HALAGUEA v.

PAL
G.R. No. 172013; October 2, 2009
Ponente: J. Peralta
FACTS:
Petitioners were employed as female flight attendants of respondent Philippine
Airlines (PAL) on different dates prior to November 22, 1996. They are members of
the Flight Attendants and Stewards Association of the Philippines (FASAP), a labor
organization certified as the sole and exclusive certified as the sole and exclusive
bargaining representative of the flight attendants, flight stewards and pursers of
respondent.
On July 11, 2001, respondent and FASAP entered into a Collective Bargaining
Agreement incorporating the terms and conditions of their agreement for the years
2000 to 2005, hereinafter referred to as PAL-FASAP CBA.
Section 144, Part A of the PAL-FASAP CBA, provides that:
A. For the Cabin Attendants hired before 22 November

1996:

3.
Compulsory Retirement Subject to the grooming standards provisions
of this Agreement, compulsory retirement shall be fifty-five (55) for females and
sixty (60) for males. x x x.
In a letter dated July 22, 2003, petitioners and several female cabin crews
manifested that the aforementioned CBA provision on compulsory retirement is
discriminatory, and demanded for an equal treatment with their male counterparts.
This demand was reiterated in a letter by petitioners' counsel addressed to
respondent demanding the removal of gender discrimination provisions in the
coming re-negotiations of the PAL-FASAP CBA.
On July 29, 2004, petitioners filed a Special Civil Action for Declaratory Relief
with Prayer for the Issuance of Temporary Restraining Order and Writ of Preliminary
Injunction with the Regional Trial Court (RTC) of Makati City, Branch 147
ISSUE:
Whether the RTC has jurisdiction over the petitioners' action challenging the legality
or constitutionality of the provisions on the compulsory retirement age contained in
the CBA between respondent PAL and FASAP.
HELD:
Jurisdiction of the court is determined on the basis of the material allegations of the
complaint and the character of the relief prayed for irrespective of whether plaintiff
is entitled to such relief. The said issue cannot be resolved solely by applying the
Labor Code. Rather, it requires the application of the Constitution, labor statutes,
law on contracts and the Convention on the Elimination of All Forms of
Discrimination Against Women, and the power to apply and interpret the

constitution and CEDAW is within the jurisdiction of trial courts, a court of general
jurisdiction.

In Georg Grotjahn GMBH & Co. v. Isnani, this Court held that not every dispute
between an employer and employee involves matters that only labor arbiters and
the NLRC can resolve in the exercise of their adjudicatory or quasi-judicial powers.
The jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is
limited to disputes arising from an employer-employee relationship which can only
be resolved by reference to the Labor Code, other labor statutes, or their collective
bargaining agreement.
Where the principal relief sought is to be resolved not by reference to the Labor
Code or other labor relations statute or a collective bargaining agreement but by
the general civil law, the jurisdiction over the dispute belongs to the regular courts
of justice and not to the labor arbiter and the NLRC. In such situations, resolution of
the dispute requires expertise, not in labor management relations or in wage
structures and other terms and conditions of employment, but rather in the
application of the general civil law. Clearly, such claims fall outside the area of
competence or expertise ordinarily ascribed to labor arbiters and the NLRC and the
rationale for granting jurisdiction over such claims to these agencies disappears.

Mariwasa Siam Ceramics vs. Secretary of Labor and Employment, et. al.
(G.R. No. 183317 December 21, 2009)
Facts: On May 2005, private respondent Samahan Ng Mga Manggagawa Sa
Mariwasa Siam Ceramics, Inc. (SMMSC-Independent) was issued a Certificate of
Registration as a legitimate labor organization by the Department of Labor and
Employment (DOLE), Region IV-A.On June 2005, petitioner Mariwasa Siam Ceramics,
Inc. filed a Petition for Cancellation of Union Registration against private respondent,
claiming that the latter violated Article 234 of the Labor Code for not complying with
the 20% requirement and that it committed massive fraud and misrepresentation in
violation of Article 239 of the same code. The Regional Director of DOLE IV-A issued
an Order granting the petition, revoking the registration of respondent, and delisting
it from the roster of active labor unions. SMMSC-Independent appealed to the
Bureau of Labor Relations. BLR ruled in favor of the respondent, thus, they remain in
the roster of legitimate labor organizations. The petitioner appealed and insisted
that private respondent failed to comply with the 20% union membership
requirement for its registration as a legitimate labor organization because of the
disaffiliation from the total number of union members of 102 employees who
executed affidavits recanting their union membership. Hence, this petition for
review on certiorari under Rule 45 of the Rules of Court.
Issues:
1) Was there failure to comply with the 20% union membership requirement? 2) Did
the withdrawal of 31 union members affect the petition for certification election
insofar as the 30% requirement is concerned?

Ruling: No.While it is true that the withdrawal of support may be considered as a

resignation from the union, the fact remains that at the time of the unions
application for registration, the affiants were members of respondent and they
comprised more than the required 20% membership for purposes of registration as
a labor union. Article 234 of the Labor Code merely requires a 20% minimum
membership during the application for union registration. It does not mandate that
a union must maintain the 20% minimum membership requirement all throughout
its existence. On the second issue, it appears undisputedly that the 31 union
members had withdrawn their support to the petition before the filing of said
petition. The distinction must be that withdrawals made before the filing of the
petition are presumed voluntary unless there is convincing proof to the contrary,
whereas withdrawals made after the filing of the petition are deemed involuntary.
Therefore, following jurisprudence, the employees were not totally free from the
employers pressure and so the voluntariness of the employees execution of the
affidavits becomes suspect. The cancellation of a unions registration doubtless has
an impairing dimension on the right of labor to self-organization. For fraud and
misrepresentation to be grounds for cancellation of union registration under the
Labor Code, the nature of the fraud and misrepresentation must be grave and
compelling enough to vitiate the consent of a majority of union members.
YRASUEGI VS. PAL
Facts: Petitioner was a former international flight steward of PAL, herein respondent.
Petitioner was dismissed because of his failure to adhere to the weight standards of
the airline company. Petitioner claims that he was illegally dismissed.
Issue: Whether or not petitioner was discriminated against when he was dismissed.
Held: Petition denied. To make his claim more believable, petitioner invokes the
equal protection clause guaranty of the Constitution. However, in the absence of
governmental interference, the liberties guaranteed by the Constitution cannot be
invoked. Put differently, the Bill of Rights is not meant to be invoked against acts of
private individuals. Indeed, the US Supreme Court, in interpreting the 14th
Amendment, which is the source of our equal protection guarantee, is consistent in
saying that the equal protection erects no shield against private conduct, however
discriminatory or wrongful. Private actions, no matter how egregious, cannot violate
the equal protection guarantee.

