

fa il i n g to co n fi n e her a s s u mp t io n o f j u ri sd i ct io n p o wer o ve r t he gro u n d ru le s o f t he CB A

ne go ti at io ns ; b u t t h e r ul in g o f t h e Co urt o f Ap p e al s o n t h e i n cl u sio n o f t he R et ire me n t P l a n a s

a va lid i s s ue i n t h e co ll ect i ve b ar ga i ni n g ne go ti atio n s b et we e n UF E -D F A- K MU a nd Ne s tl i s

AF FI RM ED. T he p ar ti e s ar e d ir ect ed to r e s u m e n e go t ia tio n s re sp e ct i n g t he Re tir e me n t P la n

and to ta ke ac tio n co ns i st e nt wi t h t h e d i sc u s s io n s her ei nab o ve se t fo rt h . No co s ts .

SO ORDERED.
#102 Estate of Nelson Dulay vs Aboitiz Maritime Inc GR 172642, June 13, 2012
ESTATE OF NELSON R. DULAY, represented by his G.R. No. 172642
wife MERRIDY JANE P. DULAY,
Petitioner, Present:

PERALTA, J., Acting Chairperson,*

- versus ABAD,
VILLARAMA, JR.,**
MENDOZA, and
PERLAS-BERNABE, JJ.
ABOITIZ JEBSEN MARITIME, INC. and GENERAL
CHARTERERS, INC., Promulgated:
Respondents.
June 13, 2012
x-----------------------------------------------------------------------------------------x

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to reverse and set
aside the Decision[1] and Resolution[2] dated July 11, 2005 and April 18, 2006 of the Court of Appeals (CA) in CA-
G.R. SP No. 76489.

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

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

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

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

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

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

xxxx

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

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

xxxx

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

On appeal, [the NLRC] affirmed the Labor Arbiters decision as to the grant of death benefits
under the CBA but reversed the latters ruling as to the proximate cause of Nelsons death.[3]

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

On July 11, 2005, the CA promulgated its assailed Decision, the dispositive portion of which reads as follows:

WHEREFORE, in view of the foregoing, the petition is hereby GRANTED and the case is
REFERRED to the National Conciliation and Mediation Board for the designation of the Voluntary
Arbitrator or the constitution of a panel of Voluntary Arbitrators for the appropriate resolution of
the issue on the matter of the applicable CBA provision.

SO ORDERED.[4]

The CA ruled that while the suit filed by Merridy Jane is a money claim, the same basically involves the
interpretation and application of the provisions in the subject CBA. As such, jurisdiction belongs to the voluntary
arbitrator and not the labor arbiter.
 Petitioner filed a Motion for Reconsideration but the CA denied it in its Resolution of April 18, 2006.

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

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

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

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

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

xxxx

(c) Cases arising from the interpretation or implementation of collective bargaining

agreements and those arising from the interpretation or enforcement of company personnel policies
shall be disposed by the Labor Arbiter by referring the same to the grievance machinery and
voluntary arbitration as may be provided in said agreements.
On their part, respondents insist that in the present case, Article 217, paragraph (c) as well as Article 261 of the Labor
Code remain to be the governing provisions of law with respect to unresolved grievances arising from the
interpretation and implementation of collective bargaining agreements. Under these provisions of law, jurisdiction
remains with voluntary arbitrators.

Article 261 of the Labor Code reads, thus:

ARTICLE 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. The

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

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

The petition is without merit.

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

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

The Company and the Union agree that in case of dispute or conflict in the interpretation or
application of any of the provisions of this Agreement, or enforcement of Company policies,
the same shall be settled through negotiation, conciliation or voluntary arbitration. The
Company and the Union further agree that they will use their best endeavor to ensure that any dispute
will be discussed, resolved and settled amicably by the parties hereof within ninety (90) days from
the date of filing of the dispute or conflict and in case of failure to settle thereof any of the parties
retain their freedom to take appropriate action.[6] (Emphasis supplied)
From the foregoing, it is clear that the parties, in the first place, really intended to bring to conciliation or voluntary
arbitration any dispute or conflict in the interpretation or application of the provisions of their CBA. It is settled that
when the parties have validly agreed on a procedure for resolving grievances and to submit a dispute to voluntary
arbitration then that procedure should be strictly observed. [7]

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

In the same manner, Section 29 of the prevailing Standard Terms and Conditions Governing the Employment of
Filipino Seafarers on Board Ocean Going Vessels, promulgated by the Philippine Overseas Employment
Administration (POEA), provides as follows:

Section 29. Dispute Settlement Procedures. − In cases of claims and disputes arising from this
employment, the parties covered by a collective bargaining agreement shall submit the claim
or dispute to the original and exclusive jurisdiction of the voluntary arbitrator or panel of
arbitrators. If the parties are not covered by a collective bargaining agreement, the parties may at
their option submit the claim or dispute to either the original and exclusive jurisdiction of the
National Labor Relations Commission (NLRC), pursuant to Republic Act (RA) 8042, otherwise
known as the Migrant Workers and Overseas Filipinos Act of 1995 or to the original and exclusive
jurisdiction of the voluntary arbitrator or panel of arbitrators. If there is no provision as to the
voluntary arbitrators to be appointed by the parties, the same shall be appointed from the accredited
voluntary arbitrators of the National Conciliation and Mediation Board of the Department of Labor
and Employment.

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

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

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

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

Consistent with this constitutional provision, Article 211 of the Labor Code provides the declared policy of the State
[t]o promote and emphasize the primacy of free collective bargaining and negotiations, including voluntary arbitration,
mediation and conciliation, as modes of settling labor or industrial disputes.

On the basis of the foregoing, the Court finds no error in the ruling of the CA that the voluntary arbitrator has
jurisdiction over the instant case.

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

SO ORDERED.
#103 Digitel Telecom Phils vs Digitel emp union GR 184903, Oct 10, 2012

G.R. Nos. 184903 October 10, 2012

DIGITAL TELECOMMUNICATIONS PHILIPPINES, INC., Petitioner,

vs.
DIGITEL EMPLOYEES UNION (DEU), ARCELO RAFAEL A. ESPLANA, ALAN D. LICANDO,
FELICITO C. ROMERO, JR., ARNOLD D. GONZALES, REYNEL FRANCISCO B. GARCIA, ZOSIMO
B. PERALTA, REGINO T. UNIDAD and JIM L. JAVIER, Respondents.

DECISION

PEREZ, J.:

This treats of the petition for review filed by Digital Telecommunications Philippines, Inc. (Digitel) assailing the 18
June 2008 Decision1 and 9 October 2008 Resolution of the Court of Appeals 10th Division in CA-G.R. SP No.
91719, which affirms the Order of the Secretary of Labor and Employment directing Digitel to commence
Collective Bargaining Agreement (CBA) negotiations and in CA-G.R. SP No. 94825, which declares the dismissal
of affected Digitel employees as illegal.

The facts, as borne by the records, follow.

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

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

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

Digitel was reluctant to negotiate with the Union and demanded that the latter show compliance with the provisions
of the Union’s Constitution and By-laws on union membership and election of officers.

On 4 November 2004, Esplana and his group filed a case for Preventive Mediation before the National Conciliation
and Mediation Board based on Digitel’s violation of the duty to bargain. On 25 November 2004, Esplana filed a
notice of strike.

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

During the pendency of the controversy, Digitel Service, Inc. (Digiserv), a non-profit enterprise engaged in call
center servicing, filed with the Department of Labor and Employment (DOLE) an Establishment Termination
Report stating that it will cease its business operation. The closure affected at least 100 employees, 42 of whom are
members of the herein respondent Union.
Alleging that the affected employees are its members and in reaction to Digiserv’s action, Esplana and his group
filed another Notice of Strike for union busting, illegal lock-out, and violation of the assumption order.

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

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

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

The appeal filed by Digitel with the BLR was eventually dismissed for lack of merit in a Resolution dated 9 March
2007, thereby affirming the 11 May 2005 Decision of the Regional Director.

CA-G.R. SP No. 91719

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

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

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

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

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

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

CA-G.R. SP No. 94825

In accordance with the 13 July 2005 Order of the Secretary of Labor, the unfair labor practice issue was certified for
compulsory arbitration before the NLRC, which, on 31 January 2006, rendered a Decision dismissing the unfair
labor practice charge against Digitel but declaring the dismissal of the 13 employees of Digiserv as illegal and
ordering their reinstatement. The Union manifested that out of 42 employees, only 13 remained, as most had already
accepted separation pay. The dispositive portion of the Decision reads:
WHEREFORE, premises considered, the charge of unfair labor practice is hereby DISMISSED for lack of merit.
However, the dismissal of the remaining thirteen (13) affected employees is hereby declared illegal and DIGITEL is
hereby ORDERED to reinstate them to their former position with full backwages up to the time they are reinstated,
computed as follows:

x x x x.10

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

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

Ruling of the Court of Appeals

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

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

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

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

2) The one hundred thousand (Ph₱ 100,000.00) peso-fine imposed on Digital Telecommunications Philippines, Inc.
is DELETED. No costs.12

The Court of Appeals upheld the Secretary of Labor’s Order for Digitel to commence CBA negotiations with the
Union and emphasized that the pendency of a petition for the cancellation of a union’s registration does not bar the
holding of negotiations for a CBA. The Court of Appeals sustained the finding that Digiserv is engaged in labor-
only contracting and that its employees are actually employees of Digitel.

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

Hence, this petition for review on certiorari.

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

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

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

The pendency of a petition

for cancellation of union
registration does not preclude
collective bargaining.

The first issue raised by Digitel is not novel. It is well-settled that the pendency of a petition for cancellation of
union registration does not preclude collective bargaining.

The 2005 case of Capitol Medical Center, Inc. v. Hon. Trajano13 is apropos. The respondent union therein sent a
letter to petitioner requesting a negotiation of their CBA. Petitioner refused to bargain and instead filed a petition for
cancellation of the union’s certificate of registration. Petitioner’s refusal to bargain forced the union to file a notice
of strike. They eventually staged a strike. The Secretary of Labor assumed jurisdiction over the labor dispute and
ordered all striking workers to return to work. Petitioner challenged said order by contending that its petition for
cancellation of union’s certificate of registration involves a prejudicial question that should first be settled before the
Secretary of Labor could order the parties to bargain collectively. When the case eventually reached this Court, we
agreed with the Secretary of Labor that the pendency of a petition for cancellation of union registration does not
preclude collective bargaining, thus:

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

Trajano was reiterated in Legend International Resorts Limited v. Kilusang Manggagawa ng Legenda (KML-
Independent).15 Legend International Resorts reiterated the rationale for allowing the continuation of either a CBA
process or a certification election even during the pendency of proceedings for the cancellation of the union’s
certificate of registration. Citing the cases of Association of Court of Appeals Employees v. Ferrer- Calleja16 and
Samahan ng Manggagawa sa Pacific Plastic v. Hon. Laguesma, 17 it was pointed out at the time of the filing of the
petition for certification election – or a CBA process as in the instant case – the union still had the personality to file
a petition for certification − or to ask for a CBA negotiation – as in the present case.

Digiserv is a labor-only contractor.

Labor-only contracting is expressly prohibited by our labor laws. Article 106 of the Labor Code defines labor-only
contracting as "supplying workers to an employer [who] does not have substantial capital or investment in the form
of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such
person are performing activities which are directly related to the principal business of such employer."

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

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

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

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

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

xxxx

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

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

After an exhaustive review of the records, there is no showing that first, Digiserv has substantial investment in the
form of capital, equipment or tools. Under the Implementing Rules, substantial capital or investment refers to
"capital stocks and subscribed capitalization in the case of corporations, tools, equipment, implements, machineries
and work premises, actually and directly used by the contractor or subcontractor in the performance or completion
of the job, work or service contracted out." The NLRC, as echoed by the Court of Appeals, did not find substantial
Digiserv’s authorized capital stock of One Million Pesos (₱ 1,000,000.00). It pointed out that only Two Hundred
Fifty Thousand Pesos (₱ 250,000.00) of the authorized capital stock had been subscribed and only Sixty-Two
Thousand Five Hundred Pesos (₱ 62,500.00) had been paid up. There was no increase in capitalization for the last
ten (10) years.19

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

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

Furthermore, Digiserv does not exercise control over the affected employees. The NLRC highlighted the fact that
Digiserv shared the same Human Resources, Accounting, Audit and Legal Departments with Digitel which
manifested that it was Digitel who exercised control over the performance of the affected employees. The NLRC
also relied on the letters of commendation, plaques of appreciation and certification issued by Digitel to the
Customer Service Representatives as evidence of control.
Considering that Digiserv has been found to be engaged in labor-only contracting, the dismissed employees are
deemed employees of Digitel.

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

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

The affected employees were

illegally dismissed.

In addition to finding that Digiserv is a labor-only contractor, records teem with proof that its dismissed employees
are in fact employees of Digitel. The NLRC enumerated these evidences, thus:

That the remaining thirteen (13) affected employees are indeed employees of DIGITEL is sufficiently established by
the facts and evidence on record.

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

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

Further, the Certificates issued to Customer Service Representative likewise show that they are employees of
DIGITEL (Annexes "C-5", "C-6" - "C-7" of UNION’s Position Paper, Records, Vol. 1, pp. 115 to 117), Take for
example the "Service Award" issued to Ma. Loretta C. Esen, one of the remaining affected employees (Annex "C-
5", Supra). The "Service Award" was signed by the officers of DIGITEL – the VP-Customer Services Division, the
VP-Human Resources Division and the Group Head-Human Resources Division. It was issued by DIGITEL to Esen
thru the above named officers "In recognition of her seven (7) years continuous and valuable contributions to the
achievement of Digitel’s organization objectives". It cannot be gainsaid that it is only the employer that issues
service award to its employees.22 (Emphasis not supplied)

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

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

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

For a valid retrenchment, the following elements must be present:

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

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

(3) That the employer pays the retrenched employees separation pay equivalent to one (1) month pay or at least ½
month pay for every year of service, whichever is higher;

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

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

Only the first 3 elements of a valid retrenchment had been here satisfied. Indeed, it is management prerogative to
close a department of the company. Digitel’s decision to outsource the call center operation of the company is a
valid reason to close down the operations of a department under which the affected employees were employed.
Digitel cited the decline in the volume of transaction of operator-assisted call services as supported by Financial
Statements for the years 2003 and 2004, during which Digiserv incurred a deficit of ₱ 163,624.00 and ₱ 164,055.00,
respectively.25 All affected employees working under Digiserv were served with individual notices of termination.
DOLE was likewise served with the corresponding notice. All affected employees were offered separation pay. Only
9 out of the 45 employees refused to accept the separation pay and chose to contest their dismissal before this Court.

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

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

When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry
indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the
dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or
certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified
in the assumption or certification order. If one has already taken place at the time of assumption or certification, all
striking or locked out employees shall immediately return to work and the employer shall immediately resume
operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The
Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to
ensure the compliance with this provision as well as with such orders as he may issue to enforce the same.

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

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

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

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

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

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

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

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

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

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

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

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

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

This length of time from the date the incident occurred to its Resolution31 coupled with the demonstrated
litigiousness of the disputants: (1) with all sorts of allegations thrown by either party against the other; (2) the two
separate filings of a notice of strike by the Union; (3) the Assumption Orders of the DOLE; (4) our own finding of
unfair labor practice by Digitel in targeting the union member-employees, abundantly show that the relationship
between Digitel and the union member-employees is strained. Indeed, such discordance between the parties can very
well be a necessary consequence of the protracted and branched out litigation. We adhere to the oft-quoted doctrine
that separation pay may avail in lieu of reinstatement if reinstatement is no longer practical or in the best interest of
the parties.32

Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to
reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates the
employee from what could be a highly oppressive work environment. On the other hand, it releases the employer
from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. 33

Finally, an illegally dismissed employee should be awarded moral and exemplary damages as their dismissal was
tainted with unfair labor practice.34 Depending on the factual milieu, jurisprudence has awarded varying amounts as
moral and exemplary damages to illegally dismissed employees when the dismissal is attended by bad faith or fraud;
or constitutes an act oppressive to labor; or is done in a manner contrary to good morals, good customs or public
policy; or if the dismissal is effected in a wanton, oppressive or malevolent manner. 35 1âwphi1

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

Unfair labor practices violate the constitutional rights of workers and employees to self-organization, are inimical to
the legitimate interests of both labor and management, including their right to bargain collectively and otherwise
deal with each other in an atmosphere of freedom and mutual respect; and disrupt industrial peace and hinder the
promotion of healthy and stable labor-management relations. As the conscience of the government, it is the Court’s
sworn duty to ensure that none trifles with labor rights. 36
We awarded moral damages in the amount of ₱ 10,000.00 and likewise awarded ₱ 5,000.00 as exemplary damages
for each dismissed employee.

In the recent case of Purefoods Corporation v. Nagkakaisang Samahang Manggagawa ng Purefoods Rank-and-
File,37 we awarded the aggregate amount of ₱ 500,000.00 as moral and exemplary damages to the illegally dismissed
union member-employees which exact number was undetermined.

In the case at hand, with the Union’s manifestation that only 13 employees remain as respondents, as most had
already accepted separation pay, and consistent with our finding that Digitel committed an unfair labor practice in
violation of the employees’ constitutional right to self-organization, we deem it proper to award each of the illegally
dismissed union member-employees the amount of ₱ 10,000.00 and ₱ 5,000.00 as moral and exemplary damages,
respectively.

WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 91719
is AFFIRMED, while the Decision in CA-G.R. SP No. 94825 declaring the dismissal of affected union member-
employees as illegal is MODIFIED to include the payment of moral and exemplary damages in amount of ₱
10,000.00 and ₱ 5,000.00, respectively, to each of the thirteen (13) illegally dismissed union-member employees.

Petitioner Digital Telecommunications Philippines, Inc. is ORDERED to pay the affected employees backwages
and separation pay equivalent to one (1) month salary, or one-half (1/2) month pay for every year of service,
whichever is higher.

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

SO ORDERED.
#103a De La Salle University vs DLSU emp union GR 169254, Aug 23, 2012

G.R. No. 169254 August 23, 2012

DE LA SALLE UNIVERSITY, Petitioner,

vs.
DE LA SALLE UNIVERSITY EMPLOYEES ASSOCIATION (DLSUEA-NAFTEU), Respondent.

LEONARDO-DE CASTRO,*

PERLAS-BERNABE, **

DECISION

LEONARDO-DE CASTRO, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the March 4,
2005 Decision 1 and August 5, 2005 Resolution2 of the Court of Appeals in CA-G.R. SP No. 82472, entitled De La
Salle University versus the Honorable Secretary of Labor and De La Salle University Employees
Association (DLSUEA-NAFTEU), which affirmed the November 17, 2003 Decision3 and January 20, 2004 Order4 of
the Secretary of Labor in OS-AJ-0033-2003 (NCMB-NCR-NS-08-246-03). These decisions and resolutions
consistently found petitioner guilty of unfair labor practice for failure to bargain collectively with respondent.

This petition involves one of the three notices of strike filed by respondent De La Salle University Employees
Association (DLSUEANAFTEU) against petitioner De La Salle University due to its refusal to bargain collectively
with it in light of the intra-union dispute between respondent’s two opposing factions. The following narration of
facts will first discuss the circumstances surrounding the said intra-union conflict between the rival factions of
respondent union and, thereafter, recite the cases relating to the aforementioned conflict, from the complaint for
unfair labor practice to the subsequent notices of strike, and to the assumption of jurisdiction by the Secretary of
Labor.

Petition for Election of Union

Officers

On May 30, 2000, some of respondent’s members headed by Belen Aliazas (the Aliazas faction) filed a petition for
the election of union officers in the Bureau of Labor Relations (BLR). 5 They alleged therein that there has been no
election for respondent’s officers since 1992 in supposed violation of the respondent union’s constitution and by-
laws which provided for an election of officers every three years. 6 It would appear that respondent’s members
repeatedly voted to approve the hold-over of the previously elected officers led by Baylon R. Bañez (Bañez faction)
and to defer the elections to expedite the negotiations of the economic terms covering the last two years of the 1995-
2000 collective bargaining agreement (CBA)7 pursuant to Article 253-A of the Labor Code.8

On March 19, 2001, BLR Regional Director Alex E. Maraan issued a Decision ordering the conduct of an election
of union officers to be presided by the Labor Relations Division of the Department of Labor and Employment-
National Capital Region (DOLE-NCR).9 He noted therein that the members of the Bañez faction were not elected by
the general membership but were appointed by the Executive Board to their positions since 1985. 10

The Bañez faction appealed the said March 19, 2001 Decision of the BLR Regional Director.

While the appeal was pending, the Aliazas faction filed a Very Urgent Motion for Intervention in the BLR. They
alleged therein that the Bañez faction, in complete disregard of the March 19, 2001 Decision, scheduled a "regular"
election of union officers without notice to or participation of the DOLE-NCR.11
In an Order dated July 6, 2001, BLR Director IV Hans Leo J. Cacdac granted the motion for intervention.12 He held
that the unilateral act of setting the date of election on July 9, 2001 and the disqualification of the Aliazas faction by
the DLSUEA-COMELEC supported the intervening faction’s fear of biased elections. 13

Thereafter, in a Resolution dated May 23, 2002, BLR Director Cacdac dismissed the appeal of the Bañez faction.
The salient portions thereof stated:

The exercise of a union member’s basic liberty to choose the union leadership is guaranteed in Article X of
[respondent’s] constitution and by-laws. Section 4 mandates the conduct of a regular election of officers on the first
Saturday of July and on the same date every three years thereafter.

In unequivocal terms, Article 241(c) of the Labor Code states that "[t]he members shall directly elect their officers,
including those of the national union or federation, to which they or their union is affiliated, by secret ballot at
intervals of five (5) years."

[The Bañez faction] admitted that no elections were conducted in 1992 and 1998, when the terms of office of
the officers expired. This Office emphasizes that even the decision to dispense with the elections and allow the
hold-over officers to continue should have been subjected to a secret ballot under Article 241(d) which states:

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.

With the clear and open admission that no election transpired even after the expiration of the union officers’
terms of office, the call for the conduct of elections by the Regional Director was valid and should be
sustained.14 (Emphases supplied.)

Subsequently, in a memorandum dated May 16, 2003, BLR Director Cacdac stated that there was no void in the
union leadership as the March 19, 2001 Decision of Regional Director Maraan did not automatically terminate the
Bañez faction’s tenure in office. He explained therein that "[a]s duly-elected officers of [respondent], their
leadership is not deemed terminated by the expiration of their terms of office, for they shall continue their functions
and enjoy the rights and privileges pertaining to their respective positions in a hold-over capacity, until their
successors shall have been elected and qualified." 15

On August 28, 2003, an election of union officers under the supervision of the DOLE was conducted. The Bañez
faction emerged as the winner thereof.16 The Aliazas faction contested the election results.

On October 29, 2003, the Bañez faction was formally proclaimed as the winner in the August 28, 2003 election of
union officers.17

The Complaint for Unfair Labor

Practices and Three Notices of
Strike

On March 20, 2001, despite the brewing conflict between the Aliazas and Bañez factions, petitioner entered into a
five-year CBA covering the period from June 1, 2000 to May 31, 2005. 18

On August 7, 2001, the Aliazas faction wrote a letter to petitioner requesting it to place in escrow the union dues and
other fees deducted from the salaries of employees pending the resolution of the intra-union conflict. We quote the
pertinent portion of the letter here:
The [BLR], in its March 19, 2001 [decision], declared that the hold-over capacity as president of Mr. Baylon Bañez,
as well as that of the other officers [of respondent] has been extinguished. It was likewise stated in the [decision]
that "to further defer the holding of a local election is whimsical, capricious and is a violation of the union members’
rights under Article 241 and is punishable by expulsion."

This being so, we would like to request [petitioner] to please put on escrow all union dues/agency fees and whatever
money considerations deducted from salaries of the concerned co-academic personnel until such time that an
election of union officials has been scheduled and subsequent elections has been held. We fully understand that
putting the collection on escrow means the continuance of our monthly deductions but the same will not be remitted
to respondent’s funds.19

Petitioner acceded to the request of the Aliazas faction and informed the Bañez faction of such fact in a letter dated
August 16, 2001. Petitioner explained:

It is evident that the intra-union dispute between the incumbent set of officers of your Union on one hand and a
sizeable number of its members on the other hand has reached serious levels. By virtue of the 19 March 2001
Decision and the 06 July 2001 Order of the Department of Labor and Employment (DOLE), the hold-over authority
of your incumbent set of officers has been considered extinguished and an election of new union officers, to be
conducted and supervised by the DOLE, has been directed to be held. Until the result of this election [come] out
and a declaration by the DOLE of the validly elected officers is made, a void in the Union leadership exists.

In light of these circumstances, the University has no other alternative but to temporarily do the following:

1. Establish a savings account for the Union where all the collected union dues and agency fees will be
deposited and held in trust; and

2. Discontinue normal relations with any group within the Union including the incumbent set of officers.

We are informing you of this decision of [petitioner] not only for your guidance but also for the apparent reason that
[it] does not want itself to be unnecessarily involved in your intra-union dispute. This is the only way [petitioner]
can maintain neutrality on this matter of grave concern. 20 (Emphasis supplied.)

In view of the foregoing decision of petitioner, respondent filed a complaint for unfair labor practice in the National
Labor Relations Commission (NLRC) on August 21, 2001. 21 It alleged that petitioner committed a violation of
Article 248(a) and (g) of the Labor Code which provides:

Article 248. Unfair labor practices of employers. It shall be unlawful for an employer to commit any of the
following unfair labor practice:

(a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization.

xxxx

(d) To initiate, dominate, assist or otherwise interfere with the formation or administrator of any labor organization,
including the giving of financial or other support to it or its organizers or supporters.

Respondent union asserted that the creation of escrow accounts was not an act of neutrality as it was influenced by
the Aliazas factions’s letter and was an act of interference with the internal affairs of the union. Thus, petitioner’s
non-remittance of union dues and discontinuance of normal relations with it constituted unfair labor practice.

Petitioner, for its defense, denied the allegations of respondent and insisted that its actions were motivated by good
faith.
Meanwhile, on March 7, 2002, respondent filed a notice of strike in the National Conciliation and Mediation Board
(NCMB).22

Shortly thereafter, or on July 12, 2002, Labor Arbiter Felipe P. Pati dismissed the August 21, 2001 complaint for
unfair labor practice against petitioner for lack of merit in view of the May 23, 2002 decision of the BLR, affirming
the need to conduct an election of the union’s officers.23 The labor arbiter, in effect, upheld the validity of
petitioner’s view that there was a void in the leadership of respondent.

The July 12, 2002 Decision of Labor Arbiter Pati, however, did not settle matters between respondent and petitioner.

On March 15, 2003, respondent sent a letter to petitioner requesting for the renegotiation of the economic terms for
the fourth and fifth years of the then current CBA, to wit:

This refers to the re-negotiation of the economic provisions for the [fourth and fifth] year[s] of the 2000-2005
[CBA] that will commence sometime in March 2003.

In this regard, the [Bañez faction] for and in behalf of [respondent] would like to respectfully request your good
office to provide us a copy of the latest Audited Financial Statements of [petitioner,] including its budget
performance report so that [petitioner] and [respondent through] their respective authorized representatives could
facilitate the negotiations thereof.

We are furnishing [petitioner through] your good self a copy of [our] CBA economic proposals for the [fourth and
fifth] year[s] of the 2000-2005 CBA signed by its authorized negotiating panel.

We also request [petitioner] to furnish us a copy of its counter proposals as well as a list of its negotiating panel not
later than ten (10) days from receipts of [our] CBA proposals so that [we] and [petitioner] can now proceed with the
initial conference to discuss the ground rules that will govern the CBA negotiation. 24

In a letter dated March 20, 2003,25 petitioner denied respondent’s request. It stated therein:

Pursuant to the [d]ecisions of appropriate government authority, and consistent with the position enunciated and
conveyed to you by [petitioner] in my letter dated August 16, 2001, there is a conclusion of fact that there is an
absolute void in the leadership of [respondent]. Accordingly, your representation as President or officer of, as
well as, that of all persons purporting to be officers and members of the board of the said employees association
[will] not [be] recognized. Normal relations with the union cannot occur until the said void in the leadership
of [respondent] is appropriately filled. Affected by the temporary suspension of normal relations
with [respondent] is the renegotiation of the economic provisions of the 2002-2005 CBA. No renegotiation can
occur given the void in the leadership of [respondent.]26

As a consequence of the aforementioned letter, respondent filed a second notice of strike on April 4, 2003. 27 Upon
the petition filed by petitioner on April 11, 2003, 28 the Secretary of Labor assumed jurisdiction over the matter
pursuant to Article 263 of the Labor Code29 as petitioner, an educational institution, was considered as belonging to
an industry indispensable to national interest and docketed the case as OS-AJ-0015-2003.30

On June 26, 2003, the Second Division of the NLRC affirmed the July 12, 2002 Decision of Labor Arbiter
Pati.31 Respondent moved for reconsideration but it was denied by the NLRC in a Resolution dated September 30,
2003.32

Meanwhile, on July 28, 2003, the Secretary of Labor issued a Decision 33 in OS-AJ-0015-2003, finding petitioner
guilty of violating Article 248(g) in relation to Article 252 of the Labor Code. 34 The salient portion thereof stated:

The University is guilty of refusal to bargain amounting to an unfair labor practice under Article 248(g) of the Labor
Code. Indeed there was a requirement on both parties of the performance of the mutual obligation to meet and
convene promptly and expeditiously in good faith for the purpose of negotiating an agreement. Undoubtedly, both
[petitioner] and [respondent] entered into a [CBA] on [March 20, 2001. The term of the said CBA commenced on
[June 1, 2000 and with the expiration of the economic provisions on the third year, [respondent] initiated negotiation
by sending a letter dated March 15, 2003, together with the CBA proposal. In reply to the letter of [respondent],
[petitioner] in its letter dated [March 20, 2003 refused.

Such an act constituted an intentional avoidance of a duty imposed by law. There was nothing in the [March 19,
2001 and July 6, 2001 orders] of Director Maraan and Cacdac which restrained or enjoined compliance by the
parties with their obligations under the CBA and under the law. The issue of union leadership is distinct and separate
from the duty to bargain.

In fact, BLR Director Cacdac clarified that there was no void in [respondent’s] leadership. The pertinent decision
dated March 19, 2001 x x x reads35 :

We take this opportunity to clarify that there is no void in [respondent’s] leadership. The [March 19, 2001 decision]
x x x should not be construed as an automatic termination of the incumbent officers[’] tenure of office. As duly-
elected officers of [respondent], their leadership is not deemed terminated by the expiration of their terms of office,
for they shall continue their functions and enjoy the rights and privileges pertaining to their respective positions in a
hold-over capacity, until their successors shall have been elected and qualified.

It is thus very clear. x x x. This official determination by the BLR Director [Cacdac] removes whatever cloud of
doubt on the authority of the incumbent to negotiate for and in behalf of [respondent] as the bargaining agent of all
the covered employees. [Petitioner] is duty bound to negotiate collectively pursuant to Art. 252 of the Labor Code,
as amended.

xxxx

On the question: [i]s [petitioner] guilty of unfair labor practice? This office resolves the issue in the affirmative.
Citing the case of the Divine Word University of Tacloban v. Secretary of Labor, [petitioner] is guilty of unfair labor
practice in refusing to abide by its duty to bargain collectively. The refusal of [petitioner] to bargain is tainted with
bad faith amounting to unfair labor practice. There is no other way to resolve the issue given the facts of the case
and the law on the matter.

WHEREFORE, premises considered, this Office finds [petitioner] guilty of refusal to bargain collectively in
violation of Article 252 in relation to Article 248 of the Labor Code, as amended. Management is hereby directed to
cease and desist from refusing to bargain collectively. The parties are therefore directed to commence negotiations
effective immediately.36 (Citations omitted.)

On August 1, 2003, respondent reiterated its demand on petitioner to bargain collectively pursuant to the
aforementioned Decision of the Secretary of Labor.37

On August 4, 2003, petitioner sent a letter to respondent explaining that it cannot act on the latter’s letter. The
August 4, 2003 letter of petitioner stated:

[Petitioner’s] counsel is preparing a Motion for Reconsideration that would be filed with the Office of the Secretary
of Labor and Employment. Under the Rule, [petitioner] still has the remedy of filing such Motion with the Office of
the Secretary before elevating the matter to higher authorities should it become necessary.

We, therefore, regret to advise you that [petitioner] cannot accede to your demand to immediately commence
negotiations for the CBA with your group or any other group of Union members, as the case may be, until such time
that the case before the Secretary is resolved with finality. We will, therefore, continue to defer the CBA
negotiations pending final resolution of the matter.
As regards your other demands, [petitioner] is of the position that the matters subject of said demands are still
pending before the various offices of the Labor Arbiters and NLRC and, therefore, it cannot act on the same until
such time that said cases are likewise resolved with finality. It cannot be assumed that all these cases that you filed
have been rendered moot and academic by the Secretary’s Decision, otherwise you would, in effect, be admitting
that you have engaged in "forum shopping." 38

Failing to secure a reconsideration of the July 28, 2003 Decision of the Secretary of Labor, petitioner assailed the
same in the Court of Appeals via a petition for certiorari docketed as CA-G.R. SP No. 81649.

On August 27, 2003, respondent filed the third notice of strike, 39 in the wake of petitioner’s August 4, 2003 letter
and citing among others petitioner’s alleged violation of the CBA and continuing refusal to bargain in good faith.
Petitioner, on the other hand, filed a petition for assumption of jurisdiction for this third notice of strike. 40 Again, the
Secretary of Labor assumed jurisdiction. This case was docketed as OS-AJ-0033-2003.

On November 17, 2003, the Secretary of Labor, in resolving OS-AJ-0033-2003, cited the July 28, 2003 Decision in
OS-AJ-0015-2003, and consequently declared that petitioner committed an unfair labor practice. The salient
portions of said Decision stated:

Considering that this case, docketed as Case No. OS-AJ-0033-2003 is based on the same set of facts with
another case, involving the same parties numbered as OS-AJ-0015-2003, and based on the same factual and
legal circumstances, we have to consistently hold that the [petitioner] has indeed failed to comply with its
obligation under the law. As a matter of fact, it admits in persisting to refuse despite the fact that there is no more
legal obstacle preventing the commencement of the Collective Bargaining Negotiation between the parties. Anent
the so called void in the Union leadership, We declared that the same does not constitute a valid ground to
refuse to negotiate because [petitioner’s] duty to bargain under the law is due and demandable under the law
by [respondent] as a whole and not by any faction within the union.

xxxx

x x x Events have lately turned out in favor of [respondent], thereby obliterating any further justification on the part
of [petitioner] not to bargain. On October 29, 2003, the new Regional Director of DOLENCR, Ciriaco E.
Lagunzad III, issued a resolution declaring the Bañez group as the duly elected officers of the Union. x x x.

xxxx

The above election results were the outcome of a duly-held union election, supervised by the Department’s
Regional Office. This was the election ordered in the [July 6, 2001 and March 19, 2001 orders of the
BLR]. This was also the same election invoked by [petitioners] in trying to justify it continuing refusal to
bargain.

The [members of the Bañez faction have] reportedly taken their oath of office and have qualified. [Petitioner] is now
under estoppel from recognizing them, considering that it committed in writing to recognize and commence
bargaining once a set of duly elected officers [is] proclaimed after an election duly conducted under the supervision
of the Department.

xxxx

Not only has [petitioner] refused to negotiate with [respondent], it has unduly withheld the money belonging to the
bargaining agent. Both these acts are illegal and are tantamount to Unfair Labor Practice under Article 248 in
relation to Article 252 of the Labor Code x x x.

ACCORDINGLY, all the foregoing premises being duly considered, this Office hereby declares that [petitioner]
committed Unfair Labor Practice in violation of [Article 248 in relation to Article 252 of the Labor Code x x x.
[Petitioner] and its duly authorized officers and personnel are therefore ordered to cease and desist from committing
said acts under pain of legal sanction.

[Petitioner] is therefore specifically directed to commence collective bargaining negotiation with [respondents]
without further delay and to immediately turn over to the Bañez group the unlawfully withheld union dues and
agency fees with legal interest corresponding to the period of the unlawful withholding. All these specific directives
should be done within ten (10) days from receipt of this Decision and with sufficient proof of compliance herewith
to be submitted immediately thereafter.41

In accordance with the terms of the aforementioned Decision, petitioner turned over to respondent the collected
union dues and agency fees from employees which were previously placed in escrow amounting to ₱ 441,924.99. 42

Nonetheless, petitioner moved for the reconsideration of the November 17, 2003 Decision of the Secretary of Labor
but it was denied in an Order dated January 20, 2004.

Aggrieved, petitioner filed a petition for certiorari under Rule 65 of the Rules of Court with the Court of Appeals.
Petitioner alleged therein that the Secretary of Labor committed grave abuse of discretion by holding that it
(petitioner) was liable for unfair labor practice. Taking a contrary stance to the findings of the Secretary of Labor,
petitioner stressed that it created the escrow accounts for the benefit of the winning faction and undertook temporary
measures in light of the March 19, 2001 and July 6, 2001 Orders of the BLR. Thus, it should not be penalized for
taking a hands-off stance in the intra-union controversy between the Aliazas and Bañez factions.

In a Decision dated March 4, 2005, the Court of Appeals affirmed the November 17, 2003 Decision and January 20,
2004 Order of the Secretary of Labor and dismissed the said petition. It held:

[Petitioner] finds reason to refuse to negotiate with [respondent’s incumbent officers] because of the alleged "void in
the union leadership" declared by the Regional Director in his March 19, 2001 decision, [but] after the election of
the union officers held on August 28, 2003, continued refusal by the University to negotiate amounts to unfair labor
practice. The non-proclamation of the newly elected union officers cannot be used as an excuse to fulfill the
duty to bargain collectively.43 (Emphasis supplied.)

Petitioner moved for reconsideration but it was denied in a Resolution dated August 5, 2005. The Court of Appeals
noted that petitioner’s arguments were a mere "rehash of the issues and discussions it presented in its petition and in
the relevant pleadings submitted x x x."44

Meanwhile, the Court of Appeals dismissed CA-G.R. SP No. 81649 (which assailed the July 28, 2003 Decision in
OS-AJ-0015-2003), in a Decision dated March 18, 2005. 45 The said decision likewise found that petitioner erred in
unilaterally suspending negotiations with respondent since the pendency of the intra-union dispute was not a
justifiable reason to do so.

Petitioner moved for reconsideration of the aforesaid decision in CAG. R. SP No. 81649 but it was denied in a
Resolution dated June 7, 200546 due to lack of merit.

Aggrieved, petitioner elevated both the assailed decisions and resolutions in this case and in CA-G.R. SP No. 81649,
which was docketed as G.R. No. 168477, to this Court. Petitioner, in both instances, essentially argued that it did not
maliciously evade its duty to bargain. On the contrary, it asserts that it merely relied in good faith on the March 19,
2001 Decision of the BLR that there was a void in respondent’s leadership. 47

This Court, through its Third Division, denied G.R. No. 168477 in a minute resolution dated July 20, 2005 due to
the petition’s "failure x x x to show that a reversible error had been committed by the appellate court." 48 The motion
for reconsideration was denied with finality on September 21,

200549 and entry of judgment was made on November 3, 2005. 50

Meanwhile, respondent was ordered to file a comment herein, and, subsequently, this petition was given due course.

We note that both G.R. No. 168477 and this petition are offshoots of petitioner’s purported temporary measures to
preserve its neutrality with regard to the perceived void in the union leadership. While these two cases arose out of
different notices to strike filed on April 3, 2003 and August 27, 2003, it is undeniable that the facts cited and the
arguments raised by petitioner are almost identical. Inevitably, G.R. No. 168477 and this petition seek only one
relief, that is, to absolve petitioner from respondent’s charge of committing an unfair labor practice, or
specifically, a violation of Article 248(g) in relation to Article 252 of the Labor Code.

For this reason, we are constrained to apply the law of the case doctrine in light of the finality of our July 20, 2005
and September 21, 2005 resolutions in G.R. No. 168477. In other words, our previous affirmance of the Court of
Appeals’ finding – that petitioner erred in suspending collective bargaining negotiations with the union and in
placing the union funds in escrow considering that the intra-union dispute between the Aliazas and Bañez factions
was not a justification therefor — is binding herein. Moreover, we note that entry of judgment in G.R. No. 168477
was made on November 3, 2005, and that put to an end to the litigation of said issues once and for all. 51

The law of the case has been defined as the opinion delivered on a former appeal. It means that whatever is once
irrevocably established as the controlling legal rule or decision between the same parties in the same case continues
to be the law of the case, whether correct on general principles or not, so long as the facts on which such decision
was predicated continue to be the facts of the case before the court. 52

In any event, upon our review of the records of this case, we find that the Court of Appeals committed no reversible
error in its assailed Decision dated March 4, 2005 and Resolution dated August 5, 2005. Petitioner’s reliance on the
July 12, 2002 Decision of Labor Arbiter Pati, and the NLRC’s affirmance thereof, is misplaced. The unfair labor
practice complaint dismissed by Labor Arbiter Pati questioned petitioner’s actions immediately after the March 19,
2001 Decision of BLR Regional Director Maraan, finding that "the reason for the hold-over [of the previously
elected union officers] is already extinguished." The present controversy involves petitioner’s actions subsequent to
(1) the clarification of said March 19, 2001 Maraan Decision by BLR Director Cacdac who opined in a May 16,
2003 memorandum that the then incumbent union officers (i.e., the Bañez faction) continued to hold office until
their successors have been elected and qualified, and (2) the July 28, 2003 Decision of the Secretary of Labor in OS-
AJ-0015-2003 ruling that the very same intra-union dispute (subject of several notices of strike) is insufficient
ground for the petitioner to suspend CBA negotiations with respondent union. We take notice, too, that the aforesaid
Decision of Labor Arbiter Pati has since been set aside by the Court of Appeals and such reversal was upheld by this
Court’s Second Division in its Decision dated April 7, 2009 in G.R. No. 177283, wherein petitioner was found liable
for unfair labor practice.53

Neither can petitioner seek refuge in its defense that as early as November 2003 it had already released the escrowed
union dues to respondent and normalized relations with the latter. The fact remains that from its receipt of the July
28, 2003 Decision of the Secretary of Labor in OS-AJ-0015-2003 until its receipt of the November 17, 2003
Decision of the Secretary of Labor in OS-AJ-0033-2003, petitioner failed in its duty to collectively bargain with
respondent union without valid reason. At most, such subsequent acts of compliance with the issuances in OS-AJ-
0015-2003 and OS-AJ-0033-2003 merely rendered moot and academic the Secretary of Labor’s directives for
petitioner to commence collective bargaining negotiations within the period provided.

To conclude, we hold that the findings of fact of the Secretary of Labor and the Court of Appeals, as well as the
conclusions derived therefrom, were amply supported by evidence on record. Thus, in line with jurisprudence that
such findings are binding on this Court, we see no reason to disturb the same. 54

WHEREFORE, the petition is DENIED.SO ORDERED.

#103b Manila Mining Corp EA-FFW vs Manila Mining Corp GR 178222-23, Sept 29, 2010
MANILA MINING CORP. EMPLOYEES G.R. Nos. 178222-23
ASSOCIATION-FEDERATION OF FREE
WORKERS CHAPTER, SAMUEL G. ZUIGA,
in his capacity as President, Present:
Petitioners,
CORONA, C.J.,
Chairperson
VELASCO, JR.,
-versus- LEONARDO-DE CASTRO,
DEL CASTILLO, and
PEREZ, JJ.

MANILA MINING CORP. and/or ARTEMIO

F. DISINI, President, RENE F.
CHANYUNGCO, (SVP-Treasurer),
RODOLFO S. MIRANDA, (VP-Controller),
VIRGILIO MEDINA (VP), ATTY.
CRISANTO MARTINEZ (HRD), NIGEL
TAMLYN (Resident Manager), BRYAN YAP
(VP), FELIPE YAP (Chairman of the Board),
and the NATIONAL LABOR RELATIONS
COMMISSION (FIRST DIVISION),
Respondents.

Promulgated:

September 29, 2010

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

DECISION

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

Respondent Manila Mining Corporation (MMC) is a publicly-listed corporation engaged in large-scale

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

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

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

On 30 July 2001, MMC called for the suspension of negotiations on the CBA with the Union until resumption
of mining operations.[5]

Among the employees laid-off, complainants Samuel Zuiga, Myrna Maquio, Doroteo Torre, Arsenio Mark
Perez, Edmundo Galvez, Diana Ruth Rellores, Jonathan Araneta, Teresita Lagman, Reynaldo Anzures, Gerardo
Opena, and Edwin Tuazon, together with the Union filed a complaint before the labor arbiter [6] on even date praying
for reinstatement, recognition of the Union as the sole and exclusive representative of its rank-and-file employees, and
payment of moral and exemplary damages and attorneys fees.[7]

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

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

The labor arbiter ruled in favor of MMC and held that the temporary shutdown of the mining operation, as
well as the temporary lay-off of the employees, is valid.[10]
On appeal, the National Labor Relations Commission (NLRC) modified the judgment of the labor arbiter
and ordered the payment of separation pay equivalent to one month pay for every year of service. It ratiocinated that
the temporary lay-off, which exceeded more than six (6) months, had the effect of severance of the employer-employee
relationship. The dispositive portion of the Decision read:

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

1. Samuel G. [Z]uiga From Feb. 1, 1995 to

July 27, 2001 = 7 yrs.
P14,300/mo.
P14,300 x 7 yrs. x P 50,050.00

2. Myrna Maquio From March 1992 to

July 27, 2001 = 9 yrs.
P14,000/mo.
P14,000 x 9 yrs. x P 63,000.00
3. Doroteo J. Torre From July 1983 to
July 27, 2001 = 18 yrs.
P10,000/mo.
P10,000 x 18 yrs. x P 90,000.00

4. Arsenio Mark M. Perez From June 1996 to

July 27, 2001 = 5 yrs.
P9,500/mo.
P9,500 x 5 yrs. x P 23,750.00

5. Edmundo M. Galvez From June 1997 to

July 27, 2001 = 4 yrs.
P9,500/mo.
P9,500 x 4 yrs. x P 19,000.00

6. Jonathan Araneta From March 1992 to

July 27, 2001 = 9 yrs.
P15,500/mo.
P15,500 x 9 yrs. x P 69,750.00

7. Teresita D. Lagman From August 1980 to

July 27, 2001 = 20 yrs.
P10,900/mo.
P10,900 x 20 yrs. x P109,000.00

8. Gerardo Opena From October 1997 to

July 27, 2001 = 4 yrs.
P8,250/mo.
P8,250 x 4 yrs. x P 16,500.00

9. Edwin Tuazon From August 1994 to

July 27, 2001 = 8 yrs.
P7,000/mo.
P7,000 x 8 yrs. x P 28,000.00
GRAND TOTAL P469,050.00
In addition respondent company is hereby ordered to pay attorneys fees to complainants equivalent to 10%
of the award. [11]
In an Order[12] dated 31 May 2004, the NLRC affirmed its Resolution.

Dissatisfied, both parties separately filed their petitions for certiorari with the Court of Appeals, docketed as CA-G.R.
SP No. 86073 and CA G.R. SP No. 86163.
The two petitions were consolidated upon motion by MMC in a Resolution dated 3 February 2005.

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

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

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

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

Only the Union elevated the case to this Court via the instant petition for review on certiorari. The Unionattributes
bad faith on the part of MMC in implementing the temporary lay-off resulting in the complainants constructive
dismissal. The Union alleges that the failure to obtain a permit to operate TP No. 7 is largely due to failure on the part
of MMC to comply with the DENR-EMBs conditions.[15]

The Union claims that the temporary lay-off was effected without any proper notice to the DOLE as mandated by
Article 283 of the Labor Code. It further maintains that MMC did not observe the jurisprudential criteria in the
selection of the employees to be laid-off.[16]

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

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

MMC further submits that where the closure is due to serious business losses, such as in this case where the aggregate
losses amounted to over P880,000,000.00, the law does not impose any obligation upon the employer to pay separation
benefits.[19]
With respect to the charge of unfair labor practice, MMC avers that it merely deferred responding to the Unions letter-
proposal until the resumption of its mining operations. It went to claim further that the employment relationship
between the parties was suspended at the time the request to bargain was made.[20]

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

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

Despite all efforts exerted by MMC, it did not succeed in obtaining the consent of the residents of the
community where the tailings pond would operate, one of the conditions imposed by DENR-EMB in granting its
application for a permanent permit. It is precisely MMCs faultless failure to secure a permit which caused the
temporary shutdown of its mining operations. As aptly put by the Court of Appeals:

The evidence on record indeed clearly shows that MMCs suspension of its mining operations was
bonafide and the reason for such suspension was supported by substantial evidence. MMC cannot
conduct mining operations without a tailings disposal system. For this purpose, MMC operates TP
No. 7 under a valid permit from the Department of Environment and Natural Resources (DENR)
through its Environmental Management Bureau (EMB). In fact, a Temporary Authority to Construct
and Operate was issued on January 25, 2001 in favor of MMC valid for a period of six (6) months
or until July 25, 2001. The NLRC did not dispute MMCs claim that it had timely filed an application
for renewal of its permit to operate TP No. 7 but that the renewal permit was not immediately
released by the DENR-EMB, hence, MMC was compelled to temporarily shutdown its milling and
mining operations. Here, it is once apparent that the suspension of MMCs mining operations
was not due to its fault nor was it necessitated by financial reasons. Such suspension was brought
about by the non-issuance of a permit for the continued operation of TP No. 7 without which MMC
cannot resume its milling and mining operations. x x x.[21] [Emphasis supplied.]

