NESTLÉ PHILIPPINES, INC v.

NLRC
G.R. No. 91231 February 4, 1991
Doctrines: 1. The fact that the retirement plan is non-contributory, i.e., that the employees contribute
nothing to the operation of the plan, does not make it a non-issue in the CBA negotiations. As a matter
of fact, almost all of the benefits that the petitioner has granted to its employees under the CBA—salary
increases, rice allowances, midyear bonuses, 13th and 14th month pay, seniority pay, medical and
hospitalization plans, health and dental services, vacation, sick & other leaves with pay—are non-
contributory benefits. Since the retirement plan has been an integral part of the CBA since 1972, the
Union’s demand to increase the benefits due the employees under said plan, is a valid CBA issue.

2. Petitioner’s contention that employees have no vested or demandable right to a non-contributory

retirement plan has no merit; Reason.—The petitioner’s contention, that employees have no vested or
demandable right to a non-contributory retirement plan, has no merit for employees do have a vested
and demandable right over existing benefits voluntarily granted to them by their employer. The latter
may not unilaterally withdraw, eliminate or diminish such benefits.

Facts: UFE was certified as the sole and exclusive bargaining agent for all regular rank-and-file
employees at the petitioner's Cagayan de Oro factory, as well as its Cebu/Davao Sales Office. August,
1987, while the parties, were negotiating, the employees at Cabuyao resorted to a "slowdown" and
walk-outs prompting the petitioner to shut down the factory. Marathon collective bargaining
negotiations between the parties ensued. On September 2, 1987, the UFE declared a bargaining
deadlock. On September 8, 1987, the Secretary of Labor assumed jurisdiction and issued a return to
work order. In spite of that order, the union struck, without notice, at the Alabang/Cabuyao factory, the
Makati office and Cagayan de Oro factory on September 11, 1987 up to December 8, 1987.

The company retaliated by dismissing the union officers and members of the negotiating panel who
participated in the illegal strike. The NLRC affirmed the dismissals. On January 26, 1988, UFE filed a
notice of strike on the same ground of CBA deadlock and unfair labor practices. However, on March 30,
1988, the company was able to conclude a CBA with the union at the Cebu/Davao Sales Office, and on
August 5, 1988, with the Cagayan de Oro factory workers. The union assailed the validity of those
agreements and filed a case of unfair labor practice against the company on November 16, 1988.
After conciliation efforts of the National Conciliation and Mediation Board (NCMB) yielded negative
results, the dispute was certified to the NLRC by the Secretary of Labor on October 28, 1988.

The dispute was certified to the NLRC. The NLRC issued a resolution on June 5, 1989, whose pertinent
disposition regarding the union's demand for liberalization of the company's retirement plan for its
workers. the NLRC issued a resolution denying the motions for reconsideration. With regard to the
Retirement Plan, the NLRC held that anent management's objection to the modification of its
Retirement Plan, the plan is specifically mentioned in the previous bargaining agreements there by
integrating or incorporating the provisions thereof to the agreement. By reason of its incorporation, the
plan assumes a consensual character which cannot be terminated or modified at will by either party.
Consequently, it becomes part and parcel of CBA negotiations. Petitioner alleged that since its
retirement plan is non-contributory, Nestle has the sole and exclusive prerogative to define the terms of
the plan because the workers have no vested and demandable rights, the grant thereof being not a
contractual obligation but merely gratuitous. At most the company can only be directed to maintain the
same but not to change its terms. It should be left to the discretion of the company on how to improve
or modify the same.
Issue: Whether the workers have vested and demandable rights over the retirement plan.
Held: YES. The Court ruled that employees have a vested and demandable right over the retirement
plan. The inclusion of the retirement plan in the collective bargaining agreement as part of the package
of economic benefits extended by the company to its employees to provide them a measure of financial
security after they shall have ceased to be employed in the company, reward their loyalty, boost their
morale and efficiency and promote industrial peace, gives "a consensual character" to the plan so that it
may not be terminated or modified at will by either party.

The fact that the retirement plan is non-contributory, i.e., that the employees contribute nothing to the
operation of the plan, does not make it a non-issue in the CBA negotiations. As a matter of fact, almost
all of the benefits that the petitioner has granted to its employees under the CBA — salary increases,
rice allowances, mid-year bonuses, 13th and 14th month pay, seniority pay, medical and hospitalization
plans, health and dental services, vacation, sick & other leaves with pay — are non-contributory
benefits. Since the retirement plan has been an integral part of the CBA since 1972, the Union's demand
to increase the benefits due the employees under said plan, is a valid CBA issue. The deadlock between
the company and the union on this issue was resolvable by the Secretary of Labor, or the NLRC, after the
Secretary had assumed jurisdiction over the labor dispute (Art. 263, subparagraph [i] of the Labor Code).
 MACTAN WORKERS UNION v. DON RAMON ABOITIZ
G.R. No. L-30241 June 30, 1972
Doctrines: 1. Collective bargaining agreement; Effect of.—The terms and conditions of a collective
bargaining contract constitute the law between the parties. Those who are entitled to its benefits can
invoke its provisions. In the event that an obligation therein imposed is not fulfilled, the aggrieved party
has the right to go to court for redress.

2. bargaining agreement benefits extend even to non-union members.—It is a well-settled doctrine that
the benefits of a collective bargaining agreement extend to the laborers and employees in the collective
bargaining unit, including those who do not belong to the chosen bargaining labor organization.

Facts: Cebu Shipyard & Engineering Works, Inc. in Lapulapu City is employing laborers and employees
belonging to two rival labor unions. Seventy-two of these employees or laborers whose names appear in
the complaint are affiliated with the Mactan Workers Union while the rest are members of the
intervenor Associated Labor Union. On November 28, 1964, the defendant Cebu Shipyard & Engineering
Works, Inc. and the Associated Labor Union entered into a 'Collective Bargaining Agreement' ... the
pertinent part of which, Article XIII thereof, [reads thus]: '... The [Company] agrees to give a profit-
sharing bonus to its employees and laborers to be taken from ten per cent (10%) of its net profits or net
income derived from the direct operation of its shipyard and shop in Lapulapu City and after deducting
the income tax and the bonus annually given to its General Manager and the Superintendent and the
members of the Board of Directors and Secretary of the Corporation, to be payable in two (2)
installments, the first installment being payable in March and the second installment in June, each year
out of the profits in agreement. In the computation of said ten per cent (10%) to [be] distributed as a
bonus among the employees and laborers of the [Company] in proportion to their salaries or wages,
only the income derived by the [Company] from the direct operation of its shipyard and shop in
Lapulapu City, as stated herein-above-commencing from the earnings during the year 1964, shall be
included. Said profit-sharing bonus shall be paid by the [Company] to [Associated Labor Union] to be
delivered by the latter to the employees and laborers concerned and it shall be the duty of the
Associated Labor Union to furnish and deliver to the [Company] the corresponding receipts duly signed
by the laborers and employees entitled to receive the profit-sharing bonus within a period of sixty (60)
days from the date of receipt by [it] from the [Company] of the profit-sharing bonus. If a laborer or
employee of the [Company] does not want to accept the profit-sharing bonus which the said employee
or laborer is entitled under this Agreement, it shall be the duty of the [Associated Labor Union] to return
the money received by [it] as profit-sharing bonus to the [Company] within a period of sixty (60) days
from the receipt by the [Union] from the [Company] of the said profit-sharing bonus.

In 1965, Cebu Shipyard delivered the bonus to Associated Labor Union, for the months of March and
June. Members of the Mactan Workers Union failed to receive their shares in the second installment of
bonus because they did not like to go to the office of the ALU to collect their shares. In accordance with
the terms of the collective bargaining after 60 days, the uncollected shares of the plaintiff union
members were returned by the ALU to the defendant corporation.

Issue: Whether members of the rival union are also entitled to the bonus

Held: YES. The terms and conditions of a collective bargaining contract constitute the law between the
parties. Those who are entitled to its benefits can invoke its provisions. In the event that an obligation
therein imposed is not fulfilled, the aggrieved party has the right to go to court for redress. Nor does it
suffice as a defense that the claim is made on behalf of non-members of intervenor Associated Labor
Union, for it is a well-settled doctrine that the benefits of a collective bargaining agreement extend to
the laborers and employees in the collective bargaining unit, including those who do not belong to the
chosen bargaining labor organization. Any other view would be a discrimination on which the law
frowns. It is appropriate that such should be the case. As was held in United Restauror's Employees and
Labor Union v. Torres, this Court speaking through Justice Sanchez, "the right to be the exclusive
representative of all the employees in an appropriate collective bargaining unit is vested in the labor
union 'designated or selected' for such purpose 'by the majority of the employees' in the unit
concerned."9 If it were otherwise, the highly salutory purpose and objective of the collective bargaining
scheme to enable labor to secure better terms in employment condition as well as rates of pay would be
frustrated insofar as non-members are concerned, deprived as they are of participation in whatever
advantages could thereby be gained. The labor union that gets the majority vote as the exclusive
bargaining representative does not act for its members alone. It represents all the employees in such a
bargaining unit. It is not to be indulged in any attempt on its part to disregard the rights of non-
members. Yet that is what intervenor labor union was guilty of, resulting in the complaint filed on behalf
of the laborers, who were in the ranks of plaintiff Mactan Labor Union.
 SANTOS JUAT V. CIR
G.R. No. L-20764 November 29, 1965
Doctrine: Collective bargaining agreement; Closed-shop proviso; Employees bound.—The closed-shop
proviso' of a collective bargaining agreement entered into between an employer and a duly authorized
Iabor union is- applicable not only to the employees or laborers that are employed after the collective
bargaining agreement had been entered into but also to old employees who are not members of any
labor union at the time the said collective bargaining agreement was entered into. In other words, if an
employee or laborer is already a member of labor union different from the contracting labor unions said
employee or worker cannot be obliged to become a member of that union as a condition for his
continued employment, Upon the other hand, if said employee or worker is a non-member of any labor
union, he can be compelled to join the contracting labor union, and his refusal to do so would constitute
a justifiable basis for dismissal

Facts: Santos Juat before the Court of Industrial Relations against respondents Bulaklak Publications and
its Executive Officer, Acting Prosecutor Alberto Cruz of the Court of Industrial Relations filed a
complaint, docketed as Case No. 2889-ULP, charging Bulaklak Publications and/or Juan N. Evangelista of
unfair labor practice within the meaning of Section 4 (a) subsections 1, 4 and 5 of Republic Act 875,
alleging, among others, that complainant Santos Juat was an employee of the respondent company
since August 1953; that on or about July 15, 1960, and on several occasions thereafter, complainant
Santos Juat was asked by his respondent employer to join the Busocope Labor Union, but he refused to
do so; that respondent employer suspended him without justifiable cause; that two separate cases were
filed by complainant against the respondents.

On December 1, 1959, a collective bargaining agreement was entered into between the Bulaklak
Publications and the BUSOCOPE LABOR UNION, to remain in effect for 3 years, and renewable for
another term of 3 years. Section 4 of said agreement contains a closed shop proviso. On December 27,
1960, said Section 4 of said agreement was amended to read as follows:

"All employees and/or workers who on January 1, 1960 are members of the Union in good standing in
accordance with its Constitution and By-Laws and all members who become members after that date
shall, as a condition of employment, maintain their membership in the Union for the duration of this
Agreement. All employees and/or workers who on January 1, 1961 are not yet members of the Union
shall, as a condition of maintaining their employment, become members of such union."

Respondent Bulaklak Publications averred that because of the refusal of Santos Juat to become a
member of said Union, Mr. Juan N. Evangelists, the executive officer of respondent company, suspended
him for 15 days. After the expiration of the suspension of Santos Juat, Mr. Evangelista addressed a letter
to the former, ordering him to report back for duty, and in spite of said letter, Santos Juat did not report
for work, consequently, Santos Juat was dropped from the service of the company. Juat could afford not
to report for duty because he has his own business by the name of JUAT PRINTING PRESS CO., INC. The
refusal of Santos Juat to become a member of the Busocope Labor Union as well as his refusal to report
for work when ordered by his superior officer, shows the lack of respect on the part of Santos Juat
toward his superior officer. With such attitude, the continuation in the service of the company of Santos
Juat is indeed inimical to the interest of his employer.

