KULAS IDEAS & CREATIONS v.
ALCOSEBA  In their Position Paper, Juliet and Flordelinda asserted that KULAS suspected them to
G.R. No. 180123, February 18, 2010
FACTS:
 KULAS, a gift boutique owned by Gil and Ma. Rachel Maningo, employed Juliet Alcoseba
and Flordelinda Arao-arao as sales attendants. Their tasks are to sell KULAS's products,
prepare weekly sales reports and assist the clerk in the monthly inventory of saleable
goods.
 In February 2000, DOLE inspected the KULAS outlet in Ayala Center, Cebu where Juliet
and Flordelinda were assigned and found that it violated several labor standards laws.
The DOLE sent KULAS a Notice of Summary Investigation directing it to pay the salary
differential of its employees from January to August 2000 amounting to P173,003.28.
 KULAS directed Juliet and Flordelinda to explain and/or investigate an alleged inventory
discrepancy of P48,179.30, and suspended Juliet and Flordelinda for 7 days, for gross
negligence of duties and responsibilities.
 Both Juliet and Flordelinda filed a complaint for illegal suspension and withholding of
salaries in NLRC.
 By Reconciliation Report sent to Juliet and Flordelinda, KULAS advised them that
discrepancies in its inventory were noted and that their task was to diligently monitor all
stocks and to report any stock discrepancy to the office, if there were any, but there was
no report made regarding stock shortage. KULAS accordingly directed them to explain
the discrepancies.
 After serving their suspension, Juliet and Flordelinda, through a letter, inquired with
KULAS the status of their employment since they were told not to report for work until
they were able to explain the discrepancies.
 KULAS advised Juliet and Flordelinda:
o Dec. 31, 1999 inventory reconciliation report reflected an overage of 3 pcs. Or
an equivalent of P808.00 which was duly acknowledged by J. Alcoseba.
o A memo was requested from both of them & Hermie Nemenzo to conduct a
physical inventory. Based on their inventory, a reconciliation report was
printed out and reflected an overage of 14 pcs.
o Based on the Feb. 2000 report, the Delivery Receipts, Sales & pull-out were
posted. The final print out reflects a shortage of 959 pcs. Or P185,544.50,
o Based on the said report they were given 3 days to settle in full the shortage.
 KULAS, by separate Memorandum required them to explain within 48 hours why they
should not be terminated for "gross neglect of duties and responsibilities resulting to
huge economic loss incurred by the company" and "dishonesty."
 Juliet and Flordelinda, in their answer, asserted that they were not responsible for the
losses.
o never given a copy of the actual stocks-on-hand when they started working in
KULAS Boutique and cannot be blamed for the discrepancies pre-existing from
the previous sales clerks and carried over to the current inventory.
o never dishonest as sales clerks. All sales have been reported properly and
accordingly.
 KULAS did not reply to the query about the status of their employment. KULAS charged
them for estafa in the prosecutor’s office. The complaint was later dismissed.
 Juliet and Flordelinda amended their complaint to illegal dismissal against KULAS and its
owners Gil and Ma. Rachel Maningo at the NLRC.
have instigated the DOLE inspection on account of which they terminated their services.
 Labor Arbiter favored KULAS, ruling that there was no illegal dismissal. On appeal, the
NLRC, likewise held that there was no illegal dismissal. However, upon motion for
reconsideration, NLRC, partially reconsidered and held that there was illegal dismissal.
 Both parties moved for reconsideration. NLRC granted KULAS' motion for
reconsideration, and reinstated its ruling that there was no illegal dismissal.
 On appeal, CA reversed the NLRC ruling. It held that KULAS did not conduct a hearing or
conference to afford the Juliet and Flordelinda an opportunity to present evidence on
their behalf, and it likewise did not send a written notice of termination to them. They
were not given a real opportunity to answer the charges hurled against them.
 CA denied the motion for reconsideration. Hence, the present petition.
ISSUE: WON KULAS invalidly dismissed Juliet and Flordelinda (YES)
HELD:
Article 282 (b) and (c) of the Labor Code provide that an employer may terminate an employee
for "gross and habitual neglect by the employee of his duties" and for "fraud." In both
instances, substantial evidence is necessary for an employer to effectuate any dismissal.
Uncorroborated assertions and accusations by the employer do not suffice, otherwise the
constitutional guaranty of security of tenure of the employee would be jeopardized.
Article 282 (b) imposes a stringent condition before an employer may terminate an
employment due to gross and habitual neglect by the employee of his duties. To sustain a
termination of employment based on this provision of law, the negligence must not only be
gross but also habitual.
KULAS did not conduct actual inventory, nor proper turnover of stocks. Inventory not part
of Juliet and Flordelinda’s task [“Assist” only].
Inventory preparation and reporting did not fall on respondents' shoulders since they were to
"assist the [stock] clerk" only.
The Court notes that after the December 31, 1999 inventory reconciliation, petitioners
undertook only two inventories in February and November 2000. That there was no regular
monthly inventory is evident from the fact that the only basis for the November inventory
was the February inventory, as reflected in its Memorandum of December 13, 2000.
As did the appellate court, the Court notes that petitioners were themselves remiss in
conducting a regular monthly stock inventory:
xxx Worth mentioning at this point is the allegation of the [respondents] that upon their assumption at the
Ayala Center branch, the management did not conduct an actual inventory as well as a proper turnover of
stocks. This must therefore explain the lapse in the sales inventory conducted by [petitioners]. Verily, [petitioners]
are guilty of contributory negligence for failure to conduct a proper turnover of stocks in the boutique upon
[respondents'] assumption therein.
No Fraud
The discrepancy in the inventory, even if true, cannot just be attributed to respondents on
the basis of their having access to the boutique's merchandise.
The undue haste in suspending respondents, even before a full and complete stock inventory
and investigation on the sales discrepancy was yet to be undertaken, betrays petitioners'
predisposition to hold respondents guilty. xxx After all, respondents were neither cashiers nor
clerks tasked with handling the daily sales proceeds of the outlet.

