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FIRST DIVISION [G.R. No. 108855. February 28, 1996] METROLAB INDUSTRIES, INC., petitioner, vs. HONORABLE MA.

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

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SYLLABUS REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT OF ADMINISTRATIVE AGENCIES; RULE; CASE AT BAR. - We reaffirm the doctrine that considering their expertise in their respective fields, factual findings of administrative agencies supported by substantial evidence are accorded great respect and binds this Court. The Secretary of Labor ruled, thus: x x x Any act committed during the pendency of the dispute that tends to give rise to further contentious issues or increase the tensions between the parties should be considered an act of exacerbation. One must look at the act itself, not on speculative reactions. A misplaced recourse is not needed to prove that a dispute has been exacerbated. For instance, the Union could not be expected to file another notice of strike. For this would depart from its theory of the case that the layoff is subsumed under the instant dispute, for which a notice of strike had already been filed. On the other hand, to expect violent reactions, unruly behavior, and any other chaotic or drastic action from the Union is to expect it to commit acts disruptive of public order or acts that may be illegal. Under a regime of laws, legal remedies take the place of violent ones. x xx Protest against the subject layoffs need not be in the form of violent action or any other drastic measure. In the instant case the Union registered their dissent by swiftly filing a motion for a cease and desist order. Contrary to petitioners allegations, the Union strongly condemned the layoffs and threatened mass action if the Secretary of Labor fails to timely intervene: x x x 3. This unilateral action of management is a blatant violation of the injunction of this Office against committing acts which would exacerbate the dispute. Unless such act is enjoined the Union will be compelled to resort to its legal right to mass actions and concerted activities to protest and stop the said management action. This mass layoff is clearly one which would result in a very serious dispute unless this Office swiftly intervenes. x x x Metrolab and the Union were still in the process of resolving their CBA deadlock when petitioner implemented the subject layoffs. As a result, motions and oppositions were filed diverting the parties attention, delaying resolution of the bargaining deadlock and postponing the signing of their new CBA, thereby aggravating the whole conflict. LABOR AND SOCIAL LEGISLATION; TERMINATION OF EMPLOYMENT; EXERCISE OF MANAGEMENT PREROGATIVES; NOT ABSOLUTE; SUBJECT TO EXCEPTIONS IMPOSED BY LAW. - This Court recognizes the exercise of management prerogatives and often declines to interfere with the legitimate business decisions of the employer. However, this privilege is not absolute but subject to limitations imposed by law. In PAL vs. NLRC, (225 SCRA 301 [1993]), we issued this reminder: ... the exercise of management prerogatives was never considered boundless. Thus, in Cruz vs. Medina (177 SCRA 565 [1989]), it was held that managements prerogatives must be without abuse of discretion ... All this points to the conclusion that the exercise of managerial prerogatives is not unlimited. It is circumscribed by limi(ations found in law, a collective bargaining agreement, or the general principles of fair play and justice (University of Sto. Tomas v. NLRC, 190 SCRA 758 [1990]). ID.; ID.; ID.; ID.; ID.; CASE AT BAR AN EXCEPTION. - The case at bench constitutes one of the exceptions. The Secretary of Labor is expressly given the power under the Labor Code to assume jurisdiction and resolve labor disputes involving industries indispensable to national interest. The disputed injunction is subsumed under this special grant of authority. Art. 263 (g) of the Labor Code specifically provides that: x x x (g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately

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resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with such orders as he may issue to enforce the same. . . . That Metrolabs business is of national interest is not disputed. Metrolab is one of the leading manufacturers and suppliers of medical and pharmaceutical products to the country. Metrolabs management prerogatives, therefore, are not being unjustly curtailed but duly balanced with and tempered by the limitations set by law, taking into account its special character and the particular circumstances in the case at bench. ID.; LABOR RELATIONS; INELIGIBILITY OF MANAGERIAL EMPLOYEES TO JOIN, FORM AND ASSIST ANY LABOR ORGANIZATION; PROHIBITION EXTENDED TO CONFIDENTIAL EMPLOYEES. - Although Article 245 of the Labor Code limits the ineligibility to join, form and assist any labor organization to managerial employees, jurisprudence has extended this prohibition to confidential employees or those who by reason of their positions or nature of work are required to assist or act in a fiduciary manner to managerial employees and hence, are likewise privy to sensitive and highly confidential records. ID.; ID.; EXCLUSION OF CONFIDENTIAL EMPLOYEES FROM THE RANK AND FILE BARGAINING UNIT; NOT TANTAMOUNT TO DISCRIMINATION. - Confidential employees cannot be classified as rank and file. As previously discussed, the nature of employment of confidential employees is quite distinct from the rank and file, thus, warranting a separate category. Excluding confidential employees from the rank and file bargaining unit, therefore, is not tantamount to discrimination. APPEARANCES OF COUNSEL Bautista Picazo Buyco Tan & Fider for petitioner. The Solicitor General for public respondent. Perfecto V. Fernandez, Jose P. Fernandez & Cristobal P. Fernandez for Metro Drug Corporation.

DECISION KAPUNAN, J.: This is a petition for certiorari under Rule 65 of the Revised Rules of Court seeking the annulment of the Resolution and Omnibus Resolution of the Secretary of Labor and Employment dated 14 April 1992 and 25 January 1993, respectively, in OS-AJ-04491-11 (NCMB-NCR-NS-08-595-9 1; NCMB-NCR-NS-09678-91) on grounds that these were issued with grave abuse of discretion and in excess of jurisdiction. Private respondent Metro Drug Corporation Employees Association-Federation of Free Workers (hereinafter referred to as the Union) is a labor organization representing the rank and file employees of petitioner Metrolab Industries, Inc. (hereinafter referred to as Metrolab/MII) and also of Metro Drug, Inc. On 31 December 1990, the Collective Bargaining Agreement (CBA) between Metrolab and the Union expired. The negotiations for a new CBA, however, ended in a deadlock. Consequently, on 23 August 1991, the Union filed a notice of strike against Metrolab and Metro Drug Inc. The parties failed to settle their dispute despite the conciliation efforts of the National Conciliation and Mediation Board. To contain the escalating dispute, the then Secretary of Labor and Employment, Ruben D. Torres, issued an assumption order dated 20 September 1991, the dispositive portion of which reads, thus: WHEREFORE, PREMISES CONSIDERED, and pursuant to Article 263 (g) of the Labor Code, as amended, this Office hereby assumes jurisdiction over the entire labor dispute at Metro Drug, Inc. - Metro Drug Distribution Division and Metrolab Industries Inc. Accordingly, any strike or lockout is hereby strictly enjoined. The Companies and the Metro Drug Corp. Employees Association - FFW are likewise directed to cease and desist from committing any and all acts that might exacerbate the situation. Finally, the parties are directed to submit their position papers and evidence on the aforequoted deadlocked issues to this office within twenty (20) days from receipt hereof. [1] SO ORDERED. (Italics ours.) On 27 December 1991, then Labor Secretary Torres issued an order resolving all the disputed items in the CBA and ordered the parties involved to execute a new CBA. Thereafter, the Union filed a motion for reconsideration.

On 27 January 1992, during the pendency of the abovementioned motion for reconsideration, Metrolab laid off 94 of its rank and file employees. On the same date, the Union filed a motion for a cease and desist order to enjoin Metrolab from implementing the mass layoff, alleging that such act violated the prohibition against committing acts that [2] would exacerbate the dispute as specifically directed in the assumption order. On the other hand, Metrolab contended that the layoff was temporary and in the exercise of its management prerogative. It maintained that the company would suffer a yearly gross revenue loss of approximately sixty-six (66) million pesos due to the withdrawal of its principals in the Toll and Contract Manufacturing Department. Metrolab further asserted that with the automation of the manufacture of its [3] product Eskinol, the number of workers required its production is significantly reduced. Thereafter, on various dates, Metrolab recalled some of the laid off workers on a temporary basis due to availability of work in the production lines. On 14 April 1992, Acting Labor Secretary Nieves Confesor issued a resolution declaring the layoff of Metrolabs 94 rank and file workers illegal and ordered their reinstatement with full backwages. The dispositive portion reads as follows: WHEREFORE, the Unions motion for reconsideration is granted in part, and our order of 28 December 1991 is affirmed subject to the modifications in allowances and in the close shop provision. The layoff of the 94 employees at MII is hereby declared illegal for the failure of the latter to comply with our injunction against committing any act which may exacerbate the dispute and with the 30-day notice requirement. Accordingly, MII is hereby ordered to reinstate the 94 employees, except those who have already been recalled, to their former positions or substantially equivalent, positions with full backwages from the date they were illegally laid off on 27 January 1992 until actually reinstated without loss of seniority rights and other benefits. Issues relative to the CBA agreed upon by the parties and not embodied in our earlier order are hereby ordered adopted for incorporation in the CBA. Further, the dispositions and directives contained in all previous orders and resolutions relative to the instant dispute, insofar as not inconsistent herein, are reiterated. Finally, the parties are enjoined to cease and desist from committing any act which may tend to circumvent this resolution. [4] SO RESOLVED. On 6 March 1992, Metrolab filed a Partial Motion for Reconsideration alleging that the layoff did not aggravate the dispute since no untoward incident occurred as a result thereof. It, likewise, filed a motion for clarification regarding the constitution of the bargaining unit covered by the CBA. On 29 June 1992, after exhaustive negotiations, the parties entered into a new CBA. The execution, however, was without prejudice to the outcome of the issues raised in the reconsideration and clarification [5] motions submitted for decision to the Secretary of Labor. Pending the resolution of the aforestated motions, on 2 October 1992, Metrolab laid off 73 of its employees on grounds of redundancy due to lack of work which the Union again promptly opposed on 5 October 1992. On 15 October 1992, Labor Secretary Confesor again issued a cease and desist order. Metrolab [6] moved for a reconsideration. On 25 January 1993, Labor Secretary Confesor issued the assailed Omnibus Resolution containing the following orders: xxx xxx xxx. 1. MIIs motion for partial reconsideration of our 14 April 1992 resolution specifically that portion thereof assailing our ruling that the layoff of the 94 employees is illegal, is hereby denied. MII is hereby ordered to pay such employees their full backwages computed from the time of actual layoff to the time of actual recall; 2. For the parties to incorporate in their respective collective bargaining agreements the clarifications herein contained; and 3. MIIs motion for reconsideration with respect to the consequences of the second wave of layoff affecting 73 employees, to the extent of assailing our ruling that such layoff tended to exacerbate the dispute, is hereby denied. But inasmuch as the legality of the layoff was not submitted for our resolution and no evidence had been adduced upon which a categorical finding thereon can be based, the same is hereby referred to the NLRC for its appropriate action. Finally, all prohibitory injunctions issued as a result of our assumption of jurisdiction over this dispute are hereby lifted. [7] SO RESOLVED.

Labor Secretary Confesor also ruled that executive secretaries are excluded from the closed-shop provision of the CBA, not from the bargaining unit. On 4 February 1993, the Union filed a motion for execution. Metrolab opposed. Hence, the present petition for certiorari with application for issuance of a Temporary Restraining Order. On 4 March 1993, we issued a Temporary Restraining Order enjoining the Secretary of Labor from enforcing and implementing the assailed Resolution and Omnibus Resolution dated 14 April 1992 and 25 January 1993, respectively. In its petition, Metrolab assigns the following errors: A THE PUBLIC RESPONDENT HON. SECRETARY OF LABOR AND EMPLOYMENT COMMITTED GRAVE ABUSE OF DISCRETION AND EXCEEDED HER JURISDICTION IN DECLARING THE TEMPORARY LAYOFF ILLEGAL AND ORDERING THE REINSTATEMENT AND PAYMENT OF * BACKWAGES TO THE AFFECTED EMPLOYEES. B THE PUBLIC RESPONDENT HON. SECRETARY OF LABOR AND EMPLOYMENT GRAVELY ABUSED HER DISCRETION IN INCLUDING EXECUTIVE SECRETARIES AS PART OF THE BARGAINING UNIT [8] OF RANK AND FILE EMPLOYEES. Anent the first issue, we are asked to determine whether or not public respondent Labor Secretary committed grave abuse of discretion and exceeded her jurisdiction in declaring the subject layoffs instituted by Metrolab illegal on grounds that these unilateral actions aggravated the conflict between Metrolab and the Union who were, then, locked in a stalemate in CBA negotiations. Metrolab argues that the Labor Secretarys order enjoining the parties from committing any act that might exacerbate the dispute is overly broad, sweeping and vague and should not be used to curtail the employers right to manage his business and ensure its viability. We cannot give credence to Metrolabs contention. This Court recognizes the exercise of management prerogatives and often declines to interfere with the legitimate business decisions of the employer. However, this privilege is not absolute but subject to [9] limitations imposed by law. [10] In PAL v. NLRC, we issued this reminder: xxx xxx xxx . . .the exercise of management prerogatives was never considered boundless. Thus, in Cruz vs. Medina ( 177 SCRA 565 [1989]), it was held that managements prerogatives must be without abuse of discretion.... xxx xxx xxx All this points to the conclusion that the exercise of managerial prerogatives is not unlimited. It is circumscribed by limitations found in law, a collective bargaining agreement, or the general principles of fair play and justice (University of Sto. Tomas v. NLRC , 190 SCRA 758 [1990]). . . . (Italics ours.) xxx xxx xxx. The case at bench constitutes one of the exceptions. The Secretary of Labor is expressly given the power under the Labor Code to assume jurisdiction and resolve labor disputes involving industries indispensable to national interest. The disputed injunction is subsumed under this special grant of authority. Art. 263 (g) of the Labor Code specifically provides that: xxx xxx xxx (g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with such orders as he may issue to enforce the same. . . (Italics ours.) xxx xxx xxx.

That Metrolabs business is of national interest is not disputed. Metrolab is one of the leading manufacturers and suppliers of medical and pharmaceutical products to the country. Metro labs management prerogatives, therefore, are not being unjustly curtailed but duly balanced with and tempered by the limitations set by law, taking into account its special character and the particular circumstances in the case at bench. As aptly declared by public respondent Secretary of Labor in its assailed resolution: xxx xxx xxx. MII is right to the extent that as a rule, we may not interfere with the legitimate exercise of management prerogatives such as layoffs. But it may nevertheless be appropriate to mention here that one of the substantive evils which Article 263 (g) of the Labor Code seeks to curb is the exacerbation of a labor dispute to the further detriment of the national interest. When a labor dispute has in fact occurred and a general injunction has been issued restraining the commission of disruptive acts, management [11] prerogatives must always be exercised consistently with the statutory objective. xxx xxx xxx. Metrolab insists that the subject layoffs did not exacerbate their dispute with the Union since no untoward incident occurred after the layoffs were implemented. There were no work disruptions or stoppages and no mass actions were threatened or undertaken. Instead, petitioner asserts, the affected employees calmly accepted their fate as this was a matter which they had been previously advised [12] would be inevitable. After a judicious review of the record, we find no compelling reason to overturn the findings of the Secretary of Labor. We reaffirm the doctrine that considering their expertise in their respective fields, factual findings of administrative agencies supported by substantial evidence are accorded great respect and binds this [13] Court. The Secretary of Labor ruled, thus: xxx xxx xxx. Any act committed during the pendency of the dispute that tends to give rise to further contentious issues or increase the tensions between the parties should be considered an act of exacerbation. One must look at the act itself, not on speculative reactions. A misplaced recourse is not needed to prove that a dispute has been exacerbated. For instance, the Union could not be expected to file another notice of strike. For this would depart from its theory of the case that the layoff is subsumed under the instant dispute, for which a notice of strike had already been filed. On the other hand, to expect violent reactions, unruly behavior, and any other chaotic or drastic action from the Union is to expect it to commit acts disruptive of public order or acts that may be illegal. Under a regime of laws, legal remedies take the [14] place of violent ones. xxx xxx xxx. Protest against the subject layoffs need not be in the form of violent action or any other drastic measure. In the instant case the Union registered their dissent by swiftly filing a motion for a cease and desist order. Contrary to petitioners allegations, the Union strongly condemned the layoffs and threatened mass action if the Secretary of Labor fails to timely intervene: xxx xxx xxx. 3. This unilateral action of management is a blatant violation of the injunction of this Office against committing acts which would exacerbate the dispute. Unless such act is enjoined the Union will be compelled to resort to its legal right to mass actions and concerted activities to protest and stop the said management action. This mass layoff is clearly one which would result in a very serious labor dispute [15] unless this Office swiftly intervenes. xxx xxx xxx. Metrolab and the Union were still in the process of resolving their CBA deadlock when petitioner implemented the subject layoffs. As a result, motions and oppositions were filed diverting the parties attention, delaying resolution of the bargaining deadlock and postponing the signing of their new CBA, thereby aggravating the whole conflict. We, likewise, find untenable Metrolabs contention that the layoff of the 94 rank -and-file employees was temporary, despite the recall of some of the laid off workers. If Metrolab intended the layoff of the 94 workers to be temporary, it should have plainly stated so in the notices it sent to the affected employees and the Department of Labor and Employment. Consider the tenor of the pertinent portions of the layoff notice to the affected employees:

xxx xxx xxx. Dahil sa mga bagay na ito, napilitan ang ating kumpanya na magsagawa ng lay-off ng mga empleyado sa Rank & File dahil nabawasan ang trabaho at puwesto para sa kanila. Marami sa atin ang kasama sa lay-off dahil wala nang trabaho para sa kanila. Mahirap tanggapin ang mga bagay na ito subalit kailangan nating gawin dahil hindi kaya ng kumpanya ang magbayad ng suweldo kung ang empleyado ay walang trabaho. Kung tayo ay patuloy na magbabayad ng suweldo, mas hihina ang ating kumpanya at mas marami ang maaring maapektuhan. Sa pagpapatupad ng lay-off susundin natin ang LAST IN-FIRST OUT policy. Ang mga empleyadong may pinakamaikling serbisyo sa kumpanya ang unang maaapektuhan. Ito ay batay na rin sa nakasaad sa ating CBA na ang mga huling pumasok sa kumpanya ang unang masasama sa lay-off kapag nagkaroon ng ganitong mga kalagayan. Ang mga empleyado na kasama sa lay-off ay nakalista sa sulat na ito. Ang umpisa ng lay-off ay sa Lunes, Enero 27. Hindi na muna sila papasok sa kumpanya. Makukuha nila ang suweldo nila sa Enero 30, 1992. Hindi po natin matitiyak kung gaano katagal ang lay-off ngunit ang aming tingin ay matatagalan bago magkaroon ng dagdag na trabaho. Dahil dito, sinimulan na namin ang isang Redundancy Program sa mga supervisors. Nabawasan ang mga puwesto para sa kanila, kaya sila ay mawawalan ng trabaho at [16] bibigyan na ng redundancy pay. (Italics ours.) xxx xxx xxx. We agree with the ruling of the Secretary of Labor, thus: xxx xxx xxx. . . .MII insists that the layoff in question is temporary not permanent. It then cites International Hardware, Inc. vs. NLRC, 176 SCRA 256, in which the Supreme Court held that the 30-day notice required under Article 283 of the Labor Code need not be complied with if the employer has no intention to permanently severe (sic) the employment relationship. We are not convinced by this argument. International Hardware involves a case where there had been a reduction of workload. Precisely to avoid laying off the employees, the employer therein opted to give them work on a rotating basis. Though on a limited scale, work was available. This was the Supreme Courts basis for holding that there was no intention to permanently severe (sic) the employment relationship. Here, there is no circumstance at all from which we can infer an intention from MII not to sever the employment relationship permanently. If there was such an intention, MII could have made it very clear in the notices of layoff. But as it were, the notices are couched in a language so uncertain that the only conclusion possible is the permanent termination, not the continuation, of the employment relationship. MII also seeks to excuse itself from compliance with the 30-day notice with a tautology. While insisting that there is really no best time to announce a bad news, (sic) it also claims that it broke the bad news only on 27 January 1992 because had it complied with the 30-day notice, it could have broken the bad news on 02 January 1992, the first working day of the year. If there is really no best time to announce a bad news (sic), it wouldnt have mattered if the same was announced at the first working day of the [17] year. That way, MII could have at least complied with the requirement of the law. The second issue raised by petitioner merits our consideration. In the assailed Omnibus Resolution, Labor Secretary Confesor clarified the CBA provisions on closed-shop and the scope of the bargaining unit in this wise: xxx xxx xxx. Appropriateness of the bargaining unit. xxx xxx xxx. Exclusions. In our 14 April 1992 resolution, we ruled on the issue of exclusion as follows: These aside, we reconsider our denial of the modifications which the Union proposes to introduce on the close shop provision. While we note that the provision as presently worded has served the relationship of the parties well under previous CBAs, the shift in constitutional policy toward expanding the right of all workers to self-organization should now be formally recognized by the parties, subject to the following exclusions only: 1. Managerial employees; and 2. The executive secretaries of the President, Executive Vice-President, Vice-President, Vice President for Sales, Personnel Manager, and Director for Corporate Planning who may have access to vital labor