Issue: Whether the refusal of Santos Juat from joining the BUSOCOPE LABOR UNION is a valid ground for
dismissal
Held: YES. A closed-shop agreement has been considered as one form of union security whereby only
union members can be hired and workers must remain union members as a condition of continued
employment. The requirement for employees or workers to become members of a union as a condition
for employment redounds to the benefit and advantage of said employees because by holding out to
loyal members a promise of employment in the closed-shop the union wields group solidarity. In fact, it
is said that "the closed-shop contract is the most prized achievement of unionism”

This Court had categorically held in the case of Freeman Shirt Manufacturing Co., Inc., et al. vs. Court of
Industrial Relations, et al., that the closed-shop proviso of a collective bargaining agreement entered
into between an employer and a duly authorized labor union is applicable not only to the employees or
laborers that are employed after the collective bargaining agreement had been entered into but also to
old employees who are not members of any labor union at the time the said collective bargaining
agreement was entered into. In other words, if an employee or laborer is already a member of a labor
union different from the union that entered into a collective bargaining agreement with the employer
providing for a closed-shop, said employee or worker cannot be obliged to become a member of that
union which had entered into a collective bargaining agreement with the employer as a condition for
his continued employment.

It being established by the evidence that petitioner Santos Juat, although an old employee of the
respondent Bulaklak Publications, was not a member of any labor union at the time when the collective
bargaining agreement in question was entered into he could be obliged by the respondent Bulaklak
Publications to become a member of the Busocope Labor Union. And because petitioner refused to join
the Busocope Labor Union respondent Bulaklak Publications was justified in dismissing him from the
service on the ground that he had refused to join said union.
We, therefore, hold that the respondent Court of Industrial Relations did not err, nor did it commit a
grave abuse of discretion, when it decided that the respondent Bulaklak Publications did not commit
unfair labor practice when it dismissed petitioner because of his refusal to join the Busocope labor
union.
FERRER v. NLRC

RULING :

The need of the company investigation is founded on the consistent ruling that the twin
requirements of notice and hearing which are essential elements of due process must be met in
employment-termination cases. The employee concerned must be notified of the employer’s
intent to dismiss him and of the reasons for the proposed dismissal. The hearing afford the
employee an opportunity to answer the charges against him and to defend himself therefrom
before dismissal is effected. Observance to the letter of company rules on investigation of an
employee about to be dismissed is not mandatory. It is enough that there is due notice and
hearing is conducted, the requirements of due process would have been met where a chance to
explain a party’s side of the controversy had been accorded him.

The law recognizes the right of the employer to dismiss the employee in warranted cases,
however, it frowns upon arbitrariness as when employees are not accorded due process. The
prerogatives of OFC to dismiss the petitioners should not have whimsically done for it unduly
exposed itself to a charge of unfair labor practice for dismissing the petitioners in line with the
closed shop provision of the CBA, without proper hearing. Neither can the manner of dismissal
be considered a managerial prerogative, it is not an absolute prerogative subject as it is to
limitations founded in law, the CBA, or general principles of fair play and justice.

FACTS :

Petitioners in this case were regular and permanent employees of Occidental Foundry
Corporation (OFC) in Valenzuela, Metro Manila which was under the management of Hui Kam
Chang. SAMAHAN and OFC entered into a CBA which would be effective for the three year
period between October 1, 1988 and September 30, 1991 where OFC agrees that all permanent
and regular factory workers in the company who are members in good standing of the union or
who thereafter becomes a member shall as a condition of continued employment, maintain
their membership in the union in good standing for the duration of the agreement and failure
to retain membership in good standing with the union shall be ground for the dismissal by the
company of the aforesaid employee upon written request by the union.

Petitioner Ferrer and the SAMAHAN filed with DOLE a complaint for the expulsion from
SAMAHAN several officers for inattentiveness to the economic demands of the workers but the
petition was then withdrawn. Petitioners conducted a special election of officers of the
SAMAHAN but the said election was then questioned by FFW. Nonetheless, the elected officers
dissuaded OFC from remitting union dues to the officers led by Capitle who’s an ally of FFW.
One of the officers elected manifested to the DOLE that he was no longer objecting to the
remittance of the union dues to the officers led by Capitle. Petitioners move to stage a strike
based on economic demands was also later disowned by members off SAMAHAN.

A resolution expelling petitioners from the SAMAHAN was issued by the union officials
headed by Capitle and a letter was sent to Hui Kam Chang requesting that petitioners to be
dismissed on the ground of failure to retain the membership in good standing which lead to
their dismissal from employment. They volunteered to be admitted as members of Federation
of Democratic Labor Unions (FEDLU) and requested that they be represented by the FEDLU in
the complaint against SAMAHAN, the FWW and the company for illegal dismissal,
reinstatement, and other benefits in accordance with law.

LA dismissed the complaint as the OFC was merely complying with the CBA - the law
between the company and the union. NLRC affirmed LA’s decision.
MSMG-UWP v. RAMOS

RULING :

Union Security Clauses embodied in the CBA may be validly enforced and that dismissals
pursuant thereto may likewise be validly enforced and that dismissals pursuant thereto may be
valid, this does not erode the fundamental requirement of due process. The reason behind the
enforcement of union security clauses which is the sanctity and inviolability of contracts cannot
override ones right to due process.

While the company, under maintenance of membership provision of the CBA, is bound to
dismiss employees expelled by the union for disloyalty upon its written request, this
undertaking should not be done hastily and summarily. The company acts in bad faith in
dismissing a worker without giving him the benefit of a hearing.

The power to dismiss is a normal prerogative of an employer. However, this is not without
limitation. The employer is bound to exercise caution in terminating the services of his
employees especially so when it is made upon the request of a labor union pursuant to the
CBA. Dismissals must not be arbitrary and capricious. Due process must be observed in
dismissing an employee because it affects not only his position but also the means of livelihood.
Employer should respect and protect the rights of their employees, which includes the right to
labor.

Respondent company dismissed the employees without conducting independent

investigation. It did not inquire into the cause of the expulsion and whether or not the
federation had sufficient grounds to effect the same.

FACTS :

Petitioner is an affiliate of the private respondent, ULGWP. The CBA between MSMG and
M. Greenfield, Inc., include the dismissal by the company by recommendation of the union of
employees who fails to maintain his membership in the union for non-payment of union dues,
resignation and for violation of union’s constitution and by-laws, also failure of new employees
to maintain membership in the union.

Petitioner held an election under the auspices of ULGWP wherein the petitioner Villanueva
and other union officers were proclaimed as winners. The minutes were filed with the Bureau
of Labor Relations. A petition for impeachment was filed with the national federation ULGWP
by the defeated candidates in the election. An audit was made by ULGWP on the MSMG’s
funds. The audit did not yield any unfavorable result and the officers were cleared of the
charges of anomaly in the custody, handling and disposition of the union funds.

14 defeated candidates filed a petition for impeachment/expulsion of the officers with the
DOLE, however, it was dismissed for failure to substantiate the charges and to present evidence
in support of the allegations. MSMG general membership meeting was held and several
members failed to attend prompting the Executive Board to create a committee tasked to
investigate the non-attendance of several union members in the said assembly pursuant to the
union’s constitution and by-laws. A letter was sent to the respondent company requesting
deduction of fines from wages/salaries of those members who failed to attend the general
membership meeting. The company denied the request and referred the matter to be settled in
the proper government office for the resolution in order to avoid placing the company in the
middle of the issue.

The imposition of fine became the subject of disagreement between the ULGWP and
MSMG culminating in the MSMG’s declaration of general autonomy from ULGWP though a
resolution by the executive board and ratified by the general membership. In retaliation,
ULGWP asked the respondent company to stop the remittance of the MSMG share in the
education funds. This was objected by MSMG which demanded that the education fund be
remitted in full. The company was constrained to file a complaint for interpleader with the
Med-Arbitration of DOLE who then ordered that ULGWP through MSMG’s officers to
administer the CBA; the company to remit the education program fund to ULGWP; and
collection of the penalty for non-attendance in the general membership meeting.

A petition for audit and examination of ULGWP and the education program funds which
was granted by the Med-Arbiter. The ULGWP advised the company to expel 30 union officers
and demanded their separation from employment pursuant to the Union Security Clause in
their CBA. The letter was sent twice to the company. A notice of strike to compel the company
to expel the union officers was made with the National Conciliation and Mediation Board. The
company was compelled and dismissed the employees. DOLE dismissed the petition.
METROBANK UNION v. NLRC

RULING :

Wage distortion means a situation where an increase in prescribed wage rates results in
the elimination or severe contradiction of intentional quantitative differences in wage or salary
rates between and among employee groups in an establishment as to effectively obliterate the
distinctions embodied in such wage structure based on skills , length of service, or other logical
bases of differentiation.

In mandating an adjustment, the law did not require that there be an elimination or total
abrogation of quantitative wage or salary differences; a severe contraction thereof is enough.
Contraction between personnel groupings comes close to 83%, which cannot, by any stretch of
imagination, be considered less than severe.

The intentional quantitative differences in wage among employees of the bank has been
set by the CBA to about P900 per month. It is intentional as it has been arrived at through the
CB process to which the parties are thereby concluded.

In keeping then with the intendment of the law and the agreement of the parties
themselves, along with the often repeated rule that all doubts in the interpretation and
implementation of labor law should be resolved in favor of labor, approximate an acceptable
quantitative difference between and among the CBA agreed work levels. Giving the employees
an across-the-board increase of P750 may not be conductive to the policy of encouraging
employers to grant wage and allowance increases to their employees higher than the minimum
rates or increases prescribed in the statute or administrative regulation.

To compel employer simply to add on legislated increases in salaries or allowances without

regard to what is already being paid, would be to penalize employers who grant their workers
more than the statutorily prescribed minimum rates of increases. Clearly, this would be
counter-productive so far as securing the interest of labor is concerned.

FACTS :
 The bank entered into a CBA with MBTCEU, granting a monthly P900 wage increase in
1989, P600 in 1990, P200 in 1991. The union also bargained for the inclusion of probationary
employees in the list of employees who would benefit from the first P900 increase but the bank
adamantly refused. Consequently, only regular employees were given he increase to the
exclusion of probationary employees.

RA. 6727 took effect increasing the wage of employees in the private sector, whether
agricultural or non-agricultural by P25 per day. Pursuant to the said provision, the bank gave
P25 increase per day or P750 a month to its probationary employees who had been promoted
to regular or permanent status before the passage of the law but whose daily rate was P100
and below. The bank refused to give the same increase to its regular employees who were
receiving more than P100 per day and the recipients of the P900 CBA increase.

The union sought from the bank the correction of the alleged distortion in pay. In order to
avert an impending strike, the bank petitioned the Secretary of Labor to assume jurisdiction
over the case to certify the same to the NLRC under Art. 263 (g) of the Labor Code. The parties
agreed to refer the issue for compulsory arbitration to the NLRC.

LA disregarded the bank’s contention that the increase in its implementation of the RA. Did
not constitute a distortion because only 143 employees or 6.8% of the bank’s population of a
total of 2,108 regular employees benefited. LA stresses that it is not necessary that a big
number of wage earners within a company be benefited by the mandatory increase of wage
before a wage distortion may be considered to have taken place. Such increase in the severe
contraction of an intentional quantitative difference in wage between the employee groups.
NLRC reversed the LA’s decision.

82. E. RAZON, INC. [formerly known as Metro Services, Inc.], Petitioner,

vs. THE HONORABLE SECRETARY OF LABOR AND EMPLOYMENT (DOLE)
and MARINA PORT SERVICES, INC. (MARINA), Respondents.

DOCTRINE:

A successor-employer does not need to assume the responsibilities and

obligations then accruing before the date of the succession. Mere absorbing of
employees and honoring the terms and conditions in the collective bargaining
agreement between the former employer and its employees, does not equate to
an assumption of the responsibility of paying separation pay to the employees.
Employees' benefits, should be applied prospectively with respect to the
successor employer. There is no law that requires the purchaser to absorb the
employees of the selling corporation. As such, when MARINA rehired the
ERI/MPSI employees, it had all the right to consider them as new ones.