G.R. No. 77951 September 26, 1988

COOPERATIVE RURAL BANK OF DAVAO CITY, INC., petitioner,
vs.
PURA FERRER-CALLEJA, DIRECTOR, BUREAU OF LABOR RELATIONS, MOLE, MANILA;
FELIZARDO T. SERAPIO, MED-ARBITER DESIGNATE, REGIONAL OFFICE NO. XI, MOLE,
DAVAO CITY; and FEDERATION OF FREE WORKERS, respondents.
Herbert P. Artes for petitioner.

The Solicitor General for Public respondent.

GANCAYCO, J.:
This is a Petition for certiorari under Rule 65 of the Rules of Court where the issue is whether or not
the employees of a cooperative can organize themselves for purposes of collective bargaining.
The record of the case discloses that the herein petitioner Cooperative Rural Bank of Davao City,
Inc. is a cooperative banking corporation operating in Davao City. It is owned in part by the
Government and its employees are members and co-owners of the same. The petitioner has around
16 rank-and-file employees. As of August, 1986, there was no existing collective bargaining
agreement between the said employees and the establishment. On the other hand, the herein
private respondent Federation of Free Workers is a labor organization registered with the
Department of Labor and Employment. It is interested in representing the said employees for
purposes of collective bargaining.
On August 27, 1986, the private respondent filed with the Davao City Regional Office of the then
Ministry of Labor and Employment a verified Petition for certification election among the rank-and-file
employees of the petitioner. 1The same was docketed as Case No. R-325 ROXI MED-UR-73-86. On
September 18, 1986, the herein public respondent issued an Order granting the Petition for certification
election.
On October 3, 1986, the petitioner filed an Appeal Memorandum and sought a reversal of the Order
of the Med-Arbiter. 2 The petitioner argues therein that, among others, a cooperative is not covered by
the Rules governing certification elections inasmuch as it is not an institution operating for profit. The
petitioner also adds that two of the alleged rank-and-file employees seeking the certification election are
managerial employees disqualified from joining concerted labor activities. In sum, the petitioner insists
that its employees are disqualified from forming labor organizations for purposes of collective bargaining.
On October 8, 1986, the private respondent filed a "Motion to Dismiss the Appeal." On October 15,
1986, the petitioner filed its opposition to the said Motion.
On February 11, 1987, the herein public respondent Bureau of Labor Relations Director Pura FerrerCalleja issued a Resolution affirming the Order of the Med-Arbiter and dismissing the Appeal. 3 The
pertinent portions of the said Resolution are as follows
It is beyond doubt that respondent-appellant, Cooperative Rural Bank of Davao City
falls within the purview of Article 212, paragraph C of the Labor Code, acting as such
in the interest of an employer. To argue otherwise would amount to closing one's
eyes to the realities of today's cooperative banking institutions. ....
Moreover, basic is the right of every worker in any establishment whether operated
for profit or not to organize and engage in concerted activity, mutually beneficial to
their interest. Such right is sacredly enshrined and protected in our fundamental law,
granting every worker the right to organize into a collective group and engage in
concerted activities for purposes of promoting their well being, subject only to such
limitations as may be provided for by law.

xxx xxx xxx

As this Office has consistently ruled and applied in various cases, being a member of
a cooperative organization does not preclude one from forming or joining a labor
union provided that such person or persons are not among those disqualified by law.
Nowhere in the records can we find any piece of evidence showing that the
signatories in the petition are among those disqualified to form or join a union.
Finally, we cannot give credence to (the) employer's allegation that two of the
signatories thereof, are managerial employees, since no evidence showing such fact
can be found from the records.

xxx xxx xxx

In a Motion dated March 2, 1987, the petitioner asked for a reconsideration of the said
Resolution. 4 The petitioner reiterated therein its view that its employees are disqualified from forming the
labor organization so contemplated. The petitioner also called attention to an Opinion rendered by then
Solicitor General and Minister of Justice Estelito P. Mendoza dated August 14, 1981. 5 The Opinion states
that employees of an electric cooperative who are themselves members/co-owners of the same cannot
form or join labor organizations for purposes of collective bargaining. The Opinion also states that the
duty to bargain exists only between an employer and his/its employees, and that an employer has no duty
to bargain with his co-owners of a corporation who are also its employees. The petitioner submits that the
said Opinion calls for application in the present controversy.
On March 26, 1987, director Calleja issued a Resolution denying the reconsideration sought by the
petitioner. 6Thus, the certification election was scheduled in the morning of April 23, 1987.
Finding the action taken by the Bureau unsatisfactory, the petitioner brought the case directly to this
Court on April 9, 1987 by way of the instant Petition for certiorari. The petitioner maintains that the
public respondents both acted without jurisdiction or in excess thereof, or with grave abuse of
discretion amounting to lack of jurisdiction, in allowing the certification election sought by the private
respondent despite the arguments of the petitioner in opposition thereto. The petitioner reiterates its
argument that employees of cooperatives who are members and co-owners of the same cannot form
and join labor organizations for purposes of collective bargaining.
On April 15, 1987, this Court issued a temporary restraining order enjoining the Bureau of Labor
Relations from proceeding with the certification election scheduled on April 23, 1987. 7 The
certification election nonetheless pushed through as scheduled for the alleged reason that the temporary
restraining order was not seasonably transmitted to Davao City. 8
This court also required the respondents to file their Comment on the Petition. The respondents
complied as instructed. The Office of the Solicitor General represented the public respondents.
The Solicitor General intimated to this Court that the instant Petition has been rendered moot and
academic inasmuch as the certification election sought to be enjoined had already been conducted.
The Solicitor General added that the public respondents did not commit any jurisdictional error. 10

