G.R. No. 103575. April 5, 1993. BUSINESSDAY INFORMATION SYSTEMS AND SERVICES, INC.

, AND RAUL LOCSIN, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, NEMESIO MOYA ALFREDO AMANTE, EDWIN BERSAMINA, SAMUEL CUELA, ROMEO DELA CRUZ, MANUEL DE JESUS, SEVERINO DELA CRUZ, DANILO ESPIRITU, ANGEL FLORES, DANILO FRANCISCO, FLORENCIO GLORIOSO, GERARDO MANUEL, ARMANDO MENDOZA, PEDRO MORELOS, ALEXON ORBETA, ROMEO PEREZ, ALFREDO SABANDO, NESTOR SANTOS, ALFREDO SEPTRIMO, OSCAR SEVILLA, EDUARDO SIOSON, REYMUNDO TIONGCO, TERESITA REYES, CARMENCITA CARPIO, GENARO NABUTAS, DANILO NAMPLATA, AND ROLANDO GAMIT, respondents. Quisumbing, Torres & Evangelista for petitioners. Reynaldo M. Maraan for private respondents. SYLLABUS 1. LABOR LAWS AND SOCIAL LEGISLATION; TERMINATION OF EMPLOYMENT; EMPLOYER MAY NOT, IN THE GUISE OF EXERCISING MANAGEMENT PREROGATIVES, PAY SEPARATION BENEFITS UNEQUALLY; CASE AT BAR. Petitioners' right to terminate employees on account of retrenchment to prevent losses or closure of business operations, is recognized by law, but it may not pay separation benefits unequally for such discrimination breeds resentment and ill-will among those who have been treated less generously than others. "Granting that the 16 May 1988 termination was a retrenchment scheme, and the 31 July 1988 and the 28 February 1989 were due to closure, the law requires the granting of the same amount of separation benefits to the affected employees in any of the cases. The respondent argued that the giving of more separation benefit to the second and third batches of employees separated was their expression of gratitude and benevolence to the remaining employees who have tried to save and make the company viable in the remaining days of operations. This justification is not plausible. there are workers in the first batch who have rendered more years of service and could even be said to be more efficient than those separated subsequently,

yet, they did not receive the same recognition. Understandably, their being retained longer in their job and be not included in the batch that was first terminated, was a concession enough and may already be considered as favor granted by the respondents to the prejudice of the complainants. As it happened, there are workers in the first batch who have rendered more years in service but received lesser separation pay, because of that arrangement made by the respondents in paying their termination benefits . . ." Clearly, there was impermissible discrimination against the private respondents in the payment of their separation benefits. The law requires an employer to extend equal treatment to its employees. It may not, in the guise of exercising management prerogatives, grant greater benefits to some and less to others. Management prerogatives are not absolute prerogatives but are subject to legal limits, collective bargaining agreements, or general principles of fair play and justice (UST vs. NLRC, 190 SCRA 758). Article 283 of the Labor Code, as amended, protects workers whose employment is terminated because of closure of the establishment or reduction of personnel (Abella vs. NLRC, 152 SCRA 141, 145). 2. ID.; ID.; CORPORATE OFFICER NOT PERSONALLY LIABLE FOR MONEY CLAIMS OF DISCHARGED CORPORATE EMPLOYEES; EXCEPTION. A corporate officer is not personally liable for the money claims of discharged corporate employees unless he acted with evident malice and bad faith in terminating their employment. There is no evidence in this case that Locsin acted in bad faith or with malice in carrying out the retrenchment and eventual closure of the company (Garcia vs. NLRC, 153 SCRA 640), hence, he may not be held personally and solidarily liable with the company for the satisfaction of the judgment in favor of the retrenched employees. 3. ID.; GRANT OF BONUS; A PREROGATIVE, NOT AN OBLIGATION, OF EMPLOYER; ENTIRELY DEPENDENT ON FINANCIAL CAPABILITY OF EMPLOYER TO GIVE IT. It is settled do trine that the grant of a bonus is a prerogative, not an obligation, of the employer (Traders Royal Bank vs. NLRC, 189 SCRA 274). The matter of giving a bonus over and above the worker's lawful salaries and allowances is entirely dependent on the financial capability of the employer to give it. The fact that the company's business was no longer profitable (it was in fact moribund) plus the fact that the private respondents did not work up to the middle of the year (they were discharge in May 1988) were valid reasons for not granting them a

mid-year bonus. Requiring the company to pay a mid-year bonus to them also would in effect penalize the company for its generosity to those workers who remained with the company "till the end" of its days. (Traders Royal Bank vs. NLRC, supra.) The award must therefore be deleted. DECISION GRIO-AQUINO, J p: In this petition for certiorari, the Businessday Information Systems and Services Inc. (or BSSI for brevity) and its president/manager, Raul Locsin, seek to annul and set aside the decision dated February 13, 1991 of the National Labor Relations Commission (NLRC) which affirmed the Labor Arbiter's finding that they (petitioners) are liable to pay the private respondents separation pay differentials and mid-year bonus. BSSI was engaged in the manufacture and sale of computer forms. Due to financial reverses, its creditors, the Development Bank of the Philippines (DBP) and the Asset Privatization Trust (APT), took possession of its assets, including a manufacturing plant in Marilao, Bulacan. As a retrenchment measure, some plant employees, including the private respondents, were laid off on May 16, 1988, after prior notice, and were paid separation pay equivalent to one-half (1/2) month pay for every year of service. Upon receipt of their separation pay, the private respondents signed individual releases and quitclaims in favor of BSSI. BSSI retained some employees in an attempt to rehabilitate its business as a trading company. However, barely two and a half months later, these remaining employees were likewise discharged because the company decided to cease business operations altogether. Unlike the private respondents, that batch of employees received separation pay equivalent to a full month's salary for every year of service plus mid-year bonus. Protesting against the discrimination in the payment of their separation benefits, the twenty-seven (27) private respondents filed three (3) separate complaints against the BSSI and Raul Locsin. These cases were later consolidated.

At the conciliation proceedings before Labor Arbiter Manuel P. Asuncion, petitioners denied that there was unlawful discrimination in the payment of separation benefits to the employees. They argued that the first batch of employees was paid "retrenchment" benefits mandated by law, while the remaining employees were granted higher "separation" benefits because their termination was on account of the closure of the business. Based on the pleadings of the parties, Labor Arbiter Asuncion rendered a decision on April 25, 1989 in favor of the complainants, now private respondents, the dispositive portion of which reads: "WHEREFORE, the respondents are hereby ordered to pay the complainants their separation pay differentials and mid-year bonus for the year 1988." (p- 38, Rollo). Upon appeal by the company to the NLRC, the Second Division on February 13, 1991, affirmed the decision of the Labor Arbiter. Petitioners' motion for reconsideration of the resolution having been denied, they have taken the present recourse. In case of retrenchment of a company to prevent losses and closure of business operation, the law provides: Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operations of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one half (l /2) month pay for every year of service, whichever is higher. A fraction of at least six (6)

months shall be considered one (1) whole year." (Labor Code; emphasis supplied.) Undoubtedly, petitioners' right to terminate employees on account of retrenchment to prevent losses or closure of business operations, is recognized by law, but it may not pay separation benefits unequally for such discrimination breeds resentment and ill-will among those who have been treated less generously than others. The following observations of the Commission are relevant: "The respondents cited financial business difficulties to justify their termination of the complainants' employment on 16 May 1988. They were given one-half (1/2) month of their salary for every year of service. Due to continuing losses, which is a sign that business, after the termination did not improve, they closed operations on 31 July 1989, where they dismissed the second batch of employees who were given one (1) month pay for every year they served. The third batch of employees were terminated on 28 February 1989, who were likewise given one (1) monthly pay for every year of service. The business climate obtaining on 16 May 1988 when the complainants were terminated did not at all defer (sic) improvement-wise, with that of 31 July 1988 nor to 28 February 1989. The internal between the dates of termination was so close to each other, so that, no improvement in business maybe likely expected. In fact, the respondents suffered continuous losses, hence, there is no difference in the circumstances of the business to distinguish. "Granting that the 16 May 1988 termination was a retrenchment scheme, and the 31 July 1988 and the 28 February 1989 were due to closure, the law requires the granting of the same amount of separation benefits to the affected employees in any of the cases. The respondent argued that the giving of more separation benefit to the second and third batches of employees separated was their expression of gratitude and benevolence to the remaining employees who have tried to save and make the company viable in the remaining days of operations. This justification is not plausible. There are workers in the first batch who have rendered more years of service and could even be said to be more efficient than those separated subsequently, yet they did not receive the same recognition. Understandably, their being retained longer in their job and be not included in the batch that was first terminated, was a concession enough and may

already be considered as favor granted by the respondents to the prejudice of the complainants. As it happened, there are workers in the first batch who have rendered more years in service but received lesser separation pay, because of that arrangement made by the respondents in paying their termination benefits . . ." (pp. 36-37, Rollo) Clearly, there was impermissible discrimination against the private respondents in the payment of their separation benefits. The law requires an employer to extend equal treatment to its employees. It may not, in the guise of exercising management prerogatives, grant greater benefits to some and less to others. Management prerogatives are not absolute prerogatives but are subject to legal limits, collective bargaining agreements, or general principles of fair play and justice (UST vs. NLRC, 190 SCRA 758). Article 283 of the Labor Code, as amended, protects workers whose employment is terminated because of closure of the establishment or reduction of personnel (Abella vs. NLRC, 152 SCRA 141, 145). With regard to the private respondents' claim for the mid-year bonus, it is settled doctrine that the grant of a bonus is a prerogative, not an obligation, of the employer (Traders Royal Bank vs. NLRC, 189 SCRA 274). The matter of giving a bonus over and above the worker's lawful salaries and allowances is entirely dependent on the financial capability of the employer to give it. The fact that the company's business was no longer profitable (it was in fact moribund) plus the fact that the private respondents did not work up to the middle of the year (they were discharged in May 1988) were valid reasons for not granting them a mid-year bonus. Requiring the company to pay a mid-year bonus to them also would in effect penalize the company for its generosity to those workers who remained with the company till the end" of its days. (Traders Royal Bank vs. NLRC, supra.) The award must therefore be deleted. There is merit in the contention of petitioner Raul Locsin that the complaint against him should be dismissed. A corporate officer is not personally liable for the money claims of discharged corporate employees unless he acted with evident malice and bad faith in terminating their employment. There is no evidence in this case that Locsin acted in bad faith or with malice in carrying out the retrenchment and eventual closure of the company (Garcia

vs. NLRC, 153 SCRA 640), hence, he may not be held personally and solidarily liable with the company for the satisfaction of the judgment in favor of the retrenched employees. WHEREFORE, the resolution of the NLRC ordering the petitioner company to pay separation pay differentials to the private respondents is AFFIRMED. However, the award of mid-year bonus to them is hereby deleted and set aside. Petitioner Raul Locsin is absolved from any personal liability to the respondent employees. No costs. SO ORDERED.

G.R. No. L-69494 June 10, 1986 A.C. RANSOM LABOR UNION-CCLU, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, First Division, A.C. RANSOM (PHILS.) CORPORATION, RUBEN HERNANDEZ, MAXIMO C. HERNANDEZ, JR., PORFIRIO R. VALENCIA, LAURA H. CORNEJO, FRANCISCO HERNANDEZ, CELESTINO C. HERNANDEZ & MA. ROSARIO HERNANDEZ, respondents.

MELENCIO-HERRERA, J.: The facts relevant to this case may be related as follows: 1. Respondent A. C. Ransom (Philippines) Corporation (RANSOM, for short) was established in 1933 by Maximo C. Hernandez, Sr. It was a "family" corporation, the stockholders of which were/are members of the Hernandez family. It has a compound in Las Pinas Rizal, where it has been engaged in the manufacture mainly of ink and articles associated with ink. 2. On June 6, 1961, employees of RANSOM, most of them being members of petitioner Labor UNION, went on strike and established a picket line which, however, was lifted on June 21st with most of the strikers returning and being allowed to resume their work by RANSOM Twenty-two (22) strikers were refused reinstatement by the Company.

3. During 1969, the same Hernandez family organized another corporation, Rosario Industrial Corporation (ROSARIO, for short) which also engaged, in the RANSOM Compound, in the business of manufacture of ink and products associated with ink. 4. The strike became the subject of Cases Nos. 2848 ULP and 2880 ULP of the Court of Industrial Relations which, on December 19, 1972, ordered RANSOM "its officers and agents to reinstate the 22 strikers with back wages from July 25, 1969. 5. On April 2, 1973, RANSOM filed an application for clearance to close or cease operations effective May 1, 1973, which was granted by the Ministry of Labor and Employment in its Order of June 7, 1973, without prejudice to the right of employees to seek redress of grievance, if any. Although it has stopped operations, RANSOM has continued its personality as a corporation. For practical purposes, reinstatement of the 22 strikers has been precluded. As a matter of fact, reinstatement is not an issue in this case. 6. Back wages of the 22 strikers were subsequently computed at P164,984.00, probably in early 1974. The exact date is not reflected in the record. 7. Up to September 9, 1976, petitioner UNION had filed about ten (10) motions for execution against RANSOM; but all of them could not be implemented, presumably for failure to find leviable assets of RANSOM; although it appears that, in 1975, RANSOM had sold machineries and equipment for P28million to Revelations Manufacturing Corporation. 8. Directly related to this case is the last Motion for Execution, dated December 18, 1978, filed by petitioner UNION wherein it asked that officers and agents of RANSOM be held personally liable for payment of the back wages. That Motion was granted by Labor Arbiter, Tito F. Genilo, on March 11, 1980 (The GENILO ORDER), wherein he expressly authorized a Writ of Execution to be issued for P164,984.00 (the back wages) against RANSOM and seven officers and directors of the Company who are the named individual respondents herein. RANSOM took an appeal to NLRC which affirmed the GENILO ORDER, except as modified in the body of its decision of July 31, 1984. 9. In RANSOM's appeal to the NLRC, two issues were raised:

(a) One of the issues was: THE DECISION OF THE INDUSTRIAL RELATIONS COURT HAVING BECOME FINAL AND EXECUTORY IN 1973, IS IT ENFORCEABLE BY A WRIT OF EXECUTION ISSUED IN 1980 OR MORE THAN FIVE YEARS AFTER THE FINALITY OF THE DECISION SOUGHT TO BE ENFORCED? The corresponding ruling made by NLRC was: Perforce respondent's theory that execution proceedings must stop after the lapse of five (5) years and that a motion to revive need be filed, must fail. Suffice it to state also that the statute of limitations has been devised to operate primarily against those who sleep on their rights, not against those who assert their right but fail for causes beyond their control. The above recital of facts contradicts respondent's contention that the CIR decision of August 19, 1972 had remained dormant to require a motion to revive. (b) The second issue raised was: IS THE JUDGMENT AGAINST A CORPORATION TO REINSTATE ITS DISMISSED EMPLOYEES WITH BACKWAGES, ENFORCEABLE AGAINST ITS OFFICERS AND AGENTS IN THEIR INDIVIDUAL, PRIVATE AND PERSONAL CAPACITIES WHO WERE NOT PARTIES IN THE CASE WHERE THE JUDGMENT WAS RENDERED; The NLRC ruling was: As to the liability of the respondent's officers and agents, we agree with the contention of the respondent-appellant that there is nothing in the Order dated May 11, 1986 that would justify the holding of the individual officers and agents of respondent in their personal capacity. As a general rule, officers of the corporation are not liable personally for the official acts unless they have exceeded the scope of their authority. In the absence of evidence showing that the officers mentioned in the Order of the Labor Arbiter dated March 11, 1980 have exceeded their authority, the writ of execution can not be enforced against

them, especially so since they were not given a chance to be heard. RANSOM and the seven individual respondents in this case have not appealed from the ruling of the NLRC that Section 6, Rule 39, is not invocable by them in regards to the execution of the decision of December 19, 1972. Hence, the issue can no longer be raised herein. Even if the said section were applicable, the 5-year period therein mentioned may not have expired by December 18, 1978 because the period should be counted only from the time the back wages were determined, which could have been in early 1974. We now come to the NLRC's decision upholding non-personal liabilities of the individual respondents herein for back wages of the 22 strikers. (a) Article 265 of the labor Code, in part. expressly provides: Any worker whose employment has been terminated as a consequence of an unlawful lockout shall be entitled to reinstatement with fill back wages. Article 273 of the Code provides that: Any person violating any of the provisions of Article 265 of this Code shall be punished by a fine of not exceeding five hundred pesos and/or imprisonment for not less than one (1) day nor more than six (6) months. (b) How can the foregoing provisions be implemented when the employer is a corporation? The answer is found in Article 212 (c) of the Labor Code which provides: (c) 'Employer includes any person acting in the interest of an employer directly or indirectly. The term shall not include any labor organization or any of its officers or agents except when acting as employer. The foregoing was culled from Section 2 of RA 602, the Minimum Wage Law. Since RANSOM is an artificial person, it must have an officer who can be presumed to be the employer, being the "person acting in the interest of

(the) employer" RANSOM. The corporation, only in the technical sense, is the employer. The responsible officer of an employer corporation can be held personally, not to say even criminally, liable for non-payment of back wages. That is the policy of the law. In the Minimum Wage Law, Section 15(b) provided: (b) If any violation of his Act is committed by a corporation, trust, partnership or association, the manager or in his default, the person acting as such when the violation took place, shall be responsible. In the case of a government corporation, the managing head shall be made responsible, except when shown that the violation was due to an act or commission of some other person, over whom he has no control, in which case the latter shall be held responsible. In PD 525, where a corporation fails to pay the emergency allowance therein provided, the prescribed penalty "shall be imposed upon the guilty officer or officers" of the corporation. (c) If the policy of the law were otherwise, the corporation employer can have devious ways for evading payment of back wages. in the instant case, it would appear that RANSOM, in 1969, foreseeing the possibility or probability of payment of back wages to the 22 strikers, organized ROSARIO to replace RANSOM, with the latter to be eventually phased out if the 22 strikers win their case. RANSOM actually ceased operation on May 1, 1973, after the December 19, 1972 Decision of the Court of Industrial Relations was promulgated against RANSOM. (d) The record does not clearly Identify "the officer or officers" of RANSOM directly responsible for failure to pay the back wages of the 22 strikers. In the absence of definite proof in that regard, we believe it should be presumed that the responsible officer is the President of the corporation who can be deemed the chief operation officer thereof. Thus, in RA 602, criminal responsibility is with the "Manager" or in his default, the person acting as such. In RANSOM, the President appears to be the Manager. (e) Considering that non-payment of the back wages of the 22 strikers has been a continuing situation, it is our opinion What the personal liability of the RANSOM President, at the time the back wages were ordered to be paid should also be a continuing joint and several personal liabilities of all

who x-ray have thereafter succeeded to the office of president; otherwise, the 22 strikers may be deprived of their rights by the election of a president without leviable assets. WHEREFORE, the questioned Decision of the National Labor Relations Commission is SET ASIDE, and the Order of Labor Arbiter Tito F. Genilo of March 11, 1980 is reinstated with the modification that personal liability for the back wages due the 22 strikers shall be limited to Ruben Hernandez, who was President of RANSOM in 1974, jointly and severally with other Presidents of the same corporation who had been elected as such after 1972 or up to the time the corporate life was terminated. SO ORDERED.