FACTS:

E. Razon, Inc. (ERI) operates arrastre services in Manila which executed a

management contract covering all the piers in South Harbor, Manila for a term
of 5 years renewable for another 5 years. ERI became Metro Port (MPSI) and
the PPA then executed a new contract with ERI/MPSI for a term of (8) years. 2
years before the expiration of the eight-year term, the PPA cancelled the
management contract for alleged violations, took over the cargo-handling
operations as well as all the equipment of MPSI, and issued Permit for cargo-
handling services to Marina Port Services, Inc. (MARINA). The permit, provided
that “Labor and personnel of previous operator, except those positions of trust
and confidence, shall be absorbed by grantee. Labor or employees benefits
provided for under existing CBA shall likewise be honored.”

MARINA began the services. The bulk of the 2,700 employees concerned
discovered that they had been hired by MARINA as new employees, prompting
them for the payment of their separation pay but both the MARINA and
ERI/MPSI refused to be liable. A P2, 000,000.00 was deducted for rentals for
MPSI equipment for the payment thereof. Still dissatisfied, a notice of strike
was effected and this move prompted the PPA, MARINA, ERI, and
representatives of the AWU, Associated Port Checkers Workers Union (ASTEU),
and Marina Management Employees (MARINE ME) to enter into an agreement
regarding the separation pay. Still, the workers went on strike as the appraisal
of the pieces of equipment and machinery of MPSI had not been
completed.

SOLE then took jurisdiction over the matter, and the separation pay of the
workers was later taken. SOLE then determined that MARINA did not
undertake to be liable for the separation pay of the workers, as it still was not
bound thereto pursuant to paragraph 7 of the permit.

ERI/MPSI then raised the instant petition against the SOLE order, as MARINA
became the successor-employer of the workers.

ISSUE

Whether MARINA should pay such benefit to the employees concerned.

RULING

NO. Under Article 283 of the Labor Code, separation pay is required where the
termination of employment relationship is occasioned by the "cessation of
operations" of an establishment. The burden of paying separation pay on
ERI/MPSI, the employer for whom services had been rendered by the
employees who were separated from employment in view of the cessation of its
business operations by the cancellation of its management contract with the
PPA.

The circumstances of this case do not warrant the conclusion that, by

"absorbing" the ERI/MPSI employees, MARINA took the place of the ERI/MPSI
as an employer as if there had been no interruption in the employer-employee
relationship between ERI/MPSI and its employees and, therefore, MARINA
should assume all responsibilities of ERI/MPSI. For, while in Marina Port
Services, Inc. vs. NLRC, the Court opined that by virtue of Paragraph 7, security
guards of the MPSI did become employees of MARINA, the undeniable fact is
that, by the termination of its management contract with the PPA, ERI/MPSI
ceased to be an employer. Admittedly, the consequent separation from the
employment of its employees was not of the ERI/MPSI's own making. However,
it may not validly lay such consequence on the lap of MARINA which, like itself,
had no hand in the termination of the management contract by the PPA. The
fact that a couple of days later, the PPA, without public bidding, issued to
MARINA, permit to operate, does not imply that MARINA stepped into the shoes
of ERI/MPSI as if there were absolute identity between them. Parenthetically,
the issue of the legality of the cancellation of MPSI's permit to operate was laid
to rest in E. Razon, Inc. vs. Philippine Ports Authority.

MARINA might have been impelled not only by compassion for the employees
but also by their tested skills in hiring them back upon their separation from
the employment of ERI/MPSI. It should be recalled, however, there is no law
that requires the purchaser to absorb the employees of the selling corporation.
As such, when MARINA rehired the ERI/MPSI employees, it had all the right to
consider them as new ones. On the other hand, ERI/MPSI, to whom years of
service had been rendered by its suddenly jobless employees, had the
corresponding obligation to grant them what is theirs under the law and the
collective bargaining agreement. After all, a collective bargaining agreement is
the law between the parties and compliance therewith is mandated by the
express policy of the law.
The situation in this case is completely different from that obtaining in Filipinas
Port Services, Inc. vs. NLRC, where the petitioner was obligated "not only to
absorb the workers of the dissolved companies but also to include the length of
service earned by the absorbed employees with their former employers as well"
because said case involved a merger of different companies into a single
company as a result of the PPA's integration of stevedoring/arrastre services.
On the other hand, in the case at bar, there is no privity of contract between
ERI/MPSI and MARINA so as to make the latter a common or even substitute
employer that it should be burdened with the obligations of the former.

83. BENGUET CONSOLIDATED, INC., plaintiff-appellant, vs. BCI

EMPLOYEES and WORKERS UNION-PAFLU, PHILIPPINE ASSOCIATION OF
FREE LABOR UNIONS, CIPRIANO CID and JUANITO GARCIA, defendants-
appellees.

DOCTRINE

The Doctrine of Substitution, as formulated by the NLRB (initial compromise

solution to the problem facing it when there occurs a shift in employees' union
allegiance after the execution of a bargaining contract with their employer),
merely states that even during the effectivity of a collective bargaining
agreement executed between employer and employees thru their agent, the
employees can change said agent but the contract continues to bind them up to
its expiration date. They may bargain however for the shortening of said
expiration date.

In formulating the "substitutionary" doctrine, the only consideration involved

was the employees' interest in the existing bargaining agreement. The agent's
interest never entered the picture. In fact, the justification 9 for said doctrine
was:

that the majority of the employees, as an entity under the statute, is the true
party in interest to the contract, holding rights through the agency of the union
representative. Thus, any exclusive interest claimed by the agent is defeasible at
the will of the principal.
Stated otherwise, the "substitutionary" doctrine only provides that the
employees cannot revoke the validly executed collective bargaining contract
with their employer by the simple expedient of changing their bargaining agent.
And it is in the light of this that the phrase "said new agent would have to
respect said contract" must be understood. It only means that the employees,
thru their new bargaining agent, cannot renege on their collective bargaining
contract, except of course to negotiate with management for the shortening
thereof.

FACTS

BBWU entered into a CBA with BENGUET, effective for a period of 4-½ years,
containing a No-Strike, No-Lockout clause. About three years later, a
certification election was conducted by the DOLE among all the rank and file
employees of BENGUET in the same collective bargaining units. BCI Employees
& Workers Union (UNION) obtained more than 50% of the total number of
votes, and was certified as the sole and exclusive collective bargaining agent of
all BENGUET employees as regards rates of pay, wages, hours of work and
such other terms and conditions of employment allowed them by law or
contract. Subsequently, separate meetings were conducted at Antamok,
Balatoc and Acupan Mines respectively by UNION directing its president to file
a notice of strike against BENGUET for: Refusal to grant any amount as
monthly living allowance for the workers; Violation of Agreements reached in
conciliation meetings among which is the taking down of investigation UNION
members went on strike (violent, unruly, nearly overturned a car, but was
prevented by PC soldiers). The parties agreed to end the raging dispute and a
collective bargaining contract was finally executed between UNION-PAFLU and
BENGUET.

BENGUET as a result of the strike incurred expenses for the rehabilitation of

mine openings, repair of mechanical equipment, amounting to P1, 911,363.83.
BENGUET sued UNION, PAFLU and their respective Presidents to recover said
amount in the CFI Manila, on the sole premise that said defendants
breached their undertaking in the existing CONTRACT not to strike
during the effectivity thereof.

CFI MANILA: dismissed the complaint grounded on that the CONTRACT did
not bind defendants. BENGUET interposed the present appeal.

ISSUE
 WON the CBA executed between BENGUET and BBWU automatically
bind UNION-PAFLU upon its certification as sole bargaining representative of
all BENGUET employees?

RULING

NO. BENGUET wrongly invoked the so-called "Doctrine of Substitution” as the

pronouncement was obiter dictum. The only issue in the General Maritime
Stevedores' Union case was whether a collective bargaining agreement which
had practically run for 5 years constituted a bar to certification proceedings.
We held it did not and accordingly directed the court a quo to order
certification elections. The "substitutionary" doctrine, therefore, cannot be
invoked to support the contention that a newly certified collective
bargaining agent automatically assumes all the personal undertakings —
like the no-strike stipulation here — in the collective bargaining agreement
made by the deposed union. When BBWU bound itself and its officers not to
strike, it could not have validly bound also all the other rival unions
existing in the bargaining units in question. BBWU was the agent of the
employees, not of the other unions which possess distinct personalities. To
consider UNION contractually bound to the no-strike stipulation would
therefore violate the legal maxim that res inter alios nec prodest nec
nocet. 10

Of course, UNION, as the newly certified bargaining agent, could always

voluntarily assume all the personal undertakings made by the displaced
agent. But as the lower court found, there was no showing at all that, prior to
the strike, 11 UNION formally adopted the existing CONTRACT as its own
and assumed all the liability ties imposed by the same upon BBWU. There
is also no estoppel. UNION did not assert the above statement against
BENGUET to force it to rely upon the same to effect the union check-off
in its favor. There is nothing then, in law as well as in fact, to support plaintiff
BENGUET's contention that defendants are contractually bound by the
CONTRACT. There is no question, defendants were not signatories nor
participants in the CONTRACT.
83. SANYO PHILIPPINES WORKERS UNION-PSSLU LOCAL CHAPTER NO.
109 AND/OR ANTONIO DIAZ, PSSLU NATIONAL
PRESIDENT, petitioners, vs.HON. POTENCIANO S. CANIZARES, in his
capacity as Labor Arbiter, BERNARDO YAP, RENATO BAYBON, SALVADOR
SOLIBEL, ALLAN MISTERIO, EDGARDO TANGKAY, LEONARDO DIONISIO,
ARNEL SALVO, REYNALDO RICOHERMOSO, BENITO VALENCIA,
GERARDO LASALA AND ALEXANDER ATANASIO, respondents.

DOCTRINE

The reference to a Grievance Machinery and Voluntary Arbitrators for the

adjustment or resolution of grievances arising from the interpretation or
implementation of their CBA and those arising from the interpretation or
enforcement of company personnel policies is mandatory. The law grants to
voluntary arbitrators the 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 (Art. 261, Labor Code). The
failure of the parties to the CBA to establish the grievance machinery and its
unavailability is not an excuse for the Labor Arbiter to assume jurisdiction over
disputes arising from the implementation and enforcement of a provision in the
CBA. In the existing CBA between PSSLU and Sanyo, the procedure and
mechanics of its establishment had been clearly laid out. All that needs to be
done to set the machinery into motion is to call for the convening thereof. If the
parties to the CBA had not designated their representatives yet, they should be
ordered to do so.

The procedure introduced in RA 6715 of referring certain grievances originally

and exclusively to the grievance machinery and when not settled at this level,
to a panel of voluntary arbitrators outlined in CBA's does not only include
grievances arising from the interpretation or implementation of the CBA but
applies as well to those arising from the implementation of company personnel
policies. No other body shall take cognizance of these cases. The last paragraph
of Article 261 enjoins other bodies from assuming jurisdiction.
FACTS

PSSLU had an existing CBA with Sanyo Philippines containing a union security
clause. In a letter, PSSLU informed the management of Sanyo that the some
employees were notified that their membership with PSSLU were cancelled for
anti-union, activities, economic sabotage, threats, coercion and intimidation,
disloyalty and for joining another union. The same letter informed Sanyo that
the same employees refused to submit themselves to the union's grievance
investigation committee. It appears that many of these employees were not
members of PSSLU but of another union, KAMAO. Officers of KAMAO, executed
a pledged of cooperation with PSSLU promising cooperation with the latter
union and among others, respecting, accepting and honoring the CBA between
Sanyo, but still engaged in anti-union activities and willfully violated the pledge
of cooperation with PSSLU as they were still threatening with bodily harm and
even death the officers of the union. This prompted a recommendation from
PSSLU for the dismissal of the employees concerned. The company sent a
memorandum to the same workers and placing them under preventive
suspension. The company received no information on whether or not said
employees appealed to PSSLU, thus it considered them dismissed.

The dismissed employees filed a complaint with the NLRC for illegal dismissal.

PSSLU filed a motion to dismiss the complaint alleging that the Labor Arbiter
was without jurisdiction over the case, since cases arising from the
interpretation or implementation of the collective bargaining agreements shall
be disposed of by the labor arbiter by referring the same to the grievance
machinery and voluntary arbitration.

Labor Arbiter: assumed jurisdiction over the complaint of private respondents

ISSUE

WON the termination cases fall under the jurisdiction of the Labor Arbiter.

