Contents

SANTA ROSA ................................................................................................................................................ 50

UNION OF FILIPRO ...................................................................................................................................... 94
OVERSEAS WORKERS WELFARE ADMINISTRATION .................................................................................. 103
MARIETTA ................................................................................................................................................. 124
NATIONAL FEDERATION ............................................................................................................................ 134




G.R. No. L-18364 February 28, 1963
PHILIPPINE AMERICAN CIGAR & CIGARETTE FACTORY WORKERS
INDEPENDENT UNION (NLU), petitioner,
vs.
PHILIPPINE AMERICAN CIGAR & CIGARETTE MANUFACTURING CO., INC.,
respondent.
Eulogio R. Lerum for petitioner.
E. B. Garcia Law Office for respondent.
CONCEPCION, J .:
Appeal by certiorari of petitioner Philippine American Cigar & Cigarette Workers Independent
Union (NLU), from a decision of the Court of Industrial Relations dismissing a complaint of said
petitioner for unfair labor practice, and ordering respondent Philippine American Cigar &
Cigarette Manufacturing Co., Inc. to reinstate Apolonio San Jose, within five (5) days from
notice of said decision, without backpay.
The pertinent facts are set forth in said decision from which we quote:
Paragraph 3, sub-paragraph (a) of the complaint states:
a. That sometime on October 23, 1958, Apolonio San Jose's brother, Francisco San Jose,
who is also a regular worker of the respondent and a member of the complainant union,
filed a charge for unfair labor practice against herein respondent docketed as Case No.
1857-ULP of this Court, which case is still pending.
b. That subsequent to the filing of the said charge, or on about November 29, 1958 and
also on or about December 11, 1958, the respondent herein, by its manager Chua Yiong,
summoned and advised union president Lazaro Peralta that if Francisco San Jose will not
withdraw his charge against the company (Case No. 1857-ULP), the company will also
dismiss his brother Apolonio San Jose, to which the union president replied that that
should not be the attitude of the company because Apolonio has nothing to do with his
brother's case.
c. That on or about January 24, 1959, respondent, by its officers and agents, did dismiss
Apolonio San Jose without just and valid cause and in gross violation of the operative
collective bargaining agreement between the complainant union and respondent
corporation.
The allegations in said sub-paragraphs (a), (b) and (c) of the complaint were substantiated
by the oral testimony of complainant's witnesses, but the Court finds that such allegations
do not constitute unfair labor practice acts on the part of respondent. In sub-paragraphs
(a) and (b), the Court finds no interference, coercion and restraint against the employees
in the exercise of their guaranteed rights to self-organization and discrimination against
complainant Apolonio San Jose in regard to hire or tenure of his employment. In short,
the complainants' charge is that if Francisco San Jose would not withdraw his unfair labor
practice charge against respondent company, the manager of the latter would dismiss
Apolonio San Jose, the brother of Francisco. In fact, said manager dismissed Apolonio
San Jose. This may be an illegal or improper dismissal, but certainly, it does not
constitute an unfair labor practice.
The Court further finds that in sub-paragraph (c), complainants allege that the dismissal
of Apolonio San Jose was in gross violation of the collective bargaining agreement
between complainant union and respondent corporation.
The Court of Industrial Relations found "that the moving cause of Apolonio's dismissal was the
refusal of his brother Francisco San Jose, to withdraw his charge of unfair labor practice against
the company. But" it added "be that as it may, it cannot constitute an actionable offense
under the Act". Seemingly believing that, since the one dismissed by reason of said charge of
unfair labor practice was, not the complainant therein, Francisco San Jose, but his brother
Apolonio San Jose, the latter's dismissal does not constitute another unfair labor practice under
Section 4 (a) (5) of Republic Act No. 875, which provides that:
(a) It shall be unfair labor practice for an employer:
x x x x x x x x x
(5) To dismiss, discharge, or otherwise prejudice or discriminate against an employee for
having filed charges or for having given or being about to give testimony under this Act.
the lower court concluded that it had no jurisdiction to entertain the claim of petitioner herein.
This conclusion is untenable.
Although subdivision (5) of paragraph (a) of said Section 4 would seem to refer only to the
discharge of the one who preferred charges against the company as constituting unfair labor
practice, the aforementioned subdivision (5) should be construed in line with the spirit and
purpose of said Section 4 and of the legislation of which forms part namely, to assure absolute
freedom of the employees and laborers to establish labor organizations and unions, as well as to
prefer charges before the proper organs of the Government for violation of our labor laws. Now,
then, if the dismissal of an employee due to the filing by him of said charges would be and is an
undue restraint upon said freedom, the dismissal of his brother owing to the non-withdrawal of
the charges of the former, would be and constitute as much a restraint upon the same freedom. In
fact, it may be a greater and more effective restraint thereto. Indeed, a complainant may be
willing to risk the hazards of a possible and even probable retaliatory action by the employer in
the form of a dismissal or another discriminatory act against him personally, considering that
nobody is perfect, that everybody commits mistakes and that there is always a possibility that the
employer may find in the records of any employee, particularly if he has long been in the service,
some act or omission constituting a fault or negligence which may be an excuse for such
dismissal or discrimination. Yet, such complainant may not withstand the pressure that would
result if his brother or another member of his immediate family were threatened with such action
unless the charges in question were withdrawn.
In fact, it is a well settled rule of law that what is prohibited to be done directly shall not be
allowed to be accomplished indirectly. Thus in the Matter of Quidnick Dye Works, Inc. and
Federation of Dyers, Finishers, Printers and Bleachers of America (2 NLRB 963) it was held that
the dismissal of a laborer on account of union activities of his brother constituted an unfair labor
practice. To the same effect, substantially, are the decisions in the Matter of the Fashion Piece
Dye Works, Inc. and Federation of Silk and Rayon Dyers and Finishers of American, 6 NLRB p.
274; In the Matter of Ford Motor Company and H.C. McGarity, 26 NLRB, p. 322 (which refers
to the union activities of the wife of the discharged employee), and Union Asbestos & Rubber
Co. and United Textile Workers of America, AFL, 98 NLRB p. 1055 (involving the dismissal of
a female employee, due to the union activities of her husband). Hence, Teller in his work on
Labor Disputes and Collective Bargaining (Vol. 2, p. 859), says:
The discharge of relatives of an employee who was himself been discriminately
discharged, for no other reason than the relation, is itself of a discriminatory discharge, in
violation of Sec. 8(3) of the Act. An illustration is Memphis Furniture Co. (3 NLRB 26
[1937], enforced 2 F2d 1018 [CCA 6, 1938], cert. den. 305 US 627, 59 S Ct 91, 83 L. Ed.
402 [CCA 6, 1938])where the evidence indicated that the sole reason for the dismissal of
a female employee was that she was the wife of an employee who has been discharged. It
was held that the discharge under the circumstances was discriminatory and a violation of
the Act, even though discharged female employee was not herself a member of any
union. The Board said: "The respondent thus made union membership and activities a bar
to the employment not only of the union member himself but of members of his family as
well. A more effective mode of discouragement of union affiliation could hardly be found
than the knowledge that such activities put not merely the union member's employment
but that of those closely related to him in jeopardy. The direct cause of Mrs. Barmer's
discharge was the fact that her husband had been discharged, but the indirect and
antecedent cause was discrimination against union members in regard to hire and tenure
of employment with intent to discourage membership in the Union." So also the Board
has held that the discharge of discriminatingly discharged employees' wives for the
reason that the employer did not desire the employees to continue to live in the
employer's houses, which they would do so long as their wives remained employed, is
itself a discriminating discharge in violation of the Act. (Mexis Textile Mills, 11 NLRB
1167 [1939], enforced 110 F2d 565 [CCA 5, 1940].) In Mansfield Mills, Inc. (3 NLRB
901 [1937] ), the respondent alleged that the wife of an employee who had been
discharged allegedly in violation of the Act was herself discharged in consequence of a
company rule requiring the dismissal of all members of the family when the head of the
family is discharged. The Board said: "Assuming this as the reason for Mrs. Sutton's
discharge, we would necessarily find that she was the victim of discrimination in
violation of the Act, if we determined that Sutton was discharged as the result of his
union affiliation."
In the usual case, it is the wife who is the sufferer because of the husband's union
affiliation. In I. Youlin and Company (22 NLRB No. 65 [1940]),the husband was
discharged for failure to secure his wife's resignation from the union this was held
violative of Section 8(3) of the Act.
In addition to violating Section 4(a) (5) of Republic Act No. 875, the discharge of Apolonio San
Jose is, therefore, an unfair labor practice under subdivision (4) of said Section 4(a), which is the
counterpart of Section 8(3)of the National Labor Relations Act (Wagner Act) of the United
States.
Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and
approved by this Honorable Court, without prejudice to the parties adducing other evidence to
prove their case not covered by this stipulation of facts. 1wph1.t
WHEREFORE, the decision appealed from is hereby reversed, insofar as it dismisses the
complaint of petitioner herein, and another one shall be entered finding respondent Philippine
American Cigar & Cigarette Manufacturing Co., Inc. guilty of unfair labor practice and ordering
said respondent to reinstate Apolonio San Jose, immediately after his decision shall have become
final, with backpay. It is so ordered..
CARLOS L. OCTAVIO, Petitioner,
vs.
PIDLIPPINE LONG DISTANCE TELEPHONE COMPANY, Respondent.
D E C I S I O N
DEL CASTILLO, J .:
Every Collective Bargaining Agreement (CBA) shall provide a grievance machinery to which all
disputes arising from its implementation or interpretation will be subjected to compulsory
negotiations. This essential feature of a CBA provides the parties with a simple, inexpensive and
expedient system of finding reasonable and acceptable solutions to disputes and helps in the
attainment of a sound and stable industrial peace.
Before us is a Petition for Review on Certiorari
1
assailing the August 31, 2006 Decision
2
of the
Court of Appeals (CA) in CA-G.R. SP No. 93578, which dismissed petitioner Carlos L.
Octavio's (Octavio) Petition for Certiorari
3
assailing the September 30, 2005 Resolution
4
of the
National Labor Relations Commission (NLRC). Said NLRC Resolution affirmed the August 30,
2004 Decision
5
of the Labor Arbiter which dismissed Octavio's Complaint for payment of salary
increases against respondent Philippine Long Distance Company (PLDT). Likewise assailed in
this Petition is the November 15, 2006 Resolution
6
which denied Octavios Motion for
Reconsideration.
7

Factual Antecedents
On May 28, 1999, PLDT and Gabay ng Unyon sa Telekominaksyon ng mga Superbisor (GUTS)
entered into a CBA covering the period January 1, 1999 to December 31, 2001 (CBA of 1999-
2001). Article VI, Section I thereof provides:
Section 1. The COMPANY agrees to grant the following across-theboard salary increase during
the three years covered by this Agreement to all employees covered by the bargaining unit as of
the given dates:
Effective January 1, 1999 10% of basic wage or P2,000.00 whichever is higher;
Effective January 1, 2000 11% of basic wage or P2,250.00 whichever is higher;
Effective January 1, 2001 12% of basic wage or P2,500.00 whichever is higher.
8

On October 1, 2000, PLDT hired Octavio as Sales System Analyst I on a probationary status. He
became a member of GUTS. When Octavio was regularized on January 1, 2001, he was
receiving a monthly basic salary of P10,000.00. On February 1, 2002, he was promoted to the
position of Sales System Analyst 2 and his salary was increased to P13,730.00.
On May 31, 2002, PLDT and GUTS entered into another CBA covering the period January 1,
2002 to December 31, 2004 (CBA of 2002-2004) which provided for the following salary
increases: 8% of basic wage or P2,000.00 whichever is higher for the first year (2002); 10% of
basic wage or P2,700.00 whichever is higher for the second year (2003); and, 10% of basic wage
or P2,400.00 whichever is higher for the third year (2004).
9

Claiming that he was not given the salary increases of P2,500.00 effective January 1, 2001 and
P2,000.00 effective January 1, 2002, Octavio wrote the President of GUTS, Adolfo Fajardo
(Fajardo).
10
Acting thereon and on similar grievances from other GUTS members, Fajardo wrote
the PLDT Human Resource Head to inform management of the GUTS members claim for
entitlement to the across-the-board salary increases.
11

Accordingly, the Grievance Committee convened on October 7, 2002 consisting of
representatives from PLDT and GUTS. The Grievance Committee, however, failed to reach an
agreement. In effect, it denied Octavios demand for salary increases. The Resolution
(Committee Resolution), reads as follows:
October 7, 2002
UNION ISSUE :
1. Mr. Carlos L. Octavio, Sales System Analyst I, CCIM-Database, was promoted
to S2 from S1 last February 01, 2002. He claimed that the whole P2,000 (1st yr.
GUTS-CBA increase) was not given to him.
2. He was hired as a probationary employee on October 01, 2000 and was
regularized on January 01, 2001. He claimed that Management failed to grant him
the GUTS-CBA increase last January 2001.
MANAGEMENT POSITION :
Issue # 1:
A) Promotional Policy: adjustment of basic monthly salary to the minimum salary
of the new position.
B) Mr. Octavios salary at the time of his promotion and before the conclusion of
the GUTS CBA was P10,000.00.
C) Upon the effectivity of his promotion on February 1, 2002, his basic monthly
salary was adjusted to P13,730.00, the minimum salary of the new position.
D) In June 2002, the GUTS-CBA was concluded and Mr. Octavios basic salary
was recomputed to include the P2,000.00 1st year increase retroactive January
2002. The resulting basic salary was P12,000.00.
E) Applying the above-mentioned policy, Mr. Octavios basic salary was adjusted
to the minimum salary of the new position, which is P13,730.00.
Issue # 2:
All regularized supervisory employees as of January 1 are not entitled to the GUTS CBA
increase. However, as agreed with GUTS in the grievance case of 18 personnel of International
& Luzon Core Network Management Center, probationary employees who were hired outside of
PLDT and regularized as supervisors/management personnel on January 1, 2002 shall be entitled
to GUTS CBA. This decision shall be applied prospectively and all previous similar cases are not
covered.
RESOLUTION :
After protracted deliberation of these issues, the committee failed to reach an agreement. Hence,
Management position deemed adopted.
MANAGEMENT UNION
_______(signed)_______
WILFREDO A. GUADIA
_______(signed)_______
ADOLFO L.FAJARDO
_______(signed)_______
ROSALINDA S. RUIZ
_______(signed)_______
CONFESOR A. ESPIRITU
_______(signed)_______
ALEJANDRO C. FABIAN
_______(signed)_______
CHARLITO A. AREVALO
12

Aggrieved, Octavio filed before the Arbitration Branch of the NLRC a Complaint for payment of
said salary increases.
Ruling of the Labor Arbiter
Octavio claimed entitlement to salary increases per the CBAs of 1999-2001 and 2002-2004. He
insisted that when he was regularized as a supervisory employee on January 1, 2001, he became
entitled to receive the across-the-board increase of P2,500.00 as provided for under the CBA of
1999-2001 which took effect on January 1, 1999. Then pursuant to the CBA of 2002-2004, he
should have received an additional increase of P2,000.00 apart from the merit increase of
P3,730.00 which was given him due to his promotion on February 1, 2002. However, PLDT
unilaterally decided to deem as included in the said P3,730.00 the P2,000.00 across-the-board
increase for 2002 as stipulated in the CBA of 2002-2004. This, according to Octavio, amounts to
diminution of benefits. Moreover, Octavio averred that the CBA cannot be the subject of further
negotiation as it has the force of law between the parties. Finally, Octavio claimed that PLDT
committed an act of unfair labor practice because, while it granted the claim for salary increase
of 18 supervisory employees who were regularized on January 1, 2002 and onwards, it
discriminated against him by refusing to grant him the same salary increase. He thus prayed for
an additional award of damages and attorneys fees.
PLDT countered that the issues advanced by Octavio had already been resolved by the Union-
Management Grievance Committee when it denied his claims through the Committee
Resolution. Moreover, the grant of across-the board salary increase for those who were
regularized starting January 1, 2002 and the exclusion thereto of those who were regularized on
January 1, 2001, do not constitute an act of unfair labor practice as would result in any
discrimination or encourage or discourage membership in a labor organization. In fact, when the
Union-Management Grievance Committee came up with the Committee Resolution, they
considered the same as the most practicable and reasonable solution for both management and
union. At any rate, the said Committee Resolution had already become final and conclusive
between the parties for failure of Octavio to elevate the same to the proper forum. In addition,
PLDT claimed that the NLRC has no jurisdiction to hear and decide Octavios claims.
In a Decision dated August 30, 2004, the Labor Arbiter dismissed the Complaint of Octavio and
upheld the Committee Resolution.
Ruling of the National Labor Relations Commission
Upon Octavios appeal, the NLRC, in its September 30, 2005 Resolution, affirmed the Labor
Arbiters Decision. It upheld the Labor Arbiters finding that Octavios salary had already been
adjusted in accordance with the provisions of the CBA. The NLRC further ruled that it has no
jurisdiction to decide the issues presented by Octavio, as the same involved the interpretation and
implementation of the CBA. According to it, Octavio should have brought his claim before the
proper body as provided in the 2002-2004 CBAs provision on grievance machinery and
procedure.
Octavios Motion for Reconsideration was likewise dismissed by the NLRC in its November 21,
2005 Resolution.
13

Ruling of the Court of Appeals
Octavio thus filed a Petition for Certiorari
14
which the CA found to be without merit. In its
August 31, 2006 Decision,
15
the CA declared the Committee Resolution to be binding on
Octavio, he being a member of GUTS, and because he failed to question its validity and
enforceability.
In his Motion for Reconsideration,
16
Octavio disclaimed his alleged failure to question the
Committee Resolution by emphasizing that he filed a Complaint before the NLRC against
PLDT. However, the CA denied Octavios Motion for Reconsideration in its November 15, 2006
Resolution.
17

Issues
Hence, Octavio filed this Petition raising the following issues for our consideration:
a. Whether x x x the employer and bargaining representative may amend the provisions
of the collective bargaining agreement without the consent and approval of the
employees;
b. If so, whether the said agreement is binding [on] the employees;
c. Whether x x x merit increases may be awarded simultaneously with increases given in
the Collective Bargaining Agreement;
d. Whether x x x damages may be awarded to the employee for violation by the employer
of its commitment under its existing collective bargaining agreement.
18

Octavio submits that the CA erred in upholding the Committee Resolution which denied his
claim for salary increases but granted the same request of 18 other similarly situated employees.
He likewise asserts that both PLDT and GUTS had the duty to strictly implement the CBA salary
increases; hence, the Committee Resolution, which effectively resulted in the modification of the
CBAs provision on salary increases, is void.
Octavio also insists that PLDT is bound to grant him the salary increase of P2,000.00 for the year
2002 on top of the merit increase given to him by reason of his promotion. It is his stance that
merit increases are distinct and separate from across-the-board salary increases provided for
under the CBA.
Our Ruling
The Petition has no merit.
Under Article 260
19
of the Labor Code, grievances arising from the interpretation or
implementation of the parties CBA should be resolved in accordance with the grievance
procedure embodied therein. It also provides that all unsettled grievances shall be automatically
referred for voluntary arbitration as prescribed in the CBA.
In its Memorandum,
20
PLDT set forth the grievance machinery and procedure provided under
Article X of the CBA of 2002-2004, viz:
Section 1. GRIEVANCE MACHINERY - there shall be a Union-Management Grievance
Committee composed of three (3) Union representatives designated by the UNION Board of
Directors and three (3) Management representatives designated by the company President. The
committee shall act upon any grievance properly processed in accordance with the prescribed
procedure. The Union representatives to the Committee shall not lose pay for attending meetings
where Management representatives are in attendance.
Section 2. GRIEVANCE PROCEDURE - The parties agree that all disputes between labor and
management may be settled through friendly negotiations; that the parties have the same interest
in the continuity of work until all points in dispute shall have been discussed and settled; 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 these principles, the parties agree to
observe the following grievance procedures.
Step 1. Any employee (or group of employees) who believes that he has a justifiable grievance
shall present the matter initially to his division head, or if the division is involved in the
grievance, to the company official next higher to the division head (the local manager in the
provincial exchanges) not later that fifteen (15) days after the occurrence of the incident giving
rise to the grievance. The initial presentation shall be made to the division head either by the
aggrieved party himself or by the Union Steward or by any Executive Officer of the Union who
is not a member of the grievance panel.1wphi1 The initial presentation may be made orally or
in writing.
Step 2. Any party who is not satisfied with the resolution of the grievance at Step 1 may appeal
in writing to the Union-Management Grievance Committee within seven (7) days from the date
of receipt of the department heads decision.
Step 3. If the grievance is not settled either because of deadlock or the failure of the
committee to decide the matter, the grievance shall be transferred to a Board of
Arbitrators for the final decision. The Board shall be composed of three (3) arbitrators, one to
be nominated by the Union, another to be nominated by the Management, and the third to be
selected by the management and union nominees. The decision of the board shall be final and
binding both the company and the Union in accordance with law. Expenses of arbitration shall be
divided equally between the Company and the Union.
21
(Emphasis supplied)
Indisputably, the present controversy involves the determination of an employees salary
increases as provided in the CBAs. When Octavios claim for salary increases was referred to the
Union-Management Grievance Committee, the clear intention of the parties was to resolve their
differences on the proper interpretation and implementation of the pertinent provisions of the
CBAs. And in accordance with the procedure prescribed therein, the said committee made up of
representatives of both the union and the management convened. Unfortunately, it failed to reach
an agreement. Octavios recourse pursuant to the CBA was to elevate his grievance to the Board
of Arbitrators for final decision. Instead, nine months later, Octavio filed a Complaint before the
NLRC.
It is settled that "when parties have validly agreed on a procedure for resolving grievances and to
submit a dispute to voluntary arbitration then that procedure should be strictly observed."
22

Moreover, we have held time and again that "before a party is allowed to seek the intervention of
the court, it is a precondition that he should have availed of all the means of administrative
processes afforded him. Hence, if a remedy within the administrative machinery can still be
resorted to by giving the administrative officer concerned every opportunity to decide on a
matter that comes within his jurisdiction, then such remedy should be exhausted first before the
courts judicial power can be sought. The premature invocation of the courts judicial
intervention is fatal to ones cause of action."
23
"The underlying principle of the rule on
exhaustion of administrative remedies rests on the presumption that when the administrative
body, or grievance machinery, is afforded a chance to pass upon the matter, it will decide the
same correctly."
24

By failing to question the Committee Resolution through the proper procedure prescribed in the
CBA, that is, by raising the same before a Board of Arbitrators, Octavio is deemed to have
waived his right to question the same. Clearly, he departed from the grievance procedure
mandated in the CBA and denied the Board of Arbitrators the opportunity to pass upon a matter
over which it has jurisdiction. Hence, and as correctly held by the CA, Octavios failure to assail
the validity and enforceability of the Committee Resolution makes the same binding upon him.
On this score alone, Octavios recourse to the labor tribunals below, as well as to the CA, and,
finally, to this Court, must therefore fail.
At any rate, Octavio cannot claim that the Committee Resolution is not valid, binding and
conclusive as to him for being a modification of the CBA in violation of Article 253
25
of the
Labor Code. It bears to stress that the said resolution is a product of the grievance procedure
outlined in the CBA itself. It was arrived at after the management and the union through their
respective representatives conducted negotiations in accordance with the CBA. On the other
hand, Octavio never assailed the competence of the grievance committee to take cognizance of
his case. Neither did he question the authority or credibility of the union representatives; hence,
the latter are deemed to have properly bargained on his behalf since "unions are the agent of its
members for the purpose of securing just and fair wages and good working conditions."
26
In fine,
it cannot be gainsaid that the Committee Resolution is a modification of the CBA. Rather, it only
provides for the proper implementation of the CBA provision respecting salary increases.
Finally, Octavios argument that the denial of his claim for salary increases constitutes a
violation of Article 100
27
of the Labor Code is devoid of merit. Even assuming that there has
been a diminution of benefits on his part, Article 100 does not prohibit a union from offering and
agreeing to reduce wages and benefits of the employees as the right to free collective bargaining
includes the right to suspend it.
28
PLDT averred that one of the reasons why Octavios salary was
recomputed as to include in his salary of P13,730.00 the P2,000.00 increase for 2002 is to avoid
salary distortion. At this point, it is well to emphasize that bargaining should not be equated to an
"adversarial litigation where rights and obligations are delineated and remedies applied."
29

Instead, it covers a process of finding a reasonable and acceptable solution to stabilize labor-
management relations to promote stable industrial peace.
30
Clearly, the Committee Resolution
was arrived at after considering the intention of both PLDT and GUTS to foster industrial peace.
All told, we find no error on the part of the Labor Arbiter, the NLRC and the CA in unanimously
upholding the validity and enforceability of the Grievance Committee Resolution dated October
7, 2002.
WHEREFORE, the petition is DENIED. The August 31, 2006 Decision and November 15,
2006 Resolution of the Court of Appeals in CA-G.R. SP No. 93578 are AFFIRMED.
SO ORDERED.
GOYA, INC., Petitioner,
vs.
GOYA, INC. EMPLOYEES UNION-FFW, Respondent.
D E C I S I O N
PERALTA, J .:
This petition for review on certiorari under Rule 45 of the Rules of Civil Procedure seeks to
reverse and set aside the June 16, 2005 Decision
1
and October 12, 2005 Resolution
2
of the Court
of Appeals in CA-G.R. SP No. 87335, which sustained the October 26, 2004 Decision
3
of
Voluntary Arbitrator Bienvenido E. Laguesma, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered declaring that the Company is NOT guilty of unfair
labor practice in engaging the services of PESO.
The company is, however, directed to observe and comply with its commitment as it pertains to
the hiring of casual employees when necessitated by business circumstances.
4

The facts are simple and appear to be undisputed.
Sometime in January 2004, petitioner Goya, Inc. (Company), a domestic corporation engaged in
the manufacture, importation, and wholesale of top quality food products, hired contractual
employees from PESO Resources Development Corporation (PESO) to perform temporary and
occasional services in its factory in Parang, Marikina City. This prompted respondent Goya, Inc.
Employees UnionFFW (Union) to request for a grievance conference on the ground that the
contractual workers do not belong to the categories of employees stipulated in the existing
Collective Bargaining Agreement (CBA).
5
When the matter remained unresolved, the grievance
was referred to the National Conciliation and Mediation Board (NCMB) for voluntary
arbitration.
During the hearing on July 1, 2004, the Company and the Union manifested before Voluntary
Arbitrator (VA) Bienvenido E. Laguesma that amicable settlement was no longer possible;
hence, they agreed to submit for resolution the solitary issue of "[w]hether or not the Company is
guilty of unfair labor acts in engaging the services of PESO, a third party service provider, under
the existing CBA, laws, and jurisprudence."
6
Both parties thereafter filed their respective
pleadings.
The Union asserted that the hiring of contractual employees from PESO is not a management
prerogative and in gross violation of the CBA tantamount to unfair labor practice (ULP). It noted
that the contractual workers engaged have been assigned to work in positions previously handled
by regular workers and Union members, in effect violating Section 4, Article I of the CBA,
which provides for three categories of employees in the Company, to wit:
Section 4. Categories of Employees. The parties agree on the following categories of
employees:
(a) Probationary Employee. One hired to occupy a regular rank-and-file position in the
Company and is serving a probationary period. If the probationary employee is hired or comes
from outside the Company (non-Goya, Inc. employee), he shall be required to undergo a
probationary period of six (6) months, which period, in the sole judgment of management, may
be shortened if the employee has already acquired the knowledge or skills required of the job. If
the employee is hired from the casual pool and has worked in the same position at any time
during the past two (2) years, the probationary period shall be three (3) months.
(b) Regular Employee. An employee who has satisfactorily completed his probationary period
and automatically granted regular employment status in the Company.
(c) Casual Employee, One hired by the Company to perform occasional or seasonal work
directly connected with the regular operations of the Company, or one hired for specific projects
of limited duration not connected directly with the regular operations of the Company.
It was averred that the categories of employees had been a part of the CBA since the 1970s and
that due to this provision, a pool of casual employees had been maintained by the Company from
which it hired workers who then became regular workers when urgently necessary to employ
them for more than a year. Likewise, the Company sometimes hired probationary employees
who also later became regular workers after passing the probationary period. With the hiring of
contractual employees, the Union contended that it would no longer have probationary and
casual employees from which it could obtain additional Union members; thus, rendering inutile
Section 1, Article III (Union Security) of the CBA, which states:
Section 1. Condition of Employment. As a condition of continued employment in the
Company, all regular rank-and-file employees shall remain members of the Union in good
standing and that new employees covered by the appropriate bargaining unit shall automatically
become regular employees of the Company and shall remain members of the Union in good
standing as a condition of continued employment.
The Union moreover advanced that sustaining the Companys position would easily weaken and
ultimately destroy the former with the latters resort to retrenchment and/or retirement of
employees and not filling up the vacant regular positions through the hiring of contractual
workers from PESO, and that a possible scenario could also be created by the Company wherein
it could "import" workers from PESO during an actual strike.
In countering the Unions allegations, the Company argued that: (a) the law expressly allows
contracting and subcontracting arrangements through Department of Labor and Employment
(DOLE) Order No. 18-02; (b) the engagement of contractual employees did not, in any way,
prejudice the Union, since not a single employee was terminated and neither did it result in a
reduction of working hours nor a reduction or splitting of the bargaining unit; and (c) Section 4,
Article I of the CBA merely provides for the definition of the categories of employees and does
not put a limitation on the Companys right to engage the services of job contractors or its
management prerogative to address temporary/occasional needs in its operation.
On October 26, 2004, VA Laguesma dismissed the Unions charge of ULP for being purely
speculative and for lacking in factual basis, but the Company was directed to observe and
comply with its commitment under the CBA. The VA opined:
We examined the CBA provision Section 4, Article I of the CBA allegedly violated by the
Company and indeed the agreement prescribes three (3) categories of employees in the Company
and provides for the definition, functions and duties of each. Material to the case at hand is the
definition as regards the functions of a casual employee described as follows:
Casual Employee One hired by the COMPANY to perform occasional or seasonal work
directly connected with the regular operations of the COMPANY, or one hired for specific
projects of limited duration not connected directly with the regular operations of the
COMPANY.
While the foregoing agreement between the parties did eliminate managements prerogative of
outsourcing parts of its operations, it serves as a limitation on such prerogative particularly if it
involves functions or duties specified under the aforequoted agreement. It is clear that the parties
agreed that in the event that the Company needs to engage the services of additional workers
who will perform "occasional or seasonal work directly connected with the regular operations of
the COMPANY," or "specific projects of limited duration not connected directly with the regular
operations of the COMPANY", the Company can hire casual employees which is akin to
contractual employees. If we note the Companys own declaration that PESO was engaged to
perform "temporary or occasional services" (See the Companys Position Paper, at p. 1), then it
should have directly hired the services of casual employees rather than do it through PESO.
It is evident, therefore, that the engagement of PESO is not in keeping with the intent and spirit
of the CBA provision in question. It must, however, be stressed that the right of management to
outsource parts of its operations is not totally eliminated but is merely limited by the CBA.
Given the foregoing, the Companys engagement of PESO for the given purpose is indubitably a
violation of the CBA.
7

While the Union moved for partial reconsideration of the VA Decision,
8
the Company
immediately filed a petition for review
9
before the Court of Appeals (CA) under Rule 43 of the
Revised Rules of Civil Procedure to set aside the directive to observe and comply with the CBA
commitment pertaining to the hiring of casual employees when necessitated by business
circumstances. Professing that such order was not covered by the sole issue submitted for
voluntary arbitration, the Company assigned the following errors:
THE HONORABLE VOLUNTARY ARBITRATOR EXCEEDED HIS POWER WHICH WAS
EXPRESSLY GRANTED AND LIMITED BY BOTH PARTIES IN RULING THAT THE
ENGAGEMENT OF PESO IS NOT IN KEEPING WITH THE INTENT AND SPIRIT OF THE
CBA.
10

THE HONORABLE VOLUNTARY ARBITRATOR COMMITTED A PATENT AND
PALPABLE ERROR IN DECLARING THAT THE ENGAGEMENT OF PESO IS NOT IN
KEEPING WITH THE INTENT AND SPIRIT OF THE CBA.
11

On June 16, 2005, the CA dismissed the petition. In dispensing with the merits of the
controversy, it held:
This Court does not find it arbitrary on the part of the Hon. Voluntary Arbitrator in ruling that
"the engagement of PESO is not in keeping with the intent and spirit of the CBA." The said
ruling is interrelated and intertwined with the sole issue to be resolved that is, "Whether or not
the Company is guilty of unfair labor practice in engaging the services of PESO, a third party
service provider, under existing CBA, laws, and jurisprudence." Both issues concern the
engagement of PESO by the Company which is perceived as a violation of the CBA and which
constitutes as unfair labor practice on the part of the Company. This is easily discernible in the
decision of the Hon. Voluntary Arbitrator when it held:
x x x x While the engagement of PESO is in violation of Section 4, Article I of the CBA, it does
not constitute unfair labor practice as it (sic) not characterized under the law as a gross violation
of the CBA. Violations of a CBA, except those which are gross in character, shall no longer be
treated as unfair labor practice. Gross violations of a CBA means flagrant and/or malicious
refusal to comply with the economic provisions of such agreement. x x x
Anent the second assigned error, the Company contends that the Hon. Voluntary Arbitrator erred
in declaring that the engagement of PESO is not in keeping with the intent and spirit of the CBA.
The Company justified its engagement of contractual employees through PESO as a management
prerogative, which is not prohibited by law. Also, it further alleged that no provision under the
CBA limits or prohibits its right to contract out certain services in the exercise of management
prerogatives.
Germane to the resolution of the above issue is the provision in their CBA with respect to the
categories of the employees:
x x x x
A careful reading of the above-enumerated categories of employees reveals that the PESO
contractual employees do not fall within the enumerated categories of employees stated in the
CBA of the parties. Following the said categories, the Company should have observed and
complied with the provision of their CBA. Since the Company had admitted that it engaged the
services of PESO to perform temporary or occasional services which is akin to those performed
by casual employees, the Company should have tapped the services of casual employees instead
of engaging PESO.
In justifying its act, the Company posits that its engagement of PESO was a management
prerogative. It bears stressing that a management prerogative refers to the right of the employer
to regulate all aspects of employment, such as the freedom to prescribe work assignments,
working methods, processes to be followed, regulation regarding transfer of employees,
supervision of their work, lay-off and discipline, and dismissal and recall of work, presupposing
the existence of employer-employee relationship. On the basis of the foregoing definition, the
Companys engagement of PESO was indeed a management prerogative. This is in consonance
with the pronouncement of the Supreme Court in the case of Manila Electric Company vs.
Quisumbing where it ruled that contracting out of services is an exercise of business judgment or
management prerogative.
This management prerogative of contracting out services, however, is not without limitation. In
contracting out services, the management must be motivated by good faith and the contracting
out should not be resorted to circumvent the law or must not have been the result of malicious
arbitrary actions. In the case at bench, the CBA of the parties has already provided for the
categories of the employees in the Companysestablishment. These categories of employees
particularly with respect to casual employees serve as limitation to the Companys prerogative to
outsource parts of its operations especially when hiring contractual employees. As stated earlier,
the work to be performed by PESO was similar to that of the casual employees. With the
provision on casual employees, the hiring of PESO contractual employees, therefore, is not in
keeping with the spirit and intent of their CBA. (Citations omitted)
12

The Company moved to reconsider the CA Decision,
13
but it was denied;
14
hence, this petition.
Incidentally, on July 16, 2009, the Company filed a Manifestation
15
informing this Court that its
stockholders and directors unanimously voted to shorten the Companys corporate existence only
until June 30, 2006, and that the three-year period allowed by law for liquidation of the
Companys affairs already expired on June 30, 2009. Referring to Gelano v. Court of Appeals,
16

Public Interest Center, Inc. v. Elma,
17
and Atienza v. Villarosa,
18
it urged Us, however, to still
resolve the case for future guidance of the bench and the bar as the issue raised herein allegedly
calls for a clarification of a legal principle, specifically, whether the VA is empowered to rule on
a matter not covered by the issue submitted for arbitration.
Even if this Court would brush aside technicality by ignoring the supervening event that renders
this case moot and academic
19
due to the permanent cessation of the Companys business
operation on June 30, 2009, the arguments raised in this petition still fail to convince Us.
We confirm that the VA ruled on a matter that is covered by the sole issue submitted for
voluntary arbitration. Resultantly, the CA did not commit serious error when it sustained the
ruling that the hiring of contractual employees from PESO was not in keeping with the intent and
spirit of the CBA. Indeed, the opinion of the VA is germane to, or, in the words of the CA,
"interrelated and intertwined with," the sole issue submitted for resolution by the parties. This
being said, the Companys invocation of Sections 4 and 5, Rule IV
20
and Section 5, Rule VI
21
of
the Revised Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings dated
October 15, 2004 issued by the NCMB is plainly out of order.
Likewise, the Company cannot find solace in its cited case of Ludo & Luym Corporation v.
Saornido.
22
In Ludo, the company was engaged in the manufacture of coconut oil, corn starch,
glucose and related products. In the course of its business operations, it engaged the arrastre
services of CLAS for the loading and unloading of its finished products at the wharf. The arrastre
workers deployed by CLAS to perform the services needed were subsequently hired, on different
dates, as Ludos regular rank-and-file employees. Thereafter, said employees joined LEU, which
acted as the exclusive bargaining agent of the rank-and-file employees. When LEU entered into a
CBA with Ludo, providing for certain benefits to the employees (the amount of which vary
according to the length of service rendered), it requested to include in its members period of
service the time during which they rendered arrastre services so that they could get higher
benefits. The matter was submitted for voluntary arbitration when Ludo failed to act. Per
submission agreement executed by both parties, the sole issue for resolution was the date of
regularization of the workers. The VA Decision ruled that: (1) the subject employees were
engaged in activities necessary and desirable to the business of Ludo, and (2) CLAS is a labor-
only contractor of Ludo. It then disposed as follows: (a) the complainants were considered
regular employees six months from the first day of service at CLAS; (b) the complainants, being
entitled to the CBA benefits during the regular employment, were awarded sick leave, vacation
leave, and annual wage and salary increases during such period; (c) respondents shall pay
attorneys fees of 10% of the total award; and (d) an interest of 12% per annum or 1% per month
shall be imposed on the award from the date of promulgation until fully paid. The VA added that
all separation and/or retirement benefits shall be construed from the date of regularization subject
only to the appropriate government laws and other social legislation. Ludo filed a motion for
reconsideration, but the VA denied it. On appeal, the CA affirmed in toto the assailed decision;
hence, a petition was brought before this Court raising the issue, among others, of whether a
voluntary arbitrator can award benefits not claimed in the submission agreement. In denying the
petition, We ruled:
Generally, the arbitrator is expected to decide only those questions expressly delineated by the
submission agreement. Nevertheless, the arbitrator can assume that he has the necessary power
to make a final settlement since arbitration is the final resort for the adjudication of disputes. The
succinct reasoning enunciated by the CA in support of its holding, that the Voluntary Arbitrator
in a labor controversy has jurisdiction to render the questioned arbitral awards, deserves our
concurrence, thus:
In general, the arbitrator is expected to decide those questions expressly stated and limited in the
submission agreement. However, since arbitration is the final resort for the adjudication of
disputes, the arbitrator can assume that he has the power to make a final settlement. Thus,
assuming that the submission empowers the arbitrator to decide whether an employee was
discharged for just cause, the arbitrator in this instance can reasonably assume that his powers
extended beyond giving a yes-or-no answer and included the power to reinstate him with or
without back pay.
In one case, the Supreme Court stressed that "xxx the Voluntary Arbitrator had plenary
jurisdiction and authority to interpret the agreement to arbitrate and to determine the scope of his
own authority subject only, in a proper case, to the certiorari jurisdiction of this Court. The
Arbitrator, as already indicated, viewed his authority as embracing not merely the determination
of the abstract question of whether or not a performance bonus was to be granted but also, in the
affirmative case, the amount thereof.
By the same token, the issue of regularization should be viewed as two-tiered issue. While the
submission agreement mentioned only the determination of the date or regularization, law and
jurisprudence give the voluntary arbitrator enough leeway of authority as well as adequate
prerogative to accomplish the reason for which the law on voluntary arbitration was created
speedy labor justice. It bears stressing that the underlying reason why this case arose is to settle,
once and for all, the ultimate question of whether respondent employees are entitled to higher
benefits. To require them to file another action for payment of such benefits would certainly
undermine labor proceedings and contravene the constitutional mandate providing full protection
to labor.
23

Indubitably, Ludo fortifies, not diminishes, the soundness of the questioned VA Decision. Said
case reaffirms the plenary jurisdiction and authority of the voluntary arbitrator to interpret the
CBA and to determine the scope of his/her own authority. Subject to judicial review, the leeway
of authority as well as adequate prerogative is aimed at accomplishing the rationale of the law on
voluntary arbitration speedy labor justice. In this case, a complete and final adjudication of the
dispute between the parties necessarily called for the resolution of the related and incidental issue
of whether the Company still violated the CBA but without being guilty of ULP as, needless to
state, ULP is committed only if there is gross violation of the agreement.
Lastly, the Company kept on harping that both the VA and the CA conceded that its engagement
of contractual workers from PESO was a valid exercise of management prerogative. It is
confused. To emphasize, declaring that a particular act falls within the concept of management
prerogative is significantly different from acknowledging that such act is a valid exercise thereof.
What the VA and the CA correctly ruled was that the Companys act of contracting
out/outsourcing is within the purview of management prerogative. Both did not say, however,
that such act is a valid exercise thereof. Obviously, this is due to the recognition that the CBA
provisions agreed upon by the Company and the Union delimit the free exercise of management
prerogative pertaining to the hiring of contractual employees. Indeed, the VA opined that "the
right of the management to outsource parts of its operations is not totally eliminated but is
merely limited by the CBA," while the CA held that "this management prerogative of contracting
out services, however, is not without limitation. x x x These categories of employees particularly
with respect to casual employees serve as limitation to the Companys prerogative to outsource
parts of its operations especially when hiring contractual employees."
A collective bargaining agreement is the law between the parties:
It is familiar and fundamental doctrine in labor law that the CBA is the law between the parties
and they are obliged to comply with its provisions. We said so in Honda Phils., Inc. v. Samahan
ng Malayang Manggagawa sa Honda:
A collective bargaining agreement or CBA refers to the negotiated contract between a legitimate
labor organization and the employer concerning wages, hours of work and all other terms and
conditions of employment in a bargaining unit.1wphi1 As in all contracts, the parties in a CBA
may establish such stipulations, clauses, terms and conditions as they may deem convenient
provided these are not contrary to law, morals, good customs, public order or public policy.
Thus, where the CBA is clear and unambiguous, it becomes the law between the parties and
compliance therewith is mandated by the express policy of the law.
Moreover, if the terms of a contract, as in a CBA, are clear and leave no doubt upon the intention
of the contracting parties, the literal meaning of their stipulations shall control. x x x.
24

In this case, Section 4, Article I (on categories of employees) of the CBA between the Company
and the Union must be read in conjunction with its Section 1, Article III (on union security).
Both are interconnected and must be given full force and effect. Also, these provisions are clear
and unambiguous. The terms are explicit and the language of the CBA is not susceptible to any
other interpretation. Hence, the literal meaning should prevail. As repeatedly held, the exercise
of management prerogative is not unlimited; it is subject to the limitations found in law,
collective bargaining agreement or the general principles of fair play and justice
25
Evidently, this
case has one of the restrictions- the presence of specific CBA provisions-unlike in San Miguel
Corporation Employees Union-PTGWO v. Bersamira,
26
De Ocampo v. NLRC,
27
Asian Alcohol
Corporation v. NLRC,
28
and Serrano v. NLRC
29
cited by the Company. To reiterate, the CBA is
the norm of conduct between the parties and compliance therewith is mandated by the express
policy of the law.
30