G.R. No. 82341 December 6, 1989 SUNDOWNER DEVELOPMENT CORPORATION, petitioner, vs. HON. FRANKLIN M. DRILON, in his capacity as Secretary of the Department of Labor and Employment, NATIONAL UNION OF WORKERS IN HOTEL, RESTAURANT AND ALLIED INDUSTRIES, (NUWHRAIN), HOTEL MABUHAY CHAPTER, THE CHAPTER OFFICERS AND MEMBERS, HOTEL MABUHAY, INC. and MR. MARIANO PENANO, President of Hotel Mabuhay, Inc., respondents. Carmelita S. Bautista-Lozada for petitioner. Paterno D. Menzon Law Office for private respondent NUWHRAIN.

GANCAYCO, J.: The principal issue in this case is whether or not the purchaser of the assets of an employer corporation can be considered a successor employer of the latter's employees. Private respondent Hotel Mabuhay, Inc. (Mabuhay for short,) leased the premises belonging to Santiago Syjuco, Inc. (Syjuco for short) located at

1430 A. Mabini St., Ermita, Manila. However, due to non-payment of rentals, a case for ejectment was filed by Syjuco against Mabuhay in the Metropolitan Trial Court of Manila. Mabuhay offered to amicably settle the case by surrendering the premises to Syjuco and to sell its assets and personal property to any interested party. Syjuco offered the said premises for lease to petitioner. The negotiation culminated with the execution of the lease agreement on April 16, 1987 to commence on May 1, 1987 and to expire on April 30,1992. 1 Mabuhay offered to sell its assets and personal properties in the premises to petitioner to which petitioner agreed. A deed of assignment of said assets and personal properties was executed by Mabuhay on April 29,1987 in favor of petitioner. 2 On same date Syjuco formally turned over the possession of the leased premises to petitioner who actually took possession and occupied the same on May 1, 1987. On May 4, 1987, respondent National Union of Workers in Hotel, Restaurant and Allied Services (NUWHRAIN for short) picketed the leased premises, barricaded the entrance to the leased premises and denied petitioner's officers, employees and guests free access to and egress from said premises. Thus, petitioner wrote a letter-complaint to Syjuco. A complaint for damages with preliminary injunction and/or temporary restraining order was filed by petitioner on May 7, 1987 with the Regional Trial Court of Manila docketed as Civil Case No. 87-40436. On the same day, the Executive Judge of said court issued a restraining order against respondent NUWHRAIN and its officers and members as prayed for in the petition. Nevertheless, NUWHRAIN maintained their strike on the subject premises but filed an answer to the complaint. On May 14, 1987, an order was issued by public respondent Secretary of Labor assuming jurisdiction over the labor dispute pursuant to Article 263(g) of the Labor Code as amended and in the interim, requiring all striking employees to return to work and for respondent Mabuhay to accept all returning employees pending final determination of the issue of the absorption of the former employees of Mabuhay. The parties were also directed to submit their respective position papers within ten (10) days from receipt of the order.

On May 25, 1987, Mabuhay submitted its position paper alleging among others that it had sold all its assets and personal properties to petitioner and that there was no sale or transfer of its shares whatsoever and that Mabuhay completely ceased operation effective April 28,1987 and surrendered the premises to petitioner so that there exists a legal and physical impossibility on its part to comply with the return to work order specifically on absorption. On June 26, 1987, petitioner in order to commence its operation, signed a tri-partite agreement so the workers may lift their strike, by and among petitioner, respondents NUWHRAIN and Mabuhay whereby the latter paid to respondent NUWHRAIN the sum of P 638,000.00 in addition to the first payment in the sum of P 386,447.11, for which reason respondent NUWHRAIN agreed to lift the picket . 3 Respondent NUWHRAIN on July 13, 1987 filed its position paper alleging connivance between Mabuhay and petitioner in selling the assets and closing the hotel to escape its obligations to the employees of Mabuhay and so it prays that petitioner accept the workforce of Mabuhay and pay backwages from April 15,1986 to April 28,1987, the day Mabuhay stopped operation. On the other hand, petitioner filed a "Partial Motion for Reconsideration and Position Paper," alleging that it was denied due process; that there were serious errors in the findings of fact which would cause grave and irreparable damage to its interest; as well as on questions of law. On January 20, 1988, the public respondent issued an order requiring petitioner to absorb the members of the union and to pay backwages from the time it started operations up to the date of the order. 4 Petitioner filed on January 27,1988 a motion for reconsideration of the aforesaid order alleging that the theory of implied acceptance and assumption of statutory wrong does not apply in the instant case; that the prevailing doctrine that there is no law requiring bona fide purchasers of the assets of an on-going concern to absorb in its employ the employees of the latter should be applied in this case; that the order for absorption of the employees of Mabuhay as well as the payment of their backwages is contrary to law. Respondent NUWHRAIN also filed a motion for clarification of the aforesaid order.

On March 8, 1988, the public respondent denied said motion for reconsideration and motion for clarification for lack of merit. Hence, this petition for review by certiorari with prayer for preliminary injunction and/or temporary restraining order filed by petitioner in this Court. Petitioner presents seven issues for resolution which all revolve about the singular issue of whether or not under the circumstances of this case the petitioner may be compelled to absorb the employees of respondent Mabuhay. On March 23, 1988, this Court, without giving due course to the petition, required respondents to comment thereon within ten (10) days from notice and issued a temporary restraining order enjoining public respondent or his duly authorized representatives from executing and implementing the orders dated January 20, 1988 and March 8, 1988. The petition is impressed with merit. The rule is that unless expressly assumed, labor contracts such as employment contracts and collective bargaining agreements are not enforceable against a transferee of an enterprise, labor contracts being in personam, thus binding only between the parties .5 A labor contract merely creates an action in personally and does not create any real right which should be respected by third parties. This conclusion draws its force from the right of an employer to select his employees and to decide when to engage them as protected under our Constitution, and the same can only be restricted by law through the exercise of the police power. 6 As a general rule, there is no law requiring a bona fide purchaser of assets of an on-going concern to absorb in its employ the employees of the latter. 7 However, although the purchaser of the assets or enterprise is not legally bound to absorb in its employ the employers of the seller of such assets or enterprise, the parties are liable to the employees if the transaction between the parties is colored or clothed with bad faith. 8 In the case at bar, contrary to the claim of the public respondent that the transaction between petitioner and Mabuhay was attended with bad faith, the court finds no cogent basis for such contention. Thus, the absorption of the employees of Mabuhay may not be imposed on petitioner.

It is undisputed that when Mabuhay surrendered the leased premises to Syjuco and asked Syjuco to offer same to other lessees it was Syjuco who found petitioner and persuaded petitioner to lease said premises. Mabuhay had nothing to do with the negotiation and consummation of the lease contract between petitioner and Syjuco. It was only when Mabuhay offered to sell its assets and personal properties in the premises to petitioner that they came to deal with each other. It appears that petitioner agreed to purchase said assets of respondent Mabuhay to enable Mabuhay to pay its obligations to its striking employees and to Syjuco. Indeed, in the deed of assignment that was executed by Mabuhay in favor of petitioner on April 14, 1 987 for and in consideration of P2,500,000.00, it is specifically provided therein that the same is "purely for and in consideration of the sale/transfer and assignment of the personal properties and assets of Hotel Mabuhay, Inc. listed . . . " and "in no way involves any assumption or undertaking on the part of Second Party (petitioner) of any debts or liabilities whatsoever of Hotel Mabuhay, Inc." 9 The liabilities alluded to in this agreement should be interpreted to mean not only any monetary liability of Mabuhay but any other liability or obligation arising from the operation of its business including its liability to its employees. Moreover, in the tripartite agreement that was entered into by petitioner with respondents NUWHRAIN and Mabuhay, it is clearly stipulated as follows: 8. That, immediately after the execution of this Agreement, the FIRST PARTY shall give a list of its members to the THIRD PARTY that it desires to recommend for employment so that the latter can consider them for employment, with no commitment whatsoever on the part of the THIRD PARTY to hire them in the business that it will operate in the premises formerly occupied by the Hotel Mabuhay; 10 From the foregoing, it is clear that petitioner has no liability whatsoever to the employees of Mabuhay And its responsibility if at all, is only to consider them for re-employment in the operation of the business in the same premises. There can be no implied acceptance of the employees of Mabuhay by petitioner and acceptance of statutory wrong as it is expressly

provided in the agreement that petitioner has no commitment or duty to absorb them. Moreover, the court does not subscribe to the theory of public respondent that petitioner should have informed NUWHRAIN of its lease of the premises and its purchase of the assets and personal properties of Mabuhay therein so that said employees could have taken steps to protect their interest. The court finds no such duty on the part of petitioner and its failure to notify said employees cannot be an indicium of bad faith. Much less is there any evidence that petitioner and respondent Mabuhay are joint tortfeasors as found by public respondent. While it is true that petitioner is using the leased property for the same type of business as that of respondent Mabuhay, there can be no continuity of the business operations of the predecessor employer by the successor employer as respondent Mabuhay had not retained control of the business. Petitioner is a corporation entirely different from Mabuhay. It has no controlling interest whatever in respondent Mabuhay. Petitioner and Mabuhay have no privity and are strangers to each other. What is obvious is that the petitioner, by purchasing the assets of respondent Mabuhay in the hotel premises, enabled Mabuhay to pay its obligations to its employees. There being no employer-employee relationship between the petitioner and the Mabuhay employees, the petition must fail. Petitioner can not be compelled to absorb the employees of Mabuhay and to pay them backwages. WHEREFORE, the petition is GRANTED and the questioned orders of public respondent Secretary of Labor and Employment dated January 20, 1988 and March 8, 1988 are reversed and set aside. The restraining order that this Court issued on March 20,1988 is hereby made permanent. No pronouncement as to costs. SO ORDERED.

G.R. No. 97237 August 16, 1991 FILIPINAS PORT SERVICES, INC., petitioner, vs.

NATIONAL LABOR RELATIONS COMMISSION, PATERNO LIBOON, SEGUNDO AQUINO, JOVITO BULAY, DOMINGO NAVOA, DELFIN BERMEJO, CELEDONIO MANCUBAT, ALBERTO MAHINAY, SR., TEODULO SILAYA, SANTOS ARGUIDO, JUANITO LABANON, FLORENCIO MIRANTES, LUCIO BARRERA, VICENTE GILDORE, LEON FUENTES, CASIMIRO MAGSAYO, FERNANDO MORIENTE, MATIAS ORBITA, SR., FRANCISCO PARDILLO, ILDEFONSO JUMILLA AND JOSE CANTONJOS, respondents. Yap, Ocampo & Associates for petitioner. Porfirio S. Daclan for private respondents.

PARAS, J.:p This is a petition for clarification with prayer for preliminary injunction filed by Filipinas Port Services, Inc. (hereinafter referred to as Filport) seeking to clarify two conflicting decisions rendered by this Court in cases involving identical or similar parties, facts and issues. The antecedent facts of the case are as follows: In view of the government policy which ordained that cargo handling operations should be limited to only one cargo handling operator-contractor for every port (under Customs Memorandum Order 28075, later on superseded by General Ports Regulations of the Philippine Ports Authority) the different stevedoring and arrastre corporations operating in the Port of Davao were integrated into a single dockhandlers corporation, known as the Davao Dockhandlers, Inc., which was registered with the Securities and Exchange Commission on July 13, 1976. Due to the late receipt of its permit to operate at the Port of Davao from the Bureau of Customs, Davao Dockhandlers, Inc., which was subsequently renamed Filport, actually started its operation on February 16, 1977. As a result of the merger, Section 118, Article X of the General Guidelines on The Integration of Stevedoring/Arrastre Services (PPA Administrative Order No. 13-77) mandated Filport to draw its personnel complements from the merging operators, as follows:

Sec. 118. Absorption of labor.Subject to the provisions of the immediate preceding section, and consistent with the actual operational requirements of the new management, all labor force together with its necessary personnel complement, of the merging operators shall be absorbed by the merged or integrated organization to constitute its labor force. (Emphasis supplied) Thus, Filport's labor force was mostly taken from the integrating corporations, among them the private respondents. On February 4,1987, private respondent Paterno Liboon and 18 others filed a complaint with the Department of Labor and Employment Regional Office in Davao City, alleging that they were employees of Filport since 1955 through 1958 up to December 31, 1986 when they retired; that they were paid retirement benefits computed from February 16,1977 up to December 31, 1986 only; and that taking into consideration their continuous length of service, they are entitled to be paid retirement benefits differentials from the time they started working with the predecessors of Filport up to the time they were absorbed by the latter in 1977 (p. 15, Rollo). Finding Filport a mere alter ego of the different integrating corporations, the Labor Arbiter held Filport liable for retirement benefits due private respondents for services rendered prior to February 16, 1977. Said decision was affirmed by the NLRC on appeal. Filport filed a petition for certiorari with the Supreme Court docketed as G.R. No. 85704, claiming that it is an entirely new corporation with a separate juridical personality from the integrating corporations; and that Filport is not a successor-employer, liable for the obligations of private respondents' previous employers, as shown clearly in the memorandum dated November 21,1978 of PPA Assistant General Manager Maximo S. Dumlao, Jr., to wit:

MEMORANDUM TO: The Officer-in-Charge PMU Davao FROM: The AGM for Operations SUBJECT: Clarification of Sec. 116 of PPA Administrative Order No. 13-77 of New Organization's Liability. In reply to your telegram dated November 16, 1978, Sec. 116 of PPA Administrative Order #13-77 is hereby quoted for clarification: New Organization's LiabilityThe integrated cargo-handling organization shall be absolutely free from any liability or obligation of the merging operators who shall continue to be individually liable for their respective liabilities or obligations, if any. (emphasis supplied) ... xxx xxx xxx The new organization's liability shall be the payment of salaries, benefits and all other money due the employee as a result of his employment, starting on the date of his service in the newly integrated organization.

In answer to your query, therefore, the absorption of an employee into a newly integrated organization does not include the carry over of his length of service. s/t MAXIMO S. DUMLAO, JR. Asst. General Manager While G.R. No. 85704 was still pending decision by this Court, Josefino Silva, another employee of Filport, instituted a suit against Filport and Damasticor (one of the defunct stevedoring firms) claiming for retirement benefits for services rendered prior to February 19, 1977. The labor arbiter found for Josefino Silva and said decision was affirmed by the NLRC. Filport filed a petition for certiorari with the Supreme Court docketed as G.R. No. 86026. On August 31, 1989, this Court, through the First Division, rendered a decision, holding that: Petitioner (Filport) cannot be held liable for the payment of the retirement pay of private respondent (Josefino Silva) while in the employ of DAMASTICOR ... who is held responsible for the same as the labor contract is in personam and cannot be passed on to the petitioner." (Rollo, p. 7) In so ruling, the First Division relied heavily on the case of Fernando v. Angat Labor Union (5 SCRA 248) where it was held that unless expressly assumed, labor contracts are not enforceable against a transferee of an enterprise labor contracts being in personam. Per entry of judgment, the aforesaid decision became final and executory on November 24, 1989 (p. 87, Rollo). On September 3, 1990, however, this Court, through the Second Division, dismissed the petition in G.R. No. 85704 "for failure to sufficiently show that the questioned judgment is tainted with grave abuse of discretion." Per entry of judgment, said resolution became final and executory on December 4, 1 990 (p. 108, Rollo).