RULING

YES. It is clear that termination cases fall under the jurisdiction of the Labor
Arbiter. It was provided in the CBA executed between PSSLU and Sanyo that a
member's voluntary resignation from membership, willful refusal to pay union
dues and his/her forming, organizing, joining, supporting, affiliating or aiding
directly or indirectly another labor union shall be a cause for it to demand
his/her dismissal from the company. The demand for the dismissal and the
actual dismissal by the company on any of these grounds is an enforcement of
the union security clause in the CBA. This act is authorized by law provided
that enforcement should not be characterized by arbitrariness and always with
due process.

In the instant case, however, We hold that the Labor Arbiter and not the
Grievance Machinery provided for in the CBA has the jurisdiction to hear and
decide the complaints of the private respondents. While it appears that the
dismissal of the private respondents was made upon the recommendation of
PSSLU pursuant to the union security clause provided in the CBA, We are of
the opinion that these facts do not come within the phrase "grievances arising
from the interpretation or implementation of (their) Collective Bargaining
Agreement and those arising from the interpretation or enforcement of
company personnel policies," the jurisdiction of which pertains to the
Grievance Machinery or thereafter, to a voluntary arbitrator or panel of
voluntary arbitrators.

In the instant case, both the union and the company are united or have come
to an agreement regarding the dismissal of private respondents. No grievance
between them exists which could be brought to a grievance machinery. The
problem or dispute in the present case is between the union and the company
on the one hand and some union and non-union members who were
dismissed, on the other hand. The dispute has to be settled before an impartial
body. The grievance machinery with members designated by the union and the
company cannot be expected to be impartial against the dismissed employees.
Due process demands that the dismissed workers grievances be ventilated
before an impartial body. Since there has already been an actual termination,
the matter falls within the jurisdiction of the Labor Arbiter.

85. CELESTINO VIVIERO, petitioner, vs. COURT OF APPEALS,

HAMMONIA MARINE SERVICES, and HANSEATIC SHIPPING CO., LTD.
respondents.

DOCTRINE:
A dismissal of an employee MAY constitute a "grievance between the parties,"
as defined under the provisions of the CBA, and consequently, within the
exclusive original jurisdiction of the Voluntary Arbitrators. However, it is not
sufficient to merely say that parties to the CBA agree on the principle that "all
disputes" should first be submitted to a Voluntary Arbitrator. There is a need
for an express stipulation in the CBA that illegal termination disputes should
be resolved by a Voluntary Arbitrator or Panel of Voluntary Arbitrators, since
the same fall within a special class of disputes that are generally within the
exclusive original jurisdiction of Labor Arbiters by express provision of law.

Absent such express stipulation, the phrase "all disputes" should be construed
as limited to the areas of conflict traditionally within the jurisdiction of
Voluntary Arbitrators, i.e., disputes relating to contract-interpretation,
contract-implementation, or interpretation or enforcement of company
personnel policies. Illegal termination disputes - not falling within any of these
categories - should then be considered as a special area of interest governed by
a specific provision of law.

FACTS

Petitioner Vivero, a licensed seaman, is a member of the Associated Marine

Officers and Seamen's Union of the Philippines (AMOSUP) with an existing
Collective Bargaining Agreement with private respondents. He was hired by
respondent as Chief Officer of the vessel "M.V. Sunny Prince, but on grounds of
very poor performance and conduct, refusal to perform his job; refusal to report
to the Captain or the vessel’s Engineers or cooperate with other ship officers
about the problem in cleaning the cargo holds; of the shipping pump and his
dismal relations with the Captain of the vessel, complainant was repatriated.

Complainant filed a complaint for illegal dismissal at AMOSUP of which

complainant was a member. Grievance proceedings were conducted; however,
parties failed to reach and settle the dispute amicably, thus, complainant filed
a complaint with the POEA. Private respondents filed a Motion to Dismiss on
the ground that the POEA had no jurisdiction over the case considering
petitioner Vivero's failure to refer it to a Voluntary Arbitration Committee in
accordance with the CBA between the parties.

Labor Arbiter: dismissed the Complaint for want of jurisdiction grounded on

the fact that since the CBA of the parties provided for the referral to a
Voluntary Arbitration Committee should the Grievance Committee fail to settle
the dispute, and considering the mandate of Art. 261 of the Labor Code on the
original and exclusive jurisdiction of Voluntary Arbitrators, the Labor Arbiter
clearly had no jurisdiction over the case.

NLRC: set aside the decision of the Labor Arbiter on the ground that the record
was clear that petitioner had exhausted his remedy by submitting his case to
the Grievance Committee of AMOSUP; and that the contested portion in the
CBA providing for the intercession of a Voluntary Arbitrator was not binding
upon petitioner since both petitioner and private respondents had to agree
voluntarily to submit the case before a Voluntary Arbitrator or Panel of
Voluntary Arbitrators.

CA: ruled in favor of private respondents, and held that the CBA "is the law
between the parties and compliance therewith is mandated by the express
policy of the law."

ISSUE:

WON the dismissal of a VIVERO constitute a "grievance between the parties,"

as defined under the provisions of the CBA, and consequently, within the
exclusive original jurisdiction of the Voluntary Arbitrators, thereby rendering
the NLRC without jurisdiction to decide the case?

RULING

No. In this case, however, while the parties did agree to make termination
disputes the proper subject of voluntary arbitration, such submission remains
discretionary upon the parties. A perusal of the CBA provisions shows that Sec.
6, Art. XII (Grievance Procedure) of the CBA is the general agreement of the
parties to refer grievances, disputes or misunderstandings to a grievance
committee, and henceforth, to a voluntary arbitration committee. The
requirement of specificity is fulfilled by Art. XVII (Job Security).

The use of the word "may" shows the intention of the parties to reserve the
right to submit the illegal termination dispute to the jurisdiction of the Labor
Arbiter, rather than to a Voluntary Arbitrator. Petitioner validly exercised his
option to submit his case to a Labor Arbiter when he filed his Complaint before
the proper government agency. The use of the word "may" shows the intention
of the parties to reserve the right of recourse to Labor Arbiters. The CBA
clarifies the proper procedure to be followed in situations where the parties
expressly stipulate to submit termination disputes to the jurisdiction of a
Voluntary Arbitrator or Panel of Voluntary Arbitrators.
After the grievance proceedings have failed to bring about a resolution,
AMOSUP, as agent of petitioner, should have informed him of his option to
settle the case through voluntary arbitration. Private respondents, on their
part, should have also timely invoked the provision of their CBA requiring the
referral of their unresolved disputes to a Voluntary Arbitrator once it became
apparent that the grievance machinery failed to resolve it prior to the filing of
the case before the proper tribunal. The private respondents should not have
waited for (9) months from the filing of their Position Paper with the POEA
before it moved to dismiss the case purportedly for lack of jurisdiction. As it is,
private respondents are deemed to have waived their right to question the
procedure followed by petitioner, assuming that they have the right to do so.
Under their CBA, both Union and respondent companies are responsible for
selecting an impartial arbitrator or for convening an arbitration committee; yet,
it is apparent that neither made a move towards this end. Consequently,
petitioner should not be deprived of his legitimate recourse because of the
refusal of both Union and respondent companies to follow the grievance
procedure.

86. LUDO & LUYM CORPORATION V SAORNIDO

G. R. No. 140960 - January 20, 2003

Doctrine:
1. Basic is the rule that findings of fact of administrative and quasi-judicial bodies, which have
acquired expertise because their jurisdiction is confined to specific matters, are generally
accorded not only great respect but even finality.

2. Compulsory arbitration has been defined both as "the process of settlement of labor disputes
by a government agency which has the authority to investigate and to make an award which is
binding on all the parties, and as a mode of arbitration where the parties are compelled to
accept the resolution of their dispute through arbitration by a third party.

Facts:
Petitioner LUDO & LUYM CORPORATION is a domestic corporation engaged in the manufacture
of coconut oil, corn starch, glucose and related products.

In the course of its business operations, LUDO engaged the arrastre services of Cresencio Lu
Arrastre Services for the loading and unloading of its finished products at the wharf.
Accordingly, several arrastre workers were deployed by CLAS to perform the services needed by
LUDO.

These arrastre workers were subsequently hired, on different dates, as regular rank-and-file
employees of LUDO every time the latter needed additional manpower services. Said employees
thereafter joined respondent union, the LUDO Employees Union (LEU), which acted as the
exclusive bargaining agent of the rank-and-file employees.

On April 13, 1992, respondent union entered into a collective bargaining agreement with LUDO
which provides certain benefits to the employees, the amount of which vary according to the
length of service rendered by the availing employee.

Thereafter, the union requested LUDO to include in its members period of service the time
during which they rendered arrastre services to LUDO through the CLAS so that they could get
higher benefits. LUDO failed to act on the request. Thus, the matter was submitted for
voluntary arbitration.

The parties accordingly executed a submission agreement raising the sole issue of the date of
regularization of the workers for resolution by the Voluntary Arbitrator.

In its decision dated April 18, 1997, the Voluntary Arbitrator ruled that: (1) the respondent
employees were engaged in activities necessary and desirable to the business of petitioner, and
(2) CLAS is a labor-only contractor of petitioner.

Issue:1. Whether or not benefits for the years 1977 to 1987 are already barred by prescription
when private respondents filed their case in january 1995; and

2. Whether or not a voluntary arbitrator can award benefits not claimed in the submission
agreement

Ruling:
1. We hold that this contention is without merit. So is petitioners stance that the benefits
claimed by the respondents, i.e., sick leave, vacation leave and 13th-month pay, had already
prescribed, considering the three-year period for the institution of monetary claims.15 Such
determination is a question of fact which must be ascertained based on the evidence, both oral
and documentary, presented by the parties before the Voluntary Arbitrator. In this case, the
Voluntary Arbitrator found that prescription has not as yet set in to bar the respondents claims
for the monetary benefits awarded to them. Basic is the rule that findings of fact of
administrative and quasi-judicial bodies, which have acquired expertise because their
jurisdiction is confined to specific matters, are generally accorded not only great respect but
even finality. Here, the Voluntary Arbitrator received the evidence of the parties first-hand. No
compelling reason has been shown for us to diverge from the findings of the Voluntary
Arbitrator, especially since the appellate court affirmed his findings, that it took some time for
respondent employees to ventilate their claims because of the repeated assurances made by
the petitioner that it would review the company records and determine therefrom the validity of
the claims, without expressing a categorical denial of their claims.

2. We held in San Jose vs. NLRC, that the jurisdiction of the Labor Arbiter and the Voluntary
Arbitrator or Panel of Voluntary Arbitrators over the cases enumerated in the Labor Code,
Articles 217, 261 and 262, can possibly include money claims in one form or
another. Comparatively, in Reformist Union of R.B. Liner, Inc. vs. NLRC, compulsory arbitration
has been defined both as "the process of settlement of labor disputes by a government
agency which has the authority to investigate and to make an award which is binding on all the
parties, and as a mode of arbitration where the parties are compelled to accept the resolution
of their dispute through arbitration by a third party (emphasis supplied)." While a voluntary
arbitrator is not part of the governmental unit or labor departments personnel, said arbitrator
renders arbitration services provided for under labor laws.

Generally, the arbitrator is expected to decide only those questions expressly delineated by the
submission agreement. Nevertheless, the arbitrator can assume that he has the necessary
power to make a final settlement since arbitration is the final resort for the adjudication of
disputes.
87. SIME DARBY PILIPINAS, INC. v MAGSALIN
G.R. No. 90426. December 15, 1989

Doctrine:
1. It must be borne in mind that the writ of certiorari is an extraordinary remedy and
that certiorari jurisdiction is not to be equated with appellate jurisdiction. In a special civil action
of certiorari, the Court will not engage in a review of the facts found nor even of the law as
interpreted or applied by the Arbitrator unless the supposed errors of fact or of law are so
patent and gross and prejudicial as to amount to a grave abuse of discretion or an excs de
pouvoir on the part of the Arbitrator.

Facts:
On 13 June 1989, petitioner Sime Darby and private respondent SDEA executed a CBA
providing, among others, that:

"Article X, Section 1. A performance bonus shall be granted, the amount of which [is] to be
determined by the Company depending on the return of [sic] capital investment as reflected in
the annual financial statement."