WHEREFORE, the petition is DENIED. The assailed June 16, 2005 Decision, as well as the
October 12, 2005 Resolution of the Court of Appeals, which sustained the October 26, 2004
Decision of the Voluntary Arbitrator, are hereby AFFIRMED.
SO ORDERED.
ACE NAVIGATION CO., INC., VELA INTERNATIONAL MARINE LTD., and/or
RODOLFO PAMINTUAN, Petitioners,
vs.
TEODORICO FERNANDEZ, assisted by GLENITA FERNANDEZ, Respondent.
D E C I S I O N
BRION, J .:
For resolution is the petition for review on certiorari
1
which seeks to nullify the decision
2
dated
September 22, 2010 and the resolution
3
dated May 26,2011 ofthe Court of Appeals (CA) in CA-
G.R. SP No. 112081.
The Antecedents
On October 9, 2008, seaman Teodorico Fernandez (Fernandez), assisted by his wife, Glenita
Fernandez, filed with the National Labor Relations Commission (NLRC) a complaint for
disability benefits, with prayer for moral and exemplary damages, plus attorneys fees, against
Ace Navigation Co., Inc., Vela International Marine Ltd., and/or Rodolfo Pamintuan
(petitioners).
The petitioners moved to dismiss the complaint,
4
contending that the labor arbiter had no
jurisdiction over the dispute. They argued that exclusive original jurisdiction is with the
voluntary arbitrator or panel of voluntary arbitrators, pursuant to Section 29 of the POEA
Standard Employment Contract (POEA-SEC), since the parties are covered by the AMOSUP-
TCC or AMOSUP-VELA (as later cited by the petitioners) collective bargaining agreement
(CBA). Under Section 14 of the CBA, a dispute between a seafarer and the company shall be
settled through the grievance machinery and mandatory voluntary arbitration.
Fernandez opposed the motion.
5
He argued that inasmuch as his complaint involves a money
claim, original and exclusive jurisdiction over the case is vested with the labor arbiter.
The Compulsory Arbitration Rulings
On December 9, 2008, Labor Arbiter Romelita N. Rioflorido denied the motion to dismiss,
holding that under Section 10 of Republic Act (R.A.) No. 8042, the Migrant Workers and
Overseas Filipinos Act of 1995, the labor arbiter has original and exclusive jurisdiction over
money claims arising out of an employer-employee relationship or by virtue of any law or
contract, notwithstanding any provision of law to the contrary.
6

The petitioners appealed to the NLRC, but the labor agency denied the appeal. It agreed with the
labor arbiter that the case involves a money claim and is within the jurisdiction of the labor
arbiter, in accordance with Section 10 of R.A. No. 8042. Additionally, it declared that the denial
of the motion to dismiss is an interlocutory order which is not appealable. Accordingly, it
remanded the case to the labor arbiter for further proceedings. The petitioners moved for
reconsideration, but the NLRC denied the motion, prompting the petitioners to elevate the case to
the CA through a petition for certiorari under Rule 65 of the Rules of Court.
The CA Decision
Through its decision of September 22, 2010,
7
the CA denied the petition on procedural and
substantive grounds.
Procedurally, it found the petitioners to have availed of the wrong remedy when they challenged
the labor arbiters denial of their motion to dismiss by way of an appeal to the NLRC. It stressed
that pursuant to the NLRC rules,
8
an order denying a motion to dismiss is interlocutory and is not
subject to appeal.
On the merits of the case, the CA believed that the petition cannot also prosper. It rejected the
petitioners submission that the grievance and voluntary arbitration procedure of the parties
CBA has jurisdiction over the case, to the exclusion of the labor arbiter and the NLRC. As the
labor arbiter and the NLRC did, it opined that under Section 10 of R.A. No. 8042, the labor
arbiter has the original and exclusive jurisdiction to hear Fernandezs money claims.
Further, the CA clarified that while the law
9
allows parties to submit to voluntary arbitration
other labor disputes, including matters falling within the original and exclusive jurisdiction of the
labor arbiters under Article 217 of the Labor Code as this Court recognized in Vivero v. Court of
Appeals,
10
the parties submission agreement must be expressed in unequivocal language. It
found no such unequivocal language in the AMOSUP/TCC CBA that the parties agreed to
submit money claims or, more specifically, claims for disability benefits to voluntary arbitration.
The CA also took note of the POEA-SEC
11
which provides in its Section 29 that in cases of
claims and disputes arising from a Filipino seafarers employment, the parties covered by a CBA
shall submit the claim or dispute to the original and exclusive jurisdiction of the voluntary
arbitrator or panel of voluntary arbitrators. The CA explained that the relevant POEA-SEC
provisions should likewise be qualified by the ruling in the Vivero case, the Labor Code, and
other applicable laws and jurisprudence.
In sum, the CA stressed that the jurisdiction of voluntary arbitrators is limited to the seafarers
claims which do not fall within the labor arbiters original and exclusive jurisdiction or even in
cases where the labor arbiter has jurisdiction, the parties have agreed in unmistakable terms
(through their CBA) to submit the case to voluntary arbitration.
The petitioners moved for reconsideration of the CA decision, but the appellate court denied the
motion, reiterating its earlier pronouncement that on the ground alone of the petitioners wrong
choice of remedy, the petition must fail.
The Petition
The petitioners are now before this Court praying for a reversal of the CA judgment on the
following grounds:
1. The CA committed a reversible error in disregarding the Omnibus Implementing Rules and
Regulations (IRR) of the Migrant Workers and Overseas Filipinos Act of 1995,
12
as amended by
R.A. No. 10022,
13
mandating that "For OFWs with collective bargaining agreements, the
caseshall be submitted for voluntary arbitration in accordance with Articles 261 and 262 of the
Labor Code."
14

The petitioners bewail the CAs rejection of the above argument for the reason that the remedy
they pursued was inconsistent with the 2005 Revised Rules of Procedure of the NLRC. Citing
Municipality of Sta. Fe v. Municipality of Aritao,
15
they argue that the "dismissal of a case for
lack of jurisdiction may be raised at any stage of the proceedings."
In any event, they posit that the IRR of R.A. No. 10022 is in the nature of an adjective or
procedural law which must be given retroactive effect and which should have been applied by
the CA in resolving the present case.
2. The CA committed a reversible error in ruling that the AMOSUP-VELA CBA does not
contain unequivocal wordings for the mandatory referral of Fernandezs claim to voluntary
arbitration.
The petitioners assail the CAs failure to explain the basis "for ruling that no explicit or
unequivocal wordings appeared on said CBA for the mandatory referral of the disability claim to
arbitration."
16
They surmise that the CA construed the phrase "either party may refer the case to
a MANDATORY ARBITRATION COMMITTEE" under Section 14.7(a) of the CBA as merely
permissive and not mandatory because of the use of the word "may." They contend that
notwithstanding the use of the word "may," the parties unequivocally and unmistakably agreed
to refer the present disability claim to mandatory arbitration.
3. The CA committed a reversible error in disregarding the NLRC memorandum prescribing the
appropriate action for complaints and/or proceedings which were initially processed in the
grievance machinery of existing CBAs. In their motion for reconsideration with the CA, the
petitioners manifested that the appellate courts assailed decision had been modified by the
following directive of the NLRC:
As one of the measures being adopted by our agency in response to the Platform and Policy
Pronouncements on Labor Employment, you are hereby directed to immediately dismiss the
complaint and/or terminate proceedings which were initially processed in the grievance
machinery as provided in the existing Collective Bargaining Agreements (CBAs) between
parties, through the issuance of an Order of Dismissal and referral of the disputes to the National
Conciliation Mediation Board (NCMB) for voluntary arbitration.
FOR STRICT COMPLIANCE.
17

4. On July 31, 2012,
18
the petitioners manifested before the Court that on June 13, 2012, the
Courts Second Division issued a ruling in G.R. No. 172642, entitled Estate of Nelson R. Dulay,
represented by his wife Merridy Jane P. Dulay v. Aboitiz Jebsen Maritime, Inc., and General
Charterers, Inc., upholding the jurisdiction of the voluntary arbitrator or panel of voluntary
arbitrators over a seafarers money claim. They implore the Court that since the factual backdrop
and the issues involved in the case are similar to the present dispute, the Dulay ruling should be
applied to this case and which should accordingly be referred to the National Conciliation and
Mediation Board for voluntary arbitration.
The Case for Fernandez
In compliance with the Courts directive,
19
Fernandez filed on October 7, 2011 his Comment
20

(on the Petition) with the plea that the petition be dismissed for lack of merit. Fernandez presents
the following arguments:
1. The IRR of the Migrant Workers and Overseas Filipinos Act of 1995 (R.A. No. 8042),
as amended by R.A. No. 10022,
21
did not divest the labor arbiters of their original and
exclusive jurisdiction over money claims arising from employment, for nowhere in said
IRR is there such a divestment.
2. The voluntary arbitrators do not have jurisdiction over the present controversy as can
be deduced from Articles 261 and 262 of the Labor Code. Fernandez explains that his
complaint does not involve any "unresolved grievances arising from the interpretation or
implementation of the Collective Bargaining Agreement [nor] from the interpretation or
enforcement of company personnel policies[.]"
22
As he never referred his claim to the
grievance machinery, there is no "unresolved grievance" to speak of. His complaint
involves a claim for compensation and damages which is outside the voluntary
arbitrators jurisdiction under Article 261. Further, only disputes involving the union and
the company shall be referred to the grievance machinery and to voluntary arbitration, as
the Court held in Sanyo Philippines Workers Union-PSSLU v. Caizares
23
and Silva v.
CA.
24

3. The CA correctly ruled that no unequivocal wordings appear in the CBA for the
mandatory referral of Fernandezs disability claim to a voluntary arbitrator.
The Courts Ruling
We first rule on the procedural question arising from the labor arbiters denial of the petitioners
motion to dismiss the complaint. On this point, Section 6, Rule V of The 2005 Revised Rules of
Procedure of the NLRC provides:
On or before the date set for the mandatory conciliation and mediation conference, the
respondent may file a motion to dismiss. Any motion to dismiss on the ground of lack of
jurisdiction, improper venue, or that the cause of action is barred by prior judgment, prescription,
or forum shopping, shall be immediately resolved by the Labor Arbiter through a written order.
An order denying the motion to dismiss, or suspending its resolution until the final determination
of the case, is not appealable. [underscoring ours]
Corollarily, Section 10, Rule VI of the same Rules states:
Frivolous or Dilatory Appeals. No appeal from an interlocutory order shall be entertained. To
discourage frivolous or dilatory appeals, including those taken from interlocutory orders, the
Commission may censure or cite in contempt the erring parties and their counsels, or subject
them to reasonable fine or penalty.
In Indiana Aerospace University v. Comm. on Higher Educ.,
25
the Court declared that "[a]n order
denying a motion to dismiss is interlocutory"; the proper remedy in this situation is to appeal
after a decision has been rendered. Clearly, the denial of the petitioners motion to dismiss in the
present case was an interlocutory order and, therefore, not subject to appeal as the CA aptly
noted.
The petitions procedural lapse notwithstanding, the CA proceeded to review the merits of the
case and adjudged the petition unmeritorious. We find the CAs action in order. The Labor Code
itself declares that "it is the spirit and intention of this Code that the Commission and its
members and the Labor Arbiters shall use every and all reasonable means to ascertain the facts in
each case speedily and objectively and without regard to technicalities of law or procedure, all in
the interest of due process."
26

We now address the focal question of who has the original and exclusive jurisdiction over
Fernandezs disability claim the labor arbiter under Section 10 of R.A. No. 8042, as amended,
or the voluntary arbitration mechanism as prescribed in the parties CBA and the POEA-SEC?
The answer lies in the States labor relations policy laid down in the Constitution and fleshed out
in the enabling statute, the Labor Code. Section 3, Article XIII (on Social Justice and Human
Rights) of the Constitution declares:
x x x x
The State shall promote the principle of shared responsibility between workers and employers
and the preferential use of voluntary modes in settling disputes, including conciliation, and shall
enforce their mutual compliance therewith to foster industrial peace.
Article 260 of the Labor Code (Grievance machinery and voluntary arbitration) states:
The parties to a Collective Bargaining Agreement shall include therein provisions that will
ensure the mutual observance of its terms and conditions. They shall establish a machinery for
the adjustment and resolution of grievances arising from the interpretation or implementation of
their Collective Bargaining Agreement and those arising from the interpretation or enforcement
of company personnel policies.
Article 261 of the Labor Code (Jurisdiction of Voluntary Arbitrators or panel of Voluntary
Arbitrators), on the other hand, reads in part:
The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive
jurisdiction to hear and decide all unresolved grievances arising from the interpretation or
implementation of the Collective Bargaining Agreement and those arising from the interpretation
or enforcement of company personnel policies[.]
Article 262 of the Labor Code (Jurisdiction over other labor disputes) declares:
The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the parties, shall
also hear and decide all other labor disputes including unfair labor practices and bargaining
deadlocks.
Further, the POEA-SEC, which governs the employment of Filipino seafarers, provides in its
Section 29 on Dispute Settlement Procedures:
In cases of claims and disputes arising from this employment, the parties covered by a
collective bargaining agreement shall submit the claim or dispute to the original and
exclusive jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators. If the
parties are not covered by a collective bargaining agreement, the parties may at their option
submit the claim or dispute to either the original and exclusive jurisdiction of the National Labor
Relations Commission (NLRC), pursuant to Republic Act (RA) 8042 otherwise known as the
Migrant Workers and Overseas Filipinos Act of 1995 or to the original and exclusive jurisdiction
of the voluntary arbitrator or panel of voluntary arbitrators. If there is no provision as to the
voluntary arbitrators to be appointed by the parties, the same shall be appointed from the
accredited voluntary arbitrators of the National Conciliation and Mediation Board of the
Department of Labor and Employment. [emphasis ours]
We find merit in the petition.
Under the above-quoted constitutional and legal provisions, the voluntary arbitrator or panel of
voluntary arbitrators has original and exclusive jurisdiction over Fernandezs disability claim.
There is no dispute that the claim arose out of Fernandezs employment with the petitioners and
that their relationship is covered by a CBA the AMOSUP/TCC or the AMOSUP-VELA
CBA. The CBA provides for a grievance procedure for the resolution of grievances or disputes
which occur during the employment relationship and, like the grievance machinery created under
Article 261 of the Labor Code, it is a two-tiered mechanism, with voluntary arbitration as the last
step.1wphi1
Contrary to the CAs reading of the CBAs Article 14, there is unequivocal or unmistakable
language in the agreement which mandatorily requires the parties to submit to the grievance
procedure any dispute or cause of action they may have against each other. The relevant
provisions of the CBA state:
14.6 Any Dispute, grievance, or misunderstanding concerning any ruling, practice, wages
or working conditions in the COMPANY or any breach of the Contract of Employment, or
any dispute arising from the meaning or application of the provisions of this Agreement or
a claim of violation thereof or any complaint or cause of action that any such Seaman may
have against the COMPANY, as well as complaints which the COMPANY may have
against such Seaman shall be brought to the attention of the GRIEVANCE RESOLUTION
COMMITTEE before either party takes any action, legal or otherwise. Bringing such a
dispute to the Grievance Resolution Committee shall be unwaivable prerequisite or
condition precedent for bringing any action, legal or otherwise, in any forum and the
failure to so refer the dispute shall bar any and all legal or other actions.
14.7a) If by reason of the nature of the Dispute, the parties are unable to amicably settle the
dispute, either party may refer the case to a MANDATORY ARBITRATION
COMMITTEE. The MANDATORY ARBITRATION COMMITTEE shall consist of one
representative to be designated by the UNION, and one representative to be designated by the
COMPANY and a third member who shall act as Chairman and shall be nominated by mutual
choice of the parties. xxx
h) Referral of all unresolved disputes from the Grievance Resolution Committee to the
Mandatory Arbitration Committee shall be unwaivable prerequisite or condition precedent
for bringing any action, claim, or cause of action, legal or otherwise, before any court,
tribunal, or panel in any jurisdiction. The failure by a party or seaman to so refer and avail
oneself to the dispute resolution mechanism contained in this action shall bar any legal or
other action. All parties expressly agree that the orderly resolution of all claims in the
prescribed manner served the interests of reaching settlements or claims in an orderly and
uniform manner, as well as preserving peaceful and harmonious labor relations between
seaman, the Union, and the Company.
27
(emphases ours)
What might have caused the CA to miss the clear intent of the parties in prescribing a grievance
procedure in their CBA is, as the petitioners have intimated, the use of the auxiliary verb "may"
in Article 14.7(a) of the CBA which, to reiterate, provides that "if by reason of the nature of
the Dispute, the parties are unable to amicably settle the dispute, either party may refer the
case to a MANDATORY ARBITRATION COMMITTEE."
28

While the CA did not qualify its reading of the subject provision of the CBA, it is reasonable to
conclude that it viewed as optional the referral of a dispute to the mandatory arbitration
committee when the parties are unable to amicably settle the dispute.
We find this a strained interpretation of the CBA provision. The CA read the provision
separately, or in isolation of the other sections of Article 14, especially 14.7(h), which, in clear,
explicit language, states that the "referral of all unresolved disputes from the Grievance
Resolution Committee to the Mandatory Arbitration Committee shall be unwaivable
prerequisite or condition precedent for bringing any action, claim, or cause of action, legal
or otherwise, before any court, tribunal, or panel in any jurisdiction"
29
and that the failure
by a party or seaman to so refer the dispute to the prescribed dispute resolution
mechanism shall bar any legal or other action.
Read in its entirety, the CBAs Article 14 (Grievance Procedure) unmistakably reflects the
parties agreement to submit any unresolved dispute at the grievance resolution stage to
mandatory voluntary arbitration under Article 14.7(h) of the CBA. And, it should be added that,
in compliance with Section 29 of the POEA-SEC which requires that in cases of claims and
disputes arising from a seafarers employment, the parties covered by a CBA shall submit the
claim or dispute to the original and exclusive jurisdiction of the voluntary arbitrator or panel of
voluntary arbitrators.
Since the parties used unequivocal language in their CBA for the submission of their disputes to
voluntary arbitration (a condition laid down in Vivero for the recognition of the submission to
voluntary arbitration of matters within the original and exclusive jurisdiction of labor arbiters),
we find that the CA committed a reversible error in its ruling; it disregarded the clear mandate of
the CBA between the parties and the POEA-SEC for submission of the present dispute to
voluntary arbitration.
Consistent with this finding, Fernandezs contention that his complaint for disability benefits
is a money claim that falls within the original and exclusive jurisdiction of the labor arbiter under
Section 10 of R.A. No. 8042 is untenable. We likewise reject his argument that he never
referred his claim to the grievance machinery (so that no unresolved grievance exists as required
under Article 261 of the Labor Code), and that the parties to the case are not the union and the
employer.
30
Needless to state, no such distinction exists in the parties CBA and the POEA-SEC.
It bears stressing at this point that we are upholding the jurisdiction of the voluntary arbitrator or
panel of voluntary arbitrators over the present dispute, not only because of the clear language of
the parties CBA on the matter; more importantly, we so uphold the voluntary arbitrators
jurisdiction, in recognition of the States express preference for voluntary modes of dispute
settlement, such as conciliation and voluntary arbitration as expressed in the Constitution, the
law and the rules.
In this light, we see no need to further consider the petitioners submission regarding the IRR of
the Migrant Workers and Overseas Filipinos Act of 1995, as amended by R.A. No. 10022, except
to note that the IRR lends further support to our ruling.
In closing, we quote with approval a most recent Court pronouncement on the same issue, thus
It is settled that when the parties have validly agreed on a procedure for resolving
grievances and to submit a dispute to voluntary arbitration then that procedure should be
strictly observed.
31
(emphasis ours)
WHEREFORE, premises considered, the petition is GRANTED. The assailed decision and
resolution of the Court of Appeals are SET ASIDE. Teodorico Fernandez's disability claim is
REFERRED to the Grievance Resolution Committee of the parties' collective bargaining
agreement and/or the Mandatory Arbitration Committee, if warranted.
SO ORDERED.
INTERPHIL LABORATORIES EMPLOYEES UNION-FFW, ENRICO GONZALES and
MA. THERESA MONTEJO, petitioners,
vs.
INTERPHIL LABORATORIES, INC., AND HONORABLE LEONARDO A.
QUISUMBING, SECRETARY OF LABOR AND EMPLOYMENT, respondents.
KAPUNAN, J .:
Assailed in this petition for review on certiorari are the decision, promulgated on 29 December
1999, and the resolution, promulgated on 05 April 2000, of the Court of Appeals in CA-G.R. SP
No. 50978.
Culled from the questioned decision, the facts of the case are as follows:
Interphil Laboratories Employees Union-FFW is the sole and exclusive bargaining agent of the
rank-and-file employees of Interphil Laboratories, Inc., a company engaged in the business of
manufacturing and packaging pharmaceutical products. They had a Collective Bargaining
Agreement (CBA) effective from 01 August 1990 to 31 July 1993.
Prior to the expiration of the CBA or sometime in February 1993, Allesandro G. Salazar,
1
Vice-
President-Human Resources Department of respondent company, was approached by Nestor
Ocampo, the union president, and Hernando Clemente, a union director. The two union officers
inquired about the stand of the company regarding the duration of the CBA which was set to
expire in a few months. Salazar told the union officers that the matter could be best discussed
during the formal negotiations which would start soon.
In March 1993, Ocampo and Clemente again approached Salazar. They inquired once more
about the CBA status and received the same reply from Salazar. In April 1993, Ocampo
requested for a meeting to discuss the duration and effectivity of the CBA. Salazar acceded and a
meeting was held on 15 April 1993 where the union officers asked whether Salazar would be
amenable to make the new CBA effective for two (2) years, starting 01 August 1993. Salazar,
however, declared that it would still be premature to discuss the matter and that the company
could not make a decision at the moment. The very next day, or on 16 April 1993, all the rank-
and-file employees of the company refused to follow their regular two-shift work schedule of
from 6:00 a.m. to 6:00 p.m., and from 6:00 p.m. to 6:00 a.m. At 2:00 p.m. and 2:00 a.m.,
respectively, the employees stopped working and left their workplace without sealing the
containers and securing the raw materials they were working on. When Salazar inquired about
the reason for their refusal to follow their normal work schedule, the employees told him to "ask
the union officers." To minimize the damage the overtime boycott was causing the company,
Salazar immediately asked for a meeting with the union officers. In the meeting, Enrico
Gonzales, a union director, told Salazar that the employees would only return to their normal
work schedule if the company would agree to their demands as to the effectivity and duration of
the new CBA. Salazar again told the union officers that the matter could be better discussed
during the formal renegotiations of the CBA. Since the union was apparently unsatisfied with the
answer of the company, the overtime boycott continued. In addition, the employees started to
engage in a work slowdown campaign during the time they were working, thus substantially
delaying the production of the company.
2

On 14 May 1993, petitioner union submitted with respondent company its CBA proposal, and
the latter filed its counter-proposal.
On 03 September 1993, respondent company filed with the National Labor Relations
Commission (NLRC) a petition to declare illegal petitioner union's "overtime boycott" and
"work slowdown" which, according to respondent company, amounted to illegal strike. The case,
docketed NLRC-NCR Case No. 00-09-05529-93, was assigned to Labor Arbiter Manuel R.
Caday.
On 22 October 1993, respondent company filed with the National Conciliation and Mediation
Board (NCMB) an urgent request for preventive mediation aimed to help the parties in their
CBA negotiations.
3
The parties, however, failed to arrive at an agreement and on 15 November
1993, respondent company filed with the Office of the Secretary of Labor and Employment a
petition for assumption of jurisdiction.
On 24 January 1994, petitioner union filed with the NCMB a Notice of Strike citing unfair labor
practice allegedly committed by respondent company. On 12 February 1994, the union staged a
strike.
On 14 February 1994, Secretary of Labor Nieves Confesor issued an assumption order
4
over the
labor dispute. On 02 March 1994, Secretary Confesor issued an order directing respondent
company to "immediately accept all striking workers, including the fifty-three (53) terminated
union officers, shop stewards and union members back to work under the same terms and
conditions prevailing prior to the strike, and to pay all the unpaid accrued year end benefits of its
employees in 1993."
5
On the other hand, petitioner union was directed to "strictly and
immediately comply with the return-to-work orders issued by (the) Office x x x
6
The same order
pronounced that "(a)ll pending cases which are direct offshoots of the instant labor dispute are
hereby subsumed herewith."
7

In the i, the case before Labor Arbiter Caday continued. On 16 March 1994, petitioner union
filed an "Urgent Manifestation and Motion to Consolidate the Instant Case and to Suspend
Proceedings" seeking the consolidation of the case with the labor dispute pending before the
Secretary of Labor. Despite objection by respondent company, Labor Arbiter Caday held in
abeyance the proceedings before him. However, on 06 June 1994, Acting Labor Secretary Jose
S. Brillantes, after finding that the issues raised would require a formal hearing and the
presentation of evidentiary matters, directed Labor Arbiters Caday and M. Sol del Rosario to
proceed with the hearing of the cases before them and to thereafter submit their report and
recommendation to his office.
On 05 September 1995, Labor Arbiter Caday submitted his recommendation to the then
Secretary of Labor Leonardo A. Quisumbing.
8
Then Secretary Quisumbing approved and
adopted the report in his Order, dated 13 August 1997, hence:
WHEREFORE, finding the said Report of Labor Arbiter Manuel R. Caday to be
supported by substantial evidence, this Office hereby RESOLVES to APPROVE and
ADOPT the same as the decision in this case, and judgment is hereby rendered:
(1) Declaring the 'overtime boycott' and 'work slowdown' as illegal strike;
(2) Declaring the respondent union officers namely:
Nestor Ocampo President
Carmelo Santos Vice-President
Marites Montejo Treasurer/Board
Member
Rico Gonzales Auditor
Rod Abuan Director
Segundino Flores Director
Hernando
Clemente
Director
who spearheaded and led the overtime boycott and work slowdown, to have lost their
employment status; and
(3) Finding the respondents guilty of unfair labor practice for violating the then existing
CBA which prohibits the union or any employee during the existence of the CBA from
staging a strike or engaging in slowdown or interruption of work and ordering them to
cease and desist from further committing the aforesaid illegal acts.
Petitioner union moved for the reconsideration of the order but its motion was denied. The union
went to the Court of Appeals via a petition for certiorari. In the now questioned decision
promulgated on 29 December 1999, the appellate court dismissed the petition. The union's
motion for reconsideration was likewise denied.
Hence, the present recourse where petitioner alleged:
THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS, LIKE THE
HONORABLE PUBLIC RESPONDENT IN THE PROCEEDINGS BELOW,
COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK
AND/OR EXCESS OF JURISDICTION WHEN IT COMPLETELY DISREGARDED
"PAROL EVIDENCE RULE" IN THE EVALUATION AND APPRECIATION OF
EVIDENCE PROFERRED BY THE PARTIES.
THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF
JURISDICTION, WHEN IT DID NOT DECLARE PRIVATE RESPONDENT'S ACT
OF EXTENDING SUBSTANTIAL SEPARATION PACKAGE TO ALMOST ALL
INVOLVED OFFICERS OF PETITIONER UNION, DURING THE PENDENCY OF
THE CASE, AS TANTAMOUNT TO CONDONATION, IF INDEED, THERE WAS
ANY MISDEED COMMITTED.
THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF
JURISDICTION WHEN IT HELD THAT THE SECRETARY OF LABOR AND
EMPLOYMENT HAS JURISDICTION OVER A CASE (A PETITION TO DECLARE
STRIKE ILLEGAL) WHICH HAD LONG BEEN FILED AND PENDING BEFORE
THE LABOR ARBITER.
9

We sustain the questioned decision.
On the matter of the authority and jurisdiction of the Secretary of Labor and Employment to rule
on the illegal strike committed by petitioner union, it is undisputed that the petition to declare the
strike illegal before Labor Arbiter Caday was filed long before the Secretary of Labor and
Employment issued the assumption order on 14 February 1994. However, it cannot be denied
that the issues of "overtime boycott" and "work slowdown" amounting to illegal strike before
Labor Arbiter Caday are intertwined with the labor dispute before the Labor Secretary. In fact,
on 16 March 1994, petitioner union even asked Labor Arbiter Caday to suspend the proceedings
before him and consolidate the same with the case before the Secretary of Labor. When Acting
Labor Secretary Brillantes ordered Labor Arbiter Caday to continue with the hearing of the
illegal strike case, the parties acceded and participated in the proceedings, knowing fully well
that there was also a directive for Labor Arbiter Caday to thereafter submit his report and
recommendation to the Secretary. As the appellate court pointed out, the subsequent participation
of petitioner union in the continuation of the hearing was in effect an affirmation of the
jurisdiction of the Secretary of Labor.
The appellate court also correctly held that the question of the Secretary of Labor and
Employment's jurisdiction over labor and labor-related disputes was already settled in
International Pharmaceutical, Inc. vs. Hon. Secretary of Labor and Associated Labor Union
(ALU)
10
where the Court declared:
In the present case, the Secretary was explicitly granted by Article 263(g) of the Labor
Code the authority to assume jurisdiction over a labor dispute causing or likely to cause a
strike or lockout in an industry indispensable to the national interest, and decide the same
accordingly. Necessarily, this authority to assume jurisdiction over the said labor dispute
must include and extend to all questions and controversies arising therefrom, including
cases over which the labor arbiter has exclusive jurisdiction.
Moreover, Article 217 of the Labor Code is not without, but contemplates, exceptions
thereto. This is evident from the opening proviso therein reading '(e)xcept as otherwise
provided under this Code . . .' Plainly, Article 263(g) of the Labor Code was meant to
make both the Secretary (or the various regional directors) and the labor arbiters share
jurisdiction, subject to certain conditions. Otherwise, the Secretary would not be able to
effectively and efficiently dispose of the primary dispute. To hold the contrary may even
lead to the absurd and undesirable result wherein the Secretary and the labor arbiter
concerned may have diametrically opposed rulings. As we have said, '(i)t is fundamental
that a statute is to be read in a manner that would breathe life into it, rather than defeat it.
In fine, the issuance of the assailed orders is within the province of the Secretary as
authorized by Article 263(g) of the Labor Code and Article 217(a) and (5) of the same
Code, taken conjointly and rationally construed to subserve the objective of the
jurisdiction vested in the Secretary.
11

Anent the alleged misappreciation of the evidence proffered by the parties, it is axiomatic that
the factual findings of the Labor Arbiter, when sufficiently supported by the evidence on record,
must be accorded due respect by the Supreme Court.
12
Here, the report and recommendation of
Labor Arbiter Caday was not only adopted by then Secretary of Labor Quisumbing but was
likewise affirmed by the Court of Appeals. We see no reason to depart from their findings.
Petitioner union maintained that the Labor Arbiter and the appellate court disregarded the "parol
evidence rule"
13
when they upheld the allegation of respondent company that the work schedule
of its employees was from 6:00 a.m. to 6:00 p.m. and from 6:00 p.m. to 6:00 am. According to
petitioner union, the provisions of their CBA on working hours clearly stated that the normal
working hours were "from 7:30 a.m. to 4:30 p.m."
14
Petitioner union underscored that the regular
work hours for the company was only eight (8) hours. It further contended that the Labor Arbiter
as well as the Court of Appeals should not have admitted any other evidence contrary to what
was stated in the CBA.
The reliance on the parol evidence rule is misplaced. In labor cases pending before the
Commission or the Labor Arbiter, the rules of evidence prevailing in courts of law or equity are
not controlling.
15
Rules of procedure and evidence are not applied in a very rigid and technical
sense in labor cases.
16
Hence, the Labor Arbiter is not precluded from accepting and evaluating
evidence other than, and even contrary to, what is stated in the CBA.
In any event, the parties stipulated:
Section 1. Regular Working Hours A normal workday shall consist of not more than
eight (8) hours. The regular working hours for the Company shall be from 7:30 A.M. to
4:30 P.M. The schedule of shift work shall be maintained; however the company may
change the prevailing work time at its discretion, should such change be necessary in the
operations of the Company. All employees shall observe such rules as have been laid
down by the company for the purpose of effecting control over working hours.
17

It is evident from the foregoing provision that the working hours may be changed, at the
discretion of the company, should such change be necessary for its operations, and that the
employees shall observe such rules as have been laid down by the company. In the case before
us, Labor Arbiter Caday found that respondent company had to adopt a continuous 24-hour work
daily schedule by reason of the nature of its business and the demands of its clients. It was
established that the employees adhered to the said work schedule since 1988. The employees are
deemed to have waived the eight-hour schedule since they followed, without any question or
complaint, the two-shift schedule while their CBA was still in force and even prior thereto. The
two-shift schedule effectively changed the working hours stipulated in the CBA. As the
employees assented by practice to this arrangement, they cannot now be heard to claim that the
overtime boycott is justified because they were not obliged to work beyond eight hours.
As Labor Arbiter Caday elucidated in his report:
Respondents' attempt to deny the existence of such regular overtime schedule is belied by
their own awareness of the existence of the regular overtime schedule of 6:00 A.M. to
6:00 P.M. and 6:00 P.M. to 6:00 A.M. of the following day that has been going on since
1988. Proof of this is the case undisputedly filed by the union for and in behalf of its
members, wherein it is claimed that the company has not been computing correctly the
night premium and overtime pay for work rendered between 2:00 A.M. and 6:00 A.M. of
the 6:00 P.M. to 6:00 A.M. shift. (tsn pp. 9-10, testimony of Alessandro G. Salazar
during hearing on August 9, 1994). In fact, the union Vice-President Carmelo C. Santos,
demanded that the company make a recomputation of the overtime records of the
employees from 1987 (Exh. "P"). Even their own witness, union Director Enrico C.
Gonzales, testified that when in 1992 he was still a Quality Control Inspector at the Sucat
Plant of the company, his schedule was sometime at 6:00 A.M. to 6:00 P.M., sometime at
6:00 A.M. to 2:00 P.M., at 2:00 P.M. to 10:00 P.M. and sometime at 6:00 P.M. to 6:00
A.M., and when on the 6 to 6 shifts, he received the commensurate pay (t.s.n. pp. 7-9,
hearing of January 10, 1994). Likewise, while in the overtime permits, dated March 1, 6,
8, 9 to 12, 1993, which were passed around daily for the employees to sign, his name
appeared but without his signatures, he however had rendered overtime during those
dates and was paid because unlike in other departments, it has become a habit to them to
sign the overtime schedule weekly (t.s.n. pp. 26-31, hearing of January 10, 1994). The
awareness of the respondent union, its officers and members about the existence of the
regular overtime schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M. of the
following day will be further shown in the discussion of the second issue.
18

As to the second issue of whether or not the respondents have engaged in "overtime
boycott" and "work slowdown" from April 16, 1993 up to March 7, 1994, both
amounting to illegal strike, the evidence presented is equally crystal clear that the
"overtime boycott" and "work slowdown" committed by the respondents amounted to
illegal strike.
As undisputably testified to by Mr. Alessandro G. Salazar, the company's Vice-President-
Human Resources Department, sometime in February, 1993, he was approached by the
union President Nestor Ocampo and Union Director Hernando Clemente who asked him
as to what was the stand of the company regarding the duration of the CBA between the
company and which was set to expire on July 31, 1993. He answered that the matter
could be best discussed during the formal renegotiations which anyway was to start soon.
This query was followed up sometime in March, 1993, and his answer was the same. In
early April, 1993, the union president requested for a meeting to discuss the duration and
effectivity of the CBA. Acceding to the request, a meeting was held on April 15, 1993
wherein the union officers asked him if he would agree to make the new CBA effective
on August 1, 1993 and the term thereof to be valid for only two (2) years. When he
answered that it was still premature to discuss the matter, the very next day, April 16,
1993, all the rank and file employees of the company refused to follow their regular two-
shift work schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M., when after
the 8-hours work, they abruptly stopped working at 2:00 P.M. and 2:00 A.M.,
respectively, leaving their place of work without sealing the containers and securing the
raw materials they were working on. When he saw the workers leaving before the end of
their shift, he asked them why and their reply was "asked (sic) the union officers."
Alarmed by the overtime boycott and the damage it was causing the company, he
requested for a meeting with the union officers. In the meeting, he asked them why the
regular work schedule was not being followed by the employees, and union Director
Enrico Gonzales, with the support of the other union officers, told him that if
management would agree to a two-year duration for the new CBA and an effectivity date
of August 1, 1993, all employees will return to the normal work schedule of two 12-hour
shifts. When answered that the management could not decide on the matter at the
moment and to have it discussed and agreed upon during the formal renegotiations, the
overtime boycott continued and the employees at the same time employed a work
slowdown campaign during working hours, causing considerable delay in the production
and complaints from the clients/customers (Exh. "O", Affidavit of Alessandro G. Salazar
which formed part of his direct testimony). This testimonial narrations of Salazar was, as
earlier said, undisputed because the respondents' counsel waived his cross examination
(t.s.n. p. 15, hearing on August 9, 1994).
Aside from the foregoing undisputed testimonies of Salazar, the testimonies of other
Department Managers pointing to the union officers as the instigators of the overtime
boycott and work slowdown, the testimony of Epifanio Salumbides (Exh. "Y") a union
member at the time the concerted activities of the respondents took place, is quoted
hereunder:
"2. Noon Pebrero 1993, ipinatawag ng Presidente ng Unyon na si Nestor Ocampo
ang lahat ng taga-maintenance ng bawat departamento upang dumalo sa isang
miting. Sa miting na iyon, sinabi ni Rod Abuan, na isang Direktor ng Unyon, na
mayroon ilalabas na memo ang Unyon na nag-uutos sa mga empleyado ng
Kompanya na mag-imbento ng sari-saring dahilan para lang hindi sila
makapagtrabaho ng "overtime". Sinabihan rin ako ni Tessie Montejo na siya
namang Treasurer ng Unyon na 'Manny, huwag ka na lang pumasok sa Biyernes
para hindi ka masabihan ng magtrabaho ng Sabado at Linggo' na siya namang
araw ng "overtime" ko x x x
"3. Nakalipas ang dalawang buwan at noong unang bahagi ng Abril 1993,
miniting kami ng Shop Stewards namin na sina Ariel Abenoja, Dany Tansiongco
at Vicky Baron. Sinabihan kami na huwag ng mag-overtime pag nagbigay ng
senyas ang Unyon ng "showtime."
"4. Noong umaga ng ika-15 ng Abril 1993, nagsabi na si Danny Tansiongco ng
"showtime". Dahil dito wala ng empleyadong nag-overtime at sabay-sabay silang
umalis, maliban sa akin. Ako ay pumasok rin noong Abril 17 at 18, 1993 na
Sabado at Linggo.
"5. Noong ika-19 ng Abril 1993, ako ay ipinatawag ni Ariel Abenoja Shop
Steward, sa opisina ng Unyon. Nadatnan ko doon ang halos lahat ng opisyales ng
Unyon na sina:
Nestor Ocampo Presidente
Carmelo Santos Bise-Presidente
Nanding
Clemente
Director
TessMontejo Chief Steward
Segundo Flores Director
Enrico Gonzales Auditor
Boy Alcantara Shop Steward
Rod Abuan Director
at marami pang iba na hindi ko na maala-ala. Pagpasok ko, ako'y pinaligiran ng
mga opisyales ng Unyon. Tinanong ako ni Rod Aguan kung bakit ako "nag-
overtime" gayong "Binigyan ka na namin ng instruction na huwag pumasok,
pinilit mo pa ring pumasok." "Management ka ba o Unyonista." Sinagot ko na ako
ay Unyonista. Tinanong niya muli kung bakit ako pumasok. Sinabi ko na wala
akong maibigay na dahilan para lang hindi pumasok at "mag-overtime."
Pagkatapos nito, ako ay pinagmumura ng mga opisyales ng Unyon kaya't ako ay
madaliang umalis.
xxx xxx xxx
Likewise, the respondents' denial of having a hand in the work slowdown since there was
no change in the performance and work efficiency for the year 1993 as compared to the
previous year was even rebuffed by their witness Ma. Theresa Montejo, a Quality Control
Analyst. For on cross-examination, she (Montejo) admitted that she could not answer
how she was able to prepare the productivity reports from May 1993 to February 1994
because from April 1993 up to April 1994, she was on union leave. As such, the
productivity reports she had earlier shown was not prepared by her since she had no
personal knowledge of the reports (t.s.n. pp. 32-35, hearing of February 27, 1995). Aside
from this admission, the comparison made by the respondents was of no moment,
because the higher production for the years previous to 1993 was reached when the
employees regularly rendered overtime work. But undeniably, overtime boycott and work
slowdown from April 16, 1993 up to March 7, 1994 had resulted not only in financial
losses to the company but also damaged its business reputation.
Evidently, from all the foregoing, respondents' unjustified unilateral alteration of the 24-
hour work schedule thru their concerted activities of "overtime boycott" and "work
slowdown" from April 16, 1993 up to March 7, 1994, to force the petitioner company to
accede to their unreasonable demands, can be classified as a strike on an installment
basis, as correctly called by petitioner company x x x
19

It is thus undisputed that members of the union by their own volition decided not to render
overtime services in April 1993.
20
Petitioner union even admitted this in its Memorandum, dated
12 April 1999, filed with the Court of Appeals, as well as in the petition before this Court, which
both stated that "(s)ometime in April 1993, members of herein petitioner, on their own volition
and in keeping with the regular working hours in the Company x x x decided not to render
overtime".
21
Such admission confirmed the allegation of respondent company that petitioner
engaged in "overtime boycott" and "work slowdown" which, to use the words of Labor Arbiter
Caday, was taken as a means to coerce respondent company to yield to its unreasonable
demands.
More importantly, the "overtime boycott" or "work slowdown" by the employees constituted a
violation of their CBA, which prohibits the union or employee, during the existence of the CBA,
to stage a strike or engage in slowdown or interruption of work.
22
In Ilaw at Buklod ng
Manggagawa vs. NLRC ,
23
this Court ruled:
x x x (T)he concerted activity in question would still be illicit because contrary to the
workers' explicit contractual commitment "that there shall be no strikes, walkouts,
stoppage or slowdown of work, boycotts, secondary boycotts, refusal to handle any
merchandise, picketing, 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 x
x x (their collective bargaining) agreement."
What has just been said makes unnecessary resolution of SMC's argument that the
workers' concerted refusal to adhere to the work schedule in force for the last several
years, is a slowdown, an inherently illegal activity essentially illegal even in the absence
of a no-strike clause in a collective bargaining contract, or statute or rule. The Court is in
substantial agreement with the petitioner's concept of a slowdown as a "strike on the
installment plan;" as a willful reduction in the rate of work by concerted action of
workers for the purpose of restricting the output of the employer, in relation to a labor
dispute; as an activity by which workers, without a complete stoppage of work, retard
production or their performance of duties and functions to compel management to grant
their demands. The Court also agrees that such a slowdown is generally condemned as
inherently illicit and unjustifiable, because while the employees "continue to work and
remain at their positions and accept the wages paid to them," they at the same time "select
what part of their allotted tasks they care to perform of their own volition or refuse
openly or secretly, to the employer's damage, to do other work;" in other words, they
"work on their own terms." x x x
24