In due time, the parties submitted other pleadings. On January 6, 1988, the case was deemed
submitted for decision.
After a careful examination of the entire record of the case, We find the instant Petition meritorious.
Contrary to the view espoused by the Solicitor General, this case cannot be considered moot and
academic simply because the certification election sought to be enjoined went on as scheduled. The
instant Petition is one for certiorari as a special civil action. Errors of jurisdiction on the part of the
public respondents are alleged in the Petition itself. If the public respondents had indeed committed
jurisdictional errors, the action taken by both the Med-Arbiter and the Bureau Director will be
deemed null and void ab initio. 11 And if this were so, the certification election would, necessarily, have
no legal justification. The arguments raised in the instant Petition strike at the very heart of the validity of
the certification election itself.
We come now to the main aspect of the case.
Article 243 of the Labor Code 12 enumerates who are eligible to form, join, or assist labor organizations
for purposes of collective bargaining, to wit
ART. 243. Coverage and employees' right to self-organization. All persons
employed in commercial, industrial and agricultural enterprises and in religious,
charitable, medical or educational institutions whether operating for profit or not, shall
have the right to self-organization and to form, join, or assist labor organizations of
their own choosing for purposes of collective bargaining. ....
The recognized exception to this enumeration is found in Article 245 of the same code, which
provides for the ineligibility of managerial employees to join any labor reorganization, vizART. 245. Ineligibility of managerial employees to join any labor organization.
Managerial employees are not eligible to join, assist or form any labor organization.
From the foregoing provisions of law it would appear at first blush that all the rank and file
employees of a cooperative who are not managerial employees are eligible to form, join or assist
any labor organization of their own choosing for the purpose of collective bargaining.
However, under Section 2 of P.D. No. 175, a cooperative is defined to mean "organizations
composed primarily of small producers and of consumers who voluntarily join together to form
business enterprises which they themselves own, control, and patronize." Its creation and growth
were declared as a policy of the State as a means of increasing the income and purchasing power of
the low-income sector of the population in order to attain a more equitable distribution of income and
wealth . 13 The principles governing it are:
a) Open membership"Should be voluntary and available without artificial
restriction, or any social, political, racial or religious discrimination, to all persons who
can make use of its services and are willing to accept responsibilities of
membership;"
b) Democratic control."Irrespective of the number of shares owned, each member
can only cast one vote in deciding upon the affairs of the cooperative;"

c) Limited interests to capital. "Share capital shall earn only limited interest, the
maximum rate of interest to be established by the Department of Local Government
and Community Development from time to time;" and
d) Patronage refund "Net income after the interest on capital has been paid shall
be redistributed among the members in proposition to their patronage." 14
While cooperatives may exercise the same rights and privileges given to persons, partnership and
corporations provided under existing laws, operate business enterprises of all kinds, establish rural
banks, enjoy all the privileges and incentives granted by the NACIDA Act and other government
agencies to business organizations under existing laws, to expropriate idle urban or rural lands for its
purposes, to own and dispose of properties, enter into contracts, to sue and be sued and perform
other acts necessary to pursue its objectives, 15 such cooperatives enjoy such privileges as:
a) Exemption from income tax and sales taxes;
b) Preferential right to supply rice, corn and other grains, and other commodities produced by them
to State agencies administering price stabilization program; and
c) In appropriate cases, exemption from application of minimum wage law upon recommendation of
the Bureau of Cooperative Development subject to the approval of the Secretary of Labor. 16
A cooperative development loan fund has been created for the development of the cooperative
movement. 17
It may be, further stated that the Department of Local Govemment and Community Development
through the Bureau of Cooperative Development is vested with full authority to promulgate rules and
regulations to cover the promotion, organization, registration, regulation and supervision of all types
of cooperatives. 18 Electric cooperatives, however, are under the regulation and supervision of the
National Electrification Ad. Administration, 19 while it is the Monetary Board of the Central Bank that has
exclusive responsibility and authority over the banking functions and operations of cooperative banks . 20
A cooperative, therefore, is by its nature different from an ordinary business concern, being run
either by persons, partnerships, or corporations. Its owners and/or members are the ones who run
and operate the business while the others are its employees. As above stated, irrespective of the
number of shares owned by each member they are entitled to cast one vote each in deciding upon
the affairs of the cooperative. Their share capital earn limited interests. They enjoy special privileges
as exemption from income tax and sales taxes, preferential right to supply their products to State
agencies and even exemption from the minimum wages laws.
An employee therefore of such a cooperative who is a member and co-owner thereof cannot invoke
the right to collective bargaining for certainly an owner cannot bargain with himself or his co-owners.
In the opinion of August 14, 1981 of the Solicitor General he correctly opined that employees of
cooperatives who are themselves members of the cooperative have no right to form or join labor
organizations for purposes of collective bargaining for being themselves co-owners of the
cooperative. 21
However, in so far as it involves cooperatives with employees who are not members or co-owners
thereof, certainly such employees are entitled to exercise the rights of all workers to organization,

collective bargaining, negotiations and others as are enshrined in the Constitution and existing laws
of the country. 22
The questioned ruling therefore of public respondent Pura Ferrer-Calleja must be upheld insofar as it
refers to the employees of petitioner who are not members or co-owners of petitioner. It cannot
extend to the other employees who are at the same time its members or co-owners.
The Court upholds the findings of said public respondent that no persuasive evidence has been
presented to show that two of the signatories in the petition for certification election are managerial
employees who under the law are disqualified from pursuing union activities.
WHEREFORE, the herein petition is hereby GRANTED and the resolution of public respondent Pura
Ferrer-Calleja, Director, Bureau of Labor Relations, of February 11, 1987 is hereby MODIFIED to the
effect that only the rank and file employees of petitioner who are not its members or co-owners are
entitled to self-organization, collective bargaining, and negotiations, while the other employees who
are members or co-owners thereof can not enjoy such right.

MERALCO vs Secretary of Labor G.R. No. 91902, May 20, 1991 MEDIALDEA,
J.
Facts: On November 22, 1988, the Staff and Technical Employees Association of
MERALCO, a labor organization of staff and technical employees of MERALCO, filed a
petition for certification election, seeking to represent regular employees of
MERALCO who are: non-managerial employees with Pay Grades VII and above, nonmanagerial employees in the Patrol Division, Treasury Security Services Section,
Secretaries who are automatically removed from the bargaining unit; and
employees within the rank and file unit who are automatically disqualified from
becoming union members of any organization within the same bargaining unit.
MERALCO moved for the dismissal of the petition on the grounds that the
employees sought to be represented by petitioner are are either managerial who
are prohibited by law from forming or joining supervisory union, security services
personnel who are prohibited from joining or assisting the rank-and-file union and
secretaries who do not consent to the petitioner's representation and whom
petitioner cannot represent.
Issue: Whether or not managerial employees, Supervisory employees and security
guards may join the rank-and-file union.
Held: No. Art. 245 of the Labor Code provides the Ineligibility ofmanagerial
employees to join any labor organization; -Managerial employees are not eligible to
join, assist or form any labor organization.
Supervisory employees shall not be eligible for membership in a labor organization
of the rank-and-file employees but may join, assist, or form separate labor
organizations of their own. While therefore under the old rules, security guards were
barred from joining a labor organization of the rank and file, under RA 6715, they
may now freely join a labor organization of the rank and file or that of the
supervisory union, depending on their rank. However there are possible