On 31 July 1989, the Sime Darby Salaried Employees Association-ALU (SDSEA-ALU) wrote
petitioner demanding the implementation of a provision identical to the above contained in their
own CBA with petitioner. Subsequently, petitioner called both respondent SDEA and SDEA-ALU
to a meeting wherein the former explained that it was unable to grant the performance bonus
corresponding to the fiscal year 1988-1989 on the ground that the workers’ performance during
said period did not justify the award of such bonus.

On 27 July 1989, private respondent SDEA filed with the National Conciliation and Mediation
Board (NCMB) an urgent request for preventive conciliation between private respondent and
petitioner.

On 1 August 1989, the parties were called to a conciliation meeting and in such meeting, both
parties agreed to submit their dispute to voluntary arbitration. Their agreement to arbitrate
stated, among other things, that they were "submitting the issue of performance bonus to
voluntary arbitration" and that "the decision/award of the voluntary arbitrator shall be respected
and implemented by the parties as final and executory, in accordance with the law."

On 14 August 1989, petitioner filed its position paper which aimed to show that the
performance of the members of respondent union during the year was below the production
goals or targets set by Sime Darby for 1988-1989 and below previous years’ levels for which
reason the performance bonus could not be granted. Petitioner there referred to the following
performance indicators: a) number of tires produced; b) degree of wastage of production
materials; and c) number of pounds of tires produced per man hour. On that same day, 14
August 1989, petitioner manifested before the Voluntary Arbitrator that it would file a Reply to
the union’s Position Paper submitted on 10 August 1989 not later than 18 August 1989.

The Voluntary Arbitrator on 17 August 1989 issued an award which declared respondent union
entitled to a performance bonus equivalent to 75% of the monthly basic pay of its members.
Issue:
1. whether or not the Voluntary Arbitrator acted with grave abuse of discretion or without or in
excess of jurisdiction in passing upon both the question of whether or not a performance bonus
is to be granted by petitioner; and

2. whether or not the Voluntary Arbitrator gravely abused his discretion or acted without or in
excess of jurisdiction in awarding an amount equivalent to seventy-five percent (75%) of the
basic monthly pay of members of respondent union.

Ruling:
1. No. It is thus essential to stress that the Voluntary Arbitrator had plenary jurisdiction and
authority to interpret the agreement to arbitrate and to determine the scope of his own
authority subject only, in a proper case, to the certiorari jurisdiction of this Court. The
Arbitrator, as already indicated, viewed his authority as embracing not merely the determination
of the abstract question of whether or not a performance bonus was to be granted but also, in
the affirmative case, the amount thereof. The Arbitrator said in his award:chanrob1es virtual
1aw library

At this juncture, it would not be amiss to emphasize to the parties that the matter of
performance bonus necessarily includes not only the determination of the existence of the right
of the union to this benefit but also the amount thereof. This conclusion arises from a perusal of
the terms of the submission agreement entered into by Sime Derby Pilipinas, Inc. and Sime
Darby Employees Association which limited the voluntary arbitration only with regard to
submission of position papers of the parties, disposition and rendition of the award. Nary (sic) a
trace of qualification as to the sole issue of performance bonus may be gleaned from a review
of said agreement.

With that as a timely reminder, this Arbitrator now proceeds to resolve the issues herein
submitted for resolution. Without doubt, the Sime Darby Employees Association is entitled to
performance bonus.

2. The Voluntary Arbitrator, explicitly considered the net earnings of petitioner Sime Darby in
1988 (P100,000,000.00) and in the first semester of 1989 (P95,377,507.00) as well as the
increase in the company’s retained earnings from P265,729,826.00 in 1988 to P324,370,372.00
as of 30 June 1989. Thus, the Arbitrator impliedly or indirectly took into account the return on
stockholders’ investment realized for the fiscal year 1988-1989. It should also be noted that the
relevant CBA provision does not specify a minimum rate of return on investment (ROI) which
must be realized before any particular amount of bonus may or should be declared by the
company.

The Voluntary Arbitrator also took into account, again in an indirect manner, the performance of
Sime Darby’s employees by referring in his award to "the total labor cost incurred by the
Company" :jgc:chanrobles.com.ph

"This Arbitrator, however, is well aware that any effort in this regard must be tempered and
balanced as against the need to sustain the continued viability of Sime Darby Pilipinas, Inc. in
accordance with the constitutional provision which recognizes `the right of enterprise to
reasonable returns on investment and to expansion and growth.’ Furthermore, any award to be
rendered must likewise take into account the total labor cost incurred by the Company. It
should not merely be confined to those pertaining to the members of the Sime Darby
Employees Association but necessarily include that which shall be paid and granted to all other
employees of Sime Darby this year." 6 (Emphasis supplied)

On balance, we believe and so hold that the award of the Voluntary Arbitrator of a bonus
amounting to seventy-five percent (75%) of the basic monthly salary cannot be said to be
merely arbitrary or capricious or to constitute an excs de pouvoir.
88. LUZON DEVELOPMENT BANK vs. ASSOCIATION
G.R. No. 120319 October 6, 1995

Doctrine:
1. In labor law context, arbitration is the reference of a labor dispute to an impartial third
person for determination on the basis of evidence and arguments presented by such parties
who have bound themselves to accept the decision of the arbitrator as final and binding.

2. Compulsory arbitration is a system whereby the parties to a dispute are compelled by the
government to forego their right to strike and are compelled to accept the resolution of their
dispute through arbitration by a third party.

3. Voluntary arbitration is the referral of a dispute by the parties is made, pursuant to a

voluntary arbitration clause in their collective agreement, to an impartial third person for a final
and binding resolution.

Facts:
At a conference, the parties agreed on the submission of their respective Position Papers on
December 1-15, 1994. Atty. Ester S. Garcia, in her capacity as Voluntary Arbitrator, received
ALDBE's Position Paper on January 18, 1995. LDB, on the other hand, failed to submit its
Position Paper despite a letter from the Voluntary Arbitrator reminding them to do so. As of May
23, 1995 no Position Paper had been filed by LDB.

On May 24, 1995, without LDB's Position Paper, the Voluntary Arbitrator rendered a decision
disposing as follows:

WHEREFORE, finding is hereby made that the Bank has not adhered to the Collective
Bargaining Agreement provision nor the Memorandum of Agreement on promotion.

Hence, this petition for certiorari and prohibition seeking to set aside the decision of the
Voluntary Arbitrator and to prohibit her from enforcing the same.

Issue:
Whether or not voluntary arbiter’s decision is appealable to the CA and not the SC

Ruling:
The jurisdiction conferred by law on a voluntary arbitrator or a panel of such arbitrators is quite
limited compared to the original jurisdiction of the labor arbiter and the appellate jurisdiction of
the NLRC for that matter. The “(d)ecision, awards, or orders of the Labor Arbiter are final and
executory unless appealed to the Commission …” Hence, while there is an express mode of
appeal from the decision of a labor arbiter, Republic Act No. 6715 is silent with respect to an
appeal from the decision of a voluntary arbitrator.

Yet, past practice shows that a decision or award of a voluntary arbitrator is, more often than
not, elevated to the SC itself on a petition for certiorari, in effect equating the voluntary
arbitrator with the NLRC or the CA. In the view of the Court, this is illogical and imposes an
unnecessary burden upon it.
In Volkschel Labor Union, et al. v. NLRC, et al., 8 on the settled premise that the judgments
of courts and awards of quasi-judicial agencies must become final at some definite time,
this Court ruled that the awards of voluntary arbitrators determine the rights of parties; hence,
their decisions have the same legal effect as judgments of a court. In Oceanic Bic Division
(FFW), et al. v. Romero, et al., this Court ruled that “a voluntary arbitrator by the nature of her
functions acts in a quasi-judicial capacity.” Under these rulings, it follows that the voluntary
arbitrator, whether acting solely or in a panel, enjoys in law the status of a quasi-judicial
agency but independent of, and apart from, the NLRC since his decisions are not appealable to
the latter.

Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides that the Court of
Appeals shall exercise:

(B) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or
awards of RTC s 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.

Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators may not
strictly be considered as a quasi-judicial agency, board or commission, still both he and the
panel are comprehended within the concept of a “quasi-judicial instrumentality.”
An “instrumentality” is anything used as a means or agency. Thus, the terms governmental
“agency” or “instrumentality” are synonymous in the sense that either of them is a means by
which a government acts, or by which a certain government act or function is performed. The
word “instrumentality,” with respect to a state, contemplates an authority to which the state
delegates governmental power for the performance of a state function. An individual person,
like an administrator or executor, is a judicial instrumentality in the settling of an estate, in the
same manner that a sub-agent appointed by a bankruptcy court is an instrumentality of the
court, and a trustee in bankruptcy of a defunct corporation is an instrumentality of the state.
The voluntary arbitrator no less performs a state function pursuant to a governmental power
delegated to him under the provisions therefor in the Labor Code and he falls, therefore, within
the contemplation of the term “instrumentality” in the aforequoted Sec. 9 of B.P. 129. The fact
that his functions and powers are provided for in the Labor Code does not place him within the
exceptions to said Sec. 9 since he is a quasi-judicial instrumentality as contemplated therein.

It will be noted that, although the Employees Compensation Commission is also provided for in
the Labor Code, Circular No. 1-91, which is the forerunner of the present Revised Administrative
Circular No. 1-95, laid down the procedure for the appealability of its decisions to the CA under
the foregoing rationalization, and this was later adopted by Republic Act No. 7902 in amending
Sec. 9 of B.P. 129. A fortiori, the decision or award of the voluntary arbitrator or panel of
arbitrators should likewise be appealable to the CA, in line with the procedure outlined in
Revised Administrative Circular No. 1-95, just like those of the quasi-judicial agencies, boards
and commissions enumerated therein.
In the same vein, it is worth mentioning that under Section 22 of Republic Act No. 876, also
known as the Arbitration Law, arbitration is deemed a special proceeding of which the court
specified in the contract or submission, or if none be specified, the RTC for the province or
city in which one of the parties resides or is doing business, or in which the arbitration is held,
shall have jurisdiction.

In effect, this equates the award or decision of the voluntary arbitrator with that of the RTC.
Consequently, in a petition for certiorari from that award or decision, the CA must be deemed to
have concurrent jurisdiction with the SC. As a matter of policy, this Court shall henceforth
remand to the Court of Appeals petitions of this nature for proper disposition.
89. Insular Life Assurance Co. EA vs. Insular Life Assurance Co.
G.R. No. L-25291 January 30, 1971

Doctrine:
it is an unfair labor practice for an employer operating under a collective bargaining agreement
to negotiate or to attempt to negotiate with his employees individually in connection with
changes in the agreement. And the basis of the prohibition regarding individual bargaining with
the strikers is that although the union is on strike, the employer is still under obligation to
bargain with the union as the employees' bargaining representative

Facts:
The Insular Life Assurance Co., Ltd., Employees Association-NATU, FGU Insurance Group
Workers & Employees Association-NATU, and Insular Life Building Employees Association-NATU
(hereinafter referred to as the Unions), while still members of the Federation of Free Workers
(FFW), entered into separate collective bargaining agreements with the Insular Life Assurance
Co., Ltd. and the FGU Insurance Group (hereinafter referred to as the Companies).

Two of the lawyers of the Unions then were Felipe Enaje and Ramon Garcia; the latter was
formerly the secretary-treasurer of the FFW and acting president of the Insular Life/FGU unions
and the Insular Life Building Employees Association. Garcia, as such acting president, in a
circular issued in his name and signed by him, tried to dissuade the members of the Unions
from disaffiliating with the FFW and joining the National Association of Trade Unions (NATU), to
no avail.

Enaje and Garcia soon left the FFW and secured employment with the Anti-Dummy Board of the
Department of Justice. Thereafter, the Companies hired Garcia in the latter part of 1956 as
assistant corporate secretary and legal assistant in their Legal Department, and he was soon
receiving P900 a month, or P600 more than he was receiving from the FFW. Enaje was hired on
or about February 19, 1957 as personnel manager of the Companies, and was likewise made
chairman of the negotiating panel for the Companies in the collective bargaining with the
Unions.

In a letter dated September 16, 1957, the Unions jointly submitted proposals to the Companies
for a modified renewal of their respective collective bargaining contracts which were then due
to expire on September 30, 1957. The parties mutually agreed and to make whatever benefits
could be agreed upon retroactively effective October 1, 1957.