Finally, the Court cannot agree with the proposition that respondent company, in extending
substantial separation package to some officers of petitioner union during the pendency of this
case, in effect, condoned the illegal acts they committed.
Respondent company correctly postured that at the time these union officers obtained their
separation benefits, they were still considered employees of the company. Hence, the company
was merely complying with its legal obligations.
25
Respondent company could have withheld
these benefits pending the final resolution of this case. Yet, considering perhaps the financial
hardships experienced by its employees and the economic situation prevailing, respondent
company chose to let its employees avail of their separation benefits. The Court views the
gesture of respondent company as an act of generosity for which it should not be punished.
WHEREFORE, the petition is DENIED DUE COURSE and the 29 December 1999 decision of
the Court of Appeals is AFFIRMED.
SO ORDERED.
NATIONAL UNION OF WORKERS IN THE HOTEL RESTAURANT AND ALLIED
INDUSTRIES (NUWHRAIN-APL-IUF) DUSIT HOTEL NIKKO CHAPTER, petitioner,
vs.
THE HONORABLE COURT OF APPEALS (Former Eighth Division), THE NATIONAL
LABOR RELATIONS COMMISSION (NLRC), PHILIPPINE HOTELIERS INC., owner
and operator of DUSIT HOTEL NIKKO and/or CHIYUKI FUJIMOTO, and
ESPERANZA V. ALVEZ, respondents.
x----------------------------------------x
G.R. No. 166295 November 11, 2008
NUWHRAIN-DUSIT HOTEL NIKKO CHAPTER, petitioner,
vs.
SECRETARY OF LABOR AND EMPLOYMENT and PHILIPPINE HOTELIERS, INC.,
respondents.
D E C I S I O N
VELASCO, JR., J .:
In G.R. No. 163942, the Petition for Review on Certiorari under Rule 45 of the National Union
of Workers in the Hotel Restaurant and Allied Industries Dusit Hotel Nikko Chapter (Union)
seeks to set aside the January 19, 2004 Decision
1
and June 1, 2004 Resolution
2
of the Court of
Appeals (CA) in CA-G.R. SP No. 76568 which affirmed the October 9, 2002 Decision
3
of the
National Labor Relations Commission (NLRC) in NLRC NCR CC No. 000215-02.
In G.R. No. 166295, the Petition for Certiorari under Rule 65 of the Union seeks to nullify the
May 6, 2004 Decision
4
and November 25, 2004 Resolution
5
of the CA in CA-G.R. SP No. 70778
which affirmed the January 31, 2002
6
and March 15, 2002
7
Orders of the Secretary of Labor and
Employment, Patricia A. Sto. Tomas (Secretary).
Evolution of the Present Petitions
The Union is the certified bargaining agent of the regular rank-and-file employees of Dusit Hotel
Nikko (Hotel), a five star service establishment owned and operated by Philippine Hoteliers, Inc.
located in Makati City. Chiyuki Fuijimoto and Esperanza V. Alvez are impleaded in their official
capacities as the Hotel's General Manager and Director of Human Resources, respectively.
On October 24, 2000, the Union submitted its Collective Bargaining Agreement (CBA)
negotiation proposals to the Hotel. As negotiations ensued, the parties failed to arrive at mutually
acceptable terms and conditions. Due to the bargaining deadlock, the Union, on December 20,
2001, filed a Notice of Strike on the ground of the bargaining deadlock with the National
Conciliation and Mediation Board (NCMB), which was docketed as NCMB-NCR-NS-12-369-
01. Thereafter, conciliation hearings were conducted which proved unsuccessful. Consequently,
a Strike Vote
8
was conducted by the Union on January 14, 2002 on which it was decided that the
Union would wage a strike.
Soon thereafter, in the afternoon of January 17, 2002, the Union held a general assembly at its
office located in the Hotel's basement, where some members sported closely cropped hair or
cleanly shaven heads. The next day, or on January 18, 2002, more male Union members came to
work sporting the same hair style. The Hotel prevented these workers from entering the premises
claiming that they violated the Hotel's Grooming Standards.
In view of the Hotel's action, the Union staged a picket outside the Hotel premises. Later, other
workers were also prevented from entering the Hotel causing them to join the picket. For this
reason the Hotel experienced a severe lack of manpower which forced them to temporarily cease
operations in three restaurants.
Subsequently, on January 20, 2002, the Hotel issued notices to Union members, preventively
suspending them and charging them with the following offenses: (1) violation of the duty to
bargain in good faith; (2) illegal picket; (3) unfair labor practice; (4) violation of the Hotel's
Grooming Standards; (5) illegal strike; and (6) commission of illegal acts during the illegal
strike. The next day, the Union filed with the NCMB a second Notice of Strike on the ground of
unfair labor practice and violation of Article 248(a) of the Labor Code on illegal lockout, which
was docketed as NCMB-NCR-NS-01-019-02. In the meantime, the Union officers and members
submitted their explanations to the charges alleged by the Hotel, while they continued to stage a
picket just inside the Hotel's compound.
On January 26, 2002, the Hotel terminated the services of twenty-nine (29) Union officers and
sixty-one (61) members; and suspended eighty-one (81) employees for 30 days, forty-eight (48)
employees for 15 days, four (4) employees for 10 days, and three (3) employees for five days.
On the same day, the Union declared a strike. Starting that day, the Union engaged in picketing
the premises of the Hotel. During the picket, the Union officials and members unlawfully
blocked the ingress and egress of the Hotel premises.
Consequently, on January 31, 2002, the Union filed its third Notice of Strike with the NCMB
which was docketed as NCMB-NCR-NS-01-050-02, this time on the ground of unfair labor
practice and union-busting.
On the same day, the Secretary, through her January 31, 2002 Order, assumed jurisdiction over
the labor dispute and certified the case to the NLRC for compulsory arbitration, which was
docketed as NLRC NCR CC No. 000215-02. The Secretary's Order partly reads:
WHEREFORE, in order to have a complete determination of the bargaining deadlock and
the other incidents of the dispute, this Office hereby consolidates the two Notices of
Strike - NCMB-NCR-NS-12-369-01 and NCMB-NCR-NS-01-019-02 - and CERTIFIES
the entire labor dispute covered by these Notices and the intervening events, to the
NATIONAL LABOR RELATIONS COMMISSION for compulsory arbitration pursuant
to Article 263 (g) of the Labor Code, as amended, under the following terms:
x x x x
d. the Hotel is given the option, in lieu of actual reinstatement, to merely reinstate the
dismissed or suspended workers in the payroll in light of the special circumstances
attendant to their reinstatement;
x x x x
SO ORDERED. (Emphasis added.)
Pursuant to the Secretary's Order, the Hotel, on February 1, 2002, issued an Inter-Office
Memorandum,
9
directing some of the employees to return to work, while advising others not to
do so, as they were placed under payroll reinstatement.
Unhappy with the Secretary's January 31, 2002 Order, the Union moved for reconsideration, but
the same was denied per the Secretary's subsequent March 15, 2002 Order. Affronted by the
Secretary's January 31, 2002 and March 15, 2002 Orders, the Union filed a Petition for Certiorari
with the CA which was docketed as CA-G.R. SP No. 70778.
Meanwhile, after due proceedings, the NLRC issued its October 9, 2002 Decision in NLRC NCR
CC No. 000215-02, in which it ordered the Hotel and the Union to execute a CBA within 30
days from the receipt of the decision. The NLRC also held that the January 18, 2002 concerted
action was an illegal strike in which illegal acts were committed by the Union; and that the strike
violated the "No Strike, No Lockout" provision of the CBA, which thereby caused the dismissal
of 29 Union officers and 61 Union members. The NLRC ordered the Hotel to grant the 61
dismissed Union members financial assistance in the amount of month's pay for every year of
service or their retirement benefits under their retirement plan whichever was higher. The NLRC
explained that the strike which occurred on January 18, 2002 was illegal because it failed to
comply with the mandatory 30-day cooling-off period
10
and the seven-day strike ban,
11
as the
strike occurred only 29 days after the submission of the notice of strike on December 20, 2001
and only four days after the submission of the strike vote on January 14, 2002. The NLRC also
ruled that even if the Union had complied with the temporal requirements mandated by law, the
strike would nonetheless be declared illegal because it was attended by illegal acts committed by
the Union officers and members.
The Union then filed a Motion for Reconsideration of the NLRC's Decision which was denied in
the February 7, 2003 NLRC Resolution. Unfazed, the Union filed a Petition for Certiorari under
Rule 65 with the CA, docketed as CA-G.R. SP No. 76568, and assailed both the October 9, 2002
Decision and the February 7, 2003 Resolution of the NLRC.
Soon thereafter, the CA promulgated its January 19, 2004 Decision in CA-G.R. SP No. 76568
which dismissed the Union's petition and affirmed the rulings of the NLRC. The CA ratiocinated
that the Union failed to demonstrate that the NLRC committed grave abuse of discretion and
capriciously exercised its judgment or exercised its power in an arbitrary and despotic manner.
For this reason, the Union filed a Motion for Reconsideration which the CA, in its June 1, 2004
Resolution, denied for lack of merit.
In the meantime, the CA promulgated its May 6, 2004 Decision in CA-G.R. SP No. 70778 which
denied due course to and consequently dismissed the Union's petition. The Union moved to
reconsider the Decision, but the CA was unconvinced and denied the motion for reconsideration
in its November 25, 2004 Resolution.
Thus, the Union filed the present petitions.
The Union raises several interwoven issues in G.R. No. 163942, most eminent of which is
whether the Union conducted an illegal strike. The issues presented for resolution are:
-A-
WHETHER OR NOT THE UNION, THE 29 UNION OFFICERS AND 61 MEMBERS
MAY BE ADJUDGED GUILTY OF STAGING AN ILLEGAL STRIKE ON
JANUARY 18, 2002 DESPITE RESPONDENTS' ADMISSION THAT THEY
PREVENTED SAID OFFICERS AND MEMBERS FROM REPORTING FOR WORK
FOR ALLEGED VIOLATION OF THE HOTEL'S GROOMING STANDARDS
-B-
WHETHER OR NOT THE 29 UNION OFFICERS AND 61 MEMBERS MAY
VALIDLY BE DISMISSED AND MORE THAN 200 MEMBERS BE VALIDLY
SUSPENDED ON THE BASIS OF FOUR (4) SELF-SERVING AFFIDAVITS OF
RESPONDENTS
-C-
WHETHER OR NOT RESPONDENTS IN PREVENTING UNION OFFICERS AND
MEMBERS FROM REPORTING FOR WORK COMMITTED AN ILLEGAL LOCK-
OUT
12

In G.R. No. 166295, the Union solicits a riposte from this Court on whether the Secretary has
discretion to impose "payroll" reinstatement when he assumes jurisdiction over labor disputes.
The Court's Ruling
The Court shall first dispose of G.R. No. 166295.
According to the Union, there is no legal basis for allowing payroll reinstatement in lieu of actual
or physical reinstatement. As argued, Art. 263(g) of the Labor Code is clear on this point.
The Hotel, on the other hand, claims that the issue is now moot and any decision would be
impossible to execute in view of the Decision of the NLRC which upheld the dismissal of the
Union officers and members.
The Union's position is untenable.
The Hotel correctly raises the argument that the issue was rendered moot when the NLRC upheld
the dismissal of the Union officers and members. In order, however, to settle this relevant and
novel issue involving the breadth of the power and jurisdiction of the Secretary in assumption of
jurisdiction cases, we now decide the issue on the merits instead of relying on mere
technicalities.
We held in University of Immaculate Concepcion, Inc. v. Secretary of Labor:
With respect to the Secretary's Order allowing payroll reinstatement instead of actual
reinstatement for the individual respondents herein, an amendment to the previous Orders
issued by her office, the same is usually not allowed. Article 263(g) of the Labor Code
aforementioned states that all workers must immediately return to work and all employers
must readmit all of them under the same terms and conditions prevailing before the strike
or lockout. The phrase "under the same terms and conditions" makes it clear that the
norm is actual reinstatement. This is consistent with the idea that any work stoppage or
slowdown in that particular industry can be detrimental to the national interest.
13

Thus, it was settled that in assumption of jurisdiction cases, the Secretary should impose actual
reinstatement in accordance with the intent and spirit of Art. 263(g) of the Labor Code. As with
most rules, however, this one is subject to exceptions. We held in Manila Diamond Hotel
Employees' Union v. Court of Appeals that payroll reinstatement is a departure from the rule, and
special circumstances which make actual reinstatement impracticable must be shown.
14
In one
case, payroll reinstatement was allowed where the employees previously occupied confidential
positions, because their actual reinstatement, the Court said, would be impracticable and would
only serve to exacerbate the situation.
15
In another case, this Court held that the NLRC did not
commit grave abuse of discretion when it allowed payroll reinstatement as an option in lieu of
actual reinstatement for teachers who were to be reinstated in the middle of the first term.
16
We
held that the NLRC was merely trying its best to work out a satisfactory ad hoc solution to a
festering and serious problem.
17

The peculiar circumstances in the present case validate the Secretary's decision to order payroll
reinstatement instead of actual reinstatement. It is obviously impracticable for the Hotel to
actually reinstate the employees who shaved their heads or cropped their hair because this was
exactly the reason they were prevented from working in the first place. Further, as with most
labor disputes which have resulted in strikes, there is mutual antagonism, enmity, and animosity
between the union and the management. Payroll reinstatement, most especially in this case,
would have been the only avenue where further incidents and damages could be avoided. Public
officials entrusted with specific jurisdictions enjoy great confidence from this Court. The
Secretary surely meant only to ensure industrial peace as she assumed jurisdiction over the labor
dispute. In this case, we are not ready to substitute our own findings in the absence of a clear
showing of grave abuse of discretion on her part.
The issues raised in G.R. No. 163942, being interrelated, shall be discussed concurrently.
To be determined whether legal or not are the following acts of the Union:
(1) Reporting for work with their bald or cropped hair style on January 18, 2002; and
(2) The picketing of the Hotel premises on January 26, 2002.
The Union maintains that the mass picket conducted by its officers and members did not
constitute a strike and was merely an expression of their grievance resulting from the lockout
effected by the Hotel management. On the other hand, the Hotel argues that the Union's
deliberate defiance of the company rules and regulations was a concerted effort to paralyze the
operations of the Hotel, as the Union officers and members knew pretty well that they would not
be allowed to work in their bald or cropped hair style. For this reason, the Hotel argues that the
Union committed an illegal strike on January 18, 2002 and on January 26, 2002.
We rule for the Hotel.
Art. 212(o) of the Labor Code defines a strike as "any temporary stoppage of work by the
concerted action of employees as a result of an industrial or labor dispute."
In Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. National Labor Relations
Commission, we cited the various categories of an illegal strike, to wit:
Noted authority on labor law, Ludwig Teller, lists six (6) categories of an illegal strike,
viz.:
(1) [when it] is contrary to a specific prohibition of law, such as strike by employees
performing governmental functions; or
(2) [when it] violates a specific requirement of law[, such as Article 263 of the Labor
Code on the requisites of a valid strike]; or
(3) [when it] is declared for an unlawful purpose, such as inducing the employer to
commit an unfair labor practice against non-union employees; or
(4) [when it] employs unlawful means in the pursuit of its objective, such as a widespread
terrorism of non-strikers [for example, prohibited acts under Art. 264(e) of the Labor
Code]; or
(5) [when it] is declared in violation of an existing injunction[, such as injunction,
prohibition, or order issued by the DOLE Secretary and the NLRC under Art. 263 of the
Labor Code]; or
(6) [when it] is contrary to an existing agreement, such as a no-strike clause or conclusive
arbitration clause.
18

With the foregoing parameters as guide and the following grounds as basis, we hold that the
Union is liable for conducting an illegal strike for the following reasons:
First, the Union's violation of the Hotel's Grooming Standards was clearly a deliberate and
concerted action to undermine the authority of and to embarrass the Hotel and was, therefore, not
a protected action. The appearances of the Hotel employees directly reflect the character and
well-being of the Hotel, being a five-star hotel that provides service to top-notch clients. Being
bald or having cropped hair per se does not evoke negative or unpleasant feelings. The reality
that a substantial number of employees assigned to the food and beverage outlets of the Hotel
with full heads of hair suddenly decided to come to work bald-headed or with cropped hair,
however, suggests that something is amiss and insinuates a sense that something out of the
ordinary is afoot. Obviously, the Hotel does not need to advertise its labor problems with its
clients. It can be gleaned from the records before us that the Union officers and members
deliberately and in apparent concert shaved their heads or cropped their hair. This was shown by
the fact that after coming to work on January 18, 2002, some Union members even had their
heads shaved or their hair cropped at the Union office in the Hotel's basement. Clearly, the
decision to violate the company rule on grooming was designed and calculated to place the Hotel
management on its heels and to force it to agree to the Union's proposals.
In view of the Union's collaborative effort to violate the Hotel's Grooming Standards, it
succeeded in forcing the Hotel to choose between allowing its inappropriately hair styled
employees to continue working, to the detriment of its reputation, or to refuse them work, even if
it had to cease operations in affected departments or service units, which in either way would
disrupt the operations of the Hotel. This Court is of the opinion, therefore, that the act of the
Union was not merely an expression of their grievance or displeasure but, indeed, a calibrated
and calculated act designed to inflict serious damage to the Hotel's finances or its reputation.
Thus, we hold that the Union's concerted violation of the Hotel's Grooming Standards which
resulted in the temporary cessation and disruption of the Hotel's operations is an unprotected act
and should be considered as an illegal strike.
Second, the Union's concerted action which disrupted the Hotel's operations clearly violated the
CBA's "No Strike, No Lockout" provision, which reads:
ARTICLE XXII - NO STRIKE/WORK STOPPAGE AND LOCKOUT
SECTION 1. No Strikes
The Union agrees that there shall be no strikes, walkouts, stoppage or slow-down
of work, boycott, refusal to handle accounts, picketing, sit-down strikes,
sympathy strikes or any other form of interference and/or interruptions with any
of the normal operations of the HOTEL during the life of this Agreement.
The facts are clear that the strike arose out of a bargaining deadlock in the CBA negotiations
with the Hotel. The concerted action is an economic strike upon which the afore-quoted "no
strike/work stoppage and lockout" prohibition is squarely applicable and legally binding.
19

Third, the Union officers and members' concerted action to shave their heads and crop their hair
not only violated the Hotel's Grooming Standards but also violated the Union's duty and
responsibility to bargain in good faith. By shaving their heads and cropping their hair, the Union
officers and members violated then Section 6, Rule XIII of the Implementing Rules of Book V of
the Labor Code.
20
This rule prohibits the commission of any act which will disrupt or impede the
early settlement of the labor disputes that are under conciliation. Since the bargaining deadlock is
being conciliated by the NCMB, the Union's action to have their officers and members' heads
shaved was manifestly calculated to antagonize and embarrass the Hotel management and in
doing so effectively disrupted the operations of the Hotel and violated their duty to bargain
collectively in good faith.
Fourth, the Union failed to observe the mandatory 30-day cooling-off period and the seven-day
strike ban before it conducted the strike on January 18, 2002. The NLRC correctly held that the
Union failed to observe the mandatory periods before conducting or holding a strike. Records
reveal that the Union filed its Notice of Strike on the ground of bargaining deadlock on
December 20, 2001. The 30-day cooling-off period should have been until January 19, 2002. On
top of that, the strike vote was held on January 14, 2002 and was submitted to the NCMB only
on January 18, 2002; therefore, the 7-day strike ban should have prevented them from holding a
strike until January 25, 2002. The concerted action committed by the Union on January 18, 2002
which resulted in the disruption of the Hotel's operations clearly violated the above-stated
mandatory periods.
Last, the Union committed illegal acts in the conduct of its strike. The NLRC ruled that the strike
was illegal since, as shown by the pictures
21
presented by the Hotel, the Union officers and
members formed human barricades and obstructed the driveway of the Hotel. There is no merit
in the Union's argument that it was not its members but the Hotel's security guards and the police
officers who blocked the driveway, as it can be seen that the guards and/or police officers were
just trying to secure the entrance to the Hotel. The pictures clearly demonstrate the tense and
highly explosive situation brought about by the strikers' presence in the Hotel's driveway.
Furthermore, this Court, not being a trier of facts, finds no reason to alter or disturb the NLRC
findings on this matter, these findings being based on substantial evidence and affirmed by the
CA.
22
Factual findings of labor officials, who are deemed to have acquired expertise in matters
within their respective jurisdictions, are generally accorded not only respect but even finality,
and bind us when supported by substantial evidence.
23
Likewise, we are not duty-bound to delve
into the accuracy of the factual findings of the NLRC in the absence of clear showing that these
were arrived at arbitrarily and/or bereft of any rational basis.
24

What then are the consequent liabilities of the Union officers and members for their participation
in the illegal strike?
Regarding the Union officers and members' liabilities for their participation in the illegal picket
and strike, Art. 264(a), paragraph 3 of the Labor Code provides that "[a]ny union officer who
knowingly participates in an illegal strike and any worker or union officer who knowingly
participates in the commission of illegal acts during a strike may be declared to have lost
his employment status x x x." The law makes a distinction between union officers and mere
union members. Union officers may be validly terminated from employment for their
participation in an illegal strike, while union members have to participate in and commit illegal
acts for them to lose their employment status.
25
Thus, it is necessary for the company to adduce
proof of the participation of the striking employees in the commission of illegal acts during the
strikes.
26

Clearly, the 29 Union officers may be dismissed pursuant to Art. 264(a), par. 3 of the Labor
Code which imposes the penalty of dismissal on "any union officer who knowingly
participates in an illegal strike." We, however, are of the opinion that there is room for
leniency with respect to the Union members. It is pertinent to note that the Hotel was able to
prove before the NLRC that the strikers blocked the ingress to and egress from the Hotel. But it
is quite apparent that the Hotel failed to specifically point out the participation of each of the
Union members in the commission of illegal acts during the picket and the strike. For this lapse
in judgment or diligence, we are constrained to reinstate the 61 Union members.
Further, we held in one case that union members who participated in an illegal strike but were
not identified to have committed illegal acts are entitled to be reinstated to their former positions
but without backwages.
27
We then held in G & S Transport Corporation v. Infante:
With respect to backwages, the principle of a "fair day's wage for a fair day's labor"
remains as the basic factor in determining the award thereof. If there is no work
performed by the employee there can be no wage or pay unless, of course, the laborer
was able, willing and ready to work but was illegally locked out, suspended or dismissed
or otherwise illegally prevented from working. While it was found that respondents
expressed their intention to report back to work, the latter exception cannot apply in this
case. In Philippine Marine Officer's Guild v. Compaia Maritima, as affirmed in
Philippine Diamond Hotel and Resort v. Manila Diamond Hotel Employees Union, the
Court stressed that for this exception to apply, it is required that the strike be legal, a
situation that does not obtain in the case at bar.
28

In this light, we stand by our recent rulings and reinstate the 61 Union members without
backwages.
WHEREFORE, premises considered, the CA's May 6, 2004 Decision in CA-G.R. SP No.
70778 is hereby AFFIRMED.
The CA's January 19, 2004 Decision in CA-G.R. SP No. 76568 is hereby SET ASIDE. The
October 9, 2002 Decision of the NLRC in NLRC NCR CC No. 000215-02 is hereby
AFFIRMED with MODIFICATIONS, as follows:
The 29 Union officials are hereby declared to have lost their employment status, to wit:
1. LEO ANTONIO ATUTUBO
2. EDWIN E. BALLESTEROS
3. LORETTA DIVINA DE LUNA
4. INISUSAN DE VELEZ
5. DENNIS HABER
6. MARITES HERNANDEZ
7. BERNARD HUGO
8. NORZAMIA INTAL
9. LAURO JAVIER
10. SHANE LAUZ
11. MAY BELEN LEANO
12. EDGAR LINGHON
13. MILAGROS LOPEZ
14. JOSE MUZONES
15. RAY NERVA
16. JESUS NONAN
17. MARLYN OLLERO
18. CATHY ORDUNA
19. REYNALDO RASING
20. JUSTO TABUNDA
21. BARTOLOME TALISAYON
22. JUN TESORO
23. LYNDON TESORO
24. SALVADOR TIPONES
25. SONNY UY
26. WILFREDO VALLES, JR.
27. MEL VILLAHUCO
28. EMMA Q. DANAO
29. JORDAN ALEJANDRO
The 61 Union members are hereby REINSTATED to their former positions without backwages:
1. DANILO AGUINALDO
2. CLARO ABRANTE
3. FELIX ARRIESGADO
4. DAN BAUTISTA
5. MA. THERESA BONIFACIO
6. JUAN BUSCANO
7. ELY CHUA
8. ALLAN DELAGON
9. FRUMENCIO DE LEON
10. ELLIE DEL MUNDO
11. EDWIN DELOS CIENTOS
12. SOLOMON DIZON
13. YLOTSKI DRAPER
14. ERLAND COLLANTES
15. JONAS COMPENIDO
16. RODELIO ESPINUEVA
17. ARMANDO ESTACIO
18. SHERWIN FALCES
19. JELA FRANZUELA
20. REY GEALOGO
21. ALONA GERNOMINO
22. VINCENT HEMBRADOR
23. ROSLYN IBARBIA
24. JAIME IDIOMA, JR.
25. OFELIA LLABAN
26. RENATON LUZONG
27. TEODULO MACALINO
28. JAKE MACASAET
29. HERNANIE PABILONIA
30. HONORIO PACIONE
31. ANDREA VILLAFUERTE
32. MARIO PACULAN
33. JULIO PAJINAG
34. JOSELITO PASION
35. VICENTE PASIOLAN
36. HAZEL PENA
37. PEDRO POLLANTE
38. EDUARDO RAMOS
39. IMELDA RASIN
40. DELFIN RAZALAN
41. EVANGELINE REYES
42. RODOLFO REYES
43. BRIGILDO RUBIO
44. RIO SALCEDO
45. JUANITO SANCHEZ
46. MA. THERESA SANCHEZ
47. DONATO SAN AGUSTIN
48. RICARDO SOCORRO
49. VALERIO SOLIS
50. DOMINADOR SUAREZ
51. ORLANDO TABUGOCA
52. HELEN TALEON
53. ROBERT TANEGRA
54. LOURDES TAYAG
55. ROLANDO TOLENTINO
56. REYNALDO TRESNADO
57. RICHARD SABLADA
58. MAE YAP-DIANGCO
59. GILBERTO VEDASTO
60. DOMINGO VIDAROZAGA
61. DAN VILLANUEVA
In view of the possibility that the Hotel might have already hired regular replacements for the
afore-listed 61 employees, the Hotel may opt to pay SEPARATION PAY computed at one (1)
month's pay for every year of service in lieu of REINSTATEMENT, a fraction of six (6)
months being considered one year of service.
SO ORDERED.
CLUB FILIPINO, INC. and ATTY. ROBERTO F. DE LEON, Petitioners,
vs.
BENJAMIN BAUTISTA, RONIE SUALOG, JOEL CALIDA, JOHNNY ARINTO AND
ROBERTO DE GUZMAN,
1
Respondents.
R E S O L U T I O N
CORONA, J .:
Petitioner Club Filipino, Inc. (the company) is a non-stock, non profit corporation duly formed,
organized and existing under Philippine laws, with petitioner Atty. Roberto F. de Leon as its
president. Respondents Ronnie Sualog, Joel Calida, Johnny Arinto and Roberto de Guzman, on
the other hand, were former officers and members of the Club Filipino Employees Association
(the union).
The union and the company had a collective bargaining agreement (CBA) which expired on May
31, 2000. Prior to the expiration of the CBA and within the freedom period,
2
the union made
several demands for negotiation but the company replied that it could not muster a quorum, thus
no CBA negotiations could be held.
Sometime in 2000, the union submitted its formal CBA proposal to the companys negotiating
panel and repeatedly asked for the start of negotiations. No negotiations, however, took place for
various reasons proffered by the company, among them the illness of the chairman of the
management panel.
In order to compel the company to negotiate, respondents, as officers of the union, filed a request
for preventive mediation with the National Conciliation and Mediation Board (NCMB). Their
strategy, however, failed to bring the management to the negotiating table. The union and
management only met on April 5, 2001, but the meeting concluded with a declaration by both
parties of a deadlock in their negotiations.
On April 6, 2001, the union filed a notice of strike with the NCMB on the grounds of bargaining
deadlock and failure to bargain. On April 22, 2001, the company formally responded to the
demands of the union when it submitted the first part of its economic counter-proposal; the
second part was submitted on May 11, 2001.
Meanwhile, on May 4, 2001, the union conducted a strike vote under the supervision of the
Department of Labor and Employment.
In response to the companys counter-proposal, the union sent the company its improved
proposal, but the company refused to improve on its offer. This prompted the union to stage a
strike on May 26, 2001 on the ground of a CBA bargaining deadlock.
On May 31, 2001, the company filed before the National Labor Relations Commission (NLRC) a
petition to declare the strike illegal. The company further prayed that all union officers who
participated in the illegal strike be considered separated from the service.
3

In a decision dated November 28, 2001, the labor arbiter
4
declared the strike "procedurally
[infirm] and therefore illegal."
5
The labor arbiter noted that the union failed to attach its written
CBA proposal and the companys counter-proposal to the notice of strike and to provide proof of
a request for a conference to settle the dispute. Thus, the notice to strike was deemed not to have
been filed and the strike illegal. As a consequence, all the officers of the union were deemed
terminated from service. However, these employees were entitled to separation pay equivalent to
that granted to employees affected by the retrenchment program which the company had earlier
launched.
6

Respondents appealed but on September 30, 2002, the NLRC in a decision
7
affirmed the labor
arbiter. The NLRC did not see fit to pass upon the issues raised by respondents because, by the
time they appealed on December 20, 2001, they had either resigned from the company or were
no longer part of the union because of the election of new set of officers.
8

Respondents motion for reconsideration was consequently denied.
9
Aggrieved, they elevated the
matter to the Court of Appeals (CA) via a petition for certiorari.
10

On May 31, 2005, the CA issued its assailed decision,
11
holding that the labor arbiter and the
NLRC "took a selective view of the attendant facts of the case" and in "negating thereby the
effects of the notice of strike the union filed."
12
What was more, the NLRCs reasoning was
flawed because "a worker ordered dismissed under a tribunals decision has every right to
question his or her dismissal."
13
The labor arbiters ruling was likewise wrong because it was
based on a "flimsy technicality" that conveniently booted out the union officers from the
company.
14

Thus, the CA set aside the rulings of the NLRC and the labor arbiter as far as respondents
Sualog, Calida, De Guzman and Arinto were concerned and ordered petitioners to pay them full
backwages and benefits from the time of their dismissal up to the finality of its decision, plus
separation pay computed at one month salary per year of service from the time they were hired
up to the finality of its decision.
15
On the other hand, the CA dismissed the petition as far as
Laureano Fegalquin,
16
Bautista and Precentacion were concerned.
17

Petitioners then sought redress from this Court by filing a petition for review on certiorari
18

hoisting the issue of whether or not the strike staged by respondents on May 26, 2001 was legal.
We rule in the affirmative.
It is undisputed that the notice of strike was filed by the union without attaching the counter-
proposal of the company. This, according to petitioners and the labor arbiter, made the ensuing
strike of respondents illegal because the notice of strike of the union was defective.
The contention is untenable.
Rule XXII, Section 4 of the Omnibus Rules Implementing the Labor Code states:
In cases of bargaining deadlocks, the notice shall, as far as practicable, further state the
unresolved issues in the bargaining negotiations and be accompanied by the written proposals of
the union, the counter-proposals of the employer and the proof of a request for conference to
settle differences. In cases of unfair labor practices, the notice shall, as far as practicable, state
the acts complained of, and efforts taken to resolve the dispute amicably.1avvphi1
Any notice which does not conform with the requirements of this and the foregoing section shall
be deemed as not having been filed and the party concerned shall be so informed by the regional
branch of the Board. (emphasis supplied)
In the instant case, the union cannot be faulted for its omission. The union could not have
attached the counter-proposal of the company in the notice of strike it submitted to the NCMB as
there was no such counter-proposal. To recall, the union filed a notice of strike on April 6, 2001
after several requests to start negotiations proved futile. It was only on April 22, 2001, or after
two weeks, when the company formally responded to the union by submitting the first part of its
counter-proposal. Worse, it took the company another three weeks to complete it by submitting
on May 11, 2001 the second part of its counter-proposal. This was almost a year after the
expiration of the CBA sought to be renewed.
The Implementing Rules use the words "as far as practicable." In this case, attaching the
counter-proposal of the company to the notice of strike of the union was not practicable. It was
absurd to expect the union to produce the companys counter-proposal which it did not have.
One cannot give what one does not have. Indeed, compliance with the requirement was
impossible because no counter-proposal existed at the time the union filed a notice of strike. The
law does not exact compliance with the impossible. Nemo tenetur ad impossibile.
Another error committed by the labor arbiter was his declaration that respondents, as union
officers, automatically severed their employment with the company due to the alleged illegal
strike. In the first place, there was no illegal strike. Moreover, it is hornbook doctrine that a mere
finding of the illegality of the strike should not be automatically followed by the wholesale
dismissal of the strikers from employment.
19

The law is clear:
Any union officer who knowingly participates in an illegal strike and any worker or union
officer who knowingly participates in the commission of illegal acts during a strike may be
declared to have lost his employment status.
20
(emphasis supplied)
Note that the verb "participates" is preceded by the adverb "knowingly." This reflects the intent
of the legislature to require "knowledge" as a condition sine qua non before a union officer can
be dismissed from employment for participating in an illegal strike.
21
The provision is worded in
such a way as to make it very difficult for employers to circumvent the law by arbitrarily
dismissing employees in the guise of exercising management prerogative. This is but one aspect
of the States constitutional
22
and statutory
23
mandate to protect the rights of employees to self-
organization.
Nowhere in the ruling of the labor arbiter can we find any discussion of how respondents, as
union officers, knowingly participated in the alleged illegal strike. Thus, even assuming
arguendo that the strike was illegal, their automatic dismissal had no basis.
WHEREFORE, the petition is hereby DENIED.
Costs against petitioners.
SO ORDERED.
SANTA ROSA COCA-COLA PLANT EMPLOYEES UNION, DONRICO V.
SEBASTIAN, EULOGIO G. BATINO, SAMUEL A. ATANQUE, MANOLO C.
ZABALJAUREGUI, DIONISIO TENORIO, EDWIN P. RELLORES, LUIS B.
NATIVIDAD, MYRNA PETINGCO, FELICIANO TOLENTINO, RODOLFO A.
AMANTE, JR., CIPRIANO C. BELLO, RONALDO T. ESPINO, EFREN GALAN, and
JUN CARMELITO SANTOS, Petitioners,
vs.
COCA-COLA BOTTLERS PHILS., INC., Respondent.
D E C I S I O N
CALLEJO, SR., J .:
This is a petition for review on certiorari of the Decision
1
of the Court of Appeals (CA) in CA-
G.R. SP Nos. 74174 and 74860, which affirmed the ruling of the National Labor Relations
Commission (NLRC) in NLRC CA No. 030424-02, and the Labor Arbiter in NLRC Case No.
RAB-IV-10-11579-99-L.
The Antecedents
The Sta. Rosa Coca-Cola Plant Employees Union (Union) is the sole and exclusive bargaining
representative of the regular daily paid workers and the monthly paid non-commission-earning
employees of the Coca-Cola Bottlers Philippines, Inc. (Company) in its Sta. Rosa, Laguna plant.
The individual petitioners are Union officers, directors, and shop stewards.
The Union and the Company had entered into a three-year Collective Bargaining Agreement
(CBA) effective July 1, 1996 to expire on June 30, 1999. Upon the expiration of the CBA, the
Union informed the Company of its desire to renegotiate its terms. The CBA meetings
commenced on July 26, 1999, where the Union and the Company discussed the ground rules of
the negotiations. The Union insisted that representatives from the Alyansa ng mga Unyon sa
Coca-Cola be allowed to sit down as observers in the CBA meetings. The Union officers and
members also insisted that their wages be based on their work shift rates. For its part, the
Company was of the view that the members of the Alyansa were not members of the bargaining
unit. The Alyansa was a mere aggregate of employees of the Company in its various plants; and
is not a registered labor organization. Thus, an impasse ensued.
2

On August 30, 1999, the Union, its officers, directors and six shop stewards filed a "Notice of
Strike" with the National Conciliation and Mediation Board (NCMB) Regional Office in
Southern Tagalog, Imus, Cavite. The petitioners relied on two grounds: (a) deadlock on CBA
ground rules; and (b) unfair labor practice arising from the companys refusal to bargain. The
case was docketed as NCMB-RBIV-NS-08-046-99.
3

The Company filed a Motion to Dismiss
4
alleging that the reasons cited by the Union were not
valid grounds for a strike. The Union then filed an Amended Notice of Strike on September 17,
1999 on the following grounds: (a) unfair labor practice for the companys refusal to bargain in
good faith; and (b) interference with the exercise of their right to self-organization.
5

Meanwhile, on September 15, 1999, the Union decided to participate in a mass action organized
by the Alyansa ng mga Unyon sa Coca-Cola in front of the Companys premises set for
September 21, 1999. 106 Union members, officers and members of the Board of Directors, and
shop stewards, individually filed applications for leave of absence for September 21, 1999.
Certain that its operations in the plant would come to a complete stop since there were no
sufficient trained contractual employees who would take over, the Company disapproved all
leave applications and notified the applicants accordingly.
6
A day before the mass action, some
Union members wore gears, red tag cloths stating "YES KAMI SA STRIKE" as headgears and
on the different parts of their uniform, shoulders and chests.
The Office of the Mayor issued a permit to the Union, allowing it "to conduct a mass protest
action within the perimeter of the Coca-Cola plant on September 21, 1999 from 9:00 a.m. to
12:00 noon."
7
Thus, the Union officers and members held a picket along the front perimeter of
the plant on September 21, 1999. All of the 14 personnel of the Engineering Section of the
Company did not report for work, and 71 production personnel were also absent. As a result,
only one of the three bottling lines operated during the day shift. All the three lines were
operated during the night shift with cumulative downtime of five (5) hours due to lack of
manning, complement and skills requirement. The volume of production for the day was short by
60,000 physical case[s] versus budget.
8

On October 13, 1999, the Company filed a "Petition to Declare Strike Illegal"
9
alleging, inter
alia, the following: there was a deadlock in the CBA negotiations between the Union and
Company, as a result of which a Notice of Strike was filed by the Union; pending resolution of
the Notice of Strike, the Union members filed applications for leave on September 21, 1999
which were disapproved because operations in the plant may be disrupted; on September 20,
1999, one day prior to the mass leave, the Union staged a protest action by wearing red arm
bands denouncing the alleged anti-labor practices of the company; on September 21, 1999,
without observing the requirements mandated by law, the Union picketed the premises of the
Company in clear violation of Article 262 of the Labor Code; because of the slowdown in the
work, the Company suffered losses amounting to P2,733,366.29; the mass/protest action
conducted on September 21, 1999 was clearly a strike; since the Union did not observe the
requirements mandated by law, i.e., strike vote, cooling-off period and reporting requirements,
the strike was therefore illegal; the Union also violated the provision of the CBA on the
grievance machinery; there being a direct violation of the CBA, the Unions action constituted an
unfair labor practice; and the officers who knowingly participated in the commission of illegal
acts during the strike should be declared to have lost their employment status. The Company
prayed that judgment be rendered as follows:
1. Declaring the strike illegal;
2. Declaring the officers of respondent Union or the individual respondents to have lost
their employment status;
3. Declaring respondent Union, its officers and members guilty of unfair labor practice
for violation of the CBA; and
4. Ordering the respondents to pay petitioner the following claims for damages:
a. Actual Damages in the amount of P 4,733,366.29
b. Moral Damages in the amount of Five (5) Million Pesos; and
c. Exemplary Damages in the amount of Two (2) Million Pesos.
10

The Union filed an Answer with a Motion to Dismiss and/or to Suspend Proceedings
11
alleging
therein that the mass action conducted by its officers and members on September 21, 1999 was
not a strike but just a valid exercise of their right to picket, which is part of the right of free
expression as guaranteed by the Constitution; several thousands of workers nationwide had
launched similar mass protest actions to demonstrate their continuing indignation over the ill
effects of martial rule in the Philippines.
12
It pointed out that even the officers and members of
the Alyansa ng mga Unyon sa Coca-Cola had similarly organized mass protest actions. The
Union insisted that officers and members filed their applications for leave for September 21,
1999 knowing fully well that there were no bottling operations scheduled on September 21 and
22, 1999; they even secured a Mayors permit for the purpose. The workers, including the
petitioners, merely marched to and fro at the side of the highway near one of the gates of the Sta.
Rosa Plant, the loading bay for public vehicles. After 3 hours, everyone returned to work
according to their respective shifting schedules. The Union averred that the petition filed by the
Company was designed to harass and its officers and members in order to weaken the Unions
position in the on-going collective bargaining negotiations.
In a letter to the Union President dated October 26, 1999, the NCMB stated that based on their
allegations, the real issue between the parties was not the proper subject of a strike, and should
be the subject of peaceful and reasonable dialogue. The NCMB recommended that the Notice of
Strike of the Union be converted into a preventive mediation case. After conciliation proceedings
failed, the parties were required to submit their respective position papers.
13
In the meantime, the
officers and directors of the Union remained absent without the requisite approved leaves. On
October 11, 1999, they were required to submit their explanations why they should not be
declared AWOL.
14

On November 26, 1999, the Labor Arbiter rendered a Decision
15
granting the petition of the
Company. He declared that the September 21, 1999 mass leave was actually a strike under
Article 212 of the Labor Code for the following reasons: based on the reports submitted by the
Production and Engineering Department of the Company, there was a temporary work
stoppage/slowdown in the company;
16
out of the usual three (3) lines for production for the day
shift, only one line operated by probationary employees was functional and there was a
cumulative downtime of five (5) hours attributed to the lack of manning complement and skills
requirement. The Labor Arbiter further declared:
x x x [T]he September 21, 1999 activity of the union and the individual respondents herein fell
within the foregoing definition of a strike. Firstly, the union itself had admitted the fact that on
the date in question, respondent officers, together with their union members and supporters from
the Alyansa ng mga Unyon sa Coca-Cola, did not report for their usual work. Instead, they all
assembled in front of the Sta. Rosa Plant and picketed the premises. Very clearly, there was a
concerted action here on the part of the respondents brought about a temporary stoppage of work
at two out of three bottling lines at the Sta. Rosa Plant. According to Edwin Jaranilla, the
Engineering Superintendent (Annex H, petition), all of his departments 14 engineering
personnel did not report for work on September 21, 1999, and that only Line 2 operated on the
day shift. Honorio Tacla, the Production Superintendent, testified (Annex H-1), that 71
production personnel were likewise absent from their respective work stations on September 21,
1999, and that only Line 2 operated on the day shift. Similarly, Federico Borja, Physical
Distribution Superintendent, stated under oath (Annex H-2) that 12 personnel from his
department did not report for work on September 21, 1999, and that no forklift servicing was
done on Lines 1 and 3. From the foregoing testimonies, it is evident that respondents concerted
activity resulted in a temporary stoppage of work at the Sta. Rosa Plant of the company. Thirdly,
such concerted activity by respondents was by reason of a labor dispute. Earlier, the union had
filed a Notice of Strike against the company on account of a disagreement with the latter
regarding CBA ground rules, i.e., the demand of the Union for Alyansa members from other
plants to attend as observers during the CBA negotiation, and for the members of the negotiating
panel to be paid their wages based on their work shift rate. Moreover, on September 20, 1999,
one day before respondents mass leave from work and concerted action, they had worn red tag
cloth materials on different parts of their uniform which contained the words, "YES kami sa
strike"; "Protesta kami"; "Sahod, karapatan, manggagawa ipaglaban"; and "Union busting itigil."
(Annexes G, G-1, G-2 & G-3). These indicated that the concerted action taken by respondents
against CCBPI was a result of or on account of a labor dispute.
17

According to the Labor Arbiter, the strike conducted by the Union was illegal since there was no
showing that the Union conducted a strike vote, observed the prescribed cooling-off period,
much less, submitted a strike vote to the DOLE within the required time. Consequently, for
knowingly participating in the illegal strike, the individual petitioners were considered to have
lost their employment status.
18

The Union appealed the decision to the NLRC. On July 31, 2002, the NLRC affirmed the
decision of the Labor Arbiter with the modification that Union Treasurer Charlita M. Abrigo,
who was on bereavement leave at the time, should be excluded from the list of those who
participated in the illegal strike. She was thus ordered reinstated to her former position with full
backwages and benefits.
19

The Union and its officers, directors and the shop stewards, filed a petition for certiorari in the
CA. The case was docketed as CA-G.R. SP No. 74174. Another petition was filed by Ricky G.
Ganarial and Almira Romo, docketed as CA-G.R. SP No. 74860. The two cases were
consolidated in the 6th Division of the CA.
Petitioners alleged the following in their respective petitions:
I
THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION FOR HAVING DECLARED PETITIONERS TO HAVE LOST THEIR
EMPLOYMENT WHEN FACTS WOULD SHOW PETITIONERS WERE NOT AFFORDED
DUE PROCESS
II
THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION IN DECLARING THE PEACEFUL PICKETING CONDUCTED BY THE
UNION AS ILLEGAL STRIKE DESPITE ABSENCE OF SUBSTANTIAL EVIDENCE ON
THE INTENT TO CREATE TEMPORARY WORK STOPPAGE
III
THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION IN DECLARING THAT PETITIONERS HAVE LOST THEIR
EMPLOYMENT FOR KNOWINGLY PARTICIPATING IN AN ILLEGAL STRIKE DESPITE
THE FACT THAT PETITIONERS ARE NOT ELECTED OFFICERS OF THE UNION AND
ARE MERE SHOP STEWARDS AND DESPITE THE FACT THAT THERE WAS NO
PROOF THAT THEY COMMITTED ILLEGAL ACTS.
20

The petitioners, likewise, raised the following, to wit:
WHETHER OR NOT PUBLIC RESPONDENT NLRC HAS GRAVELY ABUSED ITS
DISCRETION AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN AFFIRMING
THE DECISION OF THE LABOR ARBITER A QUO WHO COMMITTED SERIOUS
ERRORS IN HIS FINDINGS OF FACTS WHEN HE DECLARED THAT THE STRIKE
CONDUCTED BY THE RESPONDENTS ON SEPTEMBER 21, 1999 IS ILLEGAL.
WHETHER OR NOT PUBLIC RESPONDENT NLRC HAS GRAVELY ABUSED ITS
DISCRETION AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN AFFIRMING
THE DECISION OF THE LABOR ARBITER A QUO WHO COMMITTED SERIOUS
ERRORS IN HIS FINDINGS OF FACTS WHEN HE DECLARED THAT INDIVIDUAL
RESPONDENTS (NOW PETITIONERS), INCLUDING SIX (6) UNION SHOP STEWARDS,
ARE CONSIDERED TO HAVE LOST THEIR EMPLOYMENT STATUS (EXCEPT
CHARLITA ABRIGO) FOR KNOWINGLY PARTICIPATING IN SAID ILLEGAL STRIKE.
21