KULAS failed to comply with the procedural requirements for a valid dismissal.
In cases of termination of employees based on just causes, the law mandates the following
requisites:

(i) A written notice served on the employee specifying the ground or grounds for termination, and giving
said employee reasonable opportunity within which to explain his side.

(ii) A hearing or conference during which the employee concerned, with the assistance of counsel if he so
desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented
against him.

(iii) A written notice of termination served on the employee, indicating that upon due consideration of all
the circumstances, grounds have been established to justify his termination.

Thus a first notice informing and bearing on the charge must be sent to the employee. xxx
This notice will afford the employee an opportunity to avail all defenses and exhaust all
remedies to refute the allegations hurled against him for what is at stake is his very life and
limb his employment.

In the present case, the only time petitioners apprised respondents of gross neglect of duties
and dishonesty as grounds for the termination of the services was by Memorandum of
December 13, 2000. The memorandum did not inform outright that an investigation would
be conducted. It likewise did not contain a plain statement of the particular charges of
malfeasance or misfeasance.

Even the earlier memoranda, requiring respondents to explain and to themselves investigate
the alleged stock discrepancies as well as to restitute the monetary equivalent thereof, did
not clearly intimate termination from employment if their explanations were found
unsatisfactory.

Payment of salary differential, unpaid salaries, moral and exemplary damages and
attorney's fees DENIED
It bears noting that the DOLE had already assumed jurisdiction over the claims of
underpayment of salaries of respondents while respondents' claim for nonpayment of salaries
for the period of November 13-30, 2000 had already been paid.

As for respondents' prayer for the award to them of damages and attorney's fees, no proof
thereof is extant. As has been repeatedly stressed, broad allegations, bereft of proof, cannot
sustain the award of moral and exemplary damages, as well as attorney's fees.