Unfair labor practice cannot be imputed to MMC since, as ruled by the Court of Appeals, the call of MMC
for a suspension of the CBA negotiations cannot be equated to refusal to bargain.
 Article 252 of the Labor Code defines the phrase duty to bargain collectively, to wit:

ARTICLE 252. Meaning of duty to bargain collectively. - The duty to bargain

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

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

The Union based its contention on the letter request by MMC for the suspension of the collective bargaining
negotiations until it resumes operations.[23] Verily, it cannot be said that MMC deliberately avoided the negotiation. It
merely sought a suspension and in fact, even expressed its willingness to negotiate once the mining operations
resume. There was valid reliance on the suspension of mining operations for the suspension, in turn, of the CBA
negotiation. The Union failed to prove bad faith in MMCs actuations.

Even as we declare the validity of the lay-off, we cannot say that MMC has no obligation at all to the laid-
off employees. The validity of its act of suspending its operations does not excuse it from paying separation pay.

MMC seeks refuge in Article 286 which provides:

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

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

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

We disagree.

As correctly elucidated upon by the Court of Appeals:

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

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

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

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

Said provision is emphatic that an employee, who was dismissed due to cessation of business operation, is
entitled to the separation pay equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of
service, whichever is higher. And it is jurisprudential that separation pay should also be paid to employees even if the
closure or cessation of operations is not due to losses.[25]
 The Court is not impressed with the claim that actual severe financial losses exempt MMC from paying
separation benefits to complainants. In the first place, MMC did not appeal the decision of the Court of Appeals which
affirmed the NLRCs award of separation pay to complainants. MMCs failure had the effect of making the awards final
so that MMC could no longer seek any other affirmative relief. In the second place, the non-issuance of a permit forced
MMC to permanently cease its business operations, as confirmed by the Court of Appeals. Under Article 283, the
employer can lawfully close shop anytime as long as cessation of or withdrawal from business operations is bona
fide in character and not impelled by a motive to defeat or circumvent the tenurial rights of employees, and as long as
he pays his employees their termination pay in the amount corresponding to their length of service. [26] The cessation
of operations, in the case at bar is of such nature. It was proven that MMC stopped its operations precisely due to
failure to secure permit to operate a tailings pond. Separation pay must nonetheless be given to the separated
employees.

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

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

SO ORDERED.
#103c SMFI vs San Miguel Corp Supervisors GR 146206, Aug 1, 2011
SAN MIGUEL FOODS, INCORPORATED, G.R. No. 146206
Petitioner,
Present:

CARPIO,* J.,
VELASCO, J., Chairperson,
-versus- PERALTA,
ABAD, and
SERENO,**JJ.

SAN MIGUEL CORPORATION

SUPERVISORS and EXEMPT UNION, Promulgated:
Respondent.

August 1, 2011
x---------------------------------------------------------------------------------x

DECISION

PERALTA, J.:

The issues in the present case, relating to the inclusion of employees in supervisor levels 3 and 4 and the exempt
employees in the proposed bargaining unit, thereby allowing their participation in the certification election; the
application of the community or mutuality of interests test; and the determination of the employees who belong to the
category of confidential employees, are not novel.
In G.R. No. 110399, entitled San Miguel Corporation Supervisors and Exempt Union v. Laguesma, [1] the
Court held that even if they handle confidential data regarding technical and internal business operations, supervisory
employees 3 and 4 and the exempt employees of petitioner San Miguel Foods, Inc. (SMFI) are not to be considered
confidential employees, because the same do not pertain to labor relations, particularly, negotiation and settlement of
grievances. Consequently, they were allowed to form an appropriate bargaining unit for the purpose of collective
bargaining. The Court also declared that the employees belonging to the three different plants of San Miguel
Corporation Magnolia Poultry Products Plants in Cabuyao, San Fernando, and Otis, having community or mutuality
of interests, constitute a single bargaining unit. They perform work of the same nature, receive the same wages and
compensation, and most importantly, share a common stake in concerted activities. It was immaterial that the three
plants have different locations as they did not impede the operations of a single bargaining representative. [2]
Pursuant to the Court's decision in G.R. No. 110399, the Department of Labor and Employment National Capital
Region (DOLE-NCR) conducted pre-election conferences.[3] However, there was a discrepancy in the list of eligible
voters, i.e., petitioner submitted a list of 23 employees for the San Fernando plant and 33 for the Cabuyao plant, while
respondent listed 60 and 82, respectively.[4]
 On August 31, 1998, Med-Arbiter Agatha Ann L. Daquigan issued an Order[5] directing Election Officer
Cynthia Tolentino to proceed with the conduct of certification election in accordance with Section 2, Rule XII of
Department Order No. 9.

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

Cabuyao San Fernando Total

Plant Plant
Yes 23 23 46
No 0 0 0
Spoiled 2 0 2
Segregated 41 35 76
Total Votes
Cast 66 58 124

On the date of the election, September 30, 1998, petitioner filed the Omnibus Objections and Challenge to
Voters,[7] questioning the eligibility to vote by some of its employees on the grounds that some employees do not
belong to the bargaining unit which respondent seeks to represent or that there is no existence of employer-employee
relationship with petitioner. Specifically, it argued that certain employees should not be allowed to vote as they are: (1)
confidential employees; (2) employees assigned to the live chicken operations, which are not covered by the
bargaining unit; (3) employees whose job grade is level 4, but are performing managerial work and scheduled to be
promoted; (4) employees who belong to the Barrio Ugong plant; (5) non-SMFI employees; and (6) employees who
are members of other unions.
On October 21, 1998, the Med-Arbiter issued an Order directing respondent to submit proof showing that
the employees in the submitted list are covered by the original petition for certification election and belong to the
bargaining unit it seeks to represent and, likewise, directing petitioner to substantiate the allegations contained in its
Omnibus Objections and Challenge to Voters.[8]

In compliance thereto, respondent averred that (1) the bargaining unit contemplated in the original petition is the
Poultry Division of San Miguel Corporation, now known as San Miguel Foods, Inc.; (2) it covered the operations in
Calamba, Laguna, Cavite, and Batangas and its home base is either in Cabuyao, Laguna or San Fernando, Pampanga;
and (3) it submitted individual and separate declarations of the employees whose votes were challenged in the
election.[9]
Adding the results to the number of votes canvassed during the September 30, 1998 certification election, the final
tally showed that: number of eligible voters 149; number of valid votes cast 121; number of spoiled ballots - 3; total
number of votes cast 124, with 118 (i.e., 46 + 72 = 118 ) Yes votes and 3 No votes.[10]
 The Med-Arbiter issued the Resolution[11] dated February 17, 1999 directing the parties to appear before the
Election Officer of the Labor Relations Division on March 9, 1999, 10:00 a.m., for the opening of the segregated
ballots. Thereafter, on April 12, 1999, the segregated ballots were opened, showing that out of the 76 segregated
votes, 72 were cast for Yes and 3 for No, with one spoiled ballot. [12]

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

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

Petitioners Partial Motion for Reconsideration[15] dated August 14, 1999 was denied by the then Acting
DOLE Undersecretary in the Order[16] dated August 27, 1999.

In the Decision[17] dated April 28, 2000, in CA-G.R. SP No. 55510, entitled San Miguel Foods, Inc. v. The
Honorable Office of the Secretary of Labor, Bureau of Labor Relations, and San Miguel Corporation Supervisors and
Exempt Union, the Court of Appeals (CA) affirmed with modification the Resolution dated July 30, 1999 of the DOLE
Undersecretary, stating that those holding the positions of Human Resource Assistant and Personnel Assistant are
excluded from the bargaining unit.
Petitioners Motion for Partial Reconsideration[18] dated May 23, 2000 was denied by the CA in the
Resolution[19] dated November 28, 2000.

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

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

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

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

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

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

Petitioners contentions are erroneous. In G.R. No. 110399, the Court explained that the employees of San
Miguel Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando, and Otis constitute a single
bargaining unit, which is not contrary to the one-company, one-union policy. An appropriate bargaining unit is defined
as a group of employees of a given employer, comprised of all or less than all of the entire body of employees, which
the collective interest of all the employees, consistent with equity to the employer, indicate to be best suited to serve
the reciprocal rights and duties of the parties under the collective bargaining provisions of the law.[21]

In National Association of Free Trade Unions v. Mainit Lumber Development Company Workers
Union United Lumber and General Workers of the Phils,[22] the Court, taking into account the community or
mutuality of interests test, ordered the formation of a single bargaining unit consisting of the Sawmill Division in
Butuan City and the Logging Division in Zapanta Valley, Kitcharao, Agusan [Del] Norte of the Mainit Lumber
Development Company. It held that while the existence of a bargaining history is a factor that may be reckoned with
in determining the appropriate bargaining unit, the same is not decisive or conclusive. Other factors must be
considered. The test of grouping is community or mutuality of interest. This is so because the basic test of an asserted
bargaining units acceptability is whether or not it is fundamentally the combination which will best assure to all
employees the exercise of their collective bargaining rights. [23] Certainly, there is a mutuality of interest among the
employees of the Sawmill Division and the Logging Division. Their functions mesh with one another. One group
needs the other in the same way that the company needs them both. There may be differences as to the nature of their
individual assignments, but the distinctions are not enough to warrant the formation of a separate bargaining unit. [24]

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

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

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

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

Corollarily, although Article 245[30] of the Labor Code limits the ineligibility to join, form and assist any
labor organization to managerial employees, jurisprudence has extended this prohibition to
confidential employees or those who by reason of their positions or nature of work are required to assist or act in a
fiduciary manner to managerial employees and, hence, are likewise privy to sensitive and highly confidential
records.[31] Confidential employees are thus excluded from the rank-and-file bargaining unit.The rationale for their
separate category and disqualification to join any labor organization is similar to the inhibition for managerial
employees, because if allowed to be affiliated with a union, the latter might not be assured of their loyalty in view of
evident conflict of interests and the union can also become company-denominated with the presence of managerial
employees in the union membership.[32] Having access to confidential information, confidential employees may also
become the source of undue advantage. Said employees may act as a spy or spies of either party to a collective
bargaining agreement.[33]
 In this regard, the CA correctly ruled that the positions of Human Resource Assistant and Personnel Assistant
belong to the category of confidential employees and, hence, are excluded from the bargaining unit, considering their
respective positions and job descriptions. As Human Resource Assistant,[34] the scope of ones work necessarily
involves labor relations, recruitment and selection of employees, access to employees' personal files and compensation
package, and human resource management. As regards a Personnel Assistant,[35] one's work includes the recording of
minutes for management during collective bargaining negotiations, assistance to management during grievance
meetings and administrative investigations, and securing legal advice for labor issues from the petitioners team of
lawyers, and implementation of company programs. Therefore, in the discharge of their functions, both gain access to
vital labor relations information which outrightly disqualifies them from union membership.
The proceedings for certification election are quasi-judicial in nature and, therefore, decisions rendered in
such proceedings can attain finality.[36] Applying the doctrine of res judicata, the issue in the

present case pertaining to the coverage of the employees who would constitute the bargaining unit is now a foregone
conclusion.

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

With the foregoing disquisition, the Court writes finis to the issues raised so as to forestall future suits of
similar nature.

WHEREFORE, the petition is DENIED. The Decision dated April 28, 2000 and Resolution dated November 28,
2000 of the Court of Appeals, in CA-G.R. SP No. 55510, which affirmed with modification the Resolutions dated
July 30, 1999 and August 27, 1999 of the Secretary of Labor, are AFFIRMED.

SO ORDERED.
Voluntary Arbitration (Art 260-262)
#103d Goya vs Goya inc employees union-ffw GR 170054, Jan 21, 2013

G.R. No. 170054 January 21, 2013

GOYA, INC., Petitioner,

vs.
GOYA, INC. EMPLOYEES UNION-FFW, Respondent.

DECISION

PERALTA, J.:

This petition for review on certiorari under Rule 45 of the Rules of Civil Procedure seeks to reverse and set aside the
June 16, 2005 Decision1 and October 12, 2005 Resolution2 of the Court of Appeals in CA-G.R. SP No. 87335,
which sustained the October 26, 2004 Decision3 of Voluntary Arbitrator Bienvenido E. Laguesma, the dispositive
portion of which reads:

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

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

The facts are simple and appear to be undisputed.

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

During the hearing on July 1, 2004, the Company and the Union manifested before Voluntary Arbitrator (VA)
Bienvenido E. Laguesma that amicable settlement was no longer possible; hence, they agreed to submit for
resolution the solitary issue of "[w]hether or not the Company is guilty of unfair labor acts in engaging the services
of PESO, a third party service provider, under the existing CBA, laws, and jurisprudence." 6 Both parties thereafter
filed their respective pleadings.

The Union asserted that the hiring of contractual employees from PESO is not a management prerogative and in
gross violation of the CBA tantamount to unfair labor practice (ULP). It noted that the contractual workers engaged
have been assigned to work in positions previously handled by regular workers and Union members, in effect
violating Section 4, Article I of the CBA, which provides for three categories of employees in the Company, to wit:

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

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

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

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

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

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

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

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

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

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

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

It is evident, therefore, that the engagement of PESO is not in keeping with the intent and spirit of the CBA
provision in question. It must, however, be stressed that the right of management to outsource parts of its operations
is not totally eliminated but is merely limited by the CBA. Given the foregoing, the Company’s engagement of
PESO for the given purpose is indubitably a violation of the CBA. 7

While the Union moved for partial reconsideration of the VA Decision, 8 the Company immediately filed a petition
for review9 before the Court of Appeals (CA) under Rule 43 of the Revised Rules of Civil Procedure to set aside the
directive to observe and comply with the CBA commitment pertaining to the hiring of casual employees when
necessitated by business circumstances. Professing that such order was not covered by the sole issue submitted for
voluntary arbitration, the Company assigned the following errors:

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

THE HONORABLE VOLUNTARY ARBITRATOR COMMITTED A PATENT AND PALPABLE ERROR IN

DECLARING THAT THE ENGAGEMENT OF PESO IS NOT IN KEEPING WITH THE INTENT AND SPIRIT
OF THE CBA.11

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

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

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

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

Germane to the resolution of the above issue is the provision in their CBA with respect to the categories of the
employees:

xxxx

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

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

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

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

Incidentally, on July 16, 2009, the Company filed a Manifestation15 informing this Court that its stockholders and
directors unanimously voted to shorten the Company’s corporate existence only until June 30, 2006, and that the
three-year period allowed by law for liquidation of the Company’s affairs already expired on June 30, 2009.
Referring to Gelano v. Court of Appeals,16 Public Interest Center, Inc. v. Elma,17 and Atienza v. Villarosa,18 it urged
Us, however, to still resolve the case for future guidance of the bench and the bar as the issue raised herein allegedly
calls for a clarification of a legal principle, specifically, whether the VA is empowered to rule on a matter not
covered by the issue submitted for arbitration.

Even if this Court would brush aside technicality by ignoring the supervening event that renders this case moot and
academic19 due to the permanent cessation of the Company’s business operation on June 30, 2009, the arguments
raised in this petition still fail to convince Us.

We confirm that the VA ruled on a matter that is covered by the sole issue submitted for voluntary arbitration.
Resultantly, the CA did not commit serious error when it sustained the ruling that the hiring of contractual
employees from PESO was not in keeping with the intent and spirit of the CBA. Indeed, the opinion of the VA is
germane to, or, in the words of the CA, "interrelated and intertwined with," the sole issue submitted for resolution by
the parties. This being said, the Company’s invocation of Sections 4 and 5, Rule IV 20 and Section 5, Rule VI21 of the
Revised Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings dated October 15, 2004 issued
by the NCMB is plainly out of order.

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

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

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

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
arbitration was created – speedy labor justice. It bears stressing that the underlying reason why this case arose is to
settle, once and for all, the ultimate question of whether respondent employees are entitled to higher benefits. To
require them to file another action for payment of such benefits would certainly undermine labor proceedings and
contravene the constitutional mandate providing full protection to labor. 23

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

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

A collective bargaining agreement is the law between the parties:

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

A collective bargaining agreement or CBA refers to the negotiated contract between a legitimate labor organization
and the employer concerning wages, hours of work and all other terms and conditions of employment in a
bargaining unit.1âwphi1 As in all contracts, the parties in a CBA may establish such stipulations, clauses, terms and
conditions as they may deem convenient provided these are not contrary to law, morals, good customs, public order
or public policy. Thus, where the CBA is clear and unambiguous, it becomes the law between the parties and
compliance therewith is mandated by the express policy of the law.

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

In this case, Section 4, Article I (on categories of employees) of the CBA between the Company and the Union must
be read in conjunction with its Section 1, Article III (on union security). Both are interconnected and must be given
full force and effect. Also, these provisions are clear and unambiguous. The terms are explicit and the language of
the CBA is not susceptible to any other interpretation. Hence, the literal meaning should prevail. As repeatedly held,
the exercise of management prerogative is not unlimited; it is subject to the limitations found in law, collective
bargaining agreement or the general principles of fair play and justice 25 Evidently, this case has one of the
restrictions- the presence of specific CBA provisions-unlike in San Miguel Corporation Employees Union-PTGWO
v. Bersamira,26 De Ocampo v. NLRC,27 Asian Alcohol Corporation v. NLRC,28 and Serrano v. NLRC29cited by the
Company. To reiterate, the CBA is the norm of conduct between the parties and compliance therewith is mandated
by the express policy of the law.30

WHEREFORE, the petition is DENIED. The assailed June 16, 2005 Decision, as well as the October 12, 2005
Resolution of the Court of Appeals, which sustained the October 26, 2004 Decision of the Voluntary Arbitrator, are
hereby AFFIRMED.

SO ORDERED.
#104 Samahan ng mga manggagagawasa Hayatt-NUHRAIN vs Hotel Ent. Of the phils GR 172303, June 6, 2011

SAMAHAN NG MGA MANGGAGAWA SA

HYATT (SAMASAH-NUWHRAIN),
G.R. No. 164939
Petitioner,
- versus -

HON. VOLUNTARY
ARBITRATORBUENAVENTURA C. MAGSALIN
and HOTEL ENTERPRISES OF THE
PHILIPPINES, INC.,
Respondents.
x------------------------------------------x

SAMAHAN NG MGA MANGGAGAWA SA

HYATT (SAMASAH-NUWHRAIN),
Petitioner,

- versus -

G.R. No. 172303

HOTEL ENTERPRISES OF THE Present:

PHILIPPINES, INC.,
Respondent.
CARPIO MORALES, J.,

Chairperson,

BRION,

BERSAMIN,

ABAD,*and

VILLARAMA, JR., JJ.

Promulgated:

June 6, 2011

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

DECISION

VILLARAMA, JR., J.:

Before this Court are two consolidated petitions filed by petitioner Samahan ng mga Manggagawa saHyatt-

NUWHRAIN-APL under Rule 45 of the 1997 Rules of Civil Procedure, as amended. The first petition, docketed as G.R.
No. 164939, assails the Resolutions dated October 3, 2003[1] and August 13, 2004[2] of the Court of Appeals (CA) in CA-

G.R. SP No. 78364, which dismissed petitioners petition for review at the CA for being the wrong remedy. The second

petition, docketed as G.R. No. 172303, assails the Decision[3] dated December 16, 2005 and Resolution[4] dated April 12,

2006 of the CA in CA-G.R. SP No. 77478, modifying the judgment of the Voluntary Arbitrator in NCMB-NCR-CRN-07-

008-01.

The antecedent facts are as follows:

Petitioner Samahan ng mga Manggagawa sa Hyatt-NUWHRAIN-APL is a duly registered union and the certified

bargaining representative of the rank-and-file employees of Hyatt Regency Manila, a five-star hotel owned and operated by

respondent Hotel Enterprises of the Philippines, Inc. On January 31, 2001, Hyatts General Manager, David C. Pacey, issued

a Memorandum[5] informing all hotel employees that hotel security have been instructed to conduct a thorough bag

inspection and body frisking in every entrance and exit of the hotel. He enjoined employees to comply therewith. Copies of

the Memorandum were furnished petitioner.

On February 3, 2001, Angelito Caragdag, a waiter at the hotels Cafe Al Fresco restaurant and a director of the

union, refused to be frisked by the security personnel. The incident was reported to the hotels Human Resources Department

(HRD), which issued a Memorandum[6] to Caragdag on February 5, 2001, requiring him to explain in writing within forty-

eight (48) hours from notice why no disciplinary action should be taken against him. The following day, on February 6,

2001, Caragdag again refused to be frisked by the security personnel. Thus, on February 8, 2001, the HRD issued another

Memorandum[7] requiring him to explain.

On February 14, 2001, the HRD imposed on Caragdag the penalty of reprimand for the February 3, 2001incident, which

was considered a first offense, and suspended him for three days for the February 6, 2001incident, which was considered as

a second offense.[8] Both penalties were in accordance with the hotels Code of Discipline.

Subsequently, on February 22, 2001, when Mike Moral, the manager of Hyatts Cafe Al Fresco and Caragdags

immediate superior, was about to counsel two staff members, Larry Lacambacal and Allan Alvaro, at the training room,

Caragdag suddenly opened the door and yelled at the two with an enraged look. In a disturbing voice he said, Ang titigas

talaga ng ulo nyo. Sinabi ko na sa inyo na huwag kayong makikipagusap sa management habang ongoing pa ang kaso!

(You are very stubborn. I told you not to speak to management while the case is ongoing!) Moral asked Caragdag what the
problem was and informed him that he was simply talking to his staff. Moral also told Caragdag that he did not have the

right to interrupt and intimidate him during his counseling session with his staff.

On February 23, 2001, Moral issued a Memorandum[9] requiring Caragdag to explain his actions in the training

room. Caragdag submitted his written explanation on February 25, 2001[10] narrating that he was informed by someone that

Lacambacal and Alvaro were requesting for his assistance because Moral had invited them to the training room. Believing

that he should advise the two that they should be accompanied by a union officer to any inquisition, he went to the training

room. However, before he could enter the door, Moral blocked him. Thus, he told Lacambacal and Alvaro that they should

be assisted by a union representative before giving any statement to management. Caragdag also prayed that Moral be

investigated for harassing union officers and union members.

On February 28, 2001, Moral found the explanations unsatisfactory. In a Memorandum[11] issued on the same date,

Moral held Caragdag liable for Offenses Subject to Disciplinary Action (OSDA) 3.01 of the hotels Code of Discipline, i.e.,

threatening, intimidating, coercing, and provoking to a fight your superior for reasons directly connected with his discharge

of official duty. Thus, Caragdag was imposed the penalty of seven days suspension in accordance with the hotels Code of

Discipline.

Still later, on March 2, 2001, Caragdag committed another infraction. At 9:35 a.m. on the said date, Caragdag left

his work assignment during official hours without prior permission from his Department Head.He was required to submit

an explanation, but the explanation[12] he submitted was found unsatisfactory. OnMarch 17, 2001, Moral found Caragdag

liable for violating OSDA 3.07, i.e., leaving work assignment during official working hours without prior permission from

the department head or immediate superior, and suspended him for three days.[13]

Because of the succession of infractions he committed, the HRD also required Caragdag to explain on May 11,

2001 why the hotels OSDA 4.32 (Committing offenses which are penalized with three [3] suspensions during a 12-month

period) should not be enforced against him.[14] An investigation board was formed after receipt of Caragdags written

explanation, and the matter was set for hearing on May 19, 2001.However, despite notice of the scheduled hearing, both

Caragdag and the Union President failed to attend.Thereafter, the investigating board resolved on the said date to dismiss

Caragdag for violation of OSDA 4.32.[15] Caragdag appealed but the investigating board affirmed its resolution after hearing

on May 24, 2001.

 On June 1, 2001, the hotel, through Atty. Juancho A. Baltazar, sent Caragdag a Notice of Dismissal,[16]the pertinent

portion of which reads:

Based on the findings of the Investigation Board dated May 19, 2001 which was approved by
the General Manager Mr. David Pacey on the same day and which did not merit any reversal or
modification after the hearing on your appeal on May 24, 2001, the penalty of DISMISSAL is therefore
affirmed to take effect on June 1, 2001.

Caragdags dismissal was questioned by petitioner, and the dispute was referred to voluntary arbitration upon

agreement of the parties. On May 6, 2002, the Voluntary Arbitrator rendered a decision,[17] the dispositive portion of which

reads:

WHEREFORE, premises considered, this Arbiter rules that the three separate suspensions of
Mr. Caragdag are valid, his dismissal is legal and OSDA 4.32 of Hyatts Code of Discipline is reasonable.

However, for humanitarian considerations, Hyatt is hereby ordered to grant financial assistance
to Mr. Caragdag in the amount of One Hundred Thousand Pesos (PhP100,000.00).

In finding the three separate suspensions of Caragdag valid, the Voluntary Arbitrator reasoned that the union

officers and members had no right to breach company rules and regulations on security and employee discipline on the basis

of certain suspicions against management and an ongoing CBA negotiation standoff.The Voluntary Arbitrator also found

that when Caragdag advised Lacambacal and Alvaro not to give any statement, he threatened and intimidated his superior

while the latter was performing his duties. Moreover, there is no reason why he did not arrange his time-off with the

Department Head concerned. Thus, Caragdag was validly dismissed pursuant to OSDA 4.32 of Hyatts Code of Discipline,

which states that an employee who commits three different acts of misconduct within a twelve (12)-month period commits

serious misconduct.

Petitioner sought reconsideration of the decision while respondent filed a motion for partial reconsideration.

However, the Voluntary Arbitrator denied both motions on May 26, 2003.[18]

On August 1, 2003, petitioner assailed the decision of the Voluntary Arbitrator before the CA in a petition

for certiorari which was docketed as CA-G.R. SP No. 78364.[19] As mentioned at the outset, the CA dismissed the petition

outright for being the wrong remedy. The CA explained:

Rule 43, Section 5 of the 1997 Rules of Civil Procedure explicitly provides that the proper mode
of appeal from judgments, final orders or resolution of voluntary arbitrators is through a Petition for
Review which should be filed within fifteen (15) days from the receipt of notice of judgment, order or
resolution of the voluntary arbitrator.
 Considering that petitioner intends this petition to be a Petition for Certiorari, the Court hereby
resolves to dismiss the petition outright for being an improper mode of appeal.

Even if this Court treats the instant petition as a Petition for Review, still the Court has no
alternative but to dismiss the same for having been filed out of time. As admitted by the petitioner it
received the Order dated 26 May 2003 denying their motion for reconsideration on 02 June 2003. The
fifteen (15) day period within which to appeal through a Petition for Review is until June 17, 2003. The
petitioner filed the present petition on August 1, 2003, way beyond the reglementary period provided for
by the Rules.[20]

Petitioner duly filed a motion for reconsideration of the dismissal, but the motion was denied by the CA. Thus, petitioner

filed before this Court a petition for review on certiorari which was docketed as G.R. No. 164939.

In the meantime, on June 30, 2003, respondent also filed a petition for review[21] with the CA on the ground that the

Voluntary Arbitrator committed a grievous error in awarding financial assistance to Caragdag despite his finding that the

dismissal due to serious misconduct was valid. On December 16, 2005, the CA promulgated a decision in CA-G.R. SP. No.

77478 as follows:

WHEREFORE, the Decision dated May 6, 2002 of Voluntary Arbitrator Buenaventura C.

Magsalin is AFFIRMED with MODIFICATION by DELETING the award of financial assistance in the
amount of P100,000.00 to Angelito Caragdag.

SO ORDERED.[22]

In deleting the award of financial assistance to Caragdag, the CA cited the case of Philippine Commercial International

Bank v. Abad,[23] which held that the grant of separation pay or other financial assistance to an employee dismissed for just

cause is based on equity and is a measure of social justice, awarded to an employee who has been validly dismissed if the

dismissal was not due to serious misconduct or causes that reflected adversely on the moral character of the employee. In

this case, the CA agreed with the findings of the Voluntary Arbitrator that Caragdag was validly dismissed due to serious

misconduct. Accordingly, financial assistance should not have been awarded to Caragdag. The CA also noted that it is the

employers prerogative to prescribe reasonable rules and regulations necessary or proper for the conduct of its business or

concern, to provide certain disciplinary measures to implement said rules and to ensure compliance therewith.

Petitioner sought reconsideration of the decision, but the CA denied the motion for lack of merit. Hence, petitioner filed

before us a petition for review on certiorari docketed as G.R. No. 172303.

Considering that G.R. Nos. 164939 and 172303 have the same origin, involve the same parties, and raise

interrelated issues, the petitions were consolidated.

 Petitioner raises the following issues:

In G.R. No. 164939

THE COURT OF APPEALS ERRED IN DISMISSING OUTRIGHT THE PETITION FOR

CERTIORARI ON THE GROUND THAT THE SAME IS AN IMPROPER MODE OF APPEAL.[24]

In G.R. No. 172303

THE COURT OF APPEALS ERRED IN DELETING THE AWARD OF FINANCIAL ASSISTANCE

IN THE AMOUNT OF P100,000.00 TO ANGELITO CARAGDAG.[25]

The issues for our resolution are thus two-fold: first, whether the CA erred in dismissing outright the petition

for certiorari filed before it on the ground that the same is an improper mode of appeal; and second, whether the CA erred

in deleting the award of financial assistance in the amount of P100,000.00 to Caragdag.

On the first issue, petitioner argues that because decisions rendered by voluntary arbitrators are issued under Title

VII-A of the Labor Code, they are not covered by Rule 43 of the 1997 Rules of Civil Procedure, as amended, by express

provision of Section 2 thereof. Section 2, petitioner points out, expressly provides that Rule 43 shall not apply to judgments

or final orders issued under the Labor Code of the Philippines. Hence, a petition for certiorari under Rule 65 is the proper

remedy for questioning the decision of the Voluntary Arbitrator, and petitioner having availed of such remedy, the CA erred

in declaring that the petition was filed out of time since the petition was filed within the sixty (60)-day reglementary period.

On the other hand, respondent maintains that the CA acted correctly in dismissing the petition for certiorari for

being the wrong mode of appeal. It stresses that Section 1 of Rule 43 clearly states that it is the governing rule with regard

to appeals from awards, judgments, final orders or resolutions of voluntary arbitrators. Respondent contends that the

voluntary arbitrators authorized by law include the voluntary arbitrators appointed and accredited under the Labor Code, as

they are considered as included in the term quasi-judicial instrumentalities.

Petitioners arguments fail to persuade.

In the case of Samahan ng mga Manggagawa sa Hyatt-NUWHRAIN-APL v. Bacungan,[26]we repeated the

well-settled rule that a decision or award of a voluntary arbitrator is appealable to the CA via petition for review
under Rule 43. We held that:

The question on the proper recourse to assail a decision of a voluntary arbitrator has already been
settled in Luzon Development Bank v. Association of Luzon Development Bank Employees, where
the Court held that 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 (now embodied in Rule 43 of the 1997 Rules of Civil Procedure),
just like those of the quasi-judicial agencies, boards and commissions enumerated therein, and
consistent with the original purpose to provide a uniform procedure for the appellate review of
adjudications of all quasi-judicial entities.

Subsequently, in Alcantara, Jr. v. Court of Appeals, and Nippon Paint Employees Union-Olalia v.
Court of Appeals, the Court reiterated the aforequoted ruling. In Alcantara, the Court held that
notwithstanding Section 2 of Rule 43, the ruling in Luzon Development Bank still stands. The Court
explained, thus:

The provisions may be new to the Rules of Court but it is far from being a new
law. Section 2, Rules 42 of the 1997 Rules of Civil Procedure, as presently worded, is
nothing more but a reiteration of the exception to the exclusive appellate jurisdiction of the
Court of Appeals, as provided for in Section 9, Batas Pambansa Blg. 129, as amended by
Republic Act No. 7902:

(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.

The Court took into account this exception in Luzon Development Bank but,
nevertheless, held that the decisions of voluntary arbitrators issued pursuant to the Labor
Code do not come within its ambit x x x

Furthermore, Sections 1, 3 and 4, Rule 43 of the 1997 Rules of Civil Procedure, as amended, provide:

SECTION 1. Scope. - This Rule shall apply to appeals from judgments or final orders of
the Court of Tax Appeals and from awards, judgments, final orders or resolutions of or authorized
by any quasi-judicial agency in the exercise of its quasi-judicial functions. Among these agencies
are the x x x, and voluntary arbitrators authorized by law.

xxxx

SEC. 3. Where to appeal. - An appeal under this Rule may be taken to the Court of
Appeals within the period and in the manner therein provided, whether the appeal involves
questions of fact, of law, or mixed questions of fact and law.

SEC. 4. Period of appeal. - The appeal shall be taken within fifteen (15) days from
notice of the award, judgment, final order or resolution, or from the date of its last publication,
if publication is required by law for its effectivity, or of the denial of petitioners motion for new trial
or reconsideration duly filed in accordance with the governing law of the court or agency a quo. x
x x. (Emphasis supplied.)
Hence, upon receipt on May 26, 2003 of the Voluntary Arbitrators Resolution denying petitioners motion for
reconsideration, petitioner should have filed with the CA, within the fifteen (15)-day reglementary period, a petition
for review, not a petition for certiorari.

Petitioner insists on a liberal interpretation of the rules but we find no cogent reason in this case to deviate
from the general rule. Verily, rules of procedure exist for a noble purpose, and to disregard such rules in the guise of
liberal construction would be to defeat such purpose. Procedural rules are not to be disdained as mere technicalities.
They may not be ignored to suit the convenience of a party. Adjective law ensures the effective enforcement of
substantive rights through the orderly and speedy administration of justice. Rules are not intended to hamper litigants
or complicate litigation. But they help provide for a vital system of justice where suitors may be heard following
judicial procedure and in the correct forum.Public order and our system of justice are well served by a conscientious
observance by the parties of the procedural rules.[27]

On the second issue, petitioner argues that Caragdag is entitled to financial assistance in the amount of P100,000 on

humanitarian considerations. Petitioner stresses that Caragdags infractions were due to his being a union officer and his acts

did not show moral depravity. Petitioner also adds that, while it is true that the award of financial assistance is given only

for dismissals due to causes specified under Articles 283 and 284 of the Labor Code, as amended, this Court has, by way of

exception, allowed the grant of financial assistance to an employee dismissed for just causes based on equity.

Respondent on the other hand, asserts that the CA correctly deleted the award of financial assistance erroneously

granted to Caragdag considering that he was found guilty of serious misconduct and other acts adversely reflecting on his

moral character. Respondent stresses that Caragdags willful defiance of the hotels security policy, disrespect and

intimidation of a superior, and unjustifiable desertion of his work assignment during working hours without permission,

patently show his serious and gross misconduct as well as amoral character.[28]

Again, petitioners arguments lack merit.

The grant of separation pay or some other financial assistance to an employee dismissed for just causes is based on

equity.[29]In Phil. Long Distance Telephone Co. v. NLRC,[30] we ruled that severance compensation, or whatever name

it is called, on the ground of social justice shall be allowed only when the cause of the dismissal is other than serious

misconduct or for causes which reflect adversely on the employees moral character. The Court succinctly discussed

the propriety of the grant of separation pay in this wise:

 We hold that henceforth separation pay shall be allowed as a measure of social justice only in
those instances where the employee is validly dismissed for causes other than serious misconduct
or those reflecting on his moral character. Where the reason for the valid dismissal is, for example,
habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with
a fellow worker, the employer may not be required to give the dismissed employee separation pay,
or financial assistance, or whatever other name it is called, on the ground of social justice.

A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather than
punishing the erring employee for his offense. And we do not agree that the punishment is his
dismissal only and that the separation pay has nothing to do with the wrong he has committed. Of
course it has. Indeed, if the employee who steals from the company is granted separation pay even
as he is validly dismissed, it is not unlikely that he will commit a similar offense in his next
employment because he thinks he can expect a like leniency if he is again found out. This kind of
misplaced compassion is not going to do labor in general any good as it will encourage the
infiltration of its ranks by those who do not deserve the protection and concern of the Constitution.

The policy of social justice is not intended to countenance wrongdoing simply because it is
committed by the underprivileged. At best it may mitigate the penalty but it certainly will not
condone the offense. Compassion for the poor is an imperative of every humane society but only
when the recipient is not a rascal claiming an undeserved privilege. Social justice cannot be
permitted to be refuge of scoundrels any more than can equity be an impediment to the punishment
of the guilty. Those who invoke social justice may do so only if their hands are clean and their
motives blameless and not simply because they happen to be poor. This great policy of our
Constitution is not meant for the protection of those who have proved they are not worthy of it, like
the workers who have tainted the cause of labor with the blemishes of their own character. [31]

Here, Caragdags dismissal was due to several instances of willful disobedience to the reasonable rules and regulations

prescribed by his employer. The Voluntary Arbitrator pointed out that according to the hotels Code of Discipline, an

employee who commits three different acts of misconduct within a twelve (12)-month period commits serious

misconduct. He stressed that Caragdags infractions were not even spread in a period of twelve (12) months, but rather

in a period of a little over a month. Records show the various violations of the hotels rules and regulations were

committed by Caragdag. He was suspended for violating the hotel policy on bag inspection and body frisking. He was

likewise suspended for threatening and intimidating a superior while the latter was counseling his staff. He was again

suspended for leaving his work assignment without permission. Evidently, Caragdags acts constitute serious

misconduct.

In Piedad v. Lanao del Norte Electric Cooperative, Inc.,[32]we ruled that a series of irregularities when put together
may constitute serious misconduct, which under Article 282 of the Labor Code, as amended, is a just cause for
dismissal.
 Caragdags dismissal being due to serious misconduct, it follows that he should not be entitled to financial

assistance. To rule otherwise would be to reward him for the grave misconduct he committed.We must emphasize that

social justice is extended only to those who deserve its compassion. [33]

WHEREFORE, the petitions for review on certiorari are DENIED. The October 3, 2003 and August 13,
2004 Court of Appeals Resolutions in CA-G.R. SP No. 78364, as well as the Court of Appeals December 16, 2005
Decision and April 12, 2006 Resolution in CA-G.R. SP No. 77478, are AFFIRMED and UPHELD.

With costs against the petitioner.

SO ORDERED.
#105 7K Corp vs Albarico GR 182295, June 26, 2013

G.R. No. 182295 June 26, 2013

7K CORPORATION, Petitioner,
vs.
EDDIE ALBARICO, Respondent.

DECISION

SERENO, CJ.:

This is a Petition for Review on Certiorari filed under Rule 45 of the Revised Rules of Court, asking the Court to
determine whether a voluntary arbitrator in a labor dispute exceeded his jurisdiction in deciding issues not specified
in the submission agreement of the parties. It assails the Decision1 dated 18 September 2007 and the
Resolution2dated 17 March 2008 of the Court of Appeals (CA).3

FACTS

When he was dismissed on 5 April 1993, respondent Eddie Albarico (Albarico) was a regular employee of petitioner
7K Corporation, a company selling water purifiers. He started working for the company in 1990 as a
salesman.4Because of his good performance, his employment was regularized. He was also promoted several times:
from salesman, he was promoted to senior sales representative and then to acting team field supervisor. In 1992, he
was awarded the President’s Trophy for being one of the company’s top water purifier specialist distributors.

In April of 1993, the chief operating officer of petitioner 7K Corporation terminated Albarico’s employment
allegedly for his poor sales performance.5 Respondent had to stop reporting for work, and he subsequently submitted
his money claims against petitioner for arbitration before the National Conciliation and Mediation Board (NCMB).
The issue for voluntary arbitration before the NCMB, according to the parties’ Submission Agreement dated 19
April 1993, was whether respondent Albarico was entitled to the payment of separation pay and the sales
commission reserved for him by the corporation. 6

While the NCMB arbitration case was pending, respondent Albarico filed a Complaint against petitioner corporation
with the Arbitration Branch of the National Labor Relations Commission (NLRC) for illegal dismissal with money
claims for overtime pay, holiday compensation, commission, and food and travelling allowances. 7 The Complaint
was decided by the labor arbiter in favor of respondent Albarico, who was awarded separation pay in lieu of
reinstatement, backwages and attorney’s fees.8

On appeal by petitioner, the labor arbiter’s Decision was vacated by the NLRC for forum shopping on the part of
respondent Albarico, because the NCMB arbitration case was still pending. 9 The NLRC Decision, which explicitly
stated that the dismissal was without prejudice to the pending NCMB arbitration case, 10 became final after no appeal
was taken.

On 17 September 1997, petitioner corporation filed its Position Paper in the NCMB arbitration case. 11 It denied that
respondent was terminated from work, much less illegally dismissed. The corporation claimed that he had
voluntarily stopped reporting for work after receiving a verbal reprimand for his sales performance; hence, it was he
who was guilty of abandonment of employment. Respondent made an oral manifestation that he was adopting the
position paper he submitted to the labor arbiter, a position paper in which the former claimed that he had been
illegally dismissed.12

On 12 January 2005, almost 12 years after the filing of the NCMB case, both parties appeared in a hearing before
the NCMB.13 Respondent manifested that he was willing to settle the case amicably with petitioner based on the
decision of the labor arbiter ordering the payment of separation pay in lieu of reinstatement, backwages and
attorney’s fees. On its part, petitioner made a counter-manifestation that it was likewise amenable to settling the
dispute. However, it was willing to pay only the separation pay and the sales commission according to the
Submission Agreement dated 19 April 1993.14

The factual findings of the voluntary arbitrator, as well as of the CA, are not clear on what happened afterwards.
Even the records are bereft of sufficient information.

On 18 November 2005, the NCMB voluntary arbitrator rendered a Decision finding petitioner corporation liable for
illegal dismissal.15 The termination of respondent Albarico, by reason of alleged poor performance, was found
invalid.16 The arbitrator explained that the promotions, increases in salary, and awards received by respondent belied
the claim that the latter was performing poorly.17 It was also found that Albarico could not have abandoned his job,
as the abandonment should have been clearly shown. Mere absence was not sufficient, according to the arbitrator,
but must have been accompanied by overt acts pointing to the fact that the employee did not want to work anymore.
It was noted that, in the present case, the immediate filing of a complaint for illegal dismissal against the employer,
with a prayer for reinstatement, showed that the employee was not abandoning his work. The voluntary arbitrator
also found that Albarico was dismissed from his work without due process.

However, it was found that reinstatement was no longer possible because of the strained relationship of the
parties.18 Thus, in lieu of reinstatement, the voluntary arbitrator ordered the corporation to pay separation pay for
two years at ₱4,456 for each year, or a total amount of ₱8,912.

Additionally, in view of the finding that Albarico had been illegally dismissed, the voluntary arbitrator also ruled
that the former was entitled to backwages in the amount of ₱90,804. 19 Finally, the arbitrator awarded attorney’s fees
in respondent’s favor, because he had been compelled to file an action for illegal dismissal. 20

Petitioner corporation subsequently appealed to the CA, imputing to the voluntary arbitrator grave abuse of
discretion amounting to lack or excess of jurisdiction for awarding backwages and attorney’s fees to respondent
Albarico based on the former’s finding of illegal dismissal. 21 The arbitrator contended that the issue of the legality of
dismissal was not explicitly included in the Submission Agreement dated 19 April 1993 filed for voluntary
arbitration and resolution. It prayed that the said awards be set aside, and that only separation pay of ₱8,912.00 and
sales commission of ₱4,787.60 be awarded.

The CA affirmed the Decision of the voluntary arbitrator, but eliminated the award of attorney’s fees for having
been made without factual, legal or equitable justification.22 Petitioner’s Motion for Partial Reconsideration was
denied as well.23

Hence, this Petition.

ISSUE

The issue before the Court is whether the CA committed reversible error in finding that the voluntary arbitrator
properly assumed jurisdiction to decide the issue of the legality of the dismissal of respondent as well as the latter’s
entitlement to backwages, even if neither the legality nor the entitlement was expressedly claimed in the Submission
Agreement of the parties.

The Petition is denied for being devoid of merit.

DISCUSSION

Preliminarily, we address petitioner’s claim that under Article 217 of the Labor Code, original and exclusive
jurisdiction over termination disputes, such as the present case, is lodged only with the labor arbiter of the NLRC. 24

Petitioner overlooks the proviso in the said article, thus:

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, 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:

xxxx

2. Termination disputes;

xxxx

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 (₱5,000.00) regardless of whether accompanied with a claim for
reinstatement. (Emphases supplied)

Thus, although the general rule under the Labor Code gives the labor arbiter exclusive and original jurisdiction over
termination disputes, it also recognizes exceptions. One of the exceptions is provided in Article 262 of the Labor
Code. In San Jose v. NLRC,25 we said:

The phrase "Except as otherwise provided under this Code" refers to the following exceptions:

A. Art. 217. Jurisdiction of Labor Arbiters . . .

xxxx

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

B. Art. 262. Jurisdiction over other labor disputes. The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon
agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and
bargaining deadlocks. (Emphasis supplied)

We also said in the same case that "the labor disputes referred to in the same Article 262 of the Labor Code can
include all those disputes mentioned in Article 217 over which the Labor Arbiter has original and exclusive
jurisdiction."26

From the above discussion, it is clear that voluntary arbitrators may, by agreement of the parties, assume jurisdiction
over a termination dispute such as the present case, contrary to the assertion of petitioner that they may not.

We now resolve the main issue. Petitioner argues that, assuming that the voluntary arbitrator has jurisdiction over
the present termination dispute, the latter should have limited his decision to the issue contained in the Submission
Agreement of the parties – the issue of whether respondent Albarico was entitled to separation pay and to the sales
commission the latter earned before being terminated.27 Petitioner asserts that under Article 262 of the Labor Code,
the jurisdiction of a voluntary arbitrator is strictly limited to the issues that the parties agree to submit. Thus, it
contends that the voluntary arbitrator exceeded his jurisdiction when he resolved the issues of the legality of the
dismissal of respondent and the latter’s entitlement to backwages on the basis of a finding of illegal dismissal.

According to petitioner, the CA wrongly concluded that the issue of respondent’s entitlement to separation pay was
necessarily based on his allegation of illegal dismissal, thereby making the issue of the legality of his dismissal
implicitly submitted to the voluntary arbitrator for resolution. 28 Petitioner argues that this was an erroneous
conclusion, because separation pay may in fact be awarded even in circumstances in which there is no illegal
dismissal.

We rule that although petitioner correctly contends that separation pay may in fact be awarded for reasons other than
illegal dismissal, the circumstances of the instant case lead to no other conclusion than that the claim of respondent
Albarico for separation pay was premised on his allegation of illegal dismissal. Thus, the voluntary arbitrator
properly assumed jurisdiction over the issue of the legality of his dismissal.

True, under the Labor Code, separation pay may be given not only when there is illegal dismissal. In fact, it is also
given to employees who are terminated for authorized causes, such as redundancy, retrenchment or installation of
labor-saving devices under Article 28329 of the Labor Code. Additionally, jurisprudence holds that separation pay
may also be awarded for considerations of social justice, even if an employee has been terminated for a just cause
other than serious misconduct or an act reflecting on moral character. 30 The Court has also ruled that separation pay
may be awarded if it has become an established practice of the company to pay the said benefit to voluntarily
resigning employees31 or to those validly dismissed for non-membership in a union as required in a closed-shop
agreement.32

The above circumstances, however, do not obtain in the present case.1âwphi1 There is no claim that the issue of
entitlement to separation pay is being resolved in the context of any authorized cause of termination undertaken by
petitioner corporation. Neither is there any allegation that a consideration of social justice is being resolved here. In
fact, even in instances in which separation pay is awarded in consideration of social justice, the issue of the validity
of the dismissal still needs to be resolved first. Only when there is already a finding of a valid dismissal for a just
cause does the court then award separation pay for reason of social justice. The other circumstances when separation
pay may be awarded are not present in this case.

The foregoing findings indisputably prove that the issue of separation pay emanates solely from respondent’s
allegation of illegal dismissal. In fact, petitioner itself acknowledged the issue of illegal dismissal in its position
paper submitted to the NCMB.

Moreover, we note that even the NLRC was of the understanding that the NCMB arbitration case sought to resolve
the issue of the legality of the dismissal of the respondent. In fact, the identity of the issue of the legality of his
dismissal, which was previously submitted to the NCMB, and later submitted to the NLRC, was the basis of the
latter’s finding of forum shopping and the consequent dismissal of the case before it. In fact, petitioner also
implicitly acknowledged this when it filed before the NLRC its Motion to Dismiss respondent’s Complaint on the
ground of forum shopping. Thus, it is now estopped from claiming that the issue before the NCMB does not include
the issue of the legality of the dismissal of respondent. Besides, there has to be a reason for deciding the issue of
respondent’s entitlement to separation pay. To think otherwise would lead to absurdity, because the voluntary
arbitrator would then be deciding that issue in a vacuum. The arbitrator would have no basis whatsoever for saying
that Albarico was entitled to separation pay or not if the issue of the legality of respondent’s dismissal was not
resolve first.

Hence, the voluntary arbitrator correctly assumed that the core issue behind the issue of separation pay is the legality
of the dismissal of respondent. Moreover, we have ruled in Sime Darby Pilipinas, Inc. v. Deputy Administrator
Magsalin33 that a voluntary arbitrator has plenary jurisdiction and authority to interpret an agreement to arbitrate and
to determine the scope of his own authority when the said agreement is vague — subject only, in a proper case, to
the certiorari jurisdiction of this Court.

Having established that the issue of the legality of dismissal of Albarico was in fact necessarily – albeit not
explicitly – included in the Submission Agreement signed by the parties, this Court rules that the voluntary arbitrator
rightly assumed jurisdiction to decide the said issue.