On September 10, 2003, the CA rendered judgment dismissing the petition for lack of merit. It
also declared that petitioners, in CA-G.R. SP No. 74860, were guilty of forum shopping.
Petitioners filed a motion for reconsideration which the appellate court denied; hence, the instant
petition was filed based on the following grounds:
(1) THE HONORABLE COURT OF APPEALS HAS GRAVELY ABUSED ITS
DISCRETION IN DISMISSING THE PETITION BEFORE IT FOR LACK OF MERIT
WHEN IT IS CLEAR FROM THE EVIDENCE ON RECORD THAT THE SUBJECT
MASS ACTION WAS A VALID EXERCISE OF THE WORKERS
CONSTITUTIONAL RIGHT TO PICKET WHICH IS PART OF THE RIGHT TO
FREE EXPRESSION.
(2) THE NLRC GRAVELY ABUSED ITS DISCRETION IN AFFIRMING THE
DECISION OF THE LABOR ARBITER A QUO WHEN IT CONCLUDED THAT AS
A CONSEQUENCE OF THE ILLEGALITY OF THE STRIKE, THE DISMISSAL OF
THE OFFICERS OF THE UNION IS JUSTIFIED AND VALID, IS NOT IN ACCORD
WITH FACTS AND EVIDENCE ON RECORD.
(3) EVEN ASSUMING ARGUENDO THAT THE PROTEST MASS ACTION
STAGED BY PETITIONERS ON SEPTEMBER 21, 1999 CONSTITUTES A STRIKE,
THE NLRC SERIOUSLY ERRED WHEN IT AFFIRMED THE LABOR ARBITERS
DECISION DECLARING THE FORFEITURE OF EMPLOYMENT STATUS OF
UNION OFFICERS AND SHOP STEWARDS (WHO HAVE NOT COMMITTED
ANY ILLEGAL ACT DURING THE CONDUCT OF THE SAID MASS ACTION)
FOR HAVING KNOWINGLY PARTICIPATED IN AN ILLEGAL STRIKE.
22

The threshold issues in these cases are: (a) whether the September 21, 1999 mass action staged
by the Union was a strike; (b) if, in the affirmative, whether it was legal; and (c) whether the
individual officers and shop stewards of petitioner Union should be dismissed from their
employment.
On the first and second issues, petitioners maintain that the September 21, 1999 mass protest
action was not a strike but a picket, a valid exercise of their constitutional right to free expression
and assembly.
23
It was a peaceful mass protest action to dramatize their legitimate grievances
against respondent. They did not intend to have a work stoppage since they knew beforehand that
no bottling operations were scheduled on September 21, 1999 pursuant to the Logistics Planning
Services Mega Manila Production Plan dated September 15, 1999.
24
Thus, they applied for
leaves of absences for September 21, 1999 which, however, were not approved. They also
obtained a mayors permit to hold the picket near the highway, and they faithfully complied with
the conditions set therein. The protesting workers were merely marching to and fro at the side of
the highway or the loading bay near one of the gates of the Company plant, certainly not
blocking in any way the ingress or egress from the Companys premises. Their request to hold
their activity was for four (4) hours, which was reduced to three (3) hours. Thereafter, they all
went back to work. The bottling operations of the Company was not stopped, even temporarily.
Since petitioner Union did not intend to go on strike, there was no need to observe the mandatory
legal requirements for the conduct of a strike.
Petitioners also point out that members belonging to the IBM-KMU at the San Fernando Coca-
Cola bottling plant staged simultaneous walkout from their work assignments for two
consecutive days, on October 7 and 8, 1999. However, the Secretary of Labor and Employment
(SOLE) declared that the walkout was considered a mass action, not a strike, and the officers of
the IBM-KMU were only meted a three-day suspension. Respondent accepted the decision of the
SOLE and no longer appealed the decision. Petitioners insist that this should, likewise, apply in
the resolution of the issue of whether petitioners staged a strike or not, and whether the penalty
of dismissal from the employment with the respondent is just and equitable.
Petitioners also insist that they were denied the right to due process because the decision of the
Labor Arbiter was implemented even while their appeal was pending in the NLRC. The decision
of the Labor Arbiter against them was to become final and executory only until after the NLRC
shall have resolved their appeal with finality.
On the third issue, petitioners aver that even assuming that they had indeed staged a strike, the
penalty of dismissal is too harsh. They insist that they acted in good faith. Besides, under Article
264 of the Labor Code, the dismissal of the Union officers who participated in an illegal strike is
discretionary on the employer. Moreover, six (6) of the petitioners were shop stewards who were
mere members of the Union and not officers thereof.
In its comment on the petition, respondent avers that the issues raised by petitioners are factual;
hence, inappropriate in a petition for review on certiorari. Besides, the findings of the Labor
Arbiter had been affirmed by the NLRC and the CA, and are, thus, conclusive on this Court.
Respondent further avers that the law offers no discretion as to the proper penalty that should be
imposed against a Union official participating in an illegal strike. Contrary to the contention of
petitioners, shop stewards are also Union officers. To support its claim, respondent cited
Samahan ng Manggagawa sa Moldex Products, Inc. v. National Labor Relations Commission,
25

International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America v.
Hoffa;
26
and Coleman v. Brotherhood of Railway and Steamship Clerks, etc.
27

The petition is denied for lack of merit.
The ruling of the CA that petitioners staged a strike on September 21, 1999, and not merely a
picket is correct.
It bears stressing that this is a finding made by the Labor Arbiter which was affirmed by the
NLRC
28
and the CA.
29
The settled rule is that the factual findings and conclusions of tribunals, as
long as they are based on substantial evidence, are conclusive on this Court.
30
The raison detre
is that quasi-judicial agencies, like the Labor Arbiter and the NLRC, have acquired a unique
expertise since their jurisdictions are confined to specific matters. Besides, under Rule 45 of the
Rules of Court, the factual issues raised by the petitioner are inappropriate in a petition for
review on certiorari. Whether petitioners staged a strike or not is a factual issue.
Petitioners failed to establish that the NLRC committed grave abuse of its discretion amounting
to excess or lack of jurisdiction in affirming the findings of the Labor Arbiter that petitioners had
indeed staged a strike.
Article 212(o) of the Labor Code defines strike as a temporary stoppage of work by the
concerted action of employees as a result of an industrial or labor dispute. In Bangalisan v. Court
of Appeals,
31
the Court ruled that "the fact that the conventional term strike was not used by the
striking employees to describe their common course of action is inconsequential, since the
substance of the situation, and not its appearance, will be deemed to be controlling."
32
The term
"strike" encompasses not only concerted work stoppages, but also slowdowns, mass leaves, sit-
downs, attempts to damage, destroy or sabotage plant equipment and facilities, and similar
activities.
33

Picketing involves merely the marching to and fro at the premises of the employer, usually
accompanied by the display of placards and other signs making known the facts involved in a
labor dispute.
34
As applied to a labor dispute, to picket means the stationing of one or more
persons to observe and attempt to observe. The purpose of pickets is said to be a means of
peaceable persuasion.
35

A labor dispute includes any controversy or matter concerning terms or conditions of
employment or the association or representation of persons in negotiating, fixing, maintaining,
changing or arranging the terms and conditions of employment, regardless of whether the
disputants stand in the proximate relation of employer and employee.
36

That there was a labor dispute between the parties, in this case, is not an issue. Petitioners
notified the respondent of their intention to stage a strike, and not merely to picket. Petitioners
insistence to stage a strike is evident in the fact that an amended notice to strike was filed even as
respondent moved to dismiss the first notice. The basic elements of a strike are present in this
case: 106 members of petitioner Union, whose respective applications for leave of absence on
September 21, 1999 were disapproved, opted not to report for work on said date, and gathered in
front of the company premises to hold a mass protest action. Petitioners deliberately absented
themselves and instead wore red ribbons, carried placards with slogans such as: "YES KAMI SA
STRIKE," "PROTESTA KAMI," "SAHOD, KARAPATAN NG MANGGAGAWA
IPAGLABAN," "CBA-WAG BABOYIN," "STOP UNION BUSTING." They marched to and
fro in front of the companys premises during working hours. Thus, petitioners engaged in a
concerted activity which already affected the companys operations. The mass concerted activity
constituted a strike.
The bare fact that petitioners were given a Mayors permit is not conclusive evidence that their
action/activity did not amount to a strike. The Mayors description of what activities petitioners
were allowed to conduct is inconsequential. To repeat, what is definitive of whether the action
staged by petitioners is a strike and not merely a picket is the totality of the circumstances
surrounding the situation.
A strike is the most powerful of the economic weapons of workers which they unsheathe to force
management to agree to an equitable sharing of the joint product of labor and capital. It is a
weapon that can either breathe life to or destroy the Union and its members in their struggle with
management for a more equitable due to their labors.
37
The decision to declare a strike must
therefore rest on a rational basis, free from emotionalism, envisaged by the tempers and tantrums
of a few hot heads, and finally focused on the legitimate interests of the Union which should not,
however, be antithetical to the public welfare, and, to be valid, a strike must be pursued within
legal bounds. The right to strike as a means of attainment of social justice is never meant to
oppress or destroy the employer.
38

Since strikes cause disparity effects not only on the relationship between labor and management
but also on the general peace and progress of society, the law has provided limitations on the
right to strike. For a strike to be valid, the following procedural requisites provided by Art. 263
of the Labor Code must be observed: (a) a notice of strike filed with the DOLE 30 days before
the intended date thereof, or 15 days in case of unfair labor practice; (b) strike vote approved by
a majority of the total union membership in the bargaining unit concerned obtained by secret
ballot in a meeting called for that purpose, (c) notice given to the DOLE of the results of the
voting at least seven days before the intended strike. These requirements are mandatory and the
failure of a union to comply therewith renders the strike illegal.
39
It is clear in this case that
petitioners totally ignored the statutory requirements and embarked on their illegal strike. We
quote, with approval, the ruling of the CA which affirmed the decisions of the NLRC and of the
Labor Arbiter:
Since it becomes undisputed that the mass action was indeed a strike, the next issue is to
determine whether the same was legal or not. Records reveal that the said strike did not comply
with the requirements of Article 263 (F) in relation to Article 264 of the Labor Code, which
specifically provides, thus:
ART. 263. STRIKES, PICKETING, AND LOCKOUTS
xxx xxx xxx xxx
(f) A decision to declare a strike must be approved by a majority of the total union membership
in the bargaining unit concerned, obtained by secret ballot in meetings or referenda called for
that purpose. A decision to declare a lockout must be approved by a majority of the board of
directors of the corporation or association or of the partners in a partnership, obtained by secret
ballot in a meeting called for that purpose. The decision shall be valid for the duration of the
dispute based on substantially the same grounds considered when the strike or lockout vote was
taken. The Ministry may at its own initiative or upon the request of any affected party, supervise
the conduct of the secret balloting. In every case, the union or the employer shall furnish the
Ministry the results of the voting at least seven days before the intended strike or lockout, subject
to the cooling-off period herein provided.
ART. 264. PROHIBITED ACTIVITIES
(a) No labor organization or employer shall declare a strike or lockout without first having
bargained collectively in accordance with Title VII of this Book or without first having filed the
notice required in the preceding article or without the necessary strike or lockout vote first
having been obtained and reported to the Ministry.
No strike or lockout shall be declared after assumption of jurisdiction by the President or the
Minister or after certification or submission of the dispute to compulsory or voluntary arbitration
or during the pendency of cases involving the same grounds for the strike or lockout.
Any worker whose employment has been terminated as a consequence or an unlawful lockout
shall be entitled to reinstatement with full backwages. Any union officer who knowingly
participates in an illegal strike and any worker or union officer who knowingly participates in the
commission of illegal acts during a strike may be declared to have lost his employment status:
Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient
ground for termination of his employment, even if a replacement had been hired by the employer
during such lawful strike.
xxx xxx xxx xxx
Applying the aforecited mandatory requirements to the case at bench, the Labor Arbiter found,
thus:
In the present case, there is no evidence on record to show that respondents had complied with
the above mandatory requirements of law for a valid strike. Particularly, there is no showing that
respondents had observed the prescribed cooling-off period, conducted a strike vote, much less
submitted a strike vote report to the Department of Labor within the required time. This being
the case, respondents strike on September 21, 1999 is illegal. In the recent case of CCBPI
Postmix Workers Union vs. NLRC, 2999 (sic) SCRA 410, the Supreme Court had said: "It bears
stressing that the strike requirements under Article 264 and 265 of the Labor Code are mandatory
requisites, without which, the strike will be considered illegal. The evidence (sic) intention of the
law in requiring the strike notice and strike-vote report as mandatory requirements is to
reasonably regulate the right to strike which is essential to the attainment of legitimate policy
objectives embodied in the law. Verily, substantial compliance with a mandatory provision will
not suffice. Strict adherence to the mandate of the law is required.
Aside from the above infirmity, the strike staged by respondents was, further, in violation of the
CBA which stipulated under Section 1, Article VI, thereof that,
SECTION 1. The UNION agrees that there shall be no strike, walkout, stoppage or slowdown of
work, boycott, secondary boycott, refusal to handle any merchandise, picketing, sitdown strikes
of any kind, sympathetic or general strike, or any other interference with any of the operations of
the COMPANY during the term of this Agreement, so long as the grievance procedure for which
provision is made herein is followed by the COMPANY.
Here, it is not disputed that respondents had not referred their issues to the grievance machinery
as a prior step. Instead, they chose to go on strike right away, thereby bypassing the required
grievance procedure dictated by the CBA.
40

On the second and third issues, the ruling of the CA affirming the decisions of the NLRC and the
Labor Arbiter ordering the dismissal of the petitioners-officers, directors and shop stewards of
petitioner Union is correct.
It bears stressing, however, that the law makes a distinction between union members and union
officers. A worker merely participating in an illegal strike may not be terminated from
employment. It is only when he commits illegal acts during a strike that he may be declared to
have lost employment status.
41
For knowingly participating in an illegal strike or participates in
the commission of illegal acts during a strike, the law provides that a union officer may be
terminated from employment.
42
The law grants the employer the option of declaring a union
officer who participated in an illegal strike as having lost his employment. It possesses the right
and prerogative to terminate the union officers from service.
43

We quote, with approval, the following ruling of the Court of Appeals:
As to the imposition of the penalty provided for should an illegal strike be declared as such, We
find no legal or factual reason to digress from the following disquisition of the Labor Arbiter, to
wit:
No doubt, the strike conducted by respondents on September 21, 1999 is illegal. Under Article
264(a) of the Labor Code, it is stated that, Any union officer who knowingly participates in the
commission of illegal acts during a strike may be declared to have lost his employment status.
xxx. In the present case, CCBPI had already promptly notified respondents and their members
of the disapproval of their leave. In fact, in the company notice (of the disapproval of their
leave), CCBPI emphasized that "operations will come to a complete stop on September 21, 1999
if all the applications are approved." They were further informed that, there are no sufficiently
trained contractual employees who can take over as replacements on that day (Annexes "C," "C-
1" to "C-18"). In other words, respondents had known beforehand that their planned mass leave
would definitely result in a stoppage of the operations of the company for September 21, 1999.
Still, respondents knowingly and deliberately proceeded with their mass action, unmindful of the
ill effects thereof on the business operations of the company. In the case of Association of
Independent Unions in the Philippines v. NLRC, 305 SCRA 219, the Supreme Court had ruled
that,
Union officers are duty-bound to guide their members to respect the law. If instead of doing so,
the officers urge the members to violate the law and defy the duly constituted authorities, their
dismissal from the service is just penalty or sanction for their unlawful acts. The officers
responsibility is greater than that of the members.
Here, the law required respondents to follow a set of mandatory procedures before they could go
on with their strike. But obviously, rather than call on their members to comply therewith,
respondents were the first ones to violate the same.
44

Petitioners cannot find solace in the Order of the Secretary of Labor and Employment (SOLE) in
OS-A-J-0033-99, NCMB-RB 111-NS-10-44-99 and 11-51-99 involving the labor dispute
between the Company and the Union therein (the Ilaw at Buklod ng Manggagawa Local No. 1,
representing the daily paid rank and file members of the respondent, as well as the plant-based
route helpers and drivers at its San Fernando Plant). In said case, the SOLE found that the
simultaneous walkout staged on October 7 and 8, 1999 was indeed a mass action, initiated by the
Union leaders. The acts of the Union leaders were, however, found to be illegal which warranted
their dismissal, were it not for the presence of mitigating factors,
i.e., the walkout was staged in support of their leaders in the course of the CBA negotiation
which was pending for more than nine (9) months; the Plant was not fully disrupted as the
Company was able to operate despite the severe action of the Union members, with the
employment of casual and contractual workers; the Union had complied with the requirements of
a strike and refrained from staging an actual strike.
45

Neither can the petitioners find refuge in the rulings of this Court in Panay Electric Company v.
NLRC
46
or in Lapanday Workers Union v. NLRC.
47
In the Panay case, the Court meted the
suspension of the union officers, instead of terminating their employment status since the NLRC
found no sufficient proof of bad faith on the part of the union officers who took part in the strike
to protest the dismissal of their fellow worker, Enrique Huyan which was found to be illegal. In
Lapanday, the Court actually affirmed the dismissal of the union officers who could not claim
good faith to exculpate themselves. The officers, in fact, admitted knowledge of the law on
strike, including its procedure in conducting the same. The Court held that the officers cannot
violate the law which was designed to promote their interests.
Finally, the contention of petitioners Elenette Moises, Almira Romo, Louie Labayani, Ricky
Ganarial, Efren Galan and Jun Carmelito Santos who were appointed as shop stewards of the
Union that they were mere members and not the officers of petitioner Union is barren of merit.
We agree with the observation of respondent that under Section 501(a) and (b) of the Landrum
Griffin Act of 1959,
48
shop stewards are officers of the Union:
Sec. 501 (a) The officers, agents, shop stewards, and other representatives of a labor organization
occupy positions of trust in relation to such organization and its members as a group. It is,
therefore, the duty of each such person, taking into account the special problems and functions of
a labor organization, to hold its money and property solely for the benefit of the organization and
its members and to manage, invest, and expend the same in accordance with its constitution and
bylaws and any resolutions of the governing bodies adopted thereunder, to refrain from dealing
with such organization as an adverse party in any matter connected with his duties and from
holding or acquiring any pecuniary or personal interest which conflicts with the interest of such
organization, and to account to the organization for any profit received by him in whatever
capacity in connection with transactions conducted by him or under his direction on behalf of the
organization. A general exculpatory resolution of a governing body purporting to relieve any
such person of liability for breach of the duties declared by this section shall be void as against
public policy.
(b) When any officer, agent, shop steward, or representative of any labor organization is alleged
to have violated the duties declared in subsection (a) of this section and the labor organization or
its governing board or officers refuse or fail to sue or recover damages or secure an accounting
or other appropriate relief within a reasonable time after being requested to do so by any member
of the labor organization, such member may sue such officer, agent, shop steward, or
representative in any district court of the United States or in any State court of competent
jurisdiction to recover damages or secure an accounting or other appropriate relief for the benefit
of the labor organization.
49

Under said Act, Section 3(q) thereof provides, as follows:
(q) "Officer, agent, shop steward, or other representative", when used with respect to a labor
organization, includes elected officials and key administrative personnel, whether elected or
appointed (such as business agents, heads of departments or major units, and organizers who
exercise substantial independent authority), but does not include salaried non-supervisory
professional staff, stenographic, and service personnel.
50

Admittedly, there is no similar provision in the Labor Code of the Philippines; nonetheless,
petitioners who are shop stewards are considered union officers.
Officers normally mean those who hold defined offices. An officer is any person occupying a
position identified as an office. An office may be provided in the constitution of a labor union or
by the union itself in its CBA with the employer. An office is a word of familiar usage and
should be construed according to the sense of the thing.
51

Irrefragably, under its Constitution and By-Laws, petitioner Union has principal officers and
subordinate officers, who are either elected by its members, or appointed by its president,
including the standing committees each to be headed by a member of the Board of Directors.
Thus, under Section 1, Article VI of petitioner Unions Constitution and By-Laws, the principal
officers and other officers, as well as their functions/duties and terms of office, are as follows:
ARTICLE VI
PRINCIPAL OFFICERS
SECTION 1. The governing body of the UNION shall be the following officers who shall be
elected through secret ballot by the general membership:
President Auditor
Vice-President two (2) Public Relations Officer
Secretary Sergeant-at-Arms
Treasurer Board of Directors nine (9)
SECTION 2. The above officers shall administer Unions affairs, formulate policies and
implement programs to effectively carry out the objectives of the UNION and the Labor Code of
the Philippines and manage all the monies and property of the UNION.
SECTION 3. The officers of the UNION and the members of the Board of Directors shall hold
office for a period of five (5) years from the date of their election until their successors shall have
been duly elected and qualified; provided that they remain members of the UNION in good
standing.
52

Section 6, Article II of the CBA of petitioner Union and respondent defines the position of shop
steward, thus:
SECTION 6. Shop Stewards. The UNION shall certify a total of eight (8) shop stewards and
shall inform management of the distribution of these stewards among the departments
concerned.1avvphi1.net
Shop Stewards, union officers and members or employees shall not lose pay for attending Union-
Management Labor dialogues, investigations and grievance meetings with management.
53

Section 6, Rule XIX of the Implementing Rules of Book V of the Labor Code mentions the
functions and duties of shop stewards, as follows:
Section 2. Procedures in handling grievances. In the absence of a specific provision in the
collective bargaining agreement prescribing for the procedures in handling grievance, the
following shall apply:
(a) An employee shall present this grievance or complaint orally or in writing to the shop
steward. Upon receipt thereof, the shop steward shall verify the facts and determine
whether or not the grievance is valid.
(b) If the grievance is valid, the shop steward shall immediately bring the complaint to
the employees immediate supervisor. The shop steward, the employee and his immediate
supervisor shall exert efforts to settle the grievance at their level.
(c) If no settlement is reached, the grievance shall be referred to the grievance committee
which shall have ten (10) days to decide the case.
Where the issue involves or arises from the interpretation or implementation of a provision in the
collective bargaining agreement, or from any order, memorandum, circular or assignment issued
by the appropriate authority in the establishment, and such issue cannot be resolved at the level
of the shop steward or the supervisor, the same may be referred immediately to the grievance
committee.
All grievance unsettled or unresolved within seven (7) calendar days from the date of its
submission to the last step in the grievance machinery shall automatically be referred to a
voluntary arbitrator chosen in accordance with the provisions of the collective bargaining
agreement, or in the absence of such provisions, by mutual agreement of the parties.
54

Thus, a shop steward is appointed by the Union in a shop, department, or plant serves as
representative of the Union, charged with negotiating and adjustment of grievances of employees
with the supervisor of the employer.
55
He is the representative of the Union members in a
building or other workplace. Blacks Law Dictionary defines a shop steward as a union official
who represents members in a particular department. His duties include the conduct of initial
negotiations for settlement of grievances.
56
He
is to help other members when they have concerns with the employer or other work-related
issues. He is the first person that workers turn to for assistance or information. If someone has a
problem at work, the steward will help them sort it out or, if necessary, help them file a
complaint.
57
In the performance of his duties, he has to take cognizance of and resolve, in the
first instance, the grievances of the members of the Union. He is empowered to decide for
himself whether the grievance or complaint of a member of the petitioner Union is valid, and if
valid, to resolve the same with the supervisor failing which, the matter would be elevated to the
Grievance Committee.
It is quite clear that the jurisdiction of shop stewards and the supervisors includes the
determination of the issues arising from the interpretation or even implementation of a provision
of the CBA, or from any order or memorandum, circular or assignments issued by the
appropriate authority in the establishment.1awphi1.net In fine, they are part and parcel of the
continuous process of grievance resolution designed to preserve and maintain peace among the
employees and their employer. They occupy positions of trust and laden with awesome
responsibilities.
In this case, instead of playing the role of "peacemakers" and grievance solvers, the petitioners-
shop stewards participated in the strike. Thus, like the officers and directors of petitioner Union
who joined the strike, petitioners-shop stewards also deserve the penalty of dismissal from their
employment.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. The Decision
of the Court of Appeals is AFFIRMED. No costs.
SO ORDERED.
MSF TIRE AND RUBBER, INC., petitioner,
vs.
COURT OF APPEALS and PHILTREAD TIRE WORKERS' UNION, respondents.
MENDOZA, J .:
Petitioner seeks a review of the decision
1
of the Court of Appeals, dated March 20, 1997, which
set aside the order of the Regional Trial Court of Makati, dated July 2, 1996, in Civil Case No.
95-770, granting petitioner's application for a writ of preliminary injunction.
The facts are as follows:
A labor dispute arose between Philtread Tire and Rubber Corporation (Philtread) and private
respondent, Philtread Tire Workers' Union (Union), as a result of which the Union filed on May
27, 1994 a notice of strike in the National Conciliation and Mediation Board National Capital
Region charging Philtread with unfair labor practices for allegedly engaging in union-busting for
violation of the provisions of the collective bargaining agreement. This was followed by
picketing and the holding of assemblies by the Union outside the gate of Philtread's plant at Km.
21, East Service Road, South Superhighway, Muntinlupa, Metro Manila. Philtread, on the other
hand, filed a notice of lock-out on May 30, 1994 which it carried out on June 15, 1994.
In an order, dated September 4, 1994,
2
then Secretary of Labor Nieves Confesor assumed
jurisdiction over the labor dispute and certified it for compulsory arbitration. She enjoined the
Union from striking and Philtread from locking out members of the Union.
On December 9, 1994, during the pendency of the labor dispute, entered into a Memorandum of
Agreement with Siam Tyre Public Company Limited (Siam Tyre), a subsidiary of Siam Cement.
Under the Memorandum of Agreement, Philtread's plant and equipment would be sold to a new
company (petitioner MSF Tire and Rubber, Inc.), 80% of which would be owned by Siam Tyre
and 20% by Philtread, while the land on which the plant was located would be sold to another
company (Sucat Land Corporation), 60% of which would be owned by Philtread and 40% by
Siam Tyre.
This was done and the Union was informed of the purchase of the plant by petitioner. Petitioner
then asked the Union to desist from picketing outside its plant and to remove the banners,
streamers, and tent which it had placed outside the plant's fence.
As the Union refused petitioner's request, petitioner filed on May 25, 1995 a complaint for
injunction with damages against the Union and the latter's officers and directors before the
Regional Trial Court of Makati, Branch 59 where the case was docketed as Civil Case No. 95-
770.
On June 13, 1995, the Union moved to dismiss the complaint alleging lack of jurisdiction on the
part of the trial court. It insisted that the parties were involved in a labor dispute and that
petitioner, being a mere "alter ego" of Philtread, was not an "innocent bystander."
After petitioner made its offer of evidence as well as the submission of the parties' respective
memoranda, the trial court, in an order, dated March 25, 1996, denied petitioner's application for
injunction and dismissed the complaint. However, on petitioner's motion, the trial court, on July
2, 1996, reconsidered its order, and granted an injunction. Its order read:
3

Considering all that has been stated, the motion for reconsideration is granted. The Order
dated March 25, 1996 is reconsideration and set aside. Plaintiff's complaint is reinstated
and defendant's motion to dismiss is DENIED.
As regards plaintiff's application for the issuance of a writ of preliminary injunction, the
Court finds that the plaintiff has established a clear and sustaining right to the injunctive
relief, hence, the same is GRANTED. Upon posting by the plaintiff and approval by the
Court of a bond in the amount of One Million (P1,000,000.00) Pesos which shall answer
for any damage that the defendants may suffer by reason of the injunction in the event
that the Court may finally adjudge that the plaintiff is not entitled thereto, let a writ of
preliminary injunction issue ordering the defendants and any other persons acting with
them and/or on their behalf to desist immediately from conducting their assembly in the
area immediately outside the plaintiff's plant at Km. 21 East Service Road, South
Superhighway, Muntinlupa, Metro Manila, and from placing and/or constructing banners,
streamers, posters and placards, and/or tents/shanties or any other structure, on the fence
of, and/or along the sidewalk outside, the said plant premises until further from this
Court.
SO ORDERED.
4

Without filing a motion for reconsideration, the Union filed on August 5, 1996 a petition for
certiorari and prohibition before the Court of Appeals.
On March 20, 1997, the appellate court rendered a decision granting the Union's petition and
ordering the trial court to dismiss the civil case for lack of jurisdiction. Hence, this petition for
review. Petitioner makes the following arguments in support of its petition:
a. The Court of Appeals erred in not summarily dismissing the Union's petition for its
false certification of non-forum shopping and the Union's failure to file a motion for
reconsideration before going up to the Court of Appeals on a petition for certiorari.
b. The Court of Appeals gravely erred in dismissing Civil Case No. 95-770 for lack of
jurisdiction and merit on the alleged grounds that MSF did not have a clear and
unmistakable right to entitle it to a writ of preliminary injunction.
c. The Court of Appeals' pronouncement that it has not touched upon the issue of whether
or not private respondent is a mere innocent bystander to the labor dispute between
Philtread and the Union or upon the issue of whether or not private respondent is a mere
dummy or continuity of Philtread is contrary to its own conclusions in the body of the
decision, which conclusions are erroneous.
d. The Court of Appeals gravely abused its discretion when it disallowed the injunction
based on Philtread's remaining operations in the country and allowed the Union to
exercise its right to communicate the facts of its labor dispute within MSF's premises,
given the percentage of interest Philtread has in both MSF and the corporation which
owns the land bearing said plant.
The issues are (1) whether the Union's failure to disclose the pendency of NCMB-NCR-NS-05-
167-96 in its certification of non-forum shopping and its failure to file a motion for
reconsideration of the order, dated July 2, 1996, of the trial court were fatal to its petition for
review before the Court of Appeals; and (2) whether petitioner has shown a clear legal right to
the issuance of a writ of injunction under the "innocent bystander" rule.
First. Forum shopping is the institution of two (2) or more actions or proceedings grounded on
the same cause on the supposition that one or the other court would make a favorable
disposition.
5
It is an act of malpractice and is prohibited and condemned as trifling with courts
and abusing their processes.
6
As held in Executive Secretary v. Gordon:
7

Forum-shopping consists of filing multiple suits involving the same parties for the same
cause of action, either simultaneously or successively, for the purpose of obtaining a
favorable judgment. Thus, it has been held that there is forum-shopping
(1) whenever as a result of an adverse decision one forum, a party seeks a favorable
decision (other than by appeal or certiorari) in another, or
(2) if, after he has filed a petition before the Supreme Court, a party files another before
the Court of Appeals since in such case he deliberately splits appeals "in the hope that
even as one case in which a particular remedy is sought is dismissed, another case
(offering a similar remedy) would still be open, or
(3) where a party attempts to obtain a preliminary injunction in another court after failing
to obtain the same from the original court.
In determining whether or not there is forum-shopping, what is important is the vexation caused
the courts and parties-litigant by a party who asks different courts and/or administrative agencies
to rule on the same or related causes and/or grant the same or substantially the same reliefs and
in the process creating the possibility of conflicting decisions being rendered by the different fora
upon the same issues.
8

Petitioner asserts that the Court of Appeals should have dismissed the Union's petition for review
on the ground that the certification of non-forum shopping was false and perjurious as a result of
the Union's failure to mention the existence of NCMB-NCR-NS-05-167-96, a proceeding
involving the same parties and pending before the National Conciliation and Mediation Board.
The argument is without merit. Petitioner was a party to the proceedings before the National
Conciliation and Mediation Board in which an order, dated September 8, 1994, was issued by
then Secretary of Labor Nieves Confesor, enjoining any strike or lock-out by the parties.
9
It was
petitioner which initiated the action for injunction before the trial court. Aggrieved by the
injunctive order issued by the lower court, the Union was forced to file a petition for review
before the Court of Appeals. We cannot understand why petitioner should complain that no
mention of the pendency of the arbitration case before the labor department was made in the
certificate of non-forum shopping attached to the Union's petition in the Court of Appeals. The
petition of the Union in the Court of Appeals was provoked by petitioner's action in seeking
injunction from the trial court when it could have obtained the same relief from the Secretary of
Labor.
Indeed, by focusing on the Union's certification before the appellate court, petitioner failed to
notice that its own certification before the lower court suffered from the same omission for
which it faults the Union. Although the body of petitioner's complaint mentions NCMB-NCR-
NS-05-167-96, its own certification is silent concerning this matter.
10
It is not in keeping with the
requirements of fairness for petitioner to demand strict application of the prohibition against
forum-shopping, when it, too, is guilty of the same omission.
Second. Petitioner asserts that its status as an "innocent bystander" with respect to the labor
dispute between Philtread and the Union entitles it to a writ of injunction from the civil courts
and that the appellate court erred in not upholding its corporate personality as independent of
Philtread's.
In Philippine Association of Free Labor Unions (PAFLU) v. Cloribel,
11
this Court, through
Justice J.B.L. Reyes, stated the "innocent bystander" rule as follows:
The right to picket as a means of communicating the facts of a labor dispute is a
phase of the freedom of speech guaranteed by the constitution. If peacefully
carried out, it can not be curtailed even in the absence of employer-employee
relationship.
The right is, however, not an absolute one. While peaceful picketing is entitled to
protection as an exercise of free speech, we believe the courts are not without
power to confine or localize the sphere of communication or the demonstration to
the parties to the labor dispute, including those with related interest, and to
insulate establishments or persons with no industrial connection or having
interest totally foreign to the context of the dispute. Thus the right may be
regulated at the instance of third parties or "innocent bystanders" if it appears
that the inevitable result of its is to create an impression that a labor dispute with
which they have no connection or interest exists between them and the picketing
union or constitute an invasion of their rights. In one case decided by this Court,
we upheld a trial court's injunction prohibiting the union from blocking the
entrance to a feed mill located within the compound of a flour mill with which the
union had a dispute. Although sustained on a different ground, no connection
was found between the two mills owned by two different corporations other than
their being situated in the same premises. It is to be noted that in the instances
cited, peaceful picketing has not been totally banned but merely regulated. And
in one American case, a picket by a labor union in front of a motion picture
theater with which the union had a labor dispute was enjoined by the court from
being extended in front of the main entrance of the building housing the theater
wherein other stores operated by third persons were located.
12
(Emphasis
added)
Thus, an "innocent bystander," who seeks to enjoin a labor strike, must satisfy the court
that aside from the grounds specified in Rule 58 of the Rules of Court, it is entirely
different from, without any connection whatsoever to, either party to the dispute and,
therefore, its interests are totally foreign to the context thereof. For instance, in PAFLU
v. Cloribel, supra, this Court held that Wellington and Galang were entirely separate
entities, different from, and without any connection whatsoever to, the Metropolitan
Bank and Trust Company, against whom the strike was directed, other than the
incidental fact that they are the bank's landlord and co-lessee housed in the same
building, respectively. Similarly, in Liwayway Publications, Inc. v. Permanent Concrete
Workers Union,
13
this Court ruled that Liwayway was an "innocent bystander" and thus
entitled to enjoin the union's strike because Liwayway's only connection with the
employer company was the fact that both were situated in the same premises.
In the case at bar, petitioner cannot be said not to have such on to the dispute. As
correctly observed by the appellate court:
Coming now to the case before us, we find that the "negotiation, contract of sale,
and the post transaction" between Philtread, as vendor, and Siam Tyre, as
vendee, reveals a legal relation between them which, in the interest of petitioner,
we cannot ignore. To be sure, the transaction between Philtread and Siam Tyre,
was not a simple sale whereby Philtread ceased to have any proprietary rights
over its sold assets. On the contrary, Philtread remains as 20% owner of private
respondent and 60% owner of Sucat Land Corporation which was likewise
incorporated in accordance with the terms of the Memorandum of Agreement
with Siam Tyre, and which now owns the land were subject plant is located. This,
together with the fact that private respondent uses the same plant or factory;
similar or substantially the same working conditions; same machinery, tools, and
equipment; and manufacture the same products as Philtread, lead us to safely
conclude that private respondent's personality is so closely linked to Philtread as
to bar its entitlement to an injunctive writ. Stated differently, given its close links
with Philtread as to bar its entitlement to an injunctive writ. Stated differently,
given its close links with Philtread, we find no clear and unmistakable right on the
part of private respondent to entitle it to the writ of preliminary injunction it prayed
for below.
x x x x x x x x x
We stress that in so ruling, we have not touched on the issue of . . . whether or
not private is a mere dummy or continuation of Philtread . . . .
14

Although, as petitioner contends, the corporate fiction may be disregarded where it is
used to defeat public convenience, justify wrong, protect fraud, defend crime, or where
the corporation is used as a mere alter-ego or business conduit,
15
it is not these
standards but those of the "innocent bystander" rule which govern whether or not
petitioner is to an injunctive writ. Since petitioner is not an "innocent bystander", the trial
court's order, dated July 2, 1996, is a patent nullity, the trial court having no jurisdiction
to issue the writ of injunction. No motion for reconsideration need be filed where the
order is null and void.
16

WHEREFORE, petition is hereby DENIED and the decision of the Court of Appeals is
AFFIRMED.1wphi1.nt
SO ORDERED.
PHILIPPINE LONG DISTANCE TELEPHONE CO. INC., Petitioners,
vs.
MANGGAGAWA NG KOMUNIKASYON SA PILIPINAS and the COURT OF
APPEALS, Respondents.
D E C I S I O N
CHICO-NAZARIO, J .:
Before Us is a petition for review on certiorari which seeks the reversal and setting aside of the
Decision
1
and Resolution
2
of the Court of Appeals dated 25 November 2003 and 19 March 2004,
respectively. The said Decision and Resolution nullified the Order of the Secretary of the
Department of Labor and Employment (the Secretary) dated 02 January 2003 in NCMB-NCR-
NS-11-405-02 and NCMB-NCR-NS-11-412-02 which enjoined the strike staged by the private
respondent, and ordered the striking workers to return to work within twenty-four (24) hours,
except those who were terminated from service due to redundancy. The exemption of the
employees who were terminated from service due to redundancy from the return-to-work order is
the hub of the controversy.
THE FACTS
Petitioner Philippine Long Distance Telephone Co., Inc. (PLDT) is a domestic corporation
engaged in the telecommunications business. Private respondent Manggagawa ng Komunikasyon
sa Pilipinas (MKP) is a labor union of rank and file employees in PLDT.
The members of respondent union learned that a redundancy program would be implemented by
the petitioner. Thereupon it filed a Notice of Strike with the National Conciliation and Mediation
Board (NCMB) on 04 November 2002 (NCMB-NCR-NS-11-405-02).
3
The Notice
fundamentally contained the following:
UNFAIR LABOR PRACTICES, to wit:
1. PLDTs abolition of the Provisioning Support Division. Such action together with the
consequent redundancy of PSD employees and the farming out of the jobs to casuals and
contractuals, violates the duty to bargain collectively with MKP in good faith.
2. PLDTs unreasonable refusal to honor its commitment before this Honorable Office that it will
provide MKP its comprehensive plan/s with respect to personnel downsizing/reorganization and
closure of exchanges. Such refusal violates its duty to bargain collectively with MKP in good
faith.
3. PLDTs continued hiring of "contractual", "temporary", "project" and "casual" employees for
regular jobs performed by union members, resulting in the decimation of the union membership
and in the denial of the right to self-organization to the concerned employees.
4. PLDTs gross violation of the legal and CBA provisions on overtime work and compensation.
5. PLDTs gross violation of the CBA provisions on promotions and job grade re-evaluation or
reclassification.
On 11 November 2002, another Notice of Strike was filed by the private respondent (NCMB-
NCR-NS-11-412-02), which contained the following:
UNFAIR LABOR PRACTICES, to wit:
1. PLDTs alleged restructuring of its GMM Operation Services effective December 31, 2002
and its closure [o]f traffic operations at the Batangas, Calamba, Davao, Iloilo, Lucena, Malolos
and Tarlac Regional Operator Services effective December 31, 2002. These twin moves unjustly
imperil the job security of 503 of MKPs members and will substantially decimate the parties
bargaining unit. And in the light of PLDTs previous commitment before this Honorable Office
that it will provide MKP its comprehensive plan/s with respect to personnel
downsizing/reorganization and closure of exchanges and of its more recent declaration that the
Davao operator services will not be closed, these moves are treacherous and are thus violative of
PLDTs duty to bargain collectively with MKP in good faith. That these moves were effected
with PLDT paying only lip service to its duties under Art. Iii, Section 9 of the parties CBA
signifies PLDTs gross violation of said CBA.
A number of conciliation meetings, conducted by the NCMB, National Capital Region, were
held between the parties. However, these efforts proved futile.
On 23 December 2002, the private respondent staged a strike. On 31 December 2002, three
hundred eighty three (383) union members were terminated from service pursuant to PLDTs
redundancy program.
On 02 January 2003, the Secretary, Patricia Sto. Tomas, issued an Order
4
in NCMB-NCR-NS-
11-405-02 and NCMB-NCR-NS-11-412-02. Portions of the Order are reproduced hereunder:
PLDT is the largest telecommunications entity in the Philippines whose operations are closely
linked with the countrys other telecommunication companies. It operates the countrys
international gateway system through which overseas telecommunications are made. Its
operations are also vital to the services of cellular phone companies. The Company employs
more or less 13,000 employees, about 7,000 of whom are members of the union. A work
stoppage at PLDT, without doubt, will adversely affect the smooth operations of PLDT as well
as those other telecommunication companies dependent upon the continuous operations of PLDT
to the detriment of the public.
Undoubtedly, PLDTs operations is impressed with public and national interest as
communication plays a vital role in furtherance of trade, commerce, and industry specially at this
time of globalized economy where information is vital to economic survival. Work stoppage at
PLDT will also adversely effect the ordinary day-to-day life of the public in areas of its
franchise. Communication is also a component of state security.
. . .
These considerations have in the past guided this Office in consistently exercising its powers
under Article 263(g) of the Labor Code, as amended, in handling labor disputes involving the
Philippine Long Distance Telephone Company and other telecommunications companies.
WHEREFORE, FOREGOING PREMISES CONSIDERED, this Office hereby CERTIFIES the
labor dispute at the Philippine Long Distance Telephone Company to the National Labor
Relations Commission (NLRC) for compulsory arbitration pursuant to Article 263(g) of the
Labor Code as amended.
Accordingly, the strike staged by the Union is hereby enjoined. All striking workers are hereby
directed to return to work within twenty four (24) hours from receipt of this Order, except those
who were terminated due to redundancy.
5
The employer is hereby enjoined to accept the
striking workers under the same terms and conditions prevailing prior to the strike. The parties
are likewise directed to cease and desist from committing any act that might worsen the situation.
A Motion for Partial Reconsideration
6
dated 13 January 2003 was filed by the private respondent
with the Office of the Secretary. It alleged that the Order dated 02 January 2003 was issued by
the Secretary with grave abuse of discretion. It contended that the petitioner should have been
ordered to admit all workers under the same terms and conditions prevailing before the strike.
Those who were dismissed pursuant to the petitioners redundancy program should not have
been excluded. In doing so, the Secretary, in consequence, prejudged the case and effectively
declared the dismissal as valid.
The petitioner filed an Opposition to the "Motion for Partial Reconsideration"
7
dated 24 January
2003. It asserted that Article 263(g) of the Labor Code refers to a discretionary power on the part
of the Secretary, and thus recognizes that the Secretary has broad powers and wide discretion to
do as may be necessary to resolve the labor dispute.
On 24 February 2003, the Secretary issued another Order,
8
quoted hereunder:
In the interest of expeditious labor justice and pursuant to the Order of this Office dated January
2, 2003 certifying the instant labor dispute to the National Labor Relations Commission (NLRC),
and in order to avoid any splitting the cause of action and multiplicity of suits, which are
obnoxious to the orderly administration of justice, the Motion for Partial Reconsideration filed
by the Union, Manggagawa ng Komunikasyon sa Pilipinas (MKP) is merely NOTED without
action.
WHEREFORE, premises considered, let the Motion for Partial Reconsideration, together with
documents filed in connection thereto, be immediately referred to the NLRC for its appropriate
action.
Henceforth, this Office shall no longer entertain any motions of similar nature. The parties are
hereby directed to address all their pleadings and motions to the NLRC.
As the private respondent had no other plain, speedy and adequate remedy in the ordinary course
of law, it filed a petition for certiorari and mandamus
9
under Rule 65 of the 1997 Rules on Civil
Procedure before the Court of Appeals. In the main, it argued that Article 263(g) of the Labor
Code is very clear that once a strike is certified to the National Labor Relations Commission
(NLRC) for compulsory arbitration, it is the direct mandate of the law that an employer should
readmit all striking workers under the same terms and conditions prevailing before the strike. It
prayed that the Orders of the Secretary dated 02 January 2003 and 24 February 2003 be set aside
and, in their place, a new order be rendered directing PLDT to immediately readmit the alleged
redundant employees under the same terms and conditions prevailing prior to the strike.
The petitioner filed its Comment
10
with the Court of Appeals and contended that there was no
abuse of discretion when the Secretary issued the two assailed Orders. The Secretary, it asserted,
validly exercised the plenary powers granted by Article 263(g) of the Labor Code. This proviso,
it pointed out, refers to a discretionary power on the part of the Secretary, and recognizes that the
latter has broad powers and wide discretion to do as may be necessary to resolve the labor
dispute.
On 25 November 2003, the Court of Appeals promulgated its Decision, the dispositive portion of
which reads:
WHEREFORE, premises considered, the Petition is GRANTED and the assailed Order[s] of
respondent Secretary in NCMB-NCR-NS-11-405-02 and NCMB-NCR-NS-11-412-02 [are]
hereby SET ASIDE and NULLIFIED for being contrary to law. No costs.
11