consequences in the implementation of the law in allowing security personnel to

join labor unions within the company they serve. The law is apt to produce divided
loyalties in the faithful performance of their duties. Economic reasons would present
the employees concerned with the temptation to subordinate their duties to the
allegiance they owe the union of which they are members, aware as they are that it
is usually union action that obtains for them increased pecuniary benefits. Thus, in
the event of a strike declared by their union, security personnel may neglect or
outrightly abandon their duties, such as protection of property of their employer and
the persons of its officials andemployees, the control of access to the employers
premises, and the maintenance of order in the event of emergencies and untoward
incidents.
ARELLANO UNIVERSITY EMPLOYEES AND WORKERS UNION, et al. v. COURT
OF APPEALS, et al. 502 SCRA 219 (2006), THIRD DIVISION (Carpio Morales,
J.)
An ordinary striking worker may not be declared to have lost his employment
status by mere participation in an illegal strike.
The Arellano University Employees and Workers Union (the Union), the exclusive
bargaining representative of about 380 rank-and-file employees of Arellano
University, Inc. (the University), filed with the NationalConciliation and Mediation
Board (NCMB) a Notice of Strike charging the University with Unfair Labor Practice
(ULP). After several controversies and petitions, a strike was staged. Upon the lifting
of the strike, the University filed a Petition to Declare the Strike Illegal before the
National Labor Relations Commission (NLRC). The NLRC issued a Resolution holding
that the University was not guilty of ULP. Consequently, the strike was declared
illegal. All the employees who participated in the illegal strike were thereafter
declared to have lost their employment status.
ISSUE: Whether or not an employee is deemed to have lost his employment by
mere participation in an illegal strike
HELD: Under Article 264 of the Labor Code, an ordinary striking worker may not be
declared to have lost his employment status by mere participation in an illegal
strike. There must be proof that he knowingly participated in the commission of
illegal acts during the strike. While the University adduced photographs showing
strikers picketing outside the university premises, it failed to identify who they
were. It thus failed to meet the substantiality of evidence test applicable in
dismissal cases. With respect to the union officers, as already discussed, their mere
participation in the illegal strike warrants their dismissal.
Nogales v. Capitol Medical Center G.R. No. 142625 December 19, 2006
Facts: Corazon Nogales, 37, was under exclusive prenatal care of Dr. Oscar Estrada
with her fourth child. An increase in her blood pressure and development of leg
edema indicating preeclampsia was noted during her last trimester of pregnancy; a
dangerous complication of her pregnancy. On 26 May 1976, Corazon was admitted
to CMC after the staff nurse noted the written admission request for Dr. Estrada.
Rogelio executed and signed the Consent Admission and Agreement and

Admission Agreement. During the operation, Dr. Estrada was assisted by doctors
of CMC. The baby came out in an apnic, cyanotic, weak and injured condition and
had to be incubated and resuscitated by Drs. Enriquez and Payumo. Corazons blood
pressure dropped, she had continuous vaginal bleeding, was administered hemacel
and undergone immediate hysterectomy. Eventually, she died at 9:15 a.m. with
hemorrhage, post partum.Hence, a complaint for damages was filed. For failure to
answer, trial ensued. CA upheld the trial courts ruling.
Issue: Whether or not CMC is vicariously liable for the negligence of Dr. Estrada
under Art.2180 in relation to Art. 2176 of the Civil Code.
Ruling: Under the control test, an employer-employee relationship between
hospitals and their attending and visiting physicians must exist in allocating
responsibility in medical negligence cases. The Court finds no single evidence
pointing to CMC's exercise of control over Dr.Estrada's treatment and management
of Corazon's condition. It is undisputed that throughout Corazon's pregnancy, she
was under the exclusive prenatal care of Dr. Estrada. At the time of Corazon's
admission at CMC and during her delivery, it was Dr. Estrada, assisted by
Dr.Villaflor, who attended to Corazon. There was no showing that CMC had a part in
diagnosing Corazon's condition. While Dr. Estrada enjoyed staff privileges at CMC,
such fact alone did notmake him an employee of CMC. CMC merely allowed Dr.
Estrada to use its facilities when Corazon was about to give birth, which
CMCconsidered an emergency. Considering thesecircumstances, Dr. Estrada is not
an employeeof CMC, but an independent contractor.In general, a hospital is not
liable for thenegligence of an independent contractor-physician except under the
doctrine of apparentauthority. In the instant case, CMC impliedlyheld out Dr.
Estrada as a member of its medicalstaff. Through CMCs acts, CMC clothed
Dr.Estrada with apparent authority thereby leadingthe Spouses Nogales to believe
that Dr. Estradawas an employee or agent of CMC. CMC cannotnow repudiate such
authority.CMC is liable for damages. Dr. Estrada did notappeal the findings of CA,
rendering him solelyliable for damages.
[Note: *Doctrine of Apparent Authority : a hospital can be held vicariously liable for
thenegligent acts of a physician providing care atthe hospital, regardless of whether
the physicianis an independent contractor, unless the patientknows, or should have
known, that the physicianis an independent contractor. The elements of the action
have been set out as follows:"For a hospital to be liable under the doctrine of
apparent authority, a plaintiff must show that:(1) the hospital, or its agent, acted in
a mannerthat would lead a reasonable person to concludethat the individual who
was alleged to benegligent was an employee or agent of thehospital; (2) where the
acts of the agent createthe appearance of authority, the plaintiff mustalso prove
that the hospital had knowledge of and acquiesced in them; and (3) the plaintiff
acted in reliance upon the conduct of thehospital or its agent, consistent with
ordinarycare and prudence."The element of "holding out" on the part of thehospital
does not require an expressrepresentation by the hospital that the personalleged to
be negligent is an employee. Rather,the element is satisfied if the hospital holds
itself out as a provider of emergency room carewithout informing the patient that
the care isprovided by independent contractors.The element of justifiable reliance

on the part of the plaintiff is satisfied if the plaintiff relies uponthe hospital to
provide complete emergencyroom care, rather than upon a specificphysician.

TROPICAL HUT EMPLOYEES UNION-CGW vs. TROPICAL HUT FOOD MARKET, INC.
FACTS: January 2, 1968, the rank and file workers of the Tropical Hut Food Market
Incorporated, referred to herein as respondent company, organized a local union called the
Tropical Hut Employees Union, known for short as the THEU, elected their officers, adopted
their constitution and by-laws and immediately sought affiliation with the National
Association of Trade Unions (NATU). On January 3, 1968, the NATU accepted the THEU
application for affiliation. Following such affiliation with NATU, Registration Certificate No.
5544-IP was issued by the Department of Labor in the name of the Tropical Hut Employees
Union NATU. It appears, however, that NATU itself as a labor federation, was not
registered with the Department of Labor.
Collective Bargaining Agreement was concluded between the parties on April 1, 1968, the
term of which expired on March 31, 1971.
Sec. 1. The COMPANY recognizes the UNION as the sole and exclusive collective
bargaining agent for all its workers and employees in all matters concerning wages, hours of
work, and other terms and conditions of employment.
Sec. 1 . . . Employees who are already members of the UNION at the time of the signing
of this Agreement or who become so thereafter shall be required to maintain their
membership therein as a conditionof continued employment. xxx
Sec. 3Any employee who is expelled from the UNION for joining another federation or
forming another union, or who fails or refuses to maintain his membership therein as
required, . . . shall, upon written request of the UNION be discharged by the COMPANY.
May 21, 1971, respondent company and THEU-NATU entered into a new Collective
Bargaining Agreement which ended on March 31, 1974. This new CBA incorporated the
previous union-shop security clause and the attached checkoff authorization form.
NATU received a letter dated December 15, 1973, jointly signed by the incumbent officers of
the local union informing the NATU that THEU was disaffiliating from the NATU federation.
Secretary of the THEU, Nemesio Barro, made an announcement in an open letter to the
general membership of the THEU, concerning the latters disaffiliation from the NATU and its