Consequently, we also rule that the voluntary arbitrator may award backwages upon a finding of illegal dismissal,
even though the issue of entitlement thereto is not explicitly claimed in the Submission Agreement. Backwages, in
general, are awarded on the ground of equity as a form of relief that restores the income lost by the terminated
employee by reason of his illegal dismissal.34

In Sime Darby we ruled that although the specific issue presented by the parties to the voluntary arbitrator was only
"the issue of performance bonus," the latter had the authority to determine not only the issue of whether or not a
performance bonus was to be granted, but also the related question of the amount of the bonus, were it to be granted.
We explained that there was no indication at all that the parties to the arbitration agreement had regarded "the issue
of performance bonus" as a two-tiered issue, of which only one aspect was being submitted to arbitration. Thus, we
held that the failure of the parties to limit the issues specifically to that which was stated allowed the arbitrator to
assume jurisdiction over the related issue.

Similarly, in the present case, there is no indication that the issue of illegal dismissal should be treated. as a two-
tiered issue whereupon entitlement to backwages must be determined separately. Besides, "since arbitration is a final
resort for the adjudication of disputes," the voluntary arbitrator in the present case can assume that he has the
necessary power to make a final settlement.35 Thus, we rule that the voluntary arbitrator correctly assumed
jurisdiction over the issue of entitlement of respondent Albarico to backwages on the basis of the former's finding of
illegal dismissal.

WHEREFORE, premises considered, the instant Petition is DENIED. The 18 September 2007 Decision and 17
March 2008 Resolution of the Court of Appeals in CA-G.R. SP No. 92526, are hereby AFFIRMED.

SO ORDERED.
#106 Royal Plant Workers vs Coca-cola bottlers phils GR 198783,

G.R. No. 198783 April 15, 2013

ROYAL PLANT WORKERS UNION, Petitioner,

vs.
COCA-COLA BOTTLERS PHILIPPINES, INC.-CEBU PLANT, Respondent.

DECISION

MENDOZA, J.:

Assailed in this petition is the May 24, 2011 Decision1 and the September 2, 2011 Resolution2 of the Court of
Appeals (CA) in CA-G.R. SP No. 05200, entitled Coca-Cola Bottlers Philippines, Inc.-Cebu Plant v. Royal Plant
Workers Union, which nullified and set aside the June 11, 2010 Decision 3 of the Voluntary Arbitration Panel
(Arbitration Committee) in a case involving the removal of chairs in the bottling plant of Coca-Cola Bottlers
Philippines, Inc. (CCBPI).

The Factual and Procedural

Antecedents

The factual and procedural antecedents have been accurately recited in the May 24, 2011 CA decision as follows:

Petitioner Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a domestic corporation engaged in the manufacture, sale
and distribution of softdrink products. It has several bottling plants all over the country, one of which is located in
Cebu City. Under the employ of each bottling plant are bottling operators. In the case of the plant in Cebu City,
there are 20 bottling operators who work for its Bottling Line 1 while there are 12-14 bottling operators who man its
Bottling Line 2. All of them are male and they are members of herein respondent Royal Plant Workers Union
(ROPWU).

The bottling operators work in two shifts. The first shift is from 8 a.m. to 5 p.m. and the second shift is from 5 p.m.
up to the time production operations is finished. Thus, the second shift varies and may end beyond eight (8) hours.
However, the bottling operators are compensated with overtime pay if the shift extends beyond eight (8) hours. For
Bottling Line 1, 10 bottling operators work for each shift while 6 to 7 bottling operators work for each shift for
Bottling Line 2.

Each shift has rotations of work time and break time. Prior to September 2008, the rotation is this: after two and a
half (2 ½) hours of work, the bottling operators are given a 30-minute break and this goes on until the shift ends. In
September 2008 and up to the present, the rotation has changed and bottling operators are now given a 30-minute
break after one and one half (1 ½) hours of work.

In 1974, the bottling operators of then Bottling Line 2 were provided with chairs upon their request. In 1988, the
bottling operators of then Bottling Line 1 followed suit and asked to be provided also with chairs. Their request was
likewise granted. Sometime in September 2008, the chairs provided for the operators were removed pursuant to a
national directive of petitioner. This directive is in line with the "I Operate, I Maintain, I Clean" program of
petitioner for bottling operators, wherein every bottling operator is given the responsibility to keep the machinery
and equipment assigned to him clean and safe. The program reinforces the task of bottling operators to constantly
move about in the performance of their duties and responsibilities.

With this task of moving constantly to check on the machinery and equipment assigned to him, a bottling operator
does not need a chair anymore, hence, petitioner’s directive to remove them. Furthermore, CCBPI rationalized that
the removal of the chairs is implemented so that the bottling operators will avoid sleeping, thus, prevent injuries to
their persons. As bottling operators are working with machines which consist of moving parts, it is imperative that
they should not fall asleep as to do so would expose them to hazards and injuries. In addition, sleeping will hamper
the efficient flow of operations as the bottling operators would be unable to perform their duties competently.

The bottling operators took issue with the removal of the chairs. Through the representation of herein respondent,
they initiated the grievance machinery of the Collective Bargaining Agreement (CBA) in November 2008. Even
after exhausting the remedies contained in the grievance machinery, the parties were still at a deadlock with
petitioner still insisting on the removal of the chairs and respondent still against such measure. As such, respondent
sent a Notice to Arbitrate, dated 16 July 2009, to petitioner stating its position to submit the issue on the removal of
the chairs for arbitration. Nevertheless, before submitting to arbitration the issue, both parties availed of the
conciliation/mediation proceedings before the National Conciliation and Mediation Board (NCMB) Regional
Branch No. VII. They failed to arrive at an amicable settlement.

Thus, the process of arbitration continued and the parties appointed the chairperson and members of the Arbitration
Committee as outlined in the CBA. Petitioner and respondent respectively appointed as members to the Arbitration
Committee Mr. Raul A. Kapuno, Jr. and Mr. Luis Ruiz while they both chose Atty. Alice Morada as chairperson
thereof. They then executed a Submission Agreement which was accepted by the Arbitration Committee on 01
October 2009. As contained in the Submission Agreement, the sole issue for arbitration is whether the removal of
chairs of the operators assigned at the production/manufacturing line while performing their duties and
responsibilities is valid or not.

Both parties submitted their position papers and other subsequent pleadings in amplification of their respective
stands. Petitioner argued that the removal of the chairs is valid as it is a legitimate exercise of management
prerogative, it does not violate the Labor Code and it does not violate the CBA it contracted with respondent. On the
other hand, respondent espoused the contrary view. It contended that the bottling operators have been performing
their assigned duties satisfactorily with the presence of the chairs; the removal of the chairs constitutes a violation of
the Occupational Health and Safety Standards, the policy of the State to assure the right of workers to just and
humane conditions of work as stated in Article 3 of the Labor Code and the Global Workplace Rights Policy.

Ruling of the Arbtration Committee

On June 11, 2010, the Arbitration Committee rendered a decision in favor of the Royal Plant Workers Union (the
Union) and against CCBPI, the dispositive portion of which reads, as follows:

Wherefore, the undersigned rules in favor of ROPWU declaring that the removal of the operators chairs is not valid.
CCBPI is hereby ordered to restore the same for the use of the operators as before their removal in 2008. 4

The Arbitration Committee ruled, among others, that the use of chairs by the operators had been a company practice
for 34 years in Bottling Line 2, from 1974 to 2008, and 20 years in Bottling Line 1, from 1988 to 2008; that the use
of the chairs by the operators constituted a company practice favorable to the Union; that it ripened into a benefit
after it had been enjoyed by it; that any benefit being enjoyed by the employees could not be reduced, diminished,
discontinued, or eliminated by the employer in accordance with Article 100 of the Labor Code, which prohibited the
diminution or elimination by the employer of the employees’ benefit; and that jurisprudence had not laid down any
rule requiring a specific minimum number of years before a benefit would constitute a voluntary company practice
which could not be unilaterally withdrawn by the employer.

The Arbitration Committee further stated that, although the removal of the chairs was done in good faith, CCBPI
failed to present evidence regarding instances of sleeping while on duty. There were no specific details as to the
number of incidents of sleeping on duty, who were involved, when these incidents happened, and what actions were
taken. There was no evidence either of any accident or injury in the many years that the bottling operators used
chairs. To the Arbitration Committee, it was puzzling why it took 34 and 20 years for CCBPI to be so solicitous of
the bottling operators’ safety that it removed their chairs so that they would not fall asleep and injure themselves.
Finally, the Arbitration Committee was of the view that, contrary to CCBPI’s position, line efficiency was the result
of many factors and it could not be attributed solely to one such as the removal of the chairs.

Not contented with the Arbitration Committee’s decision, CCBPI filed a petition for review under Rule 43 before
the CA.

Ruling of the CA

On May 24, 2011, the CA rendered a contrasting decision which nullified and set aside the decision of the
Arbitration Committee. The dispositive portion of the CA decision reads:

WHEREFORE, premises considered, the petition is hereby GRANTED and the Decision, dated 11 June 2010, of the
Arbitration Committee in AC389-VII-09-10-2009D is NULLIFIED and SET ASIDE. A new one is entered in its
stead SUSTAINING the removal of the chairs of the bottling operators from the manufacturing/production line.5

The CA held, among others, that the removal of the chairs from the manufacturing/production lines by CCBPI is
within the province of management prerogatives; that it was part of its inherent right to control and manage its
enterprise effectively; and that since it was the employer’s discretion to constantly develop measures or means to
optimize the efficiency of its employees and to keep its machineries and equipment in the best of conditions, it was
only appropriate that it should be given wide latitude in exercising it.

The CA stated that CCBPI complied with the conditions of a valid exercise of a management prerogative when it
decided to remove the chairs used by the bottling operators in the manufacturing/production lines. The removal of
the chairs was solely motivated by the best intentions for both the Union and CCBPI, in line with the "I Operate, I
Maintain, I Clean" program for bottling operators, wherein every bottling operator was given the responsibility to
keep the machinery and equipment assigned to him clean and safe. The program would reinforce the task of bottling
operators to constantly move about in the performance of their duties and responsibilities. Without the chairs, the
bottling operators could efficiently supervise these machineries’ operations and maintenance. It would also be
beneficial for them because the working time before the break in each rotation for each shift was substantially
reduced from two and a half hours (2 ½ ) to one and a half hours (1 ½) before the 30-minute break. This scheme was
clearly advantageous to the bottling operators as the number of resting periods was increased. CCBPI had the best
intentions in removing the chairs because some bottling operators had the propensity to fall asleep while on the job
and sleeping on the job ran the risk of injury exposure and removing them reduced the risk.

The CA added that the decision of CCBPI to remove the chairs was not done for the purpose of defeating or
circumventing the rights of its employees under the special laws, the Collective Bargaining Agreement (CBA) or the
general principles of justice and fair play. It opined that the principles of justice and fair play were not violated
because, when the chairs were removed, there was a commensurate reduction of the working time for each rotation
in each shift. The provision of chairs for the bottling operators was never part of the CBAs contracted between the
Union and CCBPI. The chairs were not provided as a benefit because such matter was dependent upon the
exigencies of the work of the bottling operators. As such, CCBPI could withdraw this provision if it was not
necessary in the exigencies of the work, if it was not contributing to the efficiency of the bottling operators or if it
would expose them to some hazards. Lastly, the CA explained that the provision of chairs to the bottling operators
cannot be covered by Article 100 of the Labor Code on elimination or diminution of benefits because the
employee’s benefits referred to therein mainly involved monetary considerations or privileges converted to their
monetary equivalent.

Disgruntled with the adverse CA decision, the Union has come to this Court praying for its reversal on the following
GROUNDS

THAT WITH DUE RESPECT, THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN
HOLDING THAT A PETITION FOR REVIEW UNDER RULE 43 OF THE RULES OF COURT IS THE
PROPER REMEDY OF CHALLENGING BEFORE SAID COURT THE DECISION OF THE VOLUNTARY
ARBITRATOR OR PANEL OF VOLUNTARY ARBITRATORS UNDER THE LABOR CODE.

II

THAT WITH DUE RESPECT, THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN
NULLIFYING AND SETTING ASIDE THE DECISION OF THE PANEL OF VOLUNTARY ARBITRATORS
WHICH DECLARED AS NOT VALID THE REMOVAL OF THE CHAIRS OF THE OPERATORS IN THE
MANUFACTURING AND/OR PRODUCTION LINE.

In advocacy of its positions, the Union argues that the proper remedy in challenging the decision of the Arbitration
Committee before the CA is a petition for certiorari under Rule 65. The petition for review under Rule 43 resorted to
by CCBPI should have been dismissed for being an improper remedy. The Union points out that the parties agreed
to submit the unresolved grievance involving the removal of chairs to voluntary arbitration pursuant to the
provisions of Article V of the existing CBA. Hence, the assailed decision of the Arbitration Committee is a
judgment or final order issued under the Labor Code of the Philippines. Section 2, Rule 43 of the 1997 Rules of
Civil Procedure, expressly states that the said rule does not cover cases under the Labor Code of the Philippines. The
judgments or final orders of the Voluntary Arbitrator or Panel of Voluntary Arbitrators are governed by the
provisions of Articles 260, 261, 262, 262-A, and 262-B of the Labor Code of the Philippines.

On the substantive aspect, the Union argues that there is no connection between CCBPI’s "I Operate, I Maintain, I
Clean" program and the removal of the chairs because the implementation of the program was in 2006 and the
removal of the chairs was done in 2008. The 30-minute break is part of an operator’s working hours and does not
make any difference. The frequency of the break period is not advantageous to the operators because it cannot
compensate for the time they are made to stand throughout their working time. The bottling operators get tired and
exhausted after their tour of duty even with chairs around. How much more if the chairs are removed?

The Union further claims that management prerogatives are not absolute but subject to certain limitations found in
law, a collective bargaining agreement, or general principles of fair play and justice. The operators have been
performing their assigned duties and responsibilities satisfactorily for thirty (30) years using chairs. There is no
record of poor performance because the operators are sitting all the time. There is no single incident when the
attention of an operator was called for failure to carry out his assigned tasks. CCBPI has not submitted any evidence
to prove that the performance of the operators was poor before the removal of the chairs and that it has improved
after the chairs were removed. The presence of chairs for more than 30 years made the operators awake and alert as
they could relax from time to time. There are sanctions for those caught sleeping while on duty. Before the removal
of the chairs, the efficiency of the operators was much better and there was no recorded accident. After the removal
of the chairs, the efficiency of the operators diminished considerably, resulting in the drastic decline of line
efficiency.

Finally, the Union asserts that the removal of the chairs constitutes violation of the Occupational Health and Safety
Standards, which provide that every company shall keep and maintain its workplace free from hazards that are likely
to cause physical harm to the workers or damage to property. The removal of the chairs constitutes a violation of the
State policy to assure the right of workers to a just and humane condition of work pursuant to Article 3 of the Labor
Code and of CCBPI’s Global Workplace Rights Policy. Hence, the unilateral withdrawal, elimination or removal of
the chairs, which have been in existence for more than 30 years, constitutes a violation of existing practice.

The respondent’s position

CCBPI reiterates the ruling of the CA that a petition for review under Rule 43 of the Rules of Court was the proper
remedy to question the decision of the Arbitration Committee. It likewise echoes the ruling of the CA that the
removal of the chairs was a legitimate exercise of management prerogative; that it was done not to harm the bottling
operators but for the purpose of optimizing their efficiency and CCBPI’s machineries and equipment; and that the
exercise of its management prerogative was done in good faith and not for the purpose of circumventing the rights of
the employees under the special laws, the CBA or the general principles of justice and fair play.
The Court’s Ruling

The decision in this case rests on the resolution of two basic questions. First, is an appeal to the CA via a petition for
review under Rule 43 of the 1997 Rules of Civil Procedure a proper remedy to question the decision of the
Arbitration Committee? Second, was the removal of the bottling operators’ chairs from CCBPI’s
production/manufacturing lines a valid exercise of a management prerogative?

The Court sustains the ruling of the CA on both issues.

Regarding the first issue, the Union insists that the CA erred in ruling that the recourse taken by CCBPI in appealing
the decision of the Arbitration Committee was proper. It argues that the proper remedy in challenging the decision of
the Voluntary Arbitrator before the CA is by filing a petition for certiorari under Rule 65 of the Rules of Court, not a
petition for review under Rule 43.

CCBPI counters that the CA was correct in ruling that the recourse it took in appealing the decision of the
Arbitration Committee to the CA via a petition for review under Rule 43 of the Rules of Court was proper and in
conformity with the rules and prevailing jurisprudence.

A Petition for Review

under Rule 43 is the

proper remedy

CCBPI is correct. This procedural issue being debated upon is not novel. The Court has already ruled in a number of
cases that a decision or award of a voluntary arbitrator is appealable to the CA via a petition for review under Rule
43. The recent case of Samahan Ng Mga Manggagawa Sa Hyatt (SAMASAH-NUWHRAIN) v. Hon. Voluntary
Arbitrator Buenaventura C. Magsalin and Hotel Enterprises of the Philippines6 reiterated the well-settled doctrine on
this issue, to wit:

In the case of Samahan ng mga Manggagawa sa Hyatt-NUWHRAIN-APL v. Bacungan,7 we repeated the well-
settled rule that a decision or award of a voluntary arbitrator is appealable to the CA via petition for review under
Rule 43. We held that:

"The question on the proper recourse to assail a decision of a voluntary arbitrator has already been settled in Luzon
Development Bank v. Association of Luzon Development Bank Employees, where the Court held that 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 (now embodied in Rule 43 of the 1997
Rules of Civil Procedure), just like those of the quasi-judicial agencies, boards and commissions enumerated therein,
and consistent with the original purpose to provide a uniform procedure for the appellate review of adjudications of
all quasi-judicial entities.

Subsequently, in Alcantara, Jr. v. Court of Appeals, and Nippon Paint Employees Union-Olalia v. Court of Appeals,
the Court reiterated the aforequoted ruling. In Alcantara, the Court held that notwithstanding Section 2 of Rule 43,
the ruling in Luzon Development Bank still stands. The Court explained, thus:

‘The provisions may be new to the Rules of Court but it is far from being a new law. Section 2, Rules 42 of the 1997
Rules of Civil Procedure, as presently worded, is nothing more but a reiteration of the exception to the exclusive
appellate jurisdiction of the Court of Appeals, as provided for in Section 9, Batas Pambansa Blg. 129, as amended
by Republic Act No. 7902:

(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.’

The Court took into account this exception in Luzon Development Bank but, nevertheless, held that the decisions of
voluntary arbitrators issued pursuant to the Labor Code do not come within its ambit x x x."

Furthermore, Sections 1, 3 and 4, Rule 43 of the 1997 Rules of Civil Procedure, as amended, provide:

"SECTION 1. Scope. - This Rule shall apply to appeals from judgments or final orders of the Court of Tax Appeals
and from awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise
of its quasi-judicial functions. Among these agencies are the x x x, and voluntary arbitrators authorized by law.

xxxx

SEC. 3. Where to appeal. - An appeal under this Rule may be taken to the Court of Appeals within the period and in
the manner therein provided, whether the appeal involves questions of fact, of law, or mixed questions of fact and
law.

SEC. 4. Period of appeal. - The appeal shall be taken within fifteen (15) days from notice of the award, judgment,
final order or resolution, or from the date of its last publication, if publication is required by law for its effectivity, or
of the denial of petitioner’s motion for new trial or reconsideration duly filed in accordance with the governing law
of the court or agency a quo. x x x. (Emphasis supplied.)’

Hence, upon receipt on May 26, 2003 of the Voluntary Arbitrator’s Resolution denying petitioner’s motion for
reconsideration, petitioner should have filed with the CA, within the fifteen (15)-day reglementary period, a petition
for review, not a petition for certiorari.

On the second issue, the Union basically claims that the CCBPI’s decision to unilaterally remove the operators’
chairs from the production/manufacturing lines of its bottling plants is not valid because it violates some
fundamental labor policies. According to the Union, such removal constitutes a violation of the 1) Occupational
Health and Safety Standards which provide that every worker is entitled to be provided by the employer with
appropriate seats, among others; 2) policy of the State to assure the right of workers to a just and humane condition
of work as provided for in Article 3 of the Labor Code; 8 3) Global Workplace Rights Policy of CCBPI which
provides for a safe and healthy workplace by maintaining a productive workplace and by minimizing the risk of
accident, injury and exposure to health risks; and 4) diminution of benefits provided in Article 100 of the Labor
Code.9

Opposing the Union’s argument, CCBPI mainly contends that the removal of the subject chairs is a valid exercise of
management prerogative. The management decision to remove the subject chairs was made in good faith and did not
intend to defeat or circumvent the rights of the Union under the special laws, the CBA and the general principles of
justice and fair play.

Again, the Court agrees with CCBPI on the matter.

A Valid Exercise of

Management Prerogative

The Court has held that 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. The exercise of management prerogative, however, is not
absolute as it must be exercised in good faith and with due regard to the rights of labor.10

In the present controversy, it cannot be denied that CCBPI removed the operators’ chairs pursuant to a national
directive and in line with its "I Operate, I Maintain, I Clean" program, launched to enable the Union to perform their
duties and responsibilities more efficiently. The chairs were not removed indiscriminately. They were carefully
studied with due regard to the welfare of the members of the Union. The removal of the chairs was compensated by:
a) a reduction of the operating hours of the bottling operators from a two-and-one-half (2 ½)-hour rotation period to
a one-and-a-half (1 ½) hour rotation period; and b) an increase of the break period from 15 to 30 minutes between
rotations.

Apparently, the decision to remove the chairs was done with good intentions as CCBPI wanted to avoid instances of
operators sleeping on the job while in the performance of their duties and responsibilities and because of the fact that
the chairs were not necessary considering that the operators constantly move about while working. In short, the
removal of the chairs was designed to increase work efficiency. Hence, CCBPI’s exercise of its management
prerogative was made in good faith without doing any harm to the workers’ rights.

The fact that there is no proof of any operator sleeping on the job is of no moment. There is no guarantee that such
incident would never happen as sitting on a chair is relaxing. Besides, the operators constantly move about while
doing their job. The ultimate purpose is to promote work efficiency.

No Violation of Labor Laws

The rights of the Union under any labor law were not violated. There is no law that requires employers to provide
chairs for bottling operators. The CA correctly ruled that the Labor Code, specifically Article 132 11 thereof, only
requires employers to provide seats for women. No similar requirement is mandated for men or male workers. It
must be stressed that all concerned bottling operators in this case are men.

There was no violation either of the Health, Safety and Social Welfare Benefit provisions under Book IV of the
Labor Code of the Philippines. As shown in the foregoing, the removal of the chairs was compensated by the
reduction of the working hours and increase in the rest period. The directive did not expose the bottling operators to
safety and health hazards.

The Union should not complain too much about standing and moving about for one and one-half (1 ½) hours
because studies show that sitting in workplaces for a long time is hazardous to one’s health. The report of VicHealth,
Australia,12 disclosed that "prolonged workplace sitting is an emerging public health and occupational health issue
with serious implications for the health of our working population. Importantly, prolonged sitting is a risk factor for
poor health and early death, even among those who meet, or exceed, national 13 activity guidelines." In another
report,14 it was written:

Workers needing to spend long periods in a seated position on the job such as taxi drivers, call centre and office
workers, are at risk for injury and a variety of adverse health effects.

The most common injuries occur in the muscles, bones, tendons and ligaments, affecting the neck and lower back
regions. Prolonged sitting:

● reduces body movement making muscles more likely to pull, cramp or strain when stretched suddenly, causes
fatigue in the back and neck muscles by slowing the blood supply and puts high tension on the spine, especially in
the low back or neck, and

● causes a steady compression on the spinal discs that hinders their nutrition and can contribute to their premature
degeneration.
Sedentary employees may also face a gradual deterioration in health if they do not exercise or do not lead an
otherwise physically active life. The most common health problems that these employees experience are disorders in
blood circulation and injuries affecting their ability to move. Deep Vein Thrombosis (DVT), where a clot forms in a
large vein after prolonged sitting (eg after a long flight) has also been shown to be a risk.

Workers who spend most of their working time seated may also experience other, less specific adverse health
effects. Common effects include decreased fitness, reduced heart and lung efficiency, and digestive problems.
Recent research has identified too much sitting as an important part of the physical activity and health equation, and
suggests we should focus on the harm caused by daily inactivity such as prolonged sitting.
Associate professor David Dunstan leads a team at the Baker IDI in Melbourne which is specifically researching
sitting and physical activity. He has found that people who spend long periods of time seated (more than four hours
per day) were at risk of:

● higher blood levels of sugar and fats,

● larger waistlines, and

● higher risk of metabolic syndrome

regardless of how much moderate to vigorous exercise they had.

In addition, people who interrupted their sitting time more often just by standing or with light activities such as
housework, shopping, and moving about the office had healthier blood sugar and fat levels, and smaller waistlines
than those whose sitting time was not broken up.

Of course, in this case, if the chairs would be returned, no risks would be involved because of the shorter period of
working time. The study was cited just to show that there is a health risk in prolonged sitting.

No Violation of the CBA

The CBA15 between the Union and CCBPI contains no provision whatsoever requiring the management to provide
chairs for the operators in the production/manufacturing line while performing their duties and responsibilities. On
the contrary, Section 2 of Article 1 of the CBA expressly provides as follows:

Article I

SCOPE

SECTION 2. Scope of the Agreement. All the terms and conditions of employment of employees and workers
within the appropriate bargaining unit (as defined in Section 1 hereof) are embodied in this Agreement and the same
shall govern the relationship between the COMPANY and such employees and/or workers. On the other hand, all
such benefits and/or privileges as are not expressly provided for in this Agreement but which are now being
accorded, may in the future be accorded, or might have previously been accorded, to the employees and/or workers,
shall be deemed as purely voluntary acts on the part of the COMPANY in each case, and the continuance and
repetition thereof now or in the future, no matter how long or how often, shall not be construed as establishing an
obligation on the part of the COMPANY. It is however understood that any benefits that are agreed upon by and
between the COMPANY and the UNION in the Labor-Management Committee Meetings regarding the terms and
conditions of employment outside the CBA that have general application to employees who are similarly situated in
a Department or in the Plant shall be implemented. [emphasis and underscoring supplied]

As can be gleaned from the aforecited provision, the CBA expressly provides that benefits and/or privileges, not
expressly given therein but which are presently being granted by the company and enjoyed by the employees, shall
be considered as purely voluntary acts by the management and that the continuance of such benefits and/or
privileges, no matter how long or how often, shall not be understood as establishing an obligation on the company’s
part. Since the matter of the chairs is not expressly stated in the CBA, it is understood that it was a purely voluntary
act on the part of CCBPI and the long practice did not convert it into an obligation or a vested right in favor of the
Union.

No Violation of the general principles

of justice and fair play

The Court completely agrees with the CA ruling that the removal of the chairs did not violate the general principles
of justice and fair play because the bottling operators’ working time was considerably reduced from two and a half
(2 ½) hours to just one and a half (1 ½) hours and the break period, when they could sit down, was increased to 30
minutes between rotations. The bottling operators’ new work schedule is certainly advantageous to them because it
greatly increases their rest period and significantly decreases their working time. A break time of thirty (30) minutes
after working for only one and a half (1 ½) hours is a just and fair work schedule.

No Violation of Article 100

of the Labor Code

The operators’ chairs cannot be considered as one of the employee benefits covered in Article 10016 of the Labor
Code. In the Court’s view, the term "benefits" mentioned in the non-diminution rule refers to monetary benefits or
privileges given to the employee with monetary equivalents.

Such benefits or privileges form part of the employees’ wage, salary or compensation making them enforceable
obligations.

This Court has already decided several cases regarding the non-diminution rule where the benefits or privileges
involved in those cases mainly concern monetary considerations or privileges with monetary equivalents. Some of
these cases are: Eastern Telecommunication Phils. Inc. v. Eastern Telecoms Employees Union,17 where the case
involves the payment of 14th, 15th and 16th month bonuses; Central Azucarera De Tarlac v. Central Azucarera De
Tarlac Labor Union-NLU,18 regarding the 13th month pay, legal/special holiday pay, night premium pay and
vacation and sick leaves; TSPIC Corp. v. TSPIC Employees Union,19 regarding salary wage increases; and
American Wire and Cable Daily Employees Union vs. American Wire and Cable Company, Inc., 20 involving service
awards with cash incentives, premium pay, Christmas party with incidental benefits and promotional increase.

In this regard, the Court agrees with the CA when it resolved the matter and wrote:

Let it be stressed that the aforequoted article speaks of non-diminution of supplements and other employee benefits.
Supplements arc privileges given to an employee which constitute as extra remuneration besides his or her basic
ordinary earnings and wages. From this definition, We can only deduce that the other employee benefits spoken of
by Article 100 pertain only to those which are susceptible of monetary considerations. Indeed, this could only be the
most plausible conclusion because the cases tackling Article 100 involve mainly with monetary considerations or
privileges converted to their monetary equivalents.

xxxx

Without a doubt, equating the provision of chairs to the bottling operators Ds something within the ambit of
"benefits'' in the context of Article 100 of the Labor Code is unduly stretching the coverage of the law. The
interpretations of Article 100 of the Labor Code do not show even with the slightest hint that such provision of
chairs for the bottling operators may be sheltered under its mantle.21
Jurisprudence recognizes the exercise of management prerogatives. Labor Jaws also discourage interference with an
employer's judgment in the conduct of its business. For this reason, the Court often declines to interfere in legitimate
business decisions of employers. The law must protect not only the welfare of the employees, but also the right of
the employers.22

WHEREFORE, the petition is DENIED.

SO ORDERED.
#107 Auxillo jr vs NLRC 188 scra 263

G.R. No. 82189 August 2, 1990

PORFIRIO AUXILIO, JR., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, BAGUIO COUNTRY CLUB CORPORATION and
LOLITA GENOVE, respondents.

Benjamin C. Rillera for petitioner.

Ernesto P. Pangalangan for private respondents.

PARAS, J.:

In the herein petition for certiorari, petitioner seeks the review of the decision of public respondent National Labor
Relations Commission (NLRC) dated February 12, 1988, which reversed the decision of the Labor Arbiter in NLRC
Case No. RAB-1-0048-82, finding as legal and valid the employer's act of terminating the services of petitioner and
dismissing the latter's complaint for illegal dismissal.

The facts of the case are undisputed:

Petitioner Porfirio Auxilio, Jr. was first employed by private respondent Baguio Country Club Corporation as a
houseman in 1977. He became a regular employee in 1978 and in 1981 was assigned as a front desk clerk with a
basic pay of P524.00 per month. He was in charge of hotel rooms, received guests' registration and acted as
switchboard operator.

On January 17, 1982, the amount of Fifteen Thousand Pesos (P15,000.00), which had been placed in the cashier's
office of the Baguio Country Club, was found to be missing. The loss was brought to the attention of the
management on January 18, 1982. Upon receipt of the report, the Baguio City Police Department (INP) forthwith
conducted a spot investigation. Police investigation ruled out signs of forcible entry or robbery, and concluded that it
was an "inside job." Accordingly, all employees of the Country Club who had access to the cashier's office,
including the petitioner, were invited for questioning. All of them denied having stolen the money. They were then
subjected to a Polygraph examination conducted by the NBI.

Meanwhile, on January 20, 1982, petitioner was placed under preventive suspension for the usual 30-day period due
to his possible involvement in the theft, pending final result of the investigation.

The results of the Polygraph Examination revealed that petitioner could not fully explain his answers to vital
questions relative to the missing money. He was again invited to the Police Headquarters for further investigation
but he refused to attend and said that he was not feeling well when he was under the polygraph examination
(Comment of Solicitor General, p. 3). In the polygraph report on the petitioner dated February 16, 1982, it was
declared that petitioner offered no satisfactory explanation for the adverse result of the polygraph test conducted on
him. All the other employees subjected to the same examination showed no indications of deception as they
explained their side satisfactorily that they did not steal the money.

Petitioner was asked to appear for investigation by the management. However, no further examination was
conducted by the police or the employer because petitioner could not be found in his residence and the notices sent
to him were rejected by his wife.
Thus, in a Memorandum dated February 20, 1982 issued by the Baguio Country Club Corporation, Porfirio Auxilio,
Jr. was terminated for "loss of trust and confidence" and for "giving false statement during official investigation."

Aggrieved, petitioner filed a complaint for illegal dismissal with the Labor Arbiter alleging that he was dismissed on
mere suspicion that he stole the money and that he was denied an opportunity to defend himself pursuant to the
provision of the Collective Bargaining Agreement between private respondent and the union of which petitioner was
a member.

In a decision dated October 26, 1984, Labor Arbiter Saturnino P. Orate ordered the reinstatement of petitioner,
finding that there was no reasonable ground in dismissing the latter because private respondent failed to establish by
preponderance of evidence the legality of the dismissal.

On appeal, the NLRC, on February 12, 1988, set aside the Labor Arbiters decision and entered another dismissing
petitioner's complaint for illegal dismissal for lack of merit.

Hence, this petition.

Petitioner Porfirio Auxilio, Jr. claims that he was denied due process of law because the grievance procedure
provided in the Collective Bargaining Agreement (CBA) was not strictly observed. He likewise maintains that with
the rejection by the Labor Arbiter of the probative value of his flight, the Special Investigation Report and Polygraph
Report, his dismissal from employment is not legal.

A review of the records of this case shows that public respondent did not commit any grave abuse of discretion in
reversing the Labor Arbiter's decision.

The Grievance Machinery in the CBA states:

. . . Sec. 2. A GRIEVANCE is any controversy by the union or an employee against the CLUB or
any controversy by the CLUB against the UNION or an employee concerning any ruling practice
or working condition in the CLUB, or any dispute as to the interpretation of any provisions of this
Agreement. (p 38, Rollo)

As correctly pointed out by the Solicitor General in his Comment, the instances enumerated where the grievance
machinery may be availed of are not present in this case and that there was no overt act on the part of petitioner to
bring any cause for complaint to the attention of the immediate supervisor concerned as prescribed in Step 1 on the
Supervisory level. What is truly involved in the case at hand is the last action pursued by private respondent in the
face of overwhelming evidence found by the police investigators on the theft of its P15,000.00 on January 17, 1982.
The invocation of the grievance machinery provisions of the CBA is not in place. (Comment, p. 8).

No doubt petitioner was afforded due process of law. There is convincing and sufficient evidence on record to show
that private respondent corporation fully complied with the notice and hearing requirements of due process.
Petitioner was notified and repeatedly invited for further investigation but he "chose to ignore" the said notices by
his "convenient absence" from his residence and the continued refusal by his wife to receive the notices
(Memorandum of public respondent, p. 5). Private respondent cannot be faulted as petitioner had ample opportunity
to be heard. Since he unjustifiably rejected the opportunity, petitioner cannot now complain that he was denied due
process of law.

Petitioner also maintains that his dismissal was without basis as his complicity in the theft of the P15,000.00 was
solely based on suspicions and on the polygraph test conducted on his person.

Loss of confidence is a valid ground for dismissing an employee. Proof beyond reasonable doubt
of the employer's misconduct is not required, it being sufficient that there is some basis for the
same or that the employer has reasonable ground to believe that the employee is responsible for
 the misconduct and his participation therein rendered him unworthy of the trust and confidence
demanded of his position. (Nat'l Org. of Laborers and Employers vs. MRR, 21 SCRA 191; Nevans
vs. Court of Industrial Relations, 23 SCRA 1321; Galsim vs. PNB, 29 SCRA 293; Reyes v.
Zamora, 90 SCRA 92; Villadolid v. Inciong, 121 SCRA 205; San Miguel Corp. v. Deputy
Minister of Labor and Employment, G.R. Nos. 61232-33, Dec. 29, 1983)

The job of petitioner is of such nature as to require a substantial amount of trust and confidence on the part of the
employer. He may thus be dismissed on the ground of loss of trust and confidence. It was established that petitioner
had ready access to the cashier's office. He admitted having borrowed the nail cutter of the cashier included among
the bunch of keys to the latter's drawer. The investigations and inquiries conducted were made on all the employees
who had access to the cashier's drawer and not on the petitioner alone. However, his erratic reaction to the
investigator's questioning narrowed down the list of suspects to him alone. We agree with the public respondent that
petitioner's continued absence from his residence and unexplained disappearance despite several notices for further
police investigation implied flight associated with guilt. The requirement that there be some basis or reasonable
ground to believe that the employee is responsible for the misconduct is sufficiently met in the case at bar.

Petitioner's behavior rendered him unworthy of the trust and confidence demanded by his position. Considering that
an employer is entitled to terminate the services of employees for just cause and that stealing and other forms of
dishonesty have been held to be sufficient grounds for dismissal, as a measure of self-protection, private respondent
was justified in dismissing petitioner. Although petitioner's guilt was not proved beyond reasonable doubt, the
totality of the evidence presented is sufficient to warrant the dismissal of petitioner Porfirio Auxilio, Jr. As held in
the case of Filipro, Inc. vs. NLRC, 145 SCRA 123:

The law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction
of the employer.

WHEREFORE, the decision of the National Labor Relations Commission (NLRC) is AFFIRMED.

SO ORDERED.
Strikes and lockouts/consequences (Art 263, 277)
#109 Employees Union of Bayer, Phils vs Bayer Phils GR 162943, Dec 6, 2010
EMPLOYEES UNION OF BAYER PHILS., FFW G.R. No. 162943
and JUANITO S. FACUNDO, in his capacity as Present:
President,
Petitioners, CARPIO MORALES, J.,
Chairperson,
BRION,
- versus - BERSAMIN,
VILLARAMA, JR., and
SERENO, JJ.

BAYER PHILIPPINES, INC., DIETER J.

LONISHEN (President), ASUNCION AMISTOSO Promulgated:
(HRD Manager), AVELINA REMIGIO AND
ANASTACIA VILLAREAL, December 6, 2010
Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

VILLARAMA, JR., J.:

This petition for review on certiorari assails the Decision[1] dated December 15, 2003 and Resolution[2]dated March
23, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 73813.

Petitioner Employees Union of Bayer Philippines[3] (EUBP) is the exclusive bargaining agent of all rank-and-file
employees of Bayer Philippines (Bayer), and is an affiliate of the Federation of Free Workers (FFW). In 1997, EUBP,
headed by its president Juanito S. Facundo (Facundo), negotiated with Bayer for the signing of a collective bargaining
agreement (CBA). During the negotiations, EUBP rejected Bayers 9.9% wage-increase proposal resulting in a
bargaining deadlock. Subsequently, EUBP staged a strike, prompting the Secretary of the Department of Labor and
Employment (DOLE) to assume jurisdiction over the dispute.

In November 1997, pending the resolution of the dispute, respondent Avelina Remigio (Remigio) and 27 other union
members, without any authority from their union leaders, accepted Bayers wage-increase proposal. EUBPs grievance
committee questioned Remigios action and reprimanded Remigio and her allies. On January 7, 1998, the DOLE
Secretary issued an arbitral award ordering EUBP and Bayer to execute a CBA retroactive to January 1, 1997 and to
be made effective until December 31, 2001. The said CBA[4] was registered on July 8, 1998 with the Industrial
Relations Division of the DOLE-National Capital Region (NCR).[5]

Meanwhile, the rift between Facundos leadership and Remigios group broadened. On August 3, 1998, barely six
months from the signing of the new CBA, during a company-sponsored seminar,[6] Remigio solicited signatures from
union members in support of a resolution containing the decision of the signatories to: (1) disaffiliate from FFW, (2)
rename the union as Reformed Employees Union of Bayer Philippines (REUBP), (3) adopt a new constitution and by-
laws for the union, (4) abolish all existing officer positions in the union and elect a new set of interim officers, and (5)
authorize REUBP to administer the CBA between EUBP and Bayer. [7] The said resolution was signed by 147 of the
257 local union members. A subsequent resolution was also issued affirming the first resolution. [8]

A tug-of-war then ensued between the two rival groups, with both seeking recognition from Bayer and demanding
remittance of the union dues collected from its rank-and-file members. On September 8, 1998, Remigios splinter group
wrote Facundo, FFW and Bayer informing them of the decision of the majority of the union members to disaffiliate
from FFW.[9] This was followed by another letter informing Facundo, FFW and Bayer that an interim set of REUBP
executive officers and board of directors had been appointed, and demanding the remittance of all union dues to
REUBP. Remigio also asked Bayer to desist from further transacting with EUBP. Facundo, meanwhile, sent similar
requests to Bayer[10] requesting for the remittance of union dues in favor of EUBP and accusing the company of
interfering with purely union matters.[11] Bayer responded by deciding not to deal with either of the two groups, and
by placing the union dues collected in a trust account until the conflict between the two groups is resolved.[12]

On September 15, 1998, EUBP filed a complaint for unfair labor practice (first ULP complaint) against Bayer for non-
remittance of union dues. The case was docketed as NLRC-NCR-Case No. 00-09-07564-98.[13]

EUBP later sent a letter dated November 5, 1998 to Bayer asking for a grievance conference.[14] The meeting was
conducted by the management on November 11, 1998, with all REUBP officers including their lawyers
present. Facundo did not attend the meeting, but sent two EUBP officers to inform REUBP and the management that
a preventive mediation conference between the two groups has been scheduled on November 12, 1998 before the
National Conciliation and Mediation Board (NCMB).[15]

Apparently, the two groups failed to settle their issues as Facundo again sent respondent Dieter J. Lonishen two more
letters, dated January 14, 1999[16] and September 2, 1999,[17] asking for a grievance meeting with the management to
discuss the failure of the latter to comply with the terms of their CBA. Both requests remained unheeded.

On February 9, 1999, while the first ULP case was still pending and despite EUBPs repeated request for a grievance
conference, Bayer decided to turn over the collected union dues amounting to P254,857.15 to respondent Anastacia
Villareal, Treasurer of REUBP.

Aggrieved by the said development, EUBP lodged a complaint[18] on March 4, 1999 against Remigios group before
the Industrial Relations Division of the DOLE praying for their expulsion from EUBP for commission of acts that
threaten the life of the union.
On June 18, 1999, Labor Arbiter Jovencio Ll. Mayor, Jr. dismissed the first ULP complaint for lack of
jurisdiction.[19] The Arbiter explained that the root cause for Bayers failure to remit the collected union dues can be
traced to the intra-union conflict between EUBP and Remigios group [20] and that the charges imputed against Bayer
should have been submitted instead to voluntary arbitration.[21] EUBP did not appeal the said decision.[22]

On December 14, 1999, petitioners filed a second ULP complaint against herein respondents docketed as NLRC-
RAB-IV Case No. 12-11813-99-L. Three days later, petitioners amended the complaint charging the respondents with
unfair labor practice committed by organizing a company union, gross violation of the CBA and violation of their
duty to bargain.[23] Petitioners complained that Bayer refused to remit the collected union dues to EUBP despite several
demands sent to the management.[24] They also alleged that notwithstanding the requests sent to Bayer for a
renegotiation of the last two years of the 1997-2001 CBA between EUBP and Bayer, the latter opted to negotiate
instead with Remigios group.[25]

On even date, REUBP and Bayer agreed to sign a new CBA. Remigio immediately informed her allies of the
managements decision.[26]

In response, petitioners immediately filed an urgent motion for the issuance of a restraining order/injunction[27] before
the National Labor Relations Commission (NLRC) and the Labor Arbiter against respondents. Petitioners asserted
their authority as the exclusive bargaining representative of all rank-and-file employees of Bayer and asked that a
temporary restraining order be issued against Remigios group and Bayer to prevent the employees from ratifying the
new CBA. Later, petitioners filed a second amended complaint[28] to include in its complaint the issue of gross
violation of the CBA for violation of the contract bar rule following Bayers decision to negotiate and sign a new CBA
with Remigios group.

Meanwhile, on January 26, 2000, the Regional Director of the Industrial Relations Division of DOLE issued a decision
dismissing the issue on expulsion filed by EUBP against Remigio and her allies for failure to exhaust reliefs within
the union and ordering the conduct of a referendum to determine which of the two groups should be recognized as
union officers.[29] EUBP seasonably appealed the said decision to the Bureau of Labor Relations (BLR). [30] On June
16, 2000, the BLR reversed the Regional Directors ruling and ordered the management of Bayer to respect the
authority of the duly-elected officers of EUBP in the administration of the prevailing CBA. [31]

Unfortunately, the said BLR ruling came late since Bayer had already signed a new CBA[32] with REUBP on February
21, 2000. The said CBA was eventually ratified by majority of the bargaining unit. [33]

On June 2, 2000, Labor Arbiter Waldo Emerson R. Gan dismissed EUBPs second ULP complaint for lack of
jurisdiction.[34] The Labor Arbiter explained the dismissal as follows:
 All told, were it not for the fact that there were two (2) [groups] of employees, the Union led by its
President Juanito Facundo and the members who decided to disaffiliate led by Ms. Avelina Remigio,
claiming to be the rightful representative of the rank and file employees, the Company would not
have acted the way it did and the Union would not have filed the instant case.

Clearly then, as the case involves intra-union disputes, this Office is bereft of any jurisdiction
pursuant to Article 226 of the Labor Code, as amended, which provides pertinently in part, thus:

Bureau of Labor Relations The Bureau of Labor Relations and the Labor
Relations Divisions in the regional offices of the Department of Labor and
Employment shall have original and 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.

Specifically, with respect to the union dues, the authority is the case of Cebu Seamens Association[,]
Inc. vs. Ferrer-Calleja, (212 SCRA 51), where the Supreme Court held that when the issue calls for
the determination of which between the two groups within a union is entitled to the union dues, the
same cannot be taken cognizance of by the NLRC.

xxxx

WHEREFORE, premises considered, the instant complaint is hereby DISMISSED on the ground
of lack of jurisdiction.

SO ORDERED.[35]

On June 28, 2000, the NLRC resolved to dismiss[36] petitioners motion for a restraining order and/or injunction stating
that the subject matter involved an intra-union dispute, over which the said Commission has no jurisdiction.[37]

Aggrieved by the Labor Arbiters decision to dismiss the second ULP complaint, petitioners appealed the said decision,
but the NLRC denied the appeal.[38] EUBPs motion for reconsideration was likewise denied.[39]

Thus, petitioners filed a Rule 65 petition to the CA. On December 15, 2003, the CA sustained both the Labor Arbiter
and the NLRCs rulings. The appellate court explained,

A cursory reading of the three pleadings, to wit: the Complaint (Vol. I, Rollo, p[p]. 166-167);
the Amended Complaint (Vol. I, Rollo[,] pp. 168-172) and the Second Amended Complaint dated
March 8, 2000 (Vol. II, Rollo, pp. 219-225) will readily show that the instant case was brought about
by the action of the Group of REM[I]GIO to disaffiliate from FFW and to organized (sic) REUBP
under the tutelage of REM[I]GIO and VILLAREAL. At first glance of the case at bar, it involves
purely an (sic) inter-union and intra-union conflicts or disputes between EUBP-FFW and REUBP
which issue should have been resolved by the Bureau of Labor Relations under Article 226 of the
Labor Code. However, since no less than petitioners who admitted that respondents committed gross
violations of the CBA, then the BLR is divested of jurisdiction over the case and the issue should
have been referred to the Grievance Machinery and Voluntary Arbitrator and not to the Labor
Arbiter as what petitioners did in the case at bar. x x x
 xxxx

Furthermore, the CBA entered between BAYER and EUBP-FFW [has] a life span of only five years
and after the said period, the employees have all the right to change their bargaining unit who will
represent them. If there exist[s] two opposing unions in the same company, the remedy is not to
declare that such act is considered unfair labor practice but rather they should conduct a certification
election provided [that] it should be conducted within 60 days of the so[-]called freedom period
before the expiration of the CBA.

WHEREFORE, premises considered, this Petition is DENIED and the assailed Decision dated
September 27, 2001 as well as the Order dated June 21, 2002, denying the motion for
reconsideration, by the National Labor Relations Commission, First Division, in NLRC Case No.
RAB-IV-12-11813-99-L, are hereby AFFIRMEDin toto. Costs against petitioners.

SO ORDERED.[40]

Undaunted, petitioners filed this Rule 45 petition before this Court. Initially, the said petition was denied for having
been filed out of time and for failure to comply with the requirements provided in the 1997 Rules of Civil Procedure,
as amended.[41] Upon petitioners motion, however, we decided to reinstate their appeal.

The following are the issues raised by petitioners, to wit:

I. WHETHER OR NOT THE HONORABLE COURT OF APPEALS, IN ARRIVING AT THE

DECISION PROMULGATED ON 15 DECEMBER 2003 AND RESOLUTION
PROMULGATED ON 23 MARCH 2004, DECIDED THE CASE IN ACCORDANCE
WITH LAW AND JURISPRUDENCE; AND

II. WHETHER OR NOT THE HONORABLE COURT OF APPEALS, IN ARRIVING AT THE

DECISION PROMULGATED ON 15 DECEMBER 2003 AND RESOLUTION
PROMULGATED ON 23 MARCH 2004, GRAVELY ABUSE[D] ITS DISCRETION IN
ITS FINDINGS AND CONCLUSION THAT:

THE ACTS OF ABETTING OR ASSISTING IN THE CREATION OF

ANOTHER UNION, NEGOTIATING OR BARGAINING WITH SUCH
UNION, WHICH IS NOT THE SOLE AND EXCLUSIVE BARGAINING
AGENT, VIOLATING THE DUTY TO BARGAIN COLLECTIVELY,
REFUSAL TO PROCESS GRIEVABLE ISSUES IN THE GRIEVANCE
MACHINERY AND/OR REFUSAL TO DEAL WITH THE SOLE AND
EXCLUSIVE BARGAINING AGENT ARE ACTS CONSTITUTING OR
TANTAMOUNT TO UNFAIR LABOR PRACTICE.[42]

Respondents Bayer, Lonishen and Amistoso, meanwhile, identify the issues as follows:

I. WHETHER OR NOT THE UNIFORM FINDINGS OF THE COURT OF APPEALS, THE

NLRC AND THE LABOR ARBITER ARE BINDING ON THIS HONORABLE COURT;

II. WHETHER OR NOT THE LABOR ARBITER AND THE NLRC HAVE JURISDICTION
OVER THE INSTANT CASE;

III. WHETHER OR NOT THE INSTANT CASE INVOLVES AN INTRA-UNION DISPUTE;

 IV. WHETHER OR NOT RESPONDENTS COMPANY, LONISHEN AND AMISTOSO
COMMITTED AN ACT OF UNFAIR LABOR PRACTICE; AND

V. WHETHER OR NOT THE INSTANT CASE HAS BECOME MOOT AND ACADEMIC. [43]

Essentially, the issue in this petition is whether the act of the management of Bayer in dealing and negotiating with
Remigios splinter group despite its validly existing CBA with EUBP can be considered unfair labor practice and, if
so, whether EUBP is entitled to any relief.