Hence, the instant petition for clarification with prayer for preliminary injunction to enjoin the respondents from enforcing the decision in G.R. No. 85704 until further orders of this Court. We see no reason to disturb the findings of fact of the public respondent, supported as they are by substantial evidence in the light of the well established principle that findings of administrative agencies which have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect but at times even finality, and that judicial review by this Court on labor cases does not go so far as to evaluate the sufficiency of the evidence upon which the Labor Arbiter and the NLRC based their determinations but are limited to issues of jurisdiction or grave abuse of discretion. (National Federation of Labor Union v. Ople, 143 SCRA 129). In the case filed by private respondent Paterno Liboon et al against Filport, the findings of the NLRC in its November 27, 1987 decision are categorical: In resolving the issues, the Labor Arbiter concludes as follows: The eventual incorporation of the arrastre/stevedoring firms and their subsequent registration with the Securities and Exchange Commission on July 13, 1975 brought to the fore the interlocking ownership of the new corporation. xxx xxx xxx Subsequent amendment of its Articles of Incorporation highlighted by the renaming of the Davao Dockhandlers, Inc. to Filipinas Port Services, Inc. did not diminish the fact that the ownership and constituency of the new corporation are basically Identical with the previous owners. It is, therefore, the considered view of this Office that respondent Filport being a mere alter ego of the different merging companies has at the very least, the obligation not only to absorb into its employ workers of the dissolved companies, but also to absorb the length of service earned by the absorbed employees from their former employers. xxx xxx xxx

We are in full accord with, and hereby sustain, the findings and conclusions of the Labor Arbiter. Under the circumstances, respondent-appellant is a successor-employer. As a successor entity, it is answerable to the lawful obligations of the predecessor employers, herein integrees. This Commission has so held under the principle of 'substitution' that the successor firm is liable to (sic) the obligations of the predecessor employer, notwithstanding the change in management or even personality, of the new contracting employer." (Lakas Ng Manggagawang Filipino (LAKAS] v. Tarlac Electrical Cooperative, Inc. et al., NLRC Case No. RB III-1 57-75, January 28,1978, En Banc). ... The Supreme Court earlier upheld the "Substitutionary" doctrine in the case ofBenguet Consolidated, Inc. vs. BOI Employees & Workers Union, (G.R. L-24711, April 30, 1968, 23 SCRA 465). (pp. 35 & 37, Rollo) Said findings were reiterated in the case filed by Josefino Silva against Filport where the NLRC, in its decision dated January 19, 1988, further ruled that: ... As We have ruled in the similar case involving herein appellant, the latter is deemed a survivor entity because it continued in an essentially unchanged manner the business operators of the predecessor arrastre and port service operators, hiring substantially the same workers, including herein appellee, of the integree predecessors, using substantially the same facilities, with similar working conditions and line of business, and employing the same corporate control, although under a new management and corporate personality. (G.R. No. 86026, p. 35, Rollo) Thus, granting that Filport had no contract whatsoever with the private respondents regarding the services rendered by them prior to February 16, 1977, by the fact of the merger, a succession of employment rights and obligations had occurred between Filport and the private respondents. The law enforced at the time of the merger was Section 3 of Act No. 2772 which took effect on March 6, 1918. Said law provides: Sec. 3. Upon the perfecting, as aforesaid, of a consolidation made in the manner herein provided, the several corporations

parties thereto shall be deemed and taken as one corporation, upon the terms and conditions set forth in said agreement; or, upon the perfecting of a merger, the corporation merged shall be deemed and taken as absorbed by the other corporation and incorporated in it; and all and singular rights, privileges, and franchises of each of said corporations, and all property, real and personal, and all debts due on whatever account, belonging to each of such corporations, shall be taken and deemed as transferred to and vested in the new corporation formed by the consolidation, or in the surviving corporation in case of merger, without further act or deed; and the title to real estate, either by deed or otherwise, under the laws of the Philippine Islands vested in either corporation, shall not be deemed in any way impaired by reason of this Act: Provided, however, That the rights of creditors and all liens upon the property of either of said corporations shall be preserved unimpaired; and all debts liabilities, and duties of said corporations shall thenceforth attach to the new corporation in case of a consolidation, or to the surviving corporation in case of a merger, and be enforced against said new corporation or surviving corporation as if said debts, liabilities, and duties had been incurred or contracted by it. As earlier stated, it was mandated that Filport shall absorb all labor force and necessary personnel complement of the merging operators, thus, clearly indicating the intention to continue the employer-employee relationships of the individual companies with its employees through Filport. The alleged memorandum of the PPA Assistant General Manager exonerating Filport from any liability arising from and as a result of the merger is contrary to public policy and is violative of the workers' right to security of tenure. Said memorandum was issued in response to a query of the PMU Officer-in-Charge and was not even published nor made known to the workers who came to know of its existence only at the hearing before the NLRC. (G.R. No. 86026, pp. 93-94, Rollo) The principle involved in the case cited by the First Division (Fernando v. Angat Labor Union [supra]) applies only when the transferee is an entirely new corporation with a distinct personality from the integrating firms and NOT where the transferee was found to be merely an alter ego of the

different merging firms, as in this case. Thus, Filport has the obligation not only to absorb the workers of the dissolved companies but also to include the length of service earned by the absorbed employees with their former employees as well. To rule otherwise would be manifestly less than fair, certainly, less than just and equitable. Finally, to deny the private respondents the fruits of their labor corresponding to the time they worked with their previous employers would render at naught the constitutional provisions on labor protection. In interpreting the protection to labor and social justice provisions of the Constitution and the labor laws, and rules and regulations implementing the constitutional mandate, the Supreme Court has always adopted the liberal approach which favors the exercise of labor rights. (EuroLinea Phils., Inc. v. NLRC, 156 SCRA 83). WHEREFORE, the Resolution of the Second Division of this Court in G.R. No. 85704 dated September 3, 1990 is hereby REITERATED. SO ORDERED.

G.R. No. 91298 June 22, 1990 CORAZON PERIQUET, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and THE PHIL. NATIONAL CONSTRUCTION CORPORATION (Formerly Construction Development Corp. of the Phils.), respondents. Tabaquero, Albano & Associates for petitioner. The Government Corporate Counsel for private respondent.

CRUZ, J.: It is said that a woman has the privilege of changing her mind but this is usually allowed only in affairs of the heart where the rules are permissibly inconstant. In the case before us, Corazon Periquet, the herein petitioner,

exercised this privilege in connection with her work, where the rules are not as fickle. The petitioner was dismissed as toll collector by the Construction Development Corporation of the Philippines, private respondent herein, for willful breach of trust and unauthorized possession of accountable toll tickets allegedly found in her purse during a surprise inspection. Claiming she had been "framed," she filed a complaint for illegal dismissal and was sustained by the labor arbiter, who ordered her reinstatement within ten days "without loss of seniority rights and other privileges and with fun back wages to be computed from the date of her actual dismissal up to date of her actual reinstatement." 1 On appeal, this order was affirmed in toto by public respondent NLRC on August 29, 1980. 2 On March 11, 1989, almost nine years later, the petitioner filed a motion for the issuance of a writ of execution of the decision. The motion was granted by the executive labor arbiter in an order dated June 26, 1989, which required payment to the petitioner of the sum of P205,207.42 "by way of implementing the balance of the judgment amount" due from the private respondent. 3 Pursuant thereto, the said amount was garnished by the NLRC sheriff on July 12, 1989. 4 On September 11, 1989, however, the NLRC sustained the appeal of the CDCP and set aside the order dated June 20, 1989, the corresponding writ of execution of June 26, 1989, and the notice of garnishment. 5 In its decision, the public respondent held that the motion for execution was time-barred, having been filed beyond the five-year period prescribed by both the Rules of Court and the Labor Code. It also rejected the petitioner's claim that she had not been reinstated on time and ruled as valid the two quitclaims she had signed waiving her right to reinstatement and acknowledging settlement in full of her back wages and other benefits. The petitioner contends that this decision is tainted with grave abuse of discretion and asks for its reversal. We shall affirm instead. Sec. 6, Rule 39 of the Revised Rules of Court, provides: SEC. 6. Execution by motion or by independent action. A judgment may be executed on motion within five (5) years from the date of its entry or from the date it becomes final and executory. After the lapse of such time, and before it is barred

by the statute of limitations, a judgment may be enforced by action. A similar provision is found in Art. 224 of the Labor Code, as amended by RA 6715, viz. ART. 224. Execution of decision, orders, awards. (a) The Secretary of Labor and Employment or any Regional Director, the Commission or any Labor Arbiter or Med-Arbiter, or the Voluntary Arbitrator may, motu propio, or on motion of any interested party, issue a writ of execution on a judgment within five (5) years from the date it becomes final and executory, requiring a sheriff or a duly deputized officer to execute or enforce a final decision, order or award. ... The petitioner argues that the above rules are not absolute and cites the exception snowed in Lancita v. Magbanua, 6 where the Court held: Where judgments are for money only and wholly unpaid, and execution has been previously withheld in the interest of the judgment debtor, which is in financial difficulties, the court has no discretion to deny motions for leave to issue execution more than five years after the judgments are entered. (Application of Molnar, Belinsky, et al. v. Long Is. Amusement Corp., I N.Y.S, 2d 866) In computing the time limited for suing out of an execution, although there is authority to the contrary, the general rule is that there should not be included the time when execution is stayed, either by agreement of the parties for a definite time, by injunction, by the taking of an appeal or writ of error so as to operate as a supersedeas, by the death of a party, or otherwise. Any interruption or delay occasioned by the debtor will extend the time within which the writ may be issued without scire facias. xxx xxx xxx There has been no indication that respondents herein had ever slept on their rights to have the judgment executed by mere motions, within the reglementary period. The statute of

limitation has not been devised against those who wish to act but cannot do so, for causes beyond their central. Periquet insists it was the private respondent that delayed and prevented the execution of the judgment in her favor, but that is not the way we see it. The record shows it was she who dilly-dallied. The original decision called for her reinstatement within ten days from receipt thereof following its affirmance by the NLRC on August 29, 1980, but there is no evidence that she demanded her reinstatement or that she complained when her demand was rejected. What appears is that she entered into a compromise agreement with CDCP where she waived her right to reinstatement and received from the CDCP the sum of P14,000.00 representing her back wages from the date of her dismissal to the date of the agreement. 7 Dismissing the compromise agreement, the petitioner now claims she was actually reinstated only on March 16, 1987, and so should be granted back pay for the period beginning November 28, 1978, date of her dismissal, until the date of her reinstatement. She conveniently omits to mention several significant developments that transpired during and after this period that seriously cast doubt on her candor and bona fides. After accepting the sum of P14,000.00 from the private respondent and waiving her right to reinstatement in the compromise agreement, the petitioner secured employment as kitchen dispatcher at the Tito Rey Restaurant, where she worked from October 1982 to March 1987. According to the certification issued by that business, 8 she received a monthly compensation of P1,904.00, which was higher than her salary in the CDCP. For reasons not disclosed by the record, she applied for re-employment with the CDCP and was on March 16,1987, given the position of xerox machine operator with a basic salary of P1,030.00 plus P461.33 in allowances, for a total of P1,491.33 monthly. 9 On June 27, 1988; she wrote the new management of the CDCP and asked that the rights granted her by the decision dated August 29, 1980, be recognized because the waiver she had signed was invalid. 10

On September 19, 1988, the Corporate Legal Counsel of the private respondent (now Philippine National Construction Corporation) recommended the payment to the petitioner of the sum of P9,544.00, representing the balance of her back pay for three years at P654. 00 per month (minus the P14,000.00 earlier paid). 11 On November 10, 1988, the petitioner accepted this additional amount and signed another Quitclaim and Release reading as follows: KNOW ALL MEN BY THESE PRESENTS: THAT, I CORAZON PERIQUET, of legal age, married and resident of No. 87 Annapolis St., Quezon City, hereby acknowledged receipt of the sum of PESOS: NINE THOUSAND FIVE HUNDRED FORTY FOUR PESOS ONLY (P9,544.00) Philippine currency, representing the unpaid balance of the back wages due me under the judgment award in NLRC Case No. AB2-864-79 entitled "Corazon Periquet vs. PNCC- TOLLWAYS" and I further manifest that this payment is in full satisfaction of all my claims/demands in the aforesaid case. Likewise, I hereby manifest that I had voluntarily waived reinstatement to my former position as TOLL TELLER and in lieu thereof, I sought and am satisfied with my present position as XEROX MACHINE OPERATOR in the Central Office. Finally, I hereby certify that delay in my reinstatement, after finality of the Decision dated 10 May 1979 was due to my own fault and that PNCC is not liable thereto. I hereby RELEASE AND DISCHARGE the said corporation and its officers from money and all claims by way of unpaid wages, separation pay, differential pay, company, statutory and other benefits or otherwise as may be due me in connection with the above-entitled case. I hereby state further that I have no more claims or right of action of whatever nature, whether past, present, future or contingent against said corporation and its officers, relative to NLRC Case No. AB-2-864-79. IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of November 1988 at Mandaluyong, Metro Manila. (Emphasis supplied.) 12 The petitioner was apparently satisfied with the settlement, for in the memorandum she sent the PNCC Corporate Legal Counsel on November 24, 1988, 13 she said in part:

Sir, this is indeed my chance to express my gratitude to you and all others who have helped me and my family enjoy the fruits of my years of stay with PNCC by way of granting an additional amount of P9,544.00 among others ... As per your recommendation contained therein in said memo, I am now occupying the position of xerox machine operator and is (sic) presently receiving a monthly salary of P2,014.00. Reacting to her inquiry about her entitlement to longevity pay, yearly company increases and other statutory benefits, the private respondent adjusted her monthly salary from P2,014.00 to P3,588.00 monthly. Then the lull. Then the bombshell. On March 11, 1989, she filed the motion for execution that is now the subject of this petition. It is difficult to understand the attitude of the petitioner, who has blown hot and cold, as if she does not know her own mind. First she signed a waiver and then she rejected it; then she signed another waiver which she also rejected, again on the ground that she had been deceived. In her first waiver, she acknowledged full settlement of the judgment in her favor, and then in the second waiver, after accepting additional payment, she again acknowledged fun settlement of the same judgment. But now she is singing a different tune. In her petition she is now disowning both acknowledgments and claiming that the earlier payments both of which she had accepted as sufficient, are insufficient. They were valid before but they are not valid now. She also claimed she was harassed and cheated by the past management of the CDCP and sought the help of the new management of the PNCC under its "dynamic leadership." But now she is denouncing the new management-for also tricking her into signing the second quitclaim. Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of a change of mind. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on its face, that the law will step in

to annul the questionable transaction. But where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking. As in this case. The question may be asked: Why did the petitioner sign the compromise agreement of September 16, 1980, and waive all her rights under the judgment in consideration of the cash settlement she received? It must be remembered that on that date the decision could still have been elevated on certiorari before this Court and there was still the possibility of its reversal. The petitioner obviously decided that a bird in hand was worth two on the wing and so opted for the compromise agreement. The amount she was then waiving, it is worth noting, had not yet come up to the exorbitant sum of P205,207.42 that she was later to demand after the lapse of eight years. The back pay due the petitioner need not detain us. We have held in countless cases that this should be limited to three years from the date of the illegal dismissal, during which period (but not beyond) the dismissed employee is deemed unemployed without the necessity of proof. 14 Hence, the petitioner's contention that she should be paid from 1978 to 1987 must be rejected, and even without regard to the fact (that would otherwise have been counted against her) that she was actually employed during most of that period. Finally, the petitioner's invocation of Article 223 of the Labor Code to question the failure of the private respondent to file a supersedeas bond is not well-taken. As the Solicitor General correctly points out, the bond is required only when there is an appeal from the decision with a monetary award, not an order enforcing the decision, as in the case at bar. As officers of the court, counsel are under obligation to advise their clients against making untenable and inconsistent claims like the ones raised in this petition that have only needlessly taken up the valuable time of this Court, the Solicitor General, the Government Corporate Counsel, and the respondents. Lawyers are not merely hired employees who must unquestioningly do the bidding of the client, however unreasonable this may be when tested by their own expert appreciation of the pertinent facts and the applicable law and jurisprudence. Counsel must counsel.

WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so ordered.

G.R. No. 79351 November 28, 1989 DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. THE HON. SECRETARY OF LABOR, CRESENCIA DIFONTORUM, ET AL., respondents. The Chief Legal Counsel for petitioner. Dante P. Sindac for private respondents.

CORTES, J.: Petitioner Development Bank of the Philippines seeks the nullification of an order dated July 29, 1987 and issued by the Undersecretary of Labor and Employment, affirming that of National Capital Region Officer-in-Charge Romeo A. Young, directing the petitioner to deliver the properties of Riverside Mills Corporation (RMC) which it had in its possession to the Ministry (now Department) of Labor and Employment (MOLE) for proper disposition in Case No. NCR-LSED-7-334-84 pursuant to Article 110 of the Labor Code. Labor Case No. NCR-LSED-7-334-84 involves a complaint for illegal dismissal, unfair labor practice, illegal deductions from salaries and violation of the minimum wage law filed by private respondents herein against RMC. On July 3, 1985, a decision was rendered by Director Severo M. Pucan of the National Capital Region, MOLE, ordering RMC to pay private respondents backwages and separation benefits. A corresponding writ of execution was issued on October 22, 1985 directing the sheriff to collect the amount of ONE MILLION TWO HUNDRED FIFTY-SIX THOUSAND SIX HUNDRED SEVENTY-EIGHT PESOS AND SEVENTY SIX CENTAVOS (P1,256,678.76) from RMC and, in case of failure to collect, to execute the writ by selling the goods and chattel of RMC not

exempt from execution or, in case of insufficiency thereof, the real or immovable properties of RMC. However, on May 23, 1986, the writ of execution was returned unserved and unsatisfied, with the information that the company premises of RMC had been padlocked and foreclosed by petitioner. It appears that petitioner had instituted extra-judicial foreclosure proceedings as early as 1983 on the properties and other assets of RMC as a result of the latter's failure to meet its obligations on the loans it secured from petitioner. Consequently, private respondents filed with the MOLE a "Motion for Delivery of Properties of the [RMC] in the Possession of the [DBP] to the [MOLE] for Proper Disposition," stating that pursuant to Article 110 of the Labor Code, they enjoy first preference over the mortgaged properties of RMC for the satisfaction of the judgment rendered in their favor notwithstanding the foreclosure of the same by petitioner as mortgage creditor [Rollo, pp. 16-17]. Petitioner filed its opposition. In an order signed by Officer-in-Charge Romeo A. Young and dated December 11, 1986, private respondents' motion was granted based on the finding that Article 110 of the Labor Code and the ruling laid down in Philippine Commercial and Industrial Bank v. Natural Mines and Allied Workers' (NAMAWU-MIF) [G.R. No. 50402, August 19, 1982, 115 SCRA 873] support the conclusion that private respondents still enjoyed a preferential lien for the payment of their backwages and separation benefits over the properties of RMC which were foreclosed by petitioner [Rollo, pp. 21-22]. Petitioner then filed its motion for reconsideration on December 24,1986 contending that Article 110 of the Labor Code finds no application in the case at bar for the following reasons: (1) The properties sought to be delivered have ceased to belong to RMC in view of the fact that petitioner had foreclosed on the mortgage, and the properties have been sold and delivered to third parties; (2) The requisite condition for the application of Article 110 of the Labor Code is not present since no bankruptcy or insolvency proceedings over RMC properties and assets have been undertaken [Rollo, pp. 24-28]. In an order dated July 29, 1987, petitioner's motion for reconsideration was denied for lack of merit by Undersecretary Dionisio C. dela Serna.

Hence, petitioner filed this special civil action for certiorari with prayer for the issuance of a writ of preliminary injunction. On August 27, 1987, this Court issued a temporary restraining order enjoining public respondent from enforcing or carrying out its order dated July 29, 1987. After considering the allegations made and issues raised in the petition, comments thereto and reply, the Court, on March 14, 1988, resolved to give due course to the petition and to require the parties to submit their respective memoranda. Petitioner and private respondent submitted their memoranda, while public respondent adopted as its memorandum the comment it had previously submitted. After a careful study of the various arguments adduced, as well as the legal provisions and jurisprudence on the matter, the Court finds the petition impressed with merit. Indeed, the assailed Order suffers from infirmities which must be rectified by the grant of a writ of certiorari in favor of petitioner. Firstly, public respondent acted with grave abuse of discretion amounting to lack or excess of jurisdiction in enforcing private respondents' right of first preference under Article 110 of the Labor Code notwithstanding the absence of bankruptcy, liquidation or insolvency proceedings against RMC. Article 110 of the Labor Code and Section 10, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code provide the following: Article 110. WORKER PREFERENCE IN CASE OF BANKRUPTCY.In the event of bankruptcy or liquidation of an employer's business, his workers shall enjoy first preference as regards wages due them for services rendered during the period prior to the bankruptcy or liquidation, any provision of law to the contrary notwithstanding. Unpaid wages shall be paid in full before other creditors may establish any claim to a share in the assets of the employer [Emphasis supplied]. Section 10. PAYMENT OF WAGES IN CASE OF BANKRUPTCY. Unpaid wages earned by the employees before the declaration of bankruptcy or judicial liquidation of the employer's business shall be given first preference and shall be paid in full before other creditors may establish any claim to a share in the assets of the employer.

