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Case List

Labor Relations Case Digest - Atty. Joyrich Golangco

Test to Determine ER-EE Relationship


1. Francisco v. NLRC
2. Sonza v. ABS CBN
3. Javier v. Flyace Corp
4. SMCEU v. Judge Bersamira
5. Locsin et al v. PLDT
6. People Broadcasting Service v. Secretary of Labor
7. Ymbong v. ABS CBN
8. Professional Services v. CA
9. South East International Rattan Inc v. Coming
10. Tenazas et al. v. Villegas
Article 212

23. Atlas Farms Inc v. NLRC


24. Perpetual Help Credit Cooperative Inc. v. Fuburada
25. Austria v. NLRC
26. DFA v. NLRC
27. PNB v. Cabansag
28. Banez v. Valdevilla
29. Santos v. Servier Philippines Inc
30. Pepsi Cola Distributors Phils v. Galang
31. 7K Corp v. Albanco

Article 218
32. Landbank of the Phil. V. Listana
33. Meralco v. Gala
Article 221

11. Citibank v. CA
12. PAL v. NLRC

34. Nationwide Security and Allied Services v. CA


35. Diamond Taxi v. Llmas
36. Islriz Trading v. Capade et al

Managerial Employee
13. Penarada v. Bagang Plywood Corp
14. SMCC v. Charter Chemical and Coating Corp
15. Jumuad v. Hi-Flyer Food Inc
Article 217
16. Ex-Bataan Veterans Security Agency v. Sec Laguesma
17. Locsin v. Nissan Leases Philippines
18. Reyes v. RTC Makati
19. Okol v. Slimmers World
20. Rural Bank of Coron v. Cortes
21. Halguena v. PAL
22. Santiago v. CF Sharp Crew Management

Article 223
37. Garcia et al v. KJ Commercial
38. Ong v. CA
39. Rosewood Processing Inc v. NLRC
40. Filipinas System Inc. (FSFI) v. NLRC
41. Buenaobra v. Lim King Guan
42. Lepanto Consolidated Mining Corp v. Icao
43. Bergonio v. SEAIR
44. Loon v. Power Master
45. Mcburnie v. Ganzon

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Labor Relations Case Digest - Atty. Joyrich Golangco

Reinstatement Aspect of LAs Decision

46. Pioneer Texturing Corporation v. NLRC


47. Roquero v. PAL
48. Air Phil Corp v. Zamora
49. Lansangan v. Amkor Technology Philippines
50. Genuino v. NLRC
51. Garcia et al v. PAL
52. Mt. Carmel College v. Resuena
53. Buenviaje v. CA
54. Pfizer Inc v. Velasco
55. Wenphil Corp v. Abing

Article 234 amended by RA 9481


66. Mariwasa Siam Ceramics Inc v. Sec of Labor
67. Electromat Manufacturing and Recording Corporation v.
Lagunzad
68. Eagle Ridge Golf and Country Club v. CA

Certificate of Registration of Labor Organization


69. Tagaytay Highlands International Golf Club Inc. v. Tagaytay
Highlands Employees Union PGTWO
70. SS Ventures International Inc v. SS ventures Labor Union
Article 238-239

Article 224
56. Sy et al. v. Fairland Knitcraft Co.
57. Yupangco Cotton mills v. CA
58. Ando v. Campo
Article 226
59. Employees Union of Bayer Phils v. Bayer Phils
60. Montano v. Verceles
61. Diokno et al v. Cacdac
Article 227

71. Heritage Hotel Manila v. NUWHRAIN-HHMSC


72. Republic of the Phils v. Kawashima Textile Manufacturing
Article 241
73. Del Pilar Academy et al v. Del Pilar Academys Employee Union
74. Edgardo Marino Jr. et al v. Gamilia
Article 242
75. Abaria v. NLRC
Nature of CBA

62. Magbuana v. UY
63. Solomon et al. v. Powertech Corp
64. Philippine Journalist Inc v. NLRC

76. Weslayan University Phils v. Weslayan University Philippines


faculty and Staff Association
Article 245

Article 232
65. Colegio de San Juan de Letran v. Association of Employees
and Faculty of Letran et al

77. Cathay Pacific Steel Corp v. CA


78. Chris Garments v. Sto Tomas

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Article 247-249

Labor Relations Case Digest - Atty. Joyrich Golangco


Article 255

79. General Santos Coca cola Plant Free Workers Union Tupas v.
Coca-cola Bottlers Phil Inc
80. UST Faculty Union v. UST
81. Phil Skylander Inc. v. NLRC
82. Tropical Hut Employee Union v. Tropical Hut Food Market Inc
83. Purefoods Corp v. Nagkakaisang Samahang Manggawa ng
Purefoods Rank and File
84. De la sale University v. DLSUEA-NAFTEU
85. MSMG_UWP v. UWP
86. Alabang Country Club v. NLRC
87. Standard Chartered Bank Employees Union v. Confesor
88. GMC v. CA
89. Hacienda Fatima v. NFSW Food and General Trade
90. St. John Colleges Inc v. St. John Academy Faculty and
Employees Union
91. Central Azucarera De Bias Employees Union NFL v. Central
Azucarera De Bias Inc
92. UFE-DFA-KMU v. Nestle Phil
93. Malayang Mangagawa ng Stayfast v. NLRC
94. Holy Child Catholic School v. Sec of labor
Article 252
95. Kiok Loy v. NLRC
96. PAL v. Calleya
Article 253-A
97. FVC Labor Union-Phil Transport and General Workers
Association v. SANAMA-FVC-SIGLO
98. SMCEU-PTGWO v. Confesor

99. International School Alliance of Educators v. Quisumbing


100. National Association of Free Trade Unions v. Mainit Lumber
Development Company Workers Union
Article 256
101. Picop Resources Inc v. Dequilla et al
102. National Union of Workers in Hotel, Restaurants and Allied
Industries-Manila Pavillon Chapter v. Sec of Labor
Article 260-261
103. Santuyo et al v. Ramerco Garmets Manufacturing Inc
104. Teng v. Pahagac
105. Samahan ng Mangagawa ng Hyatt (SAMASAH-NUWHRAIN)
v. Magsalin
Article 263-264
106. YSS Employees Union v. YSS Laboratories Inc
107. NUWHRAIN-APL-IUL Dusit Hotel Nikko Chapter v. CA
108. Jackbuilt Industries Inc., v. Jackbilt Employees Workers
Union-NAFLU-KMU
109. Airline Pilots Association of the Philippines v. PAL
110. Olisa et al v. Escario
111. Tabangao Shell Refinery Employees Association v. Pilipinas
Shell
112. Asia Brewery Inc v. TPMA
113. Escario et al v. NLRC
114. University of San Agustin Employees Union v. CA
115. Phil Diamond Hotel and Resort Inc v. Manila Diamond Hotel
Employees Union

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Labor Relations Case Digest - Atty. Joyrich Golangco

116. Sukhothai Cuisine and Restaurant v. CA


117. Biflex Phil Inc labor Union v. Filflex Industrial Manufacturing
Corporation
118. Sta Rosa Coca-cola Plant Employee Union v. Coca-Cola
Bottlers Phil Inc
119. Manila Hotel Employee Association v. Manila Hotel
Corporation
120. G&S Transport Corporation v. Infante
121. Steel Corporation of the Phils v. SCP employees Union
National Federation of Labor Unions
Article 277(b)
122. St. Lukes Medical Center Inc. v. Notario
123. Aliling v. World Express Corp
124. Perez v. PT&T
Article 279
125.
126.
127.
128.
129.
130.
131.
132.
133.
134.
135.
136.
137.
138.

Agabon v. NLRC
Jaka food Processing Corp v. Pacot
Culili v. Eastern Telecommunications Phils
Serrano v. Gallant Maritime
Yap v. Thenamaris Ship Management
Bank of Lucbao v. Manabat
St. Marys Academy v. Palacio et al
Toyota Motors Phils Corp Workers Association v. NLRC
Bristol Myers Squibb Inc v. Haban
Yrasuegui v. PAL
Dreamland Hotel Resort v. Johnson
Manila Water v. Del Rosario
Nacar v. Gallery Frames
Bani Rural Bank Inc v. De Guzman

139.
140.
141.
142.
143.

Universal Robina Corp v. Castillo


Baptista v. Villanueva
BPI employees Union Davao City v. BPI
Integrated Microelectronics v. Pionelles
Golden Ace Builders v. Talde

Article 280
144.
145.
146.
147.
148.
149.
150.
151.
152.
153.
154.
155.
156.
157.
158.
159.
160.

Lynvil Fishing Enterprises Inc v. Ariola


Consolidated Broadcasting Systems Inc v. Oberio
Orozco v. CA
William Uy Construction Corp v. Trinidad
DM Consunji Inc v. Jamin
Aro et al v. NLRC
Universal Robina Sugar Milling Corp v. Acibo et al
GMA Network Inc v. Pabriga
Pasos v. PNCC
Gapayao v. Fulo
Millennium Erectors Corp v. Magallanes
Caparoso et al v. CA
Sps Lim v. Legaspi Hope Christian School et al
DM Consunji v. Gobres et al
Mercado et al v. Ama Computer College
Brent School v. Zamora
Pure Foods Corporation v. NLRC

Management Prerogative
161. Zuellig Frieght and Cargo System v. NLRC
162. Peckson v. Robinsons Supermarket Corp
163. Gatbaton v. NLRC

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Article 281
164.
165.
166.
167.
168.
169.
170.
171.
172.

Labor Relations Case Digest - Atty. Joyrich Golangco

Tamsons Enterprise Inc. et al v. CA


Hacienda Primera Development Corporation v. Villegas
Universidad De Sta Isabel v. Sambajon
Univac Development v. Soriano
Abbott Laboratories v. Alcaraz
Colegio de Santisimo Rosario v. Rojo
Philippine Daily Inquirer v. Magtibay
Alcira v. NLRC
Mercado v. Ama Computer College

Article 282
173. Concepcion v. Minex Import Corporation
174. Grand Asian Shipping Lines Inc v. Galvez
175. Mirant Phil Corp v. Caro
176. Bluer than Blue Joint Ventures Co v. Esteban
177. Manila Jockey Club v. Trajano
178. Hormillosa v. Coca-cola
179. Chuanico v. Legacy COnsololidated Plans
180. Duncan Association of Detailman-PGTWO v. Glaxo Welcome
Phils
181. Starpaper Corporation et al v. Simbol
182. Ace Promotion and Marketing Corp v. Notario
183. The Coca-Cola Export Corporation v. Gacayan
184. Domingo v. Rayala
185. Phil Aeolus Auto Motive United Corp v. NLRC
186. Pharmacia and Upjohn Inc. v. Albayda Jr.
187. Jerusalem v. Hock et al
188. Reno Foods Inc. v. NLM-Katipunan
189. La rosa et al v. Ambassador Hotel
190. Maribago Resort v. Dual

191.
192.
193.
194.

Centrury Canning Corp v. Ramil


Tongko v. The Manfacturers Life Insurance Co. Inc
School of Holy Spirit of Quezon City v. Taguiam
John Handcock Life Insurance Co. v. Davis

Article 283
195.
196.
197.
198.
199.
200.

SPI Technologies Inc v. Mapua


Arabit v. Jardine Pacific Finance Inc
Phil Carpet Manufacturing Corp v. Tagyamon et al
Sanoh Fulton Phil v. Bernard
Andrada et al v. NLRC
Asufrin v. San Miguel Corporation

Article 284
201. Sy et al v. CA
202. Union Motors v. CA
203. Villaruel v. Yeo Han Guan
Article 285
204.
205.
206.
207.
208.
209.
210.
211.
212.

Malig-on v. Equitable General Servces Inc


Chang Kai Shek College v. Torres
Opilando v. Ravina
Willi Hann Enterprises v. Maghuyop
Skippers United Pacific et al v. Doza
Morales v. Harbour Centre Port Terminal Inc
SHS Perforated Material Inc v. Diaz
San Miguel Properties Phis v. Gucaban
BMG Records Phils Inc v. Aparecio

Article 286
213. SKM Art Craft Corporation v. Bauca

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Labor Relations Case Digest - Atty. Joyrich Golangco

214. Emeritus Security and Maintenance System Inc v. Dailig


215. Nippon Housing Phil Inc. et al v. Leynes
216. Mayon Hotel and Restaurant et al v. Adana et al

234. Fernandez et al v. New Field Staff Solution


Change of Equity Composition of Corporations

Article 287
217.
218.
219.
220.
221.
222.
223.
224.
225.

Corporate Liabilities

Serrano v. Severino Santos Transit


Daaboy v. Coca-Cola
Pinero v. NLRC
Sta Catalina College v. NLRC
Pantranco North Express Inc v. NLRC
R and E Transport v. Latag
Obusan v. PNB
Kimberly Clark Phils v. Dimayuga
Magdadaro v. PNB

235. SME Bank v. Peregrin

Article 291
226.
227.
228.
229.
230.

Serrano v. CA
IBC v. Panganiban
Accessories Specialist v. Albanza
Autobus Transport System v. Bautista
PLDT v. Pingol

Effect of Change of Ownership of Business


231. Panafrancia Tours and Travel Transport v. Sarmiento
Liability of Corporate Officers
232. Carag v. NLRC
Effect of Company Merger on Union Shop Clause
233. BPI v. BPI Employees Union Davao Chapter
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Labor Relations Case Digest - Atty. Joyrich Golangco


1: Francisco v NLRC
FACTS: In 1995, petitioner Angelina Francisco was hired by Kasei Corporation
during its incorporation stage. She was designated as Accountant and Corporate
Secretary and was assigned to handle all the accounting needs of the company.
She was also designated as Liaison Officer to the City of Makati to secure
business permits, construction permits and other licenses for the initial
operation of the company.
Although she was designated as Corporate Secretary, she was not
entrusted with the corporate documents; neither did she attend any board
meeting nor required to do so. She never prepared any legal document and never
represented the company as its Corporate Secretary. However, on some
occasions, she was prevailed upon to sign documentation for the company.
In 1996, petitioner was designated Acting Manager. The corporation also
hired Gerry Nino as accountant in lieu of petitioner. As Acting Manager,
petitioner was assigned to handle recruitment of all employees and perform
management administration functions; represent the company in all dealings
with government agencies, especially with the Bureau of Internal Revenue (BIR),
Social Security System (SSS) and in the city government of Makati; and to
administer all other matters pertaining to the operation of Kasei Restaurant
which is owned and operated by Kasei Corporation.
For five years, petitioner performed the duties of Acting Manager.
As of December 31, 2000 her salary was P27, 500.00 plus P3, 000.00 housing
allowance and a 10% share in the profit of Kasei Corporation.
In January 2001, petitioner was replaced by Liza R. Fuentes as
Manager. Petitioner alleged that she was required to sign a prepared resolution
for her replacement but she was assured that she would still be connected with
Kasei Corporation. Timoteo Acedo, the designated Treasurer, convened a
meeting of all employees of Kasei Corporation and announced that nothing had
changed and that petitioner was still connected with Kasei Corporation as
Technical Assistant to Seiji Kamura and in charge of all BIR matters.
Thereafter, Kasei Corporation reduced her salary by P2, 500.00 a
month beginning January up to September 2001 for a total reduction of
P22, 500.00 as of September 2001. Petitioner was not paid her mid-year
bonus allegedly because the company was not earning well. On October

2001, petitioner did not receive her salary from the company. She made
repeated follow-ups with the company cashier but she was advised that the
company was not earning well.
On October 15, 2001, petitioner asked for her salary from Acedo and the
rest of the officers but she was informed that she is no longer connected with
the company.
Since she was no longer paid her salary, petitioner did not report for work and
filed an action for constructive dismissal before the labor arbiter.

Argument of Private Respondent: Private respondents averred that petitioner


is not an employee of Kasei Corporation. They alleged that petitioner was hired
in 1995 as one of its technical consultants on accounting matters and act
concurrently as Corporate Secretary. As technical consultant, petitioner
performed her work at her own discretion without control and supervision
of Kasei Corporation. Petitioner had no daily time record and she came to the
office any time she wanted. The company never interfered with her work except
that from time to time; the management would ask her opinion on matters
relating to her profession. Petitioner did not go through the usual procedure of
selection of employees, but her services were engaged through a Board
Resolution designating her as technical consultant. The money received by
petitioner from the corporation was her professional fee subject to the 10%
expanded withholding tax on professionals, and that she was not one of those
reported to the BIR or SSS as one of the companys employees.
Petitioners designation as technical consultant depended solely upon
the will of management. As such, her consultancy may be terminated any time
considering that her services were only temporary in nature and dependent on
the needs of the corporation.
To prove that petitioner was not an employee of the corporation, private
respondents submitted a list of employees for the years 1999 and 2000 duly
received by the BIR showing that petitioner was not among the employees
reported to the BIR, as well as a list of payees subject to expanded withholding
tax which included petitioner. SSS records were also submitted showing that
petitioners latest employer was Seiji Corporation.
Labor Arbiter: Petitioner was illegally dismissed
NLRC: the decision of the Labor Arbiter was affirmed

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On appeal, the Court of Appeals reversed and set aside the decision of the NLRC.
The subsequent motion for reconsideration was also denied, hence, the present
recourse.

ISSUES: (1) whether there was an employer-employee relationship between


petitioner and private respondent Kasei Corporation; and if in the affirmative
(2) Whether petitioner was illegally dismissed.

HELD: (1) YES. By applying the control test, there is no doubt that petitioner is
an employee of Kasei Corporation because she was under the direct control and
supervision of Seiji Kamura, the corporations Technical Consultant. She reported
for work regularly and served in various capacities as Accountant, Liaison
Officer, Technical Consultant, Acting Manager and Corporate Secretary, with
substantially the same job functions, that is, rendering accounting and tax
services to the company and performing functions necessary and desirable for
the proper operation of the corporation such as securing business permits and
other licenses over an indefinite period of engagement.
Under the broader economic reality test, the petitioner can likewise be said to
be an employee of respondent corporation because she had served the company
for six years before her dismissal, receiving check vouchers indicating her
salaries/wages, benefits, 13th month pay, bonuses and allowances, as well as
deductions and Social Security contributions from August 1, 1999 to December
18, 2000. When petitioner was designated General Manager, respondent
corporation made a report to the SSS signed by Irene Ballesteros. Petitioners
membership in the SSS as manifested by a copy of the SSS specimen signature
card which was signed by the President of Kasei Corporation and the inclusion of
her name in the on-line inquiry system of the SSS evinces the existence of an
employer-employee relationship between petitioner and Respondent
Corporation. It is therefore apparent that petitioner is economically
dependent on Respondent Corporation for her continued employment in
the latters line of business.
Petitioner is an employee of respondent Kasei Corporation. She was
selected and engaged by the company for compensation, and is economically
dependent upon respondent for her continued employment in that line of
business. Her main job function involved accounting and tax services rendered to
Respondent Corporation on a regular basis over an indefinite period of

engagement. Respondent Corporation hired and engaged petitioner for


compensation, with the power to dismiss her for cause. More importantly,
Respondent Corporation had the power to control petitioner with the
means and methods by which the work is to be accomplished.
(2) YES. The corporation constructively dismissed petitioner when it
reduced her salary by P2, 500 a month from January to September 2001. This
amounts to an illegal termination of employment, where the petitioner is entitled
to full back wages. Since the position of petitioner as accountant is one of trust
and confidence, and under the principle of strained relations, petitioner is
further entitled to separation pay, in lieu of reinstatement.
2: Sonza vs ABS CBN
FACTS: In May 1994, respondent ABS-CBN Broadcasting Corporation (ABSCBN) signed an Agreement with the Mel and Jay Management and Development
Corporation (MJMDC). ABS-CBN was represented by its corporate officers
while MJMDC was represented by SONZA, as President and General Manager, and
Carmela Tiangco (TIANGCO), as EVP and Treasurer. Referred to in the
Agreement as AGENT, MJMDC agreed to provide SONZAs services exclusively
to ABS-CBN as talent for radio and television.
ABS-CBN agreed to pay for SONZAs services a monthly talent fee
of P310, 000 for the first year andP317, 000 for the second and third year
of the Agreement. ABS-CBN would pay the talent fees on the 10thand
25th days of the month.

On 1 April 1996, SONZA wrote a letter to ABS-CBNs President, Eugenio


Lopez III, stating in the letter that Mr. Sonza irrevocably resigned in view of
recent events** concerning his programs and career; that these were due to acts
of the station in violation and breach of their agreement; that the letter served as
notice of rescission of said agreement; and that he is waiving and renouncing
recovery of the remaining amount stipulated in paragraph 7 of the Agreement
but reserves the right to seek recovery of the other benefits under said
Agreement.

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**DIGESTERS NOTE: later on in the case, this apparently refers to


the cancellation of his programs.

On 30 April 1996, SONZA filed a complaint against ABS-CBN before the


Department of Labor and Employment, National Capital Region in Quezon
City. SONZA complained that ABS-CBN did not pay his salaries, separation pay,
service incentive leave pay, 13th month pay, signing bonus, travel allowance and
amounts due under the Employees Stock Option Plan (ESOP).
On 10 July 1996, ABS-CBN filed a Motion to dismiss on the ground that
no employer-employee relationship existed between the parties, to which SONZA
filed an opposition to the motion.
LA: The Labor Arbiter denied the motion to dismiss. The Labor Arbiter ruled:

In this instant case, complainant for having invoked a claim that he was
an employee of respondent company until April 15, 1996 and that he was not
paid certain claims, it is sufficient enough as to confer jurisdiction over the
instant case in this Office. And as to whether or not such claim would entitle
complainant to recover upon the causes of action asserted is a matter to be
resolved only after and as a result of a hearing. Thus, the respondents plea of
lack of employer-employee relationship may be pleaded only as a matter of
defense. It behooves upon it the duty to prove that there really is no employeremployee relationship between it and the complainant.
The Labor Arbiter then considered the case submitted for resolution.
The parties submitted their position papers on 24 February 1997. The Labor
Arbiter rendered his Decision dated 8 July 1997 dismissing the complaint for
lack of jurisdiction:

It must be noted that complainant was engaged by respondent by


reason of his peculiar skills and talent as a TV host and a radio
broadcaster. Unlike an ordinary employee, he was free to perform the services
he undertook to render in accordance with his own style Whatever benefits
complainant enjoyed arose from specific agreement by the parties and not by
reason of employer-employee relationship The fact that complainant was made
subject to respondents Rules and Regulations, likewise, does not detract from
the absence of employer-employee relationship.

NLRC: Affirmed the LAs decision of lack of jurisdiction. Motion for


reconsideration denied.

MJMDC is an agent of SONZA, not a mere labor-only contractor of ABSCBN such that there exists an employer-employee relationship between the
latter and SONZA. Jurisdiction over the instant controversy belongs to the
regular courts, the same being in the nature of an action for alleged breach of
contractual obligation on the part of respondent-appellee. The compensation and
bonuses for Mr. Sonzas services are not based on the Labor Code but rather on
the provisions of their agreement.
CA: Petitioner filed a special civil action for certiorari, to which the CA dismissed
the case.

The Court of Appeals affirmed the NLRCs finding that no employeremployee relationship existed between SONZA and ABS-CBN.
The Court of Appeals ruled that the existence of an employer-employee
relationship between SONZA and ABS-CBN is a factual question that is within the
jurisdiction of the NLRC to resolve. A special civil action for certiorari extends
only to issues of want or excess of jurisdiction of the NLRC. Such action cannot
cover an inquiry into the correctness of the evaluation of the evidence which
served as basis of the NLRCs conclusion.

ISSUES: Whether the Court of Appeals gravely erred in affirming the NLRCs
decision and refusing to find that an Employer-Employee relationship existed
between SONZA and ABS-CBN.

HELD: NO, the Court of Appeals did not. No convincing reason exists to
warrant a reversal of the decision of the Court of Appeals affirming the NLRC
ruling which upheld the Labor Arbiters dismissal of the case for lack of
jurisdiction.

SONZA maintains that all essential elements of an employer-employee


relationship are present in this case. Case law has consistently held that the
elements of an employer-employee relationship are: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the employers power to control the employee on the means

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Labor Relations Case Digest - Atty. Joyrich Golangco

and methods by which the work is accomplished.[18]The last element, the socalled control test, is the most important element.

(a) On Selection: ABS-CBN engaged SONZAs services to co-host its

television and radio programs because of SONZAs peculiar


skills, talent and celebrity status. The specific selection and hiring
of SONZA, because of his unique skills, talent and celebrity
status not possessed by ordinary employees, is a circumstance
indicative, but not conclusive, of an independent contractual
relationship.

(b) On wages: All the talent fees and benefits paid to SONZA were the
result of negotiations that led to the Agreement. Whatever benefits
SONZA enjoyed arose from contract and not because of an
employer-employee relationship.

(c) On power of dismissal: For violation of any provision of the

Agreement,
either
party
may terminate
their
relationship. SONZA failed to show that ABS-CBN could terminate
his services on grounds other than breach of contract, such as
retrenchment to prevent losses as provided under labor laws.

(d) On control: Applying the control test to the present case, we find

that SONZA is not an employee but an independent contractor. ABSCBN was not involved in the actual performance that produced the
finished product of SONZAs work. ABS-CBN did not instruct SONZA
how to perform his job. ABS-CBN merely reserved the right to
modify the program format and airtime schedule for more effective
programming. ABS-CBNs sole concern was the quality of the shows
and their standing in the ratings. Clearly, ABS-CBN did not exercise
control over the means and methods of performance of SONZAs
work.

Although ABS-CBN did have the option not to broadcast


SONZAs show, ABS-CBN was still obligated to pay SONZAs talent
fees. Thus, even if ABS-CBN was completely dissatisfied with the
means and methods of SONZAs performance of his work, or even

with the quality or product of his work, ABS-CBN could not dismiss
or even discipline SONZA. All that ABS-CBN could do is not to
broadcast SONZAs show but ABS-CBN must still pay his talent fees
in full.

The present case does not call for an application of the Labor Code
provisions but an interpretation and implementation of the May 1994
Agreement. In effect, SONZAs cause of action is for breach of contract which
is intrinsically a civil dispute cognizable by the regular courts.
3: Javier vs Flyace Corp
Facts: On May 23, 2008, Javier filed a complaint before the NLRC for
underpayment of salaries and other labor standard benefits. He alleged that he
was an employee of Fly Ace since September 2007, performing various tasks at
the respondents warehouse such as cleaning and arranging the canned items
before their delivery to certain locations, except in instances when he would be
ordered to accompany the companys delivery vehicles, as pahinante; that during
his employment, he was not issued an identification card and pay slips by the
company; that on May 6, 2008, he reported for work but he was no longer
allowed to enter the company premises by the security guard upon the
instruction of Ruben Ong (Mr. Ong), his superior; that after several minutes
of begging to the guard to allow him to enter, he saw Ong whom he approached
and asked why he was being barred from entering the premises; that Ong replied
by saying, Tanungin mo anak mo; that he then went home and discussed the
matter with his family; that he discovered that Ong had been courting his
daughter Annalyn after the two met at a fiesta celebration in Malabon City; that
Annalyn tried to talk to Ong and convince him to spare her father from trouble
but he refused to accede; that thereafter, Javier was terminated from his
employment without notice; and that he was neither given the opportunity
to refute the cause/s of his dismissal from work.
To support his allegations, Javier presented an affidavit of one Bengie
Valenzuela who alleged that Javier was a stevedore or pahinante of Fly
Ace from September 2007 to January 2008. The said affidavit was subscribed
before the Labor Arbiter

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For its part, Fly Ace averred that it was engaged in the business of
importation and sales of groceries. Sometime in December 2007, Javier was
contracted by its employee, Mr. Ong, as extra helper on a pakyaw basis at an
agreed rate of 300.00 per trip, which was later increased to 325.00 in January
2008. Mr. Ong contracted Javier roughly 5 to 6 times only in a month whenever
the vehicle of its contracted hauler, Milmar Hauling Services, was not
available. On April 30, 2008, Fly Ace no longer needed the services of
Javier. Denying that he was their employee, Fly Ace insisted that there was
no illegal dismissal. Fly Ace submitted a copy of its agreement with Milmar
Hauling Services and copies of acknowledgment receipts evidencing payment to
Javier for his contracted services bearing the words, daily
manpower (pakyaw/piece rate pay) and the latters signatures/initials.
LA: the LA dismissed the complaint for lack of merit on the ground that Javier
failed to present proof that he was a regular employee of Fly Ace.

NLRC: LA Decision was reversed. On appeal with the NLRC, Javier was favored.
It ruled that the LA skirted the argument of Javier and immediately concluded
that he was not a regular employee simply because he failed to present proof. It
was of the view that a pakyaw-basis arrangement did not preclude the existence
of employer-employee relationship.
The NLRC held that substantial evidence was sufficient basis for
judgment on the existence of the employer-employee relationship. Finding
Javier to be a regular employee, the NLRC ruled that he was entitled to a security
of tenure.

CA: the CA annulled the NLRC findings that Javier was indeed a former
employee of Fly Ace and reinstated the dismissal of Javiers complaint as ordered
by the LA.
In an illegal dismissal case the onus probandi rests on the employer to
prove that its dismissal was for a valid cause. However, before a case for illegal
dismissal can prosper, an employer-employee relationship must first be
established. x x x it is incumbent upon private respondent to prove the
employee-employer relationship by substantial evidence.

Since no substantial evidence was presented to establish an employeremployee relationship, the case for illegal dismissal could not prosper.
ISSUES: Whether or not Petitioner was an employee of Fly Ace.

HELD: No, he was not an employee. The Court affirms the assailed CA decision.

As the records bear out, the LA and the CA found Javiers claim of
employment with Fly Ace as wanting and deficient. The Court is constrained
to agree. The petitioner needs to show by substantial evidence that he was
indeed an employee of the company against which he claims illegal dismissal.

Although substantial evidence is not a function of quantity but rather of


quality, the circumstances of the instant case demand that something more
should have been proffered. Had there been other proofs of employment,
such as inclusion in petitioners payroll, or a clear exercise of control, the
Court would have affirmed the finding of employer-employee relationship.
In this case, the LA and the CA both concluded that Javier failed to
establish his employment with Fly Ace. By way of evidence on this point, all that
Javier presented were his self-serving statements purportedly showing his
activities as an employee of Fly Ace. Clearly, Javier failed to pass the
substantiality requirement to support his claim. Hence, the Court sees no
reason to depart from the findings of the CA.

Javier was not able to persuade the Court that the elements of the
four-fold test exist in his case. He could not submit competent proof that Fly
Ace engaged his services as a regular employee; that Fly Ace paid his wages as an
employee, or that Fly Ace could dictate what his conduct should be while at
work. In other words, Javiers allegations did not establish that his relationship
with Fly Ace had the attributes of an employer-employee relationship on the
basis of the four-fold test.

4, SMCEU vs Judge Bersamira (of Pasig RTC)

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FACTS: Sometime in 1983 and 1984, SanMig entered into contracts for
merchandising services with Lipercon and D'Rite. These companies are
independent contractors duly licensed by the Department of Labor and
Employment (DOLE). In said contracts, it was expressly understood and agreed
that the workers employed by the contractors were to be paid by the latter and
that none of them were to be deemed employees or agents of SanMig. There was
to be no employer-employee relation between the contractors and/or its
workers, on the one hand, and SanMig on the other.

Petitioner San Miguel Corporation Employees Union-PTWGO


(the Union, for brevity) is the duly authorized representative of the monthly paid
rank-and-file employees of SanMig with whom the latter executed a Collective
Bargaining Agreement (CBA) effective 1 July 1986 to 30 June 1989. Section 1 of
their CBA specifically provides that "temporary, probationary, or contract
employees and workers are excluded from the bargaining unit and, therefore,
outside the scope of this Agreement."
In a letter, dated 20 November 1988, the Union advised SanMig
that some Lipercon and D'Rite workers had signed up for union membership and
sought the regularization of their employment with SMC. The Union alleged that
this group of employees, while appearing to be contractual workers supposedly
independent contractors, have been continuously working for SanMig for a
period ranging from six (6) months to fifteen (15) years and that their work is
neither casual nor seasonal as they are performing work or activities necessary
or desirable in the usual business or trade of SanMig. Thus, it was contended that
there exists a "labor-only" contracting situation. It was then demanded that the
employment status of these workers be regularized.

The Union filed two notices to strike and several conciliation


conferences were held to settle the dispute before the National Conciliation and
Mediation Board (NCMB) of DOLE. Beginning 14 February 1989 until 2 March
1989, series of pickets were staged by Lipercon and D'Rite workers in various
SMC plants and offices.
On 6 March 1989, SMC filed a verified Complaint for Injunction and
Damages before respondent Court to enjoin the Union from staging the strikes.

Respondent Court found the Complaint sufficient in form and substance


and issued a Temporary Restraining Order for the purpose of maintaining the
status quo, and set the application for Injunction for hearing.
In the meantime, the Union filed a Motion to Dismiss SanMig's Complaint
on the ground of lack of jurisdiction over the case/nature of the action, which
motion was opposed by SanMig. That Motion was denied by respondent Judge.

After several hearings on SanMig's application for injunctive relief,


respondent Court issued the questioned Order granting the application and
enjoining the Union from committing the acts complained of. Accordingly,
respondent Court issued the corresponding Writ of Preliminary Injunction. The
respondent court rationalized that the absence of an employer-employee
relationship negates the existence of labor dispute. Verily, this court (RTC) has
jurisdiction to take cognizance of plaintiff's grievance.

ISSUES: Whether, or not the case at bar involves, or is in connection with, or


relates to a labor dispute.

An affirmative answer would bring the case within the original and
exclusive jurisdiction of labor tribunals to the exclusion of the regular Courts.

HELD: YES, it does. That a labor dispute, as defined by the law in Article 212 (1)
of the Labor Code, does exist herein is evident. At bottom, what the Union seeks
is to regularize the status of the employees contracted by Lipercon and D'Rite in
effect, that they be absorbed into the working unit of SanMig. This matter
definitely dwells on the working relationship between said employees vis-a-vis
SanMig. Terms, tenure and conditions of their employment and the arrangement
of those terms are thus involved bringing the matter within the purview of a
labor dispute. Further, the Union also seeks to represent those workers, who
have signed up for Union membership, for the purpose of collective bargaining.
SanMig, for its part, resists that Union demand on the ground that there is no
employer-employee relationship between it and those workers and because the
demand violates the terms of their CBA. Obvious then is that representation and
association, for the purpose of negotiating the conditions of employment are also
involved. In fact, the injunction sought by SanMig was precisely also to prevent
such representation. Again, the matter of representation falls within the scope of

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a labor dispute. Neither can it be denied that the controversy below is directly
connected with the labor dispute already taken cognizance of by the NCMB-DOLE

The issues between the parties union demands; labor-only


contracting of Lipercon and Drite; the Union representing workers from
Lipercon and Drite are issues the resolution of which calls for the application
of labor laws.

As the case is indisputably linked with a labor dispute,


jurisdiction belongs to the labor tribunals. As explicitly provided for in Article
217 of the Labor Code, prior to its amendment by R.A. No. 6715 on 21 March
1989, since the suit below was instituted on 6 March 1989, Labor Arbiters have
original and exclusive jurisdiction to hear and decide the following cases
involving all workers including "1. Unfair labor practice cases; 2. Those that
workers may file involving wages, hours of work and other terms and conditions
of employment; ... and 5. Cases arising from any violation of Article 265 of this
Code, including questions involving the legality of strikes and lockouts. ..." Article
217 lays down the plain command of the law.
5. Locsin et. al. v. PLDT, October 2, 2009

Facts: On November 1, 1990, respondent PLDT and the Security and Safety
Corporation of the
Philippines (SSCP) entered into a Security Services Agreement whereby SSCP
would provide armed security guards to PLDT to be assigned to its various
offices. Petitioners Raul Locsin and Eddie Tomaquin, among other security
guards, were posted at a PLDT office. On August 30, 2001, respondent issued a
Letter terminating the Agreement effective October 1, 2001. Despite the
termination of the Agreement, however, petitioners continued to secure the
premises of their assigned office. They were allegedly directed to remain at their
post by representatives of respondent. In support of their contention, petitioners
provided the Labor Arbiter with copies of petitioner Locsin's pay slips for the
period of January to September 2002. Then, on September 30, 2002, their
services were terminated.
Petitioners filed a complaint before the Labor Arbiter for illegal dismissal and
recovery of money claims such as overtime pay, holiday pay, and premium pay

for holiday and rest day, service incentive leave pay, Emergency Cost of Living
Allowance, and moral and exemplary damages against PLDT. The Labor Arbiter
rendered a Decision finding PLDT liable for illegal dismissal. It held that
petitioners were employees of PLDT and not of SSCP for petitioners continued to
serve as guards of PLDT's offices. As such employees, they were entitled to
substantive and procedural due process before termination of employment.
PLDT appealed to NLRC which rendered a Resolution affirming in toto the
Arbiter's Decision. Thus, PDLT filed a Motion for Reconsideration of the NLRC's
Resolution which was also denied.

Hence, PLDT filed a Petition for Certiorari with the CA which rendered the
assailed decision granting PLDT's petition and dismissing petitioners' complaint.
The CA applied the fourfold
test in order to determine the existence of an employer employee relationship
between the parties but did not find such relationship. It determined that SSCP
was not a labor only
contractor and was an independent contractor having substantial capital to
operate and conduct its own business. The CA further bolstered its decision by
citing the Agreement whereby it was stipulated that there shall be no employer
employee relationship between the security guards and PLDT. Anent the pay
slips that were presented by petitioners, the CA noted that those were issued by
SSCP and not PLDT hence, SSCP continued to pay the salaries of petitioners after
the Agreement. This fact allegedly proved that petitioners continued to be
employees of SSCP albeit performing their work at PLDT's premises. Hence, this
petition.
ISSUES: Whether petitioners became employees of respondent after the
Agreement between SSCP and respondent was terminated. (yes)

Held: The SC held that there was no employer employee relationship between
the parties from the time of petitioners' first assignment to respondent by SSCP
in 1988 until the alleged termination of the Agreement between respondent and
SSCP. The petitioners were among those declared to be employees of their
respective security agencies and not of PLDT. However, the petitioners became

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the employees of respondent after the agreement between SSCP and respondent
was terminated.

While respondent and SSCP no longer had any legal relationship with the
termination of the Agreement, petitioners remained at their post securing the
premises of respondent while receiving their salaries, allegedly from SSCP.
Clearly, such a situation makes no sense, and the denials proffered by respondent
do not shed any light to the situation. It is but reasonable to conclude that, with
the directive of respondent, petitioners continued with their services. Evidently,
such are indicia of control that respondent exercised over petitioners. Such
power of control has been explained as the "right to control not only the end to
be achieved but also the means to be used in reaching such end." With the
conclusion that respondent directed petitioners to remain at their posts and
continue with their duties, it is clear that respondent exercised the power of
control over them thus, the existence of an employer employee relationship.

Evidently, respondent having the power of control over petitioners must


be considered as petitioners employerfrom the termination of the Agreement
onwardsas this was the only time that any evidence of control was exhibited
by respondent over petitioners. Thus, as aptly declared by the NLRC, petitioners
were entitled to the rights and benefits of employees of respondent, including
due process requirements in the termination of their services. Both the Labor
Arbiter and NLRC found that respondent did not observe such due process
requirements. Having failed to do so, respondent is guilty of illegal dismissal
6. PEOPLES BROADCASTING SERVICE vs SEC OF LABOR
GR NO. 179652 March 6, 2012

FACTS: The DOLE Regional Office No. VII conducted an inspection of Bombo
Radyos premises in response to Juezans money claims against the broadcasting
company, as a result an order for Bombo Radyo to rectify/restitute the labor
standards violations discovered during the inspection. Bombo Radyo failed to
make any rectification or restitution, prompting the DOLE to conduct a summary
investigation. Bombo Radyo reiterated its position, made during the inspection,
that Juezan was not its employee. Both parties submitted evidence to support
their respective positions.

DOLE Director Rodolfo M. Sabulao found Juezan to be an employee of


Bombo Radyo. Consequently, Director Sabulao ordered Bombo Radyo to pay
Juezan P203, 726.30 representing his demanded money claims. Bombo Radyo
moved for reconsideration and submitted additional evidence, but Director
Sabulao denied the motion. Bombo Radyo then appealed to the DOLE Secretary,
insisting that Juezan was not its employee as he was a drama talent hired on a
per drama basis. The Acting DOLE Secretary dismissed the appeal for nonperfection due to Bombo Radyos failure to put a cash or surety bond, as
required by Article 128(b) of the Labor Code.
Bombo Radyo went to the Court of Appeals (CA) through a petition for certiorari
under Rule 65 of the Rules of Court. But was dismissed for lack of merit, hence
this appeal. The Court found that there was no employer-employee relationship
between petitioner and private respondent. It was held that while the DOLE may
make a determination of the existence of an employer-employee relationship,
this function could not be co-extensive with the visitorial and enforcement
power provided in Art. 128(b) of the Labor Code, as amended by RA 7730. The
NLRC was held to be the primary agency in determining the existence of an
employer-employee relationship. This was the interpretation of the Court of the
clause in cases where the relationship of employer-employee still exists in Art.
128(b).
ISSUES: Whether the DOLE can determine existing EE-ER relationship.

HELD: YES, No limitation in the law was placed upon the power of the DOLE to
determine the existence of an employer-employee relationship. No procedure
was laid down where the DOLE would only make a preliminary finding, that the
power was primarily held by the NLRC. The law did not say that the DOLE would
first seek the NLRCs determination of the existence of an employer-employee
relationship, or that should the existence of the employer-employee relationship
be disputed, the DOLE would refer the matter to the NLRC. The DOLE must have
the power to determine whether or not an employer-employee relationship
exists, and from there to decide whether or not to issue compliance orders in
accordance with Art. 128(b) of the Labor Code, as amended by RA 7730.
The DOLE, in determining the existence of an employer-employee
relationship, has a ready set of guidelines to follow, the same guide the courts

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themselves use. The elements to determine the existence of an employment


relationship are: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; (4) the employers power to
control the employees conduct. The use of this test is not solely limited to the
NLRC. The DOLE Secretary, or his or her representatives, can utilize the same
test, even in the course of inspection, making use of the same evidence that
would have been presented before the NLRC.
The present Resolution now recognizes that the determination of the
existence of an employer-employee relationship by the DOLE, in the exercise of
its visitorial and enforcement power under Article 128(b) of the Labor Code, is
entitled to full respect and must be fully supported. This means that the DOLE
has the full power to determine the existence of an employer-employee
relationship in cases brought to it under Article 128(b) of the Labor Code. This
power is parallel and not subordinate to that of the NLRC.
The Court, at the same time, confirms its previous finding that no
employer-employee relationship exists between Juezan and Bombo Radyo based
on the evidence presented, and that a Deed of Assignment of Bank Deposits can
be a substitute for a cash or surety bond in perfecting an appeal to the Labor
Secretary.
7. Ymbong vs. ABS-CBN

Facts: Petitioner Ernesto G. Ymbong started working for ABS-CBN Broadcasting


Corporation (ABS-CBN) in 1993 at its regional station in Cebu as a television
talent, co-anchoring Hoy Gising and TV Patrol Cebu. His stint in ABS-CBN later
extended to radio when ABS-CBN Cebu launched its AM station DYAB in 1995
where he worked as drama and voice talent, spinner, scriptwriter and public
affairs program anchor. Like Ymbong, Leandro Patalinghug also worked for ABSCBN Cebu. Starting 1995, he worked as talent, director and scriptwriter for
various radio programs aired over DYAB. On January 1, 1996, the ABS-CBN Head
Office in Manila issued Policy No. HR-ER-016 or the Policy on Employees
Seeking Public Office. Under this policy, employees who will be seeking public
office must file a letter of resignation, while those who will be joining a political
party or actively campaign for a candidate must file a request for leave of
absence subject to the managements approval. Because of the impending May

1998 elections and based on his immediate recollection of the policy at that time,
Dante Luzon, Assistant Station Manager of DYAB issued a memorandum stating
that employees who want to run for office should file for a leave of absence and
his services will be temporarily suspended during the campaign period. Luzon,
however, admitted that upon double-checking of the exact text of the policy and
subsequent confirmation with the ABS-CBN Head Office, he saw that the policy
actually required suspension for those who intend to campaign for a political
party or candidate and resignation for those who will actually run in the
elections. Ymbong informed Luzon that he will be taking a leave of absence to
campaign for the administration ticket, however it was found out after the
elections that Ymbong actually ran for councilor of Lapu-lapu city. Patalinghug ,
on the other hand tendered his resignation for he will be running as councilor at
Naga, Cebu. Both Ymbong and Patalinghug lost in the elections. They were not
allowed to come back to work for respondent, but because of liberality, they
were given a chance to wind up their participation in a radio drama entitle
Nagbabagang Langit. Both then filed an illegal dismissal complaint against
respondent. Respondent prayed for dismissal of the complaints claiming that
there is no E-E relationship since both are mere talents.
LA found the dismissal illegal and ordered the reinstatement of respondents as
well as the payment of back wages. It also declared that there exists an E-E
relationship between the parties. The Labor Arbiter noted particularly that the
appointment letters/talent contracts imposed conditions in the performance of
their work, specifically on attendance and punctuality, which effectively placed
them under the control of ABS-CBN.

NLRC modified the decision. In the case of Patalinghug, it found that he


voluntarily resigned from employment on April 21, 1998 when he submitted his
resignation letter. The NLRC noted that although the tenor of the resignation
letter is somewhat involuntary, he knew that it is the policy of the company that
every person connected therewith should resign from his employment if he
seeks an elected position in the government. As to Ymbong, however, the NLRC
ruled otherwise.
Issues: a. Whether or not there exists E-E relationship between the parties
(discussed by the CA, but not by the SC)

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b. Whether or not Ymbong was illegally dismissed

HELD: a) CA rendered the assailed decision reversing and setting aside


the March 8, 2004 Decision and June 21, 2004 Resolution of the NLRC. The CA
declared Ymbong resigned from employment and not to have been illegally
dismissed. The award of full back wages in his favor was deleted
accordingly. The CA ruled that ABS-CBN is estopped from claiming that Ymbong
was not its employee after applying the provisions of Policy No. HR-ER-016 to
him. It noted that said policy is entitled Policy on Employees Seeking Public
Office and the guidelines contained therein specifically pertain to employees
and did not even mention talents or independent contractors. It held that it is a
complete turnaround on ABS-CBNs part to later argue that Ymbong is only a
radio talent or independent contractor and not its employee. By applying the
subject company policy on Ymbong, ABS-CBN had explicitly recognized him to be
an employee and not merely an independent contractor.

b) We find no merit in Ymbongs argument that [his] automatic termination x x


x was a blatant [disregard] of [his] right to due process as he was never asked
to explain why he did not tender his resignation before he ran for public office as
mandated by [the subject company policy]. Ymbongs overt act of running for
councilor of Lapu-Lapu City is tantamount to resignation on his part. He was
separated from ABS-CBN not because he was dismissed but because he
resigned. Since there was no termination to speak of, the requirement of due
process in dismissal cases cannot be applied to Ymbong. Thus, ABS-CBN is not
duty-bound to ask him to explain why he did not tender his resignation before he
ran for public office as mandated by the subject company policy.
8: Professional Services Inc. vs. CA

FACTS:

Natividad Agana was admitted at Medical City because of difficulty of


bowel movement and bloody anal discharge. Dr. Ampil diagnosed her to
be suffering from "cancer of the sigmoid."
Dr. Ampil, assisted by the medical staff of Medical City, performed
surgery upon her. During the surgery, he found that the malignancy in
her sigmoid area had spread to her left ovary, necessitating the removal

of certain portions of it. Thus, Dr. Ampil obtained the consent of


Natividads husband, to permit Dr. Fuentes to perform another
operation.
However, the operation appeared to be flawed. After a couple of days,
Natividad complained of excruciating pain in her anal region. They told
her that the pain was the natural consequence of the surgical operation
performed upon her.
Natividad and her husband went to the United States to seek further
treatment of her cancerous nodes. After 4 months of consultations and
laboratory examinations, Natividad was told that she was free of cancer.
Still suffering from pains. 2 weeks after returning to the Philippines, her
daughter found a piece of gauze protruding from her vagina. Dr. Ampil
was immediately informed. He proceeded to Natividads house where he
managed to extract by hand a piece of gauze measuring 1.5 inches in
width. Dr. Ampil then assured Natividad that the pains would soon
vanish.
Despite that, the pains intensified, prompting Natividad to seek
treatment at another hospital. While confined thereat, Dr. Gutierrez
detected the presence of a foreign object in her vagina -- a foul-smelling
gauze measuring 1.5 inches in width. The gauze had badly infected her
vaginal vault, which forced stool to excrete through the vagina.
Natividad and her husband filed with the Regional Trial Court a
complaint for damages against PSI (owner of Medical City), Dr. Ampil
and Dr. Fuentes.
Pending the outcome of the above case, Natividad died. She was duly
substituted by her children (the Aganas).
RTC: PSI, Dr. Ampil and Dr. Fuentes jointly and severally liable.
CA: affirmed the RTC judgment but dismissed the complaint against Dr.
Fuentes.
PSI, Dr. Ampil and the Aganas filed with SC separate petitions for review
on certiorari.
SC (First Division): PSI is jointly and severally liable with Dr. Ampil for
the following reasons:
1. There is an employer-employee relationship between Medical
City and Dr. Ampil.
2. PSIs act of publicly displaying in the lobby of the Medical City

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the names and specializations of its accredited physicians,


including Dr. Ampil, estopped it from denying the existence of
an employer-employee relationship between them under the
doctrine of ostensible agency or agency by estoppel
3. PSIs failed to supervise Dr. Ampil to take an active step in order
to remedy their negligence rendered it directly liable under the
doctrine of corporate negligence.
PSIs contention: 1) there is no employer-employee relationship
between it and its consultant, Dr. Ampil. 2) the doctrine of ostensible
agency or agency by estoppel cannot apply because spouses Agana
failed to establish that Natividad relied on the representation of the
hospital in engaging the services of Dr. 3) PSI maintains that the
doctrine of corporate negligence is misplaced because the proximate
cause of Natividads injury was Dr. Ampils negligence

ISSUES: Whether or not there exists an employee-employer relationship, thus


making PSI jointly and severally liable.
HELD: Yes An employer-employee relationship "in effect" exists between the
Medical City and Dr. Ampil. Consequently, both are jointly and severally liable to
the Agana.
In the SC decision in Ramos vs. CA

Hospitals exercise significant control in the hiring and firing of


consultants and in the conduct of their work within the hospital
premises. Doctors who apply for "consultant" slots, visiting or
attending, are required to submit proof of completion of residency, their
educational qualifications; generally, evidence of accreditation by the
appropriate board, evidence of fellowship in most cases, and references.
These requirements are carefully scrutinized by members of the
hospital administration or by a review committee set up by the
hospital who either accept or reject the application. This is
particularly true with respondent hospital.
After a physician is accepted, either as a visiting or attending
consultant, he is still normally required to accomplish more tasks.
Further, physicians performance as a specialist is generally

evaluated by a peer review committee. A consultant remiss in his


duties, or a consultant who regularly falls short of the minimum
standards acceptable to the hospital or its peer review committee,
is normally politely terminated.
In other words, private hospitals hire fire and exercise real control
over their attending and visiting "consultant" staff. While
"consultants" are not, technically employees, the control exercised,
the hiring, and the rights to terminate consultants all fulfill the
important hallmarks of an employer-employee relationship, with
the exception of the payment of wages. In assessing whether such a
relationship in fact exists, the control test is determining.
Accordingly, on the basis of the foregoing, for the purpose of
allocating responsibility in medical negligence cases, an employeremployee relationship in effect exists between hospitals and their
attending and visiting physicians.
The basis for holding an employer solidarily responsible for the
negligence of its employee is found in Article 2180 of the Civil Code
which considers a person accountable not only for his own acts but also
for those of others based on the
Even assuming that Dr. Ampil is not an employee of Medical City, but an
independent contractor, still the said hospital is liable to the Aganas.

In Nograles, et al. v. Capitol Medical Center, et al., the Court HELD:

In general, a hospital is not liable for the negligence of an


independent contractor-physician. There is, however, an exception
to this principle. The hospital may be liable if the physician is the
"ostensible" agent of the hospital.
The doctrine of apparent authority essentially involves two factors to
determine the liability of an independent contractor-physician.
o First factor focuses on the hospitals manifestations
whether the hospital acted in a manner which would lead a
reasonable person to conclude that the individual who was
alleged to be negligent was an employee or agent of the hospital
o Second factor focuses on the patients reliancewhether the
plaintiff acted in reliance upon the conduct of the hospital or its

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agent, consistent with ordinary care and prudence.


Atty. Agana categorically testified that one of the reasons why he chose
Dr. Ampil was that he knew him to be a staff member of Medical City,
a prominent and known hospital.
Clearly, PSI is estopped from passing the blame solely to Dr. Ampil. Its
act of displaying his name and those of the other physicians in the
public directory at the lobby of the hospital amounts to holding out
to the public that it offers quality medical service through the listed
physicians.
Lastly, PSI had been remiss in its duty. It did not conduct an immediate
investigation on the reported missing gauzes to the great prejudice and
agony of its patient. This renders PSI, not only vicariously liable for the
negligence of Dr. Ampil under Article 2180 of the Civil Code, but also
directly liable for its own negligence under Article 2176.

9: South East International Rattan vs. Coming

FACTS:

South East International Rattan, Inc. (SEIRI) is a domestic corporation


engaged in the business of manufacturing and exporting furniture to
various countries while petitioner Estanislao Agbay, as per records, is
the President and General Manager of SEIRI.
Respondent Jesus Coming filed a complaint for illegal dismissal,
underpayment of wages, non-payment of holiday pay, 13th month pay
and service incentive leave pay, with prayer for reinstatement, back
wages, damages and attorneys fees.
Respondents allegations: He was hired by petitioners as Sizing
Machine Operator on March 17, 1984. His work schedule is from 8:00
a.m. to 5:00 p.m. Initially, his compensation was on "pakiao" basis but
sometime it was fixed at P150.00 per day which was paid weekly. In
1990, without any apparent reason, his employment was interrupted as
he was told by petitioners to resume work in two months time
Despite being an employee for many years with his work performance
never questioned by petitioners, respondent was dismissed without
lawful cause. He was told that he will be terminated because the

company is not doing well financially and that he would be called back to
work only if they need his services again. Respondent waited for almost
a year but petitioners did not call him back to work.
Petitioners contention: denied having hired respondent and that
respondent actually worked for SEIRIs furniture suppliers. They
stressed that respondent was not included in the list of employees
submitted to the Social Security System (SSS). Moreover, respondents
brother, Vicente Coming, executed an affidavit in support of petitioners
position while Allan Mayol and Faustino Apondar issued notarized
certifications that respondent worked for them instead.
Labor Arbiter: respondent is a regular employee of SEIRI and that the
termination of his employment was illegal
o Respondents work as sizing machine operator is usually
necessary and desirable to the rattan furniture business of
petitioners and their failure to include respondent in the
employment report to SSS is not conclusive proof that
respondent is not their employee.
NLRC (Fourth Division): SET ASIDE LAs decision and dismissed the
complaint
o First complainant alleged that he worked continuously from
March 17, 1984 up to January 21, 2002. Records reveal however
that South East (Intl.) Rattan, Inc. was incorporated only last
July 18, 1986 and they were engaged purely on "buying and
exporting rattan furniture" hence no manufacturing employees
were hired. Furthermore, from the last quarter of 1989 up to
August of 1992, the company suspended operations due to
economic reverses
o Second, for all his insistence that he was a regular employee,
complainant failed to present a single pay slip, voucher or a
copy of a company payroll showing that he rendered service
during the period indicated therein.
o Complainants name does not appear in the list of employees
reported to the SSS nor does it appear in the sample payrolls of
respondents employees.
CA: reversed the NLRC and ruled that there existed an employeremployee relationship between petitioners and respondent who was

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dismissed without just and valid cause.


o As to the "control test", the following facts indubitably reveal
that respondents wielded control over the work performance of
petitioner, to wit: (1) they required him to work within the
company premises; (2) they obliged petitioner to report every
day of the week and tasked him to usually perform the same
job; (3) they enforced the observance of definite hours of work
from 8am to 5pm; (4) the mode of payment of petitioners
salary was under their discretion, at first paying him on pakiao
basis and thereafter, on daily basis; (5) they implemented
company rules and regulations; (6) Agbay directly paid
petitioners salaries and controlled all aspects of his
employment and (7) petitioner rendered work necessary and
desirable in the business of the respondent company.

ISSUES: Whether or not Coming is an employee of South East Rattan


HELD: YES

To ascertain the existence of employer-employee relationship


jurisprudence has invariably adhered to the four-fold test, to wit: (1)
the selection and engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the power to control the
employees conduct, or the so-called "control test." Although no
particular form of evidence is required to prove the existence of the
relationship, and any competent and relevant evidence to prove the
relationship may be admitted, a finding that the relationship exists must
nonetheless rest on substantial evidence.
In Tan v. Lagrama, the Court held that the fact that a worker was not
reported as an employee to the SSS is not conclusive proof of the
absence of employer-employee relationship. Otherwise, an employer
would be rewarded for his failure or even neglect to perform his
obligation.
Nor does the fact that respondents name does not appear in the
payrolls and pay envelope records submitted by petitioners negate
the existence of employer-employee relationship. For a payroll to be
utilized to disprove the employment of a person, it must contain a true

and complete list of the employee. In this case, the exhibits offered by
petitioners before the NLRC consisting of copies of payrolls and pay
earnings records are only for the years 1999 and 2000; they do not
cover the entire 18-year period during which respondent
supposedly worked for SEIRI.
While they claim that respondent was the employee of their
suppliers Mayol and Apondar, they did not submit proof that the
latter were indeed independent contractors; clearly, petitioners
failed to discharge their burden of proving their own affirmative
allegation. In any controversy between a laborer and his master,
doubts reasonably arising from the evidence are resolved in favor
of the laborer.
As a regular employee, respondent enjoys the right to security of
tenure under Article 279 of the Labor Code and may only be dismissed
for a just or authorized cause, otherwise the dismissal becomes illegal.
10: Tenazas et al vs. R. Villegas Taxi

FACTS:

Tenazas and Francisco filed a complaint for illegal dismissal against


respondents. At that time, a similar case had already been filed by
Endraca against the same respondents. The 2 cases were subsequently
consolidated.
In their position paper, petitioners alleged that they were hired and
dismissed by the respondents.
Tenazas allegation: On July 1, 2007, the taxi unit assigned to him was
sideswiped by another vehicle, causing a dent on the left fender near the
driver seat. Upon reporting the incident to the company, he was scolded
by respondents and was told to leave the garage for he is already fired.
He was even threatened with physical harm should he ever be seen in
the companys premises again. Despite the warning, Tenazas reported
for work on the following day but was told that he can no longer drive
any of the companys units as he is already fired.
Franciscos allegation: His dismissal without the benefit of procedural
due process was brought about by the companys unfounded suspicion
that he was organizing a labor union.

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Endracas allegation: His dismissal was instigated by an occasion when


he fell short of the required boundary for his taxi unit because he needed
to bring his unit for an urgent repair. Upon returning to the company
garage and informing the management of the incident, his drivers
license was confiscated and was told to settle the deficiency in his
boundary first before his license will be returned to him. He was no
longer allowed to drive a taxi unit despite his persistent pleas.
Respondents contention: Tenazas and Endraca were employees of the
company, the former being a regular driver and the latter a spare driver.
The respondents, however, denied that Francisco was an employee of
the company or that he was able to drive one of the companys units at
any point in time. That Tenazas was never terminated by the company
instead he was just advised to wait for further notice from the company
if his unit has already been fixed. However, upon being informed that his
unit is ready for release, Tenazas failed to report back to work for no
apparent reason. As regards Endraca, he stopped reporting for work
without informing the company of his reason. Even then, they
expressed willingness to accommodate Endraca should he wish to work
as a spare driver for the company again since he was never really
dismissed from employment anyway.
Petitioners filed a Motion to Admit Additional Evidence. They submitted
(a) Joint Affidavit of the petitioners; (2) Affidavit of Good Faith of Aloney
Rivera, a co-driver; (3) pictures of the petitioners wearing company
shirts; and (4) Tenazas Certification/Record of Social Security System
(SSS) contributions.
LA: There was no illegal dismissal.
NLRC: the additional pieces of evidence belatedly submitted by the
petitioners sufficed to establish the existence of employer-employee
relationship and their illegal dismissal.
CA: agreed with the NLRCs finding that Tenazas and Endraca were
employees of the company, but ruled otherwise in the case of Francisco
for failing to establish his relationship with the company.

ISSUES: Whether or not there exists employer-employee relationship


HELD: Affirmed CA Decision

In determining the presence or absence of an employer-employee


relationship, the Court has consistently looked for the following
incidents, to wit: (a) the selection and engagement of the employee;
(b) the payment of wages; (c) the power of dismissal; and (d) the
employers power to control the employee on the means and
methods by which the work is accomplished. The last element, the
so-called control test, is the most important element."
There is no hard and fast rule designed to establish the aforesaid
elements. Any competent and relevant evidence to prove the
relationship may be admitted. Identification cards, cash vouchers, social
security registration, appointment letters or employment contracts,
payrolls, organization charts, and personnel lists, serve as evidence of
employee status.
In this case, however, Francisco failed to present any proof
substantial enough to establish his relationship with the
respondents. Anent his claim that he was not issued with employment
records, he could have, at least, produced his social security records
which state his contributions, name and address of his employer, as his
co-petitioner Tenazas did. He could have also presented testimonial
evidence showing the respondents exercise of control over the
means and methods by which he undertakes his work.
Here, Francisco simply relied on his allegation that he was an
employee of the company without any other evidence supporting
his claim. Bereft of any evidence, the CA correctly ruled that
Francisco could not be considered an employee of the respondents.
The CAs order of reinstatement of Tenazas and Endraca, instead of the
payment of separation pay, is also well in accordance with prevailing
jurisprudence.
An illegally dismissed employee is entitled to two reliefs: back wages
and reinstatement.1wphi1 The two reliefs provided are separate and
distinct. In instances where reinstatement is no longer feasible because
of strained relations between the employee and the employer,
separation pay is granted. In effect, an illegally dismissed employee is
entitled to either reinstatement, if viable, or separation pay if
reinstatement is no longer viable, and back wages.

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After a perusal of the NLRC decision, this Court failed to find the factual
basis of the award of separation pay to the petitioners. The NLRC
decision did not state the facts which demonstrate that reinstatement is
no longer a feasible option that could have justified the alternative relief
of granting separation pay instead. Thus, it was a prudent call for the CA
to delete the award of separation pay and order for reinstatement
instead, in accordance with the general rule stated in Article 279 of the
Labor Code.
11. CITIBANK V CA

FACTS: In 1983, Citibank and El Toro Security Agency, Inc. (hereafter El Toro)
entered into a contract to protect the banks premises situated at Paseo de Roxas,
Makati, Metro Manila. Under the contract, El Toro obligated itself to provide the
services of security guards to safeguard and protect the premises and property
of Citibank against theft, robbery or any other unlawful acts. In
1990, this contract expired and was not renewed. Hence, private respondent
Citibank Integrated Guards Labor Alliance SEGATUPAS/ FSM (CIGLA) filed with
the National Conciliation and Mediation Board (NCMB) a request for preventive
mediation citing Citibank as respondent therein giving as issues for preventive
mediation the following:
a) Unfair labor practice
b) Dismissal of union officers/members and
c) Union busting.
Petitioner Citibank served on El Toro a written notice that the bank would not
renew anymore the service agreement with the latter. Simultaneously, Citibank
hired another security agency, the
Golden Pyramid Security Agency, to render security services at Citibank's
premises.

Private respondent CIGLA filed a manifestation with the NCMB that it was
converting its request for preventive mediation into a notice of strike for failure
of the parties to reach a mutually acceptable settlement of the issues, which it
followed with a supplemental notice of strike alleging as supplemental issue the
mass dismissal of all union officers and members. Security guards of El Toro who

were replaced by guards of the Golden Pyramid Security Agency considered the
nonrenewal
of El Toro's service agreement with Citibank as constituting a lockout and/or a
mass dismissal. They threatened to go on strike against Citibank and picket its
premises. In fact, security guards formerly assigned to Citibank under the
expired agreement loitered around and near the Citibank premises in large
groups of from twenty (20) and at times fifty (50) persons.

Faced with the prospect of disruption of its business operations, petitioner


Citibank filed with the RTC of Makati, a complaint for injunction and damages.
The complaint sought to enjoin CIGLA and any person claiming membership
therein from striking or otherwise disrupting the operations
of the bank. CIGLA filed a motion to dismiss on the ground that the RTC has no
jurisdiction, the subject matter being a labor dispute. The motion to dismiss was
denied.

CIGLA then filed with the CA a petition for certiorari assailing the validity of the
proceedings had before the regional trial court. The CA ruled in CIGLAs favor.
Hence, this petition by Citibank. The basic issue involved is whether it is the
labor tribunal or the regional trial court that has jurisdiction over the subject
matter of the complaint filed by Citibank with the trial court.
Petitioner Citibank contends that there is no employer-employee relationship
between Citibank and the security guards represented by respondent CIGLA and
that there is no "labor dispute" in the subject controversy. The security guards
were employees of El Toro security agency, not of Citibank. Its service contract
with Citibank had expired and not renewed.

We sustain the petitioner's contention. This Court has held in many cases that "in
determining the existence of an employer- employee relationship, the following
elements are generally considered: 1) the selection and engagement of the
employee 2) The payment of wages 3) The power of dismissal and 4) the
employer's power to control the employee with respect to the means and
methods by which the work is to be accomplished". It has been decided also that
the Labor Arbiter has no jurisdiction over a claim filed where no employeremployee relationship existed between a company and the security guards
assigned to it by a security service contractor. In this case, it was the security

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agency El Toro that recruited, hired and assigned the watchmen to their place of
work. It was the security agency that was answerable to Citibank for the conduct
of its guards.
ISSUES: Is there a labor dispute between Citibank and the security guards,
members of respondent CIGLA, regardless of whether they stand in the
relation of employer and employees?

HELD: NO, Article 212, paragraph l of the Labor Code provides the definition of a
"labor dispute". It "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."

If at all, the dispute between Citibank and El Toro security agency is one
regarding the termination or nonrenewal of the contract of services. This is a
civil dispute. El Toro was an independent contractor. Thus, no employeremployee relationship existed between Citibank and the security guard members
of the union in the security agency who were assigned to secure the bank's
premises and property. Hence, there was no labor dispute and no right to strike
against the bank.

On the basis of the allegations of the complaint, it is safe to conclude that the
dispute involved is a civil one, not a labor dispute. Consequently, we rule that
jurisdiction over the subject matter of the complaint lies with the regional trial
court.

12: PHILIPPINE AIRLINES vs. NATIONAL LABOR RELATIONS COMMISSION


(PAL vs. NLRC)
FACTS:

Private respondents are flight stewards of the petitioner. Both were


dismissed from the service for their alleged involvement in the April 3,
1993 currency smuggling in Hong Kong.
A confrontation between them and Mr. Abaca (the man who was

carrying the bag containing the smuggled money worth 2.5 Million pesos
when converted to Philippine currency) was compulsorily arranged by
PALs disciplinary board; Abaca was made to identify petitioners as coconspirators, which was anomalous because there was no one else in the
line-up but them.
Despite that, Abaca still had difficulty in identifying Pineda as his coconspirator, and as to Cabling, he was pointed by Abaca only after PALs
lawyer pressed the him to identify Cabling as co-conspirator;
During the next hearing Abaca finally gave statements to the board
clearing Pineda and Cabling from any participation or from being the
owners of the currencies.
Just as they thought that they were already fully cleared of the charges,
they were surprised to receive a Memorandum terminating their
services for alleged violation of PALs Code of Discipline.
Aggrieved by said dismissal, private respondents filed with the NLRC a
petition for injunction
NLRC: issued a temporary mandatory injunction enjoining petitioner to
cease and desist from enforcing its Memorandum of dismissal, adopting
the view that:
1. PALs Code of Discipline was declared illegal by the SC in the
case of PAL, Inc. vs. NLRC for the reason that it was formulated
by the petitioner without the participation of its employees as
required in R.A. 6715, amending Article 211 of the Labor Code
2. The whimsical, baseless and premature dismissals of private
respondents which "caused them grave and irreparable injury"
is enjoinable as private respondents are left "with no speedy
and adequate remedy at law
3. NLRC is empowered under Article 218 (e) of the Labor Code to
issue a temporary mandatory injunction
PAL moved for reconsideration (some of PALs contentions among
others)
1. NLRC has no jurisdiction to issue an injunction or
restraining order since this may be issued only under
Article 218 of the Labor Code if the case involves or arises
from labor disputes
2. NLRC divested the labor arbiter of its original and

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exclusive jurisdiction over illegal dismissal cases;


3. There is no irreparable or substantial injury.
4. Assuming that the acts of dismissing petitioners 'may be great,
still the same is capable of compensation', consequently,
'injunction need not be issued where adequate
compensation at law could be obtained'.
ISSUES: Whether or Not the NLRC acted in excess of its jurisdiction.

Labor Code, as amended, when it is established on the bases of the sworn


allegations in the petition that the acts complained of, involving or
arising from any labor dispute before the Commission, which, if not
restrained or performed forthwith, may cause grave or irreparable
damage to any party or render ineffectual any decision in favor of such
party.

HELD: YES

Generally, injunction is not a cause of action in itself but merely a


provisional remedy, an adjunct to a main suit. It is resorted
to only when there is a pressing necessity to avoid injurious
consequences, which cannot be remedied under any standard of
compensation. The essential conditions for granting such temporary
injunctive relief is that the complaint alleges facts which appear to be
sufficient to constitute a proper basis for injunction and that on the
entire showing from the contending parties, the injunction is
reasonably necessary to protect the legal rights of the plaintiff pending
the litigation. Injunction is also a special equitable relief granted only in
cases where there is no plain, adequate and complete remedy at
law.

In labor cases, Article 218 of the Labor Code empowers the NLRC-

"(e) To enjoin or restrain any actual or threatened commission of any or


all prohibited or unlawful acts or to require the performance of a
particular act in any labor dispute which, if not restrained or performed
forthwith, may cause grave or irreparable damage to any party or
render ineffectual any decision in favor of such party; x x x."

Complementing the above-quoted provision, Sec. 1, Rule XI of the New Rules of


Procedure of the NLRC, pertinently provides as follows:
"Section 1. Injunction in Ordinary Labor Dispute.-A preliminary injunction
or a restraining order may be granted by the Commission through its
divisions pursuant to the provisions of paragraph (e) of Article 218 of the

From the foregoing provisions of law, the power of the NLRC to issue an
injunctive writ originates from "any labor dispute" upon application by
a party thereof, which application if not granted "may cause grave or
irreparable damage to any party or render ineffectual any decision
in favor of such party."
The term "labor dispute" is defined as "any controversy or matter
concerning terms and 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 or not the disputants stand in the proximate
relation of employers and employees."
It is an essential requirement that there must first be a labor
dispute between the contending parties before the labor arbiter. In
the present case, there is no labor dispute between the petitioner
and private respondents.
The petition for injunction directly filed before the NLRC is in
reality an action for illegal dismissal. This is clear from the
allegations in the petition which prays for: reinstatement of private
respondents; award of full back wages, moral and exemplary damages;
and attorney's fees. As such, the petition should have been filed with
the labor arbiter who has the original and exclusive jurisdiction to
hear and decide such cases. The only exceptions are where the Secretary
of Labor and Employment or the NLRC exercises the power of
compulsory arbitration, or the parties agree to submit the matter to
voluntary arbitration pursuant to Article 263 (g) of the Labor Code.
The jurisdiction of the NLRC in illegal dismissal cases is appellate in
nature and, therefore, it cannot entertain the private respondents'
petition for injunction which challenges the dismissal orders of
petitioner. Article 218(e) of the Labor Code does not provide

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blanket authority to the NLRC or any of its divisions to issue writs


of injunction, injunction is only an ancillary remedy in ordinary
labor disputes Thus, the NLRC exceeded its jurisdiction when it
issued the assailed Order
Under the Labor Code, the ordinary and proper recourse of an
illegally dismissed employee is to file a complaint for illegal
dismissal with the labor arbiter. If the remedy is specifically
provided by law, it is presumed to be adequate. Moreover, the
preliminary mandatory injunction prayed for by the private
respondents in their petition before the NLRC can also be
entertained by the labor arbiter who, as shown earlier, has the
ancillary power to issue preliminary injunctions or restraining orders as
an incident in the cases pending before him in order to preserve the
rights of the parties during the pendency of the case.
Furthermore, there is no showing of any urgency or irreparable
injury, which the private respondents might suffer. It is considered
irreparable injury when it cannot be adequately compensated in
damages due to the nature of the injury itself or the nature of the right or
property injured or when there exists no certain pecuniary standard for
the measurement of damages
In the case at bar, the alleged injury which private respondents stand
to suffer by reason of their alleged illegal dismissal can be
adequately compensated and therefore, there exists no
"irreparable injury"
Finally, an injunction, as an extraordinary remedy, is not favored in
labor law considering that it generally has not proved to be an
effective means of settling labor disputes. It has been the policy of the
State to encourage the parties to use the non-judicial process of
negotiation and compromise, mediation and arbitration. Thus,
injunctions may be issued only in cases of extreme necessity based
on legal grounds clearly established, after due consultations or
hearing and when all efforts at conciliation are exhausted which
factors, however, are clearly absent in the present case.

13: CHARLITO PEARANDA vs. BAGANGA PLYWOOD CORPORATION and


HUDSON CHUA

Facts: Sometime in June 1999, Petitioner Charlito Pearanda was hired as an


employee of Baganga Plywood Corporation (BPC) to take charge of the
operations and maintenance of its steam plant boiler. In May 2001, Pearanda
filed a Complaint for illegal dismissal with money claims against BPC and its
general manager, Hudson Chua, before the NLRC.