WHEREFORE, the present petition for review is DENIED. REMANDED to the Labor Arbiter for
proper computation of respondents' backwages and separation pay.
PIZZA HUT v. HON. LAGUESMA
G.R. No. 115077, April 18, 1997
FACTS:
 Nagkakaisang Lakas ng Manggagawa (NLM)-Katipunan filed a petition for certification
election with the Department of Labor in behalf of the rank and file employees of Pizza
Hut.
 Pizza Hut then filed a verified Motion to Dismiss alleging fraud, falsification and
misrepresentation in the Union's registration.
o a) tainted with false, forged, double or multiple signatures of those who took
part in the ratification of Union's constitution and by-laws and in the election
of its officers; that the alleged chapter is claimed to have been supported by
318 members when in fact the persons who actually signed their names were
much less
o b) serious falsities in the dates of the issuance of the charter certification and
the organization meeting of the alleged chapter.
 In a Supplement to its Motion to Dismiss, Pizza Hut claimed that:
o 1) no basis for the Union’s election of officers on June 27, 1993 because as of
that date, there existed no positions to which the officers could be validly
elected, as the Union's constitution and by-laws were adopted only on July 7,
1993.
o 2) Voting was not conducted by secret ballot, violating Labor Code
o 3) The Constitution and by Laws submitted not properly acknowledged and
notarized.
 Later on, Pizza Hut filed a Petition for the cancellation of the Union's registration on the
grounds of fraud and falsification. Pizza Hut also filed a motion with Med-Arbiter for
suspension of proceedings in the certification election case until after the prejudicial
question of the Union's legal personality is determined in the cancellation of registration
case.
 Med-Arbiter Abdullah directed the holding of a certification election among Pizza Hut's
rank and file employees. It held that fraud and misrepresentation are mere collateral
issues.
 On appeal to the office of the Secretary of Labor, Labor Undersecretary Laguesma denied
the same. Motion for reconsideration was also denied.
 Hence, Special Civil Action for certioriari.
ISSUE: WON Med-Arbiter committed grave abuse of discretion (YES)
HELD:
Recognition by Bureau of Labor Relations not ministerial function
After a labor organization has filed the necessary papers and documents for registration, it
becomes mandatory for the Bureau of Labor Relations to check if the requirements under
Article 234 have been sedulously complied with. If its application for registration is vitiated
by falsification and serious irregularities, especially those appearing on the face of the
application and the supporting documents, a labor organization should be denied
recognition as a legitimate labor organization.
Registration requirements specifically afford a measure of protection to unsuspecting
employees who may be lured into joining unscrupulous or fly-by-night unions whose sole
purpose is to control union funds or use the labor organization for illegitimate ends. Such
requirements are a valid exercise of the police power, because the activities in which labor
organizations, associations and unions of workers are engaged directly affect the public
interest and should be protected.
Thus, in Progressive Development Corporation vs. Secretary of Labor and Employment, SC
held:
x x x But while Article 257 cited by the Solicitor General directs the automatic conduct of a certification
election in an unorganized establishment, it also requires that the petition for certification election
must be filed by a legitimate labor organization. xxx The employer naturally needs assurance that the
union it is dealing with is a bona-fide organization, one which has not submitted false statements or
misrepresentations to the Bureau. The inclusion of the certification and attestation requirements will in
a marked degree allay these apprehensions of management. xxx
The Court's conclusion should not be misconstrued as impairing the local union's right to be
certified as the employees' bargaining agent in the petitioner's establishment. It merely says
that the local union must first comply with the statutory requirements in order to exercise
this right.
Med-Arbiter committed grave abuse of discretion; Fraud ground not merely collateral
The Labor Code requires that in organized and unorganized establishments, a petition for
certification election must be filed by a legitimate labor organization.
In this case, Med-Arbiter summarily disregarded the petitioner's 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, therefore it is a legitimate labor organization.
It cannot be denied that the grounds invoked by Pizza Hut for the cancellation of Union's
registration fall under paragraph (a) and (c) of Article 239 of the Labor Code. It constitutes a
grave challenge to the right of Union to ask for certification election. The Med-Arbiter
should have looked into the merits of the petition for cancellation before issuing an order
calling for certification election. Registration based on false and fraudulent statements and