A Motion for Reconsideration
12
was filed by the petitioner before the Court of Appeals, which
was, however, denied in a Resolution
13
dated 19 March 2004.
The petitioner then filed a Petition for Review on Certiorari under Rule 45
14
before this Court.
The private respondent was thereafter required to file its Comment, which it did.
On 01 June 2005, the Court gave due course to the petition, and the case was subsequently
submitted for decision.
ASSIGNMENT OF ERRORS
The petitioner assigns as errors the following:
I
THE COURT OF APPEALS DID NOT RULE IN ACCORD WITH APPLICABLE
DECISIONS OF THIS HONORABLE COURT, WHICH RECOGNIZE THAT THE
SECRETARYS EXERCISE OF ART. 263(G), LABOR CODE POWERS IS BROAD,
PLENARY AND ENTITLED TO RESPECT.
II
THE COURT OF APPEALS DEPARTED FROM THE USUAL COURSE OF PROCEEDINGS
WHEN IT ISSUED THE WRIT OF CERTIORARI DESPITE (A) THE ABSENCE OF
"GRAVE ABUSE OF DISCRETION" BY THE SECRETARY OF LABOR; AND (B) THE
AVAILABILITY OF OTHER RELIEF TO MKP.
III
THE MANIFEST AND GRAVE ERROR OF THE COURT OF APPEALS IS EVIDENT
FROM THE DECISIONS INTERNAL INCONSISTENCIES.
1V
CONTRARY TO MKPS ALLEGATIONS THAT IT WAS RENDERED WITH GRAVE
ABUSE OF DISCRETION, THE SECRETARYS ASSUMPTION ORDER IS PRACTICAL,
PRESERVES THE PARTIES RIGHTS TO REDRESS, AND IS NOT UNPRECEDENTED.
15

ISSUES
Culled from the above assignment of errors, the issues that must be addressed by this Court are:
I
WHETHER OR NOT THE SPECIAL CIVIL ACTION FOR CERTIORARI INSTITUTED BY
THE RESPONDENT BEFORE THE COURT OF APPEALS WAS PROCEDURALLY
PRECISE, and
II
WHETHER THE SUBJECT ORDERS OF THE SECRETARY OF THE DEPARTMENT OF
LABOR AND EMPLOYMENT EXCLUDING FROM THE RETURN-TO-WORK ORDER
THE WORKERS DISMISSED DUE TO THE REDUNDANCY PROGRAM OF PETITIONER,
ARE VALID OR NOT.
THE COURTS RULINGS
On the procedural issue
The petitioner is of the view that a special civil action for certiorari which was instituted by the
private respondent before the Court of Appeals was not the proper remedy. It maintained that the
Court of Appeals should have recognized that the Secretary did not abuse her discretion in any
way, much less in a grave and patent, or an arbitrary or despotic manner, or that she somehow
exercised her judgment in a capricious and whimsical way, which is required for the certiorari
writ to issue. It also averred that the private respondent had other available reliefs, and that its
plainer, speedier and adequate recourse is the proceedings now underway before the NLRC, to
which the Secretary referred the parties labor dispute.
16

In its answer, the private respondent averred that the special civil action for certiorari filed with
the Court of Appeals was not barred by the supposed other remedy available to MKP. The
petitioner, in propositioning that the private respondent should have pursued its relevant claim
before the NLRC, is in fact wrongly suggesting that the NLRC can decide whether the Secretary
had indeed acted in grave abuse of discretion when she excluded 383 of its members from
returning to work in her certification order.
17

We rule that the institution of the special civil action for certiorari before the Court of Appeals
was procedurally sound.
Section 1, Rule 65 of the 1997 Rules on Civil Procedure provides:
Section 1. Petition for certiorari. When any tribunal, board or officer exercising judicial or
quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave
abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, nor any
plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby
may file a verified petition in the proper court, alleging the facts with certainty and praying that
judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer,
and granting such incidental reliefs as law and justice may require.
It is the position of the private respondent that the Secretary committed an error of jurisdiction
when she excluded from her return-to-work order the alleged redundant strikers, which should be
corrected by a special civil action for certiorari. While she has the power to certify the strike to
the NLRC for compulsory arbitration, she did not have the power to exclude a certain class of
strikers from returning to work. Further, the private respondent contended that in issuing her
assailed orders, the Secretary exceeded her authority.
18

The position taken by the private respondent is correct. The special civil action for certiorari was
justly availed of by the private respondent.
In a special civil action of certiorari, the only question that may be raised is whether or not the
respondent has acted without or in excess of jurisdiction or with grave abuse of discretion.
19
This
was precisely what was raised by the private respondent in its petition before the Court of
Appeals. The respondent asserted in the court a quo that the Secretary violated the law and
jurisprudence, and exceeded her authority when she expressly prevented from returning to work
those who were terminated due to alleged redundancy while the strike was ongoing.
20

The remedy of an aggrieved party in a Decision or Resolution of the Secretary is to timely file a
motion for reconsideration as a precondition for any further or subsequent remedy, and then
seasonably file a special civil action for certiorari under Rule 65 of the 1997 Rules on Civil
Procedure.
21

This was precisely done by the private respondent.
On the substantive issue
Article 263(g) of the Labor Code, as amended, which is pertinent to the resolution of the case at
bar, provides:
Art 263. Strikes, picketing, and lockouts.
. . .
(g) When in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout
in an industry indispensable to the national interest, the Secretary of Labor and Employment may
assume jurisdiction over the dispute and decide it or certify the same to the Commission for
compulsory arbitration. Such assumption or certification shall have the effect of automatically
enjoining the intended or impending strike or lockout as specified in the assumption or
certification order. If one has already taken place at the time of assumption or certification, all
striking or locked out employees shall immediately return to work and the employer shall
immediately resume operations and readmit all workers under the same terms and conditions
prevailing before the strike or lockout. (Emphasis supplied.)
In deciding the case, the Court of Appeals made the following observation:
The phrase "all striking or locked out employees" and "readmit all workers" does not distinguish
or qualify and emphatically is a catch all embracing enumeration of who should be returned to
work. "Where the law does not distinguish, courts should not distinguish (Recaa v. Court of
Appeals, 349 SCRA 24 [2001] )."
22

In the main, the petitioner contends that the Court of Appeals gave a narrow and too literal
interpretation of Article 263(g) to justify its reversal of the Secretarys "qualified" return-to-work
Order. The Court of Appeals erroneously favored a rule of statutory construction: ubi lex non
distinguit nec nos distinguere debemos. Where the law does not distinguish, courts should not
distinguish.
23

The Secretarys power, according to the petitioner, is broad and plenary, and is granted great
breadth of discretion. Secretary Sto. Tomas, in issuing the assailed orders, acted with appropriate
discretion, because she was secure in the knowledge that the courts have recognized her broad
and plenary powers under Art. 263(g).
The private respondent, in its Comment, contended that it is untenable for PLDT to stubbornly
argue that the Secretary has such great breadth of discretion that even encompasses her
questioned directives.
24
While conceding that the Secretarys powers under Art. 263(g) may
undoubtedly be plenary and discretionary, the same are not absolute and still subject to the
limitations set by law.
25

The petition must fail.
When the Secretary exercises the powers granted by Article 263(g) of the Labor Code, he is,
indeed, granted great breadth of discretion. However, the application of this power is not without
limitation, lest the Secretary would be above the law. Discretion is defined as the act or the
liberty to decide, according to the principles of justice and ones ideas of what is right and proper
under the circumstances, without wilfullness or favor.
26
Where anything is left to any person to
be done according to his discretion, the law intends it must be done with a sound discretion, and
according to law. The discretion conferred upon officers by law is not a capricious or arbitrary
discretion, but an impartial discretion guided and controlled in its exercise by fixed legal
principles. It is not a mental discretion to be exercised ex gratia, but a legal discretion to be
exercised in conformity with the spirit of the law, and in a manner to subserve and not to impede
or defeat the ends of substantial justice.
27
From the foregoing, it is quite apparent that no matter
how broad the exercise of discretion is, the same must be within the confines of law. Thus, the
wide latitude of discretion given the Secretary under Art. 263(g) shall and must be within the
sphere of law.
Our ruling in the case of Phimco Industries, Inc. v. Brillantes
28
was most appropriately and
auspiciously alluded to by the private respondent. In this case we held:
. . . This is precisely why the law sets and defines the standard: even in the exercise of his power
of compulsory arbitration under Article 263(g) of the Labor Code, the Secretary must follow the
law. For "when an overzealous official by-passes the law on the pretext of retaining a laudable
objective, the intendment or purpose of the law will lose its meaning as the law itself is
disregarded."
As Article 263(g) is clear and unequivocal in stating that ALL striking or locked out employees
shall immediately return to work and the employer shall immediately resume operations and
readmit ALL workers under the same terms and conditions prevailing before the strike or
lockout, then the unmistakable mandate must be followed by the Secretary.
In the case of Trans-Asia Shipping Lines, Inc.-Unlicensed Crews Employees Union-Associated
Labor Unions (Tasli-Alu) v. Court of Appeals,
29
we held:
. . . Assumption of jurisdiction over a labor dispute, or as in this case the certification of the same
to the NLRC for compulsory arbitration, always co-exists with an order for workers to return to
work immediately and for employers to readmit all workers under the same terms and conditions
prevailing before the strike or lockout.
Time and again, this Court has held that when an official bypasses the law on the asserted ground
of attaining a laudable objective, the same will not be maintained if the intendment or purpose of
the law would be defeated.
30

One last piece. Records would show that the strike occurred on 23 December 2002. Article
263(g) directs that the employer must readmit all workers under the same terms and conditions
prevailing before the strike. Since the strike was held on the aforementioned date, then the
condition prevailing before it, which was the condition present on 22 December 2002, must be
maintained.
Undoubtedly, on 22 December 2002, the members of the private respondent who were dismissed
due to alleged redundancy were still employed by the petitioner and holding their respective
positions. This is the status quo that must be maintained.
WHEREFORE, finding no reversible error in the assailed Decision and Resolution of the Court
of Appeals dated 25 November 2003 and 19
March 2004, respectively, both are hereby AFFIRMED. Costs against petitioner.
CAPITOL MEDICAL CENTER, INC., petitioner,
vs.
HON. CRESENCIANO B. TRAJANO, in his capacity as Secretary of the Department of
Labor and Employment, and CAPITOL MEDICAL CENTER EMPLOYEES
ASSOCIATION-AFW, respondents.
SANDOVAL-GUTIERREZ, J .:
For our resolution is the instant petition for review on certiorari under Rule 45 of the 1997 Rules
of Civil Procedure, as amended, assailing the Decision
1
dated September 20, 2001 and the
Resolution
2
dated October 18, 2002 rendered by the Court of Appeals in CA-G.R. SP No. 53479,
entitled "Capitol Medical Center, Inc. vs. Hon. Cresenciano B. Trajano, in his capacity as
Secretary of the Department of Labor and Employment and Capitol Medical Center Employees
Association-AFW."
The factual antecedents as gleaned from the records are:
Capitol Medical Center, Inc., petitioner, is a hospital with address at Panay Avenue corner Scout
Magbanua Street, Quezon City. Upon the other hand, Capitol Medical Center Employees
Association-Alliance of Filipino Workers, respondent, is a duly registered labor union acting as
the certified collective bargaining agent of the rank-and-file employees of petitioner hospital.
On October 2, 1997, respondent union, through its president Jaime N. Ibabao, sent petitioner a
letter requesting a negotiation of their Collective Bargaining Agreement (CBA).
In its reply dated October 10, 1997, petitioner, challenging the unions legitimacy, refused to
bargain with respondent. Subsequently or on October 15, 1997, petitioner filed with the Bureau
of Labor Relations (BLR), Department of Labor and Employment, a petition for cancellation of
respondents certificate of registration, docketed as NCR-OD-9710-006-IRD.
3

For its part, on October 29, 1997, respondent filed with the National Conciliation and Mediation
Board (NCMB), National Capital Region, a notice of strike, docketed as NCMB-NCR-NS-10-
453-97. Respondent alleged that petitioners refusal to bargain constitutes unfair labor practice.
Despite several conferences and efforts of the designated conciliator-mediator, the parties failed
to reach an amicable settlement.
On November 28, 1997, respondent staged a strike.
On December 4, 1997, former Labor Secretary Leonardo A. Quisumbing, now Associate Justice
of this Court, issued an Order assuming jurisdiction over the labor dispute and ordering all
striking workers to return to work and the management to resume normal operations, thus:
"WHEREFORE, this Office assumes jurisdiction over the labor disputes at Capitol Medical
Center pursuant to Article 263 (g) of the Labor Code, as amended. Consequently, all striking
workers are directed to return to work within twenty-four (24) hours from the receipt of this
Order and the management to resume normal operations and accept back all striking workers
under the same terms and conditions prevailing before the strike. Further, parties are directed to
cease and desist from committing any act that may exacerbate the situation.
Moreover, parties are hereby directed to submit within 10 days from receipt of this Order
proposals and counter-proposals leading to the conclusion of the collective bargaining agreement
in compliance with aforementioned Resolution of the Office as affirmed by the Supreme Court.
SO ORDERED."
Petitioner then filed a motion for reconsideration but was denied in an Order dated April 27,
1998.
On June 23, 1998, petitioner filed with this Court a petition for certiorari assailing the Labor
Secretarys Orders. Pursuant to our ruling in St. Martin Funeral Home vs.The National Labor
Relations Commission, et al.,
4
we referred the petition to the Court of Appeals for its appropriate
action and disposition.
Meantime, on October 1, 1998, the Regional Director, in NCR-OD-9710-006-IRD, issued an
Order denying the petition for cancellation of respondent unions certificate of registration.
5

On September 20, 2001, the Appellate Court rendered a Decision affirming the Orders of the
Secretary of Labor. The Court of Appeals held:
"Anent the first issue raised by the petitioner, We find the same untenable. The public respondent
acted well within his duty to order the petitioner hospital to bargain collectively, for it was the
surest way to end the dispute. In LMG Chemicals Corporation vs. Secretary of the Department of
Labor and Employment, the Hon. Leonardo A. Quisumbing and Chemical Workers Union (G.R.
No. 127422, April 17, 2001), the Supreme Court made the following pronouncement, to wit:
It is well settled in our jurisprudence that the authority of the Secretary of Labor to assume
jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry
indispensable to national interest includes and extends to all questions and controversies arising
therefrom. The power is plenary and discretionary in nature to enable him to effectively and
efficiently dispose of the primary dispute.
x x x x x x
Indeed, We find no grave abuse of discretion on the part of respondent Secretary of Labor whose
power is plenary and includes the resolution of all controversies arising from the labor dispute. In
fact, he was merely following the directive laid down by the Supreme Court (Decision dated
February 4, 1997) in the case of Capitol Medical Center Alliance of Concerned Employees-
Unified Filipino Service Workers (CMC-ACE-UFSW) vs. Hon. Bienvenido E. Laguesma,
Undersecretary of the Department of Labor and Employment, Capitol Medical Center
Employees Association-Alliance of Filipino Workers and Capitol Medical Center Incorporated
and Dra. Thelma Clemente, President, ordering petitioner hospital to collectively bargain with
the Capitol Medical Center Employees Association-Alliance of Filipino Workers (private
respondent herein) the certified bargaining agent.
As earlier mentioned, the petition for cancellation was dismissed by the regional director in a
decision dated September 30, 1998. x x x.
x x x x x x
Said decision by the regional director was affirmed by the Director of the Bureau of Labor
Relations in a resolution dated December 29, 1998, dismissing the appeal of the petitioner
hospital from the said DOLE-NCRs decision.
Finally, the petition for certiorari (docketed as CA-G.R. SP No. 52736) entitled Capitol
Medical Center, Inc. vs. Hon. Benedictor R. Bitonio, Jr., in his capacity as Director of the Bureau
of Labor Relations, Department of Labor and Employment; Hon. Maximo B. Lim in his capacity
as Regional Director, National Capital Region, Department of Labor and Employment and
Capitol Medical Center Employees Association (CMCEA-AFW), was dismissed in a decision
dated January 11, 2001. The motion for reconsideration which was subsequently filed was
denied on March 23, 2001.
x x x x x x
In order to allow an employer to validly suspend the bargaining process, there must be a valid
petition for certification election. The mere filing of a petition does not ipso facto justify the
suspension of negotiation by the employer (Colegio de San Juan de Letran vs. Association of
Employees and Faculty of Letran and Eleanor Ambas, G.R. No. 141471, September 18, 2000). If
pending a petition for certification, the collective bargaining is allowed by the Supreme Court to
proceed, with more reason should the collective bargaining (in this case) continue since the High
Court had recognized the respondent as the certified bargaining agent in spite of several petitions
for cancellation filed against it.
x x x x x x
Secondly, We are inclined to agree with the public respondents statement that the primary
assumption of jurisdiction may be exercised by this Office even without the necessity of prior
notice or hearing given to any of the parties disputants. (page 56 of the Rollo).
x x x x x x
We are also not convinced by the arguments raised by the petitioner with respect to its third
assigned error. This Court fails to see any supervening event that would render the execution of
the decision of public respondent impossible. The petitioner asserts that the respondent union has
lost its legitimacy, but at every turn it has been ruled by the various labor administrative officials
that the respondent union is legitimate. It has failed to convince the labor administrative officials,
We are likewise not persuaded. Unless and until the Certificate of Registration of the union is
cancelled, it (union) remains the certified bargaining agent and the Hospital has the duty to enter
into a collective bargaining agreement with it.
x x x x x x
WHEREFORE, premises considered, the instant petition is DENIED, hereby AFFIRMING the
two assailed orders, dated December 4, 1997 and April 27, 1998, of the public respondent in OS-
AJ-0024-97 (NCMB-NCR-NS-10-453-97).
SO ORDERED."
On October 18, 2002, the Court of Appeals issued a Resolution denying petitioners motion for
reconsideration.
Hence, this petition for review on certiorari.
Petitioner contends that its petition for the cancellation of respondent unions certificate of
registration involves a prejudicial question that should first be settled before the Secretary of
Labor could order the parties to bargain collectively.
We are not persuaded.
As aptly stated by the Solicitor General in his comment on the petition, the Secretary of Labor
correctly ruled that the pendency of a petition for cancellation of union registration does not
preclude collective bargaining, thus:
"That there is a pending cancellation proceedings against the respondent Union is not a bar to set
in motion the mechanics of collective bargaining. If a certification election may still be ordered
despite the pendency of a petition to cancel the unions registration certificate (National Union of
Bank Employees vs. Minister of Labor, 110 SCRA 274), more so should the collective bargaining
process continue despite its pendency. We must emphasize that the majority status of the
respondent Union is not affected by the pendency of the Petition for Cancellation pending
against it. Unless its certificate of registration and its status as the certified bargaining agent are
revoked, the Hospital is, by express provision of the law, duty bound to collectively bargain with
the Union. Indeed, no less than the Supreme Court already ordered the Hospital to collectively
bargain with the Union when it affirmed the resolution of this Office dated November 18, 1994
directing the management of the Hospital to negotiate a collective bargaining agreement with the
Union. That was the categorical directive of the High Court in its Resolution dated February 4,
1997 in Capitol Medical Center Alliance of Concerned Employees-United Filipino Service
Worker vs. Hon. Bienvenido E. Laguesma, et al., G.R. No. L-118915."
Moreover, as mentioned earlier, during the pendency of this case before the Court of Appeals,
the Regional Director, in NCR-OD-9710-006-IRD, issued an Order on October 1, 1998 denying
the petition for cancellation of respondents certificate of registration. This Order became final
and executory and recorded in the BLRs Book of Entries of Judgments on June 3, 1999.
Petitioner also maintains that the Secretary of Labor cannot exercise his powers under Article
263 (g) of the Labor Code without observing the requirements of due process.
Article 263 (g) of the Labor Code, as amended, provides:
"ART. 263. Strikes, Picketing and Lockouts.
x x x x x x
(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout
in an industry indispensable to the national interest, the Secretary of Labor and Employment may
assume jurisdiction over the dispute and decide it or certify the same to the Commission for
compulsory arbitration. Such assumption or certification shall have the effect of automatically
enjoining the intended or impending strike or lockout as specified in the assumption or
certification order. If one has already taken place at the time of assumption or certification, all
striking or locked out employees shall immediately resume operations and readmit all workers
under the same terms and conditions prevailing before the strike or lockout. The Secretary of
Labor and Employment or the Commission may seek the assistance of law enforcement agencies
to ensure compliance with this provision as well as with such orders as he may issue to enforce
the same.
x x x. In labor disputes adversely affecting the continued operation of such hospitals, clinics or
medical institutions, it shall be the duty of the striking union or locking-out employer to provide
and maintain an effective skeletal workforce of medical and other health personnel, whose
movement and services shall be unhampered and unrestricted, as are necessary to insure the
proper and adequate protection of the life and health of its patients, most especially emergency
cases, for the duration of the strike or lockout. In such cases, therefore, the Secretary of Labor
and Employment is mandated to immediately assume, within twenty-four (24) hours from
knowledge of the occurrence of such a strike or lockout, jurisdiction over the same or
certify it to the Commission for compulsory arbitration. For this purpose, the contending
parties are strictly enjoined to comply with such orders, prohibitions and/or injunctions as are
issued by the Secretary of Labor and Employment or the Commission, under pain of immediate
disciplinary action, including dismissal or loss of employment status or payment by the locking-
out employer of backwages, damages and other affirmative relief, even criminal prosecution
against either or both of them.
The foregoing notwithstanding, the President of the Philippines shall not be precluded from
determining the industries that, in his opinion, are indispensable to the national interest, and from
intervening at any time and assuming jurisdiction over any such labor dispute in order to settle or
terminate the same.
x x x x x x."
In Magnolia Poultry Employees Union vs. Sanchez,
6
we held that the discretion to assume
jurisdiction may be exercised by the Secretary of Labor and Employment without the necessity
of prior notice or hearing given to any of the parties. The rationale for his primary assumption of
jurisdiction can justifiably rest on his own consideration of the exigency of the situation in
relation to the national interests.
In sum, petitioners submissions are bereft of merit.
WHEREFORE, the petition is DENIED. The assailed Decision dated September 20, 2001 and
the Resolution dated October 18, 2002 of the Court of Appeals in CA-G.R. SP No. 53479 are
AFFIRMED. Costs against petitioner.
SO ORDERED.
PHIMCO INDUSTRIES, INC., petitioner,
vs.
HONORABLE ACTING SECRETARY OF LABOR JOSE BRILLANTES and PHIMCO INDUSTRIES LABOR ASSOCIATION, respondents.

PURISIMA, J .:
At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court, seeking to set aside the July 7, 1995 Order
1
of the then
Acting Secretary Jose Brillantes of the Department of Labor and Employment, in NCMB-NCR-NS-03-122-
95, on the ground of grave abuse of discretion amounting to lack or excess of jurisdiction.
The antecedent facts are, as follows:
On March 9, 1995, the private respondent, Phimco Industries Labor Association (PILA), duly certified
collective bargaining representative of the daily paid workers of the petitioner, Phimco Industries Inc.
(PHIMCO), filed a notice of strike with the National Conciliation and Mediation Board, NCR, against
PHIMCO, a corporation engaged in the production of matches, after a deadlock in the collective
bargaining and negotiation. On April 21, 1995, when the several conciliation conferences called by the
contending parties failed to resolve their differences PILA, composed of 352
2
members, staged a strike.
On June 7, 1995, PILA presented a petition for the intervention of the Secretary of Labor in the resolution
of the labor dispute, to which petition PHIMCO opposed. Pending resolution of the said petition or on
June 26, 1995, to be precise, PHIMCO sent notice of termination to some 47
3
workers including several
union officers.
On July 7, 1995, the then Acting Secretary of Labor Jose Brillantes assumed jurisdiction over the labor
dispute and issued his Order ruling, thus:
WHEREFORE, ABOVE PREMISES CONSIDERED, and pursuant to Article 263 (g) of the Labor
Code, as amended, this office hereby assumes jurisdiction over the dispute at, Phimco industries,
Inc.
Accordingly, all the striking workers, except those who have been handed down termination
papers on June 26, 1995, are hereby directed to return to work with twenty-four (24) hours from
receipt of this Order and for the Company to accept them back under the same terms and
conditions prevailing prior to the strike.
The parties are further ordered to cease and desist from committing any act that will aggravate
the situation.
To expedite the resolution of this dispute, the parties are directed to submit their position papers
and evidence within ten (10) days from receipt of this Order.
SO ORDERED.
4

On July 12, 1995, petitioner brought the present petition; theorizing, that:
I
THE HONORABLE ACTING SECRETARY JOSE BRILLANTES ACTED WITH THE GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OF EXCESS OF JURISDICTION IN ISSUING
THE ASSAILED ORDER.
II
THE HONORABLE ACTING SECRETARY JOSE BRILLANTES ACTED WITH GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN HE WENT
BEYOND THE BASIS FOR ASSUMPTION OF JURISDICTION UNDER ART. 263 OF THE
LABOR CODE.
5

On July 31, 1995, two weeks after the filing of the Petition, the public respondent issued another Order
6

temporarily holding in abeyance the implementation of the questioned Order dated July 7, 1995 for a
period of thirty (30) day; directing, as follows:
WHEREFORE PREMISES CONSIDERED, the implementation of our Order dated 7 July 1995
hereby temporarily held in abeyance for a period of thirty (30) days effective from receipt thereof
pending the private negotiations of the parties for the settlement of their labor dispute. Thereafter,
both the Union and the Company are directed to submit to this Office the result of their
negotiations for our evaluation and appropriate action.
SO ORDERED.
7

The pivotal issue here is: whether or not the public respondent acted with grave abuse of discretion
amounting to lack or excess of jurisdiction in assuming jurisdiction over subject labor dispute.
The petition is impressed with merit.
Art. 263, paragraph (g) of the Labor Code, provides:
(g) When, in his opinion, there exist a labor dispute causing or likely to cause a strike or lockout in
an industry indispensable to the national interest, the Secretary of Labor and Employment may
assume jurisdiction over the dispute and decide it or certify the same to the Commission for
compulsory arbitration . . .
The Labor Code vests in the Secretary of Labor the discretion to determine what industries are
indispensable to the national interest. Accordingly, upon the determination by the Secretary of Labor that
such industry is indispensable to the national interest, he will assume jurisdiction over the labor dispute in
the said industry.
8
This power, however, is not without any limitation. In upholding the constitutionality of
B.P. 130 insofar as it amends Article 264 (g)
9
of the Labor Code, it stressed in the case of Free
telephone Workers Union vs. Honorable Minister of Labor and Employment, et al.,
10
the limitation set by
the legislature on the power of the Secretary of Labor to assume jurisdiction over a labor dispute, thus:
Batas Pambansa Blg. 130 cannot be any clearer, the coverage being limited to "strikes or
lockouts adversely affecting the national interest.
11

In this case at bar, however, the very admission by the public respondent draws the labor dispute in
question out of the ambit of the Secretary's prerogative, to wit.
While the case at bar appears on its face not to fall within the strict categorization of cases
imbued with "national interest", this office believes that the obtaining circumstances warrant the
exercise of the powers under Article 263 (g) of the Labor Code, as amended.
12

The private respondent did not even make any effort to touch on the indispensability of the match factory
to the national interest. It must have been aware that a match factory, though of value, can scarcely be
considered as an industry "indispensable to the national interest" as it cannot be in the same category as
"generation and distribution of energy, or those undertaken by banks, hospitals, and export-oriented
industries."
13
Yet, the public respondent assumed jurisdiction thereover, ratiocinating as follows:
For one, the prolonged work disruption has adversely affected not only the protagonists, i.e., the
workers and the Company, but also those directly and indirectly dependent upon the unhampered
and continued operations of the Company for their means of livelihood and existence. In addition,
the entire community where the plant is situated has also been placed in jeopardy. If the dispute
at the Company remains unabated, possible loss of employment, not to mention consequent
social problems, might result thereby compounding the unemployment problem of the country.
Thus we cannot be unmindful of the possible dire consequences that might ensue if the present
dispute is allowed to remain unresolved, particularly when alternative dispute resolution
mechanism obtains to dispose of the differences between the parties herein.
14

It is thus evident from the foregoing that the Secretary's assumption of jurisdiction grounded on the
alleged "obtaining circumstances" and not on a determination that the industry involved in the labor
dispute is one indispensable to the "national interest", the standard set by the legislature, constitutes
grave abuse of discretion amounting to lack of or excess of jurisdiction. To uphold the action of the public
respondent under the premises would be stretching too far the power of the Secretary of Labor as every
case of a strike or lockout where there are inconveniences in the community, or work disruptions in an
industry though not indispensable to the national interest, would then come within the Secretary's power.
It would be practically allowing the Secretary of Labor to intervene in any Labor dispute at his pleasure.
This is precisely why the law sets and defines the standard: even in the exercise of his power of
compulsory arbitration under Article 263 (g) of the Labor Code, the Secretary must follow the law. For
"when an overzealous official by-passes the law on the pretext of retaining a laudable objective, the
intendment or purpose of the law will lose its meaning as the law itself is disregarded"
15

In light of the foregoing, we hold that the public respondent gravely abused his discretion in assuming
jurisdiction over the labor dispute sued upon in the case.
WHEREFORE, the petition is hereby GRANTED; and the assailed Order, dated July 7, 1995, of the
Acting Secretary of Labor SET ASIDE. No pronouncement as to costs.
SO ORDERED.
FAR EASTERN UNIVERSITY - DR. NICANOR REYES MEDICAL FOUNDATION
(FEU-NRMF) and LILIA P. LUNA. M.D., petitioners,
vs.
FEU-NRMF EMPLOYEES ASSOCIATION-ALLIANCE OF FILIPINO WORKERS
(FEU-NRMFEA-AFW), union officers DANTE F. SUCGANG, VIRGILIO P. BLANCO,
FERNANDO S.P. VILLAPANDO, LORNA M. MELECIO, FLORENCIA O. REYES,
MERCEDITA P. MENDOZA, LEONOR B. VIAJAR, union members DORIS
ABOLENCIA, SUSAN ADRIANO, AVELINO AGUILAR, REYNALDO AGUSTIN,
SERGIO ALINGOD, MARSHA EILEEN ALMAZAN, ELOISA ALONZO, LILIAN
AMBITO, FERDINAND ANGELES, PABLOITO ARGUIL, RAYMUNDO ATAYDE,
RANULFO AUSTRIA, JOHNNY BALABBO, DELIA BALINGIT, DAISY BANGUIS,
CRISPIN BARANGAN, EVELYN BARCENAS, JONATHAN BASILIO, ROMULO
BLANCO, ALFREDO CABALLES, NOLAN FERNANDEZ, VICENTE FERRER,
ALLAN FLORES, MANUEL GALANG, ESTELA CABANA, WILFREDO CABANTOG,
VIRGINIA CABRERA, MEDI GRACE CACHO, CLARA CANDELARIA, NELIA CHIU,
ANTONIA CHOZAS, IGNACIO CHUA, RUTH CUARTERO, AMELITA
DECICATORIA, VICTORINO DELOS SANTOS, YOLANDA DEL ROSARIO, JOSE
ANTHONY DEL ROSARIO, FE DIZON, RENATO DUAO, ANTONIO DUARTE,
GERTRUDES DUNGO, DEOGRACIAS ESPAO, GREGORIO ESPINOSA, ELEANOR
M. FAJARDO, EMILIA FAJARDO, EDUARDO FRAMIL, DITCHER GARCIA, HILDA
GARLITOS, JUSTINA GOOT, JOSEFINA GRIMALDO, GERARDO GUTIERREZ,
PRECILA IMPERIAL, MELLYN INSERTO, MICHELLE IRAELA, DIVINE GRACE
JEREZO, RAMERO JUSPICIO, LORENA GRACE LAO, DEXTER LA TORRE,
RONALD LANUZA, OFELIO LAZARO, CARMELITA LIPANA, JESUS LIBERES,
ZAIL BENNET LIM, MERLIE LIWANAG, ROSENDO LOBERIANO, DELIO
LOTERTE, MA. SHEILA LOTERTE, FELIX LUBAO, DENNIS LUCE, ANASTACIO
LUZON, ARACELI MAGLANTAY, NELIA MAGSINO, MA. TERESA MALALUAN,
REMUS MAPULA, MYRNA MARCENA, ROSEMARIE MANGONON, PANCHO
MANUCOM, GENARO MARASIGAN, MARIO MARCOS, WILDA MARTINEZ,
DONALYN MENDOZA, TERESITA MENDOZA, VIVIAN MENDOZA, FELIZA
MERCADO, TOMAS MERCADO, ROSITA MESINA, ADORA MEJICA, CRISANTO
MONIS, HUBERTO NIEVA, JOHN NORCIO, HERMAN OBRERO, JR., CRISTINA
ONG, FLORDELIZA ORBIEN, LUCILA PAGLINAWAN, ROMEO PAPIO, ROSARIO
PACIAL, ALFREDO PARREAS, CHRISTINE PEREZ, RODOLFO PEREZ,
FRANCISCO PIDLAOAN, EDUARDO PUSING, FELIMON QUITALEG, BERNADETH
RADOC, HERMES RAQUEO, JASMIN RAZON, ELISA REYES, AGNES RIEGO,
GLENDA RIVERA, JONEL ROMERO, RODEL ROPEREZ, ELENITA RUAN,
MARISA RUIZ, MARIO SANTOS, ARSENIA SAOI, ROSIE SARAOSOS, DESIRE
SARGADE, EDGAR SIM, LOLITA SISON, GERTRUDES TALLADOR, ZENAIDA
TAN, EVANGELINE TRINIDAD, VILMA TULABOT, MARIE TULLA, MARY ANN
VILLAFANIA, RODOLFO VILLEGAS, GLENDA VALLANO, DELSA WARQUEZ, the
ALLIANCE OF FILIPINO WORKERS (AFW), federation officers GREGORIO C. DEL
PRADO and JOSE UMALI, respondents.

D E C I S I O N

YNARES-SANTIAGO, J .:
Before Us is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court, as
amended, assailing the 22 March 2005 Decision
1
of the Court of Appeals in CA-G.R. SP No.
86690 and its 22 June 2005 Resolution
2
denying the Motion for Reconsideration of petitioner Far
Eastern University - Dr. Nicanor Reyes Medical Foundations (FEU-NRMF) Motion for
Reconsideration. The challenged Decision disposed thus:
WHEREFORE, finding grave abuse of discretion, committed by public respondent
NLRC, the instant petition is GRANTED. The assailed Resolution, dated 23 September
2002, and Order, dated 30 June 2004, are hereby REVERSED and SET ASIDE in so far
as the illegality of the strike and loss of employment status of individual petitioners are
concerned. All other respects are AFFIRMED. No costs at this instance.
3

Petitioner FEU-NRMF is a medical institution duly organized and existing under the Philippine
laws. On the other hand, respondent union is a legitimate labor organization and is the duly
recognized representative of the rank and file employees of petitioner FEU-NRMF.
In 1994, petitioner FEU-NRMF and respondent union entered into a Collective Bargaining
Agreement (CBA) that will expire on 30 April 1996.
In view of the forthcoming expiry, respondent union, on 21 March 1996, sent a letter-proposal
4

to petitioner FEU-NRMF stating therein their economic and non-economic proposals for the
negotiation of the new CBA.
On 8 May 1996, petitioner FEU-NRMF sent a letter-reply
5
flatly rejecting respondent unions
demands and proposed to maintain the same provisions of the old CBA. Petitioner FEU-NRMF
reasoned that due to financial constraints, it cannot afford to accede to a number of their
demands for educational and death benefits, uniforms, longetivity pay, meal allowance and
special pay, but nevertheless gave an assurance that it will seriously consider their proposal on
salary increase.
In an effort to arrive at a compromise, subsequent conciliation proceedings were conducted
before the National Conciliation and Mediation Board - National Capital Region (NCMB-NCR)
but because of the unyielding stance of both parties, the negotiation failed.
On 6 August 1996, respondent union filed a Notice of Strike before NCMB-NCR on the ground
of bargaining deadlock. A strike vote was conducted on 23 August 1996 and the result thereof
was submitted to NCMB-NCR on 26 August 1996. After the expiration of the thirty-day cooling
off period and the seven-day strike ban, respondent union, on 6 September 1996, staged a strike.
6

Before the strike was conducted, respondent union, on 4 September 1996, offered a skeletal force
of nursing and health personnel who will man the hospitals operation for the duration of the
strike. For reasons unknown to respondent union, however, petitioner FEU-NRMF failed or
refused to accept the offer.
For its part, petitioner FEU-NRMF, on 29 August 1996, filed a Petition for the Assumption of
Jurisdiction or for Certification of Labor Dispute with the National Labor Relations Commission
(NLRC), underscoring the fact that it is a medical institution engaged in the business of
providing health care for its patients.
7

Acting on the petition, the Secretary of Labor, on 5 September 1996, granted the petition and
thus issued an Order
8
assuming jurisdiction over the labor dispute, thereby prohibiting any strike
or lockout whether actual or impending, and enjoining the parties from committing any acts
which may exacerbate the situation.
On 6 September 1996, Francisco Escuadra, the NLRC process server, certified that, on 5
September 1996 at around 4:00 P.M., he attempted to serve a copy of the Assumption of
Jurisdiction Order to the union officers but since no one was around at the strike area, he just
posted copies of the said Order at several conspicuous places within the premises of the hospital.
Claiming that they had no knowledge that the Secretary of Labor already assumed jurisdiction
over the pending labor dispute as they were not able to receive a copy of the Assumption of
Jurisdiction Order, striking employees continued holding a strike until 12 September 1996.
On 12 September 1996, the Secretary of Labor issued another Order
9
directing all the striking
employees to return to work and the petitioner FEU-NRMF to accept them under the same terms
and conditions prevailing before the strike. Accordingly, on 13 September 1996, a Return to
Work Agreement was executed by the disputing parties, whereby striking employees agreed to
return to their work and the petitioner FEU-NRMF undertook to accept them under status pro
ante. On the same day, the striking employees returned to their respective stations.
Subsequently, petitioner FEU-NRMF filed a case before the NLRC, contending that respondent
union staged the strike in defiance of the Assumption of Jurisdiction Order; hence, it was illegal.
Further, the said strike was conducted in a deleterious and prejudicial manner, endangering the
lives of the patients confined at the hospital. In its complaint docketed as NLRC-NCR No. 10-
11-0733-96, petitioner FEU-NRMF specifically alleged that the striking employees effectively
barricaded the ingress and egress of the hospital, thus, preventing trucks carrying the supplies of
medicines and food for the patients from entering the hospitals premises. In one instance, an
ambulance carrying a patient in critical condition was likewise prevented from passing through
the blockade. Finally, respondent union also prevented patients from seeking medical assistance
by blocking their way into the hospital. In order to redress the wrongful and illegal acts of the
respondent union, petitioner FEU-NRMF prayed for the declaration that the strike is illegal and,
resultantly, for the dismissal of the striking employees and decertification of the respondent
union, plus damages.
In contrast, respondent union avers that petitioner FEU-NRMF refused to bargain collectively
despite hefty financial gains and, thus, guilty of surface bargaining. Before staging a strike,
respondent union complied with the procedural requirements by filing a notice of strike and
strike vote with the NCMB-NCR. The thirty-day cooling off period and the seven-day strike ban
was also fully observed. Respondent union also offered a skeletal work force but it was refused
by petitioner FEU-NRMF. The strike was conducted in a peaceful and orderly manner where
striking employees merely sat down outside the hospitals premises with their placards airing
their grievances. Petitioner FEU-NRMFs allegation of sabotage, therefore, was merely
concocted. Finally, respondent maintained that they did not defy any order of the Secretary of
Labor because neither its officers nor its members were able to receive a copy of the same.
On 27 May 1998, the Labor Arbiter rendered a Decision
10
declaring the strike illegal and
dismissing the union officers for conducting the strike in defiance of the Assumption of
Jurisdiction Order. The dispositive portion of the decision reads:
WHEREFORE, a decision is hereby rendered cast in favor of complainants and against
the respondents declaring the strike conducted by the latter last September 5-14, [1996]
illegal and the following individual respondents officers of union employed by
complainant hospital to have lost their employment status, Dante F. Sugcang, Virgilio P.
Blanco, Fernando S.P. Villapando, Lorna M. Melecio, Florencia O. Reyes, Mercedita P.
Mendoza and Leonor P. Vajar.
The prayer for decertification is hereby denied for lack of jurisdiction and the prayer for
damages is likewise denied for lack of sufficient evidence.
Aggrieved, the respondent union filed a Partial Appeal
11
before the NLRC asserting that the
Labor Arbiter gravely abused its discretion in denying a formal trial and in holding that the
Assumption of Jurisdiction Order dated 5 September 1996 was properly served. In its Partial
Appeal Memorandum
12
filed on 29 July 1998, respondent union claimed that the Labor Arbiter
erred in declaring the strike illegal and in adjudging that the union officers have lost their
employment status.
On 23 September 2002, the NLRC handed down a Resolution
13
affirming in toto the Decision of
the Labor Arbiter dated 27 May 1998 and, thus, upheld the illegality of the strike and loss of
employment status of the union officers. The NLRC found that during the conciliation
proceedings before the NCMB-NCR, the union officers admitted that they were aware that the
Secretary of Labor issued an Assumption of Jurisdiction Order which enjoined the strike they
were conducting. There was, therefore, an utter defiance of the said Order, making the strike
illegal. The union officers dismissal is thus warranted.
Undaunted, the respondent union filed a Motion for Reconsideration
14
which was likewise
denied by the NLRC in its Resolution
15
dated 30 June 2004, for failure to present positive
averment that the Resolution
16
dated 11 October 2002 contains palpable or patent errors as
required by the NLRC Revised Rules of Procedure.
Consequently, the respondent union brought a Petition for Certiorari under Rule 65 before the
Court of Appeals seeking to annul the NLRC Resolution dated 23 September 2002, affirming the
Decision of the Labor Arbiter dated 27 May 1998 and the Resolution dated 30 June 2004,
denying its Motion for Reconsideration. In its Petition
17
docketed as CA-G.R. SP No. 86690,
FEU-NRMF Employees Association-Alliance of Filipino Workers (FEU-NRMFEA-AFW), Dante
Sugcang, Virgilio Blanco, Norma Melencio and Florencia Reyes v. National Labor Relations
Commission, and Far Eastern University Dr. Nicanor Reyes Medical Foundation (FEU-
NRMF), respondent union alleged that the public respondents committed grave abuse of
discretion amounting to lack or excess of jurisdiction in rendering the aforesaid judgments which
are contrary to law and established jurisprudence.
On 22 March 2005, the Court of Appeals rendered a Decision granting the Petition and reversing
the assailed Resolution dated 23 September 2002, and Order dated 30 June 2004, as they were
made with grave abuse of discretion amounting to lack or excess of jurisdiction. The appellate
court found that no personal service was validly effected by the process server that could bind
the striking employees.
Similarly ill-fated was petitioner FEU-NRMFs motion for reconsideration which was denied
through the Court of Appeals Resolution promulgated on 22 June 2005.
18