Thereafter, in the months of September and October 1957 negotiations were conducted on the
Union's proposals, but these were snagged by a deadlock on the issue of union shop, as a
result of which the Unions filed on January 27, 1958 a notice of strike for "deadlock on
collective bargaining." Several conciliation conferences were held under the auspices of the
Department of Labor wherein the conciliators urged the Companies to make reply to the Unions'
proposals en toto so that the said Unions might consider the feasibility of dropping their
demand for union security in exchange for other benefits. However, the Companies did not
make any counter-proposals but, instead, insisted that the Unions first drop their demand for
union security, promising money benefits if this was done.
On May 20, 1958 the Unions went on strike and picketed the offices of the Insular Life Building
at Plaza Moraga.

Issue:
1. Whether or not the Companies are guilty of unfair labor practice when they sent individual
letters to the strikers with the promise of additional benefits, and notifying them to either return
to work, or lose their jobs; and

2. Whether or not the Companies are guilty of unfair labor practice for discriminating against
the striking members of the Unions in readmission of employees after the strike.

Ruling:
1. The Companies contended that by sending those letters, it constituted a legitimate exercise
of their freedom of expression. That contention is untenable. The Companies are guilty of unfair
labor practice when they sent individual letters to the strikers. It is an act of interference with
the right to collective bargaining through dealing with the strikers individually instead of
through their collective bargaining representatives. Although the Unions are on strike, the
employer is still obligated to bargain with the union as the employees’ bargaining
representative. Further, it is also an act of interference for the employer to send individual
letters to the employees notifying them to return to their jobs, otherwise, they would be
replaced. Individual solicitation of the employees urging them to cease union activity or cease
striking consists of unfair labor practice. Furthermore, when the Companies offered to “bribe”
the strikers with “comfortable cots, free coffee, and movies, overtime work pay” so they would
abandon their strike and return to work, it was guilty of strike-breaking and/or union busting
which constitute unfair labor practice.

2. Some of the members of the Unions were refused readmission because they had pending
criminal charges. However, despite the fact they were able to secure clearances, 34 officials and
members were still refused readmission on the alleged ground that they committed acts inimical
to the Companies. It should be noted, however, that non-strikers who also had criminal charges
pending against them in the fiscal’s office, arising from the same incidents whence against the
criminal charges against the strikers are involved, were readily readmitted and were not
required to secure clearances. This is an act of discrimination practiced by the Companies in the
process of rehiring and is therefore a violation of Sec. 4(a)(4) of the Industrial Peace Act.

The respondent Companies did not merely discriminate against all strikers in general since they
separated the active rom the less active unionists on the basis of their militancy, or lack of it, on
the picket lines. Discrimination exists where the record shows that the union activity of the
rehired strikers has been less prominent than that of the strikers who were denied
reinstatement.
G.R. Nos. L-20667 and 20669 October 29, 1965

PHILIPPINE STEAM NAVIGATION CO., petitioner,

vs.
PHILIPPINE OFFICERS GUILD, ET AL., respondents.

BENGZON, J.P., J.:

DOCTRINE: The rule in this jurisdiction is that subjection by the company of its
employees to a series of questionings regarding their membership in the union or their
union activities, in such a way as to hamper the exercise of free choice on their part,
constitutes unfair labor practice.

The Philippine Steam Navigation Co., Inc., hereafter referred to as PHILSTEAM, is a domestic
corporation, with head offices in Cebu City, engaged in inter-island shipping. I had a total of 128
officers.

Philippine Marine Officers Guild, herein otherwise called PMOG, is a labor union affiliated with
the Federation of Free Workers (FFW), representing, and which represented in 1954, some of
PHILSTEAM's officers.

The Cebu Seamen's Association, CSA for short, is another labor union that represents and
likewise represented in 1954 some of PHILSTEAM's officers.

PMOG sent PHILSTEAM a set of demands with a request for collective bargaining.
PHILSTEAM transmitted its answer to PMOG, requiring the latter to first prove its representation
of a majority of PHILSTEAM's employees before its demands will be considered as requested.
PHILSTEAM, on the same date, started interrogating and investigating its captains, deck
officers, and engineers, to find out directly from them if they had joined PMOG or authorized
PMOG to represent them.

A strike by PMOG was conducted while PHILSTEAM therein recognized CSA as representing
the majority of its employees and proceeded to consider CSA's demands.

PHILSTEAM and CSA signed a collective bargaining agreement. On the same date, PMOG
declared a strike against PHILSTEAM. Although not the subject of the present appeal, it should
also be mentioned that the dispute included two other shipping companies, namely, Compania
Maritima and Madrigal Shipping, and that PMOG simultaneously struck against all three
companies.

The Court of Industrial Relations Ruled that PHILSTEAM interfered with, coerced, and
restrained employees in their rights to self-organization. The same, if true, is unfair labor
practice (Section 4 [a] [1], Republic Act 875).

ISSUE: WoN, the act of PHILSTEAM in investigating its employees constitute ULP by
restraining their rights to self-organization.

RULE: YES
The respondent court has found that PHILSTEAM's interrogation of its employees had in fact
interfered with, restrained and coerced the employees in the exercise of their rights to self-
organization (Petition, Annex A, p. 31). Such finding being upon questions of fact, the same
cannot be reversed herein, because it is fully supported by substantial evidence.

The rule in this jurisdiction is that subjection by the company of its employees to a series
of questionings regarding their membership in the union or their union activities, in such
a way as to hamper the exercise of free choice on their part, constitutes unfair labor
practice (Scoty's Department Store vs. Micaller, 52 O.G. 5119). PHILSTEAM's aforestated
interrogation squarely falls under this rule.

PMOG's subjection to vilification is likewise borne out by substantial evidence. Santiago Beliso,
PHILSTEAM's purchasing agent, told Luis Feliciano, on August 6, 1954, that PMOG was a
"money-asking union," that "all the members of the FFW are low people" and that CSA "is a
good union." Fernando Guerrero, PHILSTEAM's inter-island manager, had authorized Beliso to
assist him in his investigation of PMOG membership. The statement of Beliso was made in the
presence of PHILSTEAM office manager Ernesto Mañeru and PHILSTEAM pier superintendent
Jose Perez, and these supervisory officials did nothing to disavow Beliso's conduct as not
intended to represent PHILSTEAM's opinion. PHILSTEAM, through its supervisory officials,
obviously made it appear to Feliciano that Beliso was speaking for or on behalf of the company,
when he made the remarks derogatory to PMOG and favorable to CSA. PHILSTEAM thereby
interfered with Feliciano's right to self-organization.

WHEREFORE, the decision and resolution appealed from are hereby affirmed, with costs
against petitioner. So ordered.
G.R. No. L-51494 August 19, 1982

JUDRIC CANNING CORPORATION, petitioner,

vs.
THE HONORABLE AMADO G. INCIONG, in his capacity as Deputy Minister of Labor, THE
HONORABLE FRANCISCO L. ESTRELLA, in his capacity as Director of Region IV, Ministry of
Labor, UNITED LUMBER & GENERAL WORKERS OF THE PHILIPPINES (ULGWP), NORMA
PINEDA, LEONILA MORALES, TERESITA BALMACEDA, VICKY PENALOSA, ADELINA
VALENZUELA and JUANITA REPOSAR, respondents.

DOCTRINE: There is unfair labor practice for an employer "to initiate, dominate, assist or
otherwise interfere with the formation or administration of any labor organization, including the
giving of financial or other support to it.

CONCEPCION JR., J.:1äwphï1.ñët

The records show that the herein private respondents Norma Pineda, Vicky Penalosa, Leonila Morales,
Teresita Balmaceda, Adelina Valenzuela, and Juanita Reposar are employees of the petitioner
corporation and are members of the United Lumber and General Workers of the Philippines (ULGWP).
The said complainants were allegedly not allowed to report for work due to their union activities in
soliciting membership in a union yet to be organized in the company and their time cards were removed
from the rack. As a result, the said complainants and their labor union filed a complaint for unfair labor
practice against the petitioner with Region IV of the Ministry of Labor, seeking the reinstatement of the
complainants with full backwages. 1

Petitioner denied the allegations

RD of Labor and employment Ruled in favor of complainants.

Ministry of Labor dismissed Jurdric’s appeal.

The petitioner further claims that it could not have committed the unfair labor practice charge for
dismissing some of its employees due to their alleged union activities because the alleged dismissal took
place more than four (4) months before the organizational meeting of the union and more than one (1)
year before actual registration of said union with the Labor Organization Division of the Bureau of Labor
Relations.

ISSUE: WoN, petitioner is guilty for ULP for dismissing the respondents for their alleged union activities.

RULE: YES

Under Article 248(a) of the Labor Code of the Philippines, "to interfere with, restrain, or coerce employees
in their exercise of the right to self-organization" is an unfair labor practice on the part of the employer.
Paragraph (d) of said Article also considers it an unfair labor practice for an employer "to initiate,
dominate, assist or otherwise interfere with the formation or administration of any labor organization,
including the giving of financial or other support to it. In this particular case, the private respondents were
dismissed or their services were terminated, because they were soliciting signatures in order to form a
union within the plant.

For sure, the petitioner corporation is guilty of unfair labor practice in interfering with the formation of a
labor union and retaliating against the employees' exercise of their right to self-organization.
WHEREFORE, the petition should be, as it is hereby, DISMISSED. The temporary restraining order
heretofore issued is hereby LIFTED and set ASIDE. With costs against the petitioner.

G.R. No. L-87672 October 13, 1989

WISE AND CO., INC., petitioner,

vs.
WISE & CO., INC. EMPLOYEES UNION-NATU AND HONORABLE BIENVENIDO G. LAGUESMA, in
his capacity as voluntary Arbitrator, respondents.
GANCAYCO, J.:

DOCTRINE: 1. There can be no discrimination where the employees concerned are not similarly
situated.

2. The Court holds that it is the prerogative of management to regulate, according

to its discretion and judgment, all aspects of employment. This flows from the established rule
that labor law does not authorize the employer in the conduct of its business. Such management
prerogative may be availed of without fear of any liability so long as it is exercised in good faith
for the advancement of the employers' interest and not for the purpose of defeating or
circumventing the rights of employees under special laws or valid agreement and are not
exercised in a malicious, harsh, oppressive, vindictive or wanton manner or out of malice or spite.

Management issued a memorandum circular introducing a profit sharing scheme for its managers and
supervisors the initial distribution of which was to take effect March 31, 1988.

The union wrote petitioner through its president asking for participation in this scheme. This was denied
by petitioner on the ground that it had to adhere strictly to the Collective Bargaining Agreement (CBA).

In the meantime, talks were underway for early negotiation by the parties of the CBA which was due to
expire.The negotiation thus begun earlier than the freedom period. Petitioner wrote respondent union
advising the latter that they were prepared to consider including the employees covered by the CBA in the
profit sharing scheme beginning the year 1987 provided that the ongoing negotiations were concluded
prior to December 1987. However, the collective bargaining negotiations reached a deadlock on the issue
of the scope of the bargaining unit. No settlement was reached.

Petitioner distributed the profit sharing benefit not only to managers and supervisors but also to all other
rank and file employees not covered by the CBA. This caused the respondent union to file a notice of
strike alleging that petitioner was guilty of unfair labor practice because the union members were
discriminated against in the grant of the profit sharing benefits.

Voluntary Arbitrator Ruled that union members be included in the scheme.

ISSUE: WoN, such scheme was constitutive of ULP for being discriminatory.

RULE: NO

The CBA "consists of all regular or permanent employees, below the rank of assistant supervisor, Also
expressly excluded from the term "appropriate bargaining unit" are all regular rank and file employees in
the office of the president, vice-president, and the other offices of the company — personnel office,
security office, corporate affairs office, accounting and treasurer department .

It is to this class of employees who were excluded in the "bargaining unit" and who do not derive benefits
from the CBA that the profit sharing privilege was extended by petitioner.

There can be no discrimination committed by petitioner thereby as the situation of the union employees
are different and distinct from the non-union employees. 5 Indeed, discrimination per se is not unlawful.
There can be no discrimination where the employees concerned are not similarly situated.