documents confer no legitimacy upon a labor organization irregularly recognized, which, at
best, holds on to a mere scrap of paper. Under such circumstances, the labor organization,
not being a legitimate labor organization, acquires no rights, particularly the right to ask for
certification election in a bargaining unit.
Clearly, fraud, falsification and misrepresentation in obtaining recognition as a legitimate
labor organization are contrary to the Med-Arbiter's conclusion not merely collateral issues.
The invalidity of respondent Union's registration would negate its legal personality to
participate in certification election.
WHEREFORE, PREMISES CONSIDERED, petition is GRANTED. The case is REMANDED to the
Med-Arbiter to resolve with reasonable dispatch petitioner's petition for cancellation of
respondent Union's registration.
S.S. VENTURES INTERNATIONAL, INC., v. S.S. VENTURES LABOR UNION
G.R. No. 161690, July 23, 2008
FACTS:
 S.S. Ventures is in the business of manufacturing sports shoes. S.S. Ventures Labor Union
(Union), on the other hand, is a labor organization registered with (DOLE).
 Union filed with DOLE-Region III a petition for certification election in behalf of the rank-
and-file employees of S.S. Ventures. 542 signatures, 82 of which belong to terminated
Ventures employees, appeared on the basic documents supporting the petition.
 S.S. Ventures filed a Petition to cancel the Union's certificate of registration invoking the
grounds in Article 239(a) of the Labor Code. It alleged:
o (1) The Union deliberately and maliciously included the names of 82 former
employees in its list of members, and forged their signatures to make it appear
they took part in the organizational meeting and adoption and ratification of
the constitution;
o (2) The Union maliciously twice entered the signatures of Mara Santos,
Raymond Balangbang, and Karen Agunos;
o (3) No organizational meeting and ratification actually took place; and
o (4) The Union's application for registration was not supported by at least 20%
of the rank-and-file employees of Ventures. Since 82 of the 500 signatures
were forged or invalid, 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.
 Union filed an answer with Motion to Dismiss, denying the imputed acts of fraud or
forgery.
 S.S. Ventures filed supplemental reply memorandum citing other instances of fraud and
misrepresentation, claiming that the "affidavits" executed by 82 alleged Union members
show that they were deceived into signing paper minutes or were harassed to signing
their attendance in the organizational meeting. It added that some employees signed the
"affidavits" denying having attended such meeting.
 Regional Director Dione decided in favor of S.S. Ventures. Union filed an MR, which was
forwarded to the Bureau of Labor Relations (BLR). BLR gave it due course and treated it
as an appeal, even though belatedly filed.
 BLR Director granted the Union's appeal and reversed RD ruling. S.S. Ventures sought
reconsideration of the above decision but was denied by the BLR.
 On appeal, CA dismissed S.S. Ventures' petition, as well as its MR.
 Hence, this petition for review.
ISSUE: WON cancellation of the Union’s registration should be granted. (NO)
HELD:
Affidavits of retraction of 82 members have no weight
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
Union's 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.
Inclusion of the said 82 individuals to the meeting and proceedings is not really fatal
The relevancy of the 82 individuals' active participation in the Union's 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.
In its union records on file with this Bureau, respondent union submitted the names of [542]
members x x x. 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 x x
x. 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.
3 Doubled signatures mere human error
The bare fact that three signatures twice appeared on the list of those who participated in the
organizational meeting would not provide a valid reason to cancel Certificate of Registration.
As the Union tenably explained without rebuttal from Ventures, the double entries are no
more than "normal human error," effected without malice. Even the labor arbiter who found
for Ventures sided with the Union in its explanation on the absence of malice.
For fraud and misrepresentation to be grounds for cancellation of union registration under
Article 239, the nature of the fraud and misrepresentation must be grave and compelling
enough to vitiate the consent of a majority of union members.
In its Comment, the Union points out that for almost seven (7) years following the filing of its
petition, no certification election has yet been conducted among the rank-and-file employees.
If this be the case, the delay has gone far enough and can no longer be allowed to continue.
The CA is right when it said that Ventures should not interfere in the certification election by
actively and persistently opposing the certification election of the Union. A certification