Petitioners are now before this Court assailing the aforementioned decision and resolution of the
Court of Appeals on the ground that the appellate court erred in reversing both the decisions of
the Labor Arbiter and the NLRC.
19

For our resolution are the following issues:
I.
WHETHER OR NOT SERVICE OF THE ASSUMPTION OF JURISDICTION ORDER
WAS VALIDLY EFFECTED.
II.
WHETHER OR NOT THE STRIKE CONDUCTED BY THE RESPONDENT UNION
WAS ILLEGAL.
III.
WHETHER OR NOT THE DISMISSAL OF THE UNION OFFICERS WAS VALID.
The crucial question for the determination of this Court, however, is whether the service of the
Assumption of Jurisdiction Order was validly effected by the process server so as to bind the
respondent union and hold them liable for the acts committed subsequent to the issuance of the
said Order.
The certification/proof of service of the process server, Francisco A. Escuadra, dated 6
September 1996, reads:
CERTIFICATION/PROOF OF SERVICE
This is to certify that on September 5, 1996 at around 4:00 P.M., I attempted to serve a
copy of the Order of Assumption of Jurisdiction issued by the Secretary of Labor and
Employment, to the officials of the FEU-NRMF Employees Association-AFL.
Since none of the officials of the said union was available to receive a copy of the said
Order, I posted copies of the same at several conspicuous places within the premises of
Far Eastern University Nicanor Reyes Medical Foundation (FEU-NRMF).
The copies of the Order were posted on September 5, 1996 at around 4:30 PM.
Manila, Philippines, 6 September 1996.
20

It can be inferred from the foregoing that the process server resorted to posting the Order when
personal service was rendered impossible since the striking employees were not present at the
strike area. This mode of service, however, is not sanctioned by either the NLRC Revised Rules
of Procedure or the Revised Rules of Court.
The pertinent provisions of the NLRC Revised Rules of Procedure
21
read:
Section 6. Service of Notices and Resolutions.
(a) Notices or summons and copies of orders, shall be served on the parties to the
case personally by the Bailiff or duly authorized public officer within three (3) days
from receipt thereof or by registered mail; Provided that in special circumstances,
service of summons may be effected in accordance with the pertinent provisions of
the Rules of Court; Provided further, that in cases of decisions and final awards,
copies thereof shall be served on both parties and their counsel or representative by
registered mail; Provided further, that in cases where a party to a case or his counsel on
record personally seeks service of the decision upon inquiry thereon, service to said party
shall be deemed effected upon actual receipt thereof; Provided finally, that where parties
are so numerous, service shall be made on counsel and upon such number of
complainants, as may be practicable, which shall be considered substantial compliance
with Article 224(a) of the Labor Code, as amended. (Emphasis supplied.)
An Order issued by the Secretary of Labor assuming jurisdiction over the labor dispute is not a
final judgment for it does not dispose of the labor dispute with finality.
22
Consequently, the rule
on service of summons and orders, and not the proviso on service of decisions and final awards,
governs the service of the Assumption of Jurisdiction Order.
Under the NLRC Revised Rules of Procedure, service of copies of orders should be made by the
process server either personally or through registered mail. However, due to the urgent nature of
the Assumption of Jurisdiction Order and the public policy underlying the injunction carried by
the issuance of the said Order, service of copies of the same should be made in the most
expeditious and effective manner, without any delay, ensuring its immediate receipt by the
intended parties as may be warranted under the circumstances. Accordingly, in this case,
personal service is the proper mode of serving the Assumption of Jurisdiction Order.
It is also provided under the same rules that in special circumstances, service of summons may
be effected in accordance with the pertinent provisions of the Rules of Court.
23

Parenthetically, the manner upon which personal service may be made is prescribed by the
following provisions of the Revised Rules of Court:
Rule 13. Filing and Service of Pleadings, Judgments And Other Papers.
Section 6. Personal service. Service of the papers may be made by delivering
personally a copy to the party or his counsel, or by leaving it in his office with his clerk
or with a person having charge thereof. if no person is found in his office, or his office is
not known, or he has no office, then by leaving a copy, between the hours of eight in the
morning and six in the evening, at the partys or counsels residence, if known, with a
person of sufficient age and discretion then residing therein.
Let it be recalled that the process server merely posted copies of the Assumption of Jurisdiction
Order in conspicuous places in the hospital. Such posting is not prescribed by the rules, nor is it
even referred to when the said rules enumerated the different modes of effecting substituted
service, in case personal service is impossible by the absence of the party concerned.
Clearly, personal service effectively ensures that the notice desired under the constitutional
requirement of due process is accomplished. If, however, efforts to find the party concerned
personally would make prompt service impossible, service may be completed by substituted
service, that is, by leaving a copy, between the hours of eight in the morning and six in the
evening, at the partys or counsels residence, if known, with a person of sufficient age and
discretion then residing therein.
Substituted service derogates the regular method of personal service. It is therefore required that
statutory restrictions for effecting substituted service must be strictly, faithfully and fully
observed. Failure to comply with this rule renders absolutely void the substituted service along
with the proceedings taken thereafter.
24
The underlying principle of this rigid requirement is that
the person, to whom the orders, notices or summons are addressed, is made to answer for the
consequences of the suit even though notice of such action is made, not upon the party
concerned, but upon another whom the law could only presume would notify such party of the
pending proceedings.
25

Applying this principle in the case at bar, presumption of receipt of the copies of the Assumption
of Jurisdiction Order could not be lightly inferred from the circumstances considering the
adverse effect in case the parties failed to heed to the injunction directed by such Order. Worthy
to note that in a number of cases, we have ruled that defiance of the assumption and return-to-
work orders of the Secretary of Labor after he has assumed jurisdiction is a valid ground for the
loss of employment status of any striking union officer or member.
26
Employment is a property
right of which one cannot be deprived of without due process.
27
Due process here would demand
that the respondent union be properly notified of the Assumption of Jurisdiction Order of the
Secretary of Labor enjoining the strike and requiring its members to return to work. Thus, there
must be a clear and unmistakable proof that the requirements prescribed by the Rules in the
manner of effecting personal or substituted service had been faithfully complied with. Merely
posting copies of the Assumption of Jurisdiction Order does not satisfy the rigid requirement for
proper service outlined by the above stated rules. Needless to say, the manner of service made by
the process server was invalid and irregular. Respondent union could not therefore be adjudged
to have defied the said Order since it was not properly apprised thereof. Accordingly, the strike
conducted by the respondent union was valid under the circumstances.
For a strike to be valid, the following requisites must concur: (1) the thirty-day notice or the
fifteen-day notice, in case of unfair labor practices; (2) the two-thirds (2/3) required vote to strike
done by secret ballot; and (3) the submission of the strike vote to the Department of Labor and
Employment at least seven days prior to the strike.
28
In addition, in case of strikes in hospitals,
clinics and medical institutions, it shall be the duty of the striking employees to provide and
maintain an effective and skeletal workforce of medical and other health personnel in order to
insure the proper and adequate protection of the life and health of its patients.
29
These procedural
requirements, along with the mandatory cooling off and strike ban periods had been fully
observed by the respondent union.
It is true that the strike may still be declared invalid where the means employed are illegal even if
the procedural requisites before staging a strike were satisfied.
30
However, in the absence of
evidence to support the allegations that the respondent union did not commit illegal acts during
the strike, we are constrained to dismiss the allegations and uphold the strike as a valid exercise
of the workers constitutional right to self-organization and collective bargaining.
The affidavits presented by the petitioner FEU-NRMF and relied upon by the Labor Arbiter and
the NLRC, in arriving at the conclusion that the respondent union committed illegal acts during
the strike, could not be given probative value by this Court as the adverse party was not given a
chance to cross-examine the affiants. In a catena of labor cases, this Court has consistently held
that where the adverse party is deprived of the opportunity to cross-examine the affiants,
affidavits are generally rejected for being hearsay, unless the affiants themselves are placed on
the witness stand to testify thereon.
31
Neither can this Court rely on the photographs supporting
these allegations without verifying its authenticity.
Verily, this Court is not bound to uphold the erroneous findings of the administrative bodies.
While it is well-settled that findings of facts of the Labor Arbiter, when affirmed by the NLRC,
are entitled to great respect and are generally binding on this Court, it is equally settled that this
Court will not uphold erroneous conclusions of the said bodies as when we find insufficient or
insubstantial evidence on record to support these factual findings. The same holds true when it is
perceived that far too much is concluded, inferred or deduced from the bare allegations or
insufficient evidence appearing on the record.
Prescinding from the above, as the strike conducted by the respondent union is valid and legal,
there is therefore no cogent reason to dismiss the union officers.
WHEREFORE, premises considered, the instant Petition is DENIED. Costs against the
petitioner.
SO ORDERED.
UNION OF FILIPRO EMPLOYEES, Petitioner, vs. THE HONORABLE NATIONAL
LABOR RELATIONS COMMISSION and NESTLE PHILIPPINES, INC., Respondents.

R E S O L U T I O N

MEDIALDEA, J.:

This special civil action of Certiorari assails the resolution (dated June 5, 1989) of the
National Labor Relations Commission (NLRC) relative to Certified Case No. 0522, and the
resolution denying the motion for reconsideration (dated August 8, 1989).
The antecedents are:
On June 22, 1988, the petitioner Union of the Filipro Employees, the sole and exclusive
bargaining agent of all rank-and-file employees of Nestle Philippines, (private respondent)
filed a Notice of Strike at the Department of Labor raising the issues of CBA deadlock and
unfair labor practice.
The National Conciliation and Mediation Board (NCMB) invited the parties for a conference
on February 4, 1988 for the purpose of settling the dispute. The private respondent
however, assailed the legal personality of the proponents of the said notice of strike to
represent the Nestle employees. This notwithstanding, the NCMB proceeded to invite the
parties to attend the conciliation meetings and to which private respondent failed to attend
contending that it will deal only with a negotiating panel duly constituted and mandated in
accordance with the UFE Constitution and By-laws.
The records show that before the filing of said notice of strike, or on June 30, 1987, the
respective CBAs in the four (4) units of Nestle, in Alabang-Cabuyao, Makati, Cagayan de
Oro and Cebu/Davao work locations had all expired. Under the said CBAs, Alabang/Cabuyao
and Makati units were represented by the UFE; the Cagayan de Oro unit was represented by
WATU; while the Cebu-Davao was represented by TUPAS. Prior to the expiration of the
CBAs for Makati and Alabang/Cabuyao, UFE submitted to the company a list of CBA
proposals. The company, on the other hand, expressed its readiness to negotiate a new CBA
for Makati and Alabang/Cabuyao units but reserved the negotiation for Cagayan de Oro and
Cebu-Davao considering that the issue of representation for the latter units was not yet
settled. On June 10, 1987 and July 28, 1987, UFE was certified as the sole and exclusive
bargaining representative of Cagayan de Oro and Cebu/Davao units, respectively.
On September 14, 1987, the Company terminated from employment all UFE Union officers,
headed by its president, Mr. Manuel Sarmiento, and all the members of the negotiating
panel for instigating and knowingly participating in a strike staged at the Makati, Alabang,
Cabuyao and Cagayan de Oro on September 11, 1987 without any notice of strike filed and
a strike vote obtained for the purpose.
On September 21, 1987, the union filed a complaint for illegal dismissal. The Labor Arbiter,
in a decision dated January 12, 1988, upheld the validity of the dismissal of said union
officers. The decision was later on affirmed by the respondent NLRC en banc, on November
2, 1988.
Respondent company contends that, "with the dismissal of UFE officers including all the
members of the union negotiating panel as later on confirmed by the NLRC en banc, said
union negotiating panel thus ceased to exist and its former members divested of any legal
personality, standing and capacity to act as such or represent the union in any manner
whatsoever."
The union officers, on the other hand, asserted their authority to represent the regular
rank-and-file employees of Nestle, Philippines, being the duly elected officers of the union.
In the meantime, private respondent sought guidelines from the Department of Labor on
how it should treat letters from several splinter groups claiming to have possessed authority
to negotiate in behalf of the UFE. It is noteworthy that aside from the names of the
negotiating panel submitted by one UFE officials, three (3) other groups in the Nestle plant
in Cabuyao and two groups in the Makati office have expressed a desire to bargain with
management professing alleged authorization from and by the general membership. These
groups however, it must be noted, belong to just one (1) union, the UFE.
In a letter dated August 20, 1988, BLR Director Pura Ferrer-Calleja advised:
"Any attempt on the part of management to directly deal with any of the factions
claiming to have the imprimatur of the majority of the employees, or to recognize
any act by a particular group to adopt the deadlock counter proposal of the
management, at this stage, would be most unwise. It may only fan the fire." (Rollo,
pp. 61-62)
On March 20, 1988 and August 5, 1988, the company concluded separate CBAs with the
general membership of the union at Cebu/Davao and Cagayan de Oro units, respectively.
The workers thereat likewise conducted separate elections of their officers.
Assailing the validity of these agreements, the union filed a case of ULP against the
company with the NLRC-NCR Arbitration Branch on November 16, 1988.
Efforts to resolve the dispute amicably were taken by the NCMB but yielded negative result
because of the irreconcilable conflicts of the parties on the matter of who should represent
and negotiate for the workers.: nad
On October 18, 1988, petitioner filed a motion asking the Secretary of Labor to assume
jurisdiction over the dispute of deadlock in collective bargaining between the parties. On
October 28, 1988, Labor Secretary Franklin Drilon certified to the NLRC the said dispute
between the UFE and Nestle, Philippines, the relevant portion of which reads as follows:
"WHEREFORE, above premises considered, this office hereby certifies the sole issue
of deadlock in CBA negotiations affecting the Makati, Alabang and Cabuyao units to
the National Labor Relations Commission for compulsory arbitration.
"The NLRC is further directed to call all the parties immediately and resolve the CBA
deadlock within twenty (20) days from submission of the case for resolution." (Rollo,
p. 225)
On June 5, 1989, the Second Division of the NLRC promulgated a resolution granting wage
increase and other benefits to Nestle's employees, ruling on non-economic issues, as well as
absolving the private respondent of the Unfair Labor Practice charge. The dispositive portion
states as follows:
"WHEREFORE, as aforestated, the parties are hereby ordered to execute and
implement through their duly authorized representatives a collective bargaining
agreement for a duration of five (5) years from promulgation of this Resolution.
"SO ORDERED." (Rollo, p. 180)
Petitioner finds said resolution to be inadequate and accordingly, does not agree therewith.
It filed a motion for reconsideration, which was, however, denied on August 8, 1989.
Hence, this petition for Certiorari.
Petitioner originally raised 13 errors committed by the public respondent. However, in its
Urgent Manifestation and Motion dated September 24, 1990, petitioner limited the issues to
be resolved into six (6). Thus, only the following shall be dealt with in this resolution:
1. WHETHER OR NOT THE SECOND DIVISION OF THE NLRC ACTED WITHOUT
JURISDICTION IN RENDERING THE ASSAILED RESOLUTION, THE SAME BEING
RENDERED ONLY BY A DIVISION OF THE PUBLIC RESPONDENT AND NOT BY EN
BANC;
2. WHETHER OR NOT THE RESPONDENT NLRC SERIOUSLY ERRED IN HOLDING THAT
THE CBA TO BE SIGNED BY THE PARTIES SHALL COVER SOLELY THE BARGAINING
UNIT CONSISTING OF ALL REGULAR RANK-AND-FILE EMPLOYEES OF THE
RESPONDENT COMPANY AT MAKATI, ALABANG AND CABUYAO;
3. WHETHER OR NOT THE RESPONDENT NLRC HAD ACTED WITH GRAVE ABUSE OF
DISCRETION AND COMMITTED SERIOUS ERRORS IN FACT AND IN LAW WHEN IT
RULED THAT THE CBA IS EFFECTIVE ONLY UPON THE PROMULGATION OF THE
ASSAILED RESOLUTION;
4. WHETHER OR NOT PUBLIC RESPONDENT HAD SERIOUSLY ERRED IN DENYING
PETITIONER'S DEMAND FOR A CONTRACT SIGNING BONUS AND IN TOTALLY
DISREGARDING THE LONG PRACTICE AND TRADITION IN THE COMPANY WHICH
AMOUNT TO DIMINUTION OF EMPLOYEES BENEFITS;
5. WHETHER OR NOT PUBLIC RESPONDENT SERIOUSLY ERRED IN NOT GRANTING
THE UNION'S DEMAND FOR A "MODIFIED UNION SHOP" SECURITY CLAUSE IN THE
CBA AS ITS RULING CLEARLY COLLIDES WITH SETTLED JURISPRUDENCE ON THE
MATTER;
6. WHETHER OR NOT PUBLIC RESPONDENT ERRED IN ENTIRELY ABSOLVING THE
COMPANY FROM THE UNFAIR LABOR PRACTICE CHARGE AND IN DISREGARDING
THE SUBSTANTIAL INCRIMINATORY EVIDENCE RELATIVE THERETO; (p. 9,
Petitioner's Urgent Manifestation and Motion dated September 24, 1990).
Counsel for the private respondent company filed a motion for leave of court to oppose the
aforesaid urgent manifestation and motion. It appearing that the allowance of said
opposition would necessarily delay the early disposition of this case, the Court Resolved to
DISPENSE with the filing of the same.:-cralaw
We affirm the public respondent's findings and rule as regards the issue of jurisdiction.
This case was certified on October 28, 1988 when existing rules prescribed that, it is
incumbent upon the Commission en banc to decide or resolve a certified dispute. However,
R.A. 6715 took effect during the pendency of this case. Aside from vesting upon each
division the power to adjudicate cases filed before the Commission, said Act further provides
that the divisions of the Commission shall have exclusive appellate jurisdiction over cases
within their respective territorial jurisdiction.
Section 5 of RA 6715 provides as follows:
"Section 5. Article 213 of the Labor Code of the Philippines, as amended, is further
amended to read as follows:
Art. 213. National Labor Relations Commission. There shall be a National Labor
Relations Commission which shall be attached to the Department of Labor and
Employment for program and policy coordination only, composed of (a) Chairman
and fourteen (14) Members.
Five (5) members each shall be chosen from among the nominees of the workers
and employers organization, respectively. The Chairman and the four (4) remaining
members shall come from the public sector, with the latter to be chosen from among
the recommendees of the Secretary of Labor and Employment.
Upon assumption into office, the members nominated by the workers and employers
organizations shall divest themselves of any affiliation with or interest in the
federation or association to which they belong.
The Commission may sit en banc or in five (5) divisions, each composed of three (3)
members. The Commission shall sit en banc only for purposes of promulgating rules
and regulations governing the hearing and disposition of cases before any of its
divisions and regional branches and formulating policies affecting its administration
and operations. The Commission shall exercise its adjudicatory and all other powers,
functions and duties through its divisions. Of the five (5) divisions, the first and
second divisions shall handle cases coming from the National Capital Region and the
third, fourth and fifth divisions, cases from other parts of Luzon, from the Visayas
and Mindanao, respectively. The divisions of the Commission shall have exclusive
appellate jurisdiction over cases within their respective territorial jurisdiction.
The concurrence of two (2) Commissioners of a division shall be necessary for the
pronouncement of a judgment or resolution. Whenever the required membership in a
division is not complete and the concurrence of two (2) commissioners to arrive at a
judgment or resolution cannot be obtained, the Chairman shall designate such
number of additional Commissioners from the other divisions as may be necessary.
The conclusions of a division on any case submitted to it for decision shall be reached
in consultation before the case is assigned to a member for the writing of the
opinion. It shall be mandatory for the division to meet for purposes of the
consultation ordained therein. A certification to this effect signed by the Presiding
Commissioner of the division shall be issued, and a copy thereof attached to the
record of the case and served upon the parties.
The Chairman shall be the Presiding Commissioner of the first division, and the four
(4) other members from the public sector shall be the Presiding Commissioners of
the second, third, fourth and fifth divisions, respectively. In case of the effective
absence or incapacity of the Chairman, the Presiding Commissioner of the second
division shall be the Acting Chairman.
The Chairman, aided by the Executive Clerk of the Commission, shall have
administrative supervision over the Commission and its regional branches and all its
personnel, including the Executive Labor Arbiters and Labor Arbiters.
The Commission when sitting en banc, shall be assisted by the same Executive Clerk,
and, when acting thru its Divisions, by said Executive Clerk for its First Division and
four (4) other Deputy Executive Clerks for the Second, Third, Fourth, and Fifth
Divisions, respectively, in the performance of such similar or equivalent functions
and duties as are discharged by the Clerk of Court and Deputy Clerks of Court of the
Court of Appeals." (Emphasis supplied)
In view of the enactment of Republic Act 6715, the aforementioned rules requiring the
Commission en banc to decide or resolve a certified dispute have accordingly been repealed.
This is supported by the fact that on March 21, 1989, the Secretary of Labor, issued
Administrative Order No. 36 (Series of 1989), which reads:
"2. Effective March 21, 1989, the date of the effectivity of Republic Act 6715, the
Commission shall cease holding en banc sessions for purposes of adjudicating cases
and shall discharge their adjudicatory functions and powers through their respective
Divisions."
Contrary to the claim of the petitioner, the above-cited Administrative Order is valid, having
been issued in accordance with existing legislation as the Secretary of Labor is clothed with
the power to promulgate rules for the implementation of the said amendatory law.:-cralaw
Section 36 of R.A. 6715 provides:
Section 36. Rule-Making Authority. The Secretary of Labor and Employment is
hereby authorized to promulgate such rules and regulations as may be necessary to
implement the provisions of this Act."
Moreover, it is to be emphasized and it is a matter of judicial notice that since the effectivity
of R.A. 6715, many cases have already been decided by the five (5) divisions of the NLRC.
We find no legal justification in entertaining petitioner's claim considering that the clear
intent of the amendatory provision is to expedite the disposition of labor cases filed before
the Commission. To rule otherwise would not be congruous to the proper administration of
justice.
As to the second issue, the Court is convinced that the public respondent committed no
grave abuse of discretion in resolving only the sole issue certified to by the Secretary and
formulating a CBA which covers the bargaining units consisting of all regular rank-and-file
employees of the respondent company at Makati, Alabang and Cabuyao only.
In its assailed resolution, public respondent stated:
"A perusal of the records and proceedings of this case reveals that after the issuance
by the Secretary of Labor of his Order dated 28 October 1988 certifying the dispute
to Us, the Union filed an Urgent Manifestation seeking the modification of the
certification order to include the Cebu Davao and Cagayan de Oro divisions, the
employees/workers therein being all bonafide members of the Union which is the
sole and exclusive bargaining representative of all the regular rank-and-file workers
of the company nationwide. Their non-inclusion in the certification order, the union
argues, would give premium to the alleged unlawful act of the Company in entering
into separate 'Collective Bargaining Agreements' directly with the workers thereat.
"In the same vein, the union manifested its intention to file a complaint for ULP
against the company and its officers responsible for such act, which it eventually did.
"Considering that the Union had reserved the right to prosecute the Company and its
officers responsible for the alleged unlawful execution of the CBA directly with the
union members in Cagayan de Oro and Cebu/Davao units, as it has in fact filed a
case which is now pending with our Arbitration Branch, the issue as to whether such
acts constitute ULP is best heard and decided separately from the certified case, not
only because of the evidentiary need to resolve the issue, but also because of the
delay that may ensue in the resolution of the present conflict.
"Furthermore, the consolidation of the issue with the instant case poses complicated
questions regarding venue and joinder of parties. We feel that each of the issues
propounded by the parties shall be better dealt with separately according to its own
merits.
"Thus, We rule to resolve the sole issue in dispute certified to this Commission, i.e.,
the deadlock in the collective bargaining negotiations in Cabuyao/Alabang and Makati
units." (Rollo, pp. 174-176)
We agree. Public respondent's resolution is proper and in full compliance with the order of
the Secretary of Labor. The concomitant delay that will result in resolving petitioner's
motion for the modification of the certification order to determine whether to include
Cebu/Davao and Cagayan de Oro Divisions or not will defeat the very purpose of the
Secretary of Labor's assumption of jurisdiction and his subsequent certification order for
compulsory arbitration.
The assumption of jurisdiction by the Secretary of Labor over labor disputes causing or
likely to cause a strike or lockout in an industry indispensable to the national interest is in
the nature of a police power measure. It cannot be denied that the private respondent is
engaged in an undertaking affected with public interest being one of the largest
manufacturers of food products. The compelling consideration of the Secretary's assumption
of jurisdiction is the fact that a prolonged strike or lockout is inimical to the national
economy and thus, the need to implement some measures to suppress any act which will
hinder the company's essential productions is indispensable for the promotion of the
common good. Under this situation, the Secretary's certification order for compulsory
arbitration which was intended for the immediate formulation of an already delayed CBA
was proper.
Corollarily, the NLRC was thereby charged with the task of implementing the certification
order for compulsory arbitration. As the implementing body, its authority did not include the
power to amend the Secretary's order (University of Santo Tomas v. National Labor
Relations Commission, UST Faculty Union, G.R. No. 89920, October 18, 1990).:- nad
For the same reason, We rule that the prayer to declare the respondent company guilty of
acts of unfair labor practice when it allegedly resorted to practices designed to delay the
collective bargaining negotiations cannot be subsumed in this petition, it being beyond the
scope of the certification order.
Petitioner argues that because of the public respondent's actuation in this regard, it
committed grave abuse of discretion as it allowed multiplicity of suits and splitting causes of
action which are barred by procedural rule.
We cannot subscribe to this argument. In the recent case of the Philippine Airlines, Inc. v.
National Labor Relations Commission, this Court had occasion to define what a compulsory
arbitration is. In said case, this Court stated:
"When the consent of one of the parties is enforced by statutory provisions, the
proceeding is referred to as compulsory arbitration In labor cases, compulsory
arbitration is the process of settlement of labor disputes by a government agency
which has the authority to investigate and to make an award which is binding on all
the parties. (G.R. No. 55159, 22 Dec. 89)."
When sitting in a compulsory arbitration certified to by the Secretary of Labor, the NLRC is
not sitting as a judicial court but as an administrative body charged with the duty to
implement the order of the Secretary. Its function only is to formulate the terms and
conditions of the CBA and cannot go beyond the scope of the order. Moreover, the
Commission is further tasked to act within the earliest time possible and with the end in
view that its action would not only serve the interests of the parties alone, but would also
have favorable implications to the community and to the economy as a whole. This is the
clear intention of the legislative body in enacting Art. 263 paragraph (g) of the Labor Code,
as amended by Section 27 of R.A. 6175, which provides:
(g) When in his opinion, there exists a labor dispute causing or likely to cause a
strike or lockout in an industry indispensable to the national interest, the Secretary
of Labor and Employment may assume jurisdiction over the dispute and decide it or
certify the same to the Commission for compulsory arbitration. Such assumption or
certification shall have the effect of automatically enjoining the intended or
impending strike or lockout as specified in the assumption or certification order. If
one has already taken place at the time of assumption or certification, all striking or
lockout employees shall immediately return to work and the employer shall
immediately resume operations and readmit all workers under the same terms and
conditions prevailing before the strike or lockout. The Secretary of Labor and
Employment or the Commission may seek the assistance of law enforcement
agencies to ensure compliance with this provision as well as with such orders as he
may issue to enforce the same.nad(Emphasis supplied)
In view of the avowed but limited purpose of respondent's assumption of jurisdiction over
this compulsory arbitration case, it cannot be faulted in not taking cognizance of other
matters that would defeat this purpose.
As regards the third issue raised by petitioner, this Court finds the provisions of Article 253
and Article 253-A of the Labor Code as amended by R.A. 6715 as the applicable laws, thus:
"Art. 253. Duty to bargain collectively when there exists a collective bargaining
agreement. When there is a collective bargaining agreement, the duty to bargain
collectively shall also mean that neither party shall terminate nor modify such
agreement during its lifetime. However, either party can serve a written notice to
terminate or modify the agreement at least sixty (60) days prior to its expiration
date. It shall be the duty of both parties to keep the status quo and to continue in
full force and effect the terms and conditions of the existing agreement during the
60-day period and/or until a new agreement is reached by the parties.
Art. 253-A. Terms of a collective bargaining agreement. Any Collective Bargaining
Agreement that the parties may enter into shall, insofar as the representation aspect
is concerned, be for a term of five (5) years. No petition questioning the majority
status of the incumbent bargaining agent shall be entertained and no certification
election shall be conducted by the Department of Labor and Employment outside of
the sixty-day period immediately before the date of expiry of such five year term of
the Collective Bargaining Agreement. All other provisions of the Collective Bargaining
Agreement shall be renegotiated not later than three (3) years after its execution.
Any agreement on such other provisions of the Collective Bargaining Agreement
entered into within six (6) months from the date of expiry of the term of such other
provisions as fixed in the Collective Bargaining Agreement, shall retroact to the day
immediately following such date. If any such agreement is entered into beyond six
months, the parties shall agree on the duration of retroactivity thereof. In case of a
deadlock in the renegotiation of the collective bargaining agreement, the parties may
exercise their rights under this Code." Chanrobles virtual lawlibrary(Emphasis supplied)
In the light of the foregoing, this Court upholds the pronouncement of the NLRC holding the
CBA to be signed by the parties effective upon the promulgation of the assailed resolution.
It is clear and explicit from Article 253-A that any agreement on such other provisions of the
CBA shall be given retroactive effect only when it is entered into within six (6) months from
its expiry date. If the agreement was entered into outside the six (6) month period, then
the parties shall agree on the duration of the retroactivity thereof.- nad
The assailed resolution which incorporated the CBA to be signed by the parties was
promulgated June 5, 1989, and hence, outside the 6 month period from June 30, 1987, the
expiry date of the past CBA. Based on the provision of Section 253-A, its retroactivity
should be agreed upon by the parties. But since no agreement to that effect was made,
public respondent did not abuse its discretion in giving the said CBA a prospective effect.
The action of the public respondent is within the ambit of its authority vested by existing
laws.
In assailing the public respondent's actuation, the Union cited the case of Villar v. Inciong
(121 SCRA 444) where this Court ruled:
". . . While petitioners were charged for alleged commission of acts of disloyalty
inimical to the interests of the Amigo Employees Union-PAFLU in the Resolution of
February 14, 1977 of the Amigo-Employees Union-PAFLU and on February 15, 1977,
PAFLU and the company entered into and concluded a new collective bargaining
agreement, petitioners may not escape the effects of the security clause under either
the old CBA or the new CBA by claiming that the old CBA had expired and that the
new CBA cannot be given retroactive enforcement. To do so would be to create a gap
during which no agreement would govern, from the time the old contract expired to
the time a new agreement shall have been entered into with the union . . ."
In the aforecited case, the Court only pointed out that, it is not right for union members to
argue that they cannot be covered by the past and the new CBAs both containing the same
closed-shop agreement for acts committed during the interregnum. What was emphasized
by this Court is that in no case should there be a period in which no agreement would
govern at all. But nowhere in the said pronouncement did We rule that every CBA
contracted after the expiry date of the previous CBA must retroact to the day following such
date. Hence, it is proper to rule that in the case at bar, the clear and unmistakable terms of
Articles 253 and 253-A must be deemed controlling.
Articles 253 and 253-A mandate the parties to keep the status quo and to continue in full
force and effect the terms and conditions of the existing agreement during the 60-day
period prior to the expiration of the old CBA and/or until a new agreement is reached by the
parties. Consequently, there being no new agreement reached, the automatic renewal
clause provided for by the law which is deemed incorporated in all CBAs, provides the
reason why the new CBA can only be given a prospective effect.
Petitioner claims that because of the prospective effect of the CBA, union members were
deprived of substantial amount of monetary benefits which they could have enjoyed had the
CBA be given retroactive effect. This would include backwages, the immediate effects of the
mandated wage increase on the fringe benefits such as the 13th and 14th month pay,
overtime premium, and right to differential pay, leaves, etc. This Court, is not unmindful of
these. Nevertheless, We are convinced that the CBA formulated by public respondent is fair,
reasonable and just. Even if prospective in effect, said CBA still entitles the Nestle workers
and employees reasonable compensation and benefits which, in the opinion of this Court, is
one of the highest, if not the highest in the industry. Petitioner did not succeed in
overcoming the presumption of regularity in the performance of the public respondent's
functions. Even if the resolution fell short of meeting the numerous demands of the union,
the petitioner failed to establish that public respondent committed grave abuse of discretion
in not giving the CBA a retrospective effect.
The fourth and fifth assignment of errors should be resolved jointly considering that they
are the terms and conditions of the CBA.
According to petitioner, the terms and conditions thereof are inadequate, unreasonable,
incompetitive and thus, prejudicial to the workers. It further decries public respondent's
alleged taking side with the private respondent. Petitioner contends that in issuing the
assailed resolutions, public respondent considered only the position of the private
respondent and totally disregarded that of the petitioner. It further avers that the awards
are bereft of any factual and legal basis.
Petitioner made so many claims and statements which were adopted and asserted without
good ground. It fails to substantiate why, in not granting its demands for the inclusion in
the CBA of a "Contract Signing Bonus" and a "Modified Union Shop Agreement," the assailed
resolutions were erroneous and were drawn up arbitrarily and whimsically.chanrobles virtual law l ibrary
In the case of Palencia v. National Labor Relations Commission, G.R. No. 75763, August 21,
1987, 153 SCRA 247, We ruled that the findings of fact of the then Court of Industrial
Relations (now NLRC), are conclusive and will not be disturbed. Thus:
"Following a long line of decisions this Court has consistently declined to disturb the findings
of fact of the then Court of Industrial Relations whose functions the NLRC now performs.
[Pambusco Employees Union Inc. v. Court of Industrial Relations, 68 Phil. 591 (1939); nad
Manila Electric Co. v. National Labor Union, 70 Phil. 617 (1940); San Carlos Milling Co. v.
Court of Industrial Relations, 111 Phil. 323 (1961),1 SCRA 734; Philippine Educational
Institution v. MLQSEA Faculty Assn., 135 Phil. 282 (1968), 26 SCRA 272; University of
Pangasinan Faculty Union v. University of Pangasinan and NLRC, G.R. No. L-63122,
February 20, 1984, 127 SCRA 691]. The findings of fact are conclusive and will not be
disturbed in the absence of a showing that there has been grave abuse of discretion.
[Philippine Educational Institution v. MLQSEA Faculty Association, 26 SCRA 272, 276] and
there being no indication that the findings are unsubstantiated by evidence [University of
Pangasinan Faculty Union v. University of Pangasinan and NLRC, G.R. No. 63122, February
20, 1984, 127 SCRA 694, 704]."
Moreover, the NLRC is in the best position to formulate a CBA which is equitable to all
concerned. Because of its expertise in settling labor disputes, it is imbued with competence
to appraise and evaluate the evidence and positions presented by the parties. In the
absence of a clear showing of grave abuse of discretion, the findings of the respondent
NLRC on the terms of the CBA should not be disturbed.
Taken as a whole, the assailed resolutions are after all responsive to the call of
compassionate justice observed in labor law and the dictates of reason which is considered
supreme in every adjudication.
ACCORDINGLY, PREMISES CONSIDERED, the petition is DISMISSED. The Resolutions of the
NLRC, dated June 5, 1989 and August 8, 1989 are AFFIRMED, except insofar as the ruling
absolving the private respondent of unfair labor practice which is declared SET ASIDE.:-cralaw
SO ORDERED.
OVERSEAS WORKERS WELFARE ADMINISTRATION, represented by
Administrator Marianito D. Roque, petitioner,
vs.
ATTY. CESAR L. CHAVEZ, OPHELIA N. ALMENARIO, ELVIRA ADOR,
REYNALDO TAYAG, TORIBIO ROBLES, JR., ROSSANE BAHIA, RACQUEL
LLAGAS-KUNTING, MA. STELLA A. DULCE, ROSSANA SIRAY, EDUARDO
MENDOZA, JR., PRISCILLA BARTOLO, ROSE VILLANUEVA, CHERRY MOLINA,
MARY ROSE RAMOS, MA. MINERVA PAISO, RODERIC DELOS REYES, RENATO
DELA CRUZ, MARIVIC DIGMA, JESSIE BALLESTEROS, DONATO DAGDAG,
MARK TUMIBAY, CYNTHIA FRUEL, DEMETRIO SORIANO, MILAGROS
GUEVARRA, ANGELITA LACSON, BERT BUQUID, JUN SAMORANAS, TEODORO
TUTAY, LEAH YOGYOG, MARIE CRUZ and CONCEPCION BRAGAS REGALADO,
respondents.
D E C I S I O N
CHICO-NAZARIO, J .:
The Case
Petitioner Overseas Workers Welfare Administration (OWWA), comes to this Court via the
instant Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the 22
September 2005 Decision
1
of the Court of Appeals in CA-G.R. SP No. 87702, which affirmed
the Order
2
dated 30 September 2004, of the Regional Trial Court (RTC), Pasay City, Branch
117, in Civil Case No. 04-0415-CFM. The RTC granted the issuance of a writ of preliminary
injunction restraining OWWA from implementing its new organizational structure.
Factual Antecedents
OWWA is a government agency tasked primarily to protect the interest and promote the welfare
of overseas Filipino workers (OFWs).
3
OWWA traces its beginnings to 1 May 1977, when the
Welfare and Training Fund for Overseas Workers in the Department of Labor and Employment
(DOLE) was created by virtue of Letter of Instructions No. 537, with the main objective, inter
alia, of providing social and welfare services to OFW, including insurance coverage, social
work, legal and placement assistance, cultural and remittances services, and the like. On 1 May
1980, Presidential Decree No. 1694 was signed into law, formalizing the operations of a
comprehensive Welfare Fund (Welfund), as authorized and created under Letter of Instructions
No. 537. Presidential Decree No. 1694 further authorized that contributions to the Welfare and
Training Fund collected pursuant to Letter of Instructions No. 537 be transferred to the Welfund.
On 16 January 1981, Presidential Decree No. 1809 was promulgated, amending certain
provisions of Presidential Decree No. 1694.
4
Subsequently, Executive Order No. 126 was passed
which reorganized the Ministry of Labor and Employment. Executive Order No. 126 also
renamed the Welfare Fund as the OWWA.
From the records, it is undisputed that on 9 January 2004, as there was yet no formal OWWA
structure duly approved by the Department of Budget and Management (DBM) and the Civil
Service Commission (CSC), the OWWA Board of Trustees passed Resolution No. 001,
5
Series
of 2004, bearing the title "Approving the Structure of the Overseas Workers Welfare
Administration," and depicting the organizational structure and staffing pattern of the OWWA,
as approved by Patricia A. Sto. Tomas (Sto. Tomas), then Chair of the OWWA Board of
Trustees and then Secretary of the DOLE. According to Resolution No. 001, the structuring of
the OWWA will stabilize the internal organization and promote careerism among the employees.
It will also ensure a more efficient and effective delivery of programs and services to member-
OFWs. Resolution No. 001 resolved, thus:
RESOLVED therefore, to approve as it is hereby approved, the OWWA Structure which is
hereto attached and made an integral part of this Resolution, comprising mainly of the approved
organizational chart, functional descriptions and staffing pattern, subject to the following:
a. There will be no displacement of existing regular employees;
b. There will be no temporary appointments; and
c. There will be no hiring of casuals, contractuals or consultants in the new structure.
RESOLVED further, that the OWWA Structure be immediately submitted for the appropriate
actions of competent authorities, particularly the DBM and CSC.
6

On 24 March 2004, DBM Secretary Emilia T. Boncodin (Boncodin), approved the
organizational structure and staffing pattern of the OWWA.
7
In her approval thereof, she stated
that the total funding requirements for the revised organizational structure shall be P107,546,379
for four hundred (400) positions. Moreover, DBM Secretary Boncodin underscored that the
funding shall come solely from the OWWA funds and that no government funds shall be
released for the implementation of the changes made.
On 31 May 2004, OWWA Administrator Virgilio R. Angelo (Angelo), issued Advisory No. 01,
8

advising the officials and employees of the OWWA that the DBM had recently approved
OWWAs organizational chart, functional statements, and the staffing pattern. Advisory No. 01
also announced that a Placement Committee will be created to evaluate and recommend
placement of all regular/permanent incumbents of OWWA in the new organizational chart and
staffing pattern. All employees were asked to indicate in writing their interest or preference in
any of the approved plantilla item, especially for promotion to the Human Resources
Management Division, not later than 11 June 2004. Further, Advisory No. 01 emphasized that
the OWWA Board of Trustees, thru its Resolution No. 001, Series of 2004, had declared the
policy that there will be no displacement of existing regular/permanent employees. Qualified
casual and contractual personnel may apply for any vacant item only after all regular/permanent
employees of OWWA had been placed.
Subsequently, on 3 June 2004, DOLE Secretary Sto. Tomas issued Administrative Order No.
171, Series of 2004, creating a Placement Committee to evaluate qualifications of employees;
and to recommend their appropriate placement in the new organizational chart, functional
statements and staffing pattern of the OWWA. Administrative Order No. 171 was partially
amended by Administrative Order No. 171-A, issued by DOLE Acting Secretary Manuel G.
Imson (Imson), authorizing the Placement Committee to recommend to the OWWA
Administrator their evaluations, which shall thereafter be endorsed to the DOLE Secretary for
consideration.
9

The Placement Committee was directed to comply with the pertinent CESB/CSC/DBM rules and
regulations on its recommended placement of all personnel of OWWA based on the following
parameters, to wit
10
:
1. There would be no diminution nor displacement of permanent/regular employees of
OWWA.
2. Qualified casuals and contractual personnel may likewise be considered in the staffing
pattern only after ensuring that the regular(s)/permanent employees of OWWA have
already been placed.
3. Decentralization of functions to bring OWWA services closer to the public shall be
adopted. Thus, priority in some promotions shall be given to those who opt to be assigned
in the regional offices, aside from performance.
4. Deployment in the overseas posts shall be made on rotation basis from both the
frontline and the administrative staff, based on performance.
5. Regular/permanent incumbents interested for promotion should indicate their interest
in writing to the Placement Committee: Attn: The Chairperson.
6. Those who may opt to retire should submit to the HRMD, their application for
retirement, copy furnished the Budget Division for budget allocation purposes.
The Placement Committee should complete its task not later than June 30, 2004.
On 8 June 2004, OWWA Administrator Angelo issued Advisory No. 02, inviting OWWA
officials and employees to an orientation on the new structure, functions and staffing pattern of
the OWWA. Moreover, Advisory No. 02 required the holding of elections for the First and
Second Level Representatives who will elect from among themselves the regular official
representatives and alternates in the Placement Committee deliberations. On 11 June 2004,
Advisory No. 03 was issued, announcing the conduct of an election for representatives and
alternates representing the employees in the first [Salary Grades (SG) 1-9] and second level (SG
10-24), pursuant to Administrative Order No. 171, dated 3 June 2004, as amended by
Administrative Order No. 171-A.
On 18 June 2004, DOLE Acting Secretary Imson issued Administrative Order No. 186, Series of
2004,
11
prescribing the guidelines on the placement of personnel in the new staffing pattern of
the OWWA.
On 29 June 2004, herein respondents filed with the RTC, a Complaint for Annulment of the
Organizational Structure of the OWWA, as approved by OWWA Board Resolution No. 001,
Series of 2004, with Prayer for the Issuance of a Writ of Preliminary Injunction
12
against herein
petitioner OWWA and its Board of Trustees.
13
The case was docketed as Civil Case No. 04-
0415-CFM.
In their Complaint, respondents alleged that the OWWA has around 24 consultants, 29 casual
employees, 76 contractual workers, and 356 officers and employees, which number does not
include the 85 contractual employees in the Office of the Secretariat of the OWWA Medicare.
14

Respondents posited that the approved Organizational Structure and Staffing Pattern of the
OWWA increases the number of regular plantilla positions from 356 to 400; however, the
increase of 42 positions will not absorb the aforementioned consultants and casual and
contractual workers. They further averred that the plantilla positions in the Central Office will be
reduced from 250 to 140, while the regional offices will have an increase of 164 positions.
According to the respondents, the resulting decrease in the number of employees in the Central
Office will result in the constructive dismissal of at least 110 employees. Meanwhile, the
deployment of the regular central office personnel to the regional offices will displace the said
employees, as well as their families.
Respondents challenged the validity of the new organizational structure of the OWWA. In fine,
they contended that the same is null and void; hence, its implementation should be prohibited.
Respondents prayed for the issuance of a writ of preliminary injunction to restrain petitioners
from: 1) implementing its organizational structure as approved by the OWWA Board of Trustees
in its Resolution dated 9 January 2004; and 2) advertising and proceeding with the recruitment
and placement of new employees under the new organizational structure.
15