It is clear from the wording of the law that the preferential right accorded to employees and workers under Article 110 may be invoked only during bankruptcy or judicial liquidation proceedings against the employer. The law is unequivocal and admits of no other construction. Respondents contend that the terms "bankruptcy" or "liquidation" are broad enough to cover a situation where there is a cessation of the operation of the employer's business as in the case at bar. However, this very same contention was struck down as unmeritorious in the case of Development Bank of the Philippines vs. Hon. Labor Arbiter Ariel C. Santos [G.R. Nos. 78261-62, March 8, 1989] involving a group of RMC employees which sought to enforce its preference of credit Article 110 against DBP over certain RMC real properties. In that case, the Court laid down the ruling that Article 110 of the Labor Code, which cannot be viewed in isolation of, and must always be reckoned with the provisions of the Civil Code on concurrence and preference of credits, may not be invoked by employees or workers of RMC like private respondents herein, in the absence of a formal declaration of bankruptcy or a judicial liquidation order of RMC. The rationale for making the application of Article 110 of the Labor Code contingent upon the institution of bankruptcy or judicial liquidation proceedings against the employer is premised upon the very nature of a preferential right of credit. A preference of credit bestows upon the preferred creditor an advantage of having his credit satisfied first ahead of other claims which may be established against the debtor. Logically, it becomes material only when the properties and assets of the debtor are insufficient to pay his debts in full; for if the debtor is amply able to pay his various creditors in full, how can the necessity exist to determine which of his creditors shall be paid first or whether they shall be paid out of the proceeds of the sale of the debtor's specific property? Indubitably, the preferential right of credit attains significance only after the properties of the debtor have been inventoried and liquidated, and the claims held by his various creditors have been established [Kuenzle & Streiff (Ltd.) v. Villanueva, 41 Phil. 611 (1916); Barrette v. Villanueva, G.R. No. L-14938, December 29, 1962, 6 SCRA 928; Philippine Savings Bank v. Lantin, G.R. No. L-33929, September 2, 1983, 124 SCRA 476]. In this jurisdiction, bankruptcy, insolvency and general judicial liquidation proceedings provide the only proper venue for the enforcement of a creditor's preferential right such as that established in Article 110 of the

Labor Code, for these are in rem proceedings binding against the whole world where all persons having any interest in the assets of the debtor are given the opportunity to establish their respective credits [Philippine Savings Bank v. Lantin, supra; Development Bank of the Philippines v. Santos supra]. Secondly, public respondent's Order directing petitioner to deliver to the MOLE the properties it had foreclosed from RMC for the purpose of executing the judgment rendered against RMC in Case No. NCR-LSED 7334-84 violates the basic rule that the power of a court or tribunal in the execution of its judgment extends only over properties unquestionably belonging to the judgment debtor [Special Services Corporation v. Centro La Paz, G.R. No. L- 44100, April 28, 1983, 121 SCRA 748; National Mines and Allied Workers' Union v. Vera, G.R. No. L-44230, November 19, 1984, 133 SCRA 295]. It appears on record, and remains undisputed by respondents, that petitioner had extra-judicially foreclosed the subject properties from RMC as early as 1983 and purchased the same at public auction, and that RMC had failed to exercise its right to redeem. Thus, when Officer-in-Charge Young issued on December 11, 1986 the order which directed the delivery of these properties to the MOLE, RMC had ceased to be the absolute owner thereof [See Dizon v. Gaborra, G.R. No. L-36821, June 22, 1978, 83 SCRA 688]. Consequently, the order was directed against properties which no longer belonged to the judgment debtor RMC. However, respondents, in citing the case of PCIB v. NAMAWU-MIF [supra], argue that by virtue of Article 110 of the Labor Code, an "automatic first lien" was created in favor of private respondents on RMC propertiesa "lien" which predated the foreclosure of the subject properties by petitioner, and remained vested on these properties even after its sale to petitioner and other parties. There is no merit to this contention. It proceeds from a misconception which must be corrected. What Article 110 of the Labor Code establishes is not a lien, but a preference of credit in favor of employees [See Republic v. Peralta, G.R. No. 56568, May 20, 1987, 150 SCRA 37]. This simply means that during bankruptcy, insolvency or liquidation proceedings involving the existing

properties of the employer, the employees have the advantage of having their unpaid wages satisfied ahead of certain claims which may be proved therein. It bears repeating that a preference of credit points out solely the order in which creditors would be paid from the properties of a debtor inventoried and appraised during bankruptcy, insolvency or liquidation proceedings. Moreover, a preference does not exist in any effective way prior to, and apart from, the institution of these proceedings, for it is only then that the legal provisions on concurrence and preference of credits begin to apply. Unlike a lien, a preference of credit does not create in favor of the preferred creditor a charge or proprietary interest upon any particular property of the debtor. Neither does it vest as a matter of course upon the mere accrual of a money claim against the debtor. Certainly, the debtor could very well sell, mortgage or pledge his property, and convey good title thereon, to third parties free from such preference [Kuenzle & Streiff v. Villanueva,supra]. Incidentally, the Court is not unmindful of the 1989 amendments to the article introduced by Section 1, R.A. No. 6715 [March 21, 1989]. Article 110 of the Labor Code as amended reads: WORKER PREFERENCE IN CASE OF BANKRUPTCY. In the event of bankruptcy or liquidation of an employer's business, his workers shall enjoy first preference as regards their unpaid wages and other monetary claims, any provision of law to the contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in full before the claims of the Government and other creditors may be paid. [Amendments indicated.] However, these amendments only relate to the scheme of concurrence and preference of credits; they do not affect the issues heretofore discussed regarding the applicability of Article 110 to the attendant facts. WHEREFORE, considering the foregoing, the present petition is hereby GRANTED. The assailed order dated July 29, 1987 is SET ASIDE and the temporary restraining order issued by the Court on August 27, 1987 is made PERMANENT. SO ORDERED.

G.R. No. 126773 April 14, 1999 RUBBERWORLD (PHILS.), INC., or JULIE YAP ONG, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, MARILYN F. ARELLANO, EMILY S. LEGASPI, MYRNA S. GALGANA, MERCEDITA R. SONGCO, WILFREDO V. SANTOS, JOSEPHINE S. RAMOS, REDENTOR G. HONA, LUZ B. HONA, ROLANDO B. CRUZ, GUILLERMA R. MUZONES, CARMELITA V. HALILI, SUSAN A. REYES, EMILY A. ROBILLOS, PLACIDO REYES, MANOLITO DELA CRUZ, VICTORINO C. FRANCISCO, ROGER B. MARIAS, VIOLETA ALEJO, RICARDO T. TORRES, EMMA DELA TORRE, PERLA N. MANZANERO, FRANCISCO D. SERDONCILLO, LUISITO P. HERNANDEZ, RAYMOND PEREA, EDITHA A. SERDONCILLO, FRANCISCO GENER, MARIO B. REYES, VALERIANO A. HERRERA, JORGE S. SEERES, ELENA S. IGNACIO, EMERITA S. CACHERO, NERIZA G. ENRIQUEZ, LOLITA M. FABULAR, NORMITA M. HERNANDEZ, DOMINADOR P. ENRIQUEZ, respondents.

PANGANIBAN, J Presidential Decree 902-A, as amended, provides that "upon the appointment of a management committee, rehabilitation receiver, board or body pursuant to this Decree, all actions for claims against corporations, partnerships, or associations under management or receivership pending before any court, tribunal, board or body shall be suspended accordingly. 1 Such suspension is intended to give enough breathing space for the management committee or rehabilitation receiver to make the business viable again, without having to divert attention and resources to litigations in various fora. Among the actions suspended are those for money claims before labor tribunals, like the National Labor Relations Commission (NLRC) and the labor arbiters. Statement of the Case The foregoing summarizes this Court's grant of the Petition for Certiorari under Rule 65 of the Rules of Court, assailing the April 26,

1996 Resolution 2 promulgated by the NLRC 3 which upheld the labor arbiter's refusal to suspend proceedings involving monetary claims of the petitioner's employees. Petitioner likewise assails the June 20, 1996 NLRC Resolution 4 which denied its Motion for Reconsideration. On November 20, 1996, this Court issued a temporary restraining order, signed by then Chief Justice Andres R. Narvasa, "restraining the public respondents from further conducting proceedings in the aforesaid cases effective immediately . . . The Facts The facts are undisputed. They are narrated by the Office of the Solicitor general as follows: Petitioner . . . is a domestic corporation which used to be in the business of manufacturing footwear, bags and garments. It filed with the Securities and Exchange Commission on November 24, 1994 a petition for suspension of payments praying that it be declared in a state of suspension of payments and that the SEC accordingly issue an order restraining its creditors from enforcing their claims against petitioner corporation. It further prayed for the creation of a management committee as well as for the approval of the proposed rehabilitation plan and memorandum of agreement between petitioner corporation and its creditors. In an order dated December 28, 1994, the SEC favorably ruled on the petition for suspension of payments thusly: Accordingly, with the creation of the Management Committee, all actions for claims against Rubberworld Philippines, Inc. pending before any court, tribunal, office, board, body Commission of Sheriff are hereby deemed SUSPENDED. Consequently, all pending incidents for preliminary injunctions, writ of attachments (sic), foreclosures

and the like are hereby rendered moot and academic. Private respondents, who claim to be employees of petitioner corporation, filed against petitioners [from] April to July 1995 their respective complaints for illegal dismissal, unfair labor practice, damages and payment of separation pay, retirement benefits, 13th month pay and service incentive pay. Petitioners moved to suspend the proceedings in the above labor cases on the strength of the SEC Order dated December 28, 1994. Likewise, petitioners cited the rulings of BF Homes vs. Court of Appeals (190 SCRA 262), Alemar's Sibal & Sons. Inc., vs. Elbinias (186 SCRA 94) and Bank of Philippine Islands vs. Court of Appeals (229 SCRA 223) to support their motion to suspend the proceedings in the labor cases. In an Order dated September 25, 1995, the Labor Arbiter denied the aforesaid motion holding that the injunction contained in the SEC Order applied only to the enforcement of established rights and did not include the suspension of proceedings involving claims against petitioner which have yet to be ascertained. The Labor Arbiter further held that the order of the SEC suspending all actions for claims against petitioners does not cover the claims of private respondents in the labor cases because said claims and the concomitant liability of petitioners still had to be determined, thus carrying no dissipation of the assets of petitioners.1wphi1.nt Petitioners appealed the adverse order of the Labor Arbiter to public respondent which, in a Resolution dated April 26, 1996, dismissed the appeal for lack of merit and, instead, sustained the rulings of the Labor Arbiter. The motion for reconsideration of petitioners fared no better and was denied by public respondent in a Resolution dated June 20, 1996. 5 Hence, this petition. 6 The Issue

Petitioner raises only one issue: Whether or not the Respondent NLRC acted without or in excess of jurisdiction or with grave abuse of discretion amounting to lack of jurisdiction in affirming the order of Labor Arbiter Voltaire A. Balitaan denying petitioners' motion to suspend proceedings despite the Order of the Securities and Exchange Commission under Sec. 6 (c) of P.D. 902-A directing the suspension of all actions against a company under the first stages of insolvency proceedings. 7 This Court's Ruling The petition is meritorious. Sole Issue: Suspension of Proceedings Jurisprudence teaches us: . . . where the petition filed is one for declaration of a state of suspension of payments due to a recognition of the inability to pay one's debts and liabilities, and where the petitioning corporation either: (a) has sufficient property to cover all its debts but foresees the impossibility of meeting them when they fall due (solvent but illiquid) or (b) has no sufficient property (insolvent) but is under the management of a rehabilitation receiver or a management committee, the applicable law is P.D. 902-A pursuant to Sec. 5 par. (d) thereof. However, if the petitioning corporation has no sufficient assists to cover its liabilities and is not under a rehabilitation receiver or a management committee created under P.D. 902-A and does not seek merely to have the payments of its debts suspended, but seeks a declaration of insolvency . . . the applicable law is Act 1956 [The Insolvency Law] on voluntary Insolvency, . . . 8 In the case at bar, Petitioner Rubberworld filed before the SEC a Petition for Declaration of Suspension of Payments, as well as a proposed rehabilitation plan. On December 28, 1994, the SEC ordered the creation of a management committee and the suspension of all actions for claims

against Rubberworld. Clearly, the applicable law is PD 902-A, as amended, the relevant provisions of which read: Sec. 5. In addition to the regulatory adjudicative functions of the Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving: xxx xxx xxx d) Petitions of corporations, partnerships or associations to be declared in the state of payments in cases where the corporation, partnership or association possesses sufficient property to cover all its debts regulatory but foresees the impossibility of meeting them when they respectively fall due or in cases where the corporation, partnership or association has no sufficient assets to cover its liabilities, but is under the management of a rehabilitation receiver or management committee created pursuant to this Decree. Sec. 6. In order to effectively exercise such jurisdiction, the Commission shall possess the following powers: xxx xxx xxx c) To appoint one or more receivers of the property, real or personal, which is the subject of the action pending before the Commission in accordance with the pertinent provisions of the Rules of Court in such other cases whenever necessary in order to preserve the rights of the parties-litigants and/or protect the interest of the investing public and creditors: . . . Provided, finally, That upon appointment of a management committee, the rehabilitation receiver, board or body, pursuant to this Decree, all actions for claims against corporations, partnerships, or associations under management or receivership pending before any court, tribunal, board or body shall be suspended accordingly. It is plain from the foregoing provisions of law that "upon the appointment [by the SEC] of a management committee or a rehabilitation receiver," all

actions for claims against the corporation pending before any court, tribunal or board shall ipso jure be suspended. 9 The justification for the automatic stay of all pending actions for claims "is to enable the management committee or the rehabilitation receiver to effectively exercise its/his powers free from any judicial or extra-judicial interference that might unduly hinder or prevent the "rescue" of the debtor company. To allow such other actions to continue would only add to the burden of the management committee or rehabilitation receiver, whose time, effort and resources would be wasted in defending claims against the corporation instead of being directed toward its restructuring and rehabilitation. 10 Parenthetically, the rehabilitation of a financially distressed corporation benefits its employees, creditors, stockholders and, in a larger sense, the general public, And in considering whether to rehabilitate or not, the SEC gives preference to the interest of creditors, including employees. The reason its that shareholders can recover their investments only upon liquidation of the corporation, and only if there are assets remaining after all corporate creditors are paid. 11 Labor Claims Included in Suspension Order The solicitor general, representing Public Respondent NLRC, argues that the rationale for an automatic stay will not be frustrated even if the NLRC proceeds with the disposition of these labor cases, because any favorable obtained by the private respondents would only establish their rights as creditors. The solicitor general also contends that the assailed Resolutions of the NLRC will not result in an undue preference for the assets of Rubberworld, as the private respondents will still present their claims before the management committee. 12 We disagree. The law is clear: upon the creation of a management committee or the appointment of a rehabilitation receiver, all claims for actions "shall be suspended accordingly." No exception in favor of labor claims is mentioned in the law. Since the law makes no distinction or exemptions, neither should this Court. Ubi lex non distinguit nec nos distinguere debemos. 13 Allowing labor cases to proceed clearly defeats the purpose of the automatic stays and severally encumbers the management committee's and resources. The said committee would need to defend

against these suits, to the detriment of its primary and urgent duty to work towards rehabilitating the corporation and making it viable again. The rule otherwise would open the floodgates to other similarly situated claimants and forestall if not defeat the rescue efforts. Besides, even if the NLRC awards the claims of private respondents, as it did, its ruling could not be enforced as long as the petitioner is under the management committee. 14 In Chua v. National Labor Relations Commission, 15 we ruled that labor claims cannot proceed independently of a bankruptcy liquidation proceeding, since these claims "would spawn needless controversy, delays, and confusion." 16 With more reason, allowing labor claims to continue in spite of a SEC suspension order in a rehabilitation case would merely lead to such results. The solicitor general insists that since Article 217 of the Labor Code 17 vested [public respondent with jurisdiction to hear and decide these labor cases, the NLRC did not exceed its jurisdiction when it refused to suspend the proceeding therein. 18 The Court is not persuaded. Article 217 of the Labor Code should be construed not in isolation but in harmony with PD 902-A, according to the basic rule in statutory construction that implied repeals are not favored. 19 Indeed, it is axiomatic that each and every statute must be construed in a way that would avoid conflict with existing laws. 20 true, the NLRC has the power to hear and decide labor disputes, but such authority is deemed suspended when PD 902-A is put into effect by the Securities and Exchange Commission. Preference in Favor of Workers in Case of Bankruptcy or Liquidation The private respondents contend that automatic stay under PD 902-A is not applicable to the instant case; otherwise, the preference granted to workers by Article 110 of the Labor Code would be rendered ineffective. 21This contention is misleading. The preferential right of workers and employees under Article 110 of the Labor code may be invoked only upon the institution of insolvency or judicial liquidation proceeding. 22 Indeed, it is well-settled that "a declaration of bankruptcy or a judicial liquidation must be present before preferences

over various money claims may be enforced." 23 But debtors resort to preference of credit giving preferred creditors the rights to have their claims paid ahead of those of other claimants only when their assets are insufficient to pay their debts fully. 24 The purpose of rehabilitation proceedings is precisely to enable the company to gain a new lease on life and thereby allow creditors to be paid their claims from its earnings. In insolvency proceedings, on the other hand, the company stops operating, and the claims of creditors are satisfied from the assets of the insolvent corporation. The present case involves the rehabilitation, not the liquidation, of petitioner-corporation. Hence, the preference of credit granted to workers or employees under Article 110 of the Labor Code is not applicable. Duration of Automatic Stay Under PD 902-A Finally, private respondents posit that under Section 6 of the Insolvency Law, the December 28, 1994 Order of the SEC suspending all actions for claims against Rubberworld should have expired after three months, in the absence of an agreement between the company and the corporate creditors. 25 Private respondents also accuse the SEC of abusing its power by "allowing said suspension order to remain pending for many years without resolving and approving any rehabilitation plan." 26 They contend that "[t]his is fatal to the instant petition for it had been a party to the abuse by the SEC of its suspension order." 27 This Court notes that PD 902-A itself does not provide for the duration of the automatic stay. Neither does the Order 28 of the SEC. Hence, the suspensive effect has no time limit and remains in force as long as reasonably necessary to accomplish the purpose of the Order. 29 On the other hand, the attack against the SEC's alleged "abuse of power" is misplaced. Under review in this Petition for Certiorari are Resolutions of the NLRC, nor of the SEC. The scope of this review is thus limited to whether the NLRC gravely abused or exceeded its jurisdiction in refusing to heed the SEC Order of Suspension and in issuing its challenged Resolutions. In any event, the bare allegation of inaction is insufficient to condemn the Securities and Exchange Commission and the management committee where, it should be noted, all affected parties, including the labor union in the company, are represented.