Petitioners argue that the subject matter of their complaint, as well as the subsequent amendments thereto, pertain to
the unfair labor practice act of respondents Bayer, Lonishen and Amistoso in dealing with Remigios splinter union.
They contend that (1) the acts of abetting or assisting in the creation of another union is among those considered by
the Labor Code, as amended, specifically under Article 248 (d) [44]thereof, as unfair labor practice; (2) the act of
negotiating with such union constitutes a violation of Bayers duty to bargain collectively; and (3) Bayers unjustified
refusal to process EUBPs grievances and to recognize the said union as the sole and exclusive bargaining agent are
tantamount to unfair labor practice.[45]

Respondents Bayer, Lonishen and Amistoso, on the other hand, contend that there can be no unfair labor practice on
their part since the requisites for unfair labor practice i.e., that the violation of the CBA should be gross, and that it
should involve violation in the economic provisions of the CBA were not satisfied. Moreover, they cite the ruling of
the Labor Arbiter that the issues raised in the complaint should have been ventilated and threshed out before the
voluntary arbitrators as provided in Article 261 of the Labor Code, as amended.[46] Respondents Remigio and
Villareal, meanwhile, point out that the case should be dismissed as against them since they are not real parties in
interest in the ULP complaint against Bayer,[47] and since there are no specific or material acts imputed against them
in the complaint.[48]

The petition is partly meritorious.

An intra-union dispute refers to any conflict between and among union members, including grievances arising from
any violation of the rights and conditions of membership, violation of or disagreement over any provision of the unions
constitution and by-laws, or disputes arising from chartering or disaffiliation of the union. [49] Sections 1 and 2, Rule
XI of Department Order No. 40-03, Series of 2003 of the DOLE enumerate the following circumstances as inter/intra-
union disputes, viz:

RULE XI
INTER/INTRA-UNION DISPUTES AND
OTHER RELATED LABOR RELATIONS DISPUTES

SECTION 1. Coverage. - Inter/intra-union disputes shall include:

 (a) cancellation of registration of a labor organization filed by its members or by
another labor organization;
(b) conduct of election of union and workers association officers/nullification of
election of union and workers association officers;
(c) audit/accounts examination of union or workers association funds;
(d) deregistration of collective bargaining agreements;
(e) validity/invalidity of union affiliation or disaffiliation;
(f) validity/invalidity of acceptance/non-acceptance for union membership;
(g) validity/invalidity of impeachment/expulsion of union and workers association
officers and members;
(h) validity/invalidity of voluntary recognition;
(i) opposition to application for union and CBA registration;
(j) violations of or disagreements over any provision in a union or workers
association constitution and by-laws;
(k) disagreements over chartering or registration of labor organizations and collective
bargaining agreements;
(l) violations of the rights and conditions of union or workers association
membership;
(m) violations of the rights of legitimate labor organizations, except interpretation of
collective bargaining agreements;
(n) such other disputes or conflicts involving the rights to self-organization, union
membership and collective bargaining
(1) between and among legitimate labor organizations;
(2) between and among members of a union or workers association.

SECTION 2. Coverage. Other related labor relations disputes shall include any conflict
between a labor union and the employer or any individual, entity or group that is not a labor
organization or workers association. This includes: (1) cancellation of registration of unions and
workers associations; and (2) a petition for interpleader.

It is clear from the foregoing that the issues raised by petitioners do not fall under any of the aforementioned
circumstances constituting an intra-union dispute. More importantly, the petitioners do not seek a determination of
whether it is the Facundo group (EUBP) or the Remigio group (REUBP) which is the true set of union officers. Instead,
the issue raised pertained only to the validity of the acts of management in light of the fact that it still has an existing
CBA with EUBP. Thus as to Bayer, Lonishen and Amistoso the question was whether they were liable for unfair labor
practice, which issue was within the jurisdiction of the NLRC. The dismissal of the second ULP complaint was
therefore erroneous.

However, as to respondents Remigio and Villareal, we find that petitioners complaint was validly dismissed.
 Petitioners ULP complaint cannot prosper as against respondents Remigio and Villareal because the issue,
as against them, essentially involves an intra-union dispute based on Section 1 (n) of DOLE Department Order No.
40-03. To rule on the validity or illegality of their acts, the Labor Arbiter and the NLRC will necessarily touch on the
issues respecting the propriety of their disaffiliation and the legality of the establishment of REUBP issues that are
outside the scope of their jurisdiction. Accordingly, the dismissal of the complaint was validly made, but only with
respect to these two respondents.

But are Bayer, Lonishen and Amistoso liable for unfair labor practice? On this score, we find that the evidence
supports an answer in the affirmative.

It must be remembered that a CBA is entered into in order to foster stability and mutual cooperation between
labor and capital. An employer should not be allowed to rescind unilaterally its CBA with the duly certified bargaining
agent it had previously contracted with, and decide to bargain anew with a different group if there is no legitimate
reason for doing so and without first following the proper procedure. If such behavior would be tolerated, bargaining
and negotiations between the employer and the union will never be truthful and meaningful, and no CBA forged after
arduous negotiations will ever be honored or be relied upon. Article 253 of the Labor Code, as amended, plainly
provides:

ART. 253. Duty to bargain collectively when there exists a collective bargaining agreement. Where
there is a collective bargaining agreement, the duty to bargain collectively shall also mean that
neither party shall terminate or modify such agreement during its lifetime. However, either
party can serve a written notice to terminate or modify the agreement at least sixty (60) days prior
to its expiration date. It shall be the duty of both parties to keep the status quo and to continue in
full force and effect the terms and conditions of the existing agreement during the 60-day period
and/or until a new agreement is reached by the parties. (Emphasis supplied.)

This is the reason why it is axiomatic in labor relations that a CBA entered into by a legitimate labor organization that
has been duly certified as the exclusive bargaining representative and the employer becomes the law between them.
Additionally, in the Certificate of Registration[50] issued by the DOLE, it is specified that the registered CBA serves
as the covenant between the parties and has the force and effect of law between them during the period of its duration.
Compliance with the terms and conditions of the CBA is mandated by express policy of the law primarily to afford
protection to labor[51] and to promote industrial peace. Thus, when a valid and binding CBA had been entered into by
the workers and the employer, the latter is behooved to observe the terms and conditions thereof bearing on union
dues and representation.[52] If the employer grossly violates its CBA with the duly recognized union, the former may
be held administratively and criminally liable for unfair labor practice. [53]
Respondents Bayer, Lonishen and Amistoso, contend that their acts cannot constitute unfair labor practice as the same
did not involve gross violations in the economic provisions of the CBA, citing the provisions of Articles 248 (1) and
261[54] of the Labor Code, as amended.[55] Their argument is, however, misplaced.

Indeed, in Silva v. National Labor Relations Commission,[56] we explained the correlations of Article 248 (1)
and Article 261 of the Labor Code to mean that for a ULP case to be cognizable by the Labor Arbiter, and for the
NLRC to exercise appellate jurisdiction thereon, the allegations in the complaint must show prima facie the
concurrence of two things, namely: (1) gross violation of the CBA; and (2) the violation pertains to the economic
provisions of the CBA.[57]

This pronouncement in Silva, however, should not be construed to apply to violations of the CBA which can
be considered as gross violations per se, such as utter disregard of the very existence of the CBA itself, similar to what
happened in this case. When an employer proceeds to negotiate with a splinter union despite the existence of its valid
CBA with the duly certified and exclusive bargaining agent, the former indubitably abandons its recognition of the
latter and terminates the entire CBA.

Respondents cannot claim good faith to justify their acts. They knew that Facundos group represented the duly-elected
officers of EUBP. Moreover, they were cognizant of the fact that even the DOLE Secretary himself had recognized
the legitimacy of EUBPs mandate by rendering an arbitral award ordering the signing of the 1997-2001 CBA between
Bayer and EUBP. Respondents were likewise well-aware of the pendency of the intra-union dispute case, yet they still
proceeded to turn over the collected union dues to REUBP and to effusively deal with Remigio. The totality of
respondents conduct, therefore, reeks with anti-EUBP animus.

Bayer, Lonishen and Amistoso argue that the case is already moot and academic following the lapse of the
1997-2001 CBA and their renegotiation with EUBP for the 2006-2007 CBA. They also reason that the act of the
company in negotiating with EUBP for the 2006-2007 CBA is an obvious recognition on their part that EUBP is now
the certified collective bargaining agent of its rank-and-file employees.[58]

We do not agree. First, a legitimate labor organization cannot be construed to have abandoned its pending
claim against the management/employer by returning to the negotiating table to fulfill its duty to represent the interest
of its members, except when the pending claim has been expressly waived or compromised in its subsequent
negotiations with the management. To hold otherwise would be tantamount to subjecting industrial peace to the
precondition that previous claims that labor may have against capital must first be waived or abandoned before
negotiations between them may resume. Undoubtedly, this would be against public policy of affording protection to
labor and will encourage scheming employers to commit unlawful acts without fear of being sanctioned in the future.
 Second, that the management of Bayer decided to recognize EUBP as the certified collective bargaining agent
of its rank-and-file employees for purposes of its 2006-2007 CBA negotiations is of no moment. It did not obliterate
the fact that the management of Bayer had withdrawn its recognition of EUBP and supported REUBP during the
tumultuous implementation of the 1997-2001 CBA. Such act of interference which is violative of the existing CBA
with EUBP led to the filing of the subject complaint.

On the matter of damages prayed for by the petitioners, we have held that as a general rule, a corporation
cannot suffer nor be entitled to moral damages. A corporation, and by analogy a labor organization, being an artificial
person and having existence only in legal contemplation, has no feelings, no emotions, no senses; therefore, it cannot
experience physical suffering and mental anguish. Mental suffering can be experienced only by one having a nervous
system and it flows from real ills, sorrows, and griefs of life all of which cannot be suffered by an artificial, juridical
person.[59] A fortiori, the prayer for exemplary damages must also be denied. [60] Nevertheless, we find it in order to
award (1) nominal damages in the amount of P250,000.00 on the basis of our ruling in De La Salle University v. De
La Salle University Employees Association (DLSUEA-NAFTEU)[61] and Article 2221,[62] and (2) attorneys fees
equivalent to 10% of the monetary award. The remittance to petitioners of the collected union dues previously turned
over to Remigio and Villareal is likewise in order.

WHEREFORE, the petition for review on certiorari is PARTLY GRANTED. The Decision
dated December 15, 2003 and the Resolution dated March 23, 2004 of the Court of Appeals in CA-G.R. SP No. 73813
are MODIFIED as follows:

1) Respondents Bayer Phils., Dieter J. Lonishen and Asuncion Amistoso are found LIABLE for Unfair
Labor Practice, and are hereby ORDERED to remit to petitioners the amount of P254,857.15
representing the collected union dues previously turned over to Avelina Remigio and Anastacia
Villareal. They are likewise ORDERED to pay petitioners nominal damages in the amount
of P250,000.00 and attorneys fees equivalent to 10% of the monetary award; and

2) The complaint, as against respondents Remigio and Villareal. is DISMISSED due to the lack of
jurisdiction of the Labor Arbiter and the NLRC, the complaint being in the nature of an intra-union
dispute.

No pronouncement as to costs.

SO ORDERED.
#110 Malayang Manggagawa ng stayfast vs NLRC Gr 155306 Aug 28, 2013

G.R. No. 155306 August 28, 2013

MALAYANG MANGGAGAWA NG STAYFAST PHILS., INC., PETITIONER,

vs.
NATIONAL LABOR RELATIONS COMMISSION, STAYFAST PHILIPPINES, INC./ MARIA
ALMEIDA,RESPONDENTS.

DECISION

LEONARDO-DE CASTRO, J.:

This petition for Certiorari under Rule 65 of the Rules of Court seeks a review and reversal of the Decision 1 dated
July 1, 2002 of the Court of Appeals in CA-G.R. SP No. 59465, which dismissed the petition for certiorari of
petitioner Malayang Mangggagawa ng Stayfast Phils., Inc.

The Labor Arbiter and the National Labor Relations Commission (NLRC) made similar findings of fact. Petitioner
and Nagkakaisang Lakas ng Manggagawa sa Stayfast (NLMS-Olalia) sought to be the exclusive bargaining agent of
the employees of respondent company, Stayfast Philippines, Inc. A certification election was conducted on
December 29, 1995.2 Out of the 223 valid votes cast, petitioner garnered 109 votes while NLMS-Olalia received 112
votes and 2 votes were for "No Union." 3 Thus, the Med-Arbiter who supervised the certification election issued an
Order dated January 9, 1996 certifying NLMS-Olalia as the sole and exclusive bargaining agent of all rank and file
employees of respondent company.4

Petitioner appealed the Order of the Med-Arbiter to the Secretary of Labor and Employment. The Secretary of Labor
and Employment initially set aside the Order of the Med-Arbiter and called for run-off election between petitioner
and NLMS-Olalia. On motion of NLMS-Olalia, however, the Secretary of Labor and Employment reconsidered his
earlier decision and restored the Med-Arbiter’s Order dated January 9, 1996. Petitioner elevated the matter via
petition for certiorari to this Court.5 The petition, docketed as G.R. No. 125957, was dismissed in a Resolution dated
January 14, 1998.6

Meanwhile, NLMS-Olalia demanded to collectively bargain with respondent company. The latter rejected
petitioner’s demand, insisting that it would negotiate a collective bargaining agreement only with whichever union is
finally certified as the sole and exclusive bargaining agent of the workers. Nevertheless, NLMS-Olalia went on
strike on April 1, 1997 until it was temporarily restrained eight days later.7

Subsequently, on June 5, 1997, petitioner filed its own notice of strike in the National Conciliation and Mediation
Board (NCMB). Respondent company opposed petitioner’s move and filed a motion to dismiss on the ground that
petitioner was not the certified bargaining agent and therefore lacked personality to file a notice of
strike.8Thereafter, the parties were able to make concessions during the conciliation-mediation stage in the NCMB
which led petitioner to withdraw its notice of strike. 9 In this connection, the NCMB issued a Certification dated July
31, 1997 which reads:

CERTIFICATION

TO WHOM IT MAY CONCERN:

This is to certify that it appears from the "Minutes/Agreement" of conciliation conference dated July 15, 1997,
which was further confirmed by Conciliator/Mediator Gil Caragayan[,] the Notice of Strike filed by MMSP-
Independent on June 5, 1997, against Stayfast Philippines, Inc. is considered dropped/withdrawn from the business
calendar of this office.
It is further certified that there is no new Notice of Strike filed by the same union.

This certification is being issued upon the written request of Atty. Edgardo R. Abaya.

July 31, 1997.

(Sgd.) LEOPOLDO B. DE JESUS

Director II10

On July 21, 1997, however, petitioner’s members staged a "sit-down strike" to dramatize their demand for a fair and
equal treatment as respondent company allegedly continued to discriminate against them. Respondent company
issued a memorandum requiring the alleged participants in the "sit-down strike" to explain within 24 hours why they
should not be terminated or suspended from work for infraction of company rules and regulations pertaining to
unauthorized work stoppage, acts inimical to company interest, and disregard of instruction of immediate supervisor
to perform assigned task. As no one complied with the memorandum within the 24-hour deadline, respondent
company promptly terminated the service of the participants in the "sit-down strike" on July 22, 1997.
Consequently, on July 23, 1997, petitioner staged a strike and filed a complaint for unfair labor practice, union
busting and illegal lockout against respondent company and its General Manager, Maria Almeida, in the NLRC. 11

In support of its complaint, petitioner alleged that respondents had repeatedly committed acts of discrimination, such
as the denial of the use of the company canteen for purposes of conducting a strike vote, the constant denial of
applications of petitioner’s members for leave to attend hearings in relation to certain labor cases while similar
applications of members of the other union were approved, and the suspension of petitioner’s president for being
absent due to attendance in hearings of labor cases involving petitioner’s members. Petitioner further claimed that
the termination of about 127 of its officers and members constituted union busting and unlawful lockout. 12

For its part, respondent company claimed that petitioner lacked legal authority to go on strike since it is a minority
union. As petitioner withdrew its notice of strike during the proceedings in the NCMB, the strike conducted by
petitioner was illegal as it constituted a wildcat strike and later became a full-blown strike on July 23, 1997.
Petitioner committed illegal acts during the strike and obstructed the free ingress and egress from respondent
company’s premises.13

On April 27, 1999, the Labor Arbiter rendered a Decision which ruled that, while petitioner may file a notice of
strike on behalf of its members, petitioner failed to cite any instance of discrimination or harassment when it filed its
notice of strike on June 5, 1997 and the incidents mentioned as discriminatory occurred after the filing of the said
notice. Moreover, assuming the strike was legal at the beginning, it became illegal when petitioner committed acts
prohibited under Article 264(e) of the Labor Code, such as acts of violence, coercion and intimidation and
obstruction of the free ingress to and egress from respondent company’s premises. Also, petitioner was supposed to
have made a self-imposed prohibition to stage a strike when it submitted its labor dispute with respondent company
for compulsory arbitration in the afternoon of July 23, 1997. Yet, petitioner continued with its strike. For these
reasons, the Labor Arbiter dismissed the petition.14 The dispositive portion of the Labor Arbiter’s Decision dated
April 27, 1999 reads:

PREMISES CONSIDERED, the complaint is hereby dismissed for lack of merit.15

Petitioner appealed but, in a Resolution dated January 31, 2000, the NLRC upheld the Labor Arbiter’s Decision.
According to the NLRC, the actuations of petitioner were patently illegal because the sit-down strike staged on July
21, 1997 was made barely a week after petitioner withdrew its notice of strike, with prejudice, on account of the
concessions agreed upon by the parties. Petitioner filed no new notice of strike that could have supported its charges
of discriminatory acts and unfair labor practice. Moreover, no evidence was presented to establish such charges.
Also, petitioner’s members were given the opportunity to explain their violation of respondent company’s rules on
unauthorized work stoppage, acts inimical to company interest and disregard of instruction of immediate supervisor
to perform assigned task. Thus, the NLRC dismissed petitioner’s appeal. 16 The dispositive portion of the NLRC’s
Resolution dated January 31, 2000 reads:
WHEREFORE, premises considered, the decision under review is AFFIRMED, and complainants’ appeal,
DISMISSED, for lack of merit.17

Petitioner filed a motion for reconsideration but the NLRC denied it in a Resolution dated April 10, 2000. 18

Petitioner filed a petition for certiorari in the Court of Appeals, docketed as CA-G.R. SP No. 59465, on the
following grounds:

(A) RESPONDENT NLRC COMMITTED GROSS AND GRAVE ABUSE OF DISCRETION WHEN IT
UPHELD THE LABOR ARBITER’S DECISION.

(B) COMPLAINANTS/APPELLANTS WHOSE TERMINATION RESULTED FROM THE UNFAIR

LABOR PRACTICE[,] UNION-BUSTING AND UNLAWFUL LOCKOUT OF HEREIN RESPONDENT
ARE ENTITLED TO REINSTATEMENT WITH FULL BACKWAGES.

(C) COMPLAINANTS, BY REASON OF THE ARBITRARY ACTION IN WANTON DISREGARD OF

THE LEGAL RIGHTS OF HEREIN [COMPLAINANTS,] ARE ENTITLED TO DAMAGES AND
ATTORNEY’S FEES.19

In a Decision dated July 1, 2002, the Court of Appeals found that petitioner was seeking a review of the findings of
fact and conclusion of the Labor Arbiter which was sustained by the NLRC. The Court of Appeals found no cogent
reason to indulge petitioner. It applied the rule that findings of fact made by the Labor Arbiter and affirmed by the
NLRC are considered by the appellate court as binding if supported by substantial evidence. The Court of Appeals
ruled that the NLRC Resolution dated January 31, 2000 was supported by justifiable reason and cannot be faulted
with grave abuse of discretion. Petitioner failed to establish that the NLRC committed grave abuse of discretion.
Moreover, a petition for certiorari is not used to correct a lower tribunal’s appreciation of evidence and findings of
fact. Thus, the Court of Appeals dismissed the petition. The dispositive portion of the Court of Appeals’ Decision
dated July 1, 2002 reads:

WHEREFORE, foregoing premises considered, the Petition, having no merit, in fact and in law, is hereby DENIED
DUE COURSE and ORDERED DISMISSED. Resultantly, the assailed Resolution[s] are AFFIRMED, with costs to
Petitioner.20

Hence, this petition for certiorari21 under Rule 65 of the Rules of Court.

According to petitioner, it "interposes appeal on the judgment of the Honorable Justices of the Court of Appeals" on
the following grounds:

(1) The Honorable Justices of the Court of Appeals committed grave abuse of discretion amounting to lack
or excess of jurisdiction when they upheld the rulings of the NLRC and disregarded the constitutional
protection of labor as well as Article 248 (e) and Article 263 of the Labor Code.

(2) The Honorable Justices of the Court of Appeals committed grave abuse of discretion amounting to lack
or excess of jurisdiction when they upheld the decision of the NLRC that the termination of
complainants/appellants were valid and corollary thereto no reinstatement[,] backwages, damages and
attorney’s fees were awarded.22

In discussing the above grounds, petitioner claims that the discriminatory acts of respondent company and its
General Manager against petitioner’s members constituted unfair labor practice under Article 248(e) of the Labor
Code, as amended. The termination of employment of petitioner’s 127 officers and members constituted union-
busting and unlawful lockout. As the said officers and members were unlawfully dismissed from employment, they
are entitled to reinstatement with full backwages. The arbitrary action of respondent company and its General
Manager wantonly disregarded the legal rights of petitioner’s officers and members thereby entitling said officers
and members to damages and attorney’s fees.23

Respondent company and its General Manager, for their part, question the timeliness of the petition which was filed
52 days after petitioner’s receipt of the Decision of the Court of Appeals. They point out that petitioner should have
filed a petition for review under Rule 45 of the Rules of Court within 15 days from receipt of a copy of the Court of
Appeals Decision. Respondent company and its General Manager also argue that the sit-down strike which
subsequently became a full blown strike conducted by petitioner was illegal as it had previously withdrawn its notice
of strike. The illegality of the strike was compounded by the commission of prohibited acts like the blocking of the
entry and exit points of respondent company’s premises. Also, petitioner’s officers and employees were afforded
due process before they were dismissed as they were issued a memorandum requiring them to explain their
participation in the illegal sit-down strike but they simply ignored the said memorandum.24

The petition fails for many reasons.

First, this petition for certiorari is a wrong remedy.

A petition for certiorari under Rule 65 of the Rules of Court is a special civil action that may be resorted to only in
the absence of appeal or any plain, speedy and adequate remedy in the ordinary course of law. 25 Contrary to
petitioner’s claim in the Jurisdictional Facts portion of its petition that there was no appeal or any other plain, speedy
and adequate remedy in the ordinary course of law other than this petition for certiorari, the right recourse was to
appeal to this Court in the form of a petition for review on certiorari under Rule 45 of the Rules of Court, Section 1
of which provides:

Section 1. Filing of petition with Supreme Court. – A party desiring to appeal by certiorari from a judgment, final
order or resolution of the Court of Appeals, the Sandiganbayan, the Court of Tax Appeals, the Regional Trial Court
or other courts, whenever authorized by law, may file with the Supreme Court a verified petition for review on
certiorari. The petition may include an application for a writ of preliminary injunction or other provisional remedies
and shall raise only questions of law, which must be distinctly set forth. The petitioner may seek the same
provisional remedies by verified motion filed in the same action or proceeding at any time during its pendency.

For purposes of appeal, the Decision dated July 1, 2002 of the Court of Appeals was a final judgment as it denied
due course to, and dismissed, the petition. Thus, the Decision disposed of the petition of petitioner in a manner that
left nothing more to be done by the Court of Appeals in respect to the said case. Thus, petitioner should have filed
an appeal by petition for review on certiorari under Rule 45, not a petition for certiorari under Rule 65, in this Court.
Where the rules prescribe a particular remedy for the vindication of rights, such remedy should be availed of.

The proper remedy to obtain a reversal of judgment on the merits, final order or resolution is appeal. This holds true
even if the error ascribed to the court rendering the judgment is its lack of jurisdiction over the subject matter, or the
exercise of power in excess thereof, or grave abuse of discretion in the findings of fact or of law set out in the
decision, order or resolution. The existence and availability of the right of appeal prohibits the resort to certiorari
because one of the requirements for the latter remedy is that there should be no appeal. 26

Petitioner cannot mask its failure to file an appeal by petition for review under Rule 45 of the Rules of Court by the
mere expedient of conjuring grave abuse of discretion to avail of a petition for certiorari under Rule 65. The error of
petitioner becomes more manifest in light of the following pronouncement in Balayan v. Acorda 27:

It bears emphasis that the special civil action for certiorari is a limited form of review and is a remedy of last
recourse. The Court has often reminded members of the bench and bar that this extraordinary action lies only where
there is no appeal nor plain, speedy and adequate remedy in the ordinary course of law. It cannot be allowed when a
party to a case fails to appeal a judgment despite the availability of that remedy, certiorari not being a substitute for a
lapsed or lost appeal. Where an appeal is available, certiorari will not prosper, even if the ground therefor is grave
abuse of discretion. x x x. (Citations omitted.)
Moreover, certiorari is not and cannot be made a substitute for an appeal where the latter remedy is available but
was lost through fault or negligence.28 In this case, petitioner received the Decision dated July 1, 2002 on August 2,
2002 and, under the rules,29 had until August 19, 2002 to file an appeal by way of a petition for review in this Court.
Petitioner let this period lapse without filing an appeal and, instead, filed this petition for certiorari on October 1,
2002.

Second, even assuming that a petition for certiorari is the correct remedy in this case, petitioner failed to comply
with the requirement of a prior motion for reconsideration.

As a general rule, a motion for reconsideration is a prerequisite for the availment of a petition for certiorari under
Rule 65.30 The filing of a motion for reconsideration before resort to certiorari will lie is intended to afford the
public respondent an opportunity to correct any actual or fancied error attributed to it by way of re-examination of
the legal and factual aspects of the case.31 While there are well recognized exceptions to this rule,32 this petition is
not covered by any of those exceptions. The Court of Appeals was not given any opportunity either to rectify
whatever error it may have made or to address the ascription and aspersion of grave abuse of discretion thrown at it
by petitioner. Nor did petitioner offer any compelling reason to warrant a deviation from the rule. The instant
petition for certiorari is therefore fatally defective.

Third, petitioner was not able to establish its allegation of grave abuse of discretion on the part of the Court of
Appeals.

Where a petition for certiorari under Rule 65 of the Rules of Court alleges grave abuse of discretion, the petitioner
should establish that the respondent court or tribunal acted in a capricious, whimsical, arbitrary or despotic manner
in the exercise of its jurisdiction as to be equivalent to lack of jurisdiction. 33 This is so because "grave abuse of
discretion" is well-defined and not an amorphous concept that may easily be manipulated to suit one’s purpose. In
this connection, Yu v. Judge Reyes-Carpio34 is instructive:

The term "grave abuse of discretion" has a specific meaning. An act of a court or tribunal can only be considered as
with grave abuse of discretion when such act is done in a "capricious or whimsical exercise of judgment as is
equivalent to lack of jurisdiction." The abuse of discretion must be so patent and gross as to amount to an "evasion
of a 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 and hostility." Furthermore,
the use of a petition for certiorari is restricted only to "truly extraordinary cases wherein the act of the lower court or
quasi-judicial body is wholly void." From the foregoing definition, it is clear that the special civil action of certiorari
under Rule 65 can only strike an act down for having been done with grave abuse of discretion if the petitioner could
manifestly show that such act was patent and gross. x x x. (Citations omitted.)

In this case, nowhere in the petition did petitioner show that the issuance of the Decision dated July 1, 2002 of the
Court of Appeals was patent and gross that would warrant striking it down through a petition for certiorari. Aside
from a general statement in the Jurisdictional Facts portion of the petition and the sweeping allegation of grave
abuse of discretion in the general enumeration of the grounds of the petition,35 petitioner failed to substantiate its
imputation of grave abuse of discretion on the part of the Court of Appeals. No argument was advanced to show that
the Court of Appeals exercised its judgment capriciously, whimsically, arbitrarily or despotically by reason of
passion and hostility. Petitioner did not even discuss how or why the conclusions of the Court of Appeals were made
with grave abuse of discretion. Instead, petitioner limited its discussion on its version of the case, which had been
already rejected both by the Labor Arbiter and the NLRC. Thus, petitioner failed in its duty to demonstrate with
definiteness the grave abuse of discretion that would justify the proper availment of a petition for certiorari under
Rule 65 of the Rules of Court.

Fourth, petitioner essentially questioned the factual findings of the Labor Arbiter and the NLRC.1âwphi1 Petitioner
cannot properly do that in a petition for certiorari.

Petitioner used the Discussion/Arguments portion of its petition to refute the findings of fact of the Labor Arbiter
which was upheld by the NLRC. In particular, petitioner reiterated its position that respondent company and its
General Manager committed discriminatory acts against petitioner’s members which constituted unfair labor
practice; that the termination of employment of petitioner’s officers and members was a case of union-busting and
unlawful lockout; and, that the said officers and members were unlawfully dismissed from employment and are
therefore entitled to reinstatement with full backwages, plus damages and attorney’s fees. 36 For petitioner to
question the identical findings of the Labor Arbiter and the NLRC is to raise a question of fact. However, it is settled
that questions of fact cannot be raised in an original action for certiorari. 37 Only established or admitted facts can be
considered.38 Romy’s Freight Service v. Castro39 explains the rationale of this rule:

The Supreme Court is not a trier of facts, more so in the consideration of the extraordinary writ of certiorari where
neither questions of fact nor of law are entertained, but only questions of lack or excess of jurisdiction or grave
abuse of discretion. The sole object of the writ is to correct errors of jurisdiction or grave abuse of discretion. The
phrase ‘grave abuse of discretion’ has a precise meaning in law, denoting abuse of discretion "too patent and gross
as to amount to an evasion of a positive duty, or a virtual refusal to perform the duty enjoined or act in
contemplation of law, or where the power is exercised in an arbitrary and despotic manner by reason of passion and
personal hostility." It does not encompass an error of law. Nor does it include a mistake in the appreciation of the
contending parties’ respective evidence or the evaluation of their relative weight. (Citations omitted.)

Fifth, considering that petitioner basically presented an issue of fact, its petition for certiorari crumbles in view of
the identical findings of the Labor Arbiter and the NLRC which were further upheld by the Court of Appeals.

The Court of Appeals correctly ruled that findings of fact made by Labor Arbiters and affirmed by the NLRC are not
only entitled to great respect, but even finality, and are considered binding if the same are supported by substantial
evidence.40 That ruling is based on established case law.41 Furthermore, in arriving at the said ruling, the Court of
Appeals even reviewed the rationale of the Labor Arbiter’s decision and was convinced that there was justifiable
reason for the NLRC to uphold the same.42 This Court finds no compelling reason to rule otherwise.

Sixth, even on the merits, the case of petitioner has no leg to stand on.

Petitioner’s case rests on the alleged discriminatory acts of respondent company against petitioner’s officers and
members. However, both the Labor Arbiter and the NLRC held that there was no sufficient proof of respondent
company’s alleged discriminatory acts.43 Thus, petitioner’s unfair labor practice, union-busting and unlawful lockout
claims do not hold water. Moreover, the established facts as found by the NLRC are as follows: the "sit-down strike"
made by petitioner’s officers and members on July 21, 1997 was in violation of respondent company’s rules, and
petitioner’s officers and members ignored the opportunity given by respondent company for them to explain their
misconduct, which resulted in the termination of their employment. 44 The Court of Appeals ruled that the said
findings were supported by substantial evidence.45 This Court finds that such ruling of the appellate court is not
grave abuse of discretion, nor could it be considered wrong.

In sum, there is an abundance of reasons, both procedural and substantive, which are all fatal to petitioner’s cause. In
contrast, the instant petition for certiorari suffers from an acute scarcity of legal and factual support.

WHEREFORE, the petition is hereby DISMISSED.

SO ORDERED.
#110a De la sale University vs DLSU Emp union

[G.R. NO. 169254 - August 23, 2012]

DE LA SALLE UNIVERSITY, Petitioner, v. DE LA SALLE UNIVERSITY EMPLOYEES ASSOCIATION

(DLSUEA-NAFTEU), Respondent.

DECISION

LEONARDO-DE CASTRO, J.:

Before this Court is a Petition for Review on Certiorariunder Rule 45 of the Rules of Court assailing the March 4,
2005 Decision 1 and August 5, 2005 Resolution2 of the Court of Appeals in CA-G.R. SP No. 82472, entitled De La
Salle University v. the Honorable Secretary of Labor and De La Salle University Employees Association (DLSUEA-
NAFTEU), which affirmed the November 17, 2003 Decision3 and January 20, 2004 Order4 of the Secretary of Labor
in OS-AJ-0033-2003 (NCMB-NCR-NS-08-246-03). These decisions and resolutions consistently found petitioner
guilty of unfair labor practice for failure to bargain collectively with respondent.

This petition involves one of the three notices of strike filed by respondent De La Salle University Employees
Association (DLSUEANAFTEU) against petitioner De La Salle University due to its refusal to bargain collectively
with it in light of the intra-union dispute between respondent s two opposing factions. The following narration of
facts will first discuss the circumstances surrounding the said intra-union conflict between the rival factions of
respondent union and, thereafter, recite the cases relating to the aforementioned conflict, from the complaint for
unfair labor practice to the subsequent notices of strike, and to the assumption of jurisdiction by the Secretary of
Labor.

Petition for Election of Union Officers

On May 30, 2000, some of respondent s members headed by Belen Aliazas (the Aliazas faction) filed a petition for
the election of union officers in the Bureau of Labor Relations (BLR). 5 They alleged therein that there has been no
election for respondent s officers since 1992 in supposed violation of the respondent union s constitution and by-
laws which provided for an election of officers every three years. 6It would appear that respondent s members
repeatedly voted to approve the hold-over of the previously elected officers led by Baylon R. Bañez (Bañez
faction) and to defer the elections to expedite the negotiations of the economic terms covering the last two years of
the 1995-2000 collective bargaining agreement (CBA)7 pursuant to Article 253-A of the Labor Code.8ςrνll

On March 19, 2001, BLR Regional Director Alex E. Maraan issued a Decision ordering the conduct of an election
of union officers to be presided by the Labor Relations Division of the Department of Labor and Employment-
National Capital Region (DOLE-NCR).9 He noted therein that the members of the Bañez faction were not elected
by the general membership but were appointed by the Executive Board to their positions since 1985.10ςrνll

The Bañez faction appealed the said March 19, 2001 Decision of the BLR Regional Director.

While the appeal was pending, the Aliazas faction filed a Very Urgent Motion for Intervention in the BLR. They
alleged therein that the Bañez faction, in complete disregard of the March 19, 2001 Decision, scheduled a
"regular" election of union officers without notice to or participation of the DOLE-NCR.11ςrνll

In an Order dated July 6, 2001, BLR Director IV Hans Leo J. Cacdac granted the motion for intervention. 12 He held
that the unilateral act of setting the date of election on July 9, 2001 and the disqualification of the Aliazas faction by
the DLSUEA-COMELEC supported the intervening faction s fear of biased elections. 13ςrνll

Thereafter, in a Resolution dated May 23, 2002, BLR Director Cacdac dismissed the appeal of the Bañez faction.
The salient portions thereof stated:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
The exercise of a union member s basic liberty to choose the union leadership is guaranteed in Article X of
[respondent s] constitution and by-laws. Section 4 mandates the conduct of a regular election of officers on the first
Saturday of July and on the same date every three years thereafter.

In unequivocal terms, Article 241(c) of the Labor Code states that "[t]he members shall directly elect their officers,
including those of the national union or federation, to which they or their union is affiliated, by secret ballot at
intervals of five (5) years."

[The Bañez faction] admitted that no elections were conducted in 1992 and 1998, when the terms of office of
the officers expired. This Office emphasizes that even the decision to dispense with the elections and allow the
hold-over officers to continue should have been subjected to a secret ballot under Article 241(d) which
states:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

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.

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With the clear and open admission that no election transpired even after the expiration of the union officers
terms of office, the call for the conduct of elections by the Regional Director was valid and should be
sustained.14 (Emphases supplied.)

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Subsequently, in a memorandum dated May 16, 2003, BLR Director Cacdac stated that there was no void in the
union leadership as the March 19, 2001 Decision of Regional Director Maraan did not automatically terminate the
Bañez faction s tenure in office. He explained therein that "[a]s duly-elected officers of [respondent], their
leadership is not deemed terminated by the expiration of their terms of office, for they shall continue their functions
and enjoy the rights and privileges pertaining to their respective positions in a hold-over capacity, until their
successors shall have been elected and qualified." 15ςrνll

On August 28, 2003, an election of union officers under the supervision of the DOLE was conducted. The Bañez
faction emerged as the winner thereof.16 The Aliazas faction contested the election results.

On October 29, 2003, the Bañez faction was formally proclaimed as the winner in the August 28, 2003 election of
union officers.17ςrνll

The Complaint for Unfair Labor

Practices and Three Notices of
Strike

On March 20, 2001, despite the brewing conflict between the Aliazas and Bañez factions, petitioner entered into a
five-year CBA covering the period from June 1, 2000 to May 31, 2005. 18ςrνll

On August 7, 2001, the Aliazas faction wrote a letter to petitioner requesting it to place in escrow the union dues and
other fees deducted from the salaries of employees pending the resolution of the intra-union conflict. We quote the
pertinent portion of the letter here:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

The [BLR], in its March 19, 2001 [decision], declared that the hold-over capacity as president of Mr. Baylon
Bañez, as well as that of the other officers [of respondent] has been extinguished. It was likewise stated in the
[decision] that "to further defer the holding of a local election is whimsical, capricious and is a violation of the union
members rights under Article 241 and [is] punishable by expulsion."

This being so, we would like to request [petitioner] to please put on escrow all union dues/agency fees and whatever
money considerations deducted from salaries of the concerned co-academic personnel until such time that an
election of union officials has been scheduled and subsequent elections has been held. We fully understand that
putting the collection on escrow means the continuance of our monthly deductions but the same will not be remitted
to [respondent s] funds.19ςrνll

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Petitioner acceded to the request of the Aliazas faction and informed the Bañez faction of such fact in a letter
dated August 16, 2001. Petitioner explained:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

It is evident that the intra-union dispute between the incumbent set of officers of your Union on one hand and a
sizeable number of its members on the other hand has reached serious levels. By virtue of the 19 March 2001
Decision and the 06 July 2001 Order of the Department of Labor and Employment (DOLE), the hold-over authority
of your incumbent set of officers has been considered extinguished and an election of new union officers, to be
conducted and supervised by the DOLE, has been directed to be held. Until the result of this election [come] out
and a declaration by the DOLE of the validly elected officers is made, a void in the Union leadership exists.

In light of these circumstances, the University has no other alternative but to temporarily do the
following:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

1. Establish a savings account for the Union where all the collected union dues and agency fees will be deposited
and held in trust; andcralawlibrary

2. Discontinue normal relations with any group within the Union including the incumbent set of officers.

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We are informing you of this decision of [petitioner] not only for your guidance but also for the apparent reason that
[it] does not want itself to be unnecessarily involved in your intra-union dispute. This is the only way [petitioner]
can maintain neutrality on this matter of grave concern. 20 (Emphasis supplied.)

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In view of the foregoing decision of petitioner, respondent filed a complaint for unfair labor practice in the National
Labor Relations Commission (NLRC) on August 21, 2001. 21 It alleged that petitioner committed a violation of
Article 248(a) and (g) of the Labor Code which provides:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

Article 248. Unfair labor practices of employers. It shall be unlawful for an employer to commit any of the
following unfair labor practice:ςrαlαω

(a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization.

xxx

(d) To initiate, dominate, assist or otherwise interfere with the formation or administrator of any labor organization,
including the giving of financial or other support to it or its organizers or supporters.

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Respondent union asserted that the creation of escrow accounts was not an act of neutrality as it was influenced by
the Aliazas factions s letter and was an act of interference with the internal affairs of the union. Thus, petitioner s
non-remittance of union dues and discontinuance of normal relations with it constituted unfair labor practice.

Petitioner, for its defense, denied the allegations of respondent and insisted that its actions were motivated by good
faith.

Meanwhile, on March 7, 2002, respondent filed a notice of strike in the National Conciliation and Mediation Board
(NCMB).22ςrνll

Shortly thereafter, or on July 12, 2002, Labor Arbiter Felipe P. Pati dismissed the August 21, 2001 complaint for
unfair labor practice against petitioner for lack of merit in view of the May 23, 2002 decision of the BLR, affirming
the need to conduct an election of the union s officers. 23 The labor arbiter, in effect, upheld the validity of petitioner
s view that there was a void in the leadership of respondent.

The July 12, 2002 Decision of Labor Arbiter Pati, however, did not settle matters between respondent and petitioner.

On March 15, 2003, respondent sent a letter to petitioner requesting for the renegotiation of the economic terms for
the fourth and fifth years of the then current CBA, to wit:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

This refers to the re-negotiation of the economic provisions for the [fourth and fifth] year[s] of the 2000-2005
[CBA] that will commence sometime in March 2003.

In this regard, the [Bañez faction] for and in behalf of [respondent] would like to respectfully request your good
office to provide us a copy of the latest Audited Financial Statements of [petitioner,] including its budget
performance report so that [petitioner] and [respondent through] their respective authorized representatives could
facilitate the negotiations thereof.

We are furnishing [petitioner through] your good self a copy of [our] CBA economic proposals for the [fourth and
fifth] year[s] of the 2000-2005 CBA signed by its authorized negotiating panel.

We also request [petitioner] to furnish us a copy of its counter proposals as well as a list of its negotiating panel not
later than ten (10) days from receipts of [our] CBA proposals so that [we] and [petitioner] can now proceed with the
initial conference to discuss the ground rules that will govern the CBA negotiation. 24ςrνll

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In a letter dated March 20, 2003,25 petitioner denied respondent s request. It stated
therein:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

Pursuant to the [d]ecisions of appropriate government authority, and consistent with the position enunciated and
conveyed to you by [petitioner] in my letter dated August 16, 2001, there is a conclusion of fact that there is an
absolute void in the leadership of [respondent]. Accordingly, your representation as President or officer of, as
well as, that of all persons purporting to be officers and members of the board of the said employees association
[will] not [be] recognized. Normal relations with the union cannot occur until the said void in the leadership
of [respondent] is appropriately filled. Affected by the temporary suspension of normal relations
with [respondent] is the renegotiation of the economic provisions of the 2002-2005 CBA. No renegotiation can
occur given the void in the leadership of [respondent.]26ςrνll

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As a consequence of the aforementioned letter, respondent filed a second notice of strike on April 4, 2003. 27 Upon
the petition filed by petitioner on April 11, 2003,28 the Secretary of Labor assumed jurisdiction over the matter
pursuant to Article 263 of the Labor Code29 as petitioner, an educational institution, was considered as belonging to
an industry indispensable to national interest and docketed the case as OS-AJ-0015-2003.30ςrνll

On June 26, 2003, the Second Division of the NLRC affirmed the July 12, 2002 Decision of Labor Arbiter
Pati.31 Respondent moved for reconsideration but it was denied by the NLRC in a Resolution dated September 30,
2003.32ςrνll

Meanwhile, on July 28, 2003, the Secretary of Labor issued a Decision33 in OS-AJ-0015-2003, finding petitioner
guilty of violating Article 248(g) in relation to Article 252 of the Labor Code.34 The salient portion thereof
stated:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

The University is guilty of refusal to bargain amounting to an unfair labor practice under Article 248(g) of the Labor
Code. Indeed there was a requirement on both parties of the performance of the mutual obligation to meet and
convene promptly and expeditiously in good faith for the purpose of negotiating an agreement. Undoubtedly, both
[petitioner] and [respondent] entered into a [CBA] on [March 20, 2001. The term of the said CBA commenced on
[June 1, 2000 and with the expiration of the economic provisions on the third year, [respondent] initiated negotiation
by sending a letter dated March 15, 2003, together with the CBA proposal. In reply to the letter of [respondent],
[petitioner] in its letter dated [March 20, 2003 refused.

Such an act constituted an intentional avoidance of a duty imposed by law. There was nothing in the [March 19,
2001 and July 6, 2001 orders] of Director Maraan and Cacdac which restrained or enjoined compliance by the
parties with their obligations under the CBA and under the law. The issue of union leadership is distinct and separate
from the duty to bargain.

In fact, BLR Director Cacdac clarified that there was no void in [respondent s] leadership. The pertinent decision
dated March 19, 2001 x x x reads35:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

We take this opportunity to clarify that there is no void in [respondent s] leadership. The [March 19, 2001 decision]
x x x should not be construed as an automatic termination of the incumbent officers[] tenure of office. As duly-
elected officers of [respondent], their leadership is not deemed terminated by the expiration of their terms of office,
for they shall continue their functions and enjoy the rights and privileges pertaining to their respective positions in a
hold-over capacity, until their successors shall have been elected and qualified.

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It is thus very clear. x x x. This official determination by the BLR Director [Cacdac] removes whatever cloud of
doubt on the authority of the incumbent to negotiate for and in behalf of [respondent] as the bargaining agent of all
the covered employees. [Petitioner] is duty bound to negotiate collectively pursuant to Art. 252 of the Labor Code,
as amended.

xxx

On the question: [i]s [petitioner] guilty of unfair labor practice? This office resolves the issue in the affirmative.
Citing the case of the Divine Word University of Tacloban v. Secretary of Labor, [petitioner] is guilty of unfair labor
practice in refusing to abide by its duty to bargain collectively. The refusal of [petitioner] to bargain is tainted with
bad faith amounting to unfair labor practice. There is no other way to resolve the issue given the facts of the case
and the law on the matter.

WHEREFORE, premises considered, this Office finds [petitioner] guilty of refusal to bargain collectively in
violation of Article 252 in relation to Article 248 of the Labor Code, as amended. Management is hereby directed to
cease and desist from refusing to bargain collectively. The parties are therefore directed to commence negotiations
effective immediately.36 (Citations omitted.)
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On August 1, 2003, respondent reiterated its demand on petitioner to bargain collectively pursuant to the
aforementioned Decision of the Secretary of Labor. 37ςrνll

On August 4, 2003, petitioner sent a letter to respondent explaining that it cannot act on the latter s letter. The
August 4, 2003 letter of petitioner stated:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

[Petitioner s] counsel is preparing a Motion for Reconsideration that would be filed with the Office of the Secretary
of Labor and Employment. Under the Rule, [petitioner] still has the remedy of filing such Motion with the Office of
the Secretary before elevating the matter to higher authorities should it become necessary.

We, therefore, regret to advise you that [petitioner] cannot accede to your demand to immediately commence
negotiations for the CBA with your group or any other group of Union members, as the case may be, until such time
that the case before the Secretary is resolved with finality. We will, therefore, continue to defer the CBA
negotiations pending final resolution of the matter.

As regards your other demands, [petitioner] is of the position that the matters subject of said demands are still
pending before the various offices of the Labor Arbiters and NLRC and, therefore, it cannot act on the same until
such time that said cases are likewise resolved with finality. It cannot be assumed that all these cases that you filed
have been rendered moot and academic by the Secretary s Decision, otherwise you would, in effect, be admitting
that you have engaged in "forum shopping." 38ςrνll

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Failing to secure a reconsideration of the July 28, 2003 Decision of the Secretary of Labor, petitioner assailed the
same in the Court of Appeals via a Petition for Certioraridocketed as CA-G.R. SP No. 81649.

On August 27, 2003, respondent filed the third notice of strike,39 in the wake of petitioner s August 4, 2003 letter
and citing among others petitioner s alleged violation of the CBA and continuing refusal to bargain in good faith.
Petitioner, on the other hand, filed a petition for assumption of jurisdiction for this third notice of strike. 40 Again, the
Secretary of Labor assumed jurisdiction. This case was docketed as OS-AJ-0033-2003.

On November 17, 2003, the Secretary of Labor, in resolving OS-AJ-0033-2003, cited the July 28, 2003 Decision in
OS-AJ-0015-2003, and consequently declared that petitioner committed an unfair labor practice. The salient
portions of said Decision stated:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

Considering that this case, docketed as Case No. OS-AJ-0033-2003 is based on the same set of facts with
another case, involving the same parties numbered as OS-AJ-0015-2003, and based on the same factual and
legal circumstances, we have to consistently hold that the [petitioner] has indeed failed to comply with its
obligation under the law. As a matter of fact, it admits in persisting to refuse despite the fact that there is no more
legal obstacle preventing the commencement of the Collective Bargaining Negotiation between the parties. Anent
the so called void in the Union leadership, We declared that the same does not constitute a valid ground to
refuse to negotiate because [petitioner s] duty to bargain under the law is due and demandable under the law
by [respondent] as a whole and not by any faction within the
union.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

xxx

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x x x Events have lately turned out in favor of [respondent], thereby obliterating any further justification on the part
of [petitioner] not to bargain. On October 29, 2003, the new Regional Director of DOLENCR, Ciriaco E.
Lagunzad III, issued a resolution declaring the Bañez group as the duly elected officers of the Union. x x
x.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

xxx

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The above election results were the outcome of a duly-held union election, supervised by the Department s
Regional Office. This was the election ordered in the [July 6, 2001 and March 19, 2001 orders of the
BLR]. This was also the same election invoked by [petitioners] in trying to justify it continuing refusal to
bargain.