After the parties failed to settle amicably, the labor arbiter8 directed the parties
to file their position papers and submit supporting documents. Their respective
allegations are summarized by the labor arbiter as follows:

Pearanda in his position paper alleges that he was employed by Baganga as


Foreman/Boiler Head/Shift Engineer until he was illegally terminated. Further,
[he] alleges that his services [were] terminated without the benefit of due
process and valid grounds in accordance with law. Furthermore, he was not paid
his overtime pay, premium pay for working during holidays/rest days, night
shift differentials and finally claims for payment of damages and attorneys fees
having been forced to litigate the present complaint.
The respondent [BPC] alleges that it was on temporary closure due to repair and
general maintenance and it applied for clearance with the DOLE Regional Office
No. XI to shut down and to dismiss employees. And due to the insistence of
herein complainant he was paid his separation benefits. Consequently, when
respondent [BPC] partially reopened in January 2001, [Pearanda] failed to
reapply. Hence, he was not terminated from employment much less illegally. He
opted to severe employment when he insisted payment of his separation
benefits. Furthermore, being a managerial employee he is not entitled to
overtime pay and if ever he rendered services beyond the normal hours of work,
[there] was no office order/or authorization for him to do so.
The labor arbiter ruled that there was no illegal dismissal and that petitioners
Complaint was premature because he was still employed by BPC. The temporary
closure of BPCs plant did not terminate his employment; hence, he need not
reapply when the plant reopened.

According to the labor arbiter, petitioners money claims for illegal dismissal was
also weakened by his quitclaim and admission during the clarificatory

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conference that he accepted separation benefits, sick and vacation leave


conversions and thirteenth month pay.

Nevertheless, the labor arbiter found petitioner entitled to overtime pay,


premium pay for working on rest days, and attorneys fees.

On appeal, the NLRC deleted the award of overtime pay and premium pay for
working on rest days. According to the Commission, petitioner was not entitled
to these awards because he was a managerial employee.
CA dismissed Penarandas petition for certiorari as well as his motion for
reconsideration.

ISSUES: Is Penaranda a managerial employee, hence not worthy of the awards


claimed?

HELD: No, However, he is still not worthy of the awards claimed because he is a
managerial staff.

Article 82 of the Labor Code exempts managerial employees from the coverage of
labor standards. Labor standards provide the working conditions of employees,
including entitlement to overtime pay and premium pay for working on rest
days. Under this provision, managerial employees are "those whose primary duty
consists of the management of the establishment in which they are employed or
of a department or subdivision."
The Implementing Rules of the Labor Code state that managerial employees are
those who meet the following conditions:
"(1) Their primary duty consists of the management of the
establishment in which they are employed or of a department or
subdivision thereof;

"(2) They customarily and regularly direct the work of two or more
employees therein;

"(3) They have the authority to hire or fire other employees of lower
rank; or their suggestions and recommendations as to the hiring and
firing and as to the promotion or any other change of status of other
employees are given particular weight."

The Court disagrees with the NLRCs finding that petitioner was a managerial
employee. However, petitioner was a member of the managerial staff, which also
takes him out of the coverage of labor standards. Like managerial employees,
officers and members of the managerial staff are not entitled to the provisions of
law on labor standards. The Implementing Rules of the Labor Code define
members of a managerial staff as those with the following duties and
responsibilities:
"(1) the primary duty consists of the performance of work directly
related to management policies of the employer;

"(2) customarily and regularly exercise discretion and independent


judgment;

"(3) (i) Regularly and directly assist a proprietor or a managerial


employee whose primary duty consists of the management of the
establishment in which he is employed or subdivision thereof; or (ii)
execute under general supervision work along specialized or technical
lines requiring special training, experience, or knowledge; or (iii)
execute under general supervision special assignments and tasks; and

"(4) who do not devote more than 20 percent of their hours worked in a
workweek to activities which are not directly and closely related to the
performance of the work described in paragraphs (1), (2), and (3)
above."

As shift engineer, petitioners duties and responsibilities were as follows:


"1. To supply the required and continuous steam to all consuming units
at minimum cost.
"2. To supervise, check and monitor manpower workmanship as well as
operation of boiler and accessories.

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"3. To evaluate performance of machinery and manpower.


"5. To train new employees for effective and safety while working.
"7. To recommend personnel actions such as: promotion, or disciplinary
action.

The foregoing enumeration, illustrates that petitioner was a member of the


managerial staff. His duties and responsibilities conform to the definition of a
member of a managerial staff under the Implementing Rules.

Petitioner supervised the engineering section of the steam plant boiler. His work
involved overseeing the operation of the machines and the performance of the
workers in the engineering section. This work necessarily required the use of
discretion and independent judgment to ensure the proper functioning of the
steam plant boiler. As supervisor, petitioner is deemed a member of the
managerial staff.

Noteworthy, even petitioner admitted that he was a supervisor. In his Position


Paper, he stated that he was the foreman responsible for the operation of the
boiler. The term foreman implies that he was the representative of management
over the workers and the operation of the department. Petitioners evidence also
showed that he was the supervisor of the steam plant. His classification as
supervisor is further evident from the manner his salary was paid. He belonged
to the 10% of respondents 354 employees who were paid on a monthly basis;
the others were paid only on a daily basis.
On the basis of the foregoing, the Court finds no justification to award overtime
pay and premium pay for rest days to petitioner.

14: SAMAHANG MANGGAGAWA SA CHARTER CHEMICAL SOLIDARITY OF


UNIONS IN THE PHILIPPINES FOR EMPOWERMENT AND REFORMS (SMCCSUPER), ZACARRIAS JERRY VICTORIO-Union President vs CHARTER
CHEMICAL and COATING CORPORATION

FACTS: Samahang Manggagawa sa Charter Chemical Solidarity of Unions in the


Philippines for Empowerment and Reforms (petitioner union) filed a petition for
certification election among the regular rank-and-file employees of Charter

Chemical and Coating Corporation (respondent company) with the Mediation


Arbitration of the DOLE, NCR.

Respondent company filed an Answer with Motion to Dismiss on the ground that
petitioner union is not a legitimate labor organization because of the inclusion of
supervisory employees within petitioner union among others

Med-Arbiter Tomas F. Falconitin issued a Decision dismissing the petition for


certification election. The Med-Arbiter ruled that petitioner union is not a
legitimate labor organization because the list of membership of petitioner union
consisted of 12 batchman, mill operator and leadman who performed
supervisory functions. Under Article 245 of the Labor Code, said supervisory
employees are prohibited from joining petitioner union which seeks to represent
the rank-and-file employees of respondent company.
DOLE initially issued a Decision in favor of respondent company dismissing
petitioner unions appeal on the ground that the latters petition for certification
election was filed out of time. On motion for reconsideration, however, the DOLE
reversed its earlier ruling. (More on documentation requirements itong part na
to so di ko na inelaborate).

In nullifying the decision of the DOLE, the CA gave credence to the findings of the
Med-Arbiter that petitioner union failed to comply with the documentation
requirements under the Labor Code. It, likewise, upheld the Med-Arbiters
finding that petitioner union consisted of both rank-and-file and supervisory
employees.
ISSUES: Is the mixture of rank-and-file and supervisory employee[s] of
petitioner [unions] membership [a] ground for the cancellation of petitioner
[unions] legal personality and dismissal of [the] petition for certification
election?

HELD: No. The mixture of rank-and-file and supervisory employees in petitioner


union does not nullify its legal personality as a legitimate labor organization.

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The CA found that petitioner union has for its membership both rank-and-file
and supervisory employees. However, petitioner union sought to represent the
bargaining unit consisting of rank-and-file employees. Under Article 245 of the
Labor Code, supervisory employees are not eligible for membership in a labor
organization of rank-and-file employees. Thus, the appellate court ruled that
petitioner union cannot be considered a legitimate labor organization pursuant
to Toyota Motor Philippines v. Toyota Motor Philippines Corporation Labor
Union (hereinafter Toyota).

Nonetheless, the inclusion of the aforesaid supervisory employees in petitioner


union does not divest it of its status as a legitimate labor organization. The
appellate courts reliance on Toyota is misplaced in view of this Courts
subsequent ruling in Republic v. Kawashima Textile Mfg., Philippines, Inc.
(hereinafter Kawashima). In Kawashima, we explained at length how and why
the Toyota doctrine no longer holds sway under the altered state of the law and
rules applicable to this case, viz:

R.A. No. 6715 omitted specifying the exact effect any violation of the prohibition
[on the co-mingling of supervisory and rank-and-file employees] would bring
about on the legitimacy of a labor organization.
Then came Tagaytay Highlands Int'l. Golf Club, Inc. v. Tagaytay Highlands
Employees Union-PGTWO in which the core issue was whether mingling affects
the legitimacy of a labor organization and its right to file a petition for
certification election. This time, given the altered legal milieu, the Court
abandoned the view in Toyota and Dunlop and pronounced that while there is a
prohibition against the mingling of supervisory and rank-and-file employees in
one labor organization, the Labor Code does not provide for the effects thereof.
Thus, the Court held that after a labor organization has been registered, it may
exercise all the rights and privileges of a legitimate labor organization. Any
mingling between supervisory and rank-and-file employees in its membership
cannot affect its legitimacy for that is not among the grounds for cancellation of
its registration, unless such mingling was brought about by misrepresentation,
false statement or fraud under Article 239 of the Labor Code.

15: Pamela Florentina P. Jumuad vs Hi-flyer Food, Inc. and Jesus R.


Montemayor

Facts: Petitioner Pamela Florentina P. Jumuad (Jumuad) began her employment


with respondent Hi-Flyer Food, Inc. (Hi-Flyer), as management trainee. Hi-Flyer
is a corporation licensed to operate Kentucky Fried Chicken (KFC) restaurants in
the Philippines. Based on her performance through the years, Jumuad received
several promotions until she became the area manager for the entire VisayasMindanao 1 region, comprising the provinces of Cebu, Bacolod, Iloilo and Bohol.
Aside from being responsible in monitoring her subordinates, Jumuad was
tasked to: 1) be highly visible in the restaurants under her jurisdiction; 2)
monitor and support day-to-day operations; and 3) ensure that all the facilities
and equipment at the restaurant were properly maintained and serviced. Among
the branches under her supervision were the KFC branches in Gaisano
Mall, Cebu City (KFC-Gaisano); in Cocomall, Cebu City (KFC-Cocomall); and in
Island City Mall, Bohol (KFC-Bohol).
In just her first year as Area Manager, Jumuad gained distinction and was
awarded the 3rd top area manager nationwide. She was rewarded with a trip
to Singapore for her excellent performance.

Hi Flyer conducted a food safety, service and sanitation audit at KFC-Gaisano. The
audit, denominated as CHAMPS Excellence Review (CER), revealed several
sanitation violations, such as the presence of rodents and the use of a defective
chiller for the storage of food. When asked to explain, Jumuad first pointed out
that she had already taken steps to prevent the further infestation of the branch.
As to why the branch became infested with rodents, Jumuad faulted
managements decision to terminate the services of the branchs pest control
program and to rely solely on the pest control program of the mall. As for the
defective chiller, she explained that it was under repair at the time of the
CER. Soon thereafter, Hi-Flyer ordered the KFC-Gaisano branch closed.
Hi-Flyer audited the accounts of KFC-Bohol amid reports that certain employees
were covering up cash shortages. As a result, the following irregularities were
discovered: 1) cash shortage amounting to 62,290.85; 2) delay in the deposits of

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cash sales by an average of three days; 3) the presence of two sealed cash-fordeposit envelopes containing paper cut-outs instead of cash; 4) falsified entries
in the deposit logbook; 5) lapses in inventory control; and 6) material product
spoilage. In her report regarding the incident, Jumuad disclaimed any fault in the
incident by pointing out that she was the one responsible for the discovery of this
irregularity.

Hi-Flyer conducted another CER, this time at its KFC-Cocomall branch. Grout and
leaks at the branchs kitchen wall, dried up spills from the marinator, as well as a
live rat under postmix, and signs of rodent gnawing/infestation were found. This
time, Jumuad explained to management that she had been busy conducting
management team meetings at the other KFC branches and that, at the date the
CER was conducted, she had no scheduled visit at the KFC-Cocomall branch.
Seeking to hold Jumuad accountable for the irregularities uncovered in the
branches under her supervision, Hi-Flyer sent Jumuad an Irregularities Report
and Notice of Charges which she received. Jumuad submitted her written
explanation. Hi-Flyer held an administrative hearing where Jumuad appeared
with counsel. Apparently not satisfied with her explanations, Hi-Flyer served her
a Notice of Dismissal effecting her termination.
This prompted Jumuad to file a complaint against Hi-Flyer and/or Jesus R.
Montemayor (Montemayor) for illegal dismissal before the NLRC on October 17,
2005, praying for reinstatement and payment of separation pay, 13th month pay,
service incentive leave, moral and exemplary damages, and attorneys fees, etc.

Labor Arbiter Ruling: Jumuad was not completely blameless for the anomalies
discovered, the dismissal was too harsh considering the circumstances. After
finding that no serious cause for termination existed, the LA ruled that Jumuad
was illegally dismissed.
NLRC affirmed the decision in toto.

CA reversed the ruling. On the issue of loss of trust and confidence, the CA
considered the deplorable sanitary conditions and the cash shortages uncovered

at three of the seven KFC branches supervised by Jumuad as enough bases for HiFlyer to lose its trust and confidence in her.
ISSUES: Was Jumuad Illegally dismissed?

HELD: No. On whether Jumuad was illegally dismissed, Article 282 of the Labor
Code provides that an employer may terminate an employment for Gross and
habitual neglect by the employee of his duties, and Fraud or willful breach by the
employee of the trust reposed in him by his employer or duly authorized
representative among others.
Jumuad was terminated for neglect of duty and breach of trust and confidence.
To be a ground for removal, the neglect of duty must be both gross and habitual.
On the other hand, breach of trust and confidence, as a just cause for termination
of employment, is premised on the fact that the employee concerned holds a
position of trust and confidence, where greater trust is placed by management
and from whom greater fidelity to duty is correspondingly expected. The betrayal
of this trust is the essence of the offense for which an employee is penalized.

After an assiduous review of the facts as contained in the records, the Court is
convinced that Jumuad cannot be dismissed on the ground of gross and habitual
neglect of duty. The Court notes the apparent neglect of Jumuad of her duty in
ensuring that her subordinates were properly monitored and that she had
dutifully done all that was expected of her to ensure the safety of the consuming
public who continue to patronize the KFC branches under her jurisdiction. Had
Jumuad discharged her duties to be highly visible in the restaurants under her
jurisdiction, monitor and support the day to day operations of the branches and
ensure that all the facilities and equipment at the restaurant were properly
maintained and serviced, the deplorable conditions and irregularities at the
various KFC branches under her jurisdiction would have been prevented.
Considering, however, that over a year had lapsed between the incidences at
KFC-Gaisano and KFC-Bohol, and that the nature of the anomalies uncovered
were each of a different nature, the Court finds that her acts or lack of action in
the performance of her duties is not born of habit.

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Despite saying this, it cannot be denied that Jumuad willfully breached her duties
as to be unworthy of the trust and confidence of Hi-Flyer. First, there is no
denying that Jumuad was a managerial employee. As correctly noted by
the appellate court, Jumuad executed management policies and had the
power to discipline the employees of KFC branches in her
area. She recommended actions on employees to the head office. Pertinent is
Article 212 (m) of the Labor Code defining a managerial employee as one who is
vested with powers or prerogatives to lay down and execute management
policies and/or hire, transfer, suspend, lay off, recall, discharge, assign or
discipline employees.
Based on established facts, the mere existence of the grounds for the loss of trust
and confidence justifies petitioners dismissal. Pursuant to the Courts ruling
in Lima Land, Inc. v. Cuevas, as long as there is some basis for such loss of
confidence, and the nature of his participation therein renders him unworthy of
the trust and confidence demanded of his position, a managerial employee may
be dismissed.

In the present case, the CERs reports of Hi-Flyer show that there were anomalies
committed in the branches managed by Jumuad. On the principle
of respondeat superioror command responsibility alone, Jumuad may be held
liable for negligence in the performance of her managerial duties. She may not
have been directly involved in causing the cash shortages in KFC-Bohol, but her
involvement in not performing her duty monitoring and supporting the day to
day operations of the branches and ensure that all the facilities and equipment at
the restaurant were properly maintained and serviced, could have truly
prevented the whole debacle from ever occurring.
Thus, there is reasonable basis for Hi-Flyer to withdraw its trust in her and
dismissing her from its service.
16. Ex-Bataan Veterans Security Agency V. Secretary of Labor Bienvenido E.
Laguesma

FACTS: Ex- Bataan Veterans Security Agency, Inc. (EBVSAI) is in the business of
providing security services while Private Respondents are employees assigned to
the National Power Corporation at Ambuklao Hydro Electric Plant, Bokod,
Benguet (Ambuklao Plant). On February 20, 1996, Private Respondents led by

Alexander Pocding instituted a complaint for underpayment of wages against


EBVSAI before the Regional Office of the Department of Labor and Employment
(DOLE). On March 7, 1996, the Regional Office Conducted a complaint inspection
and violations were noted: (1) non-presentation of records; (2) non-payment of
holiday pay; (3) non-payment of rest day premium; (4) underpayment of night
shift differential pay; (5) non-payment of service incentive leave; (6)
underpayment of 13th month pay; (7) no registration; (8) no annual medical
report; (9) no annual work accidental report; (10) no safety committee; and (11)
no trained first aider. On the same day the Regional Office issued a notice of
hearing requiring EBVSAI and private respondents to attend the hearing on 22
March 1996. On August 19,1996, the Regional Director issued an order for
EBVSAI to pay computed deficiencies owing to the affected employees in
the total amount of P763,997.85. EBVSAI filed a Motion for Reconsideration, it
alleged that the Regional Director does not have any jurisdiction over the subject
matter of the case because the money claim exceeded P5,000 and that the
Regional Director should have endorsed the case to the Labor Arbiter. Also in a
supplemental motion for reconsideration, EBVSAI questioned the Regional
Directors basis for the computation of the deficiencies due to each Private
Respondent.
The Regional Director (RD) denied the motion for
reconsideration and supplemental motion for reconsideration. The RD
stated that pursuant to RA#7730, the limitations under Articles 129 and
217(6) of the Labor Code no longer apply to the Secretary of Labors
visitorial and enforcement powers under Article 128(b). The Secretary of
Labor or his duly authorized representatives are now empowered to hear and
decide, in a summary proceeding, any matter involving the recovery of any
amount of wages and other monetary claims arising out of the EmployerEmployee relations at the time of the inspection. EBVSAI appealed to the
Secretary of Labor. The Secretary of Labor affirmed with modification the
RDs order. The Secretary of Labor ruled that, pursuant to RA 7730, the
Court's decision in the Servando case is no longer controlling insofar as the
restrictive effect of Article 129 on the visitorial and enforcement power of
the Secretary of Labor is concerned. There was also no denial of due
process because EBVSAI was accorded several opportunities to present its
side but it failed to present any evidence to controvert the findings of the
RD. The EBVSAI filed motion for reconsideration which was denied by the
Secretary of Labor, and then it filed a petition for certiorari before the court of

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appeals. The CA dismissed the petition and affirmed the Secretary of


Labors decision. CA denied motion for reconsideration.
ISSUES: Whether the Secretary of Labor or his duly authorized representatives
have jurisdiction over the money claims of private respondents which
exceed P5,000.

HELD: EBVSAI maintains that under Articles 129 and 217(6) of the Labor Code,
the Labor Arbiter, not the Regional Director, has exclusive and original
jurisdiction over the case because the individual monetary claim of private
respondents exceeds P5,000. EBVSAI also argues that the case falls under the
exception clause in Article 128(b) of the Labor Code. EBVSAI asserts that the
Regional Director should have certified the case to the Arbitration Branch of the
National Labor Relations Commission (NLRC) for a full-blown hearing on the
merits. Said provisions of law do not contemplate nor cover the visitorial and
enforcement powers of the Secretary of Labor or his duly authorized
representatives. The visitorial and enforcement powers of the DOLE Regional
Director to order and enforce compliance with labor standard laws can be
exercised even where the individual claim exceeds P5,000 (Cirineo Bowling
Plaza, Inc. v. Sensing). In order to divest the Regional Director or his
representatives of Jurisdiction, the following elements must be present; (a) that
the employer contests the findings of the labor regulations officer and raises
issues thereon; (b) that in order to resolve such issues, there is a need to examine
evidentiary matters; and (c) that such matters are not verifiable in the normal
course of inspection. The rules also provide that the employer shall raise such
objections during the hearing of the case or at any time after receipt of the notice
of inspection results. In this case, the Regional Director validly assumed
jurisdiction over the money claims of private respondents even if the claims
exceeded P5,000 because such jurisdiction was exercised in accordance with
Article 128(b) of the Labor Code and the case does not fall under the exception
clause. It was only in the supplemental motion for reconsideration before the
Regional Director that EBVSAI questioned the findings of labor regulations
officer and presented documentary evidence to controvert the claims of private
respondents. The RD and the Secretary of Labor still looked into and considered
EBVSAIs documentary evidence and found that such did not warrant the
reversal of the RDs order. The Secretary of Labor also doubted the veracity and
authenticity of EBVSAI's documentary evidence. Moreover, the pieces of

evidence presented by EBVSAI were verifiable in the normal course of inspection


because all employment records of the employees should be kept and
maintained in or about the premises of the workplace, which in this case is in
Ambuklao Plant, the establishment where private respondents were regularly
assigned.
17. Arsenio Z. Locsin v. Nissan Car Lease Phils., Inc. and Luis Banson

FACTS: On January 1, 1992, Locsin was elected Executive Vice President and
Treasurer (EVP/Treasurer) of NCLPI. As EVP/Treasurer, his duties and
responsibilities included: (1) the management of the finances of the company;
(2) carrying out the directions of the President and/or the Board of Directors
regarding financial management; and (3) the preparation of financial reports to
advise the officers and directors of the financial condition of NCLPI. Locsin held
this position for 13 years, having been re-elected every year since 1992, until
January 21, 2005, when he was nominated and elected Chairman of NCLPIs
Board of Directors. On August 25, 2005, the NCLPI Board held a special meeting.
One of items of the agenda was the election of the new set of
officers. Unfortunately, Locsin was neither re-elected Chairman nor reinstated to
his previous position as EVP/Treasurer. On June 19, 2007, Locsin filed a
complaint for illegal dismissal with prayer for reinstatement, payment of back
wages, damages and attorneys fees before the Labor Arbiter against NCLPI and
Banson, who was then the President of NCLPI. Instead of filing their position
paper NCLPI and Banson filed a motion to dismiss on the ground that the Labor
Arbiter has no jurisdiction over the case since the removal of Locsin as
EVP/Treasurer involves an intra-corporate dispute and Jurisdiction is with the
RTC.
Locsin submitted his opposition to the motion maintaining his position as an
employee of NCLPI. On March 10, 2008, Labor Arbiter Concepcion issued an
Order denying the Motion to Dismiss, holding that her office acquired
jurisdiction to arbitrate and/or decide the instant complaint finding
extant in the case an employer-employee relationship. NCLPI elevated the
case to the CA through a Petition for Certiorari under Rule 65 of the Rules of
Court. NCLPI raised the issue on whether the Labor Arbiter committed grave
abuse of discretion by denying the Motion to Dismiss and holding that her office
had jurisdiction over the dispute. The CA reversed and set aside the Labor

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Arbiters Order denying the Motion to Dismiss and ruled that Locsin was a
corporate officer. Citing PD 902-A, the CA defined corporate officers as those
officers of a corporation who are given that character either by the Corporation
Code or by the corporations by-laws. The CA held that petitioners successfully
discharged their onus of establishing that private respondent was a corporate
officer who held the position EVP/Treasurer as provided in the by-laws of
Petitioner Corporation and that he held such position by virtue of election by the
Board of Directors. Article 280 of the Labor Code, the receipt of salaries by
Locsin, SSS deductions on that salary, and the element of control in the
performance of work duties indicia used by the Labor Arbiter to conclude that
Locsin was a regular employee were held inapplicable by the CA. Further, the
CA pointed out Locsins failure to state any circumstance by which NCLPI
engaged his services as a corporate officer that would make him an employee.
Locsin filed the present petition. He essentially submits that the NCLPI
wrongfully filed a petition for certiorari before the CA, as the latters remedy is to
proceed with the arbitration, and to appeal to the NLRC after the Labor Arbiter
shall have ruled on the merits of the case, as cited on Rule V, Section 6 of the
Revised Rules of the NLRC. And even if the Labor Arbiter committed grave abuse
of discretion in denying the NCLPI motion, a special civil action for certiorari,
filed with CA was not the appropriate remedy, since this was a breach of the
doctrine of exhaustion of administrative remedies. Locsin submits that he is a
regular employee of NCLPI. First, Locsin contends that NCLPI had the power to
engage his services as EVP/Treasurer. Second, he received regular wages from
NCLPI, from which his SSS and Philhealth contributions, as well as his
withholding taxes were deducted. Third, NCLPI had the power to terminate his
employment. Lastly, Nissan had control over the manner of the performance of
his functions as EVP/Treasurer, as shown by the 13 years of faithful execution of
his job, which he carried out in accordance with the standards and expectations
set by NCLPI. NCLPI submits that the CA correctly ruled that the Labor Arbiter
does not have jurisdiction over Locsins complaint for illegal dismissal. Rule VI,
Section 2(1) of the NLRC does not apply since only appealable decisions,
resolutions and orders are covered under the rule.
ISSUES: Whether the CA has original jurisdiction to review decision of the Labor
Arbiter under Rule 65.

HELD: Prefatorily, we agree with Locsins submission that the NCLPI incorrectly
elevated the Labor Arbiters denial of the Motion to Dismiss to the CA. Locsin is
correct in positing that the denial of a motion to dismiss is unappeasable. As a
general rule, an aggrieved partys proper recourse to the denial is to file his
position paper, interpose the grounds relied upon in the motion to dismiss before
the labor arbiter, and actively participate in the proceedings. Thereafter, the labor
arbiters decision can be appealed to the NLRC, not to the CA. As a rule, we
strictly adhere to the rules of procedure and do everything we can, to the point of
penalizing violators, to encourage respect for these rules. We take exception to
this general rule, however, when a strict implementation of these rules would
cause substantial injustice to the parties. In the context of this case, we see
sufficient justification to rule on the employer-employee relationship issue raised
by NCLPI, even though the Labor Arbiters interlocutory order
was incorrectly brought to the CA under Rule 65. Art 223. Of the Labor Code:
Decisions, awards, or orders of the Labor Arbiter are final and executory
unless appealed to the Commission by any or both parties within ten (10)
calendar days from receipt of such decisions, awards, or orders. Such appeal may
be entertained only on any of the following grounds: (a) If there is prima
facie evidence of abuse of discretion on the part of the Labor Arbiter; x x x.
In Air Services Cooperative, et al. v.The Court of Appeals, et al., a case where the
jurisdiction of the labor arbiter was put in issue and was assailed through a
petition for certiorari, prohibition and annulment of judgment before a regional
trial court, this Court had the opportunity to expound on the nature of appeal as
embodied in Article 223 of the Labor Code. Abuse of discretion is admittedly
within the ambit of certiorari and its grant of review thereof to the NLRC
indicates the lawmakers intention to broaden the meaning of appeal as that term
is used in the Code. For this reason, petitioners cannot argue now that the NLRC
is devoid of any corrective power to rectify a supposed erroneous assumption of
jurisdiction by the Labor Arbiter x x x. the CA clearly erred in the application
of the procedural rules by disregarding the relevant provisions of the NLRC
Rules, as well as the requirements for a petition for certiorari under the
Rules of Court. To reiterate, the proper action of an aggrieved party faced with
the labor arbiters denial of his motion to dismiss is to submit his position paper
and raise therein the supposed lack of jurisdiction. The aggrieved party cannot
immediately appeal the denial since it is an interlocutory order; the appropriate
remedial recourse is the procedure outlined in Article 223 of the Labor Code, not

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a petition for certiorari under Rule 65. But a strict implementation of the
NLRC Rules and the Rules of Court would cause injustice to the parties
because the Labor Arbiter clearly has no jurisdiction over the present intracorporate dispute. Due to existing exceptional circumstances, the ruling on
the merits that Locsin is an officer and not an employee of Nissan must take
precedence over procedural considerations. We have to give precedence to
the merits of the case, and primacy to the element of jurisdiction. Jurisdiction is
the power to hear and rule on a case and is the threshold element that must exist
before any quasi-judicial officer can act. In the context of the present case, the
Labor Arbiter does not have jurisdiction over the termination dispute Locsin
brought, and should not be allowed to continue to act on the case after the
absence of jurisdiction has become obvious, based on the records and the law. In
more practical terms, a contrary ruling will only cause substantial delay and
inconvenience as well as unnecessary expenses, to the point of injustice, to the
parties. This conclusion, of course, does not go into the merits of termination of
relationship and is without prejudice to the filing of an intra-corporate dispute on
this point before the appropriate RTC.
18; Oscar C. Reyes v. Hon. RTC of Makati

FACTS: Oscar and private respondent Rodrigo C. Reyes (Rodrigo) are two of the
four children of the spouses Pedro and Anastacia Reyes. Pedro, Anastacia, Oscar,
and Rodrigo each owned shares of stock of Zenith Insurance Corporation
(Zenith), a domestic corporation established by their family. Pedro died in 1964,
while Anastacia died in 1993. Although Pedros estate was judicially partitioned
among his heirs sometime in the 1970s, no similar settlement and partition
appear to have been made with Anastacias estate, which included her
shareholdings in Zenith. As of June 30, 1990, Anastacia owned 136,598 shares of
Zenith; Oscar and Rodrigo owned 8,715,637 and 4,250 shares, respectively.
Zenith and Rodrigo filed a complaint with the Securities and Exchange
Commission (SEC) against Oscar. It is a derivative suit initiated and filed by
Rodrigo C. Reyes to obtain an accounting of the funds and assets of Zenith
Insurance Corporation to determine the shares of stocks of deceased spouses
Pedro and Anastacia Reyes that were arbitrarily and fraudulently appropriated
by Oscar for himself which were not collated and taken into account in the
partition, distribution, and/or settlement of the estate of the deceased spouses,
for which he should be ordered to account for all the income from the time he

took these shares of stock, and should now deliver to his brothers and sisters
their just and respective shares. Oscar denied the charge that he illegally
acquired the shares of Anastacia Reyes. He asserted, as a defense, that he
purchased the subject shares with his own funds from the unissued stocks of
Zenith, and that the suit is not a bona fide derivative suit because the requisites
therefor have not been complied with. He thus questioned the SECs jurisdiction
to entertain the complaint because it pertains to the settlement of the estate of
Anastacia Reyes. When Republic Act (R.A.) No. 8799 took effect, the SECs
exclusive and original jurisdiction over cases enumerated in Section 5 of
Presidential Decree (P.D.) No. 902-A was transferred to the RTC designated as a
special commercial court.8 The records of Rodrigos SEC case were thus turned
over to the RTC, Branch 142, Makati, and docketed as Civil Case No. 00-1553.
Oscar filed a Motion to Declare Complaint as Nuisance or Harassment Suit. He
claimed that the complaint is a mere nuisance or harassment suit and should,
according to the Interim Rules of Procedure for Intra-Corporate Controversies,
be dismissed; and that it is not a bona fide derivative suit as it partakes of the
nature of a petition for the settlement of estate of the deceased Anastacia that is
outside the jurisdiction of a special commercial court. RTC denied the motion
in part and declared: A close reading of the Complaint disclosed the presence
of two (2) causes of action, namely: a) a derivative suit for accounting of the
funds and assets of the corporation which are in the control, custody, and/or
possession of the respondent [herein petitioner Oscar] with prayer to appoint a
management committee; and b) an action for determination of the shares of
stock of deceased spouses Pedro and Anastacia Reyes allegedly taken by
respondent, its accounting and the corresponding delivery of these shares to the
parties brothers and sisters. The latter is not a derivative suit and should
properly be threshed out in a petition for settlement of estate. Oscar thereupon
went to the CA on a petition for certiorari, prohibition, and mandamus and
prayed that the RTC Order be annulled and set aside and that the trial court
be prohibited from continuing with the proceedings. The appellate court
affirmed the RTC Order and denied the petition in its Decision dated May
26, 2004. It likewise denied Oscars motion for reconsideration in a
Resolution dated October 21, 2004.

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ISSUES: Whether the complaint of Rodrigo involves an Intra-Corporate


Controversies and is within the jurisdiction of the RTC acting as a special
commercial court.

HELD: To resolve it, we rely on the judicial principle that "jurisdiction over the
subject matter of a case is conferred by law and is determined by the allegations
of the complaint, irrespective of whether the plaintiff is entitled to all or some of
the claims asserted therein." P.D. No. 902-A enumerates the cases over which the
SEC (now the RTC acting as a special commercial court) exercises exclusive
jurisdiction. The allegations set forth in Rodrigos complaint principally invoke
Section 5, paragraphs (a) and (b) as basis for the exercise of the RTCs special
court jurisdiction. a) Devices or schemes employed by or any acts of the board of
directors, business associates, its officers or partners, amounting to fraud and
misrepresentation which may be detrimental to the interest of the public and/or
of the stockholders, partners, members of associations or organizations
registered with the Commission. b) Controversies arising out of intra-corporate
or partnership relations, between and among stockholders, members, or
associates; between any or all of them and the corporation, partnership or
association of which they are stockholders, members, or associates, respectively;
and between such corporation, partnership or association and the State insofar
as it concerns their individual franchise or right to exist as such entity. In an
attempt to hold Oscar responsible for corporate fraud, Rodrigo alleged in the
complaint the following: to determine the shares of stock of the deceased
spouses Pedro and Anastacia Reyes that were arbitrarily and fraudulently
appropriated for himself [herein petitioner Oscar]; Respondent Oscar C.
Reyes, through other schemes of fraud including misrepresentation,
unilaterally, and for his own benefit, capriciously transferred and took
possession and control of the management of Zenith Insurance
Corporation. Allegations of deceit, machination, false pretenses,
misrepresentation, and threats are largely conclusions of law that, without
supporting statements of the facts to which the allegations of fraud refer, do not
sufficiently state an effective cause of action. The late Justice Jose Feria, a noted
authority in Remedial Law, declared that fraud and mistake are required to be
averred with particularity in order to enable the opposing party to controvert
the particular facts allegedly constituting such fraud or mistake. Tested against
these standards, we find that the charges of fraud against Oscar were not

properly supported by the required factual allegations. While the complaint


contained allegations of fraud purportedly committed by him, these allegations
are not particular enough to bring the controversy within the special commercial
courts jurisdiction; they are not statements of ultimate facts, but are mere
conclusions of law: how and why the alleged appropriation of shares can be
characterized as "illegal and fraudulent" were not explained nor elaborated on.
Not every allegation of fraud done in a corporate setting or perpetrated by
corporate officers will bring the case within the special commercial courts
jurisdiction. No corporate power or office was alleged to have facilitated the
transfer of the shares; rather, Oscar, as an individual and without reference to his
corporate personality, was alleged to have transferred the shares of Anastacia to
his name, allowing him to become the majority and controlling stockholder of
Zenith, and eventually, the corporations President. Regretfully, we cannot read
into the complaint any specifically alleged corporate fraud that will call for the
exercise of the courts special commercial jurisdiction. Thus, we cannot affirm
the RTCs assumption of jurisdiction over Rodrigos complaint on the basis of
Section 5(a) of P.D. No. 902-A. To determine whether a case involves an intracorporate controversy, and is to be heard and decided by the branches of the RTC
specifically designated by the Court to try and decide such cases, two elements
must concur: (a) the status or relationship of the parties; and (2) the nature of
the question that is the subject of their controversy. What is material in
resolving the issues of this case under the allegations of the complaint is
Rodrigos interest as an heir since the subject matter of the present controversy
centers on the shares of stocks belonging to Anastacia, not on Rodrigos
personally-owned shares or on his personality as shareholder owning these
shares. In this light, all reference to shares of stocks in this case shall pertain to
the shareholdings of the deceased Anastacia and the parties interest therein as
her heirs. We find that insofar as the subject shares of stock (i.e., Anastacias
shares) are concerned Rodrigo cannot be considered a stockholder of Zenith.
Consequently, we cannot declare that an intra-corporate relationship exists that
would serve as basis to bring this case within the special commercial courts
jurisdiction under Section 5(b) of PD 902-A, as amended. Rodrigos complaint,
therefore, fails the relationship test. In the application of the Controversy
Test: The body rather than the title of the complaint determines the nature of an
action. Our examination of the complaint yields the conclusion that, more than
anything else, the complaint is about the protection and enforcement of

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successional rights. The controversy it presents is purely civil rather than


corporate, although it is denominated as a "complaint for accounting of all
corporate funds and assets." we hold that the nature of the present controversy
is not one which may be classified as an intra-corporate dispute and is beyond
the jurisdiction of the special commercial court to resolve. In short, Rodrigos
complaint also fails the nature of the controversy test. The RTC sitting as
special commercial court has no jurisdiction to hear Rodrigos complaint since
what is involved is the determination and distribution of successional rights to
the shareholdings of Anastacia Reyes. Rodrigos proper remedy, under the
circumstances, is to institute a special proceeding for the settlement of the estate
of the deceased Anastacia Reyes, a move that is not foreclosed by the dismissal of
his present complaint.
19. Okoy vs. Slimmers World Intl., Behavior Modification Inc. and Ronald
Joseph Moy

FACTS: Respondent Slimmers World International operating under the name


Behavior Modifications, Inc. (Slimmers World) employed petitioner Leslie Okol
(Okol) as a management trainee on 15 June 1992. She rose up the ranks to
become Head Office Manager and then Director and Vice President from 1996
until her dismissal on 22 September 1999. Prior to Okols dismissal, Slimmers
World preventively suspended Okol. The suspension arose from the seizure by
the Bureau of Customs of seven Precor elliptical machines and seven Precor
treadmills belonging to or consigned to Slimmers World. The shipment of the
equipment was placed under the names of Okol and two customs brokers for a
value less than US$500. For being undervalued, the equipment were seized.
Okol received a memorandum that her suspension had been extended
from 2 September until 1 October 1999 pending the outcome of the investigation
on the Precor equipment importation. On 17 September 1999, Okol received
another memorandum from Slimmers World requiring her to explain why no
disciplinary action should be taken against her in connection with the equipment
seized by the Bureau of Customs. Okol filed her written explanation. However,
Slimmers World found Okols explanation to be unsatisfactory so Slimmers
World terminated Okols employment.
Okol filed a complaint with the Arbitration branch of the NLRC against
Slimmers World, Behavior Modifications, Inc. and Moy (collectively called

respondents) for illegal suspension, illegal dismissal, unpaid commissions,


damages and attorneys fees, with prayer for reinstatement and payment of
Back wages.
On 22 February 2000, respondents filed a Motion to Dismiss the case
with a reservation of their right to file a Position Paper at the proper time.
Respondents asserted that the NLRC had no jurisdiction over the subject matter
of the complaint. The labor arbiter granted the motion to dismiss. The labor
arbiter ruled that Okol was the vice-president of Slimmers World at the time of
her dismissal. Since it involved a corporate officer, the dispute was an intracorporate controversy falling outside the jurisdiction of the Arbitration branch.
Okol filed an appeal with the NLRC. The NLRC reversed and set aside the labor
arbiters order. It then ordered respondent Behavior Modification, Inc./Slimmers
World International to reinstate complainant Leslie F. Okol to her former
position with full back wages plus indemnity pay and attorneys fee and should
reinstatement be not feasible separation pay equivalent to one month pay per
year of service is awarded, a fraction of at least six months considered one whole
year. Respondents filed a Motion for Reconsideration with the NLRC but the
latter denied the motion for lack of merit. They then filed an appeal with the
Court of Appeals, which set aside the NLRCs decision ruling that the case, being
an intra-corporate dispute, falls within the jurisdiction of regular courts, as
provided under R.A. 8799. The NLRC had acted without jurisdiction in giving due
course to the complaint and deprived respondents of their right to due process in
deciding the case on the merits.
ISSUES: W/N the petitioner was an employee or corporate officer of Slimmers
World; Consequently, W/N NLRC has jurisdiction over the illegal dismissal case
filed by the petitioner

HELD: Section 25 of the Corporation Code enumerates corporate officers as the


president, secretary, treasurer and such other officers as may be provided for in
the by-laws. An office is created by the charter of the corporation and the
officer is elected by the directors or stockholders. On the other hand, an
employee usually occupies no office and generally is employed not by action of
the directors or stockholders but by the managing officer of the corporation who
also determines the compensation to be paid to such employee.

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In the present case, the respondents, in their motion to dismiss filed


before the labor arbiter, questioned the jurisdiction of the NLRC in taking
cognizance of petitioners complaint. In the motion, respondents attached the
General Information Sheet (GIS) dated 14 April 1998, Minutes of the meeting of
the Board of Directors dated 14 April 1997 and Secretarys Certificate, and the
Amended By-Laws dated 1 August 1994 of Slimmers World as submitted to the
SEC to show that petitioner was a corporate officer whose rights do not fall
within the NLRCs jurisdiction. The GIS and minutes of the meeting of the board
of directors indicated that petitioner was a member of the board of directors,
holding one subscribed share of the capital stock, and an elected corporate
officer. From the documents submitted by respondents, petitioner was a director
and officer of Slimmers World. The charges of illegal suspension, illegal
dismissal, unpaid commissions, reinstatement and back wages imputed by
petitioner against respondents fall squarely within the ambit of intra-corporate
disputes. A corporate officers dismissal is always a corporate act, or an intracorporate controversy which arises between a stockholder and a corporation.
The question of remuneration involving a stockholder and officer, not a mere
employee, is not a simple labor problem but a matter that comes within the area
of corporate affairs and management and is a corporate controversy in
contemplation of the Corporation Code. It is a settled rule that jurisdiction over
the subject matter is conferred by law. The determination of the rights of a
director and corporate officer dismissed from his employment as well as the
corresponding liability of a corporation, if any, is an intra-corporate dispute
subject to the jurisdiction of the regular courts. Thus, the appellate court
correctly ruled that it is not the NLRC but the regular courts which have
jurisdiction over the present case.
20. RURAL BANK OF CORON (PALAWAN), INC., et al. vs. ANNALISA CORTES

FACTS: Virgilio Garcia, founder of petitioner corporations (the corporations),


hired the then still single Annalisa Cortes (respondent) as clerk of the Rural Bank
of Coron (Manila Office). After Virgilio died, his son Victor took over the
management of the corporations. Anita Cortes (Anita), the wife of Victor Garcia,
was also involved in the management of the corporations. Respondent later
married Anitas brother Eduardo Cortes.

Anita soon assumed the position of Vice President of petitioner Citizens


Development Incorporated (CDI) and practically controlled the financial
operations of almost all of the other corporations in the course of which she
allowed some of her relatives and in-laws, including respondent, to hold several
key sensitive positions thereat. Respondent later became the Financial Assistant,
Personnel Officer and Corporate Secretary of The Rural Bank of Coron, Personnel
Officer of CDI, and also Personnel Officer and Disbursing Officer of The Empire
Cold Storage Development Corporation (ECSDC). She simultaneously received
salaries from these corporations. On examination of the financial books of the
corporations by petitioner Sandra Garcia Escat, a daughter of Virgilio Garcia who
was previously residing in Spain, she found out
that respondent was involved
in several anomalies, drawing petitioners to terminate respondents services on
November 23, 1998 in petitioner corporations. Respondents counsel conveyed
respondents willingness to abide by the decision to terminate her but reminded
them that she was entitled to separation pay equivalent to 11 months salary as
well as to the other benefits provided by law in her favor. Respondents counsel
thus demanded the payment of respondents unpaid salary for the months of
October and November 1998, separation pay equivalent to 12 months salary,
13th month pay and other benefits. As the demand remained unheeded,
respondent filed a complaint for illegal dismissal and non-payment of salaries
and other benefits.
Petitioners moved for the dismissal of the complaint on the ground of lack
of jurisdiction, contending that the case was an intra-corporate controversy
involving the removal of a corporate officer, respondent being the Corporate
Secretary of the Rural Bank of Coron, Inc., hence, cognizable by the Securities and
Exchange Commission (SEC).
In resolving the issue of jurisdiction, the Labor Arbiter noted that aside
from her being Corporate Secretary of Rural Bank of Coron, complainant was
likewise appointed as Financial Assistant & Personnel Officer of all respondents
herein. Verily, a Financial Assistant & Personnel Officer is not a Corporate Officer
of the [petitioners] corporation, thus, pursuant to Article 217 of the Labor Code,
as amended, the instant case falls within the ambit of original and exclusive
jurisdiction of this Office. Eventually, the Labor Arbiter found for
respondent, computing the monetary award due her and ordered respondents
jointly and severally pay complainant.

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On the tenth or last day of the period of appeal, petitioners filed their
appeal. By resolution, the NLRC, while noting that petitioners timely filed the
appeal, held that the same was not accompanied by an appeal bond, a mandatory
requirement under Article 223 of the Labor Code and Section 6, Rule VI of the
NLRC New Rules of Procedure. It also noted that the Motion for Reduction of
Bond was premised on self-serving allegations. It accordingly dismissed the
appeal. Petitioners Motion for Reconsideration was denied by the NLRC hence,
they filed a Petition for Certiorari before the Court of Appeals. The CA dismissed
the petition for lack of merit. Petitioners motion for reconsideration was also
denied.
ISSUES: W/N the labor arbiter had jurisdiction to hear the case

HELD: While, indeed, respondent was the Corporate Secretary of the Rural
Bank of Coron, she was also its Financial Assistant and the Personnel
Officer of the two other petitioner corporations. Mainland Construction Co.,
Inc. v. Movilla instructs that a corporation can engage its corporate officers
to perform services under a circumstance which would make them
employees. The Labor Arbiter has thus jurisdiction over respondents
complaint.
To reiterate, the appellate court did not err in dismissing the petition
before it. And contrary to petitioners assertion, the appellate court dismissed its
petition not on a mere technicality. For the non-posting of an appeal bond
within the reglementary period divests the NLRC of its jurisdiction to entertain
the appeal. Article 223, which prescribes the appeal bond requirement, is
a rule of jurisdiction and not of procedure. There is a little leeway for
condoning a liberal interpretation thereof, and certainly none premised on the
ground that its requirements are mere technicalities. It must be emphasized that
there is no inherent right to an appeal in a labor case, as it arises solely from
grant of statute, namely the Labor Code. The requirement for posting the
surety bond is not merely procedural but jurisdictional and cannot be trifled
with. Non-compliance with such legal requirements is fatal and has the effect of
rendering the judgment final and executory. The petitioners cannot be allowed to
seek refuge in a liberal application of rules for their act of negligence.
It bears emphasis that all that is required to perfect the appeal is the
posting of a bond to ensure that the award is eventually paid should the appeal

be dismissed. Petitioners should thus have posted a bond, even if it were only
partial, but they did not. No relaxation of the Rule may thus be considered.
21: Halaguena vs. PAL

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. 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 for the
compulsory retirement of cabin attendants hired before Nov. 22, 1996 and that it
shall be fifty-five (55) for females and sixty (60) for males. 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 PALFASAP CBA. Robert D. Anduiza, President of FASAP submitted their 2004-2005
CBA proposals and manifested their willingness to commence the collective
bargaining negotiations between the management and the association, at the
soonest possible time. Petitioners then 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. The
RTC then issued an Order upholding its jurisdiction over the present case. It
reasoned that the thrust of the Petition is Sec. 144 of the subject CBA which is
allegedly discriminatory as it discriminates against female flight attendants, in
violation of the Constitution, the Labor Code, and the CEDAW. The allegations in
the Petition do not make out a labor dispute arising from employer-employee
relationship as none is shown to exist. This case is not directed specifically
against respondent arising from any act of the latter, nor does it involve a claim
against the respondent. Rather, this case seeks a declaration of the nullity of the
questioned provision of the CBA, which is within the Court's competence, with

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the allegations in the Petition constituting the bases for such relief sought. The
RTC found for the petitioner. Aggrieved, respondent, filed a petition with the CA
praying that the order of the RTC, which denied its objection to its jurisdiction,
be annuled and set aside for having been issued without and/or with grave abuse
of discretion amounting to lack of jurisdiction.
The CA declared the RTC to have NO JURISDICTION OVER THE CASE.
ISSUES: W/N 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: Petitioners submit that the RTC has jurisdiction in all civil actions in
which the subject of the litigation is incapable of pecuniary estimation and in all
cases not within the exclusive jurisdiction of any court, tribunal, person or body
exercising judicial or quasi-judicial functions. The RTC has the power to
adjudicate all controversies except those expressly withheld from the plenary
powers of the court. Accordingly, it has the power to decide issues of
constitutionality or legality of the provisions of Section 144, Part A of the PALFASAP CBA. As the issue involved is constitutional in character, the labor arbiter
or the National Labor Relations Commission (NLRC) has no jurisdiction over the
case and, thus, the petitioners pray that judgment be rendered on the merits
declaring Section 144, Part A of the PAL-FASAP CBA null and void.
Respondent, on the other hand, alleges that the labor tribunals have
jurisdiction over the present case, as the controversy partakes of a labor dispute.
The dispute concerns the terms and conditions of petitioners' employment in
PAL, specifically their retirement age. The RTC has no jurisdiction over the
subject matter of petitioners' petition for declaratory relief because the
Voluntary Arbitrator or panel of Voluntary Arbitrators have original and
exclusive jurisdiction to hear and decide all unresolved grievances arising from
the interpretation or implementation of the CBA. Regular courts have no power
to set and fix the terms and conditions of employment. Finally, respondent
alleged that petitioners' prayer before this Court to resolve their petition for
declaratory relief on the merits is procedurally improper and baseless.
Petitioner is correct. 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 allegations in


the petition for declaratory relief plainly show that petitioners' cause of action is
the annulment of Section 144, Part A of the PAL-FASAP CBA. From the
petitioners' allegations and relief prayed for in its petition, it is clear that the
issue raised is whether Section 144, Part A of the PAL-FASAP CBA is unlawful and
unconstitutional. The petitioners' primary relief is the annulment of Section 144,
Part A of the PAL-FASAP CBA, which allegedly discriminates against them for
being female flight attendants. The subject of litigation is incapable of pecuniary
estimation, exclusively cognizable by the RTC. Being an ordinary civil action, the
same is beyond the jurisdiction of labor tribunals.
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.
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 employeremployee relationship which can only be resolved by reference to the Labor Code,
other labor statutes, or their collective bargaining agreement.
Not every controversy or money claim by an employee against the
employer or vice-versa is within the exclusive jurisdiction of the labor arbiter.
Actions between employees and employer where the employer-employee
relationship is merely incidental and the cause of action precedes from a
different source of obligation is within the exclusive jurisdiction of the regular
court. Here, the employer-employee relationship between the parties is merely
incidental and the cause of action ultimately arose from different sources of
obligation, i.e., the Constitution and CEDAW.
22: Santiago vs. CF SHARP CREW MANAGEMENT, INC.

FACTS: Petitioner Santiago had been working as a seafarer for Smith Bell
Management, Inc. (respondent) for about 5 years. He had signed a new contract
of employment with respondent, with the duration of nine (9) months. Sais
contract was approved by the POEA. Petitioner was to be deployed on board the

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"MSV Seaspread" which was scheduled to leave the port of Manila for Canada on
13 February 1998. However, a week before the scheduled date of departure,
Capt. Pacifico Fernandez, respondents Vice President, sent a facsimile message
to the captain of "MSV Seaspread," from the wife of Santiago asking him not to
send her husband to MSV Seaspread anymore. He was also informed
anonymously that Santiago, if allowed to depart will jump ship in Canada like his
brother Christopher Santiago, O/S who jumped ship from the C.S. Thus, the
captain cancelled plans for Santiagos departure. Petitioner was thus told that he
would not be leaving for Canada anymore, but he was reassured that he might be
considered for deployment at some future date. Petitioner filed a complaint for
illegal dismissal, damages, and attorney's fees against respondent and its foreign
principal, Cable and Wireless (Marine) Ltd. The case was raffled to Labor Arbiter
Teresita Castillon-Lora, who ruled that the employment contract remained valid
but had not commenced since petitioner was not deployed. According to her,
respondent violated the rules and regulations governing overseas employment
when it did not deploy petitioner, causing petitioner to suffer actual damages
representing lost salary income for nine (9) months and fixed overtime fee.
On appeal by respondent, the NLRC ruled that there is no employeremployee relationship between petitioner and respondent because under the
Standard Terms and Conditions Governing the Employment of Filipino Seafarers
on Board Ocean Going Vessels (POEA Standard Contract), the employment
contract shall commence upon actual departure of the seafarer from the airport
or seaport at the point of hire and with a POEA-approved contract. In the absence
of an employer-employee relationship between the parties, the claims for illegal
dismissal, actual damages, and attorneys fees should be dismissed. On the other
hand, the NLRC found respondents decision not to deploy petitioner to be a valid
exercise of its management prerogative.
Petitioner moved for the reconsideration of the NLRCs Decision but his
motion was denied for lack of merit. He elevated the case to the Court of Appeals
through a petition for certiorari. The CA noted that there is an ambiguity in the
NLRCs Decision when it affirmed with modification the labor arbiters Decision,
because by the very modification introduced by the Commission (vacating the
award of actual damages and attorneys fees), there is nothing more left in the
labor arbiters Decision to affirm. According to the appellate court, petitioner is
not entitled to actual damages because damages are not recoverable by a worker
who was not deployed by his agency within the period prescribed in the POEA

Rules. It agreed with the NLRCs finding that petitioners non-deployment was a
valid exercise of respondents management prerogative. It added that since
petitioner had not departed from the Port of Manila, no employer-employee
relationship between the parties arose and any claim for damages against the socalled employer could have no leg to stand on.
ISSUES: W/N the seafarer, who was prevented from leaving the port of Manila
and refused deployment without valid reason but whose POEA-approved
employment contract provides that the employer-employee relationship shall
commence only upon the seafarers actual departure from the port in the point of
hire, is entitled to relief?

HELD: Petitioner maintains that respondent violated the Migrant Workers Act
and the POEA Rules when it failed to deploy him within thirty (30) calendar days
without a valid reason. In doing so, it had unilaterally and arbitrarily prevented
the consummation of the POEA- approved contract. Since it prevented his
deployment without valid basis, said deployment being a condition to the
consummation of the POEA contract, the contract is deemed consummated, and
therefore he should be awarded actual damages, consisting of the stipulated
salary and fixed overtime pay. Petitioner adds that since the contract is deemed
consummated, he should be considered an employee for all intents and purposes,
and thus the labor arbiter and/or the NLRC has jurisdiction to take cognizance of
his claims. Petitioner additionally claims that he should be considered a regular
employee, having worked for five (5) years on board the same vessel owned by
the same principal and manned by the same local agent. He argues that
respondents act of not deploying him was a scheme designed to prevent him
from attaining the status of a regular employee. Petitioner submits that
respondent had no valid and sufficient cause to abandon the employment
contract, as it merely relied upon alleged phone calls from his wife and other
unnamed callers in arriving at the conclusion that he would jump ship like his
brother.
On the other hand, respondent argues that the Labor Arbiter has no
jurisdiction to award petitioners monetary claims. His employment with
respondent did not commence because his deployment was withheld for a valid
reason. Consequently, the labor arbiter and/or the NLRC cannot entertain
adjudication of petitioners case much less award damages to him. The

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controversy involves a breach of contractual obligations and as such is


cognizable by civil courts.
There is no question that the parties entered into an employment
contract on 3 February 1998, whereby petitioner was contracted by respondent
to render services on board "MSV Seaspread" for the consideration of US$515.00
per month for nine (9) months, plus overtime pay. However, respondent failed to
deploy petitioner from the port of Manila to Canada. Considering that petitioner
was not able to depart from the airport or seaport in the point of hire, the
employment contract did not commence, and no employer-employee
relationship was created between the parties. However, a distinction must be
made between the perfection of the employment contract and the
commencement of the employer-employee relationship.
The perfection of the contract, which in this case coincided with the date
of execution thereof, occurred when petitioner and respondent agreed on the
object and the cause, as well as the rest of the terms and conditions therein. The
commencement of the employer-employee relationship, as earlier discussed,
would have taken place had petitioner been actually deployed from the point of
hire. Thus, even before the start of any employer-employee relationship,
contemporaneous with the perfection of the employment contract was the birth
of certain rights and obligations, the breach of which may give rise to a cause of
action against the erring party. Thus, if the reverse had happened, that is the
seafarer failed or refused to be deployed as agreed upon, he would be liable for
damages.
Moreover, while the POEA Standard Contract must be recognized and
respected, neither the manning agent nor the employer can simply prevent a
seafarer from being deployed without a valid reason. Respondents act of
preventing petitioner from departing the port of Manila and boarding "MSV
Seaspread" constitutes a breach of contract, giving rise to petitioners cause of
action. Respondent unilaterally and unreasonably reneged on its obligation to
deploy petitioner and must therefore answer for the actual damages he suffered.
Despite the absence of an employer-employee relationship between
petitioner and respondent, the Court rules that the NLRC has jurisdiction over
petitioners complaint. The jurisdiction of labor arbiters is not limited to claims
arising from employer-employee relationships as provided under Section 10 of
R.A. No. 8042 (Migrant Workers Act). Since the present petition involves the

employment contract entered into by petitioner for overseas employment, his


claims are cognizable by the labor arbiters of the NLRC.
23. Atlas Farms Inc. v. NLRC Nov. 18, 2002

FACTS: Private respondent Jaime O. dela Pea was employed as a veterinary aide
by petitioner Atlas Farms, Inc., in December 1975. On March 3, 1993, Pea was
allegedly caught urinating and defecating on company premises not intended for
the purpose. The farm manager of petitioner issued a formal notice directing him
to explain within 24 hours why disciplinary action should not be taken against
him for violating company rules and regulations. Pea refused, however, to
receive the formal notice. On March 20, 1993, a notice of termination with
payment of his monetary benefits was sent to him. He duly acknowledged receipt
of his separation pay of P13, 918.67. Correspondent Martial I. Abion was a
carpenter/mason and a maintenance man whose employment by petitioner
commenced on October 8, 1990. He allegedly caused the clogging of the fishpond
drainage resulting in damages worth several hundred thousand pesos when he
improperly disposed of the cut grass and other waste materials into the pond's
drainage system. Petitioner sent a written notice to Abion, requiring him to
explain what happened, otherwise, disciplinary action would be taken against
him. He refused to receive the notice and give an explanation. The company
terminated his services on October 27, 1992. He acknowledged receipt of a
written notice of dismissal, with his separation pay.
Thereafter, Pea and Abion filed separate complaints for illegal dismissal that
were later consolidated. Both claimed that their termination from the service
was due to petitioner's suspicion that they were the leaders in a plan to form a
union to compete and replace the existing
Management dominated union. The labor arbiter dismissed their complaints on
the ground that the grievance machinery in the collective bargaining agreement
(CBA) had not yet been exhausted. Private respondents availed of the grievance
process, but later on refilled the case before the NLRC in Region IV. They alleged
"lack of sympathy" on petitioner's part to engage in conciliation proceedings.
Their cases were consolidated in the NLRC. At the initial mandatory conference,
petitioner filed

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a motion to dismiss on the ground of lack of jurisdiction, alleging private


respondents themselves admitted that they were members of the employees'
union with which petitioner had an existing CBA. According to petitioner,
jurisdiction over the case belonged to the grievance machinery and thereafter
the voluntary arbitrator, as provided in the CBA. The labor arbiter dismissed the
complaint for lack of merit, finding that the case was one of illegal dismissal and
did not involve the interpretation or implementation of any CBA provision.
Private respondents appealed to the NLRC, which reversed the labor arbiter's
decision. Dissatisfied with the NLRC ruling, petitioner went to the Court of
Appeals by way of a petition for certiorari under Rule 65, seeking reinstatement
of the labor arbiter's decision. The appellate court denied the petition and
affirmed the NLRC resolution. Hence, the present petition
.
ISSUES:
1. Whether private respondents were legally and validly dismissed
2. Whether the labor arbiter and the NLRC had jurisdiction to decide complaints
for illegal dismissal

Held:
1. No. Private respondents were illegally dismissed. Coming to the merits of the
petition, the NLRC found that petitioner did not comply with the requirements of
a valid dismissal. For a dismissal to be valid, the employer must show that: (1)
the employee was accorded due process, and (2) the dismissal must be for any of
the valid causes provided for by law.22 No evidence was shown that private
respondents refused, as alleged, to receive the notices requiring them to show
cause why no disciplinary action should be taken against them. Without proof of
notice, private respondents were subsequently dismissed without hearing.
2. Yes. The labor arbiter and then the NLRC had jurisdiction over the cases
involving private respondents dismissal, and no error was committed by the
appellate court in upholding their assumption of jurisdiction.
The General rule is that, under Article 217 of the Labor Code, labor arbiters have
original and exclusive jurisdiction over termination disputes. An exception to
that rule is found in Article 261 of the Labor Code, which provides that 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 CBA and those arising from the
interpretation or enforcement of company personnel policies referred to in the
immediately preceding article. Accordingly, violations of a CBA, except those
which are gross in character, shall no longer be treated as unfair labor practice
and shall be resolved as grievances under the Collective Bargaining Agreement.
For purposes of this article, gross violations of Collective Bargaining Agreement
shall mean flagrant and or malicious refusal to comply with the economic
provisions of such agreement. The Commission, its Regional Offices and the
Regional Directors of the Department of Labor and Employment shall not
entertain disputes, grievances or matters under the exclusive and original
jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and
shall immediately dispose and refer the same to the grievance Machinery or
Arbitration provided in the Collective Bargaining Agreement.

However, the instant case is a termination dispute falling under the original and
exclusive jurisdiction of the Labor Arbiter, and does not specifically involve the
application, implementation or enforcement of company personnel policies/CBA
since the private respondents were already dismissed from work without
hearing, also depriving them of a chance to air their side at the level of the
grievance machinery. Given the fact of dismissal, it can be said that the cases
were effectively removed from the jurisdiction of the voluntary arbitrator, thus
placing them within the jurisdiction of the labor arbiter.
Where the dispute is just in the interpretation, implementation or enforcement
stage, it may be referred to the grievance machinery set up in the CBA, or
brought to voluntary arbitration. But, where there was already actual
termination, with alleged violation of the employees rights, it is already
cognizable by the labor arbiter. Also, records show, however, that private
respondents sought without success to avail of the grievance procedure in their
CBA. On this point, petitioner maintains that by so doing, private respondents
recognized that their cases still fell under the grievance machinery. According to
petitioner, without having exhausted said machinery, the private respondents
filed their action before the NLRC, in a clear act of forum shopping.
However, it is worth pointing out that private respondents went to the NLRC
only after the labor arbiter dismissed their original complaint for illegal
dismissal. Given the circumstances, private respondents acted within their legal

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rights in finding another avenue for the redress of their grievances. The Court
also upheld the NLRC in concluding that private respondents had already
exhausted the remedies under the grievance procedure and in ruling that it was
petitioner who failed to show proof that it took steps to convene the grievance
machinery after the labor arbiter first dismissed the complaint for illegal
dismissal and directed the parties to avail of the grievance procedure under
Article VII of the existing CBA. Private respondents could not be faulted for
attempting to find an impartial forum, after petitioner failed to listen to them and
after the intercession of the labor arbiter proved futile.
24 Perpetual Help Credit Cooperative Inc., vs Faburada

FACTS: Private Respondents, Benedicto Faburada, Sisinita Vilar, Imelda Tamayo


and Harold Catipay, filed a complaint against the Perpetual Help Credit
Cooperative, Inc. (PHCCI), petitioner, with the Arbitration Branch, Department of
Labor and Employment (DOLE), Dumaguete City, for illegal dismissal, premium
pay on holidays and rest days, separation pay, wage differential, moral damages,
and attorney's fees.

Forthwith, petitioner PHCCI filed a motion to dismiss the complaint on the


ground that there is no employer-employee relationship between them as
private respondents are all members and co-owners of the cooperative. On
September 3, 1990, petitioner filed a supplemental motion to dismiss alleging
that Article 121 of R.A. No. 6939, otherwise known as the Cooperative
Development Authority Law which took effect on March 26, 1990, requires
conciliation or mediation within the cooperative before a resort to judicial
proceeding.

The Labor Arbiter denied the motion to dismiss and rendered a decision in favor
of the petitioners declaring them illegally dismissed which was affirmed by the
NLRC, Hence this petition by the PHCCI, they contended that:
1. There is no Employer-Employee relationship,
2. That the labor arbiter has no jurisdiction to take cognizance of the
complaint of private respondents considering that they failed to
submit their dispute to the grievance machinery as required by P.D.
175 (strengthening the Cooperative Movement) and its
implementing rules and regulations under LOI 23. Likewise, the

Cooperative Development Authority did not issue a Certificate of


Non-Resolution pursuant to Section 8 of R.A. 6939 or the
Cooperative Development Authority Law.

ISSUES: Whether or not, the LA has jurisdiction to take cognizance of the petition

HELD: Yes, As aptly stated by the Solicitor General in his comment, P.D. 175 does
not provide for a grievance machinery where a dispute or claim may first be
submitted. LOI 23 refers to instructions to the Secretary of Public Works and
Communications to implement immediately the recommendation of the
Postmaster General for the dismissal of some employees of the Bureau of Post.
Obviously, this LOI has no relevance to the instant case. Art 121 of Republic Act
No. 6938 (Cooperative Code of the Philippines) provides the procedure how
cooperative disputes are to be resolved, thus:
"ART. 121. Settlement of Disputes. Disputes among members, officers,
directors, and committee members, and intra-cooperative disputes shall, as far as
practicable, be settled amicably in accordance with the conciliation or mediation
mechanisms embodied in the bylaws of the cooperative, and in applicable laws.
Should such a conciliation/mediation proceeding fail, the matter shall be settled
in a court of competent jurisdiction."

Complementing this Article is Section 8 of R.A. No. 6939 (Cooperative


Development Authority Law) which reads:
SEC. 8 Mediation and Conciliation. Upon request of either or both
parties, the Authority shall mediate and conciliate disputes within a cooperative
or between cooperatives: Provided that if no mediation or conciliation succeeds
within three (3) months from request thereof, a certificate of non-resolution
shall be issued by the Commission prior to the filing of appropriate action before
the proper courts.
The above provisions apply to members, officers and directors of the cooperative
involved in disputes within a cooperative or between cooperatives. There is no
evidence that private respondents are members of petitioner PHCCI and even if
they are, the dispute is about payment of wages, overtime pay, rest day and
termination of employment. Under Art. 217 of the Labor Code, these disputes are
within the original and exclusive jurisdiction of the Labor Arbiter.

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25. Austria v. NLRC, August 16, 1999
FACTS: Pastor Dionisio Austria was dismissed from service by the Seventh Day
Adventist (SDA) for misappropriation of funds, willful breach of trust, serious
misconduct; gross and habitual neglect of duties and commission of an offense
against the person of employers duly authorized representative as grounds.
Pastor Austria began serving the religious corporation on 1963 until October
1991 when his services was terminated.

From August up to October 1991, petitioner received several communications


from Mr. Ibesate the Treasurer of the Negros Mission asking him to admit
accountability and responsibility for the church tithes and offerings collected by
his wife. He explained that it was Ibesate and Pastor Buhat, the president of the
said Mission who authorized his wife to collect since he was sick at that time. On
the other hand, Pastor Buhat and petitioner had a heated argument when Pastor
Rodrigo harbored ill feelings against the latter for helping out one Danny
Diamada for collecting the unpaid balance for the repair of Rodrigos motor
vehicle. Upon discovery that Rodrigo was about to file a complaint against him
with the Mission, Austria went to Buhats office to convene the Executive
Committee but he failed since there was no quorum. Austria banged the attach
case of Buhat, scattered the books and tried to overturn the table. Subsequently,
on October 29, 1991, the Executive Committee was convened and rendered the
dismissal of Austria.

The LA ruled in favor of the petitioner. NLRC vacated the findings of the LA for
want of merit, but it reinstated the decision of LA upon filing of the MR by
petitioner. Hence, on the ground that LA has no jurisdiction due to the
constitutional provision of the separation of church and state since the case
involved an ecclesiastical affair to which the state cannot interfere. The SDA filed
a motion for reconsideration contending, for the first time on appeal, that the
Labor Arbiter has no jurisdiction over the complaint filed by petitioner due to the
constitutional provision on the separation of church and state since the case
allegedly involved an ecclesiastical affair to which the State cannot interfere. The
NLRC without ruling on the merits of the case, reversed itself once again,

sustained the argument posed by private respondents and dismissed the


complaint of petitioner.

ISSUES:
1. Whether or not the Labor Arbiter/NLRC has jurisdiction to try and decide the
complaint filed by petitioner against the SDAYES!
2. Whether or not the termination of the services of petitioner is an ecclesiastical
affair, and, as such, involves the separation of church and state andNO
3. Whether or not such termination is valid.NO

HELD:
1. Yes. The grounds for the petitioners dismissal are based on Art 282 of the
Labor Code which enumerates the just causes for termination of employment. By
this alone, it is palpable that the reason for his dismissal from the service is not a
religious nature. Coupled with this is the act of the SDA in furnishing NLRC with a
copy of petitioners letter of termination recognizing his 28 years of service. As
such, the State, through the LA and the NLRC, has the right to take cognizance of
the case and to determine whether SDA, as employer, rightfully exercised its
management prerogative to dismiss an employee. This is in consonance with the
mandate of the Constitution to afford full protection to labor. Furthermore, the
Labor Code, under Art 278 on post-employment states that the provisions of
this Title shall apply to all establishments or undertakings, whether for profit or
not. The provision does not make any exception in favor of a religious
corporation. This is made more evident by the fact that the Rules Implementing
the LC, particularly, Section 1, Rule 1, Book VI on the termination of Employment
and Retirement, categorically includes religious institutions in the coverage of
the law. Private respondents are also estopped from raising the issue of lack of
jurisdiction for the first time on appeal since the SDA had fully participated in the
trials and hearings of the case from start to finish.
2. The principle of separation of church and state finds no application in this
case. The case does not concern an ecclesiastical or purely religious affair as to
bar the State from taking cognizance of the same. An ecclesiastical affair involves
the relationship between the church and its members and relate to matters of
faith, religious doctrines, worship and governance of the congregation. Examples
of this are proceedings for excommunication, ordinations of religious ministers,

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administration of sacraments and other activities with attached religious


significance. What is involved here is the relationship of the church as an
employer and the minister as an employee. It is purely secular and has no
relation whatsoever with the practice of faith, worship or doctrines of the
church. Aside from these, SDA admitted in a certification23 issued by its officer,
Mr. Ibesate, that petitioner has been its employee for twenty-eight (28) years.
SDA even registered petitioner with the Social Security System (SSS) as its
employee. As a matter of fact, the worker's records of petitioner have been
submitted by private respondents as part of their exhibits.

3. In termination cases, the burden of proving that the termination was for a
valid or authorized cause rests on the employer. The requisites for a valid
dismissal are: (1) the employee must be afforded due process, and (2) the
dismissal must be for a valid cause as provided in Article 282 of the Labor Code.
Without these twin requirements, termination would be illegal. The rules further
require the employer to furnish the employee with two written notices, (a) a
written notice served on the employee specifying the ground or grounds for
termination and giving the said employee reasonable opportunity within which
to explain his side And (b) a written notice of termination served on the
employee indicating that upon due consideration of all circumstances, grounds
have been established to justify his termination
.
Noncompliance is fatal because the requirements are conditions sine qua non
before dismissal may validly be effected. Private respondents substantially failed
to comply with the abovementioned requirements as regards the first notice. The
notice to attend the meeting cannot be construed as a written charge. It never
stated the particular acts or omissions on which petitioner's impending
termination was grounded. The alleged grounds for Austrias dismissal from the
service were only revealed to him when the actual letter of dismissal was finally
issued. Furthermore, the Court did not sustain the validity of the dismissal based
on the grounds enumerated by the private respondents Private respondent
failed to substantially comply with the above requirements.
26 DFA vs NLRC

FACTS: On 27 January 1993, private respondent Jose C. Magnayi initiated NLRCNCR Case No. 00-01-0690-93 for his alleged illegal dismissal by ADB and the
latter's violation of the "labor-only" contracting law. Two summonses were
served, one sent directly to the ADB and the other through the DFA, both with a
copy of the complainant. Forthwith, the ADB and the DFA notified respondent LA
Nieves de Castro that the ADB, as well as its President and Officers, were covered
by an immunity from legal process except for borrowings, guaranties or the sale
of securities pursuant to Article 50(1) and Article 55 of the Agreement
Establishing the Asian Development Bank (the "Charter") in relation to Section 5
and Section 44 of the Agreement Between The Bank And The Government Of The
Philippines Regarding The Bank's Headquarters (the "Headquarters
Agreement").
The LA took cognizance of the complaint on the impression that the ADB had
waived its diplomatic immunity from suit by entering into service contracts with
different private companies, ADB has descended to the level of an ordinary party
to a commercial transaction giving rise to a waiver of its immunity from suit, In
time, the LA rendered his decision declaring ADB liable for illegal dismissal.

The ADB did not appeal the decision. Instead, on 03 November 1993, the DFA
referred the matter to the NLRC; in its referral, the DFA sought a "formal vacation
of the void judgment." The NLRC chairman replied saying that while they
exercised administrative supervision over the Commission and its regional
branches and all its personnel, including the Executive LA and Labor Arbiters'
(penultimate paragraph, Art. 213, Labor Code), he does not have the competence
to investigate or review any decision of a Labor Arbiter. However, on the purely
administrative aspect of the decision-making process, he may cause that an
investigation be made of any misconduct, malfeasance or misfeasance, upon
complaint properly made and if DFA feels that the action of LA Nieves de Castro
constitutes misconduct, malfeasance or misfeasance, it is suggested that an
appropriate complaint be lodged with the Office of the Ombudsman.
Dissatisfied, the DFA lodged the instant petition for certiorari.
ISSUES: Whether or Not, ADB is immune from labor suits

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HELD: Yes, Article 50(1) of the Charter provides: "The Bank shall enjoy
immunity from every form of legal process, except in cases arising out of or in
connection with the exercise of its powers to borrow money, to guarantee
obligations, or to buy and sell or underwrite the sale of securities."
Under Article 55 thereof "All Governors, Directors, alternates, officers and
employees of the Bank, including experts performing missions for the Bank:
"(1) shall be immune from legal process with respect of acts performed by them
in their official capacity, except when the Bank waives the immunity.