Respondent union can not claim that there is grave abuse of discretion by the petitioner in extending the
benefits of profit sharing to the non-union employees as they are two (2) groups not similarly situated.
These non-union employees are not covered by the CBA. They do not derive and enjoy the benefits
under the CBA.

The Court holds that it is the prerogative of management to regulate, according to its discretion and
judgment, all aspects of employment. This flows from the established rule that labor law does not
authorize the the employer in the conduct of its business. 6 such management prerogative may be availed
of without fear of any liability so long as it is exercised in good faith for the advancement of the employers'
interest and not for the purpose of defeating or circumventing the rights of employees under special laws
or valid agreement and are not exercised in a malicious, harsh, oppressive, vindictive or wanton manner
or out of malice or spite.7

WHEREFORE, the petition is GRANTED and the award of respondent Voluntary Arbitrator dated March
20,1989 is hereby REVERSED AND SET ASIDE being null and void, without pronouncement as to costs.

SO ORDERED.

G.R. No. 73504 October 15, 1991

BALMAR FARMS, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION AND ASSOCIATED LABOR UNIONS
(ALU), respondent.

PARAS, J.:

DOCTRINE: The purpose of certification election is to give the employees true representation
in their collective bargaining with an employer because certification election is the most
democratic and expeditious method by which the laborers can freely determine the union that
shall act as their representative in their dealing with the establishment where they are
working. It is the most effective way of determining which labor organization can truly
represent the working force.
Petitioner Balmar Farms, Inc. (BALMAR for short) is a corporation engaged in the planting of
bananas in Davao while private respondent Associated Labor Union (ALU for short) is a labor
organization duly registered with the Ministry of Labor and Employment.

Med-Arbiter Antonino G. Jolejole issued an order certifying the ALU as the sole and exclusive
bargaining representative of the rank and file workers and employees of BALMAR.

Sometime in November, 1982, BALMAR received a copy of the letter dated November 12, 1982
signed by Johnny Y. Luces in his capacity as President of the BALMAR Employees Association,
addressed to the Regional Director, Hon. Eugenio Sagmit, Jr. The letter states that:

BALMAR Employees Association now requests through a letter that the management must negotiate
with them directly and not through ALU.

Consequently BALMAR negotiated with the Union (BALMAR EMPLOYEES UNION) stating that ALU
was dis-associated.

For alleged refusal to bargain, ALU filed a complaint for unfair labor practice and damages against
BALMAR.

NLRC: BALMAR guilty of ULP.

ISSUE:

WoN, petitioner BALMAR is guilty of unfair labor practice for refusing to bargain collectively with
ALU.

RULE:

The purpose of certification election is to give the employees true representation in their collective
bargaining with an employer because certification election is the most democratic and expeditious
method by which the laborers can freely determine the union that shall act as their representative in
their dealing with the establishment where they are working. It is the most effective way of
determining which labor organization can truly represent the working force.

Employees (like the employees in the case at bar) have a constitutional right to choose their own
bargaining representative and it is only through certification election that they can obtain this
purpose.

In the bargaining process, the workers and employer shall be represented by their exclusive
bargaining representatives. The labor organization designated or selected by the majority of
employees in an appropriate collective bargaining unit, shall be the exclusive representative of the
employees in such unit for the purpose of collective bargaining. In the case at bar, it is the ALU
which is the exclusive bargaining representative of BALMAR employees and as such it has the right
and duty to bargain collectively with BALMAR.

The duty to bargain collectively means the performance of a mutual obligation to meet and convene
promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to
wages, hours of work and all other terms and conditions or employment including proposals for
adjusting any grievance or questions arising under such agreement if requested by either party but
such duty does not compel any party to agree to a proposal or to make any concession (Art. 252,
Labor Code, as amended).

Procedurally, ALU sent a letter to BALMAR, attaching therewith its proposals for collective
bargaining agreement. In reply, BALMAR refused to negotiate with ALU allegedly because` it
received a copy of a letter purportedly written on November 12, 1982 by one Johnny Luces, who
claimed to be the president of Balmar Farms Employees Association, informing the Labor Regional
Director that more than a majority of them would like to negotiate directly with their employer
BALMAR. There is no showing, however, that said letter was favorably acted upon, much less, is
there an order superseding the Med-Arbiter's order of October 27, 1982 certifying ALU as the sole
and exclusive bargaining representative of the rank and file workerks of BALMAR.

BALMAR cannot also invoke good faith in refusing to negotiate with ALU, considering that the latter
has been certified as the exclusive bargaining representative of BALMAR rank and file employees.

PREMISES CONSIDERED, the petition is DISMISSED for lack of merit and the assailed resolution
is AFFIRMED.

SO ORDERED.

ALHAMBRA INDUSTRIES, INC., Petitioner, versus COURT OF INDUSTRIAL RELATIONS and ALHAMBBA
EMPLOYEES ASSOCIATION (FTUP), Respondents.

Doctrine: Failure on petitioner’s part to live up in good faith to the terms its collective bargaining
agreement by denying the privileges and benefits thereof to the fifteen drivers and helpers through its
device of trying to pass them off as ‘employees’ of its salesmen and propagandists was a serious
violation of petitioner’s duty to bargain collectively and constituted unfair labor practice in any
language.

Facts: The complaint for unfair labor practice 1 for violation of section 4(a) subsections (4) and (6) of the
Industrial Peace Act, was filed by the acting prosecutor of respondent court against petitioner, upon the
charges of respondent union that fifteen of the union members, employed as drivers and helpers of
petitioner, were being discriminated against by petitioner’s not affording them the benefits and
privileges enjoyed by all the other employees for no justifiable reason other than their union
membership; and that the union had asked petitioner to negotiate with respect to said fifteen drivers
and helpers who were being excluded from the benefits of their subsisting collective bargaining
agreement, but petitioner refused to do so. The union prayed for a desistance order and that petitioner
be ordered to bargain collectively in good faith and to grant the drivers and helpers the same benefits
and privileges extended to and enjoyed by all its other employees. In answer, petitioner denied the
unfair labor practice imputed to it and countered that the fifteen drivers and helpers were not its
employees, but separate and independent employees of its salesmen and propagandists who exercised
discretion and control over their selection, employment, compensation, suspension and dismissal.

Issue: Whether or not petitioner is guilty of unfair labor practice?

Ruling: Yes, In accordance with the ‘memorandum of instructions,’ Exhibit ‘24,’ which the respondent
corporation issues to the salesman or propagandist, it is really from here that the latter is authorized by
the former to engage the services of a driver or helper. So that even when the driver or helper does not
apply directly to the respondent corporation for the job but to the salesman or propagandist,
nevertheless, the authority of the salesman or propagandist to employ the driver or helper emanates
from the respondent corporation. It is, therefore, apparent that in truth and in fact, the respondent
corporation is the ‘employer’ of the driver or helper and not the salesman or propagandist who is
merely expressly authorized by the former to engage such services.

The salary of the driver or helper also comes from the respondent corporation in the form of driver
allowance’ which is appropriated for the purpose. The duties and obligations of the driver or helper do
not come from the salesman or propagandist but are expressly stated by the respondent corporation in
the ‘memorandum of instructions. It is therefore clear that the terms and conditions of employment of
the driver or helper are those fixed and determined by the respondent corporation. From all the
foregoing consideration we are convinced that the driver or helper is an employee of respondent
corporation.

Petitioner’s failure to comply with its duty under the collective bargaining agreement to extend the
privileges, rights and benefits thereof to the drivers and helpers as its actual employees clearly
amounted to the commission of an unfair labor practice. And consequently respondent court properly
ordered in its judgment that said drivers and helpers should be given and/or extended all the privileges,
rights and benefits that are given to all the other regular employees.

Failure on petitioner’s part to live up in good faith to the terms its collective bargaining agreement by
denying the privileges and benefits thereof to the fifteen drivers and helpers through its device of trying
to pass them off as ‘employees’ of its salesmen and propagandists was a serious violation of petitioner’s
duty to bargain collectively and constituted unfair labor practice in any language.

FRANCISCO SALUNGA, petitioner, vs.COURT OF INDUSTRIAL RELATIONS; SAN MIGUEL BREWERY, INC.
and MIGUEL NOEL; NATIONAL BREWERY & ALLIED INDUSTRIES LABOR UNION OF THE PHILIPPINES
(NABAILUP-PAFLU); JOHN DE CATILLO and CIPRIANO CID, respondents.

Doctrine: Although, generally, a state may not compel ordinary voluntary associations to admit thereto
any given individual, because membership therein may be accorded or withheld as a matter of privilege,
the rule is qualified in respect of labor unions holding a monopoly in the supply of labor, either in a given
locality, or as regards a particular employer with which it has a closed-shop agreement.

Facts: San Miguel Brewery, Inc (Company) entered with the Union, of which respondent John de Castillo
is the president, into a CBA.

Section 3 of the CBA reads: The company agrees to require as a condition of employment of those
workers covered by this agreement who either are members of the UNION on the date of the signing of
this agreement, or may join the UNION during the effectivity of this agreement, that they shall not
voluntarily resign from the UNION earlier than thirty (30) days before the expiry date of this agreement
as provided in Article XIII hereof, provided, however, that nothing herein contained shall be construed
to require the company to enforce any sanction whatsoever against any employee or worker who fails
to retain his membership in the UNION as hereinbefore stated, for any cause other than voluntary
resignation or non-payment of regular union dues on the part of said employee or worker.

Petitioner Francisco Salunga was a member of the National Brewery and Allied Industries Labor Union of
the Philippines (PAFLU) since 1953. On August 18, 1961, he tendered his resignation from the Union.
The Union accepted the resignation, and transmitted it to the Company, with a request for the
immediate implementation of said Section 3. The Company informed petitioner that his resignation
would result in the termination of his employment, in view of Section 3.

Petitioner wrote to the Union a letter withdrawing or revoking his resignation and advising the Union to
continue deducting his monthly union dues. The Union told the Company that petitioner's membership
could not be reinstated and insisted on his separation from the service, conformably with the stipulation
above-quoted. The Company replied: Mr. Salunga told us that he did not realize that he would be losing
his job if he were to resign from the Union. We did not at any time ask or urge him to withdraw his
resignation; neither are we now asking or insisting that you readmit him into your membership. We
thought that informing him of the consequences of his resignation from the Union, was the only
humane thing to do under the circumstances. Nevertheless, if notwithstanding our foregoing
clarification you still consider him as having actually resigned from your organization, and you insist that
we dismiss him from the service in accordance with Sec. 3, Article II of our agreement, we will have no
alternative but to do so. The Company notified petitioner that, in view of said letter and the
aforementioned section, "we regret we have to terminate your employment for cause.” Petitioner was
discharged from the employment of the Company.

A prosecutor of the Court of Industrial Relations commenced the present proceedings for unfair labor
practice against the Union, its president, respondent John de Castillo, respondent Cipriano Cid, as PAFLU
president, the Company, and its aforementioned Vice-President Miguel Noel.

The trial Judge rendered a decision directing them to readmit and to continue the membership of
Salunga in the membership rolls of the union after paying all union dues

This decision was reversed by the CIR — sitting en banc. Hence, this appeal by the petitioner.

Issue: Whether or not petitioner should be readmitted

Ruling: Yes, Having been denied readmission into the Union and having been dismissed from the service
owing to an unfair labor practice on the part of the Union, petitioner is entitled to reinstatement as
member of the Union.

The appeal is well taken, for, although petitioner had resigned from the Union and the latter had
accepted the resignation, the former had, soon later — upon learning that his withdrawal from the
Union would result in his separation from the Company, owing to the closed-shop provision above
referred to — revoked or withdrawn said resignation, and the Union refused to consent thereto without
any just cause therefor.

The Union had not only acted arbitrarily in not allowing petitioner to continue his membership. The trial
Judge found said refusal of the Union officers to be due to his critical attitude towards certain measures
taken or sanctioned by them. As set forth in the decision of the trial Judge: Prior to August, 1961, he had
been criticizing and objecting to what he believed were illegal or irregular disbursements of union funds.
Salunga was later removed by the union from his position as steward without his knowledge, and that
the union did not honor the of attorney executed in his favor by Alejandro Miranda, a co-worker, for the
collection of Miranda's indebtedness of P60.00 to him.