relations information or who may otherwise act in a confidential capacity to persons who determine or formulate management policies. The provisions of Article I (b) and Attachment I of the 1988-1990 CBA shall thus be modified consistently with the foregoing. Article I (b) of the 1988-1990 CBA provides: b)Close Shop. - All Qualified Employees must join the Association immediately upon regularization as a condition for continued employment. This provision shall not apply to: (i) managerial employees who are excluded from the scope of the bargaining unit; (ii) the auditors and executive secretaries of senior executive officers, such as, the President, Executive Vice-President, Vice-President for Finance, Head of Legal, Vice-President for Sales, who are excluded from membership in the Association; and (iii) those employees who are referred to in Attachment I hereof, subject, however, to the application of the provision of Article II, par. (b) hereof. Consequently, the above-specified employees are not required to join the Association as a condition for their continued employment. On the other hand, Attachment I provides: Exclusion from the Scope of the Close Shop Provision The following positions in the Bargaining Unit are not covered by the Close Shop provision of the CBA (Article I, par. b): 1. Executive Secretaries of Vice-Presidents, or equivalent positions. 2. Executive Secretary of the Personnel Manager, or equivalent positions. 3. Executive Secretary of the Director for Corporate Planning, or equivalent positions. 4. Some personnel in the Personnel Department, EDP Staff at Head Office, Payroll Staff at Head Office, Accounting Department at Head Office, and Budget Staff, who because of the nature of their duties and responsibilities need not join the Association as a condition for their employment. 5. Newly-hired secretaries of Branch Managers and Regional Managers. Both MDD and MII read the exclusion of managerial employees and executive secretaries in our 14 April 1992 resolution as exclusion from the bargaining unit. They point out that managerial employees are lumped under one classification with executive secretaries, so that since the former are excluded from the bargaining unit, so must the latter be likewise excluded. This reading is obviously contrary to the intent of our 14 April 1992 resolution. By recognizing the expanded scope of the right to self-organization, our intent was to delimit the types of employees excluded from the close shop provision, not from the bargaining unit, to executive secretaries only. Otherwise, the conversion of the exclusionary provision to one that refers to the bargaining unit from one that merely refers to the close shop provision would effectively curtail all the organizational rights of executive secretaries. The exclusion of managerial employees, in accordance with law, must therefore still carry the qualifying phrase from the bargaining unit in Article I (b)(i) of the 1988 -1990 CBA. In the same manner, the exclusion of executive secretaries should be read together with the qualifying phrase are excluded from membership in the Association of the same Article and with the heading of Attachment I. The latter refers to Exclusions from Scope of Close Shop Provision and provides that [t]he following positions in Bargaining Unit are not covered by the close shop provis ion of the CBA. The issue of exclusion has different dimension in the case of MII. In an earlier motion for clarification, MII points out that it has done away with the positions of Executive Vice-President, Vice-President for Sales, and Director for Corporate Planning. Thus, the foregoing group of exclusions is no longer appropriate in its present organizational structure. Nevertheless, there remain MII officer positions for which there may be executive secretaries. These include the General Manager and members of the Management Committee, specifically i) the Quality Assurance Manager; ii) the Product Development Manager; iii) the Finance Director; iv) the Management System Manager; v) the Human Resources Manager; vi) the Marketing Director; vii) the Engineering Manager; viii) the Materials Manager; and ix) the Production Manager. xxx xxx xxx The basis for the questioned exclusions, it should be noted, is no other than the previous CBA between MII and the Union. If MII had undergone an organizational restructuring since then, this is a fact to which we have never been made privy. In any event, had this been otherwise the result would have been the same. To repeat, we limited the exclusions to recognize the expanded scope of the right to self[18] organization as embodied in the Constitution.

Metrolab, however, maintains that executive secretaries of the General Manager and the executive secretaries of the Quality Assurance Manager, Product Development Manager, Finance Director, Management System Manager, Human Resources Manager, Marketing Director, Engineering Manager, Materials Manager and Production Manager, who are all members of the companys Management Committee should not only be exempted from the closed-shop provision but should be excluded from membership in the bargaining unit of the rank and file employees as well on grounds that their executive [19] secretaries are confidential employees, having access to vital labor information. We concur with Metrolab. [20] Although Article 245 of the Labor Code limits the ineligibility to join, form and assist any labor organization to managerial employees, jurisprudence has extended this prohibition to confidential employees or those who by reason of their positions or nature of work are required to assist or act in a fiduciary manner to managerial employees and hence, are likewise privy to sensitive and highly confidential records. The rationale behind the exclusion of confidential employees from the bargaining unit of the rank and file employees and their disqualification to join any labor organization was succinctly discussed in Philips [21] Industrial Development v. NLRC: xxx xxx xxx. On the main issue raised before Us, it is quite obvious that respondent NLRC committed grave abuse of discretion in reversing the decision of the Executive Labor Arbiter and in decreeing that PIDIs Service Engineers, Sales Force, division secretaries, all Staff of General Management, Personnel and Industrial Relations Department, Secretaries of Audit, EDP and Financial Systems are included within the rank and file bargaining unit. In the first place, all these employees, with the exception of the service engineers and the sales force personnel, are confidential employees. Their classification as such is not seriously disputed by PEO-FFW; the five (5) previous CBAs between PIDI and PEO-FFW explicitly considered them as confidential employees. By the very nature of their functions, they assist and act in a confidential capacity to, or have access to confidential matters of, persons who exercise managerial functions in the field of labor relations. As such, the rationale behind the ineligibility of managerial employees to form, assist or join a labor union equally applies to them. In Bulletin Publishing Co., Inc. vs. Hon. Augusto Sanchez, this Court elaborated on this rationale, thus: x x x The rationale for this inhibition has been stated to be, because if these managerial employees would belong to or be affiliated with a Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of interests. The Union can also become company-dominated with the presence of managerial employees in Union membership. In Golden Farms, Inc. vs. Ferrer-Calleja, this Court explicitly made this rationale applicable to confidential employees: This rationale holds true also for confidential employees such as accounting personnel, radio and telegraph operators, who having access to confidential information, may become the source of undue advantage. Said employee(s) may act as a spy or spies of either party to a collective bargaining agreement. This is specially true in the present case where the petitioning Union is already the bargaining agent of the rank-and-file employees in the establishment. To allow the confidential employees to join the existing Union of the rank-and-file would be in violation of the terms of the Collective Bargaining Agreement wherein this kind of employees by the nature of their functions/positions are expressly excluded. xxx xxx xxx. Similarly, in National Association of Trade Union - Republic Planters Bank Supervisors Chapter v. [22] Torres we declared: xxx xxx xxx. . . . As regards the other claim of respondent Bank that Branch Managers/OICs, Cashiers and Controllers are confidential employees, having control, custody and/ or access to confidential matters, e.g., the branchs cash position, statements of financial condition, vault combination, cash codes f or telegraphic transfers, demand drafts and other negotiable instruments, pursuant to Sec. 1166.4 of the Central Bank Manual regarding joint custody, this claim is not even disputed by petitioner. A confidential employee is one entrusted with confidence on delicate matters, or with the custody, handling, or care and protection of the employers property. While Art. 245 of the Labor Code singles out managerial employees as ineligible

to join, assist or form any labor organization, under the doctrine of necessary, implication, confidential employees are similarly disqualified. . . . xxx xxx xxx. . . .(I)n the collective bargaining process, managerial employees are supposed to be on the side of the employer, to act as its representatives, and to see to it that its interest are well protected. The employer is not assured of such protection if these employees themselves are union members. Collective bargaining in such a situation can become one-sided. It is the same reason that impelled this Court to consider the position of confidential employees as included in the disqualification found in Art. 245 as if the disqualification of confidential employees were written in the provision. If confidential employees could unionize in order to bargain for advantages for themselves, then they could be governed by their own motives rather than the interest of the employers. Moreover, unionization of confidential employees for the purpose of collective bargaining would mean the extension of the law to persons or individuals who are supposed to act in the interest of the employers. It is not farfetched that in the course of collective bargaining, they might jeopardize that interest which they are duty-bound to protect. . . . xxx xxx xxx. [23] And in the latest case of Pier 8 Arrastre & Stevedoring Services, Inc. vs. Roldan-Confesor, we ruled that: xxx xxx xxx. Upon the other hand, legal secretaries are neither managers nor supervisors. Their work is basically routinary and clerical. However, they should be differentiated from rank-and-file employees because they are tasked with, among others, the typing of legal documents, memoranda and correspondence, the keeping of records and files, the giving of and receiving notices, and such other duties as required by the legal personnel of the corporation. Legal secretaries therefore fall under the category of confidential employees. . . . xxx xxx xxx. We thus hold that public respondent acted with grave abuse of discretion in not excluding the four foremen and legal secretary from the bargaining unit composed of rank-and-file employees. xxx xxx xxx. In the case at bench, the Union does not disagree with petitioner that the executive secretaries are confidential employees. It however, makes the following contentions: xxx xxx xxx. There would be no danger of company domination of the Union since the confidential employees would not be members of and would not participate in the decision making processes of the Union. Neither would there be a danger of espionage since the confidential employees would not have any conflict of interest, not being members of the Union. In any case, there is always the danger that any employee would leak management secrets to the Union out of sympathy for his fellow rank and filer even if he were not a member of the union nor the bargaining unit. Confidential employees are rank and file employees and they, like all the other rank and file employees, should be granted the benefits of the Collective Bargaining Agreement. There is no valid basis for discriminating against them. The mandate of the Constitution and the Labor Code, primarily of protection [24] to Labor, compels such conclusion. xxx xxx xxx. The Unions assurances fail to convince. The dangers sought to be prevented, particularly the threat of conflict of interest and espionage, are not eliminated by non-membership of Metrolabs executive secretaries or confidential employees in the Union. Forming part of the bargaining unit, the executive secretaries stand to benefit from any agreement executed between the Union and Metrolab. Such a scenario, thus, gives rise to a potential conflict between personal interests and their duty as confidential employees to act for and in behalf of Metrolab. They do not have to be union members to affect or influence either side. Finally, confidential employees cannot be classified as rank and file. As previously discussed, the nature of employment of confidential employees is quite distinct from the rank and file, thus, warranting a separate category. Excluding confidential employees from the rank and file bargaining unit, therefore, is not tantamount to discrimination. WHEREFORE, premises considered, the petition is partially GRANTED. The resolutions of public respondent Secretary of Labor dated 14 April 1992 and 25 January 1993 are hereby MODIFIED to the extent that executive secretaries of petitioner Metrolabs General Manager and the executive secretaries

of the members of its Management Committee are excluded from the bargaining unit of petitioners rank and file employees. SO ORDERED. Padilla, Bellosillo, Vitug, and Hermosisima, Jr., JJ., concur.

SECOND DIVISION [G.R. No. 115949. March 16, 2000] EVANGELINE J. GABRIEL, petitioners, vs. THE HONORABLE SECRETARY OF LABOR AND EMPLOYMENT et. Al., respondents. C alrsc DECISION QUISUMBING, J.: Before us is a special civil action for certiorari seeking to reverse partially the Order of public respondent dated June 3, 1994, in Case No. OS-MA-A-8-170-92, which ruled that the workers through their union should be made to shoulder the expenses incurred for the professional services of a lawyer in connection with the collective bargaining negotiations and that the reimbursement for the deductions from the workers should be charged to the unions general fund or account. The records show the following factual antecedents: Petitioners comprise the Executive Board of the SolidBank Union, the duly recognized collective bargaining agent for the rank and file employees of Solid Bank Corporation. Private respondents are members of said union. Sometime in October 1991, the unions Executive Board decided to retain anew the service of Atty. Ignacio P. Lacsina (now deceased) as union counsel in connection with the negotiations for a new Collective Bargaining Agreement (CBA). Accordingly, on October 19, 1991, the board called a general membership meeting for the purpose. At the said meeting, the majority of all union members approved and signed a resolution confirming the decision of the executive board to engage the services of Atty. Lacsina as union counsel. As approved, the resolution provided that ten percent (10%) of the total economic benefits that may be secured through the negotiations be given to Atty. Lacsina as attorneys fees. It also contained an authorization for SolidBank Corporation to check-off said attorneys fees from the first lump sum payment of benefits to the employees under the new CBA and to turn over said amount to Atty. Lacsina and/or his [2] duly authorized representative. The new CBA was signed on February 21, 1992. The bank then, on request of the union, made payroll deductions for attorneys fees from the CBA benefits paid to the union members in accordance with the abovementioned resolution. On October 2, 1992, private respondents instituted a complaint against the petitioners and the union counsel before the Department of Labor and Employment (DOLE) for illegal deduction of attorneys fees [3] as well as for quantification of the benefits in the 1992 CBA. Petitioners, in response, moved for the dismissal of the complaint citing litis pendentia, forum shopping and failure to state a cause of action as [4] their grounds. Sccal r
[1]

On April 22, 1993, Med-Arbiter Paterno Adap of the DOLE- NCR issued the following Order: "WHEREFORE, premises considered, the Respondents Union Officers and Counsel are hereby directed to immediately return or refund to the Complainants the illegally deducted amount of attorneys fees from the package of benefits due herein complainants under the aforesaid new CBA. "Furthermore, Complainants are directed to pay five percent (5%) of the total amount to be refunded or returned by the Respondent Union Officers and Counsel to them in favor of Atty. Armando D. Morales, as attorneys fees, in accordance with Section II, Ru le VIII [5] of Book II (sic) of the Omnibus Rules Implementing the Labor Code." On appeal, the Secretary of Labor rendered a Resolution
[6]

dated December 27, 1993, stating:

"WHEREFORE, the appeal of respondents Evangeline Gabriel, et. al., is hereby partially granted and the Order of the Med-Arbiter dated 22 April 1993 is hereby modified as follows: (1) that the ordered refund shall be limited to those union members who have not signified their conformity to the check-off of attorneys fees; and (2) the directive on the payment of 5% attorneys fees should be deleted for lack of basis. SO ORDERED."
[7]

On Motion for Reconsideration, public respondent affirmed the said Order with modification that the unions counsel be dropped as a party litigant and that the workers through their union should be made to shoulder the expenses incurred for the attorneys services. Accordingly, the reimbursement should be [8] charged to the unions general fund/account. Hence, the present petition seeking to partially annul the above-cited order of the public respondent for being allegedly tainted with grave abuse of discretion amounting to lack of jurisdiction. The sole issue for consideration is, did the public respondent act with grave abuse of discretion in issuing the challenged order? Calrsp ped Petitioners argue that the General Membership Resolution authorizing the bank to check-off attorneys fee from the first lump sum payment of the benefits to the employees under the new CBA satisfies the [9] legal requirements for such assessment. Private respondents, on the other hand, claim that the checkoff provision in question is illegal because it was never submitted for approval at a general membership [10] meeting called for the purpose and that it failed to meet the formalities mandated by the Labor Code. In check-off, the employer, on agreement with the Union, or on prior authorization from employees, [11] deducts union dues or agency fees from the latters wages and remits them directly to the union. It assures continuous funding for the labor organization. As this Court has acknowledged, the system of [12] check-off is primarily for the benefit of the union and only indirectly for the individual employees. The pertinent legal provisions on check-offs are found in Article 222 (b) and Article 241 (o) of the Labor Code. Article 222 (b) states: "No attorneys fees, negotiation fees or similar charges of any kind arising from any collective bargaining negotiations or conclusions of the collective agreement shall be imposed on any individual member of the contracting union: Provided, however, that attorneys fees may be charged against union funds in an amount to be agreed upon by

the parties. Any contract, agreement or arrangement of any sort to the contrary shall be null and void." (Underscoring ours) Article 241 (o) provides: "Other than for mandatory activities under the Code, no special assessment, attorneys fees, negotiation fees or any other extraordinary fees may be checked off from any amount due to an employee without an individual written authorization duly signed by the employee. The authorization should specifically state the amount, purpose and beneficiary of the deduction." (Emphasis ours.) Article 241 has three (3) requisites for the validity of the special assessment for unions incidental expenses, attorneys fees and representation expenses. These are: 1) authorization by a written resolution of the majority of all the members at the general membership meeting called for the purpose; (2) secretarys record of the minutes of the meeting; and (3) individual written authorization for check off duly signed by the employees concerned. Sce dp Clearly, attorneys fees may not be deducted or checked off from any amount due to an employee wi thout his written consent. After a thorough review of the records, we find that the General Membership Resolution of October 19, 1991 of the SolidBank Union did not satisfy the requirements laid down by law and jurisprudence for the validity of the ten percent (10%) special assessment for unions incidental expenses, attorneys fees and representation expenses. There were no individual written check off authorizations by the employees concerned and so the assessment cannot be legally deducted by their employer. Even as early as February 1990, in the case of Palacol vs. Ferrer-Calleja we said that the express consent of employees is required, and this consent must be obtained in accordance with the steps outlined by law, which must be followed to the letter. No shortcuts are allowed. In Stellar Industrial [14] Services, Inc. vs. NLRC we reiterated that a written individual authorization duly signed by the employee concerned is a conditionsine qua non for such deduction. These pronouncements are also in accord with the recent ruling of this Court in the case of ABS-CBN [15] Supervisors Employees Union Members vs. ABS-CBN Broadcasting Corporation, et. al., which provides: "Premises studiedly considered, we are of the irresistible conclusion and, so find that the ruling in BPIEU-ALU vs. NLRC that (1)the prohibition against attorneys fees in Article 222, paragraph (b) of the Labor Code applies only when the payment of attorneys fees is effected through forced contribu tions from the workers; and (2) that no deduction must be take from the workers who did not sign the check-off authorization, applies to the case under consideration." (Emphasis ours.) We likewise ruled in Bank of the Philippine Island Employees Union-Association Labor Union (BPIEU[16] ALU) vs. NLRC, " the afore-cited provision (Article 222 (b) of the Labor Code) as prohibiting the payment of attorneys fees only when it is effected through forced contributions from workers from their own funds as distinguished from the union funds. The purpose of the provision is to prevent imposition on the workers of the duty to individually contribute their respective shares in the fee to be paid the attorney for his services on behalf of the union in its negotiations with management. The obligation to pay the attorneys fees belongs to the union and cannot be shunted to the workers as their direct responsibility. Neither the lawyer nor the union itself may require the individual
[13]

worker to assume the obligation to pay attorneys fees from their own pockets. So categorical is this intent that the law makes it clear that any agreement to the contrary shall be null and void ab initio." (Emphasis ours.) Edp sc From all the foregoing, we are of the considered view that public respondent did not act with grave abuse of discretion in ruling that the workers through their union should be made to shoulder the expenses incurred for the services of a lawyer. And accordingly the reimbursement should be charged to the unions general fund or account. No deduction can be made from the salaries of the concerned employees other than those mandated by law. WHEREFORE, the petition is DENIED. The assailed Order dated June 3, 1994, of respondent Secretary of Labor signed by Undersecretary Bienvenido E. Laguesma is AFFIRMED. No pronouncement as to costs. SO ORDERED. Bellosillo, (Chairman), Mendoza, Buena, and De Leon, Jr., JJ., concur. Ed p

[G.R. No. 110399. August 15, 1997]

SAN MIGUEL CORPORATION SUPERVISORS AND EXEMPT UNION AND ERNESTO L. PONCE, President,petitioners, vs. HONARABLE BIENVENIDO E. LAGUESMA IN HIS CAPACITY AS UNDERSECRETARY OF LABOR AND EMPLOYMENT, HONORABLE DANILO L. REYNANTE IN HIS CAPACITY AS MED-ARBITER AND SAN MIGUEL CORPORATION, respondents. DECISION ROMERO, J.: This is a Petition for Certiorari with Prayer for the Issuance of Preliminary Injunction seeking to reverse and set aside the Order of public respondent, Undersecretary of the Department of Labor and [1] Employment, Bienvenido E. Laguesma, dated March 11, 1993, in Case No. OS MA A-2-70-91 entitled In Re: Petition for Certification Election Among the Supervisory and Exempt Employees of the San Miguel Corporation Magnolia Poultry Plants of Cabuyao, San Fernando and Otis, San Miguel Corporation Supervisors and Exempt Union, Petitioner. The Order excluded the employees under supervisory levels 3 and 4 and the so-called exempt employees from the proposed bargaining unit and ruled out their participation in the certification election. The antecedent facts are undisputed: On October 5, 1990, petitioner union filed before the Department of Labor and Employment (DOLE) a Petition for District Certification or Certification Election among the supervisors and exempt employees of the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando and Otis. On December 19, 1990, Med-Arbiter Danilo L. Reynante issued an Order ordering the conduct of certification among the supervisors and exempt employees of the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando and Otis as one bargaining unit. On January 18, 1991, respondent San Miguel Corporation filed a Notice of Appeal with Memorandum on Appeal, pointing out, among others, the Med-Arbiters error in grouping together all three (3) separate plants, Otis, Cabuyao and San Fernando, into one bargaining unit, and in including supervisory levels 3 and above whose positions are confidential in nature.