WHEREFORE, the petition is hereby GRANTED. The assailed Resolutions of the NLRC dated April 26, 1996, and June 20, 1996, are REVERSED and SET ASIDE. No costs.1wphi1.nt SO ORDERED.

G.R. No. 70615 October 28, 1986 VIRGILIO CALLANTA, petitioner, vs. CARNATION PHILIPPINES, INC., and NATIONAL LABOR RELATIONS COMMISSION [NLRC], respondents. Danilo L. Pilapil for petitioner.

FERNAN, J.: The issue raised in this petition for certiorari is whether or not an action for illegal dismissal prescribes in three [3] years pursuant to Articles 291 and 292 of the Labor Code which provide: Art. 291. Offenses. Offenses penalized under this Code and the rules and regulations issued pursuant thereto shall prescribe in three [3] years. xxx xxx xxx Art. 292. Money Claims. All money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three [3] years from the time the cause of action accrued; otherwise, they shall be forever barred. xxx xxx xxx Petitioner Virgilio Callanta was employed by private respondent Carnation Philippines, Inc. [Carnation, for brevity] in January 1974 as a salesman in the Agusan del Sur area. Five [51 years later or on June 1, 1979,

respondent Carnation filed with the Regional Office No. X of the Ministry of Labor and Employment [MOLE], an application for clearance to terminate the employment of Virgilio Callanta on the alleged grounds of serious misconduct and misappropriation of company funds amounting to P12,000.00, more or less. Upon approval on June 26, 1979 by MOLE Regional Director Felizardo G. Baterbonia, of said clearance application, petitioner Virgilio Callanta's employment with Carnation was terminated effective June 1, 1979. On July 5, 1982, Virgilio Callanta filed with the MOLE, Regional Office No. X, a complaint for illegal dismissal with claims for reinstatement, backwages, and damages against respondent Carnation. In its position paper dated October 5, 1982, respondent Carnation put in issue the timeliness of petitioner's complaint alleging that the same is barred by prescription for having been filed more than three [3] years after the date of Callanta's dismissal. On March 24, 1983, Labor Arbiter Pedro C. Ramos rendered a decision finding the termination of Callanta's employment to be without valid cause. Respondent Carnation was therefore ordered to reinstate Virgilio Callanta to his former position with backwages of one [1] year without qualification including all fringe benefits provided for by law and company policy, within ten [10] days from receipt of the decision. It was likewise provided that failure on the part of respondent to comply with the decision shall entitle complainant to full backwages and all fringe benefits without loss of seniority rights. On April 18, 1983, respondent Carnation appealed to respondent National Labor Relations Commission [NLRC] which in a decision dated February 25, 1985, 1 set aside the decision of the Labor Arbiter. It declared the complaint for illegal dismissal filed by Virgilio Callanta to have already prescribed. Thus: Records show that Virgilio Callanta was dismissed from his employment with respondent company effective June 1, 1979; and that on 5 July 1982, he filed the instant complaint against respondent for: Unlawful Dismissal with Backwages, etc. The provisions of the Labor Code applicable are:

Art. 291. Offenses. Offenses penalized under this Code and the rules and regulations issued pursuant thereto shall prescribe in three [3] years. Art. 292. Money claims. All money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three [3] years from the time the cause of action accrued; otherwise, they shall be forever barred. Obviously, therefore, the causes of action, i.e., "Unlawful Dismissal" and "Backwages, etc." have already prescribed, the complaint therefore having been filed beyond the three-year period from accrual date. With this finding, there is no need to discuss the other issues raised in the appeal. WHEREFORE, in view of the foregoing, the Decision appealed from is hereby SET ASIDE and another one entered, dismissing the complaint. SO ORDERED. Hence, this petition, which We gave due course in the resolution dated September 18, 1985. 2 Petitioner contends that since the Labor Code is silent as to the prescriptive period of an action for illegal dismissal with claims for reinstatement, backwages and damages, the applicable law, by way of supplement, is Article 1146 of the New Civil Code which provides a four [4]-year prescriptive period for an action predicated upon "an injury to the rights of the plaintiff" considering that an action for illegal dismissal is neither a "penal offense" nor a mere "money claim," as contemplated under Articles 291 and 292, respectively, of the Labor Code. Petitioner further claims that an action for illegal dismissal is a more serious violation of the rights of an employee as it deprives him of his means of livelihood; thus, it should correspondingly have a prescriptive period longer than the three 13] years provided for in "money claims." Public respondent, on the other hand, counters with the arguments that a case for illegal dismissal falls under the general category of "offenses

penalized under this Code and the rules and regulations pursuant thereto" provided under Article 291 or a money claim under Article 292, so that petitioner's complaint for illegal dismissal filed on July 5, 1982, or three [3] years, one [1] month and five [5] days after his alleged dismissal on June 1, 1979, was filed beyond the three-year prescriptive period as provided under Articles 291 and 292 of the Labor Code, hence, barred by prescription; that while it is admittedly a more serious offense as it involves an employee's means of livelihood, there is no logic in assuming that it has a longer prescriptive period, as naturally, one who is truly aggrieved would immediately seek the redress of his grievance; that assuming arguendo that the law does not provide for a prescriptive period for the enforcement of petitioner's right, it is nevertheless beyond dispute that the said right has already lapsed into a stale demand; and that considering the seriousness of the act committed by petitioner, private respondent was justified in terminating the employment. We find for petitioner. Verily, the dismissal without just cause of an employee from his employment constitutes a violation of the Labor Code and its implementing rules and regulations. Such violation, however, does not amount to an "offense" as understood under Article 291 of the Labor Code. In its broad sense, an offense is an illegal act which does not amount to a crime as defined in the penal law, but which by statute carries with it a penalty similar to those imposed by law for the punishment of a crime. 3 It is in this sense that a general penalty clause is provided under Article 289 of the Labor Code which provides that "... any violation of the provisions of this code declared to be unlawful or penal in nature shall be punished with a fine of not less than One Thousand Pesos [P1,000.00] nor more than Ten Thousand Pesos [10,000.00], or imprisonment of not less than three [3] months nor more than three [3] years, or both such fine and imprisonment at the discretion of the court." [Emphasis supplied.] The confusion arises over the use of the term "illegal dismissal" which creates the impression that termination of an employment without just cause constitutes an offense. It must be noted, however that unlike in cases of commission of any of the probihited activities during strikes or lockouts under Article 265, unfair labor practices under Article 248, 249 and 250 and illegal recruitment activities under Article 38, among others, which

the Code itself declares to be unlawful, termination of an employment without just or valid cause is not categorized as an unlawful practice. Besides, the reliefs principally sought by an employee who was illegally dismissed from his employment are reinstatement to his former position without loss of seniority rights and privileges, if any, backwages and damages, in case there is bad faith in his dismissal. As an affirmative relief, reinstatement may be ordered, with or without backwages. While ordinarily, reinstatement is a concomitant of backwages, the two are not necessarily complements, nor is the award of one a condition precedent to an award of the other. 4 And, in proper cases, backwages may be awarded without ordering reinstatement . In either case, no penalty of fine nor improsonment is imposed on the employer upon a finding of illegality in the dismissal. By the very nature of the reliefs sought, therefore, an action for illegal dismissal cannot be generally categorized as an "offense" as used under Article 291 of the Labor Code, which according to public respondent, must be brought within the period of three[3] years from the time the cause of action accrued, otherwise, the same is forever barred. It is true that the "backwwages" sought by an illegally dismissed employee may be considered, by reason of its practical effect, as a "money claim." However, it is not the principal cause of action in an illegal dismissal case but the unlawful deprivation of the one's employment committed by the employer in violation of the right of an employee. Backwages is merely one of the reliefs which an illegally dismissed employee prays the labor arbiter and the NLRC to render in his favor as a consequence of the unlawful act committed by the employer. The award thereof is not private compensation or damages 5but is in furtherance and effectuation of the public objectives of the Labor Code. 6 even though the practical effect is the enrichment of the individual, the award of backwages is not inredness of a private right, but, rather, is in the nature of a command upon the employer to make public reparation for his violation of the Labor Code. 7 The case of Valencia vs. Cebu Portland Cement, et al., 106 Phil. 732, a 1959 case cited by petitioner, is applicable in the instant case insofar as it concerns the issue of prescription of actions. In said case, this Court had occasion to hold that an action for damages involving a plaintiff seperated from his employment for alleged unjustifiable causes is one for " injury to the rights of the plaintiff, and must be brought within four [4] years. 8

In Santos vs. Court of Appeals, 96 SCRA 448 [1980], this Court, thru then Chief Justice Enrique M. Fernando, sustained the sand of the Solicitor General that the period of prescription mentioned under Article 281, now Article 292, of the Labor Code, refers to and "is limited to money claims, an other cases of injury to rights of a workingman being governed by the Civil Code." Accordingly, this Court ruled that petitioner Marciana Santos, who sought reinstatement, had four [4] years within which to file her complaint for the injury to her rights as provided under Article 1146 of the Civil Code. Indeed there is, merit in the contention of petitioner that the four [4]-year prescriptive period under Article 1146 of the New Civil Code, applies by way of supplement, in the instant case, to wit: Art. 1146. The following actions must be instituted within four years. [1] Upon an injury to the lights of the plaintiff. xxx xxx xxx [Emphasis supplied] As this Court stated in Bondoc us. People's Bank and Trust Co., 9 when a person has no property, his job may possibly be his only possession or means of livelihood, hence, he should be protected against any arbitrary and unjust deprivation of his job. Unemployment, said the Court in Almira vs. B.F. Goodrich Philippines, 10 brings "untold hardships and sorrows on those dependent on the wage earners. The misery and pain attendant on the loss of jobs thus could be avoided if there be acceptance of the view that under all the circumstances of this case, petitioners should not be deprived of their means of livelihood." It is a principle in American jurisprudence which, undoubtedly, is wellrecognized in this jurisdiction that one's employment, profession, trade or calling is a "property right," and the wrongful interference therewith is an actionable wrong. 11 The right is considered to be property within the protection of a constitutional guaranty of due process of law. 12 Clearly then, when one is arbitrarily and unjustly deprived of his job or means of livelihood, the action instituted to contest the legality of one's dismissal from employment constitutes, in essence, an action predicated "upon an

injury to the rights of the plaintiff," as contemplated under Art. 1146 of the New Civil Code, which must be brought within four [4] years. In the instant case, the action for illegal dismissal was filed by petitioners on July 5, 1982, or three [3] years, one [1] month and five [5] days after the alleged effectivity date of his dismissal on June 1, 1979 which is well within the four [4]-year prescriptive period under Article 1146 of the New Civil Code. Even on the assumption that an action for illegal dismissal falls under the category of "offenses" or "money claims" under Articles 291 and 292, Labor Code, which provide for a three-year prescriptive period, still, a strict application of said provisions will not destroy the enforcement of fundamental rights of the employees. As a statutory provision on limitations of actions, Articles 291 and 292 go to matters of remedy and not to the destruction of fundamental rights. 13 As a general rule, a statute of limitation extinguishes the remedy only. Although the remedy to enforce a right may be barred, that right may be enforced by some other available remedy which is not barred. 14 More so, in the instant case, where the delay in filing the case was with justifiable cause. The threat to petitioner that he would be charged with estafa if he filed a complaint for illegal dismissal, which private respondent did after all on June 22, 1981, justifies, the delayed filing of the action for illegal dismissal with the Regional Office No. X, MOLE on July 5, 1982. Laches will not in that sense strengthen the cause of public respondent. Besides, it is deemed waived as it was never alleged before the Labor Arbiter nor the NLRC. Public respondent dismissed the action for illegal dismissal on the sole issue of prescription of actions. It did not resolve the case of illegal dismissal on the merits. Nonetheless, to resolve once and for all the issue of the legality of the dismissal, We find that petitioner, who has continuously served respondent Carnation for five [5] years was, under the attendant circumstances, arbitrarily dismissed from his employment. The alleged shortage in his accountabilities should have been impartially investigated with all due regard for due process in view of the admitted enmity between petitioner and E.L. Corsino, respondent's auditor. 15 Absent such an impartial investigation, the alleged shortage should not have been attended with such a drastic consequence as termination of the

employment relationship. Outright dismissal was too severe a penalty for a first offense, considering that the alleged shortage was explained to respondent's Auditor, E.L. Corsino, in accordance with respondent's accounting and auditing policies. The indecent haste of his dismissal from employment was, in fact, aggravated by the filing of the estafa charge against petitioner with the City Fiscal of Butuan City on June 22, 1981, or two [2] years after his questioned dismissal. After the case had remained pending for five [5] years, the Regional Trial Court of Agusan del Norte and Butuan City, Branch V finally dismissed the same provisionally in an order dated February 21, 1986 for failure of the prosecution's principal witness to appear in court. Admittedly, loss of trust and confidence arising from the same alleged misconduct is sufficient ground for dismissing an employee from his employment despite the dismissal of the criminal case. 16 However, it must not be indiscriminately used as a shield to dismiss an employee arbitrarily. 17 For, who can stop the employer from filing all the charges in the books for the simple exercise of it, and then hide behind the pretext of loss of confidence which can be proved by mere preponderance of evidence. We grant the petition and the decision of the NLRC is hereby reversed and set aside. Although We are strongly inclined to affirm that part of the decision of the Labor Arbiter ordering the reinstatement of petitioner to his former position without loss of seniority rights and privileges, a supervening event, which petitioner mentioned in his motion for early decision dated January 6, 1986 18 that is, FILIPRO, Inc.'s taking over the business of Carnation, has legally rendered the order of reinstatement difficult to enforce, unless there is an express agreement on assumption of liabilities 19 by the purchasing corporation, FILIPRO, Inc. Besides, there is no law requiring that the purchasing corporation should absorb the employees of the selling corporation. 20 In any case, the very concept of social justice dictates that petitioner shall be entitled to backwages of three [3] years. 21 WHEREFORE, respondent Carnation Philippines, Inc. is hereby ordered to pay petitioner Virgilio Callanta backwages for three [3] years without qualification and deduction. This decision is immediately executory. No costs.

SO ORDERED.

G.R. No. 118216

March 9, 2000

DELTAVENTURES RESOURCES, INC., petitioner, vs. HON. FERNANDO P. CABATO, Presiding Judge Regional Trial Court, La Trinidad, Benguet, Branch 62; HON. GELACIO L. RIVERA, JR., Executive Labor Arbiter, NLRC-CAR, Baguio City, ADAM P. VENTURA, Deputy-Sheriff, NLRC-CAR, Baguio City; ALEJANDRO BERNARDINO, AUGUSTO GRANADOS, PILANDO TANGAY, NESTOR RABANG, RAY DAYAP, MYRA BAYAONA, VIOLY LIBAO, AIDA LIBAO, JESUS GATCHO and GREGORIO DULAY, respondents. QUISUMBING, J.: This special civil action for certiorari seeks to annual the Order dated November 7, 1994,1 of respondent Judge Fernando P. Cabato of the Regional Trial Court of La Trinidad, Benguet, Branch 62, in Civil Case No. 94-CV-0948, dismissing petitioner's amended third-party complaint, as well as the Order dated December 14, 1994,2denying motion for reconsideration. On July 15, 1992, a Decision3 was rendered by Executive Labor Arbiter Norma Olegario, National Labor Relations Commission Regional Arbitration Board, Cordillera Autonomous Region (Commission), in NLRC Case No. 01-08-0165-89 entitled "Alejandro Bernardino, et al, vs. Green Mountain Farm, Roberto Ongpin and Almus Alabe", the dispositive portion of which reads as follows: WHEREFORE, judgment is hereby rendered declaring the respondents guilty of Illegal Dismissal and Unfair Labor Practice and ordering them to pay the complainants, in solidum, in the amount herein below listed: 1. Violy Libao P131,368.07 2. Myra Bayaona 121,470.23 3. Gregorio Dulay 128,362.17

4. Jesus Gatcho 126,475.17 5. Alejandro Bernardino 110,158.20 6. Pilando Tangay 107,802.66 7. Aida Libao 129,967.34 8. Rey Dayap 123,289.21 9. Nestor Rabang 90,611.69 10. Augusto Granados 108,106.03 plus attorney's fees in the amount of P10.000.00. Respondent Almus Alabe is also ordered to answer in exemplary damages in the amount of P5,00.00 each to all the complainants. xxx SO ORDERED. 4 On May 19, 1994, complainants in the abovementioned labor case filed before the Commission a motion for the issuance of a writ of execution as respondent's appeal to the Commission and this Court5 were respectively denied. On June 16, 1994, Executive Labor Arbiter Gelacio C. Rivera, Jr. to whom the case was reassigned in view of Labor Arbiter Olegario's transfer, issued a writ of execution6 directing NLRC Deputy Sheriff Adam Ventura to execute the judgment against respondents, Green Mountain Farm, Roberto Ongpin and Almus Alabe Sheriff Ventura then proceeded to enforce the writ by garnishing certain personal properties of respondents. Findings that said judgment debtors do not have sufficient personal properties to satisfy the monetary award, Sheriff Ventura proceeded to levy upon a real property covered by Tax Declaration No. 9697, registered in the name of Roberto Ongpin, one of the respondents in the labor case. Thereafter, Sheriff Ventura caused the publication on the July 17, 1994 edition of the Baguio Midland Courier the date of the public auction of said real property. xxx xxx