The officers of the Union tried to justify themselves by characterizing said criticisms as acts of disloyalty
to the Union, which, of course, is not true, not only because the criticism assailed, not the Union, but
certain acts of its officers, and, indirectly, the officers themselves, but also because the Constitution and
By-laws of the Union explicitly recognize the right of its members to give their views on "all transactions
made by the Union."

Although, generally, a state may not compel ordinary voluntary associations to admit thereto any given
individual, because membership therein may be accorded or withheld as a matter of privilege, the rule is
qualified in respect of labor unions holding a monopoly in the supply of labor, either in a given locality,
or as regards a particular employer with which it has a closed-shop agreement. The reason is that the
closed shop and the union shop cause the admission requirements of trade union to become affected
with the public interest. Likewise, a closed shop, a union shop, or maintenance of membership clauses
cause the administration of discipline by unions to be affected with the public interest.

Consequently, it is well settled that such unions are not entitled to arbitrarily exclude qualified
applicants for membership, and a closed-shop provision would not justify the employer in discharging,
or a union in insisting upon the discharge of, an employee whom the union thus refuses to admit to
membership, without any reasonable ground therefor. Needless to say, if said unions may be compelled
to admit new members, who have the requisite qualifications, with more reason may the law and the
courts exercise the coercive power when the employee involved is a long standing union member, who,
owing to provocations of union officers, was impelled to tender his resignation, which he forthwith
withdrew or revoked. Surely, he may, at least, invoke the rights of those who seek admission for the first
time, and can not arbitrarily he denied readmission.

We cannot agree, however, with the finding of the trial Judge to the effect that the Company was guilty
of unfair labor practice. The Company was reluctant — if not unwilling — to discharge the petitioner.
When the Union first informed the Company of petitioner's resignation and urged implementation of
Section 3 of the bargaining contract, the Company advised petitioner of the provision thereof, thereby
intimating that he had to withdraw his resignation in order to keep his employment. Besides, the
Company notified the Union that it (the Company) would not take any action on the case and would
consider the petitioner, "still a member" of the Union. When the latter, thereafter, insisted on
petitioner's discharge, the Company still demurred and explained it was not taking sides and that its
stand was prompted merely by "humane" considerations, springing from the belief that petitioner had
resigned from the Union without realizing its effect upon his employment. And, as the Union reiterated
its demand, the Company notified petitioner that it had no other alternative but to terminate his
employment, and dismissed him from the service, although with "regret".

Under these circumstances, the Company was not "unfair" to the petitioner. At the same time, the
Company could not safely inquire into the motives of the Union officers, in refusing to allow the
petitioner to withdraw his resignation. The arbitrary nature of the decision of said officers was not such
as to be apparent and to justify the company in regarding said decision unreasonable. Moreso, the
petitioner had appealed to the National Officers of the PAFLU and the latter had sustained the Union.
The Company was justified in presuming that the PAFLU had inquired into all relevant circumstances,
including the motives of the Union Officers.

Having been denied readmission into the Union and having been dismissed from the service owing to an
unfair labor practice on the part of the Union, petitioner is entitled to reinstatement as member of the
Union and to his former or substantially equivalent position in the Company, without prejudice to his
seniority and/or rights and privileges, and with back pay, which back pay shall be borne exclusively by
the Union.

UNITED RESTAUROR'S EMPLOYEES & LABOR UNION-PAFLU, petitioner, vs. HON. GUILLERMO E.
TORRES, as Presiding Judge of Branch VIII, Court of First Instance of Rizal, 7th Judicial District, and the
DELTA DEVELOPMENT CORPORATION, respondents.

Doctrine: Collective bargaining cannot be the appropriate objective of petitioning Union's continuation
of their concerted activities. The record before us does not reveal any other legitimate purpose. To
allow said Union to continue picketing for the purpose of drawing the employer to the collective
bargaining table would obviously be to disregard the results of the consent election. To further permit
the Union's picketing activities would be to flaunt at the will of the majority.

The outcome of a consent election cannot be rendered meaningless by a minority group of employees
who had themselves invoked the procedure to settle the dispute. Those who voted in the consent
election against the labor union that was eventually certified are hidebound to the results thereof. Logic
is with this view. By their very act of participating in the election, they are deemed to have acquiesced to
whatever is the consequence of the election. As to those who did not participate in the election, the
accepted theory is that they "are presumed to assent to the expressed will of the majority of those
voting. Adherence to the methods laid down by statute for the settlement of industrial strife is one way
of achieving industrial peace; one such method is certification election. It is the intent and purpose of
the law that this procedure, when adopted and availed of by parties to labor controversies, should end
industrial disputes, not continue them.

Facts: The case arose from a verified complaint for injunction with prayer for preliminary injunction filed
by Delta Development Corporation (Delta), against the Union It is there averred that: Delta is the owner
of the Makati Commercial Center situated at Makati, Rizal. It is in the business of leasing portions
thereof. On the other hand, the Union is an association of some employees of Sulo Restaurant, a lessee
of Delta. The Union sought permission from Delta to conduct picketing activities "on the private
property of plaintiff surrounding Sulo Restaurant. Delta denied the request because it "may be held
liable for any incident that may happen in the picket lines, since the picketing would be conducted on
the private property owned by plaintiff. Without awaiting resolution of its motion to dismiss the Union
commenced in this Court the present original petition for certiorari on September 18, 1965, claiming
that respondent judge acted without or in excess of his jurisdiction in issuing the injunctive writ as no
restraining order could be validly issued against the right to picket as part of freedom of speech.

After the submission of the parties' memoranda in lieu of oral argument, Delta moved to dismiss the
proceeding at bar on the ground that it has become moot and academic. It averred that the Union lost
in the consent election conducted by the Department of and thereby also lost its right to picket; and
that in said election cases, a rival union Sulo Employees Labor Union (SELU, for short) was certified by
CIR as the exclusive bargaining representative of all the employees of Sulo Restaurant.

Issue: Whether or not the petition must be dismissed?

Ruling: Yes, the petition must be dismissed. The case before us has become moot and academic. The
consent election, it should be noted, was ordered by CIR pursuant to the Union's petition for direct
certification and a similar petition for certification filed by SELU. Verily, the Union can no longer demand
collective bargaining. For, it became the minority union. As matters stand, said right properly belongs to
SELU, which commands the majority. By law, the right to be the exclusive representative of all the
employees in an appropriate collective bargaining unit is vested in the labor union designated or
selected for such purpose by the majority of the employees in the unit concerned. SELU has the right as
well as the obligation to hear voice out and seek remedies for the grievances of all Sulo employees,
including employees who are members of petitioner Union, regarding the "rates of pay, wages, hours of
employment, or other conditions of employment.

Collective bargaining cannot be the appropriate objective of petitioning Union's continuation of their
concerted activities. The record before us does not reveal any other legitimate purpose. To allow said
Union to continue picketing for the purpose of drawing the employer to the collective bargaining table
would obviously be to disregard the results of the consent election. To further permit the Union's
picketing activities would be to flaunt at the will of the majority.

The outcome of a consent election cannot be rendered meaningless by a minority group of employees
who had themselves invoked the procedure to settle the dispute. Those who voted in the consent
election against the labor union that was eventually certified are hidebound to the results thereof. Logic
is with this view. By their very act of participating in the election, they are deemed to have acquiesced to
whatever is the consequence of the election. As to those who did not participate in the election, the
accepted theory is that they "are presumed to assent to the expressed will of the majority of those
voting. Adherence to the methods laid down by statute for the settlement of industrial strife is one way
of achieving industrial peace; one such method is certification election. It is the intent and purpose of
the law that this procedure, when adopted and availed of by parties to labor controversies, should end
industrial disputes, not continue them.
Upon the law then, the Union's right to strike and consequently to picket ceased by its defeat in the
consent election. That election occurred during the pendency before this Court of this original petition
for certiorari lodged by the Union the thrust of which is to challenge the power of the Court of First
Instance to enjoin its picketing activities. The Union may not continue to picket.

MANILA MANDARIN EMPLOYEES UNION, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION,
and MELBA C. BELONCIO, respondents.

Doctrine: It is a well-settled principle that findings of facts quasi-judicial agencies like the NLRC, which
have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded
not only respect but at times even finality if such findings are supported by substantial evidence.

If the dispute is not purely intra-union but involves an interpretation of the collective bargaining
agreement (CBA) provisions and whether or not there was an illegal dismissal, the NLRC has jurisdiction
over the dispute.

A closed-shop agreement is an agreement whereby an employer binds himself to hire only members of
the contracting union who must continue to remain members in good standing to keep their jobs. It is
"the most prized achievement of unionism." It adds membership and compulsory dues. By holding out
to loyal members a promise of employment in the closed-shop, it welds group solidarity. It is a very
effective form of union security agreement.

A closed-shop is a valid form of union security, and such a provision in a collective bargaining agreement
is not a restriction of the right of freedom of association guaranteed by the Constitution. However,
union security clauses are also governed by law and by principles of justice, fair play, and legality. Union
security clauses cannot be used by union officials against an employer, much less their own members,
except with a high sense of responsibility, fairness, prudence, and judiciousness.

A union member may not be expelled from her union, and consequently from her job, for personal or
impetuous reasons or for causes foreign to the closed-shop agreement and in a manner characterized by
arbitrariness and whimsicality.

Facts: Melba Beloncio was Asst. head waitress of Manila Mandarins coffee shop. She got the ire of the
Union when she made taray to a lazy busboy and retorted to a co-employee, wala akong tiwala sa Union
ninyo. The Union filed a Notice of Strike, this compelled Manila Mandarin to have Beloncio on forced
leave without pay. Closed-shop agreement, a union security clause, i.e., Er to only hire Union members
this is valid under the law However, Union security clauses cannot be used by union officials against an
employer, much less their own members, except with a high sense of responsibility, fairness, prudence,
and judiciousness. The NLRC settled the case in favor of Beloncio

Issues: Whether or not NLRC has jurisdiction?

Whether or not petitioner is liable for the payment of Beloncio’s salary and fringe benefits?
Ruling: Yes, On the issue of the NLRC jurisdiction over the case, the Court finds no grave abuse of
discretion in the NLRC conclusion that the dispute is not purely intra-union but involves an
interpretation of the collective bargaining agreement (CBA) provisions and whether or not there was an
illegal dismissal. Under the CBA, membership in the union may be lost through expulsion only if there is
non-payment of dues or a member organizes, joins, or forms another labor organization. The charge of
disloyalty against Beloncio arose from her emotional remark to a waitress who happened to be a union
steward, "Wala akong tiwala sa Union ninyo." The remark was made in the course of a heated discussion
regarding Beloncio's efforts to make a lazy and recalcitrant waiter adopt a better attitude towards his
work.

It is a well-settled principle that findings of facts quasi-judicial agencies like the NLRC, which have
acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not
only respect but at times even finality if such findings are supported by substantial evidence.

Yes, on the issue of liability of petitioner, the collective bargaining agreement in this case contains a
union security clause — a closed-shop agreement.

A closed-shop agreement is an agreement whereby an employer binds himself to hire only members of
the contracting union who must continue to remain members in good standing to keep their jobs. It is
"the most prized achievement of unionism." It adds membership and compulsory dues. By holding out
to loyal members a promise of employment in the closed-shop, it welds group solidarity. It is a very
effective form of union security agreement.

This Court has held that a closed-shop is a valid form of union security, and such a provision in a
collective bargaining agreement is not a restriction of the right of freedom of association guaranteed by
the Constitution.

The Court stresses, however, that union security clauses are also governed by law and by principles of
justice, fair play, and legality. Union security clauses cannot be used by union officials against an
employer, much less their own members, except with a high sense of responsibility, fairness, prudence,
and judiciousness.

A union member may not be expelled from her union, and consequently from her job, for personal or
impetuous reasons or for causes foreign to the closed-shop agreement and in a manner characterized by
arbitrariness and whimsicality.

This is particularly true in this case where Ms. Beloncio was trying her best to make a hotel bus boy do
his work promptly and courteously so as to serve hotel customers in the coffee shop expeditiously and
cheerfully. Union membership does not entitle waiters, janitors, and other workers to be sloppy in their
work, inattentive to customers, and disrespectful to supervisors. The Union should have disciplined its
erring and troublesome members instead of causing so much hardship to a member who was only doing
her work for the best interests of the employer, all its employees, and the general public whom they
serve