On July 23, 1991, the public respondent, Undersecretary Laguesma, granted respondent companys Appeal and ordered the remand of the case to the Med-Arbiter of origin for determination of the true classification of each of the employees sought to be included in the appropriate bargaining unit. Upon petitioner-unions motion dated August 7, 1991, Undersecretary Laguesma granted the reconsideration prayed for on September 3, 1991 and directed the conduct of separate certification elections among the supervisors ranked as supervisory levels 1 to 4 (S1 to S4) and the exempt employees in each of the three plants at Cabuyao, San Fernando and Otis. On September 21, 1991, respondent company, San Miguel Corporation filed a Motion for Reconsideration with Motion to suspend proceedings. On March 11, 1993, an Order was issued by the public respondent granting the Motion, citing the [2] doctrine enunciated in Philips Industrial Development, Inc. v. NLRC case. Said Order reads in part: x x x Confidential employees, like managerial employees, are not allowed to form, join or assist a labor union for purposes of collective bargaining. In this case, S3 and S4 and the so-called exempt employees are admittedly confidential employees and therefore, they are not allowed to form, join or assist a labor union for purposes of collective bargaining following the above courts ruling. Consequently, they are not allowed to participate in the certification election. WHEREFORE, the motion is hereby granted and the Decision of this Office dated 03 September 1991 is hereby modified to the extent that employees under supervisory levels 3 and 4 (S3 and S4) and the socalled exempt employees are not allowed to join the proposed bargaining unit and are therefore excluded [3] from those who could participate in the certification election. Hence this petition. For resolution in this case are the following issues: 1. Whether Supervisory employees 3 and 4 and the exempt employees of the company are considered confidential employees, hence ineligible from joining a union. 2. If they are not confidential employees, do the employees of the three plants constitute an appropriate single bargaining unit. On the first issue, this Court rules that said employees do not fall within the term confidential employees who may be prohibited from joining a union. There is no question that the said employees, supervisors and the exempt employees, are not vested with the powers and prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, layoff, recall, discharge or dismiss employees. They are, therefore, not qualified to be [4] classified as managerial employees who, under Article 245 of the Labor Code, are not eligible to join, assist or form any labor organization. In the very same provision, they are not allowed membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. The only question that need be addressed is whether these employees are properly classified as confidential employees or not. Confidential employees are those who (1) assist or act in a confidential capacity, (2) to persons who [5] formulate, determine, and effectuate management policies in the field of labor relations. The two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee that is, the confidential relationship must exist between the employees and his supervisor, and the supervisor [6] must handle the prescribed responsibilities relating to labor relations. The exclusion from bargaining units of employees who, in the normal course of their duties, become aware of management policies relating to labor relations is a principal objective sought to be

accomplished by the confidential employee rule. The broad rationale behind this rule is that employees [7] should not be placed in a position involving a potential conflict of interests. Management should not be required to handle labor relations matters through employees who are represented by the union with the company is required to deal and who in the normal performance of their duties may obtain advance information of the companys position with regard to contract negotiations, the disposition of grievances, [8] or other labor relations matters. There have been ample precedents in this regard, thus in Bulletin Publishing Company v. Hon. [9] Augusto Sanchez, the Court held that if these managerial employees would belong to or be affi liated with a Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of interest. The Union can also become company-dominated with the presence of managerial employees in Union membership. The same rationale was applied to confidential employees in Golden Farms, Inc. v. [10] [11] Ferrer-Calleja and in the more recent case of Philips Industrial Development, Inc. v. NLRC which held that confidential employees, by the very nature of their functions, assist and act in a confidential capacity to, or have access to confidential matters of, persons who exercise managerial functions in the field of labor relations. Therefore, the rationale behind the ineligibility of managerial employees to form, [12] assist or join a labor union was held equally applicable to them. An important element of the confidential employee rule is the employees need to use labor relations information. Thus, in determining the confidentiality of certain employees, a key questions [13] frequently considered is the employees necessary access to confidential labor relations information. It is the contention of respondent corporation that Supervisory employees 3 and 4 and the exempt employees come within the meaning of the term confidential employees primarily because they answered in the affirmative when asked Do you handle confidential data or documents? in the Position [14] Questionnaires submitted by the Union. In the same questionnaire, however, it was also stated that the confidential information handled by questioned employees relate to product formulation, product [15] standards and product specification which by no means relate to labor relations. Granting arguendo that an employee has access to confidential labor relations information but such is merely incidental to his duties and knowledge thereof is not necessary in the performance of such [16] duties, said access does not render the employee a confidential employee. If access to confidential labor relations information is to be a factor in the determination of an employees confidential status, such information must relate to the employers labor relations policies. Thus, an employee of a labor union, or of a management association, must have access to confidential labor information with respect to his employer, the union, or the association, to be regarded a confidential employee, and knowledge of labor relations information pertaining to the companies with which the union deals, or which the association represents, will not clause an employee to be excluded from the bargaining unit representing employees [17] of the union or association. Access to information which is regarded by the employer to be [18] confidential from the business standpoint, such as financial information or technical trade secrets, will [19] not render an employee a confidential employee. Herein listed are the functions of supervisors 3 and higher: 1. To undertake decisions to discontinue/temporarily stop shift operations when situations require. 2. To effectively oversee the quality control function at the processing lines in the storage of chicken and other products. 3. To administer efficient system of evaluation of products in the outlets. 4. To be directly responsible for the recall, holding and rejection of direct manufacturing materials. 5. To recommend and initiate actions in the maintenance of sanitation and hygiene throughout [20] the plant. It is evident that whatever confidential data the questioned employees may handle will have to relate to their functions. From the foregoing functions, it can be gleaned that the confidential information said

employees have access to concern the employers internal business operations. As held [21] in Westinghouse Electric Corporation v. National Labor Relations Board, an employee may not be excluded from appropriate bargaining unit merely because he has access to confidential information concerning employers internal business operations and which is not related to the field of labor relations. It must be borne in mind that Section 3 of Article XIII of the 1987 Constitution mandates the State to guarantee to all workers the right to self-organization. Hence, confidential employees who may be excluded from bargaining unit must be strictly defined so as not to needlessly deprive many employees of [22] their right bargain collectively through representatives of their choosing. In the case at bar, supervisors 3 and above may not be considered confidential employees merely because they handle confidential data as such must first be s trictly classified as pertaining to labor relations for them to fall under said restrictions. The information they handle are properly classifiable as technical and internal business operations data which, to our mind, has no relevance to negotiations and settlement of grievances wherein the interests of a union and the management are invariably adversarial. Since the employees are not classifiable under the confidential type, this Court rules that they may appropriately form a bargaining unit for purposes of collective bargaining. Furthermore, even assuming that they are confidential employees, jurisprudence has established that there is no legal prohibition against confidential employees who are not performing managerial functions to form and join a [23] union. In this connection, the issue of whether the employees of San Miguel Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando, and Otis constitute a single bargaining unit needs to be threshed out. It is the contention of the petitioner union that the creation of three (3) separate bargaining units, one each for Cabuyao Otis and San Fernando as ruled by the respondent Undersecretary, is contrary to the one-company, one-union policy. It adds that Supervisors level 1 to 4 and exempt employees of the three plants have a similarity or a community of interests. This Court finds the contention of the petitioner meritorious. An appropriate bargaining unit may be defined as a group of employees of a given employer, comprised of all or less than all of the entire body of employees, which the collective interest of all the employees, consistent with equity to the employer, indicate to be best suited to serve the reciprocal rights [24] and duties of the parties under the collective bargaining provisions of the law. A unit to be appropriate must effect a grouping of employees who have substantial, mutual interests [25] in wages, hours, working conditions and other subjects of collective bargaining. It is readily seen that the employees in the instant case have community or mutuality of interest, [26] which is the standard in determining the proper constituency of a collective bargaining unit. It is undisputed that they all belong to the Magnolia Poultry Division of San Miguel Corporation. This means that, although they belong to three different plants, they perform work of the same nature, receive the same wages and compensation, and most importantly, share a common stake in concerted activities. In light of these considerations, the Solicitor General has opined that separate bargaining units in the three different plants of the division will fragmentize the employees of the said division, thus greatly diminishing their bargaining leverage. Any concerted activity held against the private respondent for a labor grievance in one bargaining unit will, in all probability, not create much impact on the operations of the private respondent. The two other plants still in operation can well step up their production and make up for the slack caused by the bargaining unit engaged in the concerted activity. This situation will clearly [27] frustrate the provisions of the Labor Code and the Mandate of the Constitution. The fact that the three plants are located in three different places, namely, in Cabuyao, Laguna, in Otis, Pandacan, Metro Manila, and in San Fernando, Pampanga is immaterial. Geographical location can be completely disregarded if the communal or mutual interests of the employees are not sacrificed as demonstrated in UP v. Calleja-Ferrer where all non-academic rank and file employees of the University of the Philippines inDiliman, Quezon City, Padre Faura, Manila, Los Baos, Laguna and the Visayas were allowed to participate in a certification election. We rule that the distance among the three plants is not

productive of insurmountable difficulties in the administration of union affairs. Neither are there regional differences that are likely to impede the operations of a single bargaining representative. WHEREFORE, the assailed Order of March 11, 1993 is hereby SET ASIDE and the Order of the Med-Arbiter on December 19, 1990 is REINSTATED under which a certification election among the supervisors (level 1 to 4) and exempt employees of the San Miguel Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando, and Otis as one bargaining unit is ordered conducted. SO ORDERED. Regalado, (Chairman), Puno, Mendoza, and Torres, Jr., JJ., concur.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-38178 October 3, 1985 ERNESTO G. GONZALES, AGUEDO GUILLERMO, JOSE MERCADO, RODOLFO C. TOLENTINO, FRISCO IBARRA, MELCHOR DIZON, GAVINO LOPEZ, MAXIMO FELICIANO, CATALINO MUOZ, DOMINGO CAPILI, MAGNO MANALANG, HONORIO DOMINGO, DONATO ESPIRITU, JUAN SANTOS, VICTORINO MERCADO and E. DE GUZMAN, plaintiffs-appellees, vs. CENTRAL AZUCARERA DE TARLAC LABOR UNION, represented by PACIFICO P. MILLO, President, and CENTRAL AZUCARERA DE TARLAC, INC., defendants-appellants.

MAKASIAR, C.J.: This is a petition for review on certiorari to set aside the decision of the Court of First Instance of Tarlac (now Regional Trial Court) in Civil Case No. 4017 dated October 29, 1964, the dispositive portion of which reads as follows: IN VIEW THEREOF, the defendant Tarlac Development Corporation is enjoined from dismissing the plaintiffs upon demand of its co-defendant, the Central Azucarera de Tarlac Labor Union, for their dismissal. Likewise, the Central Azucarera de Tarlac Labor Union is enjoined from demanding from its co-defendant Tarlac Development Corporation, the dismissal of the plaintiffs under threat of strikes, walkouts, stoppages or slowdown of work, boycotts, secondary boycotts, refusal to handle any merchandise, picketting, sit-down strikes of any kind, sympathetic or general strikes, or any other interference with any of the operations of the Central, nor from calling strikes, walkouts, stoppages or slowdown of work, boycotts, secondary boycotts, refusal to handle any merchandise, picketting. sit-down strikes of any kind, sympathetic or general strikes or any other interference with any of the operations of the Central (pp 58-59, ROA; p. 14, rec.). The facts as found by the lower court are quoted as follows:

The plaintiffs are members of the Iglesia ni Kristo, a religious sect that prohibits its members from joining a labor organization. All. except Jose Mercado and Victoriano Mercado, have been seasonal employees or laborers of the defendant Tarlac Development Corporation since prior to October 19, 1962. The Central Azucarera de Tarlac Labor Union is a labor organization represented by its president Pacifico Millo. All of its members have also been working with the Central Azucarera de Tarlac long before October 19, 1962. The defendant Tarlac Development Corporation is a corporation that operates the Central Azucarera de Tarlac. On the date mentioned, the Tarlac Development Corporation and the Central Azucarera de Tarlac Labor Union entered into an exclusive collective bargaining agreement, among the provisions of which are: Section 1. The Union agrees that there shall be no strikes, walkouts, stoppages or slowdown of work, boycotts, secondary boycotts, refusal to handle any merchandise, picketting, sit-down strikes, or any other interference with any of the operations of the Central during the term of this agreement, so long as the procedure outlined in Article X hereof is followed by the Central and the Central abides by the result of the procedure therein provided. xxx xxx xxx Section 4. The Central, upon the written request of the Union, shall discharge any employee or worker who shall fail to fulfill the conditions aforesaid or who resigns or is suspended from membership in the Union for disloyalty. violation of the Constitution and By-laws of the Union, or for any valid cause, but it assumes no obligation to discharge any employee if it has reasonable grounds for believing that membership in the Union was not available to the employee on the same terms and conditions generally applicable to other members. The plaintiffs, through members of the Iglesia ni Kristo, being ignorant of the provisions of Republic Act No. 3350, and believing that it was the only way by which they could continue working for the Central Azucarera de Tarlac, by reason of Section 4 of the Exclusive Collective Bargaining Agreement, joined the defendant Labor Union on the date mentioned. Upon being informed of the provisions of Republic Act No. 3350, which exempts them from the effects of Section 4 of the Exclusive Collective Bargaining Agreement due to their religion the plaintiffs resigned from the defendant labor Union, who in turn demanded from its co-defendant, the Tarlac Development Corporation, the dismissal of the plaintiffs from their work under the above-quoted provision of Section 4 of the bargaining agreement. The present petition seeks to enjoin the defendant Tarlac Development Corporation from dismissing or in any manner laying off the plaintiffs from their present employment. The petition also prays for the issuance of a preliminary injunction pending the resolution of their petition. The petition for preliminary injunction was issued against the defendant Tarlac Development Corporation, who, in turn, moved that pending the decision of this case, the order granting the preliminary injunction be amended by including therein the defendant Central Azucarera de Tarlac Labor Union.

At the hearing of the motion of the defendant Tarlac Development Corporation, the parties agreed to submit the case on the above facts without the necessity of presenting further evidence. (pp. 52-55, ROA; p. 14, rec.). In an order dated November 11, 1964, the court a quo corrected a technical error in its decision, by substituting Central Azucarera de Tarlac, being the real party defendant below, in lieu of Tarlac Development Corporation (p. 68, rec. on appeal; p. 14, rec.). On January 14, 1974, the then Court of Appeals certified the instant case to this Court on the ground that only questions of law were involved therein (pp. 75-79, rec.). One issue raised by defendantsappellants in this appeal is: inasmuch as there was no evidence presented by plaintiffs-appellees to support their cause of action, there can be no basis for the trial court's factual findings. There being no documentary or testimonial evidence presented in this case, We will review the correctness of the trial court's factual findings on the basis of what was admitted in the pleadings by the parties. The status of plaintiffs-appellees as members of the defendant-appellant Labor Union was expressly admitted by the latter in paragraph 2 of its answer to the amended complaint (p. 25, ROA; p. 14, rec.). The status of plaintiffs-appellees as employees of the defendant-appellant Central was admitted by the latter in paragraph 4 of its urgent motion to amend the restraining order (p. 30, ROA; p. 14, rec.) and in paragraph 16 of its answer to the amended complaint (p. 22, ROA; p. 14, rec.). Defendant-appellant Central also admitted the status of plaintiffs-appellees as members of the religious sect Iglesia ni Kristo, when the Central referred to the plaintiffs-appellees as Iglesia ni Kristo members/employees in paragraphs 15 and 16 of its answer to the amended complaint (p. 22, ROA; p. 14, rec.). With the foregoing admissions and the affirmation in open court by the defendant-appellant Labor Union that the remaining question of fact left to be resolved was the allegation that the members of the Iglesia ni Kristo were forced to join the Union (p. 10, Brief for Defendant-Appellant; p. 35, rec.), relieved plaintiffs-appellees of the burden to present evidence on these specific points and served as the basis for the lower court's factual findings. With this, We need not touch upon the other assignment of errors by defendants-appellants. The bone of this controversy is the constitutionality of Republic Act No. 3350 which exempts members of any religious sectprohibiting the affiliation of their members in any labor organizationfrom the operation of a union security provision. Defendant-appellant Central, in support of its contention that R.A. No. 3350 is unconstitutional, cited the decision of the defunct Court of Industrial Relations in the case of National Labor Union vs. Hacienda Luisita, et al., declaring R.A. No. 3350 as unconstitutional (pp. 25-46, Brief for Defendant-Appellant; p. 35, rec.). In the case of Anucension vs. National Labor Union (80 SCRA 350, 366- 375 [1977]), which reiterated the cases of Basa vs. Federacion Obrera de la Industria Tabaquera y Otros Trabajadores de Filipinas [FOITAF] (61 SCRA 93 [1974]) and Victoriano vs. Elizalde Rope Workers' Union, et al. (59 SCRA 54 [1974]), this Court said: Both the Constitution and Republic Act No. 875 recognized freedom of association. Section 1 (6) of Article I I I of the Constitution of 1935, as well as Section 7 of Article IV of the Constitution of 1973, provide that the right to form associations or societies