On July 27, 1994, a month before the scheduled auction sale, herein petitioner filed before the Commission a third-party claim7 asserting ownership over the property levied upon and subject of the Sheriff notice of sale. Labor Arbiter Rivera thus issued an order directing the suspension of the auction sale until the merits of petitioner's claim has been resolved.8 However, on August 16, 1994, petitioner filed with the Regional Trial Court of La Trinidad, Benguet a complaint for injunction and damages, with a prayer for the issuance of a temporary retraining order against Sheriff Ventura, reiterating the same allegations it raised in the third party claim it field with the Commission. The petition was docketed as Civil Case No. 94CV-0948, entitled "Deltaventures Resources, Inc., petitioner vs. Adam P. Ventura,et al., defendants." The next day, August 17, 1994, respondent Judge Cabato issued a temporary restraining order, enjoining respondents in the civil case before him to hold in abeyance any action relative to the enforcement of the decision in the labor case.9 Petitioner likewise filed on August 30, 1994, an amended complaint10 to implead Labor arbiter Rivera and herein private respondent-laborers. Further, on September 20, 1994, petitioner, filed with the Commission a manifestation11 questioning the latter's authority to hear the case, the matter being within the jurisdiction of the regular courts. The manifestation however, was dismissed by Labor arbiter Rivera on October 3, 1994.12 Meanwhile, on September 20, 1994, private respondent-laborers, moved for the dismissal of the civil case on the ground of the court's lack of jurisdiction.13 Petitioner filed its opposition to said motion on October 4, 1994.14 On November 7, 1994, after both parties had submitted their respective briefs, respondent court rendered its assailed decision premised on the following grounds: First, this Court is equal rank with the NLRC, hence, has no jurisdiction to issue an injunction against the execution of the NLRC decision. . . . Second, the NLRC retains authority over all proceedings anent the execution of its decision. This power carries with it the right to

determine every question which may be involved in the execution of its decision. . . . Third, Deltaventures Resources, Inc. should rely on and comply with the Rules of the NLRC because it is the principal procedure to be followed, the Rules of Court being merely suppletory in application, . . . Fourth, the invocation of estoppel by the plaintiffs is misplaced. . . . . [B]efore the defendants have filed their formal answer to the amended complaint, they moved to dismiss it for lack of jurisdiction. Lastly, the plaintiff, having in the first place addressed to the jurisdiction of the NLRC by filing with it a Third Party Claim may not at the same time pursue the present amended Complaint under the forum shopping rule.15 Their motion for reconsideration having been denied by respondent Judge, 16 petitioner promptly filed this petition now before us. In spite of the many errors assigned by petitioner,17 we find that here the core issue is whether or not the trial court may take cognizance of the complaint filed by petitioner and consequently provide the injunction relief sought. Such cognizance in turn, would depend on whether the acts complained of are related to, connected or interwoven with the cases falling under the exclusive jurisdiction of the Labor arbiter or the NLRC. Petitioner avers that court a quo erred in dismissing the third-party claim on the ground of lack of jurisdiction. Further, it contends that the NLRC-CAR did not acquire jurisdiction over the claim for it did not impugn the decision of the NLRC-CAR but merely questioned the propriety of the levy made by Sheriff Ventura. In support of its claim, petitioner asserts that the instant case does not involve a labor dispute, as no-employer-employee relationship exists between the parties. Nor is the petitioner's case related in any way to either parties' case before the NLRC-CAR hence, not within the jurisdiction of the Commission. Basic as a hornbook principle, jurisdiction over the subject matter of a case is conferred by law and determined by the allegations in the complainant18 which comprise a concise statement of the ultimate facts constituting the petitioner's cause of action.19 Thus we have held that:

Jurisdiction over the subject-matter is determined upon the allegations made in the complainant, irrespective of whether the plaintiff is entitled or not entitled to recover upon the claim asserted therein - a matter resolved only after and as a result of the trial. 20 Petitioner filed the third-party claim before the court a quo by reason of a writ of execution issued by the NLRC-CAR Sheriff against a property to which it claims ownership. The writ was issued to enforce and execute the commission's decision in NLRC Case No. 01-08-0165-89 (Illegal Dismissal and Unfair Labor Practice) against Green Mountain Farm, Roberto Ongpin and Almus Alabe. Ostensibly the complaint before the trial court was for the recovery of possession and injunction, but in essence it was an action challenging the legality or propriety of the levy vis-a-vis the alias writ of execution, including the acts performed by the Labor Arbiter and the Deputy Sheriff implementing the writ. The complainant was in effect a motion to quash the writ of execution of a decision rendered on a case properly within the jurisdiction of the Labor Arbiter, to wit: Illegal Dismissal and Unfair Labor Practice. Considering the factual setting, it is then logical to conclude that the subject matter of the third party claim is but an incident of the labor case, a matter beyond the jurisdiction of regional trial courts. Precedents abound confirming the rule that said courts have no labor jurisdiction to act on labor cases or various incidents arising therefrom, including the execution of decisions, awards or orders.21 Jurisdiction to try and adjudicate such cases pertains exclusively to the proper labor official concerned under the Department of Labor and Employment. To hold otherwise is to sanction split jurisdiction which is obnoxious to the orderly administration of justice.22 Petitioner failed to realize that by filing its third-party claim with the deputy sheriff, it submitted itself to the jurisdiction of the Commission acting through the Labor Arbiter.1wphi1 It failed to perceive the fact that what it is really controverting is the decision of the Labor arbiter and not the act of the deputy sheriff in executing said order issued as a consequence of said decision rendered. Jurisdiction once acquired is not lost upon the instance of the parties but continues until the case is terminated.23Whatever irregularities attended the

issuance and execution of the alias writ of execution should be referred to the same administrative tribunal which rendered the decision.24 This is because any court which issued a writ of execution has the inherent power, for the advancement of justice, to correct errors of its ministerial officers and to control its own processes.25 The broad powers granted to the Labor Arbiter and to the National Labor Relations Commission by Articles 217, 218 and 224 of the Labor Code can only be interpreted as vesting in them jurisdiction over incidents arising from, in connection with or relating to labor disputes, as the controversy under consideration, to the exclusion of the regular courts. Having established that jurisdiction over the case rests with the Commission, we find no grave abuse of discretion on the part of respondent Judge Cabato in denying petitioner's motion for the issuance of an injunction against the execution of the decision of the National Labor Relations Commission. Moreover, it must be noted that the Labor Code in Article 254 explicitly prohibits issuance of a temporary or permanent injunction or restraining order in any case involving or growing out of labor disputes by any court or other entity (except as otherwise provided in Arts. 218 and 264). As correctly observed by court a quo, the main issue and the subject of the amended complaint for injunction are questions interwoven with the execution of the Commission's decision. No doubt the aforecited prohibition in Article 254 is applicable.1wphi1 Petitioner should have filed its third-party claim before the Labor Arbiter, from whom the writ of execution originated, before instituting said civil case. The NLRC's Manual on Execution of Judgment,26 issued pursuant to Article 218 of the Labor Code, provides the mechanism for a third-party claimant to assert his claim over a property levied upon by the sheriff pursuant to an order or decision of the Commission or of the Labor Arbiter. The power of the Labor Arbiter to issue a writ of execution carries with it the power to inquire into the correctness of the execution of his decision and to consider whatever supervening events might transpire during such execution. Moreover, in denying petitioner's petition for injunction, the court a quo is merely upholding the time-honored principle that a Regional Trial Court, being a co-equal body of the National Labor Relations Commission, has no

jurisdiction to issue any restraining order or injunction to enjoin the execution of any decision of the latter.27 WHEREFORE, the petition for certiorari and prohibition is DENIED. The assailed Orders of respondent Judge Fernando P. Cabato dated November 7, 1994 and December 14, 1994, respectively are AFFIRMED. The records of this case are hereby REMANDED to the National Labor Relations Commission for further proceedings.1wphi1.nt Costs against petitioner. SO ORDERED.

G.R. No. 105090 September 16, 1993 BISIG NG MANGGAGAWA SA CONCRETE AGGREGATES, INC., (BIMCAI) FSM, AND ITS UNION OFFICERS & MEMBERS, ETC., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER ERNILO V. PEALOSA and CONCRETE AGGREGATES CORP., respondents. Jose C. Espinas for petitioner. Rayala, Estrada & Associate Law Offices for private respondent.

PUNO, J.: The restoration of the right to strike is the most valuable gain of labor after the EDSA revolution. It is the employees' sole weapon which can effectively protect their basic rights especially in a society where the levers of powers are nearly monopolized by the propertied few or their franchisees. In recognition of its importance, our Constitution has accorded the rights to strike a distinct status while our laws have assured that its rightful exercise

will not be negated by the issuance of unnecessary injunctions. The impugned Order of the public respondents in the case at bar infringes petitioners' right to strike and hence must be struck down. The labor conflict between the parties broke out in the open when the petitioner union 1 struck on April 6, 1992 protesting issues ranging from unfair labor practices and union busting allegedly committed by the private respondent. 2 The union picketed the premises of the private respondent at Bagumbayan and Longos in Quezon City; Angono and Antipolo in Rizal; San Fernando, Pampanga and San Pedro, Laguna. The strike hurt the private respondent. On April 8, 1992, it filed with the NLRC a petition for injunction 3 to stop the strike which it denounced as illegal. It alleged: xxx xxx xxx 13. On April 6, 1992, at around 7:00 p.m., respondents led by its officers and some members staged a wild-cat strike, without a valid notice of strike, nor observing cooling-off period, and made even during the pendency of a preventive mediation proceedings which was still scheduled for April 10, 1992; 14. And during the said wild-cat strike, respondents have set-up makeshifts, tents, banners and streamers and other man-made obstructions at the main plant and offices of petitioner which effectively impeding, as in fact still effectively impeding the ingress and egress of persons who have lawful business with the petitioner; 15. Furthermore, respondents have resorted, as in fact still resorting to, unlawful and illegal acts including among others threats, intimidations and coercions against persons who have lawful business with the petitioner and the non-striking employees who wish to return to work; 16. Without complying with the legal requirements for a valid strike, respondents' staging of the said "wild-cat strike", is by law considered as illegal or unlawful act which must be enjoined;

17. As a direct result of the aforesaid unlawful and illegal acts of the respondents, petitioner which has on-going projects for the government and other private entities which require completion on and agreed schedule, is at great and imminent danger to suffer substantial damages and injury, which if not urgently redressed, will inevitably become irreparable; 18. Said prohibited and unlawful acts have been threatened and will continuously be committed unless the injunction or temporary restraining order be issued against the respondents; (pp. 2-5, Records). xxx xxx xxx 23. The injury and damages to the government of Republic of the Philippines, the petitioner and other persons are unavoidable, so much so that the issuance of a Temporary Restraining Order without notice becomes imperative, as the police officers or agents of authority called upon to enforce the right to ingress and egress are unable to do so; (p. 6, ibid) The petition was set for hearing on April 13, 1992 at 3 p.m. The union, however, claimed that it was not furnished a copy of the petition. Allegedly, the company misrepresented its address to be at Rm. 205-6 Herald Bldg., Muralla St., Intramuros, Manila. On April 13, 1992, the NLRC heard the evidence of the company alone. The ex parte hearing started at 2:30 p.m. where testimonial and documentary evidence were presented. 4 Some thirty (30) minutes later, an Ocular Inspection Report was submitted by an unnamed NLRC representative 5 which reads: OCULAR INSPECTION REPORT Authorization dated April 13, 1992 was issued to the effect of directing the undersigned to conduct an ocular inspection of the premises of the petitioner located at Bagumbayan, Quezon City. The inspection was conducted immediately upon receipt hereof. OBSERVATION

The passage was obstructed with pieces of rock, an old ladder, pieces of wood and other hard objects that gave rise to a strong indication that the passage to and from the premises was not free.The barricades and obstruction were put up fifty (50) meters or less away from the main gate. The business operation was completely paralized (sic) as no person was noticed inside the company compound. No persons and/or vehicles were seen entering and leaving the premises. Ingress to and engress from the company is presumed to be not free. Before the day was over, the respondent NLRC (First Division) issued a temporary restraining order against the union, viz.: . . . RESOLVED, to issue a Temporary Restraining Order valid for twenty (20) days, subject to petitioner's posting of a cash or surety bond of Twenty Thousand (P20,000.00) Pesos conditioned to recompense respondents for any loss, expense or damage they may suffer in the event it is eventually found out that petitioner is not entitled to the relief sought and herein granted, DIRECTING: a) the respondents, their agents and symphatizers to remove (subject to their right to conduct a lawful picket) the man made barricades/obstructions complained of and to direct from further preventing and/or impeding the free ingress to and egress from petitioner's main plant and office premises of its employees, officials, vehicles, customers or any party who may want to transact business thereat through the use of any obstructive means prohibited by law; b) any officer from the Legal Division of this Commission to ensure compliance of the foregoing restraining order and where necessary, to enlist in the implementation of this Order, as deputized enforcement officers, the assistance of peace officers of this government that has jurisdiction over the strike areas; c) Labor Arbiter Ernilo V. Pealosa to immediately set this case for further hearing with the aim of affording respondents enough opportunity to contest/oppose the issuance of temporary/permanent injunction prayed for in the petition and to submit a report to this Commission within ten (10) days from termination of said hearing.

No copy of this Order was furnished the union. The union learned of the Order only when it was posted on April 15, 1992 at the premises of the company. On April 21, 1992, it filed its Opposition/Answer to the petition for Injunction. Among others, it alleged: xxx xxx xxx 9. The allegation in paragraph 13 of an alleged illegal strike for the reasons stated therein is denied. It is also added that the question of strike legality is outside the original jurisdiction of the NLRC except if the labor dispute has been certified to it for compulsory arbitration. Hence, not only is paragraph 13 denied, denial is made likewise of paragraph 16 which asks that the strike must be enjoined. Paragraph 16 is irrelevant to the cause of action in injunction because only the illegal or unlawful acts maybe enjoined. The strike itself cannot be enjoined unless certified by the honorable Secretary of Labor to the NLRC for compulsory arbitration. 9. Paragraphs 14, 15, 17, 18, and 19 of the allegations supporting the cause of action are also denied for being selfserving and premature. 10. Respondents also deny the allegation in paragraph 20 as the public officers charged with the duty to protect the petitioner's property are able and willing to furnish adequate protection as shown by the fact that when the temporary restraining order was served, the police and other law enforcement agency personnel came immediately to respond and enforced the order peacefully. On April 24, 1992, the union also filed its own Petition for Injunction to enjoin the company "from asking the aid of the police and the military officer in escorting scabs to enter the struck establishment." The records show that the case was heard on April 24 and 30, May 4 and 5, 1992 by respondent Labor Arbiter Enrilo Pealosa. 6 On April 30, 1992, the company filed a Motion for the Immediate Issuance of Preliminary Injunction wherein it alleged: xxx xxx xxx

7. In the meantime, the respondents are still committing illegal acts, by resorting to grave threats, intimidation against the nonstriking employees and persons with lawful transactions with the company since April 20, 1992, continuously up to this time, either by actual threats and intimidation whenever these persons attempt to report to work or transact business with the company, or by calling at their houses or places of residence, and then and there coerce not to report for work on pain of bodily harm; As proof thereof, petitioner attaches the affidavit of Atty. Elmer Jolo, Augusto Bautista, Ronnie Mercado, among others, as Annexes "A", "B" and "C" and made integral parts thereof. 8. For these reasons, said workers and persons are constrained to refrain from reporting for work or from transacting business with the company; 9. Finally, no less than the president of the Union, supported by the leaders of the strikers, threatened that upon the expiration of the validity of the temporary restraining order, they will "sisimentuhin namin and gates ng Concrete Aggregates na kahit ipis ay hindi makakapasok at makakalabas" ("We will cement the gates of the Concrete Aggregates that even cockcroaches could not pass through"); The union got wind of the motion only on May 4, 1992. The next day, May 5, 1992, it opposed the motion, alleging: xxx xxx xxx They were never furnished by the petitioner with a copy of the original petition for injunction filed on April 8, 1992 because as seen from the petition, petitioner addressed the respondents at Rm. 205-206 Herald Bldg., Muralla St., Manila as stated in paragraph 2 of the said petition and they came to know only of the same when Commission issued a temporary restraining order dated April 15, 1992 which was served to them at the picket line on April 15, 1992 and thus they opposed the same on April 20, 1992 (pp. 99-100, Records).

. . . . The suspicion is that same is deliberate in order for the union not to be able to immediately oppose the petition praying for a temporary restraining order and so petitioner was scot-free when it presented ex-parte evidence. The motion for the immediate issuance of a preliminary injunction foisted upon the Honorable Commission with affidavits of employees debunked by cross-examination and officers of the company making fantastic claims is an attempt to have lightning strike twice at the same place. We hope this Honorable Commission is not fooled and therefore we beseech it to examine carefully the pleadings and the transcript on this question of threat or prohibited acts. xxx xxx xxx The allegation of damages if no injunction is secured is therefore premature and irrelevant in this proceedings because there is no proof that the strike is illegal. For if the strike is legal then both sides must bear their own losses in an economic contest: the company loss of income; the workers loss of wages. These are the stakes in an economic dispute. The desperate company posture to enjoin even the strike itself is shown by its letter to the Secretary of Labor dated April 6, 1992, a copy of which is hereto attached as Annex "A". The Secretary of Labor has not yet acted on this request. The company believes probably that an injunction petition would substitute the provision of Art. 263 of the Labor Code. The same day, however, the respondent NLRC issued its disputed Order 7 granting the company's motion for preliminary injunction. It reads: It appears that despite the issuance of a temporary restraining order on April 14, 1991, the respondents have not ceased in committing the illegal acts being enjoined. As shown by petitioner during the hearings of its main petition for preliminary and/or permanent injunction, held on the first day of the implementation of the temporary restraining order on April 20, 1992 and the day thereafter, respondents, thru the formation of human blockade, have prevented the company vehicles and Employees' Shuttle Buses from entering the company premises,

and through forces and intimidation made the non-striking employees on board the vehicles and buses to get down: that even the company's Assistant Manager for Operations, Mr. Ronnie Mercado, who tried to help the non-striking employees to enter the company premises was blocked by the strikers and was even told "wala kaming pakialam sa restraining order ninyo, basta hindi namin papapasukin para magtrabaho and sino mang empleyado ng Concrete Aggregates. Bubugbugin namin kayo pag kayo nagpilit." He was further told that "Ikaw Mercado huwag kang mapapel dito baka may mangyari sa iyo." As a result of the said blockade, threats and intimidation, more or less 100 non-striking employees now, have not been able to report for work; moreover, the inability of the company's Longos Plant to operate fully had caused it to lose the contracted RMC Sales of around 10,000 cubic meters worth around P10 million, not to mention the expected loss in sales for the next three (3) months at P14 million per month since no customers, regular or prospective, could transact business with the company. But foremost of all, it has been shown that no less than the President of the Union, Ramos Banas, with the support of the leaders of the strikers, has threatened that upon the expiration of the validity of the temporary restraining order on May 5, 1992, they will not only barricade the gates of the company but even seal them all so that "even cockcroaches could not pass through." While respondents witnesses, who were mentioned in the testimonies/affidavits of petitioner's witnesses, tried to deny the illegal acts imputed against them, the fact remains undisputed that when the convoy of the company cars and Employees Shuttle Buses with reporting non-striking employees on board were about to enter the compound of the company's Longos Plant in Quezon City, they were stopped by the respondents on the lame excuse that they were only to inquire as to who those on board and that they asked those who are allegedly non employees of the petitioner to get down. It has been substantially established that out of the work force of the Longos Plant, about 100 more or less employees have not been able to enter the plant premises from April 20, 1991 up to the present, for fear of bodily harm from the strikers. Likewise, if