Further, respondents prayed that after trial on the merits, OWWAs organizational structure be
declared as unconstitutional and contrary to law; and the OWWA Board of Trustees be declared
as having acted contrary to the Constitution and existing laws, and with grave abuse of discretion
in approving Resolution No. 001, dated 9 January 2004.
16

The Ruling of the RTC
On 30 September 2004, the RTC rendered an Order
17
granting respondents prayer for a writ of
preliminary injunction upon the filing of a bond in the sum of P100,000.00. In the grant thereof,
the RTC reasoned that any move to reorganize the structure of the OWWA requires an
amendatory law. It deemed Resolution No. 001 was not merely a "formalization of the
organizational structure and staffing pattern of the OWWA," but a disruption of the existing
organization which disturbs and displaces a number of regular employees, including consultants
and casual and contractual employees.
The RTC ratiocinated in this wise:
x x x All told, what is being done now at OWWA is a reorganization of its structure as originally
conceived under P.D. No. 1694 [Organization and Administration of the Welfare for Overseas
Workers] and P.D. No. 1809 [Amending Certain Provisions of Presidential Decree 1694,
Creating the "Welfare Fund for Overseas Workers"]. In the (sic) light of Section 11 of R.A. No.
6656 which provides that "the executive branch of the government shall implement
reorganization schemes within a specified period of time authorized by law", this court doubts
whether a reorganization of OWWA can be effected without an enabling law.
Further, defendants do not dispute the fact that while the mechanics of the reorganization is still
being forged, the DOLE already processed applications and eventually hired employees not from
among the existing employees of the OWWA. This appears to be in contravention of Section 4
of R.A. No. 6656 which provides:
"Sec. 4. Officers and employees holding permanent appointments shall be given preference for
appointment to the new positions in the approved staffing pattern comparable to their former
position or in case there are not enough comparable positions, to positions next lower in rank.
"No new employees shall be taken in until all permanent officers and employees have been
appointed, including temporary and casual employees who possess the necessary qualification
requirements, among which is the appropriate civil service eligibility for permanent appointment
to positions in the approved staffing pattern, in case there are still positions to be filled, unless
such positions are policy-determining, primarily confidential or highly technical in nature."
Furthermore, defendants (sic) do not dispute the fact that the Placement Committee was hastily
constituted, that its members were not educated of their task of job placement, that there was no
real to goodness (sic) personnel evaluation and, finally, the Chairman of the Committee was
simply hand-picked by the DOLE Secretary contrary to the explicit injunction of Section 8 of the
Implementing Rules of R.A .No. 6656 that "the members shall elect their Chairman."
18

The RTC also cited the protection afforded by the Constitution to workers, specifically, officers
or employees of the Civil Service in ruling that the existing organization of the OWWA need not
be disturbed in any way and no single worker will be removed or displaced. Thus:
This court entertains no doubt that as workers, plaintiffs enjoy a right that is protected both by
the Constitution and statutes. Thus, "(n)o officer or employee of the civil service shall be
removed or suspended except for cause provided by law. "(Sec. 2, par. 3, Art. IX, Constitution).
"No person shall be deprived of life, liberty, or property without due process of law, nor shall
any person be denied the equal protection of the laws." (Sec. 1, Art. III; ibid.). A persons job is
his property. In many cases, as in the Philippine setting, ones job also means ones life and the
lives of those who depended on him. Hence, it is a policy of the State to "free the people from
poverty through policies that provide adequate social services, promote full employment, a rising
standard of living, and an improved quality of life for all." (Sec. 8, Art. II, ibid.) Any act that,
contrary to law, tends to deprive a worker of his work, violates his rights.
19

Finally, the RTC defended its jurisdiction over the controversy despite petitioners protestations
that jurisdiction over respondents complaint is lodged in the administrative agencies tasked to
implement the new OWWA structure. It ruled that the doctrine of primary jurisdiction is
applicable only where the administrative agency exercises its quasi-judicial or administrative
function; but, where what is challenged is the constitutionality of a rule or regulation issued by
the administrative agency in the performance of its quasi-legislative functions, regular courts
have jurisdiction over the matter.
20

Therefore, the RTC, in its Order, dated 30 September 2004, granted respondents prayer for a
writ of preliminary injunction, to wit:
WHEREFORE, upon plaintiffs (sic) filing of a bond in the sum of P100,000.00, let a writ of
preliminary injunction issue in: 1) restraining the defendants from implementing the new
organizational structure of OWWA approved by the Board of Trustees on January 9, 2004 and 2)
restraining the defendants from advertising and proceeding with the recruitment and placement
of new employees under the new organizational structure.
21

Without filing a Motion for Reconsideration, petitioner, thru the Office of the Solicitor General
(OSG),
22
filed with the Court of Appeals, a Petition for Certiorari and Prohibition with Prayer for
Issuance of a Temporary Restraining Order and Writ of Preliminary Injunction under Rule 65 of
the Rules of Court, assailing the RTC Order of 30 September 2004.
23

The Ruling of the Appellate Court
On 22 September 2005, the Court of Appeals rendered the assailed Decision, which dismissed
the petition. It affirmed the court a quos findings that respondents possess a clear and legal right
to the immediate issuance of the writ. It resolved that it was proper for the RTC to restrain, for
the meantime, the implementation of OWWAs reorganization to prevent injury until after the
main case is heard and decided.
24
It found respondents allegations sufficient to prove the
existence of a right that should be protected by a writ of preliminary injunction. Thus:
Petitioner averred, too, that majority of the casuals, contractuals and consultants have been
employed for more than ten (10) years, if not twenty (20) years, and were not regularized simply
due to lack of regular positions in the plantilla or the freezing of recruitment thereto.
To be sure, private respondents have convincingly adduced evidence of specific acts to
substantiate their claim of impending injury and not merely allegations of facts and conclusions
of law, but factual evidence of a clear and unmistakable right of being displaced or dismissed by
the planned reorganization. These allegations are substantial enough to prove the right in esse. At
best, the anxiety of being dismissed or displaced is not premature, speculative and purely
anticipatory, but based on real fear which shows a threatened or direct injury[,] it appearing that
the reorganization of the OWWA is already slowly being put into motion.
Apropos, having successfully established a direct and personal injury as a consequence of the
new reorganization[al] structure, it was only proper for the court a quo to grant the writ of
preliminary injunction to restrain, for the meantime, the implementation of the reorganization to
prevent injury on respondents until after the main case is heard and decided. Truly, as correctly
observed by the trial court, private respondents enjoy a right that is protected both by the
Constitution and statutes. A persons job is not only his property but his very life. The
constitutional protection of the right to life is not just a protection of the right to be alive or to the
security of ones limb against physical harm. The right to life is also a right to a good life
(Bernas, The Constitution of the Republic of the Philippines, A Commentary, Volume I, First
Edition, 1997) which includes the right to earn a living or the right to a livelihood. A fortiori, the
requisites for preliminary injunction to issue have adequately been established: the existence of a
clear and unmistakable right, and the acts violative of said right.
While the evidence to be submitted at the hearing on the motion for preliminary injunction need
not be conclusive and complete, We find that private respondents have adequately shown that
they are in clear danger of being irreparably injured unless the status quo is observed, in the
meantime x x x.
25

The appellate court was likewise of the opinion that the substantial issues raised before the court
a quo anent the validity of the organizational structure of the OWWA; the alleged lack of
authority of the DBM to approve the same including the alleged violation by the OWWA of
relevant statutes; the lack of consultation prior to the reorganization; and the supposed illegal
constitution of the Placement Committee, are matters which the RTC is behooved to resolve. In
finding no error on the part of the RTC, the Court of Appeals said that without an injunctive
relief, any decision that may be rendered in the suit would already be ineffective, moot and
academic.
26

Aggrieved, petitioner through the OSG,
27
filed the instant petition.
In the instant petition, petitioner prays that the appealed Decision of the Court of Appeals be
reversed and set aside, and that Civil Case No. 04-0415-CFM before the RTC be dismissed for
lack of merit.
28

The Issue
The issue to be resolved is, whether the court a quo gravely abused its discretion in issuing the
writ of preliminary injunction. Stated otherwise, the issue is whether the Court of Appeals erred
in affirming the RTC in its grant of the assailed writ of preliminary injunction. Clearly, we are
thus confined to the matter of the propriety of the issuance of the writ of preliminary injunction
by the trial court, and not to the merits of the case which is still pending before the latter.
The Case for the Petitioner
First, in support of their petition, petitioner posits that the OWWA has already implemented the
new organizational structure as the advertisement, recruitment, and placement of OWWA
employees have been accomplished; and in the process, none of the respondents have been
dismissed. Moreover, the act sought to be prevented has long been consummated; hence, the
remedy of injunction should no longer be entertained.
Second, petitioner adduces the proposition that the reorganization of the OWWA does not
require an amendatory law contrary to the holding of the court a quo. The OSG maintains that
there was no previous OWWA structure in the first place; and neither did Presidential Decree
No. 1694
29
nor Presidential Decree No. 1809,
30
provide for an organizational structure for the
OWWA.
Third, petitioner disputes the existence of the rights of respondents to be protected by the
preliminary injunctive writ sought on the ground that the latter did not shown any legal right
which needs the protection thereof, nor did they show that any such right was violated to warrant
the issuance of a preliminary injunction. Petitioner asserts that respondents did not claim that
they are the consultants or casual or contractual workers who would allegedly be displaced; and
neither did respondents show that there is only one right or cause of action pertaining to all of
them. Neither was there a violation of their rights because respondents have all been given
appointments in the new OWWA organizational structure.
31

Finally, on respondents allegation that the reorganization of the OWWA will reassign
permanent employees to its regional offices, and consequently, displace them and their families,
petitioner counters that an employee may be reassigned from one organizational unit to another
in the same agency, provided that such reassignment shall not involve a reduction in rank, status
or salary.
32

The Case for the Respondents
Respondents argue that the petitioner railroaded and raced against time to implement the new
OWWA organizational structure. They claim that in the process, petitioner exhibited manifest
bad faith and injustice. What existed was a hasty reorganization and restructuring of the OWWA
without adequate study and consultation, which was thereafter submitted and immediately
approved by the Board of Trustees. They insist that the creation of an organizational structure of
the OWWA would require a presidential fiat or a legislative enactment pursuant to Republic Act
No. 6656.
33

Further, respondents maintain that their right in esse was established during the proceedings for
the issuance of the writ of preliminary injunction, as their complaint sufficiently showed the
rights and interests of the parties. They alleged that at no stage in the proceedings did petitioner
question such rights. In fact, petitioner made a waiver in open court to the effect that it was not
presenting testimonial evidence. According to the respondents, such an act was constitutive of an
admission by petitioner of the existence of a right in esse in their favor.
The Ruling of the Court
Section 1, Rule 58 of the Rules of Court, defines a preliminary injunction as an order granted at
any stage of an action prior to the judgment or final order requiring a party or a court, an agency
or a person to refrain from a particular act or acts.
34
Section 3, Rule 58 of the Rules of Court,
enumerates the grounds for the issuance of a writ of preliminary injunction as follows:
Sec. 3. Grounds for issuance of preliminary injunction. A preliminary injunction may be
granted when it is established:
(a) That the applicant is entitled to the relief demanded, and the whole or part of such
relief consists in restraining the commission or continuance of the act or acts complained
of, or in requiring the performance of an act or acts, either for a limited period or
perpetually;
(b) That the commission, continuance or non-performance of the act or acts complained
of during the litigation would probably work injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening, or is attempting to do, or
is procuring or suffering to be done, some act or acts probably in violation of the rights of
the applicant respecting the subject of the action or proceeding, and tending to render the
judgment ineffectual.
A preliminary injunction is granted at any stage of an action or proceeding prior to the judgment
or final order.
35
It persists until it is dissolved or until the termination of the action without the
court issuing a final injunction.
36
To be entitled to an injunctive writ, petitioner must show, inter
alia, the existence of a clear and unmistakable right and an urgent and paramount necessity for
the writ to prevent serious damage.
37
A writ of preliminary injunction is generally based solely
on initial and incomplete evidence.
38
The evidence submitted during the hearing on an
application for a writ of preliminary injunction is not conclusive or complete for only a
"sampling" is needed to give the trial court an idea of the justification for the preliminary
injunction pending the decision of the case on the merits.
39
In fact, the evidence required to
justify the issuance of a writ of preliminary injunction in the hearing thereon need not be
conclusive or complete.
40
It must also be stressed that it does not necessarily proceed that when a
writ of preliminary injunction is issued, a final injunction will follow.
41

Moreover, the grant or denial of a preliminary injunction is discretionary on the part of the trial
court.
42
Thus, the rule is, the matter of the issuance of a writ of preliminary injunction is
addressed to the sound discretion of the trial court, unless the court commits grave abuse of
discretion.
43
In Toyota Motor Phils. Corporation Workers Association (TMPCWA) v. Court of
Appeals,
44
this Court pronounced that grave abuse of discretion in the issuance of writs of
preliminary injunction implies a capricious and whimsical exercise of judgment that is equivalent
to lack of jurisdiction; or the exercise of power in an arbitrary or despotic manner by reason of
passion, prejudice or personal aversion amounting to an evasion of positive duty or to a virtual
refusal to perform the duty enjoined, or to act at all in contemplation of law. It is clear that the
assessment and evaluation of evidence in the issuance of the writ of preliminary injunction
involve findings of facts ordinarily left to the trial court for its conclusive determination.
45
The
duty of the court taking cognizance of a prayer for a writ of preliminary injunction is to
determine whether the requisites necessary for the grant of an injunction are present in the case
before it.
46
However, as earlier stated, if the court commits grave abuse of its discretion in the
issuance of the writ of preliminary injunction, such that the act amounts to excess or lack of
jurisdiction, the same may be nullified through a writ of certiorari or prohibition.
More significantly, a preliminary injunction is merely a provisional remedy, an adjunct to the
main case subject to the latters outcome, the sole objective of which is to preserve the status quo
until the trial court hears fully the merits of the case.
47
The status quo should be that existing at
the time of the filing of the case.
48
The status quo usually preserved by a preliminary injunction
is the last actual, peaceable and uncontested status which preceded the actual controversy.
49
The
status quo ante litem is, ineluctably, the state of affairs which is existing at the time of the filing
of the case. Indubitably, the trial court must not make use of its injunctive power to alter such
status.
50

We hold that the RTC, in granting the assailed writ of preliminary injunction, committed grave
abuse of discretion amounting to lack of jurisdiction.
In the case at bar, the RTC did not maintain the status quo when it issued the writ of preliminary
injunction. Rather, it effectively restored the situation prior to the status quo, in effect, disposing
the issue of the main case without trial on the merits. What was preserved by the RTC was the
state of affairs before the issuance of Resolution No. 001, which approved the structure of the
OWWA, and the subsequent administrative orders pursuant to its passing. The RTC forgot that
what is imperative in preliminary injunction cases is that the writ can not be effectuated to
establish new relations between the parties. Hence, we find herein an application of the lessons
that can be learned from Rualo v. Pitargue.
51
In Rualo, this Court determined, among others, the
propriety of the writ of preliminary injunction which was issued restraining the Bureau of
Internal Revenue from further implementing its reorganization, and enforcing the orders
52

pursuant thereto. This Court, in lifting the therein assailed writ, underscored the legal
proscription which states that courts should avoid issuing a writ of preliminary injunction which
would in effect dispose of the main case without trial.
53
According to the Court in Rualo, the trial
court, in issuing the writ of preliminary injunction, did not maintain the status quo but restored
the situation before the status quo, that is, the situation before the issuance of the Revenue Travel
Assignment Orders.
54
The Court further declared that what existed was an acceptance of therein
respondents premise of the illegality of the reorganization, and a prejudgment on the
constitutionality of the assailed issuances.
55
As in Rualo, we find herein a similar case where the
RTC admitted hook, line and sinker the mere allegations of respondents that the reorganization
as instituted was unlawful without the benefit of a full trial on the merits. It also did not maintain
the status quo but restored the landscape before the implementation of OWWAs reorganization.
In thus issuing the writ of preliminary injunction, the substantive issues of the main case were
resolved by the trial court. What was done by the RTC was quite simply a disposition of the case
without trial. This is an error in law and an exercise of grave abuse of discretion. Furthermore,
we find that the RTC similarly prejudged the validity of the issuances released by the OWWA
Board of Trustees, as well as the other governmental bodies (i.e., DBM, DOLE), which approved
the organizational structure and staffing pattern of the OWWA. In Rualo, this Court asserted the
presumption of regularity of the therein assailed government issuances. In this case, we
accentuate the same presumption.
Ineluctably, this Court is compelled to rule against the propriety of the grant of the assailed
ancillary writ of preliminary injunction on the material ground that the records do not support
respondents entitlement thereto.
We do not find attendant the requisites for the issuance of a preliminary injunctive writ. This
Court is not convinced that respondents were able to show a clear and unmistakable legal right to
warrant their entitlement to the writ. A mere blanket allegation that they are all officers and
employees of the OWWA without a showing of how they stand to be directly injured by the
implementation of its questioned organizational structure does not suffice to prove a right in
esse. As was aptly raised by the petitioner, respondents did not show that they were dismissed
due to the challenged reorganization. There was no showing that they are the employees who are
in grave danger of being displaced. Respondents were similarly wanting in proving that they are
the consultants and contractual and casual employees, who will allegedly suffer by reason of the
re-organization. This Court is consistently adamant in demanding that a clear and positive right
especially calling for judicial protection must be established.
56
As has been reiterated, injunction
is not a remedy to protect or enforce contingent, abstract, or future rights; it will not issue to
protect a right not in esse and which may never arise, or to restrain an action which did not give
rise to a cause of action.
57
In contrast, the rights of OWWA are accorded to it by law. The
importance of the reorganization within the body and the benefits that will accrue thereto were
accentuated by the Board of Trustees in its Resolution No. 001. The aforesaid resolution
declared, inter alia, that the structuring of the OWWA will stabilize the internal organization and
promote careerism among the employees, as well as ensure a more efficient and effective
delivery of programs and services to member-OFWs.
58
However, we go further to opine that
even the question of whether the OWWA requires an amendatory law for its reorganization is
one that should be best threshed out in the disposition of the merits of the case. Indeed, the
question as to the validity of the OWWA reorganization remains the subject in the main case
pending before the trial court. Its annulment is outside the realm of the instant Petition.
Assuming arguendo that respondents stand to be in danger of being transferred due to the
reorganization, under the law, any employee who questions the validity of his transfer should
appeal to the CSC.
59
Even then, administrative remedies must be exhausted before resort to the
regular courts can be had.
Finally, as aptly pointed out by the OSG, the acts sought to be prohibited had been
accomplished. Injunction will not lie where the acts sought to be enjoined have already been
accomplished or consummated.
60
The wheels of OWWAs reorganization started to run upon the
approval by the Board of Trustees of its Resolution No. 001 entitled, "Approving the Structure of
the Overseas Workers Welfare Administration." Subsequently, a series of issuances which
approved the organizational structure and staffing pattern of the agency was issued by the DBM,
the OWWA Administrator, and by the DOLE. Resolution No. 001 has already been
implemented. Case law has it that a writ of preliminary injunction will not issue if the act sought
to be enjoined is a fait accompli.1avvphi1
A writ of preliminary injunction being an extraordinary event,
61
one deemed as a strong arm of
equity or a transcendent remedy,
62
it must be granted only in the face of actual and existing
substantial rights. In the absence of the same, and where facts are shown to be wanting in
bringing the matter within the conditions for its issuance, the ancillary writ must be struck down
for having been rendered in grave abuse of discretion.
WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals, dated 22
September 2005 in CA-G.R. SP No. 87702, is REVERSED and SET ASIDE. The Writ of
Preliminary Injunction issued by the Regional Trial Court pursuant to its Order, dated 30
September 2004, in Civil Case No. 04-0415-CFM is LIFTED and SET ASIDE.
SO ORDERED.
UNIVERSITY of IMMACULATE, CONCEPCION, INC., petitioner,
vs.
The HONORABLE SECRETARY OF LABOR, THE UIC TEACHING and NON-
TEACHING PERSONNEL AND EMPLOYEES UNION, LELIAN CONCON, MARY
ANN DE RAMOS, JOVITA MAMBURAM, ANGELINA ABADILLA, MELANIE DE LA
ROSA, ZENAIDA CANOY, ALMA VILLACARLOS, JOSIE BOSTON, PAULINA
PALMA GIL, GEMMA GALOPE, LEAH CRUZA, DELFA DIAPUEZ, respondent.
D E C I S I O N
AZCUNA, J .:
This is a petition for review of a decision of the Court of Appeals and the resolution denying
reconsideration thereof. The principal issue to be resolved in this recourse is whether or not the
Secretary of Labor, after assuming jurisdiction over a labor dispute involving an employer and
the certified bargaining agent of a group of employees in the workplace, may legally order said
employer to reinstate employees terminated by the employer even if those terminated employees
are not part of the bargaining unit.
This case stemmed from the collective bargaining negotiations between petitioner University of
Immaculate Concepcion, Inc. (UNIVERSITY) and respondent The UIC Teaching and Non-
Teaching Personnel and Employees Union (UNION). The UNION, as the certified bargaining
agent of all rank and file employees of the UNIVERSITY, submitted its collective bargaining
proposals to the latter on February 16, 1994. However, one item was left unresolved and this was
the inclusion or exclusion of the following positions in the scope of the bargaining unit:
a. Secretaries
b. Registrars
c. Accounting Personnel
d. Guidance Counselors
1

This matter was submitted for voluntary arbitration. On November 8, 1994, the panel of
voluntary arbitrators rendered a decision, the dispositive portion of which states:
WHEREFORE, premises considered, the Panel hereby resolves to exclude the above-mentioned
secretaries, registrars, chief of the accounting department, cashiers and guidance counselors from
the coverage of the bargaining unit. The accounting clerks and the accounting staff member are
hereby ordered included in the bargaining unit.
2

The UNION moved for the reconsideration of the above decision. Pending, however, the
resolution of its motion, on December 9, 1994, it filed a notice of strike with the National
Conciliation and Mediation Board (NCMB) of Davao City, on the grounds of bargaining
deadlock and unfair labor practice. During the thirty (30) day cooling-off period, two union
members were dismissed by petitioner. Consequently, the UNION went on strike on January 20,
1995.
On January 23, 1995, the then Secretary of Labor, Ma. Nieves R. Confessor, issued an Order
assuming jurisdiction over the labor dispute. The dispositive portion of the said Order states:
WHEREFORE, ABOVE PREMISES CONSIDERED, and pursuant to Article 263 (g) of the
Labor Code, as amended, this Office hereby assumes jurisdiction over the entire labor dispute at
the University of the Immaculate Concepcion College.
Accordingly, all workers are directed to return to work within twenty-four (24) hours upon
receipt of this Order and for Management to accept them back under the same terms and
conditions prevailing prior to the strike.
Parties are further directed to cease and desist from committing any or all acts that might
exacerbate the situation.
Finally, the parties are hereby directed to submit their respective position papers within ten (10)
days from receipt hereof.
SO ORDERED.
3

On February 8, 1995, the panel of voluntary arbitrators denied the motion for reconsideration
filed by the UNION. The UNIVERSITY then furnished copies of the panels denial of the
motion for reconsideration and the Decision dated November 8, 1995 to the individual
respondents herein:
1. Lelian Concon Grade School Guidance Counselor
2. Mary Ann de Ramos High School Guidance Counselor
3. Jovita Mamburam Secretary to [the] Vice President for Academic Affairs/ Dean of
College
4. Angelina Abadilla Secretary to [the] Vice President for Academic Affairs/ Dean of
College
5. Melanie de la Rosa Secretary to [the] Dean of [the] College of Pharmacy/ Academic
Affairs/ Dean of College
6. Zenaida Canoy Secretary to [the] Vice President for Academic Affairs/ Dean of
College
7. Alma Villacarlos Guidance Counselor (College)
8. Josie Boston Grade School Psychometrician
9. Paulina Palma Gil Cashier
10. Gemma Galope High School Registrar
11. Leah Cruza Guidance Counselor (College)
12. Delfa Diapuez High School Psychometrician
4

Thereafter, the UNIVERSITY gave the abovementioned individual respondents two choices: to
resign from the UNION and remain employed as confidential employees or resign from their
confidential positions and remain members of the UNION. The UNIVERSITY relayed to these
employees that they could not remain as confidential employees and at the same time as
members or officers of the Union. However, the individual respondents remained steadfast in
their claim that they could still retain their confidential positions while being members or officers
of the Union. Hence, on February 21, 1995, the UNIVERSITY sent notices of termination to the
individual respondents.1a\^/phi1.net
On March 10, 1995, the UNION filed another notice of strike, this time citing as a reason the
UNIVERSITYs termination of the individual respondents. The UNION alleged that the
UNIVERSITYs act of terminating the individual respondents is in violation of the Order of the
Secretary of Labor dated January 23, 1995.
On March 28, 1995, the Secretary of Labor issued another Order reiterating the directives
contained in the January 23, 1995 Order. The Secretary also stated therein that the effects of the
termination from employment of these individual respondents be suspended pending the
determination of the legality thereof. Hence, the UNIVERSITY was directed to reinstate the
individual respondents under the same terms and conditions prevailing prior to the labor dispute.
The UNIVERSITY, thereafter, moved to reconsider the aforesaid Order on March 28, 1995. It
argued that the Secretarys Order directing the reinstatement of the individual respondents would
render nugatory the decision of the panel of voluntary arbitrators to exclude them from the
collective bargaining unit. The UNIVERSITYs motion was denied by the Secretary in an Order
dated June 16, 1995, wherein the Secretary declared that the decision of the panel of voluntary
arbitrators to exclude the individual respondents from the collective bargaining unit did not
authorize the UNIVERSITY to terminate their employment. The UNIVERSITY filed a second
motion for reconsideration, which was again denied in an Order dated July 19, 1995. Undeterred,
the UNIVERSITY filed a third motion for reconsideration. In the Order dated August 18, 1995,
then Acting Secretary Jose S. Brilliantes denied the third motion for reconsideration, but
modified the two previous Orders by adding:
x x x
Anent the Unions Motion, we find that superseding circumstances would not warrant the
physical reinstatement of the twelve (12) terminated employees. Hence, they are hereby ordered
placed under payroll reinstatement until the validity of their termination is finally resolved.
5

x x x
Still unsatisfied with the Order of the Secretary of Labor, the UNIVERSITY filed a petition for
certiorari with this Court on September 15, 1995. However, its petition was referred to the Court
of Appeals, following the ruling in St. Martin Funeral Homes v. Court of Appeals .
6

On October 8, 2001, the Court of Appeals promulgated its Decision, affirming the questioned
Orders of the Secretary of Labor. The dispositive portion of the Decision states:
WHEREFORE, the instant petition is DISMISSED for lack of merit.
7

The UNIVERSITY then moved for the reconsideration of the abovementioned Decision,
8
but on
January 10, 2002, the Court of Appeals denied the motion on the ground that no new matters
were raised therein that would warrant a reconsideration.
9

Hence, this petition.
The UNIVERSITY assigns the following error:
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN AFFIRMING THE
ORDERS OF THE SECRETARY OF LABOR THAT SUSPENDED THE EFFECTS OF THE
TERMINATION OF TWELVE EMPLOYEES WHO WERE NOT PART OF THE
BARGAINING UNIT INVOLVED IN A LABOR DISPUTE OVER WHICH THE
SECRETARY OF LABOR ASSUMED JURISDICTION.
10

The Court of Appeals relied upon the doctrine in St. Scholasticas College v. Torres.
11
In the
case therein, this Court, citing International Pharmaceuticals Incorporated v. the Secretary of
Labor,
12
declared that:
x x x [T]he Secretary was explicitly granted by Article 263(g) of the Labor Code the authority to
assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an
industry indispensable to the national interest, and decide the same accordingly. Necessarily, the
authority to assume jurisdiction over the said labor dispute must include and extend to all
questions and controversies arising therefrom, including cases over which the Labor Arbiter has
exclusive jurisdiction.
The UNIVERSITY contends that the Secretary cannot take cognizance of an issue involving
employees who are not part of the bargaining unit. It insists that since the individual respondents
had already been excluded from the bargaining unit by a final and executory order by the panel
of voluntary arbitrators, then they cannot be covered by the Secretarys assumption order.
This Court finds no merit in the UNIVERSITYs contention. In Metrolab Industries, Inc. v.
Roldan-Confessor ,
13
this Court declared that it recognizes the exercise of management
prerogatives and it often declines to interfere with the legitimate business decisions of the
employer. This is in keeping with the general principle embodied in Article XIII, Section 3 of the
Constitution,
14
which is further echoed in Article 211 of the Labor Code.
15
However, as
expressed in PAL v. National Labor Relations Commission,
16
this privilege is not absolute, but
subject to exceptions. One of these exceptions is when the Secretary of Labor assumes
jurisdiction over labor disputes involving industries indispensable to the national interest under
Article 263(g) of the Labor Code. This provision states:
(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout
in an industry indispensable to the national interest, the Secretary of Labor and Employment may
assume jurisdiction over the dispute and decide it or certify the same to the Commission for
compulsory arbitration. Such assumption or certification shall have the effect of automatically
enjoining the intended or impending strike or lockout as specified in the assumption or
certification order. If one has already taken place at the time of assumption or certification, all
striking or locked out employees shall immediately return to work and the employer shall
immediately resume operations and readmit all workers under the same terms and conditions
prevailing before the strike or lockout. x x x
When the Secretary of Labor ordered the UNIVERSITY to suspend the effect of the termination
of the individual respondents, the Secretary did not exceed her jurisdiction, nor did the Secretary
gravely abuse the same. It must be pointed out that one of the substantive evils which Article
263(g) of the Labor Code seeks to curb is the exacerbation of a labor dispute to the further
detriment of the national interest. In her Order dated March 28, 1995, the Secretary of Labor
rightly held:
It is well to remind both parties herein that the main reason or rationale for the exercise of the
Secretary of Labor and Employments power under Article 263(g) of the Labor Code, as
amended, is the maintenance and upholding of the status quo while the dispute is being
adjudicated. Hence, the directive to the parties to refrain from performing acts that will
exacerbate the situation is intended to ensure that the dispute does not get out of hand, thereby
negating the direct intervention of this office.l^vvphi1.net
The Universitys act of suspending and terminating union members and the Unions act of filing
another Notice of Strike after this Office has assumed jurisdiction are certainly in conflict with
the status quo ante. By any standards[,] these acts will not in any way help in the early resolution
of the labor dispute. It is clear that the actions of both parties merely served to complicate and
aggravate the already strained labor-management relations.
17

Indeed, it is clear that the act of the UNIVERSITY of dismissing the individual respondents from
their employment became the impetus for the UNION to declare a second notice of strike. It is
not a question anymore of whether or not the terminated employees, the individual respondents
herein, are part of the bargaining unit. Any act committed during the pendency of the dispute that
tends to give rise to further contentious issues or increase the tensions between the parties should
be considered an act of exacerbation and should not be allowed.
With respect to the Secretarys Order allowing payroll reinstatement instead of actual
reinstatement for the individual respondents herein, an amendment to the previous Orders issued
by her office, the same is usually not allowed. Article 263(g) of the Labor Code aforementioned
states that all workers must immediately return to work and all employers must readmit all of
them under the same terms and conditions prevailing before the strike or lockout.l^vvphi1.net
The phrase "under the same terms and conditions" makes it clear that the norm is actual
reinstatement. This is consistent with the idea that any work stoppage or slowdown in that
particular industry can be detrimental to the national interest.
In ordering payroll reinstatement in lieu of actual reinstatement, then Acting Secretary of Labor
Jose S. Brillantes said:
Anent the Unions Motion, we find that superseding circumstances would not warrant the
physical reinstatement of the twelve (12) terminated employees. Hence, they are hereby ordered
placed under payroll reinstatement until the validity of their termination is finally resolved.
18

As an exception to the rule, payroll reinstatement must rest on special circumstances that render
actual reinstatement impracticable or otherwise not conducive to attaining the purposes of the
law.
19

The "superseding circumstances" mentioned by the Acting Secretary of Labor no doubt refer to
the final decision of the panel of arbitrators as to the confidential nature of the positions of the
twelve private respondents, thereby rendering their actual and physical reinstatement
impracticable and more likely to exacerbate the situation. The payroll reinstatement in lieu of
actual reinstatement ordered in these cases, therefore, appears justified as an exception to the rule
until the validity of their termination is finally resolved. This Court sees no grave abuse of
discretion on the part of the Acting Secretary of Labor in ordering the same. Furthermore, the
issue has not been raised by any party in this case.
WHEREFORE, the Decision of the Court of Appeals dated October 8, 2001 and its Resolution
dated January 10, 2002 in CA-G.R. SP No. 61693 are AFFIRMED.
No costs.
SO ORDERED.
MANILA DIAMOND HOTEL EMPLOYEES UNION, petitioner,
vs.
THE HON. COURT OF APPEALS, THE SECRETARY OF LABOR AND
EMPLOYMENT, and THE MANILA DIAMOND HOTEL, respondents.

D E C I S I O N

AZCUNA, J .:
This petition for review of a decision of the Court of Appeals arose out of a dispute between the
Philippine Diamond Hotel and Resort, Inc. ("Hotel"), owner of the Manila Diamond Hotel, and
the Manila Diamond Hotel Employees Union ("Union"). The facts are as follows:
On November 11, 1996, the Union filed a petition for a certification election so that it may be
declared the exclusive bargaining representative of the Hotels employees for the purpose of
collective bargaining. The petition was dismissed by the Department of Labor and Employment
(DOLE) on January 15, 1997. After a few months, however, on August 25, 1997, the Union sent
a letter to the Hotel informing it of its desire to negotiate for a collective bargaining agreement.
1

In a letter dated September 11, 1997, the Hotels Human Resources Department Manager, Mary
Anne Mangalindan, wrote to the Union stating that the Hotel cannot recognize it as the
employees bargaining agent since its petition for certification election had been earlier
dismissed by the DOLE.
2
On that same day, the Hotel received a letter from the Union stating
that they were not giving the Hotel a notice to bargain, but that they were merely asking for the
Hotel to engage in collective bargaining negotiations with the Union for its members only and
not for all the rank and file employees of the Hotel.
3

On September 18, 1997, the Union announced that it was taking a strike vote. A Notice of Strike
was thereafter filed on September 29, 1997, with the National Conciliation and Mediation Board
(NCMB) for the Hotels alleged "refusal x x x to bargain" and for alleged acts of unfair labor
practice. The NCMB summoned both parties and held a series of dialogues, the first of which
was on October 6, 1997.
On November 29, 1997, however, the Union staged a strike against the Hotel. Numerous
confrontations between the two parties followed, creating an obvious strain between them. The
Hotel claims that the strike was illegal and it had to dismiss some employees for their
participation in the allegedly illegal concerted activity. The Union, on the other hand, accused
the Hotel of illegally dismissing the workers. What is pertinent to this case, however, is the
Order issued by the then Secretary of Labor and Employment Cresenciano B. Trajano assuming
jurisdiction over the labor dispute. A Petition for Assumption of Jurisdiction was filed by the
Union on April 2, 1998. Thereafter, the Secretary of Labor and Employment issued an Order
dated April 15, 1998, the dispositive portion of which states:
WHEREFORE, premises considered[,] this Office CERTIFIES the labor dispute at the
Manila Diamond Hotel to the National Labor Relations Commission, for compulsory
arbitration, pursuant to Article 263 (g) of the Labor Code, as amended.
Accordingly, the striking officers and members of the Manila Diamond Hotel Employees
Union --- NUWHRAIN are hereby directed to return to work within twenty-four (24)
hours upon receipt of this Order and the Hotel to accept them back under the same terms
and conditions prevailing prior to the strike. The parties are enjoined from committing
any act that may exacerbate the situation.
The Union received the aforesaid Order on April 16, 1998 and its members reported for work the
next day, April 17, 1998. The Hotel, however, refused to accept the returning workers and
instead filed a Motion for Reconsideration of the Secretarys Order.
On April 30, 1998, then Acting Secretary of Labor Jose M. Espaol, issued the disputed Order,
which modified the earlier one issued by Secretary Trajano. Instead of an actual return to work,
Acting Secretary Espaol directed that the strikers be reinstated only in the payroll.
4
The Union
moved for the reconsideration of this Order, but its motion was denied on June 25, 1998. Hence,
it filed before this Court on August 26, 1998, a petition for certiorari under Rule 65 of the Rules
of Court alleging grave abuse of discretion on the part of the Secretary of Labor for modifying its
earlier order and requiring instead the reinstatement of the employees in the payroll. However, in
a resolution dated July 12, 1999, this Court referred the case to the Court of Appeals, pursuant to
the principle embodied in National Federation of Labor v. Laguesma.
5

On October 19, 1999, the Court of Appeals rendered a Decision dismissing the Unions petition
and affirming the Secretary of Labors Order for payroll reinstatement. The Court of Appeals
held that the challenged order is merely an error of judgment and not a grave abuse of discretion
and that payroll reinstatement is not prohibited by law, but may be "called for" under certain
circumstances.
6

Hence, the Union now stands before this Court maintaining that:
THE HONORABLE COURT OF APPEALS GRIEVIOUSLY ERRED IN RULING
THAT THE SECRETARY OF LABORS UNAUTHORIZED ORDER OF MERE
"PAYROLL REINSTATEMENT" IS NOT GRAVE ABUSE OF DISCRETION
7

The petition has merit.
The Court of Appeals based its decision on this Courts ruling in University of Santo Tomas
(UST) v. NLRC.
8
There, the Secretary assumed jurisdiction over the labor dispute between
striking teachers and the university. He ordered the striking teachers to return to work and the
university to accept them under the same terms and conditions. However, in a subsequent order,
the NLRC provided payroll reinstatement for the striking teachers as an alternative remedy to
actual reinstatement. True, this Court held therein that the NLRC did not commit grave abuse of
discretion in providing for the alternative remedy of payroll reinstatement. This Court found that
it was merely an error of judgment, which is not correctible by a special civil action for
certiorari. The NLRC was only trying its best to work out a satisfactory ad hoc solution to a
festering and serious problem.
However, this Court notes that the UST ruling was made in the light of one very important fact:
the teachers could not be given back their academic assignments since the order of the Secretary
for them to return to work was given in the middle of the first semester of the academic year. The
NLRC was, therefore, faced with a situation where the striking teachers were entitled to a return
to work order, but the university could not immediately reinstate them since it would be
impracticable and detrimental to the students to change teachers at that point in time.
In the present case, there is no showing that the facts called for payroll reinstatement as an
alternative remedy. A strained relationship between the striking employees and management is
no reason for payroll reinstatement in lieu of actual reinstatement. Petitioner correctly points out
that labor disputes naturally involve strained relations between labor and management, and that
in most strikes, the relations between the strikers and the non-strikers will similarly be tense.
9

Bitter labor disputes always leave an aftermath of strong emotions and unpleasant situations.
Nevertheless, the government must still perform its function and apply the law, especially if, as
in this case, national interest is involved.
After making the distinction between UST and the present case, this Court now addresses the
issue of whether the Court of Appeals erred in ruling that the Secretary did not commit any grave
abuse of discretion in ordering payroll reinstatement in lieu of actual reinstatement. This question
is answered by the nature of Article 263(g). As a general rule, the State encourages an
environment wherein employers and employees themselves must deal with their problems in a
manner that mutually suits them best. This is the basic policy embodied in Article XIII, Section 3
of the Constitution,
10
which was further echoed in Article 211 of the Labor Code.
11
Hence, a
voluntary, instead of compulsory, mode of dispute settlement is the general rule.
However, Article 263, paragraph (g) of the Labor Code, which allows the Secretary of Labor to
assume jurisdiction over a labor dispute involving an industry indispensable to the national
interest, provides an exception:
(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or
lockout in an industry indispensable to the national interest, the Secretary of Labor and
Employment may assume jurisdiction over the dispute and decide it or certify the same to
the Commission for compulsory arbitration. Such assumption or certification shall have
the effect of automatically enjoining the intended or impending strike or lockout as
specified in the assumption or certification order. If one has already taken place at the
time of assumption or certification, all striking or locked out employees shall
immediately return to work and the employer shall immediately resume operations and
readmit all workers under the same terms and conditions prevailing before the strike or
lockout. x x x
This provision is viewed as an exercise of the police power of the State. A prolonged strike or
lockout can be inimical to the national economy and, therefore, the situation is imbued with
public necessity and involves the right of the State and the public to self-protection.
12

Under Article 263(g), all workers must immediately return to work and all employers must
readmit all of them under the same terms and conditions prevailing before the strike or lockout.
This Court must point out that the law uses the precise phrase of "under the same terms and
conditions," revealing that it contemplates only actual reinstatement. This is in keeping with the
rationale that any work stoppage or slowdown in that particular industry can be inimical to the
national economy. It is clear that Article 263(g) was not written to protect labor from the
excesses of management, nor was it written to ease management from expenses, which it
normally incurs during a work stoppage or slowdown. It was an error on the part of the Court of
Appeals to view the assumption order of the Secretary as a measure to protect the striking
workers from any retaliatory action from the Hotel. This Court reiterates that this law was
written as a means to be used by the State to protect itself from an emergency or crisis. It is not
for labor, nor is it for management.
It is, therefore, evident from the foregoing that the Secretarys subsequent order for mere payroll
reinstatement constitutes grave abuse of discretion amounting to lack or excess of jurisdiction.
Indeed, this Court has always recognized the "great breadth of discretion" by the Secretary once
he assumes jurisdiction over a labor dispute. However, payroll reinstatement in lieu of actual
reinstatement is a departure from the rule in these cases and there must be showing of special
circumstances rendering actual reinstatement impracticable, as in the UST case aforementioned,
or otherwise not conducive to attaining the purpose of the law in providing for assumption of
jurisdiction by the Secretary of Labor and Employment in a labor dispute that affects the national
interest. None appears to have been established in this case. Even in the exercise of his discretion
under Article 236(g), the Secretary must always keep in mind the purpose of the law. Time and
again, this Court has held that when an official by-passes the law on the asserted ground of
attaining a laudable objective, the same will not be maintained if the intendment or purpose of
the law would be defeated.
13

WHEREFORE, the petition is GRANTED and the assailed Decision of the Court of Appeals
dated October 19, 1999 is REVERSED and SET ASIDE. The Order dated April 30, 1998 issued
by the Secretary of Labor and Employment modifying the earlier Order dated April 15, 1998, is
likewise SET ASIDE. No pronouncement as to costs.
SO ORDERED.
MARIETTA N. PORTILLO, Petitioner,
vs.
RUDOLF LIETZ, INC., RUDOLF LIETZ and COURT OF APPEALS Respondents.
D E C I S I O N
PEREZ, J .:
Before us is a petition for certiorari assailing the Resolution
1
dated 14 October 2010 of the
Court of Appeals in CA-G.R. SP No. I 065g I which modified its Decision
2
dated 31 March
2009, thus allowing the legal compensation or petitioner Marietta N. Portillo's (Portillo)
monetary claims against respondent corporation Rudolf Lietz, Inc.'s (Lietz Inc.)
3
claim for
liquidated damages arising from Portillos alleged violation of the "Goodwill Clause" in the
employment contract executed by the parties.
The facts are not in dispute.
In a letter agreement dated 3 May 1991, signed by individual respondent Rudolf Lietz (Rudolf)
and conformed to by Portillo, the latter was hired by the former under the following terms and
conditions:
A copy of [Lietz Inc.s] work rules and policies on personnel is enclosed and an inherent part of
the terms and conditions of employment.
We acknowledge your proposal in your application specifically to the effect that you will not
engage in any other gainful employment by yourself or with any other company either directly or
indirectly without written consent of [Lietz Inc.], and we hereby accept and henceforth consider
your proposal an undertaking on your part, a breach of which will render you liable to [Lietz
Inc.] for liquidated damages.
If you are in agreement with these terms and conditions of employment, please signify your
conformity below.
4

On her tenth (10th) year with Lietz Inc., specifically on 1 February 2002, Portillo was promoted
to Sales Representative and received a corresponding increase in basic monthly salary and sales
quota. In this regard, Portillo signed another letter agreement containing a "Goodwill Clause:"
It remains understood and you agreed that, on the termination of your employment by act of
either you or [Lietz Inc.], and for a period of three (3) years thereafter, you shall not engage
directly or indirectly as employee, manager, proprietor, or solicitor for yourself or others in a
similar or competitive business or the same character of work which you were employed by
[Lietz Inc.] to do and perform. Should you breach this good will clause of this Contract, you
shall pay [Lietz Inc.] as liquidated damages the amount of 100% of your gross compensation
over the last 12 months, it being agreed that this sum is reasonable and just.
5