Like provisions are found in the Headquarters Agreement. Thus, its Section 5
reads: "The Bank shall enjoy immunity from every form of legal process, except
in cases arising out of, or in connection with, the exercise of its powers to borrow
money, to guarantee obligations, or to buy and sell or underwrite the sale of
securities."
And, with respect to certain officials of the bank, Section 44 of the agreement
states: "Governors, other representatives of Members, Directors, the President,
Vice-President and executive officers as may be agreed upon between the
Government and the Bank shall enjoy, during their stay in the Republic of the
Philippines in connection with their official duties with the Bank:
"xxx xxx xxx
"(b) Immunity from legal process of every kind in respect of words spoken or
written and all acts done by them in their official capacity."
The above stipulations of both the Charter and Headquarters Agreement should
be able, nay well enough, to establish that, except in the specified cases of
borrowing and guarantee operations, as well as the purchase, sale and
underwriting of securities, the ADB enjoys immunity from legal process of every
form. The Bank's officers, on their part, enjoy immunity in respect of all acts
performed by them in their official capacity. The Charter and the Headquarters
Agreement granting these immunities and privileges are treaty covenants and
commitments voluntarily assumed by the Philippine government which must be
respected.

In World Health Organization vs. Aquino, we have declared:


"It is a recognized principle of international law and under our system of
separation of powers that diplomatic immunity is essentially a political question

and courts should refuse to look beyond a determination by the executive branch
of the government, and where the plea of diplomatic immunity is recognized and
affirmed by the executive branch of the government. . . it is then the duty of the
courts to accept the claim of immunity upon appropriate suggestion by the
principal law officer of the government, . . . or other officer acting under his
direction. Hence, in adherence to the settled principle that courts may not so
exercise their jurisdiction . . . as to embarrass the executive arm of the
government in conducting foreign relations, it is accepted doctrine that 'in such
cases the judicial department of government follows the action of the political
branch and will not embarrass the latter by assuming an antagonistic
jurisdiction."
Neither is the contention of respondent that by entering into service
contracts with different private companies, ADB has descended to the level
of an ordinary party to a commercial transaction giving rise to a waiver of
its immunity from suit.
"Certainly, the mere entering into a contract by a foreign state with a private
party cannot be the ultimate test. Such an act can only be the start of the inquiry.
The logical question is whether the foreign state is engaged in the activity in the
regular course of business. If the foreign state is not engaged regularly in a
business or trade, the particular act or transaction must then be tested by its
nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then
it is an act jure imperii, especially when it is not undertaken for gain or profit."
The service contracts referred to by private respondent have not been intended
by the ADB for profit or gain but are official acts over which a waiver of
immunity would not attach.
27. PNB v. Cabansag, June 21, 2005

FACTS: Respondent Florence Cabansag arrived in Singapore as a tourist. She


applied for employment, with the Singapore Branch of the PNB, a private
banking corporation organized and existing under the laws of the Philippines. At
the time, the Branch Office had two (2) types of employees: (a) expatriates or the
regular employees, hired in Manila and assigned abroad including Singapore, and
(b) locally (direct) hired. She applied for employment as Branch Credit Officer.

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She was hired (appointed) upon the recommendation of Ruben C. Tobias a
General Manager of the PNB Singapore branch. As required, she obtained an
Employee Pass for two years. Her appointment as a Credit Officer stated that
she would undergo a probation for a period of three months from the date of
assumption of duty that can be terminated upon 1 day notice and after probation
upon one month notice. The Philippine Embassy in Singapore processed the
employment contract of respondent and then she was issued by the POEA, an
Overseas Employment Certificate, certifying that she was a bona fide contract
worker for Singapore.
Barely three (3) months in office respondent Cabansag, she submitted to Tobias,
her initial performance report that the latter was so impressed with the it that he
made a notation on said Report: GOOD WORK. However, later she was told that
she had to resign because of cost cutting measure.

Perplexed, she asked for a formal advice but she received none. She refused to
resign. Tobias demanded that she submit her letter of resignation, with the
pretext that he needed a Chinese speaking Credit Officer to penetrate the local
market, with the information that a Chinese speaking Credit Officer had already
been hired and will be reporting for work soon. She was warned that, unless she
submitted her letter of resignation, her employment record will be blemished
with the notation DISMISSED spread thereon. Still respondent Cabansag
refused to resign; Tobias dismissed her just about four months from hiring.
Cabansag filed a complaint of illegal dismissal with the labor arbiter which
rendered a decision finding respondents guilty of Illegal dismissal and devoid of
due process. The respondents appealed to the NLRC, contending that the Labor
Arbiter has no jurisdiction because respondent was "locally hired" and totally
"governed by and subject to the laws, common practices and customs" of
Singapore, not of the Philippines. The NLRC denied the respondents motion.
The CA also held that petitioner had failed to establish a just cause for the
dismissal of respondent. The bank had also failed to give her sufficient notice and
an opportunity to be heard and to defend herself.
ISSUES: Whether or not the arbitration branch of the NLRC in the National
Capital Region has jurisdiction over the instant controversy

HELD: Yes. Based on Art. 127 and more specifically, Section 10 of RA 80421 and
Labor arbiters clearly have original and exclusive jurisdiction over claims arising
from Employer Employee relations, including termination disputes involving all
workers, among whom are overseas Filipino workers (OFW).

Prior to employing respondent, petitioner had to obtain an employment pass for


her from the Singapore Ministry of Manpower. Securing the pass was a
regulatory requirement pursuant to the immigration regulations of Singapore.
Similarly, the Philippine government requires non-Filipinos working in the
country to first obtain a local work permit in order to be legally employed here.
That permit, however, does not automatically mean that the noncitizen is
thereby bound by local laws only, as averred by petitioner. It does not at all imply
a waiver of ones national laws on labor. Absent any clear and convincing
evidence to the contrary, such permit simply means that its holder has a legal
status as a worker in the issuing country.
Noteworthy is the fact that respondent likewise applied for and secured an
Overseas Employment Certificate from the POEA through the Philippine
Embassy in Singapore. The Certificate issued declared her a bona fide contract
worker for Singapore. Under Philippine law, this document authorized her
working status in a foreign country and entitled her to all benefits and processes
under our statutes. Thus, even assuming arguendo that she was considered at the
start of her employment as a direct hire governed by and subject to the laws,
common practices and customs prevailing in Singapore[17] she subsequently
became a contract worker or an OFW who was covered by Philippine labor laws
and policies upon certification by the POEA. At the time her employment was
illegally terminated, she already possessed the POEA employment Certificate.
Whether employed locally or overseas, all Filipino workers enjoy the protective
mantle of Philippine labor and social legislation, contract stipulations to the
contrary notwithstanding.
Moreover, petitioner admits that it is a Philippine corporation doing business
through a branch office in Singapore. Significantly, respondents employment by
the Singapore branch office had to be approved by the president of the bank
whose principal offices were in Manila. This circumstance militates against
petitioner's contention that respondent was "locally hired, and totally "governed
by and subject to the laws, common practices and customs" of Singapore, not of

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the Philippines. Instead, this only reinforces the fact that respondent falls under
the legal definition of migrant worker, in this case one deployed in Singapore.
Hence, petitioner cannot escape the application of Philippine laws or the
jurisdiction of the NLRC and the labor arbiter
28. Banez vs Valdevilla and Oro Marketing Inc

FACTS: Petitioner Bebiano Baez was the sales operations manager of private
respondent Oro Marketing in its branch in Iligan City. In 1993, private
respondent "indefinitely suspended" petitioner and the latter filed a complaint
for illegal dismissal with NLRC-iligan City.

On July 7, 1994, LA Nicodemus G. Palangan rendered a judgment in favor of the


petitioner and ordered the payment of separation pay in lieu of reinstatement,
and of back wages and attorney's fees. The decision was appealed to the NLRC,
which dismissed the same for having been filed out of time. Elevated by petition
for certiorari before this Court, the case was dismissed on technical grounds;
however, the Court also pointed out that even if all the procedural requirements
for the filing of the petition were met, it would still be dismissed for failure to
show grave abuse of discretion on the part of the NLRC.

On November 13, 1995, private respondent filed a complaint for damages before
the RTC - Misamis Oriental, docketed as Civil Case No. 95-554, which prayed for
the payment of the following:
a. P709,217.97 plus 12% interest as loss of profit and/or unearned income of
three years;
b. P119,700.00 plus 12% interest as estimated cost of supplies, facilities,
properties, space, etc. for three years;
c. P5,000.00 as initial expenses of litigation; and
d. P25,000.00 as attorney's fees. 4
On January 30, 1996, petitioner filed a motion to dismiss the above complaint.
He contends that the action for damages having arisen from an employeremployee relationship was squarely under the exclusive original jurisdiction of
the NLRC under Article 217(a), paragraph 4 of the Labor Code and is barred by
reason of the final judgment in the labor case and that He accused private

respondent of splitting causes of action, stating that the latter could very well
have included the instant claim for damages in its counterclaim before the LA. He
also pointed out that the civil action of private respondent is an act of forumshopping and was merely resorted to after a failure to obtain a favorable decision
with the NLRC.
Respondent Judge Downey Valdevilla ruled that the complaint which is for
damages does not ask for any relief under the Labor Code of the Philippines. It
seeks to recover damages as redress for defendant's breach of his contractual
obligation to plaintiff who was damaged and prejudiced. The Court believes such
cause of action is within the realm of civil law, and jurisdiction over the
controversy belongs to the regular courts.

ISSUES: whether or not the petition is within the jurisdiction of the Labor Arbiter

HELD: Yes, Article 217(a), paragraph 4 of the Labor Code, which was already in
effect at the time of the filing of this case, reads:
ARTICLE 217. Jurisdiction of Labor Arbiters and the Commission. (a)
Except as otherwise provided under this Code, the Labor Arbiters shall have
original and exclusive jurisdiction to hear and decide, within thirty (30) calendar
days after the submission of the case by the parties for decision without
extension, even in the absence of stenographic notes, the following cases
involving all workers, whether agricultural or non-agricultural:
xxx xxx xxx
4. Claims for actual, moral, exemplary and other forms of damages arising from
the employer-employee relations;
xxx xxx xxx

The above provisions are a result of the amendment by Sec 9 of R.A. No. 6715,
which took effect on March 21, 1989, and which put to rest the earlier confusion
as to who between Labor Arbiters and regular courts had jurisdiction over claims
for damages as between employers and employees.
History of Art 271

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Prior to R.A. 6715, jurisdiction over all money claims of workers, including
claims for damages, was originally lodged with the Labor Arbiters and the NLRC
by Article 217 of the Labor Code. On May 1, 1979, however, P.D. 1367 amended
said Article 217 to the effect that "Regional Directors shall not indorse and Labor
Arbiters shall not entertain claims for moral or other forms of damages." This
limitation in jurisdiction, however, lasted only briefly since on May 1, 1980, P.D.
No. 1691 nullified P.D. No. 1367 and restored Article 217 of the Labor Code
almost to its original form. Presently, and as amended by R.A. 6715, the
jurisdiction of Labor Arbiters and the NLRC in Article 217 is comprehensive
enough to include claims for all forms of damages "arising from the employeremployee relations".
There is no mistaking the fact that in the case before us, private respondent's
claim against petitioner for actual damages arose from a prior employeremployee relationship.

In Ebon vs. de Guzman, 113 SCRA 52, 13 this Court discussed:


The lawmakers in divesting the Labor Arbiters and the NLRC of jurisdiction to
award moral and other forms of damages in labor cases could have assumed that
the Labor Arbiters' position-paper procedure of ascertaining the facts in dispute
might not be an adequate tool for arriving at a just and accurate assessment of
damages, as distinguished from back wages and separation pay, and that the trial
procedure in the Court of First Instance would be a more effective means of
determining such damages. . .
Evidently, the lawmaking authority had second thoughts about depriving the
Labor Arbiters and the NLRC of the jurisdiction to award damages in labor cases
because that setup would mean duplicity of suits, splitting the cause of action
and possible conflicting findings and conclusions by two tribunals on one and the
same claim.
So, on May 1, 1980, PD No. 1691 (which substantially reenacted Article 217 in its
original form) nullified PD No. 1367 and restored to the Labor Arbiter and the
NLRC their jurisdiction to award all kinds of damages in cases arising from
employer-employee relations. . . .
Clearly, respondent court's taking jurisdiction over the instant case would bring
about precisely the harm that the lawmakers sought to avoid in amending the

Labor Code to restore jurisdiction over claims for damages of this nature to the
NLRC.
29. SANTOS V SERVIER PHILS

FACTS: Petitioner Isabela Santos was the Human Resource Manager of


respondent Servier Philippines, Inc. since 1991 until her termination from
service in 1999. (8years) In 1998, Isabela Santos attended a meeting of all human
resource managers of respondent, held in Paris, France. Since the last day of the
meeting coincided with the graduation of her only child, she arranged for a
European vacation with her family right after the meeting. She, thus, filed a
vacation leave. Petitioner Isabela, together with her husband Antonio P. Santos,
her son, and some friends, had dinner at Leon des Bruxelles, a Paris restaurant
known for mussels as their specialty. While having dinner, petitioner complained
of stomach pain, then vomited. Eventually, she was brought to the hospital
known as Centre Chirurgical de LQuest where she fell into coma for 21 days and
later stayed at the Intensive Care Unit (ICU) for 52 days. The hospital found that
the probable cause of her sudden attack was "alimentary allergy," as she had
recently ingested a meal of mussels which resulted in a concomitant urticarial
eruption.
During the time that petitioner was confined at the hospital, her husband and son
stayed with her in Paris. Petitioners hospitalization expenses, as well as those of
her husband and son, were paid by respondent Servier Phils. Respondent Servier
Phils had requested the petitioner Isabelas physician to conduct a thorough
physical and psychological evaluation of her condition, to determine her fitness
to resume her work at the company. Petitioners physician concluded that the
petitioner had not fully recovered mentally and physically. Hence, respondent
was constrained to terminate petitioners services. As a consequence of
petitioners termination from employment, respondent offered a retirement
package which consists of:
Retirement Plan Benefits: P 1,063,841.76
Insurance Pension at 20,000.00/month for 60 months from company sponsored
group life policy: P 1,200,000.00
Educational assistance: P 465,000.00

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Medical and Health Care: P 200,000.00

Labor Relations Case Digest - Atty. Joyrich Golangco

Of the promised retirement benefits amounting to P1, 063,841.76, only


P701,454.89 was released to petitioners husband, the balance thereof was
withheld allegedly for taxation purposes. Respondent also failed to give the other
benefits listed above. Petitioner, represented by her husband, instituted the
instant case for unpaid salaries Unpaid separation pay Unpaid balance of
retirement package plus interest Insurance pension for permanent disability
Educational assistance for her son Medical assistance Reimbursement of
medical and rehabilitation expenses Moral, exemplary, and actual damages, plus
attorneys fees The Labor Arbiter dismissed the petition. The arbiter refused to
rule on the legality of the deductions made by respondent from petitioners total
retirement benefits for taxation purposes, as the issue was beyond the
jurisdiction of the NLRC.

On appeal, the NLRC emphasized that petitioner was dismissed from


employment due to a disease/disability under Article 284 of the Labor Code. In
view of her non-entitlement to retirement benefits, the amounts received by
petitioner should then be treated as her separation pay.

Unsatisfied, petitioner elevated the matter to the Court of Appeals which


affirmed the NLRC decision. The SC, before deciding on whether or not the
LA/NLRC may decide on the legality of the deduction due to tax, first settled the
issue on whether or not the benefit received by petitioner is a retirement benefit
or a separation pay. Respondent dismissed the petitioner from her employment
based on Article 284 of the Labor Code, as amended, which reads:
Art. 284. DISEASE AS GROUND FOR TERMINATION
An employer may terminate the services of an employee who
has been found to be suffering from any disease and whose continued
employment is prohibited by law or is prejudicial to his health as well as
to the health of his co-employees: Provided, That he is paid separation
pay equivalent to at least one (1) month salary or to one-half (1/2)
month salary for every year of service, whichever is greater, a fraction of
at least six (6) months being considered as one (1) whole year.

As she was dismissed on the abovementioned ground, the law gives the
petitioner the right to demand separation pay. However, respondent established
a retirement plan in favor of all its employees which specifically provides for
"disability retirement," to wit:
Sec. 4. DISABILITY RETIREMENT
In the event that a Member is retired by the Company due to
permanent total incapacity or disability, as determined by a competent
physician appointed by the Company, his disability retirement benefit
shall be the Full Members Account Balance determined as of the last
valuation date. x x

The receipt of retirement benefits does not bar the retiree from receiving
separation pay. Separation pay is a statutory right designed to provide the
employee with the wherewithal during the period that he/she is looking for
another employment. On the other hand, retirement benefits are intended to
help the employee enjoy the remaining years of his life, lessening the burden of
worrying about his financial support, and are a form of reward for his loyalty and
service to the employer. Hence, they are not mutually exclusive. However, this is
only true if there is no specific prohibition against the payment of both benefits
in the retirement plan and/or in the Collective Bargaining Agreement (CBA).In
the instant case, the Retirement Plan bars the petitioner from claiming additional
benefits on top of that provided for in the Plan.

There being such a provision, petitioner is entitled only to either the separation
pay under the law or retirement benefits under the Plan, and not both. Clearly,
the benefits received by petitioner from the respondent represent her retirement
benefits under the Plan. The question that now confronts us is whether these
benefits are taxable. If so, respondent correctly made the deduction for tax
purposes. Otherwise, the deduction was illegal and respondent is still liable for
the completion of petitioners retirement benefits. Respondent argues that the
legality of the deduction from petitioners total benefits cannot be taken
cognizance of by this Court since the issue was not raised during the early stage
of the proceedings.
ISSUES: W/N Isabel Santoss claim for illegal deduction falls within the
LA/NLRCs jurisdiction

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HELD: YES. The issue of deduction for tax purposes is intertwined with the main
issue of whether or not petitioners benefits have been fully given her. It is,
therefore, a money claim arising from the employer-employee relationship,
which clearly falls within the jurisdiction41 of the Labor Arbiter and the NLRC.
Retirement benefits are EXEMPT from tax, provided that:
(1) a reasonable private benefit plan is maintained by the employer
(2) the retiring official or employee has been in the service of the same
employer for at least ten (10) years
(3) the retiring official or employee is not less than fifty (50) years of age
at the time of his retirement and
(4) the benefit had been availed of only once.
Here, Isabela was disqualified for disability retirement. At the time of such
retirement, she was only 41 years of age and had been in the service for more or
less eight (8) years. As such, such retirement benefits are NOT EXEMPT from
taxation for failure to comply with the age and length of service requirements.
Therefore, SERRVIER PHILIPPINES cannot be faulted for deducting from
Isabela's total retirement benefits the amount of P362,386.87, for taxation
purposes.
30. Pepsi Cola v hon. Lolita o. Gal-lang et al

FACTS: The private respondents were employees of the petitioner who were
suspected of complicity in the irregular disposition of empty Pepsi Cola bottles.
On July 16, 1987, the petitioners filed a criminal complaint for theft against them
but this was later withdrawn and substituted with a criminal complaint for
falsification of private documents. On November 26, 1987, after a preliminary
investigation conducted by the Municipal Trial Court of Tanauan, Leyte, the
complaint was dismissed. The dismissal was affirmed on April 8, 1988, by the
Office of the Provincial Prosecutor.
Meantime, allegedly after an administrative investigation, the private
respondents were dismissed by the petitioner company on November 23, 1987.
As a result, they lodged a complaint for illegal dismissal with the Regional
Arbitration Branch of the NLRC in Tacloban City on December 1, 1987, and
decisions demanded reinstatement with damages. In addition, they instituted in

the Regional Trial Court of Leyte, on April 4, 1988, a separate civil complaint
against the petitioners for damages arising from what they claimed to be their
malicious prosecution.

The petitioners moved to dismiss the civil complaint on the ground that the trial
court had no jurisdiction over the case because it involved employee-employer
relations that were exclusively cognizable by the labor arbiter.

ISSUES: Whether the private respondents civil complaint for damages falls
under the jurisdiction of the labor arbiter.

HELD: NO, It must be stressed that not every controversy involving workers and
their employers can be resolved only by the labor arbiters. This will be so only if
there is a "reasonable causal connection" between the claim asserted and
employee-employer relations to put the case under the provisions of Article 217.
Absent such a link, the complaint will be cognizable by the regular courts of
justice in the exercise of their civil and criminal jurisdiction.

The case now before the Court involves a complaint for damages for malicious
prosecution which was filed with the Regional Trial Court of Leyte by the
employees of the defendant company. It does not appear that there is a
"reasonable causal connection" between the complaint and the relations of the
parties as employer and employees. The complaint did not arise from such
relations and in fact could have arisen independently of an employment
relationship between the parties. No such relationship or any unfair labor
practice is asserted. What the employees are alleging is that the petitioners acted
with bad faith when they filed the criminal complaint which the Municipal Trial
Court said was intended "to harass the poor employees" and the dismissal of
which was affirmed by the Provincial Prosecutor "for lack of evidence to
establish even a slightest probability that all the respondents herein have
committed the crime imputed against them." This is a matter which the labor
arbiter has no competence to resolve as the applicable law is not the Labor Code
but the Revised Penal Code.
31. 7K CORPORATION, v. EDDIE ALBARICO

FACTS: When he was dismissed on 5 April 1993, respondent Eddie Albarico


(Albarico) was a regular employee of petitioner 7K Corporation, a company

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selling water purifiers. In April of 1993, the chief operating officer of petitioner
7K Corporation terminated Albaricos employment allegedly for his poor sales
performance. Respondent had to stop reporting for work, and he subsequently
submitted his money claims against petitioner for arbitration before the National
Conciliation and Mediation Board (NCMB). The issue for voluntary arbitration
before the NCMB, according to the parties Submission Agreement dated 19 April
1993, was whether respondent Albarico was entitled to the payment of
separation pay and the sales commission reserved for him by the corporation.
On 17 September 1997, petitioner corporation filed its Position Paper in the
NCMB arbitration case. It denied that respondent was terminated from work,
much less illegally dismissed. The corporation claimed that he had voluntarily
stopped reporting for work after receiving a verbal reprimand for his sales
performance; hence, it was he who was guilty of abandonment of employment.
Respondent made an oral manifestation that he was adopting the position paper
he submitted to the labor arbiter, a position paper in which the former claimed
that he had been illegally dismissed.

On 18 November 2005, the NCMB voluntary arbitrator rendered a Decision


finding petitioner corporation liable for illegal dismissal. The termination of
respondent Albarico, by reason of alleged poor performance, was found invalid.
The arbitrator explained that the promotions, increases in salary, and awards
received by respondent belied the claim that the latter was performing poorly. It
was also found that Albarico could not have abandoned his job, as the
abandonment should have been clearly shown. Mere absence was not sufficient,
according to the arbitrator, but must have been accompanied by overt acts
pointing to the fact that the employee did not want to work anymore. It was
noted that, in the present case, the immediate filing of a complaint for illegal
dismissal against the employer, with a prayer for reinstatement, showed that the
employee was not abandoning his work. The voluntary arbitrator also found that
Albarico was dismissed from his work without due process.
However, it was found that reinstatement was no longer possible because of the
strained relationship of the parties. Thus, in lieu of reinstatement, the voluntary
arbitrator ordered the corporation to pay separation pay for two years at P4,456
for each year, or a total amount of P8,912.

Additionally, in view of the finding that Albarico had been illegally dismissed, the
voluntary arbitrator also ruled that the former was entitled to back wages in the
amount of P90, 804. Finally, the arbitrator awarded attorneys fees in
respondents favor, because he had been compelled to file an action for illegal
dismissal.

Petitioner corporation subsequently appealed to the CA, imputing to the


voluntary arbitrator grave abuse of discretion amounting to lack or excess of
jurisdiction for awarding back wages and attorneys fees to respondent Albarico
based on the formers finding of illegal dismissal. The arbitrator contended that
the issue of the legality of dismissal was not explicitly included in the Submission
Agreement dated 19 April 1993 filed for voluntary arbitration and resolution. It
prayed that the said awards be set aside, and that only separation pay of
P8,912.00 and sales commission of P4,787.60 be awarded.
The CA affirmed the Decision of the voluntary arbitrator, but eliminated the
award of attorneys fees for having been made without factual, legal or equitable
justification. Petitioners Motion for Partial Reconsideration was denied as well.
Hence, this Petition.

ISSUES: Whether the voluntary arbitrator properly assumed jurisdiction to


decide the issue of the legality of the dismissal of respondent as well as the
latters entitlement to back wages, (even if neither the legality nor the
entitlement was expressly claimed in the Submission Agreement of the parties).
HELD: YES. Voluntary arbitrators may, by agreement of the parties, assume
jurisdiction over a termination dispute such as the present case, contrary to the
assertion of petitioner that they may not.

We rule that although petitioner correctly contends that separation pay may in
fact be awarded for reasons other than illegal dismissal, the circumstances of the
instant case lead to no other conclusion than that the claim of respondent
Albarico for separation pay was premised on his allegation of illegal dismissal.
Thus, the voluntary arbitrator properly assumed jurisdiction over the issue of
the legality of his dismissal.

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True, under the Labor Code, separation pay may be given not only when there is
illegal dismissal. In fact, it is also given to employees who are terminated for
authorized causes, such as redundancy, retrenchment or installation of laborsaving devices under Article 28329 of the Labor Code. Additionally,
jurisprudence holds that separation pay may also be awarded for considerations
of social justice, even if an employee has been terminated for a just cause other
than serious misconduct or an act reflecting on moral character.30 The Court has
also ruled that separation pay may be awarded if it has become an established
practice of the company to pay the said benefit to voluntarily resigning
employees31 or to those validly dismissed for non-membership in a union as
required in a closed-shop agreement.32
The above circumstances, however, do not obtain in the present case. There is no
claim that the issue of entitlement to separation pay is being resolved in the
context of any authorized cause of termination undertaken by petitioner
corporation. Neither is there any allegation that a consideration of social justice
is being resolved here. In fact, even in instances in which separation pay is
awarded in consideration of social justice, the issue of the validity of the
dismissal still needs to be resolved first. Only when there is already a finding of a
valid dismissal for a just cause does the court then award separation pay for
reason of social justice. The other circumstances when separation pay may be
awarded are not present in this case.
The foregoing findings indisputably prove that the issue of separation pay
emanates solely from respondents allegation of illegal dismissal. In fact,
petitioner itself acknowledged the issue of illegal dismissal in its position paper
submitted to the NCMB.

There has to be a reason for deciding the issue of respondents entitlement to


separation pay. To think otherwise would lead to absurdity, because the
voluntary arbitrator would then be deciding that issue in a vacuum. The
arbitrator would have no basis whatsoever for saying that Albarico was entitled
to separation pay or not if the issue of the legality of respondents dismissal was
not resolve first.

Hence, the voluntary arbitrator correctly assumed that the core issue behind the
issue of separation pay is the legality of the dismissal of respondent. Moreover,

we have ruled in Sime Darby Pilipinas, Inc. v. Deputy Administrator Magsalin33


that a voluntary arbitrator has plenary jurisdiction and authority to interpret an
agreement to arbitrate and to determine the scope of his own authority when the
said agreement is vague subject only, in a proper case, to the certiorari
jurisdiction of this Court.
Having established that the issue of the legality of dismissal of Albarico was in
fact necessarily albeit not explicitly included in the Submission Agreement
signed by the parties, this Court rules that the voluntary arbitrator rightly
assumed jurisdiction to decide the said issue.

Consequently, we also rule that the voluntary arbitrator may award back wages
upon a finding of illegal dismissal, even though the issue of entitlement thereto is
not explicitly claimed in the Submission Agreement. Backwages, in general, are
awarded on the ground of equity as a form of relief that restores the income lost
by the terminated employee by reason of his illegal dismissal.
32. LAND BANK OF THE PHILIPPINES, petitioner, vs. SEVERINO LISTANA,
SR., respondent.

FACTS: Respondent Severino Listana is the owner of a parcel of land containing


an area of 246.0561 hectares, located in Inlagadian, Casiguran, Sorsogon, covered
by Transfer Certificate of Title No. T-20193. He voluntarily offered to sell the said
land to the government, through the Department of Agrarian Reform (DAR),
under Section 20 of R.A. 6657, also known as the Comprehensive Agrarian
Reform Law of 1988 (CARL). The DAR valued the property at P5,871,689.03,
which was however rejected by the respondent. Hence, the Department of
Agrarian Reform Adjudication Board (DARAB) of Sorsogon commenced
summary administrative proceedings to determine the just compensation of the
land.
On October 14, 1998, the DARAB rendered a Decision, the dispositive portion of
which reads as follows:
WHEREFORE, taking into consideration the foregoing
computation, the prior valuation made by the Land Bank of the
Philippines is hereby set aside and a new valuation in the
amount of TEN MILLION NINE HUNDRED FIFTY SIX THOUSAND

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NINE HUNDRED SIXTY THREE PESOS AND 25 CENTAVOS


(P10,956,963.25) for the acquired area of 240.9066 hectares.
The Land Bank of the Philippines is hereby ordered to pay the
same to the landowner in the manner provided for by law.
SO ORDERED.

Thereafter, a Writ of Execution was issued by the PARAD directing the manager
of Land Bank (Mr. Alex Lorayes) to pay the respondent the aforesaid amount as
just compensation in the manner provided by law.

On September 2, 1999, respondent filed a Motion for Contempt with the PARAD,
alleging that petitioner Land Bank failed to comply with the Writ of Execution
issued on June 18, 1999. He argued that such failure of the petitioner to comply
with the writ of execution constitutes contempt of the DARAB.
On August 20, 2000, the PARAD issued an Order granting the Motion for
Contempt, as follows:
WHEREFORE, premises considered, the motion for contempt is
hereby GRANTED, thus ALEX A. LORAYES, as Manager of
respondent LAND BANK, is cited for indirect contempt and
hereby ordered to be imprisoned until he complies with the
Decision of the case dated October 14, 1998.

SO ORDERED.

Petitioner Land Bank filed a petition for injunction before the Regional Trial
Court of Sorsogon, Sorsogon, with application for the issuance of a writ of
preliminary injunction to restrain PARAD Capellan from issuing the order of
arrest.13 The case was raffled to Branch 51 of said court. On January 29, 2001,
the trial court issued an Order, the dispositive portion of which reads:
WHEREFORE, premises considered, the respondent Provincial
Adjudicator of the DARAB or anyone acting in its stead is
enjoined as it is hereby enjoined from enforcing its order of
arrest against Mr. Alex A. Lorayes pending the final termination

of the case before RTC Branch 52, Sorsogon upon the posting of
a cash bond by the Land Bank.
SO ORDERED

Respondent filed a Motion for Reconsideration of the trial courts order, which
was denied in an Order dated April 2, 2001.

Thus, respondent filed a special civil action for certiorari with the Court of
Appeals, docketed as CA-G.R. SP No. 65276. On December 11, 2001, the Court of
Appeals rendered the assailed decision which nullified the Orders of the Regional
Trial Court of Sorsogon, Sorsogon, Branch 51.
Hence, the instant petition for review

ISSUES: Whether the order for the arrest of petitioners manager, Mr. Alex
Lorayes by the PARAD, was valid

HELD: No. There are only two ways a person can be charged with indirect
contempt, namely, (1) through a verified petition; and (2) by order or formal
charge initiated by the court motu proprio.In the case at bar, neither of these
modes was adopted in charging Mr. Lorayes with indirect contempt.
More specifically, Rule 71, Section 12 of the 1997 Rules of Civil Procedure,
referring to indirect contempt against quasi-judicial entities, provides:
Sec. 12. Contempt against quasi-judicial entities. Unless
otherwise provided by law, this Rule shall apply to contempt
committed against persons, entities, bodies or agencies
exercising quasi-judicial functions, or shall have suppletory
effect to such rules as they may have adopted pursuant to
authority granted to them by law to punish for contempt. The
Regional Trial Court of the place wherein the contempt has
been committed shall have jurisdiction over such charges as
may be filed therefore. (emphasis supplied)

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The foregoing amended provision puts to rest once and for all the questions
regarding the applicability of these rules to quasi-judicial bodies, to wit:
1. This new section was necessitated by the holdings that the
former Rule 71 applied only to superior and inferior courts and
did not comprehend contempt committed against
administrative or quasi-judicial officials or bodies, unless said
contempt is clearly considered and expressly defined as
contempt of court, as is done in the second paragraph of Sec.
580, Revised Administrative Code. The provision referred to
contemplates the situation where a person, without lawful
excuse, fails to appear, make oath, give testimony or produce
documents when required to do so by the official or body
exercising such powers. For such violation, said person shall be
subject to discipline, as in the case of contempt of court, upon
application of the official or body with the Regional Trial Court
for the corresponding sanctions.

Evidently, quasi-judicial agencies that have the power to cite persons for indirect
contempt pursuant to Rule 71 of the Rules of Court can only do so by initiating
them in the proper Regional Trial Court. It is not within their jurisdiction and
competence to decide the indirect contempt cases. These matters are still within
the province of the Regional Trial Courts. In the present case, the indirect
contempt charge was filed, not with the Regional Trial Court, but with the
PARAD, and it was the PARAD that cited Mr. Lorayes with indirect contempt.

Hence, the contempt proceedings initiated through an unverified Motion for


Contempt filed by the respondent with the PARAD were invalid for the following
reasons: First, the Rules of Court clearly require the filing of a verified petition
with the Regional Trial Court, which was not complied with in this case. The
charge was not initiated by the PARAD motu proprio; rather, it was by a motion
filed by respondent. Second, neither the PARAD nor the DARAB have jurisdiction
to decide the contempt charge filed by the respondent. The issuance of a warrant
of arrest was beyond the power of the PARAD and the DARAB. Consequently, all
the proceedings that stemmed from respondents Motion for Contempt,
specifically the Orders of the PARAD dated August 20, 2000 and January 3, 2001
for the arrest of Alex A. Lorayes, are null and void.

33. MANILA ELECTRIC COMPANY, v .J AN CARLO GALA

FACTS: On March 2, 2006, respondent Jan Carlo Gala commenced employment


with the petitioner Meralco Electric Company (Meralco) as a probationary
lineman. He was assigned at Meralcos Valenzuela Sector. Barely four months on
the job, Gala was dismissed for the alleged involvement in stealing Meralcos
electrical supplies sometime in May 25, 2006.

Apparently, prior to the incident, there had been "reported pilferage" or


"rampant theft" by the crew of Gala. At the time of the incident itself, unused
supplies and materials had not been returned to the prejudice of the company. So
on May 25, unknown to the workers, a surveillance task force was formed by
Meralco to monitor the activities of Gala and his colleagues on the worksite and
to record everything using a handy cam. While the Meralco crew was at work,
one Noberto "Bing" Llanes, a non Meralco employee, arrived. He appeared to be
known to the Meralco foremen as the supervisors and other crew members were
seen conversing with him. Llanes boarded the trucks, without being stopped,
and took out what were later found as electrical supplies. Gala did not call the
attention of his supervisors because, as he contends, he was just a mere
linesman. After proper investigation of Meralco, Gala was dismissed. Gala filed a
case for illegal dismissal contending that his mere presence at the scene of the
incident was not sufficient to hold him liable as a conspirator.
Facts directly related to Article 221, LCP:
By way of Galas Comment to the Petition for Cetiorari filed by Meralco, Gala
asks for a denial of the petition because of, among others, serious and fatal
infirmities in the petition. Gala contends, in regard to the alleged procedural
defects of the petition, that the "Verification and Certification," "Secretarys
Certificate" and "Affidavit of Service" do not contain the details of the Community
or Residence Tax Certificates of the affiants, in violation of Section 6 of
Commonwealth Act No. 465 (an Act to Impose a Residence Tax). Additionally, the
lawyers who signed the petition failed to indicate their updated Mandatory
Continuing Legal Education (MCLE) certificate numbers, in violation of the rules.

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LA RULING: DISMISSED FOR LACK OF MERIT. Galas participation in the


pilferage of Meralcos property rendered him unqualified to become a regular
employee.

NLRC RULING: REVERSED LA. It found that Gala had been illegally dismissed,
since there was "no concrete showing of complicity with the alleged
misconduct/dishonesty." The NLRC,
However, ruled out Galas reinstatement, stating that his tenure lasted only up to
the end of his probationary period. It awarded him back wages and attorneys
fees.

CA RULING: AFFIRMED NLRC. Gala had been illegally dismissed, a ruling that
was supported by the evidence. It opined that nothing in the records show Galas
knowledge of or complicity in the pilferage. Ordered Galas reinstatement with
full back wages and other benefits.
ISSUES: Whether or not the petition shall be dismissed outright based on
procedural grounds, to wit:
(a) lack of the Community Tax Certificate details of the affiants and (b) failure of
the lawyers who signed the petition to indicate their updated MCLE certificate
numbers.

HELD: NO. The Court stresses at this point that it is the spirit and intention of
labor legislation that the NLRC and the labor arbiters shall use every reasonable
means to ascertain the facts in each case speedily and objectively, without regard
to technicalities of law or procedure, provided due process is duly observed. In
keeping with this policy and in the interest of substantial justice, we deem it
proper to give due course to the petition, especially in view of the conflict
between the findings of the labor arbiter, on the one hand, and the NLRC and the
CA, on the other. As we said in S.S. Ventures International, Inc. v. S.S. Ventures
Labor Union, "the application of technical rules of procedure in labor cases may
be relaxed to serve the demands of substantial justice. The Court found the
dismissal to be valid. Gala violated his probationary employment agreement,
especially the requirement for him "to observe at all times the highest degree of
transparency, selflessness and integrity in the performance of their duties and
responsibilities". He failed to qualify as a regular employee. For ignoring the

evidence in this case, the NLRC committed grave abuse of discretion and, in
sustaining the NLRC, the CA committed a reversible error.

34. NATIONWIDE SECURITY and ALLIED SERVICES, INC., Petitioner, v .THE


COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION and
JOSEPH DIMPAZ, HIPOLITO LOPEZ, EDWARD ODATO, FELICISIMO PABON
and JOHNNY AGBAY

FACTS: Labor Arbiter Manuel M. Manansala found petitioner Nationwide


Security and Allied Services, Inc., a security agency, not liable for illegal
dismissal in NLRC NCR 00010083396 and 00020112996 involving eight
security guards who were employees of the petitioner. However, the Labor
Arbiter directed the petitioner to pay the aforementioned security guards
P81,750.00 in separation pay, P8,700.00 in unpaid salaries, P93,795.68 for
underpayment and 10% attorneys fees based on the total monetary award. As
supported by sufficient evidence, Nationwide received the decision of the Labor
Arbiter on July 16, 1999. Nationwide then simultaneously filed its "Appeal
Memorandum", "Notice of Appeal" and "Motion to Reduce Bond", by registered
mail on July 29, 1999, under Registry Receipt No. 003098. These were received
by the NLRC on July 30, 1999. The appeal to the NLRC should have been
perfected, as provided by its Rules, within a period of 10 days from receipt by
petitioner of the decision on July 16, 1999.
On the petition for certiorari filed to the Supreme Court, Nationwide contends
that the Court of Appeals erred when it dismissed its case based on
technicalities while the private respondents contend that the appeal to the
NLRC had not been perfected, since the appeal was filed outside the
reglementary period, and the bond was insufficient.

NLRC RULING: DISMISSED PETITION. First, for having been filed beyond the
reglementary period within which to perfect the appeal and second, for filing an
insufficient appeal bond.
CA RULING: DISMISSED PETITION TO RESOLVE ON MERITS. Nationwide
failed to prove not merely reversible error, but grave abuse of discretion

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amounting to lack of or excess of jurisdiction on the part of public respondent


NLRC.
ISSUES: Whether or not the CA erred in dismissing Nationwides appeal based
on technicalities.

HELD: NO, Failure to perfect an appeal renders the decision final and executory.
The right to appeal is a statutory right and one who seeks to avail of the right
must comply with the statute or the rules. The rules, particularly the
requirements for perfecting an appeal within the reglementary period specified
in the law, must be strictly followed as they are considered indispensable
interdictions against needless delays and for the orderly discharge of judicial
business. It is only in highly meritorious cases that this Court will opt not to
strictly apply the rules and thus prevent a grave injustice from being done. The
exception does not obtain here. Thus, we are in agreement that the decision of
the Labor Arbiter already became final and executory because petitioner failed
to file the appeal within 10 calendar days from receipt of the decision.

Clearly, the NLRC committed no grave abuse of discretion in dismissing the


appeal before it. It follows that the Court of Appeals, too, did not err, nor gravely
abuse its discretion, in sustaining the NLRC Order, by dismissing the petition for
certiorari before it.
35. DIAMOND TAXI and/or BRIAN ONG v. FELIPE LLAMAS, JR
FACTS: Llamas worked as a taxi driver for petitioner Diamond Taxi, owned
and operated by petitioner Bryan Ong. On July 18, 2005, Llamas filed before
the Labor Arbiter (LA) a complaint for illegal dismissal against the Diamond
Taxi. In their position papers, Diamond Taxi claims that Llamas has been
dismissed because of his absence without leave for two weeks, several traffic
violations in the year 20002005 and refusal to heed to management instruction.
Diamond Taxi argues that these acts constitute grounds for termination of
Llamas employment.

Llamas failed to seasonably file his position paper because his previous counsel,
despite repeated demands, deferred compliance with the LAs orders for its

submission. Llamas further claims that Bryan Ongs brother and head of
operations, Aljuver, refused to give him the car keys unless he signs a
resignation letter. The LA dismissed his petition for lack of merit

LA RULING: DISMISSED FOR LACK OF MERIT. The LA declared that Llamas


was not dismissed, legally or illegally, hence, he left his job and had been absent
for several days without leave.

NLRC RULING: DISMISSED PETITION. Non-perfection of appeal due to the


failure of Llamas to attach the required certification for non-forum shopping as
required under Section 4, Rule VI of the 2005 NLRC Rules. Llamas moved for
reconsideration, this time attaching the required certification, but was again
denied.

CA RULING: REVERSED NLRC. CA found equitable grounds to brush aside the


mandatory requirement. It ruled that noncompliance with the requirement of
filing a certification for non- forum shopping, while mandatory, may be excused
upon showing of manifest equitable grounds proving compliance. Additionally, in
order to determine if cogent reasons exist to suspend the rules of procedure, the
court must first examine the substantive aspect of the case. Diamond Taxi failed
to clearly prove that Llamas did intend to abandon his work. They even failed to
charge Llamas of his alleged infractions to give the latter the opportunity to
explain. CA awarded Llamas full back wages and other benefits. Separation pay
is also awarded instead of reinstatement because of the strained working
relationship between Llamas and Bryan Ong.
ISSUE Whether or not the CA correctly found that the NLRC committed grave
abuse of discretion in dismissing Llamas appeal on purely technical grounds.

HELD: YES. Under Article 221 (now Article 227) of the Labor Code, 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. Consistently, we have emphasized that rules of procedure are mere
tools designed to facilitate the attainment of justice. A strict and rigid application
which would result in technicalities that tend to frustrate rather than promote

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substantial justice should not be allowed x x x. No procedural rule is sacrosanct if


such shall result in subverting justice. Ultimately, what should guide judicial
action is that a party is given the fullest opportunity to establish the merits of his
action or defense rather than for him to lose life, honor, or property on mere
technicalities. Faced with these circumstances, i.e., Llamas subsequent
compliance with the certification against forum shopping requirement the utter
negligence and inattention of
Llamas former counsel to his pleas and cause, and his vigilance in immediately
securing the services of a new counsel Llamas filing of his position paper before
he learned and received a copy of the LAs decision the absence of a meaningful
opportunity for Llamas to present his case before the LA and the clear merits of
his case, the NLRC should have relaxed the application of procedural rules in the
broader interests of substantial justice.
The decision of CA is AFFIRMED. Court found that Llamas has been
constructively dismissed.
36. ISLRIZ TRADING vs CAPADA et. Al

FACTS: Respondents were helpers of Islriz Trading, a gravel and sand business owned
and operated by petitioner Victor Hugo Lu. Claiming that they were illegally dismissed,
respondents filed a Complaint for illegal dismissal and non-payment of overtime pay,
holiday pay, rest day pay, allowances and separation pay against petitioner before the
Labor Arbiter. On his part, petitioner imputed abandonment of work against
respondents.

LA Gan rendered decision against petitioner. Petitioner appealed to the


NLRC which granted the appeal and ordered respondents reinstatement but without
backwages. Respondents filed an MR but was denied. Respondents filed with the
Labor Arbiter an Ex-Parte Motion to Set Case for Conference with Motion, they averred
that despite the issuance and subsequent finality of the NLRC Resolution which likewise
ordered respondents reinstatement, petitioner still refused to reinstate them. They
prayed that in view of the orders of reinstatement, a computation of the award of
backwages be made and that an Alias Writ of Execution for its enforcement be issued.
The case was then set for pre-execution conference. Since the parties failed to come to
terms of the issue of the monetary award, LA through Fiscal Examiner Trinchera issued

an undated computation. LA Castillon then issued a writ of execution to enforce the


monetary award in accordance with the computation. By virtue of such writ, petitioners
properties were levied and set for auction sale where the respondents were the only
bidders. Later, petitioners claimed that they could not take possession of the properties
because they were padlocked by the petitioner. They asked LA Castillon to issue a
break/open order. Petitioner then filed a motion to quash the writ of execution, notice of
sale/levy. It stated that NLRCs decision did not include payment of backwages but only
reinstatement therefore the writ of execution was null and void. CA dismissed the
petition and agreed with LA Castillons ratiocination that the subject of the writ were
accrued salaries owing to respondents by virtue of the reinstatement order of LA
as provided in Article 223.

ISSUES: 1. Whether the provision of Article 223 of the Labor Code is applicable to this
case?
2. Whether respondents may collect their wages during the period between the
Labor Arbiters order of reinstatement pending appeal and the NLRC Resolution
overturning that of the Labor Arbiter?

HELD: 1. Yes. The Court held that even if the order of reinstatement of the Labor
Arbiter is reversed on appeal, it is obligatory on the part of the employer to
reinstate and pay the wages of the dismissed employee during the period of
appeal until reversal by the higher court or tribunal. It likewise settled the view
that the Labor Arbiters order of reinstatement is immediately executory and the
employer has to either re-admit them to work under the same terms and
conditions prevailing prior to their dismissal, or to reinstate them in the payroll,
and that failing to exercise the options in the alternative, employer must pay the
employees salaries.
2. Yes. The court went on to declare that after the Labor Arbiters decision is
reversed by a higher tribunal, the employee may be barred from collecting the
accrued wages, if it is shown that the delay in enforcing the reinstatement pending
appeal was without fault on the part of the employer. It then provided for the twofold test in determining whether an employee is barred from recovering his accrued
wages, to wit: (1) there must be actual delay or that the order of reinstatement pending
appeal was not executed prior to its reversal; and (2) the delay must not be due to the

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employers unjustified act or omission. If the delay is due to the employers unjustified
refusal, the employer may still be required to pay the salaries notwithstanding the
reversal of the Labor Arbiters Decision.
Applying the two-fold test, Respondents have the right to collect their accrued
salaries during the period between the Labor Arbiters Decision ordering their
reinstatement pending appeal and the NLRC Resolution overturning the same because
petitioners failure to reinstate them either actually or through payroll was due to
petitioners unjustified refusal to effect reinstatement.
1.

A Writ of Execution was issued by LA Gan on April 22, 2002. However, until the
issuance of the September 5, 2002 NLRC Resolution overturning Labor Arbiter
Gans Decision, petitioner still failed to reinstate respondents or effect payroll
reinstatement. This was what actually prompted respondents to file an ExParte Motion to Set Case for Conference with Motion wherein they also prayed
for the issuance of a computation of the award of backwages and Alias Writ of
Execution for its enforcement. It cannot therefore be denied that there was an
actual delay in the execution of the reinstatement aspect of the Decision of
Labor Arbiter Gan prior to the issuance of the NLRC Resolution overturning the
same.

2.

After petitioner was served with the Writ of Execution dated April 22, 2002 he
promised that he would first refer the matter to his counsel as he could not
effectively act on the order of execution without the latters advice. He gave his
word that upon conferment with his lawyer; he will inform the Office of the
Labor Arbiter of his action on the writ. Petitioner, however, without any
satisfactory reason, failed to fulfill this promise and respondents remained to be
not reinstated until the NLRC resolved petitioners appeal. Evidently, the delay
in the execution of respondents reinstatement was due to petitioners
unjustified refusal to affect the same.
37. GARCIA v KJ COMMERCIAL & REYNALDO QUE

FACTS: Respondent owns trucks and engages in the business of distributing


cement products. It employed as truck drivers and truck helpers petitioners.
petitioners demanded for a P40 daily salary increase. To pressure KJ Commercial

to grant their demand, they stopped working and abandoned their trucks at the
Northern Cement Plant Station in Sison, Pangasinan. They also blocked other
workers from reporting to work. Petitioners then filed with the LA a complaint
for illegal dismissal, underpayment of salary and non-payment of service
incentive leave and thirteenth month pay.

In his 30 October 2008 Decision, LA decided in favor of respondents


stating that complainants were illegally dismissed from their work and they are
entitled to their separation in lieu of reinstatement equivalent to their salary for
one (1) month for every year of service and backwages from the time that they
were terminated. KJ Commercial appealed to the NLRC. It filed before the NLRC a
motion to reduce bond and posted a P50,000 cash bond. In its 9 March 2009
Decision, the NLRC dismissed the appeal for non-perfection of the appeal and
held that the P50,000.00 cash bond posted by respondents-appellants which
represents less than two (2) percent of the monetary award is dismally
disproportionate to the monetary award of P2,612,930.00 and that the amount
of bond posted by respondents-appellants is not reasonable in relation to the
monetary award. A motion to reduce bond that does not satisfy the conditions
required under NLRC Rules shall not stop the running of the period to perfect an
appeal.

KJ filed a motion for reconsideration and posted a P2,562,930 surety


bond and . In its 8 February 2010 Resolution, NLRC granted the motion stating
that there has been an honest effort by the appellants to comply with putting up
the full amount of the required appeal bond. Moreover, considering the merit of
the appeal, by granting the motion for reconsideration, the paramount interest of
justice is better served in the resolution of this case. Petitioners filed an MR
which was denied by NLRC on June 25, 2010. They then filed a petition for
certiorari with the CA. CA affirmed the decision of NLRC on 29 April 2011.
ISSUES: Whether or not LAs 30 October 2008 Decision became final
and executory for non perfection of the appeal; thus, the NLRCs 8 February and
25 June 2010 Resolutions and the Court of Appeals 29 April 2011 Decision are
void for lack of jurisdiction?

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HELD: NO. Petitioner contends that the labor arbiters monetary award has
already reached finality, since private respondents were not able to file a timely
appeal before the NLRC, since they have failed to post the required surety bond.
KJ Commercials filing of a motion to reduce bond and delayed posting of
the P2,562,930 surety bond did not render the Labor Arbiters 30 October 2008
Decision final and executory. The Rules of Procedure of the NLRC allows the
filing of a motion to reduce bond subject to two conditions: (1) there is
meritorious ground, and (2) a bond in a reasonable amount is posted. The filing
of a motion to reduce bond and compliance with the two conditions stop the
running of the period to perfect an appeal.
The NLRC has full discretion to grant or deny the motion to reduce
bond, and it may rule on the motion beyond the 10-day period within which to
perfect an appeal. Obviously, at the time of the filing of the motion to reduce
bond and posting of a bond in a reasonable amount, there is no assurance
whether the appellants motion is indeed based on meritorious ground and
whether the bond he or she posted is of a reasonable amount. Thus, the
appellant always runs the risk of failing to perfect an appeal.

While the bond requirement on appeals involving monetary awards has


been relaxed in certain cases, this can only be done where there was substantial
compliance of the Rules or where the appellants, at the very least, exhibited
willingness to pay by posting a partial bond.

In the present case, KJ Commercial showed willingness to post a partial


bond. In fact, it posted a P50,000 cash bond. When the NLRC denied its motion,
KJ Commercial filed a motion for reconsideration and posted the full P2,
562,930 surety bond. The NLRC then granted the motion for reconsideration.
38. ONG vs CA

FACTS: Ong, owner of Milestone Metal Mfg. was charged before the NLRC for
illegal dismissal, underpayment of wages and non-payment of monetary benefits
by his employees, herein private respondents. Ong allegedly had to adopt a
rotation scheme reducing his employees workdays to 3 days a week or less for

indefinite period due to economic crisis affecting his business. The Labor Arbiter
ruled in favor of the respondents awarding P1.1M representing wage differential,
payment of benefits and attorneys fees and ordered Ong to pay separation pay
equivalent to month salary for every year of service of respondents. Ong filed a
notice and memorandum of appeal with the NLRC but instead of posting the
required cash or surety bond, he filed a motion to reduce the appeal bond. The
NLRC denied the motion and the subsequent motion for reconsideration due to
Ongs failure to post the required cash or surety bond. On appeal for certiorari,
the CA dismissed Ongs appeal for non-perfection of appeal and his subsequent
appeal for reconsideration was likewise dismissed for lack of merit.

ISSUES: Whether or not the CA erred in dismissing petitioners appeal which


was seasonably filed?

HELD: NO. The right to appeal is not a natural right but a statutory privilege i.e.
it must comply with the requirements of the rule or law. Art. 223 of the Labor
Code provides: Appeal. Decisions, awards, or orders of the Labor Arbiter are
final and executory xxx xxx In case of a judgment involving a monetary award, an
appeal by the employer may be perfected only upon the posting of a cash or
surety bond xxx xxx in the amount equivalent to the monetary award in the
judgment appealed from. Section 3, Rule VI of the New Rules of Procedure of the
NLRC provides: Requisites for Perfection of Appeal. (a) The appeal shall be
filed within the reglementary period as provided in Section 1 of this Rule; shall
be under oath with proof of payment of the required appeal fee and the posting
of a cash or surety bond as provided in Section 5 of this Rule; shall be
accompanied by a memorandum of appeal which shall state the grounds relied
upon and the arguments in support thereof; the relief prayed for; and a
statement of the date when the appellant received the appealed decision, order
or award and proof of service on the other party of such appeal. A mere notice of
appeal without complying with the other requisite aforestated shall not stop the
running of the period for perfecting an appeal. The posting of cash or surety
bond is not only mandatory but jurisdictional as well, and non-compliance
therewith is fatal and has the effect of rendering the judgment final and
executory (Phil.Transmarine Carriers, Inc. v. Cortina, G.R. No. 146094, 12
November 2003). For petitioners failure to post a full or partial appeal bond
within the prescribed period, his appeal was not perfected and the NLRC has no

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authority to entertain the appeal nor reverse the decision of the Labor Arbiter
which has become final and executory.

The Court denied and dismissed the petition for lack of merit, affirming the
assailed decision of the Court of Appeals. No costs.
39. ROSEWOOD PROCESSING INC. vs NLRC

FACTS: Six (6) security guards, private respondents herein, filed a complaint
against their employer, Veterans Phil. Scout Security Agency (Veterans for
brevity), for illegal dismissal, unpaid wages, underpayment of wages and nonpayment of other monetary benefits. Petitioner Rosewood was impleaded as
third-party respondent by Veterans being an indirect employer of the guards
during some points in time. The Labor Arbiter rendered a decision ordering
Veterans and Rosewood to pay jointly and severally the complainants a total of
P789,154.39 plus attorneys fees. Rosewood appealed to the NLRC but was
dismissed for failure to file the required appeal bond within the reglementary
period. Rosewood filed a motion for reconsideration contending that it timely
filed a Notice of Appeal with Memorandum on Appeal, a Motion to Reduce Appeal
Bond and a surety bond of P50,000 issued by Prudential Guarantee and
Assurance, Inc. The NLRC denied the motion for recon for lack of merit.
ISSUES:

1). Whether or not petitioners appeal to the NLRC was perfected on time?

2). Whether or not petitioner is solidarily liable with the security agency for
payment of salary differentials to the complainants?
HELD:

1). YES. While it is indisputable that the appeal to the Commission of the
decisions, awards or orders of the Labor Arbiter should be made within ten (10)
calendar days from receipt of such decisions, awards, or orders and may be
perfected only upon posting of a cash or surety bond in an amount equivalent to
the monetary award in the judgment appealed from (Art. 223 of the Labor Code),

the Court on some cases (Quiambao vs NLRC, 254 SCRA 211, 216-217, March 4,
1996; Globe Gen. Services & Security Agency vs NLRC, 249 SCRA 408, 414-415,
October 23 1995) had relaxed the appeal bond requirement if justified by
substantial compliance with the rule. The Court noted that the NLRC dismissed
the appeal due to late filing of the appeal bond while petitioner filed its
memorandum of appeal 10 days after its receipt of the arbiters decision together
with a motion to reduce the appeal bond accompanied by a P50,000 surety bond.
The Court held that with petitioners motion to reduce the bond together with a
surety bond, it has substantially complied with the Labor Code. The Court also
finds petitioners motion to reduce the appeal bond meritorious while the NLRC
acted with grave abuse of discretion in ignoring the merits of petitioners
motions which caused its dismissal.

2). YES. The liability of petitioner as an indirect employer was provided under
Articles 106, 107 and 109 of the Labor Code. However, petitioners liability to the
guards as contractor of the security agency extends only to the period during
which they are working for the petitioner and ends when the guards were
reassigned to another contractor. Further, petitioners liability is only limited to
the wage difference if any, between the contract price with the security agency
and the statutory minimum wage. Petitioner cannot be held liable for back wages
and separation pay as there is no showing that it committed or conspired in the
illegal dismissal of the security guards.
The Court partially granted the petition. The assailed decision of the NLRC was
modified such that petitioner, with the Security Agency, is solidarily liable to pay
complainants wage differentials during the period that the complainants were
actually under its employ. Petitioner was exonerated from payment of back
wages and separation pay. The NLRC was required to recompute the wage
differentials liability of petitioner within 15 days from finality of its decision. No
pronouncement as to costs.
40. FILIPINAS SYSTEMS, INC. vs. NLRC

FACTS: A complaint for illegal dismissal and monetary claims were filed by
private respondents against their employer, Filipinas Systems, Inc. (Filsystems
for brevity). Filsystems failed to file its position paper in spite of the order of the

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Labor Arbiter prompting the Labor Arbiter to decide in favor of respondents in


the illegal dismissal complaints and awarded their monetary claims. Filsystems
appealed to the NLRC submitting for the first time evidence showing that
respondents were project employees whose dismissal was due to the
discontinuation of the project they were assigned. Respondents questioned the
jurisdiction of the NLRC over the appeal as petitioner belatedly file the appeal
bond however, the NLRC assumed jurisdiction and remanded the case to the
Labor Arbiter for further proceedings. Respondents motion for reconsideration
was denied so they appeal to the CA via a Petition for Certiorari. The CA ruled
that the NLRC lacks jurisdiction over the appeal for late filing of the appeal bond
and reinstated the Labor Arbiters decision. Peitioners motion for
reconsideration was denied.

ISSUES: Whether or not the NLRC acquired jurisdiction over petitioners appeal?
HELD: NO. Art. 223 of the Labor Code and Section 1 of the NLRC Rules of
Procedure provide a ten (10)-day period from receipt of the decision of the
Arbiter to file an appeal together with an appeal bond if the decision involves a
monetary award. Records showed that petitioners received a copy of the
Arbiters decision on October 31. Their memorandum of appeal was dated
November 9, but their appeal bond was executed only on November 17; no
partial payment of the bond was made within the reglementary period nor did
they submit an explanation for its late filing. Thereof, the late filing of the bond
divested the NLRC of its jurisdiction to entertain petitioners appeal. Further,
petitioners failed to submit their evidence to the Labor Arbiter in spite of the
opportunities given them and submit the evidence instead to the NLRC when the
decision became adverse to them.
The Court dismissed the petition; the decision of the Labor Arbiter was
reinstated with the modification that if reinstatement of respondents is not
feasible, petitioner should pay their separation pay in accordance with law.
41. Buenaobra, et. al. vs Lim King Guan

FACTS: Petitioners were employees of private respondent Unix International


Export Corporation (UNIX), a corporation engaged in the business of
manufacturing bags, wallets and the like. Sometime in 1991 and 1992,
petitioners filed several cases against UNIX and its incorporators and officers for

unfair labor practice, illegal lockout/dismissal, underpayment of wages, holiday


pay, proportionate 13th month pay, unpaid wages, interest, moral and exemplary
damages and attorneys fees.

On February 23, 1993 the Labor Arbiter (LA) de Vera decided in favor of
the petitioners ordering UNIX to pay the former the following (more than
8Million):
P 5,821,838.40 as backwages;

P 1,484,912.00 as separation pay;

P 527,748.00 as wage differentials;

P 33,830.00 as regular holiday pay differentials; and

P 365,551.95 as proportionate 13th month pay for 1990.

The decision of the LA became final and executory as neither of the


parties appealed.

However, petitioners complained that the decision could not be


executed because UNIX allegedly diverted, invested and transferred all its
money, assets and properties to respondent Fuji Zipper Manufacturing
Corporation (FUJI) whose stockholders and officers were also those of UNIX.

Thus, on March 25, 1997, petitioners filed another complaint against


respondents UNIX, its corporate officers and stockholders of record, and FUJI.
Petitioners mainly prayed that respondents UNIX and FUJI be held jointly and
severally held liable for the payment of the monetary awards ordered LA de
Vera. A judgment was rendered by LA Pati in favor again of the petitioners
piercing the veil of corporate fiction of the two respondent sister companies
ordering them to pay the 8M plus 3M and 1M for moral and exemplary damages.

On July 30, 1998, FUJI, its officers and stockholders filed a memorandum
on appeal and a motion to dispense with the posting of a cash or surety appeal
bond on the ground that they were not the employers of petitioners before the
NLRC. They alleged that they could not be held responsible for petitioners claims
and to require them to post the bond would be unjust and unfair, and not

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sanctioned by law. The 3rd Division of the NLRC denied the motion to exempt to
post appeal bond and instead ordered them to post the appeal bond of 8M within
unextendable period of 10 days upon receipt.

The petitioners argued that timely posting of the appeal bond is


mandatory for the perfection of the appeal and should be complied with hence
they moved for the reconsideration of the decision rendered by the 3rd division
of the NLRC. The NLRC dismissed the petitioners MR for lack of merit and
allowed respondents Supplemental Memorandum of Appeal. Hence, petitioners
elevated it to the CA imputing grave abuse of discretion to the NLRC, Third
Division when it allowed private respondents to post the mandated cash or
surety bond four months after the filing of their memorandum on appeal. CA
dismissed it.
ISSUES:
Whether or not respondents be allowed to appeal and post an
appeal bond even beyond the reglementary period provided in Article 223 of the
Labor Code.
HELD: Affirmative. Respondent should be allowed to appeal and post appeal
bond. The petition has no merit.

The provision of Article 223 of the Labor Code requiring the posting of
bond on appeals involving monetary awards must be given liberal interpretation
in line with the desired objective of resolving controversies on the merits. If only
to achieve substantial justice, strict observance of the reglementary periods may
be relaxed if warranted. The NLRC, Third Division could not be said to have
abused its discretion in requiring the posting of bond after it denied private
respondents motion to be exempted therefrom.

It is true that the perfection of an appeal in the manner and within the
period prescribed by law is not only mandatory but jurisdictional, and failure to
perfect an appeal has the effect of making the judgment final and
executory. However, technicality should not be allowed to stand in the way of
equitably and completely resolving the rights and obligations of the parties. We
have allowed appeals from the decisions of the labor arbiter to the NLRC, even if
filed beyond the reglementary period, in the interest of justice. The facts and
circumstances of the instant case warrant liberality considering the amount

involved and the fact that petitioner already obtained a favorable judgment on
February 23, 1993 against their employer UNIX.

In the same decision which has already become final and executory,
labor arbiter de Vera HELD:

This Branch upholds and maintains in the absence of substantial


evidence to the contrary that both respondent corporations have legitimate
distinct and separate juridical personalities. Thus, respondent Fuji Zipper
Manufacturing, Inc. has been erroneously impleaded in this case.

It is only fair and just that respondent FUJI be afforded the opportunity
to be heard on appeal before the NLRC, especially in the light of labor arbiter
Patis later decision holding FUJI jointly and severally liable with UNIX in the
payment of the monetary awards adjudged by labor arbiter de Vera against
UNIX.

In the absence of any showing that the NLRC committed grave abuse of
discretion, or otherwise acted without or in excess of jurisdiction, this Court is
bound by its findings. Furthermore, the Court of Appeals upheld the assailed
orders of the said Commission.
42. Lepanto vs Belio Icao

FACTS: Respondent Icao filed a complaint for illegal dismissal and damages
against herein petitioner Lepanto Consolidated Mining Company (LCMC) and its
CEO Felipe Yap before the Arbitration Branch of the NLRC. Icao was a former
employee of the company and worked as the Lead Miner in its underground
mine in Paco, Mankayan, Benguet. On February 4, 2008, the company ordered
the dismissal from employment of Icao due to breach of trust and confidence and
act of highgrading (or act of concealing, possessing or unauthorized extraction of
highgrade material/ore without proper authority). This order stemmed from
what transpired on January 4, 2008, when Icao allegedly had in his possession a
wrapped object containing gold bearing highgrade ores found in his skullguard
upon being apprehended by the security guards of the company. Icao denied the
charge against him and claimed that his dismissal from work was without just or
authorized cause.

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The Labor Arbiter ruled in favor of Icao on September 30, 2008. It found
out that the charge of highgrading was fabricated and there was no just cause for
the dismissal of respondent. It further concluded that the claim of the security
guards that Icao had inserted ores in his boots while in a standing position was
not in accord with normal human physiological functioning and that it was
inconsistent with normal human behavior for a man, who knew that he was
being chased for allegedly placing wrapped ore inside his boots, to then transfer
the ore to his skullguard, where it could be found once he was apprehended.
LCMC was ordered to pay Icao his full backwages amounting to P345, 879.45.

LCMC appealed to the NLRC. On February 29, 2009, the NLRC 1st
Division ruled for the dismissal on the ground that there was non-perfection of
the appeal provided for under Article 223 of the Labor Code and consequently
declaring LAs decision to be final and executory. It noted that instead of posting
an appeal bond required under the Labor Code for the perfection of an appeal,
LCMC and its CEO filed a Consolidated Motion For Release Of Cash Bond And To
Apply Bond Subject For Release As Payment For Appeal Bond (Consolidated
Motion). They requested therein that the NLRC release the cash bond of
P401,610.84, which they had posted in the separate case Dangiw Siggaao v.
LCMC, and apply the same cash bond to their present appeal bond liability. They
reasoned that since this Court had already decided Dangiw Siggaao in their favor,
and that the ruling therein had become final and executory, the cash bond posted
therein could now be released. They also cited financial difficulty as a reason for
resorting to this course of action and prayed that, in the interest of justice, the
motion be granted.

An appeal before the CA was made but to no avail, said court affirmed
the NLRCs decision of dismissal due to non-perfection of appeal, that the posting
of the appeal bond is indispensable jurisdictional requirement. However, the CA
dropped the CEO as a party to this case as it found that no specific act was
alleged in private respondents pleadings to show that he had a hand in Icaos
illegal dismissal; much less, that he acted in bad faith.
ISSUES: Whether or not petitioner complied with the appeal bond requirement
under the Labor Code and the NLRC Rules by filing a Consolidated Motion to
release the cash bond it posted in another case, which had been decided with

finality in its favor, with a view to applying the same cash bond to the present
case.

HELD: Affirmative, We reiterate our pronouncement in Araneta v.


Rodas,22where the Court said that when the law does not clearly provide a rule
or norm for the tribunal to follow in deciding a question submitted, but leaves to
the tribunal the discretion to determine the case in one way or another, the judge
must decide the question in conformity with justice, reason and equity, in view of
the circumstances of the case. Applying this doctrine, we rule that petitioner
substantially complied with the mandatory requirement of posting an appeal
bond for the reasons explained below.
First, there is no question that the appeal was filed within the 10-day
reglementary period.23Except for the alleged failure to post an appeal bond, the
appeal to the NLRC was therefore in order.
Second, it is also undisputed that petitioner has an unencumbered
amount of money in the form of cash in the custody of the NLRC in the separate
case Dangiw Siggaao, which was earlier decided in its favor.

Under the Rule VI, Section 6 of the 2005 NLRC Rules, "[a] cash or surety
bond shall be valid and effective from the date of deposit or posting, until the
case is finally decided, resolved or terminated, or the award satisfied." Hence, it
is clear that a bond is encumbered and bound to a case only for as long as 1) the
case has not been finally decided, resolved or terminated; or 2) the award has
not been satisfied. Therefore, once the appeal is finally decided and no award
needs to be satisfied, the bond is automatically released. Since the money is now
unencumbered, the employer who posted it should now have unrestricted access
to the cash which he may now use as he pleases as appeal bond in another case,
for instance. This is what petitioner simply did.
Third, the cash bond in the amount ofP401,610.84 posted in Dangiw
Siggaao is more than enough to cover the appeal bond in the amount
ofP345,879.45 required in the present case.

Fourth, this ruling remains faithful to the spirit behind the appeal bond
requirement which is to ensure that workers will receive the money awarded in
their favor when the employers appeal eventually fails.There was no showing at

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all of any attempt on the part of petitioner to evade the posting of the appeal
bond

Court found exceptional circumstances that warranted an extraordinary


exercise of its power to exempt a party from the rules on appeal bond, there is all
the more reason in the present case to find that petitioner substantially complied
with the requirement. We emphasize that in this case we are not even exempting
petitioner from the rule, as in fact we are enforcing compliance with the posting
of an appeal bond. We are simply liberally applying the rules on what constitutes
compliance with the requirement, given the special circumstances surrounding
the case as explained above.
43. Bergonio vs SEAIR

FACTS: In 2004, petitioners filed before the LA a complaint for illegal dismissal
and illegal suspension with prayer of reinstatement against respondents. On May
31, 2005, the LA ruled in favor of the petitioners that they were illegally
dismissed and suspended and ordered respondent among others, to immediately
reinstate the petitioners with full backwages. On August 20, 2005, petitioners
filed before LA a Motion for issuance of Writ of Execution and for their
immediate reinstatement. A pre-execution conference was made and respondent
manifested their intention to reinstate petitioners in the payroll but it did not
materialize and instead the respondents subsequently filed an Opposition to the
Motion for execution on October 3, 2005 arguing its strained relationship with
the petitioners because of threatening text messages.
On October 7, 2005, LA issued a Writ of Execution. However, it was
returned unsatisfied prompting the petitioners to file for a recomputation of
accrued wages that was granted by LA.

On February 21, 2006, FOUR MONTHS after the Oct. 7, 2005 issuance of
the Writ of Execution, repondents issued a Memorandum directing petitioner to
report for work on February 24, 2006 at Clark-Field, Pampanga but petitioners
failed to report prompting the respondent to move for the suspension of the
reinstatement.

Meanwhile, the May 31, 2005 decision was appealed by the respondent
to the NLRC but the latter dismissed the same on the ground of non-perfection of

appeal on Nov. 29, 06. And on February 6, 2007, the NLRC issued an Entry of
Judgment declaring the Nov 29, 06 decision final and executory. In this
regard, another Writ of Execution was issued by the LA together with A Notice of
Garnishment sent to the respondents depositary bank in the amount of 1.9M.
On Dec. 18, 07 respondents got a partly favorable decision when it
elevated the case to the CA, ruling that the dismissal of the petitioners was in fact
valid.

But the petitioners filed with LA an Urgent Ex-Parte Motion for the
Immediate Release of the Garnished amount and LA noted that due to
respondents refusal to reinstate petitioners despite the final and executory
nature of the Reinstatement Order on May 31, 05 - the accrued wages should be
computed until the the Dec. 18, 07 CA decision reversing LAs earlier ruling of
illegal dismissal, - amounting to P 3, 078, 366.33. The LA granted the Urgent ExParte Motion and affirmed in toto by the NLRC on July 16, 08.

Again, the respondent assailed the July 16, 08 NLRC decision before the
CA. The appellate court ruled in favor of respondents and remanded the case to
the Computation and Examination Unit of the NLRC for proper computation only
up to Feb. 24, 06. Furthermore, CA agrees that the Reinstatement is immediate
in nature and should be executed even pending appeal until the decision is
reversed by a higher court --- applying this principle, the computation should be
up to Dec. 18 CA decision BUT the CA further pointed out that the petitioners
cannot do this computation because the delay of the reinstatement was
WITHOUT the fault of the employer as it was petitioners who did not show up on
Feb. 24 return-to-work order of the respondent, in effect barring them to
compute backwages up to Dec. 18, 07. Accordingly, CA reversed, for grave
abuse of discretion, the NLRC July 16, 08 decision that affirmed LAs order to
release the garnished amount and recomputation of backwages.
ISSUES: Whether or not the CA correctly found the NLRC in grave abuse of
discretion in affirming the release of the garnished amount despite the
respondents issuance of and the petitioners failure to comply with the February
21, 2006 return-to-work Memorandum.
HELD: Negative. Under Article 223 (now 229) paragraph 3 of our Labor Code:

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Xxxx

In any event, the decision of the Labor Arbiter reinstating a


dismissed or separated employee, insofar as the
reinstatement aspect is concerned, shall immediately be
executory, pending appeal. The employee shall either be
admitted back to work under the same terms and
conditions prevailing prior to his dismissal or separation
or, at the option of the employer, merely reinstated in the
payroll. The posting of a bond by the employer shall not
stay the execution for reinstatement provided herein.

Otherwise stated, a dismissed employee whose case was favorably


decided by the LA is entitled to receive wages pending appeal upon
reinstatement, which reinstatement is immediately executory. Unless the
appellate tribunal issues a restraining order, the LA is duty bound to implement
the order of reinstatement and the employer has no option but to comply with it.
Moreover, and equally worth emphasizing, is that an order of reinstatement
issued by the LA is self- executory, i.e., the dismissed employee need not even
apply for and the LA need not even issue awrit of execution to trigger the
employers duty to reinstate the dismissed employee.

The reversal by a higher tribunal of the LAs finding (of illegal dismissal),
notwithstanding, an employer, who, despite the LAs order of reinstatement, did
not reinstate the employee during the pendency of the appeal up to the reversal
by a higher tribunal may still be held liable for the accrued wages of the
employee, i.e., the unpaid salary accruing up to the time the higher tribunal
reverses the decision. The rule, therefore, is that an employee may still recover
the accrued wages up to and despite the reversal by the higher tribunal. This
entitlement of the employee to the accrued wages proceeds from the immediate
and self-executory nature of the reinstatement aspect of the LAs decision.
There are only 2 exceptions in the above rule:

1) actual delay or the fact that the order of reinstatement


pending appeal was not executed prior to its reversal; and
2) the delay must not be due to the employers unjustified act or
omission

In reversing the CAs decision for its legal error we apply this exception
as two-fold test:

FIRST, the existence of delay, whether there was actual delay or whether
the order of reinstatement pending appeal was not executed prior to its reversal?
We answer this test in the affirmative.