The [members of the Bañez faction have] reportedly taken their oath of office and have qualified. [Petitioner] is
now under estoppel from recognizing them, considering that it committed in writing to recognize and commence
bargaining once a set of duly elected officers [is] proclaimed after an election duly conducted under the supervision
of the Department.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

xxx

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Not only has [petitioner] refused to negotiate with [respondent], it has unduly withheld the money belonging to the
bargaining agent. Both these acts are illegal and are tantamount to Unfair Labor Practice under Article 248 in
relation to Article 252 of the Labor Code x x x.

ACCORDINGLY, all the foregoing premises being duly considered, this Office hereby declares that [petitioner]
committed Unfair Labor Practice in violation of [Article 248 in relation to Article 252 of the Labor Code x x x.
[Petitioner] and its duly authorized officers and personnel are therefore ordered to cease and desist from committing
said acts under pain of legal sanction.

[Petitioner] is therefore specifically directed to commence collective bargaining negotiation with [respondents]
without further delay and to immediately turn over to the Bañez group the unlawfully withheld union dues and
agency fees with legal interest corresponding to the period of the unlawful withholding. All these specific directives
should be done within ten (10) days from receipt of this Decision and with sufficient proof of compliance herewith
to be submitted immediately thereafter.41ςrνll

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In accordance with the terms of the aforementioned Decision, petitioner turned over to respondent the collected
union dues and agency fees from employees which were previously placed in escrow amounting
to P441,924.99.42ςrνll

Nonetheless, petitioner moved for the reconsideration of the November 17, 2003 Decision of the Secretary of Labor
but it was denied in an Order dated January 20, 2004.

Aggrieved, petitioner filed a Petition for Certiorariunder Rule 65 of the Rules of Court with the Court of Appeals.
Petitioner alleged therein that the Secretary of Labor committed grave abuse of discretion by holding that it
(petitioner) was liable for unfair labor practice. Taking a contrary stance to the findings of the Secretary of Labor,
petitioner stressed that it created the escrow accounts for the benefit of the winning faction and undertook temporary
measures in light of the March 19, 2001 and July 6, 2001 Orders of the BLR. Thus, it should not be penalized for
taking a hands-off stance in the intra-union controversy between the Aliazas and Bañez factions.
In a Decision dated March 4, 2005, the Court of Appeals affirmed the November 17, 2003 Decision and January 20,
2004 Order of the Secretary of Labor and dismissed the said petition. It
held:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

[Petitioner] finds reason to refuse to negotiate with [respondent s incumbent officers] because of the alleged "void in
the union leadership" declared by the Regional Director in his March 19, 2001 decision, [but] after the election of
the union officers held on August 28, 2003, continued refusal by the University to negotiate amounts to unfair labor
practice. The non-proclamation of the newly elected union officers cannot be used as an excuse to fulfill the
duty to bargain collectively.43 (Emphasis supplied.)

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Petitioner moved for reconsideration but it was denied in a Resolution dated August 5, 2005. The Court of Appeals
noted that petitioner s arguments were a mere "rehash of the issues and discussions it presented in its petition and in
the relevant pleadings submitted x x x."44ςrνll

Meanwhile, the Court of Appeals dismissed CA-G.R. SP No. 81649 (which assailed the July 28, 2003 Decision in
OS-AJ-0015-2003), in a Decision dated March 18, 2005. 45 The said decision likewise found that petitioner erred in
unilaterally suspending negotiations with respondent since the pendency of the intra-union dispute was not a
justifiable reason to do so.

Petitioner moved for reconsideration of the aforesaid decision in CAG. R. SP No. 81649 but it was denied in a
Resolution dated June 7, 200546 due to lack of merit.

Aggrieved, petitioner elevated both the assailed decisions and resolutions in this case and in CA-G.R. SP No. 81649,
which was docketed as G.R. No. 168477, to this Court. Petitioner, in both instances, essentially argued that it did not
maliciously evade its duty to bargain. On the contrary, it asserts that it merely relied in good faith on the March 19,
2001 Decision of the BLR that there was a void in respondent s leadership. 47ςrνll

This Court, through its Third Division, denied G.R. No. 168477 in a minute resolution dated July 20, 2005 due to
the petition s "failure x x x to show that a reversible error had been committed by the appellate court." 48 The motion
for reconsideration was denied with finality on September 21,

200549 and entry of judgment was made on November 3, 2005.50ςrνll

Meanwhile, respondent was ordered to file a comment herein, and, subsequently, this petition was given due course.

We note that both G.R. No. 168477 and this petition are offshoots of petitioner s purported temporary measures to
preserve its neutrality with regard to the perceived void in the union leadership. While these two cases arose out of
different notices to strike filed on April 3, 2003 and August 27, 2003, it is undeniable that the facts cited and the
arguments raised by petitioner are almost identical. Inevitably, G.R. No. 168477 and this petition seek only one
relief, that is, to absolve petitioner from respondent s charge of committing an unfair labor practice, or
specifically, a violation of Article 248(g) in relation to Article 252 of the Labor Code.

For this reason, we are constrained to apply the law of the case doctrine in light of the finality of our July 20, 2005
and September 21, 2005 resolutions in G.R. No. 168477. In other words, our previous affirmance of the Court of
Appeals finding that petitioner erred in suspending collective bargaining negotiations with the union and in placing
the union funds in escrow considering that the intra-union dispute between the Aliazas and Bañez factions was not
a justification therefor is binding herein. Moreover, we note that entry of judgment in G.R. No. 168477 was made on
November 3, 2005, and that put to an end to the litigation of said issues once and for all.51ςrνll

The law of the case has been defined as the opinion delivered on a former appeal. It means that whatever is once
irrevocably established as the controlling legal rule or decision between the same parties in the same case continues
to be the law of the case, whether correct on general principles or not, so long as the facts on which such decision
was predicated continue to be the facts of the case before the court.52ςrνll

In any event, upon our review of the records of this case, we find that the Court of Appeals committed no reversible
error in its assailed Decision dated March 4, 2005 and Resolution dated August 5, 2005. Petitioner s reliance on the
July 12, 2002 Decision of Labor Arbiter Pati, and the NLRC s affirmance thereof, is misplaced. The unfair labor
practice complaint dismissed by Labor Arbiter Pati questioned petitioner s actions immediately after the March 19,
2001 Decision of BLR Regional Director Maraan, finding that "the reason for the hold-over [of the previously
elected union officers] is already extinguished." The present controversy involves petitioner s actions subsequent to
(1) the clarification of said March 19, 2001 Maraan Decision by BLR Director Cacdac who opined in a May 16,
2003 memorandum that the then incumbent union officers (i.e., the Bañez faction) continued to hold office until
their successors have been elected and qualified, and (2) the July 28, 2003 Decision of the Secretary of Labor in OS-
AJ-0015-2003 ruling that the very same intra-union dispute (subject of several notices of strike) is insufficient
ground for the petitioner to suspend CBA negotiations with respondent union. We take notice, too, that the aforesaid
Decision of Labor Arbiter Pati has since been set aside by the Court of Appeals and such reversal was upheld by this
Court s Second Division in its Decision dated April 7, 2009 in G.R. No. 177283, wherein petitioner was found liable
for unfair labor practice.53ςrνll

Neither can petitioner seek refuge in its defense that as early as November 2003 it had already released the escrowed
union dues to respondent and normalized relations with the latter. The fact remains that from its receipt of the July
28, 2003 Decision of the Secretary of Labor in OS-AJ-0015-2003 until its receipt of the November 17, 2003
Decision of the Secretary of Labor in OS-AJ-0033-2003, petitioner failed in its duty to collectively bargain with
respondent union without valid reason. At most, such subsequent acts of compliance with the issuances in OS-AJ-
0015-2003 and OS-AJ-0033-2003 merely rendered moot and academic the Secretary of Labor s directives for
petitioner to commence collective bargaining negotiations within the period provided.

To conclude, we hold that the findings of fact of the Secretary of Labor and the Court of Appeals, as well as the
conclusions derived therefrom, were amply supported by evidence on record. Thus, in line with jurisprudence that
such findings are binding on this Court, we see no reason to disturb the
same.54ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

WHEREFORE, the petition is DENIED.

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SO ORDERED.
#110b Goya, Inc vs Goya, INc EMp union-FFW

G.R. No. 170054 : January 21, 2013

GOYA, INC., Petitioner, v. GOYA, INC. EMPLOYEES UNION-FFW, Respondent.

DECISION

PERALTA, J.:

This petition for review on certiorari under Rule 45 of the Rules of Civil Procedure seeks to reverse and set aside the
June 16, 2005 Decision1 and October 12, 2005 Resolution2 of the Court of Appeals in CA-G.R. SP No. 87335,
which sustained the October 26, 2004 Decision3 of Voluntary Arbitrator Bienvenido E. Laguesma, the dispositive
portion of which reads:cralawlibrary

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

The company is, however, directed to observe and comply with its commitment as it pertains to the hiring of casual
employees when necessitated by business circumstances.4?r?l1

The facts are simple and appear to be undisputed.

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

During the hearing on July 1, 2004, the Company and the Union manifested before Voluntary Arbitrator (VA)
Bienvenido E. Laguesma that amicable settlement was no longer possible; hence, they agreed to submit for
resolution the solitary issue of "[w]hether or not the Company is guilty of unfair labor acts in engaging the services
of PESO, a third party service provider, under the existing CBA, laws, and jurisprudence." 6 Both parties thereafter
filed their respective pleadings.

The Union asserted that the hiring of contractual employees from PESO is not a management prerogative and in
gross violation of the CBA tantamount to unfair labor practice (ULP). It noted that the contractual workers engaged
have been assigned to work in positions previously handled by regular workers and Union members, in effect
violating Section 4, Article I of the CBA, which provides for three categories of employees in the Company, to
wit:cralawlibrary

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

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

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

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

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

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

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

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

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

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

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

It is evident, therefore, that the engagement of PESO is not in keeping with the intent and spirit of the CBA
provision in question. It must, however, be stressed that the right of management to outsource parts of its operations
is not totally eliminated but is merely limited by the CBA. Given the foregoing, the Companys engagement of PESO
for the given purpose is indubitably a violation of the CBA. 7?r?l1

While the Union moved for partial reconsideration of the VA Decision, 8 the Company immediately filed a petition
for review9 before the Court of Appeals (CA) under Rule 43 of the Revised Rules of Civil Procedure to set aside the
directive to observe and comply with the CBA commitment pertaining to the hiring of casual employees when
necessitated by business circumstances. Professing that such order was not covered by the sole issue submitted for
voluntary arbitration, the Company assigned the following errors:cralawlibrary

THE HONORABLE VOLUNTARY ARBITRATOR EXCEEDED HIS POWER WHICH WAS EXPRESSLY
GRANTED AND LIMITED BY BOTH PARTIES IN RULING THAT THE ENGAGEMENT OF PESO IS NOT
IN KEEPING WITH THE INTENT AND SPIRIT OF THE CBA. 10?r?l1

THE HONORABLE VOLUNTARY ARBITRATOR COMMITTED A PATENT AND PALPABLE ERROR IN

DECLARING THAT THE ENGAGEMENT OF PESO IS NOT IN KEEPING WITH THE INTENT AND SPIRIT
OF THE CBA.11?r?l1

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

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

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

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

Germane to the resolution of the above issue is the provision in their CBA with respect to the categories of the
employees:cralawlibrary

xxx

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

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

This management prerogative of contracting out services, however, is not without limitation. In contracting out
services, the management must be motivated by good faith and the contracting out should not be resorted to
circumvent the law or must not have been the result of malicious arbitrary actions. In the case at bench, the CBA of
the parties has already provided for the categories of the employees in the Companysestablishment. These categories
of employees particularly with respect to casual employees serve as limitation to the Companys prerogative to
outsource parts of its operations especially when hiring contractual employees. As stated earlier, the work to be
performed by PESO was similar to that of the casual employees. With the provision on casual employees, the hiring
of PESO contractual employees, therefore, is not in keeping with the spirit and intent of their CBA. (Citations
omitted)12?r?l1

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

Incidentally, on July 16, 2009, the Company filed a Manifestation15 informing this Court that its stockholders and
directors unanimously voted to shorten the Companys corporate existence only until June 30, 2006, and that the
three-year period allowed by law for liquidation of the Companys affairs already expired on June 30, 2009.
Referring to Gelano v. Court of Appeals,16 Public Interest Center, Inc. v. Elma,17 and Atienza v. Villarosa,18 it urged
Us, however, to still resolve the case for future guidance of the bench and the bar as the issue raised herein allegedly
calls for a clarification of a legal principle, specifically, whether the VA is empowered to rule on a matter not
covered by the issue submitted for arbitration.

Even if this Court would brush aside technicality by ignoring the supervening event that renders this case moot and
academic19 due to the permanent cessation of the Companys business operation on June 30, 2009, the arguments
raised in this petition still fail to convince Us.

We confirm that the VA ruled on a matter that is covered by the sole issue submitted for voluntary arbitration.
Resultantly, the CA did not commit serious error when it sustained the ruling that the hiring of contractual
employees from PESO was not in keeping with the intent and spirit of the CBA. Indeed, the opinion of the VA is
germane to, or, in the words of the CA, "interrelated and intertwined with," the sole issue submitted for resolution by
the parties. This being said, the Companys invocation of Sections 4 and 5, Rule IV 20 and Section 5, Rule VI21 of the
Revised Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings dated October 15, 2004 issued
by the NCMB is plainly out of order.

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

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:cralawlibrary

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
arbitration was created speedy labor justice. It bears stressing that the underlying reason why this case arose is to
settle, once and for all, the ultimate question of whether respondent employees are entitled to higher benefits. To
require them to file another action for payment of such benefits would certainly undermine labor proceedings and
contravene the constitutional mandate providing full protection to labor. 23?r?l1

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

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

A collective bargaining agreement is the law between the parties:cralawlibrary

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

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

Moreover, if the terms of a contract, as in a CBA, are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of their stipulations shall control. x x x. 24?r?l1

In this case, Section 4, Article I (on categories of employees) of the CBA between the Company and the Union must
be read in conjunction with its Section 1, Article III (on union security). Both are interconnected and must be given
full force and effect. Also, these provisions are clear and unambiguous. The terms are explicit and the language of
the CBA is not susceptible to any other interpretation. Hence, the literal meaning should prevail. As repeatedly held,
the exercise of management prerogative is not unlimited; it is subject to the limitations found in law, collective
bargaining agreement or the general principles of fair play and justice 25 Evidently, this case has one of the
restrictions- the presence of specific CBA provisions-unlike in San Miguel Corporation Employees Union-PTGWO
v. Bersamira,26 De Ocampo v. NLRC,27 Asian Alcohol Corporation v. NLRC,28 and Serrano v. NLRC29cited by the
Company. To reiterate, the CBA is the norm of conduct between the parties and compliance therewith is mandated
by the express policy of the law.30?r?l1

WHEREFORE, the petition is DENIED. The assailed June 16, 2005 Decision, as well as the October 12, 2005
Resolution of the Court of Appeals, which sustained the October 26, 2004 Decision of the Voluntary Arbitrator, are
hereby AFFIRMED.

SO ORDERED.
#111 Asia Brewery Inc vs Tunay na Pagkakaisa ng mga manggagawa sa Asia, GR 171594-96 Sep 18, 2013

G.R. Nos. 171594-96 September 18, 2013

ASIA BREWERY, INC., Petitioner,

vs.
TUNAY NA PAGKAKAISA NG MGA MANGGAGAWA SA ASIA (TPMA), Respondent.

DECISION

DEL CASTILLO, J.:

In cases of compulsory arbitration before the Secretary of Labor pursuant to Article 263(g) of the Labor Code, the
financial statements of the employer must be properly audited by an external and independent auditor in order to be
admissible in evidence for purposes of determining the proper wage award.

This Petition for Review on Certiorari assails the Court of Appeal’s (CA) October 6, 2005 Decision 1 and the
February 17, 2006 Amended Decision2 in CA-G.R. SP Nos. 80839, and 83168 which modified the January 19, 2004
Decision3 of the Secretary of Labor in OS-AJ-0042-2003.

Factual Antecedents

The antecedents are aptly summarized by the CA:

Respondent union Tunay Na Pagkakaisa ng mga Manggagawa sa Asia (TPMA) is a legitimate labor organization,
certified as the sole and exclusive bargaining agent of all regular rank and file employees of petitioner corporation
Asia Brewery, Incorporated (ABI). The petitioner corporation, on the other hand, is a company engaged in the
manufacture, sale and distribution of beer, shandy, glass and bottled water products. It employs about 1,500 workers
and has existing distributorship agreements with at least 13 companies.

Respondent union and petitioner corporation had been negotiating for a new collective bargaining agreement (CBA)
for the years 2003-2006 since the old CBA expired last July 2003. After about 18 sessions or negotiations, the
parties were still unable to reconcile their differences on their respective positions on most items, particularly on
wages and other economic benefits.

On October 21, 2003, the Respondent union declared a deadlock. On October 27, 2003, Respondent union filed a
notice of strike with the National Conciliation and Mediation Board (NCMB), docketed as NCMB-RB-IV-LAG-
NS-10-064-03. However, the parties did not come to terms even before the NCMB.

On November 18, 2003, Respondent union conducted a strike vote. Out of the 840 union members, 768 voted in
favor of holding a strike.

On November 20, 2003, petitioner corporation then petitioned the Secretary of the Department of Labor and
Employment (DOLE) to assume jurisdiction over the parties’ labor dispute, invoking Article 263 (g) of the Labor
Code. In answer, Respondent union opposed the assumption of jurisdiction, reasoning therein that the business of
petitioner corporation is not in dispensable to the national interest.

On December 2, 2003, Respondent union filed before the Court of Appeals a petition for injunction, docketed as
CA-G.R. SP No. 80839, which sought to enjoin the respondent Secretary of Labor from assuming jurisdiction over
the labor dispute, or in the alternative, to issue a temporary restraining order, likewise to enjoin the former from
assuming jurisdiction.
On December 19, 2003, the public respondent, through Undersecretary/Acting Secretary Manuel G. Imson, issued
an order assuming jurisdiction over the labor dispute between the Respondent union and petitioner corporation. The
pertinent portions of the said order read:

xxxx

"WHEREFORE, based on our considered determination that the current labor dispute is likely to adversely affect
national interest, this Office hereby ASSUMES JURISDICTION over the labor dispute between the ASIA
BREWERY, INCORPORATED and the TUNAY NA PAGKAKAISA NGMANGGAGAWA SA ASIA pursuant to
Article 263 (g) of the Labor Code, as amended. Accordingly, any strike or lockout in the Company, whether actual
or impending, is hereby enjoined. Parties are hereby directed to cease and desist from taking any action that might
exacerbate the situation.

xxxx

"To expedite the resolution of this dispute, the parties are directed to submit in three (3) copies, their Position Papers
within ten (10) days from receipt of this Order and another five (5) days from receipt of the said position papers to
submit their Reply.

"1. The Company shall be required to provide:

"a. Complete Audited Financial Statements for the past five (5) years certified as to its
completeness by the Chief Financial Comptroller or Accountant;

"b. Projected Financial Statements of the Company for the next three (3) years;

"c. CBA history as to economic issues; and

"d. The average monthly salary of the employees in this bargaining unit.

"2. The Union is required to provide an itemized summary of their CBA demands with financial costing
and sample CBA’s (if any) in similarly situated or comparable bargaining units.

"In the interest of speedy labor justice, this Office will entertain no motion for extension or postponement.

"The appropriate police authority is hereby deputized to enforce this Order in case of defiance or the same is not
forthwith obeyed.

"SO ORDERED."

xxxx

On January 19, 2004, respondent union filed another petition for certiorari with the Court of Appeals, docketed as
CA-G.R. SP No. 81639,imputing bad faith and grave abuse of discretion to the Secretary of Labor. Respondent
union prayed therein for the nullification of the order of assumption of jurisdiction and the declaration that petitioner
corporation is not an industry indispensable to the national interest.

In the meantime, in a decision dated January 19, 2004, Secretary of Labor Patricia Sto. Tomas resolved the deadlock
between the parties. As summarized in a later resolution, the public respondent granted the following arbitral
awards:

(1) WAGE INCREASES as follows:

 First Year = ₱18.00

Second Year = 15.00

Third Year = 12.00

Total = ₱45.00

(2) HEALTH CARE (HMO)

₱1,300 premium to be shouldered by Asia Brewery, Inc., for each covered employee and ₱1,800 contribution for
each Union member-dependent.

xxxx

The respondent union moved for a reconsideration of the decision on the ground that the ruling lacks evidentiary
proof to sufficiently justify the same. It also filed a "Paglilinaw o Pagwawasto" of the Decision. Similarly, petitioner
corporation also filed a motion for clarification/reconsideration. The respondent Secretary of Labor resolved all
three motions in a resolution dated January 29, 2004 x x x.

xxxx

Thereafter, on February 9, 2004, the parties executed and signed the Collective Bargaining Agreement with a term
from August 1, 2003 to July 31,2006.

Subsequently, on April 1, 2004, respondent union filed another petition for certiorari before the Court of Appeals,
which was docketed as SP-83168, assailing the arbitral award and imputing grave abuse of discretion upon the
public respondent.

x x x x4

Court of Appeal’s Ruling

On October 6, 2005, the CA rendered the first assailed Decision affirming with modification the arbitral award of
the Secretary of Labor, viz:

WHEREFORE, judgment is hereby rendered with the following rulings:

1) The assailed order dated December 19, 2003 of public respondent Secretary of Labor is AFFIRMED .
The petitions for injunction and certiorari in CA-G.R. SP Nos. 80839 and 81639 are denied and accordingly
DISMISSED.

2) In CA-G.R. SP No. 81368, the assailed decision dated January 19,2004 and the order dated January 29,
2004 of the public respondent are hereby MODIFIED to read as follows:

a) The present CBA is declared effective as of August 1, 2003;

b) Consequently, the employees are entitled to the arbitral awards or benefits from August 1, 2003
on top of the ₱2,500.00 signing bonus;
 c) The computation of the wage increase is REMANDED to the public respondent; and

d) The health benefit of the employees shall be ₱1,390.00.

SO ORDERED.5

In modifying the arbitral award of the Secretary of Labor, the CA ruled that: (1)The effectivity of the CBA should
be August 1, 2003 because this is the date agreed upon by the parties and not January 1, 2004 as decreed by the
Secretary of Labor; (2) The computation of wage increase should be remanded to the Secretary of Labor because the
computation was based on petitioner corporation’s unaudited financial statements, which have no probative value
pursuant to the ruling in Restaurante Las Conchas v. Llego,6 and was done in contravention of DOLE Advisory No.
1, Series of 2004, which contained the guidelines in resolving bargaining deadlocks; and (3) The health benefits
should be ₱1,390.00 per covered employee because petitioner corporation had already agreed to this amount and the
same cannot be altered or reduced by the Secretary of Labor.

Aggrieved, respondent union and petitioner corporation moved for reconsideration and partial reconsideration,
respectively. On February 17, 2006,the CA issued an Amended Decision, viz :

WHEREFORE , the foregoing considered, the Motion for Reconsideration of respondent union is DENIED and the
Partial Motion for Reconsideration of petitioner corporation is PARTIALLY GRANTED .Accordingly, Our
Decision is MODIFIED and the signing bonus previously awarded is hereby DELETED . The assailed Decision of
the respondent Secretary with respect to the issue on salary increases is REMANDED to her office for a definite
resolution within one month from the finality of this Court’s Decision using as basis the externally audited financial
statements to be submitted by petitioner corporation.

SO ORDERED.7

The CA partially modified its previous Decision by deleting the award of the signing bonus. It ruled that, pursuant to
the express provisions of the CBA, the signing bonus is over and beyond what the parties agreed upon in the said
CBA.

From this Amended Decision, only petitioner corporation appealed to this Court via this Petition for Review on
Certiorari.

Issues

Petitioner corporation raises the following issues for our resolution:

I. Whether the CA erred when it failed to dismiss CA-G.R. SP No.83168 despite the lack of authority of
those who instituted it.

II. Whether the CA erred when it remanded to the Secretary of Labor the issue on wage increase.

III. Whether the CA erred when it awarded ₱1,390.00 as premium payment for each covered employee. 8

Our Ruling

The Petition lacks merit.

The authority of Rodrigo Perez (Perez)

to file the petition before the CA was not
sufficiently refuted.
Petitioner corporation claims that Perez, the person who verified the Petition in CA-G.R. SP No. 83168 questioning
the propriety of the arbitral award issued by the Secretary of Labor, was without authority to represent respondent
union. While there was a Secretary’s Certificate attached to the aforesaid Petition purportedly authorizing Perez to
file the Petition on behalf of the union, there was no showing that the union president, Jose Manuel Miranda
(Miranda), called for and presided over the meeting when the said resolution was adopted as required by the union’s
constitution and by-laws. Moreover, the aforesaid resolution was adopted on March 23, 2004 while the Petition was
filed on April 1, 2004 or nine days from the adoption of the resolution. Under the union’s constitution and by-laws,
the decision of the board of directors becomes effective only after two weeks from its issuance. Thus, at the time of
the filing of the aforesaid Petition, the resolution authorizing Perez to file the same was still ineffective. Petitioner
corporation also adverts to two labor cases allegedly divesting Perez of authority to represent the union in the case
before the appellate court.

We disagree.

The Secretary’s Certificate9 attached to the Petition in CA-G.R. SP No.83168 stated that the union’s board of
directors held a special meeting on March23, 2004 and unanimously passed a resolution authorizing Perez to file a
Petition before the CA to question the Secretary of Labor’s arbitral award. 10 While petitioner corporation claims that
the proper procedure for calling such a meeting was not followed, it presented no proof to establish the same.
Miranda, the union president who allegedly did not call for and preside over the said meeting, did not come out to
contest the validity of the aforesaid resolution or Secretary’s Certificate. Similarly, petitioner corporation’s claim
that the aforesaid resolution was still ineffective at the time of the filing of the subject Petition is unsubstantiated. A
fair reading of the provisions which petitioner corporation cited in the union’s constitution and by-laws, particularly
Article VIII, Section 211 thereof, would show that the same refers to decisions of the board of directors regarding the
laws or rules that would govern the union, hence, the necessity of a two-week prior notice to the affected parties
before they become effective. These provisions have not been shown to apply to resolutions granting authority to
individuals to represent the union in court cases. Besides, even if we assume that these provisions in the union’s
constitution and by-laws apply to the subject resolution, the continuing silence of the union, from the time of its
adoption to the filing of the Petition with the CA and up to this point in these proceedings, would indicate that such
defect, if at all present, in the authority of Perez to file the subject Petition, was impliedly ratified by respondent
union itself.

As to the two labor cases allegedly divesting Perez of the authority to file the subject Petition, an examination of the
same would show that they did not affect the legal capacity of Perez to file the subject Petition. The first labor case
(i.e., RO400-0407-AU-002,12 RO400-0409-AU-006,13 and RO400-0412-AU-00114) involved the move of Perez and
other union members to amend the union’s Constitution and By-Laws in order to include a provision on recall
elections and to conduct a recall elections on June 26, 2004. In that case, the Med-Arbiter, in his January 25, 2005
Order,15 ruled that the amendment sought to be introduced was not validly ratified by the requisite two-thirds vote
from the union membership. As a result, the recall elections held on June 26, 2004 was annulled. 16 The second labor
case (

i.e. , NLRC NCR CC No. 000282-0417 and NLRC-RAB IV-12-20200-04-L18) involved the strike staged by Perez
and other union members on October 4, 2004. There, the National Labor Relations Commission, in its March
2006Decision,19 ruled that the strike was illegal and, as a consequence, Perez and the other union members were
declared to have lost their employment status.20

These two labor cases had no bearing on the legal capacity of Perez to represent the union in CA-G.R. SP No. 83168
because (1) they did not nullify the authority granted to Perez in the March 23, 2004 resolution of the union’s board
of directors to file the subject Petition, and (2) the material facts of these cases occurred and the Decisions thereon
were rendered after the subject Petition was already filed with the CA on April 1, 2004.

The remand of this case to the Secretary

of Labor as to the issue of wage increase
was proper.
Petitioner corporation admits that what it submitted to the Secretary of Labor were unaudited financial statements
which were then used as one of the bases in fixing the wage award. However, petitioner corporation argues that
these financial statements were duly signed and certified by its chief financial officer. These statements have also
been allegedly submitted to various government agencies and should, thus, be considered official and public
documents. Moreover, respondent union did not object to the subject financial statements in the proceedings before
the Secretary of Labor and even used the same in formulating its (the union’s) arguments in said proceedings. Thus,
petitioner corporation contends that although the subject financial statements were not audited by an external and
independent auditor, the same should be considered substantial compliance with the order of the Secretary of Labor
to produce the petitioner corporation’s complete audited financial statements for the past five years. Furthermore,
the Decision of the Secretary of Labor was not solely based on the subject financial statements as the CBA history,
costing of the proposals, and wages in other similarly situated bargaining units were considered. Finally, petitioner
corporation claims that the demands of respondent union on wage increase are unrealistic and will cause the former
to close shop.

The contention is untenable.

In Restaurante Las Conchas v. Llego,21 several employees filed a case for illegal dismissal after the employer closed
its restaurant business. The employer sought to justify the closure through unaudited financial statements showing
the alleged losses of the business. We ruled that such financial statements are mere self-serving declarations and
inadmissible in evidence even if the employees did not object to their presentation before the Labor
Arbiter.22 Similarly, in Uichico v. National Labor Relations Commission, 23 the services of several employees were
terminated on the ground of retrenchment due to alleged serious business losses suffered by the employer. We ruled
that by submitting unaudited financial statements, the employer failed to prove the alleged business losses, viz :

x x x It is true that administrative and quasi-judicial bodies like the NLRC are not bound by the technical rules of
procedure in the adjudication of cases. However, this procedural rule should not be construed as a license to
disregard certain fundamental evidentiary rules. While the rules of evidence prevailing in the courts of law or equity
are not controlling in proceedings before the NLRC, the evidence presented before it must at least have a modicum
of admissibility for it to be given some probative value. The Statement of Profit and Losses submitted by Crispa,
Inc. to prove its alleged losses, without the accompanying signature of a certified public accountant or audited by an
independent auditor, are nothing but self-serving documents which ought to be treated as a mere scrap of paper
devoid of any probative value. For sure, this is not the kind of sufficient and convincing evidence necessary to
discharge the burden of proof required of petitioners to establish the alleged losses suffered by Crispa, Inc. in the
years immediately preceding 1990 that would justify the retrenchment of respondent employees. x x x 24

While the above-cited cases involve proof necessary to establish losses in cases of business closure or retrenchment,
we see no reason why this rule should not equally apply to the determination of the proper level of wage award in
cases where the Secretary of Labor assumes jurisdiction in a labor dispute pursuant to Article 263(g) 25 of the Labor
Code.

In MERALCO v. Sec. Quisumbing,26 we had occasion to expound on the extent of our review powers over the
arbitral award of the Secretary of Labor, in general, and the factors that the Secretary of Labor must consider in
determining the proper wage award, in particular, viz:

The extent of judicial review over the Secretary of Labor's arbitral award is not limited to a determination of grave
abuse in the manner of the secretary's exercise of his statutory powers. This Court is entitled to, and must — in the
exercise of its judicial power — review the substance of the Secretary's award when grave abuse of discretion is
alleged to exist in the award, i.e., in the appreciation of and the conclusions the Secretary drew from the evidence
presented.

xxxx

In this case we believe that the more appropriate and available standard — and one does not require a constitutional
interpretation — is simply the standard of reasonableness. In layman's terms, reasonableness implies the absence of
arbitrariness; in legal parlance, this translates into the exercise of proper discretion and to the observance of due
process. Thus, the question we have to answer in deciding this case is whether the Secretary's actions have been
reasonable in light of the parties' positions and the evidence they presented.

xxxx

This Court has recognized the Secretary of Labor's distinct expertise in the study and settlement of labor disputes
falling under his power of compulsory arbitration. It is also well-settled that factual findings of labor administrative
officials, if supported by substantial evidence, are entitled not only to great respect but even to finality. x x x

But at the same time, we also recognize the possibility that abuse of discretion may attend the exercise of the
Secretary's arbitral functions; his findings in an arbitration case are usually based on position papers and their
supporting documents (as they are in the present case), and not on the thorough examination of the parties'
contending claims that may be present in a court trial and in the face-to-face adversarial process that better insures
the proper presentation and appreciation of evidence. There may also be grave abuse of discretion where the board,
tribunal or officer exercising judicial function fails to consider evidence adduced by the parties. Given the parties'
positions on the justiciability of the issues before us, the question we have to answer is one that goes into the
substance of the Secretary's disputed orders: Did the Secretary properly consider and appreciate the evidence
presented before him?

xxxx

While We do not seek to enumerate in this decision the factors that should affect wage determination, we must
emphasize that a collective bargaining dispute such as this one requires due consideration and proper balancing of
the interests of the parties to the dispute and of those who might be affected by the dispute. To our mind, the best
way in approaching this task holistically is to consider the available objective facts, including, where applicable,
factors such as the bargaining history of the company, the trends and amounts of arbitrated and agreed wage awards
and the company's previous CBAs, and industry trends in general. As a rule, affordability or capacity to pay should
be taken into account but cannot be the sole yardstick in determining the wage award, especially in a public utility
like MERALCO.1âwphi1 In considering a public utility, the decision maker must always take into account the
"public interest" aspects of the case; MERALCO's income and the amount of money available for operating
expenses — including labor costs — are subject to State regulation. We must also keep in mind that high operating
costs will certainly and eventually be passed on to the consuming public as MERALCO has bluntly warned in its
pleadings.

We take note of the "middle ground" approach employed by the Secretary in this case which we do not necessarily
find to be the best method of resolving a wage dispute. Merely finding the midway point between the demands of
the company and the union, and "splitting the difference" is a simplistic solution that fails to recognize that the
parties may already be at the limits of the wage levels they can afford. It may lead to the danger too that neither of
the parties will engage in principled bargaining; the company may keep its position artificially low while the union
presents an artificially high position, on the fear that a "Solomonic" solution cannot be avoided. Thus, rather than
encourage agreement, a "middle ground approach" instead promotes a "play safe" attitude that leads to more
deadlocks than to successfully negotiated CBAs.27

Thus, we rule that the Secretary of Labor gravely abused her discretion when she relied on the unaudited financial
statements of petitioner corporation in determining the wage award because such evidence is self-serving and
inadmissible. Not only did this violate the December 19, 2003 Order28 of the Secretary of Labor herself to petitioner
corporation to submit its complete audited financial statements, but this may have resulted to a wage award that is
based on an inaccurate and biased picture of petitioner corporation's capacity to pay — one of the more significant
factors in making a wage award. Petitioner corporation has offered no reason why it failed and/or refused to submit
its audited financial statements for the past five years relevant to this case. This only further casts doubt as to the
veracity and accuracy of the unaudited financial statements it submitted to the Secretary of Labor. Verily, we cannot
countenance this procedure because this could unduly deprive labor of its right to a just share in the fruits of
production29 and provide employers with a means to understate their profitability in order to defeat the right of labor
to a just wage.

We also note with disapproval the manner by which the Secretary of Labor issued the wage award in this case,
effectively paying lip service to the guidelines we laid down in Meralco. To elaborate, the Secretary of Labor held:

Based on such factors as BARGAINING HISTORY, TRENDS OFARBITRATED AND AGREED AWARDS
AND INDUSTRY TRENDS, in general, we hold that vis-à-vis the Union’s demands and the Company’s offers, as
follows:

UNION[’S] DEMANDS COMPANY’S OFFERS

For the FIRST YEAR: ₱36 For the First 18 months: ₱18

For the SECOND YEAR: 36 For the Second 18 months: 18

For the THIRD YEAR: 36

======= =======
TOTAL: ₱108 for ₱36
three (3) years for 36 months

this Office awards the following wage increases:

For the FIRST YEAR: ₱18

For the SECOND YEAR: 15

12P
For the THIRD YEAR: ===
=

45 for three (3) years30

As can be seen, the Secretary of Labor failed to indicate the actual data upon which the wage award was
based.1âwphi1 It even appears that she utilized the "middle ground" approach which we precisely warned against in
Meralco . Factors such as the actual and projected net operating income, impact of the wage increase on net
operating income, the company's previous CBAs, and industry trends were not discussed in detail so that the precise
bases of the wage award are not discernible on the face of the Decision. The contending parties are effectively
precluded from seeking a review of the wage award, even if proper under our ruling in Meralco , because of the
general but unsubstantiated statement in the Decision that the wage award was based on factors like the bargaining
history, trends of arbitrated and agreed awards, and industry trends. In fine, there is no way of determining if the
Secretary of Labor utilized the proper evidence, figures or data in arriving at the subject wage award as well as the
reasonableness thereof. This falls short of the requirement of administrative due process obligating the decision-
maker to adjudicate the rights of the parties in such a manner that they can know the various issues involved and the
reasons for the decision rendered.31

Based on the foregoing, we hold that the Secretary of Labor gravely abused her discretion in making the subject
wage award. The appellate court, thus, correctly remanded this case to the Secretary of Labor for the proper
determination of the wage award which should utilize, among others, the audited financial statements of petitioner
corporation and state with sufficient clarity the facts and law on which the wage award is based.
The modification of the arbitral award
on health benefits from ₱1,300.00 to
₱1,390.00 was proper.

The CA held that the Secretary of Labor gravely abused her discretion when the latter awarded ₱1,300.00 as
premium payment for each covered employee because the minutes of the October 17, 2003 collective bargaining
negotiations between the parties showed that they had previously agreed to a higher ₱1,390.00 premium payment for
each covered employee. However, petitioner corporation claims that it never agreed to this higher amount as borne
out by the same minutes. The final offer of petitioner corporation on this item was allegedly to provide only
₱1,300.00 (not ₱1,390.00) as premium payment for each covered employee.

We have reviewed the minutes32 of the October 17, 2003 collective bargaining negotiations adverted to by both
parties. A fair reading thereof indicates that the issue of premium payments underwent several proposals and
counter-proposals from petitioner corporation and respondent union, respectively. The last proposal of petitioner
corporation relative thereto was to allot ₱1,390.00 as premium payment per covered employee provided that it
(petitioner corporation) would not shoulder the premium payments of the employee’s dependents. For its part,
respondent union accepted the proposal provided that the premium payment would be renegotiated on the second
and third years of the CBA. Consequently, both parties agreed at the minimum that the premium payment shall be
₱1,390.00 per covered employee and the remaining point of contention was whether the premium payment could be
renegotiated on the second and third years of the CBA. It was, thus, grave abuse of discretion on the part of the
Secretary of Labor to reduce the award to ₱1,300.00 which is below the minimum of ₱1,390.00 previously agreed
upon by the parties. We also note that in the proceedings before the CA, respondent union only pleaded for the
award of the ₱1,390.00 premium payment per covered employee33 thereby effectively waiving its proposal on the
renegotiation of the premium payment on the second and third years of the CBA.

WHEREFORE, the Petition is DENIED. The February 17, 2006 Amended Decision of the Court of Appeals in CA-
G.R. SP Nos. 80839, 81639, and 83168 is AFFIRMED.

Costs against petitioner.

SO ORDERED.
#112 Bankard, INc vs NLRC, GR 171664, march 6, 2013

G.R. No. 171664 March 6, 2013

BANKARD, INC., Petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION- FIRST DIVISION, PAULO
BUENCONSEJO,BANKARD EMPLOYEES UNION-AWATU, Respondents.

DECISION

MENDOZA, J.:

This Petition for Review on Certiorari under Rule 45 of the Rules of Court seeks to review, reverse and set aside the
October 20, 2005 Decision1 and the February 21, 2006 Resolution2 of the Court of Appeals {CA), in CA-G.R. SP
No. 68303, which affirmed the May 31, 2001 Resolution3 and the September 24, 2001 Order4 of the National Labor
Relations Commission (NLRC) in Certified Cases No. 000-185-00 and 000-191-00.

The Facts

On June 26, 2000, respondent Bankard Employees Union-AWATU (Union) filed before the National Conciliation
and Mediation Board (NCMB) its first Notice of Strike (NOS), docketed as NS-06-225-00,5 alleging commission of
unfair labor practices by petitioner Bankard, Inc. (Bankard), to wit: 1) job contractualization; 2)
outsourcing/contracting-out jobs; 3) manpower rationalizing program; and 4) discrimination.

On July 3, 2000, the initial conference was held where the Union clarified the issues cited in the NOS. On July 5,
2000, the Union held its strike vote balloting where the members voted in favor of a strike. On July 10, 2000,
Bankard asked the Office of the Secretary of Labor to assume jurisdiction over the labor dispute or to certify the
same to the NLRC for compulsory arbitration. On July 12, 2000, Secretary Bienvenido Laguesma (Labor Secretary)
of the Department of Labor and Employment (DOLE) issued the order certifying the labor dispute to the NLRC.6

On July 25, 2000, the Union declared a CBA bargaining deadlock. The following day, the Union filed its second
NOS, docketed as NS-07-265-00,7 alleging bargaining in bad faith on the part of Bankard. Bankard then again asked
the Office of the Secretary of Labor to assume jurisdiction, which was granted. Thus, the Order, dated August 9,
2000, certifying the labor dispute to the NLRC, was issued. 8

The Union, despite the two certification orders issued by the Labor Secretary enjoining them from conducting a
strike or lockout and from committing any act that would exacerbate the situation, went on strike on August 11,
2000.9

During the conciliatory conferences, the parties failed to amicably settle their dispute. Consequently, they were
asked to submit their respective position papers. Both agreed to the following issues:

1. Whether job contractualization or outsourcing or contracting-out is an unfair labor practice on the part of
the management.

2. Whether there was bad faith on the part of the management when it bargained with the Union. 10

As regards the first issue, it was Bankard’s position that job contractualization or outsourcing or contracting-out of
jobs was a legitimate exercise of management prerogative and did not constitute unfair labor practice. It had to
implement new policies and programs, one of which was the Manpower Rationalization Program (MRP) in
December 1999, to further enhance its efficiency and be more competitive in the credit card industry. The MRP was
an invitation to the employees to tender their voluntary resignation, with entitlement to separation pay equivalent to
at least two (2) months salary for every year of service. Those eligible under the company’s retirement plan would
still receive additional pay. Thereafter, majority of the Phone Center and the Service Fulfilment Division availed of
the MRP. Thus, Bankard contracted an independent agency to handle its call center needs. 11

As to the second issue, Bankard denied that there was bad faith on its part in bargaining with the Union. It came up
with counter-offers to the Union’s proposals, but the latter’s demands were far beyond what management could
give. Nonetheless, Bankard continued to negotiate in good faith until the Memorandum of Agreement (MOA) re-
negotiating the provisions of the 1997-2002, Collective Bargaining Agreement (CBA) was entered into between
Bankard and the Union. The CBA was overwhelmingly ratified by the Union members. For said reason, Bankard
contended that the issue of bad faith in bargaining had become moot and academic. 12

On the other hand, the Union alleged that contractualization started in Bankard in 1995 in the Records
Communications Management Division, particularly in the mailing unit, which was composed of two (2) employees
and fourteen (14) messengers. They were hired as contractual workers to perform the functions of the regular
employees who had earlier resigned and availed of the MRP. 13 According to the Union, there were other
departments in Bankard utilizing messengers to perform work load considered for regular employees, like the
Marketing Department, Voice Authorizational Department, Computer Services Department, and Records Retention
Department. The Union contended that the number of regular employees had been reduced substantially through the
management scheme of freeze-hiring policy on positions vacated by regular employees on the basis of cost-cutting
measures and the introduction of a more drastic formula of streamlining its regular employees through the MRP.14

With regard to the second issue, the Union averred that Bankard’s proposals were way below their demands,
showing that the management had no intention of reaching an agreement. It was a scheme calculated to force the
Union to declare a bargaining deadlock.15

On May 31, 2001, the NLRC issued its Resolution16 declaring that the management committed acts considered as
unfair labor practice (ULP) under Article 248(c) of the Labor Code. It ruled that:

The act of management of reducing its number of employees thru application of the Manpower Rationalization
Program and subsequently contracting the same to other contractual employees defeats the purpose or reason for
streamlining the employees. The ultimate effect is to reduce the number of union members and increasing the
number of contractual employees who could never be members of the union for lack of qualification. Consequently,
the union was effectively restrained in their movements as a union on their rights to self-organization. Management
had successfully limited and prevented the growth of the Union and the acts are clear violation of the provisions of
the Labor Code and could be considered as Unfair Labor Practice in the light of the provisions of Article 248
paragraph (c) of the Labor Code.17

The NLRC, however, agreed with Bankard that the issue of bargaining in bad faith was rendered moot and academic
by virtue of the finalization and signing of the CBA between the management and the Union. 18

Unsatisfied, both parties filed their respective motions for partial reconsideration.1âwphi1 Bankard assailed the
NLRC's finding of acts of ULP on its part. The Union, on the other hand, assailed the NLRC ruling on the issue of
bad faith bargaining.

On September 24, 2001, the NLRC issued the Order 19 denying both parties' motions for lack of merit.

On December 28, 2001, Bankard filed a petition for certiorari under Rule 65 with the CA arguing that the NLRC
gravely abused its discretion amounting to lack or excess of jurisdiction when:

1. It issued the Resolution, dated May 31, 2001, particularly in finding that Bankard committed acts of
unfair labor practice; and,

2. It issued the Order dated September 24, 2001 denying Bankard's partial motion for reconsideration.20
The Union filed two (2) comments, dated January 22, 2002, through its NCR Director, Cornelio Santiago, and
another, dated February 6, 2002, through its President, Paulo Buenconsejo, both praying for the dismissal of the
petition and insisting that Bankard's resort to contractualization or outsourcing of contracts constituted ULP. It
further alleged that Bankard committed ULP when it conducted CBA negotiations in bad faith with the Union.

Ruling of the Court of Appeals

The CA dismissed the petition, finding that the NLRC ruling was supported by substantial evidence.

The CA agreed with Bankard that job contracting, outsourcing and/or contracting out of jobs did not per se
constitute ULP, especially when made in good faith and for valid purposes. Despite Bankard's claim of good faith in
resorting to job contractualization for purposes of cost-efficient operations and its non-interference with the
employees' right to self-organization, the CA agreed with the NLRC that Bankard's acts impaired the employees
right to self-organization and should be struck down as illegal and invalid pursuant to Article 248(c) 21 of the Labor
Code. The CA thus, ruled in this wise:

We cannot agree more with public respondent. Incontrovertible is the fact that petitioner's acts, particularly its
promotion of the program enticing employees to tender their voluntary resignation in exchange for financial
packages, resulted to a union dramatically reduced in numbers. Coupled with the management's policy of "freeze-
hiring" of regular employees and contracting out jobs to contractual workers, petitioner was able to limit and prevent
the growth of the Union, an act that clearly constituted unfair labor practice. 22

In its assailed decision, the CA affirmed the May 31, 2001 Resolution and the September 24, 2001 Order of the
NLRC.

Aggrieved, Bankard filed a motion for reconsideration. The CA subsequently denied it for being a mere repetition of
the grounds previously raised. Hence, the present petition bringing up this lone issue:

THE COURT OF APPEALS ERRED IN FINDING THAT PETITIONER BANKARD, INC. COMMITTED ACTS
OF UNFAIR LABOR PRACTICE WHEN IT DISMISSED THE PETITION FOR CERTIORARI AND DENIED
THE MOTION FOR RECONSIDERATION FILED BY PETITIONER. 23

Ruling of the Court

The Court finds merit in the petition.

Well-settled is the rule that "factual findings of labor officials, who are deemed to have acquired expertise in matters
within their jurisdiction, are generally accorded not only respect but even finality by the courts when supported by
substantial evidence."24 Furthermore, the factual findings of the NLRC, when affirmed by the CA, are generally
conclusive on this Court.25 When the petitioner, however, persuasively alleges that there is insufficient or
insubstantial evidence on record to support the factual findings of the tribunal or court a quo, then the Court,
exceptionally, may review factual issues raised in a petition under Rule 45 in the exercise of its discretionary
appellate jurisdiction.26

This case involves determination of whether or not Bankard committed acts considered as ULP. The underlying
concept of ULP is found in Article 247 of the Labor Code, to wit:

Article 247. Concept of unfair labor practice and procedure for prosecution thereof. -- Unfair labor practices violate
the constitutional right of workers and employees to self-organization, are inimical to the legitimate interests of both
labor and management, including their right to bargain collectively and otherwise deal with each other in an
atmosphere of freedom and mutual respect, disrupt industrial peace and hinder the promotion of healthy and stable
labor-management relations. x x x
The Court has ruled that the prohibited acts considered as ULP relate to the workers’ right to self-organization and
to the observance of a CBA. It refers to "acts that violate the workers’ right to organize." 27 Without that element, the
acts, even if unfair, are not ULP.28 Thus, an employer may only be held liable for unfair labor practice if it can be
shown that his acts affect in whatever manner the right of his employees to self-organize.29

In this case, the Union claims that Bankard, in implementing its MRP which eventually reduced the number of
employees, clearly violated Article 248(c) of the Labor Code which states that:

Art. 248. Unfair labor practices of employers. – It shall be unlawful for an employer to commit any of the following
unfair labor practice:

xxxx

(c) To contract out services or functions being performed by union members when such will interfere with, restrain
or coerce employees in the exercise of their rights to self-organization;

xxxx

Because of said reduction, Bankard subsequently contracted out the jobs held by former employees to other
contractual employees. The Union specifically alleges that there were other departments in Bankard, Inc. which
utilized messengers to perform work load considered for regular employees like the Marketing Department, Voice
Authorizational Department, Computer Services Department, and Records Retention Department. 30 As a result, the
number of union members was reduced, and the number of contractual employees, who were never eligible for
union membership for lack of qualification, increased.