Three (3) years thereafter, on 6 June 2005, Portillo resigned from Lietz Inc. During her exit
interview, Portillo declared that she intended to engage in businessa rice dealership, selling
rice in wholesale.
On 15 June 2005, Lietz Inc. accepted Portillos resignation and reminded her of the "Goodwill
Clause" in the last letter agreement she had signed. Upon receipt thereof, Portillo jotted a note
thereon that the latest contract she had signed in February 2004 did not contain any "Goodwill
Clause" referred to by Lietz Inc. In response thereto, Lietz Inc. categorically wrote:
Please be informed that the standard prescription of prohibiting employees from engaging in
business or seeking employment with organizations that directly or indirectly compete against
[Lietz Inc.] for three (3) years after resignation remains in effect.
The documentation you pertain to is an internal memorandum of your salary increase, not an
employment contract. The absence of the three-year prohibition clause in this document (or any
document for that matter) does not cancel the prohibition itself. We did not, have not, and will
not issue any cancellation of such in the foreseeable future[.] [T]hus[,] regretfully, it is erroneous
of you to believe otherwise.
6

In a subsequent letter dated 21 June 2005, Lietz Inc. wrote Portillo and supposed that the
exchange of correspondence between them regarding the "Goodwill Clause" in the employment
contract was a moot exercise since Portillos articulated intention to go into business, selling rice,
will not compete with Lietz Inc.s products.
Subsequently, Lietz Inc. learned that Portillo had been hired by Ed Keller Philippines, Limited to
head its Pharma Raw Material Department. Ed Keller Limited is purportedly a direct competitor
of Lietz Inc.
Meanwhile, Portillos demands from Lietz Inc. for the payment of her remaining salaries and
commissions went unheeded. Lietz Inc. gave Portillo the run around, on the pretext that her
salaries and commissions were still being computed.
On 14 September 2005, Portillo filed a complaint with the National Labor Relations Commission
(NLRC) for non-payment of 1 months salary, two (2) months commission, 13th month pay,
plus moral, exemplary and actual damages and attorneys fees.
In its position paper, Lietz Inc. admitted liability for Portillos money claims in the total amount
of P110,662.16. However, Lietz Inc. raised the defense of legal compensation: Portillos money
claims should be offset against her liability to Lietz Inc. for liquidated damages in the amount of
869,633.09
7
for Portillos alleged breach of the "Goodwill Clause" in the employment contract
when she became employed with Ed Keller Philippines, Limited.
On 25 May 2007, Labor Arbiter Daniel J. Cajilig granted Portillos complaint:
WHEREFORE, judgment is hereby rendered ordering respondents Rudolf Lietz, Inc. to pay
complainant Marietta N. Portillo the amount of Php110,662.16, representing her salary and
commissions, including 13
th
month pay.
8

On appeal by respondents, the NLRC, through its Second Division, affirmed the ruling of Labor
Arbiter Daniel J. Cajilig. On motion for reconsideration, the NLRC stood pat on its ruling.
Expectedly, respondents filed a petition for certiorari before the Court of Appeals, alleging
grave abuse of discretion in the labor tribunals rulings.
As earlier adverted to, the appellate court initially affirmed the labor tribunals:
WHEREFORE, considering the foregoing premises, judgment is hereby rendered by us
DENYING the petition filed in this case. The Resolution of the National Labor Relations
Commission (NLRC), Second Division, in the labor case docketed as NLRC NCR Case No. 00-
09- 08113-2005 [NLRC LAC No. 07-001965-07(5)] is hereby AFFIRMED.
9

The disposition was disturbed. The Court of Appeals, on motion for reconsideration, modified its
previous decision, thus:
WHEREFORE, in view of the foregoing premises, we hereby MODIFY the decision
promulgated on March 31, 2009 in that, while we uphold the monetary award in favor of the
[petitioner] in the aggregate sum of 110,662.16 representing the unpaid salary, commission and
13
th
month pay due to her, we hereby allow legal compensation or set-off of such award of
monetary claims by her liability to [respondents] for liquidated damages arising from her
violation of the "Goodwill Clause" in her employment contract with them.
10

Portillos motion for reconsideration was denied.
Hence, this petition for certiorari listing the following acts as grave abuse of discretion of the
Court of Appeals:
THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION BY
EVADING TO RECOGNIZE (sic) THAT THE RESPONDENTS EARLIER PETITION IS
FATALLY DEFECTIVE;
THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION BY
OVERSTEPPING THE BOUNDS OF APPELLATE JURISDICTION[;]
THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION BY
MODIFYING ITS PREVIOUS DECISION BASED ON AN ISSUE THAT WAS RAISED
ONLY ON THE FIRST INSTANCE AS AN APPEAL BUT WAS NEVER AT THE TRIAL
COURT AMOUNTING TO DENIAL OF DUE PROCESS[;]
THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION BY
EVADING THE POSITIVE DUTY TO UPHOLD THE RELEVANT LAWS[.]
11

Simply, the issue is whether Portillos money claims for unpaid salaries may be offset against
respondents claim for liquidated damages.
Before anything else, we address the procedural error committed by Portillo, i.e., filing a petition
for certiorari, a special civil action under Rule 65 of the Rules of Court, instead of a petition for
review on certiorari, a mode of appeal, under Rule 45 thereof. On this score alone, the petition
should have been dismissed outright.
Section 1, Rule 45 of the Rules of Court expressly provides that a party desiring to appeal by
certiorari from a judgment or final order or resolution of the Court of Appeals may file a verified
petition for review on certiorari. Considering that, in this case, appeal by certiorari was
available to Portillo, that available recourse foreclosed her right to resort to a special civil action
for certiorari, a limited form of review and a remedy of last recourse, which lies only where
there is no appeal or plain, speedy and adequate remedy in the ordinary course of law.
12

A petition for review on certiorari under Rule 45 and a petition for certiorari under Rule 65 are
mutually exclusive remedies. Certiorari cannot co-exist with an appeal or any other adequate
remedy.
13
If a petition for review is available, even prescribed, the nature of the questions of law
intended to be raised on appeal is of no consequence. It may well be that those questions of law
will treat exclusively of whether or not the judgment or final order was rendered without or in
excess of jurisdiction, or with grave abuse of discretion. This is immaterial. The remedy is
appeal, not certiorari as a special civil action.
14

Be that as it may, on more than one occasion, to serve the ultimate purpose of all rules of
proceduresattaining substantial justice as expeditiously as possible
15
we have accepted
procedurally incorrect petitions and decided them on the merits. We do the same here.
The Court of Appeals anchors its modified ruling on the ostensible causal connection between
Portillos money claims and Lietz Inc.s claim for liquidated damages, both claims apparently
arising from the same employment relations. Thus, did it say:
x x x This Court will have to take cognizance of and consider the "Goodwill Clause" contained
[in] the employment contract signed by and between [respondents and Portillo]. There is no
gainsaying the fact that such "Goodwill Clause" is part and parcel of the employment contract
extended to [Portillo], and such clause is not contrary to law, morals and public policy. There is
thus a causal connection between [Portillos] monetary claims against [respondents] and the
latters claim for liquidated damages against the former. Consequently, we should allow legal
compensation or set-off to take place. [Respondents and Portillo] are both bound principally and,
at the same time, are creditors of each other. [Portillo] is a creditor of [respondents] in the sum of
110,662.16 in connection with her monetary claims against the latter. At the same time,
[respondents] are creditors of [Portillo] insofar as their claims for liquidated damages in the sum
of 980,295.25
16
against the latter is concerned.
17

We are not convinced.
Paragraph 4 of Article 217 of the Labor Code appears to have caused the reliance by the Court of
Appeals on the "causal connection between [Portillos] monetary claims against [respondents]
and the latters claim from liquidated damages against the former."
Art. 217. Jurisdiction of Labor Arbiters and the Commission. (a) Except as otherwise
provided under this code, the Arbiters shall have original and exclusive jurisdiction to hear and
decide, within thirty (30) calendar days after the submission of the case by the parties for
decision without extension, even in the absence of stenographic notes, the following case
involving all workers, whether agricultural or nonagricultural:
x x x x
4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-
employee relations; (Underscoring supplied)
Evidently, the Court of Appeals is convinced that the claim for liquidated damages emanates
from the "Goodwill Clause of the employment contract and, therefore, is a claim for damages
arising from the employeremployee relations."
As early as Singapore Airlines Limited v. Pao,
18
we established that not all disputes between an
employer and his employee(s) fall within the jurisdiction of the labor tribunals. We differentiated
between abandonment per se and the manner and consequent effects of such abandonment and
ruled that the first, is a labor case, while the second, is a civil law case.
Upon the facts and issues involved, jurisdiction over the present controversy must be held to
belong to the civil Courts. While seemingly petitioner's claim for damages arises from employer-
employee relations, and the latest amendment to Article 217 of the Labor Code under PD No.
1691 and BP Blg. 130 provides that all other claims arising from employer-employee
relationship are cognizable by Labor Arbiters [citation omitted], in essence, petitioner's claim for
damages is grounded on the "wanton failure and refusal" without just cause of private respondent
Cruz to report for duty despite repeated notices served upon him of the disapproval of his
application for leave of absence without pay. This, coupled with the further averment that Cruz
"maliciously and with bad faith" violated the terms and conditions of the conversion training
course agreement to the damage of petitioner removes the present controversy from the coverage
of the Labor Code and brings it within the purview of Civil Law.
Clearly, the complaint was anchored not on the abandonment per se by private respondent Cruz
of his jobas the latter was not required in the Complaint to report back to workbut on the
manner and consequent effects of such abandonment of work translated in terms of the damages
which petitioner had to suffer.
Squarely in point is the ruling enunciated in the case of Quisaba vs. Sta. Ines Melale Veneer &
Plywood, Inc. [citation omitted], the pertinent portion of which reads:
"Although the acts complained of seemingly appear to constitute 'matter involving employee-
employer' relations as Quisaba's dismissal was the severance of a pre-existing employee-
employer relations, his complaint is grounded not on his dismissal per se, as in fact he does not
ask for reinstatement or backwages, but on the manner of his dismissal and the consequent
effects of such dismissal.
"Civil law consists of that 'mass of precepts that determine or regulate the relations . . . that exist
between members of a society for the protection of private interest (1 Sanchez Roman 3).
"The 'right' of the respondents to dismiss Quisaba should not be confused with the manner in
which the right was exercised and the effects flowing therefrom. If the dismissal was done anti-
socially or oppressively as the complaint alleges, then the respondents violated Article 1701 of
the Civil Code which prohibits acts of oppression by either capital or labor against the other, and
Article 21, which makes a person liable for damages if he wilfully causes loss or injury to
another in a manner that is contrary to morals, good customs or public policy, the sanction for
which, by way of moral damages, is provided in article 2219, No. 10. [citation omitted]"
Stated differently, petitioner seeks protection under the civil laws and claims no benefits
under the Labor Code. The primary relief sought is for liquidated damages for breach of a
contractual obligation. The other items demanded are not labor benefits demanded by
workers generally taken cognizance of in labor disputes, such as payment of wages,
overtime compensation or separation pay. The items claimed are the natural consequences
flowing from breach of an obligation, intrinsically a civil dispute.
19
(Emphasis supplied)
Subsequent rulings amplified the teaching in Singapore Airlines. The reasonable causal
connection rule was discussed. Thus, in San Miguel Corporation v. National Labor Relations
Commission,
20
we held:
While paragraph 3 above refers to "all money claims of workers," it is not necessary to suppose
that the entire universe of money claims that might be asserted by workers against their
employers has been absorbed into the original and exclusive jurisdiction of Labor Arbiters. In the
first place, paragraph 3 should be read not in isolation from but rather within the context formed
by paragraph 1 (relating to unfair labor practices), paragraph 2 (relating to claims concerning
terms and conditions of employment), paragraph 4 (claims relating to household services, a
particular species of employer-employee relations), and paragraph 5 (relating to certain activities
prohibited to employees or to employers). It is evident that there is a unifying element which
runs through paragraph 1 to 5 and that is, that they all refer to cases or disputes arising out of or
in connection with an employer-employee relationship. This is, in other words, a situation where
the rule of noscitur a sociis may be usefully invoked in clarifying the scope of paragraph 3, and
any other paragraph of Article 217 of the Labor Code, as amended. We reach the above
conclusion from an examination of the terms themselves of Article 217, as last amended by B.P.
Blg. 227, and even though earlier versions of Article 217 of the Labor Code expressly brought
within the jurisdiction of the Labor Arbiters and the NLRC "cases arising from employer-
employee relations, [citation omitted]" which clause was not expressly carried over, in printer's
ink, in Article 217 as it exists today. For it cannot be presumed that money claims of workers
which do not arise out of or in connection with their employer-employee relationship, and which
would therefore fall within the general jurisdiction of regular courts of justice, were intended by
the legislative authority to be taken away from the jurisdiction of the courts and lodged with
Labor Arbiters on an exclusive basis. The Court, therefore, believes and so holds that the
"money claims of workers" referred to in paragraph 3 of Article 217 embraces money
claims which arise out of or in connection with the employer-employee relationship, or
some aspect or incident of such relationship. Put a little differently, that money claims of
workers which now fall within the original and exclusive jurisdiction of Labor Arbiters are
those money claims which have some reasonable causal connection with the employer-
employee relationship.
21
(Emphasis supplied)
We thereafter ruled that the "reasonable causal connection with the employer-employee
relationship" is a requirement not only in employees money claims against the employer but is,
likewise, a condition when the claimant is the employer.
In Dai-Chi Electronics Manufacturing Corporation v. Villarama, Jr.,
22
which reiterated the San
Miguel ruling and allied jurisprudence, we pronounced that a non-compete clause, as in the
"Goodwill Clause" referred to in the present case, with a stipulation that a violation thereof
makes the employee liable to his former employer for liquidated damages, refers to post-
employment relations of the parties.
In Dai-Chi, the trial court dismissed the civil complaint filed by the employer to recover
damages from its employee for the latters breach of his contractual obligation. We reversed the
ruling of the trial court as we found that the employer did not ask for any relief under the Labor
Code but sought to recover damages agreed upon in the contract as redress for its employees
breach of contractual obligation to its "damage and prejudice." We iterated that Article 217,
paragraph 4 does not automatically cover all disputes between an employer and its employee(s).
We noted that the cause of action was within the realm of Civil Law, thus, jurisdiction over the
controversy belongs to the regular courts. At bottom, we considered that the stipulation referred
to post-employment relations of the parties.
That the "Goodwill Clause" in this case is likewise a postemployment issue should brook no
argument. There is no dispute as to the cessation of Portillos employment with Lietz Inc.
23
She
simply claims her unpaid salaries and commissions, which Lietz Inc. does not contest. At that
juncture, Portillo was no longer an employee of Lietz Inc.
24
The "Goodwill Clause" or the "Non-
Compete Clause" is a contractual undertaking effective after the cessation of the employment
relationship between the parties. In accordance with jurisprudence, breach of the undertaking is a
civil law dispute, not a labor law case.
It is clear, therefore, that while Portillos claim for unpaid salaries is a money claim that arises
out of or in connection with an employer-employee relationship, Lietz Inc.s claim against
Portillo for violation of the goodwill clause is a money claim based on an act done after the
cessation of the employment relationship. And, while the jurisdiction over Portillos claim is
vested in the labor arbiter, the jurisdiction over Lietz Inc.s claim rests on the regular courts.
Thus:
As it is, petitioner does not ask for any relief under the Labor Code. It merely seeks to recover
damages based on the parties' contract of employment as redress for respondent's breach thereof.
Such cause of action is within the realm of Civil Law, and jurisdiction over the controversy
belongs to the regular courts. More so must this be in the present case, what with the reality that
the stipulation refers to the postemployment relations of the parties.
For sure, a plain and cursory reading of the complaint will readily reveal that the subject matter
is one of claim for damages arising from a breach of contract, which is within the ambit of the
regular court's jurisdiction. [citation omitted]
It is basic that jurisdiction over the subject matter is determined upon the allegations made in the
complaint, irrespective of whether or not the plaintiff is entitled to recover upon the claim
asserted therein, which is a matter resolved only after and as a result of a trial. Neither can
jurisdiction of a court be made to depend upon the defenses made by a defendant in his answer or
motion to dismiss. If such were the rule, the question of jurisdiction would depend almost
entirely upon the defendant.
25
[citation omitted]
x x x x
Whereas this Court in a number of occasions had applied the jurisdictional provisions of Article
217 to claims for damages filed by employees [citation omitted], we hold that by the designating
clause "arising from the employer-employee relations" Article 217 should apply with equal force
to the claim of an employer for actual damages against its dismissed employee, where the basis
for the claim arises from or is necessarily connected with the fact of termination, and should be
entered as a counterclaim in the illegal dismissal case.
26

x x x x
This is, of course, to distinguish from cases of actions for damages where the employer-
employee relationship is merely incidental and the cause of action proceeds from a
different source of obligation. Thus, the jurisdiction of regular courts was upheld where the
damages, claimed for were based on tort [citation omitted], malicious prosecution [citation
omitted], or breach of contract, as when the claimant seeks to recover a debt from a former
employee [citation omitted] or seeks liquidated damages in enforcement of a prior
employment contract. [citation omitted]
Neither can we uphold the reasoning of respondent court that because the resolution of the issues
presented by the complaint does not entail application of the Labor Code or other labor laws, the
dispute is intrinsically civil. Article 217(a) of the Labor Code, as amended, clearly bestows upon
the Labor Arbiter original and exclusive jurisdiction over claims for damages arising from
employer-employee relationsin other words, the Labor Arbiter has jurisdiction to award not
only the reliefs provided by labor laws, but also damages governed by the Civil Code.
27

(Emphasis supplied)
In the case at bar, the difference in the nature of the credits that one has against the other,
conversely, the nature of the debt one owes another, which difference in turn results in the
difference of the forum where the different credits can be enforced, prevents the application of
compensation. Simply, the labor tribunal in an employees claim for unpaid wages is without
authority to allow the compensation of such claims against the post employment claim of the
former employer for breach of a post employment condition. The labor tribunal does not have
jurisdiction over the civil case of breach of contract.
We are aware that in Baez v. Hon. Valdevilla, we mentioned that:
Whereas this Court in a number of occasions had applied the jurisdictional provisions of Article
217 to claims for damages filed by employees [citation omitted], we hold that by the designating
clause "arising from the employer-employee relations" Article 217 should apply with equal force
to the claim of an employer for actual damages against its dismissed employee, where the basis
for the claim arises from or is necessarily connected with the fact of termination, and should be
entered as a counterclaim in the illegal dismissal case.
28

While on the surface, Baez supports the decision of the Court of Appeals, the facts beneath
premise an opposite conclusion. There, the salesman-employee obtained from the NLRC a final
favorable judgment of illegal dismissal. Afterwards, the employer filed with the trial court a
complaint for damages for alleged nefarious activities causing damage to the employer.
Explaining further why the claims for damages should be entered as a counterclaim in the illegal
dismissal case, we said:
Even under Republic Act No. 875 (the Industrial Peace Act, now completely superseded by the
Labor Code), jurisprudence was settled that where the plaintiffs cause of action for damages
arose out of, or was necessarily intertwined with, an alleged unfair labor practice committed by
the union, the jurisdiction is exclusively with the (now defunct) Court of Industrial Relations,
and the assumption of jurisdiction of regular courts over the same is a nullity. To allow otherwise
would be "to sanction split jurisdiction, which is prejudicial to the orderly administration of
justice." Thus, even after the enactment of the Labor Code, where the damages separately
claimed by the employer were allegedly incurred as a consequence of strike or picketing of the
union, such complaint for damages is deeply rooted from the labor dispute between the parties,
and should be dismissed by ordinary courts for lack of jurisdiction. As held by this Court in
National Federation of Labor vs. Eisma, 127 SCRA 419:
Certainly, the present Labor Code is even more committed to the view that on policy grounds,
and equally so in the interest of greater promptness in the disposition of labor matters, a court is
spared the often onerous task of determining what essentially is a factual matter, namely, the
damages that may be incurred by either labor or management as a result of disputes or
controversies arising from employer-employee relations.
29

Evidently, the ruling of the appellate court is modeled after the basis used in Baez which is the
"intertwined" facts of the claims of the employer and the employee or that the "complaint for
damages is deeply rooted from the labor dispute between the parties." Thus, did the appellate
court say that:
There is no gainsaying the fact that such "Goodwill Clause" is part and parcel of the employment
contract extended to [Portillo], and such clause is not contrary to law, morals and public policy.
There is thus a causal connection between [Portillos] monetary claims against [respondents] and
the latters claim for liquidated damages against the former. Consequently, we should allow legal
compensation or set-off to take place.
30

The Court of Appeals was misguided. Its conclusion was incorrect.
There is no causal connection between the petitioner employees claim for unpaid wages and the
respondent employers claim for damages for the alleged "Goodwill Clause" violation. Portillos
claim for unpaid salaries did not have anything to do with her alleged violation of the
employment contract as, in fact, her separation from employment is not "rooted" in the alleged
contractual violation. She resigned from her employment. She was not dismissed. Portillos
entitlement to the unpaid salaries is not even contested. Indeed, Lietz Inc.s argument about legal
compensation necessarily admits that it owes the money claimed by Portillo.
The alleged contractual violation did not arise during the existence of the employer-employee
relationship. It was a post-employment matter, a post-employment violation. Reminders are apt.
That is provided by the fairly recent case of Yusen Air and Sea Services Phils., Inc. v. Villamor,
31

which harked back to the previous rulings on the necessity of "reasonable causal connection"
between the tortious damage and the damage arising from the employer-employee relationship.
Yusen proceeded to pronounce that the absence of the connection results in the absence of
jurisdiction of the labor arbiter. Importantly, such absence of jurisdiction cannot be remedied by
raising before the labor tribunal the tortious damage as a defense. Thus:
When, as here, the cause of action is based on a quasi-delict or tort, which has no reasonable
causal connection with any of the claims provided for in Article 217, jurisdiction over the action
is with the regular courts. [citation omitted]
As it is, petitioner does not ask for any relief under the Labor Code. It merely seeks to recover
damages based on the parties contract of employment as redress for respondents breach thereof.
Such cause of action is within the realm of Civil Law, and jurisdiction over the controversy
belongs to the regular courts. More so must this be in the present case, what with the reality that
the stipulation refers to the postemployment relations of the parties.
For sure, a plain and cursory reading of the complaint will readily reveal that the subject matter
is one of claim for damages arising from a breach of contract, which is within the ambit of the
regular courts jurisdiction. [citation omitted]
It is basic that jurisdiction over the subject matter is determined upon the allegations made in the
complaint, irrespective of whether or not the plaintiff is entitled to recover upon the claim
asserted therein, which is a matter resolved only after and as a result of a trial. Neither can
jurisdiction of a court be made to depend upon the defenses made by a defendant in his answer or
motion to dismiss. If such were the rule, the question of jurisdiction would depend almost
entirely upon the defendant.
32
(Underscoring supplied).
The error of the appellate court in its Resolution of 14 October 2010 is basic. The original
decision, the right ruling, should not have been reconsidered.1wphi1
Indeed, the application of compensation in this case is effectively barred by Article 113 of the
Labor Code which prohibits wage deductions except in three circumstances:
ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any person, shall
make any deduction from wages of his employees, except:
(a) In cases where the worker is insured with his consent by the employer, and the deduction is to
recompense the employer for the amount paid by him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to check-off has been
recognized by the employer or authorized in writing by the individual worker concerned; and
(c) In cases where the employer is authorized by law or regulations issued by the Secretary of
Labor.
WHEREFORE, the petition is GRANTED. The Resolution of the Court of Appeals in CA-
G.R. SP No. I 06581 dated 14 October 20 I 0 is SET ASIDE. The Decision of the Court of
Appeals in CA-G.R. SP No. I 06581 dated 3 I March :2009 is REINSTATED. No costs.
SO ORDERED.
NATIONAL FEDERATION OF LABOR (NFL), petitioner,
vs.
HON. BIENVENIDO E. LAGUESMA, UNDERSECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, AND ALLIANCE
OF NATIONALIST GENUINE LABOR ORGANIZATION-KILUSANG MAYO UNO (ANGLO-KMU), respondents.

KAPUNAN, J .:
Before us is a petition for certiorari under Rule 65 assailing the Resolution in OS-A-7-142-93 (RO700-9412-RU-037) dated August 8, 1995 of
Undersecretary Bienvenido E. Laguesma, by authority of the Secretary of Labor and Employment, setting aside the Resolution of the Med-
Arbiter dated March 13, 1995.
The antecedents are summarized in the assailed Resolution of Undersecretary Laguesma as follows:
Records show that on 27 December 1994, a petition for certification election among the rank and file employees of
Cebu Shipyard and Engineering Work, Inc. was filed by the Alliance of Nationalist and Genuine Labor Organization
(ANGLO-KMU), alleging among others, that it is a legitimate labor organization; that respondent Cebu Shipyard and
Engineering Work, Inc. is a company engaged in the business of shipbuilding and repair with more or less, four
hundred (400) rank and file employees; that the Nagkahiusang Mamumuo sa Baradero National Federation of Labor
is the incumbent bargaining agent of the rank and file employees of the respondent company; that the petition is
supported by more than twenty-five percent (25%) of all the employees in the bargaining unit; that the petition is filed
within the sixty (60) day period prior to the expiry date of the collective bargaining agreement (CBA) entered into by and
between the Nagkahiusang Mamumuo sa Baradero-NFL and Cebu Shipyard Engineering Work, Inc. which is due to
expire on 31 December 1994; and, that there is no bar to its bid to be certified as the sole and exclusive bargaining
agent of all the rank and file employees of the respondent company.
On 2 January 1995, the Med-Arbiter issued an Order, the pertinent portion of which reads as follows:
The petitioner is given five days from receipt of this Order to present proofs that it has created a local in the appropriate
bargaining unit where it seeks to operate as the bargaining agent and that, relative thereto, it has submitted to the
Bureau of Labor Relations or the Industrial Relations Division of this Office the following: 1) A charter certificate; 2) the
constitution and by-laws, a statement on the set of officers, and the books of accounts all of which are certified under
oath by the Secretary or Treasurer, as the case may be, of such local or chapter and attested to by its President,
OTHERWISE, this case will be dismissed.
SO ORDERED.
On 9 January 1995, forced-intervenor National Federation of Labor (NFL) moved for the dismissal of the petition on
grounds that petitioner has no legal personality to file the present petition for certification election and that it failed to
comply with the twenty-five percent (25%) consent requirement. It averred among others, that settled is the rule that
when a petition for certification election is filed by the federation which is merely an agent, the petition is deemed to be
filed by the local/chapter, the principal, which must be a legitimate labor organization; that for a local to be vested with
the status a legitimate labor organization, it must submit to the Bureau of Labor Relations (BLR) or the Industrial
Relations Division of the Regional Office of the Department of Labor and Employment the following: a) charter
certificate, indicating the creation or establishment of a local or chapter; b) constitution and by-laws; c) set of officers,
and d) books of accounts; that petitioner failed to submit the aforesaid requirements necessary for its acquisition of
legal personality; that compliance with the aforesaid requirements must be made at the time of the filing of the petition
within the freedom period; that the submission of the aforesaid requirements beyond the freedom period will not
operate to allow the defective petition to prosper; that contrary to the allegation of the petitioner, the number of workers
in the subject bargaining unit is 486, twenty-five percent (25%) of which is 122; that the consent signatures submitted
by the petitioner is 120 which is below the required 25% consent requirement; that of the 120 employees who allegedly
supported the petition, one (1) executed a certification stating that the signature, Margarito Cabalhug, does not belong
to him, 15 retracted, 9 of which were made before the filing of the petition while 6 were made after the filing of the
petition; and, that the remaining 104 signatures are way below the 25% consent requirement.
On 16 January 1995, forced-intervenor filed an Addendum/Supplement to its Motion to Dismiss, together with the
certification issued by the Regional Office No. VII, this Department, attesting to the fact that the mandatory
requirements necessary for the petitioner to acquire the requisite legal personality were submitted only on 6 January
1995 and the certification issued by the BLR, this Department, stating that as of 11 January 1995, the ANGLO-Cebu
Shipyard and Engineering Work has not been reported as one of the affiliates of the Alliance of Nationalist and
Genuine Labor Organization (ANGLO). Forced intervenor alleged that it is clear from the said certification that when the
present petition was filed on 27 December 1994, petitioner and its alleged local/chapter have no legal personality to file
the same. It claimed that the fatal defect in the instant petition cannot be cured with the submission of the requirements
in question as the local/chapter may be accorded the status of a legitimate labor organization only on 6 January 1995
which is after the freedom period expired on 31 December 1994. Forced intervenor further claimed that the documents
submitted by the petitioner were procured thru misrepresentation, and fraud, as there was no meeting on 13 November
1994 for the purpose of ratifying a constitution and by-laws and there was no election of officers that actually took
place.
On 15 February 1995, petitioner filed its opposition to the respondent's motion to dismiss. It averred among others, that
in compliance with the order of the Med-Arbiter, it submitted to the Regional Office No. VII, this Department, the
following documents; charter certificate, constitution and by-laws; statement on the set of officers and treasurer's
affidavit in lieu of the books of accounts; that the submission of the aforesaid document, as ordered, has cured
whatever defect the petition may have at the time of the filing of the petition, that at the time of the filing of petition, the
total number of rank and file employees in the respondent company was about 400 and that the petition was supported
by 120 signatures which are more than the 25% required by law; that granting without admitting that it was not able to
secure the signatures of at least 25% of the rank and file employees in the bargaining unit, the Med-Arbiter is still
empowered to order for the conduct of a certification election precisely for the purpose of ascertaining which of the
contending unions shall be the exclusive bargaining agent pursuant to the ruling of the Supreme Court in the case of
California Manufacturing Corporation vs. Hon. Undersecretary of Labor, et al., G.R. No. 97020, June 8, 1992.
On 20 February 1995, forced-intervenor filed its reply, reiterating all its arguments and allegations contained in its
previous pleadings. It stressed that petitioner is not a legitimate labor organization at the time of the filing of the petition
and that the petitioner's submission of the mandatory requirements after the freedom period would not cure the defect
of the petition.
On 13 March 1995, the Med-Arbiter issued the assailed Resolution dismissing the petition, after finding that the
submission of the required documents evidencing the due creation of a local was made after the lapse of the freedom
period.
1

The Alliance of Nationalist Genuine Labor Organization-Kilusang Mayo Uno (ANGLO-KMU) filed an
appeal from the March 13, 1995 Med-Arbiter's resolution insisting that it is a legitimate labor organization
at the time of the filing of the petition for certification election, and claiming that whatever defect the
petition may have had was cured by the subsequent submission of the mandatory requirements.
In a Resolution dated August 8, 1995, respondent Undersecretary Bienvenido E. Laguesma, by authority
of the Secretary of Labor and Employment, set aside the Med-Arbiter's resolution and entered in lieu
thereof a new order "finding petitioner [ANGLO-KMU] as having complied with the requirements of
registration at the time of filing of the petition and remanding the records of this case to the Regional
Office of origin . . . ."
2

The National Federation of Labor thus filed this special civil action for certiorari under Rule 65 of the
Rules of Court raising the following grounds:
A. RESOLUTION OF PUBLIC RESPONDENT HON.
BIENVENIDO E. LAGUESMA DATED 8 AUGUST 1995
AND HIS ORDER DATED 14 SEPTEMBER 1995
WERE ISSUED IN DISREGARD OF EXISTING LAWS
AND JURISPRUDENCE; AND
B. GRAVELY ABUSED HIS DISCRETION IN
APPLYING THE RULING IN THE CASE OF FUR V.
LAGUESMA, G.R. NO. 109251, MAY 26, 1993, IN THE
PRESENT CASE.
We will not rule on the merits of the petition. Instead, we will take this opportunity to lay the rules on the
procedure for review of decisions or rulings of the Secretary of Labor and Employment under the Labor
Code and its Implementing Rules. (P.D. No. 442 as amended)
In St. Martin Funeral Homes v. National Labor Relations Commission and Bienvenido Aricayos, G.R. No.
130866, September 16, 1998, the Court re-examined the mode of judicial review with respect to decisions
of the National Labor Relations Commission.
The course taken by decisions of the NLRC and those of the Secretary of Labor and Employment are
tangent, but all are within the umbra of the Labor Code of the Philippines and its implementing rules. On
this premise, we find that the very same rationale in St. Martin Funeral Homes v. NLRC finds application
here, leading ultimately to the same disposition as in that leading case.
We have always emphatically asserted our power to pass upon the decisions and discretionary acts of
the NLRC well as the Secretary of Labor in the face of the contention that no judicial review is provided by
the Labor Code. We stated in San Miguel Corporation v. Secretary of Labor
3
thus:
. . . It is generally understood that as to a administrative agencies exercising quasi-
judicial or legislative power there is an underlying power in the courts to scrutinize the
acts of such agencies on questions of law and jurisdiction even though no right of review
is given by statute (73 C.J.S. 506, note 56).
The purpose of judicial review is to keep the administrative agency within its jurisdiction
and protect substantial rights of parties affected by its decision (73 C.J.S. 507, Sec. 165).
It is part of the system of checks and balances which restricts the separation of powers
and forestalls arbitrary and unjust adjudications.
Considering the above dictum and as affirmed by decisions of this Court, St. Martin Funeral Homes v.
NLRC succinctly pointed out, the remedy of an aggrieved party is to timely file a motion for
reconsideration as a precondition for any further or subsequent remedy, and then seasonably file a
special civil action for certiorari under Rule 65 of the 1997 Rules of Civil Procedure.
The propriety of Rule 65 as a remedy was highlighted in St. Martin Funeral Homes v. NLRC, where the
legislative history of the pertinent statutes on judicial review of cases decided under the Labor Code was
traced, leading to and supporting the thesis that "since appeals from the NLRC to the Supreme Court
were eliminated, the legislative intendment was that the special civil action of certiorari was and still is the
proper vehicle for judicial review of decision of the NLRC"
4
and consequently "all references in the
amended Section 9 of B.P. No. 129 to supposed appeals from the NLRC to the Supreme Court are
interpreted and hereby declared to mean and refer to petitions for certiorari under Rule 65."
5

Proceeding therefrom and particularly considering that the special civil action of certiorari under Rule 65
is within the concurrent original jurisdiction of the Supreme Court and the Court of Appeals, St. Martin
Funeral Homes v. NLRC concluded and directed that all such petitions should be initially filed in the Court
of Appeals in strict observance of the doctrine on the hierarchy of courts.
In the original rendering of the Labor Code, Art. 222 thereof provided that the decisions of the NLRC are
appealable to the Secretary of Labor on specified grounds.
6
The decisions of the Secretary of Labor may
be appealed to the President of the Philippines subject to such conditions or limitations as the President
may direct.
Thus under the state of the law then, this Court had ruled that original actions for certiorari and prohibition
filed with this Court against the decision of the Secretary of Labor passing upon the decision of the NLRC
were unavailing for mere error of judgment as there was a plain, speedy and adequate remedy in the
ordinary course of law, which was an appeal to the President. We said in the 1975 case, Scott v. Inciong,
7
quoting Nation Multi Service Labor Union v. Acgoaili:
8
"It is also a matter of significance that there was
an appeal to the President. So it is explicitly provided by the Decree. That was a remedy both adequate
and appropriate. It was in line with the executive determination, after the proclamation of martial law, to
leave the solution of labor disputes as much as possible to administrative agencies and correspondingly
to limit judicial participation."
9

Significantly, we also asserted in Scott v. Inciong that while appeal did not lie, the corrective power of this
Court by a writ of certiorari was available whenever a jurisdictional issue was raised or one of grave
abuse of discretion amounting to a lack or excess thereof, citing San Miguel Corporation v. Secretary of
Labor.
10

P.D. No. 1367
11
amending certain provisions of the Labor Code eliminated appeals to the President, but
gave the President the power to assume jurisdiction over any cases which he considered national interest
cases. The subsequent P.D. No. 1391,
12
enacted "to insure speedy labor justice and further stabilize
industrial peace", further eliminated appeals from the NLRC to the Secretary of Labor but the President
still continued to exercise his power to assume jurisdiction over any cases which he considered national
interest
cases.
13

Though appeals from the NLRC to the Secretary of Labor were eliminated, presently there are several
instances in the Labor Code and its implementing and related rules where an appeal can be filed with the
Office of the Secretary of Labor or the Secretary of Labor issues a ruling, to wit:
(1) Under the Rules and Regulations Governing Recruitment and Placement Agencies for
Local Employment
14
dated June 5, 1997 superseding certain provisions of Book I (Pre-
Employment) of the implementing rules, the decision of the Regional Director on
complaints against agencies is appealable to the Secretary of Labor within ten (10)
working days from receipt of a copy of the order, on specified grounds, whose decision
shall be final and inappealable.
(2) Art. 128 of the Labor Code provides that an order issued by the duly authorized
representative of the Secretary of Labor in labor standards cases pursuant to his visitorial
and enforcement power under said article may be appealed to the Secretary of Labor.
Sec. 2 in relation to Section 3 (a), Rule X, Book III (Conditions of Employment) of the
implementing rules gives the Regional Director the power to order and administer
compliance with the labor standards provisions of the Code and other labor legislation.
Section 4 gives the Secretary the power to review the order of the Regional Director, and
the Secretary's decision shall be final and executory.
Sec. 1, Rule IV (Appeals) of the Rules on the Disposition of Labor Standards Cases in
the Regional Offices dated September 16, 1987
15
provides that the order of the Regional
Director in labor standards cases shall be final and executory unless appealed to the
Secretary of Labor.
Sec. 5, Rule V (Execution) provides that the decisions, orders or resolutions of the
Secretary of Labor and Employment shall become final and executory after ten (10)
calendar days from receipt of the case records. The filing of a petition for certiorari before
the Supreme Court shall not stay the execution of the order or decision unless the
aggrieved party secures a temporary restraining order from the Court within fifteen (15)
calendar days from the date of finality of the order or decision or posts a supersedeas
bond.
Sec. 6 of Rule VI (Health and Safety Cases) provides that the Secretary of Labor at his
own initiative or upon the request of the employer and/or employee may review the order
of the Regional Director in occupational health and safety cases. The Secretary's order
shall be final and executory.
(2) Art. 236 provides that the decision of the Labor Relations Division in the regional
office denying an applicant labor organization, association or group of unions or workers'
application for registration may be appealed by the applicant union to the Bureau of
Labor Relations within ten (10) days from receipt of notice thereof.
Sec. 4, Rule V, Book V (Labor Relations), as amended by Department Order No. 9 dated
May 1, 1997
16
provides that the decision of the Regional Office denying the application
for registration of a workers association whose place of operation is confined to one
regional jurisdiction, or the Bureau of Labor Relations denying the registration of a
federation, national or industry union or trade union center may be appealed to the
Bureau or the Secretary as the case may be who shall decide the appeal within twenty
(20) calendar days from receipt of the records of the case.
(3) Art. 238 provides that the certificate of registration of any legitimate organization shall
be canceled by the Bureau of Labor Relations if it has reason to believe, after due
hearing, that the said labor organization no longer meets one or more of the requirements
prescribed by law.
Sec. 4, Rule VIII, Book V provides that the decision of the Regional Office or the Director
of the Bureau of Labor Relations may be appealed within ten (10) days from receipt
thereof by the aggrieved party to the Director of the Bureau or the Secretary of Labor, as
the case may be, whose decision shall be final and executory.
(4) Art. 259 provides that any party to a certification election may appeal the order or
results of the election as determined by the Med-Arbiter directly to the Secretary of Labor
who shall decide the same within fifteen (15) calendar days.
Sec. 12, Rule XI, Book V provides that the decision of the Med-Arbiter on the petition for
certification election may be appealed to the Secretary.
Sec. 15, Rule XI, Book V provides that the decision of the Secretary of Labor on an
appeal from the Med-Arbiter's decision on a petition for certification election shall be final
and executory. The implementation of the decision of the Secretary affirming the decision
to conduct a certification election shall not be stayed unless restrained by the appropriate
court.
Sec. 15, Rule XII, Book V provides that the decision of the Med-Arbiter on the results of
the certification election may be appealed to the Secretary within ten (10) days from
receipt by the parties of a copy thereof, whose decision shall be final and executory.
Sec. 7, Rule XVIII (Administration of Trade Union Funds and Actions Arising Therefrom),
Book V provides that the decision of the Bureau in complaints filed directly with said
office pertaining to administration of trade union funds may be appealed to the Secretary
of Labor within ten (10) days from receipt of the parties of a copy thereof.
Sec. 1, Rule XXIV (Execution of Decisions, Awards, or Orders), Book V provides that the
decision of the Secretary of Labor shall be final and executory after ten (10) calendar
days from receipt thereof by the parties unless otherwise specifically provided for in Book
V.
(5) Art. 263 provides that the Secretary of Labor shall decide or resolve the labor dispute
over which he assumed jurisdiction within thirty (30) days from the date of the assumption
of jurisdiction. His decision shall be final and executory ten (10) calendar days after
receipt thereof by the parties.
From the foregoing we see that the Labor Code and its implementing and related rules generally do not
provide for any mode for reviewing the decision of the Secretary of Labor. It is further generally provided
that the decision of the Secretary of Labor shall be final and executory after ten (10) days from notice.
Yet, like decisions of the NLRC which under Art. 223 of the Labor Code become final after ten (10) days,
17
decisions of the Secretary of Labor come to this Court by way of a petition for certiorari even beyond
the ten-day period provided in the Labor Code and the implementing rules but within the reglementary
period set for Rule 65 petitions under the 1997 Rules of Civil Procedure. For example, in M. Ramirez
Industries v. Secretary of Labor,
18
assailed was respondent's order affirming the Regional Director's
having taken cognizance of a case filed pursuant to his visitorial powers under Art. 128 (a) of the Labor
Code; in Samahang Manggagawa sa Permex v. Secretary of
Labor,
19
assailed was respondent's order setting aside the Med-Arbiter's dismissal a petition for
certification election; Samahan ng Manggagawa sa Pacific Plastic v. Laguesma,
20
assailed was
respondent's order affirming the Med-Arbiter's decision on the results of a certification election; in
Philtread Workers Union v. Confessor,
21
assailed was respondent's order issued under Art. 263 certifying
a labor dispute to the NLRC for compulsory arbitration.
In two instances, however, there is specific mention of a remedy from the decision of the Secretary of
Labor, thus:
(1) Section 15, Rule XI, Book V of the amended implementing rules provides that the decision of the
Secretary of Labor on appeal from the Med-Arbiter's decision on a petition for certification election shall
be final and executory, but that the implementation of the Secretary's decision affirming the Med-Arbiter's
decision to conduct a certification election "shall not be stayed unless restrained by the appropriate court."
(2) Section 5, Rule V (Execution) of the Rules on the Disposition of Labor Standards Cases in Regional
Offices provides that "the filing of a petition for certiorari before the Supreme Court shall not stay the
execution of the [appealed] order or decision unless the aggrieved party secures a temporary restraining
order from the Court."
We perceive no conflict with our pronouncements on the proper remedy which is Rule 65 and which
should be initially filed in the Court of Appeals in strict observance of the doctrine on the hierarchy of
courts. Accordingly, we read "the appropriate court" in Section 15, Rule XI, Book V of the Implementing
Rules to refer to the Court of Appeals.
Sec. 5, Rule V of the Rules on the Disposition of Labor Standards Cases in Regional Offices specifying
the Supreme Court as the forum for filing the petition for certiorari is not infirm in like manner or similarly
as is the statute involved in Fabian v. Desierto.
22
And Section 5 cannot be read to mean that the petition
for certiorari can only be filed exclusively and solely with this Court, as the provision must invariably be
read in relation to the pertinent laws on the concurrent original jurisdiction of this Court and the Court of
Appeals in Rule 65 petitions.
In fine, we find that it is procedurally feasible as well as practicable that petitions for certiorari under Rule
65 against the decision of the Secretary of Labor rendered under the Labor Code and its implementing
and related rules be filed initially in the Court of Appeals. Paramount consideration is strict observance of
the doctrine on the hierarchy of the courts, emphasized in St. Martin Funeral Homes v. NLRC, on "the
judicial policy that this Court will not entertain direct resort to it unless the redress desired cannot be
obtained in the appropriate courts or where exceptional and compelling circumstances justify availment of
a remedy within and calling for the exercise of our preliminary jurisdiction."
23

WHEREFORE, in view of the foregoing, certiorari, together with all pertinent records REFERRED to the
Court of Appeals for disposition.
SO ORDERED.