election is exclusively the concern of employees and the employer lacks the legal personality
to challenge it. In fact, jurisprudence frowns on the employer's interference in a certification
election for such interference unduly creates the impression that it intends to establish a
company union.
WHEREFORE, the petition is DENIED. The Decision and Resolution dated October 20, 2003 and
January 19, 2004, respectively, of the CA are AFFIRMED. S.S. Ventures Labor Union shall
remain in the roster of legitimate labor organizations, unless it has in the meantime lost its
legitimacy for causes set forth in the Labor Code. Costs against petitioner.
TAGAYTAY HIGHLANDS INTERNATIONAL GOLF CLUB INC. v. TAGAYTAY HIGHLANDS
EMPLOYEES UNION
G.R. No. 142000, January 22, 2003
FACTS:
 Tagaytay Highlands Employees Union (THEU, a legitimate labor organization
representing majority of the rank-and-file employees of THIGCI, filed a petition for
certification election before the DOLE Mediation-Arbitration Unit, Regional Branch No.
IV.
 THIGCI, opposed on the ground that the list of union members submitted was defective
and fatally flawed as it included the names and signatures of supervisors, resigned,
terminated and 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 submitted a list of the names of its 71 actual rank-and-file employees annexed to
its Comment. It incorporated a tabulation showing the signatories whose membership in
the union is questioned as disqualified and the reasons for disqualification.
 THIGCI also alleged that some of the signatures were secured through fraudulent and
deceitful means, and submitted copies of the handwritten denial and withdrawal of
some of its employees from participating in the petition.
 THEU asserted that it had complied with all the requirements on account of which it was
duly granted a Certification of Affiliation by DOLE. That Section 5, Rule V of D.O. No. 9
provides that the legitimacy of its registration cannot be subject to collateral attack, and
unless there is a final order of cancellation, it continues to enjoy the rights accorded to a
legitimate organization.
 THEU, in its Reply argued that the Med-Arbiter should automatically order the conduct
of a certification election.
 DOLE Med-Arbiter Bactin ordered the holding of a certification election among the rank-
and-file employees of THIGCI.
o Allegations on the tabulation made should be properly raised in the exclusion-
inclusion proceedings at the pre-election conference.
o Allegation of fraud and deceit should be coursed through petition for
cancellation of union registration with DOLE Regional Director.
o THIGCI failed to submit the job descriptions of the questioned employees and
other supporting documents to bolster its claim that they are disqualified from
joining THEU.
 THIGCI appealed to the Office of the DOLE Secretary, which ruled on its favor, 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.
 On MR, DOLE Usec. Dimalipis-Baldoz, set aside the earlier resolution, and favored THEU.
It held that since THEU is a local chapter, (20%) membership requirement is not
necessary 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. Rather than disregard its status, just remove the names of alleged
disqualified supervisory employees and employees of the Country Club, Inc. Regarding
the participation of resigned and AWOL employees and those whose signatures are
illegible, the issue can be resolved during the inclusion-exclusion proceedings at the pre-
election stage. The records of the case were thus ordered remanded to the Office of the
Med-Arbiter for the conduct of certification election.
 THIGCI’s MR was denied, it filed a petition for certiorari In SC which was referred to CA.
 CA denied THIGCI’s Petition, ruling that it failed to adduce substantial evidence to
support its allegations.
 Hence, the present petition for certiorari.
ISSUE: WON the certificate of registration of the Union may be collaterally attacked (NO)
HELD:
The statutory authority for the exclusion of supervisory employees in a rank-and-file union,
and vice-versa, is Article 245 of the Labor Code. While it 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 vice-versa.
The petition fails. 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.
The grounds for cancellation of union registration are provided for under Article 239 of the
Labor Code. xxx 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 petitioner’s 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
Court’s 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.’
As for the lack of mutuality of interest argument of petitioner, it does not lie due to its failure to present
substantial evidence that the assailed employees are actually occupying supervisory positions. While
THIGCI 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. 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.
WHEREFORE, the petition is hereby DENIED. Let the records of the case be remanded to the
office of origin, the Mediation-Arbitration Unit, Regional Branch No. IV, for the immediate
conduct of a certification election subject to the usual pre-election conference.