The general principle is that the one who makes an allegation has the burden of proving it.1avvphi1 While there are
exceptions to this general rule, in ULP cases, the alleging party has the burden of proving the ULP; 31 and in order to
show that the employer committed ULP under the Labor Code, substantial evidence is required to support the
claim.32 Such principle finds justification in the fact that ULP is punishable with both civil and/or criminal
sanctions.33

Aside from the bare allegations of the Union, nothing in the records strongly proves that Bankard intended its
program, the MRP, as a tool to drastically and deliberately reduce union membership. Contrary to the findings and
conclusions of both the NLRC and the CA, there was no proof that the program was meant to encourage the
employees to disassociate themselves from the Union or to restrain them from joining any union or organization.
There was no showing that it was intentionally implemented to stunt the growth of the Union or that Bankard
discriminated, or in any way singled out the union members who had availed of the retirement package under the
MRP. True, the program might have affected the number of union membership because of the employees’ voluntary
resignation and availment of the package, but it does not necessarily follow that Bankard indeed purposely sought
such result. It must be recalled that the MRP was implemented as a valid cost-cutting measure, well within the ambit
of the so-called management prerogatives. Bankard contracted an independent agency to meet business exigencies.
In the absence of any showing that Bankard was motivated by ill will, bad faith or malice, or that it was aimed at
interfering with its employees’ right to self-organize, it cannot be said to have committed an act of unfair labor
practice.34

"Substantial evidence is more than a mere scintilla of evidence. It means such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion, even if other minds equally reasonable might conceivably
opine otherwise."35 Unfortunately, the Union, which had the burden of adducing substantial evidence to support its
allegations of ULP, failed to discharge such burden.36

The employer’s right to conduct the affairs of its business, according to its own discretion and judgment, is well-
recognized.37 Management has a wide latitude to conduct its own affairs in accordance with the necessities of its
business.38 As the Court once said:
The Court has always respected a company's exercise of its prerogative to devise means to improve its operations.
Thus, we have held that management is free to regulate, according to its own discretion and judgment, all aspects of
employment, including hiring, work assignments, supervision and transfer of employees, working methods, time,
place and manner of work.

This is so because the law on unfair labor practices is not intended to deprive employers of their fundamental right
to prescribe and enforce such rules as they honestly believe to be necessary to the proper, productive and profitable
operation of their business.39

Contracting out of services is an exercise of business judgment or management prerogative. Absent any proof that
management acted in a malicious or arbitrary manner, the Court will not interfere with the exercise of judgment by
an employer.40Furthermore, bear in mind that ULP is punishable with both civil and/or criminal sanctions.41 As
such, the party so alleging must necessarily prove it by substantial evidence. The Union, as earlier noted, failed to do
this. Bankard merely validly exercised its management prerogative. Not shown to have acted maliciously or
arbitrarily, no act of ULP can be imputed against it.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 68303, dated
October 20, 2005, and its Resolution, dated February 21, 2006, are REVERSED and SET ASIDE. Petitioner
Bankard, Inc. is hereby declared as not having committed any act constituting Unfair Labor Practice under Article
248 of the Labor Code. SO ORDERED.
#113 Tabangao shell refinery Emp assn vs pilipinas shell petroleum gr 170007 April 7, 2014

G.R. No. 170007 April 7, 2014

TABANGAO SHELL REFINERY EMPLOYEES ASSOCIATION, Petitioner,

vs.
PILIPINAS SHELL PETROLEUM CORPORATION, Respondent.

DECISION

LEONARDO-DE CASTRO, J.:

This an appeal from the Decision1 dated August 8, 2005 of the Court of Appeals in CA-G.R. SP No. 88178
dismissing the petition for certiorari of the petitioner Tabangao Shell Refinery Employees Association.

The origins of the controversy

In anticipation of the expiration on April 30, 2004 of the 2001-2004 Collective Bargaining Agreement (CBA)
between the petitioner and the respondent Pilipinas Shell Petroleum Corporation, the parties started negotiations for
a new CBA. After several meetings on the ground rules that would govern the negotiations and on political items,
the parties started their discussion on the economic items on July 27, 2004, their 31st meeting. The union proposed a
20o/o annual across-the-board basic salary increase for the next three years that would be covered by the new CBA.
In lieu of the annual salary increases, the company made a counter-proposal to grant all covered employees a lump
sum amount of ₱80,000.00 yearly for the three-year period of the new CBA.2

The union requested the company to present its counter-proposal in full detail, similar to the presentation by the
union of its economic proposal. The company explained that the lump sum amount was based on its affordability for
the corporation, the then current salary levels of the members of the union relative to the industry, and the then
current total pay and benefits package of the employees. Not satisfied with the company’s explanation, the union
asked for further justification of the lump sum amount offered by the company. When the company refused to
acknowledge any obligation to give further justification, the union rejected the company’s counter-proposal and
maintained its proposal for a 20% annual increase in basic pay for the next three years. 3

On the 39th meeting of the parties on August 24, 2004, the union lowered its proposal to 12% annual across-the-
board increase for the next three years. For its part, the company increased its counter-proposal to a yearly lump sum
payment of ₱88,000.00 for the next three years. The union requested financial data for the manufacturing class of
business in the Philippines. It also requested justification for the company’s counter-offer. In response, the company
stated that financial measures for Tabangao were available in the refinery scorecard regularly cascaded by the
management to the employees. The company reiterated that its counter-offer is based on its affordability for the
company, comparison with the then existing wage levels of allied industry, and the then existing total pay and
benefits package of the employees. The company subsequently provided the union with a copy of the company’s
audited financial statements.4

However, the union remained unconvinced and asked for additional documents to justify the company’s counter-
offer. The company invited the attention of the union to the fact that additional data, such as the refinery
performance scorecard, were available from the refinery’s website and shared network drives. The company also
declared that the bases of its counter-offer were already presented to the union and contained in the minutes of
previous meetings. The union thereafter requested for a copy of the comparison of the salaries of its members and
those from allied industries. The company denied the request on the ground that the requested information was
entrusted to the company under a confidential agreement. Alleging failure on the part of the company to justify its
offer, the union manifested that the company was bargaining in bad faith. 5 The company, in turn, expressed its
disagreement with the union’s manifestation.6
On the parties’ 41st meeting held on September 2, 2004, the company proposed the declaration of a deadlock and
recommended that the help of a third party be sought. The union replied that they would formally answer the
proposal of the company a day after the signing of the official minutes of the meeting. On that same day, however,
the union filed a Notice of Strike in the National Conciliation and Mediation Board (NCMB), alleging bad faith
bargaining on the part of the company. The NCMB immediately summoned the parties for the mandatory
conciliation-mediation proceedings but the parties failed to reach an amicable settlement. 7

Assumption of Jurisdiction by the Secretary of Labor and Employment

On September 16, 2004, during the cooling off period, the union conducted the necessary strike vote. The members
of the union, who participated in the voting, unanimously voted for the holding of a strike. Upon being aware of this
development, the company filed a Petition for Assumption of Jurisdiction with the Secretary of Labor and
Employment.8 The petition was filed pursuant to the first paragraph of Article 263(g) of the Labor Code which
provides:

ART. 263. Strikes, picketing, and lockouts. – x x x

xxxx

(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry
indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the
dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or
certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified
in the assumption or certification order. If one has already taken place at the time of assumption or certification, all
striking or locked out employees shall immediately return to work and the employer shall immediately resume
operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The
Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to
ensure the compliance with this provision as well as with such orders as he may issue to enforce the same.

The company’s petition for assumption of jurisdiction was docketed as OSEC-AJ-0033-04/NCMB-RBIV-LAG-NS-

09-048-04.

In an Order9 dated September 20, 2004, the then Secretary of Labor and Employment, Patricia Sto. Tomas, granted
the petition of the company. The Secretary of Labor and Employment took notice of the Notice of Strike filed by the
union in the NCMB which charged the company with unfair labor practice consisting of bad faith in bargaining
negotiations. The Secretary of Labor and Employment also found that the intended strike would likely affect the
company’s capacity to provide petroleum products to the company’s various clientele, including the transportation
sector, the energy sector, and the manufacturing and industrial sectors. The Secretary of Labor and Employment
further observed that a strike by the union would certainly have a negative impact on the price of commodities.
Convinced that such a strike would have adverse consequences on the national economy, the Secretary of Labor and
Employment ruled that the labor dispute between the parties would cause or likely to cause a strike in an industry
indispensable to the national interest. Thus, the Secretary of Labor and Employment assumed jurisdiction over the
dispute of the parties. The dispositive portion of the Order dated September 20, 2004 reads:

WHEREFORE, considering the foregoing premises, this Office hereby assumes jurisdiction over the labor dispute
between the TABANGAO SHELL REFINERY EMPLOYEES ASSOCIATION and the PILIPINAS SHELL
PETROLEUM CORPORATION, pursuant to Article 263 (g) of the Labor Code, as amended.

Accordingly, any form of concerted action, whether actual or intended, is hereby enjoined. Parties are directed to
maintain the status quo existing at the time of service of this Order. They are also ordered not to commit any act that
may exacerbate the situation.

However, if at the time of service of this Order a strike has already commenced, the employees are directed to
immediately return to work within twenty-four (24) hours from receipt thereof. In such case[,] the employer shall,
without unnecessary delay, resume operations and readmit all workers under the same terms and conditions
prevailing before the strike.

To expedite the resolution of this dispute, the parties are directed to submit in three [3] copies, their respective
Position Paper on the economic issues and those raised in the Notice of Strike, docketed as NCMB-RBIV-LAG-NS-
09-048-04. It must be submitted personally to this Office within seven [7] calendar days from receipt of this Order.
Another three [3] calendar days from receipt of the other party’s position paper shall be allowed for the personal
filing or submission of their respective Comment and Reply thereon. Service of position papers together with
annexes, affidavits and other papers accompanying the same should be done personally. If service by registered mail
cannot be avoided, it should follow the mandate of Article 263 of the Labor Code and shall be deemed complete
upon the expiration of five (5) calendar days from mailing. After said period[,] the allowed time for filing of Reply
shall start, after which, the case shall be deemed submitted for resolution.

The Company is ordered to attach the following documents to its position paper, to assist this Office in the prompt
resolution of this case:

a] Complete Audited Financial Statements for the past five [5] years certified as to its completeness by the Chief
Financial Comptroller or Accountant, as the case may be[;]

SEC stamped COMPLETE audited Financial Statements shall include the following:

1. Independent Auditor’s opinion

2. Comparative Balance Sheet

3. Comparative Income Statement

4. Comparative Cash Flows

5. Notes to the Financial Statements as required by SEC

b] Projected Financial Statements of the Company FOR THE NEXT THREE [3] YEARS (Balance Sheets, Income
Statements, Cash Flow, and Appropriate notes to such projected [F]inancial Statements);

c] CBA history as to all the economic issues;

d] Cost estimates of its final offer on the specific CBA issues;

e] A separate itemized summary of the Management Offer and the Union demands with [the] following format:

[[reference = http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2014/april2014/170007.pdf]]

Description of Demands Existing CBA Union Demands Management Off

1.

2.

The Union is directed to provide a copy of their last CBA, an itemized summary of its CBA demands, as well as a
computation of their cost[s] that require resolution in triplicate copies using the same format stated above.
No petition, pleading or any opposition thereto shall be acted upon by this Office, without proof of its service to the
adverse party/parties.

In the interest of speedy labor justice, this Office will entertain no motion for extension or postponement.

The urgency of the need to rule on this case is only in faithful adherence to the following provision of Article 263
paragraph (i) of the Labor Code, as follows:

"The Secretary of Labor and Employment, the Commission or the voluntary arbitrator shall decide or resolve the
dispute within thirty (30) calendar days from the date of the assumption of jurisdiction or the certification or
submission of the dispute, as the case may be. x x x"

The appropriate police authority is hereby deputized to enforce this Order if it turns out that within twenty-four (24)
hours from service hereof, there appears a refusal by either or both parties to comply herewith. 10

The Secretary of Labor and Employment denied the motion for reconsideration of the union in a Resolution dated
October 6, 2004. The union’s second motion for reconsideration was denied in a Resolution dated December 13,
2004.11

Petition for certiorari in the Court of Appeals

The union thereafter filed a petition for certiorari, 12 docketed as CA-G.R. SP No. 88178, in the Court of Appeals on
January 13, 2005. The union alleged in its petition that the Secretary of Labor and Employment acted with grave
abuse of discretion in grossly misappreciating the facts and issue of the case. It contended that the issue is the unfair
labor practice of the company in the form of bad faith bargaining and not the CBA deadlock. Anchoring its position
on item 8 of what the parties agreed upon as the ground rules that would govern the negotiations, the union argued
that, at the time the Order dated September 20, 2004 was issued, there was no CBA deadlock on account of the
union’s non-conformity with the declaration of a deadlock, as item 8 of the said ground rules provided that a
"deadlock can only be declared upon mutual consent of both parties." Thus, the Secretary of Labor and Employment
committed grave abuse of discretion when she assumed jurisdiction and directed the parties to submit position
papers even on the economic issues.13

The Court of Appeals found the position of the union untenable. It cited this Court’s ruling in St. Scholastica’s
College v. Torres14 that the authority of the Secretary of Labor and Employment under Article 263(g) of the Labor
Code to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry
indispensable to national interest includes questions and controversies arising from the said dispute, including cases
over which the Labor Arbiter has exclusive jurisdiction. Applying St. Scholastica’s College, the Court of Appeals
found that the 2004 CBA Official Minutes of the Meetings show that the union and the company were already
discussing the economic issues when the union accused the company of bargaining in bad faith. As such, the
Secretary of Labor and Employment had the authority to take cognizance of the economic issues, which issues were
the necessary consequence of the alleged bad faith bargaining. 15

Moreover, according to the Court of Appeals, Article 263(g) of the Labor Code vests in the Secretary of Labor and
Employment not only the discretion to determine what industries are indispensable to national interest but also the
power to assume jurisdiction over such industries’ labor disputes, including all questions and controversies arising
from the said disputes. Thus, as the Secretary of Labor and Employment found the company’s business to be one
that is indispensable to national interest, she had authority to assume jurisdiction over all of the company’s labor
disputes, including the economic issues.16

Finally, the Court of Appeals noted that the union’s contention that the Secretary of Labor and Employment cannot
resolve the economic issues because the union had not given its consent to the declaration of a deadlock was already
moot. The Court of Appeals observed that the union filed on February 7, 2005 another Notice of Strike citing CBA
deadlock as a ground and, in an Order dated March 1, 2005, the then Acting Secretary of Labor and Employment,
Manuel Imson, granted the company’s Manifestation with Motion to Consider the Second Notice of Strike as
Subsumed to the First Notice of Strike.17

Given the above reasons, the Court of Appeals dismissed the petition for certiorari of the union. The dispositive
portion of the Decision dated August 8, 2005 reads as follows:

UPON THE VIEW WE TAKE OF THIS CASE, THUS, the petition must be, as it hereby is DISMISSED, for lack
of merit. Costs against petitioner.18

A detour: from the National Labor Relations Commission to the Secretary of Labor and Employment

In the meantime, on February 2, 2005, the union filed a complaint for unfair labor practice against the corporation in
the National Labor Relations Commission. The union alleged that the company refused, or violated its duty, to
bargain.19

The company moved for the dismissal of the complaint, believing that all the elements of forum shopping and/or
litis pendentia were present.20

In an Order21 dated May 9, 2005, the Labor Arbiter found that the case arose from the very same CBA negotiations
which culminated into a labor dispute when the union filed a notice of strike for bad faith bargaining and CBA
deadlock. According to the Labor Arbiter, the issue raised by the union, refusal to bargain, was a proper incident of
the labor dispute over which the Secretary of Labor and Employment assumed jurisdiction. Thus, the case was
forwarded for consolidation with the labor dispute case of the parties in the Office of the Secretary of Labor and
Employment.

Decision of the Secretary of Labor and Employment

During the pendency of the union’s petition for certiorari in the Court of Appeals, the Secretary of Labor and
Employment rendered a Decision22 dated June 8, 2005 in OSEC-AJ-0033-04/NCMB-RBIV-LAG-NS-09-048-
04/NCMB-RBIV-LAG-NS-02-004-05.

In her Decision, the Secretary of Labor and Employment held that there was already deadlock although the ground
for the first Notice of Strike was unfair labor practice for bargaining in bad faith. Citing Capitol Medical Center
Alliance of Concerned Employees-Unified Filipino Service Workers v. Laguesma23 where it has been held that there
may be a deadlock not only in the strict legal sense of an impasse despite reasonable effort at good faith bargaining
but also where one of the parties unduly refuses to comply with its duty to bargain, the Secretary of Labor and
Employment ruled that the circumstances – 41 CBA meetings showing "reasonable efforts at good faith bargaining"
without arriving at a CBA – show that there was effectively a bargaining deadlock between the parties. 24

Moreover, the Secretary of Labor and Employment also passed upon the issue of whether the company was guilty of
bargaining in bad faith:

Now, is the Company guilty of bargaining in bad faith? This Office rules in the negative.

The duty to bargain does not compel any party to accept a proposal, or make any concession, as recognized by
Article 252 of the Labor Code, as amended. The purpose of collective bargaining is the reaching of an agreement
resulting in a contract binding on the parties; however, the failure to reach an agreement after negotiations continued
for a reasonable period does not establish a lack of good faith. The laws 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. Thus, the Company’s insistence on a bargaining position to the point of stalemate does not establish bad
faith. The Company’s offer[,] a lump sum of Php88,000 per year, for each covered employee in lieu of a wage
increase cannot, by itself, be taken as an act of bargaining in bad faith. The minutes of the meetings of the parties,
show that they both exerted their best efforts, to try to resolve the issues at hand. Many of the proposed
improvements or changes, were either resolved, or deferred for further discussion. It is only on the matter of the
wage increase, that serious debates were registered. However, the totality of conduct of the Company as far as their
bargaining stance with the Union is concerned, does not show that it was bargaining in bad faith. 25

The Secretary of Labor and Employment then proceeded to decide on the matter of the wage increase and other
economic issues of the new CBA. For failure of the union to substantiate its demand for wage increase as it did not
file its position paper, the Secretary of Labor and Employment looked at the financial situation of the company, as
shown by its audited financial statements, and found it just and equitable to give a lump sum package of ₱95,000.00
per year, per covered employee, for the new CBA covering the period May 1, 2004 until April 30, 2007. The
Secretary of Labor and Employment further retained the other benefits covered by the 2001-2004 CBA as she found
the said benefits to be sufficient and reasonable.26

Neither the union nor the company appealed the Decision dated June 8, 2005 of the Secretary of Labor and
Employment.27 Thus, the said Decision attained finality.

The present petition

The union now comes to this Court to press its contentions. It insists that the corporation is guilty of unfair labor
practice through bad faith bargaining. According to the union, bad faith bargaining and a CBA deadlock cannot
legally co-exist because an impasse in negotiations can only exist on the premise that both parties are bargaining in
good faith. Besides, there could have been no deadlock between the parties as the union had not given its consent to
it, pursuant to item 8 of the ground rules governing the parties’ negotiations which required mutual consent for a
declaration of deadlock. The union also posits that its filing of a CBA deadlock case against the company was a
separate and distinct case and not an offshoot of the company’s unfair labor practice through bargaining in bad faith.
According to the union, as there was no deadlock yet when the union filed the unfair labor practice of bargaining in
bad faith, the subsequent deadlock case could neither be an offshoot of, nor an incidental issue in, the unfair labor
practice case. Because there was no deadlock yet at the time of the filing of the unfair labor practice case, the union
claims that deadlock was not an incidental issue but a non-issue. As deadlock was a non-issue with respect to the
unfair labor practice case, the Court of Appeals misapplied St. Scholastica’s College and the Secretary of Labor and
Employment committed grave abuse of discretion when it presumed deadlock in its Order dated September 20, 2004
assuming jurisdiction over the labor dispute between the union and the company. 28

For its part, the company argues that the Court of Appeals correctly affirmed the Order dated September 20, 2004 of
the Secretary of Labor and Employment assuming jurisdiction over the labor dispute between the parties. The
company claims that it is engaged in an industry that is vital to the national interest, and that the evidence on record
established that there was already a full-blown labor dispute between the company and the union arising from the
deadlock in CBA negotiations. The company insists that the alleged bad faith on its part, which the union claimed to
have prevented any CBA deadlock, has no basis. The company invokes the final Decision dated June 8, 2005 of the
Secretary of Labor and Employment which ruled that the company was not guilty of bargaining in bad faith. For the
company, even if the union’s first Notice of Strike was based on unfair labor practice and not deadlock in
bargaining, the Secretary of Labor and Employment’s assumption of jurisdiction over the labor dispute between the
parties extended to all questions and controversies arising from the labor dispute, that is, including the economic
issues.29

The Court’s ruling

The petition fails. There are at least four reasons to support the denial of the petition and each reason is sufficient to
defeat the union’s claims.

First, the petition is barred by res judicata in the concept of conclusiveness of judgment.

The concept of conclusiveness of judgment is explained in Nabus v. Court of Appeals 30 as follows:

The doctrine states that a fact or question which was in issue in a former suit, and was there judicially passed on and
determined by a court of competent jurisdiction, is conclusively settled by the judgment therein, as far as concerns
the parties to that action and persons in privity with them, and cannot be again litigated in any future action between
such parties or their privies, in the same court or any other court of concurrent jurisdiction on either the same or a
different cause of action, while the judgment remains unreversed or unvacated by proper authority. The only
identities thus required for the operation of the judgment as an estoppel x x x are identity of parties and identity of
issues.

It has been held that in order that a judgment in one action can be conclusive as to a particular matter in another
action between the same parties or their privies, it is essential that the issues be identical. If a particular point or
question is in issue in the second action, and the judgment will depend on the determination of that particular point
or question, a former judgment between the same parties [or their privies] will be final and conclusive in the second
if that same point or question was in issue and adjudicated in the first suit[.] x x x. (Citations omitted.)

The Decision dated June 8, 2005 of the Secretary of Labor and Employment in the labor dispute over which he
assumed jurisdiction, OSEC-AJ-0033-04/NCMB-RBIV-LAG-NS-09-048-04/NCMB-RBIV-LAG-NS-02-004-05,
has long attained finality. The union never denied this.

In this connection, Article 263(i) of the Labor Code is clear:

ART. 263. Strikes, picketing, and lockouts. – x x x

xxxx

(i) The Secretary of Labor and Employment, the Commission or the voluntary arbitrator shall decide or resolve the
dispute within thirty (30) calendar days from the date of the assumption of jurisdiction or the certification or
submission of the dispute, as the case may be. The decision of the President, the Secretary of Labor and
Employment, the Commission or the voluntary arbitrator shall be final and executory ten (10) calendar days after
receipt thereof by the parties. (Emphases supplied.)

Pursuant to Article 263(i) of the Labor Code, therefore, the Decision dated June 8, 2005 of the Secretary of Labor
and Employment became final and executory after the lapse of the period provided under the said provision.
Moreover, neither party further questioned the Decision dated June 8, 2005 of the Secretary of Labor and
Employment.

The Decision dated June 8, 2005 of the Secretary of Labor and Employment already considered and ruled upon the
issues being raised by the union in this petition. In particular, the said Decision already passed upon the issue of
whether there was already an existing deadlock between the union and the company when the Secretary of Labor
and Employment assumed jurisdiction over their labor dispute. The said Decision also answered the issue of whether
the company was guilty of bargaining in bad faith. As the Decision dated June 8, 2005 of the Secretary of Labor and
Employment already settled the said issues with finality, the union cannot once again raise those issues in this Court
through this petition without violating the principle of res judicata, particularly in the concept of conclusiveness of
judgment.

Second, a significant consequence of the finality of the Decision dated June 8, 2005 of the Secretary of Labor and
Employment is that it rendered the controversy between the union and the company moot.

In particular, with the finality of the Decision dated June 8, 2005, the labor dispute, covering both the alleged
bargaining in bad faith and the deadlock, between the union and the company was settled with finality. As the said
Decision settled essentially the same questions being raised by the union in this case, the finality of the said
Decision rendered this case moot. The union cannot be allowed to use this case to once again unsettle the issues that
have been already settled with finality by the final and executory Decision dated June 8, 2005 of the Secretary of
Labor and Employment.
Moreover, the issues of alleged bargaining in bad faith on the part of the company and the deadlock in the
negotiations were both incident to the framing of a new CBA that would govern the parties for the period 2004 to
2007. Not only had the said period long lapsed, the final Decision dated June 8, 2005 of the Secretary of Labor and
Employment also facilitated the framing of the new CBA, particularly on the disputed provision on annual lump
sum payment in lieu of wage increase. The dispositive portion of the said Decision is clear and categorical:

WHEREFORE, this Office hereby orders:

1. The award of Php95,000 lump sum, per covered employee per year, for the duration of their CBA,
effective 01 May 2004 to 30 April 2007;

2. The retention of benefits on vacation leave, sick leave, and special leave as provided in the 2001-2004
CBA;

3. All improvements that [the] parties may have agreed upon during the negotiations, are adopted as part of
the CBA. All other demands, not passed upon herein, are deemed DENIED.

The parties are hereby directed, to submit a copy of the CBA incorporating the awards granted herein, within ten
(10) days from receipt of this Decision.31

As the above directive of the Secretary of Labor and Employment in the decretal portion of the Decision dated June
8, 2005 has long been final and executory, the dispute on the matter of the provision on annual wage increase contra
yearly lump sum payment is already moot.

Third, the petition is improper as it presents questions of fact. A question of fact cannot properly be raised in a
petition for review under Rule 45 of the Rules of Court. 32 This petition of the union now before this Court is a
petition for review under Rule 45 of the Rules of Court.

The existence of bad faith is a question of fact and is evidentiary. 33 The crucial question of whether or not a party
has met his statutory duty to bargain in good faith typically turns on the facts of the individual case, and good faith
or bad faith is an inference to be drawn from the facts. 34 Thus, the issue of whether or not there was bad faith on the
part of the company when it was bargaining with the union is a question of fact. It requires that the reviewing court
look into the evidence to find if indeed there is proof that is substantial enough to show such bad faith.

The issue of whether there was already deadlock between the union and the company is likewise a question of fact.
It requires the determination of evidence to find whether there is a "counteraction" of forces between the union and
the company and whether each of the parties exerted "reasonable effort at good faith bargaining." 35 This is so
because a deadlock is defined as follows:

A ‘deadlock’ is x x x the counteraction 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.’36

Considering that the issues presented by the union are factual issues, the union’s petition is improper. As a rule, this
Court cannot properly inquire into factual matters in the exercise of its judicial power under Rule 45 of the Rules of
Court. While there are exceptions to this rule, none of the exceptions apply in this case.

Fourth, and finally, assuming that this Court may disregard the conclusiveness of judgment and review the factual
matters raised by the union, the merits are still not in the union’s favor.

The findings of fact of the Secretary of Labor and Employment in the Decision dated June 8, 2005 that there already
existed a bargaining deadlock when she assumed jurisdiction over the labor dispute between the union and the
company, and that there was no bad faith on the part of the company when it was bargaining with the union are both
supported by substantial evidence. This Court sees no reason to reverse or overturn the said findings.

The final and executory Decision dated June 8, 2005 of the Secretary of Labor and Employment squarely addressed
the contention of the union that the company was guilty of bargaining in bad faith. The said Decision correctly
characterized the nature of the duty to bargain, that is, it does not compel any party to accept a proposal or to make
any concession.37 While the purpose of collective bargaining is the reaching of an agreement between the employer
and the employee’s union resulting in a binding contract between the parties, the failure to reach an agreement after
negotiations continued for a reasonable period does not mean lack of good faith. The laws invite and contemplate a
collective bargaining contract but do not compel one.38 For after all, a CBA, like any contract is a product of mutual
consent and not of compulsion. As such, the duty to bargain does not include the obligation to reach an
agreement.39 In this light, the corporation’s unswerving position on the matter of annual lump sum payment in lieu
of wage increase did not, by itself, constitute bad faith even if such position caused a stalemate in the negotiations,
as correctly ruled by the Secretary of Labor and Employment in the decision dated June 8, 2005.

As there was no bad faith on the part of the company in its bargaining with the union, deadlock was possible and did
occur. The union’s reliance on item 8 of the ground rules governing the parties’ negotiations which required mutual
consent for a declaration of deadlock was reduced to irrelevance by the actual facts. Contra factum non valet
argumentum. There is no argument against facts. And the fact is that the negotiations between the union and the
company were stalled by the opposing offers of yearly wage increase by the union, on the one hand, and annual
lump sum payment by the company, on the other hand. Each party found the other’s offer unacceptable and neither
party was willing to yield. The company suggested seeking the assistance of a third party to settle the issue but the
union preferred the remedy of filing a notice of strike. Each party was adamant in its position. Thus, because of the
unresolved issue on wage increase, there was actually a complete stoppage of the ongoing negotiations between the
parties and the union filed a Notice of Strike. A mutual declaration would neither add to nor subtract from the reality
of the deadlock then existing between the parties. Thus, the absence of the parties’ mutual declaration of deadlock
does not mean that there was no deadlock. At most, it would have been simply a recognition of the prevailing status
quo between the parties.

More importantly, the union only caused confusion in the proceedings before the Secretary of Labor and
Employment when it questioned the latter’s assumption of jurisdiction over the labor dispute between the union and
the company on the ground that the "Secretary erred in assuming jurisdiction over the ‘CBA’ case when it [was] not
the subject matter of the notice of strike" because the case was "all about ‘ULP’ in the form of bad faith bargaining."
For the union, the Secretary of Labor and Employment should not have touched the issue of the CBA as there was
no CBA deadlock at that time, and should have limited the assumption of jurisdiction to the charge of unfair labor
practice for bargaining in bad faith.40

The union is wrong.

As discussed above, there was already an actual existing deadlock between the parties. What was lacking was the
formal recognition of the existence of such a deadlock because the union refused a declaration of deadlock. Thus,
the union’s view that, at the time the Secretary of Labor and Employment exercised her power of assumption of
jurisdiction, the issue of deadlock was neither an incidental issue to the matter of unfair labor practice nor an
existing issue is incorrect.

More importantly, however, the union’s mistaken theory that the deadlock issue was neither incidental nor existing
is based on its premise that the case is all about the company’s alleged unfair labor practice of bargaining in bad
faith, which is the ground stated in its first Notice of Strike. In particular, the union asserts:

The evidentiary value of the Notice of Strike for ULP of BAD FAITH BARGAINING (Annex "M" of the petition)
cannot be taken for granted. It is the very important documentary evidence that shows what is the existing "labor
dispute" between the parties.41
While the first Notice of Strike is indeed significant in the determination of the existing labor dispute between the
parties, it is not the sole criterion. As this Court explained in Union of Filipro Employees-Drug, Food and Allied
Industries Unions-Kilusang Mayo Uno v. Nestle Philippines, Inc.42:

The Secretary of the DOLE has been 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.1âwphi1 And, as a matter of necessity, it includes questions
incidental to the labor dispute; that is, issues that are necessarily involved in the dispute itself, and not just to that
ascribed in the Notice of Strike or otherwise submitted to him for resolution. x x x (Emphasis supplied.)

The totality of the company’s Petition for Assumption of Jurisdiction, including every allegation therein, also guided
the Secretary of Labor and Employment in the proper determination of the labor dispute over which he or she was
being asked to assume jurisdiction.

A "labor dispute" is defined under Article 212(l) of the Labor Code as follows:

ART. 212. Definitions. – x x x

xxxx

(l) "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 the disputants stand in the proximate relation of employer and
employee.

In this case, there was a dispute, an unresolved issue on several matters, between the union and the company in the
course of the negotiations for a new CBA. Among the unsettled issues was the matter of compensation. In particular,
paragraphs 1 to 6 of the statement of Antecedent Facts in the company’s Petition for Assumption of
Jurisdiction43 read:

1. The Collective Bargaining Agreement (CBA) of the Company and the Union expired on 30 April 2004.

2. Thus, as early as 13 April 2004, the Company and the Union already met to discuss the ground rules that
would govern their upcoming negotiations. Then, on 15 April 2004, the Union submitted its proposals for
the renewal of their CBA.

3. While a total of 41 meetings were held between the parties, several items, including the matter of
compensation, remained unresolved.

Copies of the Minutes of the 41 meetings are attached hereto and made integral part hereof as Annexes "A"
to "A-40".

4. On 2 September 2004, the Union filed a Notice of Strike with the NCMB, Region IV based in Calamba,
Laguna anchored on a perceived unfair labor practice consisting of alleged bad faith bargaining on the part
of the Company.

Although there is no basis to the charge of unfair labor practice as to give a semblance of validity to the
notice of strike, the Company willingly and actually participated in the conciliation and mediation
conferences called by the NCMB to settle the dispute.

A copy of the Notice of Strike is attached hereto and made integral part hereof as Annex "B".
 5. Although conciliation meetings have been conducted by the National Conciliation and Mediation Board
(NCMB) through Conciliator Leodegario Teodoro on 09 and 13 September 2004, no settlement of the
dispute has yet been agreed upon.

6. Based on the attendant circumstances, as well as on the actuations of the Union officers and members, it
is likely that the Union has already conducted, or is set to conduct soon, a strike vote. 44

Thus, the labor dispute between the union and the company concerned the unresolved matters between the parties in
relation to their negotiations for a new CBA. The power of the Secretary of Labor and Employment to assume
jurisdiction over this dispute includes and extends to all questions and controversies arising from the said dispute,
such as, but not limited to the union’s allegation of bad faith bargaining. It also includes and extends to the various
unresolved provisions of the new CBA such as compensation, particularly the matter of annual wage increase or
yearly lump sum payment in lieu of such wage increase, whether or not there was deadlock in the negotiations.
Indeed, nowhere does the Order dated September 20, 2004 of the Secretary of Labor and Employment mention a
CBA deadlock. What the union viewed as constituting the inclusion of a CBA deadlock in the assumption of
jurisdiction was the inclusion of the economic issues, particularly the company’s stance of yearly lump sum payment
in lieu of annual wage increase, in the directive for the parties to submit their respective position papers. 45 The
union’s Motion for Reconsideration (With Urgent Prayer to Compel the Company to Justify Offer of Wage
[Increase] Moratorium) and Second Motion for Reconsideration questioning the Order dated September 20, 2004 of
the Secretary of Labor and Employment actually confirm that the labor dispute between the parties essentially and
necessarily includes the conflicting positions of the union, which advocates annual wage increase, and of the
company, which offers yearly lump sum payment in lieu of wage increase. In fact, that is the reason behind the
union’s prayer that the company be ordered to justify its offer of wage increase moratorium. 46 As there is already an
existing controversy on the matter of wage increase, the Secretary of Labor and Employment need not wait for a
deadlock in the negotiations to take cognizance of the matter. That is the significance of the power of the Secretary
of Labor and Employment under Article 263(g) of the Labor Code to assume jurisdiction over a labor dispute
causing or likely to cause a strike or lockout in an industry indispensable to the national interest. As this Court
elucidated in Bagong Pagkakaisa ng Manggagawa ng Triumph International v. Secretary of the Department of Labor
and Employment47:

Article 263(g) is both an extraordinary and a preemptive power to address an extraordinary situation - a strike or
lockout in an industry indispensable to the national interest. This grant is not limited to the grounds cited in the
notice of strike or lockout that may have preceded the strike or lockout; nor is it limited to the incidents of the strike
or lockout that in the meanwhile may have taken place. As the term "assume jurisdiction" connotes, the intent of the
law is to give the Labor Secretary full authority to resolve all matters within the dispute that gave rise to or which
arose out of the strike or lockout; it includes and extends to all questions and controversies arising from or related to
the dispute, including cases over which the labor arbiter has exclusive jurisdiction. (Citation omitted.)

Everything considered, therefore, the Secretary of Labor and Employment committed no abuse of discretion when
she assumed jurisdiction over the labor dispute of the union and the company.

WHEREFORE, the petition is hereby DENIED.

SO ORDERED.
#114 A. Soriano aviation vs emp assn of a Soriano GR 166879 Aug 14, 2009
A. SORIANO AVIATION, G.R. No. 166879
Petitioner,
Present:
CARPIO,* J.,
CORONA,**
- versus - CARPIO MORALES, J., Acting
Chairperson,
DEL CASTILLO, and
ABAD, JJ.
EMPLOYEES ASSOCIATION OF A.
SORIANO AVIATION, JULIUS S. VARGAS
IN HIS CAPACITY AS UNION
PRESIDENT, REYNALDO ESPERO,
JOSEFINO ESPINO, GALMIER BALISBIS,
GERARDO BUNGABONG, LAURENTE
BAYLON, JEFFREY NERI, ARTURO INES,
REYNALDO BERRY, RODOLFO RAMOS,
OSWALD ESPION, ALBERT AGUILA,
RAYMOND BARCO, REYNANTE
AMIMITA, SONNY BAWASANTA, MAR
NIMUAN AND RAMIR LICUANAN,
Respondents.

Promulgated:
August 14, 2009

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

DECISION

CARPIO MORALES, J.:

On May 22, 1997, A. Soriano Aviation (petitioner or the company) which is engaged in providing transportation of
guests to and from Amanpulo and El Nido resorts in Palawan, and respondent Employees Association of A. Soriano
Aviation (the Union), the duly-certified exclusive bargaining agent of the rank and file employees of petitioner, entered
into a Collective Bargaining Agreement (CBA) effective January 1, 1997 up to December 31, 1999. The CBA included
a No-Strike, No-Lock-out clause.

On May 1 & 12, and June 12, 1997, which were legal holidays and peak season for the company, eight
mechanics-members of respondent Union, its herein co-respondents Albert Aguila (Aguila), Reynante Amimita
(Amimita), Galmier Balisbis (Balisbis), Raymond Barco (Barco), Gerardo Bungabong (Bungabong), Josefino Espino
(Espino), Jeffrey Neri (Neri) and Rodolfo Ramos, Jr. (Ramos), refused to render overtime work.
 Petitioner treated the refusal to work as a concerted action which is a violation of the No-Strike, No-Lockout
clause in the CBA. It thus meted the workers a 30-day suspension. It also filed on July 31, 1997 a complaint for illegal
strike against them, docketed as NLRC Case No. 07-05409-97, which was later dismissed at its instance in order to
give way to settlement, without prejudice to its re-filing should settlement be unavailing.

The attempted settlement between the parties having been futile, the Union filed a Notice of Strike with the
National Conciliation and Mediation Board (NCMB) on October 3, 1997, attributing to petitioner the following
acts: (1) union busting, (2) illegal dismissal of union officer, (3) illegal suspension of eight mechanics, (4) violation
of memorandum of agreement, (5) coercion of employees and interrogation of newly-hired mechanics with regard to
union affiliation, (6) discrimination against the aircraft mechanics, (7) harassment through systematic fault-finding,
(8) contractual labor, and (9) constructive dismissal of the Union President, Julius Vargas (Vargas).

As despite conciliation no amicable settlement of the dispute was arrived at, the Union went on strike
on October 22, 1997.

Meanwhile, pursuant to its reservation in NLRC Case No. 07-05409-97, petitioner filed a Motion to Re-Open
the Case which was granted by Labor Arbiter Manuel P. Asuncion by Order of October 21, 1997.

By Decision[1] dated September 28, 1998 rendered in petitioners complaint in NLRC Case No. 07-05409-97,
the Labor Arbiter declared that the newly implemented work-shift schedule was a valid exercise of management
prerogative and the refusal of herein individual respondents to work on three consecutive holidays was a form of
protest by the Union, hence, deemed a concerted action. Noting that the Union failed to comply with the formal
requirements prescribed by the Labor Code in the holding of strike, the strike was declared illegal.

The Union appealed to the NLRC which dismissed it in a per curiam Decision[2] dated September 14, 1999,
and the subsequent motion for reconsideration was denied by Resolution dated November 11, 1999.

In the interim or on June 16, 1998, eight months into the second strike, petitioner filed a complaint against respondents
before the Labor Arbiter, praying for the declaration as illegal of the strike on account of their alleged pervasive and
widespread use of force and violence and for the loss of their employment, citing the following acts committed by
them: publicly shouting of foul and vulgar words to company officers and non-striking employees; threatening of
officers and non-striking employees with bodily harm and dousing them with water while passing by the strike area;
destruction of or inflicting of damage to company property, as well as private property of company officers; and
putting up of placards and streamers containing vulgar and insulting epithets including imputing crime on the
company.
By Decision[3] of June 15, 2000, Labor Arbiter Ramon Valentin C. Reyes declared the second strike illegal. Taking
judicial notice of the September 28, 1998 Decision of Labor Arbiter Asuncion, he noted that as the Union went on the
first strike on a non-strikeable issue ─ the questioned change of work schedule, it violated the No-Strike, No-Lockout
clause in the CBA and, in any event, the Union failed to comply with the requirements for a valid strike.

The Labor Arbiter went on to hold that the Union deliberately resorted to the use of violent and unlawful acts
in the course of the second strike, hence, the individual respondents were deemed to have lost their employment.

On appeal, the National Labor Relations Commission (NLRC) affirmed in toto the Labor Arbiters decision,
by Resolution[4] dated October 31, 2001. It held that even if the strike were legal at the onset, the commission of
violent and unlawful acts by individual respondents in the course thereof rendered it illegal.

Its motion for reconsideration having been denied by Resolution [5] dated December 14, 2001,
the Union appealed to the Court of Appeals.
By the assailed Decision of April 16, 2004, [6] the appellate court reversed and set aside the NLRC ruling,
holding that the acts of violence committed by the Union members in the course of the strike were not, as compared
to the acts complained of in Shell Oil Workers Union v. Shell Company of the Philippines,[7] First City Interlink
Transportation Co., Inc., v. Roldan-Confesor[8] and Maria Cristina Fertilizer Plant Employees Association v.
Tandaya, [9] (this case was applied by the Labor Arbiter in his Decision of September 28, 2008) where the acts of
violence resulted in loss of employment, concluded that the acts in the present case were not as serious or pervasive
as in these immediately-cited cases to call for loss of employment of the striking employees.

Specifically, the appellate court noted that at the time petitioner filed its complaint in June 1998, almost eight
months had already elapsed from the commencement of the strike and, in the interim, the alleged acts of violence were
committed only during nine non-consecutive days, viz: one day in October, two days in November, four days in
December, all in 1997, and two days in January 1998. To the appellate court, these incidents did not warrant the
conversion of an otherwise legal strike into an illegal one, and neither would it result in the loss of employment of the
strikers. For, so the appellate court held, the incidents consisted merely of name-calling and using of banners imputing
negligence and criminal acts to the company and its officers, which do not indicate a degree of violence that could be
categorized as grave or serious to warrant the loss of employment of the individual strikers found to be responsible.
By Resolution of January 25, 2005, the appellate court denied petitioners motion for reconsideration, hence, the
present petition.

Petitioner insists that, contrary to the appellate courts finding, the questioned acts of the strikers were of a serious
character, widespread and pervasive; and that the Unions imputation of crime and negligence on its part, and the
prolonged strike resulted in its loss of goodwill and business, particularly the termination of its lease and air-service
contract with Amanpulo, the loss of its after-sales repair service agreement with Bell Helicopters, the loss of its
accreditation as the Beechcraft service facility, and the decision of El Nido to put up its own aviation company.

Apart from the acts of violence committed by the strikers, petitioner bases its plea that the strike should be declared
illegal on the violation of the No-Strike-No-Lockout clause in the CBA, the strike having arisen from non-strikeable
issues. Petitioner proffers that what actually prompted the holding of the strike was the implementation of the new
shift schedule, a valid exercise of management prerogative.

In issue then is whether the strike staged by respondents is illegal due to the alleged commission of illegal acts and
violation of the No Strike-No Lockout clause of the CBA and, if in the affirmative, whether individual respondents
are deemed to have lost their employment status on account thereof.

The Court rules in the affirmative.

The Court notes that, as found by the Labor Arbiter in NLRC Case No. 07-05409-97, the first strike or the
mechanics refusal to work on 3 consecutive holidays was prompted by their disagreement with the management-
imposed new work schedule. Having been grounded on a non-strikeable issue and without complying with the
procedural requirements, then the same is a violation of the No Strike-No Lockout Policy in the existing
CBA. Respecting the second strike, where the Union complied with procedural requirements, the same was not a
violation of the No Strike- No Lockout provisions, as a No Strike-No Lockout 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. It would be inapplicable to prevent a strike which is grounded on unfair labor practice. [10] In the present
case, the Union believed in good faith that petitioner committed unfair labor practice when it went on strike on account
of the 30-day suspension meted to the striking mechanics, dismissal of a union officer and perceived union-busting,
among others. As held in Malayang Samahan ng mga Manggaggawa sa M. Greenfield v. Ramos:[11]

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 petitioners right to self-organization. The strike was
staged to protest respondent companys 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. (Emphasis supplied)

Be that as it may, the Court holds that the second strike became invalid due to the commission of illegal
action in its course.
 It is hornbook principle that the exercise of the right of private sector employees to strike is not absolute. Thus
Section 3 of Article XIII of the Constitution provides:

SECTION 3. x x x

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. (Emphasis and underscoring supplied)

Indeed, even if the purpose of a strike is valid, the strike may still be held illegal where the meansemployed
are illegal. Thus, the employment of violence, intimidation, restraint or coercion in carrying out concerted activities
which are injurious to the right to property renders a strike illegal. And so is picketing or the obstruction to the free
use of property or the comfortable enjoyment of life or property, when accompanied by intimidation, threats, violence,
and coercion as to constitute nuisance.[12]

Apropos is the following ruling in Sukhothai Cuisine v. Court of Appeals:[13]

Well-settled is the rule that even if the strike were to be declared valid because its objective
or purpose is lawful, the strike may still be declared invalid where the means employed are
illegal. Among such limits are the prohibited activities under Article 264 of the Labor Code,
particularly paragraph (e), which states that no person engaged in picketing shall:

a) commit any act of violence, coercion, or intimidation or

b) obstruct the free ingress to or egress from the employer's premises
for lawful purposes, or
c) obstruct public thoroughfares.

The following acts have been held to be prohibited activities: where the strikers
shouted slanderous and scurrilous words against the owners of the vessels; where the strikers
used unnecessary and obscene language or epithets to prevent other laborers to go to work,
and circulated libelous statements against the employer which show actual malice; where
the protestors used abusive and threatening language towards the patrons of a place of
business or against co-employees, going beyond the mere attempt to persuade customers to
withdraw their patronage; where the strikers formed a human cordon and blocked all the ways and
approaches to the launches and vessels of the vicinity of the workplace and perpetrated acts of
violence and coercion to prevent work from being performed; and where the strikers shook their
fists and threatened non-striking employees with bodily harm if they persisted to proceed to
the workplace. Permissible activities of the picketing workers do not include obstruction of
access of customers. (emphasis supplied)
 The appellate court found in the present case, as in fact it is not disputed, that the acts complained of were
the following:[14]

1. On 29 October 1997, while Robertus M. Cohen, personnel manager of the Company,

was eating at the canteen, petitioner Rodolfo Ramos shouted insults and other abusive,
vulgar and foul-mouthed word with the use of a megaphone, such as, sige, ubusin mo
yung pagkain, kapal ng mukha mo;that when he left the canteen to go back to his office he
was splashed with water from behind so that his whole back was drenched; that when
he confronted that strikers at the picket line accompanied by three (3) security guards, to
find out who was responsible, he was told by petitioner Oswald Espion who was then
holding a thick piece of wood approximately two (2) feet long to leave.

2. On the same day, 29 October 1997, petitioners Julius Vargas, Jeffrey Neri, and Rodolfo
Ramos, together with Jose Brin, shouted to Capt. Ben Hur Gomez, the chief operating
officer of the Company, in this wise, Matanda ka na, balatuba ka pa rin. Mangungurakot
ka sa kompanya!

3. In the morning of 11 November 1997, petitioner Ramos was reported to have shouted
to Mr. Maximo Cruz, the Mechanical and Engineering Manager of the Company, Max,
mag-resign ka na, ang baho ng bunganga mo!

4. In the afternoon of the same day, 11 November 1997, petitioner Jeffrey Neri was said
to have shouted these words Max, mag-resign ka na, ang baho ng bunganga mo! to Mr.
Maximo Cruz;
`
5. On 12 November 1997. petitioners Julius Vargas, Jeffrey Neri, Oswald Espion,
Raymond Barco, together with Jose Brin, were reported to have shouted to Capt. Gomez
and Mr. Maximo Cruz, Matanda ka na, balatuba ka pa rin! Max, ang baho ng bunganga
mo, kasing baho ng ugali mo!

6. On the same day, 12 November 1997, petitioner Oswald Espion was said to
have shouted to the non-striking employees and officers of the Company, putang-ina
ninyo!

7. Also, on 12 November 1997, petitioner Oswald Espion was reported to have

thrown gravel and sand to the car owned by Celso Villamor Gomez, lead man of the
Company, as the said car was traveling along company premises near the picket line;
(apart from the marks of mud, gravel and sand found on the entire body of the car, no heavy
damages, however, appears to have been sustained by the car).