for purposes not contrary to law shall not be abridged. Section 3 of Republic Act No, 875 provides that employees shall have the right to self-organization and to form, join or assist labor organizations of their own choosing for the purpose of collective bargaining and to engage in concerted activities for the purpose of collective other mutual aid or protection. What the Constitution and the Industrial Peace Act recognize and guarantee is the 'right' to form or join associations. Notwithstanding the different theories propounded by the different schools of jurisprudence regarding the nature and contents of a 'right', it can be safely said that whatever theory one subscribes to, a right comprehends at least two broad notions, name1y: first, liberty or freedom, i.e., the absence of legal restraint, whereby an employee may, as he pleases, join or refrain from joining an association. It is, therefore, the employee who should decide for himself whether he should join or not an association; and should be choose to join he himself make up his mind as to which association he would join: and even after he has joined, he still retains the liberty and the power to leave and cancel his membership with said organization at any time. It is clear, therefore, that the right to join a union includes the right to abstain from joining any union. Inasmuch as What both the Constitution and the Industrial Peace Act have recognized, and guaranteed to the employee, is the 'right' to join associations of his choice, it would be absurd to say that the law also imposes, in the same breath, upon the employee the duty to join associations. The law does not enjoin an employee to sign up with any association. The right to refrain from joining labor organizations recognized by Section 3 of the Industrial Peace Act is, however, limited. The legal protection, granted to such right to refrain from joining is withdrawn by operation of law, where a labor union and an employer have agreed on a closed shop, by virtue of the collective bargaining unit, and the employees must continue to be members of the union for the duration of the contract in order to keep their jobs. Thus Section 4[a] (4) of the Industrial Peace Act, before its amendment by Republic Act No. 3350 provides that although it would be unfair labor practice for an employer to discriminate in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization the employer, is however, not precluded 'from making an agreement with a labor organization, to require as a condition of employment membership therein, if such labor organization is the representative of the employees. By virtue, therefore, of a closed shop agreement, before the enactment of Republic Act No. 3350, if any person, regardless of his religious beliefs, wishes to be employed or keep his employment, he must become a member of the collective bargaining union. Hence, the right of said employee not to join the labor union is curtailed and withdrawn. To that all-embracing coverage of the closed shop arrangement, Republic Act No. 3350 introduced an exception, when it added to Section 4[a] (4) of the Industrial Peace Act the following proviso: 'but such agreement shall not cover members of any religious sects which prohibit affiliation of their members in any such labor organization.' Republic Act No. 3350 merely excludes ipso jure from the application and coverage of the closed shop agreement the employees belonging to any religious sect which prohibits affiliation of their members with any labor organization. What the exception provides, therefore, is that members of said religious sects cannot be compelled or coerced to join labor unions even when said unions have closed shop agreements with the employers; that in spite of any closed shop agreement, members of said religious sects cannot be refused employment or dismissed from their jobs on the sole ground that they are not members of the collective bargaining union. It is clear, therefore, that the assailed Act, far from

infringing the constitutional provision on freedom of association, upholds and reinforces it. It does not prohibit the members of said religious sects from affiliating with labor unions. It still leaves to said members the liberty and the power to affiliate, or not to affiliate, with labor unions. If, notwithstanding their religious beliefs, the members of said religious sects prefer to sign up with the labor union, they can do so. If in deference and fealty to their religious faith, they refuse to sign up, they can do so; the law does not coerce them to join; neither does the law prohibit them from joining; and neither may the employer or labor union compel them to join, Republic Act No. 3350, therefore, does not violate the constitutional provision on freedom of association. 2. Appellant Union also contends that the Act is unconstitutional for impairing the obligation of its contract, specifically, the 'union security clause' embodied in its Collective Bargaining Agreement with the Company, by virtue of which membership in the union was required as a condition for employment for all permanent employees workers.' This agreement was already in existence at the time Republic Act No. 3350 was enacted on June 18, 1961, and it cannot, therefore, be deemed to have been incorporated into the agreement. But by reason of this amendment, appellee, as well as others similarly situated, could no longer be dismissed from his job even if he should cease to be a member, or disaffiliate from the Union, and the Company could continue employing him notwithstanding his disaffiliation from the Union. The Act, therefore, introduced a change into the express terms of the union security clause; the Company was partly absolved by law from the contractual obligation it had with the Union of employing only Union members in permanent positions. It cannot be denied, therefore that there was indeed an impairment of said union security clause. It should not be overlooked, however, that the prohibition to impair the obligation of contracts is not absolute and unqualified. The prohibition is general, affording a broad outline and requiring construction to fill in the details. The prohibition is not to be read with literal exactness like a mathematical formula, for it prohibits unreasonable impairment only. In spite of the constitutional prohibition, the State continues to possess authority to safeguard the vital interests of its people. Legislation appropriate to safeguard said interest may modify or abrogate contracts already in effect. For not only are existing laws read into contracts in order to fix the obligations as between the parties, but the reservation of essential attributes of sovereign power is also read into contracts as postulate of the legal order. All contracts made with reference to any matter that is subject to regulation under the police power must be understood as made in reference to the possible exercising of that power. Otherwise, important and valuable reforms may be precluded by the simple device of entering into contracts for the purpose of doing that which otherwise may be prohibited. The policy of protecting contracts against impairment presupposes the maintenance of a government by virtue of which contractual relations are worthwhile-a government which retains adequate authority to secure the peace and good order of society. The contract clause of the Constitution must, therefore, be not only in harmony with, but also in subordination to, in appropriate instances, the reserved power of the State to safeguard the vital interests of the people, It follows that not all legislations, which have the effect of impairing a contract are obnoxious to the constitutional prohibition as to impairment and a statute passed in the legitimate exercise of police power, although it incidentally destroys existing contract rights, must be upheld by the courts. This has special application to contracts regulating relations between capital and labor which are not merely contractual, and said labor contracts, for being impressed with public interests, must yield to the common good.

xxx xxx xxx In order to determine whether legislation unconstitutionally impairs contract obligations, no unchanging yardstick, applicable at all times and under all circumstances, by which the validity of each statute may be measured or determined, has been fashioned, but every case must be determined upon its own circumstances. Legislation impairing the obligation of contracts can be sustained when it is enacted for the promotion of the general good of the people, and when the means adopted to secure that end are reasonable. Both the end sought and the means adopted must be legitimate, i.e., within the scope of the reserved power of the state construed in harmony with the constitutional limitation of that power. What then was the purpose sought to be achieved by Republic Act No. 3350? Its purpose was to insure freedom of belief and religion, and to promote the general welfare by preventing discrimination against those members of religious sects which prohibit their members from joining labor unions, confirming thereby their natural, statutory and constitutional right to work, the fruits of which work are usually the only means whereby they can maintain their own life and the life of their dependents. It cannot be gainsaid that said purpose is legitimate. The questioned Act also provides protection to members of said religious sects against two aggregates of group strength from which the individual needs protection. The individual employee, at various times in his working life, is confronted by two aggregates of power collective labor, directed by a union, and collective capital, directed by management. The union, an institution developed to organize labor into a collective force and thus protect the individual employee from the power of collective capital, is paradoxically, both champion of employee rights, and a new source of their frustration. Moreover, when the Union interacts with management, it produces yet a third aggregate of group strength from which the individual also needs protection-the collective bargaining relationship. It may not be amiss to point out here that the free exercise of religious profession or belief is superior to contract rights. In case of conflict, the latter must, therefore, yield to the former. The Supreme Court of the United States has also declared on several occasions that rights in the First Amendment, which include freedom of religion, enjoy a preferred position in the constitutional system. Religious freedom, although not unlimited, is a fundamental personal right and liberty, and has a preferred position in the hierarchy of values. Contractual rights, therefore, must yield to freedom of religion. It is only where unavoidably necessary to prevent an immediate and grave danger to the security and welfare of the community that infringement of religious freedom may be justified, and only to the smallest extent necessary to avoid the danger. In further support of its contention that Republic Act No. 3350 is unconstitutional, appellant Union averred that said Act discriminate in favor of members of said religious sects in violation of Section 1(7) of Article III of the 1935 Constitution, and which is now Section 8 of Article IV of the 1973 Constitution, which provides: No law shall be made respecting an establishment of religion, or prohibiting the free exercise thereof, and the free exercise and enjoyment of religious profession and worship, without discrimination and preference, shall forever be allowed. No religious test shall be required for the exercise of civil or political rights.

The constitutional provision not only prohibits legislation for the support of any religious tenets of the modes of worship of any sect thus forestalling compulsion by law of the acceptance of any creed or the practice of any form of worship but also assures the free exercise of one's chosen form of religion within the limits of utmost amplitude. It has been said that the religious clauses of the Constitution are all designed to protect the broadest possible liberty of conscience, to allow each man to believe as his conscience directs, to profess his beliefs, and to live as he believes he ought to live, consistent with the liberty of others and with the common good. Any 'legislation whose effect or purpose is to impede the observance of one or all religions, or to discriminate insidiously between the religions, is invalid, even though the burdens may be characterized as being only indirect. But if the states regulates conduct by enacting, within its power, a general law which has not its purpose and effect to advance the states regular goals, the statute is valid despite its indirect burden on religious observance, unless the state ca accomplish its purpose without imposing such burden. In Aglipay vs. Ruiz, this Court had occasion to state that the government should not be precluded from pursuing valid objectives secular in character even if the incidental result would be favorable to a religion or sect. It has likewisw been held that the statute, in order to withstand the strictures of constitutuional prohibition, must have a secular legislative purpose and a primary effect that neither advances nor inhibits religion. Assessed by these criteria, Republic Act No. 3350 cannot be said to violate the constitutional inhibition of the 'no-establisment' (of religion) clause of the Constitution. The purpose of Republic Act No. 3350 is secular, worldly, and temporal,not spritual or religious or holy and eternal. It was intended to serve the secular purpose of advancing the constitutional right to the free exercise of religion, by averting that certain persons be refused work, or be dismissed from work, or be dispossessed of their right to work and being impeded to pursue a modest means of livelihood, by reason of union secutrity agreements. To help its citizens to find gainful employment whereby they can make a living to support themselves and their families is a valid onjective of the state. In fact, the state is enjoined, in the 1935 Constitution, to afford protection to labor, and regulate the relations between labor and capital industry. More so now in the 1973 Constitution where it is mandated that 'the State shall afford protection to labor, promote full employment and security in employment, ensure equal work opportunities regrdless of sex, race or creed and regulate the relation between workers and employers. The primary effects of the exemption from closed shop agreements in favor of members of religious sects that prohibit their members from affiliating with a labor organization, is the protective of said employees against the aggregate force of the collective bargaining agreement, and relieving certains citizens os a burden of their religious beliefs; and by eliminating to a certain extent economic insecurity due to unemployment, which is a serious menace to the health, morals, and welfare of the people of the State, the Act also promotes the well-being of society. It is our view that the exemption from the effects of closed shop agreements does not directly advance, or diminish, the interests of any particular religion. Although the exemption may benefit those who are members of religious sects that prohibit their members from joining labor unions, the benefit upon the religious sect is merely incidental and indirect. The 'establishment clause' (of religion) does not ban regulation on conduct whose reason or effect merely happens to coicide or harmonize with the tenets of

some or all religions. The free exercise clause of the Constitution has been interpreted to require that religious exercise be preferentially aided. We believe that in enacing Republic Act No. 3350, Congress acted consistently with the spirit of the consitutional provision. It acted merely to relieve the exercise of religion, by certain persons, of a burden that is imposed by union security agreements. It was congress itself that imposed that burden when it enacted the Industrial Peace Act (Republic Act 875), and, certainly Congress, if it so deems advisable, could take away the same burden. It is certain that not every conscience can be accomodated by all laws of the land; but when general laws conflict with scruples of conscience, exemptions ought to be granted unless some 'compelling state interest' intervenes. In the instant case, We see no compelling state interest to withhold the exemption. Appellant bewails that while Republic Act No. 3350 protects members of certain religious sects, it leaves no right to, and is silent as to the protection of, labor organization. the purpose of republic Act No. 3350 was not to grant rights to labor unions. The right of labor unions are amply provided for in Republic Act No. 875 and the New Labor Code. As to the lamented silence of the Act regarding the rights and protection of labor unions, suffice to say, first, that the validity of a statute is determined by its provisions, not by its silence, the fact that the law may work hardships does not render it unconstitutional. It would not be amiss to state, regarding this matter, that to compel persons to join and remain members of a union to keep their jobs in violation of their religious scruples, would hurt, rather than help, labor unions. Congress has seen it fit to exempt religious objectors lest their resistance spread to other workers, for religious objections have contagious potentialities more than political and philosophic objections. Furthermore, let it be noted that coerced unity and loyalty even to the country, and a fortiori to a labor union assuming that such unity and loyalty can be attained through coercion is not a goal that is constitutionally obtainable at the expense of religious liberty. A desirable end cannot be promoted by prohibited means. xxx xxx xxx 5. Appellant avers as its fifth ground that Republic Act No. 3350 is a discriminatory legislation, inasmuch as it grants to the members of certain religious sects undue advantage over other workers, thus violating Section I of Article Ill of the 1935 Constitution which forbids the denial to any person of the equal protection of the laws. The guaranty of equal protection of the laws is not a guaranty of equality in the application of the laws upon all citizens of the State. It is not, therefore, a requirement, in order to avoid the constitutional prohibition against inequality, that every man, woman and child should be affected alike by a statute. Equality of operation of statutes does not mean indiscriminate operation on persons merely as such, but on persons according to the circumstances surrounding them. It guarantees equality, not Identity of rights. The Constitution does not require that things which are different in fact be treated in law as though they were the same. The equal protection clause does not forbid discrimination as to things that are different. It

does not prohibit legislation which is limited either in the object to which it is directed or by the territory within which it operates. The equal protection of the laws clause of the Constitution allows classification, Classification in law, as in the other departments of knowledge or practice, is the grouping of things in speculation or practice because they agree with one another in certain particulars. A law is not invalid because of simple inequality. The very Idea of classification is that of inequality, so that it goes without saying that the mere fact of inequality in no manner determines the matter of constitutionality. All that is required of a valid classification is that it be reasonable, which means that the classification should be based on substantial distinctions which make for real differences, that it must not be limited to existing conditions only; and that it must apply equally to each member of the class. This Court has held that the standard is satisfied if the classification or distinction is based on a reasonable foundation or rational basis and is not palpably arbitrary. In the exercise of its power to make classifications for the purpose of enacting laws over matters within its jurisdiction, the state is recognized as enjoying a wide range of discretion. It is not necessary that the classification be based on scientific or marked differences of things or in their relation. Neither is it necessary that the classification be made with mathematical nicety. Hence legislative classification may in many cases properly rest on narrow distinctions, for the equal protection guaranty does not preclude the legislature from recognizing degrees of evil or harm, and legislation is addressed to evils they may appear. We believe that Republic Act No. 3350 satisfies the aforementioned requirements. The act classifies employees and workers, as to the effect and coverage of union shop security agreements, into those who by reason of their religious beliefs and convictions cannot sign up with a labor union, and those whose religion does not prohibit membership in labor unions. The classification rests on real or substantial, not merely imaginary or whimsical distinctions. There is such real distinction in the beliefs, feelings and sentiments of employees. Employees do not believe in the same religious faith and different religion differ in their dogmas and canons. Religious beliefs, manifestations and practices, though they are found in all place, and in all times, take so many varied forms as to be almost beyond imagination. There are diverse manners in which beliefs, equally paramount in the lives of their possessor, may be articulated. Today the country is far more heterogenous in religion than before, differences in religion do exist, and these differences are important and should not be ignored. Even from psychological point of view, the classification is based on real and important differences. Religious beliefs are not mere beliefs, mere Ideas existing only in the and, for they carry with them practical consequences and are the motives of certain rules of human conduct and the justification of certain acts. Religious sentiment makes a man view things and events in their relation to his God, It gives to human life its distinctive characters, its tone, its happiness, or unhappiness. Its enjoyment or irksomeness. Usually, a strong and passionate desire is involved in a religious belief. To certain persons, no single factor of their experience is more important to them than their religion, or their not having any religion. Because of differences in religious belief and sentiments, a very poor person may consider himself better than the rich and the man who even lacks the necessities of life may be more cheerful than the one who has all possible luxuries. Due to their religious beliefs people, like the martyrs, became resigned to the inevitable and accepted

cheerfully even the most painful and excruciating pains. Because of differences in religious beliefs, the world has witnessed turmoil, civil strife, persecution hatred, bloodshed, and war, generated to a large extent by members of sects who were intolerant of other religious beliefs. The classification introduced by Republic Act No. 3350, therefore, rests on substantial distinctions. The classification introduced by said Act is also germane to its purpose. The purpose of the law is precisely to avoid those who cannot, because of their religious belief, join labor unions from being deprived of their right to work and from being dismissed from their work because of union shop security agreements. xxx xxx xxx As comprehensively observed by Justice Fernando in his concurring opinion in that case: 3. There is however, the question of whether such an exception possesses an implication that lessens the effectiveness of state efforts to protect labor, likewise, as noted constitutionally ordained. Such a view, on the surface, may not be lacking in plausibility, but upon closer analysis, it cannot stand scrutiny. Thought must be given to the freedom of association, likewise an aspect of intellectual liberty. For the late Professor Howe, a constitutionalist and in his lifetime the biographer of the great Holmes, it even partakes of the political theory of pluralistic sovereignty. So great is the respect for the autonomy accorded voluntary societies. Such a right implies at the very least that one can determine for himself whether or not he should join or refrain from joining a labor organization, an institutional device for promoting the welfare of the working man. A closed shop, on the other hand, is inherently coercive. That is why, as is unmistakably reflected in our decisions, the latest of which is Guijarno vs. Court of Industrial Relations, it is far from being a favorite of the law. For a statutory provision then to further curtail, its operation is precisely to follow the dictates of sound public policy. In view of the foregoing, this Court finds that plaintiffs-appellees, as members of the Iglesia ni Kristo, may not be dismissed from their employment by reason of their resignation from the defendant-appellant Labor Union. Republic Act No. 3350, which exempts plaintiffs-appellees from the operation of the union security clause in the Collective Bargaining Agreement of October 19, 1962, remains constitutional. WHEREFORE, THE DECISION OF THE COURT OF FIRST INSTANCE OF TARLAC IN CIVIL CASE NO. 4017 DATED OCTOBER 29, 1964, IS HEREBY AFFIRMED IN TOTO NO COSTS. SO ORDERED. Teehankee, Concepcion, Jr., Abad Santos, Melencio-Herrera, Plana, Escolin, Relova, Gutierrez, Jr., De la Fuente, Cuevas, Alampay and Patajo, JJ., concur. Aquino, J., took no part.