To recall, on May 31, 2005, the LA rendered the decision finding the
petitioners illegally dismissed and ordering their immediate reinstatement. Per
the records, the respondents received copy of this decision on July 8, 2005. From
the time the respondents received copy of the LAs decision, and the issuance of
the writ of execution, until the CA reversed this decision on December 17, 2008,
the respondents had not reinstated the petitioners, either by actual
reinstatement or in the payroll.
From these facts and without doubt, there was actual delay in the
execution of the reinstatement aspect of the LAs May 31, 2005 decision before it
was reversed in the CAs decision.

SECOND, the cause of the delay whether the delay was not due to the
employers unjustified act or omission. We answer this test in the negative; we
find that the delay in the execution of the reinstatement pending appeal was due
to the respondents unjustified acts.

In reversing, for grave abuse of discretion, the NLRCs order affirming


the release of the garnished amount, the CA relied on the fact of the issuance of
the February 21, 2006 Memorandum and of the petitioners failure to comply
with its return-to-work directive. In other words, with the issuance of this
Memorandum, the CA considered the respondents as having sufficiently
complied with their obligation to reinstate the petitioners. And, the subsequent
delay in or the non-execution of the reinstatement order was no longer the
respondents fault, but rather of the petitioners who refused to report back to
work despite the directive.
The Court is convinced that the delay in the reinstatement pending
appeal was due to respondents fault. For one, respondent filed several pleading
to suspend the execution of reinstatement. These pleadings to our mind show a
determined effort on the respondents part to prevent or suspend the execution

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of reinstatement pending appeal. Another is that NO actual intention to reinstate


despite return-to-work directive being issued as it was only sent to one paryt
(Pelaez) who did not act in representation of the others hence there was really
no sufficient notice.

All told, under the facts and the surrounding circumstances, the delay
was due to the acts of the respondents that we find were unjustified. We reiterate
and emphasize, Article 223, paragraph 3, of the Labor Code mandates the
employer to immediately reinstate the dismissed employee, either by actually
reinstating him/her under the conditions prevailing prior to the dismissal or, at
the option of the employer, in the payroll. The respondents' failure in this case to
exercise either option rendered them liable for the petitioners' accrued salary
until the LA decision was reversed by the CA on December 17, 2008. We,
therefore, find that the NLRC, in affirming the release of the garnished amount,
merely implemented the mandate of Article 223; it simply recognized as
immediate and self-executory the reinstatement aspect of the LA's decision.
44: LOON vs POWER MASTER

FACTS: Respondents Power Master, Inc. and Tri-C General Services employed
and assigned the petitioners as janitors and leadsmen in various Philippine Long
Distance Telephone Company (PLDT) offices in Metro Manila area. Subsequently,
the petitioners filed a complaint for money claims against Power Master, Inc.,
Tri-C General Services and their officers, the spouses Homer and Carina Alumisin
(collectively, the respondents). The petitioners alleged in their complaint that
they were not paid minimum wages, overtime, holiday, premium, service
incentive leave, and thirteenth month pays. They further averred that the
respondents made them sign blank payroll sheets. On June 11, 2001, the
petitioners amended their complaint and included illegal dismissal as their cause
of action. They claimed that the respondents relieved them from service in
retaliation for the filing of their original complaint. Notably, the respondents did
not participate in the proceedings before the Labor Arbiter except on April 19,
2001 and May 21, 2001 when Mr. Romulo Pacia, Jr. appeared on the respondents
behalf. The respondents counsel also appeared in a preliminary mandatory
conference on July 5, 2001.

LAs Ruling: The LA awarded the petitioners salary differential, service incentive

leaves and 13th month pays. In awarding these claims the LA stated that the
burden in proving the payment of these money claims rests with the employer.
However, they were not awarded backwages, overtime, holiday and premium
pays for failure to show that they rendered overtime work and worked on
holidays. Moreover, it was not decided that they were illegally dismissed for
failure to show notice of termination of employment.
NLRC: Both arties appealed to the ruling of the LA. NLRC affirmed LAs ruling
with regard the payment of holiday pay and attorneys fees but vacated the
awards of salary differential, 13th month pays and service incentive leaves.
Moreover, NLRC allowed the respondents to present pieces of evidence for the
first time on appeal on the ground that they have been deprived of due process. It
also ruled that petitioners were legally dismissed due to gross misconduct.
CA: Ruling of the NLRC was affirmed.

ISSUES: Whether the respondents perfected their appeal before the NLRC

HELD: Pursuant to Article 223 of the Labor Code, an appeal by the employer
may be perfected only upon the posting of a cash or surety bond issued by a
reputable bonding company duly accredited by the Commission in the amount
equivalent to the monetary award in the judgment appealed from. In the
present case, the respondents filed a surety bond issued by Security Pacific
Assurance Corporation (Security Pacific) on June 28, 2002. At that time, Security
Pacific was still an accredited bonding company. However, the NLRC revoked its
accreditation on February 16, 2003. Nonetheless, this subsequent revocation
should not prejudice the respondents who relied on its then subsisting
accreditation in good faith. In Del Rosario v. Philippine Journalists, Inc., we ruled
that a bonding companys revocation of authority is prospective in application.
However, the respondents should post a new bond issued by an accredited
bonding company in compliance with paragraph 4, Section 6, Rule 6 of the NLRC
Rules of Procedure. This provision states that [a] cash or surety bond shall be
valid and effective from the date of deposit or posting, until the case is finally
decided, resolved or terminated or the award satisfied.
45. Mcburnie vs Ganzon

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FACTS: On October 2002, McBurnie, an Australian national, instituted a


complaint for illegal dismissal and other monetary claims against the
respondents. McBurnie claimed that on May 11, 1999, he signed a five-year
employment agreement with the company EGI as an
Executive Vice-president who shall oversee the management of the companys
hotels and resorts within the Philippines. He performed work for the company
until sometime in November 1999, when he figured in an accident that
compelled him to go back to Australia while recuperating from his injuries. While
in Australia, he was informed by respondent Ganzon that his services were no
longer needed because their intended project would no longer push through. The
respondents opposed the complaint, contending that their agreement with
McBurnie was to jointly invest in and establish a company for the management of
hotels. They did not intend to create an employer employee relationship, and the
execution of the employment contract that was being invoked by McBurnie was
solely for the purpose of allowing McBurnie to obtain an alien work permit in the
Philippines. At the time McBurnie left for Australia for his medical treatment, he
had not yet obtained a work permit.
LAs Ruling: The LA declared McBurnie as having been illegally dismissed from
employment, and thus entitled to receive from the respondents the following
amounts:
(a) US$985,162.00 as salary and benefits for the unexpired term of their
employment contract,
(b) P2, 000,000.00 as moral and exemplary damages, and (c) attorneys fees
equivalent to 10% of the total monetary award.

The respondents appealed the LAs Decision to the NLRC. On November 2004,
they filed their Memorandum of Appeal and Motion to Reduce Bond, and posted
an appeal bond in the amount of P100,000.00. The respondents contended in
their Motion to Reduce Bond, inter alia, that the monetary awards of the LA were
null and excessive, allegedly with the intention of rendering them incapable of
posting the necessary appeal bond. They claimed that an award of "more than
P60 Million Pesos to a single foreigner who had no work permit and who left the
country for good one month after the purported commencement of his
employment" was a patent nullity.

NLRC: NLRC denied the motion to reduce bond, explaining that "in cases
involving monetary award, an employer seeking to appeal the LAs decision to
the Commission is unconditionally required by Art. 223, Labor Code to post bond
in the amount equivalent to the monetary award.
CA: Petitioners Motion to Reduce Appeal Bond was granted. Petitioners were
directed to post appeal bond in the amount of P10,000,000.00. The NLRC was
also directed to give due course to petitioners appeal which was ordered to be
remanded to the NLRC for further proceedings. The CA explained that "while Art.
223 of the Labor Code requiring bond equivalent to the monetary award is
explicit, Section 6, Rule VI of the NLRC Rules of Procedure, as amended,
recognized as exception a motion to reduce bond upon meritorious grounds and
upon posting of a bond in a reasonable amount in relation to the monetary
award." Moreover, the appellate court ruled that such bond was unreasonable
and excessive.
ISSUES: Whether or not the appeal bond should be reduced

HELD: In accordance with the foregoing, although the general rule provides that
an appeal in labor cases from a decision involving a monetary award may be
perfected only upon the posting of a cash or surety bond, the Court has relaxed
this requirement under certain exceptional circumstances in order to resolve
controversies on their merits. These circumstances include:
(1) the fundamental consideration of substantial justice
(2) the prevention of miscarriage of justice or of unjust enrichment and
(3) special circumstances of the case combined with its legal merits, and the
amount and the issue involved.

The bond requirement in appeals involving monetary awards has been and may
be relaxed in meritorious cases, including instances in which (1) there was
substantial compliance with
the Rules, (2) surrounding facts and circumstances constitute meritorious
grounds to reduce the bond, (3) a liberal interpretation of the requirement of an
appeal bond would serve the desired objective of resolving controversies on the
merits, or (4) the appellants, at the very least, exhibited their willingness and/or
good faith by posting a partial bond during the reglementary period. The Court

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held that the reduction decided upon by the CA was the reasonable amount to be
posted as bond.
46. PIONEER TEXTURIZING CORP vs. NLRC

FACTS:

Private respondent Lourdes A. de Jesus is petitioners reviser/trimmer


since 1980. As reviser/trimmer, de Jesus based her assigned work on a
paper note, identified by its P.O. Number. On August 15, 1992, de Jesus
worked on P.O. No. 3853 by trimming the cloths ribs. She thereafter
submitted tickets corresponding to the work done to her
supervisor. Three days later, de Jesus received from petitioners
personnel manager a memorandum requiring her to explain why no
disciplinary action should be taken against her for dishonesty and
tampering of official records and documents with the intention of
cheating as P.O. No. 3853 allegedly required no trimming. The
memorandum also placed her under preventive suspension for thirty
days starting from August 19, 1992. In her handwritten explanation, de
Jesus maintained that she merely committed a mistake in trimming P.O.
No. 3853 as it has the same style and design as P.O. No. 3824 which has
an attached price list for trimming the ribs and admitted that she may
have been negligent in presuming that the same work was to be done
with P.O. No. 3853, but not for dishonesty or tampering Petitioners
personnel department, nonetheless, she was terminated.

NLRC: In its July 21, 1994 decision, the NLRC ruled that de Jesus was negligent in
presuming that the ribs of P.O. No. 3853 should likewise be trimmed for having
the same style and design as P.O. No. 3824, thus petitioners cannot be entirely
faulted for dismissing de Jesus. The NLRC declared that the status quo between
them should be maintained and affirmed the Labor Arbiter's order of
reinstatement, but without back wages. The NLRC further "directed petitioner to
pay de Jesus her back salaries from the date she filed her motion for execution on
September 21, 1993 up to the date of the promulgation of the decision.

On September 22, 1992, de Jesus filed a complaint for illegal dismissal


against petitioners with the Labor Arbiter.

Labor Arbiter: The Labor Arbiter who heard the case noted that de Jesus was
amply accorded procedural due process in her termination from service.
Nevertheless, after observing that de Jesus made some further trimming on P.O.
No. 3853 and that her dismissal was not justified, the Labor Arbiter held
petitioners guilty of illegal dismissal. Petitioners were accordingly ordered to
reinstate de Jesus to her previous position without loss of seniority rights and
with full back wages from the time of her suspension on August 19, 1992

Petitioners appealed to the public respondent National Labor Relations


Commission (NLRC)

Petitioners insist that the NLRC gravely abused its discretion in holding
that de Jesus is entitled to reinstatement to her previous position for she
was not illegally dismissed in the first place. Petitioners further add that
de Jesus breached the trust reposed in her, hence her dismissal from
service is proper on the basis of loss of confidence, citing as authority
the cases of Ocean Terminal Services, Inc. v. NLRC, 197 SCRA 491; CocaCola Bottlers Phil., Inc. v. NLRC, 172 SCRA 751, and Piedad v. Lanao del
Norte Electric Cooperative,154 SCRA 500.

Petitioners' also argued the theory that an order for reinstatement is not
self-executory. They stress that there must be a writ of execution which
may be issued by the NLRC or by the Labor Arbiter motu proprio or on
motion of an interested party. They further maintain that even if a writ
of execution was issued, a timely appeal coupled by the posting of
appropriate supersedes as bond, which they did in this case, effectively
forestalled and stayed execution of the reinstatement order of the Labor
Arbiter.
Private respondent de Jesus, for her part, maintains that petitioners
should have reinstated her immediately after the decision of the Labor
Arbiter ordering her reinstatement was promulgated since the law
mandates that an order for reinstatement is immediately executory. An
appeal, she says, could not stay the execution of a reinstatement order
for she could either be admitted back to work or merely reinstated in the

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payroll without need of a writ of execution. De Jesus argues that a writ


of execution is necessary only for the enforcement of decisions, orders,
or awards which have acquired finality.
Issues:
(1) Whether or not de Jesus was illegally dismissed.
(2) Whether or not an order for reinstatement needs a writ of execution.
HELD:

(1) Yes, de Jesus was illegally dismissed. Based on the Labor Arbiter's
observations or from the NLRC's assessment, it distinctly appears that
petitioners' accusation of dishonesty and tampering of official records and
documents with intention of cheating against de Jesus was not substantiated by
clear and convincing evidence. Petitioners simply failed, both before the Labor
Arbiter and the NLRC, to discharge the burden of proof and to validly justify de
Jesus' dismissal from service. The law, in this light, directs the employers, such as
herein petitioners, not to terminate the services of an employee except for a just
or authorized cause under the Labor Code. Lack of a just cause in the dismissal
from service of an employee, as in this case, renders the dismissal illegal, despite
the employer's observance of procedural due process.And while the NLRC stated
that "there was no illegal dismissal to speak of in the case at bar" and that
petitioners cannot be entirely faulted therefor, said statements are inordinate
pronouncements which did not remove the assailed dismissal from the realm of
illegality. Neither can these pronouncements preclude us from holding
otherwise.
Equally unmeritorious is petitioners assertion that the dismissal is justified on
the basis of loss of confidence. While loss of confidence, as correctly argued by
petitioners, is one of the valid grounds for termination of employment, the same,
however, cannot be used as a pretext to vindicate each and every instance of
unwarranted dismissal. To be a valid ground, it must shown that the employee
concerned is responsible for the misconduct or infraction and that the nature of
his participation therein rendered him absolutely unworthy of the trust and
confidence demanded by his position. In this case, petitioners were unsuccessful

in establishing their accusations of dishonesty and tampering of records with


intention of cheating. Indeed, even if petitioners allegations against de Jesus
were true, they just the same failed to prove that her position needs the
continued and unceasing trust of her employees functions. Surely, de Jesus who
occupies the position of a reviser/trimmer does not require the petitioners
perpetual and full confidence. In this regard, petitioners reliance on the cases
of Ocean Terminal Services, Inc. v. NLRC; Coca-Cola Bottlers Phil., Inc. v. NLRC;
and Piedad v. Lanao del Norte Electric Cooperative, which when perused involve
positions that require the employers full trust and confidence, is wholly
misplaced. Undoubtedly, the position of a reviser/trimmer could not be equated
with that of a canvasser, sales agent, or a bill collector. Besides, the involved
employees in the three aforementioned cases were clearly proven guilty of
infractions unlike private respondent in the case at bar. Thus, petitioners
dependence on these cited cases is inaccurate, to say the least. More, whether or
not de Jesus meets the days quota of work she, just the same, is paid the daily
minimum wage

(2) No, writ of execution is not necessary for order of reinstatement. Under
Article 223 of the Labor Code, as amended, an employer has two options in order
for him to comply with an order of reinstatement, which is immediately
executory, even pending appeal. Firstly, he can admit the dismissed employee
back to work under the same terms and conditions prevailing prior to his
dismissal or separation or to a substantially equivalent position if the former
position is already filled up. Secondly, he can reinstate the employee merely in
the payroll. Failing to exercise any of the above options, the employer can be
compelled under pain of contempt, to pay instead the salary of the
employee. This interpretation is more in consonance with the constitutional
protection to labor (Section 3, Art. XIII, 1987 Constitution). The right of a person
to his labor is deemed to be property within the meaning of the constitutional
guaranty that no one shall be deprived of life, liberty, and property without due
process of law. Therefore, he should be protected against any arbitrary and
unjust deprivation of his job (Bondoc vs. Peoples Bank and Trust Co., Inc., 103
SCRA 599 [1981]). The employee should not be left without any remedy in case
the employer unreasonably delays reinstatement.
Article 224 states that the need for a writ of execution applies only within five
(5) years from the date a decision, an order or awards becomes final and

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executory. It cannot relate to an award or order of reinstatement still to be


appealed or pending appeal which Article 223 contemplates. The provision of
Article 223 is clear that an award for reinstatement shall be immediately
executory even pending appeal and the posting of a bond by the employer
shall not stay the execution for reinstatement. The legislative content is quite
obvious, to make an award of reinstatement immediately enforceable, even
pending appeal. To require the application for and issuance of a writ of execution
as prerequisites for the execution of a reinstatement award would certainly
betray and run counter to the very object and intent of Article 223, the
immediate execution of a reinstatement order. The reason is simple. An
application for a writ of execution and its issuance could be delayed for
numerous reasons. A mere continuance or postponement of a scheduled
hearing, for instance, or an inaction on the part of the Labor Arbiter or the NLRC
could easily delay the issuance of the writ thereby setting at naught the strict
mandate and noble purpose envisioned by Article 223. Statutes, as a rule, are to
be construed in the light of the purpose to be achieved and the evil sought to be
remedied and where statues are fairly susceptible of two or more construction,
that construction should be adopted which will most tend to give effect to the
manifest intent of the law maker and promote the object for which the statute
was enacted, and a construction should be rejected which would tend to render
abortive other provisions of the statute and to defeat the object which the
legislator sought to attain by its enactment.
47: ALEJANDRO ROQUERO vs. PHILIPPINE AIRLINES, INC

FACTS: Alejandro Roquero, along with Rene Pabayo, were ground equipment
mechanics of respondent Philippine Airlines, Inc. (PAL for brevity). From the
evidence on record, it appears that Roquero and Pabayo were caught red-handed
possessing and using shabu in a raid conducted by PAL security officers and
NARCOM personnel. The two alleged that they did not voluntarily indulge in the
said act but were instigated by a certain Jojie Alipato who was introduced to
them by Joseph Ocul, Manager of the Airport Maintenance Division of PAL. When
they started the procedure of taking the drugs, armed men entered the room,
arrested Roquero and Pabayo and seized the drugs and the paraphernalia used.
They assailed their arrest and asserted that they were instigated by PAL to take

the drugs. They argued that Alipato was not really a trainee of PAL but was
placed in the premises to instigate the commission of the crime. They based their
argument on the fact that Alipato was not arrested. Moreover, Alipato has no
record of employment with PAL.
In a Memorandum dated July 14, 1994, Roquero and Pabayo were dismissed by
PAL. Thus, they filed a case for illegal dismissal.

Labor Arbiter: Dismissal of Roquero and Pabayo was upheld. Both parties are
found at fault, PAL for applying means to entice the complainants into
committing the infraction and the complainants for giving in to the temptation
and eventually indulging in the prohibited activity. Nonetheless, the Labor
Arbiter awarded separation pay and attorneys fees to the complainants.

While the case was on appeal with the NLRC the complainants were acquitted by
the Regional Trial Court (RTC) Branch 114, Pasay City, in the criminal case which
charged them with conspiracy for possession and use of a regulated drug in
violation of Section 16, Article III of Republic Act 6425, on the ground of
instigation.
NLRC: The NLRC found PAL guilty of instigation and ordered reinstatement to
their former positions but without backwages.

Complainants did not appeal from the decision but filed a motion for a writ of
execution of the order of reinstatement. The Labor Arbiter granted the motion
but PAL refused to execute the said order on the ground that they have filed a
Petition for Review before this Court. PALs petition was referred to the Court of
Appeals.
During the pendency of the case with the Court of Appeals, PAL and Pabayo filed
a Motion to Withdraw/Dismiss the case with respect to Pabayo, after they
voluntarily entered into a compromise agreement. The motion was granted in a
Resolution promulgated by the Former Thirteenth Division of the Court of
Appeals on January 29, 2002.
Court of Appeals: Reversed the decision of the NLRC and reinstated the decision
of the Labor Arbiter insofar as it upheld the dismissal of Roquero. However, it
denied the award of separation pay and attorneys fees to Roquero on the ground
that one who has been validly dismissed is not entitled to those benefits.

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(1) Whether or not the instigated employee shall be solely responsible for an
action arising from the instigation perpetrated by the employer.

(2) whether or not the executory nature of the decision, more so the
reinstatement aspect of a labor tribunals order be halted by a petition having
been filed in higher courts without any restraining order or preliminary
injunction.
(3) Whether or not the employer who refused to reinstate the employee despite
a writ duly issued be held to pay the salary of the subject employee from the time
he was ordered reinstated up to the time of the reversal of the decision.
HELD:

(1) Instigation is only a defense against criminal liability. It cannot be used as a


shield against dismissal from employment especially when the position involves
the safety of human lives. Even if he was instigated to take drugs he has no right
to be reinstated to his position. He took the drugs fully knowing that he was on
duty and more so that it is prohibited by company rules.
Roquero is guilty of serious misconduct for possessing and using shabu. For
serious misconduct to warrant the dismissal of an employee, it (1) must be
serious; (2) must relate to the performance of the employees duty; and (3) must
show that the employee has become unit to continue working for the employer.
It is of public knowledge that drugs can damage the mental faculties of the user.
Roquero was tasked with the repair and maintenance of PALs airplanes. He
cannot discharge that duty if he is a drug user. His failure to do his job can mean
great loss of lives and properties.

There was procedural due process. PAL complied with the twin-notice
requirement before dismissing the petitioner. The twin-notice rule requires (1)
the notice which apprises the employee of the particular acts or omissions for
which his dismissal is being sought along with the opportunity for the employee
to air his side, and (2) the subsequent notice of the employers decision to
dismiss him.

(2) The order of reinstatement is immediately executory. The unjustified refusal


of the employer to reinstate a dismissed employee entitles him to payment of his
salaries effective from the time the employer failed to reinstate him despite the
issuance of a writ of execution. Unless there is a restraining order issued, it is
ministerial upon the Labor Arbiter to implement the order of reinstatement. In
the case at bar, no restraining order was granted. Thus, it was mandatory on PAL
to actually reinstate Roquero or reinstate him in the payroll.
(3)Having failed to do so, PAL must pay Roquero the salary he is entitled to, as if
he was reinstated, from the time of the decision of the NLRC until the finality of
the decision of this Court.

Technicalities have no room in labor cases where the Rules of Court are applied
only in a suppletory manner and only to effectuate the objectives of the Labor
Code and not to defeat them. Hence, even if the order of reinstatement of the
Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer
to reinstate and pay the wages of the dismissed employee during the period of
appeal until reversal by the higher court. On the other hand, if the employee has
been reinstated during the appeal period and such reinstatement order is
reversed with finality, the employee is not required to reimburse whatever
salary he received for he is entitled to such, more so if he actually rendered
services during the period.
48: Air Philippines Corporation vs. Enrico Zamora

FACTS: Enrico Zamora (Zamora) was employed with Air Philippines Corporation
(APC) as Flight Deck Crew when applied for promotion to the position of airplane
captain and underwent the requisite training program. After completing training,
he inquired about his promotion but APC did not act on it. APC continued to give
him assignments as flight deck crew. Thus, Zamora filed a Complaint with the
Labor Arbiter. He argued that the act of APC of withholding his promotion
rendered his continued employment with it oppressive and unjust. He therefore
asked that APC be held liable for constructive dismissal.
APC denied that it dismissed complainant. It pointed out that, when the
complaint was filed on May 14, 1997, complainant was still employed with it. It
was only on May 22, 1997 that complainant stopped reporting for work, not

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because he was forced to resign, but because he had joined a rival airline,
GrandAir.

Labor Arbiter: Declared APC liable for constructive dismissal and ordered the
reinstate complainant to his position as B-737 Captain without loss of seniority
right immediately upon receipt thereof, Pay complainant his full backwages from
May 15, 1997 up to the promulgation of this decision, TWO MILLION PESOS (P2,
000,000.00) in the concept of moral damages, ONE MILLION PESOS
(P1,000,000.00) as exemplary damages and attorneys fees equivalent to TEN
PERCENT (10%) of the total award.

Zamora immediately filed a Motion for Execution of the order of reinstatement.


Meanwhile, APC filed with the NLRC an appeal assailing the finding of the Labor
Arbiter that it was liable for constructive dismissal.

NLRC: The NLRC granted the appeal in a Resolution dated and held that no
dismissal, constructive or otherwise, took place for it was Zamora himself who
voluntarily terminated his employment by not reporting for work and by joining
a competitor Grand Air. However, upon Motion for Reconsideration filed by
Zamora, the NLRC, in a Resolution dated December 17, 1999, modified its earlier
Resolution.
Court of Appeals: APC hereafter filed a Petition for Certiorari with the Court of
Appeals to have the December 17, 1999 Resolution of the NLRC partially
annulled and its October 11, 2000 Resolution set aside on the ground that these
were issued with grave abuse of discretion. Court of Appeals dismissed the
petition for failure of petitioner to attach copies of all pleadings (such complaint,
answer, position paper) and other material portions of the record as would
support the allegations therein. APC filed a Motion for Reconsideration and
attached the documents required by the Court but it was denied.
ISSUES:

(1) Whether or not the dismissal issued by the Court of Appeals was valid on the
ground that petitioner failed to attach required documents.
(2) Whether or not the employer is obligated to reinstate and pay the wages of
the dismissed employee during the period of appeal.

HELD:

(1) It is readily apparent in this case that the Court of Appeals was overzealous in
its enforcement of the rules. The pleadings and other documents it required of
petitioner were not at all relevant to the petition. It is noted that the only issue
raised by petitioner was whether the NLRC committed grave abuse of discretion
in granting respondent unpaid salaries while declaring him guilty of
abandonment of employment. Certainly, copies of the Resolutions of the NLRC
dated February 10, 1999, December 17, 1999 and October 11, 2000 would have
sufficed as basis for the Court of Appeals to resolve this issue. After all, it is in
these Resolutions that the NLRC purportedly made contrary findings. In sum, we
annul and set aside the January 11, 2000 and May 23, 2001 Resolutions of the
Court of Appeals.
(2) Rather than remand it to the Court of Appeals for resolution, the main issue
was resolved in an expedite matters. The Supreme Court ruled that NLRC did not
commit grave abuse of discretion in holding petitioner liable to respondent for
P198, 502.30. The premise of the award of unpaid salary to respondent is that
prior to the reversal by the NLRC of the decision of the Labor Arbiter, the order
of reinstatement embodied therein was already the subject of an alias writ of
execution even pending appeal. Although petitioner did not comply with this writ
of execution, its intransigence made it liable nonetheless to the salaries of
respondent pending appeal. There is logic in this reasoning of the NLRC.
In Roquero v. Philippine Airlines, Inc. it was that technicalities have no room in
labor cases where the Rules of Court are applied only in a suppletory manner and
only to effectuate the objectives of the Labor Code and not to defeat them.Hence,
even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is
obligatory on the part of the employer to reinstate and pay the wages of the
dismissed employee during the period of appeal until reversal by the higher
court. On the other hand, if the employee has been reinstated during the appeal
period and such reinstatement order is reversed with finality, the employee is
not required to reimburse whatever salary he received for he is entitled to such,
more so if he actually rendered services during the period.
There is a policy elevated in this ruling. In Aris (Phil.) Inc. v. National Labor
Relations Commission, it was held that with respect to decisions reinstating

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employees, the law itself has determined a sufficiently overwhelming reason for
its execution pending appeal. It is pursuant to the same power (police power),
the State may authorize an immediate implementation, pending appeal, of a
decision reinstating a dismissed or separated employee since that saving act is
designed to stop, although temporarily since the appeal may be decided in favor
of the appellant, a continuing threat or danger to the survival or even the life of
the dismissed or separated employee and his family.
49: LANSANGAN vs. AMKOR TECHNOLOGY

FACTS: An anonymous e-mail was sent to the General Manager of Amkor


Technology Philippines (respondent) detailing allegations of malfeasance on the
part of its supervisory employees Lunesa Lansangan and Rosita Cendaa
(petitioners) for "stealing company time." Respondent thus investigated the
matter, requiring petitioners to submit their written explanation. In handwritten
letters, petitioners admitted their wrongdoing. Respondent thereupon
terminated petitioners for "extremely serious offenses" as defined in its Code of
Discipline, prompting petitioners to file a complaint for illegal dismissal against
it.
LA: Labor Arbiter Amansec, dismissed petitioners complaint, he having found
them guilty of "Swiping another employees I.D. card or requesting another
employee to swipe ones I.D. card to gain personal advantage and/or in the
interest of cheating", an offense of dishonesty punishable as a serious form of
misconduct and fraud or breach of trust under Article 282 of the Labor Code. The
Arbiter, however, ordered the reinstatement of petitioners to their former
positions without backwages "as a measure of equitable and compassionate
relief" owing mainly to petitioners prior unblemished employment records,
show of remorse, harshness of the penalty and defective attendance monitoring
system of respondent.
NLRC: The LAs decision was modified and the portion regarding the
reinstatement of the petitioners was deleted.

CA: The CA affirmed the finding that petitioners were guilty of misconduct and
the like, and further ordered respondent to "pay petitioners their corresponding
backwages without qualification and deduction for the period covering October

20, 2004 (date of the Arbiters decision) up to June 30, 2005 (date of the NLRC
Decision)," citing Article 223 of the Labor Code and Roquero v. Philippine
Airlines.
ISSUES: Whether or not petitioners are entitled to receive backwages pursuant
to Article 223

HELD: Roquero, as well as Article 22318 of the Labor Code on which the appellate
court also relied, finds no application in the present case. Article 223 concerns
itself with an interim relief, granted to a dismissed or separated employee while
the case for illegal dismissal is pending appeal, as what happened in Roquero. It
does not apply where there is no finding of illegal dismissal, as in the present
case.
50. Genuino v NLRC

FACTS: Citibank is an American banking corporation duly licensed to do


business in the Philippines. Genuino was employed by Citibank as Treasury Sales
Division Head with the rank of Assistant Vice-president. On August 23, 1993,
Citibank sent Genuino a letter charging her with "knowledge and/or
involvement" in transactions "which were irregular or even fraudulent and was
informed she was under preventive suspension. She was further directed to
explain in writing why she should not be terminated. Petitioners counsel replied
and demanded a bill of particular regarding the charges against her. The bank
claimed that the petitioner and Mr. Dante Santos, using the facilities of their
family corporations (Torrance and Global) appear to have participated in the
diversion of bank clients' funds from Citibank to other companies and that they
made money in the process. Genuino did not appear in the administrative
investigation and thereafter Citibank informed Genuino of the result of their
investigation and was further informed that her employment was terminated by
Citibank on grounds of (1) serious misconduct, (2) willful breach of the trust
reposed upon her by the bank, and (3) commission of a crime against the bank.
Genuino filed before the Labor Arbiter a Complaint for illegal suspension and
illegal dismissal with damages

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LA: that the dismissal was without just cause and in violation of her right to due
process, and the bank is ordered to reinstate complainant immediately and pay
other benefits, with back wages. Both parties appealed to the NLRC.
NLRC: reversed the Labor Arbiter's decision and declared that the dismissal of
the complainant valid and legal but ORDERING bank to pay the salaries due to
the complainant from the date it reinstated complainant in the payroll. The
parties filed a petition for certiorari before the Court of Appeals.

CA only modified the amount of indemnity (P5000). Citibank contends that the
Labor Arbiters decision in upholding the right of Genuino to reinstatement is not
supported by evidence thus there can be no right to payroll reinstatement.
ISSUES: WON bank shall pay the salaries due the complainant from the date or
reinstatement up to the date of final decision.

HELD: The court held that the dismissal was for just cause but lacked due
process due to failure of the bank to meet the requirement of twin notices. The
first notice informing the employee of the charges should neither be pro forma
nor vague. It should set out clearly what the employee is being held liable for.
Since the notice of charges given to Genuino is inadequate for not specifying the
specific acts and surrounding circumstances of the transactions, the dismissal
could not be in accordance with due process. However the Court nevertheless
fined Genuino's dismissal justified. Loss of confidence is a valid ground for
dismissing an employee. It is sufficient if there is some basis for such loss of
confidence. In this case, Genuino was tasked to solicit investments and keep
them in Citibank.

Curiously, Genuino did not even dissuade the depositors from withdrawing their
monies from Citibank. The Court was thus compelled to conclude that Genuino
did not have her employer's interest. Furthermore, Court cancels the directive of
NLRC directing the bank to pay salaries due to the complainant from the date it
reinstated complainant in the payroll up to and until the date of this decision,
view of the Courts finding that the dismissal is valid. In any event, the decision of
the Labor Arbiter reinstating a dismissed or separated employee, insofar as the
reinstatement aspect is concerned, shall immediately be executory, even pending

appeal. If the decision of the labor arbiter is later reversed on appeal upon the
finding that the ground for dismissal is valid, then the employer has the right to
require the dismissed employee on payroll reinstatement to refund the salaries
s/he received while the case was pending appeal, or it can be deducted from the
accrued benefits that the dismissed employee was entitled to receive from
his/her employer under existing laws, collective bargaining agreement
provisions, and company practices. However, if the employee was reinstated to
work during the pendency of the appeal, then the employee is entitled to the
compensation received for actual services rendered without need of refund.
51. GARCIA VS PAL

FACTS: an administrative charge was filed by PAL against its employees herein
petitioners after they were allegedly caught in the act of sniffing shabu when a
team of company security personnel and law enforcers raided the PAL Technical
Centers Toolroom. After due notice, PAL dismissed petitioners prompting them
to file a complaint for illegal dismissal and damages.
Labor Arbiter resolved in their favor, ordering PAL to immediately comply with
the reinstatement aspect of the decision.
Prior to the promulgation of the Labor Arbiters decision, PAL was under
Permanent Rehabilitation Receiver due to severe financial loss. Respondent
appealed to the NLRC

NLRC: reversed said decision and dismissed petitioners complaint for lack of
merit. Subsequently the Labor Arbiter issued a Writ of Execution (Writ)
respecting the reinstatement aspect and issued a Notice of Garnishment (Notice).
Respondent filed an Urgent Petition for Injunction with the NLRC which affirmed
the validity of the Writ and the Notice issued by the Labor Arbiter but suspended
and referred the action to the Rehabilitation Receiver for appropriate action. The
case was elevated to appellate court

CA nullified the NLRC Resolutions on two grounds, essentially espousing that: (1)
a subsequent finding of a valid dismissal removes the basis for implementing the
reinstatement aspect of a labor arbiters decision (the first ground), and (2) the
impossibility to comply with the reinstatement order due to corporate

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rehabilitation provides a reasonable justification for the failure to exercise the


options under Article 223 of the Labor Code
ISSUES: whether or not petitioners may collect their wages during the period
between the Labor Arbiters order of reinstatement pending appeal and the
NLRC decision overturning that of the Labor Arbiter

HELD: Even if the order of reinstatement of the Labor Arbiter is reversed on


appeal, it is obligatory on the part of the employer to reinstate and pay the wages
of the dismissed employee during the period of appeal until reversal by the
higher court. On the other hand, if the employee has been reinstated during the
appeal period and such reinstatement order is reversed with finality, the
employee is not required to reimburse whatever salary he received for he is
entitled to such, more so if he actually rendered services during the period. the
Genuino ruling not only disregards the social justice principles behind the rule,
but also institutes a scheme unduly favorable to management. The provision of
Article 223 is clear that an award [by the Labor Arbiter] for reinstatement shall
be immediately executory even pending appeal and the posting of a bond by the
employer shall not stay the execution for reinstatement. To require the
application for and issuance of a writ of execution as prerequisites for the
execution of a reinstatement award would certainly betray and run counter to
the very object and intent of Article 223, i.e., the immediate execution of a
reinstatement order. It was ruled that the inaction of the Labor Arbiter who
failed to act upon the employees motion for the issuance of a writ of execution
may no longer adversely affect the cause of the dismissed employee in view of
the self-executory nature of the order of reinstatement. After the labor arbiters
decision is reversed by a higher tribunal, the employee may be barred from
collecting the accrued wages, if it is shown that the delay in enforcing the
reinstatement pending appeal was without fault on the part of the employer.
The test is twofold:
(1) there must be actual delay or the fact that the order of reinstatement pending
appeal was not executed prior to its reversal and
(2) the delay must not be due to the employers unjustified act or omission
It is settled that upon appointment by the SEC of a rehabilitation receiver, all
actions for claims before any court, tribunal or board against the corporation

shall ipso jure be suspended. Case law recognizes that unless there is a
restraining order, the implementation of the order of reinstatement is ministerial
and mandatory. This injunction or suspension of claims by legislative fiat
partakes of the nature of a restraining order that constitutes a legal justification
for respondents noncompliance with the reinstatement order. Such being the
case, respondents obligation to pay the salaries pending appeal, as the normal
effect of the non-exercise of the options, did not attach.
52. MT. CARMEL COLLEGEvs. JOCELYN RESUENA

FACTS: Petitioner Mt. Carmel College is a private educational institution and


administered by the Carmelite Fathers . Respondents, together with several
faculty members, nonacademic
personnel, and other students, participated in a protest action against petitioner.
Thereafter, petitioner's Director, Rev. Fr. Modesto E. Malandac, issued a
Memorandum to explain in writing why they should not be dismissed for loss of
trust and confidence for joining the protest action. After a hearing dismissal or
suspension of respondents were recommended. On May 15 1998 respondents
were terminated by petitioner. Respondents filed a complaint for illegal
dismissal.

Labor Arbiter Drilon issued a decision affirming validity of termination dated 25


May 1999. On 9 September 1999, Labor Arbiter Drilon issued to the parties a
Notice of Judgment/Decision of his decision. The notice indicated that the
reinstatement of the respondents. Petitioner appealed to the NLRC.
NLRC declared the termination of respondents to be illegal. It ordered the
reinstatement of respondents, with payment of backwages or payment of
separation pay as computed in the appealed decision. The case was elevated to
the Court of Appeals

CA: decided that [NLRC] correctly held that even if participation in the protest
picket is rather improper or disappointing to the School Administrator,
termination it is definitely too harsh and having been illegally dismissed,
respondents are entitled to back wages from the time of their termination until
reinstatement, and if reinstatement is no longer possible, the grant of separation

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pay equivalent to one (1) month for every year of service. However, in this case
since the Labor Arbiter did not order reinstatement, the NLRC correctly excluded
the period of the appeal in the computation of back wages due to respondents.
Hence, appeal to Supreme
Court.

Petitioner claims that Labor Arbiter exceeded his jurisdiction in issuing the writ
of execution despite the fact that his decision did not order reinstatement. The
petitioner further avers that the Court of Appeals erred in upholding the Labor
Arbiter and the NLRC that the award of backwages goes beyond the period 15
May 1998 to 25 May 1999 on the supposition that reinstatement is selfexecutory
and does not need a writ of execution for its enforcement. Petitioner vehemently
raises the argument that the award of backwages subject to execution is limited
to the period prior to the appeal and does not include the period during the
pendency of the appeal
ISSUES: (1) whether reinstatement in the instant case is self executory and does
not need a writ of execution for its enforcement
(2) whether the continuing award of backwages is proper.

HELD: 1. An order for reinstatement must be specifically declared and cannot be


presumed like back wages, it is a separate and distinct relief given to an illegally
dismissed employee. Art. 223 of the Labor Code provide that reinstatement is
immediately executory even pending appeal only when the Labor Arbiter himself
ordered the reinstatement. In this case, the original Decision of Labor Arbiter
Drilon did not order reinstatement. Reinstatement in this case was actually
ordered by the NLRC, affirmed by the Court of Appeals. Thus, Art. 223 find no
application in the instant case. Considering that the order for reinstatement was
first decided upon appeal to the NLRC and affirmed with finality by the Court of
Appeals.
2. Petitioner seems to have missed that the NLRC Decision also directed it to
reinstate respondents, or in lieu thereof, pay separation pay. This, petitioner
failed to do. Petitioner did not exercise the option of either reinstatement or
paying the separation pay of respondents. Back wages are to be computed from
the time of illegal dismissal until reinstatement or upon petitioner's payment of

separation pay to respondents if reinstatement is no longer possible. The


backwages due respondents must be computed from the time they were unjustly
dismissed until their actual reinstatement to their former position or upon
petitioner's payment of separation pay to them if reinstatement is no longer
feasible.
53. Buenviaje vs CA

FACTS: Petitioners were former employees of Cottonway Marketing Corp.


(Cottonway), hired as promo girls for their garment products. In October, 1994,
after their services were terminated as the company was allegedly suffering
business losses, petitioners filed with the National Labor Relations Commission
(NLRC) a complaint for illegal dismissal, underpayment of salary, and nonpayment of premium pay for rest day, service incentive leave pay and thirteenth
month pay against Cottonway Marketing Corp. and Network Fashion Inc./JCT
International Trading.[1]

On December 19, 1995, Labor Arbiter Romulus S. Protasio issued a Decision


finding petitioners' retrenchment valid and ordering Cottonway to pay
petitioners' separation pay and their proportionate thirteenth month pay. NLRC
reversed the decision and ordered the reinstatement of petitioners with payment
of full wages and proportionate 13th month pay. On August 30, 1996 Cottonway
filed a manifestation with NLRC claiming that the petitioners have lost their
employment for failing to comply with the return to work order. On November 6,
1997, petitioners filed with the NLRC a motion for execution of its Decision on
the ground that it had become final and executory. Cottonway filed another
manifestation on march 4, 1997 informing NLRC that petitioners have found
work elsewhere.
LA - Nonetheless, on April 8, 1998, Labor Arbiter Romulus S. Protasio issued an
Order declaring that the award of backwages and proportionate thirteenth
month pay to petitioners should be limited from the time of their illegal dismissal
up to the time they received the notice of termination sent by the company upon
their refusal to report for work despite the order of reinstatement. He cited the
fact that petitioners failed to report to their posts without justifiable reason
despite respondent's order requiring them to return to work immediately. The

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Labor Arbiter ordered the Research and Investigation Unit to recompute the
monetary award in accordance with its ruling.

The April 8 Order of the Labor Arbiter, however, was set aside by the
Commission in its Resolution dated September 21, 1998. The Commission ruled
that its Decision dated March 26, 1996 has become final and executory and it is
the ministerial duty of the Labor Arbiter to issue the corresponding writ of
execution to effect full and unqualified implementation of said decision. The
Commission thus ordered that the records of the case be remanded to the Labor
Arbiter for execution. Cottonway moved for reconsideration of said resolution,
to no avail.

CA granted Cottonways petition for certiorari ruling that petitioners'


reinstatement was no longer possible as they deliberately refused to return to
work despite the notice given by Cottonway. The Court of Appeals thus held that
the amount of backwages due them should be computed only up to the time they
received their notice of termination.
ISSUES: WON the Honorable Court of Appeals gravely abused its discretion
amounting to lack of and/or in excess of jurisdiction in reinstating the irregular
and illegal April 8, 1998 Order of Honorable Arbiter Romulus Protasio

HELD: Petitioners' alleged failure to return to work cannot be made the basis for
their termination. Such failure does not amount to abandonment which would
justify the severance of their employment. To warrant a valid dismissal on the
ground of abandonment, the employer must prove the concurrence of two
elements: (1) the failure to report for work or absence without valid or
justifiable reason, and (2) a clear intention to sever the employer-employee
relationshipIf Cottonway were really sincere in its offer to immediately reinstate
petitioners to their former positions, it should have given them reasonable time
to wind up their current preoccupation or at least to explain why they could not
return to work at Cottonway at once. Cottonway did not do either. Instead, it
gave them only five days to report to their posts and when the petitioners failed
to do so, it lost no time in serving them their individual notices of
termination. We are, therefore, not impressed with the claim of respondent
company that petitioners have been validly dismissed on August 1, 1996 and
hence their backwages should only be computed up to that time. We hold that

petitioners are entitled to receive full backwages computed from the time their
compensation was actually withheld until their actual reinstatement, or if
reinstatement is no longer possible, until the finality of the decision, in
accordance with the Decision of the NLRC dated March 26, 1996 which has
attained finality.
54. Pfizer vs Velasco

FACTS: Respondent was on leave when she received a show- cause notice from
petitioner, mentioning about an investigation on her possible violations of
company work rules regarding "unauthorized deals and/or discounts in money
or samples and unauthorized withdrawal and/or pull-out of stocks" and
instructing her to submit her explanation on the matter within 48 hours from
receipt of the same, the notice also advised her that she was being placed under
"preventive suspension" for 30 days and ordered the surrender of
accountabilities. A second show-cause notice was sent to her informing her of
the developments in the investigation. That same day, Velasco filed a complaint
for illegal suspension with money claims before the Regional Arbitration Branch.
The following day, 17 July 2003, PFIZER sent her a letter inviting her to a
disciplinary hearing to be held on 22 July 2003. Velasco received it under protest
and informed PFIZER via the receiving copy of the said letter that she had lodged
a complaint against the latter and that the issues that may be raised in the July 22
hearing "can be tackled during the hearing of her case" or at the preliminary
conference set for 5 and 8 of August 2003. She likewise opted to withhold
answering the Second Show-cause Notice. On 25 July 2003, Velasco received a
"Third Show-cause Notice," together with copies of the affidavits of two Branch
Managers of Mercury Drug, asking her for her comment within 48 hours. Finally,
on 29 July 2003, PFIZER informed Velasco of its "Management Decision"
terminating her employment.
LA rendered Velascos dismissal illegal and ordered her reinstatement as well as
payment of backwages, moral and exemplary damages and attorneys fees. NLRC
modified the ruling and deleted the award of damages.
CA annulled the previous rulings and declared respondents dismissal with just
cause and dismissed her complaint for illegal dismissal. CA later modified its
ruling by ordering the payment of respondents back wages from the date of the

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Labor Arbiters Decision dated December 5, 2003 up to the Court of Appeals


Decision dated November 23, 2005.

ISSUES: Whether or not the Court of Appeals committed a serious but reversible
error when it ordered Pfizer to pay Velasco wages from the date of the Labor
Arbiters decision ordering her reinstatement until November 23, 2005, when
the Court of Appeals rendered its decision declaring Velascos dismissal valid.

HELD: In the case at bar, PFIZER did not immediately admit respondent back to
work which, according to the law, should have been done as soon as an order or
award of reinstatement is handed down by the Labor Arbiter without need for
the issuance of a writ of execution. Thus, respondent was entitled to the wages
paid to her under the aforementioned writ of execution. At most, PFIZERs
payment of the same can only be deemed partial compliance/execution of the
Court of Appeals Resolution dated October 23, 2006 and would not bar
respondent from being paid her wages from May 6, 2005 to November 23,
2005.It would also seem that PFIZER waited for the resolution of its appeal to the
NLRC and, only after it was ordered by the Labor Arbiter to pay the amount
of P1,963,855.00 representing respondents full backwages from December 5,
2003 up to May 5, 2005, did PFIZER decide to require respondent to report back
to work via the Letter dated June 27, 2005.PFIZER makes much of respondents
non-compliance with its return- to-work directive by downplaying the reasons
forwarded by respondent as less than sufficient to justify her purported refusal
to be reinstated. In PFIZERs view, the return-to-work order it sent to respondent
was adequate to satisfy the jurisprudential requisites concerning the
reinstatement of an illegally dismissed employee.
In the case at bar, respondents decision to claim separation pay over
reinstatement had no legal effect, not only because there was no genuine
compliance by the employer to the reinstatement order but also because the
employer chose not to act on said claim. If it was PFIZERs position that
respondents act amounted to a "resignation" it should have informed
respondent that it was accepting her resignation and that in view thereof she
was not entitled to separation pay. PFIZER did not respond to respondents
demand at all. As it was, PFIZERs failure to effect reinstatement and accept
respondents offer to terminate her employment relationship with the company
meant that, prior to the Court of Appeals reversal in the November 23, 2005

Decision, PFIZERs liability for backwages continued to accrue for the period not
covered by the writ of execution dated May 24, 2005 until November 23, 2005.
. It cannot be denied that, under our statutory and jurisprudential framework,
respondent is entitled to payment of her wages for the period after December 5,
2003 until the Court of Appeals Decision dated November 23, 2005,
notwithstanding the finding therein that her dismissal was legal and for just
cause. Thus, the payment of such wages cannot be deemed as unjust enrichment
on respondents part.
55. Wenphil Corp. vs. Abing

FACTS: This case stemmed from a complaint for illegal dismissal filed by the
respondents, Almer Abing and Anabelle Tuazon, against Wenphil.

On December 8, 2000, LA Geobel A. Bartolabac ruled that the


respondents had been illegally dismissed by Wenphil. According to the LA, the
allegation of serious misconduct against the respondents had no factual and legal
basis. LA Bartolabac ordered Wenphil to immediately reinstate the
respondents to their respective positions or to equivalent ones, whether
actuall or in the payroll and to pay the respondents their backwages.
Wenphil appealed to the NLRC on April 16, 2001. In the meantime, the
respondents moved for the immediate execution of the LAs December 8, 2000
decision.

On October 29, 2001, Wenphil and the respondents entered into a


compromise agreement before LA Bartolabac. They agreed to the
respondents payroll reinstatement while Wenphils appeal with the NLRC
was ongoing. Wenphil also agreed to pay the accumulated salaries of the
respondents for the payroll until such time that the questioned decision of
LA Bartolabac is either modified, amended or reversed by the Honorable
National Labor Relations Commission.
On January 30, 2002, the NLRC issued a resolution affirming LA
Bartolabacs decision with modifications. Instead of ordering the respondents

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reinstatement, the NLRC directed Wenphil to pay the respondents their


respective separation pay.

Wenphil filed a petition for certiorari with the CA to question the NLRCs
resolutions. On August 27, 2003, the CA rendered its decision reversing the
NLRCs finding that the respondents had been illegally dismissed. On appeal
to the Supreme Court (docketed as G.R. No. 162447 and dated December 27,
2006), the SC denied the respondents petition for review and affirmed the CAs
resolution. The respondents did not file any motion for reconsideration to
question the SCs decision; thus, the decision became final and executory on
February 15, 2007.
Sometime after the SCs decision in G.R. No. 162447 became final and
executory, the respondents filed with LA Bartolabac a motion for computation
and issuance of writ of execution. The respondents asserted that although the
CAs ruling on the absence of illegal dismissal was adverse to them, under the
law and settled jurisprudence, they were still entitled to backwages from
the time of their dismissal until the NLRCs decision finding them to be
illegally dismissed was reversed with finality.
LA Bartolabac granted the respondents motion and directed Wenphil to pay
each complainant their salaries on reinstatement.

Both parties appealed to the NLRC. Wenphil argued that the


respondents were no longer entitled to payment of backwages in view of the
compromise agreement they executed on October 29, 2001. Since the NLRC
modified the LAs ruling by ordering the payment of separation pay in lieu of
reinstatement, then the respondents, were entitled to backwages only up to the
finality of the NLRC decision.
The respondents questioned in their appeal the determined period for
the computation of their backwages; they posited that the period for payment
should end, not on November 8, 2002, but on February 14, 2007, the date SCs
decision became final and executor.

NLRC denied the parties respective appeals in its decision dated March 26,
201034 and affirmed in toto the LAs order.

CA reversed the NLRC rulings and prescribed a different computation period.

The CA cited the case of Pfizer v. Velasco37 where this Court ruled that
even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is
obligatory on the part of the employer to reinstate and pay the dismissed
employees wages during the period of appeal until reversal by the higher
court.38 The CA construed this "higher court" to be the CA, not the SC. The CA
reasoned out that it was a "higher court" than the NLRC when it reversed the
NLRCs rulings; thus, the period for computation should end when it
promulgated its decision reversing that of the NLRC, and not on the date
when the SC affirmed its decision.
ISSUES: Wenphil maintained that the respondents were no longer entitled to
payment of backwages in view of the modification of the LAs ruling by the NLRC
pursuant with their October 29, 2001 compromise agreement.
Wenphil claimed that the reliefs of reinstatement and backwages are
only available to illegally dismissed employees. A ruling that the respondents
were still entitled to reinstatement pay notwithstanding the validity of their
dismissal, would amount to the courts tolerance of an unjust and equitable
situation.

HELD: We resolve to DENY the petition. An order of reinstatement is


immediately executory even pending appeal. (Art. 223 of the Labor Code).The
employer has the obligation to reinstate and pay the wages of the dismissed
employee during the period of appeal until reversal by the higher court.
The Court discussed reason behind this legal policy in Aris v. NLRC,where it
explained:

In authorizing execution pending appeal of the reinstatement aspect of a


decision of the Labor Arbiter reinstating a dismissed or separated employee, the
law itself has laid down a compassionate policy which, once more, vivifies and

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enhances the provisions of the 1987 Constitution on labor and the working-man.
These provisions are the quintessence of the aspirations of the workingman for
recognition of his role in the social and economic life of the nation, for the
protection of his rights, and the promotion of his welfare
Since the decision is immediately executory, it is the duty of the
employer to comply with the order of reinstatement, which can be done
either actually or through payroll reinstatement. As provided under Article
223 of the Labor Code, this immediately executory nature of an order of
reinstatement is not affected by the existence of an ongoing appeal. The
employer has the duty to reinstate the employee in the interim period until a
reversal is decreed by a higher court or tribunal.

In the case of payroll reinstatement, even if the employers appeal turns


the tide in its favor, the reinstated employee has no duty to return or reimburse
the salary he received during the period that the lower court or tribunals
governing decision was for the employees illegal dismissal.

The reinstatement salaries due to the respondents were, by their nature,


payment of unworked backwages. These were salaries due to the respondents
because they had been prevented from working despite the LA and the NLRC
findings that they had been illegally dismissed.

Reinstatement and backwages are two separate reliefs available to


an illegally dismissed employee. The normal consequences of a finding that an
employee has been illegally dismissed are: first, that the employee becomes
entitled to reinstatement to his former position without loss of seniority rights;
and second, the payment of backwages covers the period running from his illegal
dismissal up to his actual reinstatement. These two reliefs are not inconsistent
with one another and the labor arbiter can award both simultaneously.
The relief of separation pay may be granted in lieu of reinstatement but
it cannot be a substitute for the payment of backwages. In instances where
reinstatement is no longer feasible because of strained relations between the
employee and the employer, separation pay should be granted.

Had Wenphil really wanted to put a stop to the running of the period for
the payment of the respondents backwages, then it should have immediately
complied with the NLRCs order to award the employees their separation pay in
lieu of reinstatement. This action would have immediately severed the employeremployee relationship. However, the records are bereft of any evidence that
Wenphil actually paid the respondents separation pay. Thus, the employeremployee relationship between Wenphil and the respondents never ceased and
the employment status remained pending and uncertain until the CA actually
rendered its decision that the respondents had not been illegally dismissed. In
the context of the parties agreement, it was only at this point that the payment of
backwages should have stopped.
The period for computing the backwages due to the respondents during
the period of appeal should end on the date that a higher court reversed the
labor arbitration ruling of illegal dismissal. In this case, the higher court which
first reversed the NLRCs ruling was not the SC but rather the CA. In this light, the
CA was correct when it found that that the period of computation should end on
August 27, 2003. The date when the SCs decision became final and executory
need not matter as the rule in Roquero, Garcia and Pfizer merely referred to the
date of reversal, not the date of the ultimate finality of such reversal.
56: Sy, et. al., vs Fairland Knitcraft Co.

FACTS: Fairland is a domestic corporation engaged in garments business, while


Susan de Leon (Susan) is the owner/proprietors of Weesan Garments (Weesan).
The complaining workers are sewers, trimmers, helpers, a guard and a secretary
who were hired by Weesan.
On December 23, 2002 and on January 2003, workers filed with the Arbitration
Branch of the NLRC a Complaint for underpayment and/or non-payment of
wages, and other monetary benefits against Susan/Weesan.

On February 5, 2003, Weesan filed before the DOLE-NCR a report on its


temporary closure for a period of not less than six months. The workers filed an
Amended Complaint, as they are not allowed to work anymore, to include the
charge of illegal dismissal and impleaded Fairland and its manager, Debbie
Manduabas (Debbie), as additional respondents.

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A Notice of Hearing was thereafter sent to Weesan requesting it to appear before


Labor Arbiter Reyes on April 3, 2003, at 10:00 a.m. On said date and time, Atty.
Geronimo appeared as counsel for Weesan and requested for an extension
of time to file his clients position paper.
On May 16, 2003, Atty. Geronimo filed two separate position papers one
for Fairland and another for Susan/Weesan. Atty. Geronimo then filed a
Consolidated Reply verified both by Susan and Debbie.
LA: On November 26, 2003, Labor Arbiter Reyes rendered his Decision,
dismissing the complaint for lack of merit; and ordering the respondents to pay
each complainant P5,000.00 by way of financial assistance.

NLRC: The workers filed their appeal which was granted by the NLRC, ruling that
the dismissal of complainants is declared illegal. Respondents are ordered to
reinstate complainants with full backwages with legal interests.
Atty. Geronimo filed a Motion for Reconsideration. However, Fairland filed
another Motion for Reconsideration through Atty. Tecson assailing the
jurisdiction of the Labor Arbiter and the NLRC over it, claiming that it was never
summoned to appear, attend or participate in all the proceedings conducted
therein. It also denied that it engaged the services of Atty. Geronimo.
The NLRC however, denied both motions for lack of merit.

In-affirm ng CA ung NLRC na may illegal dismissal na naganap. Sabi ng CA,


solidarily liable si Weeson with Fairland as labor-only contractor and principal
respectively. Nag-file ang Fairland ng MoR claiming na independent contractor
ang Weesan at nag-file din sila ng Motion for Voluntary Inhibition of two CA
Assoc. Justices. Na-grant ung Inhibition, hence, the case was transferred to CAs
Special Ninth Division for resolution ng MoR ng Fairland.

On May 9, 2008, the CAs Special Ninth Division reversed the First Divisions
ruling. It held that the labor tribunals did not acquire jurisdiction over the person
of Fairland, and even assuming they did, Fairland is not liable to the workers
since Weesan is not a mere labor-only contractor but a bona fide independent

contractor. The Special Ninth Division thus annulled and set aside the assailed
NLRC Decision and Resolution insofar as Fairland is concerned and excluded the
latter therefrom.

Syempre, nag-appeal mga workers. Sabi nila, among others, may jurisdiction over
the person of Fairland.
The Workers Arguments

The workers contend that the Labor Arbiter and the NLRC properly acquired
jurisdiction over the person of Fairland because the latter voluntarily appeared
and actively participated in the proceedings below when Atty. Geronimo
submitted on its behalf a Position Paper verified by its manager, Debbie. As
manager, Debbie knew of all the material and significant events which transpired
in Fairland since she had constant contact with the people in the day-to-day
operations of the company.
Fairlands Arguments

In gist, Fairland contests the labor tribunals acquisition of jurisdiction over its
person either through service of summons or voluntary appearance. It denies
that it engaged the services of Atty. Geronimo and asserts that it has its own legal
counsel, Atty. Tecson, who would have represented it had it known of the
pendency of the complaints against Fairland. In the absence, therefore, of a valid
service of summons or voluntary appearance, the proceedings conducted and the
judgment rendered by the labor tribunals are null and void as against it. Hence,
Fairland cannot be held solidarily liable with Susan/Weesan.
Supreme Court: Grant ang Petition ng Workers

"It is basic that the Labor Arbiter cannot acquire jurisdiction over the person of
the respondent without the latter being served with summons. However, "if
there is no valid service of summons, the court can still acquire jurisdiction over
the person of the defendant by virtue of the latters voluntary appearance."
Fairland argued before the CA that it did not engage Atty. Geronimo as its
counsel.

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The fact that Atty. Geronimo entered his appearance for Fairland and Debbie and
that he actively defended them before the Labor Arbiter raised the presumption
that he is authorized to appear for them. As held in Santos, it is unlikely that Atty.
Geronimo would have been so irresponsible as to represent Fairland and Debbie
if he were not in fact authorized. As an officer of the Court, Atty. Geronimo is
presumed to have acted with due propriety. Moreover, "[i]t strains credulity that
a counsel who has no personal interest in the case would fight for and defend a
case with persistence and vigor if he has not been authorized or employed by the
party concerned.
The presumption of authority of counsel to appear on behalf of a client is found
both in the Rules of Court and in the New Rules of Procedure of the NLRC.

Between the two provisions providing for such authority of counsel to appear,
the Labor Arbiter is primarily bound by the latter one, the NLRC Rules of
Procedure being specifically applicable to labor cases. As Atty. Geronimo
consistently indicated his PTR and IBP numbers in the pleadings he filed, there is
no reason for the Labor Arbiter not to extend to Atty. Geronimo the presumption
that he is authorized to represent Fairland.
The CA likewise emphasized that in labor cases, both the party and his counsel
must be duly served their separate copies of the order, decision or resolution
unlike in ordinary proceedings where notice to counsel is deemed notice to the
party, quoting Article 224 of the Labor Code.
The Court disagrees.

Article 224 of the Labor Code does not govern the procedure for filing a petition
for certiorari with the Court of Appeals from the decision of the NLRC but rather,
it refers to the execution of final decisions, orders or awards and requires the
sheriff or a duly deputized officer to furnish both the parties and their counsel
with copies of the decision or award for that purpose. There is no reference,
express or implied, to the period to appeal or to file a petition for certiorari as
indeed the caption is execution of decisions, orders or awards. Taken in proper
context, Article 224 contemplates the furnishing of copies of final decisions,
orders or awards and could not have been intended to refer to the period for
computing the period for appeal to the Court of Appeals from a non-final
judgment or order. The period or manner of appeal from the NLRC to the Court

of Appeals is governed by Rule 65 pursuant to the ruling of the Court in the case
of St. Martin Funeral Homes vs. NLRC. Section 4 of Rule 65, as amended, states
that the petition may be filed not later than sixty (60) days from notice of the
judgment, or resolution sought to be assailed.

Corollary, Section 4, Rule III of the New Rules of Procedure of the NLRC expressly
mandates that (F)or the purposes of computing the period of appeal, the same
shall be counted from receipt of such decisions, awards or orders by the counsel
of record. Although this rule explicitly contemplates an appeal before the Labor
Arbiter and the NLRC, we do not see any cogent reason why the same rule should
not apply to petitions for certiorari filed with the Court of Appeals from decisions
of the NLRC. This procedure is in line with the established rule that notice to
counsel is notice to party and when a party is represented by counsel,
notices should be made upon the counsel of record at his given address to
which notices of all kinds emanating from the court should be sent. It is to
be noted also that Section 7 of the NLRC Rules of Procedure provides that
(A)ttorneys and other representatives of parties shall have authority to
bind their clients in all matters of procedure.
To stress, Article 224 contemplates the furnishing of copies of final decisions,
orders or awards both to the parties and their counsel in connection with the
execution of such final decisions, orders or awards. However, for the purpose of
computing the period for filing an appeal from the NLRC to the CA, same shall be
counted from receipt of the decision, order or award by the counsel of record
pursuant to the established rule that notice to counsel is notice to party. And
since the period for filing of an appeal is reckoned from the counsels receipt of
the decision, order or award, it necessarily follows that the reckoning period for
their finality is likewise the counsels date of receipt thereof, if a party is
represented by counsel. Hence, the date of receipt referred to in Sec. 14, Rule VII
of the then in force New Rules of Procedure of the NLRC which provides that
decisions, resolutions or orders of the NLRC shall become executory after 10
calendar days from receipt of the same, refers to the date of receipt by counsel.
Thus contrary to the CAs conclusion, the said NLRC Decision became final, as to
Fairland, 10 calendar days after Atty. Tecsons receipt thereof. In sum, we hold
that the Labor Arbiter had validly acquired jurisdiction over Fairland and its
manager, Debbie, through the appearance of Atty. Geronimo as their counsel and
likewise, through the latters filing of pleadings on their behalf.

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57: Yupangco Cotton Mills vs CA

FACTS: Petitioner claims that a sheriff of the National Labor Relations


Commission "erroneously and unlawfully levied" upon certain properties which
it claims as its own.
"1. It filed a notice of third-party claim with the Labor Arbiter on May 4, 1995.

"2. It filed an Affidavit of Adverse Claim with the NLRC on July 4, 1995, which was
dismissed on August 30, 1995, by the labor Arbiter.
"3. It filed a petition for certiorari and prohibition with the Regional Trial Court
of Manilaon October 6, 1995. The Regional Trial Court dismissed the case on
October 11, 1995 for lack of merit.

"4. It appealed to the NLRC the order of the Labor Arbiter dated August 13, 1995
which dismissed the appeal for lack of merit on December 8, 1995.
"5. It filed an original petition for mandatory injunction with the NLRC on
November 16, 1995. This case is still pending with that Commission.

"6. It filed a complaint in the Regional Trial Court in Manila. The dismissal of
this case by public respondent triggered the filing of the instant petition.
In all of the foregoing actions, petitioner raised a common issue, which is that it
is the owner of the properties located in the compound and buildings of Artex
Development Corporation, which were erroneously levied upon by the sheriff
of the NLRC as a consequence of the decision rendered by the said
Commission in a labor case.
CA dismissed the petition on the ground of Forum Shopping. The Court of
Appeals sustained the trial court's ruling that the remedies granted under
Section 17, Rule 39 of the Rules of Court are not available to the petitioner
because the Manual of Instructions for Sheriffs of the NLRC does not include the
remedy of an independent action by the owner to establish his right to his
property.

In a MoR, petitioner argued that the filing of a complaint for accion


reinvindicatoria with the Regional Trial Court was proper because it is a remedy
specifically granted to an owner (whose properties were subjected to a writ of
execution to enforce a decision rendered in a labor dispute in which it was not a
party) by Section 17 (now 16), Rule 39, Revised Rules of Court.

Petitioner argued that the reliefs sought and the issues involved in the complaint
for recovery of property and damages filed with the Regional Trial Court of
Manila, were entirely distinct and separate from the reliefs sought and the issues
involved in the proceedings before the Labor Arbiter and the NLRC.
CA denied the MoR.

ISSUES: whether the Court of Appeals erred in dismissing the petitioner's accion
reinvindicatoria on the ground of lack of jurisdiction of the trial court.

HELD: A third party whose property has been levied upon by a sheriff to enforce
a decision against a judgment debtor is afforded with several alternative
remedies to protect its interests. The third party may avail himself of alternative
remedies cumulatively, and one will not preclude the third party from availing
himself of the other alternative remedies in the event he failed in the remedy
first availed of.
Thus, a third party may avail himself of the following alternative remedies:

a) File a third party claim with the sheriff of the Labor Arbiter, and
b) If the third party claim is denied, the third party may appeal the
denial to the NLRC.

Even if a third party claim was denied, a third party may still file a proper action
with a competent court to recover ownership of the property illegally seized by
the sheriff. This finds support in Section 17 (now 16), Rule 39, Revised Rules of
Court.

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As held in the case of Ong v. Tating, et. al., construing the aforecited rule, a third
person whose property was seized by a sheriff to answer for the obligation of a
judgment debtor may invoke the supervisory power of the court which
authorized such execution. Upon due application by the third person and after
summary hearing, the court may command that the property be released from
the mistaken levy and restored to the rightful owner or possession. What said
court do in these instances, however, is limited to a determination of whether the
sheriff has acted rightful or wrongly in the performance of his duties in the
execution of judgment, more specifically, if he has indeed take hold of property
not belonging to the judgment debtor. The court does not and cannot pass
upon the question of title to the property, with any character of finality.
The well-settled doctrine is that a 'proper levy' is indispensable to a valid sale on
execution. A sale unless preceded by a valid levy is void. Therefore, since there
was no sufficient levy on the execution in question, the private respondent did
not take any title to the properties sold.
"A person other than the judgment debtor who claims ownership or right over
the levied properties is not precluded, however, from taking other legal
remedies."

Jurisprudence is likewise replete with rulings that since the third-party claimant
is not one of the parties to the action, he could not, strictly speaking, appeal from
the order denying his claim, but should file a separate reinvindicatory action
against the execution creditor or the purchaser of the property after the sale at
public auction, or a complaint for damages against the bond filed by the
judgment creditor in favor of the sheriff.

A separate civil action for recovery of ownership of the property would not
constitute interference with the powers or processes of the Arbiter and the NLRC
which rendered the judgment to enforce and execute upon the levied properties.
The property levied upon being that of a stranger is not subject to levy. Thus, a
separate action for recovery, upon a claim and prima-facie showing of ownership
by the petitioner, cannot be considered as interference.

The Court renders judgment ANNULLING the sale on execution of the subject
property conducted by NLRC Sheriff Anam Timbayan in favor of respondent
SAMAR-ANGLO and the subsequent sale of the same to Rodrigo Sy Mendoza. The
Court declares the petitioner to be the rightful owner of the property involved
and remands the case to the trial court to determine the liability of respondents
SAMAR-ANGLO, Rodrigo Sy Mendoza, and WESTERN GUARANTY CORPORATION
to pay actual damages that petitioner claimed.
58. Ando vs Campo

FACTS: Petitioner was the president of Premier Allied and Contracting Services,
Inc. (PACSI), an independent labor contractor. Respondents were hired by PACSI
as pilers or haulers tasked to manually carry bags of sugar from the warehouse
of Victorias Milling Company and load them on trucks. In June 1998, respondents
were dismissed from employment. They filed a case for illegal dismissal and
some money claims with the National Labor Relations Commission (NLRC),
Regional Arbitration Branch No. VI, Bacolod City. LA Pura ruled in respondents
favour, directing PACSI and petitioner to pay P 422, 702.28.
Petitioner and PACSI appealed to the NLRC. In a decision, the NLRC ruled that
petitioner failed to perfect his appeal because he did not pay the supersedeas
bond. Upon finality of the decision, respondents moved for its execution.

To answer for the monetary award, NLRC Acting Sheriff Romeo Pasustento
issued a Notice of Sale on Execution of Personal Property over the property in
the name of "Paquito V. Ando x x x married to Erlinda S. Ando."

This prompted petitioner to file an action for prohibition and damages with
prayer for the issuance of a temporary restraining order (TRO) before the
Regional Trial Court (RTC). Petitioner claimed that the property belonged to
him and his wife, not to the corporation, and, hence, could not be subject of
the execution sale. Since it is the corporation that was the judgment debtor,
execution should be made on the latters properties.
On December 27, 2006, the RTC issued an Order denying the prayer for a TRO,
holding that the trial court had no jurisdiction to try and decide the case. The

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RTC ruled that, pursuant to the NLRC Manual on the Execution of Judgment,
petitioners remedy was to file a third-party claim with the NLRC Sheriff. Despite
lack of jurisdiction, however, the RTC went on to decide the merits of the case.

to the conjugal partnership, not to petitioner alone. Thus, the property belongs to
a third party, i.e., the conjugal partnership. At the very least, the Court can
consider that petitioners wife is a third party within contemplation of the law.

Petitioner then filed the present petition seeking the nullification of the CA
Decision. He argues that he was never sued in his personal capacity, but in his
representative capacity as president of PACSI.

Whatever irregularities attended the issuance an execution of the alias writ of


execution should be referred to the same administrative tribunal which rendered
the decision. This is because any court which issued a writ of execution has the
inherent power, for the advancement of justice, to correct errors of its ministerial
officers and to control its own processes.

Petitioner filed a petition for certiorari under Rule 65 before the CA. The CA
affirmed the RTC Order in so far as it dismissed the complaint on the ground that
it had no jurisdiction over the case, and nullified all other pronouncements in the
same Order. Petitioner moved for reconsideration, but the motion was denied.

Petitioner also raises anew his argument that he can choose between filing a
third-party claim with the sheriff of the NLRC and filing a separate action. He
maintains that this special civil action is purely civil in nature since it "involves
the manner in which the writ of execution in a labor case will be implemented
against the property of petitioner which is not a corporate property of
PACSI." What he is seeking to be restrained, petitioner maintains, is not the
Decision itself but the manner of its execution.

HELD: The CA did not, in fact, err in upholding the RTCs lack of jurisdiction to
restrain the implementation of the writ of execution issued by the Labor Arbiter.

The Court has long recognized that regular courts have no jurisdiction to hear
and decide questions which arise from and are incidental to the enforcement of
decisions, orders, or awards rendered in labor cases by appropriate officers and
tribunals of the Department of Labor and Employment. To hold otherwise is to
sanction splitting of jurisdiction which is obnoxious to the orderly administration
of justice.
There is no doubt in our mind that petitioners complaint is a third- party claim
within the cognizance of the NLRC. Petitioner may indeed be considered a "third
party" in relation to the property subject of the execution vis--vis the Labor
Arbiters decision. There is no question that the property belongs to petitioner
and his wife, and not to the corporation. It can be said that the property belongs

The subject matter of the third party claim is but an incident of the labor case, a
matter beyond the jurisdiction of regional trial courts.

The TCT of the property bears out that, indeed, it belongs to petitioner and his
wife. Thus, even if we consider petitioner as an agent of the corporation and,
therefore, not a stranger to the case such that the provision on third-party
claims will not apply to him, the property was registered not only in the name of
petitioner but also of his wife. She stands to lose the property subject of
execution without ever being a party to the case. This will be tantamount to
deprivation of property without due process.
Moreover, the power of the NLRC, or the courts, to execute its judgment extends
only to properties unquestionably belonging to the judgment debtor alone. A
sheriff, therefore, has no authority to attach the property of any person except
that of the judgment debtor. Likewise, there is no showing that the sheriff ever
tried to execute on the properties of the corporation.

59. EMPLOYEES UNION OF BAYER PHILS., FFW and JUANITO S. FACUNDO, in


his capacity as President,Petitioners,
vs.
BAYER PHILIPPINES, INC., DIETER J. LONISHEN (President), ASUNCION
AMISTOSO (HRD Manager), AVELINA REMIGIO AND ANASTACIA
VILLAREAL, Respondents.