8. On 08 December 1997, petitioners Julius Vargas, Rey Espero, Rey Barry, Galmier
Balisbis, Rodolfo Ramos, Sonny Bawasanta and Arturo Ines, together with Jose Brin,
shouted, Max, ang sama mo talaga, lumabas ka dito at pipitpitin ko ang mukha
mo! Cohen, inutil ka talaga. Nagpahaba ka pa ng balbas para kang tsonggo! Cohen,
lumabas ka dito at hahalikan kita.

9. On 10 December 1997, petitioners Vargas and Espion were reported to have shouted
to Mr. Maximino Cruz, Hoy, Max Cruz, wala kang alam dyan, huwag kang poporma-
porma dyan! and then flashed the dirty finger at him;

10. On 15 December 1997, petitioner Neri was said to have shouted to non-striking
employees at the canteen, Hoy, mga iskerol, kain lang ng kain, mga putangina ninyo!
 11. Also on 15 December 1997, petitioners Vargas, Neri, Espion, Mar Nimuan, Ramir
Licuanan, Albert Aguila and Sonny Bawasanta, together with Jose Brin, splashed water
over Edmund C. Manibog, Jr., security guard of the Company;

12. On 20 December 1997, the strikers admittedly lit and threw firecrackers
purportedly outside the Company premises, as part of a noise barrage, while the
Company was having its Christmas party inside the Company premises;

13. On 14 January 1998, when Chris A. Oballas, collector of the Company, boarded a public
utility jeepney where Jose Brin, a striker, was also passenger, Jose Brin was said to have
shouted to the other passengers and driver of the jeepney, Mga pasahero, driver, itong tao
ito sherol, ang kapal ng mukha.Iyong pinagtrabahuhan namin kinakain nito,
ibenebent[a] kami nito, hudas ito! Mga pasahero, tingnan niyo, hindi makatingin-tingin
sa akin, hindi makapagsalita. Hoy, tingin ka sa akin, napahiya ka sa mga ginagawa mo
ano? and, that when Chris Oballas was alighting from the jeepney, he was kicked on
his leg by Jose Brin; and,

14. On 15 January 1998, while Julio Tomas, Avionics Technician of the Company, and his
girlfriend, Elizabeth Gali, also an employee of the Company, were waiting for their ride,
several union members shouted to Elizabeth Gali, Beth iwanan mo na yang taong yan,
walang kwentang tao yan! Beth, paano na yung pinagsamahan natin? irked, Julio
Tomas upon boarding the passenger jeepney with his girlfriend threw a P2.00 coin in the
direction of the picketers, the coin hit the windshield of a privately-owned jeepney
belonging to petitioner Espion which was parked alongside the premises of the strike area;
The act of Tomas, provoked the petitioners Espion and Amimita to follow Tomas, who
when left alone inside the tricycle after his girlfriend took a separate tricycle to her home,
was approached by petitioners Espion and Amimita; petitioner Espion then threw a P2.00
coin at him, and while pointing a baseball bat to his face shouted, Huwag mong uulitin
yung ginawa mo kundi tatamaan ka sa akin!(Emphasis and italics in the original)

The Court notes that the placards and banners put up by the striking workers in the company premises
read: ANDRES SORIANO AVIATION, INC. CAUGHT IN THE ACT, ATTEMPTING TO BRIBE
GOVERNMENT OFFICIALS BEWARE, NOW A NAME YOU CAN TRASH, ASAI DETERIORATING SAFETY
RECORD KILLS 2 DEAD + VARIOUS (IN PLANE CRASH) FLIGHT MISHAPS BEWARE, FLY AT YOUR
OWN RISK, ANDRES SORIANO AVIATION, INC. DETERIORATING SAFETY RECORD KILLS INNOCENT
PEOPLE IN PLANE CRASH, THE CAUSE: UNTRAINED MECHANICS DOING AIRCRAFT RELEASE, THE
RESULT: SLIPSHOD MAINTENANCE AND SLOPPY PLANE INSPECTION, WANNA FLY BLIND?,
BENHUR GOMEZ DRAGS COMPANY TO DEBT AND SHAMEFUL EXPERIENCE (MAHIYA KA NAMAN,
OY!), A. SORIANO AVIATION, INC., DEAD PEOPLE IN PLANE CRASH, ELY BONIFACIO (MASAKIT ANG
TOTOO) MAGNANAKAW NG PIYESA, PALITAN NA RIN! TINGNAN NYO KUNG NAGNANAKAW,
MEKANIKO DE EROPLANO Y HUELGA UN VIAJE DE PELIGRO, AIRCRAFT MANAGEMENT BULOK; A.
SORIANO AVIATION KILLS PEOPLE FOR LAX OVERSIGHT OF SAFETY PROC. (ELY BONIFACIO-
PATALSIKIN NA RIN, MANDARAMBONG MUKHANG KWARTA, SAAN MO DINALA ANG DORNIER
SPECIAL TOOLS? IKAW HA!), ELY BONIFACIO KAWATAN BANTAY SALAKAY, AMANPULO AND EL
NIDO GUESTS, BEWARE OF ASAI FLIGHTS, AIRCRAFT MECHANICS STILL ON STRIKE, GOING TO
BORACAY AND EL NIDO IS GOOD BUT FLYING WITH A. SORIANO AVIATION? THINK TWICE!
ACHTUNG: A SORIANO AVIATION DEAD PEOPLE IN PLANE CRASH INSURANCE ENTITLEMENTS
DENIED DUE TO CAR VIOLATIONS, UNDRESS SORIANO AVIATION, INC. UNRELIABLE FIXED BASED
OPERATOR KILLS PEOPLE FOR LAX OVERSIGHT OF SAFETY PROCEDURES.

It cannot be gainsaid that by the above-enumerated undisputed acts, the Union committed illegal acts during the strike.
The Union members repeated name-calling, harassment and threats of bodily harm directed against company officers
and non-striking employees and, more significantly, the putting up of placards, banners and streamers with vulgar
statements imputing criminal negligence to the company, which put to doubt reliability of its operations, come within
the purview of illegal acts under Art. 264 and jurisprudence.

That the alleged acts of violence were committed in nine non-consecutive days during the almost eight
months that the strike was on-going does not render the violence less pervasive or widespread to be
excusable. Nowhere in Art. 264 does it require that violence must be continuous or that it should be for the entire
duration of the strike.

The appellate court took against petitioner its filing of its complaint to have the strike declared illegal almost
eight months from the time it commenced. Art. 264 does not, however, state for purposes of having a strike declared
as illegal that the employer should immediately report the same. It only lists what acts are prohibited. It is thus absurd
to expect an employer to file a complaint at the first instance that an act of violence is alleged to be committed,
especially, as in the present case, when an earlier complaint to have the refusal of the individual respondents to work
overtime declared as an illegal strike was still pending an issue resolved in its favor only on September 25, 1998.

The records show that the Union went on strike on October 22, 1997, and the first reported harassment
incident occurred on October 29, 1997, while the last occurred in January, 1998. Those instances may have been
sporadic, but as found by the Labor Arbiter and the NLRC, the display of placards, streamers and banners even up to
the time the appeal was being resolved by the NLRC works against the Unions favor.

The acts complained of including the display of placards and banners imputing criminal negligence on the
part of the company and its officers, apparently with the end in view of intimidating the companys clientele, are, given
the nature of its business, that serious as to make the second strike illegal. Specifically with respect to the putting up
of those banners and placards, coupled with the name-calling and harassment, the same indicates that it was resorted
to to coerce the resolution of the dispute the very evil which Art. 264 seeks to prevent.

While the strike is the most preeminent economic weapon of workers to force management to agree to an
equitable sharing of the joint product of labor and capital, it exerts some disquieting effects not only on the relationship
between labor and management, but also on the general peace and progress of society and economic well-being of the
State.[15] If such weapon has to be used at all, it must be used sparingly and within the bounds of law in the interest of
industrial peace and public welfare.

As to the issue of loss of employment of those who participated in the illegal strike, Sukhothai[16]instructs:

In the determination of the liabilities of the individual respondents, the applicable provision
is Article 264(a) of the Labor Code:

Art. 264. Prohibited Activities (a) x x x

xxxx

x x x x 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
an illegal 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.

xxxx

In Samahang Manggagawa sa Sulpicio Lines, Inc.-NAFLU v. Sulpicio Lines, Inc., this

Court explained that the effects of such illegal strikes, outlined in Article 264, make a distinction
between workers and union officers who participate therein: an ordinary striking worker cannot be
terminated for mere participation in an illegal. There must be proof that he or she
committed illegal acts during a strike. A union officer, on the other hand, may be terminated
from work when he knowingly participates in an illegal strike, and like other workers, when
he commits an illegal act during an illegal strike. In all cases, the striker must be identified. But
proof beyond reasonable doubt is not required. Substantial evidence available under the attendant
circumstances, which may justify the imposition of the penalty of dismissal, may
suffice.[17](Emphasis supplied)

The liability for prohibited acts has thus to be determined on an individual basis. A perusal of the Labor
Arbiters Decision, which was affirmed in toto by the NLRC, shows that on account of the staging of the illegal strike,
individual respondents were all deemed to have lost their employment, without distinction as to their respective
participation.

Of the participants in the illegal strike, whether they knowingly participated in the illegal strike in the case
of union officers or knowingly participated in the commission of violent acts during the illegal strike in the case
of union members, the records do not indicate. While respondent Julius Vargas was identified to be a union officer,
there is no indication if he knowingly participated in the illegal strike. The Court not being a trier of facts, the remand
of the case to the NLRC is in order only for the purpose of determining the status in the Union of individual
respondents and their respective liability, if any.

WHEREFORE, the petition is GRANTED. The Court of Appeals Decision and Resolution dated April 16,
2004 and January 25, 2005, respectively, are REVERSED and SET ASIDE. The Resolutions dated October 31, 2001
and December 14, 2001 of the National Labor Relations Commission affirming the Decision of the Labor Arbiter in
NLRC-NCR Case No. 00-06-04890-98 are AFFIRMED with the MODIFICATION in light of the foregoing
discussions.

The case is accordingly REMANDED to the National Labor Relations Commission for the purpose of
determining the Union status and respective liabilities, if any, of the individual respondents.

SO ORDERED.
#115 Toyota motors labor union vs Toyota motors emp union gr 135806, aug 8, 2012

G.R. No. 135806 August 8, 2002

TOYOTA MOTORS PHILIPPINES CORPORATION LABOR UNION, petitioner,

vs.
TOYOTA MOTOR PHILIPPINES CORPORATION EMPLOYEES AND WORKERS UNION, TOYOTA
MOTOR PHILIPPINES CORPORATION, and THE SECRETARY OF LABOR AND
EMPLOYMENT, respondents.

BELLOSILLO, J.:

This is a petition for certiorari under Rule 65 of the Rules of Court, as amended, seeking to set aside the Resolution
of 5 June 1998 and the Order of 10 August 1998 both issued by respondent Secretary of Labor and Employment in
OS-A-5-58-98 (NCR-OD-M-9704-0311) which affirmed the decision of the Med-Arbiter dated 24 February 1998.
The assailed decision dismissed both the Petition for Certification Election filed by respondent Toyota Motor
Philippines Corp. Employees and Workers Union (TMPCEWU) and the Petition-in-Intervention filed by petitioner
Toyota Motor Philippines Corp. Labor Union (TMPCLU).1âwphi1.nêt

On 24 April 1997 respondent TMPCEWU filed a Petition for Certification Election before the Med-Arbitration Unit
of the DOLE-National Capital Region (DOLE-NCR) seeking to represent the rank-and-file employees of the
manufacturing division from Levels 1 to 4 of Toyota Motor Philippines Corp. (TMPC).

On 13 May 1997, while the case was pending hearing, petitioner TMPCLU claiming to be the legitimate labor
organization, filed a Motion to Intervene with Opposition to the Certification Election praying that it be allowed to
intervene and, thereafter, the petition by TMPCEWU be denied for lack of merit. It claimed that the petition was
premature due to an earlier resolution by the Secretary of Labor ordering the conduct of a certification election
among the rank-and-file employees of TMPC represented by petitioner which was the subject of certiorari
proceedings before the Supreme Court and still awaiting final resolution at the time; and, that the collective
bargaining unit which respondent TMPCEWU sought to represent violated the "single or employer" unit policy
since it excluded the rank-and-file employees in the other divisions and departments in respondent TMPC. 1

In its motion petitioner TMPCLU outlined the antecedent events prior to the TMPCEWU's filing of its Petition for
Certification Election on 24 April 1997 thus -

1. On 26 November 1992 it (TMPCLU) filed a petition for certification election before Med-Arbiter
Paterno D. Adap, docketed as NCR-OD-M-9211-053;

2. On 8 March 1993 Med-Arbiter Adap dismissed TMPCLU's petition on the ground that the labor
organization's membership was composed of supervisory and rank-and-file employees in violation of Art.
245 of the Labor Code, and that at the time of the filing of its petition, TMCPLU had not even acquired
legal personality yet;

3. On appeal, the Secretary of Labor, in a Resolution dated 9 November 1993 signed by Undersecretary
Bienvenido E. Laguesma, set aside the Med-Arbiter's Order and directed the holding of a certification
election among the regular rank-and-file employees of TMPC. In setting aside the assailed order, the Office
of the Secretary argued that:

Contrary to the allegation of herein respondent-appellee, petitioner-appellant was already a

legitimate labor organization at the time of the filing of the petition on 26 November 1992.
Records show that on 24 November 1992 or two (2) days before the filing of the said petition, it
was issued a certificate of registration.
 4. Acting on TMPC's motion for reconsideration the Secretary of Labor set aside his earlier resolution and
ordered the remand of the case to the Med-Arbiter concluding that the issues raised by TMPC both on
appeal and its motion for reconsideration were factual issues requiring further hearing and production of
evidence;

5. Pursuant to the order above-mentioned, the Med-Arbiter on 28 September 1994 dismissed TMPCLU's
petition for certification election for failure of petitioner to acquire legal personality at the time of the filing
of the said petition;

6. The motion for reconsideration filed by TMPCLU before the Secretary of Labor, which was treated as an
appeal from the order of the Med-Arbiter dated 28 September 1994, was granted and the said order was set
aside. In lieu thereof, a new order was issued giving due course to the petition and directing the conduct of
a certification election among the rank-and-file employees of TMPC;

7. The Secretary of Labor, in his order dated 14 July 1995, denied for lack of merit the motion for
reconsideration filed by TMPC;

8. On 20 April 1996 the Secretary of Labor issued a new resolution directing the conduct of a certification
election among the rank-and-file employees of TMPC; and

9. TMPC lodged a special civil action for certiorari before the Supreme Court assailing the 20 April 1996
Resolution of the Secretary of Labor; and on 19 February 1997, the Supreme Court2 set aside the assailed
Resolution of the Secretary of Labor and reinstated the Order of the Med-Arbiter dated 28 September 1994.
In its decision, the Supreme Court ruled that since TMPCLU's membership list contained the names of at
least twenty-seven (27) supervisory employees in Level Five positions, "the union could not, prior to
purging itself of its supervisory employee members, attain the status of a legitimate labor organization. Not
being one, it cannot possess the requisite personality to file a petition for certification election."

At the time respondent TMPCEWU filed its Petition for Certification Election on 24 April 1997 the decision of the
Supreme Court had not ripened into a final and executory judgment. Thus petitioner invoked as among the grounds
for opposition thereto in its Motion to Intervene with Opposition to the Petition for Certification Election that the
"pending proceeding before the Supreme Court may be said to be a pre-judicial question which should be resolved
first before the instant petition can prosper." 3

TMPC also filed a similar comment on 9 June 1997. Hence, on 2 July 1997, the Med-Arbiter ordered the provisional
dismissal of TMPCEWU's Petition for Certification Election pending a final ruling by the Supreme Court on
the Petition for Certification Election.

On 3 June 1997 the decision of the Supreme Court dated 19 February 1997 became final and executory.

In view of respondent TMPCEWU's revival of its Petition for Certification Election, petitioner also filed on 30
October 1997 its Petition-in-Intervention4 alleging that (a) it was representing only the rank-and-file employees; (b)
it enjoys the support of the regular rank-and-file workers at large in TMPC, an unorganized establishment, and not
only among the rank-and-file employees in the manufacturing division thereof; (c) while respondent TMPCEWU
professed itself as a legitimate labor organization, there was serious doubt on such claim inasmuch as there was a
pending petition for the cancellation of its certification of registration on the ground of fraud; (d) respondent
TMPCEWU's representation of the rank-and-file employees, Levels 1 to 4, within the manufacturing division only
to the exclusion of those in the other departments and divisions violated the "single or employer" unit policy; and,
(e) the establishment of the proposed bargaining unit in the manufacturing division composed of employees from
Levels 1 to 4, should respondent's petition be allowed, would induce the proliferation of unions in a single
employer.5

On 24 February 1998 the Med-Arbiter rendered a decision dismissing for lack of merit TMPCEWU's Petition for
Certification Election, since it failed to include all rank-and-file employees from Levels 1 to 4 in other departments
of TMPC in violation of the "one-union in one-company" policy and likewise dismissing TMPCLU's Petition-in-
Intervention for lack of legal personality.6 Anent the issue on whether TMPCLU has the legal personality to file
the Petition-in-Intervention, the Med-Arbiter explained thus -

The uncontroverted fact in this case is that at the time intervenor TMPCLU filed its application for
registration and subsequently thereafter was issued a certificate of registration on November 24, 1992
(Annex "A," Intervenor's petition-in-intervention), its union membership is (sic) composed of supervisory
and rank-and-file employees.

From this we could infer that the registration certificate issued by the Department of Labor and
Employment is void ab initio because at the time of the issuance the constitution of intervenor union
TMPCLU is (sic) a mixture of supervisory and rank-and-file employees as per finding of fact of Med-
Arbiter Paterno Adap in his Order dated March 8, 1993 (Annex "A," respondent's Answer to Petition-in-
Intervention).

On 14 March 1998, dissatisfied with the unfavorable decision, petitioner appealed to the Secretary of Labor
contending that contrary to the finding of the Med-Arbiter it had the legal personality to intervene in the certification
election proceedings as shown by its Certificate of Registration No. NCR-UR-11-996-92.

In a Resolution dated 5 June 1998, the Secretary of Labor justified his affirmance of the Med-Arbiter's decision in
this wise -7

On the first ground raised on appeal, it is true that the employer is a mere by-stander during the conduct of
a certification election. Prior to the election, however, the employer is not precluded from ascertaining the
legitimacy of the union in order that it can be assured that the union it will be dealing with is a duly
registered labor organization which legally represents the bargaining unit sought to be represented. There is
therefore no error in allowing the employer to question the status of appellant as in the case at bar.

On the second issue, it had earlier been finally ruled by the Supreme Court (G.R. No 121084) involving
herein employer and appellant that since the bargaining unit of the rank-in-file which TMPCLU is seeking
to represent is a mixture of supervisory employees which is prohibited under Article 245 of the Labor
Code, as amended, the union prior to purging itself of supervisory employees-members, had not attained
the status of a legitimate labor organization. Appellant now simply asserts that it has purged its membership
of supervisory employees and therefore is now a legitimate labor organization of the rank-and-file
employees. Appellant has not however shown that it registered anew because admittedly some of its
officers are supervisory employees. The need to register anew is necessary and the purging by itself of its
officers who are holding supervisory position is imperative. One of the requirements for registration is the
submission of the list of officers. Under the circumstances obtaining, appellant has not as yet attained the
status of a legitimate labor organization. It has therefore no legal authority to oppose the instant petition.

On 10 August 1998 the Secretary issued an Order denying petitioner's motion for reconsideration; hence, petitioner
now comes to us assailing the aforementioned Resolution and Order of the Secretary of Labor arguing that -

First. At the time it filed its Petition-in-Intervention on 30 October 1997 it was clothed with legal personality as
a bona fide labor union. Petitioner contended that when it filed the Motion to Intervene with Opposition to the
Petition for Certification Election filed by TMPCEWU and its Petition-in-Intervention, it did have a Certificate of
Registration No. NCR-UR-1199692 which was based on its compliance with the requisites for union registration.
Hence, it had the legal personality when it filed the Petition-in-Intervention and had all the rights as well as
obligations of a legitimate labor organization. There was therefore no necessity for petitioner to register anew when
it was already a registered labor organization.

Second. The Med-Arbiter had no authority to declare that petitioner's certificate of registration was void ab initio in
a certification election proceeding; neither was the representation proceedings before the Med-Arbiter the
appropriate remedy to ventilate such issue.
To buttress its stance, petitioner drew attention to the fact that the Implementing Rules of the Labor Code of the
Philippines, particularly Book V, Rule 1, Sec. 1 (kk) thereof, and the Med-Arbiter's authority were limited to
hearing, conciliating, mediating and deciding representation cases, internal union and intra-union disputes.
Considering that the case before the Med-Arbiter was a Petition for Certification Election by respondent
TMPCEWU, the only task of the Med-Arbiter was to determine the employees' choice of their bargaining
representative, and nothing more.

Third. The Supreme Court in Toyota Motor Philippines v. Toyota Motor Corporation Philippines Labor Union and
Secretary of Labor,8 limited the finding of petitioner's lack of personality only to the time when it filed its Petition
for Certification Election.

In this regard, petitioner decries the decision of the Secretary of Labor affirming that of the Med-Arbiter on the basis
of the ruling in the aforecited case. It must be stressed, according to petitioner, that contrary to the interpretation
given by the Med-Arbiter as affirmed by the Secretary of Labor, the Supreme Court's ruling that it did not have legal
personality was limited to the time when it filed its Petition for Certification Election on 26 November 1992.
Neither did the Supreme Court, in that case, rule on the validity of the certificate of registration.

More importantly, according to petitioner, it was erroneous for the Secretary to assume that inasmuch as petitioner
failed to purge itself of its supervisory employee-members when it filed its previous Petition for Certification
Electionon 26 November 1992, it could not have possessed the appropriate legal personality when it filed
its Petition-in-Intervention on 30 October 1997. The truth of the matter is that with the purging completed, absent
any finding of the Supreme Court or any other court or tribunal declaring the invalidity of the certificate of
registration, petitioner possessed the legal personality when it filed its Petition-in-Intervention.

This Court is called upon to resolve the issue of whether petitioner had legal personality on 30 October 1997 when it
filed its Petition-in-Intervention. Corollary thereto, should petitioner register anew despite its alleged purging of the
supervisory employee-members as directed by this Court in Toyota Motor Philippines Corporation v. Toyota Motor
Philippines Corporation Labor Union9 and the issuance in its favor of a certificate of registration after it was found
to have violated Art. 245 of the Labor Code?

To find solution to the question in the instant case, we need only refer to the earlier case of Toyota Motor
Philippines Corporation v. Toyota Motor Philippines Corporation Labor Union and the Secretary of Labor and
Employment,10which sprang from a Petition for Certification Election filed by TMPCLU among the rank-and-file
employees of TMPC. On 8 March 1993, however, its petition was dismissed by the Med-Arbiter for the reason that
the labor organization's membership was composed of supervisory and rank-and-file employee-members. On appeal,
the Secretary of Labor remanded the case to the Med-Arbiter upon his finding that factual issues remained
unresolved. Pursuant to the order of the Secretary of Labor, the Med-Arbiter, in his decision dated 28 September
1994, dismissed TMPCLU's Petition for Certification Election on the basis of the following factual findings:

(T)he (in)controvertible fact is that petitioner could not have been issued its Certificate of Registration on
November 24, 1992 when it applied for registration only on November 23, 1992 as shown by the official
receipt of payment of filing fee. As Enrique Nalus, Chief LEO, this office, would attest in his letter dated
September 8, 1994 addressed to Mr. Porfirio T. Reyes, Industrial Relations Officer of Respondent
company, in response to a query posed by the latter, "it is unlikely that an application for registration is
approved on the date that it is filed or the day thereafter as the processing course had to pass through
routing, screening, and assignment, evaluation, review and initialing, and approval/disapproval procedure,
among others, that a 30-day period is provided for under the Labor Code for this purpose, let alone
opposition thereto by interested parties which must be also given due course."

Another evidence which petitioner presented is the "Union Registration 1992 Logbook of IRD" and the entry date
25 November 1992 as allegedly the date of the release of its registration certificate. On the other hand, respondent
company presented a certified true copy of an entry on page 265 of the Union Registration Logbook showing the
pertinent facts about petitioner but which did not show that petitioner's registration was issued on or before 26
November 1992.
The Med-Arbiter also found that TMPCLU had not acquired legal personality for the reason that its composition,
being a mixture of supervisory and rank-and-file employees, was in direct violation of Art. 245 of the Labor Code.11

Although there is a divergence of factual backdrops between Toyota Motor Philippines Corporation v. Toyota
Motor Philippines Corporation Labor Union and the Secretary of Labor and Employment 12 and the instant petition
in the sense that in the former the filing of a Petition for Certification Election by petitioner gave rise to the
controversy while the present case arose from the filing of a Petition-in-Intervention, the bottom-line issue in both
cases nonetheless involves the legitimacy of petitioner TMPCLU to file petitions.

We recall that in the first Toyota case, although there was no categorical pronouncement on the validity of
petitioner's certificate of registration considering that we deemed it entirely irrelevant in the light of the finding that
petitioner was not entirely a rank-and-file labor organization, we sustained however in the same decision the entire
factual findings of the Med-Arbiter when we observed -

The foregoing discussion, therefore, renders entirely irrelevant the technical issue raised as to whether or
not respondent union was in possession of the status of a legitimate labor organization at the time of filing,
when, as petitioner vigorously claims, the former was still at the stage of processing of its application for
recognition as a legitimate labor organization. The union's composition being in violation of the Labor
Code's prohibition of unions composed of supervisory and rank-and-file employees, it could not possess the
requisite personality to file for recognition as a legitimate labor organization. In any case, the factual issue,
albeit ignored by the public respondent’s assailed Resolution, was adequately threshed out in the Med-
Arbiter’s September 28, 1994 Order (underscoring supplied).

In effect therefore, we already impressed our stamp of approval on the factual findings of the Med-Arbiter in his 28
September 1994 decision, i.e., that petitioner had no valid certificate of registration and therefore no legal
personality to file the Petition for Certification Election and in the absence of any attempt on its part to rectify the
legal infirmity, likewise the disputed Petition-in-Intervention.

It is thus fatuous on petitioner's part to resurrect the issue of legitimacy in the instant case notwithstanding our
earlier ruling sustaining the factual findings of the Med-Arbiter.

We cannot also accede to petitioner's submission that the issuance of a certificate of registration in its favor is an
adequate and unassailable proof that it possesses the requisite legal personality to file a Petition for Certification
Election. Not necessarily. As we emphasized in Progressive Development Corp. - Pizza Hut v. Laguesma,13 if a
labor organization’s application for registration is vitiated by falsification and serious irregularities, a labor
organization should be denied recognition as a legitimate labor organization. And if a certificate of registration has
been issued, the propriety of its registration could be assailed directly through cancellation of registration
proceedings in accordance with Arts. 238 and 239 of the Labor Code, or indirectly, by challenging its petition for
the issuance of an order for certification election. We believe the procedural requirements to impugn the registration
by petitioner were more than adequately complied with as shown in the 1997 case of Toyota Motor Philippines
Corporation v. Toyota Motor Philippines Corporation Labor Union. 14

There is no reason to belabor the primordial importance of strictly complying with the registration requirements of
the Labor Code. As we have explained in a long line of cases, the activities of labor organizations, associations and
unions are impressed with public interest, hence, must be protected.

WHEREFORE the petition is DISMISSED for lack of merit. Accordingly, the assailed Resolution dated 5 June
1998 and Order dated 10 August 1998 of the Secretary of Labor and Employment affirming the decision of the Med-
Arbiter dated 24 February 1998 which dismissed both the Petition for Certification Election filed by respondent
Toyota Motor Philippines Corp. Employees and Workers Union (TMPCEWU) and the Petition-in-Intervention of
petitioner Toyota Motor Philippines Corp. Labor Union (TMPCLU) are AFFIRMED.1âwphi1.nêt

SO ORDERED.
#116 Telefunken semicondustors emp union vs CA GR 401 phil 776

[G.R. NOS. 143013-14. December 18, 2000]

TELEFUNKEN SEMICONDUCTORS EMPLOYEES UNION-FFW and individual union members DANILO

G. MADARA and ROMEO L. MANAYAO, petitioners, vs., THE COURT OF APPEALS, HON.
BIENVENIDO LAGUESMA, as Secretary of Labor and Employment, and TEMIC TELEFUNKEN
MICROELECTRONICS, (PHILS.), INC., respondents.

DECISION
DE LEON, JR., J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the reversal of the
Decision[1] of the Court of Appeals dated December 23, 1999 in CA-G.R. SP Nos. 54227 and 54665 and its
Resolution[2] dated April 19, 2000, denying herein petitioners motion for reconsideration.
The assailed Decision of respondent Court of Appeals granted the petition of private respondent TEMIC
TELEFUNKEN MICROELECTRONICS, (Phils.), INC., (Company, for brevity) in CA-G.R. SP No. 54227 reversing
and setting aside the Secretary of Labors: (1) Decision dated May 28, 1999; and (2) Resolution dated July 16, 1999,
insofar as the Company was directed to pay backwages and grant financial assistance to the striking workers.
In CA-G.R. SP No. 54665, on the other hand, the petition of TELEFUNKEN SEMICONDUCTORS
EMPLOYEES UNION-FFW (Union, for brevity) and individual union members DANILO G. MADARA and
ROMEO L. MANAYAO was dismissed on a finding that the Secretary of Labor did not abuse his discretion nor acted
in excess of his jurisdiction when he declared illegal the strike staged by the Union, its officers and members on
September 14, 1995, and that as a result thereof, those who participated therein have lost their employment status.
The petition is not meritorious, and the same should be as it is hereby dismissed.
The facts as borne by the records are as follows:
The labor dispute started on August 25, 1995 when the Company and the Union reached a deadlock in their
negotiations for a new collective bargaining agreement. On August 28, 1995, the Union filed a Notice of Strike with
the National Conciliation and Mediation Board (NCMB).
On September 8, 1995,[3] the then Acting Secretary of the Department of Labor and Employment, Jose S.
Brillantes, intervened and assumed jurisdiction over the dispute pursuant to Art. 263, par. (g),[4] of the Labor Code, as
amended. Thus, the Order[5] of the said Acting Secretary of Labor enjoined any strike or lockout, whether actual or
intended, between the parties. His Notice of the Assumption Order[6]was personally served on the representatives of
the Company, namely, on Atty. Allan Montao, counsel of the Union-FFW, on September 9, 1995 at 1:25 p.m. and
twice on Ms. Liza Dimaano, Union President, first on September 8, 1995 at 7:15 p.m. and again on September 11,
1995 at 9:30 a.m. but both union representatives refused to acknowledge receipt thereof.
Despite the assumption Order, the Union struck on September 14, 1995. Two (2) days later, the Acting Secretary
of Labor issued an Order[7]directing the striking workers to return to work within twenty-four (24) hours and for the
Company to admit them back to work under the terms and conditions prevailing prior to the strike.Notice[8] of the
Return-to-Work Order[9] dated September 16, 1995 of the Acting Secretary of Labor was sent to the striking Union
members but still some of them refused to heed the order and continued with their picket. The Federation of Free
Workers (FFW) received and acknowledged receipt of the said Return to Work Order on September 18, 1995. On
September 23, 1995, violence erupted in the picket lines. The service bus ferrying non-striking workers was stoned,
causing injuries to its passengers. Thereafter, complaints for threats, defamation, illegal detention and physical injuries
were filed against the strikers.
 On October 2, 1995, the Company issued letters of termination for cause to the workers who did not report back
to work despite the Notice of Assumption and Return-to-Work Orders issued by the Acting Secretary Jose S. Brillantes
of the Department of Labor and Employment (DOLE).
On October 27, 1995, the Acting Secretary of Labor issued another Order [10] directing the Company to reinstate
all striking workers except the Union Officers, shop stewards, and those with pending criminal charges, x x x while
the resolution of the legality of the strike was pending. This exclusion Order was reaffirmed with some modifications
in an Order[11] dated November 24, 1995.
On December 5, 1995, the Union filed with this Court a petition for certiorari, docketed as G.R. No. 122743,
questioning the exclusions made in the aforesaid Orders.
On June 27, 1996, while the said petition in G.R. No. 122743 was pending, then Secretary of Labor Leonardo
A. Quisumbing issued a Writ of Execution[12] for the physical reinstatement of the remaining striking workers who
were not reinstated as contained in the thirty-two (32) page list[13] attached to the aforesaid writ.
Accordingly, on July 3, 1996, the Company filed a Motion to Quash, Recall or Suspend the Writ of
Execution[14]issued by Secretary Quisumbing. This motion was denied[15] by the Department of Labor and
Employment (DOLE, for brevity) for lack of merit and, in the same Order, the DOLE directed the issuance of an Alias
Writ to enforce the actual and physical reinstatement of the workers, or in case the same was not feasible, to effect
payroll reinstatement. On November 21, 1996, the Companys motion for reconsideration was also denied. [16]
On December 9, 1996, the Company filed with this Court a petition for certiorari, docketed as G.R. No. 127215,
questioning the denial of its motion for reconsideration and the Alias Writ issued by the DOLE to enforce the actual
and physical reinstatement or the payroll reinstatement of the workers (including the Original Writ of Execution of
June 27, 1996).
After we consolidated[17] the petitions for certiorari of the Company and the Union in G.R. Nos. 122743 and
127215, respectively, we rendered a Decision therein on December 12, 1997. The Companys petition for certiorari in
G.R. No. 127215 was dismissed for lack of merit. In G.R. No. 122743, we granted the Unions petition and ordered
the reinstatement of all striking workers without exception. We also directed the Secretary of Labor and Employment
to determine with dispatch the legality of the strike as well as the liability of the individual strikers, if any.
After receipt of our said Decision in G.R. Nos. 122743 and 127215, the DOLE issued an Alias Writ of Execution
on August 26, 1998. Thereafter, the Company moved to quash the Alias Writ which was, however, denied [18] by the
DOLE. The motion for reconsideration filed by the Company was similarly denied. [19] Aggrieved by the preceding
rulings of the DOLE, the Company elevated this case to this Court via another petition for certioraridocketed as G.R.
No. 135788.
On December 7, 1998, we resolved[20] to dismiss the said petition in G.R. No. 135788 for (a) failing to state the
place of service by registered mail on the adverse party; (b) failing to submit a certification duly executed by the
president of the petitioning Company or by its representative which shows its authority to represent and act on behalf
of the Company; and (c) for lack of the requisite certificate of non-forum shopping. We denied this petition with
finality on our March 15, 1999 Resolution[21] where we held that the Secretary of Labor did not abuse his discretion
in denying the Companys motion to quash the execution of our Decision dated December 12, 1997.
In compliance with our order to the Secretary of Labor and Employment to determine with dispatch the legality
of the strike, marathon hearings were conducted[22] at the DOLE Office with Atty. Lita V. Aglibut as hearing officer.On
September 22, 1998, both the Union and the Company complied with the order to submit their respective position
papers. The Company adduced evidence and submitted its case for decision. The Union did not adduce
evidence. Instead, the Union manifested that it would file a motion to dismiss for failure of the Company to prove its
case with the request that it be allowed to present evidence should its motion be denied.
During the subsequent hearings[23] conducted by the hearing officer of DOLE, the Union insisted that a ruling
should first be made on the Demurrer to Evidence it previously filed notwithstanding repeated reminders by the
Hearing Officer that the technical rules of evidence and procedure do not apply to proceedings before
DOLE.Thereafter, an exchange of pleadings, reiterating their respective positions, ensued between the Company and
the Union.
 On May 19, 1999, the Union filed a motion before the DOLE praying for the issuance of another Alias Writ of
Execution in connection with our March 15, 1999 Resolution in G.R. No. 135788. The Union contended that this
Resolution has declared the dismissals of the striking workers as illegal and therefore a writ should be issued for the
physical reinstatement of the workers with full backwages and other benefits reckoned from June 27, 1996.
On May 28, 1999, the Secretary of Labor and Employment resolved the matter in a Decision.[24] The Secretary
of Labor declared therein that in hearings and resolutions of labor disputes, before the DOLE, his Office is not
governed by the strict and technical rules of evidence and procedure observed in the regular courts of law, and that it
will resolve the issues based on the pleadings, the documentary evidence and other records of the case.The dispositive
portion of the said Decision dated May 28, 1999 reads:

WHEREFORE, PREMISED ON THE FOREGOING, this Office hereby:

a. Declares the strike conducted by the Telefunken Semiconductors Employees Union-FFW on 14

September 1995 as illegal for having been waged in open, willful and knowing defiance of the
assumption order dated 8 September 1995 and the subsequent return-to-work order dated 16 September
1995 and consequently, the striking workers are declared to have lost their employment status;
b. Directs the payment of backwages and other benefits to the striking workers corresponding to the
temporary reinstatement periods (1) from 27 June 1996 to 28 October 1996, (2) from 21 November
1998 up to the date of this Decision;
c. Directs the Telefunken Micro-Electronics (Phils.), Inc. to grant financial assistance equivalent to one (1)
month for every year of service to the striking workers conformably with its grant of the same benefit
to other strikers as manifested by the Company to the Supreme Court on 20 November 1997.

In this connection, the Bureau of Working Conditions, this Department, is hereby directed to compute the total
award herein made and to submit its report of computation to this Office within ten (10) days from receipt of this
Decision.

SO ORDERED.[25]

Dissatisfied, both the Company and the Union together with individual union members Nancy Busa and Arnel
Badua, filed motions for reconsideration of the said Decision of the Secretary of Labor. On July 16, 1999,[26] the
Secretary of Labor denied the said motions.
The Company and the Union filed their respective petitions for certiorari docketed as CA-G.R. SP Nos. 54227
and 54665 with the Court of Appeals and these were later on consolidated. On December 23, 1999, the Court of
Appeals rendered its now assailed Decision, the dispositive portion of which states:

WHEREFORE, the COMPANYs Petition in CA-G.R. No. SP 54227 is GRANTED. The Secretary of Labors
Decision dated 28 May 1999 and his Resolution dated 16 July 1999 are REVERSED and SET ASIDE in so far as
they direct the company to pay backwages and grant financial assistance to the striking workers. The said Decision
and Resolution are AFFIRMED in all other respects. The Unions Petitions in CA-G.R. SP No. 546654 is
DISMISSED.

SO ORDERED.

On January 24, 2000, only the Union sought reconsideration [27] of the said Decision of the appellate
court.However, it was denied for lack of merit by the Court of Appeals on April 19, 2000 in its Resolution. [28]
In the petition at bench, petitioners Union, Madara and Manayao submits the following assignment of errors, to
wit:

THE HONORABLE COURT OF APPEALS ERRED:

 I

IN AFFIRMING THE DECISION OF THE RESPONDENT SECRETARY OF LABOR IN FINDING THE

STRIKE STAGE BY THE UNION ILLEGAL WHICH WAS FEEBLY BASED ON THE COMPANYS
POSITION PAPER AND THE MATERIALS AND PICTORIALS ATTACHED THERETO WHICH ARE
BEREFT OF PROBATIVE VALUE BECAUSE THEY ARE PATENTLY INADMISSIBLE AND
INCOMPETENT.

II

.IN SUSTAINING THE RESPONDENT SECRETARYS DECISION EFFECTING THE WHOLESALE

TERMINATION OF EMPLOYMENT OF THE STRIKING TEMIC WORKERS WITHOUT ANY
DETERMINATION OF THEIR INDIVIDUAL LIABILITY, IF ANY, AS ORDERED BY THE HONORABLE
SUPREME COURT, IN THE ABSENCE OF ANY ILLEGAL ACTS COMMITTED BY THE STRIKERS
ATTENDANT TO THE STRIKE.

III

.IN RULING THAT THE SOLE OFFICE OF THE WRIT OF CERTIORARI IS THE CORRECTION OF
ERRORS OF JURISDICTION INCLUDING THE COMMISSION OF ABUSE OF DISCRETION AMOUNTING
TO LACK OF JURISDICTION, DOES NOT INCLUDE CORRECTION OF HEREIN PUBLIC RESPONDENT
SECRETARY OF LABORS EVALUATION OF THE EVIDENCE AND FACTUAL FINDINGS THEREON.

IV

.IN RULING IN A MANNER ABSOLUTE THAT TECHNICAL RULES OF EVIDENCE PREVAILING IN THE
COURTS OF LAW AND EQUITY HAVE NO ROOM IN ADMINISTRATIVE AND/OR QUASI-JUDICIAL
PROCEEDINGS.

.IN UPHOLDING THE RESPONDENT SECRETARY OF LABORS RULING THAT THE NON-APPLICATION
OF TECHNICAL RULES OF PROCEDURE IN PROCEEDINGS BEFORE THE OFFICE OF THE SECRETARY
OF LABOR BARS THE PETITIONERS FROM ADDUCING EVIDENCE AFTER THE DENIAL OF THE
UNION'S DEMURRER TO EVIDENCE.

VI

.IN NEGATING THE PETITIONERS VESTED RIGHT TO BACKWAGES.

The petition has no merit.

As to the first and second assigned errors, herein petitioners contend that according to the Constitution[29] and
jurisprudence,[30] strikes enjoy the presumption of legality and the burden of proving otherwise rests upon the
respondent Company; that the case should not have been decided on the basis of the position paper method because
in several instances[31] this Court has looked with disfavor on the position paper method in disposing labor cases; that
due to the transcendental issues involved, a hearing should have been conducted to avoid the impression of denial of
due process considering the dearth of evidence submitted by respondent Company; and that the pieces of evidence
submitted by respondent Company are wanting in probative value.
Herein petitioners also argue that for a union officer to lose his employment status it must be proved that he
knowingly participated in an illegal strike; and that in the case of an ordinary member, it must not only be demonstrated
that he actually participated in the illegal strike but also that he has committed illegal acts during the strike and which
respondent Company allegedly failed to prove.
 We do not agree. Despite petitioners vain attempt to structure the case to show, on its surface, a question of law,
nevertheless, the case essentially involves a question of fact. The issues raised basically boils down to a determination
of whether or not the position paper and the pieces of evidence adduced by the Company before the DOLE are
sufficient in probative value to overthrow the constitutional presumption of the legality of the strike. As correctly
observed by the Solicitor General in his Comment,[32] it . . . .(the first and second assigned errors) essentially involve
questions of fact. It calls for a re-evaluation of facts and a re-examination of the evidence.
We take this occasion to emphasize that the office of a petition for review on certiorari under Rule 45 of the
Rules of Court requires that it shall raise only questions of law.[33] The factual findings by quasi-judicial agencies,
such as the Department of Labor and Employment, when supported by substantial evidence, are entitled to great
respect in view of their expertise in their respective fields. [34] Judicial review of labor cases does not go so far as to
evaluate the sufficiency of evidence on which the labor officials findings rest. [35] It is not our function to assess and
evaluate all over again the evidence, testimonial and documentary, adduced by the parties to an appeal, particularly
where the findings of both the trial court (here, the DOLE Secretary) and the appellate court on the matter
coincide,[36] as in this case at bar. The Rule limits that function of the Court to the review or revision of errors of law
and not to a second analysis of the evidence.[37] Here, petitioners would have us re-calibrate all over again the factual
basis and the probative value of the pieces of evidence submitted by the Company to the DOLE, contrary to the
provisions of Rule 45. Thus, absent any showing of whimsical or capricious exercise of judgment, and unless lack of
any basis for the conclusions made by the appellate court be amply demonstrated, we may not disturb such factual
findings.
Although we have ruled against the reliability of position papers in disposing of labor cases, in the cases
of Batongbacal v. Associated Bank[38] and Progress Homes v. NLRC,[39] this was due to certain patent matters that
should have been tried by the administrative agency concerned, such as certain factual circumstances which, however,
are unavailing in the case at bar.
In Batongbacal, we withheld judgment on the case due to the absence of a definitive factual determination of
the status of petitioner therein as an assistant vice-president of therein respondent Bank. It has not been established by
the Labor Arbiter whether the petitioner therein was a managerial or a rank-and-file employee, noting that there are
different causes of termination for both the managerial and rank-and-file employees. Thus, the need to remand the
case was necessary.
In Progress Homes, on the other hand, we found that despite the absence of any evidence to establish and support
therein private respondents claim that the petitioners therein were their immediate employers, the Labor Arbiter
forthwith concluded the illegal dismissal of the private respondents. Also, there was the apparent failure of the Labor
Arbiter to justify why the private petitioner therein should be held solidarily liable with Progress Homes.There was a
clear absence of evidence to show that petitioner therein had engaged the services of private respondents therein and
that petitioner therein had acted maliciously and in bad faith in terminating the services of private respondents.
The herein petitioners dismally failed to show that there really existed certain issues which would necessitate the
remand of this case at bar, or that the appellate court misapprehended certain facts when it dismissed their petition
for certiorari.
The need to determine the individual liabilities of the striking workers, the union officers and members alike,
was correctly dispensed with by the Secretary of Labor after he gave sufficient opportunity to the striking workers to
cease and desist from continuing with their picket. Ensconced in the Labor Code of the Philippines, as amended, is
the rule that:

Art. 263. Strikes, picketing and lockouts.

xxxxxxxxx
(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 per 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
had 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 re-admit all workers under the same terms and conditions prevailing before the
strike or lockout. The Secretary of Labor and Employment or the Commission may seek the assistance
of law enforcement agencies to ensure the compliance with this provision as well as with such orders
as he may issue to enforce the same. (Emphasis Ours)
xxxxxxxxx
It is clear from the foregoing legal provision that the moment the Secretary of Labor assumes jurisdiction over a labor
dispute in an industry indispensable to national interest, such assumption shall have the effect of automatically
enjoining the intended or impending strike. It was not even necessary for the Secretary of Labor to issue another
order directing them to return to work. The mere issuance of an assumption order by the Secretary of Labor
automatically carries with it a return-to-work order, even if the directive to return to work is not expressly stated in
the assumption order.[40] However, petitioners refused to acknowledge this directive of the Secretary of Labor on
September 8, 1995 thereby necessitating the issuance of another order expressly directing the striking workers to cease
and desist from their actual strike, and to immediately return to work but which directive the herein petitioners opted
to ignore. In this connection, Article 264(a) of the Labor Code clearly provides that:

Article 264. Prohibited Activities.

(a) x x x

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

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

The rationale of this prohibition is that once jurisdiction over the labor dispute has been properly acquired by the
competent authority, that jurisdiction should not be interfered with by the application of the coercive processes of a
strike.[41] We have held in a number of cases that defiance to the assumption and return-to-work orders of the Secretary
of Labor after he has assumed jurisdiction is a valid ground for loss of the employment status of any striking union
officer or member.[42]
Furthermore, the claim of petitioners that the assumption and return-to-work Orders issued by the Secretary of
Labor were allegedly inadequately served upon them is untenable in the light of what have already been clearly
established in this case, to wit:

x x x, the reports of the DOLE process server, shows that the Notice of Order of 8 September 1995 was actually
served on the Union President. The latter, however, refused to acknowledge receipt of the same on two separate
occasions (on 8 September 1995 at 7:15 p.m. and on 11 September 1995 at 9:30 a.m.). The Unions counsel of
record, Atty. Allan Montano, similarly refused to acknowledge receipt of the 8 September 1995 Order on 9
September 1995 at 1:25 p.m.

Records also show that the Order of 16 September 1995 was served at the strike area with copies left with the
striking workers, per the process servers return, although a certain Virgie Cardenas also refused to
acknowledge receipt. The Federation of Free Workers officially received a copy as acknowledged by a certain
Lourdes at 3:40 p.m. of 18 September 1995.

The foregoing clearly negate the Unions contention of inadequate service of the Orders dated 8 and 16 September
1995 of Acting Secretary Brillantes. Furthermore, the DOLE process servers discharge of his function is an official
act carrying the presumption of regularity in its performance which the Union has not disproved, much less disputed
with clear and convincing evidence.

Likewise, it would be stretching the limits of credibility if We were to believe that the Union was unaware of the
said Orders during all the conciliation conferences conducted by the NCMB-DOLE. Specifically, in the conciliation
meetings after the issuance of the Order of 8 September 1995 to settle the unresolved CBA issues and after the
issuance of the Order of 16 September 1995 to establish the mechanics for a smooth implementation of this Offices
return-to-work directive, the Union with its officers and members in attendance never questioned the propriety or
adequacy by which these Orders were served upon them.

We are not unaware of the difficulty of serving assumption and return-to-work orders on striking unions and their
members who invariably view the DOLEs process servers with suspicion and hostility. The refusal to receive such
orders and other processes is, as described by the Supreme Court in an analogous case, an apparent attempt to
frustrate the ends of justice. (Navale, et al. v. Court of Appeals, 253 SCRA 705)

Such being the case, We cannot allow the Union to thwart the efficacy of the assumption and return to work orders,
issued in the national interest, through the simple expediency of refusing to acknowledge receipt thereof.

Having thus resolved the threshold issue as hereinabove discussed, it necessarily follows that the strike of the
Union cannot be viewed as anything but illegal for having been staged in open and knowing defiance of the
assumption and return-to-work orders. The necessary consequence thereof are also detailed by the Supreme
Court in its various rulings. In Marcopper Mining Corp. v. Brillantes (254 SCRA 595), the High Tribunal
stated in no uncertain terms that -

by staging a strike after the assumption of jurisdiction or certification for arbitration, workers forfeited their
right to; be readmitted to work, having abandoned their employment, and so could be validly replaced.