it were true, as claimed, that no threats and intimidation were committed against the company officials who were to report for work, then there is no reason why the Manager for Operations, Ronnie Mercado, should be complaining to the police nearby and for the latter to advise respondents Ramon Banas and Ernest Lascona behave well. Moreover, there is merit to the claim of petitioner that even contract workers hired by it who, even before the strike and up to the present, were assigned to work inside the premises of the Longos were denied entrance by the strikers for their being alleged scabs. With this admission regarding the contract worker, there is reason to believe the truth and veracity of the statement as of petitioner's witnesses, especially the reasonable fear that after the lapse of the twenty (20) days duration of the temporary restraining order, the respondents-strikers will again resort to barricading the entrances of petitioner's plants to prevent anyone from entering the said plant's premises. On the bases of all the foregoing facts and circumstances, the First Division of this Commission, after due deliberation hereby RESOLVED: (pending conclusion of the hearing on petitioner's main petition of April 24, 1991), to issue preliminary injunction: a) enjoining the respondents, their representative and symphatizers, if any, without prejudice to their right to conduct a peaceful and lawful picket, from preventing the non-striking employees, officials of the company and their vehicles, customers and visitors free ingress to and egress from petitioner's plant and premises; directing them to make the ingress to and egress from said premises free from any and all obstruction at all times; and requiring them to desist from further threatening and intimidating at their houses or elsewhere the non-striking employees who up to now could not report for work and to allow them to report for work unmolested; b) directing them, despite the union president's statement that none of the feared illegal acts will be committed after the lapse of the temporary restraining order, to refrain from doing any illegal act which will exacerbate the situation upon the expiration of the temporary restraining order; c) applying the cash or surety bond of P20,000.00 posted by petitioner for the temporary restraining order that will expire on May 5, 1992 as

the case or surety bond for this preliminary injunction; d) deputizing any officer from the Legal Division of this Commission to effectively enforce and implement this injunctive order and, if necessary, to enlist the assistance of the PNP or other peace officers having jurisdiction over the strike areas in the enforcement and implementation of this Order. Let two (2) copies of this injunctive order be posted in two (2) conspicuous places of each of the strike areas by the Bailiff of this Commission for the information and proper guidance of all concerned. SO ORDERED. The union then filed the instant petition for certiorari and mandamus raising the following issues: xxx xxx xxx 3. Whether or not the respondent NLRC can issue a preliminary injunction, as it did issue, after the lapse of a twenty day temporary restraining order without regard to the specific provision of Article 218 (e) of the Labor Code, . . ., considering that in the Order dated May 5, 1992 (attached as Annex "E" of this petition) there is no finding of fact by the respondent NLRC in any of the five pages of the aforesaid Order, to the effect that, as required by law, "(4) That complainant has no adequate remedy at law; and (5) That the public officers charged with the duty to protect complainants property are unable or unwilling to furnish adequate protection. 4. Whether or not public respondent NLRC and Labor Arbiter have unlawfully neglected the performance of an act which the law enjoins as a duty resulting from office considering that after petitioner also filed on April 24, 1992 a petition asking a temporary restraining order and injunctionagainst the escorting by police authorities of individuals "who seek to replace the strikers in entering or leaving the premises of a strike area or work in the place of the strikers and that the police force will keep out of the picket lines unless actual violence or other criminal acts occur therein" as provided or Article 264 (d) of the

Labor Code, considering that the Labor Arbiter reluctantly allowed petitioners to present their evidence in support of their petition to enjoin the scabs being escorted by the police; WHILE in contrast, it continuously set the motion for immediate issuance of preliminary injunction of private respondents on April 30, 1992, May 4 and 5, 1992 and issued a temporary restraining order in favor of the respondent corporation in an hour. We ordered the public and private respondents to comment on the petition. 8 In its 29-page Comment, Solicitor General Raul I. Goco 9 took the position that the petition is impressed with merit. In contrast, the private respondent company, defended the validity of the Order dated May 5, 1992 of the NLRC. 10 Similarly, the NLRC contended that it did not abuse its discretion in issuing the disputed Order. 11 We find for the petitioners. Strike has been considered the most effective weapon of labor in protecting the rights of employees to improve the terms and conditions of their employment. It may be that in highly developed countries, the significance of strike as a coercive weapon has shrunk in view of the preference for more peaceful modes of settling labor disputes. In underdeveloped countries, however, where the economic crunch continues to enfeeble the already marginalized working class, the importance of the right to strike remains undiminished as indeed it has proved many a time as the only coercive weapon that can correct abuses against labor. It remains as the great equalizer. In the Philippine milieu where social justice remains more as a rhetoric than a reality, labor has vigilantly fought to safeguard the sanctity of the right to strike. Its struggle to gain the right to strike has not been easy and effortless. Labor's early exercise of the right to strike collided with the laws on rebellion and sedition and sent its leaders languishing in prisons. The spectre of incarceration did not spur its leaders to sloth; on the contrary it spiked labor to work for its legitimization. This effort was enhanced by the flowering of liberal ideas in the United States which inevitably crossed our shores. It was enormously boosted by the American occupation of our country. Hence, on June 17, 1953, Congress gave statutory recognition to the right to strike when it enacted RA 875, otherwise known as the

Industrial Peace Act. For nearly two (2) decades, labor enjoyed the right to strike until it was prohibited on September 12, 1972 upon the declaration of martial law in the country. The 14-year battle to end martial rule produced many martyrs and foremost among them were the radicals of the labor movement. It was not a mere happenstance, therefore, that after the final battle against martial rule was fought at EDSA in 1986, the new government treated labor with a favored eye. Among those chosen by then President Corazon C. Aquino to draft the 1987 Constitution were recognized labor leaders like Eulogio Lerum, Jose D. Calderon, Blas D. Ople and Jaime S.L. Tadeo. These delegates helped craft into the 1987 Constitution its Article XIII entitled Social Justice and Human Rights. For the first time in our constitutional history, the fundamental law of our land mandated the State to ". . . guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law." 12 This constitutional imprimatur given to the right to strike constitutes signal victory for labor. Our Constitutions of 1935 and 1973 did not accord constitutional status to the right to strike. Even the liberal US Federal Constitution did not elevate the right to strike to a constitutional level. With a constitutional matrix, enactment of a law implementing the right to strike was an inevitability. RA 6715 came into being on March 21, 1989, an intentional replication of RA 875. 13 In light of the genesis of the right to strike, it ought to be obvious that the right should be read with a libertarian latitude in favor of labor. In the wise words of Father Joaquin G. Bernas, S.J., a distinguished commissioner of the 1987 Constitutional Commission " . . . the constitutional recognition of the right to strike does serve as a reminder that injunctions, should be reduced to the barest minimum". 14 In the case at bar, the records will show that the respondent NLRC failed to comply with the letter and spirit of Article 218 (e), (4) and (5) of the Labor Code in issuing its Order of May 5, 1992. Article 218 (e) of the Labor Code provides both the procedural and substantive requirements which must strictly be complied with before a temporary or permanent injunction can issue in a labor dispute, viz.: Art. 218. Powers of the Commission. The Commission shall have the power and authority: xxx xxx xxx

(e) To enjoin or restrain any actual or threatened commission of any or all prohibited or unlawful acts or to require the performance of a particular act in any labor dispute which, if not restrained or performed forthwith, may cause grave or irreparable damage to any party or render ineffectual any decision in favor of such party: Provided, That no temporary or permanent injunction in any case involving or growing out of a labor dispute as defined in this Code shall be issued except after hearing the testimony of witnesses, with opportunity for cross-examination, in support of the allegations of a complaint made under oath, and testimony in opposition thereto, if offered, and only after a finding of fact by the commission, to the effect: (1) That prohibited or unlawful acts have been threatened and will be committed and will be continued unless restrained but no injunction or temporary restraining order shall be issued on account of any threat, prohibited or unlawful act, except against the person or persons, association or organization making the threat or committing the prohibited or unlawful act or actually authorizing or ratifying the same after actual knowledge thereof; (2) That substantial and irreparable injury to complainants property will follow; (3) That as to each item of relief to be granted, greater injury will be inflicted upon complainant by the denial of relief than will be inflicted upon defendants by the granting of relief; (4) That complainant has no adequate remedy at law; and (5) That the public officers charged with the duty to protect complainants property are unable or unwilling to furnish adequate protection. Such hearing shall be held after due and personal notice thereof has been served, in such manner as the Commission shall direct, to all known persons against whom relief is sought, and also to the Chief Executive and other public officials of the province or city within which the unlawful have been threatened or committed charged with the duty to protect complainant's property: . . . (Emphasis ours)

In his Comment, the Solicitor General cited various evidence on record showing the failure of public respondents to fulfill the requirements, especially of paragraphs four (4) and five (5) of the above cited law. We quote with approval the pertinent portions of the Comment: xxx xxx xxx It must be noted that to support the claim of threats, intimidation, unlawful and prohibited acts, etc. allegedly committed by the union against the non-striking employees, the company even submitted a joint affidavit signed by Joselito Concepcion, Renato Trambulo and Armando Arcos. Said affidavit reads JOINT AFFIDAVIT We ARMANDO ARCOS, CESAR NAVARRO and RENATO TRAMBULO residents of Dasmarias, Cavite and JOSELITO CONCEPCION of Binangonan, Rizal all of legal age, Filipino after having been sworn hereby depose and say: That we are contract worker (sic) of CAC under Engr. Mercado; That last April 20, 1992 at around 8:00 a.m. we were denied entry at the Longos Plant by striking workers particularly Ramon Banas, Ricardo Manalang, Rodrigo Manalang, Rodrigo Lauihon and Ernesto Lascona; That the abovenamed persons stopped us at the gate of Longos Plant, told us to get off the bus, and in threatening manner told us to leave and vacate the premises otherwise something bad will happen to us; That because of this unlawful, illegal and felonious acts of the said persons we were compelled to do something against our will that is to leave without being able to report for work; That the abovenamed person and the herein complainants are residents of barangays in different cities and municipalities hence the matter is not covered by PD 1508;

That we are executing this affidavit to charge Ramon Banas, Ricardo Manalang, Rodrigo Lauihon and Ernesto Lascana with Grave Coercion. (Exh. "I", p. 896, Records) (Emphasis Supplied). However, when presented before the Labor Arbiter, the affiants themselves controverted the allegations in said joint-affidavit. They innocently divulged having signed the prepared affidavit without first reading the same. Likewise, they admitted that they did not see or hear Banas, Manalang, Lacuna and Lacejon threatened the group of "non-strikers" including themselves of bodily harm (pp. 13-14, 20-21, 35- 37, 46-47, 49-50, 54-61, TSN, April 24, 1992). They testified, thus CROSS-EXAMINATION OF JOSELITO CONCEPCION ARBITER PEALOSA: The question is . . . who prepared the affidavit? Alam mo raw ba kung sino ang gumawa ng affidavit na ito? ATTY. ESPINAS: Sinong gumawa? ATTY. MACARUBBO: Para sa iyo? MR. CONCEPCION: Si Attorney po. (pp. 20, 21, ibid) DIRECT TESTIMONY OF RENATO TRAMBULO ATTY. MACARUBBO: Mr. Witness, did you sign an affidavit dated April 24, 1992? MR. TRAMBULO:

Yes, Sir. ATTY. MACARUBBO: Have you read this affidavit? MR. TRAMBULO: Hindi pa ho. xxx xxx xxx ATTY. MACARUBBO: Perhaps, what you meant is . . . . ATTY. ESPINAS: No, no, no, . . . You can ask another question. His answer is - Before I, signed it but I have not read it yet. ATTY. MACARUBBO: What do you mean that you have not read this? MR. TRAMBULO: Sa akin lang po, iyong sinabi sa akin na . . . iyong hinarang kami, pinababa kami . . . iyon lang po ang alam ko. Wala na po akong ibang alam. ATTY. MACARUBBO: Hinarang ka? MR. TRAMBULO: Hinarang kami, pinababa kami dahil hindi daw kami empleyado sa kompanya.

ATTY. MACARUBBO: At iyon and ibig sabihin nito? MR. TRAMBULO: CROSS-EXAMINATION OF RENATO TRAMBULO ATTY. ESPINAS: What did Lacejon said (sic) MR. TRAMBULO: Pinababa na lang po kami sa service. Sabi niya, bumaba na kayo dahil hindi naman kayo empleyado ng Concrete, kaya bumaba na lang po kami. (pp. 46-47, 49-50, id) TESTIMONY OF ARMANDO ARCOS : ATTY. ESPINAS: Cross-examination. Sinabi ba ng mga taong ito na kung hindi kayo bababa, masama ang mangyayari sa inyo? Meron bang sinabing ganoon? ATTY. ARCOS: Wala ho. ATTY. ESPINAS: Dito sa second paragraph which says . . . told you to leave and vacate the premises otherwise something bad will happen to us. Kung hindi kayo umalis . . . walang sinabing ganoon? MR. ARCOS: Wala naman ho.

xxx xxx xxx ATTY. ESPINAS: Sino ang nagsabi sa inyo na "Hindi naman kayo empleyado, bumaba na kayo?" MR. ARCOS: Si Lacejon. Iyong may salamin. ATTY. ESPINAS: Pero walang sinabi si Lacejon na kung hindi kayo bababa may masamang mangyayari sa inyo? MR. ARCOS: Wala naman ho. (pp. 59-61, id) Moreover, no less than Mr. Ronnie Mercado, the Assistant Manager for Operations of the Company, testified that after the issuance of the ex parte temporary restraining order, the barricade blocking the gates were removed and people were allowed free ingress and egress (please see also pp. 70-71, 96, TSN, April 30, 1992). He stated thus CROSS-EXAMINATION OF MR. MERCADO ATTY. ESPINAS: So after the temporary restraining order, were the barricade removed? MR. WITNESS: Those blocking the gates, yes. xxx xxx xxx ATTY. ESPINAS:

But the barricades blocking the gates were already removed. MR. WITNESS: The barricades blocking the gates were already removed. (pp. 66-67, TSN, April 30, 1992) xxx xxx xxx ATTY. ESPINAS: Let us go to Antipolo. After the restraining order the people were able to enter? MR. WITNESS: After the restraining order the people can already enter. ATTY. ESPINAS: They were escorted by the police? MR. WITNESS: No, sir. (p. 75, ibid) (Emphasis ours) xxx xxx xxx ATTY. ESPINAS: O, lahat ng gustong pumasok, makakapasok na ngayon? MR. WITNESS: Yes, sir.

(p. 85, ibid) Furthermore, Atty. Elmer Jolo, the Personnel Manager joined by Mr. Mercado, disclosed that the public authorities charged to protect the company's properties were neither unwilling or unable to furnish adequate protection. As a matter of fact, the police regularly patrolling the area, was never requested assistance. Thus CROSS-EXAMINATION OF ATTY. ELMER JOLO ATTY. ESPINAS: Did you not ask the assistance of the San Pedro policemen on this matter of obstruction and other similar activities in obstructing the gates of the plant? MR. WITNESS: I did not. ATTY. ESPINAS: Did you not ask the policemen of Angono, Rizal to help you on this matter again of extracting the trucks which were supposed to deliver pre-stress material of that day? MR. WITNESS: Personally I did not because I leave this police matter to my chief security officer. ATTY. ESPINAS: Did your chief security officers ask the assistance of the policemen of Quezon City with respect to the Longos Plant? MR. WITNESS:

That I do not know. ATTY. ESPINAS: Did you ask the aid of the policemen at Bagumbayan, Quezon City to help you regarding the incident of April 6, 1992 at 7:00 p.m.? MR. WITNESS: I did not personally because I instructed this police matter to my chief security officer. ATTY. ESPINAS: Did your chief security officer seek the aid of the policemen? MR. WITNESS: That I do not know. (pp. 41-43, TSN, April 30, 1992) CROSS-EXAMINATION OF MR. MERCADO ATTY. ESPINAS: The policemen are from Quezon city. MR. WITNESS: I think so, kasi nagpa-patrol sila. ATTY. ESPINAS: Nagpatrol? They were called by the company? MR. WITNESS: No, sir, kaya lang parati silang umiikot diyan.

ATTY. ESPINAS: So the policemen were present patrolling? MR. WITNESS: Paminsan-minsan sumulpot lang. (pp. 85-86, id) The foregoing testimonies of the senior officers of the company are further buttressed by the admission of one of the laborers, also presented as witness by the company, who testified that CROSS-EXAMINATION OF AUGUSTUS BAUTISTA ATTY. ESPINAS: But they were not bodily stopped from entering after the 21. Were they? MR. WITNESS: No. (p. 124, TSN, April 30, 1992) xxx xxx xxx ATTY. ESPINAS: In other words, aside from the police there is a security office detained? MR. WITNESS: Yes, we have our own. ATTY. ESPINAS: And the security officer can request the aid of the policemen?

MR. WITNESS: Yes. (pp. 128-129, id) Verily, the factual circumstances proven by the evidence show that there was no concurrence of the five (5) prerequisites mandated by Art. 218 (e) of the Labor Code. Thus there is no justification for the issuance of the questioned Order of preliminary injunction. The Comments of the private and public respondents did not dispute the correctness of these documentary and testimonial evidence. Moreover, the records reveal the continuing misuse of unfair strategies to secure ex parte temporary restraining orders against striking employees. Petitioner union did not receive any copy of private respondent's petition for injunction in Case No. 000249-92 filed on April 8, 1992. Its address as alleged by the private respondent turned out to be "erroneous". 15 Consequently, the petitioner was denied the right to attend the hearing held on April 13, 1992 while the private respondent enjoyed a field day presenting its evidence ex parte. On the basis of uncontested evidence, the public respondent, on the same day April 13, 1992, temporarily enjoined the petitioner from committing certain alleged illegal acts. Again, a copy of the Order was sent to the wrong address of the petitioner. Knowledge of the Order came to the petitioner only when its striking members read it after it was posted at the struck areas of the private respondent. To be sure, the issuance of an ex parte temporary restraining order in a labor dispute is not per se prohibited. Its issuance, however, should be characterized by care and caution for the law requires that it be clearly justified by considerations of extreme necessity, i.e., when the commission of unlawful acts is causing substantial and irreparable injury to company properties and the company is, for the moment, bereft of an adequate remedy at law. This is as it ought to be, for imprudently issued temporary restraining orders can break the back of employees engaged in a legal strike. Often times, they unduly tilt the balance of a labor warfare in favor of capital. When that happens, the deleterious effects of a wrongfully issued, ex parte temporary restraining order on the rights of striking

employees can no longer be repaired for they defy simple monetization. Moreover, experience shows thatex parte applications for restraining orders are often based on fabricated facts and concealed truths. A more becoming sense of fairness, therefore, demands that such ex parte applications should be more minutely examined by hearing officers, lest, our constitutional policy of protecting labor becomes nothing but a synthetic shibboleth. The immediate need to hear and resolve these ex parte applications does not provide any excuse to lower our vigilance in protecting labor against the issuance of indiscriminate injunctions. Stated otherwise, it behooves hearing officers receiving evidence in support of ex parte injunctions against employees in strike to take a more active stance in seeing to it that their right to social justice is in no way violated despite their absence. This equalizing stance was not taken in the case at bar by the public respondents. Nor do we find baseless the allegation by petitioner that the public respondents have neglected to resolve with reasonable dispatch its own Petition for Injunction with prayer for a temporary restraining order dated April 25, 1992. The petition invoked Article 264(d) of the Labor Code 16 to enjoin the private respondent from using the military and police authorities to escort scabs at the struck establishment. Sadly contrasting is the haste with which public respondent heard and acted on a similar petition for injunction filed by the private respondent. In the case of the private respondent, its prayer for an ex parte temporary restraining order was heard on April 13, 1992 and it was granted on the same day. Its petition for preliminary injunction was filed on April 30, 1992, and was granted on May 5, 1992. In the case of petitioner, its petition for injunction was filed on April 24, 1992, and to date, the records do not reveal whether the public respondent has granted or denied the same. The disparate treatment is inexplicable considering that the subject matters of their petition are of similar importance to the parties and to the public. IN VIEW WHEREOF, the petition for certiorari and mandamus is granted. The Order dated May 5, 1992 of the public respondent in NLRC NCR IC No. 000249-92 is annulled and set aside. The public respondents are likewise ordered to hear and resolve, with deliberate speed petitioner's petition for injunction filed on April 30, 1992. SO ORDERED.