SECOND DIVISION

[G.R. No. 124823. July 28, 1999]

PASVIL/PASCUAL LINER, INC., WORKERS UNION - NAFLU, and DONATO BUGTONG, PEDRO FERNANDO, RODANTE AMBAS, RODOLFO PASCUAL, FELIZARDO GASPAR, CONRADO CLEMENTE, PONCIANO GABRIEL SR., ROBERTO ESPEJON, MARCELO MOJAR JR., ARNULFO GERMAN, JOSE OGAO, ARNEL FORTALEZA, MERLITO DELA CRUZ, ROMMEL BUENAVENTE, MANUEL TRINIDAD, JOSELITO MENDIOLA, PEDRO OCIONES, GUILLERMO NARANJO and FREDENILL LAZO, petitioners vs. NATIONAL LABOR RELATIONS COMMISSION and PASVIL/PASCUAL LINER, INC., respondents. DECISION
BELLOSILLO, J.:

THE RIGHT TO STRIKE is one of the rights recognized and guaranteed by the Constitution as an instrument of labor for its protection against management exploitation. By virtue of this right the workers are able to press their demands for better terms and conditions of employment with more energy and persuasiveness, poising the threat to strike as their reaction to their employer's intransigence. The strike is indeed a powerful weapon of the working class. But precisely, if not because of this, it must be handled carefully, like a sensitive explosive, lest it blows up in the workers' own hands.[1] Simply put, a strike is recognized and protected by our labor laws only when waged on account of a labor dispute. In the absence thereof, the employees who engage themselves in work stoppage commit an illegal strike and should face the consequences thereof. On 3 August 1994 petitioner PASVIL/Pascual Liner, Inc., Workers Union - NAFLU (UNION for short)[2] filed a notice of strike with the National Conciliation and Mediation Board National Capital Region (NCMB-NCR for short) against private respondent PASVIL/Pascual Liner, Inc., (PASVIL for short) for unfair labor practices consisting in union busting, discrimination and discouraging union membership.[3] On 24 January 1995 the NCMB-NCR notified UNION President Donato Bugtong thus -

During the conciliation meetings conducted by this Office, it was clearly established that the real issues raised are the dismissal of the Union President (referring to Bugtong himself) which is pending adjudication before Labor Arbiter Melquiades Del Rosario of the NLRC-NCR, and the certification election case which is pending resolution before the Office of the Secretary. The issues raised are therefore not proper subjects of a Notice of Strike but are appropriate for Preventive Mediation.[4]

A series of conciliation conferences was thereafter conducted by the NCMB-NCR which failed however to amicably settle the dispute. As a consequence, on 18 February 1995 petitioner UNION staged a strike. Further efforts to effect settlement achieved nothing and the strike continued. On 21 February 1995, upon petition of private respondent PASVIL, then Secretary of Labor and Employment Ma. Nieves R. Confesor, pursuant to Art. 263, par. (g), of the Labor Code, assumed jurisdiction over the dispute and certified it to public respondent National Labor Relations Commission (NLRC) for compulsory arbitration. Secretary Confesor justified her direct intervention

The Company is engaged in the transportation business and has in its employ more or less 900 workers. It services the needs of thousands of commuters in Metro Manila mostly students, professionals, government and private employees, as well as traders and merchants. A prolonged work stoppage, therefore, at the Company would not only cause unnecessary inconvenience and adverse effects to the riding public but also to the livelihood of its direct employees not to mention their families and those indirectly dependent upon the continued operation of the Company. At this critical time when efforts of the present administration is (sic) seriously focused on sustaining the economic gains already achieved and putting in place the much needed social reforms, it is the utmost concern of this Office to avert unnecessary work stoppages that might result into untold dire consequences.[5]
Secretary Confesor directed all striking workers to return to work within twenty-four (24) hours from receipt thereof and for PASVIL to accept them back under the same terms and conditions of employment prevailing before the strike. Furthermore, she directed the parties to cease and desist from committing acts that would prejudice the other party or exacerbate the situation. The directive was published in Daily Balita[6] and Bulgar.[7] Notwithstanding receipt of the aforementioned order, Secretary Confesor found that petitioner UNION continued to picket and barricade PASVIL's premises thereby preventing the workers wanting to report back to work from entering the premises. On 24 February 1995 she reiterated her directive in the previous return-to-work order and deputized the Station Commander of the Novaliches Police Station to assist in the orderly and peaceful enforcement of her order including the removal of all forms of obstruction and barricades to ensure free ingress to or egress from the premises of PASVIL.[8] The conciliation conferences were then scheduled by the NLRC on 28 March and 19 April 1995 but only representatives of PASVIL appeared. On this account, an order was issued on 12 May 1995 directing the parties to submit their Position Papers. The parties complied. On 21 August 1995 PASVIL moved for the early resolution of the case on the ground that the strike was still ongoing thus causing it vast revenue losses. A hearing was set for 29 August 1995 to determine whether a formal hearing on the merits was necessary or whether PASVIL's motion should be granted. However, both parties failed to appear so a second hearing was set on 11 October 1995. On this date, the parties were asked if they wished to have the case submitted

for resolution. Petitioner UNION, through Board Member Ponciano Gabriel Sr., requested and was granted up to 23 October 1995 to notify the NLRC regarding its intention with respect to the proceedings. On the deadline, petitioner UNION moved for a formal trial on the merits. A hearing on the motion was set on 6 November 1995. However, only PASVIL's counsel attended the hearing and was given until 15 November 1995 to comment on the motion. In the comment subsequently filed, PASVIL alleged that all questions raised by petitioner UNION had been traversed by the documents already submitted in evidence. Another hearing was scheduled for 7 December 1995. Again, only PASVIL appeared. On the belief that petitioner UNION's motion for a formal trial on the merits was a mere dilatory move and on the consideration that the evidence on hand would sufficiently allow it to reach a conclusion, the NLRC denied the motion for a formal trial and proceeded to resolve the legality of petitioner UNION's purposes for staging the strike, i.e., that twenty-four (24) airconditioned buses were surreptitiously removed from the company premises to deprive UNION officers and members of their jobs, and that Bugtong was arbitrarily dismissed from employment due to Union activities. PASVIL countered that the buses were sold to E & J Transport and Mayami Transit the proceeds of which were applied to the payment of interest on its principal obligations and that Bugtong was dismissed due to gross and habitual neglect of duty/willful disobedience. On 15 January 1996 the NLRC declared the still-ongoing strike illegal and consequently deemed the UNION officers who acted as leaders thereof, petitioners herein, to have lost their employment status, namely, President Donato Bugtong, Vice President Pedro Fernando, Secretary Rodante Ambas, Treasurer Rodolfo Pascual, Auditor Felizardo Gaspar, Spokesman Conrado Clemente and Board Members Ponciano Gabriel Sr., Roberto Espejon, Marcelo Mojar Jr., Arnulfo German, Jose Ogao, Arnel Fortaleza, Merlito Dela Cruz, Rommel Buenavente, Manuel Trinidad, Joselito Mendiola, Pedro Ociones, Guillermo Naranjo and Fredenill Lazo. However, the charge of unfair labor practice was dismissed for lack of merit.[9] In support of its ruling, the NLRC ratiocinated that although PASVIL did not prove that the sale of the buses actually materialized there was evidence showing that even without those buses there was a sufficient number of buses remaining for the employees to continue working and that PASVIL even exhorted its drivers and dispatchers to accept their respective assignments and operate the buses.[10] Yet petitioners did not explain why they failed to man the remaining buses. The NLRC also found that petitioners did not specify the wage benefits they were entitled to that were not granted by PASVIL nor did they clarify the particular working conditions existing at their workplace which they could not tolerate. At any rate, the NLRC opined that the issue of underpayment or non-payment of wage benefits should have been addressed to the Labor Arbiter, whereas that of poor working conditions should have been brought to the attention of the Department of Labor and Employment or, if related to the condition of the buses themselves, to the Department of Transportation and Communication which had the authority to suspend or cancel the franchise of PASVIL. With regard to the dismissal from employment of petitioner Bugtong, the NLRC found that as previously ruled by the NCMB-NCR, a complaint therefor has been filed before Labor Arbiter Melquiades Sol D. Del Rosario who on 25 May 1995 held that the totality of infractions committed by Bugtong justified his dismissal.[11] Still another rationale for the NLRC's ruling against petitioners was its finding that the strikers did not comply with Secretary Confesor's

directive for them to return to work. To sum up, the NLRC ruled that there was no legitimate reason for petitioners to strike. On 31 January 1996 reconsideration was denied. Did the NLRC act with grave abuse of discretion in: (a) ruling on the illegality of the strike thus violating the doctrine laid down in Philippine Airlines, Inc. v. Secretary of Labor and Employment[12] that the Labor Secretary's authority to resolve a labor dispute over which he has assumed jurisdiction encompasses only the issues involved therein, not the legality or illegality of the strike; (b) refusing to hold a formal trial; (c) holding that PASVIL was not guilty of unfair labor practice; and, (d) declaring the strike illegal and considering petitioners to have lost their employment status? Petitioners allege that on the basis of Art. 217 of the Labor Code which explicitly provides that Labor Arbiters shall have original and exclusive jurisdiction to hear and decide cases involving the legality of strikes and lock-outs, the NLRC was not clothed with authority to decide on the legality of the strike. Moreover, they stress that the dispute did not involve any complaint for illegal strike but for unfair labor practice such that in Philippine Airlines involving the same factual milieu this Court held that the Secretary of Labor and Employment acted without or in excess of jurisdiction when he ruled on the legality of the strike. There is no grave abuse of discretion. Article 217 of the Labor Code categorically provides that Labor Arbiters shall have original and exclusive jurisdiction to hear and decide cases involving the legality of strikes and lock-outs. But the opening phrase of the law is as categorical in mentioning an exception thereto. Thus -

Art. 217. Jurisdiction of Labor Arbiters and the Commission. - (a) Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, the following cases involving all workers, whether agricultural or non-agricultural x x x x 5. Cases arising from any violation of Article 264 of this Code, including questions on the legality of strikes and lock-outs x x x x (underscoring supplied).
An exception to the original and exclusive jurisdiction lodged in the Labor Arbiters is found in Art. 263, par. (g), of the same Code -

Art. 263. Strikes, picketing, and lockouts. - x x x x (g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission may

seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with such orders as he may issue to enforce the same x x x x
In 1992 we clarified this point in International Pharmaceuticals, Inc. v. Secretary of Labor and Employment[13] thus -

x x x [T]he Secretary was explicitly granted by Article 263 (g) of the Labor Code the authority to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, and decide the same accordingly. Necessarily, this authority to assume jurisdiction over the said labor dispute must include and extend to all questions and controversies arising therefrom, including cases over which the Labor Arbiter has exclusive jurisdiction(underscoring supplied).
In the same manner, when the Secretary of Labor and Employment certifies the labor dispute to the NLRC for compulsory arbitration the latter is concomitantly empowered to resolve all questions and controversies arising therefrom including cases otherwise belonging originally and exclusively to the Labor Arbiter. In Philippine Airlines we ruled that the jurisdiction of the Secretary of Labor and Employment in assumption and/or certification cases is limited to the issues that are involved in the disputes or to those submitted to him for resolution. Since the legality or illegality of the strike was never submitted to him for resolution he was thus found to have exceeded his jurisdiction when he restrained the employer from taking disciplinary action against the employees who staged an illegal strike. The Philippine Airlines case finds no application to the present case because, as distinguished therefrom and as properly observed by the Office of the Solicitor General, the certification by Secretary Confesor to the NLRC of the issues sought to be settled involved the strike of petitioners. The certification stated -

On 3 August 1994, the PASVIL/Pascual Liner, Inc. Workers Union - NAFLU, hereinafter referred to as the Union, filed a Notice of Strike with the National Conciliation and Mediation Board - National Capital Region (NCMB-NCR) against PASVIL/Pascual Liner, Inc., hereinafter referred to as the Company, on grounds of unfair labor practice acts. Series of conciliation conferences conducted by the Board failed to arrive at an amicable settlement on the alleged specific acts committed by the Company. On 18 February 1995, the Union struck. Further efforts to effect settlement yielded negative results. In the meantime, the strike continues with no settlement in sight.[14]
Clearly, what was certified to the NLRC was the entire labor dispute including the strike which was then ongoing. It was thus necessary for the NLRC to rule on the matter. In St. Scholastica's College v. Torres[15] where petitioner questioned the assumption by the Secretary of Labor and Employment of jurisdiction to decide on termination disputes, likewise maintaining

that such jurisdiction was vested instead in the Labor Arbiter pursuant to Art. 217 of the Labor Code and invoking Philippine Airlines, we emphasized that -

Before the Secretary of Labor and Employment may take cognizance of an issue which is merely incidental to the labor dispute, therefore, the same must be involved in the labor dispute itself, or otherwise submitted to him for resolution. If it was not, as was the case in PAL v. Secretary of Labor and Employment, supra, and he nevertheless acted on it, that assumption of jurisdiction is tantamount to a grave abuse of discretion. Otherwise, the ruling in International Pharmaceuticals, Inc. v. Secretary of Labor and Employment, supra, will apply.
Petitioners assert that since the NLRC did not act as an appellate body in resolving the dispute it should have been guided by Rule V, Sec. 5, par. (b), of itsNew Rules of Procedure mandating that -

Sec. 5. Period to Decide Case x x x x (b) If the Labor Arbiter finds no necessity of further hearing after the parties have submitted their position papers and supporting documents, he shall issue an Order to that effect and shall inform the parties, stating the reasons therefor x x x x
Petitioners advance that conformably therewith the NLRC should have issued a separate ruling on their motion for formal trial, instead of having merely incorporated its ruling in its assailed decision, so that they could have supplied or completed whatever deficiencies there might be in their evidence. They add that there were factual issues which could not be resolved by documentary evidence, i.e., blockade of the free ingress to and egress from the company premises and non-compliance with the return-to-work order. We are not persuaded. The purpose of the rule requiring the issuance of an order submitting the case for decision is to provide a period from which to reckon the time frame within which to decide the case. We discern this purpose from a reading of Rule V, Sec. 5, par. (a), of the same rules which commands the Labor Arbiter to render his decision within thirty (30) calendar days, without extension, after submission of the case for decision. We find that the NLRC did not commit a serious violation of its own rules when it incorporated its ruling on petitioners' motion for formal trial in its decision. Determining the reckoning period to decide the case was no longer necessary since, after all, the NLRC had already prepared a decision. It was enough that it acted on the motion in its decision stating the following as reasons for denial -

Considering the fact, however, that the Union's counsel has not bothered to appear at any of the previous hearings called by this Office, which number at least five, We sincerely doubt his sincerity in wanting to proceed with a formal trial of this case. Indeed, his (sic) counsel's seeming hide-and-seek attitude tends to make Us believe this request for a trial on the merits is merely a dilatory tactic resorted to, to delay the resolution of this certified case.

Besides, after painstakingly reviewing the documents and supporting proofs on record, we are convinced that there is sufficient evidence to allow Us to reach a conclusion in this case x x x x[16]
Petitioners' theory - that had the NLRC issued a separate ruling on their motion they could have rectified whatever deficiencies there might have been in their evidence - is outrightly fallacious. Rule V, Sec. 3, of the same Rules is specific -

Sec. 3. Submission of Position Papers/Memorandum. - x x x x These verified position papers shall x x x be accompanied by all supporting documents including the affidavits of their respective witnesses which shall take the place of the latter's testimony. The parties shall thereafter not be allowed to allege facts, or present evidence to prove facts, not referred to and any cause or causes of action not included in the complaint or position papers, affidavits and other documents x x x x (underscoring supplied).
We deduce from petitioners' theory that only upon a denial of their motion will the occasion arise for them to augment their evidence. Here lies the fallacy. The opportune time to do so was when they submitted their position papers. They should have attached thereto all the documents that would have proved their claim.[17]In PMI Colleges v. NLRC[18] we made it clear that -

x x x x The absence of a formal hearing or trial before the Labor Arbiter is no cause for petitioner to impute grave abuse of discretion. Whether to conduct one or not depends on the sole discretion of the Labor Arbiter, taking into account the position papers and supporting documents submitted by the parties on every issue presented. If the Labor Arbiter, in his judgment, is confident that he can rely on the documents before him, he cannot be faulted for not conducting a formal trial anymore, unless it would appear that, in view of the particular circumstances of a case, the documents, without more, are really insufficient.
Applying the ruling to the present case and dwelling on the more important consideration of the NLRC in not granting petitioners' motion for a formal trial, i.e.,the existence of sufficient evidence allowing it to reach a conclusion, we fully agree in the denial of petitioners' motion. PASVIL's evidence adequately proved that it was not guilty of unfair labor practice; consequently, there was no legitimate reason for petitioners to hold a strike and thereafter defy the return-to-work order of Secretary Confesor. Petitioners maintain that PASVIL committed unfair labor practice when it surreptitiously pulled out twenty-four (24) buses from its garage, then manned by active UNION members, thereby substantially affecting their jobs. In the alternative, they argue that, citing People's Industrial and Commercial Employees and Workers Organization (FFW) v. People's Industrial and Commercial Corporation,[19] a strike may be considered legal where the union believed that the company committed unfair labor practices and the circumstances warranted such belief in good faith although subsequently such allegations are found to be untrue. They insist also that, as

averred in their affidavit, they wanted to comply with the return-to-work order of Secretary Confesor but that the bus company refused to reinstate them. Factual findings of the NLRC are entitled to respect and finality in the absence of proof, as herein, that they were arrived at arbitrarily or capriciously.[20]Although PASVIL failed to prove that the sale of the buses pushed through, we agree with the NLRC that there is evidence showing that a sufficient number of units remained for the employees to continue working. PASVIL, in its letter of 2 August 1994, exhorted its drivers and dispatchers individually to accept their respective assignments and operate the buses thus -

Ikaw ay sinasabihan na magpa-schedule sa Dispatcher upang maibiyahe ang bus. Maraming bus ang kumpanya kaya marami ang nakahilera lang sa ready line. Wala namang sira ang mga bus kaya kailangang maibiyahe ang mga ito.[21]
Moreover, the NCMB-NCR conducted on 7 September 1994 an ocular inspection of PASVIL's facilities and determined that there were thirty-seven (37) buses "ready for trip" but that these remained unmanned.[22] Petitioners did not bother to explain why they failed to operate the remaining buses. Good faith is still a valid defense against the claim of illegality of a strike. However, petitioners cannot find refuge in People's Industrial & Commercial Employees and Workers Organization (FFW) because, on the basis of PASVIL's letters to its individual employees and the ocular inspection by the NCMB-NCR, we do not find even a semblance of good faith on the part of petitioners.[23] The NLRC was correct in dismissing the charge of unfair labor practice against PASVIL and in declaring the strike illegal. Article 264, par. (a), of the Labor Code provides the sanction of loss of employment status for any union officer who knowingly participates in an illegal strike. The NLRC found that petitioners led the illegal strike against PASVIL. This is not disputed by petitioners. We thus sustain the NLRC's declaration that petitioners lost their employment status with PASVIL. Petitioners lay the blame on PASVIL's alleged refusal to accept them back to its fold for their failure to comply with the directive of Secretary Confesor to return to work. They invite our attention to an averment in their affidavit -

28. Na ang ilan sa mga manggagawa naman na gusto sanang bumalik din at sumunod sa Return to Work Order ngunit ayaw talagang pabalikin ng manedsment (sic) at ni ayaw papasukin sa loob ng garahe ay ang mga sumusunod x x x x[24]
As thus worded, it is unclear as to which orders of Secretary Confesor petitioners allegedly displayed willingness to obey. Exploring the other averments in their affidavit we note that they actually referred to the first order of Secretary Confesor. We took into account their previous averments -

23. Na nagsimula kaming mag-strike noong Pebrero 18, 1995 ngunit noong Pebrero 21, 1995 ay nagbaba ng return to work order ang Secretary of Labor na nagsasaad

na ang aming strike ay doon na lang didinggin sa NLRC para sa Compulsory Arbitration at inaatasan kaming bumalik sa aming trabaho; 24. Na tumalima naman ang mga miyembro ng unyon sa Order ng DOLE Secretary at bumalik na nga kami sa aming mga trabaho ngunit himdi kami lahat ng (sic) kanilang tinanggap x x x x[25]
Yet it is hard to believe that such was the situation. If this were so and that they wanted to resume their jobs but PASVIL did not reciprocate, a second recourse to Secretary Confesor would not have been undertaken by PASVIL. This second recourse paved the way for Secretary Confesor to arrive at the finding that -

Notwithstanding due receipt of the (21 February 1995) Order, the Union continues to picket and barricade the premises of the Company, thereby preventing those workers who would want to report back to work from entering the Company x x x x [26]
Secretary Confesor thus reiterated her previous return-to-work order. Pitted against the aforementioned finding, petitioners' averments cannot be sustained. Unless there are cogent reasons, and we do not find any, this Court will not alter, modify or reverse the factual findings of the Secretary of Labor and Employment because by reason of her official position she is considered to have acquired expertise as her jurisdiction is confined to specific matters.[27] A stronger proof that petitioners and other UNION members defied the return-to-work order of Secretary Confesor is the letter of petitioner Bugtong himself to the Social Security System of 3 August 1995 certifying that "employees of PASVIL/PASCUAL LINER, INC. is (sic) on strike effective last February 18, 1995 up to the present."[28] This certification effectively binds petitioners and relegates to insignificance their pretension to the contrary. Under the same Art. 264, par. (a), St. Scholastica's College expressed in no uncertain terms that from the moment a worker defies a return-to-work order he is deemed to have abandoned his job. It is already in itself knowingly participating in an illegal act. The present case is one instance when, sadly, the law cannot interpose its hand to protect the employees from the consequences of their misbehavior.[29] WHEREFORE, the petition is DISMISSED. The decision of public respondent National Labor Relations Commission of 15 January 1996 declaring illegal the strike staged by petitioners PASVIL/Pascual Liner, Inc., Workers Union - NAFLU and its officers and members on 18 February 1995 against respondent PASVIL/Pascual Liner, Inc.; declaring petitioners Donato Bugtong, Pedro Fernando, Rodante Ambas, Rodolfo Pascual, Felizardo Gaspar, Conrado Clemente, Ponciano Gabriel Sr., Roberto Espejon, Marcelo Mojar Jr., Arnulfo German, Jose Ogao, Arnel Fortaleza, Merlito dela Cruz, Rommel Buenavente, Manuel Trinidad, Joselito Mendiola, Pedro Ociones, Guillermo Naranjo and Fredenill Lazo as having lost their employment status as a consequence; and, dismissing the charge of unfair labor practice against private respondent company PASVIL/Pascual Liner, Inc., is AFFIRMED. The resolution of 30 January 1996 denying reconsideration is likewise AFFIRMED. SO ORDERED.