affiliation with the Confederation of General Workers (CGW). The letter was passed around
among the members of the THEU-NATU, to which around one hundred and thirtyseven
(137) signatures appeared as having given their consent to and acknowledgment of the
decision to disaffiliate the THEU from the NATU.
so-called THEU-CGW held its annual election of officers, with Jose Encinas elected as
President. On January 3, 1974, Encinas, in his capacity as THEU-CGW President, informed
the respondent company of the result of the elections. On January 9, 1974, Pacifico Rosal,
President of the Confederation of General Workers (CGW), wrote a letter in behalf of
complainant THEU-CGWto the respondent company demanding the remittance of the union
dues collected by the Tropical Hut Food Mart, Incorporated to the THEU-CGW, but this was
refused by the respondent company.
request made by the NATU federation to the respondent company to dismiss him (Encinas)
in view of his violation of Section 3 of Article III of the Collective Bargaining Agreement.
request of NATU, respondent company applied for clearance with the Secretary of Labor to
dismiss the other officers and members of THEU-CGW. The company also suspended them
effective that day. NLRC Case No. LR-2521 was filed by THEU-CGW and individual
complainants against private respondents for unfair labor practices.
acting as temporary chairman, presided over the election of officers of the remaining THEUNATU in an emergency meeting pending the holding of a special election to be called at a
later date.
THEU-CGW asked the employees to affirm their membership. Some did not abidenso
theybwere informed that they will be dismissed under the CBA.
President/General Manager of respondent company, upon Dilags request, suspended
twenty four (24) workers on March 5, 1974,another thirty seven (37) on March 8, 1974 and
two (2) more on March 11, 1974, pending approval by the Secretary of Labor of the
application for their dismissal.
Labor Arbiter, Arbitrator Daniel Lucas issued an orderdated March 21, 1974, holding that the
issues raised by the parties became moot and academic with the issuance of NLRC Order
dated February 25, 1974 in NLRC Case No. LR-2670, which directed the holding of a
certification election among the rank and file workers of the respondent company between

the THEU-NATU and THEUCGW. He also ordered: a) the reinstatement of all complainants;
b) for the respondent company to cease and desist from committing further acts of
dismissals without previous order from the NLRC and for the complainant Tropical Hut
Employees UNION-CGW to file representation cases on a case to case basis during the
freedom period provided for by the existing CBA between the parties.
NLRC reversed the decision. Secretary of Labor rendered a decision affirming the findings
of the Commission.
ISSUE: 1) whether or not the petitioners failed to exhaust administrative remedies when
they immediately elevated the case to this Court without an appeal having been made to the
Office of the President; 2) whether or not the disaffiliation of the local union from the national
federation was valid; and 3) whether or not the dismissal of petitioner employees resulting
from their unions disaffiliation for the mother federation was illegal and constituted unfair
labor practice on the part of respondent company and federation
RULING: 1) remedy of appeal from the Secretary of Labor to the Office of the President is
not a mandatory requirement before resort to courts can be had, but an optional relief
provided by law to parties seeking expeditious disposition of their labor disputes. Failure to
avail of such relief shall not in any way served as an impediment to judicial intervention. And
where the issue is lack of power or arbitrary or improvident exercise thereof, decisions of the
Secretary of Labor may be questioned in acertiorariproceeding without prior appeal to the
President.
2) local union, being a separate and voluntary association, is free to serve the interest of all
its members including the freedom to disaffiliate when circumstances warrant. This right is
consistent with the constitutional guarantee of freedom of association. All employees enjoy
the right to self organization and to form and join labor organizations of their own choosing
for the purpose of collective bargaining and to engage in concerted activities for their mutual
aid or protection. This is a fundamental right of labor that derives its existence from the
Constitution.
The inclusion of the word NATU after the name of the local union THEU in the registration
with the Department of Labor is merely to stress that the THEU is NATUs affiliate at the
time of the registration. It does not mean that the said local union cannot stand on its own.
Neither can it be interpreted to mean that it cannot pursue its own interests independently of
the federation. A local union owes its creation and continued existence to the will of its

members and not to the federation to which it belongs. When the local union withdrew from
the old federation to join a new federation, it was merely exercising its primary right to labor
organization for the effective enhancement and protection of common interests. In the
absence of enforceable provisions in the federations constitution preventing disaffiliation of
a local union a local may sever its relationship with its parent. Nothing in the constitution and
by laws of THEU NATU, prohibits the disaffiliation from NATU. Besides NATU is not even
recognized as a national federation.
3) When the THEU disaffiliated from its mother federation, the former did not lose its legal
personality as the bargaining union under the CBA. Moreover, the union security clause
embodied in the agreements cannot be used to justify thedismissals meted to petitioners
since it is not applicable to the circumstances obtaining in this case. The CBA imposes
dismissal only in case an employee is expelled from the union for joining another federation
or for forming another union or who fails or refuses to maintain membership therein. The
case at bar does not involve the withdrawal of merely some employees from the union but of
the whole THEU itself from its federation. Clearly, since there is no violation of the union
security provision in theCBA, there was no sufficient ground to terminate the employment of
petitioners.

SAN MIGUEL CORPORATION, petitioner,

vs.
REYNALDO R. UBALDO and EMMANUEL NOEL A. CRUZ, in their capacities as Chairman and
Member, respectively, of the Voluntary Arbitration Panel, MESSRS. FERNANDO CODILLO,
GERARDO CARDENO, RENATO L. SAGARIO, RAMON P. GUARINO AND ILAW AT BUKLOD
NG MGA MANGGAGAWA (IBM),respondents.
Angara Abello, Concepcion, Regala & Cruz for petitioner
E.N.A. Cruz & Associates for respodent Noel A. Cruz.