FACTS:

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Petitioner Employees Union of Bayer Philippines (EUBP) is the exclusive


bargaining agent of all rank-and-file employees of Bayer Philippines
(Bayer); also an affiliate of the Federation of Free Workers (FFW).
1997: EUBP, headed by its president Juanito S. Facundo (Facundo),
negotiated with Bayer for the signing of a collective bargaining
agreement (CBA); it resulted in a bargaining deadlock (9.9% wage
increase proposal was rejected by Facundo)
Thus, strike by EUBP was staged; DOLE assumed jurisdiction over the
dispute
November 1997: pending resolution, respondent Avelina Remigio
(Remigio) and 27 other union members, without any authority from
their union leaders, accepted Bayer's wage-increase proposal.
EUBP's grievance committee questioned Remigio's action and
reprimanded Remigio and her allies.
January 1998: the DOLE Secretary issued an arbitral award ordering EUBP
and Bayer to execute a CBA retroactive to January 1, 1997 til December
31, 2001.
Meanwhile, the rift between Facundo's leadership and Remigio's group
broadened; Remigio solicited signatures from union members in support
of a resolution to: (1) disaffiliate from FFW, (2) rename the union as
Reformed Employees Union of Bayer Philippines (REUBP), (3) adopt a
new constitution and by-laws for the union, (4) abolish all existing
officer positions in the union and elect a new set of interim officers, and
(5) authorize REUBP to administer the CBA between EUBP and Bayer.
A tug-of-war then ensued between the two rival groups (Facundos group
vs. Remigios group), with both seeking recognition from Bayer and
demanding remittance of the union dues collected from its rank-and-file
members.
September 1998: Remigio's group wrote Facundo, etc. informing them
that majority wished to disaffiliate from FFW. Facundo, meanwhile, sent
similar requests to Bayer requesting for the remittance of union dues in
favor of EUBP and accusing the company of interfering with purely
union matters. Bayer responded by deciding not to deal with either, and
by placing the union dues collected in a trust account until the conflict
between the two groups is resolved.
September 1998: EUBP filed a complaint for unfair labor practice against

Bayer for non-remittance of union dues


November 1998: EUBP later sent a letter to Bayer asking for a grievance
conference. Such was unheeded.
February 1999: while the first ULP case was still pending and despite
EUBP's repeated request for a grievance conference, Bayer decided to
turn over the collected union dues amounting to P254,857.15 to
respondent Anastacia Villareal, Treasurer of REUBP.
LABOR ARBITER DISMISSED: On June 18, 1999, Labor Arbiter Jovencio Ll.
Mayor, Jr. dismissed the first ULP complaint for lack of jurisdiction. The
Arbiter explained that the root cause for Bayer's failure to remit the
collected union dues can be traced to the intra-union conflict between
EUBP and Remigio's group and that the charges imputed against Bayer
should have been submitted instead to voluntary arbitration. EUBP did
not appeal the said decision.
December 1999: petitioners filed a second ULP complaint against,
complaining that Bayer refused to remit the collected union dues to
EUBP despite several demands sent to the management and also, alleged
that notwithstanding the requests sent to Bayer for a renegotiation of
the last two years of the 1997-2001 CBA between EUBP and Bayer, the
latter opted to negotiate instead with Remigio's group. On even date,
REUBP and Bayer agreed to sign a new CBA.
NLRC and LA: Petitioners filed for issuance of RO or Injunction, asserting
that their authority as the exclusive bargaining representative of all
employees of Bayer and
Regional Director of the Industrial Relations Division of DOLE: DISMISSED
for failure to exhaust reliefs within the union and ordering the conduct
of a referendum to determine which of the two groups should be
recognized as union officers.
Bureau of Labor Relations (BLR): REVERSED the Regional Director's
ruling and ordered the management of Bayer to respect the authority of
the duly-elected officers of EUBP in the administration of the prevailing
CBA.
Unfortunately, the said BLR ruling came late since Bayer had already
signed a new CBA with REUBP on February 21, 2000. The said CBA was
eventually ratified by majority of the bargaining unit.
Labor Arbiter: DISMISSED EUBP's second ULP complaint for lack of

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jurisdiction.
NLRC: resolved to DISMISS petitioners' motion for a restraining order
and/or injunction stating that the subject matter involved an intra-union
dispute, over which the said Commission has no jurisdiction.
CA: affirmed LA and NLRC

ISSUES:
WHETHER OR NOT THE LABOR ARBITER AND THE NLRC HAVE
JURISDICTION OVER THE INSTANT CASE;
WHETHER OR NOT THE INSTANT CASE INVOLVES AN INTRA-UNION
DISPUTE;
HELD:
Petitioners contention: Pertain to the unfair labor practice to
Respondents contention: Contend that there can be no unfair labor
practice on their part since the requisites for unfair labor practice
i.e., that the violation of the CBA should be gross, and that it should
involve violation in the economic provisions of the CBA were not
satisfied.
The petition is partly meritorious.
An intra-union dispute refers to any conflict between and among union
members, including grievances arising from any violation of the rights
and conditions of membership, violation of or disagreement over any
provision of the union's constitution and by-laws, or disputes arising
from chartering or disaffiliation of the union.
It is clear that the issues raised by petitioners do not fall under any of the
circumstances in RULE XI of Dept. Order 40-03 constituting an intraunion dispute. More importantly, the petitioners do not seek a
determination of whether it is the Facundo group (EUBP) or the Remigio
group (REUBP) which is the true set of union officers. Instead, the issue
raised pertained only to the validity of the acts of management in light of
the fact that it still has an existing CBA with EUBP. Thus as to Bayer,
Lonishen and Amistoso the question was whether they were liable for

unfair labor practice, which issue was within the jurisdiction of the
NLRC. The dismissal of the second ULP complaint was therefore
erroneous.
However, as to respondents Remigio and Villareal, we find that
petitioners' complaint was validly dismissed. Petitioners' ULP complaint
cannot prosper as against respondents Remigio and Villareal because
the issue, as against them, essentially involves an intra-union dispute
based on Section 1 (n) of DOLE Department Order No. 40-03. To rule on
the validity or illegality of their acts, the Labor Arbiter and the NLRC will
necessarily touch on the issues respecting the propriety of their
disaffiliation and the legality of the establishment of REUBP issues
that are outside the scope of their jurisdiction. Accordingly, the dismissal
of the complaint was validly made, but only with respect to these two
respondents.
But Bayer, Lonishen and Amistoso are liable for unfair labor practice. It
must be remembered that a CBA is entered into in order to foster
stability and mutual cooperation between labor and capital. An
employer should not be allowed to rescind unilaterally its CBA with the
duly certified bargaining agent it had previously contracted with, and
decide to bargain anew with a different group if there is no legitimate
reason for doing so and without first following the proper procedure. If
such behavior would be tolerated, bargaining and negotiations between
the employer and the union will never be truthful and meaningful, and
no CBA forged after arduous negotiations will ever be honored or be
relied upon.
Respondents Bayer, Lonishen and Amistoso, contend that their acts
cannot constitute ULP as the same did not involve gross violations in the
economic provisions of the CBA, citing the provisions of Articles 248 (1)
and 261 of the Labor Code, as amended. Their argument is, however,
misplaced.
In Silva v. National Labor Relations Commission, we explained the
correlations of Art. 248 (1) and Art. 261 to mean that for a ULP case to
be cognizable by the Labor Arbiter, and for the NLRC to exercise
appellate jurisdiction thereon, the allegations in the complaint must
show prima facie the concurrence of two things, namely: (1) gross

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violation of the CBA; and (2) the violation pertains to the economic
provisions of the CBA.
This pronouncement in Silva, however, should not be construed to apply
to violations of the CBA which can be considered as gross violations per
se, such as utter disregard of the very existence of the CBA itself, similar
to what happened in this case. When an employer proceeds to negotiate
with a splinter union despite the existence of its valid CBA with the duly
certified and exclusive bargaining agent, the former indubitably
abandons its recognition of the latter and terminates the entire CBA.
Respondents cannot claim good faith to justify their acts. They knew that
Facundos group represented the duly-elected officers of EUBP. They
were cognizant of the fact that even the DOLE Secretary himself had
recognized the legitimacy of EUBPs mandate by rendering an arbitral
award ordering the signing of the 1997-2001 CBA between Bayer and
EUBP. They were well-aware of the pendency of the intra-union dispute
case, yet they still proceeded to turn over the collected union dues to
REUBP and to effusively deal with Remigio. The totality of respondents
conduct, therefore, reeks with anti-EUBP animus.

WHEREFORE, the
petition
for
GRANTED. MODIFIED as follows:

review

on certiorari is PARTLY

1)Respondents Bayer Phils., Dieter J. Lonishen and Asuncion Amistoso are


found LIABLE for Unfair Labor Practice, and are hereby ORDERED to remit to
petitioners P254,857.15 representing the collected union dues previously turned
over to Avelina Remigio and Anastacia Villareal; and
2)The complaint, as against respondents Remigio and Villareal
is DISMISSED due to the lack of jurisdiction of the Labor Arbiter and the NLRC,
the complaint being in the nature of an intra-union dispute.
60. Montano vs Verceles

FACTS: Atty. Montao worked as legal assistant of Federation of Free Workers


(FFW) Legal Center. Subsequently, he joined the union of rank-and-file employees, the
FFW Staff Association, and eventually became the employees union president later on he

was likewise designated officer-in-charge of FFW Legal Center. During the 21st National
Convention and Election of National Officers of FFW, Atty. Montao was nominated for
the position of National Vice-President. However, the Commission on Election (FFW
COMELEC), informed him that he is not qualified for the position as his candidacy violates
the 1998 FFW Constitution and By-Laws, on the ground that Atty. Monatno is not an
officer or member of a legitimate labor organization because he was merely a confidential
employee of FFW. Atty. Montao thus filed an Urgent Motion for Reconsideration
praying that his name be included in the list for nominees.

The election pursued and despite a pending motion for reconsideration with the
FFW COMELEC and the opposition of Atty. Verceles, the president of University of the
East Employees Association (UEEA-FFW), an affiliate of FFW, Atty. Montano emerged
victorious. This now lead to the filing of a nullification of the election of Atty. Montano by
Atty. Verceles with the BLR, as well as a petition for injuction against the premature
assumption of office by the Atty. Montano. The latter then filed a motion to dismiss based
on the ground that it was the Regional Director of DOLE who has jurisdiction over the
intra-union dispute and not the BLR, and that Atty. Verceles was not a real party of
interest in the case. Meanwhile, a letter was sent by FFW COMELEC reiterating its former
decision that Atty. Monatnos candidacy contravenes the FFWs Constitution and that the
National Convention as a co-equal constitutional body of the Comelec was not given the
license nor the authority to violate the Constitution.
BLR issued its decision dismissing the case for lack of merit while upholding its
authority to try the case and affirming that Atty. Verceles was a real party of interest and
declared Atty. Montano as qualified by virtue of Sec. 26 of the FFW Constitution and bylaws. Thus the case was elevated to the CA which partially reversed the decision of the
BLR and declaring Atty. Mont;ano as unqualified for office, hence this petition.
ISSUES: WON it is the BLR who has jurisdiction over the intra-union dispute? If in the
affirmative, was its decision over the qualification of Atty. Montano correct?

HELD: Section 226 of the Labor Code clearly provides that the BLR and the Regional
Directors of DOLE have concurrent jurisdiction over inter-union and intra-union
disputes. Such disputes include the conduct or nullification of election of union and
workers association officers. Rule XVI lays down the decentralized intra-union dispute
settlement mechanism. Section 1 states that any complaint in this regard shall be filed in
the Regional Office where the union is domiciled. The concept of domicile in labor

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relations regulation is equivalent to the place where the union seeks to operate or has
established a geographical presence for purposes of collective bargaining or for dealing
with employers concerning terms and conditions of employment.
The matter of venue becomes problematic when the intra-union
dispute involves a federation, because the geographical presence of a federation
may encompass more than one administrative region. Pursuant to its authority
under Article 226, this Bureau exercises original jurisdiction over intra-union
disputes involving federations. It is well-settled that FFW, having local unions all
over the country, operates in more than one administrative region. Therefore,
this Bureau maintains original and exclusive jurisdiction over disputes arising
from any violation of or disagreement over any provision of its constitution and
by-laws.

In the issue of Montanos qualification, FFW COMELEC is vested with authority


and power, under the FFW Constitution and By-Laws, to screen candidates and
determine their qualifications and eligibility to run in the election and to adopt and
promulgate rules concerning the conduct of elections. The Committee is also regarded
as the final arbiter of all election protests. The FFW Constitution and By-laws are clear
that no member of the Governing Board shall at the same time perform functions of the
rank-and-file staff. Thus we note the CAs declaration of the illegitimate status of FFW
Staff Association is proscribed by law, owing to the preclusion of collateral attack and of
such accordingly, the election of Atty. Montao as FFW Vice-President is null and void.
61. DIOKNO et al. vs. CACDAC

FACTS: Petitioners Diokno et al. and private respondents Ong et al. and Daya et
al., members of First Line Association of Meralco Supervisory Employees
(FLAMES) union, filed their certificates of candidacy for the union election. Ong
et al.s candidacy were rejected by the FLAMES Comelec on the ground that Ong
is not a member of FLAMES while the others belong to a department excluded
from the scope of the Collective Bargaining Agreement (CBA). Ong et al. filed a
Petition before the Med-Arbitration Unit of the DOLE praying for the nullification
of the order of the FLAMES Comelec disallowing their candidacy and that a
representative from the Bureau of Labor Relations be designated to act as
chairman of the Comelec. The DOLE-NCR directed DOLE personnel to observe
the conduct of election on 7 May 2003. On 2 May, Diokno et al. filed with the

Comelec the disqualification of Dava et al. for committing acts inimical to the
interest of FLAMES and on 6 May, the Comelec disqualified and excluded the
names of Daya et al. in the election allegedly for violating the FLAMES
Constitution and By-Laws. On 7 May, the COMELEC proclaimed Diokno et al. as
winners in the election. On 8 May, Daya et al. together with Ong et al. filed with
the Med-Arbitration Unit a Petition to nullify the order of disqualification,
election proceedings & counting of votes and to declare a failure of election and
hold a new election to be controlled & supervised by the DOLE. The Med-Arbiter
granted the petition declaring a failure of election and ordering a new election
under the supervision of the DOLE; ruling that the Comelec erred in relying to
Art. IV, Sec. 4(a) (6) of the CBL as basis for disqualification of Daya et al. because
the provision refers to dismissal and/or expulsion of a member from FLAMES
which power is vested on the Executive Board and not to the disqualification of a
member as a candidate in a union election and that the Comelec also denied Daya
et al. due process when it failed to receive their motion for reconsideration and
refused to receive their written protest in violation of the unions CBL. The
Director of the BLR (Hon. Cacdac) affirmed in toto the assailed decision of the
Med-Arbiter. A new election was held on 30 June 2004 where Daya et al. won but
was challenged by Diokno et al. before the DOLE and the CA questioning the
jurisdiction of the BLR. The CA upheld the validity of the 30 June elections
declaring Daya et al. as the duly elected winners therein and affirmed the
jurisdiction of the BLR.
ISSUES: Whether or not the BLR acquired jurisdiction over the case at bar?

HELD: YES. Under Article 226 of the Labor Code, the Bureau of Labor Relations
(BLR) has the original and exclusive jurisdiction on all inter-union and intraunion conflicts. The case at bar falls under intra-union conflicts which was
defined under Section (z), Rule I of the Rules Implementing Book V of the Labor
Code, viz: (z) "Intra-Union Dispute refers to any conflict between and among
union members, and includes all disputes or grievances arising from any
violation of or disagreement over any provision of the constitution and by-laws
of a union, including cases arising from chartering or affiliation of labor
organizations or from any violation of the rights and conditions of union
membership provided for in the Code.

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The Court denied the petition and affirmed the decision of the CA with costs
against petitioners.
62. MAGBANUA vs. UY

DOCTRINE: Rights may be waived through a compromise agreement,


notwithstanding a final judgment that has already settled the rights of the
contracting parties. To be binding, the compromise must be shown to have been
voluntarily, freely and intelligently executed by the parties, who had full
knowledge of the judgment. Furthermore, it must not be contrary to law, morals,
good customs and public policy.

FACTS: As a final consequence of the final and executory decision of the


Supreme Court in Rizalino P. Uy v. National Labor Relations Commission, et. al.
(GR No. 117983, September 6, 1996), hearings were conducted to determine the
amount of wage differentials due the eight (8) complainants therein, now
[petitioners]. As computed, the award amounted to P1,487,312.69 x x x.

On February 3, 1997, [petitioners] filed a Motion for Issuance of Writ of


Execution.
On May 19, 1997, [respondent] Rizalino Uy filed a Manifestation requesting that
the cases be terminated and closed, stating that the judgment award as
computed had been complied with to the satisfaction of [petitioners]. Said
Manifestation was also signed by the eight (8) [petitioners]. Together with the
Manifestation is a Joint Affidavit dated May 5, 1997 of [petitioners], attesting to
the receipt of payment from [respondent] and waiving all other benefits due
them in connection with their complaint.
On June 3, 1997, [petitioners] filed an Urgent Motion for Issuance of Writ of
Execution wherein they confirmed that each of them received P40,000 from
[respondent] on May 2, 1997.
On June 9, 1997, [respondent] opposed the motion on the ground that the
judgment award had been fully satisfied. In their Reply, [petitioners] claimed
that they received only partial payments of the judgment award.
LA: issued an order denying the motion for issuance of writ of execution.

NLRC: reversed,holding that a final and executory judgment can no longer be


altered and that quitclaims and releases are normally frowned upon as contrary
to public policy.
CA held that compromise agreements may be entered into even after a final
judgment. Thus, petitioners validly released respondent from any claims, upon
the voluntary execution of a waiver pursuant to the compromise agreement.
Issues: Whether or not the final and executory judgment of the Supreme Court
could be subject to compromise settlement;
Whether or not the petitioners affidavit waiving their awards in the labor case
executed without the assistance of their counsel and labor arbiter is valid;

HELD:
1. Yes, A compromise agreement is a contract whereby the parties make
reciprocal concessions in order to resolve their differences and thus
avoid or put an end to a lawsuit.
The issue involving the validity of a compromise agreement notwithstanding a
final judgment is not novel. Jesalva v. Bautista upheld a compromise agreement
that covered cases pending trial, on appeal, and with final judgment. The Court
noted that Article 2040 impliedly allowed such agreements; there was no
limitation as to when these should be entered into.
There is no justification to disallow a compromise agreement, solely because it
was entered into after final judgment. The validity of the agreement is
determined by compliance with the requisites and principles of contracts, not by
when it was entered into. As provided by the law on contracts, a valid
compromise must have the following elements: (1) the consent of the
parties to the compromise, (2) an object certain that is the subject matter
of the compromise, and (3) the cause of the obligation that is established.
In the present factual milieu, compliance with the elements of a valid contract is
not in issue. Petitioners do not challenge the factual finding that they entered
into a compromise agreement with respondent. There are no allegations of
vitiated consent. Instead, petitioners base their argument on the sole fact that
the agreement was executed despite a final judgment, which the Court had
previously ruled to be allowed by law.

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The principle of novation supports the validity of a compromise after final


judgment. Novation, a mode of extinguishing an obligation, is done by changing
the object or principal condition of an obligation, substituting the person of the
debtor, or surrogating a third person in the exercise of the rights of the creditor.
For an obligation to be extinguished by another, the law requires either of these
two conditions: (1) the substitution is unequivocally declared, or (2) the old and
the new obligations are incompatible on every point.[45] A compromise of a final
judgment operates as a novation of the judgment obligation, upon compliance
with either requisite.[46] In the present case, the incompatibility of the final
judgment with the compromise agreement is evident, because the latter was
precisely entered into to supersede the former.

confronting the parties, particularly the complainants, he is satisfied that they


understand the terms and conditions of the settlement and that it was entered
into freely and voluntarily by them and the agreement is not contrary to law,
morals, and public policy.
This provision refers to proceedings in a mandatory/conciliation conference
during the initial stage of the litigation. Such provision should be made
applicable to the proceedings in the pre-execution conference, for which the
procedure for approving a waiver after final judgment is not stated. There is no
reason to make a distinction between the proceedings in mandatory/conciliation
and those in pre-execution conferences.
63. Solomon et. Al vs Powertech Corp.

Yes, The presence or the absence of counsel when a waiver is executed


does not determine its validity. There is no law requiring the presence
of a counsel to validate a waiver. The test is whether it was executed
voluntarily, freely and intelligently; and whether the consideration for it
was credible and reasonable. Where there is clear proof that a waiver
was wangled from an unsuspecting or a gullible person, the law must
step in to annul such transaction. In the present case, petitioners failed
to present any evidence to show that their consent had been vitiated.

FACTS: The case stems from a complaint for illegal dismissal and other money
claims filed by the Nagkakaisang Manggagawa Ng Powertech Corporation in
behalf of its 52 individual members and non-union members against their
employer, Powertech. The case was dismissed as to twenty-seven (27)
employees by virtue of duly executed affidavits of repudiation and quitclaim.
The case proceeded with respect to the remaining twenty-five (25) employees,
petitioners in this case.

Should the parties arrive at any agreement as to the whole or any part of the
dispute, the same shall be reduced to writing and signed by the parties and their
respective counsel, or authorized representative, if any, before the Labor Arbiter.

Powertech appealed to the NLRC. During its pendency, Carlos Gestiada, for
himself and on behalf of other petitioners, executed a quitclaim, release and
waiver in favor of Powertech in consideration of the amount of P150,000.00.

2.

The law is silent with regard to the procedure for approving a waiver after a case
has been terminated. Relevant, however, is this reference to the NLRCs New
Rules of Procedure:

The settlement shall be approved by the Labor Arbiter after being satisfied that
it was voluntarily entered into by the parties and after having explained to them
the terms and consequences thereof.

A compromise agreement entered into by the parties not in the presence of the
Labor Arbiter before whom the case is pending shall be approved by him, if after

On June 25, 1999, Labor Arbiter Dela Cruz rendered a Decision declaring illegal
the termination of twenty (20) of petitioners and granting their monetary claims
in the total amount of P2,538,728.84.

Relying on the quitclaim and release, Powertech filed a motion for the
withdrawal of the appeal and cash bond. The NLRC granted the motion,
dismissed the appeal and ordered the release of the cash bond.

The P150,000.00 check, however, bounced due to a stop payment order of


Powertech.

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Aggrieved, petitioners moved to nullify the release and quitclaim for lack of
consideration. In a Resolution dated February 29, 2000, the NLRC declared the
quitclaim, release and waiver void for lack of consideration, reinstated the appeal
and ordered Powertech to post a cash or surety bond for the monetary judgment
less the amount it had previously posted

A day later, Powertech paid P150,000.00 to Gestiada purportedly as compromise


amount for all of petitioners. That same day, Gestiada, through Atty. Felipe, and
Powertech filed a joint motion to dismiss with the NLRC based on the
compromise agreement. Atty. Evangelista opposed the motion, alleging that the
compromise agreement is unconscionable, that he was illegally terminated as
counsel for the other petitioners without their consent, and that the P150,000.00
was received by Gestiada as payment solely for his backwages and other
monetary claims.
On July 31, 2000, the NLRC issued a resolution denying the joint motion to
dismiss. The NLRC held that the P150,000.00 received by Gestiada did not cover
the monetary claim of petitioners against Powertech.

Undaunted, Powertech elevated the matter to the CA via petition for certiorari
under Rule 65 of the 1997 Rules of Civil Procedure. The CA upheld the validity of
the compromise agreement between petitioners and Powertech. Petitioners
moved to reconsider the CA decision but their motion was denied. Hence, the
present recourse.
ISSUES: Whether the Compromise Agreement is VALID?

HELD: NO. The P150,000 was paid to Gestiada solely as payment for his
backwages, not those of petitioners; there is evident collusion between
Powertech and Gestiada, hence, the compromise agreement is void.

First, the P150,000 compromise is rather measly when taken in light of the more
than P2.5 million judgment on appeal to the NLRC. Petitioners already won on
the arbiter level P2.5 million pesos. It is highly improbable that they would
suddenly agree to accept P150,000 as compromise for the P2.5 million. That

translates to a paltry sum of P6,000.00 each for petitioners. From this amount
will still be deducted attorneys fees and other litigation expenses. In effect,
petitioners agreed to waive more than 94% of what they expect to receive from
Powertech. We note that the compromise is a mere 6% of the contingent sum
that may be received by petitioners. This minuscule amount is certainly
questionable because, to Our mind, it does not represent a true and fair amount
which a reasonable agent may bargain for his principal.
Second, even granting for the mere sake of argument that the P150,000 was a fair
and reasonable compromise for all, petitioners failed to receive a single centavo
from the compromise. This conclusively indicates that Gestiada received the
P150,000 in payment of his backwages and no other.

Third, We give credence to the admission of Gestiada that he received the


P150,000.00 as payment for his own backwages. In his letter to Atty.
Evangelista, Gestiada said that he was pressured by Powertech to sign the waiver
and quitclaim for petitioners in order to receive his share in the P2.5 million
judgment. Having no stable job after his dismissal, Gestiada had no other choice
but to breach his fiduciary obligation to petitioners. He succumbed to the
pressure of Powertech in signing the waiver, release and quitclaim in exchange
for the P150,000.00. In short, he colluded with Powertech to the detriment of
petitioners.

Fourth, the events that led to the execution of the compromise agreement show
that Powertech was negotiating in bad faith. More importantly, they show that
Powertech colluded with Gestiada to defraud petitioners of their share of the
P2.5 million Labor Arbiter judgment.
Collusion is a species of fraud. Article 227 of the Labor Code empowers the NLRC
to void a compromise agreement for fraud, thus:
Any compromise settlement, including those involving labor
standard laws, voluntarily agreed upon by the parties with the
assistance of the Bureau or the regional office of the Department
of Labor, shall be final and binding upon the parties. The
National Labor Relations Commission or any court shall not

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assume jurisdiction over issues involved therein except in case


of non-compliance thereof or if there is prima facie evidence
that the settlement was obtained through fraud,
misrepresentation, or coercion.

In fine, We find that the CA erred in upholding the compromise agreement


between Powertech and Gestiada.
The NLRC justifiably declared the
compromise agreement as void.
64. Philippine Journalist, Inc. (PJI) vs NLRC

FACTS: -Petitioner PJI is a local corporation engaged in the business of


publication and sale of newspapers and magazines. The respondent Journal
Employees Union (or Union) is the bargaining agent of all the rank-and-file
employees.

-PJI implemented a retrenchment program due to over-staffing and continuing


actual losses for the past years where 31 employees were dismissed from
employment. That is the reason as to why the Union filed a notice to strike as
they claimed that PJI was guilty of unfair labor practice. Subsequently thereafter
the Labor Secretary certified the labor dispute between the parties to the NLRC
for mandatory arbitration.

-Ruling of NLRC (1st): the Commission issued its Resolution on May 31 2001
declaring that 31 employees were illegally dismissed, PJI failed to prove that the
retrenchment was valid as PJI was, among others, able to hold its Christmas
party in a luxurious hotel, made renovations and various purchases for the office,
and able to grant merit increases to employees.
-Subsequently the parties entered into a Compromise Agreement (July 9,
2001) that PJI would reinstate the 31 employees without loss of seniority rights
and benefits and to pay the latter their full and complete monetary claims.
-comes 2002 where another notice to strike was filed by the Union. They claimed
that 29 employees were illegally dismissed, salaries of 50 others were reduced,
and 200 Union members were made to sign a 5-month contract immediately
after the retrenchment program was implemented. The Union prayed that
reinstatement be made and that the benefits under the CBA be restored.

-Ruling of the NLRC (2nd): they were not illegally dismissed. The Commission
noted that the May 31, 2001 Reso couldnt be used by the Union as it DID NOT
attain its finality due to the fact that a Compromise Agreement was made it has
already been mooted and rendered academic. Neither can they claim stare
decisis based on the May 31 Reso. as it involves different set facts (first one
during the retrenchment program and the 2nd one involves facts long after the
retrenchment). Also, the Union cannot invoke CBA benefits as the 200 employees
are now considered contractual employees and necessarily excluded in the
collective bargaining unit. ---this ruling was elevated to the CA
-Ruling of the CA: NLRC gravely abused its discretion in ruling in favor of PJI.
Making 200 employees sign a 5-month contract is an act which shows
circumvention of law and the CBA as it was made after the retrenchment
program and only goes to show the intent of PJI to reduce the rights and benefits
of its employees. The May 31 Reso stands as it reached a verdict that the
retrenchment was illegally made despite the Compromise Agreement being
made.
ISSUES: Whether an NLRC Resolution, which includes a pronouncement that the
members of a union had been illegally dismissed, is abandoned or rendered
"moot and academic" by a compromise agreement subsequently entered into
between the dismissed employees and the employer; this, in turn, raises the
question of whether such a compromise agreement constitutes res judicata to a
new complaint later filed by other union members-employees, not parties to the
agreement, who likewise claim to have been illegally dismissed.

HELD: Negative. Petition DENIED. We affirm the CA. The nature of a compromise
is spelled out in Article 2028 of the New Civil Code: it is "a contract whereby the
parties, by making reciprocal concessions, avoid litigation or put an end to one
already commenced." Parties to a compromise are motivated by "the hope of
gaining, balanced by the dangers of losing." It contemplates mutual concessions
and mutual gains to avoid the expenses of litigation, or, when litigation has
already begun, to end it because of the uncertainty of the result. Article 227 of
the Labor Code of the Philippines authorizes compromise agreements voluntarily
agreed upon by the parties, in conformity with the basic policy of the State "to

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promote and emphasize the primacy of free collective bargaining and


negotiations, including voluntary arbitration, mediation and conciliation, as
modes of settling labor or industrial disputes."
ART. 227 Compromise Agreements. Any compromise settlement, including
those involving labor standard laws, voluntarily agreed upon by the parties with
the assistance of the Bureau or the regional office of the Department of Labor,
shall be final and binding upon the parties. The National Labor Relations
Commission or any court shall not assume jurisdiction over issues involved
therein except in case of noncompliance thereof or if there is prima facie
evidence that the settlement was obtained through fraud, misrepresentation, or
coercion.

A judgment rendered in accordance with a compromise agreement is not


appealable, and is immediately executory unless a motion is filed to set aside the
agreement on the ground of fraud, mistake, or duress, in which case an appeal
may be taken against the order denying the motion. Under Article 2037 of the
Civil Code, "a compromise has upon the parties the effect and authority of res
judicata," even when effected without judicial approval; and under the principle
of res judicata, an issue which had already been laid to rest by the parties
themselves can no longer be relitigated.

Adjective law governing judicial compromises annunciate that once


approved by the court, a judicial compromise is not appealable and it thereby
becomes immediately executory but this rule must be understood to refer and
apply only to those who are bound by the compromise and, on the assumption
that they are the only parties to the case, the litigation comes to an end except
only as regards to its compliance and the fulfillment by the parties of their
respective obligations thereunder. The reason for the rule, said the Court in
Domingo v. Court of Appeals [325 Phil. 469], is that when both parties so enter
into the agreement to put a close to a pending litigation between them and ask
that a decision be rendered in conformity therewith, it would only be "natural to
presume that such action constitutes an implicit waiver of the right to appeal"
against that decision. The order approving the compromise agreement thus
becomes a final act, and it forms part and parcel of the judgment that can be
enforced by a writ of execution unless otherwise enjoined by a restraining order.

Thus, contrary to the allegation of petitioners, the execution and


subsequent approval by the NLRC of the agreement forged between it and the
respondent Union did not render the NLRC resolution ineffectual, nor rendered it
"moot and academic." The agreement becomes part of the judgment of the court
or tribunal, and as a logical consequence, there is an implicit waiver of the right
to appeal.

In any event, the compromise agreement cannot bind a party who did
not voluntarily take part in the settlement itself and gave specific individual
consent. It must be remembered that a compromise agreement is also a contract;
it requires the consent of the parties, and it is only then that the agreement may
be considered as voluntarily entered into.
A careful perusal of the wordings of the compromise agreement will
show that the parties agreed that the only issue to be resolved was the question
of the monetary claim of several employees. The prayer of the parties in the
compromise agreement which was submitted to the NLRC reads:

WHEREFORE, premises considered, it is respectfully prayed that the


Compromise Settlement be noted and considered; that the instant case [be]
deemed close[d] and terminated and that the Decision dated May 31, 2001
rendered herein by this Honorable Commission be deemed to be fully
implemented insofar as concerns the thirty-one (31) employees mentioned in
paragraphs 2c and 2d hereof; and, that the only issue remaining to be resolved
be limited to the question of the monetary claim raised in the motion for
clarification by the seven employees mentioned in paragraph 2e hereof.
The agreement was later approved by the NLRC. The case was
considered closed and terminated and the Resolution dated May 31, 2001 fully
implemented insofar as the employees "mentioned in paragraphs 2c and 2d of
the compromise agreement" were concerned. Hence, the CA was correct in
holding that the compromise agreement pertained only to the "monetary
obligation" of the employer to the dismissed employees, and in no way affected
May 31, 2001 Reso where the NLRC made the pronouncement that there was no
basis for the implementation of petitioners' retrenchment program.

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To reiterate, the rule is that when judgment is rendered based on a


compromise agreement, the judgment becomes immediately executory, there
being an implied waiver of the parties' right to appeal from the decision.43 The
judgment having become final, the Court can no longer reverse, much less modify
it.

Lastly, it could not be said that the employees in this case are barred from
pursuing their claims because of their acceptance of separation pay and their
signing of quitclaims. It is settled that "quitclaims, waivers and/or complete
releases executed by employees do not stop them from pursuing their claims if
there is a showing of undue pressure or duress. The basic reason for this is that
such quitclaims, waivers and/or complete releases being figuratively exacted
through the barrel of a gun, are against public policy and therefore null and void
ab initio. In the case at bar, the employees were faced with impending
termination. As such, it was but natural for them to accept whatever monetary
benefits that they could get.
65. COLEGIO DE SAN JUAN DE LETRAN,-versus-ASSOCIATION OF
EMPLOYEES AND FACULTY OF LETRAN and ELEONOR AMBAS

FACTS: On December 1992, Salvador Abtria, then President of respondent union,


Association of Employees and Faculty of Letran, initiated the renegotiation of its
Collective Bargaining Agreement with petitioner for the last two (2) years of the
CBAs five (5) year lifetime from 1989-1994. On the same year, the union elected
a new set of officers wherein private respondent Eleanor Ambas emerged as the
newly elected President.
Ambas wanted to continue the renegotiation of the CBA but petitioner, through
Fr. Edwin Lao, claimed that the CBA was already prepared for signing by the
parties. The parties submitted the disputed CBA to a referendum by the union
members, who eventually rejected the said CBA. Petitioner accused the union
officers of bargaining in bad faith before the NLRC.

LA:Labor Arbiter Edgardo M. Madriaga decided in favor of petitioner. However,


the Labor Arbiters decision was reversed on appeal before the NLRC.

The union notified the National Conciliation and Mediation Board (NCMB) of its
intention to strike on the grounds (sic) of petitioners: non-compliance with the

NLRC (1) order to delete the name of Atty. Federico Leynes as the unions legal
counsel; and (2) refusal to bargain.

The parties agreed to disregard the unsigned CBA and to start negotiation on a
new five-year CBA starting 1994-1999. On February 7, 1996, the union
submitted its proposals to petitioner, which notified the union six days later or
on February 13, 1996 that the same had been submitted to its Board of Trustees.

In the meantime, Ambas was informed through a letter dated February 15, 1996
from her superior that her work schedule was being changed from Monday to
Friday to Tuesday to Saturday. Ambas protested and requested management to
submit the issue to a grievance machinery under the old CBA (Ibid, p. 2-3). Due to
petitioners inaction, the union filed a notice of strike on March 13, 1996. The
parties met on March 27, 1996 before the NCMB to discuss the ground rules for
the negotiation. On March 29, 1996, the union received petitioners letter
dismissing Ambas for alleged insubordination. Hence, the union amended its
notice of strike to include Ambas dismissal.
Petitioner stopped the negotiations after it purportedly received information
that a new group of employees had filed a petition for certification election.

On June 18, 1996, the union finally struck. The Secretary of Labor and
Employment assumed jurisdiction and ordered all striking employees including
the union president to return to work and for petitioner to accept them back
under the same terms and conditions before the actual strike. Petitioner
readmitted the striking members except Ambas.
DOLE: On December 2, 1996, public respondent issued an order declaring
petitioner guilty of unfair labor practice on two counts and directing the
reinstatement of private respondent Ambas with backwages.

CA: Having been denied its motion for reconsideration, petitioner sought a
review of the order of the Secretary of Labor and Employment before the Court
of Appeals. The appellate court dismissed the petition and affirmed the findings
of the Secretary of Labor and Employment.
Petitioner ascribes the following errors to the Court of Appeals:

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ISSUES: (1) Whether petitioner is guilty of unfair labor practice by refusing to


bargain with the union when it unilaterally suspended the ongoing negotiations
for a new Collective Bargaining Agreement (CBA) upon mere information that a
petition for certification has been filed by another legitimate labor organization?
(2)Whether the termination of the union president amounts to an interference of
the employees right to self-organization.
HELD: The petition is without merit. As regards the first issue, Article 252 of the
Labor Code defines the meaning of the phrase duty to bargain collectively,

Noteworthy in the above definition is the requirement on both parties of the


performance of the mutual obligation to meet and convene promptly and
expeditiously in good faith for the purpose of negotiating an agreement.
Undoubtedly, respondent Association of Employees and Faculty of Letran (AEFL)
(hereinafter, union) lived up to this requisite when it presented its proposals
for the CBA to petitioner on February 7, 1996. On the other hand, petitioner
devised ways and means in order to prevent the negotiation.
Petitioners utter lack of interest in bargaining with the union is obvious in its
failure to make a timely reply to the proposals presented by the latter. More than
a month after the proposals were submitted by the union, petitioner still had not
made any counterproposals. This inaction on the part of petitioner prompted the
union to file its second notice of strike. Petitioner could only offer a feeble
explanation that the Board of Trustees had not yet convened to discuss the
matter as its excuse for failing to file its reply. This is a clear violation of
Article 250 of the Labor Code governing the procedure in collective bargaining,
to wit:

Art. 250. Procedure in collective bargaining. The following procedures shall be


observed in collective bargaining: (a) When a party desires to negotiate an
agreement, it shall serve a written notice upon the other party with a statement
of its proposals. The other party shall make a reply thereto not later than ten
(10) calendar days from receipt of such notice.[4]
xxxxxxxxx

As we have held in the case of Kiok Loy vs. NLRC,[5] the companys refusal to
make counter-proposal to the unions proposed CBA is an indication of its bad
faith.

In the case at bar, petitioners actuation show a lack of sincere desire to negotiate
rendering it guilty of unfair labor practice.

Moreover, the series of events that transpired after the filing of the first notice of
strike in January 1996 show petitioners resort to delaying tactics to ensure that
negotiation would not push through. Thus, on February 15, 1996, or barely a few
days after the union proposals for the new CBA were submitted, the union
president was informed by her superior that her work schedule was being
changed from Mondays to Fridays to Tuesdays to Saturdays. A request from the
union president that the issue be submitted to a grievance machinery was
subsequently denied. Thereafter, the petitioner and the union met on March 27,
1996 to discuss the ground rules for negotiation. However, just two days later, or
on March 29, 1996, petitionerdismissed the union president for alleged
insubordination. In its final attempt to thwart the bargaining process, petitioner
suspended the negotiation on the ground that it allegedly received information
that a new group of employees called the Association of Concerned Employees of
Colegio (ACEC) had filed a petition for certification election. Clearly, petitioner
tried to evade its duty to bargain collectively.
PETiTIONERS CONTENTION:

Petitioner, however, argues that since it has already submitted the unions
proposals to the Board of Trustees and that a series of conferences had already
been undertaken to discuss the ground rules for negotiation such should already
be considered as acts indicative of its intention to bargain.

Petitioner, likewise, claims that the suspension of negotiation was proper since
by the filing of the petition for certification election the issue on majority
representation of the employees has arose. According to petitioner, the authority
of the union to negotiate on behalf of the employees was challenged when a rival
union filed a petition for certification election..
We disagree.

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In order to allow the employer to validly suspend the bargaining process there
must be a valid petition for certification election raising a legitimate
representation issue. Hence, the mere filing of a petition for certification election
does not ipso facto justify the suspension of negotiation by the employer.
The Contract Bar Rule under Section 3, Rule XI, Book V, of the Omnibus Rules
Implementing the Labor Code, provides that:

If a collective bargaining agreement has been duly registered in accordance


with Article 231 of the Code, a petition for certification election or a motion for
intervention can only be entertained within sixty (60) days prior to the expiry
date of such agreement.

The rule is based on Article 232, in relation to Articles 253, 253-A and 256 of the
Labor Code. No petition for certification election for any representation issue
may be filed after the lapse of the sixty-day freedom period. The old CBA is
extended until a new one is signed. The petition for certification election by
ACEC, allegedly a legitimate labor organization, was filed with the Department of
Labor and Employment (DOLE) only on May 26, 1996.

Clearly, the petition was filed outside the sixty-day freedom period. Hence, the
filing thereof was barred by the existence of a valid and existing collective
bargaining agreement. Consequently, there is no legitimate representation issue
and, as such, the filing of the petition for certification election did not constitute a
bar to the ongoing negotiation.

In view of the above, there is no doubt that petitioner is guilty of unfair labor
practice by its stern refusal to bargain in good faith with respondent union.
Concerning the issue on the validity of the termination of the union president, we
hold that the dismissal was effected in violation of the employees right to self
organization.
Admittedly, management has the prerogative to discipline its employees for
insubordination. But when the exercise of such management right tends to
interfere with the employees right to self-organization, it amounts to unionbusting and is therefore a prohibited act.
WHEREFORE, premises considered, the petition is DENIED for lack of merit.

66. Mariwasa Siam Ceramics vs. Secretary of Labor and Employment, et. al.

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?

HELD: 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

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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.
67. Electromat Manufacturing and Recording Corporation vs. Lagunzad

FACTS: the Private respondent Nagkakaisang Samahan ng Manggawa ng


Electomat-Wasto (union) a chartered affiliate of the Workers Advocate for
Struggle, transformation and organization (Wasto) applied for a registration with
the BLR and passed the following documents
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.

Copies of the ratified constitution and by-laws (CBL)


Minutes of the CBLs adoption and ratification
Minutes of the organizational meetings
Names and addresses of the union officers
List of union members
List of rank and file employees of the company
Certification of non-existence of a CBA in the company
Resolution of affiliation with WASTO a labor federation
WASTOs resolution of acceptance
Charter certificate
Verification under oath

BLR thereafter issued a certification of creation of Local Chapter (equivalent to


certificate of recognition of an independent union) pursuant to D.O. 40-03,
Petitioner Electromat filled for the cancellation of the certificate on the ground of
failure to comply with Art 234 of LC and that DO 40-03 if unconstitutional for

being an invalid amendment of the LC since it reduced the requirements of Art


234 of LC and that it is an invalid exercise of the rule making power of DOLE

DOLE acting director Ciriaco Langunzad dismissed the petition which was
affirmed by BLR Director Hans Leo Cacdac and also affirmed by the CA, hence
this appeal to SC, stating that the CA committed reversible error in upholding the
registration certificate issued by BLR
Sec 2(E), Rule III of DO 40-03 the report of creation of chartered local shall be
accompanied by a charter certificate issued by the federal or national union
indicating the creation or establishment of the chartered local.

Art 234 - requirements for registration. Any applicant labor organization,


association or group of unions or workers shall acquire legal personality and
shall be entitled to the rights and privileges granted by law to legitimate labor
organizations upon issuance of the certificate of registration based on the
following requirements:
(a) Fifty pesos (P50.00) registration fee;
(b) The names of its officers, their addresses, the principal address of the labor
organization, the minutes of the organizational meetings and the list of the
workers who participated in such meetings;
(c) The names of all its members comprising at least twenty percent (20%) of
all the employees in the bargaining unit where it seeks to operate;
(d) If the applicant union has been in existence for one or more years, copies of
its annual financial reports; and
(e) Four (4) copies of the constitution and by-laws of the applicant union,
minutes of its adoption or ratification, and the list of the members who
participated in it.
ISSUES: whether or not the union satisfied the requirements of Art 234

HELD: Yes, the union in this case has more than satisfied the requirements the
petitioner complains about specifically the union has submitted
a. Copies of the ratified constitution and by-laws (CBL)
b. Minutes of the CBLs adoption and ratification
c. Minutes of the organizational meetings
d. Names and addresses of the union officers

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e.
f.
g.
h.
i.

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List of union members


List of rank and file employees of the company
Certification of non-existence of a CBA in the company
Resolution of affiliation with WASTO and the latters acceptance
Their Charter certificate

and these submissions are property verified as required by the rules. In sum, the
petitioner has no factual basis for questioning the unions registration as event
the requirements for registration as an independent local have been complied
with.

(In case na tanungin) WON DO 40-03 is a valid exercise of the rule-making power
of the DOLE
Yes, in an Earlier case in Progressive Development Corporation v. Secretary, of
DOLE the Courte encountered a similar question on the validity of the old Section
3, Rule II, Book V of the Rules Implementing the Labor Code which stated:
Union affiliation; direct membership with a national union. - The affiliate of a
labor federation or national union may be a local or chapter thereof or an
independently registered union.

a) The labor federation or national union concerned shall issue a charter


certificate indicating the creation or establishment of a local or chapter,
copy of which shall be submitted to the Bureau of Labor Relations within
thirty (30) days from issuance of such charter certificate.
xxxx
e) The local or chapter of a labor federation or national union shall have
and maintain a constitution and by-laws, set of officers and books of
accounts. For reporting purposes, the procedure governing the reporting of
independently registered unions, federations or national unions shall be
observed.
Interpreting these provisions of the old rules, the Court said that by force of law
the local or chapter of a labor federation or national union becomes a legitimate
labor organization upon compliance with Section 3, Rule II, Book V of the Rules
Implementing the Labor Code, the only requirement being the submission of the
charter certificate to the BLR, Undoubtedly, the intent of the law in imposing

lesser requirements in the case of a branch or local of a registered federation or


national union is to encourage the affiliation of a local union with a federation or
national union in order to increase the local unions bargaining powers
respecting terms and conditions of labor.

D.O. 40-03 represents an expression of the governments implementing policy on


trade unionism. It builds upon the old rules by further simplifying the
requirements for the establishment of locals or chapters. We see nothing
contrary to the law or the Constitution in the adoption by the Secretary of Labor
and Employment of D.O. 40-03 as this department order is consistent with the
intent of the government to encourage the affiliation of a local union with a
federation or national union to enhance the locals bargaining power.
68. Eagle Ridge Golf and Country Club v. CA March 18, 2010

Nature: Petitioner Eagle Ridge is a corporation engaged in the business


of maintaining golf courses. It had, at the endof CY 2005, around 112 rank-andfile employees. The instant case is an off-shot of the desire of a number of these
employees to organize themselves as a legitimate labor union and their
employers opposition to their aspiration.

FACTS: On December 6, 2005, at least 20% of Eagle Ridges rank-and-file


employeesthe percentage threshold required under Article 234(c) of the Labor
Code for union registrationhad a meeting where they organized themselves
into an independent labor union, named "Eagle Ridge Employees Union" (EREU
or Union), elected a set of officers, and ratified their constitution and by-laws.
EREU formally applied for registration before DOLE Regional Office IV which
granted the application and issued EREU Registration Certificate. EREU then filed
a petition for certification election in Eagle Ridge Golf & Country Club. Eagle
Ridge opposed this petition and filed a petition for the cancellation of EREUs Reg
Certificate. It ascribed misrepresentation, false statement, or fraud to EREU in
connection with the adoption of its constitution and by-laws, the numerical
composition of the Union, and the election of its officers.
EAGLE RIDGEs SPECIFIC ALLEGATIONS:

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1.
2.
3.
4.

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EREU declared in its application for registration having 30 members,


when the minutes of its December 6, 2005 organizational meeting
showed it only had 26 members.
Discrepancy between the certification issued by the Union secretary and
president that 25 members actually ratified the constitution and by-laws
on December 6, 2005 and the fact that 26 members affixed
their signatures on the documents, making one signature a forgery.
It also contends that 5 employees who attended the organizational
meeting had manifested the desire to withdraw from the union.
The five executed individual affidavits or Sinumpaang Salaysay on
February 15, 2006, attesting that they arrived late at said meeting which
they claimed to be drinking spree; that they did not know that the
documents they signed on that occasion pertained to the organization of
a union; and that they now wanted to be excluded from the Union. The
withdrawal of the five, Eagle Ridge maintained, effectively reduced the
union membership to 20 or 21, either of which is below the mandatory
minimum 20% membership requirement under Art. 234(c) of the Labor
Code. Reckoned from 112rank-and-file employees of Eagle Ridge, the
required number would be 22 or 23 employees.

EREU/UNIONs COUNTERARGUMENTS:
1. Alleged discrepancies are not real for before filing of its application on
December 19, 2005, 4 additional employees joined the union on
December 8, 2005, thus raising the union membership to 30 members as
of December 19, 2005;
2. The understatement by one member who ratified the constitution and
by-laws was a typographical error, which does not make it either grave
or malicious warranting the cancellation of the unions registration;
3. The retraction of 5 union members should not be given any credence for
the reasons that: a) the sworn statements of the five retracting union
members sans other affirmative evidence presented hardly qualify as
clear and credible evidence considering the joint affidavits of the other
members attesting to the orderly conduct of the organizational meeting;
b) the retracting members did not deny signing the union documents;
c)it can be presumed that "duress, coercion or valuable consideration"
was brought to bear on the retracting members; and d) once the

required percentage requirement has been reached, the employees


withdrawal from union membership taking place after the filing of the
petition for certification election will not affect the petition. It asserted
the applicability of said ruling as the petition for certification election
was filed on January 10, 2006 or long before February 15, 2006 when
the affidavits of retraction were executed by the five union members,
thus contending that the retractions do not affect nor be deemed
compelling enough to cancel its certificate of registration.

Ruling of DOLE regional director: ruled in favor of Eagle Ridge and granted the
cancellation of the Reg Certificate of EREU.
Ruling of Bureau of Labor Relations (BLR) headed by Officer in charge
(OIC): affirmed DOLE regional directors ruling. On appeal, BLR headed by
Director Chato set aside the BLR OICs decision, declaring that the Eagle Ridge
Employees Union (EREU) shall remain in the roster of legitimate organizations.
she found as without basis allegations of misrepresentation or fraud as ground
for cancellation of EREUs registration.
CA: dismissed Eagle Ridges petition for being deficient.
ISSUES: WON fraud is procured in the registration of the labor union

HELD: No fraud in the application. Eagle Ridge cites the grounds provided under
Art. 239(a) and (c) of the Labor Code for its petition for cancellation of the
EREUs registration. On the other hand, the Union asserts bona fide compliance
with the registration requirements under Art. 234 of the Code, explaining the
seeming discrepancies between the number of employees who participated in
the organizational meeting and the total number of union members at the time it
filed its registration, as well as the typographical error in its certification which
understated by one the number of union members who ratified the unions
constitution and by-laws.
Before their amendment by Republic Act No. 9481, the then governing
Art. 234 (on the requirements of registration of a labor union) and Art. 239 (on
the grounds for cancellation of union registration) of the Labor Code respectively
provided as follows:

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ART. 234. REQUIREMENTS OF REGISTRATION. Any applicant labor


organization, association or group of unions or workers shall acquire legal
personality and shall be entitled to the rights and privileges granted by law to
legitimate labor organizations upon issuance of the certificate of registration
based on the following requirements:
(a) Fifty pesos (P50.00) registration fee;
(b) The names of its officers, their addresses, the principal address of the
labor organization, the minutes of the organizational meetings and
the list of workers who participated in such meetings;
(c) The names of all its members comprising at least twenty percent
(20%) of all the employees in the bargaining unit where it seeks to
operate;
xxxx
(e) Four copies (4) of the constitution and by-laws of the applicant
union, minutes of its adoption or ratification and the list of the
members who participated in it.41
xxxx
ART. 239. GROUNDS FOR CANCELLATION OF UNION REGISTRATION. The
following shall constitute grounds for cancellation of union registration:
(a) Misrepresentation, false statements or fraud in connection with
the adoption or ratification of the constitution and by-laws or
amendments thereto, the minutes of ratification, and the list of
members who took part in the ratification;
xxxx
(c) Misrepresentation, false statements or fraud in connection with
the election of officers, minutes of the election of officers, the list of
voters, or failure to submit these documents together with the list of the
newly elected/appointed officers and their postal addresses within
thirty (30) days from election. (Emphasis supplied.)
A scrutiny of the records fails to show any misrepresentation, false statement, or
fraud committed by EREU to merit cancellation of its registration based on the
following arguments:
1. First. The Union submitted the required documents attesting to the facts of
the organizational meeting, the election of its officers, and the adoption of the

Unions constitution and by-laws. It submitted before the DOLE Regional Office
with its Application for Registration the: (a) the minutes of its organizational
meeting held on December 6, 2005 showing 26 founding members who elected
its union officers by secret ballot; (b) the list of rank-and-file employees of Eagle
Ridge who attended the organizational meeting and the election of officers with
their individual signatures; (c) the list of rank-and-file employees45 who ratified
the unions constitution and by-laws showing the very same list as those who
attended the organizational meeting and the election of officers with their
individual signatures except the addition of four employees without their
signatures, i.e., Cherry Labajo, Grace Pollo, Annalyn Poniente and Rowel Dolendo;
(d) the unions constitution and by-laws as approved on December 6, 2005; (e)
the list of officers and their addresses; (f) the list of union members48 showing a
total of 30 members; and (g) the Sworn Statement49 of the unions elected
president and secretary. All the foregoing documents except the sworn
statement of the president and the secretary were accompanied by
Certifications by the union secretary duly attested to by the union president.
2. Second. The members of the EREU totaled 30 employees when it applied for
registration, thereby complying with the mandatory minimum 20% membership
requirement under Art. 234(c).
3. Third. The Union has sufficiently explained the discrepancy between the
number of those who attended the organizational meeting showing 26
employees and the list of union members showing 30. The difference is due to
the additional four members admitted two days after the organizational meeting
as attested to by their duly accomplished Union Membership forms.
Consequently, the total number of union members, as of December 8, 2005, was
30, which was truthfully indicated in its application for registration on December
19, 2005. As aptly found by the BLR Director, the Union already had 30 members
when it applied for registration, for the admission of new members is neither
prohibited by law nor was it concealed in its application for registration.
4. Fourth. In its futile attempt to clutch at straws, Eagle Ridge assails the
inclusion of the additional four members allegedly for not complying with what it
termed as "the sine qua non requirements" for union member applications under
the Unions constitution and by-laws, specifically Sec. 2 of Art. IV. We are not
persuaded. Any seeming infirmity in the application and admission of union
membership, most especially in cases of independent labor unions, must be
viewed in favor of valid membership.

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The right of employees to self-organization and membership in a union


must not be trammeled by undue difficulties. In this case, when the Union said
that the four employee-applicants had been admitted as union members, it is
enough to establish the fact of admission of the four that they had duly signified
such desire by accomplishing the membership form.
5. Fifth. The difference between the number of 26 members, who ratified the
Unions constitution and by-laws, and the 25 members shown in the certification
of the Union secretary as having ratified it, is, as shown by the factual
antecedents, a typographical error. It was an insignificant mistake committed
without malice or prevarication. The list of those who attended the
organizational meeting shows 26 members, as evidenced by the signatures
beside their handwritten names. Thus, the certifications understatement by one
member, while not factual, was clearly an error, but neither a misleading one nor
a misrepresentation of what had actually happened.
6. Sixth. In the more meaty issue of the affidavits of retraction executed by six
union members, we hold that the probative value of these affidavits cannot
overcome those of the supporting affidavits of 12 union members and their
counsel as to the proceedings and the conduct of the organizational meeting on
December 6, 2005. The DOLE Regional Director and the BLR OIC Director
obviously erred in giving credence to the affidavits of retraction, but not
according the same treatment to the supporting affidavits.
It is settled that affidavits partake the nature of hearsay evidence, since
they are not generally prepared by the affiant but by another who uses his own
language in writing the affiants statement, which may thus be either omitted or
misunderstood by the one writing them.
For their non-presentation and consonant to the above-quoted rule, the six
affidavits of retraction are inadmissible as evidence against the Union in the
instant case.
7. Seventh. The fact that six union members, indeed, expressed the desire to
withdraw their membership through their affidavits of retraction will not cause
the cancellation of registration on the ground of violation of Art. 234(c) of the
Labor Code requiring the mandatory minimum 20% membership of rank-andfile employees in the employees union. The six retracting union members clearly
severed and withdrew their union membership. The query is whether such
separation from the Union can detrimentally affect the registration of the Union.
We answer in the negative.

Twenty percent (20%) of 112 rank-and-file employees in Eagle Ridge


would require a union membership of at least 22 employees (112 x 205 = 22.4).
When the EREU filed its application for registration on December 19, 2005, there
were clearly 30 union members. Thus, when the certificate of registration was
granted, there is no dispute that the Union complied with the mandatory 20%
membership requirement.
With the withdrawal of six union members, there is still compliance with
the mandatory membership requirement under Art. 234(c), for the remaining 24
union members constitute more than the 20% membership requirement of 22
employees.
Evidently, as the Union persuasively argues, the withdrawal of six
member-employees from the Union will affect neither the Unions registration
nor its petition for certification election, as their affidavits of retraction were
executed after the Unions petition for certification election had been filed. The
initial five affidavits of retraction were executed on February 15, 2006; the sixth,
on March 15, 2006. Indisputably, all six were executed way after the filing of the
petition for certification election on January 10, 2006.
The Court ends this disposition by reproducing the following apt excepts
from its holding in S.S. Ventures International, Inc. v. S.S. Ventures Labor Union
(SSVLU) on the effect of the withdrawal from union membership right before or
after the filing of a petition for certification election: We are not persuaded. As
aptly noted by both the BLR and CA, these mostly undated written statements
submitted by Ventures on March 20, 2001, or seven months after it filed its
petition for cancellation of registration, partake of the nature of withdrawal of
union membership executed after the Unions filing of a petition for certification
election on March 21, 2000. We have in precedent cases said that the
employees withdrawal from a labor union made before the filing of the
petition for certification election is presumed voluntary, while withdrawal
after the filing of such petition is considered to be involuntary and does not
affect the same. Now then, if awithdrawal from union membership done
after a petition for certification election has been filed does not vitiate such
petition, is it not but logical to assume that such withdrawal cannot work to
nullify the registration of the union? Upon this light, the Court is inclined to
agree with the CA that the BLR did not abuse its discretion nor gravely err when
it concluded that the affidavits of retraction of the 82 members had no
evidentiary weight.(Emphasis supplied.)

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69. TAGAYTAY HIGHLANDS INTERNATIONAL GOLF CLUB INC v. TAGAYTAY
HIGHLANDS EMPLOYEES UNIONPGTWO
DOCTRINE: The Supreme Court ruled that the effect of issuance of certificate of
registration to a union is that it becomes legitimate and its legal personality can
only be attacked through a petition for cancellation of registration and not thru
intervention in a certification election petition.

FACTS: On October 16, 1997, the Tagaytay Highlands Employees Union (THEU)
Philippine Transport and General Workers Organization (PTGWO), Local Chapter
No. 776, a legitimate labor organization said to represent majority of the rankand-file employees of Tagaytay Highlands International Golf Club Incorporated
(THIGCI), filed a petition for certification election before the DOLE MediationArbitration Unit, Regional Branch No. IV. THIGCI, in its Comment, opposed
THEUs petition for certification election on the ground that the list of union
members submitted by it was defective and fatally flawed as it included the
names and signatures of supervisors, resigned, terminated and absent without
leave (AWOL) employees, as well as employees of The Country Club, Inc., a
corporation distinct and separate from THIGCI; and that out of the 192
signatories to the petition, only 71 were actual rank-and-file employees of
THIGCI. THIGCI thus submitted a list of the names of its 71 actual rank-and-file
employees to the petition for certification election. And it therein incorporated a
tabulation showing the number of signatories to said petition whose
membership in the union was being questioned as disqualified and the reasons
for disqualification.
THEU asserted that it complied with all the requirements for valid affiliation and
inclusion in the roster of legitimate labor organizations pursuant to DOLE
Department Order No. 9, series of 1997, on account of which it was duly granted
a Certification of Affiliation by DOLE on October 10, 1997; and that Section 5,
Rule V of said Department Order provides that the legitimacy of its registration
cannot be subject to collateral attack, and for as long as there is no final order of
cancellation, it continues to enjoy the rights accorded to a legitimate
organization. Therefore, the Med-Arbiter should, pursuant to Article 257 of the
Labor Code and Section 11, Rule XI of DOLE Department Order No. 09,

automatically order the conduct of a certification election. On January 28, 1998,


DOLE Med-Arbiter Anastacio Bactin ordered the holding of a certification
election.

THIGCI appealed to the Office of the DOLE Secretary which, by Resolution of June
4, 1998, set aside the said Med-Arbiters Order and accordingly dismissed the
petition for certification election on the ground that there is a "clear absence of
community or mutuality of interests," it finding that THEU sought to represent
two separate bargaining units (supervisory employees and rank-and-file
employees) as well as employees of two separate and distinct corporate entities.
Upon Motion for Reconsideration by THEU, DOLE Undersecretary Rosalinda
Dimalipis-Baldoz, by authority of the DOLE Secretary, issued DOLE Resolution of
November 12, 1998 setting aside the June 4, 1998 Resolution dismissing the
petition for certification election. She held that since THEU is a local chapter, the
twenty percent (20%) membership requirement is not necessary for it to acquire
legitimate status; hence, "the alleged retraction and withdrawal of support by 45
of the 70 remaining rank-and-file members . . . cannot negate the legitimacy it
has already acquired before the petition". THIGCIs Motion for Reconsideration
was denied by the DOLE Undersecretary hence it filed a petition for certiorari
with the CA.
The CA denied THIGCIs Petition for Certiorari and affirmed the DOLE Resolution
dated November 12, 1998. It held that while a petition for certification election is
an exception to the innocent bystander rule, hence, the employer may pray for
the dismissal of such petition on the basis of lack of mutuality of interests of the
members of the union as well as lack of employer-employee relationship and
petitioner failed to adduce substantial evidence to support its allegations.
ISSUES: Whether the unions legal personality can be subject to collateral attack
after a certificate of registration is issued

HELD: NO, Petition is DENIED, and the records of the case are remanded to the
office of origin. While Article 245 expressly prohibits supervisory employees
from joining a rank-and-file union, it does not provide what would be the effect if
a rank-and-file union counts supervisory employees among its members, or viceversa. Citing Toyota which held that "a labor organization composed of both

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rank-and-file and supervisory employees is no labor organization at all," and the


subsequent case of Progressive Development Corp. Pizza Hut v. Ledesma which
held that:
"The Labor Code requires that in organized and unorganized
establishments, a petition for certification election must be filed by a legitimate
labor organization. The acquisition of rights by any union or labor organization,
particularly the right to file a petition for certification election, first and
foremost, depends on whether or not the labor organization has attained the
status of a legitimate labor organization.
In the case before us, the Med-Arbiter summarily disregarded the petitioners
prayer that the former look into the legitimacy of the respondent Union by a
sweeping declaration that the union was in the possession of a charter certificate
so that for all intents and purposes, Sumasaklaw sa Manggagawa sa Pizza Hut
(was) a legitimate organization," (Underscoring and emphasis supplied),
We also do not agree with the ruling of the respondent Secretary of Labor that
the infirmity in the membership of the respondent union can be remedied in
"the pre-election conference thru the exclusion-inclusion proceedings wherein
those employees who are occupying rank-and-file positions will be excluded
from the list of eligible voters."

After a certificate of registration is issued to a union, its legal personality cannot


be subject to collateral attack. It may be questioned only in an independent
petition for cancellation in accordance with Section 5 of Rule V, Book IV of the
"Rules to Implement the Labor Code" (Implementing Rules) which section reads:

Sec. 5. Effect of registration. The labor organization or workers


association shall be deemed registered and vested with legal personality on the
date of issuance of its certificate of registration. Such legal personality cannot
thereafter be subject to collateral attack, but may be questioned only in an
independent petition for cancellation in accordance with these Rules.
(Emphasis supplied)

The inclusion in a union of disqualified employees is not among the grounds for
cancellation, unless such inclusion is due to misrepresentation, false statement

or fraud under the circumstances enumerated in Sections (a) and (c) of


Article 239 of above quoted Article 239 of the Labor Code. THEU, having
been validly issued a certificate of registration, should be considered to have
already acquired juridical personality which may not be assailed collaterally. As
for petitioners allegation that some of the signatures in the petition for
certification election were obtained through fraud, false statement and
misrepresentation, the proper procedure is, as reflected above, for it to file a
petition for cancellation of the certificate of registration, and not to intervene in a
petition for certification election.
Regarding the alleged withdrawal of union members from participating in the
certification election, this Courts following ruling is instructive:
"[T]he best forum for determining whether there were indeed
retractions from some of the laborers is in the certification election itself wherein
the workers can freely express their choice in a secret ballot. Suffice it to say that
the will of the rank-and file employees should in every possible instance be
determined by secret ballot rather than by administrative or quasi-judicial
inquiry. Such representation and certification election cases are not to be taken
as contentious litigations for suits but as mere investigations of a non-adversary,
fact-finding character as to which of the competing unions represents the
genuine choice of the workers to be their sole and exclusive collective bargaining
representative with their employer."
As for the lack of mutuality of interest argument of petitioner, it, at all events,
does not lie given, as found by the court a quo, its failure to present substantial
evidence that the assailed employees are actually occupying supervisory
positions.
While petitioner submitted a list of its employees with their corresponding job
titles and ranks, there is nothing mentioned about the supervisors respective
duties, powers and prerogatives that would show that they can effectively
recommend managerial actions which require the use of independent judgment.
As this Court put it in Pepsi-Cola Products Philippines, Inc. v. Secretary of Labor,
Designation should be reconciled with the actual job description of subject
employees x x x The mere fact that an employee is designated manager does not
necessarily make him one.

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Otherwise, there would be an absurd situation where one can be given the title
just to be deprived of the right to be a member of a union. In the case of National
Steel Corporation vs. Laguesma (G. R. No. 103743, January 29, 1996), it was
stressed that What is essential is the nature of the employees function and
not the nomenclature or title given to the job which determines whether the
employee has rank-and-file or managerial status or whether he is a supervisory
employee.
70. SS Ventures International vs SS Ventures Labor Union

FACTS: Petitioner Ventures is in the business of manufacturing sports shoes.


Respondent on the is a labor organization registered with the DOLE. Union filed
with DOLE-Region III a petition for certification election in behalf of the rankand-file employees of Ventures. 542 signatures, 82 of which belong to terminated
Ventures employees, appeared on the basic documents supporting the petition.
Ventures filed a Petition to cancel the Unions certificate of registration
arguing that the
1.

2.

The Union deliberately and maliciously included the names of more or


less 82 former employees no longer connected with Ventures in its list of
members who attended the organizational meeting and in the
adoption/ratification of its constitution and by-laws held on January 9,
2000; and the Union forged the signatures of these 82 former employees
to make it appear they took part in the organizational meeting and
adoption and ratification of the constitution;
Unions application for registration was not supported by at least 20% of
the rank-and-file employees of Ventures, or 418 of the total 2,197employee complement. Since more or less 82 of the 500 signatures were
forged or invalid, then the remaining valid signatures would only be 418,
which is very much short of the 439 minimum (2197 total employees x
20% = 439.4) required by the Labor Code.

Regional Director rendered judgment cancelling the certificate of


registration of the Union. Union appealed to the BLR which granted such appeal.
Ventures filed a petition for certiorari with the CA which was denied.

ISSUES: Whether or not respondent union committed fraud and


misrepresentation in connection with the adoption or ratification of the unions
constitution as to warrant cancellation of its registration?

HELD: NO. Once registered with the DOLE, a union is considered a legitimate
labor organization endowed with the right and privileges granted by law to such
organization. While a certificate of registration confers a union with legitimacy
with the concomitant right to participate in or ask for certification election in a
bargaining unit, the registration may be cancelled or the union may be
decertified as the bargaining unit, in which case the union is divested of the
status of a legitimate labor organization. Among the grounds for cancellation is
the commission of any of the acts enumerated in Art. 239(a) of the Labor Code,
such as fraud and misrepresentation in connection with the adoption or
ratification of the unions constitution and like documents. The Court, has in
previous cases, said that to decertify a union, it is not enough to show that the
union includes ineligible employees in its membership. It must also be shown
that there was misrepresentation, false statement, or fraud in connection with
the application for registration and the supporting documents, such as the
adoption or ratification of the constitution and by-laws or amendments thereto
and the minutes of ratification of the constitution or by-laws, among other
documents.
The Court need not delve into the question of whether these 82
dismissed individuals were still Union members qualified to vote and affix their
signature on its application for registration and supporting documents. The
relevancy of the 82 individuals active participation in the Unions organizational
meeting and the signing ceremonies thereafter comes in only for purposes of
determining whether or not the Union, even without the 82, would still meet
what Art. 234(c) of the Labor Code requires to be submitted, to wit:
Art. 234. Requirements of Registration.Any applicant labor organization x x x
shall acquire legal personality and shall be entitled to the rights and privileges
granted by law to legitimate labor organizations upon issuance of the certificate of
registration based on the following requirements:
xxxx

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(c) The names of all its members comprising at least twenty percent (20%) of all
the employees in the bargaining unit where it seeks to operate.

In its union records on file with this Bureau, respondent union submitted the
names of [542] members. This number easily complied with the 20%
requirement, be it 1,928 or 2,202 employees in the establishment. Even
subtracting the 82 employees from 542 leaves 460 union members, still within
440 or 20% of the maximum total of 2,202 rank-and-file employees.

Whatever misgivings the petitioner may have with regard to the 82 dismissed
employees is better addressed in the inclusion-exclusion proceedings during a
pre-election conference. The issue surrounding the involvement of the 82
employees is a matter of membership or voter eligibility. It is not a ground
to cancel union registration.
71. THE HERITAGE HOTEL MANILA vs. NATIONAL UNION OF WORKERS IN
THE HOTEL, RESTAURANT AND ALLIED INDUSTRIES-HERITAGE HOTEL
MANILA SUPERVISORS CHAPTER (NUWHRAIN-HHMSC)
Digesters note: The case has 2 issues: the first is on the Jurisdiction of the labor
secretary to review upon inhibition of the BLR director who has jurisdiction
conferred to him by law. The second one is about cancellation of union and is the
more relevant one to LabRel. The specific provisions covered by the case in
relation to the case list are Articles 238-239 (now 244-245) on Cancellation of
Registration of Unions both before and after the amendment by RA 9481; and
then there is also Article 248-A after the amendment which basically made the
alleged ground for cancellation no longer such.
FACTS: Respondent filed with the Department of Labor and EmploymentNational Capital Region (DOLE-NCR) a petition for certification election. The
Med-Arbiter granted the petition and ordered the holding of a certification
election. On appeal, the DOLE Secretary affirmed the Med-Arbiters order and
remanded the case to the Med-Arbiter for the holding of a preelection conferenc.
Petitioner filed a motion for reconsideration, but it was denied.

The preelection conference was not held as initially scheduled; it was held a
year later, or on February 20, 1998. Petitioner moved to archive or to dismiss the

petition due to alleged repeated non-appearance of respondent. The latter


agreed to suspend proceedings until further notice. The preelection conference
resumed on January 29, 2000.

Subsequently, petitioner discovered that respondent had failed to


submit to the Bureau of Labor Relations (BLR) its annual financial report
for several years and the list of its members since it filed its registration
papers in 1995. Consequently, petitioner filed a Petition for Cancellation of
Registration of respondent, on the ground of the non-submission of the said
documents. Petitioner prayed that respondents Certificate of Creation of
Local/Chapter be cancelled and its name be deleted from the list of legitimate
labor organizations. It further requested the suspension of the certification
election proceedings.
On June 1, 2000, petitioner reiterated its request by filing a Motion to
Dismiss or Suspend the [Certification Election] Proceedings. Nevertheless,
the certification election pushed through on June 23, 2000. Respondent emerged
as the winner.

On June 28, 2000, petitioner filed a Protest with Motion to Defer


Certification of Election Results and Winner, stating that the certification
election held on June 23, 2000 was an exercise in futility because, once
respondents registration is cancelled, it would no longer be entitled to be
certified as the exclusive bargaining agent of the supervisory employees.

Meanwhile, respondent filed its Answer to the petition for the


cancellation of its registration. It averred that the petition was filed primarily to
delay the conduct of the certification election, the respondents certification as
the exclusive bargaining representative of the supervisory employees, and the
commencement of bargaining negotiations.

Respondent prayed for the dismissal of the petition for cancellation for
the following reasons: (a) petitioner is estopped from questioning respondents
status as a legitimate labor organization as it had already recognized respondent
as such during the preelection conferences; (b) petitioner is not the party-ininterest, as the union members are the ones who would be disadvantaged by the
non-submission of financial reports; (c) it has already complied with the
reportorial requirements, having submitted its financial statements for

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1996, 1997, 1998, and 1999, its updated list of officers, and its list of
members for the years 1995, 1996, 1997, 1998, and 1999; (d) the petition is
already moot and academic, considering that the certification election had
already been held, and the members had manifested their will to be represented
by respondent.

association and right of workers to self-organization outweighed respondents


noncompliance with the statutory requirements to maintain its status as a
legitimate labor organization.

Petitioner subsequently appealed the said Order to the DOLE Secretary.


The appeal was later dismissed by DOLE Secretary Patricia A. Sto. Tomas (DOLE
Secretary Sto. Tomas) in the Resolution of August 21, 2002. Petitioner moved for
reconsideration, but the motion was also denied.

Petitioner filed a petition for certiorari with the CA, raising the issue of
whether the DOLE Secretary acted with grave abuse of discretion in taking
cognizance of the appeal and affirming the dismissal of its petition for
cancellation of respondents registration.

The Med-Arbiter held that the pendency of a petition for cancellation of


registration is not a bar to the holding of a certification election. Thus, in an
Order dated January 26, 2001, the Med-Arbiter dismissed petitioners
protest, and certified respondent as the sole and exclusive bargaining
agent of all supervisory employees.