Puno, Mendoza, Quisumbing, and Buena, JJ., concur.

SECOND DIVISION

[G.R. No. 125735. August 26, 1999]

LORLENE A. GONZALES, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, FIFTH DIVISION, CAGAYAN DE ORO CITY, and ATENEO DE DAVAO UNIVERSITY, respondents. DECISION
BELLOSILLO, J.:

By way of certiorari under Rule 65 of the Rules of Court petitioner seeks the nullification of the Decision of public respondent National Labor Relations Commission, Fifth Division, which reversed and set aside that of Executive Labor Arbiter Conchita J. Martinez. Lorlene Gonzales, petitioner, has been a schoolteacher in the Elementary Department of private respondent Ateneo de Davao University (hereafter ATENEO) since 1974 assigned to teach Reading, Mathematics, Language and Pilipino in the Grade VI class, while ATENEO is an educational institution, a corporation duly organized under the laws of the Philippines, with principal address at Jacinto St., Davao City. Sometime in 1991 Fr. Oscar Millar, S.J., Ateneo Grade School Headmaster, sent a letter dated 11 April 1991 informing petitioner Lorlene A. Gonzales of the complaints of two (2) parents for alleged use of corporal punishment on her students. Petitioner claimed that she was not informed of the identity of the parents who allegedly complained of the corporal punishment she purportedly inflicted in school-year 1990-1991. She likewise claimed that she was not confronted about it by private respondent ATENEO in 1991 and that it was only two (2) years after the complaints were made that she discovered, through her students and their parents, that ATENEO was soliciting complainants to lodge written complaints against her. On 31 March 1993 she wrote a letter to Fr. Oscar Millar, S.J., demanding that she be formally informed of the complaint and be duly investigated. On 9 June 1993 petitioner was informed of the composition of an investigative committee organized by Fr. Oscar Millar, S.J., to look into the alleged use of corporal punishment by petitioner in disciplining her students. It can be gleaned from the records that she was duly furnished with the rules of procedure, informed of the schedule of the hearings, and given copies of the affidavits executed by the students who testified against her.

Petitioner refused to take part in the investigation unless the rules of procedure laid down by the Committee be revised, contending that the same were violative of her right to due process. Petitioner specifically objected to the provision which stated: x x x 3) Counsel for Ms. Lorlene Gonzales shall not directly participate in the investigation but will merely advise Ms. Gonzales x x x (par. 3).[1] But the Committee was steadfast in its resolve to adopt the aforementioned rules. In its letter dated 9 August 1993, private respondent informed petitioner that the rules of procedure to be applied were substantially the same rules that were used in the investigation of a former Ateneo employee and therefore we are under legal advice not to change these rules."[2] Over the objection of petitioner the Committee commenced with its investigation without petitioners participation. Out of the twenty -two (22) invitations sent out by ATENEO to petitioners students and their parents to shed light on the matter of corporal punishment allegedly administered by her, eleven (11) appeared and testified before the committee. The eleven (11) witnesses also executed written statements denominated as affidavits. On 10 November 1993 private respondent served a Notice of Termination on petitioner pursuant to the findings and recommendation of the Committee. Thereafter, petitioner received a letter from the president of ATENEO demanding her voluntary resignation a week from receipt of the letter, otherwise, she would be considered resigned from the service. On 29 November 1993 petitioner filed a complaint before the Labor Arbiter for illegal dismissal. After trial, Executive Labor Arbiter Conchita J. Martinez found her dismissal illegal for lack of factual basis and ordered ATENEO to award petitioner separation pay, back wages and 13th month pay. In her decision, the Executive Labor Arbiter opined that although petitioner was afforded procedural due process respondent institution failed to establish substantial evidence as to the guilt of the complainant of the offense charged"[3] thus -

x x x the complainant was afforded procedural due process. There is convincing and sufficient evidence x x x showing respondent complied with the notice and hearing requirement x x x x.[4] After considering the evidence, arguments and counter-arguments of the parties, this office finds that the respondent failed to establish substantial evidence as to the guilt of complainant of the offense charged x x x x.[5] Complainant has sufficiently established that she is a very good teacher. She is equipped with the appropriate educational qualifications, trainings, seminars and work experiences. Such fact was affirmed by her present and former students, their parents, colleagues and the former headmaster of the grade school x x x x[6] As a matter of fact, six (6) out of the nine (9) students and their parents/guardians have retracted and withdrawn their statements x x x x[7]
Both parties appealed to the NLRC which on 25 March 1996 reversed the decision of the Executive Labor Arbiter by declaring petitioners dismissal valid and legal but added that since

ATENEO offered petitioner her retirement benefits it was but proper that she be extended said benefits. Petitioner now seeks the reversal of the decision; hence, this petition. The crux of the controversy is whether the NLRC committed grave abuse of discretion in sustaining as valid and legal the dismissal of petitioner by private respondent ATENEO. The NLRC, in our view, appears to have skirted several important issues raised by petitioner foremost of which is the absence of due process. Upon being notified of her termination, she has the right to demand compliance with the basic requirements of due process. Compliance entails the twin requirements of procedural and substantial due process. Ample opportunity must be afforded the employee to defend herself either personally and/or with assistance of a representative; to know the nature of her offense; and, to cross examine and confront face to face the witnesses against her. Likewise, due process requires that the decision must be based on established facts and on a sound legal foundation. It is precisely to demand compliance with these requirements that petitioner at the very onset of the investigation demanded the revision of the rules laid down by the Investigative Committee. The adamant refusal of the Committee to accede to this demand resulted in her failure to confront and cross-examine her accusers. This is not harping at technicalities as wrongfully pointed out by the NLRC but a serious violation of petitioner's statutory and constitutional right to due process that ultimately vitiated the investigation. Moreover, the failure of ATENEO to refute the contention of petitioner that the joint affidavits executed by the students and parents were "pre-prepared" raises serious doubts as to the probative value of this evidence. As correctly pointed out by the Executive Labor Arbiter, there is more reason to disregard it especially where the same was challenged and has remained unexplained. Hearsay evidence, in the strict sense, has no probative value whether objected to or not. In the instant case, ATENEO failed to prove by substantial evidence that petitioner had inflicted corporal punishment on her students. In Ang Tibay v. CIR, the Court set the measure of evidence to be presented in an administrative investigation when it said, substantial evidence is more than mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. The evidence of private respondent did not measure up to this standard. It relied solely on the witnesses affidavits with questionable veracity. Moreover, the affidavit of recantation executed by some students and their parents all the more weakened the case of private respondent. Failure in this regard negates the very existence of the ground for dismissal. On the other hand, petitioner adequately proved, by means of affidavits, letters of petition and manifesto made by her students and co-teachers, that she was a competent and dedicated teacher having spent seventeen (17) years of her life in the service of the very institution which is now seeking her dismissal. In view of the foregoing, the conclusion of the NLRC is unwarranted. Employment is not merely a contractual relationship; it has assumed the nature of property right. It may spell the difference whether or not a family will have food on their table, roof over their heads and education for their children. It is for this reason that the State has taken up measures to protect employees from unjustified dismissals. It is also because of this that the right to security of tenure is not only a statutory right but, more so, a constitutional right.

WHEREFORE, the assailed Decision of public respondent National Labor Relations Commission dated 25 March 1996 is REVERSED and SET ASIDE, and the decision of Executive Labor Arbiter Conchita J. Martinez declaring the dismissal of complainant Lorlene A. Gonzales illegal for lack of factual basis and ordering respondent Ateneo de Davao University to pay complainant separation pay, back wages and 13th month pay in the total amount of TWO HUNDRED SIXTEEN THOUSAND NINE HUNDRED THIRTY-EIGHT and 70/100 PESOS (P216,938.70) x x x [f]urther, ordering respondent to pay 10% of the total monetary award as attorney's fees to counsel for complainant x x x [d]ismissing all other claims for lack of merit, is REINSTATED, AFFIRMED and ADOPTED herein as the decision in the instant case. SO ORDERED. Mendoza, Quisumbing, and Buena JJ., concur.

FIRST DIVISION

[G.R. No. 118159. April 15, 1998]

JONERI ESCOBIN, RODOLFO ROJAS, FEDERICO LAGUYO, GASPAR MONTEJO, ROLANDO CABALLES, ROMEO BELARMINO, ELISEO CODILLA, ELEUTERIO BENITEZ, ELPIDIO CASINILLO, FERNANDO ABLONG, PRUDENCIO SACRISTAN, RODOLFO BRIONES, PRIMITIVO CALIXTO, ANDRES FERNANDO, ANGEL AVENIDO, FELIX GUIPITACIO, TARACIO ABILLA, ANTONIO PATINO, ANTONIO HELEN, NERIO CANOY, VICENTE FRANCISCO, TEOFILO TURA, ANTONIO LEDESMA, MARCELINO HIPOLITO, BENJAMIN FLORES, PABLO LASCOTA, WILFREDO CANTAY, GENARO DELIVERIO, MARCIANO PIOQUINTO, FEDERICK JIMENEZ, VICENTE SM LIM, LUIS TUBIL, ANGEL SUMAYO, SALVADOR SALCEDO, RIGOBERTO UTOD, FELICIANO SALONA, GERONIMO CANETE, MAXIMO AQUILLON, LARRY TURCO, SR., PORFERIO GARADO, PERFECTO CUEVAS, FELICIANO, JUANILLO, ROBERTO TUCAY, SR., and NICOLAS AMONES, JR., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, PEFTOK INTEGRATED SERVICES, INC., TEODOLFO E. SANTOS, and/or UP-NDC BASILAN PLANTATIONS, INC., respondents. DECISION

PANGANIBAN, J.:

As a just and valid cause for dismissal, willful disobedience involves the violation of a rule, order or instruction which is (1) reasonable and lawful, (2) sufficiently known to the employee, and (3) connected with the duties which the employee has been engaged to discharge. Abandonment, on the other hand, requires a showing that an employee (1) deliberately and unjustly refuses to resume his work and (2) has no intention to return to it.

The Case The Court reiterates these principles in resolving this petition for certiorari under Rule 65 of the Rules of Court assailing the Resolutions dated September 22, 1993 and December 16, 1993, which were promulgated by the National Labor Relations Commission[1] in NLRC Case No. RAB 09-08-00235-91. Petitioners filed at the Regional Arbitration Branch No. 09 in Zamboanga City a Complaint against private respondents for illegal termination by way of constructive dismissal. After conciliation proceedings failed to settle the matter, the parties were ordered to submit their respective position papers. On February 17, 1992, Labor Arbiter Rhett Julius J. Plagata rendered a Decision in favor of petitioners:[2]

WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered in the above-entitled case: (1) Declaring the [petitioners] dismissal to be illegal for being without just cause; (2) Ordering PEFTOK Integrated Security Services, Inc., through its president or other duly authorized corporate officer, to pay the [petitioners] the following awards in the following sums: Constancio Silagan Backwages---------------------------------------- P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00 Joneri Escobin Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00

Attorneys Fees ---------------------------------& Litigation Expenses Total--------------- P38,024.00 Rodolfo Rojas

1,000.00

Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00 Federico Laguyo Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00 Gaspar Montejo Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00 Rolando Caballes Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00 Romeo Belarmino Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses

Total--------------Eliseo Codilla

P38,024.00

Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00 Eleuterio Benitez Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total-------------- P38,024.00 Elidio Casinillo Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total-------------- P38,024.00 Fernando Ablong Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00 Prudencio Sacristin Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00

Rodolfo Briones Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00 Primitivo Calixto Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00 Andres Fernando Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00 Angel Avenido Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00 Felix Guipitacio Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00 Taracio Abilla

Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00 Antonio Patino Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00 Antonio Helen Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00 Nerio Canoy Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00 Vicente Francisco Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 9,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00 Teofilo Tura Backwages-----------------------------------------P17,088.00 Separation Pay-----------------------------------9,936.00

Attorneys Fees----------------------------------& Litigation Expenses Total--------------- P38,024.00 Antonio Ledesma

1,000.00

Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00 Marcelino Hipolito Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00 Benjamin Flores Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00 Pablo Lascota Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00 Wilfredo Cantay Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses

Total--------------Genaro Deliverio

P38,024.00

Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00 Marciano Pioquinto Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00 Federico Jimenez Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00 Vicente SM Lim Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00 Luis Tubil Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00

Angel Jumayo Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 19,936.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P38,024.00 Salvador Salcedo Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------- 19,936.00 Attorneys Fees------------------------------------ 1,000.00 & Litigation Expenses Total--------------- P38,024.00 Rigiberto Utod Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 18,369.60 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P36,457.60 Feliciano Salona Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 18,369.60 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P36,457.60 Geronimo Canete Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 18,369.60 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P36,457.60 Maximo Aquillon

Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 18,084.80 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P36,172.80 Larry Turco, Sr. Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 17,913.92 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P36,001.92 Porferio Garado Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------ 17,088.00 Attorneys Fees----------------------------------- 1,000.00 & Litigation Expenses Total--------------- P35,176.00 Perfecto Cuevas Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------- 17,088.00 Attorneys Fees------------------------------------ 1,000.00 & Litigation Expenses Total--------------- P35,176.00 Feliciano Juanillo Backwages-----------------------------------------P17,088.00 Separation Pay------------------------------------- 15,037.44 Attorneys Fees------------------------------------ 1,000.00 & Litigation Expenses Total--------------- P33,125.44 Roberto Tucoy, Sr. Backwages--------------------------------------------------------------P17,088.00

Separation Pay--------------------------------------------------------- 14,724.16 Attorneys Fees------------------------------------------------------- 1,000.00 & Litigation Expenses Total------------------------------------ P32,812.16 Nicolas Ramones, Jr. Backwages--------------------------------------------------------------P17,088.00 Separation Pay--------------------------------------------------------- 14,240.00 Attorneys Fees------------------------------------------------------- 1,000.00 & Litigation Expenses Total------------------------------------ P32,328.00
On appeal, Respondent Commission reversed the labor arbiter. The dispositive portion of the assailed Resolution, promulgated September 22, 1993, reads:[3]

WHEREFORE, the contested decision is hereby VACATED and SET ASIDE. In its stead, judgment is rendered declaring the dismissal of complainants valid for being with just cause and after due process.
Respondent Commission further promulgated December 16, 1993:[4] denied reconsideration in its Resolution

WHEREFORE, premises considered, the instant motion for consideration is hereby denied for lack of merit."
Hence, this recourse.[5]

The Facts In its Resolution dated September 22, 1993, Respondent NLRC relates the factual background of this case as follows:[6]

Respondent PEFTOK Integrated Services, Inc., (PISI for short), is a duly licensed watchman and protective agency while respondent UPNDC Basilan Plantations, Inc. is a corporation duly organized in accordance with law, and the owner/possessor of lands principally planted to rubber, coconut, citrus, coffee, and other fruit trees in Lamitan, Province of Basilan. Respondent Teodolfo E. Santos is the general manager of PISI.

That complainants are bona fide members of the Basilan Security Force Association hired by PISI in Sta. Clara, Lamitan, Basilan, to work as guards in UP-NDC Basilan Plantations, Inc. premises, for the purpose of guarding and protecting plantation property and installations from theft, pilferage, robbery, trespass and other unlawful acts by strangers or third persons, and plantation employees, pursuant to an agreement between PISI and UP-NDC Basilan Plantations, Inc. dated May 17, 1989[.] The complainants, residents of Sta. Clara, Lamitan, Basilan, are heads of families, hired by PISI as security guards in and for plantation premises of UP-NDC Basilan Plantations, Inc. They were hired on different dates, with the individual dates of their employment being as follows: Constancio Silagan, Joneri Escorbin, Rodolfo Rojas, Federico Laguyo, Gaspar Montejo, Rolando Cabales, Romeo Belarmino, Eliseo Codilla, Eleuterio Benitez, Elidio Casinillo, Fernando Ablong, Prudencio Sacristin, Rodolfo Briones, Primitivo Calixto, Andres Fernando, Angel Avenido, Felix Guipitacio, Teracio Abilla, Antonio Patino, Antonio Helen, Nerio Canoy, Vicente Francisco, Teofilo Tura, Antonio Ledesma, Marcelino Hipolito, Benjamin Flores, Pablo Lascota, Wilfredo Cantay, Genaro Deliverio, Marciano Pioquinto, Federico Jimenez Vicente SM Lim, Luis Tubil, and Angel Jumayo, and Salvador Salcedo, all employed on November 19, 1984; Rigoberto Utod, Feliciano Salona, and Geronino Canete on January 18, 1985; Maximo Aguillon, on February 22, 1985; Larry Turco Sr. on March 16, 1985; Porferio Garado on 15 August 1985; Feliciano Juanillo on March 18, 1986; Roberto Tucoy, Sr. on April 26, 1986 and Nicolas Ramones, Jr. on July 29, 1986 (Complainants Position Paper, Annex A). In 1988, some of the complainants, namely: Gene Engracia, Andres Fernandez, Rolando C. Caballes, Larry Turco, Fernando E. Ablong, Sr. Constancio Silagan, Winifredo N. Obedencia, Federick Laguyo, Primitivo Calixto, Felix C. Guipitacio and Claudio Calixto were dismissed by PISI for insoburdination [sic] and grave misconduct, as a result of their refusal to ring the bell in the evening of May 25, 1988 while on duty in the premises of the plantation, but were later reinstated in an agreement forged between the parties at the initiative of Congressman Alvin Dans of Basilan Province. On June 1, 1990, respondent UP-NDC Basilan Plantations, Inc. ordered the reduction of the contracted guards assigned in the

plantation from seventy (70) to sixty-seven (67), in a letter addressed by Mr. Roman R. Yap to PISI[.] And again in a letter dated January 22, 1991 sent to Col. Raymundo C. Sobrevega, President of PISI, by Hector A. Quesada, President of UPNDC Basilan Plantations, Inc., PISI was advised to reduce further the guards from sixty-seven (67) to only ten, (10), xxx a reduction [of] fiftyseven (57) guards. Subsequently, thereafter, PISI issued Office Memorandum No. 4 dated February 6, 1991 placing the fifty-nine (59) affected guards under reserved or floating status effective February 1, 1991, subject to be posted or assigned upon notice. On February 12, 1991, PISI issued Office Order No. 5 amending Office Order No. 4 by deleting therefrom the names of S/G Calixto Florentino Paddit and Sergio Quimpo. Subsequently, on April 8, 1991, the guards placed on reserved or floating status were instructed by registered letter to report to PISI Head Office at Rm. 405, Sunrise Condominium, Ortigas Avenue, Greenhills, San Juan, Metro-Manila, for posting to PISI clients within the Metro-Manila area not later than April 30, 1991. That complainants did not reply nor answer the letter sent them, prompting PISI to reinstate by way of another letter dated May 2, 1991, its order to complainants to report to PISI Head Office for posting, and to explain their failure to report as previously instructed. Still failing to receive a reply nor answer from the complainants despite receipt of said letters, PISI once more sent individual letters to complainants on May 29, 1991 ordering them to explain why no disciplinary action shall be taken against them for failing to comply with PISIs Order, at the same time, reiterating its previous Order for complainants to report to PISI Head Office for posting. Despite all these, complainants, for reasons known only to them, did not bother even sending a courtesy reply nor answer to PISI. Neither did they comply with the reiterated Order to report to their Head Office for posting. They did not also explain why they were unable to so comply with the Order. Thus, on June 28, 1991, PISI wrote complainants individual letters that by reason of their failure to respond to or to comply with PISIs letters dated April 8, May 2, and May 29, 1991, and by their failure to report to PISI Head Office for posting, as ordered, they were dismissed on