G.R. No. 119293

June 10, 2003

SAN MIGUEL CORPORATION, Petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, Second Division, ILAW AT BUKLOD NG MANGGAGAWA (IBM), Respondents. DECISION AZCUNA, J.: Before us is a petition for certiorari and prohibition seeking to set aside the decision of the Second Division of the National Labor Relations Commission (NLRC) in Injunction Case No. 00468-94 dated November 29, 1994,1 and its resolution dated February 1, 19952 denying petitioners motion for reconsideration. Petitioner San Miguel Corporation (SMC) and respondent Ilaw at Buklod ng Manggagawa (IBM), exclusive bargaining agent of petitioners daily-paid rank and file employees, executed a Collective Bargaining Agreement (CBA) under which they agreed to submit all disputes to grievance and arbitration proceedings. The CBA also included a mutually enforceable nostrike no-lockout agreement. The pertinent provisions of the said CBA are quoted hereunder: ARTICLE IV GRIEVANCE MACHINERY Section 1. - The parties hereto agree on the principle that all disputes between labor and management may be solved through friendly negotiation;. . . that an open conflict in any form involves losses to the parties, and that, therefore, every effort shall be exerted to avoid such an open conflict. In furtherance of the foregoing principle, the parties hereto have agreed to establish a procedure for the adjustment of grievances so as to (1) provide an opportunity for discussion of any request or complaint

and (2) establish procedure for the processing and settlement of grievances. xxx xxx ARTICLE V ARBITRATION Section 1. Any and all disputes, disagreements and controversies of any kind between the COMPANY and the UNION and/or the workers involving or relating to wages, hours of work, conditions of employment and/or employer-employee relations arising during the effectivity of this Agreement or any renewal thereof, shall be settled by arbitration through a Committee in accordance with the procedure established in this Article. No dispute, disagreement or controversy which may be submitted to the grievance procedure in Article IV shall be presented for arbitration until all the steps of the grievance procedure are exhausted. xxx xxx xxx xxx

ARTICLE VI STRIKES AND WORK STOPPAGES Section 1. The UNION agrees that there shall be no strikes, walkouts, stoppage or slowdown of work, boycotts, secondary boycotts, refusal to handle any merchandise, picketing, sit-down strikes of any kind, sympathetic or general strikes, or any other interference with any of the operations of the COMPANY during the term of this Agreement. Section 2. The COMPANY agrees that there shall be no lockout during the term of this Agreement so long as the procedure outlined in Article IV hereof is followed by the UNION.3 On April 11, 1994, IBM, through its vice-president Alfredo Colomeda, filed with the National Conciliation and Mediation Board (NCMB) a notice of strike, docketed as NCMB-NCR-NS-04-180-94, against petitioner for allegedly committing: (1) illegal dismissal of union members, (2) illegal transfer, (3) violation of CBA, (4) contracting out of jobs being performed by union members, (5) labor-only contracting, (6) harassment of union officers and members, (7) non-recognition of duly-elected union officers, and (8) other acts of unfair labor practice.4

The next day, IBM filed another notice of strike, this time through its president Edilberto Galvez, raising similar grounds: (1) illegal transfer, (2) labor-only contracting, (3) violation of CBA, (4) dismissal of union officers and members, and (5) other acts of unfair labor practice. This was docketed as NCMB-NCR-NS-04-182-94.5 The Galvez group subsequently requested the NCMB to consolidate its notice of strike with that of the Colomeda group,6 to which the latter opposed, alleging Galvezs lack of authority in filing the same.7 Petitioner thereafter filed a Motion for Severance of Notices of Strike with Motion to Dismiss, on the grounds that the notices raised non-strikeable issues and that they affected four corporations which are separate and distinct from each other.8 After several conciliation meetings, NCMB Director Reynaldo Ubaldo found that the real issues involved are non-strikeable. Hence on May 2, 1994, he issued separate letter-orders to both union groups, converting their notices of strike into preventive mediation. The said letter-orders, in part, read: During the conciliation meetings, it was clearly established that the real issues involved are illegal dismissal, labor only contracting and internal union disputes, which affect not only the interest of the San Miguel Corporation but also the interests of the MAGNOLIA-NESTLE CORPORATION, the SAN MIGUEL FOODS, INC., and the SAN MIGUEL JUICES, INC. Considering that San Miguel Corporation is the only impleaded employerrespondent, and considering further that the aforesaid companies are separate and distinct corporate entities, we deemed it wise to reduce and treat your Notice of Strike as Preventive Mediation case for the four (4) different companies in order to evolve voluntary settlement of the disputes. . . .9 (Emphasis supplied) On May 16, 1994, while separate preventive mediation conferences were ongoing, the Colomeda group filed with the NCMB a notice of holding a strike vote. Petitioner opposed by filing a Manifestation and Motion to Declare Notice of Strike Vote Illegal,10 invoking the case of PAL v. Drilon,11 which held that no strike could be legally declared during the pendency of preventive mediation. NCMB Director Ubaldo in response issued another letter to the Colomeda Group reiterating the conversion of

the notice of strike into a case of preventive mediation and emphasizing the findings that the grounds raised center only on an intra-union conflict, which is not strikeable, thus: xxx xxx xxx

A perusal of the records of the case clearly shows that the basic point to be resolved entails the question of as to who between the two (2) groups shall represent the workers for collective bargaining purposes, which has been the subject of a Petition for Interpleader case pending resolution before the Office of the Secretary of Labor and Employment. Similarly, the other issues raised which have been discussed by the parties at the plant level, are ancillary issues to the main question, that is, the union leadership...12 (Emphasis supplied) Meanwhile, on May 23, 1994, the Galvez group filed its second notice of strike against petitioner, docketed as NCMB-NCR-NS-05-263-94. Additional grounds were set forth therein, including discrimination, coercion of employees, illegal lockout and illegal closure.13 The NCMB however found these grounds to be mere amplifications of those alleged in the first notice that the group filed. It therefore ordered the consolidation of the second notice with the preceding one that was earlier reduced to preventive mediation.14 On the same date, the group likewise notified the NCMB of its intention to hold a strike vote on May 27, 1994. On May 27, 1994, the Colomeda group notified the NCMB of the results of their strike vote, which favored the holding of a strike.15 In reply, NCMB issued a letter again advising them that by virtue of the PAL v. Drilon ruling, their notice of strike is deemed not to have been filed, consequently invalidating any subsequent strike for lack of compliance with the notice requirement.16 Despite this and the pendency of the preventive mediation proceedings, on June 4, 1994, IBM went on strike. The strike paralyzed the operations of petitioner, causing it losses allegedly worth P29.98 million in daily lost production.17 Two days after the declaration of strike, or on June 6, 1994, petitioner filed with public respondent NLRC an amended Petition for Injunction with Prayer for the Issuance of Temporary Restraining Order, Free Ingress and Egress Order and Deputization Order.18 After due hearing and ocular inspection, the NLRC on June 13, 1994 resolved to issue a temporary

restraining order (TRO) directing free ingress to and egress from petitioners plants, without prejudice to the unions right to peaceful picketing and continuous hearings on the injunction case.19 To minimize further damage to itself, petitioner on June 16, 1994, entered into a Memorandum of Agreement (MOA) with the respondent-union, calling for a lifting of the picket lines and resumption of work in exchange of "good faith talks" between the management and the labor management committees. The MOA, signed in the presence of Department of Labor and Employment (DOLE) officials, expressly stated that cases filed in relation to their dispute will continue and will not be affected in any manner whatsoever by the agreement.20 The picket lines ended and work was then resumed. Respondent thereafter moved to reconsider the issuance of the TRO, and sought to dismiss the injunction case in view of the cessation of its picketing activities as a result of the signed MOA. It argued that the case had become moot and academic there being no more prohibited activities to restrain, be they actual or threatened.21Petitioner, however, opposed and submitted copies of flyers being circulated by IBM, as proof of the unions alleged threat to revive the strike.22 The NLRC did not rule on the opposition to the TRO and allowed it to lapse. On November 29, 1994, the NLRC issued the challenged decision, denying the petition for injunction for lack of factual basis. It found that the circumstances at the time did not constitute or no longer constituted an actual or threatened commission of unlawful acts.23 It likewise denied petitioners motion for reconsideration in its resolution dated February 1, 1995.24 Hence, this petition. Aggrieved by public respondents denial of a permanent injunction, petitioner contends that: A. THE NLRC GRAVELY ABUSED ITS DISCRETION WHEN IT FAILED TO ENFORCE, BY INJUNCTION, THE PARTIES RECIPROCAL OBLIGATIONS TO SUBMIT TO ARBITRATION AND NOT TO STRIKE.

B. THE NLRC GRAVELY ABUSED ITS DISCRETION IN WITHHOLDING INJUNCTION WHICH IS THE ONLY IMMEDIATE AND EFFECTIVE SUBSTITUTE FOR THE DISASTROUS ECONOMIC WARFARE THAT ARBITRATION IS DESIGNED TO AVOID. C. THE NLRC GRAVELY ABUSED ITS DISCRETION IN ALLOWING THE TRO TO LAPSE WITHOUT RESOLVING THE PRAYER FOR INJUNCTION, DENYING INJUNCTION WITHOUT EXPRESSING THE FACTS AND THE LAW ON WHICH IT IS BASED AND ISSUING ITS DENIAL FIVE MONTHS AFTER THE LAPSE OF THE TRO.25 We find for the petitioner. Article 254 of the Labor Code provides that no temporary or permanent injunction or restraining order in any case involving or growing out of labor disputes shall be issued by any court or other entity except as otherwise provided in Articles 218 and 264 of the Labor Code. Under the first exception, Article 218 (e) of the Labor Code expressly confers upon the NLRC the power to "enjoin or restrain actual and threatened commission of any or all prohibited or unlawful acts, or to require the performance of a particular act in any labor dispute which, if not restrained or performed forthwith, may cause grave or irreparable damage to any party or render ineffectual any decision in favor of such party x x x." The second exception, on the other hand, is when the labor organization or the employer engages in any of the "prohibited activities" enumerated in Article 264. Pursuant to Article 218 (e), the coercive measure of injunction may also be used to restrain an actual or threatened unlawful strike. In the case of San Miguel Corporation v. NLRC,26 where the same issue of NLRCs duty to enjoin an unlawful strike was raised, we ruled that the NLRC committed grave abuse of discretion when it denied the petition for injunction to restrain the union from declaring a strike based on non-strikeable grounds. Further, in IBM v. NLRC,27 we held that it is the "legal duty and obligation" of the NLRC to enjoin a partial strike staged in violation of the law. Failure promptly to issue an injunction by the public respondent was likewise held therein to be an abuse of discretion.

In the case at bar, petitioner sought a permanent injunction to enjoin the respondents strike. A strike is considered as the most effective weapon in protecting the rights of the employees to improve the terms and conditions of their employment. However, to be valid, a strike must be pursued within legal bounds.28 One of the procedural requisites that Article 263 of the Labor Code and its Implementing Rules prescribe is the filing of a valid notice of strike with the NCMB. Imposed for the purpose of encouraging the voluntary settlement of disputes,29 this requirement has been held to be mandatory, the lack of which shall render a strike illegal.30 In the present case, NCMB converted IBMs notices into preventive mediation as it found that the real issues raised are non-strikeable. Such order is in pursuance of the NCMBs duty to exert "all efforts at mediation and conciliation to enable the parties to settle the dispute amicably,"31 and in line with the state policy of favoring voluntary modes of settling labor disputes.32 In accordance with the Implementing Rules of the Labor Code, the said conversion has the effect of dismissing the notices of strike filed by respondent.33 A case in point is PAL v. Drilon,34 where we declared a strike illegal for lack of a valid notice of strike, in view of the NCMBs conversion of the notice therein into a preventive mediation case. We ruled, thus: The NCMB had declared the notice of strike as "appropriate for preventive mediation." The effect of that declaration (which PALEA did not ask to be reconsidered or set aside) was to drop the case from the docket of notice of strikes, as provided in Rule 41 of the NCMB Rules, as if there was no notice of strike. During the pendency of preventive mediation proceedings no strike could be legally declared... The strike which the union mounted, while preventive mediation proceedings were ongoing, was aptly described by the petitioner as "an ambush." (Emphasis supplied) Clearly, therefore, applying the aforecited ruling to the case at bar, when the NCMB ordered the preventive mediation on May 2, 1994, respondent had thereupon lost the notices of strike it had filed. Subsequently, however, it still defiantly proceeded with the strike while mediation was ongoing, and notwithstanding the letter-advisories of NCMB warning it of its lack of notice of strike. In the case of NUWHRAIN v. NLRC,35 where the petitioner-union therein similarly defied a prohibition by the NCMB, we said: Petitioners should have complied with the prohibition to strike ordered by the NCMB when the latter dismissed the notices of strike after finding that

the alleged acts of discrimination of the hotel were not ULP, hence not "strikeable." The refusal of the petitioners to heed said proscription of the NCMB is reflective of bad faith. Such disregard of the mediation proceedings was a blatant violation of the Implementing Rules, which explicitly oblige the parties to bargain collectively in good faith and prohibit them from impeding or disrupting the proceedings.36 The NCMB having no coercive powers of injunction, petitioner sought recourse from the public respondent. The NLRC issued a TRO only for free ingress to and egress from petitioners plants, but did not enjoin the unlawful strike itself. It ignored the fatal lack of notice of strike, and five months after came out with a decision summarily rejecting petitioners cited jurisprudence in this wise: Complainants scholarly and impressive arguments, formidably supported by a long line of jurisprudence cannot however be appropriately considered in the favorable resolution of the instant case for the complainant. The cited jurisprudence do not squarely cover and apply in this case, as they are not similarly situated and the remedy sought for were different.37 Unfortunately, the NLRC decision stated no reason to substantiate the above conclusion.1wphi1 Public respondent, in its decision, moreover ruled that there was a lack of factual basis in issuing the injunction. Contrary to the NLRCs finding, we find that at the time the injunction was being sought, there existed a threat to revive the unlawful strike as evidenced by the flyers then being circulated by the IBM-NCR Council which led the union. These flyers categorically declared: "Ipaalala nyo sa management na hindi iniaatras ang ating Notice of Strike (NOS) at anumang oras ay pwede nating muling itirik ang picket line."38 These flyers were not denied by respondent, and were dated June 19, 1994, just a day after the unions manifestation with the NLRC that there existed no threat of commission of prohibited activities. Moreover, it bears stressing that Article 264(a) of the Labor Code39 explicitly states that a declaration of strike without first having filed the required notice is a prohibited activity, which may be prevented through an injunction in accordance with Article 254. Clearly, public respondent

should have granted the injunctive relief to prevent the grave damage brought about by the unlawful strike. Also noteworthy is public respondents disregard of petitioners argument pointing out the unions failure to observe the CBA provisions on grievance and arbitration. In the case of San Miguel Corp. v. NLRC,40 we ruled that the union therein violated the mandatory provisions of the CBA when it filed a notice of strike without availing of the remedies prescribed therein. Thus we held: x x x For failing to exhaust all steps in the grievance machinery and arbitration proceedings provided in the Collective Bargaining Agreement, the notice of strike should have been dismissed by the NLRC and private respondent union ordered to proceed with the grievance and arbitration proceedings. In the case of Liberal Labor Union vs. Phil. Can Co., the court declared as illegal the strike staged by the union for not complying with the grievance procedure provided in the collective bargaining agreement. . . (Citations omitted) As in the abovecited case, petitioner herein evinced its willingness to negotiate with the union by seeking for an order from the NLRC to compel observance of the grievance and arbitration proceedings. Respondent however resorted to force without exhausting all available means within its reach. Such infringement of the aforecited CBA provisions constitutes further justification for the issuance of an injunction against the strike. As we said long ago: "Strikes held in violation of the terms contained in a collective bargaining agreement are illegal especially when they provide for conclusive arbitration clauses. These agreements must be strictly adhered to and respected if their ends have to be achieved."41 As to petitioners allegation of violation of the no-strike provision in the CBA, jurisprudence has enunciated that such clauses only bar strikes which are economic in nature, but not strikes grounded on unfair labor practices.42The notices filed in the case at bar alleged unfair labor practices, the initial determination of which would entail fact-finding that is best left for the labor arbiters. Nevertheless, our finding herein of the invalidity of the notices of strike dispenses with the need to discuss this issue. We cannot sanction the respondent-unions brazen disregard of legal requirements imposed purposely to carry out the state policy of promoting

voluntary modes of settling disputes. The states commitment to enforce mutual compliance therewith to foster industrial peace is affirmed by no less than our Constitution.43 Trade unionism and strikes are legitimate weapons of labor granted by our statutes. But misuse of these instruments can be the subject of judicial intervention to forestall grave injury to a business enterprise.44 WHEREFORE, the instant petition is hereby GRANTED. The decision and resolution of the NLRC in Injunction Case No. 00468-94 are REVERSED and SET ASIDE. Petitioner and private respondent are hereby directed to submit the issues raised in the dismissed notices of strike to grievance procedure and proceed with arbitration proceedings as prescribed in their CBA, if necessary. No pronouncement as to costs. SO ORDERED.