CAMPOS, JR., J.:

To what extent may the scales of justice be tilted in favor of labor? This is the question that is to be
resolved in this petition.
This Petition for Certiorari assails as tainted with grave abuse of discretion the Award of the
Voluntary Arbitration Panel, dated March 9, 1990, which ordered the reinstatement of private
respondents Fernando Codillo, Gerardo S. Cardeno, Renato L. Sagario and Ramon P. Guarino to
their former positions without loss of seniority rights and with financial assistance equivalent to three
(3) months pay.
Private respondents were regular daily-paid workers of petitioner San Miguel Corporation (SMC, for
brevity) as "Finished Goods Palletizers" at its
B-Meg Feeds Plant, Balintawak, Quezon City. Their duties included, but were not limited to,
removing feed sacks from the moving conveyor and piling the feed sacks on pallets which were
subsequently transported by forklifts. As found by the Arbitration Panel , it has been the usual
practice of the SMC to assign six (6) "Finished Goods Palletizers" so that they can take turns in
resting while the manual labor continues until the completion of a cycle.
The SMC subsequently reduced the palletizers from six (6) to four (4). The remaining four are the
herein private respondents, who allege that said manpower reduction resulted in heavier workload
and less-than-adequate rest periods.
Consequently, private respondents, through their Union, the Ilaw at Buklod ng mga Manggagawa
(IBM, for brevity), on July 13, 1987, filed a grievance protest against Messrs. Manuel Querol, Head
of Logistics Department and Leodegario David, Personnel Manager, for unfair labor practice,
Collective Bargaining Agreement (CBA for brevity) violation, and non-payment of overtime pay,
among others.
At the grievance meeting, the IBM requested that the usual complement of six palletizers be
restored. The SMC then promised that it would review the manning standard and other relevant
considerations arising therefrom.
Eight months passed, still the SMC did nothing to alleviate private respondents' condition, with the
exception only of payment of their overtime claims, which, however was only settled on September

30, 1988, four months after their dismissal. Moreover, the normal complement of six (6) was not
restored.
It was this inaction by the SMC, according to private respondents, which resulted in the improper
piling of feed sacks, slowdown of work and private respondents' "signing-off" fifteen (15) to twenty
(20) minutes before time-off, the latter having started on February 22, 1988.
The SMC maintains that the estimated damages to the company because of private respondents'
inefficiency, amounted to well over P190,000.00. This figure was based on the breakages and
wastage of feeds, additional manpower requirements prompted by the need to hire casuals to pick
up the mess intentionally made by private respondents, and other expenses in connection with the
repacking of the feeds.
The SMC stated in its petition that despite the verbal warnings made by their immediate supervisor,
Mr. Dante M. Aguinaldo, private respondents continued committing said violations. Not only did they
fail to heed these warnings, they also ignored the notices sent by the company giving them the
opportunity to explain why they should not be disciplinarily dealt with.
On March 16, 1988, notices of investigation were immediately given to private respondents with their
corresponding schedules for investigation. However, they all failed to appear.
Despite said failure, they were afforded another schedule on March 23, 1988, still they were absent.
On a third chance given them on April 4, 1988, only their Union representatives were present and on
behalf of private respondents, they asked for a resetting.
Thus, on April 18, 1988, private respondents, together with their Union representatives, finally
appeared before the Investigation Committee. The Union raised the following technicalities:
i) improper service of notices to explain/notices of investigation;
ii) prescription of the company's right to investigate; and
iii) lack of job description.
These were, however, found by the Investigation Committee to be without valid basis.
The investigation was then reset to May 2, 1988. It was only the Union that was present. Three
witnesses testified, to wit:
i) Mr. Aguinaldo, the warehouse (immediate) supervisor of the private respondents,
testified that he witnessed the commission of all of the offenses charged against
them, which according to him, was intentionally committed by the same.
ii) Mr. Querol, the warehouse superintendent, testified that he received reports of the
private respondents' offenses from Mr. Aguinaldo, which consequently would cause
the petitioner P190,000.00 as damages.

iii) Mr. Arenque, the security investigator of the petitioner, testified that he witnessed
the improper piling and slowdown committed by private respondents and the nature
of damages resulting therefrom.
Private respondents failed to controvert the evidences presented by the SMC and categorically
refused to present and explain their side.
On May 9, 1988, the SMC evaluated the private respondents' respective cases and decided to
dismiss them based on the evidence on record. This prompted the IBM to file a grievance protest
against management in accordance with the CBA.
Inasmuch as no settlement was reached regarding the issue of dismissal, the IBM, for and in behalf
of private respondents, brought the case for voluntary arbitration. Composing the panel were public
respondents Reynaldo R. Ubaldo from the Department of Labor and Employment, public respondent
Emmanuel Noel A. Cruz from the private respondent IBM's side, and Atty. Emiterio C. Manibog, Jr.
from the petitioner's side.
The parties were required to submit their respective position papers, since the initial conferences
before the panel did not result in any settlement.
In due time, the panel issued an Award, dated March 9, 1990, the dispositive portion of which reads:
WHEREFORE, premises considered and as above qualified, the Management of BMeg Plant. San Miguel Corporation is hereby directed to reinstate FERNANDO L.
CODILLO, RENATO L. SAGARIO, GERARDO S. CARDENO and RAMON P.
GUARINO to their former positions without loss of seniority rights and with financial
assistance equivalent to three (3) months pay. Their absence from work between 28
May 1988 to 9 March 1990 is to be treated as suspension.
All other claims of the Union and the charge of unfair labor practice are hereby
dismissed for lack of merit.
SO ORDERED. 1
Atty. Emiterio C. Manibog, Jr. dissented from the opinion of the public respondents, insofar as the
reinstatement of the private respondents is concerned. He is of the view that because of the finding
that the employees committed acts constituting just cause for dismissal, they may not be reinstated
but may only be granted separation pay if the grounds for dismissal are those other than serious
misconduct or those reflecting on the employees' moral character. 2
Hence, this petition questioning the above-cited Award.
Petitioner would have Us nullify the Award rendered by the Arbitration Panel on the ground of grave
abuse of discretion, amounting to lack of jurisdiction.
We agree with petitioner. The Award cannot be justified because the dismissals were just and valid.
Regulation of manpower by the company clearly falls within management prerogative. In a number
of cases, this Court had defined a valid exercise of management prerogative as encompassing