ground of insubordination or willful disobedience to lawful orders of their employer. Late in the day however, on July 1, 1991, complainants wrote PISI General Manager, Teodolfo Santos, saying they had no intention to abandon their employment, nor to defy fair, reasonable and lawful orders. In the same letter, they acknowledged receipt of all PISIs letters to them dated April 8 and May 2, 1991. After having been terminated, and during the arbitral proceedings below, complainants belatedly justified their inability to comply with PISIs Order to report to Head Office in Metro-Manila for posting, saying: they are residents of Basilan, have families of their own in Basilan, have never traveled beyond Visayas and Mindanao, not provided by PISI with fare money as they cannot, on their own, finance their travel from Basilan to Manila; that to comply with PISIs Order to report to Head Office for posting under said circumstances was absurd, to say the least. Complainants therefore, charged PISI with bad faith in issuing said Order. That in truth, complainants said they were constructively dismissed by PISI. For which reason, complainants prayed that the Labor Arbiter declare their dismissal as illegal and consequently they should be paid separation pay (in lieu of reinstatement), backwages, moral and exemplary damages, attorneys fees and litigation costs. The Labor Arbiter in deciding this case posed the following issues, namely: a) Whether or not complainants were indeed illegally dismissed, and corollarily, whether or not they are entitled to backwages and separation pay; and b) Whether or not complainants are entitled to moral and exemplary damages, attorneys fees and cost of litigation. The Labor Arbiter noted that S/G Winifredo Obedencia and Ignacio Antonio did not sign the complaint. They should therefore be deemed not to have filed their complaints and their names should be deleted as party-complainants in the instant case. With respect to PISIs Order for complainants to report to their head office in Manila, the Arbiter held that this is not a reasonable order considering that complainants are residents of Basilan, have families in Basilan, have never been assigned beyond Mindanao or Visayas, were not provided with fare money. Neither were they assured of compensation similar to

what they used to receive in Basilan, nor of continued posting while in Manila. That their transfer would surely entail great inconvenience to complainants and their families. Hence, the validity of their transfer could not be sustained. Therefore, complainants charged that their refusal to report to the head office was justified. Consequently, their dismissal was illegal. The Arbiter, however, found that the procedure for termination of employment had been complied with by respondent PISI. But finding complainants illegally dismissed, the Arbiter held that they are entitled to backwages set at six (6) months pay corresponding to the maximum period a security guard may be placed on floating status, computed on the basis of their latest salary of P2,848.00. That since complainants opted for separation pay instead of reinstatement considering that their positions in Basilan are probably no longer existing, complainants instead [were] awarded by the Arbiter separation pay at one (1) month pay for every year of service based on their latest salary at the time they were illegally dismissed. Complainants[] claims for moral and exemplary damages were denied for lack of factual and legal basis. However, the sum of P1,000 for each complainant was awarded as attorneys fees and litigation costs. And finally, the Labor Arbiter absolved respondent UP-NDC Basilan Plantations, Inc. from joint and several liability on the monetary awards, noting that joint and several liability of an indirect employer is limited only to non-payment of labor standards benefits mandated by the Labor Code. The monetary awards in the instant case, being in the nature of labor relations benefits, the same was, thus, ordered as sole liability of respondent PISI.
Ruling of Respondent NLRC As earlier stated, Respondent NLRC reversed the labor arbiters Decision, holding that private respondent had no choice but to place petitioners and other security guards on floating status for lack of clients to which they could be immediately reassigned. The directive to report to Manila for posting was issued, because private respondent knew that it could place petitioners on reserve status for only six months. Petitioners refusal to comply with said Order and their wanton disregard of the order to explain their inability to xxx comply and obey lawful orders from their employer constituted the proximate cause for their dismissal. The fact that petitioners had some reasonable

objections to the directive to report to Manila did not mitigate their insubordination, because petitioners raised them only during the arbitral proceedings. Under these circumstances, according to Respondent Commission, private respondent had no option left but to charge them with insubordination and willful disobedience to lawful orders of their employer. In according due process to petitioners, private respondent gave them ample time to explain why no disciplinary measures should be taken against them, but petitioners still refused to comply. Hence, private respondent was justified in dismissing petitioners. Not only did petitioners insubordination constitute willful disobedience; it also partook of abandonment. Thus, petitioners are not entitled to the payment of back wages and separation pay or reinstatement.

Assignment of Errors In their Memorandum before us, petitioners impute the following errors to Respondent Commission:[7]
-I-

The NLRC acted with grave abuse of discretion in ruling that petitioners committed willful disobedience of lawful orders of their employer.
-II-

The NLRC acted with grave abuse of discretion in ruling that petitioners abandoned their work.
-III-

The NLRC acted with grave abuse of discretion in reversing the finding of the labor arbiter that petitioners were illegally dismissed by way of constructive dismissal.
-IV-

The NLRC acted with grave abuse of discretion in denying recovery of back wages, separation pay, damages, and attorneys fees in favor of petitioners.
-V-

The NLRC acted with grave abuse of discretion in denying petitioners motion for reconsideration.
It is undisputed that due process was observed in the dismissal of petitioners. Hence, the only remaining issues are: (1) whether petitioners dismissal

was for a valid and just cause, and (2) whether they are entitled to separation pay, back wages and damages. The Courts Ruling The petition is meritorious.

First Issue: No Just Cause The solicitor general maintains that petitioners conduct amounted to clear insubordination and constituted willful disobedience to lawful orders given in connection with their work. PISI reduced its work force in UP-NDC premises as a result of the inclusion of the latters plantation in the governments agrarian reform program. He argues that PISI diligently notified petitioners for three consecutive times to report to its head office for posting, but petitioners wantonly refused receipt of the letters and abjectly failed to comply with xxx [the] directive under letters dated April 8, May 2 and May 29, 1991. We disagree. While it is true that petitioners failed to report to Manila and to respond to private respondents letters, this is not the end-all and be-all of the matter. One of the fundamental duties of an employee is to obey all reasonable rules, orders and instructions of the employer. Disobedience, to be a just cause for termination, must be willful or intentional, willfulness being characterized by a wrongful and perverse mental attitude rendering the employees act inconsistent with proper subordination. A willful or intentional disobedience of such rule, order or instruction justifies dismissal only where such rule, order or instruction is (1) reasonable and lawful, (2) sufficiently known to the employee, and (3) connected with the duties which the employee has been engaged to discharge.[8] The assailed Resolution of Respondent Commission and the arguments of the solicitor general failed to prove these requisites. On the other hand, petitioners negated the solicitor generals stance, contending that the instruction to report to the Manila office was incon venient, unreasonable and prejudicial, as they were not given transportation money or, more important, any assurance that work would be available to them once they reached Manila. They were not even furnished a copy of the so-called Office Memorandum No. 4 dated February 6, 1991, which placed them under floating status. Thus, they aver that their failure to report to the Manila office was not characterized by a wrongful and perverse [mental] attitude. They also assert that they have families which they could not just leave behind. The reasonableness and lawfulness of a rule, order or instruction depend on the circumstances availing in each case. Reasonablenesspertains to the kind or character of directives and commands and to the manner in which they are made.[9] In this case, the order to report to the Manila office fails to meet this standard.

First, it was grossly inconvenient for petitioners, who were residents and heads of families residing in Basilan, to commute to Manila. InYuco Chemical Industries, Inc. vs. Ministry of Labor and Employment,[10] the transfer to Manila of two workers, who were also studying in Tarlac, was held to be grossly inconvenient. The distance to Manila from Basilan is considerably greater than that from Tarlac. Such transfer would have necessarily entailed separation of the petitioners from their families. Second, petitioners were not provided with funds to defray their transportation and living expenses. Petitioners, not unknown to their employer, earned only P1,500 to P2,500 a month before they were placed on reserve status, after which they remained jobless. Furthermore, being residents of Basilan, petitioners would have required living arrangements in Manila which, in turn, would have entailed additional expenses on their part. Third, private respondent argues that it sent transportation money to petitioners. However, the recipients of such funds are not parties in this case. Moreover, the alleged transportation allowance was given only after petitioners had already been terminated from service. The letter[11]purportedly granting transportation allowance to other security guards was dated August 12, 1991, which was after petitioners had been dismissed June 28, 1991.[12] Fourth, no reason was given by private respondent company explaining why it had failed to inform petitioners of their specific security assignments prior to their departure from Basilan. If indeed the postings were to be made in Basilan, there would have been no necessity for petitioners to report to Manila and no justification for respondents insistence on their compliance with its directive. Since private respondent did not provide transportation and living allowances; and since, in the first place, petitioners could have been easily informed of their new assignments right there in Basilan, there was no reason for petitioners to travel all the way to Manila. Traversing these contentions, Respondent Commission gave this statement in its challenged Resolution:[13]

Unfortunately, however, for the [petitioners], they kept all these reasons only to themselves. They did not bother communicating these objections to their employer, respondent PISI. They chose to remain silent, went to the extent of even refusing to acknowledge receipt of the letters and directives sent to them dated April 8, May 2, and May 29, 1991, although they admit having received the same. It was already late in the day when complainants raised said objections after they had been dismissed, and only during the arbitral proceedings below. Under the circumstances, it was indeed difficult for respondent PISI to know [petitioners] predicament considering that they did not even bother replying to all the directives sent them. x x x x.
In contrast, private respondent granted to other similarly situated security guards a second chance to explain their failure to respond, an opportunity it denied

petitioners. This fact demonstrates that petitioners dismissal was not commensurate to their insubordination which, we reiterate, was neither willful nor intentional. Respondent Commission also held in its assailed Resolution: [H]ad their objections been seasonably raised to respondent PISI, they would have been just and reasonable. Their only fault lies in not raising said objections on time before their dismissal. Even private respondent agency said in its memorandum: if such order appears to be unreasonable or inconvenient to the petitioners at least management should have been informed why the guards cannot comply with such orders, so some remedial means could have been worked out. These ratiocinations are pointless. Private respondent very well knew that petitioners were not receiving any salary while they were on floating status and, thus, also knew that they would hardly be able to comply with the directive to report to Manila. In any event, dismissal was too harsh a penalty for an infraction which appears, under the circumstances, to be excusable.[14] The right to transfer employees from one office to another -- provided there is no demotion in rank or diminution of salary, benefits and other privileges -- is judicially recognized as a prerogative inherent in the employers right to effectively control and manage the enterprise. But this principle is not at issue here. The issue is whether petitioners alleged disobedience constituted a just and valid cause to dismiss them. It is obvious to us that the dismissal was effected with mala fides, as it was intended to punish petitioners for their refusal to heed their employers unreasonable directive. Respondent Commission therefore committed grave abuse of discretion in holding that petitioners were dismissed for a just cause.

Abandonment of Work Respondent Commission avers in its impugned Resolution: [Petitioners] are likewise guilty of quitting without just cause under Article 285 of the Labor Code, as amended. Hence, they are clearly not entitled to any affirmative reliefs under the law. They are estopped from asserting claims against their employer, PISI. Agreeing with Respondent Commission, the solicitor general posits that petitioners clearly abandoned their work without valid cause. This contention is untenable. Abandonment, as a just and valid cause for dismissal, requires a deliberate, unjustified refusal of an employee to resume his work, coupled with a clear absence of any intention of returning to his work. [15] No evidence was presented to establish that petitioners relinquished their jobs. Denying they abandoned their work, petitioners contend that it was private respondent agency which deserted them by failing to communicate with them for over two months, from February 1, 1991 to April 8, 1991; and that the directive to make them report to Manila was only a ruse to terminate their services. Although a letter[16] dated September 13, 1991 and signed by a certain Jose E. Fernandez declined the offer to work outside Basilan despite the receipt of transportation allowance, such letter cannot be attributed to petitioners because Fernandez did not represent any of them. That petitioners did not pray for

reinstatement in their pleadings is not proof of abandonment. In fact, petitioners contention is that private respondent effected constructive dismissal, which is incompatible with abandonment.[17]

No Constructive Dismissal For presuming that they were constructively dismissed, petitioners are likewise in error. Constructive discharge is an involuntary resignation resorted to when continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank and/or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee.[18] In this particular case, petitioners were not constructively dismissed; they were actually dismissed without just and valid cause.

Second Issue: Separation Pay and Back Wages The normal consequences of illegal dismissal are reinstatement and payment of back wages.[19] These remedies give life to the workers constitu tional right to security of tenure.[20] Separation pay is generally not awarded except in instances where reinstatement is no longer feasible or appropriate, as in this case. As a substitute for immediate and continued reemployment, separation pay is meant to provide the employee the wherewithal during the period that he is looking for another employment. [21] In this particular case, private respondent alleges that there is no assignment in Basilan or Zamboanga available to petitioners. Transfer to another post outside said areas would have only given rise to the same problems as those entailed by the original directive. Reinstatement presupposes that the previous position from which the employee had been removed still exists, or there is an unfilled position of a similar nature, more or less, as the one previously occupied by the employee.[22] If no such position is available, reinstatement becomes a legal impossibility. The law cannot exact compliance with what is impossible. The award of attorneys fees in the sum of one thousand pesos is reasonable and in accord with Art. 2208 of the Civil Code.[23] However, no moral and exemplary damages can be granted for lack of factual basis.[24] In sum, we hold that the labor arbiter was correct in awarding separation pay, back wages and attorneys fees. WHEREFORE, the petition is hereby GRANTED. The assailed Decision is REVERSED and SET ASIDE. The labor arbiters Decision, dated February 17, 1992, is REINSTATED. No costs. SO ORDERED.

Davide, Jr. (Chairman), Bellosillo, Vitug, and Quisumbing, JJ., concur.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 87353 July 3, 1991 PHILIPPINE AIRLINES, INC., PEDRO MARTIRES, JR. and MANUEL PANLILIO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER EDGARDO M. MADRIAGA, CARMENCITA NANNETTE G. DE VEYRA, respondents. Ricardo V. Puno, Jr., Solon R. Garcia Rene B. Gorospe and Bienvenido T. Jamoralin, Jr. for Philippine Airlines. Angara, Abello, Concepcion, Regala and Cruz for private respondent. MEDIALDEA, J.: This is a petition for certiorari with prayer for a preliminary injunction and/or restraining order seeking reversal of the decision of public respondent National Labor Relations Commission dated November 29, 1988 ordering, inter alia, reinstatement of private respondent Carmencita Nannette G. De Veyra to her former position with backwages; and its resolution dated February 21, 1989 denying the motion for reconsideration. The antecedent facts are as follows: On September 11, 1987, private respondent Carmencita Nannette G. De Veyra, a Duty Manager, filed a complaint for illegal suspension, non-payment of salaries and other benefits, as well as moral and exemplary damages against petitioners Philippine Airlines, Inc., Pedro Martires, Jr. and Manuel Panlilio. Conciliation conferences were conducted on September 30, 1987 and October 9, 1987. However, in the conciliation hearing on October 26, 1987, De Veyra's counsel manifested that due to her dismissal in the interim, they are no longer willing to settle the case amicably. Hence, without prejudice to the filing of an amended complaint by De Veyra, both parties were directed to file their position papers on November 12, 1987 and their replies thereto on November 23, 1987, after which the case will be deemed submitted for decision. On October 27, 1987, De Veyra filed an amended complaint for illegal suspension, illegal dismissal and unpaid wages with claim for reinstatement; actual, moral and exemplary damages; and attorney's fees and cost of suit. On November 23, 1987, PAL submitted its position paper, alleging the following facts (pp. 47-50, Rollo):

Sometime in August of 1987, the Internal Audit and control (sic) Department of (PAL) conducted a review of the tickets issued by the Interline Ticket Counter located at the 6th Floor of PAL Building because of the uncovering of widespread fraud and manipulation of tickets by several (of its) employees that led to their eventual termination from the firm. It was on this occasion that said department was able to confirm cases of tampering and fraudulent manipulation of official documents some of which involve the travel documents of . . ., Nannette de Veyra then Senior Supervisor, ASD, and her dependents. A memo was issued by the Vice-President of Internal Audit and Control Department to this effect addressed to the Senior Vice-President for Customer Services Group, . . . As stated therein, the priority classifications were tampered with enabling (De Veyra) and her dependents to travel first class knowing very well that they are not entitled to that privilege. On August 26, 1987, a Notice of Administrative charge was sent to (De Veyra) charging among others (sic) the fact of knowingly using falsified trip passes to reflect a higher priority and space classification than what she and her dependents were entitled to on vacation travel. Being at Senior Supervisory level at the Passenger Handling Division with access to all aspects of our airport operations including computer terminals installed at the airport, in view of this incident, her presence therein was deemed a threat to company property and to the normal operations of the company so she was place (sic) on preventive suspension. . . . . On September 11, 1987, (De Veyra) submitted a letter informing the Director of PAL Manila Station International that she hired the services of a lawyer thereby requesting for additional time within which to study and evaluate her defense, . . . . On September 18, 1987, the Director-PAL MSI replied, granting her request for extension of time to file her Answer to the Administrative Charge until September 29,1987, . . . On September 24, 1987, (De Veyra) submitted here (sic) sworn statement alleging among others (sic) that the tampering was done by somebody else, . . . On October 16, 1987, the Director-PAL MSI issued a memo terminating the services of (De Veyra) after evaluating the evidences (sic) on record for serious misconduct in the use of trip passes which were falsified to reflect higher priority and space classification than what she and her spouse were entitled to on vacation travel in violation of the Company policy on travel priority and of the PAL Code of Discipline, . .. xxx xxx xxx On the other hand, De Veyra in her position paper alleged the following facts (pp. 5057, Rollo): 1. (De Veyra) joined (PAL) as a Facilitation Representative sometime in 1967. 2. Because of sheer hardwork (sic) and consistent superlative performance, (De Veyra) rose from the ranks and held the positions of Senior Ground Stewardess, Ticket Representative, Traffic Representative, Shift Supervisor, Supervisor, Senior

Supervisor and finally Duty Manager until her illegal dismissal from the Company's employ on 26 August 1987. 3. In recognition of her exemplary performance while in the Company's employ, (De Veyra) received several commendations. To cite a few: (a) Commendation dated 24 April l971-Case of COD Exec. BaggageMr. A. Mutuc, from station manager, MSI; (b) Commendation dated 14 February 1973-from Supervisor-Ramp Handling; (c) Commendation dated 26 March 1973-from Station Manager, Mnl, Stn. Int'l.; (d) Commendation dated 19 May 1973-from Manager, Mnl, Stn, Intl.; (e) Letter of Appreciation dated 3 July 1980-from Manager Commercial Training Division, PAL Development Academy; (f) Commendation dated l6 February l981- from Director, MSI and (g) Commendation dated 20 May l981- from Director, MSI. There are many others which are not presently in the possession of (De Veyra) but are filed with the Company records, . . . 4. Sometime in August 1986, while performing her duties as Senior Supervisor at the Manila International Airport, Ma. Minda Santiago, a Mabuhay Club member (Travel Agent) and a long time acquiantance (sic), approached (De Veyra) and inquired about the planned trip of her husband to the United States. (De Veyra) informed Ms. Santiago that her husband's trip was not yet definite since it might distrupt (sic) their planned vacation tour to Europe sometime in October 1986 where they will both avail of her trip pass privilege from the Company. A trip pass privilege is a privilege to travel via the Company's airlines free of charge or at certain discounted rates granted to qualified employees and their relatives. 5. Upon learning that (De Veyra's) husband's trip was still tentative, Ms. Santiago offered to help the former's husband to go on a quick U.S. trip. She also offered to secure first class accomodation (sic) for both (De Veyra) and her husband when she found out that the former was only entitled to a maximum of executive class accomodation (sic) as a senior supervisor representing that she was close to the Company's top executives and could easily get the required authorization for the upgrading of their accomodation (sic). 6. Relying on her representations and it being ac (sic) common knowledge that she has strong, (sic) influence in the Company and with high government officials, and aware that upgrading of trip pass accomodations (sic) of even the non-managerial employees is a common practice in the company, (De Veyra) sent her trip pass No. 883125 to Ms. Santiago's Office (Sanyo Travel) for her Husband's (sic) ticket on 18 August 1986.