In the meantime, Regional Director Alex E. Maraan (Regional


Director Maraan) of DOLE-NCR finally resolved the petition for cancellation
of registration. While finding that respondent had indeed failed to file financial
reports and the list of its members for several years, he, nonetheless, denied the
petition, ratiocinating that freedom of association and the employees right to
self-organization are more substantive considerations. He took into account the
fact that respondent won the certification election and that it had already been
certified as the exclusive bargaining agent of the supervisory employees. In view
of the foregoing, Regional Director Maraanwhile emphasizing that the
non-compliance with the law is not viewed with favorconsidered the
belated submission of the annual financial reports and the list of members
as sufficient compliance thereof and considered them as having been
submitted on time.
Aggrieved, petitioner appealed the decision to the BLR. BLR Director
Hans Leo Cacdac inhibited himself from the case because he had been a
former counsel of respondent.
In view of Director Cacdacs inhibition, DOLE Secretary Sto. Tomas
took cognizance of the appeal. In a resolution dated February 21, 2003, she
dismissed the appeal, holding that the constitutionally guaranteed freedom of

Petitioner filed a motion for reconsideration, but the motion was


likewise denied in a resolution dated May 30, 2003. DOLE Secretary Sto. Tomas
admitted that it was the BLR which had jurisdiction over the appeal, but she
pointed out that the BLR Director had voluntarily inhibited himself from the case
because he used to appear as counsel for respondent. In order to maintain the
integrity of the decision and of the BLR, she therefore accepted the motion to
inhibit and took cognizance of the appeal.

The CA denied the petition. The CA opined that the DOLE Secretary may
legally assume jurisdiction over an appeal from the decision of the Regional
Director in the event that the Director of the BLR inhibits himself from the case.
According to the CA, in the absence of the BLR Director, there is no person
more competent to resolve the appeal than the DOLE Secretary. The CA
brushed aside the allegation of bias and partiality on the part of the DOLE
Secretary, considering that such allegation was not supported by any evidence.

The CA also found that the DOLE Secretary did not commit grave
abuse of discretion when she affirmed the dismissal of the petition for
cancellation of respondents registration as a labor organization. Echoing
the DOLE Secretary, the CA held that the requirements of registration of
labor organizations are an exercise of the overriding police power of the
State, designed for the protection of workers against potential abuse by the
union that recruits them. These requirements, the CA opined, should not be
exploited to work against the workers constitutionally protected right to selforganization.
ISSUES:

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1.) Whether or not the Labor secretary had jurisdiction to review the
decision of the Regional Director in a petition for cancellation when such
jurisdiction is conferred by law to the BLR (Bureau of Labor Relations).
2.) Whether the CA gravely erred in affirming the dismissal of the
Cancellation petition despite the mandatory and unequivocal provisions
of the Labor Code (Articles 238-239) and its Implementing rules.

HELD:

1.) Yes, it does. Jurisdiction to review the decision of the Regional Director
lies with the BLR. But as pointed out by the CA, the present case
involves a peculiar circumstance that was not present or covered by the
ruling in Abbott. In this case, the BLR Director inhibited himself from
the case because he was a former counsel of respondent. Who, then,
shall resolve the case in his place? Jurisdiction remained with the BLR
despite the BLR Directors inhibition.
When the DOLE Secretary resolved the appeal, she merely
stepped into the shoes of the BLR Director and performed a
function that the latter could not himself perform. She did so
pursuant to her power of supervision and control over the BLR. The
DOLE Secretary, as the person exercising the power of supervision and
control over the BLR, has the authority to directly exercise the quasijudicial function entrusted by law to the BLR Director.
It is true that the power of control and supervision does not give
the Department Secretary unbridled authority to take over the functions
of his or her subordinate. Such authority is subject to certain guidelines
which are stated in Book IV, Chapter 8, Section 39(1)(a) of the
Administrative Code of 1987. However, in the present case, the DOLE
Secretarys act of taking over the function of the BLR Director was
warranted and necessitated by the latters inhibition from the case
and the objective to maintain the integrity of the decision, as well
as the Bureau itself.
Petitioner insists that the BLR Directors subordinates should
have resolved the appeal, citing the provision under the Administrative
Code of 1987 which states, in case of the absence or disability of the
head of a bureau or office, his duties shall be performed by the assistant
head. The provision clearly does not apply considering that the BLR

Director was neither absent nor suffering from any disability; he


remained as head of the BLR. Thus, to dispel any suspicion of bias, the
DOLE Secretary opted to resolve the appeal herself.

2.) Articles 238 and 239 of the Labor Code read (these provisions are
before the amendment):
ART. 238. CANCELLATION OF REGISTRATION; APPEAL
The certificate of registration of any
legitimate labor organization, whether
national or local, shall be canceled by the
Bureau if it has reason to believe, after due
hearing, that the said labor organization no
longer meets one or more of the
requirements herein prescribed.
ART. 239. GROUNDS FOR CANCELLATION OF
UNION REGISTRATION.
The
following shall
constitute
grounds for cancellation of union registration:
xxxx

(d) Failure to submit the annual


financial report to the Bureau within thirty
(30) days after the closing of every fiscal year
and misrepresentation, false entries or fraud
in the preparation of the financial report itself;
xxxx

(i) Failure to submit list of individual


members to the Bureau once a year or
whenever required by the Bureau.

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Articles 238-239 give the Regional Director ample


discretion in dealing with a petition for cancellation of a unions
registration, particularly, determining whether the union still
meets the requirements prescribed by law. It is sufficient to give the
Regional Director license to treat the late filing of required documents as
sufficient compliance with the requirements of the law. After all, the law
requires the labor organization to submit the annual financial report and
list of members in order to verify if it is still viable and financially
sustainable as an organization so as to protect the employer and
employees from fraudulent or fly-by-night unions. With the submission
of the required documents by respondent, the purpose of the law has
been achieved, though belatedly.

We cannot ascribe abuse of discretion to the Regional Director


and the DOLE Secretary in denying the petition for cancellation of
respondents registration. The union members and, in fact, all the
employees belonging to the appropriate bargaining unit should not
be deprived of a bargaining agent, merely because of the negligence
of the union officers who were responsible for the submission of
the documents to the BLR.
It is worth mentioning that the Labor Codes provisions on
cancellation of union registration and on reportorial requirements have
been recently amended by Republic Act (R.A.) No. 9481, An Act
Strengthening the Workers Constitutional Right to Self-Organization,
Amending for the Purpose Presidential Decree No. 442, As Amended,
Otherwise Known as the Labor Code of the Philippines, which lapsed into
law on May 25, 2007 and became effective on June 14, 2007.
Thus, R.A. No. 9481 amended Article 239 (now 245) to read:
[refer to current codal provisions]
R.A. No. 9481 also inserted in the Labor Code Article 242-A
(now 248-A), which provides:
ART. 242-A. Reportorial Requirements.The
following are documents required to be submitted to
the Bureau by the legitimate labor organization
concerned:
xxxxxxx

Failure to comply with the above


requirements shall not be a ground for cancellation
of union registration but shall subject the erring
officers or members to suspension, expulsion from
membership, or any appropriate penalty.

ILO Convention No. 87, which we have ratified in 1953,


provides that workers and employers organizations shall not be liable
to be dissolved or suspended by administrative authority. The ILO has
expressed the opinion that the cancellation of union registration by the
registrar of labor unions, which in our case is the BLR, is tantamount to
dissolution of the organization by administrative authority when such
measure would give rise to the loss of legal personality of the union or
loss of advantages necessary for it to carry out its activities, which is
true in our jurisdiction. Although the ILO has allowed such measure to
be taken, provided that judicial safeguards are in place, i.e., the right to
appeal to a judicial body, it has nonetheless reminded its members that
dissolution of a union, and cancellation of registration for that matter,
involve serious consequences for occupational representation. It has,
therefore, deemed it preferable if such actions were to be taken only as a
last resort and after exhausting other possibilities with less serious
effects on the organization.

72. Republic Of The Philippines vs. Kawashima Textile Manufacturing,


Phils., Inc.

FACTS: On January 24, 2000, KFWU filed with DOLE Regional Office No. IV, a Petition for
Certification Election to be conducted in the bargaining unit composed of 145 rank-and-file
employees of respondent. Attached to its petition are a Certificate of Creation of
Local/Chapter issued on January 19, 2000 by DOLE Regional Office No. IV, stating that it
[KFWU] submitted to said office a Charter Certificate issued to it by the national federation
Phil. Transport & General Workers Organization (PTGWO), and a Report of Creation of
Local/Chapter.
Respondent filed a Motion to Dismiss the petition on the ground that KFWU did not
acquire any legal personality because its membership of mixed rank-and-file and
supervisory employees violated Article 245 of the Labor Code, and its failure to submit its

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books of account contravened the ruling of the Court in Progressive Development


Corporation v. Secretary, Department of Labor and Employment.
Med-Arbiter: In an Order dated May 17, 2000, Med-Arbiter Bactin found KFWUs legal
personality defective and dismissed its petition for certification election.

We scrutinize the facts and evidences presented by the parties and arrived at a decision
that at least two (2) members of [KFWU], namely: Dany I. Fernandez and Jesus R. Quinto, Jr.
are supervisory employees, having a number of personnel under them. Being supervisory
employees, they are prohibited under Article 245 of the Labor Code, as amended, to join the
union of the rank and file employees. Dany I. Fernandez and Jesus R. Quinto, Jr., Chief
Engineers of the Maintenance and Manufacturing Department, respectively, act as foremen
to the line engineers, mechanics and other non-skilled workers and responsible [for] the
preparation and organization of maintenance shop fabrication and schedules, inventory
and control of materials and supplies and tasked to implement training plans on line
engineers and evaluate the performance of their subordinates. The above-stated actual
functions of Dany I. Fernandez and Jesus R. Quinto, Jr. are clear manifestation that they are
supervisory employees.
Since petitioners members are mixture of rank and file and supervisory employees,
petitioner union, at this point [in] time, has not attained the status of a legitimate
labor organization. Petitioner should first exclude the supervisory employees from
it membership before it can attain the status of a legitimate labor organization.
Judgment is supported by the decision of the Supreme Court in the Toyota Case.

Furthermore, the commingling of rank and file and supervisory employees in one (1)
bargaining unit cannot be cured in the exclusion-inclusion proceedings [at] the pre-election
conference. The above ruling is supported by the Decision of the Supreme Court in Dunlop
Slazenger (Phils.), Inc. vs. Honorable Secretary of Labor and Employment, et al., G.R. No.
131248 dated December 11, 1998
On the basis of the aforecited decision, respondent filed with DOLE Regional Office
No. IV a Petition for Cancellation of Charter/Union Registration of KFWU, the final outcome
of which, unfortunately, cannot be ascertained from the records.
Meanwhile, KFWU appealed] to the DOLE which issued a Decision on August 18, 2000.

DOLE Regional Office No. IV:


The DOLE held that Med-Arbiter Bactin's reliance on
the decisions of the Court in Toyota Motor Philippines Corporation v. Toyota Motor
Philippines Corporation Labor Union and Dunlop Slazenger, Inc. v. Secretary of Labor and
Employment was misplaced, for while Article 245 declares supervisory employees ineligible
for membership in a labor organization for rank-and-file employees, the provision did not
state the effect of such prohibited membership on the legitimacy of the labor organization
and its right to file for certification election. Neither was such mixed membership a ground
for cancellation of its registration. Section 11, Paragraph II, Rule XI of Department Order No.
9 provides for the dismissal of a petition for certification election based on lack of legal
personality of a labor organization only on the following grounds: (1) [KFWU] is not listed
by the Regional Office or the Bureau of Labor Relations in its registry of legitimate labor
organizations; or (2) [KFWU's] legal personality has been revoked or canceled with
finality. The DOLE noted that neither ground existed; on the contrary, KFWU's legal
personality was well-established, for it held a certificate of creation and had been listed in
the registry of legitimate labor organizations.
As to the failure of KFWU to file its books of account, the DOLE held that such omission
was not a ground for revocation of union registration or dismissal of petition for
certification election, for under Section 1, Rule VI of Department Order No. 9, a local or
chapter like KFWU was no longer required to file its books of account.
Court of Appeals: Respondent filed a Motion for Reconsideration but the DOLE denied
the same in its September 28, 2000 Resolution.

However, on appeal by respondent, the CA rendered the December 13, 2002 Decision
assailed herein, reversing the August 18, 2000 DOLE Decision, thus:
Since respondent union clearly consists of both rank and file and supervisory
employees, it cannot qualify as a legitimate labor organization imbued with the
requisite personality to file a petition for certification election. This infirmity in
union membership cannot be corrected in the inclusion-exclusion proceedings
during the pre-election conference.
Finally, contrary to the pronouncement of public respondent, the application of the
doctrine enunciated in Toyota Motor Philippines Corporation vs. Toyota Motor Philippines
Corporation Labor Union was not construed in a way that effectively denies the

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fundamental right of respondent union to organize and seek bargaining representation


x x x.
For ignoring jurisprudential precepts on the matter, the Court finds that
the Undersecretary of Labor, acting under the authority of the Secretary
of Labor, acted with grave abuse of discretion amounting to lack or
excess of jurisdiction.

KFWU filed a Motion for Reconsideration but the CA denied it. The Republic of the
Philippines filed the present petition to seek closure on two issues.

ISSUES: 1. Whether a mixed membership of rank and file and supervisory employees in a
union is a ground for the dismissal of a petition for certification election in view of the
amendment brought by D.O. 9 series of 1997, which deleted the phraseology in the old rule
that the appropriate bargaining unit of the rank and file employee shall not include the
supervisory employees and/or security guards
2. Whether the legitimacy of a duly registered labor organization can be
collaterally attacked in a petition for a certification election through a motion to dismiss filed
by an employer such as Kawashima Textile Manufacturing Phils, Inc.

HELD: No. Under Section 12 of RA. No. 9481 employers have no personality to interfere
with or thwart a petition for certification election filed by a legitimate labor organization, to
wit: Sec 12, A new provision, Article 258-A is hereby inserted into the Labor Code to read as
follows: Art 258-A. Employer as Bystander. In all cases, whether the petition for
certification election is filed by an employer or a legitimate labor organization, the
employer shall not be considered a party thereto with a concomitant right to oppose
a petition for certification election. The employers participation in such proceedings
shall be limited to (1) being notified or informed of petitions of such nature; and (2)
submitting the list of employees during the pre-election conference should the Med
Arbiter act favorably on the petition However, RA No. 9481 took effect only on June 14,
2007; hence, it applies only to labor representation cases filed on or after said date. As the
petition for certification election subject matter of the present petition was filed by KFWU
on January 24, 2000, RA no. 9481 cannot apply to it. There may have been curative labor
legislations that were given retrospective effect, but not the aforecited provisions of RA no.
9481, for otherwise, substantive rights and interests already vested would be impaired in
the process. Instead, the law rules in force at the time of the filing by KFWU of the petition

for certification election on January 24, 2000 are RA 6715 amending Book V of Presidential
Decree 442 as amended, and the Rules and regulations Implementing RA no. 6715 as
amended by Department Order no. 9, series of 1997. If there is one constant precept in our
labor laws- be it Commonwealth Act No. 213 (1936), RA no. 875 (1953) P.D. No. 442
(1974), Executive Order (E.O) no. 111 (1986) or RA. No. 6715 (1989) it is that only a
legitimate labor organization may exercise the right to be certified as the exclusive
representative of all the employees in an appropriate collective bargaining unit for
purposes of collective bargaining. What has varied over the years has been the degree of
enforcement of this precept, as reflected in the shifting scope of administrative and judicial
scrutiny of the composition of a labor organization before it is allowed to exercise the right
of representation. One area of contention has been the composition of the membership of a
labor organization, specifically whether there is a mingling of supervisory and rank and file
employees and how such questioned mingling affects its legitimacy. More to the point is Air
Philippines Corporation v. Bureau of Labor Relations, which involved a petition for
cancellation of union registration filed by the employer in 1999 against a rank-and-file labor
organization on the ground of mixed membership: the Court therein reiterated its ruling
in Tagaytay Highlands that the inclusion in a union of disqualified employees is not among
the grounds for cancellation, unless such inclusion is due to misrepresentation, false
statement or fraud under the circumstances enumerated in Sections (a) and (c) of Article
239 of the Labor Code.

All said, while the latest issuance is R.A. No. 9481, the 1997 Amended Omnibus Rules,
as
interpreted
by
the
Court
in TagaytayHighlands, San
Miguel and Air
Philippines, had already set the tone for it. Toyota and Dunlop no longer hold sway in the
present altered state of the law and the rules.
Consequently, the Court reverses the ruling of the CA and reinstates that of the DOLE
granting the petition for certification election of KFWU.

2. No. Now to the second issue of whether an employer like respondent may collaterally
attack the legitimacy of a labor organization by filing a motion to dismiss the latters petition
for certification election. Except when it is requested to bargain collectively, an employer is
a mere bystander to any petition for certification election; such proceeding is nonadversarial and merely investigative, for the purpose thereof is to determine which
organization will represent the employees in their collective bargaining with the
employer. The choice of their representative is the exclusive concern of the employees; the

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employer cannot have any partisan interest therein; it cannot interfere with, much less
oppose, the process by filing a motion to dismiss or an appeal from it not even a mere
allegation that some employees participating in a petition for certification election are
actually managerial employees will lend an employer legal personality to block the
certification election.[ The employer's only right in the proceeding is to be notified or
informed thereof.
73. DEL PILAR ACADEMY VS DEL PILAR EMPLOYEES UNION

FACTS: Respondent Del Pilar Academy Employees Union (the UNION) is the
certified collective bargaining representative of teaching and non-teaching
personnel of petitioner Del Pilar Academy (DEL PILAR), an educational
institution
operating
in
Imus, Cavite. On September
15,
1994,
the UNION and DEL PILAR entered into a Collective Bargaining Agreement
(CBA), where it was agreed that:

1) The ACADEMY and the UNION agreed to maintain the wage


increase in absolute amount as programmed in the computation
prepared by the ACADEMY and dated30 June 1994 initialed by
the members of the bargaining panel of both parties, taking into
account increases in tuition fees, if any.
2) The teaching staff shall have a maximum load of 23 hours per week in
teaching and any excess thereon shall be considered as overload with
pay;
3) Any overload shall be paid extra;
4) There shall be an increase in the longevity pay;
5) Every faculty member who has rendered at least six (6) consecutive
academic semester of service shall be entitled to the 11th month and
12th month pay as summer vacation leave with pay;
6) Non-teaching employees who shall have rendered at least one (1) year
of service shall be entitled to fifteen days leave with pay.

The UNION then assessed agency fees from non-union employees, and
requested DEL PILAR to deduct said assessment from the employees salaries
and wages. DELPILAR, however, refused to effect deductions claiming that the
non-union employees were not amenable to it.

In September 1997, the UNION negotiated for the renewal of the


CBA. DEL PILAR, however, refused to renew the same unless the provision
regarding entitlement to two (2) months summer vacation leave with pay will be
amended by limiting the same to teachers, who have rendered at least three (3)
consecutive academic years of satisfactory service. The UNION objected to the
proposal claiming diminution of benefits. DEL PILAR refused to sign the CBA,
resulting in a deadlock. The UNION requested DEL PILAR to submit the case for
voluntary arbitration, but the latter allegedly refused, prompting the UNION to
file a case for unfair labor practice with the Labor Arbiter.

DEL PILAR
denied
committing
unfair
labor
practices
against
the UNION. DEL PILAR admitted its failure to deduct the agency fees from the
salaries of non-union employees, but justifies the non-deduction by the absence
of individual written authorization. It posits that Article 248(e) is inapplicable
considering that its employees derived no benefits from the CBA. The annual
salary increase of its employee is a benefit mandated by law, and not derived
from the CBA. Besides, the non-union employees objected to the deduction;
hence, a written authorization is indispensable to effect a valid check off.
As regards the proposal to amend the provision on summer vacation leave with
pay, DEL PILAR alleged that the proposal cannot be considered unfair for it was
done to make the provision of the CBA conformable to the DECS Manual of
Regulations for Private Schools.

Labor Arbiter: There was an error on the part of DEL PILAR not to have
collected agency fee due other workers who are non-union members but are
included in the bargaining unit being represented by the UNIO. As stated in Art.
248, to wit:
Employees of an appropriate collective bargaining unit
who are not members of the recognized collective
bargaining agency may be assessed a reasonable fee
equivalent to the dues and other fees paid by members of
the
recognized
collective
bargaining
agreement: Provided, that the individual authorization
required under Article [241], paragraph (o) of this Code

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shall not apply to the non-members of the recognized


collective bargaining agent.

For receipt of CBA benefits brought about by the CBA negotiated with
petitioners, non-union members are duty bound to pay agency fees
which may lawfully be deducted sans individual check-off
authorization. Being recipients of said benefits; they should share and
be made to pay the same considerations imposed upon the union
members.

The proposal to decrease the coverage of the 11th and 12th month
vacation with pay was not done in bad faith but rather in an honest
attempt to make perfect procession following the DECS Manuals. It is of
judicial notice that in the course of negotiation, almost all provisions are
up for grabs, amendments or change. This is something normal in the
course of a negotiation and does not necessarily connote bad faith as
each everyone has the right to negotiate reward or totally amend the
provisions of the contract/agreement. It must be noted that a CBA is a
contract between labor and management and is not simply a litany of
benefits for labor. For unfair labor practice to prosper there must be a
clear showing of acts aimed at stifling the workers right to selforganization. Mere allegations and mistake notions would not suffice.
NLRC: Affirmed the Arbiters ruling, upheld the UNIONs right to agency
fee, but did not consider DELPILARs failure to deduct the same an unfair
labor practice

CA: Private respondent Del Pilar Academy is ordered to deduct the agency fees
from non-union members. The agency fees shall be equivalent to the dues and
other fees paid by the union members.
ISSUES: Whether or not the UNION is entitled to collect agency fees from nonunion members, and if so, whether an individual written authorization is
necessary for a valid check off.

HELD: Yes, the grant of annual salary increase is not the only provision in the
CBA that benefited the non-union employees. The UNION negotiated for other

benefits, namely, limitations on teaching assignments to 23 hours per week,


additional compensation for overload units or teaching assignments in excess of
the 23 hour per week limit, and payment of longevity pay. It also negotiated for
entitlement to summer vacation leave with pay for two (2) months for teaching
staff who have rendered six (6) consecutive semesters of service. For the nonteaching personnel, the UNION worked for their entitlement to fifteen (15) days
leave with pay. These provisions in the CBA surely benefited the non-union
employees, justifying the collection of, and the UNIONs entitlement to, agency
fees.
Accordingly, no requirement of written authorization from the non-union
employees is needed to effect a valid check off. Article 248(e) makes it explicit
that Article 241, paragraph (o), requiring written authorization is inapplicable to
non-union members, especially in this case where the non-union employees
receive several benefits under the CBA.
As explained by this Court in Holy Cross of Davao College, Inc. v. Hon. Joaquin
The employee's acceptance of benefits resulting from a collective
bargaining agreement justifies the deduction of agency fees from
his pay and the union's entitlement thereto. In this aspect, the
legal basis of the union's right to agency fees is neither
contractual nor statutory, but quasi-contractual, deriving from
the established principle that non-union employees may not
unjustly enrich themselves by benefiting from employment
conditions negotiated by the bargaining union.
74. Edgardo Marino vs Gamilla
FACTS: Petitioners were among the executive officers and directors (collectively
called the Mario Group) of the University of Sto. Tomas Faculty Union (USTFU),
a labor union duly organized and registered under the laws of the Republic of the
Philippines and the bargaining representative of the faculty members of the
University of Santo Tomas (UST).
Respondents were UST professors and USTFU members.

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The 1986 Collective Bargaining Agreement (CBA) between UST and


USTFU expired on 31 May 1988. Thereafter, bargaining negotiations ensued
between UST and the Mario Group, which represented USTFU. They were not
able to reach an agreement and a bargaining deadlock was declared. USTFU filed
a notice of strike. Secretary of (DOLE) assumed jurisdiction over the dispute and
issued an Order laying the terms and conditions for a new CBA between the UST
and USTFU. In accordance with said Order, UST and USTFU entered into a CBA
which was to be effective for the period of 1988 to 1993 (hereinafter 1988-1993
CBA). Economic provisions of the 1988-1993 CBA were subject to renegotiation
for the fourth and fifth years.
On 1992, UST and USTFU executed a (MOA), whereby UST faculty
members belonging to the collective bargaining unit were granted additional
economic benefits for the fourth and fifth years of the 1988-1993 CBA,
specifically, the period from 1 June 1992 up to 31 May 1993.
MEMORANDUM OF AGREEMENT

1.0. The University hereby grants additional benefits


to Faculty Members belonging to the collective bargaining unit
xxx, which additional benefits shall amount in the aggregate
to P42,000,000.00[.]
7.0. It is clearly understood and agreed upon that the
aggregate sum of P42 million is chargeable against the
share of the faculty members in the incremental proceeds
of tuition fees collected and still to be collected; xxx
and incremental proceeds are, by law and pertinent (DECS)
regulations, required to be allotted for the payment of
salaries, wages, allowances and other benefits of teaching
and non-teaching personnel for the UNIVERSITY.
On 12 September 1992, the majority of USTFU members signed
individual instruments of ratification, which purportedly signified their consent
to the economic benefits granted under the MOA.

RATIFICATION OF THE UST-USTFU MEMORANDUM OF


AGREEMENT DATED SEPTEMBER 10, 1992 GRANTING A
PACKAGE OF THE P42 MILLION FACULTY BENEFITS WITH
PROVISION FOR CHECK-OFF.

September 12, 1992


Date

TO WHOM IT MAY CONCERN:

I, the undersigned UST faculty member xxx

In consideration of the efforts of the UST Faculty Union


as the faculty members sole and exclusive collective bargaining
representative in obtaining the said P42 million package of
economic benefits, a check-off of ten percent thereof
covering union dues, and special assessment for Labor
Education Fund and attorneys fees from USTFU members
and agency fee from non-members for the period of the
Agreement is hereby authorized xxx

USTFU, through its President, petitioner Atty. Mario, wrote a letter to


the UST Treasurer requesting the release to the union of the sum ofP4.2 million,
which was 10% of the P42 million economic benefits package granted by the
MOA to faculty members belonging to the collective bargaining unit. UST
remitted the sum of P4.2 million to USTFU.

After deducting from the P42 million economic benefits package several
expenses, a net amount of P6,389,145.04 remained and was distributed to the
faculty members.
On 15 December 1994, respondents filed with the Med-Arbiter, DOLENational Capital Region (NCR), a Complaint for the expulsion of the Mario
Group as USTFU officers and directors, which was docketed as Case No. NCROD-M-9412-022. Alleged in their Complaint that the Mario Group violated the
rights and conditions of membership in USTFU, particularly by: 1) investing the

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unspent balance of the P42 million economic benefits package given by UST
without prior approval of the general membership; 2) simultaneously holding
elections viva voce; 3) ratifying the CBA involving the P42 million economic
benefits package; and 4) approving the attorneys/agency fees worth P4.2
million in the form of check-off. Prayed that the Mario Group be declared
jointly and severally liable for refunding all collected attorneys/agency fees from
individual members of USTFU and the collective bargaining unit; and that, after
due hearing, the Mario group be expelled as USTFU officers and directors.

(2)

Case No. NCR-OD-M-9510-028

On 16 December 1994, UST and USTFU, represented by the Mario


Group, entered into a new CBA, effective 1 June 1993 to 31 May 1998 (19931998 CBA).
Respondents filed with the Med-Arbiter, DOLE-NCR another Complaint
against the Mario Group for violation of the rights and conditions of union
membership, which was docketed as Case No. NCR-OD-M-9510-028. The
Complaint sought to invalidate certain provisions of the1993-1998 CBA.
(3)

Case No. NCR-OD-M-9610-001

24 September 1996, petitioner Collantes, as USTFU SecretaryGeneral, posted notices in some faculty rooms at UST, informing the
union members of a general assembly. The agenda was the election of
new USTFU officers. Respondents wrote a letter[14] to the USTFU
Committee on Elections, urging the latter to re-schedule the elections.
But the Committee failed to act positively on respondents letter.

Thus, Respondents filed with the Med-Arbiter, DOLE-NCR, an Urgent ExParte Petition/Complaint, which was docketed as Case No. NCR-OD-M-9610001. Alleged that the general membership meeting was in violation of the
provisions of the Constitution and By-Laws of USTFU. Prayed that the DOLE
supervise the conduct of the USTFU elections, and that they be awarded
attorneys fees.

4 October 1996, Med-Arbiter DOLE-NCR, issued a (TRO) enjoining the


holding of the USTFU elections scheduled the next day.
(4)

Case No. NCR-OD-M-9610-016

4 October 1996, the UST Secretary General headed a general faculty


assembly. Respondents were among the elected officers of USTFU (collectively
referred to as the Gamilla Group). Petitioners filed with the Med-Arbiter, DOLENCR, a Petition seeking injunctive reliefs and the nullification of the results of
the 4 October 1994 election. The Petition was docketed as Case No. NCR-OD-M9610-016.
In Case No. NCR-OD-M-9610-016, Med-Arbiter DOLE-NCR, nullified the
election of the Gamilla Group as USTFU officers. Affirmed on appeal by the (BLR).
Respondents were prompted to file a Petition for Certiorari before this Court,
docketed as G.R. No. 131235.
While G.R. No. 131235 was pending, the term of office of the Gamilla
Group as USTFU officers expired on 4 October 1999. The Gamilla Group then
scheduled the next election of USTFU officers on 14 January 2000.

16 November 1999, the Court promulgated its Decision in G.R. No. 131235,
affirming the BLR Resolution.
(5)

Case No. NCR-OD-M-9611-009

15 November 1996, respondents[ filed before the Med-Arbiter, DOLE-NCR, a


fourth Complaint/Petition against the Mario Group, as well as the Philippine
Foundation for the Advancement of the Teaching Profession, Inc., Security Bank
Corporation, and Bank of the Philippine Islands, which was docketed as Case No.
NCR-OD-M-9611-009. Claimed that they were the legitimate USTFU officers,
having been elected on 4 October 1996. They prayed for an order directing the
Mario Group to cease and desist from using the name of USTFU and from
performing acts for and on behalf of the USTFU and the rest of the members of
the collective bargaining unit.

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DOLE Department Order No. 9 took effect on 21 June 1997, amending


the Rules Implementing Book V of the Labor Code. Thereunder, jurisdiction over
the complaints for any violation of the union constitution and by-laws and the
conditions of union membership was vested in the Regional Director of the
DOLE. All four Petitions/Complaints filed by respondents against the Mario
Group were consolidated and indorsed to the Office of the Regional Director of
the DOLE-NCR.

Director, for the expulsion of the Mario Group from their positions as USTFU
officers, practically extinguished Case No. NCR-OD-M-9611-009.
Petitioners interposed an appeal before the BLR, which was docketed
as BLR-A-TR-52-25-10-99.
The election of USTFU officers was held as scheduled on 14 January
2000, in which the Gamilla Group claimed victory. They entered into a
MOA with the UST, which provided for the economic benefits to be
granted to the faculty members of the UST for the years 19992001. Said Agreement was ratified by the USTFU members on 9 March
2000.

DOLE-NCR Regional Director rendered a Decision in the consolidated


cases in respondents favor.

In Case No. NCR-OD-M-9412-022 and Case No. NCR-OD-M-9510-028, the


DOLE-NCR Regional Director adjudged the Mario Group, as the executive
officers of USTFU, guilty of violating the provisions of the USTFU Constitution
and By-laws. Also, they violated Article 241(c) and (l) of the Labor Code when
among others, they invested in a bank, without prior consent of USTFU members,
the sum of P9,766,570.01, which formed part of the P42 million economic
benefits package. Additionally, the check-off of P4.2 million collected by the
Mario Group, as negotiation fees, was invalid. According to the MOA executed
on 10 September 1992 by UST and USTFU, the P42 million economic benefits
package was chargeable against the share of the faculty members in the
incremental proceeds of tuition fees collected and still to be collected. Under
Republic Act No. 6728, 70% of the tuition fee increases should be allotted to
academic and non-academic personnel. Given that the records were silent as to
how much of the P42 million economic benefits package was obtained through
negotiations and how much was from the statutory allotment of 70% of the
tuition fee increases, the DOLE-NCR Regional Director held that the entire
amount was within the statutory allotment, which could not be the subject of
negotiation and, thus, could not be burdened by negotiation fees. Lastly, the
principal subject of Case No. NCR-OD-M-9610-001 (i.e., violation by the Mario
Group of the provisions on election of officers in the Labor Code and the USTFU
Constitution and By-Laws) had been superseded by the central event in Case No.
NCR-OD-M-9611-009 (i.e., the subsequent election of another set of USTFU
officers consisting of the Gamilla Group). While there were two sets of USTFU
officers vying for legitimacy, the eventual ruling of the DOLE-NCR Regional

99:

9 March 2000, the BLR promulgated its Decision in BLR-A-TR-52-25-10Appeal is GRANTED IN PART. xxx appellant USTFU
officers are hereby ordered to return to the general
membership the amount of P4.2 million they have collected by
way of attorneys fees.

The election shall be held under the control and


supervision of the Regional Office, in accordance with Section 1
(b), Rule XV of Department Order No. 9, unless the parties
mutually agree to a different procedure consistent with
ensuring integrity and fairness in the electoral exercise.

BLR agreed in the finding of the DOLE-NCR Regional Director that the P42
million economic benefits package was sourced from the faculty members share
in the tuition fee increases under Republic Act No. 6728. This allotment is
mandatory and cannot be diminished, although it may be increased by collective
bargaining. Only the amount beyond that mandated by law shall be subject to
negotiation fees and attorney's fees for the simple reason that it was only this
amount that the school employees had to bargain for.
The BLR further reasoned that the P4.2 million collected by the Mario
Group was in the nature of attorneys fees or negotiation fees and fell under the

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general prohibition against such fees in Article 222(b) of the Labor Code. The
exception to charging against union funds was not applicable because the P42
million economic benefits package under the 10 September 1992 MOA was not
union fund, as the same was intended not for the union coffers, but for the
members of the entire bargaining unit. The fact that the P4.2 million check-off
was approved by the majority of USTFU members was immaterial in view of the
clear command of Article 222(b) that any contract, agreement, or arrangement of
any sort, contrary to the prohibition contained therein, shall be null and void.
Lastly, as to the alleged failure of the Mario Group to perform some of its
duties, the BLR held that the change of USTFU officers can best be decided, not by
outright expulsion, but by the general membership through the actual conduct of
elections.

Petitioners Motion for Partial Reconsideration of the foregoing Decision


was denied by the BLR.
petitioners filed with the Court of Appeals a Petition for Certiorari under
Rule 65 of the Rules of Court.
The Court of Appeals rendered its Decision favoring respondents.

It held that BLR did not commit grave abuse of discretion, amounting to
lack or excess of jurisdiction, in ruling that the P42 million economic benefits
package was merely the share of the faculty members in the tuition fee increases
pursuant to Republic Act No. 6728.
Xxx We thus agree with the [BLR] that the aforesaid
amount of P42,000,000.00 should not answer for any attorneys
fees claimed by the Petitioners. x x x.
xxxx

Moreover, [Section 5 of Rule X of] the CBL of


the Union provides that:

Section 5. Special assessments or other


extraordinary fees such as for payment of
attorneys fees shall be made only upon such a
resolution duly ratified by the general
membership by secret balloting. x x x.

Also, Article 241(n) of the Labor Code, as amended,


provides that no special assessment shall be levied upon the
members of the union unless authorized by a written resolution
of a majority of all the members at a general membership
meeting duly called for the purpose[.]
xxxx

Article 241(n) of the Labor Code, as amended, speaks of


three (3) requisites, to wit: (1) authorization by a written
resolution of the majority of all members at the general
membership meeting called for the purpose; (2) secretarys
record of the minutes of the meeting; and (3) individual written
authorization for check-off duly signed by the employee
concerned.

Contrary to the provisions of Articles 222(b) and 241(n)


of the Labor Code, as amended, and Section 5, Rule X of [the]
CBL of the Union, no resolution ratified by the general
membership of [the] USTFU through secret balloting which
embodied the award of attorneys fees was submitted. Instead,
the Petitioners submitted copies of the form for the ratification
of the MOA and the check-off for attorneys fees.
Worse, the check-off for union dues and attorneys fees
were included in the ratification of the MOA. The members
were thus placed in a situation where, upon ratification of the
MOA, not only the check-off of union dues and special
assessment for labor education fund but also the payment of
attorneys fees were (sic) authorized.

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CA found no grave abuse of discretion, amounting to lack or excess of
jurisdiction, on the part of the BLR in ordering the conduct of elections under the
control and supervision of the DOLE-NCR.
xxx
It appears that the term of office of the Petitioners had
already expired in September of 1996. On October 4, 1996,
[respondents] and the members of the faculty of UST elected
[respondents] as the new officers of the USTFU. The same was,
however nullified by the Supreme Court, on November 16,
1999. However, as the term of office of the [respondents] had
expired, on October 4, 1999, there is nothing to nullify
anymore. By virtue of an election, held on January 14, 2000, the
[respondents] were elected as the new officers of the Union,
which election was not contested by the Petitioners or any other
group in the union.
xxxx
We are thus faced with a situation where one set of
officers claim to be the legitimate and incumbent officers of the
Union, pursuant to the CBL of the Union, and another set of
officers who claim to have been elected by the members of the
faculty of the Union thru an election alleged to have been
supervised by the DOLE which situation partakes of and is akin
to the nature of an intra-union dispute[.] x x x.
CBL gives the Board of Officers the right to create and
appoint members of the Comelec. However, the CBL has no
application to a situation where there are two (2) sets of
officers. The BLR, which has jurisdiction over the intra-union
dispute, can validly order the immediate conduct of election of
officers. Department Order No. 09, Series of 1997, provides that,
in the absence of any agreement among the members or any
provision in the constitution and by-laws of the labor
organization, in an election ordered by the Regional Director,
the chairman of the committee shall be a representative of the
Labor Relations Division of the Regional Office[.]

Petitioners moved for reconsideration. It was denied.

ISSUES: Essentially, in order to arrive at a final disposition of the instant


case, this Court is tasked to determine the following: (1) the nature of
the P42 million economic benefits package granted by UST to USTFU; (2)
the legality of the 10% check-off collected by the Mario Group from
the P42 million economic benefits package; and (3) the validity of the
BLR order for USTFU to conduct election of union officers under the
control and supervision of the DOLE-NCR Regional Director.
HELD:
(1) The P42 million economic benefits package

Section 7 of the MOA they signed on 10 September 1992 that:

7.0. It is clearly understood and agreed upon that the


aggregate sum of P42 million is chargeable against the
share of the faculty members in the incremental proceeds
of tuition fees collected and still to be collected xxx which
incremental proceeds are, by law and pertinent
Department of Education Culture and Sports (DECS)
regulations, required to be allotted for the payment of
salaries, wages, allowances and other benefits of teaching
and non-teaching personnel for the UNIVERSITY.[44]
The law in the aforequoted Section 7 of the MOA can only
refer to Republic Act No. 6728, Government Assistance to
Students and Teachers in Private Education Act." Said statute
primarily grants various forms of financial aid to private
educational institutions such as tuition fee supplements,
assistance funds, and scholarship grants.[46]

Although Section 5 of Republic Act No. 6728 does speak of government


assistance to students in private high schools, it is not limited to the
same. Contrary to petitioners puerile claim, Section 5 likewise grants an

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unmistakable authority to private high schools to increase their tuition


fees, subject to the condition that seventy (70%) percent of the tuition fee
increases shall go to the payment of the salaries, wages, allowances, and other
benefits of their teaching and non-teaching personnel. The said allocation may
also be used to cover increases in the salaries, wages, allowances, and other
benefits of school employees as provided for in the CBAs existing or in force at
the time when Republic Act No. 6728 was approved and made effective.

Contrary to petitioners argument, the right of private schools to


increase their tuition fee -- with their corresponding obligation to allocate 70%
of said increase to the payment of the salaries, wages, allowances, and other
benefits of their employees -- is not limited to private high schools.
Indeed, a private educational institution under Republic Act No. 6728
still has the discretion on the disposition of 70% of the tuition fee increase. The
only precondition is that 70% percent of the incremental tuition fee increase
goes to the payment of salaries, wages, allowances and other benefits of teaching
and non-teaching personnel.

In this case, UST and USTFU stipulated in their 10 September 1992 MOA
that the P42 million economic benefits package granted by UST to the members
of the collective bargaining unit represented by USTFU, was chargeable against
the 70% allotment from the proceeds of the tuition fee increases collected and
still to be collected by UST. As observed by the DOLE-NCR Regional Director, and
affirmed by both the BLR and the Court of Appeals, there is no showing that any
portion of the P42 million economic benefits package was derived from sources
other than the 70% allotment from tuition fee increases of UST.

Given the lack of evidence to the contrary, it can be conclusively


presumed that the entire P42 million economic benefits package extended to
USTFU came from the 70% allotment from tuition fee increases of
UST. Preceding from this presumption, any deduction from the P42 million
economic benefits package, such as the P4.2 million claimed by the Mario Group
as attorneys/agency fees, should not be allowed, because it would ultimately
result in the reduction of the statutorily mandated 70% allotment from the
tuition fee increases of UST.

(2)

The P4.2 Million Check-off

The pertinent legal provisions on a check-off are found in Articles 222(b)


and 241(n) and (o) of the Labor Code, as amended.
Article 222(b) states:

(b) No attorney's fees, negotiation fees or similar charges


of any kind arising from any collective bargaining negotiations
or conclusion of the collective agreement shall be imposed on
any
individual
member
of
the
contracting
union: Provided, however, that attorney's fees may be charged
against unions funds in an amount to be agreed upon by the
parties. Any contract, agreement or arrangement of any sort to
the contrary shall be null and void.

Article 241(n) reads:

(n) No special assessment or other extraordinary fees


may be levied upon the members of a labor organization unless
authorized by a written resolution of a majority of all the
members at a general membership meeting duly called for the
purpose. The secretary of the organization shall record the
minutes of the meeting including the list of all members present,
the votes cast, the purpose of the special assessment or fees and
the recipient of such assessment or fees. The record shall be
attested to by the president.

And Article 241(o) provides:

(o) Other than for mandatory activities under the Code,


no special assessments, attorney's fees, negotiation fees or any
other extraordinary fees may be checked off from any amount
due to an employee without an individual written authorization
duly signed by the employee. The authorization should

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specifically state the amount, purpose and beneficiary of the


deduction.

General rule is that attorneys fees, negotiation fees, and other similar
charges may only be collected from union funds, not from the amounts that
pertain to individual union members. As an exception, special assessments or
other extraordinary fees may be levied upon or checked off from any amount due
an employee for as long as there is proper authorization by the employee.

A check-off is a process or device whereby the employer, on agreement


with the Union, recognized as the proper bargaining representative, or on prior
authorization from the employees, deducts union dues or agency fees from the
latter's wages and remits them directly to the Union.

The Court finds that, in the instant case, the P42 million economic
benefits package granted by UST did not constitute union funds from whence
the P4.2 million could have been validly deducted as attorneys fees. The P42
million economic benefits package was not intended for the USTFU coffers, but
for all the members of the bargaining unit USTFU represented, whether members
or non-members of the union. A close reading of the terms of the MOA reveals
that after the satisfaction of the outstanding obligations of UST under the 1986
CBA, the balance of the P42 million was to be distributed to the covered faculty
members of the collective bargaining unit in the form of salary increases, returns
on paycheck deductions; and increases in hospitalization, educational, and
retirement benefits, and other economic benefits. The deduction of the P4.2
million, as alleged attorneys/agency fees, from the P42 million economic
benefits package effectively decreased the share from said package accruing to
each member of the collective bargaining unit.
Petitioners line of argument that the amount of P4.2 million became
union funds after its deduction from the P42 million economic benefits package
and, thus, could already be used to pay attorneys fees, negotiation fees, or
similar charges from the CBA is absurd. Petitioners reasoning is evidently
flawed since the attorneys fees may only be paid from union funds; yet the
amount to be used in paying for the same does not become union funds until it is
actually deducted as attorneys fees from the benefits awarded to the

employees. What the law requires is that the funds be already deemed union
funds even before the attorneys fees are deducted or paid therefrom; it does not
become union funds after the deduction or payment.

The Court further determines that the requisites for a valid levy and
check-off of special assessments, laid down by Article 241(n) and (o),
respectively, of the Labor Code, as amended, have not been complied with in the
case at bar. To recall, these requisites are: (1) an authorization by a written
resolution of the majority of all the union members at the general membership
meeting duly called for the purpose; (2) secretary's record of the minutes of the
meeting; and (3) individual written authorization for check-off duly signed by
the employee concerned.

Additionally, Section 5, Rule X of the USTFU Constitution and By-Laws


mandates that:
Section 5. Special assessments or other extraordinary
fees such as for payment of attorneys fees shall be made only
upon a resolution duly ratified by the general membership by
secret balloting.

In an attempt to comply with the foregoing requirements, the Mario


Group caused the majority of the general membership of USTFU to individually
sign a document, which embodied the ratification of the MOA between UST and
USTFU, dated 10 September 1992, as well as the authorization for the check-off
of P4.2 million, from the P42 million economic benefits package, as payment for
attorneys fees. As held by the Court of Appeals, however, the said documents
constitute unsatisfactory compliance with the requisites set forth in the Labor
Code, as amended, and in the USTFU Constitution and By-Laws, even though
individually signed by a majority of USTFU members.
The inclusion of the authorization for a check-off of union dues and
special assessments for the Labor Education Fund and attorneys fees, in the
same document for the ratification of the 10 September 1992 MOA granting

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the P42 million economic benefits package, necessarily vitiated the consent of
USTFU members.

The failure of the Mario Group to strictly comply with the requirements
set forth by the Labor Code, as amended, and the USTFU Constitution and ByLaws, invalidates the questioned special assessment. Substantial compliance is
not enough in view of the fact that the special assessment will diminish the
compensation of the union members. Their express consent is required, and this
consent must be obtained in accordance with the steps outlined by law, which
must be followed to the letter. No shortcuts are allowed.

Court does not hesitate to declare as illegal the check-off of P4.2 million,
from the P42 million economic benefits package. Said amount rightfully belongs
to and should be returned by petitioners to the intended beneficiaries
thereof, i.e., members of the collective bargaining unit, whether or not members
of USTFU.
(3)

Election of new officers

Having been overtaken by subsequent events, the Court need no longer


pass upon the issue of the validity of the order of BLR for USTFU to conduct its
long overdue election of union officers, under the control and supervision of the
DOLE-NCR Regional Director.
The Court points out, however, that neither the Decision of the BLR nor
of the Court of Appeals took into account the fact that an election of USTFU
officers was already conducted on 14 January 2000, which was won by the
Gamilla Group. There is nothing in the records to show that the said election was
contested or made the subject of litigation. The Gamilla Group had exercised
their powers as USTFU officers during their elected term. Since the term of
union officers under the USTFU Constitution and By-Laws was only for three
years, then the term of the Gamilla Group already expired in 2003. It is already
beyond the jurisdiction of this Court, in the present Petition, to still look into the
subsequent elections of union officers held after 2003.
The election of the Gamilla Group as union officers in 2000 should have
already been recognized by the BLR and the Court of Appeals. The order for

USTFU to conduct another election was only a superfluity. The issue of who
between the officers of the Mario Group and of the Gamilla Group are the
legitimate USTFU officers has been rendered moot by the succeeding events in
the case.
WHEREFORE, premises considered, the Petition for Review under Rule
45 of the Rules of Court is hereby DENIED.
75 ABARIA vs. NLRC

FACTS:

Metro Cebu Community Hospital, Inc. (MCCHI), presently known as the


Visayas Community Medical Center (VCMC) operates the Metro Cebu
Community Hospital (MCCH) owned by the United Church of Christ in
the Philippines (UCCP) and Rev. Gregorio P. Iyoy is the Hospital
Administrator.
The National Federation of Labor (NFL) is the exclusive bargaining
representative of the rank-and-file employees of MCCHI.
On December 6, 1995, Nava through NAMA-MCCH-NFL wrote Rev. Iyoy
expressing the unions desire to renew the CBA, attaching to her letter a
statement of proposals signed/endorsed by 153 union members. Nava
subsequently requested that some employees to be allowed to avail of
one-day union leave with pay
Meanwhile, Atty. Alforque informed MCCHI that NFL has not authorized
any person for collective bargaining negotiations. By January 1996, the
collection of union fees (check-off) was temporarily suspended by
MCCHI in view of the existing conflict between the federation and its
local affiliate.
On February 26, 1996, upon the request of Atty. Alforque, MCCHI
granted one-day union leave with pay for 12 union members
The next day, several union members led by Nava and her group
launched a series of mass actions such as wearing black and red
armbands/headbands, marching around the hospital premises and
putting up placards, posters and streamers.
MCCHI directed the union officers led by Nava to submit within 48 hours
a written explanation why they should not be terminated for having

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engaged in illegal concerted activities amounting to strike, and placed


them under immediate preventive suspension. Responding to this
directive, Nava and her group denied there was a temporary stoppage of
work, explaining that employees wore their armbands only as a sign of
protest and reiterating their demand for MCCHI to comply with its duty
to bargain collectively.
Rev. Iyoy, having been informed that Nava and her group have also been
suspended by NFL, directed said officers to appear before his office for
investigation in connection with the illegal strike. Said union officers,
however, invoked the grievance procedure provided in the CBA to settle
the dispute between management and the union.
On March 13 and 19, 1996, DOLE issued certifications stating that there
is nothing in their records which shows that NAMA-MCCH-NFL is a
registered labor organization, and that said union submitted only a copy
of its Charter Certificate on January 31, 1995.
The union members contended that MCCHI cannot question the legal
personality of the union which had actively assisted in CBA negotiations
and implementation
NAMA-MCCH-NFL filed a Notice of Strike but the same was deemed
not filed for want of legal personality on the part of the filer. Despite
such rebuff, Nava and her group still conducted a strike vote, which an
overwhelming majority of union members approved of.
MCCHI again sent notices informing them that their refusal to submit to
investigation is deemed a waiver of their right to explain their side and
management shall proceed to impose proper disciplinary action under
the circumstances. MCCHI then sent termination letters to union leaders
and other members who participated in the strike and picketing
activities and also issued a cease-and-desist order to the rest of the
striking employees stressing that the wildcat concerted activities
spearheaded by the Nava group is illegal without a valid Notice of Strike
and warning them that non-compliance will compel management to
impose disciplinary actions against them. For their continued picketing
activities despite the said warning, more than 100 striking employees
were dismissed
Unfazed, the striking union members held more mass actions. The
means of ingress to and egress from the hospital were blocked.

Employees and patients reported acts of intimidation and harassment


perpetrated by union leaders and members. With the intensified
atmosphere of violence and animosity within the hospital premises as a
result of continued protest activities by union members, MCCHI suffered
heavy losses due to low patient admission rates.
MCCHI filed a petition for injunction in the NLRC and a TRO was
issued.
MCCHI presented 12 witnesses (hospital employees and patients),
including a security guard who was stabbed by an identified
sympathizer while in the company of Navas group. MCCHIs petition
was granted and a permanent injunction was issued enjoining the
Nava group from committing illegal acts mentioned in Art. 264 of
the Labor Code
Thereafter, several complaints for illegal dismissal and unfair labor
practice were filed by the terminated employees against MCCHI, Rev.
Iyoy, UCCP and members of the Board of Trustees of MCCHI.
Executive Labor Arbiter Reynoso A. Belarmino rendered his decision
dismissing the complaints for unfair labor practice in NLRC for finding
no basis for the charge of unfair labor practice and declared the
strike and picketing activities illegal having been conducted by
NAMA-MCCH-NFL which is not a legitimate labor organization; the
NLRC denied complainants motion for reconsideration
Complainants elevated the case to the CA via a petition for certiorari,
which was because only 47 out of 88 petitioners signed the
certification against forum shopping.

ISSUES (1) whether the CA erred in dismissing the petition for certiorari; (2)
whether MCCHI is guilty of unfair labor practice; (3) whether petitioning
employees were illegally dismissed; and (4) if their termination was illegal,
whether petitioning employees are entitled to separation pay, backwages,
damages and attorneys fees.
1. Yes, CA erred in dropping those who did not sign the certification

The Court has laid down the rule in Altres v. Empleo as culled

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from jurisprudential pronouncements, that the certification


against forum shopping must be signed by all the plaintiffs or
petitioners in a case; otherwise, those who did not sign will be
dropped as parties to the case. Under reasonable or justifiable
circumstances, however, as when all the plaintiffs or petitioners
share a common interest and invoke a common cause of action
or defense, the signature of only one of them in the certification
against forum shopping substantially complies with the Rule.
In the case at bar, the signatures of 47 out of 88 petitioning
employees in the certification against forum shopping
constitute substantial compliance with the rule. When they
appealed their case to the CA, they pursued the same as a
collective body, raising only one argument in support of their
cause of action, i.e., the illegal dismissal allegedly committed by
MCCHI when union members resorted to strike and mass
actions due to MCCHIs refusal to bargain with officers of the
local chapter. Clearly, the CA erred in dropping as partiespetitioners those who did not sign the certification against
forum shopping.
2. No. MCCHI is not guilty of ULP

Art. 248 (g) of the Labor Code, as amended, makes it an unfair labor
practice for an employer [t]o violate the duty to bargain collectively as
prescribed by the Code. The applicable provision in this case is Art. 253
which provides:
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.


Records of the NCMB and DOLE confirmed that NAMAMCCH-NFL had not registered as a labor organization,
having submitted only its charter certificate as an affiliate or
local chapter of NFL. Not being a legitimate labor
organization, NAMA-MCCH-NFL is not entitled to those
rights granted to a legitimate labor organization under
Art. 242, specifically:
(a) To act as the representative of its members for the
purpose of collective bargaining;
(b) To be certified as the exclusive representative of
all the employees in an appropriate collective
bargaining unit for purposes of collective bargaining;
NAMA-MCCH-NFL is not the labor organization certified or
designated by the majority of the rank-and-file hospital employees
to represent them in the CBA negotiations but the NFL, as evidenced
by CBAs concluded in 1987, 1991 and 1994. While it is true that a local
union has the right to disaffiliate from the national federation,
NAMA-MCCH-NFL has not done so as there was no any effort on its
part to comply with the legal requisites for a valid disaffiliation,
Nava and her group simply demanded that MCCHI directly negotiate
with the local union which has not even registered as one.
In any case, NAMA-MCCH-NFL at the time of submission of said
proposals was not a duly registered labor organization, hence it
cannot legally represent MCCHIs rank-and-file employees for
purposes of collective bargaining. Hence, even assuming that
NAMA-MCCH-NFL had validly disaffiliated from its mother union,
NFL, it still did not possess the legal personality to enter into CBA
negotiations
The NFL as the mother union has the right to investigate members of its
local chapter under the federations Constitution and By-Laws, and if
found guilty to expel such members. MCCHI therefore cannot be faulted
for deferring action on the CBA proposal submitted by NAMA-MCCHNFL in view of the union leaderships conflict with the national
federation.
NAMA-MCCH-NFL cannot demand from MCCHI the right to bargain

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collectively in their behalf. Hence, MCCHIs refusal to bargain then


with NAMA-MCCH-NFL cannot be considered an unfair labor
practice to justify the staging of the strike
Strike and picketing activities conducted by union officers and members
were illegal
Art. 263 (b) of the Labor Code, as amended, provides:
ART. 263. Strikes, picketing and lockouts. x x x
(b) Workers shall have the right to engage in
concerted activities for purposes of collective bargaining or
for their mutual benefit and protection. The right of
legitimate labor organizations to strike and picket and
of employers to lockout, consistent with the national
interest, shall continue to be recognized and
respected. However, no labor union may strike and no
employer may declare a lockout on grounds involving interunion and intra-union disputes.
x x x x (Emphasis supplied.)
Since NAMA-MCCH-NFL was not a duly registered or an
independently registered union at the time it filed the notice
of strike and when it conducted the strike vote.
Consequently, the mandatory notice of strike and the
conduct of the strike vote report were ineffective for
having been filed and conducted by NAMA-MCCH-NFL
which has no legal personality as a legitimate labor
organization, in violation of Art. 263 (c), (d) and (f) of the
Labor Code and Rule XXII, Book V of the Omnibus Rules
Implementing the Labor Code.
Art. 263 of the Labor Code provides:
ART. 263. Strikes, picketing and lockouts.
(a) x x x
xxxx
(c) In cases of bargaining deadlocks, the duly
certified or recognized bargaining agent may file a
notice of strike or the employer may file a notice of lockout
with the Department at least 30 days before the intended

date thereof. In cases of unfair labor practice, the period of


notice shall be 15 days and in the absence of a duly
certified or recognized bargaining agent, the notice of
strike may be filed by any legitimate labor organization
in behalf of its members. However, in case of dismissal
from employment of union officers duly elected in
accordance with the union constitution and by-laws, which
may constitute union busting, where the existence of the
union is threatened, the 15-day cooling-off period shall not
apply and the union may take action immediately. (As
amended by Executive Order No. 111, December 24, 1986.)
Rule XXII, Book V of the Omnibus Rules Implementing the
Labor Code reads:
RULE XXII
CONCILIATION, STRIKES AND LOCKOUTS
xxxx
SEC. 6. Who may declare a strike or lockout.
Any certified or duly recognized bargaining representative
may declare a strike in cases of bargaining deadlocks and
unfair labor practices. The employer may declare a lockout
in the same cases. In the absence of a certified or duly
recognized bargaining representative, any legitimate
labor organization in the establishment may declare a
strike but only on grounds of unfair labor
practice. (Emphasis supplied.)
Furthermore, the strike was illegal due to the commission of the
following prohibited activities: (1) violence, coercion, intimidation
and harassment against non-participating employees; and (2)
blocking of free ingress to and egress from the hospital, including
preventing patients and their vehicles from entering the hospital and
other employees from reporting to work, the putting up of placards
with a statement advising incoming patients to proceed to another
hospital because MCCHI employees are on strike/protest. The
prolonged work stoppage and picketing activities of the striking
employees severely disrupted hospital operations that MCCHI
suffered heavy financial losses.

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3. Consequences of illegal strike to union officers and members
Art. 264 (a) of the Labor Code, as amended, provides for the consequences
of an illegal strike to the participating workers:
x x x Any union officer who knowingly participates in
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.
The above provision makes a distinction between workers and union
officers who participate in an illegal strike: an ordinary striking
worker cannot be terminated for mere participation in an illegal
strike. There must be proof that he or she committed illegal acts during
a strike. A union officer, on the other hand, may be terminated from
work when he knowingly participates in an illegal strike, and like
other workers, when he commits an illegal act during a strike.
Considering their persistence in holding picketing activities despite
the declaration by the NCMB that their union was not duly
registered as a legitimate labor organization and the letter from
NFLs legal counsel informing that their acts constitute disloyalty to
the national federation, and their filing of the notice of strike and
conducting a strike vote notwithstanding that their union has no
legal personality to negotiate with MCCHI for collective bargaining
purposes, there is no question that NAMA-MCCH-NFL officers
knowingly participated in the illegal strike.
With respect to the dismissed union members, although MCCHI
submitted photographs taken at the picket line, it did not individually
name those striking employees and specify the illegal act committed by
each of them. Consequently, we find no error committed by the CA in
CA-G.R. SP No. 66540 when it modified the decision of the NLRC and
ruled that the dismissal of union members who merely participated
in the illegal strike was illegal.

4. Separation Pay Only


Since there is no clear proof that union members actually
participated in the commission of illegal acts during the strike, they
are not deemed to have lost their employment status as a
consequence of a declaration of illegality of the strike.
The CA decision ordering the payment of separation pay in lieu of
reinstatement without back wages is thus in order, to conform to the
policy of a fair days wage for a fair days labor.
Separation pay is made an alternative relief in lieu of reinstatement in
certain circumstances, like: (a) when reinstatement can no longer be
effected in view of the passage of a long period of time or because of the
realities of the situation; (b) reinstatement is inimical to the employers
interest; (c) reinstatement is no longer feasible; (d) reinstatement does
not serve the best interests of the parties involved; (e) the employer is
prejudiced by the workers continued employment; (f) facts that make
execution unjust or inequitable have supervened; or (g) strained
relations between the employer and employee.

Considering that 15 years had lapsed from the onset of this labor
dispute, and in view of strained relations that ensued, in addition to
the reality of replacements already hired by the hospital which had
apparently recovered from its huge losses, and with many of the
petitioners either employed elsewhere, already old and sickly, or
otherwise incapacitated, separation pay without back wages is the
appropriate relief. We note that during the pendency of the cases in
this Court, some of the petitioners have entered into compromise
agreements with MCCHI, all of which were duly approved by this
Court. Thus, there are some employees who are excluded from the
herein monetary awards are the following petitioners whose
compromise agreements have been approved by this Court.
76. Wesleyan University-Philippines v. Wesleyan University-Philippines
Faculty and Staff

FACTS: Petitioner Wesleyan University-Philippines is a non-stock, non-profit


educational institution duly organized and existing under the laws of the
Philippines. Respondent Wesleyan University-Philippines Faculty and Staff

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Association, on the other hand, is a duly registered labor organization acting as


the sole and exclusive bargaining agent of all rank-and-file faculty and staff
employees of petitioner. Parties entered into a 5-year CBA effective June 1, 2003
until May 31, 2008. On August 2005 petitioner issued a memorandum regarding
the implementation of sick leave and vacation leave benefits which modified the
agreement stated in the CBA. Under the memorandum, vacation and sick leave
benefits will no longer be automatic and will have to be earned by each
employee. Aside from this, only vacation leaves will be commuted to cash.
Respondents president De Lara questioned the new changes made by the
memorandum for being violative of the existing CBA practices. During the Labor
Management Committee meeting, petitioner also announced that it will be
adopting a one-retirement policy. The dispute was submitted to a voluntary
arbitrator after the parties failed to settle at the grievance level. Respondent
submitted evidence supporting its claim that there has been an established
practice of giving two retirement benefits, one from the Private Education
Retirement Annuity Association(PERAA) Plan and another from the CBA
Retirement Plan. The arbitrator ruled in favor of respondent and held that the
new memorandum and the one-retirement policy are contrary to law. CA
affirmed the decision.
ISSUES: WON the granting of two retirement policies has already been
established as practice

HELD: Yes. In this case, respondent was able to present substantial evidence in
the form of affidavits to support its claim that there are two retirement plans.
Based on the affidavits, petitioner has been giving two retirement benefits as
early as 1997. Petitioner, on the other hand, failed to present any evidence to
refute the veracity of these affidavits. Petitioners contention that these
affidavits are self-serving holds no water. The retired employees of petitioner
have nothing to lose or gain in this case as they have already received their
retirement benefits. Thus, they have no reason to perjure themselves.
Obviously, the only reason they executed those affidavits is to bring out the truth.
As we see it then, their affidavits, corroborated by the affidavits of incumbent
employees, are more than sufficient to show that the granting of two retirement
benefits to retiring employees had already ripened into a consistent and
deliberate practice.

77. CATHAY PACIFIC STEEL CORPORATION, BENJAMIN CHUA JR., VIRGILIO


AGERO, and LEONARDO VISORRO, JR., Petitioners, vs. HON. COURT OF
APPEALS, CAPASCO UNION OF SUPERVISORY EMPLOYEES (CUSE) and
ENRIQUE TAMONDONG III, Respondents.
FACTS: Petitioner CAPASCO hired private respondent Enrique Tamondong III as
Assistant to the Personnel Manager for its Cainta Plant. Thereafter, he was
promoted to the position of Personnel/Administrative Officer, and later to that of
Personnel Superintendent. Sometime in June 1996, the supervisory personnel of
CAPASCO launched a move to organize a union among their ranks, later known
as private respondent CUSE. Tamondong actively involved himself in the
formation of the union and was even elected as one of its officers after its
creation. Consequently, petitioner CAPASCO sent a memo to Tamondong
requiring him to explain and to discontinue from his union activities, with a
warning that a continuance thereof shall adversely affect his employment in the
company. Tamondong ignored said warning and made a reply letter invoking his
right as a supervisory employee to join and organize a labor union. In view of
that, CAPASCO through a memo terminated his employment on the ground of
loss of trust and confidence, citing his union activities as acts constituting serious
disloyalty to the company.

Tamondong challenged his dismissal for being illegal and as an act


involving unfair labor practice by filing a Complaint for Illegal Dismissal and
Unfair Labor Practice before the NLRC. The Acting Executive Labor Arbiter Pedro
C. Ramos rendered a Decision in favor of Tamondong.

Aggrieved, petitioners appealed said Decision to the NLRC, which


dismissed the complaint for illegal dismissal and unfair labor practice, but
ordered the payment of backwages and reinstatement. Petitioners filed a Motion
for Clarification and Partial Reconsideration while Tamondong filed a Motion for
Reconsideration of the said NLRC Decision, but the NLRC affirmed its original
Decision.
Dissatisfied, Tamondong and CUSE filed a Petition for Certiorari under
Rule 65 of the Rules of Court before the Court of Appeals, alleging grave abuse of

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discretion on the part of the NLRC. The CA granted the said Petition and
reinstated the decision of the Labor Arbiter.

Consequently, petitioners filed a Motion for Reconsideration of the said CA


Decision but this was denied.

Hence, this present Petition for Certiorari under Rule 65. Petitioners
aver that Tamondong as Personnel Superintendent of CAPASCO was performing
functions of a managerial employee because he was the one laying down major
management policies on personnel relations such as: issuing memos on company
rules and regulations, imposing disciplinary sanctions such as warnings and
suspensions, and executing the same with full power and discretion. They claim
that no further approval or review is necessary to execute these functions, and
the notations "NOTED BY" of petitioner Agerro, the Vice-President of petitioner
CAPASCO, on the aforesaid memos are nothing but mere notice that Agerro was
aware of such company actions performed by Tamondong. Additionally,
Tamondong was not only a managerial employee but also a confidential
employee having knowledge of confidential information involving company
policies on personnel relations.
Petitioners further argue that they are not guilty of illegal dismissal and
unfair labor practice because Tamondong was validly dismissed and the reason
for preventing him to join a labor union was the nature of his position and
functions as Personnel Superintendent, which position was incompatible and in
conflict with his union activities. Consequently, the CA acted with grave abuse of
discretion amounting to lack or excess of jurisdiction when it held that
Tamondong was not a managerial employee but a mere supervisory employee,
making him eligible to participate in the union activities of private respondent
CUSE, and when it held that petitioner CAPASCO was guilty of illegal dismissal
and unfair labor practice.

ISSUES: WON Tamondong is a managerial employee and is thus ineligible to join


CUSE.
HELD: NO, (In the case before this Court, petitioners fail to meet the third
requisite for the proper invocation of Petition for Certiorari under Rule 65, to

wit: that there is no appeal or any plain, speedy, and adequate remedy in the
ordinary course of law.)
In any event, granting arguendo, that the present petition is proper, still it is
dismissible. The CA cannot be said to have acted with grave abuse of discretion
amounting to lack or excess of jurisdiction in annulling the Decision of the NLRC
because the findings of the CA that Tamondong was indeed a supervisory
employee and not a managerial employee, thus, eligible to join or participate in
the union activities of private respondent CUSE, were supported by evidence on
record. In the Decision of the CA, it made reference to the Memorandum which
required private respondent Tamondong to observe fixed daily working hours
from 8:00 am to 12:00 noon and from 1:00 pm to 5:00 pm. This imposition upon
private respondent Tamondong, according to the Court of Appeals, is very
uncharacteristic of a managerial employee. To support such a conclusion, the
Court of Appeals cited the case of Engineering Equipment, Inc. v. NLRC where
this Court held that one of the essential characteristics of an employee holding a
managerial rank is that he is not subjected to the rigid observance of regular
office hours or maximum hours of work.
CA also held that upon careful examination of the documents submitted before it,
it found out that:

Tamondong may have possessed enormous powers and was performing


important functions that goes with the position of Personnel Superintendent,
nevertheless, there was no clear showing that he is at liberty, by using his own
discretion and disposition, to lay down and execute major business and
operational policies for and in behalf of CAPASCO. CAPASCO miserably failed to
establish that Tamondong was authorized to act in the interest of the company
using his independent judgment. x x x. Withal, Tamondong may have been
exercising certain important powers, such as control and supervision over erring
rank-and-file employees, however, x x x he does not possess the power to hire,
transfer, terminate, or discipline erring employees of the company. At the most,
the record merely showed that Tamondong informed and warned rank-and-file
employees with respect to their violations of CAPASCOs rules and regulations. x
x x. [Also, the functions performed by private respondent such as] issuance of
warning to employees with irregular attendance and unauthorized leave of

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absences and requiring employees to explain regarding charges of abandonment


of work, are normally performed by a mere supervisor, and not by a manager.

Article 212(m) of the Labor Code, as amended, differentiates supervisory


employees from managerial employees, to wit: supervisory employees are those
who, in the interest of the employer, effectively recommend such managerial
actions, if the exercise of such authority is not merely routinely or clerical in
nature but requires the use of independent judgment; whereas, managerial
employees are those who are vested with powers or prerogatives to lay down
and execute management policies and/or hire, transfer, suspend, lay off, recall,
discharge, assign or discipline employees. Thus, it can be clearly inferred that
Tamondong was just a supervisory employee. He did not perform any of the
functions of a managerial employee as stated in the definition given to it by the
Code. Hence, the Labor Code provisions regarding disqualification of a
managerial employee from joining, assisting or forming any labor organization
does not apply to Tamondong. Being a supervisory employee of CAPASCO, he
cannot be prohibited from joining or participating in the union activities of
private respondent CUSE, and in making such a conclusion, the CA did not act
whimsically, capriciously or in a despotic manner, rather, it was guided by the
evidence submitted before it. Thus, given the foregoing findings of the Court of
Appeals that private respondent is a supervisory employee, it is indeed an unfair
labor practice on the part of petitioner CAPASCO to dismiss him on account of his
union activities, thereby curtailing his constitutionally guaranteed right to selforganization.
78. Chris Garments Corporation vs HON. Patricia A. Sto. Tomas

FACTS: Respondent Chris Garments Workers UnionPTGWO, filed a petition for


certification election with the Med-Arbiter. The union sought to represent
petitioners rank-and-file employees not covered by its CBA with the Samahan
Ng Mga Manggagawa sa Chris Garments CorporationSolidarity of Union in
the Philippines for Empowerment and Reforms (SMCGC-SUPER), the certified
bargaining agent of the rank-and-file employees. Petitioner Chris Garments
moved to dismiss the petition. It argued that it has an existing CBA from July 1,
1999 to June 30, 2004 with SMCGC-SUPER which bars any petition for certification
election prior to the 60-day freedom period. It also contended that the union
members are not its regular employees since they are direct employees of qualified

and independent contractors. The union countered that its members are regular
employees of petitioner. The Med-Arbiter ruled that there was no employeremployee relationship between the parties since the union itself admitted that its
members are agency employees and that even if the union members are
considered direct employees of petitioner, the petition for certification election
will still fail due to the contract bar rule under Article 232 of the Labor Code.
Nevertheless, the Med-Arbiter ruled that the union may avail of the CBA benefits
by paying agency fees to SMCGC-SUPER. The Secretary of Labor and Employment
affirmed the decision of the Med-Arbiter. She ruled that petitioner failed to
prove that the union members are employees of qualified and independent
contractors. Thus, the union members may be considered part of the bargaining
unit of petitioners rank-and-file employees. However, she held that the petition
could not be entertained except during the 60-day freedom period.

On 2003, the union filed a second petition for certification election. The
Med-Arbiter dismissed the petition on the ground that it was barred by a prior
judgment. On appeal, the Secretary of Labor and Employment affirmed the
decision of the Med-Arbiter. On 2004, the union filed a third petition for
certification election. The Med-Arbiter dismissed the petition on the grounds
that no employer-employee relationship exists between the parties and that the
case was barred by a prior judgment. On appeal, the Secretary of Labor and
Employment granted the petition. Petitioner filed a petition for certiorari with
the Court of Appeals which was dismissed due to its failure to file a motion for
reconsideration of the decision before filing the petition.
ISSUES: WON the Secretary of Labor erred in granting the certificate of election
to herein private respondents despite the ground of res judicata

HELD: Res judicata has a dual aspect: first, bar by prior judgment which is
provided in Rule 39, Section 47(b) of the 1997 Rules of Civil Procedure and
second, conclusiveness of judgment which is provided in Section 47(c) of the
same Rule. In this instance, the judgment in the first case constitutes an absolute
bar to the second action. Otherwise put, the judgment or decree of the court of
competent jurisdiction on the merits concludes the litigation between the
parties, as well as their privies, and constitutes a bar to a new action or suit
involving the same cause of action before the same or any other tribunal. On the
other hand, the doctrine of conclusiveness of judgment provides that issues

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actually and directly resolved in a former suit cannot again be raised in any
future case between the same parties involving a different cause of action. Under
this doctrine, identity of causes of action is not required but merely identity of
issues.
The Secretary of Labor and Employment dismissed the first petition as it
was filed outside the 60-day freedom period. At that time therefore, the union has
no cause of action since they are not yet legally allowed to challenge openly and
formally the status of SMCGC-SUPER as the exclusive bargaining representative of
the bargaining unit. Such dismissal, however, has no bearing in the instant case
since the third petition for certification election was filed well within the 60-day
freedom period. Otherwise stated, there is no identity of causes of action to speak
of since in the first petition, the union has no cause of action while in the third, a
cause of action already exists for the union as they are now legally allowed to
challenge the status of SMCGC-SUPER as exclusive bargaining representative.
79. Gen Santos Coca-cola vs Coca Cola Bottlers

FACTS: Sometime in the late 1990s, CCBPI experienced a significant decline in


profitability due to the Asian economic crisis, decrease in sales, and tougher
competition. To curb the negative effects on the company, it implemented three
(3) waves of an Early Retirement Program.

Meanwhile, there was an inter-office memorandum sent to all of CCBPIs Plant


Human Resources Managers/Personnel Officers, including CCBPI Gen San
mandating them to put on hold "all requests for hiring to fill in vacancies in both
regular and temporary positions in [the] Head Office and in the Plants." Because
several employees availed of the early retirement program, vacancies were
created in some departments, prompting petitioner to negotiate with the Labor
Management Committee for filling up the vacancies with permanent employees.
No resolution was reached on the matter.
Faced with the "freeze hiring" directive, CCBPI Gen San engaged the services of
JLBP Services Corporation (JLBP), a company in the business of providing labor
and manpower services, including janitorial services, messengers, and office
workers to various private and government offices.