hiring, work assignments, working methods, time, place and manner of work, tools to be used,
processes to be followed, supervision of workers, working regulations, transfer of employees, work
supervision, lay-off of workers, and the discipline, dismissal and recall of workers. Except as
provided for, or limited by, special laws, an employer is free to regulate, according to his own
discretion and judgment, all aspects of employment. 3
Private respondents would however make Us believe that there was an illegal dismissal in the case
at bar. They contend that the violations were committed because of petitioner's failure to provide a
timely, reasonable and immediate solution to the problem of personnel complement.
Quoting the words of this Court in a recent case:
To sanction disregard or disobedience by employees of a rule or order laid down by
management, on the pleaded theory that the rule or order is unreasonable, illegal, or
otherwise irregular for one reason or another, would be disastrous to the discipline
and order that it is in the interest of both employer and his employees to preserve
and maintain in the working establishment and without which no meaningful
operation and progress is possible. Deliberate disregard or disobedience of rules,
defiance of management authority cannot be countenanced. This is not to say that
the employees have no remedy against rules or orders they regard as unjust or
illegal. They may object thereto, ask to negotiate thereon, bring proceedings for
redress against the employer before the Ministry of Labor. But until and unless the
rules or orders are declared to be illegal or improper by competent authority, the
employees ignore or disobey them at their peril. 4
With a view of maintaining the viability of a business enterprise, the employees are expected to
recognize the rules or orders which have not been declared to be illegal or improper by competent
authority. In the case at bar, the private respondents committed acts contrary to the rules and
regulations set out by the company, which eventually caused serious damage to the establishment.
It is a recognized principle that company policies and regulations are, unless shown to be grossly
oppressive or contrary to law, generally binding and valid on the parties and must be complied with
until finally revised or amended unilaterally or preferably through negotiation or by competent
authority. 5
Private respondents, relying heavily on the case of Manila Electric Company vs. NLRC, 6 assert that
the preservation of the lives of the citizens is a basic duty of the State, more vital than the preservation of
corporate profits.
How far then should this Court's liberality towards labor be stretched?
While it is true that what is at stake here is not only private respondents' positions but also their
means of livelihood, this Court gives equal importance to the plight of an entrepreneur whose main
objective is to generate profits. In the process, he may adopt or even devise means designed toward
that purpose. In Abbott Laboratories (Phils.) Inc. vs. NLRC, 7 the Court had stated, to wit:
. . . Even as the law is solicitous of the welfare of the employees, it must also protect
the right of an employer to exercise what are clearly management prerogatives. The

free will of management to conduct its own business affairs to achieve its purpose
cannot denied.
Moreover, time and again, this Court has upheld a company's management prerogatives so long as
they are exercised in good faith for the advancement of the employer's interest and not for the
purpose of defeating or circumventing the rights of the employees under special laws or under valid
agreements. 8
Deliberate disregard or disobedience of rules by the employees cannot be countenanced. Whatever
maybe the justification behind the violations is immaterial at this point, because the fact still remains
that an infraction of the company rules has been committed.
Under the Labor Code, the employer may terminate an employment on the ground of serious
misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work. 9Infractions of company rules and regulations have been
declared to belong to this category and thus are valid causes for termination of employment by the
employer. 10
Willful disobedience of the employer's lawful orders, as a just cause for the dismissal of an
employee, envisages the concurrence of at least two requisites: (1) the employee's assailed conduct
must have been willful or intentional, the willfulness being characterized by a "wrongful and perverse
attitude"; (2) the order violated must have been reasonable, lawful, made known to the employee
and must pertain to the duties which he had been engaged to discharge. 11 Both requisites are present
in the instant case.
The employer cannot be compelled to continue the employment of a person who was found guilty of
maliciously committing acts which are detrimental to his interests. It will be highly prejudicial to the
interests of the employer to impose on him the charges that warranted his dismissal from
employment. Indeed, it will demoralize the rank and file if the undeserving, if not undesirable, remain
in the service. It may encourage him to do even worse and will render a mockery of the rules of
discipline that employees are required to observe. 12 This Court was more emphatic in holding that in
protecting the rights of the laborer, it cannot authorize the oppression or self-destruction of the
employer. 13 Therefore, the Award, with respect to the order of reinstatement of herein private
respondents, is not proper.
In reference to the financial assistance, the same should not have been awarded. The employer may
not be required to give the dismissed employee separation pay, or financial assistance, or whatever
name it is called, on the ground of social justice where the employee is validly dismissed for serious
misconduct. 14
WHEREFORE, the petition is hereby GRANTED. The questioned decision of the Voluntary
Arbitration Panel is SET ASIDE. The private respondents are hereby held to have been validly
dismissed for serious misconduct.
SO ORDERED.
G.R. No. L-71504 December 17, 1993

ENIEDA MONTILLA, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, JESSIE BAYDO, DANILO GREGAS AND JOSE
MIRANDA,respondents.
Rogelio M. Necesario for petitioner.
Manuel O. Cardinal, Jr. for private respondents.

NOCON, J.:
This is a petition for review on certiorari to annul and set aside the Resolution of the public
respondent National Labor Relations Commission (NLRC) of Manila 1 promulgated on March 1, 1984
which affirmed the Order dated April 5, 1982 of the Labor Arbiter Jose Ma. V. Valencia.
It appears on record that private respondents Jessie Baydo, Jose Miranda and Danilo Gregas were
employed as waiters on April 7, 1978, April 17, 1978 and October 1, 1978, respectively, by petitioner
Enieda Montilla who was the owner of a restaurant named "Sa Kabukiran Restaurant" located at
Libertad Extension, Bacolod City until their dismissal on February 23, 1981.
Prior to their dismissal or on February 12, 1981, private respondents filed a complaint against
petitioner with the Ministry of Labor and Employment of Bacolod City in LRD Case No. 81-8139-81
for non-payment of living allowances, 13th month pay, incentive leave pay, holiday pay, rest-day pay
and underpayment of wages which was subsequently amended in a Complaint 2 dated February 25,
1981 to include the charge of illegal dismissal against the petitioner.
On the other hand petitioner maintained her Answer:
2. . . . that complainants (herein private respondents) were never employees of
respondent Enieda Montilla (herein petitioner) and if they had worked in the Sa
Kabukiran Restaurant, they were merely on commission basis, their compensation
were dependent on whatever sales made which includes all amounts pertaining to
their allowances and more or less they served only one (1) hour per service to
customers during lunch time or diner in the evening;
xxx xxx xxx
4. That the respondent (herein petitioner) did not have any employer-employee
relationship with the complainants (herein private respondents) because they are
actually helping the regular waiters therein from which they share their commission
and which is not coming from the funds of the respondent Enieda Montilla (herein
petitioner) who is not connected with the said restaurant and being so they were
asked to leave the premises without the necessary clearance from the Ministry of
Labor and Employment for lack of employer-employee relationship. 3