Again, in Allied Banking Corporation v. NLRC (258 SCRA 724), the Supreme Court ruled that:

xxx. However, private respondents failed to take into consideration the cases recently decided by this Court which
emphasized on the strict adherence to the rule that defiance of the return-to-work order of the Secretary of Labor
would constitute a valid ground for dismissal. The respective liabilities of striking union officers and members who
failed to immediately comply with the return-to-work order, are clearly spelled out in Article 264 of the Labor Code
which provides that any declaration of a strike or lock out after the Secretary of Labor and Employment has assumed
jurisdiction over the labor dispute is considered an illegal act. Therefore, any worker or union officer who
knowingly participates in a strike defying a return-to-work order may as a result thereof be considered to have lost
his employment status.

Viewed in the light of the foregoing, We have no alternative but to confirm the loss of employment status of all
those who participated in the strike in defiance of the assumption order dated 8 September 1995 and did not report
back to work as directed in the Order of 16 September 1995. [43]

To cast doubt on the regularity of the aforesaid service of the two Orders issued by the Secretary of Labor,
petitioners cite Section 1, Rule IX of the NLRC Manual on Execution of Judgment which provides that:

Section 1. Hours and Days When Writ Shall Be Served. Writ of Execution shall be served at any day, except
Saturdays, Sundays and holidays, between the hours of eight in the morning and five in the afternoon. x x x

However, the above-cited rule is not applicable to the case at bar inasmuch as Sections 1[44] and 4,[45] Rule III of
the same NLRC Manual provide that such Execution shall issue only upon a judgment or order that finally disposes
of an action or proceeding. The assumption and return-to-work Orders issued by the Secretary of Labor in the case at
bar are not the kind of orders contemplated in the immediately cited rule of the NLRC because such Orders of the
Secretary of Labor did not yet finally dispose of the labor dispute. As pointed out by the Secretary of Labor in his
Decision, petitioners cannot now feign ignorance of his official intervention, to wit:

The admissibility of the evidence presented by the Company, however, has been questioned. The Unions arguments
are less than convincing. The numerous publications of the subject DOLE Orders in various newspapers, tabloids,
radio and television cannot be considered hearsay and subject to authentication considering that the subject thereof
were the lawful Orders of a competent government authority. In the case of the announcements posted on the Unions
bulletin board, pictures of which were presented by the Company in evidence, suffice it for us to state that the
bulletin board belonged to the Union. Since the veracity of the contents of the announcements on the bulletin board
were never denied by the Union except to claim that these were self-serving, unverified/unverifiable and thus utterly
inadmissible, We cannot but admit the same for the purpose for which it was presented. [46]

As regards the third assigned error, petitioners contend that a resolution of a petition for certiorari under Rule
65 of the Rules of Court should include the correction of the Secretary of Labors evaluation of the evidence and factual
findings thereon pursuant to the doctrine laid down in Meralco v. The Honorable Secretary of Labor Leonardo A.
Quisumbing.[47] That contention is misplaced. In that case, we ruled that:

The extent of judicial review over the Secretary of Labors arbitral award is not limited to a determination of grave
abuse in the manner of the secretarys exercise of his statutory powers. This Court is entitled to, and must in the
exercise of its judicial power review the substance of the Secretarys award when grave abuse of discretion is alleged
to exist in the award, i.e., in the appreciation of and the conclusions the Secretary drew from the evidence presented.

However, this Courts review (of) the substance does not mean a re-calibration of the evidence presented before the
DOLE but only a determination of whether the Secretary of Labors award passed the test of reasonableness when he
arrived at his conclusions made thereon. Thus, we declared in Meralco, that:

In this case we believe that the more appropriate and available standard and one does not require a constitutional
interpretationis simply the standard of reasonableness. In laymans terms, reasonableness implies the absence of
arbitrariness; in legal parlance, this translates into the exercise of proper discretion and to the observance of due
process. Thus, the question we have to answer in deciding this case is whether the Secretarys actions have been
reasonable in light of the parties positions and the evidence they presented. [48]

Thus, notwithstanding any allegation of grave abuse of discretion, unless it can be amply demonstrated that the
Secretary of Labors arbitral award did not pass the test of reasonableness, his conclusions thereon shall not be
disturbed, as in the case at bar.
The main thrust of a petition for certiorari under Rule 65 of the Rules of Court is only the correction of errors of
jurisdiction including the commission of grave abuse of discretion amounting to lack or excess of
jurisdiction.However, for this Court to properly exercise the power of judicial review over a decision of an
administrative agency, such as the DOLE, it must first be shown that the tribunal, board or officer exercising judicial
or quasi-judicial functions has indeed acted without or in excess of its or his jurisdiction, and that there is no appeal,
or any plain, speedy and adequate remedy in the ordinary course of law. [49] In the absence of any showing of lack of
jurisdiction or grave abuse tantamount to lack or excess of jurisdiction, judicial review may not be had over an
administrative agencys decision. We have gone over the records of the case at bar and we see no cogent basis to hold
that the Secretary of Labor has abused his discretion.
In the fourth and fifth assignment of errors, petitioners would have us believe that the Court of Appeals, in its
assailed Decision ruled in a manner absolute that prevailing technical rules of evidence in the courts of law and equity
have no room in administrative and/or quasi-judicial proceedings; and that the non-application of technical rules of
procedure in proceedings before the Office of the Secretary of Labor should not have barred herein petitioners from
adducing evidence after their demurrer to evidence was denied.
We do not agree. That declaration of the Court of Appeals should be taken in the context of the whole paragraph
and the law and the jurisprudence cited in the assailed portion of its decision. We do not sanction the piecemeal
interpretation of a decision to advance ones case. To get the true intent and meaning of a decision, no specific portion
thereof should be isolated and resorted to but the decision must be considered in its entirety. [50]The portion of the
Court of Appeals assailed Decision reads, to wit:

x x x, it cannot be gainsaid that technical rules of evidence prevailing in courts of law and equity have no room in
administrative and/or quasi-judicial proceedings (Lawin Security Services, Inc. v. National Labor Relations
Commission, 273 SCRA 132; Valderama v. National Labor Relations Commission, 256 SCRA 466; De Ysasi III v.
National Labor Relations Commission, 231 SCRA 173). In fact, Article 221 of the Labor Code expressly mandates
that in proceedings before the (National Labor Relations) Commission or any of the Labor Arbiters, the rules of
evidence prevailing in courts of law or equity shall not be controlling x x x. This provision is also applicable to
proceedings before the Office of the Secretary of Labor and Employment which, under the said Code, is empowered
to hear and resolve matters arising from the exercise of its plenary power to issue assumption or (sic) jurisdiction
and return-to-work orders, all in keeping with the national interest (Article 263(g) and Article 264 of the Labor
Code).[51]

The contention of petitioners that they should have been allowed to present evidence when their demurrer to
evidence was denied by the Secretary of Labor, is untenable. The record shows that in the hearing of September 22,
1998 attended by the parties, Atty. Lita V. Aglibut, Hearing Officer, of the public respondents office, who presided
over the hearing directed the parties to submit their respective position papers together with the affidavits and
documentary evidence within ten (10) days.[52] While the Company submitted its position paper together with
supporting evidence and rested its case for resolution, herein petitioners, however, submitted only its position paper
but without attaching thereto any supporting documentary evidence. Petitioners chose to rely on the Rules of Court
by filing a demurrer to evidence in the hope of a favorable decision and disregarded our resolution in G.R. No. 127215
ordering the Secretary of Labor to determine with dispatch the legality of the strike. On the other hand, the petitioners
argued merely on the presumption that the strike was legal. The fact that the Hearing Officer of DOLE admitted their
demurrer to evidence is not a valid excuse for herein petitioners not to comply with her said directive for the petitioners
to submit their position paper and to attach thereto affidavits and documentary evidence within ten (10) days.
Petitioners non-compliance with that directive by failing or refusing to attach affidavits and supporting evidence to
their position paper should not be ascribed as the fault of the Secretary of Labor when he denied their demurrer to
evidence and forthwith rendered decision on the illegality of the strike.Petitioners have only themselves to blame for
having defied the order of the said Hearing Officer of DOLE to submit position papers with supporting evidence. A
party who has availed of the opportunity to present his position paper cannot claim to have been denied due
process.[53] The requirements of due process are satisfied when the parties to a labor case are given the opportunity to
submit position papers wherein they are supposed to attach all the documents that would prove their claim in the event
it will be decided that no further hearing should be conducted or that hearing was not necessary. [54]
The grant of plenary powers to the Secretary of Labor under Art. 263(g) of the Labor Code, as amended, makes
it incumbent for him to bring about soonest, a fair and just solution to the differences between the employer and the
employees so that the damage such labor dispute might cause upon the national interest may be minimized as much
as possible, if not totally averted, by avoiding stoppage of work or any lagging of the activities of the industry or the
possibility of these contingencies which might cause detriment to such national interest.[55]Accordingly, he may adopt
the most reasonable and expeditious way of writing finis to the labor dispute.Otherwise, the result would be absurd
and contrary to the grant of plenary powers to him by the Labor Code over a labor dispute causing or likely to cause
a strike or lockout in an industry indispensable to the national interest.
And finally, with respect to petitioners claim of backwages, we find that the ratiocination of the appellate court
in its assailed Decision is in accord with law and settled jurisprudence, to wit:

On the issue of the award of backwages and financial assistance to the striking workers, the well-entrenched
doctrine is that it is only when there is a finding of illegal dismissal that backwages are granted (St. Theresas School
of Novaliches Foundation vs. National Labor Relations Commission, 289 SCRA 111; Industrial Timber
Corporation-Stanply Operations vs. National Labor Relations Commission, 253 SCRA 623; Jackson Building
Condominium Corporation, 246 SCRA 329), and financial assistance or separation pay allowed (Mabeza v. National
Labor Relations Commission, 271 SCRA 670; Capili v. National Labor Relations Commission, 270 SCRA 688;
Aurora Land Projects Corporation v. National Labor Relations Commission, 266 SCRA 48).
 Since, as correctly found by the Secretary of Labor, the strikers were not illegally dismissed, the
COMPANY is under no obligation to pay backwages to them. It is simply inconsistent, nay, absurd, to award
backwages when there is no finding of illegal dismissal (Filflex Industrial and Manufacturing Corporation, 286
SCRA 245). xxx when the record shows that the striking workers did not comply with lawful orders for them
to return to work during said periods of time. In fact, the Secretary of Labor observed that while it was
obligatory on the part of both parties to restore, in the meantime, the status quo obtaining in the workplace, the
same was not possible considering the strikers had defied the return-to-work Order of this Office (p. 8, Ibid). With
such blatant disregard by the strikers of official edicts ordering their temporary reinstatement, there is no basis
to award them backwages corresponding to said time frames. Otherwise, they will recover something they have
not or could not have earned by their willful defiance of the return-to-work order, a patently incongruous and
unjust situation (Santos v. National Labor Relations Commission, 154 SCRA 166).
The same view holds with respect to the award of financial assistance or separation pay. The assumption for
granting financial assistance or separation pay, which is, that there is an illegally dismissed employee and that illegally
dismissed employee would otherwise have been entitled to reinstatement, is not present in the case at bench. Here, the
striking workers have been validly dismissed. Where the employees dismissal was for a just case, it would be neither
fair nor just to allow the employee to recover something he has not earned or could not have earned. This being so,
there can be no award of backwages, for it must be pointed out that while backwages are granted on the basis of
equity for earnings which a worker or employee has lost due to his illegal dismissal, where private respondents
dismissal is for just cause, as is (sic) the case herein, there is no factual or legal basis to order the payment of
backwages; otherwise, private respondent would be unjustly enriching herself at the expense of petitioners. (Cathedral
School of Technology v. National Labor Relations Commission, 214 SCRA 551).Consequently, granting financial
assistance to the strikers is clearly a specious Inconsistency supra. We are of course aware that financial assistance
may be allowed as a measure of social justice in exceptional circumstances and as an equitable concession. We are
likewise mindful that financial assistance is allowed only in those instances where the employee is validly dismissed
for causes other than serious misconduct or those reflecting on his moral character (Zenco Sales, Inc. v. National
Labor Relations Commission, 234 SCRA 689). However, the attendant facts show that such exceptional circumstances
do not obtain in the instant cases to warrant the grant of financial assistance to the striking workers. To our mind, the
strikers open and willful defiance of the assumption order dated September 16, 1995 constitute serious misconduct as
well as reflective of their moral character, hence, granting financial assistance to them is not and cannot be justified
(Philippines Airlines, Inc. v. National Labor Relations Commission, 282 SCRA 536, citing Philippine Long Distance
Telephone Company v. National Labor Relations Commission, 164 SCRA 671).[56]
In fine, there is no reversible error in the assailed Decision and Resolution of the Court of Appeals.
WHEREFORE, the petition is DISMISSED. The appealed Decision dated December 23, 1999 and the
Resolution dated April 19, 2000 of public respondent Court of Appeals are AFFIRMED. No costs.
SO ORDERED.
#117 Chua vs NLRC gr 105775 Feb 8, 1993

G.R. No. 105775 February 8, 1993

BENITO D. CHUA, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER BIENVENIDO V. HERMOGENES
and NESTLE PHILIPPINES, INC., respondents.

Jose C. Espinas for petitioner.

Siguion-Reyna, Montecillo and Ongsiako for private respondents.

RESOLUTION

FELICIANO, J.:

On 10 September 1987, the Union of Filipro Employees, of which Petitioner Benito D. Chua was a member,
declared a strike against the private respondent company, Nestle Philippines, Inc. During the strike, several of the
striking employees threw stones at the trucks entering and leaving the company premises. One truck, whose driver
was rendered unconscious by a stone hitting him on the head, rammed a private vehicle and crashed into a beauty
parlor resulting in the death of three (3) persons and extensive damage to private property.

Consequently, a criminal complaint for multiple murder and frustrated murder was filed against petitioner and
several other employees who were believed to be responsible for the stoning incident which resulted in the deaths
and property damage. The criminal complaint was dismissed for insufficiency of evidence. The strike itself was,
however, declared illegal in two (2) decisions of the National Labor Relations Commission ("NLRC") which were
affirmed by the Supreme Court.1

On 17 December 1987, the union and its striking members offered to return to work and were readmitted by the
company except sixty-nine (69) union officers and thirty-three (33) union members, including petitioner.
Subsequently, the union's counsel wrote to the private respondent requesting the reinstatement of five (5)
employees, including petitioner. The request, however, was denied. On 5 February 1988, petitioner received a notice
of dismissal from private respondent for having participated in the illegal strike.

Two days later, petitioner initiated a complaint for illegal dismissal against private respondent company. On 22
September 1989, the Labor Arbiter rendered a decision finding that petitioner had been validly dismissed. It was
held that the evidence introduced by private respondent, in the form of the testimony of Mr. Maniego, Personnel
Supervisor of its Cabuyao Plant, that he positively saw and identified petitioner as one of the union members who
actively participated and manned the barricades during the strike is "a concrete manifestation of an illegal act that is
frowned upon by law." At the same time, however, the Labor Arbiter awarded petitioner "financial assistance" in the
form of backwages from the time of his dismissal (in the amount of P75,920.00) plus separation pay equivalent to
one-half (1/2) month salary for every year of service (in the amount of P13,376.00).

Wishing to be reinstated also, petitioner appealed the Labor Arbiter's decision to the NLRC which, however,
affirmed in toto the decision of the Labor Arbiter.
In the present Petition for Certiorari, petitioner argues that the NLRC committed grave abuse of discretion in
rendering its Decision dated 18 May 1992 which affirmed the decision of the Labor Arbiter dated 22 September
1989, denying him reinstatement though granting him "financial assistance."

Petitioner contends that no substantial evidence exists on record to support the findings of the NLRC. We find this
contention to be without merit. Petitioner's participation in the illegal strike and his commission of illegal acts while
the strike was in progress, i.e., he participated in the barricade which barred people from entering and/or leaving the
employer's premises, had been sufficiently established by substantial evidence, including the testimony of
Mr. Maniego, Personnel Supervisor at the Cabuyao Plant. Mr. Maniego testified, among other things, that he was
not able to report to work because of the presence of the barricade. The law prohibits any person engaged in
picketing from obstructing free ingress to or egress from the employer's premises for lawful purposes. 2

While the criminal complaint where petitioner was included as one of the accused was dismissed for insufficiency of
evidence, the Court considers that the dismissal of the criminal complaint did not preclude a finding by the
competent administrative authorities, that petitioner had indeed committed acts inimical to the interest of his
employer.

In Pepsi Cola Bottling Company of the Philippines v. Guanzon,3 we held that: "Private respondent's guilt or
innocence in the criminal case is not determinative of the existence of a just or authorized cause for his dismissal".
This doctrine follows from the principle that the quantum and weight of evidence necessary to sustain conviction in
criminal cases are quite different from the quantum of evidence necessary for affirmance of a decision of the Labor
Arbiter and of the NLRC.

Since petitioner's participation in the unlawful and violent strike was amply shown by substantial evidence, the
NLRC was correct in holding that the dismissal of petitioner was valid being based on lawful or authorized cause.

We disagree, however, with the award by the Labor Arbiter of "financial assistance" to petitioner and with the
NLRC's affirmance of that portion of the award. Under the circumstances of this case, the Court considers that such
award of "financial assistance" was obviously unjustified. This Court has several times ruled that "financial
assistance", whatever form it might assume, is permissible where the employee has been validly dismissed, only in
those instances where the cause of dismissal was something other than serious misconduct on the part of the
employee or other cause reflecting adversely
on the employee's moral character. Thus, in Cosmopolitan Funeral, Inc. v. Maalat,4 this Court clarified the instances
where "financial assistance" to an employee who had been dismissed for cause may be awarded by the Labor Arbiter
or the NLRC. The Court declared:

In Philippine Long Distance Telephone Company (PLDT) v. NLRC (164 SCRA 671 [1988]), this
Court re-examined the doctrine in the aforecited Firestone and Soco cases and other previous cases
that employees dismissed for cause are nevertheless entitled to separation pay on the ground of
social and compassionate justice. In abandoning this doctrine, the Court held, and we quote:

. . . We hold that henceforth separation pay shall be allowed as a measure of

social justice only in those instances where the employee is validly dismissed for
causes other than serious misconduct or those reflecting on his moral character.
Where the reason for the valid dismissal is, for example, habitual intoxication or
an offense involving moral turpitude, like theft or illicit sexual relations with a
fellow worker, the employer may not be required to give the dismissed
employee separation pay, or financial assistance, or whatever other name it is
called, on the ground of social justice.

A contrary rule would, as the petitioner correctly argues, have the effect of
rewarding rather than punishing the erring employee for his offense . .
. 5 (Emphasis supplied).
In the case at bar, petitioner's participation in the unlawful and violent strike, which strike resulted in multiple deaths
and extensive property damage, constituted serious misconduct on his part; accordingly, the award of "financial
assistance" was bereft of basis and would moreover render the finding by the Labor Arbiter and the NLRC of just or
authorized cause for termination of petitioner's services merely illusory.

We are aware that in the instant case, private respondent did not appeal from the decisions of the Labor Arbiter and
the NLRC. Nevertheless, because the resolution of the issue of the lawfulness of the award of "financial assistance"
to petitioner is essential if this Court is to render substantial justice as between the parties in this case, this Court
feels compelled to pass upon that issue and has ruled accordingly. 6

It is scarcely necessary to add that there is no legal impediment to the private respondent making a grant on a
voluntary and ex gratia basis, in any amount it may feel appropriate, to petitioner. What the Court is stressing here
is that, given the circumstances of this case and under prevailing jurisprudence, the Labor Arbiter and NLRC had no
authority legally to compel the private respondent to pay to petitioner the "financial assistance" which they awarded.

ACCORDINGLY, the Court Resolved to DISMISS the Petition for Certiorari for lack of merit. At the same time,
finding grave abuse of discretion on the part of the NLRC in affirming the Labor Arbiter's award of "financial
assistance" to petitioner, the Court Resolved to MODIFY the Decision of the NLRC of 18 May 1992 by deleting the
portion thereof affirming the award of "financial assistance" by the Labor Arbiter, without prejudice to private
respondent's making a grant on a purely voluntary and ex gratia basis, to petitioner. In all other respects, the NLRC
Decision is hereby AFFIRMED. Costs against petitioner.
#118 Escario vs NLRC GR 160302 sept 27, 2010
(note: this is the case for the gr no stated above. Nxt case is for escario vs nlrc)

G.R. No. 160302 September 27, 2010

JAILE OLISA, ISIDRO SANCHEZ, ANTONIO SARCIA, OSCAR CONTRERAS, ROMEO ZAMORA,
MARIANO GAGAL, ROBERTO MARTIZANO, DOMINGO SANTILLICES, ARIEL ESCARIO, HEIRS
OF FELIX LUCIANO, AND MALAYANG SAMAHAN NG MGA MANGGAGAWA SA BALANCED
FOODS, Petitioners,
vs.
DANILO ESCARIO, PANFILO AGAO, ARSENIO AMADOR, ELMER COLICO, ROMANO DELUMEN,
DOMINADOR AGUILO, OLYMPIO GOLOSINO, RICARDO LABAN, LORETO MORATA, ROBERTO
TIGUE, GILBERT VIBAR, THOMAS MANCILLA, JR., NESTOR LASTIMOSO, JIMMY MIRABALLES,
NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION), PINAKAMASARAP
CORPORATION, DR. SY LIAN TIN, AND DOMINGO TAN, Respondents.

DECISION

BERSAMIN, J.:

Conformably with the long honored principle of a fair day’s wage for a fair day’s labor, employees dismissed for
joining an illegal strike are not entitled to backwages for the period of the strike even if they are reinstated by virtue
of their being merely members of the striking union who did not commit any illegal act during the strike.

We apply this principle in resolving this appeal via a petition for review on certiorari of the decision dated August
18, 2003 of the Court of Appeals (CA),1 affirming the decision dated November 29, 2001 rendered by the National
Labor Relations Commission (NLRC) directing their reinstatement of the petitioners to their former positions
without backwages, or, in lieu of reinstatement, the payment of separation pay equivalent to one-half month per year
of service.2

Antecedents

The petitioners were among the regular employees of respondent Pinakamasarap Corporation (PINA), a corporation
engaged in manufacturing and selling food seasoning. They were members of petitioner Malayang Samahan ng mga
Manggagawa sa Balanced Foods (Union).

At 8:30 in the morning of March 13, 1993, all the officers and some 200 members of the Union walked out of
PINA’s premises and proceeded to the barangay office to show support for Juanito Cañete, an officer of the Union
charged with oral defamation by Aurora Manor, PINA’s personnel manager, and Yolanda Fabella, Manor’s
secretary.3 It appears that the proceedings in the barangay resulted in a settlement, and the officers and members of
the Union all returned to work thereafter.

As a result of the walkout, PINA preventively suspended all officers of the Union because of the March 13, 1993
incident. PINA terminated the officers of the Union after a month.

On April 14, 1993, PINA filed a complaint for unfair labor practice (ULP) and damages. The complaint was
assigned to then Labor Arbiter Raul Aquino, who ruled in his decision dated July 13, 1994 that the March 13, 1993
incident was an illegal walkout constituting ULP; and that all the Union’s officers, except Cañete, had thereby lost
their employment.4

On April 28, 1993, the Union filed a notice of strike, claiming that PINA was guilty of union busting through the
constructive dismissal of its officers.5 On May 9, 1993, the Union held a strike vote, at which a majority of 190
members of the Union voted to strike.6 The strike was held in the afternoon of June 15, 1993.7
PINA retaliated by charging the petitioners with ULP and abandonment of work, stating that they had violated
provisions on strike of the collective bargaining agreement (CBA), such as: (a) sabotage by the insertion of foreign
matter in the bottling of company products; (b) decreased production output by slowdown; (c) serious misconduct,
and willful disobedience and insubordination to the orders of the Management and its representatives; (d) disruption
of the work place by invading the premises and perpetrating commotion and disorder, and by causing fear and
apprehension; (e) abandonment of work since June 28, 1993 despite notices to return to work individually sent to
them; and (f) picketing within the company premises on June 15, 1993 that effectively barred with the use of threat
and intimidation the ingress and egress of PINA’s officials, employees, suppliers, and customers. 8

On September 30, 1994, the Third Division of the National Labor Relations Commission (NLRC) issued a
temporary restraining order (TRO), enjoining the Union’s officers and members to cease and desist from barricading
and obstructing the entrance to and exit from PINA’s premises, to refrain from committing any and all forms of
violence, and to remove all forms of obstructions such as streamers, placards, or human barricade. 9

On November 29, 1994, the NLRC granted the writ of preliminary injunction. 10

On August 18, 1998, Labor Arbiter Jose G. de Vera (LA) rendered a decision, to wit:

WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered declaring the subject
strike to be illegal.

The complainant’s prayer for decertification of the respondent union being outside of the jurisdiction of this
Arbitration Branch may not be given due course.

And finally, the claims for moral and exemplary damages for want of factual basis are dismissed.

SO ORDERED.11

On appeal, the NLRC sustained the finding that the strike was illegal, but reversed the LA’s ruling that there was
abandonment, viz:

However, we disagree with the conclusion that respondents’ union members should be considered to have
abandoned their employment.

Under Article 264 of the Labor Code, as amended, the union officers who knowingly participate in the illegal strike
may be declared to have lost their employment status. However, mere participation of a union member in the illegal
strike does not mean loss of employment status unless he participates in the commission of illegal acts during the
strike. While it is true that complainant thru individual memorandum directed the respondents to return to work (pp.
1031-1112, Records) there is no showing that respondents deliberately refused to return to work. A worker who
joins a strike does so precisely to assert or improve the terms and conditions of his work. If his purpose is to
abandon his work, he would not go to the trouble of joining a strike (BLTB v. NLRC, 212 SCRA 794).

WHEREFORE, premises considered, the Decision appealed from is hereby MODIFIED in that complainant
company is directed to reinstate respondents named in the complaint to their former positions but without
backwages. In the event that reinstatement is not feasible complainant company is directed to pay respondents
separation pay at one (1/2) half month per year of service.

SO ORDERED.12

Following the denial of their motion for reconsideration, the petitioners assailed the NLRC’s decision through a
petition for certiorari in the Court of Appeals (CA), claiming that the NLRC gravely abused its discretion in not
awarding backwages pursuant to Article 279 of the Labor Code, and in not declaring their strike as a good faith
strike.
On August 18, 2003, the CA affirmed the NLRC.13 In denying the petitioners’ claim for full backwages, the CA
applied the third paragraph of Article 264(a) instead of Article 279 of the Labor Code, explaining that the only
instance under Article 264 when a dismissed employee would be reinstated with full backwages was when he was
dismissed by reason of an illegal lockout; that Article 264 was silent on the award of backwages to employees
participating in a lawful strike; and that a reinstatement with full backwages would be granted only when the
dismissal of the petitioners was not done in accordance with Article 282 (dismissals with just causes) and Article
283 (dismissals with authorized causes) of the Labor Code.

The CA disposed thus:14

WHEREFORE, premises considered, the Petition is DISMISSED for lack of merit and the assailed 29 November
2001 Decision of respondent Commission in NLRC NRC CA No. 009701-95 is hereby AFFIRMED in toto. No
costs.

SO ORDERED.15

On October 13, 2003, the CA denied the petitioners’ motion for reconsideration. 16

Hence, this appeal via petition for review on certiorari.

Issue

The petitioners posit that they are entitled to full backwages from the date of dismissal until the date of actual
reinstatement due to their not being found to have abandoned their jobs. They insist that the CA decided the question
in a manner contrary to law and jurisprudence.

Ruling

We sustain the CA, but modify the decision on the amount of the backwages in order to accord with equity and
jurisprudence.

Third Paragraph of Article 264 (a), >Labor Code, is Applicable

The petitioners contend that they are entitled to full backwages by virtue of their reinstatement, and submit that
applicable to their situation is Article 279, not the third paragraph of Article 264(a), both of the Labor Code.

We do not agree with the petitioners.

Article 279 provides:

Article 279. Security of Tenure. – In cases of regular employment, the employer shall not terminate the services of
an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement.

By its use of the phrase unjustly dismissed, Article 279 refers to a dismissal that is unjustly done, that is, the
employer dismisses the employee without observing due process, either substantive or procedural. Substantive due
process requires the attendance of any of the just or authorized causes for terminating an employee as provided
under Article 278 (termination by employer), or Article 283 (closure of establishment and reduction of personnel),
or Article 284 (disease as ground for termination), all of the Labor Code; while procedural due process demands
compliance with the twin-notice requirement.17

In contrast, the third paragraph of Article 264(a) states:

Art. 264. Prohibited activities. – (a) xxx

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

xxx

Contemplating two causes for the dismissal of an employee, that is: (a) unlawful lockout; and (b) participation in an
illegal strike, the third paragraph of Article 264(a) authorizes the award of full backwages only when the termination
of employment is a consequence of an unlawful lockout. On the consequences of an illegal strike, the provision
distinguishes between a union officer and a union member participating in an illegal strike. A union officer who
knowingly participates in an illegal strike is deemed to have lost his employment status, but a union member who is
merely instigated or induced to participate in the illegal strike is more benignly treated. Part of the explanation for
the benign consideration for the union member is the policy of reinstating rank-and-file workers who are misled into
supporting illegal strikes, absent any finding that such workers committed illegal acts during the period of the illegal
strikes.18

The petitioners were terminated for joining a strike that was later declared to be illegal. The NLRC ordered their
reinstatement or, in lieu of reinstatement, the payment of their separation pay, because they were mere rank-and-file
workers whom the Union’s officers had misled into joining the illegal strike. They were not unjustly dismissed from
work. Based on the text and intent of the two aforequoted provisions of the Labor Code, therefore, it is plain that
Article 264(a) is the applicable one.

II

Petitioners not entitled to backwages despite their reinstatement:

A fair day’s wage for a fair day’s labor

The petitioners argue that the finding of no abandonment equated to a finding of illegal dismissal in their favor.
Hence, they were entitled to full backwages.

The petitioners’ argument cannot be sustained.

The petitioners’ participation in the illegal strike was precisely what prompted PINA to file a complaint to declare
them, as striking employees, to have lost their employment status. However, the NLRC ultimately ordered their
reinstatement after finding that they had not abandoned their work by joining the illegal strike. They were thus
entitled only to reinstatement, regardless of whether or not the strike was the consequence of the employer’s
ULP,19considering that a strike was not a renunciation of the employment relation. 20

As a general rule, backwages are granted to indemnify a dismissed employee for his loss of earnings during the
whole period that he is out of his job. Considering that an illegally dismissed employee is not deemed to have left
his employment, he is entitled to all the rights and privileges that accrue to him from the employment. 21 The grant of
backwages to him is in furtherance and effectuation of the public objectives of the Labor Code, and is in the nature
of a command to the employer to make a public reparation for his illegal dismissal of the employee in violation of
the Labor Code.22

That backwages are not granted to employees participating in an illegal strike simply accords with the reality that
they do not render work for the employer during the period of the illegal strike.23 According to G&S Transport
Corporation v. Infante:24

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

The petitioners herein do not deny their participation in the June 15, 1993 strike. As such, they did not suffer any
loss of earnings during their absence from work. Their reinstatement sans backwages is in order, to conform to the
policy of a fair day’s wage for a fair day’s labor.

Under the principle of a fair day’s wage for a fair day’s labor, the petitioners were not entitled to the wages during
the period of the strike (even if the strike might be legal), because they performed no work during the strike. Verily,
it was neither fair nor just that the dismissed employees should litigate against their employer on the latter’s
time.25Thus, the Court deleted the award of backwages and held that the striking workers were entitled only to
reinstatement in Philippine Diamond Hotel and Resort, Inc. (Manila Diamond Hotel) v. Manila Diamond Hotel
Employees Union,26 considering that the striking employees did not render work for the employer during the strike.

III

Appropriate Amount for Separation Pay

Is One Month per Year of Service

The petitioners were ordered reinstated because they were union members merely instigated or induced to
participate in the illegal strike. By joining the strike, they did not renounce their employment relation with PINA but
remained as its employees.

The absence from an order of reinstatement of an alternative relief should the employer or a supervening event not
within the control of the employee prevent reinstatement negates the very purpose of the order. The judgment
favorable to the employee is thereby reduced to a mere paper victory, for it is all too easy for the employer to simply
refuse to have the employee back. To safeguard the spirit of social justice that the Court has advocated in favor of
the working man, therefore, the right to reinstatement is to be considered renounced or waived only when the
employee unjustifiably or unreasonably refuses to return to work upon being so ordered or after the employer has
offered to reinstate him.27

However, separation pay is made an alternative relief in lieu of reinstatement in certain circumstances, like: (a) when
reinstatement can no longer be effected in view of the passage of a long period of time or because of the realities of
the situation; (b) reinstatement is inimical to the employer’s interest; (c) reinstatement is no longer feasible; (d)
reinstatement does not serve the best interests of the parties involved; (e) the employer is prejudiced by the workers’
continued employment; (f) facts that make execution unjust or inequitable have supervened; or (g) strained relations
between the employer and employee.28

Here, PINA manifested that the reinstatement of the petitioners would not be feasible because: (a) it would "inflict
disruption and oppression upon the employer"; (b) "petitioners [had] stayed away" for more than 15 years; (c) its
machines had depreciated and had been replaced with newer, better ones; and (d) it now sold goods through
independent distributors, thereby abolishing the positions related to sales and distribution. 29
Under the circumstances, the grant of separation pay in lieu of reinstatement of the petitioners was
proper.1awph!1 It is not disputable that the grant of separation pay or some other financial assistance to an employee
is based on equity, which has been defined as justice outside law, or as being ethical rather than jural and as
belonging to the sphere of morals than of law.30 This Court has granted separation pay as a measure of social justice
even when an employee has been validly dismissed, as long as the dismissal has not been due to serious misconduct
or reflective of personal integrity or morality.31

What is the appropriate amount for separation pay?

In G & S Transport,32 the Court awarded separation pay equivalent to one month salary per year of service
considering that 17 years had passed from the time when the striking employees were refused reinstatement. In
Association of Independent Unions in the Philippines v. NLRC, 33 the Court allowed separation pay equivalent to
one month salary per year of service considering that eight years had elapsed since the employees had staged their
illegal strike.

Here, we note that this case has dragged for almost 17 years from the time of the illegal strike. Bearing in mind
PINA’s manifestation that the positions that the petitioners used to hold had ceased to exist for various reasons, we
hold that separation pay equivalent to one month per year of service in lieu of reinstatement fully aligns with the
aforecited rulings of the Court on the matter.

WHEREFORE, we affirm the decision dated August 18, 2003 of the Court of Appeals, subject to the modification to
the effect that in lieu of reinstatement the petitioners are granted backwages equivalent of one month for every year
of service.SO ORDERED.
G.R. No. 124055 June 8, 2000

ROLANDO E. ESCARIO, NESTOR ANDRES, CESAR AMPER, LORETO BALDEMOR, EDUARDO

BOLONIA, ROMEO E. BOLONIA, ANICETO CADESIM, JOEL CATAPANG, NESTOR DELA CRUZ,
EDUARDO DUNGO ESCARIO REY, ELIZALDE ESTASIO, CAROLINO M. FABIAN, RENATO JANER,
EMER B. LIQUIGAN, ALEJANDRO MABAWAD, FERNANDO M. MAGTIBAY, DOMINADOR B.
MALLILLIN, NOEL B. MANILA, VIRGILIO A. MANIO, ROMEO M. MENDOZA, TIMOTEO
NOTARION, FREDERICK RAMOS, JOSEPH REYES, JESSIE SEVILLA, NOEL STO. DOMINGO,
DODJIE TAJONERA, JOSELITO TIONLOC, ARNEL UMALI, MAURLIE C. VIBAR, ROLANDO
ZALDUA, RODOLFO TUAZON, TEODORO LUGADA, MAURING MANUEL, MARCIANO VERGARA,
JR., ARMANDO IBASCO, CAYETANO IBASCO, LEONILO MEDINA, JOSELITO ODO, MELCHOR
BUELA, GOMER GOMEZ, HENRY PONCE, RAMON ORTIZ, JR., ANTONIO MIJARES, JR., MARIO
DIZER, REYNANTE PEJO, ARNALDO RAFAEL, NELSON BERUELA, AUGUSTO RAMOS, RODOLFO
VALENTIN, ANTONIO CACAM, VERNON VELASQUEZ, NORMAN VALLO, ALEJANDRO ORTIZ,
ROSANO VALLO, ANDREW ESPINOSA, EDGAR CABARDO, FIDELES REYES, EDGARDO
FRANCISCO, FERNANDO VILLARUEL, LEOPOLDO OLEGARIO, OSCAR SORIANO, GARY RELOS,
DANTE IRANZO, RONALDO BACOLOR, RONALD ESGUERA, VICTOR ALVAREZ, JOSE
MARCELO, DANTE ESTRELLADO, MELQUIADES ANGELES, GREGORIO TALABONG, ALBERT
BALAO, ALBERT CANLAS, CAMILO VELASCO, PONTINO CHRISTOPHER, WELFREDO RAMOS,
REYNALDO RODRIGUEZ, RAZ GARIZALDE, MIGUEL TUAZON, ROBERTO SANTOS, AND
RICARDO MORTEL, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, CALIFORNIA MANUFACTURING CO. INC. AND
DONNA LOUISE ADVERTISING AND MARKETING ASSOCIATES INCORPORATED, respondents.

DECISION

KAPUNAN, J.:

Before this Court is a petition for certiorari under Rule 65, which seeks to annul and set aside the decision,
promulgated on 10 May 1995, of the National Labor Relations Commission (NLRC). The assailed decision reversed
the decision of the Labor Arbiter, and ruled that the petitioners are employees of Donna Louise Advertising and
Marketing Associates, Inc. and ordered the reinstatement of petitioners and the payment of backwages.

Private respondent California Marketing Co. Inc. (CMC) is a domestic corporation principally engaged in the
manufacturing of food products and distribution of such products to wholesalers and retailers. Private respondent
Donna Louise Advertising and Marketing Associates, Inc. (D.L. Admark) is a duly registered promotional firm.

Petitioners worked as merchandisers for the products of CMC. Their services were terminated on 16 March 1992.

The parties presented conflicting versions of the facts.

Petitioners allege that they were employed by CMC as merchandisers. Among the tasks assigned to them were the
withdrawing of stocks from the warehouse, the fixing of prices, price-tagging, displaying of merchandise, and the
inventory of stocks. These were done under the control, management and supervision of CMC. The materials and
equipment necessary in the performance of their job, such as price markers, gun taggers, toys, pentel pen, streamers
and posters were provided by CMC. Their salaries were being paid by CMC. According to petitioners, the hiring,
control and supervision of the workers and the payment of salaries, were all coursed by CMC through its agent D.L.
Admark in order for CMC to avoid its liability under the law.

On 7 February 1992, petitioners filed a case against CMC before the Labor Arbiter for the regularization of their
employment status. During the pendency of the case before the Labor Arbiter, D.L. Admark sent to petitioners
notice of termination of their employment effective 16 March 1992. Hence, their complaint was amended so as to
include illegal dismissal as cause of action. Thereafter, twenty-seven more persons joined as complainants. CMC
filed a motion to implead as party-defendant D. L. Admark and at the same time the latter filed a motion to
intervene. Both motions were granted.

CMC, on the other hand, denied the existence of an employer-employee relationship between petitioner and itself.
Rather, CMC contended that it is D.L. Admark who is the employer of the petitioners. While CMC is engaged in the
manufacturing of food products and distribution of such to wholesalers and retailers, it is not allowed by law to
engage in retail or direct sales to end consumers. It, however, hired independent job contractors such as D.L.
Admark, to provide the necessary promotional activities for its product lines.

For its part, D.L. Admark asserted that it is the employer of the petitioners. Its primary purpose is to carry on the
business of advertising, promotion and publicity, the sales and merchandising of goods and services and conduct
survey and opinion polls. As an independent contractor it serves several clients among which include Purefoods,
Corona Supply, Firstbrand, Splash Cosmetics and herein private respondent California Marketing.

On 29 July 1994, the Labor Arbiter rendered a decision finding that petitioners are the employees of CMC as they
were engaged in activities that are necessary and desirable in the usual business or trade of CMC.1 In justifying its
ruling, the Labor Arbiter cited the case of Tabas vs. CMC which, likewise, involved private respondent CMC. In
the Tabas case, this Court ruled that therein petitioner merchandisers were employees of CMC, to wit:

There is no doubt that in the case at bar, Livi performs "manpower services," meaning to say, it contracts out labor
in favor of clients. We hold that it is one not withstanding its vehement claims to the contrary and not- withstanding
its vehement claims to the contrary, and notwithstanding the provision of the contract that it is "an independent
contractor." The nature of one’s business is not determined by self-serving appellations one attaches thereto but by
the tests provided by statute and prevailing case law. The bare fact that Livi maintains a separate line of business
does not extinguish the equal fact that it has provided California with workers to pursue the latter’s own business. In
this connection, we do not agree that the petitioner has been made to perform activities "which are not directly
related to the general business of manufacturing," California’s purported "principal operation activity. The
petitioners had been charged with merchandising [sic] promotion or sale of the products of [California] in the
different sales outlets in Metro Manila including task and occational [sic] price tagging," an activity that is
doubtless, an integral part of the manufacturing business. It is not, then, as if Livi had served as its (California’s)
promotions or sales arm or agent, or otherwise rendered a piece of work it (California) could not itself have done;
Livi as a placement agency, had simply supplied it with manpower necessary to carry out its (California’s)
merchandising activities, using its (California’s) premises and equipment. 2

On appeal, the NLRC set aside the decision of the Labor Arbiter. It ruled that no employer-employee relationship
existed between the petitioners and CMC. It, likewise, held that D.L. Admark is a legitimate independent contractor,
hence, the employer of the petitioners. Finding no valid grounds existed for the dismissal of the petitioners by D.L.
Admark, it ordered their reinstatement. The dispositive portion of the decision reads:

WHEREFORE, premises considered, the appealed judgment is modified. Intervenor DL ADMARK is ordered to
reinstate the eighty one (81) complainants mentioned in the appealed decision to their former positions with
backwages from March 16, 1992 until they are actually reinstated. The award of attorney’s fees equivalent to ten
(10%) of the award is deleted for lack of basis.3

4
Petitioners filed a motion for reconsideration but the same was denied by the NLRC for lack of merit.

Hence, this petition.

In the main, the issue brought to fore is whether petitioners are employees of CMC or D.L. Admark. In resolving
this, it is necessary to determine whether D.L. Admark is a labor-only contractor or an independent contractor.

Petitioners are of the position that D.L. Admark is a labor-only contractor and cites this Court’s ruling in the case
of Tabas, which they claim is applicable to the case at bar for the following reasons:
 1. The petitioners are merchandisers and the petitioners in the Tabas case are also merchandisers who have
the same nature of work.

2. The respondent in this case is California Manufacturing Co. Inc. while respondent in the Tabas case is
the same California Manufacturing Co. Inc.

3. The agency in the Tabas case is Livi Manpower Services. In this case, there are at least, three (3)
agencies namely: the same Livi Manpower Services; the Rank Manpower Services and D.L. Admark
whose participation is to give and pay the salaries of the petitioners and that the money came from the
respondent CMC as in the Tabas case.lawphi1

4. The supervision, management and/or control rest upon respondent California Manufacturing Co. Inc. as
found by the Honorable Labor Arbiter which is also, true in the Tabas Case. 5

We cannot sustain the petition.

Petitioners’ reliance on the Tabas case is misplaced. In said case, we ruled that therein contractor Livi Manpower
Services was a mere placement agency and had simply supplied herein petitioner with the manpower necessary to
carry out the company’s merchandising activity. We, however, further stated that :

It would have been different, we believe, had Livi been discretely a promotions firm, and that California had hired it
to perform the latter’s merchandising activities. For then, Livi would have been truly the employer of its employees
and California, its client. x x x.6

In other words, CMC can validly farm out its merchandising activities to a legitimate independent contractor.

There is labor-only contracting when the contractor or sub-contractor merely recruits, supplies or places workers to
perform a job, work or service for a principal. In labor-only contracting, the following elements are present:

(a) 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

(b) The workers recruited and placed by such person are performing activities which are directly related to
the principal business of the employer. 7

In contrast, there is permissible job contracting when a principal agrees to put out or farm out with a contractor or a
subcontractor the performance or completion of a specific job, work or service within a definite or predetermined
period, regardless of whether such job or work or service is to be performed or completed within or outside the
premises of the principal. In this arrangement, the following conditions must concur:

(a)....The contractor carries on a distinct and independent business and undertakes the contract work on his
account under his own responsibility according to his own manner and method, free from the control and
direction of his employer or principal in all matters connected with the performance of his work except as
to the results thereof; and

(b)....The contractor has substantial capital or investment in the form of tools, equipment, machineries (sic),
work premises, and other materials which are necessary in the conduct of his business. 8

In the recent case of Alexander Vinoya vs. NLRC et al.,9 this Court ruled that in order to be considered an
independent contractor it is not enough to show substantial capitalization or investment in the form of tools,
equipment, machinery and work premises. In addition, the following factors need be considered: (a) whether the
contractor is carrying on an independent business; (b) the nature and extent of the work; (c) the skill required; (d) the
term and duration of the relationship; (e) the right to assign the performance of specified pieces of work; (f) the
control and supervision of the workers; (g) the power of the employer with respect to the hiring, firing and payment
of workers of the contractor; (h) the control of the premises; (i) the duty to supply premises, tools, appliances,
materials, and labor; and (j) the mode, manner and terms of payment. 10

Based on the foregoing criterion, we find that D.L. Admark is a legitimate independent contractor.

Among the circumstances that tend to establish the status of D.L. Admark as a legitimate job contractor are:

1) The SEC registration certificate of D.L. Admark states that it is a firm engaged in promotional,
advertising, marketing and merchandising activities.

2) The service contract between CMC and D.L. Admark clearly provides that the agreement is for the
supply of sales promoting merchandising services rather than one of manpower placement. 11

3) D.L. Admark was actually engaged in several activities, such as advertising, publication, promotions,
marketing and merchandising. It had several merchandising contracts with companies like Purefoods,
Corona Supply, Nabisco Biscuits, and Licron. It was likewise engaged in the publication business as
evidenced by it magazine the "Phenomenon." 12

4) It had its own capital assets to carry out its promotion business. It then had current assets amounting to
P6 million and is therefore a highly capitalized venture. 13 It had an authorized capital stock of P500,000.00.
It owned several motor vehicles and other tools, materials and equipment to service its clients. It paid
rentals of ₱30,020 for the office space it occupied.

Moreover, by applying the four-fold test used in determining employer-employee relationship, the status of D.L.
Admark as the true employer of petitioners is further established. The elements of this test are (1) the selection and
engagement of employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the
employee’s conduct.14

As regards the first element, petitioners themselves admitted that they were selected and hired by D.L. Admark.15

As to the second element, the NLRC noted that D.L. Admark was able to present in evidence the payroll of
petitioners, sample SSS contribution forms filed and submitted by D.L. Admark to the SSS, and the application for
employment by R. de los Reyes, all tending to show that D.L. Admark was paying for the petitioners’ salaries. In
contrast, petitioners did not submit an iota of evidence that it was CMC who paid for their salaries. The fact that the
agreement between CMC and D.L. Admark contains the billing rate and cost breakdown of payment for core
merchandisers and coordinators does not in any way establish that it was CMC who was paying for their salaries. As
correctly pointed out by both CMC16 and the Office of the Solicitor General,17 such cost breakdown is a standard
content of service contracts designed to insure that under the contract, employees of the job contractor will receive
benefits mandated by law.

Neither did the petitioners prove the existence of the third element. Again petitioners admitted that it was D.L.
Admark who terminated their employment.18

To prove the fourth and most important element of control, petitioners presented the memoranda of CMC’s sales
and promotions manager. The Labor Arbiter found that these memos "indubitably show that the complainants were
under the supervision and control of the CMC people." 19 However, as correctly pointed out by the NLRC, a careful
scrutiny of the documents adverted to, will reveal that nothing therein would remotely suggest that CMC was
supervising and controlling the work of the petitioners:

x x x The memorandums (Exhibit "B") were addressed to the store or grocery owners telling them about the
forthcoming sales promotions of CMC products. While in one of the memorandums a statement is made that "our
merchandisers and demonstrators will be assigned to pack the premium with your stocks in the shelves x x x, yet it
does not necessarily mean to refer to the complainants, as they claim, since CMC has also regular merchandisers and
demonstrators. It would be different if in the memorandums were sent or given to the complainants and their duties
or roles in the said sales campaign are therein defined. It is also noted that in one of the memorandums it was
addressed to: "All regular merchandisers/demonstrators." x x x we are not convinced that the documents sufficiently
prove employer-employee relationship between complainants and respondents CMC. 20

The Office of the Solicitor General, likewise, notes that the documents fail to show anything that would remotely
suggest control and supervision exercised by CMC over petitioners on the matter on how they should perform their
work. The memoranda were addressed either to the store owners or "regular" merchandisers and demonstrators of
CMC. Thus, petitioners, who filed a complaint for regularization against respondent CMC, thereby, conceding that
they are not regular employees of the latter, cannot validly claim to be the ones referred to in said memos.21

Having proven the existence of an employer-employee relationship between D.L. Admark and petitioners, it is no
longer relevant to determine whether the activities performed by the latter are necessary or desirable to the usual
business or trade of CMC.

On the issue of illegal dismissal, we agree with the findings of the NLRC that D.L. Admark "admits having
dismissed the petitioners for allegedly disowning and rejecting them as their employer." Undoubtedly, the reason
given is not just cause to terminate petitioners.22 D.L. Admark’s belated claim that the petitioners were not
terminated but simply did not report to work23 is not supported by the evidence on record. Moreover, there is no
showing that due process was afforded the petitioners.

IN VIEW OF THE FOREGOING, finding no grave abuse of discretion on the part of the National Labor
Relations Commission, the assailed decision is AFFIRMED in toto.

SO ORDERED.