On January 21, 2002, petitioner filed with the National Conciliation and
Mediation Board (NCMB) a Notice of Strike on the ground of alleged unfair labor
practice committed by CCBPI Gen San for contracting-out services regularly
performed by union members ("union busting"). The parties failed to come to an
amicable settlement. On July 3, 2002, CCBPI filed a Petition for Assumption of
Jurisdiction with the Sec. of Labor and Employment which issued an Order
enjoining the threatened strike and certifying the dispute to the NLRC for
compulsory arbitration.

In a Resolution, the NLRC ruled that CCBPI was not guilty of unfair labor practice
for contracting out jobs to JLBP. The NLRC anchored its ruling on the validity of
the "Going-to-the-Market" (GTM) system implemented by the company, which
called for restructuring its selling and distribution system, leading to the closure
of certain sales offices and the elimination of conventional sales routes. The
NLRC held that petitioner failed to prove by substantial evidence that the system
was meant to curtail the right to self-organization of petitioners members.
Petitioner filed a motion for reconsideration, but was denied, hence, petitioner
filed a Petition for Certiorari before the CA.

The CA upheld the NLRCs finding that CCBPI was not guilty of unfair labor
practice. It held that the contract between CCBPI and JLBP did not amount to
labor-only contracting. It found that JLBP was an independent contractor and
that the decision to contract out jobs was a valid exercise of management
prerogative to meet exigent circumstances. On the other hand, petitioner failed
to adduce evidence to prove that contracting out of jobs by the company resulted
in the dismissal of petitioners members, prevented them from exercising their
right to self-organization, led to the Unions demise or that their group was
singled out by the company.
Its motion for reconsideration having been denied, petitioner now comes to this
Court seeking the reversal of the CA Decision.
ISSUES: WON there is ULP committed by respondent (contracting out
services/functions)

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HELD: The petition is bereft of merit. Hence, we deny the Petition. Under Rule 45
of Rules of Court, only questions of law may be raised in a Petition for Review on
Certiorari. The issues raised by petitioner reveals that they are questions of fact.
The issues raised, i.e., whether JLBP is an independent contractor, whether
CCBPIs contracting-out of jobs to JLBP amounted to unfair labor practice, and
whether such action was a valid exercise of management prerogative, call for a
re-examination of evidence, which is not within the ambit of this Courts
jurisdiction.
It is true that the NLRC erroneously concluded that the contracting- out of jobs in
CCBPI Gen San was due to the GTM system, which actually affected CCBPIs sales
and marketing departments, and had nothing to do with petitioners complaint.
However, this does not diminish the NLRCs finding that JLBP was a legitimate,
independent contractor and that CCBPI Gen San engaged the services of JLBP to
meet business exigencies created by the freeze-hiring directive of the CCBPI
Head Office.
On the other hand, the CA squarely addressed the issue of job contracting in its
assailed Decision and Resolution. The CA itself examined the facts and evidence
of the parties and found that, based on the evidence; CCBPI did not engage in
labor-only contracting and, therefore, was not guilty of unfair labor practice.

The NLRC found and the same was sustained by the CA that the companys
action to contract-out the services and functions performed by Union members
did not constitute unfair labor practice as this was not directed at the members
right to self-organization.
Unfair labor practice refers to "acts that violate the workers right to organize."
The prohibited acts are related to the workers right to self-organization and to
the observance of a CBA. Without that element, the acts, even if unfair, are not
unfair labor practices.

Both the NLRC and the CA found that petitioner was unable to prove its charge of
unfair labor practice. It was the Union that had the burden of adducing
substantial evidence to support its allegations of unfair labor practice, which
burden it failed to discharge.

80. UST Faculty Union vs UST

FACTS: On September 21, 1996, the University of Santo Tomas Faculty Union
(USTFU) wrote a letter to all its members informing them of a General Assembly
(GA) that was to be held on October 5, 1996. The letter contained an agenda for
the GA which included an election of officers. The then incumbent president of
the USTFU was Atty. Eduardo J. Marin o, Jr. On October 2, 1996, Fr. Rodel Aligan,
O.P., Secretary General of the UST, issued a Memorandum allowing the request of
the Faculty Clubs of the university to hold a convocation on October 4, 1996.
Members of the faculties of the university attended the convocation, including
members of the USTFU, without the participation of the members of the UST
administration. Also during the convocation, an election for the officers of the
USTFU was conducted by a group called the Reformist Alliance. Upon learning
that the convocation was intended to be an election, members of the USTFU
walked out. Meanwhile, an election was conducted among those present, and Gil
Gamilla and other faculty members (Gamilla Group) were elected as the
president and officers, respectively, of the union. Such election was
communicated to the UST administration in a letter. Thus, there were two (2)
groups claiming to be the USTFU: the Gamilla Group and the group led by Atty.
Marin o, Jr. (Marin o Group). The Marin o Group filed a complaint for ULP against
the UST with the Arbitration Branch of the NLRC, it also filed a complaint with
the Office of the Med-Arbiter of the DOLE, praying for the nullification of the
election of the Gamilla Group as officers of the USTFU.

On December 3, 1996, a CBA was entered into by the Gamilla Group and the UST.
The CBA superseded an existing CBA entered into by the UST and USTFU which
was intended for the period of June 1, 1993 to May 31, 1998.

Meanwhile med-arbiter issued a Resolution, declaring the election of the Gamilla


group as null and void and ordering that this group cease and desist from
performing the duties and responsibilities of USTFU officers. This Resolution was
appealed to the Director of the BLR the director issued a Resolution affirming the
Resolution of the med-arbiter. His Resolution was then appealed to this Court
which upheld the ruling of the BLR. USTFU filed a Manifestation with the
Arbitration Branch of the NLRC informing it of the Decision of the Court.
Thereafter, the Arbitration Branch of the NLRC issued a Decision dismissing the

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complaint for lack of merit for reason that the USTFU failed to prove UST
committed ULP.

The USTFU appealed the labor arbiters Decision to the NLRC which rendered a
Resolution affirming the Decision of the labor arbiter. USTFUs Motion for
Reconsideration to the NLRC was denied. The case was then elevated to the CA
which rendered the assailed Decision affirming the Resolutions of the NLRC.

ISSUES: Whether or not UST has committed unfair labor practices against USTFU

HELD: No.The general principle is that one who makes an allegation has the
burden of proving it. While there are exceptions to this general rule, in the case
of ULP, the alleging party has the burden of proving such ULP. In order to show
that the employer committed ULP under the Labor Code, substantial evidence is
required to support the claim. Substantial evidence has been defined as such
relevant evidence as a reasonable mind might accept as adequate to support a
conclusion. Such principle finds justification in the fact that ULP is punishable
with both civil and/or criminal sanctions.

In any event, it bears stressing that at the time of these events, the legitimacy of
the Gamilla Group as the valid officers and directors of the USTFU was already
submitted to the med-arbiter and no decision had yet been reached on the
matter. Having been shown evidence to support the legitimacy of the Gamilla
Group with no counter-evidence from the Marin o Group, UST had to recognize
the Gamilla Group and negotiate with it. Thus, the acts of UST in support of the
USTFU as the legitimate representative of the bargaining unit, albeit through the
Gamilla Group, cannot be considered as ULP.

Finally, petitioner claims that despite the ruling of this Honorable Court, the
University of Santo Tomas still entertains the interlopers whose claim to the
leadership of the USTFU has been rejected by the [DOLE] and the Highest
Tribunal. Petitioner, however, fails to enumerate such objectionable actions of
the UST. Again, petitioner fails to present substantial evidence in support of its
claim.

In sum, petitioner makes several allegations that UST committed ULP. The onus
probandi falls on the shoulders of petitioner to establish or substantiate such

claims by the requisite quantum of evidence. In labor cases as in other


administrative proceedings, substantial evidence or such relevant evidence as a
reasonable mind might accept as sufficient to support a conclusion is required. In
the petition at bar, petitioner miserably failed to adduce substantial evidence as
basis for the grant of relief.
81. PHIL. SKYLANDERS, INC. vs NLRC

FACTS: Philippine Skylanders Employees Association (PSEA), a local labor union


affiliated with the Philippine Association of Free Labor Unions (PAFLU) won in
the certification election conducted among the rank and file employees of
Philippine Skylanders, Inc. (PSI). Its rival union, PSEA-WATU protested the result
of the election before the Secretary of Labor. Pending settlement of the
controversy, PSEA disaffiliated with PAFLU which was adopted and signed by
about 92.5% of its total membership and affiliated itself with the National
Congress of Workers (NCW) then changed its name to PSEA-NCW. Thereafter,
PSEA-NCW entered into a collective bargaining agreement (CBA) with PSI which
was registered with the DOLE. PAFLU filed a complaint against PSI, Romulo (PSI
President) and Dakila (Personnel Manager) for interfering with its employees
union activities and unfair labor practice and later, against the elected officers of
the PSEA-PAFLU who remained officers of the PSEA-NCW as additional
respondents for allowing themselves to be manipulated and influenced by PSI.
PSI moved for the dismissal of the complaint on the ground that the issue of
disaffiliation was an inter-union conflict which is beyond the jurisdiction of the
Labor Arbiter while the PSEA-NCW asserted that since PSEA was no longer
affiliated with PAFLU, the latter had no personality to file the complaint. The
Labor Arbiter rendered a decision declaring PSEAs disaffiliation from PAFLU
invalid and holding PSI and PSEA officers guilty of unfair labor practice on the
ground that the company knowingly sanctioned and confederated with Dakila in
actively assisting a rival union which is a classic case of interference and since
PSEA-NCWs personality was not recognized, its collective bargaining agreement
with PSI was invalid and ordered PSI, PSEA and their officers to pay PAFLU
P150,000 in damages. On appeal, the NLRC upheld the decision of the Labor
Arbiter holding that since the election protest is still pending, PSEA could not
validly separate from PAFLU, federate with another and enter into a CBA with
PSI. Petitioners motions for reconsideration were denied.

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ISSUES:
1.
2.

HELD:
1.

2.

Whether or not PSEA may validly disaffiliate from PAFLU pending the
settlement of an election protest questioning its status as the sole and
exclusive bargaining agent of PSIs rank and file employees?
Whether or not petitioners are guilty of unfair labor practice?

YES. First, the Labor Arbiter acquired no jurisdiction to try and hear the
issue of disaffiliation as it is an inter-union conflict which jurisdiction
lies with the Bureau of Labor Relations and should have been dismissed
right away. Second, in jurisprudence, the Court upheld the right of local
unions to separate from their mother federation on the ground that as
separate and voluntary associations, local unions do not owe their
creation and existence to the national federation to which they are
affiliated but, instead, to the will of their members (Liberty Cotton Mills
Workers Union vs Liberty Cotton Mills, Inc., 66 SCRA 512). In fact, the
disaffiliation was supported by 92.5% of total membership of the local
union. As the local unions remain the basic units of association, they are
free to serve their own interests subject to the restraints imposed by the
constitution and by-laws of the national federation, and free also to
renounce the affiliation upon the terms laid down in the agreement
which brought such affiliation into existence. Third, there was no
showing of a claim by PAFLU that the local union was forbidden to
disaffiliate from the federation nor there were any conditions imposed
for a valid breakaway thus, the pendency of an election protest did not
constitute a bar to a valid disaffiliation.
NO. PAFLU instituted the complaint for unfair labor practice against the
wishes of the workers (111 out of 120 total membership) whose
interests it was supposed to protect. The mere act of disaffiliation did
not divest PSEA of its own personality; neither did it give PAFLU the
license to act independently of the local union. As an agent, PAFLU can
only act in representation of and in accordance with the interests of the

local union. PAFLUs complaint, having been filed by a party with no


legal personality failed to state a cause of action.

The Court reversed and set aside the Decision of the NLRC affirming the Decision
of the Labor Arbiter holding PSEA-NCW and PSI and its officers guilty of unfair
labor practice and ordering them to pay damages to PAFLU. No pronouncement
as to costs.
82. 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.

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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 check off
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. THEUCGW 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-CGW to 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 was 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. Respondent company applied for clearance
with the Secretary of Labor to dismiss the other officers and members of THEUCGW. The company also suspended them effective that day. NLRC Case No. LR2521 was filed by THEU-CGW and individual complainants against private
respondents for unfair labor practices. THEU-CGW asked the employees to affirm
their membership. Some did not abide so they were informed that they will be
dismissed under the CBA.
The 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.
LA: Arbitrator Daniel Lucas issued an order dated 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.

ISSUES: 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

HELD: 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 a certiorari proceeding without prior appeal to the
President.
2) A local union, being a separate and voluntary association, is free to serve the
interest of all its members including the freedom to disaffiliate when

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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 bylaws 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 the
dismissals 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 the CBA, there was no sufficient ground to
terminate the employment of petitioners.
83 PUREFOODS CORPORATION Vs NAGKAKAISANG SAMAHANG
MANGGAGAWA NG PUREFOODS RANK-AND-FILE, ST. THOMAS FREE

WORKERS UNION, PUREFOODS GRANDPARENT FARM WORKERS UNION


and PUREFOODS UNIFIED LABOR ORGANIZATION

FACTS: On February 8, 1995, NAGSAMA-Purefoods manifested to petitioner


corporation its desire to re-negotiate the collective bargaining agreement (CBA)
then due to expire on the 28th of the said month. Together with its demands and
proposal, the organization submitted to the company its January 28, 1995
General Membership Resolution approving and supporting the unions affiliation
with PULO, adopting the draft CBA proposals of the federation, and authorizing a
negotiating panel which included among others a PULO representative. While
Purefoods formally acknowledged receipt of the unions proposals, it refused to
recognize PULO and its participation, even as a mere observer, in the negotiation.
Consequently, notwithstanding the PULO representatives non-involvement, the
negotiation of the terms of the CBA still resulted in a deadlock. A notice of strike
was then filed by NAGSAMA-Purefoods on May 15, 1995. In the subsequent
conciliation conference, the deadlock issues were settled except the matter of the
companys recognition of the unions affiliation with PULO.
In the meantime, STFWU and PGFWU also submitted their respective proposals
for CBA renewal, and their general membership resolutions which, among
others, affirmed the two organizations affiliation with PULO. Consistent with its
stance, Purefoods refused to negotiate with the unions should a PULO
representative be in the panel. The parties then agreed to postpone the
negotiations indefinitely.

On July 24, 1995, however, the petitioner company concluded a new CBA with
another union in its farm in Malvar, Batangas. Five days thereafter, or on July 29,
1995, at around 8:00 in the evening, four company employees facilitated the
transfer of around 23,000 chickens from the poultry farm in Sto. Tomas,
Batangas (where STFWU was the exclusive bargaining agent) to that in Malvar.
The following day, the regular rank-and-file workers in the Sto. Tomas farm were
refused entry in the company premises; and on July 31, 1995, 22 STFWU
members were terminated from employment. The farm manager, supervisors
and electrical workers of the Sto. Tomas farm, who were members of another
union, were nevertheless retained by the company in its employ.

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On August 17, 1999, the LA rendered a Decision dismissing the complaint, and
declaring that the company neither committed ULP nor illegally dismissed the
employees.

On appeal, the NLRC reversed the ruling of the LA, ordered the payment
of P500,000.00 as moral and exemplary damages and the reinstatement with full
backwages of the STFWU members. In its March 16, 2001 Decision (CA No.
022059-00), the labor commission ruled that the petitioner companys refusal to
recognize the labor organizations affiliation with PULO was unjustified
considering that the latter had been granted the status of a federation by the
Bureau of Labor Relations; and that this refusal constituted undue interference
in, and restraint on the exercise of the employees right to self-organization and
free collective bargaining.

In the assailed October 25, 2001 Resolution, the appellate court dismissed
outright the companys petition for certiorari on the ground that the verification
and certification of non-forum shopping was defective since no proof of authority
to act for and on behalf of the corporation was submitted by the corporations
senior vice-president who signed the same; thus, the petition could not be
deemed filed for and on behalf of the real party-in-interest.
ISSUES: Whether Purefoods committed unfair labor practice

HELD: YES, It is crystal clear that the closure of the Sto. Tomas farm was
made in bad faith. Badges of bad faith are evident from the following acts of
the petitioner: it unjustifiably refused to recognize the STFWUs and the
other unions affiliation with PULO; it concluded a new CBA with another
union in another farm during the agreed indefinite suspension of the
collective bargaining negotiations; it surreptitiously transferred and
continued its business in a less hostile environment; and it suddenly
terminated the STFWU members, but retained and brought the nonmembers to the Malvar farm. Petitioner presented no evidence to support
the contention that it was incurring losses or that the subject farms lease
agreement was pre-terminated. Ineluctably, the closure of the Sto. Tomas
farm circumvented the labor organizations right to collective bargaining
and violated the members right to security of tenure.

We deem as proper the award of moral and exemplary damages. We hold that
the sudden termination of the STFWU members is tainted with ULP because it
was done to interfere with, restrain or coerce employees in the exercise of their
right to self-organization.
As to the order of reinstatement, the Court modifies the same in that if it is no
longer feasible considering the length of time that the employees have been out
of petitioners employ, the company is ordered to pay the illegally dismissed
STFWU members separation pay equivalent to one (1) month pay, or one-half
(1/2) month pay for every year of service, whichever is higher.

WHEREFORE, premises considered, the petition for review on certiorari is


DENIED. The October 25, 2001 and the November 22, 2001 Resolutions of the
Court of Appeals in CA-G.R. SP No. 66871 are AFFIRMED. The March 16, 2001
Decision of the National Labor Relations Commission in NLRC-NCR-00-0705159-95 (CA No. 022059-00) is AFFIRMED with the MODIFICATION that
petitioner company is ordered to: (1) reinstate the illegally dismissed STFWU
members and pay them full backwages from the time of illegal termination up to
actual reinstatement; (2) if reinstatement is no longer feasible, pay the illegally
dismissed STFWU members their separation pay equivalent to one month pay, or
one-half month pay for every year of service, whichever is higher; and (3) pay
moral and exemplary damages in the aggregate amount of P500,000.00 to the
said illegally dismissed STFWU members.
84. De la sale University v. DLSUEA-NAFTEU

FACTS:
In 2001, Aliaza and other s (Aliaza
s gr oup) w ho w er e m em ber s of the
Respondent Union and obviously had conflict with the latter, filed a petition with
DOLE-NCR to conduct elections as the group alleged that there was a failure to
call for such election in the Union since 1985. This was opposed by the Union
declaring that an election transpired in 1987 BUT because of RA 6715 (an act
that extends protection to labor kasama na yung term of office) the officers
terms office were extended until 1992 by virtue of which, the General Assembly
(of the Union) affirmed the hold-over of tenure of the officers UNTIL a CBA is
executed. Such CBA was only executed in 2000. (kaya humihingi na ng election
yung Aliazas group).

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DOLE-NCR ruling: the hold-over of office by the incumbent officers had been
extinguished due to the CBA and ordered election with pre-election conference
under the supervision of its Labor Relations Division.

On June 26, 2003 pending appeal befor e the NLRC 2nd of the July 12, 2002
ruling was denied and it affirmed LAs ruling dismissing the ULP Complaint.
this order was appealed by the Union before the CA 1st Division.

In this r egar d, Aliazas gr oup r equested her ein Petitioner DLSU to put on escrow
all the Union dues, fees and other money considerations of concerned academic
personnel until election is held. Hence, DLSU advised the Union that it would
implement two actions to maintain its neutrality in the intra-union dispute:

CA 1st Division ruling: ruled that NLRC 2nd committed grave abuse of discretion
in ignoring the NLRC 3rds order and in effect SET ASIDE NLRC 2nds order of
dismissing ULP complaint --- this is the assailed order in this entire case before
the SC.

Respondent Union disr egar dedthe order and conducted election without prior
notice to DOLE. This prompted Aliazas group to file an Urgent motion for
Intervention that was granted 3 days before the supposed election.

1) Established Savings Account where dues and fees will be


deposited
and held in trust.

2) It discontinued normal relations with any group within the


Union including incumbent set of officers.

This m ove by DSLU pr om pted Union to file a com plaint for ULP claim ing that
DLSU unduly interfered with its internal affairs and discriminated against Union
members -- this was however dismissed by LA Pati of NLRC 2nd Div. on July 12,
2002 it was of course appealed before the same division (pending appeal)

Meanw hile, w hile such complaint was still pending before the 2nd Division of
NLRC, a Notice to Strike (March 2002) was filed before the Office of the Secretary
of Labor that was later on referred to NLRC 3rd Div. for Compulsory Arbitration
as a certified case. To this effect, 4 other complaints with ULP were filed by the
Union on behalf of its members against DLSU before the NLRC 3rd division and
subsequently filed a motion to subsume (or consolidate in other words) the
ULP complaint in NLRC 2nd (pending appeal) and the 4 other ULP complaints
before the NLRC 3rd -- this motion was granted and ordered the 2nd Division to
transmit the entire record to the 3rd Division -- hence DLSU filed an appeal before
CA 10th Division.

CA 10th Division ruling: reversed NLRC 3rds ruling in consolidating/subsuming


the ULP complaints because at that time the ULP complaint was already disposed
of or dismissed by the LA and such can no longer be the subject of arbitration.

ISSUES: WOR DLSU is guilty of ULP


HELD: YES

The acts of DLSU constitute INTERFERENCE as it w as done pending the


resolution of the intra-union dispute and to that effect the respondents officers
remained duly authorized to conduct union affairs. This is evidenced by a
Clarificatory Letter issued by the BLR Director that no void leadership in the
Union exists and the DOLE-NCR order should not be construed as an automatic
termination of the incumbent officers tenure that ends only until their successors
shall have been elected and qualified.
Fur therm or e, it is im por tant to note that the tw o acts by DLSU w er e adopted
despite of an existing CBA between the Union and the former and that the
University should have observed the terms and conditions thereof bearing on
union dues and representation.

Ruling on the conflicting or der s of the CA


s tw o divisions: CA 10ths ruling
became final and executory on July 11, 2004 while CA 1sts ruling was only
promulgated on Septmeber 16, 2005. Nauna kasi yung 10th Division so yung
order ng 1st cannot be effected. To do otherwise and transmit the records to the
3rd would create absurd consquences.
DLSU is liable for ULP.

85. MSMG-UWP VS RAMOS

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FACTS: The petitioner, Malayang Samahan ng mga Manggagawa sa M. Greenfield,


Inc., (B) (MSMG), hereinafter referred to as the "local union", is an affiliate of the
private respondent, United Lumber and General Workers of the Philippines
(ULGWP), referred to as the "federation".
On September 12, 1986, a local union election was held under the auspices of the
ULGWP wherein the herein petitioner, Beda Magdalena Villanueva, and the other
union officers were proclaimed as winners. Minutes of the said election were
duly filed with the Bureau of Labor Relations on September 29, 1986.
On March 21, 1987, a Petition for Impeachment was filed with the national
federation ULGWP by the defeated candidates in the aforementioned election.

On June 16, 1987, the federation conducted an audit of the local union funds. The
investigation did not yield any unfavorable result and the local union officers
were cleared of the charges of anomaly in the custody, handling and disposition
of the union funds.
The 14 defeated candidates filed a Petition for Impeachment/Expulsion of the
local union officers with the DOLE NCR on November 5, 1987, docketed as NCROD-M-11-780-87. However, the same was dismissed on March 2, 1988, by MedArbiter Renato Parungo for failure to substantiate the charges and to present
evidence in support of the allegations.

On April 17, 1988, the local union held a general membership meeting at the
Caruncho Complex in Pasig. Several union members failed to attend the meeting,
prompting the Executive Board to create a committee tasked to investigate the
non-attendance of several union members in the said assembly, pursuant to
Sections 4 and 5, Article V of the Constitution and By-Laws of the union, which
read: "Seksyon 4. Ang mga kinukusang hindi pagdalo o hindi paglahok sa lahat ng
hakbangin ng unyon ng sinumang kasapi o pinuno ay maaaring maging sanhi ng
pagtitiwalag o pagpapataw ng multa ng hindi hihigit sa P50.00 sa bawat araw na
nagkulang.
Seksyon 5. Ang sinumang dadalo na aalis ng hindi pa natatapos ang pulong ay
ituturing na pagliban at maparusahan ito ng alinsunod sa Article V, Seksyong 4

ng Saligang Batas na ito. Sino mang kasapi o pisyales na mahuli and dating sa
takdang oras ng di lalampas sa isang oras ay magmumulta ng P25.00 at
babawasin sa sahod sa pamamagitan ng salary deduction at higit sa isang oras ng
pagdating ng huli ay ituturing na pagliban.
On June 27, 1988, the local union wrote respondent company a letter requesting
it to deduct the union fines from the wages/salaries of those union members who
failed to attend the general membership meeting.

On July 11, 1988, the Federation wrote respondent company a letter advising the
latter not to deduct the fifty- peso fine. The imposition of P50.00 fine became the
subject of bitter disagreement between the Federation and the local union
culminating in the latters declaration of general autonomy from the former
through Resolution No. 10 passed by the local executive board and ratified by the
general membership on July 16, 1988.
In retaliation, the national federation asked respondent company to stop the
remittance of the local unions share in the education funds effective August
1988. This was objected to by the local union which demanded that the
education fund be remitted to it in full.

As early as November 21, 1988, the officers were expelled from the ULGWP. On
the same day, the federation advised respondent company of the expulsion of the
30 union officers and demanded their separation from employment pursuant to
the Union Security Clause in their collective bargaining agreement. This demand
was reiterated twice, through letters dated February 21 and March 4, 1989,
respectively, to respondent company. Thereafter, the Federation filed a Notice of
Strike with the National Conciliation and Mediation Board to compel the
company to effect the immediate termination of the expelled union officers.
On March 7, 1989, under the pressure of a threatened strike, respondent
company terminated the 30 union officers from employment, serving them
identical copies of the termination letter.

On that same day, the expelled union officers assigned in the first shift were
physically or bodily brought out of the company premises by the companys

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security guards. Likewise, those assigned to the second shift were not allowed to
report for work. This provoked some of the members of the local union to
demonstrate their protest for the dismissal of the said union officers. Some union
members left their work posts and walked out of the company premises. On the
other hand, the Federation, having achieved its objective, withdrew the Notice of
Strike filed with the NCMB.
On August 7, 1989, the petitioners filed a verified complaint with the Arbitration
Branch, National Capital Region, DOLE, Manila, charging private respondents of
unfair labor practice which consists of union busting, illegal dismissal, illegal
suspension, interference in union activities, discrimination, threats, intimidation,
coercion, violence, and oppression.
LA - termination to be valid in compliance with the union security clause of the
collective bargaining agreement. NLRC affirmed Las decision.
ISSUES: Whether the union officers were validly and legally terminated.

HELD: No. Although this Court has ruled that union security clauses embodied in
the collective bargaining agreement may be validly enforced and that dismissals
pursuant thereto may likewise be valid, this does not erode the fundamental
requirement of due process.
The reason behind the enforcement of union security clauses which is the
sanctity and inviolability of contracts cannot override ones right to due process.

In the case under scrutiny, petitioner union officers were expelled by the
federation for allegedly committing acts of disloyalty and/or inimical to the
interest of ULGWP and in violation of its Constitution and By-laws. Upon demand
of the federation, the company terminated the petitioners without conducting a
separate and independent investigation. Respondent company did not inquire
into the cause of the expulsion and whether or not the federation had sufficient
grounds to effect the same. Relying merely upon the federations allegations,
respondent company terminated petitioners from employment when a separate
inquiry could have revealed if the federation had acted arbitrarily and
capriciously in expelling the union officers. Respondent companys allegation
that petitioners were accorded due process is belied by the termination letters

received by the petitioners which state that the dismissal shall be immediately
effective.

As held in the aforecited case of Cario, "the right of an employee to be informed


of the charges against him and to reasonable opportunity to present his side in a
controversy with either the company or his own union is not wiped away by a
union security clause or a union shop clause in a collective bargaining agreement.
An employee is entitled to be protected not only from a company which
disregards his rights but also from his own union the leadership of which could
yield to the temptation of swift and arbitrary expulsion from membership and
mere dismissal from his job."

While respondent company may validly dismiss the employees expelled by the
union for disloyalty under the union security clause of the collective bargaining
agreement upon the recommendation by the union, this dismissal should not be
done hastily and summarily thereby eroding the employees right to due process,
self- organization and security of tenure. The enforcement of union security
clauses is authorized by law provided such enforcement is not characterized by
arbitrariness, and always with due process. Even on the assumption that the
federation had valid grounds to expel the union officers, due process requires
that these union officers be accorded a separate hearing by respondent company.
86. Alabang Country Club vs NLRC

FACTS: Petitioner Alabang Country Club, Inc. (Club) is a domestic non-profit


corporation with principal office at Country Club Drive, Ayala Alabang,
Muntinlupa City. Respondent Alabang Country Club Independent Employees
Union (Union) is the exclusive bargaining agent of the Clubs rank-and-file
employees. In April 1996, respondents Christopher Pizarro, Michael Braza, and
Nolasco Castueras were elected Union President, Vice-President, and Treasurer,
respectively.
On June 21, 1999, the Club and the Union entered into a Collective Bargaining
Agreement (CBA), which provided for a Union shop and maintenance of
membership shop.

The pertinent parts of the CBA included in Article II on Union Security read, as
follows:

3E Andaya Ching Espiritu Hefti Galvez Gammad Lainez Lui Madamba Nagera Narvasa
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ARTICLE II

Labor Relations Case Digest - Atty. Joyrich Golangco

UNION SECURITY

SECTION 1. CONDITION OF EMPLOYMENT. All regular rank-and-file employees,


who are members or subsequently become members of the UNION shall
maintain their membership in good standing as a condition for their continued
employment by the CLUB during the lifetime of this Agreement or any extension
thereof.
SECTION 2. [COMPULSORY] UNION MEMBERSHIP FOR NEW REGULAR RANKAND-FILE EMPLOYEES

a)New regular rank-and-file employees of the Club shall join the UNION within
five (5) days from the date of their appointment as regular employees as a
condition for their continued employment during the lifetime of this Agreement,
otherwise, their failure to do so shall be a ground for dismissal from the CLUB
upon demand by the UNION.

b)The Club agrees to furnish the UNION the names of all new probationary and
regular employees covered by this Agreement not later than three (3) days from
the date of regular appointment showing the positions and dates of hiring.
xxxx

SECTION 4. TERMINATION UPON UNION DEMAND. Upon written demand of the


UNION and after observing due process, the Club shall dismiss a regular rankand-file employee on any of the following grounds:... (f)Malversation of union
funds;

Subsequently, in July 2001, an election was held and a new set of officers was
elected. Soon thereafter, the new officers conducted an audit of the Union funds.
They discovered some irregularly recorded entries, unaccounted expenses and
disbursements, and uncollected loans from the Union funds. The Union notified
respondents Pizarro, Braza, and Castueras of the audit results and asked them to
explain the discrepancies in writing.
Despite their explanations, respondents Pizarro, Braza, and Castueras were
expelled from the Union, and, on October 16, 2001, were furnished individual
letters of expulsion for malversation of Union funds.[6] Attached to the letters

were copies of the Panawagan ng mga Opisyales ng Unyon signed by 37 out of 63


Union members and officers, and a Board of Directors Resolution[7] expelling
them from the Union.

In a letter dated October 18, 2001, the Union, invoking the Security Clause of the
CBA, demanded that the Club dismiss respondents Pizarro, Braza, and Castueras
in view of their expulsion from the Union.The Club required the three
respondents to show cause in writing within 48 hours from notice why they
should not be dismissed. Pizarro and Castueras submitted their respective
written explanations on October 20, 2001, while Braza submitted his explanation
the following day.
During the last week of October 2001, the Clubs general manager called
respondents Pizarro, Braza, and Castueras for an informal conference inquiring
about the charges against them. Said respondents gave their explanation and
asserted that the Union funds allegedly malversed by them were even over the
total amount collected during their tenure as Union officersPhP 120,000 for
Braza, PhP 57,000 for Castueras, and PhP 10,840 for Pizarro, as against the total
collection from April 1996 to December 2001 of only PhP 102,000. They claimed
the charges are baseless. The general manager announced he would conduct a
formal investigation.
Nonetheless, after weighing the verbal and written explanations of the three
respondents, the Club concluded that said respondents failed to refute the
validity of their expulsion from the Union. Thus, it was constrained to terminate
the employment of said respondents. On December 26, 2001, said respondents
received their notices of termination from the Club.

Respondents Pizarro, Braza, and Castueras challenged their dismissal from the
Club in an illegal dismissal complaint. the Labor Arbiter ruled in favor of the
Club, and found that there was justifiable cause in terminating said respondents.
He dismissed the complaint for lack of merit.

On February 21, 2003, respondents Pizarro, Braza, and Castueras filed an Appeal
with the NLRC.
On February 26, 2004, the NLRC rendered a Decision granting the appeal.

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Aggrieved by the Decision and Resolution of the NLRC, the Club filed a Petition
for Certiorari with the Court of Appeals (CA).
The CA Upheld the NLRC Ruling.

ISSUE WON termination or dismissal from employment due to the enforcement


of the union security clause in the CBA is valid.

HELD: YES. In terminating the employment of an employee by enforcing the


union security clause, the employer needs only to determine and prove that: (1)
the union security clause is applicable; (2) the union is requesting for the
enforcement of the union security provision in the CBA; and (3) there is
sufficient evidence to support the unions decision to expel the employee from
the union. These requisites constitute just cause for terminating an employee
based on the CBAs union security provision.
The three respondents were expelled from and by the Union after due
investigation for acts of dishonesty and malversation of Union funds. In
accordance with the CBA, the Union properly requested the Club to enforce the
Union security provision in their CBA and terminate said respondents. Then, in
compliance with the Unions request, the Club reviewed the documents
submitted by the Union, requested said respondents to submit written
explanations, and thereafter afforded them reasonable opportunity to present
their side. After it had determined that there was sufficient evidence that said
respondents malversed Union funds, the Club dismissed them from their
employment conformably with Sec. 4 of the CBA.

In the above case, we pronounced that while the company, under a maintenance
of membership provision of the CBA, is bound to dismiss any employee expelled
by the union for disloyalty upon its written request, this undertaking should not
be done hastily and summarily. The company acts in bad faith in dismissing a
worker without giving him the benefit of a hearing. We cautioned in the same
case that the power to dismiss is a normal prerogative of the employer; however,
this power has a limitation. The employer is bound to exercise caution in
terminating the services of the employees especially so when it is made upon the
request of a labor union pursuant to the CBA. Dismissals must not be arbitrary
and capricious. Due process must be observed in dismissing employees because
the dismissal affects not only their positions but also their means of livelihood.

Employers should respect and protect the rights of their employees, which
include the right to labor.

87. Standard Charter Bank Employees union (UNION) vs Confessor as Sec of


labor (SOLE) and Standard Charter Bank (BANK)

FACTS: In 1990 the Bank and union signed a CBA. Prior to its expiration but
within the 60-days freedom period, the union initiated the negotiations. On Feb
18, 1993 the Union through its president Eddie Divinagracia sent a proposal
covering political and economic provision and included the name of the members
negotiating panel. On Feb 24 the bank responded with its counter proposal on
the non-economic provisions and said that it is in better position to propose it
counter-proposal for the economic provisions after the union presents its
justification and list of negotiating panel. They agreed to set the meeting to settle
the differences.
Before the commencement of the negotiation, Divinagracia suggested to the bank
that the bank lawyers should be excluded from the negotiating, the bank
acceded, meanwhile the bank suggested that Jose P. Umali the president of
National union of Bank employees (NUBE), the federation to which the UNION
was affiliated be excluded in the negotiating panel. However Umali was retained
as a member thereof.

March 12 1993 the day of the negotiations Diokno suggested that the
negotiations be kept a family affair the proposed non-economic benefits were
discussed first but there are still some provisions that the parties cant agree so
the parties agreed to place the notation Deferred/Deadlock

On May 18, 1993 the negotiation for economic union commenced, both parties
presented their proposal, Umali requested the bank to validate the Union
guestimates especially the figures for the rank and file. In succeeding meetings
Umali expressed his mild disappointment for the insufficiency of the banks
counter- proposal. He reminded the bank, how the UNION got what it wanted in
1987 and stated that if need be, the UNION would go through the same route to
get what it wanted.

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Upon the bank insistence, the parties agreed to tackle the economic package item
by item, the bank indicated which provisions it would accept, reject, retain and
agree to discuss but both parties still failed to reach an agreement on some of the
provisions of the CBA. The union declared a deadlock and filled a notice of strike
before the NCMB on june 21 1993. On the other hand the Bank filed a complaint
for ULP and damages before the NLRC alleging that the union violated its duty to
bargain, and demanded sky high economic demands indicative of blue sky
bargaining and that violated its no-strike no lock out clause by filing a notice of
strike before the NCMB and with the act of the union the bank suffered nominal
and actual damages and was forced to litigate and hire the services of a lawyer.
On July 21 1993, the SOLE assumed jurisdiction of the case pursuant to Art
263(g) LC and ordered the bank and Union to execute a CBA incorporating the
economic awards proposed by SOLE. And the ULP case filed by the bank and
union be dismissed on the ground that both parties failed to substantiate their
claim and stated the ULP charges would prosper only if shown to have directly
prejudiced the public interest. The union filed 2 motion for reconsideration but
both was denied

On March 22, 1994 the union and bank signed the CBA the wage increase was
effected and the signing bonus was released, but on April 28, 1994 the union filed
a petition for certiorari under rule 65 contending the following:
1.

2.
3.

The SOLE committed grave abuse of discretion amounting to lack of


jurisdiction when it found out that the BANK did not commit ULP when
it interfered with the UNION choice of negotiator and suggested that that
negotiation be limited as family affair and that damage to public
interest need not be present in order for ULP to prosper
That the SOLE failed to rule on the ULP charges arising from the banks
surface bargaining and contended that the bank merely went through
the motions of collective bargaining without the intent to reach an
agreement and the made bad faith proposals
The union also accused the bank of refusing to disclose material and
necessary date, even after the request to validate the guestimates were
made

In its comment the bank moved for dismissal on the ground that the union is
estopped considering that it signed the CBA and that it was the union who
committed ULP by engaging in blue-sky bargaining and isolated the no-strike- no
lock out clause of the existing CBA

ISSUES: whether or not the contention of the union is with merit


1. Issue on Interference
2. Duty to bargain
3. Failure to furnish information
4. Grave abuse of Discretion
5. Estopped
6. Blue-sky bargaining
HELD: NO.
Interference-The union cited
1.

2.

U.S postal service and Harley Davidson Motor Co. where NLRB held that
upon the employers refusal to engage in negotiations with the union for
CBA when the union include a person not an employee, or one who is a
member or an official of other labor org, such employer is engaged in
ULP
And that in the case of Insular life the court said that the test to
determine whether an employer interfered with and coerced employees
in the exercise of their right to self-organization is whether the employer
has engaged in conduct which it may reasonably said, tends to interfere
with the free exercise of employees right, it is not necessary that there
be direct evidence that any employee was in fact intimidated or coerced
by statements of treats of the employer if there is reasonable inference
that anti-union conduct of the employer does have an adverse effect on
self-organization and collective bargaining.

Court: Art 2 of International Labor Organization Convention NO.87 FREEDOM


OF ASSOCIATION AND PROTECTION OF THE RIGHT TO ORGANIZE which the
Philippines is a signatory provides:
1.

Workers and employers organization shall enjoy adequate protection


against any acts or interference by each other or each others agent or
members in their establishment, functioning or administration

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2.

Labor Relations Case Digest - Atty. Joyrich Golangco

In particular, acts which are designed to promote the establishment of


workers organization under the domination of employer or employers
organization or to support workers organization by financial or other
means, with the object of placing such organization under the control of
employers or employers organization within the meaning of this article

Such ILO convention is incorporated in our labor code in art 243, 248, 249 of
LC

248(a) the labor code considers it ULP when an employer interferes with,
restrain or coerce employees in the exercise of their right to self-organization or
the right to form association. The right to self-organization necessarily includes
the right to collective bargaining. Parenthetically, if an employer interferes with
the selection of negotiators or coerces a union to exclude from its panel a
representative of union it can be inferred that the employer adopted acts that
yield to adverse effects of the free exercise to the right of self-organization and is
considered ULP in LC but, substantial evidence is required to support such claim.
Substantial evidence- is such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion. Such was not present in this case the
circumstances that occurred do not show that the suggestion made by DIOKNO
to exclude Umali is an anti-union conduct, especially considering that such was
undertaken previous to the commencement of the negotiation and
simultaneously with DIVINAGRACIAs suggestion that the bank lawyers be
excluded and also the records show that the negotiations pushed through despite
the inclusion of UMALI
Duty to Bargain- Surface bargaining

Surface Bargaining is defined as going through the motions of negotiating


without any legal intent to reach an agreement. It involves the question of
whether an employers conduct demonstrate an unwillingness to bargain in good
faith or is merely hard bargaining
The minutes of the meetings do not show that the Bank has intention of violating
its duty to bargain. Records shows that after the union sent its proposal to the
bank on Feb 17, the latter replied with its counter proposal on Feb 24 and
thereafter meeting were set for the settlement of their differences and that both

exchanged economic and non-economic proposals and counter proposals. Also it


was shown that the bank did not refuse to bargain collectively because they
accepted some of the demands while refused the others and even leaving open
other demands for future discussion and those demands where discussed in a
meeting called by the respondent themselves
It is to be emphasized that the duty to bargain does not compel either party to
agree to a proposal or require the making of a concession hence the parties
failure to agree did not amount to ULP.

Failure to furnish Information

While the refusal to furnish requested information is in itself ULP. The request
should be in writing, in which the union failed. Art 242 (c) Rights of legitimate
Labor Organization - To be furnished by the employer, upon written request,
with its annual audited financial statements, including the balance sheet and the
profit and loss statement, within thirty (30) calendar days from the date of
receipt of the request, after the union has been duly recognized by the employer
or certified as the sole and exclusive bargaining representative of the employees
in the bargaining unit, or within sixty (60) calendar days before the expiration of
the existing collective bargaining agreement, or during the collective bargaining
negotiation

The union, did not as the LC requires, send a written request for the issuance of a
copy of the data about the banks rank and file employees. Moreover, as alleged
by the union. The fact that the bank made use of the aforesaid guestimates,
amounts to a validation of the data it had used in its presentations.
Grave abuse of Discretion

No, certiorari may be availed of when a tribunal, board or officer exercising


judicial or QJ function has acted without or in excess of jurisdiction and there is
no appeal or any plain, speedy and adequate remedy in the ordinary course of
law. Grave abuse of discretion implies such capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction, or where the power is exercised
in an arbitrary or despotic manner by reason of passion or personal hostility
which must be so patent and gross as to amount to an invasion of positive duty

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or to a virtual refusal to perform the duty enjoined or to act all in contemplation


of the law. Mere abuse of discretion is not enough

While it is true that a showing of prejudice to public interest is not a requisite for
ULP to prosper, it cannot be said that the SOLE acted in capricious and whimsical
exercise of judgment, equivalent to lack of jurisdiction or excess of.
Estoppel

The approval of the CBA and the release of the signing bonus do not necessarily
mean that the UNION waived its ULP claim against the bank. After all, the
conclusions of the CBA was included in the order of the SOLE, while the signing
bonus was included in the CBA itself, Moreover the Union twice filed an MR
Blue-Sky Bargainin

The Union is not guilty of Blue-sky bargaining or making exaggerated or


unreasonable proposals. The minutes of the meeting shows that the union based
its economic proposals on data of rank and file employees and the prevailing
economic benefits received by bank employees from other foreign banks doing
business in the Philippines (same as Standard charter) and other branches of the
bank in the asian region.
88. GMC v. CA

FACTS: In its two plants located at Cebu City and Lapu-Lapu City, petitioner GMC
employed 190 workers. They were all members of private respondent General
Milling Corporation Independent Labor Union. On April 28, 1989, GMC and the
union concluded a CBA which included the issue of representation effective for a
term of three years. The day before the expiration of the CBA, the union sent GMC
a proposed CBA, with a request that a counter-proposal be submitted within 10
days. However, GMC had received collective and individual letters from workers
who stated that they had withdrawn from their union membership, on grounds
of religious affiliation and personal differences. Believing that the union no
longer had standing to negotiate a CBA, GMC did not send any counter-proposal.
GMC wrote a letter to the unions officers, stating that it felt there was no
basis to negotiate with a union which no longer existed. In answer, the union
officers wrote a letter disclaiming any massive disaffiliation or resignation from

the union and submitted a manifesto, signed by its members, stating that they
had not withdrawn from the union.

Then GMC dismissed Marcia Tumbiga, a union member, on the ground of


incompetence. The union protested and requested GMC to submit the matter to
the grievance procedure provided in the CBA. But GMC refused. Thus, the union
filed a complaint against GMC with the NLRC, Arbitration Division, Cebu City. The
complaint alleged ULP on the part of GMC for: (1) refusal to bargain collectively;
(2) interference with the right to self-organization; and (3) discrimination.

LA dismissed the case with the recommendation that a petition for


certification election be held to determine if the union still enjoyed the support of
the workers. However, NLRC ruled in favor of the Union but with respect to the
unions claim of discrimination, the NLRC found the claim unsupported by
substantial evidence.
ISSUES: WON GMC committed ULP. YES!

HELD: 1. Refusal to Bargain collectively: It was obvious that GMC had no valid
reason to refuse to negotiate in good faith with the union. For refusing to send a
counter-proposal to the union and to bargain anew on the economic terms of the
CBA, the company committed an unfair labor practice under Article 248 of the
Labor Code by violating the duty to bargain collectively as prescribed by this
Code; Under the LC, the duty to bargain collectively means the performance of a
mutual obligation to meet and convene promptly and expeditiously in good faith
for the purpose of negotiating an agreement
GMCs failure to make a timely reply to the proposals presented by the
union is indicative of its utter lack of interest in bargaining with the union. Its
excuse that it felt the union no longer represented the workers, was mainly
dilatory as it turned out to be utterly baseless.
Its refusal to make a counter-proposal to the unions proposal for CBA
negotiation is an indication of its bad faith. Where the employer did not even
bother to submit an answer to the bargaining proposals of the union, there is a
clear evasion of the duty to bargain collectively, making it liable for ULP.
2. Interference: The letters by 13 union members signifying their resignation
from the union clearly indicated that GMC exerted pressure on its
employees. The records show that GMC presented these letters to prove that the

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union no longer enjoyed the support of the workers. The fact that the
resignations of the union members occurred during the pendency of the case
before the labor arbiter shows GMCs desperate attempts to cast doubt on the
legitimate status of the union. The ill-timed letters of resignation from the union
members indicate that GMC had interfered with the right of its employees to selforganization.
89. Hacienda Fatima vs NFSW (Natl Federation of Sugar Cane WorkersFood and General Trade)

FACTS: Petitioner did not look with favor those workers having organized
themselves into a union. Thus, when NSFW was certified as the collective
bargaining representative in the certification elections, petitioner under the
pretext that the result was on appeal, refused to sit down with the union for the
purpose of entering into a collective bargaining agreement. Moreover, the
workers including respondents herein were not given work for more than one
month. In protest, NSFW staged a strike which was however settled upon the
signing of a Memorandum of Agreement.

However, alleging that NSFW failed to load the fifteen wagons as stated
in the Memorandum of Agreement petitioner reneged on its commitment to sit
down and bargain collectively. Instead, petitioner employed all means including
the use of private armed guards to prevent the organizers from entering the
premises. Petitioner then did not give respondents any more work assignments,
which prompted the latter to stage a strike which was also grounded on the
dismissal of union officers and members. But due to the conciliation efforts by
the DOLE, another Memorandum of Agreement was signed by the parties.
Pursuant thereto, the parties subsequently met. When petitioners again reneged
on its commitment, respondents filed the present complaint. Petitioner on its
part alleged that the respondents refused to work and they are being choosy in
the kind of work they will perform. Labor Arbiter held that petitioner was not
guilty of unfair labor practice. NLRC reversed the decision, finding the petitioner
guilty of ULP which was affirmed by CA.
ISSUES: Whether or not petitioner is guilty of Unfair labor Practice?

HELD:YES. Indeed, from respondents refusal to bargain, to their acts of


economic inducements resulting in the promotion of those who withdrew from
the union, the use of armed guards to prevent the organizers to come in, and the
dismissal of union officials and members, one cannot but conclude that
respondents did not want a union in their haciendaa clear interference in the
right of the workers to self-organization.
90. St. John Colleges, Inc., vs. St John Academy Faculty Employees and
Employees Union

FACTS: The Collective Bargaining Agreement (CBA) between SJCI (petitioner)


and the Union was set to expire on May 31, 1997. During the ensuing collective
bargaining negotiations, SJCI rejected all the proposals of the Union for an
increase in workers benefits. This resulted to a bargaining deadlock which led
to the holding of a valid strike by the Union on November 10, 1997. In order to
end the strike, on November 27, 1997, SJCI and the Union, through the efforts of
the National Conciliation and Mediation Board (NCMB), agreed to refer the labor
dispute to the Secretary of Labor and Employment (SOLE) for assumption of
jurisdiction. Both parties came to some agreements and after which, the strike
ended and classes resumed. Subsequently, the SOLE issued an Order dated
January 19, 1998 assuming jurisdiction over the labor dispute pursuant to Article
263 of the Labor Code. The parties were required to submit their respective
position papers within ten (10) days from receipt of said Order. Pending
resolution of the labor dispute before the SOLE, the Board of Directors of SJCI
approved on February 22, 1998 a resolution recommending the closure of the
high school which was approved by the stockholders on even date. Thereafter,
SJCI informed the Department of Labor and Employment (DOLE), Department of
Education, Culture and Sports (DECS), parents, students and the Union of the
impending closure of the high school which took effect on March 31, 1998.
Subsequently, some teaching and non-teaching personnel of the high school
agreed to the closure. On April 2, 1998, SJCI informed the DOLE that as of March
31, 1998, 51 employees had received their separation compensation package
while 25 employees refused to accept the same. On May 4, 1998, the
aforementioned 25 employees conducted a protest action within the perimeter
of the high school. The Union filed a notice of strike with the NCMB only on May
7, 1998. SJCI filed a petition to declare the strike illegal before the NLRC. It

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claimed that the strike was conducted in violation of the procedural


requirements for holding a valid strike under the strike under the Labor Code.
The 25 employees filed a complaint for unfair labor practice (ULP), illegal
dismissal and non-payment of monetary benefits against SJCI before the NLRC.
The Union members alleged that the closure of the high school was done in bad
faith in order to get rid of the Union and render useless any decision of the SOLE
on the CBA deadlocked issues. These two cases were then consolidated. On
January 8, 1999, Labor Arbiter Antonio R. Macam rendered a Decision
dismissing the Union's complaint for ULP and illegal dismissal while
granting SJCI's petition to declare the strike illegal coupled with a
declaration of loss of employment status of the 25 Union members involved
in the strike. Meanwhile, in the proceedings before the SOLE, the Union filed a
manifestation to maintain the status quo on March 30, 1998 praying that SJCI be
enjoined from closing the high school. It claimed that the decision of SJCI to close
the high school violated the SOLE's assumption order and the agreement of the
parties not to take any retaliatory action against the other. After the favorable
decision of the Labor Arbiter, SJCI resolved to reopen the high school for school
year 1999-2000. However, it did not restore the high school teaching and nonteaching employees it earlier terminated. That same school year SJCI opened an
elementary and college department. On July 23, 1999, the SOLE denied SJCI's
motions to dismiss and certified the CBA deadlock case to the NLRC. It ordered
the consolidation of the CBA deadlock case with the ULP, illegal dismissal, and
illegal strike cases which were then pending appeal before the NLRC. On June
28, 2002, the NLRC rendered judgment reversing the decision of the Labor
Arbiter. It found SJCI guilty of ULP and illegal dismissal and ordered it to
reinstate the 25 employees to their former positions without loss of
seniority rights and other benefits, and with full backwages. It also required
SJCI to pay moral and exemplary damages, attorney's fees, and two (2) months
summer/vacation pay. Moreover, it ruled that the mass actions conducted by the
25 employees on May 4, 1998 could not be considered as a strike since, by then,
the employer-employee relationship had already been terminated due to the
closure of the high school. Finally, it dismissed, without prejudice, the certified
case on the CBA deadlocked issues for failure of the parties to substantiate their
respective positions. The Court of Appeals affirmed the decision of the NLRC.
Under Article 283 of the Labor Code, the following requisites must concur for a
valid closure of the business: (1) serving a written notice on the workers at least

one (1) month before the intended date thereof; (2) serving a notice with the
DOLE one month before the taking effect of the closure; (3) payment of
separation pay equivalent to one (1) month or at least one half (1/2) month pay
for every year of service, whichever is higher, with a fraction of at least six (6)
months to be considered as a whole year; and (4) cessation of the operation must
be bona fide. 12 It is not disputed that the first two requisites were satisfied. The
third requisite would have been satisfied were it not for the refusal of the herein
private respondents to accept the separation compensation package. The
instant case, thus, revolves around the fourth requisite, i.e., whether SJCI
closed the high school in good faith.
ISSUES: W/N the closure of the high school was done in good faith and is not
liable for ULP and illegal dismissal.

HELD: NO. Whether or not the closure of the high school was done in good faith
is a question of fact and is not reviewable by this Court in a petition for review on
certiorari saves for exceptional circumstances. In fine, the finding of the NLRC,
which was affirmed by the Court of Appeals, that SJCI closed the high school in
bad faith is supported by substantial evidence and is, thus, binding on this Court.
Consequently, SJCI is liable for ULP and illegal dismissal. The determination of
whether SJCI acted in bad faith depends on the particular facts as established by
the evidence on record. Bad faith is, after all, an inference which must be drawn
from the peculiar circumstances of a case. The two decisive factors in
determining whether SJCI acted in bad faith are (1) the timing of, and reasons for
the closure of the high school, and (2) the timing of, and the reasons for the
subsequent opening of a college and elementary department, and, ultimately, the
reopening of the high school department by SJCI after only one year from its
closure. After the SOLE assumed jurisdiction, it required the parties to submit
their respective position papers. However, instead of filing its position paper,
SJCI closed its high school, allegedly because of the "irreconcilable differences
between the school management and the Academy's Union particularly the
safety of our students and the financial aspect of the ongoing CBA negotiations."
Thereafter, SJCI moved to dismiss the pending labor dispute with the SOLE
contending that it had become moot because of the closure. Nevertheless, a year
after said closure, SJCI reopened its high school and did not rehire the previously
terminated employees. Under these circumstances, it is not difficult to

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discern that the closure was done to defeat the parties' agreement to refer
the labor dispute to the SOLE; to unilaterally end the bargaining deadlock;
to render nugatory any decision of the SOLE; and to circumvent the Union's
right to collective bargaining and its members' right to security of tenure.
By admitting that the closure was due to irreconcilable differences
between the Union and school management, specifically, the financial
aspect of the ongoing CBA negotiations, SJCI in effect admitted that it
wanted to end the bargaining deadlock and eliminate the problem of
dealing with the demands of the Union. This is precisely what the Labor
Code abhors and punishes as unfair labor practice since the net effect is to
defeat the Union's right to collective bargaining. With respect to SJCI's claim
that during the 1997 CBA negotiations the Union made illegal demands because
they exceeded the 70% limitation set by R.A. No. 6728, it is important to note
that the alleged illegality or excessiveness of the Union's demands were the
issues to be resolved by the SOLE after the parties agreed to refer the said labor
dispute to the latter for assumption of jurisdiction. As previously mentioned, the
SOLE certified the case to the NLRC, which on June 28, 2002, rendered a decision
finding that there was insufficient evidence to determine the reasonableness of
the Union's proposals. The
NLRC found that SJCI failed to establish that the Union's demands were illegal or
excessive. A review of the records clearly shows that the Union submitted a
position paper detailing its demands in actual monetary terms. However, SJCI
failed to establish how and why these demands were in excess of the limitation
set by R.A. 6728. Up to this point in the proceedings, it has merely relied on its
self-serving statements that the Union's demands were illegal and excessive.
There is no basis, therefore, to hold that the Union ever made illegal or excessive
demands. At any rate, even assuming that the Union's demands were illegal or
excessive, the important and crucial point is that these alleged illegal or excessive
demands did not justify the closure of the high school and do not, in any way,
establish SJCI's good faith. The employer cannot unilaterally close its
establishment on the pretext that the demands of its employees are excessive.
Furthermore, if SJCI was after the interests of the students, then it should not
have closed the school because the parents and the students were vehemently
opposed to the same. To recapitulate, there is insufficient evidence to hold that
the safety and well-being of the students were endangered and/or compromised,
and that the Union was responsible therefor. Even assuming arguendo that the

students' safety and well-being were jeopardized by the said protest actions, the
alleged threat to the students' safety and well-being had long ceased by the time
the high school was closed. Moreover, the parents were vehemently opposed to
the closure of the school because there was no basis to claim that the students'
safety was at risk. Taken together, these circumstances lead to the inescapable
conclusion that SJCI merely used the alleged safety and well-being of the students
as a subterfuge to justify its actions. With respect to the mass action of the Union
members on May 4, 1998, I agree with the majority that, as ruled by the NLRC
and the CA, the Union members did not conduct an illegal strike, since by then,
the employee-employer relationship had ceased. Based on the records, petitioner
admitted that the school did not really operate or accept enrollees for the SY
1998-1999; 39 neither was it shown that it possessed the requisite government
permits when the alleged strike was held. Consequently, the 25 Union members
are entitled to the same separation package, i.e., separation pay plus two-month
summer/vacation pay and 13th month pay, given to other dismissed employees.
Although there is no specific law or rule as regards the payment of
summer/vacation pay, justice and equity demands that the Union members who
had honestly fought for their cause must be granted equal privileges given to
those who no longer questioned the validity of the school's closure.
91. Central Azucarera De Bias Employees Union NFL v. Central Azucarera
De Bias Inc

FACTS: Respondent Central Azucarera De Bais, Inc. (CAB) is a corporation duly


organized and existing under the laws of the Philippines while CABEU-NFL is a
duly registered labor union and a certified bargaining agent of the CAB rank-andfile employees, represented by its President, Pablito Saguran
On January 19, 2004, CABEU-NFL sent CAB a proposed Collective Bargaining
Agreement (CBA) seeking increases in the daily wage and vacation and sick leave
benefits of the monthly employees and the grant of leave benefits and 13th
month pay to seasonal workers. CAB did not agree to grant additional and
separate Christmas bonuses.
On May 21, 2004, CAB received an Amended Union Proposal sent by CABEU-NFL
r however, CAB maintained its position on the matter. Thus, the collective
bargaining negotiations resulted in a deadlock.

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CABEU-NFL filed a Notice of Strike with the National Conciliation and Mediation
Board (NCMB). The NCMB then assumed conciliatory-mediation jurisdiction and
summoned the parties to conciliation conferences.
In its June 2, 2005 Letter sent to CAB, CABEU-NFL requested copies of CABs
annual financial statements from 2001 to 2004 and asked for the resumption of
conciliation meetings.
CAB replied through its June 14, 2005 Letter to NCMB Regional Director of
Dumaguete City Isidro Cepeda, which reads:

At the outset, it observed that the letter signed by Mr. Pablito Saguran who is no
longer an employee of the Central for he was one of those lawfully terminated due
to an authorized cause x x
More importantly, the declared purpose of the requested conciliation meeting has
already been rendered moot and academic because:
(1) the Union which Mr. Saguran purportedly represents has already lost its
majority status by reason of the disauthorization and withdrawal of support; and
(2) the workers themselves, acting as principal, after disauthorizing the previous
agent CABEU-NFL have organized themselves into a new Union known as Central
Azucarera de Bais Employees Labor Association (CABELA)
Reacting from the letter-response of CAB, CABEU-NFL filed a Complaint for
Unfair Labor Practice for the formers refusal to bargain with it.

LA:In the case at bar, the record shows that respondent CAB replied to the
complainant Unions CBA proposals with its own set of counterproposals. Record
further shows that respondent CAB participated in a series of CBA negotiations
conducted by the parties at the plant level as well as in the
conciliation/mediation proceedings conducted by the NCMB. At this juncture it
cannot be said, therefore, that respondent CAB refused to negotiate or that it
violated its duty to bargain collectively. We do not agree that respondent CAB
committed an unfair labor practice act in questioning the capacity of Mr. Pablito
Saguran to represent complainant union in the CBA negotiations because he was

no longer an employee of respondent.

NLRC: On appeal, the NLRC in its July 18, 2007 Decision reversed the LAs
decision and found CAB guilty of unfair labor practice. Respondents failure to act
on the request of the complainant to resume negotiation for no valid reason
constitutes unfair labor practice. Consequently, the proposed CBA as amended
should be imposed to respondent.

CA: Reversed the NLRC's decision. In the case at bar, private respondent CABEUNFL failed in its burden of proof to present substantial evidence to support the
allegation of unfair labor practice. The assailed Decision and Resolution of public
respondent referred merely to two (2) circumstances which allegedly support
the conclusion that the presumption of good faith had been rebutted and that
bad faith was extant in petitioners actions. To recall, these circumstances are: (a)
the execution of a supposed collective bargaining agreement with another labor
union, CABELA; and (b) CABs sending of the letter dated June 14, 2005 to NCMB
seeking to call off the collective bargaining negotiations. These, however, are not
enough to ascribe the very serious offense of unfair labor practice upon
petitioner.
ISSUES: Whether or not respondent CAB was guilty of acts constituting unfair
labor practice by refusing to bargain collectively.

HELD: NO, The concept of unfair labor practice is provided in Article 247 of the
Labor Code which states:

Article 247. Concept of Unfair Labor Practice and Procedure for Prosecution
thereof. -- Unfair labor practices violate the constitutional right of workers and
employees to self-organization, are inimical to the legitimate interests of both labor
and management, including their right to bargain collectively and otherwise deal
with each other in an atmosphere of freedom and mutual respect, disrupt industrial
peace and hinder the promotion of healthy and stable labor-management relations.

The Labor Code, likewise, enumerates the acts constituting unfair labor practices of
the employer, thus:

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Article 248. Unfair Labor Practices of Employers.It shall be unlawful for an
employer to commit any of the following unfair labor practice:
xxx

xxx

xxx

UNION OF FILIPRO EMPLOYEES DRUG, FOOD AND ALLIED INDUSTRIES


UNIONS KILUSANG MAYO UNO (UFE-DFA-KMU), petitioner, vs. NESTL
PHILIPPINES, INCORPORATED, respondent.

[G.R. Nos. 158944-45. March 3, 2008.]

(g) To violate the duty to bargain collectively as prescribed by this Code.


For a charge of unfair labor practice to prosper, it must be shown that CAB was
motivated by ill will, bad faith, or fraud, or was oppressive to labor, or done in a
manner contrary to morals, good customs, or public policy, and, of course, that
social humiliation, wounded feelings or grave anxiety resulted, in suspending
negotiations with CABEU-NFL. Notably, CAB believed that CABEU-NFL was no
longer the representative of the workers. It just wanted to foster industrial peace
by bowing to the wishes of the overwhelming majority of its rank and file
workers and by negotiating and concluding in good faith a CBA with CABELA.
Such actions of CAB are nowhere tantamount to anti-unionism, the evil sought to
be punished in cases of unfair labor practices.
Furthermore, basic is the principle that good faith is presumed and he who
alleges bad faith has the duty to prove the same. By imputing bad faith to the
actuations of CAB, CABEU-NFL has the burden of proof to present substantial
evidence to support the allegation of unfair labor practice. Apparently, CABEUNFL refers only to the circumstances mentioned in the letter-response, namely,
the execution of the supposed CBA between CAB and CABELA and the request to
suspend the negotiations, to conclude that bad faith attended CABs actions. The
Court is of the view that CABEU-NFL, in simply relying on the said letterresponse, failed to substantiate its claim of unfair labor practice to rebut the
presumption of good faith.
Moreover, as correctly determined by the LA, the filing of the complaint for
unfair labor practice was premature inasmuch as the issue of collective
bargaining is still pending before the NCMB.
92. UFE-DFA-KMU VS NESTLE

[G.R. Nos. 158930-31. March 3, 2008.]

NESTL PHILIPPINES, INCORPORATED, petitioner, vs. UNION OF FILIPRO


EMPLOYEES DRUG, FOOD AND ALLIED INDUSTRIES UNIONS KILUSANG
MAYO UNO (UFE-DFA-KMU), respondent.

FACTS: UFE-DFA-KMU was the sole and exclusive bargaining agent of the rankand-file employees of Nestl. As the existing (CBA) between Nestl and UFE-DFAKMU was about to end, Presidents of UFE-DFA-KMU informed Nestl of their
intent to "open [our] new Collective Bargaining Negotiation. Nestl informed
them that it was also preparing its own counter-proposal and proposed ground
rules to govern the impending conduct of the CBA negotiations.
In another letter to the UFE-DFA-KMU, Nestl reiterated its stance that
"unilateral grants, one-time company grants, company-initiated policies and
programs, which include, but are not limited to the Retirement Plan, Incidental
Straight Duty Pay and Calling Pay Premium, are by their very nature not proper
subjects of CBA negotiations and therefore shall be excluded therefrom."

Nestl requested the (NCMB) to conduct preventive mediation proceedings


between it and UFE-DFA-KMU owing to an alleged impasse in said dialogue.

Conciliation proceedings proved ineffective. UFE-DFA-KMU filed a Notice of


Strike with the NCMB, complaining of a bargaining deadlock pertaining to
economic issues. Another Notice of Strike was filed by the union, this time
predicated on Nestl's alleged unfair labor practices, that is, bargaining in bad
faith by setting pre-conditions in the ground rules and/or refusing to include the
issue of the Retirement Plan in the CBA negotiations.

Prior to holding the strike, Nestl filed with the DOLE a Petition for Assumption
of Jurisdiction, praying for the Secretary of the DOLE to assume jurisdiction over
the current labor dispute in order to effectively enjoin any impending strike by
the members of the UFE-DFA-KMU.

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The Secretary issued an Order assuming jurisdiction over the subject labor
dispute. The fallo of said Order states that:

and the evidence on record. The union posited that the Sec. "could only assume
jurisdiction over the issues mentioned in the notice of strike subject of the
current dispute," and that the Amended Notice of Strike it filed did not cite, as
one of the grounds, the CBA deadlock.

The parties are further directed to meet and convene for the discussion of the
union proposals and company counter-proposals before the (NCMB) who is
hereby designated as the delegate/facilitator of this Office for this purpose. xxx If
no settlement of all the issues is reached, this Office shall thereafter define the
outstanding issues and order the filing of position papers for a ruling on the
merits.

On March 8, 2002, the Sec. denied the motion for reconsideration of UFE-DFAKMU.

Accordingly, any strike or lockout is hereby enjoined. The parties are directed to
cease and desist from committing any act that might lead to the further
deterioration of the current labor relations situation.

UFE-DFA-KMU sought reconsideration of the above but nonetheless moved for


additional time to file its position paper as directed by the Assumption of
Jurisdiction Order.
The Sec. denied said motion for reconsideration.

Despite the order, the employee members of UFE-DFA-KMU at Nestl's Cabuyao


Plant went on strike.

The Sec. directed: (1) the members of UFE-DFA-KMU to return-to-work; (2)


Nestl to accept back all returning workers; (3) both parties to cease and desist
from committing acts inimical to the on-going conciliation proceedings leading to
the further deterioration of the situation; and (4) the submission of their
respective position papers within ten (10) days from receipt thereof. The
members of UFE-DFA-KMU continued with their strike, thus, prompting the Sec.
to seek the assistance of the (PNP) for the enforcement of said order.
Nestl and UFE-DFA-KMU filed their respective position papers.

On 11 February 2002, the Sec. allowed UFE-DFA-KMU the chance to tender its
stand on the other issues raised by Nestl but not covered by its initial position
paper by way of a Supplemental Position Paper.

UFE-DFA-KMU filed several pleadings, one of which was a Manifestation with


Motion for Reconsideration of the Order dated February 11, 2002 assailing the
Order of February 11, 2002 for supposedly being contrary to law, jurisprudence

UFE-DFA-KMU filed a Petition for Certiorari before the CA, alleging that the Sec.
committed grave abuse of discretion amounting to lack or excess of jurisdiction
when she issued the Orders of 11 February 2002 and 8 March 2002.
Acting Secretary of the DOLE, Hon. Arturo D. Brion, came out with an Order
dated 02 April 2002, ruling that:
xxx

b. the Union's charge of unfair labor practice against the Company is hereby
dismissed for lack of merit;

c. the parties are directed to secure the best applicable terms of the recently
concluded CBSs between Nestl Phils. Inc. and it eight (8) other bargaining units,
and to adopt these as the terms and conditions of the Nestl Cabuyao Plant CBA;
xxx

f. the parties shall execute their CBA within thirty (30) days from receipt of this
Order, furnishing this Office a copy of the signed Agreement;
xxx

UFE-DFA-KMU moved to reconsider the aforequoted ruling, but such was


subsequently denied on May 6, 2002.

For the second time, UFE-DFA-KMU went to the CA via another Petition for
Certiorari seeking to annul the Orders of 02 April 2002 and 06 May 2002 of the
Secretary of the DOLE, having been issued in grave abuse of discretion
amounting to lack or excess of jurisdiction.

The appellate court promulgated its Decision on the twin petitions for certiorari,
ruling entirely in favor of UFE-DFA-KMU.

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HELD:

Both parties appealed. Nestl essentially assailed that part of the decision finding
the DOLE Secretary to have gravely abused her discretion amounting to lack or
excess of jurisdiction when she ruled that the Retirement Plan was not a valid
issue to be tackled during the CBA negotiations; UFE-DFA-KMU, in contrast,
questioned the appellate court's decision finding Nestl free and clear of any
unfair labor practice.
The motions for reconsideration of both parties were denied.UFE-DFA-KMU and
Nestl separately filed the instant Petitions for Review on Certiorari under Rule
45 of the Rules of Court.
This Court resolved to consolidate the two petitions.

This Court promulgated on 22 August 2006 its Decision, now subject of UFEDFA-KMU's Motion for Partial Reconsideration and Nestl's Motion for
Clarification.

In its Motion for Partial Reconsideration, UFE-DFA-KMU would have this Court
address and discuss anew points or arguments that have been passed upon.
Firstly, it questions this Court's finding that Nestl was not guilty of unfair labor
practice. Second, is the question of whether or not the DOLE Secretary can take
cognizance of matters beyond the amended Notice of Strike.

As to Nestl's prayer for clarification, the corporation seeks elucidation


respecting the dispositive part of this Court's Decision directing herein parties to
resume negotiations on the retirement compensation package of the concerned
employees. It posits that "[i]n directing the parties to negotiate the Retirement
Plan, the Honorable Court . . . might have overlooked the fact that here, the
Secretary of Labor had already assumed jurisdiction over the entire 2001-2004
CBA controversy . . . ."
ISSUES: 1. Whether or not Nestle was guilty of any unfair labor practice.

2. Whether or not the DOLE Secretary can take cognizance of matters beyond the
amended Notice of Strike.

1. No. The duty to bargain collectively is mandated by Articles 252 and 253 of the
Labor Code, as amended. The purpose of collective bargaining is the reaching of
an agreement resulting in a contract binding on the parties; but the failure to
reach an agreement after negotiations have continued for a reasonable period
does not establish a lack of good faith. The statutes invite and contemplate a
collective bargaining contract, but they do not compel one. There is no per se test
of good faith in bargaining. Good faith or bad faith is an inference to be drawn
from the facts.
For a charge of unfair labor practice to prosper, it must be shown that Nestl was
motivated by ill will, "bad faith, or fraud, or was oppressive to labor, or done in a
manner contrary to morals, good customs, or public policy, and, of course, that
social humiliation, wounded feelings, or grave anxiety resulted . . ." in disclaiming
unilateral grants as proper subjects in their collective bargaining negotiations.

Herein, the union merely bases its claim of refusal to bargain on a letter written
by Nestl where the latter laid down its position that "unilateral grants, one-time
company grants, company-initiated policies and programs, which include, but
are not limited to the Retirement Plan, Incidental Straight Duty Pay and Calling
Pay Premium, are by their very nature not proper subjects of CBA negotiations
and therefore shall be excluded therefrom." Said letter is not tantamount to
refusal to bargain. Nestl's desire to settle the dispute and proceed with the
negotiation being evident in its cry for compulsory arbitration is proof enough of
its exertion of reasonable effort at good-faith bargaining.

Nestle never refused to bargain collectively with UFE-DFA-KMU. An employer's


steadfast insistence to exclude a particular substantive provision is no different
from a bargaining representative's perseverance to include one that they deem
of absolute necessity.
The concept of "unfair labor practice" is defined by the Labor Code under Art.
247.
The same code likewise provides the acts constituting unfair labor practices
committed by employers under Art. 248.

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Nestl is accused of violating its duty to bargain collectively when it purportedly


imposed a pre-condition to its agreement to discuss and engage in collective
bargaining negotiations with UFE-DFA-KMU.
A meticulous review of the record and pleadings of the cases at bar shows that, of
the two notices of strike filed by UFE-DFA-KMU before the NCMB, it was only on
the second that the ground of unfair labor practice was alleged. The Notice of
Strike merely contained a general allegation that Nestl committed unfair labor
practice. In contrast, Nestl, in its Position Paper, did not confine itself to the
issue of the non-inclusion of the Retirement Plan but extensively discussed its
stance on other economic matters pertaining to the CBA. It is UFE-DFA-KMU,
therefore, who had the burden of proof to present substantial evidence to
support the allegation of unfair labor practice.
Under Rule XIII, Sec. 4, Book V of the Implementing Rules of the Labor Code:

. . . . In cases of unfair labor practices, the notice of strike shall as far as


practicable, state the acts complained of and the efforts to resolve the dispute
amicably."

In the case at bar, except for the assertion put forth by UFE-DFA-KMU, neither
the second Notice of Strike nor the records of these cases substantiate a finding
of unfair labor practice.

The rule is that good faith is always presumed. As long as the company's exercise
of the same is in good faith to advance its interest and not for purpose of
defeating or circumventing the rights of employees under the law or a valid
agreement, such exercise will be upheld.
2. Yes. This Court is not convinced by the argument raised by UFE-DFA-KMU that
the DOLE Secretary should not have gone beyond the disagreement on the
ground rules of the CBA negotiations. The union doggedly asserts that the entire
labor dispute between herein parties concerns only the ground rules.
It was UFE-DFA-KMU which first alleged a bargaining deadlock as the basis for
the filing of its Notice of Strike; and at the time of the filing of the first Notice of

Strike, several conciliation conferences had already been undertaken where both
parties had already exchanged with each other their respective CBA proposals.