7. Sometime in the afternoon of 19 August 1986, Ms. Santiago phoned to inform (De Veyra) that her husband's ticket was ready for pick up. (De Veyra) had the ticket picked-up the following morning, 20 August 1986. On the same date (De Veyra's) husband used ticket No. 079-4401 2138460/461 with priority classification Y/F (First Class) on his trip to the U.S. However, on his return to Manila on 26 August 1986, he was accomodated (sic) only in an economy class. 8. Sometime after her husband's return to Manila, (De Veyra) was able to talk to Ms. Santiago where she narrated to the latter the embarrassment experienced by her husband on his return trip to Manila when he was given only an economy class accomodation (sic) despite his ticket bearing the Y/Fstatus. After having been informed of this, Mrs. Santiago promised (De Veyra) that it will not happen again and offered to have her own accomodation (sic) upgraded to first class for her emergency trip to Washington, U.S.A. 9. Again, relying on her representations, (De Veyra) sent her trip pass RRO No. 874047 dated 8 September 1986 to Ms. Santiago's Office as what she had earlier done with respect to TP/PRO No. 883125 dated 18 August 1986. 10. On l2 September l987, Ms. Santiago phoned (De Veyra) informing her that her ticket to the U.S. was ready for pick up. (De Veyra) then instructed her driver to get said ticket. On 14 September 1986, (De Veyra) used her ticket No. 079440/2234490/489 to the U.S. and (came) back to Manila on 26 September 1986, both via first class accomodation (sic). 11. Meanwhile, on 16 June 1987, (De Veyra) was promoted to the position of Duty Manager by higher management in recognition of her consistent hard work and efficiency despite the reluctance of her superiors Messrs. Panlilio and Martirez (who) were forced to sign (De Veyra's) promotion since she was the most qualified among the contenders to the position. 12. Suddenly, much to (De Veyra's)surprise, she received a copy of a Notice of Administrative Charge dated 26 August 1987 signed by Mr. Pedro Martirez, Jr. informing her that based on an investigation conducted by the Company's Internal Audit and control (sic) Department, she and her husband were found to have used trip passes which were falsified to reflect a higher priority and space classification than what they were entitled to. In the same Notice, she was informed that effective upon rer (sic) receipt of the Notice, she is being placed on preventive suspension since her continued employment poses a serious and imminent threat to the life of her other co-employees and/or to the property of the Company. She actually received the Notice on 4 September 1987. She was further given ten (10) days from 4 September 1987 within which to submit her sworn statement/counter-affidavit in answer to the charges against her, together with the sworn statements/affidavits of her witnesses in support of her answer as to why she should not be dismissed from her employment. . . . . 13. (De Veyra) was placed under preventive suspension without giving her the opportunity to be heard, therefore violative of her fundamental right to due process and in utter disregard of the pertinent provisions of the Company's Code of Discipline . . .; xxx xxx xxx

14. In a letter dated 13 September 1987, (De Veyra) requested for a fifteen (15)-day extension of time within which to submit her sworn statement and for the lifting of her preventive suspension for lack of legal basis . . . 15. Meanwhile, on 14 September 1987, (De Veyra) filed a complaint for illegal suspension, non-payment of salaries and all other benefits and moral and exemplary damages. 16. In a Memorandum dated 18 September 1987, signed by Mr. Pedro M. Martires, Jr., (De Veyra's) request for extension was granted while her request for the immediate lifting of her preventive suspension was denied. . . . . 17. Because of the serious charges levelled against her by the Company, (De Veyra) engaged the services of undersigned counsel. 18. In a letter dated 23 September 1987, undersigned counsel submitted (De Veyra's) sworn statement in compliance with the Notice of Administrative Charge, where she vehemently denied the charges against her, while formally demanding for the immediate lifting of her preventive suspension and the immediate setting of her case for hearing to enable her, with the assistance of counsel, to prevent (sic) evidence in support of her defense . . . 19. In a Memorandum dated 7 October 1987 signed by Mr. Martires, Jr., (De Veyra) was informed by the Company that in view of (sic) request for an extension of 15 days to answer the administrative charge against her, the duration of her preventive suspension without pay and benefit is also adjusted to end on 18 October 1987 or more than 30 days, in violation of the provisions of the Labor Code and its implementing rules and regulations. . . . 20. Suddenly, without conducting the formal investigation demanded by undersigned counsel dated 23 September 1987 . . ., the company issued a Memorandum dated 16 October 1987 informing (De Veyra) that her employment with the Company is terminated effective 26 August 1987, retroactive (to) the date she was placed on preventive suspension in violation of her right to due process and in an apparent attempt to cure the illegality of her preventive suspension. . . . It must be noted that (De Veyra's) preventive suspension actually commenced upon her receipt of the Notice of Administrative Charge on 4 September 1987. 21. By dismissing (De Veyra) without a formal investigation (having been) conducted, the Company again violated the pertinent provisions of its Code of Discipline . . . xxx xxx xxx 22. On 27 0ctober l987, (DeVeyra)filed an amended complaint for illegal dismissal, illegal suspension, unpaid wages, reinstatement of other benefits under Company policies and practices and the CBA, actual, moral and exemplary damages, attorney's fees and cost of suit. 23. Based on the annexes attached to the 14 August 1987 Memorandum of the Vice President Internal Audit & Control to Mr. Ricardo G. Paloma, SVP-Customer Services, there is no showing that trip pass Nos. 883125 and 874047 were even falsified. . . . Even assuming that what were falsified were the audit coupons neither

(De Veyra) nor her husband could, under any circumstances have any control, or even see them, therefore, negating any possibility that they could have participated in the completion of said coupons. Moreover, the two (2) tickets were issued by two different Ticket Clerks as shown by said annexes. 24. Further, having used tickets bearing a higher passage classification than what is normally given to (De Veyra) and her husband, should not be taken against her since it is a known practice in the Company. It could be easily done by mere verbal advice of the Company's appropriate officials. It was only in 1987 when the Company became strict in allowing upgradings because of the rampant occurrences and issued a written Memorandum to that effect. Therefore, in using said tickets, (De Veyra) and her husband acted in utmost good faith and were not participants in any wrong doing (sic) (if any), which could constitute a ground for the Company to have lost its trust and confidence in her. xxx xxx xxx On May 31, 1988, the Labor Arbiter rendered its decision, the dispositive portion of which reads (p. 82,Rollo): WHEREFORE, premises considered, respondents are declared to have illegally suspended and dismissed complainant, and are hereby ordered to reinstate her to her former position with full backwages and other benefits provided by law until actually reinstated. Furthermore, respondents are hereby ordered to pay complainant P200,000.00 in moral damages, P100,000.00 in exemplary damages, as well as attorneys (sic) fees and costs of the suit. SO ORDERED. On appeal, the Labor Arbiter's decision was modified by the NLRC, the dispositive portion of which reads (pp. 66-67, Rollo): WHEREFORE, judgment is hereby rendered as follows: a) declaring the dismissal of complainant-appellee as illegal; b) respondents-appellants are ordered to reinstate complainant-appellee to her former position with full backwages until reinstated but not to exceed three (3) years. The price difference between the upgraded first class tickets and the economy class tickets should be deducted from the backwages; c) the award of moral and exemplary damages are deleted. SO ORDERED. The motion for reconsideration was denied (p. 68, Rollo). Hence, the present petition. On April 10, 1989, We issued a temporary restraining order enjoining the execution of the questioned decision and resolution of the NLRC (pp. 98-99, Rollo).

The issue is whether or not De Veyra was dismissed illegally from employment. PAL imputes grave abuse of discretion on the part of the NLRC: (1) in disregarding its evidence and the ineluctable conclusions therefrom; (2) in holding that there was no basis for PAL's loss of trust and confidence in De Veyra; (3) in holding that De Veyra was not afforded due process; and (4) in ordering reinstatement of De Veyra notwithstanding existing jurisprudence on the matter. For a clearer appreciation of the circumstances which led to the dismissal of De Veyra from employment, it is necessary to discuss first PAL's policy on trip pass benefit and the mechanics for availment thereof. Among the various fringe benefits PAL extends to its employees is a trip pass benefit which entitles these employees as well as their dependents to travel via PAL free of charge. This benefit, however, is subject to company policies, rules and regulations. The extent of the benefit depends upon the employee's rank, position and years of service with the company. De Veyra, who was at that time Senior Supervisor, was entitled to economy class accommodation (pp. 83-85, Rollo). An employee eligible for a trip pass must apply therefor by accomplishing an application form (p. 86, Rollo). Tickets are then issued against the trip pass authorization. In the issuance of the ticket, the issuing clerk at the ticket office writes on the blank portions of the audit coupon certain data including the priority and travel classification code of the employee. Entries written on the audit coupon are automatically reproduced by carbon copying on the succeeding flight coupons. In the case of De Veyra's tickets, entries written on the audit coupons were different from the entries written on the flight coupons. The priority code first written on the audit coupons was Q/G4/Y or first class. This was reproduced on the flight coupons. Thereafter, "Y" was super-imposed on "F," and "C" was added after "Y" only on the audit coupons. hus, as a result thereof, the priority code on the audit coupons seemed to be Q/ G4/YC to make it appear to the accountants of PAL that it conformed with the travel priority of De Veyra appearing on the travel authorization, which was Q/G4/YC or economy class (pp. 86-87, Rollo). As regards De Veyra's husband, his priority classification was S/H5/Y or economy class. The audit coupons of his tickets did not indicate said code. However, on the "Fare Basis" column on the audit coupons, letter "F" was written. In contrast, the flight coupons of said tickets showed priority code "Q" F3/YF or first class written on the "Tour Code" column. On the "Fare Basis" column, a capital letter "F" was written following letter "Y" and therefore read Y/F Priority Code Q/F3/YF corresponds to the travel and space classification of employees and their dependents who were given a seventy-five percent (75%) discount of the regular fare. Since his tickets reflected an "FOC" or free of charge, this was an indication that he did not pay the discounted fare corresponding to the priority code Q/F3/YF which he used in his travel (p.13, Rollo). Now, upgrading of priority and space classification, such as from economy class to first class, must be authorized by designated company officials through the issuance of a form referred to as special airport concession. However, in the said authorized upgrading, entries on the tickets are not altered to reflect a higher space entitlement. The ticket would still bear economy class entitlement but during the boarding process, the upgrading would be effected. Special airport concessions are issued only for valid reasons, namely, in favor of high government officials and severely inconvenienced revenue paying passengers (pp. 2526, Rollo). According to De Veyra, a certain Minda Santiago of Sanyo Travel secured their first class accommodations. Minda Santiago represented to them that she was close to PAL's top executives and can easily get the required authorization for the upgrading of their accommodations (p. 5, supra). Yet, this defense was never substantiated by De Veyra either by presenting Minda Santiago personally to testify or submitting her affidavit. More importantly, there was no authorization for the upgrading of their accommodations, at all.

The administrative charge against De Veyra was based on her and her husband's use of trip passes which were falsified to reflect a higher priority and space classification than what they were entitled to on vacation travel when the trip passes were issued (p. 91, Rollo). It is an established fact that the De Veyras used first class trip passes, but what is disputed is whether or not their trip passes/tickets were falsified. The NLRC and De Veyra limit the definition of the word "falsify" either to tamper with or alter. That is not so. The word refers likewise either to represent falsely, distort or violate the truth (Webster's Third New International Dictionary, 1986 Edition, p. 820; see Black's Law Dictionary, 1987 Edition, p. 542). Inasmuch as their tickets did not speak the truth, those were undoubtedly falsified. Having been employed with the company for twenty (20) years and familiar with its policies and procedures, De Veyra was, therefore, aware that in accordance with PAL's policy and in the absence of a valid authorization for upgrading of priority and space classification, she and her husband were entitled to economy accommodation only. Mention may be made of another circumstance which proves the falsity of De Veyra's tickets. In relation to her entitlement to travel benefits, she secured a Philippine Tourism Authority Reduced Travel Tax Certificate (p. 87, Rollo) entitling her to pay a reduced travel tax of only P810.00. This amount represents payment for economy travel. The certificate itself provided that it referred only to economy class travel and not first class passage. The certificate was purportedly presented for the purpose of availment of the reduced travel tax privilege of airline employees. However, the entries appearing on the bottom left portion of her tickets reflected a travel tax payment of P1,350.00, corresponding to first class passage (pp. 8687,Rollo). In ruling that PAL has not proven the culpability of De Veyra, the NLRC ignored PAL's ample evidence before it. It resolved the controversy based on a shallow analysis thereof, which was supported by the Solicitor General (p. 62, Rollo): At this point, it is necessary to discuss the procedures on how plane tickets are actually issued by (PAL) . . . A ticket booklet consists of the audit coupon as the first page, and the succeeding coupons constitute the passenger coupon and the agent's coupon. All entries in the audit coupon are automatically reproduced in the succeeding coupons of the ticket booklet. Upon issuance of the ticket, the audit coupon is detached by the issuing clerk, which coupon goes to the Company's Auditing Department. The other coupons are given to the passenger and are detached upon checking in at the counters for the particular flight and leg of journey involved. Records reveal that what was tampered with was the audit coupon by superimposing and letter "Y" over the letter "F" and adding the letter "C" thereto. However, the other parts of the tickets given to (De Veyra) were not tampered with. It is, therefore, misleading for (PAL) to allege that (De Veyra) used tampered tickets. As senior supervisor at the Manila International Airport (De Veyra) had no participation in the issuance of plane tickets. She was not even personally present when the tickets were being issued by the Company's ticket clerks and therefore could not have had any knowledge of the alleged tampering of the Audit coupon. . . . Considering also that there is not an iota of evidence to establish (De Veyra's) participation in the tampering of the audit coupons, her dismissal by (PAL) is illegal. While De Veyra may not have known about the alteration performed on the audit coupons, she cannot feign ignorance about the falsity of their tickets, as discussed previously. And, it is not even necessary to prove De Veyra's participation in the falsification of their tickets. What is material is their use of trip passes which were falsified to reflect a higher priority and space classification than what they were entitled to on vacation travel when the trip passes were issued, supra, which served as the basis for PAL to have lost its trust and confidence

on De Veyra. By and large, this Court has continually recognized the right of the employer to dismiss an employee on the ground of loss of confidence or breach of trust (Atlas Consolidated Mining and Development Corporation v. NLRC, et al., G.R. No. 75755, November 24, 1988, 167 SCRA 758; San Miguel Corporation v. NLRC, et al., G.R. No. 50321, March 13, 1984, 128 SCRA 180; Central Textile Mills, Inc. v. NLRC, et al., G.R. No. 50150, May 3, 1979, 90 SCRA 9; Valladolid v. Inciong, etc., et al., G. R. No. 52364, March 25, 1983, 121 SCRA 205; Dole Philippines, Inc. v. NLRC, et al., G.R. No. 55413, July 25, 1983, 123 SCRA 673; Tabacalera Insurance Co., et al. v. NLRC, et al., G.R. No. 72555, July 31, 1987, 152 SCRA 667; Riker v. Ople, et al., G.R. No. 50492, October 27, 1987, 155 SCRA 85). In fact, the mere existence of a basis for believing that the employee has breached the trust and confidence reposed on him by his employer is sufficient ground for dismissal (Sea-Land Service, Inc. v. NLRC, et al., G.R. No. 68212, May 24, 1985, 136 SCRA 544). More so, in the case of a supervisor or other personnel occupying positions of responsibility, the loss of the trust and confidence by their employer may justify their termination (Associated Citizens Bank v. Ople, etc., et al., G.R. No. L-48896, February 24, 1981, 103 SCRA 130; New Frontier Mines, Inc. v. NLRC, et al., G.R. No. 51578, May 29, 1984, 129 SCRA 502; Reynolds Philippine Corporation v. Eslava, etc., et al., G.R. No. L48814, June 27, 1985,137 SCRA 259). Aside from finding that there was no legal cause for De Veyra's dismissal from employment, the NLRC also ruled that her dismissal was arbitrary because she was not granted a hearing on the charge against her, in total disregard of PAL's Code of Discipline which, inter alia, provides that (p. 65, Rollo): ARTICLE VI INVESTIGATION PROPER SECTION 1. SETTING OF HEARING. Upon the filing of the administrative charge, the department head shall immediately set the case for hearing, with notice to the employee concerned, copy furnished his union, if he is a member of any. SECTION 2. HEARING PROPER. The employer (sic) may be accompanied to and assisted by a representative of his choice at the hearing. However, the presence of such representative shall not be allowed to unduly delay or in any way detract from the summary nature of the proceedings (Annex "C-2," p. 61, Rollo). As stated earlier, sometime in August, 1987, the Internal Audit and Control Department of PAL conducted a review of the tickets issued by the Interline Ticket Counter because of the uncovering of widespread fraud and manipulation of tickets by several of PAL's employees that resulted to their eventual termination from the firm. It was on this occasion that said department was able to confirm cases of tampering and fraudulent manipulation of official documents, some of which involved the travel documents of De Veyra and her husband. A memorandum was issued by the Vice President of the Internal Audit and Control Department to this effect addressed to the Senior Vice President for Customer Services Group. On August 26, 1987, the Notice of Administrative Charge was sent to De Veyra. On September 11, 1987, she requested additional time within which to study and evaluate her defense. On September 18, 1987, her request was granted. She was allowed until September 29, 1987 to file her answer. On September 24, 1987, De Veyra submitted her sworn statement wherein she admitted having used tickets bearing the upgraded priority classification. She mentioned Minda Santiago as the person who arranged the upgrading of their trip passes. On October 16, 1987, De Veyra's services were terminated by PAL. Taking into account these

circumstances, it cannot be said that De Veyra was denied administrative due process of law simply because the aforequoted provision was not observed by PAL. There is no violation of due process even if no hearing was conducted where a chance to explain a party's side of the controversy was accorded to him. What is frowned upon is the denial of the opportunity to be heard (Eden, et al. v. Ministry of Labor and Employment, et al., G.R. No. 72145, February 28, 1990, 182 SCRA 840; Asprec v. Itchon, et al., G.R. No. L-21685, April 30, 1966, 16 SCRA 921). Since De Veyra admitted in her sworn statement having used tickets bearing the upgraded priority classification; the documentary evidence of PAL already proved the falsity of the tickets; and De Veyra was aware of this falsity, there was no necessity for the parties to undergo the ritual of holding a hearing. To reiterate, there was a legal ground for PAL's termination of the services of De Veyra. We are not persuaded by the opinion advanced by the NLRC that (p. 63, Rollo): Even assuming, arguendo, that (De Veyra) was guilty still the supreme penalty of dismissal was greatly disproportionate to the offense imputed to her. After working for twenty (20) years with (PAL), and receiving numerous commendations and promotions at that, (De Veyra) does not deserve the penalty of dismissal for the violation of a company rule which, after all, is a common practice in the company. This is not to condone the alleged misstep committed by (De Veyra). It is merely to point out that in the light of the surrounding circumstances, dismissal is too severe a penalty. . . . In the first place, the statement that De Veyra's violation of PAL's rule is a common practice in the company is misleading because of lack of proof. In the second place, the fact that De Veyra has worked with PAL for twenty (20) years, if it is to be considered at all, should be taken against her. The infraction that she committed, vis-a-vis her long years of service with the company, reflects a regrettable lack of loyalty. Loyalty that she should have strengthened instead of betrayed. If an employee's length of service is to be regarded as a justification for moderating the penalty of dismissal, it will actually become a prize for disloyalty, perverting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of all undesirables (see Philippine Long Distance Telephone Company v. NLRC, et al., G.R. No. 80609, August 23, 1988, 164 SCRA 671). ACCORDINGLY, the petition is hereby GRANTED. The decision of the National Labor Relations Commission dated November 29, 1988 and its resolution dated February 21, 1989 with respect to paragraphs (a) and (b) are hereby MODIFIED by declaring the dismissal of private respondent Carmencita Nannette G. De Veyra as valid; but AFFIRMED with respect to paragraph (c). The temporary restraining order issued on April 10, 1989 is made permanent. SO ORDERED. Narvasa Chairman, Cruz and Grio-Aquino, JJ., concur Gancayco, J., is on leave.