Thereafter, the Assistant Regional Director of the Ministry of Labor and Employment endorsed this
case to the Regional Arbitration Branch No. VI of Bacolod City in A.B. Case No. A-384-81 and after
hearing, issued an Order on April 5, 1982, the dispositive portion of which reads as follows:
WHEREFORE, premises considered, judgment is hereby rendered for respondent
(herein petitioner) to pay the amounts due complainants (herein private respondents)
for underpayment of wages, non-payment of cost of living allowances, 13th month
pay, incentive leave pay, holiday pay and rest day pay in the total sum of P11,362.00
for Jessie Baydo, P3,422.50 for Danilo Gregas and P8,051.70 for Jose Miranda.
Respondents (herein petitioner) are further directed to reinstate complainants (herein
private respondents) to their former positions without loss of seniority rights and with
full backwages beginning February 24, 1981 up to the date of actual reinstatement.
The complaint for unfair labor practice is dismissed for lack of merit. 4
On April 23, 1982, petitioner appealed to public respondent NLRC which affirmed said decision in a
Resolution 5dated March 1, 1984.
On April 17, 1984, petitioner filed a Motion for Reconsideration which was denied in a
Resolution 6 dated March 28, 1985.
Thereafter, private respondents waived their respective claims on the outcome of this case as
evidenced by their affidavits 7 in which they received the following amounts of money as part of their outof-court settlement:
Jessie Baydo: P9,000.00 December 19, 1985 8
Jose Miranda: P4,000.00 November 29, 1985 9
Danilo Gregas: P3,500.00 November 30, 1985 10
On August 21, 1989, the First Division of this Court issued a
Resolution 11 requiring the parties to manifest whether they are still interested in prosecuting the case.
On October 16, 1989, private respondents' counsel manifested that he is still interested in the early
resolution of this case without which his Motion to enforce the attorney's lien dated December 28,
1985 would be without basis and that private respondents were only forced to accept the amounts
offered by the petitioner due to the delay in the resolution of this case since they could no longer
endure and sustain a long litigation.
Hence, this petition alleging grave abuse of discretion on the part of the public respondent NLRC in
finding that private respondents are employees of the petitioner considering that she is only a lessor
of "Sa Kabukiran Restaurant" since said restaurant was leased to Eddie Daguinotan from April,
1978, to November, 1978; to Elaine Asejo from January, 1979 to December 1979; to Gilda Montilla
from the middle of January, 1980 to July, 1980; and to Alice Araneta from February, 1981 up to the
time when this case was set for hearing.
We do not agree with petitioner's allegations.

It is well-settled that in determining the existence of an employer-employee relationship, the

elements that are generally considered are the following: (a) the manner of selection and
engagement of the putative employee; (b) the mode of payment of wages; (c) the presence or
absence of the power of dismissal; and (d) the presence or absence of power to control the putative
employee's conduct. 12
This Court had generally relied on the so-called right-of-control test where the person for whom the
services are performed reserves a right to control not only the end achieved but also the means to
be used in reaching such end. 13 In the case at bar, petitioner's contention that private respondents are
not her employees since she was merely a lessor of the restaurant and had acted only in a representative
capacity for her different lessees is not meritorious. As held by the Labor Arbiter in its Order:
A similar conclusion could also be made as regards the testimonies given by Eddie
Daguinotan and Alice Araneta, both alleged to be lessees of the property during the
period covered by the complaint. There is no dispute that both had been employees
of respondent Enieda Montilla (herein petitioner). Relative to their declarations, it
would not be amiss to state that the same were made in more deference to the
wishes of respondent Enieda Montilla, their employer. The fact is that Alice Araneta,
for instance, is still an employee of Sa Kabukiran Restaurant. It would be more
logical to believe, instead, the testimonies made by Jose Javelosa, respondent's
(petitioner's) former promoter and PRO manager, no longer having any connection at
all with any of the litigants. He consistently averred that Eddie Daguinotan was hired
as a cook of Sa Kabukiran Restaurant and was, in fact, under his supervision at the
said restaurant. The various documents shown by respondent (Exhibits "1", "1-A", "1B" and "2") are not absolute proof of ownership. Precisely, the same are contested by
complainants (herein private respondent) as the same are alleged to be a scheme
adopted by respondent Enieda Montilla (herein petitioner) to evade her
responsibilities under the law. Exhibit "C" for the complainants (herein private
respondents), [which is a] Pacific banking Corporation Interbank/Master Charge
Merchant Agreement, acknowledged before a notary public on March 21, 1979 is
very material to the issue. It shows respondent Enieda Montilla (herein petitioner)
signing the agreement as authorized representative of Sa Kabukiran Restaurant.
How can she now claim to have nothing to do with the restaurant's operation except
as lessor thereof? 14
Moreover, private respondents' testimonies that Gilda Montilla, proprietor/manager of Sa Kabukiran
Restaurant, paid their Social Security System premium contributions adds strength to the conclusion
that the latter are considered employees of the restaurant. Indeed, private respondents are
employees of petitioner's restaurant.
However, the fact that private respondents entered into a compromise agreement in connection with
the complaints they filed against petitioner and executed affidavits of waiver in full settlement of the
judgment in the NLRC case, amounts to a valid and binding compromise agreement. As we held
in Periquet vs. NLRC: 15
Not all waivers and quitclaims are invalid as against public policy. If the agreement
was voluntarily entered into and represents a reasonable settlement, it is binding on
the parties and may not later be disowned simply because of a change of mind. It is
only where there is clear proof that the waiver was wangled from an unsuspecting or

gullible person, or the terms of settlement are unconscionable on its face, that the
law will step in to annul the questionable transaction. But where it is shown that the
person making the waiver did so voluntarily, with full understanding of what he was
doing, and the consideration for the quitclaim is credible and reasonable, the
transaction must be recognized as a valid and binding undertaking. As in this case.
With respect to the Motion filed by the private respondents' counsel praying that the Court order
petitioner to pay 10% of the total award granted to the private respondents as his attorney's lien
under the authority of Rule VIII, Section 11 of the Omnibus Rules Implementing the Labor Code, we
hold that no such attorney's lien could be enforced.
A charging lien to be enforceable as security for the payment of attorney's fees requires as a
condition sine qua non a judgment for money and execution in pursuance of such judgment. A
lawyer may enforce his right to fees by filing the necessary petition as an incident in the main action
in which his services were rendered when something is due his client in the action from which the
fee is to be paid. 16
The attorney's lien can be enforced in the same action if his client is awarded a certain sum by the
Court. Only in cases where no amount is awarded to his client will the filing of an appropriate action
be necessary. 17
Accordingly, counsel for private respondents can still collect his legal fees by filing an appropriate
action for collection against his clients.
WHEREFORE, the petition for certiorari is hereby DENIED and the Resolution dated March 1, 1984
of respondent NLRC cannot anymore be enforced in view of the valid compromise agreement
entered into between herein petitioner and private respondent.
SO ORDERED.