The Secretary of the DOLE simply relied on the Notices of Strike that were filed
by UFE-DFA-KMU as stated in her Order of 08 March 2002.
The second Notice of Strike is dated November 7, 2001 and the cited ground is
like quoted verbatim below:
"B. Unfair Labor Practices (specify)
Bargaining in bad faith

Setting pre-condition in the ground rules (Retirement issue)"

Nowhere in the second Notice of Strike is it indicated that this Notice is an


amendment to and took the place of the first Notice of Strike.

Had the parties not been at the stage where the substantive provisions of the
proposed CBA had been put in issue, the union would not have based thereon its
initial notice to strike. This Court maintains its original position in the Decision
that, based on the Notices of Strike filed by UFE-DFA-KMU, the Secretary of the
DOLE rightly decided on matters of substance. That the union later on changed
its mind is of no moment because to give premium to such would make the
legally mandated discretionary power of the Dole Secretary subservient to the
whims of the parties.
WHEREFORE, premises considered, the basic issues of the case having been
passed upon and there being no new arguments availing, the Motion for Partial
Reconsideration is hereby DENIED WITH FINALITY for lack of merit.
93. MALAYANG MANGGAGAWA vs. NLRC (Aug. 28, 2013)

FACTS:

Petitioner and Nagkakaisang Lakas ng Manggagawa sa Stayfast (NLMSOlalia) sought to be the exclusive bargaining agent of the employees of
respondent company, Stayfast Philippines, Inc.

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A certification election was conductedPetitioner garnered 109 votes


while NLMS-Olalia received112 votes. The Med-Arbiter who supervised the cert
election issued an order certifying NLMS-Olalia as the sole and exclusive
bargaining agent of all rank and file employees of Stayfast.

Petitioner appealed the Order to the Secretary of Labor, who initially set
aside the Order and called for run-off election between petitioner and NLMSOlalia.

However, on motion of NLMS-Olalia, the Secretary of Labor restored the


Med-Arbiters Order.

NLMS-Olalia demanded to collectively bargain with Stayfast, which


rejected the same insisting that it would negotiate a collective bargaining
agreement only with whichever union is finally certified as the sole and exclusive
bargaining agent of the workers. Nevertheless, NLMS-Olalia went on strike until
it was temporarily restrained eight days later.

Subsequently, petitioner filed its own notice of strike in the NCMB.


Respondent company opposed petitioners move and filed a motion to dismiss on
the ground that petitioner was not the certified bargaining agent and therefore
lacked personality to file a notice of strike.

Thereafter, the parties were able to make concessions during the


conciliation-mediation stage in the NCMB which led petitioner to withdraw its
notice of strike.

However, petitioners members staged a "sit-down strike" to dramatize


their demand for a fair and equal treatment as Stayfast allegedly continued to
discriminate against them. Stayfast issued a memorandum requiring the alleged
participants in the "sit-down strike" to explain why they should not be
terminated or suspended from work. As no one complied with the memorandum,
respondent company promptly terminated the service of the participants in the
"sit-down strike"

Consequently, petitioner staged a strike and filed a complaint for unfair


labor practice, union busting and illegal lockout against respondent company and
its General Manager, Maria Almeida, in the NLRC
Petitioners contention: Respondents had repeatedly committed acts of
discrimination, such as the denial of the use of the company canteen for

purposes of conducting a strike vote, the constant denial of applications of


petitioners members for leave to attend hearings in relation to certain labor
cases and the suspension of petitioners president for being absent due to
attendance in hearings of labor cases involving petitioners members.
Respondents contention: Petitioner lacked legal authority to go on strike since it
is a minority union. As petitioner withdrew its notice of strike during the
proceedings in the NCMB, the strike conducted by petitioner was illegal as it
constituted a wildcat strike and later became a full-blown strike. Petitioner
committed illegal acts during the strike and obstructed the free ingress and
egress from respondent companys premise

LA: While petitioner may file a notice of strike on behalf of its members,
petitioner failed to cite any instance of discrimination or harassment when it
filed its notice of strike and the incidents mentioned as discriminatory occurred
after the filing of the said notice. Moreover, assuming the strike was legal at the
beginning, it became illegal when petitioner committed acts prohibited under
Article 264(e) of the Labor Code, such as acts of violence, coercion and
intimidation and obstruction of the free ingress to and egress from respondent
companys premises.
NLRC: The actuations of petitioner were patently illegal because the sit-down
strike was made barely a week after petitioner withdrew its notice of strike, with
prejudice, on account of the concessions agreed upon by the parties. Petitioner
filed no new notice of strike that could have supported its charges of
discriminatory acts and unfair labor practice. Hence it upheld the LAs decision.
CA: NLRC Resolution was supported by justifiable reason and cannot be faulted
with grave abuse of discretion. Petitioner failed to establish that the NLRC
committed grave abuse of discretion.
ISSUES: Whether or not the petition should prosper.
HELD: No. Petition fails for many reasons (both procedural and Substantive)
PROCEDURAL:

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1. Petition for certiorari is a wrong remedy.

Labor Relations Case Digest - Atty. Joyrich Golangco

A petition for certiorari under Rule 65 of the Rules of Court is a special


civil action that may be resorted to only in the absence of appeal or any plain,
speedy and adequate remedy in the ordinary course of law. The right recourse
was to appeal to this Court in the form of a petition for review on certiorari
under Rule 45 of the Rules of Court. For purposes of appeal, the Decision of the
Court of Appeals was a final judgment as it denied due course to, and dismissed,
the petition. Thus, the Decision disposed of the petition of petitioner in a manner
that left nothing more to be done by the Court of Appeals in respect to the said
case. Thus, petitioner should have filed an appeal by petition for review on
certiorari under Rule 45. Where the rules prescribe a particular remedy for the
vindication of rights, such remedy should be availed of. The existence and
availability of the right of appeal prohibits the resort to certiorari because one of
the requirements for the latter remedy is that there should be no appeal.

Moreover, certiorari is not and cannot be made a substitute for an


appeal where the latter remedy is available but was lost through fault or
negligence. In this case, petitioner received the Decision on August 2, 2002 and,
under the rules, had until August 19, 2002 to file an appeal by way of a petition
for review in this Court. Petitioner let this period lapse without filing an appeal
and, instead, filed this petition for certiorari on October 1, 2002.
2. Even assuming that a petition for certiorari is the correct remedy in this case,
petitioner failed to comply with the requirement of a prior motion for
reconsideration.

As a general rule, a motion for reconsideration is a prerequisite for the


availment of a petition for certiorari under Rule 65 to afford the public
respondent an opportunity to correct any actual or fancied error attributed to it
by way of re-examination of the legal and factual aspects of the case. Here, the
Court of Appeals was not given any opportunity either to rectify whatever error
it may have made or to address the ascription and aspersion of grave abuse of
discretion thrown at it by petitioner. Nor did petitioner offer any compelling
reason to warrant a deviation from the rule.

3. Petitioner was not able to establish its allegation of grave abuse of discretion
on the part of the Court of Appeals.

In this case, nowhere in the petition did petitioner show that the
issuance of the Decision of the Court of Appeals was patent and gross that would
warrant striking it down through a petition for certiorari. Petitioner failed to
substantiate its imputation of grave abuse of discretion on the part of the Court
of Appeals. Petitioner failed in its duty to demonstrate with definiteness the
grave abuse of discretion that would justify the proper availment of a petition for
certiorari under Rule 65 of the Rules of Court.
4. Petitioner essentially questioned the factual findings of the Labor Arbiter and
the NLRC. Petitioner cannot properly do that in a petition for certiorari.

For petitioner to question the identical findings of the Labor Arbiter and
the NLRC is to raise a question of fact. However, it is settled that questions of fact
cannot be raised in an original action for certiorari. Only established or admitted
facts can be considered.

The Supreme Court is not a trier of facts, more so in the consideration of


the extraordinary writ of
certiorari where neither questions of fact nor of law are entertained, but only
questions of lack or excess of jurisdiction or grave abuse of discretion.

5. Considering that petitioner basically presented an issue of fact, its petition for
certiorari crumbles in view of the identical findings of the Labor Arbiter and the
NLRC which were further upheld by the Court of Appeals.

The Court of Appeals correctly ruled that findings of fact made by Labor
Arbiters and affirmed by the NLRC are not only entitled to great respect, but even
finality, and are considered binding if the same are supported by substantial
evidence. In arriving at the said ruling, the Court of Appeals even reviewed the
rationale of the Labor Arbiters decision and was convinced that there was
justifiable reason for the NLRC to uphold the same. This Court finds no
compelling reason to rule otherwise.
SUBSTANTIVE:

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6. Even on the merits, the case of petitioner has no leg to stand on.

Petitioners case rests on the alleged discriminatory acts of respondent


company against petitioners officers and members. However, both the Labor
Arbiter and the NLRC held that there was no sufficient proof of respondent
companys alleged discriminatory acts. Thus, petitioners unfair labor practice,
union-busting and unlawful lockout claims do not hold water.

Moreover, the established facts as found by the NLRC are as follows: the
"sit-down strike" made by petitioners officers and members was in violation of
respondent companys rules, and petitioners officers and members ignored the
opportunity given by respondent company for them to explain their misconduct,
which resulted in the termination of their employment. The Court of Appeals
ruled that the said findings were supported by substantial evidence. This Court
finds that such ruling of the appellate court is not grave abuse of discretion, nor
could it be considered wrong.
In contrast, the instant petition for certiorari suffers from an acute scarcity of
legal and factual support.
94
. HOLY CHILD CATHOLIC SCHOOL, Petitioner, v. HON. PATRICIA STO.
TOMAS, IN HER OFFICIAL CAPACITY AS SECRETARY OF THE DEPARTMENT
OF LABOR AND EMPLOYMENT, AND PINAG-ISANG TINIG AT LAKAS NG
ANAKPAWIS HOLY CHILD CATHOLIC SCHOOL TEACHERS AND EMPLOYEES
LABOR UNION (HCCS-TELU-PIGLAS), Respondents.
FACTS: On May 31, 2002, a petition for certification election was filed by private
respondent Pinag-Isang Tinig at Lakas ng Anakpawis Holy Child Catholic School
Teachers and Employees Labor Union (HCCS-TELU-PIGLAS), alleging that: PIGLAS
is a legitimate labor organization duly registered with the Department of Labor
and Employment (DOLE) representing HCCS-TELU-PIGLAS; HCCS is a private
educational institution duly registered and operating under Philippine laws;
there are approximately one hundred twenty (120) teachers and employees
comprising the proposed appropriate bargaining unit; and HCCS is unorganized,
there is no collective bargaining agreement or a duly certified bargaining agent
or a labor organization certified as the sole and exclusive bargaining agent of the

proposed bargaining unit within one year prior to the filing of the
petition.6 Among the documents attached to the petition were the certificate of
affiliation with Pinag-Isang Tinig at Lakas ng Anakpawis Kristiyanong Alyansa ng
Makabayang Obrero (PIGLAS-KAMAO) issued by the Bureau of Labor Relations
(BLR), charter certificate issued by PIGLAS-KAMAO, and certificate of
registration of HCCS-TELU as a legitimate labor organization issued by the
DOLE.7
Herein petitioner opposed the petition for certification election on the ground
that members of private respondent do not belong to the same class; it is not
only a mixture of managerial, supervisory, and rank-and-file employees as
three (3) are vice-principals, one (1) is a department head/supervisor, and
eleven (11) are coordinators but also a combination of teaching and nonteaching personnel as twenty-seven (27) are non-teaching personnel.
Med-arbiter denied the petition for election and explained that mutuality of
interests is wanting between the teaching and non-teaching personnel.

SOLE agreed with the med-arbiter but instead directed the conduct of two
separate certification elections for the teaching and the non-teaching personnel.

Petitioner filed a petition for Certiorari with TRO with the CA which was denied.
As to the purported commingling of managerial, supervisory, and rank-and-file
employees in private respondents membership, it held that the Toyota ruling is
inapplicable because the vice-principals, department head, and coordinators are
neither supervisory nor managerial employees, because while they may
formulate policies or guidelines, nonetheless, such is merely recommendatory in
nature, and still subject to review and evaluation by the higher executives.
ISSUES: WHETHER OR NOT THE PETITION FOR CERTIFICATION ELECTION
SHOULD BE DISMISSED

HELD: NO, A.) Under the BYSTANDER RULE, it has been consistently held in a
number of cases that a certification election is the sole concern of the workers,
except when the employer itself has to file the petition pursuant to Article 259 of
the Labor Code, as amended, but even after such filing its role in the certification
process ceases and becomes merely a bystander.41The employer clearly lacks the
personality to dispute the election and has no right to interfere at all therein.
Following the doctrine laid down in Kawashima and SMCC-Super, it must be

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stressed that petitioner cannot collaterally attack the legitimacy of private


respondent by praying for the dismissal of the petition for certification election.

B.) In case of alleged inclusion of disqualified employees in a union, the proper


procedure for an employer like petitioner is to directly file a petition for
cancellation of the unions certificate of registration due to misrepresentation,
false statement or fraud under the circumstances enumerated in Article 239 of
the Labor Code, as amended.54 To reiterate, private respondent, having been
validly issued a certificate of registration, should be considered as having
acquired juridical personality which may not be attacked collaterally. A
bargaining unit is a group of employees sought to be represented by a petitioning
union. Such employees need not be members of a union seeking the conduct of a
certification election. A union certified as an exclusive bargaining agent
represents not only its members but also other employees who are not union
members. As pointed out in our assailed Decision, there were two contending
unions in the U.P. case, namely[,] the Organization of Non-Academic Personnel of
U.P. (ONAPUP) and the All U.P. Workers Union composed of both U.P. academic
and non-academic personnel. ONAPUP sought the conduct of a certification
election among the rank-and-file non-academic personnel only, while the All U.P.
Workers Union intended to cover all U.P. rank-and-file employees, involving both
academic and non-academic personnel.
The Supreme Court ordered the non-academic rank-and-file employees of U.P.
to constitute a bargaining unit to the exclusion of the academic employees of the
institution, but did not order them to organize a separate labor organization. In
the U.P. case, the Supreme Court did not dismiss the petition and affirmed the
order for the conduct of a certification election among the non-academic
personnel of U.P., without prejudice to the right of the academic personnel to
constitute a separate bargaining unit for themselves and for the All U.P. Workers
Union to institute a petition for certification election.

In the same manner, the teaching and non-teaching personnel of [petitioner]


school must form separate bargaining units. Thus, the order for the conduct of
two separate certification elections, one involving teaching personnel and the
other involving non-teaching personnel. It should be stressed that in the subject
petition, [private respondent] union sought the conduct of a certification election
among all the rank-and-file personnel of [petitioner] school. Since the decision of

the Supreme Court in the U.P. case prohibits us from commingling teaching and
non-teaching personnel in one bargaining unit, they have to be separated into
two separate bargaining units with two separate certification elections to
determine whether the employees in the respective bargaining units desired to
be represented by [private respondent]. In the U.P. case, only one certification
election among the non-academic personnel was ordered, because ONAPUP
sought to represent that bargaining unit only. No petition for certification
election among the academic personnel was instituted by All U.P. Workers Union
in the said case; thus, no certification election pertaining to its intended
bargaining unit was ordered by the Court.
95: Kiok Loy, doing business under the name and Style Sweden Ice Cream
Plant vs. NLRC and Pambansang Kilusan ng Paggawa

FACTS: The Pambansang Kilusang Paggawa (Union for short) is a legitimate late
labor federation which won the certification election and was subsequently
certified by the BLR as the sole and exclusive bargaining agent of the rank-andfile employees of Sweden Ice Cream Plant (Company, for short). The Company
filed a motion for reconsideration for the certification which was denied.

Thereafter, the Union furnished the Company with two copies of its
proposed collective bargaining agreement. At the same time, it requested the
Company for its counter proposals. Eliciting no response to the aforesaid
request, the Union again wrote the Company reiterating its request for collective
bargaining negotiations and for the Company to furnish them with its counter
proposals. Both requests were ignored and remained unacted upon by the
Company.
Left with no other alternative in its attempt to bring the Company to the
bargaining table, the Union, on February 14, 1979, filed a "Notice of Strike", with
the Bureau of Labor Relations (BLR) on ground of unresolved economic issues in
collective bargaining.
Conciliation proceedings then followed during the thirty-day statutory
cooling-off period. But all attempts towards an amicable settlement failed,
prompting the BLR to certify the case to the NLRC for compulsory

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arbitration. The labor arbiter, Andres Fidelino, to whom the case was assigned,
set the initial hearing for April 29, 1979. For failure however, of the parties to
submit their respective position papers as required, the said hearing was
cancelled and reset to another date. Meanwhile, the Union submitted its position
paper. The Company did not, and instead requested for a resetting which
was granted. The Company was directed anew to submit its financial
statements for the years 1976, 1977, and 1978.

While it is a mutual obligation of the parties to bargain, the employer,


however, is not under any legal duty to initiate contract negotiation. The
mechanics of collective bargaining is set in motion only when the following
jurisdictional preconditions are present, namely,
(1) possession of the status of majority representation
of the employees' representative in accordance with any of the
means of selection or designation provided for by the Labor
Code;

The case was further reset to May 11, 1979 due to the withdrawal of the
Company's counsel of record, Atty. Rodolfo dela Cruz. On May 24, 1978, Atty.
Fortunato Panganiban formally entered his appearance as counsel for the
Company only to request for another postponement allegedly for the purpose of
acquainting himself with the case. Meanwhile, the Company submitted its
position paper on May 28, 1979.

When the case was called for hearing on June 4, 1979 as scheduled, the
Company's representative, Mr. Ching, who was supposed to be examined,
failed to appear. Atty. Panganiban then requested for another
postponement which the labor arbiter denied. He also ruled that the
Company has waived its right to present further evidence and, therefore,
considered the case submitted for resolution.
The labor arbiter submitted its report to the NLRC which rendered the
decision declaring the Company guilty of unjustified refusal to bargain.
ISSUES: Whether Sweden Ice Cream Plant is guilty of the Unfair Labor Practice of
unjustified refusal to bargain.

HELD: Yes, it is. Collective bargaining which is defined as negotiations towards a


collective agreement is one of the democratic frameworks under the New Labor
Code, designed to stabilize the relation between labor and management and to
create a climate of sound and stable industrial peace. It is a mutual responsibility
of the employer and the Union and is characterized as a legal obligation. So much
so that Article 249, par. (g) of the Labor Code makes it an unfair labor practice.

(2) proof of majority representation; and

(3) a demand to bargain under Article 251, par.(a) of


the New Labor Code.
case.

... all of which preconditions are undisputedly present in the instant

From the over-all conduct of petitioner company in relation to the task


of negotiation, there can be no doubt that the Union has a valid cause to
complain against its (Company's) attitude, the totality of which is indicative
of the latter's disregard of, and failure to live up to, what is enjoined by the
Labor Code to bargain in good faith.
The Court is in total conformity with respondent NLRC's pronouncement
that petitioner Company is GUILTY of unfair labor practice. It has been
indubitably established that
agent;

(1) Respondent Union was a duly certified bargaining

(2) it made a definite request to bargain, accompanied


with a copy of the proposed Collective Bargaining Agreement,
to the Company not only once but twice which were left
unanswered and unacted upon; and

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(3) the Company made no counter proposal


whatsoever all of which conclusively indicate lack of a sincere
desire to negotiate.

A Company's refusal to make counter proposal if considered in relation


to the entire bargaining process, may indicate bad faith and this is especially true
where the Union's request for a counter proposal is left unanswered. Even
during the period of compulsory arbitration before the NLRC, petitioner
Company's approach and attitude-stalling the negotiation by a series of
postponements, non-appearance at the hearing conducted, and undue delay in
submitting its financial statements, lead to no other conclusion except that it is
unwilling to negotiate and reach an agreement with the Union. Petitioner has not
at any instance, evinced good faith or willingness to discuss freely and fully the
claims and demands set forth by the Union much less justify its opposition
thereto.
96. PHILIPPINE AIRLINES, INCORPORATED, Petitioner, vs. PHILIPPINE
AIRLINES EMPLOYEES ASSOCIATION (PALEA), Respondent.

FACTS: On February 6, 1987, PAL and PALEA entered into a CBA covering the
period of 1986-1989. Section 3 thereof provides that all the terms and
conditions of employment of employees within the bargaining unit are embodied
in this Agreement, and the same shall govern the relationship between the
Company and such employees. x x x Part of said agreement required petitioner
PAL to pay its rank and file employees the following: 13th Month Pay (Mid-year
Bonus) equivalent to one months current basic pay, to be paid in advance in
May; and Christmas Bonus which is the equivalent of one months current
basic pay as of November 30, to be paid in December.
On April 22, 1988, prior to the payment of the 13th month pay, PAL released a
guideline implementing said provisions, to wit:

1) Eligibility
a) Ground employees in the general payroll who are regular as of
April 30, 1988;
b) Other ground employees in the general payroll, not falling within

category a) above shall receive their 13th Month Pay on or before


December 24, 1988;

2) Amount
a) For category a) above, one month basic salary as of April 30,
1988;
b) Employees covered under 1 b) above shall be paid not less than
1/12 of their basic salary for every month of service within the
calendar year.
3) Payment Date: May 9, 1988 for category 1 a) above.

PALEA assailed the implementation of the guideline on the ground that all
employees of PAL, regular or non-regular, must be paid their 13th month pay.
Subsequently, in a letter, PALEA, through Herbert C. Baldovino, informed PAL
that some regular employees failed to receive their 13th Month Pay.

PAL answered that rank and file employees regularized after April 30, 1988 were
not entitled to the 13th month pay as they were already given their Christmas
bonuses on December 9, 1988 per the Implementing Rules of PD 851 (The 13th
Month Pay Law).
Disagreeing with PAL, PALEA filed a labor complaint for ULP against PAL before
the NLRC. The complaint interposed that "the cut-off period for regularization
should not be used as the parameter for granting [the] 13th month pay
considering that the law does not distinguish the status of employment but (sic)
the law covers all employees."

LA: dismissed PALEAs complaint, holding that the giving of the particular bonus
was said to be merely an additional practice made in the past.

NLRC: reversed the Decision of the Arbiter, convinced that the 13th month pay or
mid-year bonus is distinct from the Christmas Bonus.
PAL went directly to SC via Petition for Review on Certiorari but was referred to
the CA, which dismissed PALs petition and its subsequent MR.
Hence the instant Petition for Review on Certiorari under Rule 45.

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PAL argues that 1) the CBA does not apply to non-regular employees such that
any benefits arising from said agreement cannot be made to apply to them,
including the mid-year bonus; and 2) it has always been the company practice
not to extend the mid-year bonus to those employees who have not attained
regular status prior to the month of May, when payment of the particular bonus
accrues.

PALEA, however, disputes petitioner PALs allegations and maintains that "[a]ll
employees in PAL are entitled to the same benefit as they are within the same
collective bargaining unit and the entitlement to such benefit spills over to even
non-union members." Anent the supposed company practice of PAL not to
extend the payment of the 13th month pay or mid-year bonus to non-regular
employees, non-payment of said benefit is considered a diminution of privileges
or benefits proscribed by PD 851; that petitioner PAL misrepresented that the
13th month pay or mid-year bonus is the same as the Christmas bonus when, in
actuality, the latter is entirely different as it is a benefit paid under the provisions
of the CBA, while the former is one mandated by law, Presidential Decree No.
851, in particular.
ISSUES:
1.

WON the payment of the 13th month pay or mid-year bonus applies to
PAL employees regularized after April 30, 1988.

HELD:

YES. A cursory reading of the 1986-1989 CBA of the parties herein will instantly
reveal that Art. I, Sec. 3 of said agreement made its provision applicable to all
employees in the bargaining unit, without distinguishing between regular and
non-regular employees.

It is a well-settled doctrine that the benefits of a CBA extend to the laborers


and employees in the collective bargaining unit, including those who do not
belong to the chosen bargaining labor organization. Otherwise, it would be
a clear case of discrimination.

To be entitled to the benefits under the CBA, the employees must be members of
the bargaining unit, but not necessarily of the labor organization designated as
the bargaining agent. A "bargaining unit" has been defined as a group of
employees of a given employer, comprised of all or less than all of the entire
body of employees, which the collective interest of all the employees, consistent
with equity to the employer, indicates to be the best suited to serve the
reciprocal rights and duties of the parties under the collective bargaining
provisions of the law. PALs allegation that the non-regular employees do not
belong to the collective bargaining unit and are thus not covered by the CBA is
unjustified and unsubstantiated. PAL excludes certain employees from the
benefits of the CBA only because they have not yet achieved regular status by the
cut-off date, April 30, 1988. There is no showing that the non-regular status
of the concerned employees by said cut-off date sufficiently distinguishes
their interests from those of the regular employees so as to exclude them
from the collective bargaining unit and the benefits of the CBA.
2.

Whether the 13th month pay or mid-year bonus can be equated to the
Christmas bonus.

NO. While employers already paying their employees a 13th month pay or more
in a calendar year or its equivalent at the time of the issuance of PD 851 are
already exempted from the mandatory coverage of said law, PAL cannot escape
liability in this case by virtue thereof.
It must be stressed that in the 1986-1989 CBA, petitioner PAL agreed to pay its
employees 1) the 13th month pay or the mid-year bonus, and 2) the Christmas
bonus. The 13th month pay, guaranteed by PD 851, is explicitly covered or
provided for as the mid-year bonus in the CBA, while the Christmas bonus is
evidently and distinctly a separate benefit. PAL may not be allowed to brush
off said distinction, and unilaterally and arbitrarily declare that for nonregular employees, their Christmas bonus is the same as or equivalent to
the 13th month pay.

PD 851 mandates the payment of the 13th month pay to uniformly provide the
low-paid employees with additional income. It but sets a minimum requirement
that employers must comply with. It does not intend, however, to preclude the

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employers from voluntarily granting additional bonuses that will benefit their
employees. A bonus is an amount granted and paid to an employee for his
industry and loyalty which contributed to the success of the employer's business
and made possible the realization of profits. It is an act of generosity of the
employer for which the employee ought to be thankful and grateful. It is also
granted by an enlightened employer to spur the employee to greater efforts for
the success of the business and realization of bigger profits. We deem that the
Christmas bonus in this case is of this nature, although, by virtue of its
incorporation into the CBA, it has become more than just an act of generosity on
the part of PAL, but a contractual obligation it has undertaken.

97. FVC Labor Union Phil. Transport and General Workers Association vs.
SANAMA-FVC-SIGLO

FACTS: On December 22, 1997, the petitioner FVCLU-PTGWO the recognized


bargaining agent of the rank-and-file employees of the FVC Philippines,
Incorporated (company) signed a five-year collective bargaining agreement
(CBA) with the company. The five-year CBA period was from February 1, 1998 to
January 30, 2003. At the end of the 3rd year of the five-year term and pursuant to
the CBA, FVCLU-PTGWO and the company entered into the renegotiation of the
CBA and modified, among other provisions, the CBAs duration. Article XXV,
Section 2 of the renegotiated CBA provides that this re-negotiation agreement
shall take effect beginning February 1, 2001 and until May 31, 2003 thus
extending the original five-year period of the CBA by four (4) months.

On January 21, 2003, nine (9) days before the January 30, 2003 expiration
of the originally-agreed five-year CBA term (and four months and nine days away
from the expiration of the amended CBA period), the respondent Sama-Samang
Nagkakaisang Manggagawa sa FVC-Solidarity of Independent and General Labor
Organizations (SANAMA-SIGLO) filed before the Department of Labor and
Employment (DOLE) a petition for certification election for the same rank-andfile unit covered by the FVCLU-PTGWO CBA. FVCLU-PTGWO moved to dismiss
the petition on the ground that the certification election petition was filed
outside the freedom period or outside of the sixty (60) days before the
expiration of the CBA on May 31, 2003.
Med-arbiter: On June 17, 2003, Med-Arbiter Arturo V. Cosuco dismissed the

petition on the ground that it was filed outside the 60-day period counted from
the May 31, 2003 expiry date of the amended CBA.
Dole Sec: DOLE Secretary Patricia A. Sto. Tomas sustained SANAMA-SIGLOs
position, thereby setting aside the decision of the Med-Arbiter. She ordered the
conduct of a certification election in the company.

CA: Sustained the DOLE Secs decision.

ISSUES: W/N the extension of the life of the CBA extended the exclusive
bargaining status as well

HELD: We hold this FVCLU-PTGWO position to be correct, but only with respect
to the original five-year term of the CBA, which, by law, is also the effective period
of the unions exclusive bargaining representation status. While the parties may
agree to extend the CBAs original five-year term together with all other CBA
provisions, any such amendment or term in excess of five years will not carry
with it a change in the unions exclusive collective bargaining status. By express
provision of the above-quoted Article 253-A, the exclusive bargaining status
cannot go beyond five years and the representation status is a legal matter not
for the workplace parties to agree upon. In other words, despite an agreement
for a CBA with a life of more than five years, either as an original provision or by
amendment, the bargaining unions exclusive bargaining status is effective only
for five years and can be challenged within sixty (60) days prior to the expiration
of the CBAs first five years.

As discussed above, this negotiated extension of the CBA term has no


legal effect on the FVCLU-PTGWOs exclusive bargaining representation status
which remained effective only for five years ending on the original expiry date of
January 30, 2003. Thus, sixty days prior to this date, or starting December 2,
2002, SANAMA-SIGLO could properly file a petition for certification election. Its
petition, filed on January 21, 2003 or nine (9) days before the expiration of the
CBA and of FVCLU-PTGWOs exclusive bargaining status, was seasonably filed.
98. SMCEU vs Confesor

FACTS: On June 28, 1990, petitioner-union CBA with private respondent


San Miguel Corporation (SMC) to take effect upon the expiration of the previous

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CBA or on June 30, 1989. In keeping with their vision and long term strategy for
business expansion, SMC management informed its employees in a letter that the
company which was composed of four operating divisions namely: (1) Beer, (2)
Packaging, (3) Feeds and Livestocks, (4) Magnolia and Agri-business would
undergo a restructuring.
Magnolia and Feeds and Livestock Division were spun-off and became two
separate and distinct corporations: Magnolia Corporation (Magnolia) and San
Miguel Foods, Inc. (SMFI). Notwithstanding the spin-offs, the CBA remained in
force and effect.

After June 30, 1992, the CBA was renegotiated in accordance with the terms
of the CBA and Article 253-A of the Labor Code. Negotiations started sometime in
July, 1992 with the two parties submitting their respective proposals and
counterproposals.
During the negotiations, the petitioner-union insisted that the
bargaining unit of SMC should still include the employees of the spun-off
corporations: Magnolia and SMFI; and that the renegotiated terms of the
CBA shall be effective only for the remaining period of two years or until
June 30, 1994.

Petitioner-union contends that the duration for the non-representation


provisions of the CBA should be coterminous with the term of the bargaining
agency which in effect shall be for the remaining two years of the current CBA.
SMC, on the other hand, contended that the members/employees who
had moved to Magnolia and SMFI, automatically ceased to be part of the
bargaining unit at the SMC. Furthermore, the CBA should be effective for
three years in accordance with Art. 253-A of the Labor Code.
Unable to agree on these issues with respect to the bargaining unit and
duration of the CBA, petitioner-union declared a deadlock. A Notice of Strike was
filed against SMC. In order to avert a strike, SMC requested the NCMB to conduct
preventive mediation. No settlement was arrived at despite several meetings
held between the parties.

Private respondents SMC, Magnolia and SMFI filed a petition with the
Secretary of Labor praying that the latter assume jurisdiction over the labor
dispute in a vital industry.

The Secretary of Labor issued the assailed Order on February 15, 1993
directing, among others, that the renegotiated terms of the CBA shall be effective
for the period of three (3) years from June 30, 1992; and that such CBA shall
cover only the employees of SMC and not of Magnolia and SMFI.

Dissatisfied, petitioner-union now comes to this Court questioning this


Order of the Secretary of Labor.
ISSUES:
1. Whether or not the duration of the renegotiated terms of the CBA is to be
effective for three years or for only two years?
2. Whether or not the bargaining unit of SMC includes also the employees of
Magnolia and SMFI?
HELD:

1. The duration of the renegotiated term of the CBA is to be effective


for 3 years.
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. ..xxx. All other provisions of the Collective Bargaining Agreement
shall be renegotiated not later than three (3) years after its
execution xxx
Article 253-A is a new provision. This was incorporated by Section 21 of
Republic Act No. 6715. This new provision states that the CBA has a term of 5
years instead of 3 years, before the amendment of the law as far as the
representation aspect is concerned. All other provisions of the CBA shall be
negotiated not later than three (3) years after its execution. The representation
aspect refers to the identity and majority status of the union that negotiated the
CBA as the exclusive bargaining representative of the appropriate bargaining
unit concerned. All other provisions simply refers to the rest of the CBA,
economic as well as non-economic provisions, except representation

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As the Secretary of Labor herself observed in the instant case, the law is
clear and definite on the duration of the CBA insofar as the representation aspect
is concerned, but is quite ambiguous with the terms of the other provisions of the
CBA.
The framers of the law wanted to maintain industrial peace and stability
by having both management and labor work harmoniously together without any
disturbance. Thus, no outside union can enter the establishment within five (5)
years and challenge the status of the incumbent union as the exclusive
bargaining agent. Likewise, the terms and conditions of employment (economic
and non-economic) cannot be questioned by the employers or employees during
the period of effectivity of the CBA. The CBA is a contract between the parties
and the parties must respect the terms and conditions of the agreement. Notably,
the framers of the law did not give a fixed term as to the effectivity of the terms
and conditions of employment. It can be gleaned from their discussions that it
was left to the parties to fix the period.

In the instant case, it is not difficult to determine the period of effectivity


for the non-representation provisions of the CBA. Taking it from the history of
their CBAs, SMC intended to have the terms of the CBA effective for three (3)
years reckoned from the expiration of the old or previous CBA which was on June
30, 1989.

As a matter of policy the parties are encourages to enter into a


renegotiated CBA with a term which would coincide with the aforesaid five year
term of the bargaining representative.

In the event however, that the parties, by mutual agreement, enter


into a renegotiated contract with a term of three (3) years or one which
does not coincide with the said 5-year term, and said agreement is ratified
by majority of the members in the bargaining unit, the subject contract is
valid and legal and therefore, binds the contracting parties. The same will
however not adversely affect the right of another union to challenge the
majority status of the incumbent bargaining agent within sixty (60) days
before the lapse of the original five (5) year term of the CBA.

2. The SMC bargaining unit does not include the employees of


Magnolia and SMFI.

Magnolia and SMFI were spun-off to operate as distinct companies.


Management saw the need for these transformations in keeping with its vision
and long term strategy. Magnolia and SMFI became distinct entities with
separate juridical personalities. Thus, they can not belong to a single bargaining
unit
In determining an appropriate bargaining unit, the test of grouping is
mutuality or commonality of interests. The employees sought to be represented
by the collective bargaining agent must have substantial mutual interests in
terms of employment and working conditions as evinced by the type of work
they performed.

Considering the spin-offs, the companies would consequently have their


respective and distinctive concerns in terms of the nature of work, wages, hours
of work and other conditions of employment. Interests of employees in the
different companies perforce differ. SMC is engaged in the business of beer
manufacturing. Magnolia is involved in the manufacturing and processing of
dairy products while SMFI is involved in the production of feeds and the
processing of chicken. The nature of their products and scales of business may
require different skills which must necessarily be commensurate by different
compensation packages. The different companies may have different volumes of
work and different working conditions. For such reason, the employees of the
different companies see the need to group themselves together and organize
themselves into distinctive and different groups. It would then be best to have
separate bargaining units for the different companies where the employees can
bargain separately according to their needs and according to their own working
conditions.

Even assuming in gratia argumenti that at the time of the election they
were regular employees of San Miguel, nonetheless, these workers are no longer
connected with San Miguel Corporation in any manner because Magnolia has
ceased to be a division of San Miguel Corporation and has been formed into a
separate corporation with a personality of its own. This development, which was

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brought to our attention by private respondents, necessarily renders moot and


academic any further discourse on the propriety of the elections which
petitioners impugn via the present recourse
In view of all the foregoing, we do not find any grave abuse of discretion on
the part of the Secretary of Labor in rendering the assailed Order. Wherefore, the
petition is DISMISSED.
99. International School Alliance of Educators v. Quisumbing
FACTS: Private respondent International School, Inc. (School), pursuant to PD
732, is a domestic educational institution established primarily for dependents of
foreign diplomatic personnel and other temporary residents. The decree
authorizes the School to employ its own teaching and management personnel
selected by it either locally or abroad, from Philippine or other nationalities, such
personnel being exempt from otherwise applicable laws and regulations
attending their employment, except laws that have been or will be enacted for
the protection of employees. School hires both foreign and local teachers as
members of its faculty, classifying the same into two: (1) foreign-hires and (2)
local-hires.
The School grants foreign-hires certain benefits not accorded local-hires.
Foreign-hires are also paid a salary rate 25% more than local-hires.

When negotiations for a new CBA were held on June 1995, petitioner ISAE, a
legitimate labor union and the collective bargaining representative of all faculty
members of the School, contested the difference in salary rates between foreign
and local-hires. This issue, as well as the question of whether foreign-hires
should be included in the appropriate bargaining unit, eventually caused a
deadlock between the parties.
ISAE filed a notice of strike. Due to the failure to reach a compromise in the
NCMB, the matter reached the DOLE which favored the School. Hence this
petition.

ISSUES: Whether the foreign-hires should be included in bargaining unit of localhires.

HELD: NO. The Constitution, Article XIII, Section 3, specifically provides that
labor is entitled to humane conditions of work. These conditions are not
restricted to the physical workplace the factory, the office or the field but
include as well the manner by which employers treat their employees.

Discrimination, particularly in terms of wages, is frowned upon by the Labor


Code. Article 248 declares it an unfair labor practice for an employer to
discriminate in regard to wages in order to encourage or discourage membership
in any labor organization.
The Constitution enjoins the State to protect the rights of workers and promote
their welfare, In Section 18, Article II of the constitution mandates to afford
labor full protection. The State has the right and duty to regulate the relations
between labor and capital. These relations are not merely contractual but are so
impressed with public interest that labor contracts, collective bargaining
agreements included, must yield to the common good.
However, foreign-hires do not belong to the same bargaining unit as the localhires.

A bargaining unit is a group of employees of a given employer, comprised of all


or less than all of the entire body of employees, consistent with equity to the
employer indicate to be the best suited to serve the reciprocal rights and duties
of the parties under the collective bargaining provisions of the law.

The factors in determining the appropriate collective bargaining unit are (1) the
will of the employees (Globe Doctrine); (2) affinity and unity of the employees
interest, such as substantial similarity of work and duties, or similarity of
compensation and working conditions (Substantial Mutual Interests Rule); (3)
prior collective bargaining history; and (4) similarity of employment status. The
basic test of an asserted bargaining units acceptability is whether or not it is
fundamentally the combination which will best assure to all employees the
exercise of their collective bargaining rights.

In the case at bar, it does not appear that foreign-hires have indicated their
intention to be grouped together with local-hires for purposes of collective
bargaining. The collective bargaining history in the School also shows that these
groups were always treated separately. Foreign-hires have limited tenure; localhires enjoy security of tenure. Although foreign-hires perform similar functions

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under the same working conditions as the local-hires, foreign-hires are accorded
certain benefits not granted to local-hires such as housing, transportation,
shipping costs, taxes and home leave travel allowances. These benefits are
reasonably related to their status as foreign-hires, and justify the exclusion of the
former from the latter. To include foreign-hires in a bargaining unit with localhires would not assure either group the exercise of their respective collective
bargaining rights.
100. National Association of Free Trade Unions (NAFTU) vs. Mainit Lumber
Development Co. Workers Union-United Lumber and General Workers of
the Philippines (MALDECOWU-ULGWP)
FACTS: Mainit Lumber Devt. Co. Workers Union-United Lumber and Gen.
Workers of the Phils. (MALDECOWU-ULGWP for brevity) filed a petition for
certification election with the DOLE to determine the CBA representative of the
rank and file employees of Mainit Lumber Devt. Co., Inc. (MALDECO). The
petition alleged, among others that there was no certification election conducted
within 12 months prior to the filing of the petition; the CBA has expired, and is
supported by 101 out of a total of 201 rank & file employees or more than 30%
required by law. The Med-Arbiter granted the petition however, the National
Assn. Of Free Trade Unions (NAFTU) appealed on the ground that while
MALDECO was composed of two (2) separate and distinct bargaining units i.e.
Sawmill and Logging Divisions, both the petition and decision treated them as
one. The Bureau of Labor Relations (BLR) affirmed the Arbiters decision so a
certification election was held on separate dates for the Sawmill and Logging
Divisions where MALDECOWU-ULGWP won at a ratio of 146:2. NAFTU protested
on allegations of massive vote buying and with grave & serious threat, force &
intimidation which was corroborated by MALDECO. The Med-Arbiter dismissed
the election protest and the appeal of NAFTU to the BLR and its subsequent
motion for reconsideration were denied.
ISSUES: Whether or not the certification election is valid?

HELD: YES. NAFTUs election protest was grounded on only one (1) bargaining
representative in the concluded election instead of two separate units to be
represented, i.e. one each for Logging and Sawmill Divisions. The Court held that

in determining the appropriate bargaining unit, the test of grouping is


community or mutuality of interests since the basic test of an asserted
bargaining unit's acceptability is whether or not it is fundamentally the
combination which will best assure to all employees the exercise of their
collective bargaining rights." The petition for certification election was consented
and supported by 175 out of 201 employees of MALDECO confirming that they
desire only one bargaining representative. The functions of the Sawmill
intertwined with that of the Logging in the same way that the company needs
them both and while there may be difference in the individual assignments, the
distinctions are not that extensive as to warrant the formation of a separate
bargaining unit.
The Court affirmed the Resolution of the Bureau of Labor Relations.

101. Picop Resources Incorporated vs Ricardo Dequila et al.

Wilfredo Fruentes- Senior VP of PRI


Respondents, Ricardo Dequilla, Elmo Pabilando, Cesar Atienza, Aniceto
Orbeta Jr, and NAMAPRI-SPFI
FACTS: Pprivate respondents were regular rank-and-file employees of PICOP and
members of the NAMAPRI-SPFL, a duly registered labor organization and
existing bargaining agent of the PICOP rank-and-file employees. PICOP and
NAMAPRI-SPFL had a CBA which would expire on May 22, 2000.

The late Atty. Fuentes, then National President of the Southern Philippines
Federation of Labor (SPFL), advised the PICOP management to terminate about
800 employees due to acts of disloyalty, specifically, for allegedly campaigning,
supporting and signing a petition for the certification of a rival union, the
Federation of Free Workers Union (FFW) before the 60-day freedom period
and during the effectivity of the CBA. Such acts of disloyalty were construed to be
a valid cause for termination under the terms and conditions of the CBA. Based
on the CBA, the freedom period would start on March 22, 2000.
Atty. Boniel, Manager of the PICOP Legal and Labor Relations Department,
issued a memorandum directing the employees concerned to explain within
seventy-two (72) hours why their employment should not be terminated due to

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alleged acts of disloyalty. Upon receiving their explanation letters, Atty. Boniel
endorsed the same to Atty. Fuentes who then requested the termination of 46
employees found guilty of acts of disloyalty.

PICOP served a notice of termination due to acts of disloyalty to 31 of the


46 employees. Private respondents were among the 31 employees dismissed
from employment by PICOP
Private respondents filed a complaint before the NLRC for Unfair Labor
Practice and Illegal Dismissal with money claims, damages and attorneys fees.
LA- June 9, 2001, declaring as illegal the termination of the private respondents.

NLRC - PICOP elevated the LA decision to the NLRC but its appeal was dismissed
in the November 19, 2002 NLRC Resolution. On motion for reconsideration,
however, the NLRC issued another resolution dated December 27, 2002,
reversing and setting aside its November 19, 2002 Resolution
CA (I included the explanation ng CA in detailed manner kase eto nadin
explanation ng SC sa ruling nila, para hindi na doblihin) - CA rendered the subject
decision reversing and setting aside the December 27, 2002 NLRC resolution and
reinstating the June 9, 2001 Decision of the LA.

The CA ruled, among others, that although private respondents signed


an authorization for the filing of the petition for certification election of a rival
union,
PICOP
Democratic
Trade
Unionist-Federation
of
Free
Workers (FFW), such act was not a sufficient ground to terminate the
employment of private respondents. It explained:
Imputations of an alleged violation of the CBA should
not arise from a vague and all embracing definition of alleged
acts of disloyalty. Neither should it arise from speculative
inferences where no evidence appears from the record that
Respondent NAMAPRI-SPFL expressly defined acts of
disloyalty. Signing an authorization for the filing of the petition
for certification election does not constitute an act of

disloyalty per se. There must be proof of contemporaneous acts


of resignation or withdrawal of their membership from the
Respondent NAMAPRI-SPFL to which they are members.
Petitioners neither joined nor affiliated with FFW and
continuously paid their union dues with Respondent NAMAPRISPFL.
Likewise, the advise of the Respondent NAMAPRI-SPFL
to the Respondent PRI to effect the termination of employees,
including herein Petitioners, finds no basis in fact and in law
considering that at the time the Respondent PRI dismissed the
Petitioners, among others, on 16 November 2000, there was no
more CBA to speak of after it had already expired on 22 May
2000.[

CA further agreed with private respondents that Article 256 and not
Article 253, of the Labor Code applied in this case. The CA discussed this point as
follows:
The issue of acts of disloyalty relates more to a direct
connection on the alleged violation or breach of loyalty to the
majority status of the incumbent union than on violation of the
terms and conditions of the agreement under Article 253.
Article 256 provides that at the expiration of the 60-day period
reckoned from the expiration date of the CBA, the employer
shall continue to recognize the majority status of the incumbent
bargaining agent only where no petition for certification
election is filed. However, a petition was already filed by the
Petitioners, among others, during the 60-day freedom period.
Clearly, from the imports of said provision, it will render
nugatory the purpose of the law providing for a freedom period
for the filing of a petition for certification election should the act
of signing/filing the said petition be interpreted as an act of
disloyalty and will render farce the need for a certification
election as an instrument of ascertaining the true expression of

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the will of the workers as to which labor organization would


represent them.
To construe the provision of law in Article 253 as
imposing a restriction against the signing and filing a petition
for certification election during the freedom period, is to violate
the constitutional right of the employees to organize freely.

PICOP filed this petition for review.

ISSUES:
1. WON the act of signing an authorization for certification election before the
freedom period is an act of disloyalty
2. WON Article 256 of the Labor Code applies in the case.
HELD: The petition merits a denial.

1. No. There is no question that in the CBA entered into by the parties, there is a
union security clause. The clause imposes upon the workers the obligation to join
and maintain membership in the companys recognized union as a condition for
employment.
"Union security" is applied to and comprehends "closed
shop," "union shop," "maintenance of membership," or any
other form of agreement which imposes upon employees the
obligation to acquire or retain union membership as a condition
affecting employment. There is union shop when all new regular
employees are required to join the union within a certain period
as a condition for their continued employment. There is
maintenance of membership shop when employees, who are
union members as of the effective date of the agreement, or who
thereafter become members, must maintain union membership
as a condition for continued employment until they are
promoted or transferred out of the bargaining unit, or the
agreement is terminated. A closed shop, on the other hand, may

be defined as an enterprise in which, by agreement between the


employer and his employees or their representatives, no person
may be employed in any or certain agreed departments of the
enterprise unless he or she is, becomes, and, for the duration of
the agreement, remains a member in good standing of a union
entirely comprised of or of which the employees in interest are
a part.

The burden of proof rests upon management to show that the dismissal
of its worker was based on a just cause. When an employer exercises its power to
terminate an employee by enforcing the union security clause, it needs to
determine and prove the following: (1) the union security clause is applicable;
(2) the union is requesting for the enforcement of the union security provision in
the CBA; and (3) there is sufficient evidence to support the decision of the union
to expel the employee from the union.
Acts of private respondents are not enough proof of a violation of the
Union Security Clause which would warrant their dismissal. (Lahat ng sinabe ng
CA as to this issue was upheld by the SC so paki basa nlng ung nasa FACTS under
CA RULING as the explanation for this ruling by the SC.)

We are constrained to believe that an "authorization letter to file


a petition for certification election" is different from an actual "Petition
for Certification Election." It is clear that the actual Petition for Certification
Election of FFW was filed only on May 18, 2000. Thus, it was within the ambit of
the freedom period which commenced from March 21, 2000 until May 21, 2000.
Strictly speaking, what is prohibited is the filing of a petition for certification
election outside the 60-dayfreedom period. This is not the situation in this case.
If at all, the signing of the authorization to file a certification election was merely
preparatory to the filing of the petition for certification election, or an exercise of
respondents right to self-organization

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2. Yes. The Court agrees with the CA that its (PICOPs) argument is
misplaced. (Under the CA RULING ulit ung explanation dito, paki basa nlng ulit
ung nasa FACTS.)

While it is incumbent for the employer to continue to recognize the majority


status of the incumbent bargaining agent even after the expiration of the
freedom period, they could only do so when no petition for certification election
was filed. The reason is, with a pending petition for certification, any such agreement
entered into by management with a labor organization is fraught with the risk that such
a labor union may not be chosen thereafter as the collective bargaining
representative.
Moreover, the last sentence of Article 253 which provides for automatic renewal
pertains only to the economic provisions of the CBA, and does not
include representational aspect of the CBA. An existing CBA cannot constitute a
bar to a filing of a petition for certification election. When there is a
representational issue, the status quo provision in so far as the need to await the
creation of a new agreement will not apply. Otherwise, it will create an absurd
situation where the union members will be forced to maintain membership by virtue of the
union security clause existing under the CBA and, thereafter, support another
union when filing a petition for certification election. If we apply it, there will
always be an issue of disloyalty whenever the employees exercise their right to
self-organization. The holding of a certification election is a statutory policy that
should not be circumvented, or compromised.
Private respondents are also entitled to an award of attorneys fees
equivalent to 10% of the total monetary award as they were compelled to litigate
in order to seek redress for their illegal dismissal.
102. National Union of Workers in Hotel, Restaurants and Allied IndustriesManila Pavillon Chapter v. Sec of Labor

FACTS: National Union of Workers in Hotels, Restaurants and Allied Industries


Manila Pavilion Hotel Chapter (NUWHRAIN-MPHC), herein petitioner, seeks the
reversal of the Court of Appeals November 8, 2007 Decision and of the Secretary
of Labor and Employments January 25, 2008 Resolution in OS-A-9-52-05 which

affirmed the Med-Arbiters Resolutions dated January 22, 2007 and March 22, 20
07.
A certification election was conducted on June 16, 2006 among the rank-an
d-file employees of respondent Holiday Inn Manila Pavilion Hotel (the Hotel) wit
h the following results:
EMPLOYEES IN VOTERS LIST = 353
TOTAL VOTES CAST
= 346
NUWHRAIN-MPHC = 151
HIMPHLU
= 169
NO UNION
= 1
SPOILED
= 3
SEGREGATED
= 22

SOLE concluded that the certification of HIMPHLU as the exclusive bargaining ag


ent was proper.
Petitioner, which garnered 151 votes, appealed to the Secretary of Labor and Em
ployment (SOLE), arguing that the votes of the probationary employees should h
ave been opened considering that probationary employee Gatbontons vote was t
allied. And petitioner averred that respondent HIMPHLU, which garnered 169 vo
tes, should not be immediately certified as the bargaining agent, as the opening o
f the 17 segregated ballots would push the number of valid votes cast to 338 (15
1 + 169 + 1 + 17), hence, the 169 votes which HIMPHLU garnered would be one v
ote short of the majority which would then become 169.
ISSUES: WON HIMPHLU is the winner of the certification election

HELD: No.As to whether HIMPHLU should be certified as the exclusive bargainin


g agent, the Court rules in the negative. It is well-settled that under the so-called "
double majority rule," for there to be a valid certification election, majority of the
bargaining unit must have voted AND the winning union must have garnered maj
ority of the valid votes cast.
Prescinding from the Courts ruling that all the probationary employees
votes should be deemed valid votes while that of the supervisory employees sho
uld be excluded, it follows that the number of valid votes cast would increase fr

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om 321 to 337. Under Art. 256 of the Labor Code, the union obtaining the majorit
y of the valid votes cast by the eligible voters shall be certified as the sole and exc
lusive bargaining agent of all the workers in the appropriate bargaining unit. This
majority is 50% + 1. Hence, 50% of 337 is 168.5 + 1 or at least 170.
HIMPHLU obtained 169 while petitioner received 151 votes. Clearly, HI
MPHLU was not able to obtain a majority vote. The position of both the SOLE and
the appellate court that the opening of the 17 segregated ballots will not material
ly affect the outcome of the certification election as for, so they contend, even if s
uch member were all in favor of petitioner, still, HIMPHLU would win, is thus unt
enable.
It bears reiteration that the true importance of ascertaining the number
of valid votes cast is for it to serve as basis for computing the required majority, a
nd not just to determine which union won the elections. The opening of the segre
gated but valid votes has thus become material. To be sure, the conduct of a certif
ication election has a two-fold objective: to determine the appropriate bargaining
unit and to ascertain the majority representation of the bargaining representativ
e, if the employees desire to be represented at all by anyone. It is not simply the d
etermination of who between two or more contending unions won, but whether i
t effectively ascertains the will of the members of the bargaining unit as to wheth
er they want to be represented and which union they want to represent them.
Having declared that no choice in the certification election conducted ob
tained the required majority, it follows that a run-off election must be held to det
ermine which between HIMPHLU and petitioner should represent the rank-and-f
ile employees.
103. MIGUELA SANTUYO, CORAZON ZACARIAS, EUGENIA CINCO, ELIZABETH
PERALES, SUSANA BELEDIANO, RUFINA TABINAS, LETICIA L. DELA ROSA,
NENITA LINESES, EDITHA DELA RAMA, MARIBEL M. OLIVAR, LOEVEL
MALAPAD, FLORENDA M. GONZALO, ELEANOR O. BUEN, EULALIA ABAGAO,
LORECA MOCORRO, DIANA MAGDUA, LUZ RAGAY, LYDIA MONTE, CORNELIA
BALTAZAR and DAISY MANGANTE, Petitioners,
vs.REMERCO GARMENTS MANUFACTURING, INC. and/or VICTORIA REYES.
Respondents.

FACTS: From 1992 to 1994, due to a serious industrial dispute, the Kaisahan ng
Manggagawa sa Remerco Garments Manufacturing Inc.- KMM Kilusan (union)

staged a strike against respondent Remerco Garments Manufacturing, Inc.


(RGMI). Because the strike was subsequently declared illegal, all union officers
were dismissed. Employees who wanted to sever their employment were paid
separation pay while those who wanted to resume work were recalled on the
condition that they would no longer be paid a daily rate but on a piece-rate basis.

Without allowing RGMI to normalize its operations, the union filed a notice of
strike in the National Conciliation and Mediation Board (NCMB). According to the
union, RGMI conducted a time and motion study and changed the salary scheme
from a daily rate to piece-rate basis without consulting it. RGMI therefore not
only violated the existing collective bargaining agreement (CBA) but also
diminished the salaries agreed upon. On November 11, 1995, while the union
and RGMI were undergoing conciliation in the NCMB, RGMI transferred its
factory site. Two days after, the union went on strike and blocked the entry to
RGMIs (new) premises. The Secretary of Labor assumed jurisdiction pursuant to
Article 263(g) of the Labor Code and ordered RGMIs striking workers to return
to work immediately. He likewise ordered the union and RGMI to submit their
respective position papers. In its position paper, the union denied going on strike
and blocking entries (and exits) at RGMIs premises. Furthermore, the union
enumerated RGMIs alleged unfair labor practices. RGMI, on the other hand,
insisted that its employees refused to obey the November 21, 1995 order. Thus,
it prayed that the strike be declared illegal and that all union officers and those
employees who refused to return to work be declared to have abandoned their
employment. The Secretary of Labor held that RGMI did not lock out its
employees inasmuch as it informed them of the transfer of the worksite.
However, he did not rule on the legality of the strike. Furthermore, based on the
time and motion study, the Secretary of Labor found that the employees would
receive higher wages if they were paid on a piece-rate rather than on a daily rate
basis. Hence, the new salary scheme would be more advantageous to the
employees. the Secretary of Labor ordered all employees to return to work and
RGMI to pay its employees their unpaid salaries and neither parties appealed.
While the conciliation proceedings between the union and respondent were
pending, petitioners filed a complaint for illegal dismissal against RGMI and
respondent Victoria Reyes, accusing the latter of harassment. Respondents, on
the other hand, moved to dismiss the complaint in view of the pending

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conciliation proceedings (which involved the same issue) in the NCMB.


Moreover, alleged violations of the CBA should be resolved according to the
grievance procedure laid out therein.Thus, the labor arbiter had no jurisdiction
over the complaint. The labor arbiter found that respondents did not pay
petitioners their salaries and deprived them of the benefits they were entitled to
under the CBA and ordered that petitioners be paid of their unpaid salaries.
Petitioners moved for reconsideration but it was denied. Hence this recourse

ISSUES: WON the dispute falls under the grievance procedure laid out in the CBA
and if in the affirmative does the labor arbiter assume jurisdiction
HELD: Article 217. Jurisdiction of Labor Arbiters and the Commission. x x
x
xxx
xxx

(c) Cases arising from the interpretation or implementation of collective


bargaining agreements and those arising from the interpretation or
enforcement of company personnel policies shall be disposed of by the Labor
Arbiter by referring the same to the grievance machinery and voluntary
arbitration as may be provided in said agreements. (emphasis supplied)
This provision requires labor arbiters to refer cases involving the
implementation of CBAs to the grievance machinery provided therein and to
voluntary arbitration.

Moreover, Article 260 of the Labor Code clarifies that such disputes must be
referred first to the grievance machinery and, if unresolved within seven days,
they shall automatically be referred to voluntary arbitration. In this regard,
Article 261 thereof states:
Article 261. Jurisdiction of voluntary arbitrators and panel of voluntary
arbitrators. 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 referred to in the immediately
preceding Article. Accordingly, violations of a Collective Bargaining
Agreement, except those which are gross in character, shall no longer be

treated as unfair labor practice and shall be resolved as grievances under


the Collective Bargaining Agreement. For purposes of this Article, gross
violations of a Collective Bargaining Agreement shall mean flagrant and/or
malicious refusal to comply with the economic provisions of such agreement.

Pursuant to Articles 217 in relation to Articles 260 and 261 of the Labor Code,
the labor arbiter should have referred the matter to the grievance machinery
provided in the CBA. Because the labor arbiter clearly did not have jurisdiction
over the subject matter, his decision was void.1avvphiNonetheless, the Secretary
of the Labor assumed jurisdiction over the labor dispute between the union and
RGMI and resolved the same in his September 18, 1996 order. Article 263(g) of
the Labor Code gives the Secretary of Labor discretion to assume jurisdiction
over a labor dispute likely to cause a strike or a lockout in an industry
indispensable to the national interest and to decide the controversy or to refer
the same to the NLRC for compulsory arbitration. In doing so, the Secretary of
Labor shall resolve all questions and controversies in order to settle the dispute.
His power is therefore plenary and discretionary in nature to enable him to
effectively and efficiently dispose of the issue.
104. Teng vs Pahagac

FACTS: Albert Teng Fish Trading is engaged in deep sea fishing and, for this
purpose, owns boats (basnig), equipment, and other fishing paraphernalia. As
owner of the business, Teng claims that he customarily enters into joint venture
agreements with master fishermen (maestros) who are skilled and are experts in
deep sea fishing; they take charge of the management of each fishing venture,
including the hiring of the members of its complement. He avers that the
maestros hired the respondent workers as checkers to determine the volume of
the fish caught in every fishing voyage.

On February 20, 2003, the respondent workers filed a complaint for


illegal dismissal against Albert Teng Fish Trading, Teng, and Chua before
the NCMB, Region Branch No. IX, Zamboanga City.
The respondent workers alleged that Teng hired them, without any
written employment contract, to serve as his "eyes and ears" aboard the fishing
boats; to classify the fish caught by baera; to report to Teng via radio

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communication the classes and volume of each catch; to receive instructions


from him as to where and when to unload the catch; to prepare the list of the
provisions requested by the maestro and the mechanic for his approval; and, to
procure the items as approved by him. They also claimed that they received
regular monthly salaries, 13th month pay, Christmas bonus, and incentives in the
form of shares in the total volume of fish caught.
They asserted that sometime in September 2002, Teng expressed his
doubts on the correct volume of fish caught in every fishing voyage. In December
2002, Teng informed them that their services had been terminated. In his
defense, Teng maintained that he did not have any hand in hiring the respondent
workers; the maestros, rather than he, invited them to join the venture.
According to him, his role was clearly limited to the provision of the necessary
capital, tools and equipment, consisting of basnig, gears, fuel, food, and other
supplies.

The VA rendered a decision in Tengs favor and declared that no


employer-employee relationship existed between Teng and the respondent
workers.
The respondent workers received the VAs decision on June 12,
2003. They filed a motion for reconsideration, which was denied in an
order dated June 27, 2003 and which they received on July 8, 2003. The VA
reasoned out that Section 6, Rule VII of the 1989 Procedural Guidelines in the
Conduct of Voluntary Arbitration Proceedings (1989 Procedural Guidelines)
does not provide the remedy of a motion for reconsideration to the party
adversely affected by the VAs order or decision.
On July 21, 2003, the respondent-workers elevated the case to the CA. In
its decision of September 21, 2004, the CA reversed the VAs decision after
finding sufficient evidence showing the existence of employer-employee
relationship.

ISSUES: 1) Whether the VAs decision is subject to a motion for reconsideration;


and
2) Whether an employer-employee relationship existed between Teng and the
respondent workers.

HELD:

1) Yes, it is. Article 262-A of the Labor Code does not prohibit the filing of a
motion for reconsideration.

On March 21, 1989, Republic Act No. 6715 took effect, amending, among others,
Article 263 of the Labor Code which was originally worded as:
Art. 263 x x x Voluntary arbitration awards or decisions shall be
final, unappealable, and executory.

As amended, Article 263 is now Article 262-A, which states:

Art. 262-A. x x x [T]he award or decision x x x shall contain the


facts and the law on which it is based. It shall be final and
executory after ten (10) calendar days from receipt of the
copy of the award or decision by the parties.

Notably, Article 262-A deleted the word "unappealable" from Article


263. Previous rulings fully establish that the absence of a categorical language in
Article 262-A does not preclude the filing of a motion for reconsideration of the
VAs decision within the 10-day period. Tengs allegation that the VAs decision
had become final and executory by the time the respondent workers filed an
appeal with the CA thus fails. The Court rules that the respondent workers
seasonably filed a motion for reconsideration of the VAs judgment, and the
VA erred in denying the motion because no motion for reconsideration is
allowed.
2) Yes, an employer-employee relationship existed.

While Teng alleged that it was the maestros who hired the respondent
workers, it was his company that issued to the respondent workers identification
cards (IDs) bearing their names as employees and Tengs signature as the
employer.

For the 13 years that the respondent workers worked for Teng, they
received wages on a regular basis, in addition to their shares in the fish
caught. The worksheet showed that the respondent workers received uniform

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amounts within a given year, which amounts annually increased until the
termination of their employment in 2002.

More importantly, the element of control which we have ruled in a


number of cases to be a strong indicator of the existence of an employeremployee relationship is present in this case. Teng not only owned the tools
and equipment, he directed how the respondent workers were to perform their
job as checkers; they, in fact, acted as Tengs eyes and ears in every fishing
expedition.

Teng cannot hide behind his argument that the respondent workers were
hired by the maestros. To consider the respondent workers as employees of the
maestros would mean that Teng committed impermissible labor-only
contracting. Accordingly, the Court holds that employer-employee ties exist
between Teng and the respondent workers. A finding that the maestros are
labor-only contractors is equivalent to a finding that an employer-employee
relationship exists between Teng and the respondent workers. As regular
employees, the respondent workers are entitled to all the benefits and rights
appurtenant to regular employment. And for his failure to comply with the Labor
Codes substantive requirement on termination of employment, the Court
declares that Teng illegally dismissed the respondent workers.
105. SAMASAH-NUWHRAIN (Hyatt) vs MAGSALIN

FACTS: Petitioner is a duly registered union and the certified bargaining


representative of the rank-and-file employees of Hyatt Regency Manila, a five-star
hotel owned and operated by respondent Hotel Enterprises of the Philippines, Inc.
Hyatts General Manager issued a Memorandum informing all hotel
employees that hotel security have been instructed to conduct a thorough bag
inspection and body frisking in every entrance and exit of the hotel. He enjoined
employees to comply therewith.
Angelito Caragdag, a waiter at the hotels Cafe Al Fresco restaurant and a
director of the union, refused to be frisked by the security personnel. The incident
was reported to the hotels Human Resources Department (HRD), which he was
imposed a penalty of reprimand. Caragdag again refused to be frisked by the security
personnel, HRD suspended him for three days which was considered as a second
offense. Both penalties were in accordance with the hotels Code of Discipline.

Subsequently, Moral, manager of Hyatts Cafe Al Fresco and Caragdags


immediate superior, was about to counsel two staff members, at the training room,
Caragdag suddenly opened the door and yelled at the two with an enraged look. In a
disturbing voice he said, Ang titigas talaga ng ulo nyo. Sinabi ko na sa inyo na huwag
kayong makikipagusap sa management habang ongoing pa ang kaso! Moral held
Caragdag liable for Offenses Subject to Disciplinary Action (OSDA) 3.01 of the hotels
Code of Discipline, i.e., threatening, intimidating, coercing, and provoking to a fight
your superior for reasons directly connected with his discharge of official duty.
Thus, Caragdag was imposed the penalty of seven days suspension in accordance
with the hotels Code of Discipline.
Caragdag committed another infraction. Caragdag left his work assignment
during official hours without prior permission from his Department Head. Moral
found Caragdag liable for violating OSDA 3.07, i.e., leaving work assignment during
official working hours without prior permission from the department head or
immediate superior, and suspended him for three days.
Because of the succession of infractions he committed, the HRD also
required Caragdag to explain why the hotels OSDA 4.32 (Committing offenses which
are penalized with 3 suspensions during a 12-month period) should not be enforced
against him. Despite notice of the scheduled hearing, both Caragdag and the Union
President failed to attend. Thereafter, the investigating board resolved on the said
date to dismiss Caragdag for violation of OSDA 4.32. Caragdag appealed but the
investigating board affirmed its resolution after hearing.
Hotel then sent Caragdag a notice of dismissal. Caragdags dismissal was
questioned by petitioner, and the dispute was referred to voluntary arbitration upon
agreement of the parties. The Voluntary Arbitrator ruled that the dismissal was valid.
Petitioner assailed the decision of the Voluntary Arbitrator before the CA in a
petition for certiorari . As mentioned at the outset, the CA dismissed the
petition outright for being the wrong remedy.
CA explained that Rule 43, Section 5 of the 1997 Rules of Civil Procedure
explicitly provides that the proper mode of appeal from judgments, final orders or
resolution of voluntary arbitrators is through a Petition for Review which should be
filed within fifteen (15) days from the receipt of notice of judgment, order or
resolution of the voluntary arbitrator. Considering that petitioner intends this
petition to be a Petition for Certiorari, the Court hereby resolves to dismiss the petition
outright for being an improper mode of appeal.

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Even if this Court treats the instant petition as a Petition for Review, still the
Court has no alternative but to dismiss the same for having been filed out of time. As
admitted by the petitioner it received the Order dated 26 May 2003 denying their
motion for reconsideration on 02 June 2003. The fifteen (15) day period within
which to appeal through a Petition for Review is until June 17, 2003. The
petitioner filed the present petition on August 1, 2003, way beyond the
reglementary period provided for by the Rules.

Petitioner: It argues that because decisions rendered by voluntary arbitrators are


issued under Title VII-A of the Labor Code, they are not covered by Rule 43 of
the 1997 Rules of Civil Procedure, as amended, by express provision of Section 2
thereof. Section 2, petitioner points out, expressly provides that Rule 43 shall not
apply to judgments or final orders issued under the Labor Code of
the Philippines. Hence, a petition for certiorari under Rule 65 is the proper remedy
for questioning the decision of the Voluntary Arbitrator, and petitioner having availed
of such remedy, the CA erred in declaring that the petition was filed out of time since
the petition was filed within the sixty (60)-day reglementary period.
Respondent: Maintains that the CA acted correctly in dismissing the petition
for certiorari for being the wrong mode of appeal. It stresses that Section 1 of Rule 43
clearly states that it is the governing rule with regard to appeals from awards,
judgments, final orders or resolutions of voluntary arbitrators. Respondent contends
that the voluntary arbitrators authorized by law include the voluntary arbitrators
appointed and accredited under the Labor Code, as they are considered as included in
the term quasi-judicial instrumentalities.
ISSUES: Whether or not petition for certiorari is an improper mode of appeal?

HELD: Yes. The proper remedy is a petition for review under Rule 43. The
question on the proper recourse to assail a decision of a voluntary arbitrator has
already been settled in Luzon Development Bank v. Association of Luzon
Development Bank Employees, where the Court held that the decision or award of
the voluntary arbitrator or panel of arbitrators should likewise be appealable to
the Court of Appeals, in line with the procedure outlined in Rule 43 of the 1997
Rules of Civil Procedure, just like those of the quasi-judicial agencies, boards and
commissions enumerated therein, and consistent with the original purpose to

provide a uniform procedure for the appellate review of adjudications of all


quasi-judicial entities.
Decisions of voluntary arbitrators issued pursuant to the
Labor Code do not come within the exception provided in Sec.2 of
Rule 43.

Hence, upon receipt on May 26, 2003 of the Voluntary Arbitrators


Resolution denying petitioners motion for reconsideration, petitioner should
have filed with the CA, within the fifteen (15)-day reglementary period, a petition
for review, not a petition for certiorari.
106. YSS EMPLOYEES UNION [SEBA] v. YSS LABORATORIES

FACTS: To arrest escalating business losses, the company implemented a


retrenchment program, which affected 11 employees purportedly chosen in
accordance with reasonable standards. Of the 11, 9 were YSSEU officers and
members. Initially, they were given the option to avail of the early retirement
program, but when no one chose to avail of it, the company exercised its option
to terminate the services of its employees as allegedly authorized under LC 283.
YSSEU decided to hold a strike, claiming that the company was guilty of
discrimination and union-busting in carrying out the said retrenchment
program. They staged a strike after the necessary strike vote was taken under
NCMB-NCRs supervision. A number of conciliation proceedings were conducted,
but these efforts proved futile.

In an Order, the SOLE certified the labor dispute to the NLRC for compulsory
arbitration. All striking workers were thereby directed to return to work within
24 hours from receipt of the Order, and YSS Laboratories to accept them under
the terms and conditions prevailing before the strike. Underscoring the
governments policy of preserving economic gains and employment levels, the
SOLE deemed that the continuation of the labor dispute was inimical to national
interest.
YSS Laboratories, however, refused to fully comply. In its Urgent Motion for
Reconsideration, it argued that the 9 union officers and members [previously

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terminated from service pursuant to a valid retrenchment] should be excluded


from the operation of the return-to-work order, and that the union officers who
participated in the purported illegal strike should likewise not be allowed to be
back to their employment deemed to have already lost their employment
status.
YSSEU moved that YSS Laboratories be cited for contempt for refusing to admit
the 18 workers back to work. YSSEU prayed for the award of backwages in favor
of these employees SOLE GRANTED THE UNIONS
MOTION: Accept 18 workers pending determination of the validity of the
retrenchment and illegal strike cases.

The company won at CA level, since the CA REVERSED THE TWO SOLE
ORDERSmade with grave abuse of discretion. CA found that the company
validly carried out the retrenchment program, which severed the concerned
employees.Strike employment was considered as illegal for lack of factual and
legal basis.
UNIONS CONTENTIONS

Once a labor dispute is certified to the NLRC for compulsory arbitration,


the employer should readily admit all striking employees under the status quo
ante.

The primary reason why the strike was conducted was to protest the
implementation of the retrenchment program, which clearly discriminated
against union officers and members.
COMPANYS ARGUMENTS

Those employees who were separated from service due to a valid


retrenchment should not be readmitted.

The retrenched employees were chosen after a thorough evaluation of


their work performance, including their frequencies of absence and tardiness,
and their respective lengths of service.

ISSUE :WON the retrenched employees should be excluded from the coverage of
the return-to-work-order. NO
HELD: The SOLE Orders certifying the labor dispute to the NLRC for compulsory
arbitration, and enjoining YSSEU to return to work and YSS Laboratories to
admit them, were issued pursuant to LC 263(g).
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. 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.

After martial law was lifted and democracy was restored, the assumption of
jurisdiction in Art. 263(g) has now been viewed as an exercise of the police
power of the State with the aim of promoting the common good. The grant of
these plenary powers to the SOLE makes it incumbent upon him to bring about
soonest, a fair and just solution to the differences between the employer and the
employees, so that the damage such labor dispute might cause upon the national
interest may be minimized as much as possible, if not totally averted, by avoiding
stoppage of work or any lag in the activities of the industry or the possibility of
those contingencies that might cause detriment to the national interest.

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To effectively achieve such end, the assumption or certification order shall have
the effect of automatically enjoining the intended or impending strike or lockout.
If one has already taken place, all striking workers 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. YSS

Laboratories vigorous insistence SOLEs seriously authority to impairs forestall


labor dispute that he deems inimical to the national economy. The SOLE is
afforded plenary and broad powers, and is granted great breadth of discretion to
adopt the most reasonable and expeditious way of writing finis to the labor
dispute.

When the SOLE directed YSS Laboratories to accept all the striking workers back
to work, the Secretary did not exceed his jurisdiction, or gravely abuse the same.
There is no showing that the orders were issued in an arbitrary or despotic
manner. The Orders were issued with the end in view of preserving the status
quo ante while the main issues of the validity of the retrenchment and legality of
the strike were being threshed out in the proper forum. This was done for the
promotion of the common good and to maintain industrial peace, considering
that a lingering strike could be inimical to the interest of both employer and
employee. His certification for compulsory arbitration is not intended to
interfere with the managements rights but to obtain a speedy settlement of the
dispute.
YSS Laboratories undermines the underlying principle embodied in LC 263(g) on
the settlement of labor disputes -- that assumption and certification orders are
executory in character and are to be strictly complied with by the parties, even
during the pendency of any petition questioning their validity. Regardless
therefore of its motives, or of the validity of its claims, YSS Laboratories must
readmit a